MINNESOTA MUTUALS VARIABLE FUND D, 497, 1995-05-04

MINNESOTA MUTUALS VARIABLE FUND D
497, 1995-05-04

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<PAGE>
FILED PURSUANT TO RULE 497
FILE NUMBER: 002-29624
VARIABLE FUND D PROSPECTUS
GROUP AND INDIVIDUAL VARIABLE ANNUITY CONTRACT
OF MINNESOTA MUTUAL'S VARIABLE FUND D

THE VARIABLE ANNUITY CONTRACTS, WHICH ARE MORE FULLY DESCRIBED IN THIS
PROSPECTUS, ARE DESIGNED TO PROVIDE BENEFITS UNDER CERTAIN RETIREMENT PROGRAMS
OR PLANS WHICH QUALIFY FOR SPECIAL FEDERAL INCOME TAX TREATMENT.
The owner of a contract or a participant under a group contract may elect to
have contract values accumulated on a completely variable basis, on a completely
fixed basis (as part of Minnesota Mutual's General Account and in which the
safety of principal and interest are guaranteed) or on a combination fixed and
variable basis. To the extent that contract values are accumulated on a variable
basis, they will be a part of the Variable Fund D. The Variable Fund D invests
its assets in shares of MIMLIC Series Fund, Inc. (the "Series Fund"). The
variable accumulation value of the contract and the amount of each variable
annuity payment will vary in accordance with the performance of the Portfolio or
Portfolios of the Series Fund selected by the contract owner or participant. The
contract owner or participant bears the entire investment risk for any amounts
allocated to the Portfolios of the Series Fund.
This Prospectus sets forth information that a prospective investor should know
before investing in the Variable Fund D, and it should be read and kept for
future reference. A Statement of Additional Information, bearing the same date,
which contains further contract and Variable Fund D information, has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling (612) 298-3500, or by writing the Variable
Fund D at its principal office at Minnesota Mutual Life Center, 400 Robert
Street North, St. Paul, Minnesota 55101-2098. A Table of Contents for the
Statement of Additional Information appears in this Prospectus on page 28.

This Prospectus is not valid unless attached to a current prospectus of MIMLIC
Series Fund, Inc.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

[LOGO]

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
(612) 298-3500

The date of this document and the Statement of Additional Information is: May 1,
1995

F.16106 Rev. 5-95
<PAGE>
- ------------------------------------------------------------------------
DEFINITIONS

As used in this Prospectus, the following terms have the indicated meanings:

ACCUMULATION UNIT: an accounting device used to determine the value of a
contract before annuity payments begin.

ACCUMULATION VALUE: the sum of the values under a contract in the General
Account and in the Variable Fund D.

ANNUITY: a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain.

ANNUITY UNIT: an accounting device used to determine the amount of annuity
payments.

CODE: the Internal Revenue Code of 1986, as amended.

CONTRACT OWNER: the owner of the contract, which could be the annuitant, his or
her employer, or a trustee acting on behalf of the employer.

CONTRACT YEAR: a period of one year beginning with the contract date or a
contract anniversary.

FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.

FUND: the mutual fund or separate investment portfolio within a series mutual
fund which has been designated as an eligible investment for the Variable Fund
D, namely, MIMLIC Series Fund, Inc. and its Portfolios.

GENERAL ACCOUNT: all of our assets other than those in the Variable Fund D or in
other separate accounts established by us.

PARTICIPANT: a person for whom an interest is maintained under a group annuity
contract, prior to the time that annuity payments begin.

PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase plan
under which benefits are to be provided by the variable annuity contracts
described herein.

PURCHASE PAYMENTS: amounts paid to us under a contract.

VALUATION DATE: each date on which a Fund Portfolio is valued.

VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Variable Fund D.

VARIABLE FUND D: a separate investment account called the Minnesota Mutual
Variable Fund D, where the investment experience of its assets is kept separate
from our other assets. This separate account has several sub-accounts.

2
<PAGE>
SYNOPSIS CONTAINS A BRIEF SUMMARY OF SOME OF THE IMPORTANT FEATURES OF THE
VARIABLE ANNUITY CONTRACTS DESCRIBED IN THIS PROSPECTUS. THE SUMMARY DOES NOT
PROVIDE A FULL DESCRIPTION OF THE CONTRACTS, WHICH IS PROVIDED ONLY IN THE
PROSPECTUS. YOU MAY FIND IT HELPFUL TO RE-READ THIS SUMMARY AFTER READING THE
PROSPECTUS, WHICH SHOULD BE RETAINED FOR FUTURE REFERENCE. A GLOSSARY OF SPECIAL
TERMS USED IN THIS PROSPECTUS MAY BE FOUND ON THE PRECEDING PAGE.
This Prospectus describes variable annuity contracts which are offered for use
in connection with certain retirement plans or programs entitled to special
federal income tax benefits. These plans or programs include: (a) employer
pension or profit-sharing plans qualified under Section 401(a) or 403(a) of the
Internal Revenue Code (the "Code"); (b) pension plans established by persons
entitled to the benefits of the Self-Employed Individuals Tax Retirement Act of
1962, as amended (H.R. 10 or Keogh plans); (c) annuity purchase plans adopted by
public school systems and certain tax exempt organizations pursuant to Section
403(b) of the Code; (d) individual retirement annuity plans adopted by
individuals pursuant to Section 408 of the Code; and (e) eligible state deferred
compensation plans described in Section 457 of the Code.
Three types of variable annuity contracts are offered by Minnesota
Mutual--Individual Accumulation Annuity, Group Accumulation Annuity, and Group
Deposit Administration. The minimum purchase payment for the first contract year
under a Group Deposit Administration Contract is $3,000. The minimum periodic
purchase payment under an Individual Accumulation Annuity Contract and as to
each participant under a Group Accumulation Annuity Contract is $10. Currently,
Minnesota Mutual is waiving the enforcement of this provision. For a detailed
description of each type of contract, see "Description of the Contracts" on
pages 14-17.
For contracts used as individual retirement annuities there is a right of
revocation after the contract is established. See "Right of Revocation" on page
15.
The contracts are combined fixed and variable annuity contracts which provide
for monthly annuity payments. These payments may begin immediately or at some
future date. Purchase payments received under a contract are allocated either to
our General Account or to Variable Fund D. In the General Account, purchase
payments receive interest and principal guarantees; in the Variable Fund D, your
purchase payments are invested in one or more Portfolios of MIMLIC Series Fund,
Inc. and receive no interest or principal guarantees.
To the extent amounts are invested in the Portfolios of the Variable Fund D,
the value of the contract before the date annuity payments begin, and the amount
of monthly variable annuity benefits payable after that date, will increase or
decrease depending on increases or decreases in the market value of the
securities held by the Portfolios of the Series Fund.
This Prospectus describes only the variable aspects of the contracts, except
where fixed aspects are specifically mentioned. Please look to the language of
the contracts for a description of the fixed portion of the contracts. For more
information on the contracts, see the heading "Description of the Contracts" in
this Prospectus.
Currently, purchase payments allocated to the Variable Fund D are invested
exclusively in shares of MIMLIC Series Fund, Inc. The Series Fund is a mutual
fund of the series type, which means that it has several different portfolios
which it offers for investment. Shares of the Series Fund will be made available
at net asset value to the Variable Fund D to fund the variable annuity
contracts. The Series Fund is also required to redeem its shares at net asset
value at our request. We reserve the right to add, combine or remove other
eligible funds. The investment objectives and certain policies of the Portfolios
of the Series Fund are as follows:
The Growth Portfolio seeks the long-term accumulation of capital. Current
income, while a factor in portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The Bond Portfolio seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
securities will tend to rise

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<PAGE>
and fall inversely with the rise and fall of interest rates.
The Money Market Portfolio seeks maximum current income to the extent
consistent with liquidity and the stability of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuation in short-term interest rates.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
The Asset Allocation Portfolio seeks as high a level of long-term total
rate of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity
securities, bonds and money market instruments. The Asset Allocation
Portfolio involves the risks inherent in stocks and debt securities of
varying maturities and the risk that the Portfolio may invest too much or
too little of its assets in each type of security at any particular time.
The Mortgage Securities Portfolio seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily
in mortgage-related securities. Prices of mortgage-related securities will
tend to rise and fall inversely with the rise and fall of the general level
of interest rates.
The Index 500 Portfolio seeks investment results that correspond generally
to the price and yield performance of the common stocks included in the
Standard & Poor's Corporation 500 Composite Stock Price Index (the "Index").
It is designed to provide an economical and convenient means of maintaining
a broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been
included in the Index affords no assurance against declines in the price or
yield performance of that stock.
The Small Company Portfolio seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy
of investing primarily in common preferred stocks issued by small companies,
defined in terms of either market capitalization or gross revenues.
Investments in small companies usually involve greater investment risks than
fixed income securities or corporate equity securities generally. Small
companies will typically have a market capitalization of less than $1.5
billion or annual gross revenues of less than $1.5 billion.
There is no assurance that any Portfolio will meet its objectives. Additional
information concerning the investment objectives and policies of the Portfolios
can be found in the current prospectus for the Series Fund, which is attached to
this Prospectus.
Subject to the limitations of the type of retirement program or a specific
plan, the contracts may be surrendered in whole or in part at any time prior to
the time that annuity payments begin for their accumulation value, less a
deferred sales charge, if any. See the discussion on withdrawals and surrender
on page 23. A surrender or a withdrawal may result in adverse tax consequences.
Once an annuity option has been selected and payments begin, payments will be
made only in accordance with the terms of that option. These options, along with
a description of the method used to determine the amount of each variable
annuity payment, are found on pages 14-16.
The allocation of future purchase payments may be made by giving Minnesota
Mutual written or telephone notice. And before annuity payments begin, a
contract owner or participant may transfer all or a part of existing
accumulation values between the General Account and the separate account or
among the sub-accounts of Variable Fund D. These transfers may be made by
written request to Minnesota Mutual and, generally, must be in amounts of at
least $250. Currently, Minnesota Mutual is waiving the enforcement of this
provision. For additional information on transfers please see the section on
pages 20-21.
A sales charge of up to 7% of the payment received is deducted from each
purchase payment. A deduction may also be made from each purchase payment for
any applicable premium taxes (currently such premium taxes

4
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range from 0% to 3.50%, depending upon the applicable law and are deducted as of
the annuity commencement date). The maximum sales charge of 7% (exclusive of any
applicable premium taxes) is 7.53% of the amount initially invested.
A deduction at the rate of .795% per year is made from the value of each
sub-account of Variable Fund D. This deduction is for the assumption by
Minnesota Mutual of mortality and expense risks. For additional information on
this deduction, see page 14.
In addition, MIMLIC Asset Management Company, one of Minnesota Mutual's
subsidiaries, acts as the investment adviser to the Series Fund and deducts from
the net asset value of each Portfolio of the Series Fund a fee for its services
which are provided under an investment advisory agreement. To the extent that
the cost of investment advisory services in the Series Fund exceeds .265%,
Minnesota Mutual will make a reimbursement to Variable Fund D contracts. For
more information on this reimbursement, please see the section in this
Prospectus entitled "Contract Deductions."
Each Portfolio of the Series Fund is subject to certain expenses in addition
to its advisory fee. For funds allocated to the Growth Sub-Account, a portion of
these expenses may be reimbursed. For more information on this, see this
Prospectus under the heading "Contract Deductions." For more information on the
Series Fund, see the prospectus of MIMLIC Series Fund, Inc. which is attached to
this Prospectus.
MIMLIC Sales Corporation ("MIMLIC Sales") acts as the principal underwriter
for the Variable Fund D. This firm is also affiliated with Minnesota Mutual.

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EXPENSE TABLE
The following contract expense information is intended to illustrate the expense
of a Variable Fund D variable annuity contract. All expenses shown are rounded
to the nearest dollar. The information contained in the tables must be
considered with the narrative information which immediately follows them in this
heading.

INDIVIDUAL ACCUMULATION ANNUITY AND PARTICIPANT INTERESTS UNDER THE GROUP
ANNUITY CONTRACTS

<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES

Sales Charges on Purchase Payments (as a percentage of
purchase payments).................................... 7%

SEPARATE ACCOUNT ANNUAL EXPENSES--GROWTH SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)

Investment Management Fee Reimbursement............. (.235)%
Mortality and Expense Risk Fees..................... .795%
Other Expense Reimbursement......................... (.060)%
-------
Total Sub-Account Annual Expenses............... .500%
-------
-------

MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Growth Portfolio)

Growth Portfolio

Investment Management Fees.......................... .500%
Other Expenses...................................... .060%
-------
Total Growth Portfolio Annual Expenses.......... .560%
-------
-------
</TABLE>

5
<PAGE>
EXAMPLE--For contracts using the Growth Portfolio:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the applicable
time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets....... $80 $101 $124 $190
</TABLE>

<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--BOND SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)
Investment Management Fee Reimbursement............. (.235)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .560%
-------
-------
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Bond Portfolio)
Bond Portfolio
Investment Management Fees.......................... .500%
Other Expenses...................................... .110%
-------
Total Bond Portfolio Annual Expenses............ .610%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Bond Portfolio:

<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--MONEY MARKET
SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)
Investment Management Fee Reimbursement............. (.235)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .560%
-------
-------

MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Money Market Portfolio)
Money Market Portfolio
Investment Management Fees.......................... .500%
Other Expenses (after expense reimbursement)........ .150%
-------
Total Money Market Portfolio Annual Expenses.... .650%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Money Market Portfolio:

6
<PAGE>

<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--ASSET ALLOCATION
SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)

Investment Management Fee Reimbursement............. (.235)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .560%
-------
-------

MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Asset Allocation Portfolio)

Asset Allocation Portfolio

Investment Management Fees.......................... .500%
Other Expenses...................................... .060%
-------
Total Asset Allocation Portfolio Annual
Expenses...................................... .560%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Asset Allocation Portfolio:

<TABLE>
<S> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--MORTGAGE SECURITIES
SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)

Investment Management Fee Reimbursement............. (.235)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .560%
-------
-------

MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Mortgage Securities Portfolio)

Mortgage Securities Portfolio

Investment Management Fees.......................... .500%
Other Expenses...................................... .100%
-------
Total Mortgage Securities Portfolio Annual
Expenses...................................... .600%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Mortgage Securities Portfolio:

<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--INDEX 500 SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)

Investment Management Fee Reimbursement............. (.135)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .660%
-------
-------
</TABLE>

7
<PAGE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Index 500 Portfolio)

Index 500 Portfolio

Investment Management Fees.......................... .400%
Other Expenses...................................... .100%
-------
Total Index 500 Portfolio Annual Expenses....... .500%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Index 500 Portfolio:

<TABLE>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES--SMALL COMPANY
SUB-ACCOUNT
(as a percentage of average daily sub-account net
assets)

Investment Management Fee Reimbursement............. (.485)%
Mortality and Expense Risk Fees..................... .795%
-------
Total Sub-Account Annual Expenses............... .310%
-------
-------

MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net
assets for the Small Company Portfolio)

Small Company Portfolio

Investment Management Fees.......................... .750%
Other Expenses...................................... .140%
-------
Total Small Company Portfolio Annual Expenses... .890%
-------
-------
</TABLE>

EXAMPLE--For contracts using the Small Company Portfolio:

The tables shown above are to assist a contract owner in understanding the
costs and expenses that a contract will bear directly or indirectly. For more
information on contract costs and expenses, see the Prospectus heading "Contract
Charges" and the information immediately following. The table does not reflect
deductions for any applicable premium taxes which may be made from each purchase
payment depending upon the applicable law. The tables show the expenses of each
portfolio of Series Fund after expense reimbursement. Had each portfolio paid
all fees and expenses for the year ending December 31, 1994, the ratio of
expenses to average daily net assets would have been as follows: .72% for the
Money Market Portfolio and .92% for Small Company Portfolio. In addition,
Variable Fund D amounts in the Growth Portfolio are shown after the
reimbursement (which is made to the Separate Account Sub-Account for management
fees). For additional information on this reimbursement, see pages 13-14 of this
Prospectus.
Prior to May 3, 1993, several of the Portfolios were known by different names.
The Growth Portfolio was the Stock Portfolio, the Asset Allocation Portfolio was
the Managed Portfolio and the Index 500 Portfolio was the Index Portfolio.

8
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Definitions............................................................... 2

Synopsis.................................................................. 3

Expense Table............................................................. 5

Condensed Financial Information........................................... 10

Financial Statements...................................................... 11

Performance Data.......................................................... 11

General Descriptions...................................................... 11

Contract Deductions
Sales Charges......................................................... 13
Premium Taxes......................................................... 13
Investment Management................................................. 13
Mortality and Expense Risks........................................... 14
Expenses.............................................................. 14

Description of the Contracts.............................................. 14

Voting Rights............................................................. 17

Annuity Period............................................................ 17

Death Benefit............................................................. 19

Crediting Accumulation Units.............................................. 20

Withdrawals and Surrender................................................. 23

Distribution.............................................................. 24

Federal Tax Status........................................................ 24

Legal Proceedings......................................................... 28

Statement of Additional Information....................................... 28
</TABLE>

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<PAGE>
CONDENSED FINANCIAL INFORMATION

The financial statements of The Minnesota Mutual Life Insurance Company and of
Minnesota Mutual Variable Fund D may be found in the Statement of Additional
Information.
The table below gives per unit information about the financial history of each
sub-account for the four years ended December 31, 1994 and the period from
October 26, 1990 to December 31, 1990. This information should be read in
conjunction with the financial statements and related notes of Minnesota Mutual
Variable Fund D included in the Statement of Additional Information.

<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 26,
1990 TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1990*
---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account:
Unit value at beginning of period... $9.573 $9.196 8.803 6.595 6.061
Unit value at end of period......... $9.604 $9.573 9.196 8.803 6.595
Number of units outstanding at end
of period......................... 5,406,377 5,785,198 5,758,220 5,842,088 6,024,553
Bond Sub-Account:
Unit value at beginning of period... $1.386 $1.264 1.191 1.021 1.000
Unit value at end of period......... $1.316 $1.386 1.264 1.191 1.021
Number of units outstanding at end
of period......................... 386,750 480,411 177,794 66,385 20,037
Money Market Sub-Account:
Unit value at beginning of period... $1.097 $1.074 1.047 1.000 -- **
Unit value at end of period......... $1.131 $1.097 1.074 1.047 --
Number of units outstanding at end
of period......................... 457,011 774,078 357,877 171,773 --
Asset Allocation Sub-Account:
Unit value at beginning of period... $1.502 $1.419 1.330 1.038 1.000
Unit value at end of period......... $1.473 $1.502 1.419 1.330 1.038
Number of units outstanding at end
of period......................... 3,175,751 2,903,712 1,463,845 364,314 13,616
Mortgage Securities Sub-Account:
Unit value at beginning of period... $1.307 $1.203 1.137 1.000 -- **
Unit value at end of period......... $1.255 $1.307 1.203 1.137 --
Number of units outstanding at end
of period......................... 160,939 286,125 265,381 5,173 --
Index 500 Sub-Account:
Unit value at beginning of period... $1.572 $1.442 1.352 1.049 1.000
Unit value at end of period......... $1.580 $1.572 1.442 1.352 1.049
Number of units outstanding at end
of period......................... 886,632 684,210 332,893 174,242 5,000
Small Company Sub-Account:
Unit value at beginning of period... $1.107 $1.000
Unit value at end of period......... $1.169 $1.107***
Number of units outstanding at end
of period......................... 72,272 14,148
<FN>
* The condensed financial information is presented for the period from October
26, 1990 to December 31, 1990. October 26, 1990 was the effective date of
the 1933 Act Registration for Minnesota Mutual Variable Fund D after its
reorganization as a unit investment trust.
** As of December 31, 1990, no contract owners had elected to allocate payments
to the Money Market and Mortgage Securities sub-accounts; accordingly,
condensed financial information is not presented for the period from October
26, 1990 to December 31, 1990.
*** The information for the sub-account is shown for the period May 3, 1993 to
December 31, 1993. May 3, 1993 was the effective date of the 1933 Act
Registration Statement for the sub-account.
</TABLE>

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<PAGE>
- ------------------------------------------------------------------------
FINANCIAL STATEMENTS

The complete financial statements of Minnesota Mutual Variable Fund D and The
Minnesota Mutual Life Insurance Company are included in the Statement of
Additional Information.

- ------------------------------------------------------------------------
PERFORMANCE DATA

From time to time the Variable Fund D may publish advertisements containing
performance data relating to its sub-accounts. In the case of the Money Market
Sub-Account, the Variable Fund D will publish yield or effective yield
quotations for a seven-day or other specified period. In the case of the other
sub-accounts, performance data will consist of average annual total return
quotations for a one-year period and for the period since the sub-account became
available pursuant to the Variable Fund D's registration statement, and may also
include cumulative total return quotations for the period since the sub-account
became available pursuant to such registration statement. The Money Market
Sub-Account may also quote such average annual and cumulative total return
figures. Performance figures used by the Variable Fund D are based on historical
information of the sub-accounts for specified periods, and the figures are not
intended to suggest that such performance will continue in the future.
Performance figures of the Variable Fund D will reflect only charges made
against the net asset value of the Variable Fund D pursuant to the terms of the
contracts offered by this Prospectus. The various performance figures used in
Variable Fund D advertisements relating to the contracts described in this
Prospectus are summarized below. More detailed information on the computations
is set forth in the Statement of Additional Information.

MONEY MARKET SUB-ACCOUNT YIELD.
Yield quotations for the Money Market Sub-Account are based on the income
generated by an investment in the sub-account over a specified period, usually
seven days. The figures are "annualized," that is, the amount of income
generated by the investment during the period is assumed to be generated over a
52-week period and is shown as a percentage of the investment. Effective yield
quotations are calculated similarly, but when annualized the income earned by an
investment in the sub-account is assumed to be reinvested. Effective yield
quotations will be slightly higher than yield quotations because of the
compounding effect of this assumed reinvestment. Yield and effective yield
figures quoted by the sub-account will not reflect the deduction of any
applicable deferred sales charges.

TOTAL RETURN FIGURES.
Cumulative total return figures may also be quoted for all sub-accounts.
Cumulative total return is based on a hypothetical $1,000 investment in the
sub-account at the beginning of the advertised period, and is equal to the
percentage change between the $1,000 net asset value of that investment at the
beginning of the period and the net asset value of that investment at the end of
the period.
Prior to May 3, 1993, several of the sub-accounts were known by different
names. The Growth Sub-Account was the Stock Sub-Account, the Asset Allocation
Sub-Account was the Managed Sub-Account, and the Index 500 Sub-Account was the
Index Sub-Account.
All cumulative total return figures published for sub-accounts will be
accompanied by average annual total return figures for a one-year period,
five-year period and for the period since the sub-account became available
pursuant to the Variable Fund D's registration statement. With respect to the
Growth Sub-Account, cumulative total return quotations which include periods
prior to October 1990 assume investment in the underlying fund for the period
prior to the actual availability of that investment option as a result of the
Variable Fund D reorganization. Average annual total return figures will show
for the specified period the average annual rate of return required for an
initial investment of $1,000 to equal the surrender value of that investment at
the end of the period. Such average annual total return figures may also be
accompanied by average annual total return figures for the same or other
periods.

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GENERAL DESCRIPTIONS

A. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
The Minnesota Mutual Life Insurance Company is a mutual life insurance company
organized in 1880 under the laws of Minnesota. Its home office is at 400 Robert
Street North, St. Paul, Minnesota 55101-2098 (612 298-3500). It is licensed to
do a life insurance business in all states of the United States (except New
York, where it is an authorized reinsurer), the District of Columbia, Canada,
and Puerto Rico.

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B. MINNESOTA MUTUAL VARIABLE FUND D
On October 16, 1967, the Board of Trustees of Minnesota Mutual established a
separate account in accordance with certain provisions of Minnesota Insurance
Law. Minnesota Mutual Variable Fund D is the name by which this account is
designated. The Variable Fund D was registered as an open-end diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). The separate account meets the definition of a
separate account under the federal securities laws.
The Minnesota law under which the Variable Fund D was established provides
that the assets of the Variable Fund D shall not be chargeable with liabilities
arising out of any other business which Minnesota Mutual may conduct, but shall
be held and applied exclusively for the benefit of the holders of those variable
annuity contracts for which the Variable Fund D was established. The investment
performance of the Variable Fund D is entirely independent of both the
investment performance of our general account and of any other separate account
which we may have established or may later establish. All obligations under the
contracts are general corporate obligations of Minnesota Mutual.
At a Special Meeting of contract owners and participants of Variable Fund D
held October 23, 1990, the contract owners and participants approved an
Agreement and Plan of Reorganization whereby Variable Fund D (which was a
management investment company investing primarily in a portfolio of equity
securities, mainly common stocks) transferred all of its assets to the Growth
Portfolio of the MIMLIC Series Fund, Inc. in exchange for shares of that
Portfolio. Variable Fund D was reconstituted and registered as a unit investment
trust under the 1940 Act. As part of that Reorganization it now consists of
seven sub-accounts, each investing its assets solely in the shares of one of
seven of the Series Fund Portfolios. The Series Fund has a number of Portfolios
which are not available to Variable Fund D. Registration with the Securities and
Exchange Commission (the "Commission") does not involve supervision of the
management or investment policies or practices of the Variable Fund D by the
Commission.

C. MIMLIC SERIES FUND, INC.
The Variable Fund D currently invests exclusively in MIMLIC Series Fund, Inc.
(the "Series Fund"), a mutual fund of the series type which is advised by MIMLIC
Asset Management Company. The Series Fund is registered with the Securities and
Exchange Commission as a diversified, open-end management investment company,
but such registration does not signify that the Commission supervises the
management, or the investment practices or policies, of the Series Fund. The
Series Fund issues its shares, continually and without sales charge, only to our
separate accounts, which currently include the Variable Annuity Account and the
Variable Life Account, in addition to Variable Fund D. Shares are sold and
redeemed at net asset value. In the case of a newly issued contract, purchases
of shares of the Portfolios of the Series Fund in connection with the first
purchase payment will be based on the values next determined after issuance of
the contract by us. Redemptions of shares of the Portfolios of the Series Fund
are made at the net asset value next determined following the day we receive a
request for transfer, partial withdrawal or surrender at our home office. In the
case of outstanding contracts, purchases of shares of the Portfolio of the
Series Fund for the Variable Fund D are made at the net asset value of such
shares next determined after receipt by us of contract purchase payments.
The Series Fund's investment adviser is MIMLIC Asset Management Company
("MIMLIC Management"). It acts as an investment adviser to the Series Fund
pursuant to an advisory agreement. MIMLIC Management is a subsidiary of
Minnesota Mutual.
A prospectus for the Series Fund is attached to this Prospectus. A person
should carefully read this Variable Fund D Prospectus and that for the Series
Fund before investing in the contracts.
Shares of the Portfolios of the Series Fund are also sold to other of our
separate accounts, which are used to receive and invest premiums paid under our
variable life policies and variable annuity contracts. It is conceivable that in
the future it may be disadvantageous for variable life insurance separate
accounts and variable annuity separate accounts to invest in the Series Fund
simultaneously. Although Minnesota Mutual does not currently foresee any such
disadvantages either to variable life insurance policy owners or to variable
annuity contract owners, the Series Fund's Board of Directors intends to monitor
events in order to identify any material conflicts between such policy owners
and contract owners and to

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determine what action, if any, should be taken in response thereto. Such action
could include the sale of Series Fund shares by one or more of the separate
accounts, which could have adverse consequences. Material conflicts could result
from, for example, (1) changes in state insurance law, (2) changes in Federal
income tax laws, (3) changes in the investment management of any of the
Portfolios of the Series Fund, or (4) differences in voting instructions between
those given by policy owners and those given by contract owners.

D. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the sub-accounts of the Variable Fund D. If
investment in a fund should no longer be possible or if we determine it becomes
inappropriate for contracts of this class, we may substitute another fund for a
sub-account. Substitution may be with respect to existing accumulation values,
future purchase payments and future annuity payments.
We may also establish additional sub-accounts in the Variable Fund D and we
reserve the right to add, combine or remove any sub-accounts of the Variable
Fund D. Each additional sub-account will purchase shares in a new portfolio or
mutual fund. Such sub-accounts may be established when, in our sole discretion,
marketing, tax, investment or other conditions warrant such action. Similar
considerations will be used by us should there be a determination to eliminate
one or more of the sub-accounts of the Variable Fund D. The addition of any
investment option will be made available to existing contract owners on such
basis as may be determined by us.

We also reserve the right, when permitted by law, to de-register the Variable
Fund D under the Investment Company Act of 1940, to restrict or eliminate any
voting rights of the contract owners, and to combine the Variable Annuity
Contract with one or more of our other separate accounts.

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CONTRACT DEDUCTIONS

SALES CHARGES
MIMLIC Sales acts as principal underwriter and performs all sales functions
relative to the contracts, for which a certain amount is deducted from purchase
payments received under the contracts.
Minnesota Mutual performs all administrative functions relative to the
contracts. Minnesota Mutual bears all expenses associated with the sale and
administration of the contracts, such as sales commissions, fees and expenses of
the Committee, salaries, rent, postage, telephone, travel, office equipment and
stationery, and legal, actuarial and auditing fees.
The sales charge is equal to 7% of purchase payments (7.53% of the amount
invested) on all contracts. For the treatment of certain Group Accumulation
Annuity Contracts, see the section on divisible surplus on pages 16-17.
To the extent that sales charges are insufficient to recover sales expenses,
Minnesota Mutual will pay sales expenses from its other assets or surplus. These
assets may include proceeds from the mortality and expense risk charge described
below.

PREMIUM TAXES
Deductions for any applicable premium taxes may be made from each purchase
payment (currently such premium taxes range from 0% to 3.5%) depending upon the
applicable law.

INVESTMENT MANAGEMENT
Under contracts funded by Variable Fund D, all costs of operating Variable Fund
D as an investment management company originally were covered by an investment
management fee of .265% of contract or account values on an annual basis. As
Variable Fund D is now a unit investment trust rather than a managed investment
company, that investment management fee no longer will be paid. However,
contract values that are allocated to sub-accounts of Variable Fund D will be
invested in Series Fund Portfolios that do pay investment advisory fees (at a
rate of .40% on an annual basis for the Index 500 Portfolio, .75% for the Small
Company Portfolio and .50% for each of the five other available Portfolios) and
do incur other operating expenses. In the past two years those other operating
expenses have been voluntarily subsidized by Minnesota Mutual to the extent that
the expenses exceed .15% on an annual basis for any Portfolio. While Minnesota
Mutual has no present intention to alter that practice, it is under no
obligation to continue it.
To ensure that Contract Owners and Participants continue to get at least what
they originally expected under their contracts,

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Minnesota Mutual has agreed that, each valuation period, in calculating the net
investment factor for the Growth sub-account of Variable Fund D, it will make
adjustments that have the effect of reimbursing the excess of any expenses
indirectly incurred as a result of the investment advisory fee paid and the
operating expenses incurred by the Growth Portfolio of the Series Fund over the
former .265% investment management fee. Accordingly, to the extent that the
contract or account values continue to be allocated to the sub-account that, in
effect, continues the Variable Fund D investment objective when it was operating
as a management investment company, there will be no change in the level of
charges for the provision of investment management services. In calculating the
net investment factor for the other sub-accounts of Variable Fund D, Minnesota
Mutual will make adjustments that, in effect, reimburse the excess of the
investment advisory fees incurred through indirect investment in the Series Fund
Portfolios and the former .265% investment management fee; however, any other
Series Fund Portfolio operating expenses would not be subject to the
reimbursement. Accordingly, to the extent that a Contract Owner or Participant
chose to take advantage of the Variable Fund D sub-accounts other than the
Growth Sub-Account, he or she could incur additional expenses.

MORTALITY AND EXPENSE RISKS
Minnesota Mutual assumes the mortality risk under the contract by its obligation
to continue to make monthly annuity payments, determined in accordance with the
annuity rate tables and other provisions contained in the contracts to each
annuitant regardless of how long he or she lives and regardless of how long all
annuitants as a group live. Thus, neither an annuitant's own longevity nor an
improvement in life expectancy generally will have an adverse effect on the
monthly annuity payments an annuitant will receive under the contract.
Minnesota Mutual assumes an expense risk by assuming the risk that deductions
provided for in the contracts for expenses may be insufficient to cover the
actual expenses incurred.
For assuming these risks, Minnesota Mutual currently makes a deduction from
the Variable Fund D at the rate of .1325% per annum for the mortality risk and
.6625% per annum for the expense risk. These deductions may be increased or
decreased by resolution of the Board of Trustees of Minnesota Mutual, but not
more often than annually, and in no event will the combined deductions exceed
the amount of the present deduction of .795% per annum. If the sum of such
deductions is insufficient to cover the risks assumed, the loss will fall on
Minnesota Mutual. Conversely, if the deductions provide more than sufficient,
any excess will be credited to the surplus of Minnesota Mutual.

EXPENSES
The Variable Fund D has no expenses which are not covered by the deductions
listed above. Minnesota Mutual performs all the administrative functions
relative to the contracts and it also bears all expenses associated with the
administration of the contracts. These include such items as salaries, rent,
postage, telephone, travel, office equipment and stationery, and legal,
actuarial and auditing fees.

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DESCRIPTION OF THE CONTRACTS

DESCRIPTION
The following material is intended to provide a general description of contract
terms. In the event that there are questions concerning the contracts which are
not discussed or should you desire additional information, then inquiries may be
addressed to us at: Minnesota Mutual Life Center, 400 Robert Street North, St.
Paul, Minnesota 55101-2098.

1. TYPES OF CONTRACTS
Minnesota Mutual continuously offers three types of variable annuity contracts
pursuant to this Prospectus:

(a) Individual Accumulation Annuity. This type of contract may be used in
connection with all types of qualified plans, state deferred
compensation plans or with individual retirement annuities adopted by or
on behalf of individuals pursuant to Section 408 of the Code. The
contract provides for a variable annuity or a fixed dollar annuity to
begin at some future date, the purchase payments for the contract to be
paid prior to the annuity commencement date in a series of payments
flexible in respect to the date and amount of payment. The amount of the
first monthly annuity payment at retirement is determined

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by the value of the contract at that time.

(b) Group Accumulation Annuity. This type of contract may be used in
connection with any type of qualified plan and with state deferred
compensation plans. Purchase payments on behalf of each participant are
determined by a formula specified in the plan. Individual accounts are
maintained for each participant. The contract provides for a variable
annuity or a fixed dollar annuity to begin at a participant's annuity
commencement date. The amount of the first monthly annuity payment at
retirement is determined by the value of a participant's account at that
time.

Under some circumstances group contract owners may limit purchase
payments, allocations and transfers only to a limited number of sub-
accounts. In those cases, not all of the sub-accounts offered under the
contracts will be available to participants in those groups.

(c) Group Deposit Administration. This type of contract is used in
connection with noncontributory pension plans qualified under Section
401(a) or 403(a) of the Code, and is designed to provide maximum
flexibility to the contract owner in funding the benefits promised by
the plan. No allocation of purchase payments is made for individual
participants, and individual accounts are not maintained. The amount of
a participant's first monthly annuity payment is determined by the terms
of the plan. Annuity payments to a participant may be provided on either
a fixed dollar or a variable annuity basis. The contract owner has wide
latitude in determining the appropriate level of purchase payments,
including assumptions with respect to discounts for mortality, turnover,
and an assumed rate of investment return.

2. ISSUANCE OF CONTRACTS
The contracts are issued to the contract owner named in the application. The
owner may be the annuitant or someone else; however, once the owner has been
named in the application the ownership of the contract may not be changed.

3. RIGHT OF REVOCATION
The purchaser of an Individual Accumulation Annuity Contract, purchased as an
individual retirement annuity under Section 408 of the Code, may revoke the
contract within ten days after its delivery, for any reason, on notice to
Minnesota Mutual at 400 Robert Street North, St. Paul, Minnesota, of his or her
intention to revoke. If the contract is revoked and returned, Minnesota Mutual
will refund to the purchaser the greater of the total amount of purchase
payments or the surrender value of the contract, adjusted in the latter case for
deductions and sales charges as described in this Prospectus under "Withdrawals
and Surrender" on page 23.

4. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of (a) the mortality table
specified in the contract, which reflects the age of the annuitant, (b) the type
of annuity payment option selected, and (c) the investment performance of the
Variable Fund D. The amount of the variable annuity payments will not be
affected by adverse mortality experience or by an increase in Minnesota Mutual's
expenses in excess of the expense deductions provided for in the contract. The
annuitant will receive the value of a fixed number of annuity units each month.
The value of such units and thus the amounts of the monthly annuity payments
will, however, reflect investment gains and losses and investment income of the
Variable Fund D, and thus the annuity payments will vary with the investment
experience of the assets of the Variable Fund D.

5. MODIFICATION OF THE CONTRACT
The contract may be modified at any time by written agreement between Minnesota
Mutual and the contract owner. However, no such modification will adversely
effect the rights of a participant under the contract unless the modification is
made to comply with a law or government regulation.

6. ASSIGNMENT
The contract may not be assigned, sold, transferred, discounted or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, and to the maximum extent permitted by law, benefits payable
under the contract shall be exempt from the claims of creditors.

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7. LIMITATIONS ON PURCHASE PAYMENTS
The minimum purchase payment for the first contract year under a Group Deposit
Administration Contract is $3,000.
The minimum periodic purchase payment which may be allocated to the Variable
Fund D on behalf of each participant under an Individual Accumulation Annuity
Contract and under a Group Accumulation Annuity Contract is $10. If purchase
payments under such contracts are allocated in part to the Variable Fund D and
in part to Minnesota Mutual's general assets, the minimum which may be allocated
on behalf of a participant on either basis is $10. Currently, Minnesota Mutual
is waiving the enforcement of this provision.
Under the terms of the contracts, Minnesota Mutual may limit the amount of
purchase payments which will be accepted on behalf of a participant for any
contract year to the greater of (a) the purchase payments made under the
contract on behalf of such participant for the immediately preceding contract
year, or (b) the average purchase payments made under the contract on behalf of
such participant for all prior contract years.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.

8. DISCONTINUANCE OF PURCHASE PAYMENTS
Purchase payments for a contract may be discontinued under either of the
following circumstances:

(a) The contract owner may discontinue purchase payments as of a date
specified in a written notice to Minnesota Mutual, provided that such
date may not be earlier than the date Minnesota Mutual receives such
notice.

(b) Minnesota Mutual may discontinue acceptance of purchase payments by
giving written notice to the contract owner if the contract is no longer
part of a plan qualified under Section 401(a), 403(a), 403(b), 408, 457
or other provisions of the Code allowing similar tax treatment.
Upon discontinuance of purchase payments, the contract will continue in force
in a paid-up status. Purchase payments may subsequently be resumed under an
Individual Accumulation Annuity Contract at any date prior to the annuity
commencement date unless the contract value has previously been disbursed by
Minnesota Mutual. Under a group contract, purchase payments may be resumed only
with the written consent of Minnesota Mutual. Discontinuance of purchase
payments will have no effect on participants who are receiving annuity payments.

9. CONTRACT SETTLEMENT
Whenever any payment under a contract is to be made in a single sum, payment
will be made within seven days after the date such payment is called for by the
terms of the contract, except as payment may be subject for postponement for:

(a) any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Securities
and Exchange Commission;

(b) any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to
dispose of securities in the Variable Fund D or to fairly determine the
value of the assets of the Variable Fund D; or

10. PARTICIPATION IN DIVISIBLE SURPLUS
The contracts participate in the divisible surplus of Minnesota Mutual,
according to the annual determination of its Board of Trustees as to the
portion, if any, of the divisible surplus of Minnesota Mutual which has accrued
on the contracts.
No assurance can be given as to the amount of divisible surplus, if any, that
will be distributable under these contracts in the future. Such amount may arise
if mortality and expense experience is more favorable than assumed. No
distributions of divisible surplus have been declared on these contracts except
as to certain Group Accumulation Annuity Contracts, sold under circumstances
which reduce sales expenses to Minnesota Mutual. In such contracts, the dividend
is credited to purchase payments in anticipation of reduced expenses. When this
application of the dividend is made it has the effect of reducing the sales
charge and results in the crediting of additional accumulation units. No
distributions of divisible surplus arising from mortality experience have

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been declared, but such surplus could arise in the future under certain Group
Accumulation Annuity Contracts where mortality experience is more favorable than
assumed. When a distribution of divisible surplus from this source is made, it
may take the form of additional payments to retired participants.

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VOTING RIGHTS

The Series Fund shares held in the Variable Fund D will be voted by us at the
regular and special meetings of the Series Fund. Shares will be voted by us in
accordance with instructions received from contract owners with voting interests
in each sub-account of the Variable Fund D. In the event no instructions are
received from a contract owner, we will vote such shares of the Series Fund in
the same proportion as shares of the Series Fund for which instructions have
been received from contract owners with voting interests in each sub-account of
the Variable Fund D. In the event no instructions are received from a contract
owner, with respect to shares of a Portfolio held by a sub-account, Minnesota
Mutual will vote such shares of the Portfolio and shares not attributable to
contracts in the same proportion as shares of the Portfolio held by such
sub-account for which instructions have been received. The number of votes which
are available to a contract owner will be calculated separately for each
sub-account of the Variable Fund D. If, however, the Investment Company Act of
1940 or any regulation under that Act should change so that we may be allowed to
vote shares in our own right, then we may elect to do so.
During the accumulation period of each contract, the contract owner holds the
voting interest in each contract. The number of votes will be determined by
dividing the accumulation value of the contract attributable to each sub-account
by the net asset value per share of the underlying Series Fund shares held by
that sub-account.
During the annuity period of each contract, the annuitant holds the voting
interest in each contract. The number of votes will be determined by dividing
the reserve for each contract allocated to each sub-account by the net asset
value per share of the underlying Series Fund shares held by that sub-account.
After an annuity begins, the votes attributable to any particular contract will
decrease as the reserves decrease. In determining any voting interest,
fractional shares will be recognized.
We shall notify each contract owner or annuitant of a Series Fund
shareholders' meeting if the shares held for the contract owner's contract may
be voted at such meeting. We will also send proxy materials and a form of
instruction so that you can instruct us with respect to voting.

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ANNUITY PERIOD

1. ELECTING THE RETIREMENT DATE AND FORM OF ANNUITY
The contracts provide for four optional annuity forms, any one of which may be
elected if permitted by law. Each annuity option may be elected on either a
variable annuity or a fixed dollar annuity basis, or a combination thereof.
Other annuity options may be available on
request to Minnesota Mutual.
While the contracts require that notice of election to begin variable annuity
payments must be received by Minnesota Mutual at least thirty days prior to the
annuity commencement date, Minnesota Mutual is currently waiving that
requirement for such annuity elections received at least two valuation days
prior to the 15th of the month. Minnesota Mutual reserves the right to enforce
the thirty day notice requirement at its option at anytime in the future.
In addition, while the contracts require that notice of election to begin
fixed annuity payments must be received by Minnesota Mutual at least thirty days
prior to the annuity commencement date, if a person is transferring amounts from
a variable sub-account to the general account for the purpose of electing a
fixed annuity payment, we will make that transfer on the valuation date
coincident with the first valuation date following the 14th day of the month
preceding the date on which the fixed annuity is to begin. Annuity payments are
always made as of the first day of a month. Funds need to be made available a
number of days prior to the date of the first payment in order to allow for
administrative processing through the general account. If the request for
annuitization is received between the first valuation date following the 14th
day of the month and the second to the last valuation date of the month, the
transfer will occur on the valuation date coincident with or next following the
date on which the request is received. Transfer requests for fixed annuity
payments received after the third to the last valuation date

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of the month will be treated as a request received in the first fourteen days of
the following month. Minnesota Mutual reserves the right to enforce the thirty
day notice requirement at its option at anytime in the future.
If an election has not been made otherwise, and the plan does not specify to
the contrary, the annuitant's retirement date shall be the first day of the
calendar month next following his or her 65th birthday, the annuity option shall
be Option 2A, a life annuity with a period certain of 120 months. In this event,
a fixed annuity will be provided by any general account accumulation value and a
variable annuity will be provided by any Variable Fund D accumulation value. The
minimum first monthly annuity payment on either a variable or fixed dollar basis
is $20. If such first monthly payment would be less than $20, Minnesota Mutual
may fulfill its obligation by paying in a single sum the value of the contract
which would otherwise have been applied to provide annuity payments.
The contracts permit annuity payments to begin on the first day of any month
after the 50th birthday and before the 75th birthday of the annuitant.
Except under Option 4, once annuity payments have commenced, the annuitant
cannot surrender his or her annuity benefit and receive a single sum settlement
in lieu thereof.
Benefits under retirement plans that qualify for special tax treatment
generally must commence no later than the April 1 following the year in which
the participant reaches age 70 1/2 and are subject to other conditions and
restrictions.
The mortality and expense risks charge continues to be deducted throughout the
annuity period under each of the available annuity options, including Option 4,
under which there is no mortality risk to Minnesota Mutual.

2. OPTIONAL ANNUITY FORMS

OPTION 1--LIFE ANNUITY
This is an annuity payable monthly during the lifetime of the annuitant and
terminating with the last monthly payment preceding the death of the annuitant.
This option offers the maximum amount of monthly payments since there is no
guarantee of a minimum number of payments or provision for a death benefit for
beneficiaries. It would be possible under this option for the annuitant to
receive only one annuity payment if he or she died prior to the due date of the
second annuity payment, two if he or she died before the due date of the third
annuity payment, etc.

OPTION 2--LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS (OPTION 2C)
This is an annuity payable monthly during the lifetime of the annuitant, with
the guarantee that if the annuitant dies before payments have been made for the
period certain elected, payments will continue to the beneficiary during the
remainder of the period certain; or if the beneficiary so elects at any time
during the remainder of the period certain, the present value of the remaining
guaranteed number of payments, based on the then current dollar amount of one
such payment shall be paid in a single sum to the beneficiary.

OPTION 3--JOINT AND LAST SURVIVOR ANNUITY
This is an annuity payable monthly during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. Under this option there is no guarantee of a minimum
number of payments or provision for a death benefit for beneficiaries.

OPTION 4--PERIOD CERTAIN ANNUITY
This is an annuity payable monthly for a Period Certain of from 3 to 15 years,
as elected. If the annuitant dies before payments have been made for the Period
Certain elected, payments will continue to the beneficiary during the remainder
of such Period Certain. At any time during the payment period, the payee may
elect that (1) the present value of the remaining guaranteed number of payments,
based on the then current dollar amount of one such payment and using the same
interest rate which served as a basis for the annuity, shall be paid in a single
sum, or (2) such commuted amount shall be applied to effect a life annuity under
Option 1 or Option 2.

3. VALUE OF THE ANNUITY UNIT
The value of an annuity unit is determined monthly as of the first day of each
month. The value of the annuity unit on the first day of each month is
determined by multiplying the value on the first day of the preceding month by
the product of (a) .997137, and (b) the ratio of the value of the accumulation
unit for the valuation date next following the fourteenth day of the preceding
month to the value of the accumulation unit for the valuation date next
following the fourteenth day of the second

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preceding month. (.997137 is a factor to neutralize the assumed net investment
rate, discussed in Section 4 below, of 3.5% per annum built into the annuity
rate tables contained in the contract and which is not applicable because the
actual net investment rate is credited instead.) The value of an annuity unit as
of any date other than the first day of a month is equal to its value as of the
first day of the next succeeding month.

4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the Group Deposit Administration Contract, the amount of the first monthly
annuity payment is determined as provided in the plan. Under the other types of
contracts described in this Prospectus, the first monthly annuity payment is
determined by the value at retirement of the participant's individual account.
In addition, a number of states do, however, impose a premium tax on the amount
used to purchase annuity benefits, depending on the type of plan involved. These
taxes, where applicable, currently range from 0% to 3.5% and are deducted from
the contract value applied to provide annuity payments, though Minnesota Mutual
reserves the right to make such deductions from purchase payments as they are
received.
When annuity payments commence, the value of the contract is determined as the
product of (a) the number of accumulation units credited to the individual
account as of the date annuity payments commence, and (b) the value of an
accumulation unit for the valuation date next following the fourteenth day of
the month prior to the month in which annuity payments commence.
The contracts contain tables indicating either (a) the dollar amount of the
first monthly payment under each optional annuity form for each $1,000 of value
applied, or (b) the dollar amount of value required to provide a first monthly
payment of $1.00 under each optional annuity form. The amount of the first
monthly payment depends on the optional annuity form elected and the adjusted
age of the annuitant.
A formula for determining the adjusted age is contained in the contract. The
tables are determined from the Progressive Annuity Table with interest at the
rate of 3.5% per annum, assuming births in the year 1900. The total first
monthly annuity payment is determined by multiplying the number of thousands of
dollars of value applied (less any applicable premium taxes not previously
deducted) by the amount of the first monthly payment per $1,000 of value from
the tables in the contract. The 3.5% interest rate assumed in the annuity tables
would produce level annuity payments if the net investment rate remained
constant at 3.5% per year. Subsequent payments will be less than, equal to, or
greater than the first payment depending upon whether the actual net investment
rate is less than, equal to, or greater than 3.5%. A higher interest rate would
mean a higher initial payment, but a more slowly rising (or more rapidly
falling) series of subsequent payments. A lower assumption would have the
opposite effect.

5. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS
The amount of the first monthly annuity payment, determined as described above,
is divided by the then current annuity unit value on the date of the first
payment to determine the number of annuity units represented by the first
payment. This number of annuity units remains constant during the period of
annuity payments, and in each subsequent month, the dollar amount of the annuity
payment is determined by multiplying this constant number of annuity units by
the then current value of an annuity unit.
The Statement of Additional Information contains an illustration of the
calculation of annuity unit values and of a variable annuity payment showing the
method used for the calculation of both the initial and subsequent payments.

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DEATH BENEFIT

Death proceeds, if any, payable under Group Deposit Administration Contracts
shall be in such amount as is determined by the provisions of the applicable
qualified trust or plan. The Individual Accumulation Annuity and Group
Accumulation Annuity Contracts provide that in the event of the death of the
participant prior to the commencement of annuity payments, death proceeds
payable will be the value of the participant's individual account determined as
of the valuation date coincident with or next following the date due proof of
death is received by Minnesota Mutual. Death proceeds will be paid in a single
sum to the beneficiary designated by the contract owner, unless an annuity
option is elected by the beneficiary. Payment will be made within seven days
after we receive due proof of death and return of the

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contract. Except as noted below, the entire interest in the contract must be
distributed within five years of the owner's death. If the annuitant dies after
annuity payments have begun, Minnesota Mutual will pay to the beneficiary any
death benefit provided by the annuity option selected. The person selected by
the owner as the beneficiary of any remaining interest after the death of the
annuitant under the annuity option may be a person different from that person
designated as the contract beneficiary prior to the annuity commencement date.
Certain group accumulation annuity contracts have been endorsed to provide a
death benefit which is different from that described above. For those contracts,
the death benefit payable to the beneficiary on the death of a participant prior
to the annuity commencement date shall be determined separately for the
participant's general account and separate account accumulation values. For
general account accumulation values, the death benefit shall be the general
account accumulation value. For separate account accumulation values, the death
benefit shall be equal to the greater of: (1) the amount of the participant's
separate account accumulation value payable at death; or (2) the sum of all
purchase payments applied to the separate account by or on behalf of a
participant, plus transfers to the separate account, less all participant
withdrawals and transfers from that value.
The beneficiary will be the person or persons named in the contract
application unless the owner subsequently changes the beneficiary. In that
event, we will pay the amount payable at death to the beneficiary named in your
last change of beneficiary request. The owner's written request to change the
beneficiary will not be effective until it is recorded in Minnesota Mutual's
home office records. After it has been recorded, it will take effect as of the
date the owner signed the request. However, if the annuitant or the owner dies
before the request has been recorded, the request will not be effective as to
those death proceeds we have paid before the request was recorded in our home
office records.

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CREDITING ACCUMULATION UNITS

During the accumulation period--the period before the commencement of annuity
payments--the purchase payment (on receipt of a completed application or
subsequently) is credited on the valuation date coincident with or next
following the date such purchase payment is received. If the initial purchase
payment is accompanied by an incomplete application, the purchase payment will
not be credited until the valuation date coincident with or next following the
date a completed application is received. Minnesota Mutual will offer to return
the initial purchase payment accompanying an incomplete application if it
appears that the application cannot be completed within five business days.
Purchase payments will be credited to the contract in the form of accumulation
units. The number of accumulation units credited with respect to each purchase
payment is determined by dividing the portion of the purchase payment allocated
to each sub-account by the then current accumulation unit value for that sub-
account. The total of these separate account accumulation values in the
sub-accounts will be the separate account accumulation value. Interests in the
sub-accounts will be valued separately.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit, but the value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment experience of the Portfolios of the Series Fund.
Minnesota Mutual will determine the value of accumulation units on each day on
which the Portfolios of the Series Fund are valued. The net asset value of the
Series Fund's shares shall be computed once daily, and, in the case of Money
Market Portfolio, after the declaration of the daily dividend, as of the primary
closing time for business on the New York Stock Exchange (as of the date hereof
the primary close of trading is 3:00 p.m. (Central Time), but this time may be
changed) on each day, Monday through Friday, except (i) days on which changes in
the value of such Series Fund's portfolio securities will not materially affect
the current net asset value of such Series Fund's shares, (ii) days during which
no such Series Fund's shares are tendered for redemption and no order to
purchase or sell such Series Fund's shares is received by such Series Fund and
(iii) customary national business holidays on which the New York Stock Exchange
is closed for trading (as of the date hereof, New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day).

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Accordingly, the value of accumulation units will be determined daily, and
such determinations will be applicable to all purchase payments received by
Minnesota Mutual at its home office on that day prior to the close of business
of the Exchange. The value of accumulation units applicable to purchase payments
received subsequent to the close of business of the Exchange on that day will be
the value determined as of the close of business on the next day the Exchange is
open for trading.
In determining the value of the Series Fund on a valuation date, each security
traded on a national securities exchange is valued at the last reported sale
price on that date, as of the close of trading on the New York Stock Exchange.
If there has been no sale on such day, then the security is valued at the last
reported bid price on that day. Any security not traded on a securities
exchange, but traded in the over-the-counter market, is valued at the last
quoted bid price. Any securities or other assets for which market quotations are
not readily available are valued at fair market value as determined in good
faith by the Series Fund Board of Directors.
In addition to providing for the allocation of purchase payments to the
sub-accounts of the Variable Fund D, the contracts also provide for allocation
of purchase payments to Minnesota Mutual's General Account for accumulation at a
guaranteed interest rate. Purchase payments received without allocation
instructions will be allocated to the General Account.

TRANSFER OF VALUES
Upon your written request, values under the contract may be transferred between
the General Account and the Variable Fund D or among the sub-accounts of the
Variable Fund D. We will make the transfer on the basis of accumulation unit
values on the valuation date coincident with or next following the day we
receive the request at our home office. No deferred sales charge will be imposed
on such transfers. While the contracts currently provide that transfer amounts
must be of an amount not less than $250 we are waiving this restriction and
allowing transfers of any amount.
The contracts permit us to limit the frequency and amount of transfers from
the General Account to the Variable Fund D sub-accounts. Currently, except as
provided below, we limit such transfers to a single such transfer during any
calendar year and to any amount which is no more than 20% of the General Account
accumulation value at the time of the transfer. No transfers will be allowed
after annuity payments have begun.
There is a situation which is an exception to the above restriction. This is
where the contract owner has established a systematic transfer arrangement with
us. The contract owner may transfer General Account current interest earnings or
a specified amount from the General Account on a monthly, quarterly, semi-annual
or annual basis. For transfers of a specified amount from the General Account
the maximum initial amount that may be transferred may not exceed 10% of the
current General Account accumulation value at the time of the first transfer.
For contracts where the General Account accumulation value is increased during
the year because of transfers into the General Account or additional purchase
payments, made after the program is established, systematic transfers are
allowed to the extent of the greater of the current transfer amount or 10% of
the then current General Account accumulation value. Even with respect to
systematic transfer plans, we reserve the right to alter the terms of such
programs once established where funds are being transferred out of the General
Account. Our alteration of existing systematic transfer programs will be
effective only upon our written notice to contract owners of changes affecting
their election.
Transfer arrangements may be established to begin on the 10th or 20th of any
month and if a transfer cannot be completed it will be made on the next
available transfer date. In the absence of specific instructions, transfers will
be made on a monthly basis and will remain active until the appropriate General
Account accumulation value or sub-account is depleted.
Also, you or persons authorized by you may effect transfers, or a change in
the allocation of future premiums, by means of a telephone call. Transfers and
requests made pursuant to such a call are subject to the same conditions and
procedures as are outlined above for written transfer requests. During periods
of marked economic or market changes, contract owners may experience difficulty
in implementing a telephone transfer due to a heavy volume of telephone calls.
In such a circumstance, contract owners should consider submitting a written
transfer request while continuing to attempt a telephone transfer. We reserve
the right to restrict the frequency of--or otherwise modify, condition,
terminate or impose charges upon--telephone transfer privileges. For more
information on telephone transfers, contact Minnesota Mutual.

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While for some contract owners we have used a form to pre-authorize telephone
transactions, we now make this service automatically available to all contract
owners. We will employ reasonable procedures to satisfy ourselves that
instructions received from contract owners are genuine and, to the extent that
we do not, we may be liable for any losses due to unauthorized or fraudulent
instructions. We require contract owners to identify themselves in those
telephone conversations through contract numbers, social security numbers and
such other information as we may deem to be reasonable. We record telephone
transfer instruction conversations and we provide the contract owners with a
written confirmation of the telephone transfer.
The interests of contract owners arising from the allocation of purchase
payments or the transfer of contract values to the general assets of Minnesota
Mutual are not registered under the Securities Act of 1933, and Minnesota Mutual
is not registered as an investment company under the Investment Company Act of
1940. Accordingly, such interests and Minnesota Mutual are not subject to the
provisions of those acts that would apply if registration under such acts were
required.

VALUE OF THE CONTRACT
The value of the contract at any time prior to the commencement of annuity
payments can be determined by multiplying the total number of accumulation units
credited to the contract by the current value of an accumulation unit. There is
no assurance that such value will equal or exceed the purchase payments made.
The contract owner and, where applicable, each participant will be advised
periodically of the number of accumulation units credited to the contract or to
the participant's individual account, the current value of an accumulation unit,
and the total value of the contract or the individual account.

ACCUMULATION UNIT VALUE
The value of an accumulation unit was set at $1.000000 on the first valuation
date of the Variable Fund D. The value of an accumulation unit on any subsequent
valuation date is determined by multiplying the value of an accumulation unit on
the immediately preceding valuation date by the net investment factor (described
below) for the valuation period just ended. The value of an accumulation unit as
of any date other than a valuation date is equal to its value on the next
succeeding valuation date.

NET INVESTMENT FACTOR
The separate account net investment factor describes the investment performance
of a sub-account of Variable Fund D. It is for the period from one valuation
period to the next. For any such sub-account, the net investment factor for a
valuation period is the gross investment rate for such sub-account for the
valuation period less a deduction for the mortality and expense risk charge at
the rate of .795%. The net investment factor for each sub-account other than the
sub-account holding shares of the Growth Portfolio of the Series Fund, shall be
increased by Minnesota Mutual. It will be increased to the extent that on an
annual basis the investment advisory fee accrued by the Portfolio in which the
sub-account invests, as a percentage of the value of the average net assets of
such Portfolio, exceeds .265% per annum. The net investment factor for the sub-
account holding shares of the Growth Portfolio of the Series Fund shall also be
adjusted by Minnesota Mutual. It will be adjusted so that on an annual basis the
expenses, including the investment advisory fee, of that Portfolio, as a
percentage of the average net assets of such Portfolio, exceed .265% per annum.
For purposes of this computation, "expenses" shall be determined on the basis of
generally accepted accounting principles applicable to registered investment
companies. However, they shall exclude any expenses of the Growth Portfolio
which are reimbursed by Minnesota Mutual or any other person, any interest
expense or amortization of debt discount or any income tax expense.
The gross investment rate is equal to: (1) the net asset value per share of a
fund share held in a sub-account of the separate account determined at the end
of the current valuation period; plus (2) the per share amount of any dividend
or capital gain distribution by such fund if the "ex-dividend" date occurs
during the current valuation period; divided by (3) the net asset value per
share of that fund share determined at the end of the preceding valuation
period. The gross investment rate may be positive or negative.

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WITHDRAWALS AND SURRENDER

Under certain circumstances a contract owner may have the right to surrender his
or her contract in whole or in part, subject to possible adverse tax
consequences. (See discussion under heading "Federal Tax Status" on pages
24-28.)
The Individual Accumulation Annuity Contract provides that at any time prior
to the death of the participant and prior to the commencement of annuity
payments, the contract owner may elect to surrender the contract and receive in
a single sum the value of the participant's individual account computed as of
the valuation date coincident with or next following the date of surrender. The
contract also provides for partial withdrawal of the value of the participant's
individual account, in amounts of at least $250. All such payments are subject
to any limitations contained in an applicable qualified trust or plan or in a
state deferred compensation plan.
The Group Accumulation Annuity Contract provides that upon termination of
purchase payments for an individual participant prior to the commencement of
annuity payments, the participant shall have a vested interest in his or her
individual account to the extent specified in the plan. If purchase payments are
discontinued for all participants under the contract, each participant shall
have a vested interest in his or her individual account as specified in the
plan. The contract provides that the vested portion of the participant's
individual account may be surrendered, in which event Minnesota Mutual will pay
to the participant in a single sum the value of such vested portion, computed as
of the valuation date coincident with or next following the date of surrender.
The contract also provides for partial withdrawal of the value of the vested
portion of a participant's individual account, in amounts of at least $250.
However, the provisions of the applicable qualified trust, plan or state
deferred compensation plan may limit the right of the participant to elect such
payments.
The Group Deposit Administration Contract does not provide for individual
allocation of purchase payments or maintenance of individual accounts for
participants. The dollar amount of any payment made on behalf of a participant
by reason of his or her individual termination of employment or termination of
participation in the plan shall be determined by the provisions of the
applicable qualified trust or plan, and is not dependent upon the provisions of
the contract. If discontinuance of purchase payments for all participants under
such a contract occurs, and the accumulated value of the contract is not
transferred to another funding vehicle, the participants in the plan as of the
date of discontinuance shall receive a 100% vested interest in all benefits
earned under the terms of the plan to the extent provided by the accumulated
value of the contract. Such accumulated value may be transferred to another
funding vehicle if, prior to the date of discontinuance of purchase payments,
the contract owner gives written notice to Minnesota Mutual certifying that the
plan is to be continued as a qualified plan and requesting such transfer to be
made. The transfer date shall be the first valuation date to occur following the
effective date of discontinuance of purchase payments. Payment of the
accumulated value of the contract which is a part of the Variable Fund D will be
made in a single sum as of the transfer date.
We will waive the applicable dollar amount limitation on withdrawals where a
systematic withdrawal program is in place and such a smaller amount satisfies
the minimum distribution requirements of the Code.
Under any contract, once annuity payments have commenced for a participant
under Options 1, 2 or 3 of the optional annuity forms, the participant cannot
surrender his or her annuity benefit and receive a single sum settlement in lieu
thereof. For a discussion of commutation rights of payees and beneficiaries
subsequent to the annuity commencement date, see heading "Optional Annuity
Forms" on page 18.
Contract owners may also submit their signed written withdrawal or surrender
requests to us by facsimile (FAX) transmission. Our FAX number is (612)
298-7942. Transfer instructions or changes as to future allocations of premium
payments may be communicated to us by the same means.
The surrender of a contract or a partial withdrawal thereunder may result in a
credit against Minnesota Mutual's premium tax liability. In such event,
Minnesota Mutual will pay in addition to the cash value paid in connection with
the surrender or withdrawal, the lesser of (1) the amount by which Minnesota
Mutual's premium tax liability is reduced, or (2) the amount previously deducted
from purchase payments for premium taxes. No representation can be made that
upon any such surrender or withdrawal any such payment will be made, since
applicable tax laws at the time of surrender or withdrawal would be
determinative.

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DISTRIBUTION

The contracts will be sold by Minnesota Mutual life insurance agents who are
also registered representatives of MIMLIC Sales Corporation or other
broker-dealers who have entered into selling agreements with MIMLIC Sales
Corporation. MIMLIC Sales Corporation acts as the principal underwriter of the
contracts. MIMLIC Sales Corporation is a wholly-owned subsidiary of MIMLIC
Corporation, which in turn is a wholly-owned subsidiary of Minnesota Mutual.
MIMLIC Corporation is also the sole owner of the shares of MIMLIC Asset
Management Company, the investment adviser for the Series Fund. MIMLIC Sales
Corporation is registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers, Inc.
Commissions to dealers, paid in connection with the sale of the contracts, may
not exceed an amount which is equal to 3.75% of the purchase payments received
for the Individual Accumulation Annuity. Commissions on group cases may vary,
but will not exceed that amount shown above.
In addition, MIMLIC Sales Corporation or Minnesota Mutual will pay credits
which allow registered representatives (Agents) who are responsible for sales of
the contracts to attend conventions and other meetings sponsored by Minnesota
Mutual or its affiliates for the purpose of promoting the sale of insurance
and/or investment products offered by Minnesota Mutual and its affiliates. Such
credits may cover the registered representatives' transportation, hotel
accommodations, meals, registration fees and the like. Minnesota Mutual may also
pay registered representatives additional amounts based upon their production
and the persistency of life insurance and annuity business placed with Minnesota
Mutual.

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FEDERAL TAX STATUS

INTRODUCTION
The discussion contained herein is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any applicable state or other tax laws. In addition, this
discussion is based on our understanding of federal income tax laws as they are
currently interpreted. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service.
Minnesota Mutual is taxed as a "life insurance company" under the Internal
Revenue Code. The operations of the Variable Fund D form a part of, and are
taxed with, our other business activities. Currently, no federal income tax is
payable by us on income dividends received by the Variable Fund D or on capital
gains arising from the Variable Fund D's investment activities.

TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Internal Revenue Code governs taxation of nonqualified
annuities in general and some aspects of tax qualified programs. No taxes are
imposed on increases in the value of a contract until distribution occurs,
either in the form of a payment in a single sum or as annuity payments under the
annuity option elected.
As a general rule, deferred annuity contracts held by a corporation, trust or
other similar entity, as opposed to a natural person, are not treated as annuity
contracts for federal tax purposes. The investment income on such contracts is
taxed as ordinary income that is received or accrued by the owner of the
contract during the taxable year.
For payments made in the event of a full surrender of an annuity not part of a
qualified program, the taxable portion is generally the amount in excess of the
cost basis of the contract. Amounts withdrawn from the variable annuity
contracts are treated first as taxable income to the extent of the excess of the
contract value over the purchase payments made under the contract. Such taxable
portion is taxed at ordinary income tax rates.
In the case of a withdrawal under an annuity that is part of a qualified
program, a portion of the amount received is taxable based on the ratio of the
"investment in the contract" to the individual's balance in the retirement plan,
generally the value of the annuity. The "investment in the contract" generally
equals the portion of any deposits made by or on behalf of an individual under
an annuity which was not excluded from the gross income of the individual. For
annuities issued in connection with qualified plans, the "investment in the
contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes the ratio that the cost basis of the contract bears to the
expected return under the contract. Such taxable part is taxed at ordinary
income rates.

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If a taxable distribution is made under the variable annuity contracts, an
excise tax of 10% of the amount of the taxable distribution may apply. This
additional tax does not apply where the taxpayer is 59 1/2 or older, where
payment is made on account of the taxpayer's disability, or where payment is
made by reason of the death of the owner.
The Code also provides an exception to the excise tax for distributions in
periodic payments, of substantially equal installments, be made for the life (or
life expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and beneficiary.
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, the designation of an annuitant or
other payee who is not also the contract owner, or the assignment of a contract
may result in certain income or gift tax consequences to the contract owner that
are beyond the scope of this discussion. A contract owner who is contemplating
any such transfer, designation or assignment should consult a competent tax
adviser with respect to the potential tax effects of that transaction.
For purposes of determining a contract owner's gross income, the Code provides
that all nonqualified deferred annuity contracts issued by the same company (or
its affiliates) to the same contract owner during any calendar year shall be
treated as one annuity contract. Additional rules may be promulgated under this
provision to prevent avoidance of its effect through serial purchases of
contracts or otherwise. For further information on current aggregation rules
under this provision, see your tax adviser.

DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Variable Fund D to be
"adequately diversified" in order for the contract to be treated as a life
insurance contract for Federal tax purposes. Variable Fund D, through the Series
Fund, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Series Fund's assets may be
invested. Although the investment adviser is an affiliate of Minnesota Mutual,
Minnesota Mutual does not have control over the Series Fund or its investments.
Nonetheless, Minnesota Mutual believes that each Portfolio of the Series Fund in
which the Variable Fund D owns shares will be operated in compliance with the
requirements prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner of a contract has the choice of several sub-accounts in which
to allocate net purchase payments and contract values, and may be able to
transfer among sub-accounts more frequently than in such rulings. These
differences could result in a contract owner being treated as the owner of the
assets of Variable Fund D. In addition, Minnesota Mutual does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue. Minnesota Mutual therefore
reserves the right to modify the contract as necessary to attempt to prevent a
contract owner from being considered the owner of a pro rata share of the assets
of Variable Fund D.

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REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax purposes,
Section 72(s) of the Code requires any nonqualified contract issued after
January 18, 1985 to provide that (a) if any owner dies on or after the annuity
starting date but prior to the time the entire interest in the contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of that
owner's death; and (b) if an owner dies prior to the annuity starting date, the
entire interest in the contract must be distributed within five years after the
date of the owner's death. These requirements shall be considered satisfied if
any portion of the owner's interest which is payable to or for the benefit of a
"designated beneficiary" is distributed over the life of such beneficiary or
over a period not extending beyond the life expectancy of that beneficiary and
such distributions begin within one year of that owner's death. The owner's
"designated beneficiary" is the person designated by such owner as a beneficiary
and to whom ownership of the contract passes by reason of death and must be a
natural person. However, if the owner's "designated beneficiary" is the
surviving spouse of the owner, the contract may be continued with the surviving
spouse as the new owner.
Nonqualified contracts issued after January 18, 1985 contain provisions which
are intended to comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have yet been issued.
Minnesota Mutual intends to review such provisions and modify them if necessary
to assure that they comply with the requirements of Code Section 72(s) when
clarified by regulation or otherwise.
Other rules may apply to qualified contracts.

TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of the owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.

POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely modified
the federal taxation of certain annuities. For example, one such proposal would
have changed the tax treatment of nonqualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress is not actively
considering any legislation regarding the taxation of annuities, there is always
the possibility that the tax treatment of annuities could change by legislation
or other means (such as IRS regulations, revenue rulings, judicial decisions,
etc.). Moreover, it is also possible that any change could be retroactive (that
is, effective prior to the date of the change).

TAX QUALIFIED PROGRAMS
The annuity is designed for use with several types of retirement plans that
qualify for special tax treatment. The tax rules applicable to participants and
beneficiaries in retirement plans vary according to the type of plan and the
terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
annuity. Owners and participants under retirement plans as well as annuitants
and beneficiaries are cautioned that the rights of any person to any benefits
under annuities purchased in connection with these plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the annuity issued in connection with such a plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into our annuity administration procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the annuities comply with
applicable law. Purchasers of annuities for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
contract.

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PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.

INDIVIDUAL RETIREMENT ANNUITIES
Code Sections 219 and 408 permit individuals or their employers to contribute to
an individual retirement program known as an "Individual Retirement Annuity" or
"IRA". Individual Retirement Annuities are subject to limitations on the amount
which may be contributed and deducted and the time when distributions may
commence. In addition, distributions from certain other types of retirement
plans may be placed into an Individual Retirement Annuity on a tax deferred
basis. Employers may establish Simplified Employee Pension (SEP) Plans for
making IRA contributions on behalf of their employees.

CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the contracts to accumulate retirement savings under the
plans. Adverse tax or other legal consequences to the plan, to the participant
or to both may result if this annuity is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan complies with
all legal requirements applicable to such benefits prior to transfer of the
annuity.

DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax exempt organizations. The plans may permit participants
to specify the form of investment for their deferred compensation account. All
investments are owned by the sponsoring employer and are subject to the claims
of the general creditors of the employer. Depending on the terms of the
particular plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations. In general, all amounts
received under a Section 457 plan are taxable and are subject to federal income
tax withholding as wages.

WITHHOLDING
In general, distributions from annuities are subject to federal income tax
withholding unless the recipient elects not to have tax withheld. Different
rules may apply to payments delivered outside the United States. Some states
have enacted similar rules. Recent changes to the Code allow the rollover of
most distributions from tax-qualified plans and Section 403(b) annuities
directly to other tax-qualified plans that will accept such distributions and to
individual retirement accounts and individual retirement annuities.
Distributions which may not be rolled over are those which are: (1) one of a
series of substantially equal annual (or more frequent) payments made (a) over
the life or life expectancy of the employee, (b) the joint lives or joint
expectancies of the employee and the employee's designated beneficiary, or (c)
for a specified period of ten years or more; (2) a required minimum
distribution; or (3) the non-taxable portion of a distribution. Depending on the
terms of the particular plan, the employer may be entitled to draw on deferred
amounts for purposes unrelated to its Section 457 plan obligations. In general,
all amounts received under a Section 457 plan are taxable and are subject to
federal income tax withholding as wages.
Any distribution eligible for rollover, which may include payment to an
employee, an employee's surviving spouse or an ex-spouse who is an alternate
payee, will be subject to federal tax withholding at a 20% rate unless the
distribution is made as a direct rollover to a tax-

27
<PAGE>
qualified plan or to an individual retirement account or annuity. It may be
noted that amounts received by individuals which are eligible for rollover may
still be placed in another tax-qualified plan or individual retirement account
or individual retirement annuity if the transaction is completed within 60 days
after the distribution has been received. Such a taxpayer must replace withheld
amounts with other funds to avoid taxation on the amount previously withheld.

SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating the
purchase of a variable annuity contract or exercising elections under such a
contract. For further information a qualified tax adviser should be consulted.

- ------------------------------------------------------------------------
LEGAL PROCEEDINGS

There are no pending legal proceedings in which the Variable Fund D is a party.
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to their business, in which Minnesota Mutual, MIMLIC
Management or MIMLIC Sales is a party.

- ------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional contract and
Variable Fund D information including financial statements, is available from
the offices of the Variable Fund D at your request. The Table of Contents for
that Statement of Additional Information is as follows:

Variable Fund D
Trustees and Principal Management Officers of Minnesota Mutual
Other Contracts
Distribution of Contracts
Performance Data
Annuity Payments
Auditors
Financial Statements
Appendix A--Calculation of Unit Values

28
<PAGE>

Minnesota Mutual Variable Fund D

Statement of Additional Information

The date of this document and the Prospectus is: May 1, 1995

This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Therefore, this Statement should be read
in conjunction with the Variable Fund D's current Prospectus, bearing the same
date, which may be obtained by calling the Variable Fund D at (612) 298-3500, or
writing the Variable Fund D at Minnesota Mutual Life Center, 400 Robert Street
North, St. Paul, Minnesota 55101-2098.

TABLE OF CONTENTS

Variable Fund D

Trustees and Principal Management Officers of Minnesota Mutual

Other Contracts

Distribution of Contracts

Performance Data

Annuity Payments

Auditors

Financial Statements

Appendix A - Calculation of Unit Values

<PAGE>

VARIABLE FUND D

Minnesota Mutual Variable Fund D ("Variable Fund D") is a separate account of
The Minnesota Mutual Life Insurance Company ("Minnesota Mutual"). The Variable
Fund D is registered as a unit investment trust. Prior to the Reorganization of
the Fund in October of 1990 and the establishment of its several sub-accounts,
the Fund was a open-end, diversified, management investment company investing in
a diversified portfolio of equity securities, mainly common stocks.

TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL

Trustees Principal Occupation

Anthony L. Andersen Chair-Board of Directors and Chief Executive
Officer, H. B. Fuller Company, St. Paul, Minnesota
(Adhesive Products)

Coleman Bloomfield Chairman of the Board, The Minnesota Mutual Life
Insurance Company

John F. Grundhofer Chairman of the Board, President and Chief Executive
Officer, First Bank System, Inc., Minneapolis,
Minnesota (Banking)

Harold V. Haverty Chairman, President and Chief Executive Officer,
Deluxe Corporation, Shoreview, Minnesota (Check
Printing)

Lloyd P. Johnson Chairman of the Board, Norwest Corporation,
Minneapolis, Minnesota (Banking)

David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L. Carlson
School of Management, University of Minnesota, since
August 1991; prior thereto, Dean of the School and
Professor, University of Connecticut, School of
Business Administration from 1988 to July 1991

Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota

Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)

Terry N. Saario, Ph.D. President, Northwest Area Foundation, St. Paul,
Minnesota (Private Regional Foundation)

Robert L. Senkler Chief Executive Officer and President, The Minnesota
Mutual Life Insurance Company since July 1994; prior
thereto for more than five years Vice President and
Actuary, The Minnesota Mutual Life Insurance Company

Frederick T. Weyerhaeuser Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)

<PAGE>

Principal Officers (other than Trustees)

Name Position

John F. Bruder Senior Vice President

Keith M. Campbell Vice President

Paul H. Gooding Vice President and Treasurer

Robert E. Hunstad Executive Vice President

James E. Johnson Senior Vice President and Actuary

Joel W. Mahle Vice President

Dennis E. Prohofsky Vice President, General Counsel and
Secretary

Gregory S. Strong Vice President and Actuary

Terrence M. Sullivan Senior Vice President

Randy F. Wallake Senior Vice President

All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Dr. Kidwell, whose prior employment is as indicated above. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at least
five years.

OTHER CONTRACTS

In addition to the contracts described in the Prospectus, Minnesota Mutual
continually offers two types of Variable Fund D variable annuity contracts, both
incorporating a deferred sales charge. These contracts are the Single Premium
Deferred Variable Annuity Contract and the Flexible Payment Deferred Variable
Annuity Contract.

DISTRIBUTION OF CONTRACTS

The contracts will be continuously sold by Minnesota Mutual life insurance
agents who are also registered representatives of MIMLIC Sales Corporation or
other broker-dealers who have entered into selling agreements with MIMLIC Sales.
MIMLIC Sales acts as the principal underwriter of the contracts. MIMLIC Sales
Corporation is a wholly-owned subsidiary of MIMLIC Corporation, which is a
wholly-owned subsidiary of Minnesota Mutual. MIMLIC Corporation is also the
sole owner of the shares of MIMLIC Management, the investment adviser for the
Variable Fund D. MIMLIC Sales is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc.

Amounts paid by Minnesota Mutual for payment to the underwriter for 1994 was
$80,024. These include payments made by Minnesota Mutual on behalf of the
underwriter, as agents of Minnesota Mutual who are also registered
representatives of MIMLIC Sales are compensated directly by Minnesota Mutual.

<PAGE>

PERFORMANCE DATA

CURRENT YIELD FIGURES FOR MONEY MARKET SUB-ACCOUNT

Current annualized yield quotations for the Money Market Sub-Account are based
on the sub-account's net investment income for a seven-day or other specified
period and exclude any realized or unrealized gains or losses on sub-account
securities. Current annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical account
having a balance of one accumulation unit at the beginning of the specified
period, dividing such net change in account value by the value of the account at
the beginning of the period, and annualizing this quotient on a 365-day basis.
The Variable Fund D may also quote the effective yield of the Money Market Sub-
Account for a seven-day or other specified period for which the current
annualized yield is computed by expressing the unannualized return on a
compounded, annualized basis. The yield and effective yield of the Money Market
Sub-Account for the seven-day period ended December 31, 1994 were 4.71% and
4.82%, respectively. Such figures reflect the voluntary absorption of certain
expenses of MIMLIC Series Fund, Inc. (the "Fund") by Minnesota Mutual described
below under "Total Return Figures for All Sub-Accounts." In the absence of such
absorption of expenses, the yield figures for the Money Market Sub-Account would
have been 4.64% and 4.74%, respectively.

TOTAL RETURN FIGURES FOR ALL SUB-ACCOUNTS

Cumulative total return quotations for sub-accounts represent the total return
for the period since the sub-account became available pursuant to the Variable
Fund D's registration statement. Cumulative total return is equal to the
percentage change between the net asset value of a hypothetical $1,000
investment at the beginning of the period and the net asset value of that same
investment at the end of the period.

Prior to May 3, 1993, several of the sub-accounts were known by different names.
The Growth Sub-Account was the Stock Sub-Account, the Asset Allocation Sub-
Account was the Managed Sub-Account and the Index 500 Sub-Account was the Index
Sub-Account.

The cumulative total return figures published by the Variable Fund D relating to
the contracts described in the Prospectus will reflect Minnesota Mutual's
voluntary absorption of certain Fund expenses described below. The cumulative
total returns for the sub-accounts for the specified periods ended December 31,
1994 are shown in the table below. The figures in parentheses show what the
cumulative total returns would have been had Minnesota Mutual not absorbed Fund
expenses as described above.

<PAGE>

Cumulative Total Return Figures

7% Sales Load No Sales Load
Ten Years Cumulative Ten Years Cumulative
Ended 12/31/94* Ended 12/31/94* Ended 12/31/94* Ended 12/31/94*
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Growth Sub-Account 133.06% (133.06%) 150.61% (150.61%)

Bond Sub-Account 22.35% (21.72%) 31.56% (30.68%)

Money Market
Sub-Account 5.21% (3.24%) 13.13% (8.17%)

Asset Allocation
Sub-Account 36.96% (36.96%) 47.27% (47.27%)

Mortgage Securities
Sub-Account 16.76% (16.42%) 25.54% (25.02%)

Index 500
Sub-Account 46.99% (46.75%) 58.05% (57.76%)

Small Company
Sub-Account 8.72% (8.71%) 16.90% (9.81%)

<FN>
* Ten year cumulative total return figures are not available for the Bond Sub-
Account, the Money Market Sub-Account, the Asset Allocation Sub-Account, the
Mortgage Securities Sub-Account, the Index 500 Sub-Account, and the Small
Company Sub-Account as these sub-accounts first became available as a result of
the Variable Fund D reorganization in October 1990. The column above entitled
"Cumulative Ended 12/31/94" for these specified sub-accounts illustrates the
cumulative total return figures since the Variable Fund D reorganization.
</TABLE>

<PAGE>

Cumulative total return quotations for sub-accounts will be accompanied by
average annual total return figures for a one-year period and for the period
since the sub-account became available pursuant to the Variable Fund D's
registration statement. Average annual total return figures are the average
annual compounded rates of return required for an initial investment of $1,000
to equal the surrender value of that same investment at the end of the period.
The average annual total return figures published by the Variable Fund D will
reflect Minnesota Mutual's voluntary absorption of certain Fund expenses. Prior
to January 1, 1986, the Fund incurred no expenses. During 1986 and from January
1 to March 8, 1987 Minnesota Mutual voluntarily absorbed all fees and expenses
of any Fund portfolio that exceeded .75% of the average daily net assets of such
Fund portfolio. For the period subsequent to March 9, 1987, Minnesota Mutual is
voluntarily absorbing the fees and expenses that exceed .65% of the average
daily net assets of the Growth, Bond, Money Market, Asset Allocation and
Mortgage Securities Portfolios of the Fund, .55% of the average daily net assets
of the Index 500 Portfolio of the Fund, and .90% of the average daily net assets
of the Small Company Portfolio. There is no specified or minimum period of time
during which Minnesota Mutual has agreed to continue its voluntary absorption of
these expenses, and Minnesota Mutual may in its discretion cease its absorption
of expenses at any time. Should Minnesota Mutual cease absorbing expenses the
effect would be to increase substantially Fund expenses and thereby reduce
investment return.

<PAGE>

The average annual total return figures described above may be accompanied by
other average annual total return quotations for the same or other periods.
Such other average annual total return figures will be calculated as described
above. The average annual rates of return, as thus calculated, for the sub-
accounts of the contracts described in the Prospectus for the specified periods
ended December 31, 1994 are shown in the tables below. They are the same for
the individual accumulation annuity, group accumulation annuity and group
deposit administration contracts. The figures in parentheses show what the
average annual rates of return would have been had Minnesota Mutual not absorbed
Fund expenses as described above.

Average Annual Total Return

7% Sales Load

One Year Five Years Ten Years Since Inception
Ended 12/31/94 Ended 12/31/94* Ended 12/31/94* Ended 12/31/94*
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Growth Sub-Account -6.72% (-6.72%) 6.57% (6.57%) 8.82% (8.82%) -- --

Bond Sub-Account -11.73% (-11.73%) -- -- -- -- 4.94% (4.81%)

Money Market
Sub-Account -4.10% (-4.63%) -- -- -- -- 1.22% (0.76%)

Asset Allocation
Sub-Account -8.81% (-8.81%) -- -- -- -- 7.80% (7.80%)

Mortgage Securities
Sub-Account -10.64% (-10.64%) -- -- -- -- 3.77% (3.70%)

Index 500
Sub-Account -6.52% (-6.52%) -- -- -- -- 9.64% (9.60%)

Small Company
Sub-Account -1.82% (-1.82%) -- -- -- -- 5.15% (5.14%)

<FN>
*Five and ten year average annual total return figures are not available for the
Bond Sub-Account the Money Market Sub-Account, the Asset Allocation Sub-Account,
the Mortgage Securities Sub-Account, the Index 500 Sub-Account, and the Small
Company Sub-Account as these sub-accounts first became available as a result of
the Variable Fund D reorganization in October 1990. The column above entitled
"Since Inception Ended 12/31/94" for these specified sub-accounts illustrates
the average annual total return figures since the Variable Fund D
reorganization.
</TABLE>

<PAGE>

No Sales Load

Bond Sub-Account -5.08% (-5.08%) -- -- -- -- 6.77% (6.60%)

Money Market
Sub-Account 3.12% (2.72%) -- -- -- -- 2.99% (1.89%)

Asset Allocation
Sub-Account -1.95% (-1.95%) -- -- -- -- 9.69% (9.69%)

Mortgage Securities
Sub-Account -3.91% (-3.91%) -- -- -- -- 5.58% (5.48%)

Index 500
Sub-Account 0.51% (0.51%) -- -- -- -- 11.55% (11.50%)

Small Company
Sub-Account 5.57% (5.57%) -- -- -- -- 9.83% (9.81%)

<PAGE>

ANNUITY PAYMENTS

Please see Appendix A to this Statement of Additional Information for an
illustration of the calculation of annuity unit values and of a variable annuity
payment, showing the method used for the calculation of both the initial and
subsequent payments.

AUDITORS

The financial statements of Minnesota Mutual Variable Fund D and The Minnesota
Mutual Life Insurance Company included in this Statement of Additional
Information have been audited by KPMG Peat Marwick LLP, 4200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402, independent auditors, as
indicated in their reports in this Statement of Additional Information, and are
included herein in reliance upon such reports and upon the authority of such
firm as experts in accounting and auditing.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Trustees of the Minnesota Mutual Life Insurance Company
and Contract Owners of Minnesota Mutual Variable Fund D:

We have audited the accompanying statements of assets and liabilities of the
Growth, Bond, Money Market, Asset Allocation, Mortgage Securities, Index 500 and
Small Company Segregated Sub-Accounts of Minnesota Mutual Variable Fund D as of
December 31, 1994 and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the years in the two-
year period then ended (year ended December 31, 1994 and period from May 3, 1993
to December 31, 1993 for Small Company Segregated Sub-Account) and the financial
highlights for each of the years in the four-year period then ended and the
period from October 26, 1990 to December 31, 1990 for the Growth, Bond, Asset
Allocation and Index 500 Segregated Sub-Accounts and for each of the years in
the four-year period then ended for the Money Market and Mortgage Securities
Segregated Sub-Accounts and the year ended December 31, 1994 and the period from
May 3, 1993 to December 31, 1993 for Small Company Segregated Sub-Account.
These financial statements and the financial highlights are the responsibility
of the Account's management. Our responsibility is to express an opinion on
these financial statements and the financial highlights 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 and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investments owned at December 31, 1994 were verified by examination
of the underlying portfolios of MIMLIC Series Fund, Inc. 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 Growth, Bond, Money Market,
Asset Allocation, Mortgage Securities, Index 500 and Small Company Segregated
Sub-Accounts of Minnesota Mutual Variable Fund D at December 31, 1994 and the
results of their operations for the year then ended, changes in their net assets
and the financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

Minneapolis, Minnesota
February 13, 1995

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1994

<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------
MONEY ASSET
ASSETS GROWTH BOND MARKET ALLOCATION
------ ----------- ----------- ----------- -----------

<S> <C> <C> <C> <C>
Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 28,219,166 shares at net asset value of
$1.866 per share (cost $41,755,202). . . . . . . . . . . . . . . . . . . $ 52,656,980 -- -- --
Bond Portfolio, 439,909 shares at net asset value of
$1.157 per share (cost $549,037) . . . . . . . . . . . . . . . . . . . . -- 508,892 -- --
Money Market Portfolio, 517,000 shares at net asset value of
$1.000 per share (cost $517,000) . . . . . . . . . . . . . . . . . . . . -- -- 517,000 --
Asset Allocation Portfolio, 3,069,005 shares at net asset value of
$1.524 per share (cost $4,721,551) . . . . . . . . . . . . . . . . . . . -- -- -- 4,677,482
Mortgage Securities Portfolio, 184,030 shares at net asset value of
$1.098 per share (cost $214,101) . . . . . . . . . . . . . . . . . . . . -- -- -- --
Index 500 Portfolio, 922,839 shares at net asset value of
$1.518 per share (cost $1,345,533) . . . . . . . . . . . . . . . . . . . -- -- -- --
Small Company Portfolio, 68,883 shares at net asset value of
$1.226 per share (cost $80,894). . . . . . . . . . . . . . . . . . . . . -- -- -- --
----------- ----------- ----------- -----------
52,656,980 508,892 517,000 4,677,482

Receivable from MIMLIC Series Fund, Inc. for investments sold. . . . . . . . 34,115 11,932 60,013 1,447
Receivable from Minnesota Mutual for contract purchase payments. . . . . . . 104,343 24 -- 1,571
Dividends receivable from MIMLIC Series Fund, Inc. . . . . . . . . . . . . . -- -- 73 --
----------- ----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,795,438 520,848 577,086 4,680,500
----------- ----------- ----------- -----------
LIABILITIES
-----------
Payable to MIMLIC Series Fund, Inc. for investments purchased. . . . . . . . 104,343 24 -- 1,571
Payable to Minnesota Mutual for contract terminations and
mortality and expense charges. . . . . . . . . . . . . . . . . . . . . . . 34,115 11,932 60,013 1,447
----------- ----------- ----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,458 11,956 60,013 3,018
----------- ----------- ----------- -----------
Net assets applicable to annuity contract owners . . . . . . . . . . . . $ 52,656,980 508,892 517,073 4,677,482
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY
-----------------------
Contracts in accumulation period, accumulation units outstanding
of 5,406,377 for Growth, 386,750 for Bond, 457,011 for Money Market,
3,175,751 for Asset Allocation, 160,939 for Mortgage Securities,
886,632 for Index 500 and 72,272 for Small Company . . . . . . . . . . . . $ 51,922,854 508,892 517,073 4,677,482
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . 734,126 -- -- --
----------- ----------- ----------- -----------
Total contract owners' equity. . . . . . . . . . . . . . . . . . . . . . $ 52,656,980 508,892 517,073 4,677,482
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSET VALUE PER ACCUMULATION UNIT. . . . . . . . . . . . . . . . . . . . $ 9.604 1.316 1.131 1.473
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

SEGREGATED SUB-ACCOUNTS
---------------------------------------
MORTGAGE INDEX SMALL
ASSETS SECURITIES 500 COMPANY
------ ----------- ----------- -----------

<S> <C> <C> <C>
Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 28,219,166 shares at net asset value of
$1.866 per share (cost $41,755,202). . . . . . . . . . . . . . . . . . . -- -- --
Bond Portfolio, 439,909 shares at net asset value of
$1.157 per share (cost $549,037) . . . . . . . . . . . . . . . . . . . . -- -- --
Money Market Portfolio, 517,000 shares at net asset value of
$1.000 per share (cost $517,000) . . . . . . . . . . . . . . . . . . . . -- -- --
Asset Allocation Portfolio, 3,069,005 shares at net asset value of
$1.524 per share (cost $4,721,551) . . . . . . . . . . . . . . . . . . . -- -- --
Mortgage Securities Portfolio, 184,030 shares at net asset value of
$1.098 per share (cost $214,101) . . . . . . . . . . . . . . . . . . . . 202,086 -- --
Index 500 Portfolio, 922,839 shares at net asset value of
$1.518 per share (cost $1,345,533) . . . . . . . . . . . . . . . . . . . -- 1,401,263 --
Small Company Portfolio, 68,883 shares at net asset value of
$1.226 per share (cost $80,894). . . . . . . . . . . . . . . . . . . . . -- -- 84,484
----------- ----------- -----------
202,086 1,401,263 84,484

Receivable from MIMLIC Series Fund, Inc. for investments sold. . . . . . . . 4 7,423 2
Receivable from Minnesota Mutual for contract purchase payments. . . . . . . 25 134 139
Dividends receivable from MIMLIC Series Fund, Inc. . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,115 1,408,820 84,625
----------- ----------- -----------

LIABILITIES
-----------
Payable to MIMLIC Series Fund, Inc. for investments purchased. . . . . . . . 25 134 139
Payable to Minnesota Mutual for contract terminations and
mortality and expense charges. . . . . . . . . . . . . . . . . . . . . . . 4 7,423 2
----------- ----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 7,557 141
----------- ----------- -----------
Net assets applicable to annuity contract owners . . . . . . . . . . . . 202,086 1,401,263 84,484
----------- ----------- -----------
----------- ----------- -----------
CONTRACT OWNERS' EQUITY
-----------------------
Contracts in accumulation period, accumulation units outstanding
of 5,406,377 for Growth, 386,750 for Bond, 457,011 for Money Market,
3,175,751 for Asset Allocation, 160,939 for Mortgage Securities,
886,632 for Index 500 and 72,272 for Small Company . . . . . . . . . . . . 202,086 1,401,263 84,484
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Total contract owners' equity. . . . . . . . . . . . . . . . . . . . . . 202,086 1,401,263 84,484
----------- ----------- -----------
----------- ----------- -----------
NET ASSET VALUE PER ACCUMULATION UNIT. . . . . . . . . . . . . . . . . . . . 1.255 1.580 1.169
----------- ----------- -----------
----------- ----------- -----------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994

SEGREGATED SUB-ACCOUNTS
-----------------------------------------------------
MONEY ASSET
GROWTH BOND MARKET ALLOCATION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying mutual fund. . . . . . . $ 570,721 29,249 22,485 110,990
Reimbursement from Minnesota Mutual for excess expense
charges (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . 162,342 1,570 1,464 11,633
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . (434,740) (5,311) (4,952) (39,355)
----------- ----------- ----------- -----------
Investment income (loss) - net. . . . . . . . . . . . . . . . . . . . 298,323 25,508 18,997 83,268
----------- ----------- ----------- -----------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . . . . . 1,173,834 18,252 -- 32,344
----------- ----------- ----------- -----------

Realized gains (losses) on sales of investments (note 5):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 8,309,819 413,711 1,045,297 1,907,456
Cost of investments sold. . . . . . . . . . . . . . . . . . . . . . . (6,491,821) (438,285) (1,045,297) (1,926,573)
----------- ----------- ----------- -----------
1,817,998 (24,574) -- (19,117)
----------- ----------- ----------- -----------

Net realized gains (losses) on investments. . . . . . . . . . . . . . 2,991,832 (6,322) -- 13,227
----------- ----------- ----------- -----------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,083,223) (56,766) -- (213,180)
----------- ----------- ----------- -----------

Net gains (losses) on investments . . . . . . . . . . . . . . . . . . (91,391) (63,088) -- (199,953)
----------- ----------- ----------- -----------

Net increase (decrease) in net assets resulting from operations. . . . . . . $ 206,932 (37,580) 18,997 (116,685)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------
MORTGAGE INDEX SMALL
SECURITIES 500 COMPANY
----------- ----------- -----------
<S> <C> <C> <C>

Investment income (loss):
Investment income distributions from underlying mutual fund. . . . . . . 13,785 23,675 120
Reimbursement from Minnesota Mutual for excess expense
charges (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . 665 2,059 176
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . (2,250) (12,123) (595)
----------- ----------- -----------

Investment income (loss) - net. . . . . . . . . . . . . . . . . . . . 12,200 13,611 (299)
----------- ----------- -----------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . . . . . 6,549 4,793 --
----------- ----------- -----------

Realized gains (losses) on sales of investments (note 5):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 302,480 651,559 40,902
Cost of investments sold. . . . . . . . . . . . . . . . . . . . . . . (306,385) (620,416) (39,830)
----------- ----------- -----------
(3,905) 31,143 1,072
----------- ----------- -----------

Net realized gains (losses) on investments. . . . . . . . . . . . . . 2,644 35,936 1,072
----------- ----------- -----------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,389) (29,080) 2,887
----------- ----------- -----------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . (24,745) 6,856 3,959
----------- ----------- -----------

Net increase (decrease) in net assets resulting from operations. . . . . . . (12,545) 20,467 3,660
----------- ----------- -----------
----------- ----------- -----------

</TABLE>

See accompanying notes to financial statements.
<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------------------------------
MONEY ASSET
GROWTH BOND MARKET ALLOCATION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . $ 298,323 25,508 18,997 83,268
Net realized gains (losses) on investments . . . . . . . . . . . . . . . 2,991,832 (6,322) -- 13,227
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,083,223) (56,766) -- (213,180)
----------- ----------- ----------- -----------

Net increase (decrease) in net assets resulting from operations. . . . . . . 206,932 (37,580) 18,997 (116,685)
----------- ----------- ----------- -----------

Contract transactions (notes 2, 3 and 6):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 4,522,115 290,564 690,709 2,312,660
Contract terminations and withdrawal payments. . . . . . . . . . . . . . (7,941,885) (409,970) (1,041,808) (1,879,734)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . 152 -- -- --
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . (95,688) -- -- --
----------- ----------- ----------- -----------
Increase (decrease) in net assets from contract transact . . . . . . . . . . (3,515,306) (119,406) (351,099) 432,926
----------- ----------- ----------- -----------

Increase (decrease) in net assets. . . . . . . . . . . . . . . . . . . . . . (3,308,374) (156,986) (332,102) 316,241

Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . . 55,965,354 665,878 849,175 4,361,241
----------- ----------- ----------- -----------

Net assets at the end of year. . . . . . . . . . . . . . . . . . . . . . . . $ 52,656,980 508,892 517,073 4,677,482
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------
MORTGAGE INDEX SMALL
SECURITIES 500 COMPANY
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . 12,200 13,611 (299)
Net realized gains (losses) on investments . . . . . . . . . . . . . . . 2,644 35,936 1,072
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,389) (29,080) 2,887
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations. . . . . . . (12,545) 20,467 3,660
----------- ----------- -----------

Contract transactions (notes 2, 3 and 6):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 141,693 946,593 105,641
Contract terminations and withdrawal payments. . . . . . . . . . . . . . (300,895) (641,495) (40,483)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Increase (decrease) in net assets from contract transact . . . . . . . . . . (159,202) 305,098 65,158
----------- ----------- -----------

Increase (decrease) in net assets. . . . . . . . . . . . . . . . . . . . . . (171,747) 325,565 68,818

Net assets at the beginning of year. . . . . . . . . . . . . . . . . . . . . 373,833 1,075,698 15,666
----------- ----------- -----------

Net assets at the end of year. . . . . . . . . . . . . . . . . . . . . . . . 202,086 1,401,263 84,484
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See accompanying notes to financial statements.
<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEAR ENDED DECEMBER 31, 1993 (PERIOD FROM MAY 3, 1993 TO
DECEMBER 31, 1993 FOR SMALL COMPANY)

SEGREGATED SUB-ACCOUNTS
-----------------------------------------------------
MONEY ASSET
GROWTH BOND MARKET ALLOCATION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . $ 495,610 9,104 9,819 41,874
Net realized gains on investments. . . . . . . . . . . . . . . . . . . . 2,204,672 13,050 -- 83,263
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . (505,098) 5,124 -- 61,454
----------- ----------- ----------- -----------

Net increase in net assets resulting from operations . . . . . . . . . . . . 2,195,184 27,278 9,819 186,591
----------- ----------- ----------- -----------

Contract transactions (notes 2, 3 and 6):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 5,313,663 607,828 538,742 2,553,280
Contract terminations and withdrawal payments. . . . . . . . . . . . . . (5,034,287) (193,921) (83,861) (455,436)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . 7,849 -- -- --
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . (83,335) -- -- --
----------- ----------- ----------- -----------
Increase in net assets from contract transactions. . . . . . . . . . . . . . 203,890 413,907 454,881 2,097,844
----------- ----------- ----------- -----------

Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,399,074 441,185 464,700 2,284,435

Net assets at the beginning of period. . . . . . . . . . . . . . . . . . . . 53,566,280 224,693 384,475 2,076,806
----------- ----------- ----------- -----------

Net assets at the end of period. . . . . . . . . . . . . . . . . . . . . . . $ 55,965,354 665,878 849,175 4,361,241
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------------------
MORTGAGE INDEX SMALL
SECURITIES 500 COMPANY
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . 12,432 4,814 (12)
Net realized gains on investments. . . . . . . . . . . . . . . . . . . . 7,999 8,525 222
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,135 50,215 703
----------- ----------- -----------
Net increase in net assets resulting from operations . . . . . . . . . . . . 27,566 63,554 913
----------- ----------- -----------

Contract transactions (notes 2, 3 and 6):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . 123,390 601,325 14,753
Contract terminations and withdrawal payments. . . . . . . . . . . . . . (96,279) (69,212) --
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Increase in net assets from contract transactions. . . . . . . . . . . . . . 27,111 532,113 14,753
----------- ----------- -----------

Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,677 595,667 15,666

Net assets at the beginning of period. . . . . . . . . . . . . . . . . . . . 319,156 480,031 --
----------- ----------- -----------

Net assets at the end of period. . . . . . . . . . . . . . . . . . . . . . . 373,833 1,075,698 15,666
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

NOTES TO FINANCIAL STATEMENTS

(1) ORGANIZATION

Minnesota Mutual Variable Fund D (the Account) is organized as a segregated
asset account of The Minnesota Mutual Life Insurance Company (Minnesota
Mutual) under Minnesota law and is registered as a unit investment trust
under the Investment Company Act of 1940 (as amended).

Effective October 26, 1990, the contract owners of the Account voted to
reorganize as a unit investment trust under the Investment Company Act of
1940 (as amended). Prior to the reorganization, the Account invested
directly in a diversified portfolio of equity securities. The Account has
seven segregated sub-accounts to which contract owners may allocate their
payments. On May 3, 1993, an additional segregated sub-account, Small
Company, was added to the Account.

The assets of each segregated sub-account are held for the exclusive
benefit of the variable annuity contract owners and are not chargeable with
liabilities arising out of the business conducted by any other account or
by Minnesota Mutual. Contract owners allocate their variable payments to
one or more of the seven segregated sub-accounts. Such payments are then
invested in shares of MIMLIC Series Fund, Inc. (the Fund) organized by
Minnesota Mutual as the investment vehicle for its variable annuity
contracts and and variable life policies. The Fund is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. Payments allocated to the Growth, Bond,
Money Market, Asset Allocation, Mortgage Securities, Index 500 and Small
Company segregated sub-accounts are invested in shares of the Growth, Bond,
Money Market, Asset Allocation, Mortgage Securities, Index 500 and Small
Company Portfolios of the Fund, respectively.

MIMLIC Sales Corporation acts as the underwriter for the Account. MIMLIC
Asset Management Company acts as the investment adviser for the Fund. Both
entities are wholly-owned subsidiaries of Minnesota Mutual.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS IN MIMLIC SERIES FUND, INC.

Investments in shares of the Fund portfolios are stated at market value
which is the net asset value per share as determined daily by the Fund.
Investment transactions are accounted for on the date the shares are
purchased or sold. The cost of investments sold is determined on the
average cost method. All dividend distributions received from the Fund are
reinvested in additional shares of the Fund and are recorded by the
sub-accounts on the ex-dividend date.

FEDERAL INCOME TAXES

The Account is treated as part of Minnesota Mutual for federal income tax
purposes. Under current interpretations of existing federal income tax law,
no income taxes are payable on investment income or capital gain
distributions received by the Account from the Fund.

CONTRACTS IN ANNUITY PAYMENT PERIOD

Annuity reserves are computed for contracts currently payable using the
Progressive Annuity Mortality Table and an assumed interest rate of 3.5
percent. Charges to annuity reserves for mortality and risk expense are
reimbursed to Minnesota Mutual if the reserves required are less than
originally estimated. If additional reserves are required, Minnesota Mutual
reimburses the Account.

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(3) MORTALITY AND EXPENSE AND SALES AND ADMINISTRATIVE SERVICE CHARGES

The mortality and expense charge paid to Minnesota Mutual is computed daily
and is equal, on an annual basis, to .795% of the average daily net assets
of the Account.

Sales and adminstrative service charges, depending upon the type of
contract, may be deducted from the contract owner's contract purchase
payment or contract withdrawal. Total sales and administrative charges
deducted from contract purchase payments or contract withdrawal proceeds
for the years ended December 31, 1994 and 1993 amounted to $30,278 and
$32,378, respectively.

(4) REIMBURSEMENT FROM MINNESOTA MUTUAL FOR EXCESS EXPENSES

Under the Plan of Reorganization, Minnesota Mutual agreed to reimburse the
Account for any increase in expenses paid by the Account as a result of the
reorganization. Prior to the reorganization, the Account was charged an
investment advisory fee equal, on an annual basis, to .265% of the average
daily net assets. After the reorganization, the Account no longer pays an
investment advisory fee since it no longer invests directly in a portfolio
of securities. However, contract values that are allocated to the
segregated sub-accounts after the reorganization are invested in Fund
portfolios that pay investment advisory fees as well as other operating
expenses. Investment advisory fees are based on the average daily net
assets of the Fund portfolios at the annual rate of .50% for the Growth,
Bond, Money Market, Asset Allocation and Mortgage Securities Portfolios,
.40% for the Index 500 Portfolio and .75% for the Small Company Portfolio.

In calculating the accumulation unit value for the Growth segregated
sub-account, Minnesota Mutual has agreed to make an adjustment that will
have the effect of reimbursing the excess of any expenses indirectly
incurred as a result of the investment advisory fee and the operating
expenses incurred by the Growth Portfolio over the .265% investment
advisory paid prior to the reorganization. In calculating the accumulation
unit value for the segregated sub-accounts other than Growth, Minnesota
Mutual will make adjustments that, in effect, reimburse the excess of the
investment advisory fees incurred through indirect investment in the Fund
over the .265% investment management fee paid prior to the reorganization.
No adjustment will be made for the additional operating expenses charged to
those portfolios. However, in the past seven years Minnesota Mutual has
voluntarily absorbed other operating expenses that exceed .15% on an annual
basis for each Fund portfolio.

(5) INVESTMENT TRANSACTIONS

The Account's purchases of Fund shares, including reinvestment of dividend
distributions, were as follows during the year ended December 31, 1994:

<S> <C>
Growth Portfolio....................................$6,266,670
Bond Portfolio...................................... 338,065
Money Market Portfolio.............................. 713,122
Asset Allocation Portfolio ......................... 2,455,994
Mortgage Securities Portfolio....................... 162,027
Index 500 Portfolio................................. 975,061
Small Company Portfolio............................. 105,762
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(6) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS

Transactions in units for each segregated sub-account for the years ended
December 31, 1994 and 1993 were as follows:

SEGREGATED SUB-ACCOUNTS
---------------------------------------
MONEY
GROWTH BOND MARKET
--------- -------- --------
<S> <C> <C> <C>
Units outstanding at December 31, 1992. . . . . . . . . . . 5,758,220 177,794 357,877

Contract purchase payments. . . . . . . . . . . . . . . . . 571,430 442,104 493,056
Deductions for contract terminations and
withdrawal payments. . . . . . . . . . . . . . . . . . . (544,452) (139,487) (76,855)
--------- --------- ---------
Units outstanding at December 31, 1993. . . . . . . . . . . 5,785,198 480,411 774,078

Contract purchase payments. . . . . . . . . . . . . . . . . 470,958 214,302 623,796
Deductions for contract terminations and
withdrawal payments. . . . . . . . . . . . . . . . . . . (849,779) (307,963) (940,863)
--------- --------- ---------
Units outstanding at December 31, 1994. . . . . . . . . . . 5,406,377 386,750 457,011
--------- --------- ---------
--------- --------- ---------

SEGREGATED SUB-ACCOUNTS
---------------------------------------- ---------
ASSET MORTGAGE INDEX SMALL
ALLOCATION SECURITIES 500 COMPANY
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1992. . . . . . . . . . . 1,463,845 265,381 332,893 --

Contract purchase payments. . . . . . . . . . . . . . . . . 1,750,785 95,864 396,586 14,148
Deductions for contract terminations and
withdrawal payments. . . . . . . . . . . . . . . . . . . (310,918) (75,120) (45,269) --
--------- --------- --------- ---------

Units outstanding at December 31, 1993. . . . . . . . . . . 2,903,712 286,125 684,210 14,148

Contract purchase payments. . . . . . . . . . . . . . . . . 1,550,835 109,469 606,043 93,363
Deductions for contract terminations and
withdrawal payments. . . . . . . . . . . . . . . . . . . (1,278,796) (234,655) (403,621) (35,239)
--------- --------- --------- ---------

Units outstanding at December 31, 1994. . . . . . . . . . . 3,175,751 160,939 886,632 72,272
--------- --------- --------- ---------
--------- --------- --------- ---------

</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS

The following tables for each segregated sub-account show certain data for
an accumulation unit outstanding during the periods indicated:

GROWTH
<TABLE>
<CAPTION>

PERIOD FROM
OCTOBER 26,
YEAR ENDED DECEMBER 31, 1990 TO
--------------------------------------------------------- DECEMBER 31,
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . . . $ 9.573 9.196 8.803 6.595 6.061
----------- ---------- ---------- ---------- ------------
Income from investment operations:

Net investment income (loss). . . . . . . . . .053 .086 .109 (.032) .052
Net gains or losses on securities
(both realized and unrealized). . . . . . . (.022) .291 .284 2.240 .482
----------- ---------- ---------- ---------- ------------
Total from investment operations . . . . . .031 .377 .393 2.208 .534
----------- ---------- ---------- ---------- ------------
Unit value, end of period . . . . . . . . . . . $ 9.604 9.573 9.196 8.803 6.595
----------- ---------- ---------- ---------- ------------
----------- ---------- ---------- ---------- ------------

</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

BOND

PERIOD FROM
OCTOBER 26,
YEAR ENDED DECEMBER 31, 1990 TO
--------------------------------------------------------- DECEMBER 31,
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period. . . . . . . . . $ 1.386 1.264 1.191 1.021 1.000
----------- ---------- ---------- ---------- ------------

Income from investment operations:

Net investment income (loss). . . . . . . . . .051 .030 .035 (.007) .072
Net gains or losses on securities
(both realized and unrealized) . . . . . . (.121) .092 .038 .177 (.051)
----------- ---------- ---------- ---------- ------------
Total from investment operations . . . . . (.070) .122 .073 .170 .021
----------- ---------- ---------- ---------- ------------
Unit value, end of period . . . . . . . . . . . $ 1.316 1.386 1.264 1.191 1.021
----------- ---------- ---------- ---------- ------------
----------- ---------- ---------- ---------- ------------
</TABLE>
<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

MONEY MARKET

YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Unit value, beginning of year . . . . . . . . . $ 1.097 1.074 1.047 1.000
----------- ---------- ---------- ----------
Income from investment operations:

Net investment income . . . . . . . . . . . . .034 .023 .027 .047
----------- ---------- ---------- ----------
Total from investment operations . . . . . .034 .023 .027 .047
----------- ---------- ---------- ----------
Unit value, end of year . . . . . . . . . . . . $ 1.131 1.097 1.074 1.047
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------

- -------------------------
<FN>

* As of December 31, 1990, no contract owners had elected to allocate
payments to the Money Market segregated sub-account; accordingly, financial
highlights are not presented for the period from October 26, 1990 to December
31, 1990.

</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

ASSET ALLOCATION
<TABLE>
<CAPTION>

PERIOD FROM
OCTOBER 26,
YEAR ENDED DECEMBER 31, 1990 TO
--------------------------------------------------------- DECEMBER 31,
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . $ 1.502 1.419 1.330 1.038 1.000
----------- ---------- ---------- ---------- ------------
Income from investment operations:

Net investment income (loss). . . . . . . . . .024 .019 .020 (.006) .041
Net gains or losses on securities
(both realized and unrealized) . . . . . . (.053) .064 .069 .298 (.003)
----------- ---------- ---------- ---------- ------------
Total from investment operations. . . . . . (.029) .083 .089 .292 .038
----------- ---------- ---------- ---------- ------------
Unit value, end of year . . . . . . . . . . . . $ 1.473 1.502 1.419 1.330 1.038
----------- ---------- ---------- ---------- ------------
----------- ---------- ---------- ---------- ------------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

MORTGAGE SECURITIES

YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . $ 1.307 1.203 1.137 1.000
----------- ---------- ---------- ----------
Income from investment operations:

Net investment income (loss) . . . . . . . . .055 .044 .008 (.006)
Net gains or losses on securities
(both realized and unrealized). . . . . . . (.107) .060 .058 .143
----------- ---------- ---------- ----------
Total from investment operations. . . . . . (.052) .104 .066 .137
----------- ---------- ---------- ----------
Unit value, end of year . . . . . . . . . . . . $ 1.255 1.307 1.203 1.137
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------

- -------------------------
<FN>

* As of December 31, 1990, no contract owners had elected to allocate
payments to the Mortgage Securities segregated sub-account; accordingly,
financial highlights are not presented for the period from October 26, 1990 to
December 31, 1990.

</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

INDEX 500

PERIOD FROM
OCTOBER 26,
YEAR ENDED DECEMBER 31, 1990 TO
--------------------------------------------------------- DECEMBER 31,
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period. . . . . . . . . $ 1.572 1.442 1.352 1.049 1.000
----------- ---------- ---------- ---------- ------------
Income from investment operations:

Net investment income (loss) . . . . . . . . .014 .010 .011 (.008) .031
Net gains or losses on securities
(both realized and unrealized). . . . . . . (.006) .120 .079 .311 .018
----------- ---------- ---------- ---------- ------------
Total from investment operations . . . . . .008 .130 .090 .303 .049
----------- ---------- ---------- ---------- ------------
Unit value, end of period. . . . . . . . . . . . $ 1.580 1.572 1.442 1.352 1.049
----------- ---------- ---------- ---------- ------------
----------- ---------- ---------- ---------- ------------

</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE FUND D

(7) FINANCIAL HIGHLIGHTS - CONTINUED

SMALL COMPANY

PERIOD FROM
YEAR ENDED MAY 3, 1993*
DECEMBER TO DECEMBER
31, 1994 31, 1993
----------- ------------
<S> <C> <C>
Unit value, beginning of period . . . . . . . . . . . . . . $ 1.107 1.000
----------- -----------
Income from investment operations:

Net investment loss . . . . . . . . . . . . . . . . . . (.004) (.002)
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . . . . . .066 .109
----------- -----------
Total from investment operations . . . . . . . . . . . .062 .107
----------- -----------
Unit value, end of period. . . . . . . . . . . . . . . . . . $ 1.169 1.107
----------- -----------
----------- -----------

<FN>

* Commencement of the segregated sub-account's operations.

</TABLE>

<PAGE>
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

<TABLE>
<C> <S> <C>
Independent Auditors' Report...................................................................... 1

Balance Sheets.................................................................................... 2

Statements of Operations and Policyowners' Surplus................................................ 3

Statements of Cash Flows.......................................................................... 4

Notes to Financial Statements..................................................................... 5

Financial Statement Schedules:

I. Summary of Investments--Other than Investments in Related Parties...................... 15

V. Supplementary Insurance Information.................................................... 16

VI. Reinsurance............................................................................ 17
</TABLE>

<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT

The Board of Trustees
The Minnesota Mutual Life Insurance Company:

We have audited the accompanying balance sheets of The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993 and the related statements of
operations and policyowners' surplus and cash flows for each of the years in the
three-year period ended December 31, 1994. In connection with our audits of the
financial statements, we also have audited the financial statement schedules as
listed in the accompanying index. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles (notes 1 and 10). Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
February 9, 1995

1
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

BALANCE SHEETS
DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
ASSETS
1993
----------
1994
----------
(IN THOUSANDS)
<S> <C> <C>
Bonds $5,134,554 $4,985,026
Common stocks 209,958 211,792
Mortgage loans 598,186 542,356
Real estate, including Home Office
property 76,346 80,655
Other invested assets 60,604 49,599
Policy loans 185,599 177,820
Investments in subsidiary companies 155,404 125,865
Cash and short-term securities 112,869 90,266
Premiums deferred and uncollected 125,422 186,978
Other assets 134,594 118,596
---------- ----------
Total assets, excluding separate
accounts 6,793,536 6,568,953
Separate account assets 1,750,680 1,235,157
---------- ----------
Total assets $8,544,216 $7,804,110
---------- ----------
---------- ----------

LIABILITIES AND POLICYOWNERS' SURPLUS

Liabilities:
Policy reserves:
Life insurance $1,981,469 $1,875,570
Annuities and other fund deposits 3,179,279 3,166,944
Accident and health 343,241 317,825
Policy claims in process of
settlement 53,670 98,351
Dividends payable to policyowners 100,287 94,224
Other policy liabilities 388,538 371,333
Asset valuation reserve 165,341 135,936
Interest maintenance reserve 19,922 24,349
Federal income taxes 35,050 15,644
Other liabilities 186,575 162,934
---------- ----------
Total liabilities, excluding
separate accounts 6,453,372 6,263,110
Separate account liabilities 1,708,529 1,193,100
---------- ----------
Total liabilities 8,161,901 7,456,210
Policyowners' surplus 382,315 347,900
---------- ----------
Total liabilities and
policyowners' surplus $8,544,216 $7,804,110
---------- ----------
---------- ----------
</TABLE>

2 See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992

<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
1994 1993
---------- ----------
1992
(IN THOUSANDS)----------
<S> <C> <C> <C>
Revenues:
Premiums, annuity considerations and
fund deposits $1,424,352 $1,289,954 $1,234,413
Net investment income 488,813 493,011 485,284
---------- ---------- ----------
Total revenues 1,913,165 1,782,965 1,719,697
---------- ---------- ----------
Benefits and expenses:
Policyowner benefits 1,259,685 1,131,638 968,539
Increase in policy reserves 94,116 122,280 243,014
General insurance expenses and taxes 279,022 268,041 249,943
Commissions 75,443 70,899 65,088
Federal income taxes 49,626 36,656 39,845
---------- ---------- ----------
Total benefits and expenses 1,757,892 1,629,514 1,566,429
---------- ---------- ----------
Gain from operations before net
realized capital gains (losses)
and dividends 155,273 153,451 153,268
Realized capital gains (losses), net of
tax 18,559 2,907 (23,311)
---------- ---------- ----------
Gain from operations before
dividends 173,832 156,358 129,957
Dividends to policyowners 108,709 97,937 98,116
---------- ---------- ----------
Net income $ 65,123 $ 58,421 $ 31,841
---------- ---------- ----------
---------- ---------- ----------

STATEMENTS OF POLICYOWNERS' SURPLUS

Policyowners' surplus, beginning of year $ 347,900 $ 264,542 $ 219,488
Net income 65,123 58,421 31,841
Net change in unrealized capital
gains and losses (317) 3,286 8,294
Change in policy reserve bases 1,463 -- (2,790)
Change in asset valuation reserve (29,405) (17,002) 2,217
Change in prior year federal income
tax liability (512) 857 2,814
Guaranty fund certificate redemption
(contribution) -- 19,171 (4,500)
Change in separate account surplus (3,764) 5,623 7,910
Business combination -- 16,684 --
Other, net 1,827 (3,682) (732)
---------- ---------- ----------
Policyowners' surplus, end of year $ 382,315 $ 347,900 $ 264,542
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

See accompanying notes to financial statements. 3
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992

<TABLE>
<CAPTION>
CASH PROVIDED: 1994 1993 1992
- ---------------------------------------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
From operations:
Revenues:
Premiums, annuity considerations and
fund deposits $1,474,471 $1,252,183 $1,258,050
Net investment income 468,927 473,487 466,199
---------- ---------- ----------
Total receipts 1,943,398 1,725,670 1,724,249
---------- ---------- ----------
Benefits and expenses paid:
Policyowner benefits 1,301,060 1,069,090 957,013
Dividends to policyowners 103,634 97,697 93,087
Commissions and expenses 360,150 348,397 320,394
Federal income taxes 40,482 50,994 37,698
---------- ---------- ----------
Total payments 1,805,326 1,566,178 1,408,192
---------- ---------- ----------
Cash provided from operations 138,072 159,492 316,057
Proceeds from investments sold, matured
or repaid:
Bonds 1,031,279 1,631,215 1,080,940
Common stocks 113,228 113,945 113,503
Mortgage loans 152,418 265,356 272,337
Real estate 17,571 10,100 46,142
Other invested assets 16,831 17,266 6,414
Separate account redemption 14,519 -- --
Business combination -- 24,628 --
Other sources, net 58,072 53,531 --
---------- ---------- ----------
Total cash provided 1,541,990 2,275,533 1,835,393
---------- ---------- ----------

CASH APPLIED:
- ----------------------------------------
Cost of investments acquired:
Bonds 1,146,117 1,966,653 1,678,256
Common stocks 132,301 123,185 94,724
Mortgage loans 203,803 109,559 69,587
Real estate 11,904 16,572 13,312
Other invested assets 12,732 9,800 8,079
Guaranty fund certificate contribution -- -- 4,500
Separate account investment 12,530 3,365 10,000
Other applications, net -- -- 6,051
---------- ---------- ----------
Total cash applied 1,519,387 2,229,134 1,884,509
---------- ---------- ----------
Net change in cash and
short-term securities 22,603 46,399 (49,116)
Cash and short-term securities,
beginning of year 90,266 43,867 92,983
---------- ---------- ----------
Cash and short-term securities, end of
year $ 112,869 $ 90,266 $ 43,867
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

4 See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of The Minnesota Mutual Life Insurance
Company (the Company) have been prepared in accordance with accounting practices
prescribed or permitted by the Commerce Department of the State of Minnesota
(Department of Commerce), which are currently considered generally accepted
accounting principles for mutual life insurance companies (note 10). The
significant accounting policies follow:

REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the policies.
Annuity considerations and fund deposits are recognized as revenue when
received. Expenses, including acquisition costs related to acquiring new
business, are charged to operations as incurred. Investment income is recognized
as earned, net of related investment expenses.

VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the National Association of
Insurance Commissioners (NAIC). Bonds are generally carried at cost, adjusted
for the amortization of premiums and discounts, and common stocks at market
value. Premiums and discounts are amortized over the estimated lives of the
bonds based on the interest yield method.
Mortgage loans are generally stated at the outstanding principal balances,
net of unamortized premiums and discounts. Premiums and discounts are amortized
over the terms of the related mortgage loans based on the interest yield method.
Real estate, exclusive of properties acquired through foreclosure, is
carried at cost less accumulated depreciation of $35,707,000 and $34,723,000 at
December 31, 1994 and 1993, respectively. Depreciation is computed principally
on a straight-line basis. Properties acquired through foreclosure are carried at
the lower of cost or market.
In 1992, the Company transferred $31,770,000 of its investment in oil and
gas limited partnerships to Robert Street Energy, Incorporated (Robert Street),
a wholly-owned subsidiary. The carrying value of oil and gas investments is
reflected in investments in subsidiary companies. The oil and gas investments
are carried at the lower of cost or market value and accounted for on a pooled
investment basis. Cost represents the original cost of the investment adjusted
for depletion, and market value represents discounted values based on estimates
of the remaining oil and gas reserves at oil and gas prices as of the valuation
date. Depletion is computed on the unit-of-production method.
As permitted by the Department of Commerce, changes in carrying values of
oil and gas investments, related to market value changes incurred prior to
January 1, 1992, the date of transfer to Robert Street, were reflected as
unrealized losses and charged to policyowners' surplus. The unrealized losses
incurred prior to January 1, 1992 were evaluated on a pooled basis to determine
if such losses are other than temporary. Realized losses of $1,717,000,
$9,257,000, and $8,362,000 were recognized in 1994, 1993, and 1992,
respectively, based upon such valuation. Changes in unrealized losses on oil and
gas investments of $1,717,000, $4,757,000, and $8,362,000 were credited to
surplus in 1994, 1993, and 1992, respectively. As of December 31, 1994, Robert
Street holds no oil and gas investments.
Policy loans are carried at the unpaid principal balance.
Investments in subsidiary companies are accounted for using the equity
method. The Company records its equity in the earnings of its subsidiaries as
investment income and its equity in other changes in its subsidiaries' surplus
as credits (charges) to policyowners' surplus. These investments include
$74,154,000 and $28,026,000 at December 31, 1994 and 1993, respectively, in
registered investment funds managed by a subsidiary of the Company which are
carried at the market value of the underlying net assets. All significant
subsidiaries are wholly-owned.
Short-term securities at December 31, 1994 and 1993 amounted to $103,203,000
and $64,947,000, respectively, and are included in the caption cash and
short-term securities.

5
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Asset Valuation Reserve (AVR) is a formula reserve for possible losses
on bonds, stocks, mortgage loans, real estate, and other invested assets.
Changes in the reserve are reflected as direct charges or credits to
policyowners' surplus and are included in the change in asset valuation reserve
line.

INTEREST MAINTENANCE RESERVE
The Company separates realized capital gains and losses, net of tax, on fixed
income investments between those due to changes in interest rates and those due
to changes in credit quality. The net capital gains and losses due to interest
rate changes are amortized into investment income over the original remaining
life of the related bond or mortgage sold. Realized capital gains and losses
that are due to credit deterioration are recognized immediately as realized
capital gains and losses, net of applicable taxes.

CAPITAL GAINS AND LOSSES
Unrealized capital gains and losses are accounted for as a direct increase or
decrease to policyowner's surplus. Realized capital gains and losses, net of
related taxes and amounts transferred to the Interest Maintenance Reserves
(IMR), if any, are reflected as a component of net income. Both unrealized and
realized capital gains and losses are determined using the specific
identification method.

NON-ADMITTED ASSETS
Certain assets, designated as "non-admitted assets" (principally furniture,
equipment and certain receivables), amounting to $26,123,000 and $32,352,000 at
December 31, 1994 and 1993, respectively, have been charged to policyowners'
surplus.

SEPARATE ACCOUNT BUSINESS
Separate account business represents funds administered and invested by the
Company for the exclusive benefit of certain pension and variable life policy
and annuity contract holders. The Company receives administrative and investment
advisory fees for services rendered on behalf of these funds. Separate account
assets are carried at market value.
The Company periodically invests money in its separate accounts. The
appreciation or depreciation on the investment is reflected as a direct charge
or credit to policyowners' surplus. In 1994, the Company made a contribution to
its separate accounts in the amount of $12,530,000. The Company also redeemed a
portion of its investment in its separate accounts in the amount of $14,518,730.
A realized capital gain of $3,018,000 was recognized as a result of this
redemption.

POLICY RESERVES
Policy reserves for life insurance and annuities are based on mortality and
interest assumptions without consideration for lapses and withdrawals. Mortality
assumptions for life insurance and annuities are based on various mortality
tables including American Experience, 1941 Commissioners Standard Ordinary
(CSO), 1958 CSO, 1980 CSO, Progressive Annuity and 1960 Commissioners Standard
Group. Interest assumptions range from 2.0% to 6.0% for ordinary policy reserves
and from 2.25% to 12.0% for group policy and annuity reserves. An unearned
premium reserve is held for credit life policies.
Approximately 16% of the ordinary life reserves are calculated on a net
level reserve basis and 84% on a modified reserve basis. The use of a modified
reserve basis partially offsets the effect of immediately expensing acquisition
costs by providing a policy reserve increase in the first policy year which is
less than the reserve increase in renewal years. Policy reserves for group
mortgage life are computed on a mid-terminal basis.
Policy reserves for individual deferred annuities are generally equal to the
total contract holders' account balance, less applicable surrender charges,
calculated according to the Commissioners Annuity Reserve Valuation Method.
Policy reserves for immediate annuities and supplementary contracts are equal to
the present value of future benefit payments based on the purchase interest rate
and the Progressive Annuity tables. Group annuity reserves are equal to the
account value plus expected interest strengthening.

6
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Policy reserves for individual accident and health contracts include
reserves for active lives based on various morbidity tables including the 1964
Commissioners Disability Table (CDT) and the 1985 Commissioners Disability Table
A, modified for actual morbidity experience discounted at 7% interest. Disabled
reserves on individual policies are based on company morbidity experience at
interest rates varying from 5.15% to 7%. Group mortgage disability reserves are
equal to the present value of future benefits at 3% interest and the 1964 CDT
modified for Company experience. An unearned premium reserve is held for credit
disability policies.
The Company issues certain life and annuity products which are considered
financial instruments. The estimated fair value of these liabilities as of the
respective years ended December 31 are as follows:

<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
------------- ------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred annuities $ 2,042,383 $ 2,042,060 $ 1,970,037 $ 1,978,374
Annuity certain contracts 41,934 41,828 38,431 41,940
Other fund deposits 798,509 791,732 736,467 765,875
Guaranteed investment contracts 68,568 69,353 204,663 212,308
Supplementary contracts without life contingencies 43,205 42,433 42,587 44,301
------------- ------------- ------------- -------------
Total financial liabilities $ 2,994,599 $ 2,987,406 $ 2,992,185 $ 3,042,798
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

The fair value of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges, were
calculated using Commissioners' Annuity Reserve Valuation Method calculation
procedures and current market interest rates. Contracts without guaranteed
interest rates and surrender charges have fair values equal to their
accumulation values plus applicable market value adjustments. The fair value of
guaranteed investment contracts and supplementary contracts without life
contingencies were calculated using discounted cash flows, based on interest
rates currently offered for similar products with maturities consistent with
those remaining for the contracts being valued. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management is
not aware of any factors that would significantly affect the estimated fair
values, such amounts have not been comprehensively revalued since those dates
and therefore, estimates of fair value subsequent to the valuation dates may
differ significantly from the amounts presented herein.

PARTICIPATING BUSINESS
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are declared
by the Board of Trustees based upon actuarial determinations which take into
consideration current mortality, interest earnings and expense factors,
including federal income tax expense, attributable to the policies. Dividends
are generally recognized as expense consistent with the recognition of premiums
and contract considerations.

FEDERAL INCOME TAXES
Federal income taxes are based on income that is currently taxable. Deferred
federal income taxes are not provided for differences between financial
statement and taxable income.

RECLASSIFICATIONS
Certain 1993 financial statement balances have been reclassified to conform with
the 1994 presentation.

7
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(2) ACCOUNTING CHANGES
CAPITAL GAINS AND LOSSES
Prior to 1993, the Company generally recorded credit deterioration by reducing
the carrying value of the related asset and recording a realized capital loss.
Beginning in 1993, the Company continues to reduce the carrying value of its
assets for credit deterioration but records a realized capital loss only if the
underlying asset has been converted to another asset of lesser value. Otherwise,
losses due to credit deterioration are included in unrealized capital losses.
The effect of the accounting change resulted in an increase in income of
$10,761,000 in 1993.

SEPARATE ACCOUNT BUSINESS
Effective January 1, 1992, the Company changed its basis for computing statutory
reserves for deferred variable annuities from full accumulation value to cash
value, net of surrender charges. The change resulted in an increase in earnings
of $6,577,000 for the year ended December 31, 1992.

(3) INVESTMENTS
Net investment income for the respective years ended December 31, is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $ 412,873 $ 404,353 $ 382,890
Common stocks--unaffiliated 3,188 3,390 3,960
Common stocks--affiliated 8,526 9,562 8,674
Mortgage loans 49,882 63,881 78,837
Real estate, including Home Office property 11,337 11,554 11,938
Policy loans 11,800 10,866 10,021
Short-term securities 4,026 2,067 2,652
Other, net 1,717 2,868 2,237
----------- ----------- -----------
503,349 508,541 501,209
Amortization of interest maintenance reserve 3,741 3,458 1,728
Investment expenses (18,277) (18,988) (17,653)
----------- ----------- -----------
Total $ 488,813 $ 493,011 $ 485,284
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Changes in unrealized capital gains (losses) for the respective years ended
December 31, are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $ 4,039 $ (3,753) $ 5,392
Common stocks--unaffiliated (5,465) 2,854 (1,840)
Common stocks--affiliated (997) (1,305) (2,387)
Mortgage loans (71) 1,361 (580)
Real estate 2,270 4,211 8,072
Other, net (93) (82) (363)
--------- --------- ---------
Total $ (317) $ 3,286 $ 8,294
--------- --------- ---------
--------- --------- ---------
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) INVESTMENTS (CONTINUED)
The cost and gross unrealized gains (losses) on unaffiliated common stocks
at December 31, are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost $ 159,511 $ 155,881 $ 128,342
Gross unrealized gains 56,813 58,440 55,172
Gross unrealized losses (6,366) (2,529) (2,159)
----------- ----------- -----------
Admitted asset value $ 209,958 $ 211,792 $ 181,355
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Net realized capital gains (losses) for the respective years ended December
31 are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $ (3,511) $ 31,234 $ (5,012)
Common stocks--unaffiliated 11,268 9,651 11,599
Mortgage loans (46) (741) 1,025
Real estate 2,041 (8,496) (13,420)
Other 15,872 7,837 (378)
--------- --------- ----------
25,624 39,485 (6,186)
Less: Amount transferred to the interest maintenance reserve, net of taxes (685) 20,336 9,199
Income tax expense 7,750 16,242 7,926
--------- --------- ----------
Total $ 18,559 $ 2,907 $ (23,311)
--------- --------- ----------
--------- --------- ----------
</TABLE>

Gross realized gains (losses) on sales of bonds for the respective years
ended December 31, are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Gross realized gains $ 13,249 $ 38,443 $ 20,092
Gross realized losses (16,760) (7,209) (11,547)
</TABLE>

Proceeds from the sale of bonds amounted to $638,420,000, $1,058,684,000 and
$522,546,000 for the years ended December 31, 1994, 1993, and 1992,
respectively.
Bonds and mortgage loans held at December 31, 1994 and 1993 for which no
income was recorded for the previous twelve months totaled $88,000 and $847,000,
respectively.
At December 31, 1994, bonds with a carrying value of $2,497,000 were on
deposit with various regulatory authorities as required by law.
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1994 and 1993
and appropriate valuation methodologies. Considerable judgment, however, is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation

9
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) INVESTMENTS (CONTINUED)
methodologies may have a material effect on the estimated fair value amounts.
The admitted asset value and estimated fair value for financial instruments as
of December 31, are as follows:

<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
ADMITTED FAIR ADMITTED FAIR
ASSET VALUE VALUE ASSET VALUE VALUE
------------- ------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Bonds $ 5,134,554 $ 4,919,495 $ 4,985,026 $ 5,358,573
Common stocks 209,958 209,958 211,792 211,792
Commercial mortgages 342,205 341,195 287,932 298,698
Residential mortgages 255,981 255,449 254,424 268,783
Policy loans 185,599 185,599 177,820 177,820
Cash and short-term securities 112,869 112,869 90,266 90,266
Other assets 157,138 157,109 137,841 137,841
------------- ------------- ------------- -------------
Total financial instruments $ 6,398,304 $ 6,181,674 $ 6,145,101 $ 6,543,773
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

Fair values for bonds and commercial and residential mortgages are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are estimated using values obtained from independent
pricing services which specialize in matrix pricing and modeling techniques for
estimating fair values. The admitted asset value approximates fair value for
common stock, policy loans, cash and short-term securities, and other assets.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of the financial statements since the original valuation dates and therefore,
subsequent estimates of fair value may differ significantly from the amounts
presented herein.
The admitted asset value, gross unrealized appreciation and depreciation,
and estimated fair value of investments in bonds are as follows:

<TABLE>
<CAPTION>
GROSS UNREALIZED
ADMITTED ------------------------------ FAIR
DECEMBER 31, 1994 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------- ------------- -------------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal government $ 210,335 $ 19 $ 9,983 $ 200,371
State and local government 26,493 10 1,171 25,332
Foreign government 17,691 413 20 18,084
Corporate bonds 3,325,331 41,167 167,404 3,199,094
Mortgage-backed securities 1,554,704 11,110 89,200 1,476,614
------------- -------------- -------------- -------------
Total $ 5,134,554 $ 52,719 $ 267,778 $ 4,919,495
------------- -------------- -------------- -------------
------------- -------------- -------------- -------------
</TABLE>

10
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) INVESTMENTS (CONTINUED)

<TABLE>
<CAPTION>
GROSS UNREALIZED
ADMITTED ------------------------------- FAIR
DECEMBER 31, 1993 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------- ------------- -------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal government $ 99,240 $ 569 $ 586 $ 99,223
State and local government 5,295 817 -- 6,112
Foreign government 2,721 126 94 2,753
Corporate bonds 3,246,373 289,746 4,606 3,531,513
Mortgage-backed securities 1,631,397 90,437 2,862 1,718,972
------------- -------------- ------- -------------
Total $ 4,985,026 $ 381,695 $ 8,148 $ 5,358,573
------------- -------------- ------- -------------
------------- -------------- ------- -------------
</TABLE>

The amortized cost and estimated fair value of bonds at December 31, 1994,
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.

<TABLE>
<CAPTION>
ADMITTED FAIR
ASSET VALUE VALUE
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less $ 81,762 $ 80,250
Due after one year through five years 802,900 793,430
Due after five years through ten years 1,433,303 1,363,187
Due after ten years 1,261,885 1,206,014
------------- -------------
3,579,850 3,442,881
Mortgage-backed securities 1,554,704 1,476,614
------------- -------------
Total $ 5,134,554 $ 4,919,495
------------- -------------
------------- -------------
</TABLE>

(4) FEDERAL INCOME TAXES
The federal income tax expense varies from amounts computed by applying the
federal income tax rates of 35% for 1994 and 1993, and 34% for 1992, to the gain
from operations after dividends to policyowners and before federal income taxes
and realized capital gains (losses). The reasons for this difference, and the
tax effects thereof, are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax expense $ 33,666 $ 32,260 $ 32,299
Difference between statutory and tax basis:
Investment income (5,853) (7,204) (7,409)
Policy reserves (767) (2,079) (700)
Dividends to policyowners 593 (1,907) (77)
Acquisition expense 9,013 8,393 8,592
Other expenses 2,137 3,739 750
Special tax on mutual life insurance companies 15,466 3,396 4,667
Other, net (4,629) 58 1,723
--------- --------- ---------
Tax expense $ 49,626 $ 36,656 $ 39,845
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company's tax returns for 1991 through 1992 are under examination by the
Internal Revenue Service. The Company believes additional taxes, if any,
assessed as a result of these examinations will not have a material effect on
its financial position.

11
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(5) ACCIDENT AND HEALTH CLAIM LIABILITY
Activity in the liability for unpaid claims and claim adjustment expenses are
summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1 $ 274,253 $ 246,777 $ 227,548
Less: reinsurance recoverable 38,418 29,622 21,227
----------- ----------- -----------
Net balance at January 1 235,835 217,155 206,321
----------- ----------- -----------
Incurred related to:
Current year 91,573 85,112 87,268
Prior years (308) 7,121 125
----------- ----------- -----------
Total incurred 91,265 92,233 87,393
----------- ----------- -----------
Paid related to:
Current year 23,019 22,002 24,380
Prior years 50,380 51,551 52,179
----------- ----------- -----------
Total paid 73,399 73,553 76,559
----------- ----------- -----------
Net Balance at December 31 253,701 235,835 217,155
Plus: reinsurance recoverable 47,651 38,418 29,622
----------- ----------- -----------
Balance at December 31 $ 301,352 $ 274,253 $ 246,777
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Incurred claims related to prior years are due to the difference between
actual and estimated claims incurred as of the prior year end.

(6) BUSINESS COMBINATION
On July 1, 1993, the Company entered into an "Agreement and Plan of
Reorganization" that combined all of the assets, liabilities, and surplus of
Ministers Life--A Mutual Life Insurance Company (Ministers Life) into the
Company. Ministers Life sold life and health insurance products to religious
professionals in the continental United States. The business combination
increased the Company's assets by $272,649,000, liabilities by $255,965,000 and
policyowners' surplus by $16,684,000.

(7) RELATED PARTY TRANSACTIONS
In 1993, the Company received 2,375,000 shares of common stock of the Minnesota
Fire and Casualty Company (the Casualty Company) in return for the surrender of
outstanding guaranty fund certificates totalling $21,800,000 which had
previously been charged to surplus. The surrender of the certificates and
concurrent issuance of stock were part of the Casualty Company's
"Demutualization and Stock Conversion Plan" (the Plan) approved by the
Department of Commerce. Pursuant to the Plan, the Casualty Company became a
subsidiary of the Company on December 31, 1993. The effect of the transaction
was an increase to investments in subsidiary companies and an increase to
policyowners' surplus as of December 31, 1993 of $19,171,000.
The Company has an agreement with two of its subsidiaries which requires the
Company to invest additional capital, as needed, for repayment of any debt
outstanding to the Company. As of December 31, 1994 and 1993, $41,050,000 of
subsidiary debt owed the Company was subject to this agreement.

(8) PENSION PLANS AND OTHER RETIREMENT PLANS

PENSION PLANS
The Company has self-insured, noncontributory, defined benefit retirement plans
covering substantially all employees. The Company's funding policy is to
contribute annually the maximum amount that may be

12
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(8) PENSION PLANS AND OTHER RETIREMENT PLANS (CONTINUED)
deducted for federal income tax purposes. The Company expenses amounts as
contributed. The Company made a contribution of $1,714,200 in 1994. No
contributions were made in 1993 or 1992. Information for these plans as of the
beginning of the plan year is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefits:
Vested $ 42,849 $ 36,281 $ 33,761
Nonvested 12,033 12,996 10,556
--------- --------- ---------
Total $ 54,882 $ 49,277 $ 44,317
--------- --------- ---------
--------- --------- ---------
Net assets available for benefits $ 85,651 $ 78,952 $ 74,735
--------- --------- ---------
--------- --------- ---------
</TABLE>

In determining the actuarial present value of accumulated benefits, a
weighted average assumed rate of return of 8.4% was used in 1994, 1993, and
1992.

PROFIT SHARING PLANS
The Company also has profit sharing plans covering substantially all employees
and agents. The Company's contribution rate to the employee plan is determined
annually by the Trustees of the Company and is applied to each participant's
prior year earnings. The Company's contribution to the agent plan is made as a
certain percentage, based upon years of service, applied to each agent's total
annual compensation. The Company recognized contributions to the plans during
1994, 1993, and 1992 of $6,866,000, $6,753,000 and $4,630,000, respectively.
Participants may elect to receive a portion of their contributions in cash.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company also has postretirement plans that provide certain health care and
life insurance benefits ("postretirement benefits") to substantially all retired
employees and agents. These plans are unfunded.
In 1993, the Company changed its method of accounting for the costs of its
postretirement benefit plans to the accrual method, and elected to amortize its
transition obligation for retirees and fully eligible employees and agents over
20 years. The unamortized transition obligation was $13,000,000 and $15,085,000
at December 31, 1994 and 1993, respectively.
The net postretirement benefit cost for the years ended December 31, 1994
and 1993, was $3,202,000 and $3,832,000, respectively. This amount includes the
expected cost of such benefits for newly eligible employees, interest cost, and
amortization of the transition obligation. The Company made payments under the
plans of $526,000 and $555,000 in 1994 and 1993, respectively, as claims were
incurred.
At December 31, 1994 and 1993, the postretirement benefit obligation for
retirees and other fully eligible participants was $19,635,000 and $18,362,000,
respectively. The estimated cost of the benefit obligation for active employees
and agents who are not yet fully eligible was $13,065,000 and $12,270,000 for
1994 and 1993, respectively. The discount rate used in determining the
accumulated postretirement benefit obligation for 1994 and 1993 were 7.5% and
8.0%, respectively. The 1994 net health care cost trend rate was 11.5%, graded
to 5.5% over 12 years, and the 1993 rate was 12.5%, graded to 6% over 13 years.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the postretirement
benefit obligation as of December 31, 1994 by $2,182,000 and the estimated
eligibility cost and interest cost components of net periodic postretirement
benefit costs for 1994 by $337,000.

(9) COMMITMENTS AND CONTINGENCIES
The Company reinsures certain individual and group business. At December 31,
1994, policy reserves in the accompanying balance sheet are reflected net of
reinsurance ceded of $49,564,000. To the extent that an assuming reinsurer is
unable to meet its obligation under its agreement, the Company remains liable.

13
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has issued certain participating group annuity and life
insurance contracts jointly with another life insurance company. The joint
contract issuer has liabilities related to these contracts of $419,278,000 as of
December 31, 1994. To the extent the joint contract issuer is unable to meet its
obligation under the agreement, the Company remains liable.
The Company has long-term commitments to fund venture capital and real
estate investments totaling $78,000,000 as of December 31, 1994. The Company
estimates that $18,000,000 of these commitments will be paid in 1995 with the
remaining $60,000,000 paid over the next five years.
At December 31, 1994, the Company had guaranteed the payment of $58,400,000
in policyowner dividends payable in 1995. The Company has pledged bonds, valued
at $62,809,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessment pertaining to future insolvencies and impairments of
unaffiliated companies.

(10) MUTUAL LIFE INSURANCE COMPANY ACCOUNTING POLICIES
In April 1993 the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." In January 1995 the
FASB issued Statement of Financial Accounting Standards No. 120 (Statement),
"Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts" and, jointly with
the American Institute of Certified Public Accountants, issued a Statement of
Position (SOP), "Accounting for Certain Insurance Activities of Mutual Insurance
Enterprises." Under Interpretation No. 40, the Statement and SOP, mutual life
insurance companies that report their financial statements in conformity with
generally accepted accounting principles (GAAP) will be required to apply all
related authoritative accounting pronouncements.
Interpretation No. 40, the Statement and SOP apply to years beginning after
December 15, 1995. All of the guidance will require restatement of prior year
balances. Applying the provisions of Interpretation No. 40, the Statement and
SOP may result in policyholders' surplus and net income (loss) amounts differing
from the amounts reported under existing practices. Management has not yet
determined the impact of the adoption of GAAP.
Alternatively, the Company may continue to prepare its financial statements
in accordance with statutory accounting practices prescribed or permitted by the
Department of Commerce, which will no longer be considered generally accepted
accounting principles after December 31, 1995.

14
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE I
SUMMARY OF INVESTMENTS--OTHER THAN
INVESTMENTS IN RELATED PARTIES

DECEMBER 31, 1994

<TABLE>
<CAPTION>
AMOUNT AT WHICH
SHOWN IN THE
BALANCE
TYPE OF INVESTMENT COST(4) MARKET VALUE SHEET(1)(3)
- ------------------------------------------------------------------------ ------------- --------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds:
United States government and government agencies and authorities $ 210,335 $ 200,371 $ 210,335
States, municipalities and political subdivisions 26,493 25,332 26,493
Foreign governments 17,691 18,084 17,691
Public utilities 568,271 547,165 568,271
Mortgage-backed securities 1,554,704 1,476,614 1,554,704
All other corporate bonds 2,725,055 2,614,705 2,716,010
------------- --------------- -------------------
Total bonds 5,102,549 4,882,271 5,093,504
------------- --------------- -------------------
Equity securities:
Common stocks:
Public utilities 19,766 21,233 21,233
Banks, trusts and insurance companies 18,247 25,393 25,393
Industrial, miscellaneous and all other 121,499 163,332 163,332
------------- --------------- -------------------
Total equity securities 159,512 209,958 209,958
------------- --------------- -------------------
Mortgage loans on real estate 598,186 xxxxxx 598,186
Real estate (2) 76,346 xxxxxx 76,346
Policy loans 185,599 xxxxxx 185,599
Other long-term investments 60,604 xxxxxx 60,604
Short-term investments 92,363 xxxxxx 92,550
------------- -------------------
Total $ 1,013,098 xxxxxx $ 1,013,285
------------- -------------------
Total investments $ 6,275,159 xxxxxx $ 6,316,747
------------- -------------------
------------- -------------------
<FN>
- ---------
(1) Debt securities are carried at amortized cost or investment values
prescribed by the National Association of Insurance Commissioners.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $4,192. Real estate includes property occupied by the Company.
(3) Differences between cost and amounts shown in the balance sheet for
investments, other than equity securities and bonds, represent non-admitted
investments.
(4) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for
bonds.
</TABLE>

15
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

SCHEDULE V
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
FUTURE POLICY
DEFERRED BENEFITS, OTHER POLICY
POLICY LOSSES, CLAIMS CLAIMS AND
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS
SEGMENT COSTS(1) EXPENSES(3) PREMIUMS(3) PAYABLE
- ----------------------------------- ----------- -------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1994:
Life insurance $1,981,469 $37,909
Accident and health insurance 343,241 15,754
Annuity considerations 3,179,279 7
----------- -------------- ----------- ------------
Total -- 5,503,989 -- 53,670
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1993:
Life insurance $1,875,570 $83,365
Accident and health insurance 317,825 14,979
Annuity considerations 3,166,944 7
----------- -------------- ----------- ------------
Total -- $5,360,339 -- $98,351
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1992:
Life insurance $1,686,676 $39,643
Accident and health insurance 292,703 13,971
Annuity considerations 3,011,272 3
----------- -------------- ----------- ------------
Total -- $4,990,651 -- $53,617
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------

<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
AMORTIZATION
PREMIUMS AND BENEFITS, OF DEFERRED
ANNUITY AND NET CLAIMS, LOSSES POLICY OTHER
OTHER FUND INVESTMENT AND SETTLEMENT ACQUISITION OPERATING PREMIUMS
SEGMENT DEPOSITS INCOME EXPENSES COSTS(1) EXPENSES WRITTEN(2)
- ----------------------------------- ------------ ---------- -------------- ------------ --------- ----------

<S> <C> <C> <C> <C> <C> <C> <C>
1994:
Life insurance $ 802,265 $196,877 $ 608,091 $230,327
Accident and health insurance 142,032 32,724 93,634 71,958
Annuity considerations 480,055 259,212 652,076 52,180
------------ ---------- -------------- ------------ --------- ----------
Total 1,424,352 488,813 1,353,801 -- 354,465 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1993:
Life insurance $ 718,232 $193,724 $ 538,880 $220,861
Accident and health insurance 138,690 31,452 88,857 72,616
Annuity considerations 433,032 267,835 626,181 45,463
------------ ---------- -------------- ------------ --------- ----------
Total $1,289,954 $493,011 $1,253,918 -- $338,940 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1992:
Life insurance $ 672,004 $209,325 $ 507,921 $204,283
Accident and health insurance 135,176 16,927 85,555 71,190
Annuity considerations 427,233 259,032 618,077 39,558
------------ ---------- -------------- ------------ --------- ----------
Total $1,234,413 $485,284 $1,211,553 -- $315,031 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
<FN>
- -------------
(1) Does not apply to financial statements of mutual life insurance companies
which are prepared on a statutory basis.
(2) Does not apply to life insurance.
(3) Unearned premiums and other deposit funds are included in future policy
benefits, losses, claims and settlement expenses.
</TABLE>

16
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

SCHEDULE VI
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992

<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
----------- ----------- ----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1994:
Life insurance in force $97,181,118 $13,314,267 $20,555,910 $104,422,761 19.7%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 792,087 $ 48,773 $ 58,951 $ 802,265 7.3%
Accident and health
insurance 150,876 10,145 1,301 142,032 0.9%
Annuity 480,055 -- -- 480,055 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,423,018 $ 58,918 $ 60,252 $ 1,424,352 4.2%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
1993:
Life insurance in force $93,206,579 $11,674,202 $19,758,935 $101,291,312 19.5%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 704,172 $ 43,313 $ 57,373 $ 718,232 8.0%
Accident and health
insurance 147,229 9,699 1,160 138,690 0.8%
Annuity 433,032 -- -- 433,032 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,284,433 $ 53,012 $ 58,533 $ 1,289,954 4.5%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
1992:
Life insurance in force $89,317,556 $8,962,842 $17,182,599 $ 97,537,313 17.6%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 661,835 $ 37,038 $ 47,207 $ 672,004 7.0%
Accident and health
insurance 143,432 9,424 1,168 135,176 0.9%
Annuity 427,233 -- -- 427,233 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,232,500 $ 46,462 $ 48,375 $ 1,234,413 3.9%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
<FN>
- ------------
* There are no premiums related to either property and liability or title
insurance.
</TABLE>

17
<PAGE>

APPENDIX A

CALCULATION OF ACCUMULATION UNIT VALUES

Calculation of the net investment factor and the accumulation unit value may be
illustrated by the following hypothetical example. Assume the accumulation unit
value of the Variable Fund D Growth Sub-Account on the immediately preceding
valuation period was $6.499041. Assume the following about the Series Fund
Growth Portfolio: (a) the net asset value per share of the Growth Portfolio was
$1.394438 at the end of the current valuation period; (2) the Growth Portfolio
declared a per share dividend and capital gain distribution in the amount of
$.037162 during the current valuation period; and (3) the net asset value per
share of the Growth Portfolio was $1.426879 at the end of the preceding
valuation period.

The gross investment rate for the valuation period would be equal to 1.0033086
(1.394438 plus .037162 divided by 1.426879). The net investment rate for the
valuation period is determined by deducting the total Growth Sub-Account
expenses from the gross investment rate. Total Growth Sub-Account expenses of
.0000162 is equal to .0000315 for mortality and risk expense (the daily
equivalent of .795% assuming 252 valuation dates per year) less .0000093 for the
investment management fee reimbursement (the daily equivalent of .235% assuming
252 valuation dates per year) less .0000060 for the other expense reimbursement
(the daily equivalent of .150% assuming 252 valuation dates per year). The net
investment rate equals 1.0032924 (1.0033086 minus .0000162).

The accumulation unit value at the end of the valuation period would be equal to
the value on the immediately preceding valuation date ($6.499041) multiplied by
the net investment factor for the current valuation period (1.003294), which
produces $6.520438.

CALCULATION OF ANNUITY UNIT VALUES AND VARIABLE ANNUITY PAYMENT

The determination of the annuity unit value and the annuity payment may be
illustrated by the following hypothetical example. Assume that the contract has
been in force for more than ten years so that no deferred sales charge will
apply and that there is no deduction for annuity premium taxes. Assume further
that at the date of his or her retirement, the annuitant has credited to his or
her account 30,000 accumulation units, and that the value of an accumulation
unit on the valuation date next following the fourteenth day of the preceding
month was $1.150000, producing a total value of $34,500. Assume also that the
annuitant elects an option for which the table in the contract indicates the
first monthly payment is $6.57 per $1,000 of value applied; the annuitant's
first monthly payment would thus be 34.500 multiplied by $6.57, or $226.67.

Assume that the annuity unit value on the due date of the first payment was
$1.100000. When this is divided into the first monthly payment, the number of
annuity units represented by that payment is determined to be 206.064. The
value of this same number of annuity units will be paid in each subsequent
month.

Assume further that the accumulation unit value on the valuation date next
following the fourteenth day of the succeeding month is $1.160000. This is
divided by the accumulation unit value on the preceding monthly valuation date
($1.150000) to produce a ratio of 1.008696. Multiplying this ratio by .997137
to neutralize the assumed investment rate of 3.5% per annum already taken into
account in determining annuity units as described above, produces a result of
1.005808. This is then multiplied by the preceding annuity unit value
($1.100000) to produce a current annuity value of $1.106390.

<PAGE>

The second monthly payment is then determined by multiplying the fixed number of
annuity units (206.064) by the current annuity unit value ($1.106390), which
produces a second monthly annuity payment of $227.99.