<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1995
REGISTRATION NO. 33-11023
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
----
POST-EFFECTIVE AMENDMENT NO. 16 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 17
- --------------------------------------------------------------------------------
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
(EXACT NAME OF REGISTRANT)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE INCLUDING ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 399-1600
PATRICK A. BURNS, ESQ.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROBERT S. SCHNEIDER, ESQ.
GRAHAM & JAMES
885 THIRD AVENUE
NEW YORK, NEW YORK 10022
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
---------------
It is proposed that this filing will become effective (check appropriate
space)
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on May 1, 1995 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a) of Rule 485
---
on (date) pursuant to paragraph (a) of Rule 485
---
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The notice required by such rule for the Registrant's most recent
fiscal year was filed on February 28, 1995.
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 2
VARIABLE ACCUMULATION ANNUITY CONTRACT
Issued By
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
666 Fifth Avenue
New York, New York 10103
- --------------------------------------------------------------------------------
The group variable accumulation annuity contract ("Contract") offered by
Mutual of America Life Insurance Company (the "Insurance Company") and
described in this Prospectus is designed to aid employees of organizations in
the health and welfare and educational field in retirement and long-term
financial planning by providing monthly Annuity Payments which begin at a
selected future date. The Contract will be issued in conjunction with thrift
plans or arrangements which are qualified under either Section 401(a) or 403(a)
or meet the requirements of 403(b) of the Internal Revenue Code ("Code") for
the benefit of participating employees of organizations qualifying for tax-
exempt status under Section 501(c) of the Code.
The term "thrift plan or arrangement," as used in this Prospectus, is a plan
under which participating employees designate a percentage of salary as a
contribution thereto and employer matches a fixed percentage up to a specified
limit. Additional employee contributions may also be permitted, as well as non-
matched amounts by employers if the Plan provides.
Participating employees under this Contract are referred to in this
Prospectus as "Participants."
Under the Contract, Contributions made in accordance with the thrift plan or
arrangement may be accumulated on behalf of a Participant on a completely
variable basis, a completely fixed basis, or a combination variable and fixed
basis. The basic purpose of the variable accumulation aspect of the Contract is
to provide Participants with an opportunity to accumulate amounts toward
retirement, or for other purposes permitted by federal law, that will reflect
the investment experience of one or more of the distinct Funds comprising
Mutual of America Separate Account No. 2 ("Separate Account") to which
Contributions may be allocated. Contributions under the Contract may be
allocated in whole or in part to any of the Funds of the Separate Account or to
the General Account of the Insurance Company (the "Investment Alternatives").
The assets in each Fund of the Separate Account are invested in shares of:
--one or more of the following eight Funds of Mutual of America Investment
Corporation (the "Investment Company"): Money Market Fund, All America
Fund, Equity Index Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond
Fund, Composite Fund and Aggressive Equity Fund;
--one or more of the following three Fidelity Investments (R) portfolios:
Equity-Income Portfolio of the Variable Insurance Products Fund, and
Contrafund Portfolio and Asset Manager Portfolio of the Variable Insurance
Products Fund II (collectively, the "Fidelity Portfolios");
--one or more of the following three portfolios of Scudder Variable Life
Investment Fund (collectively, the "Scudder Portfolios"): Scudder Capital
Growth Portfolio, Scudder Bond Portfolio, and Scudder International
Portfolio;
--the TCI Growth Fund of TCI Portfolios, Inc.; and
--the Calvert Responsibly Invested Balanced Portfolio of Acacia Capital
Corporation.
The respective prospectuses for the Investment Company, the Fidelity
Portfolios, the Scudder Portfolios, the TCI Growth Fund and the Calvert
Responsibly Invested Balanced Portfolio, which are attached to this Prospectus,
describe the investment objectives and policies of each of the variable
accumulation Investment Alternatives, as well as the risks relating to
investments in each such Investment Alternative.
The value of a Participant's interest in the Separate Account will depend
upon the investment performance of the chosen Investment Alternative. THE
INSURANCE COMPANY DOES NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY FUND OF
THE SEPARATE ACCOUNT. Accordingly, the Participant bears the entire investment
risk for any amounts allocated to the Separate Account.
Amounts accumulated under the Contract may be applied to provide monthly
Annuity Payments on a fixed basis commencing at a future date selected by the
Participant.
This Prospectus generally describes only the variable portion of the
Contract. For a brief summary of the fixed portion, see "The General Account."
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the
Contracts and the Separate Account is available free by writing the Insurance
Company at the address above or by calling (212) 399-1600. The Statement of
Additional Information, which has the same date as the Prospectus, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional Information is
included at the end of this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please read this Prospectus carefully for details on the Contract being offered
and retain it for the future reference. It is not valid unless attached to the
current prospectuses for the Investment Company, Fidelity Portfolios, Scudder
Variable Life Investment Fund, TCI Growth Fund and Calvert Responsibly Invested
Balanced Portfolio.
Dated: May 1, 1995
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Annual Expenses............. 4
Unit Value Information............... 6
Definitions.......................... 8
Summary.............................. 10
Mutual of America Life Insurance
Company............................. 13
The Separate Account................. 13
Investments of the Separate Account.. 14
Charges.............................. 17
Administrative Charges.............. 17
Distribution Expense Charge......... 17
Mortality and Expense Risk Charge... 17
Portfolio Company Expenses.......... 18
Employer Contract Charge............ 19
Employer Participant Charge......... 19
The Group Annuity Contract........... 20
General............................. 20
Payment of Contributions............ 20
Allocations of Contributions........ 20
Accumulation Units.................. 20
Transfers Among Investment
Alternatives....................... 21
Withdrawals......................... 22
Specified Payments Option........... 23
Death Benefits...................... 23
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Discontinuance and Termination........................................ 24
Discontinuance....................................................... 24
Termination of Participation......................................... 24
Postponement of Payments.............................................. 25
The Annuity Period.................................................... 25
General.............................................................. 25
Annuity Commencement Date............................................ 25
Available Forms of Annuity........................................... 26
Amount of Annuity Payments........................................... 26
Small Benefit Payments............................................... 26
The General Account................................................... 27
General Matters....................................................... 28
Federal Tax Matters................................................... 31
Voting Rights......................................................... 33
Performance Information............................................... 33
Funding and Other Changes............................................. 34
Other Variable Annuity Contracts...................................... 34
Table of Contents of the Statement of Additional Information.......... 35
Obtaining a Copy of the Statement of Additional Information........... 35
Order Form for Statement of Additional Information.................... 35
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
3
<PAGE>
TABLE OF ANNUAL EXPENSES
<TABLE>
<CAPTION>
Investment
Company
All America,
Bond,
Investment Short-Term Investment Investment Fidelity Fidelity
Company Bond, Company Company VIP Fidelity VIP II Scudder
Money Mid-Term Bond, Equity Aggressive Equity- VIP II Asset Capital Scudder
Market and Composite Index Equity Income Contrafund Manager Growth Bond
---------- -------------- ---------- ---------- -------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contractowner
Transaction
Expenses
Sales Load
Imposed on
Purchases...... None None None None None None None None None
Deferred Sales
Load......... None None None None None None None None None
Surrender Fees.. None None None None None None None None None
Exchange Fee.... None None None None None None None None None
Annual Contract
Fee(1).......... $24 $24 $24 $24 $24 $24 $24 $24 $24
==== ==== ==== ==== ==== ==== ==== ==== ====
Separate Account
Annual Expenses
(as a percentage
of average
account value)
Mortality and
Expense Risk
Fees(2)........ .50% .50% .50% .50% .50% .50% .50% .50% .50%
---- ---- ---- ---- ---- ---- ---- ---- ----
Account Fees and Expenses
Administrative Charges(2). .40% .40% .40% .40% .40% .40% .40% .40% .40%
Distribution Ex-
pense
Charge(2)...... .35 .35 .35 .35 .35 .35 .35 .35 .35
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Account
Fees and
Expenses....... .75 .75 .75 .75 .75 .75 .75 .75 .75
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Separate
Account
Expenses....... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
==== ==== ==== ==== ==== ==== ==== ==== ====
Portfolio Company
Annual Expenses
(as a percentage
of portfolio
company average
net assets)
Management
Fees(3)........ .25% .50% .125% .85% .52% .62% .72% .475% .475%
Other Ex-
penses(4)...... None None None None .06 .27 .08% .105 .105
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
Company
Expenses....... .25% .50% .125% .85% .58%(5) .89%(6) .80%(5) .58% .58%
==== ==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
Calvert
Responsibly
Scudder TCI Invested
International Growth Balanced
------------- ------ -----------
<S> <C> <C> <C>
Contractowner
Transaction
Expenses
Sales Load
Imposed on
Purchases...... None None None
Deferred Sales
Load......... None None None
Surrender Fees.. None None None
Exchange Fee.... None None None
Annual Contract
Fee(1).......... $24 $24 $24
============= ====== ===========
Separate Account
Annual Expenses
(as a percentage
of average
account value)
Mortality and
Expense Risk
Fees(2)........ .50% .50% .50%
------------- ------ -----------
Account Fees and Expenses
Administrative Charges(2). .40% .20% .40%
Distribution Ex-
pense
Charge(2)...... .35 .35 .35
------------- ------ -----------
Total Account
Fees and
Expenses....... .75 .50 .75
------------- ------ -----------
Total Separate
Account
Expenses....... 1.25% 1.05% 1.25%
============= ====== ===========
Portfolio Company
Annual Expenses
(as a percentage
of portfolio
company average
net assets)
Management
Fees(3)........ .875% 1.00% .70%
Other Ex-
penses(4)...... .205 None .10
------------- ------ -----------
Total Portfolio
Company
Expenses....... 1.08% 1.00% .80%
============= ====== ===========
</TABLE>
- -------
(1) A monthly amount of $2.00 (but not to exceed 1/12 of 1% of the Account
Value in any month) is charged with respect to each Participant under a
Contract, regardless of the number of Investment Alternatives in which the
Participant is invested. Such amount is deducted from the net assets, if
any, in one or more of the Participant's Account or from such net assets
which have been allocated to one or more Funds of the Separate Account in
the order as described in "Charges--Administrative Charges" herein. The
above table reflects such amount for a full year for each Fund as if no
other Investment Alternatives were used. If the General Account is used,
the fee is deducted from it and there would be no fee with respect to
amounts allocated to any Fund. If the General Account is not used, but more
than one Fund is used, then the second or additional Fund(s) would not be
charged such fee. An employer may elect to pay this amount in which case no
amount would be deducted from a Participant's Account. See "Charges--
Administrative Charge." In addition, there is a monthly contract charge,
payable by the employer, which ranges up to $200 per group contract, and a
monthly employer participant charge of up to $4.00 per Participant. See
"Charges--Employer Contract Charge."
(2) In accordance with a Fund Participation Agreement, TCI reimburses the
Insurance Company at an annual rate of up to .20% for Administrative
Expenses. If the Fund Participation Agreement is terminated for sales of
new Contracts, TCI's reimbursement obligation will terminate, and the
administrative charge to the TCI Growth Fund will be .40% instead of .20%.
The Administrative Charges, Distribution Expense Charge and Mortality and
Expense Risk Fees items are more fully described under "Charges--
Administrative Charges"; "Charges--Distribution Expense Charge"; and
"Charges--Mortality and Expense Risk Charge."
(3) Management Fees are more fully described in "Charges--Portfolio Company
Expenses", and in the Prospectuses of the Investment Company, the Fidelity
Portfolios, the Scudder Portfolios, the TCI Growth Fund and the Calvert
Responsibly Invested Balanced Portfolio.
(4) See "Charges--Portfolio Company Expenses."
(5) A portion of the brokerage commissions paid by Fidelity VIP Equity-Income
and Fidelity VIP II Asset Manager Portfolios were used to reduce expenses.
Without this reduction, total operating expenses for the Portfolios would
have been .60% and .81%, respectively.
(6) Estimated for 1995. Fidelity VIP II Contrafund Portfolio commenced
operations January 3, 1995.
4
<PAGE>
EXAMPLES
The examples below show the expenses that would be borne by a Participant,
assuming a $1,000 investment and a 5% annual rate of return on assets. No
surrender charge is imposed upon the surrender of a contract, and therefore the
expenses would be the same whether or not the contract is surrendered at the
end of the applicable time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Example for Investment Company Money Market
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $20.49 $65.95 $118.01 $282.66
Example for Investment Company All America,
Bond, Short-Term Bond, Mid-Term Bond and Com-
posite Funds
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $22.98 $73.90 $132.11 $315.55
Example for Investment Company Equity Index
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $19.24 $61.96 $110.91 $265.94
Example for Investment Company Aggressive Eq-
uity Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $26.47 $84.97 $151.61 $360.40
Example for Fidelity VIP Equity-Income Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Fidelity VIP II Contrafund Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $26.87 $86.23 $153.83 $365.44
Example for Fidelity VIP II Asset Manager Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.87 $83.08 $148.29 $352.82
Example for Scudder Capital Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Scudder Bond Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Scudder International Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $28.77 $92.21 $164.29 $389.14
Example for TCI Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.97 $83.40 $148.84 $354.08
Example for Calvert Responsibly Invested Bal-
anced Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.97 $83.40 $148.84 $354.08
</TABLE>
The purpose of the above table is to assist the Participant in understanding
the various costs and expenses that a Participant will bear, directly or
indirectly, and the table reflects the expenses of the Separate Account as well
as the Investment Company Funds, the Fidelity VIP Equity-Income Portfolio, the
Fidelity VIP II Asset Manager Portfolio, the Scudder Portfolios, the TCI Growth
Fund and the Calvert Responsibly Invested Balanced Portfolio as they were for
the year ended December 31, 1994 and estimated 1995 expenses for the Fidelity
VIP II Contrafund Portfolio. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
ON WHICH THE EXAMPLES WERE BASED. The annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance. Each
example also assumes an annual contract fee of $.40 per $1,000 of value in the
Separate Account. See "Charges--Administrative Charges" for a description of
how such fee would be deducted from the Investment Alternatives.
5
<PAGE>
UNIT VALUE INFORMATION
Shown below is condensed financial information for an Accumulation Unit
outstanding throughout the ten years during the period ended December 31, 1994.
The information with respect to the periods ended December 31, 1994, 1993 and
1992 has been audited by the Funds' independent auditors, Arthur Andersen LLP.
Each of the years in the periods ended December 31, 1991 were audited by the
Funds' previous auditors. Since the Fidelity VIP Equity-Income Fund and
Fidelity VIP II Contrafund and Asset Manager Funds had not commenced operations
as of the date of this Prospectus, they are not represented in these tables.
THE ALL AMERICA FUND (PREVIOUSLY CALLED THE "STOCK FUND") CHANGED ITS
INVESTMENT OBJECTIVES AND POLICIES AND ADDED SUBADVISERS ON MAY 1, 1994. Prior
to May 1, 1995, the Calvert Responsibly Invested Balanced Portfolio was known
as the Calvert Socially Responsible Series.
<TABLE>
<CAPTION>
INVESTMENT COMPANY MONEY MARKET FUND
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year............ $ 1.68 $ 1.65 $ 1.62 $ 1.54 $ 1.44 $1.33 $1.25 $1.18 $1.12 $1.06
====== ====== ====== ====== ====== ===== ===== ===== ===== =====
Unit value, end
of period....... $ 1.72 $ 1.68 $ 1.65 $ 1.62 $ 1.54 $1.44 $1.33 $1.25 $1.18 $1.12
====== ====== ====== ====== ====== ===== ===== ===== ===== =====
Thousands of
accumulation
units
outstanding, end
of period....... 17,653 15,815 16,545 15,656 13,972 8,570 4,870 2,778 1,514 1,189
====== ====== ====== ====== ====== ===== ===== ===== ===== =====
<CAPTION>
INVESTMENT COMPANY ALL AMERICA FUND
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year............ $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82 $ 1.67 $ 1.49 $1.05
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Unit value, end
of period....... $ 3.35 $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82 $ 1.67 $1.49
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Thousands of
accumulation
units
outstanding, end
of period....... 38,669 36,510 32,352 26,173 20,973 20,157 20,064 23,919 17,509 3,797
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY BOND FUND
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 2.39 $ 2.13 $1.99 $1.73 $1.67 $1.49 $1.40 $1.42 $1.28 $1.05
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
Unit value, end of
period.................. $ 2.28 $ 2.39 $2.13 $1.99 $1.73 $1.67 $1.49 $1.40 $1.42 $1.28
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
Thousands of
accumulation units
outstanding, end of
period.................. 10,601 12,244 9,203 6,152 5,235 4,164 3,057 2,631 2,103 863
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT INVESTMENT INVESTMENT
COMPANY COMPANY COMPANY COMPANY
EQUITY INDEX SHORT-TERM MID-TERM AGGRESSIVE
FUND BOND FUND BOND FUND EQUITY FUND
------------- ----------- ----------- -----------
1994 1993 1994 1993 1994 1993 1994
------ ------ ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period................. $ 1.05 $ 1.00 $1.03 $1.00 $1.06 $1.00 $1.00
====== ====== ===== ===== ===== ===== =====
Unit value, end of period.... $ 1.05 $ 1.05 $1.03 $1.03 $1.01 $1.06 $1.05
====== ====== ===== ===== ===== ===== =====
Thousands of accumulation
units outstanding, end of
period...................... 4,644 2,135 1,132 747 1,444 1,411 9,145
====== ====== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY COMPOSITE FUND
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60 $ 1.51 $ 1.35 $1.05
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Unit value, end of
period.................. $ 2.82 $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60 $ 1.51 $1.35
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Thousands of
accumulation units
outstanding, end of
period.................. 73,239 71,215 50,944 43,115 37,461 32,716 29,436 28,126 20,079 4,552
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SCUDDER BOND FUND SCUDDER CAPITAL GROWTH FUND
- -------------------------------------- -----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
- -------------------------------------- -----------------------------------------
1994 1993 1992 1991 1990 1989 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.32 $ 9.30 $8.78 $7.54 $7.05 $6.39 $16.46 $13.80 $13.09 $ 9.48 $10.35 $ 8.53
====== ====== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
$ 9.69 $10.32 $9.30 $8.78 $7.54 $7.05 $14.67 $16.46 $13.80 $13.09 $ 9.48 $10.35
====== ====== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
1,169 1,277 1,053 600 354 221 8,121 6,582 3,698 2,138 1,103 844
====== ====== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
CALVERT RESPONSIBLY
SCUDDER INTERNATIONAL FUND TCI GROWTH FUND INVESTED BALANCED FUND
- -------------------------------------- ----------------------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
- -------------------------------------- ----------------------------------- -----------------------
1994 1993 1992 1991 1990 1989 1994 1993 1992 1991 1990 1989 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$11.06 $ 8.13 $8.48 $7.68 $8.41 $6.14 $9.61 $8.81 $9.01 $6.40 $6.53 $5.11 $1.64 $1.54 $1.44 $1.32
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
$10.08 $11.06 $8.13 $8.48 $7.68 $8.41 $9.39 $9.61 $8.81 $9.01 $6.40 $6.53 $1.57 $1.64 $1.54 $1.44
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
8,610 5,400 2,262 1,849 1,644 721 6,361 5,946 5,280 3,056 1,518 791 5,986 5,151 2,742 678
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
The dates the Funds of the Separate Account commenced operation are as
follows: Investment Company Money Market, All America (previously "Stock"),
Bond and Composite Funds--January 1, 1985; Scudder Capital Growth, Bond and
International Funds and TCI Growth Fund--January 3, 1989; Calvert Responsibly
Invested Balanced Fund--May 13, 1991; Investment Company Equity Index, Short-
Term Bond and Mid-Term Bonds Funds--February 5, 1993; and Investment Company
Aggressive Equity Fund--May 2, 1994.
7
<PAGE>
DEFINITIONS
Accumulation Period--For each Participant, the period from the date
Contributions are first made under a Contract to the Annuity Commencement Date.
Accumulation Unit--A measure used to calculate the value of a Participant's
interest in each of the Funds of the Separate Account prior to the Annuity
Commencement Date. Each Fund of the Separate Account has its own distinct
Accumulation Unit value.
Annuitant--A person receiving or who will receive Annuity Payments under a
Contract. A Participant, or another person designated under a Contract to
receive Annuity Payments, a single sum payment or the commuted value of
remaining periodic payments, may be an Annuitant.
Annuity Commencement Date--The date on which annuity benefits become payable
with respect to a Participant, and as of which the amount of the first Annuity
Payment will be determined. The Annuity Commencement Date may be the date
elected by a Participant, or imposed by operation of law, or, if later, the
first Valuation Day as of which all required information and documentation have
been received by the Insurance Company. Sometimes referred to by the Insurance
Company as Benefit Commencement Date.
Annuity Payments--A series of payments under a Contract for life, for a
minimum period of time, or for the joint lifetime of the Annuitant and another
person and thereafter for the life of the survivor, or for such other period
provided for under Options available from the Insurance Company.
Annuity Period--The period, beginning at the Annuity Commencement Date,
during which Annuity Payments are received by an Annuitant.
Calvert Responsibly Invested Balanced Portfolio--The Calvert Responsibly
Invested Balanced Portfolio of Acacia Capital Corporation.
Code--The Internal Revenue Code of 1986, as amended.
Contract--The group variable accumulation annuity contract described in this
Prospectus.
Contractholder--The entity to which the Insurance Company has issued a
Contract. The Contractholder may be an employer, or an association representing
employers.
Contributions--The amounts contributed from time to time toward the purchase
of an annuity under a Contract.
Eligible Spouse--The person to whom a Participant is legally married at the
earlier of the Participant's (a) Annuity Commencement Date, or (b) date of
death.
Fidelity Portfolios--The Fidelity VIP Equity-Income Portfolio and the
Fidelity VIP II Contrafund and Asset Manager Portfolios.
Fidelity VIP Equity-Income Portfolio--The Equity-Income Portfolio of the
Variable Insurance Products Fund.
Fidelity VIP II Contrafund and Asset Manager Portfolios--The Contrafund
Portfolio and the Asset Manager Portfolios of the Variable Insurance Products
Fund II.
Fund--According to the context, one of the sixteen subaccounts of the
Separate Account or one of the eight investment portfolios of the Investment
Company.
General Account--All of the assets of the Insurance Company that are not in a
separate account, but rather are held as part of its general assets.
Insurance Company--Mutual of America Life Insurance Company.
Investment Alternatives--The General Account and the sixteen distinct Funds
comprising the Separate Account, namely, the Funds which invest in the Money
Market, All America, Equity Index, Bond, Short-Term Bond, Mid-Term Bond,
Composite and Aggressive Equity Funds of the Investment Company, in the three
Fidelity Portfolios, in the three
8
<PAGE>
Scudder Portfolios, in TCI Growth Fund and in the Calvert Responsibly Invested
Balanced Portfolio. Under the Contract, a Participant may allocate
Contributions among all of the Investment Alternatives. The employer has the
right to restrict allocations of employer money to the General Account.
Investment Company--Mutual of America Investment Corporation.
Participant--An employee or former employee participating in a Plan and for
whom Contributions have been or are being made toward the purchase of an
annuity.
Participant's Account Balance (or Account Balance)--The sum of the dollar
values of the Accumulation Units credited to a Participant in the Separate
Account and the value of amounts accumulated for the benefit of that
Participant in the General Account.
Plan--The TDA Thrift Plan (sometimes referred to as a 403(b) Thrift Plan) and
Thrift Plan which are more fully described in the Summary immediately following
the definitions.
Plan Year--Generally, the twelve-month period beginning each January 1.
Portfolio Companies--The Investment Company, Variable Insurance Products
Fund, Variable Insurance Products Fund II, Scudder Variable Life Investment
Fund, TCI Portfolios, Inc. and Acacia Capital Corporation.
Scudder Portfolios--The following three portfolios of Scudder Variable Life
Investment Fund, namely, the Scudder Capital Growth Portfolio, the Scudder Bond
Portfolio and the Scudder International Portfolio.
Separate Account--Mutual of America Separate Account No. 2, a separate
investment account established by the Insurance Company to receive and invest
Contributions made under variable accumulation annuity contracts and other
variable contracts. The Separate Account is set aside and kept separate from
the other assets of the Insurance Company.
TCI Growth Fund--The TCI Growth Fund of TCI Portfolios, Inc.
Valuation Day--Each day that the New York Stock Exchange is open for
business, other than the Friday following Thanksgiving.
Valuation Period--The period beginning on the close of business of each
Valuation Day and ending on the close of business on the next Valuation Day.
9
<PAGE>
SUMMARY
The Following Summary Of Prospectus Information Should Be Read In Conjunction
With The Detailed Information Appearing Elsewhere In This Prospectus.
CONTRACT OFFERED
The group variable accumulation annuity contract offered by this Prospectus
is issued by the Insurance Company and designed to aid in retirement and long-
term financial planning. The Contract provides for the accumulation of
Contributions on a completely variable basis, a completely fixed basis or a
combination variable and fixed basis, unless otherwise restricted by the
employer. Annuity Payments under the Contract will be made on a fixed basis
only.
The two types of thrift plans or arrangements provided under which the
Contract described herein will be issued are:
1. Tax Deferred Annuity Thrift Plan ("TDA Thrift Plan"). The group contract
is used by the Employer to fund an annuity purchase arrangement meeting the
requirements of Section 403(b) of the Code by certain organizations that
qualify for tax-exempt status under Section 501(c)(3) of the Code or are
eligible public or private schools or colleges or universities. These
Contractholders are such tax-exempt organizations or associations representing
such organizations or its employees. Employee Contributions ordinarily are made
through voluntary salary reduction arrangements and the employer generally
matches all or part of such Contributions by applying a fixed matching formula
to the amount of employee Contributions. Additional employee Contributions may
also be permitted. Participants contributing to a TDA Thrift Plan may obtain
certain Federal income tax benefits provided under Section 403(b) of the Code
(see "Federal Tax Matters").
2. Voluntary Employee Contribution Thrift Plan ("Thrift Plan"). The group
contract is used to provide annuity benefits to employees participating in a
retirement plan qualified for special Federal income tax treatment under
Section 401(a) or 403(a) of the Code. Thrift Plans are adopted by
Contractholders, which are typically employers. Employee Contributions
ordinarily are made through voluntary payroll deduction arrangements and the
employer matches all or part of such Contributions by applying a fixed matching
formula to the amount of the employee Contributions. Additional employee
Contributions may also be permitted. In addition, under Section 401 an employer
may declare a non-matched amount to be allocated to employees under a formula
set forth in the Plan. For information concerning the Federal income tax
treatment of annuities in general see "Federal Tax Matters."
CONTRIBUTIONS
In general, Contributions under the Contract may be made in amounts specified
to and agreed upon with the employer at a frequency based on the employee's pay
cycle. The minimum Contribution that may be made under the Contract is $200 on
an annual basis. The maximum annual Contributions are the amounts permitted
under the Code for the types of Plans or arrangements funded by this Contract
(see "The Group Annuity Contract-Payment of Contributions" and "Federal Tax
Matters").
Participants under the Contract may, if the Plan permits, allocate
Contributions made on their behalf among the Investment Alternatives provided
in the Contract, which include the General Account and the thirteen distinct
Funds of the Separate Account.
This Prospectus is intended as a disclosure document for the variable portion
of the Contract only. See "The General Account" for a brief summary of the
fixed portion of the Contract.
THE SEPARATE ACCOUNT
Contributions made pursuant to the Contract and allocated on a variable basis
are deposited in the Separate Account. The Separate Account is divided into
sixteen Funds, or subaccounts, each one of which corresponds to one of the
eight Funds of the Investment Company, or one of the three Fidelity Portfolios,
or one of the three Scudder Portfolios, or the TCI Growth Fund or the Calvert
Responsibly Invested Balanced Portfolio, in which Separate Account assets are
invested. The objective of the variable accumulation aspect of the Contract is
to provide a return on amounts contributed that will reflect the investment
experience of the chosen Funds. The value of the Contributions accumulated for
a Participant in the Separate Account prior to the Annuity Commencement Date
will vary with the investment experience of the chosen Funds.
THE INVESTMENT ALTERNATIVES
The Investment Alternatives to which Contributions may be allocated are the
General Account and the sixteen Funds of the Separate Account, which invest in
the eight separate investment funds of Mutual of America Investment
Corporation: the Money Market Fund, which invests in money market instruments
and other short-term debt securities; the All America Fund, which invests
approximately 60% of its assets in publicly traded common stocks in the same
10
<PAGE>
manner as the Equity Index Fund (see below) and approximately 40% of its assets
in other publicly traded common stocks; the Aggressive Equity Fund, which also
invests in publicly traded common stocks; the Bond Fund, which invests in
publicly traded debt securities; the Short-Term Bond Fund which invests in
publicly traded debt securities which will produce a portfolio with an average
maturity of one to three years; the Mid-Term Bond Fund which invests in
publicly traded debt securities which will produce a portfolio with an average
maturity of three to seven years; the Composite Fund, which invests in all of
the above types of investments; and the Equity Index Fund which invests in
publicly traded common stocks comparable to the Standard & Poor's Composite
Index of 500 Stocks* (the "S&P 500 Index"); the Fidelity VIP Equity-Income
Portfolio, which invests primarily in income-producing equity securities, the
Fidelity VIP II Contrafund Portfolio, which invests mainly in securities that
are undervalued or out-of-favor, and Fidelity VIP II Asset Manager Portfolio,
which allocates its assets among domestic and foreign stocks, bonds and short-
term fixed-income instruments; the following three portfolios of Scudder
Variable Life Investment Fund: the Scudder Capital Growth Portfolio, which
invests primarily in publicly traded equity securities; the Scudder Bond
Portfolio, which invests primarily in publicly traded debt securities; and the
Scudder International Portfolio, which invests primarily in marketable foreign
equity securities; in the TCI Growth Fund of TCI Portfolios, Inc., which
invests primarily in publicly traded common stocks; and in the Calvert
Responsibly Invested Balanced Portfolio of Acacia Capital Corporation, which
invests in stocks, bonds and money market instruments selected with a concern
for the social impact of each investment. At the date of this Prospectus,
investment of Contributions in certain of the Investment Alternatives
(including the Fidelity Portfolios of the Separate Account) may not, because
certain pending state insurance department approvals have not yet been
received, be made by certain Participants in certain states. (See "Investments
of the Separate Account.")
REINVESTMENT
Distributions of the Portfolio Companies to the Separate Account are
automatically reinvested in additional Portfolio Company shares at net asset
value.
CHARGES
Certain charges will be deducted in connection with the operation of the
Contract and the Separate Account.
Administrative Charges. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
administrative expenses at an annual rate of .40%, except that in the case of
the Fund of the Separate Account which invests in the TCI Growth Fund, the
annual rate shall be .20% (TCI reimburses the Insurance Company at an annual
rate of up to .20% for administrative expenses). An additional deduction for
administrative expenses of $2.00 per month will also be made with respect to
each Participant under a Contract except that such charge shall not exceed 1/12
of 1% of the Account Value in any month. Such amount will be deducted from the
net assets, if any, in the Participant's Account which have been allocated to
the General Account. If no net assets have been allocated to such Account, such
amount will be deducted from the net assets which have been allocated to one or
more Funds of the Separate Account in the following order: (a) Investment
Company Money Market Fund, (b) Investment Company Short-Term Bond Fund, (c)
Investment Company Mid-Term Bond Fund, (d) Investment Company Bond Fund, (e)
Scudder Bond Fund, (f) Investment Company Composite Fund, (g) Fidelity VIP II
Asset Manager Fund, (h) Calvert Responsibly Invested Balanced Fund, (i)
Fidelity VIP Equity-Income Fund, (j) Investment Company All America Fund, (k)
Investment Company Equity Index Fund, (l) Fidelity VIP II Contrafund Fund, (m)
Investment Company Aggressive Equity Fund, (n) Scudder Capital Growth Fund, (o)
Scudder International Fund, and (p) TCI Growth Fund. An employer may elect to
pay the $2.00 per month charge in which case no amount would be deducted from a
Participant's Account. These daily and monthly charges may increase or decrease
during the life of the Contract (see "Charges--Administrative Charges").
Distribution Expense Charge. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
expenses associated with the distribution of the Contract at an annual rate of
.35% (see "Charges--Distribution Expense Charge").
Mortality and Expense Risk Charge. For assuming certain mortality risks under
the Contract, the Insurance Company will make a deduction each Valuation Day at
an annual rate of .35% of the net assets of each Fund of the Separate Account.
The Mortality Risk Charge is guaranteed not to increase during the life of the
Contract. For assuming
- -------
* "Standard & Poor's 500," "S&P" and "S&P 500" are trademarks of Standard &
Poor's Corporation. The Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation. Refer to the Mutual of America Investment
Corporation Prospectus for a complete description of the disclaimers and
limitations relating to Standard & Poor's Corporation.
11
<PAGE>
certain expense risks under the Contracts with respect to expenses it expects
to incur over the life of the Contracts, the Insurance Company will make a
deduction each Valuation Day at an annual rate of .15% of the net assets of
each Fund of the Separate Account (see "Charges--Mortality and Expense Risk
Charge").
Portfolio Company Expenses. The value of the assets in the Separate Account
will reflect the value of the shares of the Portfolio Companies in which such
assets are invested, and therefore the fees and expenses paid by the Investment
Company, the Fidelity Portfolios, the Scudder Portfolios, TCI Growth Fund or
Calvert Responsibly Invested Balanced Portfolio, as the case may be. A complete
description of the expenses and deductions from the Investment Company Funds,
the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth Fund and
Calvert Responsibly Invested Balanced Portfolio is found in their respective
prospectuses attached to this Prospectus.
TRANSFERS AND WITHDRAWALS
Except where the Plan restricts Contributions to the General Account, at any
time prior to the Annuity Commencement Date, a Participant under the Contract
may transfer any or all of the Participant's Account Balance from the Separate
Account to the General Account, or from the General Account to the Separate
Account, or among the Funds of the Separate Account. Withdrawals prior to the
Annuity Commencement Date are permitted upon the occurrence of certain
specified events provided for in the Contract and by the Code (see
"Withdrawals" and "The General Account"). Transfers or withdrawals from the
General Account may be restricted in the event a Participant has obtained a
loan under the plan or arrangement and such loan is secured by all or a portion
of the Participant's interest in the General Account (see "Loans"). No
withdrawals are permitted after the Annuity Commencement Date.
No charge is currently assessed for transfers or withdrawals made under the
Contract. The Insurance Company reserves the right, however, to impose a charge
for transfers or withdrawals in the future. Certain withdrawals may be subject
to a tax penalty (see "Federal Tax Matters").
EMPLOYER CONTRACT CHARGE
There is a $100 per month contract charge payable by the employer. This
charge, which is made by the Insurance Company at cost, is made for certain
administrative expenses incurred by the Insurance Company in connection with
certain plan-related services. If separate records are maintained for
affiliated employers at different locations, an additional monthly contract
charge equal to 50% of the basic contract charge will be charged for each
additional affiliate. In addition, a separate $50 charge will be made whenever
an employee who terminates employment is less than fully vested; this charge
will be deducted from the nonvested portion of such employee's accounts before
such amounts are reallocated according to the Plan. The Insurance Company
intends to increase the contract charge for certain plans which it determines
to be non-standard.
Employers who elect solely to use Contract allocation services and no plan-
related services such as assistance with preparation of summary plan
description documents, plan documents or amendments; 5500 filings and non-
discrimination kits; top heavy testing, minimum distribution requirements; and
maximum exclusion allowance calculations, will have the monthly contract charge
waived.
EMPLOYER PARTICIPANT CHARGE
There is an active Participant fee payable each month by the employer. The
charge is comprised as follows: $4.00 for each of the first 50 Participants;
$2.00 for each of the next 50 Participants; $1.00 for each of the next 50
Participants; and no charge for Participants in excess of 200. This charge will
be waived for employers who elect solely to use contract allocation services
and no plan-related services.
CONTACTING THE INSURANCE COMPANY
All written requests and notices required by the Contract, and any questions
or inquiries, should be addressed to:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President, Field Administration
National Service Support Department
666 Fifth Avenue
New York, New York 10103
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling the following number: (800) 468-3785.
12
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
The Insurance Company is a mutual life insurance company organized under the
laws of the State of New York. The Insurance Company is the successor to
National Health & Welfare Retirement Association, Inc., which was incorporated
in 1945 as a nonprofit retirement system pursuant to the then Section 200 of
the New York Insurance Law for the sole purpose of providing retirement and
other benefits for employees of nonprofit organizations in the health and
welfare field. From December 31, 1978 to January 3, 1984, the Insurance Company
was known as National Health & Welfare Mutual Life Insurance Association, Inc.
The Insurance Company currently is authorized to transact business in 50 states
and the District of Columbia. The address of the Insurance Company's home
office is 666 Fifth Avenue, New York, New York 10103.
The Insurance Company engages in the sale of pension, retirement and related
benefits on both a group and an individual basis for employees of not-for-
profit, social welfare, charitable, religious, educational and government
organizations. The Insurance Company invests the assets it derives from its
business in the manner permitted under applicable state law. In this
connection, the Insurance Company has had over 25 years of experience in
managing a broad range of investments. As of December 31, 1994, the Insurance
Company on a consolidated basis had total assets of approximately $7.6 billion.
The Insurance Company is registered as a broker-dealer under the Securities
Exchange Act of 1934, and also is registered as an investment adviser under the
Investment Advisers Act of 1940.
The Insurance Company's operations as a life insurance company are reviewed
periodically by various independent rating agencies such as A.M. Best &
Company, Standard and Poor's Insurance Rating Service, Moody's Investor
Services and Duff & Phelps Credit Rating Company. Such agencies publish their
ratings. From time to time the Insurance Company reprints and distributes these
rating reports in whole or in part or summaries of them to be given to the
public. The ratings concern the Insurance Company's operation as a life
insurance company and do not imply any guarantees of performance of the
Separate Account.
THE SEPARATE ACCOUNT
The Separate Account was established pursuant to a resolution adopted by the
Board of Directors of the Insurance Company on September 22, 1983. The Separate
Account is registered with the Securities and Exchange Commission
("Commission") as a unit investment trust under the Investment Company Act of
1940 ("1940 Act"). Registration with the Commission does not involve
supervision of management or investment practices or policies of the Separate
Account or the Insurance Company by the Commission.
The Separate Account is divided into sixteen distinct Funds corresponding to
the funds or portfolios of the Portfolio Companies in which the assets in such
Funds are invested, namely, the Money Market, All America, Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite and Aggressive Equity Funds of the
Investment Company; the Fidelity VIP Equity-Income Portfolio and the Fidelity
VIP II Contrafund and Asset Manager Portfolios; the Scudder Capital Growth,
Bond and International Portfolios; the TCI Growth Fund; and the Calvert
Responsibly Invested Balanced Portfolio. The assets of the Separate Account are
the property of the Insurance Company. The Separate Account assets attributable
to the Contract and to other annuity contracts funded by the Separate Account
are not chargeable with liabilities arising out of any other business the
Insurance Company may conduct. The income, capital gains and capital losses of
each Fund of the Separate Account are credited to or charged against the net
assets held in that Fund, without regard to the income, capital gains and
capital losses arising out of the business conducted by any of the other Funds
of the Separate Account or out of any other business that the Insurance Company
may conduct.
The Insurance Company does not guarantee the investment performance of the
Separate Account as a whole, or any of the Funds. The amount credited to a
Participant in the Separate Account, and thus the amount available to provide
annuity benefits, will depend upon the value of the assets held in the Fund(s)
of the Separate Account selected by the Participant. Accordingly, the
Participant bears the full investment risk for all amounts allocated to the
Separate Account.
The Separate Account and the Insurance Company are subject to supervision and
regulation by the Superintendent of Insurance of the State of New York, and by
the insurance regulatory authorities of each State in which it is licensed to
do business.
13
<PAGE>
INVESTMENTS OF THE SEPARATE ACCOUNT
Contributions will be allocated among one or more Funds of the Separate
Account for investment at net asset value in shares of the Funds of the
Investment Company, the Fidelity Portfolios, the Scudder Portfolios, the TCI
Growth Fund or the Calvert Responsibly Invested Balanced Portfolio, selected by
the Participant. A summary of investment objectives of the Portfolio Companies
invested in by the Funds of the Separate Account follows. More detailed
information, including risks, charges and expenses, may be found in the current
prospectuses for Mutual of America Investment Corporation, the Fidelity
Portfolios, Scudder Variable Life Investment Fund, TCI Portfolios, Inc. and the
Calvert Responsibly Invested Balanced Portfolio, which are attached to this
Prospectus. Each applicable prospectus should be read for a complete evaluation
of the Investment Alternatives. Investments in the Money Market Fund and in the
other Portfolio Companies are neither insured nor guaranteed by the U.S.
Government.
MONEY MARKET FUND OF THE INVESTMENT COMPANY
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. The Money Market Fund invests only
in money market instruments and other short-term debt securities.
ALL AMERICA FUND OF THE INVESTMENT COMPANY
The investment objective for approximately 60% of the assets of the All
America Fund (the "Indexed Assets") is to provide investment results that to
the extent practical correspond to the price and yield performance of publicly
traded common stocks in the aggregate, as represented by the S&P 500 Index. The
Indexed Assets will be invested in the same manner as the Equity Index Fund.
The investment objective for the remaining approximately 40% of the assets
(the "Active Assets") is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of a
diversified portfolio of securities that may include common stocks, securities
convertible into common stocks, bonds and money market instruments. The Active
Assets are invested by four subadvisers, and Mutual of America Capital
Management Corporation (the "Adviser") allocates the Active Assets to maintain,
to the extent practicable under current market conditions, approximately equal
amounts with the subadvisers. See "Charges--Portfolio Company Expenses".
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
The investment objective of the Equity Index Fund is to provide investment
results to the extent practical that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the S&P 500 Index.
BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Bond Fund is to provide as high a
level of current income over time as is believed to be consistent with prudent
investment risk. A secondary objective is preservation of capital. The assets
of the Bond Fund will consist primarily of publicly-traded debt securities,
such as bonds, notes, debentures and equipment trust certificates. The Bond
Fund generally will invest primarily in securities rated in the four highest
categories by a nationally recognized rating service or in instruments of
comparable quality. The Bond Fund may also invest to a limited extent in lower-
rated or unrated securities, and these may be subject to greater market and
financial risk than higher quality (lower yield) issues.
SHORT-TERM BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Short-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital. The
assets of the Short-Term Bond Fund will consist primarily of publicly traded
debt securities, such as bonds, notes, debentures and equipment trust
certificates which will produce a portfolio with an average maturity of one to
three years. The Short-Term Bond Fund generally will invest primarily in
securities rated in the four highest categories by a nationally recognized
rating service or in instruments of comparable quality. The Short-Term Bond
Fund may also invest to a limited extent in lower-rated or unrated securities,
and these may be subject to greater market and financial risk than higher
quality (lower yield) issues.
14
<PAGE>
MID-TERM BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Mid-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital. The
assets of the Mid-Term Bond Fund will consist primarily of publicly traded debt
securities, such as bonds, notes, debentures and equipment trust certificates
which will produce a portfolio with an average maturity of three to seven
years. The Mid-Term Bond Fund generally will invest primarily in securities
rated in the four highest categories by a nationally recognized rating service
or in instruments of comparable quality. The Mid-Term Bond Fund may also invest
to a limited extent in lower-rated or unrated securities, and these may be
subject to greater market and financial risk than higher quality (lower yield)
issues.
COMPOSITE FUND OF THE INVESTMENT COMPANY
The investment objective of the Composite Fund is to achieve as high a total
rate of return, through both appreciation of capital and current income, as is
consistent with prudent investment risk by means of a diversified Portfolio of
publicly-traded common stocks, publicly-traded debt securities and money market
instruments. The Fund will seek to achieve long-term growth of its capital and
increasing income by investments in common stock and other equity-type
securities, and a high level of current income through investments in publicly-
traded debt securities and money market instruments.
AGGRESSIVE EQUITY FUND OF THE INVESTMENT COMPANY
The Aggressive Equity Fund will be divided by the Adviser into two segments
so as to utilize two investment styles.
The investment objective for approximately 50% of the assets of the Fund (the
"Aggressive Growth Portfolio") is to achieve capital appreciation by investing
in companies believed to possess above-average growth potential. Growth can be
in the areas of earnings or gross sales which can be measured in either dollars
or in unit volume. Growth potential is often sought in smaller, less well-known
companies in new and emerging areas of the economy, but may also be found in
large companies in mature or declining industries that have been revitalized
and hold a strong industry or market position. The Aggressive Growth Portfolio
assets are invested by a subadviser. See "Charges--Portfolio Company Expenses".
The investment objective for the other approximately 50% of the assets of the
Fund (the "Aggressive Value Portfolio") is to achieve capital appreciation by
investing in companies believed to possess valuable assets or whose securities
are undervalued in the marketplace in relation to factors such as the company's
assets, earnings, or growth potential.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the Portfolio
will also consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the S&P 500 Index.
FIDELITY VIP II CONTRAFUND PORTFOLIO
Contrafund Portfolio is a growth fund. It seeks to increase the value of an
investment in the Portfolio over the long term by investing mainly in
securities of companies that are undervalued or out-of-favor. These securities
may be issued by domestic or foreign companies and many may not be well known.
The Portfolio usually invests primarily in common stock and securities
convertible into common stock, but it has the flexibility to invest in any type
of security that may produce capital appreciation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Asset Manager Portfolio seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term fixed-income instruments. The Portfolio's adviser will normally
allocate the Portfolio's assets among the three asset classes within the
following investment parameters: 0-70% in short-term instruments; 20-60% in
bonds; and 10-60% in stocks. The expected "neutral mix", which the Portfolio's
adviser would expect over the long-term, is 20% in short-term instruments, 40%
in bonds and 40% in stocks.
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SCUDDER CAPITAL GROWTH PORTFOLIO
The Scudder Capital Growth Portfolio seeks to maximize long-term capital
growth through a broad and flexible investment program. The Portfolio invests
in marketable securities, principally common stocks and, consistent with its
objective of long-term capital growth, preferred stocks. However, in order to
reduce risk, as market or economic conditions periodically warrant, the
Portfolio may also invest up to 25% of its assets in short-term debt
instruments.
SCUDDER BOND PORTFOLIO
The Scudder Bond Portfolio pursues a policy of investing for a high level of
income consistent with a high quality portfolio of securities. Under normal
circumstances, the Portfolio invests at least 65% of its assets in bonds,
including U.S. Government and agency, corporate and other notes and bonds
paying high current income. Not less than 80% of the debt obligations in which
the Portfolio invests will be rated, at the time of purchase, within the three
highest categories by a nationally recognized rating service or in instruments
of comparable quality. The Portfolio may also invest to a limited extent in
lower-rated securities, and these may be subject to greater market and
financial risk than higher quality (lower yield) issues.
SCUDDER INTERNATIONAL PORTFOLIO
The Scudder International Portfolio seeks long-term growth of capital
primarily through diversified holdings of marketable foreign equity
investments. The Portfolio invests primarily in equity securities of
established companies which do business primarily outside the United States and
which are listed on foreign exchanges. Investing in foreign securities may
involve a greater degree of risk than investing in domestic securities.
TCI GROWTH FUND
The TCI Growth Fund seeks capital growth by investing primarily in common
stocks (including securities convertible into common stock). It may purchase
securities only of companies that have a record of at least three years'
continuous operation and such securities must enjoy a fair degree of
marketability. All securities must be listed on major stock exchanges or traded
over-the-counter.
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Calvert Responsibly Invested Balanced Portfolio seeks to achieve a total
return above the rate of inflation through an actively managed diversified
portfolio of common and preferred stocks, bonds and money market instruments
selected with a concern for the social impact of each investment.
SHARED FUND ARRANGEMENTS
Shares of the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth
Fund and the Calvert Responsibly Invested Balanced Portfolio (together, the
"Shared Funds") currently are available to the separate accounts of a number of
insurance companies. The Board of Directors of each Shared Fund is responsible
for monitoring that Fund for the existence of any material irreconcilable
conflict between the interests of the policyowners of all separate accounts
investing in the Fund and determining what action, if any , should be taken in
response. If the Insurance Company believes that a Shared Fund's response to
any of those events insufficiently protects Contractholders, it will take
appropriate action. If any material irreconcilable conflict arises, the
Investment Alternatives may be modified or reduced. See "Charter--FMR and its
Affiliates" in the Fidelity Portfolios prospectus, "Investment Concept of the
Fund" in the Scudder Variable Life Investment Fund prospectus, "Shareholders of
TCI Portfolios" in the TCI Growth Fund prospectus and "Purchase and Redemption
of Shares" in the Calvert Responsibly Invested Balanced Portfolio prospectus
for a further discussion of the risks associated with the offering of Shared
Fund shares to the Separate Account and the separate accounts of other
insurance companies.
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CHARGES
The values of Accumulation Units reflect a deduction on each Valuation Day
for administrative and distribution expenses, and the mortality and expense
risk assumed by the Insurance Company. The following charges will be deducted
on a daily basis (based on annual rates) in determining the Accumulation Unit
value of each of the Funds of the Separate Account.
ADMINISTRATIVE CHARGES
The Insurance Company performs all administrative functions in connection
with the Contract, including receiving and allocating Contributions in
accordance with the Contract, making Annuity Payments as they become due, and
preparing and filing all reports required to be filed by the Separate Account.
Expenses incurred by the Insurance Company in connection with its
administrative functions include, but are not limited to, items such as state
or other taxes, salaries, rent, postage, telephone, travel, office equipment,
costs of outside legal, actuarial, accounting and other outside professional
services, and costs associated with determining the net asset value of the
Separate Account.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account for administrative
expenses (the provisions of the Contract include the amount of this charge with
the Distribution Expense Charge, described below) at an annual rate of .40%,
except that in the case of the Fund of the Separate Account which invests in
the TCI Growth Fund, the annual rate shall be .20% (TCI reimburses the
Insurance Company at an additional annual rate of up to .20% for Administrative
Expenses). An additional deduction for administrative expenses of $2.00 will be
made on the next to last Valuation Day of the month or on another Valuation Day
on or about that time that is administratively convenient from each
Participant's Account except that such charge shall not exceed 1/12 of 1% of
the Account Value in any month. Such amount will be deducted from the net
assets, if any, in the Participant's Account which have been allocated to the
General Account. If no net assets have been allocated to such Account, such
amount will be deducted from the net assets which have been allocated to one or
more Funds of the Separate Account in the following order: (a) Investment
Company Money Market Fund, (b) Investment Company Short-Term Bond Fund, (c)
Investment Company Mid-Term Bond Fund, (d) Investment Company Bond Fund, (e)
Scudder Bond Fund, (f) Investment Company Composite Fund, (g) Fidelity VIP II
Asset Manager, (h) Calvert Responsibly Invested Balanced Fund, (i) Fidelity VIP
Equity-Income Fund, (j) Investment Company All America Fund, (k) Investment
Company Equity Index Fund, (l) Fidelity VIP II Contrafund Fund, (m) Investment
Company Aggressive Equity Fund, (n) Scudder Capital Growth Fund, (o) Scudder
International Fund, and (p) TCI Growth Fund. The employer may elect to pay this
additional deduction in which case no amount is deducted from the Participant's
Account. THE INSURANCE COMPANY MAY INCREASE OR DECREASE THESE DAILY AND MONTHLY
CHARGES DURING THE LIFE OF THE CONTRACT, BUT THESE CHARGES MAY NOT EXCEED
COSTS.
DISTRIBUTION EXPENSE CHARGE
As principal underwriter, the Insurance Company performs all distribution and
sales functions and bears all distribution and sales expenses relative to the
Contract. These expenses include the payment of that portion of the salaries of
registered representatives of the Insurance Company attributable to the sale
and distribution of the Contract, as well as expenses for preparation of sales
literature and other promotional activities.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account at an annual rate of
.35% to cover anticipated distribution expenses, not to exceed, with respect to
any Participant, 9% of the total Contributions.
MORTALITY AND EXPENSE RISK CHARGE
The Insurance Company assumes certain mortality and expense risks under the
Contract. The mortality risks arise from the Insurance Company's guarantees in
the Contract to make Annuity Payments in certain instances in accordance with
annuity tables provided in the Contract, regardless of how long a Participant
lives and regardless of any improvement in life expectancy generally. Thus, the
Insurance Company assumes the risk that Participants, as a class, may live
longer than has been actuarially estimated, so that payments will continue for
longer than had been anticipated. This assumption of risk by the Insurance
Company relieves Participants of the risk that they will outlive the funds that
have been accumulated for their retirement.
For assuming the mortality risks associated with the Contract, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .35% of
the value of the net assets in each Fund. This charge will apply with
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respect to a Participant during the Accumulation Period. The Insurance Company
guarantees that the mortality risk charge will not increase during the life of
a Contract.
The Insurance Company assumes certain expense risks under the Contracts. The
expense risks arise from the Insurance Company's guarantees in the Contracts to
make Annuity Payments in certain instances in accordance with annuity tables
provided in the Contracts, regardless of whether its estimates of expenses it
expects to incur, over the lengthy period that Annuity Payments may be made
will turn out to be correct. Thus, the Insurance Company assumes the risk that
expenses will be higher than estimated.
For assuming the expense risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .15% of
the value of the net assets in each Fund. This charge will apply with respect
to a Participant during the Accumulation Period.
If revenues derived from the Distribution Expense Charge do not cover all the
distribution expenses, any shortfall will be paid out of the general assets of
the Insurance Company and, if revenues from the Mortality and Expense Risk
Charge exceed the actual cost of the Insurance Company's risk undertaking, the
excess will be retained by the Insurance Company and may help cover any
shortfall.
PORTFOLIO COMPANY EXPENSES
The value of the assets in the Separate Account will reflect the value of the
shares of the Portfolio Companies in which such assets are invested, and
therefore will take into account the fees and expenses paid by the Investment
Company, Fidelity Portfolios, Scudder Portfolios, TCI Growth Fund or Calvert
Responsibly Invested Balanced Portfolio, as the case may be.
Each Fund of the Investment Company receives investment advice from Mutual of
America Capital Management Corporation (the "Adviser"), an indirect wholly-
owned subsidiary of the Insurance Company. The Adviser receives from each such
Fund a fee calculated as a daily charge at the annual rate of .25% of the value
of the net assets in the Money Market Fund; .125% of the value of the net
assets in the Equity Index Fund; .50% of the value of the net assets in the All
America, Bond, Short-Term Bond, Mid-Term Bond and Composite Funds; and .85% of
the value of the net assets in the Aggressive Equity Fund of the Investment
Company. For 1994, the Adviser paid all of the expenses of the Investment
Company Funds other than advisory fees, brokers' commissions, transfer taxes
and other fees relating to portfolio transactions. The Adviser voluntarily
limits the Investment Company Funds' expenses in this manner. See "The Funds'
Expenses" in the Investment Company prospectus.
The Adviser, with respect to the Active Assets of the All America Fund, has
entered into a subadvisory agreement (a "Subadvisory Agreement") with four
professional advisers. The Active Assets are invested by Palley-Needelman Asset
Management, Inc. ("Palley-Needelman"); James Dravo Oelschlager, doing business
as Oak Associates ("Oak Associates"), Fred Alger Management, Inc. ("Alger
Management"); and Mitchell Hutchins Institutional Investors Inc. ("Mitchell
Hutchins") each as Subadviser, under the Subadvisory Agreements. The Adviser
has entered into a Subadvisory Agreement with C.J. Lawrence/Deutsche Bank
Securities Corporation ("C.J. Lawrence") for the Aggressive Growth Portfolio of
the Aggressive Equity Fund. The Adviser at its own expense will pay to the
Subadvisers an amount calculated as a daily charge at the following annual
rates: Palley-Needelman, .30%; Oak Associates, .30%; Alger Management, .45%;
Mitchell Hutchins, .50%; and C.J. Lawrence, .50% on the first $15 million and
.30% thereafter; of the value of the net assets for which each Subadviser is
providing investment advisory services.
Fidelity VIP Equity-Income Portfolio, Fidelity VIP II Contrafund Portfolio
and Fidelity VIP II Asset Manager Portfolio receive investment advice from
Fidelity Management & Research Company ("FMR"). FMR receives from each
Portfolio a fee, calculated as a daily charge and payable monthly, that is a
sum of two components multiplied by average net assets. The components are a
group fee rate based on the monthly average net assets of all the mutual funds
advised by FMR, which cannot exceed .52% and declines as assets rise, and an
individual fund fee rate. The effective group fee rate for December 1994 was
.3193%, and the individual fund fee rates for the Equity-Income, Contrafund and
Asset Manager Portfolios are .20%, .30% and .40%, respectively.
Each Scudder Portfolio receives investment advice from Scudder, Stevens &
Clark, Inc., and Scudder, Stevens & Clark, Inc. receives from each such Scudder
Portfolio a fee calculated as a daily charge at the annual rate of .475% of the
value of the assets in the Scudder Capital Growth Portfolio and the Scudder
Bond Portfolio and .875% of the value of the assets in the Scudder
International Portfolio. Also, there may be deducted from each Scudder
Portfolio up to an additional .275% of the value of the assets in the Scudder
Capital Growth Portfolio and the Scudder Bond Portfolio,
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and up to .625% of the value of the assets in the Scudder International
Portfolio, for expenses incurred by such Portfolio. Pursuant to a Participation
Agreement between Scudder and the Insurance Company, the Insurance Company will
make a capital contribution to the Scudder Portfolios in the amount of its pro
rata portion, allocated among insurance companies that purchase shares of the
portfolios, of the expenses of the Capital Growth and Bond Portfolios which
exceed .75% of their average net assets, and, for the International Portfolio,
which exceed 1.5% of its average net assets.
The TCI Growth Fund receives investment advice from Investors Research
Corporation, and Investors Research Corporation receives from the TCI Growth
Fund a fee calculated as a daily charge at the annual rate of 1.00% of the
assets of the TCI Growth Fund. Many investment companies pay smaller management
fees than the aforesaid fee paid by the TCI Growth Fund to Investors Research
Corporation. However, TCI has stated in the prospectus for the TCI Growth Fund
which is attached to this Prospectus, that most, if not all, of such companies
also pay, in addition, certain of their own expenses, while all TCI Growth
Fund's expenses except brokerage, taxes, interest, fees and expenses of non-
interested directors (including counsel fees) and extraordinary expenses are
paid by Investors Research Corporation.
Pursuant to the Fund Participation Agreement among the Insurance Company, TCI
and Investors Research Corporation, Investors Research Corporation pays the
Insurance Company for certain administrative savings resulting from that
agreement. Currently, that payment is an amount equal to .20% per annum of the
average amount of the Separate Account's investment in TCI, provided the
aggregate amount of the Separate Account's investment and the investments of
other separate accounts of the Insurance Company in the TCI Growth Fund for
that month exceeds $10 million. The administrative fees assessed against the
Separate Account Fund holding shares of TCI Growth Fund are reduced by the full
amount of such payments to the Insurance Company.
Calvert Responsibly Invested Balanced Portfolio receives investment advice
from Calvert Asset Management Company, Inc., and the Sub-Advisor to the
Portfolio is NCM Capital Management Group, Inc., which manages the equity
portion of the Portfolio. Calvert Asset Management Company, Inc. receives from
Calvert Responsibly Invested Balanced Portfolio a monthly base fee, computed on
a daily basis at an annual rate of 0.70% of average net assets of the
Portfolio. Calvert Asset Management Company, Inc. pays the Sub-Advisor's fee.
Calvert Asset Management Company, Inc. and the Sub-Advisor may earn (or have
their fees reduced by) performance fee adjustments based on the extent to which
the Portfolio exceeds or trails the Lipper Balanced Funds Index. Pursuant to an
agreement between the Insurance Company and Calvert Securities Corporation,
Calvert Securities Corporation has agreed that it shall cause the annual
operating expenses (including the investment advisory fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses) of the
Calvert Responsibly Invested Balanced Portfolio to not exceed 0.85% of such
Portfolio's average daily net assets until further notice to the Insurance
Company.
A complete description of the fees and expenses paid by the Investment
Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth
Fund and Calvert Responsibly Invested Balanced Portfolios is found in the
prospectuses of the Investment Company, Fidelity Portfolios, Scudder Variable
Life Investment Fund, TCI Portfolios, Inc. and Calvert Socially Responsibly
Invested Balanced Portfolios, which are attached to this Prospectus.
EMPLOYER CONTRACT CHARGE
There is a $100 per month contract charge payable by the employer. This
charge, which is made by the Insurance Company at cost, is made for certain
administrative expenses incurred by the Insurance Company in connection with
certain plan-related services. If separate records are maintained for
affiliated employers at different locations, an additional monthly contract
charge equal to 50% of the basic contract charge will be charged for each
additional affiliate. For employers with existing pension plans underwritten by
Mutual of America on or before January 1, 1994, the monthly contract charge
will be $100. In addition a separate $50 charge will be made whenever an
employee who terminates employment is less than fully vested; this charge will
be deducted from the nonvested portion of such employee's accounts before such
amounts are reallocated according to the Plan. Effective January 1, 1994, the
Insurance Company increased the contract charge for certain plans which it
determines to be non-standard.
Employers who elect solely to use Contract allocation services and no plan-
related services such as assistance with preparation of summary plan
description documents, plan documents or amendments; 5500 filings and non-
discrimination kits; top heavy testing, minimum distribution requirements; and
maximum exclusion allowance calculations, will have the monthly contract charge
waived.
EMPLOYER PARTICIPANT CHARGE
There is an active Participant fee payable each month by the employer. The
charge is comprised as follows: $4.00 for each of the first 50 Participants;
$2.00 for each of the next 50 Participants; $1.00 for each of the next 100
Participants; thereafter no charge for Participants in excess of 200. This
charge will be waived for employers who elect solely to use Contract allocation
services and no plan-related services.
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THE GROUP ANNUITY CONTRACT
GENERAL
The Contract is issued by the Insurance Company to Contractholders as a
funding vehicle for Plans. Any employee of an employer which has adopted a Plan
to be funded by the Contract may be eligible to become a Participant under the
Plan upon satisfying the age and service requirement specified in the Plan, if
any. Generally, remittances of all Contributions to be paid under Plans shall
be made as of the effective date of the Contract or the first day of any
calendar month thereafter.
PAYMENT OF CONTRIBUTIONS
Employee contributions ordinarily are made, as elected by Participants,
pursuant to salary reduction arrangements under the TDA Thrift Plan and by
either payroll deductions or salary reductions under the 401(a)/403(a)
qualified Thrift Plan. Employer contributions are made as a fixed matching
(25%, 50%, 100%, etc.) amount based on all or part of the amount contributed by
the employee or in a non-matching amount determined by the Employer. A
Contractholder may also remit to the Insurance Company on behalf of a
Participant in a single sum, an amount that arises from a transfer from any
Plan maintained by the Employer provided such transfers are permitted by
applicable law.
The amount of any Contributions on behalf of a Participant may not be less
than $200 on an annual basis and total contributions may not exceed the amounts
permitted under applicable state or Federal law (see "Federal Tax Matters").
No further Contributions may be made on behalf of Participants who have
terminated participation under the Plan or if a Contract has been discontinued.
Employer contributions may be subject to a vesting schedule specified in the
Plan.
Acceptance of Initial Contributions. If an initial Contribution is received
together with a completed application and other necessary information, it will
be accepted within two business days of receipt. If the application is not duly
completed, the Insurance Company will retain the Contribution for up to five
business days while attempting to obtain the information necessary to complete
the application; the Contribution will be accepted within two business days of
receipt of the completed application. If a completed application is not
received within five business days, however, the Insurance Company will return
the Contribution at the end of that period, unless the Participant and the
employer consent to the Insurance Company holding the Contribution until
additional information is provided.
ALLOCATIONS OF CONTRIBUTIONS
Employee contributions under the Contract are allocated among the General
Account and the sixteen Funds of the Separate Account unless otherwise
restricted by the Plan. For information regarding permissible Investment
Alternatives of a particular Plan, Participants are urged to consult the Plan
itself. Contributions will be allocated on the basis of a request made to the
Insurance Company and currently on file at its home office (see "General
Matters--Contacting the Insurance Company"). A Participant's request for
allocation will specify the percentage, in any whole percentage from 0% to
100%, of each Contribution to be allocated to each of the Investment
Alternatives. The request for allocation of Contributions among the Investment
Alternatives may be changed from time to time, at any time, and amounts may be
transferred among those alternatives. A Participant should make periodic
reviews of all allocations in light of market conditions, the Participant's
retirement plans, and overall estate planning requirements. The amount
contributed by the employer may be similarly allocated (using the same
allocation percentages as specified for the employee contributions) by the
Participant. The Plan may, however, restrict such allocation of employer and/or
employee contributions to the Insurance Company's General Account only, in
which case the transfer of such funds to the Separate Account will not be
permitted. Similarly, the Plan may restrict such allocation of employer and/or
employee contributions to less than all Investment Alternatives of the Separate
Account, in which case the transfer of such funds to nonpermitted Investment
Alternatives of the Separate Account will not be allowed. For information
regarding permissible Investment Alternatives of a particular Plan,
Participants are urged to consult the Plan itself. Employer Contributions may
be restricted to the General Account until they become vested in accordance
with the Plan's vesting schedule.
ACCUMULATION UNITS
Contributions under the Contract, other than initial Contributions, which are
allocated to the Separate Account on behalf of a Participant, will be credited
to an individual accumulation account maintained for such Participant with
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respect to each of the chosen Funds of the Separate Account in the form of
Accumulation Units as of the Valuation Period during which the Contributions
are received by the Insurance Company. The number of Accumulation Units in a
Fund of the Separate Account credited to the account of a Participant is
determined by dividing the amount allocated to that Fund of the Separate
Account on behalf of such Participant by the Accumulation Unit value for that
Fund of the Separate Account for the Valuation Period during which the
Contribution is received. The value of the Accumulation Units of each Fund of
the Separate Account will vary with the investment experience of that Fund.
The number of Accumulation Units in a Participant's individual account will
fluctuate in accordance with amounts allocated to or withdrawn from the Funds
of the Separate Account. The net change in Accumulation Units is determined by
adjusting the number of Accumulation Units in the Funds of the Separate Account
as of the end of the previous Valuation Period by adding or deducting
Accumulation Units with respect to Contributions made to or amounts withdrawn
from the respective Funds of the Separate Account during the Valuation Period.
The number of Accumulation Units to be so added or deducted is the number
obtained by dividing the amounts so allocated or withdrawn by the Accumulation
Unit Value for that Valuation Period.
The Accumulation Units in each Fund of the Separate Account are valued
separately. The value of an Accumulation Unit in each Fund of the Separate
Account corresponding to a Fund of the Investment Company originally was set
arbitrarily at one dollar. The value of an Accumulation Unit in the Fund of the
Separate Account corresponding to one of the Fidelity Portfolios, Scudder
Portfolios, TCI Growth Fund or Calvert Responsibly Invested Balanced Portfolio
originally was established by deducting expenses of the Separate Account
applicable to that portfolio or fund from the applicable unit value established
by the respective Portfolio Company portfolio or fund as of the end of the last
Valuation Day immediately preceding the day when the first investment was made
by the Separate Account in the Portfolio Company portfolio or fund. For any
Valuation Period, the value of an Accumulation Unit in a Fund of the Separate
Account is the amount obtained by multiplying the value of an Accumulation Unit
in that Fund as of the preceding Valuation Period, by the Fund's Accumulation
Unit Change Factor (described below) for that Valuation Period. The dollar
value of an Accumulation Unit in each Fund of the Separate Account, therefore,
will vary from Valuation Period to Valuation Period, depending on the
investment experience of the Fund.
The Accumulation Unit Change Factor for each Fund of the Separate Account for
any Valuation Period is determined as:
(a) the ratio of (i) the asset value of that Fund at the end of the
current Valuation Period, before any amounts are allocated to or
withdrawn from the Fund with respect to that Valuation Period, to (ii)
the asset value of the Fund at the end of the preceding Valuation Period,
after all allocations and withdrawals are made for that period, divided
by
(b) 1.000000 plus the component of the annual rate of mortality and
expense risk, distribution expense and administrative charges (which does
not include the monthly administrative charge per Participant which is
$2.00 but in no event to exceed 1/12 of 1% of the Account Value in any
month) against a Fund's assets for the number of days from the end of the
preceding Valuation Period to the end of the current Valuation Period
(see "Charges").
The value of the Accumulation Units credited to the account of a Participant
in the Separate Account for any Valuation Period prior to the Annuity
Commencement Date is determined by multiplying the number of Accumulation Units
credited to such Participant in each chosen Fund of the Separate Account by the
Accumulation Unit value for each chosen Fund at the end of the Valuation
Period.
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Annuity Commencement Date, Participants may elect, if the Plan
permits, subject to the conditions described below, to transfer amounts among
Investment Alternatives. Thus, amounts may be transferred among Funds of the
Separate Account, and between the Separate Account and the General Account. A
Participant may express the amount sought to be transferred as a dollar amount,
or as a number of Accumulation Units, or as a percentage of the value of the
Participant's investment in the selected Investment Alternative. Transfers may
not be made after the Annuity Commencement Date. No charges are currently
imposed for transfers, but the Insurance Company reserves the right to impose
such charges in the future.
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Any transfers from a Fund of the Separate Account will result in the
cancellation of Accumulation Units in that Fund on the basis of the current
Accumulation Unit value for the Valuation Period during which the request is
received. Transfers to a Fund of the Separate Account from either the General
Account or another Fund of the Separate Account will be credited to that Fund
based on the current Accumulation Unit value for the Valuation Period during
which the transferred amount is received (see "Postponement of Payments").
No request for a transfer will be binding on the Insurance Company until it
receives all information necessary to process the request. Transfers of
employer and/or employee contributions to the Plan from the General Account to
the Separate Account will only be permitted if the Plan so specifies.
WITHDRAWALS
A Participant may (unless a Plan or the Code provides otherwise--see the next
succeeding paragraph), prior to the Annuity Commencement Date, elect to
withdraw the Participant's Account Balance in whole or in part, except that, in
a Plan qualified under Section 401(a) or 403(a) of the Code, employer
contributions may not be withdrawn unless the employee has completed at least
five years of participation in the Plan or age 59 1/2, in some plans. To be
valid, a partial withdrawal request must specify from which of the Investment
Alternatives the withdrawal is to be made. Generally, subject to applicable
federal tax law restrictions, partial withdrawals from an Investment
Alternative will be made first from employer contribution amounts. A
Participant may express the amount sought to be withdrawn as a dollar amount, a
number of Accumulation Units, or a percentage of the value of the Participant's
investment in the selected Investment Alternative. No withdrawals are permitted
after the Annuity Commencement Date.
The withdrawal or distribution of funds from a TDA Thrift Plan is subject to
restrictions. In general, a Participant under age 59 1/2 will not be able to
withdraw or receive a distribution of either Contributions made on or after
January 1, 1989 under a salary reduction agreement, or interest and investment
earnings credited to such contributions, on and after January 1, 1989, except
in specified circumstances. These circumstances generally include death or
disability, hardship, and termination of employment. If a Participant makes a
withdrawal for hardship, he may not withdraw the post-1988 earnings on amounts
which were contributed under a salary reduction agreement. Also any amounts
transferred from a Code Section 403(b)(7) Custodial Account to a Code Section
403(b) Thrift Plan would continue to be subject to tax law withdrawal
restrictions which apply to such Custodial Accounts. (Transfers from such
Custodial Accounts cannot be made to a Code Section 401(a) Plan.)
In the case of either a partial or complete withdrawal from an Investment
Alternative of a TDA Thrift Plan, the Insurance Company will pay to the
requesting Participant the lesser of (a) the amount specified in the withdrawal
request or (b) the amount that, as of the date the Insurance Company received
the withdrawal request, represents the value of the Accumulation Units credited
to the account of the Participant in the Funds of the Separate Account from
which withdrawal is sought. With respect to each Fund of the Separate Account
for which it receives a partial or complete withdrawal request, the Insurance
Company will reduce the number of Accumulation Units credited to the account of
a Participant by the number of Accumulation Units obtained by dividing the
amount withdrawn from that Fund by the Accumulation Unit value in effect for
the Valuation Period during which the request is received. Spousal consent
generally is required for withdrawals of amounts over $3,500. Spousal consent
is required for other withdrawals, as well. Generally, subject to applicable
federal tax law restrictions, partial withdrawals from an Investment
Alternative will be made first from employer contribution amounts.
Loans. The Insurance Company will make available to the Employer a loan
option. If the Employer elects to adopt the loan provision in the Contract,
Employees shall have the right to borrow funds utilizing Thrift Plan or TDA
Thrift Plan Account Balance as collateral. The amount of the loan permitted is
governed by Section 72(p) of the Code and the Regulations thereunder and the
Contract terms. An amount sufficient to serve as Loan Collateral will be
transferred from the Separate Account to the General Account, if appropriate,
and withdrawals and transfers of such collateral will not be permitted while
the loan is outstanding.
No request for withdrawal will be binding on the Insurance Company until it
receives all information necessary to process the request.
Other Considerations. Currently, withdrawals under the Contract, whether
complete or partial, are not subject to any contingent deferred sales charge,
or any other withdrawal charge. The Insurance Company reserves the right,
however, to impose such charges in the future.
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Participants should consider the possible federal income tax consequences of
any withdrawal. Generally, a Participant will be taxed at ordinary income tax
rates on the amount withdrawn (except for nontaxable recovery of prior
nondeductible contributions). In addition, certain withdrawals may be subject
to a tax penalty (see "Federal Tax Matters").
SPECIFIED PAYMENTS OPTION
A Participant may elect, prior to the Annuity Commencement Date permitted by
the Code, to specify an amount (which may not be less than $100) to be
withdrawn from the Participant's Account Balance and paid each month to the
Participant (see "General Matters--Contacting the Insurance Company"). The
withdrawals and payments will be made, as designated by the Participant, from
either the General or Separate Account, or both (see "Postponement of
Payments").
During the period that payments under the Specified Payments Option
("Specified Payments") are received by a Participant, Contributions may be made
on that Participant's behalf. In addition, transfers of amounts among
Investment Alternatives and other withdrawals from a Participant's account may
continue to be made (see "Transfers Among Investment Alternatives" and
"Withdrawals").
Specified Payments will continue until (a) the death of the Participant; (b)
receipt by the Insurance Company of the Participant's written request to modify
or discontinue the specified payments; (c) depletion of the Participant's
Account Balance, or of any portion thereof so that the remaining balance is
insufficient to pay the next installment coming due; or (d) the attainment of
the Participant's Annuity Commencement Date.
Tax Consequences. Participants should consider the possible federal income
tax consequences of electing the Specified Payments Option. Generally, a
Participant will be taxed at ordinary income tax rates on each Specified
Payment subject to, in some instances, non-taxable recovery of prior non-
deductible Contributions (see "Federal Tax Matters").
A Participant receiving payments pursuant to the Specified Payments Option
may cancel those payments at any time and elect to receive the Participant's
Account Balance as a single sum payment or as an annuity.
DEATH BENEFITS
Death After Annuity Commencement. If a Participant dies on or after his or
her Annuity Commencement Date, the Participant's designated beneficiary will be
entitled to receive the death benefit (if any) provided by the form of annuity
in effect on the Participant's date of death (see "The Annuity Period--
Available Forms of Annuity" and "General Matters--Designation of Beneficiary").
Death Prior to Annuity Commencement. If a Participant dies prior to the
Annuity Commencement Date, the Insurance Company will pay a death benefit to a
designated beneficiary (see "General Matters--Designation of Beneficiary"). If
the Participant is married at the time of death, the death benefit will be paid
to the spouse unless elected otherwise with spousal consent.
The death benefit will be paid by the Insurance Company after it has received
(1) due proof of death; (2) notification of an election by the beneficiary of
the form in which the death benefit is to be paid; and (3) all other
information and documentation necessary to process the death benefit request.
The amount of the death benefit will be the value of the Participant's Account
Balance as of the date on which the Insurance Company receives such
information. On such date any portion of the Participant's Account Balance not
in the General Account will be transferred to the General Account. The
beneficiary may choose to receive the death benefit under any of the following
methods of payment: (1) a lump sum, (2) an annuity in a form offered by the
Insurance Company at the time the election is made, or (3) monthly payments of
a specified dollar amount (at least $100) as elected by the beneficiary, such
payments to continue until the death of the beneficiary or until all benefits
are paid; upon the death of the beneficiary, any amounts remaining unpaid will
be paid to the beneficiary's estate.
Any method of distribution selected by the beneficiary must comply with one
of the following rules:
(a) Five Year Rule. Unless (b), (c) or (d) below apply, the entire value
of the death benefit must generally be distributed to the beneficiary
within five years of the Participant's death. Special rules apply if
the beneficiary is the Participant's surviving spouse (see "Federal
Tax Matters--Obtaining Tax Advice").
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(b) Life Annuity Rule. Unless (a), (c) or (d) apply, the entire value of
the death benefit must generally be distributed to the beneficiary in
the form of annuity payments commencing within one year of the
Participant's death and payable over a period of time that does not
exceed the beneficiary's life or life expectancy (whichever is
longer). Special rules apply if the beneficiary is the Participant's
surviving spouse (see "Federal Tax Matters--Obtaining Tax Advice").
(c) Commencement of Minimum Distributions. If a Participant dies prior
to the Annuity Commencement Date, but after he or she has begun to
receive required minimum distributions from the Contract, the method
of distribution selected by the beneficiary after the Participant's
death may not be slower than the method of distribution that was in
effect before the Participant died, unless (d) applies (see "Federal
Tax Matters--Other Matters").
(d) Alternative Method of Distribution. A beneficiary will not be
required to receive a distribution from a 403(b) Contract under (a),
(b) or (c) to the extent that the required distribution is withdrawn
from another contract of the same type in accordance with applicable
IRS regulations (see "Federal Tax Matters--Obtaining Tax Advice").
DISCONTINUANCE AND TERMINATION
DISCONTINUANCE
A Contractholder may discontinue a Contract, at its discretion, as of the
first day of a calendar month that is at least 31 days after notice of such
intention to discontinue is received by the Insurance Company. The Insurance
Company may discontinue a Contract, in whole or in part, if (1) the
Contractholder fails to abide by the terms or requirements of the Contract, or
(2) the Insurance Company determines that a modification of the Contract is
necessary to comply with Federal or state requirements, including the Employee
Retirement Income Security Act of 1974, and the Contractholder refuses to
accept a substantially similar contract offered by the Insurance Company that
incorporates that modification. Discontinuance of a Contract by the Insurance
Company will be effective as of a date specified by the Insurance Company,
provided that the Insurance Company must give a Contractholder at least 31
days' advance written notice in which to cure any remedial defaults.
Discontinuance of a Contract will not relieve the Contractholder of its
obligations under the Contract, nor will it deprive Participants of the amounts
accumulated on their behalf, which remain allocated to them, and all provisions
of the Contract will continue to apply, except that (1) no further
Contributions will be made by the Contractholder, and (2) the Insurance Company
may transfer to another insurance company or other financial institution all
amounts accumulated under the Contract and allocated to Participants, and
beneficiaries. Such transfer may be made in any manner to which the
Contractholder and the Insurance Company agree in writing, and to the extent
consented to by any Participants or beneficiaries. In the event that no
transfer of the type described in clause (2) above takes place, or in the event
that such a transfer occurs which is not consented to by a Participant, or
beneficiary, amounts accumulated for the benefit of a Participant, or
beneficiary, in the above instances may, as elected by that person, be left on
deposit with the Insurance Company, or withdrawn in whole or in part (see
"Withdrawals").
TERMINATION OF PARTICIPATION
If, during the Accumulation Period, a Participant is no longer eligible to
participate under the Contract for any reason other than death or retirement
(for example, due to termination of employment), or if notice is given that the
Participant no longer desires to participate under the Contract, a termination
with respect to that Participant will be deemed to have occurred. In addition,
if no Contributions are made by a Participant for three consecutive years and
the Participant's Account Balance is less than $2,000, the Insurance Company,
in its discretion, may deem that such a termination has occurred. Upon receipt
by the Insurance Company, or a Participant (where the Insurance Company deems a
termination to have occurred), of notice of termination, Contributions may no
longer be made on behalf of a Participant. Termination will not deprive a
Participant of the vested amounts accumulated on the Participant's behalf, or
the Participant's rights to make transfers or withdrawals (see "Transfers Among
Investment Alternatives" and "Withdrawals"). Termination also will not prevent
a Participant from electing to receive annuity benefits (see "The Annuity
Period"), or having a death benefit paid on the Participant's behalf (see
"Death Benefits").
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POSTPONEMENT OF PAYMENTS
Payment of any amounts due from the Separate Account in connection with a
withdrawal, payment pursuant to the Specified Payment Option, death benefit,
termination, or transfer of any amount from the Separate Account to the General
Account will occur within seven days, unless:
1. The New York Stock Exchange is closed for other than usual weekends
or holidays, or trading on that Exchange is restricted as determined by
the Securities and Exchange Commission; or
2. The Commission by order permits postponement for the protection of
Participants; or
3. An emergency exists, as determined by the Commission, as a result
of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to determine the value of the Separate
Account's net assets.
THE ANNUITY PERIOD
GENERAL
As of the Annuity Commencement Date, the amount credited to a Participant in
the Separate Account will be transferred to the General Account and, together
with any amount previously credited to the Participant in the General Account,
will be applied to provide a monthly annuity benefit. The amount of each
Annuity Payment will be fixed and guaranteed by the Insurance Company in
accordance with the tables of annuity purchase rates contained in the Contract.
The level of Annuity Payments made to Annuitants under the Contract will not
be affected by the mortality experience (death rate) of persons receiving such
payments, or of the general population. The Insurance Company assumes the
"mortality risk" by virtue of the annuity purchase rates incorporated in the
Contract. In addition, the Insurance Company guarantees that it will not
increase charges under the Contract with respect to Annuity Payments regardless
of its actual expenses.
Accordingly, Annuity Payments will be made in a fixed and guaranteed amount
that is in no way dependent upon the investment experience of the Separate
Account. The amount of monthly payments depends only on the form of annuity
chosen, the applicable annuity purchase rates contained in the Contract and the
total amount applied to purchase the annuity.
Once Annuity Payments have commenced with respect to a Participant, no
further Contributions may be made on behalf of that Participant. In addition,
neither transfers to the Separate Account, nor withdrawals of any kind, are
permitted on behalf of an Annuitant receiving Annuity Payments.
A Participant may elect to receive the Participant's Account Balance as of
the Annuity Commencement Date in a lump sum in lieu of receiving Annuity
Payments.
The Insurance Company will issue to Contractholders for delivery to each
Participant an individual certificate setting forth the amount and terms of
payment of their annuity benefits.
Payments of benefits under the Contract will be made by the Insurance Company
directly to Annuitants at their last known address filed with the Insurance
Company by a Participant or Contractholder.
ANNUITY COMMENCEMENT DATE
The Annuity Period with respect to a Participant begins on the Annuity
Commencement Date selected in the following manner:
Participants may elect an Annuity Commencement Date that is either such
Participant's Normal Retirement Date (the first day of the calendar month
coincident with or next following such Participant's 65th birthday); Early
Retirement Date (the first day of any calendar month within the ten-year period
immediately preceding the Participant's Normal Retirement Date); or Later
Retirement Date (the first day of any calendar month following such
Participant's Normal Retirement Date, unless provided otherwise by applicable
Federal or State law).
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AVAILABLE FORMS OF ANNUITY
Annuity Payments will be made under one of the forms of annuity benefits
described below. Unless an election to the contrary is made prior to the
Annuity Commencement Date, a Participant who does not have an Eligible Spouse
at the Annuity Commencement Date will have annuity benefits paid in the Ten
Years Certain and Continuous Form described below, and a Participant who has an
Eligible Spouse will have annuity benefits paid on the Joint and Survivor Form
described below. If a Participant is married on the Annuity Commencement Date,
consent of the spouse is required if payment is to be made in any form other
than the Joint and Survivor Form.
The forms of annuity offered by the Insurance Company are:
Ten Years Certain and Continuous Form. An annuity payable monthly until the
first day of the month in which the death of the Participant occurs, or the end
of the specified period of 120 months, whichever is later. If the Participant
dies prior to the end of the specified period, payments in the same amount will
be continued to the Participant's beneficiary until the end of that period (see
"General Matters--Designation of Beneficiary").
Joint and Survivor Ten Years Certain and Continuous Form. An annuity payable
monthly until the first day of the month in which the death of the survivor of
the Participant and the Participant's Eligible Spouse occurs or the end of a
period of 120 months, whichever is later. If the Participant dies during the
Annuity Period, and the Eligible Spouse is living, payments in the amount of 66
2/3% of those payable to the Participant will be made to the Eligible Spouse.
If the Eligible Spouse dies prior to the end of the specified period, payments
will be made to the Participant's beneficiary (see "General Matters--
Designation of Beneficiary"). A Participant who has an Eligible Spouse at the
Annuity Commencement Date will be presumed to have elected this annuity option
unless the Participant notifies the Insurance Company to the contrary within
ninety days prior to that date. If the Eligible Spouse dies before
Participant's Annuity Commencement Date, the election of this form of annuity
will be automatically cancelled and, unless a new election is made by the
Participant prior to the Annuity Commencement Date, the Ten Years Certain and
Continuous Form of Annuity will become applicable.
Full Cash Refund Form. An annuity payable monthly until the first day of the
month in which the death of the Participant occurs. If, at the date of the
Participant's death, the total amount of the annuity benefits received by the
Participant is less than the amount of the Participant's Account Balance as of
the Annuity Commencement Date, the difference between these two amounts will
become payable in cash as a death benefit to the Participant's beneficiary.
Such death benefit may be paid in lump sum, or as an annuity in the Ten Years
Certain and Continuous Form, or in a combination thereof, as elected by the
beneficiary (see "General Matters--Designation of Beneficiary").
Other Forms. In addition, the Participant may elect a Straight Life Annuity,
a Fifteen Years Certain and Continuous Form, a 66 2/3% Joint and Survivor Form
without the 120-month Certain Feature or such other forms as may be agreed to
between the Participant and the Insurance Company.
AMOUNT OF ANNUITY PAYMENTS
The amount of monthly Annuity Payments under the Contract will be determined
on the basis of the application of the Participant's Account Balance to the
annuity purchase tables contained in the Contract in accordance with the form
of annuity benefit selected. The Insurance Company guarantees that the rates
used to determine the amount of Annuity Payments will never be less favorable
for an Annuitant than the guaranteed rate provided in the Contract.
SMALL BENEFIT PAYMENTS
If the initial monthly payment under an annuity benefit payable under the
Contract would be less than $20.00, or if any Participant terminates employment
and is eligible for a benefit determined to be less than $20.00 a month under
the Ten Years Certain and Continuous Form of Annuity (described above), the
Insurance Company will, in lieu of making the monthly Annuity Payments which
would otherwise be payable to the Participant commencing on the Annuity
Commencement Date, pay to the Participant on the Participant's Annuity
Commencement Date in a single sum the Participant's Account Balance, provided
that single sum does not exceed $3,500 (or such other maximum amount that may
hereafter be provided by law). The Insurance Company may make this payment as
of the date on which the first Annuity Payment under the Plan would otherwise
be payable.
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THE GENERAL ACCOUNT
Contributions allocated and transfers made to the Insurance Company's General
Account become part of the general assets of the Insurance Company, which
support insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the 1940 Act. Accordingly,
neither the General Account nor any interests therein are subject generally to
the provisions of the 1933 or 1940 Acts, and the Insurance Company has been
advised that the staff of the Commission has not reviewed the disclosures in
this Prospectus which relate to the General Account. Disclosures regarding the
fixed portion of the Contract and the General Account, however, may be subject
to certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
SCOPE OF PROSPECTUS
The Contract provides for accumulation of Contributions on a completely fixed
basis, a completely variable basis, or a combination fixed and variable basis,
and for the payment of annuity benefits on a fixed basis only. This Prospectus,
however, is generally intended to serve as a disclosure document for the
variable portion of the Contract only. For complete details regarding the
General Account, see the Contract itself.
GENERAL DESCRIPTION
The General Account consists of all of the general assets of the Insurance
Company, other than those in the Separate Account and other segregated asset
accounts. Amounts are allocated to the General Account at the election of
Participants in the form of Contributions, or as transfers from the Separate
Account. The Insurance Company bears the full investment risk for all amounts
allocated to the General Account (whereas Participants bear the investment risk
for amounts allocated to the Separate Account). The Insurance Company has sole
discretion to invest the assets of the General Account, subject to applicable
law. There are no limits on withdrawals or transfers to another Investment
Alternative from the General Account, subject to applicable federal tax law
restrictions, with respect to the amount a Participant can withdraw in cash.
The Insurance Company does, however, reserve the right to impose a 20%
restriction upon withdrawals from the General Account in any calendar year. The
Insurance Company guarantees that it will credit interest to amounts
accumulated for Participants in the General Account at an effective annual rate
of at least 3%. The Insurance Company may, at its sole discretion, credit a
higher rate of interest to amounts allocated to the General Account, although
the Insurance Company IS NOT OBLIGATED TO CREDIT INTEREST IN EXCESS OF 3% PER
YEAR. Under Contracts where employers elect to use electronic media, such as a
computer terminal, personal computer or other electronic device located at the
employer's place of business, to transmit and receive to and from the Insurance
Company, relevant and necessary information with respect to the Contract,
subject to the Insurance Company's established rules and requirements with
respect to accessing computer information, the Insurance Company reserves the
right to credit such Contracts with a different rate of interest in the General
Account than Contracts which do not use such electronic computer processing.
Any amount held in the General Account does not entitle a Participant to share
in the investment experience of the General Account.
TRANSFERS AND WITHDRAWALS
Prior to a Participant's Annuity Commencement Date, amounts may be
transferred, if permitted by the Plan, from the Funds of the Separate Account
to the General Account, and from the General Account to the Funds of the
Separate Account. No charge is currently imposed for such transfers. The
Insurance Company reserves the right, however, to impose additional charges for
transfers in the future.
Partial or complete withdrawals may be made from the General Account prior to
a Participant's Annuity Commencement Date, except that employer contributions
made to a Plan qualified under Section 401(a) or 403(a) of the Code may not be
withdrawn unless that employee has been a participant for at least five years.
In the case of such withdrawals, the Insurance Company will pay the lesser of
(a) the amount specified in the withdrawal request, and (b) the amount that, as
of the date of payment, then represents the accumulation in the General Account
credited to the Participant. No charge is currently imposed on such transfers.
Transfers and withdrawals from the General Account may be delayed for up to
six months following the date that the Insurance Company receives such
requests. Withdrawals are subject to spousal consent.
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ANNUITY PAYMENTS
All Annuity Payments under the Contract are made in the form of a fixed
annuity from the General Account. The Insurance Company does not credit
discretionary interest in excess of the guaranteed rate of 3% to Annuity
Payments. The Annuitant must rely on the annuity purchase tables provided in
the Contract to determine the amount of Annuity Payments.
GENERAL MATTERS
CONTACTING THE INSURANCE COMPANY
Except as provided in the following paragraph, all notices, requests and
elections required to be given or made under the Contract must be in writing
and mailed or delivered to the Insurance Company's home office at the following
address:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President, Field Administration
National Service Support Department
666 Fifth Avenue
New York, New York 10103
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling the following number: 800-468-3785.
TRANSFERS, WITHDRAWALS AND REALLOCATIONS BY TELEPHONE
Requests by Participants for transfers or withdrawals, or changes in the
formula for allocation of Contributions, may, if otherwise allowed by the Plan,
be made by telephone in lieu of the written procedure described above. Requests
by telephone, however, may be made only if a Participant has received a
Personal Identification Number, which the Insurance Company provides
automatically, and agreed to use it in accordance with the applicable rules and
requirements. Thereafter the Participant may contact the Insurance Company by
telephone (800-468-3785) and request the desired transaction or change.
Transfers requested by telephone will go into effect on the day on which the
request is made if received by 4 PM, Eastern Standard time (or Daylight Savings
time, as applicable), at the next calculated price. The Insurance Company
reserves the right to suspend or terminate the right to request transfers,
withdrawals or reallocations by telephone at any time. Where spousal consent is
required, telephone withdrawals are not permitted. Although failure to follow
reasonable procedures may result in the Insurance Company's liability for any
losses due to unauthorized or fraudulent telephone transfers, it will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Insurance Company will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. Those
procedures shall consist of confirming the Participant's Social Security
number, checking the Personal Identification Number, tape recording all
telephone transactions and providing written confirmation thereof.
DESIGNATION OF BENEFICIARY
Under the Contract, a Participant may designate (with the right to change
such designation from time to time) a beneficiary to receive any payments with
respect to a Participant becoming due to a beneficiary under the Contract. The
Participant may change the beneficiary while the Participant is living by
providing the Insurance Company (or the Participant's Employer where the
Employer has agreed to retain such information) with notice of such change.
Such designation or change in designation will take effect as of the date of
receipt of notice by the Insurance Company or the Participant's Employer where
the Employer has agreed to retain such information, whether or not the
Participant is living at the time of such receipt. The Insurance Company will
not be liable, however, as to any payment or settlement made prior to receiving
such notice.
In the case of a married Participant, the beneficiary shall be the Eligible
Spouse unless, on the date of death, there is in effect a written consent
signed by the Eligible Spouse and witnessed by either a notary public or the
Plan representative waiving the spouse's rights as beneficiary.
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If no designated beneficiary survives the Participant, the Insurance Company
will pay any single sum payment or the commuted value of any remaining periodic
payments to the first surviving class of the following classes of successive
preference beneficiaries: (a) the Participant's surviving spouse; (b) the
Participant's surviving children; (c) the Participant's surviving parents; (d)
the Participant's surviving brothers and sisters; and (e) the executors or
administrators of the Participant's estate. Any commuted value will be
determined on the basis of compound interest at a rate, determined by the
Insurance Company, that is consistent with the interest assumption of the rate
used to determine the amount payable under the annuity benefit (see "Amount of
Annuity Payments").
ASSIGNMENT OF CONTRACT
Except as otherwise required by law, no assignment nor transfer of any rights
conferred under a Contract is permitted.
THE INSURANCE COMPANY'S LIABILITY
The Insurance Company's liability for the payment of annuity benefits (see
"The Annuity Period"), death benefits (see "Death Benefits"), and withdrawals
(see "Withdrawals") is limited to the payments provided under the Contract that
arise from Participants' Account Balances.
Upon exhaustion of all amounts held under the Contract by withdrawals or by
transfers upon discontinuance of the Contract (see "Discontinuance and
Termination"), that Contract will terminate and the Insurance Company will be
relieved of all further liability thereunder, except with respect to any
annuity benefits provided on or before the date the Contract was terminated.
The Insurance Company may rely on the reports and other information furnished
by Contractholders or Participants as required under the Contract, and need not
inquire as to the accuracy or completeness of such reports and information (see
"Information and Determinations").
MODIFICATION OF CONTRACT
The Contract may not be modified as to the Insurance Company, nor may any of
the rights or requirements of the Insurance Company be waived, except in
writing by a duly authorized officer of the Insurance Company.
The Contract may be changed at any time by the Insurance Company by written
notice to the Contractholder without the consent of any Participant, or any
other person who is, or may become, entitled to benefits under the Contract,
provided that such change shall not affect the amount or the terms of the
annuity benefits provided thereunder before such change.
EVIDENCE OF SURVIVAL
When payment of an annuity is contingent upon the survival of any person,
evidence of that person's survival must be furnished to the Insurance Company,
either by personal endorsement of the check drawn for payment, or by other
means satisfactory to the Insurance Company.
MISSTATEMENT OF INFORMATION
If a benefit provided under one of the Contracts was based on information
that has been misstated, the benefit will not be invalidated, but the amount of
the benefit payments or the amount applied to provide the benefit, or both,
will be adjusted to the proper amount as determined on the basis of the
corrected information.
The amount of any underpayments by the Insurance Company due to any
misstatement shall be paid in full with the next payment due with respect to
the Participant under the Contract. The amount of any overpayments by the
Insurance Company due to any misstatement will be deducted to the extent
possible from the payments thereafter falling due with respect to the
Participant. Interest, based on an annual effective rate of 5%, will be
included in the amount of any underpayments or overpayments.
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INFORMATION AND DETERMINATIONS
Contractholders and Participants, as appropriate, will furnish the Insurance
Company with the facts and information that the Insurance Company may require
for the operation of the Contract including, upon request, the original or
photocopy of any pertinent records held by the Contractholder or Participant.
Any determination that a Contractholder is to make under the Contract will be
made pursuant to the terms of the Contract and will be reported by the
Contractholder to the Insurance Company.
NON-ALIENATION OF BENEFITS
To the extent permitted by law, no amount payable with respect to a
Participant under the Contract may be assigned (either at law or in equity),
alienated or be subject to attachment, garnishment, levy (other than a federal
tax levy made pursuant to Section 6331 of the Code or a Qualified Domestic
Relations Order under Section 401(a)(13)(B) of the Code), or other legal or
equitable process, and no such amount will in any way be subject to any legal
process which would subject it to the payment of any claim against the
Participant or beneficiary (see "Designation of Beneficiary").
ALTERNATE PAYMENTS OF BENEFITS
The Insurance Company may make payment due to a payee who is physically or
mentally incompetent to receive such payments, or is a minor, to certain other
persons in accordance with the Contract. Upon making these alternate payments,
the Insurance Company will be discharged from all liability with respect to
payments due to the payee. Payments to a minor will be limited to $250 a month
until either (a) a guardian is appointed or (b) the minor has attained
majority.
CLAIM PROCEDURES
In order to receive annuity benefits under the Contract, Participants or
beneficiaries thereunder must bring to the attention of the Insurance Company
or the Contractholder such person's right to claim such benefits. If the
Contractholder has received the claim directly, the Contractholder must notify
the Insurance Company of the claim on the prescribed form furnished to the
Contractholder for the purpose. The Insurance Company will have 90 days after
receipt of the claim within which to render a decision, and may extend this
period, upon written notice to the claimant, for an additional 90 days if there
are special circumstances that require such an extension.
In the event the claim is denied in whole or in part, the Insurance Company
will give notice to the Contractholder or claimant, as appropriate, of such
denial in sufficient detail so that the claimant may be informed of the reason
or reasons for the denial, the specific reference to the Contract or Plan
provision on which the denial was based, any additional information that may be
necessary to perfect the claim and the reasons therefor, and the procedure for
reviewing denied claims.
In the event a claim is denied in whole or in part, a claimant or the
claimant's representative has 60 days in which to appeal to the Insurance
Company for review thereof. The request for review must be made in writing,
either directly to the Insurance Company, or to the Contractholder for
transmission to the Insurance Company. A claimant will have the right to review
all pertinent documents and to contest the decision in writing. The Insurance
Company will render a decision on review no later than 60 days after its
receipt of the request for review unless special circumstances require
extension, in which case the decision may, upon written notice to the claimant,
be rendered within 120 days from the Insurance Company's receipt of the request
for review. The Insurance Company's decision on review will be in writing and
include specific reasons with specific reference to the Contract or Plan
provisions on which it is based.
PARTICIPATION IN DIVISIBLE SURPLUS
The Insurance Company is a mutual life insurance company and, therefore, has
no stockholders. The Contractholders or Participants share in the earnings of
the Insurance Company. No assurance can be given as to the amount of divisible
surplus, if any, that will be available for distribution under the Contract in
the future. The determination of such surplus is within the sole discretion of
the Company's Board of Directors. Under usual circumstances, separate accounts
receive little benefit from and contribute little to divisible surplus.
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FEDERAL TAX MATTERS
The Insurance Company currently is treated as a nonprofit social welfare
organization under Section 501(c)(4) of the Code, and its pension business is
exempt from federal income taxation. For federal income tax purposes, the
Separate Account is not an entity separate from the Insurance Company, and its
operations are considered part of the Insurance Company. Accordingly, it will
not be taxed separately as a "Regulated Investment Company" under Subchapter M
of the Code. Due to the Insurance Company's current tax status, investment
income and realized capital gains of the Separate Account with respect to its
pension business are not taxable. TDA Thrift Plans (under Code Section 403(b))
and other Thrift Plans (under Code Section 401(a)) are part of the Insurance
Company's pension business. However, if the Insurance Company's tax status
should ever change, any federal income tax imposed with respect to the Separate
Account will be reflected in the value of the Accumulation Units.
TAXATION OF ANNUITY PAYMENTS
The Contract offered by this Prospectus is intended to be an annuity contract
for purposes of Section 72 of the Code.
Under present law, any increase in value with respect to amounts accumulated
under an annuity contract are taxed to a Participant when distributed. When
Annuity Payments under a Thrift Plan and Contract begin, or a lump sum payment
of a Participant's Account Balance is received in lieu thereof, payments
generally are includable in the gross income of the individual recipient and
are taxed at ordinary income rates. Pursuant to the methods prescribed in
Section 72 of the Code, such recipient may exclude from gross income that
portion of Annuity Payments or a lump sum payment which in effect is a return
of capital, i.e., that portion attributable to nondeductible (for tax purposes)
Contributions (excluding any earnings thereon) made under the Contract.
Generally, in the case of withdrawals from an annuity contract before Annuity
Commencement Date, the basis recovery amount (non-taxable amount) of a
withdrawal will be calculated based on the ratio of the employee contributions
which were not excludable or deductible to the portion of the total account
balance at the time of withdrawal, excluding amounts not yet vested, if any.
Generally, employee contributions under a Thrift Plan which meets the
requirements of Code Section 403(b) are excludable (along with employer
contributions) within the applicable limits of that Code Section; employee
contributions under a Thrift Plan which meets the requirements of Code Section
401(a) are not excludable from the employee's gross income and are not
deductible.
In the case of annuity payments made from such plans, such amounts are
subject to taxation on a pro-rata basis in the same ratio as the amount that
employee contributions which were not excludable or deductible have to the
expected return under the Contract on the Annuity Commencement Date. If the
employee's life span exceeds the predicted life span, the employee will
eventually have his or her total investment in the Contract returned tax free.
Any payments made after that point are fully taxable. If the employee dies
before the basis recovery occurs, the unrecovered amount may either be deducted
on the final income tax return for the employee's last taxable year or by the
beneficiary.
In the case of permitted withdrawals from a TDA Thrift Plan, income taxation
rules described above apply and a penalty may be imposed under the Code on
certain distributions, currently equal to ten percent of the amount which is
includible in gross income for tax purposes.
The penalty tax generally is not imposed, however, on distributions made (1)
on or after age 59 1/2, death or disability; (2) as part of a series of
substantially equal periodic payments made over the life or life expectancy of
the Participant or the joint lives or life expectancy of the Participant and
his or her beneficiary; (3) on account of separation from service after
attainment of age 55; and (4) equal to deductible medical expenses under
Section 213 of the Code.
In addition, the Code restricts the withdrawal of salary reduction amounts
contributed to a TDA Thrift Plan on or after January 1, 1989 and post-1988
earnings on all salary reduction contributions to attainment of age 59 1/2,
termination of employment, death, disability and certain financial hardships.
In the case of hardship distributions after 1988, earnings on salary reduction
contributions may not be withdrawn. Also, any amounts which were transferred
from a Code Section 403(b)(7) custodial account are subject to additional tax
law withdrawal restrictions which apply to custodial accounts.
In general, a death benefit, consisting of amounts paid to a Participant's
beneficiary (see "Death Benefits") is includable in the Participant's estate
for federal tax purposes. (See "Obtaining Tax Advice.")
31
<PAGE>
A Participant who receives aggregate retirement distributions for a calendar
year in excess of a certain amount may be subject to a penalty tax equal to 15%
of the excess. This penalty generally does not apply to death benefits and
certain other distributions, and various special rules apply. (See "Obtaining
Tax Advice".)
If the Contract is offered for use with a TDA Thrift Plan meeting the
requirements of Section 403(b) of the Code, contributions made under an annuity
contract by tax-exempt organizations meeting the requirements of the Section
501(c)(3) of the Code are excludable from the gross income of employees of such
organizations. This exclusion, however, is limited to the extent that the
aggregate contributions per year on behalf of such employee do not exceed the
exclusion allowance set forth in Section 403(b)(2) of the Code or the
contribution limitation set forth in Section 415(c) of the Code. Generally,
except for a limited catch-up provision, the maximum amount that may be
excluded by an employee from gross income under a salary reduction agreement is
$9,500.
Generally, subject to the $9,500 maximum on salary reduction amounts, amounts
up to 20% of the taxable includable compensation received annually from the
employer which is applied to purchase annuities are excludable by a
Participant. Generally, the formula used in determining the excludable amount
for the current year takes into consideration the Participant's length of
employment and contributions to the Plan and to certain other plans, if any,
which were excluded from the Participant's taxable income for prior years.
Furthermore, annual employer and employee Contributions to the Plan (and to
certain other plans) may, in general, not exceed the lesser of $30,000, or 25%
of a Participant's includable compensation. Additional limits generally apply
if the employer makes matching contributions.
If the Contract is offered for use with a Thrift Plan designed to meet the
qualifications of Section 401(a) of the Code, annual contributions to all
qualified defined contribution Plans under Section 401(a) are limited to the
amounts provided for in Section 415, which generally are the lesser of $30,000
or 25% of a Participant's annual compensation. Additional limits apply to
employee contributions to such plans and, if the employer makes matching
contributions, to those matching contributions as well. If the limits on
employer matching contributions are exceeded, certain of those matching
contributions may be forfeited.
Any amounts contributed in excess of the amounts described above would be
treated as excess contributions to the Plan and could result in additional
penalties and/or corrective distributions which are includible in income.
Distributions to Participants in both a TDA Thrift Plan and a Plan qualified
under Section 401(a) or 403(a) of the Code generally must begin no later than
April 1 of the year following the year in which the Participant attains age 70
1/2. Federal tax law also generally imposes certain specific provisions for
distributions which must be made upon the death of a Participant and which may
reduce the period over which distributions may otherwise be made and/or
deferred.
If the Code requires in a particular tax year that distributions in specified
minimum amounts must commence because of the Participant's age or death, and if
a distribution is not made in an amount at least equal to the minimum amount,
the Code imposes a penalty tax equal to 50% of the difference between the
required minimum and the actual taxable distribution.
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
Most withdrawals are subject to automatic 20% federal income tax withholding
unless the participant elects to have the withdrawal paid directly, as a tax-
free rollover, to another eligible plan or an IRA. The same rules generally
apply to payments of death benefits to a surviving spouse beneficiary, or to
payments to a spouse or former spouse in connection with a divorce or
separation decree or court order, except that a surviving spouse may only have
a direct rollover made to an IRA. The required 20% federal tax withholding
cannot be waived if a direct rollover is not elected.
The rules do not apply to all payments. The automatic 20% withholding does
not apply to any distribution that is (a) one of a series of substantially
equal periodic payments (not less frequently than annually) made (1) for the
life (or life expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's designated beneficiary,
or (2) for a specified period of 10 years or more, or (b) a minimum
distribution required under Section 401(a)(9) of the Code. In general, tax
withholding at different rates (generally 10%) does apply to such payments but
payees can elect to have withholding waived. Death benefit payments to non-
spouse beneficiaries generally cannot be rolled over and are subject to tax
withholding at different rates, but payees can elect to have withholding
waived. Certain small payments may also be exempt from direct rollover and tax
withholding rules.
32
<PAGE>
When withdrawals or benefit payments are to be made, participants (or
beneficiaries) will be given detailed information and advised of their
elections. That information should be carefully reviewed. Residents of certain
states will have state withholding apply if they have elected to have federal
withholding apply.
OBTAINING TAX ADVICE
The description in this Prospectus of the federal tax status of amounts
accumulated or received under the Contracts is not exhaustive and is for
information purposes only. The description does not purport to cover all
situations involving the purchase of an annuity or the election of an option
under the Contract. Tax results may vary depending upon individual situations
and special rules may apply in certain cases. State and local taxes may also
pertain. For these reasons a qualified tax advisor should be consulted for
complete tax information regarding any specific situation.
VOTING RIGHTS
In accordance with the Insurance Company's view of present applicable law,
and so long as the Commission continues to interpret the 1940 Act as requiring
pass-through voting privileges, the Insurance Company will vote the shares of
the Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios,
the TCI Growth Fund and Calvert Responsibly Invested Balanced Portfolio held in
the Separate Account at regular and special meetings of the shareholders of the
Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the
TCI Growth Fund and Calvert Responsibly Invested Balanced Portfolio according
to instructions received from persons having the right to instruct the
Insurance Company on how to vote the shares, as defined below. The Insurance
Company will vote shares for which it has not received instructions in the same
proportion as the Insurance Company votes shares for which it has received
instructions, except for shares owned by the Insurance Company representing
"seed" money, which will be voted in the Insurance Company's discretion. The
Insurance Company exercises discretion with respect to less than 1% of the
voting interest in the Separate Account. If the Investment Company Act of 1940
should be amended, or if the present interpretation thereof should change, and
as a result the Insurance Company determines that it is permitted to vote the
shares of the Investment Company Funds, the Fidelity Portfolios, the Scudder
Portfolios, the TCI Growth Fund and Calvert Responsibly Invested Balanced
Portfolio in its own discretion, it may elect to do so.
The person having the right to give voting instructions to the Insurance
Company under a Contract is the following: under an individual Contract, the
person to whom the Contract is issued and for whom an amount is accumulated in
the Separate Account, and, under a group Contract, the individual for whom
amounts are accumulated in the Separate Account, i.e., the Participant.
Each person having the right to instruct the Insurance Company on how to vote
the shares of any of the Investment Company Funds, the Fidelity Portfolios, the
Scudder Portfolios, the TCI Growth Fund and Calvert Responsibly Invested
Balanced Portfolio will receive periodic reports relating to such funds or
portfolios, including proxy material and a form with which to give voting
instructions.
PERFORMANCE INFORMATION
MONEY MARKET FUND
From time to time, quotations of the "yield" and "effective yield" of the
Separate Account's Money Market Fund may be included in advertisements, sales
literature or shareholder reports. Both yield figures are based on the
historical performance of the Fund and show the performance of a hypothetical
investment and are not intended to indicate future performance. The yield of
the Money Market Fund refers to the net investment income generated by the Fund
over a specified seven-day period (the ending date of which will be stated).
This income is then annualized. That is, the amount of income generated by the
Fund during that week is assumed to be generated each week during such 52-week
period and is shown as a percentage. The effective yield is expressed similarly
but, when annualized, the income earned by an investment in the Fund is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Yield and
effective yield for the Money Market Fund will vary based on, among other
things, changes in the market conditions, the level of interest rates and the
level of the Money Market Fund's portfolio expenses.
33
<PAGE>
OTHER FUNDS
From time to time, quotations of a Fund's "total return" may be included in
advertisements, sales literature or shareholder reports. Total return figures
are based on the historical performance of the Fund and show the performance of
a hypothetical investment and are not intended to indicate future performance.
The total return of a Fund refers to return assuming an investment has been
held in the Fund for one, five and ten years and for the life of the Fund (the
ending date of which will be stated). The total return quotations are expressed
in terms of average annual compounded rates of return for all periods quoted
and assume that all dividends and capital gains distributions were reinvested.
Total return for a Fund will vary based on, among other things, changes in
market conditions and the level of the Fund's expenses.
For a detailed description of the methods used to determine yield and total
return for the Separate Account's Funds, see the Statement of Additional
Information.
FUNDING AND OTHER CHANGES
The Insurance Company reserves the right, subject to compliance with
applicable law, including approval of Participants if so required, (1) to
create new investment funds of the Separate Account at any time; (2) to
transfer assets determined by the Insurance Company to be associated with the
class of contracts to which the Contract belongs from the Separate Account to
another Separate Account of the Insurance Company by withdrawing the same
percentage of each investment in the Separate Account with appropriate
adjustments to avoid odd lots and fractions; (3) to create additional separate
investment accounts or combine any two or more accounts including the Separate
Account; (4) to operate the Separate Account as a diversified, open-end
management investment company under the 1940 Act, or in any other form
permitted by law, and to designate an investment adviser in connection
therewith, which may be the Insurance Company, an affiliate of the Insurance
Company or another person; (5) to deregister the Separate Account under the
1940 Act; and (6) to operate the Separate Account under the general supervision
of a committee any or all the members of which may be interested persons (as
defined in the 1940 Act) of the Insurance Company or an affiliate, or to
discharge the committee of one or more of the Separate Accounts.
OTHER VARIABLE ANNUITY CONTRACTS
In addition to the Contract described in this Prospectus, the Insurance
Company offers other individual and group variable annuity contracts, some of
which are not described in this Prospectus, but which may also participate in
the Separate Account.
34
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Distribution of the Contract Legal Proceedings
Money Market Yield Calculation Legal Matters
Performance Information Experts
Safekeeping of Separate Account Assets Additional Information
State Regulation Financial Statements
Periodic Reports
OBTAINING A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
To receive a copy of the Statement of Additional Information at no charge,
the Participant may, as an alternative to calling (212) 399-1600, detach the
Form included below and mail it to Mutual of America Life Insurance Company,
666 Fifth Avenue, New York, New York 10103.
- --------------------------------------------------------------------------------
ORDER FORM FOR STATEMENT OF ADDITIONAL INFORMATION
To: Mutual of America Life Insurance Company
Please send me a copy of the Statement of Additional Information dated May
1, 1995 for the Thrift Plan Contract offered by Mutual of America. My name and
address are as follows:
---------------------------------------------------
Name
---------------------------------------------------
Street Address
---------------------------------------------------
City State Zip
35
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
THRIFT PLAN CONTRACT
OFFERED BY
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
666 FIFTH AVENUE
NEW YORK NEW YORK 10103
---------------
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Thrift Plan Contract ("Contract") offered by
Mutual of America Life Insurance Company. You may obtain a copy of the
Prospectus dated May 1, 1995, by calling (212) 399-1600, or writing to Mutual
of America Life Insurance Company, 666 Fifth Avenue, New York, New York 10103.
Terms used in the current Prospectus for the Contracts are incorporated in this
Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS.
Dated: May 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS.............................................. 2
MONEY MARKET YIELD CALCULATION............................................. 2
PERFORMANCE INFORMATION.................................................... 2
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS..................................... 5
STATE REGULATION........................................................... 5
PERIODIC REPORTS........................................................... 6
LEGAL PROCEEDINGS.......................................................... 6
LEGAL MATTERS.............................................................. 6
EXPERTS.................................................................... 6
ADDITIONAL INFORMATION..................................................... 6
FINANCIAL STATEMENTS....................................................... 6
</TABLE>
1
<PAGE>
DISTRIBUTION OF THE CONTRACTS
The Insurance Company offers the Contracts for sale on a continuous basis
through certain employees of the Insurance Company. The only compensation paid
for sales of the Contracts is in the form of salary. The Insurance Company is
registered with the Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. All persons engaged in selling
the Contracts are licensed agents of the Insurance Company and are duly
qualified registered representatives.
MONEY MARKET YIELD CALCULATION
In accordance with regulations adopted by the Securities and Exchange
Commission, the Insurance Company is required to disclose the current
annualized yield of the Money Market Fund of the Separate Account for a seven-
day period in a manner which does not take into consideration any realized or
unrealized gains on losses or shares of the Money Market Fund of the Investment
Company or on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and losses
on the sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one unit of the Money
Market Fund of the Separate Account at the beginning of such seven-day period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return and annualizing
this quotient on a 365-day basis. The net change in account value reflects the
deductions for administrative and distribution expenses or services and the
mortality and expense risk charge and income and expenses accrued during the
period. Because of these deductions, the yield for the Money Market Fund of the
Separate Account will be lower than the yield for the Money Market Fund of the
Investment Company.
The Securities and Exchange Commission also permits the Insurance Company to
disclose the effective yield of the Money Market Fund of the Separate Account
for the same seven-day period, determined on a compounded basis. The effective
yield is calculated by compounding the unannualized base period return by
adding one to the base period return, raising the sum to a power equal to 365
divided by seven, and subtracting one from the result.
The yield on amounts held in the Money Market Fund of the Separate Account
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yield or
rates of return. The Money Market Fund of the Separate Account's actual yield
is affected by changes in interest rates on money market securities, average
portfolio maturity of the Money Market Fund of the Investment Company, the
types and quality of portfolio securities held by the Money Market Fund of the
Investment Company, and its operating expenses.
PERFORMANCE INFORMATION
MONEY MARKET FUND
From time to time, quotations of the performance of the Separate Account's
Money Market Fund may be included in advertisements, sales literature or
shareholder reports. These performance figures are calculated in the following
manner:
A. Yield is the net annualized yield based on a specified seven calendar-
days calculated at simple interest rates. Yield is calculated by
determining the net change, exclusive of capital changes, in the value of a
hypothetical preexisting account having a balance of one share at the
beginning of the period and dividing the difference by the value of the
account at the beginning of the base period to obtain the base period
return. The yield is annualized by multiplying the base period return by
365/7. The yield figure is stated to the nearest hundredth of one percent.
B. Effective yield is the net annualized yield for a specified seven
calendar-days assuming a reinvestment of the income or compounding.
Effective yield is calculated by the same method as yield except the yield
figure is compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result, according to the
following formula:
Effective Yield = [(Base Period Return +1) 365/7]-1.
The current yield of the Money Market Fund of the Separate Account for the
seven-day period ended December 31, 1994 was 4.02%.
As described above, yield and effective yield are based on historical
earnings and show the performance of a hypothetical investment and are not
intended to indicate future performance. Yield and effective yield will vary
based on changes in market conditions and the level of expenses.
2
<PAGE>
In connection with communicating its total return to current or prospective
Participants, the Money Market Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indices which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and management costs.
BOND FUNDS
From time to time, quotations of the yield of the Separate Account's
Investment Company Bond Funds and Scudder Bond Fund may be included in
advertisements, sales literature or shareholder reports. Yield is computed by
annualizing net investment income, as determined by the Commission's formula,
calculated on a per accumulation unit basis, for a recent one month or 30-day
period and dividing that amount by the unit value of the Fund at the end of the
period.
FUNDS OTHER THAN MONEY MARKET
From time to time, quotations of a Fund's "total return" may be included in
advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
A. Average Annual Total Return is the average annual compounded rate of
return for the periods of one year, five years and ten years, if
applicable, all ended on the date of a recent calendar quarter. In
addition, the total return for the life of the Fund is given. Total return
quotations reflect changes in the price of a Fund's shares and assume that
all dividends and capital gains distributions during the respective periods
were reinvested in Fund shares. Total return is calculated by finding the
average annual compounded rates of return of a hypothetical investment over
such periods, according to the following formula (total return is then
expressed as a percentage):
T = (ERV/P) TO THE POWER OF 1 DIVIDED BY N - 1
Where:
<TABLE>
<CAPTION>
<C> <C> <S>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
</TABLE>
B. Cumulative Total Return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect changes in the price of a Fund's
shares and assume that all dividends and capital gains distributions during
the period were reinvested in Fund shares. Cumulative total return is
calculated by finding the compound rates of return of a hypothetical
investment over such periods, according to the following formula
(cumulative total return is then expressed as a percentage):
C = (ERV/P) - 1.
<TABLE>
<CAPTION>
<S> <C>
C = Cumulative Total Return
P = hypothetical initial payment of $1,000
ERV = ending redeemable value: ERV is the value, at the end of the applicable period, of a
hypothetical $1,000 investment made at the beginning of the applicable period.
</TABLE>
3
<PAGE>
AVERAGE ANNUAL
TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America................ -0.3% 5.7% 11.1% 11.1%(1)
Investment Company Eq-
uity Index............. -0.3 N/A 2.2(2)
Investment Company Bond. -4.9 5.8 7.3 7.3(1)
Investment Company
Short-Term Bond........ -0.3 N/A 1.3(2)
Investment Company Mid-
Term Bond.............. -5.2 N/A 0.1(2)
Investment Company Com-
posite................. -4.8 6.1 9.6 9.6(1)
Investment Company Ag-
gressive Equity........ N/A N/A 7.1(3)
Fidelity VIP Equity-In-
come................... -11.3 6.6 10.4(4)
Fidelity VIP II Asset
Manager................ -6.5 N/A 6.3(5)
Scudder Capital Growth.. -2.8 4.5 7.4(6)
Scudder Bond............ -2.7 6.9 8.7(6)
Scudder International... -4.9 4.6 6.2(7)
TCI Growth.............. 5.3 8.6 8.9(8)
Calvert Responsibly In-
vested Balanced........ -7.9 8.8 1.7(9)
CUMULATIVE TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1994
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America................ -0.3% 32.1% 186.3% 186.3%(1)
Investment Company Eq-
uity Index............. -0.3 N/A 4.2(2)
Investment Company Bond. -4.9 31.7 92.7 92.7(1)
Investment Company
Short-Term Bond........ -0.3 N/A 2.5(2)
Investment Company Mid-
Term Bond.............. -5.2 N/A 0.5(2)
Investment Company Com-
posite................. -4.8 33.7 142.0 142.0(1)
Investment Company Ag-
gressive Equity........ N/A N/A 4.7(3)
Fidelity VIP Equity-In-
come................... -11.3 37.4 151.6(4)
Fidelity VIP II Asset
Manager................ -6.5 N/A 76.9(5)
Scudder Capital Growth.. -2.8 24.7 71.1(6)
Scudder Bond............ -2.7 37.9 79.1(6)
Scudder International... -4.9 24.8 64.2(7)
TCI Growth.............. 5.3 26.5 103.1(8)
Calvert Responsibly In-
vested Balanced........ -7.9 14.3 53.0(9)
</TABLE>
- -------
(1) For the period beginning January 1, 1985 (commencement of operations)
(2) For the period beginning February 5, 1993 (commencement of operations)
(3) For the period beginning May 2, 1994 (commencement of operations)
(4) For the period beginning October 9, 1986 (commencement of operations)
(5) For the period beginning September 6, 1989 (commencement of operations)
(6) For the period beginning July 16, 1985 (commencement of operations)
(7) For the period beginning May 1, 1987 (commencement of operations)
(8) For the period beginning November 20, 1987 (commencement of operations)
(9) For the period beginning September 2, 1986 (commencement of operations)
The Fidelity VIP II Contrafund Portfolio had not commenced operations as of
December 31, 1994 and is not represented in the above table. The returns for
the All America Fund (previously called the "Stock Fund") prior to May 1, 1994
reflect the results of that Fund prior to a change in its investment objectives
and policies and the addition of subadvisers on that date. The commencement
dates for the Funds reflect the commencement dates for the underlying fund or
portfolio. Separate Account charges have been deducted for funds or portfolios
which commenced operations prior to the commencement of operations of the
corresponding Fund of the Separate Account.
4
<PAGE>
The above figures for the Money Market and other Funds, both for average
annual total return and cumulative total return, reflect charges made to the
Separate Account and also reflect a comparative portion of a $2.00 monthly
contract fee. The monthly contract fee is deducted initially from any net
assets in the Participant's Account which have been allocated to the General
Account. If no net assets are allocated to such Account, the monthly contract
fee would be deducted from the net assets of the Participant's Account which
have been allocated to one of the Funds of the Separate Account in the
following order: (a) Investment Company Money Market, (b) Investment Company
Short-Term Bond, (c) Investment Company Mid-Term Bond, (d) Investment Company
Bond, (e) Scudder Bond, (f) Investment Company Composite, (g) Fidelity VIP II
Asset Manager, (h) Calvert Responsibly Invested Balanced, (i) Fidelity VIP
Equity-Income, (j) Investment Company All America, (k) Investment Company
Equity Index, (l) Fidelity VIP II Contrafund, (m) Investment Company Aggressive
Equity, (n) Scudder Capital Growth, (o) Scudder International, and (p) TCI
Growth. As such, the allocation of the net assets of a Participant's Account
would determine whether any monthly contract fee would be charged against a
Separate Account Fund. However, for purposes of illustrating the investment
performance of a $1,000.00 hypothetical investment, the proportionate amount of
the $2.00 fee, as determined by the proportionate amount of the total net
assets of the Separate Account in relation to the total net assets of the
General Account, is deducted.
The actual treatment of the monthly contract fee and its effect on total
return would depend on the Participant's actual allocation. If a Participant
has net assets in the General Account, the monthly contract fee would be
deducted from the General Account, not any Separate Account Fund. Accordingly,
the illustration of such a Participant's net assets held in any of the Funds of
the Separate Account would experience a higher total return than shown above.
If a Participant has no assets allocated to the General Account, but has net
assets allocated to more than one Fund of the Separate Account, the fee would
only be deducted from one of the Funds so that an illustration of total return
figures of the other Funds would be higher than shown above and the Separate
Account Fund from which the fee was deducted would illustrate a lower total
return than shown above. If a Participant has no assets in the General Account,
but has net assets allocated only to one Fund of the Separate Account, then
after deduction of the monthly contract fee, an illustration of such a total
return figure would be lower than that shown above.
Performance figures, when used, are based on historical earnings and are not
guaranteed. They are not necessarily indicative of the future investment
performance of a particular Fund. Total return and yield for a Fund will vary
based on changes in market conditions and the level of the Fund's expenses.
Unit values will fluctuate so shares, when redeemed, may be worth more or less
than their original cost.
In connection with communicating its total return to current or prospective
Participants, a Fund also may compare these figures to the performance of other
variable annuity accounts tracked by mutual fund rating services or to other
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to assets of the Separate Account is held by the Insurance Company.
Records are maintained of all purchases and redemptions of eligible Portfolio
Companies shares held by each of the Funds of the Separate Account.
STATE REGULATION
The Insurance Company is subject to regulation by the New York State
Superintendent of Insurance ("Superintendent") as well as by the insurance
departments of all the other states and jurisdictions in which it does
business.
The Insurance Company must file with the Superintendent an annual statement
on a form promulgated by the National Association of Insurance Commissioners.
It must also file with New York and other states a separate statement with
respect to any separate accounts that it may maintain, including the Separate
Account. The Insurance Company's books and assets are subject to review and
examination by the Superintendent and the Superintendent's agents at all times,
and a full examination into the affairs of the Insurance Company is made at
least every five years. A full examination of the Insurance Company's
operations may also be conducted periodically by other states.
The laws of New York and of other states in which the Insurance Company is
licensed to transact business provide specifically for regulation and
supervision of the variable annuity activities of life insurance companies.
Included in such regulations are requirements relating to mandatory contract
provisions and approval of contract form. Such state regulation does not
involve any supervision or control over the investment policies of the Separate
Account, or the selection of investments therefor, except for verification that
any such investments are permissible under applicable law.
5
<PAGE>
Generally, the states in which the Insurance Company does business apply the
laws of New York in determining permissible investments for the Insurance
Company.
PERIODIC REPORTS
Prior to a Participant's Annuity Commencement Date, the Participant will be
provided by the Insurance Company, at least quarterly, with a statement as of a
specified date covering the period since the last statement. The statement will
set forth, for the covered period: (1) the Deferred Compensation deposits made
on behalf of the Participant under 457 Contracts, or Contributions made for the
purchase of an annuity under other Contracts, to the Separate and General
Accounts; the date such Deferred Compensation was deducted from the
Participant's salary or Contribution made and the date it was credited to the
Participant's account; (2) the interest accrued on amounts allocated for the
Participant to the General Account; (3) the number and dollar value of
Accumulation Units credited to the Participant in each Fund of the Separate
Account; and (4) the total amounts of all withdrawals and transfers from each
Account and each Fund. Employers have been informed that payment must be
remitted to the Insurance Company within seven days of the date it has been
withheld from the Participant's pay. The statement also will specify the
Participant's Account Balance available to provide a periodic benefit, cash
return, or death benefit with respect to the Participant. The Insurance Company
will transmit to Participants, at least semi-annually, reports showing the
financial condition of the Separate Account, and a schedule of investments held
in each Fund of the Investment Company.
LEGAL PROCEEDINGS
The Insurance Company is engaged in litigation of various kinds which in its
judgment is not of material importance in relation to its total assets. There
are no legal proceedings pending to which the Separate Account is a party.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
the Insurance Company's right to issue the Contracts thereunder, have been
passed upon by Patrick A. Burns, Senior Executive Vice President and General
Counsel of the Insurance Company. Legal matters relating to the Federal
securities laws have been passed upon by the law firm of Graham & James, New
York, New York.
EXPERTS
The financial statements included in this Statement of Additional Information
have been audited by the Insurance Company's independent public accountants,
Arthur Andersen LLP, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
ADDITIONAL INFORMATION
A registration statement has been filed with the Commission under the
Securities Act of 1933, as amended, with respect to the Contracts discussed in
this Statement of Additional Information. Not all of the information set forth
in the registration statement, amendments and exhibits thereto has been
included in this Statement of Additional Information or in the current
Prospectus for the Contracts. Statements contained herein concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of those documents, reference
should be made to the materials filed with the Commission.
FINANCIAL STATEMENTS
The financial statements of the Insurance Company that are included in this
Statement of Additional Information should be considered only as bearing on the
ability of the Insurance Company to meet its obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Separate Account.
To the extent that Participants under the Contracts are participating in the
investment performance of the Separate Account, the amounts of Participants'
Account Balances and annuity payments are affected primarily by the investment
results of the chosen Fund(s) of the Separate Account.
6
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
-----------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment Cor-
poration at market
value
(Cost:
Money Market Fund --
$30,765,611
All America Fund --
$148,302,142
Equity Index Fund --
$2,964,974
Bond Fund --
$27,676,442)
(Notes 1 and 2)........ $30,660,425 $129,822,982 $ 2,944,467 $25,043,339
Due From (To) Mutual of
America General
Account................ (241,823) (128,254) 1,932,018 (881,206)
----------- ------------ ------------ -----------
Net Assets.............. $30,418,602 $129,694,728 $ 4,876,485 $24,162,133
=========== ============ ============ ===========
Unit Value at December
31, 1994 (Note 5)...... $1.72 $3.35 $1.05 $2.28
===== ===== ===== =====
Number of Units Out-
standing at December
31, 1994 (Note 5)...... 17,653,031 38,669,203 4,644,426 10,601,081
=========== ============ ============ ===========
<CAPTION>
MUTUAL OF AMERICA
-----------------------------------------------------
AGGRESSIVE
SHORT-TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment Cor-
poration at market
value
(Cost:
Short-Term Bond Fund --
$1,199,983
Mid-Term Bond Fund --
$1,593,221
Composite Fund --
$219,934,533
Aggressive Equity
Fund -- $7,178,148)
(Notes 1 and 2)........ $ 1,168,235 $ 1,445,497 $206,829,626 $ 7,616,427
Due From (To) Mutual of
America General
Account................ 358 11,441 (328,094) 1,988,003
----------- ------------ ------------ -----------
Net Assets.............. $ 1,168,593 $ 1,456,938 $206,501,532 $ 9,604,430
=========== ============ ============ ===========
Unit Value at December
31, 1994 (Note 5)...... $1.03 $1.01 $2.82 $1.05
===== ===== ===== =====
Number of Units Out-
standing at December
31, 1994 (Note 5)...... 1,131,695 1,444,314 73,238,713 9,144,806
=========== ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
---------------------------------------- ----------- -----------
CAPITAL SOCIALLY
BOND GROWTH INTERNATIONAL GROWTH RESPONSIBLE
FUND FUND FUND FUND FUND
----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder
Portfolios, TCI Growth
Fund and Calvert So-
cially Responsible Se-
ries at market value
(Cost:
Scudder Bond Fund --
$12,460,243
Scudder Capital Growth
Fund -- $120,514,986
Scudder International
Fund -- $86,071,036
TCI Growth Fund --
$53,468,590
Calvert Socially Re-
sponsible
Fund -- $9,730,012)
(Notes 1 and 2)........ $11,603,709 $119,622,498 $92,148,997 $59,592,306 $9,467,464
Due From (To) Mutual of
America General
Account................ (284,342) (515,226) 800,852 122,378 (90,423)
----------- ------------ ----------- ----------- ----------
Net Assets.............. $11,319,367 $119,107,272 $92,949,849 $59,714,684 $9,377,041
=========== ============ =========== =========== ==========
Unit Value at December
31, 1994 (Note 5)...... $9.69 $14.67 $10.80 $9.39 $1.57
===== ====== ====== ===== =====
Number of Units
Outstanding at December
31, 1994 (Note 5)...... 1,168,603 8,120,575 8,610,084 6,361,437 5,986,417
=========== ============ =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
----------------------------------------------------------
MUTUAL OF AMERICA
----------------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 766,369 $ 15,409,542 $ 55,083 $1,679,950
---------- ------------ ------------ ----------
Total Income............ 766,369 15,409,542 55,083 1,679,950
---------- ------------ ------------ ----------
Expenses (Note 3):
Fees................... 398,717 1,674,461 36,481 366,724
Administrative Ex-
penses................ 75,896 89,120 2,516 52,042
---------- ------------ ------------ ----------
Total Expenses.......... 474,613 1,763,581 38,997 418,766
---------- ------------ ------------ ----------
Net Investment Income... 291,756 13,645,961 16,086 1,261,184
---------- ------------ ------------ ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized (loss) on
investments........... (38,466) (567,365) (59,579) (302,472)
Net unrealized
appreciation
(depreciation) of
investments........... 759,856 (12,875,656) 36,617 (1,816,698)
---------- ------------ ------------ ----------
Net Realized and
Unrealized Gain (Loss)
On Investments......... 721,390 (13,443,021) (22,962) (2,119,170)
---------- ------------ ------------ ----------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ $1,013,146 $ 202,940 $ (6,876) $ (857,986)
========== ============ ============ ==========
<CAPTION>
FOR THE PERIOD
MAY 2, 1994
(COMMENCEMENT OF
OPERATIONS) TO
FOR THE YEAR ENDED DECEMBER 31, 1994 DECEMBER 31, 1994
--------------------------------------- -----------------
MUTUAL OF AMERICA
----------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 40,942 $ 60,545 $ 11,236,255 $ 2,376
---------- ------------ ------------ ----------
Total Income............ 40,942 60,545 11,236,255 2,376
---------- ------------ ------------ ----------
Expenses (Note 3):
Fees................... 10,337 16,900 2,867,305 22,262
Administrative Ex-
penses................ 2,034 2,513 235,778 2,203
---------- ------------ ------------ ----------
Total Expenses.......... 12,371 19,413 3,103,083 24,465
---------- ------------ ------------ ----------
Net Investment Income
(Loss)................. 28,571 41,132 8,133,172 (22,089)
---------- ------------ ------------ ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized (loss) on
investments........... (6,494) (50,900) (144,879) (17,738)
Net unrealized
appreciation
(depreciation) of
investments........... (17,177) (58,646) (17,831,209) 438,279
---------- ------------ ------------ ----------
Net Realized and
Unrealized Gain (Loss)
On Investments......... (23,671) (109,546) (17,976,088) 420,541
---------- ------------ ------------ ----------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ $ 4,900 $ (68,414) $ (9,842,916) $ 398,452
========== ============ ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------
SCUDDER TCI CALVERT
---------------------------------------- ----------- -----------
CAPITAL SOCIALLY
BOND GROWTH INTERNATIONAL GROWTH RESPONSIBLE
FUND FUND FUND FUND FUND
----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 1,035,750 $ 10,714,440 $ 507,965 $ 5,943 $ 294,010
----------- ------------ ----------- ----------- ---------
Total Income............ 1,035,750 10,714,440 507,965 5,943 294,010
----------- ------------ ----------- ----------- ---------
Expenses (Note 3):
Fees................... 166,527 1,567,907 1,173,716 672,275 124,687
Administrative Ex-
penses................ 32,651 99,271 33,958 24,118 18,113
----------- ------------ ----------- ----------- ---------
Total Expenses.......... 199,178 1,667,178 1,207,674 696,393 142,800
----------- ------------ ----------- ----------- ---------
Net Investment Income
(Loss)................. 836,572 9,047,262 (699,709) (690,450) 151,210
----------- ------------ ----------- ----------- ---------
Net Realized and
Unrealized Gain (Loss)
On Investments (Note
1):
Net realized gain
(loss) on investments. (105,216) (2,311,123) 861,109 1,389,395 21,357
Net unrealized
(depreciation) of
investments........... (1,416,683) (19,723,530) (2,847,981) (1,785,436) (668,145)
----------- ------------ ----------- ----------- ---------
Net Realized and
Unrealized (Loss) On
Investments............ (1,521,899) (22,034,653) (1,986,872) (396,041) (646,788)
----------- ------------ ----------- ----------- ---------
Net (Decrease) in Net
Assets Resulting from
Operations............. $ (685,327) $(12,987,391) $(2,686,581) $(1,086,491) $(495,578)
=========== ============ =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 5, 1993
(COMMENCEMENT
FOR THE YEARS ENDED DECEMBER 31, OF OPERATIONS) TO
---------------------------------------------------------------------- DECEMBER 31,
1994 1993 1994 1993 1994 1993
----------- ----------- ------------ ----------------- ------------ -----------------
MUTUAL OF AMERICA
----------------------------------------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND EQUITY INDEX FUND
------------------------ ------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income.. $ 291,756 $ 380,945 $ 13,645,961 $ 10,117,358 $ 16,086 $ 20,661
Net realized gain
(loss) on investments. (38,466) (87,565) (567,365) 316,258 (59,579) 17,229
Net unrealized appreci-
ation (depreciation)
of investments........ 759,856 42,789 (12,875,656) 860,147 36,617 (57,124)
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,013,146 336,169 202,940 11,293,763 (6,876) (19,234)
----------- ----------- ------------ ------------ ---------- ----------
From Unit Transactions:
Contributions.......... 6,073,509 7,094,581 19,674,339 19,372,502 1,098,680 347,499
Withdrawals............ (2,623,780) (2,894,422) (8,268,470) (7,889,221) (234,018) (21,525)
Net Transfers.......... (604,009) (5,165,852) (4,505,657) 2,022,063 1,779,248 1,932,711
Return of seed money to
General Account....... -- (167,740) -- (332,154) -- --
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
from unit transactions. 2,845,720 (1,133,433) 6,900,212 13,173,190 2,643,910 2,258,685
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 3,858,866 (797,264) 7,103,152 24,466,953 2,637,034 2,239,451
Net Assets:
Beginning of Period..... 26,559,736 27,357,000 122,591,576 98,124,623 2,239,451 --
----------- ----------- ------------ ------------ ---------- ----------
End of Period........... $30,418,602 $26,559,736 $129,694,728 $122,591,576 $4,876,485 $2,239,451
=========== =========== ============ ============ ========== ==========
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FEBRUARY 5, 1993 FEBRUARY 5, 1993
(COMMENCEMENT FOR THE YEAR (COMMENCEMENT
FOR THE YEARS ENDED DECEMBER 31, OF OPERATIONS) TO ENDED OF OPERATIONS) TO
-------------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993 1994 1993
----------- ----------- ------------ ----------------- ------------ -----------------
MUTUAL OF AMERICA
----------------------------------------------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
------------------------ ------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income.. $ 1,261,184 $ 3,111,000 $ 28,571 $ 6,643 $ 41,132 $ 102,033
Net realized gain
(loss) on investments. (302,472) 141,309 (6,494) 3,465 (50,900) 1,587
Net unrealized appreci-
ation (depreciation)
of investments........ (1,816,698) (728,884) (17,177) (14,571) (58,646) (89,078)
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ (857,986) 2,523,425 4,900 (4,463) (68,414) 14,542
----------- ----------- ------------ ------------ ---------- ----------
From Unit Transactions:
Contributions.......... 4,675,807 6,002,177 270,055 112,665 320,857 57,109
Withdrawals............ (2,006,232) (1,492,917) (36,489) (15,326) (63,445) (1,957)
Net Transfers.......... (6,857,983) 2,769,385 159,174 678,077 (227,052) 1,425,298
Return of seed money to
General Account....... -- (238,091) -- -- -- --
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
from unit transactions. (4,188,408) 7,040,554 392,740 775,416 30,360 1,480,450
----------- ----------- ------------ ------------ ---------- ----------
Net Increase (Decrease)
in Net Assets.......... (5,046,394) 9,563,979 397,640 770,953 (38,054) 1,494,992
Net Assets:
Beginning of Period..... 29,208,527 19,644,548 770,953 -- 1,494,992 --
----------- ----------- ------------ ------------ ---------- ----------
End of Period........... $24,162,133 $29,208,527 $ 1,168,593 $ 770,953 $1,456,938 $1,494,992
=========== =========== ============ ============ ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 2, 1994
(COMMENCEMENT OF
FOR THE YEARS OPERATIONS) TO
ENDED DECEMBER 31, DECEMBER 31,
-------------------------- ----------------
1994 1993 1994
------------ ------------ ----------------
MUTUAL OF AMERICA
--------------------------------------------
AGGRESSIVE
EQUITY
COMPOSITE FUND FUND
-------------------------- ----------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income............ $ 8,133,172 $ 14,342,079 $ (22,089)
Net realized gain (loss) on in-
vestments....................... (144,879) 69,952 (17,738)
Net unrealized appreciation
(depreciation) of investments... (17,831,209) 7,322,442 438,279
------------ ------------ ----------
Net Increase (Decrease) in net
assets resulting from operations. (9,842,916) 21,734,473 398,452
------------ ------------ ----------
From Unit Transactions:
Contributions.................... 34,731,678 33,396,222 830,201
Withdrawals...................... (15,888,891) (12,050,147) (91)
Net Transfers.................... (12,539,959) 37,318,215 8,375,868
Return of seed money to General
Account......................... -- (291,867) --
------------ ------------ ----------
Net Increase (Decrease) from unit
transactions..................... 6,302,828 58,372,423 9,205,978
------------ ------------ ----------
Net Increase (Decrease) in Net As-
sets............................. (3,540,088) 80,106,896 9,604,430
Net Assets:
Beginning of Period............... 210,041,620 129,934,724 --
------------ ------------ ----------
End of Period..................... $206,501,532 $210,041,620 $9,604,430
============ ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
MUTUAL OF AMERICA LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------
SCUDDER
------------------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
------------------------ -------------------------- ------------------------
1994 1993 1994 1993 1994 1993
----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income.. $ 836,572 $ 756,515 $ 9,047,262 $ 585,243 $ (699,709) $ 130,097
Net realized gain
(loss) on investments. (105,216) 107,146 (2,311,123) 274,299 861,109 158,926
Net unrealized
appreciation
(depreciation) of
investments........... (1,416,683) 238,162 (19,723,530) 12,553,300 (2,847,981) 9,414,279
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ (685,327) 1,101,823 (12,987,391) 13,412,842 (2,686,581) 9,703,302
----------- ----------- ------------ ------------ ----------- -----------
From Unit Transactions:
Contributions.......... 2,733,263 3,210,877 26,710,616 19,983,910 17,970,684 7,737,880
Withdrawals............ (1,070,007) (1,044,252) (8,092,050) (4,996,075) (4,975,428) (2,741,131)
Net Transfers.......... (2,832,706) 193,760 5,109,145 29,018,279 22,915,041 26,717,926
Return of seed money to
General Account....... -- (80,483) -- (95,397) -- (84,353)
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit transactions. (1,169,450) 2,279,902 23,727,711 43,910,717 35,910,297 31,630,322
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets.......... (1,854,777) 3,381,725 10,740,320 57,323,559 33,223,716 41,333,624
Net Assets:
Beginning of Year....... 13,174,144 9,792,419 108,366,952 51,043,393 59,726,133 18,392,509
----------- ----------- ------------ ------------ ----------- -----------
End of Year............. $11,319,367 $13,174,144 $119,107,272 $108,366,952 $92,949,849 $59,726,133
=========== =========== ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------
TCI CALVERT
------------------------ ----------------------
SOCIALLY
GROWTH FUND RESPONSIBLE FUND
------------------------ ----------------------
1994 1993 1994 1993
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income....... $ (690,450) $ (462,993) $ 151,210 $ 139,975
Net realized gain on
investments................ 1,389,395 1,262,590 21,357 31,886
Net unrealized appreciation
(depreciation) of
investments................ (1,785,436) 3,680,815 (668,145) 251,726
----------- ----------- ---------- ----------
Net Increase (Decrease) in
net assets resulting from
operations.................. (1,086,491) 4,480,412 (495,578) 423,587
----------- ----------- ---------- ----------
From Unit Transactions:
Contributions............... 12,706,848 12,935,494 2,861,238 2,658,831
Withdrawals................. (3,670,340) (4,050,835) (602,657) (352,120)
Net Transfers............... (5,384,026) (2,658,273) (834,622) 1,558,486
Return of seed money to
General Account............ -- (93,250) -- (61,306)
----------- ----------- ---------- ----------
Net Increase from unit
transactions................ 3,652,482 6,133,136 1,423,959 3,803,891
----------- ----------- ---------- ----------
Net Increase in Net Assets... 2,565,991 10,613,548 928,381 4,227,478
Net Assets:
Beginning of Year............ 57,148,693 46,535,145 8,448,660 4,221,182
----------- ----------- ---------- ----------
End of Year.................. $59,714,684 $57,148,693 $9,377,041 $8,448,660
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Separate Account No. 2 of Mutual of America Life Insurance Company ("the
Company") was established in conformity with New York Insurance Law and
commenced operations on June 4, 1984. On October 31, 1986, Separate Account No.
2 was reorganized into a unit investment trust consisting of four Funds: the
Money Market Fund, the All America Fund (formerly the Stock Fund), the Bond
Fund and the Composite Fund. These Funds invest in corresponding Funds of
Mutual of America Investment Corporation (the "Investment Company"). Prior to
May 2, 1994, the All America Fund was known as the Stock Fund and had different
investment objectives and no sub-advisors.
On January 3, 1989, the following Funds became available to Separate Account
No. 2 as investment options: Scudder Bond, Scudder Capital Growth, Scudder
International and TCI Growth. The Scudder Funds invest in corresponding
Portfolios of Scudder Variable Life Investment Fund ("Scudder"). The TCI Fund
invests in a corresponding Fund of TCI Portfolios Inc. ("TCI"). Effective May
13, 1991, the Calvert Socially Responsible Fund became available as an
investment option. The Calvert Socially Responsible Fund invests in a
corresponding Fund of the Calvert Socially Responsible Series of Acacia Capital
Corporation ("Calvert").
On February 5, 1993 the following Funds became available to Separate Account
No. 2 as investment options: Mutual of America Equity Index, Short-Term Bond
and Mid-Term Bond Funds. On May 2, 1994 the Mutual of America Aggressive Equity
Fund became available as an investment option. These Funds invest in
corresponding Funds of the Investment Company.
Separate Account No. 2 was formed by the Company to support the operations of
the Company's group and individual variable accumulation annuity contracts
("Contracts"). The assets of Separate Account No. 2 are the property of the
Company. The portion of Separate Account No. 2's assets applicable to the
Contracts will not be charged with liabilities arising out of any other
business the Company may conduct.
The significant accounting policies of Separate Account No. 2 are as follows:
Investment Valuation -- Investments are made in shares of the Investment
Company, Scudder, TCI or Calvert and are valued at the reported net asset
values of the respective Funds, Portfolios or Series.
Investment Transactions -- Investment transactions are recorded on the trade
date. Realized gains and losses on sales of investments are determined based on
the average cost of the investment sold.
Federal Income Taxes -- Separate Account No. 2 and its operations are treated
as part of the Company which is exempt from federal income taxes under Section
501(c)(4) of the Internal Revenue Code.
2. INVESTMENTS
The number of shares owned by Separate Account No. 2 and the respective net
asset values per share at December 31, 1994 of the respective Funds, Portfolios
and Series of the Investment Company, Scudder, TCI and Calvert are as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
----------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................. 25,875,359 $1.19
All America Fund.................................. 80,471,603 1.61
Equity Index Fund................................. 2,889,109 1.02
Bond Fund......................................... 19,692,278 1.27
Short-Term Bond Fund.............................. 1,167,133 1.00
Mid-Term Bond Fund................................ 1,582,615 .91
Composite Fund.................................... 131,836,275 1.57
Aggressive Equity Fund............................ 7,239,048 1.05
Scudder Portfolios:
Bond Portfolio.................................... 1,790,696 6.48
Capital Growth Portfolio.......................... 9,781,071 12.23
International Portfolio........................... 8,620,112 10.69
TCI Growth Fund.................................... 6,470,391 9.21
Calvert Socially Responsible Series................ 6,570,065 1.44
</TABLE>
14
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. EXPENSES
Administrative Charges -- In connection with its administrative functions,
the Company deducts daily, at an annual rate of .40% (.65% before 8/2/94 and
.30% before 2/5/93), an amount from the value of the net assets of each Fund
for the Mutual of America Money Market Fund, All America Fund, Equity Index
Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund, Composite Fund,
Aggressive Equity Fund, Scudder Bond Fund, Scudder Capital Growth Fund, Scudder
International Fund, Calvert Socially Responsible Fund and .20% (.45% before
8/2/94 and .10% before 2/5/93)for the TCI Growth Fund.
In addition, a deduction of up to $2.00 is made at the end of each month from
a participant's account, except that such charge shall not exceed 1/12 of 1% of
the balance in such account in any month.
Distribution Expense Charge -- As principal underwriter, the Company performs
all distribution and sales functions and bears all distribution and sales
expenses relative to the Contracts. For providing these services, the Company
deducts daily an amount from the value of the net assets of each Fund at an
annual rate of .35% to cover distribution expenses.
Mortality and Expense Risk Charge -- The Company assumes the risk to make
annuity payments in accordance with annuity tables provided in the Contracts
regardless of how long a participant lives and also assumes certain expense
risks associated with such annuity payments. For assuming this risk, the
Company deducts daily an amount from the value of the net assets of each Fund
at an annual rate of .50%. (.35% before November 22, 1993)
4. DIVIDENDS
On September 15, 1994 and December 30, 1994 dividend distributions were
declared by the Investment Company to shareholders of record on September 15,
and December 29. These dividends were paid on September 15 and December 30,
respectively. The combined amount of these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund............................................ $ 766,369
All America Fund............................................. 15,409,542
Equity Index Fund............................................ 55,083
Bond Fund.................................................... 1,679,950
Short-Term Bond Fund......................................... 40,942
Mid-Term Bond Fund........................................... 60,545
Composite Fund............................................... 11,236,255
Aggressive Equity Fund....................................... 2,376
</TABLE>
On January 27, 1994, February 24, 1994, April 28, 1994, July 27, 1994 and
October 27, 1994, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $1,035,750.
On January 27, 1994, February 24, 1994 and April 28, 1994, July 27, 1994 and
October 27, 1994, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $10,714,440.
On February 24, 1994, a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $507,965.
On April 9, 1994, a dividend was paid by the TCI Growth Fund. The amount of
the dividend was $5,943.
On December 30, 1994, a dividend was paid by the Calvert Socially Responsible
Series. The amount of the dividend was $294,010.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding throughout each
of the five years ended December 31, 1994. Mutual of America Equity Index,
Short-Term Bond and Mid-Term Bond Funds are shown for the year ended December
31, 1994 and for the period February 5, 1993 (commencement of operations) to
December 31, 1993. Mutual of America Aggressive Equity Fund is shown for the
period May 2, 1994 (commencement of operations) to December 31, 1994. Calvert
is shown for the three years ended December 31, 1994 and for the period May 13,
1991 (commencement of operations) to December 31, 1991.
15
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
MUTUAL OF AMERICA MONEY MARKET FUND
---------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.......... $1.68 $1.65 $1.62 $1.54 $1.44
======= ======= ======= ======= =======
Unit value, end of year................ $1.72 $1.68 $1.65 $1.62 $1.54
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year.................................. 17,653 15,815 16,545 15,656 13,972
======= ======= ======= ======= =======
<CAPTION>
MUTUAL OF AMERICA ALL AMERICA FUND
---------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.......... $3.36 $3.03 $2.97 $2.41 $2.47
======= ======= ======= ======= =======
Unit value, end of year................ $3.35 $3.36 $3.03 $2.97 $2.41
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year.................................. 38,669 36,510 32,352 26,173 20,973
======= ======= ======= ======= =======
<CAPTION>
MUTUAL OF AMERICA BOND FUND
---------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.......... $2.39 $2.13 $1.99 $1.73 $1.67
======= ======= ======= ======= =======
Unit value, end of year................ $2.28 $2.39 $2.13 $1.99 $1.73
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year.................................. 10,601 12,244 9,203 6,152 5,235
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA MUTUAL OF AMERICA MUTUAL OF AMERICA MUTUAL OF AMERICA
EQUITY SHORT-TERM MID-TERM AGGRESSIVE
INDEX FUND BOND FUND BOND FUND EQUITY FUND
----------------- ----------------- ----------------- -----------------
1994 1993 1994 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value beginning of
period................. $ 1.05 $ 1.00 $ 1.03 $ 1.00 $ 1.06 $ 1.00 $1.00
======== ======== ======== ======== ======== ======== =====
Unit value, end of peri-
od..................... $ 1.05 $ 1.05 $ 1.03 $ 1.03 $ 1.01 $ 1.06 $1.05
======== ======== ======== ======== ======== ======== =====
Thousands of units out-
standing, end of peri-
od..................... 4,644 2,135 1,132 747 1,444 1,411 9,145
======== ======== ======== ======== ======== ======== =====
</TABLE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA COMPOSITE FUND
----------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $2.95 $2.55 $2.43 $2.08 $2.04
====== ====== ====== ====== ======
Unit value, end of year. $2.82 $2.95 $2.55 $2.43 $2.08
====== ====== ====== ====== ======
Thousands of units out-
standing, end of year.. 73,239 71,215 50,944 43,115 37,461
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND
------------------------------- ----------------------------------
1994 1993 1992 1991 1990 1994 1993 1992 1991 1990
------ ------ ----- ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $10.32 $ 9.30 $8.78 $7.54 $7.05 $16.46 $13.80 $13.09 $ 9.48 $10.35
====== ====== ===== ===== ===== ====== ====== ====== ====== ======
Unit value, end of year. $ 9.69 $10.32 $9.30 $8.78 $7.54 $14.67 $16.46 $13.80 $13.09 $ 9.48
====== ====== ===== ===== ===== ====== ====== ====== ====== ======
Thousands of units out-
standing, end of year.. 1,169 1,277 1,053 600 354 8,121 6,582 3,698 2,138 1,103
====== ====== ===== ===== ===== ====== ====== ====== ====== ======
</TABLE>
16
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SCUDDER TCI
INTERNATIONAL FUND GROWTH FUND
------------------------------- -----------------------------
1994 1993 1992 1991 1990 1994 1993 1992 1991 1990
------ ------ ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $11.06 $ 8.13 $8.48 $7.68 $8.41 $9.61 $8.81 $9.01 $6.40 $6.53
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
Unit value, end of year. $10.80 $11.06 $8.13 $8.48 $7.68 $9.39 $9.61 $8.81 $9.01 $6.40
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
Thousands of units out-
standing,
end of year............ 8,610 5,400 2,262 1,849 1,644 6,361 5,946 5,280 3,056 1,518
====== ====== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CALVERT
SOCIALLY RESPONSIBLE FUND
---------------------------
1994 1993 1992 1991
------ ------ ------ ------
<S> <C> <C> <C> <C>
Unit value, beginning of year....................... $ 1.64 $ 1.54 $1.44 $1.32
====== ====== ====== ======
Unit value, end of year............................. $ 1.57 $ 1.64 $1.54 $1.44
====== ====== ====== ======
Thousands of units outstanding, end of year......... 5,986 5,151 2,742 678
====== ====== ====== ======
</TABLE>
17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mutual of America Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of
Mutual of America Separate Account No. 2 as of December 31, 1994, and the
related statement of operations for the periods then ended and the statements
of changes in net assets and financial highlights for the periods in the three
years ended December 31, 1994. These financial statements and financial
highlights are the responsibility of the Separate Account's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights of Mutual of
America Separate Account No. 2 for each of the periods in the two years ended
December 31, 1991, were audited by other auditors whose report dated February
19, 1992 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Mutual of America Separate Account No. 2 as of December 31, 1994, and the
results of its operations for the periods then ended and the changes in its net
assets and financial highlights for the periods in the three years ended
December 31, 1994 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 22, 1995
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mutual of America Life Insurance Company:
We have audited the accompanying statements of financial condition of Mutual
of America Life Insurance Company as of December 31, 1994 and 1993, and the
related statements of operations and surplus and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mutual of America Life
Insurance Company as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 20, 1995
19
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
ASSETS: -------------- --------------
GENERAL ACCOUNT ASSETS:
<S> <C> <C>
Bonds and notes (Notes 2 and 5).................. $4,027,388,054 $3,946,478,468
Common and preferred stock....................... 57,953,336 40,375,038
Cash and short-term investments.................. 32,178,425 99,006,162
Investment in subsidiaries (Note 9).............. 71,082,561 75,345,676
Guaranteed funds transferable (Note 3)........... 154,989,401 166,293,508
Mortgage loans................................... 60,144,482 59,689,267
Real estate...................................... 260,640,755 187,959,207
Policy loans..................................... 65,442,488 57,743,704
Investment income accrued........................ 73,967,565 69,267,695
Receivables...................................... 7,514,186 28,971,697
Due from affiliates.............................. 6,201,329 222,325
Other assets..................................... 12,887,323 5,621,828
-------------- --------------
Total general account assets.................... 4,830,389,905 4,736,974,575
SEPARATE ACCOUNT ASSETS........................... 1,625,383,655 1,539,538,962
-------------- --------------
TOTAL ASSETS...................................... $6,455,773,560 $6,276,513,537
============== ==============
LIABILITIES AND SURPLUS:
GENERAL ACCOUNT LIABILITIES:
Insurance and annuity reserves................... $3,988,030,615 $3,873,131,011
Other contract liabilities and reserves.......... 1,856,480 1,060,838
Notes payable (Note 5)........................... 136,993,262 136,995,244
Interest maintenance reserve..................... 244,579,848 272,429,475
Other liabilities................................ 34,132,131 53,537,561
-------------- --------------
Total general account liabilities............... 4,405,592,336 4,337,154,129
SEPARATE ACCOUNT RESERVES AND OTHER LIABILITIES... 1,615,365,728 1,527,383,961
-------------- --------------
Total liabilities............................... 6,020,958,064 5,864,538,090
-------------- --------------
ASSET VALUATION RESERVE........................... 71,367,533 73,789,229
-------------- --------------
SURPLUS:
Assigned surplus................................. 1,150,000 1,150,000
Unassigned surplus............................... 362,297,963 337,036,218
-------------- --------------
Total surplus................................... 363,447,963 338,186,218
-------------- --------------
TOTAL LIABILITIES AND SURPLUS..................... $6,455,773,560 $6,276,513,537
============== ==============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
-------------- ------------
Income:
<S> <C> <C>
Premiums, annuity considerations and deposits... $ 628,873,707 $542,120,200
Net investment income (Notes 2 and 3)........... 386,148,078 316,762,692
Other income.................................... 1,070,651 640,495
-------------- ------------
Total income................................... 1,016,092,436 859,523,387
-------------- ------------
Deductions:
Increase in insurance and annuity reserves (Note
3).............................................. 161,371,093 9,685,185
Annuity and surrender benefits.................. 593,701,138 594,229,275
Net transfers to separate accounts.............. 117,196,221 130,595,460
Operating expenses.............................. 93,243,766 94,852,575
-------------- ------------
Total deductions............................... 965,512,218 829,362,495
-------------- ------------
Net gain from operations....................... 50,580,218 30,160,892
Federal income tax benefit....................... 32,513 --
Net realized capital gains....................... 594,478 3,018,007
-------------- ------------
Net income..................................... 51,207,209 33,178,899
Surplus Transactions:
Change in liability for reserve strengthing
(Note 1)........................................ (17,259,176) (8,893,830)
Change in non-admitted assets................... (5,483,172) 5,989,029
Net unrealized capital gains (losses)........... (5,306,798) 5,158,273
Change in asset valuation reserve (Note 1)...... 2,421,696 (37,060,697)
Other, net...................................... (318,014) (3,365,804)
-------------- ------------
Net change in surplus.......................... 25,261,745 (4,994,130)
SURPLUS, at beginning of year.................... 338,186,218 343,180,348
-------------- ------------
SURPLUS, at end of year.......................... $ 363,447,963 $338,186,218
============== ============
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
CASH PROVIDED:
Premium and annuity funds received.............. $ 628,873,707 $ 542,120,200
Net investment income received.................. 313,964,796 321,888,618
Other, net...................................... 1,070,651 640,495
-------------- --------------
Total receipts................................ 943,909,154 864,649,313
-------------- --------------
Benefits paid................................... 592,763,369 594,015,982
Insurance and operating expenses paid........... 100,452,433 91,293,396
Net transfers to separate accounts.............. 118,133,166 133,094,445
-------------- --------------
Total payments................................ 811,348,968 818,403,823
-------------- --------------
Net cash from operations...................... 132,560,186 46,245,490
Proceeds from long-term investments sold,
matured or repaid............................... 977,771,330 5,076,362,353
Other, net...................................... 38,170,912 36,417,569
-------------- --------------
Total cash provided............................. 1,148,502,428 5,159,025,412
-------------- --------------
CASH APPLIED:
Cost of long-term investments acquired.......... 1,170,968,156 5,038,630,808
Other, net...................................... 44,362,009 42,586,920
-------------- --------------
Total cash applied............................ 1,215,330,165 5,081,217,728
-------------- --------------
Net change in cash and short-term investments. (66,827,737) 77,807,684
CASH AND SHORT-TERM INVESTMENTS:
Beginning of year............................... 99,006,162 21,198,478
-------------- --------------
End of year..................................... $ 32,178,425 $ 99,006,162
============== ==============
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are prepared in accordance with
accounting practices prescribed or permitted by the State of New York Insurance
Department. Such statutory practices are considered to be generally accepted
accounting principles ("GAAP") for mutual life insurance companies. The ability
of these insurance entities to fulfill its obligations to contract holders and
policyholders is of primary concern to insurance regulatory authorities. As
such, the financial statements are oriented to the insuring public.
The Financial Accounting Standards Board ("FASB") issued an interpretation
declaring that financial statements of mutual life insurance companies, which
are prepared on the basis of statutory accounting principles, will no longer be
considered to be in conformity with GAAP. This interpretation applies to
financial statements issued for fiscal years beginning after December 15, 1995.
Further, this interpretation requires that mutual life insurers whose financial
statements purport to be in conformity with GAAP follow all applicable guidance
from which they are not specifically exempt. In addition, certain accounting
principles for mutual life insurance companies, which will ultimately be
required to be in compliance with GAAP, have been determined by the FASB and
the American Institute of Certified Public Accountants. The Company has not yet
quantified the financial impact of this interpretation.
Mutual of America Life Insurance Company (the "Company") has also issued
financial statements on a consolidated basis with its wholly owned
subsidiaries. The issuance of such consolidated financial statements was
approved by the State of New York Insurance Department. Accounting policies
applied in the preparation and presentation of the financial statements follow.
Disclosure about Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 ("SFAS 107") requires all
entities to disclose the fair value, where practicable, of its financial
instruments. SFAS 107 does not require disclosure of certain financial
instruments such as insurance contracts other than financial guarantees and
investment contracts. Fair value estimates, methods and significant assumptions
are disclosed in each of the relevant footnotes which follow.
Asset Valuations
Investment valuations are prescribed by the National Association of Insurance
Commissioners ("NAIC"). Bonds qualifying for amortization are stated at
amortized cost; short-term investments in good standing are stated at cost.
Fair value for these securities ($3.8 billion in 1994 and $4.0 billion in 1993)
is determined by reference to market prices quoted by the NAIC. If quoted
market prices are not available, fair value is determined using quoted prices
for similar securities. All other bonds and short-term notes are stated at
market value which approximates fair value. Common stocks and preferred stock
in good standing are stated at market value, which approximates fair value.
Market value is determined by reference to valuations quoted by the NAIC.
Unrealized gains and losses are applied directly to unassigned surplus.
Mortgage loans are carried at amortized indebtedness. Fair value for these
loans (approximately $63.6 million in 1994 and $61.4 million in 1993) is
determined by discounting the expected future cash flows using the current rate
at which similar loans would be made to borrowers with similar credit ratings
and remaining maturities. Impairments of individual assets that are considered
other than temporary are recognized when incurred.
Real estate investments consist principally of a company-occupied property
and a property under renovation (refer to Note 4). The property under
renovation is stated at cost (including capital improvements) less accumulated
depreciation, or fair value, whichever is lower. The company-occupied property
is stated at cost (including capital improvements) and is depreciated on a
straight-line basis.
Policy loans are stated at the unpaid balance of the loan. The majority of
such loans are issued with variable interest rates which are periodically
adjusted based upon changes in the rates credited to these policies, and
therefore are considered to be stated at fair value.
Certain other assets, such as furniture and fixtures and prepaid expenses,
are excluded from the balance sheet ("non-admitted assets"). Such assets
totaled $40.8 million and $35.4 million at December 31, 1994 and 1993,
respectively.
23
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
Interest Maintenance and Asset Valuation Reserves
Realized gains and losses, net of applicable taxes, arising from changes in
interest rates are accumulated in the Interest Maintenance Reserve ("IMR") and
are amortized into investment income over the estimated remaining life of the
investment sold. All other realized gains and losses are reported in the
Statements of Operations and Surplus.
An Asset Valuation Reserve ("AVR"), applying to the specific risk
characteristics of all invested asset categories excluding cash, policy loans
and investment income accrued has been established based on a statutory
formula. Realized and unrealized gains and losses arising from changes in the
creditworthiness of the borrower are included in the appropriate subcomponent
of the AVR. Changes in the AVR are applied directly to unassigned surplus.
During 1993, the Company made a voluntary addition of $30.5 million to its AVR
to increase it to the maximum value required under the statutory formula.
Guaranteed Funds Transferable
Guaranteed funds transferable consist of funds held by a former reinsurer and
are stated at the total principal amount of future guaranteed transfers to the
Company. Fair value of this fund (approximately $120.2 million in 1994 and
$131.2 million in 1993) is determined by discounting future guaranteed
principal and interest transfers at a market rate of return.
Subsidiary Operations
Investments in subsidiaries are stated at equity in net assets. Changes in
net assets, excluding additional amounts invested, are included in unrealized
capital gains or losses.
Separate Account Operations
Certain annuity considerations may be invested at the participant's
discretion in separate accounts; either a multifund account, which is managed
by the Company, or certain other funds which are managed by outside investment
advisors. All of the funds investment experience is allocated to participants.
Investments held in the separate accounts are stated at market value, which is
equal to fair value. Participants corresponding equity in the separate accounts
is reported as liabilities in the accompanying statements. Operating results of
the separate accounts are combined with the Company's other business in the
accompanying statements. Net operating gains and net realized and unrealized
capital gains in the separate accounts are offset by an increase to reserve
liabilities in the respective separate accounts.
Insurance and Annuity Reserves
Reserves for annuity contracts are computed on the net single premium method
and represent the estimated present value of future retirement benefits. These
reserves are based on mortality and interest rate assumptions (ranging
primarily from 5.0% to 9.25%) which meet statutory requirements. Reserves for
contractual funds not yet used for the purchase of annuities are accumulated at
various interest rates which, during 1994 and 1993 ranged from 4.5% to 6.25%
and 4.5% to 6.0%, respectively, and are deemed sufficient to provide for
contractual surrender values of these funds. Reserves for life and disability
insurance are based on mortality, morbidity and interest rate assumptions which
meet statutory requirements.
Contractual funds not yet used to purchase retirement annuities and other
deposit liabilities are stated at their surrender value, which approximates the
fair value ($4.8 billion and $4.7 billion) at December 31, 1994 and 1993,
respectively. The fair value of annuity contracts (approximately $.7 billion
and $.8 billion) at December 31, 1994 and 1993, respectively was determined by
discounting expected future retirement benefits using current mortality tables
and interest rates based on the duration of the expected future benefits. A
weighted average rate of 8.35% and 6.32% was used at December 31,1994 and 1993,
respectively.
In addition, during 1994 and 1993, the Company changed the interest rates
used to value certain annuity and deposit type contracts issued prior to
January 1, 1994 and 1993, respectively. The effect of such changes was to
increase policyholder liabilities above the minimum statutory requirements and
to reduce surplus by $17.3 million and $8.9 million at December 31, 1994 and
1993, respectively.
24
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
Premiums, Annuity Considerations, Investment Income and Expenses
Insurance premiums and annuity considerations derived from defined
contribution plans are recognized as income when due. Voluntary savings-type
and defined benefit considerations and other deposits are recognized as income
when received.
Investment income is reported as earned and is presented net of related
investment expenses. Operating expenses, including acquisition costs for new
business and income taxes, are charged to operations as incurred.
2. DEBT SECURITIES HELD AS ASSETS
The statement values and estimated market values of investments in debt
securities at December 31, 1994 are shown below. Excluding U.S. Government and
government agency investments, the Company is not exposed to any significant
concentration of credit risk.
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUES GAINS LOSSES VALUES
- ----------------------------------- ---------- ---------- ---------- ----------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies......... $1,677,127 $ -- $ 65,627 $1,611,500
Debt securities issued by foreign
governments........................ 163,225 2,835 14,991 151,069
Corporate securities............... 2,203,812 988 148,107 2,056,693
Other debt securities.............. 18,452 -- 612 17,840
---------- ------ -------- ----------
Total.......................... $4,062,616 $3,823 $229,337 $3,837,102
========== ====== ======== ==========
</TABLE>
Short-term securities with a statement value and estimated market value of
$35.2 million at December 31, 1994 are included in the above table. As of
December 31, 1994, the Company has $2.9 million (par value $2.9 million) of its
long-term debt securities on deposit with various state regulatory agencies.
The statement values and estimated market values of investments in debt
securities at December 31, 1994, are shown below. Debt securities are stated at
contractual maturity with the exception of mortgage-backed securities which are
stated at expected maturity. Expected maturities may differ from contractual
maturities because borrowers may have the right to prepay obligations with or
without prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
STATEMENT MARKET
VALUES VALUES
---------- ----------
(000'S OMITTED)
<S> <C> <C>
Due in one year or less............................ $ 171,701 $ 172,220
Due after one year through five years.............. 909,970 880,529
Due after five years through ten years............. 1,021,087 980,601
Due after ten years................................ 1,959,858 1,803,752
---------- ----------
Total.......................................... $4,062,616 $3,837,102
========== ==========
</TABLE>
Proceeds from the sale of investment securities during 1994 were $773.6
million. Gross gains of $10.4 million and gross losses of $7.4 million were
realized on these sales of which $2.4 million of gains was accumulated in the
IMR. Such amounts, net of applicable taxes, will be amortized into investment
income over the estimated remaining life of the investment sold. During 1994,
approximately $30.2 million was amortized and included in net investment
income.
25
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
The statement values and estimated market values of investments in debt
securities at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUES GAINS LOSSES VALUES
- --------------------------------- ----------- ---------- ---------- -----------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies....... $ 1,446,541 $ 720 $ 6,042 $ 1,441,219
Debt securities issued by foreign
governments...................... 8,911 160 -- 9,071
Other debt securities............ 2,430,977 3,506 18,179 2,416,304
Corporate securities............. 149,233 2,298 1,781 149,750
----------- ------ ------- -----------
Total............................ $ 4,035,662 $6,684 $26,002 $ 4,016,344
=========== ====== ======= ===========
</TABLE>
Short-term securities with a statement value and estimated market value of
$89.2 million at December 31, 1993 are included in the above table. As of
December 31, 1993, the Company had $2.9 million (par value $2.9 million) of its
long-term debt securities portfolio on deposit with various state regulatory
agencies.
Proceeds from the sale of investment securities during 1993 were $4.8
billion. Gross gains of $244.8 million and gross losses of $1.6 million were
realized on those sales of which $239.9 million of gains was accumulated in the
IMR. Such amounts, net of applicable taxes, will be amortized into net
investment income over the estimated remaining life of the investment sold.
During 1993, approximately $18.7 million was amortized and included in net
investment income.
3. REINSURANCE AND RELATED TRANSACTIONS
In 1980, the Company terminated a reinsurance arrangement and assumed direct
ownership of funds held by the reinsurer and direct liability for the
contractual obligations of the reinsurer. Such amounts are reported as
guaranteed funds transferable and as insurance and annuity reserves in the
statements of financial condition.
The guaranteed funds are transferable to the Company over time and are stated
at the total principal amount of future guaranteed transfers to Mutual of
America as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(000'S OMITTED)
<S> <C> <C>
Certain sums, at 6% guaranteed interest, transferable
through 1995.......................................... $ 6,755 $ 8,790
-------- --------
Remaining sums, at 3 1/8% guaranteed interest,
transferable through 2030............................. 148,234 167,504
-------- --------
Total.................................................. $154,989 $166,294
======== ========
</TABLE>
The guaranteed interest and other allocated investment earnings on the funds
held by the reinsurer, amounting to $16.6 million in 1994 and $15.6 million in
1993, are included in net investment income. Such amounts include participating
dividends from a contingency fund held by the reinsurer (but not an asset of
the Company) of $4.2 million in 1994 and $4.4 million in 1993.
The Company has entered into a bulk coinsurance agreement with The American
Life Insurance Company of New York, a wholly owned stock life insurance
subsidiary, covering primarily its nonpension insurance business (group
insurance coverage and certain annuity business) deemed to be taxable. As of
December 31, 1994 and 1993, total reserve liabilities reinsured under this
agreement were as follows: life and annuities of $682.1 million and $651.1
million, funding agreements of $68.0 million and $63.6 million and other
reserves of $3.8 million and $3.2 million, respectively. As consideration for
the reserves ceded, the Company ceded premiums and annuity considerations of
$64.2 million and $88.4 million in 1994 and 1993, respectively.
26
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
4. BUILDING AND IMPROVEMENTS
In October 1992, the Company purchased an office building for its new
corporate headquarters. The purchase price of the building was fully financed.
The property requires that reconstruction work be completed prior to occupancy,
which is expected to occur in mid-1995. At December 31, 1994, the Company had
renovation commitments totaling approximately $16.9 million in connection with
this project. During the reconstruction period, interest costs on the debt
incurred to acquire the building will be deferred and capitalized as a
construction cost as permitted by the State of New York Insurance Department.
In 1994 and 1993, interest costs of $9.3 million for each year were
capitalized.
5. LONG-TERM DEBT
In connection with the acquisition of its new home office, the Company
obtained a $135.0 million, seven-year, 6.91% fixed rate secured term note. Fair
value of the note was approximately $136.5 million and $146.6 million at
December 31, 1994 and 1993, respectively. The note matures and is payable in
full on October 15, 1999 and is not redeemable prior to that date. Interest on
the note is payable semiannually in April and October. The terms of the note
require that the Company pledge collateral, to be maintained in a trust account
with the lender, consisting of securities issued by the United States
Government or its agencies. The aggregate book and market values of the
collateral must be maintained at a level greater than or equal to 100% and
110%, respectively, of the outstanding balance of the note. At December 31,
securities with a book and market value of approximately $152.6 million and
$132.6 million in 1994 and $153.4 million and $151.6 million in 1993,
respectively, were pledged as collateral. In early 1995, the Company deposited
additional securities with the lender with market values sufficient to meet the
terms of the loan agreement.
6. PENSION PLAN AND POSTRETIREMENT BENEFITS
The Company has a qualified, noncontributory defined benefit pension plan
covering all employees of the Company and its subsidiaries. The Company's
funding policy is to contribute annually, at a minimum, the amount necessary to
satisfy the funding requirements under the Employee Retirement Income Security
Act of 1974 ("ERISA"). The accounting for such pension plan is in accordance
with the provisions of Statement of Financial Accounting Standards No. 87,
"Employer's Accounting for Pensions." Pension expense for 1994 and 1993 was
$2.9 million and $2.4 million, respectively, of which $593 thousand and $259
thousand in 1994 and 1993, respectively, were allocated to the Company's wholly
owned subsidiaries. The components of net pension expense are as follows:
<TABLE>
<CAPTION>
1994 1993
------- -------
(000'S OMITTED)
<S> <C> <C>
Service Cost........................................... $ 2,531 $ 2,279
Interest cost on projected benefit obligation.......... 3,077 2,930
Return on plan assets.................................. 468 (4,242)
Asset (gain) loss deferred............................. (3,420) 1,436
Amortization of initial net asset...................... (211) (211)
Amortization of unrecognized loss...................... 367 113
Amortization of prior service cost..................... 122 122
------- -------
Net pension expense.................................. $ 2,934 $ 2,427
======= =======
The assumptions used to calculate the net pension expense were:
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Expected long-term rate of return on assets............ 8.75% 9.00%
Discount rate.......................................... 8.75% 9.00%
Rate of increase in compensation levels................ 6.00% 6.00%
</TABLE>
27
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
The status of the pension plan at December 31 is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(000'S OMITTED)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested bene-
fits of $25,147 in 1994 and $26,475 in 1993.......... $(25,322) $(26,608)
========= =========
Projected benefit obligation.......................... $ (31,265) $ (33,463)
Plan assets at fair value............................. 28,929 33,737
--------- ---------
Plan assets in excess (deficient) of projected benefit
obligation........................................... (2,336) 274
Remaining unrecognized initial net asset.............. (1,474) (1,685)
Unrecognized net (gain) loss from past experience dif-
ferent from that assumed............................. 7,877 1,077
Unrecognized prior service cost....................... -- 106
Prepaid pension cost, beginning of year............... 7,572 7,800
--------- ---------
Prepaid pension cost, end of year..................... $ 11,639 $ 7,572
========= =========
</TABLE>
For financial reporting purposes, the prepaid pension cost at December 31,
1994 and 1993 has been classified as a non-admitted asset.
The Company's pension plan assets consist of an interest in the Company's
general account, participation in one of the Company's separate accounts
(consisting primarily of equity and debt securities) and participation in
certain other funds managed by outside investment advisors.
Benefit payments from the plan made on behalf of retirees were approximately
$11.1 million in 1994 and $3.7 million in 1993. Periodic annuity benefits are
covered by annuities purchased by the plan from the Company. During 1994 and
1993, the Company made contributions to the plan of $7.0 million and $2.2
million, respectively.
In addition to the above noncontributory plan, all employees may participate
in a 401(k) savings plan under which the Company matches half of the employees'
basic contribution up to 6% of salary. The cost of this plan was approximately
$1.2 million in both 1994 and 1993.
In addition to the Company's defined benefit pension plan, the Company has
two defined benefit postretirement plans covering substantially all salaried
employees of the Company and its subsidiaries. Employees may become eligible
for such benefits upon attainment of retirement age while in the employ of the
Company and satisfaction of service requirements. One plan provides medical and
dental benefits, and the second plan provides life insurance benefits. The
postretirement plans are contributory for those individuals who retire with
less than twenty years of eligible service, with retiree contributions adjusted
annually, and contain other cost-sharing features, such as deductibles and
coinsurance. The accounting for the medical and dental plans anticipates future
cost-sharing changes to the written plan that are consistent with the Company's
expressed intent to increase the retiree contribution rate annually for the
expected general inflation rate for the year.
The accounting for such postretirement benefits is in accordance with
Statement of Financial Accounting Standards No. 106, "Employer's Accounting for
Postretirement Benefits Other Than Pensions."
The components of net postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
(000'S
OMITTED)
<S> <C> <C>
Service cost.................................................. $ 463 $ 275
Interest cost on projected benefit obligation................. 1,038 799
------ ------
Net postretirement benefit cost............................. $1,501 $1,074
====== ======
</TABLE>
28
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
During 1994 and 1993, $218 thousand and $161 thousand, respectively, of
postretirement benefit expense were allocated to the Company's wholly owned
subsidiaries.
The following table shows the plan's combined status reconciled with the
amounts reported in the Company's statement of financial condition:
<TABLE>
<CAPTION>
1994 1993
------ ------
(000'S
OMITTED)
<S> <C> <C>
Accumulated postretirement benefit obligation ("APBO"):
Retirees............................................... $3,969 $2,525
Fully eligible active plan participants................ 2,989 4,319
Other active plan participants......................... 4,438 2,067
------ ------
Total APBO............................................ 11,396 8,911
Plan assets at fair value............................... -- --
------ ------
APBO in excess of plan assets........................... 11,396 8,911
Unrecognized net loss................................... (3,230) (1,737)
------ ------
Accrued postretirement obligation....................... $8,166 $7,174
====== ======
</TABLE>
The weighted average annual assumed rate of increase in the per capita cost
of covered benefit (i.e., health care cost trend rate) for the medical plan is
approximately 11.5% for 1994. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement obligation for the plan as of December
31, 1994 by $1.2 million and the aggregate of the service and interest cost
components of the net periodic benefit cost for 1994 by $.2 million.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.75% at December 31, 1994 and 1993.
7. COMMITMENTS AND CONTINGENCIES
Rental expenses were $8.4 million and $9.5 million in 1994 and 1993,
respectively, of which $1.8 million and $1.9 million were allocated to the
Company's wholly owned subsidiaries, respectively. The minimum rental
commitments under noncancelable operating leases are as follows: 1995, $3.5
million, 1996, $1.4 million; 1997, $1.3 million, 1998, $1.1 million and 1999,
$.5 million. Such leases are principally for leased office space and certain
data processing equipment. Certain office space leases provide for adjustments
to reflect changes in real estate taxes and other operating expenses.
The Company is involved in various legal actions which have arisen in the
course of the Company's business. In the opinion of management, the ultimate
liability with respect to such lawsuits as well as other contingencies is not
considered to be material in relation to the Company's financial statements.
8. FEDERAL INCOME TAXES
The provisions contained in the Tax Reform Act of 1986 enabled the Company's
pension business (the core of its operations) to remain tax-exempt; however,
the nonpension insurance business (group insurance coverage and certain annuity
business) was deemed to be taxable. The tax provision for Mutual of America
Life Insurance Company and its subsidiaries was calculated in accordance with
the Internal Revenue Code, as amended. Mutual of America Life Insurance Company
and its life insurance subsidiaries file federal tax returns on a separate
company basis. The noninsurance subsidiaries of the Company file a consolidated
tax return.
9. UNCONSOLIDATED SUBSIDIARIES
The Company's subsidiaries' operations include insurance and certain
financial service related activities. At December 31, 1994, subsidiary assets,
liabilities and revenues were $1.26 billion, $1.18 billion and $216.6 million,
respectively. At December 31, 1993, subsidiary assets, liabilities and revenues
were $1.22 billion, $1.15 billion and $221 million, respectively.
The Company has incurred operating and investment-related expenses in
connection with the use of its personnel and property on behalf of its
subsidiaries. During 1994 and 1993, operating and investment-related expenses
of $18.2 million and $1.1 million and $15.9 million and $1.7 million,
respectively, were allocated to its subsidiaries.
29
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
8(a) Participation Agreement among Mutual of America Life
Insurance Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation.
8(b) Participation Agreement among Mutual of
America Life Insurance Company, Variable Insurance
Products Fund II and Fidelity Distributors Corporation.
9. Consent of Graham & James, Attorneys-at-Law.
10. Consent of Arthur Andersen LLP., Independent
Accountants.
14(a) Financial Data Schedule for Mutual of
America Separate Account No. 2.
14(b) Financial Data Schedule for Mutual of
America Life Insurance Company.
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
---------------------------------------
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address With Depositor
- ------------------ ----------------------
Directors
---------
<S> <C>
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
New York, New York
John R. Dunne Director
Albany, New York
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
</TABLE>
C-2
<PAGE>
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
Easton, Pennsylvania
William Kahn Director
St. Louis, Missouri
LaSalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Alan Reed Director
Buffalo Grove, Illinois
Francis H. Schott Director
New York, New York
O. Stanley Smith, Jr. Director
Columbia, South Carolina
Sheila M. Smythe Director
Valhalla, New York
Elie Wiesel Director
New York, New York
Officers-Directors
------------------
William J. Flynn Chairman of the Board
Thomas J. Moran President and Chief Executive
Officer
Richard J. Ciecka Vice Chairman of the Board
Other Officers
--------------
Manfred Altstadt Senior Executive Vice President
and Chief Financial Officer
Diane M. Aramony Senior Vice President,
Human Resources
Deborah Swinford Becker Senior Vice President and
Associate General Counsel
C-3
<PAGE>
Nicholas A. Branchina Senior Vice President and
Associate Treasurer
William Breneisen Senior Vice President,
MIS Systems
Leonard Brown Senior Vice President,
Actuarial Consulting Services
Allen J. Bruckheimer Senior Vice President and
Associate Treasurer
J. Thomas Burkard Senior Field Vice President,
Special Markets
Patrick Burke Senior Vice President,
Special Markets
Patrick A. Burns Senior Executive Vice President
and General Counsel
John Cerrato Senior Vice President, Corporate
Services
Ed Cole Senior Vice President,
MIS Operations
William S. Conway Executive Vice President
Rita Conyers Executive Vice President,
Corporate Communications,
Training and Leadership
Development
Salvatore R. Curiale Senior Executive Vice President
Linda DeHooge Senior Vice President and
Assistant Secretary
Warren A. Essner Senior Vice President and
Assistant to the President and
Chief Executive Officer
James E. Flynn Senior Vice President,
Field Operations
James M. Fox Executive Vice President, Real
Estate Management, Internal
C-4
<PAGE>
Audit and Public Relations
Harold Gannon Senior Vice President
Gordon Gaspard Senior Vice President,
Administrative Services
Robert Giaquinto Senior Vice President,
MIS Operations
Thomas E. Gilliam Executive Vice President
Thomas Harwood Senior Vice President,
Field Administration
Raymond J. Hayes Senior Vice President,
Real Estate Management
Sandra Hersko Senior Vice President,
Technical Services
Gregory A. Kleva, Jr. Executive Vice President and
Deputy General Counsel
Stephanie J. Kopp Executive Vice President
and Secretary
Robert Kordecki Senior Vice President,
National Accounts
Amir Lear Senior Vice President
Stanley M. Lenkowicz Senior Vice President and
Deputy General Counsel
Thomas MacMurray Senior Field Vice President,
National Accounts
Robert W. Maull Senior Vice President and
Actuary
George Medlin Senior Vice President and
Internal Auditor
Jane S. Murphy Senior Field Vice President,
National Accounts
Lynn M. Nalder Senior Vice President, Training
and Leadership Development
C-5
<PAGE>
Roger F. Napoleon Senior Vice President and
Associate General Counsel
Theodore J. O'Dell Senior Vice President and
Controller
James C. Peterson Senior Vice President, Training
and Leadership Development
William Rose Senior Vice President,
Individual Markets
Robert W. Ruane Senior Vice President,
Corporate Communications
William G. Shannon Senior Vice President,
Individual Financial Planning
Walter Siegel Senior Vice President, Marketing
Marc Slutzky Senior Vice President and
Actuary
Joan M. Squires Senior Vice President, MIS
Systems
Edward Wenzel Senior Vice President,
Corporate Markets
Raymond Yeager Senior Vice President,
MIS Operations
Paul R. Zwilling Executive Vice President
and Chief Actuary
The business address of all officers and directors is 666 Fifth Avenue, New
York, New York 10103, unless otherwise noted.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this post-amendment to Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and 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 New York,
the State of New York, the 27th day of April, 1995.
MUTUAL OF AMERICA SEPARATE
ACCOUNT NO. 2 Registrant)
MUTUAL OF AMERICA LIFE
INSURANCE COMPANY (Depositor)
By: /s/ Manfred Altstadt
--------------------
Manfred Altstadt
Senior Executive Vice
President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated on April 27, 1995.
Signature Title
*
__________________________ Chairman of the Board;
William J. Flynn Director
* Chief Executive Officer and
__________________________ President; Director
Thomas J. Moran (Principal Executive Officer)
Senior Executive Vice
President and Chief
Financial Officer
Principal Financial and
/s/ Manfred Altstadt Accounting Officer)
- --------------------
Manfred Altstadt
*
__________________________ Director
Clifford L. Alexander, Jr.
*
__________________________ Director
Patricia A. Cahill
*
__________________________ Director
Richard J. Ciecka
C-7
<PAGE>
*
__________________________ Director
John R. Dunne
*
__________________________ Director
Roselyn P. Epps, M.D.
*
__________________________ Director
Dudley H. Hafner
*
__________________________ Director
Earle H. Harbison, Jr.
*
___________________________ Director
Frances R. Hesselbein
*
___________________________ Director
William Kahn
*
___________________________ Director
LaSalle D. Leffall, Jr., M.D.
*
___________________________ Director
Michael A. Pelavin
*
___________________________ Director
Alan Reed
*
___________________________ Director
Francis H. Schott
*
___________________________ Director
O. Stanley Smith, Jr.
*
___________________________ Director
Sheila M. Smythe
*
___________________________ Director
Elie Wiesel
*By /s/ Manfred Altstadt
--------------------
Manfred Altstadt
Attorney-in-Fact
C-8
<PAGE>
EXHIBIT INDEX
No. Page
--- ----
27.1 Financial Data Schedule for Mutual of
America Separate Account No. 2. Money Market
27.2 Financial Data Schedule for Mutual of
America Separate Account No. 2. Bond Fund
27.3 Financial Data Schedule for Mutual of
America Separate Account No. 2. Short Term Bond Fund
27.4 Financial Data Schedule for Mutual of
America Separate Account No. 2. Mid-Term Bond Fund
27.5 Financial Data Schedule for Mutual of
America Separate Account No. 2. Composite Fund
27.6 Financial Data Schedule for Mutual of
America Separate Account No. 2. Aggressive Equity Fund
27.7 Financial Data Schedule for Mutual of
America Separate Account No. 2. Scudder Bond Fund
27.8 Financial Data Schedule for Mutual of
America Separate Account No. 2. Scudder Cap Growth Fund
27.9 Financial Data Schedule for Mutual of
America Separate Account No. 2. Scudder Int'l Fund
27.10 Financial Data Schedule for Mutual of
America Separate Account No. 2. TCI Growth Fund
27.11 Financial Data Schedule for Mutual of
America Separate Account No. 2. Calvert Socially
Responsible Fund
27.12 Financial Data Schedule for Mutual of
America Separate Account No. 2. All America
27.13 Financial Data Schedule for Mutual of
America Separate Account No. 2. Equity Index Fund
27.14 Financial Data Schedule for Mutual of
America Life Insurance Company.
99.8(a) Participation Agreement among Mutual of
America Life Insurance Company, Variable
Insurance Products Fund and Fidelity Distributors
Corporation.
99.8(b) Participation Agreement among Mutual of
America Life Insurance Company, Variable
Insurance Products Fund II and Fidelity
Distributors Corporation.
99.9. Consent of Graham & James, Attorneys-at-Law.
99.10. Consent of Arthur Andersen LLP, Independent
Accountants.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 - MONEY MARKET
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 30,765,611
<INVESTMENTS-AT-VALUE> 30,660,425
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,660,425
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 241,823
<TOTAL-LIABILITIES> 241,823
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<PAGE>
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<SERIES>
<NUMBER> 2
<NAME> MUTUAL OF AMERICA SEPARATE ACCT NO. 2 BOND FUND
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 SHORT TERM BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 MID-TERM BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 - COMPOSITE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> (13,104,907)
<NET-ASSETS> 206,501,532
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<EXPENSES-NET> 3,103,083
<NET-INVESTMENT-INCOME> 8,133,172
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 AGGRESSIVE EQTY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> MAY-02-1994
<PERIOD-END> DEC-31-1994
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<NET-INVESTMENT-INCOME> (22,089)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
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<SERIES>
<NUMBER> 7
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 SCUDDER BOND FUND
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 SCUDDER CAP GRTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
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<SERIES>
<NUMBER> 9
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 SCUDDER INTL FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> 6,077,961
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<EXPENSES-NET> 1,207,674
<NET-INVESTMENT-INCOME> (699,709)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 TCI GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> MUTUAL OF AMER. SEP. ACCT. NO. 2 CALVERT SOCIALLY RESP. FUND
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<PERIOD-TYPE> YEAR
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</TABLE>
<TABLE> <S> <C>
<PAGE>
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<SERIES>
<NUMBER> 12
<NAME> MUTUAL OF AMERICA SEPARATE ACCT. NO. 2 ALL AMERICA
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<REALIZED-GAINS-CURRENT> (567,365)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> MUTUAL OF AMERICA SEPARATE ACCT NO. 2-EQUITY INDEX FUND
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> (20,507)
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<DIVIDEND-INCOME> 55,083
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<NET-INVESTMENT-INCOME> 16,086
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-START> JAN-01-1994 JAN-01-1993
<PERIOD-END> DEC-31-1994 DEC-31-1993
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 4,027,388,054 3,946,478,468
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 57,953,336 40,375,038
<MORTGAGE> 60,144,482 59,689,268
<REAL-ESTATE> 260,640,755 187,959,207
<TOTAL-INVEST> 4,406,126,627 4,323,684,344
<CASH> 32,178,425 99,006,162
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 6,455,773,560 2,276,513,537
<POLICY-LOSSES> 0 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 3,989,887,095 3,874,191,849
<NOTES-PAYABLE> 136,993,262 1,995,244
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 6,455,773,560 6,276,513,537
628,873,707 542,120,200
<INVESTMENT-INCOME> 386,148,078 316,762,692
<INVESTMENT-GAINS> 594,478 3,018,007
<OTHER-INCOME> 1,070,651 640,495
<BENEFITS> 593,701,138 594,229,275
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 50,580,218 30,160,892
<INCOME-TAX> 32,513 0
<INCOME-CONTINUING> 51,207,209 33,178,899
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 51,207,209 33,178,899
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<EPS-DILUTED> 0 0
<RESERVE-OPEN> 3,874,191,849 3,855,399,429
<PROVISION-CURRENT> 161,371,093 9,685,185
<PROVISION-PRIOR> 9,685,185 24,875,334
<PAYMENTS-CURRENT> 592,763,367 594,015,982
<PAYMENTS-PRIOR> 594,015,982 516,576,896
<RESERVE-CLOSE> 3,989,887,095 3,874,191,849
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.8A
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND,
--------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
----------------------------------------
THIS AGREEMENT, made and entered into as of the 30th day of April, 1995
by and among MUTUAL OF AMERICA LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts (hereinafter
the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
1
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and/or variable annuity contracts under the 1933 Act; and
WHEREAS, the Company may also issue certain variable annuity contracts
that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable life insurance and
variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the
2
<PAGE>
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund then utilized by the
Accounts; or (b) the
3
<PAGE>
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding vehicle
for the Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated
4
<PAGE>
asset account under Section 4240 of the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts if such
registration is required under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further
5
<PAGE>
represents that it will sell and distribute the Fund shares in accordance with
the laws of the State of New York and all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements
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of additional information. Except as provided in the following three sentences,
all expenses of printing and distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the Company. For prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or computer diskettes in lieu of
receiving printed copies of the Fund's prospectus, the Fund will reimburse the
Company in an amount equal to the product of A and B where A is the number of
such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's semi-
annual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule B attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
7
<PAGE>
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
8
<PAGE>
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
9
<PAGE>
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing
10
<PAGE>
the assets allocable to some or all of the separate accounts from the Fund
or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account, provided,
however, that the Company shall have the right to choose which course of action
is appropriate if more than one is available to remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required
11
<PAGE>
by any such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares or approved by the Fund or its designee under
Section 4.1 hereof; or
12
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent),
but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of
this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel
13
<PAGE>
retained by it, and the Company will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other
than reasonable costs of investigation. The Indemnified Parties shall
not settle or otherwise compromise any claim for which indemnification
may be sought from the Company without the Company's prior written
consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
14
<PAGE>
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the approval of the Fund or its designee
under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or
15
<PAGE>
otherwise compromise any claim for which indemnification may be sought from the
Underwriter without the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is
16
<PAGE>
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The Fund
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Fund to such party of
the Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
17
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice to the
Company in the event of a material adverse change in financial
condition), if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to
18
<PAGE>
implement Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Underwriter the opinion of counsel for the Company (which counsel
shall be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
19
<PAGE>
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
20
<PAGE>
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 120 days after the
end of each fiscal year, in each case with any report thereon
submitted to the Company by independent accountants;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in any event
within 60 days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders,
excluding regular or periodic notices and reports to
policyholders and contract owners pertaining to the operations,
benefits or status of their contracts with the Company;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission not provided under Section 4.6 hereof, and any other
financial statement filed with any state insurance regulator,
together with any report thereon submitted to the Company by
independent accountants, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof, provided that nothing in
this subsection (e) shall require the Company to provide any
information that is otherwise privileged or confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
By: _________________________
Name: _________________________
Title: ________________________
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS
21
<PAGE>
CORPORATION
By: ________________________ By: _______________________
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
22
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and
Date Established by Board of Policy Form Numbers of Contracts Funded
Directors By Separate Account
- ---------------------------- ----------------------------------------
Separate Account No. 1 DCC-3050
DAC-DB-NC/C Series
PIC-DB-8720
IAC-8700
Separate Account No. 2 TDA-3300
VEC-3200
PEDC-3085
3805-FPA
3809-FPA(E)
3814-IRA
IAC-8700
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
24
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
---
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
25
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. Fidelity
Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
TCI Portfolios, Inc.
TCI Growth Fund
Calvert Responsibly Invested Balanced Portfolio
27
<PAGE>
EXHIBIT 99.8B
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
-----------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
----------------------------------------
THIS AGREEMENT, made and entered into as of the 30th day of April, 1995
by and among MUTUAL OF AMERICA LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
1
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and/or variable annuity contracts under the 1933 Act; and
WHEREAS, the Company may also issue certain variable annuity contracts
that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable life insurance and
variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the
2
<PAGE>
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund then utilized by the
Accounts; or (b) the
3
<PAGE>
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding vehicle
for the Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated
4
<PAGE>
asset account under Section 4240 of the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts if such
registration is required under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further
5
<PAGE>
represents that it will sell and distribute the Fund shares in accordance with
the laws of the State of New York and all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements
6
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of additional information. Except as provided in the following three sentences,
all expenses of printing and distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the Company. For prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or computer diskettes in lieu of
receiving printed copies of the Fund's prospectus, the Fund will reimburse the
Company in an amount equal to the product of A and B where A is the number of
such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's semi-
annual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule B attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
7
<PAGE>
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
8
<PAGE>
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
9
<PAGE>
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing
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<PAGE>
the assets allocable to some or all of the separate accounts from the
Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account, provided,
however, that the Company shall have the right to choose which course of action
is appropriate if more than one is available to remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required
11
<PAGE>
by any such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares or approved by the Fund or its designee under
Section 4.1 hereof; or
12
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent),
but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of
this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel
13
<PAGE>
retained by it, and the Company will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other
than reasonable costs of investigation. The Indemnified Parties shall
not settle or otherwise compromise any claim for which indemnification
may be sought from the Company without the Company's prior written
consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
14
<PAGE>
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the approval of the Fund or its designee
under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or
15
<PAGE>
otherwise compromise any claim for which indemnification may be sought from the
Underwriter without the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
16
<PAGE>
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Fund to such party of the Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
17
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice to the
Company in the event of a material adverse change in financial
condition), if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to
18
<PAGE>
implement Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Underwriter the opinion of counsel for the Company (which counsel
shall be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
19
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12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
20
<PAGE>
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 120
days after the end of each fiscal year, in each case with
any report thereon submitted to the Company by
independent accountants;
(b) the Company's quarterly statements (statutory) (and GAAP,
if any), as soon as practical and in any event within 60
days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery
thereof to stockholders, excluding regular or periodic
notices and reports to policyholders and contract owners
pertaining to the operations, benefits or status of their
contracts with the Company;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission not provided under
Section 4.6 hereof, and any other financial statement
filed with any state insurance regulator, together with
any report thereon submitted to the Company by
independent accountants, as soon as practical after the
filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or
special audit made by them of the books of the Company,
as soon as practical after the receipt thereof, provided
that nothing in this subsection (e) shall require the
Company to provide any information that is otherwise
privileged or confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND II FIDELITY DISTRIBUTORS CORPORATION
21
<PAGE>
CORPORATION
By: ________________________ By: _______________________
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
22
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
Separate Account No. 1 DCC-3050
DAC-DB-NC/C Series
PIC-DB-8720
IAC-8700
Separate Account No. 2 TDA-3300
VEC-3200
PEDC-3085
3805-FPA
3809-FPA(E)
3814-IRA
IAC-8700
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
24
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
---
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
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<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. Fidelity
Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
TCI Portfolios, Inc.
TCI Growth Fund
Calvert Responsibly Invested Balanced Portfolio
27
<PAGE>
EXHIBIT 9
CONSENT OF GRAHAM & JAMES
We hereby consent to all references to our firm included in Registration
Statement No. 33-11023.
GRAHAM & JAMES
New York, New York
April 28, 1995
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of Registration
Statement no. 33-11023.
ARTHUR ANDERSEN LLP
New York, New York
April 28, 1995
