<PAGE>
Mutual of America
SEPARATE ACCOUNT NO. 2
ANNUAL REPORT
&
ANNUAL REPORTS OF
MUTUAL OF AMERICA INVESTMENT CORPORATION
SCUDDER VARIABLE LIFE INVESTMENT FUND
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS
FUND II:
CONTRAFUND AND ASSET MANAGER PORTFOLIOS
DECEMBER 31, 1997
This report is not to be construed as an offering for sale of any Variable
Product. No offering is
made except in conjunction with a prospectus which must precede or accompany
this report.
<PAGE>
MUTUAL OF AMERICA
SEPARATE ACCOUNT NO. 2
ANNUAL REPORT
DECEMBER 31, 1997
Dear Participant:
We are pleased to send you the 1997 Annual Report of Mutual of America's
Separate Account No. 2. This Account is an investment vehicle for participants
in our Tax-Deferred Annuity, Voluntary Employee Contributions, and Individual
Retirement Annuity programs, Thrift and Section 457 Deferred Compensation
Plans, as well as for Flexible Premium Annuity policyholders. Separate Account
No. 2 consists of sixteen distinct funds. Each invests in shares of one of
eight funds of Mutual of America Investment Corporation (the "Investment
Company"): the Money Market, All America, Equity Index, Bond, Short-Term Bond,
Mid-Term Bond, Composite and Aggressive Equity Funds; three portfolios of
Scudder Variable Life Investment Fund ("Scudder"): the Bond, Capital Growth
and International Portfolios; the VP Capital Appreciation Fund (formerly TCI
Growth) of American Century Variable Portfolios, Inc. ("American Century");
the Balanced Portfolio of Acacia Capital Corporation's Calvert Responsibly
Invested Portfolios ("Calvert"); the Equity-Income Portfolio of Fidelity
Investments Variable Insurance Products Fund ("Fidelity VIP"); and the
Contrafund and Asset Manager Portfolios of Fidelity Investments Variable
Insurance Products Fund II ("Fidelity VIP II").
Each of the funds of Separate Account No. 2 owns shares in a similarly named
fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert, portfolio of Fidelity VIP and portfolio of
Fidelity VIP II. The investment results of each of the funds of Separate
Account No. 2 are based on the performance of the corresponding funds or
portfolios of the Investment Company, Scudder, American Century, Calvert,
Fidelity VIP and Fidelity VIP II.
The Separate Account funds invest in funds and portfolios which have the
following investment objectives:
THE INVESTMENT COMPANY MONEY MARKET FUND: This Fund seeks to obtain high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital through investments in money
market instruments and other short-term debt securities.
THE INVESTMENT COMPANY ALL AMERICA FUND: The investment objective for
approximately 60% of the assets of this Fund (the "Indexed Assets") is to
provide investment results that, to the extent practical, correspond to the
performance of the Standard & Poor's Composite Index of 500 Stocks (the
"S&P 500"). The Indexed Assets are invested in the same manner as the
Equity Index Fund described below. 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 INVESTMENT COMPANY EQUITY INDEX FUND: This Fund seeks to duplicate,
as closely as possible, the investment performance of the S&P 500 by
investing in approximately 500 publicly traded stocks that comprise the S&P
500 ("Standard & Poor's 500", "S&P" and "S&P 500" are trademarks of
Standard & Poor's Corporation).
THE INVESTMENT COMPANY BOND FUND: This Fund seeks a high level of current
income, together with preservation of capital, through investments in such
securities as U.S. Government, corporate and other notes and bonds.
THE INVESTMENT COMPANY SHORT-TERM BOND FUND: This Fund seeks a high level
of current income, together with preservation of capital, through
investments in such securities as U.S. Government, corporate and other
notes and bonds with an average maturity of one to three years.
THE INVESTMENT COMPANY MID-TERM BOND FUND: This Fund seeks a high level
of current income, together with preservation of capital, through
investments in such securities as U.S. Government, corporate and other
notes and bonds with an average maturity of three to seven years.
THE INVESTMENT COMPANY COMPOSITE FUND: This Fund seeks a high total rate
of return on investments, through both appreciation of capital and current
income, through investments in a diversified portfolio of common stocks,
bonds and money market instruments.
THE INVESTMENT COMPANY AGGRESSIVE EQUITY FUND: The investment objective
for approximately half of the assets of the Fund 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. The investment
objective for the other half of the assets of the Fund 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 a company's assets, earnings or growth potential.
I
<PAGE>
THE SCUDDER BOND PORTFOLIO: This Portfolio seeks a high level of income
consistent with the prudent investment of capital through a flexible
investment program emphasizing high-grade bonds.
THE SCUDDER CAPITAL GROWTH PORTFOLIO: This Portfolio seeks long-term
capital growth by investing primarily in common stocks of medium-to-large
sized U.S. companies. The Portfolio seeks to keep the value of its shares
more stable than other capital growth mutual funds. While current income is
not a stated objective of the Portfolio, many of the Portfolio's securities
may provide regular dividends, which are also expected to grow over time.
THE SCUDDER INTERNATIONAL PORTFOLIO: This Portfolio seeks long-term
growth of capital primarily through a diversified portfolio of foreign
equity securities.
VP CAPITAL APPRECIATION FUND: This Fund seeks capital growth over time by
investing primarily in common stocks that are considered by management to
have better-than-average prospects for appreciation. (Prior to May 1, 1997,
this Fund was known as TCI Growth Fund).
THE CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO: This Portfolio seeks
a total return above the rate of inflation through an actively managed
portfolio of stocks, bonds and money market instruments selected with a
concern for the social impact of each investment. (As of January 1, 1998,
the name was changed to Calvert Social Balanced Portfolio).
THE FIDELITY VIP EQUITY-INCOME PORTFOLIO: This Portfolio seeks reasonable
income by investing primarily in income-producing equity securities, while
considering the potential for capital appreciation. The Portfolio also
seeks to achieve a yield that exceeds the composite yield on the securities
comprising the S&P 500.
THE FIDELITY VIP II CONTRAFUND PORTFOLIO: This Portfolio seeks long-term
capital appreciation by investing primarily in a broad variety of common
stocks using both growth-oriented and contrarian disciplines.
THE FIDELITY VIP II ASSET MANAGER PORTFOLIO: This Portfolio seeks high
long-term return with reduced risk by using a broadly diversified mix of
stocks, bonds and short-term fixed-income investments.
For the year ended December 31, 1997, the following total returns were
experienced in these sixteen Separate Account funds:
<TABLE>
<S> <C>
Investment Company Money Market Fund(1)............................. + 3.9%
Investment Company All America Fund................................. +24.9%
Investment Company Equity Index Fund................................ +31.1%
Investment Company Bond Fund........................................ + 8.8%
Investment Company Short-Term Bond Fund............................. + 4.4%
Investment Company Mid-Term Bond Fund............................... + 5.7%
Investment Company Composite Fund................................... +15.9%
Investment Company Aggressive Equity Fund........................... +19.4%
Scudder Bond Fund................................................... + 7.4%
Scudder Capital Growth Fund......................................... +33.7%
Scudder International Fund.......................................... + 7.4%
American Century VP Capital Appreciation Fund....................... - 4.5%
Calvert Responsibly Invested Balanced Fund.......................... +18.3%
Fidelity VIP Equity-Income Fund..................................... +26.3%
Fidelity VIP II Contrafund.......................................... +22.4%
Fidelity VIP II Asset Manager Fund.................................. +18.9%
</TABLE>
- -------
(1) The current seven-day net annualized yield as of 2/17/98 was 4.15% and is
not necessarily indicative of future actual yields.
Total return is equal to the changes in the value of a unit of participation
in a fund from the beginning to the end of the specified period. It reflects
investment income earned and reinvested plus the changes in the market value
(whether realized or unrealized) of the securities in the respective fund or
portfolio of the Investment Company, Scudder, American Century, Calvert or
Fidelity during the indicated period. Results are net of all charges,
including a monthly service charge (assessed against an average account
balance for all individually allocated contracts) based upon a hypothetical
$1,000 invested at the beginning of the period. These returns are not
guaranteed and are not necessarily indicative of the future investment
performance of the particular fund. Withdrawals and contributions made within
a period would experience different rates of return based on the respective
unit values on the dates of such transactions.
II
<PAGE>
This report includes financial statements for each fund of Separate Account
No. 2. Following this report are the financial statements for each similarly
named fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert and portfolios of Fidelity VIP and VIP II.
I hope you will find this report helpful and informative.
Sincerely,
/s/ Manfred Alstadt
-------------------
Manfred Altstadt
Senior Executive Vice President and
Chief Financial Officer,
Mutual of America Life Insurance Company
III
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL REPORT OF MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2................ I
Statement of Assets and Liabilities..................................... V
Statement of Operations................................................. VII
Statements of Changes in Net Assets..................................... IX
Notes to Financial Statements........................................... XII
Report of Independent Public Accountants................................ XVI
ANNUAL REPORT OF MUTUAL OF AMERICA INVESTMENT CORPORATION................ 1
President's Message..................................................... 1
Portfolio Management Discussions........................................ 2
Portfolio of Investments in Securities:
Money Market Fund..................................................... 9
All America Fund...................................................... 10
Equity Index Fund..................................................... 19
Bond Fund............................................................. 25
Short-Term Bond Fund.................................................. 28
Mid-Term Bond Fund.................................................... 30
Composite Fund........................................................ 32
Aggressive Equity Fund................................................ 36
Statement of Assets and Liabilities..................................... 39
Statement of Operations................................................. 40
Statements of Changes in Net Assets..................................... 41
Financial Highlights.................................................... 43
Notes to Financial Statements........................................... 49
Report of Independent Public Accountants................................ 54
ANNUAL REPORT OF SCUDDER VARIABLE LIFE INVESTMENT FUND
ANNUAL REPORT OF VP CAPITAL APPRECIATION FUND OF AMERICAN CENTURY
VARIABLE PORTFOLIOS, INC.
ANNUAL REPORT OF CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO OF
ACACIA CAPITAL CORPORATION
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: CONTRAFUND PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: ASSET MANAGER PORTFOLIO
</TABLE>
IV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment
Corporation at market
value
(Cost:
Money Market Fund --
$33,424,720
All America Fund --
$273,073,807
Equity Index Fund --
$120,918,440
Bond Fund --
$37,857,784)
(Notes 1 and 2)......... $32,847,132 $347,116,077 $153,966,219 $37,979,161
Due From (To) Mutual of
America General
Account................. 1,459 (427,556) 493,450 (8,060)
----------- ------------ ------------ -----------
Net Assets............... $32,848,591 $346,688,521 $154,459,669 $37,971,101
=========== ============ ============ ===========
Unit Value at December
31, 1997 (Note 5)....... $ 1.95 $ 6.76 $ 2.26 $ 3.00
====== ====== ====== ======
Number of Units
Outstanding at December
31, 1997 (Note 5)....... 16,831,293 51,312,383 68,461,583 12,671,471
=========== ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------
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 --
$2,823,723
Mid-Term Bond Fund --
$6,010,147
Composite Fund --
$277,684,362
Aggressive Equity Fund --
$145,068,534)
(Notes 1 and 2).............. $2,756,382 $5,638,323 $267,467,587 $153,734,203
Due From (To) Mutual of
America General Account...... 51,726 2,774 48,562 82,639
---------- ---------- ------------ ------------
Net Assets.................... $2,808,108 $5,641,097 $267,516,149 $153,816,842
========== ========== ============ ============
Unit Value at December 31,
1997 (Note 5)................ $ 1.19 $ 1.26 $ 4.36 $ 2.15
====== ====== ====== ======
Number of Units Outstanding at
December 31, 1997
(Note 5)..................... 2,354,989 4,478,213 61,359,153 71,468,257
========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
V
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SCUDDER AMERICAN CENTURY CALVERT
--------------------------------------- ---------------- -------------
CAPITAL VP CAPITAL
BOND GROWTH INTERNATIONAL APPRECIATION RESPONSIBLY
FUND FUND FUND FUND INVESTED FUND
----------- ------------ ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder
Portfolios, American
Century VP Capital
Appreciation Fund and
Calvert Responsibly
Invested Portfolio at
market value
(Cost:
Scudder Bond Fund --
$18,341,309
Scudder Capital Growth
Fund -- $232,108,072
Scudder International
Fund -- $103,157,411
American Century VP
Capital Appreciation
Fund -- $49,903,872
Calvert Responsibly
Invested Fund --
$28,569,357)
(Notes 1 and 2)........ $18,301,206 $328,836,635 $118,904,168 $49,521,243 $32,998,938
Due From (To) Mutual of
America General
Account................ 46,687 (3,016) (224,195) 256,004 43,544
----------- ------------ ------------ ----------- -----------
Net Assets.............. $18,347,893 $328,833,619 $118,679,973 $49,777,247 $33,042,482
=========== ============ ============ =========== ===========
Unit Value at December
31, 1997 (Note 5)...... $ 12.37 $ 29.64 $ 14.46 $ 11.04 $ 2.65
======= ======= ======= ======= ======
Number of Units
Outstanding at
December 31, 1997 (Note
5)..................... 1,483,509 11,093,827 8,204,725 4,510,083 12,478,750
=========== ============ ============ =========== ===========
</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 --
$80,156,668
VIP II Contra Fund -- $89,492,657
VIP II Asset Manager Fund --
$21,735,892)
(Notes 1 and 2)..................... $96,838,403 $115,077,349 $24,238,728
Due From (To) Mutual of America
General Account..................... 122,065 51,690 60,586
----------- ------------ -----------
Net Assets........................... $96,960,468 $115,129,039 $24,299,314
=========== ============ ===========
Unit Value at December 31, 1997 (Note
5).................................. $ 27.77 $ 20.36 $ 21.14
======= ======= =======
Number of Units Outstanding at
December 31, 1997 (Note 5).......... 3,491,209 5,655,675 1,149,512
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------------
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.............. $2,049,430 $42,544,942 $ 3,236,502 $ 2,438,040
---------- ----------- ------------ -----------
Total income............ 2,049,430 42,544,942 3,236,502 2,438,040
---------- ----------- ------------ -----------
Expenses (Note 3):
Fees................... 408,624 3,929,915 1,385,683 429,987
Administrative
expenses.............. 78,791 186,667 75,353 62,095
---------- ----------- ------------ -----------
Total Expenses.......... 487,415 4,116,582 1,461,036 492,082
---------- ----------- ------------ -----------
Net Investment Income
(Loss)................. 1,562,015 38,428,360 1,775,466 1,945,958
---------- ----------- ------------ -----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... 132,331 6,823,750 1,092,959 111,901
Net unrealized
appreciation
(depreciation) of
investments........... (446,463 ) 22,669,697 24,542,212 889,880
---------- ----------- ------------ -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (314,132) 29,493,447 25,635,171 1,001,781
---------- ----------- ------------ -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,247,883 $67,921,807 $ 27,410,637 $ 2,947,739
========== =========== ============ ===========
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------------
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.............. $ 172,696 $ 349,575 $ 59,200,271 $15,310,328
---------- ----------- ------------ -----------
Total income............ 172,696 349,575 59,200,271 15,310,328
---------- ----------- ------------ -----------
Expenses (Note 3):
Fees................... 31,767 61,348 3,220,012 1,614,189
Administrative
expenses.............. 7,591 9,891 254,611 64,978
---------- ----------- ------------ -----------
Total Expenses.......... 39,358 71,239 3,474,623 1,679,167
---------- ----------- ------------ -----------
Net Investment Income
(Loss)................. 133,338 278,336 55,725,648 13,631,161
---------- ----------- ------------ -----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... 17,305 (98,969) 3,228,464 808,445
Net unrealized
appreciation
(depreciation) of
investments........... (40,822) 101,700 (20,441,501) 5,321,047
---------- ----------- ------------ -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (23,517) 2,731 (17,213,037) 6,129,492
---------- ----------- ------------ -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 109,821 $ 281,067 $ 38,512,611 $19,760,653
========== =========== ============ ===========
</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, 1997
<TABLE>
<CAPTION>
AMERICAN
SCUDDER CENTURY CALVERT
------------------------------------- ------------ -----------
CAPITAL VP CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL APPRECIATION INVESTED
FUND FUND FUND FUND FUND
---------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $1,026,890 $18,425,109 $ 2,549,505 $ 1,349,408 $2,295,190
---------- ----------- ----------- ----------- ----------
Total income............ 1,026,890 18,425,109 2,549,505 1,349,408 2,295,190
---------- ----------- ----------- ----------- ----------
Expenses (Note 3):
Fees................... 197,813 3,396,783 1,478,900 624,080 356,798
Administrative
expenses.............. 37,701 98,960 22,343 15,260 50,968
---------- ----------- ----------- ----------- ----------
Total Expenses.......... 235,514 3,495,743 1,501,243 639,340 407,766
---------- ----------- ----------- ----------- ----------
Net Investment Income
(Loss)................. 791,376 14,929,366 1,048,262 710,068 1,887,424
---------- ----------- ----------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... (87,907) 3,989,169 10,918,585 1,238,144 235,099
Net unrealized
appreciation
(depreciation) of
investments........... 447,914 53,719,471 (3,147,476) (4,227,421) 2,600,706
---------- ----------- ----------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 360,007 57,708,640 7,771,109 (2,989,277) 2,835,805
---------- ----------- ----------- ----------- ----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,151,383 $72,638,006 $ 8,819,371 $(2,279,209) $4,723,229
========== =========== =========== =========== ==========
</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............................ $ 5,695,825 $ 2,303,885 $1,433,986
----------- ----------- ----------
Total income.......................... 5,695,825 2,303,885 1,433,986
----------- ----------- ----------
Expenses (Note 3):
Fees................................. 886,449 1,111,011 204,162
Administrative expenses.............. 109,597 64,722 34,946
----------- ----------- ----------
Total Expenses........................ 996,046 1,175,733 239,108
----------- ----------- ----------
Net Investment Income (Loss).......... 4,699,779 1,128,152 1,194,878
----------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on invest-
ments............................... 278,906 992,567 25,536
Net unrealized appreciation (depreci-
ation) of investments............... 11,806,259 16,333,421 1,637,367
----------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments................ 12,085,165 17,325,988 1,662,903
----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ $16,784,944 $18,454,140 $2,857,781
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND EQUITY INDEX FUND
------------------------ -------------------------- -------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,562,015 $ 849,780 $ 38,428,360 $ 10,418,234 $ 1,775,466 $ 1,456,309
Net realized gain
(loss) on
investments........... 132,331 73,658 6,823,750 2,431,185 1,092,959 476,262
Net unrealized
appreciation
(depreciation) of
investments........... (446,463) 278,840 22,669,697 28,344,476 24,542,212 6,045,598
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,247,883 1,202,278 67,921,807 41,193,895 27,410,637 7,978,169
----------- ----------- ------------ ------------ ------------ -----------
From Unit Transactions:
Contributions.......... 5,788,009 6,015,021 31,724,926 30,608,222 22,975,577 11,517,471
Withdrawals............ (4,229,179) (4,077,160) (21,956,687) (15,824,928) (6,932,093) (6,193,918)
Net transfers.......... (2,770,906) 1,853,101) 360,521 15,311,478 49,789,027 23,679,496
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
from unit
transactions........... (1,212,076) 84,760 10,128,760 30,094,772 65,832,511 29,003,049
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
in Net Assets.......... 35,807 1,287,038 78,050,567 71,288,667 93,243,148 36,981,218
Net Assets:
Beginning of Year....... 32,812,784 31,525,746 268,637,954 197,349,287 61,216,521 24,235,303
----------- ----------- ------------ ------------ ------------ -----------
End of Year............. $32,848,591 $32,812,784 $346,688,521 $268,637,954 $154,459,669 $61,216,521
=========== =========== ============ ============ ============ ===========
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------------------------------------
BOND FUND SHORT-TERM BOND FUND MID-TERM BOND FUND
------------------------ -------------------------- -------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,945,958 $ 1,790,689 $ 133,338 $ 63,539 $ 278,336 $ 558,997
Net realized gain
(loss) on
investments........... 111,901 68,629 17,305 7,065 (98,969) (2,132)
Net unrealized
appreciation
(depreciation) of
investments........... 889,880 (1,221,188) (40,822) (1,966) 101,700 (455,047)
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 2,947,739 638,130 109,821 68,638 281,067 101,818
----------- ----------- ------------ ------------ ------------ -----------
From Unit Transactions:
Contributions.......... 4,701,303 5,112,307 668,221 650,490 813,398 953,690
Withdrawals............ (4,020,196) (3,323,187) (647,104) (229,391) (586,994) (231,712)
Net transfers.......... (136,699) (435,017) 252,496 344,727 585,047 424,626
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
from unit
transactions........... 544,408 1,354,103 273,613 765,826 811,451 1,146,604
----------- ----------- ------------ ------------ ------------ -----------
Net Increase (Decrease)
in Net Assets.......... 3,492,147 1,992,233 383,434 834,464 1,092,518 1,248,422
Net Assets:
Beginning of Year....... 34,478,954 32,486,721 2,424,674 1,590,210 4,548,579 3,300,157
----------- ----------- ------------ ------------ ------------ -----------
End of Year............. $37,971,101 $34,478,954 $ 2,808,108 $ 2,424,674 $ 5,641,097 $ 4,548,579
=========== =========== ============ ============ ============ ===========
</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>
INVESTMENT COMPANY
-----------------------------------------------------
COMPOSITE FUND AGGRESSIVE EQUITY FUND
-------------------------- -------------------------
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 55,725,648 $ 28,222,090 $ 13,631,161 $11,952,409
Net realized gain
(loss) on
investments........... 3,228,464 2,739,162 808,445 201,936
Net unrealized
appreciation
(depreciation) of
investments........... (20,441,501) (6,525,946) 5,321,047 547,221
------------ ------------ ------------ -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 38,512,611 24,435,306 19,760,653 12,701,566
------------ ------------ ------------ -----------
From Unit Transactions:
Contributions.......... 23,905,684 28,326,960 29,301,342 16,800,622
Withdrawals............ (24,479,468) (22,088,981) (9,246,392) 506,734
Net transfers.......... (20,666,992) (19,948,521) 24,458,890 29,646,189
------------ ------------ ------------ -----------
Net Increase (Decrease)
from unit
transactions........... (21,240,776) (13,710,542) 44,513,840 46,953,545
------------ ------------ ------------ -----------
Net Increase (Decrease)
in Net Assets.......... 17,271,835 10,724,764 64,274,493 59,655,111
Net Assets:
Beginning of Year....... 250,244,314 239,519,550 89,542,349 29,887,238
------------ ------------ ------------ -----------
End of Year............. $267,516,149 $250,244,314 $153,816,842 $89,542,349
============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
--------------------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
------------------------ -------------------------- --------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 791,376 $ 1,097,001 $ 14,929,366 $ 13,273,666 $ 1,048,262 $ 850,382
Net realized gain
(loss) on
investments........... (87,907) (110,077) 3,989,169 1,971,672 10,918,585 3,882,634
Net unrealized
appreciation
(depreciation) of
investments........... 447,914 (788,323) 53,719,471 15,612,266 (3,147,476) 7,289,627
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,151,383 198,601 72,638,006 30,857,604 8,819,371 12,022,643
----------- ----------- ------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 2,487,844 2,640,943 34,121,380 27,988,093 15,851,344 14,517,884
Withdrawals............ (1,538,662) (1,287,365) (19,076,131) (13,712,456) (9,604,601) (8,408,505)
Net transfers.......... 610,052 (259,197) 36,296,377 262,723 377,532 (1,008,537)
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... 1,559,234 1,094,381 51,341,626 14,538,360 6,624,275 5,100,842
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 2,710,617 1,292,982 123,979,632 45,395,964 15,443,646 17,123,485
Net Assets:
Beginning of Year....... 15,637,276 14,344,294 204,853,987 159,458,023 103,236,327 86,112,842
----------- ----------- ------------ ------------ ------------ ------------
End of Year............. $18,347,893 $15,637,276 $328,833,619 $204,853,987 $118,679,973 $103,236,327
=========== =========== ============ ============ ============ ============
</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>
AMERICAN CENTURY CALVERT
-------------------------- --------------------------
VP CAPITAL
APPRECIATION FUND RESPONSIBLY INVESTED FUND
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 710,068 $ 9,827,488 $ 1,887,424 $ 1,505,706
Net realized gain
(loss) on
investments........... 1,238,144 3,898,097 235,099 72,424
Net unrealized
appreciation
(depreciation) of
investments........... (4,227,421) (18,669,322) 2,600,706 439,874
------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ (2,279,209) (4,943,737) 4,723,229 2,018,004
------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 8,707,773 16,360,753 6,373,996 4,807,906
Withdrawals............ (6,920,015) (7,283,773) (2,497,692) (1,198,222)
Net transfers.......... (33,483,832) (18,548,118) 521,192 2,535,811
------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... (31,696,074) (9,471,138) 4,397,496 6,145,495
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... (33,975,283) (14,414,875) 9,120,725 8,163,499
Net Assets:
Beginning of Year....... 83,752,530 98,167,405 23,921,757 15,758,258
------------ ------------ ------------ ------------
End of Year............. $ 49,777,247 $ 83,752,530 $ 33,042,482 $ 23,921,757
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
-----------------------------------------------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------------------ ------------------------- ------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 4,699,779 $ 465,381 $ 1,128,152 $ (316,979) $ 1,194,878 $ 147,067
Net realized gain
(loss) on
investments........... 278,906 36,749 992,567 106,747 25,536 17,488
Net unrealized
appreciation
(depreciation) of
investments........... 11,806,259 4,033,446 16,333,421 8,757,016 1,637,367 726,606
----------- ----------- ------------ ----------- ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 16,784,944 4,535,576 18,454,140 8,546,784 2,857,781 891,161
----------- ----------- ------------ ----------- ----------- -----------
From Unit Transactions:
Contributions.......... 16,485,680 11,293,855 21,050,465 13,486,367 5,663,920 2,540,371
Withdrawals............ (5,431,923) (154,620) (6,172,824) 89,022 (1,306,235) (659,754)
Net transfers.......... 17,763,089 21,543,664 17,442,009 17,419,557 6,221,869 5,212,637
----------- ----------- ------------ ----------- ----------- -----------
Net Increase (Decrease)
from unit
transactions........... 28,816,846 32,682,899 32,319,650 30,994,946 10,579,554 7,093,254
----------- ----------- ------------ ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets.......... 45,601,790 37,218,475 50,773,790 39,541,730 13,437,335 7,984,415
Net Assets:
Beginning of Year....... 51,358,678 14,140,203 64,355,249 24,813,519 10,861,979 2,877,564
----------- ----------- ------------ ----------- ----------- -----------
End of Year............. $96,960,468 $51,358,678 $115,129,039 $64,355,249 $24,299,314 $10,861,979
=========== =========== ============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
XI
<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 alternatives: Scudder Bond, Scudder Capital Growth,
Scudder International and VP Capital Appreciation Fund (formerly TCI Growth).
The Scudder Funds invest in corresponding portfolios of Scudder Variable Life
Investment Fund ("Scudder"). The VP Capital Appreciation Fund invests in a
corresponding fund of American Century Variable Portfolios Inc. ("American
Century"). Effective May 13, 1991, the Calvert Responsibly Invested Balanced
Portfolio became available as an investment alternative. The Calvert
Responsibly Invested Fund 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
alternatives. 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. The Fidelity Equity-Income Portfolio
invests in a corresponding portfolio of Fidelity Variable Insurance Products
Fund and the Contrafund and Asset Manager Portfolios invest in corresponding
portfolios of 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, American Century, 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 through 1997.
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, 1997
are as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
----------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................. 27,914,026 $ 1.18
All America Fund.................................. 128,057,391 2.71
Equity Index Fund................................. 74,092,038 2.08
Bond Fund......................................... 26,610,232 1.43
Short-Term Bond Fund.............................. 2,699,652 1.02
Mid-Term Bond Fund................................ 6,245,148 0.90
Composite Fund.................................... 164,912,475 1.62
Aggressive Equity Fund............................ 95,652,782 1.61
</TABLE>
XII
<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...................................... 2,663,931 $ 6.87
Capital Growth Portfolio--Class "A"................. 15,939,730 20.63
International Portfolio--Class "A".................. 8,426,943 14.11
American Century VP Capital Appreciation Fund........ 5,115,831 9.68
Calvert Responsibly Invested Balanced Portfolio...... 16,649,313 1.98
Fidelity Portfolios:
Equity-Income--"Initial" Class...................... 3,988,402 24.28
Contrafund--"Initial" Class......................... 5,771,181 19.94
Asset Manager--"Initial" Class...................... 1,345,848 18.01
</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 American Century VP Capital
Appreciation Fund for which the annual rate is .20% and, effective in 1997,
each Fidelity fund, for which the annual rate is .30%.
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 such 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 31, 1997 a
dividend distribution was made by the Investment Company to shareholders of
record as of December 30, 1997. Prior thereto, the Investment Company declared
and paid a dividend distribution on September 15, 1997. The combined amount of
these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund.............................................. $2,049,430
All America Fund............................................... 42,544,942
Equity Index Fund.............................................. 3,236,502
Bond Fund...................................................... 2,438,040
Short-Term Bond Fund........................................... 172,696
Mid-Term Bond Fund............................................. 349,575
Composite Fund................................................. 59,200,271
Aggressive Equity Fund......................................... 15,310,328
</TABLE>
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $1,026,890.
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $18,425,109.
On February 26, 1997 a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $2,549,505.
On March 29, 1997 a dividend was paid by the American Century VP Capital
Appreciation Fund. The amount of the dividend was $1,349,408.
On December 31, 1997 a dividend was paid by the Calvert Responsibly Invested
Portfolio. The amount of the dividend was $2,295,190.
XIII
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On February 7, 1997 a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $5,695,825.
On February 7, 1997, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $2,303,885.
On February 7, 1997, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $1,433,986.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding throughout each
of the five years ended December 31, 1997, or, if not in existence a full
year, the initial period ended December 31:
<TABLE>
<CAPTION>
INVESTMENT COMPANY MONEY MARKET FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $1.87 $1.80 $1.72 $1.68 $1.65
======= ======= ======= ======= =======
Unit value, end of year............... $1.95 $1.87 $1.80 $1.72 $1.68
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 16,831 17,511 17,502 17,653 15,815
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY ALL AMERICA FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $5.39 $4.52 $3.35 $3.36 $3.03
======= ======= ======= ======= =======
Unit value, end of year............... $6.76 $5.39 $4.52 $3.35 $3.36
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 51,312 49,798 43,620 38,669 36,510
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY EQUITY INDEX FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year/period.. $1.72 $1.42 $1.05 $1.05 $1.00
======= ======= ======= ======= =======
Unit value, end of year/period........ $2.26 $1.72 $1.42 $1.05 $1.05
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year/period.......................... 68,462 35,660 17,109 4,644 2,135
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY BOND FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $2.75 $2.69 $2.28 $2.39 $2.13
======= ======= ======= ======= =======
Unit value, end of year............... $3.00 $2.75 $2.69 $2.28 $2.39
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 12,671 12,548 12,083 10,601 12,244
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY SHORT-TERM BOND FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year/period.. $1.14 $1.10 $1.03 $1.03 $1.00
======= ======= ======= ======= =======
Unit value, end of year/period........ $1.19 $1.14 $1.10 $1.03 $1.03
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year/period.......................... 2,355 2,129 1,447 1,132 747
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY MID-TERM BOND FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year/period.. $1.19 $1.16 $1.01 $1.06 $1.00
======= ======= ======= ======= =======
Unit value, end of year/period........ $1.26 $1.19 $1.16 $1.01 $1.06
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year/period.......................... 4,478 3,828 2,848 1,444 1,411
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY COMPOSITE FUND
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year......... $3.75 $3.39 $2.82 $2.95 $2.55
======= ======= ======= ======= =======
Unit value, end of year............... $4.36 $3.75 $3.39 $2.82 $2.95
======= ======= ======= ======= =======
Thousands of units outstanding, end of
year................................. 61,359 66,715 70,558 73,239 71,215
======= ======= ======= ======= =======
</TABLE>
XIV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
INVESTMENT COMPANY
AGGRESSIVE EQUITY FUND
--------------------------
1997 1996 1995 1994
------ ------ ------ -----
<S> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $1.80 $1.43 $1.05 $1.00
====== ====== ====== =====
Unit value, end of
year/period............ $2.15 $1.80 $1.43 $1.05
====== ====== ====== =====
Thousands of units
outstanding, end of
year/period............ 71,468 49,800 20,858 9,145
====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
SCUDDER BOND FUND
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $11.48 $11.30 $9.69 $10.32 $9.30
====== ====== ====== ====== ======
Unit value, end of year.................... $12.37 $11.48 $11.30 $9.69 $10.32
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 1,484 1,362 1,269 1,169 1,277
====== ====== ====== ====== ======
<CAPTION>
SCUDDER CAPITAL GROWTH FUND
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $22.11 $18.64 $14.67 $16.46 $13.80
====== ====== ====== ====== ======
Unit value, end of year.................... $29.64 $22.11 $18.64 $14.67 $16.46
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 11,094 9,266 8,556 8,121 6,582
====== ====== ====== ====== ======
<CAPTION>
SCUDDER INTERNATIONAL FUND
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $13.43 $11.85 $10.80 $11.06 $8.13
====== ====== ====== ====== ======
Unit value, end of year.................... $14.46 $13.43 $11.85 $10.80 $11.06
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 8,205 7,688 7,269 8,610 5,400
====== ====== ====== ====== ======
<CAPTION>
AMERICAN CENTURY
----------------------------------
VP CAPITAL APPRECIATION FUND
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $11.53 $12.18 $9.39 $9.61 $8.81
====== ====== ====== ====== ======
Unit value, end of year.................... $11.04 $11.53 $12.18 $9.39 $9.61
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 4,510 7,264 8,061 6,361 5,946
====== ====== ====== ====== ======
<CAPTION>
CALVERT
----------------------------------
RESPONSIBLY INVESTED FUND
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $2.23 $2.01 $1.57 $1.64 $1.54
====== ====== ====== ====== ======
Unit value, end of year.................... $2.65 $2.23 $2.01 $1.57 $1.64
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 12,479 10,713 7,849 5,986 5,151
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
-----------------------------------------
EQUITY-INCOME FUND CONTRA FUND
-------------------- --------------------
1997 1996 1995 1997 1996 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period........................ $21.93 $19.43 $16.30 $16.59 $13.85 $11.43
====== ====== ====== ====== ====== ======
Unit value, end of year/period...... $27.77 $21.93 $19.43 $20.36 $16.59 $13.85
====== ====== ====== ====== ====== ======
Thousands of units outstanding, end
of year/period..................... 3,491 2,342 728 5,656 3,880 1,792
====== ====== ====== ====== ====== ======
<CAPTION>
FIDELITY
--------------------
ASSET MANAGER FUND
--------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of year/period..................... $17.72 $15.66 $14.04
====== ====== ======
Unit value, end of year/period........................... $21.14 $17.72 $15.66
====== ====== ======
Thousands of units outstanding, end of year/period....... 1,150 613 184
====== ====== ======
</TABLE>
XV
<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, 1997, 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, 1997, 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.
/s/ Arthur Andersen LLP
New York, New York
February 20, 1998
XVI
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MUTUAL OF AMERICA LIFE INSURANCE COMPANY
320 Park Avenue New York, New York 10022-6839 212-224-1600
