<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996
REGISTRATION NO. 2-90201
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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. 21[X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[X]
AMENDMENT NO. 22
---------------
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
(EXACT NAME OF REGISTRANT)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE INCLUDING ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 224-1600
PATRICK A. BURNS, ESQ.
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE
NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROBERT S. SCHNEIDER, ESQ.
GRAHAM & JAMES LLP
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, 1996 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 29, 1996.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 2
Variable Accumulation Annuity Contracts
Issued By
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
- -------------------------------------------------------------------------------
The group and individual variable accumulation annuity contracts ("Contracts")
offered by Mutual of America Life Insurance Company (the "Insurance Company")
and described in this Prospectus are designed to aid employees of
organizations in the not-for-profit field in retirement and long-term
financial planning by providing monthly Annuity Payments which begin at a
selected future date. The following four types of contracts are offered: (1) a
group Tax-Deferred Annuity Contract ("TDA Contract"); (2) a group Voluntary
Employee Contribution Contract ("VEC Contract"); (3) an Individual Retirement
Annuity Contract ("IRA Contract"); and (4) an individual Flexible Premium
Annuity Contract ("FPA Contract").
Participating employees under TDA or VEC Contracts, and the persons to whom
IRA or FPA Contracts are issued, are referred to in this Prospectus as
"Participants."
The Contracts permit Contributions to be made, generally, in whatever amounts
and at whatever frequency is desired by a Participant. Contributions 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 Contracts is to provide
Participants with an opportunity to accumulate amounts toward retirement, or
for other financial purposes, 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 Contracts 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 Fidelity Investments(R) portfolios: Equity-
Income Portfolio of the Variable Insurance Products Fund and Contrafund and
Asset Manager Portfolios 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: Scudder Capital Growth Portfolio, Scudder Bond Portfolio, and
Scudder International Portfolio (collectively, the "Scudder Portfolios"), in
each case the Class A shares;
- -- 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 Contracts 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
Contracts. 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) 224-1600. 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 Contracts being
offered and retain it for future reference. It is not valid unless attached to
the current prospectuses for the Investment Company, the Fidelity Portfolios,
Scudder Variable Life Investment Fund, TCI Growth Fund and Calvert Responsibly
Invested Balanced Portfolio.
Dated: May 1, 1996
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Annual Expenses............. 4
Unit Value Information............... 6
Definitions.......................... 8
Summary.............................. 9
Mutual of America Life Insurance Com-
pany................................ 12
The Separate Account................. 12
Investments of the Separate Account.. 13
Charges.............................. 15
Administrative Charges.............. 15
Distribution Expense Charge......... 16
Mortality and Expense Risk Charge... 16
Portfolio Company Expenses.......... 16
The Group and Individual Annuity Con-
tracts.............................. 18
General............................. 18
Payment of Contributions............ 18
Allocations of Contributions........ 19
Accumulation Units.................. 19
Transfers Among Investment Alterna-
tives.............................. 20
Withdrawals......................... 20
Specified Payments Options.......... 21
Death Benefits...................... 22
Discontinuance and Termination....... 22
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Discontinuance of TDA and VEC Contracts.............................. 22
Termination of Participation Under TDA Contracts..................... 23
Termination by the Insurance Company................................. 23
Postponement of Payments.............................................. 23
The Annuity Period.................................................... 24
General.............................................................. 24
Annuity Commencement Date............................................ 24
Available Forms of Annuity........................................... 24
Amount of Annuity Payments........................................... 25
Small Benefit Payments............................................... 25
The General Account................................................... 26
General Matters....................................................... 27
Federal Tax Matters................................................... 29
Voting Rights......................................................... 35
Performance Information............................................... 35
Funding and Other Changes............................................. 35
Other Variable Annuity Contracts...................................... 36
Table of Contents of the Statement of Additional Information.......... 36
Obtaining a Copy of the Statement of Additional Information........... 36
Order Form for Statement of Additional Information.................... 36
</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 Scudder
Company Bond, Company Company VIP Fidelity VIP II Capital Scudder
Money Mid-Term Bond, Equity Aggressive Equity- VIP II Asset Growth Bond
Market and Composite Index Equity Income Contrafund Manager Class A Class A
---------- -------------- ---------- ---------- -------- ---------- -------- ------- -------
<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% .51% .61% .71% .475% .475%
Other Ex-
penses(4)...... None None None None .10 .12 .10% .095 .085
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
Company
Expenses....... .25% .50% .125% .85% .61% .73%(5) .81%(5) .57% .56%
==== ==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
Calvert
Scudder Responsibly
International TCI Invested
Class A 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 .55 .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 .13
------------- ------ ------------
Total Portfolio
Company
Expenses....... 1.08% 1.00% .83%(6)
============= ====== ============
</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 Accounts 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 or portfolio
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 or portfolio. If the General Account is not
used, but more than one fund or portfolio is used, then the second or
additional fund(s) or portfolio(s) would not be charged such fee. The
Employer may elect to pay such fee in which case there would be no
deduction from a participant's account. See "Charges--Administrative
Charges."
(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)Certain portfolio trades are directed to brokers who pay a portion of the
Portfolios' expenses. With this arrangement, total operating expenses for
the Contrafund and Asset Manager Portfolios for 1995 were .72% and .79%,
respectively.
(6)Management fees are subject to a performance adjustment, after July 1,
1996, which could cause the fee to be as high as .85% or as low as .55%,
depending on performance. Certain fees are paid indirectly, and with this
reduction, total operating expenses for the Portfolio were .81% for 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:.................................. $17.08 $55.57 $100.47 $246.36
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:.................................. $19.66 $63.80 $115.07 $280.49
Example for Investment Company Equity Index
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $15.79 $51.43 $ 93.10 $228.97
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:.................................. $23.26 $75.23 $135.22 $326.86
Example for Fidelity VIP Equity-Income Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $20.79 $67.41 $121.44 $295.24
Example for Fidelity VIP II Contra Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $21.92 $71.00 $127.78 $309.83
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:.................................. $22.64 $73.28 $131.79 $319.03
Example for Scudder Capital Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $20.38 $66.10 $119.13 $289.90
Example for Scudder Bond Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $20.27 $65.77 $118.55 $288.56
Example for Scudder International Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $25.61 $82.67 $148.26 $356.47
Example for TCI Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:.................................. $22.74 $73.60 $132.36 $320.34
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:.................................. $22.85 $73.93 $132.93 $321.65
</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 and Contrafund Portfolios, the
Scudder Portfolios, the TCI Growth Fund and the Calvert Responsibly Invested
Balanced Portfolio as they were for the year ended December 31, 1995. 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 $1.39 per $1,000 of value in the Separate Account based
on an average account value of $17,220. 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,
1995. The information with respect to each of the years in the four years
ended December 31, 1995, 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. 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
-------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 1.72 $ 1.68 $ 1.65 $ 1.62 $ 1.54 $ 1.44 $ 1.33 $ 1.25 $ 1.18 $ 1.12
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 1.80 $ 1.72 $ 1.68 $ 1.65 $ 1.62 $ 1.54 $ 1.44 $ 1.33 $ 1.25 $ 1.18
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 17,502 17,653 15,815 16,545 15,656 13,972 8,570 4,870 2,778 1,514
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY ALL AMERICA FUND
---------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 3.35 $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82 $ 1.67 $ 1.49
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of peri-
od..................... $ 4.52 $ 3.35 $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82 $ 1.67
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period................. 43,620 38,669 36,510 32,352 26,173 20,973 20,157 20,064 23,919 17,509
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY BOND FUND
---------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 2.28 $ 2.39 $ 2.13 $ 1.99 $ 1.73 $ 1.67 $ 1.49 $ 1.40 $ 1.42 $ 1.28
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 2.69 $ 2.28 $ 2.39 $ 2.13 $ 1.99 $ 1.73 $ 1.67 $ 1.49 $ 1.40 $ 1.42
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 12,083 10,601 12,244 9,203 6,152 5,235 4,164 3,057 2,631 2,103
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY COMPOSITE FUND
---------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 2.82 $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60 $ 1.51 $ 1.35
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 3.39 $ 2.82 $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60 $ 1.51
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 70,558 73,239 71,215 50,944 43,115 37,461 32,716 29,436 28,126 20,079
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT INVESTMENT INVESTMENT
COMPANY COMPANY COMPANY COMPANY
EQUITY INDEX SHORT-TERM MID-TERM AGGRESSIVE
FUND BOND FUND BOND FUND EQUITY FUND SCUDDER BOND FUND
- ------------------- ----------------- ----------------- ------------ --------------------------------------------
1995 1994 1993* 1995 1994 1993* 1995 1994 1993* 1995 1994* 1995 1994 1993 1992 1991 1990 1989
- ------ ----- ----- ----- ----- ----- ----- ----- ----- ---- ----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.05 $1.05 $1.00 $1.03 $1.03 $1.00 $1.01 $1.06 $1.00 $ 1.05 $1.00 $ 9.69 $10.32 $ 9.30 $8.78 $7.54 $7.05 $6.39
====== ===== ===== ===== ===== ===== ===== ===== ===== ====== ===== ====== ====== ====== ===== ===== ===== =====
$ 1.42 $1.05 $1.05 $1.10 $1.03 $1.03 $1.16 $1.01 $1.06 $ 1.43 $1.05 $11.30 $ 9.69 $10.32 $9.30 $8.78 $7.54 $7.05
====== ===== ===== ===== ===== ===== ===== ===== ===== ====== ===== ====== ====== ====== ===== ===== ===== =====
17,109 4,644 2,135 1,447 1,132 747 2,848 1,444 1,411 20,858 9,145 1,269 1,169 1,277 1,053 600 354 221
====== ===== ===== ===== ===== ===== ===== ===== ===== ====== ===== ====== ====== ====== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
SCUDDER CAPITAL GROWTH FUND SCUDDER INTERNATIONAL FUND
- ------------------------------------------------- --------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$14.67 $16.46 $13.80 $13.09 $ 9.48 $10.35 $ 8.53 $10.08 $11.06 $ 8.13 $8.48 $7.68 $8.41 $6.14
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
$18.64 $14.67 $16.46 $13.80 $13.09 $ 9.48 $10.35 $11.85 $10.08 $11.06 $8.13 $8.48 $7.68 $8.41
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
8,556 8,121 6,582 3,698 2,138 1,103 844 7,269 8,610 5,400 2,262 1,849 1,644 721
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
VIP FIDELITY FIDELITY
CALVERT RESPONSIBLY EQUITY- VIP II VIP II ASSET
TCI GROWTH FUND INVESTED BALANCED FUND INCOME FUND CONTRA FUND MANAGER FUND
- ------------------------------------------- ----------------------------- ----------- ----------- ------------
1995 1994 1993 1992 1991 1990 1989 1995 1994 1993 1992 1991* 1995* 1995* 1995*
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 9.39 $9.61 $8.81 $9.01 $6.40 $6.53 $5.11 $1.57 $1.64 $1.54 $1.44 $1.32 $16.30 $11.43 $14.04
====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== ======
$12.18 $9.39 $9.61 $8.81 $9.01 $6.40 $6.53 $2.01 $1.57 $1.64 $1.54 $1.44 $19.43 $13.85 $15.66
====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== ======
8,061 6,361 5,946 5,280 3,056 1,518 791 7,849 5,986 5,151 2,742 678 728 1,792 184
====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== ======
</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; Investment Company
Aggressive Equity Fund--May 2, 1994; and Fidelity VIP Equity-Income Fund, and
Fidelity VIP II Contra and Asset Manager Funds--May 1, 1995.
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, for the joint lifetime of the Annuitant and another
person and thereafter for the life of the survivor, or for such other period
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(s)--One (or more) of the group and individual variable accumulation
annuity contracts described in this Prospectus.
Contractholder--The entity to which the Insurance Company has issued a TDA or
VEC Contract. The Contractholder of a TDA Contract may be an employer, or an
association representing employers or employees. The Contractholder of a VEC
Contract may be an employer, or the trustee of the Plan adopted by the
employer.
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 Variable
Insurance Products Fund.
Fidelity VIP II Contrafund and Asset Manager Portfolios--The Contrafund
Portfolio and Asset Manager Portfolio 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 Scudder Portfolios, in TCI Growth Fund and
in the Calvert Responsibly Invested Balanced Portfolio. Under the Contracts, a
Participant may allocate Contributions among all of the Investment
Alternatives.
Investment Company--Mutual of America Investment Corporation.
Participant--Under TDA and VEC Contracts, 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. Under an IRA Contract, the individual, and
under an FPA Contract, the individual or employer, to whom the Contract is
issued.
8
<PAGE>
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--A retirement plan under which benefits are to be provided pursuant to
one of the Contracts described herein.
Plan Year--For TDA Contracts, the twelve-month period beginning each January
1; for VEC Contracts, the twelve-month period defined in a Plan.
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 and, for 1996, Friday July 5 and
Thursday December 26.
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.
SUMMARY
The Following Summary Of Prospectus Information Should Be Read In Conjunction
With The Detailed Information Appearing Elsewhere In This Prospectus.
CONTRACTS OFFERED
The group and individual variable accumulation annuity contracts offered by
this Prospectus are issued by the Insurance Company and designed to aid in
retirement and long-term financial planning. The Contracts provide for the
accumulation of Contributions on a completely variable basis, a completely
fixed basis or a combination variable and fixed basis. Annuity Payments under
the Contracts will be made on a fixed basis only.
The four types of contracts described herein are summarized below:
1. Tax Deferred Annuity Contract ("TDA Contract"). A group contract designed
for use in connection with annuity purchase plans adopted pursuant to 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 schools or
colleges. TDA Contracts are issued to Contractholders, which typically are
such tax-exempt organizations or an association representing such organization
or its employees. Contributions ordinarily are made through voluntary salary
reduction arrangements. Participants under TDA Contracts may obtain certain
Federal income tax benefits provided under Section 403(b) of the Code (see
"Federal Tax Matters").
2. Voluntary Employee Contribution Contract ("VEC Contract"). A group contract
designed to provide annuity benefits to employees participating in a
retirement plan qualified for special Federal income tax treatment under
Sections 401(a) and 403(a) of the Code for Contributions prior to January 1,
1987 or transfers thereafter. VEC Contracts are issued to Contractholders,
which typically are employers or the trustees or administrators of their
retirement plans (see "Federal Tax Matters").
3. Individual Retirement Annuity Contract ("IRA Contract"). A contract
designed for use in connection with individual retirement arrangements that
qualify for favorable Federal income tax treatment under Sections 219 and 408
of the Code, which permit Contributions to be made by a Participant for the
purpose of providing retirement income, and may also be issued in connection
with Simplified Employee Pension ("SEP") plans as defined in Section 408(k) of
the Code. Under a SEP, contributions are made by employers to the IRA
contracts of individual employees. Federal tax on some or all those amounts
may be deferred until Annuity Payments commence (see "Federal Tax Matters").
4. Flexible Premium Annuity Contract ("FPA Contract"). A contract designed to
provide Annuity Payments that begin at a future date to an individual, or as a
depository for employer deferred compensation obligations. The FPA Contract
may be used in connection with retirement arrangements whether or not they
qualify for special tax treatment under the Code (see "Federal Tax Matters").
9
<PAGE>
CONTRIBUTIONS
In general, Contributions under the Contracts may be made in whatever amounts
and at whatever frequency is desired by Participants. The minimum Contribution
that may be made under each of the Contracts, except TDA Contracts, is the
minimum set from time to time by the Insurance Company, currently $10.
However, there is no minimum employer contribution for an IRA issued in
connection with a SEP. On and after January 1, 1989, salary reduction
contributions under TDAs will be permitted if the total annual contribution is
$200 or more. The maximum annual Contributions under TDA, VEC and IRA
Contracts are those amounts permitted under the Code for Plans or arrangements
funded by those Contracts (see "The Group and Individual Annuity Contracts--
Payment of Contributions" and "Federal Tax Matters").
Under IRA and FPA Contracts, the Insurance Company may, in its sole
discretion, terminate the Contract and return amounts accumulated thereunder
to the Participant if prior to the Annuity Commencement Date no Contributions
have been made for three consecutive years and the Participant's Account
Balance is less than $500 in the case of FPA Contracts and either $2,000 or
the amount necessary to provide monthly Annuity Payments of at least $20 under
the form of annuity selected by the Participant in the case of IRA Contracts.
The Insurance Company may not, on that basis, terminate the Contract of an IRA
or FPA Participant who has not attained the age of 59 1/2.
Participants under the Contracts may allocate Contributions made on their
behalf among the Investment Alternatives provided in the Contracts, which
include the General Account and the sixteen distinct Funds of the Separate
Account.
This Prospectus is intended as a disclosure document for the variable portion
of the Contracts only. See "The General Account" for a brief summary of the
fixed portion of the Contracts.
THE SEPARATE ACCOUNT
Contributions made pursuant to the Contracts and allocated on a variable basis
are deposited in the Separate Account. The Separate Account is divided into
sixteen Funds, or sub-accounts, each one of which corresponds to one of the
eight Funds of the Investment Company, or one of the 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 Contracts
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
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 primary in income-producing equity securities;
the Fidelity VIP II Contrafund Portfolio, which invests mainly in securities
of companies that are undervalued or out-of-favor; and Fidelity VIP II Asset
Manager, 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 (collectively, the "Scudder
Portfolios"): the Scudder Capital Growth Portfolio, Class A Shares, which
invests primarily in publicly traded equity securities; the Scudder Bond
Portfolio, Class A Shares, which invests primarily in publicly traded debt
securities; and the Scudder International Portfolio, Class A Shares, 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
- -------
* "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.
10
<PAGE>
the Funds corresponding to the Fidelity Portfolios) 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
Contracts 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.
The Employer may elect to pay the additional deduction in which case there
would be no deduction from a Participant's Account. These daily and monthly
charges may increase or decrease during the life of the Contract, but may not
exceed costs (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 Contracts at an annual rate
of .35% (see "Charges--Distribution Expense Charge").
Mortality and Expense Risk Charge. For assuming certain mortality risks under
the Contracts, 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 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 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 Fund is found in their respective
prospectuses attached to this Prospectus.
TRANSFERS AND WITHDRAWALS
Generally, at any time prior to the Annuity Commencement Date, a Participant
under the Contracts 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.
(See "Transfers Among Investment Alternatives" and "The General Account.") In
addition, a Participant may (unless, under a TDA or VEC Contract, a Plan
provides otherwise) withdraw all or a portion of the Participant's Account
Balance at any time prior to the Annuity Commencement Date. (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 TDA
or VEC 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
Contracts. 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, and withdrawals of certain salary reduction
contributions and the earnings thereon from a TDA are subject to certain
restrictions (see "Withdrawals" and "Federal Tax Matters").
11
<PAGE>
CANCELLATION RIGHT
An IRA or FPA Contract or a TDA Certificate may be surrendered for
cancellation within ten days after receipt. The Insurance Company will refund
all Contributions allocated to the General Account without deductions plus the
value on the date of surrender of all Contributions allocated to the Separate
Account. Several states, however, require that all Contributions be refunded
without deductions. You should consult the Contract for applicable provisions.
CONTACTING THE INSURANCE COMPANY
All written requests and notices required by the Contracts, and any questions
or inquiries, should be addressed to:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President, Field Administration
320 Park Avenue
New York, New York 10022
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling 1-800-468-3785.
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 320 Park Avenue, New York, New York 10022.
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. As of December
31, 1995, the Insurance Company on a consolidated basis had total assets of
approximately $8.2 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, portfolios or series of the Portfolio Companies in which the assets
in such Funds are invested. The assets of the Separate Account are the
property of the Insurance Company. The Separate Account assets attributable to
the Contracts 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
12
<PAGE>
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.
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 Growth Fund
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 three subadvisers and Mutual of America Capital
Management Corporation (the "Adviser"). The Adviser allocates the Active
Assets to maintain, to the extent practicable under current market conditions,
approximately equal amounts among the subadvisers and the Adviser. 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-
13
<PAGE>
rated or unrated securities, and these may be subject to greater market and
financial risk than higher quality (lower yield) issues.
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. 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.
SCUDDER CAPITAL GROWTH PORTFOLIO CLASS A SHARES
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.
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SCUDDER BOND PORTFOLIO CLASS A SHARES
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 CLASS A SHARES
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.
CHARGES
The value of Accumulation Units reflects 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
for each of the Funds of the Separate Account.
ADMINISTRATIVE CHARGES
The Insurance Company performs all administrative functions in connection with
the Contracts, including receiving and allocating Contributions in accordance
with the Contracts, 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 Contracts 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
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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 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. The
Employer may elect to pay the additional amount in which case there would be
no deduction from a 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
Contracts. 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 Contracts, 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
Contracts. The mortality 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 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 Contracts, 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
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 true
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 undertakings,
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.
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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 1995, 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
limits the Investment Company Funds' expenses in this manner. See "The Funds'
Expenses" in the Investment Company prospectus.
The Adviser, with respect to three-quarters of the Active Assets of the All
America Fund, has entered into subadvisory agreements (each a "Subadvisory
Agreement") with three professional advisers: Palley-Needelman Asset
Management, Inc. ("Palley-Needelman"); Oak Associates, Ltd. ("Oak Associates")
and Fred Alger Management, Inc. ("Alger Management"). 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%; and
Alger Management, .45%; 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 1995 was
.3097%, and the individual fund fee rates for the Equity-Income, Contrafund
and Asset Manager Portfolios are .20%, .30% and .40%, respectively.
Each Scudder Portfolio, Class A Shares, 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, 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 NCM Capital Management Group,
Inc. is the Sub-Advisor for 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% (subject to adjustment as described below) of average net assets of the
Portfolio. Calvert Asset Management Company, Inc. pays, at its own expense,
the fee of the Sub-Advisor. 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. After July 1, 1996, the performance
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adjustment could cause the annual rate to be as high as .85% or as low as .55%
of average net assets. 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 Portfolio is found in their
respective prospectuses attached to this Prospectus.
THE GROUP AND INDIVIDUAL ANNUITY CONTRACTS
GENERAL
TDA and VEC Contracts. TDA and VEC Contracts are issued by the Insurance
Company to Contractholders seeking a funding vehicle for group annuity
purchase plans. Any employee of an employer which has adopted a Plan funded by
a TDA Contract is eligible to become a Participant under the Contract, as of
the effective date of the Contract or the first day of any calendar month
thereafter, by making an application to the Insurance Company on its
prescribed form. As a result of the Tax Reform Act of 1986, the Insurance
Company has amended its VEC Contracts so that no Contributions on or after
January 1, 1987 may be made. The VEC Contract may be continued for existing
accounts and may be used to accept transfers from other plans or carriers.
IRA Contract. IRA Contracts are issued to eligible individuals who complete
the prescribed application, make an initial Contribution of an amount
specified by the Insurance Company from time to time, and are accepted for
participation by the Insurance Company. The contribution requirement will be
waived for IRA contracts issued in connection with a SEP. Employees of
organizations qualifying for tax-exempt status under the Code, and their
spouses, are eligible to apply for an IRA Contract.
FPA Contract. FPA Contracts are issued, upon completion of the prescribed
application and payment of an initial Contribution of an amount specified by
the Insurance Company from time to time, to individuals, their spouses and
certain family members now or formerly affiliated with organizations that are
tax-exempt under the Code. The Contract may also be issued to such a tax-
exempt organization itself, which may use the Contract to accumulate funds for
subsequent payment of deferred compensation obligations of the organization.
The person to whom an FPA Contract is issued, whether or not such person is
the Annuitant, will be the owner of the Contract, and will possess all the
rights thereunder. (For example, the employer to whom an FPA Contract is
issued for deferred compensation purposes is the owner of the Contract, and
entitled to all payments thereunder.)
Cancellation of Contract. A TDA Certificate, IRA Contract or FPA Contract may
be surrendered for cancellation within ten days after receipt. The Insurance
Company will refund all Contributions allocated to the General Account without
deductions plus the value on the date of surrender of all Contributions
allocated to the Separate Account. Several states, however, require that all
Contributions be refunded without deductions. You should consult the Contract
for applicable provisions.
PAYMENT OF CONTRIBUTIONS
TDA Contracts. Contributions ordinarily are made, as elected by Participants,
pursuant to salary reduction arrangements. However, a single sum transfer from
another group annuity contract funded by the Insurance Company, or from any
tax-deferred annuity plan maintained under Section 403(b) of the Code or
certain custodial accounts maintained under Section 403(b)(7) of the Code
generally will also be acceptable on behalf of a Participant.
The amount of any Contributions with respect to a Participant may not be less
than $200 on an annual basis nor greater than any amount permitted under
applicable state or Federal law (see "Federal Tax Matters"). No further
Contributions may be made on behalf of a Participant who has terminated
participation under the Contract nor by a Participant under a TDA Contract
that has been discontinued.
VEC Contracts. A Contractholder can remit to the Insurance Company on behalf
of a Participant, in a single sum, an amount that arises from a transfer from
another voluntary employee contribution plan, or from a contract between a
Contractholder and the Insurance Company, or between the Contractholder and
another insurance company. Contributions may not be made on behalf of a
Participant under a VEC Contract on and after January 1, 1987.
IRA Contracts. Contributions are made, as elected by Participants, pursuant to
payroll deduction arrangements or by direct payments to the Insurance Company,
at whatever intervals and in whatever amounts are desired, except that the
amount of
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any Contribution for an IRA (other than a SEP IRA) may not be less than the
minimum set by the Insurance Company, currently $10. For IRA contracts issued
in connection with a SEP as defined in Code Section 408(k), contributions are
made by the contract owner's employer. The amount of Contributions during a
Participant's tax year cannot be greater than the amount permitted under the
Code (see "Federal Tax Matters"). If prior to the Annuity Commencement Date no
Contributions are made by or on behalf of a Participant for three consecutive
years, the Participant's Account Balance is less than either $2,000 or the
amount necessary to provide monthly Annuity Payments of at least $20 under the
form of annuity selected by the Participant, and the Participant has attained
age 59 1/2, the Insurance Company may, in its sole discretion, return the
Participant's Account Balance and terminate the Contract.
No Contributions may be made by an IRA Contract Participant with respect to a
tax year in which the Participant attained age 70 1/2 or greater. However, an
employer may make contributions for its employee under a SEP IRA even after
the employee has attained age 70 1/2.
For a Participant under an IRA Contract, Contributions may be made which
consist of amounts "rolled over" from certain other pension or retirement
arrangements qualifying for favorable tax treatment under the Code.
Contributions that represent amounts rolled over as described in Sections
402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code, or in most instances,
any amount directly transferred to an IRA Contract from an individual
retirement arrangement (other than the portion, if any, that is attributable
to Contributions made in the same tax year in which such amount is transferred
to the IRA Contract), will not be subject to the limitation as to the maximum
amount allowed to be contributed each year.
FPA Contract. Contributions are made by a Participant directly to the
Insurance Company or by the Participant's employer under a salary deduction
agreement, at whatever intervals and in whatever amounts are desired, except
that the amount of any Contribution may not be less than the minimum set by
the Insurance Company, currently $10. If prior to the Annuity Commencement
Date no Contributions are made by a Participant for three consecutive years,
the Participant's Account Balance is less than $500, and the Participant has
attained age 59 1/2, the Insurance Company may, in its sole discretion, return
the Participant's Account Balance and terminate the Contract.
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 then 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
individual applicant (under an FPA or IRA Contract where Contributions are
remitted directly by the Participant), Contractholder (under TDA or VEC
Contracts), or employer (under an IRA Contract where Contributions are
remitted by the Participant's employer) consents to the Insurance Company
holding the Contribution until additional information is provided.
Limitation on Deferrals. FPA Contracts used as a depository for employee
deferred compensation obligations in connection with such obligations which
come into existence after August 16, 1986 and which are not "eligible"
deferred compensation plans as defined in Section 457(b) of the Code, are
subject to the provisions of Section 457(f), including substantial risk of
forfeiture.
ALLOCATIONS OF CONTRIBUTIONS
Contributions under the Contract may be allocated in whole or in part among
the General Account and the sixteen Funds of the Separate Account.
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, 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.
ACCUMULATION UNITS
Contributions under the Contracts, 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
respect to each of the chosen Funds of the Separate Account in the form of the
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
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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 that 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 or series 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 that 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 were 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, 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.
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.
WITHDRAWALS
A Participant may (unless, under a TDA or VEC Contract, a Plan provides
otherwise), prior to the Annuity Commencement Date, elect to withdraw the
Participant's Account Balance in whole or in part. To be valid, a partial
withdrawal request must specify from which of the Investment Alternatives the
withdrawal is to be made. A Participant may express the amount
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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 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 and after
January 1, 1989 under a salary reduction agreement, or interest and investment
earnings credited 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 the
amounts which were contributed under a salary reduction agreement. In
addition, spousal consent may be required for withdrawals.
In the case of either a partial or complete withdrawal from the Separate
Account, 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. The Investment 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.
Loans. The Insurance Company will make available to the employer a TDA or VEC
loan option. If the employer elects to adopt the loan provision in the
Contract, Participants shall have the right to borrow funds utilizing TDA or
VEC Plan Account Balances 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 Contracts, 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.
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 (subject to the non-taxable recovery of prior
non-deductible contributions). In addition, certain withdrawals may be subject
to a tax penalty (see "Federal Tax Matters").
SPECIFIED PAYMENTS OPTIONS
A Participant in a TDA, VEC or IRA Contract may elect after attaining age 59
1/2 (or, in the case of a TDA or VEC Contract, early retirement after age 55)
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 non-taxable recovery of prior non-deductible Contributions.
In addition, payment may be subject to a tax penalty (see "Federal Tax
Matters").
A Participant receiving payment 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.
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If the Participant is subject to the minimum distribution rules of Section
401(a)(9) of the Code, the minimum Specified Payments for the year must at
least total the required annual distribution.
DEATH BENEFITS
Death benefits generally will be paid in accordance with the following rules
under IRA, TDA, VEC and FPA Contracts in which the Participant is the
Annuitant. Under an FPA Contract in which the Annuitant is not the
Participant, the following rules will apply as if the Annuitant were the
Participant.
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").
Under employer-maintained TDA and VEC Contracts, 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").
(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 under an IRA, TDA
or VEC Contract 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 an IRA or TDA 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 OF TDA AND VEC CONTRACTS
TDA and VEC Contracts provide that 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 TDA or VEC
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, as amended, and the Contractholder refuses to accept a substantially
similar contract offered by the Company that incorporates that modification.
Discontinuance of a Contract by the Insurance Company will be effective as of
a date
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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 remediable defaults. In addition, the Insurance Company has the right
to discontinue a TDA or VEC Contract if, during any Plan Year, no
Contributions are made on behalf of any of the Participants.
Discontinuance of a TDA or VEC 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 Participant or beneficiaries. In the event of a
transfer described in clause (2) above, amounts accumulated for the benefit of
a Participant or beneficiary, who does not consent to the transfer 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 UNDER TDA CONTRACTS
If, during the Accumulation Period, a TDA Contract 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
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").
TERMINATION BY THE INSURANCE COMPANY
VEC Contract. Under VEC Contracts, if, on or before (1) the first anniversary
of the effective date of the Contract, or (2) such other date as may be
communicated to the Contractholder by the Insurance Company, the
Contractholder does not provide evidence satisfactory to the Insurance Company
that the Plan pursuant to which the Contract is issued qualifies for the tax
treatment specified under Sections 401(a) and 403(a) of the Code, then
(a) no further amounts may thereafter by remitted under the Contract on
behalf of Participants;
(b) the Insurance Company will withdraw and pay to the Contractholder the
amounts accumulated under the Contract as of the date of withdrawal; and
(c) upon such withdrawal and payment, the Insurance Company will terminate
the Contract.
IRA and FPA Contracts. The Insurance Company may, in its sole discretion,
return a Participant's Account Balance and terminate an IRA or FPA Contract
prior to the Annuity Commencement Date if no Contributions have been made by
Participant for three consecutive years, the Participant's Account Balance is
less than a specified minimum, and the Participant has attained age 59 1/2.
For FPA Contracts the specified minimum Account Balance is $500. For IRA
Contracts the specified minimum is either $2,000 or the amount necessary to
provide monthly Annuity Payments of at least $20 under the form of annuity
selected by the Participant. The Insurance Company will not exercise its
option to terminate an IRA or FPA Contract without notifying the Participant
of the Insurance Company's intention to do so, and providing a period of 90
days during which additional Contributions may be made for the purpose of
reaching the required minimum Account Balance and avoiding termination.
Amounts withdrawn in connection with the termination of an IRA or FPA Contract
will be paid to the Participant in a single sum.
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
Commission; or
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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 that 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 Contracts.
The level of Annuity Payments made to Annuitants under the Contracts 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 Contracts 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 of TDA and VEC Contracts
for delivery to each Participant thereunder an individual certificate setting
forth the amount and terms of payment of their annuity benefits. The benefits
to which an IRA or FPA Contract Participant is entitled generally are set
forth in the Contract issued to the Participant.
Payment of benefits under the Contracts 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 may begin on the Annuity
Commencement Date selected in the following manner:
TDA and VEC Contracts. Participants under TDA and VEC Contracts 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, but no earlier than age 55); or Later
Retirement Date (the first day of any calendar month following such
Participant's Normal Retirement Date) but with respect to VEC Contracts,
generally no later than age 70 for Participants who are no longer actively at
work.
IRA Contract. A Participant may elect an Annuity Commencement Date that is the
first day of any calendar month that is on or after the date on which the
Participant attains age 55. For SEP-IRAs, the Annuity Commencement Date must
be no earlier than the latest of the following: the first day of the calendar
month in which the Participant attains age 55, the 30th day following the day
the Participant stops working for the employer that sponsors the SEP, and the
30th day following the day that the last employer contribution due under the
SEP is received at the Insurance Company's home office.
FPA Contract. A Participant may elect an Annuity Commencement Date that is the
first day of any calendar month.
Annuity Commencement Date elections must be made in advance, in the manner
described under "General Matters--Contacting the Insurance Company." For IRAs
and SEP-IRAs, such election must be made 30 days in advance.
AVAILABLE FORMS OF ANNUITY
Annuity Payments will be made under one of the forms of annuity benefits
described below. Under TDA and VEC Contracts, unless an election to the
contrary is made prior to the Annuity Commencement Date, a Participant who
does not have an
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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. Under the VEC and some employer
sponsored TDA plans, consent of the spouse is required if payment is to be
made in any form other than the joint and survivor form. Under IRA and FPA
Contracts, the form in which Annuity Payments will be made is the form
selected by a Participant at the time the Participant designates an Annuity
Commencement Date. 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"). If the
Participant elects this form and dies before the Annuity Commencement Date,
the election will be cancelled.
Joint and Survivor 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").
Under TDA and VEC Contracts, 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 the
Participant's Annuity Commencement Date, the election of this form of annuity
will be automatically cancelled, and the Ten Years Certain and Continuous Form
will be paid unless the Participant elects an alternate form prior to the
Annuity Commencement Date.
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 a 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").
AMOUNT OF ANNUITY PAYMENTS
The amount of monthly Annuity Payments under the Contracts will be determined
on the basis of the application of the Participant's Account Balance to the
annuity purchase tables contained in the Contracts 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 Contracts.
SMALL BENEFIT PAYMENTS
TDA and VEC Contracts. Under TDA and VEC Contracts, if the initial monthly
payment under an annuity benefit payable under the Contract would be less than
$20, or if any Participant terminates employment and is eligible for a benefit
determined to be less than $20 a month under the Ten Years Certain and
Continuous Form of Annuity (described above), the Insurance Company may, at
its option, in lieu of making the monthly annuity benefit payments which would
otherwise be payable to the Participant commencing on the Participant's
Annuity Commencement Date, pay to the Participant on the Participant's Annuity
Commencement Date in a single sum the actuarially equivalent value of the
Participant's monthly annuity benefit that would otherwise be payable on the
Ten Years Certain and Continuous Form, 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 any date that is on or
before the Participant's Annuity Commencement Date. Under VEC Contracts, for
purposes of determining whether monthly annuity benefits payable to a
Participant are less than $20, a Participant's monthly annuity benefits will
be deemed to include any annuity benefit paid with respect to that Participant
under any other Contract between the Contractholder and the Insurance Company
or between the Contractholder and another insurance company that serves as the
funding vehicle for a pension plan meeting the requirements of Section 401(a)
and 403(a) of the Code.
IRA and FPA Contracts. Under IRA and FPA Contracts, if the annuity benefit
payable is less than $20 each month, the Insurance Company may, at its option,
pay the present value of the annuity benefit in one payment to the Annuitant.
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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 Contracts 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 Contracts provide 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 Contracts only. For complete details regarding
the General Account, see the Contracts themselves.
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 not guarantee that this will always be the
case. 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 TDA 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 TDA 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
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 on transfers in the future.
Partial or complete withdrawals may be made from the General Account prior to
a Participant's Annuity Commencement Date. 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 with respect to TDA or VEC Contracts may be subject to
written spousal consent under applicable rules.
ANNUITY PAYMENTS
All Annuity Payments under the Contracts 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 Contracts to determine the amount of Annuity Payments.
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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 Contracts 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
320 Park Avenue
New York, New York 10022
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling 1-800-468-3785.
TRANSFERS, WITHDRAWALS AND REALLOCATIONS BY TELEPHONE
Requests by Participants for transfers or withdrawals, or changes in the
formula for allocation of Contributions, may 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
P.M. 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. Because of requirements for written spousal consent,
telephone withdrawal under TDA and VEC Contracts may not be 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 Contracts, 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 written 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 in a VEC Plan or an employer sponsored
TDA, 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 either by a notary public or Plan representative, to such
Participant's election to waive any qualified preretirement survivor annuity
and qualified joint and survivor annuity forms of benefit which otherwise
would be applicable and designate a beneficiary other than such Eligible
Spouse. Such other beneficiary designation or form of benefit selected cannot
be changed by the Participant unless the Eligible Spouse provides written
consent in the manner described above.
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
rates used to determine the amount payable under the annuity benefit (see
"Amount of Annuity Payments").
ASSIGNMENT OF CONTRACTS
TDA, VEC and IRA Contracts. Except as otherwise required by law, no assignment
of TDA, VEC or IRA Contracts, nor transfer of any rights conferred thereunder,
is permitted.
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FPA Contract. An FPA Contract may be assigned by the person to whom it was
issued. However, no assignment will be binding on the Insurance Company until
it has been recorded by the Insurance Company, and no assignment will apply to
payments made before such recording.
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 Contracts
that arise from Participants' Account Balances.
Upon exhaustion of all amounts held under a TDA or VEC 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.
Upon withdrawal and payment of a Participant's Account Balance upon
termination of an IRA or FPA (see "Discontinuance and Termination"), the
Insurance Company will be released from all further liability with respect to
that Participant.
The Insurance Company may rely on the reports and other information furnished
by Contractholders or Participants as required under the Contracts, and need
not inquire as to the accuracy or completeness of such reports and information
(see "Information and Determination").
MODIFICATION OF TDA AND VEC CONTRACTS
Neither TDA nor VEC Contracts may be modified as to the Insurance Company, nor
may any of the rights or requirements of the Insurance Company be waived,
except in writing and by a duly authorized officer of the Insurance Company.
A TDA or VEC Contract may be changed at any time by the Insurance Company by
written notice, amendment or replacement upon at least 31 days' written
advance 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.
AMENDMENT OF IRA CONTRACT
By accepting an IRA Contract, a Participant delegates to the Insurance Company
the power to amend or replace that Contract to conform it to the provisions of
any law, regulations, or material administrative rulings pertaining to
individual retirement annuities, and to make such other changes in the
Contract that, as determined by the Insurance Company, are from time to time
necessary or appropriate. No changes may be made without the consent of the
Participant, however, if the effect would be to change substantially the costs
or benefits under the Contract, and no amendment will affect the amount or
terms of any annuity benefit provided thereunder before the change. An
endorsement or amendment of an IRA Contract or a waiver of any of its
provisions will be valid only when made in writing by the Insurance Company
and signed by an officer of the Insurance Company.
EVIDENCE OF SURVIVAL
When payment of an annuity benefit is contingent upon the survival of any
person, evidence of that person's survival must be furnished to the Insurance
Company, either by the 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.
INFORMATION AND DETERMINATION
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
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pertinent records held by the Contractholder or Participant. Any determination
that a Contractholder is to make under a TDA or VEC 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 UNDER VEC AND IRA CONTRACTS
To the extent permitted by law, no amount payable with respect to a
Participant under a VEC or IRA Contract may be assigned (either in law or at
equity), alienated or be subject to attachment, garnishment, levy (other than
a Federal tax levy made pursuant to Section 6331 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").
CLAIMS OF CREDITORS UNDER FPA CONTRACTS
To the extent permitted by law, no payment made by the Insurance Company
pursuant to an FPA Contract will be subject to the claims of any creditors. In
addition, no payment will be subject to any legal process to enforce any such
claim.
ALTERNATE PAYMENT 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 Contracts. 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 UNDER TDA AND VEC CONTRACTS
In order to receive annuity benefits under TDA and VEC Contracts, 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 that 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 a 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 a 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 Contracts
in the future. The determination of such surplus is within the sole discretion
of the Insurance Company's Board of Directors. Under usual circumstances,
separate accounts receive little benefit from and contribute little to
divisible surplus.
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
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respect to its pension business, are not taxable. The Contracts covered by
this Prospectus, other than FPA Contracts, 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.
PAYMENTS UNDER ANNUITY CONTRACTS GENERALLY
Section 72 of the Code describes the income taxation of annuity payments. Its
provisions apply to payments made under annuity contracts purchased in
conjunction with a Section 403(b) plan, payments made under a retirement plan
meeting the requirements of Section 401(a) or 403(a), and, effective January
1, 1987, payments made under annuity contracts issued as individual retirement
annuities under Section 408(b) of the Code. Other provisions of the Code may
be applicable to payments made under an employer's deferred compensation plan.
It is intended that the provisions of Section 72 will be applicable to
payments made under Contracts offered by this Prospectus to the extent they
are issued directly to an individual Participant, i.e., the FPA and IRA
Contracts, or in conjunction with a plan described above, i.e., the TDA and
VEC Contracts.
Generally, Participants must receive a payment under a Contract or plan in
order to be subject to income taxation. Interest, earnings or other
accumulations credited to a Participant's accounts are not required to be
included in a Participant's gross income until received by the Participant.
(Such interest, earnings or other accumulations may, in some cases, be subject
to income taxation prior to receipt if the owner of the Contract is not a
natural person or if the applicable requirements of the Code pertaining to
deferral of compensation are not met. See "Obtaining Tax Advice.") Once
annuity payments are received by a Participant, all or part of such payments
will be taxable to such Participant as ordinary income. Special income tax
treatment may be available if a payment constitutes a "lump sum distribution"
made from or under a retirement plan meeting the requirements of Section
401(a) of the Code.
Whether a Participant must include all of the Annuity Payments he has received
in a taxable year in his taxable income depends upon a number of variables. If
a Participant does not have an "investment in the contract," the total amount
received by such Participant during a tax year is includable in his gross
income. If a Participant does have an "investment in the contract," the
portion of the Annuity Payments received which must be included in the
Participant's gross income is determined under the "exclusion ratio" method to
the extent this method is available.
ANNUITY PAYMENTS UNDER AN FPA CONTRACT
A Participant who begins to receive Annuity Payments on or after the Annuity
Commencement Date may apply the "exclusion ratio" method to determine the
percentage of the total of such Payments received during the tax year which is
not subject to income taxation. This percentage is calculated by dividing the
Participant's "investment in the contract" (the total of all of his non-
deductible Contributions) by the "expected return" from the Contract (the
present discounted value of the expected stream of Annuity Payments). The
amount thus excluded from gross income each year represents a partial return
of the Participant's previously non-deductible Contributions.
If the Annuity Commencement Date under the FPA Contract falls on or after
January 1, 1987, the entire amount of the Annuity Payments received by a
Participant each year must be included in gross income once all of the
Participant's investment in the contract," i.e., the sum of the Participant's
non-deductible Contributions, has been recovered under the "exclusion ratio"
method. A Participant whose Annuity Commencement Date was on or before
December 31, 1986 can continue to exclude the applicable percentage of Annuity
Payments, determined as described above, received during each tax year even
though his or her "investment in the contract" has been totally recovered.
WITHDRAWALS UNDER AN FPA CONTRACT
The "exclusion ratio" method is only applicable to amounts received as an
annuity, e.g., Annuity Payments or another form of periodic payments, such as
an installment method for a fixed period or a fixed amount. If a Participant
receives payment under the FPA Contract which are not Annuity Payments (or
otherwise are not amounts received as an annuity), e.g., by making cash
withdrawals prior to the Annuity Commencement Date, the entire amount of such
payments must be included in the Participant's gross income in the tax year in
which received to the extent that the value of the FPA Contract immediately
before the payment exceeds the Participant's "investment in the contract."
This method causes the interest or earnings credited under the FPA Contract to
be taxed to the Participant before his "investment in the contract" may be
recovered. This rule is applicable to FPA Contracts issued on or after August
14, 1982. A different method may be applicable with respect to non-annuity
payments made under FPA Contracts issued before that date (see "Obtaining Tax
Advice").
LUMP SUM DISTRIBUTIONS UNDER AN FPA CONTRACT
A Participant who receives a single lump sum payment in lieu of Annuity
Payments must include the difference between the amount of the lump sum
payment and the amount of his "investment in the contract" in gross income for
the tax year in which the single lump sum payment is received.
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ANNUITY PAYMENTS UNDER VEC, TDA AND IRA CONTRACTS
The "exclusion ratio" method is also applicable to Annuity Payments made on or
after the Annuity Commencement date under IRA, TDA and VEC Contracts. Under an
IRA Contract, a Participant's "investment in the contract" is generally equal
to the total of his non-deductible Contributions made since January 1, 1987.
With respect to a VEC Contract, a Participant's "investment in the contract"
is equal to the total of the Participant's non-deductible Contributions which
are made in accordance with the provisions of a retirement plan which meets
the requirements of either Section 401(a) or Section 403(a) of the Code. With
respect to a TDA Contract, a Participant's "investment in the contract" would
generally be represented by the total amount of Contributions made which were
not excludable from a Participant's gross income, i.e., Contributions which
are in excess of the applicable limitations set forth in Section 403(b) of the
Code. In each case, the "expected return" is equal to the present discounted
value of the expected stream of Annuity Payments. As is the case with Annuity
Payments beginning on or after January 1, 1987 under an FPA Contract, the
"exclusion ratio" method continues to apply until the "investment in the
contract" has been recovered by the Participant. After that time, the
Participant will have to include the full amount of each Annuity Payment in
his income for each taxable year. In addition, if Annuity Payments from a TDA
Contract or a VEC Contract began before July 2, 1986, the "three year cost
recovery" rule may be applicable (see "Obtaining Tax Advice").
WITHDRAWALS UNDER VEC, TDA AND IRA CONTRACTS
Participants who receive payments under an IRA, TDA or VEC Contract on and
after July 2, 1986 which are not "amounts received as an annuity" or which are
received before the Annuity Commencement Date and who have an "investment in
the contract" generally may exclude only a portion of such payments from gross
income. The portion which may be excluded from gross income is generally
determined by dividing the Participant's "investment in the contract" by the
value of his vested account balance (or, in the case of a retirement plan
which is a defined benefit pension plan, the value of the vested accrued
benefit) as of the date of the distribution. The Internal Revenue Service may
indicate another date for valuing account balances for such purposes. It
should be noted that the value of a Participant's account balance on an
applicable valuation date under a VEC Contract issued in conjunction with a
defined benefit pension plan may be used in lieu of the present value of a
Participant's total vested accrued benefit under such plan if the "separate
contract" requirements of Section 72 are met (see "Obtaining Tax Advice"). A
special rule may apply with respect to Participant Contributions made before
January 1, 1987 which constitute part of the "investment in the contract."
Generally, such Contributions may be withdrawn prior to the Annuity
Commencement Date and not be subject to income taxation (earnings are subject
to taxation) if a Participant could have made such a withdrawal under the
terms of the retirement plan on or before May 5, 1986 without separating from
service (see "Obtaining Tax Advice" and "The Group and Individual Annuity
Contracts--Withdrawals").
LUMP SUM PAYMENTS UNDER VEC, TDA AND IRA CONTRACTS
Participants who receive a single sum payment of their entire account balance
under either an IRA, TDA or VEC Contract must include the entire amount of
such payment in their gross income in the tax year in which such payment was
received. However, any "investment in the contract" which has not been
recovered prior to the payment of such lump sum may be excluded from gross
income for such tax year.
QUALIFICATION OF CONTRACTS GENERALLY
The methods of taxation described above are only applicable to payments made
under Contracts issued in conjunction with plans which satisfy the
requirements of the Code.
Qualification of FPA Contracts Under the Code. FPA Contracts are issued on a
non-tax qualified basis and are generally intended for use by Participants for
personal financial planning purposes. FPA Contracts may also be issued in
conjunction with an employer's non-tax qualified deferred compensation plan
(see "Obtaining Tax Advice"). It is intended that the FPA Contracts will meet
the requirements for annuity contracts set forth in Section 72 of the Code,
e.g., the requirements with respect to pre- and post-death distributions.
Qualification of VEC Contracts Under the Code. Generally, VEC Contracts are
issued in conjunction with tax qualified retirement plans which meet the
requirements of Section 401(a) or Section 403(a) of the Code. They are
intended to be used as funding vehicles for the after-tax employee
Contributions which were made under the provisions of such plans and within
the applicable limitations of the federal tax law. (See "Obtaining Tax
Advice.")
Qualification of TDA Contracts Under the Code. The TDA Contract is offered for
use with plans designed to meet the provisions of Section 403(b) of the Code.
Under Section 403(b), Contributions applied toward the purchase of annuity
contracts on behalf of employees of public schools and organizations exempt
from tax under Section 501(c)(3) of the Code are excludable from the gross
income of such employees. However, this exclusion is limited to the extent
that the aggregate
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Contributions per year for such employees cannot exceed the "exclusion
allowance" set forth in Section 403(b)(2) or, if applicable, the contribution
limitation set forth in Section 415(c) of the Code. If Contributions are made
under a salary reduction agreement an additional limitation, set forth in
Section 402(g) of the Code, is applicable. Generally, contributions are
limited to the least of these applicable limits. In general, these limitations
are as follows:
(1) The total Contribution for a year cannot exceed the excess of 20% of the
employee's includable compensation for that year multiplied by the employee's
years of service minus any amounts contributed by his employer and excludable
from the employee's gross income for any prior taxable years;
(2) The Contributions to the Plan cannot exceed the lesser of $30,000 or 25%
of a Participant's includable compensation;
(3) Amounts which are contributed through salary reduction are limited to
$9,500 per year. (A special "catch-up," available to employees with 15 or more
years of service with the employer who have not made maximum contributions in
prior years may increase that amount by up to $3,000 per year, to a maximum
"catch-up" of $15,000.)
In addition, under certain circumstances the tax law may allow special
elections which would permit an increased exclusion allowance.
Qualification of IRA Contracts Under the Code. The IRA Contract is designed to
meet the requirements described in Section 408(b) of the Code.
Generally, the maximum allowable deduction which a Participant may take for
Contributions to an IRA Contract is $2,000 or 100% of his annual compensation,
whichever is less. If a Participant or his spouse participates in a pension
plan, a TDA or a SEP-IRA, and such Participant has an adjusted gross income
(AGI) over $25,000 ($40,000 for a married couple filing jointly), he will not
be entitled to make the maximum allowable deductible contribution. His
allowable deductible contribution will be reduced by $1 for every $5 by which
his AGI exceeds $25,000 ($40,000 if married and filing jointly). Thus, such a
taxpayer will not be entitled to any IRA deductions at all once he has an AGI
of $35,000 ($50,000 if married and filing jointly).
A Participant who is not entitled to deduct all or part of his Contributions
to an IRA under the above rules may still make non-deductible contributions of
up to $2,000 or 100% of his annual compensation, whichever is less. As with
deductible contributions, the earnings on the non-deductible contributions
will not be subject to taxation until withdrawn. If a Participant makes a non-
deductible contribution, the Participant must report the amount of that
contribution to the IRS when filing an income tax return for the year.
Participants who make non-deductible contributions to IRAs are responsible for
maintaining their own records regarding such contributions. All contributions
will be presumed by the Insurance Company to be deductible, including for tax
reporting purposes, when distributions occur, and it is the responsibility of
the Participant to make any appropriate adjustments when reporting such
distributions to the IRS on an income tax return for the year of distribution.
The $2,000 limitation is increased to $2,250 if a Participant has a non-
working spouse (or a spouse who elects to be treated as having no
compensation) for whom a Contribution to an IRA is made. Generally, in such a
case, no more than $2,000 may be contributed to an IRA on behalf of either the
Participant or the spouse. Excess Contributions may result in adverse income
tax consequences to a Participant.
Contributions may not be made by or on behalf of an individual who has
attained 70 1/2 years of age before the close of the taxable year for which
the Contribution is to be made, except that under SEP IRAs an employer may
contribute even if the employee has reached age 70 1/2.
In general, under a SEP an employer can contribute an amount for an employee
up to 15% of the employee's compensation but not in excess of the maximum
dollar amount of $30,000. These limits may be reduced, however, by
contributions made by the employer to other tax-qualified plans. Subject to
the limits discussed above, covered employees can contribute to the same IRA
or another IRA, even if the employer makes the maximum SEP contribution.
These limits on Contributions, however, do not apply to tax-free rollovers
from other qualified retirement plans (see "Payment of Contributions").
PENALTY TAXES
TDA, IRA and VEC Contracts
In addition to ordinary income taxation, Section 72 of the Code imposes a
penalty tax on premature withdrawals from TDA, IRA and VEC Contracts. This
penalty tax is equal to 10% of the amount of the premature withdrawal which is
includable in
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gross income. The penalty tax applies to payments made to Participants under
the above Contracts prior to age 59 1/2 unless the distribution is made under
one of the following circumstances:
1. On account of a Participant's disability;
2. On account of a Participant's death;
3. 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 joint life
expectancies) of the Participant and his beneficiary (for VEC and TDA
distributions, this exception applies only after termination of service by the
Participant);
4. To a Participant after separation from service after attaining age 55.
(This exception does not apply to premature payments made under the IRA
Contract); or
5. To a Participant on account of medical expenses deductible under Section
213 of the Code. (This exception also does not apply to premature payments
made under the IRA Contract.)
FPA Contracts
Since January 1, 1987, a 10% penalty tax has been imposed on premature
withdrawals made from an FPA Contract which has been issued since January 18,
1985. This penalty tax is applicable to the amount of the premature withdrawal
which is includable in gross income. This penalty tax will be imposed on the
taxable portion of payments made before a Participant attains age 59 1/2
unless the distribution is made under one of the following circumstances:
1. On account of a Participant's death or disability;
2. As part of a series of substantially equal periodic payments made over the
Participant's life (or life expectancy) or over the joint lives (or joint life
expectancies) of a Participant and his beneficiary;
3. From amounts which are attributable to Contributions made prior to August
14, 1982;
4. From a Contract purchased in conjunction with a plan that meets the
requirements of Section 401(a) or was issued under an IRA or TDA;
5. Under an immediate annuity contract; or
6. Under a Contract purchased for an employee by a plan upon its termination,
provided the plan met the requirements of Section 401(a) or Section 403(a) of
the Code.
A 5% penalty tax was applicable to premature payments received before 1987
under FPA Contracts as well as to premature payments received after December
31, 1982 under FPA Contracts issued before January 19, 1985 (see "Obtaining
Tax Advice").
Other federal income tax penalties may be applicable to amounts accumulated or
distributed under VEC, IRA and TDA Contracts (see "Obtaining Tax Advice").
Tax Penalty on Excess Distributions
A Participant who receives aggregate retirement distributions for a calendar
year in excess of a certain amount, currently $150,000, may be subject to a
penalty tax equal to 15% of the excess. This penalty tax is in addition to the
regular income tax imposed on the excess distribution. This penalty does not
generally apply to death benefits and certain other distributions, and special
rules apply to lump sum distributions and certain "grandfathered amounts"
accrued before August 1, 1986. See "Obtaining Tax Advice."
OTHER MATTERS
Minimum Distributions
The Code contains a series of rules which require that minimum distributions
under IRA, VEC, and TDA Contracts commence by a certain time.
Generally, such rules provide that distributions under a VEC Contract must
begin no later than April 1 of the year following the year in which the
Participant attains age 70 1/2 even if the Participant does not terminate his
employment. However, under a "grandfather" provision, Participants who attain
age 70 1/2 before January 1, 1988, and remain employed, are generally not
required to begin receiving distributions until April 1 of the year following
termination of employment.
Distributions under IRA Contracts must begin by April 1 of the year following
the year in which the Participant attains age 70 1/2, even if such Participant
does not retire.
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Distributions under TDA Contracts are subject to similar rules. In general,
benefits accruing after December 31, 1986 must be distributed beginning by
April 1 of the year following the year the Participant attains age 70 1/2. The
above "grandfather provision" applies to a Participant who attained age 70 1/2
before January 1, 1988.
If minimum distribution requirements are not met, a penalty tax equal to 50%
of the difference between the required minimum and the actual distribution may
be applicable (see "Obtaining Tax Advice").
Estate Taxes
In general, a death benefit, consisting of amounts payable to a Participant's
beneficiary (see "Death Benefits") may be includable in the Participant's
estate for federal estate tax purposes. (See "Obtaining Tax Advice.")
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
FPA and IRA Contracts
Federal income tax withholding on Annuity Payments and other distributions
(such as lump sum distributions or premature withdrawals) is required. In
addition, certain states require withholding if federal withholding is
applicable. However, recipients of Annuity Payments or other distributions
under the Contracts are permitted to make an election not to have federal
income tax withheld. Such an election may be revoked by the Participant at any
time. If such election is revoked, withholding will commence.
The withholding rate utilized by the Insurance Company will be applied only
against the taxable portion of the Annuity Payments or of the other
distributions. This rate will be determined based upon the nature of the
distribution(s). Federal tax will be withheld from Annuity Payments pursuant
to the Annuitant's withholding certificate. If no withholding certificate is
filed with the Insurance Company, federal tax will be withheld from Annuity
Payments on the basis that the Annuitant is married with three withholding
exemptions. Federal tax on withdrawals other than Annuity Payments will be
withheld in general at a flat 10% rate of the amount withdrawn. Future IRS
Regulations may also require the withholding of the full 10% penalty tax (see
"Penalty Taxes" above) under some circumstances.
TDA and VEC Contracts
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 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.
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. In addition, certain
states require withholding if federal withholding is applicable.
OBTAINING TAX ADVICE
This description of the current federal tax status of amounts accumulated or
received under the Contracts is not exhaustive and is for information purposes
only. This description does not purport to cover all situations involving the
purchase of an annuity or the election of an option under the Contracts. 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 adviser should be consulted for complete tax
information regarding any specific situation.
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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
such funds or portfolios 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 the Insurance Company 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 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.
Each person having the right to give voting instructions to the Insurance
Company will receive periodic reports relating to any of the Investment
Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth
Fund and Calvert Responsibly Invested Balanced Portfolio for which he or she
has the right to give voting instructions, 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 during each
week in such a 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.
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 performances 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 Contracts belong 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
35
<PAGE>
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 Contracts 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 also participate in the
Separate Account.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Distribution of the Contracts 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) 224-1600, detach the Form
included below and mail it to Mutual of America Life Insurance Company, 320
Park Avenue, New York, New York 10022.
- -------------------------------------------------------------------------------
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,
1996 for the Tax-Deferred Annuity Plan, Voluntary Employee Contribution
Program, Individual Retirement Annuity and Flexible Premium Annuity offered by
Mutual of America. My name and address are as follows:
---------------------------------------------------
Name
---------------------------------------------------
Street Address
---------------------------------------------------
City State Zip
36
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
TAX-DEFERRED ANNUITY PLAN
VOLUNTARY EMPLOYEE CONTRIBUTION PROGRAM
INDIVIDUAL RETIREMENT ANNUITY
FLEXIBLE PREMIUM ANNUITY
OFFERED BY
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE
NEW YORK NEW YORK 10022
---------------
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Tax-Deferred Annuity Plan, Voluntary Employee
Contribution Program, Individual Retirement Annuity and Flexible Premium
Annuity Contracts ("Contracts") offered by Mutual of America Life Insurance
Company. You may obtain a copy of the Prospectus dated May 1, 1996, by calling
(212) 224-1600, or writing to Mutual of America Life Insurance Company, 320
Park Avenue, New York, New York 10022. 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, 1996
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>
<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 26, 1995 was 4.23%.
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/n - 1
Where:
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.
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.
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.
3
<PAGE>
AVERAGE ANNUAL
TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
Investment Company All
America.................. 34.4% 13.0% 11.0% 13.5%(1)
<S> <C> <C> <C> <C>
Investment Company Equity
Index.................... 34.5 N/A N/A 12.5 (2)
Investment Company Bond... 17.6 8.8 7.0 8.2 (1)
Investment Company Short-
Term Bond................ 6.1 N/A N/A 3.1 (2)
Investment Company Mid-
Term Bond................ 14.5 N/A N/A 4.9 (2)
Investment Company Compos-
ite...................... 20.0 9.9 9.0 10.5 (1)
Investment Company Aggres-
sive Equity.............. 36.0 N/A N/A 23.8 (3)
Fidelity VIP Equity-In-
come..................... 33.0 19.5 N/A 11.8 (4)
Fidelity VIP II Contra.... 37.5 N/A N/A 37.5 (5)
Fidelity VIP II Asset Man-
ager..................... 15.1 11.1 N/A 9.8 (6)
Scudder Capital Growth.... 26.7 14.1 11.7 12.2 (7)
Scudder Bond.............. 16.4 8.1 7.2 7.5 (7)
Scudder International..... 9.4 8.8 N/A 7.9 (8)
TCI Growth................ 29.3 13.3 N/A 11.3 (9)
Calvert Responsibly In-
vested Balanced.......... 27.8 9.5 N/A 8.4 (10)
CUMULATIVE TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1995
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
Investment Company All
America.................. 34.4% 84.1% 185.0% 301.9%(1)
<S> <C> <C> <C> <C>
Investment Company Equity
Index.................... 34.5 N/A N/A 40.8 (2)
Investment Company Bond... 17.6 52.2 97.5 138.2 (1)
Investment Company Short-
Term Bond................ 6.1 N/A N/A 9.1 (2)
Investment Company Mid-
Term Bond................ 14.5 N/A N/A 15.0 (2)
Investment Company Compos-
ite...................... 20.0 60.3 136.0 200.6 (1)
Investment Company Aggres-
sive Equity.............. 36.0 N/A N/A 42.8 (3)
Fidelity VIP Equity-In-
come..................... 33.0 143.3 N/A 180.4 (4)
Fidelity VIP II Contra.... 37.5 N/A N/A 37.5 (5)
Fidelity VIP II Asset Man-
ager..................... 15.1 69.4 N/A 80.2 (6)
Scudder Capital Growth.... 26.7 93.4 202.1 232.1 (7)
Scudder Bond.............. 16.4 47.6 99.9 113.9 (7)
Scudder International..... 9.4 52.6 N/A 94.0 (8)
TCI Growth................ 29.3 86.8 N/A 138.8 (9)
Calvert Responsibly In-
vested Balanced.......... 27.8 57.5 N/A 111.5 (10)
</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 January 3, 1995 (commencement of operations)
(6) For the period beginning September 6, 1989 (commencement of operations)
(7) For the period beginning July 16, 1985 (commencement of operations)
(8) For the period beginning May 1, 1987 (commencement of operations)
(9) For the period beginning November 20, 1987 (commencement of operations)
(10) For the period beginning September 2, 1986 (commencement of operations)
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, including a monthly service charge (a $2.00 monthly contract
fee assessed as a cost per $1,000 based on the average account balance for all
individually allocated contracts). 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.
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 LLP, 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
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.
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.
6
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<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 --
$32,729,141
All America Fund --
$174,927,208
Equity Index Fund --
$19,412,903
Bond Fund --
$33,061,952)
(Notes 1 and 2)........ $32,319,175 $197,955,305 $ 21,872,873 $33,514,636
Due From (To) Mutual of
America General Ac-
count.................. (793,429) (606,018) 2,362,430 (1,027,915)
----------- ------------ ------------ -----------
Net Assets.............. $31,525,746 $197,349,287 $24,235,303 $32,486,721
=========== ============ ============ ===========
Unit Value at December
31, 1995 (Note 5)...... $ 1.80 $ 4.52 $ 1.42 $ 2.69
====== ====== ====== ======
Number of Units Out-
standing at December
31, 1995
(Note 5)............... 17,501,751 43,620,409 17,109,334 12,083,433
=========== ============ ============ ===========
<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 --
$1,611,264
Mid-Term Bond Fund --
$3,265,857
Composite Fund --
$223,087,740
Aggressive Equity Fund
-- $24,261,337)
(Notes 1 and 2)........ $ 1,586,712 $ 3,247,382 $239,838,412 $27,058,738
Due From (To) Mutual of
America General Ac-
count.................. 3,498 52,775 (318,862) 2,828,500
----------- ------------ ------------ -----------
Net Assets.............. $ 1,590,210 $ 3,300,157 $239,519,550 $29,887,238
=========== ============ ============ ===========
Unit Value at December
31, 1995 (Note 5)...... $ 1.10 $ 1.16 $ 3.39 $ 1.43
====== ====== ====== ======
Number of Units Out-
standing at December
31, 1995
(Note 5)............... 1,447,249 2,848,418 70,558,367 20,857,532
=========== ============ ============ ===========
</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, 1995
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
--------------------------------------- ----------- -----------
CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL GROWTH INVESTED
FUND FUND FUND FUND FUND
------------ ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder
Portfolios, TCI Growth
Fund and Calvert Re-
sponsibly Invested
Portfolio at market
value
(Cost:
Scudder Bond Fund --
$14,168,514
Scudder Capital Growth
Fund -- $132,718,252
Scudder International
Fund -- $73,756,615
TCI Growth Fund --
$74,940,379
Calvert Responsibly In-
vested Portfolio --
$13,777,796)
(Notes 1 and 2)........ $ 14,468,821 $160,115,078 $85,361,223 $97,454,582 $15,166,797
Due From (To) Mutual of
America General Ac-
count.................. (124,527) (657,055) 751,619 712,823 591,461
------------ ------------ ----------- ----------- -----------
Net Assets.............. $14,344,294 $159,458,023 $86,112,842 $98,167,405 $15,758,258
============ ============ =========== =========== ===========
Unit Value at December
31, 1995 (Note 5)...... $ 11.30 $ 18.64 $ 11.85 $ 12.18 $ 2.01
======= ======= ======= ======= ======
Number of Units Out-
standing at December
31, 1995 (Note 5)...... 1,268,848 8,556,431 7,268,760 8,061,251 7,849,044
============ ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
---------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------- ----------- -------------
<S> <C> <C> <C>
Assets:
Investments in Fidelity Portfolios at
market value
(Cost:
VIP Equity-Income Fund -- $13,385,731
VIP II Contra Fund -- $24,149,252
VIP II Asset Manager Fund --
$2,704,368)
(Notes 1 and 2)....................... $14,227,760 $24,643,506 $2,843,230
Due From (To) Mutual of America General
Account............................... (87,557) 170,013 34,334
----------- ----------- ----------
Net Assets............................. $14,140,203 $24,813,519 $2,877,564
=========== =========== ==========
Unit Value at December 31, 1995 (Note
5).................................... $ 19.43 $ 13.85 $ 15.66
======= ======= =======
Number of Units Outstanding at December
31, 1995 (Note 5)..................... 727,702 1,792,070 183,755
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Investment Income and Ex-
penses:
Income (Notes 1 and 4):
Dividends................... $2,108,356 $ 6,282,424 $ 732,314 $1,987,417
---------- ----------- ---------- ----------
Total income................. 2,108,356 6,282,424 732,314 1,987,417
---------- ----------- ---------- ----------
Expenses (Note 3):
Fees........................ 403,965 2,014,428 146,132 357,687
Administrative expenses..... 79,141 103,563 11,167 53,297
---------- ----------- ---------- ----------
Total Expenses............... 483,106 2,117,991 157,299 410,984
---------- ----------- ---------- ----------
Net Investment Income
(Loss)...................... 1,625,250 4,164,433 575,015 1,576,433
---------- ----------- ---------- ----------
Net Realized and Unrealized
Gain (Loss) On
Investments (Note 1):
Net realized gain (loss) on
investments................ 174,996 676,857 162,564 (28,928)
Net unrealized appreciation
(depreciation) of invest-
ments...................... (485,901) 41,443,244 2,678,826 3,085,787
---------- ----------- ---------- ----------
Net Realized and Unrealized
Gain (Loss) on Investments.. (310,905) 42,120,101 2,841,390 3,056,859
---------- ----------- ---------- ----------
Net Increase (Decrease) in
Net Assets Resulting From
Operations.................. $1,314,345 $46,284,534 $3,416,405 $4,633,292
========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
-------------------------------------------
SHORT- AGGRESSIVE
TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
--------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends.......................... $85,871 $188,932 $13,270,110 $1,884,120
------- -------- ----------- ----------
Total income........................ 85,871 188,932 13,270,110 1,884,120
------- -------- ----------- ----------
Expenses (Note 3):
Fees............................... 18,202 26,456 2,798,126 182,556
Administrative expenses............ 3,969 4,659 249,136 17,188
------- -------- ----------- ----------
Total Expenses...................... 22,171 31,115 3,047,262 199,744
------- -------- ----------- ----------
Net Investment Income (Loss)........ 63,700 157,817 10,222,848 1,684,376
------- -------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on invest-
ments............................. 14,369 (8,004) 799,067 339,162
Net unrealized appreciation (depre-
ciation) of investments........... 7,196 129,249 29,855,578 2,317,578
------- -------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments.............. 21,565 121,245 30,654,645 2,656,740
------- -------- ----------- ----------
Net Increase (Decrease) in Net
Assets Resulting from Operations... $85,265 $279,062 $40,877,493 $4,341,116
======= ======== =========== ==========
</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, 1995
-------------------------------------------------------------
SCUDDER TCI CALVERT
------------------------------------- ----------- -----------
CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL GROWTH INVESTED
FUND FUND FUND FUND FUND
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 903,101 $ 5,158,070 $ 413,372 $ 68,431 $1,347,197
---------- ----------- ---------- ----------- ----------
Total income............ 903,101 5,158,070 413,372 68,431 1,347,197
---------- ----------- ---------- ----------- ----------
Expenses (Note 3):
Fees................... 162,985 1,718,435 1,062,767 810,611 151,060
Administrative ex-
penses................ 34,390 103,893 31,638 26,045 22,590
---------- ----------- ---------- ----------- ----------
Total Expenses.......... 197,375 1,822,328 1,094,405 836,656 173,650
---------- ----------- ---------- ----------- ----------
Net Investment Income
(Loss)................. 705,726 3,335,742 (681,033) (768,225) 1,173,547
---------- ----------- ---------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on invest-
ments................. (43,337) 601,944 2,996,091 2,629,546 55,268
Net unrealized appreci-
ation (depreciation)
of investments........ 1,156,840 28,289,318 5,526,646 16,390,488 1,651,549
---------- ----------- ---------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 1,113,503 28,891,262 8,522,737 19,020,034 1,706,817
---------- ----------- ---------- ----------- ----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,819,229 $32,227,004 $7,841,704 $18,251,809 $2,880,364
========== =========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED DECEMBER 31,
1995
------------------------------------
FIDELITY(a)
------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------- -------- -------------
<S> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends............................... $ 98,583 $309,298 $ --
-------- -------- --------
Total income............................. 98,583 309,298 --
-------- -------- --------
Expenses (Note 3):
Fees.................................... 41,644 90,935 10,305
Administrative expenses................. 4,756 6,620 1,343
-------- -------- --------
Total Expenses........................... 46,400 97,555 11,648
-------- -------- --------
Net Investment Income (Loss)............. 52,183 211,743 (11,648)
-------- -------- --------
Net Realized and Unrealized Gain (Loss)
on Investments (Note 1):
Net realized gain (loss) on invest-
ments.................................. 167 21,227 9,118
Net unrealized appreciation (deprecia-
tion) of investments................... 842,029 494,253 138,862
-------- -------- --------
Net Realized and Unrealized Gain (Loss)
on Investments.......................... 842,196 515,480 147,980
-------- -------- --------
Net Increase (Decrease) in Net Assets Re-
sulting from Operations................. $894,379 $727,223 $136,332
======== ======== ========
</TABLE>
- -------
(a) Commenced operation May 1, 1995
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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
-----------------------------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND EQUITY INDEX FUND
------------------------ -------------------------- -----------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,625,250 $ 291,756 $ 4,164,433 $ 13,645,961 $ 575,015 $ 16,086
Net realized gain
(loss) on invest-
ments................. 174,996 (38,466) 676,857 (567,365) 162,564 (59,579)
Net unrealized appreci-
ation (depreciation)
of investments........ (485,901) 759,856 41,443,244 (12,875,656) 2,678,826 36,617
----------- ----------- ------------ ------------ ----------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,314,345 1,013,146 46,284,534 202,940 3,416,405 (6,876)
----------- ----------- ------------ ------------ ----------- ----------
From Unit Transactions:
Contributions.......... 6,674,056 6,073,509 20,883,923 19,674,339 4,017,188 1,098,680
Withdrawals............ (3,900,806) (2,623,780) (10,074,230) (8,268,470) (2,116,885) (234,018)
Net transfers.......... (2,980,451) (604,009) 10,560,332 (4,505,657) 14,042,110 1,779,248
----------- ----------- ------------ ------------ ----------- ----------
Net Increase (Decrease)
from unit transac-
tions.................. (207,201) 2,845,720 21,370,025 6,900,212 15,942,413 2,643,910
----------- ----------- ------------ ------------ ----------- ----------
Net Increase (Decrease)
in Net Assets.......... 1,107,144 3,858,866 67,654,559 7,103,152 19,358,818 2,637,034
Net Assets:
Beginning of Year....... 30,418,602 26,559,736 129,694,728 122,591,576 4,876,485 2,239,451
----------- ----------- ------------ ------------ ----------- ----------
End of Year............. $31,525,746 $30,418,602 $197,349,287 $129,694,728 $24,235,303 $4,876,485
=========== =========== ============ ============ =========== ==========
</TABLE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
------------------------------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
------------------------ ---------------------- ----------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,576,433 $ 1,261,184 $ 63,700 $ 28,571 $ 157,817 $ 41,132
Net realized gain
(loss) on invest-
ments................. (28,928) (302,472) 14,369 (6,494) (8,004) (50,900)
Net unrealized appreci-
ation (depreciation)
of investments........ 3,085,787 (1,816,698) 7,196 (17,177) 129,249 (58,646)
----------- ----------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 4,633,292 (857,986) 85,265 4,900 279,062 (68,414)
----------- ----------- ---------- ---------- ---------- ----------
From Unit Transactions:
Contributions.......... 4,347,174 4,675,807 481,850 270,055 525,221 320,857
Withdrawals............ (2,307,210) (2,006,232) (87,191) (36,489) (262,353) (63,445)
Net transfers.......... 1,651,332 (6,857,983) (58,307) 159,174 1,301,289 (227,052)
----------- ----------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
from unit transac-
tions.................. 3,691,296 (4,188,408) 336,352 392,740 1,564,157 30,360
----------- ----------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 8,324,588 (5,046,394) 421,617 397,640 1,843,219 (38,054)
Net Assets:
Beginning of Year....... 24,162,133 29,208,527 1,168,593 770,953 1,456,938 1,494,992
----------- ----------- ---------- ---------- ---------- ----------
End of Year............. $32,486,721 $24,162,133 $1,590,210 $1,168,593 $3,300,157 $1,456,938
=========== =========== ========== ========== ========== ==========
</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
FOR THE YEARS* ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
--------------------------------------------------
COMPOSITE FUND AGGRESSIVE EQUITY FUND
-------------------------- ----------------------
1995 1994 1995 1994 (a)
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income
(loss)................... $ 10,222,848 $ 8,133,172 $ 1,684,376 $ (22,089)
Net realized gain (loss)
on investments........... 799,067 (144,879) 339,162 (17,738)
Net unrealized apprecia-
tion (depreciation) of
investments.............. 29,855,578 (17,831,209) 2,317,578 438,279
------------ ------------ ----------- ----------
Net Increase (Decrease) in
net assets resulting from
operations................ 40,877,493 (9,842,916) 4,341,116 398,452
------------ ------------ ----------- ----------
From Unit Transactions:
Contributions............. 29,572,877 34,731,678 5,686,601 830,201
Withdrawals............... (19,258,841) (15,888,891) 28,794 (91)
Net transfers............. (18,173,511) (12,539,959) 10,226,297 8,375,868
------------ ------------ ----------- ----------
Net Increase (Decrease)
from unit transactions.... (7,859,475) 6,302,828 15,941,692 9,205,978
------------ ------------ ----------- ----------
Net Increase (Decrease) in
Net Assets................ 33,018,018 (3,540,088) 20,282,808 9,604,430
Net Assets:
Beginning of Year/Period... 206,501,532 210,041,620 9,604,430 --
------------ ------------ ----------- ----------
End of Year................ $239,519,550 $206,501,532 $29,887,238 $9,604,430
============ ============ =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
--------------------------------------
VIP
EQUITY- VIP II VIP II
INCOME CONTRA ASSET MANAGER
FUND(b) FUND(b) FUND(b)
----------- ----------- -------------
1995 1995 1995
----------- ----------- -------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss)........... $ 52,183 $ 211,743 $ (11,648)
Net realized gain (loss) on invest-
ments................................. 167 21,227 9,118
Net unrealized appreciation (deprecia-
tion) of investments.................. 842,029 494,253 138,862
----------- ----------- ----------
Net Increase (Decrease) in net assets
resulting from operations.............. 894,379 727,223 136,332
----------- ----------- ----------
From Unit Transactions:
Contributions.......................... 1,349,849 2,617,118 541,615
Withdrawals............................ (11,412) 107,831 (74)
Net transfers.......................... 11,907,387 21,361,347 2,199,691
----------- ----------- ----------
Net Increase (Decrease) from unit trans-
actions................................ 13,245,824 24,086,296 2,741,232
----------- ----------- ----------
Net Increase (Decrease) in Net Assets... 14,140,203 24,813,519 2,877,564
Net Assets:
Beginning of Period..................... -- -- --
----------- ----------- ----------
End of Period........................... $14,140,203 $24,813,519 $2,877,564
=========== =========== ==========
</TABLE>
- -------
* Except for the periods noted.
(a)For the period May 2, 1994, (Commencement of Operations) to December 31,
1994.
(b) For the period May 1, 1995, (Commencement of Operations) to December 31,
1995.
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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SCUDDER
------------------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 705,726 $ 836,572 $ 3,335,742 $ 9,047,262 $ (681,033) $ (699,709)
Net realized gain
(loss) on invest-
ments................. (43,337) (105,216) 601,944 (2,311,123) 2,996,091 861,109
Net unrealized appreci-
ation (depreciation)
of investments........ 1,156,840 (1,416,683) 28,289,318 (19,723,530) 5,526,646 (2,847,981)
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,819,229 (685,327) 32,227,004 (12,987,391) 7,841,704 (2,686,581)
----------- ----------- ------------ ------------ ----------- -----------
From Unit Transactions:
Contributions.......... 2,443,120 2,733,263 24,829,211 26,710,616 15,269,408 17,970,684
Withdrawals............ (1,238,764) (1,070,007) (11,652,523) (8,092,050) (7,516,904) (4,975,428)
Net transfers.......... 1,342 (2,832,706) (5,052,941) 5,109,145 (22,431,215) 22,915,041
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit transac-
tions.................. 1,205,698 (1,169,450) 8,123,747 23,727,711 (14,678,711) 35,910,297
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets.......... 3,024,927 (1,854,777) 40,350,751 10,740,320 (6,837,007) 33,223,716
Net Assets:
Beginning of Year....... 11,319,367 13,174,144 119,107,272 108,366,952 92,949,849 59,726,133
----------- ----------- ------------ ------------ ----------- -----------
End of Year............. $14,344,294 $11,319,367 $159,458,023 $119,107,272 $86,112,842 $92,949,849
=========== =========== ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
TCI CALVERT
------------------------ -----------------------
RESPONSIBLY
GROWTH FUND INVESTED FUND
------------------------ -----------------------
1995 1994 1995 1994
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income
(loss).................... $ (768,225) $ (690,450) $ 1,173,547 $ 151,210
Net realized gain (loss) on
investments............... 2,629,546 1,389,395 55,268 21,357
Net unrealized appreciation
(depreciation) of invest-
ments..................... 16,390,488 (1,785,436) 1,651,549 (668,145)
----------- ----------- ----------- ----------
Net Increase (Decrease) in
net assets resulting from
operations................. 18,251,809 (1,086,491) 2,880,364 (495,578)
----------- ----------- ----------- ----------
From Unit Transactions:
Contributions.............. 13,560,719 12,706,848 3,096,573 2,861,238
Withdrawals................ (6,457,226) (3,670,340) (829,244) (602,657)
Net transfers.............. 13,097,419 (5,384,026) 1,233,524 (834,622)
----------- ----------- ----------- ----------
Net Increase (Decrease) from
unit transactions.......... 20,200,912 3,652,482 3,500,853 1,423,959
----------- ----------- ----------- ----------
Net Increase (Decrease) in
Net Assets................. 38,452,721 2,565,991 6,381,217 928,381
Net Assets:
Beginning of Year........... 59,714,684 57,148,693 9,377,041 8,448,660
----------- ----------- ----------- ----------
End of Year................. $98,167,405 $59,714,684 $15,758,258 $9,377,041
=========== =========== =========== ==========
</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 AND ORGANIZATION
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, the Bond Fund and the Composite
Fund. These Funds invest in corresponding Funds of Mutual of America
Investment Corporation ("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 Responsibly Invested Balanced Portfolio became available
as an investment option. The Calvert Responsibly Invested Balanced Portfolio
(formerly "Calvert Socially Responsible Series") invests in a corresponding
Fund of the Calvert Responsibly Invested Balanced Portfolio of Acacia Capital
Corporation ("Calvert").
On February 5, 1993 the Mutual of America Equity Index, Short-Term Bond and
Mid-Term Bond Funds became available to Separate Account No. 2 as investment
options. 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.
On May 1, 1995, Fidelity Investments Equity-Income, Contrafund and Asset
Manager Portfolios became available to Separate Account No. 2 as investment
options. The Fidelity Equity-Income Portfolio invests in a corresponding
Portfolio of the Fidelity Variable Insurance Products Fund and the Contrafund
and Asset Manager Portfolios invest in corresponding Portfolios of the
Fidelity Variable Insurance Products Fund II (collectively "Fidelity").
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, Calvert and Fidelity and are valued at the reported net
asset values of the respective Funds or Portfolios.
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 their respective
net asset values per share at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
----------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................. 27,443,623 $1.18
All America Fund.................................. 93,084,535 2.13
Equity Index Fund................................. 16,253,779 1.35
Bond Fund......................................... 23,459,234 1.43
Short-Term Bond Fund.............................. 1,557,128 1.02
Mid-Term Bond Fund................................ 3,246,787 1.00
Composite Fund.................................... 132,756,347 1.81
Aggressive Equity Fund............................ 20,021,560 1.35
</TABLE>
14
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
---------- ---------
<S> <C> <C>
Scudder Portfolios:
Bond Portfolio..................................... 2,017,966 $ 7.17
Capital Growth Portfolio........................... 10,617,711 15.08
International Portfolio............................ 7,221,762 11.82
TCI Growth Fund..................................... 8,080,811 12.06
Calvert Responsibly Invested Portfolio.............. 8,905,928 1.70
Fidelity Portfolios:
Equity-Income...................................... 738,337 19.27
Contrafund......................................... 1,788,353 13.78
Asset Manager...................................... 180,065 15.79
</TABLE>
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), an
amount from the value of the net assets of all Funds except the TCI Growth
Fund for which the annual rate is .20% (.45% before 8/2/94).
In addition, a deduction of up to $2.00 may be 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, at an annual rate of .35%, an amount from the value of
the net assets of each Fund 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, at an annual rate of .50%, an amount from the value of
the net assets of each Fund.
4. DIVIDENDS
All dividend distributions are reinvested in additional shares of the
respective Funds or Portfolios at net asset value.
On December 29, 1995 a dividend distribution was declared by the Investment
Company to shareholders of record on December 28, 1995. This dividend was paid
on December 29, 1995. In addition, the Investment Company declared and paid a
dividend distribution from the Money Market Fund on September 15, 1995. The
combined amount of these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund..................... $ 2,108,356
All America Fund...................... 6,282,424
Equity Index Fund..................... 732,314
Bond Fund............................. 1,987,417
Short-Term Bond Fund.................. 85,871
Mid-Term Bond Fund.................... 188,932
Composite Fund........................ 13,270,110
Aggressive Equity Fund................ 1,884,120
</TABLE>
On January 27, 1995, April 26, 1995, July 27, 1995 and October 27, 1995,
dividends were paid by the Scudder Bond Portfolio. The combined amount of the
dividends was $903,101.
On January 27, 1995, February 24, 1995, April 26, 1995, July 27, 1995 and
October 27, 1995, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $5,158,070.
On February 24, 1995, a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $413,372.
On January 7, 1995, a dividend was paid by the TCI Growth Fund. The amount
of the dividend was $68,431.
15
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On December 29, 1995, a dividend was paid by the Calvert Responsibly
Invested Portfolio. The amount of the dividend was $1,347,197.
On June 16, 1995, September 15, 1995 and December 29, 1995, dividends were
paid by the Fidelity Equity-Income Portfolio. The combined amount of the
dividends was $98,583.
On December 22, 1995, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $309,298.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding for each of the
previous five years ended December 31.
<TABLE>
<CAPTION>
MUTUAL OF AMERICA MONEY MARKET FUND
-----------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $1.72 $1.68 $1.65 $1.62 $1.54
====== ====== ====== ====== ======
Unit value, end of year............ $1.80 $1.72 $1.68 $1.65 $1.62
====== ====== ====== ====== ======
Thousands of units outstanding, end
of year........................... 17,502 17,653 15,815 16,545 15,656
====== ====== ====== ====== ======
<CAPTION>
MUTUAL OF AMERICA ALL AMERICA FUND
-----------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $3.35 $3.36 $3.03 $2.97 $2.41
====== ====== ====== ====== ======
Unit value, end of year............ $4.52 $3.35 $3.36 $3.03 $2.97
====== ====== ====== ====== ======
Thousands of units outstanding, end
of year........................... 43,620 38,669 36,510 32,352 26,173
====== ====== ====== ====== ======
<CAPTION>
MUTUAL OF AMERICA BOND FUND
-----------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $2.28 $2.39 $2.13 $1.99 $1.73
====== ====== ====== ====== ======
Unit value, end of year............ $2.69 $2.28 $2.39 $2.13 $1.99
====== ====== ====== ====== ======
Thousands of units outstanding, end
of year........................... 12,083 10,601 12,244 9,203 6,152
====== ====== ====== ====== ======
<CAPTION>
MUTUAL OF AMERICA COMPOSITE FUND
-----------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $2.82 $2.95 $2.55 $2.43 $2.08
====== ====== ====== ====== ======
Unit value, end of year............ $3.39 $2.82 $2.95 $2.55 $2.43
====== ====== ====== ====== ======
Thousands of units outstanding, end
of year........................... 70,558 73,239 71,215 50,944 43,115
====== ====== ====== ====== ======
</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
-------------------- ------------------- ------------------- --------------------
1995 1994 1993(a) 1995 1994 1993(a) 1995 1994 1993(a) 1995 1994(b)
------ ----- ------- ----- ----- ------- ----- ----- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 1.05 $1.05 $1.00 $1.03 $1.03 $1.00 $1.01 $1.06 $1.00 $ 1.05 $ 1.00
====== ===== ===== ===== ===== ===== ===== ===== ===== ========= ========
Unit value, end of
year/period............ $ 1.42 $1.05 $1.05 $1.10 $1.03 $1.03 $1.16 $1.01 $1.06 $ 1.43 $ 1.05
====== ===== ===== ===== ===== ===== ===== ===== ===== ========= ========
Thousands of units
outstanding, end of
year/period............ 17,109 4,644 2,135 1,447 1,132 747 2,848 1,444 1,411 20,858 9,145
====== ===== ===== ===== ===== ===== ===== ===== ===== ========= ========
</TABLE>
- -------
(a) Commenced Operations, February 5, 1993
(b) Commenced Operations, May 2, 1994
16
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SCUDDER
-------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND
-------------------------------- ----------------------------------
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
------ ------ ------ ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $ 9.69 $10.32 $ 9.30 $8.78 $7.54 $14.67 $16.46 $13.80 $13.09 $ 9.48
====== ====== ====== ===== ===== ====== ====== ====== ====== ======
Unit value, end of
year................... $11.30 $ 9.69 $10.32 $9.30 $8.78 $18.64 $14.67 $16.46 $13.80 $13.09
====== ====== ====== ===== ===== ====== ====== ====== ====== ======
Thousands of units
outstanding, end
of year................ 1,269 1,169 1,277 1,053 600 8,556 8,121 6,582 3,698 2,138
====== ====== ====== ===== ===== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER TCI
INTERNATIONAL FUND GROWTH FUND
-------------------------------- ----------------------------------
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
------ ------ ------ ----- ----- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $10.80 $11.06 $ 8.13 $8.48 $7.68 $ 9.39 $9.61 $8.81 $9.01 $6.40
====== ====== ====== ===== ===== ====== ===== ===== ===== =====
Unit value, end of
year................... $11.85 $10.80 $11.06 $8.13 $8.48 $12.18 $9.39 $9.61 $8.81 $9.01
====== ====== ====== ===== ===== ====== ===== ===== ===== =====
Thousands of units
outstanding, end
of year................ 7,269 8,610 5,400 2,262 1,849 8,061 6,361 5,946 5,280 3,056
====== ====== ====== ===== ===== ====== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CALVERT
RESPONSIBLY INVESTED FUND(a)
-----------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year/period............. $1.57 $1.64 $1.54 $1.44 $1.32
===== ===== ===== ===== =====
Unit value, end of year/period................... $2.01 $1.57 $1.64 $1.54 $1.44
===== ===== ===== ===== =====
Thousands of units outstanding, end of
year/period..................................... 7,849 5,986 5,151 2,742 678
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FIDELITY(b)
--------------------------------
EQUITY- CONTRA ASSET MANAGER
INCOME FUND FUND FUND
1995 1995 1995
----------- ------ -------------
<S> <C> <C> <C>
Unit value, beginning of period............... $16.30 $11.43 $14.04
====== ====== ======
Unit value, end of period..................... $19.43 $13.85 $15.66
====== ====== ======
Thousands of units outstanding, end of
period....................................... 728 1,792 184
====== ====== ======
</TABLE>
- -------
(a) Commenced Operations May 13, 1991
(b) Commenced Operations May 1, 1995
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, 1995, and the
related statement of operations for the year then ended and the statements of
changes in net assets for the years ended December 31, 1995 and 1994 and the
financial highlights for the periods in the four years ended December 31,
1995. 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 the periods in the year 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, 1995, and the
results of its operations for the year then ended, the changes in its net
assets for the years ended December 31, 1995 and 1994 and the financial
highlights for the periods in the four years ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
February 20, 1996
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, 1995 and 1994, 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, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
New York, New York
February 20, 1996
19
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
----------------------------------------
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
DECEMBER 31, 1995 AND 1994
--------------------------
<TABLE>
<CAPTION>
ASSETS: 1995 1994
-------------- --------------
<S> <C> <C>
GENERAL ACCOUNT ASSETS:
Bonds and notes (Notes 2 and 5) $3,955,508,328 $4,027,388,054
Common and preferred stocks 67,209,605 57,953,336
Cash and short-term investments 84,016,362 32,178,425
Investment in subsidiaries (Note 9) 73,615,480 71,082,561
Guaranteed funds transferable (Note 3) 135,810,488 154,989,401
Mortgage loans 50,056,580 60,144,482
Real estate 323,745,247 260,640,755
Policy loans 74,083,384 65,442,488
Investment income accrued 65,933,026 73,967,565
Receivables 11,957,198 7,514,186
Due from affiliates - 6,201,329
Other assets 16,734,867 12,887,323
-------------- --------------
Total general account assets 4,858,670,565 4,830,389,905
SEPARATE ACCOUNT ASSETS 2,123,670,361 1,625,383,655
-------------- --------------
TOTAL ASSETS $6,982,340,926 $6,455,773,560
============== ==============
LIABILITIES AND SURPLUS:
GENERAL ACCOUNT LIABILITIES:
Insurance and annuity reserves $4,056,957,632 $3,988,030,615
Other contract liabilities and
reserves 1,373,666 1,856,480
Note payable (Note 5) 136,993,262 136,993,262
Interest maintenance reserve 137,195,073 244,579,848
Due to affiliates 10,940,556 -
Other liabilities 39,171,993 34,132,131
-------------- --------------
Total general account liabilities 4,382,632,182 4,405,592,336
SEPARATE ACCOUNT RESERVES AND OTHER
LIABILITIES 2,123,670,361 1,615,365,728
-------------- --------------
Total liabilities 6,506,302,543 6,020,958,064
-------------- --------------
ASSET VALUATION RESERVE 78,549,533 71,367,533
-------------- --------------
SURPLUS:
Assigned surplus 1,150,000 1,150,000
Unassigned surplus 396,338,850 362,297,963
-------------- --------------
Total surplus 397,488,850 363,447,963
-------------- --------------
TOTAL LIABILITIES AND SURPLUS $6,982,340,926 $6,455,773,560
============== ==============
</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, 1995 AND 1994
----------------------------------------------
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
INCOME:
Premiums, annuity considerations and
deposits $ 628,120,058 $ 628,873,707
Net investment income (Notes 2 and 3) 418,460,126 386,148,078
Other income 1,107,228 1,070,651
-------------- --------------
Total income 1,047,687,412 1,016,092,436
-------------- --------------
DEDUCTIONS:
Increase in insurance and annuity
reserves (Note 3) 147,491,075 161,371,093
Annuity and surrender benefits 663,261,767 593,701,138
Net transfers to separate accounts 92,524,347 117,196,221
Operating expenses 103,437,206 93,243,766
-------------- --------------
Total deductions 1,006,714,395 965,512,218
-------------- --------------
Net gain from operations 40,973,017 50,580,218
FEDERAL INCOME TAX BENEFIT 22,814 32,513
NET REALIZED CAPITAL GAINS (LOSSES) (1,862,749) 594,478
-------------- --------------
Net income 39,133,082 51,207,209
SURPLUS TRANSACTIONS:
Change in asset valuation reserve
(Note 1) (7,182,000) 2,421,696
Net unrealized capital gains (losses) 979,961 (5,306,798)
Change in non-admitted assets 244,179 (5,483,172)
Change in liability for reserve
strengthening (Note 1) - (17,259,176)
Other, net 865,665 (318,014)
-------------- --------------
Net change in surplus 34,040,887 25,261,745
SURPLUS, AT BEGINNING OF YEAR 363,447,963 338,186,218
-------------- --------------
SURPLUS, AT END OF YEAR $ 397,488,850 $ 363,447,963
============== ==============
</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, 1995 AND 1994
----------------------------------------------
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
CASH PROVIDED:
Premium and annuity funds received $ 628,120,058 $ 628,873,707
Net investment income received 330,574,057 313,964,796
Other, net 1,107,228 1,070,651
-------------- --------------
Total receipts 959,801,343 943,909,154
-------------- --------------
Benefits paid 663,744,583 592,763,369
Insurance and operating expenses paid 100,780,453 100,452,433
Net transfers to separate accounts 94,331,406 118,133,166
-------------- --------------
Total payments 858,856,442 811,348,968
-------------- --------------
Net cash from operations 100,944,901 132,560,186
Proceeds from long-term investments
sold, matured or repaid 2,387,058,255 977,771,330
Other, net 54,252,003 38,170,912
-------------- --------------
Total cash provided 2,542,255,159 1,148,502,428
-------------- --------------
CASH APPLIED:
Cost of long-term investments acquired 2,469,388,558 1,170,968,156
Other, net 21,028,664 44,362,009
-------------- --------------
Total cash applied 2,490,417,222 1,215,330,165
-------------- --------------
Net change in cash and short-term
investments 51,837,937 (66,827,737)
CASH AND SHORT-TERM INVESTMENTS:
Beginning of year 32,178,425 99,006,162
-------------- --------------
End of year $ 84,016,362 $ 32,178,425
============== ==============
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1995 AND 1994
--------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Presentation
- ---------------------
The financial statements are prepared in conformity with generally accepted
accounting principles which include statutory accounting practices prescribed or
permitted by state regulatory authorities. Such statutory accounting 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates.
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.
Nature of Operations
- --------------------
The Company provides retirement and employee benefit plans in the small to
medium-size case area, principally to employees in the not-for-profit social
health and welfare field. The Company is licensed in all fifty states and the
District of Columbia. Operations are conducted in all states through both a
network of regional field offices and the use of direct mail.
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.
23
<PAGE>
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 (approximately $4.2 billion in 1995 and $3.7
billion in 1994) 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
stocks 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 $57.1 million in 1995 and $63.6 million in 1994) 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. During 1995, the Company
recorded impairments of $3.8 million as a reduction of unassigned surplus.
Real estate investments are carried at the lower of cost, including capital
improvements, net of accumulated depreciation, or market and are depreciated on
a straight-line basis over 39 years. Tenant improvements on real estate
investments are depreciated over the shorter of the lease term or the estimated
life of the improvement. Company-occupied real estate is carried at cost, net
of accumulated depreciation.
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 statements of financial condition ("non-admitted assets").
Such assets totaled $40.6 million and $40.8 million at December 31, 1995 and
1994, respectively.
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.
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 $112.3 million in 1995 and
$120.2 million in 1994) is determined by discounting future guaranteed principal
and interest transfers at a market rate of return.
24
<PAGE>
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 Mutual of
America Capital Management Corporation, 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,
including net realized and unrealized capital gains in the separate accounts are
offset by increases 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 3.5% 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 1995 and 1994, ranged from 4.25% to 6.25% and 4.5%
to 6.25%, 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 ($5.5 billion and $4.8 billion) at December 31, 1995 and 1994,
respectively. The fair value of annuity contracts (approximately $.8 billion
and $.7 billion at December 31, 1995 and 1994, 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 6.21% and 8.35% was used at December 31,1995 and 1994,
respectively.
In 1994, the Company changed the interest rates used to value certain annuity
and deposit type contracts issued prior to January 1, 1994. The effect of such
changes was to increase policyholder liabilities above the minimum statutory
requirements and to reduce surplus by $17.3 million at December 31, 1994.
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.
25
<PAGE>
2. DEBT SECURITIES HELD AS ASSETS
------------------------------
The statement values and estimated market values of investments in debt
securities at December 31, 1995 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 VALUE GAINS LOSSES VALUE
- ---------------------------- ---------- ---------- ---------- ----------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $1,543,209 $ 62,532 $ 234 $1,605,507
Debt securities issued by
foreign governments 139,883 7,149 1,509 145,523
Corporate securities 2,334,050 129,934 13,461 2,450,523
Other debt securities 29,328 972 - 30,300
---------- -------- ------- ----------
Total $4,046,470 $200,587 $15,204 $4,231,853
========== ======== ======= ==========
</TABLE>
Short-term securities with a statement value and estimated market value of $91.0
million at December 31, 1995 are included in the above table. As of December
31, 1995, the Company has $2.8 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, 1995, 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
VALUE VALUE
---------- ----------
(000'S OMITTED)
<S> <C> <C>
Due in one year or less $ 159,276 $ 158,865
Due after one year through five years 750,064 765,401
Due after five years through ten years 1,449,822 1,504,344
Due after ten years 1,687,308 1,803,243
---------- ----------
Total $4,046,470 $4,231,853
========== ==========
</TABLE>
Proceeds from the sale of investment securities during 1995 were $2.3 billion.
Gross gains of $18.1 million and gross losses of $105.6 million were realized on
these sales of which $86.9 million of losses were accumulated in the IMR. Such
amounts will be amortized into net investment income over the estimated
remaining life of the investment sold. During 1995, approximately $20.4 million
was amortized and included in net investment income.
26
<PAGE>
The statement values and estimated market values of investments in debt
securities at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
- ------------------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
(000'S OMITTED)
U.S. Treasury securities
and obligations of U.S.
Government corporations
and agencies $1,677,127 $ 543 $138,792 $1,538,877
Debt securities issued by
foreign governments 163,225 2,835 18,860 147,200
Corporate securities 2,203,812 3,539 224,549 1,982,802
Other debt securities 18,452 - 2,853 15,599
---------- ------ -------- ----------
Total $4,062,616 $6,917 $385,054 $3,684,478
========== ====== ======== ==========
</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 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 1994 were $773.6 million.
Gross gains of $10.4 million and gross losses of $7.4 million were realized on
those sales of which $2.4 million of gains was accumulated in the IMR. Such
amounts will be amortized into net 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.
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 the Company as
follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
(000'S OMITTED)
<S> <C> <C>
Certain sums, at 6%
guaranteed interest,
transferable through 1995 $ - $ 6,755
Remaining sums, at 3-1/8%
guaranteed interest,
transferable through 2030 135,810 148,234
-------- --------
Total $135,810 $154,989
======== ========
</TABLE>
The guaranteed interest and other allocated investment earnings on the funds
held by the reinsurer, amounting to $13.1 million in 1995 and $16.6 million in
1994, are included in net investment income. Such amounts include participating
dividends from a contingency fund held by the reinsurer (but not recorded as an
asset of the Company) of $4.0 million in 1995 and $4.2 million in 1994.
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
27
<PAGE>
business (group insurance coverage and certain annuity business) deemed to be
taxable. As of December 31, 1995 and 1994, total reserve liabilities reinsured
under this agreement were as follows: life and annuities of $768.0 million and
$682.1 million, funding agreements of $63.3 million and $68.0 million and other
reserves of $10.1 million and $3.8 million, respectively. As consideration for
the reserves ceded, the Company ceded premiums and annuity considerations of
$102.9 million and $64.2 million in 1995 and 1994, respectively.
4. REAL ESTATE
-----------
In October 1992, the Company purchased an office building for its new corporate
headquarters. The purchase price of the building was fully financed. During
the reconstruction period, interest costs on the debt incurred to acquire the
building were deferred and capitalized as a construction cost as permitted by
the State of New York Insurance Department. During 1995 and 1994, interest
costs of $6.6 million and $9.3 million, respectively, were capitalized. During
1995, the Company occupied a portion of its new corporate headquarters and began
depreciating the occupied portion of the property. Depreciation expense for
1995 totaled approximately $1.4 million.
5. NOTE PAYABLE
------------
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 $137.0 million and $136.5 million at December 31,
1995 and 1994, 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 $164.8 million and $170.2 million in 1995 and
$152.6 million and $132.6 million in 1994, respectively, were pledged as
collateral.
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. Benefits are
generally based on years of service and final average salary. 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 1995 and 1994 was
$3.5 million and $2.9 million, respectively, of which $.8 million and $.6
million in 1995 and 1994, respectively, was allocated to the Company's wholly
owned subsidiaries. The components of net pension expense are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(000'S OMITTED)
<S> <C> <C>
Service cost $ 2,467 $ 2,531
Interest cost on projected benefit
obligation 2,967 3,077
Return on plan assets (6,444) 468
Asset gain (loss) deferred 3,803 (3,420)
Amortization of initial net asset (211) (211)
Amortization of unrecognized loss 916 367
Amortization of prior service cost - 122
-------- --------
Net pension expense $ 3,498 $ 2,934
======== ========
</TABLE>
28
<PAGE>
The assumptions used to calculate the net pension expense were:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Expected long-term rate of return on assets 8.75% 8.75%
Discount rate 8.00% 8.75%
Rate of increase in compensation levels 4.00% 6.00%
</TABLE>
The status of the pension plan at December 31 is as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(000'S OMITTED)
<S> <C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of $33,422
in 1995 and $25,147 in 1994 $(33,736) $(25,322)
======== ========
Projected benefit obligation $(42,161) $(31,265)
Plan assets at fair value 36,162 28,929
-------- --------
Projected benefit obligation in excess
of plan assets (5,999) (2,336)
Remaining unrecognized initial net
asset (1,263) (1,474)
Unrecognized net loss from past
experience different from that assumed 7,031 7,877
Prepaid pension cost, beginning of year 11,639 7,572
-------- --------
Prepaid pension cost, end of year $ 11,408 $ 11,639
======== ========
</TABLE>
For financial reporting purposes, the prepaid pension cost at December 31, 1995
and 1994 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
$2.3 million in 1995 and $11.1 million in 1994. Periodic annuity benefits are
covered by annuities purchased by the plan from the Company. During 1995 and
1994, the Company made contributions to the plan of $3.3 million and $7.0
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
$1.4 million in 1995 and $1.2 million in 1994.
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.
29
<PAGE>
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>
1995 1994
------ ------
(000'S OMITTED)
<S> <C> <C>
Service cost $ 483 $ 463
Interest cost on projected benefit 986 1,038
obligation ------ ------
Net postretirement benefit cost $1,469 $1,501
====== ======
</TABLE>
During 1995 and 1994, $279 thousand and $218 thousand, respectively, of
postretirement benefit expense was 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>
1995 1994
------- -------
(000'S OMITTED)
<S> <C> <C>
Accumulated postretirement benefit
obligation ("APBO"):
Retirees $ 4,189 $ 3,969
Fully eligible active plan participants 3,191 2,989
Other active plan participants 4,598 4,438
------- -------
Total APBO 11,978 11,396
Plan assets at fair value - -
------- -------
APBO in excess of plan assets 11,978 11,396
Unrecognized net loss (2,972) (3,230)
------- -------
Accrued postretirement obligation $ 9,006 $ 8,166
======= =======
</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 9.25% for 1995. 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, 1995
by $1.1 million and the aggregate of the service and interest cost components of
the net periodic benefit cost for 1995 by $.2 million.
The weighted average discount rate used in determining the APBO was 8.0% at
December 31, 1995 and 8.75% at December 31, 1994.
7. COMMITMENTS AND CONTINGENCIES
-----------------------------
Rental expenses were $8.0 million and $11.4 million in 1995 and 1994,
respectively, of which $2.7 million and $2.5 million were allocated to the
Company's wholly owned subsidiaries, respectively. The minimum rental
commitments under noncancelable operating leases are as follows: 1996, $3.0
million; 1997, $2.9 million, 1998, $2.6 million, 1999, $2.0 million, and 2000,
$1.3 million. Such leases are principally for leased office space, furniture
and equipment. Certain office space leases provide for adjustments to reflect
changes in real estate taxes and other operating expenses.
30
<PAGE>
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 subsidiary 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, 1995, subsidiary assets,
liabilities and revenues were $1.34 billion, $1.26 billion and $272.3 million,
respectively. At December 31, 1994, subsidiary assets, liabilities and revenues
were $1.26 billion, $1.18 billion and $216.6 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 1995 and 1994, operating and investment-related expenses of $22.5 million
and $1.2 million and $16.8 million and $1.1 million, respectively, were
allocated to its subsidiaries.
31
<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
9. Consent of Graham & James LLP, 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
- ------------------ ---------------------
<S> <C>
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
Denver, Colorado
John R. Dunne Director
Albany, New York
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
New York, New York
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
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
Nicholas A. Branchina Senior Vice President and
Associate Treasurer
William Breneisen Executive Vice President,
Office of Technology
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
Edward Cole Senior Vice President,
MIS Operations
William S. Conway Executive Vice President, Marketing
Rita Conyers Executive Vice President,
Corporate Communications,
Training and Leadership
Development
Salvatore R. Curiale Senior Executive Vice President,
Technical Operations
Linda DeHooge Senior Vice President and
Assistant Secretary
William A. DeMitt Executive Vice President and Treasurer
Warren A. Essner Senior Vice President and
Assistant to the President and
Chief Executive Officer
James E. Flynn Senior Vice President,
Field Operations
Roger Ferrara Senior Vice President, Financial
Advisory Services
James M. Fox Executive Vice President,
Real Estate Management, Internal
Audit and Public Relations
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
Michael Gallagher Senior Vice President, Direct
Boca Raton, FL Response/Marketing
Harold J. Gannon Senior Vice President, Corporate Tax
Gordon Gaspard Senior Vice President,
Technical Services
Robert Giaquinto Senior Vice President,
MIS Operations
Thomas E. Gilliam Executive Vice President and Assistant
to the Vice Chairman
Thomas Harwood Senior Vice President,
Field Administration
Raymond J. Hayes Senior Vice President,
Real Estate Management
Sandra Hersko Senior Vice President,
Technical Administrator
Edward J. T. Kenney Senior Vice President, Assistant to
the President and Chief Executive
Officer
Gregory A. Kleva, Jr. Executive Vice President and
Deputy General Counsel
Stephanie J. Kopp Executive Vice President
and Corporate Secretary
Robert Kordecki Senior Vice President,
National Accounts
Amir Lear Senior Vice President, Office of the
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 Corporate
Actuary
George Medlin Senior Vice President/
Internal Audit
Lynn M. Nalder Senior Vice President, Training
Boca Raton, FL and Leadership Development
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C>
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
Dennis J. Routledge Senior Vice President,
LAN/Telecommunications
Robert W. Ruane Senior Vice President,
Corporate Communications
William G. Shannon Senior Vice President,
Individual Financial Planning
Walter W. Siegel Senior Vice President, Actuarial
Consulting
Marc Slutzky Senior Vice President and
Actuary
Joan M. Squires Senior Vice President, MIS Business
Applications
Paul Travers Senior Vice President, Investment
Advisory Services
Edward Wenzel Senior Vice President,
Corporate Markets
Raymond Yeager Senior Vice President,
Boca Raton, FL MIS Operations
Paul R. Zwilling Executive Vice President
and Chief Actuary
</TABLE>
The business address of all officers and directors is 320 Park Avenue, New
York, New York 10022, unless otherwise noted.
Item 27. Number of Holders of Securities
-------------------------------
As of March 31, 1996, there were approximately 146,300 TDA, VEC, IRA
and FPA Participants in Separate Account No. 2 attributable to holders of
Contracts registered hereby.
C-5
<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 26th day of April, 1996.
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 26, 1996.
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
__________________________ 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-6
<PAGE>
EXHIBIT INDEX
No. Page
--- ----
27.1 Financial Data Schedule for Mutual of
America Separate Account No. 2.
27.2 Financial Data Schedule for Mutual of
America Life Insurance Company.
99.9. Consent of Graham & James LLP, Attorneys-at-Law.
99.10. Consent of Arthur Andersen LLP, Independent
Accountants.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 848,180,513
<INVESTMENTS-AT-VALUE> 971,674,230
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,892,090
<TOTAL-ASSETS> 975,566,320
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 221,734,354
<SHARES-COMMON-PRIOR> 186,774,385
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 123,493,717
<NET-ASSETS> 975,566,320
<DIVIDEND-INCOME> 34,837,596
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,749,689
<NET-INVESTMENT-INCOME> 24,087,907
<REALIZED-GAINS-CURRENT> 8,400,107
<APPREC-INCREASE-CURRENT> 133,521,542
<NET-CHANGE-FROM-OPS> 166,009,556
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 275,214,666
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,996,294
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,749,689
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 6.39
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.65
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 3,955,508,328 4,027,388,054
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 67,209,605 57,953,336
<MORTGAGE> 50,056,580 60,144,482
<REAL-ESTATE> 323,745,247 260,640,755
<TOTAL-INVEST> 6,887,715,835 4,406,126,627
<CASH> 84,016,362 32,178,425
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 6,982,340,926 6,455,773,560
<POLICY-LOSSES> 0 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 4,058,331,298 3,989,887,095
<NOTES-PAYABLE> 136,993,262 136,993,262
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 6,982,340,926 6,455,773,560
628,120,058 628,873,707
<INVESTMENT-INCOME> 418,460,126 386,148,078
<INVESTMENT-GAINS> (1,862,749) 594,478
<OTHER-INCOME> 1,107,228 1,070,651
<BENEFITS> 663,261,767 593,701,138
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 40,973,017 50,580,218
<INCOME-TAX> 22,814 32,513
<INCOME-CONTINUING> 39,133,082 51,207,209
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 29,133,082 51,207,209
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<RESERVE-OPEN> 3,989,887,095 3,874,191,849
<PROVISION-CURRENT> 147,491,075 161,371,093
<PROVISION-PRIOR> 161,371,093 9,685,185
<PAYMENTS-CURRENT> 663,744,583 592,763,367
<PAYMENTS-PRIOR> 592,763,369 594,015,982
<RESERVE-CLOSE> 4,058,331,298 3,989,887,095
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.9
CONSENT OF GRAHAM & JAMES LLP
We hereby consent to all references to our firm included in Registration
Statement No. 2-90201.
GRAHAM & JAMES LLP
New York, New York
April 29, 1996
<PAGE>
EXHIBIT 99.10
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. 2-90201.
ARTHUR ANDERSEN LLP
New York, New York
April 29, 1996
