<PAGE>
American Life
SEPARATE ACCOUNT NO. 3
ANNUAL REPORT
&
THE ANNUAL REPORTS OF
MUTUAL OF AMERICA INVESTMENT CORPORATION
SCUDDER VARIABLE LIFE INVESTMENT FUND
TCI GROWTH FUND
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS
FUND II:
ASSET MANAGER AND CONTRAFUND PORTFOLIOS
DECEMBER 31, 1996
This report is not to be construed as an offering for sale of any Variable
Product. No offering is
made except in conjunction with a prospectus which must precede or accompany
this report.
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT NO. 3
ANNUAL REPORT
DECEMBER 31, 1996
Dear Policyholder:
We are pleased to send you the 1996 Annual Report of American Life's
Separate Account No. 3. This account is an investment vehicle for participants
in our Variable Universal Life policies. The Account commenced operations in
late 1994. Separate Account No. 3 consists of sixteen distinct funds. Each
invests in shares of one of eight funds of Mutual of America Investment
Corporation ("Investment Company"): the Money Market, All America (formerly
the Stock Fund), Equity Index, Bond, Short-Term Bond, Mid-Term Bond, Composite
and Aggressive Equity Funds; three portfolios of Scudder Variable Life
Investment Fund: The Scudder Bond, Capital Growth and International Funds; the
TCI Growth Fund of TCI Portfolios, Inc.; Calvert Responsibly Invested Balanced
Portfolio (formerly Calvert Socially Responsible Series) of Acacia Capital
Corporation; and, three portfolios of Fidelity Investments: Equity-Income,
Contrafund and Asset Manager Funds.
Each of the Funds of Separate Account No. 3 owns shares in a similarly named
Fund of Mutual of America Investment Corporation, Portfolio of Scudder
Variable Life Investment Fund ("Scudder"), Fund of TCI Portfolios, Inc.
("TCI"), Calvert Responsibly Invested Portfolio of Acacia Capital Corporation
("Calvert"), Fidelity Investments Variable Insurance Products Fund and
Variable Insurance Products Fund II ("Fidelity"). The investment results of
each of the Funds of Separate Account No. 3 are based on the performance of
the corresponding Funds or Portfolios, respectively, of the Investment
Company, Scudder, TCI, Calvert and Fidelity.
The Separate Account Funds invest in Funds and Portfolios which have the
following investment objectives:
THE INVESTMENT COMPANY MONEY MARKET FUND: This Fund seeks to obtain high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital through investments in money
market instruments and other short-term debt securities.
THE INVESTMENT COMPANY ALL AMERICA FUND: The investment objective for
approximately 60% of the assets of this Fund (the "Indexed Assets") is to
provide investment results that to the extent practical corresponds to the
performance of the Standard & Poor's 500 Composite Index. The Indexed Assets
are invested in the same manner as the Equity Index Fund described below. The
investment objective for the remaining approximately 40% of the assets (the
"Active Assets") is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of a
diversified portfolio of securities that may include common stocks, securities
convertible into common stocks, bonds and money market instruments.
THE INVESTMENT COMPANY EQUITY INDEX FUND: This Fund seeks to duplicate, as
closely as possible, the investment performance of the Standard & Poor's 500
Composite Index ("S&P 500") by investing in approximately 500 publicly traded
stocks that comprise the S&P 500 ("Standard & Poor's 500", "S&P" and "S&P 500"
are trademarks of Standard & Poor's Corporation.)
THE INVESTMENT COMPANY BOND FUND: This Fund seeks a high level of current
income, together with preservation of capital, through investments in such
securities as U.S. Government, corporate and other notes and bonds.
THE INVESTMENT COMPANY SHORT-TERM BOND FUND: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of one to three years.
THE INVESTMENT COMPANY MID-TERM BOND FUND: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of three to seven years.
THE INVESTMENT COMPANY COMPOSITE FUND: This Fund seeks a high total rate of
return on investments, through both appreciation of capital and current
income, through investments in a diversified portfolio of common stocks, bonds
and money market instruments.
THE INVESTMENT COMPANY AGGRESSIVE EQUITY FUND: The investment objective for
approximately half of the assets of the Fund (the "Aggressive Growth
Portfolio") is to achieve capital appreciation by investing in companies
believed to
I
<PAGE>
possess above-average growth potential. Growth can be in the areas of earnings
or gross sales which can be measured in either dollars or in unit volume. The
investment objective for the other half of the assets of the Fund (the
"Aggressive Value Portfolio") is to achieve capital appreciation by investing
in companies believed to possess valuable assets or whose securities are
undervalued in the marketplace in relation to factors such as a company's
assets, earnings or growth potential.
THE SCUDDER BOND PORTFOLIO: This Portfolio seeks a high level of income
consistent with a high quality portfolio of debt securities.
THE SCUDDER CAPITAL GROWTH PORTFOLIO: This Portfolio seeks to maximize long-
term capital growth through a broad and flexible investment program. The
Portfolio invests in marketable securities, principally common stocks, and
consistent with its objective, may invest in preferred stocks, debt securities
and foreign securities.
THE SCUDDER INTERNATIONAL PORTFOLIO: This Portfolio seeks long-term capital
growth through investing primarily in diversified holdings of marketable
foreign equity investments in companies, wherever organized, that do business
primarily outside the United States and which are listed on foreign exchanges.
THE TCI GROWTH FUND: This Fund seeks capital growth over time by investing
primarily in common stocks (including securities convertible into common
stocks) that are considered by management to have better-than-average
prospects for appreciation.
THE CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO: This Fund seeks capital
growth and a total return above the rate of inflation through an actively
managed portfolio of stocks, bonds and money market instruments selected with
a concern for the social impact of each investment.
THE FIDELITY EQUITY-INCOME PORTFOLIO: Seeks reasonable income by investing
primarily in income-producing equity securities while also considering the
potential for capital appreciation. Secondarily, the Portfolio's goal is to
achieve a yield that exceeds the composite yield on the securities comprising
the S & P 500 Composite Index.
THE FIDELITY CONTRAFUND PORTFOLIO: Seeks long-term capital appreciation by
investing primarily in a broad variety of common stocks using both growth-
oriented and contrarian disciplines.
THE FIDELITY ASSET MANAGER PORTFOLIO: Seeks high long-term return with
reduced risk by allocating assets among a broadly diversified mix of stocks,
bonds and short-term fixed-income instruments.
For the year ended December 31, 1996, the following total returns were
experienced in these sixteen Separate Account Funds:
<TABLE>
<S> <C>
Investment Company Money Market Fund(1)............................ + 3.0%
Investment Company All America Fund................................ + 18.1%
Investment Company Equity Index Fund............................... + 20.0%
Investment Company Bond Fund....................................... + 1.2%
Investment Company Short-Term Bond Fund............................ + 2.6%
Investment Company Mid-Term Bond Fund.............................. + 1.5%
Investment Company Composite Fund.................................. + 9.4%
Investment Company Aggressive Equity Fund.......................... + 24.4%
Scudder Bond Fund.................................................. + 0.5%
Scudder Capital Growth Fund........................................ + 17.5%
Scudder International Fund......................................... + 12.2%
TCI Growth Fund.................................................... - 6.3%
Calvert Responsibly Invested Balanced Fund......................... + 10.1%
Fidelity Equity-Income Fund........................................ + 11.7%
Fidelity Contrafund................................................ + 18.6%
Fidelity Asset Manager Fund........................................ + 12.1%
</TABLE>
-------
(1) The current seven-day net annualized yield as of 2/18/97 was 3.02%
and is not necessarily indicative of future actual yields.
II
<PAGE>
Total return is equal to the changes in the value of a unit of participation
in a Fund from the beginning to the end of the specified period. It reflects
investment income earned and reinvested plus the changes in the market value
(whether realized or unrealized) of the securities in the respective Fund or
Portfolio of the Investment Company, Scudder, TCI, Calvert or Fidelity during
the indicated period. Results are net of all charges, including a monthly
service charge based upon a hypothetical $1,000 invested at the beginning of
the period. These returns are not guaranteed and are not necessarily
indicative of the future investment performance of the particular Fund.
Withdrawals and contributions made within a period would experience different
rates of return based on the respective unit values on the dates of such
transactions.
This report includes financial statements for each Fund of Separate Account
No. 3. Following this report are the financial statements for each similarly
named Fund of the Investment Company, Portfolios of Scudder, Fund of TCI,
Portfolio of Calvert and Portfolios of Fidelity Investments.
I hope you will find this report helpful and informative.
Sincerely,
/s/ Manfred Altstadt
Manfred Altstadt
Senior Executive Vice President and
Chief Financial Officer, The American
Life Insurance Company of New York
III
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL REPORT OF AMERICAN LIFE SEPARATE ACCOUNT NO. 3..................... I
Statement of Assets and Liabilities...................................... VI
Statement of Operations.................................................. VIII
Statements of Changes in Net Assets...................................... X
Notes to Financial Statements............................................ XIII
Report of Independent Public Accountants................................. XVI
ANNUAL REPORT OF MUTUAL OF AMERICA INVESTMENT CORPORATION................. 1
President's Message...................................................... 1
Portfolio Management Discussions......................................... 2
Portfolio of Investments in Securities:
Money Market Fund...................................................... 9
All America Fund....................................................... 10
Equity Index Fund...................................................... 18
Bond Fund.............................................................. 24
Short-Term Bond Fund................................................... 27
Mid-Term Bond Fund..................................................... 29
Composite Fund......................................................... 31
Aggressive Equity Fund................................................. 36
Statement of Assets and Liabilities...................................... 40
Statement of Operations.................................................. 41
Statements of Changes in Net Assets...................................... 42
Financial Highlights..................................................... 44
Notes to Financial Statements............................................ 50
Report of Independent Public Accountants................................. 55
ANNUAL REPORT OF SCUDDER VARIABLE LIFE INVESTMENT FUND.................... 57
Letter from the Fund's President......................................... 58
Portfolio Management Discussions......................................... 59
Portfolio of Investments, Statement of Assets and Liabilities; Statement
of Operations; Statements of Changes in Net Assets and Financial
Highlights:
Bond Portfolio......................................................... 65
Capital Growth Portfolio............................................... 72
International Portfolio................................................ 80
Notes to Financial Statements............................................ 90
Report of Independent Accountants........................................ 94
Tax Information.......................................................... 95
ANNUAL REPORT OF TCI GROWTH FUND OF TCI PORTFOLIOS, INC................... 97
Executive Message, Performance & Portfolio Information................... 98
Management Q & A......................................................... 100
Schedule of Investments.................................................. 102
Statement of Assets and Liabilities...................................... 104
Statement of Operations.................................................. 105
Statements of Changes in Net Assets...................................... 106
Notes to Financial Statements............................................ 107
Financial Highlights..................................................... 110
Independent Accountants Report .......................................... 111
ANNUAL REPORT OF CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO OF ACACIA
CAPITAL CORPORATION...................................................... 113
President's Letter....................................................... 114
Report of Independent Accountants........................................ 116
Portfolio of Investments................................................. 117
</TABLE>
IV
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Statement of Assets and
Liabilities.............. 122
Statement of Operations... 123
Statements of Changes in
Net Assets............... 124
Notes to Financial
Statements............... 125
Financial Highlights...... 127
ANNUAL REPORT OF FIDELITY
INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND... 129
Market Environment........ 130
Equity-Income Portfolio... 131
Performance and
Investment Summary;
Portfolio Manager's
Overview............... 131
Investments............. 133
Financial Statements.... 137
Notes to Financial
Statements............. 139
Report of Independent
Accountants............ 141
Distributions........... 142
ANNUAL REPORT OF FIDELITY
INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND
II........................ 143
Market Environment........ 144
Asset Manager Portfolio... 145
Performance and
Investment Summary;
Portfolio Manager's
Overview............... 145
Investments............. 149
Financial Statements.... 160
Notes to Financial
Statements............. 162
Report of Independent
Accountants............ 165
Distributions........... 166
ANNUAL REPORT OF FIDELITY
INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND
II........................ 167
Market Environment........ 168
Contrafund Portfolio...... 169
Performance and
Investment Summary;
Portfolio Manager's
Overview............... 169
Investments............. 171
Financial Statements.... 180
Notes to Financial
Statements............. 182
Report of Independent
Accountants............ 184
Distributions........... 185
</TABLE>
V
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment Corporation
at market value
(Cost:
Money Market Fund --
$1,152
All America Fund --
$223,050
Equity Index Fund --
$52,908
Bond Fund -- $13,975)
(Notes 1 and 2)............... $1,109 $233,590 $48,397 $13,244
Due From (To) General Account.. (281) (18,279) (2,400) (4,343)
------ -------- ------- -------
Net Assets..................... $ 828 $215,311 $45,997 $ 8,901
====== ======== ======= =======
Unit Value at December 31, 1996
(Note 5)...................... $ 1.87 $ 5.39 $ 1.72 $ 2.75
====== ======== ======= =======
Number of Units Outstanding at
December 31, 1996 (Note 5).... 442 39,912 26,794 3,239
====== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
---------- --------- --------- -----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment
Corporation at market value
(Cost:
Short-Term Bond Fund --
$1,177
Mid-Term Bond Fund -- $1,177
Composite Fund -- $166,518
Aggressive Equity Fund --
$88,206)
(Notes 1 and 2).............. $1,140 $1,042 $156,090 $80,561
Due From (To) General Account. (106) (496) (54,607) 3,919
------ ------ -------- -------
Net Assets.................... $1,034 $ 546 $101,483 $84,480
====== ====== ======== =======
Unit Value at December 31,
1996 (Note 5)................ $ 1.14 $ 1.19 $ 3.75 $ 1.80
====== ====== ======== =======
Number of Units Outstanding at
December 31, 1996 (Note 5)... 908 460 27,055 46,985
====== ====== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
-------------------------------- ------- -----------
CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL GROWTH INVESTED
FUND FUND FUND FUND FUND
------- -------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Scudder Portfolios,
TCI Growth Fund and Calvert
Responsibly Invested Portfolio at
market value
(Cost:
Scudder Bond Fund -- $3,010
Scudder Capital Growth Fund --
$137,200
Scudder International Fund --
$73,235
TCI Growth Fund -- $75,973
Calvert Responsibly Invested Fund --
$9,689)
(Notes 1 and 2)..................... $ 2,506 $121,662 $55,582 $68,815 $ 7,212
Due From (To) General Account........ (1,127) (9,626) 14,160 (546) (1,933)
------- -------- ------- ------- -------
Net Assets........................... $ 1,379 $112,036 $69,742 $68,269 $ 5,279
======= ======== ======= ======= =======
Unit Value at December 31, 1996 (Note
5).................................. $ 11.48 $ 22.11 $ 13.43 $ 11.53 $ 2.23
======= ======== ======= ======= =======
Number of Units Outstanding at
December 31, 1996 (Note 5).......... 120 5,067 5,193 5,921 2,364
======= ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------- -------- -------------
<S> <C> <C> <C>
Assets:
Investments in Fidelity Portfolios at
market value
(Cost:
VIP Equity-Income Fund -- $74,771
VIP II Contra Fund -- $128,062
VIP II Asset Manager Fund --
$54,376)
(Notes 1 and 2)......................... $55,351 $103,871 $49,149
Due From (To) General Account............ (2,862) 6,805 (2,372)
------- -------- -------
Net Assets............................... $52,489 $110,676 $46,777
======= ======== =======
Unit Value at December 31, 1996 (Note 5). $ 21.93 $ 16.59 $ 17.72
======= ======== =======
Number of Units Outstanding at December
31, 1996 (Note 5)....................... 2,393 6,672 2,639
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
VII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<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........................ $ 45 $11,710 $ 1,618 $ 874
---- ------- ------- -----
Total income..................... 45 11,710 1,618 874
---- ------- ------- -----
Expenses (Note 3):
Fees............................. 3 1,632 189 59
Administrative Expenses.......... -- -- -- --
---- ------- ------- -----
Total Expenses.................... 3 1,632 189 59
---- ------- ------- -----
Net Investment Income (Loss)...... 42 10,078 1,429 815
---- ------- ------- -----
Net Realized and Unrealized Gain
(Loss) on Investments (Note 1):
Net realized gain (loss) on
investments..................... 8 3,857 4,782 160
Net unrealized appreciation
(depreciation) of investments... (40) 9,747 (4,621) (688)
---- ------- ------- -----
Net Realized and Unrealized Gain
(Loss) on Investments............ (32) 13,604 161 (528)
---- ------- ------- -----
Net Increase (Decrease) in Net
Assets Resulting From Operations. $ 10 $23,682 $ 1,590 $ 287
==== ======= ======= =====
</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.................... $ 44 $ 148 $ 19,214 $10,896
---- ----- -------- -------
Total income................. 44 148 19,214 10,896
---- ----- -------- -------
Expenses (Note 3):
Fees......................... 8 2 836 538
Administrative Expenses...... -- -- -- --
---- ----- -------- -------
Total Expenses................ 8 2 836 538
---- ----- -------- -------
Net Investment Income (Loss).. 36 146 18,378 10,358
---- ----- -------- -------
Net Realized and Unrealized
Gain (Loss) on Investments
(Note 1):
Net realized gain (loss) on
investments................. 6 11 1,028 4,488
Net unrealized appreciation
(depreciation) of
investments................. (20) (133) (10,231) (7,427)
---- ----- -------- -------
Net Realized and Unrealized
Gain (Loss) on Investments... (14) (122) (9,203) (2,939)
---- ----- -------- -------
Net Increase (Decrease) in Net
Assets Resulting From
Operations................... $ 22 $ 24 $ 9,175 $ 7,419
==== ===== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SCUDDER TCI CALVERT
---------------------------- ------- -----------
CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL GROWTH INVESTED
FUND FUND FUND FUND FUND
---- ------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends................... $ 68 $ 3,875 $ 196 $ 5,841 $ 541
---- ------- ------- ------- ------
Total income................ 68 3,875 196 5,841 541
---- ------- ------- ------- ------
Expenses (Note 3):
Fees........................ (13) (867) (480) (646) 23
Administrative Expenses..... -- -- -- -- --
---- ------- ------- ------- ------
Total Expenses............... (13) (867) (480) (646) 23
---- ------- ------- ------- ------
Net Investment Income (Loss). 55 3,008 (284) 5,195 518
---- ------- ------- ------- ------
Net Realized and Unrealized
Gain (Loss) on Investments
(Note 1):
Net realized gain(loss) on
investments................ 521 26,960 20,574 (819) 2,111
Net unrealized appreciation
(depreciation) of
investments................ (506) (18,445) (17,740) (7,075) (2,455)
---- ------- ------- ------- ------
Net Realized and Unrealized
Gain (Loss) on Investments.. 15 8,515 2,834 (7,894) (344)
---- ------- ------- ------- ------
Net Increase (Decrease) in
Net Assets Resulting From
Operations.................. $ 70 $11,523 $ 2,550 ($2,699) $ 174
==== ======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
------------------------------------
VIP II VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------- ------- -------------
<S> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends................................ $ 422 $ 97 $1,224
------- ------- ------
Total income............................. 422 97 1,224
------- ------- ------
Expenses (Note 3):
Fees..................................... 381 850 328
Administrative Expenses.................. -- -- --
------- ------- ------
Total Expenses............................ 381 850 328
------- ------- ------
Net Investment Income (Loss).............. 41 (753) 896
------- ------- ------
Net Realized and Unrealized Gain (Loss) on
Investments (Note 1):
Net realized gain (loss) on investments.. 21,966 37,528 7,735
Net unrealized appreciation
(depreciation) of investments........... (19,580) (24,248) (5,635)
------- ------- ------
Net Realized and Unrealized Gain (Loss) on
Investments.............................. 2,386 13,280 2,100
------- ------- ------
Net Increase (Decrease) in Net Assets
Resulting From Operations................ $ 2,427 $12,527 $2,996
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
IX
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS* ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX
FUND FUND FUND
---------------- ----------------- ----------------
1996 1995(A) 1996 1995 1996 1995(B)
------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income
(loss)................... $ 42 $ 3 $ 10,078 $ 1,432 $ 1,429 $ 163
Net realized gain (loss)
on investments........... 8 -- 3,857 -- 4,782 --
Net unrealized
appreciation
(depreciation) of
investments.............. (40) (3) 9,747 785 (4,621) 110
------- ---- -------- ------- ------- ------
Net Increase (Decrease) in
net assets resulting from
operations................ 10 -- 23,682 2,217 1,590 273
------- ---- -------- ------- ------- ------
From Unit Transactions:
Contributions............. 1,812 83 141,486 21,955 25,410 2,995
Withdrawals............... -- -- (1,292) -- (79) --
Net Transfers............. (1,039) (38) 7,080 19,823 12,758 3,050
------- ---- -------- ------- ------- ------
Net Increase (Decrease)
from unit transactions.... 773 45 147,274 41,778 38,089 6,045
------- ---- -------- ------- ------- ------
Net Increase (Decrease) in
Net Assets................ 783 45 170,956 43,995 39,679 6,318
Net Assets:
Beginning of Year/Period... 45 -- 44,355 360 6,318 --
------- ---- -------- ------- ------- ------
End of Year/Period......... $ 828 $ 45 $215,311 $44,355 $45,997 $6,318
======= ==== ======== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
---------------- --------------- ----------------
1996 1995(C) 1996 1995(A) 1996 1995(A)
------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income
(loss).................... $ 815 $ 58 $ 36 $ 18 $ 146 $ 2
Net realized gain (loss) on
investments............... 160 -- 6 -- 11 --
Net unrealized appreciation
(depreciation) of
investments............... (688) 43 (20) (17) (133) (2)
------- ------- ------ ---- ------- ----
Net Increase (Decrease) in
net assets resulting from
operations................. 287 101 22 1 24 --
------- ------- ------ ---- ------- ----
From Unit Transactions:
Contributions.............. 16,685 2,360 836 393 1,878 80
Withdrawals................ (36) -- -- -- -- --
Net Transfers.............. (9,398) (1,098) (156) (62) (1,388) (48)
------- ------- ------ ---- ------- ----
Net Increase (Decrease) from
unit transactions.......... 7,251 1,262 680 331 490 32
------- ------- ------ ---- ------- ----
Net Increase (decrease) in
Net Assets................. 7,538 1,363 702 332 514 32
Net Assets:
Beginning of Year/Period.... 1,363 -- 332 -- 32 --
------- ------- ------ ---- ------- ----
End of Year/Period.......... $ 8,901 $ 1,363 $1,034 $332 $ 546 $ 32
======= ======= ====== ==== ======= ====
</TABLE>
- -------
* Except for the periods noted.
(a) For the period August 25, 1995 (Commencement of Operations) to December 31,
1995.
(b) For the period February 23, 1995 (Commencement of Operations) to December
31, 1995.
(c) For the period March 3, 1995 (Commencement of Operations) to December 31,
1995.
The accompanying notes are an integral part of these financial statements.
X
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS* ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------
COMPOSITE AGGRESSIVE EQUITY
FUND FUND
----------------- ------------------
1996 1995(B) 1996 1995
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss)............ $ 18,378 $ 493 $ 10,358 $ 1,236
Net realized gain (loss) on investments. 1,028 -- 4,488 --
Net unrealized appreciation (deprecia-
tion) of investments................... (10,231) (198) (7,427) (239)
-------- ------ -------- --------
Net Increase (Decrease) in net assets re-
sulting from operations................. 9,175 295 7,419 997
-------- ------ -------- --------
From Unit Transactions:
Contributions........................... 102,419 8,009 51,635 13,503
Withdrawals............................. (815) -- (402) --
Net Transfers........................... (18,407) 807 8,080 3,065
-------- ------ -------- --------
Net Increase (Decrease) from unit trans-
actions................................. 83,197 8,816 59,313 16,568
-------- ------ -------- --------
Net Increase (decrease) in Net Assets.... 92,372 9,111 66,732 17,565
Net Assets:
Beginning of Year/Period................. 9,111 -- 17,748 183
-------- ------ -------- --------
End of Year/Period....................... $101,483 $9,111 $ 84,480 $ 17,748
======== ====== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
----------------------------------------------------
CAPITAL GROWTH INTERNATIONAL
BOND FUND FUND FUNDS
----------------- ----------------- ---------------
1996 1995(A) 1996 1995 1996 1995
-------------------------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income..... $ 55 $ -- $ 3,008 $ 303 ($284) ($21)
Net realized gain (loss)
on investments........... 521 -- 26,960 113 20,574 --
Net unrealized
appreciation
(depreciation)........... (506) 2 (18,445) 2,863 (17,740) 85
-------- ----- -------- ------- ------- ------
Net Increase (Decrease) in
net assets resulting from
operations................ 70 2 11,523 3,279 2,550 64
-------- ----- -------- ------- ------- ------
From Unit Transactions:
Contributions............. 3,469 544 81,156 31,456 55,906 7,450
Withdrawals............... (55) -- (691) -- (65) --
Net Transfers............. (2,503) (148) (17,444) (8,050) 2,880 776
-------- ----- -------- ------- ------- ------
Net Increase (Decrease)
from unit transactions.... 911 396 63,021 23,406 58,721 8,226
-------- ----- -------- ------- ------- ------
Net Increase (Decrease) in
Net Assets................ 981 398 74,544 26,685 61,271 8,290
Net Assets:
Beginning of Year/Period... 398 -- 37,492 10,807 8,471 181
-------- ----- -------- ------- ------- ------
End of Year/Period......... $ 1,379 $ 398 $112,036 $37,492 $69,742 $8,471
======== ===== ======== ======= ======= ======
</TABLE>
- -------
* Except for the periods noted.
(a) For the period August 25, 1995 (Commencement of Operations) to December 31,
1995.
(b) For the period February 23, 1995 (Commencement of Operations) to December
31, 1995.
The accompanying notes are an integral part of these financial statements.
XI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
TCI CALVERT
---------------- ----------------
RESPONSIBLY
GROWTH INVESTED
FUND FUND
---------------- ----------------
1996 1995(B) 1996 1995(A)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income...................... $ 5,195 ($23) $ 518 $ 23
Net realized gain (loss) on investments.... (819) -- 2,111 --
Net unrealized appreciation (depreciation). (7,075) (83) (2,455) (22)
------- ------- ------- ----
Net Increase (Decrease) in net assets re-
sulting from operations.................... (2,699) (106) 174 1
------- ------- ------- ----
From Unit Transactions:
Contributions.............................. 22,862 50,597 7,215 528
Withdrawals................................ (3,014) -- (11) --
Net Transfers.............................. (2,578) 3,207 (2,331) (297)
------- ------- ------- ----
Net Increase (Decrease) from unit transac-
tions...................................... 17,270 53,804 4,873 231
------- ------- ------- ----
Net Increase (Decrease) in Net Assets....... 14,571 53,698 5,047 232
Net Assets:
Beginning of Year/Period.................... 53,698 -- 232 --
------- ------- ------- ----
End of Year/Period.......................... $68,269 $53,698 $ 5,279 $232
======= ======= ======= ====
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
----------------------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
----------------- ----------------- ----------------
1996 1995(A) 1996 1995(B) 1996 1995(A)
-------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net As-
sets:
From Operations:
Net investment income. $ 41 $ 2 ($753) $ 15 $ 896 ($30)
Net realized gain
(loss) on
investments.......... 21,966 -- 37,528 -- 7,735 --
Net unrealized
appreciation
(depreciation) of
investments.......... (19,580) 160 (24,248) 57 (5,635) 408
-------- ------ -------- ------- ------- -------
Net Increase (Decrease)
in net assets
resulting from
operations............ 2,427 162 12,527 72 2,996 378
-------- ------ -------- ------- ------- -------
From Unit Transactions:
Contributions......... 55,772 6,544 53,192 10,045 34,846 20,045
Withdrawals........... (1,482) -- (490) -- (56) --
Net Transfers......... (12,956) 2,022 34,973 357 (9,449) (1,983)
-------- ------ -------- ------- ------- -------
Net Increase (Decrease)
from unit
transactions.......... 41,334 8,566 87,675 10,402 25,341 18,062
-------- ------ -------- ------- ------- -------
Net Increase (Decrease)
in Net Assets......... 43,761 8,728 100,202 10,474 28,337 18,440
Net Assets:
Beginning of
Year/Period........... 8,728 -- 10,474 -- 18,440 --
-------- ------ -------- ------- ------- -------
End of Year/Period..... $ 52,489 $8,728 $110,676 $10,474 $46,777 $18,440
======== ====== ======== ======= ======= =======
</TABLE>
- -------
* Except for the periods noted.
(a) For the period August 25, 1995 (Commencement of Operations) to December 31,
1995.
(b) For the period June 19, 1995 (Commencement of Operations) to December 31,
1995.
The accompanying notes are an integral part of these financial statements.
XII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
Separate Account No. 3 of The American Life Insurance Company ("the
Company") was established in conformity with New York Insurance Law and
commenced operations on December 21, 1994 as a unit investment trust. On that
date, the following American Life funds became available as investment
options: Money Market Fund, All America Fund, Bond Fund, Composite Fund,
Equity Index Fund, Short-Term Bond Fund, Mid-Term Bond Fund, Aggressive Equity
Fund, Scudder Bond Fund, Scudder Capital Growth Fund, Scudder International
Fund, TCI Growth Fund, and the Calvert Responsibly Invested Balanced Fund. The
American Life funds invest in a corresponding Fund of Mutual of America
Investment Corporation ("Investment Company"), Portfolio of Scudder Variable
Life Investment Fund ("Scudder"), Fund of TCI Portfolios Inc. ("TCI") and a
corresponding Fund of Calvert Responsibly Invested Balanced Portfolio
(formerly "Calvert Socially Responsible Series") of Acacia Capital Corporation
("Calvert").
On May 1, 1995, Fidelity Investments Equity-Income, Contrafund and Asset
Manager Funds became available to Separate Account No. 3 as investment
options. The Fidelity Equity-Income Fund invests in the corresponding
Portfolio of the Fidelity Variable Insurance Products Fund and the Contrafund
and Asset Manager Funds invest in corresponding Portfolios of the Fidelity
Variable Insurance Products Fund II (collectively, "Fidelity").
Separate Account No. 3 was formed by the Company to support the operations
of the Company's variable universal life insurance policies. The assets of
Separate Account No. 3 are the property of the Company. The portion of
Separate Account No. 3's assets applicable to the policies will not be charged
with liabilities arising out of any other business the Company may conduct.
The significant accounting policies of Separate Account No. 3 are as
follows:
Investment Valuation -- Investments are made in shares of the Investment
Company, Scudder, TCI, Calvert and Fidelity and are valued at the reported net
asset values of the respective Funds and 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. 3 will be treated as a part of
the Company and will not be taxed separately as a "regulated investment
company" under existing law. The Company is taxed as a life insurance company
under the life insurance tax provisions of the Internal Revenue Code of 1986.
No provision for income taxes is required in the accompanying financial
statements.
2. INVESTMENTS
The number of shares owned by Separate Account No. 3 and the respective net
asset values (rounded to the nearest cent) per share at December 31, 1996 are
as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
--------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund................................... 932 $1.19
All America Fund.................................... 95,872 2.44
Equity Index Fund................................... 30,344 1.59
Bond Fund........................................... 9,589 1.38
Short-Term Bond Fund................................ 1,109 1.03
Mid-Term Bond Fund.................................. 1,162 0.90
Composite Fund...................................... 88,194 1.77
Aggressive Equity Fund.............................. 54,721 1.47
Scudder Portfolios:
Bond Fund........................................... 372 6.73
Capital Growth Fund................................. 7,374 16.50
International Fund.................................. 4,195 13.25
</TABLE>
XIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
--------- ---------
<S> <C> <C>
TCI Growth Fund........................................ 6,720 10.24
Calvert Responsibly Invested Fund...................... 4,065 1.77
Fidelity Portfolios:
Equity-Income Fund.................................... 2,632 21.03
Contrafund............................................ 6,272 16.56
Asset Manager Fund.................................... 2,903 16.93
</TABLE>
3. EXPENSES
Administrative Fees and Expenses and Cost of Insurance -- In connection with
its administrative functions, the Company deducts daily charges at an annual
rate of .40% (except for the TCI Growth Fund for which the rate charged is
.20%) from the value of the net assets of each fund. Monthly charges equaling
the lesser of $2.00 or 1/12 of 1% of account value may also be deducted. The
cost of insurance charges, to compensate the Company for life insurance
coverage provided under the policies, are deducted monthly and reflected as
net transfers in the accompanying financial statements.
Mortality and Expense Risk Fees -- The Company assumes the risk that
insureds may live for a shorter period of time than estimated for purposes of
current or guaranteed cost of insurance rates; for this it deducts a risk
charge daily at an annual rate of .70% from the value of the net assets of
each fund. An expense risk charge, deducted daily at an annual rate of .15%
from the value of the net assets of each fund, compensates the Company for the
risk that administrative expenses incurred are greater than estimated.
4. DIVIDENDS
All dividend distributions are reinvested in additional shares of the
respective Funds or Portfolios at net asset value. On December 30, 1996 a
dividend distribution was declared by the Investment Company to shareholders
of record December 30, 1996. The dividend was paid on December 31, 1996. In
addition, the Investment Company declared and paid a dividend distribution on
September 15, 1996. The combined amount of these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund.................................................. $ 45
All America Fund................................................... 11,710
Equity Index Fund.................................................. 1,618
Bond Fund.......................................................... 874
Short-Term Bond Fund............................................... 44
Mid-Term Bond Fund................................................. 148
Composite Fund..................................................... 19,214
Aggressive Equity Fund............................................. 10,896
</TABLE>
On January 29, 1996, April 26, 1996, July 29, 1996, and October 29, 1996,
dividends were paid by the Scudder Bond Portfolio. The combined amount of the
dividends was $68.
On January 29, 1996, February 27, 1996, April 26, 1996, July 29, 1996, and
October 29, 1996 dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $3,875.
On February 27, 1996 and April 26, 1996, dividends were paid by the Scudder
International Portfolio. The combined amount of the dividends was $196.
On March 30, 1996, a dividend was paid by the TCI Growth Fund. The amount of
the dividend was $5,841.
On December 31, 1996, a dividend was paid by the Calvert Responsibly
Invested Portfolio. The amount of the dividend was $541.
On February 2, 1996, a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $422.
XIV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On February 2, 1996, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $97.
On February 2, 1996, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $1,224.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding for the year
ended December 31, 1996 and each of the previous years ended December 31:
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX
FUND FUND FUND BOND FUND
------------- -------------------- -------------- -------------
1996 1995(A) 1996 1995 1994(B) 1996 1995(C) 1996 1995(D)
----- ------- ------ ----- ------- ------ ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $1.80 $1.77 $4.52 $3.36 $3.32 $1.42 $1.25 $2.69 $2.36
===== ===== ====== ===== ===== ====== ===== ===== =====
Unit value, end of
year/period............ $1.87 $1.80 $5.39 $4.52 $3.36 $1.72 $1.42 $2.75 $2.69
===== ===== ====== ===== ===== ====== ===== ===== =====
Units outstanding, end
of year/period......... 442 25 39,912 9,813 107 26,794 4,449 3,239 507
===== ===== ====== ===== ===== ====== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------------------
SHORT-TERM MID-TERM AGGRESSIVE
BOND FUND BOND FUND COMPOSITE FUND EQUITY FUND
-------------- -------------- -------------- ---------------------
1996 1995(A) 1996 1995(A) 1996 1995(C) 1996 1995 1994(B)
------ ------- ------ ------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 1.10 $1.08 $ 1.16 $1.11 $3.39 $3.14 $1.43 $1.05 $1.03
====== ===== ====== ===== ====== ===== ====== ====== =====
Unit value, end of
year/period............ $1.14 $1.10 $1.19 $1.16 $3.75 $3.39 $1.80 $1.43 $1.05
====== ===== ====== ===== ====== ===== ====== ====== =====
Units outstanding, end
of year/period......... 908 302 460 28 27,055 2,688 46,985 12,411 174
====== ===== ====== ===== ====== ===== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
SCUDDER TCI
---------------------------------------------------------- --------------
BOND CAPITAL GROWTH INTERNATIONAL GROWTH
FUND FUND FUND FUND
-------------- --------------------- --------------------- ------------------
1996 1995(A) 1996 1995 1994(B) 1996 1995 1994(B) 1996 1995(E)
------ ------- ------ ------ ------- ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $11.30 $10.68 $18.64 $14.67 $14.50 $11.85 $10.80 $10.66 $12.18 $11.14
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
year/period............ $11.48 $11.30 $22.11 $18.64 $14.67 $13.43 $11.85 $10.80 $11.53 $12.18
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Units outstanding, end
of year/period......... 120 35 5,067 2,011 737 5,193 715 17 5,921 4,409
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
CALVERT FIDELITY
------------- --------------------------------------------
VIP VIP II
RESPONSIBLY EQUITY-INCOME VIP II ASSET MANAGER
INVESTED FUND FUND CONTRA FUND FUND
------------- -------------- -------------- --------------
1996 1995(A) 1996 1995(A) 1996 1995(E) 1996 1995(A)
----- ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $2.01 $ 1.89 $19.43 $17.68 $13.85 $12.41 $15.66 $14.87
===== ====== ====== ====== ====== ====== ====== ======
Unit value, end of
year/period............ $2.23 $ 2.01 $21.93 $19.43 $16.59 $13.85 $17.72 $15.66
===== ====== ====== ====== ====== ====== ====== ======
Units outstanding, end
of year/period......... 2,364 115 2,393 449 6,672 756 2,639 1,178
===== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- -------
(a) For the period August 25, 1995 (Commencement of Operations) to December
31, 1995.
(b) For the period December 21, 1994 (Commencement of Operations) to December
31, 1994.
(c) For the period February 23, 1995 (Commencement of Operations) to December
31, 1995.
(d) For the period March 3, 1995 (Commencement of Operations) to December 31,
1995.
(e) For the period June 19, 1995 (Commencement of Operations) to December 31,
1995.
XV
<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. 3 as of December 31, 1996, 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 three years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Separate Account's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
American Life Separate Account No. 3 as of December 31, 1996, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
February 21, 1997
XVI
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 Park Avenue New York, New York 10022-6839 212-224-1700
A subsidiary of Mutual of America Life Insurance Company
Mutual of America Life Insurance Company is a Registered Broker-Dealer and
distributes the variable products of The American Life Insurance Company of New
York
