COVA SERIES TRUST
SUPPLEMENT DATED NOVEMBER 1, 1996
TO THE PROSPECTUS DATED MAY 1, 1996,
AS AMENDED JUNE 28, 1996
COMPLETION OF ACQUISITION
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition"). As a result of the Acquisition, VK/AC
Holding, Inc. became a wholly owned subsidiary of MSAM Holdings II, Inc.
which, in turn, is a wholly owned subsidiary of Morgan Stanley Group Inc.
VK/AC Holding, Inc. is the indirect parent of Van Kampen American Capital
Investment Advisory Corp., the Sub-Adviser for the Quality Income, High Yield,
Stock Index, Money Market and Growth and Income Portfolios of Cova Series
Trust.
Morgan Stanley Group Inc. and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Asset Management Inc., an investment
adviser ("MSAM"), Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International, are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger,
acquisition, restructuring and other corporate finance advisory activities;
merchant banking; stock brokerage and research services; asset management;
trading of futures, options, foreign exchange commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate
advice, financing and investing; and global custody, securities clearance
services and securities lending. As of September 30, 1996, MSAM, together
with its affiliated investment advisory companies, had approximately $103.5
billion of assets under management and fiduciary advice.
Prior to October 31, 1996, VK/AC Holding, Inc. was indirectly controlled by
The Clayton & Dubilier Associates IV Limited Partnership. References in the
attached Prospectus to The Clayton & Dubilier Associates IV Limited
Partnership and its general partners are hereby deleted.
DATE OF STATEMENT OF ADDITIONAL INFORMATION
The following sentence is inserted in place of the first sentence of the third
paragraph on page 1 of the Prospectus:
"A Statement of Additional Information, dated October 18, 1996,
containing information about the Trust has been filed with the Securities and
Exchange Commission and is hereby incorporated by reference into this
Prospectus."
FINANCIAL HIGHLIGHTS
This Supplement contains financial highlights thereto for the period ended
June 30, 1996, with respect to the Quality Bond Portfolio, Small Cap Stock
Portfolio, Large Cap Stock Portfolio, Select Equity Portfolio, International
Equity Portfolio and Bond Debenture Portfolio of the Trust. With the filing
of this Supplement, the date of the Prospectus is changed to October 18, 1996.
COVA SERIES TRUST
QUALITY BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.126
Net realized and unrealized loss on investments (0.130)
Total from investment operations (0.004)
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.124)
Distributions from net realized gain 0.000
Total distributions (0.124)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 9.872
- ---------------------------------------------------------- ---------------
TOTAL RETURN (0.06%)
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 5,502
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.65%**
Net investment income 5.70%**
PORTFOLIO TURNOVER RATE: 67.58%
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 1.39%**
Ratio of Net Investment Income to Average Net Assets: 4.96%**
</TABLE>
COVA SERIES TRUST
SMALL CAP STOCK PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.026
Net realized and unrealized gain on investments 0.460
Total from investment operations 0.486
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.026)
Distributions from net realized gain 0.000
Total distributions (0.026)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.460
- ---------------------------------------------------------- ---------------
TOTAL RETURN 4.86%
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 5,754
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.95%**
Net investment income 1.00%**
PORTFOLIO TURNOVER RATE: 31.50%
- ---------------------------------------------------------- ---------------
AVERAGE COMMISSION RATE PAID (2): $ 0.0336
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 1.82%**
Ratio of Net Investment Income to Average Net Assets: 0.13%**
(2) Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the period by the total number of shares
purchased and sold during the period for which commissions were charged.
</TABLE>
COVA SERIES TRUST
LARGE CAP STOCK PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.047
Net realized and unrealized gain on investments 0.190
Total from investment operations 0.237
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.046)
Distributions from net realized gain 0.000
Total distributions (0.046)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.191
- ---------------------------------------------------------- ---------------
TOTAL RETURN 2.36%
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 15,504
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.75%**
Net investment income 1.94%**
PORTFOLIO TURNOVER RATE: 11.23%
- ---------------------------------------------------------- ---------------
AVERAGE COMMISSION RATE PAID (2): $ 0.0306
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 1.34%**
Ratio of Net Investment Income to Average Net Assets: 1.35%**
(2) Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the period by the total number of shares
purchased and sold during the period for which commissions were charged.
</TABLE>
COVA SERIES TRUST
SELECT EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.042
Net realized and unrealized loss on investments (0.110)
Total from investment operations (0.068)
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.042)
Distributions from net realized gain 0.000
Total distributions (0.042)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 9.890
- ---------------------------------------------------------- ---------------
TOTAL RETURN (0.68%)
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 5,624
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.85%**
Net investment income 1.74%**
PORTFOLIO TURNOVER RATE: 65.22%
- ---------------------------------------------------------- ---------------
AVERAGE COMMISSION RATE PAID (2): $ 0.0375
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 1.59%**
Ratio of Net Investment Income to Average Net Assets: 1.00%**
(2) Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the period by the total number of shares
purchased and sold during the period for which commissions were charged.
</TABLE>
COVA SERIES TRUST
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.089
Net realized and unrealized gain on investments 0.300
Total from investment operations 0.389
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.055)
Distributions from net realized gain 0.000
Total distributions (0.055)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.334
- ---------------------------------------------------------- ---------------
TOTAL RETURN 3.85%
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 7,252
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.95%**
Net investment income 4.40%**
PORTFOLIO TURNOVER RATE: 33.07%
- ---------------------------------------------------------- ---------------
AVERAGE COMMISSION RATE PAID (2): $ 0.0063
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 2.66%**
Ratio of Net Investment Income to Average Net Assets: 2.69%**
(2) Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the period by the total number of shares
purchased and sold during the period for which commissions were charged.
</TABLE>
COVA SERIES TRUST
BOND DEBENTURE PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period Ended June 30, 1996 (UNAUDITED)*
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000
- ---------------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.085
Net realized and unrealized gain on investments 0.220
Total from investment operations 0.305
---------------------------------------------------- ---------------
DISTRIBUTIONS:
Dividends from net investment income (0.083)
Distributions from net realized gain 0.000
Total distributions (0.083)
---------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.222
- ---------------------------------------------------------- ---------------
TOTAL RETURN 3.03%
- ---------------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------- ---------------
Net Assets, end of period (000) $ 1,934
RATIOS TO AVERAGE NET ASSETS (1)
- ---------------------------------------------------------- ---------------
Expenses 0.85%**
Net investment income 7.50%**
PORTFOLIO TURNOVER RATE: 67.49%
- ---------------------------------------------------------- ---------------
<FN>
* Fund commenced investment operations on April 2, 1996
** Annualized
(1) If certain expenses had not been assumed by Cova Life and/or the Adviser,
total return would have been lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets: 2.75%**
Ratio of Net Investment Income to Average Net Assets: 5.60%**
</TABLE>
