<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 33-5609
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[X]
PRE-EFFECTIVE AMENDMENT NO.[_]
----
POST-EFFECTIVE AMENDMENT NO. 18[X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[X]
AMENDMENT NO. 20
---------------
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
(EXACT NAME OF REGISTRANT)
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
320 PARK AVENUE NEW YORK, NEW YORK 10022
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE INCLUDING ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 224-1600
PATRICK A. BURNS, ESQ. MUTUAL OF AMERICA LIFE INSURANCE COMPANY 320 PARK
AVENUE NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROBERT S. SCHNEIDER, ESQ. GRAHAM & JAMES LLP 885 THIRD AVENUE NEW YORK, NEW
YORK 10022
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
---------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
SPACE)
immediately upon filing pursuant to paragraph (b) of
Rule 485
X on May 1, 1997 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a) of Rule
485
on (date) pursuant to paragraph (a) of Rule 485
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT
FISCAL YEAR WAS FILED ON FEBRUARY 28, 1997.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 2
Variable Accumulation Annuity Contracts
Issued By
Mutual of America Life Insurance Company
320 Park Avenue
New York, New York 10022
- -------------------------------------------------------------------------------
The group variable accumulation annuity contracts ("Contracts") offered by
Mutual of America Life Insurance Company (the "Insurance Company") and
described in this Prospectus are designed to aid employees of states,
agencies, instrumentalities or political subdivisions thereof, in retirement
and long-term financial planning by providing monthly Benefit Payments which
begin at a selected future date under an eligible deferred compensation plan
and contract as provided by Section 457 of the Internal Revenue Code ("Code").
Participating employees under Contracts are referred to in this Prospectus as
"Participants."
The Contracts permit Deferred Compensation deposits to be made by the
Contractholder, generally, in whatever amounts and at whatever frequency is
desired by a Participant under the Plan, subject to the limitations of Section
457. Deferred Compensation deposits may be accumulated on behalf of a
Participant on a completely variable basis, a completely fixed basis, or a
combination variable and fixed basis. The basic purpose of the variable
accumulation aspect of the Contracts is to provide Participants with an
opportunity to accumulate amounts toward retirement, or for other financial
purposes, that will reflect the investment experience of one or more of the
distinct funds comprising Mutual of America Separate Account No. 2 ("Separate
Account") to which Contributions may be allocated. Deferred Compensation
deposits under the Contracts may be allocated in whole or in part to any of
the Funds of the Separate Account or to the General Account of the Insurance
Company (the "Investment Alternatives").
The assets in each Fund of the Separate Account are invested in shares of:
- -- one or more of the following eight Funds of Mutual of America Investment
Corporation (the "Investment Company"): Money Market Fund, All America Fund,
Equity Index Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund,
Composite Fund and Aggressive Equity Fund;
- -- one or more of the following three Fidelity Investments (R) portfolios:
Equity-Income Portfolio of the Variable Insurance Products Fund and
Contrafund and Asset Manager Portfolios of the Variable Insurance Products
Fund II (collectively, the "Fidelity Portfolios");
- -- one or more of the following three portfolios of Scudder Variable Life
Investment Fund: Scudder Capital Growth Portfolio, Scudder Bond Portfolio,
and Scudder International Portfolio (collectively, the "Scudder
Portfolios");
- -- the American Century VP Capital Appreciation Fund (formerly known as the
TCI Growth Fund) of American Century Variable 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 American Century VP Capital
Appreciation Fund and the Calvert Responsibly Invested Balanced Portfolio,
which are attached to this Prospectus, describe the investment objectives and
policies of each of the variable accumulation Investment Alternatives, as well
as the risks relating to investments in each such Investment Alternative.
The value of a Participant's interest in the Separate Account will depend upon
the investment performance of the chosen Investment Alternative. THE INSURANCE
COMPANY DOES NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY FUND OF THE
SEPARATE ACCOUNT. Accordingly, the Participant bears the entire investment
risk for any amounts allocated to the Separate Account.
Amounts accumulated under the Contracts may be applied to provide monthly
Benefit Payments on a fixed basis commencing at a future date selected by the
Participant.
This Prospectus generally describes only the variable portion of the
Contracts. For a brief summary of the fixed portion, see "The General
Account."
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the
Contracts and the Separate Account is available free by writing the Insurance
Company at the address above or by calling (212) 224-1600. The Statement of
Additional Information, which has the same date as the Prospectus, has been
filed with the Securities and Exchange Commission and is incorporated herein
by reference. The table of contents of the Statement of Additional Information
is included at the end of this Prospectus.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please read this Prospectus carefully for details on the Contracts being
offered and retain it for future reference. It is not valid unless attached to
the current prospectus for the Investment Company, Fidelity Portfolios,
Scudder Variable Life Investment Fund, American Century VP Capital
Appreciation Fund (formerly known as the TCI Growth Fund) and the Calvert
Responsibly Invested Balanced Portfolio.
Dated: May 1, 1997
<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................... 14
Investments of the Separate Account.... 14
Charges................................ 19
Administrative Charges................ 19
Distribution Expense Charge........... 19
Mortality and Expense Risk Charge..... 20
Portfolio Company Expenses............ 20
The Group Contract..................... 22
General............................... 22
Deposits of Deferred Compensation..... 22
Allocations of Deferred Compensation
Deposits............................. 23
Accumulation Units.................... 23
Transfers Among Investment
Alternatives......................... 24
Withdrawals........................... 25
Death Benefits........................ 25
Benefit Payments...................... 25
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Discontinuance......................... 27
Postponement of Payments............... 27
Period After Annuity Commencement Date. 28
General............................... 28
Annuity Commencement Date............. 28
Available Forms of Periodic Benefits.. 29
Amount of Periodic Benefit Payments... 30
Small Benefit Payments................ 30
The General Account.................... 31
General Matters........................ 32
Federal Tax Matters.................... 34
Voting Rights.......................... 35
Performance Information................ 36
Funding and Other Changes.............. 36
Other Variable Annuity Contracts....... 37
Table of Contents of the Statement of
Additional Information................ 37
Obtaining a Copy of the Statement of
Additional Information................ 37
Order Form For Statement of Additional
Information........................... 37
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
3
<PAGE>
TABLE OF ANNUAL EXPENSES
<TABLE>
<CAPTION>
Investment
Company
All America,
Bond,
Investment Short-Term Investment Investment Fidelity Fidelity
Company Bond, Company Company VIP Fidelity VIP II Scudder
Money Mid-Term Bond, Equity Aggressive Equity- VIP II Asset Capital Scudder
Market and Composite Index Equity Income Contrafund Manager Growth Bond
---------- -------------- ---------- ---------- -------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contractowner
Transaction
Expenses
Sales Load
Imposed on
Purchases...... None None None None None None None None None
Deferred Sales
Load......... None None None None None None None None None
Surrender Fees.. None None None None None None None None None
Exchange Fee.... None None None None None None None None None
Annual Contract
Fee(1).......... $24 $24 $24 $24 $24 $24 $24 $24 $24
==== ==== ==== ==== ==== ==== ==== ==== ====
Separate Account
Annual Expenses
(as a percentage
of average
account value)
Mortality and
Expense Risk
Fees(2)........ .50% .50% .50% .50% .50% .50% .50% .50% .50%
---- ---- ---- ---- ---- ---- ---- ---- ----
Account Fees and Expenses
Administrative Charges
(after reim-
bursement)(2).. .40% .40% .40% .40% .40% .40% .40% .40% .40%
Distribution
Expense
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)(3)
Management Fees. .25% .50% .125% .85% .51% .61% .64% .475% .475%
Other Expenses
(after reim-
bursement)(3).. None None None None .07 .13 .10% .055 .135
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
Company
Expenses....... .25% .50% .125% .85% .58%(4) .74%(4) .74%(4) .53% .61%
==== ==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
American Calvert
Century VP Responsibly
Scudder Capital Invested
International Appreciation 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
(after reim-
bursement)(2).. .40% .20% .40%
Distribution
Expense
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)(3)
Management Fees. .875% 1.00% .71%
Other Expenses
(after reim-
bursement)(3).. .175 None .13
------------- ------------ ------------
Total Portfolio
Company
Expenses....... 1.05% 1.00% .84%(5)
============= ============ ============
</TABLE>
- -------
(1) A monthly amount of $2.00 (but not to exceed 1/12 of 1% of the Account
Value in any month) is charged with respect to each Participant under a
Contract, regardless of the number of Investment Alternatives in which the
Participant is invested. Such amount is deducted from the net assets, if
any, in one or more of the Participant's Accounts or from such net assets
which have been allocated to one or more Funds of the Separate Account in
the order as described in "Charges--Administrative Charges" herein. The
above table reflects such amount for a full year for each fund or portfolio
as if no other Investment Alternatives were used. If the General Account is
used, the fee is deducted from it and there would be no fee with respect to
amounts allocated to any fund or portfolio. If the General Account is not
used, but more than one fund or portfolio is used, then the second or
additional fund(s) or portfolio(s) would not be charged. The employer may
elect to pay this Additional Amount in which case no amount is deducted
from the Participant's Account. See "Charges--Administrative Charges."
(2) In accordance with a Fund Participation Agreement, the investment adviser
for American Century VP Capital Appreciation Fund 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, the
investment advisers reimbursement obligation will terminate, and the
administrative charge to the American Century VP Capital Appreciation 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) The investment adviser for the Investment Company voluntarily limits the
expenses of each Investment Company Fund to its investment advisory fee.
The investment adviser for the American Century VP Capital Appreciation
Fund pays the expenses of that Fund other than the investment advisory fee.
The expenses of the Portfolio Companies are more fully described in the
prospectuses of the Portfolio Companies, which are attached to this
Prospectus.
(4) A portion of the brokerage commissions that these Portfolios pay was used
to reduce their expenses. In addition, the Portfolios have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, total operating
expenses for the VIP Equity-Income Portfolio and the VIP II Contrafund and
Asset Manager Portfolios for 1996 would have been .56%, .71% and .73%,
respectively.
(5) The expense ratio has been restated to reflect an increase in transfer
agency expenses of 0.03% expected to be incurred in 1997. Management fees
may be adjusted based on performance by the Portfolio's advisors, which
could cause the fee to be as high as .85% or as low as .55%, depending on
performance. The Portfolio indirectly pays expenses of 0.03%, and the
Portfolio's total operating expenses for 1996 (after restatement) would
have been .81% with reductions to reflect fees paid indirectly.
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:................................... $18.42 $59.86 $108.09 $264.21
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:................................... $21.00 $68.06 $122.60 $297.90
Example for Investment Company Equity Index
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $17.13 $55.74 $100.76 $247.05
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:................................... $24.59 $79.44 $142.61 $343.68
Example for Fidelity VIP Equity-Income Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $21.82 $70.67 $127.20 $308.51
Example for Fidelity VIP II Contra Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.46 $75.88 $136.36 $329.47
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:................................... $23.46 $75.88 $136.36 $329.47
Example for Scudder Capital Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $21.30 $69.04 $124.33 $301.89
Example for Scudder Bond Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $22.13 $71.65 $128.92 $312.46
Example for Scudder International Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $26.64 $85.89 $153.89 $369.13
Example for American Century VP Capital Appre-
ciation Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $24.08 $77.82 $139.77 $337.24
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:................................... $24.49 $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 American Century VP Capital Appreciation Fund
(formerly known as the TCI Growth Fund) and the Calvert Responsibly Invested
Balanced Portfolio as they were for the year ended December 31, 1996. 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 $2.69 per $1,000 of value in the Separate Account based
on an average account value of $8,932. 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,
1996. The information with respect to each of the years in the five years
ended December 31, 1996, 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. Prior to May 1, 1997, the American Century VP Capital
Appreciation Fund was known as the TCI Growth Fund.
<TABLE>
<CAPTION>
INVESTMENT COMPANY MONEY MARKET FUND
-------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 1.80 $ 1.72 $ 1.68 $ 1.65 $ 1.62 $ 1.54 $ 1.44 $ 1.33 $ 1.25 $ 1.18
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 1.87 $ 1.80 $ 1.72 $ 1.68 $ 1.65 $ 1.62 $ 1.54 $ 1.44 $ 1.33 $ 1.25
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 17,511 17,502 17,653 15,815 16,545 15,656 13,972 8,570 4,870 2,778
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY ALL AMERICA FUND
---------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 4.52 $ 3.35 $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82 $ 1.67
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of peri-
od..................... $ 5.39 $ 4.52 $ 3.35 $ 3.36 $ 3.03 $ 2.97 $ 2.41 $ 2.47 $ 1.98 $ 1.82
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period................. 49,798 43,620 38,669 36,510 32,352 26,173 20,973 20,157 20,064 23,919
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY BOND FUND
---------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 2.69 $ 2.28 $ 2.39 $ 2.13 $ 1.99 $ 1.73 $ 1.67 $ 1.49 $ 1.40 $ 1.42
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 2.75 $ 2.69 $ 2.28 $ 2.39 $ 2.13 $ 1.99 $ 1.73 $ 1.67 $ 1.49 $ 1.40
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 12,548 12,083 10,601 12,244 9,203 6,152 5,235 4,164 3,057 2,631
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
INVESTMENT COMPANY COMPOSITE FUND
---------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year.................... $ 3.39 $ 2.82 $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60 $ 1.51
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
period.................. $ 3.75 $ 3.39 $ 2.82 $ 2.95 $ 2.55 $ 2.43 $ 2.08 $ 2.04 $ 1.73 $ 1.60
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Thousands of
accumulation units
outstanding, end of
period.................. 66,715 70,558 73,239 71,215 50,944 43,115 37,461 32,716 29,436 28,126
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</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
- -------------------------- ----------------------- ----------------------- -------------------
1996 1995 1994 1993* 1996 1995 1994 1993* 1996 1995 1994 1993* 1996 1995 1994*
---- ---- ---- ----- ---- ---- ---- ----- ---- ---- ---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.42 $ 1.05 $1.05 $1.00 $1.10 $1.03 $1.03 $1.00 $1.16 $1.01 $1.06 $1.00 $ 1.43 $ 1.05 $1.00
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== =====
$ 1.72 $ 1.42 $1.05 $1.05 $1.14 $1.10 $1.03 $1.03 $1.19 $1.16 $1.01 $1.06 $ 1.80 $ 1.43 $1.05
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== =====
35,660 17,109 4,644 2,135 2,129 1,447 1,132 747 3,828 2,848 1,444 1,411 49,800 20,858 9,145
====== ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ====== =====
<CAPTION>
SCUDDER BOND FUND
- ---------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$11.30 $ 9.69 $10.32 $ 9.30 $8.78 $7.54 $7.05 $6.39
====== ====== ====== ===== ===== ===== ===== ====
$11.48 $11.30 $ 9.69 $10.32 $9.30 $8.78 $7.54 $7.05
====== ====== ====== ===== ===== ===== ===== ====
1,362 1,269 1,169 1,277 1,053 600 354 221
====== ====== ====== ===== ===== ===== ===== ====
</TABLE>
<TABLE>
<CAPTION>
SCUDDER CAPITAL GROWTH FUND SCUDDER INTERNATIONAL FUND
- -------------------------------------------------------- ---------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$18.64 $14.67 $16.46 $13.80 $13.09 $ 9.48 $10.35 $ 8.53 $11.85 $10.80 $11.06 $ 8.13 $8.48 $7.68 $8.41 $6.14
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
$22.11 $18.64 $14.67 $16.46 $13.80 $13.09 $ 9.48 $10.35 $13.43 $11.85 $10.80 $11.06 $8.13 $8.48 $7.68 $8.41
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
9,266 8,556 8,121 6,582 3,698 2,138 1,103 844 7,688 7,269 8,610 5,400 2,262 1,849 1,644 721
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY FIDELITY
CALVERT RESPONSIBLY EQUITY- VIP II VIP II ASSET
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND INVESTED BALANCED FUND INCOME FUND CONTRA FUND MANAGER FUND
- -------------------------------------------------- ------------------------------------ ------------- ------------- -------------
1996 1995 1994 1993 1992 1991 1990 1989 1996 1995 1994 1993 1992 1991* 1996 1995* 1996 1995* 1996 1995*
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$12.18 $ 9.39 $9.61 $8.81 $9.01 $6.40 $6.53 $5.11 $ 2.01 $1.57 $1.64 $1.54 $1.44 $1.32 $19.43 $16.30 $13.85 $11.43 $15.66 $14.04
====== ====== ===== ===== ===== ===== ===== ===== ====== ===== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
$11.53 $12.18 $9.39 $9.61 $8.81 $9.01 $6.40 $6.53 $ 2.23 $2.01 $1.57 $1.64 $1.54 $1.44 $21.93 $19.43 $16.59 $13.85 $17.72 $15.66
====== ====== ===== ===== ===== ===== ===== ===== ====== ===== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
7,264 8,061 6,361 5,946 5,280 3,056 1,518 791 10,713 7,849 5,986 5,151 2,742 678 2,342 728 3,880 1,792 613 184
====== ====== ===== ===== ===== ===== ===== ===== ====== ===== ===== ===== ===== ===== ====== ====== ====== ====== ====== ======
</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 American Century VP Capital Appreciation Fund
(previously "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
compensation is deferred under a Contract to the Annuity Commencement Date, or
other payment 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.
American Century VP Capital Appreciation Fund--The American Century VP Capital
Appreciation Fund of American Century Variable Portfolios, Inc. Prior to May
1, 1997, this Fund was known as the TCI Growth Fund of TCI Portfolios, Inc.
Annuity Commencement Date--The date on which a Participant's Benefit Payments
begin. Sometimes referred to by the Insurance Company as Benefit Commencement
Date.
Benefit Payments--A series of payments (other than payments made solely to
comply with minimum distribution requirements of applicable tax laws) under a
Contract for life, for a minimum period of time, or for the joint lifetime of
the Participant, such Participant's Eligible Spouse, and thereafter for the
life of the survivor, or for such other specified period.
Benefit Period--The period, beginning at the Annuity Commencement Date, during
which Benefit Payments are received by a Participant.
Calvert Responsibly Invested Balanced Portfolio--The Calvert Responsibly
Invested Balanced Portfolio of Acacia Capital Corporation.
Code--The Internal Revenue Code of 1986, as amended.
Contract(s)--One (or more) of the group variable accumulation annuity
contracts described in this Prospectus.
Contractholder--The entity to which the Insurance Company has issued a
Contract. The Contractholder of a Contract may be a State, a political
subdivision of the State, the agent or instrumentality of the State or the
agent or instrumentality of the political subdivision of the State or any
other organization (other than a governmental unit) exempt from taxation under
the Code.
Deferred Compensation Amounts--The amounts deferred from a Participant's
compensation from time to time under the Plan and remitted to the Insurance
Company on his or her behalf under the 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 Asset Manager Portfolio of the Variable Insurance Products Fund
II.
Fund--According to the context, one of the sixteen subaccounts of the Separate
Account or one of the eight investment portfolios of the Investment Company.
General Account--All of the assets of the Insurance Company that are not in a
separate account, but rather are held as part of its general assets.
Insurance Company--Mutual of America Life Insurance Company.
Investment Alternatives--The General Account, and the sixteen distinct Funds
comprising the Separate Account, namely, the Funds which invest in the Money
Market, All America, Equity Index, Bond, Short-Term Bond, Mid-Term Bond,
Composite and Aggressive Equity Funds of the Investment Company, in the three
Fidelity Portfolios, in the three Scudder Portfolios, in the American Century
VP Capital Appreciation Fund (formerly called the TCI Growth Fund) and in the
Calvert Responsibly Invested Balanced Portfolio. Under the Contracts, a
Participant may allocate Deferred Compensation among all of the Investment
Alternatives.
8
<PAGE>
Investment Company--Mutual of America Investment Corporation.
Participant--An employee or former employee of the employer who is entitled to
any benefit in accordance with the Plan.
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--An eligible deferred compensation plan meeting the requirements of
Section 457 of the Code under which benefits are to be provided to a
Participant.
Plan Year--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,
American Century Variable Portfolios, Inc. and Acacia Capital Corporation.
Salary Reduction Agreement--The agreement, signed by the employee and
submitted to the employer, which specifies the amount of Compensation which
shall be considered a Deferred Compensation Amount under the Plan and which
shall be remitted to the Insurance Company on behalf of the Participant.
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
Deferred Compensation deposits made under variable accumulation annuity
contracts and other variable contracts (it being possible that the Separate
Account could in the future be used to fund variable life insurance policies).
The Separate Account is set aside and kept separate from the other assets of
the Insurance Company.
Valuation Day--Each day that the New York Stock Exchange is open for business.
Valuation Period--The period beginning on the close of business of each
Valuation Day and ending on the close of business on the next Valuation Day.
9
<PAGE>
SUMMARY
The Following Summary of Prospectus Information Should Be Read In Conjunction
With The Detailed Information Appearing Elsewhere In This Prospectus.
CONTRACT OFFERED
The group variable accumulation annuity contract offered by this Prospectus is
issued by the Insurance Company and designed to aid in retirement and long-
term financial planning. The Contract provides for the accumulation of
Deferred Compensation Amounts on a completely variable basis, a completely
fixed basis or a combination variable and fixed basis. Benefit Payments under
the Contract will be made on a fixed basis only. Benefit payments will be made
by the Insurance Company to the Contractholder which shall be responsible for
distributing such payments to Participants. If the Contractholder agrees, the
Insurance Company may make benefit payments directly to Participants for the
Contractholder. The Contract is summarized as a group contract designed for
use in connection with deferred compensation plans adopted pursuant to Section
457 of the Code by certain organizations that qualify to be Contractholders,
as defined above. The Contracts are issued to each Contractholder and are
owned by the Contractholder. Sums accumulated by Participants are regarded as
claims of a general creditor of the Contractholder. Participation in the
deferred compensation plan is entirely voluntary unless the Contractholder
elects otherwise. Participants under Contracts may obtain certain Federal
income tax benefits provided under Section 457 of the Code (see "Federal Tax
Matters").
REMITTANCES
In general, under the Plan, compensation may be deferred in whatever amounts
and at whatever frequency is desired by Participants. In certain instances,
the Plan may provide that Plan expenses, such as accounting, legal or
consulting fees, are borne by the Participant. Under the Contract, the
Contractholder may remit Deferred Compensation Amounts from time to time.
Under the Plan such remittance should be made within seven days but no later
than one month after the date on which such Amounts are first available to the
Contractholder for remittance. The minimum deferral that may be remitted to
the Insurance Company under a Contract is $10. The maximum annual deferral is
that amount permitted under the Code (see "The Group Contract--Allocations of
Deferred Compensation Deposits").
Participants under the Contracts may allocate Deferred Compensation Amounts
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 Contracts only. See "The General Account" for a brief summary of the
fixed portion of the Contracts.
THE SEPARATE ACCOUNT
Deferred Compensation Amounts remitted pursuant to the Contracts and allocated
on a variable basis become part of the Separate Account. The Separate Account
is divided into sixteen Funds, or sub-accounts, each one of which corresponds
to one of the eight Funds of the Investment Company, or one of the three
Fidelity Portfolios, or one of the three Scudder Portfolios, or the American
Century VP Capital Appreciation Fund (formerly known as 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
Deferred Compensation Amounts accumulated for a Participant in the Separate
Account prior to the Annuity Commencement Date will vary with the investment
experience of the chosen Funds.
10
<PAGE>
THE INVESTMENT ALTERNATIVES
The Investment Alternatives to which Contributions may be allocated are the
General Account and the sixteen Funds of the Separate Account, which invest in
the eight separate investment funds of Mutual of America Investment
Corporation: the Money Market Fund, which invests in money market instruments
and other short-term debt securities; the All America Fund, which invests
approximately 60% of its assets in publicly traded common stocks in the same
manner as the Equity Index Fund (see below) and approximately 40% of its
assets in other publicly traded common stocks; the Aggressive Equity Fund,
which also invests in publicly traded common stocks; the Bond Fund, which
invests in publicly traded debt securities; the Short-Term Bond Fund which
invests in publicly traded debt securities which will produce a portfolio with
an average maturity of one to three years; the Mid-Term Bond Fund which
invests in publicly traded debt securities which will produce a portfolio with
an average maturity of three to seven years; the Composite Fund, which invests
in all of the above types of investments; and the Equity Index Fund which
invests in publicly traded common stocks comparable to the Standard & Poor's
Composite Index of 500 Stocks* (the "S&P 500 Index"); the Fidelity VIP Equity-
Income Portfolio, which invests primarily in income-producing equity
securities; the Fidelity VIP II Contrafund Portfolio, which invests mainly in
securities of companies that are undervalued or out-of-favor; and Fidelity VIP
II Asset Manager Portfolio, which allocates its assets among domestic and
foreign stocks, bonds and short-term fixed-income instruments; the following
three portfolios of Scudder Variable Life Investment Fund: the Scudder Capital
Growth Portfolio which invests primarily in publicly traded equity securities;
the Scudder Bond Portfolio which invests primarily in publicly traded debt
securities; and the Scudder International Portfolio which invests primarily in
marketable foreign equity securities; in the American Century VP Capital
Appreciation Fund (formerly known as the TCI Growth Fund) of American Century
Variable 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.
REINVESTMENT
Distributions of the Portfolio Companies to the Separate Account are
automatically reinvested in additional Portfolio Company shares at net asset
value.
CHARGES
Certain charges will be deducted in connection with the operation of the
Contracts and the Separate Account.
Administrative Charges. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
administrative expenses at an annual rate of .40%, except that in the case of
the Fund of the Separate Account which invests in the American Century VP
Capital Appreciation Fund (formerly known as the TCI Growth Fund), the annual
rate shall be .20% (the Fund's investment adviser 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 per
month will
- --------
* "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>
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)
American Century VP Capital Appreciation Fund (formerly known as TCI Growth
Fund). These daily and monthly charges may increase or decrease during the
life of the Contract, but may not exceed costs. The employer may elect to pay
this additional deduction in which case no amount is deducted from the
Participant's Account (see "Charges--Administrative Charges").
Distribution Expense Charge. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
expenses associated with the distribution of the Contracts at an annual rate
of .35% (see "Charges--Distribution Expense Charge").
Mortality and Expense Risk Charge. For assuming certain mortality risks under
the Contracts, the Insurance Company will make a deduction each Valuation Day
at an annual rate of .35% of the net assets of each Fund of the Separate
Account. The Mortality Risk Charge is guaranteed not to increase during the
life of the Contract. For assuming certain expense risks under the Contracts
with respect to expenses it expects to incur over the life of the Contracts,
the Insurance Company will make a deduction each Valuation Day at an annual
rate of .15% of the net assets of each Fund of the Separate Account (see
"Charges--Mortality and Expense Risk Charge").
Portfolio Company Expenses. The value of the assets in the Separate Account
will reflect the value of the shares of the Portfolio Companies in which such
assets are invested, and therefore the fees and expenses paid by the
Investment Company, Fidelity Portfolios, Scudder Portfolios, American Century
VP Capital Appreciation Fund (formerly known as the 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, Fidelity Portfolios, Scudder Portfolios, American Century VP
Capital Appreciation Fund and the Calvert Responsibly Invested Balanced
Portfolio is found in their respective prospectuses attached to this
Prospectus.
TRANSFERS AND WITHDRAWALS
A Plan may provide that at any time prior to the Annuity Commencement Date, a
Participant under a 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 (see "Transfers Among Investment Alternatives"). In addition, a Plan
may provide that a Participant may withdraw all or a portion of the
Participant's Account Balance in the event of an "Unforeseen Emergency" (see
"Withdrawals"). The Insurance Company may take up to seven days following
receipt of a Participant's withdrawal request to process the request and mail
a check to the Participant.
No charge is currently assessed for transfers or withdrawals made under the
Contracts. The Insurance Company reserves the right, however, to impose a
charge for transfers or withdrawals in the future.
12
<PAGE>
CONTACTING THE INSURANCE COMPANY
All written requests and notices required by the Contracts, and any questions
or inquiries, should be addressed to:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President
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.
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, 1996, the Insurance
Company on a consolidated basis had total assets of approximately $8.7
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.
13
<PAGE>
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 or will be invested. The assets of the Separate Account are the
property of the Insurance Company. The Separate Account assets attributable to
the Contracts and to other annuity contracts funded by the Separate Account
are not chargeable with liabilities arising out of any other business the
Insurance Company may conduct. The income, capital gains and capital losses of
each Fund of the Separate Account are credited to or charged against the net
assets held in that Fund, without regard to the income, capital gains and
capital losses arising out of the business conducted by any 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
periodic benefits, will depend upon the value of the assets held in the
Fund(s) of the Separate Account selected by the Participant. Accordingly, the
Participant bears the full investment risk for all amounts allocated to the
Separate Account.
The Separate Account and the Insurance Company are subject to supervision and
regulation by the Superintendent of Insurance of the State of New York, and by
the insurance regulatory authorities of each State in which it is licensed to
do business.
INVESTMENTS OF THE SEPARATE ACCOUNT
Deferred Compensation Amounts 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
American Century VP Capital Appreciation Fund (formerly known as 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, the American
Century VP Capital Appreciation Fund and the Calvert Responsibly Invested
Balanced Portfolio, which are attached to this Prospectus. Each applicable
prospectus should be read for a complete evaluation of the Investment
Alternatives. Shares of the Portfolio Companies are sold to the separate
accounts of insurance companies and are not offered for sale to the general
public. 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 will invest
only in money market instruments and other short-term securities.
14
<PAGE>
ALL AMERICA FUND OF THE INVESTMENT COMPANY
The investment objective of the All American Fund is to outperform the S&P 500
Index. The objective for approximately 60% of the assets of the All America
Fund (the "Indexed Assets") is to provide investment results that to the
extent practical correspond to the price and yield performance of publicly
traded common stocks in the aggregate, as represented by the S&P 500 Index.
The Indexed Assets will be invested in the same manner as the Equity Index
Fund.
The investment objective for the remaining approximately 40% of the assets
(the "Active Assets") is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of a
diversified portfolio of securities that may include common stocks, securities
convertible into common stocks, bonds and money market instruments. The Active
Assets are invested by three subadvisers and Mutual of America Capital
Management Corporation (the "Adviser"). The Adviser allocates the Active
Assets to maintain, to the extent practicable under current market conditions,
approximately equal amounts among the subadvisers and the Adviser. See
"Charges--Portfolio Company Expenses".
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
The investment objective of the Equity Index Fund is to provide investment
results to the extent practical that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the S&P 500 Index.
BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Bond Fund is to provide as high a
level of current income over time as is believed to be consistent with prudent
investment risk. A secondary objective is preservation of capital. The assets
of the Bond Fund will consist primarily of publicly-traded debt securities,
such as bonds, notes, debentures and equipment trust certificates. The Bond
Fund generally will invest primarily in securities rated in the four highest
categories by a nationally recognized rating service or in instruments of
comparable quality. The Bond Fund may also invest to a limited extent in
lower-rated or unrated securities, and these may be subject to greater market
and financial risk than higher quality (lower yield) issues.
SHORT-TERM BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Short-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital. The
assets of the Short-Term Bond Fund will consist primarily of publicly-traded
debt securities, such as bonds, notes, debentures and equipment trust
certificates which will produce a portfolio with an average maturity of one to
three years. The Short-Term Bond Fund generally will invest primarily in
securities rated in the four highest categories by a nationally recognized
rating service or in instruments of comparable quality. The Short-Term Bond
Fund may also invest to a limited extent in lower-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
15
<PAGE>
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 is divided by the Adviser into two segments so as
to utilize two investment styles.
The investment objective for approximately 50% of the assets of the Fund (the
"Aggressive Growth Portfolio") is to achieve capital appreciation by investing
in companies believed to possess above-average growth potential. Growth can be
in the areas of earnings or gross sales which can be measured in either
dollars or in unit volume. Growth potential is often sought in smaller, less
well-known companies in new and emerging areas of the economy, but may also be
found in large companies in mature or declining industries that have been
revitalized and hold a strong industry or market position. See "Charges--
Portfolio Company Expenses".
The investment objective for the other approximately 50% of the assets of the
Fund (the "Aggressive Value Portfolio") is to achieve capital appreciation by
investing in companies believed to possess valuable assets or whose securities
are undervalued in the marketplace in relation to factors such as the
company's assets, earnings, or growth potential.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the
Portfolio will also consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite yield on
the securities comprising the S&P 500 Index.
FIDELITY VIP II CONTRAFUND PORTFOLIO
Contrafund Portfolio is a growth fund. It seeks to increase the value of an
investment in the Portfolio over the long term by investing mainly in
securities of companies that are undervalued or out-of-favor. These securities
may be issued by domestic or foreign companies and many may not be well known.
The Portfolio usually invests primarily in common stock and securities
convertible into common stock, but it has the flexibility to invest in any
type of security that may produce capital appreciation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Asset Manager Portfolio seeks high total return with reduced risk over the
long term by allocating its assets among domestic and foreign stocks, bonds
and short-term fixed-income instruments. The Portfolio's adviser will normally
allocate the Portfolio's assets among the three asset classes within the
following investment parameters: 0-50% in short-term/money market instruments;
20-60% in bonds; and 30-70% in
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stocks. The expected "neutral mix", which the Portfolio's adviser would expect
over the long term, is 10% in short-term/money market instruments, 40% in
bonds and 50% in stocks.
SCUDDER CAPITAL GROWTH PORTFOLIO
The Scudder Capital Growth Portfolio seeks to maximize long-term capital
growth through a broad and flexible investment program. The Portfolio invests
in marketable securities, principally common stocks and, consistent with its
objective of long-term capital growth, preferred stocks. However, in order to
reduce risk, as market or economic conditions periodically warrant, the
Portfolio may also invest up to 25% of its assets in short-term debt
instruments.
SCUDDER BOND PORTFOLIO
The Scudder Bond Portfolio pursues a policy of investing for a high level of
income consistent with a high quality portfolio of debt securities. Under
normal circumstances, the Portfolio invests at least 65% of its assets in
bonds, including those of the U.S. Government and its agencies, and those of
corporations and other notes and bonds paying high current income. Under
normal market conditions, the Portfolio will invest at least 65% of its assets
in securities rated within the three highest quality rating categories of
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P"), or if unrated, in bonds judged by the Portfolio's adviser to be of
comparable quality at the time of purchase. The Portfolio may invest up to 20%
of its assets in debt securities rated lower than Baa or BBB or, if unrated,
of equivalent quality as determined by the Portfolio's adviser, but will not
purchase bonds rated below B3 by Moody's or B- by S&P or their equivalent.
SCUDDER INTERNATIONAL PORTFOLIO
The Scudder International Portfolio seeks long-term growth of capital
primarily through diversified holdings of marketable foreign equity
investments. The Portfolio invests primarily in equity securities of
established companies which do business primarily outside the United States
and which are listed on foreign exchanges. Investing in foreign securities may
involve a greater degree of risk than investing in domestic securities.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
The American Century VP Capital Appreciation 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. Prior to May 1, 1997, this Fund was
known as the TCI Growth Fund.
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 non-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 American
Century VP Capital Appreciation 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
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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 American Century
Variable Portfolios, Inc." in the American Century VP Capital Appreciation
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
for each of the Funds of the Separate Account.
ADMINISTRATIVE CHARGES
The Insurance Company performs all administrative functions in connection with
the Contracts, including receiving and allocating Deferred Compensation
Amounts remitted in accordance with the Contracts, making Benefit Payments as
they become due, and preparing and filing all reports required to be filed by
the Separate Account. Expenses incurred by the Insurance Company in connection
with its administrative functions include, but are not limited to, items such
as state or other taxes, salaries, rent, postage, telephone, travel, office
equipment, costs of outside legal, actuarial, accounting and other outside
professional services, and costs associated with determining the net asset
value of the Separate Account.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account for administrative
expenses (the provisions of the Contracts include the amount of this charge
with the Distribution Expense Charge, described below) at an annual rate of
.40%, except that in the case of the Fund of the Separate Account which
invests in the American Century VP Capital Appreciation Fund (formerly known
as the TCI Growth Fund), the annual rate shall be .20% (the Fund's investment
adviser reimburses the Insurance Company at an additional annual rate of up to
.20% for administrative expenses). An additional deduction for administrative
expenses of $2.00 will be made on the next to last Valuation Day of the month
or on another Valuation Day on or about that time that is administratively
convenient from each Participant's Account except that such charge shall not
exceed 1/12 of 1% of the Account Value in any month. Such amount will be
deducted from the net assets, if any, in the Participant's Account which have
been allocated to the General Account. If no net assets have been allocated to
such Account, such amount will be deducted from the net assets which have been
allocated to one or more Funds of the Separate Account in the following order:
(a) Investment Company Money Market Fund, (b) Investment Company Short-Term
Bond Fund, (c) Investment Company Mid-Term Bond Fund, (d) Investment Company
Bond Fund, (e) Scudder Bond Fund, (f) Investment Company Composite Fund, (g)
Fidelity VIP II Asset Manager Fund, (h) Calvert Responsibly Invested Balanced
Fund, (i) Fidelity VIP Equity-Income Fund, (j) Investment Company All America
Fund, (k) Investment Company Equity Index Fund, (l) Fidelity VIP II Contrafund
Fund, (m) Investment Company Aggressive Equity Fund, (n) Scudder Capital
Growth Fund, (o) Scudder International Fund, and (p) American Century VP
Capital Appreciation 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
Contracts. These expenses include the payment of that portion of the salaries
of registered representatives of the Insurance Company attributable to the
sale and distribution of Contracts, as well as expenses for preparation of
sales literature and other promotional activities.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account, at an annual rate of
.35% to cover anticipated distribution expenses, not to exceed, with respect
to any Participant, 9% of the total Deferred Compensation Amounts.
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MORTALITY AND EXPENSE RISK CHARGE
The Insurance Company assumes certain mortality and expense risks under the
Contracts. The mortality risks arise from the Insurance Company's guarantees
in the Contracts to make Benefit Payments in certain instances in accordance
with benefit tables provided in the Contracts, regardless of how long a
Participant lives and regardless of any improvement in life expectancy
generally. Thus, the Insurance Company assumes the risk that Participants, as
a class, may live longer than has been actuarially estimated, so that payments
will continue for longer than had been anticipated. This assumption of risk by
the Insurance Company relieves Participants of the risk that they will outlive
the funds that have been accumulated for their retirement.
For assuming the mortality risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .35%
of the value of the net assets in each Fund. This charge will apply with
respect to a Participant during the Accumulation Period. The Insurance Company
guarantees that the mortality risk charge will not increase during the life of
a Contract.
The Insurance Company assumes certain expense risks under the Contracts. The
expense risks arise from the Insurance Company's guarantees in the Contracts
to make Annuity Payments in certain instances in accordance with annuity
tables provided in the Contracts, regardless of whether its estimates of
expenses it expects to incur, over the lengthy period that Annuity payments
may be made will turn out to be correct. Thus, the Insurance Company assumes
the risk that expenses will be higher than estimated.
For assuming the expense risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .15%
of the value of the net assets in each Fund. This charge will apply with
respect to a Participant during the Accumulation Period.
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, American Century VP Capital
Appreciation Fund (formerly called the 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 1996, 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.
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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 as of December 31, 1996
was .3021%, and the individual fund fee rates for the Equity-Income,
Contrafund and Asset Manager Portfolios are .20%, .30% and .25%, respectively.
Each Scudder Portfolio receives investment advice from Scudder, Stevens &
Clark, Inc., and Scudder, Stevens & Clark, Inc. receives from each such
Scudder Portfolio a fee calculated as a daily charge at the annual rate of
.475% of the value of the assets in the Scudder Capital Growth Portfolio and
the Scudder Bond Portfolio and .875% of the value of the assets in the Scudder
International Portfolio. Also, there may be deducted from each Scudder
Portfolio up to an additional .275% of the value of the assets in the Scudder
Capital Growth Portfolio and the Scudder Bond Portfolio, 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 American Century VP Capital Appreciation Fund (formerly called the TCI
Growth Fund) receives investment advice from American Century Investment
Management, Inc. (previously known as Investors Research Corporations), and
American Century Investment Management, Inc. receives from the American
Century VP Capital Appreciation Fund a fee calculated as a daily charge at the
annual rate of 1.00% of the assets of the American Century VP Capital
Appreciation Fund. Many investment companies pay smaller management fees than
the aforesaid fee paid by the American Century VP Capital Appreciation Fund to
American Century Investment Management, Inc. However, American Century
Variable Portfolios, Inc. (formerly known as TCI Portfolios, Inc.) has stated
in the prospectus for the American Century VP Capital Appreciation 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 expenses except
brokerage, taxes, interest, fees and expenses of non-interested directors
(including counsel fees) and extraordinary expenses are paid by American
Century Investment Management, Inc.
Pursuant to the Fund Participation Agreement among the Insurance Company,
American Century Variable Portfolios, Inc. and American Century Investment
Management, Inc., American Century Investment Management, Inc. 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 American Century VP
Capital Appreciation Fund, provided the aggregate amount of the Separate
Account's investment and the investments of other separate accounts of the
Insurance Company in the American Century VP Capital Appreciation Fund for
that month exceeds $10 million. The administrative fees assessed against the
Separate Account Fund holding shares of American Century VP Capital
Appreciation Fund are reduced by the full amount of such payments to the
Insurance Company.
Calvert Responsibly Invested Balanced Portfolio receives investment advice
from Calvert Asset Management Company, Inc., and NCM Capital Management Group,
Inc. is the Sub-Adviser for the equity portion of the Portfolio. Calvert Asset
Management Company, Inc. receives from Calvert Responsibly Invested Balanced
Portfolio a monthly base fee, computed on a daily basis at an annual rate of
0.70% (subject to adjustment as described below) of average net assets of the
Portfolio. Calvert Asset
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Management Company, Inc. pays, at its own expense, the fee of the Sub-Adviser.
Calvert Asset Management Company, Inc. and the Sub-Adviser 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. The
performance adjustment could cause the annual rate to be as high as .85% or as
low as .55% of average net assets.
A complete description of the fees and expenses paid by the Investment Company
Funds, the Fidelity Portfolios, the Scudder Portfolios, the American Century
VP Capital Appreciation Fund and Calvert Responsibly Invested Balanced
Portfolio is found in their respective prospectuses attached to this
Prospectus.
THE GROUP CONTRACT
GENERAL
The Contracts are issued by the Insurance Company to Contractholders as a
funding vehicle for benefits under a Plan. The Contractholder is at all times
the owner of the Contract. Eligibility for participation by any employee of an
employer shall be determined in accordance with the terms of a Plan. The Plan
or the Insurance Company may require Participants to execute agreements and
applications on their prescribed forms.
DEPOSITS OF DEFERRED COMPENSATION
Deferred Compensation Amounts are remitted to the Insurance Company.
Participants, pursuant to Salary Reduction Agreements with Contractholders,
elect the Deferred Compensation Amount to be remitted on their behalf by the
Contractholder. Employers may also remit amounts on behalf of Participants as
matching or non-matching Contributions. The Participant's Account Balance is
regarded as an asset of the Contractholder and the Participant as a general
creditor of the Contractholder. However, 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 other eligible state deferred
compensation plan of the same state.
The Deferred Compensation Amount remitted with respect to a Participant under
the contract may not be less than $10 nor greater than any amount permitted
under applicable law.
Acceptance of Initial Deferred Compensation Amounts. If an initial remittance
of Deferred Compensation Amounts is received together with necessary
information, it will be accepted within two business days of receipt. If any
necessary information is not submitted, the Insurance Company will retain the
Deferred Compensation Amounts for up to five business days while attempting to
obtain the information necessary; the Deferred Compensation Amounts will be
accepted within two business days of receipt of the information. If such
necessary information is not received within five business days, however, the
Insurance Company will return the Deferred Compensation Amount at the end of
that period, unless the Contractholder consents to the Insurance Company's
holding the Deferred Compensation Amount until additional information is
provided.
Limitation on Deferrals. The amount that may be deferred by a Participant
under the Plan for the Participant's taxable year (in general, the calendar
year) may not exceed (A) the lesser of (i) $7,500 (indexed for inflation) or
(ii) 33 1/3 percent of the Participant's includible compensation (taxable
earnings) for the year; a Plan may provide, however, that (B) during one or
more of the last three years prior to the year in which a Participant attains
normal retirement age he may defer an amount equal to the lesser of (i)
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$15,000 or (ii) the sum of the applicable limitation provided in (A) above for
the current taxable year and the excess of the applicable limitation for each
taxable year in which the Participant was eligible to participate in an
eligible deferred compensation plan over the amounts previously deferred for
such years.
The limitation set forth in (B) may be exercised only once. With respect to
government plans, the years referred to in (B)(ii) are only those years
beginning after December 31, 1978 during which the Participant was employed by
a public employer in the same state which sponsored a plan under Section 457
of the Code in which the Participant was eligible to participate and under
which amounts deferred were subject to the limits described in (A) above. With
respect to eligible non-governmental employers, the years referred to in
(B)(ii) above are only those years beginning on and after January 1, 1987
during which an eligible Participant was employed by the employer sponsoring
the Plan.
The limitations set forth above shall be reduced by any amount excluded from
the Participant's gross income for the applicable taxable year under Sections
403(b), 401(k) or 402(a)(8) of the Code, and shall be further reduced to the
extent required by Section 457 of the Code, and the regulations thereunder,
taking into account deferrals under this and any other eligible deferred
compensation plan of the employer or any other eligible employer.
ALLOCATIONS OF DEFERRED COMPENSATION DEPOSITS
Deferred Compensation Amounts remitted under the Contracts are allocated among
the General Account and the sixteen Funds of the Separate Account. Deferred
Compensation Amounts 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 remittance of Deferred Compensation Amounts to be allocated to
each of the Investment Alternatives. The request for allocation of Deferred
Compensation Amounts among the Investment Alternatives may be changed from
time to time, and amounts may be transferred among those alternatives (see
"Transfers Among Investment Alternatives"). A Contractholder may provide that
Contributions not made through salary reduction may in whole or in part be
restricted to the General Account. A Participant should make periodic reviews
of all allocations in light of market conditions, the Participant's retirement
plans, and overall financial planning requirements.
ACCUMULATION UNITS
Remittances of Deferred Compensation Amounts under the Contracts 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 Deferred
Compensation Amount is 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 remittance of Deferred Compensation Amounts 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 Deferred Compensation Amounts remitted to,
or amounts withdrawn from, the respective Funds of the Separate Account during
that Valuation Period. The number of Accumulation Units
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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, American Century VP Capital Appreciation Fund (formerly known as
the 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 were made for that period, divided by
(b) 1.000000 plus the component of the annual rate of mortality and expense
risk, distribution expense and administrative charges (which does not
include the monthly administrative charge per Participant which is $2.00
but in no event to exceed 1/12 of 1% of the Account Value in any month)
against a Fund's assets for the number of days from the end of the
preceding Valuation Period to the end of the current Valuation Period (see
"Charges").
The value of the Accumulation Units credited to the account of a Participant
in the Separate Account for any Valuation Period prior to the Annuity
Commencement Date is determined by multiplying the number of Accumulation
Units credited to such Participant in each chosen Fund of the Separate Account
by the Accumulation Unit value for each chosen Fund at the end of the
Valuation Period.
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Annuity Commencement Date, Participants may elect, subject to the
conditions imposed by the Plan or those 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
(see "General Matters--Contacting the Insurance Company"). 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
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Unit value for the Valuation Period during which the transferred amount is
received (see "Postponement of Payments").
No request for a transfer will be binding on the Insurance Company until it
receives all information necessary to process the request.
WITHDRAWALS
Pursuant to a Plan, a Participant may withdraw his account balance in the
event of an unforeseen emergency or if his account balance is $3,500 or less
and certain conditions are met. Otherwise, distributions from the Plan will be
subject to the restrictions discussed in "Benefit Payments." In the event of
an unforeseen emergency, a withdrawal may be made by the Participant in an
amount which does not exceed the lesser of (1) the amount generally needed to
meet the unforeseeable emergency and (2) the Participant's Account Balance.
Unless the Participant makes a specific determination, the amount of the
withdrawal will be made pro rata from the Funds in which the Participant has
Accumulation Units.
Income tax regulations issued before 1989 define "unforeseeable emergency" as
a severe financial hardship arising from a sudden and unexpected illness or an
accident to the Participant or to a dependent, or the loss of the
Participant's property due to casualty or other similar extraordinary and
unforeseeable circumstances arising from the events beyond his control. A
severe financial hardship will not exist if it can be relieved through
reimbursement by insurance, liquidation of other assets of the Participant
which does not cause severe financial hardship or cessation of Deferred
Compensation Amounts under the Plan. The employer shall determine whether a
Participant faces an unforeseeable emergency as defined in the Plan.
DEATH BENEFITS
A Plan may provide that a death benefit shall be payable to the Participant's
beneficiary(s), in which case 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. Until the Insurance Company receives the
items in (1)-(3), the Participant's Account Balance will remain allocated as
it was on the date of death of the Participant (unless the beneficiary is the
spouse and special rules apply).
In the case of death prior to the Participant's Annuity Commencement Date,
such death benefit may be payable in a single sum or as an annuity. Benefit
Payments made in the form of an annuity, must be: (i) payable over a period
not to exceed the beneficiary's life expectancy if the beneficiary is the
Eligible Spouse of the Participant; or (ii) payable over a period not to
exceed 15 years if the beneficiary is other than the Eligible Spouse of the
Participant. Otherwise, the Participant's entire interest in the Plan must be
distributed within five years of the date of death. In the case of death after
a Participant's Annuity Commencement Date, the Participant's beneficiary will
be entitled to receive the death benefit (if any) provided by the form of
annuity in effect on the date of the Participant's death.
BENEFIT PAYMENTS
Amounts payable under a Plan generally may not be paid or made available to a
Participant, except as discussed above under "Withdrawals," earlier than the
calendar year in which the Participant attains age 70 1/2 or terminates
employment. In addition, a Plan must provide that a Participant's entire
interest must begin to be distributed not later than April 1 of the calendar
year following the year the Participant attains age 70 1/2 (or, in the case of
certain governmental plans, the year the Participant retires) over the life of
a
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Participant, the joint lives of a Participant and a designated beneficiary or
a period certain, not longer than the life expectancy of the Participant or
joint life expectancies of the Participant and a beneficiary. Benefit Payments
before a Participant's death must be made at such time and in such amounts as
the Income Tax Regulations shall specify (see also "Annuity Commencement Date"
and "Available Forms of Periodic Benefits"). Before 1989, amounts payable
under a Plan could not be paid or made available earlier than termination of
employment, except in the case of an unforeseen emergency.
Generally, a Plan may provide for payment to be made in the form of a single
sum or annuity, as elected by a Participant. A Plan may also provide that a
Participant may elect to defer to a future date payment of benefits, subject
to the requirements discussed in "Benefit Payments" above. An election as to
the form of payment must be made at such time and in such manner as the Plan
shall provide and, any election which defers payment of benefits to a future
date, shall be made before such benefits are otherwise payable and shall be
irrevocable (except in certain limited instances).
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<PAGE>
DISCONTINUANCE
The Contracts provide that a Contractholder may discontinue a Contract, at its
discretion, as of the first day of a calendar month that is at least 31 days
after notice of such intention to discontinue is received by the Insurance
Company. The Insurance Company may discontinue a 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 Contracts is necessary to comply with Federal or state requirements, 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 remediable defaults.
In addition, the Insurance Company has the right to discontinue a Contract if,
during any Plan Year, no Deferred Compensation Amounts are remitted on behalf
of any of the Participants.
Discontinuance of a Contract will not relieve the Contractholder of its
obligations under the Contract, and all provisions of the Contract will
continue to apply, except that (1) no further Deferred Compensation Amounts
will be made by the Contractholder, and (2) the Contractholder may transfer to
another insurance company or other financial institution all amounts
accumulated under the Contracts and allocated to Participants, former
Participants, and beneficiaries. Such transfer may be made in any manner to
which the Contractholder and the Insurance Company agree in writing. In the
event of a transfer described in clause (2) above, amounts accumulated for the
benefit of a current or former Participant, or beneficiary, who does not
consent to the transfer may, as elected by that person, be left on deposit
with the Insurance Company, or withdrawn in whole or in part (see
"Withdrawals").
POSTPONEMENT OF PAYMENTS
Payment of any amounts due from the Separate Account in connection with a
withdrawal, 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 (the "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.
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<PAGE>
PERIOD AFTER ANNUITY COMMENCEMENT DATE
GENERAL
At 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 benefit. The amount of each Benefit Payment
will be fixed and guaranteed by the Insurance Company to the Contractholder in
accordance with the table of annuity purchase rates contained in the Contract.
Until paid or otherwise made available to a Participant, Benefit Payments are
subject to the claims of the Contractholders' general creditors.
The level of periodic Benefit Payments made to Contractholders 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 Contracts with respect to periodic
Benefit Payments regardless of its actual expenses.
Accordingly, periodic Benefit Payments made in a fixed and guaranteed amount
are not in any way dependent upon the investment experience of the Separate
Account. The amount of such monthly payments depends only on the form of
benefit chosen, the applicable benefit purchase rates contained in the
Contract and the total amount applied to purchase the benefit.
Once periodic Benefit Payments have commenced with respect to a Participant,
no further Deferred Compensation Amounts may be remitted on behalf of that
Participant. In addition, neither transfers to the Separate Account, nor
withdrawals of any kind, are permitted on behalf of a Participant receiving
periodic Benefit Payments.
A Plan may provide that a Participant may elect to receive the Participant's
Account Balance as of the Annuity Commencement Date in a lump sum or
installment payments in lieu of receiving fixed and guaranteed periodic
Benefit Payments.
The Insurance Company will issue to Contractholders for delivery to each
Participant thereunder an individual certificate setting forth the amount and
terms of payment of the periodic Benefit Payments.
Payment of benefits under the Contracts will be made by the Insurance Company
directly to the Contractholder or, if the Insurance Company agrees, to
Participants.
ANNUITY COMMENCEMENT DATE
The periodic Benefit Payments with respect to a Participant begin on the
Annuity Commencement Date. Participants may elect an Annuity Commencement Date
that is the Participant's normal retirement date (as provided for in his
employer's pension plan if he is covered by such plan, or if he is not covered
by such a plan, age 65); early retirement date (the first day of any calendar
month following an early retirement age, if any, as specified in a Plan), or
later retirement date (the first day of a calendar month following the
Participant's normal retirement date provided the Plan permits a Participant
to elect a later retirement date and such election is made before amounts
become payable, but no later than April 1 of the calendar year following the
year the Participant attains age 70 1/2). For governmental plans, the Annuity
Commencement Date may be delayed up to April 1 of the calendar year following
the year the Participant separates from service, if later.
Annuity Commencement Date elections must be made in advance, in writing as
described under "General Matters--Contacting the Insurance Company."
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<PAGE>
AVAILABLE FORMS OF PERIODIC BENEFITS
(1) A Participant who has an Eligible Spouse on his Annuity Commencement Date
shall have his benefit paid on the Joint and Survivor Annuity form described
in Paragraph (4)(a) below. However, the Participant may, before such Annuity
Commencement Date, elect in writing (with the right to revoke such election at
any time before his Annuity Commencement Date) to have his benefit paid in one
of the following forms of payment:
(a) the Life Annuity form described in Paragraph (4)(b) below,
(b) the 10 Years Certain and Continuous Annuity form described in
Paragraph (4)(c) below,
(c) the 15 Years Certain and Continuous Annuity form described in
Paragraph (4)(d) below, or
(d) the Full Cash Refund Annuity form described in Paragraph (4)(e)
below.
(2) A Participant who does not have an Eligible Spouse on his Annuity
Commencement Date shall have his benefit paid on the 10 Years Certain and
Continuous Annuity form described in Paragraph (4)(c) below. However, the
Participant may, before such Annuity Commencement Date, elect in writing (with
the right to revoke such election at any time before such Annuity Commencement
Date) to have his benefit paid on one of the following alternative forms of
payment:
(a) the Life Annuity form described in Paragraph (4)(b) below,
(b) the 15 Years Certain and Continuous Annuity form described in
Paragraph (4)(d) below, or
(c) the Full Cash Refund Annuity form described in Paragraph (4)(e)
below.
(3) Limits on Payment
The forms available under the Contract are those described in Paragraph (4)
below. Beginning in 1989, if the value of the Participant's benefit would be
less than 66 2/3% of the value of the benefit that would be payable on the
Life Annuity Form, such benefit shall be adjusted so that it shall be equal to
66 2/3% of the value of the Participant's benefit on the Life Annuity Form.
This may impose, in certain instances, substantial limitations on the forms of
benefit payable.
(4) Forms Described
(a) 66 2/3% Joint and Survivor Life Annuity
66 2/3% Joint and Survivor Life Annuity provides an adjusted monthly
benefit payable during the lifetime of the retired Participant and 66 2/3%
of such adjusted monthly benefit payable after his death to his joint
annuitant if such joint annuitant survives him, to continue until the death
of the joint annuitant. If the joint annuitant should die prior to the
Annuity Commencement Date of the Participant, the election of this Option
is automatically cancelled, and the Participant shall automatically have
his benefit paid on the 10 Years Certain and Continuous Annuity form
described in Paragraph 4(c) below unless, prior to the Annuity Commencement
Date, he elects in writing (with the right to revoke such election at any
time prior to the Annuity Commencement Date) to have his benefit paid on
one of the alternative forms of payment.
(b) Life Annuity
The Life Annuity form provides for monthly payments continuing to the first
day of the month in which the Participant's death occurs.
(c) 10 Years Certain and Continuous Annuity
The 10 Years Certain and Continuous Annuity form provides for monthly
payments continuing to the first day of the month in which the
Participant's death occurs or at the end of the certain period of 120
months, whichever is later. If the Participant dies before the end of the
certain period, payments
29
<PAGE>
in the same amount shall be continued to the end of such period to the
beneficiary. If the beneficiary dies before the end of the certain period,
the commuted value of payments not yet made shall be made to the payee
named by the Participant.
(d) 15 Years Certain and Continuous Annuity
The 15 Years Certain and Continuous Annuity form provides for monthly
payments continuing to the first day of the month in which the
Participant's death occurs or the end of the certain period of 180 months,
whichever is later. If the Participant dies before the end of the certain
period, payment in the same amount shall be continued to the end of such
period to the beneficiary. If the beneficiary dies before the end of the
certain period, the commuted value of payments not yet made shall be made
to the payee named by the Participant.
(e) Full Cash Refund Annuity
The Full Cash Refund Annuity form provides for monthly payments to the
Participant continuing to the first day of the month in which his death
occurs. Upon his death, the beneficiary shall be entitled to receive, in
cash, the excess, if any, of the Participant's Account Balance as of his
Annuity Commencement Date over the aggregate amount of payments made to the
Participant.
AMOUNT OF PERIODIC BENEFIT PAYMENTS
The amount of monthly Benefit 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 Contracts in accordance with the form
of benefit selected. The Insurance Company guarantees that the rates used to
determine the amount of Benefit Payments will never be less favorable for a
Participant 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, or if any Participant terminates employment
and is eligible for a benefit determined to be less than $20 a month under the
10 Years Certain and Continuous Annuity form (described above), the Insurance
Company shall, in lieu of making the monthly Benefit Payments which would
otherwise be payable to the Participant commencing on the Participant's
Annuity Commencement Date, pay to the Participant on or before the
Participant's Annuity Commencement Date, in a single sum, the value of the
Participant's monthly annuity benefit that would otherwise be payable on the
10 Years Certain and Continuous Annuity form, provided that single sum does
not exceed $3,500.
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<PAGE>
THE GENERAL ACCOUNT
Deferred Compensation Amounts allocated and transfers made to the Insurance
Company's General Account become part of the general assets of the Insurance
Company, which supports 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 (the "1933 Act") nor is
the General Account registered as an investment company under the Investment
Company Act of 1940 (the "1940 Act"). Accordingly, neither the General Account
nor any interests therein are subject generally to the provisions of the 1933
or 1940 Acts, and the Insurance Company has been advised that the staff of the
Commission has not reviewed the disclosures in this Prospectus which relate to
the General Account. Disclosures regarding the fixed portion of the Contracts
and the General Account, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
SCOPE OF PROSPECTUS
The Contracts provide for accumulation of Deferred Compensation Amounts on a
completely fixed basis, a completely variable basis, or a combination fixed
and variable basis, and for the payment of periodic benefits on a fixed basis
only. This Prospectus, however, is generally intended to serve as a disclosure
document for the variable portion of the Contracts only. For complete details
regarding the General Account, see the Contracts themselves.
GENERAL DESCRIPTION
The General Account consists of all of the general assets of the Insurance
Company, other than those in the Separate Account and the other segregated
asset accounts. Amounts are allocated to the General Account at the election
of Participants in the form of remittances made by the Contractholder on their
behalf, 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. 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
A Plan may provide that at any time prior to a Participant's Annuity
Commencement Date, amounts may be transferred from the Funds of the Separate
Account to the General Account, and, except where restricted by the
Contractholder, from the General Account to the Funds of the Separate Account.
Currently, no charge is imposed for such transfers. The Insurance Company
reserves the right, however, to impose a charge on transfers in the future.
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In the event of an unforeseen emergency, a partial or complete withdrawal may
be made from the General Account or the Separate Account prior to a
Participant's Annuity Commencement Date (see "Withdrawals"). 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 total amount in the General Account and the
Separate Account credited to the Participant.
Transfers and withdrawals from the General Account may be delayed for up to
six months following the date that the Company receives such requests.
BENEFIT PAYMENTS
All Benefit Payments under the Contracts are made in the form of a fixed
annuity from the General Account. The Insurance Company does not credit
discretionary interest in excess of the guaranteed rate of 3% to Benefit
Payments. The Contractholder must rely on the annuity purchase tables provided
in the Contracts to determine the amount of Benefit Payments to be made with
respect to a participant.
GENERAL MATTERS
CONTACTING THE INSURANCE COMPANY
Except as provided in the following paragraph, all notices, requests and
elections required to be given or made under the Contracts must be in writing
and mailed or delivered to the Insurance Company's home office at the
following address:
Mutual of America Life Insurance Company
Thomas A. Harwood
Senior Vice President
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 AND RE-ALLOCATIONS BY TELEPHONE
Requests by Participants for transfers or changes in the formula for
allocation of Deferred Compensation Amounts remitted may be made by telephone
in lieu of the written procedure described above. Requests by telephone,
however, may be made only if a Participant has received a Personal
Identification Number, which the Insurance Company provides automatically, and
agreed to use it in accordance with the applicable rules and requirements.
Thereafter, the Participant may contact the Insurance Company by telephone
(800-468-3785) and request the desired transaction or change. Transfers
requested by telephone will go into effect on the days 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 or reallocations
by telephone at any time. 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.
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DESIGNATION OF BENEFICIARY
Under the Plans, and subject to applicable laws, 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 upon a Participant's death. The Participant may change the
beneficiary while the Participant is living. Generally, the Insurance Company
will pay to the Contractholders, as beneficiaries under the contracts, any
payments becoming due because of a Participant's death.
If no designated beneficiary survives the Participant, and unless otherwise
provided by the Plan or directed by a Contractholder, the Insurance Company
will pay any single sum payment or the commuted value of any remaining
periodic payments to the first surviving class of the following classes of
successive preference beneficiaries: (a) the Participant's surviving spouse;
(b) the Participant's surviving children; (c) the Participant's surviving
parents; (d) the Participant's surviving brothers and sisters; and (e) the
executors or administrators of the Participant's estate. Any commuted value
will be determined on the basis of compound interest at a rate, determined by
the Insurance Company, that is consistent with the interest assumption of the
rates used to determine the amount payable under a periodic benefit payment
(see "Amount of Periodic Benefit Payments").
ASSIGNMENT OF CONTRACT
No assignment of a Contract, nor transfer of any rights conferred thereunder,
is permitted.
THE INSURANCE COMPANY'S LIABILITY
The Insurance Company's liability for the payment of benefits (see "Period
After Annuity Commencement Date"), death benefits and withdrawals (see
"Withdrawals") is limited to the payments provided under the Contracts that
arise from Participants' Account Balances.
Upon exhaustion of all amounts held under a Contract by withdrawals or by
transfers upon discontinuance of the Contract (see "Discontinuance"), that
Contract will terminate and the Insurance Company will be relieved of all
further liability thereunder, except with respect to any periodic 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 Contracts, and need
not inquire as to the accuracy or completeness of such reports and information
(see "Information and Determinations").
MODIFICATION OF CONTRACTS
No Contract may be modified as to the Insurance Company, nor may any of the
rights or requirements of the Insurance Company be waived, except in writing
and by a duly authorized officer of the Insurance Company.
A Contract may be changed at any time by the Insurance Company by amendment or
replacement upon at least 31 days' written advance notice to the
Contractholder without the consent of any Participant, or any other person who
is, or may become, entitled to benefits under the Contract, provided that such
changes shall not affect the amount or the terms of the periodic benefits
provided thereunder before such change.
EVIDENCE OF SURVIVAL
When payment of a periodic benefit is contingent upon the survival of any
person, evidence of that person's survival must be furnished to the Insurance
Company, either by the personal endorsement of the check drawn for payment, or
by other means satisfactory to the Insurance Company.
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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 will be made pursuant to
the terms of the Contract and will be reported by the Contractholder to the
Insurance Company.
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 Contracts. Upon making these alternate
payments, the Insurance Company will be discharged from all liability with
respect to payments due to the payee. Payments to a minor will be limited to
$250 a month until either (a) a guardian is appointed or (b) the minor has
attained majority.
PARTICIPATION IN DIVISIBLE SURPLUS
The Insurance Company is a mutual life insurance company and, therefore, has
no stockholders. The Contractholders or Participants share in the earnings of
the Insurance Company. No assurance can be given as to the amount of divisible
surplus, if any, that will be available for distribution under the Contracts
in the future. The determination of such surplus is within the sole discretion
of the Insurance Company's Board of Directors. Under usual circumstances
separate accounts receive little benefit from and contribute little to
divisible surplus.
FEDERAL TAX MATTERS
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. Under existing
Federal income tax law, no taxes are due on net investment income and realized
capital gains earned by Separate Account. The Insurance Company reserves the
right to make a deduction for taxes if in the future the Insurance Company
must pay tax on the Separate Account's operations.
TAXATION OF BENEFIT PAYMENTS
The Contracts offered by this Prospectus are intended to be annuity contracts
for purposes of Section 72 of the Code.
Any contributions by the employer (or earnings thereon) are not taxed to a
Participant until distributed or otherwise made available to the Participant
or his beneficiary.
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THE CONTRACT
The Contract is offered for use with an eligible deferred compensation plan
designed to meet the qualifications of Section 457 of the Code.
Contractholders are responsible for establishment and administration of the
Plan in accordance with the provisions of Section 457 of the Code. In addition
to limitations on amounts a Participant may defer (see "Limitations on
Deferrals") and restrictions on withdrawals (see "Withdrawals"), an eligible
deferred compensation plan must provide that the Account Balances under the
Contract shall remain solely the property of the Contractholder, subject only
to the claims of the Contractholder's general creditors, until made available
to a Participant or a Participant's beneficiary.
In general, a death benefit, consisting of amounts paid to a Participant's
beneficiary, is includible in the Participant's estate for federal estate tax
purposes (see "Obtaining Tax Advice").
WITHHOLDING ON BENEFIT PAYMENTS AND OTHER DISTRIBUTION
Federal tax withholding on periodic benefit payments and other distributions
(such as lump sum distributions or partial withdrawals to the extent available
under a Plan) may be required.
OBTAINING TAX ADVICE
The description of this Prospectus of the current 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 Contracts. Tax results may vary depending upon individual situations
and special rules may apply in certain cases. State and local taxes may also
pertain. For these reasons, a qualified tax advisor should be consulted for
complete tax information regarding any specific situation.
VOTING RIGHTS
In accordance with the Insurance Company's view of present applicable law and
so long as the Commission continues to interpret the 1940 Act as requiring
pass-through voting privileges, the Insurance Company will vote the shares of
the Investment Company Funds, the Fidelity Portfolios, the Scudder Portfolios,
the American Century VP Capital Appreciation Fund (formerly known as the TCI
Growth Fund) and Calvert Responsibly Invested Balanced Portfolio held in the
Separate Account at regular and special meetings of the shareholders of such
funds or portfolios according to instructions received from persons having the
right to instruct the Insurance Company on how to vote the shares (i.e., the
Participants). The Insurance Company will vote shares for which it has not
received instructions in the same proportion as the Insurance Company votes
shares for which the Insurance Company has received instructions, except for
shares owned by the Insurance Company representing "seed" money, which will be
voted in the Insurance Company's discretion. The Insurance Company exercises
discretion with respect to less than 1% of the voting interest in the Separate
Account. If the Investment Company Act of 1940 should be amended, or if the
present interpretation thereof should change, and as a result the Insurance
Company determines that it is permitted to vote the shares of the Investment
Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the American
Century VP Capital Appreciation Fund and the Calvert Responsibly Invested
Balanced Portfolio in its own discretion, it may elect to do so.
The person having the right to give voting instructions to the Insurance
Company is the individual for whom amounts are accumulated in the Separate
Account.
Each person having the right to give voting instructions to the Insurance
Company will receive periodic reports relating to any of the Investment
Company Funds, the Fidelity Portfolios, the Scudder Portfolios, the American
Century VP Capital Appreciation Fund and the Calvert Responsibly Invested
Balanced Portfolio for which he or she has the right to give voting
instructions, including proxy material and a form with which to give voting
instructions.
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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 Money Market Fund performance of the Fund and show the performance
of a hypothetical investment and are not intended to indicate future
performance. The yield of the Money Market Fund refers to the net investment
income generated by the Fund over a specified seven-day period (the ending
date of which will be stated). This income is then annualized. That is, the
amount of income generated by the Fund during that week is assumed to be
generated during each week in such a 52-week period and is shown as a
percentage. The effective yield is expressed similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. Yield and effective yield for
the Money Market Fund will vary based on, among other things, changes in the
market conditions, the level of interest rates and the level of the Money
Market Fund's portfolio expenses.
OTHER FUNDS
From time to time, quotations of a Fund's "total return" may be included in
advertisements, sales literature or shareholder reports. Total return figures
are based on the historical performances of the Fund and show the performance
of a hypothetical investment and are not intended to indicate future
performance. The total return of a Fund refers to return assuming an
investment has been held in the Fund for one, five and ten years and for the
life of the Fund (the ending date of which will be stated). The total return
quotations are expressed in terms of average annual compounded rates of return
for all periods quoted and assume that all dividends and capital gains
distributions were reinvested. Total return for a Fund will vary based on,
among other things, changes in market conditions and the level of the Fund's
expenses.
For a detailed description of the methods used to determine yield and total
return for the Separate Account's Funds, see the Statement of Additional
Information.
FUNDING AND OTHER CHANGES
The Insurance Company reserves the right, subject to compliance with
applicable law, including approval of Participants if so required, (1) to
create new investment funds of the Separate Account at any time; (2) to
transfer assets determined by the Insurance Company to be associated with the
class of contracts to which the Contracts belong from the Separate Account to
another separate account of the Insurance Company by withdrawing the same
percentage of each investment in the Separate Account with appropriate
adjustments to avoid odd lots and fractions; (3) to create additional separate
investment accounts 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 advisor in connection
therewith, which may be the Insurance Company, an affiliate of the Insurance
Company or another person; (5) to deregister the Separate Account under the
1940 Act; and (6) to operate the Separate Account under the general
supervision of a committee, any or all the members of which may be interested
persons (as defined in the 1940 Act) of the Insurance Company or an affiliate,
or to discharge the committee of one or more of the Separate Accounts.
OTHER VARIABLE ANNUITY CONTRACTS
In addition to the Contracts described in this Prospectus, the Insurance
Company offers other individual and group variable annuity contracts, some of
which are not described in this Prospectus but which also participate in the
Separate Account.
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Distribution of the Contracts
Money Market Yield Calculation
Performance Information
Safekeeping of Separate Account Assets
State Regulation
Periodic Reports
</TABLE>
<TABLE>
<S> <C>
Legal Proceedings
Legal Matters
Experts
Additional Information
Financial Statements
</TABLE>
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,
1997 for the Section 457 Contract offered by Mutual of America. My name and
address are as follows:
------------------------------------------------------------
Name
------------------------------------------------------------
Street Address
------------------------------------------------------------
City State Zip
37
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
457 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 457 Plan Contract ("Contract") offered by
Mutual of America Life Insurance Company. You may obtain a copy of the
Prospectus dated May 1, 1997, 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, 1997 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 31, 1996 was 4.06%.
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.
SAI-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)/1//n - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
B. Cumulative Total Return is the compound rate of return on a hypothetical
initial investment of $1,000 for a specified period. Cumulative total
return quotations reflect changes in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period
were reinvested in Fund shares. Cumulative total return is calculated by
finding the compound rates of return of a hypothetical investment over such
periods, according to the following formula (cumulative total return is
then expressed as a percentage):
C = (ERV/P) -1.
C = Cumulative Total Return
P = hypothetical initial payment of $1,000
ERV = ending redeemable value: ERV is the value, at the end of the applicable
period, of a hypothetical $1,000 investment made at the beginning of the
applicable period.
SAI-3
<PAGE>
AVERAGE ANNUAL
TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
Investment Company All
America................. 18.9% 12.3% 12.0% 13.6%(1)
<S> <C> <C> <C> <C>
Investment Company Equity
Index................... 20.8 N/A N/A 14.5 (2)
Investment Company Bond.. 1.9 6.4 6.4 7.8 (1)
Investment Company Short-
Term Bond............... 3.3 N/A N/A 3.1 (2)
Investment Company Mid-
Term Bond............... 2.2 N/A N/A 4.3 (2)
Investment Company Com-
posite.................. 10.1 8.7 9.0 10.6 (1)
Investment Company Ag-
gressive Equity......... 25.1 N/A N/A 24.2 (3)
Fidelity VIP Equity-In-
come.................... 12.5 16.2 N/A 11.9 (4)
Fidelity VIP II Contra... 19.5 N/A N/A 28.3 (5)
Fidelity VIP II Asset
Manager................. 12.8 9.6 N/A 10.2 (6)
Scudder Capital Growth... 18.3 10.7 11.4 12.7 (7)
Scudder Bond............. 1.2 5.1 6.3 6.9 (7)
Scudder International.... 13.0 9.4 N/A 8.5 (8)
American Century VP
Capital Appreciation.... (5.6) 4.7 N/A 9.3 (9)
Calvert Responsibly In-
vested Balanced......... 10.9 8.8 10.1 8.6 (10)
CUMULATIVE TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1996
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
Investment Company All
America................. 18.9% 78.8% 209.4% 364.3%(1)
<S> <C> <C> <C> <C>
Investment Company Equity
Index................... 20.8 N/A N/A 70.0 (2)
Investment Company Bond.. 1.9 36.2 85.1 146.5 (1)
Investment Company Short-
Term Bond............... 3.3 N/A N/A 13.1 (2)
Investment Company Mid-
Term Bond............... 2.2 N/A N/A 17.7 (2)
Investment Company Com-
posite.................. 10.1 51.8 137.4 236.4 (1)
Investment Company
Aggressive Equity....... 25.1 N/A N/A 65.7 (3)
Fidelity VIP Equity-In-
come.................... 12.5 111.6 N/A 216.7 (4)
Fidelity VIP II Contra... 19.5 N/A N/A 64.5 (5)
Fidelity VIP II Asset
Manager................. 12.8 58.1 N/A 103.8 (6)
Scudder Capital Growth... 18.3 66.4 195.0 295.1 (7)
Scudder Bond............. 1.2 28.4 84.5 115.4 (7)
Scudder International.... 13.0 56.8 N/A 119.4 (8)
American Century VP
Capital Appreciation.... (5.6) 26.1 N/A 124.9 (9)
Calvert Responsibly
Invested Balanced....... 10.9 52.2 161.9 134.1 (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.
SAI-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) American Century VP Capital Appreciation (formerly
known as 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.
SAI-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.
SAI-6
<PAGE>
Financial Statements of the Separate Account for the year ended December 31,
1996 are included as follows:
<TABLE>
<S> <C>
Statement of Assets and Liabilities................................... VI
Statement of Operations............................................... VIII
Statements of Changes in Net Assets................................... X
Notes to Financial Statements......................................... XIII
Report of Independent Public Accountants.............................. XVII
Financial Statements of the Insurance Company for the year ended December 31,
1996 are included as follows:
Report of Independent Public Accountants.............................. SAI-8
Consolidated Statements of Financial Condition........................ SAI-9
Consolidated Statements of Operations and Surplus..................... SAI-10
Consolidated Statements of Cash Flows................................. SAI-11
Notes to Consolidated Financial Statements............................ SAI-12
</TABLE>
SAI-7
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
-------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY BOND
FUND FUND INDEX FUND FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment
Corporation at market value
(Cost:
Money Market Fund --
$32,642,625
All America Fund --
$215,500,697
Equity Index Fund --
$50,748,917
Bond Fund -- $35,179,723)
(Notes 1 and 2)............ $32,511,499 $266,873,270 $59,254,485 $34,411,219
Due From (To) Mutual of
America General Account.... 301,285 1,764,684 1,962,036 67,735
----------- ------------ ----------- -----------
Net Assets.................. $32,812,784 $268,637,954 $61,216,521 $34,478,954
=========== ============ =========== ===========
Unit Value at December 31,
1996 (Note 5).............. $ 1.87 $ 5.39 $ 1.72 $ 2.75
====== ====== ====== ======
Number of Units Outstanding
at December 31, 1996 (Note
5)......................... 17,511,321 49,797,567 35,659,625 12,548,214
=========== ============ =========== ===========
</TABLE>
<TABLE>
<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 Corporation at
market value
(Cost:
Short-Term Bond Fund --
$2,425,654
Mid-Term Bond Fund --
$5,002,565
Composite Fund -- $240,213,132
Aggressive Equity Fund --
$86,627,575)
(Notes 1 and 2)................ $2,399,136 $4,529,043 $250,437,858 $89,972,197
Due From (To) Mutual of America
General Account................ 25,538 19,536 (193,544) (429,848)
---------- ---------- ------------ -----------
Net Assets...................... $2,424,674 $4,548,579 $250,244,314 $89,542,349
========== ========== ============ ===========
Unit Value at December 31, 1996
(Note 5).......................... $ 1.14 $ 1.19 $ 3.75 $ 1.80
====== ====== ====== ======
Number of Units Outstanding at
December 31, 1996 (Note 5)..... 2,129,412 3,828,100 66,714,952 49,800,336
========== ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<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
Responsibly Invested
Portfolio at market
value
(Cost:
Scudder Bond Fund --
$16,106,363
Scudder Capital Growth
Fund -- $161,273,633
Scudder International
Fund -- $85,733,463
TCI Growth Fund --
$79,665,157
Calvert Responsibly
Invested Portfolio --
$21,926,864)
(Notes 1 and 2)........ $15,618,347 $204,282,725 $104,627,698 $83,510,038 $23,755,739
Due From (To) Mutual of
America General
Account................ 18,929 571,262 (1,391,371) 242,492 166,018
----------- ------------ ------------ ----------- -----------
Net Assets.............. $15,637,276 $204,853,987 $103,236,327 $83,752,530 $23,921,757
=========== ============ ============ =========== ===========
Unit Value at December
31, 1996 (Note 5)...... $ 11.48 $ 22.11 $ 13.43 $ 11.53 $ 2.23
======= ======= ======= ======= ======
Number of Units
Outstanding at December
31, 1996 (Note 5)...... 1,362,287 9,265,744 7,687,579 7,264,496 10,713,395
=========== ============ ============ =========== ===========
</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 --
$47,282,361
VIP II Contra Fund -- $56,333,671
VIP II Asset Manager Fund --
$9,713,829)
(Notes 1 and 2)..................... $52,157,836 $65,584,941 $10,579,297
Due From (To) Mutual of America
General Account..................... (799,158) (1,229,692) 282,682
----------- ----------- -----------
Net Assets........................... $51,358,678 $64,355,249 $10,861,979
=========== =========== ===========
Unit Value at December 31, 1996 (Note
5).................................. $ 21.93 $ 16.59 $ 17.72
======= ======= =======
Number of Units Outstanding at
December 31, 1996 (Note 5).......... 2,341,936 3,879,776 612,867
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VII
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MUTUAL OF AMERICA
---------------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $1,324,066 $13,468,089 $ 2,017,643 $ 2,262,234
---------- ----------- ----------- -----------
Total income............ 1,324,066 13,468,089 2,017,643 2,262,234
---------- ----------- ----------- -----------
Expenses (Note 3):
Fees................... 395,269 2,902,848 528,457 409,658
Administrative
expenses.............. 79,017 147,007 32,877 61,887
---------- ----------- ----------- -----------
Total Expenses.......... 474,286 3,049,855 561,334 471,545
---------- ----------- ----------- -----------
Net Investment Income
(Loss)................. 849,780 10,418,234 1,456,309 1,790,689
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on
Investments (Note 1):
Net realized gain
(loss) on
investments........... 73,658 2,431,185 476,262 68,629
Net unrealized
appreciation
(depreciation) of
investments........... 278,840 28,344,476 6,045,598 (1,221,188)
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 352,498 30,775,661 6,521,860 (1,152,559)
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,202,278 $41,193,895 $ 7,978,169 $ 638,130
========== =========== =========== ===========
<CAPTION>
MUTUAL OF AMERICA
---------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 93,631 $ 617,704 $31,535,711 $12,716,658
---------- ----------- ----------- -----------
Total income............ 93,631 617,704 31,535,711 12,716,658
---------- ----------- ----------- -----------
Expenses (Note 3):
Fees................... 24,809 50,783 3,060,681 726,246
Administrative
expenses.............. 5,283 7,924 252,940 38,003
---------- ----------- ----------- -----------
Total Expenses.......... 30,092 58,707 3,313,621 764,249
---------- ----------- ----------- -----------
Net Investment Income
(Loss)................. 63,539 558,997 28,222,090 11,952,409
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on
Investments (Note 1):
Net realized gain
(loss) on
investments........... 7,065 (2,132) 2,739,162 201,936
Net unrealized
appreciation
(depreciation) of
investments........... (1,966) (455,047) (6,525,946) 547,221
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 5,099 (457,179) (3,786,784) 749,157
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 68,638 $ 101,818 $24,435,306 $12,701,566
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
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.............. $1,316,556 $15,621,108 $ 2,077,284 $ 10,819,616 $1,778,522
---------- ----------- ----------- ------------ ----------
Total income............ 1,316,556 15,621,108 2,077,284 10,819,616 1,778,522
---------- ----------- ----------- ------------ ----------
Expenses (Note 3):
Fees................... 182,202 2,243,282 1,201,020 965,938 237,816
Administrative
expenses.............. 37,353 104,160 25,882 26,190 35,000
---------- ----------- ----------- ------------ ----------
Total Expenses.......... 219,555 2,347,442 1,226,902 992,128 272,816
---------- ----------- ----------- ------------ ----------
Net Investment Income
(Loss)................. 1,097,001 13,273,666 850,382 9,827,488 1,505,706
---------- ----------- ----------- ------------ ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... (110,077) 1,971,672 3,882,634 3,898,097 72,424
Net unrealized
appreciation
(depreciation) of
investments........... (788,323) 15,612,266 7,289,627 (18,669,322) 439,874
---------- ----------- ----------- ------------ ----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (898,400) 17,583,938 11,172,261 (14,771,225) 512,298
---------- ----------- ----------- ------------ ----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 198,601 $30,857,604 $12,022,643 $ (4,943,737) $2,018,004
========== =========== =========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
---------------------------------------
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............................ $ 965,667 $ 261,805 $245,695
---------- ---------- --------
Total income.......................... 965,667 261,805 245,695
---------- ---------- --------
Expenses (Note 3):
Fees................................. 447,520 544,562 85,671
Administrative expenses.............. 52,766 34,222 12,957
---------- ---------- --------
Total Expenses........................ 500,286 578,784 98,628
---------- ---------- --------
Net Investment Income (Loss).......... 465,381 (316,979) 147,067
---------- ---------- --------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on
investments......................... 36,749 106,747 17,488
Net unrealized appreciation
(depreciation) of investments....... 4,033,446 8,757,016 726,606
---------- ---------- --------
Net Realized and Unrealized Gain
(Loss) on Investments................ 4,070,195 8,863,763 744,094
---------- ---------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ $4,535,576 $8,546,784 $891,161
========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
IX
<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
------------------------ -------------------------- ------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 849,780 $ 1,625,250 $ 10,418,234 $ 4,164,433 $ 1,456,309 $ 575,015
Net realized gain
(loss) on
investments........... 73,658 174,996 2,431,185 676,857 476,262 162,564
Net unrealized
appreciation
(depreciation) of
investments........... 278,840 (485,901) 28,344,476 41,443,244 6,045,598 2,678,826
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,202,278 1,314,345 41,193,895 46,284,534 7,978,169 3,416,405
----------- ----------- ------------ ------------ ----------- -----------
From Unit Transactions:
Contributions.......... 6,015,021 6,674,056 30,608,222 20,883,923 11,517,471 4,017,188
Withdrawals............ (4,077,160) (3,900,806) (15,824,928) (10,074,230) (6,193,918) (2,116,885)
Net transfers.......... (1,853,101) (2,980,451) 15,311,478 10,560,332 23,679,496 14,042,110
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit
transactions........... 84,760 (207,201) 30,094,772 21,370,025 29,003,049 15,942,413
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets.......... 1,287,038 1,107,144 71,288,667 67,654,559 36,981,218 19,358,818
Net Assets:
Beginning of Year....... 31,525,746 30,418,602 197,349,287 129,694,728 24,235,303 4,876,485
----------- ----------- ------------ ------------ ----------- -----------
End of Year............. $32,812,784 $31,525,746 $268,637,954 $197,349,287 $61,216,521 $24,235,303
=========== =========== ============ ============ =========== ===========
<CAPTION>
MUTUAL OF AMERICA
------------------------------------------------------------------------------
BOND FUND SHORT-TERM BOND FUND MID-TERM BOND FUND
------------------------ -------------------------- ------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,790,689 $ 1,576,433 $ 63,539 $ 63,700 $ 558,997 $ 157,817
Net realized gain
(loss) on
investments........... 68,629 (28,928) 7,065 14,369 (2,132) (8,004)
Net unrealized
appreciation
(depreciation) of
investments........... (1,221,188) 3,085,787 (1,966) 7,196 (455,047) 129,249
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 638,130 4,633,292 68,638 85,265 101,818 279,062
----------- ----------- ------------ ------------ ----------- -----------
From Unit Transactions:
Contributions.......... 5,112,307 4,347,174 650,490 481,850 953,690 525,221
Withdrawals............ (3,323,187) (2,307,210) (229,391) (87,191) (231,712) (262,353)
Net transfers.......... (435,017) 1,651,332 344,727 (58,307) 424,626 1,301,289
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit
transactions........... 1,354,103 3,691,296 765,826 336,352 1,146,604 1,564,157
----------- ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets.......... 1,992,233 8,324,588 834,464 421,617 1,248,422 1,843,219
Net Assets:
Beginning of Year....... 32,486,721 24,162,133 1,590,210 1,168,593 3,300,157 1,456,938
----------- ----------- ------------ ------------ ----------- -----------
End of Year............. $34,478,954 $32,486,721 $ 2,424,674 $ 1,590,210 $ 4,548,579 $ 3,300,157
=========== =========== ============ ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
X
<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
-------------------------- -----------------------
1996 1995 1996 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment
income(loss)............ $ 28,222,090 $ 10,222,848 $11,952,409 $ 1,684,376
Net realized gain (loss)
on investments.......... 2,739,162 799,067 201,936 339,162
Net unrealized
appreciation
(depreciation) of
investments............. (6,525,946) 29,855,578 547,221 2,317,578
------------ ------------ ----------- -----------
Net Increase (Decrease) in
net assets resulting from
operations............... 24,435,306 40,877,493 12,701,566 4,341,116
------------ ------------ ----------- -----------
From Unit Transactions:
Contributions............ 28,326,960 29,572,877 16,800,622 5,686,601
Withdrawals.............. (22,088,981) (19,258,841) 506,734 28,794
Net transfers............ (19,948,521) (18,173,511) 29,646,189 10,226,297
------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit transactions... (13,710,542) (7,859,475) 46,953,545 15,941,692
------------ ------------ ----------- -----------
Net Increase (Decrease) in
Net Assets............... 10,724,764 33,018,018 59,655,111 20,282,808
Net Assets:
Beginning of Year......... 239,519,550 206,501,532 29,887,238 9,604,430
------------ ------------ ----------- -----------
End of Year............... $250,244,314 $239,519,550 $89,542,349 $29,887,238
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
--------------------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
------------------------ -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment
income(loss).......... $ 1,097,001 $ 705,726 $ 13,273,666 $ 3,335,742 $ 850,382 $ (681,033)
Net realized gain
(loss) on
investments........... (110,077) (43,337) 1,971,672 601,944 3,882,634 2,996,091
Net unrealized
appreciation
(depreciation) of
investments........... (788,323) 1,156,840 15,612,266 28,289,318 7,289,627 5,526,646
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 198,601 1,819,229 30,857,604 32,227,004 12,022,643 7,841,704
----------- ----------- ------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 2,640,943 2,443,120 27,988,093 24,829,211 14,517,884 15,269,408
Withdrawals............ (1,287,365) (1,238,764) (13,712,456) (11,652,523) (8,408,505) (7,516,904)
Net transfers.......... (259,197) 1,342 262,723 (5,052,941) (1,008,537) (22,431,215)
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... 1,094,381 1,205,698 14,538,360 8,123,747 5,100,842 (14,678,711)
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 1,292,982 3,024,927 45,395,964 40,350,751 17,123,485 (6,837,007)
Net Assets:
Beginning of Year....... 14,344,294 11,319,367 159,458,023 119,107,272 86,112,842 92,949,849
----------- ----------- ------------ ------------ ------------ ------------
End of Year............. $15,637,276 $14,344,294 $204,853,987 $159,458,023 $103,236,327 $ 86,112,842
=========== =========== ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
XI
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS* ENDED DECEMBER 31,
<TABLE>
<CAPTION>
TCI CALVERT
------------------------- --------------------------
GROWTH FUND RESPONSIBLY INVESTED FUND
------------------------- --------------------------
1996 1995 1996 1995
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment
income(loss).......... $ 9,827,488 $ (768,225) $ 1,505,706 $ 1,173,547
Net realized gain
(loss) on
investments........... 3,898,097 2,629,546 72,424 55,268
Net unrealized
appreciation
(depreciation) of
investments........... (18,669,322) 16,390,488 439,874 1,651,549
------------ ----------- ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ (4,943,737) 18,251,809 2,018,004 2,880,364
------------ ----------- ------------ ------------
From Unit Transactions:
Contributions.......... 16,360,753 13,560,719 4,807,906 3,096,573
Withdrawals............ (7,283,773) (6,457,226) (1,198,222) (829,244)
Net transfers.......... (18,548,118) 13,097,419 2,535,811 1,233,524
------------ ----------- ------------ ------------
Net Increase (Decrease)
from unit
transactions........... (9,471,138) 20,200,912 6,145,495 3,500,853
------------ ----------- ------------ ------------
Net Increase (Decrease)
in Net Assets.......... (14,414,875) 38,452,721 8,163,499 6,381,217
Net Assets:
Beginning of Year....... 98,167,405 59,714,684 15,758,258 9,377,041
------------ ----------- ------------ ------------
End of Year............. $ 83,752,530 $98,167,405 $ 23,921,757 $ 15,758,258
============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
--------------------------------------------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------------------ ------------------------ -----------------------
1996 1995(A) 1996 1995(A) 1996 1995(A)
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment
income(loss).......... $ 465,381 $ 52,183 $ (316,979) $ 211,743 $ 147,067 $ (11,648)
Net realized gain
(loss) on
investments........... 36,749 167 106,747 21,227 17,488 9,118
Net unrealized
appreciation
(depreciation) of
investments........... 4,033,446 842,029 8,757,016 494,253 726,606 138,862
----------- ----------- ----------- ----------- ----------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 4,535,576 894,379 8,546,784 727,223 891,161 136,332
----------- ----------- ----------- ----------- ----------- ----------
From Unit Transactions:
Contributions.......... 11,293,855 1,349,849 13,486,367 2,617,118 2,540,371 541,615
Withdrawals............ (154,620) (11,412) 89,022 107,831 (659,754) (74)
Net transfers.......... 21,543,664 11,907,387 17,419,557 21,361,347 5,212,637 2,199,691
----------- ----------- ----------- ----------- ----------- ----------
Net Increase (Decrease)
from unit
transactions........... 32,682,899 13,245,824 30,994,946 24,086,296 7,093,254 2,741,232
----------- ----------- ----------- ----------- ----------- ----------
Net Increase (Decrease)
in Net Assets.......... 37,218,475 14,140,203 39,541,730 24,813,519 7,984,415 2,877,564
Net Assets:
Beginning of
Year/Period............ 14,140,203 -- 24,813,519 -- 2,877,564 --
----------- ----------- ----------- ----------- ----------- ----------
End of Year/Period...... $51,358,678 $14,140,203 $64,355,249 $24,813,519 $10,861,979 $2,877,564
=========== =========== =========== =========== =========== ==========
</TABLE>
- -------
* Except for the periods noted.
(a) For the period May 1, 1995, (Commencement of Operations) to December 31,
1995.
The accompanying notes are an integral part of these financial statements.
XII
<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 (rounded to the nearest cent) per share at December 31, 1996
are as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
----------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................. 27,320,060 $1.19
All America Fund.................................. 109,532,035 2.44
Equity Index Fund................................. 37,151,521 1.59
Bond Fund......................................... 24,913,606 1.38
Short-Term Bond Fund.............................. 2,334,982 1.03
Mid-Term Bond Fund................................ 5,050,510 0.90
Composite Fund.................................... 141,502,626 1.77
Aggressive Equity Fund............................ 61,114,362 1.47
</TABLE>
XIII
<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....................................... 2,320,705 $ 6.73
Capital Growth Portfolio............................. 12,380,771 16.50
International Portfolio.............................. 7,896,430 13.25
TCI Growth Fund....................................... 8,155,277 10.24
Calvert Responsibly Invested Portfolio................ 13,391,059 1.77
Fidelity Portfolios:
Equity-Income........................................ 2,480,163 21.03
Contrafund........................................... 3,960,443 16.56
Asset Manager........................................ 624,885 16.93
</TABLE>
3. EXPENSES
Administrative Charges -- In connection with its administrative functions,
the Company deducts daily, at an annual rate of .40%, an amount from the value
of the net assets of all Funds except the TCI Growth Fund for which the annual
rate is .20%.
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 30, 1996 a
dividend distribution was declared by the Investment Company to shareholders
of record December 30, 1996. This dividend was paid on December 31, 1996. In
addition, the Investment Company declared and paid a dividend distribution on
September 15, 1996. The combined amount of these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund............................................ $ 1,324,066
All America Fund............................................. 13,468,089
Equity Index Fund............................................ 2,017,643
Bond Fund.................................................... 2,262,234
Short-Term Bond Fund......................................... 93,631
Mid-Term Bond Fund........................................... 617,704
Composite Fund............................................... 31,535,711
Aggressive Equity Fund....................................... 12,716,658
</TABLE>
On January 29, 1996, April 26, 1996, July 29, 1996 and October 29, 1996,
dividends were paid by the Scudder Bond Portfolio. The combined amount of the
dividends was $1,316,556.
On January 29, 1996, February 27, 1996, April 26, 1996, July 29, 1996, and
October 29, 1996 dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $15,621,108.
On February 27, 1996 and April 26, 1996, dividends were paid by the Scudder
International Portfolio. The combined amount of the dividends was $2,077,284.
XIV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On March 30, 1996 a dividend was paid by the TCI Growth Fund. The amount of
the dividend was $10,819,616.
On December 31, 1996, a dividend was paid by the Calvert Responsibly
Invested Portfolio. The amount of the dividend was $1,778,522.
On February 2, 1996 a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $965,667.
On February 2, 1996, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $261,805.
On February 2, 1996, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $245,695.
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
---------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $1.80 $1.72 $1.68 $1.65 $1.62
======= ======= ======= ======= =======
Unit value, end of year............... $1.87 $1.80 $1.72 $1.68 $1.65
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 17,511 17,502 17,653 15,815 16,545
======= ======= ======= ======= =======
<CAPTION>
MUTUAL OF AMERICA ALL AMERICA FUND
---------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $4.52 $3.35 $3.36 $3.03 $2.97
======= ======= ======= ======= =======
Unit value, end of year............... $5.39 $4.52 $3.35 $3.36 $3.03
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 49,798 43,620 38,669 36,510 32,352
======= ======= ======= ======= =======
<CAPTION>
MUTUAL OF AMERICA BOND FUND
---------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $2.69 $2.28 $2.39 $2.13 $1.99
======= ======= ======= ======= =======
Unit value, end of year............... $2.75 $2.69 $2.28 $2.39 $2.13
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 12,548 12,083 10,601 12,244 9,203
======= ======= ======= ======= =======
<CAPTION>
MUTUAL OF AMERICA COMPOSITE FUND
---------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $3.39 $2.82 $2.95 $2.55 $2.43
======= ======= ======= ======= =======
Unit value, end of year............... $3.75 $3.39 $2.82 $2.95 $2.55
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 66,715 70,558 73,239 71,215 50,944
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA MUTUAL OF AMERICA
EQUITY SHORT-TERM
INDEX FUND BOND FUND
--------------------------- -------------------------
1996 1995 1994 1993(A) 1996 1995 1994 1993(A)
------ ------ ----- ------- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $1.42 $1.05 $1.05 $1.00 $1.10 $1.03 $1.03 $1.00
====== ====== ===== ===== ===== ===== ===== =====
Unit value, end of
year/period............ $1.72 $1.42 $1.05 $1.05 $1.14 $1.10 $1.03 $1.03
====== ====== ===== ===== ===== ===== ===== =====
Thousands of units out-
standing, end of
year/period............ 35,660 17,109 4,644 2,135 2,129 1,447 1,132 747
====== ====== ===== ===== ===== ===== ===== =====
</TABLE>
XV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
MUTUAL OF AMERICA MUTUAL OF AMERICA
MID-TERM AGGRESSIVE
BOND FUND EQUITY FUND
------------------------- ---------------------
1996 1995 1994 1993(A) 1996 1995 1994(B)
----- ----- ----- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period.................. $1.16 $1.01 $1.06 $1.00 $1.43 $1.05 $1.00
===== ===== ===== ===== ====== ====== =====
Unit value, end of
year/period.................. $1.19 $1.16 $1.01 $1.06 $1.80 $1.43 $1.05
===== ===== ===== ===== ====== ====== =====
Thousands of units outstand-
ing, end of year/period...... 3,828 2,848 1,444 1,411 49,800 20,858 9,145
===== ===== ===== ===== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
--------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND
--------------------------------- ----------------------------------
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
------ ------ ------ ------ ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $11.30 $ 9.69 $10.32 $ 9.30 $8.78 $18.64 $14.67 $16.46 $13.80 $13.09
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
Unit value, end of
year................... $11.48 $11.30 $ 9.69 $10.32 $9.30 $22.11 $18.64 $14.67 $16.46 $13.80
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
Thousands of units
outstanding, end of
year................... 1,362 1,269 1,169 1,277 1,053 9,266 8,556 8,121 6,582 3,698
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
<CAPTION>
SCUDDER TCI
--------------------------------- ----------------------------------
INTERNATIONAL FUND GROWTH FUND
--------------------------------- ----------------------------------
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
------ ------ ------ ------ ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $11.85 $10.80 $11.06 $ 8.13 $8.48 $12.18 $ 9.39 $ 9.61 $ 8.81 $ 9.01
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
Unit value, end of
year................... $13.43 $11.85 $10.80 $11.06 $8.13 $11.53 $12.18 $ 9.39 $ 9.61 $ 8.81
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
Thousands of units
outstanding, end of
year................... 7,688 7,269 8,610 5,400 2,262 7,264 8,061 6,361 5,946 5,280
====== ====== ====== ====== ===== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
CALVERT
----------------------------------
RESPONSIBLY INVESTED FUND
----------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $ 2.01 $ 1.57 $ 1.64 $ 1.54 $ 1.44
====== ====== ====== ====== ======
Unit value, end of year.................... $ 2.23 $ 2.01 $ 1.57 $ 1.64 $ 1.54
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 10,713 7,849 5,986 5,151 2,742
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
--------------------------------------------
EQUITY- CONTRA ASSET MANAGER
INCOME FUND FUND FUND
-------------- -------------- --------------
1996 1995(C) 1996 1995(C) 1996 1995(C)
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period..................... $19.43 $16.30 $13.85 $11.43 $15.66 $14.04
====== ====== ====== ====== ====== ======
Unit value, end of year/period... $21.93 $19.43 $16.59 $13.85 $17.72 $15.66
====== ====== ====== ====== ====== ======
Thousands of units outstanding,
end of year/period.............. 2,342 728 3,880 1,792 613 184
====== ====== ====== ====== ====== ======
</TABLE>
- -------
(a) Commenced Operations February 5, 1993
(b) Commenced Operations, May 2, 1994
(c) Commenced Operations May 1, 1995
XVI
<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, 1996, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
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.
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, 1996, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
LOGO
New York, New York
February 21, 1997
XVII
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mutual of America Life Insurance Company:
We have audited the accompanying consolidated statements of financial
condition of Mutual of America Life Insurance Company and its subsidiaries as
of December 31, 1996 and 1995, and the related consolidated 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.
As described in Note 1, the accompanying statutory-basis financial statements
were prepared in conformity with the accounting practices prescribed or
permitted by the State of New York Insurance Department which practices differ
from generally accepted accounting principles. The variances between such
practices and generally accepted accounting principles and the effects on the
accompanying financial statements are described in Note 9.
In our report dated February 20, 1996, we expressed an opinion that the 1995
consolidated financial statements, prepared using accounting practices
prescribed or permitted by the State of New York Insurance Department,
presented fairly, in all material respects, the financial position of the
Company and its subsidiaries as of December 31, 1995, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles. As discussed in Note 1, pursuant to
the pronouncements of the Financial Accounting Standards Board, statutory-
basis financial statements of mutual life insurance companies are no longer
considered to be presentations in conformity with generally accepted
accounting principles. Accordingly, our present opinion on the 1995 financial
statements, as presented herein, is different from that expressed in our
previous report.
In our opinion, because of the effects of the matter described in the third
paragraph, and more fully discussed in Note 9, the financial statements
referred to above do not present fairly, in conformity with generally accepted
accounting principles, the financial position of Mutual of America Life
Insurance Company and its subsidiaries as of December 31, 1996 and 1995, or
the results of their operations or their cash flows for the years then ended.
However, in our opinion, the statutory-basis consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Mutual of America Life Insurance Company and its subsidiaries as
of December 31, 1996 and 1995, and the results of their operations and their
cash flows for the years then ended in conformity with accounting practices
prescribed or permitted by the State of New York Insurance Department.
Arthur Andersen LLP
New York, New York
February 21, 1997
SAI-8
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
GENERAL ACCOUNT ASSETS
Bonds and notes................................ $5,109,395,855 $5,197,364,653
Common and preferred stocks.................... 145,172,800 67,209,605
Cash and short-term investments................ 60,485,338 100,012,903
Guaranteed funds transferable (Note 3)......... 130,203,690 135,810,488
Mortgage loans................................. 65,163,626 65,747,016
Real estate.................................... 335,968,808 324,740,163
Policy loans................................... 89,917,870 82,775,752
Investment income accrued...................... 94,055,387 83,430,123
Receivables.................................... 9,580,928 22,137,485
Other assets................................... 30,052,529 20,791,321
-------------- --------------
Total general account assets................. 6,069,996,831 6,100,019,509
SEPARATE ACCOUNT ASSETS.......................... 2,627,081,163 2,138,668,178
-------------- --------------
TOTAL ASSETS................................... $8,697,077,994 $8,238,687,687
============== ==============
LIABILITIES AND SURPLUS
GENERAL ACCOUNT LIABILITIES
Insurance and annuity reserves................. $5,174,017,708 $5,253,246,973
Other contract liabilities and reserves........ 11,419,907 15,699,419
Dividends payable to contract and
policyholders................................. 106,352 125,102
Note payable (Note 5).......................... 137,021,175 136,993,262
Interest maintenance reserve................... 145,613,609 163,329,291
Other liabilities.............................. 63,096,388 44,842,717
-------------- --------------
Total general account liabilities............ 5,531,275,139 5,614,236,764
SEPARATE ACCOUNT RESERVES AND OTHER LIABILITIES.. 2,627,081,163 2,138,668,178
-------------- --------------
Total liabilities............................ 8,158,356,302 7,752,904,942
-------------- --------------
ASSET VALUATION RESERVE.......................... 107,676,296 88,293,895
SURPLUS
Assigned surplus............................... 1,150,000 1,150,000
Unassigned surplus............................. 429,895,396 396,338,850
-------------- --------------
Total surplus................................ 431,045,396 397,488,850
-------------- --------------
TOTAL LIABILITIES AND SURPLUS.................... $8,697,077,994 $8,238,687,687
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
SAI-9
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
INCOME
Annuity considerations and deposits........... $ 685,402,916 $ 763,634,609
Life and disability insurance premiums........ 30,154,993 28,893,823
-------------- --------------
Total considerations and premiums........... 715,557,909 792,528,432
Net investment income (Notes 2 and 3)......... 436,332,446 434,572,825
Other, net.................................... (187,381) 336,972
-------------- --------------
Total income................................ 1,151,702,974 1,227,438,229
-------------- --------------
DEDUCTIONS
Increase in insurance and annuity reserves.... 80,297,961 254,839,381
Annuity and surrender benefits................ 865,685,476 769,514,090
Death and disability benefits................. 19,333,435 24,697,491
Operating expenses............................ 142,262,614 132,593,927
Other, net.................................... 131,964 498,361
-------------- --------------
Total deductions............................ 1,107,711,450 1,182,143,250
-------------- --------------
Net gain before dividends................... 43,991,524 45,294,979
DIVIDENDS TO CONTRACT AND POLICYHOLDERS......... 108,611 123,083
-------------- --------------
NET GAIN FROM OPERATIONS.................... 43,882,913 45,171,896
FEDERAL INCOME TAX BENEFIT...................... 1,745,523 665,212
NET REALIZED CAPITAL GAINS (LOSSES) (Note 2).... 9,547,354 (2,760,805)
-------------- --------------
NET INCOME.................................. 55,175,790 43,076,303
SURPLUS TRANSACTIONS
Change in asset valuation reserve............. (19,382,401) (8,212,204)
Change in net unrealized capital gains........ 10,374,635 907,848
(Increase) decrease in non-admitted assets.... (5,959,252) 605,323
Other, net.................................... (6,652,226) (2,336,383)
-------------- --------------
Net change in surplus....................... 33,556,546 34,040,887
SURPLUS, AT BEGINNING OF YEAR................... 397,488,850 363,447,963
-------------- --------------
SURPLUS, AT END OF YEAR......................... $ 431,045,396 $ 397,488,850
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
SAI-10
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
CASH PROVIDED
Premium and annuity funds received............ $ 715,557,893 $ 792,528,432
Investment income received.................... 403,131,642 425,737,917
Other, net.................................... 12,911,463 11,543,704
-------------- --------------
Total receipts.............................. 1,131,600,998 1,229,810,053
-------------- --------------
Benefits paid................................. 885,558,323 793,361,064
Dividends paid to contract and policyholders.. 129,824 111,958
Insurance and operating expenses paid......... 154,475,421 140,760,662
Net transfers to separate accounts............ 156,282,807 104,748,135
-------------- --------------
Total payments.............................. 1,196,446,375 1,038,981,819
-------------- --------------
Net cash provided (used) by operations...... (64,845,377) 190,828,234
Proceeds from long-term investments sold,
matured or repaid............................ 2,870,529,799 2,960,099,531
Federal income tax benefit on securities
transactions................................. 7,961,776 7,664,928
Other, net.................................... (3,279,684) 43,826,341
-------------- --------------
Total cash provided......................... 2,810,366,514 3,202,419,034
-------------- --------------
CASH APPLIED
Cost of long-term investments acquired........ 2,848,212,981 3,134,077,369
Other, net.................................... 1,681,098 23,786,784
-------------- --------------
Total cash applied.......................... 2,849,894,079 3,157,864,153
-------------- --------------
Net change in cash and short-term
investments................................ (39,527,565) 44,554,881
CASH AND SHORT-TERM INVESTMENTS
Beginning of year............................. 100,012,903 55,458,022
-------------- --------------
End of year................................... $ 60,485,338 $ 100,012,903
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
SAI-11
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying financial statements include the consolidated accounts of
Mutual of America Life Insurance Company ("Mutual of America") and its wholly
owned subsidiaries (collectively referred to as the "Company"). Significant
intercompany balances and transactions have been eliminated in consolidation.
Nature of Operations
Mutual of America 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. In recent years, through a wholly owned
subsidiary, the Company has expanded the scope of the field it serves to
include for-profit organizations in the small to medium size case area. The
principal insurance companies in the group are 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 through the use of direct mail.
Basis of Presentation
The financial statements are presented in conformity with statutory accounting
practices prescribed or permitted by the State of New York Insurance
Department, which practices differ from generally accepted accounting
principles ("GAAP"). The variances between such practices and generally
accepted accounting principles and the effects on the accompanying financial
statements are described in Note 9. The ability of the Company to fulfill its
obligations to contractholders and policyholders is of primary concern to
insurance regulatory authorities. As such, the financial statements are
oriented to the insuring public.
Pursuant to FASB Interpretation 40, Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises ("FIN
40"), as amended, which is effective for fiscal years beginning after December
15, 1995, financial statements based on statutory accounting practices can no
longer be described as prepared in conformity with GAAP. Furthermore,
financial statements prepared in conformity with statutory accounting
practices for periods prior to the effective date of FIN 40 are not considered
GAAP presentations when presented in comparative form with financial
statements for periods subsequent to the effective date. Accordingly, the 1995
financial statements, which were previously described as also being prepared
in accordance with GAAP for mutual life insurance companies, are no longer
considered to be presented in conformity with GAAP.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the 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.
Certain 1995 amounts included in the accompanying consolidated financial
statements have been reclassified to conform with the 1996 presentation.
Accounting policies applied in the preparation and presentation of these
financial statements follow.
Asset Valuations
Investment valuations are prescribed by the National Association of Insurance
Commissioners ("NAIC"). Bonds qualifying for amortization are stated at
amortized cost; short-term investments in good standing are stated at cost.
Fair value for these securities (approximately $5.2 billion in 1996 and $5.6
billion in 1995) 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 $67.8 million in 1996 and $73.2 million in 1995) is
determined by discounting the expected future cash flows using the current
rate at which similar
SAI-12
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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 on 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 consolidated statements of financial condition ("non-
admitted assets").
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 net investment income over the estimated remaining life of
the investment sold. All other realized gains and losses are reported in the
consolidated 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
Mutual of America. Fair value of this fund (approximately $106.7 million in
1996 and $112.3 million in 1995) is determined by discounting future
guaranteed principal and interest transfers at a market rate of return.
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, including net realized and unrealized capital gains in the
separate accounts (net of investment advisory fees and administration fees
assessed), 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 are reported as
liabilities in the accompanying statements. Premiums and benefits related to
the separate accounts are combined with the general account in the
accompanying statements. Net operating gains 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
predominately from 5.00% to 9.25%) which meet or exceed statutory
requirements. Reserves for contractual funds not yet used for the purchase of
annuities are accumulated at various interest rates which, during 1996 and
1995, ranged from 4.00% to 5.75% and 4.25% 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 cash surrender value, which
approximates fair value ($6.3 billion and $5.9 billion), at December 31, 1996
and 1995, respectively. The fair
SAI-13
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
value of annuity contracts (approximately $1.4 billion and $1.5 billion at
December 31, 1996 and 1995, respectively) was determined by discounting
expected future retirement benefits using current mortality tables and
interest rates based on the duration of expected future benefits. Weighted
average interest rates of 6.92% and 6.21% were used at December 31, 1996 and
1995, respectively.
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. Group life and disability insurance premiums are recognized as
income over the contract period.
General account 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.
Dividends
Dividends are based on formulas and scales approved by the Board of Directors
and are accrued currently for payment subsequent to plan anniversary dates.
2. FIXED MATURITY AND EQUITY SECURITIES
The statement values and estimated market values of investments in fixed
maturity securities (bonds and notes) at December 31, 1996 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
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies......... $2,136,817 $ 6,160 $ 3,955 $2,139,022
Obligations of states and political
subdivisions...................... 48,755 1,645 -- 50,400
Debt securities issued by foreign
governments....................... 159,543 7,479 1,812 165,210
Corporate securities............... 2,839,125 63,492 41,289 2,861,328
---------- ------- ------- ----------
Total............................ $5,184,240 $78,776 $47,056 $5,215,960
========== ======= ======= ==========
</TABLE>
Short-term fixed maturity securities with a statement value and estimated
market value of $74.8 million at December 31, 1996 are included in the above
table. As of December 31, 1996, the Company has $6.2 million (par value $6.0
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
The statement values and estimated market values of investments in fixed
maturity securities by contractual maturity (except for mortgage-backed
securities which are stated at expected maturity) at December 31, 1996 are
shown below. 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............................. $ 266,046 $ 269,421
Due after one year through five years............... 927,787 933,347
Due after five years through ten years.............. 1,937,748 1,948,432
Due after ten years................................. 2,052,659 2,064,760
---------- ----------
Total............................................. $5,184,240 $5,215,960
========== ==========
</TABLE>
SAI-14
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Proceeds from the sale of investments in fixed maturity securities during 1996
were $2.9 billion. Gross gains of $29.5 million and gross losses of $28.1
million were realized on these sales, of which $3.2 million of gains were
accumulated (including applicable tax benefits of $1.8 million) in the IMR.
Such amounts will be amortized into net investment income over the estimated
remaining life of the investment sold. During the year, $20.9 million of the
IMR was amortized and included in net investment income.
The statement values and estimated market values of investments in fixed
maturity securities at December 31, 1995, are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies......... $2,064,500 $ 98,981 $ 314 $2,163,167
Obligations of states and political
subdivisions...................... 35,967 1,035 27 36,975
Debt securities issued by foreign
governments....................... 186,882 12,322 1,509 197,695
Corporate securities............... 3,013,411 163,935 17,350 3,159,996
---------- -------- ------- ----------
Total............................ $5,300,760 $276,273 $19,200 $5,557,833
========== ======== ======= ==========
</TABLE>
Short-term fixed maturity securities with a statement value and estimated
market value of $103.4 million at December 31, 1995, are included in the above
table. As of December 31, 1995, the Company has $6.3 million (par value $6.0
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
Proceeds from the sale of investments in fixed maturity securities during 1995
were $2.8 billion. Gross gains of $20.2 million and gross losses of $131.0
million were realized on those sales, of which $102.0 million of losses were
accumulated (including applicable tax benefits of $8.3 million) in the IMR.
Such amounts will be amortized into net investment income over the estimated
remaining life of the investment sold. During 1995, $24.8 million of the IMR
was amortized and included in net investment income.
Net realized capital gains (losses) reflected in the statements of operations
for the years ended December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(000'S OMITTED)
<S> <C> <C>
Equity securities (common and preferred stocks)........... $11,217 $(1,270)
Fixed maturities.......................................... -- (556)
Real estate............................................... (1,670) (935)
------- -------
Net realized capital gains (losses)..................... $ 9,547 $(2,761)
======= =======
</TABLE>
At December 31, 1996 and 1995, net unrealized appreciation of equity
securities was $14.1 million and $4.8 million, respectively.
3. REINSURANCE AND RELATED TRANSACTIONS
In 1980, Mutual of America 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
consolidated statements of financial condition.
The guaranteed funds are transferable to Mutual of America over time and are
stated at the total principal amount of future guaranteed transfers to Mutual
of America of $130.2 million and $135.8 million at December 31, 1996 and 1995,
respectively.
The guaranteed interest and other allocated investment earnings on the funds
held by the reinsurer, amounting to $12.3 million and $13.1 million in 1996
and 1995, respectively, are included in net investment income. Such amounts
include
SAI-15
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
participating dividends from a contingency fund held by the reinsurer (but not
recorded as an asset of Mutual of America) of $3.7 million and $4.0 million in
1996 and 1995, respectively.
4. REAL ESTATE
In October 1992, Mutual of America 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, the
Company occupied a portion of its new corporate headquarters and began
depreciating the occupied portion of the property. Depreciation expense for
1996 and 1995 was $5.0 million and $1.4 million, respectively.
During the initial lease-up period, pro-rated interest costs relating to the
portion of the building not yet occupied were also deferred and capitalized as
a construction cost. During 1996 and 1995, interest costs of $1.5 million and
$6.6 million, respectively, were capitalized. Real estate consists of the
following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(000'S OMITTED)
<S> <C> <C>
Company occupied.......................................... $113,876 $116,366
Investment in real estate................................. 222,093 208,374
-------- --------
Total................................................... $335,969 $324,740
======== ========
</TABLE>
5. NOTE PAYABLE
In connection with the acquisition of its new home office, Mutual of America
obtained a $135.0 million, seven-year, 6.91% fixed rate secured term note.
Fair value of the note was approximately $137.0 million at December 31, 1996
and 1995. 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 Mutual
of America pledge collateral, 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 $165.5 million and
$164.9 million in 1996 and $164.8 million and $170.2 million in 1995,
respectively, were pledged as collateral.
6. PENSION PLAN AND POSTRETIREMENT BENEFITS
The Company has a qualified, noncontributory defined benefit pension plan
covering virtually all employees. 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"). Pension expense for 1996 and 1995 was $3.7 million and $3.5
million, respectively. The components of net pension expense are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(000'S OMITTED)
<S> <C> <C>
Service cost............................................... $ 3,347 $ 2,467
Interest cost on projected benefit obligation.............. 3,729 2,967
Return on plan assets...................................... (5,164) (6,444)
Asset gain deferred........................................ 883 3,803
Amortization of initial net asset.......................... (211) (211)
Amortization of unrecognized loss.......................... 1,146 916
------- -------
Net pension expense...................................... $ 3,730 $ 3,498
======= =======
</TABLE>
The assumptions used to calculate the net pension expense were:
<TABLE>
<CAPTION>
1996 1995
------ -----
<S> <C> <C>
Expected long-term rate of return on assets..................... 11.30% 8.75%
Discount rate................................................... 7.75% 8.00%
Rate of increase in compensation levels......................... 4.00% 4.00%
</TABLE>
SAI-16
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The status of the pension plan at December 31 is as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(000'S OMITTED)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $43,563 in 1996 and $33,422 in 1995....... $(43,994) $(33,736)
======== ========
Projected benefit obligation............................. $(49,542) $(42,161)
Plan assets at fair value................................ 40,071 36,162
-------- --------
Projected benefit obligation in excess of plan assets.... (9,471) (5,999)
Remaining unrecognized initial net asset................. (1,052) (1,263)
Unrecognized net loss from past experience different from
that assumed............................................ 25,666 18,670
-------- --------
Prepaid pension cost, end of year........................ $ 15,143 $ 11,408
======== ========
</TABLE>
For financial reporting purposes, the prepaid pension cost at December 31,
1996 and 1995, has been classified as a non-admitted asset.
At December 31, 1996 all of the Company's pension plan assets are invested in
one of the Company's separate accounts (consisting primarily of equity and
fixed maturity securities) and participation in certain other funds managed by
outside investment advisors.
Benefit payments from the plan made on behalf of retirees were approximately
$8.4 million in 1996 and $2.3 million in 1995. Periodic annuity benefits are
covered by annuities purchased by the plan from the Company. During 1996 and
1995, the Company made contributions to the plan of $7.5 million and $3.3
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 $1.5 million and $1.4 million in 1996 and 1995, respectively.
In addition to the Company's defined benefit pension plan, the Company has two
defined benefit postretirement plans covering substantially all salaried
employees. Employees may become eligible for such benefits upon attainment of
retirement age while in the employ of the Company and upon satisfaction of
service requirements. One plan provides medical and dental benefits, and the
second plan provides life insurance benefits. The postretirement plans are
contributory for those individuals who retire with less than twenty years of
eligible service, with retiree contributions adjusted annually, and contain
other cost-sharing features, such as deductibles and coinsurance. The
accounting for the medical and dental plans anticipates future cost-sharing
changes to the written plan that are consistent with the Company's expressed
intent to increase the retiree contribution rate annually for the expected
general inflation rate for the year.
The accounting for such postretirement benefits is in accordance with the
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>
1996 1995
------- -------
(000'S OMITTED)
<S> <C> <C>
Service cost................................................ $ 538 $ 483
Interest cost on projected benefit obligation............... 1,101 986
------- -------
Net postretirement benefit cost............................. $ 1,639 $ 1,469
======= =======
</TABLE>
SAI-17
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table shows the plan's combined status reconciled with the
amounts reported in the Company's consolidated statements of financial
condition:
<TABLE>
<CAPTION>
1996 1995
------- -------
(000'S OMITTED)
<S> <C> <C>
Accumulated postretirement benefit obligation ("APBO"):
Retirees................................................ $ 5,242 $ 4,189
Fully eligible active plan participants................. 3,149 3,191
Other active plan participants.......................... 5,280 4,598
------- -------
Total APBO............................................ 13,671 11,978
Plan assets at fair value................................. -- --
------- -------
APBO in excess of plan assets............................. 13,671 11,978
Unrecognized net loss..................................... (3,825) (2,972)
------- -------
Accrued postretirement obligation......................... $ 9,846 $ 9,006
======= =======
</TABLE>
The weighted average annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) for the medical plan is
approximately 8.5% for 1996. The health care cost trend rate assumption has a
significant affect 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, 1996 by $1.7 million and the aggregate of the service and
interest cost components of the net periodic benefit cost for 1996 by $.1
million.
The weighted average discount rate used in determining the APBO was 7.75% at
December 31, 1996 and 8.0% at December 31, 1995.
7. COMMITMENTS AND CONTINGENCIES
Rental expenses were $17.0 million and $15.3 million in 1996 and 1995,
respectively. The approximate minimum rental commitments under noncancelable
operating leases are as follows: 1997, $2.9 million, 1998, $2.7 million, 1999,
$2.1 million, 2000, $1.4 million and 2001, $0.9 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.
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 consolidated financial
statements.
8. FEDERAL INCOME TAXES
The provisions contained in the Tax Reform Act of 1986 enabled Mutual of
America'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 benefit for the
Company arises principally from the operating results of its taxable life
insurance subsidiary, The American Life Insurance Company of New York, and is
calculated in accordance with the Internal Revenue Code (as amended). Mutual
of America and its life insurance subsidiary file federal tax returns on a
separate company basis. Mutual of America's noninsurance subsidiaries file a
consolidated tax return.
9. RECONCILIATION OF STATUTORY BASIS FINANCIAL RESULTS TO A GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES BASIS
The accompanying financial statements are presented in conformity with
statutory accounting practices prescribed or permitted by the State of New
York Insurance Department which practices differ from GAAP. The variances
between such practices and GAAP and the effects on the accompanying financial
statements follow:
Asset Valuations and Investment Income Recognition
GAAP requires the Company's bonds and notes to be classified as either held to
maturity ("HTM") or available for sale ("AFS"); whereas for statutory
accounting no such classification is required. In addition, for GAAP, AFS
securities are
SAI-18
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
carried at their fair market value with the unrealized gains and losses
applied directly to surplus; whereas for statutory accounting all bonds and
notes are carried at their amortized cost.
Realized capital gains and losses, net of applicable taxes, arising from
changes in interest rates are recognized in income currently for GAAP
accounting, rather than accumulated in the IMR and amortized into income over
the remaining life of the security sold for statutory accounting.
Additionally, under GAAP, capital gains and losses are not recognized when a
security is sold and the same or substantially the same security is
repurchased unless the repurchase occurs after a reasonable exposure to market
risk.
A general formula based asset valuation reserve (AVR) is recorded for
statutory accounting purposes, whereas such reserves are established under
GAAP only when an asset's impairment is considered to be other than temporary.
Certain assets, principally furniture and fixtures and prepaid expenses, for
statutory accounting, are excluded from the statement of financial condition
by a charge to surplus; whereas under GAAP, such assets are carried at their
amortized cost.
Policy Acquisition Costs
Under GAAP, policy acquisition costs that are directly related to and vary
with the production of new business are deferred and amortized over the
estimated life of the applicable policies, rather than being expensed as
incurred.
Insurance and Annuity Reserves
Under statutory accounting practices the interest rates and mortality and
morbidity assumptions used are those which are prescribed or permitted by the
State of New York Insurance Department. Under GAAP, for annuities the interest
rate assumptions used are generally those assumed in the pricing of the
contract at issue; for disability benefits the interest rates assumed are
those anticipated to be earned over the duration of the benefit period.
Mortality and morbidity assumptions are based on Company experience.
Premium Recognition
Insurance contracts that do not subject the insurer to significant mortality
or morbidity risk are considered, under GAAP, to be primarily investment
contracts. GAAP requires all amounts received from policyholders under these
investment contracts to be recorded as a policyholder deposit rather than as
premium income.
Deferred Income Taxes
GAAP requires that a deferred tax asset or liability be established to provide
for temporary differences between the tax and financial reporting bases of
assets and liabilities. Deferred income taxes are not recorded for statutory
accounting purposes.
The tables that follow provide a reconciliation of the 1996 and 1995 statutory
financial results reflected in the accompanying financial statements to a GAAP
basis:
<TABLE>
<CAPTION>
RECONCILIATION OF STATUTORY TO GAAP SURPLUS 1996 1995
------------------------------------------- -------- --------
(000'S OMITTED)
<S> <C> <C>
Statutory Surplus........................................ $431,045 $397,489
Market value adjustment related to AFS bonds and notes. 84,569 387,000
Realized capital gains................................. 32,674 15,351
AVR.................................................... 107,676 88,294
Deferred policy acquisition costs...................... 39,854 17,788
Policy reserve adjustments............................. (21,290) (17,320)
Non-admitted assets.................................... 30,222 24,263
Deferred income taxes.................................. (6,004) (19,689)
Other.................................................. (356) (1,978)
-------- --------
GAAP Surplus............................................. $698,390 $891,198
======== ========
</TABLE>
SAI-19
<PAGE>
MUTUAL OF AMERICA LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
RECONCILIATION OF STATUTORY TO GAAP NET INCOME 1996 1995
---------------------------------------------- -------- --------
(000'S OMITTED)
<S> <C> <C>
Statutory Net Income..................................... $ 55,176 $ 43,076
Investment income adjustments.......................... (14,562) (9,771)
Realized capital gains (losses)........................ 41,208 (19,984)
Policy reserve adjustments............................. (4,071) (4,166)
Deferred policy acquisition costs...................... 2,393 5,132
Deferred income taxes.................................. (3,832) 486
Other.................................................. (1,624) (7,183)
-------- --------
GAAP Net Income.......................................... $ 74,688 $ 7,590
======== ========
<CAPTION>
RECONCILIATION OF GAAP TO STATUTORY PREMIUMS 1996 1995
-------------------------------------------- -------- --------
(000'S OMITTED)
<S> <C> <C>
GAAP Premium Income...................................... $ 63,372 $ 78,689
Premiums from investment contracts..................... 652,185 713,839
-------- --------
Statutory Premium Income................................. $715,557 $792,528
======== ========
</TABLE>
SAI-20
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
9. Consent of Graham & James LLP, Attorneys-at-Law.
10. Consent of Arthur Andersen LLP, Independent
Accountants.
14(a) Financial Data Schedule for Mutual of
America Separate Account No. 2.
14(b) Financial Data Schedule for Mutual of
America Life Insurance Company.
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
---------------------------------------
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address With Depositor
- ------------------ ---------------------
<S> <C>
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
Denver, Colorado
John R. Dunne Director
Albany, New York
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
New York, New York
William Kahn Director
St. Louis, Missouri
LaSalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Alan B. Reed Director
Buffalo Grove, Illinois
Francis H. Schott Director
New York, New York
O. Stanley Smith, Jr. Director
Columbia, South Carolina
Sheila M. Smythe Director
Valhalla, New York
Elie Wiesel Director
New York, New York
Officers-Directors
------------------
William J. Flynn Chairman of the Board
Thomas J. Moran President and Chief Executive
Officer
Richard J. Ciecka Vice Chairman of the Board
Other Officers
--------------
Manfred Altstadt Senior Executive Vice President
and Chief Financial Officer
Diane M. Aramony Senior Vice President,
Human Resources
Deborah Swinford Becker Senior Vice President and
Associate General Counsel
Meyer Baruch Senior Vice President, Technical
Services, since July 1996; prior
thereto, Assistant Chief of the Life
Insurance and Companies Bureau of
the New York State Insurance
Department
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
Nicholas A. Branchina Senior Vice President and
Associate Treasurer
William Breneisen Executive Vice President,
Office of Technology
Jeremy J. Brown Executive Vice President and Chief
Actuary, since April, 1997; prior
thereto, Consulting Actuary with
Milliman & Robertson
Allen J. Bruckheimer Senior Vice President and
Associate Treasurer
J. Thomas Burkard Senior Field Vice President,
Special Markets
Patrick Burke Senior Vice President,
Special Markets
Patrick A. Burns Senior Executive Vice President
and General Counsel
John Cerrato Senior Vice President, Corporate
Services
Edward Cole Senior Vice President,
MIS Operations
William S. Conway Executive Vice President, Marketing
Rita Conyers Executive Vice President,
Corporate Communications,
Training and Leadership
Development
Salvatore R. Curiale Senior Executive Vice President,
Technical Operations
Linda DeHooge Senior Vice President and
Assistant Secretary
William A. DeMilt Executive Vice President and Treasurer
Warren A. Essner Senior Vice President and
Assistant to the President and
Chief Executive Officer
James E. Flynn Senior Vice President,
Field Operations
James M. Fox Executive Vice President, Real
Estate Management, Internal
Audit and Public Relations
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
Michael Gallagher Senior Vice President, Direct
Boca Raton, FL Response/Marketing
Harold J. Gannon Senior Vice President, Corporate Tax
Gordon Gaspard Senior Vice President,
Technical Services
Robert Giaquinto Senior Vice President,
MIS Operations
Thomas E. Gilliam Executive Vice President and Assistant
to the Vice Chairman
John Greed Senior Vice President and Deputy
Treasurer since July 1996; prior
thereto, partner, Arthur Andersen LLP
Thomas A. Harwood Senior Vice President,
Field Administration
Raymond J. Hayes Senior Vice President,
Real Estate Management
Sandra Hersko Senior Vice President,
Technical Administration
Edward J. T. Kenney Senior Vice President and Assistant to
the President and Chief Executive
Officer
Gregory A. Kleva, Jr. Executive Vice President and
Deputy General Counsel
Stephanie J. Kopp Executive Vice President
and Corporate Secretary
Robert Kordecki Senior Vice President,
National Accounts
Amir Lear Senior Vice President, Office of the
President and Chief Executive Officer
Stanley M. Lenkowicz Senior Vice President and
Deputy General Counsel
Thomas MacMurray Senior Field Vice President,
National Accounts
Robert W. Maull Senior Vice President and Actuary
George L. Medlin Senior Vice President,
Internal Auditor
Lynn M. Nalder Senior Vice President, Training
Boca Raton, FL and Leadership Development
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C>
Roger F. Napoleon Senior Vice President and
Associate General Counsel
Theodore J. O'Dell Senior Vice President and
Controller
James C. Peterson Senior Vice President, Training
and Leadership Development
William Rose Senior Vice President,
Individual Markets
Dennis J. Routledge Senior Vice President,
LAN/Telecommunications
Robert W. Ruane Senior Vice President,
Corporate Communications
William G. Shannon Senior Vice President,
Individual Financial Planning
Walter W. Siegel Senior Vice President, Actuarial
Consulting
Joan M. Squires Senior Vice President, MIS Business
Applications
Raymond Yeager Senior Vice President,
MIS Operations
</TABLE>
The business address of all officers and directors is 320 Park Avenue, New
York, New York 10022, unless otherwise noted.
Item 27. Number of Holders of Securities
-------------------------------
As of March 31, 1997, there were 228,606 Participants in Separate
Account No. 2, 151,535 of whom were attributable to Contracts registered under
SEC File No. 2-90201; 76,830 of whom were attributable to Contracts registered
under SEC File No. 33-11023; and 241 of whom were attributable to Contracts
registered under SEC File No. 33-5609.
Item 32. Undertakings
------------
The Insurance Company represents that the fees and charges deducted
under the Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the Insurance Company.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this post-amendment to Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this post-effective amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
the State of New York, the 25th day of April, 1997.
MUTUAL OF AMERICA SEPARATE
ACCOUNT NO. 2 Registrant)
MUTUAL OF AMERICA LIFE
INSURANCE COMPANY (Depositor)
By: /s/ Manfred Altstadt
--------------------
Manfred Altstadt
Senior Executive Vice
President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated on April 25, 1997.
Signature Title
*
__________________________ Chairman of the Board;
William J. Flynn Director
* Chief Executive Officer and
__________________________ President; Director
Thomas J. Moran (Principal Executive Officer)
Senior Executive Vice
President and Chief
Financial Officer
Principal Financial and
/s/ Manfred Altstadt Accounting Officer)
- --------------------
Manfred Altstadt
*
__________________________ Director
Clifford L. Alexander, Jr.
*
__________________________ Director
Patricia A. Cahill
*
__________________________ Director
Richard J. Ciecka
C-6
<PAGE>
__________________________ Director
John R. Dunne
*
__________________________ Director
Roselyn P. Epps, M.D.
*
__________________________ Director
Dudley H. Hafner
__________________________ Director
Earle H. Harbison, Jr.
*
___________________________ Director
Frances R. Hesselbein
*
___________________________ Director
William Kahn
*
___________________________ Director
LaSalle D. Leffall, Jr., M.D.
*
___________________________ Director
Michael A. Pelavin
___________________________ Director
Alan B. Reed
*
___________________________ Director
Francis H. Schott
*
___________________________ Director
O. Stanley Smith, Jr.
*
___________________________ Director
Sheila M. Smythe
*
___________________________ Director
Elie Wiesel
*By /s/ Manfred Altstadt
--------------------
Manfred Altstadt
Attorney-in-Fact
C-7
<PAGE>
EXHIBIT INDEX
No. Page
--- ----
27.1 Financial Data Schedule for Mutual of
America Separate Account No. 2.
27.2 Financial Data Schedule for Mutual of
America Life Insurance Company.
99.9. Consent of Graham & James LLP, Attorneys-at-Law.
99.10. Consent of Arthur Andersen LLP, Independent
Accountants.
<PAGE>
EXHIBIT 99.9
CONSENT OF GRAHAM & JAMES LLP
We hereby consent to all references to our firm included in Registration
Statement No. 33-5609.
GRAHAM & JAMES LLP
New York, New York
April 28, 1997
<PAGE>
EXHIBIT 99.10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of Registration
Statement No. 33-5609.
ARTHUR ANDERSEN LLP
New York, New York
April 28, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,146,376,229
<INVESTMENTS-AT-VALUE> 1,300,505,328
<RECEIVABLES> 1,378,584
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,301,883,912
<PAYABLE-FOR-SECURITIES> 0
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715,557,909 792,528,432
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