MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT, 497, 1995-05-04

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
497, 1995-05-04

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<PAGE>
FILED PURSUANT TO RULE 497
FILE NUMBER 002-97564

VARIABLE ANNUITY CONTRACT PROSPECTUS
FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
SINGLE PAYMENT VARIABLE ANNUITY CONTRACT
OF MINNESOTA MUTUAL'S VARIABLE ANNUITY ACCOUNT

COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
FOR PERSONAL RETIREMENT PLANS

The individual variable annuity contracts offered by this Prospectus are
designed for use in connection with personal retirement plans, some of which may
qualify for federal income tax advantages available under sections 401, 403, 408
or 457 of the Internal Revenue Code. They may also be used apart from a
qualified plan. Two different contracts are offered: (1) a Flexible Payment
Variable Annuity Contract (no minimum initial purchase payment), and (2) a
Single Payment Variable Annuity Contract (minimum initial purchase payment of
$5,000 and may not exceed $250,000, except with our consent).

The owner of a 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 Annuity Account. The Variable Annuity Account invests its assets in
shares of MIMLIC Series Fund, Inc. (the "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 Fund
selected by the contract owner. The contract owner bears the entire investment
risk for any amounts allocated to the Portfolios of the Fund.

This Prospectus sets forth concisely the information that a prospective
investor should know before investing in the Variable Annuity Account, and it
should be read and kept for future reference. A Statement of Additional
Information, bearing the same date, which contains further contract 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 Minnesota Mutual 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 39.

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

LOGO

The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (612) 298-3500

The date of this document and the Statement of Additional Information is: May 1,
1995
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Questions and Answers About the Variable Annuity Contracts........................ 3

Expense Table..................................................................... 7

Condensed Financial Information................................................... 20

Performance Data.................................................................. 22

General Descriptions
The Minnesota Mutual Life Insurance Company................................... 23
Variable Annuity Account...................................................... 23
MIMLIC Series Fund, Inc....................................................... 23
Additions, Deletions or Substitutions......................................... 24

Contract Charges
Sales Charges................................................................. 24
Mortality and Expense Risk Charges............................................ 25

Exchange Offer.................................................................... 26

Voting Rights..................................................................... 26

Description of the Contracts
General Provisions............................................................ 27
Annuity Payments and Options.................................................. 28
Death Benefits................................................................ 31
Purchase Payments and Value of the Contract................................... 32
Redemptions................................................................... 34

Federal Tax Status................................................................ 35

Restrictions Under the Texas Optional Retirement Program.......................... 39

Statement of Additional Information............................................... 39

Appendix A--Special Terms......................................................... 40

Appendix B--Illustration of Variable Annuity Values............................... 41
</TABLE>

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.

2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACTS

WHAT IS AN ANNUITY?
An annuity is 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. An
annuity with payments which are guaranteed as to amount during the payment
period is a fixed annuity. An annuity with payments which vary during the
payment period in accordance with the investment experience of a separate
account is called a variable annuity.

WHAT ARE THE CONTRACTS OFFERED BY THIS PROSPECTUS?
The contracts are combined fixed and variable annuity contracts issued by us
which provide for monthly annuity payments. These payments may begin immediately
or at a future date elected by you. Purchase payments received by us under a
contract are allocated either to our General Account or Variable Annuity
Account, as specified by you. In the General Account, your purchase payments
receive interest and principal guarantees; in the Variable Annuity Account, your
purchase payments are invested in one or more Portfolios of MIMLIC Series Fund,
Inc. and receive no interest or principal guarantees.
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.

WHAT TYPES OF VARIABLE ANNUITY CONTRACTS ARE AVAILABLE?
We offer two types of contracts. They are the single payment variable annuity
contract and the flexible payment variable annuity contract.

WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE VARIABLE ANNUITY ACCOUNT?
Currently, purchase payments allocated to the Variable Annuity Account are
invested exclusively in shares of MIMLIC Series Fund, Inc. This Fund is a mutual
fund of the series type, which means that it has several different portfolios
which it offers for investment. Shares of this Fund will be made available at
net asset value to the Variable Annuity Account to fund the variable annuity
contracts. The 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
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 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.

3
<PAGE>
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 Capital Appreciation Portfolio seeks growth of capital. Investments
will be made based upon their potential for capital appreciation. Therefore,
current income will be incidental to the objective of capital growth.
Because of the market risks inherent in any equity investment, the selection
of securities on the basis of their appreciation possibilities cannot ensure
against possible loss in value.
The International Stock Portfolio seeks long-term capital growth. In
pursuit of this objective the International Stock Portfolio will follow a
policy of investing in stocks issued by companies, large and small, and debt
obligations of companies and governments outside the United States. Current
income will be incidental to the objective of capital growth. The Portfolio
is designed for persons seeking international diversification. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations, which are
in addition to the usual risks inherent in domestic investments.
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 or 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.
The Value Stock Portfolio seeks the long-term accumulation of capital. In
pursuit of this objective, the Value Stock Portfolio will follow a policy of
investing primarily in the equity securities of companies which, in the
opinion of the adviser, have market values which appear low relative to
their underlying value or future earnings and growth potential. As it is
anticipated that the Portfolio will consist in large part of dividend-paying
common stocks, the production of income will be a secondary objective of the
Portfolio.
The Maturing Government Bond Portfolios seek to provide as high an
investment return as is consistent with prudent investment risk for a
specified period of time ending on a specified liquidation date. In pursuit
of this objective each of the four Maturing Government Bond Portfolios seek
to return a reasonably assured targeted dollar amount, predictable at the
time of investment, on a specific target date in the future through
investment in a portfolio composed primarily of zero coupon securities.
These are securities that pay no cash income and are sold at a discount from
their par value at maturity. The current target dates for the maturities of
these Portfolios are 1998, 2002, 2006 and 2010, respectively. On maturity
the Portfolio will be converted to cash and reinvested at the direction of
the contract owner. In the absence of instructions, liquidation proceeds
will be allocated to the Money Market Portfolio.
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 Fund, which is attached to this
Prospectus.

CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes. You may change your allocation of future purchase payments by giving us
written notice or a telephone call notifying us of the change. And before
annuity payments begin, you may transfer all or a part of your accumulation
value from one Portfolio to another or among the Portfolios. After annuity
payments begin, transfers may be made with respect to variable annuity payments
and, subject to some restrictions, amounts held as annuity reserves may be
transferred among the variable annuity sub-accounts and the Portfolios. Annuity

4
<PAGE>
reserves may be transferred only from a variable annuity to a fixed annuity
during the annuity period.

WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
We deduct from the net asset value of the Variable Annuity Account an amount,
computed daily, equal to an annual rate of 1.25% for mortality and expense risk
guarantees. This total represents a charge of .80% for our assumption of
mortality risks and .45% for our assumption of expense risks. We reserve the
right to increase the charge for the assumption of expense risks to not more
than .60%. If this charge is increased to this maximum amount, then the total of
the mortality risk and expense risk charge would be 1.40% on an annual rate. Any
such increase would be subject to the approval of the Securities and Exchange
Commission.
In addition, MIMLIC Asset Management Company, one of our subsidiaries, acts as
the investment adviser to the Fund and deducts from the net asset value of each
Portfolio of the Fund a fee for its services which are provided under an
investment advisory agreement. The investment advisory agreements provide that
the fee shall be computed at the annual rate which may not exceed .4% of the
Index 500 Portfolio, .75% of the Capital Appreciation, Value Stock and Small
Company Portfolios, 1% for the International Stock Portfolio and .5% of each of
the remaining Portfolio's average daily net assets other than the Maturing
Government Bond Portfolios. The Maturing Government Bond Portfolios pay an
advisory fee equal to an annual rate of .25% of average daily net assets,
however, the Portfolio which matures in 1998 will pay a rate of .05% from its
inception to April 30, 1998, and .25% thereafter and the Portfolio which matures
in 2002 will pay a rate of .05% from its inception to April 30, 1998, and .25%
thereafter of average daily net assets.
The Fund is subject to certain expenses that may be incurred with respect to
its operation and those expenses are allocated among the Portfolios. For more
information on the Fund, see the prospectus of MIMLIC Series Fund, Inc. which is
attached to this Prospectus.
In addition, a deferred sales charge may apply. Deductions for any applicable
premium taxes may also be made (currently such taxes range from 0.0% to 3.5%)
depending upon applicable law.
For more information on charges, see the heading "Contract Charges" in this
Prospectus. The deferred sales charge is discussed below.

WHAT IS THE DEFERRED SALES CHARGE?
We deduct a deferred sales charge on contract withdrawals, surrenders and some
annuity elections during the first ten contract years for expenses relating to
the sale of the contracts. The amount of any deferred sales charge is deducted
from the accumulation value.
Under the flexible payment variable annuity contract, the amount of deferred
sales charge, as a percentage of the amount surrendered, withdrawn or applied to
provide an annuity, decreases uniformly during the first ten contract years from
an initial charge of 9% to no charge after ten contract years.
Under the single payment variable annuity contract, the amount of the deferred
sales charge, as a percentage of the amount surrendered, withdrawn or applied to
provide an annuity, decreases uniformly during the first ten contract years from
an initial charge of 6% to no charge after ten contract years.
The deferred sales charge is not applicable to some partial withdrawals from
the contracts. Also, there is no deferred sales charge on amounts paid in the
event of the death of the owner and the accumulation value is applied to provide
annuity payments under an option where benefits are expected to continue for a
period of at least five years. For more information on this charge, see the
heading "Sales Charges" in this Prospectus.

CAN YOU MAKE PARTIAL WITHDRAWALS FROM THE CONTRACT?
Yes. You may make withdrawals of the accumulation value of your contract before
an annuity begins. Partial withdrawals must be pursuant to your written request.
Partial withdrawals are generally subject to the deferred sales charge.
However, if withdrawals during the first calendar year are equal to or less than
10% of the purchase payments made during the first year and, if in subsequent
calendar years they are equal to or less than 10% of the accumulation value at
the end of the previous calendar year, the deferred sales charge will not apply
to those partial withdrawals. The deferred sales charge described above will
apply to all withdrawal amounts which exceed 10% of that accumulation value in
any calendar year. In addition, a penalty tax may be assessed upon withdrawals
from variable annuity contracts in

5
<PAGE>
certain circumstances. For more information, see the heading "Federal Tax
Status" in this Prospectus.

DO YOU HAVE A RIGHT TO CANCEL THE CONTRACT?
Yes. You may cancel the contract any time within 10 days of your receipt of the
contract by returning it to us or your agent.

IS THERE A GUARANTEED DEATH BENEFIT?
Yes. The single payment variable annuity contract has a guaranteed death benefit
if you die before annuity payments have started. The death benefit shall be
equal to the greater of: (1) the amount of the accumulation value payable at
death; or (2) the amount of the total purchase payment paid to us during the
first year as consideration for this contract, less all contract withdrawals. As
a matter of company practice, we use this method except that total purchase
payment will include all contributions, even those made after 12 months, to
determine the death benefit for all contracts offered by this Prospectus.

WHAT ANNUITY OPTIONS ARE AVAILABLE?
The contracts specify several annuity options. Each annuity option may be
elected on either a variable annuity or fixed annuity or a combination of the
two. Other annuity options may be available from us on request. The specified
annuity options are a life annuity; a life annuity with a period certain of
either 120 months, 180 months or 240 months; a joint and last survivor annuity
and a period certain annuity.

WHAT IF THE OWNER DIES?
If you die before payments begin, we will pay the accumulation value of the
contract as a death benefit to the named beneficiary. If the annuitant dies
after annuity payments have begun, we will pay whatever death benefit may be
called for by the terms of the annuity option selected.

WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and annuitants will be able to direct us as to how to vote
shares of the underlying Portfolios held for their contracts.

6
<PAGE>
EXPENSE TABLE
The following contract expense information is intended to illustrate the
expenses of the MultiOption Annuity variable annuity contracts. 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.

SINGLE PAYMENT VARIABLE ANNUITY CONTRACT
CONTRACT OWNER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Deferred Sales Load (as a percentage of amount 6%
surrendered)............................................... decreasing uniformly
by .05% for each of
the first 120 months
from the contract
date
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees.............................. 1.25%
-----
Total Separate Account Annual Expenses................... 1.25%
-----
-----
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Growth Portfolio
Management Fees.............................................. .50%
Other Expenses............................................... .06%
----
Total Growth Portfolio Annual Expenses................... .56%
----
----
EXAMPLE--For contracts using the Growth Portfolio:
</TABLE>

<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........ $69 $98 $130 $213
If you annuitize 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........ $18 $57 $98 $213
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets........ $18 $57 $98 $213
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Bond Portfolio
Management Fees.............................................. .50%
Other Expenses............................................... .11%
----
Total Bond Portfolio Annual Expenses..................... .61%
----
----
</TABLE>

7
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Bond Portfolio:
</TABLE>

<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:....... $69 $100 $132 $218
If you annuitize 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:....... $19 $58 $107 $218
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $58 $101 $218
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Money Market Portfolio
Management Fees.............................................. .50%
Other Expenses (after expense reimbursement)................. .15%
----
Total Money Market Portfolio Annual Expenses............. .65%
----
----
EXAMPLE--For contracts using the Money Market Portfolio:
</TABLE>

<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:....... $69 $101 $134 $222
If you annuitize 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:....... $19 $60 $103 $222
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $60 $103 $222
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Asset Allocation Portfolio
Management Fees.............................................. .50%
Other Expenses............................................... .06%
----
Total Asset Allocation Portfolio Annual Expenses......... .56%
----
----
</TABLE>

8
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Asset Allocation Portfolio:
</TABLE>

<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:....... $69 $98 $130 $213
If you annuitize 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:....... $18 $57 $98 $213
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $18 $57 $98 $213
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Mortgage Securities Portfolio
Management Fees.............................................. .50%
Other Expenses............................................... .10%
----
Total Mortgage Securities Portfolio Annual Expenses...... .60%
----
----
EXAMPLE--For contracts using the Mortgage Securities Portfolio:
</TABLE>

<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:....... $69 $100 $132 $217
If you annuitize 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:....... $19 $58 $100 $217
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $58 $100 $217
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Index 500 Portfolio
Management Fees.............................................. .40%
Other Expenses............................................... .10%
----
Total Index 500 Portfolio Annual Expenses................ .50%
----
----
</TABLE>

9
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Index 500 Portfolio:
</TABLE>

<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:....... $68 $97 $127 $206
If you annuitize 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:....... $18 $55 $95 $206
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $18 $55 $95 $206
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Capital Appreciation Portfolio
Management Fees.............................................. .75%
Other Expenses............................................... .08%
----
Total Capital Appreciation Portfolio Annual Expenses..... .83%
----
----
EXAMPLE--For contracts using the Capital Appreciation Portfolio:
</TABLE>

<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:....... $71 $106 $143 $241
If you annuitize 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:....... $21 $65 $112 $241
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $21 $65 $112 $241
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
International Stock Portfolio
Management Fees.............................................. .82%
Other Expenses............................................... .42%
-----
Total International Stock Portfolio Annual Expenses...... 1.24%
-----
-----
</TABLE>

10
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the International Stock Portfolio:
</TABLE>

<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:....... $75 $118 $163 $283
If you annuitize 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:....... $25 $78 $133 $283
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $25 $78 $133 $283
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Value Stock Portfolio
Management Fees.............................................. .75%
Other Expenses (after expense reimbursement)................. .15%
----
Total Portfolio Annual Expenses.......................... .90%
----
----
EXAMPLE--For contracts using the Value Stock Portfolio:
</TABLE>

<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:....... $72 $108 $147 $248
If you annuitize 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:....... $22 $67 $115 $248
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $22 $67 $115 $248
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Small Company Portfolio
Management Fees.............................................. .75%
Other Expenses (after expense reimbursement)................. .14%
----
Total Portfolio Annual Expenses.......................... .89%
----
----
</TABLE>

11
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Small Company Portfolio:
</TABLE>

<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
period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets: $72 $108 $146 $247
If you annuitize 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: $22 $67 $115 $247
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets: $22 $67 $115 $247
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolios)
Maturing Government Bond 1998 and Maturing Government Bond
2002 Portfolios
Management Fees (.05% until April 30, 1998 and .25% .05%
thereafter)................................................
Other Expenses (after expense reimbursement)................. .15%
----
Total Portfolio Annual Expenses.......................... .20%
----
----
EXAMPLE--For contracts using these two Portfolios:
</TABLE>

<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:....... $65 $88 $114 $188
If you annuitize 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:....... $15 $46 $82 $188
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $15 $46 $82 $188
</TABLE>

<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolios)
Maturing Government Bond 2006 and Maturing Government Bond
2010 Portfolios
Management Fees.............................................. .25%
Other Expenses (after expense reimbursement)................. .15%
----
Total Portfolio Annual Expenses.......................... .40%
----
----
</TABLE>

12
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using these two Portfolios:
</TABLE>

<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:....... $67 $94 $122 $195
If you annuitize 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:....... $17 $52 $90 $195
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $17 $52 $90 $195
</TABLE>

FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
CONTRACT OWNER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Deferred Sales Load (as a percentage of amount 9%
surrendered)............................................... decreasing uniformly
by .075% for each
of the first 120
months from the
contract date
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees.............................. 1.25%
-----
Total Separate Account Annual Expenses................... 1.25%
-----
-----
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Growth Portfolio
Management Fees.............................................. .50%
Other Expenses............................................... .06%
----
Total Growth Portfolio Annual Expenses................... .56%
----
----
EXAMPLE--For contracts using the Growth Portfolio:
</TABLE>

<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........ $94 $119 $145 $213
If you annuitize 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........ $18 $57 $98 $213
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets........ $18 $57 $98 $213
</TABLE>

13
<PAGE>

<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:....... $94 $121 $148 $218
If you annuitize 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:....... $19 $58 $101 $218
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $58 $101 $218
</TABLE>

<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:....... $94 $122 $150 $222
If you annuitize 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:....... $19 $60 $103 $222
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $60 $103 $222
</TABLE>

14
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Asset Allocation Portfolio:
</TABLE>

<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:....... $94 $119 $145 $213
If you annuitize 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:....... $18 $57 $98 $213
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $18 $57 $98 $213
</TABLE>

<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:....... $94 $120 $147 $217
If you annuitize 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:....... $19 $58 $100 $217
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $19 $58 $100 $217
</TABLE>

15
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Index 500 Portfolio:
</TABLE>

<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:....... $93 $118 $142 $206
If you annuitize 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:....... $18 $55 $95 $206
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $18 $55 $95 $206
</TABLE>

<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:....... $96 $127 $159 $241
If you annuitize 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:....... $21 $65 $112 $241
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $21 $65 $112 $241
</TABLE>

16
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the International Stock Portfolio:
</TABLE>

<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:....... $100 $139 $178 $283
If you annuitize 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:....... $25 $78 $133 $283
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $25 $78 $133 $283
</TABLE>

<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:....... $97 $129 $162 $248
If you annuitize 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:....... $22 $67 $115 $248
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $22 $67 $115 $248
</TABLE>

17
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Small Company Portfolio:
</TABLE>

<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: $97 $128 $162 $247
If you annuitize 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: $22 $67 $115 $247
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets: $22 $67 $115 $247
</TABLE>

<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:....... $90 $109 $130 $188
If you annuitize 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:....... $15 $46 $82 $188
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $15 $46 $82 $188
</TABLE>

18
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using these Portfolios:
</TABLE>

<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:....... $92 $115 $137 $195
If you annuitize 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:....... $17 $52 $90 $195
If you do NOT surrender your contract:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:....... $17 $52 $90 $195

<FN>

*Annuitization for this purpose means the election of an Annuity Option under
which benefits are expected to continue for a period of at least five years.
</TABLE>

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. Surrender amounts in years shown
reflect the contract owner's ability to withdraw an amount equal to ten percent
of the accumulation value at the end of the previous calendar year without the
imposition of the deferred sales charge. The tables show the expenses of each
portfolio of MIMLIC 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, .92% for the Small Company Portfolio, 1.12% for
Maturing Government Bond 1998 Portfolio, 1.52% for Maturing Government Bond 2002
Portfolio, 2.37% for Maturing Government Bond 2006 Portfolio, 4.01% for Maturing
Government Bond 2010 Portfolio and 1.56% for Value Stock Portfolio.
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, the Index 500 Portfolio was the Index Portfolio and the
Capital Appreciation Portfolio was the Aggressive Growth Portfolio.

19
<PAGE>
CONDENSED FINANCIAL INFORMATION

No condensed financial information is included in this prospectus for Minnesota
Mutual Variable Annuity Account for the period December 3, 1985 to December 31,
1985, inasmuch as no variable annuity contracts utilizing that account were sold
during that period. The financial statements of The Minnesota Mutual Life
Insurance Company and of Minnesota Mutual Variable Annuity Account 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 nine year period ending December 31, 1994. This information
should be read in conjunction with the financial statements and related notes of
Minnesota Mutual Variable Annuity Account included in the Statement of
Additional Information.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986
----------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Sub-Account:
Unit value at
beginning of
period............. $2.152 $2.084 2.012 1.520 1.535 1.234 1.081 1.051 1.074
Unit value at end of
period............. $1.143 $2.152 2.084 2.012 1.520 1.535 1.234 1.081 1.051
Number of units
outstanding at end
of period.......... 33,090,790 25,980,318 18,152,996 10,204,896 6,759,950 4,899,370 3,160,624 2,786,799 1,359,015

Bond Sub-Account:
Unit value at
beginning of
period............. $1.931 $1.773 1.683 1.450 1.370 1.232 1.166 1.162 1.063
Unit value at end of
period............. $1.820 $1.931 1.773 1.683 1.450 1.370 1.232 1.166 1.162
Number of units
outstanding at end
of period.......... 23,798,963 18,784,458 11,267,890 6,184,694 5,250,072 3,880,390 2,588,056 2,045,581 1,827,496

Money Market Sub-
Account:
Unit value at
beginning of
period............. $1.421 $1.402 1.375 1.321 1.241 1.157 1.099 1.055 1.013
Unit value at end of
period............. $1.455 $1.421 1.402 1.375 1.321 1.241 1.157 1.099 1.055
Number of units
outstanding at end
of period.......... 11,720,778 9,783,391 7,414,734 6,618,010 6,183,393 4,053,104 1,728,357 1,320,469 726,577

Asset Allocation Sub-
Account:
Unit value at
beginning of
period............. $2.068 $1.967 1.858 1.460 1.426 1.202 1.103 1.088 1.065
Unit value at end of
period............. $2.014 $2.068 1.967 1.858 1.460 1.426 1.202 1.103 1.088
Number of units
outstanding at end
of period.......... 109,044,286 99,680,197 66,121,882 33,820,537 22,938,615 16,134,930 12,633,285 11,334,709 5,796,509

Mortgage Securities
Sub-Account:
Unit value at
beginning of
period............. $1.739 $1.612 1.535 1.337 1.237 1.104 1.030 1.000(a)
Unit value at end of
period............. $1.660 $1.739 1.612 1.535 1.337 1.237 1.104 1.030
Number of units
outstanding at end
of period.......... 31,542,405 33,032,291 20,284,849 9,817,276 8,632,895 6,903,370 5,611,257 5,103,386

Index 500
Sub-Account:
Unit value at
beginning of
period............. $1.796 $1.657 1.563 1.220 1.285 0.998 0.870 1.000(a)
Unit value at end of
period............. $1.794 $1.796 1.657 1.563 1.220 1.285 0.998 0.870
Number of units
outstanding at end
of period.......... 29,639,298 23,455,059 16,294,129 11,254,609 13,788,252 10,567,879 6,238,579 5,527,842

Capital Appreciation
Sub-Account:
Unit value at
beginning of
period............. $2.062 $1.891 1.823 1.303 1.344 0.984 0.926 1.000(a)
Unit value at end of
period............. $2.082 $2.062 1.891 1.823 1.303 1.344 0.984 0.926
Number of units
outstanding at end
of period.......... 40,739,415 30,907,396 21,822,440 10,874,168 6,767,806 3,831,974 2,038,085 1,363,363
</TABLE>

20
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986
----------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
International Stock
Sub-Account:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value at
beginning of
period............. $1.317 $0.925 1.000(b)
Unit value at end of
period............. $1.296 $1.317 0.925
Number of units
outstanding at end
of period.......... 61,474,893 38,637,487 16,751,564
Small Company Sub-
Account:
Unit value at
beginning of
period............. $1.164 $1.000(c)
Unit value at end of
period............. $1.220 $1.164
Number of units
outstanding at end
of period.......... 29,723,609 9,554,322

Maturing Government
Bond 1998 Sub-
Account
Unit value at
beginning of
period............. $1.000(d)
Unit value at end of
period............. $0.981
Number of units
outstanding at end
of period.......... 2,578,506

Maturing Government
Bond 2002 Sub-
Account
Unit value at
beginning of
period............. $1.000(d)
Unit value at end of
period............. $0.972
Number of units
outstanding at end
of period.......... 2,528,509

Maturing Government
Bond 2006 Sub-
Account
Unit value at
beginning of
period............. $1.000(d)
Unit value at end of
period............. $0.963
Number of units
outstanding at end
of period.......... 1,808,705

Maturing Government
Bond 2010 Sub-
Account
Unit value at
beginning of
period............. $1.000(d)
Unit value at end of
period............. $0.951
Number of units
outstanding at end
of period.......... 913,358

Value Stock Sub-
Account
Unit value at
beginning of
period............. $1.000(d)
Unit value at end of
period............. $1.047
Number of units
outstanding at end
of period.......... 7,178,675
<FN>

(a) The information for the sub-account is shown for the period June 1, 1987 to
December 31, 1987. June 1, 1987 was the effective date of the 1933 Act
Registration Statement for the sub-account.

(b) The information for the sub-account is shown for the period May 1, 1992 to
December 31, 1992. May 1, 1992 was the effective date of the 1933 Act
Registration Statement for the sub-account.

(c) 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.

(d) The information for the sub-account is shown for the period May 2, 1994 to
December 31, 1994. May 2, 1994 was the effective date of the 1933 Act
Registration Statement for the sub-account.
</TABLE>

21
<PAGE>
PERFORMANCE DATA

From time to time the Variable Annuity Account may publish advertisements
containing performance data relating to its Sub-Accounts. In the case of the
Money Market Sub-Account, the Variable Annuity Account 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 Annuity Account'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
Annuity Account 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
Annuity Account will reflect only charges made against the net asset value of
the Variable Annuity Account pursuant to the terms of the contracts offered by
this Prospectus. The various performance figures used in Variable Annuity
Account 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. Cumulative total return figures quoted by
the Sub-Account will not reflect the deduction of any applicable deferred sales
charges.
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, the Index 500 Sub-Account was the Index
Sub-Account and the Capital Appreciation Sub-Account was the Aggressive Growth
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 Annuity Account's registration statement. 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. The surrender value
will reflect the deduction of the deferred sales charge applicable to the
contract and to the length of the period advertised. Such average annual total
return figures may also be accompanied by average annual total return figures,
for the same or other periods, which do not reflect the deduction of any
applicable deferred sales charges.

PREDICTABILITY OF RETURN. For each of the Maturing Government Bond
Sub-Accounts, Minnesota Mutual will calculate an anticipated growth rate (AGR)
on each day that the underlying Portfolio of the Fund is valued. Minnesota
Mutual may also calculate an anticipated value at maturity (AVM) on any such
day. Daily calculations for each are necessary because (i) the AGR and AVM
calculations assume, among other things, an expense ratio and portfolio
composition that remains unchanged for the life of each such Sub-Account to the
target date at maturity, and (ii) such calculations are therefore meaningful as
a measure of predictable return with respect to particular units only if such
units are held to the applicable target maturity date and only with respect to
units purchased on the date of such calculations (the AGR and AVM applicable to
units purchased on any other date may be materially different). Those
assumptions can only be hypothetical given that owners of

22
<PAGE>
contracts have the option to purchase or redeem units on any business day
through contract activity, and will receive dividend and capital gain
distributions through the receipt of additional shares to their unit values. A
number of factors in addition to contract owner activity can cause a Maturing
Government Bond Sub-Account's AGR and AVM to change from day to day. These
include the adviser's efforts to improve total return through market
opportunities, transaction costs, interest rate changes and other events that
affect the market value of the investments held in each Maturing Government Bond
Portfolio in the Fund. Despite these factors, it is anticipated that if specific
units of a Maturing Government Bond Sub-Account are held to the applicable
target maturity date, then the AGR and AVM applicable to such units (i.e.,
calculated as of the date of purchase of such units) will vary from the actual
return experienced by such units within a narrow range.

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GENERAL DESCRIPTIONS

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

B. VARIABLE ANNUITY ACCOUNT
A separate account called the Minnesota Mutual Variable Annuity Account was
established on September 10, 1984, by our Board of Trustees in accordance with
certain provisions of the Minnesota insurance law. The separate account is
registered as a "unit investment trust" with the Securities and Exchange
Commission under the Investment Company Act of 1940, but such registration does
not signify that the Securities and Exchange Commission supervises the
management, or the investment practices or policies, of the Variable Annuity
Account. The separate account meets the definition of a "separate account" under
the federal securities laws.
The Minnesota law under which the Variable Annuity Account was established
provides that the assets of the Variable Annuity Account shall not be chargeable
with liabilities arising out of any other business which we may conduct, but
shall be held and applied exclusively to the benefit of the holders of those
variable annuity contracts for which the separate account was established. The
investment performance of the Variable Annuity Account 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.
The Variable Annuity Account currently has 14 sub-accounts to which contract
owners may allocate purchase payments. Each sub-account invests in shares of a
corresponding Portfolio of the Fund. Additional sub-accounts may be added at our
discretion.

C. MIMLIC SERIES FUND, INC.
The Variable Annuity Account currently invests exclusively in MIMLIC Series
Fund, Inc. (the "Fund"), a mutual fund of the series type which is advised by
MIMLIC Asset Management Company. The 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 Fund. The Fund
issues its shares, continually and without sales charge, only to us and our
separate accounts, which currently include the Variable Annuity Account,
Variable Fund D, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account. 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 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 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 Fund for the Variable
Annuity Account are made at the net asset value of such shares next determined
after receipt by us of contract purchase payments.
The Fund's investment adviser is MIMLIC Asset Management Company ("MIMLIC
Management"). It acts as an investment adviser to the Fund pursuant to an
advisory agreement.

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<PAGE>
MIMLIC Management is a subsidiary of Minnesota Mutual.
MIMLIC Management acts as investment adviser for the Fund and its Portfolios.
Winslow Capital Management, Inc., a Minnesota corporation with principal offices
at 4720 IDS Tower, 80 South Eighth Street, Minneapolis, Minnesota 55402, has
been retained under an investment sub-advisory agreement with MIMLIC Asset
Management Company to provide investment advice and, in general, conduct the
management and investment program of the Capital Appreciation Portfolio.
Similarly, Templeton Investment Counsel, Inc., a Florida corporation with
principal offices in Fort Lauderdale, has been retained under an investment
sub-advisory agreement to provide investment advice to the International Stock
Portfolio of the Fund.
A prospectus for the Fund is attached to this Prospectus. A person should
carefully read the Fund's prospectus before investing in the contracts.

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 Annuity Account.
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 Annuity Account
and we reserve the right to add, combine or remove any sub-accounts of the
Variable Annuity Account. 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
Annuity Account. 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
Annuity Account 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.
Shares of the Portfolios of the Fund are also sold to other of our separate
accounts, which are used to receive and invest premiums paid under our variable
life policies. 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 Fund simultaneously. Although neither Minnesota Mutual
nor the Fund currently foresees any such disadvantages either to variable life
insurance policy owners or to variable annuity contract owners, the 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 determine what
action, if any, should be taken in response thereto. Such action could include
the sale of 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 laws, (2) changes in Federal income tax laws, (3)
changes in the investment management of any of the Portfolios of the Fund, or
(4) differences in voting instructions between those given by policy owners and
those given by contract owners.

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CONTRACT CHARGES

A. SALES CHARGES
No sales charge is deducted from the purchase payments for these contracts.
However, when a contract's accumulation value is reduced by a withdrawal,
surrender or applied to provide an annuity, a deferred sales charge may be
deducted for expenses relating to the sale of the contracts.
No deferred sales charge is deducted from the accumulation value withdrawn if:
(a) the withdrawal occurs after a contract has been in force for at least ten
contract years, (b) withdrawals during the first calendar year are equal to or
less than 10% of the purchase payments and, if in subsequent calendar years they
are equal to or less than 10% of the accumulation value at the end of the
previous calendar year, (c) the withdrawal is on account of the annuitant's
death, or (d) the withdrawal is for the purpose of providing annuity payments
under an option where payments are expected to continue for at least five years.
If withdrawals in a calendar year exceed 10% of those purchase payments or
accumulation value, the

24
<PAGE>
sales charge applies to the amount of the excess withdrawal.
The sales charge is deducted from the remaining accumulation value of the
contract except in the case of a surrender, where it reduces the amount
distributed. We will deduct the sales charge proportionally from the fixed and
variable accumulation value of the contract.
The amount of the deferred sales charge, expressed as a percentage of the
accumulation value withdrawn, is shown in the following table. Percentages are
shown as of the contract date and the end of each of the first ten contract
years. The percentages decrease uniformly each month for 120 months from the
contract date. In no event will the sum of the deferred sales charges exceed 9%
of the purchase payments made under a contract.

<TABLE>
<CAPTION>
DEFERRED SALES CHARGE
-----------------------------
FLEXIBLE
PAYMENT SINGLE PAYMENT
VARIABLE VARIABLE
BEGINNING OF ANNUITY ANNUITY
CONTRACT YEAR CONTRACT CONTRACT
- -------------------- --------- --------------
<S> <C> <C>
1 9.0% 6.0%
2 8.1 5.4
3 7.2 4.8
4 6.3 4.2
5 5.4 3.6
6 4.5 3.0
7 3.6 2.4
8 2.7 1.8
9 1.8 1.2
10 0.9 0.6
11 -0- -0-
</TABLE>

Deduction for any applicable state premium taxes may be made from each purchase
payment or at the commencement of annuity payments. (Currently, such taxes range
from 0.5% to 2.5%, depending on the applicable law.) Any amount withdrawn from
the contract may be reduced by any premium taxes not previously deducted from
purchase payments.
As a percentage of purchase payments paid to the contracts, MIMLIC Sales
Corporation ("MIMLIC Sales"), the principal underwriter, may pay up to 4.5% of
the amount of those purchase payments to broker-dealers responsible for the
sales of the contracts. In addition, MIMLIC Sales or Minnesota Mutual will pay,
based uniformly on the sale of variable annuity contracts by such
broker-dealers, credits which allow registered representatives who are
responsible for sales of variable annuity contracts to attend conventions and
other meetings sponsored by Minnesota Mutual or its affiliates for the purpose
of promoting the sale of the 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 those registered representatives
amounts based upon their production and the persistency of life insurance and
annuity business placed with Minnesota Mutual.

B. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the contracts by our 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 that annuitant lives or all annuitants as a group live.
This assures an annuitant that neither the annuitant's own longevity nor an
improvement in life expectancy generally will have an adverse effect on the
monthly annuity payments received under the contract.
We assume an expense risk by assuming the risk that deductions provided for in
the contracts for the sales and administrative expenses will be adequate to
cover the expenses incurred.
For assuming these risks, we currently make a deduction from the Variable
Annuity Account at the annual rate of .80% for the mortality risk and .45% for
the expense risk. We reserve the right to increase the charge for the assumption
of expense risks to not more than .60%. If this charge is increased to this
maximum amount, then the total of the mortality risk and expense risk charge
would be 1.40% on an annual basis. Any such increase would be subject to the
approval of the Securities and Exchange Commission.
For a discussion of how these charges are applied in the calculation of the
accumulation unit value, please see the discussion entitled "Purchase Payments
and Value of the Contract" on page 32.
If these deductions prove to be insufficient to cover the actual cost of the
expense and mortality risks assumed by us, then we will absorb the resulting
losses and make sufficient transfers to the Variable Annuity Account from our
general account, where appropriate. Conversely, if these deductions prove to be
more than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us. Some
or all of such profit may be used to cover any distribution costs not recovered
through the deferred sales charge.

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<PAGE>
EXCHANGE OFFER

Persons owning or having an interest in certain of our fixed and variable
annuities may exchange those interests for the contracts described herein and
transfer current accumulation values into the contracts.
The persons eligible for the exchange include: owners of individual fixed
annuities issued by Minnesota Mutual and The Ministers Life Insurance Company
except for those contracts known as SPDA 3 and SecureOption III; participants
under Minnesota Mutual group annuities offering fixed benefits in situations
other than where the contract is issued in connection with a stock bonus,
pension or profit sharing plan which meets the requirements for qualification
under section 401 of the Internal Revenue Code and variable annuity contracts
issued by Minnesota Mutual Variable Fund D with a contingent deferred sales
charge.
Persons who own combination fixed and variable annuity contracts, where any
general account assets are beyond the period where a withdrawal charge is
applicable, may also be eligible for such contract exchanges. For these
contracts, allocations as between fixed and variable accumulations may not be
altered at the time of the exchange and a $50 fee, to cover administrative
expenses, must be remitted with the request. In addition, for contracts with
interests in Minnesota Mutual Variable Fund D, other than those with a
contingent deferred sales load, the contract or participation must be of at
least ten year's duration. No charge is made to this transfer. For contracts
described in this Prospectus, where the contract type is to be exchanged, for
example from a single payment contract to a flexible payment contract, we will
allow such an exchange only during the original contract's first contract year
and if there have been no transfers or withdrawals. A $50 fee, to cover
administrative expenses, must be remitted with the request.
For exchanges from annuities where a sales charge is deducted from each
purchase payment received from the owner, accumulation values credited to a
contract at the time of transfer will not be subject to a deferred sales charge
at any time. However, purchase payments subsequently made to the contract may be
subject to a deferred sales charge if such amounts are then withdrawn,
surrendered or applied to provide an annuity. The deferred sales charge will be
applied so that the contract year of the contract will be determined as of the
contract date of the annuity from which the accumulation value was transferred.
For exchanges from annuities where a deferred sales charge may be made on
withdrawals, surrenders or when amounts are applied to provide an annuity, no
deferred sales charge will be made at the time of transfer. However, a deferred
sales charge may be deducted from the accumulation value of the contract on such
a basis so that the contract year of the contract will be determined as of the
contract date of the annuity from which the accumulation value was transferred
or, if transfer is of participation in a group annuity, from the first day of
the month in which contributions were first received from the individual under
the group annuity contract on behalf of that individual.
In considering an exchange, you should review the provisions of the contract
you now own and the contracts described in the Prospectus. To effect such an
exchange, your completed application, Annuity Exchange Authorization and
existing annuity contracts should be returned to us.
Inquiries regarding the contracts mentioned above or the contracts described
in this Prospectus may be directed to us at: Minnesota Mutual Life Center, 400
Robert Street North, St. Paul, Minnesota 55101-2098; or by calling us at (612)
298-3500.

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VOTING RIGHTS

The Fund shares held in the Variable Annuity Account will be voted by us at the
regular and special meetings of the Fund. Shares attributable to contracts will
be voted by us in accordance with instructions received from contract owners
with voting interests in each sub-account of the Variable Annuity Account. In
the event no instructions are received from a contract owner with respect to
shares of a Portfolio held by a sub-account, we 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 Annuity Account.
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.

26
<PAGE>
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 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 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 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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DESCRIPTION OF THE CONTRACTS

A. GENERAL PROVISIONS

1. TYPES OF CONTRACTS OFFERED

(a) Single Payment Variable Annuity Contract

This type of contract may be used in connection with a pension or profit
sharing plan under which plan contributions have been accumulating. It may
be used in connection with a plan which has previously been funded with
insurance or annuity contracts. It may be used under state deferred
compensation plans or individual retirement annuity programs. It may also be
purchased by individuals not as a part of any qualified plan. The contract
provides for a fixed or variable annuity to begin at some future date with
the purchase payment made either in a lump sum or in a series of payments in
a single contract year.

(b) Flexible Payment Variable Annuity Contract

This type of contract may be used in connection with all types of plans,
state deferred compensation plans or individual retirement annuities adopted
by or on behalf of individuals. It may also be purchased by individuals not
as a part of any plan. The contract provides for a variable annuity or a
fixed annuity to begin at some future date with 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.

2. ISSUANCE OF CONTRACTS
The contracts are issued to you, the contract owner named in the application.
The owner of the contract may be the annuitant or someone else.

3. MODIFICATION OF THE CONTRACTS
A contract may be modified at any time by written agreement between you and us.
However, no such modification will adversely affect the rights of an annuitant
under the contract unless the modification is made to comply with a law or
government regulation. You will have the right to accept or reject the
modification. This right of acceptance or rejection is limited for contracts
used as individual retirement annuities.

4. ASSIGNMENT
If the contract is sold in connection with a tax-qualified program, (including
employer sponsored employee pension benefit plans, tax-sheltered annuities and
individual retirement annuities,) your or the annuitant's interest 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.
If the contract is not issued in connection with a tax-qualified program, the
interest of any person in the contract may be assigned during the lifetime of
the annuitant. We will not be bound by any assignment until we have recorded
written notice of it at our home office. We are not responsible for the validity
of any assignment. An assignment will not apply to any payment or action made by
us before it was recorded. Any proceeds which become payable to an assignee will
be payable in a single sum. Any claim made by an assignee will be subject to
proof of the assignee's interest and the extent of the assignment.

27
<PAGE>
5. LIMITATIONS ON PURCHASE PAYMENTS
For the single payment variable annuity contract, the single payment will be
deemed to include all purchase payments made within 12 months of the contract
date. The amount of an initial purchase payment must be at least $5,000. The
amount of any subsequent payment during that 12 month period must be at least
$1,000. Some states, for example, New Jersey, will limit these contracts to a
single purchase payment and contracts issued there are so limited.
You choose when to make purchase payments under a flexible payment variable
annuity contract. There is no minimum purchase payment amount and there is no
minimum amount which must be allocated to any sub-account of the Variable
Annuity Account or to the General Account.
Total purchase payments under either contract may not exceed $1,000,000,
except with our consent.
We may cancel a flexible payment contract, in our discretion, if no purchase
payments are made for a period of two or more full contract years and both (a)
the total purchase payments made, less any withdrawals and associated charges,
and (b) the accumulation value of the entire contract, are less than $2,000. If
such a cancellation takes place, we will pay you the accumulation value of your
contract and we will notify you, in advance, of our intent to exercise this
right in our annual report which advises contract owners of the status of their
contracts. We will act to cancel the contract ninety days after the contract
anniversary unless an additional purchase payment is received before the end of
that ninety day period. Contracts issued in some states, for example, New
Jersey, do not permit such a cancellation and contracts issued there do not
contain this provision.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.

6. DEFERMENT OF PAYMENT
Whenever any payment under a contract is to be made in a single sum, payment
will be made within 7 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 Fund or to fairly determine the value of
the assets of the Fund; or

7. PARTICIPATION IN DIVISIBLE SURPLUS
The contracts participate in our divisible surplus, according to the annual
determination of our Board of Trustees as to the portion, if any, of our
divisible surplus 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. When any
distribution of divisible surplus is made, it may take the form of additional
payments to annuitants or the crediting of additional accumulation units.

B. ANNUITY PAYMENTS AND OPTIONS

1. 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
Fund Portfolios selected by the contract owner. The amount of the variable
annuity payments will not be affected by adverse mortality experience or by an
increase in our 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 Portfolios of the Fund, and thus the annuity payments
will vary with the investment experience of the assets of the Portfolio of the
Fund selected by the contract owner.

2. ELECTING THE RETIREMENT DATE AND FORM OF ANNUITY
The contracts provide for four optional annuity forms, any one of which may be
elected if

28
<PAGE>
permitted by law. Each annuity option may be elected on either a variable
annuity or a fixed annuity basis, or a combination of the two. Other annuity
options may be available from us on request.
While the contracts require that notice of election to begin annuity payments
must be received by us at least 30 days prior to the annuity commencement date,
we are currently waiving that requirement for such variable annuity elections
received at least two valuation days prior to the 15th of the month. We reserve
the right to enforce the 30 day notice requirement at our option at any time in
the future.
Each contract permits an annuity payment to begin on the first day of any
month. Under the contracts payment must begin before the later of the 85th
birthday of the annuitant, or five years after the date of issue of the
contracts. A variable annuity will be provided and the annuity option shall be
Option 2A, a life annuity with a period of 120 months. 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, we may fulfill our obligation by paying
in a single sum the surrender value of the contract which would otherwise have
been applied to provide annuity payments.
Except under Option 4, once annuity payments have commenced, you cannot
surrender an 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.

3. 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 monthly payment 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 died prior to the due date of the second annuity payment,
two if he 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. 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 and using the same interest rate which served as a basis for the
annuity 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. If this
option is elected, the contract and payments shall then be the joint property of
the annuitant and the designated joint annuitant. It would be possible under
this option for both annuitants to receive only one annuity payment if they both
died prior to the due date of the second annuity payment, two if they died
before the due date of the third annuity payment, etc.

OPTION 4--PERIOD CERTAIN ANNUITY
This is an annuity payable monthly for a period certain of from 5 to 20 years,
as elected. If the annuitant dies before payments have been made for the period
certain elected, payments will continue during the remainder of the fixed period
to the beneficiary. Contracts issued prior to May of 1993, or such later date as
we receive regulatory approval to issue these new contracts in a state and are
administratively able to do so, may allow the election of a period certain
option of less than five years. In the event of the death of the annuitant, the
beneficiary 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.

29
<PAGE>
4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the contracts described in this Prospectus, the first monthly annuity
payment is determined by the available value of the contract when an annuity
begins. In addition, a number of states do impose a premium tax on the amount
used to purchase an annuity benefit, depending on the type of plan involved.
Where applicable, these taxes currently range from 0.0% to 3.5% and are deducted
from the contract value applied to provide annuity payments. We reserve the
right to make such deductions from purchase payments as they are received.
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 contracts contain tables indicating the dollar amount of the first fixed
monthly payment under each optional annuity form for each $1,000 of value
applied. The tables are determined from the Progressive Annuity Table with
interest at the rate of 3% per annum, assuming births in the year 1900 and an
age setback of six years. If, when annuity payments are elected, we are using
tables of annuity rates for these contracts which result in larger annuity
payments, we will use those tables instead.
The dollar amount of the first monthly variable annuity payment is determined
by applying the available value (after deduction of any premium taxes not
previously deducted) to a rate per $1,000 which is based on the Progressive
Annuity Table with interest at the rate of 4.5% per annum, assuming births in
the year 1900 and with an age setback of six years. The amount of the first
payment depends upon the annuity payment option selected and the adjusted age of
the annuity and any joint annuitant. A number of annuity units is then
determined by dividing this dollar amount by the then current annuity unit
value. Thereafter, the number of annuity units remains unchanged during the
period of annuity payments. This determination is made separately for each sub-
account of the separate account. The number of annuity units is based upon the
available value in each sub-account as of the date annuity payments are to
begin.
The dollar amount determined for each sub-account will then be aggregated for
purposes of making payment.
The 4.5% interest rate assumed in the variable annuity determination would
produce level annuity payments if the net investment rate remained constant at
4.5% per year. Subsequent payments will decrease, remain the same or increase
depending upon whether the actual net investment rate is less than, equal to, or
greater than 4.5%. A higher interest rate means a higher initial payment, but a
more slowly rising (or more rapidly falling) series of subsequent payments. A
lower assumption has the opposite effect. For contracts issued prior to May of
1993, or such later date as when we receive regulatory approval to issue these
new contracts in a state and are administratively able to do so, which utilized
such a lower rate, the payments will differ from these contracts in the manner
described.
In addition, while the contracts require that notice of election to begin
fixed annuity payments must be received by us at least 30 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 payment in order to allow for administrative processing through the
general account. If the request for such a fixed annuity is received between the
first valuation date following the 14th day of the month and the second to 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 day of the month will be treated as a request received in the
first 14 days of the following month. Minnesota Mutual reserves the right to
enforce the 30 day notice requirement at its option at any time in the future.

5. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each sub-account times the annuity
unit value for that sub-account as of the due date of the payment. This amount
may increase or decrease from month to month.

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6. VALUE OF THE ANNUITY UNIT
The value of an annuity unit for a sub-account is determined monthly as of the
first day of each month by multiplying the value on the first day of the
preceding month by the product of (a) .996338, and (b) the ratio of the value of
the accumulation unit for that sub-account 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 preceding
month (.996338 is a factor to neutralize the assumed net investment rate,
discussed in Section 3 above, of 4.5% per annum built into the first payment
calculation which is not applicable because the actual net investment rate is
credited instead). The value of an annuity unit for a sub-account 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.

7. TRANSFER OF ANNUITY RESERVES
Amounts held as annuity reserves may be transferred among the variable annuity
sub-accounts during the annuity period. Annuity reserves may also be transferred
from a variable annuity to a fixed annuity during this time. The change must be
made by a written request. The annuitant and joint annuitant, if any, must make
such an election.
There are restrictions to such a transfer. The transfer of an annuity reserve
amount from any sub-account must be at least equal to $5,000 or the entire
amount of the reserve remaining in that sub-account. In addition, annuity
payments must have been in effect for a period of 12 months before a change may
be made. Such transfers can be made only once every 12 months. The written
request for an annuity transfer must be received by us more than 30 days in
advance of the due date of the annuity payment subject to the transfer. Upon
request, we will make available to you annuity reserve amount sub-account
information.
A transfer will be made on the basis of annuity unit values. The number of
annuity units from the sub-account being transferred will be converted to a
number of annuity units in the new sub-account. The annuity payment option will
remain the same and cannot be changed. After this conversion, a number of
annuity units in the new sub-account will be payable under the elected option.
The first payment after conversion will be of the same amount as it would have
been without the transfer. The number of annuity units will be set at that
number of units which are needed to pay that same amount on the transfer date.
When we receive a request for the transfer of variable annuity reserves, it
will be effective for future annuity payments. The transfer will be effective
and funds actually transferred in the middle of the month prior to the next
annuity payment affected by your request. We will use the same valuation
procedures to determine your variable annuity payment that we used initially.
However, if your annuity is based upon annuity units in a sub-account which
matures on a date other than the stated annuity valuation date, then your
annuity units will be adjusted to reflect sub-account performance in the
maturing sub-account and the sub-account to which reserves are transferred for
the period between annuity valuation dates.
Amounts held as reserves to pay a variable annuity may also be transferred to
a fixed annuity during the annuity period. However, the restrictions which apply
to annuity sub-account transfers will apply in this case as well. The amount
transferred will then be applied to provide a fixed annuity amount. This amount
will be based upon the adjusted age of the annuitant and any joint annuitant at
the time of the transfer. The annuity payment option will remain the same.
Amounts paid as a fixed annuity may not be transferred to a variable annuity.
When we receive a request to make such a transfer to a fixed annuity, it will
be effective for future annuity payments. The transfer will be effective and
funds actually transferred in the middle of the month prior to the next annuity
payment. We will use the same fixed annuity pricing at the time of transfer that
we use to determine an initial fixed annuity payment.
Contracts with this transfer feature may not be available in all states.

C. DEATH BENEFITS
The contracts provide that in the event of the death of the owner before annuity
payments begin, the amount payable at death will be the contract accumulation
value determined as of the valuation date coincident with or next following the
date due proof of death is received by us at our home office. Death proceeds
will be paid in a single sum to the beneficiary designated unless an annuity
option is elected. Payment will be made within 7 days after we receive due proof
of death. Except as noted below, the entire interest in the contract must be
distributed within 5 years of the owner's death.

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The single payment variable annuity contract has a guaranteed death benefit if
you die before annuity payments have started. The death benefit shall be equal
to the greater of: (1) the amount of the accumulation value payable at death; or
(2) the amount of the total purchase payments paid to us during the first 12
months as consideration for this contract, less all contract withdrawals. As a
matter of company practice, we use this method to determine the death benefit
for all contracts offered by this Prospectus.
If the owner dies on or before the date on which annuity payments begin and if
the designated beneficiary is a person other than the owner's spouse, that
beneficiary may elect an annuity option measured by a period not longer than
that beneficiary's life expectancy only so long as annuity payments begin not
later than one year after the owner's death. If there is no designated
beneficiary, then the entire interest in a contract must be distributed within
five years after the owner's death. If the annuitant dies after annuity payments
have begun, any payments received by a non-spouse beneficiary must be
distributed at least as rapidly as under the method elected by the annuitant as
of the date of death.
If any portion of the contract interest is payable to the owner's designated
beneficiary who is also the surviving spouse of the owner, that spouse shall be
treated as the contract owner for purposes of: (1) when payments must begin, and
(2) the time of distribution in the event of that spouse's death.

D. PURCHASE PAYMENTS AND VALUE OF THE CONTRACT

1. CREDITING ACCUMULATION UNITS
During the accumulation period--the period before annuity payments begin--each
purchase payment is credited on the valuation date coincident with or next
following the date such purchase payment is received by us at our home office.
When the contracts are originally issued, application forms are completed by the
applicant and forwarded to our home office. We will review each application form
submitted to us for compliance with our issue criteria and, if it is accepted, a
contract will be issued.
If the initial purchase payment is accompanied by an incomplete application,
that purchase payment will not be credited until the valuation date coincident
with or next following the date a completed application is received. We 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 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 Fund.
We will determine the value of accumulation units on each day on which the
Portfolios of the Funds are valued. The net asset value of the 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 Fund's portfolio securities will not materially affect the current net
asset value of such Fund's shares, (ii) days during which no such Fund's shares
are tendered for redemption and no order to purchase or sell such Fund's shares
is received by such 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). Accordingly, the value of accumulation
units so determined will be applicable to all purchase payments received by us
at our home office on that day prior to the close of business of the Exchange.
The value of accumulation units applicable to purchase payments received after
the close of business of the Exchange will be the value determined on the next
valuation date.
In addition to providing for the allocation of purchase payments to the
sub-accounts of the Variable Annuity Account, the contracts also provide for
allocation of purchase payments to our General Account for accumulation at a
guaranteed interest rate. Applications received without instructions as to
allocation will be

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treated as incomplete. Upon your written request, values under the contract may
be transferred between our General Account and the Variable Annuity Account or
among the sub-accounts of the Variable Annuity Account. 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. There is no
dollar amount limitation which is applied to transfers. The contracts permit us
to limit the frequency and amount of transfers from our General Account to the
Variable Annuity Account.
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.
There is one situation which is an exception to the above restriction. That
situation 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 or
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 redemption. 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.
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 our General Account are not
registered under the Securities Act of 1933. We are not registered as an
investment company under the Investment Company Act of 1940. Accordingly, such
interests are not subject to the provisions of those acts that would apply if
registration under such acts were required.

2. VALUE OF THE CONTRACT
The Accumulation 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

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such value will equal or exceed the purchase payments made. The contract owner
will be advised periodically of the number of accumulation units credited to the
contract, the current value of an accumulation unit, and the total value of the
contract.

3. ACCUMULATION UNIT VALUE
The value of an accumulation unit for each sub-account of the Variable Annuity
Account was set at $1.000000 on the first valuation date of the Variable Annuity
Account. 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 for the applicable
sub-account (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.

4. NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD
The net investment factor is an index used to measure the investment performance
of a sub-account from one valuation period to the next. For any 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 current rate of 1.25% per annum.
The gross investment rate is equal to: (1) the net asset value per share of a
Portfolio share held in a sub-account of the Variable Annuity Account determined
at the end of the current valuation period, plus (2) the per share amount of any
dividend or capital gain distribution by the Portfolio if the "ex-dividend" date
occurs during the current valuation period, divided by (3) the net asset value
per share of that Portfolio share determined at the end of the preceding
valuation period. The gross investment rate may be positive or negative.

E. REDEMPTIONS

1. PARTIAL WITHDRAWALS AND SURRENDER
Under both contracts, the contracts provide that prior to the date annuity
payments begin partial withdrawals may be made by you from the contract for cash
amounts of at least $250. You must make a written request for any withdrawal. In
this event, the accumulation value will be reduced by the amount of the
withdrawal and any applicable deferred sales charge. In the absence of
instructions to the contrary, withdrawals will be made from the General Account
accumulation value and from the Variable Annuity Account accumulation value in
the same proportion. In the absence of instructions, withdrawals will be made
from the sub-accounts on a pro rata basis. 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.
The contracts provide that prior to the commencement of annuity payments, you
may elect to surrender the contract for its surrender value. You will receive in
a single cash sum the accumulation value computed as of the valuation date
coincident with or next following the date of surrender, reduced by any
applicable deferred sales charge and the administrative charge, or you may elect
an annuity.
For more information on the application of the deferred sales charge, see
"Sales Charges" on page 24.
Once annuity payments have commenced for an annuitant under Options 1, 2 or 3
of the optional annuity forms, the annuitant cannot surrender his annuity
benefit and receive a single sum settlement in lieu thereof. For a discussion of
commutation rights of annuitants and beneficiaries subsequent to the annuity
commencement date, see "Optional Annuity Forms" on page 29.
Contract owners may also submit their signed written withdrawal or surrender
requests to Minnesota Mutual 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.

2. RIGHT OF CANCELLATION
You should read the contract carefully as soon as it is received. You may cancel
the purchase of a contract within ten days after its delivery, for any reason,
by giving us written notice at 400 Robert Street North, St. Paul, Minnesota
55101-2098, of an intention to cancel. If the contract is cancelled and
returned, we will refund to you the greater of (a) the accumulation value of the
contract, or (b) the amount of purchase payments paid under the contract.
Payment of the requested refund will be made to you within 7 days after we
receive notice of cancellation.

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The liability of the Variable Annuity Account under the foregoing is limited
to the accumulation value of the contract at the time it is returned for
cancellation. Any additional amounts necessary to make our refund to you equal
to the purchase payments will be made by us.

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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.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the Variable Annuity Account 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 Annuity Account or on capital
gains arising from the Variable Annuity Account's activities. The Variable
Annuity Account is not taxed as a "regulated investment company" under the Code
and it does not anticipate any change in that tax status.

TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of nonqualified annuities in general and
some aspects of 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.
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 the
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 non-qualified deferred annuity contracts

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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 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 Annuity Account to
be "adequately diversified" in order for the contract to be treated as a life
insurance contract for Federal tax purposes. The Variable Annuity Account,
through the Fund, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Fund's assets
may be invested. Although the investment adviser is an affiliate of Minnesota
Mutual, Minnesota Mutual does not have control over the Fund or its investments.
Nonetheless, Minnesota Mutual believes that each Portfolio of the Fund in which
the Variable Annuity Account 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 the Variable Annuity Account. 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 the Variable Annuity Account.

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 the 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. It 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.

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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 the 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 non-qualified 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.

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

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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.
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-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.

38
<PAGE>
- ------------------------------------------------------------------------
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM

Section 36.105, Title 110B of the Texas Revised Civil Statutes, consistent with
prior interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interests in a variable annuity contract issued under the ORP only upon (1)
termination of employment in all institutions of higher education as defined in
Texas law, (2) retirement, or (3) death. Accordingly, participants in the ORP
will be required to obtain certifications from their employers of their status
with respect to ORP employers before they may redeem their contract or transfer
contract values to another carrier qualified to participate in ORP.

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

Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements

39
<PAGE>
APPENDIX A--SPECIAL TERMS

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 your values under a contract in the General
Account and in the Variable Annuity Account.

ANNUITANT: the person who may receive lifetime benefits under the contract.

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
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 we have designated as an eligible investment for the Variable Annuity
Account, namely, MIMLIC Series Fund, Inc. and its Portfolios.

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

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 ACCOUNT: a separate investment account called the Minnesota
Mutual Variable Annuity Account, where the investment experience of its assets
is kept separate from our other assets.

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

WE, OUR, US: The Minnesota Mutual Life Insurance Company.

YOU, YOUR: the Contract Owner.

40
<PAGE>
- ------------------------------------------------------------------------
APPENDIX B--ILLUSTRATION OF VARIABLE ANNUITY VALUES

The illustration included in this appendix shows the effect of investment
performance on the monthly variable annuity income. The illustration assumes a
gross investment return, after tax, of: 0%, 6.36% and 12.00%.
For illustration purposes, an average annual expense equal to 1.86% of the
average daily net assets is deducted from the gross investment return to
determine the net investment return. The net investment return is then used to
project the monthly variable annuity incomes. The expense charge of 1.86%
includes: 1.25% for mortality and expense risk, and an average of .61% for
investment management and other fund expenses. These expenses are listed for
each portfolio in the table following.
The gross and net investment rates are for illustrative purposes only and are
not a reflection of past or future performance. Actual variable annuity income
will be more or less than shown if the actual returns are different than those
illustrated.
The illustration assumes 100% of the assets are invested in sub-account(s) of
the Variable Annuity Account. For comparison purposes, a current fixed annuity
income, available through the general account is also provided. The illustration
assumes an initial interest rate, used to determine the first variable payment
of 4.50%. For contracts issued prior to May, 1993, an initial rate of 3.50% may
also be available. After the first variable annuity payment, future payments
will increase if the annualized net rate of return exceeds the initial interest
rate, and will decrease if the annualized net rate of return is less than the
initial interest rate.
The illustration provided is for a male, age 65, selecting a life and 10 year
certain annuity option with $100,000 of non-qualified funds, residing in the
State of Minnesota. Upon request, we will provide a comparable illustration
based upon the proposed annuitant's date of birth, sex, annuity option, state of
residence, type of funds, value of funds, and selected gross annual rate of
return (not to exceed 12%).

ACTUAL 1995 VARIABLE ANNUITY SEPARATE ACCOUNT CHARGES
AND SERIES FUND EXPENSES

<TABLE>
<CAPTION>
SERIES FUND OTHER
SEPARATE ACCOUNT MORTALITY & MANAGEMENT SERIES FUND
SUB-ACCOUNT NAME EXPENSE RISK FEE EXPENSES TOTAL
- ------------------------------ ------------- ----------- ------------ ------
<S> <C> <C> <C> <C>
Growth........................ 1.25% .50% .06% 1.81%
Bond.......................... 1.25% .50% .11% 1.86%
Money Market.................. 1.25% .50% .15% 1.90%
Asset Allocation.............. 1.25% .50% .06% 1.81%
Mortgage Securities........... 1.25% .50% .10% 1.85%
Index 500..................... 1.25% .40% .10% 1.75%
Capital Appreciation.......... 1.25% .75% .08% 2.08%
International Stock........... 1.25% .82% .42% 2.49%
Small Company................. 1.25% .75% .14% 2.14%
Value Stock................... 1.25% .75% .15% 2.15%
Maturing Government Bond
1998......................... 1.25% .05% .15% 1.45%
Maturing Government Bond
2002......................... 1.25% .05% .15% 1.45%
Maturing Government Bond
2006......................... 1.25% .25% .15% 1.65%
Maturing Government Bond
2010......................... 1.25% .25% .15% 1.65%
-- --
--- ------
Average............... 1.25% .47% .14% 1.86%
</TABLE>

41
<PAGE>
VARIABLE ANNUITY PAYOUT ILLUSTRATION

PREPARED FOR: Prospect

PREPARED BY: Minnesota Mutual

SEX: Male DATE OF BIRTH: 05/01/30

STATE: MN

LIFE EXPECTANCY: 20.0 (IRS) 20.5 (MML)

ANNUITIZATION OPTION: 10 Year Certain with Life Contingency

QUOTATION DATE: 05/01/95

COMMENCEMENT DATE: 06/01/95

SINGLE PAYMENT RECEIVED: $100,000.00
FUNDS: Non-Qualified

INITIAL MONTHLY INCOME: $678

The monthly variable annuity income amount shown below assumes a constant
annual investment return. The initial interest rate of 4.50% is the assumed rate
used to calculate the first monthly payment. Thereafter, monthly payments will
increase or decrease

based upon the relationship between the initial interest rate and the
performance of the sub-account(s) selected. The investment returns shown are
hypothetical and not a representation of future results.

<TABLE>
<CAPTION>
ANNUAL RATE OF RETURN
-----------------------------------------------------------
0% GROSS 6.36% GROSS 12.00% GROSS
DATE AGE (-1.86% NET) (4.50% NET) (10.14% NET)
- ------------------------------------------------------- --------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
June 1, 1996........................................... 66 $ 637 $ 678 $ 715
June 1, 1997........................................... 67 598 678 753
June 1, 1998........................................... 68 562 678 794
June 1, 1999........................................... 69 527 678 837
June 1, 2000........................................... 70 495 678 882
June 1, 2005........................................... 75 362 678 1,147
June 1, 2010........................................... 80 264 678 1,492
June 1, 2015........................................... 85 193 678 1,940
June 1, 2020........................................... 90 141 678 2,523
June 1, 2025........................................... 95 103 678 3,282
June 1, 2030........................................... 100 75 678 4,268
</TABLE>

IF 100% OF YOUR PURCHASE WAS APPLIED TO PROVIDE A FIXED ANNUITY ON THE
QUOTATION DATE OF THIS ILLUSTRATION, THE FIXED ANNUITY INCOME AMOUNT WOULD BE
$804.
Net rates of return reflect expenses totaling 1.86%, which consist of the
1.25% Variable Annuity Account mortality and expense risk charge and .61% for
the Series Fund management fee and other Series Fund expenses (this is an
average with the actual varying from .20% to 1.24%).
Minnesota Mutual MultiOption variable annuities are available through
registered representatives of MIMLIC Sales Corporation.

This is an illustration only and not a contract.

42
<PAGE>

Minnesota Mutual Variable Annuity Account
("Variable Annuity Account"), a Separate Account of

The Minnesota Mutual Life Insurance Company
("Minnesota Mutual")
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (612) 298-3500

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 Fund's current Prospectus, bearing the same date, which
may be obtained by calling The Minnesota Mutual Life Insurance Company at (612)
298-3500, or writing to Minnesota Mutual at Minnesota Mutual Life Center, 400
Robert Street North, St. Paul, Minnesota 55101-2098.

Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements

<PAGE>

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

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

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

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.

DISTRIBUTION OF CONTRACTS

The contracts will be sold in a continuous offering by our life insurance agents
who are also registered representatives of MIMLIC Sales Corporation ("MIMLIC
Sales") or other broker-dealers who have entered into selling agreements with
MIMLIC Sales. MIMLIC Sales acts as principal underwriter of the contracts.
MIMLIC Sales is a wholly-owned subsidiary of MIMLIC Corporation, which in turn
is a wholly-owned subsidiary of Minnesota Mutual Life. MIMLIC Corporation is
also the sole owner of the shares of MIMLIC Asset Management Company, a
registered investment adviser and the investment adviser to the MIMLIC Series
Fund, Inc. 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 to the underwriter for 1994 was
$7,363,105 for payments to associated dealers on the sale of the contracts.
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 Annuity Account 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 3.98% and
4.06%, 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 3.91% and 3.98%, respectively. Yield figures quoted by the Money
Market Sub-Account will not reflect the deduction of any applicable deferred
sales charges (the deferred sales charges, as a percentage of the accumulation
value withdrawn, begin as of the contract date at 9% for the flexible payment
contract and at 6% for the single payment contract, and decrease uniformly each
month for 120 months).

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
Annuity Account'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. Such quotations of cumulative total return
will not reflect the deduction of any applicable deferred sales charges.

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, the Index 500 Sub-Account was the Index
Sub-Account and the Capital Appreciation Sub-Account was the Aggressive Growth
Sub-Account.

The cumulative total return figures published by the Variable Annuity Account
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>

From Inception Date of
to 12/31/94 Inception
-------------- ---------
<S> <C> <C>
Growth Sub-Account 105.05% (104.29%) 12/3/85

Bond Sub-Account 80.09% (73.45%) 12/3/85

Money Market Sub-Account 44.39% (40.19%) 12/3/85

Asset Allocation Sub-Account 96.13% (95.59%) 12/3/85

Mortgage Securities Sub-Account 65.95% (65.53%) 6/1/87

Index 500 Sub-Account 79.58% (78.94%) 6/1/87

Capital Appreciation Sub-Account 108.73% (106.05%) 6/1/87

International Stock Sub-Account 29.48% (29.43%) 5/1/92

Small Company Sub-Account 21.97% (21.95%) 5/3/93

Maturing Government Bond
1998 Sub-Account -.78% (-1.44%) 5/2/94

Maturing Government Bond
2002 Sub-Account -.56% (-1.48%) 5/2/94

Maturing Government Bond
2006 Sub-Account -.70% (-2.07%) 5/2/94

Maturing Government Bond
2010 Sub-Account -1.13% (-3.64%) 5/2/94

Value Stock Sub-Account 3.70% (3.31%) 5/2/94
</TABLE>

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 Annuity
Account'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 surrender value will reflect the deduction of the deferred sales
charge applicable to the contract (flexible premium/single premium) and to the
length of the period advertised. The average annual total return figures
published by the Variable Annuity Account 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

<PAGE>

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, .90% of the average
daily net assets of the Capital Appreciation and Small Company Portfolios of the
Fund and expenses that exceed 1.00% of the average daily net assets of the
International Stock Portfolio of the Fund exclusive of the advisory fee. And,
for the period subsequent to May 2, 1994, Minnesota Mutual has voluntarily
absorbed fees and expenses that exceed .90% of the average daily net assets of
the Value Stock Portfolio and fees and expenses that exceed .40% of the average
daily net assets of the Maturing Government Bond Portfolios. It should be noted
that for the Maturing Government Bond Portfolios maturing in 1998 and 2002,
Minnesota Mutual will voluntarily absorb fees and expenses that exceed .20% of
average daily net assets of those Portfolios until April 30, 1998. 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 rates of return for the Sub-Accounts, in connection with both
the flexible premium and single premium contracts described in the Prospectus,
for the specified periods ended December 31, 1994 are shown in the tables below.
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.

FLEXIBLE PREMIUM CONTRACT

Year Ended Five Years From Inception Date of
12/31/94 Ended 12/31/94 to 12/31/94 Inception
---------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Growth Sub-Account -7.71% (-7.71%) 6.02% (6.02%) 8.14% (8.02%) 12/3/85

Bond Sub-Account -12.61% (-12.61%) 4.98% (4.95%) 6.60% (6.52%) 12/3/85

Money Market Sub-Account -5.06% (-4.41%) 2.39% (2.26%) 4.04% (3.72%) 12/3/85

Asset Allocation
Sub-Account -9.72% (-9.72%) 6.27% (6.27%) 7.61% (7.58%) 12/3/85

Mortgage Securities
Sub-Account -11.53% (-11.53%) 5.18% (5.16%) 6.63% (6.60%) 6/1/87

Index 500 Sub-Account -7.37% (-7.37%) 6.02% (6.00%) 7.75% (7.70%) 6/1/87

Capital Appreciation
Sub-Account -6.39% (-6.39%) 8.24% (8.20%) 9.90% (9.72%) 6/1/87

International Stock
Sub-Account -8.74% (-8.74%) N/A (N/A) 7.67% (7.66%) 5/1/92

Small Company Sub-Account -2.80% (-2.80%) N/A (N/A) 8.03% (8.02%) 5/3/93

Maturing Government Bond
1998 Sub-Account N/A (N/A) N/A (N/A) -8.28% (-8.87%) 5/2/94
</TABLE>

<PAGE>

<S> <C> <C> <C> <C>
Maturing Government Bond
2002 Sub-Account N/A (N/A) N/A (N/A) -8.07% (-8.91%) 5/2/94

Maturing Government Bond
2006 Sub-Account N/A (N/A) N/A (N/A) -8.21% (-9.43%) 5/2/94

Maturing Government Bond
2010 Sub-Account N/A (N/A) N/A (N/A) -8.60% (-10.81%) 5/2/94

Value Stock Sub-Account N/A (N/A) N/A (N/A) -4.14% (-4.39%) 5/2/94
</TABLE>

SINGLE PREMIUM CONTRACT

Bond Sub-Account -10.32% (-10.32%) 5.27% (5.24%) 6.63% (6.55%) 12/3/85

Money Market Sub-Account -2.57% (-2.24%) 2.68% (2.53%) 4.07% (3.75%) 12/3/85

Asset Allocation
Sub-Account -7.36% (-7.36%) 6.57% (6.57%) 7.64% (7.61%) 12/3/85

Mortgage Securities
Sub-Account -9.21% (-9.21%) 5.47% (5.45%) 6.72% (6.69%) 6/1/87

Index 500 Sub-Account -4.94% (-4.94%) 6.32% (6.30%) 7.84% (7.79%) 6/1/87

Capital Appreciation
Sub-Account -3.93% (-3.93%) 8.55% (8.51%) 10.00% (9.82%) 6/1/87
</TABLE>

<PAGE>

<S> <C> <C> <C> <C>
International Stock
Sub-Account -6.35% (-6.35%) N/A (N/A) 8.52% (8.50%) 5/1/92

Small Company Sub-Account -.25% (-.25%) N/A (N/A) 9.59% (9.58%) 5/3/93

Maturing Government Bond
1998 Sub-Account N/A (N/A) N/A (N/A) -5.78% (-6.39%) 5/2/94

Maturing Government Bond
2002 Sub-Account N/A (N/A) N/A (N/A) -5.57% (-6.43%) 5/2/94

Mauturing Government Bond
2006 Sub-Account N/A (N/A) N/A (N/A) -5.71% (-6.96%) 5/2/94

Maturing Government Bond
2010 Sub-Account N/A (N/A) N/A (N/A) -6.11% (-8.37%) 5/2/94

Value Stock Sub-Account N/A (N/A) N/A (N/A) -1.53% (-1.79%) 5/2/94
</TABLE>

The average annual total return figures described above may be accompanied by
other average annual total return quotations which do not reflect the deduction
of any deferred sales charges. Such other average annual total return figures
will be calculated as described above, except that the initial $1,000 investment
will be equated to that same investment's net asset value, rather than its
surrender value, at the end of the period. 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
table below. Inasmuch as no deferred sales charges are reflected in these
figures, they are the same for both the flexible premium and the single premium
contracts. The figures in parentheses show what the average annual rates of
return, without the application of applicable deferred sales charges, would have
been had Minnesota Mutual not absorbed Fund expenses as described above.

<PAGE>

Bond Sub-Account -5.74% (-5.74%) 5.85% (5.82%) 6.69% (6.60%) 12/3/85

Money Market Sub-Account 2.41% (2.10%) 3.24% (3.06%) 4.13% (3.81%) 12/3/85

Asset Allocation
Sub-Account -2.63% (-2.63%) 7.15% (7.15%) 7.70% (7.67%) 12/3/85

Mortgage Securities
Sub-Account -4.58% (-4.85%) 6.05% (6.03%) 6.91% (6.88%) 6/1/87

Index 500 Sub-Account -.08% (-.08%) 6.90% (6.88%) 8.03% (7.98%) 6/1/87

Capital Appreciation
Sub-Account .98% (.98%) 9.14% (9.10%) 10.19% (10.01%) 6/1/87

International Stock
Sub-Account -1.56% (-1.56) -- -- 10.17% (10.15%) 5/1/92

Small Company Sub-Account 4.84% (4.84%) -- -- 12.66% (12.65%) 5/3/93

Maturing Government Bond
1998 Sub-Account -- -- -- -- -.78% (-1.44%) 5/2/94

Maturing Government Bond
2002 Sub-Account -- -- -- -- -.56% (-1.48%) 5/2/95

Maturing Government Bond
2006 Sub-Account -- -- -- -- -.70% (-2.07%) 5/2/94
</TABLE>

<PAGE>

<S> <C> <C> <C> <C>
Maturing Government Bond
2010 Sub-Account -- -- -- -- -1.13% (3.64%) 5/2/94

Value Stock Sub-Account -- -- -- -- 3.70% (3.31%) 5/2/94
</TABLE>

<PAGE>

PREDICTABILITY OF RETURN

ANTICIPATED VALUE AT MATURITY. The maturity values of zero-coupon bonds are
specified at the time the bonds are issued, and this feature, combined with the
ability to calculate yield to maturity, has made these instruments popular
investment vehicles for investors seeking reliable investments to meet long-term
financial goals.

Each Maturing Government Bond Portfolio of the Fund consists primarily of zero-
coupon bonds but is actively managed to accommodate contract owner activity and
to take advantage of perceived market opportunities. Because of this active
management approach, there is no guarantee that a certain price per share of a
Maturing Government Bond Portfolio, or a certain price per unit of the
corresponding Sub-Account, will be attained by the time a Portfolio is
liquidated. Instead, the Fund attempts to track the price behavior of a
directly held zero-coupon bond by:

(1) Maintaining a weighted average maturity within each Maturing
Government Bond Portfolio's target maturity year;

(2) Investing at least 90% of assets in securities that mature within one
year of that Portfolio's target maturity year;

(3) Investing a substantial portion of assets in Treasury STRIPS (the most
liquid Treasury zero);

(4) Under normal conditions, maintaining a nominal cash balance;

(5) Executing portfolio transactions necessary to accommodate net contract
owner purchases or redemptions on a daily basis; and

(6) Whenever feasible, contacting several U.S. government securities
dealers for each intended transaction in an effort to obtain the best
price on each transaction.

These measures enable the Company to calculate an anticipated value at maturity
(AVM) for each unit of a Maturing Government Bond Sub-Account, calculated as of
the date of purchase of such unit, that approximates the price per unit that
such unit will achieve by the weighted average maturity date of the underlying
Portfolio. The AVM calculation for each Maturing Government Bond Sub-Account is
as follows:

AVM = P(1 + AGR/2) to the power of 2T

where P = the Sub-Account's current price per unit; T = the Sub-Account's
weighted average term to maturity in years; and AGR = the anticipated growth
rate.

This calculation assumes an expense ratio and a portfolio composition for the
underlying Maturing Government Bond Portfolio that remain constant for the life
of such Portfolio. Because the Portfolio's expenses and composition do not
remain constant, however, the Company may

-12-

<PAGE>

calculate AVM for each Maturing Government Bond Sub-Account on any day on which
the underlying Maturing Government Bond Portfolio is valued. Such an AVM is
applicable only to units purchased on that date.

In addition to the measures described above, which the adviser believes are
adequate to assure close correspondence between the price behavior of each
Portfolio and the price behavior of directly held zero-coupon bonds with
comparable maturities, the Fund expects that each Portfolio will invest at least
90% of its net assets in zero-coupon bonds until it is within four years of its
target maturity year and at least 80% of its net assets in zero-coupon
securities within two to four years of its target maturity year. This
expectation may be altered if the market supply of zero-coupon securities
diminishes unexpectedly.

ANTICIPATED GROWTH RATE. The Company calculates an anticipated growth rate
(AGR) for each Maturing Government Bond Sub-Account on each day on which the
underlying Portfolio is valued. AGR is a calculation of the anticipated
annualized rate of growth for a Sub-Account unit, calculated from the date of
purchase of such unit to the Sub-Account's target maturity date. As is the case
with calculations of AVM, the AGR calculation assumes that each underlying
Maturing Government Bond Portfolio expense ratio and portfolio composition will
remain constant. Each Maturing Government Bond Sub-Account AGR changes from day
to day (i.e., a particular AGR calculation is applicable only to units purchased
on that date), due primarily to changes in interest rates and, to a lesser
extent, to changes in portfolio composition and other factors that affect the
value of the underlying Portfolio.

The Company expects that a contract owner who holds specific units until the
underlying Portfolio's weighted average maturity date will realize an investment
return and maturity value on those units that do not differ substantially from
the AGR and AVM calculated on the day such units were purchased. The AGR and
AVM calculated with respect to units purchased any other date, however, may be
materially different.

AUDITORS

The financial statements of Minnesota Mutual and the Minnesota Mutual Variable
Annuity Account included herein have been audited by KPMG Peat Marwick LLP, 4200
Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402,
independent auditors, whose reports thereon appear elsewhere herein, and have
been so included in reliance upon the reports of KPMG Peat Marwick LLP and upon
the authority of said firm as experts in accounting and auditing.

REGISTRATION STATEMENT

We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, with respect to the
contracts offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Annuity Account, Minnesota Mutual, and the
contracts. Statements contained in this Prospectus as to the contents of
contracts and other legal instruments are summaries, and reference is made to
such instruments as filed.

-13-

<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Trustees of The Minnesota Mutual Life Insurance Company
and Contract Owners of Minnesota Mutual Variable Annuity Account:

We have audited the accompanying statements of assets and liabilities of the
Growth, Bond, Money Market, Asset Allocation, Mortgage Securities, Index 500,
Capital Appreciation, International Stock, Small Company, Maturing Government
Bond 1998, Maturing Government Bond 2002, Maturing Government Bond 2006,
Maturing Government Bond 2010 and Value Stock Segregated Sub-Accounts of
Minnesota Mutual Variable Annuity Account (class of contracts offered for
combination Fixed and Variable Annuity Contracts for Personal Retirement Plans)
as of December 31, 1994 and the related statements of operation for the year
then ended (period from May 2, 1994 to December 31, 1994 for Maturing Government
Bond 1998, Maturing Government Bond 2002, Maturing Government Bond 2006,
Maturing Government Bond 2010 and Value Stock Segregated Sub-Accounts), 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 the period from May 3, 1993 to
December 31, 1993 for Small Company Segregated Sub-Account and the period from
May 2, 1994 to December 31, 1994 for Maturing Government Bond 1998, Maturing
Government Bond 2002, Maturing Government Bond 2006, Maturing Government Bond
2010 and Value Stock Segregated Sub-Accounts) and the financial highlights for
each of the years in the five-year period then ended for the Growth, Bond, Money
Market, Asset Allocation, Mortgage Securities, Index 500 and Capital
Appreciation Segregated Sub-Accounts and for each of the years in the two-year
period ended December 31, 1994 and the period from May 1, 1992 to December 31,
1992 for the International Stock Segregated Sub-Account, the year ended December
31, 1994 and the period from May 3, 1993 to December 31, 1993 for Small Company
Segregated Sub-Account and the period from May 2, 1994 to December 31, 1994 for
Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010 and Value Stock Segregated
Sub-Accounts. 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, Capital Appreciation,
International Stock, Small Company, Maturing Government Bond 1998, Maturing
Government Bond 2002, Maturing Government Bond 2006, Maturing Government Bond
2010 and Value Stock Segregated Sub-Accounts of Minnesota Mutual Variable
Annuity Account at December 31, 1994 and the results of their operations,
changes in their net assets and the financial highlights for the periods stated
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 ANNUITY ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1994

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, 38,190,437 shares at net asset value of $1.866 per share
(cost $67,426,008) .....................................................$ 71,263,378 -- -- --
Bond Portfolio, 37,872,407 shares at net asset value of $1.157 per share
(cost $46,011,540) ..................................................... -- 43,811,288 -- --
Money Market Portfolio, 17,057,390 shares at net asset value of $1.000 per
share (cost $17,057,390) .............................................. -- -- 17,057,390 --
Asset Allocation Portfolio, 144,903,163 shares at net asset value of $1.524
per share (cost $214,119,870) .......................................... -- -- -- 220,847,420
Mortgage Securities Portfolio, 48,255,024 shares at net at net asset value
of $1.098 per share (cost $55,749,245) ................................. -- -- -- --
Index 500 Portfolio, 35,229,943 shares at net asset value of $1.518 per
share (cost $48,918,060) ............................................... -- -- -- --
Capital Appreciation Portfolio, 47,118,685 shares at net asset value of
$1.808 per share (cost $76,266,965) .................................... -- -- -- --
------------ ---------- ------------ ------------
71,263,378 43,811,288 17,057,390 220,847,420

Receivable from MIMLIC Series Fund, Inc. for investments sold............... 20,664 23,399 70,811 148,574
Receivable from Minnesota Mutual for contract purchase payments............. 41,864 164,557 590,390 241,155
Dividends receivable from MIMLIC Series Fund, Inc........................... -- -- 2,416 --
------------ ---------- ------------ ------------

Total assets ....................................................... 71,325,906 43,999,244 17,721,007 221,237,149
------------ ---------- ------------ ------------

LIABILITIES
-----------

Payable to MIMLIC Series Fund, Inc. for investments purchased............... 41,864 164,557 590,390 241,155
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges .......................................................... 20,664 23,399 70,811 148,574
------------ ---------- ------------ ------------

Total liabilities .................................................. 62,528 187,956 661,201 389,729
------------ ---------- ------------ ------------

Net assets applicable to annuity contract owners ...................$ 71,263,378 43,811,288 17,059,806 220,847,420
------------ ---------- ------------ ------------
------------ ---------- ------------ ------------

CONTRACT OWNERS' EQUITY
-----------------------

Contracts in accumulation period, accumulation units outstanding of
33,090,790 for Growth; 23,798,963 for Bond; 11,720,778 for Money Market;
109,044,286 for Asset Allocation; 31,542,405 for Mortgage Securities;
29,639,298 for Index 500 and 40,739,415 for Capital Appreciation..........$ 70,914,965 43,326,160 17,059,806 219,625,868
Contracts in annuity payment period (note 2) ............................... 348,413 485,128 -- 1,221,552
------------ ----------- ------------ ------------

Total contract owners' equity ......................................$ 71,263,378 43,811,288 17,059,806 220,847,420
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------

NET ASSET VALUE PER ACCUMULATION UNIT ......................................$ 2.143 1.820 1.455 2.014
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------

MORTGAGE INDEX CAPITAL
ASSETS SECURITIES 500 APPRECIATION
------ ------------ ----------- --------------

Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 38,190,437 shares at net asset value of $1.866 per share
(cost $67,426,008) ........................................................... -- -- --
Bond Portfolio, 37,872,407 shares at net asset value of $1.157 per share
(cost $46,011,540) ........................................................... -- -- --
Money Market Portfolio, 17,057,390 shares at net asset value of $1.000 per
share (cost $17,057,390) ..................................................... -- -- --
Asset Allocation Portfolio, 144,903,163 shares at net asset value of $1.524 per
share (cost $214,119,870) .................................................... -- -- --
Mortgage Securities Portfolio, 48,255,024 shares at net asset value of $1.098
per share (cost $55,749,245) .................................................52,989,527 -- --
Index 500 Portfolio, 35,229,943 shares at net asset value of $1.518 per share
(cost $48,918,060) ........................................................... -- 53,494,066 --
Capital Appreciation Portfolio, 47,118,685 shares at net asset value of $1.808
per share (cost $76,266,965) ................................................. -- -- 85,167,828
----------- ----------- ------------
52,989,527 53,494,066 85,167,828

Receivable from MIMLIC Series Fund, Inc. for investments sold 7,874 7,894 31,506
Receivable from Minnesota Mutual for contract purchase payments 48,057 56,927 82,394
Dividends receivable from MIMLIC Series Fund, Inc................................ -- -- --
----------- ----------- ------------

Total assets .............................................................53,045,458 53,558,887 85,281,728
----------- ----------- ------------
LIABILITIES
-----------

Payable to MIMLIC Series Fund, Inc. for investments purchased..................... 48,057 56,927 82,394
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges ................................................................ 7,874 7,894 31,506
----------- ----------- ------------
Total liabilities ........................................................ 55,931 64,821 113,900
----------- ----------- ------------
Net assets applicable to annuity contract owners .........................52,989,527 53,494,066 85,167,828
----------- ----------- ------------
----------- ----------- ------------

CONTRACT OWNERS' EQUITY
-----------------------

Contracts in accumulation period, accumulation units outstanding of 33,090,790
for Growth; 23,798,963 for Bond; 11,720,778 for Money Market; 109,044,286 for
Asset Allocation; 31,542,405 for Mortgage Securities; 29,639,298 for Index 500
and 40,739,415 for Capital Appreciation.........................................52,356,931 53,180,513 84,809,567
Contracts in annuity payment period (note 2) ..................................... 632,596 313,553 358,261
----------- ----------- ------------
Total contract owners' equity ............................................52,989,527 53,494,066 85,167,828
----------- ----------- ------------
----------- ----------- ------------

NET ASSET VALUE PER ACCUMULATION UNIT ............................................ 1.660 1.794 2.082

----------- ----------- ------------
----------- ----------- ------------

</TABLE>

See accompanying notes to financial statements.
<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

STATEMENTS OF ASSETS AND LIABILITIES

DECEMBER 31, 1994

SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------------
MATURING MATURING
INTERNATIONAL SMALL GOVERNMENT GOVERNMENT
ASSETS STOCK COMPANY BOND 1998 BOND 2002
------ ------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Investments in shares of MIMLIC Series Fund, Inc.:
International Stock Portfolio, 64,959,050 shares at net asset value
of $1.235 per share (cost $78,459,456) . . . . . . . . . . . . . . $ 80,215,267 -- -- --
Small Company, 29,893,263 shares at net asset value of $1.226 per
share (cost $34,124,196) . . . . . . . . . . . . . . . . . . . . . -- 36,663,726 -- --
Maturing Government Bond 1998 Portfolio, 2,676,404 shares at net
asset value of $.945 per share (cost $2,661,554) . . . . . . . . . -- -- 2,529,937 --
Maturing Government Bond 2002 Portfolio, 2,636,013 shares at net
asset value of $.932 per share (cost $2,608,537) . . . . . . . . . -- -- -- 2,457,212
Maturing Government Bond 2006 Portfolio, 1,887,208 shares at net
asset value of $.923 per share (cost $1,863,612) . . . . . . . . . -- -- -- --
Maturing Government Bond 2010 Portfolio, 954,526 shares at net asset
value of $.910 per share (cost $928,692) . . . . . . . . . . . . . -- -- -- --
Value Stock Portfolio, 7,253,961 shares at net asset value of $1.044
per share (cost $7,502,525). . . . . . . . . . . . . . . . . . . . -- -- -- --
------------- ------------- ------------- -----------
80,215,267 36,663,726 2,529,937 2,457,212

Receivable from MIMLIC Series Fund, Inc. for investments sold. . . . . 70,249 13,160 375 361
Receivable from Minnesota Mutual for contract purchase payments. . . . 127,949 128,339 32,738 29,829
------------- ------------- ------------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,413,465 36,805,225 2,563,050 2,487,402
------------- ------------- ------------- -----------
LIABILITIES
-----------

Payable to MIMLIC Series Fund, Inc. for investments purchased. . . . . 127,949 128,339 32,738 29,829
Payable to Minnesota Mutual for contract terminations and mortality
and expense charges. . . . . . . . . . . . . . . . . . . . . . . . . 70,249 13,160 375 361
------------- ------------- ------------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 198,198 141,499 33,113 30,190
------------- ------------- ------------- -----------
Net assets applicable to annuity contract owners . . . . . . . . . $ 80,215,267 36,663,726 2,529,937 2,457,212
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------

CONTRACT OWNERS' EQUITY
-----------------------

Contracts in accumulation period, accumulation units outstanding of
61,474,893 for International Stock; 29,723,609 for Small Company;
2,578,506 for Maturing Government Bond 1998; 2,528,509 for Maturing
Government Bond 2002; 1,808,705 for Maturing Government Bond 2006;
913,358 for Maturing Government Bond 2010 and 7,178,675 for Value
Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79,674,463 36,263,379 2,529,937 2,457,212
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . 540,804 400,347 -- --
------------- ------------- ------------- -----------
Total contract owners' equity. . . . . . . . . . . . . . . . . $ 80,215,267 36,663,726 2,529,937 2,457,212
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------

NET ASSET VALUE PER ACCUMULATION UNIT. . . . . . . . . . . . . . . . . $ 1.296 1.220 0.981 0.972
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------

SEGREGATED SUB-ACCOUNTS
---------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT VALUE
ASSETS BOND 2006 BOND 2010 STOCK
------ ------------ -------------- -----------

Investments in shares of MIMLIC Series Fund, Inc.:
International Stock Portfolio, 64,959,050 shares at net asset value
of $1.235 per share (cost $78,459,456) . . . . . . . . . . . . . . -- -- --
Small Company, 29,893,263 shares at net asset value of $1.226 per
share (cost $34,124,196) . . . . . . . . . . . . . . . . . . . . . -- -- --
Maturing Government Bond 1998 Portfolio, 2,676,404 shares at net
asset value of $.945 per share (cost $2,661,554) . . . . . . . . . -- -- --
Maturing Government Bond 2002 Portfolio, 2,636,013 shares at net
asset value of $.932 per share (cost $2,608,537) . . . . . . . . . -- -- --
Maturing Government Bond 2006 Portfolio, 1,887,208 shares at net
asset value of $.923 per share (cost $1,863,612) . . . . . . . . . 1,741,677 -- --
Maturing Government Bond 2010 Portfolio, 954,526 shares at net asset
value of $.910 per share (cost $928,692) . . . . . . . . . . . . . -- 868,373 --
Value Stock Portfolio, 7,253,961 shares at net asset value of $1.044
per share (cost $7,502,525). . . . . . . . . . . . . . . . . . . . -- -- 7,571,719
------------ ----------- ---------
1,741,677 868,373 7,571,719
Receivable from MIMLIC Series Fund, Inc. for investments sol . . . . . 261 130 16,113
Receivable from Minnesota Mutual for contract purchase payments. . . . 10,722 12,574 86,597
------------ ----------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,752,660 881,077 7,674,429
------------ ----------- ---------
LIABILITIES
-----------

Payable to MIMLIC Series Fund, Inc. for investments purchased. . . . . 10,722 12,574 86,597
Payable to Minnesota Mutual for contract terminations and mortality
and expense charges. . . . . . . . . . . . . . . . . . . . . . . . . 261 130 16,113
------------ ----------- ---------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 10,983 12,704 102,710
------------ ----------- ---------
Net assets applicable to annuity contract owners . . . . . . . . . 1,741,677 868,373 7,571,719
------------ ----------- ---------
------------ ----------- ---------

CONTRACT OWNERS' EQUITY
-----------------------

Contracts in annuity payment period (note 2) . . . . . . . . . . . . . -- -- 55,933
------------ ----------- ---------
Total contract owners' equity. . . . . . . . . . . . . . . . . 1,741,677 868,373 7,571,719
------------ ----------- ---------
------------ ----------- ---------
NET ASSET VALUE PER ACCUMULATION UNIT. . . . . . . . . . . . . . . . . 0.963 0.951 1.047
------------ ----------- ---------
------------ ----------- ---------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1994

SEGREGATED SUB-ACCOUNTS
----------------------------------------------------------------
MONEY ASSET
GROWTH BOAD MARKET ALLOCATION
-------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying mutual fund. . . $ 615,444 1,621,904 514,389 4,400,640
Mortality and expense charges (note 3) . . . . . . . . . . . . . (801,260) (512,676) (173,865) (2,691,478)
-------------- ---------- ------------- -------------
Investment income (loss) - net . . . . . . . . . . . . . . . . (185,816) 1,109,228 340,524 1,709,162
-------------- ---------- ------------- -------------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . 1,265,817 1,012,102 -- 1,282,395
-------------- ---------- ------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . 7,845,012 11,146,445 20,605,382 39,074,561
Cost of investments sold . . . . . . . . . . . . . . . . . . . (7,341,906) (11,468,765) (20,605,382) (37,598,905)
-------------- ---------- ------------- -------------
503,106 (322,320) -- 1,475,656
-------------- ---------- ------------- -------------

Net realized gains on investments. . . . . . . . . . . . . . . 1,768,923 689,782 -- 2,758,051
-------------- ---------- ------------- -------------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . (1,764,688) (4,114,674) -- (9,949,558)
-------------- ---------- ------------- -------------

Net gains (losses) on investments. . . . . . . . . . . . . . . 4,235 (3,424,892) -- (7,191,507)
-------------- ---------- ------------- -------------

Net increase (decrease) in net assets resulting from operation . . $ (181,581) (2,315,664) 340,524 (5,482,345)
-------------- ---------- ------------- -------------
-------------- ---------- ------------- -------------

SEGREGATED SUB-ACCOUNTS
-------------------------------------------------
MORTGAGE INDEX CAPITAL
SECURITIES 500 APPRECIATION
--------------- ------------ --------------

Investment income (loss):
Investment income distributions from underlying mutual fund. . . 2,678,151 768,948 59,918
Mortality and expense charges (note 3) . . . . . . . . . . . . . (720,424) (614,543) (922,425)
-------------- ----------- ------------
Investment income (loss) - net . . . . . . . . . . . . . . . . 1,957,727 154,405 (862,507)
-------------- ----------- ------------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . 1,272,207 155,663 1,019,321
-------------- ----------- ------------

Realized gains on sales of investments (note 4):
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . 20,839,941 6,652,580 10,118,087
Cost of investments sold . . . . . . . . . . . . . . . . . . . (21,545,229) (6,041,659) (9,171,633)
-------------- ----------- ------------
(705,288) 610,921 946,454
-------------- ----------- ------------

Net realized gains on investments. . . . . . . . . . . . . . . 566,919 766,584 1,965,775
-------------- ----------- ------------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . 5,307,765) (877,132) 171,786
-------------- ----------- ------------

Net gains (losses) on investments. . . . . . . . . . . . . . . (4,740,846) (110,548) 2,137,561
-------------- ----------- ------------

Net increase (decrease) in net assets resulting from operations. . (2,783,119) 43,857 1,275,054
-------------- ----------- ------------
-------------- ----------- ------------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1994*

SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
INTERNATIONAL SMALL BOND BOND
STOCK COMPANY 1998 2002
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Investment income (loss):
Investment income distributions from underlying mutual fund. . . . . $ 1,605,502 52,107 112,053 119,228
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . (888,610) (307,838) (24,095) (20,735)
------------- ------------- ------------ ------------

Investment income (loss) - net . . . . . . . . . . . . . . . . . . 716,892 (255,731) 87,958 98,493
------------- ------------- ------------ ------------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . . . 2,556,182 -- -- --
------------- ------------- ------------ ------------
Realized gains (losses) on sales of investments (note 4):
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . . . 23,336,047 3,543,701 2,655,857 964,332
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . (21,170,762) (3,438,941) (2,661,554) (983,870)
------------- ------------- ------------ ------------

2,165,285 104,760 (5,697) (19,538)
------------- ------------- ------------ ------------

Net realized gains (losses) on investments . . . . . . . . . . . . 4,721,467 104,760 (5,697) (19,538)
------------- ------------- ------------ ------------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . (7,117,936) 1,729,411 (131,617) (151,325)
------------- ------------- ------------ ------------

Net gains (losses) on investments. . . . . . . . . . . . . . . . . (2,396,469) 1,834,171 (137,314) (170,863)
------------- ------------- ------------ ------------

Net increase (decrease) in net assets resulting from operations. . . . $ (1,679,577) 1,578,440 (49,356) (72,370)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------

SEGREGATED SUB-ACCOUNTS
------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND VALUE
2006 2010 STOCK
------------ ------------ ------------

Investment income (loss):
Investment income distributions from underlying mutual fund. . . . . 86,634 44,591 60,102
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . (14,618) (7,866) (38,382)
------------ ----------- ------------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . 72,016 36,725 21,720
------------ ----------- ------------

Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund. . . . . . . -- -- 24,196
------------ ----------- ------------

Realized gains (losses) on sales of investments (note 4):
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . . . 461,242 490,016 336,942
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . (477,758) (515,611) (328,268)
------------ ----------- ------------

(16,516) (25,595) 8,674
------------ ----------- ------------

Net realized gains (losses) on investments . . . . . . . . . . . . (16,516) (25,595) 32,870
------------ ----------- ------------

Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . (121,935) (60,319) 69,194
------------ ----------- ------------

Net gains (losses) on investments. . . . . . . . . . . . . . . . . (138,451) (85,914) 102,064
------------ ----------- ------------

Net increase (decrease) in net assets resulting from operations. . . . (66,435) (49,189) 123,784
------------ ----------- ------------
------------ ----------- ------------

<FN>
* Period from May 2, 1994, commencement of operations, to December 31, 1994 for Maturing Government Bond 1998, Maturing Government
Bond 2002, Maturing Government Bond 2006, Maturing Government Bond 2010 and Value Stock Segregated Sub-Accounts.

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

YEAR ENDED DECEMBER 31, 1994

SEGREGATED SUB-ACCOUNTS
------------------------------------------------------------
MONEY ASSET
GROWTH BOND MARKET ALLOCATION
------------ -------------- -------------- --------------

<S> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . $ (185,816) 1,109,228 340,524 1,709,162
Net realized gains on investments. . . . . . . . . . . . . . . . . . 1,768,923 689,782 -- 2,758,051
Net change in unrealized appreciation or depreciation
of investments.. . . . . . . . . . . . . . . . . . . . . . . . . . (1,764,688) (4,114,674) -- (9,949,558)
------------ ------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations. . . . (181,581) (2,315,664) 340,524 (5,482,345)
------------ ------------- ------------- -------------

Contract transactions (notes 2, 3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . 22,484,064 20,052,493 23,247,643 55,446,509
Contract terminations and withdrawal payments. . . . . . . . . . . . (7,029,123) (10,611,630) (20,431,518) (36,277,906)
Actuarial adjustments for mortality experience on annuities
in payment period. . . . . . . . . . . . . . . . . . . . . . . . . (629) 13,927 -- (3,351)
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . (14,000) (36,066) -- (101,826)
------------ ------------- ------------- -------------
Increase (decrease) in net assets from contract transactions . . . . . 15,440,312 9,418,724 2,816,125 19,063,426
------------ ------------- ------------- -------------

Increase (decrease) in net assets. . . . . . . . . . . . . . . . . . . 15,258,731 7,103,060 3,156,649 13,581,081

Net assets at the beginning of year. . . . . . . . . . . . . . . . . . 56,004,647 36,708,228 13,903,157 207,266,339
------------ ------------- ------------- -------------

Net assets at the end of year. . . . . . . . . . . . . . . . . . . . . $ 71,263,378 43,811,288 17,059,806 220,847,420
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------

SEGREGATED SUB-ACCOUNTS
-------------------------------------------
MORTGAGE INDEX CAPITAL
SECURITIES 500 APPRECIATION
-------------- ----------- --------------

Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . 1,957,727 154,405 (862,507)
Net realized gains on investments. . . . . . . . . . . . . . . . . . 566,919 766,584 1,965,775
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . (5,307,765) (877,132) 171,786
------------ ----------- --------------
Net increase (decrease) in net assets resulting from operations. . . . (2,783,119) 43,857 1,275,054
------------ ----------- --------------

Contract transactions (notes 2, 3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . 17,882,418 17,110,585 29,257,388
Contract terminations and withdrawal payments. . . . . . . . . . . . (20,083,853) (6,013,722) (9,183,581)
Actuarial adjustments for mortality experience on annuities
in payment period. . . . . . . . . . . . . . . . . . . . . . . . . 11,754 2,820 (1,411)
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . (47,418) (27,135) (10,670)
------------ ----------- --------------

Increase (decrease) in net assets from contract transactions . . . . . (2,237,099) 11,072,548 20,061,726
------------ ----------- --------------

Increase (decrease) in net assets. . . . . . . . . . . . . . . . . . . (5,020,218) 11,116,405 21,336,780

Net assets at the beginning of year. . . . . . . . . . . . . . . . . . 58,009,745 42,377,661 63,831,048
------------ ----------- --------------

Net assets at the end of year. . . . . . . . . . . . . . . . . . . . . 52,989,527 53,494,066 85,167,828
------------ ----------- --------------
------------ ----------- --------------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

YEAR ENDED DECEMBER 31, 1994*

SEGREGATED SUB-ACCOUNTS
------------------------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
INTERNATIONAL SMALL BOND BOND
STOCK COMPANY 1998 2002
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . $ 716,892 (255,731) 87,958 98,493
Net realized gains (losses) on investments . . . . . . . . . . . . . 4,721,467 104,760 (5,697) (19,538)
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . (7,117,936) 1,729,411 (131,617) (151,325)
------------ ----------- ----------- ------------

Net increase (decrease) in net assets resulting from operations. . . . (1,679,577) 1,578,440 (49,356) (72,370)
------------ ----------- ----------- ------------

Contract transactions (notes 2, 3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . 53,308,316 27,187,384 5,211,054 3,473,178
Contract terminations and withdrawal payments. . . . . . . . . . . . (22,428,734) (3,226,820) (2,631,761) (943,596)
Actuarial adjustments for mortality experience on annuities
in payment period. . . . . . . . . . . . . . . . . . . . . . . . . (668) 1,678 -- --
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . (18,035) (10,720) -- --
------------ ----------- ----------- ------------

Increase in net assets from contract transactions. . . . . . . . . . . 30,860,879 23,951,522 2,579,293 2,529,582
------------ ----------- ----------- ------------

Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . 29,181,302 25,529,962 2,529,937 2,457,212
------------ ----------- ----------- ------------

Net assets at the beginning of period. . . . . . . . . . . . . . . . . 51,033,965 11,133,764 -- --
------------ ----------- ----------- ------------

Net assets at the end of period. . . . . . . . . . . . . . . . . . . . $ 80,215,267 36,663,726 2,529,937 2,457,212
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------

SEGREGATED SUB-ACCOUNTS
-------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND VALUE
2006 2010 STOCK
------------- ------------- -----------

Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . 72,016 36,725 21,720
Net realized gains (losses) on investments . . . . . . . . . . . . . (16,516) (25,595) 32,870
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . (121,935) (60,319) 69,194
------------ ----------- -----------

Net increase (decrease) in net assets resulting from operations. . . . (66,435) (49,189) 123,784
------------ ----------- -----------

Contract transactions (notes 2, 3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . 2,254,736 1,399,712 7,746,494
Contract terminations and withdrawal payments. . . . . . . . . . . . (446,624) (482,150) (296,984)
Actuarial adjustments for mortality experience on annuities
in payment period. . . . . . . . . . . . . . . . . . . . . . . . . -- -- (302)
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . -- -- (1,273)
------------ ----------- -----------

Increase in net assets from contract transactions. . . . . . . . . . . 1,808,112 917,562 7,447,935
------------ ----------- -----------

Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . 1,741,677 868,373 7,571,719
------------ ----------- -----------

Net assets at the beginning of period. . . . . . . . . . . . . . . . . -- -- --
------------ ----------- -----------

Net assets at the end of period. . . . . . . . . . . . . . . . . . . . 1,741,677 868,373 7,571,719
------------ ----------- -----------
------------ ----------- -----------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

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 MORTGAGE
GROWTH BOND MARKET ALLOCATION SECURITIES
-------------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . $ (28,246) 648,670 162,096 1,201,094 1,020,149
Net realized gains on investments. . . . . . . . . . . . 1,275,082 771,596 -- 5,440,635 996,682
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . 599,330 652,573 -- 2,178,245 953,069
------------ ---------- ------------ ------------ ------------
Net increase in net assets resulting from operations . . . 1,846,166 2,072,839 162,096 8,819,974 2,969,900
------------ ---------- ------------ ------------ ------------

Contract transactions (notes 2,3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . 22,285,846 19,759,519 16,065,420 86,955,148 32,202,376
Contract terminations and withdrawal payments. . . . . . (5,979,993) (5,393,046) (12,744,100) (18,754,889) (10,123,376)
Actuarial adjustments for mortality experience on
annuities in payment period. . . . . . . . . . . . . . (1,856) 902 (853) (5,745) 3,727
Annuity benefit payments . . . . . . . . . . . . . . . . (3,584) (24,073) (1,286) (60,712) (27,152)
------------ ---------- ------------ ------------ ------------
Increase in net assets from contract transactions. . . . . 16,300,413 14,343,302 3,319,181 68,133,802 22,055,575
------------ ---------- ------------ ------------ ------------

Increase in net assets . . . . . . . . . . . . . . . . . . 18,146,579 16,416,141 3,481,277 76,953,776 25,025,475

Net assets at the beginning of period. . . . . . . . . . . 37,858,068 20,292,087 10,421,880 130,312,563 32,984,270
------------ ---------- ------------ ------------ ------------

Net assets at the end of period. . . . . . . . . . . . . . $ 56,004,647 36,708,228 13,903,157 207,266,339 58,009,745
------------ ---------- ------------ ------------ ------------
------------ ---------- ------------ ------------ ------------

SEGREGATED SUB-ACCOUNTS
--------------------------------------------------------
INDEX CAPITAL INTERNATIONAL SMALL
500 APPRECIATION STOCK COMPANY
-------------- ------------ ------------- -----------

Operations:
Investment income (loss) - net . . . . . . . . . . . . . 68,346 (525,645) (91,815) (49,535)
Net realized gains on investments. . . . . . . . . . . . 604,742 1,889,792 483,845 179,551
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . 2,072,589 4,004,531 9,927,810 810,119
------------ ---------- ----------- -----------
Net increase in net assets resulting from operations . . . 2,745,677 5,368,678 10,319,840 940,135
------------ ---------- ----------- -----------

Contract transactions (notes 2,3 and 5):
Contract purchase payments . . . . . . . . . . . . . . . 15,979,459 24,096,230 27,142,442 10,654,806
Contract terminations and withdrawal payments. . . . . . (3,366,516) (6,919,298) (1,919,186) (460,776)
Actuarial adjustments for mortality experience on
annuities in payment period. . . . . . . . . . . . . . (1,506) (1,349) (445) (4)
Annuity benefit payments . . . . . . . . . . . . . . . . (5,265) (5,370) (2,324) (397)
------------ ---------- ----------- -----------
Increase in net assets from contract transactions. . . . . 12,606,172 17,170,213 25,220,487 10,193,629
------------ ---------- ----------- -----------

Increase in net assets . . . . . . . . . . . . . . . . . . 15,351,849 22,538,891 35,540,327 11,133,764

Net assets at the beginning of period. . . . . . . . . . . 27,025,812 41,292,157 15,493,638 --
------------ ---------- ----------- -----------

Net assets at the end of period. . . . . . . . . . . . . . 42,377,661 63,831,048 51,033,965 11,133,764
------------ ---------- ----------- -----------
------------ ---------- ----------- -----------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

Notes to Financial Statements

(1) ORGANIZATION AND BASIS OF PRESENTATION

The Minnesota Mutual Variable Annuity Account (the Account) was established on
September 10, 1984 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. There are
currently three classes of contracts each consisting of fourteen segregated
sub-accounts. On September 15, 1994, an additional variable annuity contract,
the Multi-Option Select, was offered by Minnesota Mutual. The financial
statements presented herein include only the segregated sub-accounts offered in
connection with the sale of the Combination Fixed and Variable Annuity Contracts
for Personal Retirement Plans (Multi-option Annuity) and Multi-option Select.

On May 3, 1993, an additional segregated sub-account, Small Company, was added
to the Account. On May 2, 1994, five additional segregated sub-accounts,
Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010 and Value Stock, were also
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 purchase payments to one or
more of the fourteen segregated sub-accounts. Such payments are then invested
in shares of MIMLIC Series Fund, Inc. (the Fund) which was organized by
Minnesota Mutual as the investment vehicle for its variable annuity contracts
and variable life policies. The Fund is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. Payments
allocated to the Growth, Bond, Money Market, Asset Allocation, Mortgage
Securities, Index 500, Capital Appreciation, International Stock, Small Company,
Maturing Government Bond 1998, Maturing Government Bond 2002, Maturing
Government Bond 2006, Maturing Government Bond 2010 and Value Stock segregated
sub-accounts are invested in shares of the Growth, Bond, Money Market, Asset
Allocation, Mortgage Securities, Index 500, Capital Appreciation, International
Stock, Small Company, Maturing Government Bond 1998, Maturing Government Bond
2002, Maturing Government Bond 2006, Maturing Government Bond 2010 and Value
Stock 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 segregated sub-accounts on the
ex-dividend date.

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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 currently payable contracts according to the
Progressive Annuity Mortality Table, using 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.

(3) MORTALITY AND EXPENSE AND ADMINISTRATIVE CHARGES

The mortality and expense charge paid to Minnesota Mutual is computed daily and
is equal, on an annual basis, to 1.25% of the average daily net assets of the
Account. Under certain conditions, the charge may be increased to 1.40% of the
average daily net assets of the Account.

A contingent deferred sales charge may be imposed on a Multi-Option Annuity or
Multi-Option Select contract owner during the first ten years or first seven
years, respectively, if a contract's accumulation value is reduced by a
withdrawal and surrender. Total sales charges deducted from redemption proceeds
for the years ended December 31, 1994 and 1993 amounted to $1,009,877 and
$555,895, respectively.

(4) INVESTMENT TRANSACTIONS

The Account's purchases of Fund shares, including reinvestment of dividend
distributions, were as follows during the year ended December 31, 1994 (period
from May 2, 1994 to December 31, 1994 for Maturing Government Bond 1998,
Maturing Government Bond 2002, Maturing Government Bond 2006, Maturing
Government Bond 2010 and Value Stock):

<TABLE>
<CAPTION>
<S> <C>
Growth Portfolio. . . . . . . . . . . . . . . . . . . . $24,365,325

Bond Portfolio. . . . . . . . . . . . . . . . . . . . . 22,686,499

Money Market Portfolio. . . . . . . . . . . . . . . . . 23,759,615

Asset Allocation Portfolio. . . . . . . . . . . . . . . 61,129,544

Mortgage Securities Portfolio . . . . . . . . . . . . . 21,832,776

Index 500 Portfolio . . . . . . . . . . . . . . . . . . 18,035,196

Capital Appreciation Portfolio. . . . . . . . . . . . . 30,336,629

International Stock Portfolio . . . . . . . . . . . . . 57,470,000

Small Company Portfolio . . . . . . . . . . . . . . . . 27,239,492

Maturing Government Bond 1998 . . . . . . . . . . . . . 5,323,108

Maturing Government Bond 2002 . . . . . . . . . . . . . 3,592,408

Maturing Government Bond 2006 . . . . . . . . . . . . . 2,341,370

Maturing Government Bond 2010 . . . . . . . . . . . . . 1,444,303

Value Stock . . . . . . . . . . . . . . . . . . . . . . 7,830,794
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS

Transactions in units for each segregated sub-account for the years ended
December 31, 1994 and 1993 (year ended December 31, 1994 and period from May 3,
1993 to December 31, 1993 for Small Company segregated sub-account and the
period from May 2, 1994 to December 31, 1994 for Maturing Government Bond 1998,
Maturing Government Bond 2002, Maturing Government Bond 2006, Maturing
Government Bond 2010 and Value Stock segregated sub-accounts) were as follows:

Segregated Sub-Accounts
-----------------------------------------------------------------------
Money Asset
Growth Bond Market Allocation
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Units outstanding at
December 31, 1992. . . . . . . . . . . . . 18,152,996 11,267,890 7,414,734 66,121,882
Contract purchase
payments. . . . . . . . . . . . . . . 10,715,113 10,408,226 11,378,887 43,300,674
Deductions for contract
terminations and
withdrawal payments . . . . . . . . . (2,887,791) (2,891,658) (9,010,230) (9,742,359)
------------ ------------ ------------ ------------
Units outstanding at
December 31, 1993. . . . . . . . . . . . . 25,980,318 18,784,458 9,783,391 99,680,197
Contract purchase
payments. . . . . . . . . . . . . . . 10,530,761 10,794,606 16,182,637 27,477,336
Deductions for contract
terminations and
withdrawal payments . . . . . . . . . (3,420,012) (5,780,101) (14,245,250) (18,113,247)
------------ ------------ ------------ ------------
Units outstanding at
December 31, 1994 . . . . . . . . . . . . 33,090,790 23,798,963 11,720,778 109,044,286
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

Segregated Sub-Accounts
-------------------------------------------------------------------------
Mortgage Index Capital International Small
Securities 500 Appreciation Stock Company
------------ ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1992. . . . . . . . . . 20,284,849 16,294,129 21,822,440 16,751,564 --
Contract purchase
payments . . . . . . . . . . . 18,819,025 9,197,321 12,752,569 23,670,497 9,988,563
Deductions for contract
terminations and
withdrawal payments . . . . . . (6,071,583) (2,036,391) (3,667,613) (1,784,574) (434,241)
------------ ------------ ----------- ------------ ------------
Units outstanding at
December 31, 1993. . . . . . . . . . 33,032,291 23,455,059 30,907,396 38,637,487 9,554,322
Contract purchase
payments. . . . . . . . . . . . 10,539,761 9,563,198 14,497,027 40,118,593 23,217,904
Deductions for contract
terminations and
withdrawal payments . . . . . . (12,029,647) (3,378,959) (4,665,008) (17,281,187) (3,048,617)
------------ ------------ ----------- ------------ ------------
Units outstanding at
December 31, 1994. . . . . . . . . . 32,542,405 29,639,298 40,739,415 61,474,893 29,723,609
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS - CONTINUED

Segregated Sub-Accounts
----------------------------------------------------------------------------
Maturing Maturing Maturing Maturing
Government Government Government Government Value
Bond 1998 Bond 2002 Bond 2006 Bond 2010 Stock
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1993. . . . . . . . . . . . . -- -- -- -- --
Contract purchase
payments . . . . . . . . . . . . . . 5,230,196 3,500,060 2,276,597 1,432,616 7,529,045
Deductions for contract
terminations and
withdrawal payments . . . . . . . . . (2,651,690) (971,551) (467,892) (519,258) (350,370)
----------- ----------- ----------- ----------- -----------
Units outstanding at
December 31, 1994. . . . . . . . . . . . . 2,578,506 2,528,509 1,808,705 913,358 7,178,675
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

<PAGE>
5

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS

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

GROWTH

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 2.152 2.084 2.012 1.520 1.535
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income (loss). . . . . . . . . . (.006) (.001) .001 (.021) (.004)
Net gains or losses on securities
(both realized and unrealized). . . . . . . . (.003) .069 .071 .513 (.011)
-------- -------- -------- -------- --------
Total from investment operations. . . . . . . (.009) .068 .072 .492 (.015)
-------- -------- -------- -------- --------
Unit value, end of year. . . . . . . . . . . . . . $ 2.143 2.152 2.084 2.012 1.520
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

BOND

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . . . . . . $ 1.931 1.773 1.683 1.450 1.370
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income (loss). . . . . . . . . . .051 .044 .051 (.020) .095
Net gains or losses on securities
(both realized and unrealized) . . . . . . . (.162) .114 .039 .253 (.015)
-------- -------- -------- -------- --------
Total from investment operations . . . . . . (.111) .158 .090 .233 .080
-------- -------- -------- -------- --------
Unit value, end of year . . . . . . . . . . . . . $ 1.820 1.931 1.773 1.683 1.450
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

MONEY MARKET

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 1.421 1.402 1.375 1.321 1.241
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income . . . . . . . . . . . . . .034 .019 .027 .054 .080
-------- -------- -------- -------- --------
Total from investment operations. . . . . . . .034 .019 .027 .054 .080
-------- -------- -------- -------- --------
Unit value, end of year. . . . . . . . . . . . . . $ 1.455 1.421 1.402 1.375 1.321
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

ASSET ALLOCATION

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 2.068 1.967 1.858 1.460 1.426
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income (loss) . . . . . . . . . .017 .014 .013 (.021) .063
Net gains or losses on securities
(both realized and unrealized) . . . . . . . (.071) .087 .096 .419 (.029)
-------- -------- -------- -------- --------
Total from investment operations . . . . . . (.054) .101 .109 .398 .034
-------- -------- -------- -------- --------
Unit value, end of year. . . . . . . . . . . . . . $ 2.014 2.068 1.967 1.858 1.460
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

MORTGAGE SECURITIES

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 1.739 1.612 1.535 1.337 1.237
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income (loss). . . . . . . . . . .058 .038 .036 (.018) .093
Net gains or losses on securities
(both realized and unrealized). . . . . . . . (.137) .089 .041 .216 .007
-------- -------- -------- -------- --------
Total from investment operations. . . . . . . (.079) .127 .077 .198 .100
-------- -------- -------- -------- --------
Unit value, end of year . . . . . . . . . . . . . $ 1.660 1.739 1.612 1.535 1.337
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

INDEX 500

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 1.796 1.657 1.563 1.220 1.285
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income (loss). . . . . . . . . . .006 .003 .009 (.018) .024
Net gains or losses on securities
(both realized and unrealized). . . . . . . . (.008) .136 .085 .361 (.089)
-------- -------- -------- -------- --------
Total from investment operations. . . . . . . (.002) .139 .094 .343 (.065)
-------- -------- -------- -------- --------
Unit value, end of year. . . . . . . . . . . . . . $ 1.794 1.796 1.657 1.563 1.220
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

CAPITAL APPRECIATION

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year. . . . . . . . . . . $ 2.062 1.891 1.823 1.303 1.344
-------- -------- -------- -------- --------
Income from investment operations:

Net investment loss ......... . . . . . . . . . (.023) (.019) (.016) (.017) (.006)
Net gains or losses on securities
(both realized and unrealized). . . . . . . . .043 .190 .084 .537 (.035)
-------- -------- -------- -------- --------
Total from investment operations. . . . . . . .020 .171 .068 .520 (.041)
-------- -------- -------- -------- --------
Unit value, end of year . . . . . . . . . . . . . $ 2.082 2.062 1.891 1.823 1.303
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

INTERNATIONAL STOCK

Period from
Year ended December 31, May 1, 1992*
----------------------- to December
1994 1993 31, 1992
--------- --------- ------------
<S> <C> <C> <C>
Unit value, beginning of period. . . . . . . . . . $ 1.317 .925 1.000

Income from investment operations:

Net investment income (loss). . . . . . . . . . .012 (.005) .007
Net gains or losses on securities
(both realized and unrealized) . . . . . . . (.033) .397 (.082)
-------- -------- --------
Total from investment operations. . . . . . . (.021) .392 (.075)
-------- -------- --------
Unit value, end of period . . . . . . . . . . . . $ 1.296 1.317 .925
-------- -------- --------
-------- -------- --------
</TABLE>

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

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) 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. . . . . . . . . . . $ 1.164 1.000

Income from investment operations:

Net investment income loss . . . . . . . . . . . (.014) (.010)
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . .070 .174
---------- ----------
Total from investment operations. . . . . . . . .056 .164
---------- ----------
Unit value, end of period . . . . . . . . . . . . . $ 1.220 1.164
---------- ----------
---------- ----------
</TABLE>

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

<PAGE>

MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT

(6) FINANCIAL HIGHLIGHTS - CONTINUED

FOR THE PERIOD FROM MAY 2, 1994* TO DECEMBER 31, 1994
-----------------------------------------------------------------
Maturing Maturing Maturing Maturing
Government Government Government Government Value
Bond 1998 Bond 2002 Bond 2006 Bond 2010 Stock
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period. . . . . . . . . . $ 1.000 1.000 1.000 1.000 1.000
-------- -------- -------- -------- --------
Income from investment operations:

Net investment income . . . . . . . . . . . . . .030 .038 .038 .036 .004
Net gains or losses on securities
(both realized and unrealized). . . . . . . . . (.049) (.066) (.075) (.085) .043
-------- -------- -------- -------- --------
Total from investment operations . . . . . . (.019) (.028) (.037) (.049) .047
-------- -------- -------- -------- --------
Unit value, end of period . . . . . . . . . . . . $ .981 .972 .963 .951 1.047
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

* Commencement of the segregated sub-accounts' operations.

<PAGE>

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

Page

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. 17

V. Supplementary Insurance Information............................... 18

VI. Reinsurance....................................................... 19

<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

<PAGE>

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

BALANCE SHEETS

DECEMBER 31, 1994 AND 1993

<TABLE>
<CAPTION>
ASSETS
1994 1995
---------- ----------
(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>

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.

<PAGE>

THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992

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>

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 (Continued)
<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.

<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.

<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>

<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

<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>

<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.

<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

<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.

<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.

<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>

<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>