AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1999
REGISTRATION NO. 33-66406
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 8 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
AMENDMENT NO. 10
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THE AMERICAN SEPARATE ACCOUNT NO. 2
(EXACT NAME OF REGISTRANT)
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
(NAME OF DEPOSITOR)
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320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
(212) 224-1600
(DEPOSITOR'S TELEPHONE NUMBER INCLUDING AREA CODE)
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PATRICK A. BURNS, ESQ.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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COPY TO:
J. SUMNER JONES, ESQ.
JONES & BLOUCH L.L.P.
SUITE 405 WEST
1025 THOMAS JEFFERSON STREET NW
WASHINGTON, DC 20007
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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, 1999 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.
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<PAGE>
CROSS REFERENCE SHEET
(FILE NO. 33-66406, IRA/FPA CONTRACTS)
<TABLE>
<CAPTION>
PART A FORM N-4 ITEM PROSPECTUS CAPTION
<S> <C> <C>
1. Cover Page Cover Page
2. Definitions Definitions We Use in this Prospectus
3. Synopsis Table of Annual Expenses
4. Condensed Financial Information Appendix A: Unit Value Information for the
Separate Account Funds;Performance Information
for the Separate Account Fund
5. General Description of Registrant, Depositor, and About American Life and the Separate Acount;
Portfolio Companies Underlying Funds Invested in by Our Separate
Account; Your Vtoing Rights for Meetings of the
Underlying Funds; Administrative Matters
6. Deductions Table of Annual Expenses; Charges You Will Pay
7. General Description of Variable Annuity Contracts Who May Purchase a Contract and Make
Contributions; Your Account Balance in the
Separate Account Funds; Our General Account
8. Annuity Period You May Obtain an Annuity with Your Account
Balance
9. Death Benefit Our Payment of Account Balance to You or a
Beneficiary -- Death Benefit Prior to Annuity
Commencement Date
10. Purchases and Contract Value Who May Purchase a Contract and Make
Contributions; Your Account Balance in the
Separate Account Funds; Our General Account
11. Redemptions Your Account Balance in the Separate Account
Funds; Our Payment of Account Balance to You or
a Beneficiary; How to Contact Us and Give Us
Instructions
12 Taxes Federal Tax Information
13. Legal Proceedings Not Applicable (see Statement of Additional
Information)
14. Table of Contents of the Statement of Additional
Information Our Statement of Additional Information
PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History N/A
18. Services Not Applicable
19. Purchases of Securities Being Offered Distribution of the Contracts
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Data Yield and Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
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VARIABLE ACCUMULATION ANNUITY CONTRACTS
INDIVIDUAL RETIREMENT ANNUITY CONTRACTS AND
FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS
ISSUED BY
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 PARK AVENUE, NEW YORK, NEW YORK 10022
THROUGH ITS
SEPARATE ACCOUNT NO. 2
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THE CONTRACTS - We offer these individual variable accumulation annuity
contracts (CONTRACTS), without a sales charge:
o an Individual Retirement Annuity Contract (IRA CONTRACT), including
Traditional IRA, Roth IRA, SIMPLE IRA and SEP IRA Contract; and
o an individual Flexible Premium Deferred Annuity Contract (FPA CONTRACT).
The OWNER or YOU means a person to whom we have issued an IRA or FPA
Contract.
YOUR CONTRIBUTIONS - You may make Contributions in the amounts and at the
frequency you choose (subject to certain minimums), and some of the
Contracts permit your employer to make Contributions on your behalf. Under
IRA Contracts, the amount of your Contributions and those of your employer
are limited by Federal tax laws.
A Contract can help you accumulate funds for retirement and other long-term
financial needs. You may apply
the amount you have accumulated to provide fixed monthly Annuity Payments
that begin at a future date.
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE - You may allocate your
Account Balance to any of the Funds of The American Separate Account No. 2
(the SEPARATE ACCOUNT) or to our General Account. You may transfer all or
any part of your Account Balance among the available Investment Alternatives
at any time, without charge. The Separate Account Funds invest in these
funds or portfolios of mutual funds (the UNDERLYING FUNDS):
o MUTUAL OF AMERICA INVESTMENT CORPORATION: Equity Index Fund, All America
Fund, Mid-Cap Equity Index Fund, Aggressive Equity Fund, Composite Fund,
Bond Fund, Mid-Term Bond Fund, Short-Term Bond Fund and Money Market Fund;
o SCUDDER VARIABLE LIFE INVESTMENT FUND: Capital Growth Portfolio, Bond
Portfolio and International Portfolio;
o VARIABLE INSURANCE PRODUCTS FUNDS OF FIDELITY INVESTMENTS(R): Equity-Income
Portfolio of the Variable Insurance Products Fund, and Contrafund Portfolio
and Asset Manager Portfolio of the Variable Insurance Products Fund II;
o CALVERT SOCIAL BALANCED PORTFOLIO of Calvert Variable Series, Inc.; and
o AMERICAN CENTURY VP CAPITAL APPRECIATION FUND of American Century Variable
Portfolios, Inc.
WE DO NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY FUND OF THE SEPARATE
ACCOUNT. You have the entire
investment risk, including the risk of a decline in value, for amounts you
allocate to any Separate Account Fund.
We pay a fixed rate of interest on your Account Balance in our General
Account, and we change the rate from time to time. This Prospectus describes
the variable, or Separate Account, Investment Alternatives, but there is a
brief description of the General Account under the heading "Our General
Account".
STATEMENT OF ADDITIONAL INFORMATION - You may obtain at no charge a
Statement of Additional Information (an SAI), dated May 1, 1999, about the
Contracts and the Separate Account by writing to us at the address at the
top of this page or by calling 1-800-872-5963. We have filed the SAI with
the Securities and Exchange Commission and incorporate it into this
Prospectus by reference. The table of contents for the SAI is at the end of
this Prospectus for your review.
PROSPECTUSES - You should read this Prospectus before you purchase a
Contract, and you should keep it for future reference. This Prospectus is
not valid unless the prospectuses of the Underlying Funds, which you also
should read, are attached to it.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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DATED: MAY 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
TABLE OF ANNUAL EXPENSES .............................................. 1
SUMMARY OF INFORMATION IN THIS PROSPECTUS ............................. 3
ABOUT AMERICAN LIFE AND THE SEPARATE ACCOUNT .......................... 7
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT .................. 8
CHARGES YOU WILL PAY .................................................. 11
Administrative Charges ............................................... 11
Distribution Expense Charge .......................................... 12
Mortality and Expense Risk Charges ................................... 12
Expenses of the Underlying Funds ..................................... 12
Premium Taxes ........................................................ 12
WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS .................... 13
Purchase of a Contract; Participation ................................ 13
Payment of Contributions ............................................. 13
Allocation and Confirmation of Contributions ......................... 15
YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS .................... 16
OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY ................ 17
Your Right to Transfer Among Investment Alternatives ................. 17
Your Right to Make Withdrawals, including by Specified Payments ...... 17
How to Tell Us an Amount to Transfer or Withdraw ..................... 18
Death Benefit Prior to Annuity Commencement Date ..................... 18
Termination of a Contract ............................................ 19
When We May Postpone Payments ........................................ 19
YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT BALANCE ................... 20
Amount of Annuity Payments ........................................... 20
Annuity Commencement Date ............................................ 20
Available Forms of Annuity ........................................... 20
Death Benefit After Annuity Commencement Date ........................ 21
Lump Sum for Small Annuity Payments .................................. 21
OUR GENERAL ACCOUNT ................................................... 22
HOW TO CONTACT US AND GIVE US INSTRUCTIONS ............................ 23
ADMINISTRATIVE MATTERS ................................................ 24
Year 2000 Compliance ................................................. 24
Confirmation Statements to Owners .................................... 24
Designation of Beneficiary ........................................... 24
Miscellaneous Contract Provisions .................................... 25
FEDERAL TAX INFORMATION ............................................... 26
YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS ............... 31
FUNDING AND OTHER CHANGES WE MAY MAKE ................................. 31
PERFORMANCE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS ................ 32
DEFINITIONS WE USE IN THIS PROSPECTUS ................................. 33
OUR STATEMENT OF ADDITIONAL INFORMATION ............................... 35
APPENDIX A: UNIT VALUE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS ..... 37
</TABLE>
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE WE MAY NOT
LAWFULLY OFFER THE CONTRACTS FOR SALE. WE HAVE NOT AUTHORIZED ANY DEALER,
SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE CONTRACTS OTHER THAN THOSE IN THIS PROSPECTUS. A
PROSPECTIVE PURCHASER WHO RECEIVES UNAUTHORIZED INFORMATION OR REPRESENTATIONS
MUST NOT RELY ON THEM TO MAKE ANY PURCHASE DECISION.
<PAGE>
TABLE OF ANNUAL EXPENSES
The first part of the table below shows the expenses of the Separate Account
Funds during 1998 and the second part shows the expenses of the Underlying
Funds during 1998, except that we have estimated the expenses of the Mid-Cap
Equity Index Fund because it began operations on May 1, 1999.
<TABLE>
<CAPTION>
INVESTMENT COMPANY
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ALL AMERICA
COMPOSITE MID-CAP
BOND EQUITY
MID-TERM INDEX FIDELITY VIP
BOND AND --------------
MONEY SHORT-TERM EQUITY AGGRESSIVE EQUITY-
MARKET BOND INDEX EQUITY INCOME
---------- ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ................ None None None None None
ANNUAL CONTRACT FEE(1) ............. $ 24 $ 24 $ 24 $ 24 $ 24
======= ======= ======== ======= ========
SEPARATE ACCOUNT ANNUAL
EXPENSES (as a percentage of
average net assets)
Mortality and Expense Risk Fees..... .50% .50% .50% .50% .50%
------- ------- -------- ------- --------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) .......... .40% .40% .40% .40% .30%
Distribution Expense Charge ....... .35 .35 .35 .35 .35
------- ------- -------- ------- ---------
Total Account Fees and
Expenses ........................ .75 .75 .75 .75 .65
------- ------- -------- ------- ---------
TOTAL SEPARATE ACCOUNT
EXPENSES .......................... 1.25% 1.25% 1.25% 1.25% 1.15%
======= ======= ======== ======= =========
UNDERLYING FUND ANNUAL
EXPENSES (as a percentage of
average net assets)(3)
Management Fees ................... .25% .50% .125% .85% .49%
Other Expenses (after
reimbursement)(3) ................ None None None None .09
------- ------- -------- ------- ---------
TOTAL UNDERLYING FUND
EXPENSES
(after reimbursement) ............ .25% .50% .125% .85% .58%(4)
======= ======= ======== ======= ===========
<CAPTION>
FIDELITY VIP II SCUDDER AMERICAN
------------------------------- ----------------------------------- CENTURY
ASSET CAPITAL VP CAPITAL
CONTRAFUND MANAGER GROWTH BOND INTERNATIONAL APPRECIATION
--------------- --------------- --------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ................ None None None None None None
ANNUAL CONTRACT FEE(1) ............. $ 24 $ 24 $ 24 $ 24 $ 24 $ 24
======== ======== ======= ======= ======= =======
SEPARATE ACCOUNT ANNUAL
EXPENSES (as a percentage of
average net assets)
Mortality and Expense Risk Fees..... .50% .50% .50% .50% .50% .50%
-------- -------- ------- ------- ------- -------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) .......... .30% .30% .40% .40% .40% .20%
Distribution Expense Charge ....... .35 .35 .35 .35 .35 .35
--------- --------- ------- ------- ------- -------
Total Account Fees and
Expenses ........................ .65 .65 .75 .75 .75 .55
--------- --------- ------- ------- ------- -------
TOTAL SEPARATE ACCOUNT
EXPENSES .......................... 1.15% 1.15% 1.25% 1.25% 1.25% 1.05%
========= ========= ======= ======= ======= =======
UNDERLYING FUND ANNUAL
EXPENSES (as a percentage of
average net assets)(3)
Management Fees ................... .59% .54% .46% .47% .87% 1.00%
Other Expenses (after
reimbursement)(3) ................ .11 .10% .04 .10 .17 None
--------- --------- ------- ------- ------- -------
TOTAL UNDERLYING FUND
EXPENSES
(after reimbursement) ............ .70%(4) .64%(4) .50% .57% 1.04% 1.00%
=========== =========== ======= ======= ======= =======
<CAPTION>
CALVERT
SOCIAL
BALANCED
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<S> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ................ None
ANNUAL CONTRACT FEE(1) ............. $ 24
========
SEPARATE ACCOUNT ANNUAL
EXPENSES (as a percentage of
average net assets)
Mortality and Expense Risk Fees..... .50%
--------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) .......... .40%
Distribution Expense Charge ....... .35
---------
Total Account Fees and
Expenses ........................ .75
---------
TOTAL SEPARATE ACCOUNT
EXPENSES .......................... 1.25%
=========
UNDERLYING FUND ANNUAL
EXPENSES (as a percentage of
average net assets)(3)
Management Fees ................... .70%
Other Expenses (after
reimbursement)(3) ................ .18
---------
TOTAL UNDERLYING FUND
EXPENSES
(after reimbursement) ............ .88%(5)
===========
</TABLE>
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(1) You pay a monthly amount of $2.00, or 1/12 of 1.00% of your Account Balance
for the month if that amount would be less than $2.00. The above table
reflects for each Separate Account Fund the full monthly charge, as though
you had allocated your entire Account Balance only to that Fund. An employer
under a SEP-IRA or SIMPLE IRA Contract may elect to pay your monthly
charges. SEE "Charges You Will Pay -- Administrative Charges".
(2) The investment adviser for the American Century VP Capital Appreciation
Fund reimburses us at an annual rate of up to 0.20% for administrative
expenses, and the transfer agent and distributor for the Fidelity Portfolios
reimburse us at an annual rate of 0.10% for certain services we provide. The
administrative expense for the corresponding Separate Account Funds would be
0.40% if the reimbursement arrangements ended. SEE "Charges You Will Pay --
Administrative Charges".
(3) The investment adviser for the Investment Company voluntarily limits the
expenses of each Investment Company Fund to its investment advisory fee. The
investment adviser for the American Century VP Capital Appreciation Fund
pays the expenses of that Fund other than the investment advisory fee. The
prospectuses of the Underlying Funds, which are attached to this Prospectus,
more fully describe the Funds' management fees and other expenses.
(4) A portion of the brokerage commissions that these Portfolios pay was used
to reduce their expenses. In addition, the Portfolios have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances reduced custodian and transfer agent expenses.
Including these reductions, total operating expenses for the VIP
Equity-Income Portfolio and the VIP II Contrafund and Asset Manager
Portfolios for 1998 would have been 0.57%, 0.66% and 0.63%, respectively.
(5) The Portfolio's total operating expenses have been restated to reflect the
elimination of the performance adjustment in its management fees. The
restatement includes the addition of 0.01% in expenses to the Portfolio.
"Other Expenses" reflects an indirect fee, and the Portfolio's total
operating expenses for 1998 after reductions for fees paid indirectly would
be 0.86%.
-1-
<PAGE>
EXAMPLES
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The examples below show the expenses that you would pay, assuming a $1,000
investment and a 5% annual rate of return on assets. We do not impose a
surrender charge when you make a withdrawal of Account Balance. As a result,
the expenses would be the same whether or not you surrender the Account
Balance 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 EQUITY INDEX AND
MID-CAP EQUITY INDEX FUNDS
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $15 $49 $ 85 $194
EXAMPLE FOR INVESTMENT COMPANY ALL AMERICA, BOND, SHORT-TERM BOND,
MID-TERM BOND AND COMPOSITE FUNDS
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $19 $61 $106 $242
EXAMPLE FOR INVESTMENT COMPANY AGGRESSIVE EQUITY FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $23 $72 $126 $287
EXAMPLE FOR INVESTMENT COMPANY MONEY MARKET FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $17 $53 $92 $210
EXAMPLE FOR SCUDDER CAPITAL GROWTH FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $19 $61 $106 $242
EXAMPLE FOR SCUDDER BOND FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $20 $63 $110 $251
EXAMPLE FOR SCUDDER INTERNATIONAL FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $25 $78 $137 $312
EXAMPLE FOR FIDELITY VIP EQUITY-INCOME FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $19 $60 $105 $240
EXAMPLE FOR FIDELITY VIP II CONTRAFUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $20 $64 $112 $255
EXAMPLE FOR FIDELITY VIP II ASSET MANAGER FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $20 $62 $109 $247
EXAMPLE FOR CALVERT SOCIAL BALANCED FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $23 $73 $128 $291
EXAMPLE FOR AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets: $22 $70 $123 $281
</TABLE>
These examples are to assist you in understanding the various costs and
expenses that you will pay, directly or indirectly, under a Contract. The
examples reflect the expenses of the Separate Account, as well as those of
the Underlying Funds, as they were for the year ended December 31, 1998,
except that the expenses of the Mid-Cap Equity Index Fund are estimated
because the Fund began operations on May 1, 1999.
ACTUAL EXPENSES FOR PERIODS AFTER 1998 MAY BE GREATER OR LESS THAN THE
EXPENSES ON WHICH WE BASED THE EXAMPLES. We assumed a 5% annual rate of return
in the examples for illustration purposes. The 5% rate does not represent and
is not a guarantee of the Separate Account Funds' past or future investment
performance. Each example also assumed an annual contract fee of $1.30 per
$1,000 of value in the Separate Account Fund, based on an average Account
Balance of $18,479. The expenses shown do not include any premium taxes that
may be payable.
ACCUMULATION UNIT VALUES FOR THE SEPARATE ACCOUNT FUNDS
----------------------------------------------------------------------------
For information about the Accumulation Unit values of each of the Separate
Account Funds over a period of time (other than for the Mid-Cap Equity Index
Fund, which commenced operations on May 1, 1999), you should see Appendix A
to this Prospectus. The Unit values reflect the investment performance and
expenses of the Underlying Funds and the charges we assess on the assets of
the Separate Account Funds.
-2-
<PAGE>
SUMMARY OF INFORMATION IN THIS PROSPECTUS
The discussion below is a summary of information in the Prospectus. The
references in the Summary direct you to particular sections in the
Prospectus where you will find more detailed explanations. You will find
definitions at the end of this Prospectus under "Definitions We Use in This
Prospectus."
CONTRACTS WE OFFER
----------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY CONTRACTS (IRA CONTRACTS).
You may purchase an IRA Contract as a retirement arrangement that qualifies
for favorable Federal income tax treatment under the Code. If you are
married and are not a wage earner, you may purchase an IRA Contract (a
spousal IRA), and your spouse (if a wage earner) may make Contributions on
your behalf. If you have adjusted gross income for Federal income tax
purposes below a certain level, you are eligible to purchase a Roth IRA.
You may purchase an IRA Contract directly from us, and you must designate
whether the Contract is a Traditional IRA or a Roth IRA. An employee may
purchase a SEP IRA Contract under a Simplified Employee Pension (SEP) or may
purchase a SIMPLE IRA Contract under a Savings Incentive Match Plan for
Employees (SIMPLE), if the individual's employer has established one of
those plans.
For Federal income tax purposes, you may be able to deduct Contributions
under a Traditional IRA Contract or SEP IRA Contract, but there are limits
on the amount that you may deduct and restrictions on who may deduct IRA
contributions. REFER TO "FEDERAL TAX INFORMATION -- TRADITIONAL IRA AND SEP
IRA CONTRACTS -- DEDUCTION OF CONTRIBUTIONS FROM GROSS INCOME". You may not
deduct Contributions under a Roth IRA for Federal income tax purposes. You
may exclude Contributions to a SIMPLE IRA from gross income, within certain
limits.
You do not pay Federal income tax on the earnings from Contributions to an
IRA Contract, other than a Roth IRA, until you begin receiving Annuity
Payments or otherwise withdraw all or a portion of your Account Balance.
Under a Roth IRA, you may withdraw earnings tax-free if the Roth IRA
Contract is at least five years old and you are at least 59 1/2 years old,
or in certain other circumstances. REFER TO "FEDERAL TAX INFORMATION".
FLEXIBLE PREMIUM ANNUITY CONTRACTS (FPA CONTRACTS).
You may purchase an FPA Contract to accumulate assets for retirement. If you
are an individual (not a corporation, for example), you make Contributions
to an FPA Contract with "after-tax" dollars. In other words, you may not
deduct or exclude the amount of the Contributions from your income for
Federal income tax purposes. If you are an individual, you do not pay
Federal taxes on the earnings on Contributions to an FPA Contract until you
begin to receive Annuity Payments or otherwise withdraw all or a portion of
your Account Balance, in most circumstances. REFER TO "FEDERAL TAX
INFORMATION".
An employer may purchase FPA Contracts to serve as a depository for the
employer's deferred compensation obligations to employees, in States where
we have obtained state insurance department approval for use of our Contract
in this manner. There is no deferral of Federal income taxation of the
earnings on Contributions for employers who purchase FPA Contracts for
deferred compensation obligations or for other Contractholders who are not
individuals. REFER TO "FEDERAL TAX INFORMATION".
CONTRIBUTIONS DURING THE ACCUMULATION PERIOD
----------------------------------------------------------------------------
You may make Contributions at whatever times you select, but the timing will
be based on your payroll period if you make Contributions under a salary
reduction or payroll deduction agreement with your employer. The Code limits
the amount of Contributions to an IRA Contract, as described below.
MINIMUM REQUIRED. We from time to time will establish the minimum
Contribution that you may make under the Contracts. Currently, the minimum
Contribution is $10, except that there is no minimum for employer
contributions under SEP IRAs or for employer or Owner Contributions under
SIMPLE IRAs.
WHO MAY MAKE CONTRIBUTIONS. The persons who may make Contributions, and the
manner in which Contributions should be sent to us, are as follows.
-3-
<PAGE>
o Under an FPA Contract or under an IRA Contract other than a SIMPLE IRA, you
may make Contributions directly to us.
o Under an FPA Contract or Traditional IRA Contract, you may make
Contributions through a payroll deduction agreement with your employer.
o Under a SIMPLE IRA Contract, you may make Contributions only by salary
reduction agreement with your employer.
o For both SEP IRAs and SIMPLE IRAs, the employer also may contribute amounts
on your behalf, within the limits established by the Code.
o Under a SIMPLE IRA, an employer must match certain Contributions by an
employee or make a Contribution for each employee who is eligible to
contribute under the SIMPLE.
We must receive each Contribution for you at our home office, along with
sufficient information to identify the person for whom the Contribution is
made, before we can credit the Contribution to your Account Balance. If an
employer sends us Contributions, we will apply the Contributions when we
receive the amounts at our home office or receive them by wire transfer of
Federal funds into our designated bank account. REFER TO "WHO MAY PURCHASE A
CONTRACT AND MAKE CONTRIBUTIONS -- PAYMENT OF CONTRIBUTIONS" AND "FEDERAL
TAX INFORMATION".
IRA CONTRACT -- LIMITS ON AMOUNTS. The aggregate amount that you may
contribute to a Traditional IRA, SEP IRA and/or Roth IRA Contract is $2,000
per tax year, or 100% of your compensation for the year if compensation is
less than $2,000. You may contribute up to an additional $2,000 to a spousal
IRA, minus any contribution your spouse makes to the spousal IRA. For Roth
IRAs, the $2,000 contribution amount is reduced or eliminated for Owners at
certain Federal adjusted gross income levels. Under a SIMPLE IRA, you may
contribute up to $6,000 per year through a salary reduction agreement with
the employer. You also may make Contributions by "rollover" to certain IRA
Contracts. REFER TO "WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS --
PAYMENT OF CONTRIBUTIONS" AND "FEDERAL TAX INFORMATION".
If you have reached the age of 70 1/2, you may no longer make Contributions
(except by rollover from another IRA contract or eligible employer
retirement plan) to a Traditional IRA or SEP IRA Contract. There is no Owner
age limit for Contributions under a Roth IRA or a SIMPLE IRA, or for
employer contributions to a SEP IRA.
FPA CONTRACT -- LIMITS ON AMOUNTS. There is no limit on the amount of
Contributions that you may make to an FPA Contract if you are an individual.
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE
----------------------------------------------------------------------------
You may allocate Contributions among the General Account and one or more of
the Separate Account Funds, change your allocation instructions at any time
for future Contributions, and transfer all or part of your Account Balance
among the available Investment Alternatives at any time.
THE GENERAL ACCOUNT. We pay interest on the portion of your Account Balance
you allocate to our General Account, at an effective annual rate of at least
3%. In our discretion, we change the current rate of interest from time to
time. We have the full investment risk for amounts you allocate to the
General Account. We sometimes refer to the General Account Investment
Alternative as the Interest Accumulation Account.
This Prospectus serves as a disclosure document for the Separate Account
Investment Alternatives under the Contracts. You may refer to "Our General
Account" for a brief description of the General Account.
THE SEPARATE ACCOUNT. The Separate Account has Funds, or sub-accounts. The
name of each Fund corresponds to the name of its Underlying Fund. When you
allocate Contributions or transfer Account Balance to a Separate Account
Fund, the Fund purchases shares in its Underlying Fund. A Separate Account
Fund is called a "variable option", because you have the investment risk
that your Account Balance in the Fund will increase or decrease based on the
investment performance of the Underlying Fund. The Mid-Cap Equity Index Fund
will be available to you upon its approval by your State's insurance
department.
UNDERLYING FUNDS INVESTED IN BY THE SEPARATE ACCOUNT
----------------------------------------------------------------------------
The Separate Account Funds currently invest in seventeen Underlying Funds,
which have different investment objectives, investment policies and risks.
You should refer to "Underlying Funds Invested in by Our Separate
-4-
<PAGE>
Account" for more information about the Underlying Funds' investment
objectives, and to the prospectuses of the Underlying Funds that are attached
to this Prospectus.
CHARGES UNDER THE CONTRACTS
----------------------------------------------------------------------------
We deduct several charges from the net assets of each Separate Account Fund.
REFER TO "CHARGES YOU WILL PAY". The charges include:
o an administrative expense charge at an annual rate of 0.40% (except that
currently the annual rate for the American Century VP Capital Appreciation
Fund is 0.20% and the annual rate for the Funds that invest in the Fidelity
Portfolios is approximately 0.30%);
o a distribution expense charge at an annual rate of 0.35% for expenses
related to the distribution of the Contracts; and
o a mortality risk charge at an annual rate of 0.35% for assuming certain
mortality risks under the Contracts and a charge at an annual rate of 0.15%
for assuming certain expense risks under the Contracts.
We also deduct from your Account Balance a monthly administrative expense
charge. The charge is $2.00 if you have an Account Balance of $2,400 or more
during the month, or 1/12 of 1% of the Account Balance (which will be less
than $2.00) if your Account Balance is less than $2,400 in any month. REFER
TO "CHARGES YOU WILL PAY -- ADMINISTRATIVE CHARGES".
RESERVATION OF RIGHTS. We reserve the right to increase or decrease the
administrative expense charge, the monthly administrative charge and the
expense risk charge within the limits imposed under the Contracts, and the
right to deduct from Contributions any applicable State premium taxes. State
insurance provisions or federal securities laws may limit the amount of any
additional charges that we may impose.
EXPENSES OF THE UNDERLYING FUNDS. A Separate Account Fund's value is based
on the shares it owns of the Underlying Fund. As a result, the investment
management fees and other expenses the Underlying Funds pay will impact the
value of the Separate Account Funds. You should refer to the attached
prospectuses of the Underlying Funds for a complete description of their
expenses and deductions from net assets.
TRANSFERS AND WITHDRAWALS OF ACCOUNT BALANCE
----------------------------------------------------------------------------
During the Accumulation Period, you may transfer all or a portion of your
Account Balance among the Investment Alternatives. REFER TO "OUR PAYMENT OF
ACCOUNT BALANCE TO YOU OR A BENEFICIARY -- YOUR RIGHT TO TRANSFER AMONG
INVESTMENT ALTERNATIVES".
During the Accumulation Period, you may withdraw all or a portion of your
Account Balance. We may take up to seven days following receipt of your
withdrawal request to process the request and mail a check to you. REFER TO
"OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY -- YOUR RIGHT TO
MAKE WITHDRAWALS, INCLUDING BY SPECIFIED PAYMENTS".
You may have taxable income upon any withdrawal of your Account Balance,
except in the case of certain withdrawals from Roth IRA Contracts. You will
be taxed at ordinary income tax rates on the amount withdrawn, except for
the portion of the withdrawal that is considered to be a return of your
after-tax Contributions (if any). The taxable portion of withdrawals, and in
certain cases the nontaxable portion of withdrawals from Roth IRAs, may be
subject to a 10% tax penalty, or 25% for SIMPLE IRAs in limited cases. The
tax penalty is not due if you have reached the age of 59 1/2, are disabled
or in certain other circumstances (including special rules for IRA
Contracts). REFER TO "FEDERAL TAX INFORMATION".
The Code imposes minimum distribution requirements for IRA Contracts, other
than Roth IRAs, when you reach a certain age or in some other circumstances.
You may be required to make partial withdrawals of your Account Balance, or
may choose to begin receiving Annuity Payments, to meet the minimum
distribution requirements.
We currently do not assess a charge for transfers or withdrawals under the
Contracts. We reserve the right, however, to impose a charge for transfers
or withdrawals in the future.
OUR SPECIFIED PAYMENTS OPTION. You may instruct us to withdraw a certain
amount (at least $100) each month from the Investment Alternatives you name.
You must be age 59 1/2 or older to elect this Option.
-5-
<PAGE>
HOW TO MAKE ALLOCATION CHANGES, TRANSFERS AND WITHDRAWALS
----------------------------------------------------------------------------
IN WRITING. You may give instructions in writing on our forms to change your
allocations among Investment Alternatives for future Contributions, to
transfer your Account Balance among Investment Alternatives or to make any
withdrawals of Account Balance. REFER TO "HOW TO CONTACT US AND GIVE US
INSTRUCTIONS".
BY TELEPHONE. Using a Personal Identification Number (PIN) we have assigned,
you may call us at 1-800-468-3785 for certain transactions and information.
You may not make a request for rollover of an IRA Contract by telephone.
REFER TO "HOW TO CONTACT US AND GIVE US INSTRUCTIONS".
OUR HOME OFFICE, PROCESSING CENTER AND REGIONAL OFFICES. Our home office
address is 320 Park Avenue, New York, New York 10022. The address for our
Financial Transactions Processing Center, where you may send requests for
allocation changes or transfers among Investment Alternatives, is 1150
Broken Sound Parkway NW, Boca Raton, FL 33487. You may check the address for
the Regional Office that provides other services for your Contract by
calling 1-800-872-5963 or by visiting our Website at
www.mutualofamerica.com.
CONFIRMATION STATEMENTS. We will send you confirmation statements (which may
be your quarterly statements) for your allocation changes and for your
Contributions, transfers of Account Balance and withdrawals of Account
Balance. You must promptly notify us of any error in a confirmation statement,
or you will give up your right to have us correct the error. REFER TO
"ADMINISTRATIVE MATTERS -- CONFIRMATION STATEMENTS TO OWNERS".
DEATH BENEFITS DURING THE ACCUMULATION PERIOD
----------------------------------------------------------------------------
If you were to die before the Annuity Commencement Date, we will pay a death
benefit to your Beneficiary. Under an FPA Contract when you are not the
Annuitant, we will pay the death benefit upon the first to occur of your
death and the Annuitant's death.
The death benefit amount will be your Account Balance as of the date we
receive proof of your death (or the death of the Annuitant) and the election
of the Beneficiary(ies) telling us how we should pay the death benefit. The
Beneficiary selects the form of death benefit, which may be a lump sum, a
form of annuity or fixed payments. If your Eligible Spouse is the
Beneficiary and the death benefit is due upon your death, your surviving
spouse may be able to continue the Contract instead of receiving a death
benefit. REFER TO "OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY --
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE".
ANNUITANTS AND BENEFICIARIES
----------------------------------------------------------------------------
Under an IRA Contract, you must be the Annuitant. Under an FPA Contract, you
may be the Annuitant or may name another person as the Annuitant, and you
may not change the Annuitant once you have named the Annuitant. When a
Beneficiary elects to receive a death benefit due in the form of an annuity,
the Beneficiary may be the Annuitant or may name another person as the
Annuitant. You or a Beneficiary also may name a joint Annuitant.
You may designate a Beneficiary or Beneficiaries to receive any death
benefit due during the Accumulation Period or to receive any remaining
payments (or their commuted value) due during the Annuity Period. You may
change the Beneficiary by giving us written notice on a form we provide.
REFER TO "ADMINISTRATIVE MATTERS UNDER THE CONTRACTS -- DESIGNATION OF
BENEFICIARY".
ANNUITY COMMENCEMENT DATE AND AMOUNT OF MONTHLY ANNUITY PAYMENT
----------------------------------------------------------------------------
You may select the Annuity Commencement Date, but under an IRA Contract, the
Annuity Commencement Date must be after you have reached the age of 55.
Annuity Payments will be fixed at the same amount every month and will be
based on your Account Balance at the Annuity Commencement Date and the form
of annuity you select. Each Contract contains tables of annuity purchase
rates. We guarantee that the monthly amount of the Annuity Payments, for the
form of annuity you select, will never be less favorable than the guaranteed
rate in the Contract. REFER TO "YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT
BALANCE". You may choose to make withdrawals of your Account Balance instead
of electing to receive Annuity Payments.
-6-
<PAGE>
FORMS OF ANNUITY AVAILABLE. We offer several forms of annuity, some of which
have guaranteed minimum time periods for payments. If an Annuitant (and
contingent Annuitant if a joint and survivor annuity) dies before the
minimum period has ended, the Beneficiary will receive the remaining Annuity
Payments due. A life annuity protects an Annuitant from outliving the time
period for receiving monthly payments, because the payments continue for the
life of the Annuitant. You may select the annuity form when you designate
the Annuity Commencement Date. REFER TO "YOU MAY OBTAIN AN ANNUITY WITH YOUR
ACCOUNT BALANCE -- AVAILABLE FORMS OF ANNUITY".
CANCELLATION RIGHT
----------------------------------------------------------------------------
You may surrender a Contract for cancellation within ten days after you have
received it (or a longer period if your State requires it). We will refund
all Contributions you allocated to the General Account, plus the value on
the surrender date of your Account Balance allocated to the Separate
Account, unless your state requires that all Contributions to the Separate
Account be refunded.
-7-
<PAGE>
ABOUT AMERICAN LIFE AND THE SEPARATE ACCOUNT
We are a life insurance company organized in 1955 under the laws of the
State of New York. We are authorized to transact business in 50 states, the
District of Columbia and the United States Virgin Islands. Mutual of America
Life Insurance Company (MUTUAL OF AMERICA), a mutual life insurance company
also organized under New York law, is our indirect parent company. Our home
office is located at 320 Park Avenue, New York, New York 10022.
We sell individual and group life insurance, annuities and pension plans,
including variable accumulation annuity contracts and variable universal
life insurance policies. As of December 31, 1998, we had total assets of
approximately $1.4 billion.
Our operations as a life insurance company are reviewed periodically by
various independent rating agencies. These agencies, such as A.M. Best
Company, Standard & Poor's Insurance Rating Service and Duff & Phelps Credit
Rating Company, publish their ratings. From time to time we reprint and
distribute the rating reports in whole or in part, or summaries of them, to
the public. The ratings concern our operation as a life insurance company
and do not imply any guarantees of performance of the Separate Account.
OUR SEPARATE ACCOUNT
----------------------------------------------------------------------------
We established the Separate Account under a resolution of our Board of
Directors adopted 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). The
Commission does not supervise the management or investment practices or
policies of the Separate Account or American Life. The 1940 Act, however,
does regulate certain actions by the Separate Account.
We divide the Separate Account into distinct Funds. Each Fund invests its
assets in an Underlying Fund, and the name of each Separate Account Fund
reflects the name of the corresponding Underlying Fund.
The assets of the Separate Account are our property. The Separate Account
assets attributable to Owners' Account Balances and any other annuity
contracts funded through the Separate Account cannot be charged with
liabilities from other businesses that we 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. We separately determine
each Fund's net assets, without regard to the income, capital gains and
capital losses from any of the other Funds of the Separate Account or from
any other business that we conduct.
The Separate Account and American Life 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.
OTHER VARIABLE ANNUITY CONTRACTS WE ISSUE
----------------------------------------------------------------------------
In addition to the Contracts described in this Prospectus, we offer other
individual and group variable annuity contracts, some of which are not
described in this Prospectus but which also participate in the Separate
Account.
-8-
<PAGE>
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT
Below are summaries of the Underlying Funds' investment objectives and
certain investment policies. The Underlying Funds sell their shares to the
separate accounts of insurance companies and do not offer them for sale to
the general public.
You will find more detailed information about the Underlying Funds in their
current prospectuses, which are attached to this Prospectus. You should read
each prospectus for a complete evaluation of the Underlying Funds, their
investment objectives, principal investment strategies and the risks related
to those strategies.
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Equity Index Fund is to provide investment
results that correspond to the performance of the Standard & Poor's Composite
Index of 500 Stocks (the S&P 500 INDEX(R)).* The Fund invests primarily in
common stockS that are included in the S&P 500 Index.
ALL AMERICA FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the All America Fund is to outperform the S&P
500 Index by investing in a diversified portfolio of primarily common
stocks.
The Fund invests approximately 60% of its assets (the INDEXED ASSETS) to
provide investment results that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as
represented by the S&P 500 Index. The Fund invests the remaining
approximately 40% of the assets (the ACTIVE ASSETS) to seek 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
primarily common stocks with a broad exposure to the market.
MID-CAP EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Mid-Cap Equity Index Fund is to provide
investment results that correspond to the performance of the S&P
MidCap 400 Index(R).* The Fund invests primarily in common stocks that are
included in the S&P MidCap 400 Index.
AGGRESSIVE EQUITY FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Aggressive Equity Fund is capital
appreciation, by investing approximately 50% of its assets in companies
believed to possess above-average growth potential and approximately 50% of
its assets 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. In utilizing the
investment styles of growth and value stock selection, the Adviser anticipates
that the percentage of the Fund's assets in either category will range between
40% and 60%.
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, debt securities and money market
instruments. The Fund seeks 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.
----------
* Standard & Poor's, S&P, S&P 500 and S&P MidCap 400 are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by the
Investment Company. Standard & Poor's does not sponsor, endorse, sell or
promote the Equity Index Fund, All America Fund or Mid-Cap Equity Index
Fund. It has no obligation or liability for the sale or operation of the
Funds and makes no representations as to the advisability of investing in
the Funds.
-9-
<PAGE>
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 Bond Fund seeks to achieve its objective by investing primarily in
investment grade, publicly-traded debt securities, such as bonds, U.S.
Government and agency securities, including mortgage-backed securities, and
zero coupon securities.
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 average maturity of the Fund's securities holdings will be
between three and seven years.
The Mid-Term Bond Fund seeks to achieve its objective by investing primarily
in investment grade, publicly-traded debt securities, such as bonds, U.S.
Government and agency securities, including mortgage-backed securities, and
zero coupon securities.
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 average maturity of the Fund's securities holdings will be
between one and three years.
The Short-Term Bond Fund seeks to achieve its objective by investing
primarily in investment grade, publicly-traded debt securities, such as
bonds, U.S. Government and agency securities, including mortgage-backed
securities, and in money market instruments.
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 securities. Neither the Federal Deposit Insurance Corporation nor
any other U.S. Government agency insures or guarantees the Separate
Account's investments in shares of the Money Market Fund.
SCUDDER CAPITAL GROWTH PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Scudder Capital Growth Portfolio is 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 Portfolio may invest up to 25% of its assets in short-term debt
instruments, depending on market and economic conditions.
SCUDDER BOND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder Bond Portfolio is to invest for a
high level of income consistent with a high quality portfolio of debt
securities.
To attempt to achieve its objective, the Portfolio invests principally in
investment grade bonds, including those issued by the U.S. Government and
its agencies and by corporations, and other notes and bonds paying high
current income. The Portfolio may invest up to 20% of its assets in
non-investment grade debt securities.
-10-
<PAGE>
SCUDDER INTERNATIONAL PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder International Portfolio is long-term
growth of capital primarily through diversified holdings of marketable
foreign equity investments.
The Portfolio invests primarily in equity securities of established
companies that do business primarily outside the United States and that are
listed on foreign exchanges. In the event of exceptional conditions abroad,
the Portfolio may temporarily invest all or a portion of its assets in
Canadian or U.S. Government obligations or currencies, or securities of
companies incorporated in and having their principal activities in Canada or
the United States.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Equity-Income Portfolio is reasonable income
by investing primarily in income-producing equity securities. In choosing
these securities, the Portfolio also considers the potential for capital
appreciation. The Portfolio's goal is to achieve a yield that exceeds the
composite yield on the securities comprising the S&P 500 Index.
FIDELITY VIP II CONTRAFUND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Contrafund Portfolio is capital
appreciation. It seeks to increase the value of an investment in the
Portfolio over the long term by investing in securities of companies whose
value its adviser believes is not fully recognized by the public. These
securities may be issued by domestic or foreign companies and many may not
be well known. The Portfolio normally invests primarily in common stocks.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Asset Manager Portfolio is high total return
with reduced risk over the long term by allocating its assets among domestic
and foreign stocks, bonds and short-term and money market instruments.
The Portfolio's adviser normally allocates the Portfolio's assets among the
three asset classes within the following investment parameters: 0-50% in
short-term/money market instruments; 20-60% in bonds; and 30-70% in stocks.
The expected "neutral mix", which the Portfolio's adviser would expect over
the long term, is 10% in short-term/money market instruments, 40% in bonds
and 50% in stocks.
CALVERT SOCIAL BALANCED PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Calvert Social Balanced Portfolio is to achieve
a competitive total return through an actively managed non-diversified
portfolio of stocks, bonds and money market instruments that offer income
and capital growth opportunity and satisfy the social concern criteria
established for the Portfolio.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
----------------------------------------------------------------------------
The investment objective of the American Century VP Capital Appreciation
Fund is capital growth by investing primarily in common stocks that meet
certain fundamental and technical standards of selection and have, in the
opinion of the Fund's manager, better-than-average prospects for
appreciation.
INVESTMENT ADVISERS FOR THE UNDERLYING FUNDS
----------------------------------------------------------------------------
MUTUAL OF AMERICA INVESTMENT CORPORATION: The Investment Company receives
investment advice from Mutual of America Capital Management Corporation (the
ADVISER), an indirect wholly-owned subsidiary of Mutual of America. For the
Active Assets of the All America Fund, the Adviser has entered into
subadvisory agreements with Palley-Needelman Asset Management, Inc., Oak
Associates, Ltd. and Fred Alger Management, Inc. Each of these subadvisers
provides investment advice for approximately 10% of the All America Fund's
assets.
SCUDDER VARIABLE LIFE INVESTMENT FUND: The Scudder Capital Growth, Bond and
International Portfolios receive investment advice from Scudder Kemper
Investments, Inc.
-11-
<PAGE>
FIDELITY PORTFOLIOS: The Equity-Income Portfolio, Contrafund Portfolio and
Asset Manager Portfolio receive investment advice from Fidelity Management &
Research Company.
CALVERT SOCIAL BALANCED PORTFOLIO: The Portfolio receives investment advice
from Calvert Asset Management Company, Inc., which has entered into a
subadvisory agreement with NCM Capital Management Group, Inc. for the equity
portion of the Portfolio.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND: The Fund receives investment
advice from American Century Investment Management, Inc.
SHARED AND MIXED FUND ARRANGEMENTS. Shares of the Fidelity Portfolios, the
Scudder Portfolios, the American Century VP Capital Appreciation Fund and
the Calvert Social Balanced Portfolio (together, the SHARED FUNDS) currently
are available to the separate accounts of a number of insurance companies.
Shares of Mutual of America Investment Corporation and shares of certain of
the Shared Funds (together, the MIXED FUNDS) currently are available to
separate accounts for both variable annuity and variable life insurance
products.
The Board of Directors (or Trustees) of each Shared and Mixed Fund is
responsible for monitoring that Fund for the existence of any material
irreconcilable conflict between the interests of participants in all
separate accounts that invest in the Fund. The Board must determine what
action, if any, the Fund should take in response to an irreconcilable
conflict. If we believe that a response does not sufficiently protect our
Contractholders or Owners, we will take appropriate action, and we may
modify or reduce the Investment Alternatives available to you.
CHARGES YOU WILL PAY
ADMINISTRATIVE CHARGES
----------------------------------------------------------------------------
We perform all administrative functions in connection with the Contracts,
including receiving and allocating Contributions, making Annuity Payments as
they become due, and preparing and filing all reports that the Separate
Account is required to file. The expenses we incur for 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 unit values of the Separate Account
Funds.
We may increase or decrease the daily and monthly administrative charges
described below, subject to any limitations in the Contract or a Plan. The
aggregate fees and charges we impose under the Contracts must be reasonable
in relation to the services we provide, the expenses we expect to incur, and
the risks we have assumed.
SEPARATE ACCOUNT CHARGE. We deduct, on each Valuation Day, from the value of
the net assets in each Fund of the Separate Account a charge for
administrative expenses at an annual rate of 0.40%, except that we reduce
the administrative charge to the extent we receive a reimbursement for
administrative expenses.
o For the Separate Account Fund that invests in the American Century VP
Capital Appreciation Fund, the annual rate currently is 0.20%, because the
adviser for the American Century VP Capital Appreciation Fund reimburses us
at an annual rate of up to 0.20% for administrative expenses.
o For the Funds that invest in the Fidelity Portfolios, the annual rate
currently is 0.30%, because the transfer agent and distributor for the
Fidelity Portfolios reimburse us at an aggregate annual rate of 0.10% for
administrative expenses.
OWNER CHARGE. We make an additional deduction from your Account Balance for
administrative expenses each month. The charge is $2.00 per month, except
that we will reduce the charge to 1/12 of 1.00% if your Account Balance for
the month is less than $2,400.
We deduct the monthly charge from your Account Balance allocated to the
General Account, if any. If you do not have any Account Balance in the
General Account, we will deduct the charge from your Account Balance
allocated to one or more of the Separate Account Funds, in a prescribed
order we have established. (Refer to the Statement of Additional Information
for the order of the Funds.)
-12-
<PAGE>
DISTRIBUTION EXPENSE CHARGE
----------------------------------------------------------------------------
We deduct on each Valuation Day, from the net assets in each Fund of the
Separate Account, a charge at an annual rate of 0.35% to cover anticipated
distribution expenses. Mutual of America, under an administrative services
agreement with us, provides sales services for the Contracts and performs
all duties and functions needed for the distribution of the Contracts. To
compensate Mutual of America for its services, we pay it the distribution
charge under the Contracts.
MORTALITY AND EXPENSE RISK CHARGES
----------------------------------------------------------------------------
We bear certain mortality and expense risks under the Contracts. The
mortality risk we assume arises from our guarantee to make Annuity Payments
in accordance with the annuity tables provided in a Contract, regardless of
how long an Annuitant lives and regardless of any improvement in life
expectancy generally. Our mortality risk is that Annuitants as a class will
live longer than we had estimated actuarially, and as a result we make
Annuity Payments for longer than we had anticipated. Our assumption of this
risk relieves Owners (Annuitants) of the risk that they will outlive the
funds that they have accumulated for their retirement.
We assume certain expense risks under the Contracts. The expense risks we
assume arise from our guarantees in the Contracts to make Annuity Payments
in accordance with annuity tables in the Contracts. We have estimated
expenses we expect to incur over the lengthy period that we may make Annuity
Payments. We assume the risk that expenses will be higher than we estimated.
On each Valuation Day, for assuming the mortality risks we make a deduction
at an annual rate of 0.35% of the net assets in each Fund and for assuming
the expense risks we make a deduction at an annual rate of 0.15% of the net
assets in each Fund. We guarantee that we will not increase the mortality
risk charge during the life of a Contract, and we have the right to increase
the expense risk charge, subject to any limitations in the Contract.
EXPENSES OF THE UNDERLYING FUNDS
----------------------------------------------------------------------------
Owners and the Separate Account Funds do not directly pay the advisory fees
and other expenses of the Underlying Funds. These fees and expenses are
deducted by the Underlying Funds and will impact the value of the shares the
Separate Account Funds own. You should refer to "Table of Annual Expenses"
in this Prospectus, which shows the expenses of the Underlying Funds for the
most recent calendar year. The prospectuses of the Underlying Funds, which
are attached to this Prospectus, contain a complete description of the
Underlying Funds' fees and expenses.
PREMIUM TAXES
----------------------------------------------------------------------------
We currently do not deduct state premium taxes from Contributions. We reserve
the right to deduct all or a portion of the amount of any applicable taxes,
including state premium taxes, from Contributions prior to their allocation
among the Investment Alternatives. Currently, most state premium taxes range
from 2% to 4%.
-13-
<PAGE>
WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS
PURCHASE OF A CONTRACT; PARTICIPATION
----------------------------------------------------------------------------
IRA CONTRACT. We issue IRA Contracts to individuals who are (or were)
employees of an organization that qualifies for tax-exempt status under the
Code and to these individuals' immediate family members. Each purchaser must
complete the prescribed application and make an initial Contribution of at
least the minimum required amount, except that we do not require an initial
Contribution for SEP IRA Contracts.
To purchase a Roth IRA, an individual must have Federal adjusted gross
income below a certain level and must designate the Contract as a Roth IRA.
To purchase a SEP IRA or SIMPLE IRA, the individual must be eligible to
participate in the SEP or SIMPLE adopted by the individual's employer.
FPA CONTRACT. We issue FPA Contracts to individuals who currently work for
or formerly worked for organizations that are tax-exempt under the Code and
to these individuals' spouses and certain family members. Each purchaser
must complete the prescribed application and make an initial Contribution of
at least the minimum required amount. We also may issue an FPA Contract to a
tax-exempt organization, which may use the Contract to accumulate funds to
meet its deferred compensation obligations.
A person to whom we issue an FPA Contract, even if the person names someone
else as the Annuitant, is the owner of the Contract and will possess all the
rights under the Contract. For example, the employer to whom we issue an FPA
Contract for deferred compensation purposes is the owner of the Contract and
may receive all payments under the Contract
ACCEPTANCE OF INITIAL CONTRIBUTIONS. When we receive your completed
application, together with an initial Contribution (when required) and any
other necessary information, we will accept the application and Contribution
and issue the Contract, or reject them, within two business days of receipt.
If you did not properly complete the application, we will retain the
Contribution for up to five business days while we attempt to obtain the
information necessary to complete the application. We will accept the
Contribution within two business days after we receive the completed
application.
If we do not receive a completed application for you within five business
days, we will return the Contribution at the end of that period unless we
obtain consent to hold the Contribution for a longer period from you, if the
application is for an FPA or IRA Contract where you send Contributions
directly to us, or we notify your employer on your behalf if the application
is for an IRA Contract where your employer sends Contributions to us. We
enter into agreements with employers that use our electronic processing
system and that make Contributions to a SEP IRA or SIMPLE IRA or that have
payroll deduction or salary reduction programs for the forwarding of
applications and Contributions to us.
CANCELLATION OF CONTRACT. You may surrender an IRA Contract or FPA Contract
for cancellation within ten days after receipt. We will refund all
Contributions you allocated to the General Account, plus the value on the
date of surrender of your Account Balance credited to the Separate Account.
Several states, however, require that the amount of Contributions be
refunded without deductions, and you should consult the Contract for
applicable provisions. We will return to your employer any Contributions
that were sent to us by your employer on your behalf.
PAYMENT OF CONTRIBUTIONS
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IRA CONTRACTS. The method of making Contributions depends on the type of
IRA Contract.
o For Traditional IRA, Roth IRA and SEP IRA Contracts, you may make
Contributions directly to us.
o Under a Traditional IRA Contract, you also may make Contributions under a
payroll deduction agreement between you and your employer, in which case
the employer forwards to us on your behalf the amounts deducted from your
salary.
o For a SIMPLE IRA Contract, you may make Contributions only by salary
reduction under the SIMPLE adopted by your employer.
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The Code limits the amount of your total Contributions (excluding rollovers)
under a Traditional IRA, SEP IRA or Roth IRA Contract during a tax year to
the LESSER of $2,000 and 100% of your compensation for that year.
The Code limits the amount of Contributions to a Roth IRA as follows:
o A single individual with adjusted gross income of $95,000 or less, and a
married individual who files a joint tax return with adjusted gross income
of $150,000 or less, may contribute up to $2,000 to a Roth IRA. This $2,000
amount is reduced by contributions to other IRAs during the tax year, other
than rollovers and salary reduction contributions to a SIMPLE.
o The $2,000 Roth IRA contribution limit declines in fixed amounts until it
becomes zero for a single individual with adjusted gross income between
$95,000 and $110,000 and for a married individual filing a joint return
with adjusted gross income between $150,000 and $160,000.
The Code limits Owner Contributions to a SIMPLE IRA, as follows:
o You may contribute up to $6,000 per year (or 100% of compensation if less),
and this amount will be increased in future years for cost-of-living
adjustments.
o If an individual has more than one employer, the maximum amount that an
employee may contribute under a SIMPLE IRA and other salary reduction
arrangements in any year is $10,000 for 1999, as adjusted in future years
for cost-of-living increases.
Code provisions also regulate an employer's Contributions to a SIMPLE IRA:
o An employer generally must match an employee's contribution in an amount
equal to 3% of the employee's compensation, but the employer may lower the
percentage to as low as 1% for two years out of a five year period.
o Instead of matching a Contribution, the employer may make a "nonelective"
Contribution to each Owner's SIMPLE IRA. The amount of the nonelective
Contribution is equal to 2% of compensation for each eligible employee,
whether or not the employee has made Contributions during the year. The
maximum amount of compensation considered for each employee in this
calculation is $160,000 for 1999 (to be adjusted for cost-of-living
increases in the future). An employer must notify its employees of an
election to reduce the percentage of the employer's matching Contributions
or to make a nonelective Contribution instead of matching Contributions for
the coming year.
Under a SEP, an employer can contribute to the employee's SEP IRA an amount
up to 15% of the employee's compensation (with compensation limited to
$160,000), but not more than $30,000. These limits may be reduced, however,
by contributions that the employer makes to other tax-qualified plans for
the employee.
At any age you may make Contributions to a Roth IRA, as long as you are
eligible based on Federal adjusted gross income requirements. You may not
make any Contributions to a Regular IRA or SEP IRA Contract beginning in the
tax year you reach age 70 1/2, with the following exceptions:
o You may purchase an IRA Contract, or you may use an existing IRA Contract,
to receive rollover Contributions from certain other plans, as described
below, even after age 70 1/2.
o An employer may make contributions for its employee under a SEP IRA or a
SIMPLE IRA, and an employee may contribute to a SIMPLE IRA, after the
employee has attained age 70 1/2.
You may make Contributions to an IRA Contract (other than a SIMPLE IRA) by
ROLLOVER of eligible distributions from certain other pension or retirement
arrangements that qualify for favorable tax treatment under the Code, under
the following rules:
o Generally, amounts that you roll over will not be subject to the
limitations on the amount of Contributions during a tax year, except for
the portion that represents Contributions made for the same tax year as the
rollover.
o Qualified plans and arrangements include other IRA contracts, SEP IRAs and
SIMPLE IRAs, tax-sheltered annuities under Code Section 403(b), and pension
and profit-sharing plans, including 401(k) plans, under Code Section
401(a). Not all distributions from these plans and arrangements
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may be rolled over to an IRA Contract, and the tax implications of rolling
over distributions may vary depending on federal tax rules that apply to
the plan or arrangement. SEE "Federal Tax Information -- Obtaining Tax
Advice".
o You may roll over amounts to a SIMPLE IRA only from another SIMPLE IRA.
Special rules apply for rollovers to a Roth IRA or for conversions from a
Traditional IRA to a Roth IRA. If you have adjusted gross income of $100,000
or less for a tax year, you can roll over or "convert" a Traditional IRA to
a Roth IRA Contract, subject to the following:
o You may not directly transfer distributions from an employer-sponsored plan
to a Roth IRA, but you may roll over eligible distributions first to a
Traditional IRA and subsequently to a Roth IRA.
o You must include in gross income amounts rolled over from a Traditional IRA
to a Roth IRA (excluding "after-tax" Contributions), but no early
withdrawal penalty applies to the taxable amount. If you converted a
Traditional IRA to a Roth IRA during 1998, you may include one-fourth of
the resulting taxable income in each of the 1998, 1999, 2000 and 2001 tax
years for Federal income tax purposes.
o You will owe a penalty tax on withdrawals of amounts that were rolled over
to a Roth IRA from a Traditional IRA if the withdrawal is made within five
tax years after the rollover, even if the amount withdrawn is nontaxable.
SEE "Federal Tax Information -- Roth IRA Contracts -- Special Penalty Tax
on Withdrawals of Rollover or Conversion Contributions".
o Individuals considering converting or rolling over a Traditional IRA to a
Roth IRA should take into account various issues, including state and local
tax consequences. SEE "Federal Tax Information -- Obtaining Tax Advice."
FPA CONTRACT. You may make Contributions directly to us, or your employer
may make Contributions to us on your behalf under a payroll deduction
agreement. You may make Contributions at whatever intervals and in whatever
amounts you select, except that each Contribution must be at least $10.
(From time to time we may change this minimum.)
If an employer purchases an FPA Contract as a depository for employee
deferred compensation obligations that do not constitute deferrals under an
eligible deferred compensation plan as defined in Section 457(b) of the
Code, there are no limits on the amount of compensation that employees may
defer. However, amounts deferred under the Contract are subject to a
substantial risk of forfeiture by the employees, including by the claims of
the employer's creditors.
ALLOCATION OF CONTRIBUTIONS
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You may allocate Contributions among the Investment Alternatives. The
Mid-Cap Equity Index Fund may not be available to Owners in all States, due
to insurance department regulatory filings.
We will allocate a Contribution when we receive it according to instructions
sent with the Contribution, or if no instructions are sent, on the basis of
your allocation request currently on file at our home office. Your request
for allocation must specify the percentage, in any whole percentage from 0%
to 100%, of each Contribution to be allocated to each of the Investment
Alternatives. The percentages you give us must add up to 100%. We receive
your Contribution when we receive your check at our home office or your
employer transfers Federal Funds into the bank account we have designated
for the employer's use.
You may change the allocation instructions for future Contributions from
time to time. You should periodically review your allocations in light of
market conditions and your retirement plans and needs.
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YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS
ACCUMULATION UNITS IN SEPARATE ACCOUNT FUNDS
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We use Accumulation Units to represent Account Balances in each Separate
Account Fund. We separately value the Accumulation Unit for each Fund of the
Separate Account.
We determine your Account Balance in the Separate Account as of any
Valuation Day by multiplying the number of Accumulation Units credited to
you in each Fund of the Separate Account by the Accumulation Unit value of
that Fund at the end of the Valuation Day.
Investment experience by the Separate Account Funds does not impact the
number of Accumulation Units credited to your Account Balance. The value of
an Accumulation Unit for a Fund, however, will change as a result of the
Fund's investment experience, in the manner described below.
CALCULATION OF ACCUMULATION UNIT VALUES
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We determine Accumulation Unit values for the Funds as of the close of
business on each Valuation Day (generally at the close of the New York Stock
Exchange). A Valuation Period is from the close of a Valuation Day until the
close of the next Valuation Day.
The dollar value of an Accumulation Unit for each Fund of the Separate
Account will vary from Valuation Period to Valuation Period. The changes in
Accumulation Unit values for the Separate Account Funds will reflect:
o changes in the net asset values of the Underlying Funds, depending on the
investment experience and expenses of the Underlying Funds, and
o Separate Account charges under the Contracts, with the annual rates
calculated as a daily charge. (SEE "Charges You Will Pay".)
You may refer to "Appendix A: Unit Value Information for the Separate
Account Funds" in this Prospectus to review changes in Accumulation Unit
values for each Fund over a period of time (except for the Mid-Cap Equity
Index Fund, which began operations on May 1, 1999).
ACCUMULATION UNIT VALUES FOR TRANSACTIONS
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When you allocate Contributions to a Separate Account Fund or transfer any
Account Balance to a Fund, we credit Accumulation Units to your Account
Balance. When you withdraw or transfer any Account Balance from a Separate
Account Fund, we cancel Accumulation Units from your Account Balance.
The Accumulation Unit value for a transaction is the Unit value for the
Valuation Period during which we receive the Contribution or request. As a
result, we will effect the transaction at the Accumulation Unit value we
determine at the NEXT CLOSE of a Valuation Day (generally the close of the
New York Stock Exchange on that business day).
We calculate the number of Accumulation Units for a particular Fund by
dividing the dollar amount you have allocated to, or withdrawn from, the
Fund during the Valuation Period by the applicable Accumulation Unit value
for that Valuation Period. We round the resulting number of Accumulation
Units to two decimal places.
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OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY
YOUR RIGHT TO TRANSFER AMONG INVESTMENT ALTERNATIVES
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You may transfer all or a portion of your Account Balance among Funds of the
Separate Account, and between the Separate Account and the General Account.
There are no tax consequences to you for transfers among Investment
Alternatives. We currently do not impose a charge for transfers, but we
reserve the right to impose a transfer charge in the future.
YOUR RIGHT TO MAKE WITHDRAWALS, INCLUDING BY SPECIFIED PAYMENTS
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You may withdraw your Account Balance in whole or in part, at any time
during the Accumulation Period. A full withdrawal results in the surrender
of your Contract. We may take up to seven days following receipt of your
withdrawal request to process the request and mail a check to you. SEE
"Income Tax Consequences of Withdrawals" below.
SPECIFIED PAYMENTS OPTION. If you have reached age 59 1/2, you may elect to
make withdrawals of Account Balance by telling us a set amount to be
withdrawn each month. You must specify an amount, which may not be less than
$100, and must tell us the Investment Alternatives from which the
withdrawals should be taken. We will send the Specified Payments to you,
except that we will send the Specified Payments to the Annuitant if you have
an FPA Contract and have named someone else as the Annuitant.
When you are receiving Specified Payments, you may not make payroll
deduction Contributions, but you (and your employer under an IRA) may make
single sum Contributions. You also may transfer Account Balance among
Investment Alternatives and make other withdrawals when receiving Specified
Payments.
Specified Payments will continue until the earliest of (a) your death; (b)
our receipt of your written request to change or end the Specified Payments;
(c) the decline in your Account Balance (or in any Investment Alternative
that you have designated for withdrawals) so that the remaining balance is
not large enough to cover the next Specified Payment due; or (d) your
Annuity Commencement Date.
If you are subject to the minimum distribution rules under the Code, the
Specified Payments for the year should at least total the minimum required
annual distribution. (SEE "Federal Tax Information -- Minimum Distributions
under IRA Contracts.")
INCOME TAX CONSEQUENCES OF WITHDRAWALS. You should consider the possible
Federal income tax consequences of any withdrawal, including withdrawals
under the Specified Payments Option. You will be taxed at ordinary income
tax rates on the portion of your withdrawal that is taxable. You will not be
taxed on the amount of any Contributions you made with "after-tax" dollars,
but there are special rules under the Code for determining whether a
withdrawal, or portion of a withdrawal, will be considered a return to you
of after-tax Contributions (SEE "Federal Tax Information").
Your withdrawals under a Roth IRA Contract that are made after the five year
period beginning with the tax year in which the Roth IRA Contract was first
issued are not taxable if:
o you have reached age 59 1/2, or
o the withdrawals are to pay for qualified first-time home buyer expenses of
up to $10,000 per lifetime, or
o you have died or become disabled.
A withdrawal that does not meet these requirements is nevertheless not
taxable if it is not more than the amount of your Contributions to the Roth
IRA and contributions to other Roth IRAs you own. Refer to the discussion on
Roth IRA Contracts under "Federal Tax Information".
PENALTY TAX ON TAXABLE PORTION OF WITHDRAWALS AND ON CERTAIN ROTH IRA
WITHDRAWALS. There is a 10% Federal penalty tax on the taxable amount of
withdrawals you make during the Accumulation Period, unless
o you have reached age 59 1/2,
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o you are disabled or have died,
o the distributions are Annuity Payments over your life (or life expectancy)
or over the joint lives (or joint life expectancies) of you and the
Beneficiary, or
o in certain other circumstances. Refer to "Federal Tax Information" for a
listing of circumstances when the penalty is not due.
The 10% penalty you pay increases to 25% if you make a withdrawal from a
SIMPLE IRA during the first two years of your participation in the employer's
SIMPLE.
You may owe a 10% penalty tax on withdrawals of amounts that you converted
or rolled over to a Roth IRA from a Traditional IRA, even though the
withdrawal is tax-free to you. SEE "Federal Tax Information".
HOW TO TELL US AN AMOUNT TO TRANSFER OR WITHDRAW
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To tell us the amount of your Account Balance to transfer or withdraw, you
may specify to us:
o the dollar amount to be taken from each Investment Alternative,
o for Separate Account Funds, the number of Accumulation Units to be
transferred or withdrawn, or
o the percentage of your Account Balance in a particular Investment
Alternative to be transferred or withdrawn.
For transfers, you also must specify the Investment Alternative(s) to which
you are moving the transferred amount. Your request for a transfer or
withdrawal is not binding on us until we receive all information necessary
to process your request.
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE
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During the Accumulation Period, we will pay a death benefit to your
Beneficiary upon your death or, under an FPA Contract when you are not the
Annuitant, upon the death of either you or the Annuitant, whichever comes
first.
We will pay the death benefit after we have received:
o due proof of your (or under an FPA Contract, if different, the Annuitant's)
death;
o notification of election by the Beneficiary(ies) of the form in which we
are to pay the death benefit; and
o all other information and documentation necessary for us to process the
death benefit request.
The amount of the death benefit will be the value of your Account Balance as
of the date on which we receive the items listed above. Until then, your
Account Balance will remain allocated as it was on the date of death. (If
you were the Annuitant and your Eligible Spouse is the Beneficiary, special
rules apply as described below).
FORM OF PAYMENT OF DEATH BENEFIT. The Beneficiary will elect the form of
death benefit. Payout options include a lump sum or annuity payments, but
the Code imposes special requirements on the payment of a death benefit, as
described below.
Under an IRA Contract (other than a Roth IRA), you are required to begin
taking minimum distributions after you reach a certain age (called the
REQUIRED BEGINNING DATE), and certain requirements depend on whether you had
reached that age at the time of your death. When minimum distribution
requirements are applicable, they can be satisfied by withdrawals from other
eligible IRA contracts. Beneficiaries should consult their tax advisers for
any additional rules that may apply in their particular circumstances. SEE
"Federal Tax Information -- Minimum Distributions under IRA Contracts".
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<PAGE>
In general, any method of distribution that your Beneficiary selects must
comply with ONE of the following.
(a) FIVE YEAR RULE. The general rule is that we must pay the entire death
benefit to the Beneficiary by December 31 of the year that is five years
after your death (or the Annuitant's death, if applicable), unless we pay
the death benefit in accordance with (b), (c) or (d) below.
(b) LIFE ANNUITY RULE. If a Beneficiary selects a life annuity, the entire
death benefit must generally be distributed to the Beneficiary in the form
of Annuity Payments that begin within one year of your (or the Annuitant's)
death and are payable over a period of time that is not more than the
Beneficiary's life or life expectancy, whichever is longer.
(c) COMMENCEMENT OF MINIMUM DISTRIBUTIONS. Under an IRA (other than a Roth IRA)
Contract, if you die AFTER reaching the Required Beginning Date, the method
of distribution the Beneficiary selects may not be slower than the method
of distribution that was in effect before your death.
(d) BENEFICIARY IS YOUR ELIGIBLE SPOUSE. Your spouse may be able to continue an
FPA or IRA Contract.
o Under an FPA Contract when you are the Annuitant, a Beneficiary who is your
Eligible Spouse may choose to be considered as the Owner for purposes of
determining when distributions must begin. In effect, your spouse can be
substituted as the Owner under the FPA Contract, and the death benefit
distribution requirements will not apply until the spouse's death.
o Under an IRA Contract, the spouse may use your Required Beginning Date for
determining when minimum distributions must begin. Alternatively, the
spouse may take over the IRA Contract and make Contributions to the
Contract, in which case the minimum distribution rules will be based on the
spouse's Required Beginning Date, and the death benefit distribution
requirements will not apply until the spouse's death.
TERMINATION OF A CONTRACT
----------------------------------------------------------------------------
We may, in our sole discretion, return your Account Balance and terminate a
Contract prior to the Annuity Commencement Date if:
o you have not made Contributions for three consecutive years,
o your Account Balance is less than the specified minimum for FPA Contracts
of $500 and for IRA Contracts of either $2,000 or the amount needed to
provide monthly Annuity Payments of at least $20 under the form of annuity
you selected, AND
o you have reached the age 59 1/2.
Before we elect to terminate a Contract, we will notify you of our intention
to do so and provide a period of 90 days during which you may make
additional Contributions to reach the specified minimum. We will pay your
Account Balance to you in a single sum if we terminate your Contract.
WHEN WE MAY POSTPONE PAYMENTS
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We will pay any amounts due from the Separate Account for a withdrawal
(including a Specified Payments Option withdrawal), death benefit or
termination, and will transfer any amount from the Separate Account to the
General Account, within seven days, unless:
o 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
o The Commission by order permits postponement for the protection of Owners;
or
o An emergency exists, as determined by the Commission, as a result of which
disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's net
assets.
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YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT BALANCE
AMOUNT OF ANNUITY PAYMENTS
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At your Annuity Commencement Date, we will apply your Account Balance to
purchase a stream of monthly Annuity Payments (an annuity). Once Annuity
Payments have begun, you may no longer make Contributions, transfers or
withdrawals under the Contract and your employer may no longer make
Contributions on your behalf. You may elect to receive your Account Balance
by making partial or full withdrawals, including under the Specified
Payments option, instead of receiving Annuity Payments. SEE "Your Right to
Make Withdrawals, including by Specified Payments".
We will fix the amount of each Annuity Payment and guarantee payment,
according to the form of annuity you select. The amount of the Annuity
Payments depends only on the annuity form you choose, the applicable annuity
purchase rates and your Account Balance. The life expectancy of the
Annuitant(s) is a factor we use in determining the amount of the monthly
Annuity Payments, if the form of annuity requires us to make payments for
the life of the Annuitant (or joint lives of the Annuitant and joint
Annuitant).
We guarantee that the purchase rates we use to determine the amount of
Annuity Payments will never be less favorable for you than the guaranteed
rates in the Contract. In providing guaranteed rates, we assume "mortality
risk", because the rates are applicable without regard to the death rate (or
in other words, the life expectancy) of the general population after the
date of Contract issuance. We also guarantee that we will not increase
expense charges under the Contracts for the Annuity Payments, regardless of
our actual expenses.
We will send Annuity Payments directly to the Annuitant(s) at the last
address known to us, as filed with us by you.
ANNUITY COMMENCEMENT DATE
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You must notify us of the Annuity Commencement Date in advance, according to
our procedures.
IRA CONTRACTS. You may elect an Annuity Commencement Date that is the first
day of any calendar month on or after the date you attain age 55. For SEP
IRAs and SIMPLE IRAs, the Annuity Commencement Date must be no EARLIER than
the last to occur of the following: the first day of the calendar month in
which you attain age 55, the 30th day following the day you stop working for
the employer that sponsors the SEP or SIMPLE, or the 30th day following the
day that we receive at our home office the last employer contribution due
under the SEP or SIMPLE.
FPA CONTRACT. You may elect an Annuity Commencement Date that is the first
day of any calendar month.
AVAILABLE FORMS OF ANNUITY
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You select the form of annuity at the time you designate an Annuity
Commencement Date.
You may select a form of annuity from the following list. You will be the
Annuitant, unless under an FPA Contract you named someone else as the
Annuitant.
TEN YEARS CERTAIN AND CONTINUOUS FORM. This annuity form provides for
monthly Annuity Payments to the Annuitant, continuing until the LATER OF the
month of the Annuitant's death and the end of 10 years (the certain period).
If the Annuitant dies before the end of the 10 year certain period, the
Annuitant's Beneficiary will receive the monthly Annuity Payments until the
end of the 10 year period. If the Beneficiary dies before the end of the 10
year period, we will pay the commuted value of the remaining Annuity
Payments to the payee named by you.
JOINT AND 66 2/3% SURVIVOR LIFE WITH 10 YEAR PERIOD CERTAIN FORM. This
annuity form provides a monthly Annuity Payment during the lifetime of the
Annuitant and 66 2/3% of that monthly Annuity Payment to the joint Annuitant
after the Annuitant's death if the joint Annuitant survives the Annuitant.
If both the Annuitant and the joint Annuitant die before the end of the ten
year period, payments continue in the amount last paid until the end of ten
years (the certain period) to the Beneficiary. If a person named as an
Annuitant's joint annuitant dies prior to the Annuity Commencement Date,
your election of this annuity form is cancelled automatically.
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FULL CASH REFUND FORM. This annuity form provides for monthly Annuity
Payments to the Annuitant, continuing until the month of the Owner's death.
If the aggregate amount of the monthly Annuity Payments that we made to you
is less than your Account Balance at the Annuity Commencement Date, we will
pay the difference to the Beneficiary. The Beneficiary may elect to receive
the amount in a lump sum or as an annuity in the Ten Years Certain and
Continuous Form.
We will calculate any commuted value on the basis of compound interest at a
rate we determine that is consistent with the interest assumption for the
annuity rates we used to determine the Annuity Payments.
In addition to the forms of annuity listed above, we may in our discretion
offer additional forms of annuity as of your Annuity Commencement Date. As
of the date of this Prospectus, we are offering the following additional
forms of annuity and have the right to discontinue offering these forms at
any time.
PERIOD CERTAIN AND CONTINUOUS ANNUITY. Same as the Ten Years Certain and
Continuous annuity above, except that the period may be for three or five
years or for some other period we approve.
JOINT AND SURVIVOR LIFE WITH PERIOD CERTAIN ANNUITY. Same as the Joint and
Survivor Life with Period Certain annuity above, except that the percentage
to the contingent Annuitant may be 50%, 75% or 100%, rather than 66 2/3%,
and the Period Certain may be different, as elected by the Annuitant.
JOINT AND SURVIVOR LIFE ANNUITY. Same as the Joint and Survivor Life With
Period Certain annuity above, except that payments will end upon the death
of the survivor as between the Annuitant and the contingent Annuitant. There
is no guaranteed minimum payment period.
NON-REFUND LIFE ANNUITY. We make a monthly Annuity Payment until the death
of the Annuitant. No amount is payable to any contingent Annuitant or
Beneficiary.
DEATH BENEFIT AFTER ANNUITY COMMENCEMENT DATE
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If an Annuitant (and the joint Annuitant if the form is a joint annuity)
dies on or after the Annuity Commencement Date, your Beneficiary will
receive the death benefit (if any) provided by the form of annuity under
which Annuity Payments were made. SEE "Available Forms of Annuity" above.
LUMP SUM FOR SMALL ANNUITY PAYMENTS
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If the annuity benefit payable would be less than $20 each month, we may
elect to pay the Account Balance in a single payment to the Annuitant.
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OUR GENERAL ACCOUNT
SCOPE OF PROSPECTUS
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This Prospectus serves as a disclosure document for the variable, or
Separate Account, interests under the Contracts. We have not registered the
Contracts under the Securities Act of 1933 for allocations to the General
Account, nor is the General Account registered as an investment company
under the 1940 Act. The staff of the Commission has not reviewed the
disclosures in this Prospectus that relate to the General Account.
Disclosures regarding the fixed portion of the Contracts and the General
Account, however, generally are subject to certain provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
GENERAL DESCRIPTION
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Amounts that you allocate to the General Account become part of our general
assets. Our General Account supports our insurance and annuity obligations.
The General Account consists of all of our general assets, other than those
in the Separate Account and other segregated asset accounts.
We bear the full investment risk for all amounts that Owners allocate to the
General Account. We have sole discretion to invest the assets of the General
Account, subject to applicable law. Your allocation of Account Balance to
the General Account does not entitle you to share in the investment
experience of the General Account.
We guarantee that we will credit interest to Owners' Account Balances in the
General Account at an effective annual rate of at least 3%. In our sole
discretion, we may credit a higher rate of interest to Account Balances in
the General Account, although WE ARE NOT OBLIGATED TO CREDIT INTEREST IN
EXCESS OF 3% PER YEAR. We will send you notice when we change the current
rate. We credit interest daily and compound it annually.
For SEP and SIMPLE IRAs and payroll deduction IRA Contracts, we reserve the
right to credit a higher interest rate than the rate otherwise set for
amounts allocated to the General Account when the employer uses electronic
media, in compliance with our established rules and requirements, for the
transmission and receipt of certain information regarding Owners,
Contributions and other Contract information.
TRANSFERS AND WITHDRAWALS
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You may transfer any portion of your Account Balance to or from the General
Account and may withdraw any portion of your Account Balance from the
General Account prior to the Annuity Commencement Date. SEE "Your Right to
Transfer Among Investment Alternatives" and "Your Right to Make Withdrawals,
including by Specified Payments" under "Our Payment of Account Balance to
You or a Beneficiary". We have the right to delay transfers and withdrawals
from the General Account for up to six months following the date that we
receive the transaction request.
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HOW TO CONTACT US AND GIVE US INSTRUCTIONS
CONTACTING AMERICAN LIFE
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You should send in writing all notices, requests and elections required or
permitted under the Contracts, except that you may give certain instructions
by telephone, as described below. Our home office address is:
The American Life Insurance Company of New York
320 Park Avenue
New York, New York 10022
You can check the address for your Regional Office by calling 1-800-872-5963
or by visiting our Website at www.mutualofamerica.com.
TRANSFERS, ALLOCATION CHANGES AND WITHDRAWALS BY TELEPHONE
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You may make requests by telephone for transfers among Investment
Alternatives or withdrawals of Account Balance (except for IRA rollovers) or
to change the Investment Alternatives to which we will allocate your future
Contributions.
You must use a Personal Identification Number (PIN) to make telephone
requests. We will automatically send you a PIN, and your use of the PIN
constitutes your agreement to use the PIN in accordance with our rules and
requirements. You may call us to change or cancel the PIN that we have
assigned. Our toll-free telephone number for requests is 1-800-872-5963.
On any Valuation Day, we treat requests by telephone that we receive by 4
p.m. Eastern Time (or the close of the New York Stock Exchange, if earlier)
as received that day. We treat requests that we receive after 4 p.m. (or the
Exchange close) as received the next Valuation Day. We reserve the right to
suspend or terminate at any time the right of Owners to request transfers or
reallocations by telephone.
Although our failure to follow reasonable procedures may result in our
liability for any losses due to unauthorized or fraudulent telephone
transfers, we will not be liable for following instructions communicated by
telephone that we reasonably believe to be genuine. We will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. Those procedures are to confirm your Social Security number,
check the Personal Identification Number, tape record all telephone
transactions and provide written confirmation of telephone transactions.
WHERE YOU SHOULD DIRECT REQUESTS
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You should request an allocation change or a transfer of your Account
Balance among Investment Alternatives by calling 1-800-872-5963 or by
sending a written request to our Processing Center. The address is:
The American Life Insurance Company of New York
Financial Transaction Processing Center
1150 Broken Sound Parkway NW
Boca Raton, FL 33487
For withdrawals, you must make your request according to our procedures,
which we may change from time to time. Under our current procedures, you may
make a withdrawal request:
o under an IRA Contract by writing to your Regional Office or by calling our
800 number, except that a request for rollover to another IRA must be in
writing, and
o under an FPA Contract by calling our 800 number or writing to our Home
Office.
You should use our forms to submit written requests to us.
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ADMINISTRATIVE MATTERS
YEAR 2000 COMPLIANCE
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Many of the services that we provide to you depend on the proper functioning
of our computer and computer-based systems, as well as those of our service
providers. Many computer software programs, as initially developed, could
not distinguish the year 2000 from the year 1900. If not corrected, this
inability could potentially have an adverse impact on the handling of your
purchase, exchange and redemption transactions, the crediting of
Accumulation Units, accounting and other recordkeeping services.
We have performed a comprehensive review of our computer systems, made the
necessary modifications or replacements and successfully completed system
testing of our in-house software, the largest and most critical project
under our Year 2000 program. For the balance of 1999, we will continue to
monitor and verify Year 2000 compliance. We also have contacted our vendors
and service providers as to the status of their Year 2000 compliance.
Vendors and service providers whose systems are material to our operations
have confirmed they are, or expect to be, Year 2000 compliant. Although we
anticipate that our computer systems and those of our providers will be
adapted in time for the year 2000, it is possible Year 2000 problems still
may occur. We have developed written contingency plans to ensure our
business continuity through the year 2000.
CONFIRMATION STATEMENTS TO OWNERS
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We will send you a confirmation statement each time you change your
allocation instructions, we receive a new Contribution from or for you, or
you transfer any portion of your Account Balance among the Investment
Alternatives. The confirmation for a new Contribution or transfer of Account
Balance may be an individual statement for FPA and certain IRA Contracts or
may be part of your next quarterly account statement for certain IRA
Contracts. You must notify us of any error in a statement within 30 days
after the date we processed the change or transaction, or within 30 days
after the end of the period covered by the quarterly statement that serves
as the confirmation statement, or you will give up your right to have us
correct the error.
DESIGNATION OF BENEFICIARY
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You may designate one or more persons as your Beneficiary(ies). You may
change a Beneficiary while you are living, either before or after the
Annuity Commencement Date, by providing us (or your employer when the
employer has agreed to hold such information) with written notice of the
change. The designation or change in designation will take effect when we
(or your employer, if applicable) receive the notice, whether or not you are
living at the time we receive the notice. We will not be liable for any
payment or settlement we make before we receive the notice of Beneficiary or
change of Beneficiary.
If no Beneficiary designated by you is living at the time of your death
during the Accumulation Period (or under an FPA Contract, the Annuitant, if
different), or when the Annuitant dies (and the joint Annuitant, if any
dies) during the Annuity Period, we will pay a single sum payment or the
commuted value of any remaining periodic payments to a Beneficiary or
Beneficiaries determined under the Contract. The Contract lists classes of
Beneficiaries in an order of preference. We will pay the surviving family
member(s) in the first class of Beneficiaries we find, in this order:
o your spouse;
o your children;
o your parents; and
o your brothers and sisters.
If we do not find family members in these classes, we will pay the
executors or administrators of your estate.
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MISCELLANEOUS CONTRACT PROVISIONS
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ASSIGNMENT OF CONTRACTS. You may not assign or transfer an IRA Contract or
any rights under an IRA Contract, except as otherwise required by law.
You may assign an FPA Contract. Your assignment of an FPA Contract will not
be binding on us until we have recorded it, and an assignment will not apply
to payments we make before we record the assignment.
MODIFICATION OR AMENDMENT OF CONTRACTS. Our rights and obligations under a
Contract cannot be changed or waived, unless one of our duly authorized
officers signs a written agreement to the change or waiver. No amendment or
endorsement will affect the amount or terms of any Annuity Payments we
provide under a Contract that commenced before the amendment or endorsement.
By accepting an IRA Contract, you delegate to us the power to amend or
replace that Contract to conform it to the provisions of any law,
regulations, or material administrative rulings pertaining to individual
retirement annuities, and to make such other changes in the Contract that we
determine from time to time are necessary or appropriate. If the effect
would be to substantially change the costs or benefits under the Contract,
we may not make changes without your consent.
EVIDENCE OF SURVIVAL. When payment of a benefit is contingent upon the
survival of any person, we may require that evidence of that person's
survival be furnished to us, either by personal endorsement of the check
drawn for payment, or by other means satisfactory to us.
MISSTATEMENT OF INFORMATION. If we pay a benefit under a Contract based on
information that you or Beneficiary misstated to us, we will recalculate the
benefit when we learn of the misstatement. We will adjust the amount of the
benefit payments, or the amount applied to provide the benefit, or both, to
the proper amount we determine based on the corrected information.
If we underpaid benefits due to any misstatement, we will pay the amount of
the underpayment in full with the next payment due under the Contract. If we
overpaid any benefits due to a misstatement, we will deduct the overpayment
to the extent possible from payments as they become due under the Contract.
We will include interest on the amount of any underpayments or charge
interest on overpayments, at the effective rate then required under State
insurance law provisions.
INFORMATION AND DETERMINATION. You must furnish us with the facts and
information that we may require for the operation of the Contract including,
upon request, the original or photocopy of any pertinent records held by
you. We may rely on reports and other information furnished by or on your
behalf and are not obligated to inquire as to the accuracy or completeness
of such reports and information.
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FEDERAL TAX INFORMATION
For Federal income tax purposes, the Separate Account is not separate from
us, and its operations are considered part of our operations. Under existing
Federal income tax law, we do not pay taxes on the net investment income and
realized capital gains earned by the Separate Account. We reserve the right,
however, to make a deduction for taxes if in the future we must pay tax on
the Separate Account's operations.
OBTAINING TAX ADVICE
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THE DESCRIPTION BELOW OF THE CURRENT FEDERAL TAX STATUS AND CONSEQUENCES FOR
OWNERS UNDER THE CONTRACTS DOES NOT COVER EVERY POSSIBLE SITUATION AND IS
FOR INFORMATION PURPOSES ONLY. TAX PROVISIONS AND REGULATIONS MAY CHANGE AT
ANY TIME. Tax results may vary depending upon your individual situation, and
special rules may apply to you in certain cases. You also may be subject to
State and local taxes, which may not correspond to the Federal tax
provisions, especially for Roth IRAs.
For these reasons, you or a Beneficiary should consult a qualified tax
adviser for complete tax information, including advice concerning the form
of IRA Contract to purchase and methods for determining the minimum required
distributions under IRA Contracts (other than Roth IRAs).
This Prospectus does not discuss the requirements and limitations under the
Code applicable to employers in establishing and maintaining SEPs and
SIMPLEs or for the deductibility of employer contributions. Employers should
consult their own qualified tax advisers for this information.
PAYMENTS UNDER ANNUITY CONTRACTS GENERALLY
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Section 72 of the Code describes the income taxation of Annuity Payments. We
intend that the provisions of Section 72 will apply to payments we make
under your Contract, except that other provisions of the Code may apply to
payments we make under an FPA Contract issued to an employer for its
deferred compensation plan obligations.
SPECIAL TREATMENT FOR WITHDRAWALS UNDER ROTH IRAS. The discussion below on
the taxation of IRA Contract withdrawals is applicable to IRA Contracts,
other than distributions from Roth IRA Contracts. Owners receive special tax
treatment for withdrawals from Roth IRA Contracts, as discussed under "Roth
IRA Contracts Qualified Distributions" and "Roth IRA Contracts Nonqualified
Distributions; When Penalty Tax is Not Due".
GENERAL RULES FOR WITHDRAWALS UNDER CONTRACTS OTHER THAN ROTH IRAS. The
general rule is that you must receive a payment under a Contract or Plan in
order to be subject to income taxation. If you are individual, you do not
include in gross income the interest and investment earnings we credit to
your Account Balance until you withdraw or otherwise receive such amounts.
If the owner of an FPA Contract is not a natural person, or if requirements
of the Code relating to deferred compensation are not met, then the owner
may be required to include in gross income the interest and investment
earnings on amounts under the Contract.
When you receive a distribution or Annuity Payments, all or part of the
payments will be taxable to you as ordinary income. An important factor in
determining the taxable portion is whether you have an INVESTMENT IN THE
CONTRACT, which generally is the amount of after-tax Contributions (not
deducted or excluded from gross income) that you have made and not
previously withdrawn. You must report to the IRS the amount of your
after-tax Contributions to an IRA Contract, other than for a Roth IRA, and
you are responsible for determining the investment in the IRA Contract. SEE
"Traditional IRA and SEP IRA Contracts -- Deduction of Contributions from
Gross Income."
The following are general concepts, and you should refer to the
discussions below for your type of Contract.
o If you do not have an investment in the contract, you must include in gross
income the entire amount received during the tax year.
o If you do have an investment in the contract, you may be able to exclude
from gross income a portion of the Annuity Payments or other distribution
received.
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<PAGE>
o The amount you may exclude from gross income each year represents a partial
return of your Contributions that were not tax deductible or excludable
when made.
o The EXCLUSION RATIO is a method of determining the percentage of a
distribution that you may exclude from gross income for a tax year. The
percentage you may exclude is calculated by dividing your investment in the
contract by your expected return from the Contract.
o The EXPECTED RETURN is the present (or discounted) value of the Annuity
Payments or other periodic payments we expect to make to you.
DISTRIBUTIONS UNDER AN FPA CONTRACT
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ANNUITY PAYMENTS. If you begin to receive Annuity Payments, or another form
of periodic payments such as an installment method for a fixed period or a
fixed amount, you may apply the exclusion ratio method to determine the
amount to exclude from gross income for the tax year of the distribution.
After we make Annuity Payments or other periodic distributions for a
sufficient period of time, you will receive back all of your investment in
the contract. Thereafter, you must include in gross income the entire amount
of the Annuity Payments or other periodic distributions, except that an
Owner whose Annuity Commencement Date was before January 1, 1987 may
continue to use the exclusion ratio method.
WITHDRAWALS. If you make cash withdrawals, you may not use the exclusion
ratio and may owe tax on up to the entire amount of the withdrawal. You must
include in gross income the amount withdrawn to the extent that the value of
the FPA Contract immediately before the withdrawal is greater than your
investment in the contract. In effect, you must treat withdrawals as first
being withdrawals of the increase in value under the Contract, and you are
taxed on the entire amount of interest and earnings under the FPA Contract
before you may recover the investment in the contract. A different method
may be applicable for withdrawals under FPA Contracts issued on or before
August 14, 1982 (SEE "Obtaining Tax Advice").
LUMP SUM PAYMENTS. If you receive a single lump sum payment, you must
include in gross income, for the tax year in which you receive the lump sum,
the difference between the amount of the lump sum payment and the amount of
your investment in the contract.
DISTRIBUTIONS UNDER AN IRA CONTRACT (OTHER THAN A ROTH IRA)
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If you make "after-tax" Contributions under an IRA Contract (other than a
Roth IRA), you will have an investment in the contract.
ANNUITY PAYMENTS. If you have an investment in the contract and begin to
receive Annuity Payments, or another form of periodic payments such as an
installment method for a fixed period or a fixed amount, you may apply the
exclusion ratio method to determine the amount to exclude from gross income
for the tax year of the distribution. The exclusion ratio method continues
to apply until you recover the investment in the contract. After that time,
you will have to include the full amount of each Annuity Payment in gross
income for each taxable year.
WITHDRAWALS. If you receive amounts (that are not Annuity Payments) and you
have an investment in the contract, you generally may exclude a portion of
the payments from gross income.
LUMP SUM PAYMENTS. If you receive a single lump sum payment of the Account
Balance, you must include in gross income, for the tax year in which you
receive the payment, the difference between the amount of the payment and
your investment in the contract, if any.
TRADITIONAL IRA AND SEP IRA CONTRACTS -- DEDUCTION OF CONTRIBUTIONS FROM
GROSS INCOME
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You may deduct from gross income your Contributions to a Regular or SEP IRA
Contract up to a maximum of $2,000 or 100% of annual compensation, whichever
is less. The deductible amount depends on whether or not you participate
(and if you are married, whether or not your spouse participates) in a
pension or profit-sharing plan, a tax-sheltered annuity arrangement, a SEP,
a SIMPLE or an eligible 457 plan (a PENSION ARRANGEMENT) and, if so, on your
Federal adjusted gross income (AGI).
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<PAGE>
o If you are not-married and do not participate in a pension arrangement, or
if you are married and neither you nor your spouse participates in a
pension arrangement, you may deduct the maximum deductible amount.
o When (1) you (whether or not married) participate in a pension arrangement,
or if you are married and do not participate in a pension arrangement but
your spouse participates in a pension arrangement, and (2) you have AGI
over a specified amount, then you either will not be able to deduct
Contributions, or the amount that you may deduct will be reduced.
The maximum deductible amount is reduced in 1999 by $1 for every $5 of your
AGI over $31,000 if not married, or over $51,000 if married and filing
jointly (with these amounts increasing each year until 2007), or $0 if
married and filing separately. As a result, you may not deduct
Contributions under an IRA Contract once your AGI for 1999 reaches $41,000
if you are not married, or $61,000 if you are married and filing jointly
(such amounts to increase each year until 2007) or $10,000 if married and
filing separately.
o If you are married, participate in a pension arrangement, and make
Contributions to a spousal IRA of up to $2,000 (minus any amount the spouse
contributes to an IRA for the same tax year) for a spouse who does not
participate in a pension arrangement, you may deduct the Contribution to
the spousal IRA from gross income if you and your spouse file a joint
federal income tax return and your combined AGI is not more than $150,000.
The deduction is reduced by $1 for every $5 of AGI over $150,000, and the
deduction is zero at $160,000.
NON-DEDUCTIBLE CONTRIBUTIONS. If you may not deduct all or part of your
Contributions to an IRA under the above rules, you may still make
non-deductible Contributions. The maximum non-deductible Contribution is
$2,000 or 100% of annual compensation, whichever is less, reduced by the
amount of your deductible contribution for the year and by any contribution
you make to a Roth IRA, other than rollovers to a Roth IRA. You also may
make non-deductible Contributions up to $2,000 to a spousal IRA for your
spouse for any tax year, reduced by any contributions to an IRA (including a
Roth IRA) made by your spouse for the same tax year and any deductible
Contribution for the year. Excess Contributions may result in adverse income
tax consequences to you.
If you make a non-deductible contribution to an IRA, you must report the
amount of that contribution to the IRS when filing an income tax return for
the year. You are responsible for maintaining your own records regarding
non-deductible contributions. We will presume that all Contributions to our
Traditional IRA and SEP IRA Contracts are deductible, including for tax
reporting purposes. When we make distributions to you, it is your
responsibility to make any appropriate adjustments when you report the
distributions to the IRS on your income tax return for the year of
distribution.
These limits on Contributions, however, do not apply to tax-free rollovers
from other qualified retirement plans (SEE "Who May Purchase a Contract and
Make Contributions -- Payment of Contributions").
SIMPLE IRAS -- EXCLUSION OF CONTRIBUTIONS FROM GROSS INCOME; ROLLOVER
LIMITATION
----------------------------------------------------------------------------
You may exclude Contributions to a SIMPLE IRA from gross income for Federal
income tax purposes.
During the first two years of participation in a SIMPLE, you may rollover
amounts from a SIMPLE IRA only to another SIMPLE IRA. After the two year
period, you may rollover amounts from a SIMPLE IRA to any IRA (other than a
Roth IRA).
PENALTY TAXES FOR WITHDRAWALS
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In addition to ordinary income taxation, Section 72 of the Code imposes a
penalty tax on premature withdrawals, which are withdrawals before you have
reached age 59 1/2. This penalty tax is equal to 10% of the amount of the
premature withdrawal that you include in gross income. However, if you make
any withdrawals from a SIMPLE IRA within the first two years of your
participation in the employer's SIMPLE, the early withdrawal penalty
increases to 25% from 10%. Other Federal income tax penalties may apply to
amounts or withdrawals under IRA Contracts. SEE "Obtaining Tax Advice".
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FPA CONTRACTS -- WHEN NO PENALTY TAX IS DUE
The taxable amount of a withdrawal you make before you reach age 59 1/2 is
not subject to a penalty tax if:
1. You have died or become disabled;
2. The withdrawal is part of a series of substantially equal periodic
payments made over your life (or life expectancy) or over the joint lives
(or joint life expectancies) of you and the Beneficiary;
3. The withdrawn amount is attributable to Contributions made prior to August
14, 1982;
4. The Contract was purchased in conjunction with a plan that meets the
requirements of Section 401(a) or was issued under an IRA (but such
payment may be subject to a similar tax applicable to premature
distributions from such retirement plans);
5. The withdrawal is under an immediate annuity contract; or
6. The Contract was 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.
For premature payments received under FPA Contracts issued before January 19,
1985, the penalty tax may be only 5% and additional exceptions may apply to
certain amounts (SEE "Obtaining Tax Advice").
IRA CONTRACTS -- WHEN NO PENALTY TAX IS DUE
The taxable amount of a withdrawal you make before you reach age 59 1/2 is
not subject to a penalty tax if:
1. You have died or become disabled.
2. The withdrawals are Annuity Payments made over your life (or life
expectancy) or the joint lives (or joint life expectancies) of you and
the Beneficiary.
3. The withdrawals are to pay your medical expenses, or of your spouse or
dependents, if the medical expenses would be deductible by you for
Federal income tax purposes. (Generally, a taxpayer may deduct medical
expenses if they are not covered by health insurance or otherwise
reimbursed and they exceed 7.5% of the taxpayer's adjusted gross
income.)
4. The withdrawal is to pay your health insurance premiums, or the
premiums for your spouse or dependents, if you have received
unemployment compensation for at least 12 weeks and you meet certain
other eligibility requirements.
5. The withdrawal is for the payment of qualifying post-secondary
(college) education expenses, OR
6. The withdrawal is for qualified first-time home buyer expenses (up to
$10,000 per lifetime).
ROTH IRA CONTRACTS -- QUALIFIED DISTRIBUTIONS. You receive tax-free any
distribution that is a QUALIFIED DISTRIBUTION from a Roth IRA Contract. The
distribution also is penalty tax free, except for certain withdrawals from
rollover or conversion Contributions as described below.
A qualified distribution is a distribution made:
1. After the end of the five-year period beginning with the year in which
you first contributed to the Roth IRA Contract; AND
2. In one of the following circumstances:
a) You are age 59 1/2 or older; or
b) You have died or become disabled; or
c) For qualified first-time home buyer expenses (up to $10,000 per
lifetime).
ROTH IRA CONTRACTS -- NON-QUALIFIED DISTRIBUTIONS; WHEN PENALTY TAX IS NOT
DUE. Any withdrawal by you that is not a "qualified distribution" is first
considered to be a return of your after-tax Contributions. Withdrawals of
after-tax Contributions are not subject to taxation or, except as noted
below for rollover or conversion Contributions, subject to the 10% penalty
tax. After you have recovered all Contributions under the Roth IRA Contract,
you will be taxed at ordinary income rates on the amount of investment
earnings withdrawn and may be subject to the penalty tax on the taxable
amount. (For purposes of this rule, you must aggregate all of your Roth IRA
contracts.)
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There is no penalty tax for withdrawals that are not Qualified Distributions
if one of the Regular IRA exceptions to the penalty tax applies. SEE "IRA
Contracts -- When No Penalty Tax is Due" above.
ROTH IRA CONTRACTS -- SPECIAL PENALTY TAX ON WITHDRAWALS OF ROLLOVER OR
CONVERSION CONTRIBUTIONS. Your withdrawal from a Roth IRA Contract is
subject to the 10% penalty for premature withdrawals, even though the amount
withdrawn is not taxable, if:
o the amount withdrawn was rolled over or converted from a Regular IRA
Contract, and
o the withdrawal is within the 5 tax year period beginning with the tax year
in which you made the rollover or conversion.
Each rollover or conversion contribution has its own separate 5 tax year
period for purposes of this special penalty tax. If you make Contributions
from rollovers or conversions to the same Roth IRA Contract to which you
make other Contributions, then:
o your withdrawals will be considered to come first from Contributions other
than the rollover or conversion Contributions, and
o withdrawals of rollover or conversion Contributions will be considered to
come first from the oldest of these Contributions, for purposes of
calculating the 5 tax year period.
MINIMUM DISTRIBUTIONS UNDER IRA CONTRACTS
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The Code contains a series of rules that require you (or your Beneficiary)
to take minimum distributions under an IRA Contract beginning at a certain
time (called the REQUIRED BEGINNING DATE). For Roth IRAs, however,
distributions are not required until your death. Generally, you may take the
required amount from the IRA Contract we have issued, or from other IRA
contracts that you have.
Distributions under IRA Contracts (other than Roth IRAs) must begin by April
1 of the year following the year in which you reach age 70 1/2, even if you
do not retire.
You may elect to calculate the required minimum distribution amount by one
of several methods, and you should consult a tax adviser in making the
election. We will provide explanatory information to Owners before their
Required Beginning Dates. If you do not satisfy the minimum distribution
requirements, you may owe a penalty tax equal to 50% of the difference
between the required minimum and the actual amount you withdrew.
Federal tax law provisions concerning distributions upon the death of an
Owner may reduce the period over which a Beneficiary may take or defer
receipt of the death benefit. SEE "Our Payment of Account Balance to You or
a Beneficiary -- Death Benefit Prior to Annuity Commencement Date".
ESTATE TAXES; TAX LIABILITY OF BENEFICIARY FOR DEATH BENEFIT
----------------------------------------------------------------------------
The death benefit payable to your Beneficiary is included in your estate for
Federal estate tax purposes in most circumstances. An exception to this rule
may apply for an FPA Contract if you did not own or control the Contract at
the time of (and for a period before) death. SEE "Obtaining Tax Advice."
A Beneficiary will not receive a "stepped-up basis" for the increase in
value under your Contract over the amount of your Contributions. The gain
under a Contract is called "income in respect of a decedent" (IRD), and the
Beneficiary may owe income tax at ordinary income rates on the IRD when the
Beneficiary receives the death benefit. SEE "Obtaining Tax Advice." If your
estate pays any estate tax on the death benefit, the Beneficiary may be able
to credit the estate tax paid against the income tax the Beneficiary owes. A
Beneficiary should consult a tax adviser for a complete explanation of the
rules that will apply to the Beneficiary's particular situation.
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
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We are required to withhold Federal income tax on Annuity Payments and other
distributions, such as lump sum distributions or withdrawals. In addition,
certain states require us to withhold if Federal withholding is applicable.
In some instances, you may elect to have us not withhold Federal income tax.
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When you (or a Beneficiary) request withdrawals or Annuity Payments, we will
give detailed information and advise you (or your Beneficiary) of possible
elections to be made. Owners and Beneficiaries should carefully review
information they receive from us.
We are required to withhold Federal income tax on Annuity Payments and other
distributions, such as partial or lump sum withdrawals, unless the recipient
has provided us with a valid election not to have Federal income tax
withheld. You at any time may revoke an election not to withhold. If you
revoke an election, we will begin withholding.
We will withhold only against the taxable portion of the Annuity Payments or
of the other distributions. The rate we use will be determined based upon
the nature of the distribution(s).
o For Annuity Payments, we will withhold Federal tax in accordance with the
Annuitant's withholding certificate. If an Annuitant does not file a
withholding certificate with us, we will withhold Federal tax from Annuity
Payments on the basis that the Annuitant is married with three withholding
exemptions.
o For most withdrawals, we will withhold Federal tax at a flat 10% rate of
the amount withdrawn.
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YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS
We will vote the shares of the Underlying Funds owned by the Separate
Account at regular and special meetings of the shareholders of the
Underlying Funds. We will cast our votes according to instructions we
receive from Owners. The number of Underlying Fund shares that we may vote
at a meeting of shareholders will be determined as of a record date set by
the Board of Directors or Trustees of the Underlying Fund.
We will vote 100% of the shares that a Separate Account Fund owns. If you do
not send us voting instructions, we will vote the shares attributable to
your Account Balance in the same proportion as we vote shares for which we
have received voting instructions from Owners. We will determine the number
of Accumulation Units attributable to each Owner for purposes of giving
voting instructions as of the same record date used by the Underlying Fund.
Each Owner who has the right to give us voting instructions for a
shareholders' meeting of an Underlying Fund will receive information about
the matters to be voted on, including the Underlying Fund's proxy statement
and a voting instructions form to return to us.
We may elect to vote the shares of the Underlying Funds held by our Separate
Account in our own discretion if the Investment Company Act of 1940 is
amended, or if the present interpretation of the Act changes with respect to
our voting of these shares.
FUNDING AND OTHER CHANGES WE MAY MAKE
We reserve the right to make certain changes to the Separate Account Funds
and to the Separate Account's operations. In making changes, we will comply
with applicable law and will obtain the approval of Owners, if required. We
may:
o create new investment funds of the Separate Account at any time;
o to the extent permitted by state and federal law, modify, combine or remove
investment funds in the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Contracts belong from one Fund of the Separate
Account to another Fund of the Separate Account;
o create additional separate accounts or combine any two or more accounts
including the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Contracts belong from the Separate Account to
another separate account of ours by withdrawing the same percentage of each
investment in the Separate Account, with appropriate adjustments to avoid
odd lots and fractions;
o operate the Separate Account as a diversified, open-end management
investment company under the 1940 Act, or in any other form permitted by
law, and designate an investment advisor for its management, which may be
us, an affiliate of ours or another person;
o deregister the Separate Account under the 1940 Act; and
o operate the Separate Account under the general supervision of a committee,
any or all the members of which may be interested persons (as defined in
the 1940 Act) of ours or our affiliates, or discharge the committee for the
Separate Account.
-33-
<PAGE>
PERFORMANCE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS
MONEY MARKET FUND
----------------------------------------------------------------------------
From time to time, we may include quotations of the YIELD and EFFECTIVE
YIELD of the Separate Account's Money Market Fund in advertisements, sales
literature or reports to Owners. These yield figures show historical
performance of the Fund assuming a hypothetical investment for the period
indicated in the yield quotation. Yield figures do not indicate future
performance.
o The yield of the Money Market Fund refers to the net investment income
generated by the Fund over a specified seven-day period (with the ending
date stated). We then annualize this income. That is, we assume that the
amount of income the Fund generates during that week is generated during
each week in a 52-week period and we show the income as a percentage.
o The effective yield is calculated similarly to yield, except that when we
annualize income, we assume that the income earned by an investment in the
Fund is 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 its
expenses and the performance of the Investment Company Money Market Fund,
which reflects (among other things) changes in market conditions and the
level of its expenses.
TOTAL RETURN OF FUNDS
----------------------------------------------------------------------------
From time to time, we include quotations of a Separate Account Fund's TOTAL
RETURN in advertisements, sales literature or reports to Owners. Total return
figures for a Fund show historical performance of a Fund assuming a
hypothetical investment and that amounts under a Contract were allocated to
the Separate Account Fund when it commenced operations. Total return figures
do not indicate future performance.
o 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.
o Total return for a Separate Account Fund will vary based on its expenses
and the performance of its Underlying Fund, which reflects (among other
things) changes in market conditions and the level of the Underlying Fund's
expenses.
-34-
<PAGE>
DEFINITIONS WE USE IN THIS PROSPECTUS
ACCOUNT BALANCE -- The value of an Owner's Accumulation Units in the
Separate Account Funds plus the value of amounts held in the General Account
for the Owner, during the Accumulation Period. As used in this Prospectus,
the term "Account Balance" may mean all or any part of your total Account
Balance.
ACCUMULATION PERIOD -- For an Owner, the period under a Contract when
Contributions are made or held for the Owner. The Accumulation Period ends
at the Annuity Commencement Date, or the date the Owner withdraws the
Account Balance in full before the Annuity Commencement Date.
ACCUMULATION UNIT -- A measure we use to calculate the value of an Owner's
interest in each of the Funds of the Separate Account. Each Fund has its own
Accumulation Unit value.
ANNUITANT -- A person who is receiving Annuity Payments or who will receive
Annuity Payments after the Annuity Commencement Date. We use the life
expectancy of the Annuitant(s) as a factor in determining the amount of
monthly Annuity Payments for annuities with a life contingency.
ANNUITY COMMENCEMENT DATE -- The date Annuity Payments become payable under
a Contract or become payable as the death benefit for a Beneficiary. An
Owner, or a Beneficiary entitled to a death benefit, selects the Annuity
Commencement Date. The Owner's Account Balance is used to provide Annuity
Payments.
ANNUITY PAYMENTS -- A series of equal monthly payments from us to an
Annuitant. The amount of the Annuity Payments will depend on your Account
Balance on the Annuity Commencement Date and the form of annuity selected.
The Annuity Payments may be for the Annuitant's life, for a minimum period
of time, for the joint lifetime of the Annuitant and the Annuitant's joint
Annuitant, or for such other specified period as we may permit.
BENEFICIARY(IES) -- The person(s) named by an Owner to receive (1) the death
benefit under the Contract if during the Accumulation Period the Owner dies
(or if the Owner is not the Annuitant, if the Annuitant dies first), or (2)
after the Annuity Commencement Date, any remaining Annuity Payments (or
their commuted value) if the Annuitant dies and the joint Annuitant, if any,
dies.
CODE -- The Internal Revenue Code of 1986, as amended. Depending on the
context, the term Code includes the regulations adopted by the Internal
Revenue Service for the Code section being discussed.
CONTRACT(S) -- An IRA or FPA variable accumulation annuity contract (or
contracts) described in this Prospectus.
CONTRIBUTIONS -- Amounts contributed from time to time under a Contract
during the Accumulation Period.
ELIGIBLE SPOUSE -- The person to whom an Owner or Annuitant is legally
married.
FIDELITY PORTFOLIOS -- The Equity-Income Portfolio of the Variable Insurance
Products Fund (the FIDELITY VIP FUND) and the Contrafund and Asset Manager
Portfolios of the Variable Insurance Products Fund II (the FIDELITY VIP II
FUND).
FUND OF THE SEPARATE ACCOUNT (OR FUND) -- One of the subaccounts of the
Separate Account. Each Fund's name corresponds to the name of the Underlying
Fund in which it invests.
GENERAL ACCOUNT -- Assets we own that are not in a separate account, but
rather are held as part of our general assets. We sometimes refer to the
General Account as the INTEREST ACCUMULATION ACCOUNT, because amounts you
allocate to the General Account earn interest at a fixed rate that we change
from time to time.
INVESTMENT ALTERNATIVES -- Our General Account and the Funds of the Separate
Account. You may allocate your Contributions and transfer your Account
Balance among the Investment Alternatives, subject to any limitations under
a Plan.
INVESTMENT COMPANY -- Mutual of America Investment Corporation.
-35-
<PAGE>
OWNER -- Under an IRA Contract, the individual, and under an FPA Contract,
the individual or employer, to whom we issued a Contract.
PLAN -- For SEP IRA and SIMPLE IRA Contracts, a retirement plan adopted by
an employer for which a Contract has been purchased to provide benefits.
ROTH IRA -- An IRA Contract designated as a Roth IRA, in accordance with
Code Section 408A.
SCUDDER PORTFOLIOS -- The following three portfolios of the Scudder Variable
Life Investment Fund: the Capital Growth Portfolio, the Bond Portfolio and
the International Portfolio.
SEPARATE ACCOUNT -- The American Separate Account No. 2, a separate account
established by us to receive and invest deposits made under variable
accumulation annuity contracts. The assets of the Separate Account are set
aside and kept separate from our other assets.
SEP IRA -- An IRA Contract purchased by an employee in connection with a
Simplified Employee Pension (SEP) adopted by the employer.
SIMPLE IRA -- An IRA Contract purchased by an employee under a Savings
Incentive Match Plan for Employees (SIMPLE) adopted by the employer.
TRADITIONAL IRA -- An IRA Contract other than a Roth IRA, SEP IRA or SIMPLE
IRA Contract.
UNDERLYING FUNDS -- The funds or portfolios that are invested in by the
Separate Account Funds.
VALUATION DAY -- Each day that the New York Stock Exchange is open for
business until the close of the New York Stock Exchange that day.
VALUATION PERIOD -- A period beginning on the close of business of a
Valuation Day and ending on the close of the next Valuation Day.
WE, US, OUR -- Refer to The American Life Insurance Company of New York.
YOU, YOUR -- Refer to an Owner.
-36-
<PAGE>
OUR STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more information about the
Contracts and our operations.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Distribution of the Contracts Legal Proceedings
Calculation of Accumulation Unit Values Legal Matters
Yield and Performance Information Experts
Safekeeping of Separate Account Assets Additional Information
State Regulation Financial Statements
Periodic Reports
</TABLE>
HOW TO OBTAIN A STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------------------------------------
You may receive a copy of the Statement of Additional Information at no
charge by calling (212) 224-1600 or by completing the Form below and mailing
it to Mutual of America Life Insurance Company, 320 Park Avenue, New York,
New York 10022.
The Securities and Exchange Commission has an Internet web site at
http://www.sec.gov. You may obtain our Registration Statement for the
Contracts, including the SAI, and the Separate Account's semi-annual and
annual financial statement reports through the Commission's Internet site.
You also may obtain copies of these documents, upon your payment of a
duplicating fee, by writing to the Commission's Public Reference Section,
Washington, DC 20549-6009.
(PLEASE CUT HERE)
------------------------------------------------------------------------------
To: The American Life Insurance Company of New York
Please send me a copy of the Statement of Additional Information dated May
1, 1999 for the Individual Retirement Annuity and Flexible Premium 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
-37-
<PAGE>
(This page left blank intentionally)
<PAGE>
APPENDIX A
UNIT VALUE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS
The tables below show changes in Accumulation Unit values and in the number
of units outstanding for each Separate Account Fund for the period from the
commencement of operations of that Fund to December 31, 1998. (The Mid-Cap
Equity Index Fund is not included because it began operations on May 1,
1999.) Arthur Andersen LLP, the Funds' independent auditor, has audited the
information below for each of the years in the seven year period ended
December 31, 1998. The Investment Company's financial statements for the
year ended December 31, 1998, along with Arthur Andersen LLP's report
thereon, are available to you by calling 1-800-872-5963.
We calculate Accumulation Unit values from the net asset values of the
Underlying Funds. The All America Fund (previously called the Stock Fund) of
the Investment Company changed its name and its investment objectives and
policies and added subadvisers on May 1, 1994. Prior to January 1, 1998, the
Calvert Social Balanced Portfolio was known as the Calvert Responsibly
Invested Balanced Portfolio, and prior to May 1, 1995, that Portfolio was
known as the Calvert Socially Responsible Series and had a different
subadviser. Before May 1, 1997, the American Century VP Capital Appreciation
Fund was called the TCI Growth Fund.
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
MONEY MARKET FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................ $ 1.95 $ 1.87 $ 1.80 $ 1.72 $ 1.68
======= ======= ======= ======= =======
Unit value, end of
year/period ................ $ 2.03 $ 1.95 $ 1.87 $ 1.80 $ 1.72
======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ........ 373.1 90.5 66.1 62.8 29.6
======= ======= ======= ======= =======
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------------------
ALL AMERICA FUND
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................ $ 6.76 $ 5.39 $ 4.52 $ 3.35 $ 3.36 $ 3.31
======= ====== ====== ====== ======= =======
Unit value, end of
year/period ................ $ 8.09 $ 6.76 $ 5.39 $ 4.52 $ 3.35 $ 3.36
======= ====== ====== ====== ======= =======
Units outstanding, end of
year/period (000's) ........ 961.5 919 621 240 91.2 .027
======= ====== ====== ====== ======= ========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
BOND FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 3.00 $ 2.75 $ 2.69 $ 2.28 $ 2.39
======= ====== ====== ======= =======
Unit value, end of
year/period ................. $ 3.17 $ 3.00 $ 2.75 $ 2.69 $ 2.28
======= ====== ====== ======= =======
Units outstanding, end of
year/period (000's) ......... 714.9 301 328 65.5 23.4
======= ====== ====== ======= =======
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
SHORT-TERM BOND FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 1.19 $ 1.14 $ 1.10 $ 1.03 $ 1.03
======= ======= ======= ======= =======
Unit value, end of
year/period ................. $ 1.24 $ 1.19 $ 1.14 $ 1.10 $ 1.03
======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 126.9 24.3 17.8 5.3 3.6
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
MID-TERM BOND FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period .............. $ 1.26 $ 1.19 $ 1.16 $ 1.01 $ 1.06
====== ====== ====== ======= =======
Unit value, end of
year/period .............. $ 1.32 $ 1.26 $ 1.19 $ 1.16 $ 1.01
====== ====== ====== ======= =======
Units outstanding, end of
year/period (000's) ...... 197 49 261 18.6 3.7
====== ====== ====== ======= =======
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------------------
COMPOSITE FUND
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period .............. $ 4.36 $ 3.75 $ 3.39 $ 2.82 $ 2.95 $ 2.93
====== ====== ====== ====== ====== =======
Unit value, end of
year/period .............. $ 4.93 $ 4.36 $ 3.75 $ 3.39 $ 2.82 $ 2.95
====== ====== ====== ====== ====== =======
Units outstanding, end of
year/period (000's) ...... 696 643 456 282 132 .322
====== ====== ====== ====== ====== ========
</TABLE>
-39-
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------------------
EQUITY INDEX FUND
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 2.26 $ 1.72 $ 1.42 $ 1.05 $ 1.05 $ 1.04
====== ====== ====== ====== ======= =======
Unit value, end of
year/period ................. $ 2.86 $ 2.26 $ 1.72 $ 1.42 $ 1.05 $ 1.05
====== ====== ====== ====== ======= =======
Units outstanding, end of
year/period (000's) ......... 3,950 2,496 858 333 35.7 .185
====== ====== ====== ====== ======= ========
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
AGGRESSIVE EQUITY FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 2.15 $ 1.80 $ 1.43 $ 1.05 $ 1.00
====== ====== ====== ====== ======
Unit value, end of
year/period ................. $ 2.02 $ 2.15 $ 1.80 $ 1.43 $ 1.05
====== ====== ====== ====== ======
Units outstanding, end of
year/period (000's) ......... 1,778 2,289 1,386 599 107
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
----------------------------------------------------------------------
BOND FUND
----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 12.37 $ 11.48 $ 11.30 $ 9.69 $ 10.32 $ 10.24
======= ======= ======= ======= ======= =======
Unit value, end of
year/period ................. $ 13.02 $ 12.37 $ 11.48 $ 11.30 $ 9.69 $ 10.32
======= ======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 26.9 7.9 3.9 2.4 .799 --
======= ======= ======= ======= ======= =======
<CAPTION>
SCUDDER
-----------------------------------------------------------------------
CAPITAL GROWTH FUND
-----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 29.64 $ 22.11 $ 18.64 $ 14.67 $ 16.46 $ 16.10
======= ======= ======= ======= ======= =======
Unit value, end of
year/period ................. $ 36.07 $ 29.64 $ 22.11 $ 18.64 $ 14.67 $ 16.46
======= ======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 171 160 73.6 42.4 22.1 .059
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
-----------------------------------------------------------------------
INTERNATIONAL FUND
-----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 14.46 $ 13.43 $ 11.85 $ 10.80 $ 11.06 $ 10.36
======= ======= ======= ======= ======= =======
Unit value, end of
year/period ................. $ 16.93 $ 14.46 $ 13.43 $ 11.85 $ 10.80 $ 11.06
======= ======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 105.3 78.2 70.1 29.5 52.3 .038
======= ======= ======= ======= ======= =======
<CAPTION>
FIDELITY VIP
-----------------------------------------------
EQUITY-INCOME FUND
-----------------------------------------------
1998 1997 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 27.77 $ 21.93 $ 19.43 $ 16.30
======= ======= ======= =======
Unit value, end of
year/period ................. $ 30.65 $ 27.77 $ 21.93 $ 19.43
======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 115.6 94.2 61 18
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP II
-----------------------------------------------------------------------------------------------
CONTRA FUND ASSET MANAGER FUND
----------------------------------------------- -----------------------------------------------
1998 1997 1996 1995 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 20.36 $ 16.59 $ 13.85 $ 11.43 $ 21.14 $ 17.72 $ 15.66 $ 14.04
======= ======= ======= ======= ======= ======= ======= =======
Unit value, end of
year/period ................. $ 26.16 $ 20.36 $ 16.59 $ 13.85 $ 24.04 $ 21.14 $ 17.72 $ 15.66
======= ======= ======= ======= ======= ======= ======= =======
Units outstanding, end of
year/period (000's) ......... 278.9 213 153 29.1 68.1 65.1 36.9 5.6
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
CALVERT
------------------------------------------------------
SOCIAL BALANCED FUND
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 2.65 $ 2.23 $ 2.01 $ 1.57 $ 1.64
======= ====== ====== ======= =======
Unit value, end of
year/period ................. $ 3.04 $ 2.65 $ 2.23 $ 2.01 $ 1.57
======= ====== ====== ======= =======
Units outstanding, end of
year/period (000's) ......... 256.9 194 100 45.4 18.3
======= ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
AMERICAN CENTURY
--------------------------------------------------------------------
VP CAPITAL APPRECIATION FUND
--------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of year/period .................. $ 11.04 $ 11.53 $ 12.18 $ 9.39 $ 9.61 $ 9.38
======= ======== ======== ======= ======= =======
Unit value, end of year/period ........................ $ 10.69 $ 11.04 $ 11.53 $ 12.18 $ 9.39 $ 9.61
======= ======== ======== ======= ======= =======
Units outstanding, end of year/period (000's) ......... 36 44.3 67.7 56.7 13.1 .020
======= ======== ======== ======= ======= ========
</TABLE>
----------
* The dates the Funds of the Separate Account commenced operation are as
follows:
o Investment Company All America, Equity Index and Composite Funds --
November 19, 1993
o Scudder Bond, Capital Growth and International Funds -- November 19,
1993
o American CenturyVP Capital Appreciation Fund -- November 19, 1993
o Investment Company Money Market, Bond, Short-Term Bond and Mid-Term Bond
Funds -- March 10, 1994
o Calvert Social Balanced Fund -- March 10, 1994
o Investment Company Aggressive Equity Fund -- May 2, 1994
o Fidelity VIP Equity-Income and Fidelity VIP II Contra and Asset Manager
Funds -- May 1, 1995; and
o Investment Company Mid-Cap Equity Index Fund -- May 1, 1999.
-40-
<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
320 PARK AVENUE
NEW YORK, NEW YORK 10022
------------
This Statement of Additional Information expands upon subjects we discuss in
the current Prospectus for the Individual Retirement Annuity Contracts and
Flexible Premium Annuity Contracts that we offer (together, the CONTRACTS).
You may obtain a copy of the Prospectus, dated May 1, 1999, by calling
1-800-872-5963, or by writing to The American Life Insurance Company of New
York, 320 Park Avenue, New York, New York 10022 Attn: Eldon Wonacott. The
Prospectus contains definitions of various terms, and we incorporate those
terms by reference into this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND YOU SHOULD
READ IT IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Distribution of the Contracts .................... 2
Calculation of Accumulation Unit Values .......... 2
Yield and Performance Information ................ 2
Safekeeping of Separate Account Assets ........... 5
State Regulation ................................. 5
Periodic Reports ................................. 6
Legal Proceedings ................................ 6
Legal Matters .................................... 6
Experts .......................................... 6
Additional Information ........................... 6
Financial Statements ............................. 7
</TABLE>
- --------------------------------------------------------------------------------
DATED: MAY 1, 1999
<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. We offer
the Contracts for sale on a continuous basis through our employees and
certain employees of the Distributor. The only compensation we pay for sales
of the Contracts is in the form of salary. All persons engaged in selling
the Contracts are our licensed agents and are duly qualified registered
representatives of the Distributor.
CALCULATION OF ACCUMULATION UNIT VALUES
When an Owner allocates or transfers Account Balance to a Separate Account
Fund, the Owner's interest in the Fund is represented by Accumulation Units.
Each Fund's Accumulation Units have a different value, based on the value of
the Fund's investment in shares of the related Underlying Fund and the
charges we deduct from the Separate Account. To determine the change in a
Fund's Accumulation Unit value from the close of one Valuation Day to the
close of the next Valuation Day (which we call a Valuation Period), we use
an Accumulation Unit Change Factor. 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 Separate Account administrative charges
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.
YIELD AND PERFORMANCE INFORMATION
MONEY MARKET FUND
----------------------------------------------------------------------------
Regulations adopted by the Commission require us to disclose the current
annualized yield of the Money Market Fund of the Separate Account for a
seven-day period in a manner that 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 is called YIELD.
The Commission also permits us 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. This is called the EFFECTIVE YIELD.
Yield and effective yield reflect our deductions from the Separate Account
Fund for administrative and distribution expenses or services and the
mortality and expense risk charge accrued during the period. Because of
these deductions, the yield for the Money Market Fund of the Separate
Account will be lower than the yield for the Money Market Fund of the
Investment Company.
From time to time, we will include quotations of the yield or performance of
the Separate Account's Money Market Fund in advertisements, sales literature
or shareholder reports. These performance figures are calculated in the
following manner:
A. YIELD is the net annualized yield based on a specified seven
calendar-days calculated at simple interest rates. Yield is calculated by
determining the net change, exclusive of capital changes, in the value of
a hypothetical preexisting account having a balance of one 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 (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.
-2-
<PAGE>
The current yield of the Money Market Fund of the Separate Account for the
seven-day period ended December 29, 1998 was 3.61%.
Yield and effective yield are based on historical earnings and show the
performance of a hypothetical investment. The yield on amounts held in the
Money Market Fund of the Separate Account normally will fluctuate on a daily
basis, and therefore the yield for any past period is not an indication or
representation of future yield. The Money Market Fund's actual yield and
effective yield are 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.
When communicating total return to current or prospective Participants, we
also may compare the Money Market Fund's figures to the performance of other
variable annuity accounts tracked by mutual fund rating services or to
unmanaged indices that may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
BOND FUNDS
----------------------------------------------------------------------------
From time to time, we may include quotations of the yield of the Separate
Account's Investment Company Bond Funds and Scudder Bond Fund in
advertisements, sales literature or shareholder reports. YIELD is computed
by annualizing net investment income, as determined by the Commission's
formula, calculated on a per Accumulation Unit basis, for a recent one month
or 30-day period and dividing that amount by the unit value of the Fund at
the end of the period.
FUNDS OTHER THAN MONEY MARKET
----------------------------------------------------------------------------
From time to time, we may include quotations of a Fund's TOTAL RETURN in
advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of
return for the periods of one year, five years and ten years, if
applicable, all ended on the date of a recent calendar quarter. In
addition, the total return for the life of the Fund is given. Total return
quotations reflect changes in the price of a Fund's shares and assume that
all dividends and capital gains distributions during the respective
periods were reinvested in Fund shares. Total return is calculated by
finding the average annual compounded rates of return of a hypothetical
investment over such periods, according to the following formula (total
return is then expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
B. CUMULATIVE TOTAL RETURN is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect changes in the value of a
Fund's unit values and assume that all dividends and capital gains
distributions during the period were reinvested in Fund shares.
Cumulative total return is calculated by finding the compound rates of
return of a hypothetical investment over such periods, according to the
following formula (cumulative total return is then expressed as a
percentage):
C = (ERV/P) - 1.
Where:
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.
-3-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE INCEPTION
FUND ONE YEAR FIVE YEARS TEN YEARS OF FUND DATE
- ------------------------------------------------ ---------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Investment Company Equity Index .............. 26.6% 22.0% N/A 21.7% 11/19/93
Investment Company All America ............... 19.4% 18.9% N/A 18.0% 11/19/93
Investment Company Aggressive Equity ......... (6.6)% N/A N/A 15.9% 05/02/94
Investment Company Composite ................. 12.7% 10.5% N/A 9.7% 11/19/93
Investment Company Bond ...................... 5.6% N/A N/A 5.6% 3/10/94
Investment Company Mid-Term Bond ............. 4.8% N/A N/A 5.0% 3/10/94
Investment Company Short-Term Bond ........... 4.1% N/A N/A 3.9% 3/10/94
Scudder Capital Growth ....................... 21.4% 16.7% N/A 16.6% 11/19/93
Scudder Bond ................................. 5.0% 4.5% N/A 4.4% 11/19/93
Scudder International ........................ 16.7% 8.6% N/A 9.6% 11/19/93
Fidelity VIP Equity-Income ................... 10.1% N/A N/A 18.5% 5/01/95
Fidelity VIP II Contra ....................... 28.1% N/A N/A 25.0% 5/01/95
Fidelity VIP II Asset Manager ................ 13.4% N/A N/A 15.5% 5/01/95
Calvert Social Balanced ...................... 14.5% N/A N/A 13.5% 3/10/94
American Century VP Capital Appreciation ..... (3.4)% 1.9% N/A 2.2% 11/19/93
</TABLE>
CUMULATIVE TOTAL RETURNS
FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE INCEPTION
FUND ONE YEAR FIVE YEARS TEN YEARS OF FUND DATE
- ------------------------------------------------ ---------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Investment Company Equity Index .............. 26.6% 169.8% N/A 173.2% 11/19/93
Investment Company All America ............... 19.4% 138.1% N/A 133.3% 11/19/93
Investment Company Aggressive Equity ......... (6.6)% N/A N/A 103.4% 05/02/94
Investment Company Composite ................. 12.7% 65.1% N/A 60.6% 11/19/93
Investment Company Bond ...................... 5.6% N/A N/A 30.0% 3/10/94
Investment Company Mid-Term Bond ............. 4.8% N/A N/A 26.5% 3/10/94
Investment Company Short-Term Bond ........... 4.1% N/A N/A 20.2% 3/10/94
Scudder Capital Growth ....................... 21.4% 116.4% N/A 119.5% 11/19/93
Scudder Bond ................................. 5.0% 24.7% N/A 24.7% 11/19/93
Scudder International ........................ 16.7% 51.2% N/A 59.9% 11/19/93
Fidelity VIP Equity-Income ................... 10.1% N/A N/A 86.5% 5/01/95
Fidelity VIP II Contra ....................... 28.1% N/A N/A 126.9% 5/01/95
Fidelity VIP II Asset Manager ................ 13.4% N/A N/A 59.2% 5/01/95
Calvert Social Balanced ...................... 14.5% N/A N/A 83.9% 3/10/94
American Century VP Capital Appreciation ..... (3.4)% 9.9% N/A 11.6% 11/19/93
</TABLE>
The returns for the All America Fund (previously called the "Stock Fund")
prior to May 1, 1994 reflect the results of the Underlying Fund prior to a
change in its investment objectives and policies and the addition of
subadvisers on that date. The commencement dates reflect the commencement
dates for the Separate Account Funds. The Mid-Cap Equity Index Fund is not
included in the tables because it commenced operations on May 1, 1999.
The above figures for the Money Market and other Funds, both for average
annual total return and cumulative total return, reflect charges made to the
Separate Account, including a monthly service charge. In the above table, we
deducted the $2.00 monthly contract fee from each Separate Account Fund,
calculated as a cost per $1,000 based on the average Account Balance for all
of our individually allocated contracts. For any Participant, the actual
treatment of the monthly contract fee and its effect on total return will
depend on the Participant's actual allocation of Account Balance.
If you have Account Balance in the General Account, the monthly contract fee
would be deducted from the General Account, not any Separate Account Fund.
Accordingly, the illustration of your Account Balance held in
-4-
<PAGE>
any of the Funds of the Separate Account would show a slightly higher total
return than in the table above. If you do not have Account Balance allocated
to the General Account, but you do have Account Balance allocated to more than
one Fund of the Separate Account, the fee would be deducted only from one of
the Funds, so that an illustration of total return figures of the other Funds
would be slightly higher than shown above.
If you do not have any Account Balance in the General Account, we will
deduct the $2.00 monthly charge from your Account Balance allocated to one
or more of the Separate Account Funds, 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 Social Balanced Fund,
(i) Fidelity VIP Equity-Income Fund,
(j) Investment Company All America Fund,
(k) Investment Company Equity Index Fund,
(l) Investment Company Mid-Cap Equity Index Fund,
(m) Fidelity VIP II Contra Fund,
(n) Investment Company Aggressive Equity Fund,
(o) Scudder Capital Growth Fund,
(p) Scudder International Fund, and
(q) American Century VP Capital Appreciation Fund.
Performance figures are based on historical earnings and are not guaranteed
to reoccur. 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 performance of the
Underlying Fund. Unit values will fluctuate so that, when redeemed, they may
be worth more or less than their original cost.
When communicating total return to current or prospective Participants, we
also may compare a Fund's figures to the performance of other variable
annuity accounts tracked by mutual fund rating services or to unmanaged
indices that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
We hold title to the Separate Account's assets, including shares of the
Underlying Funds. We maintain records of all purchases and redemptions of
Underlying Fund shares by each of the Separate Account Funds.
STATE REGULATION
We are 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 we do business.
We must file with the Superintendent an annual statement on a form specified
by the National Association of Insurance Commissioners. We also must file
with New York and other states a separate statement covering the separate
accounts that we maintain, including the Separate Account. Our books and
assets are subject to review and examination by the Superintendent and the
Superintendent's agents at all times. The Superintendent makes a full
examination into our affairs at least every five years. Other states also
may periodically conduct a full examination of our operations.
The laws of New York and of other states in which we are licensed to
transact business specifically provide for regulation and supervision of the
variable annuity activities of life insurance companies. Regulations require
certain contract provisions and require us to obtain approval of contract
forms. 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 we do business apply
the laws of New York in determining permissible investments for us.
-5-
<PAGE>
PERIODIC REPORTS
Prior to your Annuity Commencement Date, we will provide you, 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, including
o the allocation of contributed amounts to the Separate and General
Accounts;
o the date the Contribution was made; and
o the date the amount was credited to your account.
(2) Interest accrued on amounts you have allocated to the General Account.
(3) The number and dollar value of Accumulation Units credited to you in
each Fund of the Separate Account; and
(4) The total amounts of all withdrawals and transfers from the General
Account and each Fund.
We have advised employers making payroll deductions that they should remit
your Contributions to us within seven days of the date the Contribution was
withheld from your pay.
The statement we send you also will specify your Account Balance available
to provide a periodic benefit, cash return or death benefit. We will
transmit to Participants, at least semi-annually, reports showing the
financial condition of the Separate Account and showing the schedules of
investments held in each Underlying Fund.
LEGAL PROCEEDINGS
We are engaged in litigation of various kinds, which in our judgment is not of
material importance in relation to our total assets. The Separate Account is
not a party to any pending legal proceedings.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
our right to issue the Contracts, have been passed upon by Patrick A. Burns,
Senior Executive Vice President and General Counsel of Mutual of America.
Certain legal matters relating to Federal securities laws applicable to the
Contracts have been passed upon by the law firm of Jones & Blouch L.L.P.,
Washington, D.C.
EXPERTS
Arthur Andersen LLP, our independent public accountants, have audited the
financial statements included in this Statement of Additional Information,
as indicated in their reports relating to the statements. We have included
the reports of Arthur Andersen LLP in reliance upon the authority of the
firm as experts in giving such reports.
ADDITIONAL INFORMATION
We have filed with the Commission a registration statement under the
Securities Act of 1933, as amended, concerning the Contracts. Not all of the
information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information or in
the current Prospectus for the Contracts. Statements contained herein
concerning the content of the Contracts and other legal instruments are
intended to be summaries. For a complete statement of the terms of those
documents, reference should be made to the materials filed with the
Commission. The Commission has an Internet web site at http://www.sec.gov, or
you may write to the Commission's Public Reference Section, Washington, DC
20549-6009 and obtain copies upon payment of a duplicating fee.
-6-
<PAGE>
FINANCIAL STATEMENTS
When you allocate Account Balance to the Separate Account Funds, the value of
the Account Balance in those Funds is impacted primarily by the investment
results of the Underlying Fund(s).
Financial Statements of the Separate Account No. 2 for 1998 are included as
follows:
<TABLE>
<S> <C>
Statement of Assets and Liabilities .......... 8
Statement of Operations ...................... 10
Statements of Changes in Net Assets .......... 12
Notes to Financial Statements ................ 15
Report of Independent Public Accountants ..... 21
</TABLE>
You should consider our financial statements included in this Statement of
Additional Information as bearing on our ability to meet our obligations under
the Contracts and to support our General Account.
Financial Statements of American Life for 1998 are included as follows:
<TABLE>
<S> <C>
Report of Independent Public Accountants ........... 22
Consolidated Statements of Financial Condition ..... 23
Consolidated Statements of Operations and Surplus .. 24
Consolidated Statements of Cash Flows .............. 25
Notes to Financial Statements ...................... 26
</TABLE>
-7-
<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
FUND FUND FUND BOND 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
========== ========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY 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.
-8-
<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.
-9-
<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
========= ========== ========== ==========
</TABLE>
<TABLE>
<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.
-10-
<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.
-11-
<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
========== ========= ========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------
BOND FUND
---------------------------
1998 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income (loss) .................. $ 193,334 $ 46,454
Net realized gain (loss) on investments ....... 45,639 (15,444)
Net unrealized appreciation (depreciation) of
investments ................................. (109,157) 32,882
---------- -----------
Net Increase (Decrease) in net assets resulting
from operations ............................... 129,816 63,892
---------- -----------
From Unit Transactions:
Contributions ................................. 1,131,599 249,039
Withdrawals ................................... (177,675) (55,507)
Net Transfers ................................. 280,108 (256,192)
---------- -----------
Net Increase (Decrease) from unit transactions . 1,234,032 (62,660)
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS .......... 1,363,848 1,232
NET ASSETS:
Beginning of Year .............................. 903,504 902,272
---------- -----------
End of Year .................................... $2,267,352 $ 903,504
========== ===========
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------
SHORT-TERM
BOND FUND MID-TERM FUND
-------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income (loss) .................. $ 5,780 $ 1,367 $ 11,213 $ 2,093
Net realized gain (loss) on investments ....... (28) 24 (575) (34,118)
Net unrealized appreciation (depreciation) of
investments ................................. (1,455) (388) (6,053) 35,334
--------- -------- --------- -----------
Net Increase (Decrease) in net assets resulting
from operations ............................... 4,297 1,003 4,585 3,309
--------- -------- --------- -----------
From Unit Transactions:
Contributions ................................. 73,817 14,842 42,486 18,408
Withdrawals ................................... (5,146) (1,270) (7,155) (79,572)
Net Transfers ................................. 55,949 (5,813) 159,141 (190,378)
--------- -------- --------- -----------
Net Increase (Decrease) from unit transactions . 124,620 7,759 194,472 (251,542)
--------- -------- --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS .......... 128,917 8,762 199,057 (248,233)
NET ASSETS:
Beginning of Year .............................. 29,028 20,266 61,725 309,958
--------- -------- --------- -----------
End of Year .................................... $ 157,945 $ 29,028 $ 260,782 $ 61,725
========= ======== ========= ===========
</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
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.
-13-
<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.
-14-
<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.
-15-
<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.
-16-
<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>
-17-
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCIAL HIGHLIGHTS -- (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
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<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
========== ========== ======== ======== ========
</TABLE>
<TABLE>
<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
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<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
======== ======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------------
MID-TERM BOND FUND
-----------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year .......... $ 1.26 $ 1.19 $ 1.16 $ 1.01 $ 1.06
======== ======== ======== ======== =======
Unit value, end of year ................ $ 1.32 $ 1.26 $ 1.19 $ 1.16 $ 1.01
======== ======== ======== ======== =======
Units outstanding, end of year ......... 197,045 49,001 260,862 18,581 3,694
======== ======== ======== ======== =======
</TABLE>
<TABLE>
<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>
-18-
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCIAL HIGHLIGHTS -- (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
========== ========== ========== ======== ========
</TABLE>
<TABLE>
<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
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<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
========= ========= ======== ======== ========
</TABLE>
<TABLE>
<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
========= ======== ======== ======== ========
</TABLE>
<TABLE>
<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
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<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>
-19-
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. FINANCIAL HIGHLIGHTS -- (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
========= ======== ======== ========
</TABLE>
<TABLE>
<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
========= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP II
--------------------------------------------------
ASSET MANAGER FUND
--------------------------------------------------
1998 1997 1996 1995
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Unit value, beginning of year .......... $ 21.14 $ 17.72 $ 15.66 $ 14.04
======== ======== ======== =======
Unit value, end of year ................ $ 24.04 $ 21.14 $ 17.72 $ 15.66
======== ======== ======== =======
Units outstanding, end of year ......... 68,139 65,125 36,872 5,561
======== ======== ======== =======
</TABLE>
-20-
<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.
/s/ARTHUR ANDERSEN LLP
New York, New York
February 19, 1999
-21-
<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, 1998 and 1997,
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.
As described in Note 1, the accompanying statutory-basis financial
statements were prepared in conformity with the accounting practices prescribed
or permitted by the State of New York Insurance Department which is a
comprehensive basis of accounting other than generally accepted accounting
principles.
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, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the State of New York Insurance
Department.
This report is intended solely for the information and use of the Board of
Directors and management of The American Life Insurance Company of New York and
for filing with state insurance departments and other regulatory authorities to
whose jurisdiction the Company is subject and should not be used for any other
purpose.
/s/ARTHUR ANDERSEN LLP
New York, New York
February 19, 1999
-22-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
<S> <C> <C>
ASSETS
GENERAL ACCOUNT
Bonds and notes ....................................... $ 1,148,665,458 $ 1,164,994,627
Common stocks ......................................... 18,019,909 15,407,140
Preferred stocks ...................................... 8,952,635 9,527,901
Cash and short-term investments ....................... 43,071,763 25,845,999
Mortgage loans ........................................ -- 6,350,956
Policy loans .......................................... 8,303,917 8,881,485
Other assets .......................................... 98,611 87,418
Investment income accrued ............................. 15,948,956 14,043,501
Receivables and other assets .......................... 2,142,179 2,180,703
--------------- ---------------
Total General Account ............................... 1,245,203,428 1,247,319,730
SEPARATE ACCOUNT ASSETS ................................ 140,113,056 94,399,213
--------------- ---------------
TOTAL ASSETS ........................................... $ 1,385,316,484 $ 1,341,718,943
=============== ===============
LIABILITIES AND SURPLUS
GENERAL ACCOUNT LIABILITIES
Insurance and annuity reserves ........................ $ 1,107,344,991 $ 1,090,571,807
Other contract liabilities and reserves ............... 9,293,567 9,367,352
Dividends payable to contract and policyholders ....... 93,791 106,329
Interest maintenance reserve .......................... 17,506,597 21,999,839
Due to affiliates ..................................... 5,482,793 21,073,324
Federal income taxes payable .......................... 3,941,090 5,327,311
Other liabilities ..................................... 1,710,489 10,249,938
--------------- ---------------
Total General Account ............................... 1,145,373,318 1,158,695,900
SEPARATE ACCOUNT RESERVES AND LIABILITIES .............. 140,113,056 94,399,213
--------------- ---------------
TOTAL LIABILITIES ...................................... 1,285,486,374 1,253,095,113
--------------- ---------------
ASSET VALUATION RESERVE (NOTE 2) ....................... 9,960,197 6,139,264
--------------- ---------------
SURPLUS
Capital stock, $4.55 par value, 1,100,000 shares
authorized, 550,000 shares issued and outstanding ... 2,502,500 2,502,500
Assigned surplus ...................................... 43,548,059 43,548,059
Unassigned surplus .................................... 43,819,354 36,434,007
--------------- ---------------
Total Surplus ....................................... 89,869,913 82,484,566
--------------- ---------------
TOTAL LIABILITIES AND SURPLUS .......................... $ 1,385,316,484 $ 1,341,718,943
=============== ===============
</TABLE>
See accompanying notes to financial statements.
-23-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------------- ---------------
<S> <C> <C>
INCOME
Annuity considerations and deposits (Note 4) ............ $ 112,271,585 $ 82,181,885
Life and disability insurance premiums (Note 4) ......... 34,104,069 28,214,541
------------- -------------
Total considerations and premiums ..................... 146,375,654 110,396,426
Reserve adjustment on reinsurance ceded (Note 4) ........ (2,998,456) (2,598,704)
Net investment income ................................... 91,825,033 95,846,920
Separate account investment and administrative fees ..... 1,619,170 1,088,253
Other, net .............................................. 725,189 309,103
------------- -------------
Total income .......................................... 237,546,590 205,041,998
------------- -------------
DEDUCTIONS
Change in insurance and annuity reserves ................ 40,311,794 (42,363,729)
Annuity and surrender benefits .......................... 144,107,623 192,238,148
Death and disability benefits ........................... 20,153,378 20,086,539
Operating expenses (Note 8) ............................. 27,025,335 27,401,222
------------- -------------
Total deductions ...................................... 231,598,130 197,362,180
------------- -------------
Net gain before dividends ............................. 5,948,460 7,679,818
DIVIDENDS TO CONTRACT AND POLICYHOLDERS .................. 117,184 147,104
------------- -------------
Net gain from operations .............................. 5,831,276 7,532,714
FEDERAL INCOME TAX BENEFIT ............................... 518,812 343,145
NET REALIZED CAPITAL GAINS (LOSSES) (NOTE 3) ............. 363,187 (2,636,718)
------------- -------------
Net income ............................................ 6,713,275 5,239,141
SURPLUS TRANSACTIONS
Change in asset valuation reserve ....................... (3,820,933) 4,544,799
Change in unrealized capital gains ...................... 3,857,310 18,521
Change in non-admitted assets ........................... 264,239 229,472
Other, net .............................................. 371,456 57,440
------------- -------------
Net change in surplus ................................. 7,385,347 10,089,373
SURPLUS, AT BEGINNING OF YEAR ............................ 82,484,566 72,395,193
------------- -------------
SURPLUS, AT END OF YEAR .................................. $ 89,869,913 $ 82,484,566
============= =============
</TABLE>
See accompanying notes to financial statements.
-24-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C> <C>
CASH PROVIDED
Premium and annuity funds received .............................. $ 146,653,511 $ 110,396,425
Investment income received ...................................... 79,116,499 95,229,999
Reserve adjustment on reinsurance ceded ......................... (2,875,451) (2,506,267)
Separate account investment and administrative fees ............. 1,619,170 1,088,253
Other, net ...................................................... 591,081 262,932
------------- -------------
Total receipts ................................................ 225,104,810 204,471,342
------------- -------------
Benefits paid ................................................... 164,174,894 211,664,088
Dividends paid to contract and policyholders .................... 129,722 147,127
Insurance and operating expenses paid ........................... 26,831,765 29,095,047
Net transfers to separate accounts .............................. 23,547,060 38,860,509
------------- -------------
Total payments ................................................ 214,683,441 279,766,771
------------- -------------
Net cash provided by (used in) operations ..................... 10,421,369 (75,295,429)
Proceeds from long-term investments sold, matured or repaid ..... 334,971,358 899,695,610
Other, net ...................................................... 269,274 31,768,841
------------- -------------
Total cash provided ........................................... 345,662,001 856,169,022
------------- -------------
CASH APPLIED
Cost of long-term investments acquired .......................... 303,943,877 857,753,087
Other, net ...................................................... 24,492,360 355,785
------------- -------------
Total cash applied ............................................ 328,436,237 858,108,872
------------- -------------
Net change in cash and short-term investments ................. 17,225,764 (1,939,850)
CASH AND SHORT-TERM INVESTMENTS
Beginning of year ............................................... 25,845,999 27,785,849
------------- -------------
End of year ..................................................... $ 43,071,763 $ 25,845,999
============= =============
</TABLE>
See accompanying notes to financial statements.
-25-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. ORGANIZATION
The American Life Insurance Company of New York ( the "Company") is a
stock life insurance company licensed in all fifty states and the District of
Columbia. 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
NATURE OF OPERATIONS -- The Company provides retirement and employee
benefit plans in the small to medium size case area. Operations are conducted
primarily through a network of regional field offices staffed by salaried
consultants.
BASIS OF PRESENTATION -- The financial statements are presented in
conformity with statutory accounting practices prescribed or permitted by the
State of New York Insurance Department. 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 preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Certain 1997 amounts included in the accompanying financial statements
have been reclassified to conform with the 1998 presentation.
Accounting policies applied in the preparation and presentation of these
financial statements follow.
ASSET VALUATIONS -- Investment valuations are prescribed by the National
Association of Insurance Commissioners ("NAIC"). Bonds qualifying for
amortization are stated at amortized cost; short-term investments in good
standing are stated at cost. Fair value for these securities (approximately
$1.2 billion in 1998 and 1997) is determined by reference to market prices
quoted by the NAIC. If quoted market prices are not available, fair value is
determined using quoted prices for similar securities. All other bonds and
short-term notes are stated at market value which approximates fair value.
Common stocks in good standing are stated at market value, which
approximates fair value. Market value is determined by reference to valuations
quoted by the NAIC. Unrealized gains and losses are applied directly to
unassigned surplus.
Mortgage loans are carried at amortized indebtedness. Fair value for these
loans (approximately $6.5 million in 1997) 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 other than temporary are
recognized when incurred. There were no impairments recorded during 1998 and
1997.
Policy loans are stated at the unpaid balance of the loan. The majority of
such loans are issued with variable interest rates which are periodically
adjusted based on changes in the rates credited to these policies and therefore
are considered to be stated at fair value.
Certain other assets, such as furniture and fixtures and prepaid expenses, are
excluded from the statements of financial condition ("non-admitted assets").
-26-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
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 participant's discretion in separate accounts; either a
multifund account, which is managed by Mutual of America Capital Management
Corporation, or certain other funds, which are managed by outside investment
advisors. All of the funds' investment experience, including net realized and
unrealized capital gains in the separate accounts (net of investment advisory
fees and administration fees assessed), is allocated to participants. Charges
for investment advisory fees and administration fees are assessed as a
percentage of the assets under management and vary based upon the investment
objectives of the fund and level of administrative services provided. During
1998 and 1997 such fees were equal to approximately 1.3% of the total average
assets under management.
Investments held in the separate accounts are stated at market value,
which approximates fair value. Participants' corresponding equity in the
separate accounts are reported as liabilities in the accompanying statements.
Premiums and benefits related to the separate accounts are combined with the
general account in the accompanying statements. Net operating gains are offset
by increases to reserve liabilities in the respective separate accounts.
INSURANCE AND ANNUITY RESERVES -- Reserves for annuity contracts are
computed on the net single premium method and represent the estimated present
value of future retirement benefits. These reserves are based on mortality and
interest rate assumptions (ranging predominately from 5.00% to 9.25%) which
meet or exceed statutory requirements. Reserves for contractual funds not yet
used for the purchase of annuities are accumulated at various interest rates,
which during 1998 and 1997, averaged 5.00% and 5.25%, respectively, and are
deemed sufficient to provide for contractual surrender values of these funds.
Reserves for life and disability insurance are based on mortality, morbidity
and interest rate assumptions which meet statutory requirements.
Contractual funds not yet used to purchase retirement annuities and other
deposit liabilities are stated at their cash surrender value, which
approximates fair value ($574.0 million and $507.1 million at December 31, 1998
and 1997, respectively). The fair value of annuity contracts (approximately
$660.5 million and $636.4 million at December 31, 1998 and 1997, respectively)
was determined by discounting expected future retirement benefits using current
mortality tables and interest rates based on the duration of expected future
benefits. Weighted average interest rates of 5.38% and 6.12% were used at
December 31, 1998 and 1997, 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.
General Account investment income is reported as earned and is presented
net of related investment expenses; operating expenses, including acquisition
costs for new business and income taxes, are charged to operations as incurred.
DIVIDENDS -- Dividends are based on formulas and scales approved by the
Board of Directors and are accrued currently for payment subsequent to plan
anniversary dates.
3. FIXED MATURITY SECURITIES
The statement values and NAIC market values of investments in fixed
maturity securities (bonds and notes) at December 31, 1998 are shown below.
Excluding U.S. Government and government agency investments, the Company is not
exposed to any significant concentration of credit risk.
-27-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. FIXED MATURITY SECURITIES -- (Continued)
<TABLE>
<CAPTION>
GROSS GROSS NAIC
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
- ----------------------------------------------------------- ------------- ------------ ------------ -------------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies ................................ $ 431,832 $ 9,743 $ 257 $ 441,318
Obligations of states and political subdivisions .......... 8,327 1,774 -- 10,101
Debt securities issued by foreign governments ............. 31,565 2,249 -- 33,814
Corporate securities ...................................... 720,055 16,211 7,784 728,482
---------- ------- ------ ----------
Total .................................................... $1,191,779 $29,977 $8,041 $1,213,715
========== ======= ====== ==========
</TABLE>
Short-term fixed maturity securities with a statement value and NAIC
market value of $43.1 million at December 31, 1998 are included in the above
table. As of December 31, 1998, the Company had $3.4 million (par value $3.1
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
The statement values and NAIC market values of investments in fixed
maturity securities by contractual maturity (except for mortgage-backed
securities which are stated at expected maturity) at December 31, 1998 are
shown below. Expected maturities may differ from contractual maturities because
borrowers may have the right to prepay obligations with or without prepayment
penalties.
<TABLE>
<CAPTION>
NAIC
STATEMENT MARKET
VALUE VALUE
------------- --------------
(000'S OMITTED)
<S> <C> <C>
Due in one year or less ............... $ 74,441 $ 75,810
Due after one year through five years . 494,570 503,667
Due after five years through ten years 303,857 309,448
Due after ten years ................... 318,911 324,790
---------- -----------
Total ............................... $1,191,779 $ 1,213,715
========== ===========
</TABLE>
Proceeds from the sale of investments in fixed maturity securities during
1998 were $304.6 million. Gross gains of $2.7 million and gross losses of $1.2
million were realized on these sales, of which $1.5 million of gains were
accumulated in the IMR. Such amounts will be amortized into net investment
income over the estimated remaining lives of the investments sold.
During 1998, $6.1 million of the IMR was amortized and included in net
investment income. Included in IMR amortization income for the year is a $4.1
million net adjustment related to realized capital gains that should have been
exempted from IMR since they were associated with higher than normal general
account withdrawal activity (including transfers to the separate account) that
occurred last year.
The statement values and NAIC market values of investments in fixed
maturity securities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS NAIC
STATEMENT UNREALIZED UNREALIZED MARKET
CATEGORY VALUE GAINS LOSSES VALUE
- ------------------------------------------------- -------------- ------------ ------------ --------------
(000'S OMITTED)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government corporations and agencies ... $ 608,132 $ 7,248 $ 112 $ 615,268
Obligations of states and political subdivisions 7,721 1,404 -- 9,125
Debt securities issued by foreign governments ... 36,727 1,059 -- 37,786
Corporate securities ............................ 529,943 13,958 1,255 542,646
----------- -------- ------- -----------
Total .......................................... $ 1,182,523 $ 23,669 $ 1,367 $ 1,204,825
=========== ======== ======= ===========
</TABLE>
-28-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. FIXED MATURITY SECURITIES -- (Continued)
Short-term fixed maturity securities with a statement value and NAIC
market value of $17.5 million at December 31, 1997 are included in the above
table. As of December 31, 1997, the Company had $3.4 million (par value $3.1
million) of its long-term fixed maturity securities on deposit with various
state regulatory agencies.
Proceeds from the sale of investments in fixed maturity securities during
1997 were $880.4 million. Gross gains of $12.8 million and gross losses of $4.2
million were realized on these sales, of which $8.6 million of gains were
accumulated (net of applicable taxes of $2.7 million) in the IMR. Such amounts
will be amortized into net investment income over the estimated remaining lives
of the investments sold. During 1997, $3.0 million of the IMR was amortized and
included in net investment income.
Net realized capital gains (losses) on mortgage loans and other invested
assets reflected in the statements of operations were $.4 million and ($2.6
million) for the years ended December 31, 1998 and 1997, respectively. At
December 31, 1998 and 1997, net unrealized appreciation of equity securities
was $3.9 million and $19 thousand respectively.
4. REINSURANCE AND RELATED TRANSACTIONS
The Company has a bulk coinsurance agreement with its ultimate parent,
Mutual of America, covering certain non-pension insurance business. In
consideration for additional reserves assumed under this agreement, the Company
assumed premiums and annuity considerations of $31.0 million and $18.7 million
in 1998 and 1997, respectively. Total reserve liabilities reinsured under this
agreement were as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Life and annuity ......... $ 687.3 $ 692.1
Other reserves ........... $ 3.1 $ 3.3
</TABLE>
Effective January 1, 1999 the existing reinsurance agreement in effect
between the Company and Mutual of America was amended. Under the terms of the
amended agreement, Mutual of America will cease ceding and the Company will
cease assuming new business on and after January 1, 1999.
5. PENSION PLAN AND POSTRETIREMENT BENEFITS
Mutual of America is the administrator for a qualified, non-contributory
defined benefit pension plan covering virtually 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"). Mutual of America also maintains a non-qualified defined benefit
plan. This plan provides benefits to employees whose total compensation exceeds
the maximum allowable compensation limits for qualified retirement plans under
ERISA.
At December 31, 1998, all of the qualified pension plan assets are
invested in one of Mutual of America's Separate Accounts (consisting primarily
of equity securities) and participation in certain other funds managed by
outside investment advisers. Pension expense allocated to the Company in 1998
and 1997 was $724 thousand and $388 thousand, respectively.
In addition to the above noncontributory defined benefit plan, all
employees may participate in a 401(k) savings plan, under which the Company
matches half of the employees' basic contribution up to 6% of salary. The cost
of the plan was approximately $79 thousand and $75 thousand in 1998 and 1997,
respectively.
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 upon satisfaction of service requirements.
One plan provides medical and dental benefits and the second plan provides life
insurance benefits. The postretirement plans are contributory for those
individuals who retire with less than twenty years of eligible service with
retiree contributions adjusted annually, and other cost sharing features, such
as deductibles and coinsurance. Postretirement benefit expense allocated to the
Company for the years ended 1998 and 1997 was $188 thousand and $81 thousand,
respectively.
-29-
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. PENSION PLAN AND POSTRETIREMENT BENEFITS -- (Continued)
Mutual of America also sponsors a long-term performance based incentive
compensation plan for certain employees. Shares are granted each year and
generally vest over a three year period. The value of such shares is based upon
increases in Mutual of America's statutory surplus and the maintenance of
certain financial ratios.
6. COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal actions which have arisen in the
course of its 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 of 1986, as amended. The Company files its federal tax
return on a separate company basis. The difference between the Company's
effective tax rate and the expected income tax computed by applying the federal
income tax rate of 35% to the net gain from operations before federal income
taxes results from the recognition of revenues and expenses in different
periods for statutory and tax accounting purposes and are primarily due to
policyholder insurance reserves, deferred acquisition costs and realized
capital gains and losses.
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 1998 and 1997, operating and investment-related expenses of $17.9
million and $1.4 million and $18.6 million and $1.6 million, respectively, were
charged to the Company and are reflected in the accompanying statements of
operations and surplus.
-30-
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
The financial statements of The American Separate Account No. 2 and The
American Life Insurance Company of New York for 1998 are included in this
Post-Effective Amendment.
(b) EXHIBITS
<TABLE>
<S> <C>
9 Consent of Jones & Blouch L.L.P.
10 Consent of Arthur Andersen LLP
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The name and position of each executive officer and director of the
Insurance Company are set forth below. The business address of each executive
officer and director is 320 Park Avenue, New York, NY 10022.
<TABLE>
<CAPTION>
POSITIONS AND
NAME OFFICES WITH DEPOSITOR
- ------------------------- ----------------------------------------------------------------------
<S> <C>
Manfred Altstadt Senior Executive Vice President and Chief Financial Officer; Director
Diane M. Aramony Senior Vice President and Corporate Secretary; Director
William Breneisen Executive Vice President
Jeremy J. Brown Executive Vice President and Chief Actuary; Director
Patrick A. Burns Senior Executive Vice President and General Counsel; Director
Richard J. Ciecka Director
William S. Conway Executive Vice President; Director
Salvatore R. Curiale Senior Executive Vice President; Director
William A. DeMilt Executive Vice President; Director
Thomas E. Gilliam Executive Vice President; Director
John R. Greed Executive Vice President, Treasurer; Director
Theodore L. Herman Vice Chairman of the Board; Director
Gregory A. Kleva Executive Vice President and Deputy General Counsel
Amir Lear Senior Vice President; Director
Howard Lichtenstein President and Chief Operating Officer; Director
George L. Medlin Executive Vice President, Internal Audit
Thomas J. Moran Chairman of the Board and Chief Executive Officer; Director
Robert W. Ruane Senior Vice President; Director
</TABLE>
ITEM 27. NUMBER OF HOLDERS OF SECURITIES
As of March 31, 1999, there were 5,195 Participants 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, as depositor and
principal underwriter of Mutual of America Separate Account No. 2, and as
principal underwriter of The American Separate Account No. 3 of the Insurance
Company.
C-1
<PAGE>
(b) The name, business address and position of each senior officer and
director of Mutual of America are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- ------------------------------- ------------------------------------------------------------
<S> <C>
DIRECTORS
---------
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
Denver, Colorado
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
New York, New York
William Kahn Director
St. Louis, Missouri
Lasalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Fioravante G. Perrotta Director
New York, New York
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
Manfred Altstadt Senior Executive Vice President and Chief Financial Officer
Patrick A. Burns Senior Executive Vice President and General Counsel
Salvatore R. Curiale Senior Executive Vice President, Technical Operations
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- ------------------------- ----------------------------------------------------------------------
<S> <C>
OTHER OFFICERS
--------------
Diane Aramony Senior Vice President, Corporate Secretary
and Assistant to the Chairman
Meyer Baruch Senior Vice President, State Compliance and Government Regulations
since July 1996; prior thereto, Assistant Chief of the Life Insurance
and Companies Bureau of The New York State Insurance
Department
Deborah Swinford Becker Senior Vice President and Associate General Counsel
Nicholas Branchina Senior Vice President and Associate Treasurer
William Breneisen Executive Vice President, Office of Technology
Jeremy J. Brown Executive Vice President and Chief Actuary
Allen J. Bruckheimer Senior Vice President and Associate Treasurer
Patrick Burke Senior Vice President, Special Markets
Sean Carroll Senior Vice President, Facilities Management
William Conway Executive Vice President, Marketing and Corporate Communications
William A. DeMilt Executive Vice President Real Estate Management
Warren A. Essner Senior Vice President, Corporate Services
James Flynn Senior Vice President, Marketing
Michael Gallagher Senior Vice President, Direct Response and Technical
Boca Raton, FL Communications
Harold D. Gannon Senior Vice President, Corporate Tax
Gordon Gaspard Senior Vice President, Technical Services
Robert Giaquinto Senior Vice President, MIS Operations
Thomas E. Gilliam Executive Vice President and Assistant to the President and Chief
Executive Officer
John R. Greed Executive Vice President and Treasurer
Thomas A. Harwood Senior Vice President, Competition and Asset Retention
Sandra Hersko Senior Vice President, Technical Administration
Edward J.T. Kenney Senior Vice President and Assistant to the President and Chief
Executive Officer
Gregory A. Kleva, Jr. Executive Vice President and Deputy General Counsel
Robert Kordecki Senior Vice President, National Accounts
Stanley M. Lenkowicz Senior Vice President and Deputy General Counsel
Daniel LaSaffre Senior Vice President, Human Resources and Training, since January
1999; prior thereto, FBI
Robert W. Maull Senior Vice President and Corporate Actuary
George L. Medlin Executive Vice President and Internal Auditor since March 1998;
prior thereto, Senior Vice President, Internal Audit
Lynn M. Nadler Senior Vice President, Training -- Boca
Boca Raton, FL
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- --------------------- -----------------------------------------------------------
<S> <C>
Roger F. Napoleon Senior Vice President and Associate General Counsel
James Peterson Senior Vice President, Training -- New York and Leadership
Development
William Rose Senior Vice President, Field Operations
Dennis J. Routledge Senior Vice President, LAN/Telecommunications
Robert W. Ruane Senior Vice President, Corporate Communications and Direct
Response
William G. Shannon Senior Vice President, Individual Financial Planning
Walter W. Siegel Senior Vice President and Actuary
Joan M. Squires Senior Vice President, Business Applications
Eldon Wonacott Senior Vice President, Field Administration
Raymond Yeager Senior Vice President, MIS Operations
Boca Raton, FL
</TABLE>
The business address of all officers and directors is 320 Park Avenue, New
York, New York 10022, unless otherwise noted.
C-4
<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 for effectiveness of this amendment to Registration Statement
pursuant to Rule 485(b) of the Securities Act of 1933 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, 1999.
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
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, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ -----------------------------------------
<S> <C>
* Chairman and Chief Executive Officer;
---------------------------------- Director
THOMAS J. MORAN
/s/ MANFRED ALTSTADT Senior Executive Vice President &
---------------------------------- Chief Financial Officer; Director
MANFRED ALTSTADT
*
---------------------------------- Senior Vice President & Corporate
DIANE M. ARAMONY Secretary; Director
*
---------------------------------- Executive Vice President, Chief Actuary;
JEREMY J. BROWN Director
*
---------------------------------- Senior Executive Vice President &
PATRICK A. BURNS General Counsel; Director
*
---------------------------------- Director
RICHARD J. CIECKA
*
---------------------------------- Director
WILLIAM S. CONWAY
*
---------------------------------- Director
SALVATORE R. CURIALE
*
---------------------------------- Executive Vice President; Director
WILLIAM A. DEMILT
*
---------------------------------- Executive Vice President; Director
THOMAS E. GILLIAM
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ --------------------------------------
<S> <C> <C>
* Executive Vice President & Treasurer;
---------------------------------- Director
JOHN R. GREED
* Vice Chairman; Director
----------------------------------
THEODORE L. HERMAN
* Senior Vice President; Director
----------------------------------
AMIR LEAR
* President & Chief Operating Officer;
---------------------------------- Director
HOWARD LICHTENSTEIN
* Senior Vice President; Director
----------------------------------
ROBERT W. RUANE
</TABLE>
*By: /s/ MANFRED ALTSTADT
------------------------------
NFRED ALTSTADT
ATTORNEY-IN-FACT
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
- -------- -----
<S> <C> <C>
9 Consent of Jones & Blouch L.L.P .........
10 Consent of Arthur Andersen LLP ..........
</TABLE>
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[Jones & Blouch Letterhead]
Exhibit 99.9
April 28, 1999
Board of Directors
The American Life Insurance Company
of New York
320 Park Avenue
New York, New York 10022
Gentlemen:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in post-effective amendment No. 8 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 L.L.P.
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, 1999
