<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 SOCIAL 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, 1998
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, 1998
Dear Participant:
We are pleased to send you the 1998 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 Fund; three portfolios of
Scudder Variable Life Investment Fund ("Scudder"): the Bond, Capital Growth
and International Portfolio; the VP Capital Appreciation Fund of American
Century Variable Portfolios, Inc. ("American Century"); the Calvert Social
Balanced Portfolio of Calvert Variable Series, Inc. (formerly, Acacia Capital
Corporation's Calvert Responsibly Invested Balanced Portfolios) ("Calvert");
the Equity-Income Portfolio of Fidelity Investments Variable Insurance
Products Fund ("Fidelity VIP"); and the Contrafund Portfolio and Asset Manager
Portfolio 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 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.
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.
The Calvert Social Balanced Portfolio (formerly, Calvert Responsibly
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.
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 Index.
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 money market investments.
For the year ended December 31, 1998, the following total returns were
experienced in these sixteen Separate Account funds:
<TABLE>
<S> <C>
Investment Company Money Market Fund(1)............................ + 3.8%
Investment Company All America Fund................................ +19.4%
Investment Company Equity Index Fund............................... +26.6%
Investment Company Bond Fund....................................... + 5.6%
Investment Company Short-Term Bond Fund............................ + 4.1%
Investment Company Mid-Term Bond Fund.............................. + 4.8%
Investment Company Composite Fund.................................. +12.7%
Investment Company Aggressive Equity Fund.......................... - 6.6%
Scudder Bond Fund.................................................. + 5.0%
Scudder Capital Growth Fund........................................ +21.4%
Scudder International Fund......................................... +16.7%
American Century VP Capital Appreciation Fund...................... - 3.4%
Calvert Social Balanced Fund....................................... +14.5%
Fidelity VIP Equity-Income Fund.................................... +10.1%
Fidelity VIP II Contrafund......................................... +28.1%
Fidelity VIP II Asset Manager Fund................................. +13.4%
</TABLE>
- -------
(1) The seven-day net annualized effective yield as of 2/16/99 was 3.18% 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 Fidelity VIP
II.
Total Return Separate Account Performance Notes for extended time periods
and additional services are available by calling 1-800-468-3285.
I hope you will find this report helpful and informative.
Sincerely,
/s/ MANFRED ALTSTADT
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................................ XVII
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...................................................... 18
Bond Fund.............................................................. 23
Short-Term Bond Fund................................................... 26
Mid-Term Bond Fund..................................................... 28
Composite Fund......................................................... 30
Aggressive Equity Fund................................................. 35
Statement of Assets and Liabilities..................................... 37
Statement of Operations................................................. 38
Statements of Changes in Net Assets..................................... 39
Financial Highlights.................................................... 41
Notes to Financial Statements........................................... 47
Report of Independent Public Accountants................................ 52
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 Social Balanced Portfolio of Calvert Variable
Series, Inc.
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, 1998
<TABLE>
<CAPTION>
Mutual of America
----------------------------------------------------
Money Market All America Equity Index Bond
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment
Corporation at market
value
(Cost:
Money Market Fund --
$39,380,057
All America Fund --
$314,846,209
Equity Index Fund --
$208,860,111
Bond Fund --
$57,089,249)
(Notes 1 and 2)......... $38,794,254 $400,667,622 $268,859,036 $ 56,229,192
Due From (To) Mutual of
America General
Account................. 60,443 (1,972,421) 427,185 53,002
----------- ------------ ------------ ------------
Net Assets............... $38,854,697 $398,695,201 $269,286,221 $ 56,282,194
=========== ============ ============ ============
Unit Value at December
31, 1998 (Note 5)....... $ 2.03 $ 8.09 $ 2.86 $ 3.17
======= ======= ======= =======
Number of Units
Outstanding at December
31, 1998 (Note 5)....... 19,121,114 49,275,431 94,019,102 17,745,706
=========== ============ ============ ============
<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 --
$3,989,514
Mid-Term Bond Fund --
$10,128,129
Composite Fund --
$279,954,844
Aggressive Equity
Fund -- $126,609,916)
(Notes 1 and 2)......... $ 3,915,558 $ 9,709,998 $294,734,308 $127,225,340
Due From (To) Mutual of
America General
Account................. 22,080 (15,440) 158,200 144,542
----------- ------------ ------------ ------------
Net Assets............... $ 3,937,638 $ 9,694,558 $294,892,508 $127,369,882
=========== ============ ============ ============
Unit Value at December
31, 1998 (Note 5)....... $ 1.24 $ 1.32 $ 4.93 $ 2.02
======= ======= ======= =======
Number of Units
Outstanding at December
31, 1998 (Note 5)....... 3,164,391 7,325,150 59,833,037 63,175,525
=========== ============ ============ ============
</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, 1998
<TABLE>
<CAPTION>
Scudder American Century
--------------------------------------- ----------------
Capital VP Capital
Bond Growth International Appreciation
Fund Fund Fund Fund
----------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Scudder
Portfolios and American
Century VP Capital
Appreciation Fund at
market value
(Cost:
Scudder Bond Fund --
$22,860,803
Scudder Capital Growth
Fund -- $269,953,351
Scudder International
Fund -- $122,545,170
American Century VP
Capital Appreciation
Fund -- $37,696,440)
(Notes 1 and 2)........ $22,876,887 $413,363,547 $135,499,688 $35,269,693
Due From (To) Mutual of
America General
Account................ 989 91,296 (18,735) 24,550
----------- ------------ ------------ -----------
Net Assets.............. $22,877,876 $413,454,843 $135,480,953 $35,294,243
=========== ============ ============ ===========
Unit Value at December
31, 1998 (Note 5)...... $ 13.02 $ 36.07 $ 16.93 $ 10.69
======= ======= ======= =======
Number of Units
Outstanding at December
31, 1998 (Note 5)...... 1,757,491 11,462,117 8,004,295 3,302,870
=========== ============ ============ ===========
<CAPTION>
Calvert Fidelity
----------- ---------------------------------------------
Social VIP VIP II VIP II
Balanced Equity-Income Contra Asset Manager
Fund Fund Fund Fund
----------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Calvert
Responsibly Invested
Portfolio and Fidelity
Portfolios at market
value
(Cost:
Calvert Responsibly
Invested Portfolio --
$36,579,163
VIP Equity-Income
Fund -- $102,105,966
VIP II Contra Fund --
$122,795,284
VIP II Asset Manager
Fund -- $32,517,836)
(Notes 1 and 2)........ $43,340,973 $123,143,902 $175,975,729 $35,916,658
Due From (To) Mutual of
America General
Account................ 9,166 9,264 359,027 (149,852)
----------- ------------ ------------ -----------
Net Assets.............. $43,350,139 $123,153,166 $176,334,756 $35,766,806
=========== ============ ============ ===========
Unit Value at December
31, 1998 (Note 5)...... $ 3.04 $ 30.65 $ 26.16 $ 24.04
======= ======= ======= =======
Number of Units
Outstanding at December
31, 1998 (Note 5)...... 14,257,171 4,018,401 6,741,574 1,487,673
=========== ============ ============ ===========
</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, 1998
<TABLE>
<CAPTION>
Mutual of America
-------------------------------------------------------
Money Market All America Equity Bond
Fund Fund Index Fund Fund
------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $1,752,196 $47,402,384 $20,729,224 $ 3,838,355
---------- ----------- ----------- -----------
Total income............ 1,752,196 47,402,384 20,729,224 3,838,355
---------- ----------- ----------- -----------
Expenses (Note 3):
Fees................... 439,058 4,632,136 2,649,161 568,911
Administrative
Expenses.............. 71,769 178,081 121,206 65,912
---------- ----------- ----------- -----------
Total Expenses.......... 510,827 4,810,217 2,770,367 634,823
---------- ----------- ----------- -----------
Net Investment Income
(Loss)................. 1,241,369 42,592,167 17,958,857 3,203,532
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... 94,044 10,190,529 3,546,239 196,930
Net unrealized
appreciation
(depreciation) of
investments........... (8,215) 12,779,143 26,951,145 (981,434)
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 85,829 22,969,672 30,497,384 (784,504)
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $1,327,198 $65,561,839 $48,456,241 $ 2,419,028
========== =========== =========== ===========
<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.............. $ 179,684 $ 508,247 $12,314,050 $ 1,141,598
---------- ----------- ----------- -----------
Total income............ 179,684 508,247 12,314,050 1,141,598
---------- ----------- ----------- -----------
Expenses (Note 3):
Fees................... 41,775 92,737 3,545,242 1,700,257
Administrative
Expenses.............. 8,743 11,324 207,511 57,962
---------- ----------- ----------- -----------
Total Expenses.......... 50,518 104,061 3,752,753 1,758,219
---------- ----------- ----------- -----------
Net Investment Income
(Loss)................. 129,166 404,186 8,561,297 (616,621)
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... 3,822 (28,267) 554,735 (632,431)
Net unrealized
appreciation
(depreciation) of
investments........... (6,616) (46,309) 24,996,236 (8,050,244)
---------- ----------- ----------- -----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (2,794) (74,576) 25,550,971 (8,682,675)
---------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 126,372 $ 329,610 $34,112,268 $(9,299,296)
========== =========== =========== ===========
</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, 1998
<TABLE>
<CAPTION>
American
Scudder Century Calvert
------------------------------------- ------------ ----------
Capital VP Capital Social
Bond Growth International Appreciation Balanced
Fund Fund Fund Fund Fund
---------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $1,222,480 $21,046,614 $15,648,053 $ 2,169,052 $3,132,097
---------- ----------- ----------- ----------- ----------
Total income............ 1,222,480 21,046,614 15,648,053 2,169,052 3,132,097
---------- ----------- ----------- ----------- ----------
Expenses (Note 3):
Fees................... 252,137 4,669,765 1,625,423 406,935 475,473
Administrative
Expenses.............. 36,639 95,388 16,719 8,081 60,528
---------- ----------- ----------- ----------- ----------
Total Expenses.......... 288,776 4,765,153 1,642,142 415,016 536,001
---------- ----------- ----------- ----------- ----------
Net Investment Income
(Loss)................. 933,704 16,281,461 14,005,911 1,754,036 2,596,096
---------- ----------- ----------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on
investments........... (12,188) 7,179,053 7,712,372 (1,068,586) 276,019
Net unrealized
appreciation
(depreciation) of
investments........... 56,186 46,681,634 (2,792,240) (2,044,118) 2,332,229
---------- ----------- ----------- ----------- ----------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 43,998 53,860,687 4,920,132 (3,112,704) 2,608,248
---------- ----------- ----------- ----------- ----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 977,702 $70,142,148 $18,926,043 $(1,358,668) $5,204,344
========== =========== =========== =========== ==========
</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............................ $ 6,472,639 $ 6,753,142 $3,312,566
----------- ----------- ----------
Total income.......................... 6,472,639 6,753,142 3,312,566
----------- ----------- ----------
Expenses (Note 3):
Fees................................. 1,322,031 1,599,575 355,427
Administrative Expenses.............. 144,647 69,906 54,809
----------- ----------- ----------
Total Expenses........................ 1,466,678 1,669,481 410,236
----------- ----------- ----------
Net Investment Income (Loss).......... 5,005,961 5,083,661 2,902,330
----------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on
investments......................... 853,854 2,644,396 (12,448)
Net unrealized appreciation
(depreciation) of investments....... 4,356,202 27,595,754 895,986
----------- ----------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments................ 5,210,056 30,240,150 883,538
----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ $10,216,017 $35,323,811 $3,785,868
=========== =========== ==========
</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, 1998 and 1997
<TABLE>
<CAPTION>
Investment Company
--------------------------------------------------------------------------------
Money Market Fund All America Fund Equity Index Fund
------------------------ -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,241,369 $ 1,562,015 $ 42,592,167 $ 38,428,360 $ 17,958,857 $ 1,775,466
Net realized gain
(loss) on
investments........... 94,044 132,331 10,190,529 6,823,750 3,546,239 1,092,959
Net unrealized
appreciation
(depreciation) of
investments........... (8,215) (446,463) 12,779,143 22,669,697 26,951,145 24,542,212
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,327,198 1,247,883 65,561,839 67,921,807 48,456,241 27,410,637
----------- ----------- ------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 7,176,418 5,788,009 33,052,837 31,724,926 38,144,487 22,975,577
Withdrawals............ (4,295,360) (4,229,179) (27,468,692) (21,956,687) (16,569,868) (6,932,093)
Net transfers.......... 1,797,850 (2,770,906) (19,139,304) 360,521 44,795,692 49,789,027
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... 4,678,908 (1,212,076) (13,555,159) 10,128,760 66,370,311 65,832,511
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 6,006,106 35,807 52,006,680 78,050,567 114,826,552 93,243,148
Net Assets:
Beginning of Year....... 32,848,591 32,812,784 346,688,521 268,637,954 154,459,669 61,216,521
----------- ----------- ------------ ------------ ------------ ------------
End of Year............. $38,854,697 $32,848,591 $398,695,201 $346,688,521 $269,286,221 $154,459,669
=========== =========== ============ ============ ============ ============
<CAPTION>
Investment Company
--------------------------------------------------------------------------------
Bond Fund Short-Term Bond Fund Mid-Term Bond Fund
------------------------ -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 3,203,532 $ 1,945,958 $ 129,166 $ 133,338 $ 404,186 $ 278,336
Net realized gain
(loss) on
investments........... 196,930 111,901 3,822 17,305 (28,267) (98,969)
Net unrealized
appreciation
(depreciation) of
investment............ (981,434) 889,880 (6,616) (40,822) (46,309) 101,700
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 2,419,028 2,947,739 126,372 109,821 329,610 281,067
----------- ----------- ------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 7,033,074 4,701,303 734,187 668,221 1,120,290 813,398
Withdrawals............ (4,982,221) (4,020,196) (427,168) (647,104) (627,755) (586,994)
Net transfers.......... 13,841,212 (136,699) 696,139 252,496 3,231,316 585,047
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... 15,892,065 544,408 1,003,158 273,613 3,723,851 811,451
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 18,311,093 3,492,147 1,129,530 383,434 4,053,461 1,092,518
Net Assets:
Beginning of Year....... 37,971,101 34,478,954 2,808,108 2,424,674 5,641,097 4,548,579
----------- ----------- ------------ ------------ ------------ ------------
End of Year............. $56,282,194 $37,971,101 $ 3,937,638 $ 2,808,108 $ 9,694,558 $ 5,641,097
=========== =========== ============ ============ ============ ============
</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, 1998 and 1997
<TABLE>
<CAPTION>
Investment Company
------------------------------------------------------
Composite Fund Aggressive Equity Fund
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 8,561,297 $ 55,725,648 $ (616,621) $ 13,631,161
Net realized gain
(loss) on
investments........... 554,735 3,228,464 (632,431) 808,445
Net unrealized
appreciation
(depreciation) of
investments........... 24,996,236 (20,441,501) (8,050,244) 5,321,047
------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 34,112,268 38,512,611 (9,299,296) 19,760,653
------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 25,635,215 23,905,684 28,696,822 29,301,342
Withdrawals............ (23,076,061) (24,479,468) (12,588,115) (9,246,392)
Net transfers.......... (9,295,063) (20,666,992) (33,256,371) 24,458,890
------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... (6,735,909) (21,240,776) (17,147,664) 44,513,840
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 27,376,359 17,271,835 (26,446,960) 64,274,493
Net Assets:
Beginning of Year....... 267,516,149 250,244,314 153,816,842 89,542,349
------------ ------------ ------------ ------------
End of Year............. $294,892,508 $267,516,149 $127,369,882 $153,816,842
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Scudder
--------------------------------------------------------------------------------
Bond Fund Capital Growth Fund International Fund
------------------------ -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 933,704 $ 791,376 $ 16,281,461 $ 14,929,366 $ 14,005,911 $ 1,048,262
Net realized gain
(loss) on
investments........... (12,188) (87,907) 7,179,053 3,989,169 7,712,372 10,918,585
Net unrealized
appreciation
(depreciation) of
investments........... 56,186 447,914 46,681,634 53,719,471 (2,792,240) (3,147,476)
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in net assets resulting
from operations........ 977,702 1,151,383 70,142,148 72,638,006 18,926,043 8,819,371
----------- ----------- ------------ ------------ ------------ ------------
From Unit Transactions:
Contributions.......... 3,111,360 2,487,844 45,075,165 34,121,380 15,352,696 15,851,344
Withdrawals............ (1,812,991) (1,538,662) (27,386,892) (19,076,131) (11,406,891) (9,604,601)
Net Transfers.......... 2,253,912 610,052 (3,209,197) 36,296,377 (6,070,868) 377,532
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
from unit
transactions........... 3,552,281 1,559,234 14,479,076 51,341,626 (2,125,063) 6,624,275
----------- ----------- ------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets.......... 4,529,983 2,710,617 84,621,224 123,979,632 16,800,980 15,443,646
Net Assets:
Beginning of Year....... 18,347,893 15,637,276 328,833,619 204,853,987 118,679,973 103,236,327
----------- ----------- ------------ ------------ ------------ ------------
End of Year............. $22,877,876 $18,347,893 $413,454,843 $328,833,619 $135,480,953 $118,679,973
=========== =========== ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
X
<PAGE>
MUTUAL OF AMERICA LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
American Century Calvert
------------------------ ------------------------
VP Capital
Appreciation Fund Social Balanced Fund
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income
(loss).................. $ 1,754,036 $ 710,068 $ 2,596,096 $ 1,887,424
Net realized gain (loss)
on investments.......... (1,068,586) 1,238,144 276,019 235,099
Net unrealized
appreciation
(depreciation) of
investments............. (2,044,118) (4,227,421) 2,332,229 2,600,706
----------- ----------- ----------- -----------
Net Increase (Decrease) in
net assets resulting from
operations............... (1,358,668) (2,279,209) 5,204,344 4,723,229
----------- ----------- ----------- -----------
From Unit Transactions:
Contributions............ 5,340,709 8,707,773 7,547,920 6,373,996
Withdrawals.............. (4,483,088) (6,920,015) (2,809,892) (2,497,692)
Net Transfers............ (13,981,957) (33,483,832) 365,285 521,192
----------- ----------- ----------- -----------
Net Increase (Decrease)
from unit transactions... (13,124,336) (31,696,074) 5,103,313 4,397,496
----------- ----------- ----------- -----------
Net Increase (Decrease) in
Net Assets............... (14,483,004) (33,975,283) 10,307,657 9,120,725
Net Assets:
Beginning of Year......... 49,777,247 83,752,530 33,042,482 23,921,757
----------- ----------- ----------- -----------
End of Year............... $35,294,243 $49,777,247 $43,350,139 $33,042,482
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
-------------------------------------------------------------------------------
VIP VIP II VIP II
Equity-Income Contra Asset Manager
Fund Fund Fund
------------------------- -------------------------- ------------------------
1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 5,005,961 $ 4,699,779 $ 5,083,661 $ 1,128,152 $ 2,902,330 $ 1,194,878
Net realized gain
(loss) on
investments........... 853,854 278,906 2,644,396 992,567 (12,448) 25,536
Net unrealized
appreciation
(depreciation) of
investments........... 4,356,202 11,806,259 27,595,754 16,333,421 895,986 1,637,367
------------ ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in net assets resulting
from operations........ 10,216,017 16,784,944 35,323,811 18,454,140 3,785,868 2,857,781
------------ ----------- ------------ ------------ ----------- -----------
From Unit Transactions:
Contributions.......... 22,499,025 16,485,680 25,700,149 21,050,465 8,419,597 5,663,920
Withdrawals............ (9,180,957) (5,431,923) (11,133,735) (6,172,824) (2,785,815) (1,306,235)
Net Transfers.......... 2,658,613 17,763,089 11,315,492 17,442,009 2,047,842 6,221,869
------------ ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
from unit
transactions........... 15,976,681 28,816,846 25,881,906 32,319,650 7,681,624 10,579,554
------------ ----------- ------------ ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets.......... 26,192,698 45,601,790 61,205,717 50,773,790 11,467,492 13,437,335
Net Assets:
Beginning of Year....... 96,960,468 51,358,678 115,129,039 64,355,249 24,299,314 10,861,979
------------ ----------- ------------ ------------ ----------- -----------
End of Year............. $123,153,166 $96,960,468 $176,334,756 $115,129,039 $35,766,806 $24,299,314
============ =========== ============ ============ =========== ===========
</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. 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 Social Balanced Fund (formerly, Calvert Responsibly
Invested Balanced Portfolio) became available as an investment alternative.
The Calvert Social Balanced Fund invests in a corresponding fund of Calvert
Social Balanced Portfolio of Calvert Variable Series, Inc. (formerly, 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. 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 Portfolio and Asset Manager Portfolio 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 will be treated as a part of
the Company and will not be taxed separately as a "regulated investment
company" under existing law. The Company is taxed as a life insurance company
under the life insurance tax provisions of the Internal Revenue Code of 1986.
No provision for income taxes is required in the accompanying financial
statements.
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, 1998
are as follows:
<TABLE>
<CAPTION>
Number of Net Asset
Shares Value
----------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................. 32,754,324 $1.18
All America Fund.................................. 138,352,892 2.90
Equity Index Fund................................. 109,673,279 2.45
Bond Fund......................................... 39,470,522 1.42
Short-Term Bond Fund.............................. 3,804,353 1.03
Mid-Term Bond Fund................................ 10,667,632 0.91
Composite Fund.................................... 165,687,292 1.78
Aggressive Equity Fund............................ 84,338,638 1.51
</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....................................... 3,325,129 $ 6.88
Capital Growth Portfolio--Class "A".................. 17,259,438 23.95
International Portfolio--Class "A"................... 9,306,297 14.56
American Century VP Capital Appreciation Fund......... 3,910,166 9.02
Calvert Social Balanced Portfolio..................... 20,281,223 2.14
Fidelity Portfolios:
Equity-Income--"Initial" Class....................... 4,844,371 25.42
Contrafund--"Initial" Class.......................... 7,200,316 24.44
Asset Manager--"Initial" Class....................... 1,977,790 18.16
</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 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, 1998 a
dividend distribution was made by the Investment Company to shareholders of
record as of December 30, 1998. Prior thereto, the Investment Company declared
and paid a dividend distribution on September 15, 1998. The combined amount of
these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund............................................. $ 1,752,196
All America Fund.............................................. 47,402,384
Equity Index Fund............................................. 20,792,224
Bond Fund..................................................... 3,838,355
Short-Term Bond Fund.......................................... 179,684
Mid-Term Bond Fund............................................ 508,247
Composite Fund................................................ 12,314,050
Aggressive Equity Fund........................................ 1,141,598
</TABLE>
On January 28, 1998, February 25, 1998, April 28, 1998, July 29, 1998 and
October 28, 1998, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $1,222,480.
On January 28, 1998, February 25, 1998, April 28, 1998, July 29, 1998 and
October 28, 1998, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $21,046,614.
On February 25, 1998, a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $15,648,053.
XIII
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
On March 13, 1998, a dividend was paid by the American Century VP Capital
Appreciation Fund. The amount of the dividend was $2,169,052.
On December 30, 1998, a dividend was paid by the Calvert Social Balanced
Portfolio. The amount of the dividend was $3,132,097.
On February 6, 1998, a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $6,472,639.
On February 6, 1998, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $6,753,142.
On February 6, 1998, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $3,312,566.
5. Financial Highlights
Shown below are financial highlights for a Unit outstanding throughout each
of the five years ended December 31, 1998, or, if not in existence a full
year, the initial period ended December 31:
<TABLE>
<CAPTION>
Investment Company Money Market
Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $1.95 $1.87 $1.80 $1.72 $1.68
====== ====== ====== ====== ======
Unit value, end of year.................... $2.03 $1.95 $1.87 $1.80 $1.72
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 19,121 16,831 17,511 17,502 17,653
====== ====== ====== ====== ======
<CAPTION>
Investment Company All America
Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $6.76 $5.39 $4.52 $3.35 $3.36
====== ====== ====== ====== ======
Unit value, end of year.................... $8.09 $6.76 $5.39 $4.52 $3.35
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 49,275 51,312 49,798 43,620 38,669
====== ====== ====== ====== ======
<CAPTION>
Investment Company Equity Index
Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $2.26 $1.72 $1.42 $1.05 $1.05
====== ====== ====== ====== ======
Unit value, end of year.................... $2.86 $2.26 $1.72 $1.42 $1.05
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 94,019 68,462 35,660 17,109 4,644
====== ====== ====== ====== ======
<CAPTION>
Investment Company Bond Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $3.00 $2.75 $2.69 $2.28 $2.39
====== ====== ====== ====== ======
Unit value, end of year.................... $3.17 $3.00 $2.75 $2.69 $2.28
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 17,746 12,671 12,548 12,083 10,601
====== ====== ====== ====== ======
<CAPTION>
Investment Company Short-Term Bond
Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $1.19 $1.14 $1.10 $1.03 $1.03
====== ====== ====== ====== ======
Unit value, end of year.................... $1.24 $1.19 $1.14 $1.10 $1.03
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 3,164 2,355 2,129 1,447 1,132
====== ====== ====== ====== ======
</TABLE>
XIV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Investment Company Mid-Term Bond
Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $1.26 $1.19 $1.16 $1.01 $1.06
====== ====== ====== ====== ======
Unit value, end of year.................... $1.32 $1.26 $1.19 $1.16 $1.01
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 7,325 4,478 3,828 2,848 1,444
====== ====== ====== ====== ======
<CAPTION>
Investment Company Composite Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $4.36 $3.75 $3.39 $2.82 $2.95
====== ====== ====== ====== ======
Unit value, end of year.................... $4.93 $4.36 $3.75 $3.39 $2.82
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 59,833 61,359 66,715 70,558 73,239
====== ====== ====== ====== ======
<CAPTION>
Investment Company Aggressive
Equity Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $2.15 $1.80 $1.43 $1.05 $1.00
====== ====== ====== ====== ======
Unit value, end of year.................... $2.02 $2.15 $1.80 $1.43 $1.05
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 63,176 71,468 49,800 20,858 9,145
====== ====== ====== ====== ======
<CAPTION>
Scudder Bond Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $12.37 $11.48 $11.30 $9.69 $10.32
====== ====== ====== ====== ======
Unit value, end of year.................... $13.02 $12.37 $11.48 $11.30 $9.69
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 1,757 1,484 1,362 1,269 1,169
====== ====== ====== ====== ======
<CAPTION>
Scudder Capital Growth Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $29.64 $22.11 $18.64 $14.67 $16.46
====== ====== ====== ====== ======
Unit value, end of year.................... $36.07 $29.64 $22.11 $18.64 $14.67
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 11,462 11,094 9,266 8,556 8,121
====== ====== ====== ====== ======
<CAPTION>
Scudder International Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $14.46 $13.43 $11.85 $10.80 $11.06
====== ====== ====== ====== ======
Unit value, end of year.................... $16.93 $14.46 $13.43 $11.85 $10.80
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 8,004 8,205 7,688 7,269 8,610
====== ====== ====== ====== ======
<CAPTION>
American Century
----------------------------------
VP Capital Appreciation Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $11.04 $11.53 $12.18 $9.39 $9.61
====== ====== ====== ====== ======
Unit value, end of year.................... $10.69 $11.04 $11.53 $12.18 $9.39
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 3,303 4,510 7,264 8,061 6,361
====== ====== ====== ====== ======
<CAPTION>
Calvert
----------------------------------
Social Balanced Fund
----------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $2.65 $2.23 $2.01 $1.57 $1.64
====== ====== ====== ====== ======
Unit value, end of year.................... $3.04 $2.65 $2.23 $2.01 $1.57
====== ====== ====== ====== ======
Thousands of units outstanding, end of
year...................................... 14,257 12,479 10,713 7,849 5,986
====== ====== ====== ====== ======
</TABLE>
XV
<PAGE>
MUTUAL OF AMERICA SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Fidelity
-------------------------------------------------------
VIP Equity-Income Fund VIP II Contra Fund
--------------------------- ---------------------------
1998 1997 1996 1995 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year................... $27.77 $21.93 $19.43 $16.30 $20.36 $16.59 $13.85 $11.43
====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
year................... $30.65 $27.77 $21.93 $19.43 $26.16 $20.36 $16.59 $13.85
====== ====== ====== ====== ====== ====== ====== ======
Thousands of units
outstanding, end of
year................... 4,018 3,491 2,342 728 6,742 5,656 3,880 1,792
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Fidelity
---------------------------
VIP II Asset Manager Fund
---------------------------
1998 1997 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Unit value, beginning of year...................... $21.14 $17.72 $15.66 $14.04
====== ====== ====== ======
Unit value, end of year............................ $24.04 $21.14 $17.72 $15.66
====== ====== ====== ======
Thousands of units outstanding, end of year........ 1,488 1,150 613 184
====== ====== ====== ======
</TABLE>
XVI
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mutual of American 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, 1998, 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, 1998, 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 19, 1999
XVII
<PAGE>
Mutual of America Life Insurance Company
320 Park Avenue New York, New York 10022-6839 212-224-1600
