Modern Woodmen of America Variable Annuity Account

Transcription

1 Modern Woodmen of America Variabe Annuity Account INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CERTIFICATE PROSPECTUS May 1, 2018 Modern Woodmen of America, a fraterna benefit society, (the Society ) is offering the individua fexibe premium deferred variabe annuity certificate (the Certificate ) described in this Prospectus. The Certificate provides for Accumuated Vaue and annuity payments on a fixed and variabe basis. The Society ses the Certificate to retirement pans, incuding those that quaify for specia federa tax treatment under the Interna Revenue Code. The Certificate Hoder ( you or your ) may aocate premiums and Accumuated Vaue to 1) the Decared Interest Option, an account that provides a specified rate of interest, and/or 2) Subaccounts of Modern Woodmen of America Variabe Annuity Account (the Account ), each of which invests in one of the foowing Investment Options: American Century Investments VP Capita Appreciation Fund VP Mid Cap Vaue Fund VP Utra Fund American Funds Insurance Series American Funds IS Capita Income Buider Cass 1 American Funds IS Goba Bond Fund Cass 2 American Funds IS Goba Growth and Income Fund Cass 1 American Funds IS Goba Sma Capitaization Fund Cass 1 American Funds IS Growth Fund Cass 2 American Funds IS Growth-Income Fund Cass 2 American Funds IS Managed Risk Growth Fund Cass P1 American Funds IS Managed Risk Growth-Income Fund Cass P1 American Funds IS New Word Fund Cass 1 Cavert Variabe Products, Inc. Cavert VP NASDAQ-100 Index Portfoio Cavert VP Russe 2000 Sma Cap Index Portfoio Cavert VP S&P MidCap 400 Index Portfoio The Dreyfus Sustainabe U.S. Equity Portfoio, Inc. Service Share Cass Dreyfus Variabe Investment Fund VIF Appreciation Portfoio Initia Share Cass VIF Growth & Income Portfoio Initia Share Cass VIF Internationa Equity Portfoio Initia Share Cass VIF Opportunistic Sma Cap Portfoio Initia Share Cass Federated Insurance Series Fund Federated Government Money Fund II Service Share Cass Federated Managed Tai Risk Fund II Primary Shares Federated Managed Voatiity Fund II Primary Shares Federated Quaity Bond Fund II Primary Shares Fideity Variabe Insurance Products Funds VIP Contrafund Portfoio Initia Cass VIP Energy Portfoio Service Cass 2 VIP Freedom 2015 Portfoio Initia Cass VIP Freedom 2020 Portfoio Initia Cass VIP Freedom 2025 Portfoio Initia Cass VIP Freedom 2030 Portfoio Initia Cass VIP Freedom 2035 Portfoio Initia Cass VIP Freedom 2040 Portfoio Initia Cass VIP Freedom 2045 Portfoio Initia Cass VIP Freedom 2050 Portfoio Initia Cass VIP Growth Portfoio Initia Cass VIP Growth & Income Portfoio Initia Cass VIP High Income Portfoio Service Cass 2 VIP Index 500 Portfoio Initia Cass VIP Mid Cap Portfoio Service Cass 2 VIP Overseas Portfoio Initia Cass VIP Rea Estate Portfoio Initia Cass JPMorgan Insurance Trust Mid Cap Vaue Portfoio Cass 1 Sma Cap Core Portfoio Cass 1 T. Rowe Price Equity Series, Inc. Equity Income Portfoio Heath Sciences Portfoio Mid-Cap Growth Portfoio New America Growth Portfoio Persona Strategy Baanced Portfoio T. Rowe Price Internationa Series, Inc. Internationa Stock Portfoio The accompanying prospectus for each Investment Option describes the investment objectives and attendant risks of each Investment Option. If you aocate premiums to the Subaccounts, the amount of the Certificate s Accumuated Vaue prior to the Retirement Date wi vary to refect the investment performance of the Investment Options you seect. Pease note that the Certificates and Investment Options are not bank deposits, are not federay insured, are not guaranteed to achieve their goas and are subject to risks, incuding oss of the amount invested. You may find additiona information about your Certificate and the Account in the Statement of Additiona Information, dated the same as this Prospectus. To obtain a copy of this document, pease contact us at the address or phone number shown beow. The Statement of Additiona Information ( SAI ) has been fied with the Securities and Exchange Commission ( SEC ) and is incorporated herein by reference. The SEC maintains a website ( that contains the SAI, materia incorporated by reference into this Prospectus, and other information fied eectronicay with the SEC. The tabe of contents for the SAI is at the end of this prospectus. Pease read this Prospectus carefuy and retain it for future reference. This Prospectus sets forth the information that a prospective investor shoud know before investing. A prospectus for each Investment Option must accompany this Prospectus and you shoud read it in conjunction with this Prospectus. The Securities and Exchange Commission has not approved these securities or determined that this Prospectus is accurate or compete. Any representation to the contrary is a crimina offense. Issued By Modern Woodmen of America Variabe Product Administrative Center: PO Box 2005 Rock Isand, Iinois

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3 TABLE OF CONTENTS DEFINITIONS FEE TABLES SUMMARY OF THE CERTIFICATE THE SOCIETY, ACCOUNT AND INVESTMENT OPTIONS Modern Woodmen of America Modern Woodmen of America Variabe Annuity Account Investment Options Voatiity Management Strategies Addition, Deetion or Substitution of Investments DESCRIPTION OF ANNUITY CERTIFICATE Issuance of a Certificate Premiums Free-Look Period Aocation of Premiums Variabe Accumuated Vaue Transfer Priviege Partia Withdrawas and Surrenders Transfer and Withdrawa Options Death Benefit Before the Retirement Date Abandoned Property Requirements Proceeds on the Retirement Date Payments Business Disruption and Cyber Security Risks Modification Reports to Certificate Hoders Inquiries Change of Address THE DECLARED INTEREST OPTION Minimum Guaranteed and Current Interest Rates Transfers From Decared Interest Option CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Annua Administrative Charge Transfer Processing Fee Mortaity and Expense Risk Charge Investment Option Expenses Taxes SETTLEMENT OPTIONS Description of Settement Options Eection of Settement Options and Annuity Payments YIELDS AND TOTAL RETURNS FEDERAL TAX MATTERS Introduction Tax Status of the Certificate Taxation of Annuities Transfers, Assignments or Exchanges of a Certificate Withhoding Mutipe Certificates Page

4 Taxation of Quaified Pans Possibe Charge for the Society s Taxes Other Tax Consequences DISTRIBUTION OF THE CERTIFICATES LEGAL PROCEEDINGS VOTING RIGHTS ADMINISTRATIVE SERVICES AGREEMENT FINANCIAL STATEMENTS CONDENSED FINANCIAL INFORMATION Appendix A-1 CALCULATING VARIABLE ANNUITY PAYMENTS Appendix B-1 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS SAI-TOC The Certificate may not be avaiabe in a jurisdictions. This Prospectus constitutes an offering or soicitation ony in those jurisdictions where such offering or soicitation may awfuy be made. Page 2

5 DEFINITIONS Account: Modern Woodmen of America Variabe Annuity Account. Accumuated Vaue: The tota amount invested under the Certificate, which is the sum of the vaues of the Certificate in each Subaccount of the Account pus the vaue of the Certificate in the Decared Interest Option. Administrative Center: The Society s administrative office at st Avenue, Rock Isand, Iinois, Annuitant: The person whose ife determines the annuity benefits payabe under the Certificate and whose death determines the death benefit. Beneficiary: The person (or persons) to whom the Society pays the proceeds on the death of the Annuitant. Business Day: Each day that the New York Stock Exchange is open for trading. Assets are vaued at the cose of each Business Day. Each Business Day ends at the cose of norma trading on the New York Stock Exchange (generay, 3:00 p.m. centra time). Certificate: The individua fexibe premium deferred variabe annuity certificate we offer and describe in this Prospectus, which term incudes the basic certificate, the certificate appication, any suppementa appications, any endorsements or additiona benefit riders or agreements, and the Artices of Incorporation and By-Laws of the Society which are in force on the Issue Date. Certificate Anniversary: The same date in each Certificate Year as the Issue Date. Certificate Hoder: The person who contros the Certificate and who is entited to exercise a rights and privieges provided in the Certificate. Certificate Year: A tweve-month period beginning on the Issue Date or on a Certificate Anniversary. The Code: The Interna Revenue Code of 1986, as amended. Decared Interest Option: An aocation option under the Certificate funded by the Society s Genera Account. It is not part of, nor dependent upon, the investment performance of the Account. Due Proof of Death: Satisfactory documentation provided to the Society verifying proof of death. This documentation may incude the foowing: (a) a certified copy of the death certificate; (b) a certified copy of a court decree reciting a finding of death; (c) the Beneficiary s statement of eection; (d) a copy of the Beneficiary s Form W-9; or (e) any other proof satisfactory to the Society. Fund: An investment company registered with the SEC under the Investment Company Act of 1940 as an open-end, diversified management investment company or unit investment trust in which the Account invests. Genera Account: The assets of the Society other than those aocated to the Account or any other separate account of the Society. 3

6 Good Order: This means the actua receipt by us of the instructions reating to a transaction in writingor when appropriate by teephone-aong with a forms, information and supporting ega documentation (incuding any required consents) we require in order to effect the transaction. To be in good order, instructions must be sufficienty cear so that we do not need to exercise any discretion to foow such instructions. Investment Option: A Fund, or a separate investment portfoio of a Fund, in which a Subaccount invests. Issue Date: The date foowing the day on which the Society receives a propery competed appication and an initia premium at the Administrative Center. It is the date set forth on the data page of the Certificate which the Society uses to determine Certificate Years and Certificate Anniversaries. Net Accumuated Vaue: The Accumuated Vaue ess any appicabe Surrender Charge. Non-Quaified Certificate: A Certificate that is not a Quaified Certificate. Quaified Certificate: A Certificate the Society issues in connection with pans that quaify for specia federa income tax treatment under Sections 401(a), 401(k), 403(a), 403(b), 408 or 408A of the Code. Retirement Date: The date when the Society appies the Accumuated Vaue under a settement option, if the Annuitant is sti iving. SEC: The U.S. Securities and Exchange Commission. The Society ( we, us or our ): Modern Woodmen of America, a fraterna benefit society. Subaccount: A subdivision of the Account which invests its assets excusivey in a corresponding Investment Option. Vauation Period: The period of time over which we determine the change in vaue of the Subaccounts. Each Vauation Period begins at the cose of norma trading of the New York Stock Exchange (generay, 3:00 p.m. centra time) on one Business Day and ends at the cose of norma trading of the New York Stock Exchange on the next succeeding Business Day. Written Notice: A written request or notice signed by the Certificate Hoder on a form satisfactory to the Society which we receive in good order at our Administrative Center. 4

7 FEE TABLES The foowing tabes describe the fees and expenses that are payabe when buying, owning and surrendering the Certificate. The first tabe describes the fees and expenses that are payabe at the time you buy the Certificate, surrender the Certificate or transfer Accumuated Vaue among the Subaccounts and the Decared Interest Option. Guaranteed Certificate Hoder Transaction Expenses Maximum Charge Current Charge Surrender Charge (as a percentage of amount withdrawn or surrendered) (1) 8% 8% Transfer Processing Fee (2) $25 $25 (1) The surrender charge is ony assessed during the first eight Certificate Years. The surrender charge decines 1% annuay to 0% in the ninth Certificate Year. You may annuay withdraw a maximum of 10% of the Accumuated Vaue cacuated as of the most recent prior Certificate Anniversary without incurring a surrender charge. This amount is not cumuative from Certificate Year to Certificate Year. We may waive this charge under certain circumstances. (See CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Amounts Not Subject to Surrender Charge. ) (2) We do not assess transfer processing fees for the first tweve (12) transfers in a Certificate Year, but we may impose a charge of $25 for the thirteenth (13th) and each subsequent transfer during a Certificate Year. The next tabe describes the fees and expenses that you wi pay periodicay during the time that you own your Certificate, not incuding Fund fees and expenses. Guaranteed Periodic Charges Maximum Charge Current Charge Annua Administrative Charge (3) $45 $30 Separate Account Annua Expenses (as a percentage of average variabe accumuated vaue) Mortaity and Expense Risk Charge 1.40% 1.40% Tota Separate Account Annua Expenses 1.40% 1.40% (3) We currenty deduct an annua administrative charge of $30 on the Issue Date and on each Certificate Anniversary prior to the Retirement Date and may waive the charge if your initia premium payment, or whenever your Accumuated Vaue on the most recent Certificate Anniversary, is $50,000 or greater. The next tabe shows the minimum and maximum fees and expenses charged by any of the Investment Options for the fisca year ended December 31, More detai concerning each Investment Option s fees and expenses is contained in the prospectus for each Investment Option. Annua Investment Option Operating Expenses (expenses that are deducted from Investment Option assets) (4) Minimum Maximum Tota Annua Investment Option Operating Expenses (expenses that are deducted from Investment Option assets, incuding management fees, distribution and/or service (12b-1) fees and other expenses) 0.10% 1.74% Tota Annua Investment Option Operating Expenses After Contractua Fee Waiver or Reimbursement (5)(6) 0.10% 1.74% (4) Some Investment Options may impose a redemption fee of up to 2% of the amount withdrawn to deter frequent trading activity. (5) The Tota Annua Investment Option Operating Expenses After Contractua Fee Waiver or Reimbursement ine in the above tabe shows the range of minimum and maximum fees and expenses based on the expenses of a Investment Options 5

8 after taking into account contractua fee waiver or expense reimbursement arrangements in pace. Those contractua arrangements are designed to reduce tota annua portfoio operating expenses for Certificate Hoders and wi continue past the current year. (6) For certain Investment Options, certain expenses were reimbursed or fees waived during It is anticipated that these vountary expense reimbursement and fee waiver arrangements wi continue past the current year, athough they may be terminated at any time. After taking into account these arrangements and any contractua expense reimbursement and fee waiver arrangements, tota annua Investment Option operating expenses woud have been: Minimum Maximum Tota Annua Investment Option Operating Expenses (expenses that are deducted from Investment Option assets, incuding management fees, distribution and/or service (12b-1) fees and other expenses) 0.10% 1.14% Exampes The exampes are intended to hep you compare the cost of investing in the Certificate with the cost of investing in other variabe annuity products. These costs incude Certificate Hoder transaction expenses, the annua administrative charge, mortaity and expense risk fees, and Investment Option fees and expenses. Because no deduction is currenty made under the Certificates for premium taxes, the exampes do not refect a deduction for premium taxes. Each exampe assumes that you invest $10,000 in the Certificate for the time periods indicated and that your investment has a 5% return each year. Each exampe refects a appicabe fee waiver and expense reimbursement arrangements for the Investment Options, but ony for the duration the arrangements remain in effect (i.e., one year). The expense figures for the three, five and ten year periods in each exampe do not take into account the effect of any fee waiver and expense reimbursement arrangement for the Investment Options. Exampe 1 The first exampe immediatey beow assumes the maximum fees and expenses of any of the Investment Options as set forth in the Annua Investment Option Operating Expenses tabes. Athough your actua costs may be higher or ower, based on these assumptions, your costs woud be: 1. If you surrender your Certificate or eect settement option 1 at the end of the appicabe time period: 1 Year 3 Years 5 Years 10 Years $927 $1,515 $2,057 $3, If you annuitize at the end of the appicabe time period and eect fixed settement option 2 or 4 with a one-year annuity payment period (1) : 1 Year 3 Years 5 Years 10 Years $835 $1,421 $1,960 $3, If you do not surrender your Certificate or you annuitize at the end of the appicabe time period and eect fixed settement option 3 or 5, or a variabe settement option: 1 Year 3 Years 5 Years 10 Years $283 $1,044 $1,765 $3,661 6

9 Exampe 2 The second exampe immediatey beow assumes the minimum fees and expenses of any of the Investment Options as set forth in the Annua Investment Option Operating Expenses tabes. Athough your actua costs may be higher or ower, based on these assumptions, your costs woud be: 1. If you surrender your Certificate or eect settement option 1 at the end of the appicabe time period: 1 Year 3 Years 5 Years 10 Years $830 $1,048 $1,263 $2, If you annuitize at the end of the appicabe time period and eect fixed settement option 2 or 4 with a one-year annuity payment period (1) : 1 Year 3 Years 5 Years 10 Years $737 $949 $1,158 $2, If you do not surrender your Certificate or you annuitize at the end of the appicabe time period and eect fixed settement option 3 or 5, or a variabe settement option: 1 Year 3 Years 5 Years 10 Years $180 $553 $947 $2,032 (1) Seection of an annuity payment period with a duration of greater than one year woud resut in ower one-, three- and five-year expense figures. In cacuating the surrender charge that woud appy in the case of annuitization under fixed payment option 2 or 4, the Society wi add the number of years for which payments wi be made under the annuity payment option seected to the number of Certificate Years since the Issue Date to determine the Certificate Year in which the surrender is deemed to occur for purposes of determining the surrender charge percentage that woud appy upon annuitization. For more information on the cacuation of the surrender charge on the Retirement Date, see CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Surrender Charge at the Retirement Date. For more information on the cacuation of the surrender charge associated with a partia withdrawa or surrender, see CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge). Condensed Financia Information Pease refer to APPENDIX A for accumuation unit information for each Subaccount. 7

10 SUMMARY OF THE CERTIFICATE Issuance of a Certificate. The Certificate is an individua fexibe premium deferred variabe annuity certificate with a maximum issue age of 85 for Annuitants (see DESCRIPTION OF ANNUITY CERTIFICATE Issuance of a Certificate ). See DISTRIBUTION OF THE CERTIFICATES for information on compensation of persons seing the Certificates. The Certificates are: fexibe premium because you do not have to pay premiums according to a fixed schedue; and variabe because, to the extent Accumuated Vaue is attributabe to the Account, Accumuated Vaue wi increase and decrease based on the investment performance of the Investment Options corresponding to the Subaccounts to which you aocate your premiums. Free-Look Period. You have the right to return the Certificate within 30 days after you receive it (see DESCRIPTION OF ANNUITY CERTIFICATE Free-Look Period ). If you return the Certificate, it wi become void and you wi receive the greater of: premiums paid, or the Accumuated Vaue on the date the Society receives the returned Certificate at our Administrative Center, pus administrative charges and any other charges deducted under the Certificate. For Certificates issued in Caifornia with an issue age of 60 or above, you wi receive your Accumuated Vaue upon your exercise of your right to return the Certificate which may be ess than the premiums you paid. However, if you aocated a or a portion of your initia premium payment to the Money Market Subaccount or the Decared Interest Option, upon exercise of your right to return the Certificate, you wi receive at east the amount of premium aocated to the Money Market Subaccount or the Decared Interest Option, respectivey. For Certificates issued in Idaho, you wi receive any premiums paid for the Certificate upon exercise of your right to return the Certificate. Premiums. The minimum initia premium amount the Society accepts is $1,000. (We may waive the minimum initia premium amount for certain Quaified Certificates or premium coection methods.) You may make subsequent premium payments (minimum $50 each) at any time. (See DESCRIPTION OF ANNUITY CERTIFICATE Premiums. ) Aocation of Premiums. You can aocate premiums to one or more Subaccounts, the Decared Interest Option, or both (see DESCRIPTION OF ANNUITY CERTIFICATE Aocation of Premiums ). The Society wi aocate the initia premium and any additiona premiums to the Subaccounts and the Decared Interest Option as instructed by the Certificate Hoder. Transfers. You may transfer monies in a Subaccount or the Decared Interest Option to another Subaccount or the Decared Interest Option on or before the Retirement Date (see DESCRIPTION OF ANNUITY CERTIFICATE Transfer Priviege ). The minimum amount of each transfer is $100 or the entire amount in the Subaccount or Decared Interest Option, if ess. Transfers from the Decared Interest Option may be for no more than 25% of the Accumuated Vaue in that option. If the Accumuated Vaue in the Decared Interest Option after the transfer is ess than $1,000, you may transfer the entire amount. 8

11 The Society does not assess transfer processing fees for the first tweve transfers during a Certificate Year. The Society may assess a transfer processing fee of $25 for the 13th and each subsequent transfer during a Certificate Year. Partia Withdrawa. You may withdraw part of the Accumuated Vaue upon Written Notice at any time before the Retirement Date (see DESCRIPTION OF ANNUITY CERTIFICATE Partia Withdrawas and Surrenders Partia Withdrawas ). Certain partia withdrawas may be subject to a surrender charge (see CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Charge for Partia Withdrawa or Surrender ). A partia withdrawa may have tax consequences and may be restricted under certain Quaified Certificates. (See FEDERAL TAX MATTERS. ) Surrender. You may surrender your Certificate upon Written Notice on or before the Retirement Date (see DESCRIPTION OF ANNUITY CERTIFICATE Partia Withdrawas and Surrenders Surrender ). A surrender may have tax consequences and may be restricted under certain Quaified Certificates. (See FEDERAL TAX MATTERS. ) Death Benefit. We wi pay a death benefit once we receive due proof of the Annuitant s death before the Retirement Date. If the Annuitant s age on the Issue Date was ess than 76, the death benefit equas the greatest of: (1) the sum of premiums paid, ess the sum of a partia withdrawa reductions; (2) the Accumuated Vaue; or (3) the Performance Enhanced Death Benefit (PEDB) amount. If the Annuitant s age on the Issue Date was 76 or oder, the death benefit equas the greater of (1) and (2) above. See DESCRIPTION OF ANNUITY CERTIFICATE Death Benefit Before the Retirement Date Death of an Annuitant for descriptions of the Performance Enhanced Death Benefit and partia withdrawa reductions. CHARGES AND DEDUCTIONS Your Certificate wi be assessed the foowing charges and deductions: Surrender Charge (Contingent Deferred Saes Charge). We appy a charge if you make a partia withdrawa from or surrender your Certificate during the first eight Certificate Years (see CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Charge for Partia Withdrawa or Surrender ). Certificate Year in Which Withdrawa Occurs Charge as a Percentage of Amount Withdrawn 1 8% and after 0 9

12 In each Certificate Year, you may annuay withdraw a maximum of 10% of the Accumuated Vaue as of the most recent prior Certificate Anniversary without incurring a surrender charge. (See CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Amounts Not Subject to Surrender Charge. ) We reserve the right to waive the surrender charge as provided in the Certificate. (See CHARGES AND DEDUCTIONS Surrender Charge (Contingent Deferred Saes Charge) Waiver of Surrender Charge. ) Annua Administrative Charge. We deduct an annua administrative charge of $30 on the Issue Date and on each Certificate Anniversary prior to the Retirement Date (see CHARGES AND DEDUCTIONS Annua Administrative Charge ). We currenty waive this charge: on the Issue Date if your initia premium payment is $50,000 or greater, or if the Accumuated Vaue is $50,000 or greater on each subsequent Certificate Anniversary. We may terminate this waiver at any time. We guarantee that the annua administrative charge wi not exceed $45. Transfer Processing Fee. We may assess a $25 fee for the 13th and each subsequent transfer in a Certificate Year. This charge is guaranteed not to exceed $25 per transfer. Mortaity and Expense Risk Charge. We appy a daiy mortaity and expense risk charge, cacuated at an annua rate of 1.40% (approximatey 1.01% for mortaity risk and 0.39% for expense risk) (see CHARGES AND DEDUCTIONS Mortaity and Expense Risk Charge ). Investment Option Expenses. The assets of the Account wi refect the investment advisory fee and other operating expenses incurred by each Investment Option. Risk of an Increase in Current Fees and Expenses. Certain fees and expenses are currenty assessed at ess than their maximum eves. We may increase these current charges in the future up to the guaranteed maximum eves. If fees and expenses are increased, you may need to increase the amount and/or frequency of premiums to keep the Certificate in force. ANNUITY PROVISIONS On your Retirement Date, you may choose to have the Net Accumuated Vaue distributed to you as foows: under a settement option, or in a ump sum (see SETTLEMENT OPTIONS ). FEDERAL TAX MATTERS The Certificate s earnings are generay not taxed unti you take a distribution. If you are under age when you take a distribution, the earnings may aso be subject to a penaty tax. Different tax consequences appy to distributions from Quaified Certificates. (See FEDERAL TAX MATTERS. ) THE SOCIETY, ACCOUNT AND INVESTMENT OPTIONS Modern Woodmen of America The Society was incorporated on May 5, 1884 as a fraterna benefit society in the State of Iinois and is principay engaged in the offering of ife insurance and annuity certificates to its members. We are admitted to conduct variabe annuity business in 45 states: Aabama, Arizona, Arkansas, Caifornia, Coorado, Connecticut, Deaware, Forida, Georgia, Idaho, Iinois, Indiana, Iowa, Kansas, Kentucky, 10

13 Louisiana, Maine, Maryand, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Caroina, North Dakota, Ohio, Okahoma, Oregon, Pennsyvania, South Caroina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming. The Society s principe business address is st Avenue, Rock Isand, Iinois It is the Society s objective and purpose to improve the quaity of ife for its members by bringing together persons of exempary habits and good mora character into its Chapters and provide for the socia, inteectua, mora, financia and physica improvement of its members; to promote fraterna reationships and foster acts of charity and benevoence by and among its members; to provide opportunities for service to others and positive community impact through oca vounteer projects; to promote patriotism and responsibe citizenship; to encourage and support quaity famiy ife through education, fraterna activities, and financia security; and to provide death, disabiity, annuity, and other benefits, rights, and privieges to its members and their beneficiaries. Modern Woodmen of America Variabe Annuity Account On March 30, 2001, we estabished the Account pursuant to the aws of the State of Iinois. The Account: wi receive and invest premiums paid to it under the Certificate; wi receive and invest premiums for other variabe annuity certificates we issue; is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 ( 1940 Act ). Such registration does not invove supervision by the SEC of the management or investment poicies or practices of the Account, us or the Funds. We own the Account s assets. However, we cannot charge the Account with iabiities arising out of any other business we may conduct. (The Account s assets are avaiabe to cover the genera iabiities of the Society ony to the extent that the Account s assets exceed its iabiities. We may transfer assets which exceed these reserves and iabiities to our Genera Account. For exampe, we may transfer assets attributabe to our investment in the Account or fees and charges that have been earned.) A assets hed in the Genera Account are subject to the Society s genera iabiities from business operations. A obigations arising under the Certificates are genera corporate obigations of the Society. The income, gains and osses (reaized and unreaized) from the assets of the Account are, in accordance with the Certificates, credited to or charged against the Account without regard to our other income, gains, or osses. Investment Options There are currenty 49 Subaccounts avaiabe under the Account, each of which invests excusivey in shares of a singe corresponding Investment Option. Each of the Investment Options was formed as an investment vehice for insurance company separate accounts. Each Investment Option has its own investment objective(s) and separatey determines the income and osses for that Investment Option. Whie you may be invested in up to sixteen Investment Options at any one time, incuding the Decared Interest Option, each premium payment you submit may be directed to a maximum of 10 Investment Options, incuding the Decared Interest Option. The investment objective(s) and poicies of certain Investment Options are simiar to the investment objective(s) and poicies of other portfoios that the same investment adviser, investment sub-adviser or manager may manage. The investment resuts of the Investment Options, however, may be higher or ower than the resuts of such other portfoios. There can be no assurance, and no representation is made, that the investment resuts of any of the Investment Options wi be comparabe to the investment resuts of any other portfoio, even if the other portfoio has the same investment adviser, investment sub-adviser or manager. 11

14 We have summarized beow the investment objective(s) and poicies of each Investment Option. There is no assurance that any Investment Option wi achieve its stated objective(s). You shoud aso read the prospectus for each Investment Option, which must accompany or precede this Prospectus, for more detaied information, incuding a description of risks and expenses. You may obtain a free copy of the prospectus for each Investment Option by contacting us at our Administrative Center at Note: If you received a summary prospectus for an Investment Option isted beow, pease foow the directions on the first page of the summary prospectus to obtain a copy of the fu fund prospectus. American Century Investments. American Century Investment Management, Inc. is the investment adviser to the Funds. Portfoio Investment Objective(s) and Principa Investments VP Capita Appreciation Fund This Fund seeks capita growth. The Fund pursues its objective by investing in common stocks of medium- and sma-sized companies with earnings and revenue the adviser beieves are not ony growing, but growing at a successivey faster, or acceerating pace. The adviser wi aso consider the strength of a company s stock price reative to peer companies. VP Mid Cap Vaue Fund This Fund seeks ong-term capita growth. Its secondary goa is income. The Fund pursues its objective by investing at east 80% of the fund s net assets in medium-size companies whose stock price may not refect the companies vaue. VP Utra Fund This Fund seeks ong-term capita growth. The Fund pursues this objective by investing in common stocks of arge companies with earnings and revenue that the adviser beieves are not ony growing, but growing at a successivey faster, or acceerating pace. The adviser wi aso consider other signs of business improvement, such as increasing cash fows, and the strength of a company s stock price reative to peer companies. American Funds Insurance Series (IS). Capita Research and Management Company serves as the investment advisor to these Portfoios. Portfoio American Funds IS Capita Income Buider Cass 1 Investment Objective(s) and Principa Investments The Fund has two primary investment objectives. It seeks (1) to provide a eve of current income that exceeds the average yied on U.S. stocks generay and (2) to provide a growing stream of income over the years. The Fund s secondary objective is to provide growth of capita. The Fund normay wi invest at east 90% of its assets in income-producing securities (with at east 50% of its assets in common stocks and other equity securities). The Fund invests primariy in a broad range of income-producing securities, incuding common stocks and bonds. In seeking to provide you with a eve of current income that exceeds the average yied on U.S. stocks, the Fund generay ooks to the average yied on stocks of companies isted on the S&P 500 Index. The Fund may aso invest significanty in common stocks, bonds and other securities of issuers domicied outside the United States. 12

15 Portfoio American Funds IS Goba Bond Fund Cass 2 Investment Objective(s) and Principa Investments The Fund s investment objective is to provide over the ong term, a high eve of tota return consistent with prudent investment management. Under norma market circumstances, the Fund invests at east 80% of its assets in bonds and other debt securities, which may be represented by other investment instruments, incuding derivatives. The Fund invests primariy in debt securities, incuding asset-backed and mortgage-backed securities and securities of governmenta, supranationa and corporate issuers denominated in various currencies, incuding U.S. doars. As a Fund that seeks to invest gobay, the Fund wi aocate its assets among securities of companies domicied in various countries, incuding the United States and countries with emerging markets (but in no fewer than three countries). Under norma market conditions, the Fund wi invest significanty in issuers domicied outside the United States (i.e., at east 40% of its net assets, uness market conditions are not deemed favorabe by the Fund s investment adviser, in which case the Fund woud invest at east 30% of its net assets in issuers outside the United States). Normay, the Fund s debt obigations consist substantiay of investment-grade bonds (rated Baa3 or better or BBB- or better by Nationay Recognized Statistica Rating Organizations, or NRSROs, designated by the Fund s investment adviser or unrated but determined to be of equivaent quaity by the Fund s investment adviser). The Fund may aso invest up to 35% of its assets in ower quaity, higher yieding debt securities (rated Ba1 or beow and BB+ or beow by NRSROs designated by the Fund s investment adviser or unrated but determined to be of equivaent quaity by the Fund s investment adviser). Such securities are sometimes referred to as junk bonds. The tota return of the Fund wi be the resut of interest income, changes in the market vaue of the Fund s investments and changes in the vaues of other currencies reative to the U.S. doar. The Fund may invest in certain derivative instruments, such as futures contracts and swaps. A derivative is a financia contract, the vaue of which is based on the vaue of an underying financia asset (such as a stock, bond or currency), a reference rate or a market index. The Fund may invest in a derivative ony if, in the opinion of the investment adviser, the expected risks and rewards of the proposed investment are consistent with the investment objective and strategies of the Fund as discosed in this prospectus and in the Fund s statement of additiona information. The Fund is nondiversified, which aows it to invest a greater percentage of its assets in any one issuer than woud otherwise be the case. However, the Fund intends to imit its investments in the securities of any singe issuer. 13

16 Portfoio American Funds IS Goba Growth and Income Fund Cass 1 Investment Objective(s) and Principa Investments The Fund s investment objective is to provide ong-term growth of capita whie providing current income. The Fund invests primariy in common stocks of weestabished companies around the word, which the investment adviser beieves have the potentia for growth and/or to pay dividends. As a Fund that seeks to invest gobay, the Fund wi aocate its assets among securities of companies domicied in various countries, incuding the United States and countries with emerging markets (but in no fewer than three countries). Under norma market conditions, the Fund wi invest significanty in issuers domicied outside the United States (i.e., at east 40% of its net assets, uness market conditions are not deemed favorabe by the Fund s investment adviser, in which case the Fund woud invest at east 30% of its net assets in issuers outside the United States). The Fund is designed for investors seeking both capita appreciation and income. In pursuing its objective, the Fund tends to invest in stocks that the investment adviser beieves to be reativey resiient to market decines. American Funds IS Goba Sma Capitaization Fund Cass 1 The Fund s investment objective is to provide ong-term growth of capita. Normay, the Fund invests at east 80% of its net assets in growth-oriented common stocks and other equity type securities of companies with sma market capitaizations, measured at the time of purchase. However, the Fund s hodings of sma capitaization stocks may fa beow the 80% threshod due to subsequent market action. The investment adviser currenty defines sma market capitaization companies as companies with market capitaizations of $4.0 biion or ess. The investment adviser has periodicay re-evauated and adjusted this definition and may continue to do so in the future. As a Fund that seeks to invest gobay, the Fund wi aocate its assets among securities of companies domicied in various countries, incuding the United States and countries with emerging markets (but in no fewer than three countries). Under norma market conditions, the Fund wi invest significanty in issuers domicied outside the United States (i.e., at east 40% of its net assets, uness market conditions are not deemed favorabe by the Fund s investment adviser, in which case the Fund woud invest at east 30% of its net assets in issuers outside the United States). 14

17 Portfoio American Funds IS Growth Fund Cass 2 Investment Objective(s) and Principa Investments The Fund s investment objective is to provide growth of capita. The Fund invests primariy in common stocks and seeks to invest in companies that appear to offer superior opportunities for growth of capita. The Fund may invest up to 25% of its assets in common stocks and other securities of issuers domicied outside the United States. American Funds IS Growth- Income Fund Cass 2 American Funds IS Managed Risk Growth Fund Cass P1 (1) The Fund s investment objectives are to achieve ong-term growth of capita and income. The Fund invests primariy in common stocks or other securities that the investment adviser beieves demonstrate the potentia for appreciation and/or dividends. The Fund may invest up to 15% of its assets, at the time of purchase, in securities of issuers domicied outside the United States. The Fund is designed for investors seeking both capita appreciation and income. The Fund s investment objective is to provide growth of capita whie seeking to manage voatiity and provide downside protection. The Fund pursues its investment objective by investing in shares of two underying Funds, the American Funds Insurance Series Growth Fund SM, (the Growth Fund ) and the American Funds Insurance Series Bond Fund (the Bond Fund ), whie seeking to manage portfoio voatiity and provide downside protection primariy through the use of exchange-traded futures contracts. The Fund normay seeks to invest 80% of its assets in the Growth Fund, the investment objective of which is to provide growth of capita. The Growth Fund invests primariy in common stocks and seeks to invest in companies that appear to offer superior opportunities for growth of capita. The Growth Fund may invest up to 25% of its assets in common stocks and other securities of issuers domicied outside the United States. The Fund invests the remainder of its assets in the Bond Fund and in cash and/or U.S. Treasury futures. The Bond Fund s investment objective is to provide as high a eve of current income as is consistent with the preservation of capita. Normay, the Bond Fund invests at east 80% of its assets in bonds and other debt securities. The Bond Fund invests at east 65% of its assets in investment-grade debt securities (rated Baa3 or better or BBB+ or better by Nationay Recognized Statistica Rating Organizations designated by the Fund s investment advisor or unrated but determined to be of equivaent quaity by the adviser). 15

18 Portfoio Investment Objective(s) and Principa Investments The Fund s investment in the Bond Fund seeks to provide a eve of diversification across mutipe asset casses. Because different asset casses often react differenty to changes in market conditions, such diversification seeks to manage the Fund s risk to market changes, incuding stock market decines. Additionay, the Fund empoys a risk-management overay referred to in this prospectus as the managed risk strategy. The managed risk strategy consists of using hedge instruments primariy short positions in exchange-traded futures contracts to attempt to stabiize the voatiity of the Fund around a target voatiity eve and reduce the downside exposure of the Fund during periods of significant market decines. The Fund empoys a subadviser to seect individua futures contracts on equity indexes of U.S. markets and markets outside the United States that the subadviser beieves are correated to the underying Fund s equity exposure. These instruments are seected based on the subadviser s anaysis of the reation of various equity indexes to the underying Fund s portfoio. In addition, the subadviser wi monitor iquidity eves of reevant futures contracts and transparency provided by exchanges as the counterparties in hedging transactions. The target voatiity eve wi be set from time to time by the investment adviser and the subadviser and may be adjusted if deemed advisabe in the judgment of the investment adviser and the subadviser. The subadviser may aso seek to hedge the Fund s currency risk reated to its exposure to equity index futures denominated in currencies other than the U.S. doar. A futures contract on an index is an agreement pursuant to which two parties agree to take or make deivery of an amount of cash inked to the vaue of the index at the cose of the ast trading day of the contract. A futures contract is considered a derivative because it derives its vaue from the price of the underying index. A short position in an index futures contract gains in vaue when the underying index decines and oses vaue when the underying index rises. The subadviser wi reguary adjust the eve of exchangetraded futures contracts to seek to manage the overa net risk eve of the Fund. In situations of extreme market voatiity, the subadviser wi tend to use exchange-traded equity index futures more heaviy, as the exchange-traded futures coud significanty reduce the Fund s net economic exposure to equity securities. Even in periods of ow voatiity in the equity markets, however, the subadviser wi continue to use the hedging techniques (athough, presumaby, to a esser degree) to seek to preserve gains after favorabe market conditions and reduce osses in adverse market conditions. 16

19 Portfoio Investment Objective(s) and Principa Investments The Fund is nondiversified, which aows it to invest a greater percentage of its assets in any one issuer than woud otherwise be the case. However, through the underying Growth Fund and Bond Fund, the Fund owns a diversified mix of securities. American Funds IS Managed Risk Growth-Income Fund Cass P1 (1) The Fund s investment objectives are to achieve ong-term growth of capita and income whie seeking to manage voatiity and provide downside protection. The Fund pursues its investment objectives by investing in shares of two underying Funds, the American Funds Insurance Series Growth-Income Fund SM, (the Growth- Income Fund ) and the American Funds Insurance Series Bond Fund (the Bond Fund ), whie seeking to manage portfoio voatiity and provide downside protection primariy through the use of exchange-traded futures contracts. The Fund normay seeks to invest 80% of its assets in the Growth-Income Fund, which seeks to achieve ong-term growth of capita and income. The Growth-Income Fund invests primariy in common stocks or other securities that the investment adviser beieves demonstrate the potentia for appreciation and/or dividends. The Growth-Income Fund may invest up to 15% of its assets, at the time of purchase, in securities of issuers domicied outside the United States. The Fund invests the remainder of its assets in the Bond Fund and in cash and/or U.S. Treasury futures. The Bond Fund s investment objective is to provide as high a eve of current income as is consistent with the preservation of capita. Normay, the Bond Fund invests at east 80% of its assets in bonds and other debt securities. The Bond Fund invests at east 65% of its assets in investment-grade debt securities (rated Baa3 or better or BBB+ or better by Nationay Recognized Statistica Rating Organizations designated by the Fund s investment advisor or unrated but determined to be of equivaent quaity by the advisor). 17