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File Number 33-79534
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 7
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment Number 7
GROUP VARIABLE ANNUITY ACCOUNT
------------------------------
(Exact Name of Registrant)
Minnesota Life Insurance Company
(formerly The Minnesota Mutual Life Insurance Company)
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(Name of Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
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(Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, Including Area Code: (651) 665-3500
Dennis E. Prohofsky Copy to:
Senior Vice President, J. Sumner Jones, Esq.
General Counsel and Secretary Jones & Blouch L.L.P.
Minnesota Life 1025 Thomas Jefferson Street, N.W.
Insurance Company Suite 405 West
400 Robert Street North Washington, D.C. 20007
St. Paul, Minnesota 55101-2098
(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) of Rule 485
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(date)
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60 days after filing pursuant to paragraph (a)(1) of Rule 485
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X on May 3, 1999 pursuant to paragraph (a)(1) of Rule 485
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IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED
Group Variable Annuity Contracts
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO PROSPECTUS
Form N-4
Item
Number Caption in prospectus
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1. Cover Page
2. Definitions
3. Synopsis
4. Condensed Financial Information - Appendix
5. General Descriptions
6. Contract Deductions
7. Description of the Contracts
8. Annuity Period
9. Death Benefit
10. Crediting Accumulation Units
11. Withdrawals and Surrender
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional Information
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GROUP VARIABLE ANNUITY PROSPECTUS
MINNESOTA LIFE INSURANCE COMPANY
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (651) 665-3500
http://www.minnesotamutual.com
This Prospectus describes an individual, flexible payment, variable annuity
contract ("the contract") offered by Minnesota Life Insurance Company. The
contract may be used in connection with certain retirement programs including
deferred compensation plans of state and local governments as provided in
Sections 457 and 403 of the Internal Revenue Code ("Code").
Your contract values are invested in our Group Variable Annuity Account. The
Group Variable Annuity Account invests in shares of Advantus Series Fund, Inc.
("Series Fund") and other registered investment companies or portfolios of such
companies, ("Underlying Funds"). The Underlying include: the Long-Term Corporate
Portfolio of Vanguard Fixed Income Securities Fund, Inc.; the
Vanguard/Wellington Fund, Inc.; the Scudder International Fund, a series of
Scudder International Fund, Inc.; and the Janus Twenty Fund, a series of the
Janus Investment Fund. For contracts purchased prior to May 1, 1998, the
Fidelity Contrafund is also available. Your contract's accumulation value and
the amount of each variable annuity payment will vary in accordance with the
performance of the Fund investment portfolio(s) ("Portfolio(s)") you select. You
bear the entire investment risk for any amounts you allocate to those
Portfolios.
This Prospectus includes the information you should know before purchasing a
contract. You should read it and keep it 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 ("SEC")
and is incorporated by reference into this Prospectus. A copy of the Statement
of Additional Information may be obtained without charge by calling (651)
665-3500, or by writing to us at our office at 400 Robert Street North, St.
Paul, Minnesota 55101-2098.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS OF THE
ADVANTUS SERIES FUND, INC. OR ACCOMPANIED BY THE UNDERLYING FUNDS PROSPECTUSES.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE CONTRACTS OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus and of the Statement of Additional Information is:
May 3, 1999
F. 47496 Rev.5-1999
<PAGE>
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION IN WHICH THE OFFERING
WOULD BE UNLAWFUL. WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN OR OTHER PERSON
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, YOU
SHOULD NOT RELY ON THEM.
TABLE OF CONTENTS
DEFINITIONS 1
SYNOPSIS 3
EXPENSE TABLE 7
FINANCIAL STATEMENTS 9
GENERAL DESCRIPTIONS 10
CONTRACT CHARGES 14
Sales Charges 14
Mortality and Expense Risk Charges 15
Contract Administrative Charge 15
Premium Taxes 16
Contract Fee 16
DESCRIPTION OF THE CONTRACTS 16
ANNUITY PERIOD 21
DEATH BENEFIT 25
CREDITING ACCUMULATION UNITS 26
WITHDRAWALS AND SURRENDER 29
DISTRIBUTION 30
VOTING RIGHTS 31
FEDERAL TAX STATUS 32
PERFORMANCE DATA 37
YEAR 2000 COMPUTER PROBLEM 38
REGISTRATION STATEMENT 38
STATEMENT OF ADDITIONAL INFORMATION 38
APPENDIX A -- CONDENSED FINANCIAL INFORMATION A-1
APPENDIX B -- TYPES OF QUALIFIED PLANS B-1
<PAGE>
DEFINITIONS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting device used to determine the value of a
Contract before annuity payments begin.
ACCUMULATION VALUE: the sum of the values under a Contract in the General
Account and in the Group Variable Annuity Account. Accumulation values may also
be determined with respect to each Participant's interest in 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.
CERTIFICATE: a Participant's evidence of Contract rights and privileges or of
the amount and terms of annuity payments.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the Contract, which could be a state, a local
government or other tax-exempt employer eligible to contract for a
tax-advantaged plan or any other suitable group owner.
CONTRACT YEAR: a period of one year beginning with the Contract date or a
Contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which has been designated as an eligible investment for the Group Variable
Annuity Account, which shall be in addition to the Advantus Series Fund, Inc.
and its Portfolios.
GENERAL ACCOUNT: all of our assets other than those in the Group Variable
Annuity Account or in other separate accounts established by us.
GROUP VARIABLE ANNUITY ACCOUNT: a separate investment account where the
investment experience of its assets is kept separate from our other assets. This
Group Variable Annuity Account has several sub-accounts.
PARTICIPANT: a person for whom an interest is maintained under a group variable
annuity Contract, prior to the time that annuity payments begin.
PLAN: a tax-qualified plan of state and local governments and other tax-exempt
organizations, or a plan sponsored by any other suitable group owner, under
which benefits are to be provided by the Group Variable Annuity Contracts
described herein.
PURCHASE PAYMENTS: amounts paid to us under a Contract.
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SERIES FUND: the Advantus Series Fund, Inc., a mutual fund of the series type
which is an investment alternative for the Group Variable Annuity Account.
UNDERLYING FUND: one of a number of named mutual funds which are investment
alternatives for the Group Variable Annuity Account.
UNDERLYING FUND PORTFOLIO: a securities portfolio of an Underlying Fund where
it is a mutual fund of the series type.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Group Variable Annuity Account.
WE, US, OUR: Minnesota Life Insurance Company, (formerly "The Minnesota Mutual
Life Insurance Company").
YOU, YOUR: a Participant under the Contract.
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THIS SYNOPSIS CONTAINS A BRIEF SUMMARY OF SOME OF THE IMPORTANT FEATURES OF THE
VARIABLE ANNUITY CONTRACTS DESCRIBED IN THIS PROSPECTUS.
WHAT IS AN ANNUITY?
An annuity is a series of payments by an insurance company to an "annuitant".
These payments may be made for the life of the annuitant; 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 of a guaranteed amount during the
payment period is a fixed annuity. An annuity with payments which vary with the
investment experience of a separate account is called a variable annuity.
WHAT ARE THE CONTRACTS OFFERED BY THIS PROSPECTUS?
The Contracts are combination fixed and variable annuity contracts which provide
for monthly annuity payments. These payments may begin immediately or at a
future date you specify. We allocate your purchase payments to the General
Account or the Group Variable Annuity Account. Purchase payments and other
values allocated to the General Account will be guaranteed and will accumulate
at a rate of interest guaranteed to be no less than 3%. Purchase payments and
other values allocated to the Group Variable Annuity Account are invested as you
direct in one or more Underlying Fund Portfolios. There is no guarantee of
investment return or even against investment loss on values allocated to the
Group Variable Annuity Account.
This Prospectus describes only the variable aspects of the Contracts, except
where fixed aspects are specifically mentioned. The fixed portion of the
Contracts are more fully described in the Contract.
WHAT TYPES OF VARIABLE ANNUITY CONTRACTS ARE AVAILABLE?
This Prospectus offers only a group deferred variable annuity contract (herein
"Contract"). It is designed to be used in tax-advantaged plans of state and
local governments and other tax-exempt organizations. The governments or
organizations are the owners of the Contracts. The Contract and all interests
under it are subject to the general interests of creditors of the owner of the
Contract (usually the employer).
HOW DOES A PERSON OBTAIN COVERAGE UNDER THE CONTRACT?
The Contract Owner will submit an application to us for any employee who desires
coverage under the Contract. The employee must:
- be eligible to participate in the underlying retirement program; and
- complete an application.
Such person is then covered by the Contract. This person is known as a
"Participant". Your employer or the Contract Owner should be consulted for
additional information regarding the plan.
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HOW IS THE AMOUNT OF PURCHASE PAYMENTS DETERMINED?
The Contract Owner will report to us the amount of purchase payments by or on
behalf of each Participant. The Contract does not require minimum amounts or
number of purchase payments. In the case of deferred compensation programs, the
Contract Owner will make purchase payments by or on behalf of a Participant,
pursuant to the terms of the deferred compensation plan.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE GROUP VARIABLE ANNUITY ACCOUNT?
Any purchase payments you allocate to the Group Variable Annuity Account are
invested exclusively in shares of one or more portfolios of the Series Fund or
the Underlying Funds. We reserve the right to add, combine or remove other
eligible Funds and Portfolios.
The available Portfolios of the Series Fund are:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond Portfolios
Value Stock Portfolio
Small Company Value Portfolio
Global Bond Portfolio
Index 400 Mid-Cap Portfolio
Macro-Cap Value Portfolio
Micro-Cap Growth Portfolio
Real Estate Securities Portfolio
The Group Variable Annuity Account also invests in shares of the following
Underlying Funds:
Long-Term Corporate Portfolio of Vanguard Fixed Income Fund, Inc.
Vanguard/Wellington Fund, Inc.
Scudder International Fund, a series of Scudder International Fund, Inc.
Janus Twenty Fund, a series of Janus Investment Fund
Fidelity Contrafund (available only to Contracts purchased before May 1,
1998)
There is no assurance that any Portfolios or Fund will meet its objectives.
Detailed information about the investment objectives and policies of the Fund or
Portfolios can be found in the contract prospectus for each Fund or Portfolio.
Some of these fund alternatives may be part of a series fund arrangement where
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not all of the existing fund's investment options are available to this
Contract. You should carefully read each Fund or Portfolio prospectus before
purchasing in the Contract.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes, if the Contract Owner and the underlying plan permit it. You may change
your allocation of future purchase payments by giving us written notice or a
telephone call notifying us of the change. Before annuity payments begin, you
may transfer all or a part of your accumulation value among the Portfolios.
After variable annuity payments begin, transfers of annuity reserves may be made
among the sub-accounts of the Group Variable Annuity Account and the General
Account. Once fixed annuity payments begin, no annuity reserves may be
transferred out of the General Account.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
We deduct a daily charge equal to an annual rate of 0.85% of the net asset value
of the Group Variable Annuity Account for our mortality and expense risk
guarantees. We reserve the right to increase the charge to 1.25% on an annual
basis.
A deferred sales charge of up to 6.0% of the accumulation value withdrawn or
surrendered may apply if you make partial withdrawals or surrender your
participation in the Contract within six years since your initial contract
participation.
Deductions for any applicable premium taxes may also be made depending on
applicable law.
There is a one time contract fee of $200 if you elect a fixed annuity.
The Portfolios and Underlying Funds pay investment advisory and other expenses.
Total expenses of the Portfolios range from 0.28% to 1.25% of average daily net
assets of the Portfolios on an annual basis.
We reserve the right to make a charge of up to $25 for transfers occurring more
frequently than once a month. Currently we do not impose such a charge.
CAN YOU MAKE PARTIAL WITHDRAWALS FROM THE CONTRACT?
Yes. You may make withdrawals of the accumulation value of your interest in the
contract before an annuity begins and if the plan allows it. Your requests for
partial withdrawals must be in writing.
Partial withdrawals are generally subject to the deferred sales charge. In
addition, a penalty tax on 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.
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IS THERE A GUARANTEED DEATH BENEFIT?
Yes. The Contract has a guaranteed death benefit if a Participant dies before
annuity payments have started. The death benefit shall be equal to the greater
of:
- the amount of the Participant's accumulation value payable at death; or
- the amount of the total purchase payments paid to us by or on behalf of a
Participant, less all prior Participant Contract withdrawals or
transfers.
A transfer for this purpose is the application of an amount from this Contract
to another investment alternative available in the Contract Owner's underlying
plan.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The annuity options available 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.
Each annuity options may be elected as either a variable annuity or fixed
annuity or a combination of the two. Other annuity options may be available from
us on request.
WHAT IF A CONTRACT PARTICIPANT DIES?
If a Participant dies before payments begin, we will pay the Participant's
guaranteed death benefit of the Contract to the named beneficiary. If the
annuitant dies after annuity payments have begun, we will pay whatever death
benefit may be called for by the terms of the annuity option selected.
WHAT VOTING RIGHTS DO YOU HAVE?
Participants and annuitants will be able to direct us as to how to vote shares
of the Series Fund and Underlying Funds held for their Certificates where
shareholder approval is required by law in the affairs of the Funds.
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EXPENSE TABLE
The tables shown below are to assist a Contract Owner or Participant in
understanding the costs and expenses that a Participant's interest in the
Contract will bear directly or indirectly. We reserve the right to increase the
mortality and expense risk charge to 1.25%. We also reserve the right to
increase the administrative charge to .40%. However, no such increases are
anticipated. The table does not reflect deductions for any applicable premium
taxes which may be made from each purchase payment depending upon the applicable
law. Surrender amounts in years shown reflect the Participant's ability to
withdraw an amount equal to ten percent of the accumulation value at the end of
the previous calendar year without the imposition of the deferred sales charge.
The examples contained in these tables should not be considered a representation
of past or future expenses. Actual expenses may be greater or less than those
shown.
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Deferred Sales Load (as a percentage of 6.0% decreasing uniformly by .0833%
amount surrendered) for each of the first 72 months from
the contract date
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and Expense Risk Charges 0.85%
Contract Administrative Charge 0.15%
----
Total Separate Account Annual Expenses 1.00%
----
----
</TABLE>
PAGE 7
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UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(As a percentage of average net assets for the described underlying mutual
funds.)
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
MANAGEMENT & OTHER EXPENSES EXPENSES (AFTER
INVESTMENT ADMINISTRATIVE (AFTER EXPENSE EXPENSE
MANAGEMENT FEES EXPENSES REIMBURSEMENTS) REIMBURSEMENTS)
----------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002 Portfolio (1)
Maturing Government Bond 2006 Portfolio (1)
Maturing Government Bond 2010 Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio (2)
Vanguard Fixed Income Securities Fund, Inc.--
Long-Term Corporate Portfolio
Vanguard/Wellington Fund, Inc.
Fidelity Contrafund
Scudder International Fund
Janus Twenty Fund
</TABLE>
(1) Minnesota Life voluntarily absorbed certain other fund operating expenses of
the Value Stock Portfolio for the year ended December 31, 1998. If this
portfolio had been charged for these expenses, the ratio of total annual fund
expenses to average daily net assets would have been .00%. It is Minnesota
Life's present intention to waive other fund operating expenses during the
current fiscal year which exceed, as a percentage of average daily net assets,
.00%. Minnesota Life also reserves the option to reduce the level of other fund
operating expenses which it will voluntarily absorb.
(2) Because the portfolio has only recently commenced operations, the figure for
other fund operating expenses has been based on estimates for the current fiscal
year. Minnesota Life has voluntarily agreed to absorb certain other fund
operating expense for the Small Company Value and Global Bond Portfolios for the
year ending December 31, 1998. If the Small Company Value and Global Bond
Portfolios were to be charged for these expenses, it is estimated that the ratio
of total fund annual expenses to average daily net assets would be .00% and
.00%, respectively.
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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 ANNUITIZE FOR A LIFETIME
IF YOU SURRENDERED YOUR INCOME AT THE END OF THE
CONTRACT AT THE END OF THE APPLICABLE TIME PERIOD OR YOU
APPLICABLE TIME PERIOD DO 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
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002
Portfolio (1)
Maturing Government Bond 2006
Portfolio (1)
Maturing Government Bond 2010
Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio
(2)
Templeton Variable Products Series:
Developing Markets Fund Class 2
</TABLE>
CONDENSED FINANCIAL INFORMATION
Condensed Financial Information for each of the sub-accounts may be found in the
Appendix.
FINANCIAL STATEMENTS
The financial statements of the Group Variable Annuity Account and Minnesota
Life Insurance Company's consolidated financial statements are included in the
Statement of Additional Information.
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(SIDEBAR)
We are a life insurance company.
The Group Variable Annuity Account is one of our separate accounts.
Each of the 24 sub-accounts of the Group Variable Annuity Account invests in a
different Fund Portfolio.
(END SIDEBAR)
GENERAL DESCRIPTIONS
A. MINNESOTA LIFE INSURANCE COMPANY
We are Minnesota Life Insurance Company ("Minnesota Life"), a life insurance
company organized under the laws of Minnesota. Minnesota Life was formerly known
as The Minnesota Mutual Life Insurance Company ("Minnesota Mutual"), a mutual
life insurance company organized in 1880 under the laws of Minnesota. On October
1, 1998, a plan of reorganization created a mutual insurance holding company
named Minnesota Mutual Companies, Inc. Minnesota Mutual reorganized as a stock
insurance company subsidiary of the new holding company and took the new name
Minnesota Life. Our home office is at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, telephone: (651) 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. GROUP VARIABLE ANNUITY ACCOUNT
On June 14, 1993, the Minnesota Mutual Group Variable Annuity Account was
established in accordance with Minnesota Insurance Law. Effective October 1,
1998 the name of the separate account was changed to the "Group Variable Annuity
Account." The Group Variable Annuity Account is registered as a unit investment
trust under the Investment Company Act of 1940, as amended (the "1940 Act") and
meets the definition of a "separate account" under the federal securities laws.
The assets of the Group Variable Annuity Account are not chargeable with
liabilities arising out of any other business which we may conduct. The
investment performance of the Group Variable Annuity Account is entirely
independent of both the investment performance of our General Account and of any
other separate accounts. All obligations under the Contracts are general
corporate obligations of Minnesota Life.
The Group Variable Annuity Account currently has sub-accounts to which Contract
Owners and Participants may allocate purchase payments. Each sub-account invests
in shares of a corresponding Portfolio of the Fund or an underlying Fund.
Additional sub-accounts may be added at our discretion.
C. THE FUNDS
The Advantus Series Fund, Inc. ("Series Fund") is a mutual fund advised by
Advantus Capital Management, Inc. ("Advantus Capital"). The Series Fund issues
its shares only to us and our separate accounts. It may be offered to separate
accounts of insurance companies affiliated with us in the future. Advantus
Capital is a wholly-owned subsidiary of Minnesota Life.
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Advantus Capital has retained investment sub-advisers to manage the investment
of certain Portfolios of the Series Fund. Those sub-advisers are:
<TABLE>
<CAPTION>
SERIES FUND PORTFOLIO SUB-ADVISER
- ------------------------ ----------------------------------------------------------
<S> <C>
Capital Appreciation Winslow Capital Management, Inc.
International Stock Templeton Investment Counsel, Inc.
Macro-Cap Value J.P. Morgan Investment Management, Inc.
Micro-Cap Growth Wall Street Associates
Global Bond Julius Baer Investment Management, Inc.
</TABLE>
The Group Variable Annuity Account also invests in shares in the following
Underlying Funds and portfolios of Underlying Funds:
<TABLE>
<CAPTION>
FUND/PORTFOLIO TYPE INVESTMENT ADVISER
- ------------------------- -------------------- ---------------------
<S> <C> <C>
Long-Term Corporate corporate and Wellington Management
Portfolio of Vanguard government bond Group
Fixed Income fund
Securities Fund, Inc.
Vanguard/Wellington balanced equity fund Wellington Management
Fund, Inc. Company
Scudder International international stock Scudder, Stevens &
Fund, a series of fund Clark, Inc.
Scudder International
Fund, Inc.
Janus Twenty Fund, a growth equity fund Janus Capital
series of the Janus Corporation
Investment Fund
Fidelity Contrafund* growth equity fund Fidelity Management &
Research Company, a
subsidiary of FMR
Corporation
</TABLE>
*Note: Fidelity Contrafund is available only to those contracts purchased prior
to May 1, 1998.
The prospectus for the Series Fund is attached to this prospectus. Participants
considering sub-account investments in an Underlying Fund or Portfolio should
request a current prospectus for the Fund from the Contract Owner or Fund before
investing in the contract. You should carefully read those prospectuses before
investing.
The investment objectives and certain policies of the Underlying Funds available
under the Contract are as follows:
The Vanguard Long-Term Corporate Portfolio, part of the Vanguard Fixed
Income Securities Fund, Inc., seeks to provide investors with a high level
of income consistent with the maintenance of principal and liquidity. This
Portfolio invests in a diversified portfolio of investment grade corporate
and
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government bonds. This Portfolio is exposed to substantial interest rate
risk because of the length of its average maturity and it may exhibit high
to very high price fluctuations due to changing interest rates. The
possibility that corporate bonds held by the Portfolio will be repaid prior
to maturity is an additional risk associated with this Portfolio.
The Vanguard/Wellington Fund, Inc. seeks to provide conservation of
principal, a reasonable income return, and profits without undue risk. This
Fund invests in a diversified portfolio of common stocks and bonds, with
common stocks expected to represent 60% to 70% of the Fund's total assets.
Fidelity Contrafund seeks long-term growth by investing in stocks. This Fund
invests in companies that are currently "out of favor" with the public but
show potential for capital appreciation. The Fund invests in both well-known
and lesser-known companies believed to be undervalued due to overly
pessimistic appraisals by the market. The Fund invests primarily in common
stock and convertible securities, with a bias toward medium- and smaller-
capitalization companies. This Fund is available only to Contracts purchased
prior to May 1, 1998.
The Scudder International Fund, a series of Scudder International Fund,
Inc., seeks long-term growth of capital primarily through a diversified
portfolio of marketable foreign equity securities. It generally invests in
equity securities of established companies that are listed on foreign
exchanges which the Adviser believes have favorable characteristics, but may
also invest up to 20% of its total assets in debt securities of foreign
governments, supranational organizations and private issuers. The Fund seeks
to diversify investments among several countries and to have represented in
the portfolio, in substantial proportions, business activities in not less
than three different countries. The Fund does not intend to concentrate
investments in any particular industry. Foreign investing involves exposure
to special risks, including economic or political instability and currency
fluctuation.
The Janus Twenty Fund, a series of the Janus Investment Fund, seeks long-
term growth of capital. This nondiversified Fund seeks to invest in
companies that the portfolio manager believes offer rapid growth potential.
Under normal circumstances, this Fund will concentrate its investments in a
core position of 20 to 30 common stocks. The risk of loss may be greater
than would exist with a more diversified account.
Some of these shares are available not only to insurance company separate
accounts, but may also be available to the public generally, which may have a
bearing on the question of whether the Contracts may be considered annuity
contracts for tax purposes. For more information, please see the heading
"Federal Tax Status" in this Prospectus. Persons considering sub-account
investments in these Funds should obtain a current prospectus for those Funds
from the Funds or the Contract Owners before investing in those sub-accounts.
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(SIDEBAR)
We may change the Portfolios offered under the contract.
(END SIDEBAR)
D. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the sub-accounts of the Group 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.
Investment in all Series Fund or Underlying Fund options may not be available,
and may be restricted by the Contract Owner. For example, the Contracts held by
the Church of the Nazarene Tax-Sheltered Annuity Plan make available the
Underlying Fund options and the Money Market, Growth, Asset Allocation, and
Index 500 Portfolios of the Series Fund. The Contract held by the Minnesota
State Deferred Compensation Plan makes available the Underlying Fund options and
the Money Market and Index 500 Portfolios of the Series Fund. The Minnesota
State Colleges and University 403(b) Program makes available all of the
Portfolios of the Series Fund.
We may also establish additional sub-accounts in the Group Variable Annuity
Account and we reserve the right to add, combine or remove any sub-accounts of
the Group Variable Annuity Account. Each additional sub-account will purchase
shares in a new portfolio or mutual fund. New sub-accounts may be established
when, in our sole discretion, marketing, tax, investment or other conditions
warrant. The addition of any investment option may be made available to existing
Contract owners on whatever basis we determine.
We also reserve the right, when permitted by law, to de-register the Group
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 Group
Variable Annuity Account with one or more of our other separate accounts.
Shares of the Funds are also sold to some of our other 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 a Portfolio simultaneously. Although neither we nor the Fund
currently foresee any such disadvantages either to variable life insurance
policy owners or to variable annuity contract owners, the Funds' Boards of
Directors intend to monitor events in order to identify any material conflicts
between policy owners and contract owners and to determine what action, if any,
should be take in response thereto. Possible actions 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:
- changes in state insurance laws,
- changes in federal income tax laws,
PAGE 13
<PAGE>
(SIDEBAR)
A deferred sales charge may apply.
(END SIDEBAR)
- changes in the investment management of any of the Portfolios of the
Fund, or
- differences in voting instructions between those given by policy owners
and those given by contract owners.
CONTRACT CHARGES
This contract has several types of charges, all of which are discussed below.
A. SALES CHARGES
No sales charge is deducted from the purchase payments for these Contracts.
However, when a Participant's accumulation value is reduced by a withdrawal or
surrender, a deferred sales charge may be deducted for expenses relating to the
sale of the Contracts.
The deferred sales charge is deducted from the Participant's remaining
accumulation value except in the case of a surrender, where it reduces the
amount distributed. It is made in the six year period following your
Participation date. We will deduct the deferred sales charge proportionally from
the Participant's fixed and variable accumulation value.
The amount of the deferred sales charge, expressed as a percentage of the
Participant's accumulation value withdrawn, is shown in the following table.
Percentages are shown as of the Participant's date of initial Contract
participation and the end of each of the first six years of participation. The
percentages decrease uniformly each month for 72 months from the initial date.
<TABLE>
<CAPTION>
END OF
PARTICIPATION YEAR DEFERRED SALES CHARGE
- ------------------ ---------------------
<S> <C>
Participation Date 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6 0%
</TABLE>
We may waive the sales charge on:
- amounts withdrawn because of an excess contribution to a tax qualified
plan (for example an IRA or a tax sheltered annuity);
- where sales expenses are not paid at the time of sale to registered
representatives and broker-dealers responsible for the sales of the
Contracts on the basis of purchase payments and where the Contract is
sold in anticipation of reduced expenses.
PAGE 14
<PAGE>
(SIDEBAR)
The mortality and expense risk charge is .85% but we may increase it to 1.25%.
The Administrative charge is .15% but we may increase it to .40%.
(END SIDEBAR)
B. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the Contracts by our obligation to continue
to make monthly annuity payments, determined in accordance with the annuity rate
tables and other provisions contained in the 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. In addition, we assume
mortality risk in the formulation of death benefit provided by the Contract.
Our expense risk is the risk that charges provided for in the Contracts for the
sales and administrative expenses will be adequate to cover the expenses
incurred.
For assuming these risks, we currently make a deduction from the Group Variable
Annuity Account at the annual rate of .40% for the mortality risk and .45% for
the expense risk. We reserve the right to increase the charge for the assumption
of mortality risks to not more than .60% and the expense risks to not more than
.65%. If this charge is increased to this maximum amount, then the total of the
mortality risk charge and expense risk charge would be 1.25% on an annual basis.
If these deductions prove to be insufficient to cover the actual cost of our
expenses then we will absorb the resulting losses. 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 to us. Some or all of such profit may be used to cover any distribution
costs not recovered through the deferred sales charge.
C. CONTRACT ADMINISTRATIVE CHARGE
We perform all administrative services relative to the Contract. These services
may include the review of the applications for compliance with our issue
criteria, the preparation and issue of contracts and certificates, the receipt
of purchase payments, forwarding them to the Series Fund or other fund managers
for investment, the preparation and mailing of periodic reports and the
performance of other services.
As consideration for providing these services we currently make a deduction from
the Group Variable Annuity Account at the annual rate of .15% for contract
administration. We reserve the right to increase this administrative charge to
not more than .40%.
PAGE 15
<PAGE>
(SIDEBAR)
The contract is a group deferred variable annuity.
We issue the contract to you and you select the annuitant.
(END SIDEBAR)
The administrative charge is designed to cover the administrative expenses
incurred by us under the Contract. We do not expect to recover from the charge
any amount in excess of our accumulated expenses associated with the
administration of the Contract.
D. PREMIUM TAXES
Deduction for any applicable state premium taxes may be made from each purchase
payment or at the commencement of annuity payments. There are currently no
premium taxes which are applicable to the Contracts, but we reserve the right to
make such a deduction should they become applicable to this Contract in the
future.
E. CONTRACT FEE
If you elect a fixed annuity there is a charge of $200 which is taken as a
contract fee whenever fixed annuity payments are elected and purchased at rates
guaranteed by the Contract. This fee will also be deducted when amounts are
transferred for additional fixed annuity income once fixed annuity payments have
begun.
DESCRIPTION OF THE CONTRACTS
The following material is intended to provide a general description of the terms
of the Contracts.
1. Type of Contract Offered
Group Deferred Variable Annuity Contract
The Contract is a group deferred variable annuity contract which is offered to
employers and plan sponsors which are eligible to purchase group contracts. The
contracts are to be used in connection with tax-advantaged plans of state and
local governments and other tax-exempt organizations. The type of plans for
which the Contract is suitable are described in Sections 457 and 403 of the
Internal Revenue Code. The Contract provides rights and options to individuals
who participate under such plans. The Contracts may not be purchased directly by
individuals. The Contract may also be used in other situations where a group
annuity contract is desired but where the benefit structure does not require a
contract which is recognized as an "annuity" for federal income tax purposes.
2. Issuance of Contracts
The Contracts are issued to sponsors of eligible plans upon their application.
In a typical plan, the sponsor or eligible governmental unit is the owner of the
Contract and will designate individuals eligible to participate in the Contract
as a Participant. The Contract and all interests under it are usually subject to
the general interests of creditors of the owner of the Contract (usually the
employer).
PAGE 16
<PAGE>
(SIDEBAR)
You cannot pay more than your underlying plan allows.
(END SIDEBAR)
3. Modification of Contracts
The Contract may be modified at any time by written agreement between us and the
owner of the Contract. However, no such modification will adversely affect the
rights of a Participant under the Contract unless the modification is made to
comply with a law or government regulation.
4. Annuity Payments
Variable annuity payments are determined on the basis of:
- the mortality table specified in the Contract, which reflects the age of
the annuitant;
- the type of annuity payment option selected; and
- the investment performance of the Group Variable Annuity Account and its
sub-accounts.
The amount of the variable annuity payments will not be affected by adverse
mortality experience or by an increase in an expense in excess of the expense
deduction provided for in the Contract. The annuitant electing to receive all or
a part of his or her payments as a variable annuity 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 Group Variable Annuity Account.
Therefore, the annuity payments will vary with the investment experience of the
assets of the applicable Group Variable Annuity Account.
5. Assignment
A Participant's accumulation value 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. To the maximum extent
permitted by law, benefits payable under the Contract shall be exempt from the
claims of creditors. The assets of the plan are, however, subject to the claims
of the general creditors of the Contract Owner (usually the employer).
6. Limitations on Purchase Payments
The amount of purchase payments to be paid by the Contract Owner by or on behalf
of a Participant shall be determined by the Contract Owner in accordance with
the provisions of the underlying plan. All purchase payments are payable at our
Home Office which is located at: 400 Robert Street North, St. Paul, Minnesota
55101-2098.
7. Suspension and Termination of Purchase Payments
A Contract Owner may suspend making purchase payments by giving 60 days' written
notice to us. The suspension may be with respect to all Participants or only
such classes of Participants as may be specified by the Contract Owner. Purchase
payments may be resumed as to those suspended Participants by written notice to
us.
PAGE 17
<PAGE>
Under some contracts, the Contract Owner may at any time terminate the Contract
should we fail to perform under the Contract and not cure any found deficiency
or should our activities be classified as misfeasance, malfeasance or fraud.
Some Contracts may also be terminated should we have a material change in our
financial condition as measured by the standard insurance company rating
agencies.
We may terminate the Contract at any date by written notice to the Contract
Owner in the event that the Contract is no longer part of a qualified Section
457 or Section 403 plan. We may also terminate the Contract if we determine that
a Contract amendment is necessary and the Contract Owner does not assent to such
an amendment.
After termination of the Contract, we will accept no further purchase payments.
Termination will have no effect on Participants as to whom annuity payments have
begun. As to Participants with a current accumulation value, those values will
continue to be maintained under the Contract until:
- withdrawn to provide plan benefits,
- applied to provide annuity payments or
- transferred to the Contract Owner.
So long as Participant Accumulation Values are maintained under the Contract,
the withdrawal and transfer provisions continue to apply to those values on the
same basis as prior to Contract termination.
If amounts are to be transferred to the Contract Owner on termination of the
Contract, those accumulation values attributable to the Group Variable Annuity
Account, decreased by any applicable deferred sales charge, will be transferred
within seven days after the Contract termination. Minnesota Life reserves the
right to defer payment for any period during which the New York Stock Exchange
is closed for trading or when the Securities and Exchange Commission has
determined that a state of emergency exists which may make such determination
and payment impractical.
General Account values payable to the Contract Owner on termination are subject
to current valuation procedures and payment of the General Account accumulation
value or market value to the Contract Owner, decreased by any applicable
deferred sales charge, as may be either in a lump sum or in installments over a
five year period as the Contract Owner may elect. We guarantee that on the
termination of the Contract, Participant General Account market values will not
be less than the sum of all allocations made to the General Account by or on
behalf of each Participant, accumulated at 3% per annum, less any Participant
withdrawal, any applicable deferred sales charge and less any transfers of
General Account accumulation values to the Group Variable Annuity Account.
PAGE 18
<PAGE>
(SIDEBAR)
We normally pay lump sum payments within 7 days, but may delay payments in
certain circumstances.
The contract is non-participating.
(END SIDEBAR)
8. Contract Settlement
Whenever any payment of an amount under the Contract attributable to the Group
Variable Annuity Account 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. Payment may be subject to postponement for:
- 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;
- 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 Group Variable Annuity Account or to fairly
determine the value of the assets of the Group Variable Annuity Account;
or
- such other periods as the Commission may by order permit for the
protection of the Contract Owners.
9. Participation
The Contract is a non-participating Contract. Contracts issued prior to October
1, 1998, were participating. The amounts, if any, that will be distributable
under participating contracts in the future shall be determined by us and
credited to the Contract on such a basis as we may determine. We do not
anticipate any dividends and do not anticipate making dividend payments to
Contract Owners under this Contract.
10. Contract Loans
A Participant under a Contract which satisfies the requirements of Code Section
403 as a tax-sheltered annuity (a "TSA Contract") and under a plan which
provides for loans may take a loan from us with the Contract as security for the
loan, to the extent that such loans are permitted by applicable state law. The
maximum loan available is the lesser of (a) $50,000 and (b) is the greater of
(i) one-half of the Participant's Accumulation Value less any applicable
deferred sales charge or (ii) the Participant's Accumulation Value up to the
amount of $10,000, less the amount of interest that would be charged during the
first quarter that the loan would be outstanding and less any applicable
deferred sales charge. In no event shall a loan exceed one half of the value of
the general account accumulation value. A loan taken from, or secured by, a TSA
Contract may have federal income tax consequences. The maximum loan amount is
determined as of the date we receive a Participant's request for a loan. This
minimum loan amount is $1,000.
Upon receiving a written request for a loan, we will send the Participant a loan
application and agreement for his or her signature. We will charge interest in
arrears. Restrictions other than the maximum loan amount which apply to loans
are:
- Only one loan may be outstanding at any time;
PAGE 19
<PAGE>
- A period of at least three months is required between the repayment of a
loan and the application for a new loan;
- If there is an outstanding loan on the Contract, then any withdrawals
will be limited to Accumulation Value, less the outstanding loan
principal, less any interest due and less any applicable deferred sales
charge;
- A loan is not available if annuity payments have begun; and
- The TSA loan account portion of a Participant's interest in the Contract
may not be transferred to the Group Variable Annuity Account when a loan
is outstanding, provided, however, that a single transfer from the TSA
loan account will be allowed each calendar year in an amount no more than
the TSA loan account value less the outstanding loan principal, less the
outstanding interest, and less any applicable deferred sales charge.
Two times the loan amount requested, plus the first quarter's interest, plus any
applicable deferred sales charge, will be transferred from the portion of the
Participant's Accumulation Value allocated to the Group Variable Annuity Account
to the General Account on the date the loan application is approved. Unless the
Participant directs us otherwise, amounts will be transferred from sub-accounts
of the Group Variable Annuity Account in the same proportion that the
Participant's allocations to each sub-account bears to his or her total
allocations to the Group Variable Annuity Account prior to the loan.
11. Loan Interest and TSA Loan Account Interest
The interest rate charged on a loan is variable and will be set on the first day
of each calendar quarter. It will apply to the outstanding loan principal in
that calendar quarter. The loan interest 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 "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. The
"interest rate in effect on the Contract" is the interest rate credited on
portions of Accumulation Value allocated to the General Account, including
amounts held in the TSA loan account.
The interest rate credited to allocations of Accumulation Value to the General
Account will also be credited to the TSA loan account. This will have the effect
of reducing the effective interest rate to be paid on the loan to the difference
between the interest rate paid on the loan and that credited on the TSA loan
account. A loan will have a permanent effect on the Participant's Accumulation
Value. The effect could be either positive or negative, depending upon whether
the investment results of the sub-accounts are greater or lesser than the
interest rate credited on the TSA loan account.
PAGE 20
<PAGE>
12. Loan Repayment
Repayment must be made in substantially equal payments over a period of five
years or less. Early repayment may be made without penalty at any time. When the
loan is repaid, then the TSA loan account terminates, and the amounts remain in
the General Account. A Participant may reallocate these amounts among the
General Account and the sub-accounts of the Separate Account by exercising his
or her Contract's transfer rights.
If a Participant withdraws all of his or her Accumulation Value while a loan is
outstanding, then the loan is due at the time of the withdrawal. If the loan is
not repaid prior to the complete withdrawal, the payment on withdrawal will be
the Participant's Accumulation Value, less the outstanding loan principal, less
any interest due, and less any applicable deferred sales charges. Such a
withdrawal may result in income taxation, tax penalties and disqualification of
the Participant's interest in the Contract as a tax-sheltered annuity.
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
under applicable tax rules. This may result in income taxation, tax penalties,
and disqualification of the Participant's interest in the Contract as a
tax-sheltered annuity. If there is a distribution, the Participant's
Accumulation Value will be reduced by the amount of the outstanding loan
principal, reduced by any interest due, and reduced by any applicable deferred
sales charge on that amount.
(SIDEBAR)
Each of the annuity options is available on a fixed, variable or combination
fixed and variable basis.
(END SIDEBAR)
ANNUITY PERIOD
1. Electing the Retirement Date and Form of Annuity
The Contracts provide for four annuity payment options. Any one of them may be
elected if permitted by law. Each annuity payment option may be elected on
either a variable annuity or a fixed annuity basis, or a combination thereof. We
may make other annuity options available upon request.
If you fail to elect an annuity option and the plan does not specify to the
contrary, the Participant's retirement date shall be April 1 of the calendar
year next following the calendar year in which the Participant attains age
70 1/2. The annuity payment option shall be Option 2A, a life annuity with a
period certain of 120 months. Unless notified in writing by the Contract Owner
or Participant at least 30 days prior to the Annuity Commencement Date, a fixed
annuity will be provided by any General Account accumulation value and a
variable annuity will be provided by any Group Variable Annuity Account
accumulation value. The minimum first monthly annuity payment on either a
variable or fixed dollar basis is $20. This is imposed separately for the
portion of the annuity payments payable as a fixed annuity and the portion
payable as a variable annuity under each of the sub-accounts of the Group
Variable Annuity Account. If the first
PAGE 21
<PAGE>
monthly payment would be less than $20, we may fulfill our obligation by paying
in a single sum the value of a Participant's interest in the Contract which
would otherwise have been applied to provide annuity payments.
Once annuity payments have commenced, the annuitant cannot surrender his or her
annuity benefit and receive a single sum settlement. In the event that a
beneficiary elects to receive the commuted value of the remaining guaranteed
payments in a lump sum, that value will be based on the then current dollar
amount of one payment and the same interest rate which served as a basis for the
annuity.
The mortality and expense risks charges continue to be deducted throughout the
annuity period. This applies under each of the available variable annuity
payment options, including Option 4, under which there is no mortality risk to
Minnesota Mutual.
2. Annuity Payment Options
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 usually offers the largest monthly payments
(of those options involving life contingencies) 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 shall be
paid in a single sum to the beneficiary.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY This is an annuity payable monthly
during the joint lifetime of the annuitant and a designated joint annuitant and
continuing thereafter during the remaining lifetime of the survivor. Under this
option there is no guarantee of a minimum number of payments or provision for a
death benefit for beneficiaries.
OPTION 4 - PERIOD CERTAIN ANNUITY This is an annuity payable monthly for a
period certain of from 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.
PAGE 22
<PAGE>
By written notice to us from the Contract Owner or a Participant at least 30
days prior to a Participant's Annuity Commencement Date, a lump sum settlement
of a Participant's accumulation value may be elected in lieu of the application
of that amount to an Annuity Payment Option. After the payment of such a lump
sum settlement to the Participant, the Participant shall have no further rights
under the Contract.
3. Value of the Annuity Unit
The value of an annuity unit is determined monthly as of the first day of each
month. The value of the annuity unit on the first day of each month is
determined by multiplying the value on the first day of the preceding month by
the product of
- .996338, and
- the ratio of the value of the accumulation unit for the valuation date
next following the fourteenth day of the preceding month to the value of
the accumulation unit for the valuation date next following the
fourteenth day of the second preceding month. (The factor of .996338 is
used to neutralize the assumed net investment rate, discussed in Section
4 below, of 4.5% per annum built into the first payment calculation and
which is not applicable because the actual net investment rate is
credited instead.)
The value of an annuity unit as of any date other than the first day of a month
is equal to its value as of the first day of the next succeeding month.
(SIDEBAR)
The amount of your first annuity payment depends on the age of the annuitant and
the annuity option you select.
(END SIDEBAR)
4. Determination of Amount of First Monthly Annuity Payment
The first monthly annuity payment is determined by applying the value of the
Participant's individual accumulation value at retirement. In addition, many
states impose a premium tax on the amount used to purchase an annuity benefit,
depending on the type of plan. These taxes currently range from 0 to 3.5%, and
are deducted from the accumulation 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 annuity payment option
elected, the form of annuity, and the adjusted age of the annuitant. A table
used to determine the adjusted age of the annuitant and joint annuitant is
contained in the Contract. For both fixed and variable annuity payments, the
adjusted age of the annuitant and joint annuitant, if any, is used to determine
the first payment.
For a fixed annuity, the Contract contains tables indicating the dollar amount
of the monthly payment under each annuity payment option for each $1,000 of
value applied. The tables are determined from the Progressive Annuity Table with
interest at the rate of 3% per annum, assuming births in the year 1900 and an
age setback of six years. A $200 fee may be deducted from the Participant's
General Account accumulation value before applying the rates found in the
tables.
PAGE 23
<PAGE>
The dollar amount of the first monthly variable annuity payment is determined by
applying the available value (after deduction of any applicable premium taxes
not previously deducted) to a rate 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. A number of units is then determined
by dividing this dollar amount by the then current annuity unit value.
Thereafter, the number of annuity units remains unchanged during the period of
annuity payments. This determination is made separately for each sub-account of
the separate account. The number of annuity units is based upon the available
value in each sub-account as of the date annuity payments are to begin. The
dollar amount determined for each sub-account will then be aggregated for
purposes of making payment.
The 4.5% interest rate assumed in the annuity rate would produce level annuity
payments if the net investment rate remained constant at 4.5% per year.
Subsequent payments will be less than, equal to, or greater than the first
payment depending upon whether the actual net investment rate is less than,
equal to, or greater than 4.5%. A higher interest rate would mean a higher
initial payment, but a more slowly rising (or more rapidly falling) series of
subsequent payments. A lower assumption would have the opposite effect.
If, when annuity payments are elected, we are using annuity rates for Contracts
of this class which result in larger annuity payments, we will use those rates
instead of those guaranteed in the Contract.
5. Amount of Second and Subsequent Monthly Variable Annuity Payments
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each applicable sub-account
multiplied by 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 dollar amounts for variable annuity payments determined for each applicable
sub-account will be aggregated for purposes of making the monthly variable
annuity payment to the Participant.
(SIDEBAR)
You may change Portfolios in the annuity period, subject to some restrictions.
(END SIDEBAR)
6. 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.
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
PAGE 24
<PAGE>
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. The restrictions which apply to annuity
sub-account transfers will apply as well. The amount transferred will then be
applied to provide a fixed annuity amount. This amount will be based upon the
adjusted age of the annuitant and any joint annuitant at the time of the
transfer. The annuity payment option will remain the same. Amounts paid as a
fixed annuity may not be transferred to a variable annuity.
(SIDEBAR)
If you die prior to commencement of annuity payments, there is a death benefit
that is guaranteed not to be less than your purchase payments.
(END SIDEBAR)
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 method at the time of
transfer that we used to determine an initial fixed annuity payment.
DEATH BENEFIT
Death benefits, if any, payable under Contracts shall be determined by the
applicable qualified trust or plan. The Contracts provide that in the event of
the death of the Participant prior to the commencement of annuity payments, the
death proceeds payable to the named beneficiary will be the greater of:
- the Participant's accumulation value determined as of the valuation date
coincident with or next following the date due proof of death is received
by us, or
- the total of the purchase payments made by or on behalf of a Participant
received by us less any prior Participant withdrawals or transfers to
another investment alternative available in the Contract Owner's
underlying plan.
PAGE 25
<PAGE>
Death proceeds will be paid in a single sum to the beneficiary designated by the
Participant, unless an annuity option is elected by the beneficiary. Payment
will be made within seven days after we receive due proof of death of the
Participant. Except as noted below, a Participant's entire interest in the
Contract must be distributed within five years of the Participant's death. If
the annuitant dies after annuity payments have begun, we will pay to the
beneficiary any death benefit provided by the annuity option selected. The
beneficiary of any remaining interest after the death of the annuitant under the
annuity option may be a person different from that person designated as the
beneficiary of the Participant's interest in the Contract prior to the annuity
commencement date.
The beneficiary will be the person or persons named in the Contract application
unless the Participant, or annuitant if annuity payments have commenced,
subsequently changes the beneficiary. In that event, we will pay the amount
payable at death to the beneficiary named in the last change of beneficiary
request. The Participant's or annuitant's written request to change the
beneficiary 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 the
Participant or annuitant signed the request. If the Participant or 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.
(SIDEBAR)
Initial purchase payments are credited within 2 business days of our receipt of
a complete application.
(END SIDEBAR)
CREDITING ACCUMULATION UNITS
During the accumulation period the purchase payment (on receipt of a completed
application or subsequently) is credited to a Participant's accumulation value
on the valuation date coincident with or next following the date such purchase
payment is received. If the initial purchase payment is accompanied by an
incomplete application, the purchase payment will not be credited until the
valuation date coincident with or next following the date a completed
application is received. We will offer to return the initial purchase payment
accompanying an incomplete application if it appears that the application cannot
be completed within five business days. Purchase payments will be credited to
the Contract in the form of accumulation units. The number of accumulation units
credited with respect to each purchase payment is determined by dividing the
portion of the purchase payment allocated to each sub-account by the then
current accumulation unit value for that sub-account. The total of these
separate account accumulation values in the sub-accounts will be the separate
account accumulation value. Interests in the sub-accounts will be valued
separately.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit. The value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment experience of the Portfolios of the Series Fund and those other
Underlying Funds.
We will determine the value of accumulation units on each day on which the
Portfolios of the Series Fund and such other Underlying Funds are valued. The
PAGE 26
<PAGE>
net asset value of the Series Fund and Underlying Fund shares are computed once
daily, as of the primary closing time for business on the New York Stock
Exchange, currently 3:00 p.m. Central time, on each day, except:
- days on which changes in the value of such Fund's securities will not
materially affect the current net asset value of such Fund's shares;
- days on which no such Series Fund's shares or Underlying Fund's shares
are tendered for redemption and no order to purchase or sell such Fund's
shares is received by such Fund and
- customary national business holidays on which the New York Stock Exchange
is closed for trading.
Accordingly, the value of accumulation units so determined will be applicable to
all purchase payments we receive 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 to the close of business of the Exchange will
be the value determined on the next valuation date.
TRANSFER OF VALUES
Upon a Participant's written or telephone request, values under the Contract may
be transferred between the General Account and the Group Variable Annuity
Account or among the sub-accounts of the Group 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. Transfers
between the sub-accounts of the Group Variable Annuity Account are unlimited as
to amount and frequency.
(SIDEBAR)
Systematic transfers and telephone transfers are available.
(END SIDEBAR)
The Contracts permit us to limit the frequency and amount of transfers from the
General Account to the sub-accounts of the Group Variable Annuity Account. The
Contracts provide that transfers from a Participant's Accumulation Value in our
General Account will be on a first-in, first-out (FIFO) basis and they provide
that Participants may transfer the greater of $1,000 or 10% of their General
Account accumulation value annually or in 12 monthly installments. We currently
limit such transfers during any calendar year to the greater of $1,000 or an
amount which is no more than 20% of the General Account accumulation value at
the time of the transfer.
Transfer arrangements may be established to begin on the 10th or 20th. If a
transfer cannot be completed it will be made on the next available transfer
date.
A Participant or persons authorized by Participants may also effect transfers,
or a change in the allocation of future premiums, by means of a telephone call.
Transfers and requests made pursuant to such a call are subject to the same
conditions and procedures as for written transfer requests. During periods of
marked economic or market changes, Participants may experience difficulty in
implementing a telephone transfer due to a heavy volume of telephone calls.
PAGE 27
<PAGE>
(SIDEBAR)
Your contract's accumulation value varies with the performance of the Portfolios
you select and is not guaranteed.
(END SIDEBAR)
Participants should then consider submitting a written transfer request while
continuing to attempt a telephone transfer. We reserve the right to restrict the
frequency of -- or otherwise modify, condition, terminate or impose charges upon
- -- telephone transfer privileges.
We will employ reasonable procedures to satisfy ourselves that instructions
received from Participants are genuine. We require Participants to identify
themselves through such information as we may deem to be reasonable. We record
telephone transfer and change of allocation instruction conversations and we
provide Participants with a written confirmation of the telephone transfer.
The interests of Contract Owners and Participants arising from the allocation of
purchase payments or the transfer of contract values to the General Account of
Minnesota Life, and thereby to its general assets, are not registered under the
Securities Act of 1933. Minnesota Life is not registered as an investment
company under the Investment Company Act of 1940. Accordingly, Minnesota Life is
not subject to the provisions of those acts that would apply if registration
under such acts were required.
PORTABILITY
Withdrawals are also allowed from the Participant accumulation values of the
Contract to transfer amounts to other investment alternatives offered by the
Contract Owner in its underlying plan.
Withdrawals for this purpose (other than those relating to the timing of
payments), are subject to the same limitations and restrictions as described in
the heading "Transfer of Values" immediately above and the same dollar
limitations on such transfers similarly apply.
VALUE OF THE CONTRACT
The value of the Contract at any time prior to the commencement of annuity
payments can be determined by multiplying the total number of accumulation units
credited to the Contract by the current value of an accumulation unit in each
sub-account of the Group Variable Annuity Account and adding to this amount the
sum of General Account values. There is no assurance that such value will equal
or exceed the purchase payments made, except with respect to amounts allocated
to the General Account. The Contract Owner and, where applicable, each
Participant will be advised periodically of:
- the number of accumulation units credited to the Contract or to the
Participant's individual account
- the current value of each accumulation unit, and the total value of the
Contract or the individual account.
ACCUMULATION UNIT VALUE
The value of an accumulation unit in each sub-account of the Group Variable
Annuity Account was set at $1.000000 on the first valuation date of the Group
PAGE 28
<PAGE>
Variable Annuity Account. The value of an accumulation unit on any subsequent
valuation date is determined by multiplying the value of an accumulation unit on
the immediately preceding valuation date by the net investment factor (described
below) for the valuation period just ended. The value of an accumulation unit as
of any date other than a valuation date is equal to its value on the next
succeeding valuation date.
NET INVESTMENT FACTOR
The 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
risk, expense risk and administrative charge at the current rate of 1.00% per
annum.
The gross investment rate is equal to:
- the net asset value per share of a Series Fund or Underlying Fund share
held in a sub-account of the Group Variable Annuity Account determined at
the end of the current valuation period; plus
- the per share amount of any dividend or capital gain distribution by that
Series Fund or Underlying Fund if the "ex-dividend" date occurs during
the current valuation period; divided by
- the net asset value per share of that Series Fund or Underlying Fund
share determined at the end of the preceding valuation period. The gross
investment rate may be positive or negative.
(SIDEBAR)
You may cancel your contract under certain circumstances and subject to possible
tax consequences.
(END SIDEBAR)
WITHDRAWALS AND SURRENDER
Under certain circumstances a Participant may have the right to surrender his or
her interest in the Contract in whole or in part, subject to possible adverse
tax consequences.
Withdrawals may be made only for:
- the purpose of providing plan benefits;
- making transfers to the Contract Owner;
- making transfers to plan investment alternatives available in the
Contract Owner's underlying plan other than those provided for in this
Contract; or;
- allowing other withdrawals as allowed in the plan and mutually agreed
upon by us and the Contract Owner.
The amount available for withdrawal shall be the Participant accumulation value
less any applicable deferred sales charge. If withdrawals during the first
calendar year of participation are equal to or less than 10% of the total
purchase payments
PAGE 29
<PAGE>
made on behalf of the Participant, the charge will not apply. In subsequent
calendar years there will be no charge for withdrawals equal to or less than 10%
of the prior calendar year Participant accumulation value. If a Participant's
withdrawals in any calendar year exceed this amount, the deferred sales charge
will apply to the excess.
Withdrawal amounts shall be deducted from the Participant's General Account
accumulation value on a first in, first out (FIFO) basis. Unless otherwise
instructed by the Participant or the Contract Owner, withdrawal amounts will be
made from a Participant's interest in the General Account and each sub-account
of the Group Variable Annuity Account in the same proportion. The provisions of
the applicable qualified trust, qualified plan or state deferred compensation
plan may provide further limitations on withdrawals.
You may request a withdrawal in writing from us. The withdrawal date will be the
valuation date coincident with or next following the receipt of the request by
us at our home office.
We will waive the applicable dollar amount limitation on withdrawals where a
systematic withdrawal program is in place and such a smaller amount satisfies
the minimum distribution requirements of the Code. We will also waive the
applicable dollar amount limitation on withdrawals where a withdrawal is due to
an excess contribution.
The Participant cannot surrender his or her annuity benefit and receive a single
sum settlement once annuity payments have commenced.
Contract Owners or plan administrators of the Contract Owner's underlying plan
may also submit signed written withdrawal or surrender requests to us by
facsimile (FAX) transmission. Our FAX number is (651) 665-7942. Transfer
instructions or changes as to future allocations of purchase payments may be
communicated to us by the same means.
The surrender of a Certificate or a partial withdrawal thereunder may result in
a credit against our premium tax liability. In such event, we will pay in
addition to the cash value paid in connection with the surrender or withdrawal,
the lesser of (1) the amount by which our premium tax liability is reduced, or
(2) the amount previously deducted from purchase payments for premium taxes. No
representation can be made that upon surrender or withdrawal any such payment
will be made.
DISTRIBUTION
The Contracts will be sold by Minnesota Life, life insurance agents who are also
registered representatives of Ascend Financial Services, Inc. ("Ascend
Financial"). Ascend Financial is the principal underwriter of the contract, and
may pay up to 6.0% of the amount of purchase payments to broker-dealers who sell
the contracts. In addition, either we or Ascend Financial will pay credits which
allow registered representatives who are responsible for sales of variable
annuity
PAGE 30
<PAGE>
contracts to attend conventions and other meetings that we or our affiliates
sponsor, for the purpose of promoting the sale of the insurance and/or
investment products that we or our affiliates offer. Such credits may cover the
registered representatives' transportation, hotel accommodations, meals,
registration fees and the like. We may also pay those registered representatives
amounts based upon their productions and the persistency of life insurance and
annuity business they placed with us.
(SIDEBAR)
You can instruct us how to vote Fund shares.
(END SIDEBAR)
VOTING RIGHTS
We will vote in our discretion shares of Underlying Funds other than Portfolios
of the Series Fund held in the Group Variable Annuity Account. We will vote the
Series Fund Portfolio shares held in the Group Variable Annuity Account, in
accordance with instructions received from Participants with values allocated to
sub-accounts investing in shares of those Series Fund Portfolios. We will vote
all shares of a Series Fund Portfolio held by the Group Variable Annuity Account
for which no voting instructions are received from Participants in the same
proportion as shares held by the Group Variable Annuity Account for which such
instructions have been received. If applicable laws should change so that we may
be allowed to vote such shares in our own right, then we may elect to do so.
Voting instructions for votes of Series Fund Portfolio shares are to be provided
during the accumulation period by Participants with values allocated to sub-
accounts investing in those Portfolios and during the annuity period by
annuitants with annuity reserves allocated to those sub-accounts. In each case,
the value of the amounts so allocated on behalf of a Participant or annuitant
will be divided by net asset value per share of the applicable Series Fund
Portfolio shares to determine the number of shares for which voting instructions
may be provided by the Participant or annuitant. In either case, instructions
for voting fractional shares will be recognized. We shall notify Participants or
annuitants who are entitled to provide such voting instructions and will provide
them with proxy materials and forms necessary for providing voting instructions.
During the accumulation period of each Certificate, the Participant holds the
voting interest in each Certificate. The number of votes will be determined by
dividing the accumulation value of the Contract as to the accumulation value of
each Participant attributable to each sub-account by the net asset value per
share of the underlying Series Fund shares held by that sub-account.
During the annuity period of each Certificate, the annuitant holds the voting
interest in each Certificate. The number of votes will be determined by dividing
the reserve for each annuitant allocated to each sub-account by the net asset
value per share of the underlying Series Fund shares held by that sub-account.
After an annuity begins, the votes attributable to any particular annuitant will
decrease as the reserves decrease. In determining any voting interest,
fractional shares will be recognized.
PAGE 31
<PAGE>
We shall notify each Participant or annuitant of a Series Fund shareholders'
meeting if the shares held for the Participant 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.
(SIDEBAR)
We are not offering tax advice. You should consult your own tax adviser.
(END SIDEBAR)
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. The Contract may be purchased on a non-tax qualified
basis ("Non-Qualified Contract") or purchased and used in connection with
certain retirement arrangements entitled to special income tax treatment under
section 401(a), 403(b), 408(k) or 457 of the Code ("Qualified Contracts"). The
ultimate effect of federal income taxes on the amounts held under a Contract, on
Annuity Payments, and on the economic benefit to the Contract Owner, the
Annuitant, or the Beneficiary may depend on the tax status of the individual
concerned.
We are taxed as a "life insurance company" under the Internal Revenue Code. The
operations of the Group 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 Group Variable Annuity Account or on
capital gains arising from its investment activities. The Group Variable Annuity
Account is not taxed as a "regulated investment company" under the Internal
Revenue Code (the "Code") and it does not anticipate any change in that tax
status. However, if changes in the federal tax laws or interpretations thereof
result in Minnesota Life being taxed on income or gains attributable to the
Group Variable Annuity Account, we may impose a charge against the Group
Variable Annuity Account (with respect to some or all Contracts) in order to set
aside provisions to pay such taxes.
PAGE 32
<PAGE>
(SIDEBAR)
Taxes on gains under the contract are normally deferred until there is a
distribution of contract values.
Ordinary income tax rates apply to amounts distributed in excess of purchase
payments. Gains are assumed to be distributed before return of purchase
payments.
A penalty tax may apply to distributions prior to age 59 1/2.
(END SIDEBAR)
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of nonqualified annuities in general and
some aspects of tax qualified programs. No taxes are generally 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 upon a partial surrender 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. All taxable amounts received under an
annuity contract are subject to tax at ordinary rather than capital gain 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.
The Code imposes a 10% penalty tax on the taxable portion of certain
distributions from annuity contracts. 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 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, be made for the life (or
life expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and beneficiary.
PAGE 33
<PAGE>
(SIDEBAR)
Transfers, assignments and certain designations of annuitants can have tax
consequences.
(END SIDEBAR)
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, a pledge of any interest in a contract as
security for a loan, 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,
pledge, 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 Group Variable Annuity
Account to be "adequately diversified" in order for the Contract to be treated
as an annuity contract for Federal tax purposes. Group Variable Annuity Account,
through the Series Fund, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Series Fund's
assets may be invested. Although the investment adviser is an affiliate of ours,
we do not have control over the Series Fund or its investments. Nonetheless, we
believe that each Portfolio of the Series Fund in which the Group Variable
Annuity Account owns shares will be operated in compliance with the requirements
prescribed by the Treasury.
Prior to the enactment of Section 817(h), the IRS published several rulings
under which owners of certain variable annuity contracts were treated as owners,
for federal income tax purposes, of the assets held in a 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. However, the continued effectiveness of the pre-Section
817(h) published rulings is somewhat uncertain. In connection with its issuance
of proposed regulations under Section 817(h) in 1986, the Treasury Department
announced that those regulations did 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".
While the Treasury's 1986 announcement stated that guidance would be issued on
the "extent to which the policyholders may direct their investments to
particular sub-accounts without being treated as owners of the underlying
assets", no such guidance has been forthcoming.
PAGE 34
<PAGE>
The ownership rights of a Participant under the Contract are similar to, those
described by the IRS in rulings in which it was determined that contract owners
were not owners of separate account assets. For example, a Participant has the
choice of one or more 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. Minnesota Life does not believe that the
ownership rights of a contract owner under the Contract would result in any
contract owner being treated as the owner of the assets of the Variable Account.
However, Minnesota Life does not know what standards would be applied if the
Treasury Department should proceed to issue regulations or rulings on this
issue.
Minnesota Life 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 Account.
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:
- if distributed in a lump sum, they are taxed in the same manner as a full
surrender of the Contract, as described above, or
- if distributed under an annuity option, they are taxed in the same manner
as annuity payments, as described above.
(SIDEBAR)
Congress may change the tax laws and reduce or eliminate any tax advantages of
the contract.
(END SIDEBAR)
POSSIBLE CHANGES IN TAXATION
Although the likelihood of there being any change is uncertain, there is always
the possibility that the tax treatment of the Contracts could change by
legislation or other means. Moreover, it is also possible that any change could
be retroactive (that is, effective prior to the date of the change). You should
consult a tax adviser with respect to legislative developments and their effect
on the Contract.
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.
PAGE 35
<PAGE>
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. The rights of any person
to benefits under annuity contracts 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 the annuity or other 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. If you
intend to purchase a contract for use with any retirement plan you should
consult your legal counsel and tax adviser regarding the suitability of the
contract. The contract may also be used in other situations where a group
annuity contract is desired for funding but where the benefit structure does not
require a contract which is recognized as an "annuity" for federal income tax
purposes. As with deferred compensation plans, the availability of public funds
within the contract may present additional considerations as to whether that
contract is qualified as an annuity contract for tax purposes.
For qualified plans under Section 401(a), 403(b), and 457, the Code requires
that distributions generally must commence no later than the later of April 1 of
the calendar year following the calendar year in which the Owner (or plan
participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a
specified form or manner. If the plan participant is a "5 percent owner" (as
defined by the Code), distributions generally must begin no later than April 1
of the calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2.
(SIDEBAR)
Distributions are subject to income tax withholding requirements unless you take
steps to prevent it.
(END SIDEBAR)
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:
- 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;
- a required minimum distribution; or
- the non-taxable portion of a distribution.
PAGE 36
<PAGE>
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.
LOANS
Generally, interest paid on any loan under an annuity Contract which is owned by
an individual is not deductible. A Participant should consult a competent tax
adviser before deducting any loan interest.
SEE YOUR OWN TAX ADVISER
The foregoing description of the federal income tax consequences under these
Contracts is not exhaustive. Special rules are provided with respect to
situations not discussed herein. 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 becoming a Participant under the Contract or exercising
elections under such a Contract. For further information a qualified tax adviser
should be consulted.
PERFORMANCE DATA
From time to time the Group Variable Annuity Account may publish advertisements
containing performance data relating to its sub-accounts. In the case of the
Money Market sub-account, the Group Variable Annuity Account will publish yield
or effective yield quotations for a seven-day or other specified period. In the
case of the other sub-accounts, performance data will consist of average annual
total return quotations for a one-year period and for the period since the
sub-account became available pursuant to the Group Variable Annuity Account's
registration statement, and may also include cumulative total return quotations
for the period since the sub-account became available pursuant to such
registration statement. The Money Market sub-account may also quote such average
annual and cumulative total return figures. Performance figures used by the
Group 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
Group Variable Annuity Account will reflect charges made pursuant to the terms
of the
PAGE 37
<PAGE>
Contracts offered by this Prospectus and charges of the Series Fund or
Underlying Funds. More detailed information on the computations is set forth in
the Statement of Additional Information.
YEAR 2000 COMPUTER PROBLEM
The services we provided to the Separate Account and its contract owners depend
on the smooth functioning of its computer systems. Many computer software
systems in use today cannot distinguish the year 2000 from the year 1900 because
of the way that dates are encoded, stored and calculated. That failure could
have a negative impact on our ability to provide services to contract owners. We
have been actively working on necessary changes to our computer systems to deal
with the year 2000. Although there can be no assurance of complete success, we
believe that we will be able to resolve these issues on a timely basis and that
there will be no material adverse impact on our ability to provide services to
the Separate Account.
In addition, our operations could be impacted by our service providers' or
suppliers' year 2000 efforts. We have undertaken an initiative to assess the
efforts of organizations where there is a significant business relationship.
There is no assurance however, that we will not be affected by year 2000
problems of other organizations.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Group Variable Annuity Account and the Contracts.
Statements contained in this Prospectus as to the content of Contracts and other
legal instruments are summaries. For a complete statement of the terms thereof
reference is made to such instruments as filed.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional information,
including financial statements, is available from us at your request. The Table
of Contents for that Statement of Additional Information is as follows:
Group Variable Annuity Account
Directors and Principal Management Officers of Minnesota Life
Distribution of Contracts
Annuity Payments
Auditors
Financial Statements
Appendix A -- Calculation of Unit Values
PAGE 38
<PAGE>
APPENDIX A -- CONDENSED FINANCIAL INFORMATION
The financial statements the Group Variable Annuity Account and Minnesota Life
Insurance Company may be found in the Statement of Additional Information. The
table below gives per unit information about each sub-account for the years
ended December 31, 1998, 1997 and 1996 and the period from September 2, 1994,
commencement of operations, to December 31, 1994. This information should be
read in conjunction with the financial statements and related notes of Group
Variable Annuity Account included in the Statement of Additional Information. As
of December 31, 1998, no contract owners have elected to allocate payments to
the Advantus Bond, Advantus Mortgage Securities, Advantus Capital Appreciation,
Advantus International Stock, Advantus Small Company Growth, Advantus Maturing
Government Bond 2002, Advantus Maturing Government Bond 2006, Advantus Maturing
Government Bond 2010 and Advantus Value Stock sub-accounts. Accordingly, no
condensed financial information is presented for these sub-accounts.
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 2,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advantus Growth Sub-Account:
Unit value at beginning of period............... $1.08 $1.00 -- --
Unit value at end of period..................... $1.42 $1.08 -- --
Number of units outstanding at end of period.... 351,033 136,198 -- --
Advantus Money Market Sub-Account:
Unit value at beginning of period............... $1.10 $1.06 $1.01 $1.00
Unit value at end of period..................... $1.14 $1.10 $1.06 $1.01
Number of units outstanding at end of period.... 2,345,197 1,676,436 812,075 318,636
Advantus Asset Allocation Sub-Account:
Unit value at beginning of period............... $1.06 $1.00 -- --
Unit value at end of period..................... $1.25 $1.06 -- --
Number of unit outstanding at end of period..... 368,919 69,684 -- --
Advantus Index 500 Sub-Account:
Unit value at beginning of period............... $1.60 $1.33 $0.98 $1.00
Unit value at end of period..................... $2.09 $1.60 $1.33 $0.98
Number of units outstanding at end of period.... 7,737,757 3,811,296 1,252,482 261,150
Vanguard Long-Term Corporate Sub-Account:
Unit value at beginning of period............... $1.24 $1.23 $0.99 $1.00
Unit value at end of period..................... $1.41 $1.24 $1.23 $0.99
Number of units outstanding at end of period.... 3,145,416 2,199,884 1,202,743 275,796
Vanguard Wellington Sub-Account
Unit value at beginning of period............... $1.48 $1.28 $0.98 $1.00
Unit value at end of period..................... $1.80 $1.48 $1.28 $0.98
Number of units outstanding at end of period.... 16,168,553 9,571,917 4,097,086 1,363,274
Fidelity Contrafund Sub-Account:
Unit value at beginning of period............... $1.60 $1.32 $0.98 $1.00
Unit value at end of period..................... $1.95 $1.60 $1.32 $0.98
Number of units outstanding at end of period.... 26,429,507 18,638,007 11,232,337 4,870,232
Scudder International Sub-Account:
Unit value at beginning of period............... $1.18 $1.04 $0.93 $1.00
Unit value at end of period..................... $1.26 $1.18 $1.04 $0.93
Number of units outstanding at end of period.... 5,979,571 4,774,006 3,011,428 1,807,445
Janus Twenty Sub-Account:
Unit value at beginning of period............... $1.63 $1.29 $0.96 $1.00
Unit value at end of period..................... $2.09 $1.63 $1.29 $0.96
Number of units outstanding at end of period.... 6,171,080 2,891,975 990,111 444,821
</TABLE>
PAGE A-1
<PAGE>
APPENDIX B -- TYPES OF QUALIFIED PLANS
SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
Employers may establish Simplified Employee Pension (SEP) IRAs under Code
Section 408(k) to provide IRA contributions on behalf of their employees. In
addition to all of the general Code rules governing IRAs, such plans are subject
to certain Code requirements regarding participation and amounts of
contributions.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the contracts to accumulate retirement savings under the
plans. Adverse tax or other legal consequences to the plan, to the participant
or to both may result if this annuity is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan complies with
all legal requirements applicable to such benefits prior to transfer of the
annuity.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax-exempt organizations. The plans may permit participants
to specify the form of investment for their deferred compensation account.
With respect to non-governmental Section 457 plans, all 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.
Any amount deferred under an eligible deferred compensation plan, and any income
attributable to the amounts so deferred, are currently excluded from the
Participant's income. Generally, the maximum amount of compensation that may be
deferred is the lesser of $8,000 or 33 1/3% of includable compensation (taxable
earnings). This amount shall be adjusted for cost-of-living in accordance with
Section 457(e)(15) of the Code. Different rules may apply for Participants
covered by private deferred compensation plans under this section and those
Participants should consult a competent tax adviser concerning the operation of
such a plan. A Participant who participates in a deferred compensation plan
sponsored by an employer and who also participates in a Section 403(b)
retirement program, Section 401(k) plan or a Simplified Employee Pension (SEP)
amounts excludable from gross income pursuant to that program, plan or pension
reduce the amount of compensation which may be deferred under a Section 457
deferred compensation plan.
PAGE B-1
<PAGE>
The diversification requirements of Section 817(h) of the Code, previously
described in this section, may present additional considerations for purchasers
or Participants of the Contracts. Code Section 817(h) applies to a variable
annuity contract other than a pension plan contract. Section 818 of the Code
defines pension plan contracts as contracts issued under a Section 401(a) plan,
Section 401(k) plan, Section 403(b) program, or a Section 457 retirement program
as maintained by the United States government, the government of any state or
political subdivision thereof, or by any agency or instrumentality of the
foregoing.
Notwithstanding this exemption, an existing Revenue Ruling, Revenue Ruling
81-225, may provide a legal theory that suggests that contracts which utilize a
public fund, that is -- a fund available not only to separate accounts of
insurance companies but to members of the public generally, may present
additional considerations as to whether that contract is qualified as an annuity
contract for tax purposes because of the existence of the availability of the
public funds in that contract. We believe that if the Service were to make such
a determination providing that result, that the existence of a Section 457
deferred compensation plan would, nevertheless, protect Participants in that
plan from current income taxation.
Additionally, should a contract make a public fund available to its
Participants, it is believed that additional contracts funded by the separate
account could participate in the separate account and, so long as they omitted
the use of non-public funds, that they could continue to obtain tax treatment as
an annuity under existing regulations and revenue rulings.
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.
PAGE B-2
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO STATEMENT OF ADDITIONAL INFORMATION
Form N-4
Item Number Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. Group Variable Annuity Account
18. Not Applicable
19. Not Applicable
20. Distribution of Contracts
21. Performance Data
22. Annuity Payments
23. Financial Statements
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT
Statement of Additional Information
The date of this document and the Prospectus is: May 3, 1999
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 Group Variable Annuity Account's current
Prospectus, bearing the same date, which may be obtained by calling Minnesota
Life at (651) 665-3500 or writing the Group Variable Annuity Account at
Minnesota Mutual Center, 400 Robert Street North, St. Paul, Minnesota
55101-2098.
TABLE OF CONTENTS
Separate Account
Directors and Principal Management Officers of Minnesota Life
Distribution of Contracts
Performance Data
Annuity Payments
Auditors
Financial Statements
Appendix A - Calculation of Unit Values
1
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT
The Group Variable Annuity Account is a separate account of Minnesota Life
Insurance Company ("Minnesota Life"). The Group Variable Account is
registered as a unit investment trust.
<TABLE>
<CAPTION>
DIRECTORS AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA LIFE
Directors Principal Occupation
--------- --------------------
<S> <C>
Giulio Agostini Senior Vice President, Finance and Administrative
Services, 3M, St. Paul, 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)
Leslie S. Biller Vice Chairman and Chief Operating Officer, Wells
Fargo & Company, San Francisco, California
(Banking)
John F. Grundhofer President, Chairman and Chief Executive Officer,
U.S. Bancorp, Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota, Minneapolis, Minnesota
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
William B. Lawson, Sr. Chairman and Chief Executive Officer, Lawson
Software, Minneapolis, Minnesota
Thomas E. Rohricht Of Counsel, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Robert L. Senkler Chairman of the Board, President and Chief
Executive Officer, Minnesota Life Insurance
Company, since August 1995; prior thereto for more
than five years Vice President and Actuary,
Minnesota Life Insurance Company
Michael E. Shannon Chairman, Chief Financial and Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota
(Develops and Markets Cleaning and Sanitizing
Products)
Frederick T. Weyerhaeuser Retired since April 1998, prior thereto Chairman
and Treasurer, Clearwater Investment Trust since
May 1996, prior thereto for more than five years,
Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Principal Officers (other than Directors)
Name Position
<S> <C>
John F. Bruder Senior Vice President
Keith M. Campbell Senior Vice President
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Dennis E. Prohofsky Senior Vice President, General
Counsel and Secretary
Gregory S. Strong Senior Vice President and Chief
Financial Officer
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
William N. Westhoff Senior Vice President and Treasurer
</TABLE>
All Directors who are not also officers of Minnesota Life have had the principal
occupation (or employers) shown for at least five years. All officers of
Minnesota Life have been employed by Minnesota Life for at least five years with
the exception of Mr. Westhoff. Mr. Westhoff has been employed by Minnesota Life
since April 1998. Prior thereto, Mr. Westhoff was employed by American Express
Financial Corporation, Minneapolis, Minnesota, from August 1994 to October 1997
as Senior Vice President, Global Investments and from November 1989 to July 1994
as Senior Vice President, Fixed Income Management.
DISTRIBUTION OF CONTRACTS
The Contracts will be continuously sold by Minnesota Life, life insurance
agents who are also registered representatives of Ascend Financial Services,
Inc. or other broker-dealers who have entered into selling agreements with
Ascend Financial. Ascend Financial acts as the principal underwriter of the
contracts. Ascend Financial Services, Inc. is a wholly-owned subsidiary of
Advantus Capital Management, Inc. which in turn is a wholly-owned subsidiary
of Minnesota Life. Ascend Financial 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.
3
<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 Group 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, 1998 were 4.04% and
4.12%, respectively. Such figures reflect the voluntary absorption of certain
expenses of Advantus Series Fund, Inc. (the "Fund") by Minnesota Life
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 6%).
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 Group
Variable Annuity Account's registration statement. Cumulative total return is
equal to the percentage change between the net asset value of a hypothetical
$1,000 investment at the beginning of the period and the net asset value of that
same investment at the end of the period. Such quotations of cumulative total
return will not reflect the deduction of any applicable deferred sales charge.
The cumulative total return figures published by the Group Variable Annuity
Account relating to the contract described in the Prospectus will reflect
Minnesota Life or the Underlying Fund's management voluntary absorption
of certain Series Fund or Underlying Fund expenses described below.
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one year period, five year period,
ten year period or since the inception of the Group Variable Annuity
Contract. 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 payments and to the length of the period the
payments remain in the contract. The average annual total return figures
published by the Group Variable Annuity Account will reflect Minnesota
Mutual's or the Underlying Fund's management voluntary absorption of certain
Series Fund or Underlying Fund expenses. Prior to January 1, 1986, the
Series Fund incurred no expenses. Total return is quoted for only those
Sub-Accounts that had purchase payments allocated to them as of December 31,
1998 under The Group Variable
4
<PAGE>
Annuity Account. The figures in parenthesis show what the cumulative rates
of return would have been had Minnesota Life or the Underlying Fund's
management not absorbed Fund expenses as described below.
<TABLE>
<CAPTION>
From Inception Date of
To 12/31/98 Inception
-------------------- ---------
<S> <C> <C> <C>
Growth Sub-Account 42.22% (42.22%) 01/31/96
Asset Allocation Sub-Account 25.13% (25.13%) 01/31/96
Index 500 Sub-Account 109.44% (109.44%) 09/01/94
Vanguard Long-Term Corporate
Sub-Account 39.96% (39.96%) 09/01/94
Vanguard Wellington Sub-Account 80.10% (80.10%) 09/01/94
Fidelity Contrafund Sub-Account 94.91% (94.91%) 09/01/94
Scudder International Sub-Account 25.96% (25.96%) 09/01/94
Janus Twenty Sub-Account 109.22% (109.22%) 09/01/94
</TABLE>
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 Group 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 payments and to the length of the period the payments
remain in the contract. The average annual total return figures published by
the Group Variable Annuity Account will reflect Minnesota Life 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
Life 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 Life 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 Growth 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 Life 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 Life voluntarily absorbed fees and
5
<PAGE>
expenses that exceeded .20% of average daily net assets of those Portfolios
through April 30, 1998. For the period subsequent to April 30, 1998, Minnesota
Life has voluntarily absorbed fees and expenses that exceed .40% of the
average daily net assets of the Maturing Government Bond Portfolios maturing in
1998 and 2002. For the period subsequent to October 1, 1997, Minnesota Life
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 and Real Estate Securities
Portfolios, .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
Global Bond Portfolio of the Fund exclusive of the advisory fee. There is no
specified or minimum period of time during which Minnesota Life has agreed to
continue its voluntary absorption of these expenses, and Minnesota Life may in
its discretion cease its absorption of expenses at any time. Should Minnesota
Life cease absorbing expenses the effect would be to increase substantially
Fund expenses and thereby reduce investment return.
6
<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, 1998 are shown in the tables below. The figures in parentheses
show what the average annual rates of return would have been had Minnesota
Life or the Underlying Fund's management not absorbed Series Fund or
Underlying Fund expenses as described above. These figures assume that the
contracts described herein were issued at the inception of the Group Variable
Annuity Contract. Total return is quoted for only those Sub-Accounts that
had purchase payments allocated to them as of December 31, 1998 under the
Group Variable Annuity Account.
<TABLE>
<CAPTION>
Group Deferred Variable Annuity
Year Ended Five Years Ten Years From Inception Date of
12/31/98 Ended 12/31/98 Ended 12/31/98 to 12/31/98 Inception
---------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 25.48% (25.48%) N/A (N/A) N/A (N/A) 17.60% (17.60%) 01/31/96
Asset Allocation
Sub-Account 11.92% (11.92%) N/A (N/A) N/A (N/A) 10.01% (10.01%) 01/31/96
Index 500 Sub-Account 24.49% (24.49%) N/A (N/A) N/A (N/A) 23.79% (23.79%) 09/01/94
Vanguard Long-Term
Corporate Sub-Account 7.04% (7.04%) N/A (N/A) N/A (N/A) 9.71% (9.71%) 09/01/94
Vanguard Wellington
Sub-Account 15.91% (15.91%) N/A (N/A) N/A (N/A) 18.32% (18.32%) 09/01/94
Fidelity Contrafund
Sub-Account 15.69% (15.69%) N/A (N/A) N/A (N/A) 21.15% (21.15%) 09/01/94
Scudder International
Sub-Account 1.56% (1.56%) N/A (N/A) N/A (N/A) 6.29% (6.29%) 09/01/94
Janus Twenty
Sub-Account 21.99% (21.99%) N/A (N/A) N/A (N/A) 23.75% (23.75%) 09/01/94
</TABLE>
7
<PAGE>
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. In addition,
these figures assume that the contracts described herein were issued at the
inception of the corresponding Series Fund Portfolios or Underlying Fund.
Thus the total returns reflect simulated performance under the Sub-Account of
the contract assuming all purchase payments had been allocated to the
Underlying Fund or Series Fund Portfolio, reduced for applicable expenses.
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, 1998, are shown in the table below. 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 Life or
the Underlying Fund's management not absorbed Series Fund or the Underlying
Fund expenses as described above. Total return is quoted for only those
Sub-Accounts that had purchase payments allocated to them as of December 31,
1998 under The Group Variable Annuity Account.
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years
12/31/98 Ended 12/31/98 Ended 12/31/98
-------- -------------- --------------
<S> <C> <C> <C>
Growth Sub-Account 32.09% (32.09%) 14.15% (14.15%) 14.09% (14.09%)
Asset Allocation Sub-Account 17.81% (17.81%) 10.71% (10.71%) 11.57% (11.57%)
Index 500 Sub-Account 31.05% (31.05%) 18.24% (18.24%) 16.15% (16.15%)
Vanguard Long-Term Corporate Sub-Account 12.68% (12.68%) 8.47% (8.47%) 9.79% (9.79%)
Vanguard Wellington Sub-Account 22.01% (22.01%) 15.33% (15.33%) 13.53% (13.53%)
Fidelity Contrafund Sub-Account 21.78% (21.78%) 18.47% (18.47%) 21.80% (21.80%)
Scudder International Sub-Account 6.90% (6.90%) 11.83% (11.83%) 9.55% (9.55%)
Janus Twenty Sub-Account 28.41% (28.41%) 15.69% (15.69%) 19.92% (19.92%)
</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 Minnesota Life 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:
2T
AVM = P(1 + AGR/2)
where P = the Sub-Account's current price per unit; T = the Sub-Account's
weighted average term to maturity in years; and AGR = the anticipated growth
rate.
This calculation assumes an expense ratio and a portfolio composition for the
underlying Maturing Government Bond Portfolio that remain constant for the life
of such Portfolio. Because the Portfolio's expenses and composition do not
remain constant, however, Minnesota Life
9
<PAGE>
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. Minnesota Life 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.
Minnesota Life 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.
10
<PAGE>
ANNUITY PAYMENTS
Please see Appendix A to this Statement of Additional Information for an
illustration of the calculation of annuity unit values and of a variable annuity
payment, showing the method used for the calculation of both the initial and
subsequent payments.
AUDITORS
The financial statements of the Group Variable Annuity Account and the
Consolidated Financial Statements of Minnesota Life Insurance Company
included in this Statement of Additional Information have been audited by
KPMG Peat Marwick LLP, 4200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, independent auditors, as indicated in their
reports in this Statement of Additional Information, and are included herein
in reliance upon such reports and upon the authority of such firm as experts
in accounting and auditing.
11
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Group Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item
Number
- ------
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 Group Variable Annuity Account for the
period ended December 31, 1998, are included in Part B of this filing
and consist of the following:
1. To be Filed by Subsequent Amendment
2. To be Filed by Subsequent Amendment
3. To be Filed by Subsequent Amendment
4. To be Filed by Subsequent Amendment
5. To be Filed by Subsequent Amendment
(b) Audited Financial Statements of the Minnesota Life Insurance Company for
the period ended December 31, 1998, are included in Part B of this filing
and consist of the following:
1. To be Filed by Subsequent Amendment
2. To be Filed by Subsequent Amendment
3. To be Filed by Subsequent Amendment
4. To be Filed by Subsequent Amendment
5. To be Filed by Subsequent Amendment
6. To be Filed by Subsequent Amendment
7. To be Filed by Subsequent Amendment
8. To be Filed by Subsequent Amendment
<PAGE>
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance Company's Board
of Trustees establishing Minnesota Mutual Group Variable Annuity Account
previously filed as this exhibit to Registrant's Form N-4, File Number
33-79534, Post-Effective Amendment Number 5, is hereby incorporated by
reference.
2. Not applicable.
3. (a) Form of Distribution Agreement previously filed as this exhibit to
Registrant's Form N-4, File Number 33-79534, Post-Effective
Amendment Number 5, is hereby incorporated by reference.
(b) Form of Broker-Dealer Sales Agreement previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated by
reference.
4. (a) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 94-9310 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(b) The specimen copy of the Participant's Certificate of Insurance,
form number 94-9311 Rev. 2-96 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-79534, Post-Effective
Amendment Number 4, is hereby incorporated by reference.
(c) The specimen copy of the Annuitization Endorsement, form number
94-9312 previously filed as this exhibit to Registrant's Form N-4,
File Number 33-79534, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
(d) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 95-9330 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(e) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9331 Rev. 2-96 previously filed as
this exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 4, is hereby incorporated by
reference.
(f) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 95-9332 Rev. 2-96 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534, Post-
Effective Amendment Number 4, is hereby incorporated by
reference.
(g) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9333 Rev. 2-96 previously filed as
this exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 4, is hereby incorporated by
reference.
(h) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9338 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated
by reference.
(i) TSA Limited Benefit Group Variable Annuity Certificate, form
number 97-9421 previously filed as this exhibit to Registrant's
Form N-4, File Number 33-79534, Post-Effective Amendment Number 6,
is hereby incorporated by reference.
5. (a) Application, form number F. 18210 Rev. 12-81,
Contract Owner Application previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated
by reference.
(b) Application, form number MSRS 240 Rev. 9-94,
Participant Application previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated
by reference.
(c) Annuity Application, form number 95-9325 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated
by reference.
(d) Group TSA Variable Annuity Application, form number
95-9329 previously filed as this exhibit to Registrant's Form N-4,
File Number 33-79534, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
(e) Annuity Application, form number 97-9422 12-1997 previously
filed as this exhibit to Registrant's Form N-4, File Number
33-79534, Post-Effective Amendment Number 6, is hereby
incorporated by reference.
6. (a) The Restated Certificate of Incorporation
(b) The By-Laws of Minnesota Life Insurance Company
7. Not applicable.
<PAGE>
8. Deferred Compensation Business Plan Agreement previously filed as this
exhibit to Registrant's Form N-4, File Number 33-79534,
Post-Effective Amendment Number 5, is hereby incorporated by reference.
9. Opinion and Consent of Donald F. Gruber, Esq., to be filed by
subsequent amendment.
10. (a) Consent of KPMG Peat Marwick LLP, to be filed by subsequent
amendment.
(b) Minnesota Life Insurance Company Power of Attorney to Sign
Registration Statement.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotations.
(a) Money Market Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4, File
Number 33-79534, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
(b) Index 500 Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4, File
Number 33-79534, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
(c) Long-Term Corporate Segregated Sub-Account Performance
Calculations previously filed as this exhibit to Registrant's
Form N-4, File Number 33-79534, Post-Effective Amendment Number 5,
is hereby incorporated by reference.
(d) Vanguard/Wellington Segregated Sub-Account Performance
Calculations previously filed as this exhibit to Registrant's
Form N-4, File Number 33-79534, Post-Effective Amendment Number 5,
is hereby incorporated by reference.
(e) Fidelity Contrafund Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4, File
Number 33-79534, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
(f) Scudder International Segregated Sub-Account Performance
Calculations previously filed as this exhibit to Registrant's
Form N-4, File Number 33-79534, Post-Effective Amendment Number 5,
is hereby incorporated by reference.
(g) Janus Twenty Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4, File
Number 33-79534, Post-Effective Amendment Number 5, 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>
Giulio Agostini Director None
3M
3M Center -
Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen Director None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Director None
Wells Fargo & Company
MAC 0101-121
420 Montgomery Street
San Francisco, CA 94104
John F. Bruder Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Director None
U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Robert E. Hunstad Executive Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
<PAGE>
James E. Johnson Senior Vice President None
Minnesota Life Insurance and Actuary
Company
400 Robert Street North
St. Paul, MN 55101
David S. Kidwell, Ph.D. Director None
The Curtis L. Carlson
School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Director None
General Mills Foundation
P. O. Box 1113
Minneapolis, MN 55440
William B. Lawson, Sr. Director None
Lawson Software
1300 Godward Street
Minneapolis, MN 55413
Dennis E. Prohofsky Senior Vice President, None
Minnesota Life Insurance General Counsel and
Company Secretary
400 Robert Street North
St. Paul, MN 55101
Thomas E. Rohricht Director None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World Trade
Center
30 East Seventh Street
St. Paul, MN 55101-4999
<PAGE>
Robert L. Senkler Chairman, President and None
Minnesota Life Insurance Chief Executive Officer
Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Director None
Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Senior Vice President None
Minnesota Life Insurance and Chief Financial
Company Officer
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
William N. Westhoff Senior Vice President None
Minnesota Life Insurance and Treasurer
Company
400 Robert Street North
St. Paul, MN 55101
Frederick T. Weyerhaeuser Director None
Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
Wholly-owned subsidiary of Minnesota Mutual Companies, Inc.:
Securian Holding Company (Delaware)
Wholly-owned subsidiary of Securian Holding Company:
Securian Financial Group, Inc. (Delaware)
Wholly-owned subsidiary of Securian Financial Group, Inc.
Minnesota Life Insurance Company
Wholly-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Capital Management, Inc.
HomePlus Insurance Company
Northstar Life Insurance Company (New York)
The Ministers Life Insurance Company
MIMLIC Life Insurance Company (Arizona)
Robert Street Energy, Inc.
Capitol City Property Management, Inc.
Personal Finance Company (Delaware)
Enterprise Holding Corporation
Wholly-owned subsidiary of Advantus Capital Management, Inc.:
Ascend Financial Services, Inc.
Wholly-owned subsidiaries of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
MIMLIC Insurance Agency of Texas, Inc. (Texas)
Ascend Insurance Agency of Nevada, Inc. (Nevada)
Ascend Insurance Agency of Oklahoma, Inc. (Oklahoma)
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Financial Ink Corporation
Oakleaf Service Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Lafayette Litho, Inc.
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MCM Funding 1997-1, Inc.
MCM Funding 1998-1, Inc.
MIMLIC Venture Corporation
HomePlus Insurance Agency, Inc.
Ministers Life Resources, Inc.
Wedgewood Valley Golf, Inc.
Wholly-owned subsidiary of HomePlus Insurance Agency, Inc.:
HomePlus Insurance Agency of Texas, Inc. (Texas)
Majority-owned subsidiary of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Open-end registered investment company offering shares solely to separate
accounts of Minnesota Life Insurance Company:
Advantus Series Fund, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Majority-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Real Estate Securities Fund, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of
Minnesota Life Insurance Company:
Advantus Money Market Fund, Inc.
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than 25% owned subsidiaries of Minnesota Life Insurance Company:
Advantus Horizon Fund, Inc.
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.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 25, 1998, the number of Contract Participants for
this Registration Statement were as follows:
Number of Record
Title of Class Holders
Group Variable Annuity Contracts 32,394
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute, found at 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
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-
<PAGE>
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
Minnesota Life Insurance Company and Group Variable Annuity Account pursuant
to the foregoing provisions, or otherwise, Minnesota Life Insurance Company
and Group 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 Minnesota Life Insurance Company and Group Variable Annuity
Account of expenses incurred or paid by a director, officer or controlling
person of Minnesota Life Insurance Company and Group 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, Minnesota Life Insurance Company and Group
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 Ascend Financial Services, Inc. Ascend
Financial Services, Inc. also is the principal underwriter for twelve
other organized mutual funds Advantus Spectrum Fund, Inc., MIMLIC Cash
Fund, Inc., Advantus Bond Fund, Inc., Advantus Horizon Fund, Inc.,
Advantus Money Market Fund, Inc., Advantus Mortgage Securities Fund, Inc.,
Advantus Cornerstone Fund, Inc., Advantus Enterprise Fund, Inc., Advantus
International Balanced Fund, Inc., Advantus Venture Fund, Inc., Advantus
Index 500 Fund, Inc., Advantus Real Estate Securities Fund, Inc., and for
four additional separate accounts of Minnesota Life Insurance Company, all
which offer contracts on a variable basis.
(b) Directors and officers of the Underwriter.
Positions and Positions and
Name and Principal Offices Offices
Business Address with Underwriter with Registrant
- ------------------ ---------------- ---------------
Robert E. Hunstad Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
George I. Connolly President, Chief None
Ascend Financial Services, Inc. Executive Officer, Chief
400 Robert Street North Compliance Officer and
St. Paul, Minnesota 55101 Director
<PAGE>
Margaret Milosevich Vice President, Chief Assistant
Ascend Financial Services, Inc. Operations Officer, Secretary
400 Robert Street North Treasurer and Secretary
St. Paul, Minnesota 55101
Dennis E. Prohofsky Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer Assistant
Ascend Financial Services, Inc. and Assistant Secretary Secretary
400 Robert Street North
St. Paul, Minnesota 55101
(c) All commission and other compensation received by each principal
underwriter, directly or indirectly, from the Registrant during the
Registrant's last fiscal year:
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
- ----------- ---------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Ascend Financial $1,861,317
Services, Inc.
</TABLE>
*Note: This figure does not include compensation paid to registered
representatives of Ascend Financial Services, Inc. who are also licensed
sales representatives of Minnesota Life. These registered representatives
are paid directly by Minnesota Life on behalf of Ascend Financial
Services, 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 Minnesota Life Insurance Company, St. Paul, Minnesota
55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
<PAGE>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the Contracts may be
accepted.
(b) The Registrant hereby undertakes to include as part of any application to
purchase a contract offered by the prospectus a space that an applicant can
check to request a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this form promptly upon written or oral request.
(d) The Company hereby represents that it is relying upon and complies with the
provisions of Paragraph (1) through (4) of the SEC Staff's No-Action Letter
dated November 22, 1988 with respect to language concerning withdrawal
restrictions applicable to plans established pursuant to Section 403(b) of
the Internal Revenue Code. See American Counsel of Life Insurance; SEC
No-Action Letter, [1959 Transfer Binder] Fed. Sec. L. Rep. (CCH) para.
78,904 at 78,533 (November 22, 1988).
(e) Minnesota Life Insurance Company hereby represents that, as to the variable
annuity policies which are the subject of this Registration Statement, File
No. 33-79534, 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 Minnesota Life Insurance
Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of St. Paul and the State of Minnesota on the 3rd day of March, 1999.
GROUP VARIABLE ANNUITY ACCOUNT
(Registrant)
By: MINNESOTA LIFE INSURANCE COMPANY
(Depositor)
By
-----------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor,
Minnesota Life Insurance Company, has duly caused this Post-Effective 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 3rd day of March, 1999.
MINNESOTA LIFE INSURANCE COMPANY
By
---------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this 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 March 3, 1999
Robert L. Senkler Chief Executive Officer
*
- ------------------------ Director
Giulio Agostini
*
- ------------------------ Director
Anthony L. Andersen
*
- ------------------------ Director
Leslie S. Biller
*
- ------------------------ Director
John F. Grundhofer
*
- ------------------------ Director
David S. Kidwell, Ph.D.
*
- ------------------------ Director
Reatha C. King, Ph.D.
- ------------------------ Director
William B. Lawson, Sr.
*
- ------------------------ Director
Thomas E. Rohricht
*
- ------------------------ Director
Michael E. Shannon
*
- ------------------------ Director
Frederick T. Weyerhaeuser
- ------------------------ Vice President March 3, 1999
Gregory S. Strong (chief financial officer)
- ------------------------ Vice President March 3, 1999
Gregory S. Strong (chief accounting officer)
- ------------------------ Attorney-in-Fact March 3, 1999
Dennis E. Prohofsky
* Pursuant to power of attorney dated October 19, 1998, a copy of which is filed
herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
6. (a) The Restated Certificate of Incorporation.
(b) The By-Laws of Minnesota Life Insurance Company
10. (b) Minnesota Life Insurance Company Power of Attorney to Sign
Registration Statement
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
of
MINNESOTA LIFE INSURANCE COMPANY
Robert L. Senkler and Dennis E. Prohofsky, respectively, the President and
Secretary of Minnesota Life Insurance Company, a corporation under and existing
by virtue of the laws of the State of Minnesota, do hereby certify that the
following Restated Certificate of Incorporation was duly adopted by an
affirmative vote of a majority of the stockholders at a special meeting of the
Company on December 10, 1998.
This Restated Certificate of Incorporation of Minnesota Life Insurance Company
supersedes and takes the place of the existing Certificate of Incorporation and
all amendments to it:
ARTICLE I
The name of the Company is Minnesota Life Insurance Company (the "Company").
ARTICLE II
The principal office of the Company shall be located at 400 Robert Street North,
Saint Paul, Minnesota 55101-2098.
ARTICLE III
The Company is incorporated for the purpose of transacting the business of and
making insurance upon the lives of individuals and every assurance pertaining
thereto or connected therewith, to grant, purchase and dispose of annuities and
endowments of every kind and description whatsoever, to provide an indemnity
against death and for weekly or other periodic indemnity for disability
occasioned by accident or sickness to the person of the assured and to have all
the further rights, powers and privileges granted or permitted life insurance
companies organized under the provisions of Minnesota Statutes, Chapter 300, and
all Acts amendatory thereof or additional thereto.
ARTICLE IV
The duration and continuation of the Company shall be perpetual.
ARTICLE V
The authorized capital stock of this Company shall be 5,000,000 shares initially
paid in by operation of Minnesota Statutes Section 60A.077 and subsequently paid
in cash, consisting of shares of Common Stock, with par value of $1.00 per
share. Each share of the Common Stock shall have one vote per share.
No shareholder of the Company shall have any pre-emptive or preferential right,
nor be entitled as such as a matter of right, to subscribe for or purchase any
part of any new or additional issue of stock of the Company of any class or
series, whether issued for money or for consideration other than money, or of
any issue of securities convertible into stock of the Company.
ARTICLE VI
The corporate powers of the Company shall be vested in a Board of Directors of
at least five persons and shall be exercised by the Board of Directors and by
such officers, agents, employees and committees as the Board of Directors may,
in its discretion, from time to time appoint and empower. The Board of
Directors shall have the power from time to time to make, amend or repeal such
bylaws, rules and regulations for the transaction of the business of the Company
as the Board of Directors may deem expedient and as are not inconsistent with
this Certificate of Incorporation or the constitution or other laws of the State
of Minnesota.
The directors of the Company shall be divided into three classes, as nearly
equal in number as reasonably possible: the first class, the second class and
the third class. Each such director shall serve for a term ending on the third
annual meeting of stockholders following the annual meeting at which such
director was elected, provided, that the directors first elected to the first
class shall serve for a term ending upon the election of directors at the annual
meeting in 2000, the directors
<PAGE>
first elected to the second class shall serve for a term ending upon the
election of directors at the annual meeting in 2001, and the directors first
elected to the third class shall serve for a term ending upon the election of
directors at the annual meeting in 2002.
At each annual election, commencing at the annual meeting in 2000, the
successors to the class of directors whose term expires at that time shall be
elected by stockholders to hold office for a term of three years to succeed
those directors whose term expires, so that the term of one class of directors
shall expire each year.
Notwithstanding the requirement that the three classes of directors shall be as
nearly equal in number of directors as reasonably possible, in the event of any
change in the authorized number of directors, each director then continuing to
serve as such shall nevertheless continue as a director of the class of which he
or she is a member until the expiration of his or her current term, or his or
her prior resignation, disqualification, disability or removal. There shall be
no cumulative voting in the election of the directors.
Any vacancy on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, an increase in the number of
directorships or other cause shall be filled only by the affirmative vote of a
majority of directors then in office, although less than a quorum or by the sole
remaining director. A director so chosen shall hold office for a term expiring
at the annual meeting at which the term of the class to which he or she has been
elected expires. If the number of directors is changed, any increase or
decrease shall be apportioned among the three classes by a two-thirds (2/3) vote
of the directors then in office. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
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<PAGE>
ARTICLE VII
The incumbent members of the Board of Directors as of the date of the filing of
this Restated Certificate of Incorporation shall continue to be directors of the
Company until their successors are duly elected and qualified in accordance with
the bylaws. The current members of the Board of Directors who shall continue to
be directors of the Company and their respective addresses are:
NAME OF DIRECTOR ADDRESS
Giulio Agostini 3M
3M Center - Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Norwest Corporation
Sixth and Marquette
Minneapolis, MN 55479-1052
John F. Grundhofer U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty 701 Fourth Avenue South, Suite
300
Minneapolis, MN 55415
David S. Kidwell The Curtis L. Carlson School of
Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King General Mills Foundation
P O Box 1113
Minneapolis, MN 55440
Thomas E. Rohricht Doherty, Rumble & Butler P.A.
2800 Minnesota World Trade
Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry T. Saario Bravo!, LLC
900 Hennepin Avenue
Minneapolis, MN 55403
Robert L. Senkler Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
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<PAGE>
ARTICLE VIII
A director of the Company shall not be liable to the Company or the stockholders
of the Company for monetary damages for a breach of the fiduciary duty of care
as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Minnesota Statutes, Section 300.64, as the
same currently exists or hereafter is amended. Specifically such exemption
shall not apply to:
(a) a breach of the director's duty of loyalty to the Company or its
stockholders;
(b) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of the law;
(c) acts prohibited under Minnesota Statutes, Section 300.60, as the same
currently exists or is hereafter amended;
(d) payment of a dividend when the Company is insolvent;
(e) intentional neglect or refusal to perform a duty imposed by law;
(f) a transaction from which the director derives an improper personal
benefit; or
(g) an act or omission occurring prior to the date when this Restated
Certificate of Incorporation became effective.
ARTICLE IX
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. The Board of Directors shall
designate those banks and financial institutions in which the 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.
ARTICLE X
The annual meeting of the Company shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday.
ARTICLE XI
The Company is authorized to issue any or all of its policies with or without
participation in profits, savings or unabsorbed portions of premiums; to
classify such policies issued on a participating or nonparticipating basis; and
to determine the right to participate and the extent of participation of any
class or classes of such policies, at the discretion of the Board of Directors.
The declaration and crediting of any policy dividend shall be subject to
approval by majority vote of the Minnesota Mutual Companies, Inc. Board of
Directors.
ARTICLE XII
This Restated Certificate of Incorporation may be amended at any annual meeting
of the Company, or any special meeting of the Company called for that expressly
stated purpose, by the affirmative vote of a majority of the stockholders.
IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate of
Incorporation.
__________, 1998 ________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
__________, 1998 ________________________________
Dennis E. Prohofsky
Senior Vice President, Secretary
and General Counsel
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<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
As adopted on October 1, 1998
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
TABLE OF CONTENTS
ARTICLE I STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1 ANNUAL MEETING.. . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2 SPECIAL MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.3 PLACE AND HOUR OF MEETING. . . . . . . . . . . . . . . . . . . . .1
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE. . . . . . . . . . . . . . . . . .1
SECTION 1.5 QUORUM.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.6 VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.7 VOTING BY PROXY. . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS. . . . . . . . . . . . . . . .2
ARTICLE II BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.1 NUMBER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.1 NON-OVERLAPPING DIRECTORS. . . . . . . . . . . . . . . . . . . . .2
SECTION 2.2 FILLING OF VACANCIES.. . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS. . . . . . . . . . . . . . . . .2
SECTION 2.4 REGULAR MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.5 SPECIAL MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.6 QUORUM.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.7 COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . .3
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS.. . . . . . . . .3
SECTION 2.9 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III COMMITTEES OF THE BOARD. . . . . . . . . . . . . . . . . . . . . .3
SECTION 3.1 CREATION OF COMMITTEES.. . . . . . . . . . . . . . . . . . . . . .3
SECTION 3.2 APPOINTMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.3 QUALIFICATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.4 COMMITTEE CHAIRS.. . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.5 MEETINGS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.6 QUORUM.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.7 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.8 MINUTES AND REPORTS. . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.9 AUDIT COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.10 INVESTMENT COMMITTEE. . . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS. . . . . . . . . . . . . .5
<PAGE>
ARTICLE IV OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.1 NUMBER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.2 ELECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.3 TERM OF OFFICE.. . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.4 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.5 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.6 DUTIES OF OFFICERS.. . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.7 ABSENCE OR DISABILITY. . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES . . . . . . . .7
ARTICLE VI DISPOSITION OF FUNDS AND INVESTMENTS. . . . . . . . . . . . . . . .7
SECTION 6.1 FUNDS AND INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . .7
SECTION 6.2 DEPOSITS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE VII CORPORATE STOCK. . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 7.1 CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . . . . . .7
SECTION 7.2 TRANSFER OF SHARES.. . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 7.3 TRANSFER BOOKS.. . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE VIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING.
The annual meeting of stockholders shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday, when members of the Board of Directors shall be elected to
succeed those whose terms are then expiring and such other business shall be
transacted as may properly be brought before the meeting.
SECTION 1.2 SPECIAL MEETINGS.
Special meetings of stockholders for the transaction of such business as may
properly come before the meeting may be called by order of the Board of
Directors or by stockholders holding together at least a majority of all the
shares of the Company entitled to vote at the meeting. Business transacted at
all special meetings of stockholders shall be confined to the purpose or
purposes stated in the notice of the meeting.
SECTION 1.3 PLACE AND HOUR OF MEETING.
Every annual meeting of stockholders shall commence at such hour as shall be
determined by the Board of Directors. Every meeting of stockholders, whether an
annual or a special meeting, shall be held at the principal office of the
Company at 400 Robert Street North in the City of Saint Paul, in the State of
Minnesota (the "Home Office"), or at such other place as may be selected by the
Board of Directors.
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE.
Notice of each meeting of stockholders shall be mailed to each stockholder of
the Company not less than thirty days previous to such meeting, and every such
notice shall state the day and hour and the place at which the meeting is to be
held and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors may fix in advance a date, not less
than twenty calendar days preceding the dates of the aforenamed occurrences, as
a record date for the determination of the shareholders entitled to notice of,
and to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares. In such case, such stockholders, and only such stockholders as are
stockholders of the Company of record on the record date so fixed, are entitled
to notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Company after such record date so fixed. If the
Board of Directors shall not set a record date for the determination of the
stockholders entitled to notice of, and to vote at, a meeting of stockholders,
only the stockholders who are stockholders of record at the close of business on
the 20th day preceding the date of the meeting are entitled to notice of, and to
vote at, the meeting and any adjournment of the meeting.
SECTION 1.5 QUORUM.
A majority of the outstanding shares entitled to notice of and to vote at a
meeting, present in person or by proxy conforming the requirements of Section
1.7 of these bylaws, shall constitute a quorum for the transaction of any
business coming before any regular or special meeting of stockholders duly and
properly called, except as provided by law, the Restated Certificate of
Incorporation of the Company, or these bylaws. If, however, such quorum of
stockholders shall not be present or represented at any meeting of stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a requisite number of stockholders shall be
present. At any such adjourned meeting at which the requisite number of
stockholders shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
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<PAGE>
SECTION 1.6 VOTING RIGHTS.
Each outstanding share of Common Stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of stockholders.
SECTION 1.7 VOTING BY PROXY.
Any stockholder may vote by proxy at any meeting of stockholders. 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 not to exceed one year. A proxy may be
revoked by a stockholder at any time by written notice to the Secretary of the
Company, 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
stockholder at any meeting of the stockholders.
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS.
(a) Shares of stock in the name of another corporation, foreign or
domestic, are to be voted by such officer, agent, or proxy as the bylaws of such
corporation may determine.
(b) Shares of stock in the name of a deceased person are to be voted by
his executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as guardian, curator,
or trustee are to be voted by such fiduciary either in person or by proxy,
provided the books of the Company show the stock to be in the name of such
fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted by such
receiver, and shares held by, or in the control of, a receiver are to be voted
by such receiver without the transfer thereof into his name, if such voting
authority is contained in an appropriate order of the court by which such
receiver was appointed.
(e) Shares of stock which have been pledged are to be voted by the pledgor
until the shares of stock have been transferred into the name of the pledgee,
and thereafter, the pledgee is entitled to vote the shares so transferred.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER.
The Board of Directors shall consist of such number of Directors, not fewer than
five or more than sixteen, as the Board shall from time to time determine.
SECTION 2.1 NON-OVERLAPPING DIRECTORS.
Commencing with the first annual election of directors, and unless and until
Minnesota Mutual Companies, Inc. (or any successor mutual insurance holding
company) is converted from a mutual insurance holding company to a stock
company, the Board of Directors shall at all times include at least three
directors who are not concurrently serving as directors on the board(s) of
Minnesota Mutual Companies, Inc., Securian Holding Company or Securian Financial
Group, Inc. ("Non-overlapping Directors").
SECTION 2.2 FILLING OF VACANCIES.
If the office of any Director becomes vacant for any reason, a majority of the
remaining Directors may choose a successor. Each Director so chosen shall hold
office until the next regular annual meeting of the shareholders and until his
or her successor has been duly elected and qualified. Not more than one-third
of the maximum number of Directors may be so chosen by the Board between regular
annual meetings of the shareholders.
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS.
The Board of Directors may hold its meetings and keep the books of the Company
at the Home Office of the Company, or at such other place or places as they may
from time to time by resolution determine, except as otherwise required by law.
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<PAGE>
SECTION 2.4 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 Director not less than
twenty-four hours prior to the time of that regular meeting.
SECTION 2.5 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 directors. Except as otherwise provided, notice of a
special meeting shall be given to each director 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 director. Notice of at least six hours prior to the meeting time is
required if all directors are personally either served with a written notice or
contacted by telephone. Notice need not be given to the directors of adjourned
special meetings. Also, special meetings may be held at any time without notice
if all of the directors 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.
SECTION 2.6 QUORUM.
At all meetings of the Board of Directors, a majority of the directors then in
office shall be necessary and sufficient to constitute a quorum for the
transaction of business, but if, at any meeting, less than a quorum shall be
present, a majority of those present may adjourn the meeting from time to time,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Restated Certificate of
Incorporation of the Company or by these bylaws.
SECTION 2.7 COMPENSATION OF DIRECTORS.
Members of the Board of Directors, who are not salaried officers of the Company,
shall receive such annual compensation as shall be fixed from time to time by
resolution of the Board of directors; and, in addition, the directors who are
not salaried officers of the Company shall receive a sum in such amount as shall
be fixed from time to time by resolution of the Board of Directors, and the
expenses of attendance, if any, for attendance at each regular or special
meeting of the Board, whether or not an adjournment be had because of the
absence of a quorum.
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS.
If all the directors severally or collectively consent in writing to any action
taken or to be taken by the directors, such consents have the same force and
effect as a unanimous vote of the directors at a meeting duly held, and may be
stated as such in any certificate or document filed with the Secretary of State
of Minnesota or any other state in the United States of America or other
Country. The Secretary of the Company shall file such consents with the minutes
of the meetings of the Board of Directors.
SECTION 2.9 REMOVAL.
Any director or the entire Board of Directors may be removed at any time but
only for cause or pursuant to the Company's retirement policy in effect when the
director was first elected.
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1 CREATION OF COMMITTEES.
The following designated standing committees of the Board are hereby authorized
and created: Audit, Investment, and Non-overlapping Directors. 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. In the event the Board of Directors
creates an Executive Committee invested with the full powers of the Board of
Directors
-3-
<PAGE>
between meetings of the Board of Directors, then that Committee must have at
least the same proportion of Non-overlapping Directors as does the full Board
of Directors.
SECTION 3.2 APPOINTMENTS.
The members of each standing Board committee shall consist of those Directors
appointed by the Board of Directors. Each Director 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.
SECTION 3.3 QUALIFICATIONS.
Each Director is qualified to be appointed and successively reappointed to one
or more committees.
SECTION 3.4 COMMITTEE CHAIRS.
The Board shall appoint one of the members of each of the Board committees 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.
SECTION 3.5 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.
SECTION 3.6 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 directors to serve as members of the committee only for that meeting, so
as to obtain a quorum. If the Board makes the requested appointments, any
action so taken at the committee meeting shall be valid and binding.
SECTION 3.7 VACANCIES.
In the case of the death, resignation or removal of a member of a committee, the
Board may appoint another Director 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.
SECTION 3.8 MINUTES AND REPORTS.
Each committee shall keep a written record of its acts and proceedings and shall
submit that record to the Board of Directors 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 each committee shall be recorded by the person designated by the
chair of that committee.
SECTION 3.9 AUDIT COMMITTEE.
The Audit Committee shall consist of not fewer than four directors that are not
officers or employees of Minnesota Mutual Companies, Inc. or any of its
subsidiaries. The committee shall have the following powers and duties:
(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.
-4-
<PAGE>
(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 the committee's reviews and
recommendations resulting therefrom.
SECTION 3.10 INVESTMENT COMMITTEE.
The Investment Committee shall consist of not fewer than four directors and
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 the Company investments,
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 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 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS.
The Committee of Non-overlapping Directors shall consist of not fewer than three
Non-overlapping Directors (as described in Section 2.1 of these bylaws) and
shall have the following powers and duties:
(a) Review all agreements and material transactions between and among the
Company, its affiliates and subsidiaries to assure that such agreements and
transactions are fair and reasonable and that they comply with Minnesota
Statutes, Section 60D, and all Acts amendatory thereof or additional thereto.
For purposes of this section, the term "material" shall have the definition set
forth in Minnesota Statutes, Section 60D.19, subd. 4, as it may be amended from
time to time.
(b) Such other powers and duties as determined by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 4.1 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 Directors from time to time may deem necessary. One
individual may hold two or more offices, except those of President and
Secretary.
SECTION 4.2 ELECTION.
Officers shall be elected or appointed by the Board of Directors.
SECTION 4.3 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.
-5-
<PAGE>
SECTION 4.4 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 Directors then in office.
SECTION 4.5 VACANCIES.
Any vacancy in any office from any cause may be filled by the Board of Directors
at its next meeting.
SECTION 4.6 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 Directors, 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 Directors. 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 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 Directors
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, 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 and of the Board of Directors 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 provided in these bylaws, 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
Directors shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
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<PAGE>
SECTION 4.7 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 Directors from time to time may delegate the powers and
duties of such officer to any other officer, or any Director, or any other
person whom they may select.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Company shall, to the fullest extent permitted under Minnesota Statutes,
Section 300.083, as the same currently exists or hereafter is amended, indemnify
(and advance expenses to) the directors, officers and employees of this Company.
The provisions of this Article shall not be deemed to limit or preclude
indemnification of a director, officer or employee by the Company for any
liability which has not been eliminated by the provisions of this Article.
ARTICLE VI
DISPOSITION OF FUNDS AND INVESTMENTS
SECTION 6.1 FUNDS AND INVESTMENTS.
All funds and investments of the Company shall be held in the name of "Minnesota
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 6.2 DEPOSITS.
The Board of Directors 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.
ARTICLE VII
CORPORATE STOCK
SECTION 7.1 CERTIFICATES FOR SHARES.
The Board of Directors is to prescribe the form of the certificate(s) of stock
of the Company. The certificate is to be signed by the President or Vice
President and by the Secretary, Treasurer, or Assistant Secretary or Assistant
Treasurer, is to be sealed with the seal of the Company and is to be numbered
consecutively. The name of the owner of the certificate, the number of shares
of stock represented thereby, and the date of issue are to be recorded on the
books of the Company. Certificates of stock surrendered to the Company for
transfer are to be canceled, and new certificates of stock representing the
transferred shares issued. New stock certificates may be issued to replace
lost, destroyed or mutilated certificates upon such terms and with such security
to the Company as the Board of Directors may require.
SECTION 7.2 TRANSFER OF SHARES.
Shares of stock of the Company may be transferred on the books of the Company by
the delivery of the certificates representing such shares to the Company for
cancellation, and with an assignment in writing on the back of the certificate
executed by the person named in the certificates as the owner thereof, or by a
written power of attorney executed for such purpose by such person. The person
registered on the books of the Company as the owner of shares of stock of the
Company is deemed the owner thereof and is entitled to all rights of ownership
with respect to such shares.
SECTION 7.3 TRANSFER BOOKS.
Transfer books are to be maintained under the direction of the Secretary,
showing the ownership and transfer of all certificates of stock issued by the
Company.
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<PAGE>
ARTICLE VIII
AMENDMENTS
These bylaws may be amended by the Board of Directors or by the stockholders at
a regular meeting, or at a special meeting called for that expressly-stated
purpose, by the affirmative vote of a majority of the stockholders present, in
person or by proxy, at the meeting.
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<PAGE>
Minnesota Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, Minnesota Life Insurance Company ("Minnesota Life") has
established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Variable Fund D ("Fund D") is a separate account of Minnesota Life
registered as a unit investment trust under the Investment Company Act of 1940
offering variable annuity contracts registered under the Securities Act of 1933,
and
WHEREAS, Variable Annuity Account ("Variable Annuity Account") is a
separate account of Minnesota Life registered as a unit investment trust under
the Investment Company Act of 1940 offering variable annuity contracts
registered under the Securities Act of 1933, and
WHEREAS, Minnesota Life Variable Life Account ("Variable Life Account") is
a separate account of Minnesota Life registered as a unit investment trust under
the Investment Company Act of 1940 offering variable adjustable life insurance
policies registered under the Securities Act of 1933,
WHEREAS, Group Variable Annuity Account ("Group Variable Annuity Account")
is a separate account of Minnesota Life which has been established for the
purpose of issuing group annuity contracts on a variable basis and which is to
be registered as a unit investment trust under the Investment Company Act of
1940 offering group variable annuity contracts and certificates to be registered
under the Securities Act of 1933;
WHEREAS, Minnesota Life Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Life which has been
established for the purpose of issuing group and individual variable universal
life insurance policies on a variable basis and which is to be registered as a
unit investment trust under the Investment Company Act of 1940 offering group
and individual variable universal life insurance policies to be registered under
the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Directors and Officers of Minnesota
Life, do hereby appoint Dennis E. Prohofsky and Garold M. Felland, and each
of them individually, as attorney in fact for the purpose of signing in their
names and on their behalf as Directors of Minnesota Life and filing with the
Securities and Exchange Commission Registration Statements, or any amendment
thereto, for the purpose of: a) registering contracts and policies of Fund
D, the Variable Annuity Account, the Variable Life Account, the Group
Variable Annuity Account and the Variable Universal Life Account for sale by
those entities and Minnesota Life under the Securities Act of 1933; and b)
registering Fund D, the Variable Annuity Account, the Variable Life Account,
the Group Variable Annuity Account and the Variable Universal Life Account as
unit investment trusts under the Investment Company Act of 1940.
SIGNATURE TITLE DATE
--------- ------ ----
/s/Robert L. Senkler Chairman of the Board, October 19, 1998
- ----------------------------- President and Chief
Robert L. Senkler Executive Officer
<PAGE>
SIGNATURE TITLE DATE
--------- ------ ----
/s/Giulio Agostini Director October 19, 1998
- -----------------------------
Giulio Agostini
/s/Anthony L. Andersen Director October 19, 1998
- -----------------------------
Anthony L. Andersen
/s/Leslie S. Biller Director October 19, 1998
- -----------------------------
Leslie S. Biller
/s/John F. Grundhofer Director October 19, 1998
- -----------------------------
John F. Grundhofer
/s/David S. Kidwell Director October 19, 1998
- -----------------------------
David S. Kidwell, Ph.D.
/s/Reatha C. King, Ph.D. Director October 19, 1998
- -----------------------------
Reatha C. King, Ph.D.
/s/Thomas E. Rohricht Director October 19, 1998
- -----------------------------
Thomas E. Rohricht
/s/Michael E. Shannon Director October 19, 1998
- -----------------------------
Michael E. Shannon
/s/Frederick T. Weyerhaeuser Director October 19, 1998
- -----------------------------
Frederick T. Weyerhaeuser
