<PAGE>
American Life
SEPARATE ACCOUNT NO. 2
ANNUAL REPORT
&
ANNUAL REPORTS OF
MUTUAL OF AMERICA INVESTMENT CORPORATION
SCUDDER VARIABLE LIFE INVESTMENT FUND
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
CALVERT SOCIAL BALANCED PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS
FUND II:
CONTRAFUND AND ASSET MANAGER PORTFOLIOS
DECEMBER 31, 1998
This report is not to be construed as an offering for sale of any Variable
Product. No offering is made except in conjunction with a prospectus which must
precede or accompany this report.
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
Separate Account No. 2
Annual Report
December 31, 1998
Dear Policyowner:
We are pleased to send you the 1998 Annual Report of American Life's
Separate Account No. 2. This Account, which commenced operations in late 1993,
is an investment vehicle for owners of our Individual Retirement Annuity and
Flexible Premium Annuity contracts. Separate Account No. 2 consists of sixteen
distinct funds. Each invests in shares of one of eight funds of Mutual of
America Investment Corporation (the "Investment Company"): the Money Market,
All America, Equity Index, Bond, Short-Term Bond, Mid-Term Bond, Composite and
Aggressive Equity Fund; three portfolios of Scudder Variable Life Investment
Fund ("Scudder"): the Bond, Capital Growth and International Portfolio; the VP
Capital Appreciation Fund of American Century Variable Portfolios, Inc.
("American Century"); the Calvert Social Balanced Portfolio of Calvert
Variable Series, Inc. (formerly, Acacia Capital Corporation's Calvert
Responsibly Invested Balanced Portfolio) ("Calvert"); the Equity-Income
Portfolio of Fidelity Investments Variable Insurance Products Fund ("Fidelity
VIP"); and the Contrafund Portfolio and Asset Manager Portfolio of Fidelity
Investments Variable Insurance Products Fund II ("Fidelity VIP II").
Each of the funds of Separate Account No. 2 owns shares in a similarly named
fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert, portfolio of Fidelity VIP and portfolio of
Fidelity VIP II. The investment results of each of the funds of Separate
Account No. 2 are based on the performance of the corresponding funds or
portfolios of the Investment Company, Scudder, American Century, Calvert,
Fidelity VIP and Fidelity VIP II.
The Separate Account funds invest in funds and portfolios which have the
following investment objectives:
The Investment Company Money Market Fund: This Fund seeks to obtain high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital through investments in money
market instruments and other short-term debt securities.
The Investment Company All America Fund: The investment objective for
approximately 60% of the assets of this Fund (the "Indexed Assets") is to
provide investment results that, to the extent practical, correspond to the
performance of the Standard & Poor's Composite Index of 500 Stocks (the "S&P
500"). The Indexed Assets are invested in the same manner as the Equity Index
Fund described below. The investment objective for the remaining approximately
40% of the assets (the "Active Assets") is to achieve a high level of total
return, through both appreciation of capital and, to a lesser extent, current
income, by means of a diversified portfolio of securities that may include
common stocks, securities convertible into common stocks, bonds and money
market instruments.
The Investment Company Equity Index Fund: This Fund seeks to duplicate, as
closely as possible, the investment performance of the S&P 500 by investing in
approximately 500 publicly traded stocks that comprise the S&P 500 ("Standard
& Poor's 500", "S&P" and "S&P 500" are trademarks of Standard & Poor's
Corporation).
The Investment Company Bond Fund: This Fund seeks a high level of current
income, together with preservation of capital, through investments in such
securities as U.S. Government, corporate and other notes and bonds.
The Investment Company Short-Term Bond Fund: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of one to three years.
The Investment Company Mid-Term Bond Fund: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of three to seven years.
The Investment Company Composite Fund: This Fund seeks a high total rate of
return on investments, through both appreciation of capital and current
income, through investments in a diversified portfolio of common stocks, bonds
and money market instruments.
I
<PAGE>
The Investment Company Aggressive Equity Fund: The investment objective for
approximately half of the assets of the Fund is to achieve capital
appreciation by investing in companies believed to possess above-average
growth potential. Growth can be in the areas of earnings or gross sales which
can be measured in either dollars or in unit volume. The investment objective
for the other half of the assets of the Fund is to achieve capital
appreciation by investing in companies believed to possess valuable assets or
whose securities are undervalued in the marketplace in relation to factors
such as a company's assets, earnings or growth potential.
The Scudder Bond Portfolio: This Portfolio seeks a high level of income
consistent with the prudent investment of capital through a flexible
investment program emphasizing high-grade bonds.
The Scudder Capital Growth Portfolio: This Portfolio seeks to maximize long-
term capital growth through a broad and flexible investment program. The
Portfolio invests in marketable securities, principally common stocks and,
consistent with its objective of long-term capital growth, preferred stocks.
The Scudder International Portfolio: This Portfolio seeks long-term growth
of capital primarily through a diversified portfolio of foreign equity
securities.
The VP Capital Appreciation Fund: This Fund seeks capital growth over time
by investing primarily in common stocks that are considered by management to
have better-than-average prospects for appreciation.
The Calvert Social Balanced Portfolio (formerly, Calvert Responsibly
Invested Balanced Portfolio): This Portfolio seeks a total return above the
rate of inflation through an actively managed portfolio of stocks, bonds and
money market instruments selected with a concern for the social impact of each
investment.
The Fidelity VIP Equity-Income Portfolio: This Portfolio seeks reasonable
income by investing primarily in income-producing equity securities, while
considering the potential for capital appreciation. The Portfolio also seeks
to achieve a yield that exceeds the composite yield on the securities
comprising the S&P 500 Index.
The Fidelity VIP II Contrafund Portfolio: This Portfolio seeks long-term
capital appreciation by investing primarily in a broad variety of common
stocks using both growth-oriented and contrarian disciplines.
The Fidelity VIP II Asset Manager Portfolio: This Portfolio seeks high long-
term return with reduced risk by using a broadly diversified mix of stocks,
bonds and short-term money market investments.
For the year ended December 31, 1998, the following total returns were
experienced in these sixteen Separate Account funds:
<TABLE>
<S> <C>
Investment Company Money Market Fund(1)........................... + 3.8%
Investment Company All America Fund............................... +19.4%
Investment Company Equity Index Fund.............................. +26.6%
Investment Company Bond Fund...................................... + 5.6%
Investment Company Short-Term Bond Fund........................... + 4.1%
Investment Company Mid-Term Bond Fund............................. + 4.8%
Investment Company Composite Fund................................. +12.7%
Investment Company Aggressive Equity Fund......................... - 6.6%
Scudder Bond Fund................................................. + 5.0%
Scudder Capital Growth Fund....................................... +21.4%
Scudder International Fund........................................ +16.7%
American Century VP Capital Appreciation Fund..................... - 3.4%
Calvert Social Balanced Fund...................................... +14.5%
Fidelity VIP Equity-Income Fund................................... +10.1%
Fidelity VIP II Contrafund........................................ +28.1%
Fidelity VIP II Asset Manager Fund................................ +13.4%
</TABLE>
-------
(1) The seven-day net annualized effective yield as of 2/16/99 was
3.18% and is not necessarily indicative of future actual yields.
II
<PAGE>
Total return is equal to the changes in the value of a unit of participation
in a fund from the beginning to the end of the specified period. It reflects
investment income earned and reinvested plus the changes in the market value
(whether realized or unrealized) of the securities in the respective fund or
portfolio of the Investment Company, Scudder, American Century, Calvert or
Fidelity during the indicated period. Results are net of all charges,
including a monthly service charge (assessed against an average account
balance for all individually allocated contracts) based upon a hypothetical
$1,000 invested at the beginning of the period. These returns are not
guaranteed and are not necessarily indicative of the future investment
performance of the particular fund. Withdrawals and contributions made within
a period would experience different rates of return based on the respective
unit values on the dates of such transactions.
This report includes financial statements for each fund of Separate Account
No. 2. Following this report are the financial statements for each similarly
named fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert and portfolios of Fidelity VIP and Fidelity VIP
II.
Total Return Separate Account Performance Notes for extended time periods
and other services are available by calling 1-800-468-3285.
I hope you will find this report helpful and informative.
Sincerely,
/s/ Manfred Altstadt
Manfred Altstadt
Senior Executive Vice President
and Chief Financial Officer,
The American Life Insurance Company
of New York
III
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Annual Report of American Life Separate Account No. 2..................... I
Statement of Assets and Liabilities...................................... V
Statement of Operations.................................................. VII
Statements of Changes in Net Assets...................................... IX
Notes to Financial Statements............................................ XII
Report of Independent Public Accountants................................. XVIII
Annual Report of Mutual of America Investment Corporation................. 1
President's Message...................................................... 1
Portfolio Management Discussions......................................... 2
Portfolio of Investments in Securities:
Money Market Fund...................................................... 9
All America Fund....................................................... 10
Equity Index Fund...................................................... 18
Bond Fund.............................................................. 23
Short-Term Bond Fund................................................... 26
Mid-Term Bond Fund..................................................... 28
Composite Fund......................................................... 30
Aggressive Equity Fund................................................. 35
Statement of Assets and Liabilities...................................... 37
Statement of Operations.................................................. 38
Statements of Changes in Net Assets...................................... 39
Financial Highlights..................................................... 41
Notes to Financial Statements............................................ 47
Report of Independent Public Accountants................................. 52
</TABLE>
Annual Report of Scudder Variable Life Investment Fund
Annual Report of VP Capital Appreciation Fund of American Century Variable
Portfolios, Inc.
Annual Report of Calvert Social Balanced Portfolio of Calvert Variable Series,
Inc.
Annual Report of Fidelity Investments Variable Insurance Products Fund: Equity-
Income Portfolio
Annual Report of Fidelity Investments Variable Insurance Products Fund II:
Contrafund Portfolio
Annual Report of Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio
IV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
Investment Company
---------------------------------------------------------
Money Market All America Equity Index Bond
Fund Fund Fund Fund
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment
Corporation
at market value
(Cost:
Money Market Fund --
$ 775,149
All America Fund --
$ 7,676,221
Equity Index Fund --
$10,347,879
Bond Fund --
$ 2,459,823)
(Notes 1 and 2)........ $757,429 $7,805,731 $10,886,214 $2,331,553
Due From (To) General
Account................ 735 (26,125) 428,915 (64,201)
-------- ---------- ----------- ----------
Net Assets.............. $758,164 $7,779,606 $11,315,129 $2,267,352
======== ========== =========== ==========
Unit Value at December
31, 1998 (Note 5)...... $2.03 $8.09 $2.86 $3.17
======== ========== =========== ==========
Number of Units
Outstanding at December
31, 1998
(Note 5)............... 373,107 961,495 3,950,586 714,893
======== ========== =========== ==========
<CAPTION>
Investment Company
---------------------------------------------------------
Short-Term Mid-Term Composite Aggressive 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 --
$ 160,030
Mid-Term Bond Fund --
$ 271,446
Composite Fund --
$3,508,703
Aggressive Equity
Fund -- $2,873,665)
(Notes 1 and 2)........ $157,577 $ 260,284 $ 3,431,811 $3,564,402
Due From (To) Mutual of
America General
Account................ 368 498 (916) 21,017
-------- ---------- ----------- ----------
Net Assets.............. $157,945 $ 260,782 $ 3,430,895 $3,585,419
======== ========== =========== ==========
Unit Value at December
31, 1998 (Note 5)...... $1.24 $1.32 $4.93 $2.02
======== ========== =========== ==========
Number of Units
Outstanding at December
31, 1998
(Note 5)............... 126,929 197,045 696,121 1,778,370
======== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
V
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
American
Scudder Century Calvert
--------------------------------- ------------ --------
Capital VP Capital Social
Bond Growth International Appreciation Balanced
Fund Fund Fund Fund Fund
-------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder Portfolios,
American
Century VP Capital Appreciation Fund
and
Calvert Social Balanced Portfolio at
market value
(Cost:
Scudder Bond Fund -- $ 348,293
Scudder Capital Growth Fund --
$5,100,699
Scudder International Fund --
$1,817,423
American Century VP
Capital Appreciation Fund --
$ 480,419
Calvert Social Balanced Fund --
$ 715,641)
(Notes 1 and 2)..................... $348,936 $6,154,085 $1,827,073 $478,720 $779,254
Due From (To) General Account........ 2,088 14,632 (43,469) (93,371) 1,966
-------- ---------- ---------- -------- --------
Net Assets........................... $351,024 $6,168,717 $1,783,604 $385,349 $781,220
======== ========== ========== ======== ========
Unit Value at December 31, 1998 (Note
5).................................. $13.02 $36.07 $16.93 $10.69 $3.04
======== ========== ========== ======== ========
Number of Units Outstanding at
December 31, 1998
(Note 5)............................ 26,966 171,014 105,376 36,061 256,931
======== ========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
-----------------------------------
VIP
Equity- VIP II VIP II
Income Contra Asset Manager
Fund Fund Fund
---------- ---------- -------------
<S> <C> <C> <C>
Assets:
Investments in Fidelity Portfolios at
market value
(Cost:
VIP Equity-Income Fund --
$3,189,549
VIP II Contra Fund -- $6,133,047
VIP II Asset Manager Fund --
$1,485,238)
(Notes 1 and 2)........................... $3,526,109 $7,292,320 $1,631,487
Due From (To) General Account.............. 17,511 3,495 6,728
---------- ---------- ----------
Net Assets................................. $3,543,620 $7,295,815 $1,638,215
========== ========== ==========
Unit Value at December 31, 1998 (Note 5)... $30.65 $26.16 $24.04
========== ========== ==========
Number of Units Outstanding at December 31,
1998 (Note 5)............................. 115,626 278,931 68,139
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Investment Company
--------------------------------------------------------
Money Market All America Equity Index Bond
Fund Fund Fund Fund
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 34,221 $ 921,755 $ 797,969 $ 222,968
-------- ---------- ---------- ---------
Total income............ 34,221 921,755 797,969 222,968
-------- ---------- ---------- ---------
Expenses (Note 3):
Fees................... 5,609 90,003 102,337 27,453
Administrative
expenses.............. 1,004 8,877 6,853 2,181
-------- ---------- ---------- ---------
Total expenses.......... 6,613 98,880 109,190 29,634
-------- ---------- ---------- ---------
Net Investment Income
(Loss)................. 27,608 822,875 688,779 193,334
-------- ---------- ---------- ---------
Net Realized and
Unrealized
Gain (Loss) on
Investments (Note 1):
Net realized gain
(loss) on
investments........... 343 633,058 1,334,602 45,639
Net unrealized
appreciation
(depreciation) of
investments........... (10,884) (242,666) (8,737) (109,157)
-------- ---------- ---------- ---------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (10,541) 390,392 1,325,865 (63,518)
-------- ---------- ---------- ---------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 17,067 $1,213,267 $2,014,644 $ 129,816
======== ========== ========== =========
<CAPTION>
Investment Company
--------------------------------------------------------
Short-Term Mid-Term Composite Aggressive Equity
Bond Fund Bond Fund Fund Fund
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 7,250 $ 13,485 $ 143,471 $ 35,210
-------- ---------- ---------- ---------
Total income............ 7,250 13,485 143,471 35,210
-------- ---------- ---------- ---------
Expenses (Note 3):
Fees................... 1,303 1,977 38,600 54,971
Administrative
expenses.............. 167 295 4,768 2,804
-------- ---------- ---------- ---------
Total expenses.......... 1,470 2,272 43,368 57,775
-------- ---------- ---------- ---------
Net Investment Income
(Loss)................. 5,780 11,213 100,103 (22,565)
-------- ---------- ---------- ---------
Net Realized and
Unrealized
Gain (Loss) on
Investments (Note 1):
Net realized gain
(loss) on
investments........... (28) (575) (51,778) (969,122)
Net unrealized
appreciation
(depreciation) of
investments........... (1,455) (6,053) 321,364 694,336
-------- ---------- ---------- ---------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (1,483) (6,628) 269,586 (274,786)
-------- ---------- ---------- ---------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 4,297 $ 4,585 $ 369,689 $(297,351)
======== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
American
Scudder Century
--------------------------------- ------------
Capital VP Capital
Bond Growth International Appreciation
Fund Fund Fund Fund
------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends..................... $12,180 $ 325,591 $ 175,511 $ 21,242
------- ---------- ---------- --------
Total income................... 12,180 325,591 175,511 21,242
------- ---------- ---------- --------
Expenses (Note 3):
Fees.......................... 2,493 70,985 50,299 4,220
Administrative expenses....... 747 2,332 439 108
------- ---------- ---------- --------
Total expenses................. 3,240 73,317 50,738 4,328
------- ---------- ---------- --------
Net Investment Income (Loss)... 8,940 252,274 124,773 16,914
------- ---------- ---------- --------
Net Realized and Unrealized
Gain (Loss) on Investments
(Note 1):
Net realized gain (loss) on
investments.................. 881 154,343 3,169,145 (99,213)
Net unrealized appreciation
(depreciation) of
investments.................. (1,656) 616,576 (650) 40,349
------- ---------- ---------- --------
Net Realized and Unrealized
Gain (Loss) on Investments.... (775) 770,919 3,168,495 (58,864)
------- ---------- ---------- --------
Net Increase (Decrease) in Net
Assets Resulting From
Operations.................... $ 8,165 $1,023,193 $3,293,268 $(41,950)
======= ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
Calvert Fidelity
-------- ----------------------------------
VIP
Social Equity- VIP II VIP II
Balanced Income Contra Asset Manager
Fund Fund Fund Fund
-------- -------- ---------- -------------
<S> <C> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends........................ $56,349 $179,360 $ 254,179 $169,602
------- -------- ---------- --------
Total income...................... 56,349 179,360 254,179 169,602
------- -------- ---------- --------
Expenses (Note 3):
Fees............................. 8,392 36,373 62,374 18,096
Administrative expenses.......... 1,422 6,134 3,485 2,599
------- -------- ---------- --------
Total expenses.................... 9,814 42,507 65,859 20,695
------- -------- ---------- --------
Net Investment Income (Loss)...... 46,535 136,853 188,320 148,907
------- -------- ---------- --------
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on
investments..................... 10,561 72,638 765,617 (5,492)
Net unrealized appreciation
(depreciation) of investments... 30,355 (34,830) 406,309 11,903
------- -------- ---------- --------
Net Realized and Unrealized Gain
(Loss) on Investments............ 40,916 37,808 1,171,926 6,411
------- -------- ---------- --------
Net Increase (Decrease) in Net
Assets Resulting From
Operations....................... $87,451 $174,661 $1,360,246 $155,318
======= ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Investment Company
----------------------------------------------------------------------
Money Market Fund All America Fund Equity Index Fund
--------------------- ---------------------- -----------------------
1998 1997 1998 1997 1998 1997
---------- --------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 27,608 $ 8,303 $ 822,875 $ 694,121 $ 688,779 $ 66,786
Net realized gain
(loss) on
investments........... 343 22 633,058 100,040 1,334,602 210,401
Net unrealized
appreciation
(depreciation) of
investments........... (10,884) (2,891) (242,666) 170,608 (8,737) 524,908
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 17,067 5,434 1,213,267 964,769 2,014,644 802,095
---------- --------- ---------- ---------- ----------- ----------
From Unit Transactions:
Contributions.......... 630,831 83,909 1,595,623 1,823,327 2,814,473 2,404,743
Withdrawals............ (134,654) (21,211) (918,207) (456,949) (827,177) (255,564)
Net Transfers.......... 68,215 (15,293) (322,226) 527,066 1,681,187 1,207,296
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
from unit
transactions........... 564,392 47,405 355,190 1,893,444 3,668,483 3,356,475
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
in Net Assets.......... 581,459 52,839 1,568,457 2,858,213 5,683,127 4,158,570
Net Assets:
Beginning of Year....... 176,705 123,866 6,211,149 3,352,936 5,632,002 1,473,432
---------- --------- ---------- ---------- ----------- ----------
End of Year............. $ 758,164 $ 176,705 $7,779,606 $6,211,149 $11,315,129 $5,632,002
========== ========= ========== ========== =========== ==========
<CAPTION>
Investment Company
----------------------------------------------------------------------
Short-Term
Bond Fund Bond Fund Mid-Term Fund
--------------------- ---------------------- -----------------------
1998 1997 1998 1997 1998 1997
---------- --------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 193,334 $ 46,454 $ 5,780 $ 1,367 $ 11,213 $ 2,093
Net realized gain
(loss) on
investments........... 45,639 (15,444) (28) 24 (575) (34,118)
Net unrealized
appreciation
(depreciation) of
investments........... (109,157) 32,882 (1,455) (388) (6,053) 35,334
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 129,816 63,892 4,297 1,003 4,585 3,309
---------- --------- ---------- ---------- ----------- ----------
From Unit Transactions:
Contributions.......... 1,131,599 249,039 73,817 14,842 42,486 18,408
Withdrawals............ (177,675) (55,507) (5,146) (1,270) (7,155) (79,572)
Net Transfers.......... 280,108 (256,192) 55,949 (5,813) 159,141 (190,378)
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
from unit
transactions........... 1,234,032 (62,660) 124,620 7,759 194,472 (251,542)
---------- --------- ---------- ---------- ----------- ----------
Net Increase (Decrease)
in Net Assets.......... 1,363,848 1,232 128,917 8,762 199,057 (248,233)
Net Assets:
Beginning of Year....... 903,504 902,272 29,028 20,266 61,725 309,958
---------- --------- ---------- ---------- ----------- ----------
End of Year............. $2,267,352 $ 903,504 $ 157,945 $ 29,028 $ 260,782 $ 61,725
========== ========= ========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
IX
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Investment Company
-----------------------------------------------
Composite Fund Aggressive Equity Fund
---------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income
(loss)..................... $ 100,103 $ 589,958 $ (22,565) $ 438,316
Net realized gain (loss) on
investments................ (51,778) 6,592 (969,122) 130,789
Net unrealized appreciation
(depreciation) of
investments................ 321,364 (267,950) 694,336 54,244
---------- ---------- ----------- ----------
Net Increase (Decrease) in
net assets resulting from
operations.................. 369,689 328,600 (297,351) 623,349
---------- ---------- ----------- ----------
From Unit Transactions:
Contributions............... 880,589 882,737 1,243,111 1,846,599
Withdrawals................. (465,461) (182,378) (576,815) (278,875)
Net Transfers............... (159,640) 65,188 (1,711,213) 243,989
---------- ---------- ----------- ----------
Net Increase (Decrease) from
unit transactions........... 255,488 765,547 (1,044,917) 1,811,713
---------- ---------- ----------- ----------
Net Increase (Decrease) in
Net Assets.................. 625,177 1,094,147 (1,342,268) 2,435,062
Net Assets:
Beginning of Year............ 2,805,718 1,711,571 4,927,687 2,492,625
---------- ---------- ----------- ----------
End of Year.................. $3,430,895 $2,805,718 $ 3,585,419 $4,927,687
========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Scudder
--------------------------------------------------------------------
Bond Fund Capital Growth Fund International Fund
------------------ ----------------------- -----------------------
1998 1997 1998 1997 1998 1997
-------- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 8,940 $ 2,208 $ 252,274 $ 108,379 $ 124,773 $ 4,792
Net realized gain
(loss) on
investments........... 881 285 154,343 281,436 3,169,145 114,508
Net unrealized
appreciation
(depreciation) of
investments........... (1,656) 2,025 616,576 271,584 (650) (23,785)
-------- -------- ----------- ---------- ----------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 8,165 4,518 1,023,193 661,399 3,293,268 95,515
-------- -------- ----------- ---------- ----------- ----------
From Unit Transactions:
Contributions.......... 182,295 58,335 2,042,311 1,686,187 490,933 408,312
Withdrawals............ (41,847) (18,824) (1,000,765) (318,095) (320,115) (110,707)
Net Transfers.......... 104,368 9,512 (634,248) 1,080,629 (2,811,143) (204,358)
-------- -------- ----------- ---------- ----------- ----------
Net Increase (Decrease)
from unit
transactions........... 244,816 49,023 407,298 2,448,721 (2,640,325) 93,247
-------- -------- ----------- ---------- ----------- ----------
Net Increase (Decrease)
in Net Assets.......... 252,981 53,541 1,430,491 3,110,120 652,943 188,762
Net Assets:
Beginning of Year....... 98,043 44,502 4,738,226 1,628,106 1,130,661 941,899
-------- -------- ----------- ---------- ----------- ----------
End of Year............. $351,024 $ 98,043 $ 6,168,717 $4,738,226 $ 1,783,604 $1,130,661
======== ======== =========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
X
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
American
Century Calvert
-------------------- ------------------
VP Capital Social
Appreciation Fund Balanced Fund
-------------------- ------------------
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss)....... $ 16,914 $ 7,297 $ 46,535 $ 30,017
Net realized gain (loss) on
investments....................... (99,213) (22,217) 10,561 3,585
Net unrealized appreciation
(depreciation) of investments..... 40,349 7,089 30,355 27,151
--------- --------- -------- --------
Net Increase (Decrease) in net
assets resulting from operations... (41,950) (7,831) 87,451 60,753
--------- --------- -------- --------
From Unit Transactions:
Contributions...................... 75,175 163,525 274,878 208,235
Withdrawals........................ (112,315) (84,674) (68,369) (31,570)
Net Transfers...................... (24,416) (362,546) (26,872) 52,146
--------- --------- -------- --------
Net Increase (Decrease) from unit
transactions....................... (61,556) (283,695) 179,637 228,811
--------- --------- -------- --------
Net Increase (Decrease) in Net
Assets............................. (103,506) (291,526) 267,088 289,564
Net Assets:
Beginning of Year................... 488,855 780,381 514,132 224,568
--------- --------- -------- --------
End of Year......................... $ 385,349 $ 488,855 $781,220 $514,132
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
----------------------------------------------------------------------
VIP VIP II VIP II
Equity-Income Contra Asset Manager
Fund Fund Fund
---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 136,853 $ 119,228 $ 188,320 $ 44,742 $ 148,907 $ 69,945
Net realized gain
(loss) on
investments........... 72,638 67,484 765,617 111,794 (5,492) 5,525
Net unrealized
appreciation
(depreciation) of
investments........... (34,830) 260,021 406,309 462,114 11,903 86,433
---------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 174,661 446,733 1,360,246 618,650 155,318 161,903
---------- ---------- ---------- ---------- ---------- ----------
From Unit Transactions:
Contributions.......... 1,189,305 1,025,900 1,461,583 1,479,493 663,209 579,341
Withdrawals............ (707,392) (301,479) (742,245) (140,441) (202,904) (79,334)
Net Transfers.......... 270,492 108,120 888,336 (173,641) (354,073) 61,271
---------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
from unit
transactions........... 752,405 832,541 1,607,674 1,165,411 106,232 561,278
---------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 927,066 1,279,274 2,967,920 1,784,061 261,550 723,181
Net Assets:
Beginning of Year....... 2,616,554 1,337,280 4,327,895 2,543,834 1,376,665 653,484
---------- ---------- ---------- ---------- ---------- ----------
End of Year............. $3,543,620 $2,616,554 $7,295,815 $4,327,895 $1,638,215 $1,376,665
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
XI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies and Organization
Separate Account No. 2 of The American Life Insurance Company of New York
("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
alternatives: Money Market Fund, All America Fund, Equity Index Fund, Bond
Fund, Short-Term Bond Fund, Mid-Term Bond Fund, Composite Fund, Scudder Bond
Fund, Scudder Capital Growth Fund, Scudder International Fund, American
Century VP Capital Appreciation Fund and Calvert Social Balanced Fund
(formerly, the Calvert Responsibly Invested Balanced Fund). The American Life
funds invest in a corresponding fund of Mutual of America Investment
Corporation ("Investment Company"), portfolios of Scudder Variable Life
Investment Fund ("Scudder"), fund of American Century Variable Portfolios Inc.
("American Century") and a corresponding fund of Calvert Social Balanced
Portfolio of Calvert Variable Series, Inc. (formerly, Calvert Responsibly
Invested Balanced Portfolio of Acacia Capital Corporation) ("Calvert").
On May 2, 1994 the Investment Company Aggressive Equity Fund became
available as an investment alternative 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.
On May 1, 1995, Fidelity Investments' Equity-Income, Contrafund and Asset
Manager Funds became available to Separate Account No. 2 as investment
alternatives. The Fidelity Equity-Income Fund invests in the corresponding
portfolio of Fidelity Variable Insurance Products Fund and the Contrafund and
Asset Manager Funds invest in the corresponding portfolios of Fidelity
Variable Insurance Products Fund II (collectively, "Fidelity").
Separate Account No. 2 was formed by the Company to support the operations
of the Company's group and individual variable accumulation annuity contracts
("Contracts"). The assets of Separate Account No. 2 are the property of the
Company. The portion of Separate Account No. 2's assets applicable to the
Contracts will not be charged with liabilities arising out of any other
business the Company may conduct.
The significant accounting policies of Separate Account No. 2 are as follows:
Investment Valuation--Investments are made in shares of the Investment
Company, Scudder, American Century, Calvert and Fidelity and are valued at the
reported net asset values of the respective Funds or Portfolios.
Investment Transactions--Investment transactions are recorded on the trade
date. Realized gains and losses on sales of investments are determined based
on the average cost of the investment sold.
Federal Income Taxes--Separate Account No. 2 will be treated as a part of
the Company and will not be taxed separately as a "regulated investment
company" under existing law. The Company is taxed as a life insurance company
under the life insurance tax provisions of the Internal Revenue Code of 1986.
No provision for income taxes is required in the accompanying financial
statements.
XII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investments
The number of shares owned by Separate Account No. 2 and their respective
net asset values (rounded to the nearest cent) per share at December 31, 1998
are as follows:
<TABLE>
<CAPTION>
Number of Net Asset
Shares Value
--------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund.................................... 639,505 $ 1.18
All America Fund..................................... 2,695,365 2.90
Equity Index Fund.................................... 4,440,717 2.45
Bond Fund............................................ 1,636,651 1.42
Short-Term Bond Fund................................. 153,105 1.03
Mid-Term Bond Fund................................... 285,955 0.91
Composite Fund....................................... 1,929,221 1.78
Aggressive Equity Fund............................... 2,362,869 1.51
Scudder Portfolios:
Bond Portfolio....................................... 50,718 6.88
Capital Growth Portfolio--Class "A".................. 256,955 23.95
International Portfolio--Class "A"................... 125,486 14.56
American Century VP Capital Appreciation Fund......... 53,073 9.02
Calvert Social Balanced Portfolio..................... 364,650 2.14
Fidelity Portfolios:
Equity-Income--"Initial" Class....................... 138,714 25.42
Contrafund--"Initial" Class.......................... 298,376 24.44
Asset Manager--"Initial" Class....................... 89,840 18.16
</TABLE>
3. Expenses
Administrative Charges--In connection with its administrative functions, the
Company deducts daily, at an annual rate of .40%, an amount from the value of
the net assets of all funds except the American Century Fund for which the
annual rate is .20%, and each Fidelity fund, for which the annual rate is
.30%.
In addition, a deduction of up to $2.00 may be made at the end of each month
from a participant's account, except that such charge shall not exceed 1/12 of
1% of the balance in such account in any month.
Distribution Expense Charge--The Insurance Company will make a deduction
daily from the value of the net assets of each fund, at an annual rate of
.35%, to cover anticipated distribution expenses.
Mortality and Expense Risk Charge--The Company assumes the risk to make
annuity payments in accordance with annuity tables provided in the Contracts
regardless of how long a participant lives and also assumes certain expense
risks associated with such annuity payments. For assuming the risk, the
Company deducts daily, at an annual rate of .50%, an amount from the value of
the net assets of each fund.
XIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Dividends
All dividend distributions are reinvested in additional shares of the
respective funds or portfolios at net asset value. On December 31, 1998, a
dividend distribution was made by the Investment Company to shareholders of
record as of December 30, 1998. Prior thereto, the Investment Company declared
and paid a dividend distribution on September 15, 1998. The combined amount of
these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund............................................... $ 34,221
All America Fund................................................ 921,755
Equity Index Fund............................................... 797,969
Bond Fund....................................................... 222,968
Short-Term Bond Fund............................................ 7,250
Mid-Term Bond Fund.............................................. 13,485
Composite Fund.................................................. 143,471
Aggressive Equity Fund.......................................... 35,210
</TABLE>
On January 28, 1998, February 25 1998, April 28, 1998, July 29, 1998 and
October 28, 1998, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $12,180.
On January 28, 1998, February 25, 1998, April 28, 1998, July 29, 1998 and
October 28, 1998, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $325,591.
On February 25, 1998 a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $175,511.
On March 13, 1998, a dividend was paid by the American Century VP Capital
Appreciation Fund. The amount of the dividend was $21,242.
On December 30, 1998, a dividend was paid by the Calvert Social Balanced
Portfolio. The amount of the dividend was $56,349.
On February 6, 1998, a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $179,360.
On February 6, 1998, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $254,179.
On February 6, 1998, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $169,602.
5. Financial Highlights
Shown below are financial highlights for a Unit outstanding throughout each
of the previous five years ended December 31, 1998 or, if not in existence a
full year, the initial period ended December 31:
<TABLE>
<CAPTION>
Investment Company
-----------------------------------
Money Market Fund
-----------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.............. $ 1.95 $ 1.87 $ 1.80 $ 1.72 $ 1.68
======= ====== ====== ====== ======
Unit value, end of year.................... $ 2.03 $ 1.95 $ 1.87 $ 1.80 $ 1.72
======= ====== ====== ====== ======
Units outstanding, end of year............. 373,107 90,542 66,104 62,822 29,648
======= ====== ====== ====== ======
</TABLE>
XIV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Investment Company
-------------------------------------------
All America Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 6.76 $ 5.39 $ 4.52 $ 3.35 $ 3.36
========= ========= ======= ======= =======
Unit value, end of year............ $ 8.09 $ 6.76 $ 5.39 $ 4.52 $ 3.35
========= ========= ======= ======= =======
Units outstanding, end of year..... 961,495 919,295 621,536 239,745 91,238
========= ========= ======= ======= =======
<CAPTION>
Investment Company
-------------------------------------------
Equity Index Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 2.26 $ 1.72 $ 1.42 $ 1.05 $ 1.05
========= ========= ======= ======= =======
Unit value, end of year............ $ 2.86 $ 2.26 $ 1.72 $ 1.42 $ 1.05
========= ========= ======= ======= =======
Units outstanding, end of year..... 3,950,586 2,496,288 858,298 333,578 35,717
========= ========= ======= ======= =======
<CAPTION>
Investment Company
-------------------------------------------
Bond Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 3.00 $ 2.75 $ 2.69 $ 2.28 $ 2.39
========= ========= ======= ======= =======
Unit value, end of year............ $ 3.17 $ 3.00 $ 2.75 $ 2.69 $ 2.28
========= ========= ======= ======= =======
Units outstanding, end of year..... 714,893 301,512 328,371 65,503 23,434
========= ========= ======= ======= =======
<CAPTION>
Investment Company
-------------------------------------------
Short-Term Bond Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 1.19 $ 1.14 $ 1.10 $ 1.03 $ 1.03
========= ========= ======= ======= =======
Unit value, end of year............ $ 1.24 $ 1.19 $ 1.14 $ 1.10 $ 1.03
========= ========= ======= ======= =======
Units outstanding, end of year..... 126,929 24,344 17,798 5,302 3,639
========= ========= ======= ======= =======
<CAPTION>
Investment Company
-------------------------------------------
Mid-Term Bond Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 1.26 $ 1.19 $ 1.16 $ 1.01 $ 1.06
========= ========= ======= ======= =======
Unit value, end of year............ $ 1.32 $ 1.26 $ 1.19 $ 1.16 $ 1.01
========= ========= ======= ======= =======
Units outstanding, end of year..... 197,045 49,001 260,862 18,581 3,694
========= ========= ======= ======= =======
<CAPTION>
Investment Company
-------------------------------------------
Composite Fund
-------------------------------------------
1998 1997 1996 1995 1994
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year...... $ 4.36 $ 3.75 $ 3.39 $ 2.82 $ 2.95
========= ========= ======= ======= =======
Unit value, end of year............ $ 4.93 $ 4.36 $ 3.75 $ 3.39 $ 2.82
========= ========= ======= ======= =======
Units outstanding, end of year..... 696,121 643,537 456,304 281,905 131,650
========= ========= ======= ======= =======
</TABLE>
XV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Investment Company
---------------------------------------------
Aggressive Equity Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 2.15 $ 1.80 $ 1.43 $ 1.05 $ 1.00
========= ========= ========= ======= =======
Unit value, end of year.......... $ 2.02 $ 2.15 $ 1.80 $ 1.43 $ 1.05
========= ========= ========= ======= =======
Units outstanding, end of year... 1,778,370 2,289,562 1,386,311 599,553 106,710
========= ========= ========= ======= =======
<CAPTION>
Scudder
---------------------------------------------
Bond Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 12.37 $ 11.48 $ 11.30 $ 9.69 $ 10.32
========= ========= ========= ======= =======
Unit value, end of year.......... $ 13.02 $ 12.37 $ 11.48 $ 11.30 $ 9.69
========= ========= ========= ======= =======
Units outstanding, end of year... 26,966 7,927 3,877 2,407 799
========= ========= ========= ======= =======
<CAPTION>
Scudder
---------------------------------------------
Capital Growth Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 29.64 $ 22.11 $ 18.64 $ 14.67 $ 16.46
========= ========= ========= ======= =======
Unit value, end of year.......... $ 36.07 $ 29.64 $ 22.11 $ 18.64 $ 14.67
========= ========= ========= ======= =======
Units outstanding, end of year... 171,014 159,853 73,641 42,366 22,116
========= ========= ========= ======= =======
<CAPTION>
Scudder
---------------------------------------------
International Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 14.46 $ 13.43 $ 11.85 $ 10.80 $ 11.06
========= ========= ========= ======= =======
Unit value, end of year.......... $ 16.93 $ 14.46 $ 13.43 $ 11.85 $ 10.80
========= ========= ========= ======= =======
Units outstanding, end of year... 105,376 78,166 70,139 29,549 52,296
========= ========= ========= ======= =======
<CAPTION>
American Century
---------------------------------------------
VP Capital Appreciation Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 11.04 $ 11.53 $ 12.18 $ 9.39 $ 9.61
========= ========= ========= ======= =======
Unit value, end of year.......... $ 10.69 $ 11.04 $ 11.53 $ 12.18 $ 9.39
========= ========= ========= ======= =======
Units outstanding, end of year... 36,061 44,293 67,688 56,618 13,116
========= ========= ========= ======= =======
<CAPTION>
Calvert
---------------------------------------------
Social Balanced Fund
---------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year.... $ 2.65 $ 2.23 $ 2.01 $ 1.57 $ 1.64
========= ========= ========= ======= =======
Unit value, end of year.......... $ 3.04 $ 2.65 $ 2.23 $ 2.01 $ 1.57
========= ========= ========= ======= =======
Units outstanding, end of year... 256,931 194,166 100,573 45,392 18,308
========= ========= ========= ======= =======
</TABLE>
XVI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Fidelity VIP
------------------------------
Equity-Income Fund
------------------------------
1998 1997 1996 1995
------- ------- ------- ------
<S> <C> <C> <C> <C>
Unit value, beginning of year................... $ 27.77 $ 21.93 $ 19.43 $16.30
======= ======= ======= ======
Unit value, end of year......................... $ 30.65 $ 27.77 $ 21.93 $19.43
======= ======= ======= ======
Units outstanding, end of year.................. 115,626 94,213 60,979 17,958
======= ======= ======= ======
<CAPTION>
Fidelity VIP II
------------------------------
Contra Fund
------------------------------
1998 1997 1996 1995
------- ------- ------- ------
<S> <C> <C> <C> <C>
Unit value, beginning of year................... $ 20.36 $ 16.59 $ 13.85 $11.43
======= ======= ======= ======
Unit value, end of year......................... $ 26.16 $ 20.36 $ 16.59 $13.85
======= ======= ======= ======
Units outstanding, end of year.................. 278,931 212,606 153,360 29,132
======= ======= ======= ======
<CAPTION>
Fidelity VIP II
------------------------------
Asset Manager Fund
------------------------------
1998 1997 1996 1995
------- ------- ------- ------
<S> <C> <C> <C> <C>
Unit value, beginning of year................... $ 21.14 $ 17.72 $ 15.66 $14.04
======= ======= ======= ======
Unit value, end of year......................... $ 24.04 $ 21.14 $ 17.72 $15.66
======= ======= ======= ======
Units outstanding, end of year.................. 68,139 65,125 36,872 5,561
======= ======= ======= ======
</TABLE>
XVII
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the American Life Insurance Company of New York:
We have audited the accompanying statement of assets and liabilities of
American Life Separate Account No. 2 as of December 31, 1998, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Separate Account's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights 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, 1998, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and their financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
New York, New York
February 19, 1999
XVIII
<PAGE>
The American Life Insurance Company of New York
320 Park Avenue New York, New York 10022-6839 212-224-1700
A subsidiary of Mutual of America Life Insurance Company
Mutual of America Life Insurance Company is a Registered Broker-Dealer and
Distributes the variable products of The American Life Insurance Company of New
York
