PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C, 10-K405, 1996-03-15

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C
10-K405, 1996-03-15

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

1. ANNUAL REPORT PURSUANT TO SECTION 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1995 Commission File Number 2-39957 and
(current number) Commission File Number 33-58028

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT C
(Exact Name of Registrant, as specified in its charter)

Iowa 42-0127290
- - ------------------------------- ---------------------------------
(State or other jurisdiction of IRS Employer Identification No.
incorporation or organization) (Principal Mutual Life Insurance
Company)

The Principal Financial Group
Des Moines, Iowa 50392-0200
- - ------------------------------- ---------------------------------
(Address) (Zip Code)

Registrant's telephone number, including area code (515) 248-3842

Securities registered pursuant to Section 12(g) of the Act:

Variable Contracts - Participating with Pooled Separate Account
Variable Benefits - HR-10 Plans
---------------------------------------------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes ___X___ No _______

Indicate by check mark is disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

The Registrant has no voting stock.

<PAGE>
PART I

Item 1. Business

The Registrant is a separate account established under the Iowa
insurance laws and regulations as Principal Mutual Life Insurance
Company Separate Account C on April 12, 1971, pursuant to a resolution
of the Executive Committee of the Board of Directors of Principal Mutual
Life Insurance Company. Principal Mutual Life Insurance Company,
formerly known as Bankers Life Company, adopted its new name effective
July 1, 1986. The account was formed to receive payments under Principal
Mutual Life Insurance Company Contracts designed for use in connection
with pension or profit sharing plans which qualify under the
Self-Employed Individuals Tax Retirement Act of 1962, as amended
("HR-10"). Principal Mutual Life Insurance Company is a mutual life
insurance company, incorporated under the laws of Iowa, offering life,
disability, health and annuity contracts written on an individual and
group basis.

Pursuant to the Amendments enacted in 1970 to the Investment Company Act
of 1940, the Account is not an investment company for purposes of the
Act.

The objective of these Contracts is to provide for the accumulation of
retirement funds and to provide for payments, usually commencing at
retirement, which tend to reflect changes in the cost of living both
during the years prior to and the years following the commencement of
annuity payments. With Bankers Flexible Annuity Contracts (Registration
No. 2-39957), Principal Mutual Life Insurance Company, as a depositor
for the Account, seeks to accomplish this objective by investing the
payments made under the Contracts in shares of Principal Capital
Accumulation Fund, Inc. which invests principally in common stocks.
Similarly, with Pension Builder Contracts (Registration No. 33-58028),
it seeks to accomplish this objective by investing payments made under
the Contract in three Divisions. One is a "Common Stock Division" where
payments are invested in shares of Principal Capital Accumulation Fund,
Inc. Another is a "Money Market Division" where payments are invested in
Principal Money Market Fund, Inc. which invests in short-term money
market instruments. The third Division is a "Government Securities
Division" where payments are invested in Principal Government Securities
Fund, Inc., which invests in obligations issued or guaranteed by the
United States Government or its agencies. There may be a combination of
investments in the three Divisions, as directed by Participants.

Except for those Contracts described above with payments credited to the
Registrant (Principal Mutual Life Insurance Company Separate Account C)
and Variable Annuity Contracts and Variable Life Insurance Contracts
with payments credited to Principal Mutual Life Insurance Company
Separate Account B and Variable Life Separate Account, respectively, the
Company distributes its own products as permitted under the laws of the
various jurisdictions in which the Company is authorized to do business,
namely the fifty states of the United States, the District of Columbia,
the Commonwealth of Puerto Rico and the Canadian provinces of Alberta,
British Columbia, Manitoba, Ontario and Quebec. Such distribution is
through a field agency system of approximately 1,320 full-time agents, a
group insurance sales organization of approximately 207 individuals and
through a large number of independent insurance brokers.

The Contracts described above with payments credited to the Registrant
and other Variable Annuity Contracts and Variable Life Insurance
Contracts are distributed through Princor Financial Services
Corporation, an affiliated broker-dealer offering open-end management
investment company shares, variable annuities, variable life insurance,
interests in limited partnerships and general securities to the public.
Such Contracts are sold primarily by registered representatives of the
broker-dealer who are also insurance agents of or brokers for Principal
Mutual Life Insurance Company and authorized by applicable law to sell
life and other forms of personal insurance and who are similarly
authorized to sell variable annuities. Such Contracts may also be sold
through other selected broker-dealers.

The Registration Statement filed by the Registrant was made effective
September 13, 1971, and the first sale of Bankers Flexible Annuity
Contracts occurred on October 8, 1971. Effective January 4, 1989, sales
of Bankers Flexible Annuity Contracts were discontinued.

In 1982 the Registrant filed a Registration Statement in File No.
2-78747, to register a new class of securities (called "Pension
Builder") for the same HR-10 plan market utilizing the contingent
deferred sales charge concept. The registration for Pension Builder
contracts first became effective on May 5, 1983 and the first sale under
the Pension Builder Contract was made on September 19, 1983.

In 1989 the Registrant filed a new Registration Statement in File No.
33-27256 for the contracts in view of the fact that aggregate sales
under the prior registration statement approached the amount of
contracts registered thereunder. The contracts offered by the new
registration statement are identical to contracts previously registered
under the 1933 Act in File No. 2-78747.

In 1993 the Registrant filed a new Registration Statement in File No.
33-58028 for the contracts in view of the fact that aggregate sales
under the prior registration statement approached the amount of
contracts registered thereunder. The contracts offered by the new
registration statement are identical to contracts previously registered
under the 1933 Act in File No. 33-27256.

Item 2. Properties

The Registrant owns no physical properties. The principal properties of
the Depositor, Principal Mutual Life Insurance Company, are its home
office complex at The Principal Financial Group in Des Moines, Iowa.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

Inapplicable.

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters

a. The Registrant does not issue common stock. The Contracts
described in Item 1. are distributed through Princor Financial
Services Corporation, an affiliated broker-dealer offering
open-end management investment company shares, variable annuities,
variable life insurance, interests in limited partnerships and
general securities to the public. Such Contracts are sold
primarily by registered representatives of the broker-dealer who
are also insurance agents of or brokers for Principal Mutual Life
Insurance Company and authorized by applicable law to sell life
and other forms of personal insurance and who are similarly
authorized to sell variable annuities. Such Contracts may also be
sold through other selected broker-dealers.

For Bankers Flexible Annuity Contracts (Registration No. 2-39957)
the high and low unit values for each quarterly period during 1994
and 1995 are:

Lowest Unit Value Highest Unit Value

First Quarter 1994 12.2152743 13.2415309
Second " 1994 11.9810112 12.8083427
Third " 1994 12.3525626 13.4490710
Fourth " 1994 12.3430553 13.2803101
First " 1995 12.7340882 13.7592135
Second " 1995 13.6942657 14.6657898
Third " 1995 14.5577805 15.6800495
Fourth " 1995 15.4730197 16.8388145

For Pension Builder Contracts (Registration No. 33-58028) units
were first valued at $1.00 on September 19, 1983 for the Common
Stock Division, September 22, 1983 for the Money Market Division
and March 30, 1987 for the Government Securities Division. Listed
below are the low and high unit values for each quarterly period
during 1994 and 1995.

Common Stock Money Market GovernmentSecurities
Division Division Division
------------------- ------------------- -------------------
Quarter Lowest Highest Lowest Highest Lowest Highest
------- --------- --------- --------- --------- --------- ---------

First Quarter 1994 2.5336599 2.7511198 1.6590204 1.6646759 1.5972143 1.6893543
Second " 1994 2.4838926 2.6513633 1.6647445 1.6722637 1.5463356 1.6102243
Third " 1994 2.5554476 2.7768113 1.6726689 1.6827300 1.5626396 1.6049044
Fourth " 1994 2.5425031 2.7393757 1.6828512 1.6962881 1.5410519 1.5766511
First " 1995 2.6211587 2.8254152 1.6964652 1.7132417 1.5645192 1.6662837
Second " 1995 2.8104369 3.0045562 1.7134358 1.7307405 1.6591219 1.7619418
Third " 1995 2.9813502 3.2043269 1.7311185 1.7474271 1.7282744 1.7774597
Fourth " 1995 3.1588549 3.4337785 1.7476067 1.7641630 1.7744906 1.8412779

b. The approximate number of holders of record of each group contract
and the number of the participants therein as of December 31,
1995, are as follows:

(1) (2)
Number of Group Number of
Contract Holders Participants
---------------- ------------
Bankers Flexible Annuity 80 45
Pension Builder 219 258

c. No dividends have been declared on units held by participants. Any
changes in net investment income, net realized gains and net
realized appreciation are included in the daily valuation of the
units of the Registrant.

Item 6. Selected Financial Data

The information contained in the "Statement of Net Assets, Statement of
Operations and Statements of Changes in Net Assets for Principal Mutual
Life Insurance Company Separate Account C", filed as Item 8. should be
read in conjunction with this item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation

All payments made to the Registrant on behalf of a Participant under a
contract (less any authorized deductions) are used to purchase shares of
Principal Capital Accumulation Fund, Inc., Principal Money Market Fund,
Inc., or Principal Government Securities Fund, Inc., as appropriate, at
net asset value. In addition, any distributions made by the Fund with
respect to shares held by the Registrant are reinvested by the Fund at
net asset value. Values under the contract increase or decrease to
reflect the investment performance of the underlying investments.

Principal Capital Accumulation Fund, Inc. is an open-end diversified
management investment company, sponsored by Principal Mutual Life
Insurance Company. The principal objective of the Fund is long-term
capital appreciation and growth of future investment income. It is
intended that the assets of the Fund will consist primarily of a
portfolio of common stocks. The value of the investments held by the
Fund fluctuates daily. It is subject to the risks of changing economic
conditions as well as the risks inherent in the ability of the
management of the Fund to anticipate changes in such investments
necessary to meet changes in economic conditions.

Principal Money Market Fund, Inc. is an open-end diversified management
investment company, sponsored by Principal Mutual Life Insurance
Company. The principal objective of the Fund is to seek as high a level
of income available from short-term securities as is considered
consistent with preservation of principal and maintenance of liquidity
by investing all of its assets in a portfolio of money market
instruments.

Principal Government Securities Fund, Inc. is an open-end diversified
management investment company, sponsored by Principal Mutual Life
Insurance Company. The principal objective of the Fund is to seek a high
level of current income, liquidity and safety of principal through the
purchase of obligations issued or guaranteed by the United States
Government or its agencies, with emphasis on Government National
Mortgage Association Certificates ("GNMA Certificates").
<PAGE>
Item 8. Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account C

Statement of Net Assets

December 31, 1995

Assets
Investments (Note 1):
Common Stock Division:
Principal Capital Accumulation Fund, Inc. - 146,582 shares at net asset value of
<S> <C>
$27.80 per share (cost - $3,431,031) $4,074,988
Government Securities Division:
Principal Government Securities Fund, Inc. - 79,117 shares at net asset value of
$10.55 per share (cost - $809,151) 834,687
Money Market Division:
Principal Money Market Fund, Inc. - 993,483 shares at net asset value (cost) of
$1.00 per share 993,483
------------------
Net assets $5,903,158
==================
</TABLE>
<TABLE>
<CAPTION>

Unit
Units Value
----------------------------

Net assets are represented by:
Common Stock Division:
Currently payable annuity contracts:
<S> <C> <C> <C>
Bankers Flexible Annuity 11,970 $16.73 $ 200,283
Pension Builder Plus 4,658 3.41 15,880
Contracts in accumulation period:
Bankers Flexible Annuity 88,735 16.73 1,484,660
Pension Builder Plus 696,310 3.41 2,374,165
------------------
------------------
4,074,988
Government Securities Division:
Contracts in accumulation period - Pension Builder
Plus 453,405 1.84 834,687

Money Market Division:
Contracts in accumulation period - Pension Builder
Plus 563,649 1.76 993,483
------------------
Net assets $5,903,158
==================

See accompanying notes.
</TABLE>

<PAGE>

Principal Mutual Life Insurance
Company Separate Account C

Statement of Operations

Year ended December 31, 1995

Common Government Money
Stock Securities Market
Combined Division Division Division
-------------------------------------------------------------
-------------------------------------------------------------
Investment income
Income:
<S> <C> <C> <C> <C>
Dividends (Note 1) $ 239,554 $ 86,599 $ 64,710 $88,245
Capital gains distributions 437,283 437,283 - -
-------------------------------------------------------------
-------------------------------------------------------------
676,837 523,882 64,710 88,245

Expenses (Note 2):
Mortality and expense risks 129,071 81,313 23,831 23,927
Administration charges 26,151 17,915 3,942 4,294
Contingent sales charges 2,714 1,215 276 1,223
-------------------------------------------------------------
-------------------------------------------------------------
157,936 100,443 28,049 29,444
-------------------------------------------------------------
-------------------------------------------------------------
Net investment income 518,901 423,439 36,661 58,801

Realized and unrealized gains (losses) on
investments (Note 4)
Net realized gains (losses) on investments 566,777 619,160 (52,383) -
Change in net unrealized appreciation/
depreciation of investments 955,515 665,019 290,496 -
-------------------------------------------------------------

Net increase in net assets resulting from
operations $2,041,193 $1,707,618 $274,774 $58,801
=============================================================

See accompanying notes.
</TABLE>

<PAGE>

Principal Mutual Life Insurance
Company Separate Account C

Statements of Changes in Net Assets

Years ended December 31, 1995 and 1994

Common Government Money
Stock Securities Market
Combined Division Division Division
-------------------------------------------------------------

<S> <C> <C> <C> <C>
Net assets at January 1, 1994 $21,703,996 $14,721,884 $4,173,176 $2,808,936

Increase (decrease) in net assets
Operations:
Net investment income 595,116 414,809 126,297 54,010
Net realized gains (losses) on investments 84,364 133,140 (48,776) -
Change in net unrealized appreciation/
depreciation of investments (1,044,355) (685,613) (358,742) -
-------------------------------------------------------------

Net increase (decrease) in net assets resulting
from operations (364,875) (137,664) (281,221) 54,010
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 4,965,171 2,906,809 1,131,004 927,358
Contract terminations (3,146,785) (2,313,443) (563,441) (269,901)
Transfer payments to other contracts (6,921,308) (4,103,994) (1,757,872) (1,059,442)
Annuity payments (21,562) (21,562) - -
Mortality guarantee transfer 11,692 11,692 - -
-------------------------------------------------------------

Decrease in net assets from principal (5,112,792) (3,520,498) (1,190,309) (401,985)
transactions
-------------------------------------------------------------
Total decrease (5,477,667) (3,658,162) (1,471,530) (347,975)
-------------------------------------------------------------
Net assets at December 31, 1994 16,226,329 11,063,722 2,701,646 2,460,961

Increase (decrease) in net assets
Operations:
Net investment income 518,901 423,439 36,661 58,801
Net realized gains (losses) on investments 566,777 619,160 (52,383) -
Change in net unrealized appreciation/
depreciation of investments 955,515 665,019 290,496 -
-------------------------------------------------------------
Net increase in net assets resulting from 2,041,193 1,707,618 274,774 58,801
operations
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 3,592,629 1,872,882 801,970 917,777
Contract terminations (5,907,945) (4,319,096) (800,094) (788,755)
Transfer payments to other contracts (10,028,790) (6,229,880) (2,143,609) (1,655,301)
Annuity payments (20,258) (20,258) - -
-------------------------------------------------------------
Decrease in net assets from principal (12,364,364) (8,696,352) (2,141,733) (1,526,279)
transactions
-------------------------------------------------------------
Total decrease (10,323,171) (6,988,734) (1,866,959) (1,467,478)
-------------------------------------------------------------
Net assets at December 31, 1995 $ 5,903,158 $ 4,074,988 $ 834,687 $ 993,483
=============================================================

See accompanying notes.
</TABLE>

<PAGE>
Principal Mutual Life Insurance
Company Separate Account C

Notes to Financial Statements

December 31, 1995

1. Investment and Accounting Policies

Principal Mutual Life Insurance Company Separate Account C was organized by
Principal Mutual Life Insurance Company (Principal Mutual) in accordance with
the provisions of the Iowa Insurance Laws and is a part of the total operations
of Principal Mutual. The assets and liabilities of Separate Account C are
clearly identified and distinguished from the other assets and liabilities of
Principal Mutual, with the remaining aggregate value of units registered with
the Securities and Exchange Commission under the current registration statement
(but not the authorized number of units) limited to $11.1 million. As directed
by eligible contractholders, Separate Account C invests solely in shares of
Principal Capital Accumulation Fund, Inc., Principal Government Securities Fund,
Inc. and Principal Money Market Fund, Inc., diversified open-end management
investment companies organized by Principal Mutual. Investments are stated at
the closing net asset values per share on December 31, 1995.

The average cost method is used to determine realized gains and losses on
investments. Dividends are taken into income on an accrual basis as of the
ex-dividend date.

After September 30, 1995, Principal Mutual no longer accepted contributions for
Pension Builder Plus contracts. Contractholders were given the options of
withdrawing their funds or transferring to another contract. Contingent sales
charges were waived for contracts transferred prior to November 30, 1995.
Contributions for Bankers Flexible Annuity contracts were previously
discontinued.

2. Expenses

Principal Mutual is compensated for the following expenses:

Bankers Flexible Annuity Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate of
0.48% of the asset value of each contract. An annual administration charge of $7
for each participant's account is deducted as compensation for administrative
expenses. The mortality and expense risk and annual administration charges
amounted to $9,346 and $224, respectively, during the year 1995. A sales charge
of up to 7% was deducted from each contribution made on behalf of each
participant. The sales charge was deducted from the contributions by Principal
Mutual prior to their transfer to Separate Account C.

<PAGE>

Principal Mutual Life Insurance
Company Separate Account C

Notes to Financial Statements (continued)

2. Expenses (continued)

Pension Builder Plus Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate of
1.4965% of the asset value of each contract. A contingent sales charge of up to
7% may be deducted from withdrawals made during the first 10 years of a
contract, except for death or permanent disability. An annual administration
charge will be deducted ranging from a minimum of $25 to a maximum of $275
depending upon a participant's investment account values and the number of
participants under the retirement plan and their participant investment account
value. The charges for mortality and expense risks, contingent sales and annual
administration amounted to $119,725, $2,714, and $25,927, respectively, during
the year 1995.

3. Federal Income Taxes

Operations of Separate Account C are a part of the operations of Principal
Mutual. Under current practice, no federal income taxes are allocated by
Principal Mutual to the operations of Principal Mutual Life Insurance Company
Separate Account C.

4. Purchases and Sales of Investment Securities

<TABLE>
<CAPTION>
The aggregate units and cost of purchases and proceeds from sales of investments
were as follows:

For the year ended December 31, 1995
------------------------------------------------------------------
Units Purchased Amount Purchased Units Redeemed Amount Redeemed
------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity - $ 167,512 31,593 $ 441,825
Pension Builder Plus 650,439 2,229,252 3,524,489 10,227,852
------------------------------------------------------------------
650,439 2,396,764 3,556,082 10,669,677

Government Securities Division:
Pension Builder Plus 494,421 866,680 1,762,773 2,971,752

Money Market Division:
Pension Builder Plus 535,936 1,006,023 1,424,097 2,473,501
------------------------------------------------------------------
1,680,796 $4,269,467 6,742,952 $16,114,930
==================================================================
</TABLE>

<PAGE>

Principal Mutual Life Insurance
Company Separate Account C

Notes to Financial Statements (continued)

4. Purchases and Sales of Investment Securities (continued)

For the year ended December 31, 1994
------------------------------------------------------------------
Units Purchased Amount Purchased Units Redeemed Amount Redeemed
------------------------------------------------------------------
------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity 917 $ 105,888 21,976 $ 287,677
Pension Builder Plus 1,103,649 3,461,092 2,346,403 6,384,992
------------------------------------------------------------------
------------------------------------------------------------------
1,104,566 3,566,980 2,368,379 6,672,669

Government Securities Division:
Pension Builder Plus 694,572 1,331,843 1,473,324 2,395,855

Money Market Division:
Pension Builder Plus 554,953 1,032,529 796,873 1,380,504
------------------------------------------------------------------
==================================================================
2,354,091 $5,931,352 4,638,576 $10,449,028
==================================================================
</TABLE>

Purchases include reinvested dividends and capital gains.

Money Market purchases include transactions where investment allocations are not
known at the time of the deposit. Redemptions reflect subsequent allocations to
directed investment divisions.

5. Net Assets

<TABLE>
<CAPTION>
Net assets at December 31, 1995 consisted of the following:

Net Unrealized
Accumulated Appreciation
Unit Net Investment of Investments
Combined Transactions Income
-------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity $1,684,943 $ 295,274 $ 969,242 $420,427
Pension Builder Plus 2,390,045 1,824,492 342,023 223,530
-------------------------------------------------------------------
4,074,988 2,119,766 1,311,265 643,957
Government Securities Division:
Pension Builder Plus 834,687 723,461 85,690 25,536
Money Market Division:
Pension Builder Plus 993,483 927,106 66,377 -
-------------------------------------------------------------------
$5,903,158 $3,770,333 $1,463,332 $669,493
===================================================================
</TABLE>

<PAGE>

Report of Independent Auditors

Board of Directors and Participants
Principal Mutual Life Insurance Company

We have audited the accompanying statement of net assets of Principal Mutual
Life Insurance Company Separate Account C (comprising, respectively, the Common
Stock, Government Securities, and Money Market Divisions) as of December 31,
1995, and the related statements of operations for the year then ended, and
changes in net assets for each of the two years in the period then ended. 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the transfer agent. 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 Principal Mutual Life Insurance
Company Separate Account C at December 31, 1995, and the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, in conformity with generally accepted
accounting principles.

ERNST & YOUNG LLP
Des Moines, Iowa

February 7, 1996

<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Inapplicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

Inapplicable, the Registrant does not have any directors or executive
officers.

Item 11. Executive Compensation

Inapplicable, the Registrant does not have any directors or executive
officers.

Item 12. Security Ownership of Certain Beneficial Owners and Management

No person owns beneficially or of record the assets held by the
Depositor, Principal Mutual Life Insurance Company, in the Separate
Account. As contractholders of the variable contracts each
contractholder has one vote in the election of the Board of Directors
at annual meetings and upon other Principal Mutual Life Insurance
Company matters, if any, where a policyholder's vote is taken. The
contractholders have the same voting privilege as do all other
policyholders of Principal Mutual Life Insurance Company. An individual
participant (certificateholder) does not have a vote. There are no
policyholders that are entitled to cast more than 5% of the votes to be
cast.

Item 13. Certain Relationships and Related Transactions

Inapplicable.
<PAGE>

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) Documents filed as part of this report:

1. The following financial statements are submitted herewith:

Statement of Net Assets -- December 31, 1995

Statement of Operations -- Year ended December 31, 1995

Statements of Changes in Net Assets -- Years ended December 31,
1995 and 1994.

Notes to Financial Statements

2. Schedules - All other schedules for which provision is made in
the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.

3. Exhibits:

(20) Subsidiaries of the Registrant

<PAGE>

Subsidiaries of the Registrant

The Registrant is a separate account of Principal Mutual Life Insurance Company.
It has no subsidiary. Principal Mutual Life Insurance Company, as the Depositor
of the Account, owns or controls, as of December 31, 1995, subsidiaries as
follows:

I. Principal Holding Company

A. Organized in Iowa.

B. Depositor owns 100% of outstanding stock.

C. Subsidiaries of Principal Holding Company as of December 31,
1995, are as follows:

1. Princor Financial Services Corporation (a registered
broker-dealer)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

c. Subsidiaries of Princor Financial Services Corporation
as of December 31, 1995 are as follows:

(1) Princor Management Corporation (a registered
investment adviser)

(a) Organized in Iowa.

(b) Princor Financial Services Corporation owns
100% of outstanding stock.

(2) Principal Investors Corporation (broker-dealer of
securities and registered investments)

(a) Organized in New Jersey.

(b) Princor Financial Services Corporation owns
100% of outstanding stock.

2. Petula Associates, Ltd. (a real estate development company)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

3. Patrician Associates, Inc. (a real estate development
company)

a. Organized in California.

b. Principal Holding Company owns 100% of outstanding
stock.

4. Principal Development Associates, Inc. (a real estate
development company)

a. Organized in California.

b. Principal Holding Company owns 100% of outstanding
stock.

5. Principal Spectrum Associates, Inc. (a real estate
development company)

a. Organized in California.

b. Principal Holding Company owns 100% of outstanding
stock.

6. Equity FC, Ltd. (a general business corporation that engages
in investment transactions including limited partnership and
limited liability companies)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

7. Principal Commerical Advisors, Inc. (purchasing, managing
and selling commercial real estate assets)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

8. Principal FC, Ltd. (limited purpose investment corporation)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

9. Invista Capital Management, Inc. (a registered investment
advisor)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

10. Delaware Charter Guarantee & Trust Company (nondepository
trust company)

a. Organized in Delaware.

b. Principal Holding Company currently owns 100% of
outstanding stock.

11. Principal Securities Holding Corporation, formerly known as
The Principal/EGT Financial Corporation.

a. Organized in Delaware.

b. Principal Holding Company owns 100% of outstanding
stock.

c. Subsidiary of Principal Securities Holding Corporation
as of December 31, 1995 is as follows:

(1) Principal Financial Securities, Inc., formerly
known as The Principal/Eppler, Guerin & Turner,
Inc., (investment banking and securities brokerage
firm)

(a) Organized in Delaware.

(b) Principal Securities Holding Corporation owns
100% of outstanding stock.

12. The Principal Financial Group, Inc. (general business
corporation established in connection with corporate
identity - not currently active)

a. Organized in Delaware.

b. Principal Holding Company owns 100% of outstanding
stock.

13. Principal Marketing Services, Inc. (insurance broker)

a. Organized in Delaware.

b. Principal Holding Company owns 100% of outstanding
stock.

14. Principal Health Care, Inc. (a developer and administrator
of managed care systems)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

c. Subsidiaries of Principal Health Care, Inc. as of
December 31, 1995 are as follows:

(1) Principal Health Care of Delaware, Inc. (a health
maintenance organization)

(a) Organized in Delaware.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

1) Principal Health Care of The
Mid-Atlantic, Inc. (a health maintenance
organization)

a) Organized in Virginia.

b) Principal Health Care of Delaware
owns 100% of outstanding stock.

(2) Americas Health Plan, Inc.(a developer of discount
provider networks)

(a) Organized in Maryland.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(3) PHC Merging Company (a Florida Corporation - not
currently active)

(a) Organized in Florida.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(4) Principal Health Care of Florida, Inc. (a health
maintenance organization)

(a) Organized in Florida.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(5) Principal Health Care of Illinois, Inc. (A health
maintenance organization)

(a) Organized in Illinois.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(6) Principal Health Care of Kansas City, Inc. (a
health maintenance organization)

(a) Organized in Missouri.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(7) Principal Health Care of Louisiana, Inc. (a health
maintenance organization)

(a) Organized in Louisiana.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(8) Principal Health Care of Nebraska, Inc. (a health
maintenance organization)

(a) Organized in Nebraska.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(9) Principal Health Care of Georgia, Inc.(a health
maintenance organization)

(a) Organized in Georgia.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(10) Principal Health Care of Indiana, Inc.(a health
maintenance organization)

(a) Organized in Delaware.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(11) Principal Health Care of Iowa, Inc.(a health
maintenance organization)

(a) Organized in Iowa.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(12) United Healthcare Services of Iowa, Inc.(a health
maintenance organization)

(a) Organized in Iowa.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(13) Principal Behavioral Health Care, Inc.(a
corporation doing business as a mental and
nervous/substance abuse preferred provider
organization)

(a) Organized in Iowa.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(14) Principal Health Care of the Carolinas, Inc. (a
health maintenance organization operating in North
Carolina and South Carolina)

(a) Organized in North Carolina.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(15) Principal Health Care of Pennsylvania, Inc. (a
health maintenance organization operating in
Pennsylvania - not currently active)

(a) Organized in Pennsylvania.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(16) Principal Health Care of South Carolina, Inc. (a
health maintenance organization)

(a) Organized in South Carolina.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(17) Principal Health Care of Tennessee, Inc. (a health
maintenance organization)

(a) Organized in Tennessee.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

(18) Principal Health Care of Texas, Inc.(a health
maintenance organization)

(a) Organized in Texas.

(b) Principal Health Care, Inc. owns 100% of
outstanding stock.

15. Principal Asset Markets, Inc. (a residential mortgage loan
broker)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

16. Principal Financial Advisors, Inc. (a registered investment
advisor)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

17. Principal Residential Mortgage, Inc. (a residential mortgage
loan broker)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

18. Principal Portfolio Services, Inc. (a residential mortgage
loan due diligence company)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

19. Principal International, Inc. (company formed for the
purpose of international business development)

a. Organized in Iowa.

b. Principal Holding Company owns 100% of outstanding
stock.

c. Subsidiaries of Principal International, Inc. as of
December 31, 1995 are as follows:

(1) Principal International, S.A. Compania de Seguros
(a Mexican corporation)

(a) Organized in Mexico.

(b) Principal International, Inc. owns 80% of
outstanding stock, Principal Holding Company
owns 10% of outstanding stock and Principal
Marketing services, Inc. owns 10% of
outstanding stock.

(2) Grupo Financiero Principal, S.A. de Seguros de
Vida (a Spanish insurance company)

(a) Organized in Spain.

(b) Principal International, Inc. owns
99.99993333% of outstanding stock and
Principal Holding Company owns .00006667% of
outstanding stock.

(1) Agencia de Seguros, SA (insurance agency
that is currently dormant).

(a) Organized in Spain.

(b) Grupo Financiero Principal, S.A. de
Seguros de Vida owns 99.99% of
outstanding stock and Principal
International, Inc. owns .01% of
outstanding stock.

(3) Principal International Argentina, S.A. (an
Argentina corporation)

(a) Organized in Argentina.

(b) Principal International, Inc. owns 97.06% of
outstanding Stock.

(1) Ethika S.A. Administradoras de Fondo de
Jubilaciones y Pensiones (an Argentina
corporation).

(a) Organized in Argentina.

(b) Principal International Argentina,
S.A. owns 99.9% of outstanding
stock and Principal International,
Inc. owns .1% of outstanding stock.

(2) Princor Compania de Seguros de Retiro,
S.A. (an Argentina corporation)

(a) Organized in Argentina.

(b) International Argentina, S.A. owns
99% of outstanding stock.

(3) Prinlife Compania de Seguros de Vida,
S.A. (an Argentina corporation)

(a) Organized in Argentina.

(b) International Argentina, S.A. owns
99.9% of outstanding stock and
Principal International, Inc. owns
.1% of outstanding stock.

(4) Jacaranda Administradora de Fondos
de Jubilaciones y Pensiones, S.A.
(an Argentina Corporation)

(a) Organized in Argentina.

(b) Principal International Argentina,
S.A. owns 62.95% of outstanding
stock and Principal International,
Inc. owns 7.05% of outstanding
stock.

(4) Principal International Asia Limited, formerly
known as Goldchin Champ Limited (a Hong Kong
corporation)

(a) Organized in Hong Kong.

(b) Principal International, Inc. owns 50% of
outstanding stock and Principal Holding
Company owns 50% of outstanding stock.

(5) Principal International de Chile,S.A.

(a) Organized in Chile.

(b) Principal International, Inc. owns 99%
outstanding stock and Principal Holding
Company owns 1% of outstanding stock.

(1) Ban Renta Compania de Seguros de Vida
Banmedica, S.A.

(a) Organizede in Chile.

(b) Principal International de Chile,
S.A. owns 50% of outstanding stock.

20. America's Health Plan, Inc. (a developer of discount
provider networks)

a. Organized in Maryland.

b. Principal Holding Company owns 100% of outstanding
stock.

II. Principal Life Insurance Company (a general life and annuity company)

A. Organized in Iowa.

B. Depositor owns 100% of the outstanding stock (except that of the
100,007 shares outstanding on 12-31-95 each of the 7 members of
the Board of Directors owned one qualifying share).

III. Principal National Life Insurance Company (a general life and annuity
company)

A. Organized in Iowa.

B. Depositor owns 100% of the outstanding stock (except that of the
210,000 shares outstanding on 12-31-95 each of the 8 members of
the Board of Directors owned one qualifying share).

IV. PT Asuransi Jiwa Principal Egalita Indonesia (an Indonesia
corporation)

A. Organized in Indonsesia.

B. Depositor owns 75% of the outstanding stock.

C. Subsidiary of PT Asuransi Jiwa Principal Egalita Indonesia as of
December 31, 1995 is as follows:

1. Dana Pensiun Lembaga Keuangan Principal Egalita Indonesia.

(a) Organized in Indonesia.

(b) Dana Pensiun Lembaga Keuangan Principal Egalita
Indonesia owns 100% of outstanding stock.

The Depositor's investment in its subsidiaries, which in turn includes the
subsidiary's investment in its subsidiaries, is included in the financial
statements of the Depositor.
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 15(d) of the Securities Exchange
Act of 1934, Principal Mutual Life Insurance Company has duly caused this report
to be signed on behalf of Principal Mutual Life Insurance Company Separate
Account C by the undersigned thereto duly authorized

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C

By PRINCIPAL MUTUAL LIFE INSURANCE COMPANY

D. J. DRURY
By ---------------------------------------------------
D. J. Drury, Chairman and Chief Executive Officer

March 15, 1996
Date ---------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities with Principal Mutual Life Insurance Company and on
the dates indicated.

Signature Title Date

D. J. DRURY Chairman and March 15, 1996
- - --------------------- Chief Executive Officer
D. J. Drury

D. C. CUNNINGHAM Vice President and March 15, 1996
- - ---------------------- Controller (Principal
D. C. Cunningham Accounting Officer)

C. E. ROHM Executive Vice March 15, 1996
- - ---------------------- President (Principal
C. E. Rohm Financial Officer)

(M. V. Andringa)* Director March 15, 1996
- - ----------------------
M. V. Andringa

(R. M. Davis)* Director March 15, 1996
- - ----------------------
R. M. Davis

(C. D. Gelatt)* Director March 15, 1996
- - ----------------------
C. D. Gelatt

(G. D. Hurd)* Director March 15, 1996
- - ----------------------
G. D. Hurd

(T. M. Hutchison)* Director March 15, 1996
- - ----------------------
T. M. Hutchison

(C. S. Johnson)* Director March 15, 1996
- - ----------------------
C. S. Johnson

(W. T. Kerr)* Director March 15, 1996
- - ----------------------
W. T. Kerr

(L. Liu)* Director March 15, 1996
- - ----------------------
L. Liu

(V. H. Loewenstein)* Director March 15, 1996
- - ----------------------
V. H. Loewenstein

(J. R. Price, Jr.)* Director March 14, 1996
J. R. Price, Jr.

(B. A. Rice)* Director March 15, 1996
- - ----------------------
B. A. Rice

(J-P. C. Rosso)* Director March 15, 1996
- - ----------------------
J-P. C. Rosso

(D. M. Stewart)* Director March 15, 1996
- - ----------------------
D. M. Stewart

(E. E. Tallett)* Director March 15, 1996
- - ----------------------
E. E. Tallett

(D. D. Thornton)* Director March 15, 1996
- - ----------------------
D. D. Thornton

(F. W. Weitz)* Director March 15, 1996
- - ----------------------
F. W. Weitz

DAVID J. DRURY
*By -------------------------------------
David J. Drury
Chairman and Chief Executive Officer

March 15, 1996
-------------------------------------
Pursuant to Powers of Attorney
Previously Filed or Included Herein

<PAGE>
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to variable
annuity contracts, with premiums received in connection with such contracts held
in the Principal Mutual Life Insurance Company Separate Account C on Form N-4 or
other forms under the Securities Act of 1933,and any and all amendments thereto
and reports thereunder with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person; hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
M. Vermeer Andringa
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
R. M. Davis
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
C. D. Gelatt, Jr.
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
G. D. Hurd
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
T. M. Hutchison
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
C. S. Johnson
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
W. T. Kerr
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
L. Liu
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
V. H. Loewestein
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
J. R. Price, Jr.
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
B. A. Rice
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
J-P. C. Rosso
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
D. M. Stewart
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
E. E. Tallett
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
D. D. Thornton
_____________________________________________

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 15th
day of March, 1996.
F. W. Weitz
_____________________________________________