<PAGE>
PROSPECTUS
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 2
VARIABLE ACCUMULATION ANNUITY CONTRACT
Issued By
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 Park Avenue, New York, New York 10022
- -------------------------------------------------------------------------------
The group variable accumulation annuity contract ("Contract") offered by
Mutual of America Life Insurance Company (the "Insurance Company") and
described in this Prospectus is designed to aid employees of organizations in
the health and welfare and educational field in retirement and long-term
financial planning by providing monthly Annuity Payments which begin at a
selected future date. The Contract will be issued in conjunction with thrift
plans or arrangements which are qualified under either Section 401(a) or
403(a) or meet the requirements of 403(b) of the Internal Revenue Code
("Code") for the benefit of participating employees of organizations
qualifying for tax-exempt status under Section 501(c) of the Code.
The term "thrift plan or arrangement," as used in this Prospectus, is a plan
under which participating employees designate a percentage of salary as a
contribution thereto and employer matches a fixed percentage up to a specified
limit. Additional employee contributions may also be permitted, as well as
non-matched amounts by employers if the Plan provides.
Participating employees under this Contract are referred to in this Prospectus
as "Participants."
Under the Contract, Contributions made in accordance with the thrift plan or
arrangement may be accumulated on behalf of a Participant on a completely
variable basis, a completely fixed basis, or a combination variable and fixed
basis. The basic purpose of the variable accumulation aspect of the Contract
is to provide Participants with an opportunity to accumulate amounts toward
retirement, or for other purposes permitted by federal law, that will reflect
the investment experience of one or more of the distinct Funds comprising
Mutual of America Separate Account No. 2 ("Separate Account") to which
Contributions may be allocated. Contributions under the Contract may be
allocated in whole or in part to any of the Funds of the Separate Account or
to the General Account of the Insurance Company (the "Investment
Alternatives").
The assets in each Fund of the Separate Account are invested in shares of:
- -- one or more of the following eight Funds of Mutual of America Investment
Corporation (the "Investment Company"): Money Market Fund, All America Fund,
Equity Index Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund,
Composite Fund and Aggressive Equity Fund;
- -- one or more of the following three Fidelity Investments (R) portfolios:
Equity-Income Portfolio of the Variable Insurance Products Fund, and
Contrafund Portfolio and Asset Manager Portfolio of the Variable Insurance
Products Fund II (collectively, the "Fidelity Portfolios");
- -- one or more of the following three portfolios of Scudder Variable Life
Investment Fund (collectively, the "Scudder Portfolios"): Scudder Capital
Growth Portfolio, Scudder Bond Portfolio, and Scudder International
Portfolio, 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 Contract may be applied to provide monthly
Annuity Payments on a fixed basis commencing at a future date selected by the
Participant.
This Prospectus generally describes only the variable portion of the Contract.
For a brief summary of the fixed portion, see "The General Account."
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the
Contracts and the Separate Account is available free by writing the Insurance
Company at the address above or by calling (212) 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 Contract being
offered and retain it for the future reference. It is not valid unless
attached to the current prospectuses for the Investment Company, Fidelity
Portfolios, Scudder Variable Life Investment Fund, TCI Growth Fund and Calvert
Responsibly Invested Balanced Portfolio.
Dated: May 1, 1996
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Annual Expenses............. 4
Unit Value Information............... 6
Definitions.......................... 8
Summary.............................. 10
Mutual of America Life Insurance
Company............................. 13
The Separate Account................. 13
Investments of the Separate Account.. 14
Charges.............................. 17
Administrative Charges.............. 17
Distribution Expense Charge......... 17
Mortality and Expense Risk Charge... 17
Portfolio Company Expenses.......... 18
Employer Contract Charge............ 19
Employer Participant Charge......... 20
The Group Annuity Contract........... 20
General............................. 20
Payment of Contributions............ 20
Allocations of Contributions........ 20
Accumulation Units.................. 21
Transfers Among Investment
Alternatives....................... 22
Withdrawals......................... 22
Specified Payments Option........... 23
Death Benefits...................... 23
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Discontinuance and Termination........................................ 24
Discontinuance....................................................... 24
Termination of Participation......................................... 24
Postponement of Payments.............................................. 25
The Annuity Period.................................................... 25
General.............................................................. 25
Annuity Commencement Date............................................ 25
Available Forms of Annuity........................................... 26
Amount of Annuity Payments........................................... 26
Small Benefit Payments............................................... 26
The General Account................................................... 27
General Matters....................................................... 28
Federal Tax Matters................................................... 30
Voting Rights......................................................... 33
Performance Information............................................... 33
Funding and Other Changes............................................. 34
Other Variable Annuity Contracts...................................... 34
Table of Contents of the Statement of Additional Information.......... 35
Obtaining a Copy of the Statement of Additional Information........... 35
Order Form for Statement of Additional Information.................... 35
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
3
<PAGE>
TABLE OF ANNUAL EXPENSES
<TABLE>
<CAPTION>
Investment
Company
All America,
Bond,
Investment Short-Term Investment Investment Fidelity Fidelity 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 Account or from such net assets
which have been allocated to one or more Funds of the Separate Account in
the order as described in "Charges--Administrative Charges" herein. The
above table reflects such amount for a full year for each Fund as if no
other Investment Alternatives were used. If the General Account is used,
the fee is deducted from it and there would be no fee with respect to
amounts allocated to any Fund. If the General Account is not used, but
more than one Fund is used, then the second or additional Fund(s) would
not be charged such fee. An employer may elect to pay this amount in which
case no amount would be deducted from a Participant's Account. See
"Charges--Administrative Charge." In addition, there is a monthly contract
charge, payable by the employer, which ranges up to $100 per group
contract, and a monthly employer participant charge of up to $4.00 per
Participant. See "Charges--Employer Contract Charge."
(2) In accordance with a Fund Participation Agreement, TCI reimburses the
Insurance Company at an annual rate of up to .20% for Administrative
Expenses. If the Fund Participation Agreement is terminated for sales of
new Contracts, TCI's reimbursement obligation will terminate, and the
administrative charge to the TCI Growth Fund will be .40% instead of .20%.
The Administrative Charges, Distribution Expense Charge and Mortality and
Expense Risk Fees items are more fully described under "Charges--
Administrative Charges"; "Charges--Distribution Expense Charge"; and
"Charges--Mortality and Expense Risk Charge."
(3) Management Fees are more fully described in "Charges--Portfolio Company
Expenses", and in the Prospectuses of the Investment Company, the Fidelity
Portfolios, the Scudder Portfolios, the TCI Growth Fund and the Calvert
Responsibly Invested Balanced Portfolio.
(4) See "Charges--Portfolio Company Expenses."
(5) 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 $60.85 $109.84 $268.30
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 $69.04 $124.33 $301.89
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 $56.73 $102.52 $251.19
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 $80.41 $144.31 $347.53
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 $72.63 $130.64 $316.41
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 $76.20 $136.93 $330.76
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 $78.47 $140.91 $339.82
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 $71.33 $128.35 $311.15
Example for Scudder Bond Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $20.27 $71.00 $127.78 $309.83
Example for Scudder International Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.61 $87.82 $157.25 $376.66
Example for TCI Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $22.74 $78.79 $141.47 $341.11
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 $79.12 $142.04 $342.39
</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 $3.00 per $1,000 of value in the Separate Account based
on an average account value of $8,040. 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>
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>
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>
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>
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
CALVERT RESPONSIBLY EQUITY- VIP II FIDELITY VIP II
TCI GROWTH FUND INVESTED BALANCED FUND INCOME FUND CONTRA FUND ASSET 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, or for the joint lifetime of the Annuitant and another
person and thereafter for the life of the survivor, or for such other period
provided for under Options available from the Insurance Company.
Annuity Period--The period, beginning at the Annuity Commencement Date, during
which Annuity Payments are received by an Annuitant.
Calvert Responsibly Invested Balanced Portfolio--The Calvert Responsibly
Invested Balanced Portfolio of Acacia Capital Corporation.
Code--The Internal Revenue Code of 1986, as amended.
Contract--The group variable accumulation annuity contract described in this
Prospectus.
Contractholder--The entity to which the Insurance Company has issued a
Contract. The Contractholder may be an employer, or an association
representing employers.
Contributions--The amounts contributed from time to time toward the purchase
of an annuity under a Contract.
Eligible Spouse--The person to whom a Participant is legally married at the
earlier of the Participant's (a) Annuity Commencement Date, or (b) date of
death.
Fidelity Portfolios--The Fidelity VIP Equity-Income Portfolio and the Fidelity
VIP II Contrafund and Asset Manager Portfolios.
Fidelity VIP Equity-Income Portfolio--The Equity-Income Portfolio of the
Variable Insurance Products Fund.
Fidelity VIP II Contrafund and Asset Manager Portfolios--The Contrafund
Portfolio and the Asset Manager 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
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Scudder Portfolios, in TCI Growth Fund and in the Calvert Responsibly Invested
Balanced Portfolio. Under the Contract, a Participant may allocate
Contributions among all of the Investment Alternatives. The employer has the
right to restrict allocations of employer money to the General Account.
Investment Company--Mutual of America Investment Corporation.
Participant--An employee or former employee participating in a Plan and for
whom Contributions have been or are being made toward the purchase of an
annuity.
Participant's Account Balance (or Account Balance)--The sum of the dollar
values of the Accumulation Units credited to a Participant in the Separate
Account and the value of amounts accumulated for the benefit of that
Participant in the General Account.
Plan--The TDA Thrift Plan (sometimes referred to as a 403(b) Thrift Plan) and
Thrift Plan which are more fully described in the Summary immediately
following the definitions.
Plan Year--Generally, the twelve-month period beginning each January 1.
Portfolio Companies--The Investment Company, Variable Insurance Products Fund,
Variable Insurance Products Fund II, Scudder Variable Life Investment Fund,
TCI Portfolios, Inc. and Acacia Capital Corporation.
Scudder Portfolios--The following three portfolios of Scudder Variable Life
Investment Fund, namely, the Scudder Capital Growth Portfolio, the Scudder
Bond Portfolio and the Scudder International Portfolio.
Separate Account--Mutual of America Separate Account No. 2, a separate
investment account established by the Insurance Company to receive and invest
Contributions made under variable accumulation annuity contracts and other
variable contracts. The Separate Account is set aside and kept separate from
the other assets of the Insurance Company.
TCI Growth Fund--The TCI Growth Fund of TCI Portfolios, Inc.
Valuation Day--Each day that the New York Stock Exchange is open for business,
other than the Friday following Thanksgiving 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.
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SUMMARY
The Following Summary Of Prospectus Information Should Be Read In Conjunction
With The Detailed Information Appearing Elsewhere In This Prospectus.
CONTRACT OFFERED
The group variable accumulation annuity contract offered by this Prospectus is
issued by the Insurance Company and designed to aid in retirement and long-
term financial planning. The Contract provides for the accumulation of
Contributions on a completely variable basis, a completely fixed basis or a
combination variable and fixed basis, unless otherwise restricted by the
employer. Annuity Payments under the Contract will be made on a fixed basis
only.
The two types of thrift plans or arrangements provided under which the
Contract described herein will be issued are:
1. Tax Deferred Annuity Thrift Plan ("TDA Thrift Plan"). The group contract is
used by the Employer to fund an annuity purchase arrangement meeting the
requirements of Section 403(b) of the Code by certain organizations that
qualify for tax-exempt status under Section 501(c)(3) of the Code or are
eligible public or private schools or colleges or universities. These
Contractholders are such tax-exempt organizations or associations representing
such organizations or its employees. Employee Contributions ordinarily are
made through voluntary salary reduction arrangements and the employer
generally matches all or part of such Contributions by applying a fixed
matching formula to the amount of employee Contributions. Additional employee
Contributions may also be permitted. Participants contributing to a TDA Thrift
Plan may obtain certain Federal income tax benefits provided under Section
403(b) of the Code (see "Federal Tax Matters").
2. Voluntary Employee Contribution Thrift Plan ("Thrift Plan"). The group
contract is used to provide annuity benefits to employees participating in a
retirement plan qualified for special Federal income tax treatment under
Section 401(a) or 403(a) of the Code. Thrift Plans are adopted by
Contractholders, which are typically employers. Employee Contributions
ordinarily are made through voluntary payroll deduction arrangements and the
employer matches all or part of such Contributions by applying a fixed
matching formula to the amount of the employee Contributions. Additional
employee Contributions may also be permitted. In addition, under Section 401
an employer may declare a non-matched amount to be allocated to employees
under a formula set forth in the Plan. For information concerning the Federal
income tax treatment of annuities in general see "Federal Tax Matters."
CONTRIBUTIONS
In general, Contributions under the Contract may be made in amounts specified
to and agreed upon with the employer at a frequency based on the employee's
pay cycle. The minimum Contribution that may be made under the Contract is
$200 on an annual basis. The maximum annual Contributions are the amounts
permitted under the Code for the types of Plans or arrangements funded by this
Contract (see "The Group Annuity Contract-Payment of Contributions" and
"Federal Tax Matters").
Participants under the Contract may, if the Plan permits, allocate
Contributions made on their behalf among the Investment Alternatives provided
in the Contract, which include the General Account and the sixteen distinct
Funds of the Separate Account.
This Prospectus is intended as a disclosure document for the variable portion
of the Contract only. See "The General Account" for a brief summary of the
fixed portion of the Contract.
THE SEPARATE ACCOUNT
Contributions made pursuant to the Contract and allocated on a variable basis
are deposited in the Separate Account. The Separate Account is divided into
sixteen Funds, or subaccounts, each one of which corresponds to one of the
eight Funds of the Investment Company, or one of the three Fidelity
Portfolios, or one of the three Scudder Portfolios, or the TCI Growth Fund or
the Calvert Responsibly Invested Balanced Portfolio, in which Separate Account
assets are invested. The objective of the variable accumulation aspect of the
Contract is to provide a return on amounts contributed that will reflect the
investment experience of the chosen Funds. The value of the Contributions
accumulated for a Participant in the Separate Account prior to the Annuity
Commencement Date will vary with the investment experience of the chosen
Funds.
THE INVESTMENT ALTERNATIVES
The Investment Alternatives to which Contributions may be allocated are the
General Account and the sixteen Funds of the Separate Account, which invest in
the eight separate investment funds of Mutual of America Investment
Corporation: the
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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
primarily in income-producing equity securities, the Fidelity VIP II
Contrafund Portfolio, which invests mainly in securities that are undervalued
or out-of-favor, and Fidelity VIP II Asset Manager Portfolio, which allocates
its assets among domestic and foreign stocks, bonds and short-term fixed-
income instruments; the following three portfolios of Scudder Variable Life
Investment Fund: the Scudder Capital Growth Portfolio, 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 the Fidelity Portfolios of the Separate
Account) may not, because certain pending state insurance department approvals
have not yet been received, be made by certain Participants in certain states.
(See "Investments of the Separate Account.")
REINVESTMENT
Distributions of the Portfolio Companies to the Separate Account are
automatically reinvested in additional Portfolio Company shares at net asset
value.
CHARGES
Certain charges will be deducted in connection with the operation of the
Contract and the Separate Account.
Administrative Charges. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
administrative expenses at an annual rate of .40%, except that in the case of
the Fund of the Separate Account which invests in the TCI Growth Fund, the
annual rate shall be .20% (TCI reimburses the Insurance Company at an annual
rate of up to .20% for administrative expenses). An additional deduction for
administrative expenses of $2.00 per month will also be made with respect to
each Participant under a Contract except that such charge shall not exceed
1/12 of 1% of the Account Value in any month. Such amount will be deducted
from the net assets, if any, in the Participant's Account which have been
allocated to the General Account. If no net assets have been allocated to such
Account, such amount will be deducted from the net assets which have been
allocated to one or more Funds of the Separate Account in the following order:
(a) Investment Company Money Market Fund, (b) Investment Company Short-Term
Bond Fund, (c) Investment Company Mid-Term Bond Fund, (d) Investment Company
Bond Fund, (e) Scudder Bond Fund, (f) Investment Company Composite Fund, (g)
Fidelity VIP II Asset Manager Fund, (h) Calvert Responsibly Invested Balanced
Fund, (i) Fidelity VIP Equity-Income Fund, (j) Investment Company All America
Fund, (k) Investment Company Equity Index Fund, (l) Fidelity VIP II Contrafund
Fund, (m) Investment Company Aggressive Equity Fund, (n) Scudder Capital
Growth Fund, (o) Scudder International Fund, and (p) TCI Growth Fund. An
employer may elect to pay the $2.00 per month charge in which case no amount
would be deducted from a Participant's Account. These daily and monthly
charges may increase or decrease during the life of the Contract (see
"Charges--Administrative Charges").
Distribution Expense Charge. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
expenses associated with the distribution of the Contract at an annual rate of
.35% (see "Charges--Distribution Expense Charge").
Mortality and Expense Risk Charge. For assuming certain mortality risks under
the Contract, the Insurance Company will make a deduction each Valuation Day
at an annual rate of .35% of the net assets of each Fund of the Separate
Account. The Mortality Risk Charge is guaranteed not to increase during the
life of the Contract. For assuming certain expense risks under
- -------
* "Standard & Poor's 500," "S&P" and "S&P 500" are trademarks of Standard &
Poor's Corporation. The Fund is not sponsored, endorsed, sold or promoted
by Standard & Poor's Corporation. Refer to the Mutual of America Investment
Corporation Prospectus for a complete description of the disclaimers and
limitations relating to Standard & Poor's Corporation.
11
<PAGE>
the Contracts with respect to expenses it expects to incur over the life of
the Contracts, the Insurance Company will make a deduction each Valuation Day
at an annual rate of .15% of the net assets of each Fund of the Separate
Account (see "Charges--Mortality and Expense Risk Charge").
Portfolio Company Expenses. The value of the assets in the Separate Account
will reflect the value of the shares of the Portfolio Companies in which such
assets are invested, and therefore the fees and expenses paid by the
Investment Company, the Fidelity Portfolios, the Scudder Portfolios, TCI
Growth Fund or Calvert Responsibly Invested Balanced Portfolio, as the case
may be. A complete description of the expenses and deductions from the
Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the
TCI Growth Fund and Calvert Responsibly Invested Balanced Portfolio is found
in their respective prospectuses attached to this Prospectus.
TRANSFERS AND WITHDRAWALS
Except where the Plan restricts Contributions to the General Account, at any
time prior to the Annuity Commencement Date, a Participant under the Contract
may transfer any or all of the Participant's Account Balance from the Separate
Account to the General Account, or from the General Account to the Separate
Account, or among the Funds of the Separate Account. Withdrawals prior to the
Annuity Commencement Date are permitted upon the occurrence of certain
specified events provided for in the Contract and by the Code (see
"Withdrawals" and "The General Account"). Transfers or withdrawals from the
General Account may be restricted in the event a Participant has obtained a
loan under the plan or arrangement and such loan is secured by all or a
portion of the Participant's interest in the General Account (see "Loans"). No
withdrawals are permitted after the Annuity Commencement Date.
No charge is currently assessed for transfers or withdrawals made under the
Contract. The Insurance Company reserves the right, however, to impose a
charge for transfers or withdrawals in the future. Certain withdrawals may be
subject to a tax penalty (see "Federal Tax Matters").
EMPLOYER CONTRACT CHARGE
There is a $100 per month contract charge payable by the employer. This
charge, which is made by the Insurance Company at cost, is made for certain
administrative expenses incurred by the Insurance Company in connection with
certain plan-related services. If separate records are maintained for
affiliated employers at different locations, an additional monthly contract
charge equal to 50% of the basic contract charge will be charged for each
additional affiliate. In addition, a separate $50 charge will be made whenever
an employee who terminates employment is less than fully vested; this charge
will be deducted from the nonvested portion of such employee's accounts before
such amounts are reallocated according to the Plan. The Insurance Company
intends to increase the contract charge for certain plans which it determines
to be non-standard.
Employers who elect solely to use Contract allocation services and no plan-
related services such as assistance with preparation of summary plan
description documents, plan documents or amendments; 5500 filings and non-
discrimination kits; top heavy testing, minimum distribution requirements; and
maximum exclusion allowance calculations, will have the monthly contract
charge waived. In addition, the charge will be waived for an employer for so
long as its total Plan assets exceed $1 million.
EMPLOYER PARTICIPANT CHARGE
There is an active Participant fee payable each month by the employer. The
charge is comprised as follows: $4.00 for each of the first 50 Participants;
$2.00 for each of the next 50 Participants; $1.00 for each of the next 50
Participants; and no charge for Participants in excess of 200. This charge
will be waived for employers who elect solely to use contract allocation
services and no plan-related services. In addition, the charge will be waived
for an employer for so long as its total Plan assets exceed $1 million.
CONTACTING THE INSURANCE COMPANY
All written requests and notices required by the Contract, and any questions
or inquiries, should be addressed to:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President, Field Administration
National Service Support Department
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 the following number: (800) 468-3785.
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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. In this
connection, the Insurance Company has had over 25 years of experience in
managing a broad range of investments. 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 or portfolios of the Portfolio Companies in which the assets in such
Funds are invested, namely, the Money Market, All America, Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite and Aggressive Equity Funds of the
Investment Company; the Fidelity VIP Equity-Income Portfolio and the Fidelity
VIP II Contrafund and Asset Manager Portfolios; the Scudder Capital Growth,
Bond and International Portfolios; the TCI Growth Fund; and the Calvert
Responsibly Invested Balanced Portfolio. The assets of the Separate Account
are the property of the Insurance Company. The Separate Account assets
attributable to the Contract and to other annuity contracts funded by the
Separate Account are not chargeable with liabilities arising out of any other
business the Insurance Company may conduct. The income, capital gains and
capital losses of each Fund of the Separate Account are credited to or charged
against the net assets held in that Fund, without regard to the income,
capital gains and capital losses arising out of the business conducted by any
of the other Funds of the Separate Account or out of any other business that
the Insurance Company may conduct.
The Insurance Company does not guarantee the investment performance of the
Separate Account as a whole, or any of the Funds. The amount credited to a
Participant in the Separate Account, and thus the amount available to provide
annuity benefits, will depend upon the value of the assets held in the Fund(s)
of the Separate Account selected by the Participant. Accordingly, the
Participant bears the full investment risk for all amounts allocated to the
Separate Account.
The Separate Account and the Insurance Company are subject to supervision and
regulation by the Superintendent of Insurance of the State of New York, and by
the insurance regulatory authorities of each State in which it is licensed to
do business.
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INVESTMENTS OF THE SEPARATE ACCOUNT
Contributions will be allocated among one or more Funds of the Separate
Account for investment at net asset value in shares of the Funds of the
Investment Company, the Fidelity Portfolios, the Scudder Portfolios, the TCI
Growth Fund or the Calvert Responsibly Invested Balanced Portfolio, selected
by the Participant. A summary of investment objectives of the Portfolio
Companies invested in by the Funds of the Separate Account follows. More
detailed information, including risks, charges and expenses, may be found in
the current prospectuses for Mutual of America Investment Corporation, the
Fidelity Portfolios, Scudder Variable Life Investment Fund, TCI Portfolios,
Inc. and the Calvert Responsibly Invested Balanced Portfolio, which are
attached to this Prospectus. Each applicable prospectus should be read for a
complete evaluation of the Investment Alternatives. Investments in the Money
Market Fund and in the other Portfolio Companies are neither insured nor
guaranteed by the U.S. Government.
MONEY MARKET FUND OF THE INVESTMENT COMPANY
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. The Money Market Fund invests
only in money market instruments and other short-term debt securities.
ALL AMERICA FUND OF THE INVESTMENT COMPANY
The investment objective for approximately 60% of the assets of the All
America Fund (the "Indexed Assets") is to provide investment results that to
the extent practical correspond to the price and yield performance of publicly
traded common stocks in the aggregate, as represented by the S&P 500 Index.
The Indexed Assets will be invested in the same manner as the Equity Index
Fund.
The investment objective for the remaining approximately 40% of the assets
(the "Active Assets") is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of a
diversified portfolio of securities that may include common stocks, securities
convertible into common stocks, bonds and money market instruments. The Active
Assets are invested by 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
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<PAGE>
equipment trust certificates which will produce a portfolio with an average
maturity of one to three years. The Short-Term Bond Fund generally will invest
primarily in securities rated in the four highest categories by a nationally
recognized rating service or in instruments of comparable quality. The Short-
Term Bond Fund may also invest to a limited extent in lower-rated or unrated
securities, and these may be subject to greater market and financial risk than
higher quality (lower yield) issues.
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.
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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.
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.
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CHARGES
The values of Accumulation Units reflect a deduction on each Valuation Day for
administrative and distribution expenses, and the mortality and expense risk
assumed by the Insurance Company. The following charges will be deducted on a
daily basis (based on annual rates) in determining the Accumulation Unit value
of each of the Funds of the Separate Account.
ADMINISTRATIVE CHARGES
The Insurance Company performs all administrative functions in connection with
the Contract, including receiving and allocating Contributions in accordance
with the Contract, making Annuity Payments as they become due, and preparing
and filing all reports required to be filed by the Separate Account. Expenses
incurred by the Insurance Company in connection with its administrative
functions include, but are not limited to, items such as state or other taxes,
salaries, rent, postage, telephone, travel, office equipment, costs of outside
legal, actuarial, accounting and other outside professional services, and
costs associated with determining the net asset value of the Separate Account.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account for administrative
expenses (the provisions of the Contract include the amount of this charge
with the Distribution Expense Charge, described below) at an annual rate of
.40%, except that in the case of the Fund of the Separate Account which
invests in the TCI Growth Fund, the annual rate shall be .20% (TCI reimburses
the Insurance Company at an additional annual rate of up to .20% for
Administrative Expenses). An additional deduction for administrative expenses
of $2.00 will be made on the next to last Valuation Day of the month or on
another Valuation Day on or about that time that is administratively
convenient from each Participant's Account except that such charge shall not
exceed 1/12 of 1% of the Account Value in any month. Such amount will be
deducted from the net assets, if any, in the Participant's Account which have
been allocated to the General Account. If no net assets have been allocated to
such Account, such amount will be deducted from the net assets which have been
allocated to one or more Funds of the Separate Account in the following order:
(a) Investment Company Money Market Fund, (b) Investment Company Short-Term
Bond Fund, (c) Investment Company Mid-Term Bond Fund, (d) Investment Company
Bond Fund, (e) Scudder Bond Fund, (f) Investment Company Composite Fund, (g)
Fidelity VIP II Asset Manager, (h) Calvert Responsibly Invested Balanced Fund,
(i) Fidelity VIP Equity-Income Fund, (j) Investment Company All America Fund,
(k) Investment Company Equity Index Fund, (l) Fidelity VIP II Contrafund Fund,
(m) Investment Company Aggressive Equity Fund, (n) Scudder Capital Growth
Fund, (o) Scudder International Fund, and (p) TCI Growth Fund. The employer
may elect to pay this additional deduction in which case no amount is deducted
from the Participant's Account. THE INSURANCE COMPANY MAY INCREASE OR DECREASE
THESE DAILY AND MONTHLY CHARGES DURING THE LIFE OF THE CONTRACT, BUT THESE
CHARGES MAY NOT EXCEED COSTS.
DISTRIBUTION EXPENSE CHARGE
As principal underwriter, the Insurance Company performs all distribution and
sales functions and bears all distribution and sales expenses relative to the
Contract. These expenses include the payment of that portion of the salaries
of registered representatives of the Insurance Company attributable to the
sale and distribution of the Contract, as well as expenses for preparation of
sales literature and other promotional activities.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account at an annual rate of
.35% to cover anticipated distribution expenses, not to exceed, with respect
to any Participant, 9% of the total Contributions.
MORTALITY AND EXPENSE RISK CHARGE
The Insurance Company assumes certain mortality and expense risks under the
Contract. The mortality risks arise from the Insurance Company's guarantees in
the Contract to make Annuity Payments in certain instances in accordance with
annuity tables provided in the Contract, regardless of how long a Participant
lives and regardless of any improvement in life expectancy generally. Thus,
the Insurance Company assumes the risk that Participants, as a class, may live
longer than has been actuarially estimated, so that payments will continue for
longer than had been anticipated. This assumption of risk by the Insurance
Company relieves Participants of the risk that they will outlive the funds
that have been accumulated for their retirement.
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For assuming the mortality risks associated with the Contract, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .35%
of the value of the net assets in each Fund. This charge will apply with
respect to a Participant during the Accumulation Period. The Insurance Company
guarantees that the mortality risk charge will not increase during the life of
a Contract.
The Insurance Company assumes certain expense risks under the Contracts. The
expense risks arise from the Insurance Company's guarantees in the Contracts
to make Annuity Payments in certain instances in accordance with annuity
tables provided in the Contracts, regardless of whether its estimates of
expenses it expects to incur, over the lengthy period that Annuity Payments
may be made will turn out to be correct. Thus, the Insurance Company assumes
the risk that expenses will be higher than estimated.
For assuming the expense risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .15%
of the value of the net assets in each Fund. This charge will apply with
respect to a Participant during the Accumulation Period.
If revenues derived from the Distribution Expense Charge do not cover all the
distribution expenses, any shortfall will be paid out of the general assets of
the Insurance Company and, if revenues from the Mortality and Expense Risk
Charge exceed the actual cost of the Insurance Company's risk undertaking, the
excess will be retained by the Insurance Company and may help cover any
shortfall.
PORTFOLIO COMPANY EXPENSES
The value of the assets in the Separate Account will reflect the value of the
shares of the Portfolio Companies in which such assets are invested, and
therefore will take into account the fees and expenses paid by the Investment
Company, Fidelity Portfolios, Scudder Portfolios, TCI Growth Fund or Calvert
Responsibly Invested Balanced Portfolio, as the case may be.
Each Fund of the Investment Company receives investment advice from Mutual of
America Capital Management Corporation (the "Adviser"), an indirect wholly-
owned subsidiary of the Insurance Company. The Adviser receives from each such
Fund a fee calculated as a daily charge at the annual rate of .25% of the
value of the net assets in the Money Market Fund; .125% of the value of the
net assets in the Equity Index Fund; .50% of the value of the net assets in
the All America, Bond, Short-Term Bond, Mid-Term Bond and Composite Funds; and
.85% of the value of the net assets in the Aggressive Equity Fund of the
Investment Company. For 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
voluntarily 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
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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 the Sub-Advisor to the
Portfolio is NCM Capital Management Group, Inc., which manages the equity
portion of the Portfolio. Calvert Asset Management Company, Inc. receives from
Calvert Responsibly Invested Balanced Portfolio a monthly base fee, computed
on a daily basis at an annual rate of 0.70% (subject to adjustment as
described below) of average net assets of the Portfolio. Calvert Asset
Management Company, Inc. pays the Sub-Advisor's fee. Calvert Asset Management
Company, Inc. and the Sub-Advisor may earn (or have their fees reduced by)
performance fee adjustments based on the extent to which the Portfolio exceeds
or trails the Lipper Balanced Funds Index. After July 1, 1996, the performance
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 the
prospectuses of the Investment Company, Fidelity Portfolios, Scudder Variable
Life Investment Fund, TCI Portfolios, Inc. and Calvert Responsibly Invested
Balanced Portfolio, which are attached to this Prospectus.
EMPLOYER CONTRACT CHARGE
There is a $100 per month contract charge payable by the employer. This
charge, which is made by the Insurance Company at cost, is made for certain
administrative expenses incurred by the Insurance Company in connection with
certain plan-related services. If separate records are maintained for
affiliated employers at different locations, an additional monthly contract
charge equal to 50% of the basic contract charge will be charged for each
additional affiliate. For employers with existing pension plans underwritten
by Mutual of America on or before January 1, 1994, the monthly contract charge
will be $100. In addition a separate $50 charge will be made whenever an
employee who terminates employment is less than fully vested; this charge will
be deducted from the nonvested portion of such employee's accounts before such
amounts are reallocated according to the Plan. Effective January 1, 1994, the
Insurance Company increased the contract charge for certain plans which it
determines to be non-standard.
Employers who elect solely to use Contract allocation services and no plan-
related services such as assistance with preparation of summary plan
description documents, plan documents or amendments; 5500 filings and non-
discrimination
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kits; top heavy testing, minimum distribution requirements; and maximum
exclusion allowance calculations, will have the monthly contract charge
waived. In addition, the charge will be waived for an employer for so long as
its total Plan assets exceed $1 million.
EMPLOYER PARTICIPANT CHARGE
There is an active Participant fee payable each month by the employer. The
charge is comprised as follows: $4.00 for each of the first 50 Participants;
$2.00 for each of the next 50 Participants; $1.00 for each of the next 100
Participants; thereafter no charge for Participants in excess of 200. This
charge will be waived for employers who elect solely to use Contract
allocation services and no plan-related services. In addition, the charge will
be waived for an employer for so long as its total Plan assets exceed $1
million.
THE GROUP ANNUITY CONTRACT
GENERAL
The Contract is issued by the Insurance Company to Contractholders as a
funding vehicle for Plans. Any employee of an employer which has adopted a
Plan to be funded by the Contract may be eligible to become a Participant
under the Plan upon satisfying the age and service requirement specified in
the Plan, if any. Generally, remittances of all Contributions to be paid under
Plans shall be made as of the effective date of the Contract or the first day
of any calendar month thereafter.
PAYMENT OF CONTRIBUTIONS
Employee contributions ordinarily are made, as elected by Participants,
pursuant to salary reduction arrangements under the TDA Thrift Plan and by
either payroll deductions or salary reductions under the 401(a)/403(a)
qualified Thrift Plan. Employer contributions are made as a fixed matching
(25%, 50%, 100%, etc.) amount based on all or part of the amount contributed
by the employee or in a non-matching amount determined by the Employer. A
Contractholder may also remit to the Insurance Company on behalf of a
Participant in a single sum, an amount that arises from a transfer from any
Plan maintained by the Employer provided such transfers are permitted by
applicable law.
The amount of any Contributions on behalf of a Participant may not be less
than $200 on an annual basis and total contributions may not exceed the
amounts permitted under applicable state or Federal law (see "Federal Tax
Matters").
No further Contributions may be made on behalf of Participants who have
terminated participation under the Plan or if a Contract has been
discontinued. Employer contributions may be subject to a vesting schedule
specified in the Plan.
Acceptance of Initial Contributions. If an initial Contribution is received
together with a completed application and other necessary information, it will
be accepted within two business days of receipt. If the application is not
duly completed, the Insurance Company will retain the Contribution for up to
five business days while attempting to obtain the information necessary to
complete the application; the Contribution will be accepted within two
business days of receipt of the completed application. If a completed
application is not received within five business days, however, the Insurance
Company will return the Contribution at the end of that period, unless the
Participant and the employer consent to the Insurance Company holding the
Contribution until additional information is provided.
ALLOCATIONS OF CONTRIBUTIONS
Employee contributions under the Contract are allocated among the General
Account and the sixteen Funds of the Separate Account unless otherwise
restricted by the Plan. For information regarding permissible Investment
Alternatives of a particular Plan, Participants are urged to consult the Plan
itself. Contributions will be allocated on the basis of a request made to the
Insurance Company and currently on file at its home office (see "General
Matters--Contacting the Insurance Company"). A Participant's request for
allocation will specify the percentage, in any whole percentage from 0% to
100%, of each Contribution to be allocated to each of the Investment
Alternatives. The request for allocation of Contributions among the Investment
Alternatives may be changed from time to time, at any time, and amounts may be
transferred among those alternatives. A Participant should make periodic
reviews of all allocations in light of market conditions, the Participant's
retirement plans, and overall estate planning requirements. The amount
contributed by the employer may be similarly allocated (using the same
allocation percentages as specified for the employee contributions) by the
Participant. The Plan may, however, restrict such allocation of employer
and/or employee contributions to the Insurance Company's
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General Account only, in which case the transfer of such funds to the Separate
Account will not be permitted. Similarly, the Plan may restrict such
allocation of employer and/or employee contributions to less than all
Investment Alternatives of the Separate Account, in which case the transfer of
such funds to nonpermitted Investment Alternatives of the Separate Account
will not be allowed. For information regarding permissible Investment
Alternatives of a particular Plan, Participants are urged to consult the Plan
itself. Employer Contributions may be restricted to the General Account until
they become vested in accordance with the Plan's vesting schedule.
ACCUMULATION UNITS
Contributions under the Contract, other than initial Contributions, which are
allocated to the Separate Account on behalf of a Participant, will be credited
to an individual accumulation account maintained for such Participant with
respect to each of the chosen Funds of the Separate Account in the form of
Accumulation Units as of the Valuation Period during which the Contributions
are received by the Insurance Company. The number of Accumulation Units in a
Fund of the Separate Account credited to the account of a Participant is
determined by dividing the amount allocated to that Fund of the Separate
Account on behalf of such Participant by the Accumulation Unit value for that
Fund of the Separate Account for the Valuation Period during which the
Contribution is received. The value of the Accumulation Units of each Fund of
the Separate Account will vary with the investment experience of that Fund.
The number of Accumulation Units in a Participant's individual account will
fluctuate in accordance with amounts allocated to or withdrawn from the Funds
of the Separate Account. The net change in Accumulation Units is determined by
adjusting the number of Accumulation Units in the Funds of the Separate
Account as of the end of the previous Valuation Period by adding or deducting
Accumulation Units with respect to Contributions made to or amounts withdrawn
from the respective Funds of the Separate Account during the Valuation Period.
The number of Accumulation Units to be so added or deducted is the number
obtained by dividing the amounts so allocated or withdrawn by the Accumulation
Unit Value for that Valuation Period.
The Accumulation Units in each Fund of the Separate Account are valued
separately. The value of an Accumulation Unit in each Fund of the Separate
Account corresponding to a Fund of the Investment Company originally was set
arbitrarily at one dollar. The value of an Accumulation Unit in the Fund of
the Separate Account corresponding to one of the Fidelity Portfolios, Scudder
Portfolios, TCI Growth Fund or Calvert Responsibly Invested Balanced Portfolio
originally was established by deducting expenses of the Separate Account
applicable to that portfolio or fund from the applicable unit value
established by the respective Portfolio Company portfolio or fund as of the
end of the last Valuation Day immediately preceding the day when the first
investment was made by the Separate Account in the Portfolio Company portfolio
or fund. For any Valuation Period, the value of an Accumulation Unit in a Fund
of the Separate Account is the amount obtained by multiplying the value of an
Accumulation Unit in that Fund as of the preceding Valuation Period, by the
Fund's Accumulation Unit Change Factor (described below) for that Valuation
Period. The dollar value of an Accumulation Unit in each Fund of the Separate
Account, therefore, will vary from Valuation Period to Valuation Period,
depending on the investment experience of the Fund.
The Accumulation Unit Change Factor for each Fund of the Separate Account for
any Valuation Period is determined as:
(a) the ratio of (i) the asset value of that Fund at the end of the current
Valuation Period, before any amounts are allocated to or withdrawn from the
Fund with respect to that Valuation Period, to (ii) the asset value of the
Fund at the end of the preceding Valuation Period, after all allocations and
withdrawals are made for that period, divided by
(b) 1.000000 plus the component of the annual rate of mortality and expense
risk, distribution expense and administrative charges (which does not include
the monthly administrative charge per Participant which is $2.00 but in no
event to exceed 1/12 of 1% of the Account Value in any month) against a Fund's
assets for the number of days from the end of the preceding Valuation Period
to the end of the current Valuation Period (see "Charges").
The value of the Accumulation Units credited to the account of a Participant
in the Separate Account for any Valuation Period prior to the Annuity
Commencement Date is determined by multiplying the number of Accumulation
Units credited to such Participant in each chosen Fund of the Separate Account
by the Accumulation Unit value for each chosen Fund at the end of the
Valuation Period.
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TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Annuity Commencement Date, Participants may elect, if the Plan
permits, subject to the conditions described below, to transfer amounts among
Investment Alternatives. Thus, amounts may be transferred among Funds of the
Separate Account, and between the Separate Account and the General Account. A
Participant may express the amount sought to be transferred as a dollar
amount, or as a number of Accumulation Units, or as a percentage of the value
of the Participant's investment in the selected Investment Alternative.
Transfers may not be made after the Annuity Commencement Date. No charges are
currently imposed for transfers, but the Insurance Company reserves the right
to impose such charges in the future.
Any transfers from a Fund of the Separate Account will result in the
cancellation of Accumulation Units in that Fund on the basis of the current
Accumulation Unit value for the Valuation Period during which the request is
received. Transfers to a Fund of the Separate Account from either the General
Account or another Fund of the Separate Account will be credited to that Fund
based on the current Accumulation Unit value for the Valuation Period during
which the transferred amount is received (see "Postponement of Payments").
No request for a transfer will be binding on the Insurance Company until it
receives all information necessary to process the request. Transfers of
employer and/or employee contributions to the Plan from the General Account to
the Separate Account will only be permitted if the Plan so specifies.
WITHDRAWALS
A Participant may (unless a Plan or the Code provides otherwise--see the next
succeeding paragraph), prior to the Annuity Commencement Date, elect to
withdraw the Participant's Account Balance in whole or in part, except that,
in a Plan qualified under Section 401(a) or 403(a) of the Code, employer
contributions may not be withdrawn unless the employee has completed at least
five years of participation in the Plan or age 59 1/2, in some plans. To be
valid, a partial withdrawal request must specify from which of the Investment
Alternatives the withdrawal is to be made. Generally, subject to applicable
federal tax law restrictions, partial withdrawals from an Investment
Alternative will be made first from employer contribution amounts. A
Participant may express the amount sought to be withdrawn as a dollar amount,
a number of Accumulation Units, or a percentage of the value of the
Participant's investment in the selected Investment Alternative. No
withdrawals are permitted after the Annuity Commencement Date.
The withdrawal or distribution of funds from a TDA Thrift Plan is subject to
restrictions. In general, a Participant under age 59 1/2 will not be able to
withdraw or receive a distribution of either Contributions made on or after
January 1, 1989 under a salary reduction agreement, or interest and investment
earnings credited to such contributions, on and after January 1, 1989, except
in specified circumstances. These circumstances generally include death or
disability, hardship, and termination of employment. If a Participant makes a
withdrawal for hardship, he may not withdraw the post-1988 earnings on amounts
which were contributed under a salary reduction agreement. Also any amounts
transferred from a Code Section 403(b)(7) Custodial Account to a Code Section
403(b) Thrift Plan would continue to be subject to tax law withdrawal
restrictions which apply to such Custodial Accounts. (Transfers from such
Custodial Accounts cannot be made to a Code Section 401(a) Plan.)
In the case of either a partial or complete withdrawal from an Investment
Alternative of a TDA Thrift Plan, the Insurance Company will pay to the
requesting Participant the lesser of (a) the amount specified in the
withdrawal request or (b) the amount that, as of the date the Insurance
Company received the withdrawal request, represents the value of the
Accumulation Units credited to the account of the Participant in the Funds of
the Separate Account from which withdrawal is sought. With respect to each
Fund of the Separate Account for which it receives a partial or complete
withdrawal request, the Insurance Company will reduce the number of
Accumulation Units credited to the account of a Participant by the number of
Accumulation Units obtained by dividing the amount withdrawn from that Fund by
the Accumulation Unit value in effect for the Valuation Period during which
the request is received. Spousal consent generally is required for withdrawals
of amounts over $3,500. Spousal consent is required for other withdrawals, as
well. Generally, subject to applicable federal tax law restrictions, partial
withdrawals from an Investment Alternative will be made first from employer
contribution amounts.
Loans. The Insurance Company will make available to the Employer a loan
option. If the Employer elects to adopt the loan provision in the Contract,
Employees shall have the right to borrow funds utilizing Thrift Plan or TDA
Thrift Plan Account Balance as collateral. The amount of the loan permitted is
governed by Section 72(p) of the Code and the
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Regulations thereunder and the Contract terms. An amount sufficient to serve
as Loan Collateral will be transferred from the Separate Account to the
General Account, if appropriate, and withdrawals and transfers of such
collateral will not be permitted while the loan is outstanding.
No request for withdrawal will be binding on the Insurance Company until it
receives all information necessary to process the request.
Other Considerations. Currently, withdrawals under the Contract, whether
complete or partial, are not subject to any contingent deferred sales charge,
or any other withdrawal charge. The Insurance Company reserves the right,
however, to impose such charges in the future.
Participants should consider the possible federal income tax consequences of
any withdrawal. Generally, a Participant will be taxed at ordinary income tax
rates on the amount withdrawn (except for nontaxable recovery of prior
nondeductible contributions). In addition, certain withdrawals may be subject
to a tax penalty (see "Federal Tax Matters").
SPECIFIED PAYMENTS OPTION
A Participant may elect, prior to the Annuity Commencement Date permitted by
the Code, to specify an amount (which may not be less than $100) to be
withdrawn from the Participant's Account Balance and paid each month to the
Participant (see "General Matters--Contacting the Insurance Company"). The
withdrawals and payments will be made, as designated by the Participant, from
either the General or Separate Account, or both (see "Postponement of
Payments").
During the period that payments under the Specified Payments Option
("Specified Payments") are received by a Participant, Contributions may be
made on that Participant's behalf. In addition, transfers of amounts among
Investment Alternatives and other withdrawals from a Participant's account may
continue to be made (see "Transfers Among Investment Alternatives" and
"Withdrawals").
Specified Payments will continue until (a) the death of the Participant; (b)
receipt by the Insurance Company of the Participant's written request to
modify or discontinue the specified payments; (c) depletion of the
Participant's Account Balance, or of any portion thereof so that the remaining
balance is insufficient to pay the next installment coming due; or (d) the
attainment of the Participant's Annuity Commencement Date.
Tax Consequences. Participants should consider the possible federal income tax
consequences of electing the Specified Payments Option. Generally, a
Participant will be taxed at ordinary income tax rates on each Specified
Payment subject to, in some instances, non-taxable recovery of prior non-
deductible Contributions (see "Federal Tax Matters").
A Participant receiving payments pursuant to the Specified Payments Option may
cancel those payments at any time and elect to receive the Participant's
Account Balance as a single sum payment or as an annuity.
DEATH BENEFITS
Death After Annuity Commencement. If a Participant dies on or after his or her
Annuity Commencement Date, the Participant's designated beneficiary will be
entitled to receive the death benefit (if any) provided by the form of annuity
in effect on the Participant's date of death (see "The Annuity Period--
Available Forms of Annuity" and "General Matters--Designation of
Beneficiary").
Death Prior to Annuity Commencement. If a Participant dies prior to the
Annuity Commencement Date, the Insurance Company will pay a death benefit to a
designated beneficiary (see "General Matters--Designation of Beneficiary"). If
the Participant is married at the time of death, the death benefit will be
paid to the spouse unless elected otherwise with spousal consent.
The death benefit will be paid by the Insurance Company after it has received
(1) due proof of death; (2) notification of an election by the beneficiary of
the form in which the death benefit is to be paid; and (3) all other
information and documentation necessary to process the death benefit request.
The amount of the death benefit will be the value of the Participant's Account
Balance as of the date on which the Insurance Company receives such
information. On such date any portion of the Participant's Account Balance not
in the General Account will be transferred to the General Account. The
beneficiary may choose to receive the death benefit under any of the following
methods of payment: (1) a lump sum, (2) an annuity in a form offered by the
Insurance Company at the time the election is made, or (3) monthly payments of
a specified
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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 dies prior to the
Annuity Commencement Date, but after he or she has begun to receive required
minimum distributions from the Contract, the method of distribution selected
by the beneficiary after the Participant's death may not be slower than the
method of distribution that was in effect before the Participant died,
unless (d) applies (see "Federal Tax Matters--Other Matters").
(d) Alternative Method of Distribution. A beneficiary will not be required to
receive a distribution from a 403(b) Contract under (a), (b) or (c) to the
extent that the required distribution is withdrawn from another contract of
the same type in accordance with applicable IRS regulations (see "Federal
Tax Matters--Obtaining Tax Advice").
DISCONTINUANCE AND TERMINATION
DISCONTINUANCE
A Contractholder may discontinue a Contract, at its discretion, as of the
first day of a calendar month that is at least 31 days after notice of such
intention to discontinue is received by the Insurance Company. The Insurance
Company may discontinue a Contract, in whole or in part, if (1) the
Contractholder fails to abide by the terms or requirements of the Contract, or
(2) the Insurance Company determines that a modification of the Contract is
necessary to comply with Federal or state requirements, including the Employee
Retirement Income Security Act of 1974, and the Contractholder refuses to
accept a substantially similar contract offered by the Insurance Company that
incorporates that modification. Discontinuance of a Contract by the Insurance
Company will be effective as of a date specified by the Insurance Company,
provided that the Insurance Company must give a Contractholder at least 31
days' advance written notice in which to cure any remedial defaults.
Discontinuance of a Contract will not relieve the Contractholder of its
obligations under the Contract, nor will it deprive Participants of the
amounts accumulated on their behalf, which remain allocated to them, and all
provisions of the Contract will continue to apply, except that (1) no further
Contributions will be made by the Contractholder, and (2) the Insurance
Company may transfer to another insurance company or other financial
institution all amounts accumulated under the Contract and allocated to
Participants, and beneficiaries. Such transfer may be made in any manner to
which the Contractholder and the Insurance Company agree in writing, and to
the extent consented to by any Participants or beneficiaries. In the event
that no transfer of the type described in clause (2) above takes place, or in
the event that such a transfer occurs which is not consented to by a
Participant, or beneficiary, amounts accumulated for the benefit of a
Participant, or beneficiary, in the above instances may, as elected by that
person, be left on deposit with the Insurance Company, or withdrawn in whole
or in part (see "Withdrawals").
TERMINATION OF PARTICIPATION
If, during the Accumulation Period, a Participant is no longer eligible to
participate under the Contract for any reason other than death or retirement
(for example, due to termination of employment), or if notice is given that
the Participant no longer desires to participate under the Contract, a
termination with respect to that Participant will be deemed to have occurred.
In addition, if no Contributions are made by a Participant for three
consecutive years and the Participant's Account Balance is less than $2,000,
the Insurance Company, in its discretion, may deem that such a termination has
occurred. Upon receipt by the Insurance Company, or a Participant (where the
Insurance Company deems a termination to have occurred), of notice of
termination, Contributions may no longer be made on behalf of a Participant.
Termination will not deprive a Participant of
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the vested amounts accumulated on the Participant's behalf, or the
Participant's rights to make transfers or withdrawals (see "Transfers Among
Investment Alternatives" and "Withdrawals"). Termination also will not prevent
a Participant from electing to receive annuity benefits (see "The Annuity
Period"), or having a death benefit paid on the Participant's behalf (see
"Death Benefits").
POSTPONEMENT OF PAYMENTS
Payment of any amounts due from the Separate Account in connection with a
withdrawal, payment pursuant to the Specified Payment Option, death benefit,
termination, or transfer of any amount from the Separate Account to the
General Account will occur within seven days, unless:
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on that Exchange is restricted as determined by the
Securities and Exchange Commission; or
2. The Commission by order permits postponement for the protection of
Participants; or
3. An emergency exists, as determined by the Commission, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets.
THE ANNUITY PERIOD
GENERAL
As of the Annuity Commencement Date, the amount credited to a Participant in
the Separate Account will be transferred to the General Account and, together
with any amount previously credited to the Participant in the General Account,
will be applied to provide a monthly annuity benefit. The amount of each
Annuity Payment will be fixed and guaranteed by the Insurance Company in
accordance with the tables of annuity purchase rates contained in the
Contract.
The level of Annuity Payments made to Annuitants under the Contract will not
be affected by the mortality experience (death rate) of persons receiving such
payments, or of the general population. The Insurance Company assumes the
"mortality risk" by virtue of the annuity purchase rates incorporated in the
Contract. In addition, the Insurance Company guarantees that it will not
increase charges under the Contract with respect to Annuity Payments
regardless of its actual expenses.
Accordingly, Annuity Payments will be made in a fixed and guaranteed amount
that is in no way dependent upon the investment experience of the Separate
Account. The amount of monthly payments depends only on the form of annuity
chosen, the applicable annuity purchase rates contained in the Contract and
the total amount applied to purchase the annuity.
Once Annuity Payments have commenced with respect to a Participant, no further
Contributions may be made on behalf of that Participant. In addition, neither
transfers to the Separate Account, nor withdrawals of any kind, are permitted
on behalf of an Annuitant receiving Annuity Payments.
A Participant may elect to receive the Participant's Account Balance as of the
Annuity Commencement Date in a lump sum in lieu of receiving Annuity Payments.
The Insurance Company will issue to Contractholders for delivery to each
Participant an individual certificate setting forth the amount and terms of
payment of their annuity benefits.
Payments of benefits under the Contract will be made by the Insurance Company
directly to Annuitants at their last known address filed with the Insurance
Company by a Participant or Contractholder.
ANNUITY COMMENCEMENT DATE
The Annuity Period with respect to a Participant begins on the Annuity
Commencement Date selected in the following manner:
Participants may elect an Annuity Commencement Date that is either such
Participant's Normal Retirement Date (the first day of the calendar month
coincident with or next following such Participant's 65th birthday); Early
Retirement Date (the first day of any calendar month within the ten-year
period immediately preceding the Participant's Normal Retirement Date); or
Later Retirement Date (the first day of any calendar month following such
Participant's Normal Retirement Date, unless provided otherwise by applicable
Federal or State law).
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AVAILABLE FORMS OF ANNUITY
Annuity Payments will be made under one of the forms of annuity benefits
described below. Unless an election to the contrary is made prior to the
Annuity Commencement Date, a Participant who does not have an Eligible Spouse
at the Annuity Commencement Date will have annuity benefits paid in the Ten
Years Certain and Continuous Form described below, and a Participant who has
an Eligible Spouse will have annuity benefits paid on the Joint and Survivor
Form described below. If a Participant is married on the Annuity Commencement
Date, consent of the spouse is required if payment is to be made in any form
other than the Joint and Survivor Form.
The forms of annuity offered by the Insurance Company are:
Ten Years Certain and Continuous Form. An annuity payable monthly until the
first day of the month in which the death of the Participant occurs, or the
end of the specified period of 120 months, whichever is later. If the
Participant dies prior to the end of the specified period, payments in the
same amount will be continued to the Participant's beneficiary until the end
of that period (see "General Matters--Designation of Beneficiary").
Joint and Survivor Ten Years Certain and Continuous Form. An annuity payable
monthly until the first day of the month in which the death of the survivor of
the Participant and the Participant's Eligible Spouse occurs or the end of a
period of 120 months, whichever is later. If the Participant dies during the
Annuity Period, and the Eligible Spouse is living, payments in the amount of
66 2/3% of those payable to the Participant will be made to the Eligible
Spouse. If the Eligible Spouse dies prior to the end of the specified period,
payments will be made to the Participant's beneficiary (see "General Matters--
Designation of Beneficiary"). A Participant who has an Eligible Spouse at the
Annuity Commencement Date will be presumed to have elected this annuity option
unless the Participant notifies the Insurance Company to the contrary within
ninety days prior to that date. If the Eligible Spouse dies before
Participant's Annuity Commencement Date, the election of this form of annuity
will be automatically cancelled and, unless a new election is made by the
Participant prior to the Annuity Commencement Date, the Ten Years Certain and
Continuous Form of Annuity will become applicable.
Full Cash Refund Form. An annuity payable monthly until the first day of the
month in which the death of the Participant occurs. If, at the date of the
Participant's death, the total amount of the annuity benefits received by the
Participant is less than the amount of the Participant's Account Balance as of
the Annuity Commencement Date, the difference between these two amounts will
become payable in cash as a death benefit to the Participant's beneficiary.
Such death benefit may be paid in lump sum, or as an annuity in the Ten Years
Certain and Continuous Form, or in a combination thereof, as elected by the
beneficiary (see "General Matters--Designation of Beneficiary").
Other Forms. In addition, the Participant may elect a Straight Life Annuity, a
Fifteen Years Certain and Continuous Form, a 66 2/3% Joint and Survivor Form
without the 120-month Certain Feature or such other forms as may be agreed to
between the Participant and the Insurance Company.
AMOUNT OF ANNUITY PAYMENTS
The amount of monthly Annuity Payments under the Contract will be determined
on the basis of the application of the Participant's Account Balance to the
annuity purchase tables contained in the Contract in accordance with the form
of annuity benefit selected. The Insurance Company guarantees that the rates
used to determine the amount of Annuity Payments will never be less favorable
for an Annuitant than the guaranteed rate provided in the Contract.
SMALL BENEFIT PAYMENTS
If the initial monthly payment under an annuity benefit payable under the
Contract would be less than $20.00, or if any Participant terminates
employment and is eligible for a benefit determined to be less than $20.00 a
month under the Ten Years Certain and Continuous Form of Annuity (described
above), the Insurance Company will, in lieu of making the monthly Annuity
Payments which would otherwise be payable to the Participant commencing on the
Annuity Commencement Date, pay to the Participant on the Participant's Annuity
Commencement Date in a single sum the Participant's Account Balance, provided
that single sum does not exceed $3,500 (or such other maximum amount that may
hereafter be provided by law). The Insurance Company may make this payment as
of the date on which the first Annuity Payment under the Plan would otherwise
be payable.
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THE GENERAL ACCOUNT
Contributions allocated and transfers made to the Insurance Company's General
Account become part of the general assets of the Insurance Company, which
support insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the 1940 Act. Accordingly,
neither the General Account nor any interests therein are subject generally to
the provisions of the 1933 or 1940 Acts, and the Insurance Company has been
advised that the staff of the Commission has not reviewed the disclosures in
this Prospectus which relate to the General Account. Disclosures regarding the
fixed portion of the Contract and the General Account, however, may be subject
to certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
SCOPE OF PROSPECTUS
The Contract provides for accumulation of Contributions on a completely fixed
basis, a completely variable basis, or a combination fixed and variable basis,
and for the payment of annuity benefits on a fixed basis only. This
Prospectus, however, is generally intended to serve as a disclosure document
for the variable portion of the Contract only. For complete details regarding
the General Account, see the Contract itself.
GENERAL DESCRIPTION
The General Account consists of all of the general assets of the Insurance
Company, other than those in the Separate Account and other segregated asset
accounts. Amounts are allocated to the General Account at the election of
Participants in the form of Contributions, or as transfers from the Separate
Account. The Insurance Company bears the full investment risk for all amounts
allocated to the General Account (whereas Participants bear the investment
risk for amounts allocated to the Separate Account). The Insurance Company has
sole discretion to invest the assets of the General Account, subject to
applicable law. There are no limits on withdrawals or transfers to another
Investment Alternative from the General Account, subject to applicable federal
tax law restrictions, with respect to the amount a Participant can withdraw in
cash. The Insurance Company does, however, reserve the right to impose a 20%
restriction upon withdrawals from the General Account in any calendar year.
The Insurance Company guarantees that it will credit interest to amounts
accumulated for Participants in the General Account at an effective annual
rate of at least 3%. The Insurance Company may, at its sole discretion, credit
a higher rate of interest to amounts allocated to the General Account,
although the Insurance Company IS NOT OBLIGATED TO CREDIT INTEREST IN EXCESS
OF 3% PER YEAR. Under Contracts where employers elect to use electronic media,
such as a computer terminal, personal computer or other electronic device
located at the employer's place of business, to transmit and receive to and
from the Insurance Company, relevant and necessary information with respect to
the Contract, subject to the Insurance Company's established rules and
requirements with respect to accessing computer information, the Insurance
Company reserves the right to credit such Contracts with a different rate of
interest in the General Account than Contracts which do not use such
electronic computer processing. Any amount held in the General Account does
not entitle a Participant to share in the investment experience of the General
Account.
TRANSFERS AND WITHDRAWALS
Prior to a Participant's Annuity Commencement Date, amounts may be
transferred, if permitted by the Plan, from the Funds of the Separate Account
to the General Account, and from the General Account to the Funds of the
Separate Account. No charge is currently imposed for such transfers. The
Insurance Company reserves the right, however, to impose additional charges
for transfers in the future.
Partial or complete withdrawals may be made from the General Account prior to
a Participant's Annuity Commencement Date, except that employer contributions
made to a Plan qualified under Section 401(a) or 403(a) of the Code may not be
withdrawn unless that employee has been a participant for at least five years.
In the case of such withdrawals, the Insurance Company will pay the lesser of
(a) the amount specified in the withdrawal request, and (b) the amount that,
as of the date of payment, then represents the accumulation in the General
Account credited to the Participant. No charge is currently imposed on such
transfers.
Transfers and withdrawals from the General Account may be delayed for up to
six months following the date that the Insurance Company receives such
requests. Withdrawals are subject to spousal consent.
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ANNUITY PAYMENTS
All Annuity Payments under the Contract are made in the form of a fixed
annuity from the General Account. The Insurance Company does not credit
discretionary interest in excess of the guaranteed rate of 3% to Annuity
Payments. The Annuitant must rely on the annuity purchase tables provided in
the Contract to determine the amount of Annuity Payments.
GENERAL MATTERS
CONTACTING THE INSURANCE COMPANY
Except as provided in the following paragraph, all notices, requests and
elections required to be given or made under the Contract must be in writing
and mailed or delivered to the Insurance Company's home office at the
following address:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President, Field Administration
National Service Support Department
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 the following number: 800-468-3785.
TRANSFERS, WITHDRAWALS AND REALLOCATIONS BY TELEPHONE
Requests by Participants for transfers or withdrawals, or changes in the
formula for allocation of Contributions, may, if otherwise allowed by the
Plan, be made by telephone in lieu of the written procedure described above.
Requests by telephone, however, may be made only if a Participant has received
a Personal Identification Number, which the Insurance Company provides
automatically, and agreed to use it in accordance with the applicable rules
and requirements. Thereafter the Participant may contact the Insurance Company
by telephone (800-468-3785) and request the desired transaction or change.
Transfers requested by telephone will go into effect on the day on which the
request is made if received by 4 PM, Eastern Standard time (or Daylight
Savings time, as applicable), at the next calculated price. The Insurance
Company reserves the right to suspend or terminate the right to request
transfers, withdrawals or reallocations by telephone at any time. Where
spousal consent is required, telephone withdrawals are not permitted. Although
failure to follow reasonable procedures may result in the Insurance Company's
liability for any losses due to unauthorized or fraudulent telephone
transfers, it will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. The Insurance Company
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Those procedures shall consist of confirming the
Participant's Social Security number, checking the Personal Identification
Number, tape recording all telephone transactions and providing written
confirmation thereof.
DESIGNATION OF BENEFICIARY
Under the Contract, a Participant may designate (with the right to change such
designation from time to time) a beneficiary to receive any payments with
respect to a Participant becoming due to a beneficiary under the Contract. The
Participant may change the beneficiary while the Participant is living by
providing the Insurance Company (or the Participant's Employer where the
Employer has agreed to retain such information) with notice of such change.
Such designation or change in designation will take effect as of the date of
receipt of notice by the Insurance Company or the Participant's Employer where
the Employer has agreed to retain such information, whether or not the
Participant is living at the time of such receipt. The Insurance Company will
not be liable, however, as to any payment or settlement made prior to
receiving such notice.
In the case of a married Participant, the beneficiary shall be the Eligible
Spouse unless, on the date of death, there is in effect a written consent
signed by the Eligible Spouse and witnessed by either a notary public or the
Plan representative waiving the spouse's rights as beneficiary.
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
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surviving parents; (d) the Participant's surviving brothers and sisters; and
(e) the executors or administrators of the Participant's estate. Any commuted
value will be determined on the basis of compound interest at a rate,
determined by the Insurance Company, that is consistent with the interest
assumption of the rate used to determine the amount payable under the annuity
benefit (see "Amount of Annuity Payments").
ASSIGNMENT OF CONTRACT
Except as otherwise required by law, no assignment nor transfer of any rights
conferred under a Contract is permitted.
THE INSURANCE COMPANY'S LIABILITY
The Insurance Company's liability for the payment of annuity benefits (see
"The Annuity Period"), death benefits (see "Death Benefits"), and withdrawals
(see "Withdrawals") is limited to the payments provided under the Contract
that arise from Participants' Account Balances.
Upon exhaustion of all amounts held under the Contract by withdrawals or by
transfers upon discontinuance of the Contract (see "Discontinuance and
Termination"), that Contract will terminate and the Insurance Company will be
relieved of all further liability thereunder, except with respect to any
annuity benefits provided on or before the date the Contract was terminated.
The Insurance Company may rely on the reports and other information furnished
by Contractholders or Participants as required under the Contract, and need
not inquire as to the accuracy or completeness of such reports and information
(see "Information and Determinations").
MODIFICATION OF CONTRACT
The Contract may not be modified as to the Insurance Company, nor may any of
the rights or requirements of the Insurance Company be waived, except in
writing by a duly authorized officer of the Insurance Company.
The Contract may be changed at any time by the Insurance Company by written
notice to the Contractholder without the consent of any Participant, or any
other person who is, or may become, entitled to benefits under the Contract,
provided that such change shall not affect the amount or the terms of the
annuity benefits provided thereunder before such change.
EVIDENCE OF SURVIVAL
When payment of an annuity is contingent upon the survival of any person,
evidence of that person's survival must be furnished to the Insurance Company,
either by personal endorsement of the check drawn for payment, or by other
means satisfactory to the Insurance Company.
MISSTATEMENT OF INFORMATION
If a benefit provided under one of the Contracts was based on information that
has been misstated, the benefit will not be invalidated, but the amount of the
benefit payments or the amount applied to provide the benefit, or both, will
be adjusted to the proper amount as determined on the basis of the corrected
information.
The amount of any underpayments by the Insurance Company due to any
misstatement shall be paid in full with the next payment due with respect to
the Participant under the Contract. The amount of any overpayments by the
Insurance Company due to any misstatement will be deducted to the extent
possible from the payments thereafter falling due with respect to the
Participant. Interest, based on an annual effective rate of 5%, will be
included in the amount of any underpayments or overpayments.
INFORMATION AND DETERMINATIONS
Contractholders and Participants, as appropriate, will furnish the Insurance
Company with the facts and information that the Insurance Company may require
for the operation of the Contract including, upon request, the original or
photocopy of any pertinent records held by the Contractholder or Participant.
Any determination that a Contractholder is to make under the Contract will be
made pursuant to the terms of the Contract and will be reported by the
Contractholder to the Insurance Company.
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NON-ALIENATION OF BENEFITS
To the extent permitted by law, no amount payable with respect to a
Participant under the Contract may be assigned (either at law or in equity),
alienated or be subject to attachment, garnishment, levy (other than a federal
tax levy made pursuant to Section 6331 of the Code or a Qualified Domestic
Relations Order under Section 401(a)(13)(B) of the Code), or other legal or
equitable process, and no such amount will in any way be subject to any legal
process which would subject it to the payment of any claim against the
Participant or beneficiary (see "Designation of Beneficiary").
ALTERNATE PAYMENTS OF BENEFITS
The Insurance Company may make payment due to a payee who is physically or
mentally incompetent to receive such payments, or is a minor, to certain other
persons in accordance with the Contract. Upon making these alternate payments,
the Insurance Company will be discharged from all liability with respect to
payments due to the payee. Payments to a minor will be limited to $250 a month
until either (a) a guardian is appointed or (b) the minor has attained
majority.
CLAIM PROCEDURES
In order to receive annuity benefits under the Contract, Participants or
beneficiaries thereunder must bring to the attention of the Insurance Company
or the Contractholder such person's right to claim such benefits. If the
Contractholder has received the claim directly, the Contractholder must notify
the Insurance Company of the claim on the prescribed form furnished to the
Contractholder for the purpose. The Insurance Company will have 90 days after
receipt of the claim within which to render a decision, and may extend this
period, upon written notice to the claimant, for an additional 90 days if
there are special circumstances that require such an extension.
In the event the claim is denied in whole or in part, the Insurance Company
will give notice to the Contractholder or claimant, as appropriate, of such
denial in sufficient detail so that the claimant may be informed of the reason
or reasons for the denial, the specific reference to the Contract or Plan
provision on which the denial was based, any additional information that may
be necessary to perfect the claim and the reasons therefor, and the procedure
for reviewing denied claims.
In the event a claim is denied in whole or in part, a claimant or the
claimant's representative has 60 days in which to appeal to the Insurance
Company for review thereof. The request for review must be made in writing,
either directly to the Insurance Company, or to the Contractholder for
transmission to the Insurance Company. A claimant will have the right to
review all pertinent documents and to contest the decision in writing. The
Insurance Company will render a decision on review no later than 60 days after
its receipt of the request for review unless special circumstances require
extension, in which case the decision may, upon written notice to the
claimant, be rendered within 120 days from the Insurance Company's receipt of
the request for review. The Insurance Company's decision on review will be in
writing and include specific reasons with specific reference to the Contract
or Plan provisions on which it is based.
PARTICIPATION IN DIVISIBLE SURPLUS
The Insurance Company is a mutual life insurance company and, therefore, has
no stockholders. The Contractholders or Participants share in the earnings of
the Insurance Company. No assurance can be given as to the amount of divisible
surplus, if any, that will be available for distribution under the Contract in
the future. The determination of such surplus is within the sole discretion of
the Company's Board of Directors. Under usual circumstances, separate accounts
receive little benefit from and contribute little to divisible surplus.
FEDERAL TAX MATTERS
The Insurance Company currently is treated as a nonprofit social welfare
organization under Section 501(c)(4) of the Code, and its pension business is
exempt from federal income taxation. For federal income tax purposes, the
Separate Account is not an entity separate from the Insurance Company, and its
operations are considered part of the Insurance Company. Accordingly, it will
not be taxed separately as a "Regulated Investment Company" under Subchapter M
of the Code. Due to the Insurance Company's current tax status, investment
income and realized capital gains of the Separate Account with respect to its
pension business are not taxable. TDA Thrift Plans (under Code Section 403(b))
and other Thrift Plans (under Code Section 401(a)) are part of the Insurance
Company's pension business. However, if the Insurance Company's tax status
should ever change, any federal income tax imposed with respect to the
Separate Account will be reflected in the value of the Accumulation Units.
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TAXATION OF ANNUITY PAYMENTS
The Contract offered by this Prospectus is intended to be an annuity contract
for purposes of Section 72 of the Code.
Under present law, any increase in value with respect to amounts accumulated
under an annuity contract are taxed to a Participant when distributed. When
Annuity Payments under a Thrift Plan and Contract begin, or a lump sum payment
of a Participant's Account Balance is received in lieu thereof, payments
generally are includable in the gross income of the individual recipient and
are taxed at ordinary income rates. Pursuant to the methods prescribed in
Section 72 of the Code, such recipient may exclude from gross income that
portion of Annuity Payments or a lump sum payment which in effect is a return
of capital, i.e., that portion attributable to nondeductible (for tax
purposes) Contributions (excluding any earnings thereon) made under the
Contract. Generally, in the case of withdrawals from an annuity contract
before Annuity Commencement Date, the basis recovery amount (non-taxable
amount) of a withdrawal will be calculated based on the ratio of the employee
contributions which were not excludable or deductible to the portion of the
total account balance at the time of withdrawal, excluding amounts not yet
vested, if any. Generally, employee contributions under a Thrift Plan which
meets the requirements of Code Section 403(b) are excludable (along with
employer contributions) within the applicable limits of that Code Section;
employee contributions under a Thrift Plan which meets the requirements of
Code Section 401(a) are not excludable from the employee's gross income and
are not deductible.
In the case of annuity payments made from such plans, such amounts are subject
to taxation on a pro-rata basis in the same ratio as the amount that employee
contributions which were not excludable or deductible have to the expected
return under the Contract on the Annuity Commencement Date. If the employee's
life span exceeds the predicted life span, the employee will eventually have
his or her total investment in the Contract returned tax free. Any payments
made after that point are fully taxable. If the employee dies before the basis
recovery occurs, the unrecovered amount may either be deducted on the final
income tax return for the employee's last taxable year or by the beneficiary.
In the case of permitted withdrawals from a TDA Thrift Plan, income taxation
rules described above apply and a penalty may be imposed under the Code on
certain distributions, currently equal to ten percent of the amount which is
includible in gross income for tax purposes.
The penalty tax generally is not imposed, however, on distributions made (1)
on or after age 59 1/2, death or disability; (2) as part of a series of
substantially equal periodic payments made over the life or life expectancy of
the Participant or the joint lives or life expectancy of the Participant and
his or her beneficiary; (3) on account of separation from service after
attainment of age 55; and (4) equal to deductible medical expenses under
Section 213 of the Code.
In addition, the Code restricts the withdrawal of salary reduction amounts
contributed to a TDA Thrift Plan on or after January 1, 1989 and post-1988
earnings on all salary reduction contributions to attainment of age 59 1/2,
termination of employment, death, disability and certain financial hardships.
In the case of hardship distributions after 1988, earnings on salary reduction
contributions may not be withdrawn. Also, any amounts which were transferred
from a Code Section 403(b)(7) custodial account are subject to additional tax
law withdrawal restrictions which apply to custodial accounts.
In general, a death benefit, consisting of amounts paid to a Participant's
beneficiary (see "Death Benefits") is includable in the Participant's estate
for federal tax purposes. (See "Obtaining Tax Advice.")
A Participant who receives aggregate retirement distributions for a calendar
year in excess of a certain amount may be subject to a penalty tax equal to
15% of the excess. This penalty generally does not apply to death benefits and
certain other distributions, and various special rules apply. (See "Obtaining
Tax Advice".)
If the Contract is offered for use with a TDA Thrift Plan meeting the
requirements of Section 403(b) of the Code, contributions made under an
annuity contract by tax-exempt organizations meeting the requirements of the
Section 501(c)(3) of the Code are excludable from the gross income of
employees of such organizations. This exclusion, however, is limited to the
extent that the aggregate contributions per year on behalf of such employee do
not exceed the exclusion allowance set forth in Section 403(b)(2) of the Code
or the contribution limitation set forth in Section 415(c) of the Code.
Generally, except for a limited catch-up provision, the maximum amount that
may be excluded by an employee from gross income under a salary reduction
agreement is $9,500.
31
<PAGE>
Generally, subject to the $9,500 maximum on salary reduction amounts, amounts
up to 20% of the taxable includable compensation received annually from the
employer which is applied to purchase annuities are excludable by a
Participant. Generally, the formula used in determining the excludable amount
for the current year takes into consideration the Participant's length of
employment and contributions to the Plan and to certain other plans, if any,
which were excluded from the Participant's taxable income for prior years.
Furthermore, annual employer and employee Contributions to the Plan (and to
certain other plans) may, in general, not exceed the lesser of $30,000, or 25%
of a Participant's includable compensation. Additional limits generally apply
if the employer makes matching contributions.
If the Contract is offered for use with a Thrift Plan designed to meet the
qualifications of Section 401(a) of the Code, annual contributions to all
qualified defined contribution Plans under Section 401(a) are limited to the
amounts provided for in Section 415, which generally are the lesser of $30,000
or 25% of a Participant's annual compensation. Additional limits apply to
employee contributions to such plans and, if the employer makes matching
contributions, to those matching contributions as well. If the limits on
employer matching contributions are exceeded, certain of those matching
contributions may be forfeited.
Any amounts contributed in excess of the amounts described above would be
treated as excess contributions to the Plan and could result in additional
penalties and/or corrective distributions which are includible in income.
Distributions to Participants in both a TDA Thrift Plan and a Plan qualified
under Section 401(a) or 403(a) of the Code generally must begin no later than
April 1 of the year following the year in which the Participant attains age 70
1/2. Federal tax law also generally imposes certain specific provisions for
distributions which must be made upon the death of a Participant and which may
reduce the period over which distributions may otherwise be made and/or
deferred.
If the Code requires in a particular tax year that distributions in specified
minimum amounts must commence because of the Participant's age or death, and
if a distribution is not made in an amount at least equal to the minimum
amount, the Code imposes a penalty tax equal to 50% of the difference between
the required minimum and the actual taxable distribution.
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
Most withdrawals are subject to automatic 20% federal income tax withholding
unless the participant elects to have the withdrawal paid directly, as a tax-
free rollover, to another eligible plan or an IRA. The same rules generally
apply to payments of death benefits to a surviving spouse beneficiary, or to
payments to a spouse or former spouse in connection with a divorce or
separation decree or court order, except that a surviving spouse may only have
a direct rollover made to an IRA. The required 20% federal tax withholding
cannot be waived if a direct rollover is not elected.
The rules do not apply to all payments. The automatic 20% withholding does not
apply to any distribution that is (a) one of a series of substantially equal
periodic payments (not less frequently than annually) made (1) for the life
(or life expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's designated beneficiary,
or (2) for a specified period of 10 years or more, or (b) a minimum
distribution required under Section 401(a)(9) of the Code. In general, tax
withholding at different rates (generally 10%) does apply to such payments but
payees can elect to have withholding waived. Death benefit payments to non-
spouse beneficiaries generally cannot be rolled over and are subject to tax
withholding at different rates, but payees can elect to have withholding
waived. Certain small payments may also be exempt from direct rollover and tax
withholding rules.
When withdrawals or benefit payments are to be made, participants (or
beneficiaries) will be given detailed information and advised of their
elections. That information should be carefully reviewed. Residents of certain
states will have state withholding apply if they have elected to have federal
withholding apply.
OBTAINING TAX ADVICE
The description in this Prospectus of the federal tax status of amounts
accumulated or received under the Contracts is not exhaustive and is for
information purposes only. The description does not purport to cover all
situations involving the purchase of an annuity or the election of an option
under the Contract. Tax results may vary depending upon individual situations
and special rules may apply in certain cases. State and local taxes may also
pertain. For these reasons a qualified tax advisor should be consulted for
complete tax information regarding any specific situation.
32
<PAGE>
VOTING RIGHTS
In accordance with the Insurance Company's view of present applicable law, and
so long as the Commission continues to interpret the 1940 Act as requiring
pass-through voting privileges, the Insurance Company will vote the shares of
the Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios,
the TCI Growth Fund and Calvert Responsibly Invested Balanced Portfolio held
in the Separate Account at regular and special meetings of the shareholders of
the Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios,
the TCI Growth Fund and Calvert Responsibly Invested Balanced Portfolio
according to instructions received from persons having the right to instruct
the Insurance Company on how to vote the shares, as defined below. The
Insurance Company will vote shares for which it has not received instructions
in the same proportion as the Insurance Company votes shares for which it has
received instructions, except for shares owned by the Insurance Company
representing "seed" money, which will be voted in the Insurance Company's
discretion. The Insurance Company exercises discretion with respect to less
than 1% of the voting interest in the Separate Account. If the Investment
Company Act of 1940 should be amended, or if the present interpretation
thereof should change, and as a result the Insurance Company determines that
it is permitted to vote the shares of the Investment Company Funds, the
Fidelity Portfolios, the Scudder Portfolios, the TCI Growth Fund and Calvert
Responsibly Invested Balanced Portfolio in its own discretion, it may elect to
do so.
The person having the right to give voting instructions to the Insurance
Company under a Contract is the following: under an individual Contract, the
person to whom the Contract is issued and for whom an amount is accumulated in
the Separate Account, and, under a group Contract, the individual for whom
amounts are accumulated in the Separate Account, i.e., the Participant.
Each person having the right to instruct the Insurance Company on how to vote
the shares of any of the Investment Company Funds, the Fidelity Portfolios,
the Scudder Portfolios, the TCI Growth Fund and Calvert Responsibly Invested
Balanced Portfolio will receive periodic reports relating to such funds or
portfolios, including proxy material and a form with which to give voting
instructions.
PERFORMANCE INFORMATION
MONEY MARKET FUND
From time to time, quotations of the "yield" and "effective yield" of the
Separate Account's Money Market Fund may be included in advertisements, sales
literature or shareholder reports. Both yield figures are based on the
historical performance of the Fund and show the performance of a hypothetical
investment and are not intended to indicate future performance. The yield of
the Money Market Fund refers to the net investment income generated by the
Fund over a specified seven-day period (the ending date of which will be
stated). This income is then annualized. That is, the amount of income
generated by the Fund during that week is assumed to be generated each week
during such 52-week period and is shown as a percentage. The effective yield
is expressed similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. Yield and effective yield for the Money Market Fund will
vary based on, among other things, changes in the market conditions, the level
of interest rates and the level of the Money Market Fund's portfolio expenses.
OTHER FUNDS
From time to time, quotations of a Fund's "total return" may be included in
advertisements, sales literature or shareholder reports. Total return figures
are based on the historical performance of the Fund and show the performance
of a hypothetical investment and are not intended to indicate future
performance. The total return of a Fund refers to return assuming an
investment has been held in the Fund for one, five and ten years and for the
life of the Fund (the ending date of which will be stated). The total return
quotations are expressed in terms of average annual compounded rates of return
for all periods quoted and assume that all dividends and capital gains
distributions were reinvested. Total return for a Fund will vary based on,
among other things, changes in market conditions and the level of the Fund's
expenses.
For a detailed description of the methods used to determine yield and total
return for the Separate Account's Funds, see the Statement of Additional
Information.
33
<PAGE>
FUNDING AND OTHER CHANGES
The Insurance Company reserves the right, subject to compliance with
applicable law, including approval of Participants if so required, (1) to
create new investment funds of the Separate Account at any time; (2) to
transfer assets determined by the Insurance Company to be associated with the
class of contracts to which the Contract belongs from the Separate Account to
another Separate Account of the Insurance Company by withdrawing the same
percentage of each investment in the Separate Account with appropriate
adjustments to avoid odd lots and fractions; (3) to create additional separate
investment accounts or combine any two or more accounts including the Separate
Account; (4) to operate the Separate Account as a diversified, open-end
management investment company under the 1940 Act, or in any other form
permitted by law, and to designate an investment adviser in connection
therewith, which may be the Insurance Company, an affiliate of the Insurance
Company or another person; (5) to deregister the Separate Account under the
1940 Act; and (6) to operate the Separate Account under the general
supervision of a committee any or all the members of which may be interested
persons (as defined in the 1940 Act) of the Insurance Company or an affiliate,
or to discharge the committee of one or more of the Separate Accounts.
OTHER VARIABLE ANNUITY CONTRACTS
In addition to the Contract described in this Prospectus, the Insurance
Company offers other individual and group variable annuity contracts, some of
which are not described in this Prospectus, but which may also participate in
the Separate Account.
34
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Distribution of the Contract Legal Proceedings
Money Market Yield Calculation Legal Matters
Performance Information Experts
Safekeeping of Separate Account Assets Additional Information
State Regulation Financial Statements
Periodic Reports
OBTAINING A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
To receive a copy of the Statement of Additional Information at no charge, the
Participant may, as an alternative to calling (212) 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 Thrift Plan Contract offered by Mutual of America. My name and
address are as follows:
---------------------------------------------------
Name
---------------------------------------------------
Street Address
---------------------------------------------------
City State Zip
35
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
THRIFT PLAN CONTRACT
OFFERED BY
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 PARK AVENUE
NEW YORK NEW YORK 10022
---------------
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Thrift Plan Contract ("Contract") offered by
Mutual of America Life Insurance Company. You may obtain a copy of the
Prospectus dated May 1, 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 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
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America.................. 34.4% 13.0% 11.0% 13.5%(1)
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)
<CAPTION>
CUMULATIVE TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1995
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America.................. 34.4% 84.1% 185.0% 301.9%(1)
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
