<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1995
REGISTRATION NO. 33-66406
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE
AMENDMENT NO. 2 AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 AMENDMENT NO. 4
- --------------------------------------------------------------------------------
THE AMERICAN SEPARATE ACCOUNT NO. 2
(Exact name of Registrant)
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
666 FIFTH AVENUE NEW YORK, NEW YORK 10103 (ADDRESS OF DEPOSITOR'S PRINCIPAL
EXECUTIVE OFFICES)
(212) 399-1600
(DEPOSITOR'S TELEPHONE NUMBER INCLUDING AREA CODE)
PATRICK A. BURNS, ESQ. THE AMERICAN Copy to: J. SUMNER JONES, ESQ.JONES &
LIFE INSURANCE COMPANY OF NEW YORK BLOUCH 2100 PENNSYLVANIA AVENUE, N.W.
666 FIFTH AVENUE NEW YORK, NEW YORK WASHINGTON, DC 20037
10103
(Name and Address of Agent for
Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
---------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1995 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a) of Rule 485
on (date) pursuant to paragraph (a) of Rule 485.
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's most recent fiscal year was
filed on February 28, 1995.
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
THE AMERICAN SEPARATE ACCOUNT NO. 2
VARIABLE ACCUMULATION ANNUITY CONTRACTS
Issued By
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
666 Fifth Avenue
New York, New York 10103
- --------------------------------------------------------------------------------
The individual variable accumulation annuity contracts ("Contracts") offered
by The American Life Insurance Company of New York (the "Insurance Company")
and described in this Prospectus are designed for use by individuals and others
in retirement and long-term financial planning by providing monthly Annuity
Payments which begin at a selected future date. The following two types of
contracts are offered: (1) an Individual Retirement Annuity Contract ("IRA
Contract"); and (2) an individual Flexible Premium Annuity Contract ("FPA
Contract").
Persons to whom IRA or FPA Contracts are issued, are referred to in this
Prospectus as "Policyowners."
The Contracts permit Contributions to be made, generally, in whatever amounts
and at whatever frequency is desired by a Policyowner. Contributions may be
accumulated on a completely variable basis, a completely fixed basis or a
combination variable and fixed basis. The basic purpose of the variable
accumulation aspect of the Contracts is to provide Policyowners with an
opportunity to accumulate amounts toward retirement, or for other financial
purposes, that will reflect the investment experience of one or more of the
distinct Funds comprising The American Separate Account No. 2 ("Separate
Account") to which Contributions may be allocated. Contributions under the
Contracts may be allocated in whole or in part to any of the Funds of the
Separate Account or to the General Account of the Insurance Company (the
"Investment Alternatives").
The assets of the Separate Account are invested in, and Contributions under
the Contracts may be allocated to, one or more of:
--the following eight Funds of Mutual of America Investment Corporation
(the "Investment Company"): Money Market Fund, All America Fund, Equity
Index Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund,
Composite Fund and Aggressive Equity Fund;
--the following three portfolios of Fidelity Investments (R): Equity-
Income Portfolio of the Variable Insurance Products Fund and Contrafund
and Asset Manager Portfolios of the Variable Insurance Products Fund II
(collectively, the "Fidelity Portfolios");
--the following three portfolios of Scudder Variable Life Investment
Fund: Scudder Capital Growth Portfolio, Scudder Bond Portfolio, and
Scudder International Portfolio (collectively, the "Scudder
Portfolios");
--TCI Growth Fund of TCI Portfolios, Inc.; and
--Calvert Responsibly Invested Balanced Portfolio of Acacia Capital
Corporation.
The respective prospectuses for the Investment Company, the Fidelity
Portfolios, the Scudder Portfolios, the TCI Growth Fund and the Calvert
Responsibly Invested Balanced Portfolio (collectively, the "Underlying Funds"),
which are attached to this Prospectus, describe the investment objectives and
policies of each of the variable accumulation Investment Alternatives, as well
as the risks relating to investments in each such Investment Alternative.
The value of a Policyowner's interest in the Separate Account will depend
upon the investment performance of the chosen Investment Alternative. THE
INSURANCE COMPANY DOES NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY FUND OF
THE SEPARATE ACCOUNT. Accordingly, the Policyowner bears the entire investment
risk for any amounts allocated to the Separate Account.
Amounts accumulated under the Contracts may be applied to provide monthly
Annuity Payments on a fixed basis commencing at a future date selected by the
Policyowner.
This Prospectus generally describes only the variable portion of the
Contracts. For a brief summary of the fixed portion, see "The General Account."
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the
Contracts and the Separate Account is available free by writing the Insurance
Company at the address above or by calling 1-800-872-5963. The Statement of
Additional Information, which has the same date as the Prospectus, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional Information is
included at the end of this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please read this Prospectus carefully for details on the Contracts being
offered and retain it for future reference. It is not valid unless attached to
the current prospectuses for the Underlying Funds.
Dated: May 1, 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Annual Expenses............. 3
Unit Value Information............... 5
Definitions.......................... 6
Summary.............................. 8
The American Life Insurance Company
of New York......................... 11
The Separate Account................. 11
Investments of the Separate Account.. 11
Charges.............................. 14
Administrative Charges.............. 14
Distribution Expense Charge......... 15
Mortality and Expense Risk Charge... 15
Portfolio Company Expenses.......... 16
The Accumulation Period.............. 17
General............................. 17
Payment of Contributions............ 18
Allocations of Contributions........ 19
Accumulation Units.................. 19
Transfers Among Investment
Alternatives....................... 19
Withdrawals......................... 20
Specified Payments Options.......... 20
Death Benefits...................... 21
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination by the Insurance Company................................. 22
Postponement of Payments............................................. 22
The Annuity Period.................................................... 22
General.............................................................. 22
Annuity Commencement Date............................................ 23
Available Forms of Annuity........................................... 23
Amount of Annuity Payments........................................... 23
Small Benefit Payments............................................... 24
The General Account................................................... 24
General Matters....................................................... 25
Federal Tax Matters................................................... 26
Voting Rights......................................................... 30
Performance Information............................................... 31
Funding and Other Changes............................................. 31
Other Variable Annuity Contracts...................................... 31
Table of Contents of the Statement of Additional Information.......... 32
Obtaining a Copy of the Statement of Additional Information........... 32
Order Form for Statement of Additional Information.................... 32
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
<PAGE>
TABLE OF ANNUAL EXPENSES
<TABLE>
<CAPTION>
Investment Company
Investment All America, Bond, Investment Investment Fidelity Fidelity
Company Short-Term Bond, Company Company VIP Fidelity VIP II Scudder
Money Mid-Term Bond, Equity Aggressive Equity- VIP II Asset Capital Scudder
Market and Composite Index Equity Income Contrafund Manager Growth Bond
---------- ------------------ ---------- ---------- -------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contractowner
Transaction
Expenses
Sales Load
Imposed on
Purchases...... None None None None None None None None None
Deferred Sales
Load......... None None None None None None None None None
Surrender Fees.. None None None None None None None None None
Exchange Fee.... None None None None None None None None None
Annual Contract
Fee(1).......... $24 $24 $24 $24 $24 $24 $24 $24 $24
==== ==== ==== ==== ==== ==== ==== ==== ====
Separate Account
Annual Expenses
(as a percentage
of average
account value)
Mortality and
Expense Risk
Fees........... .50% .50% .50% .50% .50% .50% .50% .50% .50%
---- ---- ---- ---- ---- ---- ---- ---- ----
Account Fees and
Expenses
Administrative
Charges(2)..... .40% .40% .40% .40% .40% .40% .40% .40% .40%
Distribution Ex-
pense Charge... .35 .35 .35 .35 .35 .35 .35 .35 .35
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Account
Fees and
Expenses....... .75 .75 .75 .75 .75 .75 .75 .75 .75
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Separate
Account
Expenses....... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
==== ==== ==== ==== ==== ==== ==== ==== ====
Portfolio Company
Annual Expenses
(as a percentage
of portfolio
company average
net assets)
Management Fees. .25% .50% .125% .85% .52% .62% .72% .475% .475%
Other Expenses.. None None None None .06% .27 .08 .105 .105
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio
Company
Expenses(3).... .25% .50% .125% .85%(4) .58%(5) .89%(5) .80%(5) .58% .58%
==== ==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
Calvert
Responsibly
Scudder TCI Invested
International Growth Balanced
------------- ------ -----------
<S> <C> <C> <C>
Contractowner
Transaction
Expenses
Sales Load
Imposed on
Purchases...... None None None
Deferred Sales
Load......... None None None
Surrender Fees.. None None None
Exchange Fee.... None None None
Annual Contract
Fee(1).......... $24 $24 $24
============= ====== ===========
Separate Account
Annual Expenses
(as a percentage
of average
account value)
Mortality and
Expense Risk
Fees........... .50% .50% .50%
------------- ------ -----------
Account Fees and
Expenses
Administrative
Charges(2)..... .40% .20% .40%
Distribution Ex-
pense Charge... .35 .35 .35
------------- ------ -----------
Total Account
Fees and
Expenses....... .75 .50 .75
------------- ------ -----------
Total Separate
Account
Expenses....... 1.25% 1.05% 1.25%
============= ====== ===========
Portfolio Company
Annual Expenses
(as a percentage
of portfolio
company average
net assets)
Management Fees. .875% 1.00% .70%
Other Expenses.. .205 None .10
------------- ------ -----------
Total Portfolio
Company
Expenses(3).... 1.08% 1.00% .80%
============= ====== ===========
</TABLE>
- -------
(1) A monthly amount of $2.00 (but not to exceed 1/12 of 1% of the Account
Value in any month) is charged under a Contract, regardless of the number
of Investment Alternatives in which the Policyowner is invested. Such
amount is deducted from the Policyowner's net assets allocated to the
General Account, if any, or from one or more Funds of the Separate Account
in the order described in "Charges--Administrative Charges" herein.
(2) In accordance with a Fund Participation Agreement, TCI reimburses the
Insurance Company at an annual rate of up to .20% for Administrative
Expenses. If the Fund Participation Agreement were terminated for sales of
new Contracts, then the Administrative Expense for the TCI Growth Fund
would be .40%.
(3) Management fees and other expenses are more fully described in "Charges--
Portfolio Company Expenses," and in the prospectuses of the Underlying
Funds.
(4) The Investment Company Aggressive Equity Fund commenced operations on May
2, 1994, and expense information has been annualized.
(5) Estimated for 1995. Fidelity VIP II Contrafund Portfolio commenced
operations on January 3, 1995, and expenses have been estimated for 1995. A
portion of the brokerage commissions paid by Fidelity VIP Equity-Income and
Fidelity VIP II Asset Manager Portfolios were used to reduce expenses.
Without this reduction, total operating expenses for the Portfolios would
have been .60% and .81%, respectively.
3
<PAGE>
EXAMPLES
The examples below show the expenses that would be borne by a Policyowner,
assuming a $1,000 investment and a 5% annual rate of return on assets. No
surrender charge is imposed upon the surrender of a contract, and therefore the
expenses would be the same whether or not the contract is surrendered at the
end of the applicable time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Example for Investment Company Money Market
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $20.49 $65.95 $118.01 $282.66
Example for Investment Company All America,
Bond, Short-Term Bond, Mid-Term Bond and Com-
posite Funds
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $22.98 $73.90 $132.11 $315.55
Example for Investment Company Equity Index
Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $19.24 $61.96 $110.91 $265.94
Example for Investment Company Aggressive Eq-
uity Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $26.47 $84.97 $151.61 $360.40
Example for Fidelity VIP Equity-Income Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Fidelity VIP II Contrafund Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $26.87 $86.23 $153.83 $365.44
Example for Fidelity VIP II Asset Manager Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.87 $83.08 $148.29 $352.81
Example for Scudder Capital Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Scudder Bond Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $23.78 $76.44 $136.59 $325.92
Example for Scudder International Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $28.77 $92.21 $164.29 $389.14
Example for TCI Growth Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.97 $83.40 $148.84 $354.08
Example for Calvert Responsibly Invested Bal-
anced Fund
You would pay the following expenses on a
$1,000 investment, assuming 5% annual return
on assets:................................... $25.97 $83.40 $148.84 $354.08
</TABLE>
The purpose of the above table is to assist the Policyowner in understanding
the various costs and expenses that a Policyowner will bear, directly or
indirectly, and the table reflects the expenses of the Separate Account as well
as the Investment Company Funds, the Fidelity VIP Equity-Income Portfolio, the
Fidelity VIP II Asset Manager Portfolio, the Scudder Portfolios, the TCI Growth
Fund and the Calvert Responsibly Invested Balanced Portfolio as they were for
the year ended December 31, 1994 and estimated 1995 expenses for the Fidelity
VIP II Contrafund Portfolio. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
ON WHICH THE EXAMPLES WERE BASED. The annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance. Each
example also assumes an annual contract fee of $.40 per $1,000 of value in the
Separate Account. See "Charges--Administrative Charges" for a description of
how such fee would be deducted from the Investment Alternatives.
4
<PAGE>
UNIT VALUE INFORMATION
Shown below is condensed financial information for an Accumulation Unit
outstanding throughout the period from the commencement of operations of the
Funds to December 31, 1994. This information has been audited by the Funds'
independent auditors, Arthur Andersen LLP. Since the Funds corresponding to the
Fidelity Portfolios had not commenced operations as of the date of this
Prospectus, they are not represented in these tables. THE ALL AMERICA FUND
(PREVIOUSLY CALLED THE "STOCK FUND") CHANGED ITS INVESTMENT OBJECTIVES AND
POLICIES AND ADDED SUBADVISERS EFFECTIVE ON MAY 1, 1994. Prior to May 1, 1995,
the Calvert Responsibly Invested Balanced Portfolio was known as the Calvert
Socially Responsible Series.
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
1994 1994 1993 1994 1993 1994
------ ------ ----- ------ ----- ------
Unit value, beginning of
year/period..................... $ 1.68 $ 3.36 $3.31 $ 1.05 $1.04 $ 2.39
====== ====== ===== ====== ===== ======
Unit value, end of year/period... $ 1.72 $ 3.35 $3.36 $ 1.05 $1.05 $ 2.28
====== ====== ===== ====== ===== ======
Units outstanding, end of
year/period..................... 29,648 91,238 27 35,717 185 23,434
====== ====== ===== ====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
AGGRESSIVE
SHORT-TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1994 1994 1994 1993 1994
----- ----- ------- ----- -------
Unit value, beginning of
year/period..................... $1.03 $1.06 $ 2.95 $2.93 $ 1.00
===== ===== ======= ===== =======
Unit value, end of year/period... $1.03 $1.01 $ 2.82 $2.95 $ 1.05
===== ===== ======= ===== =======
Units outstanding, end of
year/period..................... 3,639 3,694 131,650 322 106,710
===== ===== ======= ===== =======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
----------------------------------------- ------------ -----------
RESPONSIBLY
INVESTED
CAPITAL INTERNATIONAL BALANCED
BOND FUND GROWTH FUND FUND GROWTH FUND FUND
------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1994 1993 1994 1993 1994 1993 1994
------ ------ ------ ------ ------ ------ ------ ----- ------
Unit value, beginning of
year/period............ $10.32 $10.24 $16.46 $16.10 $11.06 $10.36 $ 9.61 $9.38 $ 1.64
====== ====== ====== ====== ====== ====== ====== ===== ======
Unit value, end of
year/period............ $ 9.69 $10.32 $14.67 $16.46 $10.80 $11.06 $ 9.39 $9.61 $ 1.57
====== ====== ====== ====== ====== ====== ====== ===== ======
Units outstanding, end
of year/period......... 799 -- 22,116 59 52,296 38 13,116 20 18,308
====== ====== ====== ====== ====== ====== ====== ===== ======
</TABLE>
The dates the Funds of the Separate Account commenced operation are as
follows: Investment Company All America, Equity Index and Composite Funds--
November 19, 1993; Investment Company Money Market, Bond, Short-Term Bond and
Mid-Term Bond Funds--March 10, 1994; Investment Company Aggressive Equity
Fund--May 2, 1994; Scudder Bond, Capital Growth and International Funds--
November 19, 1993; TCI Growth Fund--November 19, 1993; and Calvert Responsibly
Invested Balanced Fund--March 10, 1994.
5
<PAGE>
DEFINITIONS
Accumulation Period--For each Policyowner, the period from the date
Contributions are first made under a Contract to the Annuity Commencement Date.
Accumulation Unit--A measure used to calculate the value of a Policyowner's
interest in each of the Funds of the Separate Account prior to the Annuity
Commencement Date. Each Fund of the Separate Account has its own distinct
Accumulation Unit value.
Annuitant--A person receiving, or who will receive, Annuity Payments under a
Contract. A Policyowner, or another person designated under a Contract to
receive Annuity Payments, a single sum payment or the commuted value of
remaining periodic payments, may be an Annuitant.
Annuity Commencement Date--The date on which annuity benefits become payable
with respect to a Policyowner, and as of which the amount of the first Annuity
Payment will be determined. The Annuity Commencement Date may be the date
elected by a Policyowner or imposed by operation of law or, if later, the first
Valuation Day as of which all required information and documentation have been
received by the Insurance Company. Sometimes referred to by the Insurance
Company as Benefit Commencement Date.
Annuity Payments--A series of payments under a Contract for life, for a
minimum period of time, for the joint lifetime of the Annuitant and another
person and thereafter for the life of the survivor, or for such other period
under options available from the Insurance Company.
Annuity Period--The period, beginning at the Annuity Commencement Date,
during which Annuity Payments are received by an Annuitant.
Calvert Responsibly Invested Balanced Portfolio--The Calvert Responsibly
Invested Balanced Portfolio of Acacia Capital Corporation.
Code--The Internal Revenue Code of 1986, as amended.
Contract(s)--One (or more) of the individual variable accumulation annuity
contracts described in this Prospectus.
Contributions--The amounts contributed from time to time toward the purchase
of an annuity under a Contract.
Eligible Spouse--The person to whom a Policyowner is legally married at the
earlier of the Policyowner's (a) Annuity Commencement Date or (b) date of
death.
Fidelity Portfolios--The Fidelity VIP Equity-Income Portfolio and the
Fidelity VIP II Contrafund and Asset Manager Portfolios.
Fidelity VIP Equity-Income Portfolio--The Equity-Income Portfolio of Variable
Insurance Products Fund.
Fidelity VIP II Contrafund and Asset Manager Portfolios--The Contrafund
Portfolio and the Asset Manager Portfolio of Variable Insurance Products Fund
II.
Fund--According to the context, one of the sixteen subaccounts of the
Separate Account or one of the eight investment portfolios of the Investment
Company.
General Account--All of the assets of the Insurance Company that are not in a
separate account, but rather are held as part of its general assets.
Insurance Company--The American Life Insurance Company of New York.
Investment Alternatives--The General Account and the sixteen distinct Funds
comprising the Separate Account, namely, the eight Funds of the Investment
Company, the three Fidelity Portfolios, the three Scudder Portfolios, the TCI
Growth Fund and the Calvert Responsibly Invested Balanced Portfolio. Under the
Contracts, a Policyowner may allocate Contributions among all of the Investment
Alternatives.
Investment Company--Mutual of America Investment Corporation.
6
<PAGE>
Policyowner--Under an IRA Contract, the individual, and under an FPA
Contract, the individual or employer, to whom the Contract is issued.
Policyowner's Account Balance or Value (or Account Balance or Value)--The sum
of the dollar values of the Accumulation Units credited to a Policyowner in the
Separate Account and the value of amounts accumulated for the benefit of that
Policyowner in the General Account.
Portfolio Companies--The Investment Company, Variable Insurance Products
Fund, Variable Insurance Products Fund II, Scudder Variable Life Investment
Fund, TCI Portfolios, Inc. and Acacia Capital Corporation.
Scudder Portfolios--The following three portfolios of Scudder Variable Life
Investment Fund, namely, the Scudder Capital Growth Portfolio, the Scudder Bond
Portfolio and the Scudder International Portfolio.
Separate Account--The American Separate Account No. 2, a separate investment
account established by the Insurance Company to receive and invest
Contributions made under variable accumulation annuity contracts and other
variable contracts. The Separate Account is set aside and kept separate from
the other assets of the Insurance Company.
TCI Growth Fund--The TCI Growth Fund of TCI Portfolios, Inc.
Underlying Funds--The Money Market, All America, Equity Index, Bond, Short-
Term Bond, Mid-Term Bond, Composite and Aggressive Equity Funds of the
Investment Company, Fidelity VIP Equity-Income Portfolio, Fidelity VIP II
ContraFund and Asset Manager Portfolios, the Scudder Capital Growth, Bond and
International Portfolios, the TCI Growth Fund and the Calvert Responsibly
Invested Balanced Portfolio.
Valuation Day--Each day that the New York Stock Exchange is open for
business, other than the Friday following Thanksgiving.
Valuation Period--The period beginning on the close of business of each
Valuation Day and ending on the close of business on the next Valuation Day.
7
<PAGE>
SUMMARY
The Following Summary Of Prospectus Information Should Be Read In Conjunction
With The Detailed Information Appearing Elsewhere In This Prospectus.
CONTRACTS OFFERED
The individual variable accumulation annuity contracts offered by this
Prospectus are issued by the Insurance Company and designed to aid in
retirement and long-term financial planning. The Contracts provide for the
accumulation of Contributions on a completely variable basis, a completely
fixed basis or a combination variable and fixed basis. Annuity Payments under
the Contracts will be made on a fixed basis only.
The two types of contracts described herein are summarized below:
1. Individual Retirement Annuity Contract ("IRA Contract"). A contract
designed for use in connection with individual retirement arrangements that
qualify for favorable Federal income tax treatment under Sections 219 and
408 of the Code, which permit Contributions to be made by a Policyowner for
the purpose of providing retirement income, and may also be issued in
connection with a Simplified Employee Pension plans ("SEP") as defined in
Section 408(k) of the Code. Under a SEP, Contributions are made by
employers to the IRA contracts of individual employees. Federal tax on some
or all those amounts may be deferred until Annuity Payments commence (see
"Federal Tax Matters").
2. Flexible Premium Annuity Contract ("FPA Contract"). A contract
designed to provide Annuity Payments that begin at a future date to an
individual, or as a depository for employer deferred compensation
obligations. The FPA Contract may be used in connection with retirement
arrangements whether or not they qualify for special tax treatment under
the Code (see "Federal Tax Matters").
CONTRIBUTIONS
In general, Contributions under the Contracts may be made in whatever amounts
and at whatever frequency is desired by Policyowners. The minimum Contribution
that may be made under each of the Contracts will be announced from time to
time, except that there is no minimum employer contribution for an IRA issued
in connection with a SEP. The maximum annual Contributions under IRA Contracts
are those amounts permitted under the Code for Plans or arrangements funded by
those Contracts (see "The Accumulation Period--Payment of Contributions" and
"Federal Tax Matters").
Under IRA and FPA Contracts, the Insurance Company may, in its sole
discretion, terminate the Contract prior to the Annuity Commencement Date and
return amounts accumulated thereunder to the Policyowner if prior to the
Annuity Commencement Date no Contributions have been made for three consecutive
years and the Policyowner's Account Balance is less than $500 in the case of
FPA Contracts and either $2,000 or the amount necessary to provide monthly
Annuity Payments of at least $20 under the form of annuity selected by the
Policyowner in the case of IRA Contracts. The Insurance Company may not, on
that basis, terminate such Contracts if the Annuitant has not attained the age
of 59 1/2.
Policyowners may allocate Contributions made on their behalf among the
Investment Alternatives provided in the Contracts, which include the General
Account and the thirteen distinct Funds of the Separate Account.
This Prospectus is intended as a disclosure document for the variable portion
of the Contracts only. See "The General Account" for a brief summary of the
fixed portion of the Contracts.
THE SEPARATE ACCOUNT
Contributions to be accumulated on a variable basis are allocated to the
Separate Account. The Separate Account is divided into sixteen sub-accounts,
each one of which corresponds to one of the eight Funds of the Investment
Company, or one of the three Fidelity Portfolios, or one of the three Scudder
Portfolios, or the TCI Growth Fund or the Calvert Responsibly Invested Balanced
Portfolio, in which Contributions may be invested. The objective of the
variable accumulation aspect of the Contracts is to provide a return on amounts
contributed that will reflect the investment experience of the chosen Funds.
The value of the Contributions accumulated for a Policyowner in the Separate
Account prior to the Annuity Commencement Date will vary with the investment
experience of the chosen Funds.
8
<PAGE>
THE INVESTMENT ALTERNATIVES
The Investment Alternatives in which Contributions currently may be invested
are the General Account and the sixteen Funds of the Separate Account, which
invest in the eight separate investment funds of the Investment Company: the
Money Market Fund, which invests in money market instruments and other short-
term debt securities; the All America Fund, which invests approximately 60% of
its assets in publicly traded common stocks in the same manner as the Equity
Index Fund (see below) and approximately 40% of its assets in other publicly
traded common stocks; the Bond Fund, which invests in publicly traded debt
securities; the Short-Term Bond Fund, which invests in publicly traded debt
securities which will produce a portfolio with an average maturity of one to
three years; the Mid-Term Bond Fund, which invests in publicly traded debt
securities which will produce a portfolio with an average maturity of three to
seven years; the Composite Fund, which invests in all of the above types of
investments; the Equity Index Fund, which invests in publicly traded common
stocks comparable to the Standard & Poor's Composite Index of 500 Stocks/1/
(the "S&P 500 Index") and the Aggressive Equity Fund, which also invests in
publicly traded common stocks; in Fidelity VIP Equity-Income Portfolio, which
invests primarily in income producing equity securities; Fidelity VIP II
Contrafund Portfolio, which invests mainly in securities of companies that are
undervalued or out-of-favor; and Fidelity VIP II Asset Manager, which
allocates its assets among domestic and foreign stocks, bonds and short-term
fixed-income instruments; in one or more of the following three portfolios of
Scudder Variable Life Investment Fund: the Scudder Capital Growth Portfolio,
which invests primarily in publicly traded equity securities; the Scudder Bond
Portfolio, which invests primarily in publicly traded debt securities; and the
Scudder International Portfolio, which invests primarily in marketable foreign
equity securities; in the TCI Growth Fund of TCI Portfolios, Inc., which
invests primarily in publicly traded common stocks; and in the Calvert
Responsibly Invested Balanced Portfolio of Acacia Capital Corporation, which
invests in stocks, bonds and money market instruments selected with a concern
for the social impact of each investment. At the date of this Prospectus,
investment of Contributions in certain of the Investment Alternatives
(including the Funds corresponding to the Fidelity Portfolios) may not,
because certain pending state insurance department approvals have not yet been
received, be made by certain Policyowners in certain states. (See "Investments
of the Separate Account.")
REINVESTMENT
Distributions of the Portfolio Companies to the Separate Account are
automatically reinvested in additional Portfolio Company shares at net asset
value.
CHARGES
Certain charges described below will be deducted in connection with the
operation of the Contracts and the Separate Account. The Insurance Company
reserves the right to impose additional charges on a uniform basis to the
class of contracts to which the Contracts belong.
Administrative Charges. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
administrative expenses at an annual rate of .40%, except that in the case of
the Fund of the Separate Account which invests in the TCI Growth Fund, the
annual rate shall be .20% (TCI reimburses the Insurance Company at an annual
rate of up to .20% for administrative expenses). An additional deduction for
administrative expenses of $2.00 per month will also be made under each
Contract except that such charge shall not exceed 1/12 of 1% of the Account
Value in any month. Such amount will be deducted from the net assets, if any,
in the Policyowner's Account which have been allocated to the Interest
Accumulation Account of the General Account. If no net assets have been
allocated to such Account, such amount will be deducted from the net assets
which have been allocated to one or more Funds of the Separate Account, in the
following order: (a) Investment Company Money Market Fund, (b) Investment
Company Short-Term Bond Fund, (c) Investment Company Mid-Term Bond Fund, (d)
Investment Company Bond Fund, (e) Scudder Bond Fund, (f) Investment Company
Composite Fund, (g) Fidelity VIP II Asset Manager Fund, (h) Calvert
Responsibly Invested Balanced Fund, (i) Fidelity Equity-Income Fund, (j)
Investment Company All America Fund, (k) Investment Company Equity Index Fund,
(l) Fidelity VIP II Contrafund Fund, (m) Investment Company Aggressive Equity
Fund, (n) Scudder Capital Growth Fund, (o) Scudder International Fund, and (p)
TCI Growth Fund. These daily and monthly charges may increase or decrease
during the life of the Contract, but may not exceed costs (see "Charges--
Administrative Charges").
- -------
/1"Standard/& Poor's 500," "S&P" and "S&P 500" are trademarks of Standard &
Poor's Corporation. The Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation. Refer to the Mutual of America Investment
Corporation Prospectus for a complete description of the disclaimers and
limitations relating to Standard & Poor's Corporation.
9
<PAGE>
Distribution Expense Charge. The Insurance Company will make a deduction each
Valuation Day from the net assets of each Fund of the Separate Account for
expenses associated with the distribution of the Contracts at an annual rate of
.35% (see "Charges--Distribution Expense Charge"). This charge is subject to
increase but may not exceed, with respect to any Contract, 9% of the
Contributions made thereto. Moreover, under current law, no increase may be
made in the percentage charge without an order from the Securities and Exchange
Commission permitting the increased charge.
Mortality and Expense Risk Charge. For assuming certain mortality risks under
the Contracts, the Insurance Company will make a deduction each Valuation Day
at an annual rate of .35% of the net assets of each Fund of the Separate
Account. The Mortality Risk Charge is guaranteed not to increase during the
life of the Contract. For assuming certain expense risks under the Contracts
with respect to expenses it expects to incur over the life of the Contracts,
the Insurance Company will make a deduction each Valuation Day at an annual
rate of .15% of the net assets of each Fund of the Separate Account. The
Expense Risk Charge is subject to increase. However, under current law, no
increase may be made in the percentage charge without an order from the
Securities and Exchange Commission permitting the increased charge (see
"Charges--Mortality and Expense Risk Charge").
Portfolio Company Expenses. The value of the assets in the Separate Account
will reflect the value of the Portfolio Companies in which such assets are
invested, and therefore the fees and expenses paid by the Investment Company,
the Fidelity Portfolios, the Scudder Portfolios, TCI Growth Fund or Calvert
Responsibly Invested Balanced Portfolio, as the case may be. A complete
description of the expenses and deductions from the Underlying Funds is found
in the attached prospectuses of the Underlying Funds.
TRANSFERS AND WITHDRAWALS
Generally, at any time prior to the Annuity Commencement Date, a Policyowner
may transfer any or all of the Policyowner's Account Balance from the Separate
Account to the General Account, or from the General Account to the Separate
Account, or among the Funds of the Separate Account. (See "Transfers Among
Investment Alternatives" and "The General Account.") In addition, a Policyowner
may withdraw all or a portion of the Policyowner's Account Balance at any time
prior to the Annuity Commencement Date. (See "Withdrawals" and "The General
Account.") No withdrawals are permitted after the Annuity Commencement Date.
No charge is currently assessed for transfers or withdrawals made under the
Contracts. The Insurance Company reserves the right, however, to impose a
charge for transfers or withdrawals in the future. Certain withdrawals may be
subject to a tax penalty (see "Withdrawals" and "Federal Tax Matters").
CANCELLATION RIGHT
An IRA or FPA Contract may be surrendered for cancellation within ten days
after receipt. The Insurance Company will refund all Contributions allocated to
the General Account without deductions plus the value on the date of surrender
of all Contributions allocated to the Separate Account. Several states,
however, require that all Contributions be refunded without deductions. You
should consult the Contract for the applicable provisions. (See "The
Accumulation Period--General".)
CONTACTING THE INSURANCE COMPANY
All written requests and notices required by the Contracts, and any questions
or inquiries, should be addressed to:
The American Life Insurance Company of New York
Thomas A. Harwood
Senior Vice President, Field Administration
666 Fifth Avenue
New York, New York 10103
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling the following number: 1-800-872-5963.
10
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
The American Life Insurance Company of New York was organized under the laws
of the State of New York in 1955. The Insurance Company currently is
authorized to transact business in 50 states, the District of Columbia and the
United States Virgin Islands. It is an indirect wholly-owned subsidiary of
Mutual of America Life Insurance Company ("Mutual of America"), a mutual life
insurance company also organized under New York law. The Company's home office
is located at 666 Fifth Avenue, New York, New York 10103.
The Insurance Company engages in the sale of individual and group life
insurance, annuities and pension plans. The Insurance Company invests the
assets it derives from its business in the manner permitted under applicable
state law. As of December 31, 1994, the Insurance Company had total assets of
approximately $1.2 billion.
The Insurance Company's operations as a life insurance company are reviewed
periodically by various independent rating agencies such as A.M. Best &
Company and Duff & Phelps Credit Rating Company. Such agencies publish their
ratings. From time to time the Insurance Company reprints and distributes
these rating reports in whole or in part or summaries of them to be given to
the public. The ratings concern the Insurance Company's operation as a life
insurance company and do not imply any guarantees of performance of the
Separate Account.
THE SEPARATE ACCOUNT
The Separate Account was established pursuant to a resolution adopted by the
Board of Directors of the Insurance Company on February 23, 1993. The Separate
Account is registered with the Securities and Exchange Commission
("Commission") as a unit investment trust under the Investment Company Act of
1940 ("1940 Act"). Registration with the Commission does not involve
supervision of management or investment practices or policies of the Separate
Account or the Insurance Company by the Commission.
The Separate Account is divided into sixteen distinct Funds corresponding to
the funds or portfolios of the Portfolio Companies in which the assets in such
Funds are invested, namely, the Money Market, All America, Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite and Aggressive Equity Funds of the
Investment Company; the Fidelity VIP Equity-Income Portfolio and the Fidelity
VIP II Contrafund and Asset Manager Portfolios; the Scudder Capital Growth,
Bond and International Portfolios; the TCI Growth Fund; and the Calvert
Responsibly Invested Balanced Portfolio. The assets of the Separate Account
are the property of the Insurance Company. The Separate Account assets
attributable to the Contracts and to any other annuity contracts funded by the
Separate Account are not chargeable with liabilities arising out of any other
business the Insurance Company may conduct. The income, capital gains and
capital losses of each Fund of the Separate Account are credited to or charged
against the net assets held in that Fund, without regard to the income,
capital gains and capital losses arising out of the business conducted by any
of the other Funds of the Separate Account or out of any other business that
the Insurance Company may conduct.
The Insurance Company does not guarantee the investment performance of the
Separate Account as a whole, or any of the Funds. The amount credited to a
Policyowner in the Separate Account, and thus the amount available to provide
annuity benefits, will depend upon the value of the assets held in the Fund(s)
of the Separate Account selected by the Policyowner. Accordingly, the
Policyowner bears the full investment risk for all amounts allocated to the
Separate Account.
The Separate Account and the Insurance Company are subject to supervision
and regulation by the Superintendent of Insurance of the State of New York,
and by the insurance regulatory authorities of each State in which it is
licensed to do business.
INVESTMENTS OF THE SEPARATE ACCOUNT
Contributions will be allocated among one or more Funds of the Separate
Account for investment at net asset value in shares of the Underlying Funds,
selected by the Policyowner. A summary of investment objectives of the
Underlying Funds invested in by the Funds of the Separate Account follows.
More detailed information, including risks, charges and expenses, may be found
in the current prospectuses for Mutual of America Investment Corporation, the
Fidelity Portfolios, the Scudder Variable Life Investment Fund, the TCI Growth
Fund and the Calvert Responsibly Invested Balanced Portfolio, which are
attached to this Prospectus. Each applicable prospectus should be read for a
complete evaluation of the Investment Alternatives. Investments in the Money
Market Fund and in the other Portfolio Companies are neither insured nor
guaranteed by the U.S. Government.
11
<PAGE>
MONEY MARKET FUND OF THE INVESTMENT COMPANY
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. The Money Market Fund invests only
in money market instruments and other short-term debt securities.
ALL AMERICA FUND OF THE INVESTMENT COMPANY
The investment objective for approximately 60% of the assets of the All
America Fund (the "Indexed Assets") is to provide investment results that to
the extent practical correspond to the price and yield performance of publicly
traded common stocks in the aggregate, as represented by the S&P 500 Index. The
Indexed Assets will be invested in the same manner as the Equity Index Fund.
The investment objective for the remaining approximately 40% of the assets
(the "Active Assets") is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of a
diversified portfolio of securities that may include common stocks, securities
convertible into common stocks, bonds and money market instruments. The Active
Assets are invested by four subadvisers, and Mutual of America Capital
Management Corporation (the "Adviser") allocates the Active Assets to maintain,
to the extent practicable under current market conditions, approximately equal
amounts with the subadvisers. See "Charges--Portfolio Company Expenses."
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
The investment objective of the Equity Index Fund is to provide investment
results to the extent practical that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the S&P 500 Index.
BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Bond Fund is to provide as high a
level of current income over time as is believed to be consistent with prudent
investment risk. A secondary objective is preservation of capital. The assets
of the Bond Fund will consist primarily of publicly-traded debt securities,
such as bonds, notes, debentures and equipment trust certificates. The Bond
Fund generally will invest primarily in securities rated in the four highest
categories by a nationally recognized rating service or in instruments of
comparable quality. The Bond Fund may also invest to a limited extent in lower-
rated or unrated securities, and these may be subject to greater market and
financial risk than higher quality (lower yield) issues.
SHORT-TERM BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Short-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital. The
assets of the Short-Term Bond Fund will consist primarily of publicly-traded
debt securities, such as bonds, notes, debentures and equipment trust
certificates which will produce a portfolio with an average maturity of one to
three years. The Short-Term Bond Fund generally will invest primarily in
securities rated in the four highest categories by a nationally recognized
rating service or in instruments of comparable quality. The Short-Term Bond
Fund may also invest to a limited extent in lower-rated or unrated securities,
and these may be subject to greater market and financial risk than higher
quality (lower yield) issues.
MID-TERM BOND FUND OF THE INVESTMENT COMPANY
The primary investment objective of the Mid-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital. The
assets of the Mid-Term Bond Fund will consist primarily of publicly-traded debt
securities, such as bonds, notes, debentures and equipment trust certificates
which will produce a portfolio with an average maturity of three to seven
years. The Mid-Term Bond Fund generally will invest primarily in securities
rated in the four highest categories by a nationally recognized rating service
or in instruments of comparable quality. The Mid-Term Bond Fund may also invest
to a limited extent in lower-rated or unrated securities, and these may be
subject to greater market and financial risk than higher quality (lower yield)
issues.
12
<PAGE>
COMPOSITE FUND OF THE INVESTMENT COMPANY
The investment objective of the Composite Fund is to achieve as high a total
rate of return, through both appreciation of capital and current income, as is
consistent with prudent investment risk by means of a diversified portfolio of
publicly-traded common stocks, publicly-traded debt securities and money market
instruments. The Fund will seek to achieve long-term growth of its capital and
increasing income by investments in common stock and other equity-type
securities, and a high level of current income through investments in publicly-
traded debt securities and money market instruments.
AGGRESSIVE EQUITY FUND OF THE INVESTMENT COMPANY
The Aggressive Equity Fund will be divided by the Adviser into two segments
to facilitate using two investment styles.
The investment objective for approximately 50% of the assets of the Fund (the
"Aggressive Growth Portfolio") is to achieve capital appreciation by investing
in companies believed to possess above-average growth potential. Growth can be
in the areas of earnings or gross sales which can be measured in either dollars
or in unit volume. Growth potential is often sought in smaller, less well-known
companies in new and emerging areas of the economy, but may also be found in
large companies in mature or declining industries that have been revitalized
and hold a strong industry or market position. The Aggressive Growth Portfolio
assets are invested by a subadviser. See "Charges--Portfolio Company Expenses."
The investment objective for the other approximately 50% of the assets of the
Fund (the "Aggressive Value Portfolio") is to achieve capital appreciation by
investing in companies believed to possess valuable assets or whose securities
are undervalued in the marketplace in relation to factors such as the company's
assets, earnings, or growth potential.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the Portfolio
will also consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the S&P 500 Index.
FIDELITY VIP II CONTRAFUND PORTFOLIO
Contrafund Portfolio is a growth fund. It seeks to increase the value of an
investment in the Portfolio over the long term by investing mainly in
securities of companies that are undervalued or out-of-favor. These securities
may be issued by domestic or foreign companies and many may not be well known.
The Portfolio usually invests primarily in common stock and securities
convertible into common stock, but it has the flexibility to invest in any type
of security that may produce capital appreciation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Asset Manager Portfolio seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term fixed-income instruments. The Portfolio's adviser will normally
allocate the Portfolio's assets among the three asset classes within the
following investment parameters: 0-70% in short-term instruments; 20-60% in
bonds; and 10-60% in stocks. The expected "neutral mix", which the Portfolio's
adviser would expect over the long-term, is 20% in short-term instruments, 40%
in bonds and 40% in stocks.
SCUDDER CAPITAL GROWTH PORTFOLIO
The Scudder Capital Growth Portfolio seeks to maximize long-term capital
growth through a broad and flexible investment program. The Portfolio invests
in marketable securities, principally common stocks and, consistent with its
objective of long-term capital growth, preferred stocks. However, in order to
reduce risk, as market or economic conditions periodically warrant, the
Portfolio may also invest up to 25% of its assets in short-term debt
instruments.
13
<PAGE>
SCUDDER BOND PORTFOLIO
The Scudder Bond Portfolio pursues a policy of investing for a high level of
income consistent with a high quality portfolio of securities. Under normal
circumstances, the Portfolio invests at least 65% of its assets in bonds,
including U.S. Government and agency, corporate and other notes and bonds
paying high current income. Not less than 80% of the debt obligations in which
the Portfolio invests will be rated, at the time of purchase, within the three
highest categories by a nationally recognized rating service or in instruments
of comparable quality. The Portfolio may also invest to a limited extent in
lower-rated securities, and these may be subject to greater market and
financial risk than higher quality (lower yield) issues.
SCUDDER INTERNATIONAL PORTFOLIO
The Scudder International Portfolio seeks long-term growth of capital
primarily through diversified holdings of marketable foreign equity
investments. The Portfolio invests primarily in equity securities of
established companies which do business primarily outside the United States and
which are listed on foreign exchanges. Investing in foreign securities may
involve a greater degree of risk than investing in domestic securities.
TCI GROWTH FUND
The TCI Growth Fund seeks capital growth by investing primarily in common
stocks (including securities convertible into common stock). It may purchase
securities only of companies that have a record of at least three years'
continuous operation and such securities must enjoy a fair degree of
marketability. All securities must be listed on major stock exchanges or traded
over-the-counter.
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Calvert Responsibly Invested Balanced Portfolio seeks to achieve a total
return above the rate of inflation through an actively managed diversified
portfolio of common and preferred stocks, bonds and money market instruments
selected with a concern for the social impact of each investment.
SHARED FUNDING ARRANGEMENTS
Shares of the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth
Fund and the Calvert Responsibly Invested Balanced Portfolio (together, the
"Shared Funds") currently are available to the separate accounts of a number of
insurance companies. The Board of Directors of each Shared Fund is responsible
for monitoring that Fund for the existence of any material irreconcilable
conflict between the interests of the policyowners of all separate accounts
investing in the Fund and determining what action, if any, should be taken in
response. If the Insurance Company believes that a Shared Fund's response to
any of those events insufficiently protects Policyholders, it will take
appropriate action. If any material irreconcilable conflict arises, the
Investment Alternatives under the Contracts may be modified or reduced. See
"Charter--FMR and its Affiliates" in the Fidelity Portfolios prospectus,
"Investment Concept of the Fund" in the Scudder Variable Life Investment Fund
prospectus, "Shareholders of TCI Portfolios" in the TCI Growth Fund prospectus
and "Purchase and Redemption of Shares" in the Calvert Responsibly Invested
Balanced Portfolio prospectus for a further discussion of the risks associated
with the offering of Shared Fund shares to the Separate Account and the
separate accounts of other insurance companies.
CHARGES
Charges under the Contracts are assessed currently against the Policyowner's
Account Balance or against the Separate Account. No deduction is made from
Contributions. Other than the $2.00 monthly administration charge described
below, all charges are deducted on a daily basis (based on annual rates) in
determining the Accumulation Unit value for each of the Funds of the Separate
Account. The Insurance Company reserves the right to impose additional charges
on a uniform basis to the class of contracts to which the Contracts belong.
ADMINISTRATIVE CHARGES
The Insurance Company is responsible for all administrative functions in
connection with the Contracts, including receiving and allocating Contributions
in accordance with the Contracts, making Annuity Payments as they become due,
and preparing and filing all reports required to be filed by the Separate
Account. Expenses incurred in connection with
14
<PAGE>
the administrative functions include, but are not limited to, items such as
state or other taxes, salaries, rent, postage, telephone, travel, office
equipment, costs of outside legal, actuarial, accounting and other professional
services, and costs associated with determining the net asset value of the
Separate Account.
The Insurance Company has entered into an agreement with its parent, Mutual
of America, whereby Mutual of America agrees to perform (i) such administrative
services relating to the Contracts and the Separate Account as Mutual of
America customarily performs in the course of its own operations in connection
with products that are substantially similar to the Contracts and (ii) such
other administrative services as the Insurance Company deems appropriate.
Mutual of America may contract with other entities for the performance of all
or a part of its obligations under the agreement. For performing administrative
services for the Insurance Company, Mutual of America is entitled to receive
all administration charges provided in the Contracts, but if such charges
should either not be sufficient to cover its administrative costs, or if they
should exceed such costs, an adjustment to the amount received by Mutual of
America will be made so that Mutual of American will be fully compensated for
the administrative costs incurred by it, but no more than such costs.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account for administrative
expenses (the provisions of the Contracts include the amount of this charge
with the Distribution Expense Charge, described below) at an annual rate of
.40%, except that in the case of the Fund of the Separate Account which invests
in the TCI Growth Fund, the annual rate shall be .20% (TCI reimburses the
Insurance Company at an additional annual rate of up to .20% for administrative
expenses).
An additional deduction for administrative expenses of $2.00 will be made
each month, on a Valuation Day that is administratively convenient, from the
Policyowner's Account, except that such charge shall not exceed 1/12 of 1% of
the Policyowner's Account Value in any month. Such amount will be deducted from
the net assets, if any, in the Policyowner's Account which have been allocated
to the Interest Accumulation Account of the General Account. If no net assets
have been allocated to such Account, such amount will be deducted from the net
assets which have been allocated to one or more Funds of the Separate Account
in the following order: (a) Investment Company Money Market Fund, (b)
Investment Company Short-Term Bond Fund, (c) Investment Company Mid-Term Bond
Fund, (d) Investment Company Bond Fund, (e) Scudder Bond Fund, (f) Investment
Company Composite Fund, (g) Fidelity VIP II Asset Manager Fund, (h) Calvert
Responsibly Invested Balanced Fund, (i) Fidelity VIP Equity-Income Fund, (j)
Investment Company All America Fund, (k) Investment Company Equity Index Fund,
(l) Fidelity VIP II Contrafund Fund, (m) Investment Company Aggressive Equity
Fund, (n) Scudder Capital Growth Fund, (o) Scudder International Fund, and (p)
TCI Growth Fund. THE INSURANCE COMPANY MAY INCREASE OR DECREASE THESE DAILY AND
MONTHLY CHARGES DURING THE LIFE OF THE CONTRACT, BUT THESE CHARGES MAY NOT
EXCEED COSTS.
DISTRIBUTION EXPENSE CHARGE
Mutual of America, pursuant to its agreement with the Insurance Company,
provides sales services relative to the Contracts and performs all duties and
functions which are necessary and proper for the distribution of the Contracts.
As compensation for its services, Mutual of America is entitled to receive the
distribution charge provided in the Contracts, but if such charge should either
not be sufficient to cover its distribution costs, or if it should exceed such
costs, an adjustment to the amount received by Mutual of America will be made
so that Mutual of America will be fully compensated for the distribution costs
incurred by it, but no more than such costs.
The Insurance Company will make a deduction each Valuation Day from the value
of the net assets in each Fund of the Separate Account, at an annual rate of
.35%, to cover anticipated distribution expenses, not to exceed, with respect
to any Contract, 9% of the Contributions made thereto. Moreover, under current
law, no increase in the distribution expense charge may be made without an
order from the Securities and Exchange Commission permitting the increased
charge.
MORTALITY AND EXPENSE RISK CHARGE
The Insurance Company assumes certain mortality and expense risks under the
Contracts. The mortality risks arise from the Insurance Company's guarantees in
the Contracts to make Annuity Payments in certain instances in accordance with
annuity tables provided in the Contracts, regardless of how long an Annuitant
lives and regardless of any improvement in life expectancy generally. Thus, the
Insurance Company assumes the risk that Annuitants as a class, may live longer
than has been actuarial estimated, so that payments will continue for longer
than had been anticipated.
15
<PAGE>
This assumption of risk by the Insurance Company relieves Annuitants of the
risk that they will outlive the funds that have been accumulated for their
retirement.
For assuming the mortality risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .35% of
the value of the net assets in each Fund. This charge will apply with respect
to a Policyowner during the Accumulation Period. The Insurance Company
guarantees that the mortality risk charge will not increase during the life of
a Contract.
The Insurance Company assumes certain expense risks under the Contracts. The
expense risks arise from the Insurance Company's guarantees in the Contracts to
make Annuity Payments in certain instances in accordance with annuity tables
provided in the Contracts, regardless of whether its estimates of expenses it
expects to incur, over the lengthy period that Annuity payments may be made,
will turn out to be correct. Thus, the Insurance Company assumes the risk that
expenses will be higher than estimated.
For assuming the expense risks associated with the Contracts, the Insurance
Company will, each Valuation Day, make a deduction at an annual rate of .15% of
the value of the net assets in each Fund. This charge will apply with respect
to a Policyowner during the Accumulation Period. This charge is subject to
increase. However, under current law, no increase may be made in the percentage
charge without an order from the Securities and Exchange Commission permitting
the increased charge.
If revenues derived from the Distribution Expense Charge do not cover all
true distribution expenses, any shortfall will be paid out of the general
assets of the Insurance Company and, if revenues from the Mortality and Expense
Risk Charge exceed the actual cost of the Insurance Company's risk
undertakings, the excess will be retained by the Insurance Company and may help
cover any shortfall.
PORTFOLIO COMPANY EXPENSES
The value of the assets in the Separate Account will reflect the value of the
shares of the Investment Alternative in which such assets are invested and,
therefore, the fees and expenses paid by the Underlying Funds.
Each Fund of the Investment Company receives investment advice from the
Adviser, an indirect wholly-owned subsidiary of Mutual of America. The Adviser
receives from each such Fund a fee calculated as a daily charge at the annual
rate of .25% of the value of the assets in the Money Market Fund; .50% of the
value of the net assets in the All America, Bond, Short-Term Bond, Mid-Term
Bond and Composite Funds; and .85% of the value of the assets in the Aggressive
Equity Fund of the Investment Company. For 1994, the Adviser paid all of the
expenses of the Investment Company Funds other than advisory fees, brokers'
commission, transfer taxes and other fees relating to portfolio transactions.
The Adviser voluntarily limits the Investment Company Funds' expenses in this
manner. See "The Funds' Expenses" in the Investment Company prospectus.
The Adviser, with respect to the Active Assets of the All America Fund, has
entered into a subadvisory agreement (a "Subadvisory Agreement") with four
professional advisers. The Active Assets are invested by Palley-Needelman Asset
Management, Inc. ("Palley-Needelman"); James Dravo Oelschlager, doing business
as Oak Associates ("Oak Associates"), Fred Alger Management, Inc. ("Alger
Management"); and Mitchell Hutchins Institutional Investors Inc. ("Mitchell
Hutchins"), each as Subadviser under the Subadvisory Agreements. The Adviser
has entered into a Subadvisory Agreement with C.J. Lawrence/Deutsche Bank
Securities Corporation ("C.J. Lawrence") for the Aggressive Growth Portfolio of
the Aggressive Equity Fund. The Adviser, at its own expense, will pay each
Subadviser an amount calculated as a daily change at the following annual
rates: Palley-Needelman, .30%; Oak Associates, .30%; Alger Management, .45%;
Mitchell Hutchins, .50%; and C.J. Lawrence, .50% on the first $15 million and
.30% thereafter; of the value of the net assets for which that Subadviser is
providing investment advisory services.
Fidelity VIP Equity-Income Portfolio, Fidelity VIP II Contrafund Portfolio
and Fidelity VIP II Asset Manager Portfolio receive investment advice from
Fidelity Management & Research Company ("FMR"). FMR receives from each
Portfolio a fee, calculated as a daily charge and payable monthly, that is a
sum of two components multiplied by average net assets. The components are a
group fee rate based on the monthly average net assets of all the mutual funds
advised by FMR, which cannot exceed .52% and declines as assets rise, and an
individual fund fee rate. The effective group fee rate for December 1994 was
.3193%, and the individual fund fee rates for the Equity-Income, Contrafund and
Asset Manager Portfolios are .20%, .30% and .40%, respectively.
16
<PAGE>
Each Scudder Portfolio receives investment advice from Scudder, Stevens &
Clark, Inc., and Scudder, Stevens & Clark, Inc. receives from each such Scudder
Portfolio a fee calculated as a daily charge at the annual rate of .475% of the
value of the assets in the Scudder Capital Growth Portfolio and the Scudder
Bond Portfolio and .875% of the value of the assets in the Scudder
International Portfolio. Also, there may be deducted from each Scudder
Portfolio up to an additional .275% of the value of the assets in the Scudder
Capital Growth Portfolio and the Scudder Bond Portfolio, and .625% of the value
of the assets in the Scudder International Portfolio, for expenses incurred by
such Portfolio.
Pursuant to a Participation Agreement between Scudder and the Insurance
Company, the Insurance Company will make a capital contribution to the Scudder
Portfolios in the amount of its pro rata portion, allocated among insurance
companies that purchase shares of the Portfolios, of the expenses of the
Capital Growth and Bond Portfolios which exceed .75% of their average net
assets, and, for the International Portfolio, which exceed 1.5% of its average
net assets.
The TCI Growth Fund receives investment advice from Investors Research
Corporation, and Investors Research Corporation receives from the TCI Growth
Fund a fee calculated as a daily charge at the annual rate of 1.00% of the
assets of the TCI Growth Fund. Many investment companies pay smaller management
fees than the aforesaid fee paid by the TCI Growth Fund to Investors Research
Corporation. However, TCI has stated in the prospectus for the TCI Growth Fund,
which is attached to this Prospectus, that most, if not all, of such companies
also pay, in addition, certain of their own expenses, while all TCI Growth
Fund's expenses except brokerage, taxes, interest, fees and expenses of non-
interested directors (including counsel fees) and extraordinary expenses are
paid by Investors Research Corporation.
Pursuant to the Fund Participation Agreement among the Insurance Company, TCI
and Investors Research Corporation, Investors Research Corporation pays the
Insurance Company for certain administrative savings resulting from that
agreement. Currently, that payment is an amount equal to .20% per annum of the
average amount of the Separate Account's investment in TCI, provided the
aggregate amount of the Separate Account's investment and the investments of
other separate accounts of the Insurance Company and any affiliate in the TCI
Growth Fund for that month exceeds $10 million. The administrative fees
assessed against the Separate Account Fund holding shares of TCI Growth Fund
are reduced by the full amount of such payments to the Insurance Company.
Calvert Responsibly Invested Balanced Portfolio receives investment advice
from Calvert Asset Management Company, Inc., and NCM Capital Management Group,
Inc. ("NCM"), is the Sub-Adviser for the equity portion of the Portfolio.
Calvert Asset Management Company, Inc. receives from Calvert Responsibly
Invested Balanced Portfolio a monthly base fee computed on a daily basis at an
annual rate of 0.70% of the average net assets of the Portfolio. Calvert Asset
Management Company, Inc. pays, at its own expense, the fee of NCM. Calvert
Asset Management Company, Inc. and NCM may earn (or have their fees reduced by)
performance fee adjustments based on the extent to which the Portfolio exceeds
or trails the Lipper Balanced Funds Index. Pursuant to an agreement between the
Insurance Company and Calvert Securities Corporation, Calvert Securities
Corporation has agreed that it shall cause the annual operating expenses
(including the investment advisors fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses) of the Calvert Responsibly Invested
Balanced Portfolio to not exceed 0.85% of such Portfolio's average annual daily
net assets until further notice to the Insurance Company.
A complete description of the fees and expenses paid by the Underlying Funds
is found in the prospectuses of the Investment Company, the Fidelity
Portfolios, Scudder Variable Life Investment Fund, TCI Growth Fund and Calvert
Responsibly Invested Balanced Portfolio, which are attached to this Prospectus.
THE ACCUMULATION PERIOD
GENERAL
IRA Contract. IRA Contracts are issued to eligible individuals who complete
the prescribed application, make an initial Contribution of an amount specified
by the Insurance Company from time to time, and are accepted for participation
by the Insurance Company. The contribution requirement will be waived for IRA
contracts issued in connection with a SEP. Employees of organizations
qualifying for tax-exempt status under the Code, and their spouses, are
eligible to apply for an IRA Contract.
FPA Contract. FPA Contracts are issued upon completion of the prescribed
application and payment of an initial Contribution of an amount specified by
the Insurance Company from time to time, to individuals, their spouses and
certain family members now or formerly affiliated with organizations that are
tax-exempt under the Code. The Contract
17
<PAGE>
may also be issued to such a tax-exempt organization itself, which may use the
Contract to accumulate funds for subsequent payment of deferred compensation
obligations of the organization. The person to whom an FPA Contract is issued,
whether or not such person is the Annuitant, will be the owner of the Contract
and will possess all the rights thereunder. (For example, the employer to whom
an FPA Contract is issued for deferred compensation purposes is the owner of
the Contract and entitled to all payments thereunder.)
Cancellation of Contract. An IRA Contract or FPA Contract may be surrendered
for cancellation within ten days after receipt. The Insurance Company will
refund all Contributions allocated to the General Account without deductions
plus the value on the date of surrender of all Contributions allocated to the
Separate Account. Several states, however, require that all Contributions be
refunded without deductions. You should consult your Contract for applicable
provisions.
PAYMENT OF CONTRIBUTIONS
IRA Contract. Contributions are made, as elected by Policyowners, pursuant to
payroll deduction arrangements or by direct payments to the Insurance Company,
at whatever intervals and in whatever amounts are desired, except that the
amount of any contribution for an IRA (other than a SEP IRA) may not be less
than the minimum set by the Insurance Company, currently $10. For IRA Contracts
issued in connection with a SEP as defined in Code Section 408(k),
Contributions are made by the Policyowner's employer. The amount of
Contributions during a Policyowner's tax year cannot be greater than the amount
permitted under the Code (see "Federal Tax Matters"). If prior to the Annuity
Commencement Date no Contributions are made by or on behalf of a Policyowner
for three consecutive years, the Policyowner's Account Balance is less than
either $2,000 or the amount necessary to provide monthly Annuity Payments of at
least $20 under the form of annuity selected by the Policyowner, and the
Policyowner has attained age 59 1/2, the Insurance Company may, in its sole
discretion, return the Policyowner's Account Balance and terminate the
Contract.
No Contributions may be made by an IRA Contract Policyowner with respect to a
tax year in which the Policyowner attained age 70 1/2 or greater. However, an
employer may make contributions for its employee under a SEP IRA even after the
employee has attained age 70 1/2.
For a Policyowner under an IRA Contract, Contributions may be made which
consist of amounts "rolled over" from certain other pension or retirement
arrangements qualifying for favorable tax treatment under the Code.
Contributions that represent amounts rolled over as described in Sections
402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code, or in most instances,
any amount directly transferred to an IRA Contract from an individual
retirement arrangement (other than the portion, if any, that is attributable to
Contributions made in the same tax year in which such amount is transferred to
the IRA Contract), will not be subject to the limitation as to the maximum
amount allowed to be contributed each year.
FPA Contract. Contributions are made by a Policyowner directly to the
Insurance Company or by the Policyowner's employer under a salary deduction
agreement, at whatever intervals and in whatever amounts are desired, except
that the amount of any Contribution may not be less than the minimum set by the
Insurance Company, currently $10. If prior to the Annuity Commencement Date no
Contributions are made by a Policyowner for three consecutive years, the
Policyowner's Account Balance is less than $500, and the Annuitant has attained
age 59 1/2, the Insurance Company may, in its sole discretion, return the
Policyowner's Account Balance and terminate the Contract.
Acceptance of Initial Contributions. If an initial Contribution is received
together with a completed application and other necessary information, it will
be accepted within two business days of receipt. If the application is not duly
completed, the Insurance Company will retain the Contribution for up to five
business days while attempting to obtain the information necessary to complete
the application; the Contribution will then be accepted within two business
days of receipt of the completed application. If a completed application is not
received within five business days, however, the Insurance Company will return
the Contribution at the end of that period.
Limitation on Deferrals. FPA Contracts used as a depository for employee
deferred compensation obligations in connection with such obligations which
come into existence after August 16, 1986 and which are not "eligible" deferred
compensation plans as defined in Section 457(b) of the Code, are subject to the
provisions of Section 457(f), including substantial risk of forfeiture.
18
<PAGE>
ALLOCATIONS OF CONTRIBUTIONS
Contributions under the Contract may be allocated in whole or in part among
the General Account and the sixteen Funds of the Separate Account.
Contributions will be allocated on the basis of a request made to the Insurance
Company and currently on file at its home office (see "General Matters--
Contacting the Insurance Company"). A Policyowner's request for allocation will
specify the percentage, in any whole percentage from 0% to 100%, of each
Contribution to be allocated to each of the Investment Alternatives. The
request for allocation of Contributions among the Investment Alternatives may
be changed from time to time, and amounts may be transferred among those
alternatives (see "Transfers Among Investment Alternatives" and "The General
Account"). A Policyowner should make periodic reviews of all allocations in
light of market conditions, the Policyowner's retirement plans, and overall
estate planning requirements.
ACCUMULATION UNITS
Contributions under the Contracts which are allocated to the Separate Account
on behalf of a Policyowner will be credited to an individual accumulation
account maintained for such Policyowner with respect to each of the chosen
Funds of the Separate Account in the form of Accumulation Units as of the
Valuation Period during which the Contributions are received by the Insurance
Company or, in the case of the initial Contribution, is accepted by the
Insurance Company. The number of Accumulation Units of a Fund of the Separate
Account credited to the individual accumulation account of a Policyowner is
determined by dividing the amount allocated to that Fund of the Separate
Account on behalf of such Policyowner by the Accumulation Unit value for that
Fund of the Separate Account for the Valuation Period during which the
Contribution is received, or in the case of the initial Contribution, is
accepted. The value of the Accumulation Units of each Fund of the Separate
Account will vary with the investment experience of that Fund.
The number of Accumulation Units in a Policyowner's individual account with
respect to each Fund of the Separate Account will fluctuate in accordance with
amounts allocated to or withdrawn from that Fund by the Policyowner. The number
of Accumulation Units to be added or deducted each Valuation Period is the
number obtained by dividing the amounts allocated to or withdrawn from the Fund
by the applicable Accumulation Unit value for that Valuation Period.
The Accumulation Units for each Fund of the Separate Account are valued
separately. The value of an Accumulation Unit for each Fund was or will be set
on the date of the first investment in such Fund at the value of an
accumulation unit for the fund in a separate account of Mutual of America Life
Insurance Company that invests in the same corresponding portfolio or fund of
the applicable Portfolio Company as the Fund. For each subsequent Valuation
Period, the value of an Accumulation Unit for that Fund is obtained by
multiplying the value of the Accumulation Unit for that Fund for the preceding
Valuation Period by that Fund's Accumulation Unit Change Factor (described
below) for that subsequent Valuation Period. The dollar value of an
Accumulation Unit for each Fund of the Separate Account, therefore, will vary
from Valuation Period to Valuation Period, depending on the investment
experience of the Fund.
The Accumulation Unit Change Factor for each Fund of the Separate Account for
any Valuation Period is:
(a) the ratio of (i) the asset value of that Fund at the end of the
current Valuation Period, before any amounts are allocated to or withdrawn
from the Fund with respect to that Valuation Period, to (ii) the asset
value of the Fund at the end of the preceding Valuation Period, after all
allocations and withdrawals were made for that period, divided by
(b) 1.000000 plus the component of the annual rate of mortality and
expense risk, distribution expense and administrative charges (which does
not include the monthly administrative charge per Contract which is $2.00
but in no event to exceed 1/12 of 1% of the Account Value in any month)
against the Fund's assets for the number of days from the end of the
preceding Valuation Period to the end of the current Valuation Period (see
"Charges").
The value of the Accumulation Units credited to the account of a Policyowner
for any Valuation Period prior to the Annuity Commencement Date is determined
by multiplying the number of Accumulation Units credited to such Policyowner
for each chosen Fund of the Separate Account by the Accumulation Unit value for
each chosen Fund at the end of the Valuation Period.
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Annuity Commencement Date, Policyowners may elect, subject to
the conditions described below, to transfer amounts among Investment
Alternatives. Thus, amounts may be transferred among Funds of the Separate
19
<PAGE>
Account, and between the Separate Account and the General Account. (See
"General Matters--Contacting the Insurance Company".) A Policyowner may express
the amount sought to be transferred as a dollar amount, or as a number of
Accumulation Units, or as a percentage of the value of the Policyowner's
investment in the selected Investment Alternative. Transfers may not be made on
or after the Annuity Commencement Date. No charges are currently imposed for
transfers, but the Insurance Company reserves the right to impose such charges
in the future.
Any transfers from a Fund of the Separate Account will result in the
cancellation of Accumulation Units for that Fund on the basis of the current
Accumulation Unit value for the Valuation Period during which the request is
received. Transfers to a Fund of the Separate Account from either the General
Account or another Fund of the Separate Account will be credited to that Fund
based on the current Accumulation Unit value for the Valuation Period during
which the transferred amount is received (see "Postponement of Payments").
No request for a transfer will be binding on the Insurance Company until it
receives all information necessary to process the request.
WITHDRAWALS
A Policyowner may, prior to the Annuity Commencement Date, elect to withdraw
the Policyowner's Account Balance in whole or in part. (See "General Matters--
Contacting the Insurance Company.") To be valid, a partial withdrawal request
must specify from which of the Investment Alternatives the withdrawal is to be
made. A Policyowner may express the amount sought to be withdrawn as a dollar
amount, a number of Accumulation Units, or a percentage of the value of the
Policyowner's investment in the selected Investment Alternative. No withdrawals
are permitted on or after the Annuity Commencement Date.
In the case of either a partial or complete withdrawal from the Separate
Account, the Insurance Company will pay to the requesting Policyowner the
lesser of (a) the amount specified in the withdrawal request or (b) the amount
that, as of the date the Insurance Company received the withdrawal request,
represents the value of the Accumulation Units credited to the account of the
Policyowner for the Funds of the Separate Account from which withdrawal is
sought. The Investment Company will reduce the number of Accumulation Units
credited to the account of a Policyowner by the number of Accumulation Units
obtained by dividing the amount withdrawn from that Fund by the Accumulation
Unit value in effect for the Valuation Period during which the request is
received.
No request for withdrawal will be binding on the Insurance Company until it
receives all information necessary to process the request.
Other Considerations. Currently, withdrawals under the Contracts, whether
complete or partial, are not subject to any contingent deferred sales charge or
any other withdrawal charge. The Insurance Company reserves the right, however,
to impose such charges in the future.
Policyowners should consider the possible Federal income tax consequences of
any withdrawal. Generally, a Policyowner will be taxed at ordinary income tax
rates on the amount withdrawn (subject to the non-taxable recovery of prior
non-deductible contributions). In addition, certain withdrawals may be subject
to a tax penalty (see "Federal Tax Matters").
SPECIFIED PAYMENTS OPTIONS
A Policyowner may elect prior to the Annuity Commencement Date to specify an
amount (which may not be less than $100) to be withdrawn from the Policyowner's
Account Balance and paid each month to the Annuitant (see "General Matters--
Contacting the Insurance Company"). For IRA Contracts, the Policyowner must
have attained age 59 1/2 to elect this option. The withdrawals and payments
will be made, as designated by the Policyowner, from either the General or
Separate Account, or both (see "Postponement of Payments").
During the period that payments under the Specified Payments Option
("Specified Payments") are received by a Policyowner, Contributions may be made
on that Policyowner's behalf. In addition, transfers of amounts among
Investment Alternatives and other withdrawals from a Policyowner's account may
continue to be made (see "Transfers Among Investment Alternatives" and
"Withdrawals").
Specified Payments will continue until (a) the death of the Annuitant; (b)
receipt by the Insurance Company of the Policyowner's written request to modify
or discontinue the specified payments; (c) depletion of the Policyowner's
20
<PAGE>
Account Balance, or of any portion thereof, so that the remaining balance is
insufficient to pay the next installment coming due; or (d) the attainment of
the Policyowner's Annuity Commencement Date.
Tax Consequences. Policyowners should consider the possible Federal income
tax consequences of electing the Specified Payments Option. Generally, a
Policyowner will be taxed at ordinary income tax rates on each Specified
Payment subject to non-taxable recovery of prior non-deductible Contributions.
In addition, payment may be subject to a tax penalty (see "Federal Tax
Matters").
A Policyowner receiving payment pursuant to the Specified Payments Option may
cancel those payments at any time and elect to receive the Policyowner's
Account Balance as a single sum payment.
If the Policyowner is subject to the minimum distribution rules of Section
401(a)(9) of the Code, the minimum Specified Payments for the year must at
least total the required annual distribution. In the case of an IRA Contract,
the minimum distribution can be satisfied by withdrawals from other eligible
contracts.
DEATH BENEFITS
In the event of the death of the Annuitant prior to the Annuity Commencement
Date, the Insurance Company will pay a death benefit to a designated
beneficiary (see "General Matters--Designation of Beneficiary").
The death benefit will be paid by the Insurance Company after it has received
(1) due proof of death; (2) notification of an election by the beneficiary of
the form in which the death benefit is to be paid; and (3) all other
information and documentation necessary to process the death benefit request.
The amount of the death benefit will be the value of the Policyowner's Account
Balance as of the date on which such information is received by the Insurance
Company. On such date any portion of the Policyowner's Account Balance not in
the Interest Accumulation Account will be transferred to the Interest
Accumulation Account. The death benefit may be paid in a lump sum, as an
annuity in a form offered by the Insurance Company at the time the election is
made, or in monthly payments of a specified dollar amount (at least $100) as
elected by the beneficiary, such payments to continue until the death of the
beneficiary or until all benefits are paid. Upon the death of the beneficiary,
any amounts remaining unpaid will be paid to the beneficiary's estate. The
specified amount must comply with any minimum distribution rules imposed by the
Code. In the case of an IRA Contract, this minimum can be satisfied by
withdrawals from other eligible contracts.
FPA Contracts. If the Policyowner dies prior to the Annuity Commencement
Date, the entire interest under the Contract must be distributed to the
beneficiary within five years after the death of the Policyowner, except that
if payments to a named beneficiary begin within one year of the Policyowner's
death, such payments may be made over the life of the beneficiary or a period
not extending beyond the life expectancy of the beneficiary. If the Policyowner
is not the Annuitant and the Annuitant has been designated to receive the
proceeds, then the Annuitant will be deemed to be the beneficiary. If the named
beneficiary is the spouse of the Policyowner, the spouse will be treated as the
Policyowner for purposes of the provision described above.
If the Policyowner dies on or after the Annuity Commencement Date and before
the entire interest under the Contract has been distributed, the remaining
portion will be distributed at least as rapidly as under the method of
distributions being used as of the date of the Policyowner's death, except that
if the Policyowner is the Annuitant, the remaining portion will be distributed
either as continued payments to the beneficiary if the payment option was the
period certain and continuous annuity form or as continued payments to the
joint annuitant if the payment option was the joint and survivor form. If the
named beneficiary is the spouse of the Policyowner, the spouse will be treated
as the Policyowner for purposes of the provision described above.
IRA Contracts. If the Policyowner dies prior to the Annuity Commencement Date
but on or after April 1 of the calendar year next following the calendar year
in which the Policyowner attains 70 1/2 ("Required Beginning Date"), the method
of payment chosen by the beneficiary may not be slower than the method of
payment that was in effect prior to the Policyowner's death, unless the minimum
distribution is satisfied by withdrawals from another eligible contract. If the
Policyowner dies prior to the Annuity Commencement Date and before the Required
Beginning Date, the entire value of the death benefit must be distributed to
the beneficiary (i) by December 31 of the calendar year that contains the fifth
anniversary of the death of the Policyowner or (ii) in the form of annuity
payments over a period not exceeding the beneficiary's life or life expectancy,
whichever is longer. Annuity payments must commence no later than December 31
of the calendar year next following the calendar year in which the Policyowner
died. Special rules apply where the beneficiary is the surviving spouse of the
Policyowner. The minimum distribution requirements described above can be
satisfied by
21
<PAGE>
withdrawals from other eligible contracts. Provisions of the Internal Revenue
Code may impose different minimum distribution requirements, and therefore
beneficiaries should consult their tax advisers.
TERMINATION BY THE INSURANCE COMPANY
The Insurance Company may, in its sole discretion, return a Policyowner's
Account Balance and terminate an IRA or FPA Contract prior to the Annuity
Commencement Date if no Contributions have been made by Policyowner for three
consecutive years, the Policyowner's Account Balance is less than a specified
minimum and the Policy owner has attained age 59 1/2. For FPA Contracts the
specified minimum Account Balance is $500. For IRA Contracts the specified
minimum is either $2,000 or the amount necessary to provide monthly Annuity
Payments of at least $20 under the form of annuity selected by the Policyowner.
The Insurance Company will not exercise its option to terminate an IRA or FPA
Contract if the Annuitant has not attained the age of 59 1/2 and without
notifying the Policyowner of the Insurance Company's intention to terminate and
providing a period of 90 days during which additional Contributions may be made
for the purpose of reaching the required minimum Account Balance to avoid
termination.
Amounts withdrawn in connection with the termination of an IRA or FPA
Contract will be paid to the Policyowner in a single sum.
POSTPONEMENT OF PAYMENTS
Payment of any amounts due from the Separate Account in connection with a
withdrawal, payment pursuant to the Specified Payment Option, death benefit,
termination, or transfer of any amount from the Separate Account to the General
Account will occur within seven days, unless:
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on that Exchange is restricted as determined by the
Commission; or
2. The Commission by order permits postponement for the protection of
Policyowners; or
3. An emergency exists, as determined by the Commission, as a result of
which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's net
assets.
THE ANNUITY PERIOD
GENERAL
As of the Annuity Commencement Date, the amount credited to a Policyowner in
the Separate Account will be transferred to the General Account and, together
with any amount previously credited to the Policyowner in that Account, will be
applied to provide a monthly annuity benefit. The amount of each Annuity
Payment will be fixed and guaranteed by the Insurance Company in accordance
with the tables of annuity purchase rates contained in the Contracts.
The level of Annuity Payments made to Annuitants under the Contracts will not
be affected by the mortality experience (death rate) of persons receiving such
payments, or of the general population. The Insurance Company assumes the
"mortality risk" by virtue of the annuity purchase rates incorporated in the
Contract. In addition, the Insurance Company guarantees that it will not
increase charges under the Contracts with respect to Annuity Payments
regardless of its actual expenses.
Accordingly, Annuity Payments will be made in a fixed and guaranteed amount
that is in no way dependent upon the investment experience of the Separate
Account. The amount of monthly payments depends only on the form of annuity
chosen, the applicable annuity purchase rates contained in the Contract and the
total amount applied to purchase the annuity.
Once Annuity Payments have commenced with respect to a Policyowner, no
further Contributions may be made on behalf of that Policyowner. In addition,
neither transfers to the Separate Account, nor withdrawals of any kind, are
permitted on behalf of an Annuitant receiving Annuity Payments.
A Policyowner may elect to receive the Policyowner's Account Balance as of
the Annuity Commencement Date in a lump sum in lieu of receiving Annuity
Payments.
22
<PAGE>
Payment of benefits under a Contract will be made by the Insurance Company
directly to the Annuitant at his or her last known address filed with the
Insurance Company by the Policyowner.
ANNUITY COMMENCEMENT DATE
The Annuity Period will begin on the Annuity Commencement Date selected by
the Policyowner in the following manner:
IRA Contract. The Policyowner may elect an Annuity Commencement Date that
is the first day of any calendar month on or after the first of the month
in which the Policyowner attains age 55. The Annuity Commencement Date must
be no later than the Required Beginning Date. For SEP-IRAs, the Annuity
Commencement Date must be no earlier than the latest of the following: the
first day of the calendar month in which the Policyowner attains age 55,
the 30th day following the day the Policyowner stops working for the
employer that sponsors the SEP, and the 30th day following the day that the
last employer contribution due under the SEP is received at the Insurance
Company's home office.
FPA Contract. The Policyowner may elect an Annuity Commencement Date that
is the first day of any calendar month.
Annuity Commencement Date elections must be made in advance, in the manner
described under "General Matters--Contacting the Insurance Company." For IRAs
and SEP-IRAs such election must be made 30 days in advance.
AVAILABLE FORMS OF ANNUITY
Annuity Payments will be made under one of the forms of annuity benefits
described below. Under IRA and FPA Contracts, the form in which Annuity
Payments will be made is the form selected by a Policyowner at the time the
Policyowner designates an Annuity Commencement Date. However, in the case of
IRA Contracts, the annuity form must provide for equal or substantially equal
payments over the life or life expectancy of the Policyowner or the lives or
life expectancies of the Policyowner and beneficiary. (Life expectancies can be
recalculated as permitted by applicable tax regulations.) The forms of annuity
offered by the Insurance Company are:
Ten Years Certain and Continuous Form. An annuity payable monthly until the
first day of the month in which the death of the Annuitant occurs, or, the end
of the specified period of 120 months, whichever is later. If the Annuitant
dies prior to the end of the specified period, payments in the same amount will
be continued to the beneficiary until the end of that period (see "General
Matters--Designation of Beneficiary"). If the Policyowner elects this form and
dies before the Annuity Commencement Date, the election will be cancelled.
Joint and Survivor Form. An annuity payable monthly until the first day of
the month in which the death of the survivor of the Annuitant and the
Annuitant's Eligible Spouse occurs or the end of a period of 120 months,
whichever is later. If the Annuitant dies during the Annuity Period, and the
Eligible Spouse is living, payments in the amount of 66 2/3% of those payable
to the Annuitant will be made to the Eligible Spouse. If the Eligible Spouse
dies prior to the end of the specified period, payments will be made to the
Annuitant's beneficiary (see "General Matters--Designation of Beneficiary").
Full Cash Refund Form. An annuity payable monthly until the first day of the
month in which the death of the Annuitant occurs. If, at the date of the
Annuitant's death, the total amount of the annuity benefits received by the
Annuitant is less than the amount of the Annuitant's Account Balance as of the
Annuity Commencement Date, the difference between these two amounts will become
payable in cash as a death benefit to the beneficiary. Such death benefit may
be paid in a lump sum, or as an annuity in the Ten Years Certain and Continuous
Form, or in a combination thereof, as elected by the beneficiary (see "General
Matters--Designation of Beneficiary"). However, under an FPA Contract, if the
beneficiary is a person other than the Annuitant's surviving spouse, the entire
amount to be paid to such beneficiary must be paid in a lump sum.
AMOUNT OF ANNUITY PAYMENTS
The amount of monthly Annuity Payments under the Contracts will be determined
on the basis of the application of the Policyowner's Account Balance to the
annuity purchase tables contained in the Contracts in accordance with the form
of annuity benefit selected. If the Insurance Company is issuing a single
premium immediate annuity on the date of election of payment of benefits, the
Insurance Company will determine if the interest and mortality tables for the
single
23
<PAGE>
premium immediate annuity are more favorable and use the more favorable table
in calculating benefit payments. The Insurance Company guarantees that the
rates used to determine the amount of Annuity Payments will never be less
favorable for an Annuitant than the guaranteed rate provided in the Contracts.
SMALL BENEFIT PAYMENTS
Under IRA and FPA Contracts, if the annuity benefit payable is less than $20
each month, the Insurance Company may, at its option, pay the present value of
the annuity benefit in one payment to the Annuitant.
THE GENERAL ACCOUNT
Contributions allocated and transfers made to the Insurance Company's General
Account become part of the general assets of the Insurance Company, which
support insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the 1940 Act. Accordingly,
neither the General Account nor any interests therein are subject generally to
the provisions of the 1933 or 1940 Acts, and the Insurance Company has been
advised that the staff of the Commission has not reviewed the disclosures in
this Prospectus which relate to the General Account. Disclosures regarding the
fixed portion of the Contracts and the General Account, however, may be subject
to certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
SCOPE OF PROSPECTUS
The Contracts provide for accumulation of Contributions on a completely fixed
basis, a completely variable basis, or a combination fixed and variable basis,
and for the payment of annuity benefits on a fixed basis only. This Prospectus,
however, is generally intended to serve as a disclosure document for the
variable portion of the Contracts only. For complete details regarding the
General Account, see the Contracts themselves.
GENERAL DESCRIPTION
The General Account consists of all of the general assets of the Insurance
Company, other than those in the Separate Account and other segregated asset
accounts. Amounts are allocated to the General Account at the election of
Policyowners in the form of Contributions or as transfers from the Separate
Account. The Insurance Company bears the full investment risk for all amounts
allocated to the General Account (whereas Policyowners bear the investment risk
for amounts allocated to the Separate Account). The Insurance Company has sole
discretion to invest the assets of the General Account, subject to applicable
law. The Insurance Company guarantees that it will credit interest to amounts
accumulated for Policyowners in the General Account at an effective annual rate
of at least 3%. The Insurance Company may, at its sole discretion, credit a
higher rate of interest to amounts allocated to the General Account, although
the Insurance Company IS NOT OBLIGATED TO CREDIT INTEREST IN EXCESS OF 3% PER
YEAR. Any amount held in the General Account does not entitle a Policyowner to
share in the investment experience of the General Account.
TRANSFERS AND WITHDRAWALS
Prior to a Policyowner's Annuity Commencement Date, amounts may be
transferred from the Funds of the Separate Account to the General Account, and
from the General Account to the Funds of the Separate Account. No charge is
currently imposed for such transfers. The Insurance Company reserves the right,
however, to impose additional charges on transfers in the future.
Partial or complete withdrawals may be made from the General Account prior to
a Policyowner's Annuity Commencement Date. In the case of such withdrawals, the
Insurance Company will pay the lesser of (a) the amount specified in the
withdrawal request, and (b) the amount that, as of the date of payment, then
represents the accumulation in the General Account credited to the Policyowner.
No charge is currently imposed on such transfers.
Transfers and withdrawals from the General Account may be delayed for up to
six months following the date that the Insurance Company receives such
requests.
24
<PAGE>
ANNUITY PAYMENTS
All Annuity Payments under the Contracts are made in the form of a fixed
annuity from the General Account. The Insurance Company does not credit
discretionary interest in excess of the guaranteed rate of 3% to Annuity
Payments. The Annuitant must rely on the annuity purchase tables provided in
the Contracts to determine the amount of Annuity Payments.
GENERAL MATTERS
CONTACTING THE INSURANCE COMPANY
Except as provided in the following paragraph, all notices, requests and
elections required to be given or made under the Contracts must be in writing
and mailed or delivered to the Insurance Company's home office at the following
address:
The American Life Insurance Company of New York
Thomas A. Harwood
Senior Vice President, Field Administration
666 Fifth Avenue
New York, New York 10103
or to your appropriate Regional Office. You can check the address for your
Regional Office by calling the following number: 1-800-872-5963.
Transfers, Withdrawals and Reallocations by Telephone. Requests by
Policyowners for transfers or withdrawals, or changes in the formula for
allocation of Contributions, may be made by telephone in lieu of the written
procedure described above. Requests by telephone, however, may be made only if
a Policyowner has received a Personal Identification Number, which the
Insurance Company provides automatically, and agreed to use it in accordance
with the applicable rules and requirements. Thereafter, the Policyowner may
contact the Insurance Company by telephone (1-800-872-5963) and request the
desired transaction or change. Transfers requested by telephone will go into
effect on the day on which the request is made, if received by 4 P.M. Eastern
Standard Time (or Daylight Savings Time, as applicable), at the next calculated
price. The Insurance Company reserves the right to suspend or terminate the
right to request transfers, withdrawals or reallocations by telephone at any
time. Although failure to follow reasonable procedures may result in the
Insurance Company's liability for any losses due to unauthorized or fraudulent
telephone transfers, it will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine. The
Insurance Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Those procedures shall
consist of confirming the Participant's Social Security number, checking the
Personal Identification Number, tape recording all telephone transactions and
providing written confirmation thereof.
DESIGNATION OF BENEFICIARY
Under the Contracts, a Policyowner may designate (with the right to change
such designation from time to time) a beneficiary to receive any payments with
respect to a Policyowner becoming due to a beneficiary under the Contract. The
Policyowner may change the beneficiary while the Policyowner is living by
providing the Insurance Company with written notice of such change. Such
designation or change in designation will take effect as of the date the notice
is signed whether or not the Policyowner is living at the time it is received
by the Insurance Company. The Insurance Company will not be liable, however, as
to any payment or settlement made prior to receiving such notice.
If no designated beneficiary survives the Annuitant, the Insurance Company
will pay any single sum payment or the commuted value of any remaining periodic
payments to the first surviving class of the following classes of successive
preference beneficiaries: (a) the Annuitant's surviving spouse; (b) the
Annuitant's surviving children; (c) the Annuitant's surviving parents; (d) the
Annuitant's surviving brothers and sisters; and (e) the executors or
administrators of the Annuitant's estate. Any commuted value will be determined
on the basis of compound interest at a rate, determined by the Insurance
Company, that is consistent with the interest assumption of the rates used to
determine the amount payable under the annuity benefit (see "Amount of Annuity
Payments").
ASSIGNMENT OF CONTRACTS
Except as otherwise permitted by law, no assignment of a Contract, nor
transfer of any rights conferred thereunder, is permitted.
25
<PAGE>
THE INSURANCE COMPANY'S LIABILITY
The Insurance Company's liability for the payment of annuity benefits (see
"The Annuity Period"), death benefits (see "Death Benefits"), and withdrawals
(see "Withdrawals") is limited to the payments provided under the Contract that
arise from the Policyowner's Account Balance.
Upon withdrawal and payment of a Policyowner's Account Balance upon
termination of an IRA or FPA Contract (see "Termination by the Insurance
Company"), the Insurance Company will be released from all further liability
with respect to that Policyowner.
The Insurance Company may rely on the reports and other information furnished
by Policyowners as required under the Contracts, and need not inquire as to the
accuracy or completeness of such reports and information (see "Information and
Determination").
EVIDENCE OF SURVIVAL
When payment of a benefit is contingent upon the survival of any person,
evidence of that person's survival must be furnished to the Insurance Company,
either by the personal endorsement of the check drawn for payment, or by other
means satisfactory to the Insurance Company.
MISSTATEMENT OF INFORMATION
If a benefit provided under one of the Contracts was based on information
that has been misstated, the benefit will not be invalidated, but the amount of
the benefit payments or the amount applied to provide the benefit, or both,
will be adjusted to the proper amount as determined on the basis of the
corrected information.
The amount of any underpayments by the Insurance Company due to any
misstatement shall be paid in full with the next payment due with respect to
the Policyowner under the Contract. The amount of any overpayments by the
Insurance Company due to any misstatement will be deducted to the extent
possible from the payments thereafter falling due with respect to the
Policyowner. Interest based on an annual effective rate of 5% for IRA Contracts
and 6% for FPA Contracts will be included in the amount of any underpayments or
overpayments.
INFORMATION AND DETERMINATION
Policyowners will furnish the Insurance Company with the facts and
information that the Insurance Company may require for the operation of the
Contract including, upon request, the original or photocopy of any pertinent
records held by the Policyowner.
NON-ALIENATION OF BENEFITS
To the extent permitted by law, no amount payable with respect to a
Policyowner under a Contract may be subject to alienation, attachment,
garnishment, levy (other than a Federal tax levy made pursuant to Section 6331
of the Code), execution, or other legal or equitable process, and no such
amount will in any way be subject to any legal process which would subject it
to the payment of any claim against the Policyowner or beneficiary (see
"Designation of Beneficiary").
CLAIMS OF CREDITORS
To the extent permitted by law, no payment made by the Insurance Company
pursuant to a Contract will be subject to the claims of any creditors. In
addition, no payment will be subject to any legal process to enforce any such
claim.
ALTERNATE PAYMENT OF BENEFITS
The Insurance Company may make payment due to a payee who is physically or
mentally incompetent to receive such payments, or is a minor, to certain other
persons. Upon making these alternate payments, the Insurance Company will be
discharged from all liability with respect to payments due to the payee.
Payments to a minor will be limited to $250 a month until either (a) a guardian
is appointed or (b) the minor has attained majority.
FEDERAL TAX MATTERS
The Insurance Company is taxed as a life insurance company under Part I of
Sub-chapter L of the Code. Since the Separate Account is not a separate entity
from the Insurance Company and its operations form a part of the Insurance
26
<PAGE>
Company, it will not be taxed separately as a "regulated investment company"
under Sub-chapter M of the Code. Investment income and realized capital gains
on the assets of the Separate Account are reinvested and taken into account in
determining the value of the Accumulation Units. Under existing Federal income
tax law, the Separate Account's investment income, including realized net
capital gains, is not taxed to the Insurance Company. The Insurance Company
reserves the right to make a deduction for taxes should they be imposed with
respect to such items in the future.
PAYMENTS UNDER ANNUITY CONTRACTS GENERALLY
Section 72 of the Code describes the income taxation of annuity payments. Its
provisions apply to payments made under annuity contracts issued as individual
retirement annuities under Section 408(b) of the Code. It is intended that the
provisions of Section 72 will be applicable to payments made under Contracts
offered by this Prospectus.
Generally, Policyowners must receive a payment under a Contract in order to
be subject to income taxation. Interest, earnings or other accumulations
credited to a Policyowner's accounts are not required to be included in a
Policyowner's gross income until received by the Policyowner. Such interest,
earnings or other accumulations may, in some cases, be subject to income
taxation prior to receipt if the owner of the Contract is not a natural person
or if the applicable requirements of the Code pertaining to deferral of
compensation are not met (See "Obtaining Tax Advice"). Once annuity payments
are received by a Policyowner, all or part of such payments will be taxable to
such Policyowner as ordinary income.
Whether a Policyowner must include all of the Annuity Payments he has
received in a taxable year in his taxable income depends upon a number of
variables. If a Policyowner does not have an "investment in the contract," the
total amount received by such Policyowner during a tax year is includable in
his gross income. If a Policyowner does have an "investment in the contract,"
the portion of the Annuity Payments received which must be included in the
Policyowner's gross income is determined under the "exclusion ratio" method to
the extent this method is available.
ANNUITY PAYMENTS UNDER AN FPA CONTRACT
A Policyowner who begins to receive Annuity Payments on or after the Annuity
Commencement Date may apply the "exclusion ratio" method to determine the
percentage of the total of such Payments received during the tax year which is
not subject to income taxation. This percentage is calculated by dividing the
Policyowner's "investment in the contract" (the total of all of his non-
deductible Contributions) by the "expected return" from the Contract (the
present discounted value of the expected stream of Annuity Payments). The
amount thus excluded from gross income each year represents a partial return of
the Policyowner's previously non-deductible Contributions.
If the Annuity Commencement Date under the FPA Contract falls on or after
January 1, 1987, the entire amount of the Annuity Payments received by a
Policyowner each year must be included in gross income once all of the
Policyowner's investment in the contract, i.e., the sum of the Policyowner's
non-deductible Contributions, has been recovered under the "exclusion ratio"
method. A Policyowner whose Annuity Commencement Date was on or before December
31, 1986 can continue to exclude the applicable percentage of Annuity Payments,
determined as described above, received during each tax year even though his or
her "investment in the contract" has been totally recovered.
WITHDRAWALS UNDER AN FPA CONTRACT
The "exclusion ratio" method is only applicable to amounts received as an
annuity, e.g., Annuity Payments or another form of periodic payments, such as
an installment method for a fixed period or a fixed amount. If a Policyowner
receives payment under the FPA Contract which are not Annuity Payments (or
otherwise are not amounts received as an annuity), e.g., by making cash
withdrawals prior to the Annuity Commencement Date, the entire amount of such
payments must be included in the Policyowner's gross income in the tax year in
which received to the extent that the value of the FPA Contract immediately
before the payment exceeds the Policyowner's "investment in the contract." This
method causes the interest or earnings credited under the FPA Contract to be
taxed to the Policyowner before his "investment in the contract" may be
recovered. This rule is applicable to FPA Contracts issued on or after August
14, 1982. A different method may be applicable with respect to non-annuity
payments made under FPA Contracts issued before that date (see "Obtaining Tax
Advice").
LUMP SUM DISTRIBUTIONS UNDER AN FPA CONTRACT
A Policyowner who receives a single lump sum payment in lieu of Annuity
Payments must include the difference between the amount of the lump sum payment
and the amount of his "investment in the contract" in gross income for the tax
year in which the single lump sum payment is received.
27
<PAGE>
ANNUITY PAYMENTS UNDER IRA CONTRACTS
The "exclusion ratio" method is also applicable to Annuity Payments made on
or after the Annuity Commencement date under IRA Contracts. Under an IRA
Contract, a Policyowner's "investment in the contract" is generally equal to
the total of his non-deductible Contributions made since January 1, 1987. The
"expected return" is equal to the present discounted value of the expected
stream of Annuity Payments. As is the case with Annuity Payments beginning on
or after January 1, 1987 under an FPA Contract, the "exclusion ratio" method
continues to apply until the "investment in the contract" has been recovered by
the Policyowner. After that time, the Policyowner will have to include the full
amount of each Annuity Payment in his income for each taxable year (see
"Obtaining Tax Advice").
WITHDRAWALS UNDER IRA CONTRACTS
Policyowners who receive payments under an IRA Contract on and after January
1, 1987 which are not "amounts received as an annuity" or which are received
before the Annuity Commencement Date and who have an "investment in the
contract" generally may exclude only a portion of such payments from gross
income. The portion which may be excluded from gross income is generally
determined by dividing the Policyowner's "investment in the contract" by the
value of his vested account balance as of the date of the distribution. The
Internal Revenue Service may indicate another date for valuing account balances
for such purposes (see "Obtaining Tax Advice" and "The Accumulation Period--
Withdrawals").
LUMP SUM PAYMENTS UNDER IRA CONTRACTS
Policyowners who receive a single sum payment of their entire account balance
under an IRA Contract must include the entire amount of such payment in their
gross income in the tax year in which such payment was received. However, any
"investment in the contract" which has not been recovered prior to the payment
of such lump sum may be excluded from gross income for such tax year.
QUALIFICATION OF CONTRACTS GENERALLY
The methods of taxation described above are only applicable to payments made
under Contracts issued in conjunction with plans which satisfy the requirements
of the Code.
Qualification of FPA Contracts Under the Code. FPA Contracts are issued on a
non-tax qualified basis and are generally intended for use by Policyowners for
personal financial planning purposes. FPA Contracts may also be issued in
conjunction with an employer's non-tax qualified deferred compensation plan
(see "Obtaining Tax Advice"). It is intended that the FPA Contracts will meet
the requirements for annuity contracts set forth in Section 72 of the Code,
e.g., the requirements with respect to pre- and post-death distributions.
Qualification of IRA Contracts Under the Code. The IRA Contract is designed
to meet the requirements described in Section 408(b) of the Code.
Generally, the maximum allowable deduction which a Policyowner may take for
Contributions to an IRA Contract is $2,000 or 100% of his annual compensation,
whichever is less. If a Policyowner or spouse participates in a pension plan, a
tax-deferred annuity contract, a SEP or an eligible 457 plan, and such
Policyowner has an adjusted gross income (AGI) over $25,000 ($40,000 for a
married couple filing jointly), he will not be entitled to make the maximum
allowable deductible contribution. His allowable deductible contribution will
be reduced by $1 for every $5 by which his AGI exceeds $25,000 ($40,000 if
married and filing jointly). Thus, such a taxpayer will not be entitled to any
IRA deductions at all once he has an AGI of $35,000 ($50,000 if married and
filing jointly).
A Policyowner who is not entitled to deduct all or part of his Contributions
to an IRA under the above rules may still make non-deductible contributions of
up to $2,000 or 100% of his annual compensation, whichever is less. As with
deductible contributions, the earnings on the non-deductible contributions will
not be subject to taxation until withdrawn. If a Policyowner makes a non-
deductible contribution, the Policyowner must report the amount of that
contribution to the IRS when filing an income tax return for the year.
Policyowners who make non-deductible contributions to IRAs are responsible for
maintaining their own records regarding such contributions. All contributions
will be presumed by the Insurance Company to be deductible, including for tax
reporting purposes, when distributions occur, and it is the responsibility of
the Policyowner to make any appropriate adjustments when reporting such
distributions to the IRS on an income tax return for the year of distribution.
28
<PAGE>
The $2,000 limitation is increased to $2,250 if a Policyowner has a non-
working spouse (or a spouse who elects to be treated as having no compensation)
for whom a Contribution to an IRA is made. Generally, in such a case, no more
than $2,000 may be contributed to an IRA on behalf of either the Policyowner or
the spouse. Excess Contributions may result in adverse income tax consequences
to a Policyowner.
Contributions may not be made by or on behalf of an individual who has
attained 70 1/2 years of age before the close of the taxable year for which the
Contribution is to be made, except under SEP IRAs an employer may contribute
even if the employee has reached age 70 1/2.
In general, under a SEP an employer can contribute an amount for an employee
up to 15% of the employee's compensation but not in excess of the maximum
dollar amount of $30,000. These limits may be reduced, however, by
contributions made by the employer to other tax-qualified plans. Subject to the
limits discussed above, covered employees can contribute to the same IRA or
another IRA, even if the employer makes the maximum SEP contribution.
These limits on Contributions, however, do not apply to tax-free rollovers
from other qualified retirement plans (see "Payment of Contributions").
PENALTY TAXES
IRA Contracts
In addition to ordinary income taxation, Section 72 of the Code imposes a
penalty tax on premature withdrawals from IRA Contracts. This penalty tax is
equal to 10% of the amount of the premature withdrawal which is includable in
gross income. The penalty tax applies to payments made to Policyowners under
the above Contracts prior to age 59 1/2 unless the distribution is made under
one of the following circumstances:
1. On account of a Policyowner's disability;
2. On account of a Policyowner's death; or
3. As part of a series of substantially equal periodic payments made over
the life (or life expectancy) of the Policyowner or the joint lives (or
joint life expectancies) of the Policyowner and his beneficiary.
FPA Contracts
Since January 1, 1987, a 10% penalty tax has been imposed on premature
withdrawals made from an FPA Contract which has been issued since January 18,
1985. This penalty tax is applicable to the amount of the premature withdrawal
which is includable in gross income. This penalty tax will be imposed on the
taxable portion of payments made before a Policyowner attains age 59 1/2 unless
the distribution is made under one of the following circumstances:
1. On account of an Annuitant's death or disability;
2. As part of a series of substantially equal periodic payments made over
the Policyowner's life (or life expectancy) or over the joint lives (or
joint life expectancies) of a Policyowner and his beneficiary;
3. From amounts which are attributable to Contributions made prior to
August 14, 1982;
4. From a Contract purchased in conjunction with a plan that meets the
requirements of Section 401(a) or 403(b) of the Code or was issued under an
IRA;
5. Under an immediate annuity contract; or
6. Under a Contract purchased for an employee by a plan upon its
termination, provided the plan met the requirements of Section 401(a) or
Section 403(a) of the Code.
A 5% penalty tax was applicable to premature payments received before 1987
under FPA Contracts as well as to premature payments received after December
31, 1982 under FPA Contracts issued before January 19, 1985 (see "Obtaining Tax
Advice").
Other federal income tax penalties may be applicable to amounts accumulated
or distributed under IRA Contracts (see "Obtaining Tax Advice").
Tax Penalty on Excess Distributions
A Policyowner who receives aggregate retirement distributions for a calendar
year in excess of a certain amount, currently $150,000, may be subject to a
penalty tax equal to 15% of the excess. This penalty tax is in addition to the
29
<PAGE>
regular income tax imposed on the excess distribution. This penalty does not
generally apply to death benefits and certain other distributions, and special
rules apply to lump sum distributions and certain "grandfathered amounts"
accrued before August 1, 1986. See "Obtaining Tax Advice."
OTHER MATTERS
Minimum Distributions
Distributions under IRA Contracts must begin by April 1 of the year following
the year in which the Policyowner attains age 70 1/2, even if such Policyowner
does not retire. The Code also imposes minimum requirements on the amounts
which must be distributed. If such requirements are not met, a penalty tax
equal to 50% of the difference between the required minimum and the actual
distribution may be applicable (see "Obtaining Tax Advice").
Estate Taxes
In general, a death benefit, consisting of amounts payable to a Policyowner's
beneficiary (see "Death Benefits") may be includable in the Policyowner's
estate for federal estate tax purposes. (See "Obtaining Tax Advice").
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
Federal income tax withholding on Annuity Payments and other distributions
(such as lump sum distributions or premature withdrawals) is required. In
addition, certain states require withholding if federal withholding is
applicable. However, recipients of Annuity Payments or other distributions
under the Contracts are permitted to make an election not to have federal
income tax withheld. Such an election may be revoked by the Policyowner at any
time. If such election is revoked, withholding will commence.
The withholding rate utilized by the Insurance Company will be applied only
against the taxable portion of the Annuity Payments or of the other
distributions. This rate will be determined based upon the nature of the
distribution(s). Federal tax will be withheld from Annuity Payments pursuant to
the Annuitant's withholding certificate. If no withholding certificate is filed
with the Insurance Company, federal tax will be withheld from Annuity Payments
on the basis that the Annuitant is married with three withholding exemptions.
Federal tax on withdrawals other than Annuity Payments will be withheld in
general at a flat 10% rate of the amount withdrawn. Future IRS Regulations may
also require the withholding of the full 10% penalty tax (see "Penalty Taxes"
above) under some circumstances.
OBTAINING TAX ADVICE
This description of the current federal tax status of amounts accumulated or
received under the Contracts is not exhaustive and is for information purposes
only. This description does not purport to cover all situations involving the
purchase of an annuity or the election of an option under the Contracts. Tax
results may vary depending upon individual situations and special rules may
apply in certain cases. State and local taxes may also pertain. For these
reasons a qualified tax adviser should be consulted for complete tax
information regarding any specific situation.
VOTING RIGHTS
In accordance with the Insurance Company's view of present applicable law and
so long as the Commission continues to interpret the 1940 Act as requiring
pass-through voting rights, the Insurance Company will vote the shares of the
Underlying Funds held in the Separate Account at regular and special meetings
of the shareholders of the Underlying Funds according to instructions received
from persons having the right to instruct the Insurance Company on how to vote
shares (i.e., the Policyowners). The Insurance Company will vote shares for
which it has not received instructions in the same proportion as the Insurance
Company votes shares for which the Insurance Company has received instructions.
If the Investment Company Act of 1940 should be amended, or if the present
interpretation thereof should change, and as a result the Insurance Company
determines that it is permitted to vote the shares of the Underlying Funds in
its own discretion, it may elect to do so.
The number of Underlying Fund shares for which voting instructions may be
given will be determined by the Insurance Company as of a date set by the
applicable Portfolio Company, which will be not more than 90 days prior to any
meeting of the shareholders of the Underlying Fund.
30
<PAGE>
Each person having the right to give voting instructions to the Insurance
Company will receive periodic reports relating to the Investment Company Funds,
the Fidelity Portfolios, the Scudder Portfolios, the TCI Growth Fund and
Calvert Responsibly Invested Balanced Portfolio with respect to which he or she
has the right to give voting instructions, including proxy material and a form
with which to give voting instructions.
PERFORMANCE INFORMATION
MONEY MARKET FUND
From time to time, quotations of the "yield" and "effective yield" for the
Money Market Fund of the Separate Account may be included in advertisements,
sales literature or shareholder reports. Both yield figures are based on
historical performance and show the performance of a hypothetical investment
and are not intended to indicate future performance. The yield of the Money
Market Fund refers to the net investment income generated by the Fund over a
specified seven-day period (the ending date of which will be stated). This
income is then annualized. That is, the amount of income generated by the Fund
during that week is assumed to be generated during each week in such a 52-week
period and is shown as a percentage. The effective yield is expressed similarly
but, when annualized, the income earned by an investment in the Fund is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Yield and
effective yield for the Money Market Fund will vary based on, among other
things, changes in the market conditions, the level of interest rates and the
level of the underlying Money Market Fund's portfolio expenses.
OTHER FUNDS
From time to time, quotations of "total return" of a Fund of the Separate
Account may be included in advertisements, sales literature or shareholder
reports. Total return figures are based on a Contract described in this
Prospectus as if contributions thereunder had been invested in each Underlying
Fund when that Underlying Fund first commenced operations. Total return figures
are based on historical performances and show the performance of a hypothetical
investment and are not intended to indicate future performance. The total
return of a Fund refers to return assuming an investment has been held in the
Underlying Fund for one year, in certain cases five and ten years, and for the
period of the assumed investment (the ending date of which will be stated). The
total return quotations are expressed in terms of average annual compounded
rates of return for all periods quoted and assume that all dividends and
capital gains distributions were reinvested. Total return for a Fund will vary
based on, among other things, changes in market conditions and the level of the
Underlying Fund's expenses.
For a detailed description of the methods used to determine yield and total
return for the Separate Account's Funds, see the Statement of Additional
Information.
FUNDING AND OTHER CHANGES
The Insurance Company reserves the right, subject to compliance with
applicable law, including approval of Policyowners if so required, (1) to
create new investment funds of the Separate Account at any time; (2) to
transfer assets determined by the Insurance Company to be associated with the
class of contracts to which the Contracts belong from the Separate Account to
another separate account of the Insurance Company; (3) to create additional
separate investment accounts or combine any two or more accounts including the
Separate Account; and (4) to deregister the Separate Account under the 1940
Act.
OTHER VARIABLE ANNUITY CONTRACTS
In addition to the Contracts described in this Prospectus, the Insurance
Company may in the future offer other individual and group variable annuity
contracts which also participate in the Separate Account.
31
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Distribution of the Contracts........................................... 3
Money Market Yield Calculation.......................................... 3
Performance Information................................................. 3
Safekeeping of Separate Account Assets.................................. 4
State Regulation........................................................ 4
Periodic Reports........................................................ 7
Legal Proceedings....................................................... 7
Legal Matters........................................................... 7
Experts................................................................. 7
Additional Information.................................................. 7
Financial Statements.................................................... 7
</TABLE>
OBTAINING A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
To receive a copy of the Statement of Additional Information at no charge,
the Policyowner may as an alternative to calling 1-800-872-5963, detach the
Form included below and mail it to The American Life Insurance Company of New
York, 666 Fifth Avenue, New York, New York 10103.
- --------------------------------------------------------------------------------
ORDER FORM FOR STATEMENT OF ADDITIONAL INFORMATION
To: The American Life Insurance Company of New York
Please send me a copy of the Statement of Additional Information dated May 1,
1995 for the Variable Accumulation Annuity Contracts offered by The American
Life Insurance Company of New York. My name and address are as follows:
---------------------------------------------------
Name
---------------------------------------------------
Street Address
---------------------------------------------------
City State Zip
32
<PAGE>
PART B
THE AMERICAN SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR
VARIABLE ACCUMULATION ANNUITY CONTRACTS
Issued by
The American Life Insurance Company of New York
666 Fifth Avenue
New York, New York 10103
----------------------
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Variable Accumulation Annuity Contracts
("Contracts") issued by The American Life Insurance Company of New York. You
may obtain a copy of the Prospectus dated May 1, 1995, by calling 1-800-872-
5963, or writing to The American Life Insurance Company of New York, 666 Fifth
Avenue, New York, New York 10103. Terms used in the current Prospectus for the
Contracts are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS.
Dated: May 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS.............................................. 3
MONEY MARKET YIELD CALCULATION............................................. 3
PERFORMANCE INFORMATION.................................................... 3
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS..................................... 4
STATE REGULATION........................................................... 4
PERIODIC REPORTS........................................................... 7
LEGAL PROCEEDINGS.......................................................... 7
LEGAL MATTERS.............................................................. 7
EXPERTS.................................................................... 7
ADDITIONAL INFORMATION..................................................... 7
FINANCIAL STATEMENTS....................................................... 7
</TABLE>
2
<PAGE>
DISTRIBUTION OF THE CONTRACTS
Mutual of America Life Insurance Company, a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc. ("Distributor")
acts as the principal underwriter of the Contracts. The Contracts are offered
for sale on a continuous basis through employees of the Insurance Company and
certain employees of the Distributor. The only compensation paid for sales of
the Contracts is in the form of salary. All persons engaged in selling the
Contracts are licensed agents of the Insurance Company and are duly qualified
registered representatives of the Distributor.
MONEY MARKET YIELD CALCULATION
In accordance with regulations adopted by the Securities and Exchange
Commission, the Insurance Company may quote the current annualized yield of the
Money Market Fund of the Separate Account for a seven-day period in a manner
which does not take into consideration any realized or unrealized gains or
losses on shares of the Money Market Fund of the Investment Company or on its
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of
securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market Fund of
the Separate Account at the beginning of such seven-day period, dividing such
net change in account value by the value of the account at the beginning of the
period to determine the base period return and annualizing this quotient on a
365-day basis. The net change in account value reflects the deductions for
administrative and distribution expenses or services, the mortality and expense
risk charge and income and expenses accrued during the period. Because of these
deductions, the yield for the Money Market Fund of the Separate Account will by
lower than the yield for the Money Market Fund of the Investment Company.
The Securities and Exchange Commission also permits the Insurance Company to
disclose the effective yield of the Money Market Fund of the Separate Account
for the same seven-day period, determined on a compounded basis. The effective
yield is calculated by compounding the unannualized base period return by
adding one to the base period return, raising the sum to a power equal to 365
divided by seven, and subtracting one from the result. (See also the
description of the Money Market Fund's yield quotations under "Performance
Information" below.)
The yield on amounts held in the Money Market Fund of the Separate Account
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yield or
rates of return. The Money Market Fund of the Separate Account's actual yield
is affected by changes in interest rates on money market securities, average
portfolio maturity of the Money Market Fund of the Investment Company, the
types and quality of portfolio securities held by the Money Market Fund of the
Investment Company, and its operating expenses.
PERFORMANCE INFORMATION
MONEY MARKET FUND
From time to time, quotations of the performance of the Separate Account's
Money Market Fund may be included in advertisements, sales literature or
shareholder reports. These performance figures are calculated in the following
manner:
A. Yield is the net annualized yield based on a specified seven calendar-
days calculated as simple interest rates. Yield is calculated by
determining the net change, exclusive of capital changes, in the value
of a hypothetical preexisting account having a balance of one
accumulation unit at the beginning of the period and dividing the
difference by the value of the account at the beginning of the base
period to obtain the base period return. The yield is annualized by
multiplying the base period return by 365/7. The yield figure is stated
to the nearest hundredth of one percent.
B. Effective yield is the net annualized yield for a specified seven
calendar-days assuming a reinvestment of the income or compounding.
Effective yield is calculated by the same method as yield except the
yield figure is compounded by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting one from the result, according to
the following formula:
Effective Yield = ((Base Period Return +1) 365/7) - 1.
3
<PAGE>
The current yield of the Money Market Fund of the Separate Account for the
seven-day period ended December 31, 1994 was 4.02%.
As described above, yield and effective yield are based on historical
earnings and show the performance of a hypothetical investment and are not
intended to indicate future performance. Yield and effective yield will vary
based on changes in market conditions and the level of expenses.
In connection with communicating its total return to current or prospective
Policyowners, the Money Market Fund also may compare these figures to the
performance of other unmanaged indices which may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
FUNDS OTHER THAN MONEY MARKET
From time to time, quotations of a Fund's "total return" may be included in
advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
A. Average Annual Total Return is the average annual compounded rate of
return for the periods of one year, five years and ten years, if
applicable, all ended on the date of a recent calendar quarter. In
addition, the total return for the life of the Fund is given. Total
return quotations reflect changes in the price of the underlying
portfolio's shares and assume that all dividends and gains distributions
during the respective periods were reinvested in portfolio shares. Total
return is calculated by finding the average annual compounded rates of
return of a hypothetical investment over such periods, according to the
following formula (total return is then expressed as a percentage):
T = (ERV/P) to the 1/nth power - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
B. Cumulative Total Return is the compound rate of return on a hypothetical
initial investment of $1,000 for a specified period. Cumulative total
return quotations reflect changes in the price of the underlying
portfolio's shares and assume that all dividends and capital gains
distributions during the period were reinvested in portfolio shares.
Cumulative total return is calculated by finding the rates of return of
a hypothetical investment over such periods, according to the following
formula (cumulative total return is then expressed as a percentage):
C = (ERV/P) - 1
C = Cumulative Total Return
P = hypothetical initial payment of $1,000
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
4
<PAGE>
AVERAGE ANNUAL
TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America................ -0.3% 5.7% 11.1% 11.1%(1)
Investment Company
Equity Index........... -0.3 N/A 2.2(2)
Investment Company Bond. -4.9 5.8 7.3 7.3(1)
Investment Company
Short-Term Bond........ -0.3 N/A 1.3(2)
Investment Company Mid-
Term Bond.............. -5.2 N/A 0.1(2)
Investment Company
Composite.............. -4.8 6.1 9.6 9.6(1)
Investment Company
Aggressive Equity...... N/A N/A 7.1(3)
Fidelity VIP Equity-
Income................. -11.3 6.6 10.4(4)
Fidelity VIP II Asset
Manager................ -6.5 N/A 6.3(5)
Scudder Capital Growth.. -2.8 4.5 7.4(6)
Scudder Bond............ -2.7 6.9 8.7(6)
Scudder International... -4.9 4.6 6.2(7)
TCI Growth.............. 5.3 8.6 8.9(8)
Calvert Responsibly
Invested Balanced...... -7.9 8.8 1.7(9)
CUMULATIVE TOTAL RETURN FOR PERIODS
ENDED DECEMBER 31, 1994
<CAPTION>
FUND ONE YEAR FIVE YEARS TEN YEARS LIFE OF THE FUND
---- -------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Investment Company All
America................ -0.3% 32.1% 186.3% 186.3%(1)
Investment Company
Equity Index........... -0.3 N/A 4.2(2)
Investment Company Bond. -4.9 31.7 92.7 92.7(1)
Investment Company
Short-Term Bond........ -0.3 N/A 2.5(2)
Investment Company Mid-
Term Bond.............. -5.2 N/A 0.5(2)
Investment Company
Composite.............. -4.8 33.7 142.0 142.0(1)
Investment Company
Aggressive Equity...... N/A N/A 4.7(3)
Fidelity VIP Equity-
Income................. -11.3 37.4 151.6(4)
Fidelity VIP II Asset
Manager................ -6.5 N/A 76.9(5)
Scudder Capital Growth.. -2.8 24.7 71.1(6)
Scudder Bond............ -2.7 37.9 79.1(6)
Scudder International... -4.9 24.8 64.2(7)
TCI Growth.............. 5.3 26.5 103.1(8)
Calvert Responsibly
Invested Balanced...... -7.9 14.3 53.0(9)
</TABLE>
- -------
(1) For the period beginning January 1, 1985 (commencement of operations)
(2) For the period beginning February 5, 1993 (commencement of operations)
(3) For the period beginning May 2, 1994 (commencement of operations)
(4) For the period beginning October 9, 1986 (commencement of operations)
(5) For the period beginning September 6, 1989 (commencement of operations)
(6) For the period beginning July 16, 1985 (commencement of operations)
(7) For the period beginning May 1, 1987 (commencement of operations)
(8) For the period beginning November 20, 1987 (commencement of operations)
(9) For the period beginning September 2, 1986 (commencement of operations)
The Fidelity VIP II Contrafund Portfolio had not commenced operations as of
December 31, 1994 and is not represented in the above table. The returns for
the All America Fund (previously called the "Stock Fund") prior to May 1, 1994
reflect the results of that Fund prior to a change in its investment objectives
and policies and the addition of subadvisers on that date. The commencement
dates for the Funds reflect the commencement dates for the underlying fund or
portfolio. Separate Account charges have been deducted for funds or portfolios
which commenced operations prior to the commencement of operations of the
corresponding Fund of the Separate Account.
The above figures for the Money Market and other Funds, and both for average
annual total return and cumulative total return, reflect charges made to the
Separate Account and also reflect a comparative portion of a $2.00 monthly
contract fee. The monthly contract fee is deducted initially from any net
assets in the Policyowner's Account which have been allocated to the General
Account. If no net assets are allocated to such Account, the monthly contract
fee would be deducted from the net assets of the Policyowner's Account which
have been allocated to one of the Funds of
5
<PAGE>
the Separate Account in the following order: (a) Investment Company Money
Market, (b) Investment Company Short-Term Bond, (c) Investment Company Mid-Term
Bond, (d) Investment Company Bond, (e) Scudder Bond, (f) Investment Company
Composite, (g) Fidelity VIP II Asset Manager, (h) Calvert Responsibly Invested
Balanced, (i) Fidelity VIP Equity-Income, (j) Investment Company All America,
(k) Investment Company Equity Index, (l) Fidelity VIP II Contrafund, (m)
Investment Company Aggressive Equity, (n) Scudder Capital Growth, (o) Scudder
International, and (p) TCI Growth. As such, the allocation of the net assets of
a Participant's Account would determine whether any monthly contract fee would
be charged against a Separate Account Fund. However, for purposes of
illustrating the investment performance of a $1,000.00 hypothetical investment,
the proportionate amount of the $2.00 fee, as determined by the proportionate
amount of the total net assets of the Separate Account in relation to the total
net assets of the General Account, is deducted.
The actual treatment of the monthly contract fee and its effect on total
return would depend on the Policyowner's actual allocation. If a Policyowner
has net assets in the General Account, the monthly contract fee would be
deducted from the General Account, not any Separate Account Fund. Accordingly,
the illustration of such a Policyowner's net assets held in any of the Funds of
the Separate Account would experience a higher total return than shown above.
If a Policyowner has no assets allocated to the General Account, but has net
assets allocated to more than one Fund of the Separate Account, the fee would
only be deducted from one of the Funds so that an illustration of total return
figures of the other Funds would be higher than shown above and the Separate
Account Fund from which the fee was deducted would illustrate a lower total
return than shown above. If a Policyowner has no assets in the General Account,
but has net assets allocated only to one Fund of the Separate Account, then
after deduction of the monthly contract fee, an illustration of such a total
return figure would be lower than that shown above.
Performance figures, when used, are based on historical earnings and are not
guaranteed. They are not necessarily indicative of the future investment
performance of a particular Fund. Total return and yield for a Fund will vary
based on changes in market conditions and the level of the Fund's expenses. As
a consequence, unit values will fluctuate so accumulation units, when redeemed,
may be worth more or less than their original cost.
In connection with communicating its total return to current or prospective
Policyowners, a Fund also may compare these figures to the performance of other
variable annuity accounts tracked by rating services or to other unmanaged
indices which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to assets of the Separate Account is held by the Insurance Company.
Records are maintained of all purchases and redemptions of Eligible Portfolio
Company shares held by each of the Funds of the Separate Account.
STATE REGULATION
The Insurance Company is subject to regulation by the New York State
Superintendent of Insurance ("Superintendent") as well as by the insurance
departments of all the other states and jurisdictions in which it does
business.
The Insurance Company must file with the Superintendent an annual statement
on a form promulgated by the National Association of Insurance Commissioners.
It must also file with New York and other states a separate statement with
respect to any separate accounts that it may maintain, including the Separate
Account. The Insurance Company's books and assets are subject to review and
examination by the Superintendent and the Superintendent's agents at all times,
and a full examination into the affairs of the Insurance Company is made at
least every five years. A full examination of the Insurance Company's
operations may also be conducted periodically by other states.
The laws of New York and of other states in which the Insurance Company is
licensed to transact business provide specifically for regulation and
supervision of the variable annuity activities of life insurance companies.
Included in such regulations are requirements relating to mandatory contract
provisions and approval of contract form. Such state regulation does not
involve any supervision or control over the investment policies of the Separate
Account, or the selection of investments therefor, except for verification that
any such investments are permissible under applicable law. Generally, the
states in which the Insurance Company does business apply the laws of New York
in determining permissible investments for the Insurance Company.
6
<PAGE>
PERIODIC REPORTS
Prior to a Policyowner's Annuity Commencement Date, the Policyowner will be
provided by the Insurance Company, at least quarterly, with a statement as of a
specified date covering the period since the last statement. The statement will
set forth, for the covered period: (1) the amount of Contributions paid under
the Contract; (2) the interest accrued on amounts allocated for the Policyowner
to the General Account; (3) the number and dollar value of Accumulation Units
credited to the Policyowner in each Fund of the Separate Account; and (4) the
total amounts of all withdrawals and transfers from each Account and each Fund.
Employers making payroll deductions have been informed that payment must be
remitted to the Insurance Company within seven days of the date it has been
withheld from an individual's pay. The statement also will specify the
Policyowner's Account Balance available to provide a periodic benefit, cash
return, or death benefit with respect to the Policyowner. The Insurance Company
will also transmit to Policyowners, at least semi-annually, reports showing the
financial condition of the Separate Account, and a schedule of investments held
in each Fund of the Investment Company.
LEGAL PROCEEDINGS
The Insurance Company is engaged in litigation of various kinds which in its
judgment is not of material importance in relation to its total assets. There
are no legal proceedings pending to which the Separate Account is a party.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
the Insurance Company's right to issue the Contracts thereunder, have been
passed upon by Patrick A. Burns, Senior Executive Vice President and General
Counsel of the Insurance Company. Certain legal matters relating to the Federal
securities laws have been passed upon by the law firm of Jones & Blouch,
Washington, D.C.
EXPERTS
The financial statements included in this Statement of Additional Information
have been audited by the Insurance Company's independent public accountants,
Arthur Andersen LLP, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
ADDITIONAL INFORMATION
A registration statement has been filed with the Commission under the
Securities Act of 1933, as amended, with respect to the Contracts discussed in
this Statement of Additional Information. Not all of the information set forth
in the registration statement, amendments and exhibits thereto has been
included in this Statement of Additional Information or in the current
Prospectus for the Contracts. Statements contained herein and in the Prospectus
concerning the content of the Contracts and other legal instruments are
intended to be summaries. For a complete statement of the terms of those
documents, reference should be made to the materials filed with the Commission.
FINANCIAL STATEMENTS
The financial statements of the Insurance Company that are included in this
Statement of Additional Information should be considered only as bearing on the
ability of the Insurance Company to meet its obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Separate Account. To the extent that Policyowners under the
Contracts are participating in the investment performance of the Separate
Account, the amounts of Policyowners' Account Balances and annuity payments are
affected primarily by the investment results of the chosen Fund(s) of the
Separate Account.
7
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------
ALL
MONEY MARKET 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 -- $47,774
All America Fund -- $151,725
Equity Index Fund -- $35,884
Bond Fund -- $41,638)
(Notes 1 and 2)................... $49,212 $139,938 $35,204 $21,592
Due From General Account........... 1,884 166,069 2,297 31,820
------- -------- ------- -------
Net Assets......................... $51,096 $306,007 $37,501 $53,412
======= ======== ======= =======
Unit Value at December 31, 1994
(Note 5).......................... $1.72 $3.35 $1.05 $2.28
===== ===== ===== =====
Number of Units Outstanding at De-
cember 31, 1994
(Note 5).......................... 29,648 91,238 35,717 23,434
======= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
----------------------------------------
SHORT- AGGRESSIVE
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 -- $2,581
Mid-Term Bond Fund -- $678
Composite Fund -- $282,262
Aggressive Equity Fund -- $66,315)
(Notes 1 and 2)..................... $2,489 $ 705 $221,680 $ 69,686
Due From General Account............. 1,268 3,022 149,516 42,387
------ ------ -------- --------
Net Assets........................... $3,757 $3,727 $371,196 $112,073
====== ====== ======== ========
Unit Value at December 31, 1994
(Note 5)............................ $1.03 $1.01 $2.82 $1.05
===== ===== ===== =====
Number of Units Outstanding at Decem-
ber 31, 1994 (Note 5)............... 3,639 3,694 131,650 106,710
====== ====== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
----------------------------- -------- -----------
CAPITAL SOCIALLY
BOND GROWTH INTERNATIONAL GROWTH RESPONSIBLE
FUND FUND FUND FUND FUND
------ -------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder
Portfolios, TCI Growth
Fund and Calvert
Socially Responsible
Series at market value
(Cost:
Scudder Bond Fund --
$2,504
Scudder Capital Growth
Fund -- $263,309
Scudder International
Fund -- $477,226
TCI Growth Fund --
$94,692
Calvert Socially Re-
sponsible Series --
$29,164
(Notes 1 and 2)........ $2,486 $250,981 $449,161 $ 94,298 $28,109
Due From General
Account................ 5,254 73,395 115,397 28,821 578
------ -------- -------- -------- -------
Net Assets.............. $7,740 $324,376 $564,558 $123,119 $28,687
====== ======== ======== ======== =======
Unit Value at December
31, 1994 (Note 5)...... $9.69 $14.67 $10.80 $9.39 $1.57
===== ====== ====== ===== =====
Number of Units Out-
standing at December
31, 1994 (Note 5)...... 799 22,116 52,296 13,116 18,308
====== ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------------------------
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.............. $1,224 $ 13,437 $ 1,092 $ 1,448
------ -------- -------- --------
Total income............ 1,224 13,437 1,092 1,448
------ -------- -------- --------
Expenses (Note 3):
Fees................... 112 1,564 107 272
Administrative Ex-
penses................ 41 244 23 144
------ -------- -------- --------
Total Expenses.......... 153 1,808 130 416
------ -------- -------- --------
Net Investment Income... 1,071 11,629 962 1,032
------ -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on investments. 3 470 2 (57)
Net unrealized
appreciation
(depreciation) of
investments........... 1,438 (11,787) (680) (20,046)
------ -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
On Investments......... 1,441 (11,317) (678) (20,103)
------ -------- -------- --------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ $2,512 $ 312 $ 284 $(19,071)
====== ======== ======== ========
<CAPTION>
FOR THE PERIOD
MAY 2, 1994
(COMMENCEMENT OF
OPERATIONS) TO
FOR THE YEAR ENDED DECEMBER 31, 1994 DECEMBER 31, 1994
------------------------------------- -----------------
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.............. $ 85 $ 30 $ 10,221 $ 498
------ -------- -------- --------
Total income........... 85 30 10,221 498
------ -------- -------- --------
Expenses (Note 3):
Fees................... 12 22 2,014 192
------ -------- -------- --------
Administrative Ex-
penses................ 9 13 514 81
------ -------- -------- --------
Total Expenses......... 21 35 2,528 273
------ -------- -------- --------
Net Investment Income
(Loss)................ 64 (5) 7,693 225
------ -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on investments. -- (13) (1,049) --
------ -------- -------- --------
Net unrealized appreci-
ation (depreciation)
of investments........ (92) 27 (60,582) 3,371
------ -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
On
Investments........... (92) 14 (61,631) 3,371
------ -------- -------- --------
Net Increase (Decrease)
in Net Assets
Resulting From
Operations............ $ (28) $ 9 $(53,938) $ 3,596
====== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------
SCUDDER TCI CALVERT
------------------------------ ------ -----------
CAPITAL SOCIALLY
BOND GROWTH INTERNATIONAL GROWTH RESPONSIBLE
FUND FUND FUND FUND FUND
----- -------- ------------- ------ -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends................. $ 203 $ 478 $ -- $ 1 $ 874
----- -------- -------- ----- ------
Total income............... 203 478 -- 1 874
----- -------- -------- ----- ------
Expenses (Note 3):
Fees...................... 70 1,160 846 238 2
Administrative Expenses... 55 283 158 55 4
----- -------- -------- ----- ------
Total Expenses............. 125 1,443 1,004 293 6
----- -------- -------- ----- ------
Net Investment Income
(Loss).................... 78 (965) (1,004) (292) 868
----- -------- -------- ----- ------
Net Realized and Unrealized
Gain (Loss) On Investments
(Note 1):
Net realized gain (loss)
on investments........... (348) (56) (26) 607 --
Net unrealized
depreciation of
investments.............. (18) (12,328) (28,065) (394) (1,055)
----- -------- -------- ----- ------
Net Realized and Unrealized
Gain (Loss) On
Investments............... (366) (12,384) (28,091) 213 (1,055)
----- -------- -------- ----- ------
Net Decrease in Net Assets
Resulting from Operations. $(288) $(13,349) $(29,095) $ (79) $ (187)
===== ======== ======== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1993 NOVEMBER 19, 1993
(COMMENCEMENT OF FOR THE YEAR (COMMENCEMENT OF
OPERATIONS) ENDED OPERATIONS)
FOR THE YEAR ENDED TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
DECEMBER 31, 1994 1993 1994 1993
--------------------------- ----------------- ----------------- -----------------
INVESTMENT COMPANY
----------------------------------------------------------------------------------
EQUITY
MONEY MARKET FUND ALL AMERICA FUND INDEX FUND
----------------- ---------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income............ $ 1,071 $ 11,629 $ 39 $ 962 $ 4
Net realized gain (loss) on
investments..................... 3 470 -- 2 --
Net unrealized appreciation
(depreciation) of investments... 1,438 (11,787) -- (680) --
------- -------- -------- ------- --------
Net Increase in net assets
resulting from operations........ 2,512 312 39 284 4
------- -------- -------- ------- --------
From Unit Transactions:
Contributions.................... 51,107 262,750 335 34,515 190
Withdrawals...................... (412) (88,222) -- (113) --
Net Transfers.................... (2,111) 131,078 (285) 2,621 --
------- -------- -------- ------- --------
Net Increase from unit
transactions..................... 48,584 305,606 50 37,023 190
------- -------- -------- ------- --------
Net Increase in Net Assets........ 51,096 305,918 89 37,307 194
Net Assets:
Beginning of Period............... -- 89 -- 194 --
------- -------- -------- ------- --------
End of Period..................... $51,096 $306,007 $ 89 $37,501 $ 194
======= ======== ======== ======= ========
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1993 MAY 2, 1994
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) OPERATIONS)
TO DECEMBER 31, TO DECEMBER 31,
FOR THE YEAR ENDED DECEMBER 31, 1994 1993 1994
--------------------------------------------------------- ----------------- -----------------
INVESTMENT COMPANY
---------------------------------------------------------------------------------------------
SHORT-TERM MID-TERM AGGRESSIVE EQUITY
BOND FUND BOND FUND BOND FUND COMPOSITE FUND FUND
--------- ----------------- --------- ----------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 1,032 $ 64 $ (5) $ 7,693 $ 76 $ 225
-------- ------- -------- -------- ------- --------
Net realized gain on
investments........... (57) -- (13) (1,049) -- --
-------- ------- -------- -------- ------- --------
Net unrealized
appreciation
(depreciation) of
investments........... (20,046) (92) 27 (60,582) -- 3,371
======== ======= ======== ======== ======= ========
Net Increase (Decrease)
in net assets resulting
from operations........ (19,071) (28) 9 (53,938) 76 3,596
======== ======= ======== ======== ======= ========
From Unit Transactions:
Contributions.......... 39,377 3,796 3,328 323,827 876 96,389
-------- ------- -------- -------- ------- --------
Withdrawals............ -- -- -- (38,760) -- --
-------- ------- -------- -------- ------- --------
Net Transfers.......... 33,106 (11) 390 139,117 (2) 12,088
-------- ------- -------- -------- ------- --------
Net Increase from unit
transactions........... 72,483 3,785 3,718 424,184 874 108,477
-------- ------- -------- -------- ------- --------
Net Increase in Net
Assets................. 53,412 3,757 3,727 370,246 950 112,073
Net Assets:
Beginning of Period..... -- -- -- 950 -- --
-------- ------- -------- -------- ------- --------
End of Period........... $ 53,412 $ 3,757 $ 3,727 $371,196 $ 950 $112,073
======== ======= ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1993 NOVEMBER 19, 1993 NOVEMBER 19, 1993
FOR THE YEAR (COMMENCEMENT OF FOR THE YEAR (COMMENCEMENT OF FOR THE YEAR (COMMENCEMENT OF
ENDED OPERATIONS) ENDED OPERATIONS) ENDED OPERATIONS)
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1994 1993 1994 1993 1994 1993
------------ ----------------- ------------ ----------------- ----------------- -----------------
SCUDDER
-------------------------------------------------------------------------------------------------
CAPITAL GROWTH INTERNATIONAL
BOND FUND FUND FUND
------------------------------ ------------------------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment
income................. $ 78 $-- $ (965) $ -- $ (1,004) $ --
Net realized gain (loss)
on investments......... (348) -- (56) -- (26) --
Net unrealized
appreciation
(depreciation) of
investments............ (18) -- (12,328) -- (28,065) --
------ ---- -------- -------- -------- -------
Net Increase (Decrease)
in net assets resulting
from operations........ (288) -- (13,349) -- (29,095) --
------ ---- -------- -------- -------- -------
From Unit Transactions:
Contributions........... 16,177 1 248,544 970 456,168 405
Withdrawals............. (22) -- (31,003) -- (27,979) --
Net Transfers........... (8,128) -- 119,209 5 165,041 18
------ ---- -------- -------- -------- -------
Net Increase from unit
transactions........... 8,027 1 336,750 975 593,230 423
------ ---- -------- -------- -------- -------
Net Increase in Net
Assets................. 7,739 1 323,401 975 564,135 423
Net Assets:
Beginning of Period..... 1 -- 975 -- 423 --
------ ---- -------- -------- -------- -------
End of Period........... $7,740 $ 1 $324,376 $ 975 $564,558 $ 423
====== ==== ======== ======== ======== =======
<CAPTION>
FOR THE PERIOD
NOVEMBER 19, 1993
FOR THE YEAR (COMMENCEMENT OF FOR THE YEAR
ENDED OPERATIONS) ENDED
DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1994 1993 1994
----------------- ----------------- -----------------
CALVERT SOCIALLY
RESPONSIBLE
TCI GROWTH FUND FUND
----------------------------------- -----------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income.............................................. $ (292) $ -- $ 868
Net realized gain (loss) on investments............................ 607 -- --
Net unrealized appreciation (depreciation) of investments.......... (394) -- (1,055)
-------- -------- -------
Net Increase (Decrease) in net assets resulting from operations..... (79) -- (187)
-------- -------- -------
From Unit Transactions:
Contributions...................................................... 75,540 193 3,189
Withdrawals........................................................ (23,938) -- (1,501)
Net Transfers...................................................... 71,403 -- 27,186
-------- -------- -------
Net Increase from unit transactions................................. 123,005 193 28,874
-------- -------- -------
Net Increase in Net Assets.......................................... 122,926 193 28,687
Net Assets:
Beginning of Period................................................. 193 -- --
-------- -------- -------
End of Period....................................................... $123,119 $ 193 $28,687
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements
13
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Separate Account No. 2 ("Separate Account No. 2") of The American Life
Insurance Company of New York ("the Company") was established in conformity
with New York Insurance Law and commenced operations on November 19, 1993 as a
unit investment trust. On that date, the following American Life funds became
available as investment options: Money Market Fund, All America Fund (formerly
the Stock Fund), Bond Fund, Composite Fund, Equity Index Fund, Short-Term Bond
Fund, Mid-Term Bond Fund, Scudder Bond Fund, Scudder Capital Growth Fund,
Scudder International Fund, TCI Growth Fund, and the Calvert Socially
Responsible Series Fund. The American Life Funds invest in corresponding Funds
of Mutual of America Investment Corporation (the "Investment Company"). The
three Scudder Funds invest in corresponding Portfolios of Scudder Variable Life
Investment Fund ("Scudder"). The TCI Fund invests in a corresponding Fund of
TCI Portfolios Inc. ("TCI") and the Calvert Socially Responsible Series Fund
invests in a corresponding Fund of Calvert Socially Responsible Series of
Acacia Capital Corporation ("Calvert").
On May 2, 1994 the American Life Aggressive Equity Fund became available as
an investment option to Separate Account No. 2. Also, prior to May 2, 1994 the
All America Fund was known as the Stock Fund and had a different objective and
no sub-advisors.
Separate Account No. 2 was formed by the Company to support the operations of
the Company's group and individual variable accumulation annuity contracts
("Contracts"). The assets of Separate Account No. 2 are the property of the
Company. The portion of Separate Account No. 2's assets applicable to the
Contracts will not be charged with liabilities arising out of any other
business the Company may conduct.
The significant accounting policies of Separate Account No. 2 are as follows:
Investment Valuation -- Investments are made in shares of the Investment
Company, Scudder, TCI and Calvert and are valued at the reported net asset
values of the respective Funds, Portfolios or Series.
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 the respective net
asset value per share at December 31, 1994 of the respective Funds, Portfolios
and Series of the Investment Company, Scudder, TCI and Calvert are as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
--------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................... 41,336 $ 1.19
All America Fund.................................... 86,741 1.61
Equity Index Fund................................... 34,188 1.02
Bond Fund........................................... 16,979 1.27
Short-Term Bond Fund................................ 2,487 1.00
Mid-Term Bond Fund.................................. 772 .91
Composite Fund...................................... 141,302 1.57
Aggressive Equity Fund.............................. 66,233 1.05
Scudder Portfolios:
Bond Portfolio...................................... 384 6.48
Capital Growth Portfolio............................ 20,522 12.23
International Portfolio............................. 42,017 10.69
TCI Growth Fund...................................... 10,238 9.21
Calvert Socially Responsible Series.................. 19,506 1.44
</TABLE>
14
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. EXPENSES
Administrative Charges -- In connection with its administrative functions,
the Company deducts daily, an amount from the value of the net assets of each
Fund at an annual rate of .40% (.65% before 8/2/94) for the American Life Money
Market, All America Fund, Equity Index Fund, Bond Fund, Short-Term Bond Fund,
Mid-Term Bond Fund, Composite Fund, Aggressive Equity Fund, Scudder Bond Fund,
Scudder Capital Growth Fund, Scudder International Fund, Calvert Socially
Responsible Series Fund and .20% (.45% before 8/2/94) for the TCI Growth Fund.
In addition, a deduction of up to $2.00 is 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 an amount from the value of the net assets from each Fund at an
annual rate of .35% to cover distribution expenses.
Mortality and Expense Risk Charge -- The Company assumes the risk to make
annuity payments regardless of how long a participant lives. For assuming this
risk, the Company deducts daily an amount from the value of the net assets from
each Fund at an annual rate of .35%. For assuming certain expense risks it
expects to incur over the life of the contracts, the Company deducts daily an
amount from the value of the net assets from each Fund at an annual rate of
.15%.
A deduction for administrative expenses of up to $2.00 is made at the end of
the month from a participant's account, except that such charge shall not
exceed 1/12 of 1% in any month.
4. DIVIDENDS
On September 15, 1994 and December 30, 1994 dividend distributions were
declared by the Investment Company to shareholders of record on September 15
and December 29. These dividends were paid on September 15 and December 30,
respectively. The combined amounts of these dividends were as follows:
<TABLE>
<S> <C>
Money Market Fund................................................ $ 1,224
All America Fund................................................. 13,437
Equity Index Fund................................................ 1,092
Bond Fund........................................................ 1,448
Short-Term Bond Fund............................................. 85
Mid-Term Bond Fund............................................... 30
Composite Fund................................................... 10,221
Aggressive Equity Fund........................................... 498
</TABLE>
On January 27, 1994, February 24, 1994, April 28, 1994, July 27, 1994 and
October 27, 1994, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $203.
On January 27, 1994, February 24, 1994, April 28, 1994, July 27, 1994 and
October 27, 1994, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $478.
On April 9, 1994, a dividend was paid by the TCI Growth Fund. The amount of
the dividend was $1.
On December 30, 1994, a dividend was paid by the Calvert Socially Responsible
Series. The amount of the dividend was $874.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding throughout the
year ended December 31, 1994 and for the initial period ended December 31,
1993, if applicable:
<TABLE>
<CAPTION>
INVESTMENT COMPANY
----------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------- ------
1994 1994 1993 1994 1993 1994
------------ ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period.................... $ 1.68 $ 3.36 $3.31 $ 1.05 $ 1.04 $ 2.39
====== ====== ===== ====== ====== ======
Unit value, end of year/period.. $ 1.72 $ 3.35 $3.36 $ 1.05 $ 1.05 $ 2.28
====== ====== ===== ====== ====== ======
Units outstanding, end of
year/period.................... 29,648 91,238 27 35,717 185 23,434
====== ====== ===== ====== ====== ======
</TABLE>
15
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
AGGRESSIVE
SHORT-TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
---------- --------- ------------- ----------
1994 1994 1994 1993 1994
---------- --------- ------- ----- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period................. $1.03 $1.06 $2.95 $2.93 $ 1.00
===== ===== ======= ===== =======
Unit value, end of
year/period................. $1.03 $1.01 $2.82 $2.95 $ 1.05
===== ===== ======= ===== =======
Units outstanding, end of
year/period................. 3,639 3,694 131,650 322 106,710
===== ===== ======= ===== =======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
----------------------------------------- ------------ -----------
SOCIALLY
CAPITAL INTERNATIONAL RESPONSIBLE
BOND FUND GROWTH FUND FUND GROWTH FUND FUND
------------- ------------- ------------- ------------ -----------
1994 1993 1994 1993 1994 1993 1994 1993 1994
------ ------ ------ ------ ------ ------ ------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $10.32 $10.24 $16.46 $16.10 $11.06 $10.36 $ 9.61 $9.38 $ 1.64
====== ====== ====== ====== ====== ====== ====== ===== ======
Unit value, end of
year/period............ $ 9.69 $10.32 $14.67 $16.46 $10.80 $11.06 $ 9.39 $9.61 $ 1.57
====== ====== ====== ====== ====== ====== ====== ===== ======
Units outstanding, end
of year/period......... 799 -- 22,116 59 52,296 38 13,116 20 18,308
====== ====== ====== ====== ====== ====== ====== ===== ======
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of American Life Separate Account No. 2:
We have audited the accompanying statement of assets and liabilities of
American Life Separate Account No. 2 as of December 31, 1994, and the related
statement of operations for the year then ended and the statements of changes
in net assets and financial highlights for the year ended December 31, 1994 and
for the period November 19, 1993 (commencement of operations) to December 31,
1993. 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
American Life Separate Account No. 2 as of December 31, 1994, and the results
of its operations for the year then ended and the changes in its net assets and
financial highlights for the year ended December 31, 1994 and for the period
November 19, 1993 (commencement of operations) to December 31, 1993 in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 22, 1995
17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The American Life Insurance Company of New York:
We have audited the accompanying statements of financial condition of The
American Life Insurance Company of New York as of December 31, 1994 and 1993,
and the related statements of operations and surplus and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The American Life Insurance
Company of New York as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 20, 1995
18
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
ASSETS:
GENERAL ACCOUNT ASSETS:
Bonds and notes (Note 3)..................... $1,161,336,455 $1,096,096,915
Cash and short-term investments.............. 22,568,986 31,924,555
Mortgage loans............................... 27,047,563 27,847,000
Real estate.................................. 1,464,537 2,184,722
Policy loans................................. 9,372,315 14,000,744
Other invested assets........................ 145,000 132,000
Investment income accrued.................... 21,363,704 19,305,874
Federal income tax recoverable............... 5,588,116 --
Receivables.................................. 4,090,656 3,795,842
Due from affiliates.......................... 4,497 24,684,968
-------------- --------------
Total general account assets............... 1,252,981,829 1,219,972,620
Separate account assets...................... 3,060,042 998,280
-------------- --------------
TOTAL ASSETS..................................... $1,256,041,871 $1,220,970,900
============== ==============
LIABILITIES AND SURPLUS:
GENERAL ACCOUNT LIABILITIES:
Insurance and annuity reserves............... $1,115,176,428 $1,075,815,394
Other contract liabilities and reserves...... 10,556,106 9,434,756
Dividends payable to contract and policyhold-
ers......................................... 122,806 135,108
Federal income tax payable................... -- 964,562
Interest maintenance reserve................. 46,029,105 60,967,790
Due to affiliates............................ 6,090,859 --
Other liabilities............................ 598,359 3,514,358
-------------- --------------
Total general account liabilities.......... 1,178,573,663 1,150,831,968
Separate account reserves and liabilities.... 3,060,042 998,280
-------------- --------------
Total liabilities.......................... 1,181,633,705 1,151,830,248
-------------- --------------
ASSET VALUATION RESERVE (NOTE 2)................. 8,714,158 7,869,703
-------------- --------------
SURPLUS:
Capital stock, $4.55 par value, 1,100,000
shares authorized,
550,000 issued and outstanding................ 2,502,500 2,502,500
Assigned surplus (Note 9)...................... 43,548,059 33,548,059
Unassigned surplus............................. 19,643,449 25,220,390
-------------- --------------
Total surplus.............................. 65,694,008 61,270,949
-------------- --------------
TOTAL LIABILITIES AND SURPLUS.................... $1,256,041,871 $1,220,970,900
============== ==============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
INCOME:
Annuity considerations and deposits (Note 4). $ 86,633,831 $ 96,665,647
Life and disability insurance premiums (Note
4).......................................... 30,365,223 34,079,660
------------ ------------
Total considerations and premiums.......... 116,999,054 130,745,307
Reserve adjustment on reinsurance ceded (Note
4).......................................... (1,584,494) (1,205,526)
Net investment income (Note 8)............... 89,217,703 88,487,828
Other, net................................... 355,243 1,203,175
------------ ------------
Total income............................... 204,987,506 219,230,784
------------ ------------
DEDUCTIONS:
Increase in insurance and annuity reserves... 37,540,895 57,131,083
Annuity and surrender benefits............... 116,774,722 105,731,804
Death and disability benefits................ 25,917,744 20,927,253
Operating expenses (Note 8).................. 25,044,907 22,612,052
Agents commissions........................... 216,074 582,455
Other, net................................... 827,321 638,396
------------ ------------
Total deductions........................... 206,321,663 207,623,043
------------ ------------
Net gain (loss) before dividends........... (1,334,157) 11,607,741
DIVIDENDS TO CONTRACT AND POLICYHOLDERS........ 115,880 133,820
------------ ------------
Net gain (loss) from operations............ (1,450,037) 11,473,921
FEDERAL INCOME TAX BENEFIT (EXPENSE)........... 2,131,416 (5,107,176)
NET REALIZED CAPITAL GAINS (NOTE 2)............ -- 822,282
------------ ------------
Net income................................. 681,379 7,189,027
SURPLUS TRANSACTIONS:
Capital contribution (Note 9)................ 10,000,000 --
Change in liability for reserve strengthening
(Note 2).................................... (3,217,870) (3,023,712)
Change in asset valuation reserve............ (844,455) (719,229)
Change in non-admitted assets................ (286,154) 489,733
Net unrealized capital losses................ (979,262) --
Other, net................................... (930,579) 123,428
------------ ------------
Net change in surplus...................... 4,423,059 4,059,247
SURPLUS, AT BEGINNING OF YEAR.................. 61,270,949 57,211,702
------------ ------------
SURPLUS, AT END OF YEAR........................ $ 65,694,008 $ 61,270,949
============ ============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
CASH PROVIDED:
Premium and annuity funds received............. $ 139,623,626 $ 109,139,032
Investment income received..................... 87,924,678 88,124,574
Reserve adjustment on reinsurance ceded........ (1,584,495) (906,784)
Other, net..................................... 64,722 1,086,673
------------- -------------
Total receipts............................... 226,028,531 197,443,495
------------- -------------
Benefits paid.................................. 140,352,356 128,652,443
Dividends paid to contract and policyholders... 127,196 160,769
Insurance and operating expenses paid.......... 27,859,815 29,372,560
Net transfers to separate accounts............. 2,343,625 949,652
------------- -------------
Total payments............................... 170,682,992 159,135,424
------------- -------------
Net cash from operations..................... 55,345,539 38,308,071
Proceeds from long-term investments sold,
matured or repaid............................. 317,293,169 841,814,164
Capital contribution (Note 9).................. 10,000,000 --
Federal income tax benefit (payment) on
securities transactions....................... 349,786 (30,105,112)
Other, net..................................... 9,659,531 345,935
------------- -------------
Total cash provided.......................... 392,648,025 850,363,058
------------- -------------
CASH APPLIED:
Cost of long-term investments acquired......... 397,300,231 813,107,144
Other, net..................................... 4,703,363 6,868,326
------------- -------------
Total cash applied........................... 402,003,594 819,975,470
------------- -------------
Net change in cash and short-term
investments................................. (9,355,569) 30,387,588
CASH AND SHORT-TERM INVESTMENTS:
Beginning of year.............................. 31,924,555 1,536,967
------------- -------------
End of year.................................... $ 22,568,986 $ 31,924,555
============= =============
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. ORGANIZATION
The American Life Insurance Company of New York ( the "Company") is a stock
life insurance company licensed in all fifty states, the District of Columbia,
and the Virgin Islands. The Company is a wholly owned subsidiary of Mutual of
America Corporation. Mutual of America Corporation is a wholly owned subsidiary
of Mutual of America Life Insurance Company ("Mutual of America").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company is licensed under New York Insurance Law as a stock life
insurance company. The accompanying financial statements are prepared in
accordance with accounting practices prescribed or permitted by the New York
State Insurance Department. Such statutory accounting practices are considered
to be generally accepted accounting principles ("GAAP") for stock life
insurance companies which are wholly owned subsidiaries of a mutual life
insurance company. The ability of the Company to fulfill its obligations to
contractholders and policyholders is of primary concern to insurance regulatory
authorities. As such, the financial statements are oriented to the insuring
public.
The Financial Accounting Standards Board ("FASB") issued an interpretation
declaring that financial statements of mutual life insurance companies,
including stock life insurance companies that are wholly owned by a mutual life
insurance company, which are prepared on the basis of statutory accounting
principles, will no longer be considered to be in conformity with GAAP. This
interpretation applies to financial statements issued for fiscal years
beginning after December 15, 1995. Further, this interpretation requires that
insurers whose financial statements purport to be in conformity with GAAP
follow all applicable guidance from which they are not specifically exempt. In
addition, certain accounting principles for mutual life insurance companies,
which will ultimately be required to be in compliance with GAAP, have been
determined by the FASB and the American Institute of Certified Public
Accountants. The Company has not yet quantified the financial impact of this
interpretation.
Accounting policies applied in the preparation and presentation of the
financial statements follow.
Disclosure About Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 ("SFAS 107") requires all
entities to disclose the fair value, where practicable, of its financial
instruments. SFAS 107 does not require disclosure of certain financial
instruments such as insurance contracts other than financial guarantees and
investment contracts. Fair value estimates, methods and significant assumptions
are disclosed in each of the relevant footnotes which follow.
Asset Valuations
Investment valuations are prescribed by the National Association of Insurance
Commissioners ("NAIC"). Bonds qualifying for amortization are stated at
amortized cost; short-term investments in good standing are stated at cost.
Fair value for these securities (approximately $1.1 billion in 1994 and 1993)
is determined by reference to market prices quoted by the NAIC. If quoted
market prices are not available, fair value is determined using quoted prices
for similar securities. All other bonds and short-term notes are stated at
market value which approximates fair value. Mortgage loans are carried at
amortized indebtedness. Fair value for these loans (approximately $27.2 million
in 1994 and $28.0 million in 1993) is determined by discounting the expected
future cash flows using the current rate at which similar loans would be made
to borrowers with similar credit ratings and remaining maturities. Impairments
of individual assets that are considered to be other than temporary are
recognized when incurred.
Policy loans are stated at the unpaid balance of the loan. The majority of
such loans are issued with variable interest rates which are periodically
adjusted based upon changes in the rates credited to these policies, and
therefore are considered to be stated at fair value.
22
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
Real estate investments are stated at cost less accumulated depreciation,
which approximates fair value.
Certain other assets, such as furniture and fixtures and prepaid expenses,
are excluded from the balance sheet ("non-admitted assets"). Such assets
totaled $.9 million and $.6 million at December 31, 1994 and 1993,
respectively.
Interest Maintenance and Asset Valuation Reserves
Realized gains and losses, net of applicable taxes, arising from changes in
interest rates are accumulated in the Interest Maintenance Reserve ("IMR") and
are amortized into net investment income over the estimated remaining life of
the investment sold. All other realized gains and losses are reported in the
Statements of Operations and Surplus.
An Asset Valuation Reserve ("AVR"), applying to the specific risk
characteristics of all invested asset categories, excluding cash, policy loans
and investment income accrued has been established based on a statutory
formula. Realized and unrealized gains and losses arising from changes in the
creditworthiness of the borrower are included in the appropriate subcomponent
of the AVR. Changes in the AVR are applied directly to unassigned surplus.
Separate Account Operations
Certain annuity considerations may be invested at the participants'
discretion in separate accounts; either a multifund account, which is managed
by Mutual of America or certain other funds which are managed by outside
investment advisors. All of the funds' investment experience is allocated to
participants. Investments held in the separate accounts are stated at market
value, which is equal to fair value. Participants' corresponding equity in the
separate accounts is reported as liabilities in the accompanying statements.
Operating results of the separate accounts are combined with the Company's
other business in the accompanying statements. Net operating gains and net
realized and unrealized capital gains in the separate accounts are offset by
increases to reserve liabilities in the respective separate accounts.
Insurance and Annuity Reserves
Reserves for annuity contracts are computed on the net single premium method
and represent the estimated present value of future retirement benefits. These
reserves are based on mortality and interest rate assumptions (ranging
primarily from 5.0% to 9.25%) which meet statutory requirements. Reserves for
contractual funds not yet used for the purchase of annuities are accumulated at
various interest rates which, during 1994 and 1993 ranged from 4.5% to 6.25%
and 4.5% to 6.0%, respectively, and are deemed sufficient to provide for
contractual surrender values of these funds. Reserves for life and disability
insurance are based on mortality, morbidity and interest rate assumptions which
meet statutory requirements.
Contractual funds not yet used to purchase retirement annuities and other
deposit liabilities are stated at their cash surrender value, which
approximates fair value ($468.1 million and $470.5 million) at December 31,
1994 and 1993, respectively. The fair value of annuity contracts, approximately
$532.4 million and $592.1 million at December 31, 1994 and 1993, respectively,
was determined by discounting expected future benefits using current mortality
tables and interest rates based on the duration of expected future benefits. A
weighted average rate of 8.28% and 6.14% was used at December 31, 1994 and
1993, respectively.
In addition, during 1994 and 1993, the Company changed the interest rates
used to value certain annuity and deposit type contracts issued prior to
January 1, 1994 and 1993, respectively. The effect of such changes was to
increase policyholder liabilities above the minimum statutory requirements and
to reduce surplus by $3.2 million and $3.0 million at December 31, 1994 and
1993, respectively.
Premiums, Annuity Considerations, Investment Income and Expenses
Annuity considerations are recognized as income when due; considerations for
deposit type contracts are recognized as income when received. Group life and
disability insurance premiums are recognized as income over the contract
period. Investment income is reported as earned and is presented net of related
investment expenses. Operating expenses,
23
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
including acquisition costs such as commissions and underwriting expenses
associated with new business, are charged to operations as incurred.
Dividends
Dividends are based on formulas and scales approved by the Board of Directors
and are accrued currently for payment subsequent to plan anniversary dates.
Reclassifications
Certain 1993 amounts contained in the accompanying financial statements have
been reclassified to conform to the 1994 presentation.
3. DEBT SECURITIES HELD AS ASSETS
The statement values and estimated market values of investments in debt
securities at December 31, 1994 are shown below. Excluding U.S. government and
government agency investments, the Company is not exposed to any significant
concentration of credit risk.
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUES GAINS LOSSES VALUES
-------- ---------- ---------- ---------- ----------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies......... $ 373,954 $1,819 $ 2,749 $ 373,024
Debt securities issued by foreign
governments....................... 48,276 56 1,912 46,420
Corporate securities............... 756,672 683 54,140 703,215
---------- ------ ------- ----------
Total.......................... $1,178,902 $2,558 $58,801 $1,122,659
========== ====== ======= ==========
</TABLE>
Short-term securities with a statement value and estimated market value of
$17.6 million are included in the above table. As of December 31, 1994, the
Company has $3.0 million (par value $2.6 million) of its long-term debt
securities on deposit with various state regulatory agencies.
The statement values and estimated market values of investments in debt
securities at December 31, 1994, by contractual maturity, are shown below. Debt
securities are stated at contractual maturity with the exception of mortgage-
backed securities which are stated at expected maturity. Expected maturities
may differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
STATEMENT MARKET
VALUES VALUES
---------- ----------
(000'S OMITTED)
<S> <C> <C>
Due in one year or less........................... $ 29,335 $ 29,708
Due after one year through five years............. 259,209 251,247
Due after five years through ten years............ 395,418 373,315
Due after ten years............................... 494,940 468,389
---------- ----------
Total......................................... $1,178,902 $1,122,659
========== ==========
</TABLE>
Proceeds from the sale of investment securities during 1994 were $248.3
million. Gross gains of $1.6 million and gross losses of $15.2 million were
realized on these sales, of which $8.8 million of losses was accumulated (net
of applicable taxes of $4.8 million) in the IMR. Such amounts will be amortized
into investment income over the estimated remaining life of the investment
sold. During the year, $6.1 million of the IMR (net of applicable taxes of $3.3
million) was amortized and included in net investment income.
24
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
The statement values and estimated market values of investments in debt
securities at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUES GAINS LOSSES VALUES
-------- ---------- ---------- ---------- ----------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies......... $ 340,665 $ 7,087 $ 585 $ 347,167
Debt securities issued by foreign
governments....................... 28,272 420 207 28,485
Corporate securities............... 752,487 4,293 8,246 748,534
---------- ------- ------ ----------
Total.......................... $1,121,424 $11,800 $9,038 $1,124,186
========== ======= ====== ==========
</TABLE>
Short-term securities with a statement value and estimated market value of
$25.3 million are included in the above table. As of December 31, 1993, the
Company has $2.5 million (par value $2.1 million) of its long-term debt
securities portfolio on deposit with several state regulatory agencies.
Proceeds from the sale of investment securities during 1993 were $838.1
million. Gross gains of $88.4 million were realized on these sales, of which
$56.2 million of gains was accumulated (net of applicable taxes of $30.3
million) in the IMR. Such amounts will be amortized into investment income over
the estimated remaining life of the investment sold. During the year, $2.5
million (net of applicable taxes of $1.3 million) of the IMR was amortized and
included in net investment income.
4. REINSURANCE AND RELATED TRANSACTIONS
The Company has a bulk co-insurance agreement with its ultimate parent,
Mutual of America, covering certain nonpension insurance business. In
consideration for additional reserves assumed under this agreement, the Company
assumed premiums and annuity considerations of $64.2 million and $82.8 million
in 1994 and 1993, respectively. Total reserve liabilities reinsured under this
agreement were as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
Life and annuity.......................... $682.1 $651.0
Funding agreements........................ $ 68.0 $ 63.9
Other reserves............................ $ 3.8 $ 3.2
</TABLE>
During 1993, the Company also had a reinsurance agreement with a former
affiliate, National Pension Life Insurance Company ("National Pension"),
whereby National Pension reinsured, on a modified co-insurance basis, certain
business previously offered by the Company. As of December 31, 1993, reserves
reinsured under this agreement amounted to $1.1 million. During 1993, premiums
ceded under this agreement amounted to $487 thousand; claims ceded amounted to
$363 thousand. In early 1994, National Pension was sold to an unaffiliated
company. The reinsurance agreement in effect between the Company and National
Pension was terminated as of January 1, 1994.
5. PENSION PLAN AND POST RETIREMENT BENEFIT
Mutual of America is the administrator for a qualified, noncontributory
defined benefit pension plan covering substantially all of its own and the
Company's eligible employees. Benefits are generally based on years of service
and final average salary. Mutual of America's funding policy is to contribute
annually, at a minimum, the amount necessary to satisfy the funding
requirements under the Employee Retirement Income Security Act of 1974
("ERISA").
Pension plan assets consist of an interest in Mutual of America's general
account, participation in one of Mutual of America's separate accounts and
participation in certain other funds managed by outside investment advisors.
The accounting for this pension plan is in accordance with the provisions of
Statement of Financial Accounting Standards No. 87, "Employers' Accounting for
Pensions." Pension expense allocated to the Company for 1994 and 1993 was $593
thousand and $259 thousand, respectively.
25
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1993
Mutual of America also administers two defined benefit postretirement plans
providing medical, dental and life insurance benefits. These plans cover
substantially all of its own and the Company's salaried employees. Employees
may become eligible for such benefits upon attainment of retirement age while
in the employ of the Company and satisfaction of service requirements. The
accounting for such postretirement benefits is in accordance with Statement of
Financial Accounting Standards No. 106, "Accounting for Postretirement Benefits
Other Than Pensions." Postretirement benefit expense allocated to the Company
for the years ended 1994 and 1993 was $218 thousand and $161 thousand,
respectively.
6. COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal actions which have arisen in the
course of the Company's business. In the opinion of management, the ultimate
liability with respect to such lawsuits as well as other contingencies is not
considered to be material in relation to the Company's financial statements.
7. FEDERAL INCOME TAXES
The tax provision for the Company was calculated in accordance with the
Internal Revenue Code, as amended. The Company files federal tax returns on a
separate company basis. Differences between the Company's effective tax rate
and the expected income tax computed by applying the federal income tax rate of
35% to net gain (loss) from operations before federal income taxes result from
the recognition of revenues and expenses in different periods for statutory and
tax reporting purposes and are primarily due to policyholder reserves, deferred
acquisition costs and realized capital gains.
8. RELATED PARTY TRANSACTIONS
Mutual of America has incurred operating and investment-related costs in
connection with the use of its personnel and property on behalf of the Company.
During 1994 and 1993, operating and investment-related expenses of $25.0
million and $1.1 million, and $22.8 million and $1.8 million, respectively,
were charged to the Company and are reflected in the accompanying Statements of
Operations and Surplus.
9. CAPITAL TRANSACTIONS
During 1994, the Company received a capital contribution of $10.0 million
from Mutual of America Corporation.
26
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement, as amended.
(b) Exhibits
8(a) Participation Agreement among The American Life Insurance
Company of New York, Variable Insurance Products Fund and Fidelity
Distributors Corporation.
8(b) Participation Agreement among The American Life Insurance
Company of New York, Variable Insurance Products Fund II and Fidelity
Distributors Corporation
9 Consent of Jones & Blouch
10 Consent of Arthur Andersen LLP
14(a) Financial Data Schedule for The American Separate Account
No. 2
14(b) Financial Data Schedule for The American Life Insurance
Company of New York
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
---------------------------------------
The name and position of each officer and director of the Insurance
Company are set forth below. All officers listed below are also directors of
the Insurance Company. The business address of each officer and director is 666
Fifth Avenue, New York, NY 10103.
Positions and Offices
Name with Depositor
- ------------------ ---------------------
Manfred Altstadt Senior Executive Vice
President and Chief
Financial Officer; Director
Patrick A. Burns Senior Executive Vice
President and
General Counsel; Director
Richard J. Ciecka Director
William S. Conway Director
Rita Conyers Director
William A. DeMilt Executive Vice President
and Treasurer; Director
James E. Flynn Senior Vice President;
Director
Thomas E. Gilliam Executive Vice President;
Director
Theodore L. Herman Vice Chairman; Director
Stephanie J. Kopp Executive Vice President
and Secretary; Director
Howard Lichtenstein President and Chief
Operating Officer; Director
C-2
<PAGE>
Thomas J. Moran Chairman and
Chief Executive Officer;
Director
Paul R. Zwilling Executive Vice President
and Chief Actuary; Director
Item 27. Number of Holders of Securities
-------------------------------
As of March 31, 1995, there were approximately 800 Policyholders in The
American Separate Account No. 2.
Item 29. Principal Underwriters
----------------------
(a) Mutual of America, the principal underwriter of the Separate Account,
acts as sponsor of Mutual of America Investment Corporation and as depositor and
principal underwriter of Mutual of America Separate Account No. 2.
(b) The name, business address and position of each officer and director
of Mutual of America are as follows:
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Directors
---------
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
New York, New York
John R. Dunne Director
Albany, New York
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
C-3
<PAGE>
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
Easton, Pennsylvania
William Kahn Director
St. Louis, Missouri
LaSalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Alan Reed Director
Buffalo Grove, Illinois
Francis H. Schott Director
New York, New York
O. Stanley Smith, Jr. Director
Columbia, South Carolina
Sheila M. Smythe Director
Valhalla, New York
Elie Wiesel Director
New York, New York
Officers-Directors
------------------
William J. Flynn Chairman of the Board
Thomas J. Moran President and Chief Executive
Officer
Richard J. Ciecka Vice Chairman of the Board
Other Officers
--------------
Manfred Altstadt Senior Executive Vice President
and Chief Financial Officer
Diane M. Aramony Senior Vice President,
Human Resources
Deborah Swinford Becker Senior Vice President and
Associate General Counsel
C-4
<PAGE>
Nicholas A. Branchina Senior Vice President and
Associate Treasurer
William Breneisen Senior Vice President,
MIS Systems
Leonard Brown Senior Vice President,
Actuarial Consulting Services
Allen J. Bruckheimer Senior Vice President and
Associate Treasurer
J. Thomas Burkard Senior Field Vice President,
Special Markets
Patrick Burke Senior Vice President,
Special Markets
Patrick A. Burns Senior Executive Vice President
and General Counsel
John Cerrato Senior Vice President, Corporate
Services
Ed Cole Senior Vice President,
MIS Operations
William S. Conway Executive Vice President
Rita Conyers Executive Vice President,
Corporate Communications,
Training and Leadership
Development
Salvatore R. Curiale Senior Executive Vice President
Linda DeHooge Senior Vice President and
Assistant Secretary
Warren A. Essner Senior Vice President and
Assistant to the President and
Chief Executive Officer
James E. Flynn Senior Vice President,
Field Operations
James M. Fox Executive Vice President, Real
Estate Management, Internal
C-5
<PAGE>
Audit and Public Relations
Harold Gannon Senior Vice President
Gordon Gaspard Senior Vice President,
Administrative Services
Robert Giaquinto Senior Vice President,
MIS Operations
Thomas E. Gilliam Executive Vice President
Thomas Harwood Senior Vice President,
Field Administration
Raymond J. Hayes Senior Vice President,
Real Estate Management
Sandra Hersko Senior Vice President,
Technical Services
Gregory A. Kleva, Jr. Executive Vice President and
Deputy General Counsel
Stephanie J. Kopp Executive Vice President
and Secretary
Robert Kordecki Senior Vice President,
National Accounts
Amir Lear Senior Vice President
Stanley M. Lenkowicz Senior Vice President and
Deputy General Counsel
Thomas MacMurray Senior Field Vice President,
National Accounts
Robert W. Maull Senior Vice President and
Actuary
George Medlin Senior Vice President and
Internal Auditor
Jane S. Murphy Senior Field Vice President,
National Accounts
Lynn M. Nalder Senior Vice President, Training
and Leadership Development
C-6
<PAGE>
Roger F. Napoleon Senior Vice President and
Associate General Counsel
Theodore J. O'Dell Senior Vice President and
Controller
James C. Peterson Senior Vice President, Training
and Leadership Development
William Rose Senior Vice President,
Individual Markets
Robert W. Ruane Senior Vice President,
Corporate Communications
William G. Shannon Senior Vice President,
Individual Financial Planning
Walter Siegel Senior Vice President, Marketing
Marc Slutzky Senior Vice President and
Actuary
Joan M. Squires Senior Vice President, MIS
Systems
Edward Wenzel Senior Vice President,
Corporate Markets
Raymond Yeager Senior Vice President,
MIS Operations
Paul R. Zwilling Executive Vice President
and Chief Actuary
The business address of all officers and directors is 666 Fifth Avenue, New
York, New York 10103, unless otherwise noted.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements of the Securities Act Rule 485(b) for the effectivness of this
amendment to Registration Statement and has duly caused this amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of New York, the State of New York, the 27th day of
April, 1995.
THE AMERICAN LIFE SEPARATE
ACCOUNT NO. 2
(Registrant)
THE AMERICAN LIFE INSURANCE
COMPANY OF NEW YORK
Depositor)
By:/s/ Manfred Altstadt
--------------------
Manfred Altstadt
Senior Executive Vice
President and Chief
Financial Officer
C-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
to Registration Statement has been signed below by the following persons in the
capacities indicated on April 27, 1995.
Signature Title
___________________________ Senior Vice President; Director
James E. Flynn
*
___________________________ Chairman and Chief Executive
Thomas J. Moran Officer; Director
/s/ Manfred Altstadt Senior Executive Vice
___________________________ President & Chief Financial
Manfred Altstadt Officer; Director
*
___________________________ Senior Executive Vice President
Patrick A. Burns & General Counsel; Director
*
___________________________ Director
Richard J. Ciecka
*
___________________________ Director
William S. Conway
*
___________________________ Director
Rita Conyers
*
___________________________ Executive Vice President &
William A. DeMilt Treasurer; Director
*
___________________________ Executive Vice President;
Thomas E. Gilliam Director
C-9
<PAGE>
*
___________________________ Vice Chairman; Director
Theodore L. Herman
*
___________________________ Executive Vice President &
Stephanie J. Kopp Secretary; Director
*
___________________________ President & Chief Operating Officer;
Howard Lichtenstein Director
*
___________________________ Executive Vice President & Chief Actuary;
Paul R. Zwilling Director
*By /s/ Manfred Altstadt
---------------------
Manfred Altstadt
Attorney-in-Fact
C-10
<PAGE>
EXHIBIT INDEX
NO. PAGE
--- ----
27.1 Financial Data Schedule for The American
Separate Account No. 2 Money Market Fund
27.2 Financial Data Schedule for The American
Separate Account No. 2 All American Fund
27.3 Financial Data Schedule for The American
Separate Account No. 2 Equity Index Fund
27.4 Financial Data Schedule for The American
Separate Account No. 2 Invest Co. MID-TRM BND Fund
27.5 Financial Data Schedule for The American
Separate Account No. 2 Invest Co. Composite Fund
27.6 Financial Data Schedule for The American
Separate Account No. 2 Calvert Socially Resp. Fund
27.7 Financial Data Schedule for The American
Separate Account No. 2 Aggressive Equity Fund
27.8 Financial Data Schedule for The American
Separate Account No. 2 TCI Growth Fund
27.9 Financial Data Schedule for The American
Separate Account No. 2 Scudder Int'l Fund
27.10 Financial Data Schedule for The American
Separate Account No. 2 Scudder Capital Growth Fund
27.11 Financial Data Schedule for The American
Separate Account No. 2 Scudder Bond Fund
27.12 Financial Data Schedule for The American
Separate Account No. 2 Invest Co. Short-Term Bond Fund
27.13 Financial Data Schedule for The American
Separate Account No. 2 Bond Fund
27.14 Financial Data Schedule for The American
Life Insurance Company of New York
99.8(a) Participation Agreement among The American
Life insurance Company of New York, Variable Insurance
Products Fund and Fidelity Distributors Corporation
99.8(b) Participation Agreement among The American
Life Insurance Company of New York, Variable Insurance
Products Fund II and Fidelity Distributors Corporation
99.9 Consent of Jones & Blouch
99.10 Consent of Arthur Andersen LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 - MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 47,774
<INVESTMENTS-AT-VALUE> 49,212
<RECEIVABLES> 1,884
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,096
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 29,648
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,438
<NET-ASSETS> 51,096
<DIVIDEND-INCOME> 1,224
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 153
<NET-INVESTMENT-INCOME> 1,071
<REALIZED-GAINS-CURRENT> 3
<APPREC-INCREASE-CURRENT> 1,438
<NET-CHANGE-FROM-OPS> 2,512
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 51,096
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 112
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 153
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.68
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.72
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> AMERICAN LIFE SEPARATE ACCOUNT NO. 2 - ALL AMERICAN FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 151,725
<INVESTMENTS-AT-VALUE> 139,938
<RECEIVABLES> 166,069
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 306,007
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 91,238
<SHARES-COMMON-PRIOR> 27
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,787)
<NET-ASSETS> 306,007
<DIVIDEND-INCOME> 13,437
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,808
<NET-INVESTMENT-INCOME> 11,629
<REALIZED-GAINS-CURRENT> 470
<APPREC-INCREASE-CURRENT> (11,787)
<NET-CHANGE-FROM-OPS> 312
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 305,918
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,564
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,808
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 3.36
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.35
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> AMERICAN LIFE SEPARATE ACCOUNT NO. 2 - EQUITY INDEX FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 35,884
<INVESTMENTS-AT-VALUE> 35,204
<RECEIVABLES> 2,297
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,501
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 35,717
<SHARES-COMMON-PRIOR> 185
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (680)
<NET-ASSETS> 37,501
<DIVIDEND-INCOME> 1,092
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 130
<NET-INVESTMENT-INCOME> 962
<REALIZED-GAINS-CURRENT> 2
<APPREC-INCREASE-CURRENT> (680)
<NET-CHANGE-FROM-OPS> 284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 37,307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 130
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.05
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.05
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 INVEST CO. MID-TRM BND FD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 678
<INVESTMENTS-AT-VALUE> 705
<RECEIVABLES> 3,022
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,727
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,694
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27
<NET-ASSETS> 3,727
<DIVIDEND-INCOME> 30
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 35
<NET-INVESTMENT-INCOME> (5)
<REALIZED-GAINS-CURRENT> (13)
<APPREC-INCREASE-CURRENT> 27
<NET-CHANGE-FROM-OPS> 9
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,727
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 35
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.06
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.01
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 INVEST CO. COMPOSITE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 282,262
<INVESTMENTS-AT-VALUE> 221,680
<RECEIVABLES> 149,516
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 371,196
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 131,650
<SHARES-COMMON-PRIOR> 322
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (60,582)
<NET-ASSETS> 371,196
<DIVIDEND-INCOME> 10,221
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,528
<NET-INVESTMENT-INCOME> 7,693
<REALIZED-GAINS-CURRENT> (1,049)
<APPREC-INCREASE-CURRENT> (60,582)
<NET-CHANGE-FROM-OPS> (53,938)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 370,246
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,528
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 2.95
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.82
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 CALVERT SOCIALLY RESP. FD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 29,164
<INVESTMENTS-AT-VALUE> 28,109
<RECEIVABLES> 578
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,687
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 18,308
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,055)
<NET-ASSETS> 28,687
<DIVIDEND-INCOME> 874
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6
<NET-INVESTMENT-INCOME> 868
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (1,055)
<NET-CHANGE-FROM-OPS> (187)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28,687
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.64
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.57
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> AMERICAN LIFE SEPARATE ACCOUNT NO. 2 AGGRESSIVE EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> MAY-02-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 66,315
<INVESTMENTS-AT-VALUE> 69,686
<RECEIVABLES> 42,387
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,073
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 106,710
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,371
<NET-ASSETS> 112,073
<DIVIDEND-INCOME> 498
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 273
<NET-INVESTMENT-INCOME> 225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 3,371
<NET-CHANGE-FROM-OPS> 3,596
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 112,073
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 192
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 273
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.05
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 - TCI GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 94,692
<INVESTMENTS-AT-VALUE> 94,298
<RECEIVABLES> 28,821
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,119
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 13,116
<SHARES-COMMON-PRIOR> 20
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (394)
<NET-ASSETS> 28,687
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 293
<NET-INVESTMENT-INCOME> (292)
<REALIZED-GAINS-CURRENT> 607
<APPREC-INCREASE-CURRENT> (394)
<NET-CHANGE-FROM-OPS> (79)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 122,926
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 233
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 293
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.61
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.39
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 - SCUDDER INT'L FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 477,226
<INVESTMENTS-AT-VALUE> 449,161
<RECEIVABLES> 115,397
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 564,558
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 52,296
<SHARES-COMMON-PRIOR> 38
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (28,065)
<NET-ASSETS> 564,558
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,004
<NET-INVESTMENT-INCOME> (1,004)
<REALIZED-GAINS-CURRENT> (26)
<APPREC-INCREASE-CURRENT> (28,005)
<NET-CHANGE-FROM-OPS> (29,095)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 564,135
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 846
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,004
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 11.06
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.80
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 - SCUDDER CAPITAL GWTH FD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 263,309
<INVESTMENTS-AT-VALUE> 250,981
<RECEIVABLES> 73,395
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 324,376
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 22,116
<SHARES-COMMON-PRIOR> 59
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (12,328)
<NET-ASSETS> 324,376
<DIVIDEND-INCOME> 478
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,443
<NET-INVESTMENT-INCOME> (965)
<REALIZED-GAINS-CURRENT> (56)
<APPREC-INCREASE-CURRENT> (12,328)
<NET-CHANGE-FROM-OPS> (13,349)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 323,401
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,160
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,443
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 16.46
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.67
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> AMERICAN LIFE SEPARATE ACCT. NO. 2 - SCUDDER BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,504
<INVESTMENTS-AT-VALUE> 2,486
<RECEIVABLES> 5,254
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,740
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 799
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (18)
<NET-ASSETS> 7,740
<DIVIDEND-INCOME> 203
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 125
<NET-INVESTMENT-INCOME> 78
<REALIZED-GAINS-CURRENT> (348)
<APPREC-INCREASE-CURRENT> (18)
<NET-CHANGE-FROM-OPS> (288)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,739
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 125
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.32
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.69
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> AMER. LIFE SEP. ACCT. NO. 2 INVEST. CO. SHORT-TRM BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,581
<INVESTMENTS-AT-VALUE> 2,489
<RECEIVABLES> 1,268
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,757
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,639
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (92)
<NET-ASSETS> 3,757
<DIVIDEND-INCOME> 85
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 21
<NET-INVESTMENT-INCOME> 64
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (92)
<NET-CHANGE-FROM-OPS> (28)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,757
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.03
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.03
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> AMERICAN LIFE SEPARATE ACCOUNT NO. 2 - BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 41,638
<INVESTMENTS-AT-VALUE> 21,592
<RECEIVABLES> 31,820
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,412
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 23,434
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (20,046)
<NET-ASSETS> 53,412
<DIVIDEND-INCOME> 1,448
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 416
<NET-INVESTMENT-INCOME> 1,032
<REALIZED-GAINS-CURRENT> (57)
<APPREC-INCREASE-CURRENT> (20,046)
<NET-CHANGE-FROM-OPS> (19,071)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 53,412
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 272
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 416
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 2.39
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.28
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<CURRENCY> U.S. DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-START> JAN-01-1994 JAN-01-1993
<PERIOD-END> DEC-31-1994 DEC-31-1993
<EXCHANGE-RATE> 1 1
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 1,161,336,455 1,096,096,915
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 27,047,563 27,847,000
<REAL-ESTATE> 1,464,537 2,184,744
<TOTAL-INVEST> 1,109,848,555 1,126,128,659
<CASH> 22,713,986 32,056,555
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 1,256,041,871 1,220,970,900
<POLICY-LOSSES> 0 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 1,125,732,534 1,085,250,150
<NOTES-PAYABLE> 0 0
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 65,694,008 60,272,669
<TOTAL-LIABILITY-AND-EQUITY> 1,256,041,871 1,220,970,900
116,999,054 130,745,307
<INVESTMENT-INCOME> 89,217,703 88,487,828
<INVESTMENT-GAINS> 0 0
<OTHER-INCOME> (1,229,251) (2,351)
<BENEFITS> 142,692,466 126,659,057
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> (1,450,037) 11,473,922
<INCOME-TAX> 2,131,416 (5,107,176)
<INCOME-CONTINUING> 681,379 7,189,028
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 681,379 7,189,078
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<RESERVE-OPEN> 1,085,250,150 1,027,730,382
<PROVISION-CURRENT> 37,540,895 57,131,083
<PROVISION-PRIOR> 57,131,083 175,233,273
<PAYMENTS-CURRENT> 140,352,356 128,652,443
<PAYMENTS-PRIOR> 128,652,443 116,058,434
<RESERVE-CLOSE> 1,125,732,534 1,085,250,150
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.8A
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND,
--------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
-----------------------------------------------
THIS AGREEMENT, made and entered into as of the 30th day of April, 1995
by and among THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts (hereinafter
the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
1
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and/or variable annuity contracts under the 1933 Act; and
WHEREAS, the Company may also issue certain variable annuity contracts
that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable life insurance and
variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the
2
<PAGE>
Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund then utilized by the
Accounts; or (b) the
3
<PAGE>
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding vehicle
for the Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated
4
<PAGE>
asset account under Section 4240 of the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts if such
registration is required under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further
5
<PAGE>
represents that it will sell and distribute the Fund shares in accordance with
the laws of the State of New York and all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements
6
<PAGE>
of additional information. Except as provided in the following three sentences,
all expenses of printing and distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the Company. For prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film or computer diskettes in lieu of
receiving printed copies of the Fund's prospectus, the Fund will reimburse the
Company in an amount equal to the product of A and B where A is the number of
such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's semi-
annual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule B attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
7
<PAGE>
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
8
<PAGE>
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
9
<PAGE>
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing
10
<PAGE>
the assets allocable to some or all of the separate accounts from the Fund or
any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account, provided,
however, that the Company shall have the right to choose which course of action
is appropriate if more than one is available to remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required
11
<PAGE>
by any such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares or approved by the Fund or its designee under
Section 4.1 hereof; or
12
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent),
but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of
this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel
13
<PAGE>
retained by it, and the Company will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other
than reasonable costs of investigation. The Indemnified Parties shall
not settle or otherwise compromise any claim for which indemnification
may be sought from the Company without the Company's prior written
consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
14
<PAGE>
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the approval of the Fund or its designee
under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or
15
<PAGE>
otherwise compromise any claim for which indemnification may be sought from the
Underwriter without the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
16
<PAGE>
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Fund to such party of the Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by ninety (90) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
17
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice to the
Company in the event of a material adverse change in financial
condition), if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to
18
<PAGE>
implement Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Underwriter the opinion of counsel for the Company (which counsel
shall be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
19
<PAGE>
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
20
<PAGE>
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report (prepared
under generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 120 days
after the end of each fiscal year, in each case with any report
thereon submitted to the Company by independent accountants;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in any event
within 60 days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery thereof
to stockholders, excluding regular or periodic notices and
reports to policyholders and contract owners pertaining to the
operations, benefits or status of their contracts with the
Company;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the Securities and
Exchange Commission not provided under Section 4.6 hereof, and
any other financial statement filed with any state insurance
regulator, together with any report thereon submitted to the
Company by independent accountants, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any annual, interim
or special audit made by them of the books of the Company, as
soon as practical after the receipt thereof, provided that
nothing in this subsection (e) shall require the Company to
provide any information that is otherwise privileged or
confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
By: ___________________________
Name: ___________________________
Title: ___________________________
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS
21
<PAGE>
CORPORATION
By: ________________________ By: _______________________
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
22
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
Separate Account No. 1 IAC-8700-AX
Separate Account No. 2 3805-FPA-AX
3814-IRA-AX
Separate Account No. 3 3410-VUL-AX
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
24
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
---
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
25
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. Fidelity
Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
TCI Portfolios, Inc.
TCI Growth Fund
Calvert Responsibly Invested Balanced Portfolio
27
<PAGE>
EXHIBIT 99.8B
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
-----------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
-----------------------------------------------
THIS AGREEMENT, made and entered into as of the 30th day of April, 1995
by and among THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity
1
<PAGE>
and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and/or variable annuity contracts under the 1933 Act; and
WHEREAS, the Company may also issue certain variable annuity contracts
that are exempt from registration under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable life insurance and
variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act if such Account is required to be
registered under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and/or variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of
2
<PAGE>
this Section 1.1, the Company shall be the designee of the Fund for receipt of
such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such order by
9:00 a.m. Boston time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available in the Accounts and under the variable annuity policies
and/or variable annuity contracts with the form number(s) which are listed on
Schedule A attached hereto and incorporated herein by this reference, as such
Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof,
3
<PAGE>
has investment objectives or policies that are substantially different from the
investment objectives and policies of all the Portfolios of the Fund then
utilized by the Accounts; or (b) the Company gives the Fund and the Underwriter
45 days written notice of its intention to make such other investment company
available as a funding vehicle for the Contracts; or (c) such other investment
company was available as a funding vehicle for the Contracts prior to the date
of this Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement (a list of such funds appearing on Schedule C to
this Agreement); or (d) the Fund or Underwriter consents to the use of such
other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
and if more than one Account is entering a purchase order on a particular day
payments on behalf of multiple Accounts may be aggregated for purchases of
Portfolio shares. However, if one or more Accounts are redeeming shares on a
given day the amount of any redemptions may NOT be netted against any purchases,
by that Account or other Accounts. For purpose of Section 2.10 and 2.11, upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act if registration is required under the 1933
Act; that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
4
<PAGE>
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established each Account prior to any issuance
or sale thereof as a segregated asset account under Section 4240 of the New York
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts if such registration is required under the 1940 Act.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, life insurance or annuity contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
5
<PAGE>
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film (in either or both of two
sizes, per the Company's request: 8.375" by 10.875" and 5.375" by 8.375")
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one
6
<PAGE>
document. Alternatively, the Company may print the Fund's prospectus and/or its
Statement of Additional Information in combination with other fund companies'
prospectuses and statements of additional information. Except as provided in the
following three sentences, all expenses of printing and distributing Fund
prospectuses and Statements of Additional Information shall be the expense of
the Company. For prospectuses and Statements of Additional Information provided
by the Company to its existing owners of Contracts in order to update disclosure
as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film or
computer diskettes in lieu of receiving printed copies of the Fund's prospectus,
the Fund will reimburse the Company in an amount equal to the product of A and B
where A is the number of such prospectuses distributed to owners of the
Contracts, and B is the Fund's per unit cost of typesetting and printing the
Fund's prospectus. The same procedures shall be followed with respect to the
Fund's Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. If requested by the
Company, the Fund shall provide camera ready film containing the Fund's semi-
annual and annual reports to shareholders.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule B attached hereto and
7
<PAGE>
incorporated herein by this reference, which standards will also be provided to
the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy
8
<PAGE>
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, contemporaneously with the filing
of such document with the Securities and Exchange Commission or other regulatory
authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other securities regulatory authorities, and brochures for
Contracts not registered under the 1933 Act, contemporaneously with their first
use by the Company.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of
9
<PAGE>
all statements and notices required by any federal or state law, and all taxes
on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as
10
<PAGE>
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including: (1), withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
----
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contract owners the option of making such a change; and
(2), establishing a new registered management investment company or managed
separate account, provided, however, that the Company shall have the right to
choose which course of action is appropriate if more than one is available to
remedy the problem.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6)
11
<PAGE>
months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares or approved by the Fund or its designee under
Section 4.1 hereof; or
12
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by
the Company, or persons under its control) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent),
but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of
this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Company to such party of the Company's election to assume the
defense thereof,
13
<PAGE>
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable
to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation. The
Indemnified Parties shall not settle or otherwise compromise any claim
for which indemnification may be sought from the Company without the
Company's prior written consent.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter
or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
14
<PAGE>
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the approval of the Fund or its designee
under Section 4.1 hereof; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Parties shall not settle or
15
<PAGE>
otherwise compromise any claim for which indemnification may be sought from the
Underwriter without the Underwriter's prior written consent.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
16
<PAGE>
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Fund to such party of the Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
17
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by 30 days'
written notice to the Company (or by immediate written notice to the
Company in the event of a material adverse change in financial
condition), if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to
18
<PAGE>
implement Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Underwriter the opinion of counsel for the Company (which counsel
shall be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company before 6/2/95:
Mutual of America Life Insurance Company
666 Fifth Avenue
New York, NY 10103
Attention: General Counsel
If to the Company after 6/1/95
Mutual of America Life Insurance Company
320 Park Avenue
New York, NY 10022
Attn: General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
19
<PAGE>
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
20
<PAGE>
(a) the Company's annual statement (prepared under
statutory accounting principles) and annual report (prepared
under generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 120 days
after the end of each fiscal year, in each case with any report
thereon submitted to the Company by independent accountants;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in any event
within 60 days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice
or report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery thereof
to stockholders, excluding regular or periodic notices and
reports to policyholders and contract owners pertaining to the
operations, benefits or status of their contracts with the
Company;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the Securities and
Exchange Commission not provided under Section 4.6 hereof, and
any other financial statement filed with any state insurance
regulator, together with any report thereon submitted to the
Company by independent accountants, as soon as practical after
the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any annual, interim
or special audit made by them of the books of the Company, as
soon as practical after the receipt thereof, provided that
nothing in this subsection (e) shall require the Company to
provide any information that is otherwise privileged or
confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
By: ___________________________
Name: ___________________________
Title: ___________________________
VARIABLE INSURANCE PRODUCTS FUND II FIDELITY DISTRIBUTORS
21
<PAGE>
CORPORATION
By: ________________________ By: _______________________
J. Gary Burkhead Kurt A. Lange
Senior Vice President President
22
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
Separate Account No. 1 IAC-8700-AX
Separate Account No. 2 3805-FPA-AX
3814-IRA-AX
Separate Account No. 3 3410-VUL-AX
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
24
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal as to references to the
Fund, the Underwriter or any affiliate of either.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
---
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
25
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. Fidelity
Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Scudder Variable Life Insurance Fund
Capital Growth Portfolio
Bond Portfolio
International Portfolio
TCI Portfolios, Inc.
TCI Growth Fund
Calvert Responsibly Invested Balanced Portfolio
27
<PAGE>
EXHIBIT 99.9
[JONES & BLOUCH LETTERHEAD]
APRIL 27, 1995
BOARD OF DIRECTORS
THE AMERICAN LIFE INSURANCE COMPANY
OF NEW YORK
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
GENTLEMEN:
WE HEREBY CONSENT TO THE REFERENCE TO THIS FIRM UNDER THE CAPTION
"LEGAL MATTERS" IN THE STATEMENT OF ADDITIONAL INFORMATION CONTAINED IN POST-
EFFECTIVE AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT ON FORM N-4 OF THE
AMERICAN SEPARATE ACCOUNT NO. 2 AND THE AMERICAN LIFE INSURANCE COMPANY OF NEW
YORK, FILE NO. 33-66406, TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
VERY TRULY YOURS,
JONES & BLOUCH
<PAGE>
EXHIBIT 99.10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of registration
statement no. 33-66406.
ARTHUR ANDERSEN LLP
New York, New York
April 28, 1995
