CC-4046.DOC
COVA FINANCIAL LIFE INSURANCE COMPANY
COVA VARIABLE ANNUITY ACCOUNT FIVE
Supplement dated May 1, 1998
to Prospectus dated May 1, 1998
This supplement should be attached to your copy of the Prospectus for the
variable annuity contracts issued by Cova Financial Life Insurance Company
("Cova Life" or "Cova") and Cova Variable Annuity Account Five ("Variable
Account Five").
Proposed Substitution
One of the purposes of this supplement is to notify you of a proposal to
substitute shares of certain Portfolios of Cova Series Trust and of General
American Capital Company for shares of certain other Portfolios of Cova Series
Trust and for shares of Lord Abbett Series Fund, Inc. as follows:
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<CAPTION>
Substitution
<S> <C>
From the Following Portfolios Into the Following Portfolios
COVA SERIES TRUST COVA SERIES TRUST
Stock Index Portfolio Large Cap Stock Portfolio
Quality Income Portfolio Quality Bond Portfolio
VKAC Growth and Income Portfolio Lord Abbett Growth and Income Portfolio
LORD ABBETT SERIES FUND, INC. COVA SERIES TRUST
Growth and Income Portfolio Lord Abbett Growth and Income Portfolio
COVA SERIES TRUST GENERAL AMERICAN CAPITAL COMPANY
Money Market Portfolio Money Market Fund
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Cova Life has filed an application with the Securities and Exchange Commission
("Commission") requesting an order approving the Substitution. Upon obtaining
the order from the Commission approving the Substitution, and subject to any
prior approval by applicable state insurance authorities, Cova Life and Variable
Account Five propose to effect the Substitution as soon as it is practical.
A Contract owner, prior to the date of Substitution, may transfer Sub-Account
Values involved in the Substitution to any other sub-account of Variable Account
Five without any limitation or charge being imposed. Moreover, following the
Substitution for a period of 30 days, Cova Life will permit transfers from such
sub-accounts to any other sub-account of Variable Account Five available under
your Contract without any limitation or charge being imposed. After the 30 days,
any transfers from such sub-accounts will be subject to the restrictions
described in the Prospectus.
A complete list of all available Portfolios in which Variable Account Five
invests is set forth in the Prospectus. You may obtain a Prospectus by writing
or calling Cova Life at the address or telephone number set forth below.
Cova Life will effect the Substitution by simultaneously placing an order to
redeem the shares of each Portfolio being substituted from and an order to
purchase shares of each Portfolio being substituted into.
Cova Life will bear the expenses attributable to the Substitution. Cova Life
will send affected Owners a notice within five days after the Substitution.
Shares of the Stock Index, Quality Income, VKAC Growth and Income and Money
Market Portfolios are no longer offered for sale. However, Contract owners
participating in the Dollar Cost Averaging program will be allowed to continue
to have monies transferred into these Portfolios until the earlier of the
completion of their programs or the Substitution.
CUSTOMER SERVICE: (800) 343-8496
Issued by: Cova Financial Life Insurance Company
Distributed by: Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
Until the substitution is completed, Cova Life and Variable Account Five are
required to continue to provide certain information to Contract owners
concerning the Portfolios managed by Van Kampen American Capital Investment
Advisory Corp. This information is contained in the pages that follow.
(Information concerning all other Portfolios listed above is contained in the
Prospectus).
INVESTMENT PORTFOLIOS MANAGED BY VAN KAMPEN
AMERICAN CAPITAL INVESTMENT ADVISORY CORP.:
Cova Series Trust
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory), which is an indirect subsidiary of Cova. Cova Series Trust is a
mutual fund with multiple portfolios. Each investment portfolio has a different
investment objective. Cova Advisory has engaged sub-advisers to provide
investment advice for the individual investment portfolios.
The following investment portfolios of Cova Series Trust are managed by Van
Kampen American Capital Investment Advisory Corp.:
VKAC Growth and Income
Money Market
Quality Income
Stock Index
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<CAPTION>
Investment Portfolio Expenses
(as a percentage of the average daily net assets of an investment portfolio)
Other Expenses
(after expense Total Annual
Management reimbursement for Portfolio
Fees certain Portfolios) Expenses
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Cova Series Trust (a)
Managed by Van Kampen American
Capital Investment Advisory Corp.
<S> <C> <C> <C>
VKAC Growth and Income .60% .10% .70%
Money Market(b) .00% .11% .11%
Quality Income .50% .10% .60%
Stock Index .50% .10% .60%
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<FN>
(a) Since August 20, 1990, 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%. Absent the expense reimbursement (and,
with respect to the Money Market Portfolio, the management fee waiver), the
percentages shown for total annual portfolio expenses (on an annualized basis)
for the year or period ended December 31, 1997 would have been .70% for the
Quality Income Portfolio, .68% for the Money Market Portfolio, .69% for the
Stock Index Portfolio and .88% for the VKAC Growth and Income Portfolio.
(b) Cova Advisory, the investment adviser for Cova Series Trust, currently
waives its fees for the Money Market Portfolio. Although not obligated to, Cova
Advisory expects to continue to waive its fees for the Money Market Portfolio.
In the future, Cova Advisory may charge its fees on a partial or complete basis.
Absent the management fee waiver, the total management fee on an annual basis
for the Money Market Portfolio is .50%. The examples shown below for the Money
Market Portfolio are calculated based upon a waiver of the management fee.
</FN>
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<CAPTION>
Examples
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets: (a) upon surrender at the end of each time period;
(b) if the contract is not surrendered or is annuitized.
Time Periods
1 year 3 years 5 years 10 years
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Cova Series Trust
Managed by Van Kampen American
Capital Investment Advisory Corp.
<S> <C> <C> <C> <C>
VKAC Growth and Income (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
Money Market (a) $66.36 (a) $ 95.62 (a) $132.07 (a) $188.79
(b) $16.36 (b) $ 50.62 (b) $ 87.07 (b) $188.79
Quality Income (a) $71.29 (a) $110.60 (a) $157.34 (a) $240.77
(b) $21.29 (b) $ 65.60 (b) $112.34 (b) $240.77
Stock Index (a) $71.29 (a) $110.60 (a) $157.34 (a) $240.77
(b) $21.29 (b) $ 65.60 (b) $112.34 (b) $240.77
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<CAPTION>
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 Period from
Period Period Commencement of
Ended Ended Operations through
12/31/97 12/31/96 12/31/95
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Cova Series Trust
Managed by Van Kampen American
Capital Investment Advisory Corp.
Quality Income Sub-Account
<S> <C> <C> <C>
Beginning of Period $15.54 $15.33 $14.42
End of Period $16.72 15.54 15.33
Number of Accum. Units
Outstanding 43,729 19,237 8,702
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Money Market Sub-Account
Beginning of Period $11.88 $11.42 $11.13
End of Period $12.38 11.88 11.42
Number of Accum. Units
Outstanding 29,951 27,094 28,509
VKAC Growth and Income Sub-Account
Beginning of Period $17.01 $14.61 $13.05
End of Period $20.98 17.01 14.61
Number of Accum. Units
Outstanding 80,080 40,350 7,197
Stock Index Sub-Account
Beginning of Period $19.04 $15.77 $14.13
End of Period $24.96 19.04 15.77
Number of Accum. Units
Outstanding 69,602 50,426 13,384
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<FN>
* The Cova Series Trust Money Market Portfolio started regular investment
operations on June 19, 1995, the Cova Series Trust Stock Index Portfolio started
regular investment operations on July 20, 1995, and the Cova Series Trust VKAC
Growth and Income Portfolio started regular investment operations on July 19,
1995.
</FN>
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<CAPTION>
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
Van Kampen American Capital Investment Advisory Corp. is the sub-adviser for the
following portfolios of Cova Series Trust: Money Market, Stock Index, Quality
Income and VKAC Growth and Income. Each of these portfolios began operations
before May 1, 1998. As a result, performance information is available for the
accumulation unit values investing in these portfolios.
Column A presents performance figures for the accumulation units which reflect
the insurance charges as well as the fees and expenses of the investment
portfolio. Column B presents performance figures for the accumulation units
which reflect the insurance charges, the contract maintenance charge, the fees
and expenses of the investment portfolio, and assume that you make a withdrawal
at the end of the period and therefore the withdrawal charge is reflected. The
inception dates shown below reflect the dates the Separate Account first
invested in the Portfolio.
Cova Series Trust
Average Annual Total Return for the periods ended 12/31/97
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Accumulation Unit Performance
Column A Column B
(reflects insurance (reflects all charges
charges and and portfolio
portfolio expenses) expenses)
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Separate Account
Inception Date Since Since
Portfolio in Portfolio 1 yr Inception 1 yr Inception
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<S> <C> <C> <C> <C> <C> <C>
VKAC Growth and Income 7/19/95 23.34% 21.33% 18.05% 19.59%
Money Market 6/19/95 4.17% 4.25% (1.00)% 2.32%
Quality Income 8/16/95 7.57% 6.40% 2.34% 4.30%
Stock Index 7/20/95 31.13% 26.13% 25.78% 24.42%
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</TABLE>
CC-4046 (5/98)
