File Nos. 333-34817
811-07060
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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. 5 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 19 [X]
(Check appropriate box or boxes.)
COVA VARIABLE ANNUITY ACCOUNT FIVE
___________________________________
(Exact Name of Registrant)
COVA FINANCIAL LIFE INSURANCE COMPANY
______________________________________
(Name of Depositor)
4100 Newport Place Drive, Suite 840, Newport Beach, CA 92600
______________________________________________________ ______
(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 Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
(800) 831-5433
Copies to:
Judith A. Hasenauer and Bernard J. Spaulding
Blazzard, Grodd & Hasenauer, P.C. Senior Vice President,
943 Post Road East General Counsel and Secretary
P.O. Box 5108 Cova Financial Life Insurance
Westport, CT 06881 Company
(203) 226-7866 One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
It is proposed that this filing will become effective:
__X__ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) 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.
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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. Different versions of Version A of the Prospectus will be
created -- each one with different funding options available. 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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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 . . . . . . . . . . . . . . . Profile
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
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 FIVE
and
COVA FINANCIAL
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Life Insurance Company (Cova).
The annuity contract has 43 investment choices - a fixed account which offers an
interest rate which is guaranteed by Cova, and 42 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, Inc.:
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
Real Estate Investment Portfolio
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 (a "high yield" portfolio under California
insurance regulations)
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
General American Capital Company:
Managed by Conning Asset
Management Company
Money Market Fund
Goldman Sachs Variable Insurance Trust:
Managed by Goldman Sachs
Asset Management
Goldman Sachs Growth and Income Fund
Managed by Goldman Sachs
Asset Management International
Goldman Sachs Global Income Fund
Goldman Sachs 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/Foreign & Colonial Emerging
Markets Equity Series (not available)
MFS Global Governments Series
(formerly MFS World Governments)
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
(formerly Oppenheimer Growth)
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
(formerly Oppenheimer Growth & Income)
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
Templeton Variable Products Series Fund:
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Fund, Class 1 Shares
Managed by Templeton Asset
Management Ltd.
Templeton Developing Markets Fund, Class 1 Shares
Managed by Templeton Investment
Counsel, Inc.
Templeton International Fund, Class 1 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
November __, 1999. 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.
November __, 1999
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS 3
SUMMARY 4
Fee Table 6
Examples 11
1. THE ANNUITY CONTRACT 14
2. ANNUITY PAYMENTS (THE INCOME PHASE) 14
Annuity Date 14
Annuity Payments 14
Annuity Options 14
3. PURCHASE 15
Purchase Payments 15
Allocation of Purchase Payments 15
Free Look 15
Accumulation Units 15
4. INVESTMENT OPTIONS 16
AIM Variable Insurance Funds, Inc. 16
Alliance Variable Products Series Fund, Inc. 16
Cova Series Trust 16
General American Capital Company 16
Goldman Sachs Variable Insurance Trust 16
Kemper Variable Series 16
Liberty Variable Investment Trust 16
MFS Variable Insurance Trust 17
Oppenheimer Variable Account Funds 17
Putnam Variable Trust 17
Templeton Variable Products Series Fund 17
Transfers 17
Dollar Cost Averaging Program 18
Automatic Rebalancing Program 18
Approved Asset Allocation Programs 18
Voting Rights 18
Substitution 18
5. EXPENSES 19
Insurance Charges 19
Contract Maintenance Charge 19
Withdrawal Charge 19
Reduction or Elimination of the Withdrawal Charge 19
Premium Taxes 20
Transfer Fee 20
Income Taxes 20
Investment Portfolio Expenses 20
6. TAXES 20
Annuity Contracts in General 20
Qualified and Non-Qualified Contracts 20
Withdrawals - Non-Qualified Contracts 21
Withdrawals - Qualified Contracts 21
Withdrawals - Tax-Sheltered Annuities 21
Diversification 21
7. ACCESS TO YOUR MONEY 21
Systematic Withdrawal Program 22
Suspension of Payments or Transfers 22
8. PERFORMANCE 22
9. DEATH BENEFIT 22
Upon Your Death 22
Death of Annuitant 23
10. OTHER INFORMATION 24
Cova 24
Year 2000 24
The Separate Account 24
Distributor 24
Ownership 24
Beneficiary 24
Assignment 24
Financial Statements 24
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION 24
APPENDIX A
Condensed Financial Information A-1
APPENDIX B B-1
APPENDIX C
Performance Information C-1
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable and need an explanation. We have identified the
following as some of these words or terms. They are identified in the text in
italic and the page that is indicated here is where we believe you will find the
best explanation for the word or term.
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 42 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 described herein
and 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. 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.
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 1.66%
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, in the State of California, within 30 days if you are 60 years or older
when we issue the contract) 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 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 FIVE 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.
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
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AIM Variable Insurance Funds, Inc.
Managed by A I M Advisors, Inc.
<S> <C> <C> <C>
A I M V.I. Capital Appreciation Fund .62% .05% .67%
A I M V.I. International Equity Fund .75% .16% .91%
A I M V.I. Value Fund .61% .05% .66%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Expenses after Total Annual Portfolio
(expense reimbursement Expenses (after expense
Management for Real Estate reimbursement for Real
Fees Investment Portfolio) Estate Investment Portfolio)
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Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth Portfolio* 1.00% .06% 1.06%
Real Estate Investment Portfolio** .08% .87% .95%
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<FN>
* The adviser to the Fund discontinued the expense reimbursement with respect to
the Premier Growth Portfolio effective May 1, 1998.
** 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. The estimated expenses for the Real Estate Investment
Portfolio, before reimbursement, are: .90% management fees and 1.41% for other
expenses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE 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 .80% .28% 1.08%
Large Cap Stock Portfolio .65% .10% .75%
Quality Bond Portfolio .55% .10% .65%
Select Equity Portfolio .68% .18% .86%
Small Cap Stock Portfolio .85% .27% 1.12%
Managed by Lord, Abbett &Co.
Bond Debenture Portfolio (a "high yield" portfolio under
California insurance regulations) .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% .07% .72%
Mid-Cap Value Portfolio 1.00% .30% 1.30%
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<FN>
(1) Since May 1, 1996, Cova has been reimbursing the investment portfolios of
Cova Series Trust for all operating expenses (exclusive of the management fees)
in excess of approximately .10%. This reimbursement arrangement for the
Select Equity, Small Cap Stock and International Equity Portfolios was
discontinued effective May 1, 1999. Therefore, the amounts shown above under
"Other Expenses" have been restated to reflect the actual expenses for these
Portfolios for the year ended December 31, 1998. Effective May 1, 1999, Cova
reimburses the Mid-Cap Value, Large Cap Research and Developing Growth Portfolios
for all operating expenses (exclusive of the management fees) in excess of
approximately .30%, (instead of .10% as had been the case prior to May 1, 1999).
This change is reflected above under "Other Expenses" for these three
Portfolios. Absent the expense reimbursement, the percentages shown for
total annual portfolio expenses for the year ended December 31, 1998 would
have been .86% for the Quality Bond Portfolio, .94% for the Large Cap Stock
Portfolio, .93% for the Bond Debenture Portfolio, 1.68% for the Mid-Cap Value
Portfolio, 1.95% for the Large Cap Research Portfolio and 1.70% for the
Developing Growth Portfolio.
(2) Estimated. The Portfolio commenced investment operations on January 8, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Management Fees Other Expenses Portfolio Expenses
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General American Capital Company
Managed by Conning Asset Management Company
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
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COVA VARIABLE ANNUITY ACCOUNT FIVE 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 Growth and Income Fund .75% .15% .90%
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund .90% .15% 1.05%
Goldman Sachs International Equity Fund 1.00% .25% 1.25%
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<FN>
* The investment advisers to the Goldman Sachs Growth and Income, International
Equity and Global Income Funds have voluntarily agreed to reduce or limit
certain "Other Expenses" of such Funds (excluding management fees, taxes,
interest and brokerage fees and litigation, indemnification and other
extraordinary expenses) to the extent such expenses exceed 0.15%, 0.25% and
0.15% 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,
International Equity and Global Income Funds would be 1.94% and 2.69%, 1.97% and
2.97% and 2.40% and 3.30%, respectively. The reductions or limitations may be
discontinued or modified by the investment advisers in their discretion at any
time.
</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% .11% .66%
Kemper Small Cap Growth Portfolio .65% .05% .70%
Kemper Small Cap Value Portfolio .75% .05%* .80%
- ------------------------------------------------------------------------------------------------------------------------------------
<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, 1999, 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 lower than these expense limits.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE 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% .40% 1.30%
- ------------------------------------------------------------------------------------------------------------------------------------
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% .10% .85%
MFS/Foreign & Colonial Emerging
Markets Equity Series (2) 1.25% .25% 1.50%
MFS Global Governments Series (2) .75% .26% 1.01%
MFS Growth With Income Series .75% .13% .88%
MFS High Income Series .75% .28% 1.03%
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. Expenses do not take into account these
expense reductions, and are therefore higher than the actual expenses of the
series.
(2) MFS has agreed to bear expenses for the Global Governments Series and the
MFS/Foreign & Colonial Emerging Markets Equity Series, subject to reimbursement
by these series, such that each series' "Other Expenses" shall not exceed 0.25%
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, 1998, would have been 1.11% for the MFS Global
Governments Series and 3.26% for the MFS/Foreign & Colonial 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, 2000, unless terminated with the consent of
the board of trustees which oversees the series.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE 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% .02% .74%
Oppenheimer Capital Appreciation Fund/VA .72% .03% .75%
Oppenheimer High Income Fund/VA .74% .04% .78%
Oppenheimer Main Street Growth & Income Fund/VA .74% .05% .79%
Oppenheimer Strategic Bond Fund/VA .74% .06% .80%
- ------------------------------------------------------------------------------------------------------------------------------------
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% .27% 1.07%
Putnam VT International New Opportunities Fund - Class IA Shares* 1.18% .42% 1.60%
Putnam VT New Value Fund - Class IA Shares .70% .11% .81%
Putnam VT Vista Fund - Class IA Shares .65% .12% .77%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The Management Fees and Total Annual Portfolio Expenses reflect an expense
limitation. In the absence of the expense limitation, the Management Fees and
Total Annual Portfolio Expenses would have been 1.20% and 1.62%, respectively.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees one Portfolio) one Portfolio)
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products Series Fund
<S> <C> <C> <C> <C>
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Fund,
Class 1 Shares * .00% 1.00% 1.00%
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Fund,
Class 1 Shares 1.25% .41% 1.66%
Managed by Templeton Investment Counsel, Inc.
Templeton International Fund,
Class 1 Shares .69% .17% .86%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Figures reflect expenses from the Fund's inception on May 1, 1998, which
have been annualized for the Management Fees and estimated for Other Expenses.
The investment manager agreed in advance to limit management fees and
make certain payments to reduce Fund expenses as necessary so that Total
Annual Portfolio Expenses did not exceed 1.00% of the Fund's Class 1 net assets
in 1998. The investment manager has agreed to continue this arrangement through
1999. Management Fees, Other Expenses and Total Annual Portfolio Expenses in
1998 before any waivers were as follows: 0.60%, 2.27% and 2.87% for the Mutual
Shares Investments 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
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc.
Managed by A I M Advisors, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation (a) $71.99 (a) $112.73 (a) $160.90 (a) $247.97
(b) $21.99 (b) $ 67.73 (b) $115.90 (b) $247.97
AIM V.I. International Equity (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
AIM V.I. Value (a) $71.89 (a) $112.42 (a) $160.39 (a) $246.95
(b) $21.89 (b) $ 67.42 (b) $115.39 (b) $246.95
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth (a) $75.90 (a) $124.47 (a) $180.49 (a) $287.10
(b) $25.90 (b) $ 79.47 (b) $135.49 (b) $287.10
Real Estate Investment (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) $76.10 (a) $125.06 (a) $181.48 (a) $289.07
(b) $26.10 (b) $ 80.06 (b) $136.48 (b) $289.07
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) $71.79 (a) $112.12 (a) $159.89 (a) $245.92
(b) $21.79 (b) $ 67.12 (b) $114.89 (b) $245.92
Select Equity (a) $73.90 (a) $118.46 (a) $170.49 (a) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
Small Cap Stock (a) $76.50 (a) $126.26 (a) $183.47 (a) $292.98
(b) $26.50 (b) $ 81.26 (b) $138.47 (b) $292.98
- -----------------------------------------------------------------------------------------------------------------------------------
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) $72.49 (a) $114.24 (a) $163.43 (a) $253.08
(b) $22.49 (b) $ 69.24 (b) $118.43 (b) $253.08
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
- ------------------------------------------------------------------------------------------------------------------------------------
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 Growth and Income Fund (a) $74.30 (a) $119.67 (a) $172.50 (a) $271.25
(b) $24.30 (b) $ 74.67 (b) $127.50 (b) $271.25
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund (a) $75.80 (a) $124.17 (a) $179.99 (a) $286.12
(b) $25.80 (b) $ 79.17 (b) $134.99 (b) $286.12
Goldman Sachs International Equity Fund (a) $77.80 (a) $130.14 (a) $189.89 (a) $305.57
(b) $27.80 (b) $ 85.14 (b) $144.89 (b) $305.57
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities (a) $71.89 (a) $112.42 (a) $160.39 (a) $246.95
(b) $21.89 (b) $ 67.42 (b) $115.39 (b) $246.95
Kemper Small Cap Growth (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
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) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth (a) $73.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
MFS/Foreign & Colonial Emerging
Markets Equity Series (a) $80.29 (a) $137.54 (a) $202.11 (a) $329.29
(b) $30.29 (b) $ 92.54 (b) $157.11 (b) $329.29
MFS Global Governments (a) $75.40 (a) $122.97 (a) $178.00 (a) $282.18
(b) $25.40 (b) $ 77.97 (b) $133.00 (b) $282.18
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) $75.60 (a) $123.57 (a) $179.00 (a) $284.15
(b) $25.60 (b) $ 78.57 (b) $134.00 (b) $284.15
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) $72.69 (a) $114.84 (a) $164.45 (a) $255.12
(b) $22.69 (b) $ 69.84 (b) $119.45 (b) $255.12
Oppenheimer Capital Appreciation 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 High 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 Main Street Growth & Income Fund/VA (a) $73.20 (a) $116.35 (a) $166.97 (a) $260.19
(b) $23.20 (b) $ 71.35 (b) $121.97 (b) $260.19
Oppenheimer Strategic Bond Fund/VA (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 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) $76.00 (a) $124.77 (a) $180.99 (a) $288.08
(b) $26.00 (b) $ 79.77 (b) $135.99 (b) $288.08
Putnam VT International New Opportunities - Class IA Shares (a) $81.28 (a) $140.49 (a) $206.96 (a) $338.60
(b) $31.28 (b) $ 95.49 (b) $161.96 (b) $338.60
Putnam VT New Value - Class IA Shares (a) $73.40 (a) $116.96 (a) $167.98 (a) $262.21
(b) $23.40 (b) $ 71.96 (b) $122.98 (b) $262.21
Putnam VT Vista - Class IA Shares (a) $73.00 (a) $115.75 (a) $165.96 (a) $258.16
(b) $23.00 (b) $ 70.75 (b) $120.96 (b) $258.16
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products Series Fund, Class 1 Shares
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments (a) $75.30 (a) $122.67 (a) $177.50 (a) $281.19
(b) $25.30 (b) $ 77.67 (b) $132.50 (b) $281.19
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets (a) $81.88 (a) $142.26 (a) $209.86 (a) $344.13
(b) $31.88 (b) $ 97.26 (b) $164.86 (b) $344.13
Managed by Templeton Investment Counsel, Inc.
Templeton International (a) $73.90 (a) $118.46 (a) $170.49 (a) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
- -----------------------------------------------------------------------------------------------------------------------------------
</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. 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, Cova has the right to change the frequency of payments so that
your annuity payments are at least $100.
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, in the state of California, within 30 days if you
are 60 years or older when we issue the contract). 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.
If you have purchased the contract as an IRA, we are 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). 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 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 42 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 before investing.
Copies of these prospectuses are attached to this prospectus. Certain portfolios
contained in the fund prospectuses may not be available with your contract. (See
Appendix B which contains a summary of investment objectives for each investment
portfolio).
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Variable Insurance Funds, Inc. 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
Real Estate Investment Portfolio
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 ( a "high yield" portfolio under California
insurance regulations)
Developing Growth Portfolio
Large Cap Research Portfolio
Lord Abbett Growth and Income Portfolio
Mid-Cap Value Portfolio
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 Growth and Income Fund and Goldman Sachs Asset Management
International is the investment adviser for the Goldman Sachs International
Equity Fund and the Goldman Sachs Global Income Fund. The following portfolios
are available under the contract:
Goldman Sachs Global Income Fund
Goldman Sachs Growth and Income Fund
Goldman Sachs International Equity 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
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
(a portfolio investing in equity securities of companies located in certain
countries of Asia).
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/Foreign & Colonial Emerging Markets
Equity Series (not available)
MFS Global Governments Series
(formerly MFS World 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
(formerly Oppenheimer Growth Fund)
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
(formerly Oppenheimer Growth & Income Fund)
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
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Variable Products Series Fund is a mutual fund with multiple
portfolios. Each portfolio has two classes of shares: Class 1 and Class 2. The
portfolios available in connection with your contract are Class 1 shares.
Templeton Asset Management Ltd. is the investment adviser for the Templeton
Developing Markets Fund, Templeton Investment Counsel, Inc. is the investment
adviser for the Templeton International Fund and Franklin Mutual Advisers, LLC
is the investment adviser for the Mutual Shares Investments Fund. The following
portfolios are available under the contract:
Mutual Shares Investments Fund, Class 1 Shares
Templeton Developing Markets Fund, Class 1 Shares
Templeton International Fund, Class 1 Shares
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.
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. 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. 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.
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.
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
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. 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.
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 Life Insurance Company ("Cova") was originally incorporated on
September 6, 1972 as Industrial Indemnity Life Insurance Company, a California
corporation and changed its named to Xerox Financial Life Insurance Company
in 1986. On June 1, 1995, a wholly-owned subsidiary of General American Life
Insurance Company purchased Cova which on that date changed its name to Cova
Financial Life Insurance Company.
Cova is presently licensed to do business in the state of California.
On August 26, 1999, it was announced that The Metropolitan Life Insurance
Company would purchase General American Life Insurance Company, the parent
company of Cova. Metropolitan Life is one of the country's oldest and most
financially sound life insurance organizations.
Year 2000
Cova has developed and initiated plans to assure that its computer systems will
function properly in the year 2000 and later years. These efforts have included
receiving assurances from outside service providers that their computer systems
will also function properly in this context. Included within these plans are the
computer systems of the advisers and sub-advisers of the various investment
portfolios underlying the Separate Account.
The total cost of implementing these plans is not expected to have a material
effect on Cova's financial position or results of operations. Cova believes that
it has taken all reasonable steps to address these potential problems. There can
be no guarantee, however, that the steps taken will be adequate to avoid any
adverse impact.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account Five
(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
California insurance law on March 24, 1992. 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. 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.
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc.
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C>
Beginning of Period $11.80 $10.00 * *
End of Period 12.83 11.80
Number of Accum. Units Outstanding 22,822 5,570
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Sub-Account
Beginning of Period $11.42 $10.00 * *
End of Period 11.84 11.42
Number of Accum. Units Outstanding 19,985 15,257
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Sub-Account
Beginning of Period $13.08 $10.00 * *
End of Period 14.86 13.08
Number of Accum. Units Outstanding 76,589 2,865
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth Sub-Account
Beginning of Period $14.62 $10.00 * *
End of Period 16.42 14.62
Number of Accum. Units Outstanding 109,670 62,869
- -----------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Sub-Account
Beginning of Period $ 8.00 $10.00 * *
End of Period 8.42 8.00
Number of Accum. Units Outstanding 20,503 22,077
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $11.30 $10.15
End of Period 13.54 13.50 12.88 11.30
Number of Accum. Units Outstanding 787,761 681,676 347,400 39,545
- -----------------------------------------------------------------------------------------------------------------------------------
Developing Growth Sub-Account
Beginning of Period $11.07 $10.53 $10.83 *
End of Period 12.72 11.07 10.53
Number of Accum. Units Outstanding 103,083 70,926 6,039
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Research Sub-Account
Beginning of Period $11.83 $10.76 * *
End of Period 13.32 11.83
Number of Accum. Units Outstanding 94,431 49,894
- -----------------------------------------------------------------------------------------------------------------------------------
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 39.10
Number of Accum. Units Outstanding 1,190,290
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Sub-Account
Beginning of Period $10.44 $10.47 $10.05 *
End of Period 11.56 10.44 10.47
Number of Accum. Units Outstanding 110,007 85,457 8,510
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by J.P. Morgan Investment Management Inc.
International Equity Sub-Account
Beginning of Period $12.89 $11.46 $10.97 $10.10
End of Period 13.53 12.89 11.46 10.97
Number of Accum. Units Outstanding 810,816 779,375 554,105 124,032
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Stock Sub-Account
Beginning of Period $19.43 $14.89 $11.34 $10.16
End of Period 21.76 19.43 14.89 11.34
Number of Accum. Units Outstanding 1,456,851 1,132,390 686,677 126,231
- -----------------------------------------------------------------------------------------------------------------------------------
Quality Bond Sub-Account
Beginning of Period $11.91 $11.16 $10.37 $9.95
End of Period 11.58 11.91 11.16 10.37
Number of Accum. Units Outstanding 639,959 501,045 234,643 64,534
- -----------------------------------------------------------------------------------------------------------------------------------
Select Equity Sub-Account
Beginning of Period $16.99 $14.05 $10.84 $10.15
End of Period 18.79 16.99 14.05 10.84
Number of Accum. Units Outstanding 1,167,029 1,052,797 700,550 185,509
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Stock Sub-Account
Beginning of Period $12.58 $13.49 $11.31 $10.91
End of Period 13.25 12.58 13.49 11.31
Number of Accum. Units Outstanding 649,071 663,925 487,580 113,118
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.63 *
End of Period 11.30 11.11 10.67
Number of Accum. Units Outstanding 128,072 129,569 14,091
- ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs Growth and Income Sub-Account
Beginning of Period $ 9.91 $11.21 * *
End of Period 10.87 9.91
Number of Accum. Units Outstanding 16,391 13,107
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Sub-Account
Beginning of Period $10.82 $10.15 * *
End of Period 10.58 10.82
Number of Accum. Units Outstanding 3,084 3,002
- ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs International Equity Sub-Account
Beginning of Period $11.42 $11.20 * *
End of Period 11.64 11.42
Number of Accum. Units Outstanding 18,603 15,859
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities Sub-Account
Beginning of Period $10.63 $10.00 * *
End of Period 10.56 10.63
Number of Accum. Units Outstanding 11,620 2,519
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Growth Sub-Account
Beginning of Period $11.69 $10.00 * *
End of Period 12.09 11.69
Number of Accum. Units Outstanding 5,733 3,829
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Value Sub-Account
Beginning of Period $ 8.77 $10.00 * *
End of Period 9.32 8.77
Number of Accum. Units Outstanding 22,134 16,641
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $ 9.28 $10.00 * *
End of Period 11.93 9.28
Number of Accum. Units Outstanding 2,639 2,397
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Sub-Account
Beginning of Period $13.24 $10.00 * *
End of Period 14.84 13.24
Number of Accum. Units Outstanding 59,264 47,710
- ---------------------------------------------------------------------------------------------------------------------------------
MFS/Foreign & Colonial Emerging Markets Equity Sub-Account
Beginning of Period $ 6.58 $10.00 * *
End of Period 8.00 6.58
Number of Accum. Units Outstanding 2,895 4,234
- --------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Sub-Account
Beginning of Period $10.66 $10.00 * *
End of Period 10.28 10.66
Number of Accum. Units Outstanding 689 385
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Sub-Account
Beginning of Period $12.08 $10.00 * *
End of Period 12.69 12.08
Number of Accum. Units Outstanding 87,892 64,791
- ---------------------------------------------------------------------------------------------------------------------------------
MFS High Income Sub-Account
Beginning of Period $ 9.86 $10.00 * *
End of Period 10.28 9.86
Number of Accum. Units Outstanding 15,906 13,080
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Research Sub-Account
Beginning of Period $12.18 $10.00 * *
End of Period 13.17 12.18
Number of Accum. Units Outstanding 47,243 25,994
- ---------------------------------------------------------------------------------------------------------------------------------
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Managed by OppenheimerFunds, Inc.
Oppenheimer Bond Sub-Account
Beginning of Period $10.55 $10.00 * *
End of Period 10.30 10.55
Number of Accum. Units Outstanding 44,596 46,377
Oppenheimer Capital Appreciation Sub-Account
Beginning of Period $12.24 $10.00 * *
End of Period 14.08 12.24
Number of Accum. Units Outstanding 7,447 5,037
Oppenheimer High Income Sub-Account
Beginning of Period $ 9.91 $10.00 * *
End of Period 10.21 9.91
Number of Accum. Units Outstanding 14,309 10,533
Oppenheimer Main Street Growth & Income Sub-Account
Beginning of Period $10.34 $10.00 * *
End of Period 11.77 10.34
Number of Accum. Units Outstanding 26,114 14,882
Oppenheimer Strategic Bond Sub-Account
Beginning of Period $10.16 $10.00 * *
End of Period 10.11 10.16
Number of Accum. Units Outstanding 4,794 2,684
- ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $11.40 $10.00 * *
End of Period 12.53 11.40
Number of Accum. Units Outstanding 103,960 80,114
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Sub-Account
Beginning of Period $11.73 $10.00 * *
End of Period 13.09 11.73
Number of Accum. Units Outstanding 65,433 56,566
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Sub-Account
Beginning of Period $11.42 $10.00 * *
End of Period 13.56 11.42
Number of Accum. Units Outstanding 8,020 4,783
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Sub-Account
Beginning of Period $10.50 $10.00 * *
End of Period 11.92 10.50
Number of Accum. Units Outstanding 2,757 2,202
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Sub-Account
Beginning of Period $11.80 $10.00 * *
End of Period 13.22 11.80
Number of Accum. Units Outstanding 12,486 6,799
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products Series Fund,
Class 1 Shares
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Sub-Account
Beginning of Period $ 9.65 $8.64 * *
End of Period 11.03 9.65
Number of Accum. Units Outstanding 4,327 944
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Sub-Account
Beginning of Period $ 7.56 $5.65 * *
End of Period 10.76 7.56
Number of Accum. Units Outstanding 9,510 7,033
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Investment Counsel, Inc.
Templeton International Sub-Account
Beginning of Period $ 9.15 $7.89 * *
End of Period 10.02 9.15
Number of Accum. Units Outstanding 20,763 6,626
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The accumulation unit values shown above for the beginning of the
period for the Select Equity, Small Cap Stock, Large Cap Stock,
International Equity, Quality Bond, Bond Debenture, Developing Growth,
Mid-Cap Value and Large Cap Research Portfolios reflect the dates
these investment portfolios were first offered for sale to the public
which were as follows: May 15, 1996 for the Select Equity and Small
Cap Stock Portfolios; May 16, 1996 for the Large Cap Stock Portfolio;
May 14, 1996 for the International Equity Portfolio; May 20, 1996 for
the Quality Bond and Bond Debenture Portfolios; November 7, 1997 for
the Developing Growth and Mid-Cap Value Portfolios; and February 17,
1998 for the Large Cap Research Portfolio. 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 - December 4,
1997; Goldman Sachs Variable Insurance Trust - March 31, 1998; and
Templeton Variable Products Series Fund - September 21, 1998.
</FN>
</TABLE>
APPENDIX B
PARTICIPATING INVESTMENT PORTFOLIOS
Below are the investment objectives of each investment portfolio available
under the Contract. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES WILL BE ACHIEVED.
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM Variable Insurance Funds, Inc. 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 stock, with emphasis on medium- and small-sized
growth companies. The Fund may also investment up to 20% of its total assets
in foreign securities.
AIM V.I. INTERNATIONAL EQUITY FUND
Investment Objective: The Fund's investment objective is to provide long-term
growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings momentum.
The Fund seeks to meet this objective by investing at least 70% of its total
assets in marketable equity securities of foreign companies that are listed on a
recognized foreign securities exchange or traded in a foreign over-the-counter
market. The Fund will normally invest in companies located in at least four
countries outside of the United States, emphasizing investment in companies in
the developed countries of Western Europe and the Pacific Basin. The Fund may
invest up to 20% of its total assets in securities of issuers located in
developing countries, i.e., those that are in the initial stages of their
industrial cycles. The Fund may invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies.
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. The Fund may also invest in preferred stocks
and debt instruments that have prospects for growth of capital. The Fund also
may invest up to 25% of its total assets in foreign securities.
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
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
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 by investing primarily in dividend-paying common
stock. The Portfolio will typically hold approximately 300 stocks.
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 by
investing at least 65% of its assets in bonds under normal circumstances.
SELECT EQUITY PORTFOLIO
Investment Objective: The Select Equity Portfolio seeks to provide long-term
growth of capital and income by investing primarily in dividend-paying common
stock. The Portfolio will typically hold between 60 and 90 stocks.
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 through a professionally-managed portfolio consisting primarily of
convertible and discount debt securities, many of which are lower rated.
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. Production of current
income is a secondary consideration. The Portfolio invests primarily in common
stocks, including securities convertible into common stocks.
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. The Portfolio will normally invest in common stocks, including
securities convertible into common stocks, of large, seasoned companies in sound
financial condition, which common stocks are expected to show above-average
price appreciation.
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.
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 is the investment adviser for the
Goldman Sachs Growth and Income Fund and Goldman Sachs Asset Management
International is the investment adviser for the Goldman Sachs International
Equity Fund and the Goldman Sachs Global Income Fund. The following portfolios
are available under the contract:
GOLDMAN SACHS 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 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 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.
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/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 for purchase by variable annuity or
variable life contract holders whose contracts take effect on or after May 1,
1999.
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. Prior to May 1, 1999, the Series' investment objective
was to seek not only preservation but also growth of capital, together with
moderate current income.
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
(formerly Oppenheimer Growth)
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
(formerly Oppenheimer Growth & Income)
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 principally
derived from interest on debt securities and seeks to enhance that income by
writing covered call options on debt securities. 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. The Fund
invests primarily in "value" stocks, that offer the potential for capital
growth, current income, or both. Value stocks are those that the adviser
believes are currently undervalued compared to their true worth.
PUTNAM VT INTERNATIONAL GROWTH FUND, CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation. Under normal
conditions, the Fund generally diversifies its investments among a number of
different countries by investing at least 65% of its total assets in at least
three countries other than the United States. The Fund may invest in both growth
and value stocks.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND, CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund generally invests at least 65% of its total
assets in at least three countries other than the United States. The Fund
invests mainly in growth stocks, which are stocks issued by companies whose
earnings the adviser believes are likely to grow faster than the economy as a
whole.
PUTNAM VT NEW VALUE FUND, CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund invests in value stocks, which are common
stocks that the adviser believes are undervalued at the time of purchase and
have the potential for long-term capital appreciation.
PUTNAM VT VISTA FUND, CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation. The Fund invests
mainly in "growth" stocks that are issued by companies whose earnings the
adviser believes are likely to grow faster than the economy as a whole. The
Fund mainly buys stocks of medium size companies, although the Fund may
invest in companies of any size.
TEMPLETON VARIABLE PRODUCTS SERIES FUND, CLASS 1 SHARES:
Templeton Variable Products Series Fund is a mutual fund with multiple
portfolios. Each portfolio has two classes of shares: Class 1 and Class 2. The
portfolios available in connection with your contract are Class 1 shares.
Templeton Asset Management Ltd. is the investment adviser for the Templeton
Developing Markets Fund, Templeton Investment Counsel, Inc. is the investment
adviser for the Templeton International Fund and Franklin Mutual Advisers, LLC
is the investment adviser for the Mutual Shares Investments Fund. The following
portfolios are available under the contract:
MUTUAL SHARES INVESTMENTS FUND
Investment Objective: 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 actual value
based on certain recognized or objective criteria (intrinsic value).
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 have their principal activities in emerging market
countries.
TEMPLETON INTERNATIONAL FUND
Investment Objective: 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. While there are no set percentage targets, the Fund
generally invests in large- to medium-cap companies with market capitalization
values (share price times the number of common stock shares outstanding) greater
than $1.5 billion, but may invest a small portion in small-cap companies which
have more risk.
<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 June 30, 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 June 30, 1999 may
be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before June 30, 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 6/30/99:
- -----------------------------------------------------------------------------------------------------------------------------------
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, Inc.
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C>
Appreciation 12/31/97 9.52% - - 15.21% 14.14% - - 18.15%
AIM V.I. International
Equity 12/31/97 (4.53)% - - 8.95% 0.07% - - 11.97%
AIM V.I. Value 12/31/97 21.33% - - 27.49% 25.96% - - 30.32%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products
Series Fund, Inc.
Premier Growth 12/31/97 23.94% - - 36.58% 28.57% - - 39.33%
Real Estate Investment 12/31/97 (14.12)% - - (14.17)% (9.53)% - - (10.84)%
- -----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
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 5/20/96 (4.43)% - - 8.39% 0.17% - - 9.70%
Developing Growth 11/7/97 7.85% - - 7.56% 12.47% - - 10.28%
International Equity 5/14/96 (1.00)% - - 8.49% 3.60% - - 9.79%
Large Cap Research 2/17/98 12.81% - - 13.64% 17.42% - - 16.93%
Large Cap Stock 5/16/96 18.60% - - 26.62% 23.22% - - 27.61%
Lord Abbett Growth and Income 1/8/99 - - - - 3.78% - - - - 8.89%
Mid-Cap Value 11/7/97 (1.47)% - - 6.14% 3.13% - - 8.88%
Quality Bond 5/20/96 (4.11)% - - 3.57% 0.49% - - 4.99%
Select Equity 5/15/96 14.32% - - 20.67% 18.94% - - 21.74%
Small Cap Stock 5/15/96 (10.08)% - - 5.04% (5.49)% - - 6.42%
- -----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 12/4/97 (0.86)% - - 1.00% 3.75% - - 3.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable
Insurance Trust
Goldman Sachs
Global Income 3/31/98 (2.05)% - - (0.28)% 2.56% - - 3.39%
Goldman Sachs Growth
and Income 3/31/98 (3.81)% - - (6.17)% 0.79% - - (2.45)%
Goldman Sachs
International Equity 3/31/98 (2.91)% - - (0.52)% 1.70% - - 3.15%
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 12/31/97 (2.10)% - - 0.62% 2.50% - - 3.74%
Kemper Small Cap Growth 12/31/97 2.69% - - 10.51% 7.30% - - 13.50%
Kemper Small Cap Value 12/31/97 (14.01)% - - (8.48)% (9.42)% - - (5.23)%
- ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
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 57.83% - - 9.51% 62.50% - - 12.51%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging Growth 12/31/97 18.18% - - 27.35% 22.80% - - 30.18%
MFS Foreign & Colonial
Emerging Markets Equity 12/31/97 (12.53)% - - (17.26)% (7.94)% - - (13.87)%
MFS Global Governments 12/31/97 (3.44)% - - (1.25)% 1.16% - - 1.89%
MFS Growth With Income 12/31/97 5.34% - - 14.32% 9.95% - - 17.28%
MFS High Income 12/31/97 (5.89)% - - (1.27)% (1.29)% - - 1.87%
MFS Research 12/31/97 6.82% - - 17.26% 11.43% - - 20.18%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
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 (4.99)% - - (1.13)% (0.39)% - - 2.01%
Oppenheimer Capital
Appreciation Fund/VA 12/31/97 16.31% - - 22.85% 20.93% - - 25.72%
Oppenheimer High
Income Fund/VA 12/31/97 (6.61)% - - (1.73)% (2.02)% - - 1.42%
Oppenheimer Main Street
Growth & Income Fund/VA 12/31/97 0.00% - - 8.50% 4.60% - - 11.52%
Oppenheimer Strategic
Bond Fund/VA 12/31/97 (6.24)% - - (2.43)% (1.65)% - - 0.72%
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth and
Income - Class IA Shares 12/31/97 9.91% - - 13.28% 14.53% - - 16.25%
Putnam VT International
Growth - Class IA Shares 12/31/97 5.19% - - 16.78% 9.80% - - 19.71%
Putnam VT International
New Opportunities -
Class IA Shares 12/31/97 12.57% - - 19.67% 17.18% - - 22.57%
Putnam VT New Value -
Class IA Shares 12/31/97 10.77% - - 9.43% 15.38% - - 12.44%
Putnam VT Vista -
Class IA Shares 12/31/97 9.06% - - 17.59% 13.68% - - 20.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products
Series Fund, Class 1 Shares
*Mutual Shares Investments 9/21/98 - - - - 22.50% - - - - 27.63%
*Templeton Developing
Markets 9/21/98 - - - - 85.36% - - - - 90.55%
Templeton International 9/21/98 - - - - 21.87% - - - - 27.00%
- -----------------------------------------------------------------------------------------------------------------------------------
*Past expense reductions by the manager increased returns.
</TABLE>
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
The contracts are relatively new and therefore have a limited performance
history. However, 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 6/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
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, Inc.
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation 5/5/93 15.81% 21.16% 18.88% 9.52% 19.66% 17.38% 14.14% 19.76% 17.48%
AIM V.I.
International Equity 5/5/93 1.52% 12.82% 13.02% (4.53)% 11.32% 11.52% 0.07% 11.42% 11.62%
AIM V.I. Value 5/5/93 27.94% 25.41% 22.63% 21.33% 23.91% 21.13% 25.96% 24.01% 21.23%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Premier Growth 6/26/92 30.38% 32.57% 25.64% 23.94% 31.07% 24.14% 28.57% 31.17% 24.24%
Real Estate
Investment 1/9/97 (8.25)% - - 2.34% (14.12)% - - (3.66)% (9.53)% - - 0.94%
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 10/1/87 5.21% 5.54% 5.53% (0.86)% 4.04% 4.03% 3.75% 4.14% 4.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Goldman Sachs
Global Income 1/12/98 3.91% - - 4.53% (2.05)% - - (1.47)% 2.56% - - 3.13%
Goldman Sachs
Growth and Income 1/12/98 2.26% - - 10.96% (3.81)% - - 4.96% 0.79% - - 9.56%
Goldman Sachs
International Equity 1/12/98 3.18% - - 15.36% (2.91)% - - 9.36% 1.70% - - 13.96%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99:
- ------------------------------------------------------------------------------------------------------------------------------------
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 3.61% 7.41% 7.51% (2.10)% 5.91% 6.01% 2.50% 6.01% 6.11%
Kemper Small
Cap Growth 5/2/94 8.90% 23.95% 22.60% 2.69% 22.45% 21.10% 7.30% 22.55% 21.20%
Kemper Small
Cap Value 5/1/96 (8.04)% - - 4.98% (14.01)% - - (1.02)% (9.42)% - - 3.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
Variable Series 5/1/95 64.19% - - 1.65% 57.83% - - (4.35)% 62.50% - - 0.25%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging
Growth 7/24/95 24.52% - - 26.65% 18.18% - - 20.65% 22.80% _ _ 25.25%
MFS Foreign & Colonial
Emerging Markets
Equity 10/16/97 (6.65)% - - (16.61)% (12.53)% - - (22.61)% (7.94)% -- (18.01)%
MFS Global
Governments 6/14/94 2.58% 4.40% 4.40% (3.44)% 2.90% 2.90% 1.16% 3.00% 3.00%
MFS Growth
With Income 10/9/95 11.50% - - 24.02% 5.34% - - 18.02% 9.95% _ _ 22.62%
MFS High Income 7/26/95 0.10% - - 8.95% (5.89)% - - 2.95% (1.29)% _ _ 7.55%
MFS Research 7/26/95 13.00% - - 22.00% 6.82% - - 16.00% 11.43% _ _ 20.60%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99:
- -----------------------------------------------------------------------------------------------------------------------------------
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 4/3/85 1.02% 7.09% 8.26% (4.99)% 5.59% 6.76% (0.39)% 5.69% 6.86%
Oppenheimer Capital
Appreciation
Fund/VA 4/3/85 22.71% 27.00% 16.98% 16.31% 25.50% 15.48% 20.93% 25.60% 15.58%
Oppenheimer High
Income Fund/VA 4/30/86 (0.62)% 9.79% 12.63% (6.61)% 8.29% 11.13% (2.02)% 8.39% 11.23%
Oppenheimer Main
Street Growth &
Income Fund/VA 7/5/95 6.14% - - 27.57% 0.00% - - 21.57% 4.60% - - 26.17%
Oppenheimer Strategic
Bond Fund/VA 5/3/93 (0.25)% 7.60% 6.25% (6.24)% 6.10% 4.75% (1.65)% 6.20% 4.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth
and Income -
Class IA Shares 2/1/88 16.14% 21.98% 15.93% 9.91% 20.48% 14.43% 14.53% 20.58% 14.53%
Putnam VT International
Growth - Class
IA Shares 1/2/97 11.34% - - 19.20% 5.19% - - 13.20% 9.80% - - 17.80%
Putnam VT International
New Opportunities -
Class IA Shares 1/2/97 18.82% - - 13.82% 12.57% - - 7.82% 17.18% - - 12.42%
Putnam VT New Value -
Class IA Shares 1/2/97 17.01% - - 15.39% 10.77% - - 9.39% 15.38% - - 13.99%
Putnam VT Vista -
Class IA Shares 1/2/97 15.28% - - 22.58% 9.06% - - 16.58% 13.68% - - 21.18%
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products
Series Fund
*Mutual Shares Investments,
Class 1 Shares 5/1/98 17.41% - - 10.14% 11.41% - - 4.14% 16.01% - - 8.74%
*Templeton Developing
Markets Fund, Class
1 Shares 3/4/96 47.76% - - (8.10)% 41.76% - - (14.10)% 46.36% - - (9.50)%
Templeton
International Fund,
Class 1 Shares 5/1/92 5.39% 15.27% 14.69% (0.61)% 13.77% 13.19% 3.99% 13.87% 13.29%
- -----------------------------------------------------------------------------------------------------------------------------------
*Past expense reductions by the manager increased returns.
</TABLE>
Please send me, at no charge, the Statement of Additional Information dated
November __, 1999, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
CC-3043 (11/99) CUST-CA
- ------------------------------
- ------------------------------
- ------------------------------
Cova Financial Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
COVA
Cova Financial Life Insurance Company
Marketing and Executive Office
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
800-523-1661
Annuity Service Office
P.O. Box 10366
Des Moines, IA 50306-9775
800-343-8496
CC-3035 (5/99) Policy Form Series XLCC-648, XLCC-833 21-CSA-CA (5/99)
PART A - VERSION B
The Fixed
And Variable Annuity
issued by
COVA VARIABLE ANNUITY
ACCOUNT FIVE
and
COVA FINANCIAL
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial 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 November __, 1999.
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.
November __, 1999
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS 2
SUMMARY 3
FEE TABLE 5
EXAMPLES 6
1. THE ANNUITY CONTRACT 7
2. ANNUITY PAYMENTS (THE INCOME PHASE) 7
Annuity Date 7
Annuity Payments 7
Annuity Options 7
3. PURCHASE 8
Purchase Payments 8
Allocation of Purchase Payments 8
Free Look 8
Accumulation Units 8
4. INVESTMENT OPTIONS 9
Russell Insurance Funds 9
General American Capital Company. 9
Transfers 9
Dollar Cost Averaging Program 9
Automatic Rebalancing Program 10
Approved Asset Allocation Programs 10
Voting Rights 10
Substitution 10
5. EXPENSES 10
Insurance Charges 11
Contract Maintenance Charge 11
Withdrawal Charge 11
Reduction or Elimination of the
Withdrawal Charge 11
Premium Taxes 12
Transfer Fee 12
Income Taxes 12
Investment Portfolio Expenses 12
6. TAXES 12
Annuity Contracts in General 12
Qualified and Non-Qualified Contracts 12
Withdrawals - Non-Qualified Contracts 12
Withdrawals - Qualified Contracts 13
Withdrawals - Tax-Sheltered Annuities 13
Diversification 13
7. ACCESS TO YOUR MONEY 13
Systematic Withdrawal Program 13
Suspension of Payments or Transfers 14
8. PERFORMANCE 14
9. DEATH BENEFIT 14
Upon Your Death 14
Death of Annuitant 15
10. OTHER INFORMATION 16
Cova 16
Year 2000 16
The Separate Account 16
Distributor 16
Ownership 16
Beneficiary 16
Assignment 16
Financial Statements 16
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION 16
APPENDIX A
Condensed Financial Information A-1
APPENDIX B
Performance Information B-1
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable and need an explanation. We have identified the
following as some of these words or terms. They are identified in the text in
italic and the page that is indicated here is where we believe you will find the
best explanation for the word or term.
Page
Accumulation Phase 7
Accumulation Unit 8
Annuitant 7
Annuity Date 7
Annuity Options 7
Annuity Payments 7
Annuity Unit 8
Beneficiary 16
Fixed Account 7
Income Phase 7
Investment Portfolios 9
Joint Owner 16
Non-Qualified 12
Owner 16
Purchase Payment 8
Qualified 12
Tax Deferral 12
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 the following investment portfolios which are
described in the prospectuses for the funds. 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.
Managed by Frank Russell
Investment Management Company
Aggressive Equity
Core Bond
Multi-Style Equity
Non-U.S.
Real Estate Securities
Managed by Conning Asset
Management Company
Money Market
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, in
the state of California, within 30 days if you are 60 years or older when we
issue the contract), 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 of General American Capital Company 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 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 FIVE 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.
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)
Other Expenses Total Annual
Management Fees (after expense Portfolio
(after fee waiver) reimbursement) Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds*
Managed by Frank Russell
Investment Management Company
<S> <C> <C> <C>
Aggressive Equity .51% .74% 1.25%
Core Bond .12% .68% .80%
Multi-Style Equity .49% .43% .92%
Non-U.S. 0% 1.30% 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, 2000, 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 1.21% for the Multi-Style
Equity Fund; .95% and 1.67% for the Aggressive Equity Fund; .95% and 2.37% for
the Non-U.S. Fund; .60% and 1.28% for the Core Bond Fund and ___% and ___% for
the Real Estate Securities 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. 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. Cova has the right to change the frequency of payments so that your
annuity payments are at least $100.
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, in the state of California, within 30 days if you
are 60 years or older when we issue the contract). 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. If you have purchased the contract as an IRA, we are 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). 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 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 before investing.
Copies of these prospectuses are attached to this prospectus.
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
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.
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.
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. 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.
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.
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
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. 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.
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.
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 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 Life Insurance Company ("Cova") was originally incorporated on
September 6, 1972 as Industrial Indemnity Life Insurance Company, a California
corporation and changed its name to Xerox Financial Life Insurance Company in
1986. On June 1, 1995, a wholly-owned subsidiary of General American Life
Insurance Company purchased Cova which on that date changed its name to Cova
Financial Life Insurance Company.
Cova is presently licensed to do business in the state of California.
On August 26, 1999, it was announced that The Metropolitan Life Insurance
Company would purchase General American Life Insurance Company, the parent
company of Cova. Metropolitan Life is one of the country's oldest and most
financially sound life insurance organizations.
Year 2000
Cova has developed and initiated plans to assure that its computer systems will
function properly in the year 2000 and later years. These efforts have included
receiving assurances from outside service providers that their computer systems
will also function properly in this context. Included within these plans are the
computer systems of the advisers and sub-advisers of the various investment
portfolios underlying the Separate Account.
The total cost of implementing these plans is not expected to have a material
effect on Cova's financial position or results of operations. Cova believes that
it has taken all reasonable steps to address these potential problems. There can
be no guarantee, however, that the steps taken will be adequate to avoid any
adverse impact.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account Five
(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
California insurance law on March 24, 1992. 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. 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
Period Period Period
Period Ended Ended Ended Ended
6/30/99 12/31/98 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
Russell Insurance Funds
Aggressive Equity Sub-Account
Beginning of Period $10.00 $10.00 * *
End of Period 10.03 10.00
Number of Accum. Units
Outstanding 30,679 8,651
- ------------------------------------------------------------------------------------------------------------------------------------
Core Bond Sub-Account
Beginning of Period $10.63 $10.00 * *
End of Period 10.44 10.63
Number of Accum. Units
Outstanding 170,243 61,498
- ------------------------------------------------------------------------------------------------------------------------------------
Multi-Style Equity Sub-Account
<S> <C>
Beginning of Period $12.74 $10.00 * *
End of Period 14.19 12.74
Number of Accum. Units
Outstanding 140,966 48,388
- ------------------------------------------------------------------------------------------------------------------------------------
Non-U.S. Sub-Account
Beginning of Period $11.18 $10.00 * *
End of Period 11.89 11.18
Number of Accum. Units
Outstanding 66,742 18,259
- ------------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.63 *
End of Period 11.30 11.11 10.67
Number of Accum. Units
Outstanding 128,072 129,569 14,091
- ------------------------------------------------------------------------------------------------------------------------------------
<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 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-accounts and December 4,
1997 for the Money Market 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 June 30, 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 June 30, 1999 may
be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before June 30, 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 6/30/99:
- ------------------------------------------------------------------------------------------------------------------------------------
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 (10.57)% (2.94)% (5.98)% 0.22%
Core Bond 12/31/97 (3.78)% (0.21)% 0.82% 2.92%
Multi-Style Equity 12/31/97 13.67% 23.47% 18.29% 26.34%
Non-U.S. 12/31/97 1.12% 9.24% 5.73% 12.25%
General American
Capital Company
Money Market 12/4/97 (0.86)% 1.00% 3.75% 3.96%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Appendix - Performance Information (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
The contracts are relatively new and therefore have no meaningful performance
history. However, the portfolios of Russell Insurance Funds 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 6/30/99:
- ------------------------------------------------------------------------------------------------------------------------------------
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 (4.64)% - - 13.76% (10.57)% - - 7.76% (5.98)% - - 12.36%
Core Bond 1/2/97 2.24% - - 6.34% (3.78)% - - 0.34% 0.82% - - 4.94%
Multi-Style Equity 1/2/97 19.96% - - 28.18% 13.67% - - 22.18% 18.29% - - 26.78%
Non-U.S. 1/2/97 7.23% - - 8.05% 1.12% - - 2.05% 5.73% - - 6.65%
- ------------------------------------------------------------------------------------------------------------------------------------
General American
Capital Company
Money Market 10/1/87 5.21% 5.54% 5.53% (0.86)% 4.04% 4.03% 3.75% 4.14% 4.13%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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Cova Financial 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
November __, 1999, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
CC-3044 (11/99) RUSS-CA
COVA
Cova Financial Life Insurance Company
Marketing and Executive Office
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
800-523-1661
Annuity Service Office
P.O. Box 10366
Des Moines, IA 50306
800-343-8496
CC-3003 (5/99) Policy Form Series XLCC-648, XLCC-833 21-RUSS-CA (5/99)
PART A - VERSION C
The Fixed
And Variable Annuity
issued by
COVA VARIABLE ANNUITY
ACCOUNT FIVE
and
COVA FINANCIAL
LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Life Insurance Company (Cova).
The annuity contract has 51 investment choices - a fixed account which offers an
interest rate which is guaranteed by Cova, and 50 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, Inc.:
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
Real Estate Investment Portfolio
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 (a "high yield" portfolio under
California insurance regulations)
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 - Capital Appreciation Portfolio
Dreyfus VIF - Disciplined Stock Portfolio
General American Capital Company:
Managed by Conning Asset
Management Company
Money Market Fund
Goldman Sachs Variable Insurance Trust:
Managed by Goldman Sachs
Asset Management
Goldman Sachs Growth and Income Fund
Managed by Goldman Sachs
Asset Management International
Goldman Sachs Global Income Fund
Goldman Sachs 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
(formerly MFS World Governments)
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
Templeton Variable Products Series Fund:
Managed by Franklin Advisers, Inc.
Franklin Small Cap Investments Fund, Class 1 Shares
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Fund, Class 1 Shares
Managed by Templeton Asset
Management Ltd.
Templeton Developing Markets Fund, Class 1 Shares
Managed by Templeton Investment
Counsel, Inc.
Templeton International Fund, Class 1 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 November ___,
1999. 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.
November ___, 1999
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS 3
SUMMARY 4
Fee Table 6
Examples 11
1. THE ANNUITY CONTRACT 14
2. ANNUITY PAYMENTS (THE INCOME PHASE) 14
Annuity Date 14
Annuity Payments 14
Annuity Options 14
3. PURCHASE 15
Purchase Payments 15
Allocation of Purchase Payments 15
Free Look 15
Accumulation Units 15
4. INVESTMENT OPTIONS 16
AIM Variable Insurance Funds, Inc. 16
Alliance Variable Products Series Fund, Inc. 16
American Century Variable Portfolios, Inc.
Cova Series Trust 16
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund
General American Capital Company 16
Goldman Sachs Variable Insurance Trust 16
INVESCO Variable Investment Funds, Inc.
Kemper Variable Series 16
Scudder Variable Life Investment Fund
Liberty Variable Investment Trust 16
MFS Variable Insurance Trust 17
PIMCO Variable Insurance Trust
Putnam Variable Trust 17
Templeton Variable Products Series Fund 17
Transfers 17
Dollar Cost Averaging Program 18
Automatic Rebalancing Program 18
Approved Asset Allocation Programs 18
Voting Rights 18
Substitution 18
5. EXPENSES 19
Insurance Charges 19
Contract Maintenance Charge 19
Withdrawal Charge 19
Reduction or Elimination of the Withdrawal Charge 19
Premium Taxes 20
Transfer Fee 20
Income Taxes 20
Investment Portfolio Expenses 20
6. TAXES 20
Annuity Contracts in General 20
Qualified and Non-Qualified Contracts 20
Withdrawals - Non-Qualified Contracts 21
Withdrawals - Qualified Contracts 21
Withdrawals - Tax-Sheltered Annuities 21
Diversification 21
7. ACCESS TO YOUR MONEY 21
Systematic Withdrawal Program 22
Suspension of Payments or Transfers 22
8. PERFORMANCE 22
9. DEATH BENEFIT 22
Upon Your Death 22
Death of Annuitant 23
10. OTHER INFORMATION 24
Cova 24
Year 2000 24
The Separate Account 24
Distributor 24
Ownership 24
Beneficiary 24
Assignment 24
Financial Statements 24
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION 24
APPENDIX A
Condensed Financial Information A-1
APPENDIX B B-1
APPENDIX C
Performance Information C-1
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable and need an explanation. We have identified the
following as some of these words or terms. They are identified in the text in
italic and the page that is indicated here is where we believe you will find the
best explanation for the word or term.
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 50 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 described herein
and 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. 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.
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 1.66%
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, in the state of California, within 30 days if you are 60 years or older
when we issue the contract) 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 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 FIVE 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.
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, Inc.
Managed by A I M Advisors, Inc.
<S> <C> <C> <C>
A I M V.I. Capital Appreciation Fund .62% .05% .67%
A I M V.I. International Equity Fund .75% .16% .91%
A I M V.I. Value Fund .61% .05% .66%
- ------------------------------------------------------------------------------------------------------------------------------------
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* 1.00% .06% 1.06%
Real Estate Investment Portfolio** .08% .87% .95%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The adviser to the Fund discontinued the expense reimbursement with respect to
the Premier Growth Portfolio effective May 1, 1998.
** 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. The estimated expenses for the Real Estate Investment
Portfolio, before reimbursement, are: .90% management fees and 1.41% for other
expenses.
</FN>
</TABLE>
<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
- -----------------------------------------------------------------------------------------------------------------------------------
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 1.37% .0% 1.37%
VP Value Fund 1.00% .0% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE 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 .80% .28% 1.08%
Large Cap Stock Portfolio .65% .10% .75%
Quality Bond Portfolio .55% .10% .65%
Select Equity Portfolio .68% .18% .86%
Small Cap Stock Portfolio .85% .27% 1.12%
Managed by Lord, Abbett & Co.
Bond Debenture Portfolio (a "high yield" portfolio under
California insurance regulations) .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% .07% .72%
Mid-Cap Value Portfolio 1.00% .30% 1.30%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Since May 1, 1996, Cova has been reimbursing the investment portfolios of
Cova Series Trust for all operating expenses (exclusive of the management fees)
in excess of approximately .10%. This reimbursement arrangement for the
Select Equity, Small Cap Stock and International Equity Portfolios was
discontinued effective May 1, 1999. Therefore, the amounts shown above under
"Other Expenses" have been restated to reflect the actual expenses for these
Portfolios for the year ended December 31, 1998. Effective May 1, 1999, Cova
reimburses the Mid-Cap Value, Large Cap Research and Developing Growth
Portfolios for all operating expenses (exclusive of the management fees)
in excess of approximately .30% (instead of .10% as had been the case prior to
May 1, 1999). This change is reflected above under "Other Expenses" for these
three Portfolios. Absent the expense reimbursement, the percentages shown
for total annual portfolio expenses for the year ended December 31, 1998
would have been .86% for the Quality Bond Portfolio, .94% for the Large Cap
Stock Portfolio, .93% for the Bond Debenture Portfolio, 1.68% for the Mid-Cap
Value Portfolio, 1.95% for the Large Cap Research Portfolio and 1.70% for
the Developing Growth Portfolio.
(2) Estimated. The Portfolio commenced investment operations on January 8, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Management Fees Other Expenses Portfolio Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dreyfus Stock Index Fund .25% .01% .26%
Managed by The Dreyfus Corporation
(Index Fund Manager: Mellon Equity Associates)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Annual
Management Fees Other Expenses Portfolio Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Managed by The Dreyfus Corporation
<S> <C> <C> <C>
Dreyfus VIF - Capital Appreciation Portfolio .75% .06% .81%
Dreyfus VIF - Disciplined Stock Portfolio .75% .13% .88%
- -----------------------------------------------------------------------------------------------------------------------------------
</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 FIVE 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 Growth and Income Fund .75% .15% .90%
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund .90% .15% 1.05%
Goldman Sachs International Equity Fund 1.00% .25% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The investment advisers to the Goldman Sachs Growth and Income, International
Equity and Global Income Funds have voluntarily agreed to reduce or limit
certain "Other Expenses" of such Funds (excluding management fees, taxes,
interest and brokerage fees and litigation, indemnification and other
extraordinary expenses) to the extent such expenses exceed 0.15%, 0.25% and
0.15% 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,
International Equity and Global Income Funds would be 1.94% and 2.69%, 1.97% and
2.97% and 2.40% and 3.30%, respectively. The reductions or limitations may be
discontinued or modified by the investment advisers in their discretion at any
time.
</FN>
</TABLE>
<TABLE>
<CAPTION>
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 .60% .85% 1.45%
INVESCO VIF - High Yield Fund .60% .47% 1.07%
- -----------------------------------------------------------------------------------------------------------------------------------
</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% .11% .66%
Kemper Small Cap Growth Portfolio .65% .05% .70%
Kemper Small Cap Value Portfolio .75% .05%* .80%
- ------------------------------------------------------------------------------------------------------------------------------------
<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, 1999, 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 lower than these expense limits.
</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 .862% .184% 1.046%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE 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% .40% 1.30%
- ------------------------------------------------------------------------------------------------------------------------------------
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% .10% .85%
MFS Global Governments Series (2) .75% .26% 1.01%
MFS Growth With Income Series .75% .13% .88%
MFS High Income Series .75% .28% 1.03%
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. Expenses do not take into account these
expense reductions, and are therefore higher than the actual expenses of the
series.
(2) MFS has agreed to bear expenses for the Global Governments Series subject
to reimbursement by this series, such that the series' "Other Expenses" shall
not exceed 0.25% 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, 1998, would have been
1.11% for the MFS Global Governments 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, 2000, unless terminated with the consent of the board
of trustees which oversees this series.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE FEE TABLE (continued)
Total Annual
Management Fees Other Expenses Portfolio Expenses*
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Managed by Pacific Investment Management Company
PIMCO High Yield Bond Portfolio .50% .25% .75%
PIMCO Low Duration Bond Portfolio .40% .25%** .65%
PIMCO StocksPLUS Growth and Income Portfolio .40% .25% .65%
PIMCO Total Return Bond Portfolio .40% .25% .65%
*PIMCO, the investment adviser, has agreed to reduce its administrative fee, subject to potential future reimbursements, to the
extent that total Portfolio operating expenses would exceed, due to organizational expenses and the payment by the Portfolio of its
prorata portion of the Trust's Trustees' fees, 0.65% with respect to the Low Duration Bond, Stocks Plus Growth and Income and Total
Return Bond Portfolios and .075% with respect to the High Yield Bond Portfolio.
**Other Expenses are based on estimates for the current fiscal year.
- ------------------------------------------------------------------------------------------------------------------------------------
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% .27% 1.07%
Putnam VT International New Opportunities Fund - Class IA Shares* 1.18% .42% 1.60%
Putnam VT New Value Fund - Class IA Shares .70% .11% .81%
Putnam VT Vista Fund - Class IA Shares .65% .12% .77%
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<FN>
* The Management Fees and Total Annual Portfolio Expenses reflect an expense
limitation. In the absence of the expense limitation, the Management Fees and
Total Annual Portfolio Expenses would have been 1.20% and 1.62%, respectively.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Total Annual
Other Expenses Portfolio Expenses
(after expense (after expense
Management reimbursement for reimbursement for
Fees one Portfolio) one Portfolio)
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<S> <C> <C> <C> <C>
Templeton Variable Products Series Fund
Managed by Franklin Advisers, Inc.
Franklin Small Cap Investments Fund,
Class 1 Shares* .15% .85% 1.00%
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Fund,
Class 1 Shares * .00% 1.00% 1.00%
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Fund,
Class 1 Shares 1.25% .41% 1.66%
Managed by Templeton Investment Counsel, Inc.
Templeton International Fund,
Class 1 Shares .69% .17% .86%
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<FN>
* Figures reflect expenses from the Fund's inception on May 1, 1998, which
have been annualized for the Management Fees and estimated for Other Expenses.
The investment manager agreed in advance to limit management fees and
make certain payments to reduce Fund expenses as necessary so that Total
Annual Portfolio Expenses did not exceed 1.00% of the Fund's Class 1 net assets
in 1998. The investment manager has agreed to continue this arrangement through
1999. Management Fees, Other Expenses and Total Annual Portfolio Expenses in
1998 before any waivers were as follows: 0.75%, 1.00% and 1.75% for the Franklin
Small Cap Investments Fund and 0.60%, 2.27% and 2.87% for the Mutual Shares
Investments 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
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AIM Variable Insurance Funds, Inc.
Managed by A I M Advisors, Inc.
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation (a) $71.99 (a) $112.73 (a) $160.90 (a) $247.97
(b) $21.99 (b) $ 67.73 (b) $115.90 (b) $247.97
AIM V.I. International Equity (a) $74.40 (a) $119.97 (a) $173.00 (a) $272.25
(b) $24.40 (b) $ 74.97 (b) $128.00 (b) $272.25
AIM V.I. Value (a) $71.89 (a) $112.42 (a) $160.39 (a) $246.95
(b) $21.89 (b) $ 67.42 (b) $115.39 (b) $246.95
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Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth (a) $75.90 (a) $124.47 (a) $180.49 (a) $287.10
(b) $25.90 (b) $ 79.47 (b) $135.49 (b) $287.10
Real Estate Investment (a) $74.80 (a) $121.17 (a) $175.00 (a) $276.23
(b) $24.80 (b) $ 76.17 (b) $130.00 (b) $276.23
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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) $78.99 (a) $133.70
(b) $28.99 (b) $ 88.70
VP Value (a) $75.30 (a) $122.67
(b) $25.30 (b) $ 77.67
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Cova Series Trust
Managed by J.P. Morgan Investment Management Inc.
International Equity (a) $76.10 (a) $125.06 (a) $181.48 (a) $289.07
(b) $26.10 (b) $ 80.06 (b) $136.48 (b) $289.07
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) $71.79 (a) $112.12 (a) $159.89 (a) $245.92
(b) $21.79 (b) $ 67.12 (b) $114.89 (b) $245.92
Select Equity (a) $73.90 (a) $118.46 (a) $170.49 (a) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
Small Cap Stock (a) $76.50 (a) $126.26 (a) $183.47 (a) $292.98
(b) $26.50 (b) $ 81.26 (b) $138.47 (b) $292.98
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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) $72.49 (a) $114.24 (a) $163.43 (a) $253.08
(b) $22.49 (b) $ 69.24 (b) $118.43 (b) $253.08
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
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Examples (continued)
Time Periods
1 year 3 years 5 years 10 years
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Dreyfus Stock Index Fund
Managed by The Dreyfus Corporation (Index Fund
Manager: Mellon Equity Associates) (a) $67.87 (a) $100.23
(b) $17.87 (b) $ 55.23
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Dreyfus Variable Investment Fund
Managed by The Dreyfus Corporation
Dreyfus VIF - Capital Appreciation (a) $73.40 (a) $116.96
(b) $23.40 (b) $ 71.96
Dreyfus VIF - Disciplined Stock (a) $74.10 (a) $119.07
(b) $24.10 (b) $ 74.07
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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
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Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs Growth and Income Fund (a) $74.30 (a) $119.67 (a) $172.50 (a) $271.25
(b) $24.30 (b) $ 74.67 (b) $127.50 (b) $271.25
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund (a) $75.80 (a) $124.17 (a) $179.99 (a) $286.12
(b) $25.80 (b) $ 79.17 (b) $134.99 (b) $286.12
Goldman Sachs International Equity Fund (a) $77.80 (a) $130.14 (a) $189.89 (a) $305.57
(b) $27.80 (b) $ 85.14 (b) $144.89 (b) $305.57
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INVESCO Variable Investment Funds, Inc.
Managed by INVESCO Funds Group, Inc.
INVESCO VIF - Dynamics (a) $79.79 (a) $136.07
(b) $29.79 (b) $ 91.07
INVESCO VIF - High Yield (a) $76.00 (a) $124.77
(b) $26.00 (b) $ 79.77
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Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities (a) $71.89 (a) $112.42 (a) $160.39 (a) $246.95
(b) $21.89 (b) $ 67.42 (b) $115.39 (b) $246.95
Kemper Small Cap Growth (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
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
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Scudder Variable Life Investment Fund
Managed by Scudder Kemper Investments, Inc.
International (a) $75.76 (a) $124.05
(b) $25.76 (b) $ 79.05
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Managed by Newport Fund Management Inc.
Newport Tiger Fund, Variable Series (a) $78.30 (a) $131.62 (a) $192.35 (a) $310.37
(b) $28.30 (b) $ 86.62 (b) $147.35 (b) $310.37
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MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth (a) $73.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
MFS Global Governments (a) $75.40 (a) $122.97 (a) $178.00 (a) $282.18
(b) $25.40 (b) $ 77.97 (b) $133.00 (b) $282.18
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) $75.60 (a) $123.57 (a) $179.00 (a) $284.15
(b) $25.60 (b) $ 78.57 (b) $134.00 (b) $284.15
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
- -----------------------------------------------------------------------------------------------------------------------------------
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) $71.79 (a) $112.12
(b) $21.79 (b) $ 67.12
PIMCO StocksPLUS Growth and Income (a) $71.79 (a) $112.12
(b) $21.79 (b) $ 67.12
PIMCO Total Return Bond (a) $71.79 (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) $76.00 (a) $124.77 (a) $180.99 (a) $288.08
(b) $26.00 (b) $ 79.77 (b) $135.99 (b) $288.08
Putnam VT International New Opportunities - Class IA Shares (a) $81.28 (a) $140.49 (a) $206.96 (a) $338.60
(b) $31.28 (b) $ 95.49 (b) $161.96 (b) $338.60
Putnam VT New Value - Class IA Shares (a) $73.40 (a) $116.96 (a) $167.98 (a) $262.21
(b) $23.40 (b) $ 71.96 (b) $122.98 (b) $262.21
Putnam VT Vista - Class IA Shares (a) $73.00 (a) $115.75 (a) $165.96 (a) $258.16
(b) $23.00 (b) $ 70.75 (b) $120.96 (b) $258.16
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Templeton Variable Products Series Fund, Class 1 Shares
Managed by Franklin Advisers, Inc.
Franklin Small Cap Investments (a) $75.30 (a) $122.67
(b) $25.30 (b) $ 77.67
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments (a) $75.30 (a) $122.67 (a) $177.50 (a) $281.19
(b) $25.30 (b) $ 77.67 (b) $132.50 (b) $281.19
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets (a) $81.88 (a) $142.26 (a) $209.86 (a) $344.13
(b) $31.88 (b) $ 97.26 (b) $164.86 (b) $344.13
Managed by Templeton Investment Counsel, Inc.
Templeton International (a) $73.90 (a) $118.46 (a) $170.49 (a) $267.24
(b) $23.90 (b) $ 73.46 (b) $125.49 (b) $267.24
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</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. 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, Cova has the right to change the frequency of payments so that your
annuity payments are at least $100.
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, in the state of California, within 30 days if you
are 60 years or older when we issue the contract). 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.
If you have purchased the contract as an IRA, we are 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). 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 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 50 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 before investing.
Copies of these prospectuses are attached to this prospectus. Certain portfolios
contained in the fund prospectuses may not be available with your contract. (See
Appendix B which contains a summary of investment objectives for each investment
portfolio.)
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Variable Insurance Funds, Inc. 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
Real Estate Investment Portfolio
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 (a "high yield" portfolio under California
insurance regulations)
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. The following
portfolios are available under the contract:
Dreyfus VIF - Capital Appreciation Portfolio
Dreyfus VIF - Disciplined Stock Portfolio
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 Growth and Income Fund and Goldman Sachs Asset Management
International is the investment adviser for the Goldman Sachs International
Equity Fund and the Goldman Sachs Global Income Fund. The following portfolios
are available under the contract:
Goldman Sachs Global Income Fund
Goldman Sachs Growth and Income Fund
Goldman Sachs International Equity Fund
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
(a portfolio investing in equity securities of companies located in certain
countries of Asia).
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
(formerly MFS World 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
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Variable Products Series Fund is a mutual fund with multiple
portfolios. 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
Investments Fund, Templeton Asset Management Ltd. is the investment adviser
for the Templeton Developing Markets Fund, Templeton Investment Counsel, Inc.
is the investment adviser for the Templeton International Fund and Franklin
Mutual Advisers, LLC is the investment adviser for the Mutual Shares
Investments Fund. The following portfolios are available under the contract:
Franklin Small Cap Investments Fund, Class 1 Shares
Mutual Shares Investments Fund, Class 1 Shares
Templeton Developing Markets Fund, Class 1 Shares
Templeton International Fund, Class 1 Shares
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.
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. 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. 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.
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.
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
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. 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.
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.
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 Life Insurance Company ("Cova") was originally incorporated on
September 6, 1972 as Industrial Indemnity Life Insurance Company, a California
corporation and changed its name to Xerox Financial Life Insurance Company in
1986. On June 1, 1995, a wholly-owned subsidiary of General American Life
Insurance Company purchased Cova which on that date changed its name to Cova
Financial Life Insurance Company.
Cova is presently licensed to do business in the state of California.
On August 26, 1999, it was announced that The Metropolitan Life Insurance
Company would purchase General American Life Insurance Company, the parent
company of Cova. Metropolitan Life is one of the country's oldest and most
financially sound life insurance organizations.
Year 2000
Cova has developed and initiated plans to assure that its computer systems will
function properly in the year 2000 and later years. These efforts have included
receiving assurances from outside service providers that their computer systems
will also function properly in this context. Included within these plans are the
computer systems of the advisers and sub-advisers of the various investment
portfolios underlying the Separate Account.
The total cost of implementing these plans is not expected to have a material
effect on Cova's financial position or results of operations. Cova believes
that it has taken all reasonable steps to address these potential problems.
There can be no guarantee, however, that the steps taken will be adequate
to avoid any adverse impact.
The Separate Account
Cova has established a separate account, Cova Variable Annuity Account Five
(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
California insurance law on March 24, 1992. 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. 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.
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc.
Managed by A I M Advisors, Inc.
AIM V.I. Capital Appreciation Sub-Account
<S> <C> <C>
Beginning of Period $11.80 $10.00 * *
End of Period 12.83 11.80
Number of Accum. Units Outstanding 22,822 5,570
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Sub-Account
Beginning of Period $11.42 $10.00 * *
End of Period 11.84 11.42
Number of Accum. Units Outstanding 19,985 15,257
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Sub-Account
Beginning of Period $13.08 $10.00 * *
End of Period 14.86 13.08
Number of Accum. Units Outstanding 76,589 2,865
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Managed by Alliance Capital Management L.P.
Premier Growth Sub-Account
Beginning of Period $14.62 $10.00 * *
End of Period 16.42 14.62
Number of Accum. Units Outstanding 109,670 62,869
- -----------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Sub-Account
Beginning of Period $ 8.00 $10.00 * *
End of Period 8.42 8.00
Number of Accum. Units Outstanding 20,503 22,077
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $11.30 $10.15
End of Period 13.54 13.50 12.88 11.30
Number of Accum. Units Outstanding 787,761 681,676 347,400 39,545
- -----------------------------------------------------------------------------------------------------------------------------------
Developing Growth Sub-Account
Beginning of Period $11.07 $10.53 $10.83 *
End of Period 12.72 11.07 10.53
Number of Accum. Units Outstanding 103,083 70,926 6,039
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Research Sub-Account
Beginning of Period $11.83 $10.76 * *
End of Period 13.32 11.83
Number of Accum. Units Outstanding 94,431 49,894
- -----------------------------------------------------------------------------------------------------------------------------------
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 39.10
Number of Accum. Units Outstanding 1,190,290
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Sub-Account
Beginning of Period $10.44 $10.47 $10.05 *
End of Period 11.56 10.44 10.47
Number of Accum. Units Outstanding 110,007 85,457 8,510
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by J.P. Morgan Investment Management Inc.
International Equity Sub-Account
Beginning of Period $12.89 $11.46 $10.97 $10.10
End of Period 13.53 12.89 11.46 10.97
Number of Accum. Units Outstanding 810,816 779,375 554,105 124,032
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Stock Sub-Account
Beginning of Period $19.43 $14.89 $11.34 $10.16
End of Period 21.76 19.43 14.89 11.34
Number of Accum. Units Outstanding 1,456,851 1,132,390 686,677 126,231
- -----------------------------------------------------------------------------------------------------------------------------------
Quality Bond Sub-Account
Beginning of Period $11.91 $11.16 $10.37 $9.95
End of Period 11.58 11.91 11.16 10.37
Number of Accum. Units Outstanding 639,959 501,045 234,643 64,534
- -----------------------------------------------------------------------------------------------------------------------------------
Select Equity Sub-Account
Beginning of Period $16.99 $14.05 $10.84 $10.15
End of Period 18.79 16.99 14.05 10.84
Number of Accum. Units Outstanding 1,167,029 1,052,797 700,550 185,509
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Stock Sub-Account
Beginning of Period $12.58 $13.49 $11.31 $10.91
End of Period 13.25 12.58 13.49 11.31
Number of Accum. Units Outstanding 649,071 663,925 487,580 113,118
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Managed by Conning Asset Management Company
Money Market Sub-Account
Beginning of Period $11.11 $10.67 $10.63 *
End of Period 11.30 11.11 10.67
Number of Accum. Units Outstanding 128,072 129,569 14,091
- ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Managed by Goldman Sachs Asset Management
Goldman Sachs Growth and Income Sub-Account
Beginning of Period $ 9.91 $11.21 * *
End of Period 10.87 9.91
Number of Accum. Units Outstanding 16,391 13,107
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Goldman Sachs Asset Management International
Goldman Sachs Global Income Sub-Account
Beginning of Period $10.82 $10.15 * *
End of Period 10.58 10.82
Number of Accum. Units Outstanding 3,084 3,002
- ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs International Equity Sub-Account
Beginning of Period $11.42 $11.20 * *
End of Period 11.64 11.42
Number of Accum. Units Outstanding 18,603 15,859
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Managed by Scudder Kemper Investments, Inc.
Kemper Government Securities Sub-Account
Beginning of Period $10.63 $10.00 * *
End of Period 10.56 10.63
Number of Accum. Units Outstanding 11,620 2,519
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Growth Sub-Account
Beginning of Period $11.69 $10.00 * *
End of Period 12.09 11.69
Number of Accum. Units Outstanding 5,733 3,829
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Small Cap Value Sub-Account
Beginning of Period $ 8.77 $10.00 * *
End of Period 9.32 8.77
Number of Accum. Units Outstanding 22,134 16,641
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $ 9.28 $10.00 * *
End of Period 11.93 9.28
Number of Accum. Units Outstanding 2,639 2,397
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
Managed by Massachusetts Financial Services Company
MFS Emerging Growth Sub-Account
Beginning of Period $13.24 $10.00 * *
End of Period 14.84 13.24
Number of Accum. Units Outstanding 59,264 47,710
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Sub-Account
Beginning of Period $10.66 $10.00 * *
End of Period 10.28 10.66
Number of Accum. Units Outstanding 689 385
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Sub-Account
Beginning of Period $12.08 $10.00 * *
End of Period 12.69 12.08
Number of Accum. Units Outstanding 87,892 64,791
- ---------------------------------------------------------------------------------------------------------------------------------
MFS High Income Sub-Account
Beginning of Period $ 9.86 $10.00 * *
End of Period 10.28 9.86
Number of Accum. Units Outstanding 15,906 13,080
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Research Sub-Account
Beginning of Period $12.18 $10.00 * *
End of Period 13.17 12.18
Number of Accum. Units Outstanding 47,243 25,994
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 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 $11.40 $10.00 * *
End of Period 12.53 11.40
Number of Accum. Units Outstanding 103,960 80,114
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Sub-Account
Beginning of Period $11.73 $10.00 * *
End of Period 13.09 11.73
Number of Accum. Units Outstanding 65,433 56,566
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Sub-Account
Beginning of Period $11.42 $10.00 * *
End of Period 13.56 11.42
Number of Accum. Units Outstanding 8,020 4,783
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Sub-Account
Beginning of Period $10.50 $10.00 * *
End of Period 11.92 10.50
Number of Accum. Units Outstanding 2,757 2,202
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Sub-Account
Beginning of Period $11.80 $10.00 * *
End of Period 13.22 11.80
Number of Accum. Units Outstanding 12,486 6,799
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value History (continued)
Period Ended Year or Period Year or Period Year or Period
6/30/99 Ended 12/31/98 Ended 12/31/97 Ended 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products Series Fund,
Class 1 Shares
Managed by Franklin Advisers, Inc.
Franklin Small Cap Investments Sub-Account (Sub-Account commenced operations during
1999. The value denoted is the initial AUV.)
Beginning of Period $10.00
End of Period 12.14
Number of Accum. Units Outstanding 213
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products Series Fund,
Class 1 Shares
Managed by Franklin Mutual Advisers, LLC
Mutual Shares Investments Sub-Account
Beginning of Period $ 9.65 $8.64 * *
End of Period 11.03 9.65
Number of Accum. Units Outstanding 4,327 944
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Asset Management Ltd.
Templeton Developing Markets Sub-Account
Beginning of Period $ 7.56 $5.65 * *
End of Period 10.76 7.56
Number of Accum. Units Outstanding 9,510 7,033
- -----------------------------------------------------------------------------------------------------------------------------------
Managed by Templeton Investment Counsel, Inc.
Templeton International Sub-Account
Beginning of Period $ 9.15 $7.89 * *
End of Period 10.02 9.15
Number of Accum. Units Outstanding 20,763 6,626
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* The accumulation unit values shown above for the beginning of the
period for the Select Equity, Small Cap Stock, Large Cap Stock,
International Equity, Quality Bond, Bond Debenture, Developing Growth,
Mid-Cap Value and Large Cap Research Portfolios reflect the dates
these investment portfolios were first offered for sale to the public
which were as follows: May 15, 1996 for the Select Equity and Small
Cap Stock Portfolios; May 16, 1996 for the Large Cap Stock Portfolio;
May 14, 1996 for the International Equity Portfolio; May 20, 1996 for
the Quality Bond and Bond Debenture Portfolios; November 7, 1997 for
the Developing Growth and Mid-Cap Value Portfolios; and February 17,
1998 for the Large Cap Research Portfolio. 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 - December 4,
1997; Goldman Sachs Variable Insurance Trust - March 31, 1998; and
Templeton Variable Products Series Fund - September 21, 1998 (except
March 1, 1999 for the Franklin Small Cap Investments Fund).
</FN>
</TABLE>
APPENDIX B
PARTICIPATING INVESTMENT PORTFOLIOS
Below are the investment objectives of each investment portfolio available
under the Contract. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES WILL BE ACHIEVED.
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM Variable Insurance Funds, Inc. 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 stock, with emphasis on medium- and small-sized
growth companies. The Fund may also investment up to 20% of its total assets
in foreign securities.
AIM V.I. INTERNATIONAL EQUITY FUND
Investment Objective: The Fund's investment objective is to provide long-term
growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings momentum.
The Fund seeks to meet this objective by investing at least 70% of its total
assets in marketable equity securities of foreign companies that are listed on a
recognized foreign securities exchange or traded in a foreign over-the-counter
market. The Fund will normally invest in companies located in at least four
countries outside of the United States, emphasizing investment in companies in
the developed countries of Western Europe and the Pacific Basin. The Fund may
invest up to 20% of its total assets in securities of issuers located in
developing countries, i.e., those that are in the initial stages of their
industrial cycles. The Fund may invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies.
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. The Fund may also invest in preferred stocks
and debt instruments that have prospects for growth of capital. The Fund also
may invest up to 25% of its total assets in foreign securities.
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
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
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 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 by investing primarily in dividend-paying common
stock. The Portfolio will typically hold approximately 300 stocks.
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 by
investing at least 65% of its assets in bonds under normal circumstances.
SELECT EQUITY PORTFOLIO
Investment Objective: The Select Equity Portfolio seeks to provide long-term
growth of capital and income by investing primarily in dividend-paying common
stock. The Portfolio will typically hold between 60 and 90 stocks.
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 through a professionally-managed portfolio consisting primarily of
convertible and discount debt securities, many of which are lower rated.
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. Production of current
income is a secondary consideration. The Portfolio invests primarily in common
stocks, including securities convertible into common stocks.
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. The Portfolio will normally invest in common stocks, including
securities convertible into common stocks, of large, seasoned companies in sound
financial condition, which common stocks are expected to show above-average
price appreciation.
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 S&P 500.
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. The
following portfolios are available under the contract:
CAPITAL 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.
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 is the investment adviser for the
Goldman Sachs Growth and Income Fund and Goldman Sachs Asset Management
International is the investment adviser for the Goldman Sachs International
Equity Fund and the Goldman Sachs Global Income Fund. The following portfolios
are available under the contract:
GOLDMAN SACHS 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 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 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.
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. Prior to May 1, 1999, the Series' investment objective
was to seek not only preservation but also growth of capital, together with
moderate current income.
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 bonds 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. The Fund
invests primarily in "value" stocks, that offer the potential for capital
growth, current income, or both. Value stocks are those that the adviser
believes are currently undervalued compared to their true worth.
PUTNAM VT INTERNATIONAL GROWTH FUND, CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation. Under normal
conditions, the Fund generally diversifies its investments among a number of
different countries by investing at least 65% of its total assets in at least
three countries other than the United States. The Fund may invest in both growth
and value stocks.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND, CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund generally invests at least 65% of its total
assets in at least three countries other than the United States. The Fund
invests mainly in growth stocks, which are stocks issued by companies whose
earnings the adviser believes are likely to grow faster than the economy as a
whole.
PUTNAM VT NEW VALUE FUND, CLASS IA SHARES
Investment Objective: The Fund seeks long-term capital appreciation. Under
normal market conditions, the Fund invests in value stocks, which are common
stocks that the adviser believes are undervalued at the time of purchase and
have the potential for long-term capital appreciation.
PUTNAM VT VISTA FUND, CLASS IA SHARES
Investment Objective: The Fund seeks capital appreciation. The Fund invests
mainly in "growth" stocks that are issued by companies whose earnings the
adviser believes are likely to grow faster than the economy as a whole. The
Fund mainly buys stocks of medium size companies, although the Fund may
invest in companies of any size.
TEMPLETON VARIABLE PRODUCTS SERIES FUND, CLASS 1 SHARES: Templeton Variable
Products Series Fund is a mutual fund with multiple portfolios. 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 Investments Fund, Templeton Asset
Management Ltd. is the investment adviser for the Templeton Developing Markets
Fund, Templeton Investment Counsel, Inc. is the investment adviser for the
Templeton International Fund and Franklin Mutual Advisers, LLC is the investment
adviser for the Mutual Shares Investments Fund. The following portfolios are
available under the contract:
FRANKLIN SMALL CAP INVESTMENTS FUND
Investment Objective: 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. Small cap companies are generally those with market cap values (share
price times the number of common stocks outstanding) of less than $1.5 billion,
at the time of purchase.
MUTUAL SHARES INVESTMENTS FUND
Investment Objective: 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 actual value
based on certain recognized or objective criteria (intrinsic value).
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 have their principal activities in emerging market
countries.
TEMPLETON INTERNATIONAL FUND
Investment Objective: 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. While there are no set percentage targets, the Fund
generally invests in large- to medium-cap companies with market capitalization
values (share price times the number of common stock shares outstanding) greater
than $1.5 billion, but may invest a small portion in small-cap companies which
have more risk.
<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 June 30, 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 June 30, 1999 may
be different than the numbers shown below.
PART 1 - SEPARATE ACCOUNT PERFORMANCE
The portfolios listed below began operations before June 30, 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 6/30/99:
- -----------------------------------------------------------------------------------------------------------------------------------
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 5yrs inception
- -----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance
Funds, Inc.
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C>
Appreciation 12/31/97 9.52% - - 15.21% 14.14% - - 18.15%
AIM V.I. International
Equity 12/31/97 (4.53)% - - 8.95% 0.07% - - 11.97%
AIM V.I. Value 12/31/97 21.33% - - 27.49% 25.96% - - 30.32%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products
Series Fund, Inc.
Premier Growth 12/31/97 23.94% - - 36.58% 28.57% - - 39.33%
Real Estate Investment 12/31/97 (14.12)% - - (14.17)% (9.53)% - - (10.84)%
- -----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
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 5/20/96 (4.43)% - - 8.39% 0.17% - - 9.70%
Developing Growth 11/7/97 7.85% - - 7.56% 12.47% - - 10.28%
International Equity 5/14/96 (1.00)% - - 8.49% 3.60% - - 9.79%
Large Cap Research 2/17/98 12.81% - - 13.64% 17.42% - - 16.93%
Large Cap Stock 5/16/96 18.60% - - 26.62% 23.22% - - 27.61%
Lord Abbett Growth and Income 1/8/99 - - - - 3.78% - - - - 8.89%
Mid-Cap Value 11/7/97 (1.47)% - - 6.14% 3.13% - - 8.88%
Quality Bond 5/20/96 (4.11)% - - 3.57% 0.49% - - 4.99%
Select Equity 5/15/96 14.32% - - 20.67% 18.94% - - 21.74%
Small Cap Stock 5/15/96 (10.08)% - - 5.04% (5.49)% - - 6.42%
- -----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 12/4/97 (0.86)% - - 1.00% 3.75% - - 3.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable
Insurance Trust
Goldman Sachs
Global Income 3/31/98 (2.05)% - - (0.28)% 2.56% - - 3.39%
Goldman Sachs Growth
and Income 3/31/98 (3.81)% - - (6.17)% 0.79% - - (2.45)%
Goldman Sachs
International Equity 3/31/98 (2.91)% - - (0.52)% 1.70% - - 3.15%
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 12/31/97 (2.10)% - - 0.62% 2.50% - - 3.74%
Kemper Small Cap Growth 12/31/97 2.69% - - 10.51% 7.30% - - 13.50%
Kemper Small Cap Value 12/31/97 (14.01)% - - (8.48)% (9.42)% - - (5.23)%
- ----------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
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 57.83% - - 9.51% 62.50% - - 12.51%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging Growth 12/31/97 18.18% - - 27.35% 22.80% - - 30.18%
MFS Global Governments 12/31/97 (3.44)% - - (1.25)% 1.16% - - 1.89%
MFS Growth With Income 12/31/97 5.34% - - 14.32% 9.95% - - 17.28%
MFS High Income 12/31/97 (5.89)% - - (1.27)% (1.29)% - - 1.87%
MFS Research 12/31/97 6.82% - - 17.26% 11.43% - - 20.18%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth and
Income - Class IA Shares 12/31/97 9.91% - - 13.28% 14.53% - - 16.25%
Putnam VT International
Growth - Class IA Shares 12/31/97 5.19% - - 16.78% 9.80% - - 19.71%
Putnam VT International
New Opportunities -
Class IA Shares 12/31/97 12.57% - - 19.67% 17.18% - - 22.57%
Putnam VT New Value -
Class IA Shares 12/31/97 10.77% - - 9.43% 15.38% - - 12.44%
Putnam VT Vista -
Class IA Shares 12/31/97 9.06% - - 17.59% 13.68% - - 20.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products
Series Fund, Class 1 Shares
*Franklin Small Cap Investments 3/1/99 - - - - 16.24% - - - - 21.36%
*Mutual Shares Investments 9/21/98 - - - - 22.50% - - - - 27.63%
*Templeton Developing
Markets 9/21/98 - - - - 85.36% - - - - 90.55%
Templeton International 9/21/98 - - - - 21.87% - - - - 27.00%
- -----------------------------------------------------------------------------------------------------------------------------------
*Past expense reductions by the manager increased returns.
</TABLE>
<TABLE>
<CAPTION>
APPENDIX C
PERFORMANCE INFORMATION (continued)
PART 2 - HISTORICAL FUND PERFORMANCE
The contracts are relatively new and therefore have a limited performance
history. However, 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 6/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
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 5yrs inception
- -----------------------------------------------------------------------------------------------------------------------------------
AIM Variable Insurance Funds, Inc.
AIM V.I. Capital
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appreciation 5/5/93 15.81% 21.16% 18.88% 9.52% 19.66% 17.38% 14.14% 19.76% 17.48%
AIM V.I.
International Equity 5/5/93 1.52% 12.82% 13.02% (4.53)% 11.32% 11.52% 0.07% 11.42% 11.62%
AIM V.I. Value 5/5/93 27.94% 25.41% 22.63% 21.33% 23.91% 21.13% 25.96% 24.01% 21.23%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Variable Products Series Fund, Inc.
Premier Growth 6/26/92 30.38% 32.57% 25.64% 23.94% 31.07% 24.14% 28.57% 31.17% 24.24%
Real Estate
Investment 1/9/97 (8.25)% - - 2.34% (14.12)% - - (3.66)% (9.53)% - - 0.94%
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
VP Income & Growth 10/30/97 18.54% - - 27.61% 12.54% - - 21.61% 17.14% - - 26.21%
VP International 5/1/94 1.74% 13.53% 12.59% (4.26)% 12.03% 11.09% 0.34% 12.13% 11.19%
VP Value 5/1/96 11.98% - - 17.79% 5.98% - - 11.79% 10.58% - - 16.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 9/29/89 22.36% 27.36% 17.57% 16.36% 25.86% 16.07% 20.96% 25.96% 16.17%
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund
Dreyfus VIF - Capital
Appreciation 4/5/93 15.86% 26.10% 21.12% 9.86% 24.60% 19.62% 14.46% 24.70% 19.72%
Dreyfus VIF -
Disciplined Stock 5/1/96 18.85% - - 28.12% 12.85% - - 22.12% 17.45% - - 26.72%
- -----------------------------------------------------------------------------------------------------------------------------------
General American Capital Company
Money Market 10/1/87 5.21% 5.54% 5.53% (0.86)% 4.04% 4.03% 3.75% 4.14% 4.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Insurance Trust
Goldman Sachs
Global Income 1/12/98 3.91% - - 4.53% (2.05)% - - (1.47)% 2.56% - - 3.13%
Goldman Sachs
Growth and Income 1/12/98 2.26% - - 10.96% (3.81)% - - 4.96% 0.79% - - 9.56%
Goldman Sachs
International Equity 1/12/98 3.18% - - 15.36% (2.91)% - - 9.36% 1.70% - - 13.96%
- ------------------------------------------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds, Inc.
INVESCO VIF - Dynamics 8/25/97 21.92% - - 23.84% 15.92% - - 17.84% 20.52% - - 22.44%
INVESCO VIF - High Yield 5/27/94 1.73% 12.18% 11.92% (4.27)% 10.68% 10.42% 0.33% 10.78% 10.52%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99:
- ------------------------------------------------------------------------------------------------------------------------------------
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 5yrs inception
- -----------------------------------------------------------------------------------------------------------------------------------
Kemper Variable Series
Kemper Government
Securities 9/3/87 3.61% 7.41% 7.51% (2.10)% 5.91% 6.01% 2.50% 6.01% 6.11%
Kemper Small
Cap Growth 5/2/94 8.90% 23.95% 22.60% 2.69% 22.45% 21.10% 7.30% 22.55% 21.20%
Kemper Small
Cap Value 5/1/96 (8.04)% - - 4.98% (14.01)% - - (1.02)% (9.42)% - - 3.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund
International 5/1/87 7.99% 12.28% 11.61% 1.99% 10.78% 10.11% 6.59% 10.88% 10.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Liberty Variable Investment Trust
Newport Tiger Fund,
Variable Series 5/1/95 64.19% - - 1.65% 57.83% - - (4.35)% 62.50% - - 0.25%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Variable Insurance Trust
MFS Emerging
Growth 7/24/95 24.52% - - 26.65% 18.18% - - 20.65% 22.80% _ _ 25.25%
MFS Global
Governments 6/14/94 2.58% 4.40% 4.40% (3.44)% 2.90% 2.90% 1.16% 3.00% 3.00%
MFS Growth
With Income 10/9/95 11.50% - - 24.02% 5.34% - - 18.02% 9.95% _ _ 22.62%
MFS High Income 7/26/95 0.10% - - 8.95% (5.89)% - - 2.95% (1.29)% _ _ 7.55%
MFS Research 7/26/95 13.00% - - 22.00% 6.82% - - 16.00% 11.43% _ _ 20.60%
- ------------------------------------------------------------------------------------------------------------------------------------
APPENDIX C
PERFORMANCE INFORMATION (continued)
Total Return for the periods ended 6/30/99:
- -----------------------------------------------------------------------------------------------------------------------------------
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 2.28% - - 2.83% (3.72)% - - (3.17)% 0.88% - - 1.43%
PIMCO Low Duration
Bond 2/16/99 - - - - 1.28% - - - - (4.34)% - - - - 0.76%
PIMCO StocksPLUS
Growth and Income 12/31/97 23.86% - - 28.16% 17.86% - - 22.16% 22.46% - - 26.76%
PIMCO Total Return
Bond 12/31/97 3.55% - - 4.42% (2.45)% - - (1.58)% 2.15% - - 3.02%
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Variable Trust
Putnam VT Growth
and Income -
Class IA Shares 2/1/88 16.14% 21.98% 15.93% 9.91% 20.48% 14.43% 14.53% 20.58% 14.53%
Putnam VT International
Growth - Class
IA Shares 1/2/97 11.34% - - 19.20% 5.19% - - 13.20% 9.80% - - 17.80%
Putnam VT International
New Opportunities -
Class IA Shares 1/2/97 18.82% - - 13.82% 12.57% - - 7.82% 17.18% - - 12.42%
Putnam VT New Value -
Class IA Shares 1/2/97 17.01% - - 15.39% 10.77% - - 9.39% 15.38% - - 13.99%
Putnam VT Vista -
Class IA Shares 1/2/97 15.28% - - 22.58% 9.06% - - 16.58% 13.68% - - 21.18%
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Variable Products
Series Fund
*Franklin Small Cap Investments,
Class 1 Shares 5/1/98 15.12% - - 8.36% 9.12% - - 2.36% 13.72% - - 6.96%
*Mutual Shares Investments,
Class 1 Shares 5/1/98 17.41% - - 10.14% 11.41% - - 4.14% 16.01% - - 8.74%
*Templeton Developing
Markets Fund, Class
1 Shares 3/4/96 47.76% - - (8.10)% 41.76% - - (14.10)% 46.36% - - (9.50)%
Templeton
International Fund,
Class 1 Shares 5/1/92 5.39% 15.27% 14.69% (0.61)% 13.77% 13.19% 3.99% 13.87% 13.29%
- -----------------------------------------------------------------------------------------------------------------------------------
*Past expense reductions by the manager increased returns.
</TABLE>
Please send me, at no charge, the Statement of Additional Information dated
November __, 1999, for the annuity contract issued by Cova.
(Please print or type and fill in all information)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
CC-____ (11/99) NAVI-CA
- ------------------------------
- ------------------------------
- ------------------------------
Cova Financial Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
COVA
Cova Financial Life Insurance Company
Marketing and Executive Office
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
800-523-1661
Annuity Service Office
P.O. Box 10366
Des Moines, IA 50306-9775
800-343-8496
CC-3035 (5/99) Policy Form Series XLCC-648, XLCC-833 21-CSA-CA (5/99)
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
issued by
COVA VARIABLE ANNUITY ACCOUNT FIVE
AND
COVA FINANCIAL LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED NOVEMBER __, 1999 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 60181-4644,
(800) 831-5433.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED NOVEMBER ___, 1999.
TABLE OF CONTENTS
Page
COMPANY .................................................................... 3
EXPERTS .................................................................... 3
LEGAL OPINIONS............................................................... 3
DISTRIBUTION................................................................. 3
Reduction or Elimination of the Withdrawal Charge................... 4
CALCULATION OF PERFORMANCE INFORMATION....................................... 4
Total Return........................................................ 4
Historical Unit Values.............................................. 6
Reporting Agencies.................................................. 7
FEDERAL TAX STATUS........................................................... 7
General ........................................................... 7
Diversification..................................................... 8
Multiple Contracts.................................................. 10
Contracts Owned by Other than Natural Persons....................... 10
Tax Treatment of Assignments or Transfer of Ownership............... 10
Income Tax Withholding............................................. 11
Tax Treatment of Withdrawals - Non-Qualified Contracts............. 11
Qualified Plans.................................................... 12
Tax Treatment of Withdrawals - Qualified Contracts................. 15
Tax-Sheltered Annuities - Withdrawal Limitations................... 16
ANNUITY PROVISIONS.......................................................... 16
Variable Annuity................................................... 16
Fixed Annuity...................................................... 17
Annuity Unit Value................................................. 17
Net Investment Factor.............................................. 17
Mortality and Expense Guarantee.................................... 18
FINANCIAL STATEMENTS........................................................ 18
COMPANY
Cova Financial Life Insurance Company (the "Company") was originally
incorporated on September 6, 1972 as Industrial Indemnity Life Insurance
Company, a California corporation and changed its name on January 1, 1986 to
Xerox Financial Life Insurance Company. The Company presently is licensed to do
business in the state of California. On June 1, 1995 a wholly-owned subsidiary
of General American Life Insurance Company ("General American") purchased Xerox
Financial Services Life Insurance Company ("Xerox Life"), an affiliate of the
Company, from Xerox Financial Services, Inc. The acquisition of Xerox Life
included related companies, including the Company. On June 1, 1995 the Company
changed its name to Cova Financial Life Insurance Company.
General American is a St. Louis-based mutual company with more than $300 billion
of life insurance in force and approximately $24 billion in assets. It provides
life and health insurance, retirement plans, and related financial services to
individuals and groups.
On August 26, 1999, it was announced that The Metropolitan Life Insurance
Company would purchase General American Life Insurance Company, the parent
company of Cova. Metropolitan Life is one of the country's oldest and most
financially sound life insurance organizations.
EXPERTS
The balance sheets of the Company as of December 31, 1998 and 1997, and the
related statements of income, shareholder's equity, and cash flows for each of
the years in the three-year period ended December 31, 1998, and the statement of
assets and liabilities of the Separate Account as of December 31, 1998, 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 contracts are relatively new and therefore have no meaningful performance
history. However, the Separate Account and certain Portfolios have been in
existence for sometime and consequently 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
excludible 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.
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.
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.
Effective January 1, 1993, 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. Owners, participants
and Beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law. 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 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 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); (h) 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 (i) 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 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.
Generally, distributions from a qualified plan must commence 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 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 FIVE
Statement of Assets and Liabilities
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Assets:
Investments:
Cova Series Trust (Trust):
<S> <C> <C> <C>
Lord Abbett Growth and Income Portfolio 1,964,967 shares at a net asset value of $23.682058 per share $ 46,534,465
Bond Debenture Portfolio 852,809 shares at a net asset value of $12.503713 per share 10,663,274
Developing Growth Portfolio 100,798 shares at a net asset value of $13.012586 per share 1,311,643
Large Cap Research Portfolio 92,690 shares at a net asset value of $13.570827 per share 1,257,884
Mid-Cap Value Portfolio 107,753 shares at a net asset value of $11.802264 per share 1,271,727
Quality Bond Portfolio 687,141 shares at a net asset value of $10.786856 per share 7,412,094
Small Cap Stock Portfolio 676,887 shares at a net asset value of $12.704940 per share 8,599,811
Large Cap Stock Portfolio 1,551,676 shares at a net asset value of $20.430631 per share 31,701,712
Select Equity Portfolio 1,224,622 shares at a net asset value of $17.903279 per share 21,924,756
International Equity Portfolio 807,216 shares at a net asset value of $13.590555 per share 10,970,517
General American Capital Company (GACC):
Money Market Fund 73,401 shares at a net asset value of $19.715236 per share 1,447,113
Russell Insurance Funds (Russell):
Multi-Style Equity Fund 120,253 shares at a net asset value of $16.63 per share 1,999,807
Aggressive Equity Fund 24,065 shares at a net asset value of $12.79 per share 307,791
Non-US Fund 67,632 shares at a net asset value of $11.73 per share 793,324
Core Bond Fund 175,622 shares at a net asset value of $10.12 per share 1,777,293
AIM Variable Insurance Funds, Inc. (AIM):
AIM V.I. Value Fund 37,887 shares at a net asset value of $30.04 per share 1,138,120
AIM V.I. Capital Appreciation Fund 10,612 shares at a net asset value of $27.60 per share 292,905
AIM V.I. International Equity Fund 11,550 shares at a net asset value of $20.49 per share 236,669
Alliance Variable Products Series Fund Inc.
(Alliance):
Premier Growth Portfolio 52,086 shares at a net asset value of $34.58 per share 1,801,144
Real Estate Investment Portfolio 17,427 shares at a net asset value of $9.91 per share 172,698
Liberty Variable Investment Trust (Liberty):
Newport Tiger Fund, Variable Series 15,542 shares at a net asset value of $2.03 per share 31,550
Goldman Sachs Variable Insurance Trust
(Goldman Sachs):
Growth and Income Fund 15,439 shares at a net asset value of $11.54 per share 178,171
International Equity Fund 17,709 shares at a net asset value of $12.23 per share 216,581
Global Income Fund 3,210 shares at a net asset value of $10.17 per share 32,644
Kemper Variable Series (Kemper):
Kemper Dreman High Return Equity Portfolio 104 shares at a net asset value of $1.064610 per share 110
Kemper Small Cap Growth Portfolio 33,731 shares at a net asset value of $2.054050 per share 69,285
Kemper Small Cap Value Portfolio 182,589 shares at a net asset value of $1.118560 per share 204,237
Kemper Government Securities Portfolio 106,834 shares at a net asset value of $1.149070 per share 122,760
MFS Variable Insurance Trust (MFS):
MFS Bond Series 9 shares at a net asset value of $10.97 per share 104
MFS Research Series 30,369 shares at a net asset value of $20.48 per share 621,954
MFS Growth with Income Series 52,769 shares at a net asset value of $21.14 per share 1,115,543
MFS Emerging Growth Series 36,305 shares at a net asset value of $24.22 per share 879,296
MFS Foreign & Colonial Emerging Markets
Equity Series 3,208 shares at a net asset value of $7.22 per share 23,160
MFS High Income Series 14,433 shares at a net asset value of $11.33 per share 163,530
MFS Global Governments Series 709 shares at a net asset value of $9.99 per share 7,084
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Assets, continued:
Investments, continued:
<S> <C> <C> <C>
Oppenheimer Variable Account Funds (Oppenheimer):
Oppenheimer Capital Appreciation Fund 2,574 shares at a net asset value of $40.75 per share $ 104,880
Oppenheimer Main Street Growth & Income Fund 13,251 shares at a net asset value of $23.20 per share 307,424
Oppenheimer High Income Fund 13,697 shares at a net asset value of $10.67 per share 146,149
Oppenheimer Bond Fund 39,949 shares at a net asset value of $11.50 per share 459,409
Oppenheimer Strategic Bond Fund 10,012 shares at a net asset value of $4.84 per share 48,460
Putnam Variable Trust (Putnam)
Putnam VT Growth and Income Fund 44,625 shares at a net asset value of $29.18 per share 1,302,162
Putnam VT New Value Fund 2,430 shares at a net asset value of $13.52 per share 32,848
Putnam VT Vista Fund 9,943 shares at a net asset value of $16.60 per share 165,054
Putnam VT International Growth Fund 56,375 shares at a net asset value of $15.19 per share 856,343
Putnam VT International New Opportunities Fund 7,920 shares at a net asset value of $13.73 per share 108,739
Templeton Variable Products Series Fund (Templeton):
Templeton Bond Fund 10 shares at a net asset value of $10.04 per share 98
Franklin Small Cap Investments Fund 241 shares at a net asset value of $10.74 per share 2,590
Templeton Stock Fund 2,994 shares at a net asset value of $21.28 per share 63,714
Templeton International Fund 10,504 shares at a net asset value of $19.85 per share 208,513
Templeton Developing Markets Fund 14,179 shares at a net asset value of $7.23 per share 102,513
Mutual Shares Investments Fund 4,284 shares at a net asset value of $11.16 per share 47,812
Franklin Growth Investments Fund 2,260 shares at a net asset value of $13.13 per share 29,676
Variable Insurance Products Fund, Fund II and
Fund III (Fidelity):
VIP Growth Portfolio 661 shares at a net asset value of $45.73 per share 30,208
VIP II Contrafund Portfolio 175 shares at a net asset value of $26.10 per share 4,580
VIP III Growth Opportunities Portfolio 276 shares at a net asset value of $23.64 per share 6,513
VIP III Growth & Income Portfolio 4,275 shares at a net asset value of $17.10 per share 73,098
VIP Equity-Income Portfolio 1,430 shares at a net asset value of $27.25 per share 38,957
----------------
Total assets $ 159,420,496
================
</TABLE>
<TABLE>
<CAPTION>
Liabilities:
<S> <C>
Liberty Newport Tiger Fund, Variable $ 64
Franklin Small Cap Investments 3
Templeton Stock 93
Templeton International 385
Templeton Developing Markets 215
Templeton Mutual Shares Investments 84
Franklin Growth Investments 17
Fidelity VIP Growth 109
Fidelity VIP II Contrafund 15
Fidelity VIP III Growth Opportunities 32
Fidelity VIP III Growth & Income 286
Fidelity VIP Equity-Income 132
----------------
Total liabilities $ 1,435
================
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Net assets:
Accumulation units:
<S> <C> <C> <C>
Trust Lord Abbett Growth and Income 1,190,290 accumulation units at $39.095071 per unit $ 46,534,465
Trust Bond Debenture 787,761 accumulation units at $13.536178 per unit 10,663,274
Trust Developing Growth 103,083 accumulation units at $12.724207 per unit 1,311,643
Trust Large Cap Research 94,431 accumulation units at $13.320653 per unit 1,257,884
Trust Mid-Cap Value 110,007 accumulation units at $11.560422 per unit 1,271,727
Trust Quality Bond 639,959 accumulation units at $11.582147 per unit 7,412,094
Trust Small Cap Stock 649,071 accumulation units at $13.249411 per unit 8,599,811
Trust Large Cap Stock 1,456,851 accumulation units at $21.760437 per unit 31,701,712
Trust Select Equity 1,167,029 accumulation units at $18.786819 per unit 21,924,756
Trust International Equity 810,816 accumulation units at $13.530210 per unit 10,970,517
GACC Money Market 128,072 accumulation units at $11.299208 per unit 1,447,113
Russell Multi-Style Equity 140,966 accumulation units at $14.186493 per unit 1,999,807
Russell Aggressive Equity 30,679 accumulation units at $10.032732 per unit 307,791
Russell Non-US 66,742 accumulation units at $11.886482 per unit 793,324
Russell Core Bond 170,243 accumulation units at $10.439720 per unit 1,777,293
AIM V.I. Value 76,589 accumulation units at $14.860062 per unit 1,138,120
AIM V.I. Capital Appreciation 22,822 accumulation units at $12.834364 per unit 292,905
AIM V.I. International Equity 19,985 accumulation units at $11.842406 per unit 236,669
Alliance Premier Growth 109,670 accumulation units at $16.423320 per unit 1,801,144
Alliance Real Estate Investment 20,503 accumulation units at $8.423121 per unit 172,698
Liberty Newport Tiger Fund, Variable 2,639 accumulation units at $11.928849 per unit 31,486
Goldman Sachs Growth and Income 16,391 accumulation units at $10.869858 per unit 178,171
Goldman Sachs International Equity 18,603 accumulation units at $11.642518 per unit 216,581
Goldman Sachs Global Income 3,084 accumulation units at $10.584393 per unit 32,644
Kemper Dreman High Return Equity 10 accumulation units at $11.040000 per unit 110
Kemper Small Cap Growth 5,733 accumulation units at $12.086038 per unit 69,285
Kemper Small Cap Value 22,134 accumulation units at $9.322726 per unit 204,237
Kemper Government Securities 11,620 accumulation units at $10.564382 per unit 122,760
MFS Bond 10 accumulation units at $10.356000 per unit 104
MFS Research 47,243 accumulation units at $13.165059 per unit 621,954
MFS Growth with Income 87,892 accumulation units at $12.692150 per unit 1,115,543
MFS Emerging Growth 59,264 accumulation units at $14.837048 per unit 879,296
MFS/Foreign & Colonial Emerging Markets Equity 2,895 accumulation units at $7.998729 per unit 23,160
MFS High Income 15,906 accumulation units at $10.281026 per unit 163,530
MFS Global Governments 689 accumulation units at $10.283862 per unit 7,084
Oppenheimer Capital Appreciation 7,447 accumulation units at $14.082942 per unit 104,880
Oppenheimer Main Street Growth & Income 26,114 accumulation units at $11.772262 per unit 307,424
Oppenheimer High Income 14,309 accumulation units at $10.213444 per unit 146,149
Oppenheimer Bond 44,596 accumulation units at $10.301628 per unit 459,409
Oppenheimer Strategic Bond 4,794 accumulation units at $10.108287 per unit 48,460
Putnam VT Growth and Income 103,960 accumulation units at $12.525638 per unit 1,302,162
Putnam VT New Value 2,757 accumulation units at $11.916467 per unit 32,848
Putnam VT Vista 12,486 accumulation units at $13.219555 per unit 165,054
Putnam VT International Growth 65,433 accumulation units at $13.087306 per unit 856,343
Putnam VT International New Opportunities 8,020 accumulation units at $13.558702 per unit 108,739
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Net assets, continued:
Accumulation units, continued:
<S> <C> <C> <C>
Templeton Bond 10 accumulation units at $9.816000 per unit $ 98
Franklin Small Cap Investments 213 accumulation units at $12.136171 per unit 2,587
Templeton Stock 5,435 accumulation units at $11.704915 per unit 63,621
Templeton International 20,763 accumulation units at $10.024137 per unit 208,128
Templeton Developing Markets 9,510 accumulation units at $10.757350 per unit 102,298
Templeton Mutual Shares Investments 4,327 accumulation units at $11.031485 per unit 47,728
Franklin Growth Investments 2,550 accumulation units at $11.629394 per unit 29,659
Fidelity VIP Growth 2,019 accumulation units at $14.907940 per unit 30,099
Fidelity VIP II Contrafund 332 accumulation units at $13.740706 per unit 4,565
Fidelity VIP III Growth Opportunities 519 accumulation units at $12.492249 per unit 6,481
Fidelity VIP III Growth & Income 5,541 accumulation units at $13.141588 per unit 72,812
Fidelity VIP Equity-Income 3,248 accumulation units at $11.954405 per unit 38,825
----------------
Total net assets $ 159,419,061
================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Trust
------------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money Stock and and Bond Developing
Income (1) Market (1) Index (1) Income (1) Income (2) Debenture Growth
----------- ---------- ---------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 27,755 223 13,623 13,703 - - -
----------- ---------- ---------- ------------ ------------ ------------ -------------
Expenses:
Mortality and expense risk 210 73 637 582 251,173 61,771 6,280
Administrative fee 25 9 76 70 30,141 7,413 754
----------- ---------- ---------- ------------ ------------ ------------ -------------
Total expenses 235 82 713 652 281,314 69,184 7,034
----------- ---------- ---------- ------------ ------------ ------------ -------------
Net investment
income (loss) 27,520 141 12,910 13,051 (281,314) (69,184) (7,034)
----------- ---------- ---------- ------------ ------------ ------------ -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (16,882) - 308,128 112,186 (1,148) 18,117 503
Realized gain distributions - - 232,665 207,864 - - -
----------- ---------- ---------- ------------ ------------ ------------ -------------
Net realized gain (loss) (16,882) - 540,793 320,050 (1,148) 18,117 503
----------- ---------- ---------- ------------ ------------ ------------ -------------
Change in unrealized appreciation (19,209) - (491,713) (316,285) 4,040,799 69,197 157,049
----------- ---------- ---------- ------------ ------------ ------------ -------------
Net increase (decrease) in net
from operations $ (8,571) 141 61,990 16,816 3,758,337 18,130 150,518
=========== ========== ========== ============ ============ ============ =============
</TABLE>
(1) Sub-account ceased operations on January 8, 1999.
(2) Sub-account commenced operations on January 8, 1999.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Trust
------------------------------------------------------------------------------------------
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>
Income:
Dividends $ - - - - - - -
---------- ---------- ----------- ---------- ------------ ------------ --------------
Expenses:
Mortality and expense risk 5,572 6,477 44,805 50,233 171,675 122,295 65,166
Administrative fee 669 777 5,376 6,028 20,601 14,675 7,820
---------- ---------- ----------- ---------- ------------ ------------ --------------
Total expenses 6,241 7,254 50,181 56,261 192,276 136,970 72,986
---------- ---------- ----------- ---------- ------------ ------------ --------------
Net investment
income (loss) (6,241) (7,254) (50,181) (56,261) (192,276) (136,970) (72,986)
---------- ---------- ----------- ---------- ------------ ------------ --------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 3,084 529 16,468 (17,727) 134,172 139,281 46,737
Realized gain distributions - - - - - - -
---------- ---------- ----------- ---------- ------------ ------------ --------------
Net realized gain (loss) 3,084 529 16,468 (17,727) 134,172 139,281 46,737
---------- ---------- ----------- ---------- ------------ ------------ --------------
Change in unrealized appreciation 115,694 133,043 (166,690) 499,033 3,214,114 2,067,060 546,439
---------- ---------- ----------- ---------- ------------ ------------ --------------
Net increase (decrease) in net
from operations $ 112,537 126,318 (200,403) 425,045 3,156,010 2,069,371 520,190
========== ========== =========== ========== ============ ============ ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
GACC Lord Abbett Russell AIM
---------- ------------- -------------------------------------------------- ----------
Growth Multi-
Money and Style Aggressive Core
Market Income (1) Equity Equity Non-US Bond V.I. Value
---------- ------------- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - 3,520 180 3,982 26,899 -
---------- ------------- ----------- ------------ --------- ---------- ----------
Expenses:
Mortality and expense risk 10,038 10,298 8,370 1,193 3,187 7,549 3,235
Administrative fee 1,205 1,235 1,004 143 382 906 388
---------- ------------- ----------- ------------ --------- ---------- ----------
Total expenses 11,243 11,533 9,374 1,336 3,569 8,455 3,623
---------- ------------- ----------- ------------ --------- ---------- ----------
Net investment
income (loss) (11,243) (11,533) (5,854) (1,156) 413 18,444 (3,623)
---------- ------------- ----------- ------------ --------- ---------- ----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 17,013 4,505,534 858 (140) 549 (353) 3,277
Realized gain distributions - - 68,270 239 - 15,241 -
---------- ------------- ----------- ------------ --------- ---------- ----------
Net realized gain (loss) 17,013 4,505,534 69,128 99 549 14,888 3,277
---------- ------------- ----------- ------------ --------- ---------- ----------
Change in unrealized appreciation 21,576 (2,782,796) 86,323 17,597 39,178 (58,676) 57,590
---------- ------------- ----------- ------------ --------- ---------- ----------
Net increase (decrease) in net
from operations $ 27,346 1,711,205 149,597 16,540 40,140 (25,344) 57,244
========== ============= =========== ============ ========= ========== ==========
(1) Sub-account ceased operations on January 8, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
AIM Alliance Liberty Goldman Sachs
----------------------------- --------------------- ---------- --------------------------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and International
Appreciation Equity Growth Investment Variable Income Equity
------------- -------------- --------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - - - 7,818 - - -
------------- -------------- --------- ----------- ---------- ---------- --------------
Expenses:
Mortality and expense risk 749 1,130 8,213 1,123 158 944 1,231
Administrative fee 90 136 985 135 19 113 148
------------- -------------- --------- ----------- ---------- ---------- --------------
Total expenses 839 1,266 9,198 1,258 177 1,057 1,379
------------- -------------- --------- ----------- ---------- ---------- --------------
Net investment
income (loss) (839) (1,266) (9,198) 6,560 (177) (1,057) (1,379)
------------- -------------- --------- ----------- ---------- ---------- --------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 1,498 (2,223) 8,483 (4,327) - 402 904
Realized gain distributions - - 21,117 - - - -
------------- -------------- --------- ----------- ---------- ---------- --------------
Net realized gain (loss) 1,498 (2,223) 29,600 (4,327) - 402 904
------------- -------------- --------- ----------- ---------- ---------- --------------
Change in unrealized appreciation 16,819 10,127 126,794 7,325 6,927 15,609 4,829
------------- -------------- --------- ----------- ---------- ---------- --------------
Net increase (decrease) in net
from operations $ 17,478 6,638 147,196 9,558 6,750 14,954 4,354
============= ============== ========= =========== ========== ========== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Goldman
Sachs Kemper MFS
---------- -------------------------------------------------- ----------------------
Dreman
High Small Small
Global Return Cap Cap Government
Income Equity Growth Value Securities Bond Research
---------- ----------- ---------- ---------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - 1 1,730 3,820 2 988
---------- ----------- ---------- ---------- ------------- --------- -----------
Expenses:
Mortality and expense risk 204 - 329 1,068 396 - 2,792
Administrative fee 25 - 39 128 48 - 335
---------- ----------- ---------- ---------- ------------- --------- -----------
Total expenses 229 - 368 1,196 444 - 3,127
---------- ----------- ---------- ---------- ------------- --------- -----------
Net investment
income (loss) (229) 1 (368) 534 3,376 2 (2,139)
---------- ----------- ---------- ---------- ------------- --------- -----------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (1) - 16 (2,633) (8) - 105
Realized gain distributions - - - - - - 5,219
---------- ----------- ---------- ---------- ------------- --------- -----------
Net realized gain (loss) (1) - 16 (2,633) (8) - 5,324
---------- ----------- ---------- ---------- ------------- --------- -----------
Change in unrealized appreciation (481) 4 3,568 15,629 (3,812) (3) 38,228
---------- ----------- ---------- ---------- ------------- --------- -----------
Net increase (decrease) in net
from operations $ (711) 5 3,216 13,530 (444) (1) 41,413
========== =========== ========== ========== ============= ========= ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
MFS Oppenheimer
----------------------------------------------------------- ------------------------------
F&C Main Street
Growth Emerging Growth
with Emerging Markets High Global Capital and
Income Growth Equity Income Governments Appreciation Income
-------- --------- ----------- --------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 3,198 - - 8,526 322 262 815
-------- --------- ----------- --------- -------------- -------------- -------------
Expenses:
Mortality and expense risk 5,880 4,672 161 918 34 504 1,321
Administrative fee 706 561 19 110 4 61 159
-------- --------- ----------- --------- -------------- -------------- -------------
Total expenses 6,586 5,233 180 1,028 38 565 1,480
-------- --------- ----------- --------- -------------- -------------- -------------
Net investment
income (loss) (3,388) (5,233) (180) 7,498 284 (303) (665)
-------- --------- ----------- --------- -------------- -------------- -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 3,760 3,594 (2,147) 1,428 - 120 175
Realized gain distributions 3,839 - - - - 2,880 1,373
-------- --------- ----------- --------- -------------- -------------- -------------
Net realized gain (loss) 7,599 3,594 (2,147) 1,428 - 3,000 1,548
-------- --------- ----------- --------- -------------- -------------- -------------
Change in unrealized appreciation 50,003 89,208 7,649 (2,844) (499) 9,366 30,515
-------- --------- ----------- --------- -------------- -------------- -------------
Net increase (decrease) in net
from operations $ 54,214 87,569 5,322 6,082 (215) 12,063 31,398
======== ========= =========== ========= ============== ============== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Oppenheimer Putnam
---------------------------------- -----------------------------------------------------
VT Growth VT
High Strategic and VT New International
Income Bond Bond Income Value VT Vista Growth
--------- --------- ---------- ------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 8,100 22,575 1,644 15,328 3 - -
--------- --------- ---------- ------------- ---------- ------------ -------------
Expenses:
Mortality and expense risk 765 2,939 229 6,838 205 772 4,804
Administrative fee 92 353 27 821 25 93 577
--------- --------- ---------- ------------- ---------- ------------ -------------
Total expenses 857 3,292 256 7,659 230 865 5,381
--------- --------- ---------- ------------- ---------- ------------ -------------
Net investment
income (loss) 7,243 19,283 1,388 7,669 (227) (865) (5,381)
--------- --------- ---------- ------------- ---------- ------------ -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares (27) (1,496) (112) 1,810 1,268 969 5,694
Realized gain distributions - 2,168 - 76,488 668 - -
--------- --------- ---------- ------------- ---------- ------------ -------------
Net realized gain (loss) (27) 672 (112) 78,298 1,936 969 5,694
--------- --------- ---------- ------------- ---------- ------------ -------------
Change in unrealized appreciation (4,054) (30,817) (1,877) 20,151 2,920 16,624 85,874
--------- --------- ---------- ------------- ---------- ------------ -------------
Net increase (decrease) in net
from operations $ 3,162 (10,862) (601) 106,118 4,629 16,728 86,187
========= ========= ========== ============= ========== ============ =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Putnam Templeton
------------- -----------------------------------------------------------------------------
VT Franklin
International Small Cap Mutual
New Investments Developing Shares
Opportunities Bond (3) (3) Stock (4) International Markets Investments
------------- --------- ------------ --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 36 - - - 1,768 833 35
------------- --------- ------------ --------- ------------- ------------- -------------
Expenses:
Mortality and expense risk 526 - 3 83 645 437 132
Administrative fee 63 - - 10 77 52 16
------------- --------- ------------ --------- ------------- ------------- -------------
Total expenses 589 - 3 93 722 489 148
------------- --------- ------------ --------- ------------- ------------- -------------
Net investment
income (loss) (553) - (3) (93) 1,046 344 (113)
------------- --------- ------------ --------- ------------- ------------- -------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares 105 - - (26) 29 1,745 5
Realized gain distributions - - - - 6,140 - -
------------- --------- ------------ --------- ------------- ------------- -------------
Net realized gain (loss) 105 - - (26) 6,169 1,745 5
------------- --------- ------------ --------- ------------- ------------- -------------
Change in unrealized appreciation 15,318 (2) 223 747 4,330 24,898 3,613
------------- --------- ------------ --------- ------------- ------------- -------------
Net increase (decrease) in net
from operations $ 14,870 (2) 220 628 11,545 26,987 3,505
============= ========= ============ ========= ============= ============= =============
(3) Sub-account commenced operations on March 1, 1999.
(4) Sub-account commenced operations on March 2, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Templeton Fidelity
------------ ------------------------------------------------------------
Franklin
Growth VIP III VIP III VIP
Investments VIP VIP II Growth Growth & Equity-
(3) Growth Contrafund Opportunities Income Income Total
------------ ---------- ------------ ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ - 11 5 14 153 124 167,996
------------ ---------- ------------ ------------- ----------- ----------- --------------
Expenses:
Mortality and expense risk 15 85 13 28 204 107 881,476
Administrative fee 2 10 1 4 24 13 105,778
------------ ---------- ------------ ------------- ----------- ----------- --------------
Total expenses 17 95 14 32 228 120 987,254
------------ ---------- ------------ ------------- ----------- ----------- --------------
Net investment
income (loss) (17) (84) (9) (18) (75) 4 (819,258)
------------ ---------- ------------ ------------- ----------- ----------- --------------
Net realized gain (loss) on investments:
Realized gain (loss) on sale of fund
shares - 110 - - 145 5 5,289,556
Realized gain distributions - 689 35 25 306 274 645,500
------------ ---------- ------------ ------------- ----------- ----------- --------------
Net realized gain (loss) - 799 35 25 451 279 5,935,056
------------ ---------- ------------ ------------- ----------- ----------- --------------
Change in unrealized appreciation 1,562 1,293 141 559 2,515 695 7,798,997
------------ ---------- ------------ ------------- ----------- ----------- --------------
Net increase (decrease) in net
from operations $ 1,545 2,008 167 566 2,891 978 12,914,795
============ ========== ============ ============= =========== =========== ==============
(3) Sub-account commenced operations on March 1, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Trust
---------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money Stock and and Bond Developing
Income (1) Market (1) Index (1) Income (1) Income (2) Debenture Growth
----------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 27,520 141 12,910 13,051 (281,314) (69,184) (7,034)
Net realized gain (loss) (16,882) - 540,793 320,050 (1,148) 18,117 503
Change in unrealized appreciation (19,209) - (491,713) (316,285) 4,040,799 69,197 157,049
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) from
operations (8,571) 141 61,990 16,816 3,758,337 18,130 150,518
----------- ----------- ----------- ---------- ----------- ----------- ----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners - - - - 462,638 253,620 106,340
Transfers between sub-accounts
(including fixed account), net (762,920) (267,611) (2,368,403) (2,135,470) 43,539,312 1,840,270 272,493
Transfers for contract benefits and
terminations - - - - (1,225,822) (648,988) (2,705)
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) in net
assets from contract
transactions (762,920) (267,611) (2,368,403) (2,135,470) 42,776,128 1,444,902 376,128
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) in net
assets (771,491) (267,470) (2,306,413) (2,118,654) 46,534,465 1,463,032 526,646
Net assets at beginning of period 771,491 267,470 2,306,413 2,118,654 - 9,200,242 784,997
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net assets as end of period $ - - - - 46,534,465 10,663,274 1,311,643
=========== =========== =========== ========== =========== =========== ==========
(1) Sub-account ceased operations on January 8, 1999.
(2) Sub-account commenced operations on January 8, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Trust
-------------------------------------------------------------------------------------------
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) $ (6,241) (7,254) (50,181) (56,261) (192,276) (136,970) (72,986)
Net realized gain (loss) 3,084 529 16,468 (17,727) 134,172 139,281 46,737
Change in unrealized appreciation 115,694 133,043 (166,690) 499,033 3,214,114 2,067,060 546,439
---------- ------------ ---------- ----------- ------------ ------------- --------------
Net increase (decrease) from
operations 112,537 126,318 (200,403) 425,045 3,156,010 2,069,371 520,190
---------- ------------ ---------- ----------- ------------ ------------- --------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 119,261 36,124 448,827 50,986 857,503 444,354 121,607
Transfers between sub-accounts
(including fixed account), net 441,670 230,025 1,326,216 22,470 6,238,944 2,266,781 515,012
Transfers for contract benefits and
terminations (5,606) (12,737) (132,251) (252,776) (551,390) (739,823) (231,904)
---------- ------------ ---------- ----------- ------------ ------------- --------------
Net increase (decrease) in net
assets from contract
transactions 555,325 253,412 1,642,792 (179,320) 6,545,057 1,971,312 404,715
---------- ------------ ---------- ----------- ------------ ------------- --------------
Net increase (decrease) in net
assets 667,862 379,730 1,442,389 245,725 9,701,067 4,040,683 924,905
Net assets at beginning of period 590,022 891,997 5,969,705 8,354,086 22,000,645 17,884,073 10,045,612
---------- ------------ ---------- ----------- ------------ ------------- --------------
Net assets as end of period $1,257,884 1,271,727 7,412,094 8,599,811 31,701,712 21,924,756 10,970,517
========== ============ ========== =========== ============ ============= ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
GACC Lord Abbett Russell AIM
---------- ------------- -------------------------------------------------- -------------
Growth Multi-
Money and Style Aggressive Core
Market Income (1) Equity Equity Non-US Bond V.I. Value
---------- ------------- ----------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (11,243) (11,533) (5,854) (1,156) 413 18,444 (3,623)
Net realized gain (loss) 17,013 4,505,534 69,128 99 549 14,888 3,277
Change in unrealized appreciation 21,576 (2,782,796) 86,323 17,597 39,178 (58,676) 57,590
---------- ------------- ----------- ----------- ---------- ------------- -------------
Net increase (decrease) from
operations 27,346 1,711,205 149,597 16,540 40,140 (25,344) 57,244
---------- ------------- ----------- ----------- ---------- ------------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - (135)
Payments received from contract
owners 297,017 60,200 892,083 144,898 367,032 470,730 391,173
Transfers between sub-accounts
(including fixed account), net 101,200 (38,834,206) 342,437 60,011 182,377 679,073 653,118
Transfers for contract benefits and
terminations (417,955) (34,967) (783) (183) (411) (964) (739)
---------- ------------- ----------- ----------- ---------- ------------- -------------
Net increase (decrease) in net
assets from contract
transactions (19,738) (38,808,973) 1,233,737 204,726 548,998 1,148,839 1,043,417
---------- ------------- ----------- ----------- ---------- ------------- -------------
Net increase (decrease) in net
assets 7,608 (37,097,768) 1,383,334 221,266 589,138 1,123,495 1,100,661
Net assets at beginning of period 1,439,505 37,097,768 616,473 86,525 204,186 653,798 37,459
---------- ------------- ----------- ----------- ---------- ------------- -------------
Net assets as end of period $1,447,113 - 1,999,807 307,791 793,324 1,777,293 1,138,120
========== ============= =========== =========== ========== ============= =============
(1) Sub-account ceased operations on January 8, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
AIM Alliance Liberty Goldman Sachs
----------------------------- ------------------------ --------- -------------------------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and International
Appreciation Equity Growth Investment Variable Income Equity
------------- -------------- ---------- ------------ --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (839) (1,266) (9,198) 6,560 (177) (1,057) (1,379)
Net realized gain (loss) 1,498 (2,223) 29,600 (4,327) - 402 904
Change in unrealized appreciation 16,819 10,127 126,794 7,325 6,927 15,609 4,829
------------- -------------- ---------- ------------ --------- ---------- -------------
Net increase (decrease) from
operations 17,478 6,638 147,196 9,558 6,750 14,954 4,354
------------- -------------- ---------- ------------ --------- ---------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions (117) - - - - - -
Payments received from contract
owners 113,315 49,471 358,050 9,851 2,494 12,612 19,951
Transfers between sub-accounts
(including fixed account), net 96,816 7,683 440,573 (14,073) - 19,944 11,348
Transfers for contract benefits and
terminations (319) (1,336) (63,851) (9,263) - 744 (125)
------------- -------------- ---------- ------------ --------- ---------- -------------
Net increase (decrease) in net
assets from contract
transactions 209,695 55,818 734,772 (13,485) 2,494 33,300 31,174
------------- -------------- ---------- ------------ --------- ---------- -------------
Net increase (decrease) in net
assets 227,173 62,456 881,968 (3,927) 9,244 48,254 35,528
Net assets at beginning of period 65,732 174,213 919,176 176,625 22,242 129,917 181,053
------------- -------------- ---------- ------------ --------- ---------- -------------
Net assets as end of period $ 292,905 236,669 1,801,144 172,698 31,486 178,171 216,581
============= ============== ========== ============ ========= ========== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Goldman
Sachs Kemper MFS
---------- -------------------------------------------------- ---------------------
Dreman
High Small Small
Global Return Cap Cap Government
Income Equity Growth Value Securities Bond Research
---------- ---------- ---------- ---------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (229) 1 (368) 534 3,376 2 (2,139)
Net realized gain (loss) (1) - 16 (2,633) (8) - 5,324
Change in unrealized appreciation (481) 4 3,568 15,629 (3,812) (3) 38,228
---------- ---------- ---------- ---------- ------------- -------- -----------
Net increase (decrease) from
operations (711) 5 3,216 13,530 (444) (1) 41,413
---------- ---------- ---------- ---------- ------------- -------- -----------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners - - 16,891 46,548 44,474 - 132,734
Transfers between sub-accounts
(including fixed account), net 900 - 5,383 9,060 52,193 - 132,147
Transfers for contract benefits and
terminations (17) - (962) (10,844) (249) - (924)
---------- ---------- ---------- ---------- ------------- -------- -----------
Net increase (decrease) in net
assets from contract
transactions 883 - 21,312 44,764 96,418 - 263,957
---------- ---------- ---------- ---------- ------------- -------- -----------
Net increase (decrease) in net
assets 172 5 24,528 58,294 95,974 (1) 305,370
Net assets at beginning of period 32,472 105 44,757 145,943 26,786 105 316,584
---------- ---------- ---------- ---------- ------------- -------- -----------
Net assets as end of period $ 32,644 110 69,285 204,237 122,760 104 621,954
========== ========== ========== ========== ============= ======== ===========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
MFS Oppenheimer
----------------------------------------------------------- -----------------------------
F&C Main Street
Growth Emerging Growth
with Emerging Markets High Global Capital and
Income Growth Equity Income Governments Appreciation Income
------------ ---------- ---------- --------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (3,388) (5,233) (180) 7,498 284 (303) (665)
Net realized gain (loss) 7,599 3,594 (2,147) 1,428 - 3,000 1,548
Change in unrealized appreciation 50,003 89,208 7,649 (2,844) (499) 9,366 30,515
------------ ---------- ---------- --------- ------------- -------------- ------------
Net increase (decrease) from
operations 54,214 87,569 5,322 6,082 (215) 12,063 31,398
------------ ---------- ---------- --------- ------------- -------------- ------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 63,315 76,332 - 18,029 - 11,185 43,832
Transfers between sub-accounts
(including fixed account), net 247,099 99,719 (9,963) 10,632 3,224 20,319 81,128
Transfers for contract benefits and
terminations (31,443) (16,207) (64) (227) (25) (357) (2,818)
------------ ---------- ---------- --------- ------------- -------------- ------------
Net increase (decrease) in net
assets from contract
transactions 278,971 159,844 (10,027) 28,434 3,199 31,147 122,142
------------ ---------- ---------- --------- ------------- -------------- ------------
Net increase (decrease) in net
assets 333,185 247,413 (4,705) 34,516 2,984 43,210 153,540
Net assets at beginning of period 782,358 631,883 27,865 129,014 4,100 61,670 153,884
------------ ---------- ---------- --------- ------------- -------------- ------------
Net assets as end of period $ 1,115,543 879,296 23,160 163,530 7,084 104,880 307,424
============ ========== ========== ========= ============= ============== ============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Oppenheimer Putnam
--------------------------------- ------------------------------------------------------
VT Growth VT
High Strategic and VT New International
Income Bond Bond Income Value VT Vista Growth
---------- ---------- -------- ------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 7,243 19,283 1,388 7,669 (227) (865) (5,381)
Net realized gain (loss) (27) 672 (112) 78,298 1,936 969 5,694
Change in unrealized appreciation (4,054) (30,817) (1,877) 20,151 2,920 16,624 85,874
---------- ---------- -------- ------------- ----------- ---------- --------------
Net increase (decrease) from
operations 3,162 (10,862) (601) 106,118 4,629 16,728 86,187
---------- ---------- -------- ------------- ----------- ---------- --------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 15,905 18,958 14,538 107,212 10,334 14,434 47,326
Transfers between sub-accounts
(including fixed account), net 23,275 (21,262) 7,358 200,732 (5,009) 54,327 85,764
Transfers for contract benefits and
terminations (557) (16,775) (114) (25,454) (225) (688) (26,420)
---------- ---------- -------- ------------- ----------- ---------- --------------
Net increase (decrease) in net
assets from contract
transactions 38,623 (19,079) 21,782 282,490 5,100 68,073 106,670
---------- ---------- -------- ------------- ----------- ---------- --------------
Net increase (decrease) in net
assets 41,785 (29,941) 21,181 388,608 9,729 84,801 192,857
Net assets at beginning of period 104,364 489,350 27,279 913,554 23,119 80,253 663,486
---------- ---------- -------- ------------- ----------- ---------- --------------
Net assets as end of period $ 146,149 459,409 48,460 1,302,162 32,848 165,054 856,343
========== ========== ======== ============= =========== ========== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Putnam Templeton
-------------- ---------------------------------------------------------------------------
VT Franklin
International Small Cap Mutual
New Investments Developing Shares
Opportunities Bond (3) (3) Stock (4) International Markets Investments
-------------- ---------- ------------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (553) - (3) (93) 1,046 344 (113)
Net realized gain (loss) 105 - - (26) 6,169 1,745 5
Change in unrealized appreciation 15,318 (2) 223 747 4,330 24,898 3,613
-------------- ---------- ------------- ---------- ------------- ------------ ------------
Net increase (decrease) from
operations 14,870 (2) 220 628 11,545 26,987 3,505
-------------- ---------- ------------- ---------- ------------- ------------ ------------
Contract transactions:
Cova payments - 100 100 100 - - -
Cova redemptions - - - - (114) - -
Payments received from contract
owners 3,024 - 2,000 37,508 60,554 8,526 -
Transfers between sub-accounts
(including fixed account), net 36,223 - 267 25,242 75,885 14,060 35,118
Transfers for contract benefits and
terminations (4) - - 143 (373) (424) -
-------------- ---------- ------------- ---------- ------------- ------------ ------------
Net increase (decrease) in net
assets from contract
transactions 39,243 100 2,367 62,993 135,952 22,162 35,118
-------------- ---------- ------------- ---------- ------------- ------------ ------------
Net increase (decrease) in net
assets 54,113 98 2,587 63,621 147,497 49,149 38,623
Net assets at beginning of period 54,626 - - - 60,631 53,149 9,105
-------------- ---------- ------------- ---------- ------------- ------------ ------------
Net assets as end of period $ 108,739 98 2,587 63,621 208,128 102,298 47,728
============== ========== ============= ========== ============= ============ ============
(3) Sub-account commenced operations on March 1, 1999.
(4) Sub-account commenced operations on March 2, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Six months ended June 30, 1999
Unaudited
<TABLE>
<CAPTION>
Templeton Fidelity
------------ -------------------------------------------------------------
Franklin
Growth VIP III VIP III VIP
Investments VIP VIP II Growth Growth & Equity-
(3) 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) $ (17) (84) (9) (18) (75) 4 (819,258)
Net realized gain (loss) - 799 35 25 451 279 5,935,056
Change in unrealized appreciation 1,562 1,293 141 559 2,515 695 7,798,997
------------ ------- ----------- --------------- ----------- ---------- -------------
Net increase (decrease) from
operations 1,545 2,008 167 566 2,891 978 12,914,795
------------ ------- ----------- --------------- ----------- ---------- -------------
Contract transactions:
Cova payments 100 - - - - - 400
Cova redemptions - - - - - - (366)
Payments received from contract
owners - 9,310 3,423 4,570 34,169 1,285 6,936,553
Transfers between sub-accounts
(including fixed account), net 28,014 12,105 - - 10,169 28,323 16,167,522
Transfers for contract benefits and
terminations - 53 - - 59 - (4,469,070)
------------ ------- ----------- --------------- ----------- ---------- -------------
Net increase (decrease) in net
assets from contract
transactions 28,114 21,468 3,423 4,570 44,397 29,608 18,635,039
------------ ------- ----------- --------------- ----------- ---------- -------------
Net increase (decrease) in net
assets 29,659 23,476 3,590 5,136 47,288 30,586 31,549,834
Net assets at beginning of period - 6,623 975 1,345 25,524 8,239 127,869,227
------------ ------- ----------- --------------- ----------- ---------- -------------
Net assets as end of period $ 29,659 30,099 4,565 6,481 72,812 38,825 159,419,061
============ ======= =========== =============== =========== ========== =============
(3) Sub-account commenced operations on March 1, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Trust
-----------------------------------------------------------------------------------------
VKAC
Growth Large
Quality Money Stock and Bond Developing Cap
Income Market Index Income Debenture Growth Research
---------- ---------- ----------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 31,278 11,868 (17,610) (15,214) 92,644 (5,086) (2,082)
Net realized gain (loss) 1,603 - 391,001 237,648 87,212 (1,333) 25
Change in unrealized appreciation 4,531 - 98,370 64,902 110,064 57,229 52,098
---------- ---------- ----------- ---------- ----------- ------------- -------------
Net increase (decrease) in
net assets from operations 37,412 11,868 471,761 287,336 289,920 50,810 50,041
---------- ---------- ----------- ---------- ----------- ------------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners - - - 1,000 1,051,661 334,325 237,270
Transfers between sub-accounts
(including fixed account), net 11,714 (111,191) 138,069 202,862 3,726,785 337,360 303,087
Transfers for contract benefits and
terminations (8,629) (3,863) (40,936) (52,497) (343,261) (1,070) (376)
---------- ---------- ----------- ---------- ----------- ------------- -------------
Net increase (decrease) in net
assets from contract
transactions 3,085 (115,054) 97,133 151,365 4,435,185 670,615 539,981
---------- ---------- ----------- ---------- ----------- ------------- -------------
Net increase (decrease) in net
assets 40,497 (103,186) 568,894 438,701 4,725,105 721,425 590,022
Net assets at beginning of period 730,994 370,656 1,737,519 1,679,953 4,475,137 63,572 -
---------- ---------- ----------- ---------- ----------- ------------- -------------
Net assets at end of period $ 771,491 267,470 2,306,413 2,118,654 9,200,242 784,997 590,022
========== ========== =========== ========== =========== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Trust GACC
--------------------------------------------------------------------------- -------------
Small Large
Mid-Cap Quality Cap Cap Select International Money
Value Bond Stock Stock Equity Equity Market
---------- ----------- ----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (5,560) 29,095 (95,891) (176,715) (152,047) 34,256 (6,981)
Net realized gain (loss) (4,501) 10,751 280,526 352,389 999,481 25,322 18,462
Change in unrealized appreciation 11,980 212,005 (768,604) 4,086,693 1,878,770 827,333 8,306
---------- ----------- ----------- ------------- ----------- ------------- -------------
Net increase (decrease) in
net assets from operations 1,919 251,851 (583,969) 4,262,367 2,726,204 886,911 19,787
---------- ----------- ----------- ------------- ----------- ------------- -------------
Contract transactions:
Cova payments - - - - - - -
Cova redemptions - - - - - - -
Payments received from contract
owners 593,364 828,237 664,035 1,433,747 1,284,829 470,560 1,894,032
Transfers between sub-accounts
(including fixed account), net 210,332 2,485,711 2,154,230 6,772,257 4,674,806 2,712,309 (358,103)
Transfers for contract benefits and
terminations (2,706) (213,576) (458,393) (691,973) (646,951) (375,560) (266,514)
---------- ----------- ----------- ------------- ----------- ------------- -------------
Net increase (decrease) in net
assets from contract
transactions 800,990 3,100,372 2,359,872 7,514,031 5,312,684 2,807,309 1,269,415
---------- ----------- ----------- ------------- ----------- ------------- -------------
Net increase (decrease) in net
assets 802,909 3,352,223 1,775,903 11,776,398 8,038,888 3,694,220 1,289,202
Net assets at beginning of period 89,088 2,617,482 6,578,183 10,224,247 9,845,185 6,351,392 150,303
========== =========== =========== ============= =========== ============= =============
Net assets at end of period $ 891,997 5,969,705 8,354,086 22,000,645 17,884,073 10,045,612 1,439,505
========== =========== =========== ============= =========== ============= =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Lord Abbett Russell AIM
------------- --------------------------------------------- ---------------------------
Growth Multi-
and Style Aggressive Core V.I. Capital
Income Equity Equity Non-US Bond V.I. Value Appreciation
------------- --------- ---------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 110,598 (2,142) (365) (884) 1,981 (29) (179)
Net realized gain (loss) 1,847,461 202 (45) (78) 2 (47) 1,256
Change in unrealized appreciation 1,268,706 37,385 (1,753) 1,844 3,543 1,376 5,386
------------- --------- ---------- ---------- ---------- ----------- --------------
Net increase (decrease) in
net assets from operations 3,226,765 35,445 (2,163) 882 5,526 1,300 6,463
------------- --------- ---------- ---------- ---------- ----------- --------------
Contract transactions:
Cova payments - 100 100 100 100 100 100
Cova redemptions - (127) (95) (93) (103) - -
Payments received from contract
owners 2,282,528 550,062 80,621 187,582 578,539 33,651 57,937
Transfers between sub-accounts
(including fixed account), net 8,659,268 31,554 8,298 15,688 70,898 2,043 1,227
Transfers for contract benefits and
terminations (1,472,455) (561) (236) 27 (1,162) 365 5
------------- --------- ---------- ---------- ---------- ----------- --------------
Net increase (decrease) in net
assets from contract
transactions 9,469,341 581,028 88,688 203,304 648,272 36,159 59,269
------------- --------- ---------- ---------- ---------- ----------- --------------
Net increase (decrease) in net
assets 12,696,106 616,473 86,525 204,186 653,798 37,459 65,732
Net assets at beginning of period 24,401,662 - - - - - -
------------- --------- ---------- ---------- ---------- ----------- --------------
Net assets at end of period $ 37,097,768 616,473 86,525 204,186 653,798 37,459 65,732
============= ========= ========== ========== ========== =========== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
AIM Alliance Liberty Goldman Sachs
------------- ------------------------ ---------- --------------------------------------
Newport
V.I. Real Tiger Growth
International Premier Estate Fund, and International Global
Equity Growth Investment Variable Income Equity Income
------------- --------- ------------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 187 (4,379) (540) 355 125 (1,051) 1,029
Net realized gain (loss) (5,943) (6,634) (2,767) 4 (4,119) 1,202 330
Change in unrealized appreciation (6,224) 118,514 (17,191) 2,743 (11,213) 2,720 (187)
------------- --------- ------------- ---------- ---------- ------------- ---------
Net increase (decrease) in
net assets from operations (11,980) 107,501 (20,498) 3,102 (15,207) 2,871 1,172
------------- --------- ------------- ---------- ---------- ------------- ---------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions (100) (138) (81) - (97) (86) -
Payments received from contract
owners 184,408 794,977 178,563 19,040 128,899 154,193 31,200
Transfers between sub-accounts
(including fixed account), net 3,073 20,139 19,454 - 16,047 23,975 -
Transfers for contract benefits and
terminations (1,288) (3,403) (913) - 175 - -
------------- --------- ------------- ---------- ---------- ------------- ---------
Net increase (decrease) in net
assets from contract
transactions 186,193 811,675 197,123 19,140 145,124 178,182 31,300
------------- --------- ------------- ---------- ---------- ------------- ---------
Net increase (decrease) in net
assets 174,213 919,176 176,625 22,242 129,917 181,053 32,472
Net assets at beginning of period - - - - - - -
------------- --------- ------------- ---------- ---------- ------------- ---------
Net assets at end of period $ 174,213 919,176 176,625 22,242 129,917 181,053 32,472
============= ========= ============= ========== ========== ============= =========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Kemper MFS
--------------------------------------------------- -----------------------------------
Dreman
High Small Small Growth
Return Cap Cap Government with
Equity Growth Value Securities Bond Research Income
----------- ---------- ----------- ------------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ - (265) (889) (42) - (1,500) (4,815)
Net realized gain (loss) - 191 (6,422) - - 145 (4,972)
Change in unrealized appreciation 5 3,989 (13,980) 206 5 24,572 54,989
----------- ---------- ----------- ------------- ------- ----------- ------------
Net increase (decrease) in
net assets from operations 5 3,915 (21,291) 164 5 23,217 45,202
----------- ---------- ----------- ------------- ------- ----------- ------------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - (108) (78) - - (123) (120)
Payments received from contract
owners - 35,374 184,026 23,032 - 252,002 692,249
Transfers between sub-accounts
(including fixed account), net - 5,487 (15,831) 3,490 - 42,134 48,220
Transfers for contract benefits and
terminations - (11) (983) - - (746) (3,293)
----------- ---------- ----------- ------------- ------- ----------- ------------
Net increase (decrease) in net
assets from contract
transactions 100 40,842 167,234 26,622 100 293,367 737,156
----------- ---------- ----------- ------------- ------- ----------- ------------
Net increase (decrease) in net
assets 105 44,757 145,943 26,786 105 316,584 782,358
Net assets at beginning of period - - - - - - -
----------- ---------- ----------- ------------- ------- ----------- ------------
Net assets at end of period $ 105 44,757 145,943 26,786 105 316,584 782,358
=========== ========== =========== ============= ======= =========== ============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
MFS Oppenheimer
------------------------------------------------ ----------------------------------------
F&C Main Street
Emerging Growth
Emerging Markets High Global Capital and High
Growth Equity Income Governments Appreciation Income Income
---------- ---------- ----------- ------------ ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (3,541) 124 (541) (8) (286) (748) (559)
Net realized gain (loss) (2,706) (10,435) (1,086) 1 1,028 (157) (139)
Change in unrealized appreciation 87,574 (7,685) (2,625) 189 9,357 (771) (2,071)
---------- ---------- ----------- ------------ ------------- ------------ ----------
Net increase (decrease) in
net assets from operations 81,327 (17,996) (4,252) 182 10,099 (1,676) (2,769)
---------- ---------- ----------- ------------ ------------- ------------ ----------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions (126) (65) (93) - - (89) (93)
Payments received from contract
owners 527,982 71,508 125,820 3,193 42,486 144,121 93,367
Transfers between sub-accounts
(including fixed account), net 24,659 (25,211) 8,401 625 9,440 11,637 14,033
Transfers for contract benefits and
terminations (2,059) (471) (962) - (455) (209) (274)
---------- ---------- ----------- ------------ ------------- ------------ ----------
Net increase (decrease) in net
assets from contract
transactions 550,556 45,861 133,266 3,918 51,571 155,560 107,133
---------- ---------- ----------- ------------ ------------- ------------ ----------
Net increase (decrease) in net
assets 631,883 27,865 129,014 4,100 61,670 153,884 104,364
Net assets at beginning of period - - - - - - -
---------- ---------- ----------- ------------ ------------- ------------ ----------
Net assets at end of period $ 631,883 27,865 129,014 4,100 61,670 153,884 104,364
========== ========== =========== ============ ============= ============ ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Oppenheimer Putnam
---------------------- -------------------------------------------------------------------
VT
VT Growth VT International
Strategic and VT New International New
Bond Bond Income Value VT Vista Growth Opportunities
--------- ---------- ----------- ----------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (2,628) (166) (5,191) 101 (436) (1,984) (266)
Net realized gain (loss) 238 (4) (4,815) 79 (12) (8,326) (27)
Change in unrealized appreciation 12,503 (129) 44,649 860 7,815 (2,297) 299
--------- ---------- ----------- ----------- ---------- ------------- --------------
Net increase (decrease) in
net assets from operations 10,113 (299) 34,643 1,040 7,367 (12,607) 6
--------- ---------- ----------- ----------- ---------- ------------- --------------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions (105) - (113) - (109) (127) (109)
Payments received from contract
owners 407,896 22,655 787,874 4,669 46,531 674,756 50,740
Transfers between sub-accounts
(including fixed account), net 73,891 4,823 94,763 17,311 26,352 5,031 3,797
Transfers for contract benefits and
terminations (2,545) - (3,713) (1) 12 (3,667) 92
--------- ---------- ----------- ----------- ---------- ------------- --------------
Net increase (decrease) in net
assets from contract
transactions 479,237 27,578 878,911 22,079 72,886 676,093 54,620
--------- ---------- ----------- ----------- ---------- ------------- --------------
Net increase (decrease) in net
assets 489,350 27,279 913,554 23,119 80,253 663,486 54,626
Net assets at beginning of period - - - - - - -
--------- ---------- ----------- ----------- ---------- ------------- --------------
Net assets at end of period $ 489,350 27,279 913,554 23,119 80,253 663,486 54,626
========= ========== =========== =========== ========== ============= ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Templeton Fidelity
---------------------------------------- -------------------------------------------------
Mutual VIP III VIP III
Developing Shares VIP VIP II Growth Growth &
International Markets Investments Growth Contrafund Opportunities Income
------------- ------------ ------------ -------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (139) (93) (3) (17) (1) - (58)
Net realized gain (loss) 9 8 - - - - -
Change in unrealized appreciation 4,711 3,570 263 1,118 99 19 3,784
------------- ------------ ------------ -------- ----------- -------------- ------------
Net increase (decrease) in
net assets from operations 4,581 3,485 260 1,101 98 19 3,726
------------- ------------ ------------ -------- ----------- -------------- ------------
Contract transactions:
Cova payments 100 100 100 100 100 100 100
Cova redemptions - (133) - - - - -
Payments received from contract
owners 54,930 25,540 8,079 990 777 - 3,746
Transfers between sub-accounts
(including fixed account), net 1,153 24,157 666 4,427 - 1,226 17,428
Transfers for contract benefits and
terminations (133) - - 5 - - 524
------------- ------------ ------------ -------- ----------- -------------- ------------
Net increase (decrease) in net
assets from contract
transactions 56,050 49,664 8,845 5,522 877 1,326 21,798
------------- ------------ ------------ -------- ----------- -------------- ------------
Net increase (decrease) in net
assets 60,631 53,149 9,105 6,623 975 1,345 25,524
Net assets at beginning of period - - - - - - -
------------- ------------ ------------ -------- ----------- -------------- ------------
Net assets at end of period $ 60,631 53,149 9,105 6,623 975 1,345 25,524
============= ============ ============ ======== =========== ============== ============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity
-------------
VIP
Equity-
Income Total
------------- --------------
<S> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (12) (197,302)
Net realized gain (loss) - 4,192,008
Change in unrealized appreciation 635 8,280,979
------------- --------------
Net increase (decrease) in
net assets from operations 623 12,275,685
------------- --------------
Contract transactions:
Cova payments 100 4,200
Cova redemptions - (2,511)
Payments received from contract
owners 2,968 18,342,571
Transfers between sub-accounts
(including fixed account), net 4,427 32,538,428
Transfers for contract benefits and
terminations 121 (4,604,519)
------------- --------------
Net increase (decrease) in net
assets from contract
transactions 7,616 46,278,169
------------- --------------
Net increase (decrease) in net
assets 8,239 58,553,854
Net assets at beginning of period - 69,315,373
------------- --------------
Net assets at end of period $ 8,239 127,869,227
============= ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
(1) ORGANIZATION
Cova Variable Annuity Account Five (the Separate Account), a unit
investment trust registered under the Investment Company Act of 1940 as
amended, was established by Cova Financial Life Insurance Company (Cova)
and exists in accordance with the regulations of the California
Department of Insurance. The Separate Account is a funding vehicle for
variable annuity contracts issued by Cova.
<TABLE>
<CAPTION>
The Separate Account is divided into sub-accounts with the assets of each
sub-account invested in corresponding portfolios of the following
investment companies. Each investment company is a diversified, open-end,
management investment company 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 Cova.
<S> <C>
Cova Series Trust (Trust) 10 portfolios
General American Capital Company (GACC) 1 portfolio
Russell Insurance Funds (Russell) 4 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
Investors Fund 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
</TABLE>
On January 8, 1999, the four sub-accounts investing in the Cova Series
Trust portfolios managed by Van Kampen American Capital Advisory Corp.,
Quality Income, Money Market, Stock Index and VKAC Growth and Income
portfolios, ceased operations and their assets were transferred to four
existing sub-accounts. In addition, the Lord Abbett Growth and Income
sub-account ceased operations and its assets were transferred to the
Trust Lord Abbett Growth and Income sub-account which commenced
operations on January 8, 1999. The asset transfers were in accordance
with a substitution order issued by the Securities and Exchange
Commission.
(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.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
(C) FEDERAL INCOME TAXES
The operations of the Separate Account are included in the federal
income tax return of Cova which is taxed as a Life Insurance Company
under the provisions of the Internal Revenue Code (IRC). Under
current IRC provisions, Cova 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 Cova 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 Cova.
(3) SEPARATE ACCOUNT EXPENSES
Cova 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 Cova 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 six months ending June 30, 1999,
surrender fees of $86 thousand were deducted.
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 six months ending June 30, 1999, contract maintenance and
transfer fees of $16 thousand were deducted.
Currently, Cova advances any premium taxes due at the time purchase
payments are made and then deducts premium taxes at the time annuity
payments begin. Cova reserves the right to deduct premium taxes when
incurred.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(5) COST BASIS OF INVESTMENTS
The cost basis of each sub-account's investment follows:
<S> <C> <C> <C>
Trust Lord Abbett Growth and Income $ 42,493,666 MFS Bond $ 102
Trust Bond Debenture 10,320,678 MFS Research 559,154
Trust Developing Growth 1,096,961 MFS Growth with Income 1,010,551
Trust Large Cap Research 1,090,092 MFS Emerging Growth 702,514
Trust Mid-Cap Value 1,124,168 MFS/F&C Emerging Markets Equity 23,196
Trust Quality Bond 7,324,663 MFS High Income 168,999
Trust Small Cap Stock 8,103,610 MFS Global Governments 7,394
Trust Large Cap Stock 23,770,037 Oppenheimer Capital Appreciation 86,157
Trust Select Equity 16,693,953 Oppenheimer Main Street Growth & Income 277,680
Trust International Equity 9,505,090 Oppenheimer High Income 152,274
GACC Money Market 1,416,791 Oppenheimer Bond 477,723
Russell Multi-Style Equity 1,876,099 Oppenheimer Strategic Bond 50,466
Russell Aggressive Equity 291,947 Putnam VT Growth and Income 1,237,362
Russell Non-US 752,302 Putnam VT New Value 29,068
Russell Core Bond 1,832,426 Putnam VT Vista 140,615
AIM V.I. Value 1,079,154 Putnam VT International Growth 772,766
AIM V.I. Capital Appreciation 270,700 Putnam VT International New Opportunities 93,122
AIM V.I. International Equity 232,766 Templeton Bond 100
Alliance Premier Growth 1,555,836 Franklin Small Cap Investments 2,367
Alliance Real Estate Investment 182,564 Templeton Stock 62,967
Liberty Newport Tiger Fund, Variable 21,880 Templeton International 199,472
Goldman Sachs Growth and Income 173,775 Templeton Developing Markets 74,045
Goldman Sachs International Equity 209,032 Templeton Mutual Shares Investments 43,936
Goldman Sachs Global Income 33,312 Franklin Growth Investments 28,114
Kemper Dreman High Return Equity 101 Fidelity VIP Growth 27,797
Kemper Small Cap Growth 61,728 Fidelity VIP II Contrafund 4,340
Kemper Small Cap Value 202,588 Fidelity VIP III Growth Opportunities 5,935
Kemper Government Securities 126,366 Fidelity VIP III Growth & Income 66,799
Fidelity VIP Equity-Income 37,627
----------------
$ 138,184,927
================
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<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 6/30/99 12/31/98 12/31/97 12/31/96
------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Trust Lord Abbett Growth and Income 1/8/99 $ 39.095071
Trust Bond Debenture 5/20/96 13.536178 13.496510 12.881799 11.294929
Trust Developing Growth 11/7/97 12.724207 11.067868 10.527555
Trust Large Cap Research 2/17/98 13.320653 11.825638
Trust Mid-Cap Value 11/7/97 11.560422 10.437956 10.467957
Trust Quality Bond 5/20/96 11.582147 11.914509 11.155144 10.368767
Trust Small Cap Stock 5/15/96 13.249411 12.582885 13.491493 11.308427
Trust Large Cap Stock 5/16/96 21.760437 19.428505 14.889464 11.334982
Trust Select Equity 5/15/96 18.786819 16.987203 14.053503 10.838053
Trust International Equity 5/14/96 13.530210 12.889314 11.462436 10.967004
GACC Money Market 12/4/97 11.299208 11.109949 10.667017
Russell Multi-Style Equity 12/31/97 14.186493 12.740123 10.000000
Russell Aggressive Equity 12/31/97 10.032732 10.001283 10.000000
Russell Non-US 12/31/97 11.886482 11.182808 10.000000
Russell Core Bond 12/31/97 10.439720 10.631124 10.000000
AIM V.I. Value 12/31/97 14.860062 13.075597 10.000000
AIM V.I. Capital Appreciation 12/31/97 12.834364 11.800084 10.000000
AIM V.I. International Equity 12/31/97 11.842406 11.418467 10.000000
Alliance Premier Growth 12/31/97 16.423320 14.620511 10.000000
Alliance Real Estate Investment 12/31/97 8.423121 8.000583 10.000000
Liberty Newport Tiger Fund, Variable 12/31/97 11.928849 9.278784 10.000000
Goldman Sachs Growth and Income 3/31/98 10.869858 9.911702
Goldman Sachs International Equity 3/31/98 11.642518 11.416783
Goldman Sachs Global Income 3/31/98 10.584393 10.815310
Kemper Dreman High Return Equity 5/15/98 11.040000 10.489000
Kemper Small Cap Growth 12/31/97 12.086038 11.687795 10.000000
Kemper Small Cap Value 12/31/97 9.322726 8.770360 10.000000
Kemper Government Securities 12/31/97 10.564382 10.634608 10.000000
MFS Bond 5/15/98 10.356000 10.509000
MFS Research 12/31/97 13.165059 12.179142 10.000000
MFS Growth with Income 12/31/97 12.692150 12.075079 10.000000
MFS Emerging Growth 12/31/97 14.837048 13.244101 10.000000
MFS/F&C Emerging Markets Equity 12/31/97 7.998729 6.581757 10.000000
MFS High Income 12/31/97 10.281026 9.863111 10.000000
MFS Global Governments 12/31/97 10.283862 10.663503 10.000000
Oppenheimer Capital Appreciation 12/31/97 14.082942 12.244057 10.000000
Oppenheimer Main Street Growth & Income 12/31/97 11.772262 10.340279 10.000000
Oppenheimer High Income 12/31/97 10.213444 9.907918 10.000000
Oppenheimer Bond 12/31/97 10.301628 10.551643 10.000000
Oppenheimer Strategic Bond 12/31/97 10.108287 10.164797 10.000000
Putnam VT Growth and Income 12/31/97 12.525638 11.403244 10.000000
Putnam VT New Value 12/31/97 11.916467 10.498075 10.000000
Putnam VT Vista 12/31/97 13.219555 11.804097 10.000000
Putnam VT International Growth 12/31/97 13.087306 11.729428 10.000000
Putnam VT International New Opportunities 12/31/97 13.558702 11.420772 10.000000
Templeton Bond 3/1/99 9.816000
Franklin Small Cap Investments 3/1/99 12.136171
Templeton Stock 3/2/99 11.704915
Templeton International 9/21/98 10.024137 9.149729
Templeton Developing Markets 9/21/98 10.757350 7.557531
Templeton Mutual Shares Investments 9/21/98 11.031485 9.646506
Franklin Growth Investments 3/1/99 11.629394
Fidelity VIP Growth 2/17/98 14.907940 13.115493
Fidelity VIP II Contrafund 2/17/98 13.740706 12.429344
Fidelity VIP III Growth Opportunities 2/17/98 12.492249 11.814000
Fidelity VIP III Growth & Income 2/17/98 13.141588 12.259160
Fidelity VIP Equity-Income 2/17/98 11.954405 10.674283
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED:
Net Assets (in thousands)
Commenced -----------------------------------------------------------------
Operations 6/30/99 12/31/98 12/31/97 12/31/96
------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Trust Lord Abbett Growth and Income 1/8/99 $ 46,534
Trust Bond Debenture 5/20/96 10,663 9,200 4,475 447
Trust Developing Growth 11/7/97 1,312 785 64
Trust Large Cap Research 2/17/98 1,258 590
Trust Mid-Cap Value 11/7/97 1,272 892 89
Trust Quality Bond 5/20/96 7,412 5,970 2,617 669
Trust Small Cap Stock 5/15/96 8,600 8,354 6,578 1,279
Trust Large Cap Stock 5/16/96 31,702 22,001 10,224 1,431
Trust Select Equity 5/15/96 21,925 17,884 9,845 2,011
Trust International Equity 5/14/96 10,971 10,046 6,351 1,360
GACC Money Market 12/4/97 1,447 1,440 150
Russell Multi-Style Equity 12/31/97 2,000 616 -
Russell Aggressive Equity 12/31/97 308 87 -
Russell Non-US 12/31/97 793 204 -
Russell Core Bond 12/31/97 1,777 654 -
AIM V.I. Value 12/31/97 1,138 37 -
AIM V.I. Capital Appreciation 12/31/97 293 66 -
AIM V.I. International Equity 12/31/97 237 174 -
Alliance Premier Growth 12/31/97 1,801 919 -
Alliance Real Estate Investment 12/31/97 173 177 -
Liberty Newport Tiger Fund, Variable 12/31/97 31 22 -
Goldman Sachs Growth and Income 3/31/98 178 130
Goldman Sachs International Equity 3/31/98 217 181
Goldman Sachs Global Income 3/31/98 33 32
Kemper Dreman High Return Equity 5/15/98 - -
Kemper Small Cap Growth 12/31/97 69 45 -
Kemper Small Cap Value 12/31/97 204 146 -
Kemper Government Securities 12/31/97 123 27 -
MFS Bond 5/15/98 - -
MFS Research 12/31/97 622 317 -
MFS Growth with Income 12/31/97 1,116 782 -
MFS Emerging Growth 12/31/97 879 632 -
MFS/F&C Emerging Markets Equity 12/31/97 23 28 -
MFS High Income 12/31/97 164 129 -
MFS Global Governments 12/31/97 7 4 -
Oppenheimer Capital Appreciation 12/31/97 105 62 -
Oppenheimer Main Street Growth & Income 12/31/97 307 154 -
Oppenheimer High Income 12/31/97 146 104 -
Oppenheimer Bond 12/31/97 459 489 -
Oppenheimer Strategic Bond 12/31/97 48 27 -
Putnam VT Growth and Income 12/31/97 1,302 914 -
Putnam VT New Value 12/31/97 33 23 -
Putnam VT Vista 12/31/97 165 80 -
Putnam VT International Growth 12/31/97 856 663 -
Putnam VT International New Opportunities 12/31/97 109 55 -
Templeton Bond 3/1/99 -
Franklin Small Cap Investments 3/1/99 3
Templeton Stock 3/2/99 64
Templeton International 9/21/98 208 61
Templeton Developing Markets 9/21/98 102 53
Templeton Mutual Shares Investments 9/21/98 48 9
Franklin Growth Investments 3/1/99 30
Fidelity VIP Growth 2/17/98 30 7
Fidelity VIP II Contrafund 2/17/98 5 1
Fidelity VIP III Growth Opportunities 2/17/98 6 1
Fidelity VIP III Growth & Income 2/17/98 73 26
Fidelity VIP Equity-Income 2/17/98 39 8
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(6) UNIT FAIR VALUE, CONTINUED:
Total Return*
Commenced -----------------------------------------------------------------
Operations 1999 1998 1997 1996
------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Trust Lord Abbett Growth and Income 1/8/99 8.89%
Trust Bond Debenture 5/20/96 0.29% 4.77% 14.05% 11.32%
Trust Developing Growth 11/7/97 14.97% 5.13% -2.80%
Trust Large Cap Research 2/17/98 12.64% 9.94%
Trust Mid-Cap Value 11/7/97 10.75% -0.29% 4.17%
Trust Quality Bond 5/20/96 -2.79% 6.81% 7.58% 4.20%
Trust Small Cap Stock 5/15/96 5.30% -6.74% 19.31% 3.69%
Trust Large Cap Stock 5/16/96 12.00% 30.49% 31.36% 11.62%
Trust Select Equity 5/15/96 10.59% 20.88% 29.67% 6.76%
Trust International Equity 5/14/96 4.97% 12.45% 4.52% 8.60%
GACC Money Market 12/4/97 1.70% 4.15% 0.34%
Russell Multi-Style Equity 12/31/97 11.35% 27.40%
Russell Aggressive Equity 12/31/97 0.31% 0.01%
Russell Non-US 12/31/97 6.29% 11.83%
Russell Core Bond 12/31/97 -1.80% 6.31%
AIM V.I. Value 12/31/97 13.65% 30.76%
AIM V.I. Capital Appreciation 12/31/97 8.77% 18.00%
AIM V.I. International Equity 12/31/97 3.71% 14.19%
Alliance Premier Growth 12/31/97 12.33% 46.21%
Alliance Real Estate Investment 12/31/97 5.28% -19.99%
Liberty Newport Tiger Fund, Variable 12/31/97 28.56% -7.21%
Goldman Sachs Growth and Income 3/31/98 9.67% -11.60%
Goldman Sachs International Equity 3/31/98 1.98% 1.94%
Goldman Sachs Global Income 3/31/98 -2.14% 6.53%
Kemper Dreman High Return Equity 5/15/98 5.25% 4.89%
Kemper Small Cap Growth 12/31/97 3.41% 16.88%
Kemper Small Cap Value 12/31/97 5.21% -12.30%
Kemper Government Securities 12/31/97 -0.66% 6.35%
MFS Bond 5/15/98 -1.46% 5.09%
MFS Research 12/31/97 8.10% 21.79%
MFS Growth with Income 12/31/97 5.11% 20.75%
MFS Emerging Growth 12/31/97 12.03% 32.44%
MFS/F&C Emerging Markets Equity 12/31/97 21.53% -34.18%
MFS High Income 12/31/97 4.24% -1.37%
MFS Global Governments 12/31/97 -3.56% 6.63%
Oppenheimer Capital Appreciation 12/31/97 15.02% 22.44%
Oppenheimer Main Street Growth & Income 12/31/97 13.85% 3.40%
Oppenheimer High Income 12/31/97 3.08% -0.92%
Oppenheimer Bond 12/31/97 -2.37% 5.52%
Oppenheimer Strategic Bond 12/31/97 -0.56% 1.65%
Putnam VT Growth and Income 12/31/97 9.84% 14.03%
Putnam VT New Value 12/31/97 13.51% 4.98%
Putnam VT Vista 12/31/97 11.99% 18.04%
Putnam VT International Growth 12/31/97 11.58% 17.29%
Putnam VT International New Opportunities 12/31/97 18.72% 14.21%
Templeton Bond 3/1/99 -1.84%
Franklin Small Cap Investments 3/1/99 21.36%
Templeton Stock 3/2/99 17.05%
Templeton International 9/21/98 9.56% 15.92%
Templeton Developing Markets 9/21/98 42.34% 33.87%
Templeton Mutual Shares Investments 9/21/98 14.36% 11.61%
Franklin Growth Investments 3/1/99 16.29%
Fidelity VIP Growth 2/17/98 13.67% 31.16%
Fidelity VIP II Contrafund 2/17/98 10.55% 24.29%
Fidelity VIP III Growth Opportunities 2/17/98 5.74% 18.14%
Fidelity VIP III Growth & Income 2/17/98 7.20% 22.59%
Fidelity VIP Equity-Income 2/17/98 11.99% 6.74%
* The total return for sub-accounts that commenced operations during the period is not annualized.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<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>
Trust Lord Abbett Growth and Income 1/8/99 1.40%
Trust Bond Debenture 5/20/96 1.40% 1.40% 1.40% 1.40%
Trust Developing Growth 11/7/97 1.40% 1.40% 1.40%
Trust Large Cap Research 2/17/98 1.40% 1.40%
Trust Mid-Cap Value 11/7/97 1.40% 1.40% 1.40%
Trust Quality Bond 5/20/96 1.40% 1.40% 1.40% 1.40%
Trust Small Cap Stock 5/15/96 1.40% 1.40% 1.40% 1.40%
Trust Large Cap Stock 5/16/96 1.40% 1.40% 1.40% 1.40%
Trust Select Equity 5/15/96 1.40% 1.40% 1.40% 1.40%
Trust International Equity 5/14/96 1.40% 1.40% 1.40% 1.40%
GACC Money Market 12/4/97 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%
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% 1.39%
Goldman Sachs Growth and Income 3/31/98 1.40% 1.40%
Goldman Sachs International Equity 3/31/98 1.40% 1.40%
Goldman Sachs Global Income 3/31/98 1.40% 1.40%
Kemper Dreman High Return Equity 5/15/98 1.40% 0.55%
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% 1.38%
MFS Bond 5/15/98 1.40% 0.52%
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/F&C 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% 1.37%
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 3/2/99 1.40%
Templeton International 9/21/98 1.40% 1.40%
Templeton Developing Markets 9/21/98 1.40% 1.40%
Templeton Mutual Shares Investments 9/21/98 1.40% 1.32%
Franklin Growth Investments 3/1/99 1.40%
Fidelity VIP Growth 2/17/98 1.40% 1.35%
Fidelity VIP II Contrafund 2/17/98 1.40% 0.75%
Fidelity VIP III Growth Opportunities 2/17/98 1.40% 0.52%
Fidelity VIP III Growth & Income 2/17/98 1.40% 1.39%
Fidelity VIP Equity-Income 2/17/98 1.40% 1.34%
** The expense ratio for sub-accounts that commenced operations during the period is annualized.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<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 six months ending
June 30, 1999 and the year ending December 31, 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>
Trust Quality Income 1999 $ 763,185 $ 780,067 $ (16,882)
1998 68,255 66,652 1,603
Trust Money Market 1999 267,703 267,703 -
1998 127,698 127,698 -
Trust Stock Index 1999 2,369,204 2,061,076 308,128
1998 135,751 117,530 18,221
Trust VKAC Growth and Income 1999 2,136,203 2,024,017 112,186
1998 104,628 89,010 15,618
Trust Lord Abbett Growth and Income 1999 1,681,501 1,682,649 (1,148)
1998
Trust Bond Debenture 1999 522,360 504,243 18,117
1998 670,935 657,487 13,448
Trust Developing Growth 1999 7,002 6,499 503
1998 59,769 61,323 (1,554)
Trust Large Cap Research 1999 27,944 24,860 3,084
1998 1,318 1,293 25
Trust Mid-Cap Value 1999 61,669 61,140 529
1998 121,779 126,280 (4,501)
Trust Quality Bond 1999 582,785 566,317 16,468
1998 319,864 309,113 10,751
Trust Small Cap Stock 1999 775,015 792,742 (17,727)
1998 986,220 974,390 11,830
Trust Large Cap Stock 1999 583,055 448,883 134,172
1998 1,700,678 1,489,784 210,894
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), 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>
Trust Select Equity 1999 $ 691,057 $ 551,776 $ 139,281
1998 1,190,393 1,040,041 150,352
Trust International Equity 1999 429,022 382,285 46,737
1998 652,667 629,290 23,377
GACC Money Market 1999 1,405,137 1,388,124 17,013
1998 2,053,922 2,035,460 18,462
Lord Abbett Growth and Income 1999 38,963,704 34,458,170 4,505,534
1998 1,839,293 1,749,075 90,218
Russell Multi-Style Equity 1999 33,144 32,286 858
1998 7,462 7,262 200
Russell Aggressive Equity 1999 6,034 6,174 (140)
1998 416 468 (52)
Russell Non-US 1999 16,162 15,613 549
1998 821 900 (79)
Russell Core Bond 1999 17,269 17,622 (353)
1998 1,162 1,160 2
AIM V.I. Value 1999 161,486 158,209 3,277
1998 26,188 27,774 (1,586)
AIM V.I. Capital Appreciation 1999 34,022 32,524 1,498
1998 236 258 (22)
AIM V.I. International Equity 1999 36,994 39,217 (2,223)
1998 40,160 46,103 (5,943)
Alliance Premier Growth 1999 62,516 54,033 8,483
1998 67,438 74,072 (6,634)
Alliance Real Estate Investment 1999 60,467 64,794 (4,327)
1998 14,746 17,733 (2,987)
Liberty Newport Tiger Fund, Variable 1999 - - -
1998 37 33 4
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), 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>
Goldman Sachs Growth and Income 1999 $ 21,002 $ 20,600 $ 402
1998 23,582 27,701 (4,119)
Goldman Sachs International Equity 1999 22,618 21,714 904
1998 999 1,123 (124)
Goldman Sachs Global Income 1999 247 248 (1)
1998 181 176 5
Kemper Dreman High Return Equity 1999 - - -
1998 - - -
Kemper Small Cap Growth 1999 1,215 1,199 16
1998 7,419 7,675 (256)
Kemper Small Cap Value 1999 35,221 37,854 (2,633)
1998 21,781 28,205 (6,424)
Kemper Government Securities 1999 374 382 (8)
1998 9 9 -
MFS Bond 1999 - - -
1998 - - -
MFS Research 1999 1,499 1,394 105
1998 1,823 1,914 (91)
MFS Growth with Income 1999 49,961 46,201 3,760
1998 40,854 45,826 (4,972)
MFS Emerging Growth 1999 23,185 19,591 3,594
1998 31,963 34,744 (2,781)
MFS/Foreign & Colonial
Emerging Markets Equity 1999 17,699 19,846 (2,147)
1998 32,580 43,015 (10,435)
MFS High Income 1999 37,193 35,765 1,428
1998 18,006 19,172 (1,166)
MFS Global Governments 1999 64 64 -
1998 34 33 1
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), 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>
Oppenheimer Capital Appreciation 1999 803 683 120
1998 731 756 (25)
Oppenheimer Main Street Growth & Income 1999 3,918 3,743 175
1998 1,004 1,167 (163)
Oppenheimer High Income 1999 6,898 6,925 (27)
1998 2,657 2,855 (198)
Oppenheimer Bond 1999 121,617 123,113 (1,496)
1998 17,891 17,655 236
Oppenheimer Strategic Bond 1999 14,827 14,939 (112)
1998 160 165 (5)
Putnam VT Growth and Income 1999 40,794 38,984 1,810
1998 45,339 51,871 (6,532)
Putnam VT New Value 1999 12,516 11,248 1,268
1998 6,880 6,868 12
Putnam VT Vista 1999 7,083 6,114 969
1998 376 388 (12)
Putnam VT International Growth 1999 92,258 86,564 5,694
1998 64,381 72,707 (8,326)
Putnam VT International New Opportunities 1999 5,773 5,668 105
1998 378 405 (27)
Templeton Bond 1999 - - -
1998
Franklin Small Cap Investments 1999 - - -
1998
Templeton Stock 1999 13,323 13,349 (26)
1998
Templeton International 1999 880 851 29
1998 133 124 9
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) REALIZED GAIN (LOSS), 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>
Templeton Developing Markets 1999 $ 9,068 $ 7,323 $ 1,745
1998 133 125 8
Templeton Mutual Shares Investments 1999 67 62 5
1998 - - -
Franklin Growth Investments 1999 - - -
1998
Fidelity VIP Growth 1999 522 412 110
1998 3 3 -
Fidelity VIP II Contrafund 1999 - - -
1998 - - -
Fidelity VIP III Growth Opportunities 1999 - - -
1998 - - -
Fidelity VIP III Growth & Income 1999 961 816 145
1998 - - -
Fidelity VIP Equity-Income 1999 139 134 5
1998 - - -
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) UNREALIZED APPRECIATION:
Unrealized Appreciation (Depreciation)
---------------------------------------------------------------
Appreciation Appreciation
Year or (Depreciation) (Depreciation)
Period End of Period Beginning of Period Change
------------ ------------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Trust Quality Income 1999 $ - $ 19,209 $ (19,209)
1998 19,209 14,678 4,531
Trust Money Market 1999 - - -
1998 - - -
Trust Stock Index 1999 - 491,713 (491,713)
1998 491,713 393,343 98,370
Trust VKAC Growth and Income 1999 - 316,285 (316,285)
1998 316,285 251,383 64,902
Trust Lord Abbett Growth and Income 1999 4,040,799 - 4,040,799
1998
Trust Bond Debenture 1999 342,596 273,399 69,197
1998 273,399 163,335 110,064
Trust Developing Growth 1999 214,682 57,633 157,049
1998 57,633 404 57,229
Trust Large Cap Research 1999 167,792 52,098 115,694
1998 52,098 - 52,098
Trust Mid-Cap Value 1999 147,559 14,516 133,043
1998 14,516 2,536 11,980
Trust Quality Bond 1999 87,431 254,121 (166,690)
1998 254,121 42,116 212,005
Trust Small Cap Stock 1999 496,201 (2,832) 499,033
1998 (2,832) 765,772 (768,604)
Trust Large Cap Stock 1999 7,931,675 4,717,561 3,214,114
1998 4,717,561 630,868 4,086,693
Trust Select Equity 1999 5,230,803 3,163,743 2,067,060
1998 3,163,743 1,284,973 1,878,770
Trust International Equity 1999 1,465,427 918,988 546,439
1998 918,988 91,655 827,333
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) 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>
GACC Money Market 1999 $ 30,322 $ 8,746 $ 21,576
1998 8,746 440 8,306
Lord Abbett Growth and Income 1999 - 2,782,796 (2,782,796)
1998 2,782,796 1,514,090 1,268,706
Russell Multi-Style Equity 1999 123,708 37,385 86,323
1998 37,385 - 37,385
Russell Aggressive Equity 1999 15,844 (1,753) 17,597
1998 (1,753) - (1,753)
Russell Non-US 1999 41,022 1,844 39,178
1998 1,844 - 1,844
Russell Core Bond 1999 (55,133) 3,543 (58,676)
1998 3,543 - 3,543
AIM V.I. Value 1999 58,966 1,376 57,590
1998 1,376 - 1,376
AIM V.I. Capital Appreciation 1999 22,205 5,386 16,819
1998 5,386 - 5,386
AIM V.I. International Equity 1999 3,903 (6,224) 10,127
1998 (6,224) - (6,224)
Alliance Premier Growth 1999 245,308 118,514 126,794
1998 118,514 - 118,514
Alliance Real Estate Investment 1999 (9,866) (17,191) 7,325
1998 (17,191) - (17,191)
Liberty Newport Tiger Fund, Variable 1999 9,670 2,743 6,927
1998 2,743 - 2,743
Goldman Sachs Growth and Income 1999 4,396 (11,213) 15,609
1998 (11,213) - (11,213)
Goldman Sachs International Equity 1999 7,549 2,720 4,829
1998 2,720 - 2,720
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) 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>
Goldman Sachs Global Income 1999 $ (668) $ (187) $ (481)
1998 (187) - (187)
Kemper Dreman High Return Equity 1999 9 5 4
1998 5 - 5
Kemper Small Cap Growth 1999 7,557 3,989 3,568
1998 3,989 - 3,989
Kemper Small Cap Value 1999 1,649 (13,980) 15,629
1998 (13,980) - (13,980)
Kemper Government Securities 1999 (3,606) 206 (3,812)
1998 206 - 206
MFS Bond 1999 2 5 (3)
1998 5 - 5
MFS Research 1999 62,800 24,572 38,228
1998 24,572 - 24,572
MFS Growth with Income 1999 104,992 54,989 50,003
1998 54,989 - 54,989
MFS Emerging Growth 1999 176,782 87,574 89,208
1998 87,574 - 87,574
MFS/Foreign & Colonial
Emerging Markets Equity 1999 (36) (7,685) 7,649
1998 (7,685) - (7,685)
MFS High Income 1999 (5,469) (2,625) (2,844)
1998 (2,625) - (2,625)
MFS Global Governments 1999 (310) 189 (499)
1998 189 - 189
Oppenheimer Capital Appreciation 1999 18,723 9,357 9,366
1998 9,357 - 9,357
Oppenheimer Main Street Growth & Income 1999 29,744 (771) 30,515
1998 (771) - (771)
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) 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>
Oppenheimer High Income 1999 $ (6,125) $ (2,071) $ (4,054)
1998 (2,071) - (2,071)
Oppenheimer Bond 1999 (18,314) 12,503 (30,817)
1998 12,503 - 12,503
Oppenheimer Strategic Bond 1999 (2,006) (129) (1,877)
1998 (129) - (129)
Putnam VT Growth and Income 1999 64,800 44,649 20,151
1998 44,649 - 44,649
Putnam VT New Value 1999 3,780 860 2,920
1998 860 - 860
Putnam VT Vista 1999 24,439 7,815 16,624
1998 7,815 - 7,815
Putnam VT International Growth 1999 83,577 (2,297) 85,874
1998 (2,297) - (2,297)
Putnam VT International New Opportunities 1999 15,617 299 15,318
1998 299 - 299
Templeton Bond 1999 (2) - (2)
1998
Franklin Small Cap Investments 1999 223 - 223
1998
Templeton Stock 1999 747 - 747
1998
Templeton International 1999 9,041 4,711 4,330
1998 4,711 - 4,711
Templeton Developing Markets 1999 28,468 3,570 24,898
1998 3,570 - 3,570
Templeton Mutual Shares Investments 1999 3,876 263 3,613
1998 263 - 263
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(7) 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>
Franklin Growth Investments 1999 $ 1,562 $ - $ 1,562
1998
Fidelity VIP Growth 1999 2,411 1,118 1,293
1998 1,118 - 1,118
Fidelity VIP II Contrafund 1999 240 99 141
1998 99 - 99
Fidelity VIP III Growth Opportunities 1999 578 19 559
1998 19 - 19
Fidelity VIP III Growth & Income 1999 6,299 3,784 2,515
1998 3,784 - 3,784
Fidelity VIP Equity-Income 1999 1,330 635 695
1998 635 - 635
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS
The change in the number of units for each sub-account follows:
Trust
--------------------------------------------------------------------------------------------
VKAC Lord Abbett
Growth Growth
Quality Money Stock and and Bond Developing
Income (1) Market (1) Index (1) Income (1) Income (2) Debenture Growth
----------- ----------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 43,729 29,951 69,602 80,080 347,400 6,039
Cova units purchased - - - - - -
Cova units redeemed - - - - - -
Contract units purchased - - - 48 83,877 31,649
Contract units transferred, net 763 (8,882) 5,039 9,020 280,852 33,339
Contract units redeemed (507) (306) (1,474) (2,306) (30,453) (101)
----------- ----------- ----------- ------------ ----------- -------------
Unit balance at 12/31/98 43,985 20,763 73,167 86,842 681,676 70,926
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased - - - - 12,676 18,652 9,057
Contract units transferred, net (43,985) (20,763) (73,167) (86,842) 1,211,355 135,253 23,343
Contract units redeemed - - - - (33,741) (47,820) (243)
----------- ----------- ----------- ------------ ------------- ----------- -------------
Unit balance at 6/30/99 - - - - 1,190,290 787,761 103,083
=========== =========== =========== ============ ============= =========== =============
(1) Sub-account ceased operations on January 8, 1999.
(2) Sub-account commenced operations on January 8, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
Trust
-------------------------------------------------------------------------------------------
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>
Accumulation units:
Unit balance at 12/31/97 8,510 234,643 487,580 686,677 700,550 554,105
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 21,971 56,591 71,796 55,831 86,312 93,645 39,068
Contract units transferred, net 27,982 20,523 212,881 162,174 401,442 309,696 218,017
Contract units redeemed (59) (167) (18,275) (41,660) (42,041) (51,094) (31,815)
---------- ---------- ---------- ----------- ------------ ------------ --------------
Unit balance at 12/31/98 49,894 85,457 501,045 663,925 1,132,390 1,052,797 779,375
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 9,526 3,541 38,047 4,244 42,108 25,646 9,497
Contract units transferred, net 35,488 22,169 112,124 1,272 309,470 130,069 39,401
Contract units redeemed (477) (1,160) (11,257) (20,370) (27,117) (41,483) (17,457)
---------- ---------- ---------- ----------- ------------ ------------ --------------
Unit balance at 6/30/99 94,431 110,007 639,959 649,071 1,456,851 1,167,029 810,816
========== ========== ========== =========== ============ ============ ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
GACC Lord Abbett Russell AIM
---------- ------------- -------------------------------------------------- -----------
Growth Multi-
Money and Style Aggressive Core
Market Income (1) Equity Equity Non-US Bond V.I. Value
---------- ------------- ---------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97 14,091 791,310
Cova units purchased - - 10 10 10 10 10
Cova units redeemed - - (10) (10) (10) (10) -
Contract units purchased 175,697 70,041 45,702 7,795 16,824 54,877 2,811
Contract units transferred, net (33,948) 266,026 2,780 887 1,475 6,720 44
Contract units redeemed (26,271) (46,611) (94) (31) (40) (99) -
---------- ------------- ---------- ------------ ---------- ----------- -----------
Unit balance at 12/31/98 129,569 1,080,766 48,388 8,651 18,259 61,498 2,865
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - (10)
Contract units purchased 26,576 1,724 67,205 15,685 32,519 44,528 27,378
Contract units transferred, net 9,200 (1,081,503) 25,434 6,358 16,000 64,308 46,378
Contract units redeemed (37,273) (987) (61) (15) (36) (91) (22)
---------- ------------- ---------- ------------ ---------- ----------- -----------
Unit balance at 6/30/99 128,072 - 140,966 30,679 66,742 170,243 76,589
========== ============= ========== ============ ========== =========== ===========
(1) Sub-account ceased operations on January 8, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
AIM Alliance Liberty Goldman Sachs
------------------------------ ------------------------ ---------- -------------------------
Newport
V.I. Real Tiger Growth
V.I. Capital International Premier Estate Fund, and International
Appreciation Equity Growth Investment Variable Income Equity
-------------- -------------- ---------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97
Cova units purchased 10 10 10 10 10 9 9
Cova units redeemed - (10) (10) (10) - (9) (9)
Contract units purchased 5,456 15,482 61,989 20,016 2,387 11,978 13,558
Contract units transferred, net 104 (97) 1,056 2,144 - 1,129 2,301
Contract units redeemed - (128) (176) (83) - - -
-------------- -------------- ---------- ------------ ---------- ---------- -------------
Unit balance at 12/31/98 5,570 15,257 62,869 22,077 2,397 13,107 15,859
Cova units purchased - - - - - - -
Cova units redeemed (10) - - - - - -
Contract units purchased 9,359 4,220 22,847 1,266 242 1,235 1,739
Contract units transferred, net 7,931 628 28,038 (1,754) - 2,050 1,016
Contract units redeemed (28) (120) (4,084) (1,086) - (1) (11)
-------------- -------------- ---------- ------------ ---------- ---------- -------------
Unit balance at 6/30/99 22,822 19,985 109,670 20,503 2,639 16,391 18,603
============== ============== ========== ============ ========== ========== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
Goldman
Sachs Kemper MFS
---------- ------------------------------------------------ -------------------
Dreman
High Small Small
Global Return Cap Cap Government
Income Equity Growth Value Securities Bond Research
---------- --------- ---------- ---------- ------------- ------- ----------
<S> <C> <C> <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)
Contract units purchased 2,992 - 3,287 18,879 2,180 - 22,166
Contract units transferred, net - - 542 (2,152) 329 - 3,870
Contract units redeemed - - - (86) - - (42)
---------- --------- ---------- ---------- ------------- ------- ----------
Unit balance at 12/31/98 3,002 10 3,829 16,641 2,519 10 25,994
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased - - 1,511 5,762 4,210 - 10,720
Contract units transferred, net 84 - 481 927 4,915 - 10,604
Contract units redeemed (2) - (88) (1,196) (24) - (75)
---------- --------- ---------- ---------- ------------- ------- ----------
Unit balance at 6/30/99 3,084 10 5,733 22,134 11,620 10 47,243
========== ========= ========== ========== ============= ======= ==========
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
MFS Oppenheimer
--------------------------------------------------------------- -----------------------------
F&C Main Street
Growth Emerging Growth
with Emerging Markets High Global Capital and
Income Growth Equity Income Governments Appreciation 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)
Contract units purchased 60,871 45,740 8,277 12,308 316 4,131 13,701
Contract units transferred, net 4,170 2,112 (3,990) 826 59 938 1,202
Contract units redeemed (250) (142) (53) (54) - (42) (21)
---------- ----------- ----------- --------- -------------- -------------- -------------
Unit balance at 12/31/98 64,791 47,710 4,234 13,080 385 5,037 14,882
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 5,225 5,571 - 1,765 - 849 4,069
Contract units transferred, net 20,412 7,150 (1,330) 1,083 306 1,589 7,417
Contract units redeemed (2,536) (1,167) (9) (22) (2) (28) (254)
---------- ----------- ----------- --------- -------------- -------------- -------------
Unit balance at 6/30/99 87,892 59,264 2,895 15,906 689 7,447 26,114
========== =========== =========== ========= ============== ============== =============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
Oppenheimer Putnam
---------------------------------- -----------------------------------------------------
VT Growth VT
High Strategic and VT New International
Income Bond Bond Income Value VT Vista Growth
---------- ---------- ---------- ------------ --------- ---------- --------------
<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 9,108 39,444 2,196 72,178 487 4,298 56,707
Contract units transferred, net 1,436 7,160 478 8,219 1,705 2,501 107
Contract units redeemed (11) (227) - (283) - - (248)
---------- ---------- ---------- ------------ --------- ---------- --------------
Unit balance at 12/31/98 10,533 46,377 2,684 80,114 2,202 6,799 56,566
Cova units purchased - - - - - - -
Cova units redeemed - - - - - - -
Contract units purchased 1,578 1,816 1,431 9,079 960 1,207 3,827
Contract units transferred, net 2,252 (1,993) 690 16,796 (386) 4,535 7,102
Contract units redeemed (54) (1,604) (11) (2,029) (19) (55) (2,062)
---------- ---------- ---------- ------------ --------- ---------- --------------
Unit balance at 6/30/99 14,309 44,596 4,794 103,960 2,757 12,486 65,433
========== ========== ========== ============ ========= ========== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
Putnam Templeton
-------------- ---------------------------------------------------------------------------------
VT Franklin
International Small Cap Mutual
New Investments Developing Shares
Opportunities Bond (3) (3) Stock (4) International Markets Investments
-------------- --------- ------------ ---------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97
Cova units purchased 10 13 18 12
Cova units redeemed (10) - (18) -
Contract units purchased 4,416 6,502 3,871 863
Contract units transferred, net 367 126 3,162 69
Contract units redeemed - (15) - -
-------------- -------------- -------------- -------------
Unit balance at 12/31/98 4,783 6,626 7,033 944
Cova units purchased - 10 10 10 - - -
Cova units redeemed - - - - (13) - -
Contract units purchased 227 - - - 6,322 1,037 -
Contract units transferred, net 3,010 - 23 2,167 7,868 1,487 3,383
Contract units redeemed - - 180 3,258 (40) (47) -
-------------- --------- ------------ ---------- -------------- -------------- -------------
Unit balance at 6/30/99 8,020 10 213 5,435 20,763 9,510 4,327
============== ========= ============ ========== ============== ============== =============
(3) Sub-account commenced operations on March 1, 1999.
(4) Sub-account commenced operations on March 2, 1999.
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
June 30, 1999
Unaudited
<TABLE>
<CAPTION>
(8) UNIT TRANSACTIONS, CONTINUED
The change in the number of units for each sub-account follows:
Templeton Fidelity
-------------------------------------------------------------------------------------
Franklin
Growth VIP III VIP III VIP
Investments VIP VIP II Growth Growth & Equity-
(3) Growth Contrafund Opportunities Income Income
------------- --------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units:
Unit balance at 12/31/97
Cova units purchased 10 10 10 10 10
Cova units redeemed - - - - -
Contract units purchased 89 68 - 325 296
Contract units transferred, net 406 - 104 1,747 466
Contract units redeemed - - - - -
--------- -------------- --------------- ----------- -----------
Unit balance at 12/31/98 505 78 114 2,082 772
Cova units purchased 10 - - - - -
Cova units redeemed - - - - - -
Contract units purchased - 668 254 405 2,665 111
Contract units transferred, net 2,540 846 - - 794 2,365
Contract units redeemed - - - - - -
------------- --------- -------------- --------------- ----------- -----------
Unit balance at 6/30/99 2,550 2,019 332 519 5,541 3,248
============= ========= ============== =============== =========== ===========
(3) Sub-account commenced operations on March 1, 1999.
</TABLE>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Contract Owners of Cova Variable Annuity Account Five, Board of
Directors and Shareholder of Cova Financial Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of the
Quality Income, Money Market, Stock Index, Growth and Income, Bond
Debenture, Developing Growth, Large Cap Research, Mid-Cap Value, Quality
Bond, Small Cap Stock, Large Cap Stock, Select Equity, and International
Equity sub-accounts (investment options within the Cova Series Trust); the
Growth and Income sub-account (investment option within the Lord Abbett
Series Fund, Inc.); the Money Market sub-account (investment option within
the General American Capital Company); the Multi-Style Equity, Aggressive
Equity, Non-US, and Core Bond sub-accounts (investment options within the
Russell Insurance Funds); the AIM V.I. Value, AIM V.I. Capital
Appreciation, and AIM V.I. International Equity sub-accounts (investment
options within the AIM Variable Insurance Funds, Inc.); the Premier Growth
and Real Estate Investment sub-accounts (investment options within the
Alliance Variable Products Series Fund, Inc.); the Newport Tiger
sub-account (investment option within the Liberty Variable Investment
Trust); the Growth and Income, International Equity, and Global Income
sub-accounts (investment options within the Goldman Sachs Variable
Insurance Trust); the Kemper-Dreman High Return Equity, Kemper Small Cap
Growth, Kemper Small Cap Value, and Kemper Government Securities
sub-accounts (investment options within the Investors Fund Series); the MFS
Bond, MFS Research, MFS Growth with Income, MFS Emerging Growth,
MFS/Foreign & Colonial Emerging Markets Equity, MFS High Income, and MFS
World Governments sub-accounts (investment options within the MFS Variable
Insurance Trust); the Oppenheimer Growth, Oppenheimer Growth & Income,
Oppenheimer High Income, Oppenheimer Bond, and Oppenheimer Strategic Bond
sub-accounts (investment options within the Oppenheimer Variable Account
Funds); the Putnam Growth and Income, Putnam New Value, Putnam Vista,
Putnam International Growth, and Putnam International New Opportunities
(investment options within the Putnam Variable Trust); the Templeton
International, Templeton Developing Markets, and Mutual Shares Investments
(investment options within the Templeton Variable Products Series Fund) and
Growth, Contrafund, Growth Opportunities, Growth & Income, and
Equity-Income sub-accounts (investment options within the Variable
Insurance Products Fund, Fund II, and Fund III) of Cova Variable Annuity
Account Five of Cova Financial Life Insurance Company (the Separate
Account) as of December 31, 1998, 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 audits 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, 1998, 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 Five of Cova Financial Life Insurance Company
as of December 31, 1998, 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 1, 1999
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
December 31, 1998
<S> <C>
Assets:
Investments:
Cova Series Trust (Trust):
Quality Income Portfolio - 70,231 shares at a net asset value of $10.99 per share (cost: $ 771,521
$752,312)
Money Market Portfolio - 267,480 shares at a net asset value of $1.00 per share (cost: 267,480
$267,480)
Stock Index Portfolio - 103,701 shares at a net asset value of $22.24 per share (cost: 2,306,502
$1,814,789)
VKAC Growth and Income Portfolio - 118,981 shares at a net asset value of $17.81 per share 2,118,735
(cost: $1,802,450)
Bond Debenture Portfolio - 743,132 shares at a net asset value of $12.38 per share (cost: 9,200,594
$8,927,195)
Developing Growth Portfolio - 69,838 shares at a net asset value of $11.24 per share (cost: 785,026
$727,393)
Large Cap Research Portfolio - 49,317 shares at a net asset value of $11.96 per share 590,045
(cost: $537,947)
Mid-Cap Value Portfolio - 84,292 shares at a net asset value of $10.58 per share (cost: 892,031
$877,515)
Quality Bond Portfolio - 541,754 shares at a net asset value of $11.02 per share (cost: 5,969,934
$5,715,813)
Small Cap Stock Portfolio - 697,228 shares at a net asset value of $11.98 per share (cost: 8,354,398
$8,357,230)
Large Cap Stock Portfolio - 1,214,540 shares at a net asset value of $18.12 per share 22,001,488
(cost: $17,283,927)
Select Equity Portfolio - 1,112,492 shares at a net asset value of $16.08 per share (cost: 17,884,756
$14,721,013)
International Equity Portfolio - 781,347 shares at a net asset value of $12.86 per share 10,045,997
(cost: $9,127,009)
Lord Abbett Series Fund, Inc. (Lord
Abbett):
Growth and Income Portfolio - 1,796,658 shares at a net asset value of $20.65 per share 37,099,191
(cost: $34,316,395)
General American Capital Company
(GACC):
Money Market Portfolio - 74,779 shares at a net asset value of $19.25 per share (cost: 1,439,559
$1,430,813)
Russell Insurance Funds
(Russell):
Multi-Style Equity Fund - 38,483 shares at a net asset value of $16.02 per share (cost: 616,495
$579,110)
Aggressive Equity Fund - 6,813 shares at a net asset value of $12.70 per share (cost: 86,528
$88,281)
Non-US Fund - 18,412 shares at a net asset value of $11.09 per share 204,193
(cost: $202,349)
Core Bond Fund - 61,219 shares at a net asset value of $10.68 per share 653,821
(cost: $650,278)
AIM Variable Insurance Funds, Inc.
(AIM):
AIM V.I. Value Fund - 1,427 shares at a net asset value of $26.25 per share (cost: $36,084) 37,460
AIM V.I. Capital Appreciation Fund - 2,608 shares at a net asset value of $25.20 per share 65,734
(cost: $60,348)
AIM V.I. International Equity Fund - 8,880 shares at a net asset value of $19.62 per share 174,220
(cost: $180,444)
Alliance Variable Products Series Fund, Inc.
(Alliance):
Premier Growth Portfolio - 29,623 shares at a net asset value of $31.03 per share (cost: 919,211
$800,697)
Real Estate Investment Portfolio - 18,061 shares at a net asset value of $9.78 per share 176,632
(cost: $193,823)
Liberty Variable Investment Trust
(Liberty):
Newport Tiger Fund, Variable Series - 14,183 shares at a net asset value of $1.57 per share 22,267
(cost: $19,524)
Goldman Sachs Variable Insurance Trust
(Goldman Sachs):
Growth and Income Fund - 12,433 shares at a net asset value of $10.45 per share (cost: 129,922
$141,135)
International Equity Fund - 15,202 shares at a net asset value of $11.91 per share (cost: 181,060
$178,340)
Global Income Fund - 3,147 shares at a net asset value of $10.32 per 32,473
share (cost: $32,660)
Investors Fund Series
(Kemper):
Kemper Dreman High Return Equity Portfolio - 102 shares at a net asset value of $1.03 per 105
share (cost: $100)
Kemper Small Cap Growth Portfolio - 22,750 shares at a net asset value of $1.97 per share 44,868
(cost: $40,879)
Kemper Small Cap Value Portfolio - 137,341 shares at a net asset value of $1.07 per share 146,329
(cost: $160,309)
Kemper Government Securities Portfolio - 22,204 shares at a net asset value of $1.21 per 26,826
share (cost: $26,620)
MFS Variable Insurance Trust (MFS):
MFS Bond Series - 9 shares at a net asset value of $11.38 per share 105
(cost: $100)
MFS Research Series - 16,619 shares at a net asset value of $19.05 per share (cost: 316,596
$292,024)
MFS Growth with Income Series - 38,905 shares at a net asset value of $20.11 per share 782,388
(cost: $727,399)
MFS Emerging Growth Series - 29,432 shares at a net asset value of $21.47 per share (cost: 631,907
$544,333)
MFS / Foreign & Colonial Emerging
Markets Equity Series - 4,723 shares at a net asset value of $5.90 per share (cost: 27,866
$35,551)
MFS High Income Series - 11,190 shares at a net asset value of $11.53 per share (cost: 129,019
$131,644)
MFS World Governments Series - 377 shares at a net asset value of $10.88 per share (cost: 4,100
$3,911)
Oppenheimer Variable Account Funds
(Oppenheimer):
Oppenheimer Growth Fund - 1,682 shares at a net asset value of $36.67 per share (cost: 61,672
$52,315)
Oppenheimer Growth & Income Fund - 7,514 shares at a net asset value of $20.48 per share 153,890
(cost: $154,661)
Oppenheimer High Income Fund - 9,471 shares at a net asset value of $11.02 per share (cost: 104,368
$106,439)
Oppenheimer Bond Fund - 39,722 shares at a net asset value of $12.32 per share (cost: 489,369
$476,866)
Oppenheimer Strategic Bond Fund - 5,328 shares at a net asset value of $5.12 per share 27,280
(cost: $27,409)
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
December 31, 1998
<S> <C>
Assets, continued:
Investments,
continued:
Putnam Variable Trust
(Putnam):
Putnam Growth and Income Fund - 31,755 shares at a net asset value of $28.77 per share $ 913,589
(cost: $868,940)
Putnam New Value Fund - 1,922 shares at a net asset value of $12.03 per share (cost: 23,120
$22,260)
Putnam Vista Fund - 5,452 shares at a net asset value of $14.72 per 80,256
share (cost: $72,441)
Putnam International Growth Fund - 49,076 shares at a net asset value of $13.52 per share 663,511
(cost: $665,808)
Putnam International New
Opportunities
Fund - 4,754 shares at a net asset value of $11.49 per share 54,628
(cost: $54,329)
Templeton Variable Products Series Fund
(Templeton):
Templeton International Fund - 2,937 shares at a net asset value of $20.69 per share (cost: 60,769
$56,058)
Templeton Developing Markets Fund - 10,379 shares at a net asset value of $5.13 per share 53,242
(cost: $49,672)
Mutual Shares Investments Fund - 937 shares at a net asset value of $9.72 per share (cost: 9,108
$8,845)
Variable Insurance Products Fund, Fund II, and Fund
III (Fidelity):
Growth Portfolio - 148 shares at a net asset value of $44.87 per share 6,637
(cost: $5,519)
Contrafund Portfolio - 40 shares at a net asset value of $24.44 per 976
share (cost: $877)
Growth Opportunities Portfolio - 59 shares at a net asset value of $22.88 per share (cost: 1,345
$1,326)
Growth & Income Portfolio - 1,584 shares at a net asset value of $16.15 per share (cost: 25,582
$21,798)
Equity-Income Portfolio - 325 shares at a net asset value of $25.42 per 8,251
share (cost: $7,616)
----------
Total $ 127,874,975
assets
==========
Liabilities:
Trust Quality Income $ 30
Trust Money Market 10
Trust Stock 89
Index
Trust VKAC Growth and Income 81
Trust Bond Debenture 352
Trust Developing 29
Growth
Trust Large Cap 23
Research
Trust Mid-Cap Value 34
Trust Quality 229
Bond
Trust Small Cap Stock 312
Trust Large Cap Stock 843
Trust Select 683
Equity
Trust International 385
Equity
Lord Abbett Growth and Income 1,423
GACC Money Market 54
Russell Multi-Style 22
Equity
Russell Aggressive 3
Equity
Russell Non-US 7
Russell Core 23
Bond
AIM Value 1
AIM Capital 2
Appreciation
AIM International 7
Equity
Alliance Premier 35
Growth
Alliance Real Estate 7
Investment
Liberty Newport Tiger 25
Goldman Sachs Growth and 5
Income
Goldman Sachs International 7
Equity
Goldman Sachs Global Income 1
Kemper Small Cap 111
Growth
Kemper Small Cap 386
Value
Kemper Government Securities 40
MFS Research 12
MFS Growth with 30
Income
MFS Emerging Growth 24
MFS / F&C Emerging Markets Equity 1
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
December 31, 1998
<S> <C>
Liabilities,
continued:
MFS High Income $ 5
Oppenheimer Growth 2
Oppenheimer Growth & Income 6
Oppenheimer High 4
Income
Oppenheimer 19
Bond
Oppenheimer Strategic Bond 1
Putnam Growth and Income 35
Putnam New 1
Value
Putnam Vista 3
Putnam International Growth 25
Putnam International New Opportunities 2
Templeton 138
International
Templeton Developing Markets 93
Templeton Mutual Shares Investments 3
Fidelity VIP 14
Growth
Fidelity VIP II 1
Contrafund
Fidelity VIP III Growth & 58
Income
Fidelity VIP 12
Equity-Income
----------
Total $ 5,748
liabilities
==========
Net
assets:
Trust Quality Income - 43,985 accumulation units at $17.539867 $ 771,491
per unit
Trust Money Market - 20,763 accumulation units at $12.882157 per 267,470
unit
Trust Stock Index - 73,167 accumulation units at 2,306,413
$31.522519 per unit
Trust VKAC Growth and Income - 86,842 accumulation units at 2,118,654
$24.396679 per unit
Trust Bond Debenture - 681,676 accumulation units at $13.496510 9,200,242
per unit
Trust Developing Growth - 70,926 accumulation units at $11.067868 784,997
per unit
Trust Large Cap Research - 49,894 accumulation units at 590,022
$11.825638 per unit
Trust Mid-Cap Value - 85,457 accumulation units at $10.437956 per 891,997
unit
Trust Quality Bond - 501,045 accumulation units at 5,969,705
$11.914509 per unit
Trust Small Cap Stock - 663,925 accumulation units at $12.582885 8,354,086
per unit
Trust Large Cap Stock - 1,132,390 accumulation units at 22,000,645
$19.428505 per unit
Trust Select Equity - 1,052,797 accumulation units at $16.987203 17,884,073
per unit
Trust International Equity - 779,375 accumulation units at 10,045,612
$12.889314 per unit
Lord Abbett Growth and Income - 1,080,766 accumulation units at $34.325431 37,097,768
per unit
GACC Money Market - 129,569 accumulation units at $11.109949 per 1,439,505
unit
Russell Multi-Style Equity - 48,388 accumulation units at 616,473
$12.740123 per unit
Russell Aggressive Equity - 8,651 accumulation units at 86,525
$10.001283 per unit
Russell Non-US - 18,259 accumulation units at 204,186
$11.182808 per unit
Russell Core Bond - 61,498 accumulation units at 653,798
$10.631124 per unit
AIM Value - 2,865 accumulation units at 37,459
$13.075597 per unit
AIM Capital Appreciation - 5,570 accumulation units at $11.800084 65,732
per unit
AIM International Equity - 15,257 accumulation units at 174,213
$11.418467 per unit
Alliance Premier Growth - 62,869 accumulation units at $14.620511 919,176
per unit
Alliance Real Estate Investment - 22,077 accumulation units at 176,625
$8.000583 per unit
Liberty Newport Tiger - 2,397 accumulation units at 22,242
$9.278784 per unit
Goldman Sachs Growth and Income - 13,107 accumulation units at $9.911702 129,917
per unit
Goldman Sachs International Equity - 15,859 accumulation units at 181,053
$11.416783 per unit
Goldman Sachs Global Income - 3,002 accumulation units at 32,472
$10.815310 per unit
Kemper Dreman High Return Equity - 10 accumulation units at 105
$10.489000 per unit
Kemper Small Cap Growth - 3,829 accumulation units at $11.687795 44,757
per unit
Kemper Small Cap Value - 16,641 accumulation units at $8.770360 145,943
per unit
Kemper Government Securities - 2,519 accumulation units at 26,786
$10.634608 per unit
MFS Bond - 10 accumulation units at $10.509000 105
per unit
MFS Research - 25,994 accumulation units at $12.179142 316,584
per unit
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Assets and Liabilities
December 31, 1998
<S> <C>
Net assets,
continued:
MFS Growth with Income - 64,791 accumulation units at $12.075079 $ 782,358
per unit
MFS Emerging Growth - 47,710 accumulation units at $13.244101 per 631,883
unit
MFS / F&C Emerging Markets Equity - 4,234 accumulation units at $6.581757 27,865
per unit
MFS High Income - 13,080 accumulation units at 129,014
$9.863111 per unit
MFS World Governments - 385 accumulation units at $10.663503 per 4,100
unit
Oppenheimer Growth - 5,037 accumulation units at $12.244057 per 61,670
unit
Oppenheimer Growth & Income - 14,882 accumulation units at 153,884
$10.340279 per unit
Oppenheimer High Income - 10,533 accumulation units at $9.907918 104,364
per unit
Oppenheimer Bond - 46,377 accumulation units at 489,350
$10.551643 per unit
Oppenheimer Strategic Bond - 2,684 accumulation units at 27,279
$10.164797 per unit
Putnam Growth and Income - 80,114 accumulation units at 913,554
$11.403244 per unit
Putnam New Value - 2,202 accumulation units at 23,119
$10.498075 per unit
Putnam Vista - 6,799 accumulation units at $11.804097 80,253
per unit
Putnam International Growth - 56,566 accumulation units at 663,486
$11.729428 per unit
Putnam International New Opportunities - 4,783 accumulation units at 54,626
$11.420772 per unit
Templeton International - 6,626 accumulation units at $9.149729 60,631
per unit
Templeton Developing Markets - 7,033 accumulation units at 53,149
$7.557531 per unit
Templeton Mutual Shares Investments - 944 accumulation units at $9.646506 9,105
per unit
Fidelity VIP Growth - 505 accumulation units at 6,623
$13.115493 per unit
Fidelity VIP II Contrafund - 78 accumulation units at $12.429344 975
per unit
Fidelity VIP III Growth Opportunities - 114 accumulation units at 1,345
$11.814000 per unit
Fidelity VIP III Growth & Income - 2,082 accumulation units at 25,524
$12.259160 per unit
Fidelity VIP Equity-Income - 772 accumulation units at $10.674283 8,239
per unit
----------
Total net $ 127,869,227
assets
==========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
TRUST
-------------------------------------------------------------------------------
VKAC
QUALITY MONEY STOCK GROWTH AND BOND DEVELOPING LARGE CAP
INCOME MARKET INDEX INCOME DEBENTURE GROWTH RESEARCH
-------- -------- --------- ------------ -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ 42,140 15,998 11,040 11,939 189,684 -- 384
-------- -------- --------- ------------ ----------- ------------ --------
Expenses:
Mortality and expense risk fee 9,698 3,687 25,580 24,244 86,643 4,541 2,202
Administrative fee 1,164 443 3,070 2,909 10,397 545 264
-------- -------- --------- ------------ ----------- ------------ --------
Total expenses 10,862 4,130 28,650 27,153 97,040 5,086 2,466
-------- -------- --------- ------------ ----------- ------------ --------
Net investment income (loss) 31,278 11,868 (17,610) (15,214) 92,644 (5,086) (2,082)
-------- -------- --------- ------------ ----------- ------------ --------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares 1,603 -- 18,221 15,618 13,448 (1,554) 25
Realized gain distributions -- -- 372,780 222,030 73,764 221 --
-------- -------- --------- ------------ ----------- ------------ --------
Net realized gain (loss) 1,603 -- 391,001 237,648 87,212 (1,333) 25
-------- -------- --------- ---------- --------- ------------ --------
Change in unrealized appreciation
during the year 4,531 -- 98,370 64,902 110,064 57,229 52,098
-------- -------- --------- ------------ ----------- ------------ --------
Net increase (decrease)
in net assets from operations $ 37,412 11,868 471,761 287,336 289,920 50,810 50,041
======== ======== ========= =========== =========== ============ ========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
TRUST LORD ABBETT GACC
------------------------------------------------------------- ------------- ----------
GROWTH
MID-CAP QUALITY SMALL CAP LARGE CAP SELECT INTERNATIONAL AND MONEY
VALUE BOND STOCK STOCK EQUITY EQUITY INCOME MARKET
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ 591 84,774 10,505 42,974 42,555 153,341 546,511 --
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Expenses:
Mortality and expense risk fee 5,492 49,714 94,997 196,151 173,752 106,326 389,208 6,233
Administrative fee 659 5,965 11,399 23,538 20,850 12,759 46,705 748
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Total expenses 6,151 55,679 106,396 219,689 194,602 119,085 435,913 6,981
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Net investment income (loss) (5,560) 29,095 (95,891) (176,715) (152,047) 34,256 110,598 (6,981)
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares (4,501) 10,751 11,830 210,894 150,352 23,377 90,218 18,462
Realized gain distributions -- -- 268,696 141,495 849,129 1,945 1,757,243 --
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Net realized gain (loss) (4,501) 10,751 280,526 352,389 999,481 25,322 1,847,461 18,462
-------- --------- --------- ---------- ---------- ----------- ----------- ----------
Change in unrealized appreciation
during the year 11,980 212,005 (768,604) 4,086,693 1,878,770 827,333 1,268,706 8,306
-------- --------- --------- ---------- ---------- ----------- ------------- ----------
Net increase (decrease)
in net assets from operations $ 1,919 251,851 (583,969) 4,262,367 2,726,204 886,911 3,226,765 19,787
======== ========= ========= ========== ========== =========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
RUSSELL AIM
-------------------------------------------- -----------------------------------
MULTI-STYLE AGGRESSIVE CORE CAPITAL INTERNATIONAL
EQUITY EQUITY NON-US BOND VALUE APPRECIATION EQUITY
------------ ----------- -------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ 714 22 2 3,287 174 72 1,368
------------ ----------- -------- ------- ------- ------------- -----------
Expenses:
Mortality and expense risk fee 2,550 346 791 1,166 181 224 1,054
Administrative fee 306 41 95 140 22 27 127
------------ ----------- -------- ------- ------- ------------- -----------
Total expenses 2,856 387 886 1,306 203 251 1,181
------------ ----------- -------- ------- ------- ------------- -----------
Net investment income (loss) (2,142) (365) (884) 1,981 (29) (179) 187
------------ ----------- -------- ------- ------- ------------- -----------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares 200 (52) (79) 2 (1,586) (22) (5,943)
Realized gain distributions 2 7 1 -- 1,539 1,278 --
------------ ----------- -------- ------- ------- ------------- -----------
Net realized gain (loss) 202 (45) (78) 2 (47) 1,256 (5,943)
------------ ----------- -------- ------- ------- ------------- ---------
Change in unrealized appreciation
during the year 37,385 (1,753) 1,844 3,543 1,376 5,386 (6,224)
------------ ----------- -------- ------- ------- ------------- -----------
Net increase (decrease)
in net assets from operations $ 35,445 (2,163) 882 5,526 1,300 6,463 (11,980)
============ =========== ======== ======= ======= ============= ===========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
ALLIANCE LIBERTY GOLDMAN SACHS KEMPER
-------------------- -------- ------------------------------- -----------------------
GROWTH
PREMIER REAL ESTATE NEWPORT AND INTERNATIONAL GLOBAL DREMAN HIGH SMALL CAP
GROWTH INVESTMENT TIGER INCOME EQUITY INCOME RETURN EQUITY GROWTH
--------- ---------- -------- --------- ------------ ------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ 149 505 418 1,162 -- 1,211 -- --
--------- ---------- -------- --------- ------------ ------- --------- ------
Expenses:
Mortality and expense risk fee 4,043 933 56 926 938 163 -- 236
Administrative fee 485 112 7 111 113 19 -- 29
--------- ---------- -------- --------- ------------ ------- --------- --------
Total expenses 4,528 1,045 63 1,037 1,051 182 -- 265
--------- ---------- -------- --------- ------------ ------- --------- --------
Net investment income (loss) (4,379) (540) 355 125 (1,051) 1,029 -- (265)
--------- ---------- -------- --------- ------------ ------- --------- --------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares (6,634) (2,987) 4 (4,119) (124) 5 -- (256)
Realized gain distributions -- 220 -- -- 1,326 325 -- 447
--------- ---------- -------- --------- ------------ ------- --------- --------
Net realized gain (loss) (6,634) (2,767) 4 (4,119) 1,202 330 -- 191
--------- ---------- -------- --------- ------------ ------- --------- --------
Change in unrealized appreciation
during the year 118,514 (17,191) 2,743 (11,213) 2,720 (187) 5 3,989
--------- ---------- -------- --------- ------------ ------- --------- ---------
Net increase (decrease)
in net assets from operations $ 107,501 (20,498) 3,102 (15,207) 2,871 1,172 5 3,915
========= ========== ======== ========= ============ ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
KEMPER MFS
----------------------- -------------------------------------------------------
GROWTH F&C EMERGING
SMALL CAP GOVERNMENT WITH EMERGING MARKETS
VALUE SECURITIES BOND RESEARCH INCOME GROWTH EQUITY
-------- ------------ ----- ----------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ -- 7 -- 18 -- -- 449
-------- ------------ ----- ----------- -------- ----------- ---------------
Expenses:
Mortality and expense risk fee 794 44 -- 1,355 4,299 3,162 290
Administrative fee 95 5 -- 163 516 379 35
-------- ------------ ----- ----------- -------- ----------- ---------------
Total expenses 889 49 -- 1,518 4,815 3,541 325
-------- ------------ ----- ----------- -------- ----------- ---------------
Net investment income (loss) (889) (42) -- (1,500) (4,815) (3,541) 124
-------- ------------ ----- ----------- -------- ----------- ---------------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares (6,424) -- -- (91) (4,972) (2,781) (10,435)
Realized gain distributions 2 -- -- 236 -- 75 --
-------- ------------ ----- ----------- -------- ----------- ---------------
Net realized gain (loss) (6,422) -- -- 145 (4,972) (2,706) (10,435)
-------- ------------ ----- ----------- -------- ----------- ---------------
Change in unrealized appreciation
during the year (13,980) 206 5 24,572 54,989 87,574 (7,685)
-------- ------------ ----- ----------- -------- ----------- ---------------
Net increase (decrease)
in net assets from operations $ (21,291) 164 5 23,217 45,202 81,327 (17,996)
======== ============ ===== =========== ======== =========== ===============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
MFS OPPENHEIMER PUTNAM
------------------- -------------------------------------------- -----------------
GROWTH GROWTH
HIGH WORLD AND HIGH STRATEGIC AND NEW
INCOME GOVERNMENTS GROWTH INCOME INCOME BOND BOND INCOME VALUE
------- ----------- -------- -------- ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ 234 26 87 -- 49 2 2 263 248
------- ---------- -------- -------- ------- ------- -------- -------- -------
Expenses:
Mortality and expense risk fee 692 31 333 668 543 2,348 150 4,870 131
Administrative fee 83 3 40 80 65 282 18 584 16
------- ----------- -------- -------- ------- ------- -------- -------- -------
Total expenses 775 34 373 748 608 2,630 168 5,454 147
------- ----------- -------- -------- ------- ------- -------- -------- -------
Net investment income (loss) (541) (8) (286) (748) (559) (2,628) (166) (5,191) 101
------- ---------- -------- -------- ------- ------- -------- -------- -------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares (1,166) 1 (25) (163) (198) 236 (5) (6,532) 12
Realized gain distributions 80 -- 1,053 6 59 2 1 1,717 67
------- ---------- -------- -------- ------- ------- -------- -------- -------
Net realized gain (loss) (1,086) 1 1,028 (157) (139) 238 (4) (4,815) 79
------- ---------- -------- -------- ------- ------- -------- -------- -------
Change in unrealized appreciation
during the year (2,625) 189 9,357 (771) (2,071) 12,503 (129) 44,649 860
------- ---------- -------- -------- ------- ------- -------- -------- -------
Net increase (decrease)
in net assets from operations $ (4,252) 182 10,099 (1,676) (2,769) 10,113 (299) 34,643 1,040
======= ========== ======== ======== ======= ======= ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
PUTNAM TEMPLETON
--------------------------------------------------------------- ---------------
INTERNATIONAL
INTERNATIONAL NEW DEVELOPING
VISTA GROWTH OPPORTUNITIES INTERNATIONAL MARKETS
--------- ---------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Income -
dividends $ -- 2,161 5 -- --
--------- ---------------- ---------------- ---------------- --------------
Expenses:
Mortality and expense risk fee 389 3,701 242 124 83
Administrative fee 47 444 29 15 10
--------- ---------------- ---------------- ---------------- --------------
Total expenses 436 4,145 271 139 93
--------- ---------------- ---------------- ---------------- --------------
Net investment income (loss) (436) (1,984) (266) (139) (93)
--------- ---------------- ---------------- ---------------- --------------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares (12) (8,326) (27) 9 8
Realized gain distributions -- -- -- -- --
--------- ---------------- ---------------- ---------------- --------------
Net realized gain (loss) (12) (8,326) (27) 9 8
--------- ---------------- ---------------- ---------------- --------------
Change in unrealized appreciation
during the year 7,815 (2,297) 299 4,711 3,570
--------- ---------------- ---------------- ---------------- --------------
Net increase (decrease)
in net assets from operations $ 7,367 (12,607) 6 4,581 3,485
========= ================ ================ ================ ==============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Operations
Year ended December 31, 1998
TEMPLETON FIDELITY
---------- -------------------------------------------------------------
MUTUAL
SHARES GROWTH GROWTH & EQUITY-
INVESTMENTS GROWTH CONTRAFUND OPPORTUNITIES INCOME INCOME TOTAL
---------- --------- ----------- ------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income -
dividends $ -- -- -- -- -- -- 1,165,071
---------- --------- ----------- ------------- ------------ ---------- -------------
Expenses:
Mortality and expense risk fee 3 15 1 -- 52 11 1,216,406
Administrative fee -- 2 -- -- 6 1 145,967
---------- --------- ----------- ------------- ------------ ---------- -------------
Total expenses 3 17 1 -- 58 12 1,362,373
---------- --------- ----------- ------------- ------------ ---------- -------------
Net investment income (loss) (3) (17) (1) -- (58) (12) (197,302)
---------- --------- ----------- ------------- ------------ ---------- -------------
Realized gain (loss) on investments:
Realized gain (loss) on sale of
fund shares -- -- -- -- -- -- 496,262
Realized gain distributions -- -- -- -- -- -- 3,695,746
---------- --------- ----------- ------------- ------------ ---------- -------------
Net realized gain (loss) -- -- -- -- -- -- 4,192,008
---------- --------- ----------- ------------- ------------ ---------- -------------
Change in unrealized appreciation
during the year 263 1,118 99 19 3,784 635 8,280,979
---------- --------- ----------- ------------- ------------ ---------- -------------
Net increase (decrease)
in net assets from operations $ 260 1,101 98 19 3,726 623 12,275,685
========== ========= =========== ============= ============ ========== =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
TRUST
-------------------------------------------------------------------------------------
VKAC
QUALITY MONEY STOCK GROWTH AND BOND DEVELOPING LARGE CAP
INCOME MARKET INDEX INCOME DEBENTURE GROWTH RESEARCH
--------- --------- ---------- ------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 31,278 11,868 (17,610) (15,214) 92,644 (5,086) (2,082)
Net realized gain (loss) 1,603 -- 391,001 237,648 87,212 (1,333) 25
Change in unrealized appreciation
during the year 4,531 -- 98,370 64,902 110,064 57,229 52,098
--------- --------- ---------- ------------- ----------- ------------ ----------
Net increase (decrease) in
net assets from operations 37,412 11,868 471,761 287,336 289,920 50,810 50,041
--------- --------- ---------- ------------- ----------- ------------ ----------
Contract transactions:
Cova payments -- -- -- -- -- -- --
Cova transfers -- -- -- -- -- -- --
Payments received from contract
owners -- -- -- 1,000 1,051,661 334,325 237,270
Transfers between sub-accounts
(including fixed account), net 11,714 (111,191) 138,069 202,862 3,726,785 337,360 303,087
Transfers for contract benefits
and terminations (8,629) (3,863) (40,936) (52,497) (343,261) (1,070) (376)
--------- --------- ---------- ------------- ----------- ------------ ----------
Net increase (decrease) in
net assets from contract
transactions 3,085 (115,054) 97,133 151,365 4,435,185 670,615 539,981
--------- --------- ---------- ------------- ----------- ------------ ----------
Net increase (decrease)
in net assets 40,497 (103,186) 568,894 438,701 4,725,105 721,425 590,022
Net assets at beginning of period 730,994 370,656 1,737,519 1,679,953 4,475,137 63,572 --
--------- --------- ---------- ------------- ----------- ------------ ----------
Net assets at end of period $ 771,491 267,470 2,306,413 2,118,654 9,200,242 784,997 590,022
========= ========= ========== ============= =========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
TRUST
----------------------------------------------------------
MID-CAP QUALITY SMALL CAP LARGE CAP
VALUE BOND STOCK STOCK
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ (5,560) 29,095 (95,891) (176,715)
Net realized gain (loss) (4,501) 10,751 280,526 352,389
Change in unrealized appreciation
during the year 11,980 212,005 (768,604) 4,086,693
----------- ------------- ------------ --------------
Net increase (decrease) in
net assets from operations 1,919 251,851 (583,969) 4,262,367
----------- ------------- ------------ --------------
Contract transactions:
Cova payments -- -- -- --
Cova transfers -- -- -- --
Payments received from contract
owners 593,364 828,237 664,035 1,433,747
Transfers between sub-accounts
(including fixed account), net 210,332 2,485,711 2,154,230 6,772,257
Transfers for contract benefits
and terminations (2,706) (213,576) (458,393) (691,973)
----------- ------------- ------------ --------------
Net increase (decrease) in
net assets from contract
transactions 800,990 3,100,372 2,359,872 7,514,031
----------- ------------- ------------ --------------
Net increase (decrease)
in net assets 802,909 3,352,223 1,775,903 11,776,398
Net assets at beginning of period 89,088 2,617,482 6,578,183 10,224,247
----------- ------------- ------------ --------------
Net assets at end of period $ 891,997 5,969,705 8,354,086 22,000,645
=========== ============= ============ ==============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
TRUST LORD ABBETT GACC
--------------------------------- --------------- -------------
GROWTH
SELECT INTERNATIONAL AND MONEY
EQUITY EQUITY INCOME MARKET
-------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ (152,047) 34,256 110,598 (6,981)
Net realized gain (loss) 999,481 25,322 1,847,461 18,462
Change in unrealized appreciation
during the year 1,878,770 827,333 1,268,706 8,306
-------------- ---------------- --------------- -------------
Net increase (decrease) in
net assets from operations 2,726,204 886,911 3,226,765 19,787
-------------- ---------------- --------------- -------------
Contract transactions:
Cova payments -- -- -- --
Cova transfers -- -- -- --
Payments received from contract
owners 1,284,829 470,560 2,282,528 1,894,032
Transfers between sub-accounts
(including fixed account), net 4,674,806 2,712,309 8,659,268 (358,103)
Transfers for contract benefits
and terminations (646,951) (375,560) (1,472,455) (266,514)
-------------- ---------------- --------------- -------------
Net increase (decrease) in
net assets from contract
transactions 5,312,684 2,807,309 9,469,341 1,269,415
-------------- ---------------- --------------- -------------
Net increase (decrease)
in net assets 8,038,888 3,694,220 12,696,106 1,289,202
Net assets at beginning of period 9,845,185 6,351,392 24,401,662 150,303
-------------- ---------------- --------------- -------------
Net assets at end of period $ 17,884,073 10,045,612 37,097,768 1,439,505
============== ================ =============== =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
RUSSELL AIM
------------------------------------------------ -------------------------
MULTI-STYLE AGGRESSIVE CORE CAPITAL
EQUITY EQUITY NON-US BOND VALUE APPRECIATION
------------ ------------- --------- --------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (2,142) (365) (884) 1,981 (29) (179)
Net realized gain (loss) 202 (45) (78) 2 (47) 1,256
Change in unrealized appreciation
during the year 37,385 (1,753) 1,844 3,543 1,376 5,386
------------ ------------- --------- --------- -------- ---------------
Net increase (decrease) in
net assets from operations 35,445 (2,163) 882 5,526 1,300 6,463
------------ ------------- --------- --------- -------- ---------------
Contract transactions:
Cova payments 100 100 100 100 100 100
Cova transfers (127) (95) (93) (103) -- --
Payments received from contract
owners 550,062 80,621 187,582 578,539 33,651 57,937
Transfers between sub-accounts
(including fixed account), net 31,554 8,298 15,688 70,898 2,043 1,227
Transfers for contract benefits
and terminations (561) (236) 27 (1,162) 365 5
------------ ------------- --------- --------- -------- ---------------
Net increase (decrease) in
net assets from contract
transactions 581,028 88,688 203,304 648,272 36,159 59,269
------------ ------------- --------- --------- -------- ---------------
Net increase (decrease)
in net assets 616,473 86,525 204,186 653,798 37,459 65,732
Net assets at beginning of period -- -- -- -- -- --
------------ ----------- --------- --------- -------- ---------------
Net assets at end of period $ 616,473 86,525 204,186 653,798 37,459 65,732
============ ============= ========= ========= ======== ===============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
AIM ALLIANCE LIBERTY
----------------- ----------------------------- -----------
INTERNATIONAL PREMIER REAL ESTATE NEWPORT
EQUITY GROWTH INVESTMENT TIGER
----------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 187 (4,379) (540) 355
Net realized gain (loss) (5,943) (6,634) (2,767) 4
Change in unrealized appreciation
during the year (6,224) 118,514 (17,191) 2,743
----------------- ----------- --------------- -----------
Net increase (decrease) in
net assets from operations (11,980) 107,501 (20,498) 3,102
----------------- ----------- --------------- -----------
Contract transactions:
Cova payments 100 100 100 100
Cova transfers (100) (138) (81) --
Payments received from contract
owners 184,408 794,977 178,563 19,040
Transfers between sub-accounts
(including fixed account), net 3,073 20,139 19,454 --
Transfers for contract benefits
and terminations (1,288) (3,403) (913) --
----------------- ----------- --------------- -----------
Net increase (decrease) in
net assets from contract
transactions 186,193 811,675 197,123 19,140
----------------- ----------- --------------- -----------
Net increase (decrease)
in net assets 174,213 919,176 176,625 22,242
Net assets at beginning of period -- -- -- --
----------------- ----------- --------------- -----------
Net assets at end of period $ 174,213 919,176 176,625 22,242
================= =========== =============== ===========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
GOLDMAN SACHS KEMPER
------------------------------------------ ----------------------------
GROWTH
AND INTERNATIONAL GLOBAL DREMAN HIGH SMALL CAP
INCOME EQUITY INCOME RETURN EQUITY GROWTH
------------ -------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 125 (1,051) 1,029 -- (265)
Net realized gain (loss) (4,119) 1,202 330 -- 191
Change in unrealized appreciation
during the year (11,213) 2,720 (187) 5 3,989
------------ -------------- ---------- ------------- ------------
Net increase (decrease) in
net assets from operations (15,207) 2,871 1,172 5 3,915
------------ -------------- ---------- ------------- ------------
Contract transactions:
Cova payments 100 100 100 100 100
Cova transfers (97) (86) -- -- (108)
Payments received from contract
owners 128,899 154,193 31,200 -- 35,374
Transfers between sub-accounts
(including fixed account), net 16,047 23,975 -- -- 5,487
Transfers for contract benefits
and terminations 175 -- -- -- (11)
------------ -------------- ---------- ------------- ------------
Net increase (decrease) in
net assets from contract
transactions 145,124 178,182 31,300 100 40,842
------------ -------------- ---------- ------------- ------------
Net increase (decrease)
in net assets 129,917 181,053 32,472 105 44,757
Net assets at beginning of period -- -- -- -- --
------------ -------------- ---------- ------------- ------------
Net assets at end of period $ 129,917 181,053 32,472 105 44,757
============ ============== ========== ============= ============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
KEMPER MFS
------------------------- ----------------------------------------
GROWTH
SMALL CAP GOVERNMENT WITH EMERGING
VALUE SECURITIES BOND RESEARCH INCOME GROWTH
--------- ------------- ------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (889) (42) -- (1,500) (4,815) (3,541)
Net realized gain (loss) (6,422) -- -- 145 (4,972) (2,706)
Change in unrealized appreciation
during the year (13,980) 206 5 24,572 54,989 87,574
--------- ------------- ------ --------- --------- ----------
Net increase (decrease) in
net assets from operations (21,291) 164 5 23,217 45,202 81,327
--------- ------------- ------ --------- --------- ----------
Contract transactions:
Cova payments 100 100 100 100 100 100
Cova transfers (78) -- -- (123) (120) (126)
Payments received from contract
owners 184,026 23,032 -- 252,002 692,249 527,982
Transfers between sub-accounts
(including fixed account), net (15,831) 3,490 -- 42,134 48,220 24,659
Transfers for contract benefits
and terminations (983) -- -- (746) (3,293) (2,059)
--------- ------------- ------ --------- --------- ----------
Net increase (decrease) in
net assets from contract
transactions 167,234 26,622 100 293,367 737,156 550,556
--------- ------------- ------ --------- --------- ----------
Net increase (decrease)
in net assets 145,943 26,786 105 316,584 782,358 631,883
Net assets at beginning of period -- -- -- -- -- --
--------- ------------- ------ --------- --------- ----------
Net assets at end of period $ 145,943 26,786 105 316,584 782,358 631,883
========= ============= ====== ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
MFS OPPENHEIMER
------------------------------------------- ---------------------
F&C EMERGING GROWTH
MARKETS HIGH WORLD AND
EQUITY INCOME GOVERNMENTS GROWTH INCOME
---------------- ---------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 124 (541) (8) (286) (748)
Net realized gain (loss) (10,435) (1,086) 1 1,028 (157)
Change in unrealized appreciation
during the year (7,685) (2,625) 189 9,357 (771)
---------------- ---------- --------------- --------- ---------
Net increase (decrease) in
net assets from operations (17,996) (4,252) 182 10,099 (1,676)
---------------- ---------- --------------- --------- ---------
Contract transactions:
Cova payments 100 100 100 100 100
Cova transfers (65) (93) -- -- (89)
Payments received from contract
owners 71,508 125,820 3,193 42,486 144,121
Transfers between sub-accounts
(including fixed account), net (25,211) 8,401 625 9,440 11,637
Transfers for contract benefits
and terminations (471) (962) -- (455) (209)
---------------- ---------- --------------- --------- ---------
Net increase (decrease) in
net assets from contract
transactions 45,861 133,266 3,918 51,571 155,560
---------------- ---------- --------------- --------- ---------
Net increase (decrease)
in net assets 27,865 129,014 4,100 61,670 153,884
Net assets at beginning of period -- -- -- -- --
---------------- ---------- --------------- --------- ---------
Net assets at end of period $ 27,865 129,014 4,100 61,670 153,884
================ ========== =============== ========= =========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
OPPENHEIMER PUTNAM
----------------------------------------- ----------------------
GROWTH
HIGH STRATEGIC AND NEW
INCOME BOND BOND INCOME VALUE
----------- ------------ -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ (559) (2,628) (166) (5,191) 101
Net realized gain (loss) (139) 238 (4) (4,815) 79
Change in unrealized appreciation
during the year (2,071) 12,503 (129) 44,649 860
----------- ------------ -------------- ----------- ---------
Net increase (decrease) in
net assets from operations (2,769) 10,113 (299) 34,643 1,040
----------- ------------ -------------- ----------- ---------
Contract transactions:
Cova payments 100 100 100 100 100
Cova transfers (93) (105) -- (113) --
Payments received from contract
owners 93,367 407,896 22,655 787,874 4,669
Transfers between sub-accounts
(including fixed account), net 14,033 73,891 4,823 94,763 17,311
Transfers for contract benefits
and terminations (274) (2,545) -- (3,713) (1)
----------- ------------ -------------- ----------- ---------
Net increase (decrease) in
net assets from contract
transactions 107,133 479,237 27,578 878,911 22,079
----------- ------------ -------------- ----------- ---------
Net increase (decrease)
in net assets 104,364 489,350 27,279 913,554 23,119
Net assets at beginning of period -- -- -- -- --
----------- ------------ ---------- ----------- ---------
Net assets at end of period $ 104,364 489,350 27,279 913,554 23,119
=========== ============ ============== =========== =========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
PUTNAM TEMPLETON
---------------------------------------- ----------------------------------------
INTERNATIONAL MUTUAL
INTERNATIONAL NEW DEVELOPING SHARES
VISTA GROWTH OPPORTUNITIES INTERNATIONAL MARKETS INVESTMENTS
--------- ------------ -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (436) (1,984) (266) (139) (93) (3)
Net realized gain (loss) (12) (8,326) (27) 9 8 --
Change in unrealized appreciation
during the year 7,815 (2,297) 299 4,711 3,570 263
--------- ------------ -------------- ------------- ------------ ----------
Net increase (decrease) in
net assets from operations 7,367 (12,607) 6 4,581 3,485 260
--------- ------------ -------------- ------------- ------------ ----------
Contract transactions:
Cova payments 100 100 100 100 100 100
Cova transfers (109) (127) (109) -- (133) --
Payments received from contract
owners 46,531 674,756 50,740 54,930 25,540 8,079
Transfers between sub-accounts
(including fixed account), net 26,352 5,031 3,797 1,153 24,157 666
Transfers for contract benefits
and terminations 12 (3,667) 92 (133) -- --
--------- ------------ -------------- ------------- ------------ ----------
Net increase (decrease) in
net assets from contract
transactions 72,886 676,093 54,620 56,050 49,664 8,845
--------- ------------ -------------- ------------- ------------ ----------
Net increase (decrease)
in net assets 80,253 663,486 54,626 60,631 53,149 9,105
Net assets at beginning of period -- -- -- -- -- --
--------- ------------ -------------- ------------- ------------ ----------
Net assets at end of period $ 80,253 663,486 54,626 60,631 53,149 9,105
========= ============ ============== ============= ============ ==========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1998
Fidelity
----------------------------------------------------------
Growth Growth & Equity-
Growth Contrafund Opportunities Income Income Total
------- ------------- --------------- --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) $ (17) (1) - (58) (12) (197,302)
Net realized gain (loss) - - - - - 4,192,008
Change in unrealized appreciation
during the year 1,118 99 19 3,784 635 8,280,979
------- ----------- -------------- --------- -------- -------------
Net increase (decrease) in
net assets from operations 1,101 98 19 3,726 623 12,275,685
------- ----------- -------------- --------- -------- -------------
Contract transactions:
Cova payments 100 100 100 100 100 4,200
Cova transfers - - - - - (2,511)
Payments received from contract
owners 990 777 - 3,746 2,968 18,342,571
Transfers between sub-accounts
(including fixed account), net 4,427 - 1,226 17,428 4,427 32,538,428
Transfers for contract benefits
and terminations 5 - - 524 121 (4,604,519)
------- ----------- -------------- --------- -------- -------------
Net increase (decrease) in
net assets from contract
transactions 5,522 877 1,326 21,798 7,616 46,278,169
------- ----------- -------------- --------- -------- -------------
Net increase (decrease)
in net assets 6,623 975 1,345 25,524 8,239 58,553,854
Net assets at beginning of period - - - - - 69,315,373
------- ----------- -------------- --------- -------- -------------
Net assets at end of period $ 6,623 975 1,345 25,524 8,239 127,869,227
======= =========== ============== ========= ======== =============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1997
TRUST
---------------------------------------------------------------------------
VKAC
QUALITY MONEY STOCK GROWTH AND BOND DEVELOPING
INCOME MARKET INDEX INCOME DEBENTURE GROWTH
--------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) $ 21,228 33,229 1,305 917 120,111 (65)
Net realized gain (loss) (265) -- 24,202 17,990 6,426 (15)
Change in unrealized appreciation
during the year 14,231 -- 311,158 213,640 154,943 404
--------- ----------- ----------- ----------- ----------- ------------
Net increase in net
assets from operations 35,194 33,229 336,665 232,547 281,480 324
--------- ----------- ----------- ----------- ----------- ------------
Contract transactions:
Payments received from contract
owners 5,588 5,425,271 21,617 145,535 986,444 15,000
Transfers between sub-accounts
(including fixed account), net 437,402 (5,336,710) 444,691 627,885 2,836,964 48,082
Transfers for contract benefits
and terminations (46,134) (73,008) (25,416) (12,290) (76,410) 166
--------- ----------- ----------- ----------- ----------- ------------
Net increase in net assets
from contract transactions 396,856 15,553 440,892 761,130 3,746,998 63,248
--------- ----------- ----------- ----------- ----------- ------------
Net increase in net assets 432,050 48,782 777,557 993,677 4,028,478 63,572
Net assets at beginning of period 298,944 321,874 959,962 686,276 446,659 --
--------- ----------- ----------- ----------- ----------- ------------
Net assets at end of period $ 730,994 370,656 1,737,519 1,679,953 4,475,137 63,572
========= =========== =========== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1997
-----------------------------------------------------------------------------
MID-CAP QUALITY SMALL CAP LARGE CAP SELECT
VALUE BOND STOCK STOCK EQUITY
----------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) $ (17) 76,826 (29,973) (14,663) (32,802)
Net realized gain (loss) 50 12,743 19,329 566,223 50,103
Change in unrealized appreciation
during the year 2,536 39,803 731,752 574,012 1,183,581
----------- ------------- ------------- -------------- -------------
Net increase in net
assets from operations 2,569 129,372 721,108 1,125,572 1,200,882
----------- ------------- ------------- -------------- -------------
Contract transactions:
Payments received from contract
owners 32,249 283,752 965,134 1,764,924 1,672,740
Transfers between sub-accounts
(including fixed account), net 54,202 1,563,687 3,732,024 6,016,134 5,100,198
Transfers for contract benefits
and terminations 68 (28,465) (119,268) (113,206) (139,188)
----------- ------------- ------------- -------------- -------------
Net increase in net assets
from contract transactions 86,519 1,818,974 4,577,890 7,667,852 6,633,750
----------- ------------- ------------- -------------- -------------
Net increase in net assets 89,088 1,948,346 5,298,998 8,793,424 7,834,632
Net assets at beginning of period -- 669,136 1,279,185 1,430,823 2,010,553
----------- ------------- ------------- -------------- -------------
Net assets at end of period $ 89,088 2,617,482 6,578,183 10,224,247 9,845,185
=========== ============= ============= ============== =============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Statement of Changes in Net Assets
Year ended December 31, 1997
TRUST LORD ABBETT GACC
---------------- ---------------- -----------
GROWTH
INTERNATIONAL AND MONEY
EQUITY INCOME MARKET TOTAL
---------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) $ (1,201) 165,930 (119) 340,706
Net realized gain (loss) 6,340 1,595,470 74 2,298,670
Change in unrealized appreciation
during the year 24,972 1,139,321 440 4,390,793
---------------- ---------------- ----------- ---------------
Net increase in net
assets from operations 30,111 2,900,721 395 7,030,169
---------------- ---------------- ----------- ---------------
Contract transactions:
Payments received from contract
owners 1,161,490 1,887,670 178,947 14,546,361
Transfers between sub-accounts
(including fixed account), net 3,891,923 10,712,632 (29,039) 30,100,075
Transfers for contract benefits
and terminations (92,391) (515,567) -- (1,241,109)
---------------- ---------------- ----------- ---------------
Net increase in net assets
from contract transactions 4,961,022 12,084,735 149,908 43,405,327
---------------- ---------------- ----------- ---------------
Net increase in net assets 4,991,133 14,985,456 150,303 50,435,496
Net assets at beginning of period 1,360,259 9,416,206 -- 18,879,877
---------------- ---------------- ----------- ---------------
Net assets at end of period $ 6,351,392 24,401,662 150,303 69,315,373
================ ================ =========== ===============
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(1) ORGANIZATION
Cova Variable Annuity Account Five (the Separate Account), a unit
investment trust registered under the Investment Company Act of 1940 as
amended, was established by Cova Financial Life Insurance Company (Cova)
and exists in accordance with the regulations of the California
Department of Insurance. The Separate Account is a funding vehicle for
variable annuity contracts issued by Cova.
<TABLE>
<CAPTION>
The Separate Account is divided into sub-accounts with the assets of
each sub-account invested in the corresponding portfolios of the
following investment companies:
<S> <C>
Cova Series Trust (Trust) 13 portfolios
Lord Abbett Series Fund, Inc. (Lord Abbett) 1 portfolio
General American Capital Company (GACC) 1 portfolio
Russell Insurance Funds (Russell) 4 portfolios
AIM Variable Insurance Funds, Inc. (AIM) 3 portfolios
Alliance Variable Products Series Funds, Inc. (Alliance) 2 portfolios
Liberty Variable Investment Trust (Liberty) 1 portfolio
Goldman Sachs Variable Insurance Trust (Goldman Sachs) 3 portfolios
Investors Fund 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) 3 portfolios
Variable Insurance Products Fund, Fund II, and Fund III (Fidelity) 5 portfolios
</TABLE>
Each investment company is a diversified, open-end, management
investment company registered under the Investment Company Act of 1940
as amended. Not all sub-accounts are available for investment depending
upon the terms of the variable annuity contracts offered for sale by
Cova.
(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 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 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 capital gain in the
Separate Account.
(C) FEDERAL INCOME TAXES
The operations of the Separate Account are included in the Federal
income tax return of Cova, which is taxed as a Life Insurance
Company under the provisions of the Internal Revenue Code (IRC).
Under current IRC provisions, Cova 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 is being made currently 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 contracts.
(3) SEPARATE ACCOUNT EXPENSES
Cova deducts a daily charge from the net assets of the Separate 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 Cova 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. In 1998, surrender fees of $60,272 were
deducted from the contract values in 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 policy
anniversary. This fee covers the cost of contract administration for the
previous year and is prorated between the 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 of the Separate Account and the fixed rate account offered
by Cova. If more than 12 transfers have been made in the contract year,
a transfer fee of $25 per transfer or, if less, 2% of amount
transferred, will be deducted from the contract account value. Transfers
made in the Dollar Cost Averaging program are not subject to the
transfer fee.
In 1998, contract maintenance and transfer fees of $27,322 were deducted
from the contract values in the Separate Account.
Cova currently advances any premium taxes due at the time purchase
payments are made and then deducts premium taxes from the contract value
at the time annuity payments begin. Cova reserves the right to deduct
premium taxes when incurred.
(5) SUBSEQUENT EVENT
On January 8, 1999, the four sub-accounts investing in the Trust
portfolios managed by Van Kampen American Capital Advisory Corp. (VKAC)
- Quality Income, Money Market, Stock Index, and VKAC Growth and Income
portfolios ceased operations and their assets were transferred to one
new and three existing sub-accounts in accordance with the substitution
order issued by the Securities and Exchange Commission.
On January 8, 1999, the Lord Abbett Growth and Income sub-account ceased
operations and its assets were transferred to the Trust Lord Abbett
Growth and Income sub-account which commenced operations on January 8,
1999. The Trust Lord Abbett Growth and Income sub-account invests in the
Trust Lord Abbett Growth and Income Portfolio which commenced operations
on January 8, 1999. The Trust Lord Abbett Growth and Income Portfolio is
managed by Lord Abbett who also manages the Lord Abbett Growth and
Income Portfolio.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(6) UNIT FAIR VALUES
A summary of accumulation unit values, net assets, total return, and
expense ratios for each sub-account follows:
COMMENCED ACCUMULATION UNIT VALUE
---------------------------------------------------
OPERATIONS 1998 1997 1996 1995
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Trust Quality Income* 08/16/95 $ 17.539867 16.716340 15.540286 15.331980
Trust Money Market* 06/19/95 12.882157 12.375227 11.879722 11.425132
Trust Stock Index* 07/20/95 31.522519 24.963612 19.036955 15.773909
Trust VKAC Growth and Income* 07/19/95 24.396679 20.978338 17.008156 14.608910
Trust Bond Debenture 05/20/96 13.496510 12.881799 11.294929 --
Trust Developing Growth 11/07/97 11.067868 10.527555 -- --
Trust Large Cap Research 02/17/98 11.825638 -- -- --
Trust Mid-Cap Value 11/07/97 10.437956 10.467957 -- --
Trust Quality Bond 05/20/96 11.914509 11.155144 10.368767 --
Trust Small Cap Stock 05/15/96 12.582885 13.491493 11.308427 --
Trust Large Cap Stock 05/16/96 19.428505 14.889464 11.334982 --
Trust Select Equity 05/15/96 16.987203 14.053503 10.838053 --
Trust International Equity 05/14/96 12.889314 11.462436 10.967004 --
Lord Abbett Growth and Income* 07/20/95 34.325431 30.837057 25.089540 21.306278
GACC Money Market 12/04/97 11.109949 10.667017 -- --
Russell Multi-Style Equity 12/31/97 12.740123 10.000000 -- --
Russell Aggressive Equity 12/31/97 10.001283 10.000000 -- --
Russell Non-US 12/31/97 11.182808 10.000000 -- --
Russell Core Bond 12/31/97 10.631124 10.000000 -- --
AIM Value 12/31/97 13.075597 10.000000 -- --
AIM Capital Appreciation 12/31/97 11.800084 10.000000 -- --
AIM International Equity 12/31/97 11.418467 10.000000 -- --
Alliance Premier Growth 12/31/97 14.620511 10.000000 -- --
Alliance Real Estate Investment 12/31/97 8.000583 10.000000 -- --
Liberty Newport Tiger 12/31/97 9.278784 10.000000 -- --
Goldman Sachs Growth and Income 03/31/98 9.911702 -- -- --
Goldman Sachs International Equity 03/31/98 11.416783 -- -- --
Goldman Sachs Global Income 03/31/98 10.815310 -- -- --
Kemper Dreman High Return Equity 05/15/98 10.489000 -- -- --
Kemper Small Cap Growth 12/31/97 11.687795 10.000000 -- --
Kemper Small Cap Value 12/31/97 8.770360 10.000000 -- --
Kemper Government Securities 12/31/97 10.634608 10.000000 -- --
MFS Bond 05/15/98 10.509000 -- -- --
MFS Research 12/31/97 12.179142 10.000000 -- --
MFS Growth with Income 12/31/97 12.075079 10.000000 -- --
MFS Emerging Growth 12/31/97 13.244101 10.000000 -- --
MFS / F&C Emerging Markets Equity 12/31/97 6.581757 10.000000 -- --
MFS High Income 12/31/97 9.863111 10.000000 -- --
MFS World Governments 12/31/97 10.663503 10.000000 -- --
Oppenheimer Growth 12/31/97 12.244057 10.000000 -- --
Oppenheimer Growth & Income 12/31/97 10.340279 10.000000 -- --
Oppenheimer High Income 12/31/97 9.907918 10.000000 -- --
Oppenheimer Bond 12/31/97 10.551643 10.000000 -- --
Oppenheimer Strategic Bond 12/31/97 10.164797 10.000000 -- --
Putnam Growth and Income 12/31/97 11.403244 10.000000 -- --
Putnam New Value 12/31/97 10.498075 10.000000 -- --
Putnam Vista 12/31/97 11.804097 10.000000 -- --
Putnam International Growth 12/31/97 11.729428 10.000000 -- --
Putnam International New Opportunities 12/31/97 11.420772 10.000000 -- --
Templeton International 09/21/98 9.149729 -- -- --
Templeton Developing Markets 09/21/98 7.557531 -- -- --
Templeton Mutual Shares Investments 09/21/98 9.646506 -- -- --
Fidelity VIP Growth 02/17/98 13.115493 -- -- --
Fidelity VIP II Contrafund 02/17/98 12.429344 -- -- --
Fidelity VIP III Growth Opportunities 02/17/98 11.814000 -- -- --
Fidelity VIP III Growth & Income 02/17/98 12.259160 -- -- --
Fidelity VIP Equity-Income 02/17/98 10.674283 -- -- --
=========== =========== ============ ============
</TABLE>
* Sub-account ceased operations on January 8, 1999.
** Performance returns for sub-accounts that commenced operations during the
year are not annualized. Expense ratios for sub-accounts that commenced
operations during the year are annualized.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(6) UNIT FAIR VALUES
A summary of accumulation unit values, net assets, total return, and
expense ratios for each sub-account follows:
COMMENCED NET ASSETS (IN 000'S)
------------------------------------------
OPERATIONS 1998 1997 1996 1995
------------ -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Trust Quality Income* 08/16/95 $ 771 731 299 133
Trust Money Market* 06/19/95 267 371 322 326
Trust Stock Index* 07/20/95 2,306 1,738 960 211
Trust VKAC Growth and Income* 07/19/95 2,119 1,680 686 105
Trust Bond Debenture 05/20/96 9,200 4,475 447 --
Trust Developing Growth 11/07/97 785 64 -- --
Trust Large Cap Research 02/17/98 590 -- -- --
Trust Mid-Cap Value 11/07/97 892 89 -- --
Trust Quality Bond 05/20/96 5,970 2,617 669 --
Trust Small Cap Stock 05/15/96 8,354 6,578 1,279 --
Trust Large Cap Stock 05/16/96 22,001 10,224 1,431 --
Trust Select Equity 05/15/96 17,884 9,845 2,011 --
Trust International Equity 05/14/96 10,046 6,351 1,360 --
Lord Abbett Growth and Income* 07/20/95 37,098 24,402 9,416 2,675
GACC Money Market 12/04/97 1,440 150 -- --
Russell Multi-Style Equity 12/31/97 616 -- -- --
Russell Aggressive Equity 12/31/97 87 -- -- --
Russell Non-US 12/31/97 204 -- -- --
Russell Core Bond 12/31/97 654 -- -- --
AIM Value 12/31/97 37 -- -- --
AIM Capital Appreciation 12/31/97 66 -- -- --
AIM International Equity 12/31/97 174 -- -- --
Alliance Premier Growth 12/31/97 919 -- -- --
Alliance Real Estate Investment 12/31/97 177 -- -- --
Liberty Newport Tiger 12/31/97 22 -- -- --
Goldman Sachs Growth and Income 03/31/98 130 -- -- --
Goldman Sachs International Equity 03/31/98 181 -- -- --
Goldman Sachs Global Income 03/31/98 32 -- -- --
Kemper Dreman High Return Equity 05/15/98 -- -- -- --
Kemper Small Cap Growth 12/31/97 45 -- -- --
Kemper Small Cap Value 12/31/97 146 -- -- --
Kemper Government Securities 12/31/97 27 -- -- --
MFS Bond 05/15/98 -- -- -- --
MFS Research 12/31/97 317 -- -- --
MFS Growth with Income 12/31/97 782 -- -- --
MFS Emerging Growth 12/31/97 632 -- -- --
MFS / F&C Emerging Markets Equity 12/31/97 28 -- -- --
MFS High Income 12/31/97 129 -- -- --
MFS World Governments 12/31/97 4 -- -- --
Oppenheimer Growth 12/31/97 62 -- -- --
Oppenheimer Growth & Income 12/31/97 154 -- -- --
Oppenheimer High Income 12/31/97 104 -- -- --
Oppenheimer Bond 12/31/97 489 -- -- --
Oppenheimer Strategic Bond 12/31/97 27 -- -- --
Putnam Growth and Income 12/31/97 914 -- -- --
Putnam New Value 12/31/97 23 -- -- --
Putnam Vista 12/31/97 80 -- -- --
Putnam International Growth 12/31/97 663 -- -- --
Putnam International New Opportunities 12/31/97 55 -- -- --
Templeton International 09/21/98 61 -- -- --
Templeton Developing Markets 09/21/98 53 -- -- --
Templeton Mutual Shares Investments 09/21/98 9 -- -- --
Fidelity VIP Growth 02/17/98 7 -- -- --
Fidelity VIP II Contrafund 02/17/98 1 -- -- --
Fidelity VIP III Growth Opportunities 02/17/98 1 -- -- --
Fidelity VIP III Growth & Income 02/17/98 26 -- -- --
Fidelity VIP Equity-Income 02/17/98 8 -- -- --
======== ======== ======= =======
</TABLE>
* Sub-account ceased operations on January 8, 1999.
** Performance returns for sub-accounts that commenced operations during the
year are not annualized. Expense ratios for sub-accounts that commenced
operations during the year are annualized.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(6) UNIT FAIR VALUES
A summary of accumulation unit values, net assets, total return, and
expense ratios for each sub-account follows:
COMMENCED TOTAL RETURN**
---------------------------------------------
OPERATIONS 1998 1997 1996 1995
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Trust Quality Income* 08/16/95 4.93 % 7.57 1.36 6.30
Trust Money Market* 06/19/95 4.10 4.17 3.98 2.61
Trust Stock Index* 07/20/95 26.27 31.13 20.69 11.65
Trust VKAC Growth and Income* 07/19/95 16.30 23.34 16.42 11.93
Trust Bond Debenture 05/20/96 4.77 14.05 11.32 --
Trust Developing Growth 11/07/97 5.13 (2.80) -- --
Trust Large Cap Research 02/17/98 9.94 -- -- --
Trust Mid-Cap Value 11/07/97 (.29) 4.17 -- --
Trust Quality Bond 05/20/96 6.81 7.58 4.20 --
Trust Small Cap Stock 05/15/96 (6.74) 19.31 3.69 --
Trust Large Cap Stock 05/16/96 30.49 31.36 11.62 --
Trust Select Equity 05/15/96 20.88 29.67 6.76 --
Trust International Equity 05/14/96 12.45 4.52 8.60 --
Lord Abbett Growth and Income* 07/20/95 11.31 22.91 17.76 9.05
GACC Money Market 12/04/97 4.15 .34 -- --
Russell Multi-Style Equity 12/31/97 27.40 -- -- --
Russell Aggressive Equity 12/31/97 .01 -- -- --
Russell Non-US 12/31/97 11.83 -- -- --
Russell Core Bond 12/31/97 6.31 -- -- --
AIM Value 12/31/97 30.76 -- -- --
AIM Capital Appreciation 12/31/97 18.00 -- -- --
AIM International Equity 12/31/97 14.19 -- -- --
Alliance Premier Growth 12/31/97 46.21 -- -- --
Alliance Real Estate Investment 12/31/97 (19.99) -- -- --
Liberty Newport Tiger 12/31/97 (7.21) -- -- --
Goldman Sachs Growth and Income 03/31/98 (11.60) -- -- --
Goldman Sachs International Equity 03/31/98 1.94 -- -- --
Goldman Sachs Global Income 03/31/98 6.53 -- -- --
Kemper Dreman High Return Equity 05/15/98 4.89 -- -- --
Kemper Small Cap Growth 12/31/97 16.88 -- -- --
Kemper Small Cap Value 12/31/97 (12.30) -- -- --
Kemper Government Securities 12/31/97 6.35 -- -- --
MFS Bond 05/15/98 5.09 -- -- --
MFS Research 12/31/97 21.79 -- -- --
MFS Growth with Income 12/31/97 20.75 -- -- --
MFS Emerging Growth 12/31/97 32.44 -- -- --
MFS / F&C Emerging Markets Equity 12/31/97 (34.18) -- -- --
MFS High Income 12/31/97 (1.37) -- -- --
MFS World Governments 12/31/97 6.63 -- -- --
Oppenheimer Growth 12/31/97 22.44 -- -- --
Oppenheimer Growth & Income 12/31/97 3.40 -- -- --
Oppenheimer High Income 12/31/97 (0.92) -- -- --
Oppenheimer Bond 12/31/97 5.52 -- -- --
Oppenheimer Strategic Bond 12/31/97 1.65 -- -- --
Putnam Growth and Income 12/31/97 14.03 -- -- --
Putnam New Value 12/31/97 4.98 -- -- --
Putnam Vista 12/31/97 18.04 -- -- --
Putnam International Growth 12/31/97 17.29 -- -- --
Putnam International New Opportunities 12/31/97 14.21 -- -- --
Templeton International 09/21/98 15.92 -- -- --
Templeton Developing Markets 09/21/98 33.87 -- -- --
Templeton Mutual Shares Investments 09/21/98 11.61 -- -- --
Fidelity VIP Growth 02/17/98 31.16 -- -- --
Fidelity VIP II Contrafund 02/17/98 24.29 -- -- --
Fidelity VIP III Growth Opportunities 02/17/98 18.14 -- -- --
Fidelity VIP III Growth & Income 02/17/98 22.59 -- -- --
Fidelity VIP Equity-Income 02/17/98 6.74 -- -- --
======= ======= ======= =======
</TABLE>
* Sub-account ceased operations on January 8, 1999.
** Performance returns for sub-accounts that commenced operations during the
year are not annualized. Expense ratios for sub-accounts that commenced
operations during the year are annualized.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(6) UNIT FAIR VALUES
A summary of accumulation unit values, net assets, total return, and
expense ratios for each sub-account follows:
SEPARATE ACCOUNT EXPENSES
COMMENCED TO AVERAGE NET ASSETS**
-----------------------------------------
OPERATIONS 1998 1997 1996 1995
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Trust Quality Income* 08/16/95 1.40 1.40 1.40 1.40
Trust Money Market* 06/19/95 1.40 1.40 1.40 1.40
Trust Stock Index* 07/20/95 1.40 1.40 1.40 1.40
Trust VKAC Growth and Income* 07/19/95 1.40 1.40 1.40 1.40
Trust Bond Debenture 05/20/96 1.40 1.40 1.40 --
Trust Developing Growth 11/07/97 1.40 1.40 -- --
Trust Large Cap Research 02/17/98 1.40 -- -- --
Trust Mid-Cap Value 11/07/97 1.40 1.40 -- --
Trust Quality Bond 05/20/96 1.40 1.40 1.40 --
Trust Small Cap Stock 05/15/96 1.40 1.40 1.40 --
Trust Large Cap Stock 05/16/96 1.40 1.40 1.40 --
Trust Select Equity 05/15/96 1.40 1.40 1.40 --
Trust International Equity 05/14/96 1.40 1.40 1.40 --
Lord Abbett Growth and Income* 07/20/95 1.40 1.40 1.40 1.40
GACC Money Market 12/04/97 1.40 1.40 -- --
Russell Multi-Style Equity 12/31/97 1.40 -- -- --
Russell Aggressive Equity 12/31/97 1.40 -- -- --
Russell Non-US 12/31/97 1.40 -- -- --
Russell Core Bond 12/31/97 1.40 -- -- --
AIM Value 12/31/97 1.40 -- -- --
AIM Capital Appreciation 12/31/97 1.40 -- -- --
AIM International Equity 12/31/97 1.40 -- -- --
Alliance Premier Growth 12/31/97 1.40 -- -- --
Alliance Real Estate Investment 12/31/97 1.40 -- -- --
Liberty Newport Tiger 12/31/97 1.39 -- -- --
Goldman Sachs Growth and Income 03/31/98 1.40 -- -- --
Goldman Sachs International Equity 03/31/98 1.40 -- -- --
Goldman Sachs Global Income 03/31/98 1.40 -- -- --
Kemper Dreman High Return Equity 05/15/98 .55 -- -- --
Kemper Small Cap Growth 12/31/97 1.40 -- -- --
Kemper Small Cap Value 12/31/97 1.40 -- -- --
Kemper Government Securities 12/31/97 1.38 -- -- --
MFS Bond 05/15/98 .52 -- -- --
MFS Research 12/31/97 1.40 -- -- --
MFS Growth with Income 12/31/97 1.40 -- -- --
MFS Emerging Growth 12/31/97 1.40 -- -- --
MFS / F&C Emerging Markets Equity 12/31/97 1.40 -- -- --
MFS High Income 12/31/97 1.40 -- -- --
MFS World Governments 12/31/97 1.37 -- -- --
Oppenheimer Growth 12/31/97 1.40 -- -- --
Oppenheimer Growth & Income 12/31/97 1.40 -- -- --
Oppenheimer High Income 12/31/97 1.40 -- -- --
Oppenheimer Bond 12/31/97 1.40 -- -- --
Oppenheimer Strategic Bond 12/31/97 1.40 -- -- --
Putnam Growth and Income 12/31/97 1.40 -- -- --
Putnam New Value 12/31/97 1.40 -- -- --
Putnam Vista 12/31/97 1.40 -- -- --
Putnam International Growth 12/31/97 1.40 -- -- --
Putnam International New Opportunities 12/31/97 1.40 -- -- --
Templeton International 09/21/98 1.40 -- -- --
Templeton Developing Markets 09/21/98 1.40 -- -- --
Templeton Mutual Shares Investments 09/21/98 1.32 -- -- --
Fidelity VIP Growth 02/17/98 1.35 -- -- --
Fidelity VIP II Contrafund 02/17/98 .75 -- -- --
Fidelity VIP III Growth Opportunities 02/17/98 .52 -- -- --
Fidelity VIP III Growth & Income 02/17/98 1.39 -- -- --
Fidelity VIP Equity-Income 02/17/98 1.34 -- -- --
======= ======= ======= =======
</TABLE>
* Sub-account ceased operations on January 8, 1999.
** Performance returns for sub-accounts that commenced operations during the
year are not annualized. Expense ratios for sub-accounts that commenced
operations during the year are annualized.
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(7) REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION
The table below summarizes the realized gain (loss) on the sale of fund
shares and the change in unrealized appreciation for each sub-account
during the year.
1998 1997
------------- -------------
<S> <C> <C>
Realized gain (loss) on sale of fund shares:
Trust Quality Income:
Aggregate proceeds from sales of fund shares $ 68,255 78,042
Aggregate cost of fund shares redeemed 66,652 78,307
------------- -------------
Realized gain (loss) $ 1,603 (265)
============= =============
Trust Money Market:
Aggregate proceeds from sales of fund shares $ 127,698 5,031,278
Aggregate cost of fund shares redeemed 127,698 5,031,278
------------- -------------
Realized gain (loss) $ -- --
============= =============
Trust Stock Index:
Aggregate proceeds from sales of fund shares $ 135,751 100,563
Aggregate cost of fund shares redeemed 117,530 81,687
------------- -------------
Realized gain (loss) $ 18,221 18,876
============= =============
Trust VKAC Growth and Income:
Aggregate proceeds from sales of fund shares $ 104,628 21,278
Aggregate cost of fund shares redeemed 89,010 18,280
------------- -------------
Realized gain (loss) $ 15,618 2,998
============= =============
Trust Bond Debenture:
Aggregate proceeds from sales of fund shares $ 670,935 109,027
Aggregate cost of fund shares redeemed 657,487 103,526
------------- -------------
Realized gain (loss) $ 13,448 5,501
============= =============
Trust Developing Growth:
Aggregate proceeds from sales of fund shares $ 59,769 15,035
Aggregate cost of fund shares redeemed 61,323 15,050
------------- -------------
Realized gain (loss) $ (1,554) (15)
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Trust Large Cap Research:
Aggregate proceeds from sales of fund shares $ 1,318 --
Aggregate cost of fund shares redeemed 1,293 --
------------- -------------
Realized gain (loss) $ 25 --
============= =============
Trust Mid-Cap Value:
Aggregate proceeds from sales of fund shares $ 121,779 5,141
Aggregate cost of fund shares redeemed 126,280 5,091
------------- -------------
Realized gain (loss) $ (4,501) 50
============= =============
Trust Quality Bond:
Aggregate proceeds from sales of fund shares $ 319,864 149,426
Aggregate cost of fund shares redeemed 309,113 147,472
------------- -------------
Realized gain (loss) $ 10,751 1,954
============= =============
Trust Small Cap Stock:
Aggregate proceeds from sales of fund shares $ 986,220 91,131
Aggregate cost of fund shares redeemed 974,390 81,824
------------- -------------
Realized gain (loss) $ 11,830 9,307
============= =============
Trust Large Cap Stock:
Aggregate proceeds from sales of fund shares $ 1,700,678 121,132
Aggregate cost of fund shares redeemed 1,489,784 106,386
------------- -------------
Realized gain (loss) $ 210,894 14,746
============= =============
Trust Select Equity:
Aggregate proceeds from sales of fund shares $ 1,190,393 150,731
Aggregate cost of fund shares redeemed 1,040,041 130,262
------------- -------------
Realized gain (loss) $ 150,352 20,469
============= =============
Trust International Equity:
Aggregate proceeds from sales of fund shares $ 652,667 185,858
Aggregate cost of fund shares redeemed 629,290 182,972
------------- -------------
Realized gain (loss) $ 23,377 2,886
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Lord Abbett Growth and Income:
Aggregate proceeds from sales of fund shares $ 1,839,293 585,935
Aggregate cost of fund shares redeemed 1,749,075 507,692
------------- -------------
Realized gain (loss) $ 90,218 78,243
============= =============
GACC Money Market:
Aggregate proceeds from sales of fund shares $ 2,053,922 29,146
Aggregate cost of fund shares redeemed 2,035,460 29,072
------------- -------------
Realized gain (loss) $ 18,462 74
============= =============
Russell Multi-Style Equity:
Aggregate proceeds from sales of fund shares $ 7,462 --
Aggregate cost of fund shares redeemed 7,262 --
------------- -------------
Realized gain (loss) $ 200 --
============= =============
Russell Aggressive Equity:
Aggregate proceeds from sales of fund shares $ 416 --
Aggregate cost of fund shares redeemed 468 --
------------- -------------
Realized gain (loss) $ (52) --
============= =============
Russell Non-US:
Aggregate proceeds from sales of fund shares $ 821 --
Aggregate cost of fund shares redeemed 900 --
------------- -------------
Realized gain (loss) $ (79) --
============= =============
Russell Core Bond:
Aggregate proceeds from sales of fund shares $ 1,162 --
Aggregate cost of fund shares redeemed 1,160 --
------------- -------------
Realized gain (loss) $ 2 --
============= =============
AIM Value:
Aggregate proceeds from sales of fund shares $ 26,188 --
Aggregate cost of fund shares redeemed 27,774 --
------------- -------------
Realized gain (loss) $ (1,586) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
AIM Capital Appreciation:
Aggregate proceeds from sales of fund shares $ 236 --
Aggregate cost of fund shares redeemed 258 --
------------- -------------
Realized gain (loss) $ (22) --
============= =============
AIM International Equity:
Aggregate proceeds from sales of fund shares $ 40,160 --
Aggregate cost of fund shares redeemed 46,103 --
------------- -------------
Realized gain (loss) $ (5,943) --
============= =============
Alliance Premier Growth:
Aggregate proceeds from sales of fund shares $ 67,438 --
Aggregate cost of fund shares redeemed 74,072 --
------------- -------------
Realized gain (loss) $ (6,634) --
============= =============
Alliance Real Estate:
Aggregate proceeds from sales of fund shares $ 14,746 --
Aggregate cost of fund shares redeemed 17,733 --
------------- -------------
Realized gain (loss) $ (2,987) --
============= =============
Liberty Newport Tiger:
Aggregate proceeds from sales of fund shares $ 37 --
Aggregate cost of fund shares redeemed 33 --
------------- -------------
Realized gain (loss) $ 4 --
============= =============
Goldman Sachs Growth and Income:
Aggregate proceeds from sales of fund shares $ 23,582 --
Aggregate cost of fund shares redeemed 27,701 --
------------- -------------
Realized gain (loss) $ (4,119) --
============= =============
Goldman Sachs International Equity:
Aggregate proceeds from sales of fund shares $ 999 --
Aggregate cost of fund shares redeemed 1,123 --
------------- -------------
Realized gain (loss) $ (124) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Goldman Sachs Global Income:
Aggregate proceeds from sales of fund shares $ 181 --
Aggregate cost of fund shares redeemed 176 --
------------- -------------
Realized gain (loss) $ 5 --
============= =============
Kemper-Dreman High Return Equity:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Kemper Small Cap Growth:
Aggregate proceeds from sales of fund shares $ 7,419 --
Aggregate cost of fund shares redeemed 7,675 --
------------- -------------
Realized gain (loss) $ (256) --
============= =============
Kemper Small Cap Value:
Aggregate proceeds from sales of fund shares $ 21,781 --
Aggregate cost of fund shares redeemed 28,205 --
------------- -------------
Realized gain (loss) $ (6,424) --
============= =============
Kemper Government Securities:
Aggregate proceeds from sales of fund shares $ 9 --
Aggregate cost of fund shares redeemed 9 --
------------- -------------
Realized gain (loss) $ -- --
============= =============
MFS Bond:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
MFS Research:
Aggregate proceeds from sales of fund shares $ 1,823 --
Aggregate cost of fund shares redeemed 1,914 --
------------- -------------
Realized gain (loss) $ (91) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
MFS Growth with Income:
Aggregate proceeds from sales of fund shares $ 40,854 --
Aggregate cost of fund shares redeemed 45,826 --
------------- -------------
Realized gain (loss) $ (4,972) --
============= =============
MFS Emerging Growth:
Aggregate proceeds from sales of fund shares $ 31,963 --
Aggregate cost of fund shares redeemed 34,744 --
------------- -------------
Realized gain (loss) $ (2,781) --
============= =============
MFS / F&C Emerging Markets Equity:
Aggregate proceeds from sales of fund shares $ 32,580 --
Aggregate cost of fund shares redeemed 43,015 --
------------- -------------
Realized gain (loss) $ (10,435) --
============= =============
MFS High Income:
Aggregate proceeds from sales of fund shares $ 18,006 --
Aggregate cost of fund shares redeemed 19,172 --
------------- -------------
Realized gain (loss) $ (1,166) --
============= =============
MFS World Governments:
Aggregate proceeds from sales of fund shares $ 34 --
Aggregate cost of fund shares redeemed 33 --
------------- -------------
Realized gain (loss) $ 1 --
============= =============
Oppenheimer Growth:
Aggregate proceeds from sales of fund shares $ 731 --
Aggregate cost of fund shares redeemed 756 --
------------- -------------
Realized gain (loss) $ (25) --
============= =============
Oppenheimer Growth & Income:
Aggregate proceeds from sales of fund shares $ 1,004 --
Aggregate cost of fund shares redeemed 1,167 --
------------- -------------
Realized gain (loss) $ (163) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Oppenheimer High Income:
Aggregate proceeds from sales of fund shares $ 2,657 --
Aggregate cost of fund shares redeemed 2,855 --
------------- -------------
Realized gain (loss) $ (198) --
============= =============
Oppenheimer Bond:
Aggregate proceeds from sales of fund shares $ 17,891 --
Aggregate cost of fund shares redeemed 17,655 --
------------- -------------
Realized gain (loss) $ 236 --
============= =============
Oppenheimer Strategic Bond:
Aggregate proceeds from sales of fund shares $ 160 --
Aggregate cost of fund shares redeemed 165 --
------------- -------------
Realized gain (loss) $ (5) --
============= =============
Putnam Growth and Income:
Aggregate proceeds from sales of fund shares $ 45,339 --
Aggregate cost of fund shares redeemed 51,871 --
------------- -------------
Realized gain (loss) $ (6,532) --
============= =============
Putnam New Value:
Aggregate proceeds from sales of fund shares $ 6,880 --
Aggregate cost of fund shares redeemed 6,868 --
------------- -------------
Realized gain (loss) $ 12 --
============= =============
Putnam Vista:
Aggregate proceeds from sales of fund shares $ 376 --
Aggregate cost of fund shares redeemed 388 --
------------- -------------
Realized gain (loss) $ (12) --
============= =============
Putnam International Growth:
Aggregate proceeds from sales of fund shares $ 64,381 --
Aggregate cost of fund shares redeemed 72,707 --
------------- -------------
Realized gain (loss) $ (8,326) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Putnam International New Opportunities:
Aggregate proceeds from sales of fund shares $ 378 --
Aggregate cost of fund shares redeemed 405 --
------------- -------------
Realized gain (loss) $ (27) --
============= =============
Templeton International:
Aggregate proceeds from sales of fund shares $ 133 --
Aggregate cost of fund shares redeemed 124 --
------------- -------------
Realized gain (loss) $ 9 --
============= =============
Templeton Developing Markets:
Aggregate proceeds from sales of fund shares $ 133 --
Aggregate cost of fund shares redeemed 125 --
------------- -------------
Realized gain (loss) $ 8 --
============= =============
Templeton Mutual Shares Investments:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Fidelity Growth:
Aggregate proceeds from sales of fund shares $ 3 --
Aggregate cost of fund shares redeemed 3 --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Fidelity Contrafund:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Fidelity Growth Opportunities:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Realized gain (loss) on sale of fund shares, continued:
Fidelity Growth & Income:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Fidelity Equity-Income:
Aggregate proceeds from sales of fund shares $ -- --
Aggregate cost of fund shares redeemed -- --
------------- -------------
Realized gain (loss) $ -- --
============= =============
Unrealized appreciation (depreciation):
Trust Quality Income:
Appreciation (Depreciation), end of period $ 19,209 14,678
Appreciation (Depreciation), beginning of period 14,678 447
------------- -------------
Unrealized appreciation (depreciation) $ 4,531 14,231
============= =============
Trust Money Market:
Appreciation (Depreciation), end of period $ -- --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ -- --
============= =============
Trust Stock Index:
Appreciation (Depreciation), end of period $ 491,713 393,343
Appreciation (Depreciation), beginning of period 393,343 82,185
------------- -------------
Unrealized appreciation (depreciation) $ 98,370 311,158
============= =============
Trust VKAC Growth & Income:
Appreciation (Depreciation), end of period $ 316,285 251,383
Appreciation (Depreciation), beginning of period 251,383 37,743
------------- -------------
Unrealized appreciation (depreciation) $ 64,902 213,640
============= =============
Trust Bond Debenture:
Appreciation (Depreciation), end of period $ 273,399 163,335
Appreciation (Depreciation), beginning of period 163,335 8,392
------------- -------------
Unrealized appreciation (depreciation) $ 110,064 154,943
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Trust Developing Growth:
Appreciation (Depreciation), end of period $ 57,633 404
Appreciation (Depreciation), beginning of period 404 --
------------- -------------
Unrealized appreciation (depreciation) $ 57,229 404
============= =============
Trust Large Cap Research:
Appreciation (Depreciation), end of period $ 52,098 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 52,098 --
============= =============
Trust Mid-Cap Value:
Appreciation (Depreciation), end of period $ 14,516 2,536
Appreciation (Depreciation), beginning of period 2,536 --
------------- -------------
Unrealized appreciation (depreciation) $ 11,980 2,536
============= =============
Trust Quality Bond:
Appreciation (Depreciation), end of period $ 254,121 42,116
Appreciation (Depreciation), beginning of period 42,116 2,313
------------- -------------
Unrealized appreciation (depreciation) $ 212,005 39,803
============= =============
Trust Small Cap Stock:
Appreciation (Depreciation), end of period $ (2,832) 765,772
Appreciation (Depreciation), beginning of period 765,772 34,020
------------- -------------
Unrealized appreciation (depreciation) $ (768,604) 731,752
============= =============
Trust Large Cap Stock:
Appreciation (Depreciation), end of period $ 4,717,561 630,868
Appreciation (Depreciation), beginning of period 630,868 56,856
------------- -------------
Unrealized appreciation (depreciation) $ 4,086,693 574,012
============= =============
Trust Select Equity:
Appreciation (Depreciation), end of period $ 3,163,743 1,284,973
Appreciation (Depreciation), beginning of period 1,284,973 101,392
------------- -------------
Unrealized appreciation (depreciation) $ 1,878,770 1,183,581
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Trust International Equity:
Appreciation (Depreciation), end of period $ 918,988 91,655
Appreciation (Depreciation), beginning of period 91,655 66,683
------------- -------------
Unrealized appreciation (depreciation) $ 827,333 24,972
============= =============
Lord Abbett Growth and Income:
Appreciation (Depreciation), end of period $ 2,782,796 1,514,090
Appreciation (Depreciation), beginning of period 1,514,090 374,769
------------- -------------
Unrealized appreciation (depreciation) $ 1,268,706 1,139,321
============= =============
GACC Money Market:
Appreciation (Depreciation), end of period $ 8,746 440
Appreciation (Depreciation), beginning of period 440 --
------------- -------------
Unrealized appreciation (depreciation) $ 8,306 440
============= =============
Russell Multi-Style Equity:
Appreciation (Depreciation), end of period $ 37,385 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 37,385 --
============= =============
Russell Aggressive Equity:
Appreciation (Depreciation), end of period $ (1,753) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (1,753) --
============= =============
Russell Non-US:
Appreciation (Depreciation), end of period $ 1,844 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 1,844 --
============= =============
Russell Core Bond:
Appreciation (Depreciation), end of period $ 3,543 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 3,543 --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
AIM Value:
Appreciation (Depreciation), end of period $ 1,376 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 1,376 --
============= =============
AIM Capital Appreciation:
Appreciation (Depreciation), end of period $ 5,386 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 5,386 --
============= =============
AIM International Equity:
Appreciation (Depreciation), end of period $ (6,224) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (6,224) --
============= =============
Alliance Premier Growth:
Appreciation (Depreciation), end of period $ 118,514 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 118,514 --
============= =============
Alliance Real Estate Investment:
Appreciation (Depreciation), end of period $ (17,191) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (17,191) --
============= =============
Liberty Newport Tiger:
Appreciation (Depreciation), end of period $ 2,743 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 2,743 --
============= =============
Goldman Sachs Growth and Income:
Appreciation (Depreciation), end of period $ (11,213) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (11,213) --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Goldman Sachs International Equity:
Appreciation (Depreciation), end of period $ 2,720 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 2,720 --
============= =============
Goldman Sachs Global Income:
Appreciation (Depreciation), end of period $ (187) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (187) --
============= =============
Kemper-Dreman High Return Equity:
Appreciation (Depreciation), end of period $ 5 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 5 --
============= =============
Kemper Small Cap Growth:
Appreciation (Depreciation), end of period $ 3,989 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 3,989 --
============= =============
Kemper Small Cap Value:
Appreciation (Depreciation), end of period $ (13,980) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (13,980) --
============= =============
Kemper Government Securities:
Appreciation (Depreciation), end of period $ 206 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 206 --
============= =============
MFS Bond:
Appreciation (Depreciation), end of period $ 5 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 5 --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
MFS Research:
Appreciation (Depreciation), end of period $ 24,572 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 24,572 --
============= =============
MFS Growth with Income:
Appreciation (Depreciation), end of period $ 54,989 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 54,989 --
============= =============
MFS Emerging Growth:
Appreciation (Depreciation), end of period $ 87,574 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 87,574 --
============= =============
MFS / F&C Emerging Markets Equity:
Appreciation (Depreciation), end of period $ (7,685) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (7,685) --
============= =============
MFS High Income:
Appreciation (Depreciation), end of period $ (2,625) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (2,625) --
============= =============
MFS World Governments:
Appreciation (Depreciation), end of period $ 189 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 189 --
============= =============
Oppenheimer Growth:
Appreciation (Depreciation), end of period $ 9,357 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 9,357 --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Oppenheimer Growth & Income:
Appreciation (Depreciation), end of period $ (771) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (771) --
============= =============
Oppenheimer High Income:
Appreciation (Depreciation), end of period $ (2,071) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (2,071) --
============= =============
Oppenheimer Bond:
Appreciation (Depreciation), end of period $ 12,503 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 12,503 --
============= =============
Oppenheimer Strategic Bond:
Appreciation (Depreciation), end of period $ (129) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (129) --
============= =============
Putnam Growth and Income:
Appreciation (Depreciation), end of period $ 44,649 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 44,649 --
============= =============
Putnam New Value:
Appreciation (Depreciation), end of period $ 860 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 860 --
============= =============
Putnam Vista:
Appreciation (Depreciation), end of period $ 7,815 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 7,815 --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Putnam International Growth:
Appreciation (Depreciation), end of period $ (2,297) --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ (2,297) --
============= =============
Putnam International New Opportunities:
Appreciation (Depreciation), end of period $ 299 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 299 --
============= =============
Templeton International:
Appreciation (Depreciation), end of period $ 4,711 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 4,711 --
============= =============
Templeton Developing Markets:
Appreciation (Depreciation), end of period $ 3,570 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 3,570 --
============= =============
Templeton Mutual Shares Investments:
Appreciation (Depreciation), end of period $ 263 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 263 --
============= =============
Fidelity Growth:
Appreciation (Depreciation), end of period $ 1,118 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 1,118 --
============= =============
Fidelity Contrafund:
Appreciation (Depreciation), end of period $ 99 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 99 --
============= =============
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
1998 1997
------------- -------------
Unrealized appreciation (depreciation), continued:
Fidelity Growth Opportunities:
Appreciation (Depreciation), end of period $ 19 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 19 --
============= =============
Fidelity Growth & Income:
Appreciation (Depreciation), end of period $ 3,784 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 3,784 --
============= =============
Fidelity Equity-Income:
Appreciation (Depreciation), end of period $ 635 --
Appreciation (Depreciation), beginning of period -- --
------------- -------------
Unrealized appreciation (depreciation) $ 635 --
============= =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(8) UNIT TRANSACTIONS
The change in the number of accumulation units is as follows:
TRUST
----------------------------------------------------------------------
VKAC
QUALITY MONEY STOCK GROWTH AND BOND
INCOME MARKET INDEX INCOME DEBENTURE
----------- ------------ ---------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 19,237 27,094 50,426 40,350 39,545
Contract units purchased 339 449,124 927 8,266 82,546
Contract units transferred, net 27,138 (440,275) 19,361 32,087 231,381
Contract units redeemed (2,985) (5,992) (1,112) (623) (6,072)
----------- ------------ ---------- --------------- -------------
Unit balance at December 31, 1997 43,729 29,951 69,602 80,080 347,400
Contract units purchased -- -- -- 48 83,877
Contract units transferred, net 763 (8,882) 5,039 9,020 280,852
Contract units redeemed (507) (306) (1,474) (2,306) (30,453)
----------- ------------ ---------- --------------- -------------
Unit balance at December 31, 1998 43,985 20,763 73,167 86,842 681,676
=========== ============ ========== =============== =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(8) UNIT TRANSACTIONS
The change in the number of accumulation units is as follows:
TRUST
-----------------------------------------------------------------------------
DEVELOPING LARGE CAP MID-CAP QUALITY SMALL CAP
GROWTH RESEARCH VALUE BOND STOCK
----------------------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- 64,534 113,118
Contract units purchased 1,385 -- 3,163 26,745 81,088
Contract units transferred, net 4,654 -- 5,347 146,007 302,653
Contract units redeemed -- -- -- (2,643) (9,279)
----------------------------- ----------- ------------- -------------
Unit balance at December 31, 1997 6,039 -- 8,510 234,643 487,580
Contract units purchased 31,649 21,971 56,591 71,796 55,831
Contract units transferred, net 33,339 27,982 20,523 212,881 162,174
Contract units redeemed (101) (59) (167) (18,275) (41,660)
----------------------------- ----------- ------------- -------------
Unit balance at December 31, 1998 70,926 49,894 85,457 501,045 663,925
============================= =========== ============= =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
(8) UNIT TRANSACTIONS
The change in the number of accumulation units is as follows:
LORD ABBETT GACC
--------------------------------------------------- --------------- -------------
GROWTH
LARGE CAP SELECT INTERNATIONAL AND MONEY
STOCK EQUITY EQUITY INCOME MARKET
----------------- -------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 126,231 185,509 124,032 375,304 --
Contract units purchased 131,724 133,310 100,609 66,936 16,814
Contract units transferred, net 436,729 392,067 337,714 366,957 (2,723)
Contract units redeemed (8,007) (10,336) (8,250) (17,887) --
----------------- -------------- ---------------- --------------- -------------
Unit balance at December 31, 1997 686,677 700,550 554,105 791,310 14,091
Contract units purchased 86,312 93,645 39,068 70,041 175,697
Contract units transferred, net 401,442 309,696 218,017 266,026 (33,948)
Contract units redeemed (42,041) (51,094) (31,815) (46,611) (26,271)
----------------- -------------- ---------------- --------------- -------------
Unit balance at December 31, 1998 1,132,390 1,052,797 779,375 1,080,766 129,569
================= ============== ================ =============== =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
RUSSELL AIM
----------------------------------------------- -------------------------------------
MULTI-STYLE AGGRESSIVE CORE CAPITAL INTERNATIONAL
EQUITY EQUITY NON-US BOND VALUE APPRECIATION EQUITY
------------ ------------ --------- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- -- -- --
Contract units purchased -- -- -- -- -- -- --
Contract units transferred, net -- -- -- -- -- -- --
Contract units redeemed -- -- -- -- -- -- --
------------ ------------ --------- --------- -------- --------------- ------------
Unit balance at December 31, 1997 -- -- -- -- -- -- --
Contract units purchased 45,702 7,795 16,824 54,877 2,811 5,456 15,482
Contract units transferred, net 2,780 887 1,475 6,720 44 104 (97)
Contract units redeemed (94) (31) (40) (99) -- -- (128)
------------ ------------ --------- --------- -------- --------------- ------------
Unit balance at December 31, 1998 48,388 8,651 18,259 61,498 2,855 5,560 15,257
============ ============ ========= ========= ======== =============== ============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
ALLIANCE LIBERTY GOLDMAN SACHS
----------------------------- --------- -------------------------------------------
GROWTH
PREMIER REAL ESTATE NEWPORT AND INTERNATIONAL GLOBAL
GROWTH INVESTMENT TIGER INCOME EQUITY INCOME
------------ -------------- --------- ----------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- -- --
Contract units purchased -- -- -- -- -- --
Contract units transferred, net -- -- -- -- -- --
Contract units redeemed -- -- -- -- -- --
------------ -------------- --------- ----------- ---------------- ----------
Unit balance at December 31, 1997 -- -- -- -- -- --
Contract units purchased 61,989 20,016 2,387 11,978 13,558 2,992
Contract units transferred, net 1,056 2,144 -- 1,129 2,301 --
Contract units redeemed (176) (83) -- -- -- --
------------ -------------- --------- ----------- ---------------- ----------
Unit balance at December 31, 1998 62,869 22,077 2,387 13,107 15,859 2,992
============ ============== ========= =========== ================ ==========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
KEMPER
---------------------------------
DREMAN HIGH SMALL CAP
RETURN EQUITY GROWTH
----------------- -------------
<S> <C> <C>
Unit balance at December 31, 1996 -- --
Contract units purchased -- --
Contract units transferred, net -- --
Contract units redeemed -- --
----------------- -------------
Unit balance at December 31, 1997 -- --
Contract units purchased -- 3,287
Contract units transferred, net -- 542
Contract units redeemed -- --
----------------- -------------
Unit balance at December 31, 1998 -- 3,829
================= =============
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
KEMPER MFS
---------------------------- ----------------------------------------------------
GROWTH
SMALL CAP GOVERNMENT WITH EMERGING
VALUE SECURITIES BOND RESEARCH INCOME GROWTH
---------- --------------- ------ ----------- ------------------------------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- -- --
Contract units purchased -- -- -- -- -- --
Contract units transferred, net -- -- -- -- -- --
Contract units redeemed -- -- -- -- -- --
---------- --------------- ------ ----------- ------------------------------
Unit balance at December 31, 1997 -- -- -- -- -- --
Contract units purchased 18,879 2,180 -- 22,166 60,871 45,740
Contract units transferred, net (2,152) 329 -- 3,870 4,170 2,112
Contract units redeemed (86) -- -- (42) (250) (142)
---------- --------------- ------ ----------- ------------------------------
Unit balance at December 31, 1998 16,641 2,509 -- 25,994 64,791 47,710
========== =============== ====== =========== ==============================
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
MFS OPPENHEIMER
----------------------------------------------------- ------------------------------------
F&C EMERGING GROWTH
MARKETS HIGH WORLD AND HIGH
EQUITY INCOME GOVERNMENTS GROWTH INCOME INCOME
-------------------- ----------- ------------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- -- --
Contract units purchased -- -- -- -- -- --
Contract units transferred, net -- -- -- -- -- --
Contract units redeemed -- -- -- -- -- --
-------------------- ----------- ------------------ ---------- ----------- -----------
Unit balance at December 31, 1997 -- -- -- -- -- --
Contract units purchased 8,277 12,308 316 4,131 13,701 9,108
Contract units transferred, net (3,990) 826 59 938 1,202 1,436
Contract units redeemed (53) (54) -- (42) (21) (11)
-------------------- ----------- ------------------------------ ----------- -----------
Unit balance at December 31, 1998 4,234 13,080 375 5,027 14,882 10,533
==================== =========== ================== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
OPPENHEIMER PUTNAM
------------------------ -----------------------
GROWTH
STRATEGIC AND NEW
BOND BOND INCOME VALUE
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- --
Contract units purchased -- -- -- --
Contract units transferred, net -- -- -- --
Contract units redeemed -- -- -- --
----------- ----------- ----------- ----------
Unit balance at December 31, 1997 -- -- -- --
Contract units purchased 39,444 2,196 72,178 487
Contract units transferred, net 7,160 478 8,219 1,705
Contract units redeemed (227) -- (283) --
----------- ----------- ----------- ----------
Unit balance at December 31, 1998 46,377 2,674 80,114 2,192
=========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
PUTNAM TEMPLETON
----------------------------- ---------------------------------------------------------
INTERNATIONAL
INTERNATIONAL NEW DEVELOPING
VISTA GROWTH OPPORTUNITIES INTERNATIONAL MARKETS
---------- ---------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- --
Contract units purchased -- -- -- -- --
Contract units transferred, net -- -- -- -- --
Contract units redeemed -- -- -- -- --
---------- ---------------- ----------------------------------- ----------------
Unit balance at December 31, 1997 -- -- -- -- --
Contract units purchased 4,298 56,707 4,416 6,502 3,871
Contract units transferred, net 2,501 107 367 126 3,162
Contract units redeemed -- (248) -- (15) --
---------- ---------------- ----------------------------------- ----------------
Unit balance at December 31, 1998 6,799 56,566 4,783 6,613 7,033
========== ================ =================================== ================
</TABLE>
<TABLE>
<CAPTION>
COVA VARIABLE ANNUITY ACCOUNT FIVE
Notes to Financial Statements
December 31, 1998 and 1997
TEMPLETON FIDELITY
-------------- --------------------------------------------------------------------
MUTUAL
SHARES GROWTH GROWTH & EQUITY-
INVESTMENTS GROWTH CONTRAFUND OPPORTUNITIES INCOME INCOME
-------------- -------- ----------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Unit balance at December 31, 1996 -- -- -- -- -- --
Contract units purchased -- -- -- -- -- --
Contract units transferred, net -- -- -- -- -- --
Contract units redeemed -- -- -- -- -- --
-------------- -------- ----------- ----------------- --------- ----------
Unit balance at December 31, 1997 -- -- -- -- -- --
Contract units purchased 863 89 68 -- 325 296
Contract units transferred, net 69 406 -- 104 1,747 466
Contract units redeemed -- -- -- -- -- --
-------------- -------- ----------- ----------------- --------- ----------
Unit balance at December 31, 1998 932 495 68 104 2,072 762
============== ======== =========== ================= ========= ==========
</TABLE>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Financial Statements
December 31, 1998, 1997, and 1996
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Cova Financial Life Insurance Company:
We have audited the accompanying balance sheets of Cova Financial Life
Insurance Company (a wholly owned subsidiary of Cova Financial Services
Life Insurance Company) (the Company) as of December 31, 1998 and 1997, and
the related statements of income, shareholder's equity, and cash flows for
each of the years in the three-year period ended December 31, 1998. These
financial statements are the responsibility of the Company'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 audits 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 financial statements referred to above present fairly,
in all material respects, the financial position of Cova Financial Life
Insurance Company as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted
accounting principles.
March 4, 1999
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Balance Sheets
December 31, 1998 and 1997
ASSETS 1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Investments:
Debt securities available-for-sale, at fair value
(cost of $99,228 in 1998 and $96,884 in 1997) $ 100,658 97,520
Mortgage loans, net of allowance for potential loan
loss of $10 in 1998 and $-0- in 1997 5,245 1,786
Policy loans 1,223 1,083
----------- -----------
Total investments 107,126 100,389
Cash and cash equivalents - interest-bearing 5,789 756
Cash - noninterest-bearing 1,200 1,392
Accrued investment income 1,641 1,826
Deferred policy acquisition costs 9,142 6,774
Present value of future profits 854 900
Goodwill 1,813 1,923
Deferred tax asset, net 585 1,042
Receivable from OakRe 35,312 68,533
Reinsurance receivables 118 114
Other assets 398 14
Separate account assets 127,873 69,318
----------- -----------
Total assets $ 291,851 252,981
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Balance Sheets, Continued
December 31, 1998 and 1997
LIABILITIES AND SHAREHOLDER'S EQUITY 1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Policyholder deposits $ 135,106 157,566
Future policy benefits 6,191 5,381
Payable on purchase of securities 27 92
Accounts payable and other liabilities 1,653 1,462
Federal and state income taxes payable 172 106
Future purchase price payable to OakRe 342 565
Guaranty fund assessments 1,000 1,000
Separate account liabilities 127,871 69,318
----------- -----------
Total liabilities 272,362 235,490
----------- -----------
Shareholder's equity:
Common stock, $233.34 par value. (Authorized
30,000 shares; issued and outstanding
12,000 shares in 1998 and 1997) 2,800 2,800
Additional paid-in capital 14,523 13,523
Retained earnings 1,833 1,023
Accumulated other comprehensive income,
net of tax 333 145
----------- -----------
Total shareholder's equity 19,489 17,491
----------- -----------
Total liabilities and shareholder's equity $ 291,851 252,981
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Statements of Income
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Revenues:
Premiums $ 1,308 1,191 488
Net investment income 7,516 6,761 4,176
Net realized gains (losses) on sales of
investments 178 158 (28)
Separate account fees 1,392 599 134
Other income 66 45 35
---------- ---------- ----------
Total revenues 10,460 8,754 4,805
---------- ---------- ----------
Benefits and expenses:
Interest on policyholder deposits 5,486 4,837 2,563
Current and future policy benefits 1,549 1,481 722
Operating and other expenses 1,614 1,203 570
Amortization of purchased intangible
assets 194 165 66
Amortization of deferred policy
acquisition costs 530 320 187
---------- ---------- ----------
Total benefits and expenses 9,373 8,006 4,108
---------- ---------- ----------
Income before income taxes 1,087 748 697
---------- ---------- ----------
Income tax expense (benefit):
Current (80) 310 351
Deferred 357 (5) (66)
---------- ---------- ----------
Total income tax expense 277 305 285
---------- ---------- ----------
Net income $ 810 443 412
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Statements of Shareholder's Equity
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Common stock, at beginning
and end of period $ 2,800 2,800 2,800
---------- ---------- ----------
Additional paid-in capital:
Balance at beginning of period 13,523 13,523 13,523
Capital contribution 1,000 -- --
---------- ---------- ----------
Balance at end of period 14,523 13,523 13,523
---------- ---------- ----------
Retained earnings:
Balance at beginning of period 1,023 580 168
Net income 810 443 412
---------- ---------- ----------
Balance at end of period 1,833 1,023 580
---------- ---------- ----------
Accumulated other comprehensive income:
Balance at beginning of period 145 1 192
Change in unrealized appreciation (depreciation)
of debt and equity securities 794 630 (840)
Deferred federal income tax impact (101) (77) 103
Change in deferred policy acquisition costs
attributable to unrealized appreciation (513) (144) (69)
Change in present value of future profits
attributable to unrealized depreciation (appreciation) 8 (265) 615
---------- ---------- ----------
Balance at end of period 333 145 1
---------- ---------- ----------
Total shareholder's equity $ 19,489 17,491 16,904
========== ========== ==========
Total comprehensive income:
Net income $ 810 443 412
Other comprehensive income (change in net unrealized
appreciation (depreciation) of debt and equity securities) 188 144 (191)
---------- ---------- ----------
Total comprehensive income $ 998 587 221
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Statements of Cash Flows
Years ended December 31, 1998, 1997 and 1996
1998 1997 1996
------------ ------------ -----------
(in thousands)
<S> <C> <C> <C>
Reconciliation of net income to net cash provided by (used in) operating
activities:
Net income $ 810 443 412
Adjustments to reconcile net
income (loss) to net cash provided by
(used in) operating activities:
Increase in future policy benefits 810 820 192
Increase in payables and
accrued liabilities 191 82 95
Decrease (increase) in accrued
investment income 185 (704) (556)
Amortization of intangible assets and
deferred policy acquisition costs 724 485 253
Amortization and accretion of
securities, premiums, and discounts (87) (10) 73
Net realized (gain) loss on sale of investments (178) (158) 28
Interest on policyholder deposits 5,486 4,837 2,563
Increase (decrease) in current and
deferred federal income taxes 523 91 (66)
Recapture commissions paid to OakRe (223) (159) (273)
Commissions and expenses deferred (3,411) (3,917) (2,413)
Due to/from affiliates -- -- 44
Other 219 (498) (452)
------------ ------------ -----------
Net cash provided by (used in) operating activities 5,049 1,312 (100)
------------ ------------ -----------
Cash flows from investing activities:
Cash used in the purchase of
investment securities (56,673) (53,534) (42,655)
Proceeds from investment securities
sold and matured 50,661 25,379 10,635
Other (121) (81) (90)
------------ ------------ -----------
Net cash used in investing activities (6,133) (28,236) (32,110)
------------ ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Statements of Cash Flows, Continued
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
------------ ------------ -----------
(in thousands)
<S> <C> <C> <C>
Cash flows from financing activities:
Policyholder deposits $ 69,459 81,788 38,348
Transfers from OakRe 35,590 25,060 36,553
Transfer to separate accounts (60,181) (56,144) (13,669)
Return of policyholder deposits (39,943) (28,267) (28,521)
Capital contributions received 1,000 -- --
------------ ------------ -----------
Net cash provided by financing activities 5,925 22,437 32,711
------------ ------------ -----------
Increase (decrease) in cash and cash equivalents 4,841 (4,487) 501
Cash and cash equivalents - beginning of period 2,148 6,635 6,134
------------ ------------ -----------
Cash and cash equivalents - end of period $ 6,989 2,148 6,635
============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova Financial Services
Life Insurance Company)
Notes to Financial Statements
December 31, 1998, 1997, and 1996
(1) NATURE OF BUSINESS AND ORGANIZATION
NATURE OF THE BUSINESS
Cova Financial Life Insurance Company (the Company) markets and
services 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 conduct business in the state of
California. Most of the policies issued present no significant
mortality or longevity risk to the Company, but rather represent
investment deposits by the policyholders. 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. 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
account. 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 account 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 may also 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 97%, 85%, and 81% of the
Company's sales have been through two specific brokerage firms, A.
G. Edwards & Sons, Incorporated, and Edward Jones & Company,
Incorporated, in 1998, 1997, and 1996, respectively.
ORGANIZATION
The Company, formerly Xerox Financial Life Insurance Company
(XFLIC), is a wholly owned subsidiary of Cova Financial Services
Life Insurance Company (CFSLIC). On December 31, 1996, Cova
Corporation, an insurance holding company wholly owned by General
American Life Insurance Company (GALIC), transferred 100% of the
outstanding shares of the Company to CFSLIC, an affiliated life
insurer domiciled in Missouri. The transfer of direct ownership
had no effect on the operations of the Company as both CFSLIC and
the Company had existed under common management and control prior
to the transfer.
Cova Corporation purchased the Company from Xerox Financial
Services, Inc. (XFSI), a wholly owned subsidiary of Xerox
Corporation, on June 1, 1995. In conjunction with the purchase,
Cova Corporation entered into a financing reinsurance transaction
with OakRe Life Insurance Company (OakRe), a subsidiary of XFSI,
to assume the economic benefits and risks of the existing single
premium deferred annuity deposits (SPDAs) of the Company. 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 the end of
the year 2000, from the transfer of cash 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 during the periods
ending December 31, 1998 and 1997.
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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEBT SECURITIES
Investments in all debt securities with readily determinable fair
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 and short-term investments at December 31, 1998 and
1997 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 of 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").
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.
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 market value that is deemed to be other than temporary.
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, and the valuation allowance for
potential losses on mortgage loans was $10,000 and $319, at
December 31, 1998 and 1997, respectively.
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 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 accounts and assesses withdrawal charges in the
event of early withdrawals. Separate accounts assets are valued at
fair market 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 accounts 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, 1998 and 1997, are 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. These deferred
costs 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 of shareholder's equity. The amortization period is the
remaining life of the policies, which is approximately 20 years
from the date of original policy issue.
<TABLE>
<CAPTION>
The components of deferred policy acquisition costs are shown
below:
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred policy acquisition costs, beginning of period $ 6,774 3,321 1,164
Commissions and expenses deferred 3,411 3,917 2,413
Amortization (530) (320) (187)
Deferred policy acquisition costs attributable to
unrealized appreciation (513) (144) (69)
------------ ------------ ------------
Deferred policy acquisition costs, end of period $ 9,142 6,774 3,321
============ ============ ============
</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
purchase date.
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
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
the inception. The amortization and adjustments resulting from
unrealized appreciation and depreciation is not recognized
currently in income but as an offset to the accumulated other
comprehensive income 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.
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 4.9%, 7.2%, 7.8%, 7.7%, and
7.2% for the years ended December 31, 1999 through 2003,
respectively. Actual amortization incurred during these years
may be more or less as assumptions are modified to incorporate
actual results.
During 1996, the Company adjusted its original purchase
accounting to include a revised estimate of the ultimate
renewal (recapture) rate. This adjustment resulted in a
reallocation of the net purchased intangible asset between
PVFP, goodwill, future payable, and deferred taxes. This final
allocation and the resulting impact on inception to date
amortization was recorded, in its entirety, in 1996.
<TABLE>
<CAPTION>
The components of PVFP are shown below:
1998 1997 1996
-------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
PVFP - beginning of period $ 900 1,178 576
Net amortization (54) (13) 78
Adjustment due to revised push-down purchase
accounting -- -- (91)
PVFP attributable to unrealized
depreciation (appreciation) 8 (265) 615
-------- ---------- ---------
PVFP - end of period $ 854 900 1,178
======== ========== =========
</TABLE>
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.
<TABLE>
<CAPTION>
The components of goodwill are shown below:
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Goodwill - beginning of period $ 1,923 2,034 2,306
Amortization (110) (111) (105)
Adjustment due to revised push-down purchase
accounting -- -- (167)
------------ ------------ ------------
Future payable - end of period $ 1,813 1,923 2,034
============ ============ ============
</TABLE>
Future Payable
Pursuant to the financial reinsurance agreement, 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 with OakRe into
the next rate guarantee period, the Company will pay a
commission to OakRe of 1.75% up to 40% of policy account
values originally reinsured and 3.5% 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 6.5%. 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:
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future payable - beginning of period $ 565 683 1,265
Interest added 29 41 39
Payments to OakRe (252) (159) (273)
Adjustment due to revised push-down purchase
accounting -- -- (348)
---------- ---------- ----------
Future payable - end of period $ 342 565 683
========== ========== ==========
</TABLE>
DEFERRED TAX ASSETS AND LIABILITIES
XFSI 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 as of June
1, 1995. The principal effect of the election was to establish a
tax asset on the tax-basis balance sheet of approximately $2.9
million for the value of the business acquired that is amortizable
for tax purposes over ten to fifteen years.
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, 1998 was 6.05%.
FUTURE POLICY BENEFITS
Reserves are held for policy annuity 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 5.50% to 8.50%, depending upon year 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.
FEDERAL INCOME TAXES
Beginning in 1997, the Company files a consolidated income tax
return with its immediate parent, CFSLIC. 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 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.
RISKS AND UNCERTAINTIES
In preparing the 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 financial statements are most
affected by the use of estimates and assumptions:
- Investment valuation
- Amortization of deferred policy acquisition costs
- Amortization of present value of future profits
- 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 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 and recaptured
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
asset.
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, 1998.
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 a value of a business is also
based upon its anticipated earning power, the aggregate fair value
amounts presented do not represent 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 balance sheets for
these instruments approximate their fair values. Short-term
debt securities are considered "available-for-sale" and are
carried at fair value.
Investments 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).
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.
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 contracts 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, 1998 and 1997, the cash
surrender value of policyholder deposits was $4,707,689 and
$7,204,647, respectively, 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 ultimate parent, GALIC, and the receivable from OakRe
equal to the SPDA obligations is guaranteed by OakRe's parent,
XFSI.
REINSURANCE
The impact of reinsurance on the December 31, 1998 financial
statements is not considered material.
The financing reinsurance agreement entered into with OakRe does
not meet the conditions for reinsurance accounting under generally
accepted accounting principles (GAAP). The net assets initially
transferred to OakRe were established as a receivable and then are
subsequently increased as interest is accrued on the underlying
liabilities and decreased as funds are transferred back to the
Company when policies reach their crediting rate reset date or
benefits are claimed.
RECENTLY ADOPTED ACCOUNTING STANDARDS
On June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes
standards for the reporting and display of comprehensive income
and its components in the financial statements. SFAS No. 130 is
effective for the fiscal year beginning after December 15, 1997.
Reclassification of financial statements for earlier periods
provided is required for comparative purposes. The Company has
elected to adopt SFAS No. 130 in 1998. The adoption of SFAS No.
130 has no impact on the Company's net income or shareholder's
equity. The Company's only component of accumulated other
comprehensive income relates to unrealized appreciation and
depreciation on debt securities.
RECENTLY ISSUED ACCOUNTING STANDARD
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. SFAS No. 133 requires all
derivative instruments to be recorded on the balance sheet at
estimated fair value. The Company's present accounting policies
would apply 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. 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.
SFAS No. 133 is effective for the Company beginning January 1,
2000. The Company's management is currently evaluating the impact
of SFAS No. 133; at present, the management does not believe it
will have a material effect on the Company's financial position or
results of operations.
OTHER
Certain 1997 and 1996 amounts have been reclassified to conform to
the 1998 presentation.
<TABLE>
<CAPTION>
(3) INVESTMENTS
The Company's investments in debt securities and short-term investments
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, 1998 and 1997, are as follows:
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. Government
treasuries $ 100 1 -- 101 101
Collateralized
mortgage obligations 15,260 161 (32) 15,389 15,389
Corporate, state,
municipalities, and
political subdivisions 83,868 1,733 (433) 85,168 85,168
--------------- -------------- -------------- -------------- --------------
Total debt
securities 99,228 1,895 (465) 100,658 100,658
Mortgage loans (net) 5,245 204 -- 5,449 5,245
Policy loans 1,223 -- -- 1,223 1,223
--------------- -------------- -------------- -------------- --------------
Total investments $ 105,696 2,099 (465) 107,330 107,126
=============== ============== ============== ============== ==============
Company's beneficial
interest in separate
accounts $ 2 -- -- 2 2
=============== ============== ============== ============== ==============
</TABLE>
<TABLE>
1997
-------------------------------------------------------------------------------
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. Government
treasuries $ 100 1 -- 101 101
Collateralized
mortgage obligations 24,018 305 (64) 24,259 24,259
Corporate, state,
municipalities, and
political subdivisions 72,766 1,500 (1,106) 73,160 73,160
--------------- -------------- -------------- -------------- --------------
Total debt
securities 96,884 1,806 (1,170) 97,520 97,520
Mortgage loans (net) 1,786 143 -- 1,929 1,786
Policy loans 1,083 -- -- 1,083 1,083
--------------- -------------- -------------- -------------- --------------
$ 99,753 1,949 (1,170) 100,532 100,389
=============== ============== ============== ============== ==============
Company's beneficial
interest in separate
accounts $ -- -- -- -- --
=============== ============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
The amortized cost and estimated fair value of debt securities at
December 31, 1998, 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.
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Less than one year $ 2,341 2,362
Due after one year through five years 34,579 35,067
Due after five years through ten years 32,584 33,321
Due after ten years 14,464 14,519
Mortgage-backed securities 15,260 15,389
--------------- ---------------
Total $ 99,228 100,658
=============== ===============
</TABLE>
At December 31, 1998, approximately 95.1% of the Company's debt
securities are investment grade or are nonrated but considered to be of
investment grade. Of the 4.9% noninvestment grade debt securities, 4.3%
are rated as BB or its equivalent, and 0.6% are rated B or its
equivalent.
All debt securities were income producing during the years ended
December 31, 1998 and 1997. As of December 31, 1998 and 1997, the
Company had no impaired investments.
<TABLE>
<CAPTION>
The components of investment income, realized gains (losses), and
unrealized appreciation are as follows:
1998 1997 1996
------------ ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income on debt securities $ 6,928 6,575 3,926
Income on short-term investments 305 186 243
Income on policy loans 92 83 86
Interest on mortgage loans 308 32 --
Miscellaneous interest 2 -- 8
------------ ------------- ------------
Total investment income 7,635 6,876 4,263
Investment expenses (119) (115) (87)
------------ ------------- ------------
Net investment income $ 7,516 6,761 4,176
============ ============= ============
Net realized capital gains (losses) -
debt securities $ 178 158 (28)
============ ============= ============
Unrealized appreciation
is as follows:
Debt securities $ 1,430 633 6
Short-term investments -- 3 --
Effects on deferred acquisition
costs amortization (726) (213) (69)
Effects on PVFP amortization (192) (200) 65
------------ ------------- ------------
Unrealized appreciation before income taxes 512 223 2
Unrealized income tax expenses (179) (78) (1)
------------ ------------- ------------
Net unrealized appreciation on
investments $ 333 145 1
============ ============= ============
</TABLE>
Proceeds from sales, redemptions, and paydowns of investments in debt
securities during 1998 were $50,660,583. Gross gains of $591,755 and
gross losses of $413,588 were realized on those sales. Included in these
amounts were $133,138 of gross gains and $106,165 of gross losses
realized on the sale of noninvestment grade securities.
Proceeds from sales, redemptions, and paydowns for investments in debt
securities during 1997 were $25,379,783. Gross gains of $166,335 and
gross losses of $8,658 were realized on those sales. Included in these
amounts were $47,391 of gross gains and $7,300 of gross losses realized
on the sale of noninvestment grade securities.
Proceeds from sales, redemptions, and paydowns for investments in debt
securities during 1996 were $10,635,608. Gross gains of $16,757 and
gross losses of $44,311 were realized on those sales. Included in these
amounts were $1,355 of gross gains realized on the sale of noninvestment
grade securities.
<TABLE>
<CAPTION>
(4) SECURITY GREATER THAN 10% OF SHAREHOLDER'S EQUITY
As of December 31, 1998 and 1997, the Company held the following
individual security which exceeded 10% of shareholder's equity:
1998 1997
--------------- ---------------
<S> <C> <C>
Colonial Realty, at carrying value $ 1,997,287 2,017,400
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
(5) COMPREHENSIVE INCOME
The components of comprehensive income are as follows:
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net income $ 810 443 412
------------ ------------ ------------
Other comprehensive income (loss), before tax -
unrealized appreciation (depreciation) on
investments arising during period:
Unrealized appreciation (depreciation)
on investments 616 472 (812)
Adjustment to deferred acquisition
costs attributable to unrealized
(appreciation) depreciation (398) (108) (67)
Adjustment to PVFP attributable to
unrealized (appreciation) depreciation 6 (198) 594
------------ ------------ ------------
Total unrealized appreciation (depreciation) on
investments arising during period 224 166 (285)
------------ ------------ ------------
Less reclassification adjustments for realized (gains) losses included
in net income:
Adjustment for (gains) losses included in
net realized gains (losses) on sales
of investments (178) (158) 28
Adjustment for (gains) losses included in
amortization of PVFP 115 36 2
Adjustment for (gains) losses included in
amortization of deferred acquisition costs (2) 67 (21)
------------ ------------ ------------
Total reclassification adjustments for (gains) losses
included in net income (65) (55) 9
------------ ------------ ------------
Other comprehensive income (loss), before related income tax
expense (benefits) 289 221 (294)
Related income tax expense (benefit) 101 77 (103)
------------ ------------ ------------
Other comprehensive income (loss), net of tax 188 144 (191)
------------ ------------ ------------
Comprehensive income $ 998 587 221
============ ============ ============
</TABLE>
(6) 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 by
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 1998, 1997, and 1996, the Company was allocated a
portion of benefit costs including severance pay, accumulated vacations,
and disability benefits. At December 31, 1998, 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 allocations is not material.
<TABLE>
<CAPTION>
(7) INCOME TAXES
The Company will file a consolidated federal income tax return with its
immediate parent, CFSLIC. Income taxes are recorded in the statements of
income and directly in certain shareholder's equity accounts. Income
tax expense for the years ended December 31 was allocated as follows:
1998 1997 1996
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Statements of income:
Operating income (excluding realized investment gains and losses) $ 215 250 295
Realized investment gains (losses) 62 55 (10)
--------- --------- ---------
Income tax expense included in the statements of
income 277 305 285
Shareholder's equity - change in deferred federal income taxes
related to unrealized appreciation (depreciation) on securities 101 77 (103)
--------- --------- ---------
Total income tax expense $ 378 382 182
========= ========= =========
</TABLE>
<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:
1998 1997 1996
-------------------- -------------------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Computed expected tax expense $ 380 35.0% $ 262 35.0% $ 244 35.0%
Dividends received deduction - separate
account (150) (13.9) -- -- -- --
Amortization of intangible assets 39 3.6 39 5.2 37 5.3
Other 8 0.8 4 0.5 4 0.6
-------- ---------- -------- ---------- -------- ---------
Total $ 277 25.5% $ 305 40.7% $ 285 40.9%
======== ========== ======== ========== ======== ==========
</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, 1998 and 1997 are as follows:
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Tax basis of intangible assets purchased $ 624 679
Liability for commission on recaptures 120 198
Policy reserves 2,477 1,898
DAC "Proxy Tax" 1,252 977
Other deferred tax assets (359) --
------------ ------------
Total deferred tax assets 4,114 3,752
------------ ------------
Deferred tax liabilities:
Unrealized gains in investments 179 78
PVFP 150 144
Deferred acquisition costs 3,200 2,371
Other deferred tax liabilities -- 117
------------ ------------
Total deferred tax liabilities 3,529 2,710
------------ ------------
Net deferred tax asset $ 585 1,042
============ ============
</TABLE>
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax assets will not be realized. Management
believes the deferred tax assets will be fully realized in the future
based upon consideration of the reversal of existing temporary
differences, anticipated future earnings, and all other available
evidence. Accordingly, no valuation allowance was established at
December 31, 1998 or 1997.
(8) RELATED-PARTY TRANSACTIONS
On December 31, 1997, CLMC and Navisys Incorporated, affiliated
companies, purchased certain assets of Johnson & Higgins/Kirke Van
Orsdel, Inc. (J&H/KVI), an unaffiliated Delaware corporation, for
$2,500,000. The purchased assets are the administrative and service
systems that provide the marketing, underwriting, claims, and
administrative functions for the Company's life and annuity products. On
January 1, 1998, the purchased assets of J&H/KVI were merged into Cova
Life Administrative Service Company (CLASC). Navisys Incorporated
purchased 51% of CLASC, the remaining 49% was purchased by CLMC.
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; and
Conning Asset Management, which provides investment advice.
Additionally, a portion of overhead and other corporate expenses are
allocated by the Company's ultimate parent, GALIC. CLASC provides
various services for the Company including underwriting, claims, and
administrative functions. Expenses and fees paid to affiliated
companies in 1998, 1997, and 1996 for the Company were $1,587,833,
$396,806, and $303,694 respectively.
(9) STATUTORY SURPLUS AND DIVIDEND RESTRICTION
GAAP differs in certain respects from 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, and 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
under statutory accounting principles. In addition, adjustments to
record the carrying values of debt securities and certain equity
securities at estimated 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 established fair
values, 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 were as
follows:
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Statutory capital and surplus $ 10,411 10,389
Reconciling items:
Statutory asset valuation reserve 1,078 1,151
Statutory interest maintenance reserve 190 111
GAAP investment adjustments to fair value 1,430 636
GAAP deferred policy acquisition costs 9,142 6,774
GAAP basis policy reserves (4,670) (3,871)
GAAP deferred federal income taxes (net) 585 1,042
GAAP guarantee assessment adjustment (1,000) (1,000)
GAAP goodwill 1,813 1,923
GAAP present value of future profits 854 900
GAAP future purchase price payable (342) (565)
Other (2) 1
------------ ------------
GAAP shareholder's equity $ 19,489 17,491
============ ============
</TABLE>
COVA FINANCIAL LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Cova
Financial Services Life Insurance Company)
Notes to Financial Statements
December 31, 1998, 1997, and 1996
Statutory net loss for the years ended December 31, 1998, 1997, and 1996
was $142,046, $461,118, and $113,236, respectively.
The maximum amount of dividends which can be paid by State of California
insurance companies to shareholders without prior approval of the
insurance commissioner is the greater of 10% of statutory surplus or
statutory net gain from operations for the preceding year. The maximum
dividend permissible during 1998 will be $761,109, which is 10% of the
Company's December 31, 1998 statutory surplus of $7,611,089.
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,
1998, the Company's Total Adjusted Capital and Authorized Control Level
RBC were $11,488,766 and $1,619,495, respectively. This level of
adjusted capital qualifies under all tests.
(10) GUARANTY FUND ASSESSMENTS
The Company participates with life insurance companies licensed in
California in an association formed to guaranty benefits to
policyholders of insolvent life insurance companies. Under state law, 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 association for insolvencies incurred through
1998, but for which assessments have not yet been determined or
assessed, to a maximum generally of 1% of statutory premiums per annum.
In November 1998, 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 $1.0 million in
future assessments on insolvencies that occurred before December 31,
1998. 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. The Company paid $33,505, $460,167, and $265,760 in
guaranty fund assessment in 1998, 1997, and 1996, 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 to be retained for 1998 were
not material.
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. Statement of Assets and Liabilities - June 30, 1999 (unaudited).
2. Statement of Operations - Six Months ended June 30, 1999 (unaudited).
3. Statement of Changes in Net Assets - Six Months ended June 30, 1999
(unaudited).
4. Notes to Financial Statements - June 30, 1999 (unaudited).
5. Independent Auditors' Report.
6. Statement of Assets and Liabilities as of December 31, 1998.
7. Statement of Operations for the year ended December 31, 1998.
8. Statements of Changes in Net Assets for the years ended December 31,
1998 and 1997.
9. Notes to Financial Statements - December 31, 1998 and 1997.
The following financial statements of the Company are included in Part B hereof:
1. Independent Auditors' Report.
2. Balance Sheets as of December 31, 1998 and 1997.
3. Statements of Income for the years ended December 31, 1998, 1997, and
1996.
4. Statements of Shareholder's Equity for the Years Ended December 31,
1998, 1997, and 1996.
5. Statements of Cash Flows for the Years Ended December 31, 1998, 1997,
and 1996.
6. Notes to Financial Statements - December 31, 1998, 1997, and 1996.
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 and Fixed
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 Insurance Company and Massachusetts
Financial Services Company +
(ii) Form of Fund Participation Agreement among Cova Financial
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 Life
Insurance Company++
(iv) Form of Fund Participation Agreement among Putnam Variable Trust,
Putnam Mutual Funds Corp. and Cova Financial Life Insurance
Company++
(v) Form of Fund Participation Agreement by and among AIM Variable
Insurance Funds, Inc., A I M Distributors, Inc., Cova Financial
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 Life Insurance Company++
(vii) Form of Participation Agreement by and between Goldman Sachs
Variable Insurance Trust, Goldman, Sachs & Co. and Cova Financial
Life Insurance Company++
(viii) Form of Participation Agreement among Russell Insurance Funds,
Russell Fund Distributors, Inc. and Cova Financial Life
Insurance Company++
(ix) Form of Participation Agreement among Liberty Variable Investment
Trust, Liberty Financial Investments, Inc. and Cova Financial
Life Insurance Company++
(x) Form of Participation Agreement among Templeton Variable Products
Series Fund, Franklin Templeton Distributors, Inc. and Cova
Financial Life Insurance Company***
9. Opinion and Consent of Counsel
10. Consent of Independent Auditors
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information
14. Company Organizational Chart**
27. Not Applicable
** incorporated by reference to Registrant's Form N-4 ,(File Nos.
333-34817 and 811-07060) electronically filed on September 2,
1997.
*** incorporated by reference to Registrant's Post-Effective
Amendment No. 4 to Form N-4 (File Nos. 333-34817 and 811-07060)
electronically filed on April 30, 1999.
+ Incorporated by reference to Registrant's 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 February 11, 1998.
+++ Incorporated by reference to Cova Variable Life Account Five,
Initial Registration Statement on Form S-6 (File No. 333-37559)
electronically filed on October 9, 1997.
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
Mark E. Reynolds Executive Vice President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Barber Director
13045 Tesson Ferry Rd.
St. Louis, MO 63128
William P. Boscow Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Constance 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 Street
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 and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Matthew P. McCauley Assistant Secretary and Director
700 Market Street
St. Louis, MO 63101
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,
One Tower Lane, Suite 3000 General Counsel and Secretary
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
One Tower Lane, Suite 300 Controller
Oakbrook Terrace, IL 60181-4644
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT.
A company organizational chart was filed as Exhibit 14 to Registrant's Form N-4
(File Nos. 333-34817 and 811-07060) filed on September 2, 1997 and is
incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of November 9, 1999 there were 68 Qualified Contract Owners and 270
Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION.
The Bylaws of the Company (Article V, Section 9) provide that:
This corporation shall indemnify, to the fullest extent allowed by California
law, its present and former directors and officers against expenses, judgments,
fines, settlements, and other amounts incurred in connection with any proceeding
or threatened proceeding brought against such directors or officers in their
capacity as such. Such indemnification shall be made in accordance with
procedures set forth by California law. Sums for expenses incurred in defending
any such proceeding may also be advanced to any such director or officer to the
extent and under the conditions provided by California law.
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 One
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 Twenty-Six
Security Equity Separate Account Twenty-Seven
(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>
(b) 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 maintains 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 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 9th day of November, 1999.
<TABLE>
<CAPTION>
<S> <C>
COVA VARIABLE ANNUITY ACCOUNT FIVE
(Registrant)
By: COVA FINANCIAL LIFE INSURANCE COMPANY
By: /s/LORRY J. STENSRUD
_________________________________________
COVA FINANCIAL LIFE INSURANCE COMPANY
Depositor
By: /s/LORRY J. STENSRUD
_________________________________________
</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 and
- ---------------------- Director --------
Richard A. Liddy Date
/s/LORRY J. STENSRUD President and Director 11/8/99
- --------------------- --------
Lorry J. Stensrud Date
/s/J. ROBERT HOPSON Director 11/9/99
- ---------------------- --------
J. Robert Hopson Date
William C. Mair* Director 11/8/99
- ---------------------- --------
William C. Mair Date
E. Thomas Hughes, Jr.* Treasurer and Director 11/8/99
- ---------------------- --------
E. Thomas Hughes, Jr. Date
Matthew P. McCauley* Director 11/8/99
- ---------------------- --------
Matthew P. McCauley Date
John W. Barber* Director 11/8/99
- ---------------------- --------
John W. Barber Date
/S/ MARK E. REYNOLDS Director 11/9/99
- ---------------------- --------
Mark E. Reynolds Date
/s/J. TERRI TANAKA 11/9/99
- --------------------- Director --------
J. Terri Tanaka Date
/s/PETER L. WITKEWIZ 11/9/99
- --------------------- Controller --------
Peter L. Witkewiz Date
</TABLE>
*By: /s/LORRY J. STENSRUD
____________________________________
Lorry J. Stensrud, Attorney-in-Fact
INDEX TO EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 5 (FILE NO. 333-34817)
TO
FORM N-4
COVA VARIABLE ANNUITY ACCOUNT FIVE
EXHIBIT NO. PAGE NO.
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Consent of Independent Auditors
EX-99.B13 Calculation of Performance Information
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
November 12, 1999
Board of Directors
Cova Financial Life Insurance Company
4100 Newport Place Drive, Suite 840
Newport Beach, CA 92600
RE: Opinion of Counsel - Cova Variable Annuity Account Five
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 Life Insurance Company and its separate account, Cova Variable Annuity
Account Five.
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 Five 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 Life Insurance Company
We consent to the use of our reports on the financial statements of Cova
Financial Life Insurance Company (the Company) dated March 4, 1999, and
on the financial statements of the sub-accounts of Cova Variable Annuity
Account Five dated March 1, 1999, and to the reference to our firm under
the heading "Experts" in the Statement of Additional Information, in the
Post-Effective Amendment No. 5 to the Registration Statement (Form N-4,
No. 333-34817) of Cova Variable Annuity Account Five.
/S/ KPMG LLP
Chicago, Illinois
November 11, 1999
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Standard 1 Year Performance Data- Part I
As of 6/30/99
Date Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
Cova Series Trust Bond Debenture
<S> <C> <C> <C> <C> <C> <C>
6/30/1998 purchase 1,000.00 13.512820 - 74.0038 74.0038
6/30/1999 annual fee (1.00) 13.536178 74.0038 (0.0739) 73.9299
6/30/1999 surrender fee (45.00) 13.536178 73.9299 (3.3244) 70.6055
General American Capital Company Money Market
6/30/1998 purchase 1,000.00 10.891342 - 91.8160 91.8160
6/30/1999 annual fee (1.04) 11.299208 91.8160 (0.0920) 91.7240
6/30/1999 surrender fee (45.00) 11.299208 91.7240 (3.9826) 87.7414
Cova Series Trust Developing Growth
6/30/1998 purchase 1,000.00 11.313756 - 88.3880 88.3880
6/30/1999 annual fee (1.12) 12.724207 88.3880 (0.0880) 88.3000
6/30/1999 surrender fee (45.00) 12.724207 88.3000 (3.5366) 84.7634
Cova Series Trust Large Cap Research
6/30/1998 purchase 1,000.00 11.344142 - 88.1512 88.1512
6/30/1999 annual fee (1.17) 13.320653 88.1512 (0.0878) 88.0634
6/30/1999 surrender fee (45.00) 13.320653 88.0634 (3.3782) 84.6852
Cova Series Trust Mid-Cap Value
6/30/1998 purchase 1,000.00 11.209646 - 89.2089 89.2089
6/30/1999 annual fee (1.03) 11.560422 89.2089 (0.0891) 89.1198
6/30/1999 surrender fee (45.00) 11.560422 89.1198 (3.8926) 85.2272
Cova Series Trust Quality Bond
6/30/1998 purchase 1,000.00 11.525627 - 86.7632 86.7632
6/30/1999 annual fee (1.00) 11.582147 86.7632 (0.0863) 86.6769
6/30/1999 surrender fee (45.00) 11.582147 86.6769 (3.8853) 82.7916
Cova Series Trust Small Cap Stock
6/30/1998 purchase 1,000.00 14.018905 - 71.3322 71.3322
6/30/1999 annual fee (0.95) 13.249411 71.3322 (0.0717) 71.2605
6/30/1999 surrender fee (45.00) 13.249411 71.2605 (3.3964) 67.8641
Cova Series Trust Large Cap Stock
6/30/1998 purchase 1,000.00 17.659385 - 56.6271 56.6271
6/30/1999 annual fee (1.23) 21.760437 56.6271 (0.0565) 56.5706
6/30/1999 surrender fee (45.00) 21.760437 56.5706 (2.0680) 54.5026
Cova Series Trust Select Equity
6/30/1998 purchase 1,000.00 15.795532 - 63.3090 63.3090
6/30/1999 annual fee (1.19) 18.786819 63.3090 (0.0633) 63.2457
6/30/1999 surrender fee (45.00) 18.786819 63.2457 (2.3953) 60.8504
Cova Series Trust International Equity
6/30/1998 purchase 1,000.00 13.059689 - 76.5715 76.5715
6/30/1999 annual fee (1.04) 13.530210 76.5715 (0.0769) 76.4946
6/30/1999 surrender fee (45.00) 13.530210 76.4946 (3.3259) 73.1687
Russell Multi-Style Equity
6/30/1998 purchase 1,000.00 11.993206 - 83.3805 83.3805
6/30/1999 annual fee (1.18) 14.186493 83.3805 (0.0832) 83.2973
6/30/1999 surrender fee (45.00) 14.186493 83.2973 (3.1720) 80.1253
Russell Aggressive Equity
6/30/1998 purchase 1,000.00 10.670391 - 93.7173 93.7173
6/30/1999 annual fee (0.94) 10.032732 93.7173 (0.0937) 93.6236
6/30/1999 surrender fee (45.00) 10.032732 93.6236 (4.4853) 89.1383
Russell Non-U.S.
6/30/1998 purchase 1,000.00 11.242493 - 88.9482 88.9482
6/30/1999 annual fee (1.06) 11.886482 88.9482 (0.0892) 88.8590
6/30/1999 surrender fee (45.00) 11.886482 88.8590 (3.7858) 85.0732
Russell Core Bond
6/30/1998 purchase 1,000.00 10.354530 - 96.5761 96.5761
6/30/1999 annual fee (1.01) 10.439720 96.5761 (0.0967) 96.4794
6/30/1999 surrender fee (45.00) 10.439720 96.4794 (4.3105) 92.1689
AIM V.I. Value
6/30/1998 purchase 1,000.00 11.797664 - 84.7625 84.7625
6/30/1999 annual fee (1.26) 14.860062 84.7625 (0.0848) 84.6777
6/30/1999 surrender fee (45.00) 14.860062 84.6777 (3.0283) 81.6494
AIM V.I. Capital Appreciation
6/30/1998 purchase 1,000.00 11.244780 - 88.9302 88.9302
6/30/1999 annual fee (1.14) 12.834364 88.9302 (0.0888) 88.8414
6/30/1999 surrender fee (45.00) 12.834364 88.8414 (3.5062) 85.3352
AIM V.I. International Equity
6/30/1998 purchase 1,000.00 11.834130 - 84.5014 84.5014
6/30/1999 annual fee (1.00) 11.842406 84.5014 (0.0844) 84.4170
6/30/1999 surrender fee (45.00) 11.842406 84.4170 (3.7999) 80.6171
Alliance Premier Growth
6/30/1998 purchase 1,000.00 12.773593 - 78.2865 78.2865
6/30/1999 annual fee (1.29) 16.423320 78.2865 (0.0785) 78.2080
6/30/1999 surrender fee (45.00) 16.423320 78.2080 (2.7400) 75.4680
Alliance Real Estate Investment
6/30/1998 purchase 1,000.00 9.310281 - 107.4081 107.4081
6/30/1999 annual fee (0.90) 8.423121 107.4081 (0.1068) 107.3013
6/30/1999 surrender fee (45.00) 8.423121 107.3013 (5.3424) 101.9589
Liberty Newport Tiger Fund, Variable Series
6/30/1998 purchase 1,000.00 7.341000 - 136.2212 136.2212
6/30/1999 annual fee (1.62) 11.928849 136.2212 (0.1358) 136.0854
6/30/1999 surrender fee (45.00) 11.928849 136.0854 (3.7724) 132.3130
Goldman Sachs Growth and Income
6/30/1998 purchase 1,000.00 10.784483 - 92.7258 92.7258
6/30/1999 annual fee (1.01) 10.869858 92.7258 (0.0929) 92.6329
6/30/1999 surrender fee (45.00) 10.869858 92.6329 (4.1399) 88.4930
Goldman Sachs International Equity
6/30/1998 purchase 1,000.00 11.448337 - 87.3489 87.3489
6/30/1999 annual fee (1.02) 11.642518 87.3489 (0.0876) 87.2613
6/30/1999 surrender fee (45.00) 11.642518 87.2613 (3.8651) 83.3962
Goldman Sachs Global Income
6/30/1998 purchase 1,000.00 10.320498 - 96.8945 96.8945
6/30/1999 annual fee (1.03) 10.584393 96.8945 (0.0973) 96.7972
6/30/1999 surrender fee (45.00) 10.584393 96.7972 (4.2515) 92.5457
Kemper Small Cap Growth
6/30/1998 purchase 1,000.00 11.264000 - 88.7784 88.7784
6/30/1999 annual fee (1.07) 12.086038 88.7784 (0.0885) 88.6899
6/30/1999 surrender fee (45.00) 12.086038 88.6899 (3.7233) 84.9666
Kemper Small Cap Value
6/30/1998 purchase 1,000.00 10.186468 - 98.1695 98.1695
6/30/1999 annual fee (0.91) 9.227261 98.1695 (0.0986) 98.0709
6/30/1999 surrender fee (45.00) 9.227261 98.0709 (4.8769) 93.1940
Kemper Government Securities
6/30/1998 purchase 1,000.00 10.307000 - 97.0214 97.0214
6/30/1999 annual fee (1.02) 10.564382 97.0214 (0.0966) 96.9248
6/30/1999 surrender fee (45.00) 10.564382 96.9248 (4.2596) 92.6652
MFS Research
6/30/1998 purchase 1,000.00 11.814415 - 84.6424 84.6424
6/30/1999 annual fee (1.11) 13.165059 84.6424 (0.0843) 84.5581
6/30/1999 surrender fee (45.00) 13.165059 84.5581 (3.4181) 81.1400
MFS Growth with Income
6/30/1998 purchase 1,000.00 11.543425 - 86.6294 86.6294
6/30/1999 annual fee (1.10) 12.692150 86.6294 (0.0867) 86.5427
6/30/1999 surrender fee (45.00) 12.692150 86.5427 (3.5455) 82.9972
MFS Emerging Growth
6/30/1998 purchase 1,000.00 12.082390 - 82.7651 82.7651
6/30/1999 annual fee (1.23) 14.837048 82.7651 (0.0829) 82.6822
6/30/1999 surrender fee (45.00) 14.837048 82.6822 (3.0329) 79.6493
MFS / Foreign & Colonial Emerging Markets Equity
6/30/1998 purchase 1,000.00 8.688515 - 115.0945 115.0945
6/30/1999 annual fee (0.92) 7.998729 115.0945 (0.1150) 114.9795
6/30/1999 surrender fee (45.00) 7.998729 114.9795 (5.6259) 109.3536
MFS High Income
6/30/1998 purchase 1,000.00 10.415267 - 96.0129 96.0129
6/30/1999 annual fee (0.99) 10.281026 96.0129 (0.0963) 95.9166
6/30/1999 surrender fee (45.00) 10.281026 95.9166 (4.3770) 91.5396
MFS Global Governments
6/30/1998 purchase 1,000.00 10.165697 - 98.3700 98.3700
6/30/1999 annual fee (1.01) 10.283862 98.3700 (0.0982) 98.2718
6/30/1999 surrender fee (45.00) 10.283862 98.2718 (4.3758) 93.8960
Oppenheimer Capital Appreciation
6/30/1998 purchase 1,000.00 11.645438 - 85.8705 85.8705
6/30/1999 annual fee (1.21) 14.082942 85.8705 (0.0859) 85.7846
6/30/1999 surrender fee (45.00) 14.082942 85.7846 (3.1954) 82.5892
Oppenheimer Main Street Growth & Income
6/30/1998 purchase 1,000.00 11.254357 - 88.8545 88.8545
6/30/1999 annual fee (1.05) 11.772262 88.8545 (0.0892) 88.7653
6/30/1999 surrender fee (45.00) 11.772262 88.7653 (3.8225) 84.9428
Oppenheimer High Income
6/30/1998 purchase 1,000.00 10.423521 - 95.9369 95.9369
6/30/1999 annual fee (0.98) 10.213444 95.9369 (0.0960) 95.8409
6/30/1999 surrender fee (45.00) 10.213444 95.8409 (4.4060) 91.4349
Oppenheimer Bond
6/30/1998 purchase 1,000.00 10.341618 - 96.6967 96.6967
6/30/1999 annual fee (1.00) 10.301628 96.6967 (0.0971) 96.5996
6/30/1999 surrender fee (45.00) 10.301628 96.5996 (4.3682) 92.2314
Oppenheimer Strategic Bond
6/30/1998 purchase 1,000.00 10.277402 - 97.3009 97.3009
6/30/1999 annual fee (0.98) 10.108287 97.3009 (0.0970) 97.2039
6/30/1999 surrender fee (45.00) 10.108287 97.2039 (4.4518) 92.7521
Putnam VT Growth and Income
6/30/1998 purchase 1,000.00 10.936902 - 91.4336 91.4336
6/30/1999 annual fee (1.15) 12.525638 91.4336 (0.0918) 91.3418
6/30/1999 surrender fee (45.00) 12.525638 91.3418 (3.5926) 87.7492
Putnam VT New Value
6/30/1998 purchase 1,000.00 10.327686 - 96.8271 96.8271
6/30/1999 annual fee (1.15) 11.916467 96.8271 (0.0965) 96.7306
6/30/1999 surrender fee (45.00) 11.916467 96.7306 (3.7763) 92.9543
Putnam VT Vista
6/30/1998 purchase 1,000.00 11.628968 - 85.9922 85.9922
6/30/1999 annual fee (1.14) 13.219555 85.9922 (0.0862) 85.9060
6/30/1999 surrender fee (45.00) 13.219555 85.9060 (3.4040) 82.5020
Putnam VT International Growth
6/30/1998 purchase 1,000.00 11.918946 - 83.9000 83.9000
6/30/1999 annual fee (1.10) 13.087306 83.9000 (0.0841) 83.8159
6/30/1999 surrender fee (45.00) 13.087306 83.8159 (3.4384) 80.3775
Putnam VT International New Opportunities
6/30/1998 purchase 1,000.00 11.570562 - 86.4262 86.4262
6/30/1999 annual fee (1.17) 13.558702 86.4262 (0.0863) 86.3399
6/30/1999 surrender fee (45.00) 13.558702 86.3399 (3.3189) 83.0210
</TABLE>
<TABLE>
<CAPTION>
Account Account
Value Value
Before After
Transaction Transaction
<S> <C>
- 1,000.00
1,001.73 1,000.73
1,000.73 955.73
- 1,000.00
1,037.45 1,036.41
1,036.41 991.41
- 1,000.00
1,124.67 1,123.55
1,123.55 1,078.55
- 1,000.00
1,174.23 1,173.06
1,173.06 1,128.06
- 1,000.00
1,031.29 1,030.26
1,030.26 985.26
- 1,000.00
1,004.90 1,003.90
1,003.90 958.90
- 1,000.00
945.11 944.16
944.16 899.16
- 1,000.00
1,232.23 1,231.00
1,231.00 1,186.00
- 1,000.00
1,189.37 1,188.19
1,188.19 1,143.19
- 1,000.00
1,036.03 1,034.99
1,034.99 989.99
- 1,000.00
1,182.88 1,181.70
1,181.70 1,136.70
- 1,000.00
940.24 939.30
939.30 894.30
- 1,000.00
1,057.28 1,056.22
1,056.22 1,011.22
- 1,000.00
1,008.23 1,007.22
1,007.22 962.22
- 1,000.00
1,259.58 1,258.32
1,258.32 1,213.32
- 1,000.00
1,141.36 1,140.22
1,140.22 1,095.22
- 1,000.00
1,000.70 999.70
999.70 954.70
- 1,000.00
1,285.72 1,284.44
1,284.44 1,239.44
- 1,000.00
904.71 903.81
903.81 858.81
- 1,000.00
1,624.96 1,623.34
1,623.34 1,578.34
- 1,000.00
1,007.92 1,006.91
1,006.91 961.91
- 1,000.00
1,016.96 1,015.94
1,015.94 970.94
- 1,000.00
1,025.57 1,024.54
1,024.54 979.54
- 1,000.00
1,072.98 1,071.91
1,071.91 1,026.91
- 1,000.00
905.84 904.93
904.93 859.93
- 1,000.00
1,024.97 1,023.95
1,023.95 978.95
- 1,000.00
1,114.32 1,113.21
1,113.21 1,068.21
- 1,000.00
1,099.51 1,098.41
1,098.41 1,053.41
- 1,000.00
1,227.99 1,226.76
1,226.76 1,181.76
- 1,000.00
920.61 919.69
919.69 874.69
- 1,000.00
987.11 986.12
986.12 941.12
- 1,000.00
1,011.62 1,010.61
1,010.61 965.61
- 1,000.00
1,209.31 1,208.10
1,208.10 1,163.10
- 1,000.00
1,046.02 1,044.97
1,044.97 999.97
- 1,000.00
979.85 978.87
978.87 933.87
- 1,000.00
996.13 995.13
995.13 950.13
- 1,000.00
983.55 982.56
982.56 937.56
- 1,000.00
1,145.26 1,144.11
1,144.11 1,099.11
- 1,000.00
1,153.84 1,152.69
1,152.69 1,107.69
- 1,000.00
1,136.78 1,135.64
1,135.64 1,090.64
- 1,000.00
1,098.02 1,096.92
1,096.92 1,051.92
- 1,000.00
1,171.83 1,170.66
1,170.66 1,125.66
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Standard 1 Year Performance- Part I
As of 6/30/1999
Sub-Account Total Account Unit Value Initial Inception Days Since
Return Value 6/30/1999 Investment Date Inception
Cova Series Trust Lord Abbett Growth and Income 1/8/1999 173
<S> <C> <C> <C> <C> <C> <C> <C>
Cova Series Trust Bond Debenture -4.43% 955.73 13.536178 1,000.00 5/20/1996 1,136
General American Capital Company Money Market -0.86% 991.41 11.299208 1,000.00 12/4/1997 573
Cova Series Trust Developing Growth 7.85% 1,078.55 12.724207 1,000.00 11/7/1997 600
Cova Series Trust Large Cap Research 12.81% 1,128.06 13.320653 1,000.00 2/17/1998 498
Cova Series Trust Mid-Cap Value -1.47% 985.26 11.560422 1,000.00 11/7/1997 600
Cova Series Trust Quality Bond -4.11% 958.90 11.582147 1,000.00 5/20/1996 1,136
Cova Series Trust Small Cap Stock -10.08% 899.16 13.249411 1,000.00 5/15/1996 1,141
Cova Series Trust Large Cap Stock 18.60% 1,186.00 21.760437 1,000.00 5/16/1996 1,140
Cova Series Trust Select Equity 14.32% 1,143.19 18.786819 1,000.00 5/15/1996 1,141
Cova Series Trust International Equity -1.00% 989.99 13.530210 1,000.00 5/14/1996 1,142
Russell Multi-Style Equity 13.67% 1,136.70 14.186493 1,000.00 12/31/1997 546
Russell Aggressive Equity -10.57% 894.30 10.032732 1,000.00 12/31/1997 546
Russell Non-U.S. 1.12% 1,011.22 11.886482 1,000.00 12/31/1997 546
Russell Core Bond -3.78% 962.22 10.439720 1,000.00 12/31/1997 546
AIM V.I. Value 21.33% 1,213.32 14.860062 1,000.00 12/31/1997 546
AIM V.I. Capital Appreciation 9.52% 1,095.22 12.834364 1,000.00 12/31/1997 546
AIM V.I. International Equity -4.53% 954.70 11.842406 1,000.00 12/31/1997 546
Alliance Premier Growth 23.94% 1,239.44 16.423320 1,000.00 12/31/1997 546
Alliance Real Estate Investment -14.12% 858.81 8.423121 1,000.00 12/31/1997 546
Liberty Newport Tiger Fund, Variable Series 57.83% 1,578.34 11.928849 1,000.00 12/31/1997 546
Goldman Sachs Growth and Income -3.81% 961.91 10.869858 1,000.00 3/31/1998 456
Goldman Sachs International -2.91% 970.94 11.642518 1,000.00 3/31/1998 456
Goldman Sachs Global Income -2.05% 979.54 10.584393 1,000.00 3/31/1998 456
Kemper Small Cap Growth 2.69% 1,026.91 12.086038 1,000.00 12/31/1997 546
Kemper Small Cap Value -14.01% 859.93 9.227261 1,000.00 12/31/1997 546
Kemper Government Securities -2.10% 978.95 10.564382 1,000.00 12/31/1997 546
MFS Research 6.82% 1,068.21 13.165059 1,000.00 12/31/1997 546
MFS Growth with Income 5.34% 1,053.41 12.692150 1,000.00 12/31/1997 546
MFS Emerging Growth 18.18% 1,181.76 14.837048 1,000.00 12/31/1997 546
MFS / Foreign & Colonial Emerging Markets Equity -12.53% 874.69 7.998729 1,000.00 12/31/1997 546
MFS High Income -5.89% 941.12 10.281026 1,000.00 12/31/1997 546
MFS Global Governments -3.44% 965.61 10.283862 1,000.00 12/31/1997 546
Oppenheimer Capital Appreciation 16.31% 1,163.10 14.082942 1,000.00 12/31/1997 546
Oppenheimer Main Street Growth & Income 0.00% 999.97 11.772262 1,000.00 12/31/1997 546
Oppenheimer High Income -6.61% 933.87 10.213444 1,000.00 12/31/1997 546
Oppenheimer Bond -4.99% 950.13 10.301628 1,000.00 12/31/1997 546
Oppenheimer Strategic Bond -6.24% 937.56 10.108287 1,000.00 12/31/1997 546
Putnam VT Growth and Income 9.91% 1,099.11 12.525638 1,000.00 12/31/1997 546
Putman VT New Value 10.77% 1,107.69 11.916467 1,000.00 12/31/1997 546
Putnam VT Vista 9.06% 1,090.64 13.219555 1,000.00 12/31/1997 546
Putnam VT International Growth 5.19% 1,051.92 13.087306 1,000.00 12/31/1997 546
Putnam VT International New Opportunities 12.57% 1,125.66 13.558702 1,000.00 12/31/1997 546
Franklin Small Cap Investments 3/1/1999 121
Templeton International 9/21/1998 282
Templeton Developing Markets 9/21/1998 282
Templeton Mutual Shares Investments 9/21/1998 282
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Standard Since Inception Performance Data- Part I
As of 6/30/99
Date Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
Cova Series Trust Lord Abbett Growth and Income
<S> <C> <C> <C> <C> <C> <C>
1/8/1999 purchase 1,000.00 35.903763 - 27.8522 27.8522
6/30/1999 annual fee (1.09) 39.095071 27.8522 (0.0279) 27.8243
6/30/1999 surrender fee (50.00) 39.095071 27.8243 (1.2789) 26.5454
Cova Series Trust Bond Debenture
5/20/1996 purchase 1,000.00 10.146329 - 98.5578 98.5578
5/20/1997 annual fee (1.16) 11.758378 98.5578 (0.0987) 98.4591
5/20/1998 annual fee (1.33) 13.473825 98.4591 (0.0987) 98.3604
6/30/1999 annual fee (1.33) 13.536178 98.3604 (0.0983) 98.2621
6/30/1999 surrender fee (45.00) 13.536178 98.2621 (3.3244) 94.9377
General American Capital Company Money Market
12/4/1997 purchase 1,000.00 10.630827 - 94.0661 94.0661
12/4/1998 annual fee (1.04) 11.081985 94.0661 (0.0938) 93.9723
6/30/1999 annual fee (1.06) 11.299208 93.9723 (0.0938) 93.8785
6/30/1999 surrender fee (45.00) 11.299208 93.8785 (3.9826) 89.8959
Cova Series Trust Developing Growth
11/7/1997 purchase 1,000.00 10.830839 - 92.3290 92.3290
11/9/1998 annual fee (0.92) 9.967264 92.3290 (0.0923) 92.2367
6/30/1999 annual fee (1.17) 12.724207 92.2367 (0.0920) 92.1447
6/30/1999 surrender fee (45.00) 12.724207 92.1447 (3.5366) 88.6081
Cova Series Trust Large Cap Research
2/17/1998 purchase 1,000.00 10.756077 - 92.9707 92.9707
2/17/1999 annual fee (1.08) 11.579471 92.9707 (0.0933) 92.8774
6/30/1999 annual fee (1.24) 13.320653 92.8774 (0.0931) 92.7843
6/30/1999 surrender fee (45.00) 13.320653 92.7843 (3.3782) 89.4061
Cova Series Trust Mid-Cap Value
11/7/1997 purchase 1,000.00 10.048781 - 99.5146 99.5146
11/9/1998 annual fee (1.03) 10.358485 99.5146 (0.0994) 99.4152
6/30/1999 annual fee (1.15) 11.560422 99.4152 (0.0995) 99.3157
6/30/1999 surrender fee (45.00) 11.560422 99.3157 (3.8926) 95.4231
Cova Series Trust Quality Bond
5/20/1996 purchase 1,000.00 9.951189 - 100.4905 100.4905
5/20/1997 annual fee (1.05) 10.440361 100.4905 (0.1006) 100.3899
5/20/1998 annual fee (1.15) 11.413235 100.3899 (0.1008) 100.2891
6/30/1999 annual fee (1.16) 11.582147 100.2891 (0.1002) 100.1889
6/30/1999 surrender fee (45.00) 11.582147 100.1889 (3.8853) 96.3036
Cova Series Trust Small Cap Stock
5/15/1996 purchase 1,000.00 10.905675 - 91.6954 91.6954
5/15/1997 annual fee (1.01) 10.995232 91.6954 (0.0919) 91.6035
5/15/1998 annual fee (1.35) 14.699217 91.6035 (0.0918) 91.5117
6/30/1999 annual fee (1.21) 13.249411 91.5117 (0.0913) 91.4204
6/30/1999 surrender fee (45.00) 13.249411 91.4204 (3.3964) 88.0240
Cova Series Trust Large Cap Stock
5/16/1996 purchase 1,000.00 10.155238 - 98.4714 98.4714
5/16/1997 annual fee (1.26) 12.753841 98.4714 (0.0988) 98.3726
5/18/1998 annual fee (1.71) 17.363858 98.3726 (0.0985) 98.2741
6/30/1999 annual fee (2.14) 21.760437 98.2741 (0.0983) 98.1758
6/30/1999 surrender fee (45.00) 21.760437 98.1758 (2.0680) 96.1078
Cova Series Trust Select Equity
5/15/1996 purchase 1,000.00 10.151958 - 98.5032 98.5032
5/15/1997 annual fee (1.19) 12.101835 98.5032 (0.0983) 98.4049
5/15/1998 annual fee (1.58) 16.090569 98.4049 (0.0982) 98.3067
6/30/1999 annual fee (1.85) 18.786819 98.3067 (0.0985) 98.2082
6/30/1999 surrender fee (45.00) 18.786819 98.2082 (2.3953) 95.8129
Cova Series Trust International Equity
5/14/1996 purchase 1,000.00 10.098675 - 99.0229 99.0229
5/14/1997 annual fee (1.16) 11.696691 99.0229 (0.0992) 98.9237
5/14/1998 annual fee (1.30) 13.129981 98.9237 (0.0990) 98.8247
6/30/1999 annual fee (1.34) 13.530210 98.8247 (0.0990) 98.7257
6/30/1999 surrender fee (45.00) 13.530210 98.7257 (3.3259) 95.3998
Russell Multi-Style Equity
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
6/30/1999 annual fee (1.42) 14.186493 99.9000 (0.1001) 99.7999
6/30/1999 surrender fee (45.00) 14.186493 99.7999 (3.1720) 96.6279
Russell Aggressive Equity
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
6/30/1999 annual fee (1.00) 10.032732 99.8996 (0.0997) 99.7999
6/30/1999 surrender fee (45.00) 10.032732 99.7999 (4.4853) 95.3146
Russell Non-U.S.
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
6/30/1999 annual fee (1.19) 11.886482 99.9004 (0.1001) 99.8003
6/30/1999 surrender fee (45.00) 11.886482 99.8003 (3.7858) 96.0145
Russell Core Bond
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
6/30/1999 annual fee (1.04) 10.439720 99.8999 (0.0996) 99.8003
6/30/1999 surrender fee (45.00) 10.439720 99.8003 (4.3105) 95.4898
AIM V.I. Value
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
6/30/1999 annual fee (1.48) 14.860062 99.8997 (0.0996) 99.8001
6/30/1999 surrender fee (45.00) 14.860062 99.8001 (3.0283) 96.7718
AIM V.I. Capital Appreciation
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
6/30/1999 annual fee (1.28) 12.834364 99.8998 (0.0997) 99.8001
6/30/1999 surrender fee (45.00) 12.834364 99.8001 (3.5062) 96.2939
AIM V.I. International Equity
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
6/30/1999 annual fee (1.18) 11.842406 99.8999 (0.0996) 99.8003
6/30/1999 surrender fee (45.00) 11.842406 99.8003 (3.7999) 96.0004
Alliance Premier Growth
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
6/30/1999 annual fee (1.64) 16.423320 99.9000 (0.0999) 99.8001
6/30/1999 surrender fee (45.00) 16.423320 99.8001 (2.7400) 97.0601
Alliance Real Estate Investment
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
6/30/1999 annual fee (0.84) 8.423121 99.8999 (0.0997) 99.8002
6/30/1999 surrender fee (45.00) 8.423121 99.8002 (5.3424) 94.4578
Liberty Newport Tiger Fund, Variable Series
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
6/30/1999 annual fee (1.19) 11.928849 99.9003 (0.0998) 99.8005
6/30/1999 surrender fee (45.00) 11.928849 99.8005 (3.7724) 96.0281
Goldman Sachs Growth and Income
3/31/1998 purchase 1,000.00 11.212646 - 89.1850 89.1850
6/30/1999 annual fee (0.97) 10.869858 89.1850 (0.0892) 89.0958
6/30/1999 surrender fee (45.00) 10.869858 89.0958 (4.1399) 84.9559
Goldman Sachs International Equity
3/31/1998 purchase 1,000.00 11.199710 - 89.2880 89.2880
6/30/1999 annual fee (1.04) 11.642518 89.2880 (0.0893) 89.1987
6/30/1999 surrender fee (45.00) 11.642518 89.1987 (3.8651) 85.3336
Goldman Sachs Global Income
3/31/1998 purchase 1,000.00 10.152000 - 98.5028 98.5028
6/30/1999 annual fee (1.04) 10.584393 98.5028 (0.0983) 98.4045
6/30/1999 surrender fee (45.00) 10.584393 98.4045 (4.2515) 94.1530
Kemper Small Cap Growth
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
6/30/1999 annual fee (1.21) 12.086038 99.8998 (0.1001) 99.7997
6/30/1999 surrender fee (45.00) 12.086038 99.7997 (3.7233) 96.0764
Kemper Small Cap Value
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
6/30/1999 annual fee (0.92) 9.227261 99.8995 (0.0997) 99.7998
6/30/1999 surrender fee (45.00) 9.227261 99.7998 (4.8769) 94.9229
Kemper Government Securities
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
6/30/1999 annual fee (1.06) 10.564382 99.8996 (0.1003) 99.7993
6/30/1999 surrender fee (45.00) 10.564382 99.7993 (4.2596) 95.5397
MFS Research
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
6/30/1999 annual fee (1.32) 13.165059 99.8998 (0.1003) 99.7995
6/30/1999 surrender fee (45.00) 13.165059 99.7995 (3.4181) 96.3814
MFS Growth with Income
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
6/30/1999 annual fee (1.27) 12.692150 99.8997 (0.1001) 99.7996
6/30/1999 surrender fee (45.00) 12.692150 99.7996 (3.5455) 96.2541
MFS Emerging Growth
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
6/30/1999 annual fee (1.48) 14.837048 99.9003 (0.0998) 99.8005
6/30/1999 surrender fee (45.00) 14.837048 99.8005 (3.0329) 96.7676
MFS / Foreign & Colonial Emerging Markets Equity
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
6/30/1999 annual fee (0.80) 7.998729 99.8996 (0.1000) 99.7996
6/30/1999 surrender fee (45.00) 7.998729 99.7996 (5.6259) 94.1737
MFS High Income
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
6/30/1999 annual fee (1.03) 10.281026 99.9005 (0.1002) 99.8003
6/30/1999 surrender fee (45.00) 10.281026 99.8003 (4.3770) 95.4233
MFS Global Governments
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
6/30/1999 annual fee (1.03) 10.283862 99.8997 (0.1002) 99.7995
6/30/1999 surrender fee (45.00) 10.283862 99.7995 (4.3758) 95.4237
Oppenheimer Capital Appreciation
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
6/30/1999 annual fee (1.41) 14.082942 99.9003 (0.1001) 99.8002
6/30/1999 surrender fee (45.00) 14.082942 99.8002 (3.1954) 96.6048
Oppenheimer Main Street Growth & Income
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
6/30/1999 annual fee (1.18) 11.772262 99.9003 (0.1002) 99.8001
6/30/1999 surrender fee (45.00) 11.772262 99.8001 (3.8225) 95.9776
Oppenheimer High Income
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
6/30/1999 annual fee (1.02) 10.213444 99.8999 (0.0999) 99.8000
6/30/1999 surrender fee (45.00) 10.213444 99.8000 (4.4060) 95.3940
Oppenheimer Bond
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
6/30/1999 annual fee (1.03) 10.301628 99.8999 (0.1000) 99.7999
6/30/1999 surrender fee (45.00) 10.301628 99.7999 (4.3682) 95.4317
Oppenheimer Strategic Bond
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
6/30/1999 annual fee (1.01) 10.108287 99.8995 (0.0999) 99.7996
6/30/1999 surrender fee (45.00) 10.108287 99.7996 (4.4518) 95.3478
Putnam VT Growth and Income
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
6/30/1999 annual fee (1.25) 12.525638 99.8998 (0.0998) 99.8000
6/30/1999 surrender fee (45.00) 12.525638 99.8000 (3.5926) 96.2074
Putnam VT New Value
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
6/30/1999 annual fee (1.19) 11.916467 99.8998 (0.0999) 99.7999
6/30/1999 surrender fee (45.00) 11.916467 99.7999 (3.7763) 96.0236
Putnam VT Vista
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
6/30/1999 annual fee (1.32) 13.219555 99.8999 (0.0999) 99.8000
6/30/1999 surrender fee (45.00) 13.219555 99.8000 (3.4040) 96.3960
Putnam VT International Growth
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
6/30/1999 annual fee (1.31) 13.087306 99.9001 (0.1001) 99.8000
6/30/1999 surrender fee (45.00) 13.087306 99.8000 (3.4384) 96.3616
Putnam VT International New Opportunities
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
6/30/1999 annual fee (1.35) 13.558702 99.9000 (0.0996) 99.8004
6/30/1999 surrender fee (45.00) 13.558702 99.8004 (3.3189) 96.4815
Franklin Small Cap Investments
3/1/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
6/30/1999 annual fee (1.21) 12.136171 100.0000 (0.0997) 99.9003
6/30/1999 surrender fee (50.00) 12.136171 99.9003 (4.1199) 95.7804
Templeton International
9/21/1998 purchase 1,000.00 7.893131 - 126.6924 126.6924
6/30/1999 annual fee (1.27) 10.024137 126.6924 (0.1267) 126.5657
6/30/1999 surrender fee (50.00) 10.024137 126.5657 (4.9880) 121.5777
Templeton Developing Markets
9/21/1998 purchase 1,000.00 5.645520 - 177.1316 177.1316
6/30/1999 annual fee (1.91) 10.757350 177.1316 (0.1776) 176.9540
6/30/1999 surrender fee (50.00) 10.757350 176.9540 (4.6480) 172.3060
Templeton Mutual Shares Investments
9/21/1998 purchase 1,000.00 8.643412 - 115.6951 115.6951
6/30/1999 annual fee (1.28) 11.031485 115.6951 (0.1160) 115.5791
6/30/1999 surrender fee (50.00) 11.031485 115.5791 (4.5325) 111.0466
</TABLE>
<TABLE>
<CAPTION>
Account Account
Value Value
Before After
Transaction Transaction
<S> <C>
- 1,000.00
1,088.88 1,087.79
1,087.79 1,037.79
- 1,000.00
1,158.88 1,157.72
1,326.62 1,325.29
1,331.42 1,330.09
1,330.09 1,285.09
- 1,000.00
1,042.44 1,041.40
1,061.81 1,060.75
1,060.75 1,015.75
- 1,000.00
920.27 919.35
1,173.64 1,172.47
1,172.47 1,127.47
- 1,000.00
1,076.55 1,075.47
1,237.19 1,235.95
1,235.95 1,190.95
- 1,000.00
1,030.82 1,029.79
1,149.28 1,148.13
1,148.13 1,103.13
- 1,000.00
1,049.16 1,048.11
1,145.77 1,144.62
1,161.56 1,160.40
1,160.40 1,115.40
- 1,000.00
1,008.21 1,007.20
1,346.50 1,345.15
1,212.48 1,211.27
1,211.27 1,166.27
- 1,000.00
1,255.89 1,254.63
1,708.13 1,706.42
2,138.49 2,136.35
2,136.35 2,091.35
- 1,000.00
1,192.07 1,190.88
1,583.39 1,581.81
1,846.87 1,845.02
1,845.02 1,800.02
- 1,000.00
1,158.24 1,157.08
1,298.87 1,297.57
1,337.12 1,335.78
1,335.78 1,290.78
- 1,000.00
1,269.48 1,268.21
1,417.23 1,415.81
1,415.81 1,370.81
- 1,000.00
996.33 995.33
1,002.27 1,001.27
1,001.27 956.27
- 1,000.00
1,114.21 1,113.10
1,187.46 1,186.27
1,186.27 1,141.27
- 1,000.00
1,059.12 1,058.06
1,042.93 1,041.89
1,041.89 996.89
- 1,000.00
1,306.02 1,304.71
1,484.52 1,483.04
1,483.04 1,438.03
- 1,000.00
1,177.07 1,175.89
1,282.15 1,280.87
1,280.87 1,235.87
- 1,000.00
1,139.14 1,138.00
1,183.06 1,181.88
1,181.88 1,136.88
- 1,000.00
1,459.55 1,458.09
1,640.69 1,639.05
1,639.05 1,594.05
- 1,000.00
798.84 798.04
841.47 840.63
840.63 795.63
- 1,000.00
922.88 921.96
1,191.70 1,190.51
1,190.51 1,145.50
- 1,000.00
969.43 968.46
968.46 923.46
- 1,000.00
1,039.54 1,038.50
1,038.50 993.50
- 1,000.00
1,042.59 1,041.55
1,041.55 996.55
- 1,000.00
1,167.61 1,166.44
1,207.39 1,206.18
1,206.18 1,161.18
- 1,000.00
875.32 874.44
921.80 920.88
920.88 875.88
- 1,000.00
1,055.65 1,054.59
1,055.38 1,054.32
1,054.32 1,009.32
- 1,000.00
1,217.28 1,216.06
1,315.19 1,313.87
1,313.87 1,268.87
- 1,000.00
1,206.66 1,205.45
1,267.94 1,266.67
1,266.67 1,221.67
- 1,000.00
1,323.32 1,322.00
1,482.23 1,480.74
1,480.74 1,435.75
- 1,000.00
657.18 656.52
799.07 798.27
798.27 753.27
- 1,000.00
984.52 983.54
1,027.08 1,026.05
1,026.05 981.05
- 1,000.00
1,066.99 1,065.92
1,027.35 1,026.32
1,026.32 981.32
- 1,000.00
1,223.27 1,222.05
1,406.89 1,405.48
1,405.48 1,360.48
- 1,000.00
1,032.65 1,031.62
1,176.05 1,174.87
1,174.87 1,129.87
- 1,000.00
989.38 988.39
1,020.32 1,019.30
1,019.30 974.30
- 1,000.00
989.38 988.39
1,029.13 1,028.10
1,028.10 983.10
- 1,000.00
1,015.13 1,014.11
1,009.81 1,008.80
1,008.80 963.80
- 1,000.00
1,138.27 1,137.12
1,251.31 1,250.06
1,250.06 1,205.06
- 1,000.00
1,048.35 1,047.30
1,190.45 1,189.26
1,189.26 1,144.26
- 1,000.00
1,178.57 1,177.39
1,320.63 1,319.31
1,319.31 1,274.31
- 1,000.00
1,170.70 1,169.53
1,307.42 1,306.11
1,306.11 1,261.11
- 1,000.00
1,140.23 1,139.08
1,354.51 1,353.16
1,353.16 1,308.16
- 1,000.00
1,213.62 1,212.41
1,212.41 1,162.41
- 1,000.00
1,269.98 1,268.71
1,268.71 1,218.71
- 1,000.00
1,905.47 1,903.56
1,903.56 1,853.56
- 1,000.00
1,276.29 1,275.01
1,275.01 1,225.01
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Standard Since Inception Performance- Part I
As of 6/30/99
Sub-Account Annualized Account Unit Value Initial Inception
Return Value 6/30/1999 Investment Date
<S> <C> <C> <C> <C> <C> <C> <C>
Cova Series Trust Lord Abbett Growth and Income (1) 3.78% 1,037.79 39.095071 1,000.00 1/8/1999
Cova Series Trust Bond Debenture 8.39% 1,285.09 13.536178 1,000.00 5/20/1996
General American Capital Company Money Market 1.00% 1,015.75 11.299208 1,000.00 12/4/1997
Cova Series Trust Developing Growth 7.56% 1,127.47 12.724207 1,000.00 11/7/1997
Cova Series Trust Large Cap Research 13.64% 1,190.95 13.320653 1,000.00 2/17/1998
Cova Series Trust Mid-Cap Value 6.14% 1,103.13 11.560422 1,000.00 11/7/1997
Cova Series Trust Quality Bond 3.57% 1,115.40 11.582147 1,000.00 5/20/1996
Cova Series Trust Small Cap Stock 5.04% 1,166.27 13.249411 1,000.00 5/15/1996
Cova Series Trust Large Cap Stock 26.62% 2,091.35 21.760437 1,000.00 5/16/1996
Cova Series Trust Select Equity 20.67% 1,800.02 18.786819 1,000.00 5/15/1996
Cova Series Trust International Equity 8.49% 1,290.78 13.530210 1,000.00 5/14/1996
Russell Multi-Style Equity 23.47% 1,370.81 14.186493 1,000.00 12/31/1997
Russell Aggressive Equity -2.94% 956.27 10.032732 1,000.00 12/31/1997
Russell Non-U.S. 9.24% 1,141.27 11.886482 1,000.00 12/31/1997
Russell Core Bond -0.21% 996.89 10.439720 1,000.00 12/31/1997
AIM V.I. Value 27.49% 1,438.03 14.860062 1,000.00 12/31/1997
AIM V.I. Capital Appreciation 15.21% 1,235.87 12.834364 1,000.00 12/31/1997
AIM V.I. International Equity 8.95% 1,136.88 11.842406 1,000.00 12/31/1997
Alliance Premier Growth 36.58% 1,594.05 16.423320 1,000.00 12/31/1997
Alliance Real Estate Investment -14.17% 795.63 8.423121 1,000.00 12/31/1997
Liberty Newport Tiger Fund, Variable Series 9.51% 1,145.50 11.928849 1,000.00 12/31/1997
Goldman Sachs Growth and Income -6.17% 923.46 10.869858 1,000.00 3/31/1998
Goldman Sachs International -0.52% 993.50 11.642518 1,000.00 3/31/1998
Goldman Sachs Global Income -0.28% 996.55 10.584393 1,000.00 3/31/1998
Kemper Small Cap Growth 10.51% 1,161.18 12.086038 1,000.00 12/31/1997
Kemper Small Cap Value -8.48% 875.88 9.227261 1,000.00 12/31/1997
Kemper Government Securities 0.62% 1,009.32 10.564382 1,000.00 12/31/1997
MFS Research 17.26% 1,268.87 13.165059 1,000.00 12/31/1997
MFS Growth with Income 14.32% 1,221.67 12.692150 1,000.00 12/31/1997
MFS Emerging Growth 27.35% 1,435.75 14.837048 1,000.00 12/31/1997
MFS / Foreign & Colonial Emerging Markets Equity -17.26% 753.27 7.998729 1,000.00 12/31/1997
MFS High Income -1.27% 981.05 10.281026 1,000.00 12/31/1997
MFS Global Governments -1.25% 981.32 10.283862 1,000.00 12/31/1997
Oppenheimer Capital Appreciation 22.85% 1,360.48 14.082942 1,000.00 12/31/1997
Oppenheimer Main Street Growth & Income 8.50% 1,129.87 11.772262 1,000.00 12/31/1997
Oppenheimer High Income -1.73% 974.30 10.213444 1,000.00 12/31/1997
Oppenheimer Bond -1.13% 983.10 10.301628 1,000.00 12/31/1997
Oppenheimer Strategic Bond -2.43% 963.80 10.108287 1,000.00 12/31/1997
Putnam VT Growth and Income 13.28% 1,205.06 12.525638 1,000.00 12/31/1997
Putman VT New Value 9.43% 1,144.26 11.916467 1,000.00 12/31/1997
Putnam VT Vista 17.59% 1,274.31 13.219555 1,000.00 12/31/1997
Putnam VT International Growth 16.78% 1,261.11 13.087306 1,000.00 12/31/1997
Putnam VT International New Opportunities 19.67% 1,308.16 13.558702 1,000.00 12/31/1997
Franklin Small Cap Investments (1) 16.24% 1,162.41 12.136171 1,000.00 3/1/1999
Templeton International (1) 21.87% 1,218.71 10.024137 1,000.00 9/21/1998
Templeton Developing Markets (1) 85.36% 1,853.56 10.757350 1,000.00 9/21/1998
Templeton Mutual Shares Investments (1) 22.50% 1,225.01 11.031485 1,000.00 9/21/1998
<FN>
(1) Return is not annualized for periods less than 1 year.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Days Since
Inception
<S> <C>
173
1,137
573
601
499
601
1,137
1,142
1,141
1,142
1,143
546
546
546
546
546
546
546
546
546
546
456
456
456
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
121
282
282
282
<FN>
(1) Return is not annualized for periods less than 1 year.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Non-Standard 1 Year Performance Data- Part I
As of 6/30/99
Date Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
Cova Series Trust Bond Debenture
<S> <C> <C> <C> <C> <C> <C>
6/30/1998 purchase 1,000.00 13.512820 - 74.0038 74.0038
6/30/1999 annual fee 13.536178 74.0038 - 74.0038
6/30/1999 surrender fee 13.536178 74.0038 - 74.0038
General American Capital Company Money Market
6/30/1998 purchase 1,000.00 10.891342 - 91.8160 91.8160
6/30/1999 annual fee 11.299208 91.8160 - 91.8160
6/30/1999 surrender fee 11.299208 91.8160 - 91.8160
Cova Series Trust Developing Growth
6/30/1998 purchase 1,000.00 11.313756 - 88.3880 88.3880
6/30/1999 annual fee 12.724207 88.3880 - 88.3880
6/30/1999 surrender fee 12.724207 88.3880 - 88.3880
Cova Series Trust Large Cap Research
6/30/1998 purchase 1,000.00 11.344142 - 88.1512 88.1512
6/30/1999 annual fee 13.320653 88.1512 - 88.1512
6/30/1999 surrender fee 13.320653 88.1512 - 88.1512
Cova Series Trust Mid-Cap Value
6/30/1998 purchase 1,000.00 11.209646 - 89.2089 89.2089
6/30/1999 annual fee 11.560422 89.2089 - 89.2089
6/30/1999 surrender fee 11.560422 89.2089 - 89.2089
Cova Series Trust Quality Bond
6/30/1998 purchase 1,000.00 11.525627 - 86.7632 86.7632
6/30/1999 annual fee 11.582147 86.7632 - 86.7632
6/30/1999 surrender fee 11.582147 86.7632 - 86.7632
Cova Series Trust Small Cap Stock
6/30/1998 purchase 1,000.00 14.018905 - 71.3322 71.3322
6/30/1999 annual fee 13.249411 71.3322 - 71.3322
6/30/1999 surrender fee 13.249411 71.3322 - 71.3322
Cova Series Trust Large Cap Stock
6/30/1998 purchase 1,000.00 17.659385 - 56.6271 56.6271
6/30/1999 annual fee 21.760437 56.6271 - 56.6271
6/30/1999 surrender fee 21.760437 56.6271 - 56.6271
Cova Series Trust Select Equity
6/30/1998 purchase 1,000.00 15.795532 - 63.3090 63.3090
6/30/1999 annual fee 18.786819 63.3090 - 63.3090
6/30/1999 surrender fee 18.786819 63.3090 - 63.3090
Cova Series Trust International Equity
6/30/1998 purchase 1,000.00 13.059689 - 76.5715 76.5715
6/30/1999 annual fee 13.530210 76.5715 - 76.5715
6/30/1999 surrender fee 13.530210 76.5715 - 76.5715
Russell Multi-Style Equity
6/30/1998 purchase 1,000.00 11.993206 - 83.3805 83.3805
6/30/1999 annual fee 14.186493 83.3805 - 83.3805
6/30/1999 surrender fee 14.186493 83.3805 - 83.3805
Russell Aggressive Equity
6/30/1998 purchase 1,000.00 10.670391 - 93.7173 93.7173
6/30/1999 annual fee 10.032732 93.7173 - 93.7173
6/30/1999 surrender fee 10.032732 93.7173 - 93.7173
Russell Non-U.S.
6/30/1998 purchase 1,000.00 11.242493 - 88.9482 88.9482
6/30/1999 annual fee 11.886482 88.9482 - 88.9482
6/30/1999 surrender fee 11.886482 88.9482 - 88.9482
Russell Core Bond
6/30/1998 purchase 1,000.00 10.354530 - 96.5761 96.5761
6/30/1999 annual fee 10.439720 96.5761 - 96.5761
6/30/1999 surrender fee 10.439720 96.5761 - 96.5761
AIM V.I. Value
6/30/1998 purchase 1,000.00 11.797664 - 84.7625 84.7625
6/30/1999 annual fee 14.860062 84.7625 - 84.7625
6/30/1999 surrender fee 14.860062 84.7625 - 84.7625
AIM V.I. Capital Appreciation
6/30/1998 purchase 1,000.00 11.244780 - 88.9302 88.9302
6/30/1999 annual fee 12.834364 88.9302 - 88.9302
6/30/1999 surrender fee 12.834364 88.9302 - 88.9302
AIM V.I. International Equity
6/30/1998 purchase 1,000.00 11.834130 - 84.5014 84.5014
6/30/1999 annual fee 11.842406 84.5014 - 84.5014
6/30/1999 surrender fee 11.842406 84.5014 - 84.5014
Alliance Premier Growth
6/30/1998 purchase 1,000.00 12.773593 - 78.2865 78.2865
6/30/1999 annual fee 16.423320 78.2865 - 78.2865
6/30/1999 surrender fee 16.423320 78.2865 - 78.2865
Alliance Real Estate Investment
6/30/1998 purchase 1,000.00 9.310281 - 107.4081 107.4081
6/30/1999 annual fee 8.423121 107.4081 - 107.4081
6/30/1999 surrender fee 8.423121 107.4081 - 107.4081
Liberty Newport Tiger Fund, Variable Series
6/30/1998 purchase 1,000.00 7.341000 - 136.2212 136.2212
6/30/1999 annual fee 11.928849 136.2212 - 136.2212
6/30/1999 surrender fee 11.928849 136.2212 - 136.2212
Goldman Sachs Growth and Income
6/30/1998 purchase 1,000.00 10.784483 - 92.7258 92.7258
6/30/1999 annual fee 10.869858 92.7258 - 92.7258
6/30/1999 surrender fee 10.869858 92.7258 - 92.7258
Goldman Sachs International Equity
6/30/1998 purchase 1,000.00 11.448337 - 87.3489 87.3489
6/30/1999 annual fee 11.642518 87.3489 - 87.3489
6/30/1999 surrender fee 11.642518 87.3489 - 87.3489
Goldman Sachs Global Income
6/30/1998 purchase 1,000.00 10.320498 - 96.8945 96.8945
6/30/1999 annual fee 10.584393 96.8945 - 96.8945
6/30/1999 surrender fee 10.584393 96.8945 - 96.8945
Kemper Small Cap Growth
6/30/1998 purchase 1,000.00 11.264000 - 88.7784 88.7784
6/30/1999 annual fee 12.086038 88.7784 - 88.7784
6/30/1999 surrender fee 12.086038 88.7784 - 88.7784
Kemper Small Cap Value
6/30/1998 purchase 1,000.00 10.186468 - 98.1695 98.1695
6/30/1999 annual fee 9.227261 98.1695 - 98.1695
6/30/1999 surrender fee 9.227261 98.1695 - 98.1695
Kemper Government Securities
6/30/1998 purchase 1,000.00 10.307000 - 97.0214 97.0214
6/30/1999 annual fee 10.564382 97.0214 - 97.0214
6/30/1999 surrender fee 10.564382 97.0214 - 97.0214
MFS Research
6/30/1998 purchase 1,000.00 11.814415 - 84.6424 84.6424
6/30/1999 annual fee 13.165059 84.6424 - 84.6424
6/30/1999 surrender fee 13.165059 84.6424 - 84.6424
MFS Growth with Income
6/30/1998 purchase 1,000.00 11.543425 - 86.6294 86.6294
6/30/1999 annual fee 12.692150 86.6294 - 86.6294
6/30/1999 surrender fee 12.692150 86.6294 - 86.6294
MFS Emerging Growth
6/30/1998 purchase 1,000.00 12.082390 - 82.7651 82.7651
6/30/1999 annual fee 14.837048 82.7651 - 82.7651
6/30/1999 surrender fee 14.837048 82.7651 - 82.7651
MFS / Foreign & Colonial Emerging Markets Equity
6/30/1998 purchase 1,000.00 8.688515 - 115.0945 115.0945
6/30/1999 annual fee 7.998729 115.0945 - 115.0945
6/30/1999 surrender fee 7.998729 115.0945 - 115.0945
MFS High Income
6/30/1998 purchase 1,000.00 10.415267 - 96.0129 96.0129
6/30/1999 annual fee 10.281026 96.0129 - 96.0129
6/30/1999 surrender fee 10.281026 96.0129 - 96.0129
MFS Global Governments
6/30/1998 purchase 1,000.00 10.165697 - 98.3700 98.3700
6/30/1999 annual fee 10.283862 98.3700 - 98.3700
6/30/1999 surrender fee 10.283862 98.3700 - 98.3700
Oppenheimer Capital Appreciation
6/30/1998 purchase 1,000.00 11.645438 - 85.8705 85.8705
6/30/1999 annual fee 14.082942 85.8705 - 85.8705
6/30/1999 surrender fee 14.082942 85.8705 - 85.8705
Oppenheimer Main Street Growth & Income
6/30/1998 purchase 1,000.00 11.254357 - 88.8545 88.8545
6/30/1999 annual fee 11.772262 88.8545 - 88.8545
6/30/1999 surrender fee 11.772262 88.8545 - 88.8545
Oppenheimer High Income
6/30/1998 purchase 1,000.00 10.423521 - 95.9369 95.9369
6/30/1999 annual fee 10.213444 95.9369 - 95.9369
6/30/1999 surrender fee 10.213444 95.9369 - 95.9369
Oppenheimer Bond
6/30/1998 purchase 1,000.00 10.341618 - 96.6967 96.6967
6/30/1999 annual fee 10.301628 96.6967 - 96.6967
6/30/1999 surrender fee 10.301628 96.6967 - 96.6967
Oppenheimer Strategic Bond
6/30/1998 purchase 1,000.00 10.277402 - 97.3009 97.3009
6/30/1999 annual fee 10.108287 97.3009 - 97.3009
6/30/1999 surrender fee 10.108287 97.3009 - 97.3009
Putnam VT Growth and Income
6/30/1998 purchase 1,000.00 10.936902 - 91.4336 91.4336
6/30/1999 annual fee 12.525638 91.4336 - 91.4336
6/30/1999 surrender fee 12.525638 91.4336 - 91.4336
Putnam VT New Value
6/30/1998 purchase 1,000.00 10.327686 - 96.8271 96.8271
6/30/1999 annual fee 11.916467 96.8271 - 96.8271
6/30/1999 surrender fee 11.916467 96.8271 - 96.8271
Putnam VT Vista
6/30/1998 purchase 1,000.00 11.628968 - 85.9922 85.9922
6/30/1999 annual fee 13.219555 85.9922 - 85.9922
6/30/1999 surrender fee 13.219555 85.9922 - 85.9922
Putnam VT International Growth
6/30/1998 purchase 1,000.00 11.918946 - 83.9000 83.9000
6/30/1999 annual fee 13.087306 83.9000 - 83.9000
6/30/1999 surrender fee 13.087306 83.9000 - 83.9000
Putnam VT International New Opportunities
6/30/1998 purchase 1,000.00 11.570562 - 86.4262 86.4262
6/30/1999 annual fee 13.558702 86.4262 - 86.4262
6/30/1999 surrender fee 13.558702 86.4262 - 86.4262
</TABLE>
<TABLE>
<CAPTION>
Account Account
Value Value
Before After
Transaction Transaction
<S> <C>
- 1,000.00
1,001.73 1,001.73
1,001.73 1,001.73
- 1,000.00
1,037.45 1,037.45
1,037.45 1,037.45
- 1,000.00
1,124.67 1,124.67
1,124.67 1,124.67
- 1,000.00
1,174.23 1,174.23
1,174.23 1,174.23
- 1,000.00
1,031.29 1,031.29
1,031.29 1,031.29
- 1,000.00
1,004.90 1,004.90
1,004.90 1,004.90
- 1,000.00
945.11 945.11
945.11 945.11
- 1,000.00
1,232.23 1,232.23
1,232.23 1,232.23
- 1,000.00
1,189.37 1,189.37
1,189.37 1,189.37
- 1,000.00
1,036.03 1,036.03
1,036.03 1,036.03
- 1,000.00
1,182.88 1,182.88
1,182.88 1,182.88
- 1,000.00
940.24 940.24
940.24 940.24
- 1,000.00
1,057.28 1,057.28
1,057.28 1,057.28
- 1,000.00
1,008.23 1,008.23
1,008.23 1,008.23
- 1,000.00
1,259.58 1,259.58
1,259.58 1,259.58
- 1,000.00
1,141.36 1,141.36
1,141.36 1,141.36
- 1,000.00
1,000.70 1,000.70
1,000.70 1,000.70
- 1,000.00
1,285.72 1,285.72
1,285.72 1,285.72
- 1,000.00
904.71 904.71
904.71 904.71
- 1,000.00
1,624.96 1,624.96
1,624.96 1,624.96
- 1,000.00
1,007.92 1,007.92
1,007.92 1,007.92
- 1,000.00
1,016.96 1,016.96
1,016.96 1,016.96
- 1,000.00
1,025.57 1,025.57
1,025.57 1,025.57
- 1,000.00
1,072.98 1,072.98
1,072.98 1,072.98
- 1,000.00
905.84 905.84
905.84 905.84
- 1,000.00
1,024.97 1,024.97
1,024.97 1,024.97
- 1,000.00
1,114.32 1,114.32
1,114.32 1,114.32
- 1,000.00
1,099.51 1,099.51
1,099.51 1,099.51
- 1,000.00
1,227.99 1,227.99
1,227.99 1,227.99
- 1,000.00
920.61 920.61
920.61 920.61
- 1,000.00
987.11 987.11
987.11 987.11
- 1,000.00
1,011.62 1,011.62
1,011.62 1,011.62
- 1,000.00
1,209.31 1,209.31
1,209.31 1,209.31
- 1,000.00
1,046.02 1,046.02
1,046.02 1,046.02
- 1,000.00
979.85 979.85
979.85 979.85
- 1,000.00
996.13 996.13
996.13 996.13
- 1,000.00
983.55 983.55
983.55 983.55
- 1,000.00
1,145.26 1,145.26
1,145.26 1,145.26
- 1,000.00
1,153.84 1,153.84
1,153.84 1,153.84
- 1,000.00
1,136.78 1,136.78
1,136.78 1,136.78
- 1,000.00
1,098.02 1,098.02
1,098.02 1,098.02
- 1,000.00
1,171.83 1,171.83
1,171.83 1,171.83
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Non-Standard 1 Year Performance- Part I
As of 6/30/1999
Sub-Account Total Account Unit Value Initial Inception Days Since
Return Value 6/30/1999 Investment Date Inception
Cova Series Trust Lord Abbett Growth and Income 1/8/1999 173
<S> <C> <C> <C> <C> <C> <C> <C>
Cova Series Trust Bond Debenture 0.17% 1,001.73 13.536178 1,000.00 5/20/1996 1,137
General American Capital Company Money Market 3.75% 1,037.45 11.299208 1,000.00 12/4/1997 573
Cova Series Trust Developing Growth 12.47% 1,124.67 12.724207 1,000.00 11/7/1997 601
Cova Series Trust Large Cap Research 17.42% 1,174.23 13.320653 1,000.00 2/17/1998 499
Cova Series Trust Mid-Cap Value 3.13% 1,031.29 11.560422 1,000.00 11/7/1997 601
Cova Series Trust Quality Bond 0.49% 1,004.90 11.582147 1,000.00 5/20/1996 1,137
Cova Series Trust Small Cap Stock -5.49% 945.11 13.249411 1,000.00 5/15/1996 1,142
Cova Series Trust Large Cap Stock 23.22% 1,232.23 21.760437 1,000.00 5/16/1996 1,141
Cova Series Trust Select Equity 18.94% 1,189.37 18.786819 1,000.00 5/15/1996 1,142
Cova Series Trust International Equity 3.60% 1,036.03 13.530210 1,000.00 5/14/1996 1,143
Russell Multi-Style Equity 18.29% 1,182.88 14.186493 1,000.00 12/31/1997 546
Russell Aggressive Equity -5.98% 940.24 10.032732 1,000.00 12/31/1997 546
Russell Non-U.S. 5.73% 1,057.28 11.886482 1,000.00 12/31/1997 546
Russell Core Bond 0.82% 1,008.23 10.439720 1,000.00 12/31/1997 546
AIM V.I. Value 25.96% 1,259.58 14.860062 1,000.00 12/31/1997 546
AIM V.I. Capital Appreciation 14.14% 1,141.36 12.834364 1,000.00 12/31/1997 546
AIM V.I. International Equity 0.07% 1,000.70 11.842406 1,000.00 12/31/1997 546
Alliance Premier Growth 28.57% 1,285.72 16.423320 1,000.00 12/31/1997 546
Alliance Real Estate Investment -9.53% 904.71 8.423121 1,000.00 12/31/1997 546
Liberty Newport Tiger Fund, Variable Series 62.50% 1,624.96 11.928849 1,000.00 12/31/1997 546
Goldman Sachs Growth and Income 0.79% 1,007.92 10.869858 1,000.00 3/31/1998 456
Goldman Sachs International 1.70% 1,016.96 11.642518 1,000.00 3/31/1998 456
Goldman Sachs Global Income 2.56% 1,025.57 10.584393 1,000.00 3/31/1998 456
Kemper Small Cap Growth 7.30% 1,072.98 12.086038 1,000.00 12/31/1997 546
Kemper Small Cap Value -9.42% 905.84 9.227261 1,000.00 12/31/1997 546
Kemper Government Securities 2.50% 1,024.97 10.564382 1,000.00 12/31/1997 546
MFS Research 11.43% 1,114.32 13.165059 1,000.00 12/31/1997 546
MFS Growth with Income 9.95% 1,099.51 12.692150 1,000.00 12/31/1997 546
MFS Emerging Growth 22.80% 1,227.99 14.837048 1,000.00 12/31/1997 546
MFS / Foreign & Colonial Emerging Markets Equity -7.94% 920.61 7.998729 1,000.00 12/31/1997 546
MFS High Income -1.29% 987.11 10.281026 1,000.00 12/31/1997 546
MFS Global Governments 1.16% 1,011.62 10.283862 1,000.00 12/31/1997 546
Oppenheimer Capital Appreciation 20.93% 1,209.31 14.082942 1,000.00 12/31/1997 546
Oppenheimer Main Street Growth & Income 4.60% 1,046.02 11.772262 1,000.00 12/31/1997 546
Oppenheimer High Income -2.02% 979.85 10.213444 1,000.00 12/31/1997 546
Oppenheimer Bond -0.39% 996.13 10.301628 1,000.00 12/31/1997 546
Oppenheimer Strategic Bond -1.65% 983.55 10.108287 1,000.00 12/31/1997 546
Putnam VT Growth and Income 14.53% 1,145.26 12.525638 1,000.00 12/31/1997 546
Putman VT New Value 15.38% 1,153.84 11.916467 1,000.00 12/31/1997 546
Putnam VT Vista 13.68% 1,136.78 13.219555 1,000.00 12/31/1997 546
Putnam VT International Growth 9.80% 1,098.02 13.087306 1,000.00 12/31/1997 546
Putnam VT International New Opportunities 17.18% 1,171.83 13.558702 1,000.00 12/31/1997 546
Franklin Small Cap Investments 3/1/1999 121
Templeton International 9/21/1998 282
Templeton Developing Markets 9/21/1998 282
Templeton Mutual Shares Investments 9/21/1998 282
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Non-Standard Since Inception Performance Data-Part I
As of 6/30/99
Date Transaction Amount Unit Unit Balance Transaction Unit
Value Before Units Balance
Transaction After
Transaction
Cova Series Trust Lord Abbett Growth and Income
<S> <C> <C> <C> <C> <C> <C>
1/8/1999 purchase 1,000.00 35.903763 - 27.8522 27.8522
6/30/1999 annual fee 39.095071 27.8522 - 27.8522
6/30/1999 surrender fee 39.095071 27.8522 - 27.8522
Cova Series Trust Bond Debenture
5/20/1996 purchase 1,000.00 10.146329 - 98.5578 98.5578
5/20/1997 annual fee 11.758378 98.5578 - 98.5578
5/20/1998 annual fee 13.473825 98.5578 - 98.5578
6/30/1999 annual fee 13.536178 98.5578 - 98.5578
6/30/1999 surrender fee 13.536178 98.5578 - 98.5578
General American Capital Company Money Market
12/4/1997 purchase 1,000.00 10.630827 - 94.0661 94.0661
12/4/1998 annual fee 11.081985 94.0661 - 94.0661
6/30/1999 annual fee 11.299208 94.0661 - 94.0661
6/30/1999 surrender fee 11.299208 94.0661 - 94.0661
Cova Series Trust Developing Growth
11/7/1997 purchase 1,000.00 10.830839 - 92.3290 92.3290
11/9/1998 annual fee 9.967264 92.3290 - 92.3290
6/30/1999 annual fee 12.724207 92.3290 - 92.3290
6/30/1999 surrender fee 12.724207 92.3290 - 92.3290
Cova Series Trust Large Cap Research
2/17/1998 purchase 1,000.00 10.756077 - 92.9707 92.9707
2/17/1999 annual fee 11.579471 92.9707 - 92.9707
6/30/1999 annual fee 13.320653 92.9707 - 92.9707
6/30/1999 surrender fee 13.320653 92.9707 - 92.9707
Cova Series Trust Mid-Cap Value
11/7/1997 purchase 1,000.00 10.048781 - 99.5146 99.5146
11/9/1998 annual fee 10.358485 99.5146 - 99.5146
6/30/1999 annual fee 11.560422 99.5146 - 99.5146
6/30/1999 surrender fee 11.560422 99.5146 - 99.5146
Cova Series Trust Quality Bond
5/20/1996 purchase 1,000.00 9.951189 - 100.4905 100.4905
5/20/1997 annual fee 10.440361 100.4905 - 100.4905
5/20/1998 annual fee 11.413235 100.4905 - 100.4905
6/30/1999 annual fee 11.582147 100.4905 - 100.4905
6/30/1999 surrender fee 11.582147 100.4905 - 100.4905
Cova Series Trust Small Cap Stock
5/15/1996 purchase 1,000.00 10.905675 - 91.6954 91.6954
5/15/1997 annual fee 10.995232 91.6954 - 91.6954
5/15/1998 annual fee 14.699217 91.6954 - 91.6954
6/30/1999 annual fee 13.249411 91.6954 - 91.6954
6/30/1999 surrender fee 13.249411 91.6954 - 91.6954
Cova Series Trust Large Cap Stock
5/16/1996 purchase 1,000.00 10.155238 - 98.4714 98.4714
5/16/1997 annual fee 12.753841 98.4714 - 98.4714
5/18/1998 annual fee 17.363858 98.4714 - 98.4714
6/30/1999 annual fee 21.760437 98.4714 - 98.4714
6/30/1999 surrender fee 21.760437 98.4714 - 98.4714
Cova Series Trust Select Equity
5/15/1996 purchase 1,000.00 10.151958 - 98.5032 98.5032
5/15/1997 annual fee 12.101835 98.5032 - 98.5032
5/15/1998 annual fee 16.090569 98.5032 - 98.5032
6/30/1999 annual fee 18.786819 98.5032 - 98.5032
6/30/1999 surrender fee 18.786819 98.5032 - 98.5032
Cova Series Trust International Equity
5/14/1996 purchase 1,000.00 10.098675 - 99.0229 99.0229
5/14/1997 annual fee 11.696691 99.0229 - 99.0229
5/14/1998 annual fee 13.129981 99.0229 - 99.0229
6/30/1999 annual fee 13.530210 99.0229 - 99.0229
6/30/1999 surrender fee 13.530210 99.0229 - 99.0229
Russell Multi-Style Equity
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 12.694810 100.0000 - 100.0000
6/30/1999 annual fee 14.186493 100.0000 - 100.0000
6/30/1999 surrender fee 14.186493 100.0000 - 100.0000
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
6/30/1999 annual fee 10.032732 100.0000 - 100.0000
6/30/1999 surrender fee 10.032732 100.0000 - 100.0000
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
6/30/1999 annual fee 11.886482 100.0000 - 100.0000
6/30/1999 surrender fee 11.886482 100.0000 - 100.0000
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
6/30/1999 annual fee 10.439720 100.0000 - 100.0000
6/30/1999 surrender fee 10.439720 100.0000 - 100.0000
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
6/30/1999 annual fee 14.860062 100.0000 - 100.0000
6/30/1999 surrender fee 14.860062 100.0000 - 100.0000
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
6/30/1999 annual fee 12.834364 100.0000 - 100.0000
6/30/1999 surrender fee 12.834364 100.0000 - 100.0000
AIM V.I. International 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
6/30/1999 annual fee 11.842406 100.0000 - 100.0000
6/30/1999 surrender fee 11.842406 100.0000 - 100.0000
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
6/30/1999 annual fee 16.423320 100.0000 - 100.0000
6/30/1999 surrender fee 16.423320 100.0000 - 100.0000
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
6/30/1999 annual fee 8.423121 100.0000 - 100.0000
6/30/1999 surrender fee 8.423121 100.0000 - 100.0000
Liberty Newport Tiger Fund, 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
6/30/1999 annual fee 11.928849 100.0000 - 100.0000
6/30/1999 surrender fee 11.928849 100.0000 - 100.0000
Goldman Sachs Growth and Income
3/31/1998 purchase 1,000.00 11.212646 - 89.1850 89.1850
6/30/1999 annual fee 10.869858 89.1850 - 89.1850
6/30/1999 surrender fee 10.869858 89.1850 - 89.1850
Goldman Sachs International Equity
3/31/1998 purchase 1,000.00 11.199710 - 89.2880 89.2880
6/30/1999 annual fee 11.642518 89.2880 - 89.2880
6/30/1999 surrender fee 11.642518 89.2880 - 89.2880
Goldman Sachs Global Income
3/31/1998 purchase 1,000.00 10.152000 - 98.5028 98.5028
6/30/1999 annual fee 10.584393 98.5028 - 98.5028
6/30/1999 surrender fee 10.584393 98.5028 - 98.5028
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
6/30/1999 annual fee 12.086038 100.0000 - 100.0000
6/30/1999 surrender fee 12.086038 100.0000 - 100.0000
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
6/30/1999 annual fee 9.227261 100.0000 - 100.0000
6/30/1999 surrender fee 9.227261 100.0000 - 100.0000
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
6/30/1999 annual fee 10.564382 100.0000 - 100.0000
6/30/1999 surrender fee 10.564382 100.0000 - 100.0000
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
6/30/1999 annual fee 13.165059 100.0000 - 100.0000
6/30/1999 surrender fee 13.165059 100.0000 - 100.0000
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
6/30/1999 annual fee 12.692150 100.0000 - 100.0000
6/30/1999 surrender fee 12.692150 100.0000 - 100.0000
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
6/30/1999 annual fee 14.837048 100.0000 - 100.0000
6/30/1999 surrender fee 14.837048 100.0000 - 100.0000
MFS / Foreign & Colonial 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
6/30/1999 annual fee 7.998729 100.0000 - 100.0000
6/30/1999 surrender fee 7.998729 100.0000 - 100.0000
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
6/30/1999 annual fee 10.281026 100.0000 - 100.0000
6/30/1999 surrender fee 10.281026 100.0000 - 100.0000
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
6/30/1999 annual fee 10.283862 100.0000 - 100.0000
6/30/1999 surrender fee 10.283862 100.0000 - 100.0000
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
6/30/1999 annual fee 14.082942 100.0000 - 100.0000
6/30/1999 surrender fee 14.082942 100.0000 - 100.0000
Oppenheimer Main Street Growth & Income
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 10.326519 100.0000 - 100.0000
6/30/1999 annual fee 11.772262 100.0000 - 100.0000
6/30/1999 surrender fee 11.772262 100.0000 - 100.0000
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
6/30/1999 annual fee 10.213444 100.0000 - 100.0000
6/30/1999 surrender fee 10.213444 100.0000 - 100.0000
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
6/30/1999 annual fee 10.301628 100.0000 - 100.0000
6/30/1999 surrender fee 10.301628 100.0000 - 100.0000
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
6/30/1999 annual fee 10.108287 100.0000 - 100.0000
6/30/1999 surrender fee 10.108287 100.0000 - 100.0000
Putnam VT Growth and Income
12/31/1997 purchase 1,000.00 10.000000 - 100.0000 100.0000
12/31/1998 annual fee 11.382650 100.0000 - 100.0000
6/30/1999 annual fee 12.525638 100.0000 - 100.0000
6/30/1999 surrender fee 12.525638 100.0000 - 100.0000
Putnam 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
6/30/1999 annual fee 11.916467 100.0000 - 100.0000
6/30/1999 surrender fee 11.916467 100.0000 - 100.0000
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
6/30/1999 annual fee 13.219555 100.0000 - 100.0000
6/30/1999 surrender fee 13.219555 100.0000 - 100.0000
Putnam VT International 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
6/30/1999 annual fee 13.087306 100.0000 - 100.0000
6/30/1999 surrender fee 13.087306 100.0000 - 100.0000
Putnam VT International 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
6/30/1999 annual fee 13.558702 100.0000 - 100.0000
6/30/1999 surrender fee 13.558702 100.0000 - 100.0000
Franklin Small Cap Investments
3/1/1999 purchase 1,000.00 10.000000 - 100.0000 100.0000
6/30/1999 annual fee 12.136171 100.0000 - 100.0000
6/30/1999 surrender fee 12.136171 100.0000 - 100.0000
Templeton International
9/21/1998 purchase 1,000.00 7.893131 - 126.6924 126.6924
6/30/1999 annual fee 10.024137 126.6924 - 126.6924
6/30/1999 surrender fee 10.024137 126.6924 - 126.6924
Templeton Developing Markets
9/21/1998 purchase 1,000.00 5.645520 - 177.1316 177.1316
6/30/1999 annual fee 10.757350 177.1316 - 177.1316
6/30/1999 surrender fee 10.757350 177.1316 - 177.1316
Templeton Mutual Shares Investments
9/21/1998 purchase 1,000.00 8.643412 - 115.6951 115.6951
6/30/1999 annual fee 11.031485 115.6951 - 115.6951
6/30/1999 surrender fee 11.031485 115.6951 - 115.6951
</TABLE>
<TABLE>
<CAPTION>
Account Account
Value Value
Before After
Transaction Transaction
<S> <C>
- 1,000.00
1,088.88 1,088.88
1,088.88 1,088.88
- 1,000.00
1,158.88 1,158.88
1,327.95 1,327.95
1,334.10 1,334.10
1,334.10 1,334.10
- 1,000.00
1,042.44 1,042.44
1,062.87 1,062.87
1,062.87 1,062.87
- 1,000.00
920.27 920.27
1,174.81 1,174.81
1,174.81 1,174.81
- 1,000.00
1,076.55 1,076.55
1,238.43 1,238.43
1,238.43 1,238.43
- 1,000.00
1,030.82 1,030.82
1,150.43 1,150.43
1,150.43 1,150.43
- 1,000.00
1,049.16 1,049.16
1,146.92 1,146.92
1,163.90 1,163.90
1,163.90 1,163.90
- 1,000.00
1,008.21 1,008.21
1,347.85 1,347.85
1,214.91 1,214.91
1,214.91 1,214.91
- 1,000.00
1,255.89 1,255.89
1,709.84 1,709.84
2,142.78 2,142.78
2,142.78 2,142.78
- 1,000.00
1,192.07 1,192.07
1,584.97 1,584.97
1,850.56 1,850.56
1,850.56 1,850.56
- 1,000.00
1,158.24 1,158.24
1,300.17 1,300.17
1,339.80 1,339.80
1,339.80 1,339.80
- 1,000.00
1,269.48 1,269.48
1,418.65 1,418.65
1,418.65 1,418.65
- 1,000.00
996.33 996.33
1,003.27 1,003.27
1,003.27 1,003.27
- 1,000.00
1,114.21 1,114.21
1,188.65 1,188.65
1,188.65 1,188.65
- 1,000.00
1,059.12 1,059.12
1,043.97 1,043.97
1,043.97 1,043.97
- 1,000.00
1,306.02 1,306.02
1,486.01 1,486.01
1,486.01 1,486.01
- 1,000.00
1,177.07 1,177.07
1,283.44 1,283.44
1,283.44 1,283.44
- 1,000.00
1,139.14 1,139.14
1,184.24 1,184.24
1,184.24 1,184.24
- 1,000.00
1,459.55 1,459.55
1,642.33 1,642.33
1,642.33 1,642.33
- 1,000.00
798.84 798.84
842.31 842.31
842.31 842.31
- 1,000.00
922.88 922.88
1,192.88 1,192.88
1,192.88 1,192.88
- 1,000.00
969.43 969.43
969.43 969.43
- 1,000.00
1,039.54 1,039.54
1,039.54 1,039.54
- 1,000.00
1,042.59 1,042.59
1,042.59 1,042.59
- 1,000.00
1,167.61 1,167.61
1,208.60 1,208.60
1,208.60 1,208.60
- 1,000.00
875.32 875.32
922.73 922.73
922.73 922.73
- 1,000.00
1,055.65 1,055.65
1,056.44 1,056.44
1,056.44 1,056.44
- 1,000.00
1,217.28 1,217.28
1,316.51 1,316.51
1,316.51 1,316.51
- 1,000.00
1,206.66 1,206.66
1,269.22 1,269.22
1,269.22 1,269.22
- 1,000.00
1,323.32 1,323.32
1,483.70 1,483.70
1,483.70 1,483.70
- 1,000.00
657.18 657.18
799.87 799.87
799.87 799.87
- 1,000.00
984.52 984.52
1,028.10 1,028.10
1,028.10 1,028.10
- 1,000.00
1,066.99 1,066.99
1,028.39 1,028.39
1,028.39 1,028.39
- 1,000.00
1,223.27 1,223.27
1,408.29 1,408.29
1,408.29 1,408.29
- 1,000.00
1,032.65 1,032.65
1,177.23 1,177.23
1,177.23 1,177.23
- 1,000.00
989.38 989.38
1,021.34 1,021.34
1,021.34 1,021.34
- 1,000.00
989.38 989.38
1,030.16 1,030.16
1,030.16 1,030.16
- 1,000.00
1,015.13 1,015.13
1,010.83 1,010.83
1,010.83 1,010.83
- 1,000.00
1,138.27 1,138.27
1,252.56 1,252.56
1,252.56 1,252.56
- 1,000.00
1,048.35 1,048.35
1,191.65 1,191.65
1,191.65 1,191.65
- 1,000.00
1,178.57 1,178.57
1,321.96 1,321.96
1,321.96 1,321.96
- 1,000.00
1,170.70 1,170.70
1,308.73 1,308.73
1,308.73 1,308.73
- 1,000.00
1,140.23 1,140.23
1,355.87 1,355.87
1,355.87 1,355.87
- 1,000.00
1,213.62 1,213.62
1,213.62 1,213.62
- 1,000.00
1,269.98 1,269.98
1,269.98 1,269.98
- 1,000.00
1,905.47 1,905.47
1,905.47 1,905.47
- 1,000.00
1,276.29 1,276.29
1,276.29 1,276.29
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Non-Standard Since Inception Performance- Part I
As of 6/30/99
Sub-Account Annualized Account Unit Value Initial Inception
Return Value 6/30/1999 Investment Date
<S> <C> <C> <C> <C> <C> <C> <C>
Cova Series Trust Lord Abbett Growth and Income (1) 8.89% 1,088.88 39.095071 1,000.00 1/8/1999
Cova Series Trust Bond Debenture 9.70% 1,334.10 13.536178 1,000.00 5/20/1996
General American Capital Company Money Market 3.96% 1,062.87 11.299208 1,000.00 12/4/1997
Cova Series Trust Developing Growth 10.28% 1,174.81 12.724207 1,000.00 11/7/1997
Cova Series Trust Large Cap Research 16.93% 1,238.43 13.320653 1,000.00 2/17/1998
Cova Series Trust Mid-Cap Value 8.88% 1,150.43 11.560422 1,000.00 11/7/1997
Cova Series Trust Quality Bond 4.99% 1,163.90 11.582147 1,000.00 5/20/1996
Cova Series Trust Small Cap Stock 6.42% 1,214.91 13.249411 1,000.00 5/15/1996
Cova Series Trust Large Cap Stock 27.61% 2,142.78 21.760437 1,000.00 5/16/1996
Cova Series Trust Select Equity 21.74% 1,850.56 18.786819 1,000.00 5/15/1996
Cova Series Trust International Equity 9.79% 1,339.80 13.530210 1,000.00 5/14/1996
Russell Multi-Style Equity 26.34% 1,418.65 14.186493 1,000.00 12/31/1997
Russell Aggressive Equity 0.22% 1,003.27 10.032732 1,000.00 12/31/1997
Russell Non-U.S. 12.25% 1,188.65 11.886482 1,000.00 12/31/1997
Russell Core Bond 2.92% 1,043.97 10.439720 1,000.00 12/31/1997
AIM V.I. Value 30.32% 1,486.01 14.860062 1,000.00 12/31/1997
AIM V.I. Capital Appreciation 18.15% 1,283.44 12.834364 1,000.00 12/31/1997
AIM V.I. International Equity 11.97% 1,184.24 11.842406 1,000.00 12/31/1997
Alliance Premier Growth 39.33% 1,642.33 16.423320 1,000.00 12/31/1997
Alliance Real Estate Investment -10.84% 842.31 8.423121 1,000.00 12/31/1997
Liberty Newport Tiger Fund, Variable Series 12.51% 1,192.88 11.928849 1,000.00 12/31/1997
Goldman Sachs Growth and Income -2.45% 969.43 10.869858 1,000.00 3/31/1998
Goldman Sachs International 3.15% 1,039.54 11.642518 1,000.00 3/31/1998
Goldman Sachs Global Income 3.39% 1,042.59 10.584393 1,000.00 3/31/1998
Kemper Small Cap Growth 13.50% 1,208.60 12.086038 1,000.00 12/31/1997
Kemper Small Cap Value -5.23% 922.73 9.227261 1,000.00 12/31/1997
Kemper Government Securities 3.74% 1,056.44 10.564382 1,000.00 12/31/1997
MFS Research 20.18% 1,316.51 13.165059 1,000.00 12/31/1997
MFS Growth with Income 17.28% 1,269.22 12.692150 1,000.00 12/31/1997
MFS Emerging Growth 30.18% 1,483.70 14.837048 1,000.00 12/31/1997
MFS / Foreign & Colonial Emerging Markets Equity -13.87% 799.87 7.998729 1,000.00 12/31/1997
MFS High Income 1.87% 1,028.10 10.281026 1,000.00 12/31/1997
MFS Global Governments 1.89% 1,028.39 10.283862 1,000.00 12/31/1997
Oppenheimer Capital Appreciation 25.72% 1,408.29 14.082942 1,000.00 12/31/1997
Oppenheimer Main Street Growth & Income 11.52% 1,177.23 11.772262 1,000.00 12/31/1997
Oppenheimer High Income 1.42% 1,021.34 10.213444 1,000.00 12/31/1997
Oppenheimer Bond 2.01% 1,030.16 10.301628 1,000.00 12/31/1997
Oppenheimer Strategic Bond 0.72% 1,010.83 10.108287 1,000.00 12/31/1997
Putnam VT Growth and Income 16.25% 1,252.56 12.525638 1,000.00 12/31/1997
Putman VT New Value 12.44% 1,191.65 11.916467 1,000.00 12/31/1997
Putnam VT Vista 20.51% 1,321.96 13.219555 1,000.00 12/31/1997
Putnam VT International Growth 19.71% 1,308.73 13.087306 1,000.00 12/31/1997
Putnam VT International New Opportunities 22.57% 1,355.87 13.558702 1,000.00 12/31/1997
Franklin Small Cap Investments (1) 21.36% 1,213.62 12.136171 1,000.00 3/1/1999
Templeton International (1) 27.00% 1,269.98 10.024137 1,000.00 9/21/1998
Templeton Developing Markets (1) 90.55% 1,905.47 10.757350 1,000.00 9/21/1998
Mutual Shares Investments (1) 27.63% 1,276.29 11.031485 1,000.00 9/21/1998
<FN>
(1) Return is not annualized for periods less than 1 year.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Days Since
Inception
<S> <C>
173
1,137
573
601
499
601
1,137
1,142
1,141
1,142
1,143
546
546
546
546
546
546
546
546
546
546
456
456
456
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
546
121
282
282
282
<FN>
(1) Return is not annualized for periods less than 1 year.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
1 Year Performance- Part II
As of 6/30/99
Less:
---------------------------------------
Portfolio Sub-Account 1 Year M & E / Contract
Inception Inception Portfolio Admin Annual Withdrawal
Date Date Return Fees Fee Fee
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Templeton Developing Markets 3/1/1996 9/21/1998 47.76% 1.40% 0.10% 4.50%
Templeton International 5/1/1992 9/21/1998 5.39% 1.40% 0.10% 4.50%
Templeton Mutual Shares Investments 5/1/1998 9/21/1998 17.41% 1.40% 0.10% 4.50%
Franklin Small Cap Investments 5/1/1998 3/1/1999 15.12% 1.40% 0.10% 4.50%
American Century VP Income & Growth 10/30/1997 n / a 18.54% 1.40% 0.10% 4.50%
American Century VP International 5/1/1994 n / a 1.74% 1.40% 0.10% 4.50%
American Century VP Value 5/1/1996 n / a 11.98% 1.40% 0.10% 4.50%
Dreyfus VIF Capital Appreciation 4/5/1993 n / a 15.86% 1.40% 0.10% 4.50%
Dreyfus VIF Disciplined Stock 5/1/1996 n / a 18.85% 1.40% 0.10% 4.50%
Dreyfus Stock Index 9/29/1989 n / a 22.36% 1.40% 0.10% 4.50%
INVESCO VIF Dynamics 8/25/1997 n / a 21.92% 1.40% 0.10% 4.50%
INVESCO VIF High Yield 5/27/1994 n / a 1.73% 1.40% 0.10% 4.50%
PIMCO High Yield Bond 4/30/1998 n / a 2.28% 1.40% 0.10% 4.50%
PIMCO StocksPLUS Growth & Income 12/31/1997 n / a 23.86% 1.40% 0.10% 4.50%
PIMCO Total Return Bond 12/31/1997 n / a 3.55% 1.40% 0.10% 4.50%
Scudder V.L. International 5/1/1987 n / a 7.99% 1.40% 0.10% 4.50%
</TABLE>
<TABLE>
<CAPTION>
Avg. Annual Total Return
1 Year
--------------------------
Non-
Standard Standard
<S> <C>
41.76% 46.36%
-0.61% 3.99%
11.41% 16.01%
9.12% 13.72%
12.54% 17.14%
-4.26% 0.34%
5.98% 10.58%
9.86% 14.46%
12.85% 17.45%
16.36% 20.96%
15.92% 20.52%
-4.27% 0.33%
-3.72% 0.88%
17.86% 22.46%
-2.45% 2.15%
1.99% 6.59%
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
5 Year Performance- Part II
As of 6/30/99
Less:
---------------------------------------
Portfolio Sub-Account 5 Year M & E / Contract
Inception Inception Portfolio Admin Annual Withdrawal
Date Date Return Fees Fee Fee
<S> <C> <C> <C> <C> <C> <C> <C>
General American Capital Company Money Market 10/1/1987 6/3/1996 5.54% 1.40% 0.10%
AIM V.I. Value 5/5/1993 12/31/1997 25.41% 1.40% 0.10%
AIM V.I. Capital Appreciation 5/5/1993 12/31/1997 21.16% 1.40% 0.10%
AIM V.I. International Equity 5/5/1993 12/31/1997 12.82% 1.40% 0.10%
Alliance Premier Growth 6/26/1992 12/31/1997 32.57% 1.40% 0.10%
Kemper Small Cap Growth 5/2/1994 12/31/1997 23.95% 1.40% 0.10%
Kemper Government Securities 9/3/1987 12/31/1997 7.41% 1.40% 0.10%
MFS Global Governments 6/14/1994 12/31/1997 4.40% 1.40% 0.10%
Oppenheimer Capital Appreciation 4/3/1985 12/31/1997 27.00% 1.40% 0.10%
Oppenheimer High Income 4/30/1986 12/31/1997 9.79% 1.40% 0.10%
Oppenheimer Bond 4/3/1985 12/31/1997 7.09% 1.40% 0.10%
Oppenheimer Strategic Bond 5/3/1993 12/31/1997 7.60% 1.40% 0.10%
Putnam VT Growth and Income 2/1/1988 12/31/1997 21.98% 1.40% 0.10%
Templeton International 5/1/1992 5/1/1998 15.27% 1.40% 0.10%
American Century VP International 5/1/1994 n / a 13.53% 1.40% 0.10%
Dreyfus VIF Capital Appreciation 4/5/1993 n / a 26.10% 1.40% 0.10%
Dreyfus Stock Index 9/29/1989 n / a 27.36% 1.40% 0.10%
INVESCO VIF High Yield 5/27/1994 n / a 12.18% 1.40% 0.10%
Scudder V.L. International 5/1/1987 n / a 12.28% 1.40% 0.10%
</TABLE>
<TABLE>
<CAPTION>
Avg. Annual Total Return
5 Year
--------------------------
Non-
Standard Standard
<S> <C>
4.04% 4.14%
23.91% 24.01%
19.66% 19.76%
11.32% 11.42%
31.07% 31.17%
22.45% 22.55%
5.91% 6.01%
2.90% 3.00%
25.50% 25.60%
8.29% 8.39%
5.59% 5.69%
6.10% 6.20%
20.48% 20.58%
13.77% 13.87%
12.03% 12.13%
24.60% 24.70%
25.86% 25.96%
10.68% 10.78%
10.78% 10.88%
</TABLE>
<TABLE>
<CAPTION>
Cova Variable Annuity Account Five (333-34817)
Since Inception Performance- Part II
As of 6/30/99
Less:
---------------------------------------
Portfolio Sub-Account Inception M & E / Contract
Inception Inception Portfolio Admin Annual Withdrawal
Date Date Return Fees Fee Fee
<S> <C> <C> <C> <C> <C> <C> <C>
General American Capital Company Money Market 10/1/1987 6/3/1996 5.53% 1.40% 0.10%
Russell Multi-Style Equity 1/2/1997 12/31/1997 28.18% 1.40% 0.10% 4.50%
Russell Aggressive Equity 1/2/1997 12/31/1997 13.76% 1.40% 0.10% 4.50%
Russell Non-U.S. 1/2/1997 12/31/1997 8.05% 1.40% 0.10% 4.50%
Russell Core Bond 1/2/1997 12/31/1997 6.34% 1.40% 0.10% 4.50%
AIM V.I. Value 5/5/1993 12/31/1997 22.63% 1.40% 0.10%
AIM V.I. Capital Appreciation 5/5/1993 12/31/1997 18.88% 1.40% 0.10%
AIM V.I. International Equity 5/5/1993 12/31/1997 13.02% 1.40% 0.10%
Alliance Premier Growth 6/26/1992 12/31/1997 25.64% 1.40% 0.10%
Alliance Real Estate Investment 1/9/1997 12/31/1997 2.34% 1.40% 0.10% 4.50%
Liberty Newport Tiger Fund, Variable Series 5/1/1995 12/31/1997 1.65% 1.40% 0.10% 4.50%
Goldman Sachs Growth and Income 1/12/1998 1/29/1998 10.96% 1.40% 0.10% 4.50%
Goldman Sachs International Equity 1/12/1998 1/29/1998 15.36% 1.40% 0.10% 4.50%
Goldman Sachs Global Income 1/12/1998 1/29/1998 4.53% 1.40% 0.10% 4.50%
Kemper Small Cap Growth 5/2/1994 12/31/1997 22.60% 1.40% 0.10%
Kemper Small Cap Value 5/1/1996 12/31/1997 4.98% 1.40% 0.10% 4.50%
Kemper Government Securities 9/3/1987 12/31/1997 7.51% 1.40% 0.10%
MFS Research 7/26/1995 12/31/1997 22.00% 1.40% 0.10% 4.50%
MFS Growth with Income 10/9/1995 12/31/1997 24.02% 1.40% 0.10% 4.50%
MFS Emerging Growth 7/24/1995 12/31/1997 26.65% 1.40% 0.10% 4.50%
MFS / Foreign & Colonial Emerging Markets Equity 10/16/1997 12/31/1997 -16.61% 1.40% 0.10% 4.50%
MFS High Income 7/26/1995 12/31/1997 8.95% 1.40% 0.10% 4.50%
MFS Global Governments 6/14/1994 12/31/1997 4.40% 1.40% 0.10%
Oppenheimer Capital Appreciation 4/3/1985 12/31/1997 16.98% 1.40% 0.10%
Oppenheimer Main Street Growth & Income 7/5/1995 12/31/1997 27.57% 1.40% 0.10% 4.50%
Oppenheimer High Income 4/30/1986 12/31/1997 12.63% 1.40% 0.10%
Oppenheimer Bond 4/3/1985 12/31/1997 8.26% 1.40% 0.10%
Oppenheimer Strategic Bond 5/3/1993 12/31/1997 6.25% 1.40% 0.10%
Putnam VT Growth and Income 2/1/1988 12/31/1997 15.93% 1.40% 0.10%
Putman VT New Value 1/2/1997 12/31/1997 15.39% 1.40% 0.10% 4.50%
Putnam VT Vista 1/2/1997 12/31/1997 22.58% 1.40% 0.10% 4.50%
Putnam VT International Growth 1/2/1997 12/31/1997 19.20% 1.40% 0.10% 4.50%
Putnam VT International New Opportunities 1/2/1997 12/31/1997 13.82% 1.40% 0.10% 4.50%
Franklin Small Cap Investments 5/1/1998 3/1/1999 8.36% 1.40% 0.10% 4.50%
Templeton International 5/1/1992 5/1/1998 14.69% 1.40% 0.10%
Templeton Developing Markets 3/1/1996 5/1/1998 -8.10% 1.40% 0.10% 4.50%
Templeton Mutual Shares Investments 5/1/1998 5/1/1998 10.14% 1.40% 0.10% 4.50%
American Century VP Income & Growth 10/30/1997 n / a 27.61% 1.40% 0.10% 4.50%
American Century VP International 5/1/1994 n / a 12.59% 1.40% 0.10%
American Century VP Value 5/1/1996 n / a 17.79% 1.40% 0.10% 4.50%
Dreyfus VIF Capital Appreciation 4/5/1993 n / a 21.12% 1.40% 0.10%
Dreyfus VIF Disciplined Stock 5/1/1996 n / a 28.12% 1.40% 0.10% 4.50%
Dreyfus Stock Index 9/29/1989 n / a 17.57% 1.40% 0.10%
INVESCO VIF Dynamics 8/25/1997 n / a 23.84% 1.40% 0.10% 4.50%
INVESCO VIF High Yield 5/27/1994 n / a 11.92% 1.40% 0.10%
PIMCO High Yield Bond 4/30/1998 n / a 2.83% 1.40% 0.10% 4.50%
PIMCO Low Duration Bond 2/16/1999 n / a 1.28% 0.52% 0.10% 5.00%
PIMCO StocksPLUS Growth & Income 12/31/1997 n / a 28.16% 1.40% 0.10% 4.50%
PIMCO Total Return Bond 12/31/1997 n / a 4.42% 1.40% 0.10% 4.50%
Scudder V.L. International 5/1/1987 n / a 11.61% 1.40% 0.10%
</TABLE>
<TABLE>
<CAPTION>
Avg. Annual Total Return
Since Inception
--------------------------
Non-
Standard Standard
<S> <C>
4.03% 4.13%
22.18% 26.78%
7.76% 12.36%
2.05% 6.65%
0.34% 4.94%
21.13% 21.23%
17.38% 17.48%
11.52% 11.62%
24.14% 24.24%
-3.66% 0.94%
-4.35% 0.25%
4.96% 9.56%
9.36% 13.96%
-1.47% 3.13%
21.10% 21.20%
-1.02% 3.58%
6.01% 6.11%
16.00% 20.60%
18.02% 22.62%
20.65% 25.25%
-22.61% -18.01%
2.95% 7.55%
2.90% 3.00%
15.48% 15.58%
21.57% 26.17%
11.13% 11.23%
6.76% 6.86%
4.75% 4.85%
14.43% 14.53%
9.39% 13.99%
16.58% 21.18%
13.20% 17.80%
7.82% 12.42%
2.36% 6.96%
13.19% 13.29%
-14.10% -9.50%
4.14% 8.74%
21.61% 26.21%
11.09% 11.19%
11.79% 16.39%
19.62% 19.72%
22.12% 26.72%
16.07% 16.17%
17.84% 22.44%
10.42% 10.52%
-3.17% 1.43%
-4.34% 0.76%
22.16% 26.76%
-1.58% 3.02%
10.11% 10.21%
</TABLE>
