File Nos. 333-34741
811-05200
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 40 [X]
(Check appropriate box or boxes.)
COVA VARIABLE ANNUITY ACCOUNT ONE
__________________________________
(Exact Name of Registrant)
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
_______________________________________________
(Name of Depositor)
One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4644
______________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 831-5433
Name and Address of Agent for Service
Lorry J. Stensrud, President
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
(800) 523-1661
Copies to:
Judith A. Hasenauer and Bernard J. Spaulding
Blazzard, Grodd & Hasenauer, P.C. Senior Vice President, General
P.O Box 5108 Counsel and Secretary
Westport, CT 06881 Cova Financial Services
Life Insurance Company
(203) 226-7866 One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 2000 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following:
____ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Registered:
Individual Variable Annuity Contracts
EXPLANATORY NOTE
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This Registration Statement contains three Prospectuses (Version A, Version B
and Version C). The three versions are substantially similar except for the
funding options. The Prospectuses will be filed with the Commission pursuant
to Rule 497 under the Securities Act of 1933. The Registrant undertakes to
update this Explanatory Note, as needed, each time a Post-Effective
Amendment is filed.
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<TABLE>
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- - -------- --------------------------------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . Index of Special Terms
Item 3. Synopsis . . . . . . . . . . . . . . . Summary
Item 4. Condensed Financial Information . . . Appendix - Condensed Financial Information
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies . . Other Information - Cova; The
Separate Account; Investment
Options; Appendix B
Item 6. Deductions and Expenses. . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts. . . . . . . . . . . The Fixed and Variable Annuity
Item 8. Annuity Period . . . . . . . . . . . . Income Phase
Item 9. Death Benefit. . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value . . . . . Purchase
Item 11. Redemptions. . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information . . . . . . . . Table of Contents of the
Statement of Additional
Information
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- - -------- -----------------------
PART B
Item 15. Cover Page . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . Company
Item 18. Services . . . . . . . . . . . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered . Not Applicable
Item 20. Underwriters . . . . . . . . . . . . . Distribution
Item 21. Calculation of Performance Data. . . . Performance Information
Item 22. Annuity Payments . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
PART A - VERSION A
The Fixed
And Variable Annuity
issued by
COVA VARIABLE ANNUITY
ACCOUNT ONE
and
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Services Life Insurance Company (Cova).
The annuity contract has 45 investment choices - a fixed account which offers an
interest rate which is guaranteed by Cova, and 44 investment portfolios listed
below. You can put your money in the fixed account and/or any of these
investment portfolios (except as noted). CURRENTLY, IF YOU ARE NOT PARTICIPATING
IN AN ASSET ALLOCATION PROGRAM, YOU CAN ONLY INVEST IN 15 INVESTMENT PORTFOLIOS
AT ANY ONE TIME.
AIM Variable Insurance Funds:
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
Alliance Variable Products Series Fund, Inc.:
Managed by Alliance Capital
Management L.P.
Premier Growth Portfolio (Class A)
Real Estate Investment Portfolio (Class A)
Cova Series Trust:
Managed by J.P. Morgan
Investment Management Inc.
International Equity Portfolio
Large Cap Stock Portfolio
Quality Bond Portfolio
Select Equity Portfolio
Small Cap Stock Portfolio
Managed by Lord, Abbett & Co.
Bond Debenture Portfolio
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
Franklin Templeton Variable Insurance Products Trust*, Class 1 Shares:
Managed by Franklin Advisers, Inc.
Franklin Small Cap Fund (the surviving fund of the merger with
Franklin Small Cap Investments Fund)
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund (the surviving fund of the merger with
Mutual Shares Investments Fund)
Managed by Templeton Asset
Management Ltd.
Templeton Developing Markets Securities Fund (formerly,
Templeton Developing Markets Fund)
Managed by Templeton Investment
Counsel, Inc.
Templeton International Securities Fund (formerly, Templeton
International Fund)
*Effective May 1, 2000, the portfolios of the Templeton Variable Products Series
Fund were merged into similar portfolios of Franklin Templeton Variable
Insurance Products Trust.
General American Capital Company:
Managed by Conning Asset
Management Company
Money Market Fund
Goldman Sachs Variable Insurance Trust ("VIT"):
Managed by Goldman Sachs
Asset Management, a unit of the Investment Management Division of
Goldman, Sachs & Co.
Goldman Sachs VIT Growth and Income Fund
Goldman Sachs VIT Internet Tollkeeper Fund (available as of
July 1, 2000)
Managed by Goldman Sachs
Asset Management International
Goldman Sachs VIT Global Income Fund
Goldman Sachs VIT International Equity Fund
Kemper Variable Series:
Managed by Scudder Kemper
Investments, Inc.
Kemper Government Securities Portfolio
Kemper Small Cap Growth Portfolio
Kemper Small Cap Value Portfolio
Liberty Variable Investment Trust:
Managed by Newport Fund
Management Inc.
Newport Tiger Fund, Variable Series
MFS Variable Insurance Trust:
Managed by Massachusetts
Financial Services Company
MFS Emerging Growth Series
MFS Emerging Markets Equity Series (formerly,
MFS/Foreign & Colonial Emerging
Markets Equity Series)(not available)
MFS Global Governments Series
MFS Growth With Income Series
MFS High Income Series
MFS Research Series
Oppenheimer Variable Account Funds:
Managed by OppenheimerFunds, Inc.
Oppenheimer Bond Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
Putnam Variable Trust:
Managed by Putnam Investment
Management, Inc.
Putnam VT Growth and Income Fund Class IA Shares
Putnam VT International Growth Fund Class IA Shares
Putnam VT International New
Opportunities Fund Class IA Shares
Putnam VT New Value Fund Class IA Shares
Putnam VT Vista Fund - Class IA Shares
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Cova Fixed and Variable
Annuity Contract.
To learn more about the Cova Fixed and Variable Annuity Contract, you can obtain
a copy of the Statement of Additional Information (SAI) dated May 1, 2000.
The SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of the prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding companies that file electronically with the SEC.
The Table of Contents of the SAI is on Page __ of this prospectus. For a free
copy of the SAI, call us at (800)523-1661 or write us at: One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644.
The Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
May 1, 2000
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS
SUMMARY
Fee Table
Examples
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Annuity Payments
Annuity Options
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Free Look
Accumulation Units
4. INVESTMENT OPTIONS
AIM Variable Insurance Funds
Alliance Variable Products Series Fund, Inc.
Cova Series Trust
General American Capital Company
Franklin Templeton Variable Insurance Products Trust
Goldman Sachs Variable Insurance Trust
Kemper Variable Series
Liberty Variable Investment Trust
MFS Variable Insurance Trust
Oppenheimer Variable Account Funds
Putnam Variable Trust
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Approved Asset Allocation Programs
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the Withdrawal Charge
Premium Taxes
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
Suspension of Payments or Transfers
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A
Condensed Financial Information
APPENDIX B
APPENDIX C
Performance Information
INDEX OF SPECIAL TERMS
Because of the complex nature of the contract, we have used certain words
or terms in this prospectus which may need an explanation. We have
identified the following as some of these words or terms. The page that is
indicated here is where we believe you will find the best explanation for
the word or term. These words and terms are in italics on the indicated
page.
Page
Accumulation Phase 14
Accumulation Unit 15
Annuitant 14
Annuity Date 14
Annuity Options 14
Annuity Payments 14
Annuity Unit 15
Beneficiary 24
Fixed Account 14
Income Phase 14
Investment Portfolios 16
Joint Owner 24
Non-Qualified 20
Owner 24
Purchase Payment 15
Qualified 20
Tax Deferral 20
SUMMARY
The sections in this Summary correspond to sections in this prospectus which
discuss the topics in more detail.
1. THE ANNUITY CONTRACT:
The fixed and variable annuity contract offered by Cova is a contract between
you, the owner, and Cova, an insurance company. The contract provides a means
for investing on a tax-deferred basis. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
This contract offers 44 investment portfolios. These portfolios are designed to
offer a potentially better return than the fixed account. However, this is NOT
guaranteed. You can also lose your money.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Cova. While your money is in the fixed account, the interest your money
will earn as well as your principal is guaranteed by Cova.
You can put money in up to 15 of the investment portfolios and the fixed
account. (If you are participating in an asset allocation program, this limit
may not apply.) You can transfer between accounts up to 12 times a year without
charge or tax implications.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine, in part, the amount of income payments during
the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE):
If you want to receive regular income from your annuity, you can choose an
annuity option. Once you begin receiving regular payments, you cannot change
your payment plan. During the income phase, you have the same investment choices
you had during the accumulation phase. You can choose to have payments come from
the fixed account, the investment portfolios or both. If you choose to have any
part of your payments come from the investment portfolios, the dollar amount of
your payments may go up or down.
3. HOW TO PURCHASE THE CONTRACT:
You can buy this contract with $5,000 or more under most circumstances. You can
add $500 or more any time you like during the accumulation phase. Your
registered representative can help you fill out the proper forms.
4. INVESTMENT OPTIONS:
You can put your money in the investment portfolios which are briefly described
in Appendix B and more fully described in the prospectuses for the funds.
Currently, if you are not participating in an asset allocation program, you can
only invest in 15 investment portfolios at any one time.
Depending upon market conditions and the performance of the portfolio(s) you
select, you can make or lose money in any of these portfolios.
5. EXPENSES:
The contract has insurance features and investment features, and there are costs
related to each.
o Each year Cova deducts a $30 contract maintenance charge from your
contract. During the accumulation phase, Cova currently waives this charge
if the value of your contract is at least $50,000.
o Cova also deducts for its insurance charges which total 1.40% of the
average daily value of your contract allocated to the investment
portfolios.
o If you take your money out, Cova may assess a withdrawal charge which is
equal to 5% of the purchase payment you withdraw. After Cova has had a
purchase payment for 5 years, there is no charge by Cova for a withdrawal
of that purchase payment.
o When you begin receiving regular income payments from your annuity, Cova
will assess a state premium tax charge, if applicable, which ranges from 0%
- 4% depending upon the state.
o The first 12 transfers in a year are free. After that, a transfer fee of
$25 or 2% of the amount transferred (whichever is less) is assessed.
o There are also investment charges which currently range from ____% to ____%
of the average daily value of the investment portfolio depending upon the
investment portfolio.
6. TAXES:
Your earnings are not taxed until you take them out. If you take money out
during the accumulation phase, earnings come out first and are taxed as income.
If you are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the earnings. Payments during the income phase are
considered partly a return of your original investment. That part of each
payment is not taxable as income.
7. ACCESS TO YOUR MONEY:
You can take money out at any time during the accumulation phase. After the
first year, you can take up to 10% of your total purchase payments each year
without charge from Cova. Withdrawals of purchase payments in excess of that may
be charged a withdrawal charge, depending on how long your money has been in the
contract. However, Cova will never assess a withdrawal charge on earnings you
withdraw. Earnings are defined as the value in your contract minus the remaining
purchase payments in your contract. Of course, you may also have to pay income
tax and a tax penalty on any money you take out.
8. DEATH BENEFIT:
If you die before moving to the income phase, the person you have chosen as your
beneficiary will receive a death benefit.
9. OTHER INFORMATION:
Free Look. If you cancel the contract within 10 days after receiving it (or
whatever period is required in your state), we will send your money back without
assessing a withdrawal charge. You will receive whatever your contract is worth
on the day we receive your request. This may be more or less than your original
payment. If we're required by law to return your original payment, we reserve
the right to put your money in the Money Market Fund during the free look
period.
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
Who should purchase the contract? The contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state income tax brackets. You should not buy this contract if
you are looking for a short-term investment or if you cannot take the risk of
getting back less money than you put in.
Additional Features. This contract has additional features you might be
interested in. These include:
o You can arrange to have money automatically sent to you each month while
your contract is still in the accumulation phase. Of course, you'll have to
pay taxes on money you receive. We call this feature the Systematic
Withdrawal Program.
o You can arrange to have a regular amount of money automatically invested in
investment portfolios each month, theoretically giving you a lower average
cost per unit over time than a single one time purchase. We call this
feature Dollar Cost Averaging.
o You can arrange to automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
o Under certain circumstances, Cova will give you your money without a
withdrawal charge if you need it while you're in a nursing home. We call
this feature the Nursing Home Waiver.
These features are not available in all states and may not be suitable for your
particular situation.
10. INQUIRIES
If you need more information, please contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE
The purpose of the Fee Table is to show you the various expenses you will incur
directly or indirectly with the contract. The Fee Table reflects expenses of the
Separate Account as well as of the investment portfolios. Expenses of the
investment portfolios are not fixed or specified under the terms of the contract
and actual expenses may vary.
Owner Transaction Expenses
Withdrawal Charge (see Note 1 below)
5% of purchase payment withdrawn
Transfer Fee (see Note 2 below)
No charge for first 12 transfers in a contract year; thereafter, the fee is
$25 per transfer or, if less, 2% of the amount transferred.
Contract Maintenance Charge (see Note 3 below)
$30 per contract per year
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
---
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES 1.40%
<TABLE>
<CAPTION>
Investment Portfolio Expenses
(as a percentage of the average daily net assets of an investment portfolio)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
<S> <C> <C> <C>
A I M V.I. Capital Appreciation Fund .62% .11% .73%
A I M V.I. International Equity Fund .75% .22% .97%
A I M V.I. Value Fund .61% .15% .76%
- - ----------------------------------------------------------------------------------------------------------------------------------
Other Expenses after Total Annual Portfolio
(expense reimbursement Expenses (after expense
Management for Real Estate reimbursement for Real
Fees Investment Portfolio) Estate Investment Portfolio)
- - ----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth Portfolio (Class A) 1.00% .05% 1.05%
Real Estate Investment Portfolio (Class A)* .49% .46% .95%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The expenses shown with respect to the Real Estate Investment Portfolio are
net of voluntary reimbursements. Expenses have been capped at .95% annually and
the adviser to the Fund intends to continue such reimbursements for the
foreseeable future. For the year ended December 31, 1999, the expenses for the
Real Estate Investment Portfolio, before reimbursement, were: .90% management
fees and .82% for other expenses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees certain Portfolios)(1) certain Portfolios)(1)
- - ----------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by J.P. Morgan Investment Management Inc.
<S>
<C> <C> <C>
International Equity Portfolio .79% .31% 1.10%
Large Cap Stock Portfolio .65% .10% .75%
Quality Bond Portfolio .54% .10% .64%
Select Equity Portfolio .67% .10% .77%
Small Cap Stock Portfolio .85% .19% 1.04%
Managed by Lord, Abbett &Co.
Bond Debenture Portfolio .75% .10% .85%
Developing Growth Portfolio .90% .30% 1.20%
Large Cap Research Portfolio 1.00% .30% 1.30%
Lord Abbett Growth and Income Portfolio(2) .65% .05% .70%
Mid-Cap Value Portfolio 1.00% .30% 1.30%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Cova reimburses the investment portfolios, except the Select Equity,
Small Cap Stock and International Equity Portfolios, for all operating
expenses (exclusive of the management fees) in excess of approximately .30%
for the Mid-Cap Value, Large Cap Research and Developing Growth Portfolios
and in excess of approximately .10% for the other investment portfolios.
Prior to May 1, 1999, Cova had reimbursed expenses in excess of approximately
.10% with respect to the Select Equity, Small Cap Stock, International Equity,
Mid-Cap Value, Large Cap Research and Developing Growth Portfolios. Therefore,
the amounts shown above under "Other Expenses" have been restated to reflect
the estimated expenses for the Select Equity, Small Cap Stock and International
Equity Portfolios for the year ending December 31, 2000. Absent these expense
reimbursement arrangements, the total annual portfolio expenses for the year
ended December 31, 1999 were: 1.09% for the Small Cap Stock Portfolio; 1.15% for
the International Equity Portfolio; .71% for the Quality Bond Portfolio; .76% for
the Large Cap Stock Portfolio; .86% for the Bond Debenture Portfolio; 1.41% for the
Mid-Cap Value Portfolio; 1.38% for the Large Cap Research Portfolio; and 1.34% for
the Developing Growth Portfolio.
(2) The Portfolio commenced investment operations on January 8, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees one Portfolio) one Portfolio)
- - ----------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust, Class 1 Shares
<S> <C> <C> <C> <C>
Managed by Franklin Advisers, Inc.
Small Cap Fund (*) .55% .27% .82%
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund(**) .60% .19% .79%
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets
Securities Fund (***) 1.25% .31% 1.56%
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities
Fund (****) .69% .19% .88%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* On 2/8/00, a merger and reorganization was approved that combined the
assets of the fund with a similar fund of Templeton Variable Products Series
Fund, effective 5/1/00. On 2/8/00, fund shareholders approved new management
fees, which apply to the combined fund effective 5/1/00. The table shows
restated total expenses based on the new fees and assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.55%, Other Expenses
0.27%, and Total Fund Operating Expenses 0.82%.
** On 2/8/00, a merger and reorganization was approved that combined the
fund with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of 12/31/99,
and not the assets of the combined fund. However, if the table reflected
combined assets, the fund's expenses after 5/1/00 would be estimated as:
Management Fees 0.60%, Other Expenses 0.19%, and Total Fund Operating Expenses
0.79%.
*** On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton Developing Markets Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees, which
apply to the combined fund effective 5/1/00. The table shows restated total
expenses based on the new fees and the assets of the fund as of 12/31/99, and
not the assets of the combined fund. However, if the table reflected both the
new fees and the combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 1.25%, Other Expenses 0.29%, and Total Fund Operating Expenses 1.54%.
**** On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton International Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees,
which apply to the combined fund effective 5/1/00. The table shows restated
total expenses based on the new fees and the assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.65%, Other Expenses
0.20%, and Total Fund Operating Expenses 0.85%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Management Fees Other Expenses Portfolio Expenses
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
- - ----------------------------------------------------------------------------------------------------------------------------------
- - -
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Other Expenses Portfolio Expenses
Management (after expense (after expense
Fees reimbursement)* reimbursement)*
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs VIT Growth and Income Fund .75% .25% 1.00%
Goldman Sachs VIT Internet Tollkeeper Fund 1.00% .25% 1.25%
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Fund .90% .25% 1.15%
Goldman Sachs VIT International Equity Fund 1.00% .35% 1.35%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The investment advisers to the Goldman Sachs VIT Growth and Income, Internet
Tollkeeper, International Equity and Global Income Funds have voluntarily
agreed to reduce or limit certain "Other Expenses" of such Funds (excluding
management fees, taxes, interest, brokerage fees, litigation, indemnification
and other extraordinary expenses) to the extent such expenses exceed 0.25%,
0.25%, 0.35% and 0.25% per annum of such Funds' average daily net assets,
respectively. The expenses shown include this reimbursement. If not included,
the "Other Expenses" and "Total Annual Portfolio Expenses" for the Goldman
Sachs Growth and Income, Internet Tollkeeper, International Equity and Global
Income Funds would be .47% and 1.22%, ___% and ___% (estimated), .77% and 1.77%
and 1.78% and 2.68%, respectively. The reductions or limitations may be
discontinued or modified by the investment advisers in their discretion at
any time. The Fund's expenses shown in the fee table are based on estimated
expenses for the fiscal year ending December 31, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees Small Cap Value Portfolio) Small Cap Value Portfolio)
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
<S> <C> <C> <C>
Kemper Government Securities Portfolio .55% .08% .63%
Kemper Small Cap Growth Portfolio .65% .06% .71%
Kemper Small Cap Value Portfolio .75% .09%* .84%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Pursuant to its agreement with Kemper Variable Series, the investment manager
and the accounting agent have agreed, for the one year period commencing May 1,
2000, to limit their respective fees and to reimburse other operating expenses to
the extent necessary to limit total operating expenses of the Kemper Small Cap
Value Portfolio to .84%. The amounts set forth in the table above reflect
actual expenses for the past fiscal year, which were at or lower than these
expense limits, after the benefit of any custodial credits.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- - ----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management Inc.
<S> <C> <C> <C>
Newport Tiger Fund, Variable Series .90% .31% 1.21%
- - ----------------------------------------------------------------------------------------------------------------------------------
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement reimbursement
Fees for certain Series) for certain Series)
- - ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust (1)
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Series .75% .09% .84%
MFS Emerging Markets Equity Series (2) 1.25% .32% 1.57%
MFS Global Governments Series (2) .75% .16% .91%
MFS Growth With Income Series .75% .13% .88%
MFS High Income Series (2) .75% .16% .91%
MFS Research Series .75% .11% .86%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with its
custodian and dividend disbursing agent. Each series may enter into other such
arrangements and directed brokerage arrangements, which would also have the
effect of reducing the series' expenses. The expenses shown above do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the series.
(2) MFS has contractually agreed to bear expenses for these series, subject to
reimbursement by these series, such that each series' "Other Expenses" do not
exceed 0.15% of the average daily net assets of the series during the current
fiscal year with respect to the Global Governments Series and High Income Series
and 0.25% with respect to the Emerging Markets Equity Series. Absent the expense
reimbursement, the Total Annual Portfolio Expenses for the year ended December
31, 1999, were 1.05% for the MFS Global Governments Series, .97% for the High
Income Series and 6.09% for the MFS Emerging Markets Equity Series.
The payments made by MFS on behalf of each series under this arrangement
are subject to reimbursement by the series to MFS, which will be accomplished by
the payment of an expense reimbursement fee by the series to MFS computed and paid
monthly at a percentage of the series' average daily net assets for its then
current fiscal year, with a limitation that immediately after such payment, the
series' "Other Expenses" will not exceed the percentage set forth above for that
series. The obligation of MFS to bear a series' "Other Expenses" pursuant to
this arrangement, and the series' obligation to pay the reimbursement fee to
MFS, terminates on the earlier of the date on which payments made by the
series equal the prior payment of such reimbursable expenses by MFS or
December 31, 2004. MFS may, in its discretion, terminate this arrangement at an
earlier date provided that the arrangement will continue for each series until
at least May 1, 2001, unless terminated with the consent of the board of
trustees which oversees the series.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- - ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Managed by OppenheimerFunds, Inc.
<S> <C> <C> <C>
Oppenheimer Bond Fund/VA .72% .01% .73%
Oppenheimer Capital Appreciation Fund/VA .68% .02% .70%
Oppenheimer High Income Fund/VA .74% .01% .75%
Oppenheimer Main Street Growth & Income Fund/VA .73% .05% .78%
Oppenheimer Strategic Bond Fund/VA .74% .04% .78%
- - ----------------------------------------------------------------------------------------------------------------------------------
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees one Portfolio) one Portfolio)
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
<S> <C> <C> <C>
Putnam VT Growth and Income Fund - Class IA Shares .46% .04% .50%
Putnam VT International Growth Fund - Class IA Shares .80% .22% 1.02%
Putnam VT International New Opportunities Fund - Class IA Shares 1.08% .33% 1.41%
Putnam VT New Value Fund - Class IA Shares .70% .10% .80%
Putnam VT Vista Fund - Class IA Shares .65% .10% .75%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
</FN>
</TABLE>
<TABLE>
<CAPTION>
Examples
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
For purposes of the examples, the assumed average contract size is $30,000.
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets: (a) if you surrender the contract at the end of each time period;
(b) if you do not surrender the contract or if you apply the contract
value to an annuity option.
Time Periods
1 year 3 years 5 years 10 years
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation (a) $72.59 (a) $114.54 (a) $163.94 (a) $254.10
(b) $22.59 (b) $ 69.54 (b) $118.94 (b) $254.10
AIM V.I. International Equity (a) $75.00 (a) $121.77 (a) $176.00 (a) $278.22
(b) $25.00 (b) $ 76.77 (b) $131.00 (b) $278.22
AIM V.I. Value (a) $72.90 (a) $115.45 (a) $165.46 (a) $257.15
(b) $22.90 (b) $ 70.45 (b) $120.46 (b) $257.15
- - ----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund
Managed by Alliance Capital Management L.P.
Premier Growth (Class A) (a) $75.80 (a) $124.17 (a) $179.99 (a) $286.12
(b) $25.80 (b) $ 79.17 (b) $134.99 (b) $286.12
Real Estate Investment (Class A) (a) $74.80 (a) $121.17 (a) $175.00 (a) $276.23
(b) $24.80 (b) $ 76.17 (b) $130.00 (b) $276.23
- - ----------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by J.P. Morgan Investment Management Inc.
International Equity (a) $76.30 (a) $125.66 (a) $182.48 (a) $291.02
(b) $26.30 (b) $ 80.66 (b) $137.48 (b) $291.02
Large Cap Stock (a) $72.80 (a) $115.15 (a) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (b) $119.95 (b) $256.13
Quality Bond (a) $71.69 (a) $111.82 (a) $159.38 (a) $244.89
(b) $21.69 (b) $ 66.82 (b) $114.38 (b) $244.89
Select Equity (a) $73.00 (a) $115.75 (a) $165.96 (a) $258.16
(b) $23.00 (b) $ 70.75 (b) $120.96 (b) $258.16
Small Cap Stock (a) $75.70 (a) $123.87 (a) $179.49 (a) $285.14
(b) $25.70 (b) $ 78.87 (b) $134.49 (b) $285.14
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by Lord, Abbett & Co.
Bond Debenture (a) $73.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
Developing Growth (a) $77.30 (a) $128.65 (a) $187.42 (a) $300.75
(b) $27.30 (b) $ 83.65 (b) $142.42 (b) $300.75
Large Cap Research (a) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
Lord Abbett Growth and Income (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
Mid-Cap Value (a) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
- - ----------------------------------------------------------------------------------------------------------------------------------
Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
- - ----------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust, Class 1 Shares
Managed by Franklin Advisers, Inc.
Small Cap (a) $73.50 (a) $117.26 (a) $168.48 (a) $263.22
(b) $23.50 (b) $ 72.26 (b) $123.48 (b) $263.22
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities (a) $73.20 (a) $116.35 (a) $166.97 (a) $260.19
(b) $23.20 (b) $ 71.35 (b) $121.97 (b) $260.19
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Securities (a) $80.89 (a) $139.31 (a) $205.03 (a) $334.89
(b) $30.89 (b) $ 94.31 (b) $160.03 (b) $334.89
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities (a) $74.10 (a) $119.07 (a) $171.50 (a) $269.25
(b) $24.10 (b) $ 74.07 (b) $126.50 (b) $269.25
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market (a) $67.31 (a) $98.54 (a) $137.02 (a) $199.08
(b) $17.31 (b) $53.54 (b) $ 92.02 (b) $199.08
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs VIT Growth and Income Fund (a) $75.30 (a) $122.67 (a) $177.50 (a) $281.19
(b) $25.30 (b) $ 77.67 (b) $132.50 (b) $281.19
Goldman Sachs VIT Internet Tollkeeper Fund (a) $77.80 (a) $130.14
(b) $27.80 (b) $ 85.14
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Fund (a) $76.80 (a) $127.16 (a) $184.95 (a) $295.90
(b) $26.80 (b) $ 82.16 (b) $139.95 (b) $295.90
Goldman Sachs VIT International Equity Fund (a) $78.79 (a) $133.11 (a) $194.80 (a) $315.14
(b) $28.79 (b) $ 88.11 (b) $149.80 (b) $315.14
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities (a) $71.59 (a) $111.51 (a) $158.87 (a) $243.86
(b) $21.59 (b) $ 66.51 (b) $113.87 (b) $243.86
Kemper Small Cap Growth (a) $72.39 (a) $113.94 (a) $162.93 (a) $252.06
(b) $22.39 (b) $ 68.94 (b) $117.93 (b) $252.06
Kemper Small Cap Value (a) $73.70 (a) $117.86 (a) $169.49 (a) $265.23
(b) $23.70 (b) $ 72.86 (b) $124.49 (b) $265.23
- - ----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management Inc.
Newport Tiger Fund, Variable Series (a) $72.40 (a) $128.94 (a) $187.92 (a) $301.71
(b) $27.40 (b) $ 83.94 (b) $142.92 (b) $301.71
- - ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth (a) $73.70 (a) $117.86 (a) $169.49 (a) $265.23
(b) $23.70 (b) $ 72.86 (b) $124.49 (b) $265.23
MFS Emerging Markets Equity
Series (a) $80.98 (a) $139.61 (a) $205.51 (a) $335.82
(b) $30.98 (b) $ 94.61 (b) $160.51 (b) $335.82
MFS Global Governments (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
MFS Growth With Income (a) $74.10 (a) $119.07 (a) $171.50 (a) $269.25
(b) $24.10 (b) $ 74.07 (b) $126.50 (b) $269.25
MFS High Income (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
MFS Research (a) $73.90 (a) $118.46 (a) $170.49 (b) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
- - ----------------------------------------------------------------------------------------------------------------------------------
Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
- - ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Managed by OppenheimerFunds, Inc.
Oppenheimer Bond Fund/VA (a) $72.59 (a) $114.54 (a) $163.94 (a) $254.10
(b) $22.59 (b) $ 69.54 (b) $118.94 (b) $254.10
Oppenheimer Capital Appreciation Fund/VA (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
Oppenheimer High Income Fund/VA (a) $72.80 (a) $115.15 (a) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (b) $119.95 (b) $256.13
Oppenheimer Main Street Growth & Income Fund/VA (a) $73.10 (a) $116.05 (a) $166.47 (a) $259.18
(b) $23.10 (b) $ 71.05 (b) $121.47 (b) $259.18
Oppenheimer Strategic Bond Fund/VA (a) $73.10 (a) $116.05 (a) $166.47 (a) $259.18
(b) $23.10 (b) $ 71.05 (b) $121.47 (b) $259.18
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
Putnam VT Growth and Income - Class IA Shares (a) $70.29 (a) $107.56 (a) $152.24 (a) $230.39
(b) $20.29 (b) $ 62.56 (b) $107.24 (b) $230.39
Putnam VT International Growth - Class IA Shares (a) $75.50 (a) $123.27 (a) $178.50 (a) $283.17
(b) $25.50 (b) $ 78.27 (b) $133.50 (b) $283.17
Putnam VT International New Opportunities - Class IA Shares (a) $79.39 (a) $134.88 (a) $197.73 (a) $320.83
(b) $29.39 (b) $ 89.88 (b) $152.73 (b) $320.83
Putnam VT New Value - Class IA Shares (a) $73.30 (a) $116.65 (a) $167.47 (a) $261.20
(b) $23.30 (b) $ 71.65 (b) $122.47 (b) $261.20
Putnam VT Vista - Class IA Shares (a) $72.80 (a) $115.15 (a) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (b) $119.95 (b) $256.13
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Explanation of Fee Table
1. The withdrawal charge is 5% of the purchase payments you withdraw. After
Cova has had a purchase payment for 5 years, there is no charge by Cova for
a withdrawal of that purchase payment. You may also have to pay income tax
and a tax penalty on any money you take out. After the first year, you can
take up to 10% of your total purchase payments each year without a charge
from Cova.
2. Cova will not charge you the transfer fee even if there are more than 12
transfers in a year if the transfer is for the Dollar Cost Averaging,
Automatic Rebalancing or Approved Asset Allocation Programs.
3. During the accumulation phase, Cova will not charge the contract
maintenance charge if the value of your contract is $50,000 or more,
although, if you make a complete withdrawal, Cova will charge the contract
maintenance charge.
4. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
There is an accumulation unit value history (Condensed Financial
Information)contained in Appendix A.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
Cova.
An annuity is a contract between you, the owner, and an insurance company (in
this case Cova), where the insurance company promises to pay an income to you,
in the form of annuity payments, beginning on a designated date that is at least
30 days in the future. Until you decide to begin receiving annuity payments,
your annuity is in the accumulation phase. Once you begin receiving annuity
payments, your contract switches to the income phase.
The contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your contract until you take
money out of your contract.
The contract is called a variable annuity because you can choose among the
investment portfolios and, depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends, in part, upon the investment performance of the
investment portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers an interest
rate that is guaranteed by Cova. Cova guarantees that the interest rate credited
to the fixed account will not be less than 3% per year. If you select the fixed
account, your money will be placed with the other general assets of Cova. If you
select the fixed account, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the total interest credited
to your contract. The amount of the annuity payments you receive during the
income phase from the fixed account portion of the contract will remain level
for the entire income phase.
As owner of the contract, you exercise all interest and rights under the
contract. You can change the owner at any time by notifying Cova in writing. You
and your spouse can be named joint owners. We have described more information on
this under "Other Information."
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month.
We ask you to choose your annuity date when you purchase the contract. You can
change it at any time before the annuity date with 30 days notice to us. Your
annuity date cannot be any earlier than one month after you buy the contract.
Annuity Payments
You will receive annuity payments during the income phase. In general, annuity
payments must begin by the annuitant's 85th birthday or 10 years from the date
the contract was issued, whichever is later (this requirement may differ
slightly for special programs). The annuitant is the person whose life we look
to when we make annuity payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the:
o fixed account,
o the investment portfolio(s), or
o a combination of both.
If you don't tell us otherwise, your annuity payments will be based on the
investment allocations that were in place on the annuity date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things:
1) the value of your contract in the investment portfolio(s) on the annuity
date,
2) the 3% assumed investment rate used in the annuity table for the contract,
and
3) the performance of the investment portfolios you selected.
If the actual performance exceeds the 3% assumed investment rate, your annuity
payments will increase. Similarly, if the actual investment rate is less than
3%, your annuity payments will decrease.
Annuity payments are made monthly unless you have less than $5,000 to apply
toward a payment ($2,000 if the contract is issued in Massachusetts or Texas).
In that case, Cova may provide your annuity payment in a single lump sum.
Likewise, if your annuity payments would be less than $100 a month ($20 in
Texas), Cova has the right to change the frequency of payments so that your
annuity payments are at least $100 ($20 in Texas).
Annuity Options
You can choose among income plans. We call those annuity options. We ask you to
choose an annuity option when you purchase the contract. You can change it at
any time before the annuity date with 30 days notice to us. If you do not choose
an annuity option at the time you purchase the contract, we will assume that you
selected Option 2 which provides a life annuity with 10 years of guaranteed
payments.
You can choose one of the following annuity options or any other annuity option
acceptable to Cova. After annuity payments begin, you cannot change the annuity
option.
Option 1. Life Annuity. Under this option, we will make an annuity payment each
month so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
Option 2. Life Annuity With 5, 10 or 20 Years Guaranteed. Under this option, we
will make an annuity payment each month so long as the annuitant is alive.
However, if, when the annuitant dies, we have made annuity payments for less
than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us for
a single lump sum.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
annuity payments each month so long as the annuitant and a second person are
both alive. When either of these people dies, we will continue to make annuity
payments, so long as the survivor continues to live. The amount of the annuity
payments we will make to the survivor can be equal to 100%, 66-2/3 % or 50% of
the amount that we would have paid if both were alive.
3. PURCHASE
Purchase Payments
A purchase payment is the money you give us to invest in the contract. The
minimum we will accept is $5,000 when the contract is purchased as a
non-qualified contract. If you are purchasing the contract as part of an IRA
(Individual Retirement Annuity), 401(k) or other qualified plan, the minimum we
will accept is $2,000. The maximum we accept is $1 million without our prior
approval. You can make additional purchase payments of $500 or more to either
type of contract.
Allocation of Purchase Payments
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have selected.
If you make additional purchase payments, we will allocate them in the same way
as your first purchase payment unless you tell us otherwise.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit these
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the contract within this time period, Cova will not assess a withdrawal charge.
You will receive back whatever your contract is worth on the day we receive your
request. In certain states, or if you have purchased the contract as an IRA, we
may be required to give you back your purchase payment if you decide to cancel
your contract within 10 days after receiving it (or whatever period is required
in your state). If that is the case, we reserve the right to put your purchase
payment in the Money Market Fund for 15 days before we allocate your first
purchase payment to the investment portfolio(s) you have selected. (In some
states, the period may be longer.) In such case, we will refund the greater of
purchase payments (less withdrawals) or contract value. Currently, Cova directly
allocates your purchase payment to the investment portfolios and/or fixed
account you select.
Accumulation Units
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
1. determining the total amount of money invested in the particular investment
portfolio;
2. subtracting from that amount any insurance charges and any other charges
such as taxes we have deducted; and
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio by the value
of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
Example:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Quality Bond Portfolio. When the New
York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Quality Bond Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The contract offers 44 investment portfolios which are listed below. Currently,
if you are not participating in an asset allocation program, you can only invest
in 15 investment portfolios at any one time. Additional investment portfolios
may be available in the future.
You should read the prospectuses for these funds carefully. Copies of these
prospectuses will be sent to you with your contract. Certain portfolios
contained in the fund prospectuses may not be available with your contract. (See
Appendix B which contains a summary of investment objectives and strategies for
each investment portfolio).
The investment objectives and policies of certain of the investment
portfolios are similar to the investment objectives and policies of other
mutual funds that certain of the investment advisers manage. Although the
objectives and policies may be similar, the investment results of the investment
portfolios may be higher or lower than the results of such other mutual funds.
The investment advisers cannot guarantee, and make no representation, that the
investment results of similar funds will be comparable even though the funds
have the same investment advisers.
A fund's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a fund with a small asset base. A
fund may not experience similar performance as its assets grow.
Shares of the investment portfolios may be offered in connection with certain
variable annuity contracts and variable life insurance policies of various life
insurance companies which may or may not be affiliated with Cova. Certain
investment portfolios may also be sold directly to qualified plans. The funds
believe that offering their shares in this manner will not be disadvantageous to
you.
Cova may enter into certain arrangements under which it is reimbursed by the
investment portfolios' advisers, distributors and/or affiliates for the
administrative services which it provides to the portfolios.
AIM VARIABLE INSURANCE FUNDS
AIM Variable Insurance Funds is a mutual fund with multiple portfolios.
A I M Advisors, Inc. is the investment adviser to each portfolio.
The following portfolios are available under the contract:
AIM V.I. Capital Appreciation Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Alliance Variable Products Series Fund, Inc. is a mutual fund with multiple
portfolios. Alliance Capital Management L.P. is the investment adviser to each
portfolio. The following portfolios are available under the contract:
Premier Growth Portfolio (Class A)
Real Estate Investment Portfolio (Class A)
COVA SERIES TRUST
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory), which is an affiliate of Cova. Cova Series Trust is a mutual fund
with multiple portfolios. Cova Advisory has engaged sub-advisers to provide
investment advice for the individual investment portfolios. The following
portfolios are available under the contract:
J.P. Morgan Investment Management Inc. is the sub-adviser to the following
portfolios:
International Equity Portfolio
Large Cap Stock Portfolio
Quality Bond Portfolio
Select Equity Portfolio
Small Cap Stock Portfolio
Lord, Abbett & Co. is the sub-adviser to the following portfolios:
Bond Debenture Portfolio
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Templeton Variable Insurance Products Trust is a mutual fund with
multiple portfolios. Effective May 1, 2000, the portfolios of Templeton Variable
Products Series Fund were merged into similar portfolios of Franklin Templeton
Variable Insurance Products Trust. Each portfolio has two classes of shares:
Class 1 and Class 2. The portfolios available in connection with your contract
are Class 1 shares. Franklin Advisers, Inc. is the investment adviser to the
Franklin Small Cap Fund, Templeton Asset Management Ltd. is the investment
adviser for the Templeton Developing Markets Securities Fund, Templeton
Investment Counsel, Inc. is the investment adviser for the Templeton
International Securities Fund and Franklin Mutual Advisers, LLC is the
investment adviser for the Mutual Shares Securities Fund. The following
portfolios are available under the contract:
Franklin Small Cap Fund (the surviving fund of the merger with Franklin
Small Cap Investments Fund)
Mutual Shares Securities Fund (the surviving fund of the merger with Mutual
Shares Investments Fund)
Templeton Developing Markets Securities Fund (formerly, Templeton
Developing Markets Fund)
Templeton International Securities Fund (formerly, Templeton International
Fund)
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
Money Market Fund
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Variable Insurance Trust is a mutual fund with multiple
portfolios. Goldman Sachs Asset Management is the investment adviser for the
Goldman Sachs VIT Growth and Income Fund and the Goldman Sachs VIT Internet
Tollkeeper Fund and Goldman Sachs Asset Management International is the
investment adviser for the Goldman Sachs VIT International Equity Fund and the
Goldman Sachs VIT Global Income Fund. The following portfolios are available
under the contract:
Goldman Sachs VIT Global Income Fund
Goldman Sachs VIT Growth and Income Fund
Goldman Sachs VIT International Equity Fund
Goldman Sachs VIT Internet Tollkeeper Fund (available as of July 1, 2000)
KEMPER VARIABLE SERIES
Kemper Variable Series is a mutual fund with multiple portfolios. Scudder Kemper
Investments, Inc. is the investment adviser for the Kemper Government Securities
Portfolio, the Kemper Small Cap Growth Portfolio and the Kemper Small Cap Value
Portfolio. The following portfolios are available under the contract:
Kemper Government Securities Portfolio
Kemper Small Cap Growth Portfolio
Kemper Small Cap Value Portfolio
LIBERTY VARIABLE INVESTMENT TRUST
Liberty Variable Investment Trust is a mutual fund with multiple portfolios.
Liberty Advisory Services Corp. (LASC) is the investment manager to the Trust.
LASC has engaged Newport Fund Management, Inc. as sub-adviser to provide
investment advice for the Newport Tiger Fund, Variable Series. The following
portfolio is available under the contract:
Newport Tiger Fund, Variable Series
MFS VARIABLE INSURANCE TRUST
MFS Variable Insurance Trust is a mutual fund with multiple portfolios.
Massachusetts Financial Services Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
MFS Emerging Growth Series
MFS Emerging Markets Equity Series (formerly, MFS/Foreign & Colonial
Emerging Markets Equity Series) (not available)
MFS Global Governments Series
MFS Growth With Income Series
MFS High Income Series
MFS Research Series
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Variable Account Funds is a mutual fund with multiple portfolios.
OppenheimerFunds, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
Oppenheimer Bond Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
PUTNAM VARIABLE TRUST
Putnam Variable Trust is a mutual fund with multiple portfolios. Putnam
Investment Management, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
Putnam VT Growth and Income Fund - Class IA Shares
Putnam VT International Growth Fund - Class IA Shares
Putnam VT International New Opportunities Fund - Class IA Shares
Putnam VT New Value Fund - Class IA Shares
Putnam VT Vista Fund (a stock portfolio) - Class IA Shares
Transfers
You can transfer money among the fixed account and the investment portfolios.
Cova has reserved the right during the year to terminate or modify the transfer
provisions described below.
Telephone Transfers. You and/or your registered representative on your behalf,
can make transfers by telephone. Telephone transfers will be automatically
permitted unless you tell us otherwise. If you own the contract with a joint
owner, unless Cova is instructed otherwise, Cova will accept instructions from
either you or the other owner. Cova will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If Cova fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. Cova tape records all telephone instructions.
Transfers during the Accumulation Phase. You can make 12 transfers every year
during the accumulation phase without charge. We measure a year from the
anniversary of the day we issued your contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make more
than 12 transfers in a year, there is a transfer fee deducted. The following
apply to any transfer during the accumulation phase:
1. Your request for transfer must clearly state which investment portfolio(s)
or the fixed account are involved in the transfer.
2. Your request for transfer must clearly state how much the transfer is for.
3. You cannot make any transfers within 7 calendar days of the annuity date.
Transfers during the Income Phase. You can only make transfers between the
investment portfolios once each year. We measure a year from the anniversary of
the day we issued your contract. You cannot transfer from the fixed account to
an investment portfolio, but you can transfer from one or more investment
portfolios to the fixed account at any time.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Fund or the fixed account to any of the
other investment portfolio(s). By allocating amounts on a regular schedule as
opposed to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. The Dollar Cost Averaging
Program is available only during the accumulation phase.
Cova reserves the right to modify, terminate or suspend the Dollar Cost
Averaging Program.
The minimum amount which can be transferred each month is $500. You must have at
least $6,000 in the Money Market Fund or the fixed account, (or the amount
required to complete your program, if less) in order to participate in the
Dollar Cost Averaging Program. Cova will waive the minimum transfer amount and
the minimum amount required to establish dollar cost averaging if you establish
dollar cost averaging for 6 or 12 months at the time you buy the contract.
There is no additional charge for participating in the Dollar Cost Averaging
Program. If you participate in the Dollar Cost Averaging Program, the transfers
made under the program are not taken into account in determining any transfer
fee. Cova may, from time to time, offer other dollar cost averaging programs
which may have terms different from those described above.
Automatic Rebalancing Program
Once your money has been allocated to the investment portfolios, the performance
of each portfolio may cause your allocation to shift. You can direct us to
automatically rebalance your contract to return to your original percentage
allocations by selecting our Automatic Rebalancing Program. You can tell us
whether to rebalance quarterly, semi-annually or annually. We will measure these
periods from the anniversary of the date we issued your contract. The transfer
date will be the 1st day after the end of the period you selected.
The Automatic Rebalancing Program is available only during the accumulation
phase. There is no additional charge for participating in the Automatic
Rebalancing Program. If you participate in the Automatic Rebalancing Program,
the transfers made under the program are not taken into account in determining
any transfer fee.
Example:
Assume that you want your initial purchase payment split between 2 investment
portfolios. You want 40% to be in the Quality Bond Portfolio and 60% to be in
the Select Equity Portfolio. Over the next 2-1/2 months the bond market does
very well while the stock market performs poorly. At the end of the first
quarter, the Quality Bond Portfolio now represents 50% of your holdings
because of its increase in value. If you have chosen to have your holdings
rebalanced quarterly, on the first day of the next quarter, Cova will sell
some of your units in the Quality Bond Portfolio to bring its value back to
40% and use the money to buy more units in the Select Equity Portfolio to
increase those holdings to 60%.
Approved Asset Allocation Programs
Cova recognizes the value to certain owners of having available, on a continuous
basis, advice for the allocation of your money among the investment options
available under the contracts. Certain providers of these types of services have
agreed to provide such services to owners in accordance with Cova's
administrative rules regarding such programs.
Cova has made no independent investigation of these programs. Cova has only
established that these programs are compatible with our administrative systems
and rules. Approved asset allocation programs are only available during the
accumulation phase. Currently, Cova does not charge for participating in an
approved asset allocation program.
Even though Cova permits the use of approved asset allocation programs, the
contract was not designed for professional market timing organizations. Repeated
patterns of frequent transfers are disruptive to the operations of the
investment portfolios, and when Cova becomes aware of such disruptive practices,
we may modify the transfer provisions of the contract.
If you participate in an Approved Asset Allocation Program, the transfers made
under the program are not taken into account in determining any transfer fee.
Voting Rights
Cova is the legal owner of the investment portfolio shares. However, Cova
believes that when an investment portfolio solicits proxies in conjunction with
a vote of shareholders, it is required to obtain from you and other affected
owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Cova owns on its own
behalf. Should Cova determine that it is no longer required to comply with the
above, we will vote the shares in our own right.
Substitution
Cova may be required to substitute one of the investment portfolios you have
selected with another portfolio. We would not do this without the prior approval
of the Securities and Exchange Commission. We will give you notice of our intent
to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Insurance Charges
Each day, Cova makes a deduction for its insurance charges. Cova does this as
part of its calculation of the value of the accumulation units and the annuity
units. The insurance charge has two parts:
1) the mortality and expense risk premium, and
2) the administrative expense charge.
Mortality and Expense Risk Premium. This charge is equal, on an annual basis, to
1.25% of the daily value of the contracts invested in an investment portfolio,
after fund expenses have been deducted. This charge is for all the insurance
benefits e.g., guarantee of annuity rates, the death benefits, for certain
expenses of the contract, and for assuming the risk (expense risk) that the
current charges will be insufficient in the future to cover the cost of
administering the contract. If the charges under the contract are not
sufficient, then Cova will bear the loss. Cova does, however, expect to profit
from this charge. The mortality and expense risk premium cannot be increased.
Cova may use any profits it makes from this charge to pay for the costs of
distributing the contract.
Administrative Expense Charge. This charge is equal, on an annual basis, to .15%
of the daily value of the contracts invested in an investment portfolio, after
fund expenses have been deducted. This charge, together with the contract
maintenance charge (see below), is for the expenses associated with the
administration of the contract. Some of these expenses are: preparation of the
contract, confirmations, annual reports and statements, maintenance of contract
records, personnel costs, legal and accounting fees, filing fees, and computer
and systems costs. Because this charge is taken out of every unit value, you may
pay more in administrative costs than those that are associated solely with your
contract. Cova does not intend to profit from this charge. However, if this
charge and the contract maintenance charge are not enough to cover the costs of
the contracts in the future, Cova will bear the loss.
Contract Maintenance Charge
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, Cova deducts $30 from your contract as a contract
maintenance charge. (In South Carolina, the charge is the lesser of $30 or 2% of
the value of the contract.) This charge is for administrative expenses (see
above). This charge cannot be increased.
Cova will not deduct this charge during the accumulation phase if, when the
deduction is to be made, the value of your contract is $50,000 or more. Cova may
some time in the future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A pro rata portion of the charge will be deducted
if the annuity date is other than an anniversary. After the annuity date, the
charge will be collected monthly out of the annuity payment.
Withdrawal Charge
During the accumulation phase, you can make withdrawals from your contract. Cova
keeps track of each purchase payment. Once a year after the first year (and once
a year during the first year for purposes of payment of charitable remainder
trust administration fees), you can withdraw up to 10% of your total purchase
payments and no withdrawal charge will be assessed on the 10%, if on the day you
make your withdrawal the value of your contract is $5,000 or more. Withdrawals
for purposes of payment of charitable remainder trust administration fees are
included in the 10% free withdrawal amount. Otherwise, the charge is 5% of each
purchase payment you take out unless the purchase payment was made more than 5
years ago. After Cova has had a purchase payment for 5 years, there is no charge
when you withdraw that purchase payment. Cova does not assess a withdrawal
charge on earnings withdrawn from the contract. Earnings are defined as the
value in your contract minus the remaining purchase payments in your contract.
The withdrawal order for calculating the withdrawal charge is shown below.
o 10% of purchase payments free.
o Remaining purchase payments that are over 5 years old and not subject to a
withdrawal charge.
o Earnings in the contract free.
o Remaining purchase payments that are less than 5 years old and are subject
to a withdrawal charge.
For purposes of calculating the withdrawal charge, slightly different rules may
apply to Section 1035 exchanges.
When the withdrawal is for only part of the value of your contract, the
withdrawal charge is deducted from the remaining value in your contract.
Cova does not assess the withdrawal charge on any payments paid out as annuity
payments or as death benefits.
NOTE: For tax purposes, earnings are considered to come out first.
Reduction or Elimination of the Withdrawal Charge
General
Cova will reduce or eliminate the amount of the withdrawal charge when the
contract is sold under circumstances which reduce its sales expense. Some
examples are: if there is a large group of individuals that will be purchasing
the contract or a prospective purchaser already had a relationship with Cova.
Cova will not deduct a withdrawal charge under a contract issued to an officer,
director or employee of Cova or any of its affiliates.
Nursing Home Waiver
After you have owned the contract for one year, if you, or your joint owner,
becomes confined to a nursing home or hospital for at least 90 consecutive days
under a doctor's care and you need part or all of the money from your contract,
Cova will not impose a withdrawal charge. You or your joint owner cannot have
been so confined when you purchased your contract if you want to take advantage
of this provision (confinement must begin after the first contract anniversary).
This is called the Nursing Home Waiver. This provision is not available in all
states.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Cova is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some of
these taxes are due when the contract is issued, others are due when annuity
payments begin. It is Cova's current practice to not charge anyone for these
taxes until annuity payments begin. Cova may some time in the future discontinue
this practice and assess the charge when the tax is due. Premium taxes generally
range from 0% to 4%, depending on the state.
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred whichever is less.
If the transfer is part of the Dollar Cost Averaging Program, the Automatic
Rebalancing Program or an Approved Asset Allocation Program, it will not count
in determining the transfer fee.
Income Taxes
Cova will deduct from the contract for any income taxes which it incurs because
of the contract. At the present time, we are not making any such deductions.
Investment Portfolio Expenses
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
6. TAXES
NOTE: Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. Cova has
included an additional discussion regarding taxes in the Statement of Additional
Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs either as a withdrawal or as annuity payments. When
you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified and Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 plans.
A qualified contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59-1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
Withdrawals - Qualified Contracts
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The Code also provides that any amount received under a qualified contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a
lifetime annuity;
(5) paid to you after you have attained age 55 and you have left your
employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid on account of an IRS levy upon the qualified contract;
(9) paid from an IRA for medical insurance (as defined in the Code);
(10) paid from an IRA for qualified higher education expenses; or
(11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in
(4) above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to purchase payments made
under a salary reduction agreement by owners from Tax-Sheltered Annuities.
Withdrawals can only be made when an owner:
(1) reaches age 59-1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Cova believes that the investment portfolios are being managed
so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Cova would be
considered the owner of the shares of the investment portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the contract. It is unknown to what extent owners are
permitted to select investment portfolios, to make transfers among the
investment portfolios or the number and type of investment portfolios owners may
select from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the contract, could be treated as the owner of the shares of the
investment portfolios.
Due to the uncertainty in this area, Cova reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract:
(1) by making a withdrawal (either a partial or a complete withdrawal);
(2) by electing to receive annuity payments; or
(3) when a death benefit is paid to your beneficiary.
Under most circumstances, withdrawals can only be made during the accumulation
phase.
When you make a complete withdrawal you will receive the withdrawal value of the
contract. The withdrawal value of the contract is the value of the contract at
the end of the business day when Cova receives a written request for a
withdrawal:
o less any applicable withdrawal charge,
o less any premium tax, and
o less any contract maintenance charge.
Unless you instruct Cova otherwise, any partial withdrawal will be made pro-rata
from all the investment portfolios and the fixed account you selected. Under
most circumstances the amount of any partial withdrawal must be for at least
$500. Cova requires that after a partial withdrawal is made you keep at least
$500 in any selected investment portfolio. If the remaining withdrawal value
would be less than $500 ($1,000 in New Jersey) after you make a partial
withdrawal, the partial withdrawal amount will be the remaining withdrawal
value.
There are limits to the amount you can withdraw from a qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the Statement of Additional Information.
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
Systematic Withdrawal Program
You may use the Systematic Withdrawal Program. This program provides an
automatic monthly payment to you of up to 10% of your total purchase payments
each year. No withdrawal charge will be made for these payments. Cova does not
have any charge for this program, but reserves the right to charge in the
future. If you use this program, you may not also make a single 10% free
withdrawal. For a discussion of the withdrawal charge and the 10% free
withdrawal, see "Expenses."
Income taxes, tax penalties and certain restrictions may apply to Systematic
Withdrawals.
Suspension of Payments or Transfers
Cova may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Cova cannot
reasonably value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
Cova has reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
8. PERFORMANCE
Cova periodically advertises performance of the various investment portfolios.
Cova will calculate performance by determining the percentage change in the
value of an accumulation unit by dividing the increase (decrease) for that unit
by the value of the accumulation unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
investment portfolio expenses. It does not reflect the deduction of any
applicable contract maintenance charge and withdrawal charge. The deduction of
any applicable contract maintenance charge and withdrawal charges would reduce
the percentage increase or make greater any percentage decrease. Any
advertisement will also include total return figures which reflect the deduction
of the insurance charges, contract maintenance charge, withdrawal charges and
the investment portfolio expenses.
For periods starting prior to the date the contracts were first offered, the
performance will be based on the historical performance of the corresponding
investment portfolios for the periods commencing from the date on which the
particular investment portfolio was made available through the Separate Account.
In addition, for certain investment portfolios performance may be shown for the
period commencing from the inception date of the investment portfolio. These
figures should not be interpreted to reflect actual historical performance of
the Separate Account.
Cova may, from time to time, include in its advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
The Appendix contains performance information that you may find informative. It
is divided into various parts, depending upon the type of performance
information shown. Future performance will vary and results shown are not
necessarily representative of future results.
9. DEATH BENEFIT
Upon Your Death
If you die before annuity payments begin, Cova will pay a death benefit to your
beneficiary (see below). If you have a joint owner, the death benefit will be
paid when the first of you dies. Joint owners must be spouses. The surviving
joint owner will be treated as the beneficiary.
Beginning May 1, 1999, at the time you buy the contract, you will receive Death
Benefit Option A. If you purchased your contract before May 1, 1999, you
received Death Benefit Option C. For these contracts (i.e., contracts purchased
prior to May 1, 1999), effective beginning with your next contract anniversary
on or after July 1, 1999, your death benefit will be automatically enhanced to
Death Benefit Option B.
The death benefits are described below. The amount of death benefit depends on
how old you or your joint owner is. If you have a joint owner, the death benefit
is determined based on the age of the oldest joint owner and the death benefit
is payable on the death of the first joint owner.
DEATH BENEFIT OPTION A:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any contract anniversary while the owner, or
a joint owner is living, plus any purchase payments you made subsequent to
that contract anniversary, less any withdrawals (and any withdrawal charges
paid on the withdrawals) subsequent to that contract anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any prior contract anniversary on or before
your or your joint owner's 80th birthday, plus any purchase payments you
made subsequent to that contract anniversary, less any withdrawals (and any
withdrawal charges paid on the withdrawals) subsequent to that contract
anniversary.
DEATH BENEFIT OPTION B:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values of your contract resulting from taking the
contract value on any contract anniversary on or after July 1, 1999 while
the owner, or a joint owner is living, plus any purchase payments you made
subsequent to that contract anniversary, less any withdrawals (and any
withdrawal charges paid on the withdrawals) subsequent to that contract
anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values of your contract resulting from taking the
contract value on any prior contract anniversary on or after July 1, 1999
and on or before your or your joint owner's 80th birthday, plus any
purchase payments you made subsequent to that contract anniversary, less
any withdrawals (and any withdrawal charges paid on the withdrawals)
subsequent to that contract anniversary.
DEATH BENEFIT OPTION C:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals); or
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values resulting from taking the contract value on any
five (5) year contract anniversary prior to the date of your death or the
joint owner's death, plus any purchase payments you made subsequent to that
contract anniversary, less any withdrawals (and any withdrawal charges paid
on the withdrawals) subsequent to that contract anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values resulting from taking the contract value on any
prior five (5) year contract anniversary on or before your or your joint
owner's 80th birthday, plus any purchase payments you made after that
contract anniversary, less any withdrawals (and any withdrawal charges paid
on the withdrawals) made after that contract anniversary.
Check your contract and applicable endorsement for your death benefit.
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an annuity
option. The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If the
beneficiary is the spouse of the owner, he/she can continue the contract in
his/her own name at the then current value. If a lump sum payment is elected and
all the necessary requirements are met, the payment will be made within 7 days.
Payment under an annuity option may only be elected during the 60 day period
beginning with the date Cova receives proof of death. If Cova does not receive
an election during such time, it will make a single sum payment to the
beneficiary at the end of the 60 day period.
Death of Annuitant
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days of
the death of the annuitant, you will become the annuitant. However, if the owner
is a non-natural person (for example, a corporation), then the death or change
of annuitant will be treated as the death of the owner, and a new annuitant may
not be named.
Upon the death of the annuitant after annuity payments begin, the death benefit,
if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
Cova
Cova Financial Services Life Insurance Company (Cova) was incorporated on August
17, 1981 as Assurance Life Company, a Missouri corporation, and changed its name
to Xerox Financial Services Life Insurance Company in 1985. On June 1, 1995, a
wholly-owned subsidiary of General American Life Insurance Company (General
American Life) purchased Cova which on that date changed its name to Cova
Financial Services Life Insurance Company. On January 6, 2000, Metropolitan
Life Insurance Company (MetLife) acquired GenAmerica Corporation, the ultimate
parent company of General American Life. The acquisition of GenAmerica
Corporation does not affect policy benefits or any other terms or conditions
under your contract. MetLife, headquartered in New York City since 1868, is a
leading provider of insurance and financial products and services to
individual and group customers.
Cova is licensed to do business in the District of Columbia and all states
except California, Maine, New Hampshire, New York and Vermont.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account One
(Separate Account), to hold the assets that underlie the contracts. The Board of
Directors of Cova adopted a resolution to establish the Separate Account under
Missouri insurance law on February 24, 1987. We have registered the Separate
Account with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940. The Separate Account is divided into
sub-accounts.
The assets of the Separate Account are held in Cova's name on behalf of the
Separate Account and legally belong to Cova. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business Cova may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts Cova may issue.
Distributor
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the contracts. Life
Sales is an affiliate of Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions up to 5.63% of purchase payments but,
under certain circumstances, may be paid up to 6.0% commission. Sometimes, Cova
enters into an agreement with the broker-dealer to pay the broker-dealer
persistency bonuses, in addition to the standard commissions.
Ownership
Owner. You, as the owner of the contract, have all the interest and rights under
the contract. Prior to the annuity date, the owner is as designated at the time
the contract is issued, unless changed. On and after the annuity date, the
annuitant is the owner (this may be a taxable event). The beneficiary becomes
the owner when a death benefit is payable. When this occurs, some ownership
rights may be limited.
Joint Owner. The contract can be owned by joint owners. Any joint owner must be
the spouse of the other owner (except in Pennsylvania). Upon the death of either
joint owner, the surviving spouse will be the designated beneficiary. Any other
beneficiary designation at the time the contract was issued or as may have been
later changed will be treated as a contingent beneficiary unless otherwise
indicated.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
Assignment
You can assign the contract at any time during your lifetime. Cova will not be
bound by the assignment until it receives the written notice of the assignment.
Cova will not be liable for any payment or other action we take in accordance
with the contract before we receive notice of the assignment. AN ASSIGNMENT MAY
BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be
limitations on your ability to assign the contract.
Financial Statements
The consolidated financial statements of Cova and the Separate Account have been
included in the Statement of Additional Information.
Table of Contents of the
Statement of Additional Information
Company
Experts
Legal Opinions
Distribution
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
<TABLE>
<CAPTION>
APPENDIX A
Condensed Financial Information
Accumulation Unit Value History
The following schedule includes accumulation unit values for the periods
indicated. This data has been extracted from the Separate Account's Financial
Statements. This information should be read in conjunction with the Separate
Account's Financial Statements and related notes which are included in the
Statement of Additional Information.
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C>
Beginning of Period $11.77 $10.00 * *
End of Period 16.79 11.77
Number of Accum. Units Outstanding 901,235 183,488
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Sub-Account
Beginning of Period $11.39 $10.00 * *
End of Period 17.42 11.39
Number of Accum. Units Outstanding 277,998 204,072
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Sub-Account
Beginning of Period $13.06 $10.00 * *
End of Period 16.73 13.06
Number of Accum. Units Outstanding 2,544,761 521,890
- - ----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc. (Class A)
Managed by Alliance Capital Management L.P.
Premier Growth Sub-Account
Beginning of Period $14.60 $10.00 * *
End of Period 19.04 14.60
Number of Accum. Units Outstanding 2,065,459 667,854
- - ----------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Sub-Account
Beginning of Period $ 7.99 $10.00 * *
End of Period 7.47 7.99
Number of Accum. Units Outstanding 475,475 191,411
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by Lord, Abbett & Co.
Bond Debenture Sub-Account
Beginning of Period $13.50 $12.88 $11.29 $10.10
End of Period 13.77 13.50 12.88 11.29
Number of Accum. Units Outstanding 11,413,993 8,184,894 3,945,097 659,663
- - ----------------------------------------------------------------------------------------------------------------------------------
Developing Growth Sub-Account
Beginning of Period $11.07 $10.53 $10.00 *
End of Period 14.45 11.07 10.53
Number of Accum. Units Outstanding 2,153,899 1,342,201 148,658
- - ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Research Sub-Account
Beginning of Period $11.83 $9.90 $10.00 *
End of Period 14.64 11.83 9.90
Number of Accum. Units Outstanding 2,260,424 1,094,920 124,559
- - ----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Growth and Income Sub Account
(Sub-Account commenced operations during 1999. The value denoted is the initial AUV)
Beginning of Period $35.90
End of Period 39.46
Number of Accum. Units Outstanding 21,128,621
- - ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Sub-Account
Beginning of Period $10.44 $10.47 $10.00 *
End of Period 10.88 10.44 10.47
Number of Accum. Units Outstanding 2,528,900 1,642,553 194,386
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by J.P. Morgan Investment Management Inc.
International Equity Sub-Account
Beginning of Period $12.89 $11.46 $10.97 $10.21
End of Period 16.33 12.89 11.46 10.97
Number of Accum. Units Outstanding 7,578,951 7,309,325 5,440,592 1,306,892
- - ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Stock Sub-Account
Beginning of Period $19.43 $14.89 $11.33 $10.00
End of Period 22.55 19.43 14.89 11.33
Number of Accum. Units Outstanding 10,050,149 4,178,035 1,473,929 1,389,606
- - ----------------------------------------------------------------------------------------------------------------------------------
Quality Bond Sub-Account
Beginning of Period $11.91 $11.16 $10.37 $9.90
End of Period 11.57 11.91 11.16 10.37
Number of Accum. Units Outstanding 7,608,610 3,323,343 1,433,081 508,830
- - ----------------------------------------------------------------------------------------------------------------------------------
Select Equity Sub-Account
Beginning of Period $16.99 $14.05 $10.84 $10.08
End of Period 18.38 16.99 14.05 10.84
Number of Accum. Units Outstanding 12,271,286 10,544,818 6,903,606 2,044,523
- - ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Stock Sub-Account
Beginning of Period $12.58 $13.49 $11.31 $10.51
End of Period 17.93 12.58 13.49 11.31
Number of Accum. Units Outstanding 5,435,852 5,532,610 3,940,243 1,237,405
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust,
Class 1 Shares
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Sub-Account
Beginning of Period $ 9.63 $10.00 * *
End of Period 10.41 9.63
Number of Accum. Units Outstanding 247,806 106,035
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Securities Sub-Account
Beginning of Period $ 7.55 $10.00 * *
End of Period 11.46 7.55
Number of Accum. Units Outstanding 304,489 89,960
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities Sub-Account
Beginning of Period $ 9.14 $10.00 * *
End of Period 11.15 9.14
Number of Accum. Units Outstanding 826,137 164,775
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by Franklin Advisers, Inc.
Franklin Small Cap Sub-Account
Beginning of Period $10.00 * * *
End Of Period 17.68
Number of Accum _ Units Outstanding 55,398
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.23 $10.00
End of Period 11.53 11.11 10.67 10.23
Number of Accum. Units Outstanding 3,709,173 1,473,737 311,051 34,964
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs VIT Growth and Income Sub-Account
Beginning of Period $ 9.91 $10.00 * *
End of Period 10.30 9.91
Number of Accum. Units Outstanding 620,568 467,675
- - ----------------------------------------------------------------------------------------------------------------------------------
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Sub-Account
Beginning of Period $10.78 $10.00 * *
End of Period 10.52 10.78
Number of Accum. Units Outstanding 31,541 18,833
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT International Equity Sub-Account
Beginning of Period $11.40 $10.00 * *
End of Period 14.83 11.40
Number of Accum. Units Outstanding 240,170 112,824
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities Sub-Account
Beginning of Period $10.56 $10.00 * *
End of Period 10.48 10.56
Number of Accum. Units Outstanding 218,804 59,712
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Growth Sub-Account
Beginning of Period $11.68 $10.00 * *
End of Period 15.49 11.68
Number of Accum. Units Outstanding 113,560 76,492
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Value Sub-Account
Beginning of Period $ 8.75 $10.00 * *
End of Period 8.87 8.75
Number of Accum. Units Outstanding 496,083 245,092
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management, Inc.
Newport Tiger Fund, Variable Sub-Account
Beginning of Period $ 9.23 $10.00 * *
End of Period 15.29 9.23
Number of Accum. Units Outstanding 40,648 31,936
- - ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Sub-Account
Beginning of Period $13.23 $10.00 * *
End of Period 23.06 13.23
Number of Accum. Units Outstanding 1,237,361 539,659
- - ---------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Markets Equity Sub-Account
Beginning of Period $6.57 $10.00 * *
End of Period 8.95 6.57
Number of Accum. Units Outstanding 16,687 73,171
- - --------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Sub-Account
Beginning of Period $10.67 $10.00 * *
End of Period 10.26 10.67
Number of Accum. Units Outstanding 7,473 2,082
- - ---------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Sub-Account
Beginning of Period $12.07 $10.00 * *
End of Period 12.70 12.07
Number of Accum. Units Outstanding 1,373,014 581,434
- - ---------------------------------------------------------------------------------------------------------------------------------
MFS High Income Sub-Account
Beginning of Period $ 9.85 $10.00 * *
End of Period 10.33 9.85
Number of Accum. Units Outstanding 437,876 219,209
- - ---------------------------------------------------------------------------------------------------------------------------------
MFS Research Sub-Account
Beginning of Period $12.17 $10.00 * *
End of Period 14.89 12.17
Number of Accum. Units Outstanding 1,098,586 464,786
- - ---------------------------------------------------------------------------------------------------------------------------------
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Managed by OppenheimerFunds, Inc.
Oppenheimer Bond Fund/VA Sub-Account
Beginning of Period $10.53 $10.00 * *
End of Period 10.23 10.53
Number of Accum. Units Outstanding 1,030,539 401,990
Oppenheimer Capital Appreciation Fund/VA Sub-Account
Beginning of Period $12.23 $10.00 * *
End of Period 17.09 12.23
Number of Accum. Units Outstanding 436,692 97,161
Oppenheimer High Income Fund/VA Sub-Account
Beginning of Period $ 9.89 $10.00 * *
End of Period 10.17 9.89
Number of Accum. Units Outstanding 238,266 78,513
Oppenheimer Main Street Growth & Income Fund/VA Sub-Account
Beginning of Period $10.33 $10.00 * *
End of Period 12.39 10.33
Number of Accum. Units Outstanding 618,771 284,830
Oppenheimer Strategic Bond Fund/VA Sub-Account
Beginning of Period $10.15 $10.00 * *
End of Period 10.29 10.15
Number of Accum. Units Outstanding 306,527 107,869
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
Putnam VT Growth and Income Sub-Account
Beginning of Period $11.38 $10.00 * *
End of Period 11.40 11.38
Number of Accum. Units Outstanding 2,304,013 1,115,668
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Sub-Account
Beginning of Period $11.71 $10.00 * *
End of Period 18.49 11.71
Number of Accum. Units Outstanding 1,092,379 530,055
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Sub-Account
Beginning of Period $11.40 $10.00 * *
End of Period 22.82 11.40
Number of Accum. Units Outstanding 110,085 52,809
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Sub-Account
Beginning of Period $10.48 $10.00 * *
End of Period 10.37 10.48
Number of Accum. Units Outstanding 66,900 42,091
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Sub-Account
Beginning of Period $11.79 $10.00 * *
End of Period 17.77 11.79
Number of Accum. Units Outstanding 385,345 151,405
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The Mid-Cap Value, Large Cap Research and Developing Growth Portfolios started
regular investment operations on August 20, 1997. The Lord Abbett Growth and
Income Portfolio commenced regular investment operations on January 8, 1999.
Separate Account inception dates in the other investment portfolios are as
follows: AIM Variable Insurance Funds, Inc., Alliance Variable Products Series
Fund, Inc., Kemper Variable Series, Liberty Variable Investment Trust, MFS
Variable Insurance Trust, Oppenheimer Variable Account Funds and Putnam Variable
Trust - December 31, 1997; General American Capital Company - June 3, 1996;
Goldman Sachs Variable Insurance Trust - January 29, 1998; and Franklin
Templeton Variable Insurance Products Trust - May 1, 1998.
</FN>
</TABLE>
APPENDIX B
PARTICIPATING INVESTMENT PORTFOLIOS
Below are the investment objectives and strategies of each investment
portfolio available under the contract. The fund prospectuses contain more
complete information including a description of the investment objectives,
policies, restrictions and risks. THERE CAN BE NO ASSURANCE THAT THE
INVESTMENT OBJECTIVES WILL BE ACHIEVED.
AIM VARIABLE INSURANCE FUNDS:
AIM Variable Insurance Funds is a mutual fund with multiple portfolios.
A I M Advisors, Inc. is the investment adviser to each portfolio.
The following portfolios are available under the contract:
AIM V.I. CAPITAL APPRECIATION FUND
Investment Objective: The Fund's investment objective is growth of capital
through investment in common stocks, with emphasis on medium- and small-sized
companies. The portfolio managers focus on companies they believe are likely to
benefit from new or innovative products, services or processes as well as those
that have experienced above-average, long-term growth in earnings and have
excellent prospects for future growth.
AIM V.I. INTERNATIONAL EQUITY FUND
Investment Objective: The Fund's investment objective is to achieve long-term
growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings momentum.
AIM V.I. VALUE FUND
Investment Objective: The Fund's investment objective is to achieve long-term
growth of capital by investing primarily in equity securities judged by
the Fund's investment advisor to be undervalued relative to the investment
advisor's appraisal of the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned
by the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.:
Alliance Variable Products Series Fund, Inc. is a mutual fund with multiple
portfolios. Alliance Capital Management L.P. is the investment adviser to each
portfolio. The following portfolios are available under the contract:
PREMIER GROWTH PORTFOLIO (Class A)
Investment Objective: The Portfolio's investment objective is growth of capital
by pursuing aggressive investment policies. The Portfolio invests primarily
in equity securities of U.S. companies. Normally, the Portfolio invests in
about 40-50 companies, with the 25 most highly regarded of these companies
usually constituting approximately 70% of the Portfolio's net assets.
REAL ESTATE INVESTMENT PORTFOLIO (Class A)
Investment Objective: The Portfolio's investment objective is total return from
long-term growth of capital and income principally through investing in equity
securities of companies that are primarily engaged in or related to the real
estate industry.
COVA SERIES TRUST:
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory), which is an affiliate of Cova. Cova Series Trust is a mutual fund
with multiple portfolios. Cova Advisory has engaged sub-advisers to provide
investment advice for the individual investment portfolios. The following
portfolios are available under the contract:
PORTFOLIOS MANAGED BY J. P. MORGAN INVESTMENT MANAGEMENT INC.:
INTERNATIONAL EQUITY PORTFOLIO
Investment Objective: The International Equity Portfolio seeks to provide a high
total return from a portfolio of equity securities of foreign corporations.
LARGE CAP STOCK PORTFOLIO
Investment Objective: The Large Cap Stock Portfolio seeks to provide long-term
growth of capital and income.
QUALITY BOND PORTFOLIO
Investment Objective: The Quality Bond Portfolio seeks to provide a high total
return consistent with moderate risk of capital and maintenance of liquidity.
SELECT EQUITY PORTFOLIO
Investment Objective: The Select Equity Portfolio seeks to provide long-term
growth of capital and income.
SMALL CAP STOCK PORTFOLIO
Investment Objective: The Small Cap Stock Portfolio seeks to provide a high
total return from a portfolio of equity securities of small companies.
PORTFOLIOS MANAGED BY LORD, ABBETT & CO.:
BOND DEBENTURE PORTFOLIO
Investment Objective: The Bond Debenture Portfolio seeks to provide high current
income and the opportunity for capital appreciation to produce a high total
return.
DEVELOPING GROWTH PORTFOLIO
Investment Objective: The Developing Growth Portfolio seeks long-term growth of
capital through a diversified and actively-managed portfolio consisting of
developing growth companies, many of which are traded over the counter.
LARGE CAP RESEARCH PORTFOLIO
Investment Objective: The Large Cap Research Portfolio seeks growth of capital
and growth of income consistent with reasonable risk.
LORD ABBETT GROWTH AND INCOME PORTFOLIO
Investment Objective: The Lord Abbett Growth and Income Portfolio seeks to
achieve long-term growth of capital and income without excessive fluctuation in
market value.
MID-CAP VALUE PORTFOLIO
Investment Objective: The Mid-Cap Value Portfolio seeks capital appreciation
through investments, primarily in equity securities, which are believed to be
undervalued in the marketplace.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST, CLASS 1 SHARES:
Franklin Templeton Variable Insurance Products Trust is a mutual fund with
multiple portfolios. Effective May 1, 2000 the portfolios of Templeton Variable
Products Series Fund were merged into similar portfolios of Franklin Templeton
Variable Insurance Products Trust. Each portfolio has two classes of shares:
Class 1 and Class 2. The portfolios available in connection with your contract
are Class 1 shares. Franklin Advisers, Inc. is the investment adviser for the
Franklin Small Cap Fund, Franklin Mutual Advisers, LLC is the investment adviser
for the Mutual Shares Securities Fund, Templeton Investment Counsel, Inc. is the
investment adviser for the Templeton International Securities Fund, and
Templeton Asset Management Ltd. is the investment adviser for the Templeton
Developing Markets Securities Fund. The following portfolios are available under
the contract:
MUTUAL SHARES SECURITIES FUND (the surviving fund of the merger with Mutual
Shares Investments Fund)
Investment Objective and Principal Investments: The Fund's principal goal is
capital appreciation. Its secondary goal is income. Under normal market
conditions, the Fund will invest at least 65% of its total assets in equity
securities of companies that the manager believes are available at market prices
less than their value based on certain recognized or objective criteria
(intrinsic value).
FRANKLIN SMALL CAP FUND (the surviving fund of the merger with Franklin
Small Cap Investments Fund)
Investment Objective and Principal Investments: The Fund's investment goal is
long-term capital growth. Under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of U.S. small
capitalization (small cap) growth companies.
TEMPLETON INTERNATIONAL SECURITIES FUND (formerly, Templeton International
Fund)
Investment Objective and Principal Investments: The Fund's investment goal is
long-term capital growth. Under normal market conditions, the Fund will invest
at least 65% of its total assets in the equity securities of companies located
outside the U.S., including in emerging markets.
TEMPLETON DEVELOPING MARKETS SECURITIES FUND (formerly, Templeton
Developing Markets Fund)
Investment Objective: The Fund's investment goal is long-term capital
appreciation. Under normal market conditions, the Fund will invest at least 65%
of its total assets in emerging market equity securities. Emerging market equity
securities generally include equity securities that trade in emerging markets or
are issued by companies that derive revenue from goods or services produced, or
that have their principal activities or assets in, emerging market countries.
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
MONEY MARKET FUND
Investment Objective: The Money Market Fund's investment objective is to provide
investors with current income while preserving capital and maintaining
liquidity. The Fund seeks to achieve this objective by investing primarily in
high-quality, short-term money market instruments. The Fund purchases securities
that meet the quality, maturity, and diversification requirements applicable to
money market funds.
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Variable Insurance Trust is a mutual fund with multiple
portfolios. Goldman Sachs Asset Management, a unit of the Investment Management
Division of Goldman, Sachs & Co., is the investment adviser for the Goldman
Sachs VIT Growth and Income Fund and Goldman Sachs VIT Internet Tollkeeper Fund
and Goldman Sachs Asset Management International is the investment adviser for
the Goldman Sachs VIT International Equity Fund and the Goldman Sachs VIT Global
Income Fund. The following portfolios are available under the contract:
GOLDMAN SACHS VIT GLOBAL INCOME FUND
Investment Objective: The Fund seeks a high total return, emphasizing current
income, and, to a lesser extent, providing opportunities for capital
appreciation. The Fund invests primarily in a portfolio of high quality
fixed-income securities of U.S. and foreign issuers and enters into
transactions in foreign currencies.
GOLDMAN SACHS VIT INTERNET TOLLKEEPER FUND
Investment Objective: The Fund seeks long-term growth of capital by investing,
under normal circumstances, at least 90% of its total assets in equity
securities and at least 65% of its total assets in equity securities of
"Internet Tollkeeper" companies, which are companies in the media,
telecommunications, technology and Internet sectors which provide access,
infrastructure, content and services to Internet companies and Internet users.
GOLDMAN SACHS VIT GROWTH AND INCOME FUND
Investment Objective: The Fund seeks long-term growth of capital and growth of
income by investing in large capitalization U.S. stocks that are believed to
be undervalued or undiscovered in the marketplace.
GOLDMAN SACHS VIT INTERNATIONAL EQUITY FUND
Investment Objective: The Fund seeks long-term capital appreciation by investing
primarily in equity securities of companies organized outside the United States
or whose securities are principally traded outside the United States. The Fund
intends to invest in companies with public stock market capitalizations that are
larger than $1 billion at the time of investment.
KEMPER VARIABLE SERIES
Kemper Variable Series is a mutual fund with multiple portfolios. Scudder Kemper
Investments, Inc. is the investment adviser for the Kemper Government Securities
Portfolio, the Kemper Small Cap Growth Portfolio and the Kemper Small Cap Value
Portfolio. The following portfolios are available under the contract:
KEMPER GOVERNMENT SECURITIES PORTFOLIO
Investment Objective: Kemper Government Securities seeks high current return
consistent with preservation of capital. The Portfolio pursues its objective
by investing at least 65% of its total assets in U.S. Government securities
and repurchase agreements of U.S. Government securities.
KEMPER SMALL CAP GROWTH PORTFOLIO
Investment Objective: Kemper Small Cap Growth Portfolio seeks maximum
appreciation of investors' capital. The Portfolio pursues its objective by
investing at least 65% of its total assets in small capitalization stocks
similar in size to those companies comprising the Russell 2000 Index. Many
of these companies would be in the early stages of their life cycle. Equity
securities in which the Portfolio invests consist primarily of common stocks,
but may include convertible securities, including warrants and rights.
KEMPER SMALL CAP VALUE PORTFOLIO
Investment Objective: Kemper Small Cap Value Portfolio seeks long-term capital
appreciation. The Portfolio pursues its investment objective by investing
primarily in a diversified portfolio of the stocks of small U.S. companies,
which are those similar in size to those comprising the Russell 2000 Index and
that the investment manager believes to be undervalued. Under normal market
conditions, the Portfolio invests at least 65% of its assets in small
capitalization stocks similar in size to those comprising the Russell 2000
Index.
LIBERTY VARIABLE INVESTMENT TRUST:
Liberty Variable Investment Trust is a mutual fund with multiple portfolios.
Liberty Advisory Services Corp. (LASC) is the investment manager to the Trust.
LASC has engaged Newport Fund Management, Inc. as sub-adviser to provide
investment advice for the Newport Tiger Fund, Variable Series. The following
portfolio is available under the contract:
NEWPORT TIGER FUND, VARIABLE SERIES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund invests primarily in stocks of companies
located in the nine Tiger countries of Asia. The Tigers of Asia are Hong Kong,
Singapore, South Korea, Taiwan, Malaysia, Thailand, Indonesia, The People's
Republic of China and the Philippines. The Fund typically invests in stocks of
larger, well-established companies.
MFS VARIABLE INSURANCE TRUST:
MFS Variable Insurance Trust is a mutual fund with multiple portfolios.
Massachusetts Financial Services Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
MFS EMERGING GROWTH SERIES
Investment Objective: The Series' investment objective is long term growth of
capital. The Series invests, under normal market conditions, at least 65% of its
total assets in common stocks and related securities of emerging growth
companies.
MFS EMERGING MARKETS EQUITY SERIES (formerly, MFS/Foreign & Colonial
Emerging Markets Equity Series)
Investment Objective: The Series' investment objective is capital appreciation.
The Series invests, under normal market conditions, at least 65% of its total
assets in common stocks and related securities, such as preferred stock,
convertible securities and depositary receipts, of emerging market issuers.
Shares of this Series are not available.
MFS GLOBAL GOVERNMENTS SERIES
Investment Objective: The Series' investment objective is to provide income
and capital appreciation. The Series invests primarily in U.S. and foreign
government securities.
MFS GROWTH WITH INCOME SERIES
Investment Objective: The Series' investment objective is to provide reasonable
current income and long-term growth of capital and income. The Series invests,
under normal market conditions, at least 65% of its total assets in common
stocks and related securities.
MFS HIGH INCOME SERIES
Investment Objective: The Series' investment objective is to provide high
current income by investing primarily in a professionally managed diversified
portfolio of fixed income securities, some of which may involve equity features.
The Series invests, under normal market conditions, at least 80% of its total
assets in high yield fixed income securities which generally are lower rated
bonds commonly known as junk bonds. Junk bonds are subject to a substantially
higher degree of risk than higher rated bonds.
MFS RESEARCH SERIES
Investment Objective: The Series' investment objective is long-term growth of
capital and future income. The Series invests, under normal market conditions,
at least 80% of its total assets in common stocks and related securities, such
as preferred stocks, convertible securities and depositary receipts.
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Variable Account Funds is a mutual fund with multiple portfolios.
OppenheimerFunds, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
OPPENHEIMER BOND FUND/VA
Investment Objective: The Fund's main objective is to seek a high level of
current income. As a secondary objective, the Fund seeks capital appreciation
when consistent with its primary objective. Normally, the Fund invests at least
65% of its total assets in investment-grade debt securities, U.S. Government
securities and money market instruments.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA
Investment Objective: The Fund seeks capital appreciation by investing in
securities of well-known established companies. The Fund invests mainly in
common stocks of established and well-known U.S. companies.
OPPENHEIMER HIGH INCOME FUND/VA
Investment Objective: The Fund seeks a high level of current income from
investment in high-yield fixed income securities. The Fund invests mainly
in a variety of high-yield fixed-income securities of domestic and foreign
issuers.
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Investment Objective: The Fund's objective is to seek high total return (which
includes growth in the value of its shares as well as current income) from
equity and debt securities. The Fund invests mainly in common stocks of U.S.
companies, and can also invest in other equity securities such as preferred
stocks and securities convertible into common stocks.
OPPENHEIMER STRATEGIC BOND FUND/VA
Investment Objective: The Fund seeks a high level of current income. The Fund
invests mainly in debt securities of issuers in three market sectors: foreign
governments and companies, U.S. government securities and lower-grade high-yield
securities of U.S. companies.
PUTNAM VARIABLE TRUST:
Putnam Variable Trust is a mutual fund with multiple portfolios. Putnam
Investment Management, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
PUTNAM VT GROWTH AND INCOME FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital growth and current income.
PUTNAM VT INTERNATIONAL GROWTH FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND-CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation.
PUTNAM VT NEW VALUE FUND-CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation.
PUTNAM VT VISTA FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation.
APPENDIX C
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
Note: The figures below present investment performance information for the
periods ended December 31, 1999. While these numbers represent the returns as of
that date, they do not represent performance information of the portfolios since
that date. Performance information for the periods after December 31, 1999 may
be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before December 31, 1999. As a
result, performance information is available for the accumulation units
investing in these portfolios.
o Column A presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of each portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
o Column B presents performance figures for the accumulation units which
reflect the insurance charges and fees and expenses of each portfolio.
o Performance figures shown for sub-accounts in existence for less than one
year are not annualized.
Total Return for the periods ended 12/31/99:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance
Funds
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C>
Appreciation 12/31/97 37.96% N/A 27.68% 42.60% N/A 29.56%
AIM V.I. International
Equity 12/31/97 48.24% N/A 30.12% 52.89% N/A 31.97%
AIM V.I. Value 12/31/97 23.46% N/A 27.46% 28.09% N/A 29.34%
- - ----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products
Series Fund, Inc.
Premier Growth (Class A) 12/31/97 25.85% N/A 36.22% 30.48% N/A 38.00%
Real Estate Investment (Class A) 12/31/97 -11.02% N/A -16.28% -6.43% N/A -13.54%
- - ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Bond Debenture 5/1/96 -2.61% N/A 7.70% 1.99% N/A 8.81%
Developing Growth 8/20/97 25.95% N/A 15.15% 30.58% N/A 16.86%
International Equity 5/1/96 22.10% N/A 12.64% 26.72% N/A 13.65%
Large Cap Research 8/20/97 19.14% N/A 15.79% 23.76% N/A 17.48%
Large Cap Stock 5/1/96 11.45% N/A 23.98% 16.06% N/A 24.80%
Lord Abbett Growth and Income 1/8/99 N/A N/A 4.79% N/A N/A 9.90%
Mid-Cap Value 8/20/97 -0.41% N/A 1.64% 4.19% N/A 3.61%
Quality Bond 5/1/96 -7.51% N/A 3.11% -2.92% N/A 4.34%
Select Equity 5/1/96 3.62% N/A 16.86% 8.23% N/A 17.79%
Small Cap Stock 5/1/96 37.87% N/A 14.70% 42.52% N/A 15.67%
- - ----------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust,
Class 1 Shares
Mutual Shares Securities (1) 5/1/98 7.23% N/A -3.23% 11.85% N/A 1.47%
Templeton Developing
Markets Securities (2) 5/1/98 47.06% N/A 5.79% 51.71% N/A 8.50%
Templeton International
Securities (3) 5/1/98 17.28% N/A 3.99% 21.90% N/A 6.72%
Franklin Small Cap (4) 3/1/99 N/A N/A 99.28% N/A N/A 104.48%
(1) Effective May 1, 2000, the Mutual Shares Investments Fund (previously
offered under the contract) merged into the Mutual Shares Securities Fund.
Performance shown reflects historical performance of the Mutual Shares
Securities Fund.
(2) Previously, the Templeton Developing Markets Securities Fund
was known as the Templeton Developing Markets Fund. Effective May 1, 2000,
the Templeton Developing Markets Securities Fund merged into the Templeton
Developing Markets Equity Fund. Performance shown reflects historical
performance of the Templeton Developing Markets Securities Fund.
(3) Previously, the Templeton International Securities Fund was known as the
Templeton International Fund. Effective May 1, 2000, the Templeton
International Securities Fund merged into the Templeton International
Equity Fund. Performance shown reflects historical performance of the
Templeton International Securities Fund.
(4) Effective May 1, 2000, the Franklin Small Cap Investments Fund
(previously offered under the contract) merged into the Franklin Small
Cap Fund. Performance shown reflects historical performance of the
Franklin Small Cap Fund.
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 6/3/96 -0.86% N/A 2.78% 3.74% N/A 4.05%
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable
Insurance Trust
Goldman Sachs
VIT Global Income 1/29/98 -6.99% N/A 0.28% -2.39% N/A 2.70%
Goldman Sachs VIT Growth
and Income 1/29/98 -0.66% N/A -0.90% 3.94% N/A 1.55%
Goldman Sachs VIT
International Equity 1/29/98 25.39% N/A 20.68% 30.02% N/A 22.76%
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 12/31/97 -5.31% N/A 0.05% -0.71% N/A 2.38%
Kemper Small Cap Growth 12/31/97 28.06% N/A 22.53% 32.69% N/A 24.47%
Kemper Small Cap Value 12/31/97 -3.24% N/A -8.32% 1.36% N/A -5.81%
- - ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
Variable Series 12/31/97 61.02% N/A 21.70% 65.69% N/A 23.66%
- - ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging Growth 12/31/97 69.58% N/A 50.21% 74.26% N/A 51.85%
MFS Emerging Markets Equity 12/31/97 31.62% N/A -7.88% 36.26% N/A -5.37%
MFS Global Governments 12/31/97 -8.45% N/A -1.06% -3.85% N/A 1.29%
MFS Growth With Income 12/31/97 0.60% N/A 10.54% 5.21% N/A 12.67%
MFS High Income 12/31/97 0.36% N/A -0.68% 4.97% N/A 1.66%
MFS Research 12/31/97 17.70% N/A 20.04% 22.32% N/A 22.03%
- - ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Oppenheimer Bond Fund/VA 12/31/97 -7.49% N/A -1.22% -2.89% N/A 1.14%
Oppenheimer Capital
Appreciation Fund/VA 12/31/97 35.05% N/A 28.85% 39.69% N/A 30.72%
Oppenheimer High
Income Fund/VA 12/31/97 -1.76% N/A -1.49% 2.84% N/A 0.87%
Oppenheimer Main Street
Growth & Income Fund/VA 12/31/97 15.39% N/A 9.17% 20.01% N/A 11.33%
Oppenheimer Strategic
Bond Fund/VA 12/31/97 -3.20% N/A -0.89% 1.40% N/A 1.46%
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth and
Income - Class IA Shares 12/31/97 -4.43% N/A 4.55% 0.17% N/A 6.78%
Putnam VT International
Growth - Class IA Shares 12/31/97 53.25% N/A 34.16% 57.91% N/A 35.96%
Putnam VT International
New Opportunities -
Class IA Shares 12/31/97 95.44% N/A 49.41% 100.14% N/A 51.06%
Putnam VT New Value -
Class IA Shares 12/31/97 -5.73% N/A -0.53% -1.13% N/A 1.81%
Putnam VT Vista -
Class IA Shares 12/31/97 46.12% N/A 31.47% 50.77% N/A 33.30%
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
Certain portfolios have been in existence for some time and have an investment
performance history. In order to show how the historical performance of the
portfolios affects the contract's accumulation unit values, the following
performance information was developed.
The information is based upon the historical experience of the portfolios and is
for the periods shown. The chart below shows the investment performance of the
portfolios and the accumulation unit performance calculated by assuming that the
contracts were invested in the portfolios for the same periods.
o The performance figures in Column A reflect the fees and expenses paid by
each portfolio.
o Column B presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of each portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
o Column C presents performance figures for the accumulation units which
reflect the insurance charges and the fees and expenses of each portfolio.
o Performance figures shown for portfolios in existence for less than one
year are not annualized.
Total Return for the periods ended 12/31/99
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all (reflects insurance
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation 5/5/93 44.61% 25.59% 22.33% 37.96% 24.09% 20.83% 42.60% 24.19% 20.93%
AIM V.I.
International Equity 5/5/93 55.04% 21.93% 18.82% 48.24% 20.43% 17.32% 52.89% 20.53% 17.42%
AIM V.I. Value 5/5/93 29.90% 27.23% 23.07% 23.46% 25.73% 21.57% 28.09% 25.83% 21.67%
- - ----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Premier Growth
(Class A) 6/26/92 32.32% 36.03% 26.31% 25.85% 34.53% 24.81% 30.48% 34.63% 24.91%
Real Estate
Investment (Class A) 1/9/97 -5.11% N/A -1.79% -11.02% N/A -4.83% -6.43% N/A -3.19%
- - ----------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust,
Class 1 Shares
Mutual Shares
Securities (1) 11/08/96 13.40% N/A 10.86% 7.40% N/A 7.91% 12.00% N/A 9.46%
Templeton Developing
Markets Securities
Fund (2) 3/04/96 53.84% N/A -5.30% 47.84% N/A -7.99% 52.44% N/A -6.70%
Templeton
International
Securities Fund (3) 5/01/92 23.61% 17.21% 15.36% 17.61% 15.71% 13.86% 22.21% 15.81% 13.96%
Franklin Small Cap
Fund (4) 11/01/95 96.94% N/A 30.41% 90.94% N/A 27.81% 95.54% N/A 29.01%
1) Effective May 1, 2000, the Mutual Shares Investments Fund (previously
offered under the contract) merged into the Mutual Shares Securities Fund.
Performance shown reflects historical performance and inception date of the Mutual
Shares Securities Fund.
(2) Previously, the Templeton Developing Markets Fund. Effective May 1, 2000,
the Templeton Developing Markets Fund merged into the Templeton Developing Markets
Equity Fund. Performance shown reflects historical performance and inception date
of the Templeton Developing Markets Securities Fund.
(3) Previously, the Templeton International Fund. Effective May 1, 2000, the
Templeton International Securities Fund merged into the Templeton International
Equity Fund. Performance shown reflects historical performance and inception date
of the Templeton International Securities Fund.
(4) Effective May 1, 2000, the Franklin Small Cap Investments Fund (previously
offered under the contract) merged into the Franklin Small Cap Fund. Performance
shown reflects historical performance and inception date of the Franklin Small Cap
Fund.
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 10/1/87 5.20% 5.60% 5.35% -0.86% 4.10% 3.85% 3.74% 4.20% 3.95%
- - ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Goldman Sachs VIT
Global Income 1/12/98 -1.01% N/A 3.59% -6.99% N/A -0.22% -2.39% N/A 2.19%
Goldman Sachs VIT
Growth and Income 1/12/98 5.41% N/A 5.53% -0.66% N/A 1.72% 3.94% N/A 4.13%
Goldman Sachs VIT
International Equity 1/12/98 31.85% N/A 26.26% 25.39% N/A 22.45% 30.02% N/A 24.86%
- - ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all (reflects insurance
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 9/3/87 0.68% 7.46% 7.12% -5.31% 5.96% 5.62% -0.71% 6.06% 5.72%
Kemper Small
Cap Growth 5/2/94 34.56% 28.92% 25.97% 28.06% 27.42% 24.47% 32.69% 27.52% 24.57%
Kemper Small
Cap Value 5/1/96 2.80% N/A 3.42% -3.24% N/A 0.67% 1.36% N/A 2.02%
- - ----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
Variable Series 5/1/95 68.01% N/A 7.31% 61.02% N/A 4.83% 65.69% N/A 5.91%
- - ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging
Growth 7/24/95 76.71% N/A 36.44% 69.58% N/A 33.91% 74.26% N/A 35.04%
MFS Emerging Markets
Equity 10/16/97 38.18% N/A -8.16% 31.62% N/A -11.72% 36.26% N/A -9.56%
MFS Global
Governments 6/14/94 -2.50% 4.36% 4.07% -8.45% 2.86% 2.57% -3.85% 2.96% 2.67%
MFS Growth
With Income 10/09/95 6.69% N/A 21.12% 0.60% N/A 18.54% 5.21% N/A 19.72%
MFS High Income 7/26/95 6.44% N/A 8.24% 0.36% N/A 5.71% 4.97% N/A 6.84%
MFS Research 7/26/95 24.05% N/A 22.86% 17.70% N/A 20.33% 22.32% N/A 21.46%
- - ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all (reflects insurance
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account
Funds
Oppenheimer Bond
Fund/VA 4/03/85 -1.52% 7.10% 7.76% -7.49% 5.60% 6.26% -2.89% 5.70% 6.36%
Oppenheimer Capital
Appreciation
Fund/VA 4/03/85 41.66% 30.65% 18.46% 35.05% 29.15% 16.96% 39.69% 29.25% 17.06%
Oppenheimer High
Income Fund/VA 4/30/86 4.29% 10.24% 12.65% -1.76% 8.74% 11.15% 2.84% 8.84% 11.25%
Oppenheimer Main
Street Growth &
Income Fund/VA 7/05/95 21.71% N/A 25.80% 15.39% N/A 23.28% 20.01% N/A 24.40%
Oppenheimer Strategic
Bond Fund/VA 5/03/93 2.83% 8.25% 6.18% -3.20% 6.75% 4.68% 1.40% 6.85% 4.78%
- - ----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth
and Income -
Class IA Shares 2/01/88 1.59% 19.40% 14.00% -4.43% 17.90% 12.50% 0.17% 18.00% 12.60%
Putnam VT International
Growth - Class
IA Shares 1/02/97 60.13% N/A 30.29% 53.25% N/A 27.26% 57.91% N/A 28.89%
Putnam VT International
New Opportunities -
Class IA Shares 1/02/97 102.95% N/A 32.92% 95.44% N/A 29.89% 100.14% N/A 31.52%
Putnam VT New Value -
Class IA Shares 1/02/97 0.27% N/A 7.83% -5.73% N/A 4.80% -1.13% N/A 6.43%
Putnam VT Vista -
Class IA Shares 1/02/97 52.90% N/A 31.14% 46.12% N/A 28.11% 50.77% N/A 29.74%
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please send me, at no charge, the Statement of Additional Information dated
May 1, 2000, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- - ------------------------------------------------------------------------------
Name
- - ------------------------------------------------------------------------------
Address
- - ------------------------------------------------------------------------------
City State Zip Code
CL-2096 (5/00) CUST-MO
- - ------------------------------
- - ------------------------------
- - ------------------------------
Cova Financial Services Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
PART A - VERSION B
The Fixed
And Variable Annuity
issued by
COVA VARIABLE ANNUITY
ACCOUNT ONE
and
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Services Life Insurance Company (Cova).
The annuity contract has 7 investment choices - a fixed account which offers an
interest rate which is guaranteed by Cova, and 6 investment portfolios listed
below. The 6 investment portfolios are part of the Russell Insurance Funds or
General American Capital Company. You can put your money in the fixed account
and/or any of these investment portfolios.
Russell Insurance Funds:
Managed by Frank Russell
Investment Management Company
Aggressive Equity
Core Bond
Multi-Style Equity
Non-U.S.
Real Estate Securities
General American Capital Company:
Managed by Conning Assets
Management Company
Money Market
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Cova Fixed and Variable
Annuity Contract.
To learn more about the Cova Fixed and Variable Annuity Contract, you can obtain
a copy of the Statement of Additional Information (SAI) dated May 1, 2000.
The SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of the prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding companies that file electronically with the SEC.
The Table of Contents of the SAI is on Page __ of this prospectus. For a free
copy of the SAI, call us at (800) 523-1661 or write us at: One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644.
The Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
May 1, 2000
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS
SUMMARY
FEE TABLE
EXAMPLES
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Annuity Payments
Annuity Options
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Free Look
Accumulation Units
4. INVESTMENT OPTIONS
Russell Insurance Funds
General American Capital Company.
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Approved Asset Allocation Programs
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the
Withdrawal Charge
Premium Taxes
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
Suspension of Payments or Transfers
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A
Condensed Financial Information
APPENDIX B
Performance Information
INDEX OF SPECIAL TERMS
Because of the complex nature of the contract, we have used certain words
or terms in this prospectus which may need an explanation. We have
identified the following as some of these words or terms. The page that is
indicated here is where we believe you will find the best explanation for
the word or term. These words and terms are in italics on the indicated
page.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Date
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Fixed Account
Income Phase
Investment Portfolios
Joint Owner
Non-Qualified
Owner
Purchase Payment
Qualified
Tax Deferral
SUMMARY
The sections in this Summary correspond to sections in this prospectus which
discuss the topics in more detail.
1. THE ANNUITY CONTRACT:
The fixed and variable annuity contract offered by Cova is a contract between
you, the owner, and Cova, an insurance company. The contract provides a means
for investing on a tax-deferred basis. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
This contract offers 6 investment portfolios. These portfolios are designed to
offer a potentially better return than the fixed account. However, this is NOT
guaranteed. You can also lose your money.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Cova. While your money is in the fixed account, the interest your money
will earn as well as your principal is guaranteed by Cova.
You can put money into any or all of the investment portfolios and the fixed
account. You can transfer between accounts up to 12 times a year without charge
or tax implications.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine, in part, the amount of income payments during
the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE):
If you want to receive regular income from your annuity, you can choose an
annuity option. Once you begin receiving regular payments, you cannot change
your payment plan. During the income phase, you have the same investment choices
you had during the accumulation phase. You can choose to have payments come from
the fixed account, the investment portfolios or both. If you choose to have any
part of your payments come from the investment portfolios, the dollar amount of
your payments may go up or down.
3. HOW TO PURCHASE THE CONTRACT:
You can buy this contract with $5,000 or more under most circumstances. You can
add $500 or more any time you like during the accumulation phase. Your
registered representative can help you fill out the proper forms.
4. INVESTMENT OPTIONS:
You can put your money in any or all of the investment portfolios which are
described in the prospectuses for the funds.
Depending upon market conditions and the performance of the portfolio(s) you
select, you can make or lose money in any of these portfolios.
5. EXPENSES:
The contract has insurance features and investment features, and there are costs
related to each.
o Each year Cova deducts a $30 contract maintenance charge from your
contract. During the accumulation phase, Cova currently waives this charge
if the value of your contract is at least $50,000.
o Cova also deducts for its insurance charges which total 1.40% of the
average daily value of your contract allocated to the investment
portfolios.
o If you take your money out, Cova may assess a withdrawal charge which is
equal to 5% of the purchase payment you withdraw. After Cova has had a
purchase payment for 5 years, there is no charge by Cova for a withdrawal
of that purchase payment.
o When you begin receiving regular income payments from your annuity, Cova
will assess a state premium tax charge, if applicable, which ranges from 0%
- 4% depending upon the state.
o The first 12 transfers in a year are free. After that, a transfer fee of
$25 or 2% of the amount transferred (whichever is less) is assessed.
o There are also investment charges which currently range from .205% to 1.30%
of the average daily value of the investment portfolio depending upon the
investment portfolio.
6. TAXES:
Your earnings are not taxed until you take them out. If you take money out
during the accumulation phase, earnings come out first and are taxed as income.
If you are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the earnings. Payments during the income phase are
considered partly a return of your original investment. That part of each
payment is not taxable as income.
7. ACCESS TO YOUR MONEY:
You can take money out at any time during the accumulation phase. After the
first year, you can take up to 10% of your total purchase payments each year
without charge from Cova. Withdrawals of purchase payments in excess of that may
be charged a withdrawal charge, depending on how long your money has been in the
contract. However, Cova will never assess a withdrawal charge on earnings you
withdraw. Earnings are defined as the value in your contract minus the remaining
purchase payments in your contract. Of course, you may also have to pay income
tax and a tax penalty on any money you take out.
8. DEATH BENEFIT:
If you die before moving to the income phase, the person you have chosen as your
beneficiary will receive a death benefit.
9. OTHER INFORMATION:
Free Look. If you cancel the contract within 10 days after receiving it (or
whatever period is required in your state), we will send your money back without
assessing a withdrawal charge. You will receive whatever your contract is worth
on the day we receive your request. This may be more or less than your original
payment. If we're required by law to return your original payment, we reserve
the right to put your money in the Money Market Fund during the free-look period
and will refund the greater of your original payment (less any withdrawals) or
the value of your contract.
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
Who should purchase the contract? This contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state income tax brackets. You should not buy this contract if
you are looking for a short-term investment or if you cannot take the risk of
getting back less money than you put in.
Additional Features. This contract has additional features you might be
interested in. These include:
o You can arrange to have money automatically sent to you each month while
your contract is still in the accumulation phase. Of course, you'll have to
pay taxes on money you receive. We call this feature the Systematic
Withdrawal Program.
o You can arrange to have a regular amount of money automatically invested in
investment portfolios each month, theoretically giving you a lower average
cost per unit over time than a single one time purchase. We call this
feature Dollar Cost Averaging.
o You can arrange to automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
o Under certain circumstances, Cova will give you your money without a
withdrawal charge if you need it while you're in a nursing home. We call
this feature the Nursing Home Waiver.
These features are not available in all states and may not be suitable for your
particular situation.
10. INQUIRIES:
If you need more information, please contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE
The purpose of the Fee Table is to show you the various expenses you will incur
directly or indirectly with the contract. The Fee Table reflects expenses of the
Separate Account as well as of the investment portfolios. Expenses of the
investment portfolios are not fixed or specified under the terms of the contract
and actual expenses may vary.
Owner Transaction Expenses
Withdrawal Charge (see Note 1 below)
5% of purchase payment withdrawn
Transfer Fee (see Note 2 below)
No charge for first 12 transfers in a contract year; thereafter, the fee is
$25 per transfer or, if less, 2% of the amount transferred.
Contract Maintenance Charge (see Note 3 below)
$30 per contract per year
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
-----
TOTAL SEPARATE ACCOUNT 1.40%
ANNUAL EXPENSES
<TABLE>
<CAPTION>
Investment Portfolio Expenses
(as a percentage of the average daily net assets of an investment portfolio)
Total Annual
Management Fees Portfolio Expenses
(after reimbursement (after reimbursement
and/or waivers as noted) Other Expenses and/or waivers as noted)
- - ----------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds*
Managed by Frank Russell
Investment Management Company
<S> <C> <C> <C>
Aggressive Equity .86% .39% 1.25%
Core Bond .54% .26% .80%
Multi-Style Equity .77% .15% .92%
Non-U.S. .75% .55% 1.30%
Real Estate Securities .85% .30% 1.15%
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset
Management Company
Money Market .125% .08% .205%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
*The manager of Russell Insurance Funds, Frank Russell Investment
Management Company, has contractually agreed to waive, at least until
April 30, 2001, a portion of the management fee, up to the full amount
of that fee, equal to the amount by which the Fund's total operating
expenses exceed the amounts set forth above under "Total Annual Portfolio
Expenses" and to reimburse the Fund for all remaining expenses, after fee
waivers which exceed the amount set forth above for each Fund under "Total
Annual Portfolio Expenses". Absent such waiver and reimbursement, the management
fees and total operating expenses would be .78% and .93% for the Multi-Style
Equity Fund; .95% and 1.34% for the Aggressive Equity Fund; .95% and 1.50% for
the Non-U.S. Fund; .60% and .66% for the Core Bond Fund.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Examples
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
For purposes of the examples, the assumed average contract size is $30,000.
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets: (a) if you surrender the contract at the end of each time period;
(b) if you do not surrender the contract or if you apply the contract value to an annuity option.
Time Periods
1 year 3 years 5 years 10 years
- - ----------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds
Managed by Frank Russell
Investment Management Company
<S> <C> <C> <C> <C>
Aggressive Equity (a)$ 77.80 (a) $130.14 (a) $189.89 (a) $305.57
(b)$ 27.80 (b) $ 85.14 (b) $144.89 (b) $305.57
Core Bond (a)$ 73.30 (a) $116.65 (a) $167.47 (a) $261.20
(b)$ 23.30 (b) $ 71.65 (b) $122.47 (b) $261.20
Multi-Style Equity (a)$ 74.50 (a) $120.27 (a) $173.50 (a) $273.25
(b)$ 24.50 (b) $ 75.27 (b) $128.50 (b) $273.25
Non-U.S. (a)$ 78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b)$ 28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
Real Estate Securities (a)$ 76.80 (a) $127.16 (a) $184.95 (a) $295.90
(b)$ 26.80 (b) $ 82.16 (b) $139.95 (b) $295.90
- - ----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset
Management Company
Money Market (a)$ 67.31 (a) $ 98.54 (a) $137.02 (a) $199.08
(b)$ 17.31 (b) $ 53.54 (b) $ 92.02 (b) $199.08
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Explanation of Fee Table
1. The withdrawal charge is 5% of the purchase payments you withdraw. After
Cova has had a purchase payment for 5 years, there is no charge by Cova for
a withdrawal of that purchase payment. You may also have to pay income tax
and a tax penalty on any money you take out. After the first year, you can
take up to 10% of your total purchase payments each year without a charge
from Cova.
2. Cova will not charge you the transfer fee even if there are more than 12
transfers in a year if the transfer is for the Dollar Cost Averaging,
Automatic Rebalancing or Approved Asset Allocation Programs.
3. During the accumulation phase, Cova will not charge the contract
maintenance charge if the value of your contract is $50,000 or more,
although, if you make a complete withdrawal, Cova will charge the contract
maintenance charge.
4. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
There is an accumulation unit value history (condensed financial information)
contained in Appendix A.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
Cova.
An annuity is a contract between you, the owner, and an insurance company (in
this case Cova), where the insurance company promises to pay an income to you,
in the form of annuity payments, beginning on a designated date that is at least
30 days in the future. Until you decide to begin receiving annuity payments,
your annuity is in the accumulation phase. Once you begin receiving annuity
payments, your contract switches to the income phase.
The contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your contract until you take
money out of your contract.
The contract is called a variable annuity because you can choose among 6
investment portfolios, and, depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends, in part, upon the investment performance of the
investment portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers an interest
rate that is guaranteed by Cova. Cova guarantees that the interest rate credited
to the fixed account will not be less than 3% per year. If you select the fixed
account, your money will be placed with the other general assets of Cova. If you
select the fixed account, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the total interest credited
to your contract. The amount of the annuity payments you receive during the
income phase from the fixed account portion of the contract will remain level
for the entire income phase.
As owner of the contract, you exercise all rights under the contract. You can
change the owner at any time by notifying Cova in writing. You and your spouse
can be named joint owners. We have described more information on this under
"Other Information."
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month.
We ask you to choose your annuity date when you purchase the contract. You can
change it at any time before the annuity date with 30 days notice to us. Your
annuity date cannot be any earlier than one month after you buy the contract.
Annuity Payments
You will receive annuity payments during the income phase. In general, annuity
payments must begin by the annuitant's 85th birthday or 10 years from the date
the contract was issued, whichever is later (this requirement may differ
slightly for special programs). The annuitant is the person whose life we look
to when we make annuity payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the:
o fixed account,
o the investment portfolio(s), or
o a combination of both.
If you don't tell us otherwise, your annuity payments will be based on the
investment allocations that were in place on the annuity date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things:
1) the value of your contract in the investment portfolio(s) on the annuity
date,
2) the 3% assumed investment rate used in the annuity table for the contract,
and
3) the performance of the investment portfolios you selected.
If the actual performance exceeds the 3% assumed investment rate, your annuity
payments will increase. Similarly, if the actual investment rate is less than
3%, your annuity payments will decrease.
Annuity payments are made monthly unless you have less than $5,000 to apply
toward a payment ($2,000 if the contract is issued in Massachusetts or Texas).
In that case, Cova may provide your annuity payment in a single lump sum.
Likewise, if your annuity payments would be less than $100 a month ($20 in
Texas), Cova has the right to change the frequency of payments so that your
annuity payments are at least $100 ($20 in Texas).
Annuity Options
You can choose among income plans. We call those annuity options. We ask you to
choose an annuity option when you purchase the contract. You can change it at
any time before the annuity date with 30 days notice to us. If you do not choose
an annuity option at the time you purchase the contract, we will assume that you
selected Option 2 which provides a life annuity with 10 years of guaranteed
payments.
You can choose one of the following annuity options or any annuity option
acceptable to Cova. After annuity payments begin, you cannot change the annuity
option.
Option 1. Life Annuity. Under this option, we will make an annuity payment each
month so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
Option 2. Life Annuity With 5, 10 or 20 Years Guaranteed. Under this option, we
will make an annuity payment each month so long as the annuitant is alive.
However, if, when the annuitant dies, we have made annuity payments for less
than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us for
a single lump sum.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
annuity payments each month so long as the annuitant and a second person are
both alive. When either of these people dies, we will continue to make annuity
payments, so long as the survivor continues to live. The amount of the annuity
payments we will make to the survivor can be equal to 100%, 662/3% or 50% of the
amount that we would have paid if both were alive.
3. PURCHASE
Purchase Payments
A purchase payment is the money you give us to invest in the contract. The
minimum we will accept is $5,000 when the contract is purchased as a
non-qualified contract. If you are purchasing the contract as part of an IRA
(Individual Retirement Annuity), 401(k) or other qualified plan, the minimum we
will accept is $2,000. The maximum purchase payment we accept is $1 million
without our prior approval. You can make additional purchase payments of $500 or
more to either type of contract.
Allocation of Purchase Payments
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have selected.
If you make additional purchase payments, we will allocate them in the same way
as your first purchase payment unless you tell us otherwise.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit these
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the contract within this time period, Cova will not assess a withdrawal charge.
You will receive back whatever your contract is worth on the day we receive your
request. In certain states, or if you have purchased the contract as an IRA, we
may be required to give you back your purchase payment if you decide to cancel
your contract within 10 days after receiving it (or whatever period is required
in your state). If that is the case, we reserve the right to put your purchase
payment in the Money Market Fund for 15 days before we allocate your first
purchase payment to the investment portfolio(s) you have selected. (In some
states, the period may be longer.) In such case, we will refund the greater of
purchase payments (less withdrawals) or contract value. Currently, Cova directly
allocates your purchase payment to the investment portfolios and/or fixed
account you select.
Accumulation Units
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
1. determining the total amount of money invested in the particular investment
portfolio;
2. subtracting from that amount any insurance charges and any other charges
such as taxes we have deducted; and
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio by the value
of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
Example:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Multi-Style Equity Fund. When the New
York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Multi-Style Equity Fund is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Multi-Style Equity Fund.
4. INVESTMENT OPTIONS
The Contract offers 6 investment portfolios which are listed below. Additional
investment portfolios may be available in the future.
You should read the prospectuses for these funds carefully. Copies of these
prospectuses are attached to this prospectus.
The investment objectives and policies of certain of the investment
portfolios are similar to the investment objectives and policies of other
mutual funds that certain of the investment advisers manage. Although the
objectives and policies may be similar, the investment results of the
investment portfolios may be higher or lower than the results of such other
mutual funds. The investment advisers cannot guarantee, and make no
representation, that the investment results of similar funds will be comparable
even though the funds have the same investment advisers.
A fund's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a fund with a small asset base. A
fund may not experience similar performance as its assets grow.
Shares of the investment portfolios may be offered in connection with certain
variable annuity contracts and variable life insurance policies of various life
insurance companies which may or may not be affiliated with Cova. Certain
investment portfolios may also be sold directly to qualified plans. The funds
believe that offering their shares in this manner will not be disadvantageous to
you.
Cova may enter into certain arrangements under which it is reimbursed by the
investment portfolios' advisers, distributors and/or affiliates for the
administrative services which it provides to the portfolios.
Russell Insurance Funds
Russell Insurance Funds is managed by Frank Russell Investment Management
Company. Russell Insurance Funds is a mutual fund with five portfolios, each
with its own investment objective. The following portfolios are available under
the contract:
Aggressive Equity Fund
Core Bond Fund
Multi-Style Equity Fund
Non-U.S. Fund
Real Estate Securities Fund
General American Capital Company
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
Money Market Fund
Transfers
You can transfer money among the fixed account and the investment portfolios.
Cova has reserved the right during the year to terminate or modify the transfer
provisions described below.
Telephone Transfers. You and/or your registered representative on your behalf,
can make transfers by telephone. Telephone transfers will be automatically
permitted unless you tell us otherwise. If you own the contract with a joint
owner, unless Cova is instructed otherwise, Cova will accept instructions from
either you or the other owner. Cova will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If Cova fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. Cova tape records all telephone instructions.
Transfers during the Accumulation Phase. You can make 12 transfers every year
during the accumulation phase without charge. We measure a year from the
anniversary of the day we issued your contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make more
than 12 transfers in a year, there is a transfer fee deducted. The following
apply to any transfer during the accumulation phase:
1. Your request for transfer must clearly state which investment portfolio(s)
or the fixed account are involved in the transfer.
2. Your request for transfer must clearly state how much the transfer is for.
3. You cannot make any transfers within 7 calendar days of the annuity date.
Transfers during the Income Phase. You can only make transfers between the
investment portfolios once each year. We measure a year from the anniversary of
the day we issued your contract. You cannot transfer from the fixed account to
an investment portfolio, but you can transfer from one or more investment
portfolios to the fixed account at any time.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Fund or the fixed account to any of the
other investment portfolio(s). By allocating amounts on a regular schedule as
opposed to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. The Dollar Cost Averaging
Program is available only during the accumulation phase.
Cova reserves the right to modify, terminate or suspend the Dollar Cost
Averaging Program.
The minimum amount which can be transferred each month is $500. You must have at
least $6,000 in the Money Market Fund or the fixed account, (or the amount
required to complete your program, if less) in order to participate in the
Dollar Cost Averaging Program. There is no additional charge for participating
in the Dollar Cost Averaging Program. Cova will waive the minimum transfer
amount and the minimum amount required to establish dollar cost averaging if you
establish dollar cost averaging for 6 or 12 months at the time you buy the
contract.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
Cova may, from time to time, offer other dollar cost averaging programs which
may have terms different from those described above.
Automatic Rebalancing Program
Once your money has been allocated to the investment portfolios, the performance
of each portfolio may cause your allocation to shift. You can direct us to
automatically rebalance your contract to return to your original percentage
allocations by selecting our Automatic Rebalancing Program. You can tell us
whether to rebalance quarterly, semi-annually or annually. We will measure these
periods from the anniversary of the date we issued your contract. The transfer
date will be the 1st day after the end of the period you selected.
The Automatic Rebalancing Program is available only during the accumulation
phase. There is no additional charge for participating in the Automatic
Rebalancing Program. If you participate in the Automatic Rebalancing Program,
the transfers made under the program are not taken into account in determining
any transfer fee.
Example:
Assume that you want your initial purchase payment split between 2 investment
portfolios. You want 40% to be in the Core Bond Fund and 60% to be in the
Multi-Style Equity Fund. Over the next 21/2 months the bond market does very
well while the stock market performs poorly. At the end of the first quarter,
the Core Bond Fund now represents 50% of your holdings because of its
increase in value. If you have chosen to have your holdings rebalanced
quarterly, on the first day of the next quarter, Cova will sell some of your
units in the Core Bond Fund to bring its value back to 40% and use the money
to buy more units in the Multi-Style Equity Fund to increase those holdings
to 60%.
Approved Asset Allocation Programs
Cova recognizes the value to certain owners of having available, on a continuous
basis, advice for the allocation of your money among the investment options
available under the contracts. Certain providers of these types of services have
agreed to provide such services to owners in accordance with Cova's
administrative rules regarding such programs.
Cova has made no independent investigation of these programs. Cova has only
established that these programs are compatible with our administrative systems
and rules. Approved asset allocation programs are only available during the
accumulation phase. Currently, Cova does not charge for participating in an
approved asset allocation program.
Even though Cova permits the use of approved asset allocation programs, the
contract was not designed for professional market timing organizations. Repeated
patterns of frequent transfers are disruptive to the operations of the
investment portfolios, and when Cova becomes aware of such disruptive practices,
we may modify the transfer provisions of the contract.
If you participate in an Approved Asset Allocation Program, the transfers made
under the program are not taken into account in determining any transfer fee.
Voting Rights
Cova is the legal owner of the investment portfolio shares. However, Cova
believes that when an investment portfolio solicits proxies in conjunction with
a vote of shareholders, it is required to obtain from you and other affected
owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Cova owns on its own
behalf. Should Cova determine that it is no longer required to comply with the
above, we will vote the shares in our own right.
Substitution
Cova may be required to substitute one of the investment portfolios you have
selected with another portfolio. We would not do this without the prior approval
of the Securities and Exchange Commission. We will give you notice of our intent
to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Insurance Charges
Each day, Cova makes a deduction for its insurance charges. Cova does this as
part of its calculation of the value of the accumulation units and the annuity
units. The insurance charge has two parts:
1) the mortality and expense risk premium, and
2) the administrative expense charge.
Mortality and Expense Risk Premium. This charge is equal, on an annual basis, to
1.25% of the daily value of the contracts invested in an investment portfolio,
after fund expenses have been deducted. This charge is for the insurance
benefits e.g., guarantee of annuity rates, the death benefits, for certain
expenses of the contract, and for assuming the risk (expense risk) that the
current charges will be insufficient in the future to cover the cost of
administering the contract. If the charges under the contract are not
sufficient, then Cova will bear the loss. Cova does, however, expect to profit
from this charge. The mortality and expense risk premium cannot be increased.
Cova may use any profits it makes from this charge to pay for the costs of
distributing the contract.
Administrative Expense Charge. This charge is equal, on an annual basis, to .15%
of the daily value of the contracts invested in an investment portfolio, after
fund expenses have been deducted. This charge, together with the contract
maintenance charge (see below), is for the expenses associated with the
administration of the contract. Some of these expenses are: preparation of the
contract, confirmations, annual reports and statements, maintenance of contract
records, personnel costs, legal and accounting fees, filing fees, and computer
and systems costs. Because this charge is taken out of every unit value, you may
pay more in administrative costs than those that are associated solely with your
contract. Cova does not intend to profit from this charge. However, if this
charge and the contract maintenance charge are not enough to cover the costs of
the contracts in the future, Cova will bear the loss.
Contract Maintenance Charge
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, Cova deducts $30 from your contract as a contract
maintenance charge. (In South Carolina, the charge is the lesser of $30 or 2% of
the value of the contract.) This charge is for administrative expenses (see
above). This charge cannot be increased.
Cova will not deduct this charge during the accumulation phase, if when the
deduction is to be made, the value of your contract is $50,000 or more. Cova may
some time in the future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A pro rata portion of the charge will be deducted
if the annuity date is other than an anniversary. After the annuity date, the
charge will be collected monthly out of the annuity payment.
Withdrawal Charge
During the accumulation phase, you can make withdrawals from your contract. Cova
keeps track of each purchase payment. Once a year after the first year (and once
a year during the first year for purposes of payment of charitable remainder
trust administration fees), you can withdraw up to 10% of your total purchase
payments and no withdrawal charge will be assessed on the 10%, if on the day you
make your withdrawal the value of your contract is $5,000 or more. Withdrawals
for purposes of charitable remainder trust administration fees are included in
the 10% free withdrawal amount. Otherwise, the charge is 5% of each purchase
payment you take out, unless the payment was made more than 5 years ago. After
Cova has had a purchase payment for 5 years, there is no charge when you
withdraw that purchase payment. Cova does not assess a withdrawal charge on
earnings withdrawn from the contract. Earnings are defined as the value in your
contract minus the remaining purchase payments in your contract. The withdrawal
order for calculating the withdrawal charge is shown below.
o 10% of purchase payments free.
o Remaining purchase payments that are over 5 years old and not subject to a
withdrawal charge.
o Earnings in the contract free.
o Remaining purchase payments that are less than 5 years old and not subject
to a withdrawal charge.
For purposes of calculating the withdrawal charge, slightly different rules may
apply to Section 1035 exchanges.
When the withdrawal is for only part of the value of your contract, the
withdrawal charge is deducted from the remaining value in your contract.
Cova does not assess the withdrawal charge on any payments paid out as annuity
payments or as death benefits.
NOTE: For tax purposes, earnings are considered to come out first.
Reduction or Elimination of the Withdrawal Charge
General
Cova will reduce or eliminate the amount of the withdrawal charge when the
contract is sold under circumstances which reduce its sales expense. Some
examples are: if there is a large group of individuals that will be purchasing
the contract or a prospective purchaser already had a relationship with Cova.
Cova will not deduct a withdrawal charge under a contract issued to an officer,
director or employee of Cova or any of its affiliates.
Nursing Home Waiver
After you have owned the contract for one year, if you, or your joint owner,
become confined to a nursing home or hospital for at least 90 consecutive days
under a doctor's care and you need part or all of the money from your contract,
Cova will not impose a withdrawal charge. You or your joint owner cannot have
been so confined when you purchased your contract if you want to take advantage
of this provision (confinement must begin after the first contract anniversary).
This is called the Nursing Home Waiver. This provision is not available in all
states.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Cova is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some of
these taxes are due when the contract is issued, others are due when annuity
payments begin. It is Cova's current practice to not charge anyone for these
taxes until annuity payments begin. Cova may some time in the future discontinue
this practice and assess the charge when the tax is due. Premium taxes
generally range from 0% to 4%, depending on the state.
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred whichever is less.
If the transfer is part of the Dollar Cost Averaging Program, the Automatic
Rebalancing Program or an Approved Asset Allocation Program, it will not count
in determining the transfer fee.
Income Taxes
Cova will deduct from the contract for any income taxes which it incurs because
of the contract. At the present time, we are not making any such deductions.
Investment Portfolio Expenses
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
6. TAXES
NOTE: Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. Cova has
included an additional discussion regarding taxes in the Statement of Additional
Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs - either as a withdrawal or as annuity payments.
When you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified and Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 plans.
A qualified contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty.
They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
Withdrawals - Qualified Contracts
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The Code also provides that any amount received under a qualified contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a
lifetime annuity;
(5) paid to you after you have attained age 55 and you have left your
employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid on account of an IRS levy upon the qualified contract;
(9) paid from an IRA for medical insurance (as defined in the Code);
(10) paid from an IRA for qualified higher education expenses; or
(11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in
(4) above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to purchase payments
under a salary reduction agreement made by owners from Tax-Sheltered Annuities.
Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Cova believes that the investment portfolios are being managed
so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Cova would be
considered the owner of the shares of the investment portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the contract. It is unknown to what extent owners are
permitted to select investment portfolios, to make transfers among the
investment portfolios or the number and type of investment portfolios owners may
select from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the contract, could be treated as the owner of the shares of the
investment portfolios.
Due to the uncertainty in this area, Cova reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract:
(1) by making a withdrawal (either a partial or a complete withdrawal);
(2) by electing to receive annuity payments; or
(3) when a death benefit is paid to your beneficiary.
Under most circumstances, withdrawals can only be made during the accumulation
phase.
When you make a complete withdrawal you will receive the withdrawal value of the
contract. The withdrawal value of the contract is the value of the contract at
the end of the business day when Cova receives a written request for a
withdrawal:
o less any applicable withdrawal charge,
o less any premium tax, and
o less any contract maintenance charge.
Unless you instruct Cova otherwise, any partial withdrawal will be made pro-rata
from all the investment portfolios and the fixed account you selected. Under
most circumstances the amount of any partial withdrawal must be for at least
$500. Cova requires that after a partial withdrawal is made you keep at least
$500 in any selected investment portfolio. If the remaining withdrawal value
would be less than $500 ($1,000 in New Jersey) after you make a partial
withdrawal, the partial withdrawal amount will be the remaining withdrawal
value.
There are limits to the amount you can withdraw from a qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the Statement of Additional Information.
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
Systematic Withdrawal Program
You may use the Systematic Withdrawal Program. This program provides an
automatic monthly payment to you of up to 10% of your total purchase payments
each year. No withdrawal charge will be made for these payments. Cova does not
have any charge for this program, but reserves the right to charge in the
future. If you use this program, you may not also make a single 10% free
withdrawal. For a discussion of the withdrawal charge and the 10% free
withdrawal, see "Expenses."
Income taxes, tax penalties and certain restrictions may apply to Systematic
Withdrawals.
Suspension of Payments or Transfers
Cova may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Cova cannot
reasonably value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
Cova has reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
8. PERFORMANCE
Cova periodically advertises performance of the various investment portfolios.
Cova will calculate performance by determining the percentage change in the
value of an accumulation unit by dividing the increase (decrease) for that unit
by the value of the accumulation unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
expenses of the investment portfolio. It does not reflect the deduction of any
applicable contract maintenance charge and withdrawal charge. The deduction of
any applicable contract maintenance charge and withdrawal charges would reduce
the percentage increase or make greater any percentage decrease. Any
advertisement will also include total return figures which reflect the deduction
of the insurance charges, contract maintenance charge, withdrawal charges and
the expenses of the investment portfolio.
For periods starting prior to the date the contracts were first offered, the
performance will be based on the historical performance of the corresponding
investment portfolios for the periods commencing from the date on which the
particular investment portfolio was made available through the Separate Account.
In addition, for certain investment portfolios, performance may be shown for the
period commencing from the inception date of the investment portfolio. These
figures should not be interpreted to reflect actual historical performance of
the Separate Account.
Cova may, from time to time, include in its advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
Appendix B contains performance information that you may find informative. It
is divided into various parts, depending upon the type of performance
information shown. Future performance will vary and results shown are not
necessarily representative of future results.
9. DEATH BENEFIT
Upon Your Death
If you die before annuity payments begin, Cova will pay a death benefit to your
beneficiary (see below). If you have a joint owner, the death benefit will be
paid when the first of you dies. Joint owners must be spouses. The surviving
joint owner will be treated as the beneficiary.
Beginning May 1, 1999, at the time you buy the contract, you will receive Death
Benefit Option A. If you purchased your contract before May 1, 1999, you
received Death Benefit Option C. For these contracts (i.e., contracts purchased
prior to May 1, 1999), effective beginning with your next contract anniversary
on or after July 1, 1999, your death benefit will automatically be enhanced to
Death Benefit Option B.
The death benefits are described below. The amount of death benefit depends on
how old you or your joint owner is. If you have a joint owner, the death benefit
is determined based on the age of the oldest joint owner and the death benefit
is payable on the death of the first joint owner.
DEATH BENEFIT OPTION A:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less any withdrawals (and any withdrawal charges
paid on the withdrawals); or
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any contract anniversary while the owner, or
a joint owner is living, plus any purchase payments you made subsequent to
that contract anniversary, less any withdrawals (and any withdrawal charges
paid on the withdrawals) subsequent to that contract anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals); or
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any prior contract anniversary on or before
your or your joint owner's 80th birthday, plus any purchase payments you
made subsequent to that contract anniversary, less any withdrawals (and any
withdrawal charges paid on the withdrawals) subsequent to that contract
anniversary.
DEATH BENEFIT OPTION B:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values of your contract resulting from taking the
contract value on any contract anniversary on or after July 1, 1999 while
the owner, or a joint owner is living, plus any purchase payments you made
subsequent to that contract anniversary, less any withdrawals (and any
withdrawal charges paid on the withdrawals) subsequent to that contract
anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values of your contract resulting from taking the
contract value on any prior contract anniversary on or after July 1, 1999
and on or before your or your joint owner's 80th birthday, plus any
purchase payments you made subsequent to that contract anniversary, less
any withdrawals (and any withdrawal charges paid on the withdrawals)
subsequent to that contract anniversary.
DEATH BENEFIT OPTION C:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals); or
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values resulting from taking the contract value on any
five (5) year contract anniversary prior to the date of your death or the
joint owner's death, plus any purchase payments you made subsequent to that
contract anniversary, less any withdrawals (and any withdrawal charges paid
on the withdrawals) subsequent to that contract anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest of the values resulting from taking the contract value on any
prior five (5) year contract anniversary on or before your or the joint
owner's 80th birthday, plus any purchase payments you made after that
contract anniversary, less any withdrawals (and any withdrawal charges paid
on the withdrawals) made after that contract anniversary.
Check your contract and applicable endorsement for your death benefit.
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an annuity
option. The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If the
beneficiary is the spouse of the owner, he/she can continue the contract in
his/her own name at the then current value. If a lump sum payment is elected and
all the necessary requirements are met, the payment will be made within 7 days.
Payment under an annuity option may only be elected during the 60 day period
beginning with the date Cova receives proof of death. If Cova does not receive
an election during such time, it will make a single sum payment to the
beneficiary at the end of the 60 day period.
Death of Annuitant
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days of
the death of the annuitant, you will become the annuitant. However, if the owner
is a non-natural person (for example, a corporation), then the death or change
of annuitant will be treated as the death of the owner, and a new annuitant may
not be named.
Upon the death of the annuitant after annuity payments begin, the death benefit,
if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
Cova
Cova Financial Services Life Insurance Company (Cova) was incorporated on August
17, 1981 as Assurance Life Company, a Missouri corporation, and changed its name
to Xerox Financial Services Life Insurance Company in 1985. On June 1, 1995, a
wholly-owned subsidiary of General American Life Insurance Company (General
American Life) purchased Cova which on that date changed its name to Cova
Financial Services Life Insurance Company. On January 6, 2000, Metropolitan
Life Insurance Company (MetLife) acquired GenAmerica Corporation, the ultimate
parent company of General American Life. The acquisition of GenAmerica
Corporation does not affect policy benefits or any other terms or conditions
under your contract. MetLife, headquartered in New York City since 1868, is a
leading provider of insurance and financial products and services to individual
and group customers.
Cova is licensed to do business in the District of Columbia and all states
except California, Maine, New Hampshire, New York and Vermont.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account One
(Separate Account), to hold the assets that underlie the contracts. The Board of
Directors of Cova adopted a resolution to establish the Separate Account under
Missouri insurance law on February 24, 1987. We have registered the Separate
Account with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940. The Separate Account is divided into
sub-accounts.
The assets of the Separate Account are held in Cova's name on behalf of the
Separate Account and legally belong to Cova. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business Cova may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts Cova may issue.
Distributor
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the contracts. Life
Sales is an affiliate of Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions up to 5.75% of purchase payments but,
under certain circumstances, may be paid an additional .5% commission.
Sometimes, Cova enters into an agreement with the broker-dealer to pay the
broker-dealer persistency bonuses, in addition to the standard commissions.
Ownership
Owner. You as the owner of the contract, have all the interest and rights under
the contract. Prior to the annuity date, the owner is as designated at the time
the contract is issued, unless changed. On and after the annuity date, the
annuitant is the owner (this may be a taxable event). The beneficiary becomes
the owner when a death benefit is payable.
Joint Owner. The contract can be owned by joint owners. Any joint owner must be
the spouse of the other owner (except in Pennsylvania). Upon the death of either
joint owner, the surviving spouse will be the designated beneficiary. Any other
beneficiary designation at the time the contract was issued or as may have been
later changed will be treated as a contingent beneficiary unless otherwise
indicated.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
Assignment
You can assign the contract at any time during your lifetime. Cova will not be
bound by the assignment until it receives the written notice of the assignment.
Cova will not be liable for any payment or other action we take in accordance
with the contract before we receive notice of the assignment. An assignment may
be a taxable event.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract.
Financial Statements
The consolidated financial statements of Cova and the Separate Account have been
included in the Statement of Additional Information.
Table of Contents of the Statement of Additional Information
Company
Experts
Legal Opinions
Distribution
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
<TABLE>
<CAPTION>
APPENDIX A
Condensed Financial Information
Accumulation Unit Value History
The following schedule includes accumulation unit values for the periods
indicated. This data has been extracted from the Separate Account's Financial
Statements. This information should be read in conjunction with the Separate
Account's Financial Statements and related notes which are included in the
Statement of Additional Information.
Year or Year or Year or
Year or Period Period Period
Period Ended Ended Ended Ended
12/31/99 12/31/98 12/31/97 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds
Aggressive Equity Sub-Account
Beginning of Period $9.96 $10.00 * *
End of Period 10.42 9.96
Number of Accum. Units
Outstanding 907,258 536,278
- - ----------------------------------------------------------------------------------------------------------------------------------
Core Bond Sub-Account
Beginning of Period $10.59 $10.00 * *
End of Period 10.38 10.59
Number of Accum. Units
Outstanding 2,654,149 1,609,851
- - ----------------------------------------------------------------------------------------------------------------------------------
Multi-Style Equity Sub-Account
<S> <C>
Beginning of Period $12.69 $10.00 * *
End of Period 14.67 12.69
Number of Accum. Units
Outstanding 3,839,689 2,328,430
- - ----------------------------------------------------------------------------------------------------------------------------------
Non-U.S. Sub-Account
Beginning of Period $11.14 $10.00 * *
End of Period 14.65 11.14
Number of Accum. Units
Outstanding 1,566,787 925,792
- - ----------------------------------------------------------------------------------------------------------------------------------
Real Estate Securities Sub-Account
Beginning of Period $10.00 * * *
End of Period 9.39
Number of Accum. Units
Outstanding 67,264
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.23 $10.00
End of Period 11.53 11.11 10.67 10.23
Number of Accum. Units
Outstanding 3,709,173 1,473,737 311,051 34,964
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The accumulation unit values shown above for the beginning of the period for
the Multi-Style Equity, Aggressive Equity, Non-U.S., Core Bond Real Estate
Securities and Money Market sub-accounts reflect the dates these investment
portfolios were first offered for sale through the Separate Account (December
31, 1997 for the Multi-Style Equity, Aggressive Equity, Non-U.S. and Core Bond
sub-account, June 3, 1996 for the Money Market sub-account and _________, 1999,
for the Real Estate Securities sub-account.)
</FN>
</TABLE>
APPENDIX B
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
Note: The figures below present investment performance information for the
periods ended December 31, 1999. While these numbers represent the returns as of
that date, they do not represent performance information of the portfolios since
that date. Performance information for the periods after December 31, 1999 may
be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before December 31, 1999. As a
result, performance information is available for the accumulation unit values
investing in these portfolios.
o Column A presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of the portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
o Column B presents performance figures for the accumulation units which
reflect the insurance charges and the fees and expenses of the portfolio.
<TABLE>
<CAPTION>
Total Return for the periods ended 12/31/99:
- - ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and
portfolio expenses) portfolio expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date since since
Portfolio in Portfolio 1 yr inception 1 yr inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds
<S> <C> <C> <C> <C> <C> <C>
Aggressive Equity 12/31/97 0.00% -0.24% 4.61% 2.09%
Core Bond 12/31/97 -6.59% -0.45% -1.99% 1.88%
Multi-Stye Equity 12/31/97 10.93% 19.12% 15.54% 21.11%
Non-U.S. 12/31/97 26.87% 19.05% 31.50% 21.05%
Real Estate Securities 7/01/99 N/A -11.21% N/A -6.12%
General American
Capital Company
Money Market 6/3/96 -0.86% 2.78% 3.74% 4.05%
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Appendix - Performance Information (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
The portfolios of Russell Insurance Funds (except for Real Estate Securities
Fund) and the Money Market Fund of General American Capital Company have been
in existence for some time and have an investment performance history. In
order to show how the historical performance of the portfolios affects the
contract's accumulation unit values, the following performance was developed.
The information is based upon the historical experience of the portfolios and
is for the periods shown.
The chart below shows the investment performance of the portfolios and the
accumulation unit performance calculated by assuming that the contracts were
invested in the portfolios for the same periods.
o The performance figures in Column A reflect the fees and expenses paid by
each portfolio.
o Column B presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of each portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
o Column C presents performance figures for the accumulation units which
reflect the insurance charges and the fees and expenses of each portfolio.
Total Return for the periods ended 12/31/99:
-----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all (reflects insurance
Portfolio Performance charges and charges and
Column A portfolio expenses) portfolio expenses)
- - ----------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- - ----------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Equity 1/2 /97 6.08% N/A 13.14% 0.00% N/A 10.11% 4.61% N/A 11.74%
Core Bond 1/2 /97 -0.61% N/A 5.42% -6.59% N/A 2.39% -1.99% N/A 4.02%
Multi-Style Equity 1/2 /97 17.17% N/A 24.73% 10.93% N/A 21.70% 15.54% N/A 23.33%
Non-U.S. 1/2 /97 33.36% N/A 14.78% 26.87% N/A 11.75% 31.50% N/A 13.38%
Real Estate Securities 4/30/99 N/A N/A -7.26% N/A N/A -13.30% N/A N/A -8.20%
- ------------------------------------------------------------------------------------------------------------------------------------
General American
Capital Company
Money Market 10/1/87 5.20% 5.60% 5.35% -0.86% 4.10% 3.85% 3.74% 4.20% 3.95%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- - ------------------------------
- - ------------------------------
- - ------------------------------
Cova Financial Services Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
Please send me, at no charge, the Statement of Additional Information dated
May 1, 2000, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- - ------------------------------------------------------------------------------
Name
- - ------------------------------------------------------------------------------
Address
- - ------------------------------------------------------------------------------
City State Zip Code
CL-2093 (5/00) RUSS-MO
PART A - VERSION C
The Fixed
And Variable Annuity
issued by
COVA VARIABLE ANNUITY
ACCOUNT ONE
and
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Services Life Insurance Company (Cova).
The annuity contract has 52 investment choices - a fixed account which offers an
interest rate which is guaranteed by Cova, and 51 investment portfolios listed
below. You can put your money in the fixed account and/or any of these
investment portfolios (except as noted). CURRENTLY, IF YOU ARE NOT PARTICIPATING
IN AN ASSET ALLOCATION PROGRAM, YOU CAN ONLY INVEST IN 15 INVESTMENT PORTFOLIOS
AT ANY ONE TIME.
AIM Variable Insurance Funds:
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
Alliance Variable Products Series Fund, Inc.:
Managed by Alliance Capital Management L.P.
Premier Growth Portfolio (Class A)
Real Estate Investment Portfolio (Class A)
American Century Variable Portfolios, Inc.:
Managed by American Century Investment Management, Inc.
VP Income & Growth Fund
VP International Fund
VP Value Fund
Cova Series Trust:
Managed by J.P. Morgan Investment Management Inc.
International Equity Portfolio
Large Cap Stock Portfolio
Quality Bond Portfolio
Select Equity Portfolio
Small Cap Stock Portfolio
Managed by Lord, Abbett & Co.
Bond Debenture Portfolio
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
Dreyfus Stock Index Fund:
Managed by The Dreyfus Corporation
(Index Fund Manager: Mellon Equity Associates)
Dreyfus Variable Investment Fund:
Managed by The Dreyfus Corporation
Dreyfus VIF - Appreciation Portfolio (Sub-Investment Adviser: Fayez
Sarofim & Co.)
Dreyfus VIF - Disciplined Stock Portfolio
Franklin Templeton Variable Insurance Products Trust*, Class 1 Shares:
Managed by Franklin Advisers, Inc.
Franklin Small Cap Fund (the surviving fund of the merger
with Franklin Small Cap
Investments Fund)
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund, (the surviving fund of the
merger with Mutual Shares Investments
Fund)
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Securities Fund (formerly, Templeton
Developing Markets Fund)
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities Fund (formerly, Templeton
International Fund)
*Effective May 1, 2000, the portfolios of the Templeton Variable Products
Series Fund were merged into similar portfolios of Franklin Templeton
Variable Insurance Products Trust.
General American Capital Company:
Managed by Conning Asset Management Company
Money Market Fund
Goldman Sachs Variable Insurance Trust ("VIT"):
Managed by Goldman Sachs Asset Management,
a unit of the Investment Management Division of
Goldman, Sachs & Co.
Goldman Sachs VIT Growth and Income Fund
Goldman Sachs VIT Internet Tollkeeper Fund (available as of July
1, 2000)
Managed by Goldman Sachs
Asset Management International
Goldman Sachs VIT Global Income Fund
Goldman Sachs VIT International Equity Fund
INVESCO Variable Investment Funds, Inc.:
Managed by INVESCO Funds Group, Inc.
INVESCO VIF - Dynamics Fund
INVESCO VIF - High Yield Fund
Kemper Variable Series:
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities Portfolio
Kemper Small Cap Growth Portfolio
Kemper Small Cap Value Portfolio
Scudder Variable Life Investment Fund:
Managed by Scudder Kemper Investments, Inc.
International Portfolio
Liberty Variable Investment Trust:
Managed by Newport Fund Management Inc.
Newport Tiger Fund, Variable Series
MFS Variable Insurance Trust:
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Series
MFS Global Governments Series
MFS Growth With Income Series
MFS High Income Series
MFS Research Series
PIMCO Variable Insurance Trust:
Managed by Pacific Investment Management Company
PIMCO High Yield Bond Portfolio
PIMCO Low Duration Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
PIMCO Total Return Bond Portfolio
Putnam Variable Trust:
Managed by Putnam Investment Management, Inc.
Putnam VT Growth and Income Fund - Class IA Shares
Putnam VT International Growth Fund - Class IA Shares
Putnam VT International New
Opportunities Fund - Class IA Shares
Putnam VT New Value Fund - Class IA Shares
Putnam VT Vista Fund - Class IA Shares
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Cova Fixed and Variable
Annuity Contract.
To learn more about the Cova Fixed and Variable Annuity Contract, you can obtain
a copy of the Statement of Additional Information (SAI) dated May 1, 2000.
The SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of the prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding companies that file electronically with the SEC.
The Table of Contents of the SAI is on Page __ of this prospectus. For a free
copy of the SAI, call us at (800)523-1661 or write us at: One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
May 1, 2000
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS
SUMMARY
Fee Table
Examples
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Annuity Payments
Annuity Options
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Free Look
Accumulation Units
4. INVESTMENT OPTIONS
AIM Variable Insurance Funds
Alliance Variable Products Series Fund, Inc.
American Century Variable Portfolios, Inc.
Cova Series Trust
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund
Franklin Templeton Variable Insurance Products Trust
General American Capital Company
Goldman Sachs Variable Insurance Trust
INVESCO Variable Investment Funds, Inc.
Kemper Variable Series
Scudder Variable Life Investment Fund
Liberty Variable Investment Trust
MFS Variable Insurance Trust
PIMCO Variable Insurance Trust
Putnam Variable Trust
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Approved Asset Allocation Programs
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the Withdrawal Charge
Premium Taxes
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
Suspension of Payments or Transfers
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A
Condensed Financial Information
APPENDIX B
Participating Investment Portfolios
APPENDIX C
Performance Information
INDEX OF SPECIAL TERMS
Because of the complex nature of the contract, we have used certain words
or terms in this prospectus which may need an explanation. We have
identified the following as some of these words or terms. The page that is
indicated here is where we believe you will find the best explanation for
the word or term. These words and terms are in italics on the indicated
page.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Date
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Fixed Account
Income Phase
Investment Portfolios
Joint Owner
Non-Qualified
Owner
Purchase Payment
Qualified
Tax Deferral
SUMMARY
The sections in this Summary correspond to sections in this prospectus which
discuss the topics in more detail.
1. THE ANNUITY CONTRACT:
The fixed and variable annuity contract offered by Cova is a contract between
you, the owner, and Cova, an insurance company. The contract provides a means
for investing on a tax-deferred basis. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit
and guaranteed income options.
This contract offers 51 investment portfolios. These portfolios are designed to
offer a potentially better return than the fixed account. However, this is NOT
guaranteed. You can also lose your money.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Cova. While your money is in the fixed account, the interest your money
will earn as well as your principal is guaranteed by Cova.
You can put money in up to 15 of the investment portfolios and the fixed
account. (If you are participating in an asset allocation program, this limit
may not apply.) You can transfer between accounts up to 12 times a year without
charge or tax implications.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine, in part, the amount of income payments during
the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE):
If you want to receive regular income from your annuity, you can choose an
annuity option. Once you begin receiving regular payments, you cannot change
your payment plan. During the income phase, you have the same investment choices
you had during the accumulation phase. You can choose to have payments come from
the fixed account, the investment portfolios or both. If you choose to have any
part of your payments come from the investment portfolios, the dollar amount of
your payments may go up or down.
3. HOW TO PURCHASE THE CONTRACT:
You can buy this contract with $5,000 or more under most circumstances. You can
add $500 or more any time you like during the accumulation phase. Your
registered representative can help you fill out the proper forms.
4. INVESTMENT OPTIONS:
You can put your money in the investment portfolios which are briefly described
in Appendix B and more fully described in the prospectuses for the funds.
Currently, if you are not participating in an asset allocation program, you can
only invest in 15 investment portfolios at any one time.
Depending upon market conditions and the performance of the portfolio(s) you
select, you can make or lose money in any of these portfolios.
5. EXPENSES:
The contract has insurance features and investment features, and there are costs
related to each.
* Each year Cova deducts a $30 contract maintenance charge from your
contract. During the accumulation phase, Cova currently waives this charge
if the value of your contract is at least $50,000.
* Cova also deducts for its insurance charges which total 1.40% of the
average daily value of your contract allocated to the investment
portfolios.
* If you take your money out, Cova may assess a withdrawal charge which is
equal to 5% of the purchase payment you withdraw. After Cova has had a
purchase payment for 5 years, there is no charge by Cova for a withdrawal
of that purchase payment.
* When you begin receiving regular income payments from your annuity, Cova
will assess a state premium tax charge, if applicable, which ranges from 0%
- 4% depending upon the state.
* The first 12 transfers in a year are free. After that, a transfer fee of
$25 or 2% of the amount transferred (whichever is less) is assessed.
* There are also investment charges which currently range from .205% to ____%
of the average daily value of the investment portfolio depending upon the
investment portfolio.
6. TAXES:
Your earnings are not taxed until you take them out. If you take money out
during the accumulation phase, earnings come out first and are taxed as income.
If you are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the earnings. Payments during the income phase are
considered partly a return of your original investment. That part of each
payment is not taxable as income.
7. ACCESS TO YOUR MONEY:
You can take money out at any time during the accumulation phase. After the
first year, you can take up to 10% of your total purchase payments each year
without charge from Cova. Withdrawals of purchase payments in excess of that may
be charged a withdrawal charge, depending on how long your money has been in the
contract. However, Cova will never assess a withdrawal charge on earnings you
withdraw. Earnings are defined as the value in your contract minus the remaining
purchase payments in your contract. Of course, you may also have to pay income
tax and a tax penalty on any money you take out.
8. DEATH BENEFIT:
If you die before moving to the income phase, the person you have chosen as your
beneficiary will receive a death benefit.
9. OTHER INFORMATION:
Free Look. If you cancel the contract within 10 days after receiving it (or
whatever period is required in your state), we will send your money back without
assessing a withdrawal charge. You will receive whatever your contract is worth
on the day we receive your request. This may be more or less than your original
payment. If we're required by law to return your original payment, we reserve
the right to put your money in the Money Market Fund during the free look
period.
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
Who should purchase the contract? The contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state income tax brackets. You should not buy this contract if
you are looking for a short-term investment or if you cannot take the risk of
getting back less money than you put in.
Additional Features. This contract has additional features you might be
interested in. These include:
* You can arrange to have money automatically sent to you each month while
your contract is still in the accumulation phase. Of course, you'll have to
pay taxes on money you receive. We call this feature the Systematic
Withdrawal Program.
* You can arrange to have a regular amount of money automatically invested in
investment portfolios each month, theoretically giving you a lower average
cost per unit over time than a single one time purchase. We call this
feature Dollar Cost Averaging.
* You can arrange to automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
* Under certain circumstances, Cova will give you your money without a
withdrawal charge if you need it while you're in a nursing home. We call
this feature the Nursing Home Waiver.
These features are not available in all states and may not be suitable for your
particular situation.
10. INQUIRIES:
If you need more information, please contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE
The purpose of the Fee Table is to show you the various expenses you will incur
directly or indirectly with the contract. The Fee Table reflects expenses of the
Separate Account as well as of the investment portfolios. Expenses of the
investment portfolios are not fixed or specified under the terms of the contract
and actual expenses may vary.
Owner Transaction Expenses
Withdrawal Charge (see Note 1 below)
5% of purchase payment withdrawn
Transfer Fee (see Note 2 below)
No charge for first 12 transfers in a contract year; thereafter, the fee is
$25 per transfer or, if less, 2% of the amount transferred.
Contract Maintenance Charge (see Note 3 below)
$30 per contract per year
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
----
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES 1.40%
<TABLE>
<CAPTION>
Investment Portfolio Expenses
(as a percentage of the average daily net assets of an investment portfolio)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund .62% .11% .73%
AIM V.I. International Equity Fund .75% .22% .97%
AIM V.I. Value Fund .61% .15% .76%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Expenses (after Total Annual Portfolio
expense reimbursement Expenses (after expense
Management for Real Estate reimbursement for Real
Fees Investment Portfolio) Estate Investment Portfolio)
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth Portfolio (Class A) 1.00% .05% 1.05%
Real Estate Investment Portfolio (Class A)* .49% .46% .95%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The expenses shown with respect to the Real Estate Investment Portfolio are
net of voluntary reimbursements. Expenses have been capped at .95% annually
and the adviser to the Fund intends to continue such reimbursements for the
foreseeable future. For the year ended December 31, 1999, the expenses
for the Real Estate Investment Portfolio, before reimbursement, were:
.90% management fees and .82% for other expenses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Investment Portfolio Expenses
(as a percentage of the average daily net assets of an investment portfolio)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
Managed by American Century Investment Management, Inc.
<S> <C> <C> <C>
VP Income & Growth Fund .70% .0% .70%
VP International Fund 1.34% .0% 1.34%
VP Value Fund 1.00% .0% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees certain Portfolios)(1) certain Portfolios)(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by J.P. Morgan Investment Management Inc.
International Equity Portfolio .79% .31% 1.10%
Large Cap Stock Portfolio .65% .10% .75%
Quality Bond Portfolio .54% .10% .64%
Select Equity Portfolio .67% .10% .77%
Small Cap Stock Portfolio .85% .19% 1.04%
Managed by Lord, Abbett &Co.
Bond Debenture Portfolio .75% .10% .85%
Developing Growth Portfolio .90% .30% 1.20%
Large Cap Research Portfolio 1.00% .30% 1.30%
Lord Abbett Growth and Income Portfolio(2) .65% .05% .70%
Mid-Cap Value Portfolio 1.00% .30% 1.30%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Cova reimburses the investment portfolios, except the Select Equity,
Small Cap Stock and International Equity Portfolios, for all operating
expenses (exclusive of the management fees) in excess of approximately .30%
for the Mid-Cap Value, Large Cap Research and Developing Growth Portfolios
and in excess of approximately .10% for the other investment portfolios.
Prior to May 1, 1999, Cova had reimbursed expenses in excess of approximately
.10% with respect to the Select Equity, Small Cap Stock, International Equity,
Mid-Cap Value, Large Cap Research and Developing Growth Portfolios. Therefore,
the amounts shown above under "Other Expenses" have been restated to reflect
the estimated expenses for the Select Equity, Small Cap Stock and International
Equity Portfolios for the year ending December 31, 2000. Absent these expense
reimbursement arrangements, the total annual portfolio expenses for the year
ended December 31, 1999 were: 1.09% for the Small Cap Stock Portfolio; 1.15% for
the International Equity Portfolio; .71% for the Quality Bond Portfolio; .76% for
the Large Cap Stock Portfolio; .86% for the Bond Debenture Portfolio; 1.41% for
the Mid-Cap Value Portfolio; 1.38% for the Large Cap Research Portfolio; and 1.34%
for the Developing Growth Portfolio.
(2) The Portfolio commenced investment operations on January 8, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund
Managed by The Dreyfus Corporation
<S> <C> <C> <C>
.25% .01% .26%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Managed by The Dreyfus Corporation
Dreyfus VIF - Appreciation Portfolio .75% .03% .78%
Dreyfus VIF - Disciplined Stock Portfolio .75% .06% .81%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust, Class 1 Shares
Managed by Franklin Advisers, Inc.
<S> <C> <C> <C> <C>
Franklin Small Cap Fund* .55% .27% .82%
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund** .60% .19% .79%
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets
Securities Fund*** 1.25% .31% 1.56%
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities Fund**** .69% .19% .88%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* On 2/8/00, a merger and reorganization was approved that combined the
assets of the fund with a similar fund of Templeton Variable Products Series
Fund, effective 5/1/00. On 2/8/00, fund shareholders approved new management
fees, which apply to the combined fund effective 5/1/00. The table shows
restated total expenses based on the new fees and assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.55%, Other Expenses
0.27%, and Total Fund Operating Expenses 0.82%.
** On 2/8/00, a merger and reorganization was approved that combined the
fund with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of 12/31/99,
and not the assets of the combined fund. However, if the table reflected
combined assets, the fund's expenses after 5/1/00 would be estimated as:
Management Fees 0.60%, Other Expenses 0.19%, and Total Fund Operating Expenses
0.79%.
*** On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton Developing Markets Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees, which
apply to the combined fund effective 5/1/00. The table shows restated total
expenses based on the new fees and the assets of the fund as of 12/31/99, and
not the assets of the combined fund. However, if the table reflected both the
new fees and the combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 1.25%, Other Expenses 0.29%, and Total Fund
Operating Expenses 1.54%.
**** On 2/8/00, shareholders approved a merger and reorganization that
combined the fund with the Templeton International Equity Fund, effective
5/1/00. The shareholders of that fund had approved new management fees,
which apply to the combined fund effective 5/1/00. The table shows restated
total expenses based on the new fees and the assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.65%, Other Expenses
0.20%, and Total Fund Operating Expenses 0.85%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market Fund .125% .08% .205%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual
Other Expenses Portfolio Expenses
Management (after expense (after expense
Fees reimbursement)* reimbursement)*
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
<S> <C> <C> <C>
Goldman Sachs VIT Growth and Income Fund .75% .25% 1.00%
Goldman Sachs VIT Internet Tollkeeper Fund 1.00% .25% 1.25%
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Fund .90% .25% 1.15%
Goldman Sachs VIT International Equity Fund 1.00% .35% 1.35%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The investment advisers to the Goldman Sachs VIT Growth and Income, Internet
Tollkeeper, International Equity and Global Income Funds have voluntarily agreed
to reduce or limit certain "Other Expenses" of such Funds (excluding management
fees, taxes, interest, brokerage fees, litigation, indemnification and other
extraordinary expenses) to the extent such expenses exceed 0.25%, 0.25%, 0.35%
and 0.25% per annum of such Funds' average daily net assets, respectively. The
expenses shown include this reimbursement. If not included, the "Other Expenses"
and "Total Annual Portfolio Expenses" for the Goldman Sachs Growth and Income,
Internet Tollkeeper, International Equity and Global Income Funds would be .47%
and 1.22%, ___% and ___% (estimated), .77% and 1.77% and 1.78% and 2.68%,
respectively. The reductions or limitations may be discontinued or modified by
the investment advisers in their discretion at any time. The Fund's expenses
shown in the fee table are based on estimated expenses for the fiscal year
ending December 31, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.*
Managed by INVESCO Funds Group, Inc..
<S> <C> <C> <C>
INVESCO VIF - Dynamics Fund .75% .51% 1.26%
INVESCO VIF - High Yield Fund .60% .47% 1.07%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Certain expenses of the Fund were absorbed voluntarily by INVESCO in order to
ensure that "Other Expenses" for the Fund did not exceed 1.05% of the High
Yield Fund's average net assets and 1.15% of the Dynamics Fund's average net
assets pursuant to an agreement between the Fund and INVESCO. This commitment
may be changed at any time following consultation with the board of directors.
Absent the expense absorption, the Fund's "Other Expenses" and "Total Annual
Portfolio Expenses" for the fiscal year ended December 31, 1999 were 0.48% and
1.08% respectively of the High Yield Fund's average net assets and 1.53% and
2.28% respectively of the Dynamics Fund's average net assets.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees Small Cap Value Portfolio)Small Cap Value Portfolio)
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
<S> <C> <C> <C>
Kemper Government Securities Portfolio .55% .08% .63%
Kemper Small Cap Growth Portfolio .65% .06% .71%
Kemper Small Cap Value Portfolio .75% .09%* .84%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Pursuant to its agreement with Kemper Variable Series, the investment
manager and the accounting agent have agreed, for the one year period
commencing on May 1, 2000, to limit their respective fees and to reimburse
other operating expenses, in a manner communicated to the Board of the
Fund, to the extent necessary to limit total operating expenses of the
Kemper Small Cap Value Portfolio to .84%. The amounts set forth in the
table above reflect actual expenses for the past fiscal year, which were
at or lower than these expense limits, after the benefit of any custodial
credits.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund
Managed by Scudder Kemper Investments, Inc.
<S> <C> <C> <C>
International Portfolio .853% .18% 1.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual
Management Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management Inc.
Newport Tiger Fund, Variable Series .90% .31% 1.21%
- ------------------------------------------------------------------------------------------------------------------------------------
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement reimbursement
Fees for certain Series) for certain Series)
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust (1)
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Series .75% .09% .84%
MFS Global Governments Series (2) .75% .16% .91%
MFS Growth With Income Series .75% .13% .88%
MFS High Income Series (2) .75% .16% .91%
MFS Research Series .75% .11% .86%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses. The expenses shown
above do not take into account these expense reductions, and are therefore
higher than the actual expenses of the series.
(2) MFS has contractually agreed to bear expenses for these series, subject
to reimbursement by the series, such that the series' "Other Expenses"
do not exceed 0.15% of the average daily net assets of the series during
the current fiscal year. Absent the expense reimbursement, the Total Annual
Portfolio Expenses for the year ended December 31, 1999, would have been
1.05% for the MFS Global Governments Series and .97% with respect to
the High Income Series. The payments made by MFS on behalf of the series
under this arrangement are subject to reimbursement by the series to MFS,
which will be accomplished by the payment of an expense reimbursement fee
by the series to MFS computed and paid monthly at a percentage of the
series' average daily net assets for its then current fiscal year, with a
limitation that immediately after such payment, the series' "Other
Expenses" will not exceed the percentage set forth above for this series. The
obligation of MFS to bear the series' "Other Expenses" pursuant to this
arrangement, and the series' obligation to pay the reimbursement fee to
MFS, terminates on the earlier of the date on which payments made by this
series equal the prior payment of such reimbursable expenses by MFS or
December 31, 2004. MFS may, in its discretion, terminate this arrangement
at an earlier date provided that the arrangement will continue for this
series until at least May 1, 2001, unless terminated with the consent of the
board of trustees which oversees this series.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Management Service Total Annual
Fees Fees Other Expenses* Portfolio Expenses**
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Managed by Pacific Investment Management Company
<S> <C> <C> <C>
PIMCO High Yield Bond Portfolio .25% .15% .35% .75%
PIMCO Low Duration Bond Portfolio .25% .15% .25% .65%
PIMCO StocksPLUS Growth and Income Portfolio .40% .15% .10% .65%
PIMCO Total Return Bond Portfolio .25% .15% .25% .65%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*"Other Expenses" reflects a 0.35% administrative fee for High Yield Bond, a 0.25% administrative fee
for Low Duration and Total Return Bond, and a 0.10% administrative fee for StocksPLUS Growth and Income
Portfolio.
**PIMCO has contractually agreed to reduce total annual Portfolio operating expenses for the
Administrative Class shares to the extent they would exceed, due to the payment of organizational
expenses and Trustees' fees, 0.75%, 0.65%, 0.65% and 0.65% of the High Yield Bond, Low Duration,
StocksPLUS Growth and Income and Total Return Bond Portfolios, respectively, of average daily net
assets. Without such reductions, the Total Annual Portfolio Expenses would have been .78% and
.69% for the Low Duration Bond and Total Return Bond Portfolios, respectively. Management Fees,
Service Fees and Other Expenses are restated as of April 1, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE (continued)
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees one Portfolio) one Portfolio)
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
<S> <C> <C> <C>
Putnam VT Growth and Income Fund - Class IA Shares .46% .04% .50%
Putnam VT International Growth Fund - Class IA Shares .80% .22% 1.02%
Putnam VT International New Opportunities Fund
- Class IA Shares 1.08% .33% 1.41%
Putnam VT New Value Fund - Class IA Shares .70% .10% .80%
Putnam VT Vista Fund - Class IA Shares .65% .10% .75%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Management
Fees Other Expenses Portfolio Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
</TABLE>
Examples
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. For purposes
of the examples, the assumed average contract size is $30,000.
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets: (a) if you surrender the contract at the end of each time period;
(b) if you do not surrender the contract or if you apply the contract
value to an annuity option.
Time Periods
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation (a) $72.59 (a) $114.54 (a) $163.94 (a) $254.10
(b) $22.59 (b) $ 69.54 (b) $118.94 (b) $254.10
AIM V.I. International Equity (a) $75.00 (a) $121.77 (a) $176.00 (a) $278.22
(b) $25.00 (b) $ 76.77 (b) $131.00 (b) $278.22
AIM V.I. Value (a) $72.90 (a) $115.45 (a) $165.46 (a) $257.15
(b) $22.90 (b) $ 70.45 (b) $120.46 (b) $257.15
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth (Class A) (a) $75.80 (a) $124.17 (a) $179.99 (a) $286.12
(b) $25.80 (b) $ 79.17 (b) $134.99 (b) $286.12
Real Estate Investment (Class A) (a) $74.80 (a) $121.17 (a) $175.00 (a) $276.23
(b) $24.80 (b) $ 76.17 (b) $130.00 (b) $276.23
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
Managed by American Century Investment Management, Inc.
VP Income & Growth (a) $72.29 (a) $113.63
(b) $22.29 (b) $ 68.63
VP International (a) $78.69 (a) $132.81
(b) $28.69 (b) $ 87.81
VP Value (a) $75.30 (a) $122.67
(b) $25.30 (b) $ 77.67
- ------------------------------------------------------------------------------------------------------------------------------------
Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by J.P. Morgan Investment Management Inc.
International Equity (a) $78.79 (a) $133.11 (a) $194.80 (a) $315.14
(b) $28.79 (b) $ 88.11 (b) $149.80 (b) $315.14
Large Cap Stock (a) $72.80 (a) $115.15 (a) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (b) $119.95 (b) $256.13
Quality Bond (a) $71.69 (a) $111.82 (a) $159.38 (a) $244.89
(b) $21.69 (b) $ 66.82 (b) $114.38 (b) $244.89
Select Equity (a) $73.00 (a) $115.75 (a) $165.96 (a) $258.16
(b) $23.00 (b) $ 70.75 (b) $120.96 (b) $258.16
Small Cap Stock (a) $75.70 (a) $123.87 (a) $179.49 (a) $285.14
(b) $25.70 (b) $ 78.87 (b) $134.49 (b) $285.14
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by Lord, Abbett & Co.
Bond Debenture (a) $73.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
Developing Growth (a) $77.30 (a) $128.65 (a) $ 87.42 (a) $300.75
(b) $27.30 (b) $ 83.65 (b) $142.42 (b) $300.75
Large Cap Research (a) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
Lord Abbett Growth and Income (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
Mid-Cap Value (a) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund
Managed by The Dreyfus Corporation
(Index Fund Manager: Mellon Equity Associates (a) $67.87 (a) $100.23 (a) $139.87 (a) $205.00
(b) $17.87 (b) $ 55.23 (b) $ 94.87 (b) $205.00
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Managed by The Dreyfus Corporation
Dreyfus VIF - Appreciation (a) $73.10 (a) $116.05 (a) $166.47 (a) $259.18
(b) $23.10 (b) $ 71.05 (b) $121.47 (b) $259.18
Dreyfus VIF - Disciplined Stock (a) $73.40 (a) $116.96 (a) $167.98 (a) $262.21
(b) $23.40 (b) $ 71.96 (b) $122.98 (b) $262.21
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust, Class 1 Shares
Managed by Franklin Advisers, Inc.
Franklin Small Cap (a) $73.50 (a) $117.26 (a) $168.48 (a) $263.22
(b) $23.50 (b) $ 72.26 (b) $123.48 (b) $263.22
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities (a) $73.20 (a) $116.35 (a) $166.97 (a) $260.19
(b) $23.20 (b) $ 71.35 (b) $121.97 (b) $260.19
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets
Securities (a) $80.89 (a) $139.31 (a) $205.03 (a) $334.89
(b) $30.89 (b) $ 94.31 (b) $160.03 (b) $334.89
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities (a) $74.10 (a) $119.07 (a) $171.50 (a) $269.25
(b) $24.10 (b) $ 74.07 (b) $126.50 (b) $269.25
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market (a) $67.31 (a) $98.54 (a) $137.02 (a) $199.08
(b) $17.31 (b) $53.54 (b) $ 92.02 (b) $199.08
- ------------------------------------------------------------------------------------------------------------------------------------
Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs VIT Growth and Income Fund (a) $75.30 (a) $122.67 (a) $177.50 (a) $281.19
(b) $25.30 (b) $ 77.67 (b) $132.50 (b) $281.19
Goldman Sachs VIT Internet Tollkeeper Fund (a) $77.80 (a) $130.14
(b) $27.80 (b) $ 85.14
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Fund (a) $76.80 (a) $127.16 (a) $184.95 (a) $295.90
(b) $26.80 (b) $ 82.16 (b) $139.95 (b) $295.90
Goldman Sachs VIT International Equity Fund (a) $78.79 (a) $133.11 (a) $194.80 (a) $315.14
(b) $28.79 (b) $ 88.11 (b) $149.80 (b) $315.14
- - ----------------------------------------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.
Managed by INVESCO Funds Group, Inc.
INVESCO VIF - Dynamics (a) $77.90 (a) $130.43 (a) $190.38 (a) $306.53
(b) $27.90 (b) $ 85.43 (b) $145.38 (b) $306.53
INVESCO VIF - High Yield (a) $76.00 (a) $124.77 (a) $180.99 (a) $288.08
(b) $26.00 (b) $ 79.55 (b) $135.99 (b) $288.08
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities
Kemper Small Cap Growth (a) $72.39 (a) $113.94 (a) $162.93 (a) $252.06
(b) $22.39 (b) $ 68.94 (b) $117.93 (b) $252.06
Kemper Small Cap Value (a) $73.70 (a) $117.86 (a) $169.49 (a) $265.23
(b) $23.70 (b) $ 72.86 (b) $124.49 (b) $265.23
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund
Managed by Scudder Kemper Investments, Inc.
International (a) $75.63 (a) $123.66
(b) $25.63 (b) $ 78.66
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management Inc.
Newport Tiger Fund, Variable Series (a) $77.40 (a) $128.96 (a) $187.92 (a) $301.71
(b) $27.40 (b) $ 83.94 (b) $142.92 (b) $301.71
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth (a) $73.70 (a) $117.86 (a) $169.49 (a) $265.23
(b) $23.70 (b) $ 72.86 (b) $124.49 (b) $265.23
MFS Global Governments (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
MFS Growth With Income (a) $74.10 (a) $119.07 (a) $171.50 (a) $269.25
(b) $24.10 (b) $ 74.07 (b) $126.50 (b) $269.25
MFS High Income (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
MFS Research (a) $73.90 (a) $118.46 (a) $170.49 (a) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
- ------------------------------------------------------------------------------------------------------------------------------------
Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Managed by Pacific Investment Management Company
PIMCO High Yield Bond (a) $72.80 (a) $115.15
(b) $22.80 (b) $ 70.15
PIMCO Low Duration Bond (a) $71.19 (a) $112.12
(b) $21.79 (b) $ 67.12
PIMCO StocksPLUS Growth and Income (a) $71.19 (a) $112.12
(b) $21.79 (b) $ 67.12
PIMCO Total Return Bond (a) $71.19 (a) $112.12
(b) $21.79 (b) $ 67.12
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
Putnam VT Growth and Income - Class IA Shares (a) $70.29 (a) $107.56 (a) $152.24 (a) $230.39
(b) $20.29 (b) $ 62.56 (b) $107.24 (b) $230.39
Putnam VT International Growth - Class IA Shares (a) $75.50 (a) $123.27 (a) $178.50 (a) $283.17
(b) $25.50 (b) $ 78.27 (b) $133.50 (b) $283.17
Putnam VT International New Opportunities
- Class IA Shares (a) $79.39 (a) $134.88 (a) $197.73 (a) $320.83
(b) $29.39 (b) $ 89.88 (b) $152.73 (b) $320.83
Putnam VT New Value - Class IA Shares (a) $73.30 (a) $116.65 (a) $167.47 (a) $261.20
(b) $23.30 (b) $ 71.65 (b) $122.47 (b) $261.20
Putnam VT Vista - Class IA Shares (a) $72.80 (a) $115.15 (a) $164.95 (a) $256.13
(b) $22.80 (b) $ 70.15 (b) $119.95 (b) $256.13
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Explanation of Fee Table
1. The withdrawal charge is 5% of the purchase payments you withdraw. After
Cova has had a purchase payment for 5 years, there is no charge by Cova for
a withdrawal of that purchase payment. You may also have to pay income tax
and a tax penalty on any money you take out. After the first year, you can
take up to 10% of your total purchase payments each year without a charge
from Cova.
2. Cova will not charge you the transfer fee even if there are more than 12
transfers in a year if the transfer is for the Dollar Cost Averaging,
Automatic Rebalancing or Approved Asset Allocation Programs.
3. During the accumulation phase, Cova will not charge the contract
maintenance charge if the value of your contract is $50,000 or more,
although, if you make a complete withdrawal, Cova will charge the contract
maintenance charge.
4. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
There is an accumulation unit value history (Condensed Financial Information)
contained in Appendix A.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
Cova.
An annuity is a contract between you, the owner, and an insurance company (in
this case Cova), where the insurance company promises to pay an income to you,
in the form of annuity payments, beginning on a designated date that is at least
30 days in the future. Until you decide to begin receiving annuity payments,
your annuity is in the accumulation phase. Once you begin receiving annuity
payments, your contract switches to the income phase.
The contract benefits from tax deferral. Tax deferral means that you are not
taxed on earnings or appreciation on the assets in your contract until you take
money out of your contract.
The contract is called a variable annuity because you can choose among the
investment portfolios and, depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends, in part, upon the investment performance of the
investment portfolios you select for the income phase. The contract also
contains a fixed account. The fixed account offers an interest rate that is
guaranteed by Cova. Cova guarantees that the interest rate credited to the fixed
account will not be less than 3% per year. If you select the fixed account, your
money will be placed with the other general assets of Cova. If you select the
fixed account, the amount of money you are able to accumulate in your contract
during the accumulation phase depends upon the total interest credited to your
contract. The amount of the annuity payments you receive during the income phase
from the fixed account portion of the contract will remain level for the entire
income phase.
As owner of the contract, you exercise all interest and rights under the
contract. You can change the owner at any time by notifying Cova in writing. You
and your spouse can be named joint owners. We have described more information on
this under "Other Information."
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Date
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month.
We ask you to choose your annuity date when you purchase the contract. You can
change it at any time before the annuity date with 30 days notice to us. Your
annuity date cannot be any earlier than one month after you buy the contract.
Annuity Payments
You will receive annuity payments during the income phase. In general, annuity
payments must begin by the annuitant's 85th birthday or 10 years from the date
the contract was issued, whichever is later (this requirement may differ
slightly for special programs). The annuitant is the person whose life we look
to when we make annuity payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the:
* fixed account,
* the investment portfolio(s), or
* a combination of both.
If you don't tell us otherwise, your annuity payments will be based on the
investment allocations that were in place on the annuity date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things:
1) the value of your contract in the investment portfolio(s) on the annuity
date,
2) the 3% assumed investment rate used in the annuity table for the contract,
and
3) the performance of the investment portfolios you selected.
If the actual performance exceeds the 3% assumed investment rate, your annuity
payments will increase. Similarly, if the actual investment rate is less than
3%, your annuity payments will decrease.
Annuity payments are made monthly unless you have less than $5,000 to apply
toward a payment ($2,000 if the contract is issued in Massachusetts or Texas).
In that case, Cova may provide your annuity payment in a single lump sum.
Likewise, if your annuity payments would be less than $100 a month ($20 in
Texas), Cova has the right to change the frequency of payments so that your
annuity payments are at least $100 ($20 in Texas).
Annuity Options
You can choose among income plans. We call those annuity options. We ask you to
choose an annuity option when you purchase the contract. You can change it at
any time before the annuity date with 30 days notice to us. If you do not choose
an annuity option at the time you purchase the contract, we will assume that you
selected Option 2 which provides a life annuity with 10 years of guaranteed
payments.
You can choose one of the following annuity options or any other annuity option
acceptable to Cova. After annuity payments begin, you cannot change the annuity
option.
Option 1. Life Annuity. Under this option, we will make an annuity payment each
month so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
Option 2. Life Annuity With 5, 10 or 20 Years Guaranteed. Under this option, we
will make an annuity payment each month so long as the annuitant is alive.
However, if, when the annuitant dies, we have made annuity payments for less
than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us for
a single lump sum.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
annuity payments each month so long as the annuitant and a second person are
both alive. When either of these people dies, we will continue to make annuity
payments, so long as the survivor continues to live. The amount of the annuity
payments we will make to the survivor can be equal to 100%, 662/3 % or 50% of
the amount that we would have paid if both were alive.
3. PURCHASE
Purchase Payments
A purchase payment is the money you give us to invest in the contract. The
minimum we will accept is $5,000 when the contract is purchased as a
non-qualified contract. If you are purchasing the contract as part of an IRA
(Individual Retirement Annuity), 401(k) or other qualified plan, the minimum we
will accept is $2,000. The maximum we accept is $1 million without our prior
approval. You can make additional purchase payments of $500 or more to either
type of contract.
Allocation of Purchase Payments
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have selected.
If you make additional purchase payments, we will allocate them in the same way
as your first purchase payment unless you tell us otherwise.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit these
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the contract within this time period, Cova will not assess a withdrawal charge.
You will receive back whatever your contract is worth on the day we receive your
request. In certain states, or if you have purchased the contract as an IRA, we
may be required to give you back your purchase payment if you decide to cancel
your contract within 10 days after receiving it (or whatever period is required
in your state). If that is the case, we reserve the right to put your purchase
payment in the Money Market Fund for 15 days before we allocate your first
purchase payment to the investment portfolio(s) you have selected. (In some
states, the period may be longer.) In such case, we will refund the greater of
purchase payments (less withdrawals) or contract value. Currently, Cova directly
allocates your purchase payment to the investment portfolios and/or fixed
account you select.
Accumulation Units
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
1. determining the total amount of money invested in the particular investment
portfolio;
2. subtracting from that amount any insurance charges and any other charges
such as taxes we have deducted; and
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing
the amount of the purchase payment allocated to an investment portfolio by
the value of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
Example:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Quality Bond Portfolio. When the
New York Stock Exchange closes on that Monday, we determine that the value
of an accumulation unit for the Quality Bond Portfolio is $13.90. We then
divide $5,000 by $13.90 and credit your contract on Monday night with
359.71 accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The contract offers 51 investment portfolios which are listed below. Currently,
if you are not participating in an asset allocation program, you can only invest
in 15 investment portfolios at any one time. Additional investment portfolios
may be available in the future.
You should read the prospectuses for these funds carefully. Copies of these
prospectuses will be sent to you with your contract. Certain portfolios
contained in the fund prospectuses may not be available with your contract.
(See Appendix B which contains a summary of investment objectives and
strategies for each investment portfolio.)
The investment objectives and policies of certain of the investment
portfolios are similar to the investment objectives and policies of other
mutual funds that certain of the investment advisers manage. Although the
objectives and policies may be similar, the investment results of the investment
portfolios may be higher or lower than the results of such other mutual funds.
The investment advisers cannot guarantee, and make no representation, that the
investment results of similar funds will be comparable even though the funds
have the same investment advisers.
A fund's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a fund with a small asset base. A
fund may not experience similar performance as its assets grow.
Shares of the investment portfolios may be offered in connection with certain
variable annuity contracts and variable life insurance policies of various life
insurance companies which may or may not be affiliated with Cova. Certain
investment portfolios may also be sold directly to qualified plans. The funds
believe that offering their shares in this manner will not be disadvantageous to
you.
Cova may enter into certain arrangements under which it is reimbursed by the
investment portfolios' advisers, distributors and/or affiliates for the
administrative services which it provides to the portfolios.
AIM VARIABLE INSURANCE FUNDS
AIM Variable Insurance Funds is a mutual fund with multiple portfolios.
AIM Advisors, Inc. is the investment adviser to each portfolio. The following
portfolios are available under the contract:
AIM V.I. Capital Appreciation Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Alliance Variable Products Series Fund, Inc. is a mutual fund with multiple
portfolios. Alliance Capital Management L.P. is the investment adviser to each
portfolio. The following portfolios are available under the contract:
Premier Growth Portfolio (Class A)
Real Estate Investment Portfolio (Class A)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Investment Management, Inc. is the investment adviser to each
portfolio. The following portfolios are available under the contract:
VP Income & Growth Fund
VP International Fund
VP Value Fund
COVA SERIES TRUST
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory), which is an affiliate of Cova. Cova Series Trust is a mutual fund
with multiple portfolios. Cova Advisory has engaged sub-advisers to provide
investment advice for the individual investment portfolios. The following
portfolios are available under the contract:
J.P. Morgan Investment Management Inc. is the sub-adviser to the following
portfolios:
International Equity Portfolio
Large Cap Stock Portfolio
Quality Bond Portfolio
Select Equity Portfolio
Small Cap Stock Portfolio
Lord, Abbett & Co. is the sub-adviser to the following portfolios:
Bond Debenture Portfolio
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
DREYFUS STOCK INDEX FUND
The Dreyfus Corporation serves as the Fund's manager. Dreyfus has hired its
affiliate, Mellon Equity Associates, to serve as the Fund's index fund manager
and provide day-to-day management of the Fund's investments.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund is a mutual fund with multiple portfolios. The
Dreyfus Corporation serves as the investment adviser. Fayez Sarofim & Co. serves
as sub-investment adviser for the Appreciation Portfolio. The following
portfolios are available under the contract:
Dreyfus VIF - Appreciation Portfolio
Dreyfus VIF - Disciplined Stock Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Templeton Variable Insurance Products Trust is a mutual fund with
multiple portfolios. Effective May 1, 2000, the portfolios of Templeton Variable
Products Series Fund were merged into similar portfolios of Franklin Templeton
Variable Insurance Products Trust. Each portfolio has two classes of shares:
Class 1 and Class 2. The portfolios available in connection with your contract
are Class 1 shares. Franklin Advisers, Inc. is the investment adviser to the
Franklin Small Cap Fund, Templeton Asset Management Ltd. is the investment
adviser for the Templeton Developing Markets Securities Fund, Templeton
Investment Counsel, Inc. is the investment adviser for the Templeton
International Securities Fund and Franklin Mutual Advisers, LLC is the
investment adviser for the Mutual Shares Securities Fund. The following
portfolios are available under the contract:
Franklin Small Cap Fund (the surviving fund of the merger with Franklin
Small Cap Investments Fund)
Mutual Shares Securities Fund (the surviving fund of the merger with Mutual
Shares Investments Fund)
Templeton Developing Markets Securities Fund (formerly, Templeton
Developing Markets Fund)
Templeton International Securities Fund (formerly, Templeton International
Fund)
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
Money Market Fund
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Variable Insurance Trust is a mutual fund with multiple
portfolios. Goldman Sachs Asset Management is the investment adviser for the
Goldman Sachs VIT Growth and Income Fund and the Goldman Sachs VIT Internet
Tollkeeper Fund and Goldman Sachs Asset Management International is the
investment adviser for the Goldman Sachs VIT International Equity Fund and the
Goldman Sachs VIT Global Income Fund. The following portfolios are available
under the contract:
Goldman Sachs VIT Global Income Fund
Goldman Sachs VIT Growth and Income Fund
Goldman Sachs VIT International Equity Fund
Goldman Sachs VIT Internet Tollkeeper Fund (available as of July 1, 2000)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a mutual fund with multiple
portfolios. INVESCO Funds Group, Inc. is the investment adviser. The following
portfolios are available under the contract:
INVESCO VIF - Dynamics Fund
INVESCO VIF - High Yield Fund
KEMPER VARIABLE SERIES
Kemper Variable Series is a mutual fund with multiple portfolios. Scudder Kemper
Investments, Inc. is the investment adviser for the Kemper Government Securities
Portfolio, the Kemper Small Cap Growth Portfolio and the Kemper Small Cap Value
Portfolio. The following portfolios are available under the contract:
Kemper Government Securities Portfolio
Kemper Small Cap Growth Portfolio
Kemper Small Cap Value Portfolio
SCUDDER VARIABLE LIFE INVESTMENT FUND
Scudder Variable Life Investment Fund is a mutual fund with multiple portfolios.
Scudder Kemper Investments, Inc. is the investment adviser to each portfolio.The
following portfolio is available under the contract:
International Portfolio
LIBERTY VARIABLE INVESTMENT TRUST
Liberty Variable Investment Trust is a mutual fund with multiple portfolios.
Liberty Advisory Services Corp. (LASC) is the investment manager to the Trust.
LASC has engaged Newport Fund Management, Inc. as sub-adviser to provide
investment advice for the Newport Tiger Fund, Variable Series. The following
portfolio is available under the contract:
Newport Tiger Fund, Variable Series
MFS VARIABLE INSURANCE TRUST
MFS Variable Insurance Trust is a mutual fund with multiple portfolios.
Massachusetts Financial Services Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
MFS Emerging Growth Series
MFS Global Governments Series
MFS Growth With Income Series
MFS High Income Series
MFS Research Series
PIMCO VARIABLE INSURANCE TRUST
PIMCO Variable Insurance Trust is a mutual fund with multiple portfolios.
Pacific Investment Management Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
PIMCO High Yield Bond Portfolio
PIMCO Low Duration Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
PIMCO Total Return Bond Portfolio
PUTNAM VARIABLE TRUST
Putnam Variable Trust is a mutual fund with multiple portfolios. Putnam
Investment Management, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
Putnam VT Growth and Income Fund - Class IA Shares
Putnam VT International Growth Fund - Class IA Shares
Putnam VT International New Opportunities Fund - Class IA Shares
Putnam VT New Value Fund - Class IA Shares
Putnam VT Vista Fund (a stock portfolio) - Class IA Shares
Transfers
You can transfer money among the fixed account and the investment portfolios.
Cova has reserved the right during the year to terminate or modify the transfer
provisions described below.
Telephone Transfers. You and/or your registered representative on your behalf,
can make transfers by telephone. Telephone transfers will be automatically
permitted unless you tell us otherwise. If you own the contract with a joint
owner, unless Cova is instructed otherwise, Cova will accept instructions from
either you or the other owner. Cova will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If Cova fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. Cova tape records all telephone instructions.
Transfers during the Accumulation Phase. You can make 12 transfers every year
during the accumulation phase without charge. We measure a year from the
anniversary of the day we issued your contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make more
than 12 transfers in a year, there is a transfer fee deducted. The following
apply to any transfer during the accumulation phase:
1. Your request for transfer must clearly state which investment portfolio(s)
or the fixed account are involved in the transfer.
2. Your request for transfer must clearly state how much the transfer is for.
3. You cannot make any transfers within 7 calendar days of the annuity date.
Transfers during the Income Phase. You can only make transfers between the
investment portfolios once each year. We measure a year from the anniversary of
the day we issued your contract. You cannot transfer from the fixed account to
an investment portfolio, but you can transfer from one or more investment
portfolios to the fixed account at any time.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Fund or the fixed account to any of the
other investment portfolio(s). By allocating amounts on a regular schedule as
opposed to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. The Dollar Cost Averaging
Program is available only during the accumulation phase.
Cova reserves the right to modify, terminate or suspend the Dollar Cost
Averaging Program.
The minimum amount which can be transferred each month is $500. You must have at
least $6,000 in the Money Market Fund or the fixed account, (or the amount
required to complete your program, if less) in order to participate in the
Dollar Cost Averaging Program. Cova will waive the minimum transfer amount and
the minimum amount required to establish dollar cost averaging if you establish
dollar cost averaging for 6 or 12 months at the time you buy the contract.
There is no additional charge for participating in the Dollar Cost Averaging
Program. If you participate in the Dollar Cost Averaging Program, the transfers
made under the program are not taken into account in determining any transfer
fee. Cova may, from time to time, offer other dollar cost averaging programs
which may have terms different from those described above.
Automatic Rebalancing Program
Once your money has been allocated to the investment portfolios, the performance
of each portfolio may cause your allocation to shift. You can direct us to
automatically rebalance your contract to return to your original percentage
allocations by selecting our Automatic Rebalancing Program. You can tell us
whether to rebalance quarterly, semi-annually or annually. We will measure these
periods from the anniversary of the date we issued your contract. The transfer
date will be the 1st day after the end of the period you selected.
The Automatic Rebalancing Program is available only during the accumulation
phase. There is no additional charge for participating in the Automatic
Rebalancing Program. If you participate in the Automatic Rebalancing Program,
the transfers made under the program are not taken into account in determining
any transfer fee.
Example:
Assume that you want your initial purchase payment split between 2
investment portfolios. You want 40% to be in the Quality Bond Portfolio and
60% to be in the Select Equity Portfolio. Over the next 21/2 months the
bond market does very well while the stock market performs poorly. At the
end of the first quarter, the Quality Bond Portfolio now represents 50% of
your holdings because of its increase in value. If you have chosen to have
your holdings rebalanced quarterly, on the first day of the next quarter,
Cova will sell some of your units in the Quality Bond Portfolio to bring
its value back to 40% and use the money to buy more units in the Select
Equity Portfolio to increase those holdings to 60%.
Approved Asset Allocation Programs
Cova recognizes the value to certain owners of having available, on a continuous
basis, advice for the allocation of your money among the investment options
available under the contracts. Certain providers of these types of services have
agreed to provide such services to owners in accordance with Cova's
administrative rules regarding such programs.
Cova has made no independent investigation of these programs. Cova has only
established that these programs are compatible with our administrative systems
and rules. Approved asset allocation programs are only available during the
accumulation phase. Currently, Cova does not charge for participating in an
approved asset allocation program.
Even though Cova permits the use of approved asset allocation programs, the
contract was not designed for professional market timing organizations. Repeated
patterns of frequent transfers are disruptive to the operations of the
investment portfolios, and when Cova becomes aware of such disruptive practices,
we may modify the transfer provisions of the contract.
If you participate in an Approved Asset Allocation Program, the transfers made
under the program are not taken into account in determining any transfer fee.
Voting Rights
Cova is the legal owner of the investment portfolio shares. However, Cova
believes that when an investment portfolio solicits proxies in conjunction with
a vote of shareholders, it is required to obtain from you and other affected
owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Cova owns on its own
behalf. Should Cova determine that it is no longer required to comply with the
above, we will vote the shares in our own right.
Substitution
Cova may be required to substitute one of the investment portfolios you have
selected with another portfolio. We would not do this without the prior approval
of the Securities and Exchange Commission. We will give you notice of our intent
to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Insurance Charges
Each day, Cova makes a deduction for its insurance charges. Cova does this as
part of its calculation of the value of the accumulation units and the annuity
units. The insurance charge has two parts:
1) the mortality and expense risk premium, and
2) the administrative expense charge.
Mortality and Expense Risk Premium. This charge is equal, on an annual basis, to
1.25% of the daily value of the contracts invested in an investment portfolio,
after fund expenses have been deducted. This charge is for all the insurance
benefits e.g., guarantee of annuity rates, the death benefits, for certain
expenses of the contract, and for assuming the risk (expense risk) that the
current charges will be insufficient in the future to cover the cost of
administering the contract. If the charges under the contract are not
sufficient, then Cova will bear the loss. Cova does, however, expect to profit
from this charge. The mortality and expense risk premium cannot be increased.
Cova may use any profits it makes from this charge to pay for the costs of
distributing the contract.
Administrative Expense Charge. This charge is equal, on an annual basis, to .15%
of the daily value of the contracts invested in an investment portfolio, after
fund expenses have been deducted. This charge, together with the contract
maintenance charge (see below), is for the expenses associated with the
administration of the contract. Some of these expenses are: preparation of the
contract, confirmations, annual reports and statements, maintenance of contract
records, personnel costs, legal and accounting fees, filing fees, and computer
and systems costs. Because this charge is taken out of every unit value, you may
pay more in administrative costs than those that are associated solely with your
contract. Cova does not intend to profit from this charge. However, if this
charge and the contract maintenance charge are not enough to cover the costs of
the contracts in the future, Cova will bear the loss.
Contract Maintenance Charge
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, Cova deducts $30 from your contract as a contract
maintenance charge. (In South Carolina, the charge is the lesser of $30 or 2% of
the value of the contract.) This charge is for administrative expenses (see
above). This charge cannot be increased.
Cova will not deduct this charge during the accumulation phase if, when the
deduction is to be made, the value of your contract is $50,000 or more. Cova may
some time in the future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A pro rata portion of the charge will be deducted
if the annuity date is other than an anniversary. After the annuity date, the
charge will be collected monthly out of the annuity payment.
Withdrawal Charge
During the accumulation phase, you can make withdrawals from your contract. Cova
keeps track of each purchase payment. Once a year after the first year (and once
a year during the first year for purposes of payment of charitable remainder
trust administration fees), you can withdraw up to 10% of your total purchase
payments and no withdrawal charge will be assessed on the 10%, if on the day you
make your withdrawal the value of your contract is $5,000 or more. Withdrawals
for purposes of payment of charitable remainder trust administration fees are
included in the 10% free withdrawal amount. Otherwise, the charge is 5% of each
purchase payment you take out unless the purchase payment was made more than 5
years ago. After Cova has had a purchase payment for 5 years, there is no charge
when you withdraw that purchase payment. Cova does not assess a withdrawal
charge on earnings withdrawn from the contract. Earnings are defined as the
value in your contract minus the remaining purchase payments in your contract.
The withdrawal order for calculating the withdrawal charge is shown below.
* 10% of purchase payments free.
* Remaining purchase payments that are over 5 years old and not subject to a
withdrawal charge.
* Earnings in the contract free.
* Remaining purchase payments that are less than 5 years old and are subject
to a withdrawal charge.
For purposes of calculating the withdrawal charge, slightly different rules may
apply to Section 1035 exchanges.
When the withdrawal is for only part of the value of your contract, the
withdrawal charge is deducted from the remaining value in your contract.
Cova does not assess the withdrawal charge on any payments paid out as annuity
payments or as death benefits.
NOTE: For tax purposes, earnings are considered to come out first.
Reduction or Elimination of the Withdrawal Charge
General
Cova will reduce or eliminate the amount of the withdrawal charge when the
contract is sold under circumstances which reduce its sales expense. Some
examples are: if there is a large group of individuals that will be purchasing
the contract or a prospective purchaser already had a relationship with Cova.
Cova will not deduct a withdrawal charge under a contract issued to an officer,
director or employee of Cova or any of its affiliates.
Nursing Home Waiver
After you have owned the contract for one year, if you, or your joint owner,
becomes confined to a nursing home or hospital for at least 90 consecutive days
under a doctor's care and you need part or all of the money from your contract,
Cova will not impose a withdrawal charge. You or your joint owner cannot have
been so confined when you purchased your contract if you want to take advantage
of this provision (confinement must begin after the first contract anniversary).
This is called the Nursing Home Waiver. This provision is not available in all
states.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Cova is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some of
these taxes are due when the contract is issued, others are due when annuity
payments begin. It is Cova's current practice to not charge anyone for these
taxes until annuity payments begin. Cova may some time in the future discontinue
this practice and assess the charge when the tax is due. Premium taxes generally
range from 0% to 4%, depending on the state.
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred whichever is less.
If the transfer is part of the Dollar Cost Averaging Program, the Automatic
Rebalancing Program or an Approved Asset Allocation Program, it will not count
in determining the transfer fee.
Income Taxes
Cova will deduct from the contract for any income taxes which it incurs because
of the contract. At the present time, we are not making any such deductions.
Investment Portfolio Expenses
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the fund prospectuses.
6. TAXES
NOTE: Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any
individual.You should consult your own tax adviser about your own circumstances.
Cova has included an additional discussion regarding taxes in the Statement of
Additional Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs either as a withdrawal or as annuity payments. When
you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified and Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b) contracts), and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 plans.
A qualified contract will not provide any necessary or additional tax deferral
if it is used to fund a qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a qualified contract.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
Withdrawals - Qualified Contracts
If you make a withdrawal from your qualified contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax purchase payments to the after-tax purchase payments in your contract.
If all of your purchase payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified contracts.
The Code also provides that any amount received under a qualified contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a
lifetime annuity;
(5) paid to you after you have attained age 55 and you have left your
employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid on account of an IRS levy upon the qualified contract;
(9) paid from an IRA for medical insurance (as defined in the Code);
(10) paid from an IRA for qualified higher education expenses; or
(11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in
(4) above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to purchase payments made
under a salary reduction agreement by owners from Tax-Sheltered Annuities.
Withdrawals can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Cova believes that the investment portfolios are being managed
so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Cova would be
considered the owner of the shares of the investment portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the contract. It is unknown to what extent owners are
permitted to select investment portfolios, to make transfers among the
investment portfolios or the number and type of investment portfolios owners may
select from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the contract, could be treated as the owner of the shares of the
investment portfolios.
Due to the uncertainty in this area, Cova reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract:
(1) by making a withdrawal (either a partial or a complete withdrawal);
(2) by electing to receive annuity payments; or
(3) when a death benefit is paid to your beneficiary.
Under most circumstances, withdrawals can only be made during the accumulation
phase.
When you make a complete withdrawal you will receive the withdrawal value of the
contract. The withdrawal value of the contract is the value of the contract at
the end of the business day when Cova receives a written request for a
withdrawal:
* less any applicable withdrawal charge,
* less any premium tax, and
* less any contract maintenance charge.
Unless you instruct Cova otherwise, any partial withdrawal will be made pro-rata
from all the investment portfolios and the fixed account you selected. Under
most circumstances the amount of any partial withdrawal must be for at least
$500. Cova requires that after a partial withdrawal is made you keep at least
$500 in any selected investment portfolio. If the remaining withdrawal value
would be less than $500 ($1,000 in New Jersey) after you make a partial
withdrawal, the partial withdrawal amount will be the remaining withdrawal
value.
There are limits to the amount you can withdraw from a qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the Statement of Additional Information.
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
Systematic Withdrawal Program
You may use the Systematic Withdrawal Program. This program provides an
automatic monthly payment to you of up to 10% of your total purchase payments
each year. No withdrawal charge will be made for these payments. Cova does not
have any charge for this program, but reserves the right to charge in the
future. If you use this program, you may not also make a single 10% free
withdrawal. For a discussion of the withdrawal charge and the 10% free
withdrawal, see "Expenses."
Income taxes, tax penalties and certain restrictions may apply to Systematic
Withdrawals.
Suspension of Payments or Transfers
Cova may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Cova cannot
reasonably value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
Cova has reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
8. PERFORMANCE
Cova periodically advertises performance of the various investment portfolios.
Cova will calculate performance by determining the percentage change in the
value of an accumulation unit by dividing the increase (decrease) for that unit
by the value of the accumulation unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
investment portfolio expenses. It does not reflect the deduction of any
applicable contract maintenance charge and withdrawal charge. The deduction of
any applicable contract maintenance charge and withdrawal charges would reduce
the percentage increase or make greater any percentage decrease. Any
advertisement will also include total return figures which reflect the deduction
of the insurance charges, contract maintenance charge, withdrawal charges and
the investment portfolio expenses.
For periods starting prior to the date the contracts were first offered, the
performance will be based on the historical performance of the corresponding
investment portfolios for the periods commencing from the date on which the
particular investment portfolio was made available through the Separate Account.
In addition, for certain investment portfolios performance may be shown for the
period commencing from the inception date of the investment portfolio. These
figures should not be interpreted to reflect actual historical performance of
the Separate Account.
Cova may, from time to time, include in its advertising and sales materials, tax
deferred compounding charts and other hypothetical illustrations, which may
include comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
Appendix C contains performance information that you may find informative. It
is divided into various parts, depending upon the type of performance
information shown. Future performance will vary and results shown are not
necessarily representative of future results.
9. DEATH BENEFIT
Upon Your Death
If you die before annuity payments begin, Cova will pay a death benefit to your
beneficiary (see below). If you have a joint owner, the death benefit will be
paid when the first of you dies. Joint owners must be spouses. The surviving
joint owner will be treated as the beneficiary.
The death benefit is described below. The amount of death benefit depends on how
old you or your joint owner is. If you have a joint owner, the death benefit is
determined based on the age of the oldest joint owner and the death benefit is
payable on the death of the first joint owner.
DEATH BENEFIT:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any contract anniversary while the owner, or
a joint owner is living, plus any purchase payments you made subsequent to
that contract anniversary, less any withdrawals (and any withdrawal charges
paid on the withdrawals) subsequent to that contract anniversary.
After you, or your joint owner, reaches age 80, the death benefit will be the
greatest of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid
on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The greatest contract value on any prior contract anniversary on or before
your or your joint owner's 80th birthday, plus any purchase payments you
made subsequent to that contract anniversary, less any withdrawals (and any
withdrawal charges paid on the withdrawals) subsequent to that contract
anniversary.
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an annuity
option. The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If the
beneficiary is the spouse of the owner, he/she can continue the contract in
his/her own name at the then current value. If a lump sum payment is elected and
all the necessary requirements are met, the payment will be made within 7 days.
Payment under an annuity option may only be elected during the 60 day period
beginning with the date Cova receives proof of death. If Cova does not receive
an election during such time, it will make a single sum payment to the
beneficiary at the end of the 60 day period.
Death of Annuitant
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days of
the death of the annuitant, you will become the annuitant. However, if the owner
is a non-natural person (for example, a corporation), then the death or change
of annuitant will be treated as the death of the owner, and a new annuitant may
not be named.
Upon the death of the annuitant after annuity payments begin, the death benefit,
if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
Cova
Cova Financial Services Life Insurance Company (Cova) was incorporated on August
17, 1981 as Assurance Life Company, a Missouri corporation, and changed its name
to Xerox Financial Services Life Insurance Company in 1985. On June 1, 1995, a
wholly-owned subsidiary of General American Life Insurance Company (General
American Life) purchased Cova which on that date changed its name to Cova
Financial Services Life Insurance Company. On January 6, 2000, Metropolitan
Life Insurance Company (MetLife) acquired GenAmerica Corporation, the ultimate
parent company of General American Life. The acquisition of GenAmerica
Corporation does not affect policy benefits or any other terms or conditions
under your contract. MetLife, headquartered in New York City since 1868, is a
leading provider of insurance and financial products and services to
individual and group customers.
Cova is licensed to do business in the District of Columbia and all states
except California, Maine, New Hampshire, New York and Vermont.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account One
(Separate Account), to hold the assets that underlie the contracts. The Board of
Directors of Cova adopted a resolution to establish the Separate Account under
Missouri insurance law on February 24, 1987. We have registered the Separate
Account with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940. The Separate Account is divided into
sub-accounts.
The assets of the Separate Account are held in Cova's name on behalf of the
Separate Account and legally belong to Cova. However, those assets that underlie
the contracts, are not chargeable with liabilities arising out of any other
business Cova may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts Cova may issue.
Distributor
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the contracts. Life
Sales is an affiliate of Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions up to 5.63% of purchase payments but,
under certain circumstances, may be paid up to 6.0%. Sometimes, Cova enters into
an agreement with the broker-dealer to pay the broker-dealer persistency
bonuses, in addition to the standard commissions.
Ownership
Owner. You, as the owner of the contract, have all the interest and rights under
the contract. Prior to the annuity date, the owner is as designated at the time
the contract is issued, unless changed. On and after the annuity date, the
annuitant is the owner (this may be a taxable event). The beneficiary becomes
the owner when a death benefit is payable. When this occurs, some ownership
rights may be limited.
Joint Owner. The contract can be owned by joint owners. Any joint owner must be
the spouse of the other owner (except in Pennsylvania). Upon the death of either
joint owner, the surviving spouse will be the designated beneficiary. Any other
beneficiary designation at the time the contract was issued or as may have been
later changed will be treated as a contingent beneficiary unless otherwise
indicated.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
Assignment
You can assign the contract at any time during your lifetime. Cova will not be
bound by the assignment until it receives the written notice of the assignment.
Cova will not be liable for any payment or other action we take in accordance
with the contract before we receive notice of the assignment. An assignment may
be a taxable event.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract.
Financial Statements
The consolidated financial statements of Cova and the Separate Account have been
included in the Statement of Additional Information.
Table of Contents of the
Statement of Additional Information
Company
Experts
Legal Opinions
Distribution
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
<TABLE>
<CAPTION>
APPENDIX A
Condensed Financial Information
Accumulation Unit Value History
The following schedule includes accumulation unit values for the periods
indicated. This data has been extracted from the Separate Account's
Financial Statements. This information should be read in conjunction with
the Separate Account's Financial Statements and related notes which are included
in the Statement of Additional Information.
Year or
Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C>
Beginning of Period $11.77 $10.00 * *
End of Period 16.79 11.77
Number of Accum. Units Outstanding 901,235 183,488
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Sub-Account
Beginning of Period $11.39 $10.00 * *
End of Period 17.42 11.39
Number of Accum. Units Outstanding 277,998 204,072
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Sub-Account
Beginning of Period $13.06 $10.00 * *
End of Period 16.73 13.06
Number of Accum. Units Outstanding 2,544,761 521,890
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc. (Class A)
Managed by Alliance Capital Management L.P.
Premier Growth Sub-Account
Beginning of Period $14.60 $10.00 * *
End of Period 19.04 14.60
Number of Accum. Units Outstanding 2,065,459 667,854
- ------------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Sub-Account
Beginning of Period $7.99 $10.00 * *
End of Period 7.47 7.99
Number of Accum. Units Outstanding 475,475 191,411
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc
Managed by American Century Investment Management, Inc.
Beginning of Period $10.00 * * *
End of Period 10.32
Number of Accum. Units Outstanding 27,012
- ------------------------------------------------------------------------------------------------------------------------------------
VP International Sub-Account
Beginning of Period $10.00 * * *
End of Period 12.51
Number of Accum. Units Outstanding 155
- -----------------------------------------------------------------------------------------------------------------------------------
VP Value Sub-Account
Beginning of Period $10.00 * * *
End of Period 9.58
Number of Accum. Units Outstanding 17,999
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Managed by Lord, Abbett & Co.
Bond Debenture Sub-Account
Beginning of Period $13.50 $12.88 $11.29 $10.10
End of Period 13.77 13.50 12.88 11.29
Number of Accum. Units Outstanding 11,413,993 8,184,894 3,945,097 659,663
- ------------------------------------------------------------------------------------------------------------------------------------
Developing Growth Sub-Account
Beginning of Period $11.07 $10.53 $10.00 *
End of Period 14.45 11.07 10.53
Number of Accum. Units Outstanding 2,153,899 1,342,201 148,658
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Research Sub-Account
Beginning of Period $11.83 $9.90 $10.00 *
End of Period 14.64 11.83 9.90
Number of Accum. Units Outstanding 2,260,424 1,094,920 124,559
- ------------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Growth and Income Sub-Account
(Sub-Account commenced operations during 1999. The value denoted is the initial AUV)
Beginning of Period $35.90
End of Period 39.46
Number of Accum. Units Outstanding 21,128,621
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Sub-Account
Beginning of Period $10.44 $10.47 $10.00 *
End of Period 10.88 10.44 10.47
Number of Accum. Units Outstanding 2,528,900 1,642,553 194,386
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by J.P. Morgan Investment Management Inc.
International Equity Sub-Account
Beginning of Period $12.89 $11.46 $10.97 $10.21
End of Period 16.33 12.89 11.46 10.97
Number of Accum. Units Outstanding 7,578,951 7,309,325 5,440,592 1,306,892
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Stock Sub-Account
Beginning of Period $19.43 $14.89 $11.33 $10.00
End of Period 22.55 19.43 14.89 11.33
Number of Accum. Units Outstanding 10,050,149 4,178,035 1,473,929 1,389,606
- ------------------------------------------------------------------------------------------------------------------------------------
Quality Bond Sub-Account
Beginning of Period $11.91 $11.16 $10.37 $9.90
End of Period 11.57 11.91 11.16 10.37
Number of Accum. Units Outstanding 7,608,610 3,323,343 1,433,081 508,830
- ------------------------------------------------------------------------------------------------------------------------------------
Select Equity Sub-Account
Beginning of Period $16.99 $14.05 $10.84 $10.08
End of Period 18.38 16.99 14.05 10.84
Number of Accum. Units Outstanding 12,271,286 10,544,818 6,903,606 2,044,523
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Stock Sub-Account
Beginning of Period $12.58 $13.49 $11.31 $10.51
End of Period 17.93 12.58 13.49 11.31
Number of Accum. Units Outstanding 5,435,852 5,532,610 3,940,243 1,237,405
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund
Managed by The Dreyfus Corporation
Dreyfus Stock Index Fund Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.32 * * *
Number of Accum. Units Outstanding 1,373 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Managed by The Dreyfus Corporation
Dreyfus VIF - Appreciation Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.12 * * *
Number of Accum. Units Outstanding 22,221 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF - Disciplined Stock Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.30 * * *
Number of Accum. Units Outstanding 944 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Variable Insurance Products Trust,
Class 1 Shares
Managed by Franklin Advisers, Inc.
Franklin Small Cap Sub-Account
(Sub-Account commenced operations during 1999. The value denoted is the initial AUV.)
Beginning of Period $10.00 * *
End of Period 17.68
Number of Accum. Units Outstanding 55.398
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Securities Sub-Account
Beginning of Period $9.63 $10.00 * *
End of Period 10.41 9.63
Number of Accum. Units Outstanding 247.806 106,035
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Securities Sub-Account
Beginning of Period $7.55 $10.00 * *
End of Period 11.46 7.55
Number of Accum. Units Outstanding 304,489 89,960
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Investment Counsel, Inc.
Templeton International Securities Sub-Account
Beginning of Period $9.14 $10.00 * *
End of Period 11.15 9.14
Number of Accum. Units Outstanding 826,137 164,775
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.23 $10.00
End of Period 11.53 11.11 10.67 10.23
Number of Accum. Units Outstanding 3,709,173 1,473,737 311,051 34,964
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs VIT Growth and Income Sub-Account
Beginning of Period $9.91 $10.00 * *
End of Period 10.30 9.91
Number of Accum. Units Outstanding 620,568 467,675
- ------------------------------------------------------------------------------------------------------------------------------------
Managed by Goldman Sachs Asset Management International
Goldman Sachs VIT Global Income Sub-Account
Beginning of Period $10.78 $10.00 * *
End of Period 10.52 10.78
Number of Accum. Units Outstanding 31,541 18,833
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT International Equity Sub-Account
Beginning of Period $11.40 $10.00 * *
End of Period 14.83 11.40
Number of Accum. Units Outstanding 240,170 112,824
- ------------------------------------------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.
Managed by INVESCO Funds Group, Inc.
INVESCO VIF - Dynamics Sub-Account
Beginning of Period $10.00 * * *
End of Period $11.14 * * *
Number of Accum. Units Outstanding 16,259 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
INVESCO VIF - High Yield Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.12 * * *
Number of Accum. Units Outstanding 5,548 * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities Sub-Account
Beginning of Period $10.56 $10.00 * *
End of Period 10.48 10.56
Number of Accum. Units Outstanding 218,804 59,712
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Growth Sub-Account
Beginning of Period $11.68 $10.00 * *
End of Period 15.49 11.68
Number of Accum. Units Outstanding 113,560 76,492
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Value Sub-Account
Beginning of Period $8.75 $10.00 * *
End of Period 8.87 8.75
Number of Accum. Units Outstanding 496,083 245,092
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management, Inc.
Newport Tiger Fund, Variable Sub-Account
Beginning of Period $9.23 $10.00 * *
End of Period 15.29 9.23
Number of Accum. Units Outstanding 40,648 31,936
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Sub-Account
Beginning of Period $13.23 $10.00 * *
End of Period 23.06 13.23
Number of Accum. Units Outstanding 1,237,361 539,659
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Sub-Account
Beginning of Period $10.67 $10.00 * *
End of Period 10.26 10.67
Number of Accum. Units Outstanding 7,473 2,082
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Sub-Account
Beginning of Period $12.07 $10.00 * *
End of Period 12.70 12.07
Number of Accum. Units Outstanding 1,373,014 581,434
- ------------------------------------------------------------------------------------------------------------------------------------
MFS High Income Sub-Account
Beginning of Period $9.85 $10.00 * *
End of Period 10.33 9.85
Number of Accum. Units Outstanding 437,876 219,209
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Sub-Account
Beginning of Period $12.17 $10.00 * *
End of Period 14.89 12.17
Number of Accum. Units Outstanding 1,098,586 464,786
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Managed by Pacific Investment Management Company
PIMCO High Yield Bond Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.08 * * *
Number of Accum. Units Outstanding 10 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
PIMCO Low Duration Bond Sub-Account
Beginning of Period $10.00 * * *
End of Period $9.97 * * *
Number of Accum. Units Outstanding 10 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
PIMCO StocksPLUS Growth and Income Sub-Account
Beginning of Period $10.00 * * *
End of Period $10.31 * * *
Number of Accum. Units Outstanding 887 * * *
- ----------------------------------------------------------------------------------------------------------------------------------
PIMCO Total Return Bond Sub-Account
Beginning of Period $10.00 * * *
End of Period $9.88 * * *
Number of Accum. Units Outstanding 7,170 * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Managed by Putnam Investment Management, Inc.
Putnam VT Growth and Income Sub-Account
Beginning of Period $11.38 $10.00 * *
End of Period 11.40 11.38
Number of Accum. Units Outstanding 2,304,013 1,115,668
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Sub-Account
Beginning of Period $11.71 $10.00 * *
End of Period 18.49 11.71
Number of Accum. Units Outstanding 1,092,379 530,055
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Sub-Account
Beginning of Period $11.40 $10.00 * *
End of Period 22.82 11.40
Number of Accum. Units Outstanding 110,085 52,809
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Sub-Account
Beginning of Period $10.48 $10.00 * *
End of Period 10.37 10.48
Number of Accum. Units Outstanding 66,900 42,091
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Sub-Account
Beginning of Period $11.79 $10.00 * *
End of Period 17.77 11.79
Number of Accum. Units Outstanding 385,345 151,405
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund
Managed by Scudder Kemper Investments, Inc.
International Sub-Account
Beginning of Period $10.00 * * *
End of Period $11.63 * * *
Number of Accum. Units Outstanding 14,499 * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Year or Period Year or Period Year or Period Year or Period
Ended 12/31/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The Mid-Cap Value, Large Cap Research and Developing Growth Portfolios
started regular investment operations on August 20, 1997. The Lord Abbett
Growth and Income Portfolio commenced regular investment operations on
January 8, 1999. Separate Account inception dates in the other investment
portfolios are as follows: AIM Variable Insurance Funds, Inc., Alliance
Variable Products Series Fund, Inc., Kemper Variable Series, Liberty
Variable Investment Trust, MFS Variable Insurance Trust, Oppenheimer
Variable Account Funds and Putnam Variable Trust - December 31, 1997;
General American Capital Company - June 3, 1996; Goldman Sachs Variable
Insurance Trust - January 29, 1998; Franklin Templeton Variable Insurance
Products Trust - May 1, 1998 (except March 1, 1999 for the Franklin
Small Cap Investments Fund); American Century Variable Portfolios, Inc.,
Dreyfus Stock Index Fund; Dreyfus Variable Investment Fund; INVESCO Variable
Investment Funds, Inc., Scudder Variable Life Investment Fund; and PIMCO
Variable Insurance Trust - _________, 1999.
</FN>
</TABLE>
APPENDIX B
PARTICIPATING INVESTMENT PORTFOLIOS
Below are the investment objectives and strategies of each investment portfolio
available under the contract. The fund prospectuses contain more complete
information, including a description of the investment objectives, policies,
restrictions and risks. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES WILL BE ACHIEVED.
AIM VARIABLE INSURANCE FUNDS
AIM Variable Insurance funds is a mutual fund with multiple portfolios. A I M
Advisors, Inc. is the investment adviser to each portfolio. The following
portfolios are available under the contract:
AIM V.I. CAPITAL APPRECIATION FUND
Investment Objective: The Fund's investment objective is growth of capital
through investment in common stocks, with emphasis on medium- and small-sized
companies. The portfolio managers focus on companies they believe are likely to
benefit from new or innovative products, services or processes as well as those
that have experienced above-average, long-term growth in earnings and have
excellent prospects for future growth.
AIM V.I. INTERNATIONAL EQUITY FUND
Investment Objective: The Fund's investment objective is to achieve long-term
growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings momentum.
AIM V.I. VALUE FUND
Investment Objective: The Fund's investment objective is to achieve long-term
growth of capital by investing primarily in equity securities judged by
the Fund's investment advisor to be undervalued relative to the investment
advisor's appraisal of the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned
by the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.:
Alliance Variable Products Series Fund, Inc. is a mutual fund with multiple
portfolios. Alliance Capital Management L.P. is the investment adviser to each
portfolio. The following portfolios are available under the contract:
PREMIER GROWTH PORTFOLIO (Class A)
Investment Objective: The Portfolio's investment objective is growth of capital
by pursuing aggressive investment policies. The Portfolio invests primarily
in equity securities of U.S. companies. Normally, the Portfolio invests in
about 40-50 companies, with the 25 most highly regarded of these companies
usually constituting approximately 70% of the Portfolio's net assets.
REAL ESTATE INVESTMENT PORTFOLIO (Class A)
Investment Objective: The Portfolio's investment objective is total return from
long-term growth of capital and income principally through investing in equity
securities of companies that are primarily engaged in or related to the real
estate industry.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.:
American Century Investment Management, Inc. is the investment
adviser to each portfolio. The following portfolios are available under
the contract:
VP INCOME & GROWTH FUND
Investment Objective: The Fund seeks dividend growth, current income and capital
appreciation by investing in common stocks.
VP INTERNATIONAL FUND
Investment Objective: The Fund seeks capital growth by investing in
internationally diversified stocks of companies that the adviser believes will
increase in value over time.
VP VALUE FUND
Investment Objective: The Fund seeks long-term capital growth by investing
primarily in common stocks. Income is a secondary objective.
COVA SERIES TRUST:
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory), which is an affiliate of Cova. Cova Series Trust is a mutual fund
with multiple portfolios. Cova Advisory has engaged sub-advisers to provide
investment advice for the individual investment portfolios. The following
portfolios are available under the contract:
PORTFOLIOS MANAGED BY J. P. MORGAN INVESTMENT MANAGEMENT INC.:
INTERNATIONAL EQUITY PORTFOLIO
Investment Objective: The International Equity Portfolio seeks to provide a high
total return from a portfolio of equity securities of foreign corporations.
LARGE CAP STOCK PORTFOLIO
Investment Objective: The Large Cap Stock Portfolio seeks to provide long-term
growth of capital and income.
QUALITY BOND PORTFOLIO
Investment Objective: The Quality Bond Portfolio seeks to provide a high total
return consistent with moderate risk of capital and maintenance of liquidity.
SELECT EQUITY PORTFOLIO
Investment Objective: The Select Equity Portfolio seeks to provide long-term
growth of capital and income.
SMALL CAP STOCK PORTFOLIO
Investment Objective: The Small Cap Stock Portfolio seeks to provide a high
total return from a portfolio of equity securities of small companies.
PORTFOLIOS MANAGED BY LORD, ABBETT & CO.:
BOND DEBENTURE PORTFOLIO
Investment Objective: The Bond Debenture Portfolio seeks to provide high current
income and the opportunity for capital appreciation to produce a high total
return.
DEVELOPING GROWTH PORTFOLIO
Investment Objective: The Developing Growth Portfolio seeks long-term growth of
capital through a diversified and actively-managed portfolio consisting of
developing growth companies, many of which are traded over the counter.
LARGE CAP RESEARCH PORTFOLIO
Investment Objective: The Large Cap Research Portfolio seeks growth of capital
and growth of income consistent with reasonable risk.
LORD ABBETT GROWTH AND INCOME PORTFOLIO
Investment Objective: The Lord Abbett Growth and Income Portfolio seeks to
achieve long-term growth of capital and income without excessive fluctuation in
market value.
MID-CAP VALUE PORTFOLIO
Investment Objective: The Mid-Cap Value Portfolio seeks capital appreciation
through investments, primarily in equity securities, which are believed to be
undervalued in the marketplace.
DREYFUS STOCK INDEX FUND:
The Dreyfus Corporation serves as the Fund's manager. Dreyfus has hired its
affiliate, Mellon Equity Associates, to serve as the Fund's index fund
manager and provide day-to-day management of the Fund's investments.
Investment Objective: The Fund seeks to match the total return of the Standard &
Poor's 500 Composite Stock Price Index. To pursue this goal, the Fund generally
invests in all 500 stocks in the S&P 500 in proportion to their weighting in the
index.
DREYFUS VARIABLE INVESTMENT FUND:
The Dreyfus Variable Investment Fund is a mutual fund with multiple
portfolios. The Dreyfus Corporation serves as the investment adviser. Fayez
Sarofim & Co. serves as sub-investment adviser to the Appreciation Portfolio.
The following portfolios are available under the contract:
APPRECIATION PORTFOLIO
Investment Objective: The Portfolio seeks long-term capital growth consistent
with the preservation of capital; current income is a secondary goal. To pursue
these goals, the Portfolio invests in common stocks focusing on "blue chip"
companies with total market values of more than $5 billion at the time of
purchase. These established companies have demonstrated sustained patterns
of profitability, strong balance sheets, an expanding global presence and the
potential to achieve predictable, above-average earnings growth.
DISCIPLINED STOCK PORTFOLIO
Investment Objective: The Portfolio seeks investment returns (consisting of
capital appreciation and income) that are greater than the total return
performance of stocks represented by the Standard & Poor's 500 Composite
Stock Price Index (S&P 500). To pursue this goal, the Portfolio invests in
a blended portfolio of growth and value stocks chosen through a disciplined
investment process. Consistency of returns and stability of the Portfolio's
share price compared to the S&P 500 are primary goals of the process.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST, CLASS 1 SHARES:
Franklin Templeton Variable Insurance Products Trust is a mutual fund with
multiple portfolios. Effective May 1, 2000 the portfolios of Templeton Variable
Products Series Fund were merged into similar portfolios of Franklin Templeton
Variable Insurance Products Trust. Each portfolio has two classes of shares:
Class 1 and Class 2. The portfolios available in connection with your contract
are Class 1 shares. Franklin Advisers, Inc. is the investment adviser for the
Franklin Small Cap Fund, Franklin Mutual Advisers, LLC is the investment adviser
for the Mutual Shares Securities Fund, Templeton Investment Counsel, Inc. is the
investment adviser for the Templeton International Securities Fund, and
Templeton Asset Management Ltd. is the investment adviser for the Templeton
Developing Markets Securities Fund. The following portfolios are available under
the contract:
MUTUAL SHARES SECURITIES FUND (the surviving fund of the merger with Mutual
Shares Investments Fund)
Investment Objective and Principal Investments: The Fund's principal goal is
capital appreciation. Its secondary goal is income. Under normal market
conditions, the Fund will invest at least 65% of its total assets in equity
securities of companies that the manager believes are available at market prices
less than their value based on certain recognized or objective criteria
(intrinsic value).
FRANKLIN SMALL CAP FUND (the surviving fund of the merger with Franklin
Small Cap Investments Fund)
Investment Objective and Principal Investments: The Fund's investment goal is
long-term capital growth. Under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of U.S. small
capitalization (small cap) growth companies.
TEMPLETON INTERNATIONAL SECURITIES FUND (formerly, Templeton International
Fund)
Investment Objective and Principal Investments: The Fund's investment goal is
long-term capital growth. Under normal market conditions, the Fund will invest
at least 65% of its total assets in the equity securities of companies located
outside the U.S., including in emerging markets.
TEMPLETON DEVELOPING MARKETS SECURITIES FUND (formerly, Templeton
Developing Markets Fund)
Investment Objective: The Fund's investment goal is long-term capital
appreciation. Under normal market conditions, the Fund will invest at least 65%
of its total assets in emerging market equity securities. Emerging market equity
securities generally include equity securities that trade in emerging markets or
are issued by companies that derive revenue from goods or services produced, or
that have their principal activities or assets in, emerging market countries.
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
MONEY MARKET FUND
Investment Objective: The Money Market Fund's investment objective is to provide
investors with current income while preserving capital and maintaining
liquidity. The Fund seeks to achieve this objective by investing primarily in
high-quality, short-term money market instruments. The Fund purchases securities
that meet the quality, maturity, and diversification requirements applicable to
money market funds.
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Variable Insurance Trust is a mutual fund with multiple
portfolios. Goldman Sachs Asset Management, a unit of the Investment Management
Division of Goldman, Sachs & Co., is the investment adviser for the Goldman
Sachs VIT Growth and Income Fund and Goldman Sachs VIT Internet Tollkeeper Fund
and Goldman Sachs Asset Management International is the investment adviser for
the Goldman Sachs VIT International Equity Fund and the Goldman Sachs VIT Global
Income Fund. The following portfolios are available under the contract:
GOLDMAN SACHS VIT GLOBAL INCOME FUND
Investment Objective: The Fund seeks a high total return, emphasizing current
income, and, to a lesser extent, providing opportunities for capital
appreciation. The Fund invests primarily in a portfolio of high quality
fixed-income securities of U.S. and foreign issuers and enters into
transactions in foreign currencies.
GOLDMAN SACHS VIT INTERNET TOLLKEEPER FUND
Investment Objective: The Fund seeks long-term growth of capital by investing,
under normal circumstances, at least 90% of its total assets in equity
securities and at least 65% of its total assets in equity securities of
"Internet Tollkeeper" companies, which are companies in the media,
telecommunications, technology and Internet sectors which provide access,
infrastructure, content and services to Internet companies and Internet users.
GOLDMAN SACHS VIT GROWTH AND INCOME FUND
Investment Objective: The Fund seeks long-term growth of capital and growth of
income by investing in large capitalization U.S. stocks that are believed to
be undervalued or undiscovered in the marketplace.
GOLDMAN SACHS VIT INTERNATIONAL EQUITY FUND
Investment Objective: The Fund seeks long-term capital appreciation by investing
primarily in equity securities of companies organized outside the United States
or whose securities are principally traded outside the United States. The Fund
intends to invest in companies with public stock market capitalizations that are
larger than $1 billion at the time of investment.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a mutual fund with multiple
portfolios. INVESCO Funds Group, Inc. is the investment adviser. The following
portfolios are available under the contract:
INVESCO VIF - DYNAMICS FUND
Investment Objective: The Fund tries to buy securities that will increase in
value over the long term. It is aggressively managed. Because its strategy
includes many short-term factors - including current information about a
company, investor interest, price movements of a company's securities and
general market and monetary conditions - securities in its portfolio usually
are bought and sold relatively frequently. The Fund invests in a variety of
securities that the adviser believes present opportunities for capital growth -
primarily common stocks of companies traded on U.S. securities exchanges, as
well as over-the-counter. The Fund also may invest in preferred stocks (which
generally pay higher dividends than common stocks) and debt instruments that
are convertible into common stocks, as well as in securities of foreign
companies.
INVESCO VIF - HIGH YIELD FUND
Investment Objective: The Fund seeks to provide a high level of current income,
with growth of capital as a secondary objective. It invests substantially all of
its assets in lower-rated debt securities, commonly called "junk bonds," and
preferred stock, including securities issued by foreign companies. These debt
securities are highly sensitive to changes in interest rates; in general, as
interest rates rise, the value of these securities will decline. Because the
debt securities held by the Fund tend to be lower rated, they are more
susceptible to the impact of overall fluctuations in the economy than other,
higher-rated debt securities. Although these securities carry with them higher
risks, they generally provide higher yields - and therefore higher income - than
higher-rated debt securities.
KEMPER VARIABLE SERIES
Kemper Variable Series is a mutual fund with multiple portfolios. Scudder Kemper
Investments, Inc. is the investment adviser for the Kemper Government Securities
Portfolio, the Kemper Small Cap Growth Portfolio and the Kemper Small Cap Value
Portfolio. The following portfolios are available under the contract:
KEMPER GOVERNMENT SECURITIES PORTFOLIO
Investment Objective: Kemper Government Securities seeks high current return
consistent with preservation of capital. The Portfolio pursues its objective
by investing at least 65% of its total assets in U.S. Government securities
and repurchase agreements of U.S. Government securities.
KEMPER SMALL CAP GROWTH PORTFOLIO
Investment Objective: Kemper Small Cap Growth Portfolio seeks maximum
appreciation of investors' capital. The Portfolio pursues its objective by
investing at least 65% of its total assets in small capitalization stocks
similar in size to those companies comprising the Russell 2000 Index. Many
of these companies would be in the early stages of their life cycle. Equity
securities in which the Portfolio invests consist primarily of common stocks,
but may include convertible securities, including warrants and rights.
KEMPER SMALL CAP VALUE PORTFOLIO
Investment Objective: Kemper Small Cap Value Portfolio seeks long-term capital
appreciation. The Portfolio pursues its investment objective by investing
primarily in a diversified portfolio of the stocks of small U.S. companies,
which are those similar in size to those comprising the Russell 2000 Index and
that the investment manager believes to be undervalued. Under normal market
conditions, the Portfolio invests at least 65% of its assets in small
capitalization stocks similar in size to those comprising the Russell 2000
Index.
SCUDDER VARIABLE LIFE INVESTMENT FUND:
The Scudder Variable Life Investment Fund is a mutual fund with multiple
portfolios. Scudder Kemper Investments, Inc. is the investment adviser to each
portfolio. The following portfolio is available under the contract:
INTERNATIONAL PORTFOLIO
Investment Objective: The International Portfolio seeks long-term growth of
capital primarily through diversified holdings of marketable foreign equity
investments.
LIBERTY VARIABLE INVESTMENT TRUST:
Liberty Variable Investment Trust is a mutual fund with multiple portfolios.
Liberty Advisory Services Corp. (LASC) is the investment manager to the Trust.
LASC has engaged Newport Fund Management, Inc. as sub-adviser to provide
investment advice for the Newport Tiger Fund, Variable Series. The following
portfolio is available under the contract:
NEWPORT TIGER FUND, VARIABLE SERIES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund invests primarily in stocks of companies
located in the nine Tiger countries of Asia. The Tigers of Asia are Hong Kong,
Singapore, South Korea, Taiwan, Malaysia, Thailand, Indonesia, The People's
Republic of China and the Philippines. The Fund typically invests in stocks of
larger, well-established companies.
MFS VARIABLE INSURANCE TRUST:
MFS Variable Insurance Trust is a mutual fund with multiple portfolios.
Massachusetts Financial Services Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
MFS EMERGING GROWTH SERIES
Investment Objective: The Series' investment objective is long term growth of
capital. The Series invests, under normal market conditions, at least 65% of its
total assets in common stocks and related securities of emerging growth
companies.
MFS GLOBAL GOVERNMENTS SERIES
Investment Objective: The Series' investment objective is to provide income
and capital appreciation. The Series invests primarily in U.S. and foreign
government securities.
MFS GROWTH WITH INCOME SERIES
Investment Objective: The Series' investment objective is to provide reasonable
current income and long-term growth of capital and income. The Series invests,
under normal market conditions, at least 65% of its total assets in common
stocks and related securities.
MFS HIGH INCOME SERIES
Investment Objective: The Series' investment objective is to provide high
current income by investing primarily in a professionally managed diversified
portfolio of fixed income securities, some of which may involve equity features.
The Series invests, under normal market conditions, at least 80% of its total
assets in high yield fixed income securities which generally are lower rated
bonds commonly known as junk bonds. Junk bonds are subject to a substantially
higher degree of risk than higher rated bonds.
MFS RESEARCH SERIES
Investment Objective: The Series' investment objective is long-term growth of
capital and future income. The Series invests, under normal market conditions,
at least 80% of its total assets in common stocks and related securities, such
as preferred stocks, convertible securities and depositary receipts.
PIMCO VARIABLE INSURANCE TRUST:
PIMCO Variable Insurance Trust is a mutual fund with multiple portfolios.
Pacific Investment Management Company is the investment adviser to each
portfolio. The following portfolios are available under the contract:
PIMCO HIGH YIELD BOND PORTFOLIO
Investment Objective: The High Yield Bond Portfolio seeks to maximize total
return, consistent with preservation of capital and prudent investment
management. The High Yield Bond Portfolio invests under normal circumstances at
least 65% of its assets in a diversified portfolio of high yield securities
rated at least B by Moody's or S&P, or, if unrated, determined by the adviser to
be of comparable quality.
PIMCO LOW DURATION BOND PORTFOLIO
Investment Objective: The Low Duration Bond Portfolio seeks to maximize total
return, consistent with preservation of capital and prudent investment
management. The Low Duration Bond Portfolio invests under normal circumstances
at least 65% of its assets in a diversified portfolio of fixed income
instruments of varying maturities.
PIMCO STOCKSPLUS GROWTH AND INCOME PORTFOLIO
Investment Objective: The StocksPLUS Growth and Income Portfolio seeks to
achieve a total return which exceeds the total return performance of the S&P
500. The StocksPLUS Growth and Income Portfolio invests in common stocks,
options, futures, options on futures and swaps. Under normal market conditions,
the Portfolio invests substantially all of its assets in S&P 500 derivatives,
backed by a portfolio of fixed income instruments.
PIMCO TOTAL RETURN BOND PORTFOLIO
Investment Objective: The PIMCO Total Return Bond Portfolio seeks to maximize
total return, consistent with preservation of capital and prudent investment
management. The Total Return Bond Portfolio invests under normal circumstances
at least 65% of its assets in a diversified portfolio of fixed income
instruments of varying maturities.
PUTNAM VARIABLE TRUST:
Putnam Variable Trust is a mutual fund with multiple portfolios. Putnam
Investment Management, Inc. is the investment adviser to each portfolio. The
following portfolios are available under the contract:
PUTNAM VT GROWTH AND INCOME FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital growth and current income.
PUTNAM VT INTERNATIONAL GROWTH FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND-CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation.
PUTNAM VT NEW VALUE FUND-CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation.
PUTNAM VT VISTA FUND-CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation.
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
Note: The figures below present investment performance information for the
periods ended December 31, 1999. While these numbers represent the returns as of
that date, they do not represent performance information of the portfolios since
that date. Performance information for the periods after December 31, 1999
may be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before December 31, 1999. As a
result, performance information is available for the accumulation units
investing in these portfolios.
* Column A presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of each portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
* Column B presents performance figures for the accumulation units which
reflect the insurance charges and fees and expenses of each portfolio.
* Performance figures shown for sub-accounts in existence for less than one
year are not annualized.
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation 12/31/97 37.96% N/A 27.68% 42.60% N/A 29.56&
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. International
Equity 12/31/97 48.24% N/A 30.12% 52.89% N/A 31.97%
AIM V.I. Value 12/31/97 23.46% N/A 27.46% 28.09% N/A 29.34&
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products
Series Fund, Inc.
Premier Growth (Class A) 12/31/97 25.85% N/A 36.22% 30.48% N/A 38.00%
Real Estate Investment (Class A) 12/31/97 -11.02% N/A -16.28% -6.43% N/A -13.54%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- ------------------------------------------------------------------------------------------------------------------------------------
Cova Series Trust
Bond Debenture 5/1/96 -2.61% N/A 7.70% 1.99% N/A 8.81%
Developing Growth 8/20/97 25.95% N/A 15.15% 30.58% N/A 16.86%
International Equity 5/1/96 22.10% N/A 12.64% 26.72% N/A 13.65%
Large Cap Research 8/20/97 19.14% N/A 15.79% 23.76% N/A 17.48%
Large Cap Stock 5/1/96 11.45% N/A 23.98% 16.06% N/A 24.80%
Lord Abbett Growth and Income 1/8/99 N/A N/A 4.79% N/A N/A 9.90%
Mid-Cap Value 8/20/97 -0.41% N/A 1.64% 4.19% N/A 3.61%
Quality Bond 5/1/96 -7.51% N/A 3.11% -2.92% N/A 4.34%
Select Equity 5/1/96 3.62% N/A 16.86% 8.23% N/A 17.79%
Small Cap Stock 5/1/96 37.87% N/A 14.70% 42.52% N/A 15.67%
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Insurance Variable Products Trust,
Class 1 Shares
Mutual Shares Securities (1) 5/1/98 7.23% N/A -3.23% 11.85% N/A 1.47%
Templeton Developing
Markets Securities (2) 5/1/98 47.06% N/A 5.79% 51.71% N/A 8.50%
Templeton International
Securities (3) 5/1/98 17.28% N/A 3.99% 21.90% N/A 6.72%
Franklin Small Cap (4) 3/1/99 N/A N/A 99.28% N/A N/A 104.48%
(1) Effective May 1, 2000, the Mutual Shares Investments Fund (previously
offered under the contract) merged into the Mutual Shares Securities Fund.
Performance shown reflects historical performance of the Mutual Shares
Securities Fund.
(2) Previously, the Templeton Developing Markets Securities Fund
was known as the Templeton Developing Markets Fund. Effective May 1, 2000,
the Templeton Developing Markets Securities Fund merged into the Templeton
Developing Markets Equity Fund. Performance shown reflects historical
performance of the Templeton Developing Markets Securities Fund.
(3) Previously, the Templeton International Securities Fund was known as the
Templeton International Fund. Effective May 1, 2000, the Templeton
International Securities Fund merged into the Templeton International
Equity Fund. Performance shown reflects historical performance of the
Templeton International Securities Fund.
(4) Effective May 1, 2000, the Franklin Small Cap Investments Fund
(previously offered under the contract) merged into the Franklin Small
Cap Fund. Performance shown reflects historical performance of the
Franklin Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 6/3/96 -0.86% N/A 2.78% 3.74% N/A 4.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable
Insurance Trust
Goldman Sachs VIT
Global Income 1/29/98 -6.99% N/A 0.28% -2.39% N/A 2.70%
Goldman Sachs VIT Growth
and Income 1/29/98 -0.66% N/A -0.90% 3.94% N/A 1.55%
Goldman Sachs VIT
International Equity 1/29/98 25.39% N/A 20.68% 30.02% N/A 22.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 12/31/97 -5.31% N/A 0.05% -0.71% N/A 2.38%
Kemper Small Cap Growth 12/31/97 28.06% N/A 22.53% 32.69% N/A 24.47%
Kemper Small Cap Value 12/31/97 -3.24% N/A -8.32% 1.36% N/A -5.81%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column A Column B
(reflects all (reflects insurance
charges and charges and portfolio
portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr 5 yrs inception 1 yr 5 yrs inception
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
<S> <C> <C> <C> <C> <C> <C>
Variable Series 12/31/97 61.02% N/A 21.70% 65.69% N/A 23.66%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging Growth 12/31/97 69.58% N/A 50.21% 74.26% N/A 51.85%
MFS Global Governments 12/31/97 -8.45% N/A -1.06% -3.85% N/A 1.29%
MFS Growth With Income 12/31/97 0.60% N/A 10.54% 5.21% N/A 12.67%
MFS High Income 12/31/97 0.36% N/A -0.68% 4.97% N/A 1.66%
MFS Research 12/31/97 17.70% N/A 20.04% 22.32% N/A 22.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth and
Income - Class IA Shares 12/31/97 -4.43% N/A 4.55% 0.17% N/A 6.78%
Putnam VT International
Growth - Class IA Shares 12/31/97 53.25% N/A 34.16% 57.91% N/A 35.96%
Putnam VT International
New Opportunities -
Class IA Shares 12/31/97 95.44% N/A 49.41% 100.14% N/A 51.06%
Putnam VT New Value -
Class IA Shares 12/31/97 -5.73% N/A -0.53% -1.13% N/A 1.81%
Putnam VT Vista -
Class IA Shares 12/31/97 46.12% N/A 31.47% 50.77% N/A 33.30%
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</TABLE>
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
Certain portfolios have been in existence for some time and have an investment
performance history. In order to show how the historical performance of the
portfolios affects the contract's accumulation unit values, the following
performance information was developed.
The information is based upon the historical experience of the portfolios and is
for the periods shown. The chart below shows the investment performance of the
portfolios and the accumulation unit performance calculated by assuming that the
contracts were invested in the portfolios for the same periods.
* The performance figures in Column A reflect the fees and expenses paid by
each portfolio.
* Column B presents performance figures for the accumulation units which
reflect the insurance charges, the contract maintenance charge, the fees
and expenses of each portfolio, and assumes that you make a withdrawal at
the end of the period and therefore the withdrawal charge is reflected.
* Column C presents performance figures for the accumulation units which
reflect the insurance charges and the fees and expenses of each portfolio.
* Performance figures shown for portfolios in existence for less than one
year are not annualized.
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects insurance (reflects all
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation 5/5/93 44.61% 25.59% 22.33% 37.96% 24.09% 20.83% 42.60% 24.19% 20.93%
AIM V.I.
International Equity5/5/93 55.04% 21.93% 18.82% 48.24% 20.43% 17.32% 52.89% 20.53% 17.42%
AIM V.I. Value 5/5/93 29.90% 27.23% 23.07% 23.46% 25.73% 21.57% 28.09% 25.83% 21.67%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Premier Growth
(Class A) 6/26/92 32.32% 36.03% 26.31% 25.85% 34.53% 24.81% 30.48% 34.63% 24.91%
Real Estate
Investment
(Class A) 1/9/97 -5.11% N/A -1.79% -11.02% N/A -4.83% -6.43% N/A -3.19%
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
VP Income & Growth 10/30/97 18.02% N/A 24.69% 12.02% N/A 21.09% 16.62% N/A 23.29%
VP International 5/1/94 64.04% 24.28% 20.07% 58.04% 22.78% 18.57% 62.64% 22.88% 18.67%
VP Value 5/1/96 -0.85% N/A 11.10% -6.85% N/A 8.35% -2.25% N/A 9.70%
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Dreyfus Stock Index Fund 9/29/89 20.60% 28.07% 17.70% 14.60% 26.57% 16.20% 19.20% 26.67% 16.30%
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Dreyfus VIF -
Appreciation 4/5/93 11.46% 25.52% 20.05% 5.46% 24.02% 18.55% 10.06% 24.12% 18.65%
Dreyfus VIF -
Disciplined Stock 5/1/96 18.45% N/A 26.16% 12.45% N/A 23.41% 17.05% N/A 24.76%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all (reflects insurance
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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Franklin Templeton Insurance Variable Products Trust, Class 1 Shares
Mutual Shares
Securities (1) 11/8/96 13.40% N/A 10.86% 7.40% N/A 7.91% 12.00% N/A 9.46%
Templeton Developing
Markets
Securities (2) 3/1/96 53.84% N/A -5.30% 47.84% N/A -7.99% 52.44% N/A -6.70%
Templeton International
Securities (3) 5/1/92 23.61% 17.21% 15.36% 17.61% 15.71% 13.86% 22.21% 15.81% 13.96%
Franklin Small
Cap (4) 11/1/95 96.94% N/A 30.41% 90.94% N/A 27.81% 95.54% N/A 29.01%
(1) Effective May 1, 2000, the Mutual Shares Investments Fund (previously
offered under the contract) merged into the Mutual Shares Securities Fund.
Performance shown reflects historical performance and inception date of the Mutual
Shares Securities Fund.
(2) Previously, the Templeton Developing Markets Fund. Effective May 1, 2000,
the Templeton Developing Markets Fund merged into the Templeton Developing Markets
Equity Fund. Performance shown reflects historical performance and inception date
of the Templeton Developing Markets Securities Fund.
(3) Previously, the Templeton International Fund. Effective May 1, 2000, the
Templeton International Securities Fund merged into the Templeton International
Equity Fund. Performance shown reflects historical performance and inception date
of the Templeton International Securities Fund.
(4) Effective May 1, 2000, the Franklin Small Cap Investments Fund (previously
offered under the contract) merged into the Franklin Small Cap Fund. Performance
shown reflects historical performance and inception date of the Franklin Small Cap
Fund.
General American Capital Company
Money Market 10/1/87 5.20% 5.60% 5.35% -0.86% 4.10% 3.85% 3.74% 4.20% 3.95%
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Goldman Sachs VIT
Global Income 1/12/98 -1.01% N/A 3.59% -6.99% N/A -0.22% -2.39% N/A 2.19%
Goldman Sachs VIT
Growth and Income 1/12/98 5.41% N/A 5.53% -0.66% N/A 1.72% 3.94% N/A 4.13%
Goldman Sachs VIT
International Equity1/12/98 31.85% N/A 26.26% 25.39% N/A 22.45% 30.02% N/A 24.86%
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INVESCO Variable Investment Funds, Inc.
INVESCO VIF -
Dynamics 8/25/97 55.60% N/A 31.95% 49.60% N/A 28.51% 54.20% N/A 30.55%
INVESCO VIF -
High Yield 5/27/94 9.20% 12.65% 11.34% 3.20% 11.15% 9.84% 7.80% 11.25% 9.94%
- ------------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 9/3/87 0.68% 7.46% 7.12% -5.31% 5.96% 5.62% -0.71% 6.06% 5.72%
Kemper Small
Cap Growth 5/2/94 34.56% 28.92% 25.97% 28.06% 27.42% 24.47% 32.69% 27.52% 24.57%
Kemper Small
Cap Value 5/1/96 2.80% N/A 3.42% -3.24% N/A 0.67% 1.36% N/A 2.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund
International 5/1/87 54.51% 20.56% 13.25% 48.51% 19.06% 11.75% 53.11% 19.16% 11.85%
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
Variable Series 5/1/95 68.01% N/A 7.31% 61.02% N/A 4.83% 65.69% N/A 5.91%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging
Growth 7/24/95 76.71% N/A 36.44% 69.58% N/A 33.91% 74.26% N/A 35.04%
MFS Global
Governments 6/14/94 -2.50% 4.36% 4.07% -8.45% 2.86% 2.57% -3.85% 2.96% 2.67%
MFS Growth
With Income 10/9/95 6.69% N/A 21.12% 0.60% N/A 18.54% 5.21% N/A 19.72%
MFS High Income 7/26/95 6.44% N/A 8.24% 0.36% N/A 5.71% 4.97% N/A 6.84%
MFS Research 7/26/95 24.05% N/A 22.86% 17.70% N/A 20.33% 22.32% N/A 21.46%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 12/31/99:
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Performance
Column B Column C
(reflects all reflects insurance
Portfolio Performance charges and charges and portfolio
Column A portfolio expenses) expenses)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio 10 yrs or 10 yrs or 10 yrs or
Inception since since since
Portfolio Date 1 yr 5 yrs inception 1 yr 5 yrs inception 1 yr 5 yrs inception
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
PIMCO High Yield Bond 4/30/98 3.01% N/A 2.88% -2.99% N/A -1.34% 1.61% N/A 1.48%
PIMCO Low
Duration Bond 2/16/99 N/A N/A 2.56% N/A N/A -3.76% N/A N/A 1.34%
PIMCO StocksPLUS
Growth and Income 12/31/97 19.85% N/A 24.87% 13.85% N/A 21.09% 18.45% N/A 23.47%
PIMCO Total
Return Bond 12/31/97 -0.58% N/A 3.91% -6.58% N/A 0.13% -1.98% N/A 2.51%
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth
and Income -
Class IA Shares 2/1/88 1.59% 19.40% 14.00% -4.43% 17.90% 12.50% 0.17% 18.00% 12.60%
Putnam VT International
Growth - Class
IA Shares 1/2 /97 60.13% N/A 30.29% 53.25% N/A 27.26% 57.91% N/A 28.89%
Putnam VT International
New Opportunities -
Class IA Shares 1/2 /97 102.95% N/A 32.92% 95.44% N/A 29.89% 100.14% N/A 31.52%
Putnam VT New Value -
Class IA Shares 1/2 /97 0.27% N/A 7.83% -5.73% N/A 4.80% -1.13% N/A 6.43%
Putnam VT Vista -
Class IA Shares 1/2 /97 52.90% N/A 31.14% 46.12% N/A 28.11% 50.77% N/A 29.74%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please send me, at no charge, the Statement of Additional Information dated
May 1, 2000, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- - ------------------------------------------------------------------------------
Name
- - ------------------------------------------------------------------------------
Address
- - ------------------------------------------------------------------------------
City State Zip Code
CL-4279 (5/00) NAVI-MO
- - ------------------------------
- - ------------------------------
- - ------------------------------
Cova Financial Services Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
issued by
COVA VARIABLE ANNUITY ACCOUNT ONE
AND
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 2000 FOR THE
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT WHICH IS DESCRIBED
HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4a644,
(800) 831-5433.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED MAY 1, 2000.
TABLE OF CONTENTS
Page
COMPANY ....................................................................
EXPERTS ....................................................................
LEGAL OPINIONS...............................................................
DISTRIBUTION.................................................................
Reduction or Elimination of the Withdrawal Charge...................
CALCULATION OF PERFORMANCE INFORMATION.......................................
Total Return........................................................
Historical Unit Values..............................................
Reporting Agencies..................................................
FEDERAL TAX STATUS...........................................................
General ...........................................................
Diversification.....................................................
Multiple Contracts.................................................
Contracts Owned by Other than Natural Persons......................
Tax Treatment of Assignments or Transfer of Ownership..............
Death Benefits.....................................................
Income Tax Withholding.............................................
Tax Treatment of Withdrawals - Non-Qualified Contracts.............
Qualified Plans....................................................
Tax Treatment of Withdrawals - Qualified Contracts.................
Tax-Sheltered Annuities - Withdrawal Limitations...................
ANNUITY PROVISIONS..........................................................
Variable Annuity...................................................
Fixed Annuity......................................................
Annuity Unit Value.................................................
Net Investment Factor..............................................
Mortality and Expense Guarantee....................................
FINANCIAL STATEMENTS........................................................
COMPANY
Cova Financial Services Life Insurance Company (the "Company") was originally
incorporated on August 17, 1981 as Assurance Life Company, a Missouri
corporation and changed its name to Xerox Financial Services Life Insurance
Company in 1985. On June 1, 1995 a wholly-owned subsidiary of General American
Life Insurance Company ("General American Life") purchased the Company from
Xerox Financial Services, Inc. The Company changed its name to Cova Financial
Services Life Insurance Company. On January 6, 2000, Metropolitan Life Insurance
Company (MetLife) acquired GenAmerica Corporation, the ultimate parent company
of General American Life. The acquisition of GenAmerica Corporation does not
affect policy benefits or any other terms or conditions under your contract.
MetLife, headquartered in New York City since 1868, is a leading provider of
insurance and financial products and services to individual and group customers.
The Company presently is licensed to do business in the District of Columbia and
all states except California, Maine, New Hampshire, New York and Vermont.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1999 and 1998,
and the related consolidated statements of income, shareholder's equity, and
cash flows for each of the years in the three-year period ended December 31,
1999, and the statement of assets and liabilities of the Separate Account as of
December 31, 1999, and the related statement of operations for the year then
ended and the statements of changes in net assets for the two years then ended,
have been included herein in reliance upon the reports of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
DISTRIBUTION
Cova Life Sales Company ("Life Sales") acts as the distributor. Prior to June 1,
1995, Cova Life Sales Company was known as Xerox Life Sales Company. Life Sales
is an affiliate of the Company. The offering is on a continuous basis.
Reduction or Elimination of the Withdrawal Charge
The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group of
individuals in a manner that results in savings of sales expenses. The
entitlement to reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than for a
smaller group because of the ability to implement large numbers of Contracts
with fewer sales contacts.
2. The total amount of purchase payments to be received will be considered.
Per Contract sales expenses are likely to be less on larger purchase payments
than on smaller ones.
3. Any prior or existing relationship with the Company will be considered.
Per Contract sales expenses are likely to be less when there is a prior existing
relationship because of the likelihood of implementing the Contract with fewer
sales contacts.
4. There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.
The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will any reduction or elimination of the Withdrawal Charge be permitted
where the reduction or elimination will be unfairly discriminatory to any
person.
CALCULATION OF PERFORMANCE INFORMATION
Total Return
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an Accumulation Unit based on the
performance of an investment portfolio over a period of time, usually a calendar
year, determined by dividing the increase (decrease) in value for that unit by
the Accumulation Unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a 1.25% Mortality and Expense Risk Premium, a .15% Administrative
Expense Charge, the expenses for the underlying investment portfolio being
advertised and any applicable Contract Maintenance Charges and Withdrawal
Charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Withdrawal Charges to arrive at
the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 purchase payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described. The formula used in these
calculations is:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV= ending redeemable value at the end of the time periods used (or
fractional portion thereof) of a hypothetical $1,000 payment made at
the beginning of the time periods used.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
contract maintenance charge and withdrawal charge. The deduction of any contract
maintenance charge and withdrawal charge would reduce any percentage increase or
make greater any percentage decrease.
You should note that the investment results of each investment portfolio will
fluctuate over time, and any presentation of the investment portfolio's total
return for any period should not be considered as a representation of what an
investment may earn or what your total return may be in any future period.
The Separate Account and certain Portfolios have been in existence for sometime
and have an investment performance history. In order to show how the historical
investment performance of the Separate Account and the Portfolios affect
accumulation unit values, performance information was developed. The information
is based upon the historical experience of the Separate Account and the
Portfolios and is for the periods shown. The prospectus contains performance
information.
Future performance of the Portfolios will vary and the results shown are not
necessarily representative of future results. Performance for periods ending
after those shown may vary substantially from the examples shown. The
performance for a Portfolio is calculated for a specified period of time by
assuming an initial Purchase Payment of $1,000 allocated to the Portfolio. There
are performance figures for the Accumulation Units which reflect the insurance
charges as well as the Portfolio expenses. There are also performance figures
for the Accumulation Units which reflect the insurance charges, the contract
maintenance charge, the Portfolio expenses, and assume that you make a
withdrawal at the end of the period and therefore the withdrawal charge is
reflected. The percentage increases (decreases) are determined by subtracting
the initial Purchase Payment from the ending value and dividing the remainder by
the beginning value. The performance may also show figures when no withdrawal is
assumed.
Historical Unit Values
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
Reporting Agencies
The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
FEDERAL TAX STATUS
General
NOTE: The following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. The Company does not guarantee the tax status of the contracts.
Purchasers bear the complete risk that the contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described herein may be applicable in certain situations. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities in general. An Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the form of a lump sum
payment or as annuity payments under the Annuity Option selected. For a lump sum
payment received as a total withdrawal (total surrender), the recipient is taxed
on the portion of the payment that exceeds the cost basis of the Contract. For
Non-Qualified Contracts, this cost basis is generally the purchase payments,
while for Qualified Contracts there may be no cost basis. The taxable portion of
the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one non-
qualified annuity contract in any calendar year.
Partial 1035 Exchanges
Section 1035 of the Code provides that an annuity contract may be exchanged in
a tax-free transaction for another annuity contract. Historically, it was
presumed that only the exchange of an entire contract, as opposed to a
partial exchange, would be accorded tax-free status. In 1998 in CONWAY VS.
COMMISSIONER, the Tax Court held that the direct transfer of a portion of
an annuity contract into another annuity contract qualified as a non-taxable
exchange. On November 22, 1999, the Internal Revenue Service filed an Action
on Decision which indicated that it acquiesced in the Tax Court decision in
CONWAY. However, in its acquiescence with the decision of the Tax Court, the
Internal Revenue Service stated that it will challenge transactions where
taxpayers enter into a series of partial exchanges and annuitizations as part
of a design to avoid application of the 10% premature distribution penalty or
other limitations imposed on annuity contracts under the Code. In the absence
of further guidance from the Internal Revenue Service it is unclear what
specific types of partial exchange designs and transactions will be challenged
by the Internal Revenue Service. Due to the uncertainty in this area owners
should consult their own tax advisers prior to entering into a partial exchange
of an annuity contract.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
Tax Treatment of Assignments or Transfer of Ownership
An assignment, pledge or transfer of ownership of a Contract may be a taxable
event. Owners should therefore consult competent tax advisers should they wish
to assign, pledge or transfer ownership of their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Certain distributions from retirement plans qualified under Section 401 or
Section 403(b) of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Qualified Plans
The Contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. The Company is not
bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. A qualified contract will
not provide any necessary or additional tax deferral if it is used to fund a
qualified plan that is tax deferred. However, the contract has features and
benefits other than tax deferral that may make it an appropriate investment for
a qualified plan. Following are general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the Contracts. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not allowable under the
Contracts. Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year period beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-
employed individuals, to establish various types of retirement plans for
employees. These retirement plans may permit the purchase of the Contracts to
provide benefits under the Plan. Contributions to the Plan for the benefit of
employees will not be includible in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places limitations
and restrictions on all Plans including on such items as: amount of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals - Qualified
Contracts" below.) Purchasers of Contracts for use with Pension or Profit
Sharing Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Owner or Annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and his
or her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions made on
account of an IRS levy upon the Qualified Contract; (h) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days); (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Owner or Annuitant (as
applicable) for the taxable year; and (j) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8) of
the Code). The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax-Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers and transfers between certain Qualified Plans. Owners should
consult their own tax counsel or other tax adviser regarding any distributions.
ANNUITY PROVISIONS
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable investment portfolio(s) of the Separate Account. At the
Annuity Date, the Contract Value in each investment portfolio will be applied to
the applicable Annuity Tables. The Annuity Table used will depend upon the
Annuity Option chosen. If, as of the Annuity Date, the then current Annuity
Option rates applicable to this class of Contracts provide a first Annuity
Payment greater than guaranteed under the same Annuity Option under this
Contract, the greater payment will be made. The dollar amount of Annuity
Payments after the first is determined as follows:
(1) the dollar amount of the first Annuity Payment is divided by the value of
an Annuity Unit as of the Annuity Date. This establishes the number of
Annuity Units for each monthly payment. The number of Annuity Units remains
fixed during the Annuity Payment period.
(2) the fixed number of Annuity Units is multiplied by the Annuity Unit value
for the last Valuation Period of the month preceding the month for which
the payment is due. This result is the dollar amount of the payment.
The total dollar amount of each Variable Annuity Payment is the sum of all
investment portfolios' Variable Annuity Payments reduced by the applicable
Contract Maintenance Charge.
Fixed Annuity
A fixed annuity is a series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Separate Account. The General Account Value on the
day immediately preceding the Annuity Date will be used to determine the Fixed
Annuity monthly payment. The first monthly Annuity Payment will be based upon
the Annuity Option elected and the appropriate Annuity Option Table.
Annuity Unit Value
The value of an Annuity Unit for each investment portfolio was arbitrarily set
initially at $10. This was done when the first investment portfolio shares were
purchased. The investment portfolio Annuity Unit value at the end of any
subsequent Valuation Period is determined by multiplying the investment
portfolio Annuity Unit value for the immediately preceding Valuation Period by
the product of (a) the Net Investment Factor for the day for which the Annuity
Unit value is being calculated, and (b) 0.999919.
Net Investment Factor
The Net Investment Factor for any investment portfolio for any Valuation Period
is determined by dividing:
(a) the Accumulation Unit value as of the close of the current Valuation
Period, by
(b) the Accumulation Unit value as of the close of the immediately preceding
Valuation Period.
The Net Investment Factor may be greater or less than one, as the Annuity Unit
value may increase or decrease.
Mortality and Expense Guarantee
The Company guarantees that the dollar amount of each Annuity Payment after the
first Annuity Payment will not be affected by variations in mortality or expense
experience.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
COVA VARIABLE ANNUITY ACCOUNT ONE
Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Contract Owners of Cova Variable
Annuity Account One, Board of Directors
and Shareholder of Cova Financial
Services Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of each of
the sub-accounts comprising Cova Variable Annuity Account One of Cova Financial
Services Life Insurance Company (the Separate Account), as of December 31, 1999,
and the related statement of operations for the year then ended and the
statements of changes in net assets for the two years then ended. These
financial statements are the responsibility of the Separate Account's
management. Our responsibility is to express an opinion on these financial
statements 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 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 securities owned as of December 31, 1999 by correspondence with
transfer agents. 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 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, 1999, and the results of their operations and the changes in
their net assets for each of the years presented, in conformity with generally
accepted accounting principles.
Chicago, Illinois
March 20, 2000
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Assets:
Investments:
<S> <C> <C> <C>
Cova Series Trust (Cova):
Lord Abbett Growth and Income Portfolio 34,707,072 shares at a net asset value of $24.070563 per share $ 835,419
Bond Debenture Portfolio 12,630,708 shares at a net asset value of $12.474609 per share 157,563
Developing Growth Portfolio 2,091,722 shares at a net asset value of $14.885144 per share 31,136
Large Cap Research Portfolio 2,208,460 shares at a net asset value of $14.991245 per share 33,108
Mid-Cap Value Portfolio 2,463,026 shares at a net asset value of $11.168093 per share 27,507
Quality Bond Portfolio 8,264,208 shares at a net asset value of $10.669328 per share 88,174
Small Cap Stock Portfolio 5,647,655 shares at a net asset value of $17.268582 per share 97,527
Large Cap Stock Portfolio 10,977,166 shares at a net asset value of $20.674865 per share 226,951
Select Equity Portfolio 14,012,264 shares at a net asset value of $16.112437 per share 225,772
International Equity Portfolio 7,636,292 shares at a net asset value of $16.225039 per share 123,899
Balanced Portfolio 711,844 shares at a net asset value of $11.857810 per share 8,441
Equity Income Portfolio 511,023 shares at a net asset value of $11.168718 per share 5,707
Growth and Income Equity Portfolio 1,085,889 shares at a net asset value of $13.788230 per share 14,972
Riggs U.S. Government Securities Portfolio 29,121 shares at a net asset value of $10.044951 per share 292
Riggs Stock Portfolio 21,243 shares at a net asset value of $10.287914 per share 219
General American Capital Company (GACC):
Money Market Fund 2,118,010 shares at a net asset value of $20.252283 per share 42,895
Russell Insurance Funds (Russell):
Multi-Style Equity Fund 3,354,855 shares at a net asset value of $16.79 per share 56,328
Aggressive Equity Fund 707,879 shares at a net asset value of $13.36 per share 9,457
Non-US Fund 1,618,203 shares at a net asset value of $14.19 per share 22,962
Core Bond Fund 2,858,271 shares at a net asset value of $9.64 per share 27,554
Real Estate Securities Fund 71,678 shares at a net asset value of $8.81 per share 631
AIM Variable Insurance Funds, Inc. (AIM):
AIM V.I. Value Fund 1,270,795 shares at a net asset value of $33.50 per share 42,572
AIM V.I. Capital Appreciation Fund 425,170 shares at a net asset value of $35.58 per share 15,128
AIM V.I. International Equity Fund 165,305 shares at a net asset value of $29.29 per share 4,842
Alliance Variable Products Series
Fund, Inc. (Alliance):
Premier Growth Portfolio 972,396 shares at a net asset value of $40.45 per share 39,333
Real Estate Investment Portfolio 400,684 shares at a net asset value of $8.87 per share 3,554
Liberty Variable Investment Trust (Liberty):
Newport Tiger Fund, Variable Series 237,245 shares at a net asset value of $2.62 per share 622
Goldman Sachs Variable Insurance
Trust (Goldman Sachs):
Growth and Income Fund 586,954 shares at a net asset value of $10.89 per share 6,392
International Equity Fund 246,107 shares at a net asset value of $14.47 per share 3,561
Global Income Fund 33,771 shares at a net asset value of $9.83 per share 332
Kemper Variable Series (Kemper):
Kemper-Dreman High Return Equity Portfolio 192,771 shares at a net asset value of $0.896450 per share 173
Kemper Small Cap Growth Portfolio 662,996 shares at a net asset value of $2.653950 per share 1,760
Kemper Small Cap Value Portfolio 4,057,278 shares at a net asset value of $1.084940 per share 4,402
Kemper Government Securities Portfolio 1,982,984 shares at a net asset value of $1.156570 per share 2,293
MFS Variable Insurance Trust (MFS):
MFS Bond Series 20,057 shares at a net asset value of $10.93 per share 219
MFS Research Series 700,868 shares at a net asset value of $23.34 per share 16,358
MFS Growth with Income Series 817,962 shares at a net asset value of $21.31 per share 17,431
MFS Emerging Growth Series 752,059 shares at a net asset value of $37.94 per share 28,533
MFS/Foreign & Colonial Emerging
Markets Equity Series 18,334 shares at a net asset value of $8.15 per share 149
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Assets, continued:
Investments, continued:
<S> <C> <C> <C>
MFS High Income Series 393,825 shares at a net asset value of $11.49 per share $ 4,525
MFS Global Governments Series 7,643 shares at a net asset value of $10.03 per share 77
Oppenheimer Variable Account Funds (Oppenheimer):
Oppenheimer Capital Appreciation Fund 149,729 shares at a net asset value of $49.84 per share 7,463
Oppenheimer Main Street Growth & Income Fund 311,375 shares at a net asset value of $24.63 per share 7,669
Oppenheimer High Income Fund 226,164 shares at a net asset value of $10.72 per share 2,424
Oppenheimer Bond Fund 915,108 shares at a net asset value of $11.52 per share 10,542
Oppenheimer Strategic Bond Fund 634,884 shares at a net asset value of $4.97 per share 3,155
Putnam Variable Trust (Putnam)
Putnam VT Growth and Income Fund 980,278 shares at a net asset value of $26.80 per share 26,271
Putnam VT New Value Fund 58,470 shares at a net asset value of $11.86 per share 693
Putnam VT Vista Fund 331,114 shares at a net asset value of $20.68 per share 6,847
Putnam VT International Growth Fund 932,755 shares at a net asset value of $21.65 per share 20,194
Putnam VT International New
Opportunities Fund 107,771 shares at a net asset value of $23.31 per share 2,512
Templeton Variable Products Series
Fund (Templeton):
Templeton Bond Fund 32,682 shares at a net asset value of $9.99 per share 326
Franklin Small Cap Investments Fund 62,033 shares at a net asset value of $15.79 per share 980
Templeton Stock Fund 22,057 shares at a net asset value of $24.39 per share 538
Templeton International Fund 413,917 shares at a net asset value of $22.25 per share 9,210
Templeton Developing Markets Fund 449,045 shares at a net asset value of $7.77 per share 3,489
Mutual Shares Investments Fund 242,768 shares at a net asset value of $10.63 per share 2,581
Franklin Growth Investments Fund 61,027 shares at a net asset value of $16.70 per share 1,019
Variable Insurance Products Fund, Fund II
and Fund III (Fidelity):
VIP Growth Portfolio 33,314 shares at a net asset value of $54.93 per share 1,830
VIP II Contrafund Portfolio 62,294 shares at a net asset value of $29.15 per share 1,816
VIP III Growth Opportunities Portfolio 31,500 shares at a net asset value of $23.15 per share 729
VIP III Growth & Income Portfolio 143,448 shares at a net asset value of $17.30 per share 2,482
VIP Equity-Income Portfolio 47,752 shares at a net asset value of $25.71 per share 1,228
American Century Variable Portfolios,
Inc. (American Century):
American Century VP Income & Growth Fund 34,859 shares at a net asset value of $8.00 per share 279
American Century VP International Fund 156 shares at a net asset value of $12.50 per share 2
American Century VP Value Fund 28,998 shares at a net asset value of $5.95 per share 173
Dreyfus Stock Index Fund (Dreyfus) 369 shares at a net asset value of $38.45 per share 14
Dreyfus Variable Investment Fund (Dreyfus):
Dreyfus VIF Disciplined Stock Portfolio 361 shares at a net asset value of $26.92 per share 10
Dreyfus VIF Capital Appreciation Portfolio 5,642 shares at a net asset value of $39.87 per share 225
INVESCO Variable Investment Funds,
Inc. (INVESCO):
INVESCO VIF Dynamics Fund 9,589 shares at a net asset value of $18.90 per share 181
INVESCO VIF High Yield Fund 4,879 shares at a net asset value of $11.51 per share 56
PIMCO Variable Insurance Trust (PIMCO):
PIMCO High Yield Bond Portfolio 11 shares at a net asset value of $9.18 per share -
PIMCO Low Duration Bond Portfolio 10 shares at a net asset value of $9.74 per share -
PIMCO StocksPLUS Growth & Income Portfolio 674 shares at a net asset value of $13.56 per share 9
PIMCO Total Return Bond Portfolio 7,495 shares at a net asset value of $9.45 per share 71
Scudder Variable Life Investment Fund (Scudder):
International Portfolio 8,294 shares at a net asset value of $20.34 per share 169
-------------
Total assets $ 2,343,957
=============
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Net assets:
Accumulation units:
<S> <C> <C> <C>
Cova Lord Abbett Growth and Income 21,128,621 accumulation units at $39.456928 per unit $ 833,671
Cova Bond Debenture 11,413,993 accumulation units at $13.765381 per unit 157,118
Cova Developing Growth 2,153,899 accumulation units at $14.452868 per unit 31,130
Cova Large Cap Research 2,260,424 accumulation units at $14.635627 per unit 33,083
Cova Mid-Cap Value 2,528,900 accumulation units at $10.875538 per unit 27,503
Cova Quality Bond 7,608,610 accumulation units at $11.567155 per unit 88,010
Cova Small Cap Stock 5,435,852 accumulation units at $17.932441 per unit 97,478
Cova Large Cap Stock 10,050,149 accumulation units at $22.548941 per unit 226,620
Cova Select Equity 12,271,286 accumulation units at $18.384654 per unit 225,604
Cova International Equity 7,578,951 accumulation units at $16.333906 per unit 123,794
Cova Balanced 678,937 accumulation units at $12.432529 per unit 8,441
Cova Equity Income 467,721 accumulation units at $12.202725 per unit 5,707
Cova Growth and Income Equity 1,072,066 accumulation units at $13.966013 per unit 14,972
Cova Riggs U.S. Government Securities 29,265 accumulation units at $9.995395 per unit 292
Cova Riggs Stock 21,344 accumulation units at $10.239524 per unit 219
GACC Money Market 3,709,173 accumulation units at $11.525358 per unit 42,750
Russell Multi-Style Equity 3,839,689 accumulation units at $14.667724 per unit 56,319
Russell Aggressive Equity 907,258 accumulation units at $10.422234 per unit 9,455
Russell Non-US 1,566,787 accumulation units at $14.652149 per unit 22,956
Russell Core Bond 2,654,149 accumulation units at $10.380043 per unit 27,550
Russell Real Estate Securities 67,264 accumulation units at $9.388124 per unit 631
AIM V.I. Value 2,544,761 accumulation units at $16.729131 per unit 42,572
AIM V.I. Capital Appreciation 901,235 accumulation units at $16.785351 per unit 15,128
AIM V.I. International Equity 277,998 accumulation units at $17.416663 per unit 4,842
Alliance Premier Growth 2,065,459 accumulation units at $19.043436 per unit 39,333
Alliance Real Estate Investment 475,475 accumulation units at $7.474763 per unit 3,554
Liberty Newport Tiger Fund, Variable 40,648 accumulation units at $15.290670 per unit 622
Goldman Sachs Growth and Income 620,568 accumulation units at $10.299328 per unit 6,392
Goldman Sachs International Equity 240,170 accumulation units at $14.826563 per unit 3,561
Goldman Sachs Global Income 31,541 accumulation units at $10.524196 per unit 332
Kemper-Dreman High Return Equity 18,808 accumulation units at $9.187195 per unit 173
Kemper Small Cap Growth 113,560 accumulation units at $15.493396 per unit 1,760
Kemper Small Cap Value 496,083 accumulation units at $8.872647 per unit 4,402
Kemper Government Securities 218,804 accumulation units at $10.480981 per unit 2,293
MFS Bond 21,525 accumulation units at $10.184471 per unit 219
MFS Research 1,098,586 accumulation units at $14.890281 per unit 16,358
MFS Growth with Income 1,373,014 accumulation units at $12.695264 per unit 17,431
MFS Emerging Growth 1,237,361 accumulation units at $23.059667 per unit 28,533
MFS/Foreign & Colonial Emerging
Markets Equity 16,687 accumulation units at $8.954559 per unit 149
MFS High Income 437,876 accumulation units at $10.334082 per unit 4,525
MFS Global Governments 7,473 accumulation units at $10.258675 per unit 77
Oppenheimer Capital Appreciation 436,692 accumulation units at $17.087450 per unit 7,463
Oppenheimer Main Street Growth & Income 618,771 accumulation units at $12.393263 per unit 7,669
Oppenheimer High Income 238,266 accumulation units at $10.174699 per unit 2,424
Oppenheimer Bond 1,030,539 accumulation units at $10.228856 per unit 10,542
Oppenheimer Strategic Bond 306,527 accumulation units at $10.293168 per unit 3,155
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Net assets, continued:
Accumulation units, continued:
<S> <C> <C> <C>
Putnam VT Growth and Income 2,304,013 accumulation units at $11.402482 per unit $ 26,271
Putnam VT New Value 66,900 accumulation units at $10.365439 per unit 693
Putnam VT Vista 385,345 accumulation units at $17.769589 per unit 6,847
Putnam VT International Growth 1,092,379 accumulation units at $18.486388 per unit 20,194
Putnam VT International New Opportunities 110,085 accumulation units at $22.820083 per unit 2,512
Templeton Bond 33,720 accumulation units at $9.681884 per unit 326
Franklin Small Cap Investments 55,398 accumulation units at $17.679923 per unit 980
Templeton Stock 42,835 accumulation units at $12.557918 per unit 538
Templeton International 826,137 accumulation units at $11.147003 per unit 9,210
Templeton Developing Markets 304,489 accumulation units at $11.457935 per unit 3,489
Templeton Mutual Shares Investments 247,806 accumulation units at $10.413095 per unit 2,581
Franklin Growth Investments 69,488 accumulation units at $14.665449 per unit 1,019
Fidelity VIP Growth 103,240 accumulation units at $17.723853 per unit 1,830
Fidelity VIP II Contrafund 119,923 accumulation units at $15.140886 per unit 1,816
Fidelity VIP III Growth Opportunities 60,394 accumulation units at $12.073401 per unit 729
Fidelity VIP III Growth & Income 188,911 accumulation units at $13.135609 per unit 2,482
Fidelity VIP Equity-Income 110,182 accumulation units at $11.141767 per unit 1,228
American Century VP Income & Growth 27,012 accumulation units at $10.320209 per unit 279
American Century VP International 155 accumulation units at $12.514968 per unit 2
American Century VP Value 17,999 accumulation units at $9.582238 per unit 173
Dreyfus Stock Index 1,373 accumulation units at $10.321607 per unit 14
Dreyfus VIF Disciplined Stock 944 accumulation units at $10.300470 per unit 10
Dreyfus VIF Capital Appreciation 22,221 accumulation units at $10.118366 per unit 225
INVESCO Dynamics 16,259 accumulation units at $11.142628 per unit 181
INVESCO High Yield 5,548 accumulation units at $10.117511 per unit 56
PIMCO High Yield Bond 10 accumulation units at $10.078000 per unit -
PIMCO Low Duration Bond 10 accumulation units at $9.969000 per unit -
PIMCO StocksPLUS Growth & Income 887 accumulation units at $10.306817 per unit 9
PIMCO Total Return Bond 7,170 accumulation units at $9.875011 per unit 71
Scudder International 14,499 accumulation units at $11.631204 per unit 169
-------------
2,340,746
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Assets and Liabilities
December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Net assets, continued:
Annuity units:
<S> <C> <C> <C>
Cova Lord Abbett Growth and Income 59,648 annuity units at $29.309972 per unit $ 1,748
Cova Bond Debenture 36,141 annuity units at $12.317493 per unit 445
Cova Developing Growth 413 annuity units at $13.475931 per unit 6
Cova Large Cap Research 1,820 annuity units at $13.646349 per unit 25
Cova Mid-Cap Value 409 annuity units at $10.140412 per unit 4
Cova Quality Bond 15,804 annuity units at $10.350485 per unit 164
Cova Small Cap Stock 3,048 annuity units at $16.046246 per unit 49
Cova Large Cap Stock 16,416 annuity units at $20.177175 per unit 331
Cova Select Equity 10,234 annuity units at $16.450916 per unit 168
Cova International Equity 7,202 annuity units at $14.615841 per unit 105
GACC Money Market 13,985 annuity units at $10.368367 per unit 145
Russell Multi-Style 616 annuity units at $13.825531 per unit 9
Russell Aggressive Equity 164 annuity units at $9.823809 per unit 2
Russell Non-US 398 annuity units at $13.810834 per unit 6
Russell Core Bond 363 annuity units at $9.784047 per unit 4
-------------
Total net assets $ 2,343,957
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
-----------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money High Stock and and Bond
Income Market Yield Index Income Income Debenture
----------- --------- --------- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 1,404 7 1,324 576 331 - 2,999
----------- --------- --------- -------- ------------ ------------- -------------
Expenses:
Mortality and expense risk 11 2 8 27 14 9,608 1,878
Administrative fee 1 - 1 3 2 1,153 225
----------- --------- --------- -------- ------------ ------------- -------------
Total expenses 12 2 9 30 16 10,761 2,103
----------- --------- --------- -------- ------------ ------------- -------------
Net investment income (loss) 1,392 5 1,315 546 315 (10,761) 896
----------- --------- --------- -------- ------------ ------------- -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (520) - (955) 18,079 6,587 1,426 123
Realized gain distributions - - - 9,833 5,025 - 972
----------- --------- --------- -------- ------------ ------------- -------------
Net realized gain (loss) (520) - (955) 27,912 11,612 1,426 1,095
----------- --------- --------- -------- ------------ ------------- -------------
Change in unrealized appreciation (1,307) - (174) (25,838) (11,521) 84,856 825
----------- --------- --------- -------- ------------ ------------- -------------
Net increase (decrease) in net
assets from operations $ (435) 5 186 2,620 406 75,521 2,816
=========== ========= ========= ======== ============ ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
------------------------------------------------------------------------------------
Large Small Large
Developing Cap Mid-Cap Quality Cap Cap Select
Growth Research Value Bond Stock Stock Equity
------------ --------- ---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - 40 32 980 201 273 528
------------ --------- ---------- --------- --------- ---------- ----------
Expenses:
Mortality and expense risk 263 280 290 1,077 900 2,451 2,538
Administrative fee 32 34 35 129 108 294 305
------------ --------- ---------- --------- --------- ---------- ----------
Total expenses 295 314 325 1,206 1,008 2,745 2,843
------------ --------- ---------- --------- --------- ---------- ----------
Net investment income (loss) (295) (274) (293) (226) (807) (2,472) (2,315)
------------ --------- ---------- --------- --------- ---------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 69 9 21 (12) 116 2,080 283
Realized gain distributions - - - 491 - 5,964 17,924
------------ --------- ---------- --------- --------- ---------- ----------
Net realized gain (loss) 69 9 21 479 116 8,044 18,207
------------ --------- ---------- --------- --------- ---------- ----------
Change in unrealized appreciation 6,712 5,533 1,266 (2,613) 29,693 20,021 404
------------ --------- ---------- --------- --------- ---------- ----------
Net increase (decrease) in net
assets from operations $ 6,486 5,268 994 (2,360) 29,002 25,593 16,296
============ ========= ========== ========= ========= ========== ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
--------------------------------------------------------------------------------------
Growth Riggs
Small and U.S.
International Cap Equity Income Government Riggs
Equity Balanced Equity Income Equity Securities Stock
------------- ---------- --------- --------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 509 161 - 92 53 - -
------------- ---------- --------- --------- --------- ------------- ----------
Expenses:
Mortality and expense risk 1,283 77 14 62 148 1 -
Administrative fee 154 9 2 7 18 - -
------------- ---------- --------- --------- --------- ------------- --------
Total expenses 1,437 86 16 69 166 1 -
------------- ---------- --------- --------- --------- ------------- --------
Net investment income (loss) (928) 75 (16) 23 (113) (1) -
------------- ---------- --------- --------- --------- ------------- --------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 1,060 43 76 27 62 1 -
Realized gain distributions 1,361 80 - 266 95 - -
------------- ---------- --------- --------- --------- ------------- --------
Net realized gain (loss) 2,421 123 76 293 157 1 -
------------- ---------- --------- --------- --------- ------------- --------
Change in unrealized appreciation 24,455 138 (34) (336) 1,557 (4) 4
------------- ---------- --------- --------- --------- ------------- --------
Net increase (decrease) in net
assets from operations $ 25,948 336 26 (20) 1,601 (4) 4
============= ========== ========= ========= ========= ============= ========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
GACC Lord Abbett Russell
---------- ------------ ------------------------------------------------------------
Growth Multi- Real
Money and Style Aggressive Core Estate
Market Income Equity Equity Non-US Bond Securities
---------- ------------ --------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - 304 22 287 1,359 20
---------- ------------ --------- ----------- ----------- --------- ----------
Expenses:
Mortality and expense risk 476 186 528 87 190 284 2
Administrative fee 57 22 63 10 23 34 -
---------- ------------ --------- ----------- ----------- --------- ----------
Total expenses 533 208 591 97 213 318 2
---------- ------------ --------- ----------- ----------- --------- ----------
Net investment income (loss) (533) (208) (287) (75) 74 1,041 18
---------- ------------ --------- ----------- ----------- --------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 955 145,466 122 (10) 45 (71) -
Realized gain distributions - - 3,846 38 468 812 -
---------- ------------ --------- ----------- ----------- --------- ----------
Net realized gain (loss) 955 145,466 3,968 28 513 741 -
---------- ------------ --------- ----------- ----------- --------- ----------
Change in unrealized appreciation 984 (114,453) 2,497 661 4,373 (2,215) (9)
---------- ------------ --------- ----------- ----------- --------- ----------
Net increase (decrease) in net
assets from operations $ 1,406 30,805 6,178 614 4,960 (433) 9
========== ============ ========= =========== =========== ========= ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
AIM Alliance Liberty Goldman Sachs
---------------------------------------- ---------------------- ---------- ---------------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and
V.I. Value Appreciation Equity Growth Investment Variable Income
----------- -------------- ------------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 106 9 30 - 137 4 71
----------- -------------- ------------- -------- ------------ ---------- ---------------
Expenses:
Mortality and expense risk 247 76 39 283 35 5 72
Administrative fee 30 9 5 34 4 1 9
----------- -------------- ------------- -------- ------------ ---------- ---------------
Total expenses 277 85 44 317 39 6 81
----------- -------------- ------------- -------- ------------ ---------- ---------------
Net investment income (loss) (171) (76) (14) (317) 98 (2) (10)
----------- -------------- ------------- -------- ------------ ---------- ---------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 16 14 671 58 (22) 170 (20)
Realized gain distributions 555 294 128 279 - - -
----------- -------------- ------------- -------- ------------ ---------- ---------------
Net realized gain (loss) 571 308 799 337 (22) 170 (20)
----------- -------------- ------------- -------- ------------ ---------- ---------------
Change in unrealized appreciation 5,538 3,433 927 6,844 (237) 47 205
----------- -------------- ------------- -------- ------------ ---------- ---------------
Net increase (decrease) in net
assets from operations $ 5,938 3,665 1,712 6,864 (161) 215 175
=========== ============== ============= ======== ============ ========== ===============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Goldman Sachs Kemper MFS
------------------------ -------------------------------------------------- ------
Kemper-
Dreman Small Small
International Global High Return Cap Cap Government
Equity Income Equity Growth Value Securities Bond
------------- -------- ------------- --------- -------- -------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 44 10 1 - 33 69 4
------------- -------- ------------- --------- -------- -------------- ------
Expenses:
Mortality and expense risk 27 3 2 16 45 20 2
Administrative fee 3 - - 2 5 2 -
------------- -------- ------------- --------- -------- -------------- ------
Total expenses 30 3 2 18 50 22 2
------------- -------- ------------- --------- -------- -------------- ------
Net investment income (loss) 14 7 (1) (18) (17) 47 2
------------- -------- ------------- --------- -------- -------------- ------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 158 - - 37 (18) (1) -
Realized gain distributions 217 2 1 - - - -
------------- -------- ------------- --------- -------- -------------- ------
Net realized gain (loss) 375 2 1 37 (18) (1) -
------------- -------- ------------- --------- -------- -------------- ------
Change in unrealized appreciation 380 (14) (21) 435 195 (57) (7)
------------- -------- ------------- --------- -------- -------------- ------
Net increase (decrease) in net
assets from operations $ 769 (5) (21) 454 160 (11) (5)
============= ======== ============= ========= ======== ============== ======
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
MFS Oppenheimer
--------------------------------------------------------------------------- -------------
F&C
Growth Emerging
with Emerging Markets High Global Capital
Research Income Growth Equity Income Governments Appreciation
---------- --------- ----------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 16 35 - - 210 3 7
---------- --------- ----------- ----------- ---------- ------------- -------------
Expenses:
Mortality and expense risk 126 155 175 4 43 1 47
Administrative fee 15 19 21 - 5 - 6
---------- --------- ----------- ----------- ---------- ------------- -------------
Total expenses 141 174 196 4 48 1 53
---------- --------- ----------- ----------- ---------- ------------- -------------
Net investment income (loss) (125) (139) (196) (4) 162 2 (46)
---------- --------- ----------- ----------- ---------- ------------- -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 27 20 139 (12) (5) - 18
Realized gain distributions 86 42 - - - - 78
---------- --------- ----------- ----------- ---------- ------------- -------------
Net realized gain (loss) 113 62 139 (12) (5) - 96
---------- --------- ----------- ----------- ---------- ------------- -------------
Change in unrealized appreciation 2,613 841 11,084 118 (24) (4) 1,620
---------- --------- ----------- ----------- ---------- ------------- -------------
Net increase (decrease) in net
assets from operations $ 2,601 764 11,027 102 133 (2) 1,670
========== ========= =========== =========== ========== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Oppenheimer Putnam
----------------------------------------------- -------------------------------------
Main Street
Growth VT Growth
& High Strategic and VT New
Income Income Bond Bond Income Value VT Vista
------------ --------- -------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 15 72 286 84 240 - 484
------------ --------- -------- ---------- ------------ --------- ----------
Expenses:
Mortality and expense risk 56 20 98 27 258 8 43
Administrative fee 7 2 12 3 31 1 5
------------ --------- -------- ---------- ------------ --------- ----------
Total expenses 63 22 110 30 289 9 48
------------ --------- -------- ---------- ------------ --------- ----------
Net investment income (loss) (48) 50 176 54 (49) (9) 436
------------ --------- -------- ---------- ------------ --------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 27 (1) (7) (4) 2 (7) 22
Realized gain distributions 26 - 28 - 1,199 9 -
------------ --------- -------- ---------- ------------ --------- ----------
Net realized gain (loss) 53 (1) 21 (4) 1,201 2 22
------------ --------- -------- ---------- ------------ --------- ----------
Change in unrealized appreciation 905 (25) (412) (3) (1,651) (28) 1,514
------------ --------- -------- ---------- ------------ --------- ----------
Net increase (decrease) in net
assets from operations $ 910 24 (215) 47 (499) (35) 1,972
============ ========= ======== ========== ============ ========= ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Putnam Templeton
--------------------------- --------------------------------------------------------------
VT
VT International Franklin
International New Small Cap Developing
Growth Opportunities Bond Investments Stock International Markets
------------- ------------- -------- ------------- ------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - - - - 57 13
------------- ------------- -------- ------------- ------- ------------- --------------
Expenses:
Mortality and expense risk 150 13 2 3 2 64 26
Administrative fee 18 2 - - - 8 3
------------- ------------- -------- ------------- ------- ------------- --------------
Total expenses 168 15 2 3 2 72 29
------------- ------------- -------- ------------- ------- ------------- --------------
Net investment income (loss) (168) (15) (2) (3) (2) (15) (16)
------------- ------------- -------- ------------- ------- ------------- --------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 464 250 - 12 2 186 68
Realized gain distributions - - - - - 198 -
------------- ------------- -------- ------------- ------- ------------- --------------
Net realized gain (loss) 464 250 - 12 2 384 68
------------- ------------- -------- ------------- ------- ------------- --------------
Change in unrealized appreciation 6,452 820 (3) 231 60 957 828
------------- ------------- -------- ------------- ------- ------------- --------------
Net increase (decrease) in net
assets from operations $ 6,748 1,055 (5) 240 60 1,326 880
============= ============= ======== ============= ======= ============= ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Templeton Fidelity
--------------------------- -------------------------------------------------------------
Mutual Franklin VIP III VIP III VIP
Shares Growth VIP VIP II Growth Growth & Equity-
Investments Investments Growth Contrafund Opportunities Income Income
------------ ------------ -------- ------------ ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 3 - 1 2 1 7 5
------------ ------------ -------- ------------ ------------- --------- ---------
Expenses:
Mortality and expense risk 23 3 11 13 5 22 10
Administrative fee 3 - 1 2 1 3 1
------------ ------------ -------- ------------ ------------- --------- ---------
Total expenses 26 3 12 15 6 25 11
------------ ------------ -------- ------------ ------------- --------- ---------
Net investment income (loss) (23) (3) (11) (13) (5) (18) (6)
------------ ------------ -------- ------------ ------------- --------- ---------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 10 7 9 40 1 20 2
Realized gain distributions - - 32 18 3 13 12
------------ ------------ -------- ------------ ------------- --------- ---------
Net realized gain (loss) 10 7 41 58 4 33 14
------------ ------------ -------- ------------ ------------- --------- ---------
Change in unrealized appreciation 121 161 298 219 15 119 -
------------ ------------ -------- ------------ ------------- --------- ---------
Net increase (decrease) in net
assets from operations $ 108 165 328 264 14 134 8
============ ============ ======== ============ ============= ========= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
American Century Dreyfus INVESCO
------------------------------------ --------------------------------------- -----------
VP VIF VIF
Income & VP VP Stock Disciplined Capital VIF
Growth International Value Index Stock Appreciation Dynamics
---------- -------------- -------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - - - - 1 -
---------- -------------- -------- --------- ----------- ------------- -----------
Expenses:
Mortality and expense risk - - - - - - -
Administrative fee - - - - - - -
---------- -------------- -------- --------- ----------- ------------- -----------
Total expenses - - - - - - -
---------- -------------- -------- --------- ----------- ------------- -----------
Net investment income (loss) - - - - - 1 -
---------- -------------- -------- --------- ----------- ------------- -----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - - - - - - -
Realized gain distributions - - - - - - -
---------- -------------- -------- --------- ----------- ------------- -----------
Net realized gain (loss) - - - - - - -
---------- -------------- -------- --------- ----------- ------------- -----------
Change in unrealized appreciation 7 - 2 - - 1 8
---------- -------------- -------- --------- ----------- ------------- -----------
Net increase (decrease) in net
assets from operations $ 7 - 2 - - 2 8
========== ============== ======== ========= =========== ============= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Operations
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
INVESCO PIMCO Scudder
----------- ---------------------------------------------- -------------
VIF High Low StocksPLUS Total
High Yield Duration Growth & Return
Yield Bond Bond Income Bond International Total
----------- -------- --------- ------------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - - - - - 13,562
----------- -------- --------- ------------- -------- ------------- -------------
Expenses:
Mortality and expense risk - - - - - - 24,965
Administrative fee - - - - - - 2,994
----------- -------- --------- ------------- -------- ------------- -------------
Total expenses - - - - - - 27,959
----------- -------- --------- ------------- -------- ------------- -------------
Net investment income (loss) - - - - - - (14,397)
----------- -------- --------- ------------- -------- ------------- -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - - - - - - 177,435
Realized gain distributions - - - - - - 50,395
----------- -------- --------- ------------- -------- ------------- -------------
Net realized gain (loss) - - - - - - 227,830
----------- -------- --------- ------------- -------- ------------- -------------
Change in unrealized appreciation - - - - - 11 69,998
----------- -------- --------- ------------- -------- ------------- -------------
Net increase (decrease) in net
assets from operations $ - - - - - 11 283,431
=========== ======== ========= ============= ======== ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
------------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money High Stock and and Bond
Income Market Yield Index Income Income Debenture
----------- ---------- ---------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ 1,392 5 1,315 546 315 (10,761) 896
Net realized gain (loss) (520) - (955) 27,912 11,612 1,426 1,095
Change in unrealized appreciation (1,307) - (174) (25,838) (11,521) 84,856 825
----------- ---------- ---------- ----------- ----------- -------------- -----------
Net increase (decrease) from
operations (435) 5 186 2,620 406 75,521 2,816
----------- ---------- ---------- ----------- ----------- -------------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners (1) - 2 5 - 23,054 7,755
Transfers between sub-accounts
(including fixed account), net (38,617) (7,850) (28,915) (99,953) (51,639) 812,130 52,101
Transfers for contract benefits and
terminations (37) (46) (73) (259) (78) (75,286) (15,580)
----------- ---------- ---------- ----------- ----------- -------------- -----------
Net increase (decrease) in net
assets from contract
transactions (38,655) (7,896) (28,986) (100,207) (51,717) 759,898 44,276
----------- ---------- ---------- ----------- ----------- -------------- -----------
Net increase (decrease) in net
assets (39,090) (7,891) (28,800) (97,587) (51,311) 835,419 47,092
Net assets at beginning of period 39,090 7,891 28,800 97,587 51,311 - 110,471
----------- ---------- ---------- ----------- ----------- -------------- -----------
Net assets at end of period $ - - - - - 835,419 157,563
=========== ========== ========== =========== =========== ============== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
--------------------------------------------------------------------------------------
Large Small Large
Developing Cap Mid-Cap Quality Cap Cap Select
Growth Research Value Bond Stock Stock Equity
------------ ---------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (295) (274) (293) (226) (807) (2,472) (2,315)
Net realized gain (loss) 69 9 21 479 116 8,044 18,207
Change in unrealized appreciation 6,712 5,533 1,266 (2,613) 29,693 20,021 404
------------ ---------- ---------- ---------- --------- ---------- -----------
Net increase (decrease) from
operations 6,486 5,268 994 (2,360) 29,002 25,593 16,296
------------ ---------- ---------- ---------- --------- ---------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 2,941 3,671 3,226 6,217 2,616 15,231 8,929
Transfers between sub-accounts
(including fixed account), net 7,784 12,332 7,457 59,758 1,942 129,577 32,542
Transfers for contract benefits and
terminations (930) (1,131) (1,315) (15,079) (5,678) (24,819) (11,305)
------------ ---------- ---------- ---------- --------- ---------- -----------
Net increase (decrease) in net
assets from contract
transactions 9,795 14,872 9,368 50,896 (1,120) 119,989 30,166
------------ ---------- ---------- ---------- --------- ---------- -----------
Net increase (decrease) in net
assets 16,281 20,140 10,362 48,536 27,882 145,582 46,462
Net assets at beginning of period 14,855 12,968 17,145 39,638 69,645 81,369 179,310
------------ ---------- ---------- ---------- --------- ---------- -----------
Net assets at end of period $ 31,136 33,108 27,507 88,174 97,527 226,951 225,772
============ ========== ========== ========== ========= ========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
-----------------------------------------------------------------------------------------
Growth Riggs
Small and U.S.
International Cap Equity Income Government Riggs
Equity Balanced Equity Income Equity Securities Stock
------------- ----------- --------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (928) 75 (16) 23 (113) (1) -
Net realized gain (loss) 2,421 123 76 293 157 1 -
Change in unrealized appreciation 24,455 138 (34) (336) 1,557 (4) 4
------------- ----------- --------- ---------- ---------- ------------- ---------
Net increase (decrease) from
operations 25,948 336 26 (20) 1,601 (4) 4
------------- ----------- --------- ---------- ---------- ------------- ---------
Contract transactions:
Cova payments - - - - - 404 201
Cova redemptions - - - - - (201) (100)
Payments received from contract
owners 2,505 1,362 175 940 1,970 93 114
Transfers between sub-accounts
(including fixed account), net 7,781 3,613 (1,487) 1,509 4,068 - -
Transfers for contract benefits and
terminations (6,580) (242) (41) (185) (490) - -
------------- ----------- --------- ---------- ---------- ------------- ---------
Net increase (decrease) in net
assets from contract
transactions 3,706 4,733 (1,353) 2,264 5,548 296 215
------------- ----------- --------- ---------- ---------- ------------- ---------
Net increase (decrease) in net
assets 29,654 5,069 (1,327) 2,244 7,149 292 219
Net assets at beginning of period 94,245 3,372 1,327 3,463 7,823 - -
------------- ----------- --------- ---------- ---------- ------------- ---------
Net assets at end of period $ 123,899 8,441 - 5,707 14,972 292 219
============= =========== ========= ========== ========== ============= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
GACC Lord Abbett Russell
----------- -------------- ------------------------------------------------------------
Growth Multi- Real
Money and Style Aggressive Core Estate
Market Income Equity Equity Non-US Bond Securities
----------- -------------- ---------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (533) (208) (287) (75) 74 1,041 18
Net realized gain (loss) 955 145,466 3,968 28 513 741 -
Change in unrealized appreciation 984 (114,453) 2,497 661 4,373 (2,215) (9)
----------- -------------- ---------- ----------- ---------- --------- -----------
Net increase (decrease) from
operations 1,406 30,805 6,178 614 4,960 (433) 9
----------- -------------- ---------- ----------- ---------- --------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 3,455 672 9,850 1,630 3,213 3,169 282
Transfers between sub-accounts
(including fixed account), net 38,999 (699,900) 12,467 2,064 5,007 8,483 351
Transfers for contract benefits and
terminations (17,429) (780) (1,726) (194) (534) (715) (11)
----------- -------------- ---------- ----------- ---------- --------- -----------
Net increase (decrease) in net
assets from contract
transactions 25,025 (700,008) 20,591 3,500 7,686 10,937 622
----------- -------------- ---------- ----------- ---------- --------- -----------
Net increase (decrease) in net
assets 26,431 (669,203) 26,769 4,114 12,646 10,504 631
Net assets at beginning of period 16,464 669,203 29,559 5,343 10,316 17,050 -
----------- -------------- ---------- ----------- ---------- --------- -----------
Net assets at end of period $ 42,895 - 56,328 9,457 22,962 27,554 631
=========== ============== ========== =========== ========== ========= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
AIM Alliance Liberty Goldman Sachs
----------------------------------------- ---------------------- ---------- -----------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and
V.I. Value Appreciation Equity Growth Investment Variable Income
----------- ------------- -------------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (171) (76) (14) (317) 98 (2) (10)
Net realized gain (loss) 571 308 799 337 (22) 170 (20)
Change in unrealized appreciation 5,538 3,433 927 6,844 (237) 47 205
----------- ------------- -------------- --------- ----------- ---------- -----------
Net increase (decrease) from
operations 5,938 3,665 1,712 6,864 (161) 215 175
----------- ------------- -------------- --------- ----------- ---------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 11,865 3,232 484 14,342 1,540 108 697
Transfers between sub-accounts
(including fixed account), net 19,423 6,441 419 9,396 754 11 1,182
Transfers for contract benefits and
terminations (1,470) (370) (98) (1,017) (108) (7) (296)
----------- ------------- -------------- --------- ----------- ---------- -----------
Net increase (decrease) in net
assets from contract
transactions 29,818 9,303 805 22,721 2,186 112 1,583
----------- ------------- -------------- --------- ----------- ---------- -----------
Net increase (decrease) in net
assets 35,756 12,968 2,517 29,585 2,025 327 1,758
Net assets at beginning of period 6,816 2,160 2,325 9,748 1,529 295 4,634
----------- ------------- -------------- --------- ----------- ---------- -----------
Net assets at end of period $ 42,572 15,128 4,842 39,333 3,554 622 6,392
=========== ============= ============== ========= =========== ========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Goldman Sachs Kemper MFS
------------------------ ------------------------------------------------- --------
Kemper-
Dreman Small Small
International Global High Return Cap Cap Government
Equity Income Equity Growth Value Securities Bond
------------- -------- ----------- -------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ 14 7 (1) (18) (17) 47 2
Net realized gain (loss) 375 2 1 37 (18) (1) -
Change in unrealized appreciation 380 (14) (21) 435 195 (57) (7)
------------- -------- ----------- -------- --------- ------------- --------
Net increase (decrease) from
operations 769 (5) (21) 454 160 (11) (5)
------------- -------- ----------- -------- --------- ------------- --------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 613 82 15 394 1,586 694 2
Transfers between sub-accounts
(including fixed account), net 1,010 57 82 114 641 1,039 48
Transfers for contract benefits and
terminations (118) (5) - (95) (130) (59) -
------------- -------- ----------- -------- --------- ------------- --------
Net increase (decrease) in net
assets from contract
transactions 1,505 134 97 413 2,097 1,674 50
------------- -------- ----------- -------- --------- ------------- --------
Net increase (decrease) in net
assets 2,274 129 76 867 2,257 1,663 45
Net assets at beginning of period 1,287 203 97 893 2,145 630 174
------------- -------- ----------- -------- --------- ------------- --------
Net assets at end of period $ 3,561 332 173 1,760 4,402 2,293 219
============= ======== =========== ======== ========= ============= ========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
MFS Oppenheimer
------------------------------------------------------------------------ -------------
F&C
Growth Emerging
with Emerging Markets High Global Capital
Research Income Growth Equity Income Governments Appreciation
---------- --------- ---------- ---------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (125) (139) (196) (4) 162 2 (46)
Net realized gain (loss) 113 62 139 (12) (5) - 96
Change in unrealized appreciation 2,613 841 11,084 118 (24) (4) 1,620
---------- --------- ---------- ---------- -------- ------------- -------------
Net increase (decrease) from
operations 2,601 764 11,027 102 133 (2) 1,670
---------- --------- ---------- ---------- -------- ------------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 4,090 4,972 6,753 2 1,006 6 1,670
Transfers between sub-accounts
(including fixed account), net 4,495 5,267 4,232 (414) 1,344 52 3,178
Transfers for contract benefits and
terminations (486) (588) (621) (22) (116) (1) (244)
---------- --------- ---------- ---------- -------- ------------- -------------
Net increase (decrease) in net
assets from contract
transactions 8,099 9,651 10,364 (434) 2,234 57 4,604
---------- --------- ---------- ---------- -------- ------------- -------------
Net increase (decrease) in net
assets 10,700 10,415 21,391 (332) 2,367 55 6,274
Net assets at beginning of period 5,658 7,016 7,142 481 2,158 22 1,189
---------- --------- ---------- ---------- -------- ------------- -------------
Net assets at end of period $ 16,358 17,431 28,533 149 4,525 77 7,463
========== ========= ========== ========== ======== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Oppenheimer Putnam
----------------------------------------------- ------------------------------------
Main Street
Growth VT Growth
& High Strategic and VT New
Income Income Bond Bond Income Value VT Vista
------------ --------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (48) 50 176 54 (49) (9) 436
Net realized gain (loss) 53 (1) 21 (4) 1,201 2 22
Change in unrealized appreciation 905 (25) (412) (3) (1,651) (28) 1,514
------------ --------- --------- --------- ----------- --------- -----------
Net increase (decrease) from
operations 910 24 (215) 47 (499) (35) 1,972
------------ --------- --------- --------- ----------- --------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 2,482 663 2,986 899 6,678 235 1,372
Transfers between sub-accounts
(including fixed account), net 1,575 1,015 3,843 1,188 8,212 121 1,943
Transfers for contract benefits and
terminations (239) (55) (306) (74) (819) (69) (225)
------------ --------- --------- --------- ----------- --------- -----------
Net increase (decrease) in net
assets from contract
transactions 3,818 1,623 6,523 2,013 14,071 287 3,090
------------ --------- --------- --------- ----------- --------- -----------
Net increase (decrease) in net
assets 4,728 1,647 6,308 2,060 13,572 252 5,062
Net assets at beginning of period 2,941 777 4,234 1,095 12,699 441 1,785
------------ --------- --------- --------- ----------- --------- -----------
Net assets at end of period $ 7,669 2,424 10,542 3,155 26,271 693 6,847
============ ========= ========= ========= =========== ========= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Putnam Templeton
----------------------------- ----------------------------------------------------------
VT
VT International Franklin
International New Small Cap Developing
Growth Opportunities Bond Investments Stock International Markets
------------- ------------- ------- ------------- ------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (168) (15) (2) (3) (2) (15) (16)
Net realized gain (loss) 464 250 - 12 2 384 68
Change in unrealized appreciation 6,452 820 (3) 231 60 957 828
------------- ------------- ------- ------------- ------ ------------- -------------
Net increase (decrease) from
operations 6,748 1,055 (5) 240 60 1,326 880
------------- ------------- ------- ------------- ------ ------------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 4,990 423 36 164 131 3,225 1,189
Transfers between sub-accounts
(including fixed account), net 2,769 529 301 609 348 3,301 838
Transfers for contract benefits and
terminations (519) (97) (6) (33) (1) (149) (97)
------------- ------------- ------- ------------- ------ ------------- -------------
Net increase (decrease) in net
assets from contract
transactions 7,240 855 331 740 478 6,377 1,930
------------- ------------- ------- ------------- ------ ------------- -------------
Net increase (decrease) in net
assets 13,988 1,910 326 980 538 7,703 2,810
Net assets at beginning of period 6,206 602 - - - 1,507 679
------------- ------------- ------- ------------- ------ ------------- -------------
Net assets at end of period $ 20,194 2,512 326 980 538 9,210 3,489
============= ============= ======= ============= ====== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
Templeton Fidelity
--------------------------- ------------------------------------------------------------
Mutual Franklin VIP III VIP III VIP
Shares Growth VIP VIP II Growth Growth & Equity-
Investments Investments Growth Contrafund Opportunities Income Income
------------ ------------ -------- ------------ ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (23) (3) (11) (13) (5) (18) (6)
Net realized gain (loss) 10 7 41 58 4 33 14
Change in unrealized appreciation 121 161 298 219 15 119 -
------------ ------------ -------- ------------ ------------- --------- ---------
Net increase (decrease) from
operations 108 165 328 264 14 134 8
------------ ------------ -------- ------------ ------------- --------- ---------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 736 175 550 460 158 449 271
Transfers between sub-accounts
(including fixed account), net 796 792 952 773 469 1,156 731
Transfers for contract benefits and
terminations (80) (113) (88) (81) (24) (109) (38)
------------ ------------ -------- ------------ ------------- --------- ---------
Net increase (decrease) in net
assets from contract
transactions 1,452 854 1,414 1,152 603 1,496 964
------------ ------------ -------- ------------ ------------- --------- ---------
Net increase (decrease) in net
assets 1,560 1,019 1,742 1,416 617 1,630 972
Net assets at beginning of period 1,021 - 88 400 112 852 256
------------ ------------ -------- ------------ ------------- --------- ---------
Net assets at end of period $ 2,581 1,019 1,830 1,816 729 2,482 1,228
============ ============ ======== ============ ============= ========= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
American Century Dreyfus INVESCO
----------------------------------- --------------------------------------- -----------
VP VIF VIF
Income & VP VP Stock Disciplined Capital VIF
Growth International Value Index Stock Appreciation Dynamics
---------- -------------- ------- -------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ - - - - - 1 -
Net realized gain (loss) - - - - - - -
Change in unrealized appreciation 7 - 2 - - 1 8
---------- -------------- ------- -------- -------------- ------------- -----------
Net increase (decrease) from
operations 7 - 2 - - 2 8
---------- -------------- ------- -------- -------------- ------------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 269 2 169 14 10 220 172
Transfers between sub-accounts
(including fixed account), net 3 - 2 - - 3 1
Transfers for contract benefits and
terminations - - - - - - -
---------- -------------- ------- -------- -------------- ------------- -----------
Net increase (decrease) in net
assets from contract
transactions 272 2 171 14 10 223 173
---------- -------------- ------- -------- -------------- ------------- -----------
Net increase (decrease) in net
assets 279 2 173 14 10 225 181
Net assets at beginning of period - - - - - - -
---------- -------------- ------- -------- -------------- ------------- -----------
Net assets at end of period $ 279 2 173 14 10 225 181
========== ============== ======= ======== ============== ============= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1999
(In thousands of dollars)
<TABLE>
<CAPTION>
INVESCO PIMCO Scudder
---------- -------------------------------------------- -------------
VIF High Low StocksPLUS Total
High Yield Duration Growth & Return
Yield Bond Bond Income Bond International Total
---------- -------- --------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ - - - - - - (14,397)
Net realized gain (loss) - - - - - - 227,830
Change in unrealized appreciation - - - - - 11 69,998
---------- -------- --------- ------------- -------- ------------- -------------
Net increase (decrease) from
operations - - - - - 11 283,431
---------- -------- --------- ------------- -------- ------------- -------------
Contract transactions:
Cova payments - - - - - - 605
Cova redemptions - - - - - - (301)
Payments received from contract
owners 56 - - 9 71 156 186,649
Transfers between sub-accounts
(including fixed account), net - - - - - 2 362,647
Transfers for contract benefits and
terminations - - - - - - (189,616)
---------- -------- --------- ------------- -------- ------------- -------------
Net increase (decrease) in net
assets from contract
transactions 56 - - 9 71 158 359,984
---------- -------- --------- ------------- -------- ------------- -------------
Net increase (decrease) in net
assets 56 - - 9 71 169 643,415
Net assets at beginning of period - - - - - - 1,700,542
---------- -------- --------- ------------- -------- ------------- -------------
Net assets at end of period $ 56 - - 9 71 169 2,343,957
========== ======== ========= ============= ======== ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
--------------------------------------------------------------------------------------
VKAC
Growth
Quality Money High Stock and Bond Developing
Income Market Yield Index Income Debenture Growth
--------- ---------- --------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 1,737 583 923 (803) (390) 1,149 (99)
Net realized gain (loss) 455 - 135 21,907 7,127 899 (10)
Change in unrealized appreciation 6 - (668) 838 634 1,565 883
--------- ---------- --------- ---------- --------- ----------- -------------
Net increase (decrease) from
operations 2,198 583 390 21,942 7,371 3,613 774
--------- ---------- --------- ---------- --------- ----------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - (112)
Payments received from contract
owners 21 6 55 69 39 21,396 6,348
Transfers between sub-accounts
(including fixed account), net (3,399) (10,098) (1,392) 3,960 1,244 38,789 6,481
Transfers for contract benefits and
terminations (8,833) (4,210) (3,514) (17,021) (3,490) (4,147) (201)
--------- ---------- --------- ---------- --------- ----------- -------------
Net increase (decrease) in net
assets from contract
transactions (12,211) (14,302) (4,851) (12,992) (2,207) 56,038 12,516
--------- ---------- --------- ---------- --------- ----------- -------------
Net increase (decrease) in net
assets (10,013) (13,719) (4,461) 8,950 5,164 59,651 13,290
Net assets at beginning of period 49,103 21,610 33,261 88,637 46,147 50,820 1,565
--------- ---------- --------- ---------- --------- ----------- -------------
Net assets at end of period $ 39,090 7,891 28,800 97,587 51,311 110,471 14,855
========= ========== ========= ========== ========= =========== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova
--------------------------------------------------------------------------------------
Large Small Large
Cap Mid-Cap Quality Cap Cap Select International
Research Value Bond Stock Stock Equity Equity
--------- --------- ---------- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (66) (109) 192 (791) (530) (1,491) 307
Net realized gain (loss) 5 (3) 36 2,068 412 8,442 328
Change in unrealized appreciation 1,278 120 1,412 (6,177) 13,680 20,065 7,969
--------- --------- ---------- ---------- --------- ---------- -------------
Net increase (decrease) from
operations 1,217 8 1,640 (4,900) 13,562 27,016 8,604
--------- --------- ---------- ---------- --------- ---------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions (102) (107) - - - - -
Payments received from contract
owners 6,104 7,924 9,698 8,193 18,801 21,003 8,143
Transfers between sub-accounts
(including fixed account), net 4,750 7,602 14,372 15,607 29,039 38,783 18,076
Transfers for contract benefits and
terminations (234) (317) (2,058) (2,424) (2,022) (4,555) (2,949)
--------- --------- ---------- ---------- --------- ---------- -------------
Net increase (decrease) in net
assets from contract
transactions 10,518 15,102 22,012 21,376 45,818 55,231 23,270
--------- --------- ---------- ---------- --------- ---------- -------------
Net increase (decrease) in net
assets 11,735 15,110 23,652 16,476 59,380 82,247 31,874
Net assets at beginning of period 1,233 2,035 15,986 53,169 21,989 97,063 62,371
--------- --------- ---------- ---------- --------- ---------- -------------
Net assets at end of period $ 12,968 17,145 39,638 69,645 81,369 179,310 94,245
========= ========= ========== ========== ========= ========== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Cova GACC Lord Abbett Russell
----------------------------------------- ---------- -------------- ----------
Growth
Small and Growth Multi-
Cap Equity Income Money and Style
Balanced Equity Income Equity Market Income Equity
--------- -------- -------- -------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 23 (10) 11 (30) (161) 1,761 (129)
Net realized gain (loss) 40 11 80 167 436 33,820 40
Change in unrealized appreciation 173 39 49 548 185 26,592 3,199
--------- -------- -------- -------- ---------- -------------- ----------
Net increase (decrease) from
operations 236 40 140 685 460 62,173 3,110
--------- -------- -------- -------- ---------- -------------- ----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 1,408 442 1,820 3,014 35,352 55,721 21,870
Transfers between sub-accounts
(including fixed account), net 1,373 588 988 2,913 (19,753) 102,796 4,748
Transfers for contract benefits and
terminations (46) (15) (42) (98) (2,913) (38,987) (169)
--------- -------- -------- -------- ---------- -------------- ----------
Net increase (decrease) in net
assets from contract
transactions 2,735 1,015 2,766 5,829 12,686 119,530 26,449
--------- -------- -------- -------- ---------- -------------- ----------
Net increase (decrease) in net
assets 2,971 1,055 2,906 6,514 13,146 181,703 29,559
Net assets at beginning of period 401 272 557 1,309 3,318 487,500 -
--------- -------- -------- -------- ---------- -------------- ----------
Net assets at end of period $ 3,372 1,327 3,463 7,823 16,464 669,203 29,559
========= ======== ======== ======== ========== ============== ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Russell AIM Alliance
---------------------------------- ----------------------------------------- ---------
V.I.
Aggressive Core V.I. Capital International Premier
Equity Non-US Bond V.I. Value Appreciation Equity Growth
----------- --------- --------- ---------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (31) (54) 178 (8) (11) (1) (45)
Net realized gain (loss) (18) 5 7 250 50 (3) (4)
Change in unrealized appreciation 75 412 268 668 164 81 1,522
----------- --------- --------- ---------- -------------- ------------- ---------
Net increase (decrease) from
operations 26 363 453 910 203 77 1,473
----------- --------- --------- ---------- -------------- ------------- ---------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 4,296 8,107 13,098 4,061 1,431 1,648 6,485
Transfers between sub-accounts
(including fixed account), net 1,041 1,920 3,732 2,030 609 609 1,828
Transfers for contract benefits and
terminations (20) (74) (233) (185) (83) (9) (38)
----------- --------- --------- ---------- -------------- ------------- ---------
Net increase (decrease) in net
assets from contract
transactions 5,317 9,953 16,597 5,906 1,957 2,248 8,275
----------- --------- --------- ---------- -------------- ------------- ---------
Net increase (decrease) in net
assets 5,343 10,316 17,050 6,816 2,160 2,325 9,748
Net assets at beginning of period - - - - - - -
----------- --------- --------- ---------- -------------- ------------- ---------
Net assets at end of period $ 5,343 10,316 17,050 6,816 2,160 2,325 9,748
=========== ========= ========= ========== ============== ============= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Alliance Liberty Goldman Sachs Kemper
----------- ---------- ------------------------------------ --------------------------
Newport Kemper
Real Tiger Growth Dreman Small
Estate Fund, and International Global High Return Cap
Investment Variable Income Equity Income Equity Growth
----------- ---------- --------- ------------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 1 4 12 (7) 6 - (5)
Net realized gain (loss) 3 (30) (12) 10 3 - (3)
Change in unrealized appreciation (170) 54 (207) 56 (1) 1 107
----------- ---------- --------- ------------- --------- -------------- ----------
Net increase (decrease) from
operations (166) 28 (207) 59 8 1 99
----------- ---------- --------- ------------- --------- -------------- ----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 1,193 159 3,067 979 125 - 630
Transfers between sub-accounts
(including fixed account), net 514 108 1,826 255 84 96 162
Transfers for contract benefits and
terminations (12) - (52) (6) (14) - 2
----------- ---------- --------- ------------- --------- -------------- ----------
Net increase (decrease) in net
assets from contract
transactions 1,695 267 4,841 1,228 195 96 794
----------- ---------- --------- ------------- --------- -------------- ----------
Net increase (decrease) in net
assets 1,529 295 4,634 1,287 203 97 893
Net assets at beginning of period - - - - - - -
----------- ---------- --------- ------------- --------- -------------- ----------
Net assets at end of period $ 1,529 295 4,634 1,287 203 97 893
=========== ========== ========= ============= ========= ============== ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Kemper MFS
----------------------- --------------------------------------------------------
F&C
Small Growth Emerging
Cap Government with Emerging Markets
Value Securities Bond Research Income Growth Equity
-------- ------------ ------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (13) - - (28) (38) (37) 3
Net realized gain (loss) 8 - - 16 - (2) (97)
Change in unrealized appreciation (155) 9 1 481 574 985 (94)
-------- ------------ ------- ---------- -------- ---------- -----------
Net increase (decrease) from
operations (160) 9 1 469 536 946 (188)
-------- ------------ ------- ---------- -------- ---------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 1,656 503 3 3,760 4,624 5,018 421
Transfers between sub-accounts
(including fixed account), net 670 120 170 1,530 1,901 1,216 252
Transfers for contract benefits and
terminations (21) (2) - (101) (45) (38) (4)
-------- ------------ ------- ---------- -------- ---------- -----------
Net increase (decrease) in net
assets from contract
transactions 2,305 621 173 5,189 6,480 6,196 669
-------- ------------ ------- ---------- -------- ---------- -----------
Net increase (decrease) in net
assets 2,145 630 174 5,658 7,016 7,142 481
Net assets at beginning of period - - - - - - -
-------- ------------ ------- ---------- -------- ---------- -----------
Net assets at end of period $ 2,145 630 174 5,658 7,016 7,142 481
======== ============ ======= ========== ======== ========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
MFS Oppenheimer
------------------------ ------------------------------------------------------------
Main Street
Growth
High Global Capital & High Strategic
Income Governments Appreciation Income Income Bond Bond
-------- ------------- -------------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 5 - (6) (19) (1) (19) (3)
Net realized gain (loss) 3 - 7 2 3 5 2
Change in unrealized appreciation (34) 1 134 (28) (15) 95 3
-------- ------------- -------------- ----------- --------- --------- ---------
Net increase (decrease) from
operations (26) 1 135 (45) (13) 81 2
-------- ------------- -------------- ----------- --------- --------- ---------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 1,634 4 838 2,140 517 3,298 725
Transfers between sub-accounts
(including fixed account), net 570 17 220 859 281 889 371
Transfers for contract benefits and
terminations (20) - (4) (13) (8) (34) (3)
-------- ------------- -------------- ----------- --------- --------- ---------
Net increase (decrease) in net
assets from contract
transactions 2,184 21 1,054 2,986 790 4,153 1,093
-------- ------------- -------------- ----------- --------- --------- ---------
Net increase (decrease) in net
assets 2,158 22 1,189 2,941 777 4,234 1,095
Net assets at beginning of period - - - - - - -
-------- ------------- -------------- ----------- --------- --------- ---------
Net assets at end of period $ 2,158 22 1,189 2,941 777 4,234 1,095
======== ============= ============== =========== ========= ========= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Putnam Templeton
--------------------------------------------------------------- ---------------------------
VT
VT Growth VT International
and VT New International New Developing
Income Value VT Vista Growth Opportunities International Markets
----------- -------- ---------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (46) 2 (9) (17) (4) (6) (3)
Net realized gain (loss) 192 2 (1) (39) 24 8 (4)
Change in unrealized appreciation 660 6 173 353 40 48 44
----------- -------- ---------- ------------- ------------- ------------- ------------
Net increase (decrease) from
operations 806 10 163 297 60 50 37
----------- -------- ---------- ------------- ------------- ------------- ------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 8,705 173 1,241 4,444 423 1,261 509
Transfers between sub-accounts
(including fixed account), net 3,257 259 385 1,511 127 201 139
Transfers for contract benefits and
terminations (69) (1) (4) (46) (8) (5) (6)
----------- -------- ---------- ------------- ------------- ------------- ------------
Net increase (decrease) in net
assets from contract
transactions 11,893 431 1,622 5,909 542 1,457 642
----------- -------- ---------- ------------- ------------- ------------- ------------
Net increase (decrease) in net
assets 12,699 441 1,785 6,206 602 1,507 679
Net assets at beginning of period - - - - - - -
----------- -------- ---------- ------------- ------------- ------------- ------------
Net assets at end of period $ 12,699 441 1,785 6,206 602 1,507 679
=========== ======== ========== ============= ============= ============= ============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Statement of Changes in Net Assets
Year ended December 31, 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
Templeton Fidelity
------------- ------------------------------------------------------------
Mutual VIP III VIP III VIP
Shares VIP VIP II Growth Growth & Equity-
Investments Growth Contrafund Opportunities Income Income Total
------------- --------- ----------- ------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (5) - (2) - (5) (1) 1,864
Net realized gain (loss) - (3) (2) (2) (5) (3) 76,767
Change in unrealized appreciation 32 12 48 13 94 17 78,917
------------- --------- ----------- ------------- ---------- --------- -----------
Net increase (decrease) from
operations 27 9 44 11 84 13 157,548
------------- --------- ----------- ------------- ---------- --------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - (321)
Payments received from contract
owners 584 86 330 114 435 195 316,347
Transfers between sub-accounts
(including fixed account), net 415 (5) 24 (13) 333 51 288,031
Transfers for contract benefits and
terminations (5) (2) 2 - - (3) (99,409)
------------- --------- ----------- ------------- ---------- --------- -----------
Net increase (decrease) in net
assets from contract
transactions 994 79 356 101 768 243 504,648
------------- --------- ----------- ------------- ---------- --------- -----------
Net increase (decrease) in net
assets 1,021 88 400 112 852 256 662,196
Net assets at beginning of period - - - - - - 1,038,346
------------- --------- ----------- ------------- ---------- --------- -----------
Net assets at end of period $ 1,021 88 400 112 852 256 1,700,542
============= ========= =========== ============= ========== ========= ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(1) ORGANIZATION
Cova Variable Annuity Account One (the Separate Account), a unit
investment trust registered under the Investment Company Act of 1940 as
amended, was established by Cova Financial Services Life Insurance
Company (CFSLIC) and exists in accordance with the regulations of the
Missouri Department of Insurance. The Separate Account is a funding
vehicle for variable annuity contracts issued by CFSLIC.
The Separate Account is divided into sub-accounts with the assets of each
sub-account invested in corresponding portfolios of the following
investment companies which are diversified, open-end, management
investment companies registered under the Investment Company Act of 1940
as amended. The sub-accounts available for investment may vary between
variable annuity contracts offered for sale by CFSLIC.
<TABLE>
<S> <C>
Cova Series Trust (Cova) 15 portfolios
General American Capital Company (GACC) 1 portfolio
Lord Abbett Series Fund, Inc. (Lord Abbett) 1 portfolio
Russell Insurance Funds (Russell) 5 portfolios
AIM Variable Insurance Funds, Inc. (AIM) 3 portfolios
Alliance Variable Products Series Fund, Inc. (Alliance) 2 portfolios
Liberty Variable Investment Trust (Liberty) 1 portfolio
Goldman Sachs Variable Insurance Trust (Goldman Sachs) 3 portfolios
Kemper Variable Series (Kemper) 4 portfolios
MFS Variable Insurance Trust (MFS) 7 portfolios
Oppenheimer Variable Account Funds (Oppenheimer) 5 portfolios
Putnam Variable Trust (Putnam) 5 portfolios
Templeton Variable Products Series Fund (Templeton) 7 portfolios
Variable Insurance Products Fund, Fund II and Fund III (Fidelity) 5 portfolios
American Century Variable Portfolios, Inc. (American Century) 3 portfolios
Dreyfus Stock Index Fund (Dreyfus) 1 portfolio
Dreyfus Variable Investment Fund (Dreyfus) 2 portfolios
INVESCO Variable Investment Funds, Inc. 2 portfolios
PIMCO Variable Insurance Trust 4 portfolios
Scudder Variable Life Investment Fund 1 portfolio
</TABLE>
The following sub-accounts commenced operations in 1999:
Cova Lord Abbett Growth and Income January 8, 1999
Cova Riggs U.S. Government Securities August 5, 1999
Cova Riggs Stock August 5, 1999
Russell Real Estate Securities July 1, 1999
Templeton Bond March 1, 1999
Franklin Small Cap Investments March 1, 1999
Templeton Stock January 19, 1999
Franklin Growth Investments March 1, 1999
American Century VP Income & Growth November 19, 1999
American Century VP International November 19, 1999
American Century VP Value November 19, 1999
Dreyfus Stock Index November 19, 1999
Dreyfus VIF Disciplined Stock November 19, 1999
Dreyfus VIF Capital Appreciation November 19, 1999
INVESCO Dynamics November 19, 1999
INVESCO High Yield November 19, 1999
PIMCO High Yield Bond November 19, 1999
PIMCO Low Duration Bond November 19, 1999
PIMCO StocksPLUS Growth & Income November 19, 1999
PIMCO Total Return Bond November 19, 1999
Scudder International November 19, 1999
The Cova Riggs U.S. Government Securities and Stock sub-accounts were
not available for investment until November 2, 1999.
The following sub-accounts ceased operations in 1999:
Lord Abbett Growth and Income January 8, 1999
Cova Quality Income January 8, 1999
Cova Money Market January 8, 1999
Cova High Yield January 8, 1999
Cova Stock Index January 8, 1999
Cova VKAC Growth and Income January 8, 1999
Cova Small Cap Equity October 8, 1999
On August 26, 1999, CFSLIC's ultimate parent company, GenAmerica
Corporation, entered into a definitive agreement to be acquired by
Metropolitan Life Insurance Company. The acquisition occurred
on January 6, 2000.
<PAGE>
(2) SIGNIFICANT ACCOUNTING POLICIES
(A) INVESTMENT VALUATION
Investments made in the portfolios of the investment companies are
valued at the reported net asset value of such portfolios, which
value their investment securities at fair value. The average cost
method is used to compute the realized gains and losses on the sale
of portfolio shares owned by the sub-accounts. Income from dividends
and gains from realized capital gain distributions are recorded on
the ex-distribution date.
(B) REINVESTMENT OF DISTRIBUTIONS
With the exception of the GACC Money Market Fund, dividends and
gains from realized gain distributions are reinvested in additional
shares of the portfolio.
GACC follows the Federal income tax practice known as consent
dividending, whereby substantially all of its net investment income
and realized capital gains are deemed to pass through to the
Separate Account. As a result, GACC does not distribute dividends
and realized capital gains. During December of each year, the
accumulated net investment income and realized capital gains of the
GACC Money Market Fund are allocated to the Separate Account by
increasing the cost basis and recognizing a gain in the Separate
Account.
(C) FEDERAL INCOME TAXES
The operations of the Separate Account are included in the federal
income tax return of CFSLIC which is taxed as a Life Insurance
Company under the provisions of the Internal Revenue Code (IRC).
Under current IRC provisions, CFSLIC believes it will be treated as
the owner of the Separate Account assets for federal income tax
purposes and does not expect to incur federal income taxes on the
earnings of the Separate Account to the extent the earnings are
credited to the variable annuity contracts. Based on this, no charge
has been made to the Separate Account for federal income taxes. A
charge may be made in future years for any federal income taxes that
would be attributable to the variable annuity contracts.
(D) ANNUITY RESERVES
Annuity reserves are computed for contracts in the payout stage
according to the 1983a Mortality Table. The assumed investment
return is 3%. The mortality risk is borne by CFSLIC and may result
in additional transfers to the Separate Account. Conversely, if
reserves exceed amounts required, transfers may be made from the
Separate Account to CFSLIC.
<PAGE>
(3) SEPARATE ACCOUNT EXPENSES
CFSLIC deducts a daily charge from the net assets of each Separate
Account sub-account equivalent to an annual rate of 1.25% for the
assumption of mortality and expense risks and 0.15% for administrative
expenses. The mortality risks assumed by CFSLIC arise from its
contractual obligation to make annuity payments after the annuity date
for the life of the annuitant and to waive the withdrawal fee in the
event of the death of the contract owner. The administrative fees cover
the cost of establishing and maintaining the variable annuity contracts
and the Separate Account.
(4) CONTRACT FEES
There are no deductions made from purchase payments for sales fees at the
time a variable annuity contract is purchased. However, if all or a
portion of the contract value is withdrawn, a withdrawal fee may be
assessed and deducted from the contract value or payment to the contract
owner. The withdrawal fee 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 the contract value exceeds $5,000, the contract
owner may make one withdrawal each contract year of up to 10% of the
aggregate purchase payments (on deposit for more than one year) without
incurring a surrender fee. During the year ended December 31, 1999,
surrender fees of $1.8 million were deducted from the Separate Account.
An annual contract maintenance fee of $30 is imposed on all variable
annuity contracts with contract values less than $50,000 on their
anniversary. This fee covers the cost of contract administration for the
previous year and is prorated between the Separate Account sub- accounts
and the fixed rate account to which the contract value is allocated.
Subject to certain restrictions, the contract owner may transfer all or a
part of the accumulated value of the contract among the available
sub-accounts and the fixed rate account. 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, may be deducted from the contract
value. Transfers made in a dollar cost averaging program are not subject
to the transfer fee.
During the year ended December 31, 1999, contract maintenance and
transfer fees of $639 thousand were deducted from the Separate Account.
Currently, CFSLIC advances any premium taxes due at the time purchase
payments are made and then deducts premium taxes at the time annuity
payments begin. CFSLIC reserves the right to deduct premium taxes when
incurred.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(5) COST BASIS OF INVESTMENTS
The cost basis of each sub-account's investment (in thousands of dollars)
at December 31, 1999 follows:
<S> <C> <C> <C>
Cova Lord Abbett Growth and Income $ 750,563 MFS/Foreign & Colonial Emerging Markets Equity $ 125
Cova Bond Debenture 153,215 MFS High Income 4,583
Cova Developing Growth 23,534 MFS Global Governments 80
Cova Large Cap Research 26,291 Oppenheimer Capital Appreciation 5,709
Cova Mid-Cap Value 26,081 Oppenheimer Main Street Growth & Income 6,792
Cova Quality Bond 89,189 Oppenheimer High Income 2,464
Cova Small Cap Stock 67,488 Oppenheimer Bond 10,859
Cova Large Cap Stock 190,395 Oppenheimer Strategic Bond 3,155
Cova Select Equity 191,783 Putnam VT Growth and Income 27,262
Cova International Equity 90,166 Putnam VT New Value 715
Cova Balanced 8,130 Putnam VT Vista 5,160
Cova Equity Income 5,973 Putnam VT International Growth 13,389
Cova Growth and Income Equity 12,849 Putnam VT International New Opportunities 1,652
Cova Riggs Stock 296 Templeton Bond 329
Cova Riggs U.S. Government Securities 215 Franklin Small Cap Investments 749
GACC Money Market 41,680 Templeton Stock 478
Russell Multi-Style Equity 50,632 Templeton International 8,205
Russell Aggressive Equity 8,721 Templeton Developing Markets 2,617
Russell Non-US 18,177 Templeton Mutual Shares Investments 2,428
Russell Core Bond 29,501 Franklin Growth Investments 858
Russell Real Estate Securities 640 Fidelity VIP Growth 1,520
AIM V.I. Value 36,366 Fidelity VIP II Contrafund 1,549
AIM V.I. Capital Appreciation 11,531 Fidelity VIP III Growth Opportunities 701
AIM V.I. International Equity 3,834 Fidelity VIP III Growth & Income 2,269
Alliance Premier Growth 30,967 Fidelity VIP Equity-Income 1,211
Alliance Real Estate Investment 3,961 American Century VP Income & Growth 272
Liberty Newport Tiger Fund, Variable 521 American Century VP International 2
Goldman Sachs Growth and Income 6,394 American Century VP Value 171
Goldman Sachs International Equity 3,125 Dreyfus Stock Index 14
Goldman Sachs Global Income 347 Dreyfus VIF Disciplined Stock 10
Kemper-Dreman High Return Equity 193 Dreyfus VIF Capital Appreciation 224
Kemper Small Cap Growth 1,218 INVESCO Dynamics 173
Kemper Small Cap Value 4,362 INVESCO High Yield 56
Kemper Government Securities 2,341 PIMCO High Yield Bond -
MFS Bond 225 PIMCO Low Duration Bond -
MFS Research 13,264 PIMCO StocksPLUS Growth & Income 9
MFS Growth with Income 16,016 PIMCO Total Return Bond 71
MFS Emerging Growth 16,464 Scudder International 158
--------------
$ 2,042,667
==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE
A summary of accumulation unit values, net assets, total return
and expense ratios for each sub-account follows:
Accumulation Unit Value
Commenced -------------------------------------------------------
Operations 12/31/99 12/31/98 12/31/97 12/31/96
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 1/8/99 $ 39.456928 - - -
Cova Bond Debenture 5/1/96 13.765381 13.496500 12.881792 11.294930
Cova Developing Growth 8/20/97 14.452868 11.067854 10.527554 -
Cova Large Cap Research 8/20/97 14.635627 11.825550 9.899560 -
Cova Mid-Cap Value 8/20/97 10.875538 10.437949 10.467957 -
Cova Quality Bond 5/1/96 11.567155 11.914489 11.155126 10.368764
Cova Small Cap Stock 5/1/96 17.932441 12.582860 13.491466 11.308419
Cova Large Cap Stock 5/1/96 22.548941 19.428499 14.889462 11.334979
Cova Select Equity 5/1/96 18.384654 16.987204 14.053502 10.838053
Cova International Equity 5/1/96 16.333906 12.889315 11.462435 10.967004
Cova Balanced 7/1/97 12.432529 11.767845 10.531920 -
Cova Equity Income 7/1/97 12.202725 12.068849 11.194166 -
Cova Growth and Income Equity 7/1/97 13.966013 12.188331 10.756082 -
Cova Riggs Stock 8/5/99 10.239524 - - -
Cova Riggs U.S. Government Securities 8/5/99 9.995395 - - -
GACC Money Market 6/3/96 11.525358 11.109943 10.667011 10.233546
Russell Multi-Style Equity 12/31/97 14.667724 12.694810 10.000000 -
Russell Aggressive Equity 12/31/97 10.422234 9.963254 10.000000 -
Russell Non-US 12/31/97 14.652149 11.142092 10.000000 -
Russell Core Bond 12/31/97 10.380043 10.591175 10.000000 -
Russell Real Estate Securities 7/1/99 9.388124 - - -
AIM V.I. Value 12/31/97 16.729131 13.060203 10.000000 -
AIM V.I. Capital Appreciation 12/31/97 16.785351 11.770729 10.000000 -
AIM V.I. International Equity 12/31/97 17.416663 11.391449 10.000000 -
Alliance Premier Growth 12/31/97 19.043436 14.595485 10.000000 -
Alliance Real Estate Investment 12/31/97 7.474763 7.988435 10.000000 -
Liberty Newport Tiger Fund, Variable 12/31/97 15.290670 9.228765 10.000000 -
Goldman Sachs Growth and Income 1/29/98 10.299328 9.908613 - -
Goldman Sachs International Equity 1/29/98 14.826563 11.402925 - -
Goldman Sachs Global Income 1/29/98 10.524196 10.781765 - -
Kemper-Dreman High Return Equity 5/15/98 9.187195 10.487302 - -
Kemper Small Cap Growth 12/31/97 15.493396 11.676086 10.000000 -
Kemper Small Cap Value 12/31/97 8.872647 8.753222 10.000000 -
Kemper Government Securities 12/31/97 10.480981 10.556498 10.000000 -
MFS Bond 5/15/98 10.184471 10.491811 - -
MFS Research 12/31/97 14.890281 12.172796 10.000000 -
MFS Growth with Income 12/31/97 12.695264 12.066568 10.000000 -
MFS Emerging Growth 12/31/97 23.059667 13.233235 10.000000 -
MFS/Foreign & Colonial Emerging Markets Equity 12/31/97 8.954559 6.571830 10.000000 -
MFS High Income 12/31/97 10.334082 9.845193 10.000000 -
MFS Global Governments 12/31/97 10.258675 10.669943 10.000000 -
Oppenheimer Capital Appreciation 12/31/97 17.087450 12.232731 10.000000 -
Oppenheimer Main Street Growth & Income 12/31/97 12.393263 10.326519 10.000000 -
Oppenheimer High Income 12/31/97 10.174699 9.893828 10.000000 -
Oppenheimer Bond 12/31/97 10.228856 10.533011 10.000000 -
Oppenheimer Strategic Bond 12/31/97 10.293168 10.151332 10.000000 -
Putnam VT Growth and Income 12/31/97 11.402482 11.382650 10.000000 -
Putnam VT New Value 12/31/97 10.365439 10.483517 10.000000 -
Putnam VT Vista 12/31/97 17.769589 11.785702 10.000000 -
Putnam VT International Growth 12/31/97 18.486388 11.707003 10.000000 -
Putnam VT International New Opportunities 12/31/97 22.820083 11.402252 10.000000 -
Templeton Bond 3/1/99 9.681884 - - -
Franklin Small Cap Investments 3/1/99 17.679923 - - -
Templeton Stock 1/19/99 12.557918 - - -
Templeton International 5/1/98 11.147003 9.144522 - -
Templeton Developing Markets 5/1/98 11.457935 7.552448 - -
Templeton Mutual Shares Investments 5/1/98 10.413095 9.630622 - -
Franklin Growth Investments 3/1/99 14.665449 - - -
Fidelity VIP Growth 2/17/98 17.723853 13.077878 - -
Fidelity VIP II Contrafund 2/17/98 15.140886 12.357373 - -
Fidelity VIP III Growth Opportunities 2/17/98 12.073401 11.742360 - -
Fidelity VIP III Growth & Income 2/17/98 13.135609 12.202502 - -
Fidelity VIP Equity-Income 2/17/98 11.141767 10.626607 - -
American Century VP Income & Growth 11/19/99 10.320209 - - -
American Century VP International 11/19/99 12.514968 - - -
American Century VP Value 11/19/99 9.582238 - - -
Dreyfus Stock Index 11/19/99 10.321607 - - -
Dreyfus VIF Disciplined Stock 11/19/99 10.300470 - - -
Dreyfus VIF Capital Appreciation 11/19/99 10.118366 - - -
INVESCO Dynamics 11/19/99 11.142628 - - -
INVESCO High Yield 11/19/99 10.117511 - - -
PIMCO High Yield Bond 11/19/99 10.078000 - - -
PIMCO Low Duration Bond 11/19/99 9.969000 - - -
PIMCO StocksPLUS Growth & Income 11/19/99 10.306817 - - -
PIMCO Total Return Bond 11/19/99 9.875011 - - -
Scudder International 11/19/99 11.631204 - - -
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE
A summary of accumulation unit values, net assets, total return and
expense ratios for each sub-account follows:
Net Assets (in thousands)
Commenced -------------------------------------------------------
Operations 12/31/99 12/31/98 12/31/97 12/31/96
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 1/8/99 $ 835,419 - - -
Cova Bond Debenture 5/1/96 157,563 110,471 50,820 7,451
Cova Developing Growth 8/20/97 31,136 14,855 1,565 -
Cova Large Cap Research 8/20/97 33,108 12,968 1,233 -
Cova Mid-Cap Value 8/20/97 27,507 17,145 2,035 -
Cova Quality Bond 5/1/96 88,174 39,638 15,986 5,276
Cova Small Cap Stock 5/1/96 97,527 69,645 53,169 13,993
Cova Large Cap Stock 5/1/96 226,951 81,369 21,989 15,751
Cova Select Equity 5/1/96 225,772 179,310 97,063 22,159
Cova International Equity 5/1/96 123,899 94,245 62,371 14,333
Cova Balanced 7/1/97 8,441 3,372 401 -
Cova Equity Income 7/1/97 5,707 3,463 557 -
Cova Growth and Income Equity 7/1/97 14,972 7,823 1,309 -
Cova Riggs Stock 8/5/99 219 - - -
Cova Riggs U.S. Government Securities 8/5/99 292 - - -
GACC Money Market 6/3/96 42,895 16,464 3,318 -
Russell Multi-Style Equity 12/31/97 56,328 29,559 - -
Russell Aggressive Equity 12/31/97 9,457 5,343 - -
Russell Non-US 12/31/97 22,962 10,316 - -
Russell Core Bond 12/31/97 27,554 17,050 - -
Russell Real Estate Securities 7/1/99 631 - - -
AIM V.I. Value 12/31/97 42,572 6,816 - -
AIM V.I. Capital Appreciation 12/31/97 15,128 2,160 - -
AIM V.I. International Equity 12/31/97 4,842 2,325 - -
Alliance Premier Growth 12/31/97 39,333 9,748 - -
Alliance Real Estate Investment 12/31/97 3,554 1,529 - -
Liberty Newport Tiger Fund, Variable 12/31/97 622 295 - -
Goldman Sachs Growth and Income 1/29/98 6,392 4,634 - -
Goldman Sachs International Equity 1/29/98 3,561 1,287 - -
Goldman Sachs Global Income 1/29/98 332 203 - -
Kemper-Dreman High Return Equity 5/15/98 173 97 - -
Kemper Small Cap Growth 12/31/97 1,760 893 - -
Kemper Small Cap Value 12/31/97 4,402 2,145 - -
Kemper Government Securities 12/31/97 2,293 630 - -
MFS Bond 5/15/98 219 174 - -
MFS Research 12/31/97 16,358 5,658 - -
MFS Growth with Income 12/31/97 17,431 7,016 - -
MFS Emerging Growth 12/31/97 28,533 7,142 - -
MFS/Foreign & Colonial Emerging Markets Equity 12/31/97 149 481 - -
MFS High Income 12/31/97 4,525 2,158 - -
MFS Global Governments 12/31/97 77 22 - -
Oppenheimer Capital Appreciation 12/31/97 7,463 1,189 - -
Oppenheimer Main Street Growth & Income 12/31/97 7,669 2,941 - -
Oppenheimer High Income 12/31/97 2,424 777 - -
Oppenheimer Bond 12/31/97 10,542 4,234 - -
Oppenheimer Strategic Bond 12/31/97 3,155 1,095 - -
Putnam VT Growth and Income 12/31/97 26,271 12,699 - -
Putnam VT New Value 12/31/97 693 441 - -
Putnam VT Vista 12/31/97 6,847 1,785 - -
Putnam VT International Growth 12/31/97 20,194 6,206 - -
Putnam VT International New Opportunities 12/31/97 2,512 602 - -
Templeton Bond 3/1/99 326 - - -
Franklin Small Cap Investments 3/1/99 980 - - -
Templeton Stock 1/19/99 538 - - -
Templeton International 5/1/98 9,210 1,507 - -
Templeton Developing Markets 5/1/98 3,489 679 - -
Templeton Mutual Shares Investments 5/1/98 2,581 1,021 - -
Franklin Growth Investments 3/1/99 1,019 - - -
Fidelity VIP Growth 2/17/98 1,830 88 - -
Fidelity VIP II Contrafund 2/17/98 1,816 400 - -
Fidelity VIP III Growth Opportunities 2/17/98 729 112 - -
Fidelity VIP III Growth & Income 2/17/98 2,482 852 - -
Fidelity VIP Equity-Income 2/17/98 1,228 256 - -
American Century VP Income & Growth 11/19/99 279 - - -
American Century VP International 11/19/99 2 - - -
American Century VP Value 11/19/99 173 - - -
Dreyfus Stock Index 11/19/99 14 - - -
Dreyfus VIF Disciplined Stock 11/19/99 10 - - -
Dreyfus VIF Capital Appreciation 11/19/99 225 - - -
INVESCO Dynamics 11/19/99 181 - - -
INVESCO High Yield 11/19/99 56 - - -
PIMCO High Yield Bond 11/19/99 - - - -
PIMCO Low Duration Bond 11/19/99 - - - -
PIMCO StocksPLUS Growth & Income 11/19/99 9 - - -
PIMCO Total Return Bond 11/19/99 71 - - -
Scudder International 11/19/99 169 - - -
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Total Return*
Commenced -------------------------------------------------------
Operations 1999 1998 1997 1996
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 1/8/99 9.90% - - -
Cova Bond Debenture 5/1/96 1.99% 4.77% 14.05% 11.86%
Cova Developing Growth 8/20/97 30.58% 5.13% 5.28% -
Cova Large Cap Research 8/20/97 23.76% 19.46% -1.00% -
Cova Mid-Cap Value 8/20/97 4.19% -0.29% 4.68% -
Cova Quality Bond 5/1/96 -2.92% 6.81% 7.58% 4.76%
Cova Small Cap Stock 5/1/96 42.52% -6.74% 19.31% 7.57%
Cova Large Cap Stock 5/1/96 16.06% 30.49% 31.36% 13.32%
Cova Select Equity 5/1/96 8.23% 20.88% 29.67% 7.48%
Cova International Equity 5/1/96 26.72% 12.45% 4.52% 7.36%
Cova Balanced 7/1/97 5.65% 11.74% 5.32% -
Cova Equity Income 7/1/97 1.11% 7.81% 11.94% -
Cova Growth and Income Equity 7/1/97 14.59% 13.32% 7.56% -
Cova Riggs Stock 8/5/99 -1.34% - - -
Cova Riggs U.S. Government Securities 8/5/99 1.56% - - -
GACC Money Market 6/3/96 3.74% 4.15% 4.24% 2.34%
Russell Multi-Style Equity 12/31/97 15.54% 26.95% - -
Russell Aggressive Equity 12/31/97 4.61% -0.37% - -
Russell Non-US 12/31/97 31.50% 11.42% - -
Russell Core Bond 12/31/97 -1.99% 5.91% - -
Russell Real Estate Securities 7/1/99 -6.12% - - -
AIM V.I. Value 12/31/97 28.09% 30.60% - -
AIM V.I. Capital Appreciation 12/31/97 42.60% 17.71% - -
AIM V.I. International Equity 12/31/97 52.89% 13.91% - -
Alliance Premier Growth 12/31/97 30.48% 45.96% - -
Alliance Real Estate Investment 12/31/97 -6.43% -20.12% - -
Liberty Newport Tiger Fund, Variable 12/31/97 65.69% -7.71% - -
Goldman Sachs Growth and Income 1/29/98 3.94% -0.91% - -
Goldman Sachs International Equity 1/29/98 30.02% 14.03% - -
Goldman Sachs Global Income 1/29/98 -2.39% 7.82% - -
Kemper-Dreman High Return Equity 5/15/98 -12.40% 4.87% - -
Kemper Small Cap Growth 12/31/97 32.69% 16.76% - -
Kemper Small Cap Value 12/31/97 1.36% -12.47% - -
Kemper Government Securities 12/31/97 -0.71% 5.57% - -
MFS Bond 5/15/98 -2.93% 4.92% - -
MFS Research 12/31/97 22.32% 21.73% - -
MFS Growth with Income 12/31/97 5.21% 20.67% - -
MFS Emerging Growth 12/31/97 74.26% 32.33% - -
MFS/Foreign & Colonial Emerging Markets Equity 12/31/97 36.26% -34.28% - -
MFS High Income 12/31/97 4.97% -1.55% - -
MFS Global Governments 12/31/97 -3.85% 6.70% - -
Oppenheimer Capital Appreciation 12/31/97 39.69% 22.33% - -
Oppenheimer Main Street Growth & Income 12/31/97 20.01% 3.27% - -
Oppenheimer High Income 12/31/97 2.84% -1.06% - -
Oppenheimer Bond 12/31/97 -2.89% 5.33% - -
Oppenheimer Strategic Bond 12/31/97 1.40% 1.51% - -
Putnam VT Growth and Income 12/31/97 0.17% 13.83% - -
Putnam VT New Value 12/31/97 -1.13% 4.83% - -
Putnam VT Vista 12/31/97 50.77% 17.86% - -
Putnam VT International Growth 12/31/97 57.91% 17.07% - -
Putnam VT International New Opportunities 12/31/97 100.14% 14.02% - -
Templeton Bond 3/1/99 -3.18% - - -
Franklin Small Cap Investments 3/1/99 76.80% - - -
Templeton Stock 1/19/99 25.58% - - -
Templeton International 5/1/98 21.90% -8.55% - -
Templeton Developing Markets 5/1/98 51.71% -24.48% - -
Templeton Mutual Shares Investments 5/1/98 8.13% -3.69% - -
Franklin Growth Investments 3/1/99 46.65% - - -
Fidelity VIP Growth 2/17/98 35.53% 30.78% - -
Fidelity VIP II Contrafund 2/17/98 22.53% 23.57% - -
Fidelity VIP III Growth Opportunities 2/17/98 2.82% 17.42% - -
Fidelity VIP III Growth & Income 2/17/98 7.65% 22.03% - -
Fidelity VIP Equity-Income 2/17/98 4.85% 6.27% - -
American Century VP Income & Growth 11/19/99 3.20% - - -
American Century VP International 11/19/99 25.15% - - -
American Century VP Value 11/19/99 -4.18% - - -
Dreyfus Stock Index 11/19/99 3.22% - - -
Dreyfus VIF Disciplined Stock 11/19/99 3.00% - - -
Dreyfus VIF Capital Appreciation 11/19/99 1.18% - - -
INVESCO Dynamics 11/19/99 11.43% - - -
INVESCO High Yield 11/19/99 1.17% - - -
PIMCO High Yield Bond 11/19/99 0.78% - - -
PIMCO Low Duration Bond 11/19/99 -0.31% - - -
PIMCO StocksPLUS Growth & Income 11/19/99 3.07% - - -
PIMCO Total Return Bond 11/19/99 -1.25% - - -
Scudder International 11/19/99 16.31% - - -
* The total return for sub-accounts that commenced operations during the period is not annualized.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED
Separate Account Expenses
As a % of Average Net Assets**
Commenced -------------------------------------------------------
Operations 1999 1998 1997 1996
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cova Lord Abbett Growth and Income 1/8/99 1.40% - - -
Cova Bond Debenture 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova Developing Growth 8/20/97 1.40% 1.40% 1.40% -
Cova Large Cap Research 8/20/97 1.40% 1.40% 1.40% -
Cova Mid-Cap Value 8/20/97 1.40% 1.40% 1.40% -
Cova Quality Bond 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova Small Cap Stock 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova Large Cap Stock 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova Select Equity 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova International Equity 5/1/96 1.40% 1.40% 1.40% 1.40%
Cova Balanced 7/1/97 1.40% 1.40% 1.40% -
Cova Equity Income 7/1/97 1.40% 1.40% 1.40% -
Cova Growth and Income Equity 7/1/97 1.40% 1.40% 1.40% -
Cova Riggs Stock 8/5/99 1.40% - - -
Cova Riggs U.S. Government Securities 8/5/99 1.40% - - -
GACC Money Market 6/3/96 1.40% 1.40% 1.40% 1.40%
Russell Multi-Style Equity 12/31/97 1.40% 1.40% - -
Russell Aggressive Equity 12/31/97 1.40% 1.40% - -
Russell Non-US 12/31/97 1.40% 1.40% - -
Russell Core Bond 12/31/97 1.40% 1.40% - -
Russell Real Estate Securities 7/1/99 1.40% - - -
AIM V.I. Value 12/31/97 1.40% 1.40% - -
AIM V.I. Capital Appreciation 12/31/97 1.40% 1.40% - -
AIM V.I. International Equity 12/31/97 1.40% 1.40% - -
Alliance Premier Growth 12/31/97 1.40% 1.40% - -
Alliance Real Estate Investment 12/31/97 1.40% 1.40% - -
Liberty Newport Tiger Fund, Variable 12/31/97 1.40% 1.40% - -
Goldman Sachs Growth and Income 1/29/98 1.40% 1.40% - -
Goldman Sachs International Equity 1/29/98 1.40% 1.40% - -
Goldman Sachs Global Income 1/29/98 1.40% 1.40% - -
Kemper-Dreman High Return Equity 5/15/98 1.40% 1.40% - -
Kemper Small Cap Growth 12/31/97 1.40% 1.40% - -
Kemper Small Cap Value 12/31/97 1.40% 1.40% - -
Kemper Government Securities 12/31/97 1.40% 1.40% - -
MFS Bond 5/15/98 1.40% 1.40% - -
MFS Research 12/31/97 1.40% 1.40% - -
MFS Growth with Income 12/31/97 1.40% 1.40% - -
MFS Emerging Growth 12/31/97 1.40% 1.40% - -
MFS/Foreign & Colonial Emerging Markets Equity 12/31/97 1.40% 1.40% - -
MFS High Income 12/31/97 1.40% 1.40% - -
MFS Global Governments 12/31/97 1.40% 1.40% - -
Oppenheimer Capital Appreciation 12/31/97 1.40% 1.40% - -
Oppenheimer Main Street Growth & Income 12/31/97 1.40% 1.40% - -
Oppenheimer High Income 12/31/97 1.40% 1.40% - -
Oppenheimer Bond 12/31/97 1.40% 1.40% - -
Oppenheimer Strategic Bond 12/31/97 1.40% 1.40% - -
Putnam VT Growth and Income 12/31/97 1.40% 1.40% - -
Putnam VT New Value 12/31/97 1.40% 1.40% - -
Putnam VT Vista 12/31/97 1.40% 1.40% - -
Putnam VT International Growth 12/31/97 1.40% 1.40% - -
Putnam VT International New Opportunities 12/31/97 1.40% 1.40% - -
Templeton Bond 3/1/99 1.40% - - -
Franklin Small Cap Investments 3/1/99 1.40% - - -
Templeton Stock 1/19/99 1.40% - - -
Templeton International 5/1/98 1.40% 1.40% - -
Templeton Developing Markets 5/1/98 1.40% 1.40% - -
Templeton Mutual Shares Investments 5/1/98 1.40% 1.40% - -
Franklin Growth Investments 3/1/99 1.40% - - -
Fidelity VIP Growth 2/17/98 1.40% 1.40% - -
Fidelity VIP II Contrafund 2/17/98 1.40% 1.40% - -
Fidelity VIP III Growth Opportunities 2/17/98 1.40% 1.40% - -
Fidelity VIP III Growth & Income 2/17/98 1.40% 1.40% - -
Fidelity VIP Equity-Income 2/17/98 1.40% 1.40% - -
American Century VP Income & Growth 11/19/99 1.40% - - -
American Century VP International 11/19/99 1.40% - - -
American Century VP Value 11/19/99 1.40% - - -
Dreyfus Stock Index 11/19/99 1.40% - - -
Dreyfus VIF Disciplined Stock 11/19/99 1.40% - - -
Dreyfus VIF Capital Appreciation 11/19/99 1.40% - - -
INVESCO Dynamics 11/19/99 1.40% - - -
INVESCO High Yield 11/19/99 1.40% - - -
PIMCO High Yield Bond 11/19/99 1.40% - - -
PIMCO Low Duration Bond 11/19/99 1.40% - - -
PIMCO StocksPLUS Growth & Income 11/19/99 1.40% - - -
PIMCO Total Return Bond 11/19/99 1.40% - - -
Scudder International 11/19/99 1.40% - - -
** The expense ratio for sub-accounts that commenced operations during the period is annualized.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION
The realized gain (loss) on the sale of fund shares and the change in
unrealized appreciation for each sub-account during the year ended
December 31, 1999 and 1998 follows:
Realized Gain (Loss)
------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Cova Quality Income 1999 $ 38,668 $ 39,188 $ (520)
1998 13,031 12,576 455
Cova Money Market 1999 7,897 7,897 -
1998 14,519 14,519 -
Cova High Yield 1999 28,995 29,950 (955)
1998 6,314 6,178 136
Cova Stock Index 1999 100,241 82,162 18,079
1998 23,196 17,093 6,103
Cova VKAC Growth and Income 1999 51,735 45,148 6,587
1998 6,244 4,804 1,440
Cova Lord Abbett Growth and Income 1999 33,043 31,617 1,426
1998 - - -
Cova Bond Debenture 1999 8,143 8,020 123
1998 9,489 9,470 19
Cova Developing Growth 1999 614 545 69
1998 138 152 (14)
Cova Large Cap Research 1999 68 59 9
1998 161 156 5
Cova Mid-Cap Value 1999 481 460 21
1998 82 85 (3)
Cova Quality Bond 1999 13,923 13,935 (12)
1998 1,336 1,299 37
Cova Small Cap Stock 1999 6,406 6,290 116
1998 3,113 3,237 (124)
Cova Large Cap Stock 1999 24,473 22,393 2,080
1998 147 131 16
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Realized Gain (Loss)
------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Cova Select Equity 1999 $ 2,126 $ 1,843 $ 283
1998 1,485 1,274 211
Cova International Equity 1999 7,673 6,613 1,060
1998 4,919 4,609 310
Cova Balanced 1999 507 464 43
1998 30 30 -
Cova Small Cap Equity 1999 1,828 1,752 76
1998 39 42 (3)
Cova Equity Income 1999 355 328 27
1998 75 75 -
Cova Growth and Income Equity 1999 510 448 62
1998 210 204 6
Cova Riggs U.S. Government Securities 1999 201 200 1
1998 - - -
Cova Riggs Stock 1999 100 100 -
1998 - - -
GACC Money Market 1999 54,974 54,019 955
1998 37,059 36,624 435
Lord Abbett Growth and Income 1999 700,973 555,507 145,466
1998 12,298 10,217 2,081
Russell Multi-Style Equity 1999 1,756 1,634 122
1998 62 61 1
Russell Aggressive Equity 1999 568 578 (10)
1998 203 247 (44)
Russell Non-US 1999 604 559 45
1998 92 90 2
Russell Core Bond 1999 2,193 2,264 (71)
1998 523 522 1
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Realized Gain (Loss)
------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Russell Real Estate Securities 1999 $ 6 $ 6 $ -
1998 - - -
AIM V.I. Value 1999 231 215 16
1998 253 263 (10)
AIM V.I. Capital Appreciation 1999 191 177 14
1998 73 75 (2)
AIM V.I. International Equity 1999 12,169 11,498 671
1998 8,247 8,249 (2)
Alliance Premier Growth 1999 617 559 58
1998 54 58 (4)
Alliance Real Estate Investment 1999 310 332 (22)
1998 28 30 (2)
Liberty Newport Tiger Fund, Variable 1999 1,971 1,801 170
1998 416 445 (29)
Goldman Sachs Growth and Income 1999 1,183 1,203 (20)
1998 126 138 (12)
Goldman Sachs International Equity 1999 3,457 3,299 158
1998 29 29 -
Goldman Sachs Global Income 1999 51 51 -
1998 17 16 1
Kemper-Dreman High Return Equity 1999 8 8 -
1998 - - -
Kemper Small Cap Growth 1999 401 364 37
1998 1,008 1,035 (27)
Kemper Small Cap Value 1999 446 464 (18)
1998 21 25 (4)
Kemper Government Securities 1999 206 207 (1)
1998 17 17 -
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Realized Gain (Loss)
-----------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
---------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
MFS Bond 1999 $ 14 $ 14 $ -
1998 - - -
MFS Research 1999 335 308 27
1998 120 122 (2)
MFS Growth with Income 1999 391 371 20
1998 28 28 -
MFS Emerging Growth 1999 671 532 139
1998 129 140 (11)
MFS/Foreign & Colonial
Emerging Markets Equity 1999 561 573 (12)
1998 1,059 1,156 (97)
MFS High Income 1999 307 312 (5)
1998 61 63 (2)
MFS Global Governments 1999 6 6 -
1998 - - -
Oppenheimer Capital Appreciation 1999 219 201 18
1998 187 189 (2)
Oppenheimer Main Street Growth & Income 1999 438 411 27
1998 326 364 (38)
Oppenheimer High Income 1999 42 43 (1)
1998 32 32 -
Oppenheimer Bond 1999 246 253 (7)
1998 49 49 -
Oppenheimer Strategic Bond 1999 170 174 (4)
1998 3 3 -
Putnam VT Growth and Income 1999 362 360 2
1998 294 302 (8)
Putnam VT New Value 1999 231 238 (7)
1998 2 3 (1)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Realized Gain (Loss)
----------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Putnam VT Vista 1999 $ 175 $ 153 $ 22
1998 27 28 (1)
Putnam VT International Growth 1999 4,284 3,820 464
1998 4,316 4,354 (38)
Putnam VT International New Opportunities 1999 3,566 3,316 250
1998 2,989 2,965 24
Templeton Bond 1999 6 6 -
1998 - - -
Franklin Small Cap Investments 1999 72 60 12
1998 - - -
Templeton Stock 1999 49 47 2
1998 - - -
Templeton International 1999 10,350 10,164 186
1998 6,057 6,049 8
Templeton Developing Markets 1999 1,026 958 68
1998 357 361 (4)
Templeton Mutual Shares Investments 1999 187 177 10
1998 7 7 -
Franklin Growth Investments 1999 165 158 7
1998 - - -
Fidelity VIP Growth 1999 99 90 9
1998 35 37 (2)
Fidelity VIP II Contrafund 1999 426 386 40
1998 17 19 (2)
Fidelity VIP III Growth Opportunities 1999 65 64 1
1998 24 25 (1)
Fidelity VIP III Growth & Income 1999 275 255 20
1998 69 74 (5)
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Realized Gain (Loss)
------------------------------------------------------------------
Aggregate Aggregate Cost
Year or Proceeds from Sales of Fund Shares Realized
Period of Fund Shares Redeemed Gain (Loss)
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Fidelity VIP Equity-Income 1999 $ 141 $ 139 $ 2
1998 27 30 (3)
American Century VP Income & Growth 1999 - - -
1998 - - -
American Century VP International 1999 16 16 -
1998 - - -
American Century VP Value 1999 - - -
1998 - - -
Dreyfus Stock Index 1999 - - -
1998 - - -
Dreyfus VIF Disciplined Stock 1999 - - -
1998 - - -
Dreyfus VIF Capital Appreciation 1999 - - -
1998 - - -
INVESCO VIF Dynamics 1999 - - -
1998 - - -
INVESCO VIF High Yield 1999 - - -
1998 - - -
PIMCO High Yield Bond 1999 - - -
1998 - - -
PIMCO Low Duration Bond 1999 - - -
1998 - - -
PIMCO StocksPLUS Growth & Income 1999 - - -
1998 - - -
PIMCO Total Return Bond 1999 - - -
1998 - - -
Scudder International 1999 - - -
1998 - - -
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Cova Quality Income 1999 $ - $ 1,307 $ (1,307)
1998 1,307 1,301 6
Cova Money Market 1999 - - -
1998 - - -
Cova High Yield 1999 - 174 (174)
1998 174 842 (668)
Cova Stock Index 1999 - 25,838 (25,838)
1998 25,838 25,000 838
Cova VKAC Growth and Income 1999 - 11,521 (11,521)
1998 11,521 10,887 634
Cova Lord Abbett Growth and Income 1999 84,856 - 84,856
1998 - - -
Cova Bond Debenture 1999 4,348 3,523 825
1998 3,523 1,958 1,565
Cova Developing Growth 1999 7,602 890 6,712
1998 890 7 883
Cova Large Cap Research 1999 6,817 1,284 5,533
1998 1,284 6 1,278
Cova Mid-Cap Value 1999 1,426 160 1,266
1998 160 40 120
Cova Quality Bond 1999 (1,015) 1,598 (2,613)
1998 1,598 186 1,412
Cova Small Cap Stock 1999 30,039 346 29,693
1998 346 6,523 (6,177)
Cova Large Cap Stock 1999 36,556 16,535 20,021
1998 16,535 2,855 13,680
Cova Select Equity 1999 33,989 33,585 404
1998 33,585 13,520 20,065
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
---------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Cova International Equity 1999 $ 33,733 $ 9,278 $ 24,455
1998 9,278 1,309 7,969
Cova Balanced 1999 311 173 138
1998 173 - 173
Cova Small Cap Equity 1999 - 34 (34)
1998 34 (5) 39
Cova Equity Income 1999 (266) 70 (336)
1998 70 21 49
Cova Growth and Income Equity 1999 2,123 566 1,557
1998 566 18 548
Cova Riggs U.S. Government Securities 1999 (4) - (4)
1998 - - -
Cova Riggs Stock 1999 4 - 4
1998 - - -
GACC Money Market 1999 1,215 231 984
1998 231 46 185
Lord Abbett Growth and Income 1999 - 114,453 (114,453)
1998 114,453 87,861 26,592
Russell Multi-Style Equity 1999 5,696 3,199 2,497
1998 3,199 - 3,199
Russell Aggressive Equity 1999 736 75 661
1998 75 - 75
Russell Non-US 1999 4,785 412 4,373
1998 412 - 412
Russell Core Bond 1999 (1,947) 268 (2,215)
1998 268 - 268
Russell Real Estate Securities 1999 (9) - (9)
1998 - - -
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
AIM V.I. Value 1999 $ 6,206 $ 668 $ 5,538
1998 668 - 668
AIM V.I. Capital Appreciation 1999 3,597 164 3,433
1998 164 - 164
AIM V.I. International Equity 1999 1,008 81 927
1998 81 - 81
Alliance Premier Growth 1999 8,366 1,522 6,844
1998 1,522 - 1,522
Alliance Real Estate Investment 1999 (407) (170) (237)
1998 (170) - (170)
Liberty Newport Tiger Fund, Variable 1999 101 54 47
1998 54 - 54
Goldman Sachs Growth and Income 1999 (2) (207) 205
1998 (207) - (207)
Goldman Sachs International Equity 1999 436 56 380
1998 56 - 56
Goldman Sachs Global Income 1999 (15) (1) (14)
1998 (1) - (1)
Kemper-Dreman High Return Equity 1999 (20) 1 (21)
1998 1 - 1
Kemper Small Cap Growth 1999 542 107 435
1998 107 - 107
Kemper Small Cap Value 1999 40 (155) 195
1998 (155) - (155)
Kemper Government Securities 1999 (48) 9 (57)
1998 9 - 9
MFS Bond 1999 (6) 1 (7)
1998 1 - 1
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
---------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
MFS Research 1999 $ 3,094 $ 481 $ 2,613
1998 481 - 481
MFS Growth with Income 1999 1,415 574 841
1998 574 - 574
MFS Emerging Growth 1999 12,069 985 11,084
1998 985 - 985
MFS/Foreign & Colonial
Emerging Markets Equity 1999 24 (94) 118
1998 (94) - (94)
MFS High Income 1999 (58) (34) (24)
1998 (34) - (34)
MFS Global Governments 1999 (3) 1 (4)
1998 1 - 1
Oppenheimer Capital Appreciation 1999 1,754 134 1,620
1998 134 - 134
Oppenheimer Main Street Growth & Income 1999 877 (28) 905
1998 (28) - (28)
Oppenheimer High Income 1999 (40) (15) (25)
1998 (15) - (15)
Oppenheimer Bond 1999 (317) 95 (412)
1998 95 - 95
Oppenheimer Strategic Bond 1999 - 3 (3)
1998 3 - 3
Putnam VT Growth and Income 1999 (991) 660 (1,651)
1998 660 - 660
Putnam VT New Value 1999 (22) 6 (28)
1998 6 - 6
Putnam VT Vista 1999 1,687 173 1,514
1998 173 - 173
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
---------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Putnam VT International Growth 1999 $ 6,805 $ 353 $ 6,452
1998 353 - 353
Putnam VT International New Opportunities 1999 860 40 820
1998 40 - 40
Templeton Bond 1999 (3) - (3)
1998 - - -
Franklin Small Cap Investments 1999 231 - 231
1998 - - -
Templeton Stock 1999 60 - 60
1998 - - -
Templeton International 1999 1,005 48 957
1998 48 - 48
Templeton Developing Markets 1999 872 44 828
1998 44 - 44
Templeton Mutual Shares Investments 1999 153 32 121
1998 32 - 32
Franklin Growth Investments 1999 161 - 161
1998 - - -
Fidelity VIP Growth 1999 310 12 298
1998 12 - 12
Fidelity VIP II Contrafund 1999 267 48 219
1998 48 - 48
Fidelity VIP III Growth Opportunities 1999 28 13 15
1998 13 - 13
Fidelity VIP III Growth & Income 1999 213 94 119
1998 94 - 94
Fidelity VIP Equity-Income 1999 17 17 -
1998 17 - 17
(Continued)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
(In thousands of dollars)
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION, CONTINUED
Unrealized Appreciation (Depreciation)
------------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
----------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
American Century VP Income & Growth 1999 $ 7 $ - $ 7
1998 - - -
American Century VP International 1999 - - -
1998 - - -
American Century VP Value 1999 2 - 2
1998 - - -
Dreyfus Stock Index 1999 - - -
1998 - - -
Dreyfus VIF Disciplined Stock 1999 - - -
1998 - - -
Dreyfus VIF Capital Appreciation 1999 1 - 1
1998 - - -
INVESCO VIF Dynamics 1999 8 - 8
1998 - - -
INVESCO VIF High Yield 1999 - - -
1998 - - -
PIMCO High Yield Bond 1999 - - -
1998 - - -
PIMCO Low Duration Bond 1999 - - -
1998 - - -
PIMCO StocksPLUS Growth & Income 1999 - - -
1998 - - -
PIMCO Total Return Bond 1999 - - -
1998 - - -
Scudder International 1999 11 - 11
1998 - - -
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS
The change in the number of units for each sub-account follows:
Cova
--------------------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money High Stock and and Bond
Income Market Yield Index Income Income Debenture
------------- ---------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 2,931,053 1,742,444 1,409,290 3,547,220 2,198,250 - 3,945,097
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 1,214 491 1,763 2,532 1,131 - 1,632,919
Contract units transferred, net (196,389) (799,477) (59,692) 159,577 54,353 - 2,939,109
Contract units redeemed (512,199) (333,892) (146,202) (616,360) (152,515) - (332,231)
------------- ----------- ----------- ------------ ----------- ------------- -------------
Unit balance at 12/31/98 2,223,679 609,566 1,205,159 3,092,969 2,101,219 - 8,184,894
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased - - 83 187 - 642,997 506,293
Contract units transferred, net (2,215,623) (606,382) (1,202,292) (3,084,953) (2,098,056) 22,553,102 3,839,982
Contract units redeemed (8,056) (3,184) (2,950) (8,203) (3,163) (2,067,478) (1,117,176)
------------- ----------- ----------- ------------ ----------- ------------- -------------
Unit balance at 12/31/99 - - - - - 21,128,621 11,413,993
============= =========== =========== ============ =========== ============= =============
Annuity units:
Unit balance at 12/31/97 8,069 4,562 2,229 4,097 1,803 - -
Contract units purchased - - 798 - 798 - 272
Contract units redeemed (1,686) (901) (523) (608) (196) - (8)
------------- ----------- ----------- ------------ ----------- ------------- -------------
Unit balance at 12/31/98 6,383 3,661 2,504 3,489 2,405 - 264
Contract units purchased - - - - - 614,517 184,677
Contract units transferred, net (6,225) (3,576) (2,444) (3,431) (2,373) 33,239 -
Contract units redeemed (158) (85) (60) (58) (32) (588,108) (148,800)
------------- ----------- ----------- ------------ ----------- ------------- -------------
Unit balance at 12/31/99 - - - - - 59,648 36,141
============= =========== =========== ============ =========== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8)UNIT TRANSACTIONS, CONTINUED
Cova
----------------------------------------------------------------------------------
Large Small Large
Developing Cap Mid-Cap Quality Cap Cap Select
Growth Research Value Bond Stock Stock Equity
---------- ---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 148,658 124,559 194,386 1,433,081 3,940,243 1,473,929 6,903,606
Cova units purchased - - - - - - -
Cova units redeemed (10,000) (10,000) (10,000) - - - -
Contract units purchased 596,000 569,392 755,701 833,031 619,802 1,118,109 1,382,912
Contract units transferred, net 630,230 437,664 736,868 1,236,444 1,172,828 1,713,122 2,562,725
Contract units redeemed (22,687) (26,695) (34,402) (179,213) (200,263) (127,125) (304,425)
---------- ---------- ---------- ---------- ---------- ----------- ----------
Unit balance at 12/31/98 1,342,201 1,094,920 1,642,553 3,323,343 5,532,610 4,178,035 10,544,818
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 243,231 289,429 311,212 516,514 203,018 731,340 510,633
Contract units transferred, net 645,209 965,273 698,565 5,060,268 132,023 6,332,217 1,861,802
Contract units redeemed (76,742) (89,198) (123,430) (1,291,515) (431,799) (1,191,443) (645,967)
---------- ---------- ---------- ---------- ---------- ----------- ----------
Unit balance at 12/31/99 2,153,899 2,260,424 2,528,900 7,608,610 5,435,852 10,050,149 12,271,286
========== ========== ========== ========== ========== =========== ==========
Annuity units:
Unit balance at 12/31/97 - - - - 773 3,028 3,237
Contract units purchased - 2,090 - 3,947 1,944 9,187 9,682
Contract units redeemed - (266) - (109) (162) (1,259) (1,203)
---------- ---------- ---------- ---------- ---------- ----------- ----------
Unit balance at 12/31/98 - 1,824 - 3,838 2,555 10,956 11,716
Contract units purchased 479 452 474 30,174 1,448 13,399 1,722
Contract units transferred, net - - - - 504 - 732
Contract units redeemed (66) (456) (65) (18,208) (1,459) (7,939) (3,936)
---------- ---------- ---------- ---------- ---------- ----------- ----------
Unit balance at 12/31/99 413 1,820 409 15,804 3,048 16,416 10,234
========== ========== ========== ========== ========== =========== ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
Cova
---------------------------------------------------------------------------------------
Growth Riggs
and U.S.
International Small Cap Equity Income Government Riggs
Equity Balanced Equity Income Equity Securities Stock
----------- ----------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 5,440,592 38,079 26,148 49,725 121,673 - -
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 651,488 128,875 44,062 157,967 269,879 - -
Contract units transferred, net 1,460,450 124,051 61,306 83,645 260,136 - -
Contract units redeemed (243,205) (4,494) (1,880) (4,384) (9,899) - -
----------- ----------- ----------- ----------- ----------- ----------- -----------
Unit balance at 12/31/98 7,309,325 286,511 129,636 286,953 641,789 - -
Cova units purchased - - - - - 20,033 10,014
Cova units redeemed - - - - - - -
Contract units purchased 179,705 114,865 17,649 75,387 156,781 9,232 11,330
Contract units transferred, net 567,208 299,533 (143,078) 120,762 314,093 - -
Contract units redeemed (477,287) (21,972) (4,207) (15,381) (40,597) - -
----------- ----------- ----------- ----------- ----------- ----------- -----------
Unit balance at 12/31/99 7,578,951 678,937 - 467,721 1,072,066 29,265 21,344
=========== =========== =========== =========== =========== =========== ===========
Annuity units:
Unit balance at 12/31/97 790
Contract units purchased 2,208
Contract units redeemed (173)
-----------
Unit balance at 12/31/98 2,825
Contract units purchased 6,131
Contract units transferred, net 559
Contract units redeemed (2,313)
-----------
Unit balance at 12/31/99 7,202
===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
GACC Lord Abbett Russell
---------- ------------ --------------------------------------------------------------
Growth Multi- Real
Money and Style Aggressive Core Estate
Market Income Equity Equity Non-US Bond Securities
---------- ------------ ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 311,051 15,788,404 - - - - -
Cova units purchased - - 10 10 10 10 -
Cova units redeemed - - (10) (10) (10) (10) -
Contract units purchased 3,293,174 1,737,150 1,960,886 438,734 773,431 1,318,370 -
Contract units transferred, net (1,834,605) 3,166,896 416,532 107,823 180,088 360,854 -
Contract units redeemed (295,883) (1,222,057) (48,988) (10,279) (27,727) (69,373) -
---------- ------------ ----------- ---------- ----------- ----------- -----------
Unit balance at 12/31/98 1,473,737 19,470,393 2,328,430 536,278 925,792 1,609,851 -
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 386,321 21,056 728,717 174,001 269,355 304,076 30,745
Contract units transferred, net 3,471,617 (19,468,292) 911,226 217,404 416,224 810,756 37,642
Contract units redeemed (1,622,502) (23,157) (128,684) (20,425) (44,584) (70,534) (1,123)
---------- ------------ ----------- ---------- ----------- ----------- -----------
Unit balance at 12/31/99 3,709,173 - 3,839,689 907,258 1,566,787 2,654,149 67,264
========== ============ =========== ========== =========== =========== ===========
Annuity units:
Unit balance at 12/31/97 - 26,046 - - - -
Contract units purchased 9,003 10,428 - - - -
Contract units redeemed (128) (3,208) - - - -
---------- ------------ ----------- ---------- ----------- -----------
Unit balance at 12/31/98 8,875 33,266 - - - -
Contract units purchased 6,080 - 644 171 417 380
Contract units transferred, net - (32,829) - - - -
Contract units redeemed (970) (437) (28) (7) (19) (17)
---------- ------------ ----------- ---------- ----------- -----------
Unit balance at 12/31/99 13,985 - 616 164 398 363
========== ============ =========== ========== =========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
AIM Alliance Liberty Goldman Sachs
------------------------------------ ------------------------ ---------- -------------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and
V.I. Value Appreciation Equity Growth Investment Variable Income
----------- ----------- ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 10 10 10 10 10 10
Cova units redeemed (10) (10) (10) (10) (10) (10) (10)
Contract units purchased 365,254 134,252 148,215 523,722 136,005 18,873 298,119
Contract units transferred, net 177,976 57,235 57,321 149,553 58,393 13,289 178,567
Contract units redeemed (21,340) (7,999) (1,464) (5,421) (2,987) (226) (9,011)
----------- ----------- ----------- ----------- ----------- ---------- -------------
Unit balance at 12/31/98 521,890 183,488 204,072 667,854 191,411 31,936 467,675
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 817,276 258,835 39,014 894,320 201,575 8,694 68,346
Contract units transferred, net 1,315,650 489,743 43,444 574,874 97,095 516 114,482
Contract units redeemed (110,055) (30,831) (8,532) (71,589) (14,606) (498) (29,935)
----------- ----------- ----------- ----------- ----------- ---------- -------------
Unit balance at 12/31/99 2,544,761 901,235 277,998 2,065,459 475,475 40,648 620,568
=========== =========== =========== =========== =========== ========== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
Goldman Sachs Kemper MFS
------------------------ ------------------------------------------------- -----------
Kemper-
Dreman Small Small
International Global High-Return Cap Cap Government
Equity Income Equity Growth Value Securities Bond
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 10 10 10 10 10 10
Cova units redeemed (10) (10) - (10) (10) (10) -
Contract units purchased 89,807 12,114 - 61,682 178,532 48,334 245
Contract units transferred, net 23,575 8,062 9,213 15,201 69,892 11,575 16,283
Contract units redeemed (558) (1,343) - (391) (3,332) (197) -
----------- ----------- ----------- ----------- ----------- ----------- -----------
Unit balance at 12/31/98 112,824 18,833 9,223 76,492 245,092 59,712 16,538
Cova units purchased - - - - - - -
Cova units redeemed - - (10) - - - (10)
Contract units purchased 50,978 7,735 1,434 35,023 192,093 65,778 207
Contract units transferred, net 85,746 5,384 8,161 9,941 74,108 98,962 4,791
Contract units redeemed (9,378) (411) - (7,896) (15,210) (5,648) (1)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Unit balance at 12/31/99 240,170 31,541 18,808 113,560 496,083 218,804 21,525
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
MFS Oppenheimer
-------------------------------------------------------------------------- ------------
F&C
Growth Emerging
with Emerging Markets High Global Capital
Research Income Growth Equity Income Governments Appreciation
---------- ----------- ----------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 10 10 10 10 10 10
Cova units redeemed (10) (10) (10) (10) (10) - (10)
Contract units purchased 337,107 416,517 438,345 45,159 164,144 423 83,004
Contract units transferred, net 137,437 171,689 106,215 28,739 57,879 1,674 19,949
Contract units redeemed (9,758) (6,772) (4,901) (727) (2,814) (25) (5,792)
---------- ----------- ----------- ---------- ----------- ----------- ------------
Unit balance at 12/31/98 464,786 581,434 539,659 73,171 219,209 2,082 97,161
Cova units purchased - - - - - - -
Cova units redeemed - - - - - (10) -
Contract units purchased 321,715 408,104 462,628 225 99,258 554 126,688
Contract units transferred, net 352,320 433,658 278,360 (53,623) 131,707 4,906 231,902
Contract units redeemed (40,235) (50,182) (43,286) (3,086) (12,298) (59) (19,059)
---------- ----------- ----------- ---------- ----------- ----------- ------------
Unit balance at 12/31/99 1,098,586 1,373,014 1,237,361 16,687 437,876 7,473 436,692
========== =========== =========== ========== =========== =========== ============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
Oppenheimer Putnam
-------------------------------------------------- ------------------------------------
Main Street
Growth VT Growth
& High Strategic and VT New
Income Income Bond Bond Income Value VT Vista
------------ ----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 10 10 10 10 10 10
Cova units redeemed (10) (10) (10) (10) (10) (10) (10)
Contract units purchased 211,120 51,949 320,045 71,817 820,015 16,925 116,318
Contract units transferred, net 78,591 27,811 86,123 36,774 304,805 25,293 36,195
Contract units redeemed (4,881) (1,247) (4,178) (722) (9,152) (127) (1,108)
------------ ----------- ----------- ----------- ----------- ---------- -----------
Unit balance at 12/31/98 284,830 78,513 401,990 107,869 1,115,668 42,091 151,405
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 217,620 65,326 286,718 88,595 570,960 21,598 107,080
Contract units transferred, net 138,599 100,092 372,208 117,379 695,247 9,722 144,797
Contract units redeemed (22,278) (5,665) (30,377) (7,316) (77,862) (6,511) (17,937)
------------ ----------- ----------- ----------- ----------- ---------- -----------
Unit balance at 12/31/99 618,771 238,266 1,030,539 306,527 2,304,013 66,900 385,345
============ =========== =========== =========== =========== ========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
Putnam Templeton
-------------------------- ----------------------------------------------------------------
VT
VT International Franklin
International New Small Cap Developing
Growth Opportunities Bond Investments Stock International Markets
----------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 10 - - - 10 10
Cova units redeemed (10) (10) - - - (10) (10)
Contract units purchased 394,877 38,270 - - - 140,734 72,847
Contract units transferred, net 141,372 14,803 - - - 26,597 18,743
Contract units redeemed (6,194) (264) - - - (2,556) (1,630)
----------- ------------- ----------- ----------- ----------- ------------- -----------
Unit balance at 12/31/98 530,055 52,809 - - - 164,775 89,960
Cova units purchased - - 10 10 10 - -
Cova units redeemed - - (10) (10) (10) - -
Contract units purchased 392,488 27,922 3,637 11,648 11,900 341,262 139,782
Contract units transferred, net 209,762 35,664 30,636 46,259 31,002 335,736 84,543
Contract units redeemed (39,926) (6,310) (553) (2,509) (67) (15,636) (9,796)
----------- ------------- ----------- ----------- ----------- ------------- -----------
Unit balance at 12/31/99 1,092,379 110,085 33,720 55,398 42,835 826,137 304,489
=========== ============= =========== =========== =========== ============= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
Templeton Fidelity
------------------------- ----------------------------------------------------------------
Mutual Franklin VIP III VIP III VIP
Shares Growth VIP VIP II Growth Growth & Equity-
Investments Investments Growth Contrafund Opportunities Income Income
------------ ----------- ---------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased 10 - 10 10 10 10 10
Cova units redeemed (10) - (10) (10) (10) (10) (10)
Contract units purchased 61,499 - 8,130 30,391 11,440 53,646 20,381
Contract units transferred, net 45,054 - (1,021) 2,056 (1,406) 30,141 4,635
Contract units redeemed (518) - (361) (93) (511) (13,954) (884)
------------ ----------- ---------- ----------- -------------- ----------- -----------
Unit balance at 12/31/98 106,035 - 6,748 32,354 9,523 69,833 24,132
Cova units purchased - 10 - - - - -
Cova units redeemed - (10) - - - - -
Contract units purchased 72,494 14,183 38,395 34,583 13,353 35,444 25,192
Contract units transferred, net 78,011 65,739 64,277 59,264 39,571 92,257 65,071
Contract units redeemed (8,734) (10,434) (6,180) (6,278) (2,053) (8,623) (4,213)
------------ ----------- ---------- ----------- -------------- ----------- -----------
Unit balance at 12/31/99 247,806 69,488 103,240 119,923 60,394 188,911 110,182
============ =========== ========== =========== ============== =========== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
American Century Dreyfus INVESCO
-------------------------------------- --------------------------------------- -----------
VP VIF VIF
Income & VP Stock Disciplined Capital VIF
Growth International VP Value Index Stock Appreciation Dynamics
---------- ------------- ----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - - -
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased - - - - - - -
Contract units transferred, net - - - - - - -
Contract units redeemed - - - - - - -
---------- ------------- ----------- ----------- ----------- -------------- -----------
Unit balance at 12/31/98 - - - - - - -
Cova units purchased 10 10 10 10 10 10 10
Cova units redeemed (10) - (10) - - (10) (10)
Contract units purchased 26,706 145 17,835 1,363 934 21,909 16,138
Contract units transferred, net 306 - 164 - - 312 121
Contract units redeemed - - - - - - -
---------- ------------- ----------- ----------- ----------- -------------- -----------
Unit balance at 12/31/99 27,012 155 17,999 1,373 944 22,221 16,259
========== ============= =========== =========== =========== ============== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
INVESCO PIMCO Scudder
------------ ---------------------------------------------------- --------------
VIF High Low StocksPLUS Total
High Yield Duration Growth & Return
Yield Bond Bond Income Bond International
------------ ----------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 - - - - - -
Cova units purchased - - - - - -
Cova units redeemed - - - - - -
Contract units purchased - - - - - -
Contract units transferred, net - - - - - -
Contract units redeemed - - - - - -
------------ ----------- ----------- -------------- ---------- --------------
Unit balance at 12/31/98 - - - - - -
Cova units purchased 10 10 10 10 10 10
Cova units redeemed - - - - - (10)
Contract units purchased 5,538 - - 877 7,160 14,363
Contract units transferred, net - - - - - 136
Contract units redeemed - - - - - -
------------ ----------- ----------- -------------- ---------- --------------
Unit balance at 12/31/99 5,548 10 10 887 7,170 14,499
============ =========== =========== ============== ========== ==============
</TABLE>
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Cova Financial Services Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Cova
Financial Services Life Insurance Company and subsidiaries (a wholly owned
subsidiary of Cova Corporation) (the Company) as of December 31, 1999 and
1998, and the related consolidated statements of income, shareholder's
equity, and cash flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements 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 are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cova
Financial Services Life Insurance Company and subsidiaries as of December
31, 1999 and 1998, and the results of their operations and their cash flows
for each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles.
February 4, 2000
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Investments:
Debt securities available-for-sale, at fair value (cost of
$1,575,536 in 1999 and $1,375,198 in 1998) $ 1,481,997 1,371,513
Preferred stock - affiliate, at fair value 6,892 9,000
Common stock, at fair value 12 37
Mortgage loans, net of allowance for potential loan loss
of $1,090 in 1999 and $510 in 1998 376,147 312,865
Policy loans 27,778 26,295
Other invested assets 4,625 --
------------ ------------
Total investments 1,897,451 1,719,710
Cash and cash equivalents - interest-bearing 86,038 94,770
Cash - noninterest-bearing 5,893 5,008
Receivable from sale of securities 1,452 5,845
Accrued investment income 24,992 21,505
Deferred policy acquisition costs 214,120 131,973
Present value of future profits 55,406 42,230
Goodwill 16,157 18,585
Deferred tax asset, net 21,964 4,786
Receivable from OakRe 336,376 720,904
Federal and state income taxes recoverable 1,190 --
Due from affiliates -- 246,198
Other assets 741 829
Separate account assets 2,537,962 1,832,396
------------ ------------
Total assets $ 5,199,742 4,844,739
============ ============
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets, Continued
December 31, 1999 and 1998
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY 1999 1998
------------- -------------
(IN THOUSANDS)
Liabilities:
<S> <C> <C>
Policyholder deposits $ 2,270,795 2,643,124
Future policy benefits 58,432 54,336
Payable on return of collateral on loaned securities 37,862 25,923
Payable on purchase of securities 516 1,040
Due to affiliates 4,220 --
Federal and state income taxes payable -- 446
Accounts payable and other liabilities 22,905 18,714
Future purchase price payable to OakRe 2,898 6,976
Guaranty fund assessments 9,900 9,700
Separate account liabilities 2,537,652 1,832,394
------------- -------------
Total liabilities 4,945,180 4,592,653
------------- -------------
Shareholder's equity:
Common stock, $2 par value. Authorized
5,000,000 shares; issued and outstanding
2,899,466 shares in 1999 and 1998 5,799 5,799
Additional paid-in capital 260,491 220,491
Retained earnings 12,906 26,410
Accumulated other comprehensive
loss - net of tax (24,634) (614)
------------- -------------
Total shareholder's equity 254,562 252,086
------------- -------------
Total liabilities and shareholder's equity $ 5,199,742 4,844,739
============= =============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Income
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
(in thousands)
Revenues:
<S> <C> <C> <C>
Premiums $ 8,468 23,875 9,368
Net investment income 131,372 127,812 111,661
Net realized (losses) gains on sales
of investments (20,214) (1,600) 563
Separate account fees 30,999 20,820 12,455
Other income 6,142 1,197 2,400
----------- ----------- -----------
Total revenues 156,767 172,104 136,447
----------- ----------- -----------
Benefits and expenses:
Interest on policyholder deposits 102,274 93,759 81,129
Current and future policy benefits 27,409 25,225 11,496
Operating and other expenses 37,270 20,151 16,179
Amortization of purchased
intangible assets 6,087 6,309 6,697
Amortization of deferred policy
acquisition costs 3,621 9,393 6,307
----------- ----------- -----------
Total benefits and expenses 176,661 154,837 121,808
----------- ----------- -----------
(Loss) income before income taxes (19,894) 17,267 14,639
----------- ----------- -----------
Income tax (benefit) expense:
Current (2,146) (1,576) 1,951
Deferred (4,244) 4,949 3,710
----------- ----------- -----------
Total income tax (benefit) expense (6,390) 3,373 5,661
----------- ----------- -----------
Net (loss) income $ (13,504) 13,894 8,978
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
(in thousands)
Common stock, balance at beginning
<S> <C> <C> <C>
and end of period $ 5,799 5,799 5,799
----------- ----------- -----------
Additional paid-in capital:
Balance at beginning of period 220,491 191,491 166,491
Capital contribution 40,000 29,000 25,000
----------- ----------- -----------
Balance at end of period 260,491 220,491 191,491
----------- ----------- -----------
Retained earnings:
Balance at beginning of period 26,410 12,516 3,538
Net (loss) income (13,504) 13,894 8,978
----------- ----------- -----------
Balance at end of period 12,906 26,410 12,516
----------- ----------- -----------
Accumulated other comprehensive (loss) income:
Balance at beginning of period (614) 2,732 (784)
Change in unrealized (depreciation) appreciation
of debt and equity securities (91,987) (14,571) 14,077
Deferred federal income tax impact 12,934 1,801 (1,893)
Change in deferred policy acquisition costs attributable
to unrealized depreciation (appreciation) 39,975 6,996 (5,342)
Change in present value of future profits
attributable to unrealized depreciation (appreciation) 15,058 2,428 (3,326)
----------- ----------- -----------
Balance at end of period (24,634) (614) 2,732
----------- ----------- -----------
Total shareholder's equity $ 254,562 252,086 212,538
=========== =========== ===========
Total comprehensive (loss) income:
Net (loss) income $ (13,504) 13,894 8,978
Other comprehensive (loss) income (change in net unrealized
(depreciation) appreciation of debt and equity securities) (24,020) (3,346) 3,516
----------- ----------- -----------
Total comprehensive (loss) income $ (37,524) 10,548 12,494
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- ------------
(in thousands)
Reconciliations of net income to net cash provided by operating activities:
<S> <C> <C> <C>
Net income (loss) $ (13,504) 13,894 8,978
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in future policy benefits 4,096 15,975 6,019
Increase (decrease) in payables and
accrued liabilities 1,620 (9,419) (9,278)
Increase in accrued investment income (1,483) (903) (5,591)
Amortization of intangible assets and
deferred policy acquisition costs 14,963 15,702 13,004
Amortization and accretion of securities
premiums and discounts (59) (1,767) 1,664
Decrease in recapture commissions payable to OakRe (4,078) (5,197) (4,837)
Net SPDA benefits recaptured from RGA 14,043 -- --
Net realized loss (gain) on sale of investments 20,214 1,600 (563)
Interest accumulated on policyholder deposits 102,274 93,759 81,129
(Decrease) increase in current and
deferred federal income taxes (1,360) 4,083 5,022
Separate account net income 1 (12) (2,637)
Commissions and expenses deferred (45,793) (50,044) (46,142)
Other (8,720) (2,011) 2,413
------------- -------------- ------------
Net cash provided by operating activities 82,214 75,660 49,181
------------- -------------- ------------
Cash flows from investing activities:
Cash used in the purchase of investment securities (560,288) (733,049) (809,814)
Proceeds from investment securities sold and matured 478,398 642,481 382,783
Other (3,524) (1,159) 15,400
------------- -------------- ------------
Net cash used in investing activities $ (85,414) (91,727) (411,631)
------------- -------------- ------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows, Continued
Years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- ------------
(in thousands)
Cash flows from financing activities:
<S> <C> <C> <C>
Policyholder deposits $ 740,599 1,014,075 841,174
Transfers from OakRe 441,742 812,520 637,168
Transfer to separate accounts (404,241) (789,872) (450,303)
Return of policyholder deposits (878,516) (889,202) (597,425)
Proceeds from security collateral on securities lending 11,939 25,923 --
Transfers from (to) RGA 43,830 (103,175) (120,411)
Capital contributions received 40,000 29,000 25,000
------------- -------------- ------------
Net cash (used) provided by financing activities (4,647) 99,269 335,203
------------- -------------- ------------
(Decrease) increase in cash and
cash equivalents (7,847) 83,202 (27,247)
Cash and cash equivalents at beginning of period 99,778 16,576 43,823
------------- -------------- ------------
Cash and cash equivalents at end of period $ 91,931 99,778 16,576
============= ============== ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(1) NATURE OF BUSINESS AND ORGANIZATION
NATURE OF THE BUSINESS
Cova Financial Services Life Insurance Company (CFSLIC) and
subsidiaries (the Company) market and service single premium
deferred annuities, immediate annuities, variable annuities, term
life, single premium variable universal life, and single premium
whole life insurance policies. The Company is licensed to do
business in 47 states and the District of Columbia. Most of the
policies issued present no significant mortality nor longevity
risk to the Company, but rather represent investment deposits by
the policyholders. Single premium whole life insurance policies
provide policy beneficiaries with mortality benefits amounting to
a multiple, which declines with age, of the original premium.
Under the deferred fixed annuity contracts, interest rates
credited to policyholder deposits are guaranteed by the Company
for periods from one to ten years, but in no case may renewal
rates be less than 3%. The Company may assess surrender fees
against amounts withdrawn prior to scheduled rate reset and adjust
account values based on current crediting rates. Policyholders
also may incur certain federal income tax penalties on
withdrawals.
Under the variable annuity contracts, policyholder deposits are
allocated to various separate account sub-accounts or the general
accounts. A sub-account is valued at the sum of market values of
the securities in its underlying investment portfolio. The
contract value allocated to a sub-account will fluctuate based on
the performance of the sub-accounts. The contract value allocated
to the general accounts is credited with a fixed interest rate for
a specified period. The Company may assess surrender fees against
amounts withdrawn prior to the end of the withdrawal charge
period. Policyholders also may incur certain federal income tax
penalties on withdrawals.
Under the single premium variable life contracts, policyholder
deposits are allocated to various separate account sub-accounts.
The account value allocated to a sub-account will fluctuate based
on the performance of the sub-accounts. The Company guarantees a
minimum death benefit to be paid to the beneficiaries upon the
death of the insured. The Company may assess surrender fees
against amounts withdrawn prior to the end of the surrender charge
period. A deferred premium tax may also be assessed against
amounts withdrawn in the first ten years. Policyholders may also
incur certain federal income tax penalties on withdrawals.
Under the term life insurance policies, policyholders pay a level
premium over a certain period of time to guarantee a death benefit
will be paid to the beneficiaries upon the death of the insured.
This policy has no cash accumulation available to the
policyholder.
Although the Company markets its products through numerous
distributors, including regional brokerage firms, national
brokerage firms, and banks, approximately 86%, 89%, and 73% of the
Company's sales have been through two specific brokerage firms, A.
G. Edwards & Sons, Incorporated and Edward Jones & Company, in
1999, 1998, and 1997, respectively.
<PAGE>
ORGANIZATION
The Company is a wholly owned subsidiary of Cova Corporation,
which is a wholly owned subsidiary of General American Life
Insurance Company (GALIC), a Missouri domiciled life insurance
company. GALIC is a wholly owned subsidiary of GenAmerica
Corporation, which in turn is wholly owned by the ultimate parent,
General American Mutual Holding Company (GAMHC). The Company owns
100% of the outstanding shares of two subsidiaries, First Cova
Life Insurance Company (a New York domiciled insurance company)
(FCLIC) and Cova Financial Life Insurance Company (a California
domiciled insurance company) (CFLIC).
On August 26, 1999, GAMHC entered into a definitive agreement,
whereby Metropolitan Life Insurance Company (MetLife), a New York
domiciled life insurance company, will acquire GenAmerica
Corporation and all its holdings for $1.2 billion in cash. The
purchase was approved by the Missouri Director of Insurance on
November 10, 1999. The purchase, however, was not consummated as
of December 31, 1999, and, as a result, these financial statements
do not reflect purchase accounting treatment of this transaction.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles (GAAP) and include the accounts and operations of the
Company. Significant intercompany transactions have been
eliminated. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions
that affect the amounts reported. Actual results could differ from
these estimates.
DEBT SECURITIES
Investments in all debt securities with readily determinable
market values are classified into one of three categories: held to
maturity, trading, or available-for-sale. Classification of
investments is based on management's current intent. All debt
securities at December 31, 1999 and 1998 were classified as
available-for-sale. Securities available-for-sale are carried at
fair value, with unrealized holding gains and losses reported as
accumulated other comprehensive income in the shareholder's
equity, net of deferred effects of income tax and related effects
on deferred acquisition costs and present value of future profits.
Amortization of the discount or premium from the purchase of
mortgage-backed bonds is recognized using a level-yield method
which considers the estimated timing and amount of prepayments of
the underlying mortgage loans. Actual prepayment experience is
periodically reviewed and effective yields are recalculated when
differences arise between the prepayments previously anticipated
and the actual prepayments received and currently anticipated.
When such a difference occurs, the net investment in the
mortgage-backed bond is adjusted to the amount that would have
existed had the new effective yield been applied since the
acquisition of the bond, with a corresponding charge or credit to
interest income (the "retrospective method").
<PAGE>
A realized loss is recognized and charged against income if the
Company's carrying value in a particular investment in the
available-for-sale category has experienced a significant decline
in fair value that is deemed to be other than temporary.
Investment income is recorded when earned. Realized capital gains
and losses on the sale of investments are determined on the basis
of specific costs of investments and are credited or charged to
income. Gains or losses on financial future or option contracts
which qualify as hedges of investments are treated as basis
adjustments and are recognized in income over the life of the
hedged investments.
SECURITIES LENDING
The Company recognizes on its consolidated balance sheet cash
related to collateral controlled on securities lending
transactions and a corresponding obligation to return such
collateral at the termination of such transactions.
PREFERRED STOCK - AFFILIATE
Preferred stock represents an investment in nonredeemable
preferred stock in GenAmerica Management Company, an affiliate.
The security is carried at fair value, which is determined
primarily through published quotes of trading values. Changes to
adjust the carrying value are reported directly in shareholder's
equity. Other-than-temporary declines below cost are recorded as
realized losses.
COMMON STOCK
Common stock represents an investment in common stock warrants.
The security is carried at fair value, which is determined
primarily through published quotes of trading values. Changes to
adjust the carrying value are reported directly in shareholder's
equity. Other-than-temporary declines below cost are recorded as
realized losses.
MORTGAGE LOANS AND POLICY LOANS
Mortgage loans and policy loans are carried at their unpaid
principal balances. An allowance for mortgage loan losses is
established based on an evaluation of the mortgage loan portfolio,
past credit loss experience, and current economic conditions.
Reserves for loans are established when the Company determines
that collection of all amounts due under the contractual terms is
doubtful and are calculated in conformity with Statement of
Financial Accounting Standards (SFAS) No. 114, Accounting by
Creditors for Impairment of a Loan, as amended by SFAS No. 118,
Accounting by Creditors for Impairment of a Loan -Income
Recognition and Disclosures.
The Company had no impaired loans at December 31, 1999. The
valuation allowance for potential losses on mortgage loans was
$1,090,000 and $510,000 at December 31, 1999 and 1998,
respectively.
<PAGE>
OTHER INVESTED ASSETS
Other invested assets consist of investments in joint ventures in
real estate.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include currency and demand deposits in
banks, U.S. Treasury bills, money market accounts, and commercial
paper with maturities under 90 days, which are not otherwise
restricted.
SEPARATE ACCOUNT ASSETS
Separate accounts contain segregated assets of the Company that
are specifically assigned to variable annuity or life
policyholders in the separate accounts and are not available to
other creditors of the Company. The earnings of separate account
investments are also assigned to the policyholders in the separate
accounts, and are not guaranteed or supported by the other general
investments of the Company. The Company earns mortality and
expense risk fees from the separate account and assesses
withdrawal charges in the event of early withdrawals. Separate
account assets are carried at fair value.
In order to provide for optimum policyholder returns and to allow
for the replication of the investment performance of existing
"cloned" mutual funds, the Company has periodically transferred
capital to the separate account to provide for the initial
purchase of investments in new portfolios. As additional funds
have been received through policyholder deposits, the Company has
periodically reduced its capital investment in the separate
accounts. The Company's capital investment in the separate
accounts as of December 31, 1999 and 1998 is presented in note 3.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business which vary with and are
directly related to the production of new business, principally
commissions, premium taxes, sales costs, and certain policy
issuance and underwriting costs, are deferred. The Company sets a
limit on the deferral of acquisition costs incurred from internal
marketing and wholesaling operations in any year at 1% to 1.5% of
premiums and deposits receipts, varying according to specific
product. This limit is based on typical market rates of
independent marketing service and wholesaling organizations. This
practice also avoids possible deferral of costs in excess of
amounts recoverable.
The costs deferred are amortized in proportion to estimated future
gross profits derived from investment income, realized gains and
losses on sales of securities, unrealized securities gains and
losses, interest credited to accounts, surrender fees, mortality
costs, and policy maintenance expenses. The estimated gross profit
streams are periodically reevaluated and the unamortized balance
of deferred policy acquisition costs is adjusted to the amount
that would have existed had the actual experience and revised
estimates been known and applied from the inception of the
policies and contracts. The amortization and adjustments resulting
from unrealized gains and losses are not recognized currently in
income but as an offset to the accumulated other comprehensive
income component of shareholder's equity. The amortization period
is the remaining life of the policies, which is estimated to be 20
years from the date of original policy issue.
<PAGE>
<TABLE>
<CAPTION>
The components of deferred policy acquisition costs are shown
below.
1999 1998 1997
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred policy acquisition costs, beginning of period $ 131,973 84,326 49,833
Commissions and costs deferred 45,793 50,044 46,142
Amortization (3,621) (9,393) (6,307)
Deferred policy acquisition costs attributable to
unrealized depreciation (appreciation) of investments 39,975 6,996 (5,342)
------------ ------------ -------------
Deferred policy acquisition costs, end of period $ 214,120 131,973 84,326
============ ============ =============
Costs expensed that exceeded the established deferred
limit $ 9,789 4,933 3,016
============ ============ =============
</TABLE>
PURCHASE-RELATED INTANGIBLE ASSETS AND LIABILITIES
In accordance with the purchase method of accounting for business
combinations, two intangible assets and a future payable related
to accrued purchase price consideration were established as of the
date the Company was purchased by GALIC.
Present Value of Future Profits
The Company established an intangible asset which represents
the present value of future profits (PVFP) to be derived from
both the purchased and transferred blocks of business. Certain
estimates were utilized in the computation of this asset
including estimates of future policy retention, investment
income, interest credited to policyholders, surrender fees,
mortality costs, and policy maintenance costs discounted at a
pretax rate of 18% (12% net after tax).
In addition, as the Company has the option of retaining its
single premium deferred annuity (SPDA) policies after they
reach their next interest rate reset date and are recaptured
from OakRe, a component of this asset represents estimates of
future profits on recaptured business. This asset will be
amortized in proportion to estimated future gross profits
derived from investment income, realized gains and losses on
sales of securities, unrealized securities appreciation and
depreciation, interest credited to accounts, surrender fees,
mortality costs, and policy maintenance expenses. The
estimated gross profit streams are periodically reevaluated
and the unamortized balance of PVFP will be adjusted to the
amount that would have existed had the actual experience and
revised estimates been known and applied from inception. The
amortization and adjustments resulting from unrealized
appreciation and depreciation are not recognized currently in
income but as an offset to the accumulated other comprehensive
income reflected as a separate component of shareholder's
equity. The amortization period is the remaining life of the
policies, which is estimated to be 20 years from the date of
original policy issue.
<PAGE>
Based on current assumptions, amortization of the original
in-force PVFP asset, expressed as a percentage of the original
in-force asset, is projected to be 7.6%, 7.7%, 7.5%, 6.8%, and
6.4% for the years ended December 31, 2000 through 2004,
respectively. Actual amortization incurred during these years
may be more or less as assumptions are modified to incorporate
actual results. The average crediting rate on the original
in-force PVFP asset is 6.8% for 1999, 1998 and 1997.
<TABLE>
<CAPTION>
The components of PVFP are shown below.
1999 1998 1997
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
PVFP - beginning of period $ 42,230 41,486 46,389
Interest credited 2,695 2,864 3,029
Amortization (4,577) (4,548) (4,606)
Present value of future profits attributable to unrealized
depreciation (appreciation) of investments
15,058 2,428 (3,326)
------------ ------------ -------------
PVFP - end of period $ 55,406 42,230 41,486
============ ============ =============
</TABLE>
<TABLE>
<CAPTION>
Goodwill
Under the push-down method of purchase accounting, the excess
of purchase price over the fair value of tangible and
intangible assets and liabilities acquired is established as
an asset and referred to as goodwill. The Company has elected
to amortize goodwill on the straight-line basis over a 20-year
period. The components of goodwill are shown below.
1999 1998 1997
----------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Goodwill - beginning of period $ 18,585 19,717 20,849
Amortization (1,132) (1,132) (1,132)
Experience adjustment to future purchase price payable to
OakRe (1,296) -- --
----------- ------------ ------------
Goodwill - end of period $ 16,157 18,585 19,717
=========== ============ ============
</TABLE>
<PAGE>
Future Payable
Pursuant to the financial reinsurance agreement with OakRe,
the receivable from OakRe becomes due in installments when the
SPDA policies reach their next crediting rate reset date. For
any recaptured policies that continue in force into the next
guarantee period, the Company will pay a commission to OakRe
of 1.75% up to 40% of policy account values originally
reinsured and 3.50% thereafter. On policies that are
recaptured and subsequently exchanged to a variable annuity
policy, the Company will pay a commission to OakRe of 0.50%.
The Company has recorded a future payable that represents the
present value of the anticipated future commission payments
payable to OakRe over the remaining life of the financial
reinsurance agreement discounted at an estimated borrowing
rate of 6.50%. This liability represents a contingent purchase
price payable for the policies transferred to OakRe on the
purchase date and has been pushed down to the Company through
the financial reinsurance agreement. The Company expects that
this payable will be substantially extinguished by the end of
the year 2000.
<TABLE>
<CAPTION>
The components of this future payable are shown below.
1999 1998 1997
----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future payable - beginning of period $ 6,976 12,173 16,051
Interest added 378 629 959
Payments to OakRe (3,160) (5,826) (4,837)
Experience adjustment to future purchase price
payable to OakRe (1,296) -- --
----------- ------------ -----------
Future payable - end of period $ 2,898 6,976 12,173
=========== ============ ===========
</TABLE>
DEFERRED TAX ASSETS AND LIABILITIES
Xerox Financial Services, Inc. (XFSI) (previous parent of the
Company) and GALIC agreed to file an election to treat the
acquisition of the Company as an asset acquisition under the
provisions of Internal Revenue Code Section 338(h)(10). As a
result of that election, the tax basis of the Company's assets as
of the date of acquisition was revalued based upon fair market
values. The principal effect of the election was to establish a
tax asset on the tax-basis consolidated balance sheet of
approximately $37.9 million for the value of the business acquired
that is amortizable for tax purposes over ten to fifteen years.
<PAGE>
POLICYHOLDER DEPOSITS
The Company recognizes its liability for policy amounts that are
not subject to policyholder mortality nor longevity risk at the
stated contract value, which is the sum of the original deposit
and accumulated interest, less any withdrawals. The average
weighted interest crediting rate on the Company's policyholder
deposits as of December 31, 1999 was 5.9%.
FUTURE POLICY BENEFITS
Reserves are held for future policy benefits that subject the
Company to risks to make payments contingent upon the continued
survival of an individual or couple (longevity risk). These
reserves are valued at the present value of estimated future
benefits discounted for interest, expenses, and mortality. The
assumed mortality is the 1983 Individual Annuity Mortality Tables
discounted at 4.50% to 8.00%, depending upon date of issue.
Current mortality benefits payable are recorded for reported
claims and estimates of amounts incurred but not reported.
PREMIUM REVENUE
The Company recognizes premium revenue at the time of issue on
annuity policies that subject it to longevity risks. Amounts
collected on annuity policies not subject to longevity risk are
recorded as increases in the policyholder deposits liability. For
term and single premium variable life products, premiums are
recognized as revenue when due.
OTHER INCOME
Other income consists primarily of policy surrender charges and
fees from a modified coinsurance agreement with GALIC.
FEDERAL INCOME TAXES
The Company files a consolidated income tax return with its
subsidiaries. Allocations of federal income taxes are based upon
separate return calculations.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the
consolidated financial statement carrying amount of existing
assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
<PAGE>
COMPREHENSIVE INCOME
The Company reports and presents comprehensive income and its
components in accordance with SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 has no impact on the Company's
consolidated net income or shareholder's equity. The Company's
only component of accumulated other comprehensive income relates
to unrealized appreciation or depreciation on debt and equity
securities held at available-for-sale.
RISKS AND UNCERTAINTIES
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the balance
sheet and revenues and expenses for the period.
Actual results could differ significantly from those estimates.
The following elements of the consolidated financial statements
are most affected by the use of estimates and assumptions:
O Investment valuation
O Amortization of deferred policy acquisition costs
O Amortization of present value of future profits
O Recoverability of goodwill
The fair value of the Company's investments is subject to the risk
that interest rates will change and cause a temporary increase or
decrease in the liquidation value of debt securities. To the
extent that fluctuations in interest rates cause the cash flows of
assets and liabilities to change, the Company might have to
liquidate assets prior to their maturity and recognize a gain or
loss. Interest rate exposure for the investment portfolio is
managed through asset/liability management techniques which
attempt to control the risks presented by differences in the
probable cash flows and reinvestment of assets with the timing of
crediting rate changes in the Company's policies and contracts.
Changes in the estimated prepayments of mortgage-backed securities
also may cause retrospective changes in the amortization period of
securities and the related recognition of income.
The amortization of deferred policy acquisition costs is based on
estimates of long-term future gross profits from existing
policies. These gross profits are dependent upon policy retention
and lapses, the spread between investment earnings and crediting
rates, and the level of maintenance expenses. Changes in
circumstances or estimates may cause retrospective adjustment to
the periodic amortization expense and the carrying value of the
deferred expense.
In a similar manner, the amortization of PVFP is based on
estimates of long-term future profits from existing policies when
the Company was purchased by GALIC and policies recaptured from
OakRe. These gross profits are dependent upon policy retention and
lapses, the spread between investment earnings and crediting
rates, and the level of maintenance expenses. Changes in
circumstances or estimates may cause retrospective adjustment to
the periodic amortization expense and the carrying value of the
asset.
<PAGE>
The Company has considered the recoverability of goodwill and has
concluded that no circumstances have occurred which would give
rise to impairment of goodwill at December 31, 1999.
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures About Fair Value of Financial
Instruments, applies fair value disclosure practices with regard
to financial instruments, both assets and liabilities, for which
it is practical to estimate fair value. In cases where quoted
market prices are not readily available, fair values are based on
estimates that use present value or other valuation techniques.
These techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash
flows. Although fair value estimates are calculated using
assumptions that management believes are appropriate, changes in
assumptions could cause these estimates to vary materially. In
that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many
cases, might not be realized in the immediate settlement of the
instruments. SFAS No. 107 excludes certain financial instruments
and all nonfinancial instruments from its disclosure requirements.
Because of this, and further because the value of a business is
also based upon its anticipated earning power, the aggregate fair
value amounts represented do not present the underlying value of
the Company.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents, Short-term Investments,
and Accrued Investment Income
The carrying value amounts reported in the consolidated
balance sheets for these instruments approximate their fair
values. Short-term debt securities are considered
available-for-sale.
Investment Securities and Mortgage Loans
(Including Mortgage-backed Securities)
Fair values of debt securities are based on quoted market
prices, where available. For debt securities not actively
traded, fair value estimates are obtained from independent
pricing services. In some cases, such as private placements,
certain mortgage-backed securities, and mortgage loans, fair
values are estimated by discounting expected future cash flows
using a current market rate applicable to the yield, credit
quality, and maturity of the investments (see note 3 for fair
value disclosures).
<PAGE>
Policy Loans
Fair values of policy loans approximate carrying value as the
interest rates on the majority of policy loans are reset
periodically and, therefore, approximate current interest
rates.
Interest Rate Swaps and Financial Futures Contracts
The fair value of interest rate swaps and financial futures
contracts are the amounts the Company would receive or pay to
terminate the contracts at the reporting date, thereby taking
into account the current unrealized gains or losses of open
contracts. Amounts are based on quoted market prices or
pricing models or formulas using current assumptions (see note
5 for fair value disclosures).
Investment Contracts
The Company's policy contracts require the beneficiaries to
commence receipt of payments by the later of age 85 or 10
years after purchase, and substantially all permit earlier
surrenders, generally subject to fees and adjustments. Fair
values for the Company's liabilities for investment type
contracts (policyholder deposits) are estimated as the amount
payable on demand. As of December 31, 1999 and 1998, the cash
surrender value of policyholder deposits was approximately
$84.9 million and $103.7 million less than their stated
carrying value. Of the contracts permitting surrender,
substantially all provide the option to surrender without fee
or adjustment during the 30 days following reset of guaranteed
crediting rates. The Company has not determined a practical
method to determine the present value of this option.
All of the Company's deposit obligations are fully guaranteed
by its parent, GALIC, and the receivable from OakRe equal to
the SPDA obligations is guaranteed by OakRe's parent, XFSI.
REINSURANCE
Effective July 25, 1999, the Company entered into a modified
coinsurance reinsurance agreement with MetLife. Under the
reinsurance agreement, the Company ceded life insurance and
annuity business that was issued or renewed from July 25, 1999
through December 31, 1999 to MetLife amounting to $259 million.
Net earnings to MetLife from that business are experience refunded
to the Company. The agreement does not meet the conditions for
reinsurance accounting under GAAP. In substance, the agreement
represents a guarantee by MetLife of new business and renewed SPDA
business during this period. There was no impact on the Company's
financial statements resulting from the reinsurance transaction
with MetLife.
Effective January 1, 1998, the Company entered into a modified
coinsurance financial reinsurance agreement with GALIC. The
reinsurance agreement provided that the Company would reinsurance
a block of "stable value" annuity business issued by GALIC on a
36% coinsurance basis amounting to $88 million and $635 million in
1999 and 1998, respectively. The agreement does not meet the
conditions for reinsurance accounting under GAAP, and no assets
were transferred. Effective July 1, 1999, the Company terminated
the financing reinsurance agreement with GALIC. The Company
recognized income of $1.6 million from this transaction in both
1999 and 1998.
<PAGE>
Effective January 1, 1997, the Company entered into a financial
reinsurance agreement with RGA Reinsurance Company (RGA), an
affiliate, related to certain of the Company's single premium
deferred annuity products, and transferred assets equal to 60% of
deposits received. The agreement does not meet the conditions for
reinsurance accounting under GAAP. Deposits reinsured under the
contract were approximately $219 million at December 31, 1998, and
are reflected as policyholder deposits of the Company and a "Due
from affiliate" asset in the consolidated balance sheets.
On January 31, 1999, the Company suspended ceding new business to
RGA, and on November 30, 1999, the Company recaptured all of the
obligations and related investments from RGA. The Company
recognized an operating expense of $12.6 million related to the
recapture.
On June 1, 1995, when GALIC formed Cova Corporation and purchased
CSFLIC, then known as Xerox Financial Services Life Insurance
Company (XFSLIC), from XFSI, a wholly owned subsidiary of Xerox
Corporation, it entered into a financing reinsurance transaction
with OakRe Life Insurance Company (OakRe), then a subsidiary of
XFSLIC, for OakRe to assume the economic benefits and risks of the
existing single premium deferred annuity deposits of XFSLIC.
Ownership of OakRe was retained by XFSI subsequent to the sale of
XFSLIC and other affiliates.
In substance, terms of the agreement have allowed the seller,
XFSI, to retain substantially all of the existing financial
benefits and risks of the existing business, while the purchaser,
GALIC, obtained the corporate operating and product licenses,
marketing, and administrative capabilities of the Company and
access to the retention of the policyholder deposit base that
persists beyond the next crediting rate reset date.
The financing reinsurance agreement entered into with OakRe as
condition to the purchase of the Company does not meet the
criteria for reinsurance accounting under GAAP. The net assets
initially transferred to OakRe were established as a receivable
and are subsequently increased as interest accrued on the
underlying deposits and decrease as funds are transferred back to
the Company when policies reach their crediting rate reset date or
benefits are claimed. The receivable from OakRe to the Company
that was created by this transaction will be liquidated over the
remaining crediting rate guaranty periods which will be
substantially expired by mid-year 2000, and completely by mid-year
2002. The liquidations transfer cash daily in the amount of the
then current account value, less a recapture commission fee to
OakRe on policies retained beyond their 30-day-no-fee surrender
window by the Company, upon the next crediting rate reset date of
each annuity policy. The Company may then reinvest that cash for
those policies that are retained and thereafter assume the
benefits and risks of those deposits.
In the event that both OakRe and XFSI default on the receivable,
the Company may draw funds from a standby bank irrevocable letter
of credit established by XFSI in the amount of $500 million. No
funds were drawn on this letter of credit since inception of the
agreement.
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARD
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, issued in June 1998, requires all derivative financial
instruments to be recorded on the balance sheet at estimated fair
value. The Company's present accounting policies applies such
accounting treatment only to marketable securities as defined
under SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, and to off-balance sheet derivative
instruments. SFAS No. 133 will broaden the definition of
derivative instruments to include all classes of financial assets
and liabilities. It also will require separate disclosure of
identifiable derivative instruments embedded in hybrid securities.
The change in the fair value of derivative instruments is to be
recorded each period either in current earnings or other
comprehensive income, depending on whether a derivative is
designed as part of a hedge transaction and, if it is, on the type
of hedge transaction.
In June 1999, the FASB issued SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of SFAS No. 133. SFAS No. 137 defers for one year
the effective date of Statement of SFAS No 133, Accounting for
Derivative Instruments and Hedging Activities. The Company plans
to adopt the provision of SFAS No. 133 effective January 1, 2001.
At this time the Company does not believe it will have a material
effect on the Company's consolidated financial position or results
of operations.
OTHER
Certain 1998 and 1997 amounts have been reclassified to conform to
the 1999 presentation.
<PAGE>
(3) INVESTMENTS
<TABLE>
<CAPTION>
The Company's investments in debt and equity securities are considered
available-for-sale and carried at estimated fair value, with the
aggregate unrealized appreciation or depreciation being recorded as a
separate component of shareholder's equity. The amortized cost, estimated
fair value, and carrying value of investments at December 31, 1999 and
1998, are as follows:
1999
-----------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
-------------- -------------- --------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Debt securities:
U.S. treasury securities $ 28,209 35 (2,665) 25,579 25,579
Government agency
obligations 34,121 76 (318) 33,879 33,879
Corporate securities 1,040,309 1,901 (60,641) 981,569 981,569
Mortgage-backed
securities 199,979 42 (7,335) 192,686 192,686
Asset-backed securities 272,918 389 (25,023) 248,284 248,284
-------------- -------------- --------------- --------------- --------------
Total debt securities 1,575,536 2,443 (95,982) 1,481,997 1,481,997
Preferred stock - affiliate 9,000 -- (2,108) 6,892 6,892
Common stock 37 -- (25) 12 12
Mortgage loans (net) 376,147 -- (1,979) 374,168 376,147
Other invested assets 4,625 -- -- 4,625 4,625
Policy loans 27,778 -- -- 27,778 27,778
-------------- -------------- --------------- --------------- --------------
Total investments $ 1,993,123 2,443 (100,094) 1,895,472 1,897,451
============== ============== =============== =============== ==============
Company's beneficial interest
in separate accounts
$ 310 -- -- 310 310
============== ============== =============== =============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
-------------- -------------- --------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Debt securities:
U.S. treasury securities $ 28,288 249 (84) 28,453 28,453
Government agency
obligations 53,869 1,015 (1) 54,883 54,883
Corporate securities 902,139 16,583 (24,799) 893,923 893,923
Mortgage-backed
securities 253,704 2,118 (1,570) 254,252 254,252
Asset-backed securities 137,198 3,087 (283) 140,002 140,002
-------------- -------------- --------------- --------------- --------------
Total debt securities 1,375,198 23,052 (26,737) 1,371,513 1,371,513
Preferred stock - affiliate 9,000 -- -- 9,000 9,000
Common stock 37 -- -- 37 37
Mortgage loans (net) 312,865 17,500 -- 330,365 312,865
Policy loans 26,295 -- -- 26,295 26,295
-------------- -------------- --------------- --------------- --------------
Total investments $ 1,723,395 40,552 (26,737) 1,737,210 1,719,710
============== ============== =============== =============== ==============
Company's beneficial interest
in separate accounts
$ 2 -- -- 2 2
============== ============== =============== =============== ==============
</TABLE>
<PAGE>
The amortized cost and estimated fair value of debt securities at
December 31, 1999, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties. Maturities of mortgage-backed securities will be
substantially shorter than their contractual maturity because they
require monthly principal installments and mortgagees may prepay
principal.
<TABLE>
<CAPTION>
1999
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Less than one year $ 65,222 65,553
Due after one year through five years 513,181 488,850
Due after five years through ten years 504,184 465,079
Due after ten years 292,970 269,828
Mortgage-backed securities 199,979 192,687
-------------- --------------
Total $ 1,575,536 1,481,997
============== ==============
</TABLE>
At December 31, 1999, approximately 91.1% of the Company's debt
securities are investment grade or are nonrated but considered to be of
investment grade. Of the 8.9% noninvestment grade debt securities, 7.3%
are rated as BB, 0.8% are rated as B, and 0.8% are rated C and treated
as impaired.
At December 31, 1999, the Company had nine impaired debt securities with
estimated fair value of $9.4 million, of which seven debt securities,
with estimated fair value of $8.1 million, became non-income producing
in 1999. At December 31, 1998, the Company had two impaired debt
securities with estimated value of $2.1 million, of which one debt
security, with estimated fair value of $0.5 million, became non-income
producing.
The Company participates in a securities lending program whereby certain
securities are loaned to third parties, primarily major brokerage firms.
The agreement with a custodian bank facilitating such lending requires a
minimum of 102% of the initial market value of the domestic loaned
securities to be maintained in a collateral pool. To further minimize
the credit risk related to this lending program, the Company monitors
the financial condition of the counterparties to these agreements.
Securities loaned at December 31, 1999 had market values totaling
$36,957,975. Cash of $37,861,652 was held as collateral to secure this
agreement. Income on the Company's security lending program in 1999
was immaterial.
<PAGE>
<TABLE>
<CAPTION>
The components of investment income, realized capital gains (losses),
and unrealized appreciation (depreciation) are as follows:
1999 1998 1997
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income on debt securities $ 100,969 94,876 84,203
Income on cash and cash equivalents 2,459 2,720 2,265
Income on equity securities 563 -- --
Interest on mortgage loans 27,161 28,650 24,890
Income on real estate 103 -- --
Income on policy loans 2,136 1,980 1,852
Income on separate account investments -- 13 2,637
Loss on derivatives -- -- (2,035)
Miscellaneous interest 335 1,715 (215)
------------ ------------ -------------
Total investment income 133,726 129,954 113,597
Investment expenses (2,354) (2,142) (1,936)
------------ ------------ -------------
Net investment income $ 131,372 127,812 111,661
============ ============ =============
Net realized capital (losses) gains are as follows:
Debt securities $ (20,011) (1,600) 537
Equity securities 3 -- --
Mortgage loans -- -- 27
Real estate (38) -- --
Other investments (168) -- (1)
------------ ------------ -------------
Net realized (losses) gains on investments $ (20,214) (1,600) 563
============ ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
(IN THOUSANDS)
Unrealized appreciation (depreciation) are as follows:
<S> <C> <C>
Debt securities $ (93,540) (3,685)
Preferred stock - affiliate (2,108) --
Common stock (25) --
Effects on deferred acquisition costs amortization 43,190 3,215
Effects on PVFP amortization 14,585 (473)
-------------- --------------
Unrealized depreciation before income tax (37,898) (943)
Unrealized income tax benefit 13,264 329
-------------- --------------
Unrealized depreciation on investments $ (24,634) (614)
============== ==============
</TABLE>
Proceeds from sales, redemptions, and paydowns of investments in debt
securities during 1999 were $439,069,999. Gross gains of $2,445,497 and
gross losses of $22,456,541 were realized on those sales. Included in
these amounts were $500,674 of gross gains and $1,938,767 of gross
losses realized on the sale of noninvestment grade securities. Net
realized losses include a 1999 impairment adjustment totaling
$18,768,778 related to ten debt securities held by the Company.
Proceeds from sales, redemptions, and paydowns of investments in debt
securities during 1998 were $486,264,174. Gross gains of $5,102,040 and
gross losses of $6,601,099 were realized on those sales. Included in
these amounts were $1,002,539 of gross gains and $6,011,305 of gross
losses realized on the sale of noninvestment grade securities. Net
realized losses include a 1998 impairment adjustment totaling
approximately $100,000 related to two debt securities held by the
Company.
Proceeds from sales, redemptions, and paydowns of investments in debt
securities during 1997 were $358,658,091. Gross gains of $1,765,242 and
gross losses of $254,493 were realized on those sales. Included in these
amounts were $681,159 of gross gains and $122,480 of gross losses
realized on the sale of noninvestment grade securities. Net realized
gains include a 1997 impairment adjustment totaling approximately
$974,000 related to one debt security held by the Company.
Securities with a carrying value of approximately $7,019,456 at December
31, 1999 were deposited with government authorities as required by law.
<PAGE>
(4) SECURITIES GREATER THAN 10% OF SHAREHOLDER'S EQUITY
The Company does not have any individual security that exceeds 10% of
shareholder's equity at December 31, 1999 and 1998.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
A derivative financial instrument, in very general terms, refers to a
security whose value is derived from the value of an underlying asset,
reference rate, or index.
The Company has a variety of reasons to use derivative instruments, such
as to attempt to protect the Company against possible changes in the
market value of its portfolio and to manage the portfolio's effective
yield, maturity, and duration. All of the Company's holdings are marked
to fair value monthly with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when the disposition closes a hedge. In
this instance, the gain or loss adjusts the unamortized cost of the
hedged security, and the resulting premium or discount is amortized or
accreted over the remaining life of the hedge security.
Summarized below are the specific types of derivative instruments used
by the Company.
INTEREST RATE SWAPS
Under interest rate swaps, the Company agrees with counterparties
to exchange, at specific intervals, the payments between floating
and fixed-rate interest amounts calculated by reference to
notional amounts. Net interest payments are recognized within net
investment income in the consolidated statement of income.
At December 31, 1999, the Company does not have any outstanding
interest rate swap agreements. The swap agreements outstanding at
December 31, 1998 were terminated during 1999 by the
counterparties at a loss of $167,500 to the Company.
At December 31, 1998, the Company had two outstanding interest
rate swap agreements which would have expired in 2002 and 2003.
Under the agreements, the Company received a fixed rate of 6.63%
and 6.70% on a notional amount of $7 and $8 million, respectively,
and paid a floating rate based on London Interbank Offered Rate
(LIBOR). The estimated fair value of the agreements at December
31, 1998 was a net unrealized gain of approximately $0.6 million
which is recognized in the accompanying consolidated balance
sheet.
FUTURES
In order to limit exposure to market fluctuations related to
temporary seed money invested within the separate account, the
Company entered into financial futures contracts on the S&P 500
index during 1997. No financial futures contracts were held during
1999 or 1998. The Company recorded $-0-, $-0-, and $2,035,309 of
losses from terminated contracts as a component of net investment
income during 1999, 1998, and 1997, respectively. The Company also
recorded gains of $-0-, $-0-, and $2,636,999 as a component of net
investment income from market appreciation on the underlying
hedged securities within the separate account during 1999, 1998,
and 1997, respectively.
A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon
price. Upon entering into futures contracts, the Company
maintains, in a segregated account with its custodian, securities
with a value equal to an agreed upon portion of the notional
obligation under the futures contracts. During the period the
futures contract is open, payments are received from or made to
the broker daily based upon changes in the value of the contract
with the related income or loss reflected in the consolidated
statement of income as a contra to changes in fair value of the
hedged securities.
The Company is exposed to credit related risk in the event of
nonperformance by counterparties to financial instruments but does
not expect any counterparties to fail to meet their obligations.
It is the Company's policy to deal only with highly rated
companies.
<PAGE>
<TABLE>
<CAPTION>
(6) COMPREHENSIVE INCOME
The components of comprehensive income are as follows:
1999 1998 1997
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net (loss) income $ (13,504) 13,894 8,978
------------ ------------ -------------
Other comprehensive (loss) income, before tax -
unrealized (depreciation) appreciation of debt and
equity securities arising during period:
Unrealized holding (depreciation) appreciation
of debt and equity securities (71,773) (12,971) 13,514
Adjustment to deferred acquisition costs
attributable to unrealized depreciation
(appreciation) 31,191 6,228 (5,128)
Adjustment to PVFP attributable to unrealized
depreciation (appreciation) 11,749 2,161 (3,193)
------------ ------------ -------------
Total unrealized (depreciation) appreciation
arising during period (28,833) (4,582) 5,193
------------ ------------ -------------
Less reclassification adjustments for realized losses (gains)
included in net income:
Adjustment for losses (gains) included in
net realized (losses) gains on sales
of investments 20,214 1,600 (563)
Adjustment for (gains) losses included in
amortization of deferred acquisition costs (8,784) (768) 214
Adjustment for (gains) losses included in
amortization of PVFP (3,309) (267) 133
------------ ------------ -------------
Total reclassification adjustments for losses
(gains) included in net income 8,121 565 (216)
------------ ------------ -------------
Other comprehensive (loss) income before related
income tax (benefit) expense (36,954) (5,147) 5,409
Related income tax (benefit) expense (12,934) (1,801) 1,893
------------ ------------ -------------
Other comprehensive (loss) income, net of tax (24,020) (3,346) 3,516
------------ ------------ -------------
Comprehensive (loss) income $ (37,524) 10,548 12,494
============ ============ =============
</TABLE>
<PAGE>
(7) POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company has no direct employees and no retired employees. All
personnel used to support the operations of the Company are supplied
under contract by Cova Life Management Company (CLMC), a wholly owned
subsidiary of Cova Corporation. The Company is allocated a portion of
certain health care and life insurance benefits for future retired
employees of CLMC. In 1999, 1998, and 1997, the Company was allocated a
portion of benefit costs including severance pay, accumulated vacations,
and disability benefits. At December 31, 1999, CLMC had no retired
employees nor any employees fully eligible for retirement and had no
disbursements for such benefit commitments. The expense arising from
these obligations is not material.
(8) INCOME TAXES
The Company will file a consolidated federal income tax return with its
wholly owned subsidiaries, CFLIC and FCLIC. Amounts payable or
recoverable related to periods before June 1, 1995 are subject to an
indemnification agreement with XFSI, which has the effect that the
Company is not at risk for any income taxes nor entitled to recoveries
related to those periods, except for approximately $0.2 million of state
income tax recoveries.
<TABLE>
<CAPTION>
Income taxes are recorded in the consolidated statement of income and
directly in certain shareholder's equity accounts. Income tax expense
for the years ended December 31 is allocated as follows:
1999 1998 1997
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Statements of income:
Operating (loss) income (excluding realized
investment gains and losses) $ (4,830) 3,906 5,464
Realized investment (losses) gains (1,560) (533) 197
------------ ------------ -------------
Income tax (benefit) expense
included in the consolidated
statements of income (6,390) 3,373 5,661
Shareholder's equity -
change in deferred federal income
taxes related to unrealized (depreciation)
appreciation on securities (12,934) (1,801) 1,893
------------ ------------ -------------
Total income tax (benefit) expense $ (19,324) 1,572 7,554
============ ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The actual federal income tax expense differed from the expected tax
expense computed by applying the U.S. federal statutory rate to income
before taxes on income as follows:
1999 1998 1997
--------------------- --------------------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Computed expected tax (benefit) expense $ (6,963) (35.0)% $ 6,043 35.0% $ 5,124 35.0%
State income taxes, net (10) -- (8) -- (33) (0.2)
Amortization of intangible assets 396 2.0 396 2.3 396 2.7
Dividend received deduction - separate
account (2,175) (10.9) (3,183) (18.5) -- --
Valuation allowance for permanent impairments
2,996 15.0 -- -- -- --
Return to provision adjustment (759) (3.8) -- -- -- --
Other 125 0.6 125 0.7 174 1.2
--------- ----------- ---------- ---------- --------- ----------
Total $ (6,390) (32.1)% $ 3,373 19.5% $ 5,661 38.7%
========= ========== ========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1999 and 1998 follows:
1999 1998
----------- ------------
(IN THOUSANDS)
Deferred tax assets:
<S> <C> <C>
Policy reserves $ 31,657 31,003
Liability for commissions on recapture 1,014 2,896
Tax basis of intangible assets purchased 4,577 5,351
DAC "Proxy Tax" 23,832 20,619
Permanent impairments 5,482 --
Unrealized depreciation on investments 13,264 330
Net operating and capital loss 8,519 --
Other deferred tax assets 7,294 2,690
----------- ------------
Total deferred tax assets 95,639 62,889
Valuation allowance - permanent impairments (2,996) --
----------- ------------
Total deferred tax assets, net of valuation allowance 92,643 62,889
Deferred tax liabilities:
PVFP 10,507 11,013
Deferred policy acquisition costs 59,825 46,190
Other deferred tax liabilities 347 900
----------- ------------
Total deferred tax liabilities 70,679 58,103
----------- ------------
Net deferred tax assets $ 21,964 4,786
=========== ============
</TABLE>
<PAGE>
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax assets will not be realized. As of
December 31, 1999, the Company has provided a 55% valuation allowance
against the deferred tax asset related to the permanent impairments,
based on income projections for future years. Management believes that
it is more likely than not that the results of future operations will
generate sufficient taxable income to realize the remaining deferred
tax asset.
(9) RELATED-PARTY TRANSACTIONS
On December 31, 1997, Cova Life Management Company (CLMC) and Navisys
Incorporated (Navisys), both affiliated companies, purchased certain
assets of Johnson & Higgins/Kirke Van Orsdel, Inc. (J&H/KVI), an
unaffiliated Delaware corporation, for $2,500,000, and merged them into
Cova Life Administrative Service Company (CLASC), a joint subsidiary of
CLMC and Navisys. Navisys purchased 51% of CLASC, and the remaining 49%
was purchased by CLMC. The purchased assets are the administrative and
service systems and organization that provide the policy service
functions for the Company's life and annuity products. On October 31,
1999, CLMC purchased the remaining 51% interest in CLASC from Navisys
for $1,184,414.
The Company has entered into management, operations, and servicing
agreements with its affiliated companies. The affiliated companies are
CLMC, a Delaware corporation, which provides management services and the
employees necessary to conduct the activities of the Company; Conning
Asset Management, which provides investment advice; and CLASC, which
provides underwriting, policy issuance, claims, and other policy
administration functions. Additionally, a portion of overhead and other
corporate expenses is allocated by the Company's parent, GALIC. Expenses
and fees paid to affiliated companies in 1999, 1998, and 1997 for the
Company were $28,995,330, $20,923,330, and $9,400,517, respectively.
In 1999 and 1998, the Company's affiliate, CLMC, received approximately
$3.9 million and $3.2 million, respectively, in advisory fees from GALIC
related to advisory services on GALIC's individual annuity products.
<PAGE>
(10) STATUTORY SURPLUS AND DIVIDEND RESTRICTION
GAAP differs in certain respects from the accounting practices
prescribed or permitted by insurance regulatory authorities (statutory
accounting principles).
The major differences arise principally from the immediate expense
recognition of policy acquisition costs and intangible assets for
statutory reporting, determination of policy reserves based on different
discount rates and methods, the recognition of deferred taxes under GAAP
reporting, the nonrecognition of financial reinsurance for GAAP
reporting, the establishment of an asset valuation reserve as a
contingent liability based on the credit quality of the Company's
investment securities, and an interest maintenance reserve as an
unearned liability to defer the realized gains and losses of fixed
income investments presumably resulting from changes to interest rates
and amortize them into income over the remaining life of the investment
sold. In addition, adjustments to record the carrying values of debt
securities and certain equity securities at fair value are applied only
under GAAP reporting, and capital contributions in the form of notes
receivable from an affiliated company are not recognized under GAAP
reporting.
Purchase accounting creates another difference as it requires the
restatement of GAAP assets and liabilities to their estimated fair
values at the date of purchase and shareholder's equity to the net
purchase price.
Statutory accounting does not recognize the purchase method of
accounting.
<TABLE>
<CAPTION>
As of December 31, the differences between statutory capital and surplus
and shareholder's equity determined in conformity with GAAP are as
follows:
1999 1998
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Statutory capital and surplus $ 102,041 104,740
Reconciling items:
GAAP investment valuation reserves (1,090) (510)
Statutory asset valuation reserve 7,362 19,206
Statutory interest maintenance reserve 6,466 5,983
GAAP investment adjustments to fair value (95,673) (3,685)
GAAP deferred policy acquisition costs 214,120 131,973
GAAP basis policy reserves (57,802) (52,305)
GAAP deferred federal income taxes (net) 21,964 4,786
GAAP guarantee assessment adjustment (9,900) (9,700)
GAAP goodwill 16,157 18,585
GAAP present value of future profits 55,406 42,230
GAAP future purchase price payable (2,898) (6,976)
Other (1,591) (2,241)
------------- -------------
GAAP shareholder's equity $ 254,562 252,086
============= =============
</TABLE>
<PAGE>
Statutory net losses for CFSLIC for the years ended December 31, 1999,
1998, and 1997 were $46,095,427, $2,830,105, and $9,816,357,
respectively.
The maximum amount of dividends which can be paid by State of Missouri
insurance companies to shareholders without prior approval of the
insurance commissioner is the greater of 10% of statutory earned surplus
or statutory net gain from operations for the preceding year. Due to the
1999 statutory net loss and the Company's negative earned surplus at
December 31, 1999, no dividends are permissible in 2000 without prior
approval of the insurance commissioner.
The National Association of Insurance Commissioners has developed
certain risk based capital (RBC) requirements for life insurers. If
prescribed levels of RBC are not maintained, certain actions may be
required on the part of the Company or its regulators. At December 31,
1999, the Company's total adjusted capital and authorized control level
RBC were $109,402,439 and $28,033,662 respectively. This level of
adjusted capital qualifies under all tests.
(11) GUARANTY FUND ASSESSMENTS
The Company participates with life insurance companies licensed
throughout the United States in associations formed to guarantee
benefits to policyholders of insolvent life insurance companies. Under
state laws, as a condition for maintaining the Company's authority to
issue new business, the Company is contingently liable for its share of
claims covered by the guaranty associations for insolvencies incurred
through 1999, but for which assessments have not yet been determined nor
assessed, to a maximum in each state generally of 2% of statutory
premiums per annum in the given state. Most states then permit recovery
of assets as a credit against premium taxes over, most commonly, five
years.
In November 1999, the National Organization of Life and Health Guaranty
Associations distributed a study of the major outstanding industry
insolvencies, with estimates of future assessments by state. Based on
this study, the Company has accrued a liability for approximately
$9,900,000 in future assessments on insolvencies that occurred before
December 31, 1999. Under the coinsurance agreement between the Company
and OakRe (see note 1), OakRe is required to reimburse the Company for
any future assessments that it pays which relate to insolvencies
occurring prior to June 1, 1995. As such, the Company has recorded a
receivable from OakRe for approximately $9,900,000. The Company paid
approximately $36,000, $1,500,000, and $3,000,000 in guaranty fund
assessments in 1999, 1998, and 1997, respectively. These payments were
substantially reimbursed by OakRe. At the same time, the Company is
liable to OakRe for 80% of any future premium tax recoveries that are
realized from any such assessments and may retain the remaining 20%. The
credits retained for 1999, 1998 and 1997 were not material.
(12) SUBSEQUENT EVENT
The purchase of GenAmerica Corporation and subsidiary, including the
Company, by MetLife was completed on January 6, 2000. On that date also,
the Company's modified coinsurance agreement with MetLife was suspended
for subsequent business.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements
________________________________________________________________________
The following financial statements of the Separate Account are included
in Part B hereof:
1. Independent Auditors' Report.
2. Statement of Assets and Liabilities as of December 31, 1999.
3. Statement of Operations for the year ended December 31, 1999.
4. Statements of Changes in Net Assets for the years ended
December 31, 1999 and 1998.
5. Notes to Financial Statements - December 31, 1999 and 1998.
The following consolidated financial statements of the Company are
included in Part B hereof:
1. Independent Auditors' Report.
2. Consolidated Balance Sheets as of December 31, 1999 and 1998.
3. Consolidated Statements of Income for the years ended December 31,
1999, 1998 and 1997.
4. Consolidated Statements of Shareholder's Equity for the
years ended December 31, 1999, 1998, and 1997.
5. Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997.
6. Notes to Consolidated Financial Statements - December 31,
1999, 1998, and 1997.
b. Exhibits
---------------------------------------------------------------
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account.**
2. Not Applicable.
3.(i) Form of Principal Underwriter's Agreement. +
(ii) Form of Selling Agreement. +
4.(i) Individual Flexible Purchase Payment Deferred Variable Annuity
Contract.***
(ii)Death Benefit Rider***
(iii)Rider - Nursing Home Waiver***
(iv)Death Benefit Endorsements**
(v) Charitable Remainder Trust Endorsement**
5. Application for Variable Annuity. +
6.(i) Copy of Articles of Incorporation of the Company.***
(ii) Copy of the Bylaws of the Company.***
7. Not Applicable.
8.(i) Form of Fund Participation Agreement among MFS Variable Insurance
Trust, Cova Financial Services Life Insurance Company and
Massachusetts Financial Services Company+
(ii) Form of Fund Participation Agreement among Cova Financial
Services Life Insurance Company, Cova Life Sales Company,
Alliance Capital Management LP and Alliance Fund Distributors,
Inc.+
(iii) Form of Fund Participation Agreement among Oppenheimer Variable
Account Funds, OppenheimerFunds, Inc. and Cova Financial Services
Life Insurance Company++
(iv) Form of Fund Participation Agreement among Putnam Variable Trust,
Putnam Mutual Funds Corp. and Cova Financial Services Life
Insurance Company++
(v) Form of Fund Participation Agreement by and among AIM Variable
Insurance Funds, Inc., A I M Distributors, Inc., Cova Financial
Services Life Insurance Company, on behalf of itself and its
Separate Accounts, and Cova Life Sales Company++
(vi) Form of Fund Participation Agreement among Investors Fund Series,
Zurich Kemper Investments, Inc., Zurich Kemper Distributors, Inc.
and Cova Financial Services Life Insurance Company++
(vii) Form of Participation Agreement by and between Goldman Sachs
Variable Insurance Trust, Goldman, Sachs & Co. and Cova Financial
Services Life Insurance Company++
(viii) Form of Participation Agreement among Russell Insurance Funds,
Russell Fund Distributors, Inc. and Cova Financial Services Life
Insurance Company++
(ix) Form of Participation Agreement among Liberty Variable Investment
Trust, Liberty Financial Investments, Inc. and Cova Financial
Services Life Insurance Company++
(x) Form of Participation Agreement among Templeton Variable Products
Series Fund, Franklin Templeton Distributors, Inc. and Cova
Financial Services Life Insurance Company**
(xi) Form of Fund Participation Agreement - American Century Variable
Portfolios, Inc.
(xii) Form of Fund Participation Agreement - Dreyfus
(xiii)Form of Fund Participation Agreement - INVESCO Variable Investment
Funds, Inc.
(xiv) Form of Fund Participation Agreement - PIMCO Variable Insurance
Trust
(xv) Form of Fund Participation Agreement - Scudder Variable Life
Investment Fund
9. Opinion and Consent of Counsel.
10. Consent of Independent Auditors.
11. Not Applicable.
12. Agreement Governing Contribution.**
13. Calculation of Performance Information
14. Company Organizational Chart.
27. Not Applicable
***Incorporated by reference to Registrant's Form N-4 (File Nos. 333-34741
and 811-05200) electronically filed on August 29, 1997.
+Incorporated by reference to Registrants Pre-Effective Amendment No. 1
to Form N-4 electronically filed on November 19, 1997.
++Incorporated by reference to Post-Effective Amendment No. 1 to Form N-4
electronically filed on January 26, 1998.
**Incorporated by reference to Registrant's Post-Effective Amendment No. 4
(File Nos. 333-34741 and 811-05200) electronically filed on April 30, 1999.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors who are engaged directly or
indirectly in activities relating to the Registrant or the variable annuity
contracts offered by the Registrant and the executive officers of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
_______________________________ ____________________________________
Richard A. Liddy Chairman of the Board and Director
700 Market Street
St. Louis, MO 63101
Lorry J. Stensrud President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Barber Director
13045 Tesson Ferry Road
St. Louis, MO 63128
William P. Boscow Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Connie A. Doern Vice President
4700 Westown Parkway
West Des Moines, IA 50266
Patricia E. Gubbe Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Philip A. Haley Executive Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
J. Robert Hopson Vice President,
One Tower Lane, Suite 3000 Chief Actuary and Director
Oakbrook Terrace, IL 60181-4644
E. Thomas Hughes, Jr. Treasurer and Director
700 Market St.
St. Louis, MO 63101
Douglas E. Jacobs Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Lisa O. Kirchner Vice President
4700 Westown Parkway
West Des Moines, IA 50266
James W. Koeger Assistant Treasurer
700 Market Street
St. Louis, MO 63101
William C. Mair Vice President
One Tower Lane, Suite 3000 and Director
Oakbrook Terrace, IL 60181-4644
Matthew P. McCauley Assistant Secretary and Director
700 Market St.
St. Louis, MO 63101
John J. Myers Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Mark E. Reynolds Executive Vice President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Myron H. Sandberg Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Schaus Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Bernard J. Spaulding Senior Vice President and General
One Tower Lane, Suite 3000 Counsel
Oakbrook Terrace, IL 60181-4644
Joann T. Tanaka Senior Vice President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Patricia M. Wersching Assistant Treasurer
700 Market Street
St. Louis, MO 63101
Peter L. Witkewiz Vice President and Controller
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
A company organizational chart is filed as Exhibit 14 herein.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of April 12, 2000 there were 1,502 Qualified Contract Owners and 5,568
Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company (Article IV, Section 1) provide that:
Each person who is or was a director, officer or employee of the corporation or
is or was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise (including the heirs, executors, administrators or estate of such
person) shall be indemnified by the corporation as of right to the full extent
permitted or authorized by the laws of the State of Missouri, as now in effect
and as hereafter amended, against any liability, judgment, fine, amount paid in
settlement, cost and expenses (including attorney's fees) asserted or threatened
against and incurred by such person in his capacity as or arising out of his
status as a director, officer or employee of the corporation or if serving at
the request of the corporation, as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnification provided by this bylaw provision shall not be exclusive of any
other rights to which those indemnified may be entitled under any other bylaw or
under any agreement, vote of shareholders or disinterested directors or
otherwise, and shall not limit in any way any right which the corporation may
have to make different or further indemnification with respect to the same or
different persons or classes of persons.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Cova Life Sales Company is the principal underwriter for the following
investment companies (other than Registrant):
Cova Variable Annuity Account Five
First Cova Variable Annuity Account One
Cova Variable Life Account One
Cova Variable Life Account Five
Cova Variable Annuity Account Four
General American Separate Account Twenty-Eight
General American Separate Account Twenty-Nine
Security Equity Separate Account 26
Security Equity Separate Account 27
(b) Cova Life Sales Company is the principal underwriter for the Contracts.
The following persons are the officers and directors of Cova Life Sales Company.
The principal business address for each officer and director of Cova Life Sales
Company is One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4644.
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Underwriter
- - ------------------ --------------------------
Lorry J. Stensrud Director
Patricia E. Gubbe President, Chief Compliance Officer
and Director
William C. Mair Director
Philip A. Haley Vice President
Shari Ruecker Vice President
Mark E. Reynolds Treasurer
James W. Koeger Assistant Treasurer
Bernard J. Spaulding Secretary
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
William Flory, whose address is One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644 and Cova Life Administration Services Company,
4700 Westown Parkway, Bldg. 4, Suite 200, West Des Moines, IA 50266
maintain physical possession of the accounts, books or documents of the
Variable Account required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Cova Financial Services Life Insurance Company ("Company") hereby
represents that the fees and charges deducted under the Contracts described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Oakbrook
Terrace, and State of Illinois on this 28th day of April, 2000.
<TABLE>
<CAPTION>
<S> <C>
COVA VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: COVA FINANCIAL SERVICES LIFE
INSURANCE COMPANY
By: /s/BERNARD J. SPAULDING
____________________________________
Senior Vice President, General Counsel
and Secretary
COVA FINANCIAL SERVICES LIFE
INSURANCE COMPANY
Depositor
By: /s/BERNARD J. SPAULDING
____________________________________
Senior Vice President, General Counsel
and Secretary
</TABLE>
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
- - ---------------------- Chairman of the Board ------
Richard A. Liddy and Director Date
/s/LORRY J. STENSRUD President and Director 4-28-00
- - ---------------------- ------
Lorry J. Stensrud Date
/s/J. ROBERT HOPSON Director 4-28-00
- - ---------------------- ------
J. Robert Hopson Date
William C. Mair* Director 4-28-00
- - ---------------------- ------
William C. Mair Date
E. Thomas Hughes, Jr.* Treasurer and Director 4-28-00
- - ---------------------- ------
E. Thomas Hughes, Jr. Date
Matthew P. McCauley* Director 4-28-00
- - ---------------------- ------
Matthew P. McCauley Date
John W. Barber* Director 4-28-00
- - ---------------------- ------
John W. Barber Date
/s/MARK E. REYNOLDS Director 4-28-00
- - ---------------------- ------
Mark E. Reynolds Date
/s/J. TERRI TANAKA 4-28-00
- - ---------------------- Director ------
J. Terri Tanaka Date
/s/PETER L. WITKEWIZ 4-28-00
- - ---------------------- Controller ------
Peter L. Witkewiz Date
</TABLE>
*By: /s/LORRY J. STENSRUD
____________________________________
Lorry J. Stensrud, Attorney-in-Fact
INDEX TO EXHIBITS
EXHIBIT NO.
EX-99.B8(xi) Form of Fund Participation Agreement - American Century Variable
Portfolios, Inc.
EX-99.B8(xii) Form of Fund Participation Agreement - Dreyfus
EX-99.B8(xiii)Form of Fund Participation Agreement - INVESCO Variable Investment
Funds, Inc.
EX-99.B8(xiv) Form of Fund Participation Agreement - PIMCO Variable Insurance
Trust
EX-99.B8(xv) Form of Fund Participation Agreement - Scudder Variable Life
Investment Fund
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Consent of Independent Auditors
EX-99.B13 Calculation of Performance Information
EX-99.B14 Company Organizational Chart
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of
___________, 1998 by and between COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
(the "Company"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM").
WHEREAS, the Company offers to the public certain group and individual
variable annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options under
the Contracts, VP Balanced, VP Income & Growth, VP International and VP Value
(the "Funds"), each of which is a series of mutual fund shares registered under
the Investment Company Act of 1940, as amended, and issued by American Century
Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, ACIM desires to
make shares of the Funds available as investment options under the Contracts and
to retain the Company to perform certain administrative services on behalf of
the Funds, and the Company is willing and able to furnish such services;
NOW, THEREFORE, the Company and ACIM agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of this
Agreement, ACIM will cause the Issuer to make shares of the Funds available to
be purchased, exchanged, or redeemed, by or on behalf of the Accounts (defined
in SECTION 7(A) below) through a single account per Fund at the net asset value
applicable to each order. The Funds' shares shall be purchased and redeemed on a
net basis in such quantity and at such time as determined by the Company to
satisfy the requirements of the Contracts for which the Funds serve as
underlying investment media. Dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the Funds.
2. ADMINISTRATIVE SERVICES. The Company agrees to provide all
administrative services for the Contract owners, including but not limited to
those services specified in EXHIBIT A (the "Administrative Services"). Neither
ACIM nor the Issuer shall be required to provide Administrative Services for the
benefit of Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of the Administrative Services. Upon request, the
Company will provide ACIM or its representatives reasonable information
regarding the quality of the Administrative Services being provided and its
compliance with the terms of this Agreement.
3. TIMING OF TRANSACTIONS. ACIM hereby appoints the Company as agent for
the Funds for the limited purpose of accepting purchase and redemption orders
for Fund shares from the Contract owners. On each day the New York Stock
Exchange (the "Exchange") is open for business (each, a "Business Day"), the
Company may receive instructions from the Contract owners for the purchase or
redemption of shares of the Funds ("Orders"). Orders received and accepted by
the Company prior to the close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and
transmitted to the Funds' transfer agent by 8:30 a.m. Eastern time on the next
Business Day, will be executed at the net asset value determined as of the Close
of Trading on such Business Day. Any Orders received by the Company on such day
but after the Close of Trading, and all Orders that are transmitted to the
Funds' transfer agent after 8:30 a.m. Eastern time on the next Business Day,
will be executed at the net asset value determined as of the Close of Trading on
the next Business Day following the day of receipt of such Order. The day as of
which an Order is executed by the Funds' transfer agent pursuant to the
provisions set forth above is referred to herein as the "Trade Date".
4. PROCESSING OF TRANSACTIONS.
(a) If transactions in Fund shares are to be settled through the National
Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the FUND/SERV
AGREEMENT, between Company and American Century Services Corporation, shall
apply.
(b) If transactions in Fund shares are to be settled directly with the
Funds' transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day, ACIM (or one of its
affiliates) will provide to the Company via facsimile or other electronic
transmission acceptable to the Company the Funds' net asset value, dividend and
capital gain information and, in the case of income funds, the daily accrual for
interest rate factor (mil rate), determined at the Close of Trading. If ACIM (or
one of its affiliates) provides the Company with a materially incorrect net
asset value for any Fund, the Company, on behalf of the Accounts, shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of net asset value per share, dividend or capital gain information shall be
reported to the Company promptly upon discovery.
(2) By 8:30 a.m. Eastern time on each Business Day, the Company will
provide to ACIM via facsimile or other electronic transmission acceptable to
ACIM a report stating whether the instructions received by the Company from
Contract owners by the Close of Trading on the immediately prior Business Day
resulted in the Accounts being a net purchaser or net seller of shares of the
Funds. As used in this Agreement, the phrase "other electronic transmission
acceptable to ACIM" includes the use of remote computer terminals located at the
premises of the Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of ACIM, its agents or affiliates
(hereinafter, "Remote Computer Terminals").
(3) Upon the timely receipt from the Company of the report described in (2)
above, the Funds' transfer agent will execute the purchase or redemption
transactions (as the case may be) at the net asset value computed as of the
Close of Trading on the Trade Date. Payment for net purchase transactions shall
be made by wire transfer to the applicable Fund custodial account designated by
the Funds on the Business Day next following the Trade Date. Such wire transfers
shall be initiated by the Company's bank prior to 4:00 p.m. Eastern time and
received by the Funds prior to 6:00 p.m. Eastern time on the Business Day next
following the Trade Date ("T+1"). If payment for a purchase Order is not timely
received, such Order will be executed at the net asset value next computed
following receipt of payment. Payments for net redemption transactions shall be
made by wire transfer by the Issuer to the account(s) designated by the Company
on T+1; provided, however, the Issuer reserves the right to settle redemption
transactions within the time period set forth in the applicable Fund's
then-current prospectus. On any Business Day when the Federal Reserve Wire
Transfer System is closed, all communication and processing rules will be
suspended for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System is open and the
original Trade Date will apply.
5. PROSPECTUS AND PROXY MATERIALS.
(a) ACIM shall provide the Company with copies of the Issuer's proxy
materials, periodic fund reports to shareholders and other materials that are
required by law to be sent to the Issuer's shareholders. In addition, ACIM shall
provide the Company with a sufficient quantity of prospectuses of the Funds to
be used in conjunction with the transactions contemplated by this Agreement,
together with such additional copies of the Issuer's prospectuses as may be
reasonably requested by Company. If the Company provides for pass-through voting
by the Contract owners, or if the Company determines that pass-through voting is
required by law, ACIM will provide the Company with a sufficient quantity of
proxy materials for each, as directed by the Company. If requested by the
Company, ACIM shall provide such documentation (including a "camera ready" copy
of the new prospectus as set in type or, at the request of the Company, as a
diskette in the form sent to the printer) and other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if the
Funds' prospectuses are supplemented or amended) to have the prospectus or
private offering memorandum for the Contracts and the prospectuses for the Funds
printed together in one document together with other funds available under the
Contracts.
(b) ACIM will provide the Company with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements and all amendments or supplements to any of the above
that relate to the Funds as soon as reasonably practicable after the filing of
each such document with the Securities and Exchange Commission (the "SEC") or
other regulatory authority or is available for shareholders. The Company will
provide ACIM with at least one complete copy of all prospectuses, private
offering memoranda, statements of additional information, annual and semi-annual
reports, proxy statements and all amendments or supplements to any of the above
that relate to an Account as soon as reasonably practicable after the filing, if
applicable, of each such document with the SEC or other regulatory authority or
after it is available for shareholders.
(c) The cost of preparing, printing and shipping of the prospectuses, proxy
materials, periodic fund reports and other materials of the Issuer to the
Company shall be paid by ACIM or its agents or affiliates; provided, however,
that if at any time ACIM or its agent reasonably deems the usage by the Company
of such items to be excessive, it may, prior to the delivery of any quantity of
materials in excess of what is deemed reasonable, request that the Company
demonstrate the reasonableness of such usage. If ACIM believes the
reasonableness of such usage has not been adequately demonstrated, it may
request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, ACIM may refuse to
supply such additional materials and ACIM shall be deemed in compliance with
this SECTION 5 if it delivers to the Company at least the number of prospectuses
and other materials as may be required by the Issuer under applicable law.
(d) The cost of any distribution of prospectuses, proxy materials, periodic
fund reports and other materials of the Issuer to the Contract owners shall be
paid by the Company and shall not be the responsibility of ACIM or the Issuer.
6. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares purchased for
the Contract owners pursuant to this Agreement (the "Record Owner"). The Record
Owner shall properly complete any applications or other forms required by ACIM
or the Issuer from time to time.
(b) ACIM acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company, ACIM
will pay the Company a fee (the "Administrative Services Fee") equal to 20 basis
points (0.20%) per annum of the average aggregate amount invested by the Company
under this Agreement.
(c) The payments received by the Company under this Agreement are for
administrative and shareholder services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution.
(d) For the purposes of computing the payment to the Company contemplated
by this SECTION 6, the average aggregate amount invested by the Company on
behalf of the Accounts in the Funds over a one month period shall be computed by
totaling the Company's aggregate investment (share net asset value multiplied by
total number of shares of the Funds held by the Company) on each Business Day
during the month and dividing by the total number of Business Days during such
month.
(e) ACIM will calculate the amount of the payment to be made pursuant to
this SECTION 6 at the end of each calendar quarter and will make such payment to
the Company within 30 days thereafter. The check for such payment will be
accompanied by a statement showing the calculation of the amounts being paid by
ACIM for the relevant months and such other supporting data as may be reasonably
requested by the Company and shall be mailed to:
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
Attention: General Counsel
7. REPRESENTATIONS.
(a) The Company represents and warrants that (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Cova Variable Life Account Eight (the "Account"), which is a duly authorized and
established separate account under Missouri insurance law, is exempt from being
registered as a unit investment trust under the Investment Company Act of 1940
(the "1940 Act"), and will serve as an investment vehicle for the Contracts;
(iii) each Contract provides for the allocation of net amounts received by the
Company to an Account for investment in the shares of one or more specified
investment companies selected among those companies available through the
Account to act as underlying investment media; (iv) selection of a particular
investment company is made by the Contract owner under a particular Contract,
who may change such selection from time to time in accordance with the terms of
the applicable Contract; and (v) the activities of the Company contemplated by
this Agreement comply in all material respects with all provisions of federal
and state securities laws applicable to such activities.
(b) ACIM represents that (i) this Agreement has been duly authorized by all
necessary corporate action and, when executed and delivered, shall constitute
the legal, valid and binding obligation of ACIM, enforceable in accordance with
its terms; (ii) the investments of the Funds will at all times be adequately
diversified within the meaning of Section 817(h) of the Internal Revenue Service
Code of 1986, as amended (the "Code"), and the regulations thereunder, and that
at all times while this Agreement is in effect, all beneficial interests in each
of the Funds will be owned by one or more insurance companies' segregated asset
accounts or by any other party permitted under Section 1.817-5(f)(3) of the
Regulations promulgated under the Code; (iii) each Fund has elected to be taxed
as a "regulated investment company" under Subchapter M of the Code; (iv) the
prospectus of each Fund complies in all material respects with federal and state
securities laws; (v) shares of the Issuer are registered and authorized for sale
in accordance with all federal and state securities laws; and (vi) it is duly
registered and licensed under all applicable federal and state securities laws
where the failure to be so registered would have a material adverse effect on
its business.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement. All obligations of
each party under this Agreement are subject to compliance with applicable
federal and state laws.
(b) Each party shall promptly notify the other parties in the event that it
is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business Day.
The Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with SECTION 8(C) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to ACIM, shall be sent by or under the authority and direction of a
person designated by the Company as being duly authorized to act on behalf of
the owner of the Accounts. ACIM shall be entitled to rely on the existence of
such authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to ACIM by the Company by telephone, telecopy or other
electronic transmission acceptable to ACIM.
(e) The Company agrees that, to the extent it is able to do so, it will use
its best efforts to give equal emphasis and promotion to shares of the Funds as
is given to other underlying investments of the Accounts, subject to applicable
Securities and Exchange Commission rules. In addition, the Company shall not
impose any fee, condition, or requirement for the use of the Funds as investment
options for the Contracts that operates to the specific prejudice of the Funds
vis-a-vis the other investment media made available for the Contracts by the
Company.
(f) The Company will furnish, or will cause to be furnished, to ACIM each
piece of sales literature or other promotional material in which the Issuer or
ACIM is named, at least fifteen (15) Business Days prior to its intended use. No
such sales literature or promotional material will be used if ACIM objects to
its use in writing within ten (10) Business Days after receipt of such material.
(g) ACIM will furnish, or will cause to be furnished, to the Company, each
piece of sales literature or other promotional material in which the Company or
its Separate Accounts are named, at least fifteen (15) Business Days prior to
its intended use. No such material will be used if the Company objects to its
use in writing within ten (10) Business Days after receipt of such material.
(h) The Company, its affiliates and agents shall not, without the written
consent of ACIM, make representations concerning the Issuer or the shares of the
Funds except those contained in the then-current prospectus and in current
printed sales literature approved by ACIM or the Issuer. ACIM, its affiliates
and agents, shall not, without the written consent of the Company, make
representations concerning the Company, the Account or the Contracts except
those contained in the then-current registration statement, prospectus or
private offering memorandum and in current printed sales literature or other
promotional material produced or approved by the Company or its designee.
(i) For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. (the "NASD")
rules, the 1940 Act or the Securities Act of 1933.
(j) ACIM will notify the Company as soon as reasonably practicable if a
Fund has ceased to be qualified as a regulated investment company under
Subchapter M of the Code.
9. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither ACIM nor any of its affiliates or the Funds shall use any
trademark, trade name, service mark or logo of the Company, or any variation of
any such trademark, trade name, service mark or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service mark or logo of the
Issuer, ACIM or any of its affiliates or any variation of any such trademarks,
trade names, service marks, or logos, without the prior written consent of
either the Issuer or ACIM, as appropriate, the granting of which shall be at the
sole option of ACIM and/or the Issuer.
10. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in SECTION 12(A) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by ACIM and will vote shares in accordance with instructions received
from such Contract owners. The Company shall vote Fund shares for which no
voting instructions are received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners.
11. INDEMNITY.
(a) ACIM agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this SECTION 11(A))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses:
(i) arise out of or are based upon any untrue statement of material fact
contained in the registration statement or prospectus of the Issuer (or any
amendment or supplement to any of the foregoing), or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that this
indemnification shall not apply as to any Indemnified Party if such statement or
omission was made in reliance upon and in conformity with information furnished
to ACIM or the Issuer by or on behalf of the Company for use in the Issuer's
registration statement or prospectus (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or the Issuer's
shares;
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus, or private placement memorandum for the Contracts not supplied by
ACIM or the Issuer or their agents) or wrongful conduct of the Issuer or its
agents, with respect to the sale or distribution of the Contracts or the
Issuer's shares;
(iii) arise out of any untrue statement of a material fact contained in a
registration statement or prospectus covering the Account or the Contracts, or
any amendment thereof or supplement thereto or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished to the Company for inclusion
therein by or on behalf of the Issuer; or
(iv) result from a breach by ACIM of a material provision of this
Agreement.
ACIM will reimburse any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such
Losses. ACIM shall not be liable for indemnification hereunder if such Losses
are attributable to the willful misfeasance, bad faith or negligence of the
Company in performing its obligations under this Agreement or the Company's
reckless disregard of its obligations or duties hereunder.
(b) The Company agrees to indemnify and hold harmless ACIM and the Issuer,
and their respective officers, directors, employees, agents, affiliates and each
person, if any, who controls Issuer or ACIM within the meaning of the Securities
Act of 1933 (collectively, the "Indemnified Parties" for purposes of this
SECTION 11(B)) against any Losses to which the Indemnified Parties may become
subject, insofar as such Losses:
(i) arise out of or are based upon any untrue statement of any material
fact contained in the registration statement, prospectus or private offering
memorandum for the Contracts or contained in the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Issuer for use in
the registration statement, prospectus or private offering memorandum for the
Contracts or in the Contracts (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or the Issuer's shares;
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement or
prospectus of the Issuer not supplied by the Company or its agents) or wrongful
conduct of the Company or its agents, with respect to the sale or distribution
of the Contracts or the Issuer's shares;
(iii) arise out of any untrue statement of material fact contained in a
registration statement or prospectus of the Issuer or any amendment thereof or
supplement thereto or the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and in conformity with
information furnished to the Issuer by or on behalf of the Company;
(iv) result from a breach by the Company of a material provision of this
Agreement; or
(v) result from the use by any person of the Remote Computer Terminals.
The Company will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. The Company shall not be liable for indemnification hereunder if such
Losses are attributable to the willful misfeasance, bad faith or negligence of
ACIM or the Issuer in performing their obligations under this Agreement or their
reckless disregard of their obligations or duties hereunder.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this SECTION 11. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this SECTION 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
12. POTENTIAL CONFLICTS
(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by the Issuer on December 21, 1987, with the SEC and the order
issued by the SEC in response thereto (the "Shared Funding Exemptive Order").
The Company has reviewed the conditions to the requested relief set forth in
such application for exemptive relief. As set forth in such application, the
Board of Directors of the Issuer (the "Board") will monitor the Issuer for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts ("Participating Companies") investing
in funds of the Issuer. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar actions by insurance, tax or
securities regulatory authorities; (iii) an administrative or judicial decision
in any relevant proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting instructions given by
variable annuity contract owners and variable life insurance contract owners; or
(vi) a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund and
reinvesting such assets in a different investment medium or submitting the
question of whether such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and/or
(ii) establishing a new registered management investment company or managed
separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Issuer, the Company at its sole
cost, may be required, at the Board's election, to withdraw an Account's
investment in the Issuer and terminate this Agreement; provided, however, that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For the purpose of this SECTION 12, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Issuer
be required to establish a new funding medium for any Contract. The Company
shall not be required by this SECTION 12 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
13. TERMINATION; WITHDRAWAL OF OFFERING.
(a) This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
(b) This Agreement shall terminate in accordance with the following
provisions:
(i) At the option of the Company or ACIM at any time from the date hereof
upon 180 days' notice, unless a shorter time is agreed to by the parties;
(ii) At the option of the Company, if the Issuer's shares are not
reasonably available to meet the requirements of the Contracts as determined by
the Company. Prompt notice of election to terminate shall be furnished by the
Company, said termination to be effective ten days after receipt of notice
unless the Issuer makes available a sufficient number of shares to reasonably
meet the requirements of the Contracts within said ten-day period;
(iii) At the option of the Company, upon the institution of formal
proceedings against the Issuer or ACIM by the SEC, the NASD, or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in the Company's reasonable judgment, materially impair the
Issuer's or ACIM's ability to meet and perform their obligations and duties
hereunder. Prompt notice of election to terminate shall be furnished by the
Company with said termination to be effective upon receipt of notice;
(iv) At the option of ACIM, upon the institution of formal proceedings
against the Company by the SEC, the NASD, or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which would, in ACIM's
reasonable judgment, materially impair the Company's ability to meet and perform
its obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by ACIM with said termination to be effective upon receipt of
notice;
(v) In the event ACIM's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the use
of such shares as the underlying investment medium of Contracts issued or to be
issued by the Company. Termination shall be effective upon receipt of notice by
the Company, which ACIM shall provide promptly upon such occurrence;
(vi) At the option of the Issuer if the Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the Code, or
if ACIM reasonably believes that the Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by the Company;
(vii) At the option of either party, upon the other party's breach of any
material provision of this Agreement, which breach has not been cured to the
satisfaction of the non-breaching party within ten days after written notice of
such breach is delivered to the breaching party;
(viii) At the option of ACIM, if the Contracts are not registered, issued
or sold in accordance with applicable federal and/or state law. Termination
shall be effective upon receipt of notice by ACIM, which the Company shall
provide promptly upon such occurrence.
Notwithstanding any termination of this Agreement, ACIM will cause the
Issuer to continue to make available additional shares, as provided below, for
so long as the Company desires pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts or the Company,
whichever shall have legal authority to do so, shall be permitted to reallocate
or redeem investments in the Funds. In addition, for a period of 2 years after
the date of termination, ACIM will remain obligated to pay the Company the
Administrative Services Fee for assets attributable to the Existing Contracts.
This Agreement shall survive termination to the extent necessary for each party
to perform its obligations with respect to shares for which the Administrative
Services Fee continues to be due subsequent to such termination.
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each of the parties is free to enter into similar agreements and
arrangements with other entities.
15. SURVIVAL. The provisions of SECTION 9 (use of names) and SECTION 11
(indemnity) of this Agreement shall survive termination of this Agreement.
16. AMENDMENT. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
Attention: General Counsel
To the Issuer or ACIM:
American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without the
written consent of all parties to the Agreement at the time of such assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
22. COOPERATION. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
This covenant shall survive any termination of the Agreement.
23. CUMULATIVE RIGHTS. The rights, remedies and obligations contained in
this Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
COVA FINANCIAL SERVICES LIFE AMERICAN CENTURY INVESTMENT
INSURANCE COMPANY MANAGEMENT, INC.
By:_________________________ By:________________________________
Name:_______________________ William M. Lyons
Title:______________________ Executive Vice President
EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which records shall
reflect the shares purchased and redeemed and share balances of such Contract
owners. The Company will maintain a single master account with each Fund on
behalf of the Contract owners and such account shall be in the name of the
Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of redemptions of
shares of the Funds and all dividends and other distributions not reinvested in
shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or the
Contracts, periodic statements showing the total number of shares owned by the
Contract owners as of the statement closing date, purchases and redemptions of
Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of the
Contract owners in accordance with the procedures set forth in SECTION 4 to the
Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus, proxy
materials, periodic fund reports to shareholders and other materials that the
Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be maintained
and preserved in connection with providing the Administrative Services for the
Contracts.
FUND PARTICIPATION AGREEMENT
This Agreement is effective as of the 1st day of November, 1999, between COVA
FINANCIAL SERVICES LIFE INSURANCE COMPANY, a life insurance company organized
under the laws of the State of Missouri ("Insurance Company"), and each of
DREYFUS VARIABLE INVESTMENT FUND; THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND,
INC.; DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK INDEX
FUND); AND DREYFUS INVESTMENT PORTFOLIOS (each a "Fund").
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may be,
of a Fund, which has the responsibility for management and control of the
Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract that
uses any Participating Fund (as defined below) as an underlying investment
medium. Individuals who participate under a group Contract are
"Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract with a
Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of a
Fund that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates, including
Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an agreement
with one or more of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable, any
series thereof, specified in Exhibit A, as such Exhibit may be amended from
time to time by agreement of the parties hereto, the shares of which are
available to serve as the underlying investment medium for the aforesaid
Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of additional
information of a Fund, as most recently filed with the Commission.
1.12 "Separate Account" shall mean Cova Variable Annuity Account One, a separate
account established by Insurance Company in accordance with the laws of the
State of Missouri .
1.13 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset value
per share. Such Program may include the Lion System. In situations where
the Lion System or any other Software Program used by a Fund is not
available, such information may be provided by telephone. The Lion System
shall be provided to Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general account(s)
of Insurance Company and its affiliates that invest in a Fund.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it
has legally and validly established the Separate Account pursuant to the
Missouri Insurance Code for the purpose of offering to the public certain
individual and group variable annuity and life insurance contracts; (c) it
has registered the Separate Account as a unit investment trust under the
Act to serve as the segregated investment account for the Contracts; and
(d) the Separate Account is eligible to invest in shares of each
Participating Fund without such investment disqualifying any Participating
Fund as an investment medium for insurance company separate accounts
supporting variable annuity contracts or variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registration statement filed under the Securities Act of
1933, as amended ("1933 Act"); (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state
laws; and (c) the sale of the Contracts shall comply in all material
respects with state insurance law requirements. Insurance Company agrees to
notify each Participating Fund promptly of any investment restrictions
imposed by state insurance law and applicable to the Participating Fund.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be credited to
or charged against such Separate Account without regard to other income,
gains or losses from assets allocated to any other accounts of Insurance
Company. Insurance Company represents and warrants that the assets of the
Separate Account are and will be kept separate from Insurance Company's
General Account and any other separate accounts Insurance Company may have,
and will not be charged with liabilities from any business that Insurance
Company may conduct or the liabilities of any companies affiliated with
Insurance Company.
2.4 Each Participating Fund represents that it is registered with the
Commission under the Act as an open-end, management investment company and
possesses, and shall maintain, all legal and regulatory licenses,
approvals, consents and/or exemptions required for the Participating Fund
to operate and offer its shares as an underlying investment medium for
Participating Companies.
2.5 Each Participating Fund represents that it is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will maintain such
qualification (under Subchapter M or any successor or similar provision)
and that it will notify Insurance Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are currently,
and at the time of issuance will be, treated as life insurance policies or
annuity contracts, whichever is appropriate, under applicable provisions of
the Code, and that it will make every effort to maintain such treatment and
that it will notify each Participating Fund and Dreyfus immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future. Insurance
Company agrees that any prospectus offering a Contract that is a "modified
endowment contract," as that term is defined in Section 7702A of the Code,
will identify such Contract as a modified endowment contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be managed and
invested in a manner that complies with the requirements of Section 817(h)
of the Code and the Regulations thereunder. In the event a Participating
Fund becomes aware that it has failed to so comply, it will take all
reasonable steps (a) to notify Insurance Company of such failure and (b) to
adequately diversify the Fund so as to achieve compliance.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares available
to other Participating Companies and Contractholders.
2.9 Each Participating Fund represents and warrants that any of its directors,
trustees, officers, employees, investment advisers, and other
individuals/entities who deal with the money and/or securities of the
Participating Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the
Participating Fund in an amount not less than that required by Rule 17g-1
under the Act. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating Fund
are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage in an amount not less than the coverage required
to be maintained by the Participating Fund. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for purchase at
the then applicable net asset value per share by Insurance Company and the
Separate Account on each Business Day pursuant to rules of the Commission.
Notwithstanding the foregoing, each Participating Fund may refuse to sell
its shares to any person, or suspend or terminate the offering of its
shares, if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of its Board, acting in
good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary and in the best interests of the
Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund will
be sold only to (a) Participating Companies and their separate accounts or
(b) "qualified pension or retirement plans" as determined under Section
817(h)(4) of the Code. Except as otherwise set forth in this Section 3.3,
no shares of any Participating Fund will be sold to the general public.
3.4 Each Participating Fund shall use its best efforts to provide closing net
asset value, dividend and capital gain information on a per-share basis to
Insurance Company by 6:00 p.m. Eastern time on each Business Day. Any
material errors in the calculation of net asset value, dividend and capital
gain information shall be reported immediately upon discovery to Insurance
Company. Non-material errors will be corrected in the next Business Day's
net asset value per share.
If the Participating Fund provides the Insurance Company with materially
incorrect share net asset value information, the Separate Account(s) shall
be entitled to an adjustment to the number of shares purchased or redeemed
to reflect the correct share net asset value. Any material error in the
calculation of the net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to the Insurance
Company. Furthermore, the Participating Fund shall be liable for the
reasonable administrative costs incurred by the Insurance Company in
relation to the correction of any material error, provided such error is
attributable to the Participating Fund. Administrative costs shall include
reasonable allocation of staff time, costs of outside service providers,
printing and postage.
3.5 At the end of each Business Day, Insurance Company will use the information
described in Sections 3.2 and 3.4 to calculate the unit values of the
Separate Account for the day. Using this unit value, Insurance Company will
process the day's Separate Account transactions received by it by the close
of trading on the floor of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) to determine the net dollar amount of each Participating
Fund's shares that will be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders will be
transmitted to each Participating Fund by Insurance Company by 11:00 a.m.
Eastern time on the Business Day next following Insurance Company's receipt
of that information. Subject to Sections 3.6 and 3.8, all purchase and
redemption orders for Insurance Company's General Accounts shall be
effected at the net asset value per share of each Participating Fund next
calculated after receipt of the order by the Participating Fund or its
Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating Fund
will execute orders at the applicable net asset value per share determined
as of the close of trading on the day of receipt of such orders by
Insurance Company acting as agent ("effective trade date"), provided that
the Participating Fund receives notice of such orders by 11:00 a.m. Eastern
time on the next following Business Day and, if such orders request the
purchase of Participating Fund shares, the conditions specified in
Section 3.8, as applicable, are satisfied. A redemption or purchase request
that does not satisfy the conditions specified above and in Section 3.8, as
applicable, will be effected at the net asset value per share computed on
the Business Day immediately preceding the next following Business Day upon
which such conditions have been satisfied in accordance with the
requirements of this Section and Section 3.8. Insurance Company represents
and warrants that all orders submitted by the Insurance Company for
execution on the effective trade date shall represent purchase or
redemption orders received from Contractholders prior to the close of
trading on the New York Stock Exchange on the effective trade date.
3.7 Insurance Company will make its best efforts to notify each applicable
Participating Fund in advance of any unusually large purchase or redemption
orders.
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial account
on the day the order is transmitted. Insurance Company shall make all
reasonable efforts to transmit to the applicable Participating Fund payment
in Federal Funds by 12:00 noon Eastern time on the Business Day the
Participating Fund receives the notice of the order pursuant to Section
3.5. Each applicable Participating Fund will execute such orders at the
applicable net asset value per share determined as of the close of trading
on the effective trade date if the Participating Fund receives payment in
Federal Funds by 12:00 midnight Eastern time on the Business Day the
Participating Fund receives the notice of the order pursuant to
Section 3.5. If payment in Federal Funds for any purchase is not received
or is received by a Participating Fund after 12:00 noon Eastern time on
such Business Day, Insurance Company shall promptly, upon each applicable
Participating Fund's request, reimburse the respective Participating Fund
for any charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred by
the Participating Fund, as a result of portfolio transactions effected by
the Participating Fund based upon such purchase request. If Insurance
Company's order requests the redemption of any Participating Fund's shares
valued at or greater than $1 million dollars, the Participating Fund will
wire such amount to Insurance Company within seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares are
registered with applicable federal agencies at all times. Each
Participating Fund will register and qualify its shares in accordance with
the laws of the applicable states as may be required by law.
3.10 Each Participating Fund will confirm each purchase or redemption order made
by Insurance Company. Transfer of Participating Fund shares will be by book
entry only. No share certificates will be issued to Insurance Company.
Insurance Company will record shares ordered from a Participating Fund in
an appropriate title for the corresponding account.
3.11 Each Participating Fund shall credit Insurance Company with the appropriate
number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business Day,
on the first Business Day thereafter, each Participating Fund shall
communicate to Insurance Company the amount of dividend and capital gain,
if any, per share. All dividends and capital gains shall be automatically
reinvested in additional shares of the applicable Participating Fund at the
net asset value per share on the ex-dividend date. Each Participating Fund
shall, on the day after the ex-dividend date or, if not a Business Day, on
the first Business Day thereafter, notify Insurance Company of the number
of shares so issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as of
the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of the
Participating Fund's Prospectuses, proxy materials, notices, periodic
reports and other printed materials (which the Participating Fund
customarily provides to its shareholders) in quantities as Insurance
Company may reasonably request for distribution to each Contractholder and
Participant. Insurance Company may elect to print the Participating Fund's
prospectus and/or its statement of additional information in combination
with other fund companies' prospectuses and statements of additional
information, which are also offered in Insurance Companies insurance
product at their own cost. At Insurance Company's request, the
Participating Fund will provide, in lieu of printed documents, camera-ready
copy or diskette of prospectuses, annual and semi-annual reports for
printing by the Insurance Company.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, reports, proxy
statements, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Participating Fund or its shares,
contemporaneously with the filing of such document with the Commission or
other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at least one copy
of all registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Contracts or the Separate Account,
contemporaneously with the filing of such document with the Commission.
4.5 Insurance Company will provide Participating Funds on a semi-annual basis,
or more frequently as reasonably requested by the Participating Funds, with
a current tabulation of the number of existing Variable Contract owners of
Insurance Company whose Variable Contract values are invested in the
Participating Funds. This tabulation will be sent to Participating Funds in
the form of a letter signed by a duly authorized officer of the Insurance
Company attesting to the accuracy of the information contained in the
letter.
ARTICLE V
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be included in
the determination of the Participating Fund's daily net asset value per
share.
5.2 Except as provided in Article IV and V, in particular in the next sentence,
Insurance Company shall not be required to pay directly any expenses of any
Participating Fund or expenses relating to the distribution of its shares.
Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Participating Fund
materials, including the cost of printing a Participating Fund's
Prospectus, or marketing materials for prospective Insurance Company
Contractholders and Participants as Dreyfus and Insurance Company
shall agree from time to time. Such materials shall not include
Participating Fund proxy solicitation materials.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company Contractholders
and Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and
Participants. Such materials shall not include Participating Fund
proxy solicitation materials.
Except as provided herein, Insurance Company shall not be responsible for
any other Participating Fund expenses.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of (i) the amended order dated
December 31, 1997 of the Securities and Exchange Commission under Section
6(c) of the Act with respect to Dreyfus Variable Investment Fund and
Dreyfus Life and Annuity Index Fund, Inc.; and (ii) the order dated
February 5, 1998 of the Securities and Exchange Commission under Section
6(c) of the Act with respect to The Dreyfus Socially Responsible Growth
Fund, Inc. and Dreyfus Investment Portfolios, and, in particular, has
reviewed the conditions to the relief set forth in each related Notice. As
set forth therein, if Dreyfus Variable Investment Fund, Dreyfus Life and
Annuity Index Fund, Inc., The Dreyfus Socially Responsible Growth Fund,
Inc. or Dreyfus Investment Portfolios is a Participating Fund, Insurance
Company agrees, as applicable, to report any potential or existing
conflicts promptly to the respective Board of Dreyfus Variable Investment
Fund, Dreyfus Life and Annuity Index Fund, Inc., The Dreyfus Socially
Responsible Growth Fund, Inc. and/or Dreyfus Investment Portfolios, and, in
particular, whenever contract voting instructions are disregarded, and
recognizes that it will be responsible for assisting each applicable Board
in carrying out its responsibilities under such application. Insurance
Company agrees to carry out such responsibilities with a view to the
interests of existing Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Contractholder investments in a Participating Fund, the Board shall give
prompt notice to all Participating Companies and any other Participating
Fund. If the Board determines that Insurance Company is responsible for
causing or creating said conflict, Insurance Company shall at its sole cost
and expense, and to the extent reasonably practicable (as determined by a
majority of the Disinterested Board Members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvesting such assets in another
Participating Fund (if applicable) or a different investment medium,
or submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and said
decision represents a minority position or would preclude a majority vote
by all Contractholders having an interest in a Participating Fund,
Insurance Company may be required, at the Board's election, to withdraw the
investments of the Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a new
funding medium for any Contract. Insurance Company shall not be required by
this Article to establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the Contractholders
materially adversely affected by the irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result of
any act or failure to act by Insurance Company pursuant to this Article VI,
shall relieve Insurance Company of its obligations under, or otherwise
affect the operation of, Article V.
ARTICLE VII
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at no
cost to Insurance Company, of the Participating Fund's proxy material,
reports to shareholders and other communications to shareholders in such
quantity as Insurance Company shall reasonably require for distributing to
Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants
on a timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions have
been received in the same proportion as Participating Fund shares for
which instructions have been received.
Insurance Company agrees at all times to vote its General Account shares in
the same proportion as the Participating Fund shares for which instructions
have been received from Contractholders or Participants. Insurance Company
further agrees to be responsible for assuring that voting the Participating
Fund shares for the Separate Account is conducted in a manner consistent
with other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the prior written
consent of each applicable Participating Fund and Dreyfus, solicit, induce
or encourage Contractholders to (a) change or supplement the Participating
Fund's current investment adviser or (b) change, modify, substitute, add to
or delete from the current investment media for the Contracts.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne by Insurance
Company in accordance with Section 5.2 of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company shall
make reasonable efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to each
applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating Fund,
its investment adviser or the administrator is named, at least fifteen
Business Days prior to its use. No such material shall be used unless the
Participating Fund or its designee approves such material. Such approval
(if given) must be in writing and shall be presumed not given if not
received within ten Business Days after receipt of such material. Each
applicable Participating Fund or its designee, as the case may be, shall
use all reasonable efforts to respond within ten days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Prospectus of, as may be amended or supplemented
from time to time, or in reports or proxy statements for, the applicable
Participating Fund, or in sales literature or other promotional material
approved by the applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of the Participating Fund's sales literature
or other promotional material in which Insurance Company or the Separate
Account is named, at least fifteen Business Days prior to its use. No such
material shall be used unless Insurance Company approves such material.
Such approval (if given) must be in writing and shall be presumed not given
if not received within ten Business Days after receipt of such material.
Insurance Company shall use all reasonable efforts to respond within ten
days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, give any information or make any representations
on behalf of Insurance Company or concerning Insurance Company, the
Separate Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as may be amended or supplemented from time to time, or in
published reports for the Separate Account that are in the public domain or
approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material approved
by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards, motion
pictures or other public media), sales literature (such as any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, or reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. rules,
the Act or the 1933 Act.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each Participating
Fund, Dreyfus, each respective Participating Fund's investment adviser and
sub-investment adviser (if applicable), each respective Participating
Fund's distributor, and their respective affiliates, and each of their
directors, trustees, officers, employees, agents and each person, if any,
who controls or is associated with any of the foregoing entities or persons
within the meaning of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of Section 9.1), against any and all losses, claims, damages
or liabilities joint or several (including any investigative, legal and
other expenses reasonably incurred in connection with, and any amounts paid
in settlement of, any action, suit or proceeding or any claim asserted) for
which the Indemnified Parties may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect to thereof) (i) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in information furnished by Insurance Company for use in the registration
statement or Prospectus or sales literature or advertisements of the
respective Participating Fund or with respect to the Separate Account or
Contracts, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) arise out of
or as a result of conduct, statements or representations (other than
statements or representations contained in the Prospectus and sales
literature or advertisements of the respective Participating Fund) of
Insurance Company or its agents, with respect to the sale and distribution
of Contracts for which the respective Participating Fund's shares are an
underlying investment; (iii) arise out of the wrongful conduct of Insurance
Company or persons under its control with respect to the sale or
distribution of the Contracts or the respective Participating Fund's
shares; (iv) arise out of Insurance Company's incorrect calculation and/or
untimely reporting of net purchase or redemption orders; or (v) arise out
of any breach by Insurance Company of a material term of this Agreement or
as a result of any failure by Insurance Company to provide the services and
furnish the materials or to make any payments provided for in this
Agreement. Insurance Company will reimburse any Indemnified Party in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that with respect to clauses
(i) and (ii) above Insurance Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or
is based upon any untrue statement or omission or alleged omission made in
such registration statement, prospectus, sales literature, or advertisement
in conformity with written information furnished to Insurance Company by
the respective Participating Fund specifically for use therein. This
indemnity agreement will be in addition to any liability which Insurance
Company may otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees, agents
and each person, if any, who controls Insurance Company within the meaning
of the 1933 Act against any losses, claims, damages or liabilities to which
Insurance Company or any such director, officer, employee, agent or
controlling person may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted) (1) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or Prospectus or
sales literature or advertisements of the respective Participating Fund;
(2) arise out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or advertisements
of the respective Participating Fund any material fact required to be
stated therein or necessary to make the statements therein not misleading;
or (3) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or Prospectus or sales literature or advertisements with respect
to the Separate Account or the Contracts and such statements were based on
information provided to Insurance Company by the respective Participating
Fund; or (4) arise out of any breach by a Participating Fund of a material
term of this Agreement or as a result of any failure by a Participating
Fund to provide the services and furnish the material or to make any
payments provided fo in the Agreement; and the respective Participating
Fund will reimburse any legal or other expenses reasonably incurred by
Insurance Company or any such director, officer, employee, agent or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
respective Participating Fund will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or omission or alleged omission made in such
registration statement, Prospectus, sales literature or advertisements in
conformity with written information furnished to the respective
Participating Fund by Insurance Company specifically for use therein. This
indemnity agreement will be in addition to any liability which the
respective Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company and each of its directors, officers, employees, agents , and each
person, if any, who controls Insurance Company within the meaning of the
1933 Act, harmless against any and all liability, loss, damages, costs or
expenses (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted which Insurance Company
may incur, suffer or be required to pay due to the respective Participating
Fund's (1) incorrect calculation of the daily net asset value, dividend
rate or capital gain distribution rate; (2) incorrect reporting of the
daily net asset value, dividend rate or capital gain distribution rate; and
(3) untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance Company
if the incorrect calculation or incorrect or untimely reporting was the
result of incorrect information furnished by Insurance Company or
information furnished untimely by Insurance Company or otherwise as a
result of or relating to a breach of this Agreement by Insurance Company.
9.4 Promptly after receipt by an indemnified party under this Article of notice
of the commencement of any action, such indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Article, notify the indemnifying party of the commencement thereof. The
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability under this Article IX, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice. In case any such action is
brought against any indemnified party, and it notified the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such indemnified party, and
to the extent that the indemnifying party has given notice to such effect
to the indemnified party and is performing its obligations under this
Article, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof, other than reasonable costs of investigation.
Notwithstanding the foregoing, in any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
provisions of this Article IX shall survive termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective Participating
Fund, Dreyfus and sub-investment adviser of the Participating Fund harmless
against any tax liability incurred by the Participating Fund under Section
851 of the Code arising from purchases or redemptions by Insurance
Company's General Accounts but only if the Participating Fund provides
prior written notice to the Insurance Company that any such purchase or
redemption may cause the Participating Fund to incur tax liability under
Section 851 .
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or the
Participating Fund at any time from the date hereof upon 180 days' notice,
unless a shorter time is agreed to by the respective Participating Fund and
Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company, if
shares of that Participating Fund are not reasonably available to meet the
requirements of the Contracts as determined by Insurance Company. Prompt
notice of election to terminate shall be furnished by Insurance Company,
said termination to be effective ten days after receipt of notice unless
the Participating Fund makes available a sufficient number of shares to
meet the requirements of the Contracts within said ten-day period;
c. As to a Participating Fund, at the option of Insurance Company, upon the
institution of formal proceedings against that Participating Fund by the
Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in Insurance Company's reasonable judgment, materially impair
that Participating Fund's ability to meet and perform the Participating
Fund's obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by Insurance Company with said termination to
be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating Fund,
upon the institution of formal proceedings against Insurance Company by the
Commission, National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in the Participating Fund's reasonable judgment, materially
impair Insurance Company's ability to meet and perform Insurance Company's
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by such Participating Fund with said termination to be
effective upon receipt of notice;
e. As to a Participating Fund, at the option of that Participating Fund, if
the Participating Fund shall determine, in its sole judgment reasonably
exercised in good faith, that Insurance Company has suffered a material
adverse change in its business or financial condition or is the subject of
material adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact upon the
business and operation of that Participating Fund or Dreyfus, such
Participating Fund shall notify Insurance Company in writing of such
determination and its intent to terminate this Agreement, and after
considering the actions taken by Insurance Company and any other changes in
circumstances since the giving of such notice, such determination of the
Participating Fund shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination;
f. As to a Participating Fund, upon termination of the Investment Advisory
Agreement between that Participating Fund and Dreyfus or its successors
unless Insurance Company specifically approves the selection of a new
Participating Fund investment adviser. Such Participating Fund shall
promptly furnish notice of such termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating Fund's
shares are not registered, issued or sold in accordance with applicable
federal law, or such law precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by Insurance Company.
Termination shall be effective immediately as to that Participating Fund
only upon such occurrence without notice;
h. At the option of a Participating Fund upon a determination by its Board
in good faith that it is no longer advisable and in the best interests of
shareholders of that Participating Fund to continue to operate pursuant to
this Agreement. Termination pursuant to this Subsection (h) shall be
effective upon notice by such Participating Fund to Insurance Company of
such termination;
i. At the option of a Participating Fund if the Contracts cease to qualify
as annuity contracts or life insurance policies, as applicable, under the
Code, or if such Participating Fund reasonably believes that the Contracts
may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
k. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law; or
l. Upon assignment of this Agreement, unless made with the written consent
of every other non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this Agreement.
Any termination of this Agreement shall not affect the operation of Article
IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof, each Participating Fund and Dreyfus may, at the option of the
Insurance Company , continue to make available additional shares of that
Participating Fund, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts or Insurance Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in that Participating
Fund, redeem investments in that Participating Fund and/or invest in that
Participating Fund upon the making of additional purchase payments under
the Existing Contracts. In the event of a termination of this Agreement
pursuant to Section 10.2 hereof, Insurance Company, as promptly as is
practicable under the circumstances, shall notify Participating Fund and
Dreyfus whether Insurance Company desires to have that Participating Fund's
shares available after such termination. If such Participating Fund shares
continue to be made available after such termination, the provisions of
this Agreement shall remain in effect and thereafter either of that
Participating Fund or Insurance Company may terminate the Agreement as to
that Participating Fund, as so continued pursuant to this Section 10.3,
upon prior written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but, if given by the
Participating Fund, need not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall not be
deemed a termination as to any other Participating Fund unless Insurance
Company or such other Participating Fund, as the case may be, terminates
this Agreement as to such other Participating Fund in accordance with this
Article X.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the addition
or deletion of any Participating Fund as specified in Exhibit A, shall be
made by agreement in writing between Insurance Company and each respective
Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate parties at the following
addresses:
Insurance Company: Cova Financial Services Life Insurance Company
One Tower Lane, Suite 300
Oakbrook Terrace, IL 60181
Attn: General Counsel
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue
New York, New York 10166
Attn: Vice President and Assistant Secretary
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: General Counsel
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10038-4982
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the addresses
as evidenced by the return receipt.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any director, trustee,
officer or shareholder of the Fund individually. It is agreed that the
obligations of the Funds are several and not joint, that no Fund shall be
liable for any amount owing by another Fund and that the Funds have
executed one instrument for convenience only.
13.2 Each Participating Fund and Insurance Company represents and warrants that
the computer systems which it will use in performing its duties under this
Agreement perform all date related functions in respect of dates prior to
the year 1999 accurately, and will perform all such functions in respect of
dates during and after the year 1999 with the same accuracy.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
duly executed and attested as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
By:
Its:
Attest:_____________________
DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS STOCK INDEX
FUND)
By:
Its:
Attest:_____________________
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
By:
Its:
Attest:_____________________
DREYFUS VARIABLE INVESTMENT FUND
By:
Its:
Attest:_____________________
DREYFUS INVESTMENT PORTFOLIOS
By:
Its:
Attest:_____________________
</TABLE>
EXHIBIT A
LIST OF PARTICIPATING FUNDS
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio
Disciplined Stock Portfolio
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this day of 1999 (the "Agreement") by and
among Cova Financial Services Life Insurance Company, organized under the laws
of the State of Missouri (the "Company"), on behalf of itself and each separate
account of the Company named in Schedule A to this Agreement, as may be amended
from time to time (each account referred to as the "Account" and collectively as
the "Accounts"); INVESCO Variable Investment Funds, Inc., an open-end management
investment company organized under the laws of the State of Maryland (the
"Fund"); INVESCO Funds Group, Inc., a corporation organized under the laws of
the State of Delaware and investment adviser to the Fund (the "Adviser"); and
INVESCO Distributors, Inc., a corporation organized under the laws of the State
of Delaware and principal underwriter/distributor of the Fund (the
"Distributor).
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company, as depositor, has established the Accounts to serve as
investment vehicles for certain variable annuity contracts and variable life
insurance policies and funding agreements offered by the Company set forth on
Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of the State of Missouri, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order for
the shares of the Fund. For purposes of this Section 1.1, the Company will
be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee will constitute receipt by the Fund; provided
that the Fund receives notice of such order by 11:00 a.m. Eastern Time on
the next following business day. "Business Day" will mean any day on which
the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission (the "Commission"). The Fund may net the notice of
redemptions it receives from the Company under Section 1.3 of this
Agreement against the notice of purchases it receives from the Company
under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt by
the Fund of the payment, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.3, the Company will be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by
such designee will constitute receipt by the Fund; provided the Fund
receives notice of such requests for redemption by 11:00 a.m. Eastern Time
on the next following Business Day. Payment will be made in federal funds
transmitted by wire to the Company's account as designated by the Company
in writing from time to time, on the same Business Day the Fund receives
notice of the redemption order from the Company. After consulting with the
Company, the Fund reserves the right to delay payment of redemption
proceeds, but in no event may such payment be delayed longer than the
period permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Fund will not bear any responsibility whatsoever for
the proper disbursement or crediting of redemption proceeds; the Company
alone will be responsible for such action. If notification of redemption is
received after 11:00 Eastern Time, payment for redeemed shares will be made
on the next following Business Day. The Fund may net the notice of
purchases it receives from the Company under Section 1.1 of this Agreement
against the notice of redemptions it receives from the Company under this
Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days
on which the Fund calculates its Designated Portfolio net asset value
pursuant to rules of the Commission; provided, however, that the Board of
Directors of the Fund (the "Fund Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Fund
Board, acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests of
the shareholders of such Portfolio.
1.5 The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, qualified pension and
retirement plans or such other persons as are permitted under Section
817(h)(4) of the Internal Revenue Code of 1986, as amended, (the "Code"),
and regulations promulgated thereunder, the sale to which will not impair
the tax treatment currently afforded the Contracts. No shares of any
Portfolio will be sold directly to the general public.
1.6 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, and VI of this Agreement are in effect to govern such
sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus. 1.8 Issuance and transfer of the
Fund's shares will be by book entry only. Stock certificates will not be
issued to the Company or to any Account. Purchase and redemption orders for
Fund shares will be recorded in an appropriate title for each Account or
the appropriate sub-account of each Account.
1.9 The Fund will furnish same day notice (by facsimile) to the Company of the
declaration of any income, dividends or capital gain distributions payable
on each Designated Portfolio's shares. The Company hereby elects to receive
all such dividends and distributions as are payable on the Portfolio shares
in the form of additional shares of that Portfolio at the ex-dividend date
net asset values. The Company reserves the right to revoke this election
and to receive all such dividends and distributions in cash. The Fund will
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10 The Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily basis as
soon as reasonably practical after the net asset value per share is
calculated and will use its best efforts to make such net asset value per
share available by 6:30 p.m., Eastern Time, each business day. In the event
the Fund is unable to meet the 6:30 p.m. time stated herein, it shall
provided additional time for the Company to place orders for the purchase
and redemption of shares. Such additional time shall equal the additional
time which the Fund takes to make the net asset value available to the
Company. Notwithstanding the foregoing, such purchase or redemption orders
shall not be placed by Company later than 12:30 p.m. Eastern Time on the
Business Day next following receipt of such order by Company. If the Fund
provides the Company materially incorrect net asset value per share
information (as determined under SEC guidelines), the Company shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gain information shall be reported to the Company upon discovery by the
Fund. Furthermore, the Distributor shall be liable for the reasonable
administrative costs incurred by the Company in relation to the correction
of any material error. Administrative costs shall include reasonable
allocation of staff time, costs of outside service providers, printing and
postage.
ARTICLE II REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are exempt
from registration thereunder, and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account as a separate account under the laws
of the State of Missouri and that each Account is or will be registered as
a unit investment trust in accordance with the provisions of the 1940 Act
to serve as a segregated investment account for the Contracts, or is exempt
from registration thereunder, and that it will maintain such registration
for so long as any Contracts are outstanding, as applicable. The Company
will amend the registration statement under the 1933 Act for the Contracts
and the registration statement under the 1940 Act for the Account from time
to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company
will register and qualify the Contracts for sale in accordance with the
securities laws of the various states only if and to the extent deemed
necessary by the Company.
2.2 The Company represents that the Contracts are currently and at the time of
issuance will be treated as annuity contracts and/or life insurance
policies (as applicable) under applicable provisions of the Code, and that
it will make every effort to maintain such treatment and that it will
notify the Fund and the Adviser immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of the
Designated Portfolio(s) with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with
such plans.
2.4 The Fund represents and warrants that shares of the Designated Portfolio(s)
sold pursuant to this Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with applicable law and that the
Fund is and will remain registered as an open-end management investment
company under the 1940 Act for as long as such shares of the Designated
Portfolio(s) are sold. The Fund will amend the registration statement for
its shares under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its shares. The Fund
will register and qualify the shares of the Designated Portfolio(s) for
sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with any
applicable state insurance laws or regulations as they may apply to the
investment objectives, policies and restrictions of the Portfolios, as they
may apply to the Fund, to the extent specifically requested in writing by
the Company. If the Fund cannot comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Fund makes no
other representation as to whether any aspect of its operations (including,
but not limited to, fees and expenses, and investment policies) complies
with the insurance laws or regulations of any state. The Company represents
that it will use its best efforts to notify the Fund of any restrictions
imposed by state insurance laws that may become applicable to the Fund as a
result of the Accounts' investments therein. The Fund and the Adviser agree
that they will furnish the information required by state insurance laws to
assist the Company in obtaining the authority needed to issue the Contracts
in various states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the directors of its
Fund Board, a majority of whom are not "interested" persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in
all material respects with applicable provisions of the 1940 Act.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at
all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended,
and will remain duly registered under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
1.10 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws, and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and serves as
principal underwriter/distributor of the Funds and that it will perform its
obligations for the Fund in accordance in all material respects with the
laws of the State of Delaware and any applicable state and federal
securities laws.
1.11 The Fund, the Adviser and the Distributor represents and warrants to the
Company that each has a Year 2000 compliance program in existence and that
each reasonably intends to be Year 2000 compliant so as to be able perform
all of the services and/or obligations contemplated by or under this
Agreement without interruption. The Fund, the Adviser, and the Distributor
shall immediately notify the Company if it determines that it will be
unable perform all of the services and/or obligations contemplated by or
under this Agreement in a manner that is Year 2000 compliant.
ARTICLE III - FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether intentional
or in good faith or otherwise) to comply with the requirements of
Subchapter M of the Code or the diversification requirements of Section
817(h) of the Code may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. The Fund and the Adviser
further acknowledge that any such failure may result in costs and expenses
being incurred by the Company in obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Fund or as well as fees and expenses of
legal counsel and other advisors to the Company and any federal income
taxes, interest or tax penalties incurred by the Company in connection with
any such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it
will maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts under the Code and the regulations issued thereunder;
including, but not limited to, that the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended from
time to time, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and with Section 817(d) of
the Code, relating to the definition of a variable contract, and any
amendments or other modifications to such Section or Regulation. The Fund
will notify the Company immediately upon having a reasonable basis for
believing that the Fund or a Portfolio thereunder has ceased to comply with
the diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the event of
a breach of this representation by the Fund, it will take all reasonable
steps to adequately diversify the Fund so as to achieve compliance within
the grace period afforded by Treasury Regulation 1.817-5.
2.4 The Adviser agrees to provide the Company with a certificate or statement
indicating compliance by each Portfolio of the Fund with Section 817(h) of
the Code, such certificate or statement to be sent to the Company no later
than thirty (30) days following the end of each calendar quarter.
ARTICLE IV PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current Fund
prospectus and any supplements thereto for the Designated Portfolio(s) as
the Company may reasonably request for distribution, at the Fund's expense,
to Contract owners at the time of Contract fulfillment and confirmation. To
the extent that the Designated Portfolio(s) are one or more of several
Portfolios of the Fund, the Fund shall bear the cost of providing the
Company only with disclosure related to the Designated Portfolio(s). The
Fund will provide, at the Fund's expense, as many copies of said prospectus
as necessary for distribution, at the Fund's expense, to existing Contract
owners. The Fund will provide the copies of said prospectus to the Company
or to its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will bill the Fund for the reasonable cost of
such distribution. If requested by the Company, in lieu thereof, the Fund
will provide such documentation, including a final copy of a current
prospectus set in type at the Fund's expense, and other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Fund prospectus is amended more frequently) to have the
new prospectus for the Contracts, prospectuses of other funds available
under the Contract, and the Fund's new prospectus printed together, in
which case the Fund agrees to pay its proportionate share of reasonable
expenses directly related to the required disclosure of information
concerning the Fund. The Fund will, upon request, provide the Company with
a copy of the Fund's prospectus through electronic means to facilitate the
Company's efforts to provide Fund prospectuses via electronic delivery, in
which case the Fund agrees to pay its proportionate share of reasonable
expenses related to the required disclosure of information concerning the
Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide the Company, at the Fund's expense, with as many copies
of the SAI and any supplements thereto as the Company may reasonably
request for distribution, at the Fund's expense, to prospective Contract
owners and applicants. To the extent that the Designated Portfolio(s) are
one or more of several Portfolios of the Fund, the Fund shall bear the cost
of providing the Company only with disclosure related to the Designated
Portfolio(s). The Fund will provide, at the Fund's expense, as many copies
of said SAI as necessary for distribution, at the Fund's expense, to any
existing Contract owner who requests such statement or whenever state or
federal law requires that such statement be provided. The Fund will provide
the copies of said SAI to the Company or to its mailing agent. The Company
will distribute the SAI as requested or required and will bill the Fund for
the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to shareholders/Contract
owners and other permissible communications to shareholders/Contract owners
in such quantity as the Company will reasonably require. The Company will
distribute this proxy material, reports and other communications to
existing Contract owners and will bill the Fund for the reasonable cost of
such distribution.
3.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in the Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Designated Portfolios held in the Account for which
no timely instructions have been received, in the same proportion as
shares of such Designated Portfolio for which instructions have been
received from the Company's Contract owners, so long as and to the
extent that the Commission continues to interpret the 1940 Act to
require pass-through voting privileges for variable Contract owners.
The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by
law. The Company will be responsible for assuring that the Accounts
participating in the Fund calculates voting privileges in a manner
consistent with all legal requirements, including the Proxy Voting
Procedures set forth in Schedule C and the Mixed and Shared Funding
Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the Commission may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Fund currently intends,
to comply with Section 16(c) of the 1940 Act (although the Fund is not one
of the trusts described in Section 16(c) of the 1940 Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Commission's interpretation of the requirements
of Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE V SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or the
Adviser, each piece of sales literature or other promotional material in
which the Fund or the Adviser is named, at least ten (10) Business Days
prior to its use. No such material will be used if the Fund or the Adviser
reasonably objects to such use within five (5) Business Days after receipt
of such material.
5.2 The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or SAI for Fund shares,
as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in published reports for the Fund which are in the public domain
or approved by the Fund or the Adviser for distribution, or in sales
literature or other material provided by the Fund or by the Adviser, except
with permission of the Fund or the Adviser. The Fund and the Adviser agree
to respond to any request for approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to the
Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is named,
at least ten (10) Business Days prior to its use. No such material will be
used if the Company reasonably objects to such use within five (5) Business
Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI
for the Contracts, as such registration statement, prospectus and SAI may
be amended or supplemented from time to time, or in published reports for
each Account or the Contracts which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or
other material provided by the Company, except with permission of the
Company. The Company agrees to respond to any request for approval on a
prompt and timely basis.
5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Fund or its shares, within a reasonable time
after filing of each such document with the Commission or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for voting
instructions, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all
amendments to any of the above, that relate to the Contracts or each
Account, contemporaneously with the filing of each such document with the
Commission or the NASD (Except that with respect to post-effective
amendments to such prospectuses and SAIs and sales literature and
promotional material, only those prospectuses and SAIs and sales literature
and promotional material that relate to or refer to the Fund will be
provided.) In addition, the Company will provide to the Fund at least one
complete copy of (i) a registration statement that relates to the Contracts
or each Account, containing representative and relevant disclosure
concerning the Fund; and (ii) any post-effective amendments to any
registration statements relating to the Contracts or such Account that
refer to or relate to the Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media,
(i.e., on-line networks such as the Internet or other electronic
messages)), sales literature (i.e., any written communication distributed
or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933
Act or the 1940 Act.
5.8 The Fund and the Adviser hereby consent to the Company's use of the names
INVESCO, AMVESCAP and INVESCO Funds Group, Inc., as well as the names of
the Designated Portfolios set forth in Schedule B of this Agreement, in
connection with marketing the Contracts, subject to the terms of Sections
5.1 and 5.2 of this Agreement. The Fund and the Adviser hereby consent to
the use of any logo or mark used by the Fund or Adviser, subject to the
Fund's and/or the Adviser's approval of such use and in accordance with
reasonable requirements of the Fund or the Adviser. Such consent will
terminate with the termination of this Agreement. The Company agrees and
acknowledges that either of the Fund, the Adviser or the Distributor are
the owner of the name, logo or mark and that all use of any designation
comprised in whole or in part of the name, logo or mark under this
Agreement shall inure to the benefit of the Fund, Adviser and/or the
Distributor.
4.9 The Fund, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is intended
for use only by brokers or agents selling the Contracts is properly marked
as "Not For Use With The Public" and that such information is only so used.
ARTICLES VI FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under this
Agreement, except as provided below: (a) if the Fund or any Designated
Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then, subject to obtaining any
required exemptive orders or other regulatory approvals, the Fund may make
payments to the Company or to the underwriter for the Contracts if and in
such amounts agreed to by the Fund in writing; (b) the Fund may pay fees to
the Company for administrative services provided to Contract owners that
are not primarily intended to result in the sale of shares of the
Designated Portfolio or of underlying Contracts.
5.2 All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and registered
in accordance with applicable federal law and, to the extent deemed
advisable by the Fund, in accordance with applicable state law, prior to
sale. The Fund will bear the expenses for the cost of registration and
qualification of the Fund's shares, including without limitation, the
preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2
Notices and payment of all applicable registration or filing fees with
respect to shares of the Fund; preparation and filing of the Fund's
prospectus, SAI and registration statement, proxy materials and reports;
typesetting the Fund's prospectus; typesetting and printing proxy materials
and reports to Contract owners (including the costs of printing a Fund
prospectus that constitutes an annual report); the preparation of all
statements and notices required by any federal or state law; all taxes on
the issuance or transfer of the Fund's shares; any expenses permitted to be
paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1
under the 1940 Act; and other costs associated with preparation of
prospectuses and SAIs for the Designated Portfolios in electronic or
typeset format, as well as any distribution expenses as set forth in
Article III of this Agreement.
5.3 In the event the Fund intends to terminate the existence of a Portfolio(s),
the parties shall negotiate in good faith to determine a fair and equitable
allocation between the parties of all expenses incurred in connection with
any fund substitution undertaken by the Company as a result of such
termination. Such expenses shall include but not be limited to legal,
accounting and brokerage costs.
ARTICLE VII MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief from
the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act
and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity separate accounts and variable life insurance separate accounts of
both affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate account
context (the "Mixed and Shared Funding Exemptive Order"). The parties to
this Agreement agree that the conditions or undertakings specified in the
Mixed and Shared Funding Exemptive Order and that may be imposed on the
Company, the Fund and/or the Adviser by virtue of the receipt of such order
by the Commission, will be incorporated herein by reference, and such
parties agree to comply with such conditions and undertakings to the extent
applicable to each such party.
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the Contract owners
of all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including, but not limited to:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by Participating Insurance Companies or by variable
annuity and variable life insurance Contract owners; or (f) a decision by
an insurer to disregard the voting instructions of Contract owners. The
Fund Board will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof. A
majority of the Fund Board will consist of persons who are not "interested"
persons of the Fund.
7.3 The Company will report any potential or existing conflicts of which it is
aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Fund Board whenever Contract owner voting instructions are to be
disregarded. The Fund Board will record in its minutes, or other
appropriate records, all reports received by it and all action with regard
to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of its
disinterested directors, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies will, at their
expense and to the extent reasonably practicable (as determined by a
majority of the disinterested directors), take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be submitted to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity Contract owners or variable life insurance Contract owners
of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such disregard
of voting instructions could conflict with the majority of Contract owner
voting instructions, and the Company's judgment represents a minority
position or would preclude a majority vote, the Company may be required, at
the Fund's election, to withdraw the affected sub-account of the Account's
investment in the Fund and terminate this Agreement with respect to such
sub-account; provided, however, that such withdrawal and termination will
be limited to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of the
Fund Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within six
(6) months after the Fund gives written notice to the Company that this
provision is being implemented. Until the end of such six-month period the
Adviser and Fund will, to the extent permitted by law and any exemptive
relief previously granted to the Fund, continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the
Fund.
7.6 If an irreconcilable conflict arises because a particular state insurance
regulator's decision applicable to the Company conflicts with the majority
of other state insurance regulators, then the Company will withdraw the
affected sub-account of the Account's investment in the Fund and terminate
this Agreement with respect to such sub-account; provided, however, that
such withdrawal and termination will be limited to the extent required by
the foregoing irreconcilable material conflict as determined by a majority
of the disinterested directors of the Fund Board. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Advisor and Fund will, to the
extent permitted by law and any exemptive relief previously granted to the
Fund, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of
the disinterested members of the Fund Board will determine whether any
proposed action adequately remedies any irreconcilable material conflict,
but in no event, other than as specified in Section 7.4, will the Fund be
required to establish a new funding medium for the Contracts. The Company
will not be required by Section 7.4 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict.
7.7 The Company will at least annually submit to the Fund Board such reports,
materials or data as the Fund Board may reasonably request so that the Fund
Board may fully carry out the duties imposed upon it as delineated in the
Mixed and Shared Funding Exemptive Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the Fund
Board.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those contained in the Mixed
and Shared Funding Exemptive Order, then: (a) the Fund and/or the
Participating Insurance Companies, as appropriate, will take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b)
Sections 4.4, 4.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement will
continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as
so amended or adopted.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Distributor, and each person, if any, who controls or is
associated with the Fund, the Adviser, or the Distributor within the
meaning of such terms under the federal securities laws and any
director, trustee, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or actions in respect thereof (including
reasonable legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(1) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus or SAI for the Contracts or
contained in the Contracts or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated or necessary to make such
statements not misleading in light of the circumstances in which
they were made; provided that this agreement to indemnify will
not apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund, the Adviser, of the
Distributor for use in the registration statement, prospectus or
SAI for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund, or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect
to the sale or distribution of the Contracts or Fund shares; or
(3) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund (or amendment or supplement) or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make such statements not
misleading in light of the circumstances in which they were made,
if such a statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on behalf
of the Company or persons under its control; or
(4) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(5) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.1(a) if
such loss, claim, damage, liability or action is due to the willful
misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations or duties under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or
sale of the Fund shares or the Contracts or the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold harmless the
Company and each person, if any, who controls or is associated with
the Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 8.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the
written consent of the Adviser and Distributor) or actions in respect
thereof (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or SAI for the Fund or sales
literature or other promotional material of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated or necessary to
make such statements not misleading in light of the circumstances
in which they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party if such
statement or omission of such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Adviser or Distributor by or on behalf of the
Company for use in the registration statement, prospectus or SAI
for the Fund or in sales literature of the Fund (or any amendment
or supplement thereto) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Fund registration statements,
prospectuses or statements of additional information or sales
literature or other promotional material for the Contracts or of
the Fund, or any amendment or supplement to the foregoing, not
supplied by the Distributor, or Adviser or persons under the
control of the Adviser or the Distributor respectively) or
wrongful conduct of the Adviser or the Distributor or persons
under the control of the Distributor, or Adviser respectively,
with respect to the sale or distribution of the Contracts or Fund
shares; or
(3) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI or sales literature or other promotional material
covering the Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein a material
fact required to be stated or necessary to make such statement or
statements not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Distributor or Adviser, or persons
under the control of the Adviser or the Distributor; or
(4) arise as a result of any failure by the Distributor or the
Adviser to provide the services and furnish the materials under
the terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Distributor in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or the
Distributor (including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements of Subchapter
M of the Code specified in Article III, Section 3.2 of this
Agreement and the diversification requirements specified in
Article III, Section 3.3 of this Agreement, as described more
fully in Section 8.5 below);
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Adviser
or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a) if
such loss, claim, damage, liability or action is due to the willful
misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's
reckless disregard or its obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser and the
Distributor of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the operation
of the Account. 8.3Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent of
the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or action in
respect thereof (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements, are related to the operations of
the Fund and:
(1) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund (including a failure,
whether intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code specified
in Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III,
Section 3.3 of this Agreement as described more fully in
Section 8.5 below); or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per share
or dividend or capital gain distribution rate; except to the
extent provided in Sections 8.3(b) and 8.4 hereof.
This indemnification will be in addition to any liability that the Fund
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a) if
such loss, claim, damage, liability or action is due to the willful
misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations and duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under
this Article VIII ("Indemnified Party" for the purpose of this Section 8.4)
unless such Indemnified Party will have notified the Indemnifying Party in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim will have been served
upon such Indemnified Party (or after such party will have received notice
of such service on any designated agent), but failure to notify the
Indemnifying Party of any such claim will not relieve the Indemnifying
Party from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of the
indemnification provision of this Article VIII, except to the extent that
the failure to notify results in the failure of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged solely as a
result of failure to give such notice. In case any such action is brought
against the Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The Indemnifying
Party also will be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the
Indemnifying Party to the Indemnified Party of the Indemnifying Party's
election to assume the defense thereof, the Indemnified Party will bear the
fees and expenses of any additional counsel retained by it, and the
Indemnifying Party will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation, unless: (a) the Indemnifying Party and the
Indemnified Party will have mutually agreed to the retention of such
counsel; or (b) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
The Indemnifying Party will not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. A successor by law
of the parties to this Agreement will be entitled to the benefits of the
indemnification contained in this Article VIII. The indemnification
provisions contained in this Article VIII will survive any termination of
this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether intentional
or in good faith or otherwise) to comply with the diversification
requirements specified in Article III, Section 3.3 of this Agreement may
result in the Contracts not being treated as variable contracts for federal
income tax purposes, which would have adverse tax consequences for Contract
owners and could also adversely affect the Company's corporate tax
liability. Accordingly, without in any way limiting the effect of Sections
8.2(a) and 8.3(a) hereof and without in any way limiting or restricting any
other remedies available to the Company, the Fund, the Adviser and the
Distributor will pay on a joint and several basis all costs associated with
or arising out of any failure, or any anticipated or reasonably foreseeable
failure, of the Fund or any Portfolio to comply with Section 3.3 of this
Agreement, including all costs associated with correcting or responding to
any such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment company
as a funding medium for the Contracts and/or the costs of obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Fund or Portfolio
(including but not limited to an order pursuant to Section 26(b) of the
1940 Act); fees and expenses of legal counsel and other advisors to the
Company and any federal income taxes or tax penalties (or "toll charges" or
exactments or amounts paid in settlement) incurred by the Company in
connection with any such failure or anticipated or reasonably foreseeable
failure. Such indemnification and reimbursement obligation shall be in
addition to any other indemnification and reimbursement obligations of the
Fund, the Adviser and/or the Distributor under this Agreement.
ARTICLE IX APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof will be interpreted and
construed in accordance therewith.
ARTICLE X TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to
one, some or all of the Portfolios, upon six (6) month's advance
written notice to the other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise
agreed in a separate written agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the Portfolio are
not reasonably available to meet the requirements of the Contracts as
determined in good faith by the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by Company; or
(d) at the option of the Fund, upon written notice to the other parties,
upon institution of formal proceedings against the Company by the
NASD, the Commission, the Insurance Commission of any state or any
other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the administration
of the Contracts, the operation of the Account, or the purchase of the
Fund shares, provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the Fund or
the Adviser by the NASD, the Commission or any state securities or
insurance department or any other regulatory body, provided that the
Company determines in its sole judgment, exercised in good faith, that
any such proceeding would have a material adverse effect on the Fund's
or the Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably and in good faith
believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to meet the
diversification requirements specified in Section 3.3 hereof or if the
Company reasonably and in good faith believes the Fund may fail to
meet such requirements; or
(h) at the option of any party to this Agreement, upon written notice to
the other parties, upon another party's material breach of any
provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that either the Fund or the Adviser
has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject
of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company, such
termination to be effective sixty (60) days' after receipt by the
other parties of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or Adviser
respectively, determines in its sole judgment exercised in good faith
that the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Fund or the Adviser, such termination to be
effective sixty (60) days' after receipt by the other parties of
written notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any necessary
regulatory approvals and/or the vote of the Contract owners having an
interest in the Account (or any sub-account) to substitute the shares
of another investment company for the corresponding Portfolio's shares
of the Fund in accordance with the terms of the Contracts for which
those Portfolio shares had been selected to serve as the underlying
portfolio. The Company will give sixty (60) days' prior written notice
to the Fund of the date of any proposed vote or other action taken to
replace the Fund's shares or of the filing of any required regulatory
approval(s); or
(1) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested Fund
Board members, that an irreconcilable material conflict exists among
the interests of: (1) all Contract owners of variable insurance
products of all separate accounts; or (2) the interests of the
Participating Insurance Companies investing in the Fund as set forth
in Article VII of this Agreement; or
(m) at the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or state law.
Termination will be effective immediately upon such occurrence without
notice.
10.2 Notice Requirement
(a) No termination of this Agreement, except a termination under Section
10.1 (m) of this Agreement, will be effective unless and until the
party terminating this Agreement gives prior written notice to all
other parties of its intent to terminate, which notice will set forth
the basis for the termination.
(b) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice will be given in
advance of the effective date of termination as required by such
provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the Adviser
and the Distributor will, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts will be permitted to reallocate investments in the Designated
Portfolios (as in effect on such date), redeem investments in the
Designated Portfolios and/or invest in the Designated Portfolios upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.3 will not apply to any terminations
under Article VII and the effect of such Article VII terminations will be
governed by Article VII of this Agreement.
9.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be
affected by any termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement also will survive and
not be affected by any termination of this Agreement.
ARTICLE XI NOTICES
Any notice will be deemed duly given when sent by registered or certified
mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing
to the other parties.
If to the Company:
Cova Financial Services Life Insurance Company
One Tower Lane
Suite 3000
Oakbrook Terrace IL 60181
Attn: General Counsel
If to the Fund:
INVESCO Variable Investment Funds, Inc.
7800 E. Union Avenue
Denver, Colorado 80217-3706
Attn: General Counsel
If to the Adviser:
INVESCO Funds Group, Inc.
7800 E. Union Avenue
Denver, Colorado 80217-3706
Attn: General Counsel
If to the Distributor:
INVESCO Distributors, Inc.
7800 E. Union Avenue
Denver, Colorado 80217-3706
Attn: General Counsel
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the
directors, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the customers
of the Company or any of its affiliates (collectively the "Protected
Parties" for purposes of this Section 12.2), information maintained
regarding those customers, and all computer programs and procedures
developed by the Protected Parties or any of their employees or agents in
connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties. The Fund and
the Adviser agree that if they come into possession of any list or
compilation of the identities of or other information about the Protected
Parties' customers, or any other property of the Protected Parties, other
than such information as may be independently developed or compiled by the
Fund or the Adviser from information supplied to them by the Protected
Parties' customers who also maintain accounts directly with the Fund or the
Adviser, the Fund and the Adviser will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Company' s prior written
consent; or (b) as required by law or judicial process. The Fund and the
Adviser acknowledge that any breach of the agreements in this Section 12.2
would result in immediate and irreparable harm to the Protected Parties for
which there would be no adequate remedy at law and agree that in the event
of such a breach, the Protected Parties will be entitled to equitable
relief by way of temporary and permanent injunctions, as well as such other
relief as any court of competent jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will
not be affected thereby.
11.6 This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
11.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal law.
11.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
12.10Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or board action, as applicable, by
such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with
its terms.
12.11The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Accounts or the Portfolios of the Fund or other applicable terms of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: ______________________________
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By: ______________________________
Ronald L. Grooms
Treasurer
INVESCO FUNDS GROUP, INC.
By: ______________________________
Ronald L. Grooms
Senior Vice President
INVESCO DISTRIBUTORS, INC.
By: ______________________________
Ronald L. Grooms
Senior Vice President
SCHEDULE A
The following Separate Accounts and Associated Contracts of Cova Financial
Services Life Insurance Company are permitted in accordance with the provisions
of this Agreement to invest in Portfolios of the Fund shown in Schedule B:
Contracts Funded by Separate Account Name of Separate Account
- ------------------------------------ ------------------------
Navigator Variable Annuity Cova Variable Annuity Account One
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
INVESCO VIF Dynamics Fund
INVESCO VIF High Yield Fund
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the Agreement
to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
* name (legal name as found on account registration)
* address
* Fund or account number
* coding to state number of units
* individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
12. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
* Voting Instruction Card(s)
* one proxy notice and statement (one document)
* return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
* "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
* cover letter - optional, supplied by Company and reviewed and approved
in advance by the Fund
12. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
13. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but NOT including,) the meeting,
counting backwards.
14. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
15. Signatures on Card checked against legal name on account registration which
was printed on the Card. Note: For Example, if the account registration is
under "John A. Smith, Trustee," then that is the exact legal name to be
printed on the Card and is the signature needed on the Card.
16. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
17. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
18. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
19. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund
may request an earlier deadline if reasonable and if required to calculate
the vote in time for the meeting.
20. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
21. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
22. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
PARTICIPATION AGREEMENT
AMONG
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
AND
PIMCO FUNDS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the 15th day of November, 1999 by and among
Cova Financial Services Life Insurance Company, (the "Company"), a Missouri life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each account hereinafter referred to as the "Account"), PIMCO
Variable Insurance Trust (the "Fund"), a Delaware business trust, and PIMCO
Funds Distributors LLC (the "Underwriter"), a Delaware limited liability
company.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (the "SEC") granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company (the "Adviser"), which
serves as investment adviser to the Fund, is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so instructed,
the Underwriter to make available to the Company for purchase on behalf of the
Account Fund shares of those Designated Portfolios selected by the Underwriter.
Pursuant to such authority and instructions, and subject to Article X hereof,
the Underwriter agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Portfolios listed on Schedule A to
this Agreement, such purchases to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Fund
series (other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the
Underwriter may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, suspension or termination is necessary in the best
interests of the shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or fractional
Designated Portfolio shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Fund shares attributable to Contract owners except in the circumstances
permitted in Section 10.3 of this Agreement, and (ii) the Fund may delay
redemption of Fund shares of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund for the
limited purpose of receiving purchase and redemption requests on behalf of
the Account (but not with respect to any Fund shares that may be held in
the general account of the Company) for shares of those Designated
Portfolios made available hereunder, based on allocations of amounts to the
Account or subaccounts thereof under the Contracts and other transactions
relating to the Contracts or the Account. Receipt of any such request (or
relevant transactional information therefor) on any day the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the SEC (a "Business Day") by the Company as
such limited agent of the Fund prior to the time that the Fund ordinarily
calculates its net asset value as described from time to time in the Fund
Prospectus (which as of the date of execution of this Agreement is 4:00
p.m. Eastern Time) shall constitute receipt by the Fund on that same
Business Day, provided that the Fund receives notice of such request by
9:00 a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each Designated Portfolio on the same
day that it notifies the Fund of a purchase request for such shares.
Payment for Designated Portfolio shares shall be made in federal funds
transmitted to the Fund by wire to be received by the Fund by 4:00 p.m.
Eastern Time on the day the Fund is notified of the purchase request for
Designated Portfolio shares (unless the Fund determines and so advises the
Company that sufficient proceeds are available from redemption of shares of
other Designated Portfolios effected pursuant to redemption requests
tendered by the Company on behalf of the Account). If federal funds are not
received on time, such funds will be invested, and Designated Portfolio
shares purchased thereby will be issued, as soon as practicable and the
Company shall promptly, upon the Fund's request, reimburse the Fund for any
charges, costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by, the Fund,
or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. Upon
receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the
Fund.
(c) Payment for Designated Portfolio shares redeemed by the Account or the
Company shall be made in federal funds transmitted by wire to the Company
or any other designated person on the next Business Day after the Fund is
properly notified of the redemption order of such shares (unless redemption
proceeds are to be applied to the purchase of shares of other Designated
Portfolios in accordance with Section 1.3(b) of this Agreement), except
that the Fund reserves the right to redeem Designated Portfolio shares in
assets other than cash and to delay payment of redemption proceeds to the
extent permitted under Section 22(e) of the 1940 Act and any Rules
thereunder, and in accordance with the procedures and policies of the Fund
as described in the then current prospectus. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be responsible
for such action.
(d) Any purchase or redemption request for Designated Portfolio shares held
or to be held in the Company's general account shall be effected at the
net asset value per share next determined after the Fund's receipt of
such request, provided that, in the case of a purchase request, payment
for Fund shares so requested is received by the Fund in federal funds
prior to close of business for determination of such value, as defined
from time to time in the Fund Prospectus.
1.4. The Fund shall use its best efforts to make the net asset value per share
for each Designated Portfolio available to the Company by 7:00 p.m. Eastern Time
each Business Day, and in any event, as soon as reasonably practicable after the
net asset value per share for such Designated Portfolio is calculated, and shall
calculate such net asset value in accordance with the Fund's Prospectus. In the
event the Fund is unable to meet the 7:00 p.m. time stated herein, it shall
provide additional time for the Company to place orders on the next Business
Day, as outlined in section 1.3(a), for the purchase and redemption of shares.
Such additional time shall equal the additional time which the Fund takes to
make the net asset value available to the Company. Neither the Fund, any
Designated Portfolio, the Underwriter, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company or
any other Participating Insurance Company to the Fund or the Underwriter.
1.5. The Fund shall furnish notice (by wire or telephone followed by written
confirmation) to the Company as soon as reasonably practicable of any income
dividends or capital gain distributions payable on any Designated Portfolio
shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any Designated
Portfolio shares in the form of additional shares of that Designated Portfolio.
The Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash. The Fund shall notify the Company promptly of the number
of Designated Portfolio shares so issued as payment of such dividends and
distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry only. Stock
certificates will not be issued to the Company or the Account. Purchase and
redemption orders for Fund shares shall be recorded in an appropriate ledger for
the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.8 hereof) and the cash value of the
Contracts may be invested in other investment companies, provided, however, that
until this Agreement is terminated pursuant to Article X, the Company shall
promote the Designated Portfolios on the same basis as other funding vehicles
available under the Contracts.
The Company shall not, without prior notice to the Underwriter (unless
otherwise required by applicable law), take any action to operate the Account as
a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Underwriter (unless
otherwise required by applicable law), induce Contract owners to change or
modify the Fund or change the Fund's distributor or investment adviser.
(d) The Company shall not, without prior notice to the Fund, induce Contract
owners to vote on any matter submitted for consideration by the shareholders of
the Fund in a manner other than as recommended by the Board of Trustees of the
Fund.
1.8. The Underwriter and the Fund shall sell Fund shares only to Participating
Insurance Companies and their separate accounts and to persons or plans
("Qualified Persons") that communicate to the Underwriter and the Fund that they
qualify to purchase shares of the Fund under Section 817(h)(4) of the Internal
Revenue Code of 1986, as amended (the "Code") and the regulations thereunder
without impairing the ability of the Account to consider the portfolio
investments of the Fund as constituting investments of the Account for the
purpose of satisfying the diversification requirements of Section 817(h). The
Underwriter and the Fund shall not sell Fund shares to any insurance company or
separate account unless an agreement complying with Article VI of this Agreement
is in effect to govern such sales, to the extent required. The Company hereby
represents and warrants that it and the Account are Qualified Persons.
1.9 The Fund will provide notice of any material error in calculation of net
asset value per share, dividend or capital gain information of a Designated
Portfolio as soon as reasonably practical after discovery thereof. Any such
notice will state for each day for which an error occurred, the incorrect price,
the correct price, and the reason for the price change. The Fund will make the
Company and the Account whole for any payments or adjustments to the number of
shares in the Account that are reasonably demonstrated to be required as a
result of pricing errors.
ARTICLE II. Representations and Warranties
The Company represents and warrants that the Contracts (a)
are, or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Missouri insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company shall register and qualify the Contracts or
interests therein as securities in accordance with the laws of the various
states only if and to the extent deemed advisable by the Company.
2.2. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with applicable state and federal securities laws and
that the Fund is and shall remain registered under the 1940 Act. The Fund shall
amend the registration statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Fund or the Underwriter.
2.3. The Fund may make payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act. Prior to financing distribution expenses pursuant
to Rule 12b-1, the Fund will have the Board, a majority of whom are not
interested persons of the Fund, formulate and approve a plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund makes no representations as to whether any aspect of its
operations, including, but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states.
2.5. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in all
material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.7. The Fund and the Underwriter represent and warrant that all of their
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.8. The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed or controlled by the Company
dealing with the money and/or securities of the Account are covered by a blanket
fidelity bond or similar coverage for the benefit of the Account, in an amount
not less than $5 million. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company agrees to
hold for the benefit of the Fund and to pay to the Fund any amounts lost from
larceny, embezzlement or other events covered by the aforesaid bond to the
extent such amounts properly belong to the Fund pursuant to the terms of this
Agreement. The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect, and agrees
to notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
The Underwriter shall provide the Company with as many copies
of the Fund's current prospectus (describing only the Designated Portfolios
listed on Schedule A) or, to the extent permitted, the Fund's profiles as the
Company may reasonably request. The Fund shall bear the expense of printing
copies of the current prospectus and profiles for the Contracts that will be
distributed to existing Contract owners, and the Company shall bear the expense
of printing copies of the Fund's prospectus and profiles that are used in
connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus on diskette at the Fund's expense)
and other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus for the Fund is amended) to have
the prospectus for the Contracts and the Fund's prospectus or profile printed
together in one document with other funds available under the Contracts. The
allocation of the expenses of such printing will be governed by Section 5.3 of
this agreement.
3.2. The Fund's prospectus shall state that the current Statement of Additional
Information ("SAI") for the Fund is available, and the Underwriter (or the
Fund), at its expense, shall provide a reasonable number of copies of such SAI
free of charge to the Company for itself and for any owner of a Contract who
requests such SAI.
3.3. The Fund shall provide the Company with information regarding the Fund's
expenses, which information may include a table of fees and related narrative
disclosure for use in any prospectus or other descriptive document relating to a
Contract. The Company agrees that it will use such information in the form
provided. The Company shall provide prior written notice of any proposed
modification of such information, which notice will describe in detail the
manner in which the Company proposes to modify the information, and agrees that
it may not modify such information in any way without the prior consent of the
Fund.
3.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners; and
(iii)vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such portfolio for which
instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Fund shares held in any
segregated asset account in the same proportion as Fund shares of such portfolio
for which voting instructions have been received from Contract owners, to the
extent permitted by law.
3.6. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt and provide
in writing.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material that
the Company develops and in which the Fund (or a Designated Portfolio thereof)
or the Adviser or the Underwriter is named at least 15 Business Days prior to
its intended use. . No such material shall be used unless the Fund or its
designee objects to its use within ten Business Days after receipt of such
material. The Fund or its designee reserves the right to reasonably object to
the continued use of any such sales literature or other promotional material in
which the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named, and no such material shall be used if the Fund or its
designee so object.
4.2. The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund or the Adviser or the
Underwriter in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee or by the Underwriter,
except with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund and the Underwriter, or their designee, shall furnish, or cause to
be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named at least 15 Business Days prior to its intended use. No such
material shall be used unless the Company objects to its use within ten Business
Days after receipt of such material. The Company reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Company and/or its Account is named, and no
such material shall be used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
or the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by the Company or interests therein are not
registered under the 1933 Act), or SAI for the Contracts, as such registration
statement, prospectus, or SAI may be amended or supplemented from time to time,
or in published reports for the Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, promptly after the filing of such document(s)
with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Underwriter any complaints received from the
Contract owners pertaining to the Fund or the Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Designated Portfolio, and of any
material change in the Fund's registration statement, particularly any change
resulting in a change to the registration statement or prospectus for any
Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales literature and other
promotional materials" includes, but is not limited to, any of the following
that refer to the Fund or any affiliate of the Fund: advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Fund or Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing, and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter, or other
resources available to the Underwriter. Currently, no such payments are
contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall see to it that all its shares are registered
and authorized for issuance in accordance with applicable federal law and, if
and to the extent deemed advisable by the Fund, in accordance with applicable
state laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Fund's shares.
5.3. For the initial 12-month period following the effective date of the
agreement, the Fund shall contribute a maximum of $5,000 in aggregate towards
the expenses of the combined printing of the Fund's prospectus to owners of
Contracts issued by the Company to such Contract owners, with any additional
expenses to be borne by the Company. The Company shall bear all printing
expenses of such combined documents where used for distribution to prospective
purchasers. The Fund and the Company may agree at a future date to adjust the
amount contributed by the Fund for expenses described under this Section 5.3
relating to the printing of a combined prospectus for existing Contract owners.
The Fund shall bear the expense of distributing the Fund's proxy materials to
owners of the Contracts.
ARTICLE VI. Diversification and Qualification
The Fund will invest its assets in such a manner as to ensure
that the Contracts will be treated as annuity or life insurance contracts,
whichever is appropriate, under the Code and the regulations issued thereunder
(or any successor provisions). Without limiting the scope of the foregoing, each
Designated Portfolio has complied and will continue to comply with Section
817(h) of the Code and Treasury Regulation ss.1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 1.817-5.
6.2. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will maintain
such qualification (under Subchapter M or any successor or similar provisions)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
6.3. The Company represents that the Contracts are currently, and at the time of
issuance shall be, treated as life insurance or annuity insurance contracts,
under applicable provisions of the Code, and that it will maintain such
treatment, and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII. Potential Conflicts
The following provisions shall apply only upon issuance of the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts, and then only to the extent required under the 1940 Act.
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which it is
aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever Contract owner voting instructions
are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement with respect to each Account; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within six months after the Board informs the Company in writing
that it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Until the
end of the foregoing six month period, the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contract if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemption Order or any
amendment thereto contains terms and conditions different from Sections 3.4,
3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with the Mixed and Shared Funding Exemptive Order,
and Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in the Mixed and Shared Funding
Exemptive Order or any amendment thereto. If and to the extent that Rule 6e-2
and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and the
Underwriter and each of its trustees/directors and officers, and each person, if
any, who controls the Fund or Underwriter within the meaning of Section 15 of
the 1933 Act or who is under common control with the Underwriter (collectively,
the "Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue
statements of any material fact contained in the registration
statement, prospectus (which shall include a written description of a
Contract that is not registered under the 1933 Act), or SAI for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
registration statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or its agents or persons under the Company's
authorization or control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any material failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the qualification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Company; or
(vi) as limited by and in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or SAI or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Fund or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or Fund
shares; or
(iii)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI
or sales literature covering the Contracts, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter to
provide the services and furnish the materials under the terms of this
Agreement (including a failure of the Fund, whether unintentional or
in good faith or otherwise, to comply with the diversification and
other qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
The Company agrees promptly to notify the Underwriter of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Contracts or the operation of the
Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement with the
written consent of the Fund) or litigation (including legal and other expenses)
to which the Indemnified Parties may be required to pay or may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, expenses, damages, liabilities or expenses (or actions in
respect thereof) or settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of California.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
If, in the future, the Mixed and Shared Funding Exemptive Order should no longer
be necessary under applicable law, then Article VII shall no longer apply.
ARTICLE X. Termination
This Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party, for any reason with respect to some or all
Designated Portfolios, by three (3) months advance written notice
delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter based upon the Company's determination that shares of the
Fund are not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter in the event any of the Designated Portfolio's shares are
not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by the
NASD, the SEC, the Insurance Commissioner or like official of any
state or any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Fund's shares;
provided, however, that the Fund or Underwriter determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Company to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the
NASD, the SEC, or any state securities or insurance department or any
other regulatory body; provided, however, that the Company determines
in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon
the ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company
under Subchapter M or fails to comply with the Section 817(h)
diversification requirements specified in Article VI hereof, or if the
Company reasonably believes that such Portfolio may fail to so qualify
or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Article 6.3 hereof; or
(h) termination by either the Fund or the Underwriter by written notice to
the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company has suffered a material adverse change in
its business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund, Adviser, or the Underwriter
has suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(j) termination by the Company upon any substitution of the shares of
another investment company or series thereof for shares of a
Designated Portfolio of the Fund in accordance with the terms of the
Contracts, provided that the Company has given at least 45 days prior
written notice to the Fund and Underwriter of the date of
substitution; or
(k) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict exists as
provided in Article VII.
10.2. Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Underwriter requests that the Company seek an order pursuant to Section 26(b) of
the 1940 Act to permit the substitution of other securities for the shares of
the Designated Portfolios in which case additional shares will be made available
until the order of substitution is granted. The Underwriter agrees to split the
cost of seeking such an order, and the Company agrees that it shall reasonably
cooperate with the Underwriter and seek such an order upon request.
Specifically, the owners of the Existing Contracts may be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts (subject to any such election by the Underwriter). The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement. The parties further agree that this Section 10.2 shall not apply
to any terminations under Section 10.1(g) of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the Account)
except (i) as necessary to implement Contract owner initiated or approved
transactions, (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"), (iii) upon 45 days prior written notice
to the Fund and Underwriter, as permitted by an order of the SEC pursuant to
Section 26(b) of the 1940 Act, but only if a substitution of other securities
for the shares of the Designated Portfolios is consistent with the terms of the
Contracts, or (iv) as permitted under the terms of the Contract. Upon request,
the Company will promptly furnish to the Fund and the Underwriter reasonable
assurance that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contacts, the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 45 days notice of its
intention to do so.
10.4. Notwithstanding any termination of this Agreement, each party's obligation
under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund: PIMCO Variable Insurance Trust
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
If to the Company: Cova Financial Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
Attention: General Counsel
If to Underwriter: PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902
ARTICLE XII. Miscellaneous
All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
12.2. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information has come into the
public domain.
12.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Missouri Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with the
Missouri variable annuity laws and regulations and any other applicable law or
regulations.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto.
12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles) filed with any state or federal regulatory body
or otherwise made available to the public, as soon as practicable and
in any event within 90 days after the end of each fiscal year; and
(b) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulatory, as soon as practicable after the filing
thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY:
By its authorized officer
By:_______________________
Name:_____________________
Title:____________________
Date:_____________________
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: _____________________
Name: Brent R. Harris
Title: Chairman
Date:_____________________
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
By:______________________________
Name: Newton B. Schott, Jr.
Title: Executive Vice President
Date:____________________________
Schedule A
PIMCO VARIABLE INSURANCE TRUST PORTFOLIOS:
PIMCO Total Return Bond Portfolio
PIMCO High Yield Bond Portfolio
PIMCO Low Duration Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
Separate Account: Cova Variable Annuity Account One
Dated _________________, 199___.
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and between SCUDDER
VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts business trust
created under a Declaration of Trust dated March 15, 1985, as amended, with a
principal place of business in Boston, Massachusetts and Cova Financial Services
Life Insurance Company, a Missouri corporation (the "Company"), with a principal
place of business in Oakbrook, Illinois on behalf of Cova Variable Annuity
Account One, a separate account of the Company, and any other separate account
of the Company as designated by the Company from time to time, upon written
notice to the Fund in accordance with Section 9 herein (each, an "Account").
WHEREAS, the Fund acts as the investment vehicle for the separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively referred to herein as "Variable Insurance Products") to be offered
by insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies")
and their affiliated insurance companies; and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares of beneficial interest without par value ("Shares"), and additional
series of Shares may be established, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities; and
WHEREAS, each Portfolio of the Fund, except the Money Market Portfolio, is
divided into two classes of Shares, and additional classes of Shares may be
established; and
WHEREAS, the Parties desire to evidence their agreement as to certain other
matters,
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereto agree as follows:
1. Duty of Fund to Sell.
The Fund shall make its Shares available for purchase at the applicable net
asset value per Share by Participating Insurance Companies and their affiliates
and separate accounts on those days on which the Fund calculates its net asset
value pursuant to rules of the Securities and Exchange Commission; provided,
however, that the Trustees of the Fund may refuse to sell Shares of any
Portfolio to any person, or suspend or terminate the offering of Shares of any
Portfolio, if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees, necessary in the
best interest of the shareholders of any Portfolio.
2. Fund Materials.
The Fund, at its expense, shall provide the Company or its designee with
camera-ready copy or computer diskette versions of all prospectuses, statements
of additional information, annual and semi-annual reports and proxy materials
(collectively, "Fund Materials") to be printed and distributed by the Company or
its broker/dealer to the Company's existing or prospective contract owners, as
appropriate. The Company agrees to bear the cost of printing and distributing
such Fund Materials.
3. Requirement to Execute Participation Agreement; Requests.
Each Participating Insurance Company shall, prior to purchasing Shares in
the Fund, execute and deliver a participation agreement in a form substantially
identical to this Agreement.
The Fund shall make available, upon written request from the Participating
Insurance Company given in accordance with Paragraph 9, to each Participating
Insurance Company which has executed an Agreement and which Agreement has not
been terminated pursuant to Paragraph 7 (i) a list of all other Participating
Insurance Companies, and (ii) a copy of the Agreement as executed by any other
Participating Insurance Company.
The Fund shall also make available upon request to each Participating
Insurance Company which has executed an Agreement and which Agreement has not
been terminated pursuant to Paragraph 7, the net asset value of any Portfolio of
the Fund as of any date upon which the Fund calculates the net asset value of
its Portfolios for the purpose of purchase and redemption of Shares.
4. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and each of
its Trustees and officers and each person, if any, who controls the Fund within
the meaning of Section 15 of the Securities Act of 1933 (the "Act") against any
and all losses, claims, damages, liabilities or litigation (including legal and
other expenses), arising out of the acquisition of any Shares by any person, to
which the Fund or such Trustees, officers or controlling person may become
subject under the Act, under any other statute, at common law or otherwise,
which (i) may be based upon any wrongful act by the Company, any of its
employees or representatives, any affiliate of or any person acting on behalf of
the Company or a principal underwriter of its insurance products, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or omission was made
in reliance upon information furnished to the Fund by the Company, or (iii) may
be based on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance products
sold by the Company or any insurance company which is an affiliate thereof, or
any amendments or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the Company or such
affiliate by or on behalf of the Fund; provided, however, that in no case (i) is
the Company's indemnity in favor of a Trustee or officer or any other person
deemed to protect such Trustee or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Company to be liable under its indemnity agreement
contained in this Paragraph 4 with respect to any claim made against the Fund or
any person indemnified unless the Fund or such person, as the case may be, shall
have notified the Company in writing pursuant to Paragraph 9 within a reasonable
time after the summons or other first legal process giving information of the
nature of the claims shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice of such service on
any designated agent), but failure to notify the Company of any such claim shall
not relieve the Company from any liability which it has to the Fund or any
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this Paragraph 4. The Company shall be entitled
to participate, at its own expense, in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but, if it
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Fund, to its officers and Trustees, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that the Company elects to assume the defense of any such suit and retain such
counsel, the Fund, such officers and Trustees or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Company does not elect to
assume the defense of any such suit, the Company will reimburse the Fund, such
officers and Trustees or controlling person or persons, defendant or defendants
in such suit, for the reasonable fees and expenses of any counsel retained by
them. The Company agrees promptly to notify the Fund pursuant to Paragraph 9 of
the commencement of any litigation or proceedings against it in connection with
the issue and sale of any Shares.
(b) The Fund agrees to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Act against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
it or such directors, officers or controlling person may become subject under
the Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based upon any wrongful
act by the Fund, any of its employees or representatives or a principal
underwriter of the Fund, or (ii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering Shares or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance upon
information furnished to the Fund by the Company or (iii) may be based on any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering insurance products sold by the
Company, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; provided, however, that in no case (i) is
the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Fund to be liable under its indemnity agreement
contained in this Paragraph 4 with respect to any claims made against the
Company or any such director, officer or controlling person unless it or such
director, officer or controlling person, as the case may be, shall have notified
the Fund in writing pursuant to Paragraph 9 within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon it or upon such director, officer or
controlling person (or after the Company or such director, officer or
controlling person shall have received notice of such service on any designated
agent), but failure to notify the Fund of any claim shall not relieve it from
any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
Paragraph. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Fund elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the
Company, its directors, officers or controlling person or persons, defendant or
defendants, in the suit. In the event the Fund elects to assume the defense of
any such suit and retain such counsel, the Company, its directors, officers or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Fund does not elect to assume the defense of any such suit, it will
reimburse the Company or such directors, officers or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Fund agrees promptly to notify the
Company pursuant to Paragraph 9 of the commencement of any litigation or
proceedings against it or any of its officers or Trustees in connection with the
issuance or sale of any Shares.
The provisions of this Section 4 shall survive the termination of the
Agreement.
5. Procedure for Resolving Irreconcilable Conflicts.
(a) The Trustees of the Fund will monitor the operations of the Fund for
the existence of any material irreconcilable conflict among the interests of all
the contract holders and policy owners of Variable Insurance Products (the
"Participants") of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise, among other things, from: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
insurance laws or regulations; (c) a tax ruling or provision of the Internal
Revenue Code or the regulations thereunder; (d) any other development relating
to the tax treatment of insurers, contract holders or policy owners or
beneficiaries of Variable Insurance Products; (e) the manner in which the
investments of any Portfolio are being managed; (f) a difference in voting
instructions given by variable annuity contract holders, on the one hand, and
variable life insurance policy owners, on the other hand, or by the contract
holders or policy owners of different participating insurance companies; or (g)
a decision by an insurer to override the voting instructions of Participants.
(b) The Company will be responsible for reporting any potential or existing
conflicts to the Trustees of the Fund. The Company will be responsible for
assisting the Trustees in carrying out their responsibilities under this
Paragraph 5(b) and Paragraph 5(a), by providing the Trustees with all
information reasonably necessary for the Trustees to consider the issues raised.
The Fund will also request its investment adviser to report to the Trustees any
such conflict which comes to the attention of the adviser.
(c) If it is determined by a majority of the Trustees of the Fund, or a
majority of its disinterested Trustees, that a material irreconcilable conflict
exists involving the Company, the Company shall, at its expense, and to the
extent reasonably practicable (as determined by a majority of the disinterested
Trustees), take whatever steps are necessary to eliminate the irreconcilable
material conflict, including withdrawing the assets allocable to some or all of
the separate accounts from the Fund or any Portfolio or class thereof and
reinvesting such assets in a different investment medium, including another
Portfolio of the Fund or class thereof, offering to the affected Participants
the option of making such a change or establishing a new funding medium
including a registered investment company.
For purposes of this Paragraph 5(c), the Trustees, or the disinterested
Trustees, shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict. In the event of a determination of the
existence of an irreconcilable material conflict, the Trustees shall cause the
Fund to take such action, such as the establishment of one or more additional
Portfolios or classes, as they in their sole discretion determine to be in the
interest of all shareholders and Participants in view of all applicable factors,
such as cost, feasibility, tax, regulatory and other considerations. In no event
will the Fund be required by this Paragraph 5(c) to establish a new funding
medium for any variable contract or policy.
The Company shall not be required by this Paragraph 5(c) to establish a new
funding medium for any variable contract or policy if an offer to do so has been
declined by a vote of a majority of the Participants materially adversely
affected by the material irreconcilable conflict. The Company will recommend to
its Participants that they decline an offer to establish a new funding medium
only if the Company believes it is in the best interest of the Participants.
(d) The Trustees' determination of the existence of an irreconcilable
material conflict and its implications promptly shall be communicated to all
Participating Insurance Companies by written notice thereof delivered or mailed,
first class postage prepaid.
6. Voting Privileges.
The Company shall be responsible for assuring that its separate account or
accounts participating in the Fund shall use a calculation method of voting
procedures substantially the same as the following: those Participants permitted
to give instructions and the number of Shares for which instructions may be
given will be determined as of the record date for the Fund shareholders'
meeting, which shall not be more than 60 days before the date of the meeting.
Whether or not voting instructions are actually given by a particular
Participant, all Fund shares held in any separate account or sub-account thereof
and attributable to policies will be voted for, against, or withheld from voting
on any proposition in the same proportion as (i) the aggregate record date cash
value held in such sub-account for policies giving instructions, respectively,
to vote for, against, or withhold votes on such proposition, bears to (ii) the
aggregate record date cash value held in the sub-account for all policies for
which voting instructions are received. Participants continued in effect under
lapse options will not be permitted to give voting instructions. Shares held in
any other insurance company general or separate account or sub-account thereof
will be voted in the proportion specified in the second preceding sentence for
shares attributable to policies.
7. Duration and Termination.
This Agreement shall continue in effect as set forth below. This Agreement
may be terminated at any time, at the option of either of the Company or the
Fund, when neither the Company, any insurance company nor the separate account
or accounts of such insurance company which is an affiliate thereof which is not
a Participating Insurance Company own any Shares of the Fund or may be
terminated by either party to the Agreement upon a determination by a majority
of the Trustees of the Fund, or a majority of its disinterested Trustees,
following certification thereof by a Participating Insurance Company given in
accordance with Paragraph 9 that an irreconcilable conflict exists among the
interests of (i) all contract holders and policy holders of Variable Insurance
Products of all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund. If this Agreement is so terminated,
the Fund may, at any time thereafter, automatically redeem the Shares of any
Portfolio held by a Participating Shareholder.
8. Compliance.
The Fund will comply with the provisions of Section 4240(a) of the New York
Insurance Law. Each Portfolio of the Fund will comply with the provisions of
Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code"),
relating to diversification requirements for variable annuity, endowment and
life insurance contracts. Specifically, each Portfolio will comply with either
(i) the requirement of Section 817(h)(1) of the Code that its assets be
adequately diversified, or (ii) the "Safe Harbor for Diversification" specified
in Section 817(h)(2) of the Code. The Fund will notify the Company immediately
upon having a reasonable basis for believing that a Portfolio has ceased to
comply with the requirements of Section 817(h) of the Code or that the Portfolio
might not so comply in the future.
The provisions of Paragraphs 5 and 6 of this Agreement shall be interpreted
in a manner consistent with any Rule or order of the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, applicable to
the parties hereto.
No Shares of any Portfolio of the Fund may be sold to the general public.
9. Notices.
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Scudder Variable Life Investment Fund
Two International Place
Boston, Massachusetts 02110
(617) 295-4548
Attn: William M. Thomas
If to the Company:
Cova Financial Services Life Insurance Company
One Tower Lane
Suite 3000
Oakbrook, Illinois 60181
Attn: General Counsel
10. Massachusetts Law to Apply.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
11. Miscellaneous.
The name "Scudder Variable Life Investment Fund" is the designation of the
Trustees for the time being under a Declaration of Trust dated March 15, 1985,
as amended, and all persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund. No Portfolio shall
be liable for any obligations properly attributable to any other Portfolio.
The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
12. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12. Entire Agreement.
This Agreement incorporates the entire understanding and agreement among
the parties hereto, and supersedes any and all prior understandings and
agreements between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the ____ day of __________, 1999.
SEAL SCUDDER VARIABLE LIFE
INVESTMENT FUND
By:________________________________
William M. Thomas
President
SEAL COVA FINANCIAL SERVICES LIFE
INSURANCE COMPANY
By:______________________________
Its:_____________________________
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
April 28, 2000
Board of Directors
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
RE: Opinion of Counsel - Cova Variable Annuity Account One
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with the
Securities and Exchange Commission of a Post-Effective Amendment to a
Registration Statement on Form N-4 for the Individual Flexible Purchase Payment
Deferred Variable Annuity Contracts (the "Contracts") to be issued by Cova
Financial Services Life Insurance Company and its separate account, Cova
Variable Annuity Account One.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to render
the opinions expressed below.
We are of the following opinions:
1. Cova Variable Annuity Account One is a Unit Investment Trust as that
term is defined in Section 4(2) of the Investment Company Act of 1940 (the
"Act"), and is currently registered with the Securities and Exchange Commission,
pursuant to Section 8(a) of the Act.
2. Upon the acceptance of purchase payments made by an Owner pursuant to a
Contract issued in accordance with the Prospectus contained in the Registration
Statement and upon compliance with applicable law, such an Owner will have a
legally-issued, fully paid, non-assessable contractual interest under such
Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /s/RAYMOND A. O'HARA III
-----------------------------
Raymond A. O'Hara III
Consent of Independent Auditors
The Board of Directors
Cova Financial Services Life Insurance Company
We consent to the use of our reports on the consolidated financial statements of
Cova Financial Services Life Insurance Company and subsidiaries (the Company)
dated February 4, 2000, and on the financial statements of the sub-accounts of
Cova Variable Annuity Account One dated March 20, 2000, and to the reference to
our firm under the heading "Experts" in the Statement of Additional Information,
in the Post-Effective Amendment No. 6 to the Registration Statement (Form N-4,
File No. 333-34741) of Cova Variable Annuity Account One.
/s/ KPMG LLP
---------------
KPMG LLP
Chicago, Illinois
April 28, 2000
<TABLE>
<CAPTION>
Cova Variable Annuity Account One
Standard 1 Year Return Data
As of 12/31/99
Sub-Account Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
6 Cova Lord Abbett G&I
<S> <C> <C> <C> <C> <C>
12/31/1998 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/1999 annual fee #DIV/0! 39.456928 #DIV/0! #DIV/0! #DIV/0!
12/31/1999 surrender fee (45.00) 39.456928 #DIV/0! (1.1405) #DIV/0!
8 Cova Bond Debenture
12/31/1998 purchase 1,000.00 13.496500 - 74.0933 74.0933
12/31/1999 annual fee (1.02) 13.765381 74.0933 (0.0741) 74.0192
12/31/1999 surrender fee (45.00) 13.765381 74.0192 (3.2691) 70.7501
9 GACC Money Market
12/31/1998 purchase 1,000.00 11.109943 - 90.0095 90.0095
12/31/1999 annual fee (1.04) 11.525358 90.0095 (0.0902) 89.9193
12/31/1999 surrender fee (45.00) 11.525358 89.9193 (3.9044) 86.0149
11 Cova Developing Growth
12/31/1998 purchase 1,000.00 11.067854 - 90.3518 90.3518
12/31/1999 annual fee (1.31) 14.452868 90.3518 (0.0906) 90.2612
12/31/1999 surrender fee (45.00) 14.452868 90.2612 (3.1136) 87.1476
12 Cova Large Cap Research
12/31/1998 purchase 1,000.00 11.825550 - 84.5627 84.5627
12/31/1999 annual fee (1.24) 14.635627 84.5627 (0.0847) 84.4780
12/31/1999 surrender fee (45.00) 14.635627 84.4780 (3.0747) 81.4033
13 Cova Mid-Cap Value
12/31/1998 purchase 1,000.00 10.437949 - 95.8043 95.8043
12/31/1999 annual fee (1.04) 10.875538 95.8043 (0.0956) 95.7087
12/31/1999 surrender fee (45.00) 10.875538 95.7087 (4.1377) 91.5710
15 Cova Quality Bond
12/31/1998 purchase 1,000.00 11.914489 - 83.9314 83.9314
12/31/1999 annual fee (0.97) 11.567155 83.9314 (0.0839) 83.8475
12/31/1999 surrender fee (45.00) 11.567155 83.8475 (3.8903) 79.9572
16 Cova Small Cap Stock
12/31/1998 purchase 1,000.00 12.582860 - 79.4732 79.4732
12/31/1999 annual fee (1.43) 17.932441 79.4732 (0.0797) 79.3935
12/31/1999 surrender fee (45.00) 17.932441 79.3935 (2.5094) 76.8841
17 Cova Large Cap Stock
12/31/1998 purchase 1,000.00 19.428499 - 51.4708 51.4708
12/31/1999 annual fee (1.16) 22.548941 51.4708 (0.0514) 51.4194
12/31/1999 surrender fee (45.00) 22.548941 51.4194 (1.9957) 49.4237
18 Cova Select Equity
12/31/1998 purchase 1,000.00 16.987204 - 58.8678 58.8678
12/31/1999 annual fee (1.08) 18.384654 58.8678 (0.0587) 58.8091
12/31/1999 surrender fee (45.00) 18.384654 58.8091 (2.4477) 56.3614
19 Cova Int'l Equity
12/31/1998 purchase 1,000.00 12.889315 - 77.5836 77.5836
12/31/1999 annual fee (1.27) 16.333906 77.5836 (0.0778) 77.5058
12/31/1999 surrender fee (45.00) 16.333906 77.5058 (2.7550) 74.7508
20 Cova Balanced
12/31/1998 purchase 1,000.00 11.767845 - 84.9773 84.9773
12/31/1999 annual fee (1.06) 12.432529 84.9773 (0.0853) 84.8920
12/31/1999 surrender fee (45.00) 12.432529 84.8920 (3.6195) 81.2725
22 Cova Equity Income
12/31/1998 purchase 1,000.00 12.068849 - 82.8579 82.8579
12/31/1999 annual fee (1.01) 12.202725 82.8579 (0.0828) 82.7751
12/31/1999 surrender fee (45.00) 12.202725 82.7751 (3.6877) 79.0874
23 Cova G&I Equity
12/31/1998 purchase 1,000.00 12.188331 - 82.0457 82.0457
12/31/1999 annual fee (1.15) 13.966013 82.0457 (0.0823) 81.9634
12/31/1999 surrender fee (45.00) 13.966013 81.9634 (3.2221) 78.7413
24 Russell Multi-Style Equity
12/31/1998 purchase 1,000.00 12.694810 - 78.7723 78.7723
12/31/1999 annual fee (1.16) 14.667724 78.7723 (0.0791) 78.6932
12/31/1999 surrender fee (45.00) 14.667724 78.6932 (3.0680) 75.6252
25 Russell Aggressive Equity
12/31/1998 purchase 1,000.00 9.963254 - 100.3688 100.3688
12/31/1999 annual fee (1.05) 10.422234 100.3688 (0.1007) 100.2681
12/31/1999 surrender fee (45.00) 10.422234 100.2681 (4.3177) 95.9504
26 Russell Non-U.S.
12/31/1998 purchase 1,000.00 11.142092 - 89.7498 89.7498
12/31/1999 annual fee (1.32) 14.652149 89.7498 (0.0901) 89.6597
12/31/1999 surrender fee (45.00) 14.652149 89.6597 (3.0712) 86.5885
27 Russell Core Bond
12/31/1998 purchase 1,000.00 10.591175 - 94.4182 94.4182
12/31/1999 annual fee (0.98) 10.380043 94.4182 (0.0944) 94.3238
12/31/1999 surrender fee (45.00) 10.380043 94.3238 (4.3352) 89.9886
28 Russell Real Estate Securities
12/31/1998 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/1999 annual fee #DIV/0! 9.388124 #DIV/0! #DIV/0! #DIV/0!
12/31/1999 surrender fee (45.00) 9.388124 #DIV/0! (4.7933) #DIV/0!
30 AIM V.I. Value
12/31/1998 purchase 1,000.00 13.060203 - 76.5685 76.5685
12/31/1999 annual fee (1.28) 16.729131 76.5685 (0.0765) 76.4920
12/31/1999 surrender fee (45.00) 16.729131 76.4920 (2.6899) 73.8021
31 AIM V.I. Capital Appreciation
12/31/1998 purchase 1,000.00 11.770729 - 84.9565 84.9565
12/31/1999 annual fee (1.43) 16.785351 84.9565 (0.0852) 84.8713
12/31/1999 surrender fee (45.00) 16.785351 84.8713 (2.6809) 82.1904
32 AIM V.I. Int'l Equity
12/31/1998 purchase 1,000.00 11.391449 - 87.7851 87.7851
12/31/1999 annual fee (1.53) 17.416663 87.7851 (0.0878) 87.6973
12/31/1999 surrender fee (45.00) 17.416663 87.6973 (2.5837) 85.1136
35 Alliance Premier Growth
12/31/1998 purchase 1,000.00 14.595485 - 68.5143 68.5143
12/31/1999 annual fee (1.30) 19.043436 68.5143 (0.0683) 68.4460
12/31/1999 surrender fee (45.00) 19.043436 68.4460 (2.3630) 66.0830
36 Alliance Real Estate Investment
12/31/1998 purchase 1,000.00 7.988435 - 125.1810 125.1810
12/31/1999 annual fee (0.94) 7.474763 125.1810 (0.1258) 125.0552
12/31/1999 surrender fee (45.00) 7.474763 125.0552 (6.0203) 119.0349
37 Cova Riggs U.S. Gov't Securities
12/31/1998 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/1999 annual fee #DIV/0! 9.995395 #DIV/0! #DIV/0! #DIV/0!
12/31/1999 surrender fee (45.00) 9.995395 #DIV/0! (4.5021) #DIV/0!
38 Cova Riggs Stock
12/31/1998 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/1999 annual fee #DIV/0! 10.239524 #DIV/0! #DIV/0! #DIV/0!
12/31/1999 surrender fee (45.00) 10.239524 #DIV/0! (4.3947) #DIV/0!
39 Liberty Newport Tiger, Variable Series
12/31/1998 purchase 1,000.00 9.228765 - 108.3569 108.3569
12/31/1999 annual fee (1.66) 15.290670 108.3569 (0.1086) 108.2483
12/31/1999 surrender fee (45.00) 15.290670 108.2483 (2.9430) 105.3053
40 Goldman Sachs G&I
12/31/1998 purchase 1,000.00 9.908613 - 100.9223 100.9223
12/31/1999 annual fee (1.04) 10.299328 100.9223 (0.1010) 100.8213
12/31/1999 surrender fee (45.00) 10.299328 100.8213 (4.3692) 96.4521
41 Goldman Sachs Int'l Equity
12/31/1998 purchase 1,000.00 11.402925 - 87.6968 87.6968
12/31/1999 annual fee (1.30) 14.826563 87.6968 (0.0877) 87.6091
12/31/1999 surrender fee (45.00) 14.826563 87.6091 (3.0351) 84.5740
42 Goldman Sachs Global Income
12/31/1998 purchase 1,000.00 10.781765 - 92.7492 92.7492
12/31/1999 annual fee (0.98) 10.524196 92.7492 (0.0931) 92.6561
12/31/1999 surrender fee (45.00) 10.524196 92.6561 (4.2759) 88.3802
44 Kemper Dreman High Return
12/31/1998 purchase 1,000.00 10.487302 - 95.3534 95.3534
12/31/1999 annual fee (0.88) 9.187195 95.3534 (0.0958) 95.2576
12/31/1999 surrender fee (45.00) 9.187195 95.2576 (4.8981) 90.3595
45 Kemper Small Cap Growth
12/31/1998 purchase 1,000.00 11.676086 - 85.6451 85.6451
12/31/1999 annual fee (1.33) 15.493396 85.6451 (0.0858) 85.5593
12/31/1999 surrender fee (45.00) 15.493396 85.5593 (2.9045) 82.6548
46 Kemper Small Cap Value
12/31/1998 purchase 1,000.00 8.753222 - 114.2436 114.2436
12/31/1999 annual fee (1.01) 8.872647 114.2436 (0.1138) 114.1298
12/31/1999 surrender fee (45.00) 8.872647 114.1298 (5.0718) 109.0580
47 Kemper Government Securities
12/31/1998 purchase 1,000.00 10.556498 - 94.7284 94.7284
12/31/1999 annual fee (0.99) 10.480981 94.7284 (0.0945) 94.6339
12/31/1999 surrender fee (45.00) 10.480981 94.6339 (4.2935) 90.3404
48 MFS Bond
12/31/1998 purchase 1,000.00 10.491811 - 95.3124 95.3124
12/31/1999 annual fee (0.97) 10.184471 95.3124 (0.0952) 95.2172
12/31/1999 surrender fee (45.00) 10.184471 95.2172 (4.4185) 90.7987
49 MFS Research
12/31/1998 purchase 1,000.00 12.172796 - 82.1504 82.1504
12/31/1999 annual fee (1.22) 14.890281 82.1504 (0.0819) 82.0685
12/31/1999 surrender fee (45.00) 14.890281 82.0685 (3.0221) 79.0464
50 MFS Growth with Income
12/31/1998 purchase 1,000.00 12.066568 - 82.8736 82.8736
12/31/1999 annual fee (1.05) 12.695264 82.8736 (0.0827) 82.7909
12/31/1999 surrender fee (45.00) 12.695264 82.7909 (3.5446) 79.2463
51 MFS Emerging Growth
12/31/1998 purchase 1,000.00 13.233235 - 75.5673 75.5673
12/31/1999 annual fee (1.74) 23.059667 75.5673 (0.0755) 75.4918
12/31/1999 surrender fee (45.00) 23.059667 75.4918 (1.9515) 73.5403
52 MFS / F&C Emerging Markets Equity
12/31/1998 purchase 1,000.00 6.571830 - 152.1646 152.1646
12/31/1999 annual fee (1.36) 8.954559 152.1646 (0.1519) 152.0127
12/31/1999 surrender fee (45.00) 8.954559 152.0127 (5.0254) 146.9873
53 MFS High Income
12/31/1998 purchase 1,000.00 9.845193 - 101.5724 101.5724
12/31/1999 annual fee (1.05) 10.334082 101.5724 (0.1016) 101.4708
12/31/1999 surrender fee (45.00) 10.334082 101.4708 (4.3545) 97.1163
54 MFS Global Governments
12/31/1998 purchase 1,000.00 10.669943 - 93.7212 93.7212
12/31/1999 annual fee (0.96) 10.258675 93.7212 (0.0936) 93.6276
12/31/1999 surrender fee (45.00) 10.258675 93.6276 (4.3865) 89.2411
55 Oppenheimer Capital Appreciation
12/31/1998 purchase 1,000.00 12.232731 - 81.7479 81.7479
12/31/1999 annual fee (1.40) 17.087450 81.7479 (0.0819) 81.6660
12/31/1999 surrender fee (45.00) 17.087450 81.6660 (2.6335) 79.0325
56 Oppenheimer Main Street G&I
12/31/1998 purchase 1,000.00 10.326519 - 96.8381 96.8381
12/31/1999 annual fee (1.20) 12.393263 96.8381 (0.0968) 96.7413
12/31/1999 surrender fee (45.00) 12.393263 96.7413 (3.6310) 93.1103
57 Oppenheimer High Income
12/31/1998 purchase 1,000.00 9.893828 - 101.0731 101.0731
12/31/1999 annual fee (1.03) 10.174699 101.0731 (0.1012) 100.9719
12/31/1999 surrender fee (45.00) 10.174699 100.9719 (4.4227) 96.5492
58 Oppenheimer Bond
12/31/1998 purchase 1,000.00 10.533011 - 94.9396 94.9396
12/31/1999 annual fee (0.97) 10.228856 94.9396 (0.0948) 94.8448
12/31/1999 surrender fee (45.00) 10.228856 94.8448 (4.3993) 90.4455
59 Oppenheimer Strategic Bond
12/31/1998 purchase 1,000.00 10.151332 - 98.5092 98.5092
12/31/1999 annual fee (1.01) 10.293168 98.5092 (0.0981) 98.4111
12/31/1999 surrender fee (45.00) 10.293168 98.4111 (4.3718) 94.0393
60 Putnam VT G&I
12/31/1998 purchase 1,000.00 11.382650 - 87.8530 87.8530
12/31/1999 annual fee (1.00) 11.402482 87.8530 (0.0877) 87.7653
12/31/1999 surrender fee (45.00) 11.402482 87.7653 (3.9465) 83.8188
61 Putman VT New Value
12/31/1998 purchase 1,000.00 10.483517 - 95.3878 95.3878
12/31/1999 annual fee (0.99) 10.365439 95.3878 (0.0955) 95.2923
12/31/1999 surrender fee (45.00) 10.365439 95.2923 (4.3414) 90.9509
62 Putnam VT Vista
12/31/1998 purchase 1,000.00 11.785702 - 84.8486 84.8486
12/31/1999 annual fee (1.51) 17.769589 84.8486 (0.0850) 84.7636
12/31/1999 surrender fee (45.00) 17.769589 84.7636 (2.5324) 82.2312
63 Putnam VT Int'l Growth
12/31/1998 purchase 1,000.00 11.707003 - 85.4190 85.4190
12/31/1999 annual fee (1.58) 18.486388 85.4190 (0.0855) 85.3335
12/31/1999 surrender fee (45.00) 18.486388 85.3335 (2.4342) 82.8993
64 Putnam VT Int'l New Opportunities
12/31/1998 purchase 1,000.00 11.402252 - 87.7020 87.7020
12/31/1999 annual fee (2.00) 22.820083 87.7020 (0.0876) 87.6144
12/31/1999 surrender fee (45.00) 22.820083 87.6144 (1.9719) 85.6425
67 Templeton International Securities
12/31/1998 purchase 1,000.00 9.144522 - 109.3551 109.3551
12/31/1999 annual fee (1.22) 11.147003 109.3551 (0.1094) 109.2457
12/31/1999 surrender fee (45.00) 11.147003 109.2457 (4.0370) 105.2087
68 Templeton Developing Markets Securities
12/31/1998 purchase 1,000.00 7.552448 - 132.4074 132.4074
12/31/1999 annual fee (1.52) 11.457935 132.4074 (0.1327) 132.2747
12/31/1999 surrender fee (45.00) 11.457935 132.2747 (3.9274) 128.3473
69 Mutual Shares Securities
12/31/1998 purchase 1,000.00 9.310282 - 107.4081 107.4081
12/31/1999 annual fee (1.12) 10.413095 107.4081 (0.1076) 107.3005
12/31/1999 surrender fee (45.00) 10.413095 107.3005 (4.3215) 102.9790
71 Fidelity VIP Growth
12/31/1998 purchase 1,000.00 13.077878 - 76.4650 76.4650
12/31/1999 annual fee (1.36) 17.723853 76.4650 (0.0767) 76.3883
12/31/1999 surrender fee (45.00) 17.723853 76.3883 (2.5390) 73.8493
72 Fidelity VIP II Contrafund
12/31/1998 purchase 1,000.00 12.357373 - 80.9233 80.9233
12/31/1999 annual fee (1.23) 15.140886 80.9233 (0.0812) 80.8421
12/31/1999 surrender fee (45.00) 15.140886 80.8421 (2.9721) 77.8700
73 Fidelity VIP III Growth Opportunities
12/31/1998 purchase 1,000.00 11.742360 - 85.1618 85.1618
12/31/1999 annual fee (1.03) 12.073401 85.1618 (0.0853) 85.0765
12/31/1999 surrender fee (45.00) 12.073401 85.0765 (3.7272) 81.3493
75 Fidelity VIP III Growth & Income
12/31/1998 purchase 1,000.00 12.202502 - 81.9504 81.9504
12/31/1999 annual fee (1.08) 13.135609 81.9504 (0.0822) 81.8682
12/31/1999 surrender fee (45.00) 13.135609 81.8682 (3.4258) 78.4424
76 Fidelity VIP Equity-Income
12/31/1998 purchase 1,000.00 10.626607 - 94.1034 94.1034
12/31/1999 annual fee (1.05) 11.141767 94.1034 (0.0942) 94.0092
12/31/1999 surrender fee (45.00) 11.141767 94.0092 (4.0389) 89.9703
Cova Variable Annuity Account One
Standard 1 Year Returns
12/31/1999
Sub-Account Total Account 12/31/1999 Initial Inception
Return Value AUV Investment Date
6 Cova Lord Abbett G&I (1) 1/8/1999
8 Cova Bond Debenture -2.61% 973.90 13.765381 1,000.00 5/1/1996
9 GACC Money Market -0.86% 991.35 11.525358 1,000.00 6/3/1996
11 Cova Developing Growth 25.95% 1,259.53 14.452868 1,000.00 8/20/1997
12 Cova Large Cap Research 19.14% 1,191.39 14.635627 1,000.00 8/20/1997
13 Cova Mid-Cap Value -0.41% 995.88 10.875538 1,000.00 8/20/1997
15 Cova Quality Bond -7.51% 924.88 11.567155 1,000.00 5/1/1996
16 Cova Small Cap Stock 37.87% 1,378.72 17.932441 1,000.00 5/1/1996
17 Cova Large Cap Stock 11.45% 1,114.45 22.548941 1,000.00 5/1/1996
18 Cova Select Equity 3.62% 1,036.18 18.384654 1,000.00 5/1/1996
19 Cova Int'l Equity 22.10% 1,220.97 16.333906 1,000.00 5/1/1996
20 Cova Balanced 1.04% 1,010.42 12.432529 1,000.00 7/1/1997
22 Cova Equity Income -3.49% 965.08 12.202725 1,000.00 7/1/1997
23 Cova G&I Equity 9.97% 1,099.70 13.966013 1,000.00 7/1/1997
24 Russell Multi-Style Equity 10.93% 1,109.25 14.667724 1,000.00 12/31/1997
25 Russell Aggressive Equity 1,000.02 10.422234 1,000.00 12/31/1997
26 Russell Non-U.S. 26.87% 1,268.71 14.652149 1,000.00 12/31/1997
27 Russell Core Bond -6.59% 934.09 10.380043 1,000.00 12/31/1997
28 Russell Real Estate Securities (1) 7/1/1999
30 AIM V.I. Value 23.46% 1,234.64 16.729131 1,000.00 12/31/1997
31 AIM V.I. Capital Appreciation 37.96% 1,379.59 16.785351 1,000.00 12/31/1997
32 AIM V.I. Int'l Equity 48.24% 1,482.39 17.416663 1,000.00 12/31/1997
35 Alliance Premier Growth 25.85% 1,258.45 19.043436 1,000.00 12/31/1997
36 Alliance Real Estate Investment -11.02% 889.76 7.474763 1,000.00 12/31/1997
37 Cova Riggs U.S. Gov't Securities (1) 11/2/1999
38 Cova Riggs Stock (1) 11/2/1999
39 Liberty Newport Tiger, Variable Series 61.02% 1,610.19 15.290670 1,000.00 12/31/1997
40 Goldman Sachs G&I -0.66% 993.39 10.299328 1,000.00 1/29/1998
41 Goldman Sachs Int'l Equity 25.39% 1,253.94 14.826563 1,000.00 1/29/1998
42 Goldman Sachs Global Income -6.99% 930.13 10.524196 1,000.00 1/29/1998
43 Templeton Global Income Securities (1) 3/1/1999
44 Kemper Dreman High Return -16.99% 830.15 9.187195 1,000.00 5/15/1998
45 Kemper Small Cap Growth 28.06% 1,280.60 15.493396 1,000.00 12/31/1997
46 Kemper Small Cap Value -3.24% 967.63 8.872647 1,000.00 12/31/1997
47 Kemper Government Securities -5.31% 946.86 10.480981 1,000.00 12/31/1997
48 MFS Bond -7.53% 924.74 10.184471 1,000.00 5/15/1998
49 MFS Research 17.70% 1,177.02 14.890281 1,000.00 12/31/1997
50 MFS Growth with Income 0.60% 1,006.05 12.695264 1,000.00 12/31/1997
51 MFS Emerging Growth 69.58% 1,695.81 23.059667 1,000.00 12/31/1997
52 MFS / F&C Emerging Markets Equity 31.62% 1,316.21 8.954559 1,000.00 12/31/1997
53 MFS High Income 0.36% 1,003.61 10.334082 1,000.00 12/31/1997
54 MFS Global Governments -8.45% 915.50 10.258675 1,000.00 12/31/1997
55 Oppenheimer Capital Appreciation 35.05% 1,350.46 17.087450 1,000.00 12/31/1997
56 Oppenheimer Main Street G&I 15.39% 1,153.94 12.393263 1,000.00 12/31/1997
57 Oppenheimer High Income -1.76% 982.36 10.174699 1,000.00 12/31/1997
58 Oppenheimer Bond -7.49% 925.15 10.228856 1,000.00 12/31/1997
59 Oppenheimer Strategic Bond -3.20% 967.96 10.293168 1,000.00 12/31/1997
60 Putnam VT G&I -4.43% 955.74 11.402482 1,000.00 12/31/1997
61 Putman VT New Value -5.73% 942.75 10.365439 1,000.00 12/31/1997
62 Putnam VT Vista 46.12% 1,461.21 17.769589 1,000.00 12/31/1997
63 Putnam VT Int'l Growth 53.25% 1,532.51 18.486388 1,000.00 12/31/1997
64 Putnam VT Int'l New Opportunities 95.44% 1,954.37 22.820083 1,000.00 12/31/1997
65 Franklin Small Cap (1) 3/1/1999
66 Templeton Growth Securities (1) 1/19/1999
67 Templeton International Securities 17.28% 1,172.76 11.147003 1,000.00 5/1/1998
68 Templeton Developing Markets Securities 47.06% 1,470.60 11.457935 1,000.00 5/1/1998
69 Mutual Shares Securities 7.23% 1,072.33 10.413095 1,000.00 5/1/1998
71 Fidelity VIP Growth 30.89% 1,308.89 17.723853 1,000.00 2/17/1998
72 Fidelity VIP II Contrafund 17.90% 1,179.02 15.140886 1,000.00 2/17/1998
73 Fidelity VIP III Growth Opportunities -1.78% 982.16 12.073401 1,000.00 2/17/1998
75 Fidelity VIP III Growth & Income 3.04% 1,030.39 13.135609 1,000.00 2/17/1998
76 Fidelity VIP Equity-Income 0.24% 1,002.43 11.141767 1,000.00 2/17/1998
99 Franklin Large Cap Growth Securities (1) 3/1/1999
140 American Century VP Income & Growth (1) 11/19/1999
141 American Century VP Int'l (1) 11/19/1999
142 American Century VP Value (1) 11/19/1999
160 Dreyfus Stock Index (1) 11/19/1999
161 Dreyfus VIF Disciplined Stock (1) 11/19/1999
162 Dreyfus VIF Capital Appreciation (1) 11/19/1999
180 INVESCO VIF Dynamics (1) 11/19/1999
181 INVESCO VIF High Yield (1) 11/19/1999
210 PIMCO High Yield Bond (1) 11/19/1999
211 PIMCO Low Duration Bond (1) 11/19/1999
212 PIMCO StocksPLUS G&I (1) 11/19/1999
213 PIMCO Total Return Bond (1) 11/19/1999
230 Scudder Int'l (1) 11/19/1999
(1)Sub-account has not been in existence for 1 year.
Cova Variable Annuity Account One
Standard Inception to Date Return Data
As of 12/31/99
Sub-Account Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
6 Cova Lord Abbett G&I 0.98 yrs
1/8/1999 purchase 1,000.00 35.903757 - 27.8522 27.8522
12/31/1999 annual fee (1.10) 39.456928 27.8522 (0.0279) 27.8243
12/31/1999 surrender fee (50.00) 39.456928 27.8243 (1.2672) 26.5571
8 Cova Bond Debenture 3.67 yrs
5/1/1996 purchase 1,000.00 10.097690 - 99.0326 99.0326
5/1/1997 annual fee (1.14) 11.516923 99.0326 (0.0990) 98.9336
5/1/1998 annual fee (1.34) 13.535615 98.9336 (0.0990) 98.8346
5/3/1999 annual fee (1.36) 13.805909 98.8346 (0.0985) 98.7361
12/31/1999 annual fee (1.36) 13.765381 98.7361 (0.0988) 98.6373
12/31/1999 surrender fee (45.00) 13.765381 98.6373 (3.2691) 95.3682
9 GACC Money Market 3.58 yrs
6/3/1996 purchase 1,000.00 10.000000 - 100.0000 100.0000
6/3/1997 annual fee (1.04) 10.410578 100.0000 (0.0999) 99.9001
6/3/1998 annual fee (1.08) 10.858145 99.9001 (0.0995) 99.8006
6/3/1999 annual fee (1.12) 11.271281 99.8006 (0.0994) 99.7012
12/31/1999 annual fee (1.15) 11.525358 99.7012 (0.0998) 99.6014
12/31/1999 surrender fee (45.00) 11.525358 99.6014 (3.9044) 95.6970
11 Cova Developing Growth 2.36 yrs
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee (0.98) 9.823023 100.0000 (0.0998) 99.9002
8/20/1999 annual fee (1.22) 12.172305 99.9002 (0.1002) 99.8000
12/31/1999 annual fee (1.44) 14.452868 99.8000 (0.0996) 99.7004
12/31/1999 surrender fee (45.00) 14.452868 99.7004 (3.1136) 96.5868
12 Cova Large Cap Research 2.36 yrs
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee (1.05) 10.537316 100.0000 (0.0996) 99.9004
8/20/1999 annual fee (1.29) 12.925442 99.9004 (0.0998) 99.8006
12/31/1999 annual fee (1.46) 14.635627 99.8006 (0.0998) 99.7008
12/31/1999 surrender fee (45.00) 14.635627 99.7008 (3.0747) 96.6261
13 Cova Mid-Cap Value 2.36 yrs
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee (0.99) 9.919404 100.0000 (0.0998) 99.9002
8/20/1999 annual fee (1.14) 11.429524 99.9002 (0.0997) 99.8005
12/31/1999 annual fee (1.09) 10.875538 99.8005 (0.1002) 99.7003
12/31/1999 surrender fee (45.00) 10.875538 99.7003 (4.1377) 95.5626
15 Cova Quality Bond 3.67 yrs
5/1/1996 purchase 1,000.00 9.897228 - 101.0384 101.0384
5/1/1997 annual fee (1.05) 10.405141 101.0384 (0.1009) 100.9375
5/1/1998 annual fee (1.15) 11.356198 100.9375 (0.1013) 100.8362
5/3/1999 annual fee (1.19) 11.809700 100.8362 (0.1008) 100.7354
12/31/1999 annual fee (1.17) 11.567155 100.7354 (0.1011) 100.6343
12/31/1999 surrender fee (45.00) 11.567155 100.6343 (3.8903) 96.7440
16 Cova Small Cap Stock 3.67 yrs
5/1/1996 purchase 1,000.00 10.512560 - 95.1243 95.1243
5/1/1997 annual fee (0.99) 10.358427 95.1243 (0.0956) 95.0287
5/1/1998 annual fee (1.42) 14.969970 95.0287 (0.0949) 94.9338
5/3/1999 annual fee (1.20) 12.606262 94.9338 (0.0952) 94.8386
12/31/1999 annual fee (1.70) 17.932441 94.8386 (0.0948) 94.7438
12/31/1999 surrender fee (45.00) 17.932441 94.7438 (2.5094) 92.2344
17 Cova Large Cap Stock 3.67 yrs
5/1/1996 purchase 1,000.00 10.003025 - 99.9698 99.9698
5/1/1997 annual fee (1.22) 12.198198 99.9698 (0.1000) 99.8698
5/1/1998 annual fee (1.75) 17.502632 99.8698 (0.1000) 99.7698
5/3/1999 annual fee (2.15) 21.572882 99.7698 (0.0997) 99.6701
12/31/1999 annual fee (2.25) 22.548941 99.6701 (0.0998) 99.5703
12/31/1999 surrender fee (45.00) 22.548941 99.5703 (1.9957) 97.5746
18 Cova Select Equity 3.67 yrs
5/1/1996 purchase 1,000.00 10.083890 - 99.1681 99.1681
5/1/1997 annual fee (1.14) 11.445501 99.1681 (0.0996) 99.0685
5/1/1998 annual fee (1.60) 16.125129 99.0685 (0.0992) 98.9693
5/3/1999 annual fee (1.84) 18.567838 98.9693 (0.0991) 98.8702
12/31/1999 annual fee (1.82) 18.384654 98.8702 (0.0990) 98.7712
12/31/1999 surrender fee (45.00) 18.384654 98.7712 (2.4477) 96.3235
19 Cova Int'l Equity 3.67 yrs
5/1/1996 purchase 1,000.00 10.214899 - 97.8962 97.8962
5/1/1997 annual fee (1.09) 11.135715 97.8962 (0.0979) 97.7983
5/1/1998 annual fee (1.28) 13.138587 97.7983 (0.0974) 97.7009
5/3/1999 annual fee (1.33) 13.586693 97.7009 (0.0979) 97.6030
12/31/1999 annual fee (1.59) 16.333906 97.6030 (0.0973) 97.5057
12/31/1999 surrender fee (45.00) 16.333906 97.5057 (2.7550) 94.7507
20 Cova Balanced 2.50 yrs
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee (1.12) 11.236058 100.0000 (0.0997) 99.9003
7/1/1999 annual fee (1.26) 12.590207 99.9003 (0.1001) 99.8002
12/31/1999 annual fee (1.24) 12.432529 99.8002 (0.0997) 99.7005
12/31/1999 surrender fee (45.00) 12.432529 99.7005 (3.6195) 96.0810
22 Cova Equity Income 2.50 yrs
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee (1.24) 12.418195 100.0000 (0.0999) 99.9001
7/1/1999 annual fee (1.34) 13.363970 99.9001 (0.1003) 99.7998
12/31/1999 annual fee (1.22) 12.202725 99.7998 (0.1000) 99.6998
12/31/1999 surrender fee (45.00) 12.202725 99.6998 (3.6877) 96.0121
23 Cova G&I Equity 2.50 yrs
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee (1.19) 11.941375 100.0000 (0.0997) 99.9003
7/1/1999 annual fee (1.39) 13.889347 99.9003 (0.1001) 99.8002
12/31/1999 annual fee (1.39) 13.966013 99.8002 (0.0995) 99.7007
12/31/1999 surrender fee (45.00) 13.966013 99.7007 (3.2221) 96.4786
24 Russell Multi-Style Equity 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.27) 12.694810 100.0000 (0.1000) 99.9000
12/31/1999 annual fee (1.47) 14.667724 99.9000 (0.1002) 99.7998
12/31/1999 surrender fee (45.00) 14.667724 99.7998 (3.0680) 96.7318
25 Russell Aggressive Equity 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.00) 9.963254 100.0000 (0.1004) 99.8996
12/31/1999 annual fee (1.04) 10.422234 99.8996 (0.0998) 99.7998
12/31/1999 surrender fee (45.00) 10.422234 99.7998 (4.3177) 95.4821
26 Russell Non-U.S. 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.11) 11.142092 100.0000 (0.0996) 99.9004
12/31/1999 annual fee (1.46) 14.652149 99.9004 (0.0996) 99.8008
12/31/1999 surrender fee (45.00) 14.652149 99.8008 (3.0712) 96.7296
27 Russell Core Bond 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.06) 10.591175 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.04) 10.380043 99.8999 (0.1002) 99.7997
12/31/1999 surrender fee (45.00) 10.380043 99.7997 (4.3352) 95.4645
28 Russell Real Estate Securities 0.50 yrs
7/1/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (0.94) 9.388124 100.0000 (0.1001) 99.8999
12/31/1999 surrender fee (50.00) 9.388124 99.8999 (5.3259) 94.5740
30 AIM V.I. Value 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.31) 13.060203 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.67) 16.729131 99.8997 (0.0998) 99.7999
12/31/1999 surrender fee (45.00) 16.729131 99.7999 (2.6899) 97.1100
31 AIM V.I. Capital Appreciation 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.18) 11.770729 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.68) 16.785351 99.8998 (0.1001) 99.7997
12/31/1999 surrender fee (45.00) 16.785351 99.7997 (2.6809) 97.1188
32 AIM V.I. Int'l Equity 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.14) 11.391449 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.74) 17.416663 99.8999 (0.0999) 99.8000
12/31/1999 surrender fee (45.00) 17.416663 99.8000 (2.5837) 97.2163
35 Alliance Premier Growth 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.46) 14.595485 100.0000 (0.1000) 99.9000
12/31/1999 annual fee (1.90) 19.043436 99.9000 (0.0998) 99.8002
12/31/1999 surrender fee (45.00) 19.043436 99.8002 (2.3630) 97.4372
36 Alliance Real Estate Investment 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.80) 7.988435 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (0.75) 7.474763 99.8999 (0.1003) 99.7996
12/31/1999 surrender fee (45.00) 7.474763 99.7996 (6.0203) 93.7793
37 Cova Riggs U.S. Gov't Securities 0.16 yrs
11/2/1999 purchase 1,000.00 10.130899 - 98.7079 98.7079
12/31/1999 annual fee (0.99) 9.995395 98.7079 (0.0990) 98.6089
12/31/1999 surrender fee (50.00) 9.995395 98.6089 (5.0023) 93.6066
38 Cova Riggs Stock 0.16 yrs
11/2/1999 purchase 1,000.00 10.082728 - 99.1795 99.1795
12/31/1999 annual fee (1.02) 10.239524 99.1795 (0.0996) 99.0799
12/31/1999 surrender fee (50.00) 10.239524 99.0799 (4.8830) 94.1969
39 Liberty Newport Tiger, Variable Series 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.92) 9.228765 100.0000 (0.0997) 99.9003
12/31/1999 annual fee (1.53) 15.290670 99.9003 (0.1001) 99.8002
12/31/1999 surrender fee (45.00) 15.290670 99.8002 (2.9430) 96.8572
40 Goldman Sachs G&I 1.92 yrs
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 annual fee (1.00) 9.973396 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.03) 10.299328 99.8997 (0.1000) 99.7997
12/31/1999 surrender fee (45.00) 10.299328 99.7997 (4.3692) 95.4305
41 Goldman Sachs Int'l Equity 1.92 yrs
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 annual fee (1.16) 11.581610 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.48) 14.826563 99.8998 (0.0998) 99.8000
12/31/1999 surrender fee (45.00) 14.826563 99.8000 (3.0351) 96.7649
42 Goldman Sachs Global Income 1.92 yrs
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 purchase (1.09) 10.874138 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.05) 10.524196 99.8998 (0.0998) 99.8000
12/31/1999 surrender fee (45.00) 10.524196 99.8000 (4.2759) 95.5241
43 Templeton Global Income Securities
3/1/1999 purchase 1,000.00 10.050717 - 99.4954 99.4954
12/31/1999 annual fee (0.96) 9.681844 99.4954 (0.0992) 99.3962
12/31/1999 surrender fee (50.00) 9.681844 99.3962 (5.1643) 94.2319
44 Kemper Dreman High Return 1.63 yrs
5/15/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/17/1999 annual fee (1.11) 11.054279 100.0000 (0.1004) 99.8996
12/31/1999 annual fee (0.92) 9.187195 99.8996 (0.1001) 99.7995
12/31/1999 surrender fee (45.00) 9.187195 99.7995 (4.8981) 94.9014
45 Kemper Small Cap Growth 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.17) 11.676086 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.55) 15.493396 99.8998 (0.1000) 99.7998
12/31/1999 surrender fee (45.00) 15.493396 99.7998 (2.9045) 96.8953
46 Kemper Small Cap Value 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.88) 8.753222 100.0000 (0.1005) 99.8995
12/31/1999 annual fee (0.89) 8.872647 99.8995 (0.1003) 99.7992
12/31/1999 surrender fee (45.00) 8.872647 99.7992 (5.0718) 94.7274
47 Kemper Government Securities 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.06) 10.556498 100.0000 (0.1004) 99.8996
12/31/1999 annual fee (1.05) 10.480981 99.8996 (0.1002) 99.7994
12/31/1999 surrender fee (45.00) 10.480981 99.7994 (4.2935) 95.5059
48 MFS Bond 1.63 yrs
5/15/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/17/1999 annual fee (1.04) 10.386737 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.02) 10.184471 99.8999 (0.1002) 99.7997
12/31/1999 surrender fee (45.00) 10.184471 99.7997 (4.4185) 95.3812
49 MFS Research 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.22) 12.172796 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.49) 14.890281 99.8998 (0.1001) 99.7997
12/31/1999 surrender fee (45.00) 14.890281 99.7997 (3.0221) 96.7776
50 MFS Growth with Income 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.21) 12.066568 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.27) 12.695264 99.8997 (0.1000) 99.7997
12/31/1999 surrender fee (45.00) 12.695264 99.7997 (3.5446) 96.2551
51 MFS Emerging Growth 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.32) 13.233235 100.0000 (0.0997) 99.9003
12/31/1999 annual fee (2.30) 23.059667 99.9003 (0.0997) 99.8006
12/31/1999 surrender fee (45.00) 23.059667 99.8006 (1.9515) 97.8491
52 MFS / F&C Emerging Markets Equity 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.66) 6.571830 100.0000 (0.1004) 99.8996
12/31/1999 annual fee (0.89) 8.954559 99.8996 (0.0994) 99.8002
12/31/1999 surrender fee (45.00) 8.954559 99.8002 (5.0254) 94.7748
53 MFS High Income 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.98) 9.845193 100.0000 (0.0995) 99.9005
12/31/1999 annual fee (1.03) 10.334082 99.9005 (0.0997) 99.8008
12/31/1999 surrender fee (45.00) 10.334082 99.8008 (4.3545) 95.4463
54 MFS Global Governments 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.07) 10.669943 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.02) 10.258675 99.8997 (0.0994) 99.8003
12/31/1999 surrender fee (45.00) 10.258675 99.8003 (4.3865) 95.4138
55 Oppenheimer Capital Appreciation 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.22) 12.232731 100.0000 (0.0997) 99.9003
12/31/1999 annual fee (1.71) 17.087450 99.9003 (0.1001) 99.8002
12/31/1999 surrender fee (45.00) 17.087450 99.8002 (2.6335) 97.1667
56 Oppenheimer Main Street G&I 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.03) 10.326519 100.0000 (0.0997) 99.9003
12/31/1999 annual fee (1.24) 12.393263 99.9003 (0.1001) 99.8002
12/31/1999 surrender fee (45.00) 12.393263 99.8002 (3.6310) 96.1692
57 Oppenheimer High Income 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.99) 9.893828 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.02) 10.174699 99.8999 (0.1002) 99.7997
12/31/1999 surrender fee (45.00) 10.174699 99.7997 (4.4227) 95.3770
58 Oppenheimer Bond 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (0.99) 9.893828 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.02) 10.228856 99.8999 (0.0997) 99.8002
12/31/1999 surrender fee (45.00) 10.228856 99.8002 (4.3993) 95.4009
59 Oppenheimer Strategic Bond 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.02) 10.151332 100.0000 (0.1005) 99.8995
12/31/1999 annual fee (1.03) 10.293168 99.8995 (0.1001) 99.7994
12/31/1999 surrender fee (45.00) 10.293168 99.7994 (4.3718) 95.4276
60 Putnam VT G&I 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.14) 11.382650 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.14) 11.402482 99.8998 (0.1000) 99.7998
12/31/1999 surrender fee (45.00) 11.402482 99.7998 (3.9465) 95.8533
61 Putman VT New Value 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.05) 10.483517 100.0000 (0.1002) 99.8998
12/31/1999 annual fee (1.04) 10.365439 99.8998 (0.1003) 99.7995
12/31/1999 surrender fee (45.00) 10.365439 99.7995 (4.3414) 95.4581
62 Putnam VT Vista 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.18) 11.785702 100.0000 (0.1001) 99.8999
12/31/1999 annual fee (1.78) 17.769589 99.8999 (0.1002) 99.7997
12/31/1999 surrender fee (45.00) 17.769589 99.7997 (2.5324) 97.2673
63 Putnam VT Int'l Growth 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.17) 11.707003 100.0000 (0.0999) 99.9001
12/31/1999 annual fee (1.85) 18.486388 99.9001 (0.1001) 99.8000
12/31/1999 surrender fee (45.00) 18.486388 99.8000 (2.4342) 97.3658
64 Putnam VT Int'l New Opportunities 2.00 yrs
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee (1.14) 11.402252 100.0000 (0.1000) 99.9000
12/31/1999 annual fee (2.28) 22.820083 99.9000 (0.0999) 99.8001
12/31/1999 surrender fee (45.00) 22.820083 99.8001 (1.9719) 97.8282
65 Franklin Small Cap
3/1/1999 purchase 1,000.00 8.646100 - 115.6591 115.6591
12/31/1999 annual fee (2.04) 17.679923 115.6591 (0.1154) 115.5437
12/31/1999 surrender fee (50.00) 17.679923 115.5437 (2.8281) 112.7156
66 Templeton Growth Securities
1/19/1999 purchase 1,000.00 10.419670 - 95.9723 95.9723
12/31/1999 annual fee (1.21) 12.557918 95.9723 (0.0964) 95.8759
12/31/1999 surrender fee (50.00) 12.557918 95.8759 (3.9816) 91.8943
67 Templeton International Securities 1.67 yrs
5/1/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/3/1999 annual fee (1.00) 9.996786 100.0000 (0.1000) 99.9000
12/31/1999 annual fee (1.11) 11.147003 99.9000 (0.0996) 99.8004
12/31/1999 surrender fee (45.00) 11.147003 99.8004 (4.0370) 95.7634
68 Templeton Developing Markets Securities 1.67 yrs
5/1/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/3/1999 annual fee (1.00) 9.972042 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.14) 11.457935 99.8997 (0.0995) 99.8002
12/31/1999 surrender fee (45.00) 11.457935 99.8002 (3.9274) 95.8728
69 Mutual Shares Securities
5/1/1998 purchase 1,000.00 10.262212 - 97.4449 97.4449
5/1/1999 annual fee (1.00) 10.307081 97.4449 (0.0970) 97.3479
12/31/1999 annual fee (1.01) 10.413095 97.3479 (0.0970) 97.2509
12/31/1999 surrender fee (45.00) 10.413095 97.2509 (4.3215) 92.9294
71 Fidelity VIP Growth 1.87 yrs
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee (1.33) 13.296297 100.0000 (0.1000) 99.9000
12/31/1999 annual fee (1.77) 17.723853 99.9000 (0.0999) 99.8001
12/31/1999 surrender fee (45.00) 17.723853 99.8001 (2.5390) 97.2611
72 Fidelity VIP II Contrafund 1.87 yrs
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee (1.24) 12.429231 100.0000 (0.0998) 99.9002
12/31/1999 annual fee (1.51) 15.140886 99.9002 (0.0997) 99.8005
12/31/1999 surrender fee (45.00) 15.140886 99.8005 (2.9721) 96.8284
73 Fidelity VIP III Growth Opportunities 1.87 yrs
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee (1.13) 11.255274 100.0000 (0.1004) 99.8996
12/31/1999 annual fee (1.21) 12.073401 99.8996 (0.1002) 99.7994
12/31/1999 surrender fee (45.00) 12.073401 99.7994 (3.7272) 96.0722
75 Fidelity VIP III Growth & Income 1.87 yrs
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee (1.21) 12.066871 100.0000 (0.1003) 99.8997
12/31/1999 annual fee (1.31) 13.135609 99.8997 (0.0997) 99.8000
12/31/1999 surrender fee (45.00) 13.135609 99.8000 (3.4258) 96.3742
76 Fidelity VIP Equity-Income 1.87 yrs
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee (1.03) 10.322067 100.0000 (0.0998) 99.9002
12/31/1999 annual fee (1.11) 11.141767 99.9002 (0.0996) 99.8006
12/31/1999 surrender fee (45.00) 11.141767 99.8006 (4.0389) 95.7617
99 Franklin Large Cap Growth Securities
3/1/1999 purchase 1,000.00 10.985852 - 91.0262 91.0262
12/31/1999 annual fee (1.30) 14.307568 91.0262 (0.0909) 90.9353
12/31/1999 surrender fee (50.00) 14.307568 90.9353 (3.4947) 87.4406
140 American Century VP Income & Growth 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.03) 10.320209 100.0000 (0.0998) 99.9002
12/31/1999 surrender fee (50.00) 10.320209 99.9002 (4.8449) 95.0553
141 American Century VP Int'l 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.25) 12.514968 100.0000 (0.0999) 99.9001
12/31/1999 surrender fee (50.00) 12.514968 99.9001 (3.9952) 95.9049
142 American Century VP Value 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (0.96) 9.582238 100.0000 (0.1002) 99.8998
12/31/1999 surrender fee (50.00) 9.582238 99.8998 (5.2180) 94.6818
160 Dreyfus Stock Index 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.03) 10.321607 100.0000 (0.0998) 99.9002
12/31/1999 surrender fee (50.00) 10.321607 99.9002 (4.8442) 95.0560
161 Dreyfus VIF Disciplined Stock 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.03) 10.300470 100.0000 (0.1000) 99.9000
12/31/1999 surrender fee (50.00) 10.300470 99.9000 (4.8541) 95.0459
162 Dreyfus VIF Capital Appreciation 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.01) 10.118366 100.0000 (0.0998) 99.9002
12/31/1999 surrender fee (50.00) 10.118366 99.9002 (4.9415) 94.9587
180 INVESCO VIF Dynamics 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.11) 11.142628 100.0000 (0.0996) 99.9004
12/31/1999 surrender fee (50.00) 11.142628 99.9004 (4.4873) 95.4131
181 INVESCO VIF High Yield 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.01) 10.117511 100.0000 (0.0998) 99.9002
12/31/1999 surrender fee (50.00) 10.117511 99.9002 (4.9419) 94.9583
210 PIMCO High Yield Bond 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.01) 10.078000 100.0000 (0.1002) 99.8998
12/31/1999 surrender fee (50.00) 10.078000 99.8998 (4.9613) 94.9385
211 PIMCO Low Duration Bond 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.00) 9.969000 100.0000 (0.1003) 99.8997
12/31/1999 surrender fee (50.00) 9.969000 99.8997 (5.0155) 94.8842
212 PIMCO StocksPLUS G&I 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.03) 10.306817 100.0000 (0.0999) 99.9001
12/31/1999 surrender fee (50.00) 10.306817 99.9001 (4.8512) 95.0489
213 PIMCO Total Return Bond 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (0.99) 9.875011 100.0000 (0.1003) 99.8997
12/31/1999 surrender fee (50.00) 9.875011 99.8997 (5.0633) 94.8364
230 Scudder Int'l 0.12 yrs
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee (1.16) 11.631204 100.0000 (0.0997) 99.9003
12/31/1999 surrender fee (50.00) 11.631204 99.9003 (4.2988) 95.6015
Cova Variable Annuity Account One
Standard Since Inception Returns
12/31/1999
Sub-Account Annualized Account 12/31/1999 Initial Inception
Inception Value AUV Investment Date
Return
6 Cova Lord Abbett G&I (1) 4.79% 1,047.86 39.456928 1,000.00 1/8/1999
8 Cova Bond Debenture 7.70% 1,312.78 13.765381 1,000.00 5/1/1996
9 GACC Money Market 2.78% 1,102.94 11.525358 1,000.00 6/3/1996
11 Cova Developing Growth 15.15% 1,395.96 14.452868 1,000.00 8/20/1997
12 Cova Large Cap Research 15.79% 1,414.18 14.635627 1,000.00 8/20/1997
13 Cova Mid-Cap Value 1.64% 1,039.29 10.875538 1,000.00 8/20/1997
15 Cova Quality Bond 3.11% 1,119.05 11.567155 1,000.00 5/1/1996
16 Cova Small Cap Stock 14.70% 1,653.99 17.932441 1,000.00 5/1/1996
17 Cova Large Cap Stock 23.98% 2,200.20 22.548941 1,000.00 5/1/1996
18 Cova Select Equity 16.86% 1,770.87 18.384654 1,000.00 5/1/1996
19 Cova Int'l Equity 12.64% 1,547.65 16.333906 1,000.00 5/1/1996
20 Cova Balanced 7.36% 1,194.53 12.432529 1,000.00 7/1/1997
22 Cova Equity Income 6.54% 1,171.61 12.202725 1,000.00 7/1/1997
23 Cova G&I Equity 12.66% 1,347.42 13.966013 1,000.00 7/1/1997
24 Russell Multi-Style Equity 19.12% 1,418.84 14.667724 1,000.00 12/31/1997
25 Russell Aggressive Equity -0.24% 995.14 10.422234 1,000.00 12/31/1997
26 Russell Non-U.S. 19.05% 1,417.30 14.652149 1,000.00 12/31/1997
27 Russell Core Bond -0.45% 990.93 10.380043 1,000.00 12/31/1997
28 Russell Real Estate Securities (1) -11.21% 887.87 9.388124 1,000.00 7/1/1999
30 AIM V.I. Value 27.46% 1,624.57 16.729131 1,000.00 12/31/1997
31 AIM V.I. Capital Appreciation 27.68% 1,630.17 16.785351 1,000.00 12/31/1997
32 AIM V.I. Int'l Equity 30.12% 1,693.18 17.416663 1,000.00 12/31/1997
35 Alliance Premier Growth 36.22% 1,855.54 19.043436 1,000.00 12/31/1997
36 Alliance Real Estate Investment -16.28% 700.98 7.474763 1,000.00 12/31/1997
37 Cova Riggs U.S. Gov't Securities (1) -6.44% 935.63 9.995395 1,000.00 11/2/1999
38 Cova Riggs Stock (1) -3.55% 964.53 10.239524 1,000.00 11/2/1999
39 Liberty Newport Tiger, Variable Series 21.70% 1,481.01 15.290670 1,000.00 12/31/1997
40 Goldman Sachs G&I -0.90% 982.87 10.299328 1,000.00 1/29/1998
41 Goldman Sachs Int'l Equity 20.68% 1,434.69 14.826563 1,000.00 1/29/1998
42 Goldman Sachs Global Income 0.28% 1,005.31 10.524196 1,000.00 1/29/1998
43 Templeton Global Income Securities (1) -8.77% 912.34 9.681844 1,000.00 3/1/1999
44 Kemper Dreman High Return -8.07% 871.88 9.187195 1,000.00 5/15/1998
45 Kemper Small Cap Growth 22.53% 1,501.24 15.493396 1,000.00 12/31/1997
46 Kemper Small Cap Value -8.32% 840.48 8.872647 1,000.00 12/31/1997
47 Kemper Government Securities 0.05% 1,001.00 10.480981 1,000.00 12/31/1997
48 MFS Bond -1.76% 971.41 10.184471 1,000.00 5/15/1998
49 MFS Research 20.04% 1,441.05 14.890281 1,000.00 12/31/1997
50 MFS Growth with Income 10.54% 1,221.98 12.695264 1,000.00 12/31/1997
51 MFS Emerging Growth 50.21% 2,256.37 23.059667 1,000.00 12/31/1997
52 MFS / F&C Emerging Markets Equity -7.88% 848.67 8.954559 1,000.00 12/31/1997
53 MFS High Income -0.68% 986.35 10.334082 1,000.00 12/31/1997
54 MFS Global Governments -1.06% 978.82 10.258675 1,000.00 12/31/1997
55 Oppenheimer Capital Appreciation 28.85% 1,660.33 17.087450 1,000.00 12/31/1997
56 Oppenheimer Main Street G&I 9.17% 1,191.85 12.393263 1,000.00 12/31/1997
57 Oppenheimer High Income -1.49% 970.43 10.174699 1,000.00 12/31/1997
58 Oppenheimer Bond -1.22% 975.84 10.228856 1,000.00 12/31/1997
59 Oppenheimer Strategic Bond -0.89% 982.25 10.293168 1,000.00 12/31/1997
60 Putnam VT G&I 4.55% 1,092.97 11.402482 1,000.00 12/31/1997
61 Putman VT New Value -0.53% 989.47 10.365439 1,000.00 12/31/1997
62 Putnam VT Vista 31.47% 1,728.40 17.769589 1,000.00 12/31/1997
63 Putnam VT Int'l Growth 34.16% 1,799.94 18.486388 1,000.00 12/31/1997
64 Putnam VT Int'l New Opportunities 49.41% 2,232.45 22.820083 1,000.00 12/31/1997
65 Franklin Small Cap (1) 99.28% 1,992.80 17.679923 1,000.00 3/1/1999
66 Templeton Growth Securities (1) 15.40% 1,154.00 12.557918 1,000.00 1/19/1999
67 Templeton International Securities 3.99% 1,067.47 11.147003 1,000.00 5/1/1998
68 Templeton Developing Markets Securities 5.79% 1,098.50 11.457935 1,000.00 5/1/1998
69 Mutual Shares Securities -3.23% 967.68 10.413095 1,000.00 5/1/1998
71 Fidelity VIP Growth 33.84% 1,723.84 17.723853 1,000.00 2/17/1998
72 Fidelity VIP II Contrafund 22.72% 1,466.07 15.140886 1,000.00 2/17/1998
73 Fidelity VIP III Growth Opportunities 8.26% 1,159.92 12.073401 1,000.00 2/17/1998
75 Fidelity VIP III Growth & Income 13.45% 1,265.93 13.135609 1,000.00 2/17/1998
76 Fidelity VIP Equity-Income 3.53% 1,066.95 11.141767 1,000.00 2/17/1998
99 Franklin Large Cap Growth Securities 25.11% 1,251.06 14.307568 1,000.00 3/1/1999
140 American Century VP Income & Growth (1) -1.90% 980.99 10.320209 1,000.00 11/19/1999
141 American Century VP Int'l (1) 20.03% 1,200.25 12.514968 1,000.00 11/19/1999
142 American Century VP Value (1) -9.27% 907.26 9.582238 1,000.00 11/19/1999
160 Dreyfus Stock Index (1) -1.89% 981.13 10.321607 1,000.00 11/19/1999
161 Dreyfus VIF Disciplined Stock (1) -2.10% 979.02 10.300470 1,000.00 11/19/1999
162 Dreyfus VIF Capital Appreciation (1) -3.92% 960.83 10.118366 1,000.00 11/19/1999
180 INVESCO VIF Dynamics (1) 6.32% 1,063.15 11.142628 1,000.00 11/19/1999
181 INVESCO VIF High Yield (1) -3.93% 960.74 10.117511 1,000.00 11/19/1999
210 PIMCO High Yield Bond (1) -4.32% 956.79 10.078000 1,000.00 11/19/1999
211 PIMCO Low Duration Bond (1) -5.41% 945.90 9.969000 1,000.00 11/19/1999
212 PIMCO StocksPLUS G&I (1) -2.04% 979.65 10.306817 1,000.00 11/19/1999
213 PIMCO Total Return Bond (1) -6.35% 936.51 9.875011 1,000.00 11/19/1999
230 Scudder Int'l (1) 11.20% 1,111.96 11.631204 1,000.00 11/19/1999
(1)Returns are not annualized for sub-accounts in existence less than 1 year.
Cova Variable Annuity Account One
Non-Standard 1 Year Return Data
As of 12/31/99
Sub-Account Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
6 Cova Lord Abbett G&I
12/31/98 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/99 annual fee 39.456928 #DIV/0! - #DIV/0!
12/31/99 surrender fee 39.456928 #DIV/0! - #DIV/0!
8 Cova Bond Debenture
12/31/98 purchase 1,000.00 13.496500 - 74.0933 74.0933
12/31/99 annual fee 13.765381 74.0933 - 74.0933
12/31/99 surrender fee 13.765381 74.0933 - 74.0933
9 GACC Money Market
12/31/98 purchase 1,000.00 11.109943 - 90.0095 90.0095
12/31/99 annual fee 11.525358 90.0095 - 90.0095
12/31/99 surrender fee 11.525358 90.0095 - 90.0095
11 Cova Developing Growth
12/31/98 purchase 1,000.00 11.067854 - 90.3518 90.3518
12/31/99 annual fee 14.452868 90.3518 - 90.3518
12/31/99 surrender fee 14.452868 90.3518 - 90.3518
12 Cova Large Cap Research
12/31/98 purchase 1,000.00 11.825550 - 84.5627 84.5627
12/31/99 annual fee 14.635627 84.5627 - 84.5627
12/31/99 surrender fee 14.635627 84.5627 - 84.5627
13 Cova Mid-Cap Value
12/31/98 purchase 1,000.00 10.437949 - 95.8043 95.8043
12/31/99 annual fee 10.875538 95.8043 - 95.8043
12/31/99 surrender fee 10.875538 95.8043 - 95.8043
15 Cova Quality Bond
12/31/98 purchase 1,000.00 11.914489 - 83.9314 83.9314
12/31/99 annual fee 11.567155 83.9314 - 83.9314
12/31/99 surrender fee 11.567155 83.9314 - 83.9314
16 Cova Small Cap Stock
12/31/98 purchase 1,000.00 12.582860 - 79.4732 79.4732
12/31/99 annual fee 17.932441 79.4732 - 79.4732
12/31/99 surrender fee 17.932441 79.4732 - 79.4732
17 Cova Large Cap Stock
12/31/98 purchase 1,000.00 19.428499 - 51.4708 51.4708
12/31/99 annual fee 22.548941 51.4708 - 51.4708
12/31/99 surrender fee 22.548941 51.4708 - 51.4708
18 Cova Select Equity
12/31/98 purchase 1,000.00 16.987204 - 58.8678 58.8678
12/31/99 annual fee 18.384654 58.8678 - 58.8678
12/31/99 surrender fee 18.384654 58.8678 - 58.8678
19 Cova Int'l Equity
12/31/98 purchase 1,000.00 12.889315 - 77.5836 77.5836
12/31/99 annual fee 16.333906 77.5836 - 77.5836
12/31/99 surrender fee 16.333906 77.5836 - 77.5836
20 Cova Balanced
12/31/1998 Purchase 1,000.00 11.767845 - 84.9773 84.9773
12/31/1999 Annual Fee 12.432529 84.9773 - 84.9773
12/31/1999 Surrender 12.432529 84.9773 - 84.9773
22 Cova Equity Income
12/31/98 Purchase 1,000.00 12.068849 - 82.8579 82.8579
12/31/99 Annual Fee 12.202725 82.8579 - 82.8579
12/31/99 Surrender 12.202725 82.8579 - 82.8579
23 Cova G&I Equity
12/31/98 Purchase 1,000.00 12.188331 - 82.0457 82.0457
12/31/99 Annual Fee 13.966013 82.0457 - 82.0457
12/31/99 Surrender 13.966013 82.0457 - 82.0457
24 Russell Multi-Style Equity
12/31/98 purchase 1,000.00 12.694810 - 78.7723 78.7723
12/31/99 annual fee 14.667724 78.7723 - 78.7723
12/31/99 surrender fee 14.667724 78.7723 - 78.7723
25 Russell Aggressive Equity
12/31/98 purchase 1,000.00 9.963254 - 100.3688 100.3688
12/31/99 annual fee 10.422234 100.3688 - 100.3688
12/31/99 surrender fee 10.422234 100.3688 - 100.3688
26 Russell Non-U.S.
12/31/98 purchase 1,000.00 11.142092 - 89.7498 89.7498
12/31/99 annual fee 14.652149 89.7498 - 89.7498
12/31/99 surrender fee 14.652149 89.7498 - 89.7498
27 Russell Core Bond
12/31/98 purchase 1,000.00 10.591175 - 94.4182 94.4182
12/31/99 annual fee 10.380043 94.4182 - 94.4182
12/31/99 surrender fee 10.380043 94.4182 - 94.4182
28 Russell Real Estate Securities
12/31/98 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/99 annual fee 9.388124 #DIV/0! - #DIV/0!
12/31/99 surrender fee 9.388124 #DIV/0! - #DIV/0!
30 AIM V.I. Value
12/31/98 purchase 1,000.00 13.060203 - 76.5685 76.5685
12/31/99 annual fee 16.729131 76.5685 - 76.5685
12/31/99 surrender fee 16.729131 76.5685 - 76.5685
31 AIM V.I. Capital Appreciation
12/31/98 purchase 1,000.00 11.770729 - 84.9565 84.9565
12/31/99 annual fee 16.785351 84.9565 - 84.9565
12/31/99 surrender fee 16.785351 84.9565 - 84.9565
32 AIM V.I. Int'l Equity
12/31/98 purchase 1,000.00 11.391449 - 87.7851 87.7851
12/31/99 annual fee 17.416663 87.7851 - 87.7851
12/31/99 surrender fee 17.416663 87.7851 - 87.7851
35 Alliance Premier Growth
12/31/98 purchase 1,000.00 14.595485 - 68.5143 68.5143
12/31/99 annual fee 19.043436 68.5143 - 68.5143
12/31/99 surrender fee 19.043436 68.5143 - 68.5143
36 Alliance Real Estate Investment
12/31/98 purchase 1,000.00 7.988435 - 125.1810 125.1810
12/31/99 annual fee 7.474763 125.1810 - 125.1810
12/31/99 surrender fee 7.474763 125.1810 - 125.1810
37 Cova Riggs U.S. Gov't Securities
12/31/98 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/99 annual fee 9.995395 #DIV/0! - #DIV/0!
12/31/99 surrender fee 9.995395 #DIV/0! - #DIV/0!
38 Cova Riggs Stock
12/31/98 purchase 1,000.00 - - #DIV/0! #DIV/0!
12/31/99 annual fee 10.239524 #DIV/0! - #DIV/0!
12/31/99 surrender fee 10.239524 #DIV/0! - #DIV/0!
39 Liberty Newport Tiger, Variable Series
12/31/98 purchase 1,000.00 9.228765 - 108.3569 108.3569
12/31/99 annual fee 15.290670 108.3569 - 108.3569
12/31/99 surrender fee 15.290670 108.3569 - 108.3569
40 Goldman Sachs G&I
12/31/98 purchase 1,000.00 9.908613 - 100.9223 100.9223
12/31/99 annual fee 10.299328 100.9223 - 100.9223
12/31/99 surrender fee 10.299328 100.9223 - 100.9223
41 Goldman Sachs Int'l Equity
12/31/98 purchase 1,000.00 11.402925 - 87.6968 87.6968
12/31/99 annual fee 14.826563 87.6968 - 87.6968
12/31/99 surrender fee 14.826563 87.6968 - 87.6968
42 Goldman Sachs Global Income
12/31/98
12/31/99 purchase 1,000.00 10.781765 - 92.7492 92.7492
12/31/99 annual fee 10.524196 92.7492 - 92.7492
surrender fee 10.524196 92.7492 - 92.7492
44 Kemper Dreman High Return
12/31/98 purchase 1,000.00 10.487302 - 95.3534 95.3534
12/31/99 annual fee 9.187195 95.3534 - 95.3534
12/31/99 surrender fee 9.187195 95.3534 - 95.3534
45 Kemper Small Cap Growth
12/31/98 purchase 1,000.00 11.676086 - 85.6451 85.6451
12/31/99 annual fee 15.493396 85.6451 - 85.6451
12/31/99 surrender fee 15.493396 85.6451 - 85.6451
46 Kemper Small Cap Value
12/31/98 purchase 1,000.00 8.753222 - 114.2436 114.2436
12/31/99 annual fee 8.872647 114.2436 - 114.2436
12/31/99 surrender fee 8.872647 114.2436 - 114.2436
47 Kemper Government Securities
12/31/98 purchase 1,000.00 10.556498 - 94.7284 94.7284
12/31/99 annual fee 10.480981 94.7284 - 94.7284
12/31/99 surrender fee 10.480981 94.7284 - 94.7284
48 MFS Bond
12/31/98 purchase 1,000.00 10.491811 - 95.3124 95.3124
12/31/99 annual fee 10.184471 95.3124 - 95.3124
12/31/99 surrender fee 10.184471 95.3124 - 95.3124
49 MFS Research
12/31/98 purchase 1,000.00 12.172796 - 82.1504 82.1504
12/31/99 annual fee 14.890281 82.1504 - 82.1504
12/31/99 surrender fee 14.890281 82.1504 - 82.1504
50 MFS Growth with Income
12/31/98 purchase 1,000.00 12.066568 - 82.8736 82.8736
12/31/99 annual fee 12.695264 82.8736 - 82.8736
12/31/99 surrender fee 12.695264 82.8736 - 82.8736
51 MFS Emerging Growth
12/31/98 purchase 1,000.00 13.233235 - 75.5673 75.5673
12/31/99 annual fee 23.059667 75.5673 - 75.5673
12/31/99 surrender fee 23.059667 75.5673 - 75.5673
52 MFS / F&C Emerging Markets Equity
12/31/98 purchase 1,000.00 6.571830 - 152.1646 152.1646
12/31/99 annual fee 8.954559 152.1646 - 152.1646
12/31/99 surrender fee 8.954559 152.1646 - 152.1646
53 MFS High Income
12/31/98 purchase 1,000.00 9.845193 - 101.5724 101.5724
12/31/99 annual fee 10.334082 101.5724 - 101.5724
12/31/99 surrender fee 10.334082 101.5724 - 101.5724
54 MFS Global Governments
12/31/98 purchase 1,000.00 10.669943 - 93.7212 93.7212
12/31/99 annual fee 10.258675 93.7212 - 93.7212
12/31/99 surrender fee 10.258675 93.7212 - 93.7212
55 Oppenheimer Capital Appreciation
12/31/98 purchase 1,000.00 12.232731 - 81.7479 81.7479
12/31/99 annual fee 17.087450 81.7479 - 81.7479
12/31/99 surrender fee 17.087450 81.7479 - 81.7479
56 Oppenheimer Main Street G&I
12/31/98 purchase 1,000.00 10.326519 - 96.8381 96.8381
12/31/99 annual fee 12.393263 96.8381 - 96.8381
12/31/99 surrender fee 12.393263 96.8381 - 96.8381
57 Oppenheimer High Income
12/31/98 purchase 1,000.00 9.893828 - 101.0731 101.0731
12/31/99 annual fee 10.174699 101.0731 - 101.0731
12/31/99 surrender fee 10.174699 101.0731 - 101.0731
58 Oppenheimer Bond
12/31/98 purchase 1,000.00 10.533011 - 94.9396 94.9396
12/31/99 annual fee 10.228856 94.9396 - 94.9396
12/31/99 surrender fee 10.228856 94.9396 - 94.9396
59 Oppenheimer Strategic Bond
12/31/98 purchase 1,000.00 10.151332 - 98.5092 98.5092
12/31/99 annual fee 10.293168 98.5092 - 98.5092
12/31/99 surrender fee 10.293168 98.5092 - 98.5092
60 Putnam VT G&I
12/31/98 purchase 1,000.00 11.382650 - 87.8530 87.8530
12/31/99 annual fee 11.402482 87.8530 - 87.8530
12/31/99 surrender fee 11.402482 87.8530 - 87.8530
61 Putman VT New Value
12/31/98 purchase 1,000.00 10.483517 - 95.3878 95.3878
12/31/99 annual fee 10.365439 95.3878 - 95.3878
12/31/99 surrender fee 10.365439 95.3878 - 95.3878
62 Putnam VT Vista
12/31/98 purchase 1,000.00 11.785702 - 84.8486 84.8486
12/31/99 annual fee 17.769589 84.8486 - 84.8486
12/31/99 surrender fee 17.769589 84.8486 - 84.8486
63 Putnam VT Int'l Growth
12/31/98 purchase 1,000.00 11.707003 - 85.4190 85.4190
12/31/99 annual fee 18.486388 85.4190 - 85.4190
12/31/99 surrender fee 18.486388 85.4190 - 85.4190
64 Putnam VT Int'l New Opportunities
12/31/98 purchase 1,000.00 11.402252 - 87.7020 87.7020
12/31/99 annual fee 22.820083 87.7020 - 87.7020
12/31/99 surrender fee 22.820083 87.7020 - 87.7020
67 Templeton International Securities
12/31/98 purchase 1,000.00 9.144522 - 109.3551 109.3551
12/31/99 annual fee 11.147003 109.3551 - 109.3551
12/31/99 surrender fee 11.147003 109.3551 - 109.3551
68 Templeton Developing Markets Securities
12/31/98 purchase 1,000.00 7.552448 - 132.4074 132.4074
12/31/99 annual fee 11.457935 132.4074 - 132.4074
12/31/99 surrender fee 11.457935 132.4074 - 132.4074
69 Mutual Shares Securities
12/31/98 purchase 1,000.00 9.310282 - 107.4081 107.4081
12/31/99 annual fee 10.413095 107.4081 - 107.4081
12/31/99 surrender fee 10.413095 107.4081 - 107.4081
71 Fidelity VIP Growth
12/31/98 purchase 1,000.00 13.077878 - 76.4650 76.4650
12/31/99 annual fee 17.723853 76.4650 - 76.4650
12/31/99 surrender fee 17.723853 76.4650 - 76.4650
72 Fidelity VIP II Contrafund
12/31/98 purchase 1,000.00 12.357373 - 80.9233 80.9233
12/31/99 annual fee 15.140886 80.9233 - 80.9233
12/31/99 surrender fee 15.140886 80.9233 - 80.9233
73 Fidelity VIP III Growth Opportunities
12/31/98 purchase 1,000.00 11.742360 - 85.1618 85.1618
12/31/99 annual fee 12.073401 85.1618 - 85.1618
12/31/99 surrender fee 12.073401 85.1618 - 85.1618
75 Fidelity VIP III Growth & Income
12/31/98 purchase 1,000.00 12.202502 - 81.9504 81.9504
12/31/99 annual fee 13.135609 81.9504 - 81.9504
12/31/99 surrender fee 13.135609 81.9504 - 81.9504
76 Fidelity VIP Equity-Income
12/31/98 purchase 1,000.00 10.626607 - 94.1034 94.1034
12/31/99 annual fee 11.141767 94.1034 - 94.1034
12/31/99 surrender fee 11.141767 94.1034 - 94.1034
Cova Variable Annuity Account One
Non-Standard 1 Year Returns
12/31/99
Sub-Account Total Account 12/31/1999 Initial Inception
Return Value AUV Investment Date
6 Cova Lord Abbett G&I (1) 1/8/1999
8 Cova Bond Debenture 1.99% 1,019.92 13.765381 1,000.00 5/1/1996
9 GACC Money Market 3.74% 1,037.39 11.525358 1,000.00 6/3/1996
11 Cova Developing Growth 30.58% 1,305.84 14.452868 1,000.00 8/20/1997
12 Cova Large Cap Research 23.76% 1,237.63 14.635627 1,000.00 8/20/1997
13 Cova Mid-Cap Value 4.19% 1,041.92 10.875538 1,000.00 8/20/1997
15 Cova Quality Bond -2.92% 970.85 11.567155 1,000.00 5/1/1996
16 Cova Small Cap Stock 42.52% 1,425.15 17.932441 1,000.00 5/1/1996
17 Cova Large Cap Stock 16.06% 1,160.61 22.548941 1,000.00 5/1/1996
18 Cova Select Equity 8.23% 1,082.26 18.384654 1,000.00 5/1/1996
19 Cova Int'l Equity 26.72% 1,267.24 16.333906 1,000.00 5/1/1996
20 Cova Balanced 5.65% 1,056.48 12.432529 1,000.00 7/1/1997
22 Cova Equity Income 1.11% 1,011.09 12.202725 1,000.00 7/1/1997
23 Cova G&I Equity 14.59% 1,145.85 13.966013 1,000.00 7/1/1997
24 Russell Multi-Style Equity 15.54% 1,155.41 14.667724 1,000.00 12/31/1997
25 Russell Aggressive Equity 4.61% 1,046.07 10.422234 1,000.00 12/31/1997
26 Russell Non-U.S. 31.50% 1,315.03 14.652149 1,000.00 12/31/1997
27 Russell Core Bond -1.99% 980.06 10.380043 1,000.00 12/31/1997
28 Russell Real Estate Securities (1) 7/1/1999
30 AIM V.I. Value 28.09% 1,280.92 16.729131 1,000.00 12/31/1997
31 AIM V.I. Capital Appreciation 42.60% 1,426.02 16.785351 1,000.00 12/31/1997
32 AIM V.I. Int'l Equity 52.89% 1,528.92 17.416663 1,000.00 12/31/1997
35 Alliance Premier Growth 30.48% 1,304.75 19.043436 1,000.00 12/31/1997
36 Alliance Real Estate Investment -6.43% 935.70 7.474763 1,000.00 12/31/1997
37 Cova Riggs U.S. Gov't Securities (1) 11/2/1999
38 Cova Riggs Stock (1) 11/2/1999
39 Liberty Newport Tiger, Variable Series 65.69% 1,656.85 15.290670 1,000.00 12/31/1997
40 Goldman Sachs G&I 3.94% 1,039.43 10.299328 1,000.00 1/29/1998
41 Goldman Sachs Int'l Equity 30.02% 1,300.24 14.826563 1,000.00 1/29/1998
42 Goldman Sachs Global Income -2.39% 976.11 10.524196 1,000.00 1/29/1998
43 Templeton Global Income Securities (1) 3/1/1999
44 Kemper Dreman High Return -12.40% 876.03 9.187195 1,000.00 5/15/1998
45 Kemper Small Cap Growth 32.69% 1,326.93 15.493396 1,000.00 12/31/1997
46 Kemper Small Cap Value 1.36% 1,013.64 8.872647 1,000.00 12/31/1997
47 Kemper Government Securities -0.71% 992.85 10.480981 1,000.00 12/31/1997
48 MFS Bond -2.93% 970.71 10.184471 1,000.00 5/15/1998
49 MFS Research 22.32% 1,223.24 14.890281 1,000.00 12/31/1997
50 MFS Growth with Income 5.21% 1,052.10 12.695264 1,000.00 12/31/1997
51 MFS Emerging Growth 74.26% 1,742.56 23.059667 1,000.00 12/31/1997
52 MFS / F&C Emerging Markets Equity 36.26% 1,362.57 8.954559 1,000.00 12/31/1997
53 MFS High Income 4.97% 1,049.66 10.334082 1,000.00 12/31/1997
54 MFS Global Governments -3.85% 961.46 10.258675 1,000.00 12/31/1997
55 Oppenheimer Capital Appreciation 39.69% 1,396.86 17.087450 1,000.00 12/31/1997
56 Oppenheimer Main Street G&I 20.01% 1,200.14 12.393263 1,000.00 12/31/1997
57 Oppenheimer High Income 2.84% 1,028.39 10.174699 1,000.00 12/31/1997
58 Oppenheimer Bond -2.89% 971.12 10.228856 1,000.00 12/31/1997
59 Oppenheimer Strategic Bond 1.40% 1,013.97 10.293168 1,000.00 12/31/1997
60 Putnam VT G&I 0.17% 1,001.74 11.402482 1,000.00 12/31/1997
61 Putman VT New Value -1.13% 988.74 10.365439 1,000.00 12/31/1997
62 Putnam VT Vista 50.77% 1,507.72 17.769589 1,000.00 12/31/1997
63 Putnam VT Int'l Growth 57.91% 1,579.09 18.486388 1,000.00 12/31/1997
64 Putnam VT Int'l New Opportunities 100.14% 2,001.37 22.820083 1,000.00 12/31/1997
65 Franklin Small Cap (1) 3/1/1999
66 Templeton Growth Securities (1) 1/19/1999
67 Templeton International Securities 21.90% 1,218.98 11.147003 1,000.00 5/1/1998
68 Templeton Developing Markets Securities 51.71% 1,517.12 11.457935 1,000.00 5/1/1998
69 Mutual Shares Securities 11.85% 1,118.45 10.413095 1,000.00 5/1/1998
71 Fidelity VIP Growth 35.53% 1,355.25 17.723853 1,000.00 2/17/1998
72 Fidelity VIP II Contrafund 22.53% 1,225.25 15.140886 1,000.00 2/17/1998
73 Fidelity VIP III Growth Opportunities 2.82% 1,028.19 12.073401 1,000.00 2/17/1998
75 Fidelity VIP III Growth & Income 7.65% 1,076.47 13.135609 1,000.00 2/17/1998
76 Fidelity VIP Equity-Income 4.85% 1,048.48 11.141767 1,000.00 2/17/1998
99 Franklin Large Cap Growth Securities (1) 3/1/1999
140 American Century VP Income & Growth (1) 11/19/1999
141 American Century VP Int'l (1) 11/19/1999
142 American Century VP Value (1) 11/19/1999
160 Dreyfus Stock Index (1) 11/19/1999
161 Dreyfus VIF Disciplined Stock (1) 11/19/1999
162 Dreyfus VIF Capital Appreciation (1) 11/19/1999
180 INVESCO VIF Dynamics (1) 11/19/1999
181 INVESCO VIF High Yield (1) 11/19/1999
210 PIMCO High Yield Bond (1) 11/19/1999
211 PIMCO Low Duration Bond (1) 11/19/1999
212 PIMCO StocksPLUS G&I (1) 11/19/1999
213 PIMCO Total Return Bond (1) 11/19/1999
230 Scudder Int'l (1) 11/19/1999
(1) Sub-account has not been in existence for 1 year.
Cova Variable Annuity Account One
Non-Standard Since Inception Return Data
As of 12/31/99
Sub-Account Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
6 Cova Lord Abbett G&I
1/8/1999 purchase 1,000.00 35.903757 - 27.8522 27.8522
12/31/1999 annual fee 39.456928 27.8522 - 27.8522
12/31/1999 surrender fee 39.456928 27.8522 - 27.8522
8 Cova Bond Debenture
5/1/1996 purchase 1,000.00 10.097690 - 99.0326 99.0326
5/1/1997 annual fee 11.516923 99.0326 - 99.0326
5/1/1998 annual fee 13.535615 99.0326 - 99.0326
5/3/1999 annual fee 13.805909 99.0326 - 99.0326
12/31/1999 annual fee 13.765381 99.0326 - 99.0326
12/31/1999 surrender fee 13.765381 99.0326 - 99.0326
9 GACC Money Market
6/3/1996 purchase 1,000.00 10.000000 - 100.0000 100.0000
6/3/1997 annual fee 10.410578 100.0000 - 100.0000
6/3/1998 annual fee 10.858145 100.0000 - 100.0000
6/3/1999 annual fee 11.271281 100.0000 - 100.0000
12/31/1999 annual fee 11.525358 100.0000 - 100.0000
12/31/1999 surrender fee 11.525358 100.0000 - 100.0000
11 Cova Developing Growth
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee 9.823023 100.0000 - 100.0000
8/20/1999 annual fee 12.172305 100.0000 - 100.0000
12/31/1999 annual fee 14.452868 100.0000 - 100.0000
12/31/1999 surrender fee 14.452868 100.0000 - 100.0000
12 Cova Large Cap Research
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee 10.537316 100.0000 - 100.0000
8/20/1999 annual fee 12.925442 100.0000 - 100.0000
12/31/1999 annual fee 14.635627 100.0000 - 100.0000
12/31/1999 surrender fee 14.635627 100.0000 - 100.0000
13 Cova Mid-Cap Value
8/20/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
8/20/1998 annual fee 9.919404 100.0000 - 100.0000
8/20/1999 annual fee 11.429524 100.0000 - 100.0000
12/31/1999 annual fee 10.875538 100.0000 - 100.0000
12/31/1999 surrender fee 10.875538 100.0000 - 100.0000
15 Cova Quality Bond
5/1/1996 purchase 1,000.00 9.897228 - 101.0384 101.0384
5/1/1997 annual fee 10.405141 101.0384 - 101.0384
5/1/1998 annual fee 11.356198 101.0384 - 101.0384
5/3/1999 annual fee 11.809700 101.0384 - 101.0384
12/31/1999 annual fee 11.567155 101.0384 - 101.0384
12/31/1999 surrender fee 11.567155 101.0384 - 101.0384
16 Cova Small Cap Stock
5/1/1996 purchase 1,000.00 10.512560 - 95.1243 95.1243
5/1/1997 annual fee 10.358427 95.1243 - 95.1243
5/1/1998 annual fee 14.969970 95.1243 - 95.1243
5/3/1999 annual fee 12.606262 95.1243 - 95.1243
12/31/1999 annual fee 17.932441 95.1243 - 95.1243
12/31/1999 surrender fee 17.932441 95.1243 - 95.1243
17 Cova Large Cap Stock
5/1/1996 purchase 1,000.00 10.003025 - 99.9698 99.9698
5/1/1997 annual fee 12.198198 99.9698 - 99.9698
5/1/1998 annual fee 17.502632 99.9698 - 99.9698
5/3/1999 annual fee 21.572882 99.9698 - 99.9698
12/31/1999 annual fee 22.548941 99.9698 - 99.9698
12/31/1999 surrender fee 22.548941 99.9698 - 99.9698
18 Cova Select Equity
5/1/1996 purchase 1,000.00 10.083890 - 99.1681 99.1681
5/1/1997 annual fee 11.445501 99.1681 - 99.1681
5/1/1998 annual fee 16.125129 99.1681 - 99.1681
5/3/1999 annual fee 18.567838 99.1681 - 99.1681
12/31/1999 annual fee 18.384654 99.1681 - 99.1681
12/31/1999 surrender fee 18.384654 99.1681 - 99.1681
19 Cova Int'l Equity
5/1/1996 purchase 1,000.00 10.214899 - 97.8962 97.8962
5/1/1997 annual fee 11.135715 97.8962 - 97.8962
5/1/1998 annual fee 13.138587 97.8962 - 97.8962
5/3/1999 annual fee 13.586693 97.8962 - 97.8962
12/31/1999 annual fee 16.333906 97.8962 - 97.8962
12/31/1999 surrender fee 16.333906 97.8962 - 97.8962
20 Cova Balanced
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee 11.236058 100.0000 - 100.0000
7/1/1999 annual fee 12.590207 100.0000 - 100.0000
12/31/1999 annual fee 12.432529 100.0000 - 100.0000
12/31/1999 surrender fee 12.432529 100.0000 - 100.0000
22 Cova Equity Income
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee 12.418195 100.0000 - 100.0000
7/1/1999 annual fee 13.363970 100.0000 - 100.0000
12/31/1999 annual fee 12.202725 100.0000 - 100.0000
12/31/1999 surrender fee 12.202725 100.0000 - 100.0000
23 Cova G&I Equity
7/1/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
7/1/1998 annual fee 11.941375 100.0000 - 100.0000
7/1/1999 annual fee 13.889347 100.0000 - 100.0000
12/31/1999 annual fee 13.966013 100.0000 - 100.0000
12/31/1999 surrender fee 13.966013 100.0000 - 100.0000
24 Russell Multi-Style Equity
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 12.694810 100.0000 - 100.0000
12/31/1999 annual fee 14.667724 100.0000 - 100.0000
12/31/1999 surrender fee 14.667724 100.0000 - 100.0000
25 Russell Aggressive Equity
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 9.963254 100.0000 - 100.0000
12/31/1999 annual fee 10.422234 100.0000 - 100.0000
12/31/1999 surrender fee 10.422234 100.0000 - 100.0000
26 Russell Non-U.S.
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.142092 100.0000 - 100.0000
12/31/1999 annual fee 14.652149 100.0000 - 100.0000
12/31/1999 surrender fee 14.652149 100.0000 - 100.0000
27 Russell Core Bond
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.591175 100.0000 - 100.0000
12/31/1999 annual fee 10.380043 100.0000 - 100.0000
12/31/1999 surrender fee 10.380043 100.0000 - 100.0000
28 Russell Real Estate Securities
7/1/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 9.388124 100.0000 - 100.0000
12/31/1999 surrender fee 9.388124 100.0000 - 100.0000
30 AIM V.I. Value
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 13.060203 100.0000 - 100.0000
12/31/1999 annual fee 16.729131 100.0000 - 100.0000
12/31/1999 surrender fee 16.729131 100.0000 - 100.0000
31 AIM V.I. Capital Appreciation
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.770729 100.0000 - 100.0000
12/31/1999 annual fee 16.785351 100.0000 - 100.0000
12/31/1999 surrender fee 16.785351 100.0000 - 100.0000
32 AIM V.I. Int'l Equity
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.391449 100.0000 - 100.0000
12/31/1999 annual fee 17.416663 100.0000 - 100.0000
12/31/1999 surrender fee 17.416663 100.0000 - 100.0000
35 Alliance Premier Growth
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 14.595485 100.0000 - 100.0000
12/31/1999 annual fee 19.043436 100.0000 - 100.0000
12/31/1999 surrender fee 19.043436 100.0000 - 100.0000
36 Alliance Real Estate Investment
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 7.988435 100.0000 - 100.0000
12/31/1999 annual fee 7.474763 100.0000 - 100.0000
12/31/1999 surrender fee 7.474763 100.0000 - 100.0000
37 Cova Riggs U.S. Gov't Securities
11/2/1999 purchase 1,000.00 10.130899 - 98.7079 98.7079
12/31/1999 annual fee 9.995395 98.7079 - 98.7079
12/31/1999 surrender fee 9.995395 98.7079 - 98.7079
38 Cova Riggs Stock
11/2/1999 purchase 1,000.00 10.082728 - 99.1795 99.1795
12/31/1999 annual fee 10.239524 99.1795 - 99.1795
12/31/1999 surrender fee 10.239524 99.1795 - 99.1795
39 Liberty Newport Tiger, Variable Series
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 9.228765 100.0000 - 100.0000
12/31/1999 annual fee 15.290670 100.0000 - 100.0000
12/31/1999 surrender fee 15.290670 100.0000 - 100.0000
40 Goldman Sachs G&I
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 annual fee 9.973396 100.0000 - 100.0000
12/31/1999 annual fee 10.299328 100.0000 - 100.0000
12/31/1999 surrender fee 10.299328 100.0000 - 100.0000
41 Goldman Sachs Int'l Equity
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 annual fee 11.581610 100.0000 - 100.0000
12/31/1999 annual fee 14.826563 100.0000 - 100.0000
12/31/1999 surrender fee 14.826563 100.0000 - 100.0000
42 Goldman Sachs Global Income
1/29/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
1/29/1999 purchase 10.874138 100.0000 - 100.0000
12/31/1999 annual fee 10.524196 100.0000 - 100.0000
12/31/1999 surrender fee 10.524196 100.0000 - 100.0000
43 Templeton Global Income Securities
3/1/1999 purchase 1,000.00 10.050717 - 99.4954 99.4954
12/31/1999 annual fee 9.681844 99.4954 - 99.4954
12/31/1999 surrender fee 9.681844 99.4954 - 99.4954
44 Kemper Dreman High Return
5/15/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/17/1999 annual fee 11.054279 100.0000 - 100.0000
12/31/1999 annual fee 9.187195 100.0000 - 100.0000
12/31/1999 surrender fee 9.187195 100.0000 - 100.0000
45 Kemper Small Cap Growth
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.676086 100.0000 - 100.0000
12/31/1999 annual fee 15.493396 100.0000 - 100.0000
12/31/1999 surrender fee 15.493396 100.0000 - 100.0000
46 Kemper Small Cap Value
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 8.753222 100.0000 - 100.0000
12/31/1999 annual fee 8.872647 100.0000 - 100.0000
12/31/1999 surrender fee 8.872647 100.0000 - 100.0000
47 Kemper Government Securities
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.556498 100.0000 - 100.0000
12/31/1999 annual fee 10.480981 100.0000 - 100.0000
12/31/1999 surrender fee 10.480981 100.0000 - 100.0000
48 MFS Bond
5/15/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/17/1999 annual fee 10.386737 100.0000 - 100.0000
12/31/1999 annual fee 10.184471 100.0000 - 100.0000
12/31/1999 surrender fee 10.184471 100.0000 - 100.0000
49 MFS Research
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 12.172796 100.0000 - 100.0000
12/31/1999 annual fee 14.890281 100.0000 - 100.0000
12/31/1999 surrender fee 14.890281 100.0000 - 100.0000
50 MFS Growth with Income
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 12.066568 100.0000 - 100.0000
12/31/1999 annual fee 12.695264 100.0000 - 100.0000
12/31/1999 surrender fee 12.695264 100.0000 - 100.0000
51 MFS Emerging Growth
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 13.233235 100.0000 - 100.0000
12/31/1999 annual fee 23.059667 100.0000 - 100.0000
12/31/1999 surrender fee 23.059667 100.0000 - 100.0000
52 MFS / F&C Emerging Markets Equity
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 6.571830 100.0000 - 100.0000
12/31/1999 annual fee 8.954559 100.0000 - 100.0000
12/31/1999 surrender fee 8.954559 100.0000 - 100.0000
53 MFS High Income
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 9.845193 100.0000 - 100.0000
12/31/1999 annual fee 10.334082 100.0000 - 100.0000
12/31/1999 surrender fee 10.334082 100.0000 - 100.0000
54 MFS Global Governments
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.669943 100.0000 - 100.0000
12/31/1999 annual fee 10.258675 100.0000 - 100.0000
12/31/1999 surrender fee 10.258675 100.0000 - 100.0000
55 Oppenheimer Capital Appreciation
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 12.232731 100.0000 - 100.0000
12/31/1999 annual fee 17.087450 100.0000 - 100.0000
12/31/1999 surrender fee 17.087450 100.0000 - 100.0000
56 Oppenheimer Main Street G&I
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.326519 100.0000 - 100.0000
12/31/1999 annual fee 12.393263 100.0000 - 100.0000
12/31/1999 surrender fee 12.393263 100.0000 - 100.0000
57 Oppenheimer High Income
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 9.893828 100.0000 - 100.0000
12/31/1999 annual fee 10.174699 100.0000 - 100.0000
12/31/1999 surrender fee 10.174699 100.0000 - 100.0000
58 Oppenheimer Bond
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 9.893828 100.0000 - 100.0000
12/31/1999 annual fee 10.228856 100.0000 - 100.0000
12/31/1999 surrender fee 10.228856 100.0000 - 100.0000
59 Oppenheimer Strategic Bond
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.151332 100.0000 - 100.0000
12/31/1999 annual fee 10.293168 100.0000 - 100.0000
12/31/1999 surrender fee 10.293168 100.0000 - 100.0000
60 Putnam VT G&I
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.382650 100.0000 - 100.0000
12/31/1999 annual fee 11.402482 100.0000 - 100.0000
12/31/1999 surrender fee 11.402482 100.0000 - 100.0000
61 Putman VT New Value
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.483517 100.0000 - 100.0000
12/31/1999 annual fee 10.365439 100.0000 - 100.0000
12/31/1999 surrender fee 10.365439 100.0000 - 100.0000
62 Putnam VT Vista
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.785702 100.0000 - 100.0000
12/31/1999 annual fee 17.769589 100.0000 - 100.0000
12/31/1999 surrender fee 17.769589 100.0000 - 100.0000
63 Putnam VT Int'l Growth
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.707003 100.0000 - 100.0000
12/31/1999 annual fee 18.486388 100.0000 - 100.0000
12/31/1999 surrender fee 18.486388 100.0000 - 100.0000
64 Putnam VT Int'l New Opportunities
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.402252 100.0000 - 100.0000
12/31/1999 annual fee 22.820083 100.0000 - 100.0000
12/31/1999 surrender fee 22.820083 100.0000 - 100.0000
65 Franklin Small Cap
3/1/1999 purchase 1,000.00 8.646100 - 115.6591 115.6591
12/31/1999 annual fee 17.679923 115.6591 - 115.6591
12/31/1999 surrender fee 17.679923 115.6591 - 115.6591
66 Templeton Growth Securities
1/19/1999 purchase 1,000.00 10.419670 - 95.9723 95.9723
12/31/1999 annual fee 12.557918 95.9723 - 95.9723
12/31/1999 surrender fee 12.557918 95.9723 - 95.9723
67 Templeton International Securities
5/1/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/3/1999 annual fee 9.996786 100.0000 - 100.0000
12/31/1999 annual fee 11.147003 100.0000 - 100.0000
12/31/1999 surrender fee 11.147003 100.0000 - 100.0000
68 Templeton Developing Markets Securities
5/1/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
5/3/1999 annual fee 9.972042 100.0000 - 100.0000
12/31/1999 annual fee 11.457935 100.0000 - 100.0000
12/31/1999 surrender fee 11.457935 100.0000 - 100.0000
69 Mutual Shares Securities
5/1/1998 purchase 1,000.00 10.262212 - 97.4449 97.4449
5/1/1999 annual fee 10.307081 97.4449 - 97.4449
12/31/1999 annual fee 10.413095 97.4449 - 97.4449
12/31/1999 surrender fee 10.413095 97.4449 - 97.4449
71 Fidelity VIP Growth
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee 13.296297 100.0000 - 100.0000
12/31/1999 annual fee 17.723853 100.0000 - 100.0000
12/31/1999 surrender fee 17.723853 100.0000 - 100.0000
72 Fidelity VIP II Contrafund
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee 12.429231 100.0000 - 100.0000
12/31/1999 annual fee 15.140886 100.0000 - 100.0000
12/31/1999 surrender fee 15.140886 100.0000 - 100.0000
73 Fidelity VIP III Growth Opportunities
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee 11.255274 100.0000 - 100.0000
12/31/1999 annual fee 12.073401 100.0000 - 100.0000
12/31/1999 surrender fee 12.073401 100.0000 - 100.0000
75 Fidelity VIP III Growth & Income
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee 12.066871 100.0000 - 100.0000
12/31/1999 annual fee 13.135609 100.0000 - 100.0000
12/31/1999 surrender fee 13.135609 100.0000 - 100.0000
76 Fidelity VIP Equity-Income
2/17/1998 purchase 1,000.00 10.000000 - 100.0000 100.0000
2/17/1999 annual fee 10.322067 100.0000 - 100.0000
12/31/1999 annual fee 11.141767 100.0000 - 100.0000
12/31/1999 surrender fee 11.141767 100.0000 - 100.0000
99 Franklin Large Cap Growth Securities
3/1/1999 purchase 1,000.00 10.985852 - 91.0262 91.0262
12/31/1999 annual fee 14.307568 91.0262 - 91.0262
12/31/1999 surrender fee 14.307568 91.0262 - 91.0262
140 American Century VP Income & Growth
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.320209 100.0000 - 100.0000
12/31/1999 surrender fee 10.320209 100.0000 - 100.0000
141 American Century VP Int'l
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 12.514968 100.0000 - 100.0000
12/31/1999 surrender fee 12.514968 100.0000 - 100.0000
142 American Century VP Value
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 9.582238 100.0000 - 100.0000
12/31/1999 surrender fee 9.582238 100.0000 - 100.0000
160 Dreyfus Stock Index
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.321607 100.0000 - 100.0000
12/31/1999 surrender fee 10.321607 100.0000 - 100.0000
161 Dreyfus VIF Disciplined Stock
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.300470 100.0000 - 100.0000
12/31/1999 surrender fee 10.300470 100.0000 - 100.0000
162 Dreyfus VIF Capital Appreciation
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.118366 100.0000 - 100.0000
12/31/1999 surrender fee 10.118366 100.0000 - 100.0000
180 INVESCO VIF Dynamics
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 11.142628 100.0000 - 100.0000
12/31/1999 surrender fee 11.142628 100.0000 - 100.0000
181 INVESCO VIF High Yield
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.117511 100.0000 - 100.0000
12/31/1999 surrender fee 10.117511 100.0000 - 100.0000
210 PIMCO High Yield Bond
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.078000 100.0000 - 100.0000
12/31/1999 surrender fee 10.078000 100.0000 - 100.0000
211 PIMCO Low Duration Bond
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 9.969000 100.0000 - 100.0000
12/31/1999 surrender fee 9.969000 100.0000 - 100.0000
212 PIMCO StocksPLUS G&I
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 10.306817 100.0000 - 100.0000
12/31/1999 surrender fee 10.306817 100.0000 - 100.0000
213 PIMCO Total Return Bond
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 9.875011 100.0000 - 100.0000
12/31/1999 surrender fee 9.875011 100.0000 - 100.0000
230 Scudder Int'l
11/19/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1999 annual fee 11.631204 100.0000 - 100.0000
12/31/1999 surrender fee 11.631204 100.0000 - 100.0000
Cova Variable Annuity Account One
Non-Standard Since Inception Returns
12/31/1999
Sub-Account Annualized Account 12/31/1999 Initial Inception
Inception Value AUV Investment Date
Return
6 Cova Lord Abbett G&I (1) 9.90% 1,098.96 39.456928 1,000.00 1/8/1999
8 Cova Bond Debenture 8.81% 1,363.22 13.765381 1,000.00 5/1/1996
9 GACC Money Market 4.05% 1,152.54 11.525358 1,000.00 6/3/1996
11 Cova Developing Growth 16.86% 1,445.29 14.452868 1,000.00 8/20/1997
12 Cova Large Cap Research 17.48% 1,463.56 14.635627 1,000.00 8/20/1997
13 Cova Mid-Cap Value 3.61% 1,087.55 10.875538 1,000.00 8/20/1997
15 Cova Quality Bond 4.34% 1,168.73 11.567155 1,000.00 5/1/1996
16 Cova Small Cap Stock 15.67% 1,705.81 17.932441 1,000.00 5/1/1996
17 Cova Large Cap Stock 24.80% 2,254.21 22.548941 1,000.00 5/1/1996
18 Cova Select Equity 17.79% 1,823.17 18.384654 1,000.00 5/1/1996
19 Cova Int'l Equity 13.65% 1,599.03 16.333906 1,000.00 5/1/1996
20 Cova Balanced 9.09% 1,243.25 12.432529 1,000.00 7/1/1997
22 Cova Equity Income 8.28% 1,220.27 12.202725 1,000.00 7/1/1997
23 Cova G&I Equity 14.29% 1,396.60 13.966013 1,000.00 7/1/1997
24 Russell Multi-Style Equity 21.11% 1,466.77 14.667724 1,000.00 12/31/1997
25 Russell Aggressive Equity 2.09% 1,042.22 10.422234 1,000.00 12/31/1997
26 Russell Non-U.S. 21.05% 1,465.21 14.652149 1,000.00 12/31/1997
27 Russell Core Bond 1.88% 1,038.00 10.380043 1,000.00 12/31/1997
28 Russell Real Estate Securities (1) -6.12% 938.81 9.388124 1,000.00 7/1/1999
30 AIM V.I. Value 29.34% 1,672.91 16.729131 1,000.00 12/31/1997
31 AIM V.I. Capital Appreciation 29.56% 1,678.54 16.785351 1,000.00 12/31/1997
32 AIM V.I. Int'l Equity 31.97% 1,741.67 17.416663 1,000.00 12/31/1997
35 Alliance Premier Growth 38.00% 1,904.34 19.043436 1,000.00 12/31/1997
36 Alliance Real Estate Investment -13.54% 747.48 7.474763 1,000.00 12/31/1997
37 Cova Riggs U.S. Gov't Securities (1) -1.34% 986.62 9.995395 1,000.00 11/2/1999
38 Cova Riggs Stock (1) 1.56% 1,015.55 10.239524 1,000.00 11/2/1999
39 Liberty Newport Tiger, Variable Series 23.66% 1,529.07 15.290670 1,000.00 12/31/1997
40 Goldman Sachs G&I 1.55% 1,029.93 10.299328 1,000.00 1/29/1998
41 Goldman Sachs Int'l Equity 22.76% 1,482.66 14.826563 1,000.00 1/29/1998
42 Goldman Sachs Global Income 2.70% 1,052.42 10.524196 1,000.00 1/29/1998
43 Templeton Global Income Securities (1) -3.67% 963.30 9.681844 1,000.00 3/1/1999
44 Kemper Dreman High Return -5.07% 918.72 9.187195 1,000.00 5/15/1998
45 Kemper Small Cap Growth 24.47% 1,549.34 15.493396 1,000.00 12/31/1997
46 Kemper Small Cap Value -5.81% 887.26 8.872647 1,000.00 12/31/1997
47 Kemper Government Securities 2.38% 1,048.10 10.480981 1,000.00 12/31/1997
48 MFS Bond 1.13% 1,018.45 10.184471 1,000.00 5/15/1998
49 MFS Research 22.03% 1,489.03 14.890281 1,000.00 12/31/1997
50 MFS Growth with Income 12.67% 1,269.53 12.695264 1,000.00 12/31/1997
51 MFS Emerging Growth 51.85% 2,305.97 23.059667 1,000.00 12/31/1997
52 MFS / F&C Emerging Markets Equity -5.37% 895.46 8.954559 1,000.00 12/31/1997
53 MFS High Income 1.66% 1,033.41 10.334082 1,000.00 12/31/1997
54 MFS Global Governments 1.29% 1,025.87 10.258675 1,000.00 12/31/1997
55 Oppenheimer Capital Appreciation 30.72% 1,708.75 17.087450 1,000.00 12/31/1997
56 Oppenheimer Main Street G&I 11.33% 1,239.33 12.393263 1,000.00 12/31/1997
57 Oppenheimer High Income 0.87% 1,017.47 10.174699 1,000.00 12/31/1997
58 Oppenheimer Bond 1.14% 1,022.89 10.228856 1,000.00 12/31/1997
59 Oppenheimer Strategic Bond 1.46% 1,029.32 10.293168 1,000.00 12/31/1997
60 Putnam VT G&I 6.78% 1,140.25 11.402482 1,000.00 12/31/1997
61 Putman VT New Value 1.81% 1,036.54 10.365439 1,000.00 12/31/1997
62 Putnam VT Vista 33.30% 1,776.96 17.769589 1,000.00 12/31/1997
63 Putnam VT Int'l Growth 35.96% 1,848.64 18.486388 1,000.00 12/31/1997
64 Putnam VT Int'l New Opportunities 51.06% 2,282.01 22.820083 1,000.00 12/31/1997
65 Franklin Small Cap (1) 104.48% 2,044.84 17.679923 1,000.00 3/1/1999
66 Templeton Growth Securities (1) 20.52% 1,205.21 12.557918 1,000.00 1/19/1999
67 Templeton International Securities 6.72% 1,114.70 11.147003 1,000.00 5/1/1998
68 Templeton Developing Markets Securities 8.50% 1,145.79 11.457935 1,000.00 5/1/1998
69 Mutual Shares Securities (1) 1.47% 1,014.70 10.413095 1,000.00 5/1/1998
71 Fidelity VIP Growth 35.84% 1,772.39 17.723853 1,000.00 2/17/1998
72 Fidelity VIP II Contrafund 24.86% 1,514.09 15.140886 1,000.00 2/17/1998
73 Fidelity VIP III Growth Opportunities 10.61% 1,207.34 12.073401 1,000.00 2/17/1998
75 Fidelity VIP III Growth & Income 15.72% 1,313.56 13.135609 1,000.00 2/17/1998
76 Fidelity VIP Equity-Income 5.96% 1,114.18 11.141767 1,000.00 2/17/1998
99 Franklin Large Cap Growth Securities (1) 30.24% 1,302.36 14.307568 1,000.00 3/1/1999
140 American Century VP Income & Growth (1) 3.20% 1,032.02 10.320209 1,000.00 11/19/1999
141 American Century VP Int'l (1) 25.15% 1,251.50 12.514968 1,000.00 11/19/1999
142 American Century VP Value (1) -4.18% 958.22 9.582238 1,000.00 11/19/1999
160 Dreyfus Stock Index (1) 3.22% 1,032.16 10.321607 1,000.00 11/19/1999
161 Dreyfus VIF Disciplined Stock (1) 3.00% 1,030.05 10.300470 1,000.00 11/19/1999
162 Dreyfus VIF Capital Appreciation (1) 1.18% 1,011.84 10.118366 1,000.00 11/19/1999
180 INVESCO VIF Dynamics (1) 11.43% 1,114.26 11.142628 1,000.00 11/19/1999
181 INVESCO VIF High Yield (1) 1.17% 1,011.75 10.117511 1,000.00 11/19/1999
210 PIMCO High Yield Bond (1) 0.78% 1,007.80 10.078000 1,000.00 11/19/1999
211 PIMCO Low Duration Bond (1) -0.31% 996.90 9.969000 1,000.00 11/19/1999
212 PIMCO StocksPLUS G&I (1) 3.07% 1,030.68 10.306817 1,000.00 11/19/1999
213 PIMCO Total Return Bond (1) -1.25% 987.50 9.875011 1,000.00 11/19/1999
230 Scudder Int'l (1) 16.31% 1,163.12 11.631204 1,000.00 11/19/1999
(1) Returns are not annualized for sub-accounts in existence less than 1 year.
Cova Variable Annuity Account One
Standard 1 Year Return Data
As of 12/31/99
Sub-Account Account Account
Value Value
Before After
Transaction Transaction
6 Cova Lord Abbett G&I
12/31/1998 - #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
8 Cova Bond Debenture
12/31/1998 - 1,000.00
12/31/1999 1,019.92 1,018.90
12/31/1999 1,018.90 973.90
9 GACC Money Market
12/31/1998 - 1,000.00
12/31/1999 1,037.39 1,036.35
12/31/1999 1,036.35 991.35
11 Cova Developing Growth
12/31/1998 - 1,000.00
12/31/1999 1,305.84 1,304.53
12/31/1999 1,304.53 1,259.53
12 Cova Large Cap Research
12/31/1998 - 1,000.00
12/31/1999 1,237.63 1,236.39
12/31/1999 1,236.39 1,191.39
13 Cova Mid-Cap Value
12/31/1998 - 1,000.00
12/31/1999 1,041.92 1,040.88
12/31/1999 1,040.88 995.88
15 Cova Quality Bond
12/31/1998 - 1,000.00
12/31/1999 970.85 969.88
12/31/1999 969.88 924.88
16 Cova Small Cap Stock
12/31/1998 - 1,000.00
12/31/1999 1,425.15 1,423.72
12/31/1999 1,423.72 1,378.72
17 Cova Large Cap Stock
12/31/1998 - 1,000.00
12/31/1999 1,160.61 1,159.45
12/31/1999 1,159.45 1,114.45
18 Cova Select Equity
12/31/1998 - 1,000.00
12/31/1999 1,082.26 1,081.18
12/31/1999 1,081.18 1,036.18
19 Cova Int'l Equity
12/31/1998 - 1,000.00
12/31/1999 1,267.24 1,265.97
12/31/1999 1,265.97 1,220.97
20 Cova Balanced
12/31/1998 - 1,000.00
12/31/1999 1,056.48 1,055.42
12/31/1999 1,055.42 1,010.42
22 Cova Equity Income
12/31/1998 - 1,000.00
12/31/1999 1,011.09 1,010.08
12/31/1999 1,010.08 965.08
23 Cova G&I Equity
12/31/1998 - 1,000.00
12/31/1999 1,145.85 1,144.70
12/31/1999 1,144.70 1,099.70
24 Russell Multi-Style Equity
12/31/1998 - 1,000.00
12/31/1999 1,155.41 1,154.25
12/31/1999 1,154.25 1,109.25
25 Russell Aggressive Equity
12/31/1998 - 1,000.00
12/31/1999 1,046.07 1,045.02
12/31/1999 1,045.02 1,000.02
26 Russell Non-U.S.
12/31/1998 - 1,000.00
12/31/1999 1,315.03 1,313.71
12/31/1999 1,313.71 1,268.71
27 Russell Core Bond
12/31/1998 - 1,000.00
12/31/1999 980.06 979.09
12/31/1999 979.09 934.09
28 Russell Real Estate Securities
12/31/1998 - #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
30 AIM V.I. Value
12/31/1998 - 1,000.00
12/31/1999 1,280.92 1,279.64
12/31/1999 1,279.64 1,234.64
31 AIM V.I. Capital Appreciation
12/31/1998 - 1,000.00
12/31/1999 1,426.02 1,424.59
12/31/1999 1,424.59 1,379.59
32 AIM V.I. Int'l Equity
12/31/1998 - 1,000.00
12/31/1999 1,528.92 1,527.39
12/31/1999 1,527.39 1,482.39
35 Alliance Premier Growth
12/31/1998 - 1,000.00
12/31/1999 1,304.75 1,303.45
12/31/1999 1,303.45 1,258.45
36 Alliance Real Estate Investment
12/31/1998 - 1,000.00
12/31/1999 935.70 934.76
12/31/1999 934.76 889.76
37 Cova Riggs U.S. Gov't Securities
12/31/1998 - #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
38 Cova Riggs Stock
12/31/1998 - #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
12/31/1999 #DIV/0! #DIV/0!
39 Liberty Newport Tiger, Variable Series
12/31/1998 - 1,000.00
12/31/1999 1,656.85 1,655.19
12/31/1999 1,655.19 1,610.19
40 Goldman Sachs G&I
12/31/1998 - 1,000.00
12/31/1999 1,039.43 1,038.39
12/31/1999 1,038.39 993.39
41 Goldman Sachs Int'l Equity
12/31/1998 - 1,000.00
12/31/1999 1,300.24 1,298.94
12/31/1999 1,298.94 1,253.94
42 Goldman Sachs Global Income
12/31/1998 - 1,000.00
12/31/1999 976.11 975.13
12/31/1999 975.13 930.13
44 Kemper Dreman High Return
12/31/1998 - 1,000.00
12/31/1999 876.03 875.15
12/31/1999 875.15 830.15
45 Kemper Small Cap Growth
12/31/1998 - 1,000.00
12/31/1999 1,326.93 1,325.60
12/31/1999 1,325.60 1,280.60
46 Kemper Small Cap Value
12/31/1998 - 1,000.00
12/31/1999 1,013.64 1,012.63
12/31/1999 1,012.63 967.63
47 Kemper Government Securities
12/31/1998 - 1,000.00
12/31/1999 992.85 991.86
12/31/1999 991.86 946.86
48 MFS Bond
12/31/1998 - 1,000.00
12/31/1999 970.71 969.74
12/31/1999 969.74 924.74
49 MFS Research
12/31/1998 - 1,000.00
12/31/1999 1,223.24 1,222.02
12/31/1999 1,222.02 1,177.02
50 MFS Growth with Income
12/31/1998 - 1,000.00
12/31/1999 1,052.10 1,051.05
12/31/1999 1,051.05 1,006.05
51 MFS Emerging Growth
12/31/1998 - 1,000.00
12/31/1999 1,742.56 1,740.82
12/31/1999 1,740.82 1,695.81
52 MFS / F&C Emerging Markets Equity
12/31/1998 - 1,000.00
12/31/1999 1,362.57 1,361.21
12/31/1999 1,361.21 1,316.21
53 MFS High Income
12/31/1998 - 1,000.00
12/31/1999 1,049.66 1,048.61
12/31/1999 1,048.61 1,003.61
54 MFS Global Governments
12/31/1998 - 1,000.00
12/31/1999 961.46 960.50
12/31/1999 960.50 915.50
55 Oppenheimer Capital Appreciation
12/31/1998 - 1,000.00
12/31/1999 1,396.86 1,395.46
12/31/1999 1,395.46 1,350.46
56 Oppenheimer Main Street G&I
12/31/1998 - 1,000.00
12/31/1999 1,200.14 1,198.94
12/31/1999 1,198.94 1,153.94
57 Oppenheimer High Income
12/31/1998 - 1,000.00
12/31/1999 1,028.39 1,027.36
12/31/1999 1,027.36 982.36
58 Oppenheimer Bond
12/31/1998 - 1,000.00
12/31/1999 971.12 970.15
12/31/1999 970.15 925.15
59 Oppenheimer Strategic Bond
12/31/1998 - 1,000.00
12/31/1999 1,013.97 1,012.96
12/31/1999 1,012.96 967.96
60 Putnam VT G&I
12/31/1998 - 1,000.00
12/31/1999 1,001.74 1,000.74
12/31/1999 1,000.74 955.74
61 Putman VT New Value
12/31/1998 - 1,000.00
12/31/1999 988.74 987.75
12/31/1999 987.75 942.75
62 Putnam VT Vista
12/31/1998 - 1,000.00
12/31/1999 1,507.72 1,506.21
12/31/1999 1,506.21 1,461.21
63 Putnam VT Int'l Growth
12/31/1998 - 1,000.00
12/31/1999 1,579.09 1,577.51
12/31/1999 1,577.51 1,532.51
64 Putnam VT Int'l New Opportunities
12/31/1998 - 1,000.00
12/31/1999 2,001.37 1,999.37
12/31/1999 1,999.37 1,954.37
67 Templeton International Securities
12/31/1998 - 1,000.00
12/31/1999 1,218.98 1,217.76
12/31/1999 1,217.76 1,172.76
68 Templeton Developing Markets Securities
12/31/1998 - 1,000.00
12/31/1999 1,517.12 1,515.59
12/31/1999 1,515.59 1,470.60
69 Mutual Shares Securities
12/31/1998 - 1,000.00
12/31/1999 1,118.45 1,117.33
12/31/1999 1,117.33 1,072.33
71 Fidelity VIP Growth
12/31/1998 - 1,000.00
12/31/1999 1,355.25 1,353.90
12/31/1999 1,353.90 1,308.89
72 Fidelity VIP II Contrafund
12/31/1998 - 1,000.00
12/31/1999 1,225.25 1,224.02
12/31/1999 1,224.02 1,179.02
73 Fidelity VIP III Growth Opportunities
12/31/1998 - 1,000.00
12/31/1999 1,028.19 1,027.16
12/31/1999 1,027.16 982.16
75 Fidelity VIP III Growth & Income
12/31/1998 - 1,000.00
12/31/1999 1,076.47 1,075.39
12/31/1999 1,075.39 1,030.39
76 Fidelity VIP Equity-Income
12/31/1998 - 1,000.00
12/31/1999 1,048.48 1,047.43
12/31/1999 1,047.43 1,002.43
Cova Variable Annuity Account One
Standard 1 Year Returns
12/31/1999
Sub-Account Days Since
Inception
6 Cova Lord Abbett G&I 357
8 Cova Bond Debenture 1,339
9 GACC Money Market 1,306
11 Cova Developing Growth 863
12 Cova Large Cap Research 863
13 Cova Mid-Cap Value 863
15 Cova Quality Bond 1,339
16 Cova Small Cap Stock 1,339
17 Cova Large Cap Stock 1,339
18 Cova Select Equity 1,339
19 Cova Int'l Equity 1,339
20 Cova Balanced 913
22 Cova Equity Income 913
23 Cova G&I Equity 913
24 Russell Multi-Style Equity 730
25 Russell Aggressive Equity 730
26 Russell Non-U.S. 730
27 Russell Core Bond 730
28 Russell Real Estate Securities 183
30 AIM V.I. Value 730
31 AIM V.I. Capital Appreciation 730
32 AIM V.I. Int'l Equity 730
35 Alliance Premier Growth 730
36 Alliance Real Estate Investment 730
37 Cova Riggs U.S. Gov't Securities 59
38 Cova Riggs Stock 59
39 Liberty Newport Tiger, Variable Series 730
40 Goldman Sachs G&I 701
41 Goldman Sachs Int'l Equity 701
42 Goldman Sachs Global Income 701
43 Templeton Global Income Securities 305
44 Kemper Dreman High Return 595
45 Kemper Small Cap Growth 730
46 Kemper Small Cap Value 730
47 Kemper Government Securities 730
48 MFS Bond 595
49 MFS Research 730
50 MFS Growth with Income 730
51 MFS Emerging Growth 730
52 MFS / F&C Emerging Markets Equity 730
53 MFS High Income 730
54 MFS Global Governments 730
55 Oppenheimer Capital Appreciation 730
56 Oppenheimer Main Street G&I 730
57 Oppenheimer High Income 730
58 Oppenheimer Bond 730
59 Oppenheimer Strategic Bond 730
60 Putnam VT G&I 730
61 Putman VT New Value 730
62 Putnam VT Vista 730
63 Putnam VT Int'l Growth 730
64 Putnam VT Int'l New Opportunities 730
65 Franklin Small Cap 305
66 Templeton Growth Securities 346
67 Templeton International Securities 609
68 Templeton Developing Markets Securities 609
69 Mutual Shares Securities 609
71 Fidelity VIP Growth 682
72 Fidelity VIP II Contrafund 682
73 Fidelity VIP III Growth Opportunities 682
75 Fidelity VIP III Growth & Income 682
76 Fidelity VIP Equity-Income 682
99 Franklin Large Cap Growth Securities 305
140 American Century VP Income & Growth 42
141 American Century VP Int'l 42
142 American Century VP Value 42
160 Dreyfus Stock Index 42
161 Dreyfus VIF Disciplined Stock 42
162 Dreyfus VIF Capital Appreciation 42
180 INVESCO VIF Dynamics 42
181 INVESCO VIF High Yield 42
210 PIMCO High Yield Bond 42
211 PIMCO Low Duration Bond 42
212 PIMCO StocksPLUS G&I 42
213 PIMCO Total Return Bond 42
230 Scudder Int'l 42
(1)Sub-account has not been in existence for
Cova Variable Annuity Account One
Standard Inception to Date Return Data
As of 12/31/99
Sub-Account Account Account
Value Value
Before After
Transaction Transaction
6 Cova Lord Abbett G&I
1/8/1999 - 1,000.00
12/31/1999 1,098.96 1,097.86
12/31/1999 1,097.86 1,047.86
8 Cova Bond Debenture
5/1/1996 - 1,000.00
5/1/1997 1,140.55 1,139.41
5/1/1998 1,339.13 1,337.79
5/3/1999 1,364.50 1,363.14
12/31/1999 1,359.14 1,357.78
12/31/1999 1,357.78 1,312.78
9 GACC Money Market
6/3/1996 - 1,000.00
6/3/1997 1,041.06 1,040.02
6/3/1998 1,084.73 1,083.65
6/3/1999 1,124.88 1,123.76
12/31/1999 1,149.09 1,147.94
12/31/1999 1,147.94 1,102.94
11 Cova Developing Growth
8/20/1997 - 1,000.00
8/20/1998 982.30 981.32
8/20/1999 1,216.02 1,214.80
12/31/1999 1,442.40 1,440.96
12/31/1999 1,440.96 1,395.96
12 Cova Large Cap Research
8/20/1997 - 1,000.00
8/20/1998 1,053.73 1,052.68
8/20/1999 1,291.26 1,289.97
12/31/1999 1,460.64 1,459.18
12/31/1999 1,459.18 1,414.18
13 Cova Mid-Cap Value
8/20/1997 - 1,000.00
8/20/1998 991.94 990.95
8/20/1999 1,141.81 1,140.67
12/31/1999 1,085.38 1,084.29
12/31/1999 1,084.29 1,039.29
15 Cova Quality Bond
5/1/1996 - 1,000.00
5/1/1997 1,051.32 1,050.27
5/1/1998 1,146.27 1,145.12
5/3/1999 1,190.85 1,189.65
12/31/1999 1,165.22 1,164.05
12/31/1999 1,164.05 1,119.05
16 Cova Small Cap Stock
5/1/1996 - 1,000.00
5/1/1997 985.34 984.35
5/1/1998 1,422.58 1,421.16
5/3/1999 1,196.76 1,195.56
12/31/1999 1,700.69 1,698.99
12/31/1999 1,698.99 1,653.99
17 Cova Large Cap Stock
5/1/1996 - 1,000.00
5/1/1997 1,219.45 1,218.23
5/1/1998 1,747.98 1,746.23
5/3/1999 2,152.32 2,150.17
12/31/1999 2,247.46 2,245.20
12/31/1999 2,245.20 2,200.20
18 Cova Select Equity
5/1/1996 - 1,000.00
5/1/1997 1,135.03 1,133.89
5/1/1998 1,597.49 1,595.89
5/3/1999 1,837.65 1,835.81
12/31/1999 1,817.69 1,815.87
12/31/1999 1,815.87 1,770.87
19 Cova Int'l Equity
5/1/1996 - 1,000.00
5/1/1997 1,090.14 1,089.05
5/1/1998 1,284.93 1,283.65
5/3/1999 1,327.43 1,326.10
12/31/1999 1,594.24 1,592.65
12/31/1999 1,592.65 1,547.65
20 Cova Balanced
7/1/1997 - 1,000.00
7/1/1998 1,123.61 1,122.49
7/1/1999 1,257.77 1,256.51
12/31/1999 1,240.77 1,239.53
12/31/1999 1,239.53 1,194.53
22 Cova Equity Income
7/1/1997 - 1,000.00
7/1/1998 1,241.82 1,240.58
7/1/1999 1,335.06 1,333.72
12/31/1999 1,217.83 1,216.61
12/31/1999 1,216.61 1,171.61
23 Cova G&I Equity
7/1/1997 - 1,000.00
7/1/1998 1,194.14 1,192.95
7/1/1999 1,387.55 1,386.16
12/31/1999 1,393.81 1,392.42
12/31/1999 1,392.42 1,347.42
24 Russell Multi-Style Equity
12/31/1997 - 1,000.00
12/31/1998 1,269.48 1,268.21
12/31/1999 1,465.31 1,463.84
12/31/1999 1,463.84 1,418.84
25 Russell Aggressive Equity
12/31/1997 - 1,000.00
12/31/1998 996.33 995.33
12/31/1999 1,041.18 1,040.14
12/31/1999 1,040.14 995.14
26 Russell Non-U.S.
12/31/1997 - 1,000.00
12/31/1998 1,114.21 1,113.10
12/31/1999 1,463.76 1,462.30
12/31/1999 1,462.30 1,417.30
27 Russell Core Bond
12/31/1997 - 1,000.00
12/31/1998 1,059.12 1,058.06
12/31/1999 1,036.97 1,035.93
12/31/1999 1,035.93 990.93
28 Russell Real Estate Securities
7/1/1999 - 1,000.00
12/31/1999 938.81 937.87
12/31/1999 937.87 887.87
30 AIM V.I. Value
12/31/1997 - 1,000.00
12/31/1998 1,306.02 1,304.71
12/31/1999 1,671.24 1,669.57
12/31/1999 1,669.57 1,624.57
31 AIM V.I. Capital Appreciation
12/31/1997 - 1,000.00
12/31/1998 1,177.07 1,175.89
12/31/1999 1,676.85 1,675.17
12/31/1999 1,675.17 1,630.17
32 AIM V.I. Int'l Equity
12/31/1997 - 1,000.00
12/31/1998 1,139.14 1,138.00
12/31/1999 1,739.92 1,738.18
12/31/1999 1,738.18 1,693.18
35 Alliance Premier Growth
12/31/1997 - 1,000.00
12/31/1998 1,459.55 1,458.09
12/31/1999 1,902.44 1,900.54
12/31/1999 1,900.54 1,855.54
36 Alliance Real Estate Investment
12/31/1997 - 1,000.00
12/31/1998 798.84 798.04
12/31/1999 746.73 745.98
12/31/1999 745.98 700.98
37 Cova Riggs U.S. Gov't Securities
11/2/1999 - 1,000.00
12/31/1999 986.62 985.63
12/31/1999 985.63 935.63
38 Cova Riggs Stock
11/2/1999 - 1,000.00
12/31/1999 1,015.55 1,014.53
12/31/1999 1,014.53 964.53
39 Liberty Newport Tiger, Variable Series
12/31/1997 - 1,000.00
12/31/1998 922.88 921.96
12/31/1999 1,527.54 1,526.01
12/31/1999 1,526.01 1,481.01
40 Goldman Sachs G&I
1/29/1998 - 1,000.00
1/29/1999 997.34 996.34
12/31/1999 1,028.90 1,027.87
12/31/1999 1,027.87 982.87
41 Goldman Sachs Int'l Equity
1/29/1998 - 1,000.00
1/29/1999 1,158.16 1,157.00
12/31/1999 1,481.17 1,479.69
12/31/1999 1,479.69 1,434.69
42 Goldman Sachs Global Income
1/29/1998 - 1,000.00
1/29/1999 1,087.41 1,086.32
12/31/1999 1,051.37 1,050.31
12/31/1999 1,050.31 1,005.31
43 Templeton Global Income Securities
3/1/1999 - 1,000.00
12/31/1999 963.30 962.34
12/31/1999 962.34 912.34
44 Kemper Dreman High Return
5/15/1998 - 1,000.00
5/17/1999 1,105.43 1,104.32
12/31/1999 917.80 916.88
12/31/1999 916.88 871.88
45 Kemper Small Cap Growth
12/31/1997 - 1,000.00
12/31/1998 1,167.61 1,166.44
12/31/1999 1,547.79 1,546.24
12/31/1999 1,546.24 1,501.24
46 Kemper Small Cap Value
12/31/1997 - 1,000.00
12/31/1998 875.32 874.44
12/31/1999 886.37 885.48
12/31/1999 885.48 840.48
47 Kemper Government Securities
12/31/1997 - 1,000.00
12/31/1998 1,055.65 1,054.59
12/31/1999 1,047.05 1,046.00
12/31/1999 1,046.00 1,001.00
48 MFS Bond
5/15/1998 - 1,000.00
5/17/1999 1,038.67 1,037.63
12/31/1999 1,017.43 1,016.41
12/31/1999 1,016.41 971.41
49 MFS Research
12/31/1997 - 1,000.00
12/31/1998 1,217.28 1,216.06
12/31/1999 1,487.54 1,486.05
12/31/1999 1,486.05 1,441.05
50 MFS Growth with Income
12/31/1997 - 1,000.00
12/31/1998 1,206.66 1,205.45
12/31/1999 1,268.25 1,266.98
12/31/1999 1,266.98 1,221.98
51 MFS Emerging Growth
12/31/1997 - 1,000.00
12/31/1998 1,323.32 1,322.00
12/31/1999 2,303.67 2,301.37
12/31/1999 2,301.37 2,256.37
52 MFS / F&C Emerging Markets Equity
12/31/1997 - 1,000.00
12/31/1998 657.18 656.52
12/31/1999 894.56 893.67
12/31/1999 893.67 848.67
53 MFS High Income
12/31/1997 - 1,000.00
12/31/1998 984.52 983.54
12/31/1999 1,032.38 1,031.35
12/31/1999 1,031.35 986.35
54 MFS Global Governments
12/31/1997 - 1,000.00
12/31/1998 1,066.99 1,065.92
12/31/1999 1,024.84 1,023.82
12/31/1999 1,023.82 978.82
55 Oppenheimer Capital Appreciation
12/31/1997 - 1,000.00
12/31/1998 1,223.27 1,222.05
12/31/1999 1,707.04 1,705.33
12/31/1999 1,705.33 1,660.33
56 Oppenheimer Main Street G&I
12/31/1997 - 1,000.00
12/31/1998 1,032.65 1,031.62
12/31/1999 1,238.09 1,236.85
12/31/1999 1,236.85 1,191.85
57 Oppenheimer High Income
12/31/1997 - 1,000.00
12/31/1998 989.38 988.39
12/31/1999 1,016.45 1,015.43
12/31/1999 1,015.43 970.43
58 Oppenheimer Bond
12/31/1997 - 1,000.00
12/31/1998 989.38 988.39
12/31/1999 1,021.86 1,020.84
12/31/1999 1,020.84 975.84
59 Oppenheimer Strategic Bond
12/31/1997 - 1,000.00
12/31/1998 1,015.13 1,014.11
12/31/1999 1,028.28 1,027.25
12/31/1999 1,027.25 982.25
60 Putnam VT G&I
12/31/1997 - 1,000.00
12/31/1998 1,138.27 1,137.12
12/31/1999 1,139.11 1,137.97
12/31/1999 1,137.97 1,092.97
61 Putman VT New Value
12/31/1997 - 1,000.00
12/31/1998 1,048.35 1,047.30
12/31/1999 1,035.51 1,034.47
12/31/1999 1,034.47 989.47
62 Putnam VT Vista
12/31/1997 - 1,000.00
12/31/1998 1,178.57 1,177.39
12/31/1999 1,775.18 1,773.40
12/31/1999 1,773.40 1,728.40
63 Putnam VT Int'l Growth
12/31/1997 - 1,000.00
12/31/1998 1,170.70 1,169.53
12/31/1999 1,846.79 1,844.94
12/31/1999 1,844.94 1,799.94
64 Putnam VT Int'l New Opportunities
12/31/1997 - 1,000.00
12/31/1998 1,140.23 1,139.08
12/31/1999 2,279.73 2,277.45
12/31/1999 2,277.45 2,232.45
65 Franklin Small Cap
3/1/1999 - 1,000.00
12/31/1999 2,044.84 2,042.80
12/31/1999 2,042.80 1,992.80
66 Templeton Growth Securities
1/19/1999 - 1,000.00
12/31/1999 1,205.21 1,204.00
12/31/1999 1,204.00 1,154.00
67 Templeton International Securities
5/1/1998 - 1,000.00
5/3/1999 999.68 998.68
12/31/1999 1,113.59 1,112.48
12/31/1999 1,112.48 1,067.47
68 Templeton Developing Markets Securities
5/1/1998 - 1,000.00
5/3/1999 997.20 996.20
12/31/1999 1,144.64 1,143.50
12/31/1999 1,143.50 1,098.50
69 Mutual Shares Securities
5/1/1998 - 1,000.00
5/1/1999 1,004.37 1,003.37
12/31/1999 1,013.69 1,012.68
12/31/1999 1,012.68 967.68
71 Fidelity VIP Growth
2/17/1998 - 1,000.00
2/17/1999 1,329.63 1,328.30
12/31/1999 1,770.61 1,768.84
12/31/1999 1,768.84 1,723.84
72 Fidelity VIP II Contrafund
2/17/1998 - 1,000.00
2/17/1999 1,242.92 1,241.68
12/31/1999 1,512.58 1,511.07
12/31/1999 1,511.07 1,466.07
73 Fidelity VIP III Growth Opportunities
2/17/1998 - 1,000.00
2/17/1999 1,125.53 1,124.40
12/31/1999 1,206.13 1,204.92
12/31/1999 1,204.92 1,159.92
75 Fidelity VIP III Growth & Income
2/17/1998 - 1,000.00
2/17/1999 1,206.69 1,205.48
12/31/1999 1,312.24 1,310.93
12/31/1999 1,310.93 1,265.93
76 Fidelity VIP Equity-Income
2/17/1998 - 1,000.00
2/17/1999 1,032.21 1,031.18
12/31/1999 1,113.06 1,111.96
12/31/1999 1,111.96 1,066.95
99 Franklin Large Cap Growth Securities
3/1/1999 - 1,000.00
12/31/1999 1,302.36 1,301.06
12/31/1999 1,301.06 1,251.06
140 American Century VP Income & Growth
11/19/1999 - 1,000.00
12/31/1999 1,032.02 1,030.99
12/31/1999 1,030.99 980.99
141 American Century VP Int'l
11/19/1999 - 1,000.00
12/31/1999 1,251.50 1,250.25
12/31/1999 1,250.25 1,200.25
142 American Century VP Value
11/19/1999 - 1,000.00
12/31/1999 958.22 957.26
12/31/1999 957.26 907.26
160 Dreyfus Stock Index
11/19/1999 - 1,000.00
12/31/1999 1,032.16 1,031.13
12/31/1999 1,031.13 981.13
161 Dreyfus VIF Disciplined Stock
11/19/1999 - 1,000.00
12/31/1999 1,030.05 1,029.02
12/31/1999 1,029.02 979.02
162 Dreyfus VIF Capital Appreciation
11/19/1999 - 1,000.00
12/31/1999 1,011.84 1,010.83
12/31/1999 1,010.83 960.83
180 INVESCO VIF Dynamics
11/19/1999 - 1,000.00
12/31/1999 1,114.26 1,113.15
12/31/1999 1,113.15 1,063.15
181 INVESCO VIF High Yield
11/19/1999 - 1,000.00
12/31/1999 1,011.75 1,010.74
12/31/1999 1,010.74 960.74
210 PIMCO High Yield Bond
11/19/1999 - 1,000.00
12/31/1999 1,007.80 1,006.79
12/31/1999 1,006.79 956.79
211 PIMCO Low Duration Bond
11/19/1999 - 1,000.00
12/31/1999 996.90 995.90
12/31/1999 995.90 945.90
212 PIMCO StocksPLUS G&I
11/19/1999 - 1,000.00
12/31/1999 1,030.68 1,029.65
12/31/1999 1,029.65 979.65
213 PIMCO Total Return Bond
11/19/1999 - 1,000.00
12/31/1999 987.50 986.51
12/31/1999 986.51 936.51
230 Scudder Int'l
11/19/1999 - 1,000.00
12/31/1999 1,163.12 1,161.96
12/31/1999 1,161.96 1,111.96
Cova Variable Annuity Account One
Standard Since Inception Returns
12/31/1999
Sub-Account Days Since
Inception
6 Cova Lord Abbett G&I 357
8 Cova Bond Debenture 1,339
9 GACC Money Market 1,306
11 Cova Developing Growth 863
12 Cova Large Cap Research 863
13 Cova Mid-Cap Value 863
15 Cova Quality Bond 1,339
16 Cova Small Cap Stock 1,339
17 Cova Large Cap Stock 1,339
18 Cova Select Equity 1,339
19 Cova Int'l Equity 1,339
20 Cova Balanced 913
22 Cova Equity Income 913
23 Cova G&I Equity 913
24 Russell Multi-Style Equity 730
25 Russell Aggressive Equity 730
26 Russell Non-U.S. 730
27 Russell Core Bond 730
28 Russell Real Estate Securities 183
30 AIM V.I. Value 730
31 AIM V.I. Capital Appreciation 730
32 AIM V.I. Int'l Equity 730
35 Alliance Premier Growth 730
36 Alliance Real Estate Investment 730
37 Cova Riggs U.S. Gov't Securities 59
38 Cova Riggs Stock 59
39 Liberty Newport Tiger, Variable Series 730
40 Goldman Sachs G&I 701
41 Goldman Sachs Int'l Equity 701
42 Goldman Sachs Global Income 701
43 Templeton Global Income Securities 305
44 Kemper Dreman High Return 595
45 Kemper Small Cap Growth 730
46 Kemper Small Cap Value 730
47 Kemper Government Securities 730
48 MFS Bond 595
49 MFS Research 730
50 MFS Growth with Income 730
51 MFS Emerging Growth 730
52 MFS / F&C Emerging Markets Equity 730
53 MFS High Income 730
54 MFS Global Governments 730
55 Oppenheimer Capital Appreciation 730
56 Oppenheimer Main Street G&I 730
57 Oppenheimer High Income 730
58 Oppenheimer Bond 730
59 Oppenheimer Strategic Bond 730
60 Putnam VT G&I 730
61 Putman VT New Value 730
62 Putnam VT Vista 730
63 Putnam VT Int'l Growth 730
64 Putnam VT Int'l New Opportunities 730
65 Franklin Small Cap 305
66 Templeton Growth Securities 346
67 Templeton International Securities 609
68 Templeton Developing Markets Securities 609
69 Mutual Shares Securities 609
71 Fidelity VIP Growth 682
72 Fidelity VIP II Contrafund 682
73 Fidelity VIP III Growth Opportunities 682
75 Fidelity VIP III Growth & Income 682
76 Fidelity VIP Equity-Income 682
99 Franklin Large Cap Growth Securities 305
140 American Century VP Income & Growth 42
141 American Century VP Int'l 42
142 American Century VP Value 42
160 Dreyfus Stock Index 42
161 Dreyfus VIF Disciplined Stock 42
162 Dreyfus VIF Capital Appreciation 42
180 INVESCO VIF Dynamics 42
181 INVESCO VIF High Yield 42
210 PIMCO High Yield Bond 42
211 PIMCO Low Duration Bond 42
212 PIMCO StocksPLUS G&I 42
213 PIMCO Total Return Bond 42
230 Scudder Int'l 42
(1)Returns are not annualized for sub-account
Cova Variable Annuity Account One
Non-Standard 1 Year Return Data
As of 12/31/99
Sub-Account Account Account
Value Value
Before After
Transaction Transaction
6 Cova Lord Abbett G&I
12/31/98 - #DIV/0!
12/31/99 #DIV/0! #DIV/0!
12/31/99 #DIV/0! #DIV/0!
8 Cova Bond Debenture
12/31/98 - 1,000.00
12/31/99 1,019.92 1,019.92
12/31/99 1,019.92 1,019.92
9 GACC Money Market
12/31/98 - 1,000.00
12/31/99 1,037.39 1,037.39
12/31/99 1,037.39 1,037.39
11 Cova Developing Growth
12/31/98 - 1,000.00
12/31/99 1,305.84 1,305.84
12/31/99 1,305.84 1,305.84
12 Cova Large Cap Research
12/31/98 - 1,000.00
12/31/99 1,237.63 1,237.63
12/31/99 1,237.63 1,237.63
13 Cova Mid-Cap Value
12/31/98 - 1,000.00
12/31/99 1,041.92 1,041.92
12/31/99 1,041.92 1,041.92
15 Cova Quality Bond
12/31/98 - 1,000.00
12/31/99 970.85 970.85
12/31/99 970.85 970.85
16 Cova Small Cap Stock
12/31/98 - 1,000.00
12/31/99 1,425.15 1,425.15
12/31/99 1,425.15 1,425.15
17 Cova Large Cap Stock
12/31/98 - 1,000.00
12/31/99 1,160.61 1,160.61
12/31/99 1,160.61 1,160.61
18 Cova Select Equity
12/31/98 - 1,000.00
12/31/99 1,082.26 1,082.26
12/31/99 1,082.26 1,082.26
19 Cova Int'l Equity
12/31/98 - 1,000.00
12/31/99 1,267.24 1,267.24
12/31/99 1,267.24 1,267.24
20 Cova Balanced
12/31/1998 - 1,000.00
12/31/1999 1,056.48 1,056.48
12/31/1999 1,056.48 1,056.48
22 Cova Equity Income
12/31/98 - 1,000.00
12/31/99 1,011.09 1,011.09
12/31/99 1,011.09 1,011.09
23 Cova G&I Equity
12/31/98 - 1,000.00
12/31/99 1,145.85 1,145.85
12/31/99 1,145.85 1,145.85
24 Russell Multi-Style Equity
12/31/98 - 1,000.00
12/31/99 1,155.41 1,155.41
12/31/99 1,155.41 1,155.41
25 Russell Aggressive Equity
12/31/98 - 1,000.00
12/31/99 1,046.07 1,046.07
12/31/99 1,046.07 1,046.07
26 Russell Non-U.S.
12/31/98 - 1,000.00
12/31/99 1,315.03 1,315.03
12/31/99 1,315.03 1,315.03
27 Russell Core Bond
12/31/98 - 1,000.00
12/31/99 980.06 980.06
12/31/99 980.06 980.06
28 Russell Real Estate Securities
12/31/98 - #DIV/0!
12/31/99 #DIV/0! #DIV/0!
12/31/99 #DIV/0! #DIV/0!
30 AIM V.I. Value
12/31/98 - 1,000.00
12/31/99 1,280.92 1,280.92
12/31/99 1,280.92 1,280.92
31 AIM V.I. Capital Appreciation
12/31/98 - 1,000.00
12/31/99 1,426.02 1,426.02
12/31/99 1,426.02 1,426.02
32 AIM V.I. Int'l Equity
12/31/98 - 1,000.00
12/31/99 1,528.92 1,528.92
12/31/99 1,528.92 1,528.92
35 Alliance Premier Growth
12/31/98 - 1,000.00
12/31/99 1,304.75 1,304.75
12/31/99 1,304.75 1,304.75
36 Alliance Real Estate Investment
12/31/98 - 1,000.00
12/31/99 935.70 935.70
12/31/99 935.70 935.70
37 Cova Riggs U.S. Gov't Securities
12/31/98 - #DIV/0!
12/31/99 #DIV/0! #DIV/0!
12/31/99 #DIV/0! #DIV/0!
38 Cova Riggs Stock
12/31/98 - #DIV/0!
12/31/99 #DIV/0! #DIV/0!
12/31/99 #DIV/0! #DIV/0!
39 Liberty Newport Tiger, Variable Series
12/31/98 - 1,000.00
12/31/99 1,656.85 1,656.85
12/31/99 1,656.85 1,656.85
40 Goldman Sachs G&I
12/31/98 - 1,000.00
12/31/99 1,039.43 1,039.43
12/31/99 1,039.43 1,039.43
41 Goldman Sachs Int'l Equity
12/31/98 - 1,000.00
12/31/99 1,300.24 1,300.24
12/31/99 1,300.24 1,300.24
42 Goldman Sachs Global Income
12/31/98
12/31/99 - 1,000.00
12/31/99 976.11 976.11
976.11 976.11
44 Kemper Dreman High Return
12/31/98 - 1,000.00
12/31/99 876.03 876.03
12/31/99 876.03 876.03
45 Kemper Small Cap Growth
12/31/98 - 1,000.00
12/31/99 1,326.93 1,326.93
12/31/99 1,326.93 1,326.93
46 Kemper Small Cap Value
12/31/98 - 1,000.00
12/31/99 1,013.64 1,013.64
12/31/99 1,013.64 1,013.64
47 Kemper Government Securities
12/31/98 - 1,000.00
12/31/99 992.85 992.85
12/31/99 992.85 992.85
48 MFS Bond
12/31/98 - 1,000.00
12/31/99 970.71 970.71
12/31/99 970.71 970.71
49 MFS Research
12/31/98 - 1,000.00
12/31/99 1,223.24 1,223.24
12/31/99 1,223.24 1,223.24
50 MFS Growth with Income
12/31/98 - 1,000.00
12/31/99 1,052.10 1,052.10
12/31/99 1,052.10 1,052.10
51 MFS Emerging Growth
12/31/98 - 1,000.00
12/31/99 1,742.56 1,742.56
12/31/99 1,742.56 1,742.56
52 MFS / F&C Emerging Markets Equity
12/31/98 - 1,000.00
12/31/99 1,362.57 1,362.57
12/31/99 1,362.57 1,362.57
53 MFS High Income
12/31/98 - 1,000.00
12/31/99 1,049.66 1,049.66
12/31/99 1,049.66 1,049.66
54 MFS Global Governments
12/31/98 - 1,000.00
12/31/99 961.46 961.46
12/31/99 961.46 961.46
55 Oppenheimer Capital Appreciation
12/31/98 - 1,000.00
12/31/99 1,396.86 1,396.86
12/31/99 1,396.86 1,396.86
56 Oppenheimer Main Street G&I
12/31/98 - 1,000.00
12/31/99 1,200.14 1,200.14
12/31/99 1,200.14 1,200.14
57 Oppenheimer High Income
12/31/98 - 1,000.00
12/31/99 1,028.39 1,028.39
12/31/99 1,028.39 1,028.39
58 Oppenheimer Bond
12/31/98 - 1,000.00
12/31/99 971.12 971.12
12/31/99 971.12 971.12
59 Oppenheimer Strategic Bond
12/31/98 - 1,000.00
12/31/99 1,013.97 1,013.97
12/31/99 1,013.97 1,013.97
60 Putnam VT G&I
12/31/98 - 1,000.00
12/31/99 1,001.74 1,001.74
12/31/99 1,001.74 1,001.74
61 Putman VT New Value
12/31/98 - 1,000.00
12/31/99 988.74 988.74
12/31/99 988.74 988.74
62 Putnam VT Vista
12/31/98 - 1,000.00
12/31/99 1,507.72 1,507.72
12/31/99 1,507.72 1,507.72
63 Putnam VT Int'l Growth
12/31/98 - 1,000.00
12/31/99 1,579.09 1,579.09
12/31/99 1,579.09 1,579.09
64 Putnam VT Int'l New Opportunities
12/31/98 - 1,000.00
12/31/99 2,001.37 2,001.37
12/31/99 2,001.37 2,001.37
67 Templeton International Securities
12/31/98 - 1,000.00
12/31/99 1,218.98 1,218.98
12/31/99 1,218.98 1,218.98
68 Templeton Developing Markets Securities
12/31/98 - 1,000.00
12/31/99 1,517.12 1,517.12
12/31/99 1,517.12 1,517.12
69 Mutual Shares Securities
12/31/98 - 1,000.00
12/31/99 1,118.45 1,118.45
12/31/99 1,118.45 1,118.45
71 Fidelity VIP Growth
12/31/98 - 1,000.00
12/31/99 1,355.25 1,355.25
12/31/99 1,355.25 1,355.25
72 Fidelity VIP II Contrafund
12/31/98 - 1,000.00
12/31/99 1,225.25 1,225.25
12/31/99 1,225.25 1,225.25
73 Fidelity VIP III Growth Opportunities
12/31/98 - 1,000.00
12/31/99 1,028.19 1,028.19
12/31/99 1,028.19 1,028.19
75 Fidelity VIP III Growth & Income
12/31/98 - 1,000.00
12/31/99 1,076.47 1,076.47
12/31/99 1,076.47 1,076.47
76 Fidelity VIP Equity-Income
12/31/98 - 1,000.00
12/31/99 1,048.48 1,048.48
12/31/99 1,048.48 1,048.48
Cova Variable Annuity Account One
Non-Standard 1 Year Returns
12/31/99
Sub-Account Days Since
Inception
6 Cova Lord Abbett G&I 357
8 Cova Bond Debenture 1,339
9 GACC Money Market 1,306
11 Cova Developing Growth 863
12 Cova Large Cap Research 863
13 Cova Mid-Cap Value 863
15 Cova Quality Bond 1,339
16 Cova Small Cap Stock 1,339
17 Cova Large Cap Stock 1,339
18 Cova Select Equity 1,339
19 Cova Int'l Equity 1,339
20 Cova Balanced 913
22 Cova Equity Income 913
23 Cova G&I Equity 913
24 Russell Multi-Style Equity 730
25 Russell Aggressive Equity 730
26 Russell Non-U.S. 730
27 Russell Core Bond 730
28 Russell Real Estate Securities 183
30 AIM V.I. Value 730
31 AIM V.I. Capital Appreciation 730
32 AIM V.I. Int'l Equity 730
35 Alliance Premier Growth 730
36 Alliance Real Estate Investment 730
37 Cova Riggs U.S. Gov't Securities 59
38 Cova Riggs Stock 59
39 Liberty Newport Tiger, Variable Series 730
40 Goldman Sachs G&I 701
41 Goldman Sachs Int'l Equity 701
42 Goldman Sachs Global Income 701
43 Templeton Global Income Securities 305
44 Kemper Dreman High Return 595
45 Kemper Small Cap Growth 730
46 Kemper Small Cap Value 730
47 Kemper Government Securities 730
48 MFS Bond 595
49 MFS Research 730
50 MFS Growth with Income 730
51 MFS Emerging Growth 730
52 MFS / F&C Emerging Markets Equity 730
53 MFS High Income 730
54 MFS Global Governments 730
55 Oppenheimer Capital Appreciation 730
56 Oppenheimer Main Street G&I 730
57 Oppenheimer High Income 730
58 Oppenheimer Bond 730
59 Oppenheimer Strategic Bond 730
60 Putnam VT G&I 730
61 Putman VT New Value 730
62 Putnam VT Vista 730
63 Putnam VT Int'l Growth 730
64 Putnam VT Int'l New Opportunities 730
65 Franklin Small Cap 305
66 Templeton Growth Securities 346
67 Templeton International Securities 609
68 Templeton Developing Markets Securities 609
69 Mutual Shares Securities 609
71 Fidelity VIP Growth 682
72 Fidelity VIP II Contrafund 682
73 Fidelity VIP III Growth Opportunities 682
75 Fidelity VIP III Growth & Income 682
76 Fidelity VIP Equity-Income 682
99 Franklin Large Cap Growth Securities 305
140 American Century VP Income & Growth 42
141 American Century VP Int'l 42
142 American Century VP Value 42
160 Dreyfus Stock Index 42
161 Dreyfus VIF Disciplined Stock 42
162 Dreyfus VIF Capital Appreciation 42
180 INVESCO VIF Dynamics 42
181 INVESCO VIF High Yield 42
210 PIMCO High Yield Bond 42
211 PIMCO Low Duration Bond 42
212 PIMCO StocksPLUS G&I 42
213 PIMCO Total Return Bond 42
230 Scudder Int'l 42
(1) Sub-account has not been in existence for
Cova Variable Annuity Account One
Non-Standard Since Inception Return Data
As of 12/31/99
Sub-Account Account Account
Value Value
Before After
Transaction Transaction
6 Cova Lord Abbett G&I
1/8/1999 - 1,000.00
12/31/1999 1,098.96 1,098.96
12/31/1999 1,098.96 1,098.96
8 Cova Bond Debenture
5/1/1996 - 1,000.00
5/1/1997 1,140.55 1,140.55
5/1/1998 1,340.47 1,340.47
5/3/1999 1,367.24 1,367.24
12/31/1999 1,363.22 1,363.22
12/31/1999 1,363.22 1,363.22
9 GACC Money Market
6/3/1996 - 1,000.00
6/3/1997 1,041.06 1,041.06
6/3/1998 1,085.81 1,085.81
6/3/1999 1,127.13 1,127.13
12/31/1999 1,152.54 1,152.54
12/31/1999 1,152.54 1,152.54
11 Cova Developing Growth
8/20/1997 - 1,000.00
8/20/1998 982.30 982.30
8/20/1999 1,217.23 1,217.23
12/31/1999 1,445.29 1,445.29
12/31/1999 1,445.29 1,445.29
12 Cova Large Cap Research
8/20/1997 - 1,000.00
8/20/1998 1,053.73 1,053.73
8/20/1999 1,292.54 1,292.54
12/31/1999 1,463.56 1,463.56
12/31/1999 1,463.56 1,463.56
13 Cova Mid-Cap Value
8/20/1997 - 1,000.00
8/20/1998 991.94 991.94
8/20/1999 1,142.95 1,142.95
12/31/1999 1,087.55 1,087.55
12/31/1999 1,087.55 1,087.55
15 Cova Quality Bond
5/1/1996 - 1,000.00
5/1/1997 1,051.32 1,051.32
5/1/1998 1,147.41 1,147.41
5/3/1999 1,193.23 1,193.23
12/31/1999 1,168.73 1,168.73
12/31/1999 1,168.73 1,168.73
16 Cova Small Cap Stock
5/1/1996 - 1,000.00
5/1/1997 985.34 985.34
5/1/1998 1,424.01 1,424.01
5/3/1999 1,199.16 1,199.16
12/31/1999 1,705.81 1,705.81
12/31/1999 1,705.81 1,705.81
17 Cova Large Cap Stock
5/1/1996 - 1,000.00
5/1/1997 1,219.45 1,219.45
5/1/1998 1,749.73 1,749.73
5/3/1999 2,156.64 2,156.64
12/31/1999 2,254.21 2,254.21
12/31/1999 2,254.21 2,254.21
18 Cova Select Equity
5/1/1996 - 1,000.00
5/1/1997 1,135.03 1,135.03
5/1/1998 1,599.10 1,599.10
5/3/1999 1,841.34 1,841.34
12/31/1999 1,823.17 1,823.17
12/31/1999 1,823.17 1,823.17
19 Cova Int'l Equity
5/1/1996 - 1,000.00
5/1/1997 1,090.14 1,090.14
5/1/1998 1,286.22 1,286.22
5/3/1999 1,330.09 1,330.09
12/31/1999 1,599.03 1,599.03
12/31/1999 1,599.03 1,599.03
20 Cova Balanced
7/1/1997 - 1,000.00
7/1/1998 1,123.61 1,123.61
7/1/1999 1,259.02 1,259.02
12/31/1999 1,243.25 1,243.25
12/31/1999 1,243.25 1,243.25
22 Cova Equity Income
7/1/1997 - 1,000.00
7/1/1998 1,241.82 1,241.82
7/1/1999 1,336.40 1,336.40
12/31/1999 1,220.27 1,220.27
12/31/1999 1,220.27 1,220.27
23 Cova G&I Equity
7/1/1997 - 1,000.00
7/1/1998 1,194.14 1,194.14
7/1/1999 1,388.93 1,388.93
12/31/1999 1,396.60 1,396.60
12/31/1999 1,396.60 1,396.60
24 Russell Multi-Style Equity
12/31/1997 - 1,000.00
12/31/1998 1,269.48 1,269.48
12/31/1999 1,466.77 1,466.77
12/31/1999 1,466.77 1,466.77
25 Russell Aggressive Equity
12/31/1997 - 1,000.00
12/31/1998 996.33 996.33
12/31/1999 1,042.22 1,042.22
12/31/1999 1,042.22 1,042.22
26 Russell Non-U.S.
12/31/1997 - 1,000.00
12/31/1998 1,114.21 1,114.21
12/31/1999 1,465.21 1,465.21
12/31/1999 1,465.21 1,465.21
27 Russell Core Bond
12/31/1997 - 1,000.00
12/31/1998 1,059.12 1,059.12
12/31/1999 1,038.00 1,038.00
12/31/1999 1,038.00 1,038.00
28 Russell Real Estate Securities
7/1/1999 - 1,000.00
12/31/1999 938.81 938.81
12/31/1999 938.81 938.81
30 AIM V.I. Value
12/31/1997 - 1,000.00
12/31/1998 1,306.02 1,306.02
12/31/1999 1,672.91 1,672.91
12/31/1999 1,672.91 1,672.91
31 AIM V.I. Capital Appreciation
12/31/1997 - 1,000.00
12/31/1998 1,177.07 1,177.07
12/31/1999 1,678.54 1,678.54
12/31/1999 1,678.54 1,678.54
32 AIM V.I. Int'l Equity
12/31/1997 - 1,000.00
12/31/1998 1,139.14 1,139.14
12/31/1999 1,741.67 1,741.67
12/31/1999 1,741.67 1,741.67
35 Alliance Premier Growth
12/31/1997 - 1,000.00
12/31/1998 1,459.55 1,459.55
12/31/1999 1,904.34 1,904.34
12/31/1999 1,904.34 1,904.34
36 Alliance Real Estate Investment
12/31/1997 - 1,000.00
12/31/1998 798.84 798.84
12/31/1999 747.48 747.48
12/31/1999 747.48 747.48
37 Cova Riggs U.S. Gov't Securities
11/2/1999 - 1,000.00
12/31/1999 986.62 986.62
12/31/1999 986.62 986.62
38 Cova Riggs Stock
11/2/1999 - 1,000.00
12/31/1999 1,015.55 1,015.55
12/31/1999 1,015.55 1,015.55
39 Liberty Newport Tiger, Variable Series
12/31/1997 - 1,000.00
12/31/1998 922.88 922.88
12/31/1999 1,529.07 1,529.07
12/31/1999 1,529.07 1,529.07
40 Goldman Sachs G&I
1/29/1998 - 1,000.00
1/29/1999 997.34 997.34
12/31/1999 1,029.93 1,029.93
12/31/1999 1,029.93 1,029.93
41 Goldman Sachs Int'l Equity
1/29/1998 - 1,000.00
1/29/1999 1,158.16 1,158.16
12/31/1999 1,482.66 1,482.66
12/31/1999 1,482.66 1,482.66
42 Goldman Sachs Global Income
1/29/1998 - 1,000.00
1/29/1999 1,087.41 1,087.41
12/31/1999 1,052.42 1,052.42
12/31/1999 1,052.42 1,052.42
43 Templeton Global Income Securities
3/1/1999 - 1,000.00
12/31/1999 963.30 963.30
12/31/1999 963.30 963.30
44 Kemper Dreman High Return
5/15/1998 - 1,000.00
5/17/1999 1,105.43 1,105.43
12/31/1999 918.72 918.72
12/31/1999 918.72 918.72
45 Kemper Small Cap Growth
12/31/1997 - 1,000.00
12/31/1998 1,167.61 1,167.61
12/31/1999 1,549.34 1,549.34
12/31/1999 1,549.34 1,549.34
46 Kemper Small Cap Value
12/31/1997 - 1,000.00
12/31/1998 875.32 875.32
12/31/1999 887.26 887.26
12/31/1999 887.26 887.26
47 Kemper Government Securities
12/31/1997 - 1,000.00
12/31/1998 1,055.65 1,055.65
12/31/1999 1,048.10 1,048.10
12/31/1999 1,048.10 1,048.10
48 MFS Bond
5/15/1998 - 1,000.00
5/17/1999 1,038.67 1,038.67
12/31/1999 1,018.45 1,018.45
12/31/1999 1,018.45 1,018.45
49 MFS Research
12/31/1997 - 1,000.00
12/31/1998 1,217.28 1,217.28
12/31/1999 1,489.03 1,489.03
12/31/1999 1,489.03 1,489.03
50 MFS Growth with Income
12/31/1997 - 1,000.00
12/31/1998 1,206.66 1,206.66
12/31/1999 1,269.53 1,269.53
12/31/1999 1,269.53 1,269.53
51 MFS Emerging Growth
12/31/1997 - 1,000.00
12/31/1998 1,323.32 1,323.32
12/31/1999 2,305.97 2,305.97
12/31/1999 2,305.97 2,305.97
52 MFS / F&C Emerging Markets Equity
12/31/1997 - 1,000.00
12/31/1998 657.18 657.18
12/31/1999 895.46 895.46
12/31/1999 895.46 895.46
53 MFS High Income
12/31/1997 - 1,000.00
12/31/1998 984.52 984.52
12/31/1999 1,033.41 1,033.41
12/31/1999 1,033.41 1,033.41
54 MFS Global Governments
12/31/1997 - 1,000.00
12/31/1998 1,066.99 1,066.99
12/31/1999 1,025.87 1,025.87
12/31/1999 1,025.87 1,025.87
55 Oppenheimer Capital Appreciation
12/31/1997 - 1,000.00
12/31/1998 1,223.27 1,223.27
12/31/1999 1,708.75 1,708.75
12/31/1999 1,708.75 1,708.75
56 Oppenheimer Main Street G&I
12/31/1997 - 1,000.00
12/31/1998 1,032.65 1,032.65
12/31/1999 1,239.33 1,239.33
12/31/1999 1,239.33 1,239.33
57 Oppenheimer High Income
12/31/1997 - 1,000.00
12/31/1998 989.38 989.38
12/31/1999 1,017.47 1,017.47
12/31/1999 1,017.47 1,017.47
58 Oppenheimer Bond
12/31/1997 - 1,000.00
12/31/1998 989.38 989.38
12/31/1999 1,022.89 1,022.89
12/31/1999 1,022.89 1,022.89
59 Oppenheimer Strategic Bond
12/31/1997 - 1,000.00
12/31/1998 1,015.13 1,015.13
12/31/1999 1,029.32 1,029.32
12/31/1999 1,029.32 1,029.32
60 Putnam VT G&I
12/31/1997 - 1,000.00
12/31/1998 1,138.27 1,138.27
12/31/1999 1,140.25 1,140.25
12/31/1999 1,140.25 1,140.25
61 Putman VT New Value
12/31/1997 - 1,000.00
12/31/1998 1,048.35 1,048.35
12/31/1999 1,036.54 1,036.54
12/31/1999 1,036.54 1,036.54
62 Putnam VT Vista
12/31/1997 - 1,000.00
12/31/1998 1,178.57 1,178.57
12/31/1999 1,776.96 1,776.96
12/31/1999 1,776.96 1,776.96
63 Putnam VT Int'l Growth
12/31/1997 - 1,000.00
12/31/1998 1,170.70 1,170.70
12/31/1999 1,848.64 1,848.64
12/31/1999 1,848.64 1,848.64
64 Putnam VT Int'l New Opportunities
12/31/1997 - 1,000.00
12/31/1998 1,140.23 1,140.23
12/31/1999 2,282.01 2,282.01
12/31/1999 2,282.01 2,282.01
65 Franklin Small Cap
3/1/1999 - 1,000.00
12/31/1999 2,044.84 2,044.84
12/31/1999 2,044.84 2,044.84
66 Templeton Growth Securities
1/19/1999 - 1,000.00
12/31/1999 1,205.21 1,205.21
12/31/1999 1,205.21 1,205.21
67 Templeton International Securities
5/1/1998 - 1,000.00
5/3/1999 999.68 999.68
12/31/1999 1,114.70 1,114.70
12/31/1999 1,114.70 1,114.70
68 Templeton Developing Markets Securities
5/1/1998 - 1,000.00
5/3/1999 997.20 997.20
12/31/1999 1,145.79 1,145.79
12/31/1999 1,145.79 1,145.79
69 Mutual Shares Securities
5/1/1998 - 1,000.00
5/1/1999 1,004.37 1,004.37
12/31/1999 1,014.70 1,014.70
12/31/1999 1,014.70 1,014.70
71 Fidelity VIP Growth
2/17/1998 - 1,000.00
2/17/1999 1,329.63 1,329.63
12/31/1999 1,772.39 1,772.39
12/31/1999 1,772.39 1,772.39
72 Fidelity VIP II Contrafund
2/17/1998 - 1,000.00
2/17/1999 1,242.92 1,242.92
12/31/1999 1,514.09 1,514.09
12/31/1999 1,514.09 1,514.09
73 Fidelity VIP III Growth Opportunities
2/17/1998 - 1,000.00
2/17/1999 1,125.53 1,125.53
12/31/1999 1,207.34 1,207.34
12/31/1999 1,207.34 1,207.34
75 Fidelity VIP III Growth & Income
2/17/1998 - 1,000.00
2/17/1999 1,206.69 1,206.69
12/31/1999 1,313.56 1,313.56
12/31/1999 1,313.56 1,313.56
76 Fidelity VIP Equity-Income
2/17/1998 - 1,000.00
2/17/1999 1,032.21 1,032.21
12/31/1999 1,114.18 1,114.18
12/31/1999 1,114.18 1,114.18
99 Franklin Large Cap Growth Securities
3/1/1999 - 1,000.00
12/31/1999 1,302.36 1,302.36
12/31/1999 1,302.36 1,302.36
140 American Century VP Income & Growth
11/19/1999 - 1,000.00
12/31/1999 1,032.02 1,032.02
12/31/1999 1,032.02 1,032.02
141 American Century VP Int'l
11/19/1999 - 1,000.00
12/31/1999 1,251.50 1,251.50
12/31/1999 1,251.50 1,251.50
142 American Century VP Value
11/19/1999 - 1,000.00
12/31/1999 958.22 958.22
12/31/1999 958.22 958.22
160 Dreyfus Stock Index
11/19/1999 - 1,000.00
12/31/1999 1,032.16 1,032.16
12/31/1999 1,032.16 1,032.16
161 Dreyfus VIF Disciplined Stock
11/19/1999 - 1,000.00
12/31/1999 1,030.05 1,030.05
12/31/1999 1,030.05 1,030.05
162 Dreyfus VIF Capital Appreciation
11/19/1999 - 1,000.00
12/31/1999 1,011.84 1,011.84
12/31/1999 1,011.84 1,011.84
180 INVESCO VIF Dynamics
11/19/1999 - 1,000.00
12/31/1999 1,114.26 1,114.26
12/31/1999 1,114.26 1,114.26
181 INVESCO VIF High Yield
11/19/1999 - 1,000.00
12/31/1999 1,011.75 1,011.75
12/31/1999 1,011.75 1,011.75
210 PIMCO High Yield Bond
11/19/1999 - 1,000.00
12/31/1999 1,007.80 1,007.80
12/31/1999 1,007.80 1,007.80
211 PIMCO Low Duration Bond
11/19/1999 - 1,000.00
12/31/1999 996.90 996.90
12/31/1999 996.90 996.90
212 PIMCO StocksPLUS G&I
11/19/1999 - 1,000.00
12/31/1999 1,030.68 1,030.68
12/31/1999 1,030.68 1,030.68
213 PIMCO Total Return Bond
11/19/1999 - 1,000.00
12/31/1999 987.50 987.50
12/31/1999 987.50 987.50
230 Scudder Int'l
11/19/1999 - 1,000.00
12/31/1999 1,163.12 1,163.12
12/31/1999 1,163.12 1,163.12
Cova Variable Annuity Account One
Non-Standard Since Inception Returns
12/31/1999
Sub-Account Days Since
Inception
6 Cova Lord Abbett G&I 357
8 Cova Bond Debenture 1,339
9 GACC Money Market 1,306
11 Cova Developing Growth 863
12 Cova Large Cap Research 863
13 Cova Mid-Cap Value 863
15 Cova Quality Bond 1,339
16 Cova Small Cap Stock 1,339
17 Cova Large Cap Stock 1,339
18 Cova Select Equity 1,339
19 Cova Int'l Equity 1,339
20 Cova Balanced 913
22 Cova Equity Income 913
23 Cova G&I Equity 913
24 Russell Multi-Style Equity 730
25 Russell Aggressive Equity 730
26 Russell Non-U.S. 730
27 Russell Core Bond 730
28 Russell Real Estate Securities 183
30 AIM V.I. Value 730
31 AIM V.I. Capital Appreciation 730
32 AIM V.I. Int'l Equity 730
35 Alliance Premier Growth 730
36 Alliance Real Estate Investment 730
37 Cova Riggs U.S. Gov't Securities 59
38 Cova Riggs Stock 59
39 Liberty Newport Tiger, Variable Series 730
40 Goldman Sachs G&I 701
41 Goldman Sachs Int'l Equity 701
42 Goldman Sachs Global Income 701
43 Templeton Global Income Securities 305
44 Kemper Dreman High Return 595
45 Kemper Small Cap Growth 730
46 Kemper Small Cap Value 730
47 Kemper Government Securities 730
48 MFS Bond 595
49 MFS Research 730
50 MFS Growth with Income 730
51 MFS Emerging Growth 730
52 MFS / F&C Emerging Markets Equity 730
53 MFS High Income 730
54 MFS Global Governments 730
55 Oppenheimer Capital Appreciation 730
56 Oppenheimer Main Street G&I 730
57 Oppenheimer High Income 730
58 Oppenheimer Bond 730
59 Oppenheimer Strategic Bond 730
60 Putnam VT G&I 730
61 Putman VT New Value 730
62 Putnam VT Vista 730
63 Putnam VT Int'l Growth 730
64 Putnam VT Int'l New Opportunities 730
65 Franklin Small Cap 305
66 Templeton Growth Securities 346
67 Templeton International Securities 609
68 Templeton Developing Markets Securities 609
69 Mutual Shares Securities 609
71 Fidelity VIP Growth 682
72 Fidelity VIP II Contrafund 682
73 Fidelity VIP III Growth Opportunities 682
75 Fidelity VIP III Growth & Income 682
76 Fidelity VIP Equity-Income 682
99 Franklin Large Cap Growth Securities 305
140 American Century VP Income & Growth 42
141 American Century VP Int'l 42
142 American Century VP Value 42
160 Dreyfus Stock Index 42
161 Dreyfus VIF Disciplined Stock 42
162 Dreyfus VIF Capital Appreciation 42
180 INVESCO VIF Dynamics 42
181 INVESCO VIF High Yield 42
210 PIMCO High Yield Bond 42
211 PIMCO Low Duration Bond 42
212 PIMCO StocksPLUS G&I 42
213 PIMCO Total Return Bond 42
230 Scudder Int'l 42
(1) Returns are not annualized for sub-accounts in existence less than 1 year.
</TABLE>
Cova Corporation, a Missouri corporation, is owned by General American Life
Insurance Company, a Missouri company.
General American Life Insurance Company is owned by GenAmerica Corporation, a
Missouri corporation.
GenAmerica Corporation is owned by Metropolitan Life Insurance Company, a New
York company.
Cova Corporation owns 100% of Cova Financial Services Life Insurance Company,
a Missouri company, and Cova Life Management Company, a Delaware company.
Cova Financial Services Life Insurance Company owns 100% of First Cova Life
Insurance Company, a New York company, and Cova Financial Life Insurance
Company, a California company.
Cova Life Management Company owns 100% of Cova Investment Advisory Corporation,
an Illinois corporation, Cova Investment Allocation Corporation, an Illinois
corporation, and Cova Life Sales Company, a Delaware company.
