<PAGE>
American Life
SEPARATE ACCOUNT NO. 3
ANNUAL REPORT
&
ANNUAL REPORTS OF
MUTUAL OF AMERICA INVESTMENT CORPORATION
SCUDDER VARIABLE LIFE INVESTMENT FUND
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS
FUND II:
CONTRAFUND AND ASSET MANAGER PORTFOLIOS
DECEMBER 31, 1997
This report is not to be construed as an offering for sale of any Variable
Policy. 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, 1997
Dear Policyowner:
We are pleased to send you the 1997 Annual Report of American Life's
Separate Account No. 3. This Account, which commenced operations in late 1994,
is an investment vehicle for owners of our Variable Universal Life policies.
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, Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite and Aggressive Equity Funds; three
portfolios of Scudder Variable Life Investment Fund ("Scudder"): The Bond,
Capital Growth and International Portfolios; the VP Capital Appreciation Fund
(formerly TCI Growth) of American Century Variable Portfolios, Inc. ("American
Century"); the Balanced Portfolio of Acacia Capital Corporation's Calvert
Responsibly Invested Balanced Portfolios ("Calvert"); the Equity-Income
Portfolio of Fidelity Investments Variable Insurance Products Fund ("Fidelity
VIP"); and the Contrafund and Asset Manager Portfolios of Fidelity Investments
Variable Insurance Products Fund II ("Fidelity VIP II").
Each of the Funds of Separate Account No. 3 owns shares in a similarly named
fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert, portfolio of Fidelity VIP and portfolio of
Fidelity VIP II. The investment results of each of the funds of Separate
Account No. 3 are based on the performance of the corresponding funds or
portfolios of the Investment Company, Scudder, American Century, Calvert,
Fidelity VIP and Fidelity VIP II.
The Separate Account funds invest in funds and portfolios which have the
following investment objectives:
THE INVESTMENT COMPANY MONEY MARKET FUND: This Fund seeks to obtain high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital through investments in money
market instruments and other short-term debt securities.
THE INVESTMENT COMPANY ALL AMERICA FUND: The investment objective for
approximately 60% of the assets of this Fund (the "Indexed Assets") is to
provide investment results that, to the extent practical, correspond to the
performance of the Standard & Poor's 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.
I
<PAGE>
THE INVESTMENT COMPANY AGGRESSIVE EQUITY FUND: The investment objective for
approximately half of the assets of the Fund is to achieve capital
appreciation by investing in companies believed to possess above-average
growth potential. Growth can be in the areas of earnings or gross sales which
can be measured in either dollars or in unit volume. The investment objective
for the other half of the assets of the Fund is to achieve capital
appreciation by investing in companies believed to possess valuable assets or
whose securities are undervalued in the marketplace in relation to factors
such as a company's assets, earnings or growth potential.
THE SCUDDER BOND PORTFOLIO: This Portfolio seeks a high level of income
consistent with the prudent investment of capital through a flexible
investment program emphasizing high-grade bonds.
THE SCUDDER CAPITAL GROWTH PORTFOLIO: This Portfolio seeks to maximize long-
term capital growth by investing primarily in common stocks of medium-to-large
sized U.S. companies. The Portfolio seeks to keep the value of its shares more
stable than other capital growth mutual funds. While current income is not a
stated objective of the Portfolio, many of the Portfolio's securities may
provide regular dividends, which are also expected to grow over time.
THE SCUDDER INTERNATIONAL PORTFOLIO: This Portfolio seeks long-term growth
of capital primarily through a diversified portfolio of foreign equity
securities.
VP CAPITAL APPRECIATION FUND: This Fund seeks capital growth over time by
investing primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. (Prior to May 1, 1997, this
Fund was known as TCI Growth Fund).
THE CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO: This Portfolio seeks a
total return above the rate of inflation through an actively managed portfolio
of stocks, bonds and money market instruments selected with a concern for the
social impact of each investment. (As of January 1, 1998, the name was changed
to Calvert Social Balanced Portfolio).
THE FIDELITY VIP EQUITY-INCOME PORTFOLIO: This Portfolio seeks reasonable
income by investing primarily in income-producing equity securities while also
considering the potential for capital appreciation. The Portfolio also seeks
to achieve a yield that exceeds the composite yield on the securities
comprising the S&P 500.
THE FIDELITY VIP II CONTRAFUND PORTFOLIO: This Portfolio seeks long-term
capital appreciation by investing primarily in a broad variety of common
stocks using both growth-oriented and contrarian disciplines.
THE FIDELITY VIP II ASSET MANAGER PORTFOLIO: This Portfolio seeks high long-
term return with reduced risk by using a broadly diversified mix of stocks,
bonds and short-term fixed-income investments.
For the year ended December 31, 1997, the following total returns were
experienced in these sixteen Separate Account funds:
<TABLE>
<S> <C>
Investment Company Money Market Fund(1)............................. + 3.1%
Investment Company All America Fund................................. +24.0%
Investment Company Equity Index Fund................................ +30.1%
Investment Company Bond Fund........................................ + 8.0%
Investment Company Short-Term Bond Fund............................. + 3.7%
Investment Company Mid-Term Bond Fund............................... + 5.0%
Investment Company Composite Fund................................... +15.1%
Investment Company Aggressive Equity Fund........................... +18.5%
Scudder Bond Fund................................................... + 6.7%
Scudder Capital Growth Fund......................................... +32.7%
Scudder International Fund.......................................... + 6.6%
American Century VP Capital Appreciation Fund....................... - 5.2%
Calvert Responsibly Invested Balanced Fund.......................... +17.4%
Fidelity VIP Equity-Income Fund..................................... +25.4%
Fidelity VIP II Contrafund.......................................... +21.5%
Fidelity VIP II Asset Manager Fund.................................. +18.1%
</TABLE>
-------
(1) The current seven-day net annualized yield as of 2/17/98 was 3.43%
and is not necessarily indicative of future actual yields.
II
<PAGE>
Total return is equal to the changes in the value of a unit of participation
in a fund from the beginning to the end of the specified period. It reflects
investment income earned and reinvested plus the changes in the market value
(whether realized or unrealized) of the securities in the respective fund or
portfolio of the Investment Company, Scudder, American Century, Calvert or
Fidelity during the indicated period. Results are net of all charges,
including a monthly service charge (assessed against an average account
balance for all policyowners) 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 American
Century, portfolio of Calvert and portfolios of Fidelity VIP and VIP II.
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..................................... V
Statement of Operations................................................. VII
Statements of Changes in Net Assets..................................... IX
Notes to Financial Statements........................................... XII
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..................................................... 19
Bond Fund............................................................. 25
Short-Term Bond Fund.................................................. 28
Mid-Term Bond Fund.................................................... 30
Composite Fund........................................................ 32
Aggressive Equity Fund................................................ 36
Statement of Assets and Liabilities..................................... 39
Statement of Operations................................................. 40
Statements of Changes in Net Assets..................................... 41
Financial Highlights.................................................... 43
Notes to Financial Statements........................................... 49
Report of Independent Public Accountants................................ 54
ANNUAL REPORT OF SCUDDER VARIABLE LIFE INVESTMENT FUND
ANNUAL REPORT OF VP CAPITAL APPRECIATION FUND OF AMERICAN CENTURY
VARIABLE PORTFOLIOS, INC.
ANNUAL REPORT OF CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO OF
ACACIA CAPITAL CORPORATION
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: CONTRAFUND PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: ASSET MANAGER PORTFOLIO
</TABLE>
IV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<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 Corpora-
tion at market value
(Cost:
Money Market Fund--$3,571
All America Fund--$530,105
Equity Index Fund--$143,348
Bond Fund--$22,010)
(Notes 1 and 2)............. $3,427 $550,696 $161,635 $ 21,806
Due From (To) General Ac-
count....................... (1) (1,641) (143) (218)
------ -------- -------- --------
Net Assets................... $3,426 $549,055 $161,492 $ 21,588
====== ======== ======== ========
Unit Value at December 31,
1997 (Note 5)............... $ 1.95 $ 6.76 $ 2.26 $ 3.00
====== ======== ======== ========
Number of Units Outstanding
at December 31, 1997 (Note
5).......................... 1,755 81,264 71,579 7,204
====== ======== ======== ========
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------
AGGRESSIVE
SHORT-TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of
America Investment Corpora-
tion at market value
(Cost:
Short-Term Bond Fund --
$1,874
Mid-Term Bond Fund -- $1,889
Composite Fund -- $398,294
Aggressive Equity Fund --
$228,361)
(Notes 1 and 2)............. $1,825 $ 1,813 $349,263 $221,740
Due From (To) General Ac-
count....................... (1) (82) (3,017) 409
------ -------- -------- --------
Net Assets................... $1,824 $ 1,731 $346,246 $222,149
====== ======== ======== ========
Unit Value at December 31,
1997 (Note 5)............... $ 1.19 $ 1.26 $ 4.36 $ 2.15
====== ======== ======== ========
Number of Units Outstanding
at December 31, 1997 (Note
5).......................... 1,530 1,374 79,417 103,218
====== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
V
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMERICAN
SCUDDER CENTURY CALVERT
------------------------------- ------------ -----------
CAPITAL VP CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL APPRECIATION INVESTED
FUND FUND FUND FUND FUND
------ -------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Scudder Portfolios,
American Century VP Capital
Appreciation Fund and Calvert
Responsibly Invested Portfolio at
market value
(Cost:
Scudder Bond Fund-- $ 6,570
Scudder Capital Growth Fund-- $403,695
Scudder International Fund-- $139,175
American Century VP Capital
Appreciation Fund-- $ 90,326
Calvert Responsibly Invested Fund--
$ 30,979)
(Notes 1 and 2)....................... $4,245 $416,017 $106,552 $80,732 $25,882
Due From (To) General Account.......... (42) (1,917) 154 (356) (38)
------ -------- -------- ------- -------
Net Assets............................. $4,203 $414,100 $106,706 $80,376 $25,844
====== ======== ======== ======= =======
Unit Value at December 31, 1997 (Note
5).................................... $12.37 $ 29.64 $ 14.46 $ 11.04 $ 2.65
====== ======== ======== ======= =======
Number of Units Outstanding at December
31, 1997 (Note 5)..................... 340 13,970 7,377 7,282 9,760
====== ======== ======== ======= =======
</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--
$169,423
VIP II Contra Fund-- $232,384
VIP II Asset Manager Fund--
$105,872)
(Notes 1 and 2)........................ $155,618 $235,494 $100,469
Due From (To) General Account........... (1,955) (174) (228)
-------- -------- --------
Net Assets.............................. $153,663 $235,320 $100,241
======== ======== ========
Unit Value at December 31, 1997 (Note
5)..................................... $ 27.77 $ 20.36 $ 21.14
======== ======== ========
Number of Units Outstanding at December
31, 1997 (Note 5)...................... 5,533 11,560 4,742
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<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.............. $213 $67,427 $ 3,403 $ 1,398
---- ------- ------- -------
Total income........... 213 67,427 3,403 1,398
---- ------- ------- -------
Expenses (Note 3):
Fees and Administrative
Expenses.............. 26 4,945 1,419 235
Total Expenses.......... 26 4,945 1,419 235
---- ------- ------- -------
Net Investment Income
(Loss)................. 187 62,482 1,984 1,163
---- ------- ------- -------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain
(loss) on investments. (1) 8,270 3,540 53
Net unrealized
appreciation
(depreciation) of
investments........... (101) 10,051 22,798 527
---- ------- ------- -------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (102) 18,321 26,338 580
---- ------- ------- -------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ $ 85 $80,803 $28,322 $ 1,743
==== ======= ======= =======
<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.............. $114 $ 110 $77,287 $21,953
---- ------- ------- -------
Total income........... 114 110 77,287 21,953
---- ------- ------- -------
Expenses (Note 3):
Fees and Administrative
Expenses.............. 21 18 3,096 1,879
Total Expenses.......... 21 18 3,096 1,879
---- ------- ------- -------
Net Investment Income
(Loss)................. 93 92 74,191 20,074
---- ------- ------- -------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain on
investments........... 15 (65) 2,976 968
Net unrealized
appreciation
(depreciation) of
investments........... (12) 59 (38,603) 1,024
---- ------- ------- -------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 3 (6) (35,627) 1,992
---- ------- ------- -------
Net Increase (Decrease)
in Net Assets Resulting
From Operations ....... $ 96 $ 86 $38,564 $22,066
==== ======= ======= =======
</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, 1997
<TABLE>
<CAPTION>
SCUDDER AMERICAN CENTURY CALVERT
----------------------------- ---------------- -----------
CAPITAL VP CAPITAL RESPONSIBLY
BOND GROWTH INTERNATIONAL APPRECIATION INVESTED
FUND FUND FUND FUND FUND
------ ------- ------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends.............. $ 235 $12,671 $ 1,533 $ 1,480 $1,800
------ ------- ------- ------- ------
Total income........... 235 12,671 1,533 1,480 1,800
------ ------- ------- ------- ------
Expenses (Note 3):
Fees and Administrative
Expenses.............. 45 3,276 1,100 790 209
------ ------- ------- ------- ------
Total Expenses.......... 45 3,276 1,100 790 209
------ ------- ------- ------- ------
Net Investment Income
(Loss)................. 190 9,395 433 690 1,591
------ ------- ------- ------- ------
Net Realized and
Unrealized Gain (Loss)
On Investments (Note
1):
Net realized gain
(loss) on investments. 1,921 23,338 18,444 (1,449) 3,885
Net unrealized
appreciation
(depreciation) of
investments........... (1,821) 27,860 (14,970) (2,436) (2,620)
------ ------- ------- ------- ------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 100 51,198 3,474 (3,885) 1,265
------ ------- ------- ------- ------
Net Increase (Decrease)
in Net Assets Resulting
From Operations ....... $ 290 $60,593 $ 3,907 $(3,195) $2,856
====== ======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
-----------------------
VIP VIP II VIP II
EQUITY- ASSET
INCOME CONTRA MANAGER
FUND FUND FUND
------- ------- -------
<S> <C> <C> <C>
Investment Income and Expenses:
Income (Notes 1 and 4):
Dividends............................................ $ 6,675 $ 3,702 $ 6,181
------- ------- -------
Total income......................................... 6,675 3,702 6,181
------- ------- -------
Expenses (Note 3):
Fees and Administrative Expenses..................... 1,230 2,050 814
------- ------- -------
Total Expenses........................................ 1,230 2,050 814
------- ------- -------
Net Investment Income (Loss).......................... 5,445 1,652 5,367
------- ------- -------
Net Realized and Unrealized Gain (Loss) on Investments
(Note 1):
Net realized gain (loss) on investments.............. 12,348 5,525 6,538
Net unrealized appreciation (depreciation) of invest-
ments............................................... 5,615 27,301 (176)
------- ------- -------
Net Realized and Unrealized Gain (Loss) on Invest-
ments................................................ 17,963 32,826 6,362
------- ------- -------
Net Increase (Decrease) in Net Assets Resulting From
Operations........................................... $23,408 $34,478 $11,729
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<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 EQUITY INDEX
FUND ALL AMERICA FUND FUND
---------------- ------------------ -----------------
1997 1996 1997 1996 1997 1996
------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net As-
sets:
From Operations:
Net investment income
(loss)................ $ 187 $ 42 $ 62,482 $ 10,078 $ 1,984 $ 1,429
Net realized gain
(loss) on investments. (1) 8 8,270 3,857 3,540 4,782
Net unrealized
appreciation
(depreciation) of
investments........... (101) (40) 10,051 9,747 22,798 (4,621)
------- ------- -------- -------- -------- -------
Net Increase (Decrease)
in net assets resulting
from operations........ 85 10 80,803 23,682 28,322 1,590
------- ------- -------- -------- -------- -------
From Unit Transactions:
Contributions.......... 5,245 1,812 192,506 141,486 113,705 25,410
Withdrawals............ (116) -- (16,643) (1,292) (8,950) (79)
Net Transfers.......... (2,616) (1,039) 77,078 7,080 (17,582) 12,758
------- ------- -------- -------- -------- -------
Net Increase (Decrease)
from unit transactions. 2,513 773 252,941 147,274 87,173 38,089
------- ------- -------- -------- -------- -------
Net Increase (Decrease)
in Net Assets.......... 2,598 783 333,744 170,956 115,495 39,679
Net Assets:
Beginning of Year....... 828 45 215,311 44,355 45,997 6,318
------- ------- -------- -------- -------- -------
End of Year............. $ 3,426 $ 828 $549,055 $215,311 $161,492 $45,997
======= ======= ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
----------------- -------------- ----------------
1997 1996 1997 1996 1997 1996
-------- ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net As-
sets:
From Operations:
Net investment income
(loss)................ $ 1,163 $ 815 $ 93 $ 36 $ 92 $ 146
Net realized gain
(loss) on investments. 53 160 15 6 (65) 11
Net unrealized
appreciation
(depreciation) of
investments........... 527 (688) (12) (20) 59 (133)
-------- ------- ------ ------ ------- -------
Net Increase (Decrease)
in net assets resulting
from operations........ 1,743 287 96 22 86 24
-------- ------- ------ ------ ------- -------
From Unit Transactions:
Contributions.......... 25,566 16,685 1,200 836 3,609 1,878
Withdrawals............ (1,237) (36) (234) -- -- --
Net Transfers.......... (13,385) (9,398) (272) (156) (2,510) (1,388)
-------- ------- ------ ------ ------- -------
Net Increase (Decrease)
from unit transactions. 10,944 7,251 694 680 1,099 490
-------- ------- ------ ------ ------- -------
Net Increase (Decrease)
in Net Assets.......... 12,687 7,538 790 702 1,185 514
Net Assets
Beginning of Year....... 8,901 1,363 1,034 332 546 32
-------- ------- ------ ------ ------- -------
End of Year............. $ 21,588 $ 8,901 $1,824 $1,034 $ 1,731 $ 546
======== ======= ====== ====== ======= =======
</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
-------------------------------------
AGGRESSIVE
COMPOSITE FUND EQUITY FUND
------------------ -----------------
1997 1996 1997 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss)........... $ 74,191 $ 18,378 $ 20,074 $10,358
Net realized gain (loss) on invest-
ments................................. 2,976 1,028 968 4,488
Net unrealized appreciation (deprecia-
tion) of investments.................. (38,603) (10,231) 1,024 (7,427)
-------- -------- -------- -------
Net Increase (Decrease) in net assets
resulting from operations.............. 38,564 9,175 22,066 7,419
-------- -------- -------- -------
From Unit Transactions:
Contributions.......................... 111,675 102,419 145,655 51,635
Withdrawals............................ (4,754) (815) (5,821) (402)
Net Transfers.......................... 99,278 (18,407) (24,231) 8,080
-------- -------- -------- -------
Net Increase (Decrease) from unit
transactions........................... 206,199 83,197 115,603 59,313
-------- -------- -------- -------
Net Increase (Decrease) in Net Assets... 244,763 92,372 137,669 66,732
Net Assets:
Beginning of Year....................... 101,483 9,111 84,480 17,748
-------- -------- -------- -------
End of Year............................. $346,246 $101,483 $222,149 $84,480
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
---------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
------- ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net As-
sets:
From Operations:
Net investment income.. $ 190 $ 55 $ 9,395 $ 3,008 $ 433 $ (284)
Net realized gain
(loss) on investments. 1,921 521 23,338 26,960 18,444 20,574
Net unrealized
appreciation
(depreciation) on
investments........... (1,821) (506) 27,860 (18,445) (14,970) (17,740)
------- ------- --------- --------- --------- ---------
Net Increase (Decrease)
in net assets resulting
from operations........ 290 70 60,593 11,523 3,907 2,550
------- ------- --------- --------- --------- ---------
From Unit Transactions:
Contributions.......... 7,137 3,469 118,952 81,156 35,724 55,906
Withdrawals............ (80) (55) (13,128) (691) (7,350) (65)
Net Transfers.......... (4,523) (2,503) 135,647 (17,444) 4,683 2,880
------- ------- --------- --------- --------- ---------
Net Increase (Decrease)
from unit transactions. 2,534 911 241,471 63,021 33,057 58,721
------- ------- --------- --------- --------- ---------
Net Increase (Decrease)
in Net Assets.......... 2,824 981 302,064 74,544 36,964 61,271
Net Assets:
Beginning of Year....... 1,379 398 112,036 37,492 69,742 8,471
------- ------- --------- --------- --------- ---------
End of Year............. $ 4,203 $ 1,379 $ 414,100 $ 112,036 $ 106,706 $ 69,742
======= ======= ========= ========= ========= =========
</TABLE>
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>
AMERICAN CENTURY CALVERT
------------------ ----------------
VP CAPITAL RESPONSIBLY
APPRECIATION FUND INVESTED FUND
------------------ ----------------
1997 1996 1997 1996
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income................... $ 690 $ 5,195 $ 1,591 $ 518
Net realized gain (loss) on investments. (1,449) (819) 3,885 2,111
Net unrealized appreciation (deprecia-
tion) of investments................... (2,436) (7,075) (2,620) (2,455)
-------- -------- ------- -------
Net Increase (Decrease) in net assets re-
sulting from operations................. (3,195) (2,699) 2,856 174
-------- -------- ------- -------
From Unit Transactions:
Contributions........................... 28,353 22,862 27,549 7,215
Withdrawals............................. (1,802) (3,014) (1,511) (11)
Net Transfers........................... (11,249) (2,578) (8,329) (2,331)
-------- -------- ------- -------
Net Increase (Decrease) from unit trans-
actions................................. 15,302 17,270 17,709 4,873
-------- -------- ------- -------
Net Increase (Decrease) in Net Assets.... 12,107 14,571 20,565 5,047
Net Assets:
Beginning of Year........................ 68,269 53,698 5,279 232
-------- -------- ------- -------
End of Year.............................. $ 80,376 $ 68,269 $25,844 $ 5,279
======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
---------------------------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
------------------ ------------------ -----------------
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net As-
sets:
From Operations:
Net investment income
(loss)............... $ 5,445 $ 41 $ 1,652 $ (753) $ 5,367 $ 896
Net realized gain
(loss) on
investments.......... 12,348 21,966 5,525 37,528 6,538 7,735
Net unrealized
appreciation
(depreciation) of
investments.......... 5,615 (19,580) 27,301 (24,248) (176) (5,635)
-------- -------- -------- -------- -------- -------
Net Increase (Decrease)
in net assets
resulting from
operations............ 23,408 2,427 34,478 12,527 11,729 2,996
-------- -------- -------- -------- -------- -------
From Unit Transactions:
Contributions......... 115,463 55,772 90,026 53,192 54,797 34,846
Withdrawals........... (6,744) (1,482) (4,539) (490) (1,606) (56)
Net Transfers......... (30,953) (12,956) 4,679 34,973 (11,456) (9,449)
-------- -------- -------- -------- -------- -------
Net Increase (Decrease)
from unit
transactions.......... 77,766 41,334 90,166 87,675 41,735 25,341
-------- -------- -------- -------- -------- -------
Net Increase (Decrease)
in Net Assets......... 101,174 43,761 124,644 100,202 53,464 28,337
Net Assets:
Beginning of Year...... 52,489 8,728 110,676 10,474 46,777 18,440
-------- -------- -------- -------- -------- -------
End of Year............ $153,663 $ 52,489 $235,320 $110,676 $100,241 $46,777
======== ======== ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
XI
<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
alternatives: Money Market Fund, All America Fund, Equity Index Fund, Bond
Fund, Short-Term Bond Fund, Mid-Term Bond Fund, Composite Fund, Aggressive
Equity Fund, Scudder Bond Fund, Scudder Capital Growth Fund, Scudder
International Fund, American Century VP Capital Appreciation Fund (formerly
the TCI Growth Fund), and 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 Responsibly
Invested Balanced Portfolio 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
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 corresponding portfolios of 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, American Century, 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, 1997 are
as follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
--------- ---------
<S> <C> <C>
Investment Company Funds:
Money Market Fund..................................... 2,912 $ 1.18
All America Fund...................................... 203,162 2.71
Equity Index Fund..................................... 77,782 2.08
Bond Fund............................................. 15,278 1.43
Short-Term Bond Fund.................................. 1,788 1.02
Mid-Term Bond Fund.................................... 2,008 0.90
Composite Fund........................................ 215,345 1.62
Aggressive Equity Fund................................ 137,965 1.61
Scudder Portfolios:
Bond Portfolio........................................ 618 6.87
Capital Growth Portfolio--Class "A"................... 20,166 20.63
International Portfolio--Class "A".................... 7,551 14.11
American Century VP Capital Appreciation Fund.......... 8,340 9.68
Calvert Responsibly Invested Balanced Portfolio........ 13,059 1.98
</TABLE>
XII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF NET ASSET
SHARES VALUE
--------- ---------
<S> <C> <C>
Fidelity Portfolios:
Equity-Income--"Initial" Class........................ 6,409 $24.28
Contrafund--"Initial" Class........................... 11,810 19.94
Asset Manager--"Initial" Class........................ 5,578 18.01
</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 American Century for which the rate charged is .20%
and, effective in 1997, each Fidelity fund, for which the rate is .30%) 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, to compensate the Company for life insurance coverage provided
under the policies, is 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 mortality
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 31, 1997, a
dividend distribution by the Investment Company was made to shareholders of
record as of December 30, 1997. Prior thereto, a dividend was declared and
distributed on September 15, 1997. The combined amount of these dividends was
as follows:
<TABLE>
<S> <C>
Money Market Fund.................................................. $ 213
All America Fund................................................... 67,427
Equity Index Fund.................................................. 3,403
Bond Fund.......................................................... 1,398
Short-Term Bond Fund............................................... 114
Mid-Term Bond Fund................................................. 110
Composite Fund..................................................... 77,287
Aggressive Equity Fund............................................. 21,953
</TABLE>
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $235.
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $12,671.
On February 26, 1997, a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $1,533.
On March 29, 1997, a dividend was paid by the American Century VP Capital
Appreciation Fund. The amount of the dividend was $1,480.
On December 31, 1997, a dividend was paid by the Calvert Responsibly
Invested Portfolio. The amount of the dividend was $1,800.
On February 7, 1997, a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $6,675.
XIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On February 7, 1997, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $3,702.
On February 7, 1997, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $6,181.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding for the year
ended December 31, 1997 and for each of the previous years ended December 31:
<TABLE>
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND
----------------------- --------------------------------
1997 1996 1995(A) 1997 1996 1995 1994(B)
------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 1.87 $ 1.80 $ 1.77 $ 5.39 $ 4.52 $ 3.36 $3.32
======= ======= ====== ======== ======= ======= =====
Unit value, end of
year/period............ $ 1.95 $ 1.87 $ 1.80 $ 6.76 $ 5.39 $ 4.52 $3.36
======= ======= ====== ======== ======= ======= =====
Units outstanding, end
of year/period......... 1,755 442 25 81,264 39,912 9,813 107
======= ======= ====== ======== ======= ======= =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
EQUITY INDEX FUND BOND FUND
----------------------- ---------------------
1997 1996 1995(C) 1997 1996 1995(D)
------- ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period..................... $ 1.72 $ 1.42 $ 1.25 $ 2.75 $ 2.69 $2.36
======= ======= ====== ====== ====== =====
Unit value, end of year/period... $ 2.26 $ 1.72 $ 1.42 $ 3.00 $ 2.75 $2.69
======= ======= ====== ====== ====== =====
Units outstanding, end of
year/period..................... 71,579 26,794 4,449 7,204 3,239 507
======= ======= ====== ====== ====== =====
<CAPTION>
INVESTMENT COMPANY
---------------------------------------------
SHORT-TERM BOND FUND MID-TERM BOND FUND
----------------------- ---------------------
1997 1996 1995(A) 1997 1996 1995(A)
------- ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period..................... $ 1.14 $ 1.10 $ 1.08 $ 1.19 $ 1.16 $1.11
======= ======= ====== ====== ====== =====
Unit value, end of year/period... $ 1.19 $ 1.14 $ 1.10 $ 1.26 $ 1.19 $1.16
======= ======= ====== ====== ====== =====
Units outstanding, end of
year/period..................... 1,530 908 302 1,374 460 28
======= ======= ====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------------
COMPOSITE FUND AGGRESSIVE EQUITY FUND
----------------------- --------------------------------
1997 1996 1995(C) 1997 1996 1995 1994(B)
------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $ 3.75 $ 3.39 $ 3.14 $ 1.80 $ 1.43 $ 1.05 $1.03
======= ======= ====== ======== ======= ======= =====
Unit value, end of
year/period............ $ 4.36 $ 3.75 $ 3.39 $ 2.15 $ 1.80 $ 1.43 $1.05
======= ======= ====== ======== ======= ======= =====
Units outstanding, end
of year/period......... 79,417 27,055 2,688 103,218 46,985 12,411 174
======= ======= ====== ======== ======= ======= =====
</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.
XIV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 3
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SCUDDER
---------------------------------------------------
BOND FUND CAPITAL GROWTH FUND
--------------------- -----------------------------
1997 1996 1995(A) 1997 1996 1995 1994(B)
------ ------ ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............... $11.48 $11.30 $10.68 $ 22.11 $18.64 $14.67 $14.50
====== ====== ====== ======= ====== ====== ======
Unit value, end of
year/period............... $12.37 $11.48 $11.30 $ 29.64 $22.11 $18.64 $14.67
====== ====== ====== ======= ====== ====== ======
Units outstanding, end of
year/period............... 340 120 35 13,970 5,067 2,011 737
====== ====== ====== ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
----------------------------
INTERNATIONAL FUND
----------------------------
1997 1996 1995 1994(B)
------ ------ ------ -------
<S> <C> <C> <C> <C>
Unit value, beginning of year/period............... $13.43 $11.85 $10.80 $10.66
====== ====== ====== ======
Unit value, end of year/period..................... $14.46 $13.43 $11.85 $10.80
====== ====== ====== ======
Units outstanding, end of year/period.............. 7,377 5,193 715 17
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
AMERICAN CENTURY CALVERT
--------------------- ---------------------
VP CAPITAL RESPONSIBLY
APPRECIATION FUND INVESTED FUND
--------------------- ---------------------
1997 1996 1995(D) 1997 1996 1995(A)
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period....................... $11.53 $12.18 $11.14 $ 2.23 $ 2.01 $1.89
====== ====== ====== ====== ====== =====
Unit value, end of year/period..... $11.04 $11.53 $12.18 $ 2.65 $ 2.23 $2.01
====== ====== ====== ====== ====== =====
Units outstanding, end of
year/period....................... 7,282 5,921 4,409 9,760 2,364 115
====== ====== ====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
--------------------------------------------
VIP VIP II
EQUITY-INCOME CONTRA
FUND FUND
--------------------- ----------------------
1997 1996 1995(A) 1997 1996 1995(D)
------ ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period...................... $21.93 $19.43 $17.68 $ 16.59 $13.85 $12.41
====== ====== ====== ======= ====== ======
Unit value, end of year/period.... $27.77 $21.93 $19.43 $ 20.36 $16.59 $13.85
====== ====== ====== ======= ====== ======
Units outstanding, end of
year/period...................... 5,533 2,393 449 11,560 6,672 756
====== ====== ====== ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
---------------------
VIP II
ASSET MANAGER
FUND
---------------------
1997 1996 1995(A)
------ ------ -------
<S> <C> <C> <C>
Unit value, beginning of year/period...................... $17.72 $15.66 $14.87
====== ====== ======
Unit value, end of year/period............................ $21.14 $17.72 $15.66
====== ====== ======
Units outstanding, end of year/period..................... 4,742 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 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, 1997, 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 four 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, 1997, 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 four years in the period then ended, in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 20, 1998
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
