<PAGE>
File Number 33-80788
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number
---
Post-Effective Amendment Number 4
---
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
---------------------------------------------------------------------
(Exact Name of Registrant)
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
---------------------------------------------------------------------
(Name of Depositor)
400 ROBERT STREET NORTH, ST. PAUL, MINNESOTA 55101-2098
---------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
(612) 665-3500
---------------------------------------------------------------------
(Depositor's Telephone Number, Including Area Code)
Dennis E. Prohofsky Copy to:
Senior Vice President, J. Sumner Jones, Esq.
General Counsel and Secretary Jones & Blouch L.L.P.
The Minnesota Mutual Life Insurance Company 1025 Thomas Jefferson St., N.W.
400 Robert Street North Suite 405 West
St. Paul, Minnesota 55101-2098 Washington, D.C. 20007
- -------------------------------------------
(Name and Address of Agent for Service)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
X on May 1, 1997 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(i)
---
on (date) pursuant to paragraph (a)(i)
---
75 days after filing pursuant to paragraph (a)(ii)
---
on (date) pursuant to paragraph (a)(ii) of Rule 485.
---
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Regulation 270.24f-2 under the Investment Company Act of 1940,
Registrant has previously elected to register an indefinite amount of its
variable annuity units under the Securities Act of 1933. The Rule 24f-2
Notice for Registrant's most recent fiscal year was filed on February 26,
1997.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Prospectus
Form N-4
Item Number Caption in Prospectus
1. Cover Page
2. Special Terms
3. Questions and Answers About the Variable Annuity Contract
4. Condensed Financial Information; Performance Data
5. General Descriptions
6. Contract Charges
7. Description of the Contract
8. Description of the Contract; Annuity Payments and Options
9. Description of the Contract; Death Benefits
10. Description of the Contract; Purchase Payments and Value of the
Contract
11. Description of the Contract; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional
Information
<PAGE>
VARIABLE ANNUITY CONTRACT PROSPECTUS
MULTIOPTION SELECT
FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
OF MINNESOTA MUTUAL'S VARIABLE ANNUITY ACCOUNT
The individual variable annuity contract offered by this Prospectus is
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. It may also be used apart from a qualified
plan.
The owner of a contract will have contract values accumulated on a completely
variable basis as part of the Variable Annuity Account. The Variable Annuity
Account invests its assets in shares of Advantus Series Fund, Inc. and Class 2
of the Templeton Developing Markets Funds (the "Funds"). The 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 Funds
selected by the contract owner. The contract owner bears the entire investment
risk for any amounts allocated to the Portfolios of the Funds.
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) 665-3500, 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 27.
This Prospectus is not valid unless attached to a current prospectus of Advantus
Series Fund, Inc. and the Templeton Developing Markets Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
[LOGO]
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
PH 612/665-3500
http://www.minnesotamutual.com
The date of this document and the Statement of Additional Information is: May 1,
1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Special Terms............................................... 3
Questions and Answers About the Variable Annuity Contract... 4
Expense Table............................................... 9
Condensed Financial Information............................. 12
Performance Data............................................ 13
General Descriptions
The Minnesota Mutual Life Insurance Company............. 14
Variable Annuity Account................................ 14
Advantus Series Fund, Inc............................... 14
Templeton Variable Products Series Fund................. 15
Additions, Deletions or Substitutions................... 16
Contract Charges
Deferred Sales Charges.................................. 16
Mortality and Expense Risk Charges...................... 17
Transaction and Contract Charges........................ 17
Voting Rights............................................... 18
Description of the Contract
General Provisions...................................... 18
Annuity Payments and Options............................ 19
Death Benefits.......................................... 23
Purchase Payments, Value of the Contract and
Transfers.............................................. 23
Redemptions............................................. 25
Federal Tax Status.......................................... 26
Statement of Additional Information......................... 30
Appendix A--Illustration of Variable Annuity Values......... 31
</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>
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 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 or
her employer, or a trustee acting on behalf of the employer.
CONTRACT YEAR: a period of one year beginning with the contract date or a
contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which we have designated as an eligible investment for the Variable Annuity
Account, namely, Advantus Series Fund, Inc. and its Portfolios and Class 2 of
the Templeton Developing Markets Fund.
GENERAL ACCOUNT: all of our assets other than those in the Variable Annuity
Account or in our other separate accounts.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase plan
under which benefits are to be provided by the variable annuity contract
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 that of our other assets.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Fund.
VOLUME CREDIT: an additional amount, other than a dividend, which may be
credited by us to your contract.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
YOU, YOUR: the Contract Owner.
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACT
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 IS THE CONTRACT OFFERED BY THIS PROSPECTUS?
The contract is a variable annuity contract issued by us which provides 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 to the Variable Annuity Account. In the Variable Annuity Account, your
purchase payments are invested in one or more Portfolios of Advantus Series
Fund, Inc. according to your instructions. If your application fails to specify
which Portfolios are desired, or is otherwise incomplete, and you do not consent
to our retention of your initial payment until the application is made complete,
we will return your initial payment within five business days. There are no
interest or principal guarantees on your funds.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE VARIABLE ANNUITY ACCOUNT?
Purchase payments allocated to the Variable Annuity Account are invested
exclusively in shares of each Fund. Each Fund is a mutual fund of the series
type, which means that it has several different portfolios which it offers for
investment. Shares of each Fund will be made available at net asset value to the
Variable Annuity Account to fund the variable annuity contract. 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
Advantus Series Fund are as follows:
The Growth Portfolio seeks the long-term accumulation of capital. Current
income, while a factor in portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The Bond Portfolio seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
securities will tend to rise and fall inversely with the rise and fall of
interest rates.
The Money Market Portfolio seeks maximum current income to the extent
consistent with liquidity and the stability of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuation in short-term interest rates.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
The Asset Allocation Portfolio seeks as high a level of long-term total
rate of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity
securities, bonds and money market instruments. The Asset Allocation
Portfolio involves the risks inherent in stocks and debt securities of
varying maturities and the risk that the Portfolio may invest too much or
too little of its assets in each type of security at any particular time.
The Mortgage Securities Portfolio seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective, the
Mortgage Securities Portfolio will follow a policy of investment primarily
in mortgage-related securities. Prices of mortgage-related securities will
tend to rise and fall inversely with the rise and fall of the general level
of interest rates.
The Index 500 Portfolio seeks investment results that correspond generally
to the price and yield performance of the common stocks included in the
Standard & Poor's Corporation 500 Composite Stock Price Index (the "Index").
It is designed to provide an economical and convenient means of maintaining
a broad position in the equity market as part of an overall
4
<PAGE>
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. The
production of income through the holdings of dividend-paying stocks will be
a secondary objective of the Portfolio. The Value Stock Portfolio will
invest primarily in equity securities of companies which, in the opinion of
the Portfolio's investment adviser, have market values which appear low
relative to their underlying value or future earnings and growth potential.
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. The
investments in each Portfolio are primarily zero coupon securities, debt
securities which pay no cash income and are sold at a discount from their
par value at maturity, particularly those issued by the U.S. Treasury and
those issued by the U.S. Government and its agencies. There are four
Portfolios of this type and each will mature on a specified target date as
indicated in the name of each Portfolio. The current maturity dates are in
September in the years 1998, 2002, 2006 and 2010.
The Small Company Value Portfolio seeks the long-term accumulation of
capital. The Portfolio will follow a policy of investing primarily in the
equity securities of small companies, defined in terms of market
capitalization and which appear to have market values which are low relative
to their underlying value or future earnings and growth potential. Dividend
income will be incidental to the investment objective for this Portfolio.
The International Bond Portfolio seeks to maximize current income
consistent with protection of principal. The Portfolio pursues its objective
by investing primarily in a managed portfolio of non-U.S. dollar debt
securities issued by foreign governments, companies and supranational
entities.
The Index 400 Mid-Cap Portfolio seeks to provide investment results
generally corresponding to the aggregate price and dividend performance of
publicly traded common stocks that comprise the Standard & Poor's 400 Mid
Cap Index. The Portfolio pursues its investment objective by investing
primarily in the 400 common stocks that comprise the Index, issued by
medium-sized domestic companies with market capitalizations that generally
range from $200 million to $5 billion. It is designed to provide an
economical and convenient means of maintaining a diversified portfolio in
this equity security area as part of an over-all investment strategy. The
inclusion of a stock in the Index in no way implies an opinion by
5
<PAGE>
Standard & Poor's as to its attractiveness as an investment, nor is it a
sponsor or in any way affiliated with the Portfolio.
The Micro-Cap Value Portfolio seeks capital appreciation. The Portfolio
will pursue its objective by investing in a diversified portfolio of
securities that the sub-adviser believes to be undervalued. It will invest
primarily in common stocks and stock equivalents of micro-cap companies,
that is, companies with a market capitalization of less than $300 million.
The Macro-Cap Value Portfolio seeks to provide high total return. It
pursues this objective by investing in equity securities that the
sub-adviser believes, through the use of dividend discount models, to be
undervalued relative to their long-term earnings power, creating a
diversified portfolio of equity securities which typically will have a
price/earnings ratio and a price to book ratio that reflects a value
orientation. The Portfolio seeks to enhance its total return relative to
that of a universe of large-sized U.S. companies.
The Micro-Cap Growth Portfolio seeks long-term capital appreciation. It
pursues its objective by investing primarily in equity securities of smaller
companies which the sub-adviser believes are in an early stage or
transitional point in their development and have demonstrated or have the
potential for above average revenue growth. It will invest primarily in
common stocks and stock equivalents of micro-cap companies, that is,
companies with a market capitalization of less than $300 million.
ALTHOUGH THE MACRO-CAP VALUE, THE INDEX 400 MID-CAP, THE SMALL COMPANY VALUE,
THE MICRO-CAP VALUE, THE MICRO-CAP GROWTH AND THE INTERNATIONAL BOND PORTFOLIOS
OF THE FUND ARE INCLUDED IN THIS PROSPECTUS, THEY WILL NOT BE AVAILABLE UNTIL
OCTOBER 1, 1997.
In addition to the investments in the Advantus Series Fund, the Variable
Annuity Account invests in the Templeton Developing Markets Fund, a diversified
portfolio with two classes of shares of the Templeton Variable Products Series
Fund Class 2, a mutual fund of the series type.
ALTHOUGH THE TEMPLETON DEVELOPING MARKETS FUND IS INCLUDED IN THIS PROSPECTUS,
IT WILL NOT BE AVAILABLE IN THE CONTRACT UNTIL OCTOBER 1, 1997.
The investment objectives and certain policies of the Templeton Developing
Markets Fund available under the contract are as follows:
The Templeton Developing Markets Fund seeks long-term capital
appreciation. It pursues this objective by investing primarily in equity
securities of issuers in countries having developing markets. Countries
generally considered to have developing markets are all countries that are
considered to be developing or emerging countries by the International Bank
for Reconstruction and Development (more commonly referred to as the World
Bank) or the International Finance Corporation, as well as countries that
are classified by the United Nations or otherwise regarded by their
authorities as developing.
There is no assurance that any Fund will meet its objectives. Additional
information concerning the investment objectives and policies of the Funds can
be found in the current prospectus for each Fund, which is attached to this
Prospectus.
A person should carefully read each prospectus before investing in the
contract.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes. You can 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 Fund to another or among the Portfolios. After annuity payments
begin, amounts held as annuity reserves may be transferred among the variable
annuity sub-accounts subject to some restrictions. Annuity reserves may be
transferred only from a variable annuity to a fixed annuity during the annuity
period. For a more detailed discussion of applicable telephone procedures,
please see pages 20-22 of this Prospectus under the heading "Purchase Payments,
Value of the Contract and Transfers."
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACT?
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
6
<PAGE>
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.
In addition, Advantus Capital Management, Inc., one of our subsidiaries, acts
as the investment adviser to the Series Fund and deducts from the net asset
value of each Portfolio of the Series Fund a fee for its services which are
provided under an investment advisory agreement. The investment advisory
agreements with Advantus Capital provide that the fee shall be computed at the
annual rate of .4% of the Index 500 Portfolio, .75% of the Capital Appreciation,
Value Stock, Small Company Value and the Small Company Value Portfolios, 1.0% of
the International Stock Portfolio .6% of the International Bond Portfolio, .7%
of the Macro-Cap Value Portfolio, 1.1% of the Micro-Cap Growth Portfolio and
1.25% of the Micro-Cap Value Portfolio and .5% of each of the remaining
Portfolio's net assets except for the Maturing Government Bond Portfolios. The
advisory fee for the Maturing Government Bond Portfolios is generally .25%,
however, for the Portfolios maturing in 1998 and 2002, the fee will be .05%
until April 30, 1998 and .25% thereafter. For the Templeton Developing Markets
Fund, its investment manager deducts from the net asset value of the Fund a fee
for services provided under an investment advisory agreement which, effective
May 1, 1997, will be at an annual rate of 1.25%. Also deducted from the net
asset value on a daily basis is a Rule 12b-1 fee of .25%.
The Funds are subject to certain expenses that may be incurred with respect to
their operations. For more information, see the prospectuses of each Fund which
are attached to this prospectus. The Templeton Developing Markets Fund pays its
investment adviser management fees at an annual rate of 1.25% of the Fund's
average daily net assets and pays other operating expenses which will vary every
year but, for the most recent fiscal year, were 0.53% of its average daily net
assets. In addition, Class 2 of the Templeton Developing Markets Fund has a rule
12b-1 plan and may pay up to 0.25% annually of the average daily net assets for
distribution. For more information, see the fund's 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 and surrenders during
the first seven contract years following receipt of each purchase payment for
expenses relating to the sale of the contract. The amount of any deferred sales
charge is deducted from the accumulation value.
The amount of deferred sales charge, as a percentage of the amount surrendered
or withdrawn, decreases during the first seven contract years following receipt
of each purchase payment from an initial charge of 7% to 0%. The charge does not
apply to the excess, if any, of the accumulation value over the sum of all
purchase payments made to the contract, less the amount of previous purchase
payment withdrawals. The charge is applied to each purchase payment on a
first-in, first-out basis. The charge will not exceed 7% of the purchase
payments made under the contract.
There is no deferred sales charge on (1) amounts applied to provide an annuity
under the contract, (2) amounts returned pursuant to the contracts' cancellation
right, or (3) amounts paid in the event of the death of the owner.
For more information on this charge, see the heading "Deferred Sales Charges"
in this Prospectus.
ARE THERE ANY OTHER CHARGES IN THE CONTRACT?
Yes. We reserve the right to make a charge, not to exceed $25, for transfers
occurring more frequently than once a month. Currently we do not impose such a
charge. Also, the contract contains a provision of a contract fee of $200 when a
fixed annuity is elected.
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. In
addition, a penalty tax of 10% of the amount of the taxable distribution may be
assessed upon withdrawals from the variable annuity contract in certain
circumstances, including distributions made prior to the owner's attainment of
age 59 1/2. For
7
<PAGE>
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 ten days of your receipt of the
contract by returning it to us or your agent. In some states, such as
California, the free look period may be extended. In California, the free look
period is extended to thirty days' time for contracts issued or delivered to
owners that are sixty years of age or older at the time of delivery. These
rights are subject to change and may vary among the states.
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. 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 as consideration for this contract, less all contract withdrawals.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The contract specifies 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 death benefit to the named
beneficiary. In the case of joint owners, this amount would be payable at the
death of the second owner.
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. If
the owner of this contract is other than a natural person, such as a trust or
other similar entity, we will pay a death benefit of the accumulation value to
the named beneficiary on the death of the annuitant, if death occurs prior to
the date for annuity payments to begin.
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 Funds held for their contracts where shareholder
approval is required by law in the affairs of the Funds.
8
<PAGE>
EXPENSE TABLE
The tables shown below are to assist a contract owner in understanding the costs
and expenses that a contract will bear directly or indirectly. For more
information on contract costs and expenses, see the Prospectus heading "Contract
Charges" and the information immediately following. The table does not reflect
deductions for any applicable premium taxes which may be made from each purchase
payment depending upon the applicable law. The tables show the expenses of each
portfolio of the Funds after expense reimbursement.
The following contract expense information is intended to illustrate the
expenses of the MultiOption Select variable annuity contract. All expenses shown
are rounded to the nearest dollar. The information contained in the tables must
be considered with the narrative information which immediately follows them in
this heading.
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
MULTIOPTION SELECT
CONTRACT OWNER TRANSACTION EXPENSES
The amount of the deferred sales charge percentage is as shown in the table
below:
<TABLE>
<CAPTION>
CONTRACT YEARS SINCE PAYMENT CHARGE
- -------------------------------- -------------
<S> <C>
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and Expense Risk Fees............... 1.25%
------
Total Separate Account Annual Expenses.... 1.25%
------
------
</TABLE>
Note: We have reserved the right to increase the total of the mortality and
expense risk fees to not more than 1.40% on an annual rate. For more information
on these charges, please see the heading "Mortality and Expense Risk Charges" on
page 14 of this Prospectus.
FUND ANNUAL EXPENSES
(As a percentage of average net assets for the described Advantus Series Fund,
Inc. Portfolios and the Templeton Variable Product Series.)
<TABLE>
<CAPTION>
OTHER TOTAL FUND
EXPENSES ANNUAL EXPENSES
INVESTMENT (AFTER EXPENSE (AFTER EXPENSE
MANAGEMENT REIMBURSEMENTS DISTRIBUTION REIMBURSEMENTS
FEES IF ANY) EXPENSES IF ANY)
----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio.................... 0.50% 0.09% -- 0.59%
Bond Portfolio...................... 0.50% 0.06% -- 0.56%
Money Market Portfolio.............. 0.50% 0.10% -- 0.60%
Asset Allocation Portfolio.......... 0.50% 0.04% -- 0.54%
Mortgage Securities Portfolio....... 0.50% 0.08% -- 0.58%
Index 500 Portfolio................. 0.40% 0.05% -- 0.45%
Capital Appreciation Portfolio...... 0.75% 0.10% -- 0.85%
International Stock Portfolio....... 0.74% 0.32% -- 1.06%
Small Company Portfolio............. 0.75% 0.06% -- 0.81%
Maturing Government Bond 1998
Portfolio (1)(2).................. 0.05% 0.15% -- 0.20%
Maturing Government Bond 2002
Portfolio (1)(2).................. 0.05% 0.15% -- 0.20%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
OTHER TOTAL FUND
EXPENSES ANNUAL EXPENSES
INVESTMENT (AFTER EXPENSE (AFTER EXPENSE
MANAGEMENT REIMBURSEMENTS DISTRIBUTION REIMBURSEMENTS
FEES IF ANY) EXPENSES IF ANY)
----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Maturing Government Bond 2006
Portfolio (2)..................... 0.25% 0.15% -- 0.40%
Maturing Government Bond 2010
Portfolio (2)..................... 0.25% 0.15% -- 0.40%
Value Stock Portfolio............... 0.75% 0.08% -- 0.83%
Small Company Value Portfolio (3)... 0.75% 0.15% -- 0.90%
International Bond
Portfolio (3)..................... 0.60% 1.00% -- 1.60%
Index 400 Mid-Cap
Portfolio (3)..................... 0.40% 0.15% -- 0.55%
Micro-Cap Value Portfolio (3)....... 1.25% 0.15% -- 1.40%
Macro-Cap Value Portfolio (3)....... 0.70% 0.15% -- 0.85%
Micro-Cap Growth
Portfolio (3)..................... 1.10% 0.15% -- 1.25%
Templeton Variable Products Series:
Templeton Developing Markets Fund
Class 2 (4)....................... 1.25% 0.53% 0.25% 2.03%
</TABLE>
(1) Investment management fees for the Maturing Government Bond 1998 and 2002
Portfolios are equal on an annual basis to .05% of average daily net assets
until April 30, 1998 at which time the fees will be .25% of average daily
net assets.
(2) Minnesota Mutual voluntarily absorbed certain expenses of the Maturing
Government Bond 1998, Maturing Government Bond 2002, Maturing Government
Bond 2006 and Maturing Government Bond 2010 Portfolios for the year ended
December 31, 1996. If these portfolios had been charged for expenses, the
ratio of expenses to average daily net assets would have been .72%, 1.14%,
1.58% and 2.18%, respectively. It is Minnesota Mutual's present intention to
waive other fund expenses during the current fiscal year which exceed, as a
percentage of average daily net assets, .15%. Minnesota Mutual also reserves
the option to reduce the level of other expenses which it will voluntarily
absorb.
(3) Although the Small Company Value, International Bond, Index 400 Mid-Cap,
Micro-Cap Value, Macro-Cap Value, and Micro-Cap Growth Portfolios will not
be available until October 1, 1997, Minnesota Mutual has voluntarily agreed
to absorb or waive other fund expenses which exceed, as a percentage of
average daily net assets, 1.00% for International Bond and .15% for Small
Company Value, Index 400 Mid-Cap, Micro-Cap Value, Macro-Cap Value and
Micro-Cap Growth Portfolios for the period ended December 31, 1997. If the
Portfolios were to be charged for these expenses, it is estimated that the
ratio of total expenses to average daily net assets would be 3.04% for Small
Company Value, 3.19% for International Bond, 2.20% for Index 400 Mid-Cap,
4.07% for Micro-Cap Value, 2.97% for Macro-Cap Value, 3.77% for Micro-Cap
Growth and 3.75% for Templeton Developing Markets. Minnesota Mutual also
reserves the option to reduce the level of other expenses which it will
voluntarily absorb.
(4) Templeton Developing Markets -- Class 2. Figures are estimates for 1997
based on annualized Class 1 1996 figures. The Fund began operations in March
1996. Class 2 shares of the Fund were first offered May 1, 1997, and have a
distribution plan or "Rule 12b-1 Plan" which is described in the Fund's
prospectus. In addition, figures do not reflect the Investment Manager's
agreement in advance to waive a portion of its fees during 1996. After the
waiver, actual management fees and total operating expenses of the portfolio
were 1.17% and 1.95% of net assets, respectively. This waiver agreement has
been terminated.
10
<PAGE>
CONTRACT OWNER EXPENSE EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
IF YOU SURRENDERED YOUR IF YOU ANNUITIZE AT THE END OF THE
CONTRACT AT THE END OF THE APPLICABLE TIME PERIOD OR YOU DO
APPLICABLE TIME PERIOD NOT SURRENDER YOUR CONTRACT*
------------------------------------------ --------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------- ------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Portfolio................... $ 89 $ 118 $ 140 $ 216 $19 $ 58 $100 $216
Bond Portfolio..................... $ 88 $ 117 $ 138 $ 213 $18 $ 57 $ 98 $213
Money Market Portfolio............. $ 89 $ 118 $ 140 $ 217 $19 $ 58 $100 $217
Asset Allocation Portfolio......... $ 88 $ 116 $ 137 $ 211 $18 $ 56 $ 97 $211
Mortgage Securities
Portfolio........................ $ 89 $ 118 $ 139 $ 215 $19 $ 58 $ 99 $215
Index 500 Portfolio................ $ 87 $ 114 $ 132 $ 201 $17 $ 54 $ 92 $201
Capital Appreciation
Portfolio........................ $ 91 $ 126 $ 153 $ 243 $21 $ 66 $113 $243
International Stock Portfolio...... $ 93 $ 132 $ 164 $ 265 $23 $ 72 $124 $265
Small Company Portfolio............ $ 91 $ 125 $ 151 $ 239 $21 $ 65 $111 $239
Maturing Government Bond 1998
Portfolio........................ $ 85 $ 106 $ 122 $ 188 $15 $ 46 $ 82 $188
Maturing Government Bond 2002
Portfolio........................ $ 85 $ 106 $ 122 $ 188 $15 $ 46 $ 82 $188
Maturing Government Bond 2006
Portfolio........................ $ 87 $ 112 $ 130 $ 195 $17 $ 52 $ 90 $195
Maturing Government Bond 2010
Portfolio........................ $ 87 $ 112 $ 130 $ 195 $17 $ 52 $ 90 $195
Value Stock Portfolio.............. $ 91 $ 125 $ 152 $ 241 $21 $ 65 $112 $241
Small Company Value Portfolio...... $ 92 $ 127 N/A N/A $22 $ 67 N/A N/A
International Bond Portfolio....... $ 99 $ 148 N/A N/A $29 $ 88 N/A N/A
Index 400 Mid-Cap Portfolio........ $ 88 $ 117 N/A N/A $18 $ 57 N/A N/A
Micro-Cap Value Portfolio.......... $ 97 $ 142 N/A N/A $27 $ 82 N/A N/A
Macro-Cap Value Portfolio.......... $ 91 $ 126 N/A N/A $21 $ 66 N/A N/A
Micro-Cap Growth Portfolio......... $ 95 $ 138 N/A N/A $25 $ 78 N/A N/A
Templeton Developing Markets
Portfolio Class 2................ $ 103 $ 161 N/A N/A $33 $101 N/A N/A
</TABLE>
* 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.
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.
11
<PAGE>
CONDENSED FINANCIAL INFORMATION
The financial statements of Minnesota Mutual Variable Annuity Account and of The
Minnesota Mutual Life Insurance Company 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 years ended December 31, 1996 and December 31, 1995 and the
period from September 15, 1994, commencement of operations, to 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 this prospectus.
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Growth Sub-Account:
Unit value at beginning of period............... $2.630 $2.143 $2.222
Unit value at end of period..................... $3.043 $2.630 $2.143
Number of units outstanding at end of period.... 38,448,452 35,809,340 33,090,790
Bond Sub-Account:
Unit value at beginning of period............... $2.153 $1.820 $1.845
Unit value at end of period..................... $2.189 $2.153 $1.820
Number of units outstanding at end of period.... 36,732,062 28,069,241 23,798,963
Money Market Sub-Account:
Unit value at beginning of period............... $1.515 $1.455 $1.441
Unit value at end of period..................... $1.570 $1.515 $1.455
Number of units outstanding at end of period.... 22,929,634 14,809,515 11,720,778
Asset Allocation Sub-Account:
Unit value at beginning of period............... $2.486 $2.014 $2.048
Unit value at end of period..................... $2.762 $2.486 $2.014
Number of units outstanding at end of period.... 116,211,650 110,975,477 109,044,286
Mortgage Securities Sub-Account:
Unit value at beginning of period............... $1.934 $1.660 $1.677
Unit value at end of period..................... $2.010 $1.934 $1.660
Number of units outstanding at end of period.... 32,527,955 31,277,934 31,542,405
Index 500 Sub-Account:
Unit value at beginning of period............... $2.425 $1.794 $1.847
Unit value at end of period..................... $2.913 $2.425 $1.794
Number of units outstanding at end of period.... 46,097,553 35,272,024 29,639,298
Capital Appreciation Sub-Account:
Unit value at beginning of period............... $2.524 $2.082 $2.096
Unit value at end of period..................... $2.932 $2.524 $2.082
Number of units outstanding at end of period.... 51,023,999 45,964,468 40,739,415
International Stock Sub-Account:
Unit value at beginning of period............... $1.462 $1.296 $1.374
Unit value at end of period..................... $1.730 $1.462 $1.296
Number of units outstanding at end of period.... 86,521,264 68,725,183 61,474,893
Small Company Sub-Account:
Unit value at beginning of period............... $1.591 $1.220 $1.210
Unit value at end of period..................... $1.673 $1.591 $1.220
Number of units outstanding at end of period.... 59,295,273 43,234,716 29,723,609
Maturing Government Bond 1998 Sub-Account:
Unit value at beginning of period............... $1.124 $0.981 $1.001
Unit value at end of period..................... $1.156 $1.124 $0.981
Number of units outstanding at end of period.... 3,911,112 3,330,772 2,578,506
Maturing Government Bond 2002 Sub-Account:
Unit value at beginning of period............... $1.200 $0.972 $0.987
Unit value at end of period..................... $1.205 $1.200 $0.972
Number of units outstanding at end of period.... 2,935,860 2,417,823 2,528,509
Maturing Government Bond 2006 Sub-Account:
Unit value at beginning of period............... $1.281 $0.963 $0.964
Unit value at end of period..................... $1.250 $1.281 $0.963
Number of units outstanding at end of period.... 2,334,109 1,878,731 1,808,705
Maturing Government Bond 2010 Sub-Account:
Unit value at beginning of period............... $1.326 $0.951 $0.938
Unit value at end of period..................... $1.265 $1.326 $0.951
Number of units outstanding at end of period.... 2,077,124 924,681 913,358
Value Stock Sub-Account:
Unit value at beginning of period............... $1.375 $1.047 $1.085
Unit value at end of period..................... $1.778 $1.375 $1.047
Number of units outstanding at end of period.... 43,796,523 18,744,902 7,178,675
</TABLE>
12
<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 one year, five year and ten year periods and for the
period since the inception of the underlying Portfolios. Such performance data
may be accompanied by cumulative total return quotations for the comparable
periods. For periods prior to the date of this Prospectus the quotations will be
based on the assumption that the contracts described herein were issued when the
underlying Portfolios first became available to the Variable Annuity Account
under other contracts issued by us. 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 charges made pursuant to the terms of the
contracts offered by this Prospectus and charges of underlying funds. The
various performance figures used in Variable Annuity Account advertisements
relating to the contract 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.
All cumulative total return figures published 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
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 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 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
13
<PAGE>
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.
- ------------------------------------------------------------------------
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) 665-3500. 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, Puerto Rico, and Guam.
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 twenty-one 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. ADVANTUS SERIES FUND, INC.
The Variable Annuity Account currently invests exclusively in Advantus Series
Fund, Inc. (the "Series Fund"), a mutual fund of the series type which is
advised by Advantus Capital Management, Inc. Prior to May 1, 1997, the name of
the Series Fund was "MIMLIC Series Fund, Inc." On January 14, 1997, the Series
Fund's Board of Directors approved an amendment of the Series Fund's Articles of
Incorporation for the purpose of changing the name of the Series Fund to
"Advantus Series Fund, Inc." effective May 1, 1997. The purpose of the name
change is to provide the Series Fund with a more distinctive name which may
provide greater visibility and name recognition, which reflects the name of its
adviser, and which may provide additional marketing opportunities for variable
contracts investing in shares of the Series Fund. The change in the Series
Fund's name will not result in any change in investment objectives policies or
practices for the Series Fund or any of its Portfolios. The Series Fund is
registered with the Securities and Exchange Commission as a diversified,
open-end management investment company, but such registration does not signify
that the Commission supervises the management, or the investment practices or
policies, of the Series Fund. The Series Fund issues its shares, continually and
without sales charge, only to us and our separate accounts, which currently
include the Variable Annuity Account, the Group Variable Annuity Account,
Variable Fund D, the Variable Life Account and the Variable Universal Life
Account. The Series Fund may be made available to other separate accounts as new
products are developed and may be used as
14
<PAGE>
the underlying investment medium for separate accounts of the Northstar Life
Insurance Company, a wholly-owned life insurance subsidiary of ours domiciled in
the State of New York. Shares are sold and redeemed at net asset value. In the
case of a newly issued contract, purchases of shares of the Portfolios of the
Series Fund in connection with the first purchase payment will be based on the
values next determined after issuance of the contract by us. Redemptions of
shares of the Portfolios of the Series Fund are made at the net asset value next
determined from 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 Portfolios of the Series 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 Series Fund's investment adviser is Advantus Capital Management, Inc.
("Advantus Capital"). Advantus Capital is a wholly-owned subsidiary of MIMLIC
Asset Management Company ("MIMLIC Management") which, prior to May 1, 1997,
served as investment adviser to the Fund. MIMLIC Management is a wholly-owned
subsidiary of Minnesota Mutual. The same portfolio managers and other personnel
who previously provided investment advisory services to the Fund through MIMLIC
Management continue to provide the same services through Advantus Capital. It
acts as an investment adviser to the Fund pursuant to an advisory agreement.
Advantus Capital 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 Advantus Capital
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, Florida, has been retained under an investment sub-advisory
agreement to provide investment advice to the International Stock Portfolio of
the Fund.
J.P. Morgan Investment Management Inc., a Delaware corporation with principal
offices in New York, New York, has been retained under an investment
sub-advisory agreement to provide investment advice for the Macro-Cap Value
Portfolio of the Fund. Keystone Investment Management Company a Delaware
corporation with principal offices in Boston, Massachusetts has been retained
under an investment sub-advisory agreement to provide investment advice for the
Micro-Cap Value Portfolio of the Fund. Wall Street Associates, a California
corporation with principal offices in La Jolla, California, has been retained
under an investment sub-advisory agreement to provide investment advice for the
Micro-Cap Growth Portfolio of the Fund. Julius Baer Investment Management, Inc.,
a Delaware corporation with principal offices in New York, New York, has been
retained under an investment sub-advisory agreement to provide investment advice
for the International Bond 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 contract.
D. TEMPLETON VARIABLE PRODUCTS SERIES FUND
In addition to the investments in the Fund, the Variable Annuity Account invests
in the Templeton Developing Markets Fund, a diversified portfolio of the
Templeton Variable Products Series Fund, a mutual fund of the series type.
The investment objectives and certain policies of the Templeton Developing
Markets Fund available under the contract are as follows:
The Templeton Developing Markets Fund seeks long-term capital
appreciation. It pursues this objective by investing primarily in equity
securities of issuers in countries having developing markets. Countries
generally considered to have developing markets are all countries that are
considered to be developing or emerging countries by the International Bank
for Reconstruction and Development (more commonly referred to as the World
Bank) or the International Finance Corporation, as well as countries that
are classified by the United Nations or otherwise regarded by their
authorities as developing.
Class 2 of the Templeton Developing Markets Fund pays 0.25% of the average
daily net assets annually under a distribution plan adopted under Rule 12b-1 of
the Investment Company Act of 1940. Amounts paid under the 12b-1 plan to
Minnesota Mutual may be used for certain contract owner services or distribution
activities.
15
<PAGE>
The investment adviser of Templeton Developing Markets Fund is Templeton Asset
Management Ltd., a Singapore corporation. It is an indirect wholly-owned
subsidiary of Franklin Resources, Inc. ("Franklin"). Through its subsidiaries,
Franklin is engaged in the financial services industry. The Templeton
organization has been investing globally since 1940 and, with its affiliates,
provides investment management and advisory services to a worldwide client base.
The investment adviser and its affiliates have offices worldwide. A prospectus
for the Fund is attached to this Prospectus. A person should carefully read the
Fund's prospectus before investing in the contract.
E. 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 Funds are also sold to other of our separate accounts, which are
used to receive and invest purchase payments 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 two Funds simultaneously. Although neither Minnesota Mutual nor the
Funds currently foresees any such disadvantages either to variable life
insurance policy owners or to variable annuity contract owners, the Funds' 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.
- ------------------------------------------------------------------------
CONTRACT CHARGES
The contract has several types of charges, all of which are discussed below.
They include a deferred sales charge, mortality and expense risk charges and a
transaction charge.
A. DEFERRED SALES CHARGES
No deferred sales charge is deducted from the purchase payment made for this
contract. However, when a contract's accumulation value is reduced by a
withdrawal or a surrender, a deferred sales charge may be deducted for expenses
relating to the sale of the contracts. There is no deferred sales charge on (1)
amounts applied to provide an annuity under the contract, (2) amounts returned
pursuant to the contract's cancellation right, or (3) amounts paid in the event
of the death of the owner.
The deferred sales charge is the charge made on contract withdrawals or
surrenders. It is made during the seven year period following the receipt of
each purchase payment. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. Accumulation units will be cancelled of a
value equal to the applicable charge and the amount of the withdrawal.
The amount of the deferred sales charge is determined from the percentages
shown in the table below. All purchase payments will be allocated to a
withdrawal or a surrender for this
16
<PAGE>
purpose on a first-in, first-out basis for the purpose of determining the amount
of the deferred sales charge. It applies only to withdrawal or surrender of
purchase payments received by us within seven years of the date of the
withdrawal or surrender. However, you may receive the excess, if any, of the
accumulation value of the contract over the sum of all of the purchase payments
made to the contract, reduced by the amount of previous purchase payment
withdrawals, without a deferred sales charge. In addition, we will waive the
sales charge on that portion of a contract's purchase payments which are applied
to the purchase of an Adjustable Income Annuity, which is an immediate variable
annuity product issued by us.
The amount of the deferred sales charge percentage is as shown in the table
below:
<TABLE>
<CAPTION>
CONTRACT YEARS SINCE PAYMENT CHARGE
- -------------------------------- -------------
<S> <C>
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
The amount of the deferred sales charge is determined by: (a) calculating the
number of years each purchase payment being withdrawn has been in the contract;
(b) multiplying each purchase payment withdrawn by the appropriate sales charge
percentage in the table; and (c) adding the deferred sales charge from all
purchase payments as calculated in (b).
As a percentage of purchase payments paid to the contract, MIMLIC Sales
Corporation ("MIMLIC Sales"), the principal underwriter, may pay up to 4.5% of
the amount of the purchase payments to the contract. 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 contract by our obligation to continue to
make monthly annuity payments, determined in accordance with the annuity rate
tables and other provisions contained in the contract, 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 contract for the mortality and other 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.
For a discussion of how these charges are applied in the calculation of the
accumulation unit value, please see the discussion entitled "Purchase Payments,
Value of the Contract and Transfers" on pages 20-22.
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.
C. TRANSACTION AND CONTRACT CHARGES
We reserve the right to make a charge, not to exceed $25, for each transfer
among the sub-accounts of the separate account when the frequency of such
transfer requests exceeds one every calendar month. No charge is currently
imposed on transfer requests exceeding this frequency.
17
<PAGE>
A $200 contract fee is imposed when a fixed annuity is elected under the
contract and the guaranteed rates are applied to provide an annuity.
- ------------------------------------------------------------------------
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.
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.
- ------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACT
A. GENERAL PROVISIONS
1. FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
This is a contract which may be used in connection with all types of
tax-qualified 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 with respect to the date and amount of payment. The
contract is also appropriate for situations where only a single purchase payment
is anticipated.
2. ISSUANCE OF CONTRACT
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 CONTRACT
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.
18
<PAGE>
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.
5. LIMITATIONS ON PURCHASE PAYMENTS
You choose when to make purchase payments under the 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. In the Variable
Annuity Account, your purchase payments are invested in the Funds according to
your instructions. If your application fails to specify which Portfolios are
desired, or is otherwise incomplete, and you do not consent to our retention of
your initial payment until the application is made complete, we will return your
initial payment within five business days.
Total purchase payments under the contract may not exceed $5,000,000, except
with our consent.
We may cancel the 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 seven days after the date such payment is called for by the
terms of the contract, except as payment may be subject to 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
(c) such other periods as the Commission may by order permit for the
protection of the contract owners.
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. We do
not anticipate any divisible surplus and do not anticipate making dividend
payments to contract owners under this contract.
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
19
<PAGE>
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 Funds, and thus the annuity payments will vary with the
investment experience of the assets of the Funds, selected
by the contract owner.
2. ELECTING THE RETIREMENT DATE AND FORM OF ANNUITY
The contract provides for four optional annuity forms, any one of which may be
elected if permitted by law. Each annuity option may be elected on either a
variable annuity or a fixed 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 three 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 contract, if you do not make an election, annuity payments will
begin on the later of: (a) the 85th birthday of the annuitant, or (b) five years
after the date of issue of the contract. Currently, it is our practice to await
instructions from a contract owner before beginning to pay annuity payments. If
you fail to elect an annuity option or form, 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 must be at least $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.
In addition, the contract restricts the maximum amount which may be applied to
provide a fixed annuity under the contract. The maximum amount which may be
applied for a fixed annuity is $1,000,000.
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 or she died prior to the due date of the second annuity
payment, two if he or she died before the due date of the third annuity payment,
etc.
OPTION 2--LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS (OPTION 2C)
This is an annuity payable monthly during the lifetime of the annuitant, with
the guarantee that if the annuitant dies before payments have been made for the
period certain elected, payments will continue to the beneficiary during the
remainder of the period certain. 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.
20
<PAGE>
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 to the beneficiary during the remainder
of such period certain. At any time during the payment period, the payee may
elect that (1) the present value of the remaining guaranteed number of payments,
based on the then current dollar amount of one such payment and using the same
interest rate which served as a basis for the annuity, shall be paid in a single
sum, or (2) such commuted amount shall be applied to effect a life annuity under
Option 1 or Option 2.
4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the contract 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 contract contains tables indicating the dollar amount of the first fixed
monthly payment under each optional annuity form for each $1,000 of value
applied (after deduction of any premium taxes not previously deducted). 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 this contract 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 annuitant 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. If, when annuity payments are elected, we are using tables of annuity
rates for this contract which result in larger annuity payments, we will use
those tables instead.
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 factor remained constant at
4.5% per year. Subsequent payments will decrease, remain the same or increase
depending upon whether the actual net investment factor 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.
Annuity payments are always made as of the first day of a month. The contracts
require that notice of election to begin annuity payments must be received by us
at least thirty days prior to the annuity commencement date. However, Minnesota
Mutual currently waives this requirement, and at the same time reserves the
right to enforce the thirty day notice at its option in the future.
Money will be transferred to the General Account for the purpose of electing
fixed annuity payments, or to the appropriate variable sub-accounts for variable
annuity payments, on the valuation date coincident with the first valuation date
following the fourteenth day of the month preceding the date on which the
annuity is to begin.
If a request for a fixed annuity is received between the first valuation date
following the fourteenth day of the month and the second to last valuation date
of the month prior to commencement, the transfer will occur on the valuation
date coincident with or next following the date on which the request is
received. If a
21
<PAGE>
fixed annuity request is received after the third to the last valuation day of
the month prior to commencement, it will be treated as a request received the
following month, and the commencement date will be changed to the first of the
month following the requested commencement date. The account value used to
determine fixed annuity payments will be the value as of the last valuation date
of the month preceding the date the fixed annuity is to begin.
If a variable annuity request is received after the third valuation date
preceding the first valuation date following the fourteenth day of the month
prior to the commencement date, it will be treated as a request received the
following month, and the commencement date will be changed to the first of the
month following the requested commencement date. The account value used to
determine the initial variable annuity payment will be the value as of the first
valuation date following the fourteenth day of the month prior to the variable
annuity begin date.
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.
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 factor, as
discussed 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.
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 and a $200 contract fee will be imposed. The annuity
payment option will remain the same. Amounts paid as a fixed annuity may not be
transferred to a variable annuity.
22
<PAGE>
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. 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 to which reserves
are transferred for the period between annuity valuation dates.
C. DEATH BENEFITS
The contract provides 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 seven days after we receive due
proof of death. Except as noted below, the entire interest in the contract must
be distributed within five years of the owner's death.
The 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 as consideration for this contract, less all
contract withdrawals.
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 there are joint owners of this contract, the death benefit described will
not be payable until the death of the surviving joint owner.
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. Payments must
be made in substantially equal installments.
If the owner of this contract is other than a natural person, such as a trust
or other entity, we will pay a death benefit of the accumulation value to the
named beneficiary on the death of the annuitant, if death occurs prior to the
date for annuity payments to begin.
D. PURCHASE PAYMENTS, VALUE OF THE CONTRACT AND TRANSFERS
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 contract is 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 are
required to return the initial purchase payment accompanying an incomplete
application immediately and in full if it appears that the application cannot be
completed within five business days, unless the prospective owner specifically
consents to our retention of the purchase payment until the application is made
complete.
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.
23
<PAGE>
We will determine the value of accumulation units on each day on which each
Fund is 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.
Applications received without instructions as to allocation of purchase
payment amounts among the sub-accounts of the Variable Annuity Account will be
treated as incomplete.
Upon your written request, values under the contract may be transferred 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.
Systematic transfer arrangements may be established among the sub-accounts of
the Variable Annuity Account. They may 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 sub-account
accumulation value is depleted. Systematic transfer arrangements are limited to
a maximum of twenty sub-accounts.
Also, you may effect transfers, or a change in the allocation of future
purchase payments, by means of a telephone call. Transfers 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 telephone instructions. 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 us.
We make telephone contract services 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 or a person authorized by you to
personally identify themselves in 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.
2. VOLUME CREDIT
Wherever allowed by law, we reserve the right to credit certain additional
amounts ("volume credit") to your contract if you submit large initial or
subsequent purchase payments. Such volume credit is credited by us on your
behalf with funds from our General Account. As of the date of this Prospectus,
we were making such a program available. However, we reserve the right to
modify, suspend or terminate it at any time, or from time to time, without
notice.
The current breakpoints for qualifying for a volume credit are shown below.
Also shown is
24
<PAGE>
the value of such volume credit as a percentage of your purchase payment.
<TABLE>
<CAPTION>
VOLUME CREDIT AS A
PERCENTAGE OF THE
PURCHASE PAYMENT PURCHASE PAYMENT
- -------------------------- -------------------------
<S> <C>
$ 0-- 499,999 0
500,000-- 749,999 .375
750,000-- 999,999 .75
1,000,000--1,499,999 1.125
1,500,000--1,999,999 1.50
2,000,000--2,499,999 1.875
2,500,000--2,999,999 2.25
3,000,000--3,999,999 2.625
4,000,000--5,000,000 3.00
</TABLE>
The volume credit is added the next business day after the purchase payments
are allocated to the contract, and are allocated to the investment options in
the same manner as the purchase payment. Should you exercise your right to
return the contract under the free look provision, the then current value of any
volume credit as of the date your contract is cancelled and will be deducted
from your account value prior to determining the amount to be returned to you.
We do not consider volume credit to be "investment in the contract" for income
tax purposes (see "Federal Tax Status"). Volume credit amounts may be withdrawn
without assessment of the deferred sales charge (see "Deferred Sales Charge").
Each time a new purchase payment is made, a new volume credit will be
calculated. The applicable percentage from the chart will be based on the total
cumulative purchase payments to date, including the new purchase payment, less
all prior purchase payments withdrawn. The new volume credit equals this
percentage times the amount of the new purchase payment.
3. 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 for each sub-account of the Variable Annuity Account. There is
no assurance that 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 for each sub-account of the Variable Annuity
Account, the current value of an accumulation unit, and the total value of the
contract.
4. 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 such sub-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.
5. 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
The contract provides 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 Variable Annuity Account in the same
proportion that the value of your interest in any sub-account bears to your
total accumulation value on a pro rata basis. We will waive the applicable
dollar amount limitation on withdrawals where a systematic withdrawal
25
<PAGE>
program is in place and where such a smaller amount satisfies the minimum
distribution requirements of the Code. Withdrawal values will be determined as
of the valuation date coincident with or next following the date your written
withdrawal request is received at our home office.
In the absence of instructions to the contrary, systematic withdrawals will be
made from the sub-accounts on a pro rata basis if the accumulation values are in
no more than twenty sub-accounts. If more than twenty sub-accounts have
accumulation values, we will need instructions as to those sub-accounts from
which systematic withdrawals are to be made. For systematic withdrawals, the
maximum number of sub-accounts which may be used is twenty.
The contract provides 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 or you may elect an annuity.
For more information on the application of the deferred sales charge, see
"Deferred Sales Charges" on pages 13-14.
Once annuity payments have commenced the annuitant cannot surrender his or her
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 pages 17-18.
Contract owners may also submit their signed written withdrawal or surrender
requests to Minnesota Mutual by facsimile (FAX) transmission. Our FAX number is
(612) 665-7942. Transfer instructions or changes as to future allocations of
purchase payments may be communicated to us by the same means. Payment of a
partial withdrawal or surrender will be made to you within 7 days after we
receive your completed request.
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 seven days after we
receive notice of cancellation.
In some states, such as California, the free look period may be extended. In
California, the free look period is extended to thirty days' time for contracts
issued or delivered to owners that are sixty years of age or older at the time
of delivery. Those rights are subject to change and may vary among the states.
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.
- ------------------------------------------------------------------------
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
26
<PAGE>
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, the taxable
portion is generally the amount in excess of the cost basis (i.e., purchase
payments) of the contract. Amounts withdrawn from the variable annuity contracts
not part of a qualified program 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, a
penalty 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, and in certain other circumstances.
The Code also provides an exception to the penalty tax for distributions, in
periodic payments, of substantially equal installments, where they are 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 nonqualified deferred annuity contracts issued by the same company (or
its affiliates) to the same contract owner during any calendar year shall be
treated as one annuity contract. Additional rules may be promulgated under this
provision to prevent avoidance of its effect through serial contracts or
otherwise. For further information on these rules, 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 an
annuity 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 includable 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
27
<PAGE>
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
sub-accounts 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 reports 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 an 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.
Nonqualified contracts issued after January 18, 1985 contain provisions which
are intended to comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have yet been issued.
Minnesota Mutual intends to review such provisions and modify them if necessary
to assure that they comply with the requirements of Code Section 72(s) when
clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of the owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely modified
the federal taxation of certain annuities. For example, one such proposal would
have changed the tax treatment of nonqualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress is not actively
considering any legislation regarding the taxation of annuities, there is always
the possibility that the tax treatment of annuities could change by legislation
or other means (such as IRS regulations, revenue rulings, judicial decisions,
etc.). Moreover, it is also possible that any change could be retroactive (that
is, effective prior to the date of the change).
28
<PAGE>
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. 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 transfer
restrictions, 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 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.
SIMPLE RETIREMENT ACCOUNTS
Beginning January 1, 1997, certain small employers may establish Simple
Retirement Accounts as provided by Section 408(p) of the Code, under which
employees may elect to defer up to $6,000 (as increased for cost of living
adjustments) as a percentage of compensation. The sponsoring employer is
required to make a matching contribution on behalf of contributing employees.
Distributions from a Simple Retirement Account are subject to the same
restrictions that apply to IRA distributions and are taxed as ordinary income.
Subject to certain exceptions, premature distributions prior to age 59 1/2 are
subject to a 10% penalty tax, which is increased to 25% if the distribution
occurs within the first two years after the commencement of the employee's
participation in the plan. The failure of the Simple Retirement Account to meet
Code requirements may result in adverse tax consequences.
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
29
<PAGE>
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. With
respect to non-governmental Section 457 plans, investments are owned by the
sponsoring employer and are subject to the claims of the general creditors of
the employer and 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.
- ------------------------------------------------------------------------
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 Contract
Performance Data
Auditors
Registration Statement
Financial Statements
30
<PAGE>
APPENDIX A--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%, 6.54% and 12.00%.
For illustration purposes, an average annual expense equal to 2.04% 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 2.04%
includes: 1.25% for Mortality and Expense Risk, and an average of .79% 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%. 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 1996 VARIABLE ANNUITY SEPARATE ACCOUNT CHARGES
AND SERIES FUND EXPENSES
<TABLE>
<CAPTION>
FUND OTHER
SEPARATE ACCOUNT MORTALITY & MANAGEMENT FUND DISTRIBUTION
SUB-ACCOUNT NAME EXPENSE RISK FEE EXPENSES EXPENSES TOTAL
- ---------------------------------------- ------------- ---------- -------- ------------ ------
<S> <C> <C> <C> <C> <C>
Growth.................................. 1.25% .50% .09% -- 1.84%
Bond.................................... 1.25% .50% .06% -- 1.81%
Money Market............................ 1.25% .50% .10% -- 1.85%
Asset Allocation........................ 1.25% .50% .04% -- 1.79%
Mortgage Securities..................... 1.25% .50% .08% -- 1.83%
Index 500............................... 1.25% .40% .05% -- 1.70%
Capital Appreciation.................... 1.25% .75% .10% -- 2.10%
International Stock..................... 1.25% .74% .32% -- 2.31%
Small Company........................... 1.25% .75% .06% -- 2.06%
Value Stock............................. 1.25% .75% .08% -- 2.08%
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%
Small Company Value Portfolio........... 1.25% .75% .15% -- 2.15%
International Bond...................... 1.25% .60% 1.00% -- 2.85%
Index 400 Mid-Cap....................... 1.25% .40% .15% -- 1.80%
Micro-Cap Value......................... 1.25% 1.25% .15% -- 2.65%
Macro-Cap Value......................... 1.25% .70% .15% -- 2.10%
Micro-Cap Growth........................ 1.25% 1.10% .15% -- 2.50%
Templeton Developing Markets Class 2.... 1.25% 1.25% .53% .25% 3.28%
--
--- --- --- ------
Average........................... 1.25% .60% .18% .01% 2.04%
</TABLE>
31
<PAGE>
VARIABLE ANNUITY PAYOUT ILLUSTRATION
PREPARED FOR: Prospect
PREPARED BY: Minnesota Mutual
SEX: Male DATE OF BIRTH: 05/01/32
STATE: MN
LIFE EXPECTANCY: 20.0 (IRS) 17.3 (MML)
ANNUITIZATION OPTION:10 Year Certain with Life Contingency
QUOTATION DATE: 05/01/97
COMMENCEMENT DATE: 06/01/97
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
-------------------------------------------
0.00% GROSS 6.54% GROSS 12.00% GROSS
DATE AGE (-2.04% NET) (4.50% NET) (9.96% NET)
- ---------------------------------------- ----- ------------ ------------ -------------
<S> <C> <C> <C> <C>
June 1, 1997............................ 65 $678 $678 $678
June 1, 1998............................ 66 636 678 714
June 1, 1999............................ 67 596 678 751
June 1, 2000............................ 68 559 678 790
June 1, 2001............................ 69 524 678 832
June 1, 2006............................ 74 379 678 1,073
June 1, 2011............................ 79 274 678 1,384
June 1, 2016............................ 84 199 678 1,785
June 1, 2021............................ 89 144 678 2,303
June 1, 2026............................ 94 104 678 2,971
June 1, 2031............................ 99 75 678 3,832
June 1, 2032............................ 100 71 678 4,032
</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
$742.
Net rates of return reflect expenses totaling 2.04%, which consist of the
1.25% Variable Annuity Account mortality and expense risk charge and .79% for
the Series Fund management fee and other Series Fund expenses (this is an
average with the actual varying from .20% to 2.03%).
Minnesota Mutual MultiOption variable annuities are available through
registered representatives of MIMLIC Sales Corporation.
This is an illustration only and not a contract.
32
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<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) 665-3500
Statement of Additional Information
The date of this document and the Prospectus is: May 1, 1997
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) 665-3500, 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 Contract
Performance Data
Auditors
Registration Statement
Financial Statements
<PAGE>
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
Trustees Principal Occupation
Giulio Agostini Senior Vice President, Finance and Administrative
Services, Minnesota Mining and
Manufacturing Company, Maplewood, Minnesota
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company, St.
Paul, Minnesota, since June 1995, prior thereto for
more than five years President and Chief Executive
Officer, H. B. Fuller Company (Adhesive Products)
John F. Grundhofer Chairman of the Board, President and Chief Executive
Officer, First Bank System, Inc., Minneapolis,
Minnesota (Banking)
Harold V. Haverty Retired since May 1995, prior thereto, for more than
five years Chairman of the Board, President and
Chief Executive Officer, Deluxe Corporation,
Shoreview, Minnesota (Check Printing)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota
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 Tinson Saario, Prior to March 1996, and for more than five years,
Ph.D. President, Northwest Area Foundation, St. Paul,
Minnesota (Private Regional Foundation)
Robert L. Senkler Chairman of the Board, President and Chief
Executive Officer, The Minnesota Mutual Life
Insurance Company, since August 1995; prior
thereto for more than five years Vice President and
Actuary, The Minnesota Mutual Life Insurance
Company
Michael E. Shannon Chairman, Chief Financial and Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota, since
August 1992, prior thereto President, Residential
Services Group, Ecolab, Inc., St. Paul, Minnesota
from October 1990 to July 1992 (Develops and
Markets Cleaning and Sanitizing Products)
Frederick T. Weyerhaeuser Chairman, Clearwater Investment Trust, since May 1996,
prior thereto for more than five years, Chairman,
Clearwater Management Company, St. Paul, Minnesota
(Financial Management)
1
<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
Richard D. Lee Vice President
Joel W. Mahle Vice President
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary
Gregory S. Strong Vice President and Actuary
Terrence S. 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. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at
least five years.
DISTRIBUTION OF CONTRACT
The contract 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 Advantus
Capital Management Company, a registered investment adviser and the
investment adviser to the Advantus 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 1996, 1995 and 1994, were
$13,034,146, $7,203,781 and $7,363,105, respectively, for payment to
associated dealers on the sale of the contracts, which include other
contracts issued through the Variable Annuity Account. Agents of Minnesota
Mutual who are also registered representatives of MIMLIC Sales are
compensated directly by Minnesota Mutual.
2
<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, 1996 were 3.51% and 3.57%, respectively. Such
figures reflect the voluntary absorption of certain expenses of Advantus
Series Fund, Inc. (the "Fund") by Minnesota Mutual described below under
"Total Return Figures for All Sub-Accounts." Yield figures quoted by the
Money Market Sub-Account will not reflect the deduction of any applicable
deferred sales charges (the deferred sales charge, as a percentage of the
accumulation value withdrawn, begin as of the contract date at 9% for the
flexible payment contract).
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. Therefore, for periods
prior to the date of this Prospectus the quotations will be based on the
assumption that the contracts described herein were issued when the
underlying Portfolios first became available to the Variable Annuity Account
under other contracts issued by us. 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.
The cumulative total return figures published by the Variable Annuity Account
relating to the contract described in the Prospectus will reflect Minnesota
Mutual's voluntary absorption of certain Fund expenses described below.
3
<PAGE>
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one-year period and for the period
since the Sub-Account became available pursuant to the Variable 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 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.
<TABLE>
<CAPTION>
From Inception Date of
to 12/31/96 Inception
-------------- ---------
<S> <C> <C>
Growth Sub-Account 191.18% (188.83%) 12/3/85
Bond Sub-Account 116.57% (115.50%) 12/3/85
Money Market Sub-Account 55.81% (53.49%) 12/3/85
Asset Allocation Sub-Account 169.03% (168.48%) 12/3/85
Mortgage Securities Sub-Account 100.93% (100.58%) 6/1/87
Index 500 Sub-Account 191.54% (190.76%) 6/1/87
Capital Appreciation Sub-Account 193.98% (191.13%) 6/1/87
International Stock Sub-Account 72.80% (72.77%) 5/1/92
Small Company Sub-Account 67.23% (67.22%) 5/3/93
Maturing Government Bond
1998 Sub-Account 16.89% (16.60%) 5/2/94
Maturing Government Bond
2002 Sub-Account 23.35% (22.71%) 5/2/94
Maturing Government Bond
2006 Sub-Account 28.89% (27.84%) 5/2/94
Maturing Government Bond
2010 Sub-Account 31.52% (29.35%) 5/2/94
Value Stock Sub-Account 77.79% (77.54%) 5/2/94
</TABLE>
4
<PAGE>
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one-year period, five-year period
and ten-year period or for the period since the Sub-Account became available
pursuant to the Variable Annuity Account's registration statement if less
than ten years. 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 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. Minnesota Mutual has voluntarily
agreed to absorb fees and expenses that exceed .55% of the average daily net
assets of the Index 400 Mid-Cap Portfolio, .90% of the average daily net
assets of the Small Company Value Portfolio, 1.40% of the average daily net
assets of the Mid-Cap Value Portfolio, 1.25% of the average daily net assets
of the Micro-Cap Growth Portfolio, .85% of the average daily net assets of
the Macro-Cap Value Portfolio and expenses that exceed 1.00% of the average
daily net assets of the International Bond Portfolio of the Fund exclusive of
the advisory fee. 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.
5
<PAGE>
The average annual rates of return for the Sub-Accounts, in connection with
the contract described in the Prospectus, for the specified periods ended
December 31, 1996 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. These figures also
assume that the contracts described herein were issued when the Underlying
Portfolios first became available to the Variable Annuity Account. This
contract only became available as of the date of this Prospectus.
<TABLE>
<CAPTION>
Flexible Premium Deferred Variable Annuity
MultiOption Select
------------------------------------------
Year Ended Five Years Ten Years From Inception Date of
12/31/96 Ended 12/31/96 Ended 12/31/96 to 12/31/96 Inception
---------- -------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 8.70% (8.70%) 8.04% (8.04%) 11.22% (11.10%) N/A (N/A) 12/3/85
Bond Sub-Account -5.32% (-5.32%) 4.73% (4.70%) 6.54% (6.45%) N/A (N/A) 12/3/85
Money Market Sub-Account -3.35% (-3.35%) 1.97% (1.75%) 4.06% (3.72%) N/A (N/A) 12/3/85
Asset Allocation
Sub-Account 4.10% (4.10%) 7.67% (7.67%) 9.76% (9.73%) N/A (N/A) 12/3/85
Mortgage Securities
Sub-Account -3.05% (-3.05%) 4.90% (4.88%) N/A (N/A) 7.56% (7.53%) 6/1/87
Index 500 Sub-Account 13.13% (13.13%) 12.77% (12.75%) N/A (N/A) 11.81% (11.77%) 6/1/87
Capital Appreciation
Sub-Account 9.15% (9.15%) 9.42% (9.40%) N/A (N/A) 11.49% (11.76%) 6/1/87
6
<PAGE>
International Stock
Sub-Account 11.30% (11.30%) N/A (N/A) N/A (N/A) 11.87% (11.86%) 5/1/92
Small Company Sub-Account -1.88% (-1.88%) N/A (N/A) N/A (N/A) 14.11% (14.11%) 5/3/93
Maturing Government Bond -4.16% (-4.68%) N/A (N/A) N/A (N/A) 3.95% (3.39%) 5/2/94
1998 Sub-Account
Maturing Government Bond
2002 Sub-Account -6.54% (-10.25%) N/A (N/A) N/A (N/A) 6.18% (5.27%) 5/2/94
Maturing Government Bond
2006 Sub-Account -9.44% (-10.44%) N/A (N/A) N/A (N/A) 8.03% (6.81%) 5/2/94
Maturing Government Bond
2010 Sub-Account -11.62% (-13.40%) N/A (N/A) N/A (N/A) 8.89% (6.60%) 5/2/94
Value Stock Sub-Account 22.32% (22.32%) N/A (N/A) N/A (N/A) 22.03% (21.92%) 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, 1996 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.
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years From Inception Date of
12/31/96 Ended 12/31/96 Ended 12/31/96 to 12/31/96 Inception
------------- -------------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 15.70% (15.70%) 8.62% (8.62%) 11.22% (11.22%) N/A (N/A) 12/3/85
Bond Sub-Account 1.68% (1.68%) 5.39% (5.36%) 6.54% (6.45%) N/A (N/A) 12/3/85
7
<PAGE>
Money Market
Sub-Account 3.65% (3.65%) 2.69% (2.47%) N/A (N/A) N/A (N/A) 12/3/85
Asset Allocation
Sub-Account 11.10% (11.10%) 8.26% (8.26%) N/A (N/A) N/A (N/A) 12/3/85
Mortgage Securities
Sub-Account 3.95% (3.95%) 5.55% (5.53%) N/A (N/A) 7.56% (7.53%) 6/1/87
Index 500
Sub-Account 20.13% (20.13%) 13.26% (13.24%) N/A (N/A) 11.81% (11.77%) 6/1/87
Capital Appreciation
Sub-Account 16.15% (16.15%) 9.98% (9.96%) N/A (N/A) 11.91% (11.76%) 6/1/87
International Stock
Sub-Account 18.30% (18.30%) N/A (N/A) N/A (N/A) 12.43% (12.42%) 5/1/92
Small Company
Sub-Account 5.12% (5.12%) N/A (N/A) N/A (N/A) 15.06% (15.06%) 5/3/93
Maturing Government
Bond 1998
Sub-Account 2.84% (2.32%) N/A (N/A) N/A (N/A) 6.02% (5.46%) 5/2/94
Maturing Government
Bond 2002
Sub-Account .46% (-.35%) N/A (N/A) N/A (N/A) 8.18% (7.27%) 5/2/94
Maturing Government
Bond 2006
Sub-Account -2.44% (-3.44%) N/A (N/A) N/A (N/A) 9.98% (8.76%) 5/2/94
Maturing Government
Bond 2010
Sub-Account -4.62% (-6.40%) N/A (N/A) N/A (N/A) 10.81% (8.52%) 5/2/94
Value Stock
Sub-Account 29.32% (29.32%) N/A (N/A) N/A (N/A) 23.62% (23.51%) 5/2/94
</TABLE>
8
<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)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.
9
<PAGE>
Because the Portfolio's expenses and composition do not remain constant,
however, the Company may 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 on 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.
-10-
<PAGE>
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
contract 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 contract. 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.
-11-
<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 (the Account) (class of contracts
offered for combination Fixed and Variable Annuity Contracts for Personal
Retirement Plans) as of December 31, 1996 and the related statements of
operations for the year then ended, the statements of changes in net assets
for each of the years in the two-year period then ended and the financial
highlights for the periods in footnote (6). 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, 1996 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, 1996 and the results of their
operations, changes in their net assets and the financial highlights for the
periods stated in the first paragraph above, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 14, 1997
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
---------------------------
ASSETS GROWTH BOND
------------ ------------
<S> <C> <C>
Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 50,156,918 shares at net asset value of $2.343 per share
(cost $96,272,317) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 117,531,708 -
Bond Portfolio, 63,035,908 shares at net asset value of $1.283 per share
(cost $77,678,207) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80,892,883
Money Market Portfolio, 36,601,424 shares at net asset value of $1.000 per
share (cost $36,601,424) . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Asset Allocation Portfolio, 173,295,897 shares at net asset value of $1.865 per
share (cost $271,469,123) . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Mortgage Securities Portfolio, 55,490,821 shares at net asset value of $1.187
per share (cost $63,809,744) . . . . . . . . . . . . . . . . . . . . . . . . . - -
Index 500 Portfolio, 56,185,560 shares at net asset value of $2.409 per share
(cost $96,535,954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Capital Appreciation Portfolio, 60,868,073 shares at net asset value of $2.471
per share (cost $112,719,241) . . . . . . . . . . . . . . . . . . . . . . . . - -
------------ ------------
117,531,708 80,892,883
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 41,514 26,278
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 80,136 241,899
Dividends receivable from MIMLIC Series Fund, Inc. . . . . . . . . . . . . . . . - -
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,653,358 81,161,060
------------ ------------
------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 80,136 241,899
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,514 26,278
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,650 268,177
------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . $ 117,531,708 80,892,883
------------ ------------
------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding of 38,448,452
for Growth; 36,732,062 for Bond; 22,929,634 for Money Market; 116,211,650 for
Asset Allocation; 32,527,955 for Mortgage Securities; 46,097,553 for Index 500
and 51,023,999 for Capital Appreciation. . . . . . . . . . . . . . . . . . . . . $ 116,970,041 80,422,303
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . 561,667 470,580
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . $ 117,531,708 80,892,883
------------ ------------
------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . $ 3.043 2.189
------------ ------------
------------ ------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
------------------------------------------
MONEY ASSET MORTGAGE
ASSETS MARKET ALLOCATION SECURITIES
------------ ------------ ------------
Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 50,156,918 shares at net asset value of $2.343 per share
(cost $96,272,317) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Bond Portfolio, 63,035,908 shares at net asset value of $1.283 per share
(cost $77,678,207) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Money Market Portfolio, 36,601,424 shares at net asset value of $1.000 per
share (cost $36,601,424) . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,601,424 - -
Asset Allocation Portfolio, 173,295,897 shares at net asset value of $1.865 per
share (cost $271,469,123) . . . . . . . . . . . . . . . . . . . . . . . . . . - 323,180,479 -
Mortgage Securities Portfolio, 55,490,821 shares at net asset value of $1.187. .
per share (cost $63,809,744) . . . . . . . . . . . . . . . . . . . . . . . . . - - 65,845,545
Index 500 Portfolio, 56,185,560 shares at net asset value of $2.409 per share
(cost $96,535,954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Capital Appreciation Portfolio, 60,868,073 shares at net asset value of $2.471
per share (cost $112,719,241) . . . . . . . . . . . . . . . . . . . . . . . . - - -
------------ ------------ ------------
36,601,424 323,180,479 65,845,545
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 22,953 106,584 30,871
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 1,134,459 205,397 193,011
Dividends receivable from MIMLIC Series Fund, Inc. . . . . . . . . . . . . . . . 20 - -
------------ ------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,758,856 323,492,460 66,069,427
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 1,134,459 205,397 193,011
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,953 106,584 30,871
------------ ------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,157,412 311,981 223,882
------------ ------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . 36,601,444 323,180,479 65,845,545
------------ ------------ ------------
------------ ------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding of 38,448,452
for Growth; 36,732,062 for Bond; 22,929,634 for Money Market; 116,211,650 for
Asset Allocation; 32,527,955 for Mortgage Securities; 46,097,553 for Index 500
and 51,023,999 for Capital Appreciation. . . . . . . . . . . . . . . . . . . . . 36,010,963 321,058,362 65,396,887
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . 590,481 2,122,117 448,658
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . 36,601,444 323,180,479 65,845,545
------------ ------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . 1.570 2.762 2.010
------------ ------------ ------------
------------ ------------ ------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------
INDEX CAPITAL
ASSETS 500 APPRECIATION
------------ ------------
Investments in shares of MIMLIC Series Fund, Inc.:
Growth Portfolio, 50,156,918 shares at net asset value of $2.343 per share
(cost $96,272,317) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Bond Portfolio, 63,035,908 shares at net asset value of $1.283 per share
(cost $77,678,207) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Money Market Portfolio, 36,601,424 shares at net asset value of $1.000 per
share (cost $36,601,424) . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Asset Allocation Portfolio, 173,295,897 shares at net asset value of $1.865 per
share (cost $271,469,123) . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Mortgage Securities Portfolio, 55,490,821 shares at net asset value of $1.187
per share (cost $63,809,744) . . . . . . . . . . . . . . . . . . . . . . . . . - -
Index 500 Portfolio, 56,185,560 shares at net asset value of $2.409 per share
(cost $96,535,954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,334,726 -
Capital Appreciation Portfolio, 60,868,073 shares at net asset value of $2.471
per share (cost $112,719,241) . . . . . . . . . . . . . . . . . . . . . . . . - 150,431,644
------------ ------------
135,334,726 150,431,644
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 33,464 44,461
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 119,042 59,698
Dividends receivable from MIMLIC Series Fund, Inc. . . . . . . . . . . . . . . . - -
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,487,232 150,535,803
------------ ------------
------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 119,042 59,698
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,464 44,461
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,506 104,159
------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . 135,334,726 150,431,644
------------ ------------
------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding of 38,448,452
for Growth; 36,732,062 for Bond; 22,929,634 for Money Market; 116,211,650 for
Asset Allocation; 32,527,955 for Mortgage Securities; 46,097,553 for Index 500
and 51,023,999 for Capital Appreciation. . . . . . . . . . . . . . . . . . . . . 134,294,656 149,610,997
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . 1,040,070 820,647
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . 135,334,726 150,431,644
------------ ------------
------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . 2.913 2.932
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
---------------------------
INTERNATIONAL SMALL
ASSETS STOCK COMPANY
------------ ------------
<S> <C> <C>
Investments in shares of MIMLIC Series Fund, Inc.:
International Stock Portfolio, 94,266,211 shares at net asset value of $1.597
per share (cost $123,613,089) . . . . . . . . . . . . . . . . . . . . . . . . $ 150,564,285
Small Company Portfolio, 65,253,909 shares at net asset value of $1.535 per
share (cost $91,962,096) . . . . . . . . . . . . . . . . . . . . . . . . . . . - 100,154,435
Maturing Government Bond 1998 Portfolio, 4,186,461 shares at net asset value
of $1.080 share (cost $4,278,404) . . . . . . . . . . . . . . . . . . . . . . - -
Maturing Government Bond 2002 Portfolio, 3,398,126 shares at net asset value
of $1.049 per share (cost $3,494,110) . . . . . . . . . . . . . . . . . . . . - -
Maturing Government Bond 2006 Portfolio, 2,690,353 shares at net asset value
of $1.094 per share (cost $2,819,520) . . . . . . . . . . . . . . . . . . . . - -
Maturing Government Bond 2010 Portfolio, 2,242,466 shares at net asset value
of $1.172 per share (cost $2,477,360) . . . . . . . . . . . . . . . . . . . . - -
Value Stock Portfolio, 49,328,087 shares at net asset value of $1.591 per
share (cost $68,377,558) . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
------------ ------------
150,564,285 100,154,435
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 41,237 25,603
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 154,873 119,110
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,760,395 100,299,148
------------ ------------
------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 154,873 119,110
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,237 25,603
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,110 144,713
------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . $ 150,564,285 100,154,435
------------ ------------
------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding 86,521,264
for International Stock; 59,295,273 for Small Company; 3,911,112 for Maturing
Government Bond 1998; 2,935,860 for Maturing Government Bond 2002;
2,334,109 for Maturing Government Bond 2006; 2,077,124 for Maturing
Government Bond 2010 and 43,796,523 for Value Stock . . . . . . . . . . . . . . $ 149,642,437 99,170,276
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . 921,848 984,159
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . $ 150,564,285 100,154,435
------------ ------------
------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . $ 1.730 1.673
------------ ------------
------------ ------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
ASSETS BOND 1998 BOND 2002
------------ ------------
Investments in shares of MIMLIC Series Fund, Inc.:
International Stock Portfolio, 94,266,211 shares at net asset value of $1.597
per share (cost $123,613,089) . . . . . . . . . . . . . . . . . . . . . . . . - -
Small Company Portfolio, 65,253,909 shares at net asset value of $1.535 per
share (cost $91,962,096) . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Maturing Government Bond 1998 Portfolio, 4,186,461 shares at net asset value
of $1.080 share (cost $4,278,404) . . . . . . . . . . . . . . . . . . . . . . 4,520,878 -
Maturing Government Bond 2002 Portfolio, 3,398,126 shares at net asset value
of $1.049 per share (cost $3,494,110) . . . . . . . . . . . . . . . . . . . . - 3,564,303
Maturing Government Bond 2006 Portfolio, 2,690,353 shares at net asset value
of $1.094 per share (cost $2,819,520) . . . . . . . . . . . . . . . . . . . . - -
Maturing Government Bond 2010 Portfolio, 2,242,466 shares at net asset value
of $1.172 per share (cost $2,477,360) . . . . . . . . . . . . . . . . . . . . - -
Value Stock Portfolio, 49,328,087 shares at net asset value of $1.591 per
share (cost $68,377,558) . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
4,520,878 3,564,303
------------ ------------
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 1,283 683
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 5 979
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,522,166 3,565,965
------------ ------------
------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 5 979
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,283 683
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,288 1,662
------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . 4,520,878 3,564,303
------------ ------------
------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding 86,521,264
for International Stock; 59,295,273 for Small Company; 3,911,112 for Maturing
Government Bond 1998; 2,935,860 for Maturing Government Bond 2002;
2,334,109 for Maturing Government Bond 2006; 2,077,124 for Maturing
Government Bond 2010 and 43,796,523 for Value Stock . . . . . . . . . . . . . . 4,520,878 3,538,965
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . - 25,338
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . 4,520,878 3,564,303
------------ ------------
------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . 1.156 1.205
------------ ------------
------------ ------------
<CAPTION>
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, 94,266,211 shares at net asset value of $1.597
per share (cost $123,613,089) . . . . . . . . . . . . . . . . . . . . . . . . - - -
Small Company Portfolio, 65,253,909 shares at net asset value of $1.535 per
share (cost $91,962,096) . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Maturing Government Bond 1998 Portfolio, 4,186,461 shares at net asset value
of $1.080 share (cost $4,278,404) . . . . . . . . . . . . . . . . . . . . . . - - -
Maturing Government Bond 2002 Portfolio, 3,398,126 shares at net asset value
of $1.049 per share (cost $3,494,110) . . . . . . . . . . . . . . . . . . . . - - -
Maturing Government Bond 2006 Portfolio, 2,690,353 shares at net asset value
of $1.094 per share (cost $2,819,520) . . . . . . . . . . . . . . . . . . . . 2,943,403 - -
Maturing Government Bond 2010 Portfolio, 2,242,466 shares at net asset value
of $1.172 per share (cost $2,477,360) . . . . . . . . . . . . . . . . . . . . - 2,627,061 -
Value Stock Portfolio, 49,328,087 shares at net asset value of $1.591 per
share (cost $68,377,558) . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 78,462,099
------------ ------------ ------------
2,943,403 2,627,061 78,462,099
Receivable from MIMLIC Series Fund, Inc. for investments sold . . . . . . . . . . 1,759 5,553 23,097
Receivable from Minnesota Mutual for contract purchase payments . . . . . . . . . 1,307 6 159,640
------------ ------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,946,469 2,632,620 78,644,836
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES
Payable to MIMLIC Series Fund, Inc. for investments purchased . . . . . . . . . . 1,307 6 159,640
Payable to Minnesota Mutual for contract terminations and mortality and
expense charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,759 5,553 23,097
------------ ------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,066 5,559 182,737
------------ ------------ ------------
Net assets applicable to annuity contract owners . . . . . . . . . . . . . . . 2,943,403 2,627,061 78,462,099
------------ ------------ ------------
------------ ------------ ------------
CONTRACT OWNERS' EQUITY
Contracts in accumulation period, accumulation units outstanding 86,521,264
for International Stock; 59,295,273 for Small Company; 3,911,112 for Maturing
Government Bond 1998; 2,935,860 for Maturing Government Bond 2002;
2,334,109 for Maturing Government Bond 2006; 2,077,124 for Maturing
Government Bond 2010 and 43,796,523 for Value Stock . . . . . . . . . . . . . . 2,917,539 2,627,061 77,866,457
Contracts in annuity payment period (note 2) . . . . . . . . . . . . . . . . . . 25,864 - 595,642
Total contract owners' equity . . . . . . . . . . . . . . . . . . . . . . . . 2,943,403 2,627,061 78,462,099
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE PER ACCUMULATION UNIT . . . . . . . . . . . . . . . . . . . . . . 1.250 1.265 1.778
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY CONTRACT
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
----------------------------
GROWTH BOND
------------- -------------
<S> <C> <C>
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . $ 875,449 3,489,096
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (1,315,044) (868,779)
------------- -------------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . (439,595) 2,620,317
------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . 8,226,602 628,966
------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,289,438 11,085,435
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,519,660) (10,863,618)
------------- -------------
2,769,778 221,817
------------- -------------
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . 10,996,380 850,783
------------- -------------
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,627,723 (1,797,465)
------------- -------------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . . . . . 15,624,103 (946,682)
------------- -------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . $ 15,184,508 1,673,635
------------- -------------
------------- -------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
------------------------------------------
MONEY ASSET MORTGAGE
MARKET ALLOCATION SECURITIES
------------ ------------ ------------
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . 1,468,988 9,151,379 3,951,650
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (382,125) (3,746,894) (773,507)
------------- ------------- -------------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . 1,086,863 5,404,485 3,178,143
------------- ------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . - 16,755,857 -
------------- ------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,165,964 44,263,762 13,390,362
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,165,964) (38,041,256) (13,284,230)
------------- ------------- -------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6,222,506 106,132
------------- ------------- -------------
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . - 22,978,363 106,132
------------- ------------- -------------
Net change in unrealized appreciation or depreciation
of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,391,254 (863,049)
------------- ------------- -------------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . . . . . - 26,369,617 (756,917)
------------- ------------- -------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 1,086,863 31,774,102 2,421,226
------------- ------------- -------------
------------- ------------- -------------
<CAPTION>
INDEX CAPITAL
500 APPRECIATION
------------ ------------
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . 1,354,495 -
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (1,367,650) (1,690,612)
------------- -------------
(13,155) (1,690,612)
------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . 701,159 3,355,808
------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500,891 19,677,859
Cost of investment sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,957,554) (14,970,457)
------------- -------------
3,543,337 4,707,402
------------- -------------
Net realized gainson investmens. . . . . . . . . . . . . . . . . . . . . . . . 4,244,496 8,063,210
------------- -------------
Net change in unrealized appreciation or depreciation. . . . . . . . . . . . . 16,185,492 13,204,750
------------- -------------
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,429,988 21,267,960
------------- -------------
------------- -------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 20,416,833 19,577,348
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
---------------------------
INTERNATIONAL SMALL
STOCK COMPANY
------------- -------------
<S> <C> <C>
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . $ 2,977,785 210,314
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (1,543,943) (1,083,010)
------------- -------------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . 1,433,842 (872,696)
------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . 3,259,963 9,395,869
------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,173,191 12,520,887
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,115,088) (10,196,111)
------------- -------------
2,058,103 2,324,776
------------- -------------
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . 5,318,066 11,720,645
------------- -------------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,598,427 (7,159,671)
------------- -------------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . . . . . 19,916,493 4,560,974
------------- -------------
Net increase (decreases) in net assets resulting from operations . . . . . . . . $ 21,350,335 3,688,278
------------- -------------
------------- -------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
---------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND
1998 2002
------------- -------------
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . 2,787 195,568
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (48,940) (39,559)
------------- -------------
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . (46,153) 156,009
------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . - -
------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 886,766 275,865
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (855,369) (260,619)
------------- -------------
31,397 15,246
------------- -------------
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . 31,397 15,246
------------- -------------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,703 (135,902)
------------- -------------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . . . . . 159,100 (120,656)
------------- -------------
Net increase (decreases) in net assets resulting from operations . . . . . . . . 112,947 35,353
------------- -------------
------------- -------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND VALUE
2006 2010 STOCK
------------- ------------- -------------
Investment income (loss):
Investment income distributions from underlying mutual fund . . . . . . . . . . 163,096 948 617,684
Mortality and expense charges (note 3) . . . . . . . . . . . . . . . . . . . . . (31,583) (20,970) (609,577)
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . 131,513 (20,022) 8,107
------------- ------------- -------------
Realized and unrealized gains (losses) on investments - net:
Realized gain distributions from underlying mutual fund . . . . . . . . . . . . 4,030 - 4,738,174
------------- ------------- -------------
Realized gains on sales of investments (note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,514 405,961 6,800,945
Cost of investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . (184,298) (401,440) (5,822,204)
------------- ------------- -------------
15,216 4,521 978,741
------------- ------------- -------------
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . 19,246 4,521 5,716,915
------------- ------------- -------------
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (188,675) (7,215) 7,186,237
------------- ------------- -------------
Net gains (losses) on investments . . . . . . . . . . . . . . . . . . . . . . (169,429) (2,694) 12,903,152
------------- ------------- -------------
Net increase (decreases) in net assets resulting from operations . . . . . . . . (37,916) (22,716) 12,911,259
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
----------------------------
GROWTH BOND
-------------- --------------
<S> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . $ (439,595) 2,620,317
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 10,996,380 850,783
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,627,723 (1,797,465)
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 15,184,508 1,673,635
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,686,286 28,459,419
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (14,919,406) (10,171,421)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,969 9,564
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60,957) (54,798)
-------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 7,711,892 18,242,764
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,896,400 19,916,399
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 94,635,308 60,976,484
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 117,531,708 80,892,883
-------------- --------------
-------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------
MONEY ASSET MORTGAGE
MARKET ALLOCATION SECURITIES
-------------- -------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 1,086,863 5,404,485 3,178,143
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . - 22,978,363 106,132
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,391,254 (863,049)
-------------- -------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 1,086,863 31,774,102 2,421,226
-------------- -------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,853,330 54,563,388 14,864,436
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (39,767,006) (40,381,655) (12,572,781)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,007 24,449 2,662
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,840) (159,662) (46,736)
-------------- -------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 13,069,491 14,046,520 2,247,581
-------------- -------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,156,354 45,820,622 4,668,807
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 22,445,090 277,359,857 61,176,738
-------------- -------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 36,601,444 323,180,479 65,845,545
-------------- -------------- --------------
-------------- -------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------
INDEX CAPITAL
500 APPRECIATION
-------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . (13,155) (1,690,612)
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 4,244,496 8,063,210
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,185,492 13,204,750
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 20,416,833 19,577,348
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,905,486 32,359,143
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (12,092,904) (17,945,477)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,413 30,374
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,750) (72,144)
-------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 28,772,245 14,371,896
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,189,078 33,949,244
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 86,145,648 116,482,400
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 135,334,726 150,431,644
-------------- --------------
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
-----------------------------
INTERNATIONAL SMALL
STOCK COMPANY
-------------- --------------
<S> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,433,842 (872,696)
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 5,318,066 11,720,645
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,598,427 (7,159,671)
-------------- --------------
Net increase (decrease) in net assets resulting from operations . . . . . . . . . 21,350,335 3,688,278
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):. . . . . . . . . . . . . . . . . . .
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,935,430 38,517,725
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (14,587,080) (11,390,236)
Actuarial adjustments for mortality experience on annuities. . . . . . . . . . .
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,969 36,861
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (69,138) (84,501)
-------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 28,306,181 27,079,849
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,656,516 30,768,127
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 100,907,769 69,386,308
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,564,285 100,154,435
-------------- --------------
-------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND
1998 2002
-------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . (46,153) 156,009
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 31,397 15,246
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,703 (135,902)
-------------- --------------
Net increase (decrease) in net assets resulting from operations . . . . . . . . . 112,947 35,353
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,501,980 864,195
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (837,825) (237,287)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,006
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (2,024)
-------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 664,155 627,890
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777,102 663,243
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 3,743,776 2,901,060
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 4,520,878 3,564,303
-------------- --------------
-------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
--------------------------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND VALUE
2006 2010 STOCK
-------------- -------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 131,513 (20,022) 8,107
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 19,246 4,521 5,716,915
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (188,675) (7,215) 7,186,237
-------------- -------------- --------------
Net increase (decrease) in net assets resulting from operations . . . . . . . . . (37,916) (22,716) 12,911,259
-------------- -------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 742,285 1,808,688 45,810,561
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (169,160) (384,991) (6,189,324)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,303 - 25,380
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,074) - (27,424)
-------------- -------------- --------------
Increase in net assets from contract transactions . . . . . . . . . . . . . . . . 574,354 1,423,697 39,619,193
-------------- -------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536,438 1,400,981 52,530,452
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 2,406,965 1,226,080 25,931,647
-------------- -------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 2,943,403 2,627,061 78,462,099
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
-----------------------------
GROWTH BOND
-------------- --------------
<S> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . $ (291,957) 1,114,029
Net realized gains (losses) on investments . . . . . . . . . . . . . . . . . . . 4,339,338 89,210
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,794,298 7,212,393
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 16,841,679 8,415,632
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,363,970 17,296,925
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (10,796,321) (8,512,323)
Actuarial adjustments for mortality experience on annuities. . . . . . . . . . .
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,960 4,532
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,358) (39,570)
-------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . 6,530,251 8,749,564
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,371,930 17,165,196
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 71,263,378 43,811,288
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,635,308 60,976,484
-------------- --------------
-------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------
MONEY ASSET MORTGAGE
MARKET ALLOCATION SECURITIES
-------------- -------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 769,167 3,888,695 2,965,361
Net realized gains (losses) on investments . . . . . . . . . . . . . . . . . . . - 6,207,397 (121,622)
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41,592,552 5,658,568
-------------- -------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 769,167 51,688,644 8,502,307
-------------- -------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,977,987 38,493,764 9,481,967
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (22,361,870) (33,554,259) (9,747,738)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5,210 97
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (120,922) (49,422)
-------------- -------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . 4,616,117 4,823,793 (315,096)
-------------- -------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,385,284 56,512,437 8,187,211
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 17,059,806 220,847,420 52,989,527
-------------- -------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 22,445,090 277,359,857 61,176,738
-------------- -------------- --------------
-------------- -------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------
INDEX CAPITAL
500 APPRECIATION
-------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 246,151 (1,292,911)
Net realized gains (losses) on investments . . . . . . . . . . . . . . . . . . . 1,920,999 4,761,028
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,037,274 15,606,790
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 20,204,424 19,074,907
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,277,060 23,567,255
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (6,802,839) (11,285,041)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,002 2,885
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37,065) (45,434)
-------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . 12,447,158 12,239,665
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,651,582 31,314,572
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 53,494,066 85,167,828
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 86,145,648 116,482,400
-------------- --------------
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED
YEAR ENDED DECEMBER 31, 1996
SEGREGATED SUB-ACCOUNTS
---------------------------------------------
MATURING
GOVERNMENT
INTERNATIONAL SMALL BOND
STOCK COMPANY 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,117,692) (571,081) 159,883
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 1,227,434 1,626,888 9,237
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,596,958 12,812,480 246,388
-------------- -------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 10,706,700 13,868,287 415,508
-------------- -------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,249,522 24,201,389 2,388,058
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (17,218,586) (5,289,049) (1,589,727)
Actuarial adjustments for mortality experience on annuities. . . . . . . . . . .
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,418 (7,859) -
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,552) (50,186) -
-------------- -------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . 9,985,802 18,854,295 798,331
-------------- -------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,692,502 32,722,582 1,213,839
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 80,215,267 36,663,726 2,529,937
-------------- -------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,907,769 69,386,308 3,743,776
-------------- -------------- --------------
-------------- -------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------
MATURING MATURING
GOVERNMENT GOVERNMENT
BOND BOND
2002 2006
-------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 145,542 108,269
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 75,537 40,348
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357,420 434,493
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 578,499 583,110
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 855,808 523,251
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (990,459) (441,073)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
-------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . (134,651) 82,178
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,848 665,288
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 2,457,212 1,741,677
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 2,901,060 2,406,965
-------------- --------------
-------------- --------------
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-----------------------------
MATURING
GOVERNMENT
BOND VALUE
2010 STOCK
-------------- --------------
Operations:
Investment income (loss) - net . . . . . . . . . . . . . . . . . . . . . . . . . 55,069 (4,550)
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . 38,710 1,282,060
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,235 2,829,110
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 311,014 4,106,620
-------------- --------------
Contract transactions (notes 2, 3, 4 and 5):
Contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 972,498 15,700,757
Contract terminations and withdrawal payments . . . . . . . . . . . . . . . . . (925,805) (1,443,541)
Actuarial adjustments for mortality experience on annuities
in payment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4,017
Annuity benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (7,925)
-------------- --------------
Increase (decrease) in net assets from contract transactions . . . . . . . . . . 46,693 14,253,308
-------------- --------------
Increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357,707 18,359,928
Net assets at the beginning of year . . . . . . . . . . . . . . . . . . . . . . . 868,373 7,571,719
-------------- --------------
Net assets at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 1,226,080 25,931,647
-------------- --------------
-------------- --------------
</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 (as amended). There are currently
four types of contracts each consisting of one to fourteen segregated
sub-accounts. 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.
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 annuity 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 amended) 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. MIMLIC Sales Corporation is a wholly-owned subsidiary of MIMLIC
Asset Management Company. MIMLIC Asset Management Company is a
wholly-owned subsidiary of Minnesota Mutual.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases
and decreases in net assets resulting from operations during the
period. Actual results could differ from those estimates.
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>
2
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 SALES CHARGES
The mortality and expense charge paid to Minnesota Mutual is computed
daily and is equal, on an annual basis, to 1.25 percent of the average
daily net assets of the Account. Under certain conditions, the charge
may be increased to 1.40 percent 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 or surrender. Total sales charges
deducted from redemption proceeds for the years ended December 31, 1996
and 1995 amounted to $1,677,688 and $1,494,935, 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, 1996:
Growth Portfolio. . . . . . . . . . . . . . . . . . . . $31,788,337
Bond Portfolio. . . . . . . . . . . . . . . . . . . . . 32,577,482
Money Market Portfolio. . . . . . . . . . . . . . . . . 54,328,470
Asset Allocation Portfolio. . . . . . . . . . . . . . . 80,470,624
Mortgage Securities Portfolio . . . . . . . . . . . . . 18,816,086
Index 500 Portfolio . . . . . . . . . . . . . . . . . . 42,961,140
Capital Appreciation Portfolio. . . . . . . . . . . . . 35,714,951
International Stock Portfolio . . . . . . . . . . . . . 49,173,177
Small Company Portfolio . . . . . . . . . . . . . . . . 48,123,909
Maturing Government Bond 1998 Portfolio . . . . . . . . 1,504,768
Maturing Government Bond 2002 Portfolio . . . . . . . . 1,059,764
Maturing Government Bond 2006 Portfolio . . . . . . . . 909,411
Maturing Government Bond 2010 Portfolio . . . . . . . . 1,809,636
Value Stock Portfolio . . . . . . . . . . . . . . . . . 51,166,419
<PAGE>
3
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, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
----------------------------------------------------------
MONEY ASSET
GROWTH BOND MARKET ALLOCATION
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Units outstanding at
December 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . 33,090,790 23,798,963 11,720,778 109,044,286
Contract purchase payments . . . . . . . . . . . . . . . . . . . . 7,192,753 8,612,934 18,164,557 16,964,209
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . . . . . . . . . (4,474,203) (4,342,656) (15,075,820) (15,033,018)
------------- ------------- ------------- -------------
Units outstanding at
December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . 35,809,340 28,069,241 14,809,515 110,975,477
Contract purchase payments . . . . . . . . . . . . . . . . . . . . 7,959,321 13,440,580 34,210,814 20,938,882
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . . . . . . . . . (5,320,209) (4,777,759) (26,090,695) (15,702,709)
------------- ------------- ------------- -------------
Units outstanding at
December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . 38,448,452 36,732,062 22,929,634 116,211,650
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
-------------------------------------------------------------------------
MORTGAGE INDEX CAPITAL INTERNATIONAL SMALL
SECURITIES 500 APPRECIATION STOCK COMPANY
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1994. . . . . . . . . . . . . . . . . . 31,542,405 29,639,298 40,739,415 61,474,893 29,723,609
Contract purchase payments . . . . . . . . . . . . 5,175,401 8,862,249 10,017,490 19,829,803 17,368,989
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . (5,439,872) (3,229,523) (4,792,437) (12,579,513) (3,857,882)
------------- ------------- ------------- ------------- -------------
Units outstanding at
December 31, 1995. . . . . . . . . . . . . . . . . . 31,277,934 35,272,024 45,964,468 68,725,183 43,234,716
Contract purchase payments . . . . . . . . . . . . 7,656,512 15,526,087 11,655,640 27,327,499 23,161,740
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . (6,406,491) (4,700,558) (6,596,109) (9,531,418) (7,101,183)
------------- ------------- ------------- ------------- -------------
Units outstanding at
December 31, 1996. . . . . . . . . . . . . . . . . . 32,527,955 46,097,553 51,023,999 86,521,264 59,295,273
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
<PAGE>
4
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
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, 1994. . . . . . . . . . . . . . . . . . 2,578,506 2,528,509 1,808,705 913,358 7,178,675
Contract purchase payments . . . . . . . . . . . . 2,297,675 784,333 460,903 888,273 12,757,957
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . (1,545,409) (895,019) (390,877) (876,950) (1,191,730)
------------ ------------ ------------ ------------ ------------
Units outstanding at
December 31, 1995. . . . . . . . . . . . . . . . . . 3,330,772 2,417,823 1,878,731 924,681 18,744,902
Contract purchase payments . . . . . . . . . . . . 1,322,226 736,594 611,384 1,477,104 29,156,933
Deductions for contract terminations
and withdrawal payments. . . . . . . . . . . . . (741,886) (218,557) (156,006) (324,661) (4,105,312)
------------ ------------ ------------ ------------ ------------
Units outstanding at
December 31, 1996. . . . . . . . . . . . . . . . . . 3,911,112 2,935,860 2,334,109 2,077,124 43,796,523
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</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:
<TABLE>
<CAPTION>
GROWTH
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . . $2.630 2.143 2.152 2.084 2.012
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) . . . . . . (.012) (.008) (.006) (.001) .001
Net gains or losses on securities
(both realized and unrealized) . . . . .425 .495 (.003) .069 .071
------ ------ ------ ------ ------
Total from investment operations . . . . .413 .487 (.009) .068 .072
------ ------ ------ ------ ------
Unit value, end of year . . . . . . . . . $3.043 2.630 2.143 2.152 2.084
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
<PAGE>
6
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
BOND
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . . . $2.153 1.820 1.931 1.773 1.683
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income . . . . . . . . . . .081 .044 .051 .044 .051
Net gains or losses on securities
(both realized and unrealized) . . . . . (.045) .289 (.162) .114 .039
------ ----- ----- ----- -----
Total from investment operations . . . . .036 .333 (.111) .158 .090
------ ----- ----- ----- -----
Unit value, end of year . . . . . . . . . . $2.189 2.153 1.820 1.931 1.773
------ ----- ----- ----- -----
------ ----- ----- ----- -----
</TABLE>
<PAGE>
7
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MONEY MARKET
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . . . $1.515 1.455 1.421 1.402 1.375
------ ------ ------ ------ ------
Income from investment operations:
Net investment income . . . . . . . . . . .055 .060 .034 .019 .027
------ ------ ------ ------ ------
Total from investment operations . . . . .055 .060 .034 .019 .027
------ ------ ------ ------ ------
Unit value, end of year . . . . . . . . . . $1.570 1.515 1.455 1.421 1.402
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
<PAGE>
8
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
(6) FINANCIAL HIGHLIGHTS - CONTINUED
ASSET ALLOCATION
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year............ $2.486 2.014 2.068 1.967 1.858
------ ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income................. .047 .036 .017 .014 .013
Net gains or losses on securities
(both realized and unrealized)...... .229 .436 (.071) .087 .096
------ ----- ----- ----- -----
Total from investment operations.... .276 .472 (.054) .101 .109
------ ----- ----- ----- -----
Unit value, end of year.................. $2.762 2.486 2.014 2.068 1.967
------ ----- ----- ----- -----
------ ----- ----- ----- -----
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MORTGAGE SECURITIES
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . $1.934 1.660 1.739 1.612 1.535
------ ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income . . . . . . . . .101 .097 .058 .038 .036
Net gains or losses on securities
(both realized and unrealized) . . . . (.025) .177 (.137) .089 .041
------ ----- ----- ----- -----
Total from investment operations . . . .076 .274 (.079) .127 .077
------ ----- ----- ----- -----
Unit value, end of year . . . . . . . . $2.010 1.934 1.660 1.739 1.612
------ ----- ----- ----- -----
------ ----- ----- ----- -----
</TABLE>
<PAGE>
10
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
(6) FINANCIAL HIGHLIGHTS - CONTINUED
INDEX 500
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year . . . . . $2.425 1.794 1.796 1.657 1.563
------ ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income . . . . . . . . . - .008 .006 .003 .009
Net gains or losses on securities
(both realized and unrealized) . . . . .488 .623 (.008) .136 .085
------ ----- ----- ----- -----
Total from investment operations . . . .488 .631 (.002) .139 .094
------ ----- ----- ----- -----
Unit value, end of year . . . . . . . . $2.913 2.425 1.794 1.796 1.657
------ ----- ----- ----- -----
------ ----- ----- ----- -----
</TABLE>
<PAGE>
11
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
CAPITAL APPRECIATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.......... $ 2.524 2.082 2.062 1.891 1.823
------- ------- ------- ------- -------
Income from investment operations:
Net investment loss............... (.035) (.030) (.023) (.019) (.016)
Net gains on securities (both
realized and unrealized)........ .443 .472 .043 .190 .084
------- ------- ------- ------- -------
Total from investment operations .408 .442 .020 .171 .068
------- ------- ------- ------- -------
Unit value, end of year................ $ 2.932 2.524 2.082 2.062 1.891
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
<PAGE>
12
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
INTERNATIONAL STOCK
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 1, 1992*
---------------------------------------------------- TO DECEMBER
1996 1995 1994 1993 31, 1992
------- ------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.......... $1.462 1.296 1.317 .925 1.000
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (loss)........ .017 (.018) .012 (.005) .007
Net gains or losses on securities
(both realized and unrealized)..... .251 .184 (.033) .397 (.082)
------- ------- ------- ------- -------
Total from investment operations.. .268 .166 (.021) .392 (.075)
------- ------- ------- ------- -------
Unit value, end of period................ $1.730 1.462 1.296 1.317 .925
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
13
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
SMALL COMPANY
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 3, 1993*
------------------------------------ TO DECEMBER
1996 1995 1994 31, 1993
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Unit value, beginning of period............ $1.591 1.220 1.164 1.000
------- ------- ------- -------
Income from investment operations:
Net investment loss...................... (.018) (.017) (.014) (.010)
Net gains on securities (both
realized and unrealized)............... .100 .388 .070 .174
------- ------- ------- -------
Total from investment operations....... .082 .371 .056 .164
------- ------- ------- -------
Unit value, end of period.................. $1.673 1.591 1.220 1.164
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
14
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MATURING GOVERNMENT BOND 1998
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 2, 1994*
----------------------- TO DECEMBER
1996 1995 31, 1994
-------- -------- ------------
<S> <C> <C> <C>
Unit value, beginning of period............................................ $1.124 .981 1.000
-------- -------- --------
Income (loss) from investment operations:
Net investment income (loss).......................................... (.014) .053 .030
Net gains or losses on securities (both realized and unrealized)...... .046 .090 (.049)
-------- -------- --------
Total from investment operations.................................... .032 .143 (.019)
-------- -------- --------
Unit value, end of period.................................................. $1.156 1.124 .981
-------- -------- --------
-------- -------- --------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
15
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MATURING GOVERNMENT BOND 2002
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 2, 1994*
---------------------- TO DECEMBER
1996 1995 31, 1994
------ ------ ------------
<S> <C> <C> <C>
Unit value, beginning of period............................................ $1.200 .972 1.000
------ ------ ------
Income (loss) from investment operations:
Net investment income................................................. .057 .058 .038
Net gains or losses on securities (both realized and unrealized)...... (.052) .170 (.066)
------ ------ ------
Total from investment operations.................................... .005 .228 (.028)
------ ------ ------
Unit value, end of period.................................................. $1.205 1.200 .972
------ ------ ------
------ ------ ------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
16
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MATURING GOVERNMENT BOND 2006
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 2, 1994*
----------------------- TO DECEMBER
1996 1995 31, 1994
------ ------ ------------
<S> <C> <C> <C>
Unit value, beginning of period........................................ $1.281 .963 1.000
------ ------ --------
Income (loss) from investment operations:
Net investment income (loss)...................................... .062 .059 .038
Net gains or losses on securities (both realized and unrealized).. (.093) .259 (.075)
------ ------ --------
Total from investment operations................................ (.031) .318 (.037)
------ ------ --------
Unit value, end of period.............................................. $1.250 1.281 .963
------ ------ --------
------ ------ --------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
17
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
MATURING GOVERNMENT BOND 2010
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 2, 1994*
----------------------- TO DECEMBER
1996 1995 31, 1994
------ ------ -----------
<S> <C> <C> <C>
Unit value, beginning of period......................................... $1.326 .951 1.000
------ ------ ---------
Income (loss) from investment operations:
Net investment income (loss)....................................... (.015) .063 .036
Net gains or losses on securities (both realized and unrealized)... (.046) .312 (.085)
------ ------ ---------
Total from investment operations................................. (.061) .375 (.049)
------ ------ ---------
Unit value, end of period .............................................. $1.265 1.326 .951
------ ------ ---------
------ ------ ---------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
18
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS - CONTINUED
VALUE STOCK
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, MAY 2, 1994*
----------------------- TO DECEMBER
1996 1995 31, 1994
------ ----- -----------
<S> <C> <C> <C>
Unit value, beginning of period............................... $1.375 1.047 1.000
------ ----- --------
Income from investment operations:
Net investment income.................................... - - .004
Net gains on securities (both realized and unrealized)... .403 .328 .043
------ ----- --------
Total from investment operations....................... .403 .328 .047
------ ----- --------
Unit value, end of period..................................... $1.778 1.375 1.047
------ ----- --------
------ ----- --------
</TABLE>
* Commencement of the segregated sub-account's operations.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company
We have audited the accompanying consolidated balance sheets of The Minnesota
Mutual Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations and policyowners'
surplus and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Minnesota Mutual Life Insurance Company and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1996 in
conformity with generally accepted accounting principles. As discussed in Note
2 to the consolidated financial statements, the Company adopted Statement of
Financial Accounting Standards No. 120, "Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain Long-
Duration Participating Contracts," in 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in the accompanying schedules is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 10, 1997
53
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Fixed maturity securities:
Available-for-sale, at fair value (amortized cost
$4,558,975 and $4,525,352) $ 4,674,082 $ 4,761,561
Held-to-maturity, at amortized cost (fair value
$1,179,112 and $1,281,523) 1,125,638 1,180,654
Equity securities, at fair value (cost $429,509 and
$277,554) 549,797 384,882
Mortgage loans, net 608,808 608,537
Real estate, net 43,082 47,256
Policy loans 204,178 198,716
Short-term investments 122,772 72,841
Other invested assets 98,247 91,530
----------- -----------
Total investments 7,426,604 7,345,977
Cash 57,140 48,358
Finance receivables, net 259,192 226,720
Deferred policy acquisition costs 589,517 539,732
Accrued investment income 90,996 98,373
Premiums receivable 77,140 85,247
Property and equipment, net 55,050 50,809
Reinsurance recoverables 126,629 102,198
Other assets 54,798 46,530
Separate account assets 3,706,256 2,609,460
----------- -----------
Total assets $12,443,322 $11,153,404
=========== ===========
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy and contract account balances $ 4,310,015 $ 4,287,083
Future policy and contract benefits 1,638,720 1,554,898
Pending policy and contract claims 70,577 55,812
Other policyowner funds 396,848 371,537
Policyowner dividends payable 49,899 50,450
Unearned premiums and fees 207,111 210,494
Federal income tax liability:
Current 25,643 39,516
Deferred 149,665 173,905
Other liabilities 286,042 320,607
Notes payable 319,000 279,967
Separate account liabilities 3,691,374 2,596,285
----------- -----------
Total liabilities 11,144,894 9,940,554
Policyowners' surplus:
Unassigned surplus 1,190,116 1,059,598
Net unrealized investment gains 108,312 153,252
----------- -----------
Total policyowners' surplus 1,298,428 1,212,850
----------- -----------
Total liabilities and policyowners' surplus $12,443,322 $11,153,404
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
54
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Premiums $ 612,359 $ 603,770 $ 562,018
Policy and contract fees 245,966 214,203 188,115
Net investment income 530,987 515,047 486,101
Net realized investment gains 59,546 66,643 25,769
Finance charge income 46,932 39,937 34,258
Other income 51,630 40,250 30,106
---------- ---------- ---------
Total revenues 1,547,420 1,479,850 1,326,367
---------- ---------- ---------
Benefits and expenses:
Policyowner benefits 541,520 517,771 498,424
Interest credited to policies and con-
tracts 288,967 297,145 283,626
General operating expenses 302,618 273,425 253,317
Commissions 103,370 93,465 87,631
Administrative and sponsorship fees 79,360 76,223 71,143
Dividends to policyowners 24,804 27,282 26,672
Interest on notes payable 22,798 11,128 7,295
Increase in deferred policy acquisition
costs (15,312) (29,822) (43,974)
---------- ---------- ---------
Total benefits and expenses 1,348,125 1,266,617 1,184,134
---------- ---------- ---------
Income from operations before taxes 199,295 213,233 142,233
Federal income tax expense:
Current 68,033 71,379 63,641
Deferred 744 11,995 (1,511)
---------- ---------- ---------
Total federal income tax expense 68,777 83,374 62,130
Net income $ 130,518 $ 129,859 $ 80,103
========== ========== =========
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $1,212,850 $ 874,577 $ 892,510
Net income 130,518 129,859 80,103
Change in net unrealized investment
gains and losses (44,940) 208,414 (98,036)
---------- ---------- ---------
Policyowners' surplus, end of year $1,298,428 $1,212,850 $ 874,577
========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
55
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 130,518 $ 129,859 $ 80,103
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest credited to annuity and insur-
ance contracts 275,968 288,218 277,863
Fees deducted from policy and contract
balances (206,780) (201,575) (188,226)
Change in future policy benefits 84,389 100,025 63,328
Change in other policyowner liabilities 16,099 (4,762) (16,794)
Change in deferred policy acquisition
costs (15,312) (29,822) (43,974)
Change in premiums due and other receiv-
ables (26,142) (18,039) 38,166
Change in federal income tax liabilities (12,055) 18,376 17,854
Net realized investment gains (59,546) (66,643) (25,769)
Other, net 29,987 36,561 28,958
---------- ---------- ----------
Net cash provided by operating activi-
ties 217,126 252,198 231,509
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of:
Fixed maturity securities, available-
for-sale 877,682 1,349,348 653,498
Equity securities 352,901 203,493 88,645
Mortgage loans 15,567 4,315 20,912
Real estate 11,678 15,948 17,571
Other invested assets 12,280 10,775 28,305
Proceeds from maturities and repayments
of:
Fixed maturity securities, available-
for-sale 329,550 253,576 327,337
Fixed maturity securities, held-to-matu-
rity 114,222 127,617 75,648
Mortgage loans 94,703 104,730 126,134
Cost of purchases of:
Fixed maturity securities, available-
for-sale (1,228,048) (1,975,130) (1,123,125)
Fixed maturity securities, held-to-matu-
rity (60,612) (140,763) (131,820)
Equity securities (446,599) (212,142) (131,483)
Mortgage loans (108,691) (209,399) (145,964)
Real estate (3,786) (16,554) (10,985)
Other invested assets (29,271) (20,517) (12,732)
Finance receivable originations or pur-
chases (175,876) (167,298) (134,867)
Finance receivable principal payments 142,723 123,515 104,539
Other, net (43,662) (19,292) 15,309
---------- ---------- ----------
Net cash used for investing activities (145,239) (567,778) (233,078)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits credited to annuity and insurance
contracts 657,405 710,525 647,237
Withdrawals from annuity and insurance
contracts (702,681) (563,569) (645,969)
Proceeds from issuance of surplus notes -- 124,967 --
Proceeds from issuance of debt by subsidi-
ary 60,000 50,000 30,000
Payments on debt by subsidiary (21,000) (10,000) (9,100)
Other, net (6,898) (3,801) (5,940)
---------- ---------- ----------
Net cash provided by (used for) fi-
nancing activities (13,174) 308,122 16,228
---------- ---------- ----------
Net increase (decrease) in cash and short-
term investments 58,713 (7,458) 14,659
Cash and short-term investments, beginning
of year 121,199 128,657 113,998
---------- ---------- ----------
Cash and short-term investments, end of
year $ 179,912 $ 121,199 $ 128,657
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
56
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS
The Minnesota Mutual Life Insurance Company (the Company), both directly and
through its subsidiaries, provides a diversified array of insurance and
financial products and services designed principally to protect and enhance the
long-term financial well-being of individuals and families.
The Company's strategy is to be successful in carefully selected niche
markets, primarily in the United States, while focusing on the retention of
existing business and the maintenance of profitability. To achieve this
objective, the Company has divided its businesses into four strategic business
units which focus on various markets: Individual, Financial Services, Group,
and Pension. Revenues reported in 1996 by these business units were
$780,250,000, $279,554,000, $213,461,000 and $104,059,000, respectively.
Additional revenues of $170,096,000 were reported by the Company's
subsidiaries.
At December 31, 1996, the Company was one of the 11 largest mutual life
insurance company groups in the United States, as measured by total assets. The
Company serves nearly seven million people through more than 4,000 associates
located at its St. Paul headquarters and in 81 general agencies and 43 regional
offices throughout the United States.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP), which vary in
certain respects from accounting practices prescribed or permitted by state
insurance regulatory authorities. The consolidated financial statements include
the accounts of The Minnesota Mutual Life Insurance Company and its
subsidiaries (collectively, "the Company"). All material intercompany
transactions and balances have been eliminated.
The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that affect reported
assets and liabilities, including reporting or disclosure of contingent assets
and liabilities as of the balance sheet date and the reported amounts of
revenues and expenses during the reporting period. Actual results could vary
from management's estimates.
New Accounting Principles
In 1995 and prior years, the Company prepared its financial statements
according to statutory accounting practices prescribed or permitted by the
Commerce Department of the State of Minnesota (Department of Commerce), and
these accounting practices were considered GAAP for mutual life insurance
companies.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40 (the Interpretation), "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises."
The Interpretation was supposed to become effective for fiscal years beginning
after December 15, 1994 and stated that financial statements prepared in
accordance with statutory accounting practices would no longer be considered to
be in conformity with GAAP. The Interpretation requires all mutual life
insurance companies that report their financial statements in conformity with
GAAP to apply all applicable authoritative GAAP pronouncements, with the
exception of Statements of Financial Accounting Standards (SFAS) No. 60,
"Accounting and Reporting by Insurance Enterprises," No. 97, "Accounting and
Reporting by Insurance Enterprises for Certain Long Duration Contracts and
Realized Gains and Losses from the Sale of Investments," and No. 113,
"Accounting for Reinsurance of Short-Duration and Long-Duration Contracts."
In January 1995, the FASB issued SFAS 120, "Accounting and Reporting by
Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long
Duration Participating Contracts." This statement deferred the implementation
of the Interpretation to fiscal years beginning after December 15, 1995 and
extended the requirements of SFAS Nos. 60, 97 and 113 to mutual life insurance
enterprises.
SFAS No. 120 also requires mutual life insurance enterprises to adopt
Statement of Position 95-1, "Accounting for Certain Insurance Activities of
Mutual Life Insurance Enterprises," which was issued by the American Institute
of Certified Public Accountants.
57
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company adopted SFAS No. 120 on January 1, 1996, and the accompanying
1994 and 1995 financial statements and related notes have been restated to
conform with the presentation of the 1996 GAAP financial statements.
The Company will continue to prepare financial statements according to
statutory accounting practices prescribed or permitted by the Department of
Commerce for purposes of filing with the Department of Commerce, the National
Association of Insurance Commissioners and states in which the Company is
licensed to do business. The significant differences between statutory and GAAP
financial results are presented in Note 12.
Insurance Revenues and Expenses
Premiums on traditional life products, which include individual whole life and
term insurance and immediate annuities, are credited to revenue when due. For
accident and health and group life products, premiums are credited to revenue
over the contract period as earned. Benefits and expenses are recognized in
relation to premiums over the contract period via a provision for future policy
benefits and the amortization of deferred policy acquisition costs.
Nontraditional life products include individual adjustable and variable life
insurance and group universal and variable life insurance. Revenue from
nontraditional life products and deferred annuities is comprised of policy and
contract fees charged for the cost of insurance, policy administration and
surrenders. Expenses include the portion of claims not covered by and interest
credited to the related policy and contract account balances. Policy
acquisition costs are amortized relative to gross margins.
Deferred Policy Acquisition Costs
The costs of acquiring new and renewal business, which vary with and are
primarily related to the production of new and renewal business, are generally
deferred to the extent recoverable from future premiums or expected gross
profits. Deferrable costs include commissions, underwriting expenses and
certain other selling and issue costs.
For traditional life, accident and health and group life products, deferred
acquisition costs are amortized over the premium paying period in proportion to
the ratio of annual premium revenues to ultimate anticipated premium revenues.
The ultimate premium revenues are estimated based upon the same assumptions
used to calculate the future policy benefits.
For nontraditional life products and deferred annuities, deferred acquisition
costs are amortized over the estimated lives of the contracts in relation to
the present value of estimated gross profits from surrender charges and
investment, mortality and expense margins.
Deferred acquisition costs amortized were $125,978,000, $104,940,000 and
$86,477,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Finance Charge Income and Receivables
Finance charge income represents fees and interest charged on consumer loans.
The Company uses the interest (actuarial) method of accounting for finance
charges and interest on finance receivables. Accrual of finance charges and
interest is suspended when a loan is contractually delinquent for more than 60
days and is subsequently recognized when received. Accrual is resumed when the
loan is contractually less than 60 days past due. An allowance for
uncollectible amounts is maintained by direct charges to operations at an
amount which management believes, based upon historical losses and economic
conditions, is adequate to absorb probable losses on existing receivables that
may become uncollectible. The reported receivables are net of this allowance.
Valuation of Investments
Fixed maturity securities (bonds) which the Company has the positive intent and
ability to hold to maturity are classified as held-to-maturity and are carried
at amortized cost, net of write-downs for other than temporary declines in
value. Premiums and discounts are amortized or accreted over the estimated
lives of the securities based on the interest yield method. Fixed maturity
securities which may be sold prior to maturity are classified as available-for-
sale and carried at fair value.
58
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equity securities (common stocks and preferred stocks) are carried at fair
value. Equity securities also include initial contributions to affiliated
registered investment funds that are managed by a subsidiary of the Company.
These contributions are carried at the market value of the underlying net
assets of the funds.
Mortgage loans are carried at amortized cost less an allowance for
uncollectible amounts. Premiums and discounts are amortized or accreted over
the terms of the mortgage loans based on the interest yield method. A mortgage
loan is considered impaired if it is probable that contractual amounts due will
not be collected. Impaired mortgage loans are valued at the fair value of the
underlying collateral. Interest income on impaired mortgage loans is recorded
on an accrual basis. However, when the likelihood of collection is doubtful,
interest income is recognized when received.
Fair values of fixed maturity securities and equity securities 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. Fair values of mortgage loans are based upon discounted
cash flows, quoted market prices and matrix pricing.
Real estate is carried at cost less accumulated depreciation and an allowance
for estimated losses. Accumulated depreciation on real estate at December 31,
1996 and 1995, was $5,968,000 and $8,342,000, respectively.
Policy loans are carried at the unpaid principal balance.
Derivative Financial Instruments
The Company entered into equity swaps in 1996 as part of an overall risk
management strategy. The swaps are used to hedge exposure to market risk on
$400,000,000 of the Company's common stock portfolio. The swaps are based upon
certain stock indices, and settlement with the counterparties will take place
in January 1998. If, at the time of settlement for a particular swap, the
designated stock index has fallen below a specified level, the counterparty
will pay the Company an amount based upon the decline in the index and the
stock portfolio value protected by the swap. If, at the time of settlement, the
designated stock index has risen, the Company will pay the counterparty an
amount based upon the increase in the index and 25% of the stock portfolio
value protected by the swap.
The basic types of risks associated with derivatives are market risk (that
the value of the derivative will be adversely affected by changes in the
market) and credit risk (that the counterparty will not perform according to
the contract terms). To reduce credit risk, the swap contracts require that the
counterparties maintain sufficient credit ratings and provide collateral under
certain circumstances.
The swaps are carried at fair value, which is based upon dealer quotes.
Changes in fair value are recorded directly in policyowners' surplus. Upon
settlement of the swaps, gains or losses are recognized in income.
Capital Gains and Losses
Realized and unrealized capital gains and losses are determined on the specific
identification method. Write-downs of held-to-maturity securities and the
provision for credit losses on mortgage loans and real estate are recorded as
realized losses.
Changes in the fair value of fixed maturity securities available-for-sale and
equity securities are recorded as a separate component of policyowners'
surplus, net of taxes and related adjustments to deferred policy acquisition
costs and unearned policy and contract fees.
Property and Equipment
Property and equipment are carried at cost, net of accumulated depreciation of
$81,962,000 and $75,507,000 at December 31, 1996 and 1995, respectively.
Buildings are depreciated over 40 years and equipment is generally depreciated
over 5 to 10 years. Depreciation expense for the years ended December 31, 1996,
1995 and 1994, was $6,454,000, $5,941,000 and $8,136,000, respectively.
59
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the exclusive benefit of certain policyowners
and contractholders. The Company receives administrative and investment
advisory fees for services rendered on behalf of these funds. Separate account
assets and liabilities are carried at fair value, based upon the market value
of the investments held in the segregated funds.
The Company periodically invests money in its separate accounts. The market
value of such investments is included with separate account assets and amounted
to $14,882,000 and $13,175,000 as of December 31, 1996 and 1995, respectively.
Policyowner Liabilities
Policy and contract account balances represent the net accumulation of funds
associated with nontraditional life products and deferred annuities. Additions
to the account balances include premiums, deposits and interest credited by the
Company. Decreases in the account balances include surrenders, withdrawals,
benefit payments, and charges assessed for the cost of insurance, policy
administration and surrenders.
Future policy and contract benefits are comprised of reserves for traditional
life, group life, and accident and health products. The reserves were
calculated using the net level premium method based upon assumptions regarding
investment yield, mortality, morbidity, and withdrawal rates determined at the
date of issue, commensurate with the Company's experience. Provision has been
made in certain cases for adverse deviations from these assumptions.
Other policyowner funds are comprised of dividend accumulations, premium
deposit funds and supplementary contracts without life contingencies.
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, expense factors and federal
income taxes. Dividends are recognized as expenses consistent with the
recognition of premiums.
Income Taxes
Current income taxes are charged to operations based upon amounts estimated to
be payable as a result of taxable operations for the current year. Deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between financial statement
carrying amounts and income tax bases of assets and liabilities.
Reinsurance Recoverables
Insurance liabilities are reported before the effects of ceded reinsurance.
Reinsurance recoverables represent amounts due from reinsurers for paid and
unpaid benefits, expense reimbursements, prepaid premiums and future policy
benefits.
60
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS
Net investment income for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $433,985 $426,114 $417,698
Equity securities 14,275 8,883 4,485
Mortgage loans 63,865 58,943 49,676
Real estate (475) 497 648
Policy loans 13,828 12,821 11,800
Short-term investments 6,535 6,716 4,262
Other invested assets 4,901 5,168 3,212
-------- -------- --------
Gross investment income 536,914 519,142 491,781
Investment expenses (5,927) (4,095) (5,680)
-------- -------- --------
Total $530,987 $515,047 $486,101
======== ======== ========
</TABLE>
Net realized capital gains (losses) for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities $(6,536) $24,025 $(2,528)
Equity securities 57,770 36,374 11,268
Mortgage loans (721) (207) (82)
Real estate 7,088 2,436 3,915
Other invested assets 1,945 4,015 13,196
------- ------- -------
Total $59,546 $66,643 $25,769
======= ======= =======
</TABLE>
Gross realized gains (losses) on the sales of fixed maturity securities and
equity securities for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities, available-for-sale:
Gross realized gains $ 19,750 $ 34,898 $ 13,375
Gross realized losses (26,286) (10,873) (15,903)
Equity securities:
Gross realized gains 79,982 52,670 21,538
Gross realized losses (22,212) (16,296) (10,270)
</TABLE>
Net unrealized gains (losses) included in policyowners' surplus at December
31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Gross unrealized gains $314,576 $358,877
Gross unrealized losses (77,337) (13,713)
Adjustment to deferred policy acquisition costs (65,260) (99,732)
Adjustment to unearned policy and contract fees (8,192) (11,665)
Deferred federal income taxes (55,475) (80,515)
-------- --------
Net unrealized gains $108,312 $153,252
======== ========
</TABLE>
61
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and fair value of investments in marketable securities by
type of investment were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------- FAIR
COST GAINS LOSSES VALUE
---------- -------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 302,820 $ 2,397 $ 6,756 $ 298,461
States, municipalities, and polit-
ical subdivisions 11,296 759 -- 12,055
Foreign governments 1,926 -- 54 1,872
Corporate securities 2,450,126 115,846 19,554 2,546,418
Mortgage-backed securities 1,792,807 64,834 42,365 1,815,276
---------- -------- ------- ----------
Total fixed maturities 4,558,975 183,836 68,729 4,674,082
Equity securities--unaffiliated 353,983 107,172 5,168 455,987
Equity securities--affiliated 75,526 18,284 -- 93,810
---------- -------- ------- ----------
Total equity securities 429,509 125,456 5,168 549,797
---------- -------- ------- ----------
Total available-for-sale 4,988,484 309,292 73,897 5,223,879
Held-to-maturity:
Corporate securities 904,994 50,187 3,130 952,051
Mortgage-backed securities 220,644 7,833 1,416 227,061
---------- -------- ------- ----------
Total held-to-maturity 1,125,638 58,020 4,546 1,179,112
---------- -------- ------- ----------
Total $6,114,122 $367,312 $78,443 $6,402,991
========== ======== ======= ==========
DECEMBER 31, 1995
Available-for-sale:
United States government and gov-
ernment agencies and authorities $ 261,669 $ 10,911 $ 440 $ 272,140
States, municipalities, and polit-
ical subdivisions 26,317 3,262 -- 29,579
Foreign governments 1,704 223 -- 1,927
Corporate securities 2,523,889 169,329 6,098 2,687,120
Mortgage-backed securities 1,711,773 62,510 3,488 1,770,795
---------- -------- ------- ----------
Total fixed maturities 4,525,352 246,235 10,026 4,761,561
Equity securities--unaffiliated 196,355 91,269 1,590 286,034
Equity securities--affiliated 81,199 17,649 -- 98,848
---------- -------- ------- ----------
Total equity securities 277,554 108,918 1,590 384,882
---------- -------- ------- ----------
Total available-for-sale 4,802,906 355,153 11,616 5,146,443
Held-to-maturity:
United States government and gov-
ernment agencies and authorities 250 3 -- 253
States, municipalities, and polit-
ical subdivisions 525 6 -- 531
Corporate securities 953,511 89,962 525 1,042,948
Mortgage-backed securities 226,368 11,540 117 237,791
---------- -------- ------- ----------
Total held-to-maturity 1,180,654 101,511 642 1,281,523
---------- -------- ------- ----------
Total $5,983,560 $456,664 $12,258 $6,427,966
========== ======== ======= ==========
</TABLE>
62
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The amortized cost and estimated fair value of fixed maturity securities at
December 31, 1996, 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>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
--------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 33,390 $ 33,429 $ 4,889 $ 4,948
Due after one year through five
years 435,040 459,870 163,206 168,527
Due after five years through ten
years 1,383,954 1,429,460 223,848 235,754
Due after ten years 913,784 936,047 513,051 542,822
---------- ---------- ---------- ----------
2,766,168 2,858,806 904,994 952,051
Mortgage-backed securities 1,792,807 1,815,276 220,644 227,061
---------- ---------- ---------- ----------
Total $4,558,975 $4,674,082 $1,125,638 $1,179,112
========== ========== ========== ==========
</TABLE>
At December 31, 1996 and 1995, bonds and certificates of deposit with a
carrying value of $12,934,000 and $15,296,000, respectively, were on deposit
with various regulatory authorities as required by law.
Allowances for credit losses on investments are reflected on the consolidated
balance sheets as a reduction of the related assets and were as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans $ 1,895 $ 1,711
Foreclosed real estate 535 400
Investment real estate 2,529 2,565
------- -------
Total $ 4,959 $ 4,676
======= =======
</TABLE>
At December 31, 1996, the recorded investment in mortgage loans that were
considered to be impaired was $6,518,000 before allowance for credit losses.
Included in this amount is $2,225,000 of impaired loans, for which the related
allowance for credit losses is $395,000, and $4,293,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
At December 31, 1995, the recorded investment in mortgage loans that were
considered to be impaired was $12,232,000 before allowance for credit losses.
Included in this amount is $3,256,000 of impaired loans, for which the related
allowance for credit losses is $211,000, and $8,976,000 of impaired loans that,
as a result of adequate fair market value of underlying collateral, do not have
an allowance for credit losses.
In addition to the allowance for credit losses on impaired mortgage loans, a
general allowance for credit losses was established for potential impairments
in the remainder of the mortgage loan portfolio. The general allowance was
$1,500,000 at December 31, 1996, 1995 and 1994.
Changes in the allowance for credit losses on mortgage loans were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $1,711 $2,449 $2,412
Provision for credit losses 381 127 622
Charge-offs (197) (865) (585)
------ ------ ------
Balance at end of year $1,895 $1,711 $2,449
====== ====== ======
</TABLE>
63
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
Below is a summary of interest income on impaired mortgage loans.
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Average impaired mortgage loans $9,375 $15,845 $20,236
Interest income on impaired mortgage loans--contractual 1,796 1,590 2,103
Interest income on impaired mortgage loans--collected 1,742 1,515 1,963
</TABLE>
(4) NET FINANCE RECEIVABLES
Finance receivables as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Direct installment loans $204,038 $178,262
Retail installment notes 30,843 32,345
Retail revolving credit 24,863 14,864
Credit card receivables 3,541 4,479
Accrued interest 3,404 3,147
-------- --------
Gross receivables 266,689 233,097
Allowance for uncollectible amounts (7,497) (6,377)
-------- --------
Finance receivables, net $259,192 $226,720
======== ========
</TABLE>
Direct installment loans at December 31, 1996 consisted of $93,127,000 of
discount basis loans (net of unearned finance charges) and $110,911,000 of
interest-bearing loans. As of December 31, 1995, discount basis loans amounted
to $92,351,000 and interest-bearing loans amounted to $85,911,000. Direct
installment loans generally have a maximum term of 84 months. Retail
installment notes are principally discount basis, arise from the sale of
household appliances, furniture, and sundry services, and generally have a
maximum term of 48 months. Experience has shown that a substantial portion of
finance receivables will be renewed, converted or paid in full prior to
maturity.
Principal cash collections of direct installment loans amounted to
$92,438,000, $75,865,000 and $70,941,000, and the percentage of these cash
collections to average net balances was 48%, 47% and 55% for the years ended
December 31, 1996, 1995 and 1994, respectively.
Changes in the allowance for uncollectible amounts for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $ 6,377 $5,360 $4,801
Provision for credit losses 10,086 6,140 4,652
Charge-offs (11,036) (6,585) (5,305)
Recoveries 2,070 1,462 1,212
------- ------ ------
Balance at end of year $ 7,497 $6,377 $5,360
======= ====== ======
</TABLE>
64
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) INCOME TAXES
Income tax expense varies from the amount computed by applying the federal
income tax rate of 35% to income from operations before taxes. The significant
components of this difference were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax expense $69,753 $74,631 $49,781
Differences between
computed and actual tax
expense:
Dividends received
deduction (2,534) (1,710) (1,293)
Special tax on mutual
life insurance
companies 2,760 10,134 9,880
Tax credits (3,475) (1,840) (1,150)
Expense adjustments and
other 2,273 2,159 4,912
------- ------- -------
Total tax expense $68,777 $83,374 $62,130
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to the Company's net
deferred federal tax liability were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Policyowner liabilities $ 15,854 $ 22,151
Unearned fee income 43,232 43,576
Pension and post-retirement benefits 21,815 20,187
Tax deferred policy acquisition costs 58,732 47,228
Net realized capital losses 8,275 7,881
Other 19,229 17,997
-------- --------
Gross deferred tax assets 167,137 159,020
Deferred tax liabilities:
Deferred policy acquisition costs 206,331 188,906
Real estate and property and equipment depreciation 10,089 9,049
Basis difference on investments 8,605 7,402
Net unrealized capital gains 81,339 119,604
Other 10,438 7,964
-------- --------
Gross deferred tax liabilities 316,802 332,925
-------- --------
Net deferred tax liability $149,665 $173,905
======== ========
</TABLE>
A valuation allowance for deferred tax assets was not considered necessary as
of December 31, 1996 and 1995, because the Company believes that it is more
likely than not that the deferred tax assets will be realized through future
reversals of existing taxable temporary differences and future taxable income.
Income taxes paid for the years ended December 31, 1996, 1995 and 1994, were
$79,026,000, $64,390,000 and $45,268,000, respectively.
65
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) LIABILITY FOR UNPAID ACCIDENT AND HEALTH CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Activity in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1 $377,302 $349,311 $323,304
Less: reinsurance recoverable 80,333 61,624 51,549
-------- -------- --------
Net balance at January 1 296,969 287,687 271,755
-------- -------- --------
Incurred related to:
Current year 134,727 129,896 129,028
Prior years 4,821 (4,014) 860
-------- -------- --------
Total incurred 139,548 125,882 129,888
-------- -------- --------
Paid related to:
Current year 51,695 47,620 46,270
Prior years 70,073 68,980 67,686
-------- -------- --------
Total paid 121,768 116,600 113,956
-------- -------- --------
Net balance at December 31 314,749 296,969 287,687
Plus: reinsurance recoverable 102,161 80,333 61,624
-------- -------- --------
Balance at December 31 $416,910 $377,302 $349,311
======== ======== ========
</TABLE>
The liability for unpaid accident and health claims and claim adjustment
expenses is included in future policy and contract benefits and pending policy
and contract claims on the consolidated balance sheets.
Incurred claims related to prior years are due to the differences between
actual and estimated claims incurred as of the end of the prior year and
interest credited to future policy and contract benefits.
(7) EMPLOYEE BENEFIT PLANS
Pension Plans
The Company has noncontributory defined benefit retirement plans covering
substantially all employees and certain agents. Benefits are based upon years
of participation and the employee's average monthly compensation or the agent's
adjusted annual compensation. Plan assets are comprised of mostly stocks and
bonds which are held in the general and separate accounts of the Company and
administered under group annuity contracts issued by the Company. The Company's
funding policy is to contribute annually the minimum amount required by
applicable regulations. The Company also has an unfunded noncontributory
defined benefit retirement plan which provides certain employees with benefits
in excess of limits for qualified retirement plans.
Net periodic pension cost for the years ended December 31 included the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 6,019 $ 5,294 $ 4,880
Interest accrued on projected benefit obligation 8,541 7,935 7,382
Actual return on plan assets (12,619) (18,061) (1,331)
Net amortization and deferral 4,698 11,811 (5,094)
-------- -------- -------
Net periodic pension cost $ 6,639 $ 6,979 $ 5,837
======== ======== =======
</TABLE>
66
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status for the Company's plans as of December 31 was calculated as
follows:
<TABLE>
<CAPTION>
FUNDED PLANS UNFUNDED PLAN
------------------ ----------------
1996 1995 1996 1995
-------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit ob-
ligations:
Vested benefit obligation $ 61,328 $ 56,428 $ -- $ --
Non-vested benefit obligation 19,119 16,599 5,912 4,539
-------- -------- ------- -------
Accumulated benefit obligation $ 80,447 $ 73,027 $ 5,912 $ 4,539
======== ======== ======= =======
Pension liability included in other li-
abilities:
Projected benefit obligation $117,836 $105,180 $12,576 $10,430
Plan assets at fair value 115,107 102,594 -- --
-------- -------- ------- -------
Plan assets less than projected bene-
fit obligation 2,729 2,586 12,576 10,430
Unrecognized net gain (loss) 3,633 2,095 (2,332) (1,187)
Unrecognized prior service cost (364) (213) -- --
Unamortized transition asset (obliga-
tion) 2,422 2,643 (8,451) (9,219)
Additional minimum liability -- -- 4,119 4,515
-------- -------- ------- -------
Net pension liability $ 8,420 $ 7,111 $ 5,912 $ 4,539
======== ======== ======= =======
</TABLE>
A weighted average discount rate of 7.5% and a weighted average rate of
increase in future compensation levels of 5.8% were used in determining the
actuarial present value of the projected benefit obligation at December 31,
1996 and 1995. The assumed long-term rate of return on plan assets was either
7.5% or 8.5%, depending on the plan.
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
1996, 1995 and 1994 of $6,092,000, $6,595,000 and $6,866,000, respectively.
Participants may elect to receive a portion of their contributions in cash.
Postretirement Benefits Other than Pensions
The Company also has unfunded postretirement plans that provide certain health
care and life insurance benefits to substantially all retired employees and
agents. Eligibility is determined by age at retirement and years of service
after age 30. Health care premiums are shared with retirees, and other cost-
sharing features include deductibles and co-payments.
Components of net periodic postretirement benefit cost for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period $1,011 $1,276 $1,760
Interest accrued on projected benefit obligation 2,041 2,452 2,298
Amortization of prior service cost (513) (513) (223)
Amortization of net gain (177) -- --
------ ------ ------
Net periodic postretirement benefit cost $2,362 $3,215 $3,835
====== ====== ======
</TABLE>
67
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) EMPLOYEE BENEFIT PLANS (CONTINUED)
The accumulated postretirement benefit obligation and the accrued
postretirement benefit liability for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $10,238 $11,875
Other fully eligible plan participants 4,594 5,535
Other active plan participants 9,514 9,809
------- -------
Total accumulated postretirement benefit obligation 24,346 27,219
Unrecognized prior service cost 4,107 4,620
Unrecognized net gain 9,880 4,743
------- -------
Accrued postretirement benefit liability $38,333 $36,582
======= =======
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation for 1996 and 1995 was 7.5%. The 1996 net health care cost trend rate
was 9.0%, graded to 5.5% over 7 years, and the 1995 rate was 11.0%, graded to
5.5% over 11 years.
The assumptions presented herein are based on pertinent information available
to management as of December 31, 1996 and 1995. Actual results could differ
from those estimates and assumptions. For example, 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, 1996 by
$4,262,000 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit costs for 1996 by $583,000.
(8) REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance companies. To the extent that a reinsurer is
unable to meet its obligations under the reinsurance agreement, the Company
remains liable. The Company evaluates the financial condition of its reinsurers
and monitors concentrations of credit risk to minimize its exposure to
significant losses from reinsurer insolvencies.
Reinsurance is accounted for over the life of the underlying reinsured
policies using assumptions consistent with those used to account for the
underlying policies.
The effect of reinsurance on premiums for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $615,098 $600,841 $558,066
Reinsurance assumed 64,489 64,792 60,939
Reinsurance ceded (67,228) (61,863) (56,987)
-------- -------- --------
Net premiums $612,359 $603,770 $562,018
======== ======== ========
</TABLE>
Reinsurance recoveries on ceded reinsurance contracts were $72,330,000,
$58,338,000 and $60,970,000 during 1996, 1995 and 1994, respectively.
68
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1996 and 1995.
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. Therefore, estimates of fair value subsequent to the
valuation dates may differ significantly from the amounts presented herein.
Considerable judgment is required to interpret market data to develop the
estimates of fair value. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Please refer to Note 2 for additional fair value disclosures concerning fixed
maturity securities, equity securities, mortgages and derivatives. The carrying
amounts for policy loans, cash, short term investments and finance receivables
approximate the assets' fair values.
The interest rates on the finance receivables outstanding as of December 31,
1996 and 1995, are consistent with the rates at which loans would currently be
made to borrowers of similar credit quality and for the same maturity; as such,
the carrying value of the finance receivables outstanding as of December 31,
1996 and 1995, approximate the fair value for those respective dates.
The fair values of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges, are
estimated to be the amount payable on demand as of December 31, 1996 and 1995.
The amount payable on demand equates to the account balance less applicable
surrender charges. Contracts without guaranteed interest rates and surrender
charges have fair values equal to their accumulation values plus applicable
market value adjustments. The fair values of guaranteed investment contracts
and supplementary contracts without life contingencies are 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.
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the fair value of notes payable.
The carrying amounts and fair values of the Company's financial instruments
which were classified as assets as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturity securities:
Available-for-sale $4,674,082 $4,674,082 $4,761,561 $4,761,561
Held-to-maturity 1,125,638 1,179,112 1,180,654 1,281,523
Equity securities 549,797 549,797 384,882 384,882
Mortgage loans:
Commercial 432,198 445,976 373,897 391,089
Residential 176,610 180,736 234,640 239,723
Policy loans 204,178 204,178 198,716 198,716
Short-term investments 122,772 122,772 72,841 72,841
Cash 57,140 57,140 48,358 48,358
Finance receivables, net 259,192 259,192 226,720 226,720
Derivatives 1,197 1,197 -- --
---------- ---------- ---------- ----------
Total financial assets $7,602,804 $7,674,182 $7,482,269 $7,605,413
========== ========== ========== ==========
</TABLE>
69
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and fair values of the Company's financial instruments
which were classified as liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred annuities $2,178,355 $2,152,636 $2,178,223 $2,156,886
Annuity certain contracts 52,636 53,962 48,492 50,732
Other fund deposits 808,592 805,709 856,535 847,975
Guaranteed investment contracts 18,770 18,866 47,426 47,987
Supplementary contracts without
life contingencies 47,966 47,536 41,431 39,962
Notes payable 319,000 325,974 279,967 294,103
---------- ---------- ---------- ----------
Total financial liabilities $3,425,319 $3,404,683 $3,452,074 $3,437,645
========== ========== ========== ==========
</TABLE>
(10) NOTES PAYABLE
In September 1995, the Company issued surplus notes with a face value of
$125,000,000, at 8.25%, due in 2025. The surplus notes are subordinate to all
current and future policyowners' interests, including claims, and indebtedness
of the Company. All payments of interest and principal on the notes are subject
to the approval of the Department of Commerce. The approved accrued interest
was $3,008,000 as of December 31, 1996 and 1995. The issuance costs of
$1,403,000 are deferred and amortized over 30 years on a straight-line basis.
Notes payable as of December 31 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Corporate--surplus notes, 8.25%, 2025 $125,000 $124,967
Consumer finance subsidiary--senior, 6.53%--8.77%, through
2003 194,000 155,000
-------- --------
Total notes payable $319,000 $279,967
======== ========
</TABLE>
At December 31, 1996, the aggregate minimum annual notes payable maturities
for the next five years were as follows: 1997, $21,000,000; 1998, $31,000,000;
1999, $49,000,000; 2000, $33,000,000; 2001, $26,000,000.
Long-term borrowing agreements involving the consumer finance subsidiary
include provisions with respect to borrowing limitations, payment of cash
dividends on or purchases of common stock, and maintenance of liquid net worth.
As of December 31, 1996, the consumer finance subsidiary was required to have a
minimum liquid net worth of $41,354,000. Liquid net worth at that date was
$51,803,000.
Interest paid on debt for the years ended December 31, 1996, 1995 and 1994,
was $21,849,000, $6,504,000 and $5,378,000, respectively.
(11) COMMITMENTS AND CONTINGENCIES
The Company is involved in various pending or threatened legal proceedings
arising out of the normal course of business. In the opinion of management, the
ultimate resolution of such litigation will not have a material adverse effect
on operations or the financial position of the Company.
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
70
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) COMMITMENTS AND CONTINGENCIES (CONTINUED)
$328,346,000 as of December 31, 1996. 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 $142,469,000 as of December 31, 1996. The Company
estimates that $35,000,000 of these commitments will be invested in 1997, with
the remaining $107,469,000 invested over the next four years.
As of December 31, 1996, the Company had committed to purchase bonds and
mortgage loans totaling $74,123,000 but had not completed the purchase
transactions.
At December 31, 1996, the Company had guaranteed the payment of $68,700,000
in policyowner dividends and discretionary amounts payable in 1997. The Company
has pledged bonds, valued at $70,336,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessments pertaining to future insolvencies and impairments of
unaffiliated insurance companies. The Company records a liability for future
guaranty fund assessments based upon known insolvencies, according to data
received from the National Organization of Life and Health Insurance Guaranty
Associations. An asset is held for the amount of guaranty fund assessments paid
which can be recovered through future premium tax credits.
(12) STATUTORY FINANCIAL DATA
Statutory accounting is primarily focused on solvency and surplus adequacy.
Therefore, fundamental differences exist between statutory and GAAP accounting,
and their effects on income and policyowners' surplus are illustrated below:
<TABLE>
<CAPTION>
POLICYOWNERS' SURPLUS NET INCOME
---------------------- ----------------------------
1996 1995 1996 1995 1994
---------- ---------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statutory basis $ 682,886 $ 601,565 $115,797 $ 88,706 $ 65,123
Adjustments:
Deferred policy acquisi-
tion costs 589,517 539,732 15,312 29,822 43,974
Net unrealized invest-
ment gains 111,575 235,143 -- -- --
Statutory asset valua-
tion reserve 240,474 201,721 -- -- --
Statutory interest main-
tenance reserve 24,707 32,899 (8,192) 12,976 (4,426)
Premiums and fees de-
ferred or receivable (75,716) (77,444) 1,587 497 (2,310)
Change in reserve basis 98,406 77,464 20,114 12,382 (1,444)
Separate accounts (40,755) (36,010) (6,304) (854) (5,837)
Unearned policy and con-
tract fees (121,843) (122,786) (2,530) (4,410) (10,406)
Surplus notes (125,000) (124,967) -- -- --
Net deferred taxes (149,665) (173,905) 744 (11,995) 1,511
Nonadmitted assets 31,531 28,211 -- -- --
Policyowner dividends 57,765 57,263 502 4,660 2,446
Other (25,454) (26,036) (6,512) (1,925) (8,528)
---------- ---------- -------- -------- --------
As reported in the
accompanying
consolidated
financial statements $1,298,428 $1,212,850 $130,518 $129,859 $ 80,103
========== ========== ======== ======== ========
</TABLE>
71
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AS SHOWN
MARKET ON THE BALANCE
TYPE OF INVESTMENT COST(3) VALUE SHEET(1)
- ------------------ ---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds:
United States government and government
agencies and authorities $ 302,820 $ 298,461 $ 298,461
States, municipalities and political
subdivisions 11,296 12,055 12,055
Foreign governments 1,926 1,872 1,872
Public utilities 547,228 590,445 573,030
Mortgage-backed securities 2,013,451 2,042,337 2,035,920
All other corporate bonds 2,807,892 2,908,024 2,878,382
---------- ---------- ----------
Total bonds 5,684,613 5,853,194 5,799,720
---------- ---------- ----------
Equity securities:
Common stocks:
Public utilities 510 611 611
Banks, trusts and insurance companies 12,824 21,484 21,484
Industrial, miscellaneous and all
other 329,792 422,401 422,401
Nonredeemable preferred stocks 10,857 11,491 11,491
---------- ---------- ----------
Total equity securities 353,983 455,987 455,987
---------- ---------- ----------
Mortgage loans on real estate 608,808 xxxxxx 608,808
Real estate (2) 43,082 xxxxxx 43,082
Policy loans 204,178 xxxxxx 204,178
Other long-term investments 98,247 xxxxxx 98,247
Short-term investments 122,772 xxxxxx 122,772
---------- ----------
Total $1,077,087 xxxxxx $1,077,087
---------- ----------
Total investments $7,115,683 xxxxxx $7,332,794
========== ==========
</TABLE>
- -------
(1) Amortized cost for bonds classified as held-to-maturity and fair value for
common stocks and bonds classified as available-for-sale.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $1,810,000.
(3) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for bonds
and other investments.
72
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------- ------------------------------------------------------------
FUTURE POLICY AMORTIZATION
DEFERRED BENEFITS OTHER POLICY BENEFITS, OF DEFERRED
POLICY LOSSES, CLAIMS CLAIMS AND NET CLAIMS, LOSSES POLICY OTHER
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS PREMIUM INVESTMENT AND SETTLEMENT ACQUISITION OPERATING
SEGMENT COSTS EXPENSES(1) PREMIUMS(2) PAYABLE REVENUE(3) INCOME EXPENSES COSTS EXPENSES
- ------- ----------- -------------- ----------- ------------ ---------- ---------- -------------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
Life insurance $456,461 $2,123,148 $149,152 $51,772 $568,874 $223,762 $478,228 $ 97,386 $290,525
Accident and
health insurance 62,407 437,118 33,770 18,774 160,097 34,202 96,743 14,017 87,222
Annuity 70,649 3,360,614 -- 31 79,245 267,473 243,387 14,575 111,366
Property and
liability
insurance -- 27,855 24,189 -- 50,109 5,550 36,933 -- 19,033
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$589,517 $5,948,735 $207,111 $70,577 $858,325 $530,987 $855,291 $125,978 $508,146
======== ========== ======== ======= ======== ======== ======== ======== ========
1995:
Life insurance $430,829 $2,009,154 $151,864 $41,212 $540,353 $203,487 $454,299 $ 80,896 $266,090
Accident and
health insurance 55,888 400,950 34,847 14,567 153,505 33,358 93,482 11,448 83,345
Annuity 53,015 3,401,760 -- 33 74,899 272,499 260,854 12,596 86,716
Property and
liability
insurance -- 30,117 23,783 -- 49,216 5,703 33,563 -- 18,090
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$539,732 $5,841,981 $210,494 $55,812 $817,973 $515,047 $842,198 $104,940 $454,241
======== ========== ======== ======= ======== ======== ======== ======== ========
1994:
Life insurance $510,117 $1,867,170 $133,221 $47,099 $505,300 $192,141 $443,233 $ 59,351 $245,791
Accident and
health insurance 46,506 352,955 36,529 17,142 136,619 30,119 93,359 12,401 75,380
Annuity 92,664 3,263,042 -- 12 60,479 258,196 238,301 14,725 79,498
Property and
liability
insurance -- 32,807 21,865 -- 47,735 5,645 33,829 -- 18,717
-------- ---------- -------- ------- -------- -------- -------- -------- --------
$649,287 $5,515,974 $191,615 $64,253 $750,133 $486,101 $808,722 $ 86,477 $419,386
======== ========== ======== ======= ======== ======== ======== ======== ========
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
PREMIUMS
SEGMENT WRITTEN(4)
- ------- ----------
(IN THOUSANDS)
<S> <C>
1996:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 50,515
-------
$50,515
=======
1995:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 51,133
-------
$51,133
=======
1994:
Life insurance
Accident and
health insurance
Annuity
Property and
liability
insurance 47,073
-------
$47,073
=======
</TABLE>
- -----
(1) Includes policy and contract account balances
(2) Includes unearned policy and contract fees
(3) Includes policy and contract fees
(4) Applies only to property and liability insurance
73
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
OTHER FROM OTHER NET ASSUMED TO
GROSS AMOUNT COMPANIES COMPANIES AMOUNT NET
------------ ----------- ----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996:
Life insurance in force $116,445,975 $15,164,764 $22,957,287 $124,238,498 18.5%
============ =========== =========== ============
Premiums:
Life insurance $ 347,056 $ 45,988 $ 63,044 $ 364,112 17.3%
Accident and health
insurance 174,219 15,511 1,389 160,097 0.9%
Annuity 38,041 -- -- 38,041 --
Property and liability
insurance 55,782 5,729 56 50,109 0.1%
------------ ----------- ----------- ------------
Total premiums $ 615,098 $ 67,228 $ 64,489 $ 612,359 10.5%
============ =========== =========== ============
1995:
Life insurance in force $106,228,277 $15,620,303 $24,289,241 $114,897,215 21.1%
============ =========== =========== ============
Premiums:
Life insurance $ 342,433 $ 44,778 $ 62,169 $ 359,824 17.3%
Accident and health
insurance 163,412 12,296 2,389 153,505 1.6%
Annuity 41,225 -- -- 41,225 --
Property and liability
insurance 53,771 4,789 234 49,216 0.5%
------------ ----------- ----------- ------------
Total premiums $ 600,841 $ 61,863 $ 64,792 $ 603,770 10.7%
============ =========== =========== ============
1994:
Life insurance in force $ 99,220,067 $13,570,369 $23,520,616 $109,170,314 21.5%
============ =========== =========== ============
Premiums:
Life insurance $ 322,799 $ 38,088 $ 59,064 $ 343,775 17.2%
Accident and health
insurance 145,333 10,007 1,293 136,619 0.9%
Annuity 33,889 -- -- 33,889 --
Property and liability
insurance 56,045 8,892 582 47,735 1.2%
------------ ----------- ----------- ------------
Total premiums $ 558,066 $ 56,987 $ 60,939 $ 562,018 10.8%
============ =========== =========== ============
</TABLE>
74
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item Number Caption in Other Information
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Minnesota Mutual Variable Annuity
Account for the fiscal year ended December 31, 1996, are included in
Part B of this filing and consist of the following:
1. Independent Auditors' Report
2. Statements of Assets and Liabilities.
3. Statements of Operations.
4. Statements of Changes in Net Assets.
5. Notes to Financial Statements.
(b) Audited Financial Statements of the Depositor, The Minnesota Mutual
Life Insurance Company, for the fiscal year ended December 31, 1996
and 1995, are included in Part B of this filing and consist of the
following:
1. Independent Auditors' Report - The Minnesota Mutual Life Insurance
Company.
2. Balance Sheets - The Minnesota Mutual Life Insurance Company.
3. Statements of Operations and Policyowners' Surplus - The Minnesota
Mutual Life Insurance Company.
4. Statements of Cash Flows - The Minnesota Mutual Life Insurance
Company.
5. Notes to Financial Statements - The Minnesota Mutual Life
Insurance Company.
6. Summary of Investments-Other than Investments in Related Parties -
The Minnesota Mutual Life Insurance Company.
7. Supplementary Insurance Information - The Minnesota Mutual Life
Insurance Company.
8. Reinsurance - The Minnesota Mutual Life Insurance Company.
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance Company's
Executive Committee of its Board of Trustees establishing the
Variable Annuity Account.
2. Not applicable.
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and MIMLIC Sales Corporation
<PAGE>
(b) Agent's Agreement
4. (a) The Flexible Payment Deferred Variable Annuity, form 94-
9307
(b) The Qualified Plan Agreement, form 84-9094
(c) The Individual Retirement Annuity Agreement, form 83-9058
Rev. 3-1997
(d) The Retirement Certificate, form 83-9060
(e) Tax Sheltered Annuity Loan Agreement, form 94-9309
5. (a) Application, form 84-9093 Rev. 2-94
(b) Application, form 92-9286 Rev. 1-95
6. Certificate of Incorporation and Bylaws.
(a) The Articles of Re-Incorporation of the Depositor
(b) The Bylaws of the Depositor
7. Not applicable.
8. Not applicable.
9. Opinion and consent of Donald F. Gruber, Esq.
10. Consent of KPMG Peat Marwick LLP.
11. Not applicable.
12. Not applicable.
<PAGE>
13. Schedule for Computation of Performance Quotation
(a) Stock Segregated Sub-Account Performance Calculations
(b) Bond Segregated Sub-Account Performance Calculations
(c) Money Market Segregated Sub-Account Performance Calculations
(d) Managed Segregated Sub-Account Performance Calculations
(e) Mortgage Securities Segregated Sub-Account Performance
Calculations
(f) Index Segregated Sub-Account Performance Calculations
(g) Aggressive Growth Segregated Sub-Account Performance
Calculations
(h) International Stock Segregated Sub-Account Performance
Calculations
(i) Small Company Segregated Sub-Account Performance
Calculations
(j) Value Stock Segregated Sub-Account Performance Calculations
(k) Maturing Government Bond - 1998 Segregated Sub-Account
Performance Calculations
<PAGE>
(l) Maturing Government Bond - 2002 Segregated Sub-Account
Performance Calculations
(m) Maturing Government Bond - 2006 Segregated Sub-Account
Performance Calculations
(n) Maturing Government Bond - 2010 Segregated Sub-Account
Performance Calculations
14. (a) Financial Data Schedule - MIMLIC Growth Sub-Account
(b) Financial Data Schedule - MIMLIC Bond Sub-Account
(c) Financial Data Schedule - MIMLIC Money Market Sub-Account
(d) Financial Data Schedule - MIMLIC Asset Allocation Sub-Account
(e) Financial Data Schedule - MIMLIC Mortgage Sub-Account
(f) Financial Data Schedule - MIMLIC Index 500 Sub-Account
(g) Financial Data Schedule - MIMLIC Capital Appreciation
Sub-Account
(h) Financial Data Schedule - MIMLIC International Stock
Sub-Account
(i) Financial Data Schedule - Small Company Sub-Account
(j) Financial Data Schedule - MIMIC MGB 1998 Sub-Account
(k) Financial Data Schedule - MIMLIC MGB 2002 Sub-Account
(l) Financial Data Schedule - MIMLIC MGB 2006 Sub-Account
(m) Financial Data Schedule - MIMLIC MGB 2010 Sub-Account
(n) Financial Data Schedule - MIMLIC Value Stock Sub-Account
15. The Minnesota Mutual Life Insurance Company Power of Attorney
To Sign Registration Statements, previously filed as this
Exhibit to Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 3, is hereby incorporated
by reference.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>
Guilio Agostini Trustee None
3M
3M Center -
Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen Trustee None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
John F. Bruder Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Paul H. Gooding Vice President and None
The Minnesota Mutual Life Treasurer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Trustee None
First Bank System, Inc.
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty Trustee None
Deluxe Corporation
401 Woodduck Lane
North Oaks, MN 55127
Robert E. Hunstad Executive Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
James E. Johnson Senior Vice President None
The Minnesota Mutual Life and Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
271 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Trustee None
General Mills Foundation
P.O. Box 1113
Minneapolis, MN 55440
Richard D. Lee Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Joel W. Mahle Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Dennis E. Prohofsky Senior Vice President None
The Minnesota Mutual Life General Counsel and
Insurance Company Secretary
400 Robert Street North
St. Paul, MN 55101
Thomas E. Rohricht Trustee None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry Tinson Saario, Ph.D. Trustee None
3141 Dean Court #1202
Minneapolis, MN 55416
Robert L. Senkler Chairman, President and None
The Minnesota Mutual Life Chief Executive Officer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Trustee None
Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Vice President and None
The Minnesota Mutual Life Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Frederick T. Weyerhaeuser Trustee None
Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
</TABLE>
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Minnesota Fire and Casualty Company
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
Open-end registered investment company offering shares soley to separate
accounts of The Minnesota Mutual Life Insurance Company and Northstar Life
Insurance Company:
Advantus Series Fund, Inc.
Wholly-owned subsidiaries of MIMLIC Asset Management Company:
MIMLIC Sales Corporation
Advantus Capital Management, Inc.
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
HomePlus Insurance Agency, Inc.
MCM Funding 1997-1, Inc.
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Wholly-owned subsidiary of Minnesota Fire and Casualty Company:
HomePlus Insurance Company
Majority-owned subsidiaries of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation (Tennessee)
Consolidated Capital Advisors, Inc. (Tennessee)
Majority-owned subsidiary of MIMLIC Sales Corporation:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Majority-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than majority-owned, but greater than 25% owned, subsidiaries of
The Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Unless indicated otherwise, parenthetically, each of the above
corporations is a Minnesota corporation.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1996, the number of holders of securities of this class were
as follows:
Number of Record
Title of Class Holders
-------------- ----------------
Variable Annuity Contracts 3,790
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute (Minnesota Statutes
300.083), as amended, effective January 1, 1984, which requires
indemnification of individuals only under the circumstances described by the
statute. Expenses incurred in the defense of any action, including
attorneys' fees, may be advanced to the individual after written request by
the board of directors upon receiving an undertaking from the individual to
repay any amount advanced unless it is ultimately determined that he or she
is entitled to be indemnified by the corporation as authorized by the statute
and after a
<PAGE>
determination that the facts then known to those making the determination
would not preclude indemnification.
Indemnification is required for persons made a part to a proceeding by reason of
their official capacity so long as they acted in good faith, received no
improper personal benefit and have not been indemnified by another organization.
In the case of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other acts arising out
of official capacity: (1) where the person is acting directly for the
corporation there must be a reasonable belief by the person that his or her
conduct was in the best interests of the corporation or, (2) where the person is
serving another organization or plan at the request of the corporation, the
person must have reasonably believed that his or her conduct was not opposed to
the best interests of the corporation. In the case of persons not directors,
officers or policy-making employees, determination of eligibility for
indemnification may be made by a board-appointed committee of which a director
is a member. For other employees, directors and officers, the determination of
eligibility is made by the Board or a committee of the Board, special legal
counsel, the shareholder of the corporation or pursuant to a judicial
proceeding.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Annuity
Account pursuant to the foregoing provisions, or otherwise, The Minnesota Mutual
Life Insurance Company and Minnesota Mutual Variable Annuity Account have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Variable Annuity Account of expenses incurred or
paid by a director, officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Variable Annuity Account in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, The Minnesota Mutual Life Insurance Company and Minnesota Mutual
Variable Annuity Account will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter is MIMLIC Sales Corporation. MIMLIC
Sales Corporation is also the principal underwriter for eleven
mutual funds (Advantus Horizon Fund, Inc.; Advantus Spectrum Fund,
Inc.; Advantus Money Market Fund, Inc.; Advantus Mortgage
Securities Fund, Inc.; Advantus Bond Fund, Inc.; Advantus
Cornerstone Fund, Inc.; Advantus Enterprise Fund, Inc.; Advantus
International Balanced Fund, Inc.; Advantus Venture Fund, Inc.;
Advantus Index 500 Fund, Inc.; and the MIMLIC Cash Fund, Inc.)
and for four additional registered separate accounts of The
Minnesota Mutual Life Insurance Company, all of which offer annual
contracts and life insurance policies on a variable basis.
(b) Directors and Officers of Underwriter.
DIRECTORS AND OFFICERS OF UNDERWRITER
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
<PAGE>
Robert E. Hunstad Chairman of the Board Executive Vice President
400 Robert Street North and Director
St. Paul, Minnesota 55101
George I. Connolly President, Chief Director, Broker-Dealer
400 Robert Street North Executive Officer and
St. Paul, Minnesota 55101 Director
Margaret Milosevich Vice President, Chief Manager
400 Robert Street North Operations Officer and
St. Paul, Minnesota 55101 Treasurer
Dennis E. Prohofsky Secretary and Director Senior Vice President,
400 Robert Street North General Counsel and Secretary
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer Compliance Analyst
400 Robert Street North
St. Paul, Minnesota 55101
Margaret A. Berg Assistant Secretary Manager
400 Robert Street North
St. Paul, Minnesota 55101
</TABLE>
(c) All commissions and other compensation received by each principal
underwriter, directly or indirectly, from the Registrant during
the Registrant's last fiscal year:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
- ------------ ---------------- ---------------- ----------- ------------
MIMLIC Sales, $13,034,146
Inc.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules promulgated thereunder are in the physical
possession of The Minnesota Mutual Life Insurance Company, St. Paul, Minnesota
55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(a) Previously Filed
(b) Previously Filed
(c) Previously Filed
(d) The Minnesota Mutual Life Insurance Company hereby represents that,
as to the variable annuity contract which is the subject of this
Registration Statement, File No. 33-80788, the fees and charges
deducted under the contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be
incurred and the risks assumed by the Minnesota Mutual Life Insurance
Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant, Minnesota Mutual Variable
Annuity Account, certifies that it meets the requirements of Securities Act
Rule 405(b) for effectiveness of this Amendment to the Registration Statement
and has duly caused this Amendment to the Registration Statement to be signed
on its behalf by the Undersigned, thereunto duly authorized, in the City of
Saint Paul, and State of Minnesota, on the 23rd day of April, 1997.
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By _______________________________________________
Robert L. Senkler
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor,
The Minnesota Mutual Life Insurance Company, has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the Undersigned,
thereunto duly authorized, in the City of Saint Paul, and State of Minnesota,
on the 23rd day of April, 1997.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By _______________________________________________
Robert L. Senkler
Chairman, President and Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in
their capacities with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman, President
- ---------------------------- and Chief Executive
Robert L. Senkler Officer
* Trustee
- ----------------------------
Giulio Agostini
* Trustee
- ----------------------------
Anthony L. Andersen
* Trustee
- ----------------------------
John F. Grundhofer
* Trustee
- ----------------------------
Harold V. Haverty
* Trustee
- ----------------------------
David S. Kidwell, Ph.D.
* Trustee
- ----------------------------
Reatha C. King, Ph.D.
* Trustee
- ----------------------------
Thomas E. Rohricht
* Trustee
- ----------------------------
Terry N. Saario, Ph.D.
* Trustee
- ----------------------------
Michael E. Shannon
* Trustee
- ----------------------------
Frederick T. Weyerhaeuser
Vice President April 23, 1997
- ---------------------------- and Treasurer
Paul H. Gooding (chief financial officer)
Vice President April 23, 1997
- ---------------------------- (chief accounting officer)
Gregory S. Strong
*By
- ---------------------------- Attorney-in-Fact April 23, 1997
Dennis E. Prohofsky
* Pursuant to power of attorney dated February 12, 1996, previously filed as
Exhibit 15 to this Registration Statement.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
1. The Resolution of The Minnesota Mutual Life Insurance Company's
Executive Committee of its Board of Trustees establishing the
Variable Annuity Account.
3.(a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and MIMLIC Sales Corporation
(b) Agent's Agreement
4.(a) The Flexible Payment Deferred Variable Annuity, form
94-9307
(b) The Qualified Plan Agreement, form 84-9094
(c) The Individual Retirement Annuity Agreement, form 83-9058
Rev. 3-1997
(d) The Retirement Certificate, form 83-9060
(e) Tax Sheltered Annuity Loan Agreement, form 94-9309
5.(a) Application, form 84-9093 Rev. 2-94
(b) Application, form 92-9286 Rev. 1-95
6.(a) The Articles of Re-Incorporation of the Depositor
(b) The Bylaws of the Depositor
9. Opinion and consent of Donald F. Gruber, Esq.
10. Consent of KPMG Peat Marwick LLP.
13. Schedule for Computation of Performance Quotation
(a) Stock Segregated Sub-Account Performance Calculations
(b) Bond Segregated Sub-Account Performance Calculations
(c) Money Market Segregated Sub-Account Performance Calculations
(d) Managed Segregated Sub-Account Performance Calculations
(e) Mortgage Securities Segregated Sub-Account Performance
Calculations
(f) Index Segregated Sub-Account Performance Calculations
(g) Aggressive Growth Segregated Sub-Account Performance
Calculations
(h) International Stock Segregated Sub-Account Performance
Calculations
(i) Small Company Segregated Sub-Account Performance Calculations
(j) Value Stock Segregated Sub-Account Performance Calculations
(k) Maturing Government Bond - 1998 Segregated Sub-Account
Performance Calculations
(l) Maturing Government Bond - 2002 Segregated Sub-Account
Performance Calculations
(m) Maturing Government Bond - 2006 Segregated Sub-Account
Performance Calculations
(n) Maturing Government Bond - 2010 Segregated Sub-Account
Performance Calculations
<PAGE>
14.(a) Financial Data Schedule - MIMLIC Growth Sub-Account
(b) Financial Data Schedule - MIMLIC Bond Sub-Account
(c) Financial Data Schedule - MIMLIC Money Market Sub-Account
(d) Financial Data Schedule - MIMLIC Asset Allocation
Sub-Account
(e) Financial Data Schedule - MIMLIC Mortgage Sub-Account
(f) Financial Data Schedule - MIMLIC Index 500 Sub-Account
(g) Financial Data Schedule - MIMLIC Capital Appreciation
Sub-Account
(h) Financial Data Schedule - MIMLIC International Stock
Sub-Account
(i) Financial Data Schedule - Small Company Sub-Account
(j) Financial Data Schedule - MIMLIC MGB 1998 Sub-Account
(k) Financial Data Schedule - MIMLIC MGB 2002 Sub-Account
(l) Financial Data Schedule - MIMLIC MGB 2006 Sub-Account
(m) Financial Data Schedule - MIMLIC MGB 2010 Sub-Account
(n) Financial Data Schedule - MIMLIC Value Stock Sub-Account
<PAGE>
CERTIFICATE OF SECRETARY
I, Robert J. Hasling, hereby certify that I am the Secretary of The
Minnesota Mutual Life Insurance Company, Saint Paul, Minnesota; that I have
charge, custody and control of the record books and corporate seal of said
Company; that the following is a true and correct copy of a resolution adopted
by the Executive Committee of said Company at a meeting held September 10, 1984,
at which meeting a quorum was present and acting throughout; and that the
meeting was duly called for the purpose of acting upon the attached "Resolution
- - Separate Account H".
I hereby certify that the attached resolution has not been modified,
amended or rescinded and continues in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of The Minnesota Mutual Life Insurance Company this first day of May, 1985.
/s/ Robert J. Hasling
------------------------------
Secretary
(Seal)
<PAGE>
RESOLUTION-SEPARATE ACCOUNT H
"RESOLVED, That the Company hereby establishes a separate account in accordance
with Subdivision 1 of Section 61A.14 of Minnesota Statutes 1967, as amended, for
the purpose of issuing contracts on a variable basis, which account shall be
known as Minnesota Mutual Variable fund H, or by such other name as the Chief
Executive Officer may determine;
FURTHER RESOLVED, That such separate account be registered as unit investment
trust pursuant to the provisions of the Investment company Act of 1940, as
amended, and that application be made for such exemptions from that Act as may
be necessary or desirable;
FURTHER RESOLVED, That there be prepared and filed with the Securities and
Exchange Commission in accordance with the provisions, of the Securities Act of
1933, as amended, a registration statement, and any amendments thereto, relating
to such contracts on a variable basis as may be offered to the public;
FURTHER RESOLVED, That the chief executive officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized to
seek such exemptive or other relief as may be necessary or appropriate in
connection with the separate account or the offered contracts; and
FURTHER RESOLVED, That the chief executive officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized and
directed to take such further actions as may in their judgment be necessary and
desirable to implement the foregoing resolutions."
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this _____ day of _____________, 1994, between and among
Minnesota Mutual Variable Annuity Account (the "Separate Account"), a registered
separate account of The Minnesota Mutual Life Insurance Company, a Minnesota
corporation ("Minnesota Mutual"), and MIMLIC Sales Corporation, a Minnesota
corporation ("Distributor").
WITNESSETH:
WHEREAS, Minnesota Mutual established the Separate Account, a separate
account of Minnesota Mutual; and
WHEREAS, the Separate Account offers for sale certain variable annuity
contracts, individual Flexible Payment Deferred Variable Annuity Contracts, also
known as "MultiOption Select" variable annuity contracts (the "contracts") which
are deemed to be securities under the Securities Act of 1933 (the "1933 Act")
and the laws of some states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of Minnesota Mutual, is
registered as a broker-dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 ("1934 Act") and is a member
of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the parties desire to have the Distributor act as principal
underwriter of the contracts and assume full responsibility for the securities
activities of each "person associated" (as that term is defined in Section
3(a)(18) of the 1934 Act) with the Distributor and engaged directly or
indirectly in the sale of the contracts (the "associated persons"); and
WHEREAS, the parties desire to have Minnesota Mutual perform certain
services in connection with the sale of the contracts;
NOW THEREFORE, in consideration of the covenants and mutual promises of the
parties made to each other, it is hereby covenanted and agreed as follows:
1. The Distributor will act as the exclusive principal underwriter of the
contracts and as such will assume full responsibility for the securities
activities of all the associated persons. The Distributor will train the
associated persons, use its best efforts to prepare them to complete
satisfactorily the applicable NASD and state examinations so that they may be
qualified, register the associated persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. Unless otherwise permitted by applicable
state law, all persons engaged in the sale of the contracts must also be agents
of Minnesota Mutual.
<PAGE>
2. The Distributor will assume full responsibility for the continued
compliance by itself and the associated persons with the NASD Rules of Fair
Practice and Federal and state laws, to the extent applicable, in connection
with the sale of the contracts. The Distributor will make timely filings with
the SEC, NASD, and any other regulatory authorities of all reports and any sales
literature relating to the contracts required by law to be filed by the
Distributor. Minnesota Mutual will make available to the Distributor copies of
any agreements or plans intended for use in connection with the sale of
contracts in sufficient number and in adequate time for clearance by the
appropriate regulatory authorities before they are used, and it is agreed that
the parties will use their best efforts to obtain such clearance as
expeditiously as is reasonably possible.
3. With the consent of Minnesota Mutual, the Distributor may enter into
agreements with other broker-dealers duly licensed under applicable Federal and
state laws for the sale and distribution of the contracts and may perform such
duties as may be provided for in such agreements.
4. Minnesota Mutual, with respect to the contracts, will prepare and file
all registration statements and prospectuses (including amendments) and all
reports required by law to be filed with Federal and state regulatory
authorities. Minnesota Mutual will bear the cost of printing and mailing all
notices, proxies, proxy statements, and periodic reports that are to be
transmitted to persons having voting rights under the contracts. Minnesota
Mutual will make prompt and reasonable efforts to effect and keep in effect, at
its expense, the registration or qualification of its contracts in such
jurisdictions as may be required by Federal and state regulatory authorities.
5. Minnesota Mutual will (a) maintain and preserve in accordance with
Rules 17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained by it in connection with the offer and sale of the contracts, which
books and records shall be and remain the property of the Distributor and shall
at all times be subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act and by all other regulatory bodies having jurisdiction,
and (b) upon or prior to completion of each "transaction" as that term is used
in Rule 10b-10 of the 1934 Act, send a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by Minnesota Mutual acting in the capacity of agent for the Distributor.
6. All purchase payments and any other monies payable upon the sale,
distribution, renewal or other transaction involving the contracts shall be paid
or remitted directly to, and all checks shall be drawn to the order of,
Minnesota Mutual, and the Distributor shall not have or be deemed to have any
interest in such payments or monies. All such payments and monies received by
the Distributor shall be remitted daily by the Distributor to Minnesota Mutual
for allocation to the Account in accordance with the contracts and any
prospectus with respect to the contracts.
7. Minnesota Mutual will, in connection with the sale of the contracts,
pay on behalf of the Distributor all amounts (including sales commissions due to
the sale representatives of the
- 2-
<PAGE>
Distributor or to broker-dealers who have entered into sales agreements with the
Distributor. The records in respect of such payments shall be properly
reflected on the books and records maintained by Minnesota Mutual.
8. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from Minnesota Mutual the following
amounts:
(a) Upon receipt of proper evidence of expenditures, an amount sufficient
to reimburse the Distributor for its expenses incurred in carrying out
the terms of this Agreement, and
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual.
9. As compensation for its services performed and expenses incurred under
this Agreement, Minnesota Mutual will receive all amounts deducted as
administrative, sales, mortality and expense risk charges under the contracts,
as specified in the contracts and in the prospectus or prospectuses forming a
part of any registration statement with respect to the contracts filed with the
SEC under the 1933 Act. It is understood that Minnesota Mutual assumes the risk
that the above compensation for its services under the contracts may not prove
sufficient to cover its actual expenses in connection therewith and that its
compensation for assuming such risk shall be included in and limited to the
foregoing charges described in said prospectus(es).
10. Minnesota Mutual will, except as otherwise provided in this Agreement,
bear the cost of all administrative services and expenses of the Separate
Account, including but not limited to such expenses as salaries, rent, postage,
telephone, travel, legal, actuarial and auditing fees, office equipment and
stationery, legal services and expenses, registration, filing and other fees, in
connection with (a) registering and qualifying the contracts and (to the extent
requested by the Distributor) the associated persons with Federal and state
regulatory authorities and the NASD and (b) printing and distributing all
contracts and all registration statements and prospectuses (including
amendments), notices, periodic reports, sales literature and advertising
prepared, filed or distributed with respect to the contracts.
11. Each party hereto shall advise the others promptly of (a) any action
of the SEC or any authorities of any state or territory, of which it has
knowledge, affecting registration or qualification of the contracts, or the
right to offer the contracts for sale, and (b) the happening of any event which
makes untrue any statement, or which requires the making of any change, in the
registration statement or prospectus in order to make the statements therein not
misleading.
12. The services of the Distributor and Minnesota Mutual under this
Agreement are not deemed to be exclusive and the Distributor and Minnesota
Mutual shall be free to render similar services to others, including, without
implied limitation, such other separate accounts as are now or hereafter
established by Minnesota Mutual, so long as the services of the Distributor and
Minnesota Mutual hereunder are not impaired or interfered with thereby.
- 3 -
<PAGE>
13. This Agreement shall upon execution become effective as of the date
first above written, and shall continue in effect indefinitely unless terminated
by either party on 60 days' written notice to the other.
14. This Agreement shall automatically terminate in the event of its
assignment, as that term is defined in the Investment Company Act of 1940, as
amended, unless an appropriate exemptive order is issued by the SEC with respect
to such assignment.
15. This Agreement shall be and is subject to the provisions of the
Investment Company Act of 1940, as amended, and the Rules and Regulations
thereunder.
16. This Agreement may be amended at any time by mutual consent of the
parties.
17. This Agreement shall be governed by and construed in accordance with
the laws of Minnesota.
IT WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
Witness: By:
------------------------ ---------------------------
Secretary Chairman of the Board and
Chief Executive Officer
MINNESOTA MUTUAL VARIABLE
ANNUITY ACCOUNT
Witness: By:
----------------------- -------------------------
Secretary The Minnesota Mutual Life
Insurance Company
MIMLIC SALES CORPORATION
Witness: By:
----------------------- --------------------------
Vice President President
- 4 -
<PAGE>
Variable Contract Supplement--Agent
(a) GENERAL. This supplement is a part of your Agent's contract to which it is
attached and is subject to all its terms, definitions and conditions. This
supplement describes both the compensation we will provide on your variable
contract business and your responsibilities with respect to the solicitation,
sale or distribution of these contracts for us.
(b) DEFINITIONS. Whenever we use the following words this is what we mean:
VARIABLE ANNUITY BUSINESS. All variable annuities issued by Minnesota Mutual,
which are registered, contain identifiable sales charges and have contract
values varying with the investments in a separate account, which we issue on
applications you obtain. This does not include group or fixed annuities.
VARIABLE ADJUSTABLE LIFE BUSINESS. The Variable Adjustable Life insurance
policies, issued by Minnesota Mutual, which we may issue on applications you
obtain. This does not include group or fixed annuities.
VARIABLE CONTRACTS. Variable annuity business and variable adjustable business,
issued by Minnesota Mutual.
ANNUITIZATION BUSINESS. The election of an annuity payment option which you
initiate for a deferred annuity (except for Policy form 87-9154).
EARNED PREMIUM. Money which we have received in our home office and applied to
pay the premiums due on Variable contract business.
FIRST-YEAR PREMIUMS. Premiums due on a policy during the first policy year.
FIRST-YEAR COMMISSIONS. Commissions on earned first-year premiums.
PRODUCTION BONUS. An amount credited on first-year premiums paid on certain
Flexible Payment Variable Annuity and Variable Adjustable Life business.
RENEWAL PREMIUMS. Premiums due on a policy after the first policy year.
RENEWAL COMMISSIONS. Commissions on earned renewal premiums during the second
through the tenth policy year.
TRAILING COMMISSIONS. Commissions on Qualifying Accumulation Values at the end
of each calendar quarter.
QUALITY BONUS. An amount credited on each renewal premium paid on your Variable
Adjustable Life business in the second and third policy years.
<PAGE>
SERVICE FEES. The amount credited on each renewal premium paid on your Variable
Adjustable Life business and amount credited on each renewal premium paid on
Variable Annuity business after the tenth policy year.
(c) LICENSES. You will do all things necessary to get, and to keep in good
standing, all licenses which you will need to solicit and sell variable
contracts as a life insurance salesman for us in the jurisdictions in which you
do business.
(d) BROKER-DEALER. You will do all things necessary to get, and to keep in
good standing, all licenses which you will need to solicit and sell variable
contracts for us and which are required because of your status as a registered
representative of the broker-dealer authorized to distribute the variable
contracts as our agent. You will also contract with the broker-dealer, such
contract to govern your conduct and undertakings with respect to the sale of our
variable contracts.
(e) THIS AGREEMENT. For all purposes under this supplement, we will consider
the variable contracts to be our products.
(f) COMMISSIONS ON VARIABLE CONTRACTS:
(1) FIRST-YEAR COMMISSIONS.
Commissions are a percentage of earned first-year premiums.
KIND OF POLICY RATE OF COMMISSIONS
-------------- -------------------
*Variable Adjustable 50%
Life Business
Variable Annuity Business 3%
(Including Forms 84-9091, 84-9092,
92-9283, 92-9284 and Fund D Contracts)
Variable Annuity Business
MultiOption Select Annuity
(Policy Form 94-9307)**
CUMULATIVE EARNED PREMIUM
-------------------------
0 - 499,999 3.0%
500,000 - 749,999 2.75%
750,000 - 999,999 2.50%
1,000,000 - 1,499,999 2.25%
1,500,000 - 1,999,999 2.00%
2,000,000 - 2,499,999 1.75%
2,500,000 - 2,999,999 1.50%
3,000,000 - 3,999,999 1.25%
<PAGE>
4,000,000 - 5,000,000 1.00%
*Target Premium Definition--50% first-year commission rate applies to
premium up to whole life plan of insurance. Premiums in excess
receive a 4% first-year commission.
**Cumulative earned premium is the sum of all earned premiums
including current premium less any premium withdrawals. Rate from
table applies to all premium from the current transaction.
First-year commissions are vested and will be credited to you as they
become due.
(2) RENEWAL COMMISSIONS.
Renewal commissions are percentages of earned renewal premiums during
the second through tenth policy year.
Rate of Commission
------------------
Second Policy Year
Kind of Policy Through Tenth Policy Year
-------------- -------------------------
Variable Adjustable 4%
Life Business
Variable Annuity Business 3%
(Including Forms 84-9091, 84-9092,
92-9283, 92-9284 and Fund D Contracts
Variable Annuity Business Same Rate as First-Year
MultiOption Select Annuity Commission
(Policy Form 94-9307)
"Renewal commissions will be vested as described in Section 7(d) of
the Agent's contract."
(3) TRAILING COMMISSIONS ON VARIABLE ANNUITY BUSINESS
(I) MULTIOPTION ANNUITIES (POLICY FORMS 84-9091, 84-9092,
92-9283, 92-9284 AND 94-9307)
Trailing commissions are payable in an amount equal to .03125% of
Qualifying Accumulation Values at the end of each calendar quarter
(.125% annually); provided, that such trailing commissions will
not be paid unless the aggregate of
<PAGE>
all Qualifying Accumulation Values, as of the end of the quarter
for which such trailing commissions are determined, is at least:
AGGREGATE VALUE OF FOR CALENDAR QUARTERS
QUALIFYING ACCUMULATION VALUES ENDING IN
------------------------------ ---------------------
$ 70,000 1994
80,000 1995
90,000 1996
100,000 1997 and later
"Qualifying Accumulation Values" means, with respect to each
MultiOption annuity contract included in your Variable Annuity
Business, all separate account accumulation values held under such
contract; provided, that the separate account accumulation values held
under any contract shall not be Qualifying Accumulation Values unless
such separate account accumulation values are at least:
Single Premium Contract and MultiOption Select Contract
-------------------------------------------------------
$10,000
Flexible Payment Contract
-------------------------
$15,000 in contract years 1-5
$25,000 in contract years 6-10
$35,000 in contract years 11 and later
Trailing commissions will be paid during the month following the end
of each quarter. No trailing commissions will be paid after our
Agency relationship has been terminated.
(ii) MEGANNUITY (POLICY FORM 87-9154)
Trailing commissions are payable in an amount equal to .05% of
accumulation values in excess of $5 million, as of the end of each
calendar quarter (.20% annually), held under MegAnnuity contracts
included in your Variable Annuity Business; provided, however, that
with respect to accumulation values attributable to sub-account
investment in the Maturing Government Bond Portfolios of the MIMLIC
Series Fund, trailing commissions are payable in an amount equal to
.025% of such accumulation values as of the end of each calendar
quarter (.10% annually), again as held under MegAnnuity contracts
included in your Variable Annuity Business.
Trailing commissions will be paid during the month following the end
of each quarter. No trailing commissions will be paid after your
Agency relationship has been terminated.
<PAGE>
(g1) COMMISSIONS ON ANNUITIZATION BUSINESS. Other than as provided in
paragraph (g2), we agree to credit to you commissions on your annuitization
business if the values have been held by us in a deferred annuity for at least
five years. If those values have been held by us in a deferred annuity for five
or more years but less than ten years, we will credit to you 1.5% of those
values. If the values have been held by us in a deferred annuity for ten years
or more, we will credit to you an amount equal to 3% of those values.
(g2) COMMISSIONS ON ANNUITIZATION BUSINESS FOR MULTIOPTION SELECT CONTRACT
(POLICY FORM 94-9307). We agree to credit to you commissions on your
annuitization business on all premiums held by us in a deferred annuity for at
least five years and on any gain in the contract. For all premiums held by us
in a deferred annuity for five years or more but less than ten years, we will
credit to you 1.5% of those values. For all premiums held by us in a deferred
annuity for ten years or more, we will credit to you 3% of those values. For
all gain in the contract (Accumulation Value less cumulative earned premium
minus any premium withdrawals), we will credit to you an amount equal to 3% of
those values.
(h) COMMISSION ADJUSTMENT. We reserve the right to refund any purchase
payments credited to our General Account under a variable contract. If we do
make such a refund, we will charge you will the amount of any commission
previously paid on the refunded payment. All charges thus made will be a debt
which you owe us and will become a first lien against any and all amounts due
you; we may offset this debt against any amount which we would otherwise credit
to you under the Agent's contract.
(i) PRODUCTION BONUS. We will credit you with a production bonus on first-year
earned commissions, which you earn on Flexible Payment Variable Annuities
(except for Policy Form 87-9154 and Policy Form 94-9307) and Variable Adjustable
Life. No production bonus will be paid on commissions for Single Payment
Variable Annuities, annuitization business or compensation paid under paragraph
(h) above. We will calculate the production bonus according to the schedule
shown in the Contract Update. Production bonus for flexible payment variable
annuities will cease after 1994.
(j) QUALITY BONUS. We will credit you with a quality bonus for each renewal
premium paid on your Variable Adjustable Life business in the second and third
policy years. We will calculate the quality bonus according to the schedule
shown in the Contract Update.
(k) SERVICE FEES. We will credit you with a service fee for each renewal
premium paid on your Variable Adjustable Life business for the second and later
policy years. the amount of the service fee is shown in the Contract Update for
life renewal premiums. We will credit you with a service fee for each renewal
premium paid on your Variable Annuity business (except for Policy Form 87-915),
for the eleventh and later policy years. The amount of service fee is 3% of the
renewal premium. For MultiOption Select (Policy Form 94-9307), the amount of
the service fee is the rate calculated as shown in the First-Year Commission
Section multiplied by the renewal premium.
<PAGE>
(l) All provisions of Section 6-10 of the Agent's contract will apply where
applicable to any compensation payable under this supplement.
(m) MINIMUM PRODUCTION REQUIREMENTS. In determining whether you have satisfied
the minimum production requirements shown in the contract Update, we will give
you credit for your Variable annuity business and Variable Adjustable Life
business. The credit will be equal to 100% of commissions credited on your
Variable Adjustable Life and Variable Annuity business.
(n) TERMINATION OF THIS SUPPLEMENT. We reserve the right to modify or
terminate this supplement at any time; however, any such modification or
termination will be made uniformly among all of our agencies of the same class
or as required by law or other competent authority.
(0) EFFECTIVE DATE. This supplement shall become effective as of the date
shown below.
Executed this__________ day of _____________________, 19____.
_______________________________________
Agent's signature
_______________________________________
General Agent's signature
The Minnesota Mutual Life Insurance Company
By ____________________________________
Authorized Officer
<PAGE>
READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay, subject to the provisions of this contract, the benefits
described by this contract.
We make this promise and issue this contract in consideration of the application
for this contract and the payment of the purchase payments.
The owner and the beneficiary are as named in the application unless they are
changed as provided for in this contract.
You are a member of The Minnesota Mutual Life Insurance Company. Our annual
meetings are held at our home office on the first Tuesday in March of each year
at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota,
on the contract date.
President /s/ Coleman Bloomfield
Secretary /s/ Robert J. Hasling
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED
WITH THIS CONTRACT. IF YOU ARE NOT *****************************
SATISFIED, YOU MAY RETURN THE CONTRACT TO US * *
OR TO YOUR AGENT WITHIN 10 DAYS OF ITS * FLEXIBLE PAYMENT DEFERRED *
RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU * VARIABLE ANNUITY CONTRACT *
WILL RECEIVE THE GREATER OF (a) THE * *
ACCUMULATION VALUE OF THIS CONTRACT * FIXED OR VARIABLE ANNUITY *
ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS, OR * BENEFITS *
(b) THE AMOUNT OF PURCHASE PAYMENTS PAID BY * *
YOU UNDER THIS CONTRACT. WE WILL PAY THIS * A PARTICIPATING CONTRACT *
REFUND WITHIN 7 DAYS AFTER WE RECEIVE YOUR * *
NOTICE OF CANCELLATION. *****************************
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT
MINNESOTA MUTUAL
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
SAINT PAUL, MINNESOTA 55101-2098
94-9307
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provision of Your Contract
Page
----
Additional Information 10
Allocation of Purchase Payments 3
Amount Payable at Death 9
Annuity Payment Options 6
Annuity Provisions 6
Assignment 10
Beneficiary 10
Contract Charges 4
Definitions 2
Dividends 5
General Information 2
Misstatement 10
Purchase Payments 3
Transfer Provisions 5
Valuation 4
Withdrawal and Surrender 5
94-9307
<PAGE>
YOUR CONTRACT INFORMATION
Annuitant: John C. Doe
-----------
Date of Birth: December 1, 1958
----------------
Owner: John C. Doe
-----------
Jurisdiction: Your State
----------
Contract Number: 1-234-567
---------
Contract Date: September 1, 1994
-----------------
Annuity Commencement Date: January 1, 2024
---------------
Anticipated Purchase Payment: $5,000.00
---------
*****************************
* *
* FLEXIBLE PAYMENT DEFERRED *
* VARIABLE ANNUITY CONTRACT *
* *
* FIXED OR VARIABLE ANNUITY *
* BENEFITS *
* *
* A PARTICIPATING CONTRACT *
* *
*****************************
94-9307
<PAGE>
DEFINITIONS
When we use the following words, this is what we mean:
THE ANNUITANT
The person named on page 1 who may receive lifetime benefits under this
contract. Joint annuitants will be considered a single entity.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person named as owner in the application. The owner may
be changed. Joint owners will be considered a single entity.
JOINT OWNER
The person designated to share equally in all rights and privileges of this
contract. Only your spouse may be named as joint owner. Both signatures will
be required to exercise your rights under this contract.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
CONTRACT DATE
The effective date of this contract. It is also the date from which we
determine contract anniversaries and contract years.
CONTRACT ANNIVERSARY
The same day and month as the contract date for each succeeding year of this
contract.
CONTRACT YEAR
A period of one year beginning with the contract date or a contract anniversary.
-2-
<PAGE>
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
The sum of your values under this contract in the separate account. It is
composed of your interest in one or more sub-accounts of the separate account
excluding variable annuity payment amounts. Your interest in each sub-account
shall be valued separately. The total of those values will be the accumulation
value.
SURRENDER VALUE
The surrender value of this contract shall be the accumulation value reduced by
any deferred sales charge.
SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Variable Annuity Account.
This separate account was established by us for this class of contract under
Minnesota law. The separate account is composed of several sub-accounts. The
assets of the separate account are ours. Those assets are not subject to claims
arising out of any other business of ours.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
-3-
<PAGE>
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required. In some cases, we may provide a form for your
use. We also may require that this contract be sent in with your written
request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
Total purchase payments in the contract may not exceed $5,000,000 without our
consent.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
Annuity payments of equal amounts during the payment period.
VARIABLE ANNUITY
Annuity payments which increase or decrease in amount to reflect the investment
experience of the separate account and its sub-accounts.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it contain the entire
contract between you and us. Any statements made in the application either by
you or the annuitant will, in the absence of fraud, be considered
representations and not warranties. Also, any statement made either by you or
the annuitant will not be used to avoid this contract or defend against a claim
under this contract unless the statement is contained in the application.
-4-
<PAGE>
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. It must also be signed by our president, a vice
president, our secretary or an assistant secretary. No agent or other person
has the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract. It will be subject to all the terms and conditions of this contract
unless we state otherwise in the agreement.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract. You can do this by making
a written request to us. You have these rights during the annuitant's lifetime
and before annuity payments begin. We will deal with you, unless this contract
provides otherwise, on the basis that you have full ownership and control of
this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will summarize the year's
transactions. It will show the current accumulation value and surrender value
of this contract. It will also show the current separate account accumulation
unit values. The report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098.
When we receive a purchase payment from you at our home office, we will send you
a confirmation.
DO YOU CHOOSE WHEN TO MAKE PURCHASE PAYMENTS?
Yes. You may choose when to make purchase payments. They may be made at any
time prior to the date that annuity payments are to begin.
-5-
<PAGE>
ARE THERE OTHER METHODS OF MAKING PURCHASE PAYMENTS?
Yes. It may be possible for you to arrange with your employer to make your
purchase payments by payroll deduction. Or, under some plans, your employer may
make purchase payments on your behalf. Also, your bank or other financial
institution may consent to have your purchase payments automatically withdrawn
from your account and paid directly to us.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated to the separate account and its sub-accounts. The allocation
is made as you direct. Initially, you must indicate your allocation in the
application. Later, you may change your allocation for future purchase payments
by giving us written notice. Applications received without instructions as to
allocation will be treated as incomplete.
ARE SEPARATE ACCOUNT OPTIONS AVAILABLE?
Yes. The separate account currently is composed of the following sub-accounts:
Growth Account
Bond Account
Money Market Account
Asset Allocation Account
Mortgage Securities Account
Index 500 Account
Capital Appreciation Account
International Stock Account
Small Company Account
Value Stock Account
Maturing Government Bond-1998 Account
Maturing Government Bond-2002 Account
Maturing Government Bond-2006 Account
Maturing Government Bond-2010 Account
Purchase payments may be applied to one or more of these sub-accounts. They may
also be
-6-
<PAGE>
made to any other sub-account which may be established by us under the separate
account for contracts of this class. We reserve the right to add, combine or
remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. Purchase payments
are invested in the funds at their net asset value. The net asset value per
share for each fund is determined by adding the current value of all securities
and all other assets held by such fund, subtracting liabilities, and dividing
the remainder by the number of shares outstanding.
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. Substitution may be with respect to existing accumulation values, future
purchase payments and future annuity payments.
IS THERE A MINIMUM AMOUNT WHICH MUST BE ALLOCATED TO THE SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT?
No.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account when permitted by law. The transfer will be of assets
associated with this class of contracts. We will make that determination. If
this type of transfer is made, the term "separate account", as used in this
contract, shall then mean the separate account to which the assets were
transferred.
We reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of 1940;
(b) restrict or eliminate any voting rights of contract owners or other persons
who have voting rights as to the separate account; and
-7-
<PAGE>
(c) combine the separate account with one or more other separate accounts.
WHEN ARE PURCHASE PAYMENTS CREDITED TO THE CONTRACT?
Purchase payments are credited to the contract on the valuation date coincident
with or next following the day they are received in our home office. If they
are received on a day which is not a valuation date, those amounts will be
credited on the next valuation date.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at any time. If you stop making
purchase payments, the contract remains in force as a paid-up annuity according
to its terms. Its value may be applied to provide annuity payments at a later
date. You may make purchase payments again at any time before annuity payments
start unless the contract has been surrendered.
MAY WE CANCEL THE CONTRACT?
Yes. We may, in our discretion, cancel a contract 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 contract, are less than $2,000. If such a
cancellation takes place, we will pay the accumulation value to you.
We will notify you of our intention to exercise these rights in our annual
report. We will act 90 days after the contract anniversary unless an additional
purchase payment is received before the end of that 90 day period.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account and a transaction charge.
-8-
<PAGE>
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on contract withdrawals or
surrenders. It is made during the seven year period following the receipt of
each purchase payment. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be cancelled of a value equal to the applicable charge and the amount
of the withdrawal.
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The amount of the deferred sales charge is determined from the percentages shown
in the table below. All purchase payments will be allocated to a withdrawal or
surrender on a first-in, first-out basis for the purpose of determining the
amount of the deferred sales charge. The deferred sales charge applies only to
withdrawal or surrender of purchase payments received by us within seven years
of the date of the withdrawal or surrender. The deferred sales charge
percentage is as shown in the table below:
Years Since Payment Charge
------------------- ------
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
The amount of the deferred sales charge is determined by: (a) calculating the
number of years each purchase payment being withdrawn has been in the contract;
(b) multiplying each purchase payment being withdrawn by the appropriate
deferred sales charge percentage in the table; and (c) adding the deferred sales
charge from all purchase payments as calculated in (b).
ARE THERE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
Yes. There are two charges associated with the separate account. They are the
mortality risk charge and the expense risk charge.
-9-
<PAGE>
Both of these charges are deducted on each valuation date from the separate
account. On an annual basis, together they may be as much as 1.40% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, it may be as
much as .80% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
in this contract will be sufficient to cover our actual expenses. Actual
expense results incurred by us shall not adversely affect any payments or values
under this contract. On an annual basis, it may be as much as .60% of the net
asset value of the separate account.
VALUATION
HOW IS YOUR ACCUMULATION VALUE DETERMINED?
It is determined for each sub-account of the separate account. The separate
account value will include all sub-accounts of the separate account.
For each sub-account of the separate account, it is your accumulation units
multiplied by the accumulation unit value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. 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. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation units
will not be
-10-
<PAGE>
affected by changes in the accumulation unit value. However, the total number
of accumulation units for a sub-account will be affected by future contract
transactions including that sub-account. In addition, the units of each
sub-account will be increased by subsequent purchase payments and transfers to
that sub-account. The units of each sub-account will be decreased by deductions
for deferred sales charges and for transfers or withdrawals from that
sub-account.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account during the valuation
period. The value of an accumulation unit for each sub-account was originally
set at $1.00 on the first valuation date. For any subsequent valuation date,
its value is equal to its value on the preceding valuation date multiplied by
the net investment factor for that sub-account for the valuation period ending
on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of not more than 1.40% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(b) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period;
divided by
(c) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
-11-
<PAGE>
DIVIDENDS
WILL THIS CONTRACT RECEIVE DIVIDENDS?
Each year we determine if this contract will share in our divisible surplus. We
call your share a dividend.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, will be added to the accumulation value or applied to
increase annuity payments. If you so elect, they may be paid in cash.
TRANSFER PROVISIONS
WHAT IS A TRANSFER?
A transfer is a reallocation of funds under this contract among the sub-accounts
of the separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. These transfers may be made by your written request. 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.
DOES A DOLLAR AMOUNT LIMIT APPLY TO TRANSFERS?
No.
DO ANY OTHER RESTRICTIONS APPLY?
Yes. We reserve the right to make a charge, not to exceed $25, for each
transfer among the sub-accounts of the separate account when the frequency of
such transfer requests exceeds one every calendar month. If applied, this
charge will be deducted from your accumulation value.
MAY TRANSFERS TAKE PLACE ONCE AN ANNUITY BEGINS?
Yes. However, transfers are limited. They may be made only with respect to any
variable annuity payments. See the Annuity Payment Options section of this
contract.
-12-
<PAGE>
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time before annuity payments begin, you may request a partial
withdrawal from the accumulation value. You must make a written request for any
withdrawal. The amount of any withdrawal must be for at least $250. In the
event of a cash withdrawal, the accumulation value will be reduced by the amount
requested and by the deferred sales charge, if any. However, you may receive
the excess, if any, of the accumulation value of the contract over the sum of
all of the purchase payments made to the contract, reduced by the amount of
previous purchase payment withdrawals, without a deferred sales charge.
Unless instructed otherwise by you, withdrawals will be made from your interest
in each sub-account of the separate account in the same proportion that the
value of your interest in any sub-account bears to your total accumulation
value. Withdrawal values will be determined as of the valuation date coincident
with or next following the date your written withdrawal request is received at
our home office.
Systematic withdrawal plans of a fixed amount or a fixed amount over a specified
period are also available.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before annuity payments begin, you may surrender this contract
for its surrender value. The surrender value will be determined as of the
valuation date coincident with or next following the date your written request
is received at our home office.
HOW WILL WITHDRAWAL OR SURRENDER BENEFITS BE PAID?
We will pay these benefits in a single sum. However, if this contract is
surrendered you may elect one of the annuity payment options. This election is
subject to the provisions of this contract.
-13-
<PAGE>
ANNUITY PROVISIONS
WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us in writing: (a) that annuity payments are to be made to the
annuitant; (b) when these payments are to begin; (c) the form of the annuity;
and (d) what annuity payment option has been selected. We must receive this
notice at least 30 days before annuity payments are to begin. This contract
permits annuity payments to begin no later than age 85 or five years after the
date of issue of this contract, whichever is later. However, the beginning date
for annuity payments must be consistent with any restrictions applicable to the
plan under which this contract may have been purchased.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
On the date annuity payments are to begin, we will apply the accumulation value.
WHAT TYPES OF ANNUITIES ARE AVAILABLE?
Both fixed and variable annuities are available under this contract.
ARE THERE RESTRICTIONS ON ANNUITY PAYMENTS?
Yes. We require that the first monthly fixed or variable annuity payment must
be at least $20. It may be less if a payment of a smaller minimum amount is
required by law. If the first monthly fixed or variable annuity payment would
be less than that amount, we reserve the right to pay you the surrender value in
a lump sum. This payment would be in lieu of all other rights under this
contract.
In addition, we restrict the maximum amount which may be applied to provide a
fixed annuity under this contract. The maximum amount which may be applied
under this contract for a fixed annuity is $1,000,000.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant before payments begin.
-14-
<PAGE>
We may also require proof that a person is alive before making any annuity
payment which is based on the survival of that person.
IF YOU MAKE NO ELECTION, WHEN DO ANNUITY PAYMENTS BEGIN?
If you do not elect another date, annuity payments will begin on the later of
the first day of the month immediately following: (a) the 85th birthday of the
annuitant; or (b) five years after the date of issue of this contract.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of Option 2A, a life annuity with a period certain of 120
months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment form, we will make annuity payments
in the form of a variable annuity using the Money Market Account.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment instead. If you do so, you and the
annuitant shall have no further rights under this contract.
ANNUITY PAYMENT OPTIONS
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
The following annuity payment options are available:
Option 1 -- Life Annuity -- annuity payments payable monthly for the lifetime of
the annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 -- Life Annuity with a Period Certain -- annuity payments payable
monthly for the lifetime of the annuitant; provided, if the annuitant dies
before payments have
-15-
<PAGE>
been made for the entire period certain, those remaining certain payments will
be made to the beneficiary.
The period certain may be for 120 months (Option 2A); for 180 months (Option
2B); or for 240 months (Option 2C).
Option 3 -- Joint and Last Survivor Annuity -- annuity payments payable monthly
for the joint lifetimes of the annuitant and a designated joint annuitant. The
payments end with the last payment due before the survivor's death. If this
option is elected, the contract and payments shall be the joint property of the
annuitant and the designated joint annuitant.
Option 4 -- Fixed Period Annuity -- annuity payments payable monthly for a fixed
period of from five to twenty years. If the annuitant dies before all payments
for the fixed period are received, payments will continue for the remainder of
the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING PERIOD
CERTAIN ANNUITY PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
period certain payments paid in a lump sum. This right exists under Options 2
and 4.
The lump sum payment will be the commuted value of the remaining period certain
payments. It will be based on the then current dollar amount of one payment.
We will use the same interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
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
-16-
<PAGE>
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, the adjusted age of
the annuitant and any joint annuitant and the amount applied. The ages shall be
adjusted using the same table illustrated in the answer describing the
determination of a fixed annuity amount. 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 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.
The value of an annuity unit for a sub-account is determined each month as of
the first day of the month. The value is equal to the annuity unit value for
that sub-account as of the first day of the preceding month multiplied by the
product of: (a) .996338; and (b) a sub-account investment factor. This
investment factor is the accumulation unit value for that sub-account on the
valuation date next following the fourteenth day of the preceding month divided
by the accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that on the first day of
the next month.
The dollar amount determined for each sub-account will be aggregated for
purposes of making payment.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
The dollar amount of a fixed annuity payment is determined by applying the
available value, after deduction of any premium taxes
-17-
<PAGE>
not previously deducted, and deduction of a one-time contract fee of $200, to
the tables shown below. They show the dollar amount of each payment that can be
provided with each $1,000 of available value. Amounts shown here are based on
the Progressive Annuity Table with interest at the rate of 3% per annum,
assuming births in the year 1900, and with an age setback of six years. The
amount of each payment depends upon the adjusted age of the annuitant and any
joint annuitant. The adjusted age is determined from the actual age nearest
birthday at the time the first payment is due in the following manner:
CALENDAR YEAR ADJUSTED AGE IS
OF BIRTH IS EQUAL TO--
------------- ---------------
1900 - 1919 Actual Age
1920 - 1939 Age Minus 1
1940 - 1959 Age Minus 2
1960 - 1979 Age Minus 3
1980 and Later Age Minus 4
GUARANTEED MINIMUM DOLLAR AMOUNT OF FIXED MONTHLY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 OF VALUE APPLIED
ADJUSTED AGE
OF ANNUITANT SINGLE LIFE ANNUITIES
- ------------ ---------------------------------------------------------------
OPTION 1 OPTION 2A OPTION 2B OPTION 2C
-------- --------- --------- ---------
50 $3.99 $3.97 $3.94 $3.89
51 4.05 4.03 4.00 3.95
52 4.13 4.10 4.06 4.00
53 4.20 4.17 4.13 4.06
54 4.28 4.25 4.20 4.12
55 4.37 4.33 4.27 4.18
56 4.46 4.41 4.35 4.25
57 4.55 4.50 4.42 4.31
58 4.65 4.59 4.51 4.38
59 4.76 4.69 4.59 4.44
60 4.87 4.79 4.68 4.51
61 4.99 4.90 4.77 4.58
52 5.12 5.01 4.86 4.65
63 5.26 5.13 4.96 4.72
64 5.40 5.25 5.06 4.79
65 5.56 5.39 5.16 4.85
66 5.72 5.52 5.27 4.92
67 5.90 5.67 5.37 4.99
68 6.09 5.82 5.48 5.05
69 6.29 5.97 5.59 5.11
-18-
<PAGE>
70 6.51 6.13 5.69 5.16
71 6.74 6.30 5.80 5.21
72 6.99 6.48 5.90 5.26
73 7.26 6.66 6.01 5.31
74 7.54 6.84 6.11 5.34
75 7.86 7.03 6.20 5.38
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY
ADJUSTED AGE OF
JOINT ANNUITANT* ADJUSTED AGE OF ANNUITANT*
- ---------------- ----------------------------------------------------------
55 60 62 65 67 70 75
---- ---- ---- ---- ---- ---- ----
54 $3.80 $3.93 $3.98 $4.04 $4.08 $4.13 $4.19
59 3.95 4.14 4.21 4.32 4.38 4.46 4.57
61 4.00 4.22 4.31 4.43 4.50 4.61 4.75
64 4.07 4.34 4.44 4.60 4.70 4.83 5.03
66 4.12 4.41 4.53 4.71 4.82 4.99 5.23
69 4.17 4.50 4.65 4.86 5.01 5.23 5.56
74 4.25 4.64 4.81 5.09 5.29 5.60 6.11
* Dollar amounts of the monthly payments for ages not shown in this table will
be calculated on the same basis as those shown and may be obtained from us
upon request.
OPTION 4 -- FIXED PERIOD ANNUITY
FIXED PERIOD DOLLAR AMOUNT FIXED PERIOD DOLLAR AMOUNT
(YEARS) OF PAYMENT (YEARS) OF PAYMENT
------------ ------------- ------------ -------------
5 $17.91 13 $7.71
6 15.14 14 7.26
7 13.16 15 6.87
8 11.68 16 6.53
9 10.53 17 6.23
10 9.61 18 5.96
11 8.86 19 5.73
12 8.24 20 5.51
WILL THESE TABLES ALWAYS BE USED FOR ANNUITY PURCHASES?
Not necessarily. If, when annuity payments are elected, we are using tables of
annuity purchase rates for this class of contract which would result in larger
annuity payments, we will use those tables instead.
ONCE ANNUITY PAYMENTS BEGIN, MAY A FIXED ANNUITY OPTION BE CHANGED?
No.
-19-
<PAGE>
ONCE ANNUITY PAYMENTS BEGIN, MAY A VARIABLE ANNUITY OPTION BE CHANGED?
No.
MAY AMOUNTS BE TRANSFERRED DURING THE ANNUITY PERIOD?
Yes. 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
maximum amount which may be applied for a fixed annuity is $1,000,000.
HOW DOES AN ANNUITANT CHANGE SUB-ACCOUNT ELECTIONS OR TRANSFER AMOUNTS TO A
FIXED ANNUITY?
The change must be made by written request. The annuitant and joint annuitant,
if any, must make such an election.
HOW WILL A TRANSFER OF VARIABLE ANNUITY SUB-ACCOUNTS BE MADE?
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 a new sub-account. The annuity payment option will
stay the same.
When you tell us to make such a transfer it will be effective for future annuity
payments. Your transfer will be effective and funds will be actually
transferred in the middle of the month prior to the next annuity payment
affected by your request. We will use the described valuation procedures and
the adjusted current age of the annuitant and any joint annuitant to determine
an initial variable annuity payment.
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.
-20-
<PAGE>
ARE THERE ANY RESTRICTIONS ON ANNUITY SUB-ACCOUNT TRANSFERS?
Yes. The transfer of an annuity reserve amount from any sub-account must be at
least equal to: (a) $5,000; or (b) 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. Your 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.
MAY AMOUNTS HELD AS RESERVES TO PAY A VARIABLE ANNUITY BE TRANSFERRED TO A FIXED
ANNUITY?
Yes. However, the restrictions which apply to annuity sub-account transfers
will apply here as well.
When you tell us to make such a transfer it will be effective for future annuity
payments. Your transfer will be effective and funds will be actually
transferred in the middle of the month prior to the next annuity payment. We
will use the described fixed annuity pricing at the time of transfer to
determine an initial fixed annuity payment, including the deduction of a
one-time contract fee of $200 and using the adjusted current age of the
annuitant and any joint annuitant.
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 payment option will remain the same.
MAY AMOUNTS PAID AS A FIXED ANNUITY BE TRANSFERRED TO A VARIABLE ANNUITY?
No.
-21-
<PAGE>
AMOUNT PAYABLE AT DEATH
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, we will pay the accumulation
value of the contract to the named beneficiary. If the owner of this contract
is other than a natural person, such as a trust or other similar entity, we will
pay a death benefit of the accumulation value to the named beneficiary on the
death of the annuitant, if it occurs prior to the date that annuity payments
have started.
The accumulation value will be determined as of the valuation date coincident
with or next following the day we receive due proof of death at our home office.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. This contract has a guaranteed death benefit if you die before annuity
payments have started. The death benefit shall be equal to the greater of: (a)
the amount of the accumulation value payable at death; or (b) the amount of the
total purchase payments paid to us as consideration for this contract, less all
contract withdrawals.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries. The
beneficiary will be the person or persons named in the application for this
contract unless you subsequently change the beneficiary. In that event, we will
pay the amount payable at death to the beneficiary named in your last change of
beneficiary request as provided in this contract.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been
-22-
<PAGE>
requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN MUST DEATH BENEFITS BE PAID?
If you die on or before the date on which annuity payments begin and if the
designated beneficiary is a person other than your spouse, that beneficiary may
elect an annuity option measured by a period not longer than that beneficiary's
life expectancy. Annuity payments must begin not later than one year after your
death. If there is no designated beneficiary, then the entire interest in this
contract must be distributed within five years after your 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 there are joint owners of this contract, the death benefit described will not
be payable until the death of the surviving joint owner.
If any portion of the contract interest is payable to your designated
beneficiary who is your surviving spouse, that spouse shall be treated as the
contract owner for purposes of: (a) when payments must begin; and (b) the time
of distribution in the event of your spouse's death.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE?
Before annuity payments have begun, if a beneficiary dies, that beneficiary's
interest in this contract ends with that beneficiary's death. Only those
beneficiaries who survive will be eligible to share in a death benefit. If no
beneficiary survives you prior to the date an annuity begins we will pay the
accumulation value of this contract to the executors or administrators of your
estate.
After annuity payments have begun, if there is no beneficiary after the death of
the annuitant, any remaining value under the annuity option will be paid to the
annuitant's estate.
-23-
<PAGE>
CAN YOU CHANGE THE BENEFICIARY?
Yes. You can file a written request with us to change the beneficiary.
Your written request will not be effective until it is recorded in our home
office records. After it has been recorded, it will take effect as of the date
you signed the request. However, if the annuitant dies before the request has
been recorded, the request will not be effective as to those death proceeds we
have paid before the request was recorded in our home office records.
ADDITIONAL INFORMATION
CAN YOU ASSIGN THIS CONTRACT?
Unless this contract provides otherwise, you may assign all rights to this
contract 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
payable to an assignee will be paid 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.
If this contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Section 401, 403, 404, 408 or
457 of the Internal Revenue Code, then, it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
ARE THE CONTRACT BENEFITS PROTECTED?
Yes. To the extent permitted by law, no benefit provided by this contract will
be subject to any creditor's claim or process of law.
HOW WILL BENEFITS BE DETERMINED?
Any paid-up benefit, withdrawal benefit, surrender benefit, or any other benefit
described by this contract shall be
-24-
<PAGE>
calculated as of the date the provisions of the contract are exercised.
WILL THERE BE AN ADJUSTMENT IF A PERSON'S AGE IS MISSTATED?
Yes. If a person's age has been misstated, the amount payable under this
contract as an annuity will be that amount which would have been paid based upon
that person's correct age. In the case of an overpayment, we may either deduct
the required amount from that person's payments under this contract; or, we may
require you to pay us in cash; or we may do both until we are fully repaid. In
the case of an underpayment, we will pay the required amount with the next
payment.
MUST YOU PROVIDE ADDITIONAL INFORMATION?
Yes. You must provide any other information we need to administer this
contract. If you cannot do so, we may ask the person concerned for that
information. We shall not be liable for any payment based upon information
given to us in error or not given to us.
DO CONTRACT VALUES COMPLY WITH STATE REQUIREMENTS?
Yes. Amounts payable at death, withdrawal and surrender benefits, accumulation
values and the paid-up annuity benefit described by this contract are not less
than the minimum benefits required by any statue of the state in which this
contract is delivered.
WHAT ANNUITY RESERVES WILL WE HOLD UNDER THIS CONTRACT?
Reserves held by us for annuity payments under this contract shall not be less
than those reserves required by the law in the state in which this contract is
delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This 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 this contract unless the modification is made to comply with a
law or government regulation. Such modification will be in writing. You will
have the right to accept or reject such a modification.
-25-
<PAGE>
DO WE OWN THE SEPARATE ACCOUNT?
Yes. We have exclusive and absolute ownership of the assets of the separate
account.
WHEN WILL LUMP SUM PAYMENTS BE MADE?
Usually, we will make payment within seven days after payment is called for by
the terms of the contract. We reserve the right to defer payment for any period
during which the New York Stock Exchange is closed for trading (except for
normal holiday closing) or when the Securities and Exchange Commission has
determined that a state of emergency exists which may make such determination
and payment impractical.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account accumulation or annuity units under this
contract you may direct us with respect to the voting rights of fund shares held
by us and attributable to this contract where shareholder approval is required
by law.
FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
FIXED OR VARIABLE ANNUITY BENEFITS
A PARTICIPATING CONTRACT
MINNESOTA MUTUAL
-26-
<PAGE>
MINNESOTA MUTUAL LIFE QUALIFIED PLAN AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies certain contract provisions. It is used in connection
with a tax-qualified plan under Section 401(a) of the Internal Revenue Code,
("Code") as amended.
WHEN MUST AN ANNUITY BEGIN?
The interest of an Annuitant must be distributed or annuity payments commence
not later than April 1 following the calendar year in which the later of the
following occurs: (a) he attains the age of 70 1/2 years; or (b) retires. For
persons who were or are 5% owners, distributions must take place or commence as
described in (a) above.
WHAT ANNUITY FORMS ARE AVAILABLE?
All of the options provided by this contract are available. However, under
Options 2 and 4 the period certain may not extend beyond the life expectancy of
the annuitant.
WHEN MUST DEATH BENEFITS BE PAID?
If you die before annuity payments have begun, certain rules apply. Your entire
contract interest must be distributed no later than 5 years after your death.
This rule of distribution will not apply if an election is made as described in
(a) or (b) below:
(a) If any portion of your interest is payable to a designated
beneficiary, payments must begin no later than one year after your
death. They may be paid over the life or life expectancy of the
designated beneficiary. Payments must be made in substantially
equal installments.
(b) If any portion of your contract interest is payable to a designated
beneficiary who is your surviving spouse, 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. Payments must be made in substantially equal
installments.
MAY TAX PENALTIES APPLY TO A SURRENDER?
Yes. If there is a withdrawal or surrender prior to the Annuitant's age 59 1/2,
the Annuitant may be subject to tax penalties under the Code. These penalties
may not apply if: (a) the Annuitant is disabled as defined by the Internal
Revenue Code; or (b) the amount received by the Annuitant is the form of an
annuity extending over a period of at least 60 months.
Minnesota Mutual will not be liable for any tax penalties on amounts received or
paid by Minnesota Mutual under this contract.
84-9094 Qualified Plan Agreement
<PAGE>
This agreement is effective as of the original contract date of this contract
unless a different effective date is shown here.
/s/ Robert J. Hasling /s/ Coleman Bloomfield
Secretary President
84-9094 Qualified Plan Agreement 2
<PAGE>
MINNESOTA MUTUAL INDIVIDUAL RETIREMENT ANNUITY
(IRA) AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies the contract. Provisions are changed before issue. In
the event of a conflict between the provisions of this agreement and the
contract to which it is attached, the provisions of this agreement will control.
These changes will allow its use: (a) with a Simplified Employee Pension
(herein "SEP"); and/or (b) as an Individual Retirement Annuity under the
Employee Retirement Income Security Act of 1974, as amended (herein "IRA"), or
(c) with a Savings Incentive Match Plan for Employees (herein SIMPLE-IRA).
PURCHASE PAYMENTS
ARE IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has an IRA, purchase payments may be limited. An
annual cash purchase payment may not exceed the lesser of: (a) the amount of
compensation includible in gross income in any taxable year; or (b) $2,000, or
such other maximum amount as may be allowed by law.
Where an annuitant establishes an IRA along with a nonemployed spouse, purchase
payments may be limited. They are also limited if the annuitant is the
nonemployed spouse. The cash purchase payments for both annuities and accounts
must then be considered together. They may not exceed the lesser of: (a) the
amount of compensation includible in the working spouse's compensation
includible in gross income in any taxable year; or (b) $4,000, or such other
maximum amount as may be allowed by law. In no event may an annuitant's annual
purchase payment exceed the cash amount of: (a) $2,000; or (b) the maximum
annual contribution allowed for an IRA.
ARE SIMPLE-IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant's employer establishes a SIMPLE-IRA, purchase payments
may be limited. The annual cash purchase payment must be the lesser of: (a) an
amount equal to 100% of the compensation included in gross income in any taxable
year; or (b) $6,000, or such other maximum amount as may be allowed by law.
Mandated employer purchase payments, in addition to your purchase payments, can
range from 0% to 3% or your annual compensation.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER?
No. Limits on purchase payments to the contract do not apply with a rollover
contribution. A rollover contribution is one within the meaning of sections
408(d)(3), 402(c), 403(a)(4) or 403(b)(8) of the Internal Revenue Code
(herein "Code") or a purchase payment made in accordance with the terms of a
SEP as described in Section 408(k) of the Code. In that case, a cash
purchase payment may be the amount received by or on behalf of an annuitant
as all or any portion of a distribution which is a rollover contribution.
The distribution may be one from an individual retirement account, annuity or
bond plan; or an eligible rollover distribution from a tax-exempt employee's
trust, a qualified employee annuity plan or such other plan as may be allowed
by law. A rollover contribution must be received by us not later than 60
days after the annuitant receives it. A direct rollover payment may be made
to us from the plan making the distribution. A purchase payment may not
include contributions to a tax-qualified plan made by the annuitant as an
employee.
MAY THE ANNUITANT ALWAYS MAKE PURCHASE PAYMENTS?
No. We will not accept purchase payments under this contract as of a date the
annuitant is not eligible for an IRA, SEP, or SIMPLE-IRA.
In addition, no additional cash contributions or rollover contributions may be
accepted under the contract if: (a) the owner dies before the distribution of
the entire interest in the contract; and (b) the beneficiary is not the
surviving spouse.
Purchase payments which exceed those allowed for an IRA may be returned. We
will send them to the annuitant. Return is without regard to the provisions of
this contract dealing with withdrawals. Excess purchase payments to a SEP or
SIMPLE-IRA may similarly be returned. We will send them to the payer.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS?
Yes. The distribution of an annuitant's value shall be made in accordance with
the minimum distribution requirements of section 408(b)(3) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed regulations. All of these rules are
incorporated herein by reference.
The annuitant's accumulation value, or withdrawal value if applicable, must be
distributed or begin to be distributed, by the annuitant's required beginning
date. This is the April 1 following the calendar year in which the annuitant
reaches age 70 1/2. For each succeeding year, a distribution must be made on or
before December 31.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE?
By the required beginning date the annuitant may elect to have the accumulation
value, or withdrawal value if
83-9058 Rev. 3-1997
<PAGE>
applicable, distributed. It must be in one of the following forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the annuitant;
(c) equal or substantially equal payments over the joint lives of the
annuitant and spouse;
(d) equal or substantially equal payments over a specified period that may
not be longer than the annuitant's life expectancy;
(e) equal or substantially equal payments over a specified period that may
not be longer than the joint life and last survivor expectancy of the
annuitant and spouse.
Options (b), (c), (d), and (e) can be satisfied by an annuity form elected by
the annuitant or by systematic withdrawal.
Payments must be made in periodic payments at intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may increase
only as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations or such final regulations as adopted.
ARE THERE SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ENTIRE VALUE IN THE
CONTRACT IS DISTRIBUTED?
Yes. If the annuitant dies on or after the date distributions have begun, the
entire remaining value must be distributed at least as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If
the annuitant dies before distributions have begun, the entire remaining value
must be distributed as elected by the annuitant or, if the annuitant has not so
elected, as elected by the beneficiary or beneficiaries, as follows:
(a) by December 31st of the year containing the fifth anniversary of the
annuitant's death; or
(b) in equal or substantially equal payments over the life or life
expectancy of the designated beneficiary or beneficiaries starting by
December 31st of the year following the year of the annuitant's death.
If, however, the beneficiary is the annuitant's surviving spouse, then
this distribution is not required to begin until later. It must begin
by December 31st of the year in which the annuitant would have turned
70 1/2.
ARE OTHER OPTIONS AVAILABLE TO A SPOUSE BENEFICIARY?
Yes. In addition to the options discussed above, the spouse beneficiary has
other options. He or she may elect to treat the annuitant's IRA as his or her
own. This is done by either: (a) not taking a distribution within the required
time period; or (b) making eligible IRA contributions to it.
If the beneficiary chooses one of these options then he or she is the contract
owner. He or she will assume all rights and privileges under the contract.
This right is available only to the spouse of the annuitant.
HOW ARE LIFE EXPECTANCIES FOR CALCULATING REQUIRED DISTRIBUTIONS DETERMINED?
Life expectancy is computed by use of the expected return multiples in Table V
and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the annuitant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the annuitant
dies before distributions have commenced, life expectancies of an annuitant
or spouse beneficiary shall be recalculated annually for purposes of required
distributions. An election not to recalculate shall be irrevocable and shall
apply to all subsequent years. The life expectancy of a nonspouse
beneficiary shall not be recalculated.
MAY THE ANNUITANT SATISFY MINIMUM DISTRIBUTION REQUIREMENTS BY RECEIVING A
DISTRIBUTION FROM ANOTHER IRA?
Yes. An annuitant may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or more
IRAs may use the "alternative method" described in Notice 88-38, to satisfy the
minimum distribution requirements described above.
WITHDRAWAL BENEFITS
ARE THERE LIMITS ON WITHDRAWALS?
Yes. These limits apply to a partial withdrawal or a surrender of the contract
before the annuitant's age 59 1/2. In that case, we must receive notice of the
intended disposition of the proceeds. This will not apply if the annuitant dies
or is disabled.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if: (1) the annuitant becomes disabled as defined by
the Code; (2) the amount received is in excess of the allowed deduction and
returned to the annuitant before the required tax return filing date for that
year, together with any earned
2 Minnesota Mutual
<PAGE>
interest; or (3) if the entire amount in the contract is received and reinvested
in a similar plan entitled to similar tax treatment. Additional exceptions to
tax penalties may be available to the annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract. Any
transaction treated by law as a contract distribution may be treated by us as a
complete contract surrender.
GENERAL INFORMATION
IS THE INTEREST OF THE ANNUITANT IN THIS CONTRACT NONFORFEITABLE?
Yes. The entire interest of the annuitant in this contract is nonforfeitable.
The annuitant shall possess the entire benefit provided by this contract. This
contract is established for the exclusive benefit of the annuitant and his or
her beneficiaries.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, must be added to the accumulation value or applied to
increase annuity payments.
HOW WILL A REFUND OF PREMIUMS BE APPLIED?
Any refund of premiums (other than those attributable to excess purchase
payments) will be applied, before the close of the calendar year following the
year of the refund, toward the payment of future premiums or the purchase of
additional benefits.
MAY THIS AGREEMENT BE AMENDED?
Yes. This contract may be amended as required to reflect any change in the
Code, regulations or published revenue rulings. The annuitant will be deemed to
have consented to any such amendment. We will promptly furnish any such
amendment to the annuitant.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
/s/ Dennis E. Prohofsky
Secretary
/s/ Robert L. Senkler
President
Minnesota Mutual 3
<PAGE>
MINNESOTA MUTUAL LIFE ANNUITY PAYMENT ENDORSEMENT
The Minnesota Mutual Life Insurance Company certifies that the Annuitant named
in the Schedule below is entitled to the Annuity Payments described in this
schedule. Payments are to commence on the Annuity Commencement Date. The
effective date of this endorsement shall be the Annuity Commencement Date.
ANNUITY PAYMENTS SCHEDULE
ANNUITANT_______________________________________________________________________
ANNUITANT'S DATE OF BIRTH_______________________________________________________
ANNUITY COMMENCEMENT DATE_______________________________________________________
FORM OF ANNUITY PAYMENT_________________________________________________________
FIXED ANNUITY PAYMENT $_________________________________________________________
NUMBER OF VARIABLE ANNUITY UNITS________________________________________________
NUMBER OF VARIABLE ANNUITY UNITS________________________________________________
INITIAL VARIABLE ANNUITY PAYMENT $______________________________________________
JOINT ANNUITANT_________________________________________________________________
JOINT ANNUITANT'S DATE OF BIRTH_________________________________________________
ANNUITANT'S BENEFICIARY_________________________________________________________
/s/ Robert J. Hasling /s/ Coleman Bloomfield
Secretary Registrar President
83-9060
<PAGE>
MINNESOTA MUTUAL TAX SHELTERED ANNUITY LOAN AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
Before we issued your contract, we made the following changes. They modify the
contract and are considered to be a part of it.
These changes will allow contract loans when the contract is used as a tax
sheltered annuity. A tax sheltered annuity ("TSA") is one described under
Section 403(b) of the Internal Revenue Code, as amended.
DEFINITIONS
GENERAL ACCOUNT
All assets of ours other than those in the separate accounts established by us.
ACCUMULATION VALUE
The sum of your values under this contract in the separate account and in the
general account. It is composed of your interest in the general account, which
exists only during the period that a TSA loan is outstanding, and your interest
in one or more sub-accounts of the separate account, excluding variable annuity
payment amounts. Your interest in each sub-account and the general account
shall be valued separately. The total of those values will be your accumulation
value.
TSA LOAN ACCOUNT
A portion of our general account, created for accounting purposes only, to which
contract amounts are transferred as security for an outstanding loan under a
tax-sheltered annuity contract.
CONTRACT LOANS
CAN YOU BORROW MONEY ON YOUR CONTRACT?
Yes. You may borrow up to the maximum loan amount determined as of the date we
receive your request for a loan. We will require your written request for a
contract loan. We will send you a loan application and agreement for your
signature. We will charge interest on the loan in arrears. The contract will
be the only security required for your loan.
ARE THERE LIMITATIONS ON THE AMOUNT WHICH MAY BE BORROWED?
Yes. There is both a minimum loan amount and a maximum loan amount.
WHAT IS THE MINIMUM LOAN AMOUNT?
The minimum loan amount is $2,500.
WHAT IS THE MAXIMUM LOAN AMOUNT?
The maximum loan amount is the lesser of: a) $50,000; or b) one-half of your
contract's accumulation value or, if greater, your accumulation value up to
94-9309
<PAGE>
the amount of $10,000, less 7% and less the amount of interest that would be
charged during the first quarter that such a loan would be outstanding.
WHAT ARE THE CONDITIONS OF THE LOAN REPAYMENT?
You must execute a loan agreement. The loan agreement will call for the
repayment of the loan over a period of five years or less. Repayment must be
made in substantially equal payments. The loan repayment schedule will require
the level amortization of the loan over the repayment period. Early repayment
may be made without penalty. You may repay the balance of the loan at any time.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
contract. Treatment of a loan as a distribution will result in taxable income.
In addition, depending upon your circumstances, it may result in income
taxation, tax penalties and disqualification of the contract as a tax-sheltered
annuity.
If there is a distribution, your surrender value will be reduced. The surrender
value will be reduced by the amount of the distribution, plus any applicable
deferred sales charges on that amount.
We will not be liable for any taxes or tax penalties on amounts received or paid
by us under the contract.
HOW ARE LOAN AMOUNTS SHOWN IN THE CONTRACT?
At the time that you make application for a loan, the amount requested as a loan
plus the interest that will be charged during the first quarter that the loan is
outstanding, plus an amount equal to 7% of the amount requested, will be
transferred from your separate account accumulation value into the general
account on the date your application is approved. The TSA Loan Account will
then be the source of the loan and the succeeding loan transactions.
ARE THERE ANY OTHER CONDITIONS?
Yes. You must indicate the separate account sub-accounts that will be
transferred to the TSA Loan Account. Unless instructed by you, transfers of
amounts to the TSA Loan Account will be made from amounts in each sub-account of
the separate account in the same proportion that the value of an amount in any
sub-account bears to your total accumulation value prior to the loan.
WHAT INTEREST RATE DO YOU HAVE TO PAY?
The loan interest rate will be set quarterly on the first day of each calendar
quarter. It will apply to the loan balance in that calendar quarter. This rate
will not exceed the greater of the "published monthly average" for the calendar
month ending two months before the beginning of the calendar quarter, or the
composite interest rate in effect on the contract plus 1%.
The "published monthly average" means the Moody's Composite Average of Yields on
Bonds as published by the Moody's Investors Service.
DOES THE CONTRACT CREDIT INTEREST ON THE GENERAL ACCOUNT?
Yes. This contract credits interest on the general account accumulation value
of this contract. Interest is credited at a rate of at least 3% per year,
compounded annually. We guarantee this rate for the life of the contract.
<PAGE>
MAY ADDITIONAL INTEREST BE CREDITED ON THE GENERAL ACCOUNT?
Yes. As conditions permit, we will credit additional amounts of interest to the
general account accumulation value.
HOW ARE TSA LOAN REPAYMENTS ALLOCATED?
As TSA loan amounts are repaid, those amounts are used to reduce the loan. When
the loan is repaid in full through early repayment or the completion of the loan
payments over the scheduled payment period, then the TSA Loan Account balance is
transferred to the Money Market Sub-Account of the separate account and TSA Loan
Account in the general account terminates. You may reallocate amounts among the
sub-accounts of the separate account by exercising your contract rights of
transfer.
Should you make application for a TSA contract loan and not complete the
necessary loan repayment forms, then after a period of sixty days the amount
transferred to the TSA Loan Account in the general account to secure the loan
will be transferred to the Money Market Sub-Account of the separate account.
The TSA Loan Account in the general account will then terminate. You may
reallocate amounts among the sub-accounts of the separate account by exercising
your contract rights of transfer.
WHAT HAPPENS IF YOU DO NOT REPAY YOUR LOAN?
Your contract will remain in force so long as there is a surrender value. If
there is a loan equal to the surrender value and if it is not repaid, a
distribution of the surrender value will cause the contract to terminate and may
disqualify the contract as a tax-sheltered annuity.
ARE THERE OTHER LIMITATIONS ON CONTRACT LOANS?
Yes. Those additional limitations are:
a) Only one loan may be outstanding at any time.
b) A period of at least three months is required between the repayment of a
loan and the application for a new loan.
c) If there is an outstanding loan on the contract, then any withdrawals will
be limited to the separate account accumulation values less any deferred
sales charges.
d) A loan is not available if annuity payments have begun.
e) The TSA Loan Account portion of your contract in the general account may
not be transferred to the separate account when the loan is outstanding,
provided, however, that a single transfer from the TSA Loan Account to the
separate account will be allowed each calendar year. The amount remaining
in the TSA Loan Account must be equal to the amount of the loan outstanding
plus 7% of that amount plus the amount of interest that would be charged
during the next calendar quarter on such loan.
MAY THE CONTRACT BE SURRENDERED WHILE THERE IS A LOAN?
Yes. If there is a loan and the contract is surrendered, the loan is due. If
it is not repaid prior to the surrender, the payment on surrender will be the
surrender value less the current loan balance. In addition, depending upon your
circumstances, such a surrender may result in income taxation, tax penalties and
disqualification of the contract as a tax-sheltered annuity.
<PAGE>
MAY THIS AGREEMENT BE AMENDED?
Yes. This agreement may be amended. It may be amended only to reflect any
change in the Internal Revenue Code, regulations or published revenue rulings.
You will be deemed to have consented to such an amendment. We will promptly
furnish you with any such amendment.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
/s/ Robert J. Hasling /s/ Coleman Bloomfield
Secretary Registrar President
<PAGE>
<TABLE>
<S><C>
MINNESOTA MUTUAL VARIABLE ANNUITY APPLICATION
The Minnesota Mutual Life Insurance Company - Annuity Services
400 Robert Street North - St. Paul, Minnesota 55101-2098 - Toll Free 1-800-362-3141
- ---------------------------------------------------------------------------------------
OWNER (PLEASE PRINT)
- ---------------------------------------------------------------------------------------
NAME
- ---------------------------------------------------------------------------------------
ADDRESS
- ---------------------------------------------------------------------------------------
CITY, STATE, ZIP
- ---------------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER I.D.(Soc Sec # or EIN)
/ /M / /F
- ---------------------------------------------------------------------------------------
ANNUITANT (IF OTHER THAN OWNER)
- ---------------------------------------------------------------------------------------
NAME
- ---------------------------------------------------------------------------------------
ADDRESS
- ---------------------------------------------------------------------------------------
CITY, STATE, ZIP
- ---------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F
- ---------------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER)
- ---------------------------------------------------------------------------------------
NAME
- ---------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F
- ---------------------------------------------------------------------------------------
JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
- ---------------------------------------------------------------------------------------
NAME
- ---------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F
- ---------------------------------------------------------------------------------------
BENEFICIARY
- ---------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F
- ---------------------------------------------------------------------------------------
/ /M / /F
- ---------------------------------------------------------------------------------------
EMPLOYER (IF OTHER THAN OWNER)
- ---------------------------------------------------------------------------------------
NAME ADDRESS CITY, STATE, ZIP
- ---------------------------------------------------------------------------------------
TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX - SEE REVERSE FOR ADDITIONAL INSTRUCTIONS)
- ---------------------------------------------------------------------------------------
/ / Non-Qualified
/ / Under the ____________(State) Uniform Transfers to Minor Act
/ / Individual Retirement Annuity (IRA) for tax year ____________
/ / IRA Rollover
/ / IRA Transfer from existing IRA
/ / Simplified Employee Pension (SEP)
/ / Salary Reduction Simplified Employee Pension (SARSEP)
/ / Tax Sheltered Annuity (IRC Section 403(b))
Annual Earned Income $ _____________
/ / Qualified Retirement Plan (IRC Section 401)
/ / Public Employee Deferred Compensation (IRC Section 457)
/ / Non-Qualified Deferred Compensation
- ---------------------------------------------------------------------------------------
TYPE OF CONTRACT AND AMOUNT OF PAYMENT
- ---------------------------------------------------------------------------------------
/ / MultiOption SELECT Flexible Payment Deferred Variable Annuity
of $ _____________ per ______________ or, $ ___________ as a single payment.
/ / MultiOption Flexible Payment Deferred Variable Annuity
of $ _____________ per ______________ or, $ ___________ as a single payment.
/ / MultiOption Single Payment Deferred Variable Annuity
of $ _____________________ - $5,000 minimum.
- ---------------------------------------------------------------------------------------
PAYMENT METHOD
- ---------------------------------------------------------------------------------------
/ / APP (Automatic Payment Plan)
Commencing on Month ___________ Day ______________
/ / Bill employer commencing on Month __________ and continuing
/ / Annually (1) / / Semi-Annually (2) / / Quarterly (4)
/ / Monthly (12) / / Semi-Monthly (24) / / Bi-Weekly (26)
/ / Individual Billing. Commencing on the 1st day of
(month) _________________ and continuing
/ / Quarterly / / Semi-Annually / / Annually
- ---------------------------------------------------------------------------------------
PURCHASE PAYMENT ACCOUNT ALLOCATION
- ---------------------------------------------------------------------------------------
_____ % General-not available _____ % Bond
for MultiOption SELECT _____ % Money Market
_____ % Maturing Government _____ % Asset Allocation
Bond-1998 _____ % Mortgage Securities
_____ % Maturing Government _____ % Index 500
Bond-2002 _____ % Capital Appreciation
_____ % Maturing Government _____ % International Stock
Bond-2006 _____ % Small Company
_____ % Maturing Government _____ % Value Stock
Bond-2010
_____ % Growth
- ---------------------------------------------------------------------------------------
REPLACEMENT
- ---------------------------------------------------------------------------------------
Will this contract applied for replace or change an existing insurance or
annuity contract?
/ / Yes* / / No
*If yes, please provide your contract number and the name of the insurance company
under Special Instructions.
- ---------------------------------------------------------------------------------------
The Prospectuses for the Variable Annuity Account and the Fund each refer to a
Statement of Additional Information. Would you like us to send you a copy?
/ / Yes / / No
- ---------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS OR REMARKS
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
OWNER/ANNUITANT SIGNATURES
- ---------------------------------------------------------------------------------------
I represent that the statements and answers in this application are full,
complete and true to the best of my knowledge. I agree that they are to be
considered the basis of any contract issued to me. I ACKNOWLEDGE RECEIPT OF
A CURRENT VARIABLE ANNUITY ACCOUNT PROSPECTUS AND A CURRENT PROSPECTUS FOR
THE MIMLIC SERIES FUND, INC. I UNDERSTAND THAT ALL PAYMENTS AND VALUES OF
ANY CONTRACT ISSUED, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
- ---------------------------------------------------------------------------------------
SIGNED AT (City, State) DATE AMOUNT REMITTED WITH APPLICATION
- ---------------------------------------------------------------------------------------
SIGNATURE OF OWNER
X
- ---------------------------------------------------------------------------------------
SIGNATURE OF ANNUITANT (if other than owner)
X
- ---------------------------------------------------------------------------------------
SIGNATURE OF JOINT OWNER
X
- ---------------------------------------------------------------------------------------
SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X
- ---------------------------------------------------------------------------------------
TO BE COMPLETED BY AGENT
- ---------------------------------------------------------------------------------------
To the best of my knowledge this contract / /will / /will not replace or change an
existing insurance or annuity contract. I certify that a current prospectus was
delivered. No written sales materials were used other than those furnished by the
Home Office.
- ---------------------------------------------------------------------------------------
REPRESENTATIVE NAME (PRINT) REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE
X %
- ---------------------------------------------------------------------------------------
X %
- ---------------------------------------------------------------------------------------
TO BE COMPLETED BY DEALER
- ---------------------------------------------------------------------------------------
DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
- ---------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY MIMLIC SALES CORPORATION
- ---------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ---------------------------------------------------------------------------------------
</TABLE>
84-9093 Rev. 2-94
<PAGE>
IMPORTANT INSTRUCTIONS
1. ATTACH NEW ACCOUNT INFORMATION, F. 38487
2. COMPLETE ALL ITEMS ON THE APPLICATION
3. IF YOU ARE REQUESTING: PLEASE SUBMIT:
- TSA contract - TSA Withdrawal Disclosure F. 38754
- Salary Modification Agreement F. 23251
- Calculation worksheet if the
contribution is to exceed the maximum
exclusion allowance
- Qualified Retirement Plan - Employee Benefit Plan Statement F. 23273
- SEP contract - Completed IRS form 5305-SEP or
5305A-SEP or
- Prototype Request and Document
Services Agreement and service fee
- Immediate Annuity contract - Variable Annuity Service Request F. 35264
(Includes W-4P. If Deferred
Compensation, submit W-4)
- Proof of age for annuitant(s) if a
life option is selected (Copy of
driver's license or birth certificate)
- Automatic Payment Plan (APP) - APP Authorization F. 25744.2
- Voided Check
- Systematic Dollar Cost - Variable Annuity Service Request
Averaging F. 35264
- Systematic Withdrawal - Variable Annuity Service Request
F. 35264
- Replacement of another life - Appropriate replacement forms as
insurance or annuity contract required by the state of jurisdiction
- 1035 Exchange (non-qualified) - Agreement for Exchange F. 32059
- Original contract
- Transfer (Available for use - Transfer Authorization F. 28325
with transfers from TSA to TSA
or IRA/SEP to IRA/SEP only)
- Direct Rollover (Client - Request for Direct Rollover F. 45256
initiated distribution) (send to existing institution)
- MultiOption Annuity Exchange - Exchange Authorization F. 35079
If more than one beneficiary is specified, indicate the class of each. All
living Class 1 beneficiaries receive an equal share of the death proceeds.
If no Class 1 beneficiaries are living, all living Class 2 beneficiaries
receive an equal share and so on.
Class 1 beneficiaries are considered the primary beneficiaries.
Class 2 beneficiaries and so on, are considered the contingent beneficiaries.
<PAGE>
<TABLE>
<S><C>
MINNESOTA MUTUAL VARIABLE ANNUITY APPLICATION
(MultiOption Annuity)
The Minnesota Mutual Life Insurance Company - Annuity Services -
400 Robert Street North - St. Paul, Minnesota 55101-2098 - Toll Free 1-800-362-3141
- --------------------------------------------------------------------------------------------------------------------
OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
- --------------------------------------------------------------------------------------------------------------------
NAME NAME
- --------------------------------------------------------------------------------------------------------------------
ADDRESS ADDRESS
- --------------------------------------------------------------------------------------------------------------------
CITY, STATE, ZIP CITY, STATE, ZIP
- --------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
- --------------------------------------------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER) JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
- --------------------------------------------------------------------------------------------------------------------
NAME NAME
- --------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
- --------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- --------------------------------------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------------------------------------------
/ /M / /F
- --------------------------------------------------------------------------------------------------------------------
/ /M / /F
- --------------------------------------------------------------------------------------------------------------------
TYPE OF CONTRACT AND AMOUNT OF PAYMENT TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX)
- --------------------------------------------------------------------------------------------------------------------
/ / MultiOption SELECT Flexible Payment Deferred / / Non-Qualified $_____________
Variable Annuity of $________________ per / / Under the ______ (State) Uniform Transfers
__________________ or, $_______________ as a to Minor Act
single payment.
/ / MultiOption Flexible Payment Deferred Variable / / Individual Retirement Annuity (IRA)
Annuity of $_______________ per __________________ for tax year ________ $_______________
or, $______________ as a single payment. / / IRA Rollover $_______________
/ / MultiOption Single Payment Deferred Variable / / IRA Transfer from existing IRA $_______________
Annuity of $______________ - $5,000 minimum.
- --------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT ACCOUNT ALLOCATION REPLACEMENT
- --------------------------------------------------------------------------------------------------------------------
_____% General _____% Bond Will this contract applied for replace or change an
_____% Maturing Government _____% Money Market existing insurance or annuity contract?
Bond - 1998 _____% Asset Allocation
_____% Maturing Government _____% Mortgage Securities / / Yes* / / No
Bond - 2002 _____% Index 500
_____% Maturing Government _____% Capital Appreciation *If yes, please provide your contract number and the
Bond - 2006 _____% International Stock name of the insurance company under Special Instructions.
_____% Maturing Government _____% Small Company ---------------------------------------------------------
Bond - 2010 _____% Value Stock The Prospectuses for the Variable Annuity Account and the
_____% Growth Fund each refer to a Statement of Additional Information.
Would you like us to send you a copy? / /Yes / /No
- --------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS OR REMARKS
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
OWNER/ANNUITANT SIGNATURES
- --------------------------------------------------------------------------------------------------------------------
I represent that the statements and answers in this application are full, complete and true to the best of my
knowledge. I agree that they are to be considered the basis of any contract issued to me. I ACKNOWLEDGE RECEIPT OF
A CURRENT VARIABLE ANNUITY ACCOUNT PROSPECTUS AND CURRENT PROSPECTUS FOR THE MIMLIC SERIES FUND, INC. I UNDERSTAND
THAT ALL PAYMENTS AND VALUES OF ANY CONTRACT ISSUED, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
- --------------------------------------------------------------------------------------------------------------------
SIGNED AT (City, State) DATE AMOUNT REMITTED WITH APPLICATION
- --------------------------------------------------------------------------------------------------------------------
SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (if other than owner)
X X
- --------------------------------------------------------------------------------------------------------------------
SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X X
- --------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY REPRESENTATIVE
- --------------------------------------------------------------------------------------------------------------------
To the best of my knowledge this contract / / will / / will not replace or change an existing insurance or annuity
contract. I certify that a current prospectus was delivered. No written sales materials were used other than those
furnished by the Home Office.
- --------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME (PRINT) CASE NUMBER
- --------------------------------------------------------------------------------------------------------------------
SIGNATURE OF REGISTERED REPRESENTATIVE AGENCY SPONSOR CODE REPRESENTATIVE'S CODE
X
- --------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY DEALER
- --------------------------------------------------------------------------------------------------------------------
DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
- --------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY MIMLIC SALES CORPORATION
- --------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER
- --------------------------------------------------------------------------------------------------------------------
92-9286 Rev. 1-95
</TABLE>
<PAGE>
IMPORTANT INSTRUCTIONS
1. Attach New Account Information, F. 38487 (if applicable)
2. Complete all items on the application.
3. Only the owner's spouse can be the joint owner.
4. Only the annuitant's spouse can be the joint annuitant.
5. The owner and joint owner (if applicable) must sign the application.
6. Beneficiary information:
If more than one beneficiary is specified, indicate the class of each. All
living Class 1 beneficiaries receive an equal share of the death proceeds.
If no Class 1 beneficiaries are living, all living Class 2 beneficiaries
receive an equal share and so on.
Class 1 beneficiaries are considered the primary beneficiaries.
Class 2 beneficiaries and so on, are considered the contingent beneficiaries.
Remit all funds directly to the Home Office; NASD regulations do not permit the
commingling of these funds with agency/sponsor funds or any other funds.
Make checks payable to Minnesota Mutual Life.
<PAGE>
RE-INCORPORATION
OF
"THE BANKERS LIFE ASSOCIATION OF MINNESOTA"
and
Change of Name to
"THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY"
(as adopted on August 5, 1901)
"Resolved, that THE BANKERS LIFE ASSOCIATION OF MINNESOTA, hereby
authorizes and declares its Re-incorporation, and does hereby Re-incorporate
under and by virtue of Chapter One Hundred and Seventy-five (175), as amended,
of the General Laws of the State of Minnesota for the year Eighteen Hundred and
Ninety-five entitled 'An Act to Revise and Codify the Insurance Laws of the
State'; and to that end does hereby adopt the following Articles of
Incorporation, in lieu of, and as a substitute for, any and all Articles of
Incorporation, heretofore existing, viz:
ARTICLE I.
The future corporate name of this corporation is THE MINNESOTA MUTUAL
LIFE INSURANCE COMPANY.
ARTICLE II.
The location and Home Office of the Company is and shall be in the City of
Saint Paul, State of Minnesota.
ARTICLE III.
This Company is re-incorporated for the purpose of transacting and it
proposes, upon the Mutual Plan, to transact, the business of, and to make,
insurance upon the lives of individuals, and every insurance appertaining
thereto or connected therewith; to grant, purchase or dispose of annuities and
endowments of any kind whatsoever; and to take risks, and insure, against
accident to or sickness of persons.
It is proposed and intended that the duration and continuance of this
corporation and its corporate powers shall be perpetual, and that it shall have
perpetual succession.
<PAGE>
-2-
ARTICLE IV.
By-laws not in conflict herewith or with the law, may be adopted, and from
time to time amended, repealed or abrogated in whole or in part, by the Board of
Trustees.
ARTICLE V.
Except as herein otherwise expressly provided, all of the corporate powers
of the company shall be exercised and the amount of compensation of Officers and
Trustees shall be regulated by a Board of Trustees, and authority is vested in
the Board of Trustees to appoint, and delegate power and authority to, such
Officers, Servants and Agents as said Board shall by resolution or by-law
determine.
ARTICLE VI.
The Board of Trustees shall consist of at least five persons, and may
consist of a greater number, if the by-laws shall at any time so provide.
All of the members of the Board of Trustees shall be residents and citizens
of the State of Minnesota, until such time as the By-laws otherwise provide.
The names of the members of the present Board of Trustees are CHARLES H.
BIGELOW, MAURICE AUERBACH, JOHN B. SANBORN, CRAWFORD LIVINGSTON AND J.F.R. FOSS.
ARTICLE VII.
The first meeting of members hereafter shall be held at three o'clock in
the afternoon on the first Tuesday in March, A.D. Nineteen Hundred and Two at
the Home Office of the Company; provided, that a special meeting, or special
meetings of members may be held prior to said date upon due notice.
ARTICLE VIII.
The regular annual meeting of members shall be held at three o'clock in the
afternoon of the first Tuesday in March of each year, at the Home Office, for
the election of Trustees, whenever any are to be elected, and for the
transaction of such other business as may properly come before it.
<PAGE>
-3-
ARTICLE IX.
Article ten of these Articles relates solely to a Guaranty Trust Fund
heretofore created by the deposits of members who became such under the
assessment plan.
ARTICLE X.
All amounts pledged to this Company to secure payment of assessments
occasioned by death of its members shall be used only for that purpose, and
meanwhile the same shall be and remain invested in United States Registered
Bonds, and shall constitute and be known as "The Guaranty Trust Fund". Such
bonds shall be made payable to this company, and shall be transferable or
convertible only upon resolution of its Board of Trustees, and such board shall
have the exclusive charge and control thereof.
All interest realized from such bonds shall meanwhile be used to defray the
Company's operating expenses.
This article shall never be amended or in any way at all changed without
the consent of every member of this Company, to be given in writing, signed by
him and filed with the Company's Secretary, and reciting in full the proposed
amendment or change.
ARTICLE XI.
These Articles may be amended at any time to any extent, not in violation
of law, by resolution adopted by a two-thirds vote of all the votes cast by the
members at any special meeting lawfully called for that purpose, or by such
two-thirds vote at any regular meeting of the members."
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
As Amended by Resolution of the Board of
Trustees
July 22, 1994
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE I. MEMBERS
Section 1. Regular Annual Meetings . . . . . . . . . . . . . . . . . . 1
Section 2. Special Meetings. . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Number of Votes . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Presiding Officer and Recording
of Minutes . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II. BOARD OF TRUSTEES
Section 1. Composition of the Board of Trustees. . . . . . . . . . . . 3
(a) Number of Trustees. . . . . . . . . . . . . . . . . . . . . . 3
(b) Qualifications. . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Election. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Term of Office of Elected Trustee . . . . . . . . . . . . . . 4
(e) Appointment by the Board. . . . . . . . . . . . . . . . . . . 5
Section 2. Meetings of the Board . . . . . . . . . . . . . . . . . . . 5
(a) Place of Meetings . . . . . . . . . . . . . . . . . . . . . . 5
(b) Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . 5
(c) Special Meetings. . . . . . . . . . . . . . . . . . . . . . . 6
(d) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Action without Meeting . . . . . . . . . . . . . . . . . . . 7
Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4. Chair of the Board . . . . . . . . . . . . . . . . . . . . 8
Section 5. Compensation. . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III. COMMITTEES OF THE BOARD
Section 1. Standing and Other Committees
of the Board. . . . . . . . . . . . . . . . . . . . . . 9
(a) Creation of Committees. . . . . . . . . . . . . . . . . . . . 9
(b) Appointments. . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Qualifications. . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Committee Chairs. . . . . . . . . . . . . . . . . . . . . . .10
(e) Meetings . . . . . . . . . . . . . . . . . . . . . . . . . .10
(f) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(g) Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . .11
(h) Minutes and Reports . . . . . . . . . . . . . . . . . . . . .11
Section 2. Audit Committee . . . . . . . . . . . . . . . . . . . . . .11
Section 3. Corporate Governance and Public
Affairs Committee. . . . . . . . . . . . . . . . . . . .12
Section 4. Executive Committee . . . . . . . . . . . . . . . . . . . 14
Section 5. Investment Committee. . . . . . . . . . . . . . . . . . . .14
Section 6. Personnel and Compensation Committee . . . . . . . . . . .15
<PAGE>
ARTICLE IV. OFFICERS Page
----
Section 1. Number. . . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 2. Election . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 3. Term of Office. . . . . . . . . . . . . . . . . . . . . . .17
Section 4. Removal . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 5. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 6. Duties of Officers. . . . . . . . . . . . . . . . . . . . .18
(a) Chief Executive Officer . . . . . . . . . . . . . . . . . . .18
(b) President . . . . . . . . . . . . . . . . . . . . . . . . . .18
(c) Vice Presidents . . . . . . . . . . . . . . . . . . . . . . .19
(d) Secretary . . . . . . . . . . . . . . . . . . . . . . . . . .19
(e) Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . .20
(f) Controller . . . . . . . . . . . . . . . . . . . . . . . . .20
(g) Actuary . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(h) Other Officers. . . . . . . . . . . . . . . . . . . . . . . .20
Section 7. Absence or Disability . . . . . . . . . . . . . . . . . . .21
ARTICLE V. DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. Fund and Investments. . . . . . . . . . . . . . . . . . . .21
Section 2. Deposits. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI. INDEMNIFICATION
Section 1. Trustees and Officers . . . . . . . . . . . . . . . . . . .22
Section 2. Employees and Agents. . . . . . . . . . . . . . . . . . . .23
Section 3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 4. Other Indemnification Permitted . . . . . . . . . . . . . .24
ARTICLE VII. CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE VIII. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . .25
<PAGE>
BY-LAWS
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
AS AMENDED BY RESOLUTION
OF THE BOARD OF TRUSTEES
JULY 22, 1994
ARTICLE I
MEMBERS
Section 1. REGULAR ANNUAL MEETINGS. The regular annual meeting of members
shall be held at three o'clock in the afternoon of the first Tuesday in March of
each year, at the Home Office of the Company, as required by Article VIII of the
Articles of Re-incorporation. Notice of the meeting shall be as prescribed in
Section 61A.32 of Minnesota Statutes, as amended from time to time.
Section 2. SPECIAL MEETINGS. A special meeting of the members may be
called at any time by the Board of Trustees or by the joint action of either the
Chair of the Board or the Chief Executive Officer and not less than three other
Trustees. The Secretary shall give notice of the special meeting by causing to
be mailed to each member, at the member's address then appearing on the books of
the Company, a notice of the time, place and purpose of the meeting at least
thirty days before the date set for the meeting.
-1-
<PAGE>
Section 3. NUMBER OF VOTES. At each meeting of the members, every person
insured by this Company will be a member entitled to one vote, and one
additional vote for each one thousand dollars of insurance in excess of the
first one thousand dollars, subject to a maximum of one hundred votes; provided,
however, that, in the case of group insurance, voting rights shall be determined
by Section 61A.32 of Minnesota Statutes, as amended from time to time. The
Company has no cumulative voting.
Section 4. PROXIES. Any member may vote by proxy at any meeting of
members. To be valid, the proxy appointment must be in writing and must be
filed with, and received by, the Secretary at the Home Office of the Company at
least five days before the meeting at which it is to be used, exclusive of the
day of the meeting, but inclusive of the day of receipt and filing of the proxy.
A proxy appointment may be for a specified period of time or may provide that it
will be in effect until revoked. A proxy may be revoked by a member at any time
by written notice to the Secretary, or by executing a new proxy appointment and
filing it as required herein, or by personally appearing and exercising his or
her rights as a member at any meeting of the members.
Section 5. QUORUM. Insurance of an amount not less than One Hundred
Million Dollars, represented in person or by proxy, or partly in person and
partly by proxy, shall constitute a quorum at any regular or special meeting of
members. In the
-2-
<PAGE>
absence of a quorum, those members present may adjourn the meeting from time to
time until a quorum shall be present. If a quorum is present when a duly called
or held meeting is convened, the members present may continue to transact
business until adjournment, even though member(s) may have left the meeting so
that less than a quorum is present at the meeting.
Section 6. PRESIDING OFFICER AND RECORDING OF MINUTES. Meetings of the
members shall be presided over by the Chair of the Board, if present, otherwise
by the Chief Executive Officer, if present, otherwise by the President, if
present, otherwise by a Vice President; provided that if none of those
designated are present, then by a chair to be chosen by a majority of the
members who are present in person or by proxy. The Secretary, if present,
otherwise an Assistant Secretary, shall record the minutes of every meeting;
provided that if none of those designated are present, then a person to record
the minutes of that meeting shall be chosen by a majority of the members who are
present in person or by proxy.
ARTICLE II
BOARD OF TRUSTEES
Section 1. COMPOSITION OF THE BOARD OF TRUSTEES. The composition of the
Board of Trustees shall be as follows:
(a) NUMBER OF TRUSTEES. The property, affairs and business of the Company
shall be managed by a Board of Trustees which shall consist of not fewer than
five (as required by
-3-
<PAGE>
Article VI of the Articles of Re-incorporation) or more than sixteen persons,
the number of which for each year shall be determined by the members at their
regular annual meeting. The person or persons who hold the offices of Chief
Executive Officer and President shall, without the necessity of election, be
Trustees by virtue of the office.
(b) QUALIFICATIONS. Trustees need not be members of the Company, nor
residents or citizens of Minnesota. Additional qualifications for initial or
continued Board membership may be prescribed from time to time by the Board.
(c) ELECTION. Except as otherwise provided in these By-Laws, Trustees
shall be elected at regular annual meetings of the members. Nominations for the
office of Trustee shall be made before voting for that office commences. Votes
for persons not so nominated shall be disregarded. The election of each Trustee
shall be by a plurality of the votes cast for the office. In the event the
members fail to elect nominees to fill all of the offices to be elected, then
the Board of Trustees shall have the authority to choose qualified persons to
fill such office or offices by appointment as provided in Section 1(e) of this
Article II.
(d) TERM OF OFFICE OF ELECTED TRUSTEE. The term of office of each elected
Trustee shall be to such of the next three regular annual meetings of the
members as is stated in his or her nomination, or, if none is stated, to the
third such meeting following the date of his or her election, or until his
-4-
<PAGE>
or her earlier death, resignation or removal. No Trustee shall be elected to
the Board for a term of office which extends beyond the annual meeting of
members which coincides with or next follows his or her seventieth birthday.
(e) APPOINTMENT BY THE BOARD. If the office of any Trustee is not filled
by the members at a regular annual meeting of members, a majority of the
Trustees may choose a person to fill that office. If the office of any Trustee
becomes vacant for any reason, a majority of the remaining Trustees may choose a
successor. Each Trustee so chosen shall hold office until the next regular
annual meeting of the members. Not more than one-third of the maximum number of
Trustees may be so chosen by the Board between regular annual meetings of the
members.
Section 2. MEETINGS OF THE BOARD. Meetings of the Board of Trustees shall
be as follows:
(a) PLACE OF MEETINGS. Meetings of the Board may be held either within or
without the State of Minnesota.
(b) REGULAR MEETINGS. Regular meetings of the Board shall be held at such
times and places as are fixed from time to time by resolution of the Board.
Notice need not be given of those regular meetings of the Board held at the
times and places fixed by resolution, nor need notice be given of adjourned
meetings. If either or both the time or place of a regular meeting are other
than that fixed by resolution, a telephonic or written notice shall be given to
each Trustee not
-5-
<PAGE>
less than twenty-four hours prior to the time of that regular meeting.
(c) SPECIAL MEETINGS. Special meetings of the Board may be held at any
time upon call either of the Chair of the Board, or of the Chief Executive
Officer, or upon written request of any three or more Trustees. Except as
otherwise provided, notice of a special meeting shall be given to each Trustee
either in writing or by telephone. Notice of at least seventy-two hours prior
to the meeting time is required if written notice is deposited in the United
States mail in the City of Saint Paul. Notice of at least twenty-four hours
prior to the meeting time is required if written notice is left at either the
place of business or residence of each Trustee. Notice of at least six hours
prior to the meeting time is required if all Trustees are personally either
served with a written notice or contacted by telephone. Notice need not be
given to the Trustees of adjourned special meetings. Also, special meetings may
be held at any time without notice if all of the Trustees are present, or if,
before the meeting, those not present waive such notice in writing. Notice of a
special meeting shall state the purpose of the meeting.
(d) NOTICE. All notices of meetings of the Board required to be given
under these By-Laws shall be given either by the person or persons who called
the meeting, or by the Secretary, or, in his or her absence, by an Assistant
Secretary.
-6-
<PAGE>
(e) QUORUM. A majority of the Trustees shall constitute a quorum for the
transaction of business at any meeting of the Board. In the absence of a
quorum, those Trustees present may adjourn the meeting from time to time until a
quorum shall be present. Except as otherwise provided in these By-Laws, the
acts of a majority of the Trustees present at any meeting at which a quorum is
present shall be the acts of the Board. The Trustees present at a duly called
or held meeting at which a quorum is present, may continue to transact business
until adjournment, even though Trustee(s) may have left the meeting so that less
than a quorum is present at the meeting.
(f) ACTION WITHOUT MEETING. Any action which may be taken at a meeting of
the Board may be taken without a meeting if a consent in writing, setting forth
the actions to be taken, shall be signed by all of the Trustees. The action so
taken shall be effective on the date on which the last signature is placed on
the writing or writings, or on such earlier effective date as is stated in the
writing.
Section 3. REMOVAL. A member of the Board of Trustees who fails to meet
the standards set by the Board for Board members, or who is deemed by the
remaining members of the Board to be untrustworthy, or incapable by reason of
total and permanent disability of fulfilling the duties of his or her office,
may be removed from office by the unanimous vote of the remaining Trustees then
in office.
-7-
<PAGE>
Section 4. CHAIR OF THE BOARD. The Board of Trustees shall elect annually
from among its members a Chair of the Board. The Chair of the Board shall
continue to serve at the will and pleasure of the Board, for the term of his or
her election or until his or her prior death, resignation, or removal from the
Board. The Chair of the Board shall preside at meetings of the members, of the
Board and of the Executive Committee. In addition, the Chair shall have such
other powers, duties and responsibilities as may be determined and assigned by
the Board or these By-Laws.
Section 5. COMPENSATION. Except as provided in this Section, Trustees
shall be entitled to reasonable compensation for their services, and to
reimbursement for reasonable expenses incurred, as Trustees and as members of
committees of the Board. The amount of compensation shall be set from time to
time by resolution of the Board of Trustees. Except as otherwise expressly
provided by the Board, no such compensation or reimbursement shall be paid to an
officer of the Company who also serves as a Trustee. Any Trustee receiving
compensation under this Section shall not be barred from serving the Company in
a non-officer capacity and receiving reasonable compensation for such other
services.
-8-
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. STANDING AND OTHER COMMITTEES OF THE BOARD. The Board of
Trustees shall have the following committees:
(a) CREATION OF COMMITTEES. The following designated standing committees
of the Board are hereby authorized and created: Audit, Corporate Governance and
Public Affairs, Executive, Investment, and Personnel and Compensation. In
addition, the Board is authorized to create any other committee or committees of
the Board as the Board from time to time deems necessary. The name, duration
and duties of each other committee and the number of members thereof shall be as
prescribed in the action creating the committee.
(b) APPOINTMENTS. Except as provided in Section 4 of this Article III,
the members of each standing Board committee shall consist of those Trustees
appointed by the Board of Trustees. Each Trustee appointed to a Board committee
shall continue to serve on that committee at the will and pleasure of the Board
for the period specified in his or her appointment or until his or her earlier
death, resignation or removal.
(c) QUALIFICATIONS. Each Trustee is qualified to be appointed and
successively reappointed to one or more committees, except that a Trustee who
also acts as an officer or employee of the Company shall not serve as a member
of the Audit Committee.
-9-
<PAGE>
(d) COMMITTEE CHAIRS. The Board shall appoint one of the members of each
of the Board committees, except the Executive Committee, to chair that committee
and, in its discretion, may also appoint one of the members of each of the
committees to serve as a vice chair of that committee. If neither the committee
chair nor the committee vice chair is present at a meeting of a committee, the
committee members present at that committee meeting shall elect another
committee member to chair that meeting.
(e) MEETINGS. Each committee shall meet at such times as the chair of
that committee may designate or as a majority of that committee may determine,
subject to a minimum of not less than two meetings per calendar year, except
that the Executive Committee is not subject to a minimum number of meetings
requirement.
(f) QUORUM. A majority of each Board committee shall constitute a quorum
at each meeting of that committee. At any meeting of a committee at which a
quorum is present, the committee may continue to transact business until
adjournment, even though committee member(s) may have left the meeting so that
less than a quorum is present at the meeting. If a quorum is not present for a
committee meeting, the chair of that committee may request the Board to appoint
a sufficient number of other Trustees to serve as members of the committee only
for that meeting, so as to obtain a quorum. If the Board makes the
-10-
<PAGE>
requested appointments, any action so taken at the committee meeting shall be
valid and binding.
(g) VACANCIES. In the case of the death, resignation or removal of a
member of a committee, the Board may appoint another Trustee to fill the vacancy
so created on that committee for the balance of the unexpired appointment. The
appointment shall be subject to the qualifications set forth for that committee.
(h) MINUTES AND REPORTS. Each committee shall keep a written record of
its acts and proceedings and shall submit that record to the Board of Trustees
at a regular meeting of the Board and at such other times as requested by the
Board or when a majority of the committee deems it desirable to do so. Failure
to submit a record will not, however, invalidate any action taken by the
committee prior to the time the record of the action was, or should have been
submitted to the Board. The minutes of the Corporate Governance and Public
Affairs, Executive, and Personnel and Compensation Committees shall be recorded
by the Secretary. The minutes of each of the other committees shall be recorded
by the person designated by the chair of that committee.
Section 2. AUDIT COMMITTEE. The Audit Committee shall consist of not
fewer than four non-management Trustees and shall have the following powers and
duties:
-11-
<PAGE>
(a) Annually recommend to the Board a firm of independent certified public
accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's internal
auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the Company
conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and disaster
recovery.
(h) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 3. CORPORATE GOVERNANCE AND PUBLIC AFFAIRS COMMITTEE. The
Corporate Governance and Public Affairs Committee shall consist of not fewer
than four Trustees and shall have the following powers and duties:
-12-
<PAGE>
(a) Annually review the size and composition of the Board.
(b) Periodically develop and recommend to the Board the standards to be
met by persons selected for nomination to the Board.
(c) Prior to the annual meeting of members each year, recommend to the
Board a slate of persons to be nominated to serve on the Board for whom the
Company should solicit proxies.
(d) On the recommendation of the Chair of the Board or the Chief Executive
Officer, review the ongoing affiliation with the Board of any member who fails
to meet the standards set by the Board for Board members, or who is deemed by
the remaining members of the Board to be untrustworthy, or incapable by reason
of total and permanent disability of fulfilling the duties of his or her office.
(e) Periodically, review the powers and duties of Board committees.
(f) Annually review and approve the methods and levels of compensation for
members of the Board, including but not limited to benefit plans and
compensation deferral plans; and review and make changes in the method and
timing of benefits for individuals covered under any such plans in accordance
with the terms of such plans.
(g) Annually review and approve the contributions policy.
(h) Annually review Company contributions to be made to the foundation.
-13-
<PAGE>
(i) Review Company's code of ethics and conflict of interest disclosures.
(j) Review Company policy on major issues in areas of social
responsibility and public affairs, including such matters as voting and
solicitation of proxies, "social purpose" investments, and other like matters as
may properly come before it.
(k) Periodically review Company by-laws.
(l) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 4. EXECUTIVE COMMITTEE. The Executive Committee shall consist of
the Chairs of the other standing Board committees and the Chair of the Board
and, in the interim between meetings of the Board, shall have and exercise all
of the powers and authority of the Board (including the determination of whether
a person is entitled to indemnification under Article VI of these By-Laws as
required by Section 300.083, Subdivision 6(b) of Minnesota Statutes, as amended
from time to time), except the Committee shall not:
(a) alter or amend the By-Laws;
(b) make appointments to the Board of Trustees;
(c) elect, appoint or terminate the Chairman of the Board, Chief Executive
Officer, President, any Vice President, Secretary, or Treasurer.
Section 5. INVESTMENT COMMITTEE. The Investment Committee shall consist
of not fewer than four Trustees and
-14-
<PAGE>
shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for Company investments, the
procedures for the valuation of real estate owned by the Company and commercial
loans held by the Company, recommend changes thereto, and submit to the Board
for its approval and adoption the policy and procedures for the ensuing twelve
months.
(b) Review all investments, except policy loans, of Company funds,
including their acquisition and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
Section 6. PERSONNEL AND COMPENSATION COMMITTEE. The Personnel and
Compensation Committee shall consist of not fewer than four Trustees and shall
have the following powers and duties:
(a) For senior management, annually review performance and total
compensation, including salary, bonus plans, employee benefits and perquisites.
Senior management is defined as Chief Executive Officer, Chief Operating
Officer, President and all vice presidents. Approve and report to the Board for
ratification total compensation for the Chief Executive
-15-
<PAGE>
Officer, President and Chief Operating Officer. Approve total compensation for
the vice presidents.
(b) Review qualifications of candidates for election as officers of the
Company. Recommend to the Board for approval officer candidates for the
positions of Chief Executive Officer, Chief Operating Officer, President, all
vice presidents, controller, secretary, treasurer, assistant secretary and
assistant treasurer.
(c) Periodically review succession plans for Chief Executive Officer,
Chief Operating Officer and senior vice presidents.
(d) Review and report to the Board organization changes that have
significant Company and business impact.
(e) Review and approve special employment or compensation contracts for
active, retired or terminated employees.
(f) Annually review and approve salary policies for Company employees.
(g) Annually review and recommend to the Board a PSP distribution to
covered employees.
(h) Periodically review and approve changes to compensation deferral plans
for officers and employees, including the designation of plan trustees and plan
administrators. Review and make changes in the method of timing of benefits for
individuals covered under any of said plans in accordance with the terms of said
plans. Annually determine and approve the interest crediting rates for amounts
-16-
<PAGE>
held under deferred compensation plans for officers, employees and Trustees and
make any other determination necessary or advisable in the administration of
those plans.
(i) Periodically review and approve major changes to benefit plans.
(j) Annually review programs and progress made for developing diversity at
all levels of the Company and submit findings to the Board.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Company shall be a Chief Executive
Officer, a President, one or more Vice Presidents, a Treasurer, an Actuary, a
Controller, a Secretary, and one or more Assistant Secretaries. In addition,
there may be such other officers as the Board of Trustees from time to time may
deem necessary. One individual may hold two or more offices, except that of
President and Secretary.
Section 2. ELECTION. Officers shall be elected or appointed by the Board
of Trustees.
Section 3. TERM OF OFFICE. Each officer shall serve for the term stated
in his or her election or appointment or until his or her earlier death,
resignation or removal.
-17-
<PAGE>
Section 4. REMOVAL. Any officer may be removed from office, with or
without cause, at any time by the affirmative vote of the majority of the Board
of Trustees then in office.
Section 5. VACANCIES. Any vacancy in any office from any cause may be
filled by the Board of Trustees at its next meeting.
Section 6. DUTIES OF OFFICERS. The duties of the officers shall be as
follows:
(a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general active management of the business of the Company and, in the absence of
the Chair of the Board, shall preside at all meetings of the members and the
Board of Trustees, and shall see that all orders and resolutions of the Board
are carried into effect. Except where, by law, the signature of the President
is required, the Chief Executive Officer shall possess the same power as the
President to sign and execute all authorized certificates, contracts, bonds, and
other obligations of the Company.
(b) PRESIDENT. The President, in the absence of the Chair of the Board
and the Chief Executive Officer, shall preside at all meetings of the members
and the Board of Trustees. The President shall be the chief administrative
officer of the Company and shall have the power to sign and execute all
authorized certificates, contracts, bonds, and other obligations of the Company.
The President also shall perform such other duties as are incident to the office
or are
-18-
<PAGE>
properly required of him or her by the Board or the Chief Executive Officer.
(c) VICE PRESIDENTS. Each Vice President will perform those duties as
from time to time may be assigned by the Chief Executive Officer. In the
absence of the President, a Vice President designated by the Board of Trustees
shall perform the duties of the President. A Vice President shall have the
power to sign and execute all authorized certificates, contracts, bonds and
other obligations of the Company. One or more of the Vice Presidents may be
entitled Executive Vice President, Senior Vice President, Vice President, Second
Vice President, Group Vice President, Assistant Vice President, or such other
variation thereof as may be designated by the Board.
(d) SECRETARY. The Secretary shall give notice and keep the minutes of
all meetings of the members, the Board of Trustees, the Corporate Governance and
Public Affairs Committee, the Executive Committee and the Personnel and
Compensation Committees and shall give and serve all notices of the Company.
The Secretary or an Assistant Secretary shall have the power to sign with the
Chief Executive Officer, President, or any Vice President in the name of the
Company all authorized certificates, contracts, bonds, or other obligations of
the company and may affix the Company Seal thereto. The Secretary shall have
charge and custody of the books and papers of the Company and in general shall
perform all duties incident to the office of Secretary, except as otherwise
specifically
-19-
<PAGE>
provided in these By-Laws, and such other duties as from time to time may be
assigned by the Chief Executive Officer. If Assistant Secretaries are elected
or appointed, they shall have those powers and perform those duties as from time
to time may be assigned to them by the Chief Executive Officer and, in the
absence of the Secretary, one of them shall perform the duties of the Secretary.
(e) TREASURER. The Treasurer shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Treasurer, one of
them shall perform the duties of the Treasurer.
(f) CONTROLLER. The Controller shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) ACTUARY. The Actuary shall have those powers and shall perform those
duties as from time to time may be assigned by the Chief Executive Officer.
(h) OTHER OFFICERS. Other officers elected or appointed by the Board of
Trustees shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
-20-
<PAGE>
Section 7. ABSENCE OR DISABILITY. In the case of the absence or
disability of any officer of the Company or of any person authorized to act in
his or her place during such period of absence or disability, the Board of
Trustees from time to time may delegate the powers and duties of such officer to
any other officer, or any Trustee, or any other person whom they may select.
ARTICLE V
DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. FUNDS AND INVESTMENTS. All funds and investments of the
Company shall be held in the name of "The Minnesota Mutual Life Insurance
Company" or its nominee or as otherwise provided in accordance with applicable
Minnesota Statutes, as amended from time to time. In no event shall any funds
or investments be held in the name of any individual who is an officer or
employee of the Company.
Section 2. DEPOSITS. The Board of Trustees shall designate those banks
and financial institutions in which Company funds shall be deposited. The Board
by separate resolution also shall designate the persons authorized to withdraw
or transfer funds held in those accounts. No funds shall be withdrawn or
transferred from those accounts except upon the authorization of the person or
persons so authorized.
-21-
<PAGE>
ARTICLE VI
INDEMNIFICATION
Section 1. TRUSTEES AND OFFICERS. To the fullest extent permitted by
applicable Minnesota Statutes, as amended from time to time, the Company shall
indemnify each person (and the legal representatives of the person) who has
been, or is, a Trustee or officer of the Company. This indemnification shall
extend to all judgments, penalties, and fines, including, without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been a Trustee or officer of the Company or who,
while a Trustee or officer of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee, or agent of another organization
or of an employee benefit plan. However, indemnification for appeals from any
determination in a proceeding shall be subject to prior approval of the Board by
Trustees.
-22-
<PAGE>
Section 2. EMPLOYEES AND AGENTS. Subject to the provisions of applicable
Minnesota Statutes, as amended from time to time, the Board of Trustees may, but
need not, decide to indemnify a person (and the legal representatives of the
person), other than a Trustee or officer, who has been or is an employee or
agent of the Company. The indemnification, if any, shall extend to all
judgments, penalties, and fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been an employee or agent of the Company or who,
while an employee or agent of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee or agent of another organization
or of an employee benefit plan. Also, indemnification for appeals from any
determination in a proceeding, where indemnification was previously granted by
the Board, shall be subject to prior approval by the Board.
-23-
<PAGE>
Section 3. INSURANCE. The Board of Trustees may authorize the purchase
and maintenance of such form or forms of insurance as the Board may deem
necessary or prudent to indemnify the Company and/or those persons who have
been, are or may be Trustees, officers, employees, or agents of the Company, or
who, while a Trustee, officer, employee or agent of the Company, is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee, or agent of another organization or of an employee benefit plan
against any liability asserted against and incurred by the person in or arising
from that capacity, whether or not the Company would have been required to
indemnify the person against the liability under the provisions of this Article
VI or under applicable Minnesota Statutes, as amended from time to time.
Section 4. OTHER INDEMNIFICATION PERMITTED. Nothing contained in this
Article shall affect the rights to indemnification to which Company personnel
other than Trustees and officers may be entitled by contract or otherwise under
law.
ARTICLE VII
CORPORATE SEAL
The corporate seal of this Company shall be the words "Corporate Seal"
encircled with the words "The Minnesota Mutual Life Insurance Company".
-24-
<PAGE>
ARTICLE VIII
AMENDMENTS
By the affirmative vote of a majority of the Board of Trustees, these By-
Laws, or any part thereof, may be amended, repealed, or abrogated.
-25-
<PAGE>
April 23, 1997
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Variable Annuity Account (the
"Account") in connection with Post-Effective Amendment No. 4 to its Registration
Statement on Form N-4. This Post-Effective Amendment is to be filed by the
Company and the Account with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, with respect to certain variable annuity
contracts (Securities and Exchange Commission File No. 33-80788).
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant to the laws of the State of Minnesota; and
2. The issuance and sale of the variable annuity contracts funded by the
Account have been duly authorized by the Company and such contracts,
when issued in accordance with and as described in the current
Prospectus contained in the Registration Statement, and upon compliance
with applicable local and federal laws, will be legal and binding
obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
Donald F. Gruber
Senior Counsel
<PAGE>
(KPMG Peat Marwick LLP Letterhead)
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
The Minnesota Mutual Life Insurance Company and
Contract Owners of Minnesota Mutual Variable Annuity Account:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "AUDITORS" in Part B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 23, 1997
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
GROWTH SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on
December 3, 1985. Using the accumulation unit value information attached, the
cumulative total return for each type of Multi-Option Select Annuity Contract
without consideration of the contingent deferred sales charge at December 31,
1994 is as follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
2,050.54 - 1,000.00 * 100 = 105.05%
--------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from December 3, 1985 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [(1 + .0823) ] = $2,050.54 T = 8.23%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [(1 + .0823) ] = $2,050.54 T = 8.23%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0628) ] = $1,355.76 T =6.28%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0690) ] = $1,395.76 T = 6.90%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0745) ] = $925.58 T =--7.45%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0045) ] = $995.50 T = -.45%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
12/03/85 $1.045123
12/31/89 1.535414
12/31/93 2.152745
12/31/94 2.143068
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
BOND SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on
December 3, 1985. Using the accumulation unit value information attached, the
cumulative total return for each type of Multi-option Select Annuity Contract
without consideration of the contingent deferred sales charge at December 31,
1994 is as follows:
CUMULATIVE = (ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED ) * 100
TOTAL RETURN ----------------------------------------------------
INITIAL AMOUNT INVESTED
1,800.91 - 1,000.00 * 100 = 80.09%
--------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from December 3, 1985 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [(1 + .0669) ] = $1,800.91 T =6.69%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [( 1 + .0669) ] = $1,800.91 T =6.69%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0537) ] = $1,298.84 T =5.37%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0585) ] = $1,328.84 T = 5.85%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .1274) ] = $872.59 T =-12.74%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0574) ] = $942.59 T = -5.74%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
12/03/85 $1.010698
12/31/89 1.369751
12/31/93 1.931031
12/31/94 1.820179
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MONEY MARKET SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
SIMPLE YIELD CALCULATION
Simple yields are computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical account having a balance of one
accumulation unit of the Money Market segregated sub-account at the beginning of
the most recent seven calendar day period, subtracting a hypothetical charge
reflecting deductions from contractowner accounts, and dividing the difference
by the value of the account at the beginning of the seven day period to
determine the base period return, and multiplying the base period return by
365/7. The simple yield for the Money Market segregated sub-account at December
31, 1994 is calculated as follows:
365
[ (1.000763 - 1.000000)/1.000000 ] * ___ = 3.98%
7
EFFECTIVE YIELD CALCULATION
Effective yields are computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical account having a balance of one
accumulation unit of the Money Market segregated sub-account at the beginning of
the most recent seven calendar day period, subtracting a hypothetical charge
reflecting deductions from contractowner accounts, and dividing the difference
by the value of the account at the beginning of the seven day period to
determine the base period return, and then compounding the based period return
by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result. Effective yield calculation for the Money Market
segregated sub-account at December 31, 1994 is calculated as follows:
365/7
([(1.000763 - 1.000000)/1.000000] + 1.000000) - 1.000000 = 4.06%
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on
December 3, 1985. Using the accumulation unit value information attached, the
cumulative total return for each type
<PAGE>
of Multi-Option Select Annuity Contract without consideration of the contingent
deferred sales charge at December 31, 1994 is as follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
1,443.85 - 1,000.00 * 100 = 44.39%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from December 3, 1985 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [(1 + .0413) ] = $1,443.85 T = 4.13%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [( 1 + .0413) ] = $1,443.85 T = 4.13%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0253) ] = $1,133.01 T = 2.53%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0324) ] = $1,173.01 T = 3.24%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0459) ] = $954.08 T = -4.59%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 + .0241) ] = $1,024.08 T = 2.41%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
12/03/85 $ 1.007938
12/31/89 1.240664
12/31/93 1.421098
12/31/94 1.455312
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
ASSET ALLOCATION SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on
December 3, 1985. Using the accumulation unit value information attached, the
cumulative total return for each type of Multi-option Select Annuity Contract
without consideration of the contingent deferred sales charge at December 31,
1994 is as follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
1,961.27 - 1,000.00 * 100 = 96.13%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from December 3, 1985 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [(1 + .0770) ] = $1,961.27 T =7.70%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
9.08
$1,000.00 [( 1 + .0770) ] = $1,961.27 T =7.70%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0654) ] = $1,372.41 T =6.54%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0715) ] = $1,412.41 T = 7.15%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0963) ] = $903.74 T =--9.63%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0263) ] = $973.74 T = -2.63%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
12/03/85 $1.026837
12/31/89 1.425863
12/31/93 2.068213
12/31/94 2.013909
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MORTGAGE SECURITIES SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on June 1,
1987. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
1,659.48 - 1,000.00 * 100 = 65.95%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from June 1, 1987 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [(1 + .0691) ] = $1,659.48 T =6.91%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [( 1 + .0691) ] = $1,659.48 T =6.91%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0541) ] = $1,301.41 T =5.41%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + ..0605) ] = $1,341.41 T = 6.05%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .1158) ] = $884.24 T =--11.58%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0458) ] = $954.24 T = -4.58%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
06/01/87 $1.000061
12/31/89 1.237189
12/31/93 1.739165
12/31/94 1.659583
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
INDEX 500 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on June 1,
1987. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
1,795.83 - 1,000.00 * 100 = 79.58%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from June 1, 1987 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [(1 + .0803) ] = $1,795.83 T = 8.03%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [( 1 + .0803) ] = $1,795.83 T = 8.03%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0628) ] = $1,356.03 T =6.28%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0690) ] = $1,396.03 T = 6.90%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0708) ] = $929.18 T =--7.08%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0008) ] = $999.18 T =-.08%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
06/01/87 $.999161
12/31/89 1.285300
12/31/93 1.795792
12/31/94 1.794322
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
CAPITAL APPRECIATION SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on June 1,
1987. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
2,087.33 - 1,000.00 * 100 = 108.73%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from June 1, 1987 to December 31,
1994 for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [(1 + .1019) ] = $2,087.33 T = 10.19%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
7.58
$1,000.00 [( 1 + .1019) ] = $2,087.33 T = 10.19%
Average annual total return for the five-year period ending December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0857) ] = $1,508.66 T = 8.57%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
5.00
$1,000.00 [(1 + .0914) ] = $1,548.66 T = 9.14%
Average annual total return for the one-year period ending December 31, 1994
for each type of Multi-option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0602) ] = $939.76 T = -6.02%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 + .0098) ] = $1,009.76 T = .98%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
06/01/87 $.997353
12/31/89 1.344262
12/31/93 2.061685
12/31/94 2.081802
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
INTERNATIONAL STOCK SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 1,
1992. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
1,294.81 - 1,000.00 * 100 = 29.48%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 1, 1992 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
2.67
$1,000.00 [(1 + .0823) ] = $1,234.81 T = 8.23%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
2.67
$1,000.00 [(1 + .1017) ] = $1,294.81 T = 10.17%
Average annual total return for the one-year period ending December 31, 1994 for
each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0856) ] = $914.39 T = -8.56%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0156) ] = $984.39 T = -1.56%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/01/92 $1.000898
12/31/93 1.316524
12/31/94 1.295970
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
SMALL COMPANY SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 3,
1993. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
1,219.69 - 1,000.00 * 100 = 21.97%
---------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 3, 1993 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.67
$1,000.00 [(1 + .0873) ] = $1,149.69 T = 8.73%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.67
$1,000.00 [( 1 + .1266) ] = $1,219.69 T = 12.66%
Average annual total return for the one-year period ending December 31, 1994 for
each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 - .0216) ] = $978.43 T = -2.16%
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1.00
$1,000.00 [(1 + .0484) ] = $1,048.43 T = 4.84%
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/03/93 $1.000290
12/31/93 1.163693
12/31/94 1.220048
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
VALUE STOCK SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 2,
1994. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
1,037.00 - 1,000.00 * 100 = 3.70%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 2, 1994 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1- .0330) ] = $967.00 T = -3.30%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1 + .0370) ] = $1037.00 T = 3.70%
The above total return calculations for the period from May 2, 1994 to December
31, 1994 have not been annualized, as results are not indicativeive of
anticipated annual results.
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/02/94 $1.009628
12/31/94 1.046981
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MATURING GOVERNMENT BOND 1998 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 2,
1994. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
992.19 - 1,000.00 * 100 = -.78%
-----------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 2, 1994 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1- .0078) ] = $922.19 T = -7.78%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1 - .0078) ] = $992.19 T = -.78%
The above total return calculations for the period from May 2, 1994 to December
31, 1994 have not been annualized, as results are not indicative of anticipated
annual results.
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/02/94 $.988895
12/31/94 .981169
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MATURING GOVERNMENT BOND 2002 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 2,
1994. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
994.45 - 1,000.00 * 100 = - .56%
-----------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 2, 1994 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1- .0756) ] = $924.45 T = -7.56%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1 - .0056) ] = $994.45 T = -.56%
The above total return calculations for the period from May 2, 1994 to December
31, 1994 have not been annualized, as results are not indicative of anticipated
annual results.
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/02/94 $.977234
12/31/94 .971807
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MATURING GOVERNMENT BOND 2006 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 2,
1994. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN -------------------------------------------------
INITIAL AMOUNT INVESTED
992.98 - 1,000.00 * 100 =-.70%
-----------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 2, 1994 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1- .0770) ] = $992.98 T = -7.70%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [( 1 - .0070) ] = $992.98 T = -.70%
The above total return calculations for the period from May 2, 1994 to December
31, 1994 have not been annualized, as results are not indicative of anticipated
annual results.
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/02/94 $.969755
12/31/94 .962952
<PAGE>
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT - MULTI-OPTION SELECT
MATURING GOVERNMENT BOND 2010 SEGREGATED SUB-ACCOUNT
PERFORMANCE CALCULATIONS
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the offering price of one
accumulation unit at the beginning of a period and the redeemable value of that
accumulation unit at the end of a period. A data base file is kept and updated
monthly with respect to accumulation unit values. From this data base file,
total return can be calculated for any specified number of periods since the
segregated sub-account's date of beginning operations.
CUMULATIVE TOTAL RETURN
Cumulative total return is based on an initial $1,000 investment made on May 2,
1994. Using the accumulation unit value information attached, the cumulative
total return for each type of Multi-Option Select Annuity Contract without
consideration of the contingent deferred sales charge at December 31, 1994 is as
follows:
CUMULATIVE = ENDING REDEEMABLE VALUE - INITIAL AMOUNT INVESTED * 100
TOTAL RETURN --------------------------------------------------
INITIAL AMOUNT INVESTED
988.70 - 1,000.00 * 100 = - .1.13%
------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the SEC, average annual total return (T) allocates equal
value among each period (N) by comparing the initial amount invested (P) to the
ending redeemable value (ERV). The formula prescribed by the SEC is as follows:
N
P[(1+T) ] = ERV
Average annual total return for the period from May 2, 1994 to December 31, 1994
for each type of Multi-Option Select Annuity Contract (with and without
consideration of the contingent deferred sales charge) is as follows:
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - INCLUDING CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1- .0813) ] = $918.70 T = -8.13%
<PAGE>
FLEXIBLE AND SINGLE PAYMENT VARIABLE ANNUITY CONTRACT - WITHOUT CONTINGENT
DEFERRED SALES CHARGE
1
$1,000.00 [(1 - .0113) ] = $988.70 T = -1.13%
The above total return calculations for the period from May 2, 1994 to December
31, 1994 have not been annualized, as results are not indicative of anticipated
annual results.
The following information is used in the total return calculations:
Accumulation
Date unit value
---- ----------
05/02/94 $.961624
12/31/94 .950758
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 2
<NAME> MIMLIC GROWTH SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 96272317
<INVESTMENTS-AT-VALUE> 117531708
<RECEIVABLES> 121650
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117653358
<PAYABLE-FOR-SECURITIES> 80136
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41514
<TOTAL-LIABILITIES> 121650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 38448452
<SHARES-COMMON-PRIOR> 35809340
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 117531708
<DIVIDEND-INCOME> 875449
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1315044
<NET-INVESTMENT-INCOME> (439595)
<REALIZED-GAINS-CURRENT> 10996380
<APPREC-INCREASE-CURRENT> 4627723
<NET-CHANGE-FROM-OPS> 15184508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7959321
<NUMBER-OF-SHARES-REDEEMED> 5320209
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22896400
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1315044
<AVERAGE-NET-ASSETS> 105285682
<PER-SHARE-NAV-BEGIN> 2.630
<PER-SHARE-NII> (.012)
<PER-SHARE-GAIN-APPREC> .425
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.043
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 3
<NAME> MIMLIC BOND SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 77678207
<INVESTMENTS-AT-VALUE> 80892883
<RECEIVABLES> 268177
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 81161060
<PAYABLE-FOR-SECURITIES> 241899
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26278
<TOTAL-LIABILITIES> 268177
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 36732062
<SHARES-COMMON-PRIOR> 28069241
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 80892883
<DIVIDEND-INCOME> 3489096
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 868779
<NET-INVESTMENT-INCOME> 2620317
<REALIZED-GAINS-CURRENT> 850783
<APPREC-INCREASE-CURRENT> (1797465)
<NET-CHANGE-FROM-OPS> 1673635
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13440580
<NUMBER-OF-SHARES-REDEEMED> 4777759
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 19916399
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 868779
<AVERAGE-NET-ASSETS> 69507515
<PER-SHARE-NAV-BEGIN> 2.153
<PER-SHARE-NII> .135
<PER-SHARE-GAIN-APPREC> (.099)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.189
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 1
<NAME> MIMLIC MONEY MARKET SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 36601424
<INVESTMENTS-AT-VALUE> 36601424
<RECEIVABLES> 1157432
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37758856
<PAYABLE-FOR-SECURITIES> 1134459
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22953
<TOTAL-LIABILITIES> 1157412
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 22929634
<SHARES-COMMON-PRIOR> 14809515
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 36601444
<DIVIDEND-INCOME> 1468988
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 382125
<NET-INVESTMENT-INCOME> 1086863
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1086863
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34210814
<NUMBER-OF-SHARES-REDEEMED> 26090695
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14156354
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 382125
<AVERAGE-NET-ASSETS> 30362548
<PER-SHARE-NAV-BEGIN> 1.515
<PER-SHARE-NII> .055
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.570
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 4
<NAME> MIMLIC ASSET ALLOCATION SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 271469123
<INVESTMENTS-AT-VALUE> 323180479
<RECEIVABLES> 311981
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 323492460
<PAYABLE-FOR-SECURITIES> 205397
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106584
<TOTAL-LIABILITIES> 311981
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 116211650
<SHARES-COMMON-PRIOR> 110975477
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 323180479
<DIVIDEND-INCOME> 9151379
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3746894
<NET-INVESTMENT-INCOME> 5404485
<REALIZED-GAINS-CURRENT> 22978363
<APPREC-INCREASE-CURRENT> 3391254
<NET-CHANGE-FROM-OPS> 31774102
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20938882
<NUMBER-OF-SHARES-REDEEMED> 15702709
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 45820622
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3746894
<AVERAGE-NET-ASSETS> 298894469
<PER-SHARE-NAV-BEGIN> 2.486
<PER-SHARE-NII> .047
<PER-SHARE-GAIN-APPREC> .229
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.762
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 5
<NAME> MIMLIC MORTGAGE SECURITIES SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 63809744
<INVESTMENTS-AT-VALUE> 65845545
<RECEIVABLES> 223882
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66069427
<PAYABLE-FOR-SECURITIES> 193011
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30871
<TOTAL-LIABILITIES> 223882
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 32497955
<SHARES-COMMON-PRIOR> 31277934
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 65845545
<DIVIDEND-INCOME> 3951650
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 773507
<NET-INVESTMENT-INCOME> 3178143
<REALIZED-GAINS-CURRENT> 106132
<APPREC-INCREASE-CURRENT> 863049
<NET-CHANGE-FROM-OPS> 2421226
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7626512
<NUMBER-OF-SHARES-REDEEMED> 6406491
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4668807
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 773507
<AVERAGE-NET-ASSETS> 61921578
<PER-SHARE-NAV-BEGIN> 1.934
<PER-SHARE-NII> .101
<PER-SHARE-GAIN-APPREC> (.025)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.010
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 6
<NAME> MIMLIC INDEX 500 SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 96535954
<INVESTMENTS-AT-VALUE> 135334726
<RECEIVABLES> 152506
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 135487232
<PAYABLE-FOR-SECURITIES> 119042
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33464
<TOTAL-LIABILITIES> 152506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 46097553
<SHARES-COMMON-PRIOR> 35272024
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 135334726
<DIVIDEND-INCOME> 1354495
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1367650
<NET-INVESTMENT-INCOME> (13155)
<REALIZED-GAINS-CURRENT> 4244496
<APPREC-INCREASE-CURRENT> 16185492
<NET-CHANGE-FROM-OPS> 20416833
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15526087
<NUMBER-OF-SHARES-REDEEMED> 4700558
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 49189078
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1367650
<AVERAGE-NET-ASSETS> 109491009
<PER-SHARE-NAV-BEGIN> 2.425
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .488
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.913
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 7
<NAME> MIMLIC CAPITAL APPRECIATION SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 112719241
<INVESTMENTS-AT-VALUE> 150431644
<RECEIVABLES> 104159
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 150535803
<PAYABLE-FOR-SECURITIES> 59698
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44461
<TOTAL-LIABILITIES> 104159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 51023999
<SHARES-COMMON-PRIOR> 45964468
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 150431644
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1690612
<NET-INVESTMENT-INCOME> (1690612)
<REALIZED-GAINS-CURRENT> 8063210
<APPREC-INCREASE-CURRENT> 13204750
<NET-CHANGE-FROM-OPS> 19577348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11655640
<NUMBER-OF-SHARES-REDEEMED> 6596109
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 33949244
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1690612
<AVERAGE-NET-ASSETS> 135308219
<PER-SHARE-NAV-BEGIN> 2.524
<PER-SHARE-NII> (.035)
<PER-SHARE-GAIN-APPREC> .443
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.932
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 8
<NAME> MIMLIC INTERNATIONAL STOCK SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 123613089
<INVESTMENTS-AT-VALUE> 150564285
<RECEIVABLES> 196110
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 150760395
<PAYABLE-FOR-SECURITIES> 154873
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41237
<TOTAL-LIABILITIES> 196110
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 86521264
<SHARES-COMMON-PRIOR> 68725183
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 150564285
<DIVIDEND-INCOME> 2977785
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1543943
<NET-INVESTMENT-INCOME> 1433842
<REALIZED-GAINS-CURRENT> 5318066
<APPREC-INCREASE-CURRENT> 14598427
<NET-CHANGE-FROM-OPS> 21350335
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27327499
<NUMBER-OF-SHARES-REDEEMED> 9531418
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 49656516
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1543943
<AVERAGE-NET-ASSETS> 123545560
<PER-SHARE-NAV-BEGIN> 1.462
<PER-SHARE-NII> .017
<PER-SHARE-GAIN-APPREC> .251
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.730
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 9
<NAME> MIMLIC SMALL COMPANY SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 91962096
<INVESTMENTS-AT-VALUE> 100154435
<RECEIVABLES> 144713
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100299148
<PAYABLE-FOR-SECURITIES> 119110
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25603
<TOTAL-LIABILITIES> 144713
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 59295273
<SHARES-COMMON-PRIOR> 43234716
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100154435
<DIVIDEND-INCOME> 210314
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1083010
<NET-INVESTMENT-INCOME> (872696)
<REALIZED-GAINS-CURRENT> 11720645
<APPREC-INCREASE-CURRENT> (7159671)
<NET-CHANGE-FROM-OPS> 3688278
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23161740
<NUMBER-OF-SHARES-REDEEMED> 7101183
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30768127
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1083010
<AVERAGE-NET-ASSETS> 86639313
<PER-SHARE-NAV-BEGIN> 1.591
<PER-SHARE-NII> (.018)
<PER-SHARE-GAIN-APPREC> .100
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.673
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 11
<NAME> MIMLIC MGB 1998 SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 4278404
<INVESTMENTS-AT-VALUE> 4520878
<RECEIVABLES> 1288
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4522166
<PAYABLE-FOR-SECURITIES> 5
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1283
<TOTAL-LIABILITIES> 1288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3911112
<SHARES-COMMON-PRIOR> 3330772
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4520878
<DIVIDEND-INCOME> 2787
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 48940
<NET-INVESTMENT-INCOME> (46153)
<REALIZED-GAINS-CURRENT> 31397
<APPREC-INCREASE-CURRENT> 127703
<NET-CHANGE-FROM-OPS> 112947
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1322226
<NUMBER-OF-SHARES-REDEEMED> 741886
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 777102
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48940
<AVERAGE-NET-ASSETS> 3915555
<PER-SHARE-NAV-BEGIN> 1.124
<PER-SHARE-NII> (.014)
<PER-SHARE-GAIN-APPREC> .046
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.156
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 12
<NAME> MIMLIC MGB 2002 SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 3494110
<INVESTMENTS-AT-VALUE> 3564303
<RECEIVABLES> 1662
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3565965
<PAYABLE-FOR-SECURITIES> 979
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 683
<TOTAL-LIABILITIES> 1662
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2935860
<SHARES-COMMON-PRIOR> 2417823
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3564303
<DIVIDEND-INCOME> 195568
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 39559
<NET-INVESTMENT-INCOME> 156009
<REALIZED-GAINS-CURRENT> 15246
<APPREC-INCREASE-CURRENT> (135902)
<NET-CHANGE-FROM-OPS> 35353
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 736594
<NUMBER-OF-SHARES-REDEEMED> 218557
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 663243
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 39559
<AVERAGE-NET-ASSETS> 3165938
<PER-SHARE-NAV-BEGIN> 1.2
<PER-SHARE-NII> .057
<PER-SHARE-GAIN-APPREC> (.052)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.205
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 13
<NAME> MIMLIC MGB 2006
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2819520
<INVESTMENTS-AT-VALUE> 2943403
<RECEIVABLES> 3066
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2946469
<PAYABLE-FOR-SECURITIES> 1307
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1759
<TOTAL-LIABILITIES> 3066
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2334109
<SHARES-COMMON-PRIOR> 1878731
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2943403
<DIVIDEND-INCOME> 163096
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 31583
<NET-INVESTMENT-INCOME> 131513
<REALIZED-GAINS-CURRENT> 19246
<APPREC-INCREASE-CURRENT> (188675)
<NET-CHANGE-FROM-OPS> 37916
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 611384
<NUMBER-OF-SHARES-REDEEMED> 156006
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 536438
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 31583
<AVERAGE-NET-ASSETS> 2526364
<PER-SHARE-NAV-BEGIN> 1.281
<PER-SHARE-NII> .062
<PER-SHARE-GAIN-APPREC> (.093)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.250
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 14
<NAME> MIMLIC MGB 2010
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2477360
<INVESTMENTS-AT-VALUE> 2627061
<RECEIVABLES> 5559
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2632620
<PAYABLE-FOR-SECURITIES> 6
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5553
<TOTAL-LIABILITIES> 5559
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2077124
<SHARES-COMMON-PRIOR> 924681
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2627061
<DIVIDEND-INCOME> 948
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 20970
<NET-INVESTMENT-INCOME> (20022)
<REALIZED-GAINS-CURRENT> 4521
<APPREC-INCREASE-CURRENT> (7215)
<NET-CHANGE-FROM-OPS> (22716)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1477104
<NUMBER-OF-SHARES-REDEEMED> 324661
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1400981
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20970
<AVERAGE-NET-ASSETS> 1678469
<PER-SHARE-NAV-BEGIN> 1.326
<PER-SHARE-NII> (.015)
<PER-SHARE-GAIN-APPREC> (.046)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.265
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000768609
<NAME> MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
<SERIES>
<NUMBER> 10
<NAME> MIMLIC VALUE STOCK SUB-ACCOUNT
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 68377558
<INVESTMENTS-AT-VALUE> 78462099
<RECEIVABLES> 182737
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78644836
<PAYABLE-FOR-SECURITIES> 159640
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23097
<TOTAL-LIABILITIES> 182737
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 43796523
<SHARES-COMMON-PRIOR> 18744902
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 78462099
<DIVIDEND-INCOME> 617684
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 609577
<NET-INVESTMENT-INCOME> 8107
<REALIZED-GAINS-CURRENT> 5716915
<APPREC-INCREASE-CURRENT> 7186237
<NET-CHANGE-FROM-OPS> 12911259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29156933
<NUMBER-OF-SHARES-REDEEMED> 4105312
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 52530452
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 609577
<AVERAGE-NET-ASSETS> 48825410
<PER-SHARE-NAV-BEGIN> 1.375
<PER-SHARE-NII> (.001)
<PER-SHARE-GAIN-APPREC> .404
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.778
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
