<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
Principal Office Located at:
320 Park Avenue, New York, New York 10022
Mutual of America Investment Corporation (the "Investment Company") is a
mutual fund. It issues eight series of common stock representing,
respectively, the Money Market Fund, the All America Fund, the Bond Fund, the
Short-Term Bond Fund, the Mid-Term Bond Fund, the Equity Index Fund, the
Aggressive Equity Fund and the Composite Fund.
Shares of the Funds are sold only to separate accounts of Mutual of America
Life Insurance Company ("Mutual of America Life") and The American Life
Insurance Company of New York ("American Life"), an indirect, wholly-owned
subsidiary of Mutual of America Life, as a funding medium for variable annuity
contracts and variable life insurance contracts issued by the companies.
Mutual of America Life and American Life are referred to as the "Insurance
Companies" and each, an "Insurance Company". The separate accounts of the
Insurance Companies are referred to as the "Separate Accounts" and each, a
"Separate Account". The variable annuity and variable life insurance contracts
issued by the Insurance Companies are referred to as the "Contracts" and each,
a "Contract". Each of the Insurance Companies has its principal offices at 320
Park Avenue, New York 10022.
This Prospectus describes in detail the investment objectives and policies of
the eight Funds and sets forth information about the Investment Company that
you ought to know before investing in the Investment Company. Investments in
the Money Market Fund (and in the other Funds of the Investment Company) are
neither insured nor guaranteed by the U.S. Government.
A Statement of Additional Information dated May 1, 1998 has been filed with
the Securities and Exchange Commission. This Statement of Additional
Information is incorporated by reference into this Prospectus and is available
at no charge by writing Mutual of America Investment Corporation at the above
address. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
This Prospectus should be read carefully and retained for further reference.
-------------------
Prospectus dated May 1, 1998
-------------------
<PAGE>
FINANCIAL HIGHLIGHTS
Income and capital changes per share for a Fund share outstanding throughout
each of the ten years during the period ended December 31, 1997, or since the
Fund's inception date if in existence less than ten years, and other
supplementary data with respect to the Funds are as follows. The information
for each of the years in the six year period ended December 31, 1997 has been
audited by the Fund's independent auditors, Arthur Andersen LLP. The financial
statements of the Investment Company, along with the report of Arthur Andersen
LLP thereon, are in the Statement of Additional Information. Information for
each of the four prior years in the period ended December 31, 1991 was audited
by the Fund's previous auditors, and per share information for these years is
presented from the perspective of the Separate Accounts. Effective 1992, the
per share information is presented from the perspective of the Funds.
Information for periods less than a full year has been annualized except where
noted. INFORMATION FOR THE ALL AMERICA FUND REFLECTS THE RESULTS OF THAT FUND
PRIOR TO A CHANGE IN ITS INVESTMENT OBJECTIVE AND POLICIES AND THE ADDITION OF
SUBADVISERS. SUCH CHANGES WERE EFFECTIVE ON MAY 1, 1994, AT WHICH DATE THE
FUND WAS RENAMED THE ALL AMERICA FUND. Further information about the
performance of the Funds, including management's discussion of performance, is
contained in the Investment Company's annual report to shareholders, which may
be obtained without charge by request to the Investment Company.
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $1.19 $ 1.18 $1.19 $1.17 $1.17 $1.18 $1.23 $1.23 $1.22 $1.25
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Income From Investment
Operations
Net Investment Income.. .07 .06 .07 .03 .04 .04 .12 .10 .12 .08
Net Gains or Losses on
Securities (both
realized and
unrealized)........... -- -- -- .02 -- -- (.05) -- -- --
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Total From Investment
Operations.......... .07 .06 .07 .05 .04 .04 .07 .10 .12 .08
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Less Distributions
Dividends (from net
investment income).... (.08) (.05) (.08) (.03) (.04) (.05) (.12) (.10) (.11) (.11)
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions.. (.08) (.05) (.08) (.03) (.04) (.05) (.12) (.10) (.11) (.11)
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD................. $1.18 $ 1.19 $1.18 $1.19 $1.17 $1.17 $1.18 $1.23 $1.23 $1.22
===== ====== ===== ===== ===== ===== ===== ===== ===== =====
Total Return(c)......... 5.5% 5.3% 5.8% 4.1% 2.9% 3.3% 4.4% 6.8% 7.8% 5.9%
Net Assets, End of
Period ($ millions).... $ 68 $ 78 $ 73 $ 81 $ 38 $ 39 $ 43 $ 89 $ 81 $ 6
Ratio of Expenses to
Average Net Assets..... .25% .25% .25% .25% .26% .40% .40% .40% .40% .40%
Ratio of Net Income to
Average Net Assets..... 5.32% 5.21% 5.66% 4.15% 2.90% 3.33% 5.73% 7.79% 8.90% 6.85%
Portfolio Turnover
Rate(a)................ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
ALL AMERICA FUND
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $2.44 $ 2.13 $1.61 $ 1.80 $1.79 $ 1.93 $ 1.70 $ 1.81 $ 1.69 $1.82
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
Income From Investment
Operations
Net Investment Income.. .03 .03 .03 .04 .04 .04 .18 .08 .28 .06
Net Gains or Losses on
Securities
(both realized and
unrealized)........... .62 .41 .56 (.01) .18 .03 .23 (.11) .14 .10
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
Total From Investment
Operations............ .65 .44 .59 .03 .22 .07 .41 (.03) .42 .16
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
Less Distributions
Dividends (from net
investment income).... (.03) (.03) (.03) (.04) (.04) (.04) (.05) (.06) (.05) (.09)
Distributions (from
capital gains)........ (.35) (.10) (.04) (.18) (.17) (.17) (.13) (.02) (.25) (.20)
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
Total Distributions.... (.38) (.13) (.07) (.22) (.21) (.21) (.18) (.08) (.30) (.29)
----- ------ ----- ------ ----- ------ ------ ------ ------ -----
NET ASSET VALUE, END OF
PERIOD................. $2.71 $ 2.44 $2.13 $ 1.61 $1.80 $ 1.79 $ 1.93 $ 1.70 $ 1.81 $1.69
===== ====== ===== ====== ===== ====== ====== ====== ====== =====
Total Return(c)......... 26.8% 20.7% 36.6% 1.3%* 12.0% 3.2% 22.6% (3.8)% 24.1% 8.7%
Net Assets, End of Pe-
riod ($ millions)...... $ 700 $ 637 $ 533 $ 375 $ 424 $ 398 $ 434 $ 377 $ 437 $ 40
Ratio of Expenses to
Average Net Assets..... .50% .50% .50% .50% .50% .50% .50% .50% .50% .50%
Ratio of Net Income to
Average Net Assets..... .98% 1.26% 1.57% 2.11% 1.92% 2.02% 2.49% 3.33% 2.54% 3.07%
Portfolio Turnover
Rate(a)................ 28.64% 28.35% 33.63% 129.80% 93.86% 129.40% 158.35% 108.75% 117.60% 56.94%
Average Commission Rate
Paid(d)................ .0364 $.0549 -- -- -- -- -- -- -- --
</TABLE>
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* Reflects the combined data of this Fund and that of its predecessor.
2
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BOND FUND
----------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 1.38 $ 1.43 $1.27 $ 1.41 $ 1.41 $ 1.41 $ 1.33 $ 1.37 $ 1.27 $ 1.40
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
Income From Investment
Operations
Net Investment Income.. .09 .09 .09 .09 .09 .09 .13 .09 -- .09
Net Gains or Losses on
Securities
(both realized and
unrealized)........... .06 (.04) .16 (.14) .09 .03 .08 (.02) .16 (.01)
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
Total From Investment
Operations............ .15 .05 .25 (.05) .18 .12 .21 .07 .16 .08
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
Less Distributions
Dividends (from net in-
vestment income)...... (.09) (.09) (.09) (.09) (.09) (.09) (.11) (.11) (.06) (.21)
Distributions (from
capital gains)........ (.01) (.01) -- -- (.09) (.03) (.02) -- -- --
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
Total Distributions.... (.10) (.10) (.09) (.09) (.18) (.12) (.13) (.11) (.06) (.21)
------ ------ ----- ------ ------- ------- ------ ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 1.43 $ 1.38 $1.43 $ 1.27 $ 1.41 $ 1.41 $ 1.41 $ 1.33 $ 1.37 $ 1.27
====== ====== ===== ====== ======= ======= ====== ======= ====== ======
Total Return(c)......... 10.4% 3.5% 19.4% (3.2%) 13.1% 8.6% 14.0% 3.5% 11.1% 6.2%
Net Assets, End of Pe-
riod ($ millions)...... $ 414 $ 329 $ 311 $ 249 $ 263 $ 233 $ 187 $ 163 $ 109 $ 5
Ratio of Expenses to
Average Net Assets..... .50% .50% .50% .50% .50% .50% .50% .50% .50% .50%
Ratio of Net Income to
Average Net Assets..... 6.69% 6.70% 6.64% 6.32% 6.30% 6.93% 7.59% 8.57% 8.55% 8.25%
Portfolio Turnover
Rate(a)................ 57.71% 30.14% 41.93% 51.14% 103.16% 112.40% 95.00% 129.02% 47.70% 75.61%
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM
BOND FUND BOND FUND
------------------------------------- ----------------------------------------
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------------------- ----------------------------------------
1997 1996 1995 1994 1993(1) 1997 1996 1995 1994 1993(1)
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.03 $1.02 $ 1.00 $1.02 $ 1.00 $ .90 $ 1.00 $ .91 $ .99 $ 1.00
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
Income From Investment
Operations
Net Investment Income.. .07 .04 .06 .04 .02 .05 .14 .06 .03 .04
Net Gains or Losses on
Securities
(both realized and
unrealized)........... (.01) .01 .02 (.02) .02 .01 (.10) .09 (.07) .04
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
Total From Investment
Operations.......... .06 .05 .08 .02 .04 .06 .04 .15 (.04) .08
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
Less Distributions
Dividends (from net
investment income).... (.07) (.04) (.06) (.04) (.02) (.06) (.14) (.06) (.04) (.04)
Distributions (from
capital gains)........ -- -- -- -- -- -- -- -- -- (.05)
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
Total Distributions.. (.07) (.04) (.06) (.04) (.02) (.06) (.14) (.06) (.04) (.09)
------ ----- ------ ----- ------- ------ ------- ------ ----- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.02 $1.03 $ 1.02 $1.00 $ 1.02 $ .90 $ .90 $ 1.00 $0.91 $ 0.99
====== ===== ====== ===== ======= ====== ======= ====== ===== =======
Total Return(c)......... 6.0% 4.9% 7.7% 1.4% (b) 4.6% 7.3% 3.9% 16.3% (3.7)% (b) 7.3%
Net Assets, End of
Period ($ millions).... $ 15 $ 16 $ 3 $ 2 $ 3 $ 15 $ 13 $ 24 $ 24 $ 19
Ratio of Expenses to
Average Net Assets..... .50% .50% .50% .48% .45% .50% .50% .50% .50% .45%
Ratio of Net Income to
Average Net Assets..... 5.81% 5.42% 4.65% 3.51% 3.09% 5.87% 5.80% 5.73% 4.71% 4.13%
Portfolio Turnover
Rate(a)................ 74.95% 6.68% 16.47% 0.00% 122.37% 12.89% 144.55% 73.72% 7.52% 162.03%
</TABLE>
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(1) The Fund commenced operations on February 5, 1993.
3
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX AGGRESSIVE
FUND EQUITY FUND
------------------------------------ -----------------------------
YEARS ENDED
DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------------------ -----------------------------
1997 1996 1995 1994 1993(1) 1997 1996 1995 1994(2)
------ ------ ----- ----- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.59 $ 1.35 $1.02 $1.04 $ 1.00 $1.47 $ 1.35 $ 1.05 $ 1.00
------ ------ ----- ----- ------ ----- ------ ------ ------
Income From Investment
Operations
Net Investment Income.. .03 .03 .02 .03 .02 .01 .01 .01 .01
Net Gains or Losses on
Securities
(both realized and
unrealized)........... .50 .27 .36 (.01) .04 .31 .36 .39 .05
------ ------ ----- ----- ------ ----- ------ ------ ------
Total From Investment
Operations.......... .53 .30 .38 .02 .06 .32 .37 .40 .06
------ ------ ----- ----- ------ ----- ------ ------ ------
Less Distributions
Dividends (from net
investment income).... (.03) (.03) (.03) (.03) (.02) (.01) (.01) (.01) (.01)
Distributions (from
capital gains)........ (.01) (.03) (.02) (.01) -- (.17) (.24) (.09) --
------ ------ ----- ----- ------ ----- ------ ------ ------
Total Distributions.. (.04) (.06) (.05) (.04) (.02) (.18) (.25) (.10) (.01)
------ ------ ----- ----- ------ ----- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 2.08 $ 1.59 $1.35 $1.02 $ 1.04 $1.61 $ 1.47 $ 1.35 $ 1.05
====== ====== ===== ===== ====== ===== ====== ====== ======
Total Return(c)......... 33.1% 22.7% 36.6% 1.5% (b)6.2% 21.2% 27.1% 38.2% (b)6.0%
Net Assets, End of
Period ($ millions).... $ 237 $ 102 $ 43 $ 26 $ 27 $ 287 $ 136 $ 59 $ 27
Ratio of Expenses to
Average Net Assets..... .13% .13% .13% .13% .11% .85% .85% .85% .56%
Ratio of Net Income to
Average Net Assets..... 1.86% 2.19% 2.50% 2.67% 2.43% .33% .45% .65% .70%
Portfolio Turnover
Rate(a)................ 14.17% 5.85% 13.99% 6.59% 1.44% 80.94% 103.68% 116.52% 60.86%
Average Commission Rate
Paid(d)................ $.0308 $.0388 -- -- -- .0537 $.0591 -- --
</TABLE>
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(1) The Fund commenced operations on February 5, 1993.
(2) The Fund commenced operations on May 2, 1994.
<TABLE>
<CAPTION>
COMPOSITE FUND
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.77 $ 1.81 $1.57 $ 1.71 $ 1.59 $ 1.61 $ 1.53 $ 1.63 $1.46 $1.60
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
Income From Investment
Operations
Net Investment Income.. .07 .07 .08 .05 .05 .06 .19 .14 .11 .08
Net Gains or Losses on
Securities (both
realized and
unrealized)........... .24 .14 .27 (.10) .22 .03 .09 (.09) .17 .05
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
Total From Investment
Operations.......... .31 .21 .35 (.05) .27 .09 .28 .05 .28 .13
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
Less Distributions
Dividends (from net
investment income).... (.07) (.08) (.08) (.07) (.05) (.06) (.07) (.10) (.08) (.17)
Distributions (from
capital gains)........ (.39) (.17) (.03) (.02) (.10) (.05) (.13) (.05) (.03) (.10)
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
Total Distributions.. (.46) (.25) (.11) (.09) (.15) (.11) (.20) (.15) (.11) (.27)
------ ------ ----- ------ ------ ------ ------ ------ ----- -----
NET ASSET VALUE, END OF
PERIOD................. $ 1.62 $ 1.77 $1.81 $ 1.57 $ 1.71 $ 1.59 $ 1.61 $ 1.53 $1.63 $1.46
====== ====== ===== ====== ====== ====== ====== ====== ===== =====
Total Return(c)......... 17.7% 11.9% 21.9% (3.0%) 16.9% 5.9% 16.4% 1.5% 17.2% 7.9%
Net Assets, End of
Period ($ millions).... $ 305 $ 283 $ 276 $ 233 $ 228 $ 138 $ 111 $ 79 $ 67 $ 51
Ratio of Expenses to
Average Net Assets..... .50% .50% .50% .50% .50% .50% .50% .50% .50% .50%
Ratio of Net Income to
Average Net Assets..... 3.57% 3.63% 4.30% 3.88% 3.48% 4.01% 4.75% 6.20% 5.48% 5.94%
Portfolio Turnover
Rate(a)................ 104.04% 69.79% 76.84% 113.86% 100.76% 107.69% 134.91% 105.06% 87.32% 50.88%
Average Commission Rate
Paid(d)................ $.0471 $.0597 -- -- -- -- -- -- -- --
</TABLE>
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(a) Portfolio turnover rate excludes all short-term securities.
(b) Not annualized.
(c) Total Return information does not reflect separate account charges under
contracts that allocate premiums or contributions to the Separate
Accounts, which invest in the Funds. Inclusion of separate account charges
would reduce Total Return figures.
(d) Average commission rate paid per share of stock is calculated for years
beginning after 1995.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Highlights.................................................... 2
General Description of the Investment Company........................... 5
Money Market Fund Yield Information..................................... 5
Investment Objectives and Policies of the Funds......................... 5
Investment Advisory Arrangements........................................ 13
The Funds' Expenses..................................................... 15
Portfolio Transactions.................................................. 15
Purchase of Shares...................................................... 15
Redemption of Shares.................................................... 16
Dividends, Distributions and Taxes...................................... 16
Additional Information.................................................. 16
</TABLE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE INVESTMENT COMPANY OR MUTUAL OF AMERICA
CAPITAL MANAGEMENT CORPORATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
GENERAL DESCRIPTION OF THE INVESTMENT COMPANY
The Investment Company was formed as a Maryland corporation on February 21,
1986. It is a diversified, open-end management company as such terms are
defined in the Investment Company Act of 1940 (the "1940 Act"). Its investment
adviser is Mutual of America Capital Management Corporation (the "Adviser").
As a "series" type of mutual fund, the Investment Company issues separate
classes (or series) of stock, currently consisting of the Money Market Fund,
the All America Fund, the Bond Fund, the Short-Term Bond Fund, the Mid-Term
Bond Fund, the Equity Index Fund, the Aggressive Equity Fund and the Composite
Fund. The Investment Company's assets and liabilities are split into these
Funds ("Funds"). Additional Funds may be established in the future.
The terms "shareholder" and "shareholders" in this Prospectus refer to the
Insurance Companies. Mutual of America Life and American Life, through the
Separate Accounts, own all of the Investment Company's shares.
MONEY MARKET FUND YIELD INFORMATION
Set forth below is the current yield information for the Money Market Fund for
the seven-day period ended December 31, 1997, computed to include and exclude
realized and unrealized gains and losses. Yields may fluctuate from the
amounts shown.
<TABLE>
<S> <C>
Annualized Yield:
Including gains and losses..................................... 5.64%
Excluding gains and losses..................................... 5.64%
Average maturity of portfolio at end of period................... 12.7 days
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
INVESTMENT OBJECTIVES
Each Fund of the Investment Company has a different investment objective which
it pursues through separate investment policies as described below. The
differences in objectives and policies among the Funds can be expected to
affect the return of each Fund and the degree of market and financial risk to
which each Fund is subject. As used in the following discussion, "market risk"
refers to the volatility of the reaction of the price of the security to
changes in conditions in the securities markets in general and, with
particular reference to debt securities, changes in the overall level of
interest rates (prices decline when interest rates rise); "financial risk"
refers to the ability of an issuer of a debt security to pay principal and
interest on that security and to the earning stability and overall financial
soundness of an issuer of an equity security; and "current income volatility"
refers to the degree and rapidity with which changes in the overall level of
interest rates become reflected in the level of current income of a Fund. The
investment objectives of each Fund may not be changed without the approval of
the holders of a majority of the outstanding shares of each Fund affected.
There can be no assurance that the
5
<PAGE>
objectives of any of the Funds will be met. Investments in the Money Market
Fund (and in the other Funds of the Investment Company) are neither insured
nor guaranteed by the U.S. Government. The investment objectives and policies
of each Fund are discussed below.
THE MONEY MARKET FUND
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. The Fund will invest only in
money market instruments and other short-term debt securities.
Specifically, the Money Market Fund will invest only in the following kinds of
money market instruments, payable in United States dollars: (1) securities
issued or guaranteed by the United States Government or one of its agencies or
instrumentalities ("government securities"); (2) negotiable certificates of
deposit, bank time deposits, bankers' acceptances and other short-term debt
obligations of domestic banks and foreign branches of domestic banks and U.S.
branches of foreign banks (see "Investment Objectives and Policies of the
Funds--Other Portfolio Strategies--Foreign Securities"), which at the time of
their most recent annual financial statements show assets in excess of $5
billion; (3) certificates of deposit, time deposits and other short-term debt
obligations of domestic savings and loan associations, which at the time of
their most recent annual financial statements show assets in excess of $1
billion; (4) repurchase agreements covering government securities,
certificates of deposit, commercial paper or bankers' acceptances; (5)
commercial paper; (6) variable amount floating rate notes; and (7) debt
securities issued by a corporation. These instruments are more fully described
in the Statement of Additional Information.
For purposes of the Money Market Fund's investment policy only, "money market
instruments and other short-term debt securities" shall mean securities having
a remaining maturity of up to 13 months (25 months in the case of government
securities). The dollar-weighted average maturity of the securities held by
the Money Market Fund will not exceed 90 days.
The Money Market Fund may also enter into transactions in options, futures
contracts and options on futures, contracts on United States Treasury
securities and Eurodollar deposits. Such transactions and instruments are more
fully described below and in the Statement of Additional Information.
All of the securities held by the Money Market Fund will have received (or be
of comparable quality to securities which have received), at the time of the
purchase, a rating in one of the two highest categories by any two nationally
recognized statistical rating agencies and at least 95% of the securities held
by the Money Market Fund will have received (or be of comparable quality to
securities which have received), at the time of purchase, the highest rating
by any two such rating agencies. (The Board of Directors of the Investment
Company must approve or ratify the purchase of any security (other than any
government security) which has received no rating or which has been rated by
only one rating agency.) Securities which are subsequently downgraded below
the two highest categories will be disposed of as soon as practicable absent a
finding by the Board of Directors that this would not be in the best interests
of the Fund.
The Money Market Fund will not invest more than 5% of its total assets in
securities of, or subject to puts from, any one issuer (other than government
securities and repurchase agreements fully collateralized by government
securities) provided that (x) the Fund may invest up to 10% of its total
assets in securities issued or guaranteed by a single issuer with respect to
which the Fund has an unconditional put and (y) with respect to 25% of its
total assets the Fund may, with respect to securities meeting the highest
investment criteria, exceed the 5% limit for up to three business days.
The Money Market Fund should be subject to relatively little market or
financial risk but a relatively high level of current income volatility.
THE ALL AMERICA FUND
The investment objective of the All America Fund is to outperform the S&P 500
Index by providing a diversified portfolio of Active Assets with diversified
management and a broad exposure to the market. At least 65% of the All America
Fund's total assets will be invested in equity securities under normal market
conditions, and the issuers of at least 80% of the Fund's total assets will be
United States corporations or entities.
Indexed Assets. The investment objective for approximately 60% of the assets
of the All America Fund (the "Indexed Assets") is to provide investment
results that to the extent practical correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the Standard & Poor's Composite Index of 500 Stocks (the "S&P 500 Index").
The Indexed Assets will be invested in the same manner as the Equity Index
Fund. See "The Equity Index Fund" below.
Active Assets. 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
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a diversified portfolio of securities that may include common stocks,
securities convertible into common stocks, bonds and money market instruments.
The Active Assets will be invested by three subadvisers (each a "Subadviser",
and together the "Subadvisers"), under a subadvisory agreement (each a
"Subadvisory Agreement") between the Adviser and each of the Subadvisers, and
the Adviser. The Adviser will allocate the Active Assets to maintain, to the
extent practicable under current market conditions, approximately equal
amounts with the Subadvisers and the Adviser. The Subadvisers are Palley-
Needelman Asset Management, Inc. ("Palley-Needelman"), Oak Associates, Ltd.
and Fred Alger Management, Inc. ("Alger Management"). See "Investment Advisory
Arrangements--The Subadvisers".
The Subadvisers and the Adviser each follow a different approach for the
investment of the Active Assets. Palley-Needelman invests its portion of
Active Assets generally in stocks that Palley-Needelman considers to be of
high quality with lower than average price volatility and low price/earning
ratios. Companies generally will have below market debt levels, earnings
growth of 10% or more, current yield greater than the average of the S&P 500,
and market capitalization of $1 billion or more. No more than 10% of the
Palley-Needelman portion may be invested in any one industry and no more than
20% may be invested in American Depositary Receipts ("ADRs"). Oak Associates
invests in mid- and large-sized capitalization stocks that have low current
income and the potential for significant growth. Oak Associates monitors 400
stocks and at any one time invests its portion of the Fund in approximately
15-25 common stocks without regard for market industry weighting. Alger
Management invests in stocks that it considers to be fundamentally sound with
the potential for strong growth and for earnings in excess of market
expectations. The securities of these companies often are traded in the over-
the-counter market. Except during temporary defensive periods, the Alger
Management portion of the Fund invests at least 65% of its assets in equity
securities of companies that, at the time of the Fund's purchase of the
securities, have total market capitalization within the range of
capitalization of the companies included in the Russell 2000 Growth Index or
the S&P SmallCap 600 Index, updated quarterly. The Adviser generally invests
in small capitalization stocks that it considers undervalued. Its approach is
to identify companies with strong financials, substantial cash flow,
conservative accounting, usually low debt-to-equity ratios and average market
capitalization generally below $1 billion. Some of the companies whose stocks
are purchased by Oak Associates, or by the Adviser for its portion of the
Active Assets, may have limited Wall Street coverage and low institutional
ownership.
Each of the Subadvisers and the Adviser will seek to achieve the investment
objective of the Active Assets by investing in such securities that, based on
certain fundamental and/or technical standards of selection, it determines
offer attractive opportunities for total return through capital appreciation
and, to a lesser degree, income. Assets in the All America Fund will be
rebalanced periodically to retain the approximate 60%/40% relationship between
Indexed Assets and Active Assets. The Adviser may manage cash allocated to the
Active Assets prior to investment in securities by the Subadvisers.
THE EQUITY INDEX FUND
The investment objective of the Equity Index Fund is to provide investment
results that to the extent practical correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the S&P 500 Index.
The Equity Index Fund will attempt to duplicate the investment results of the
S&P 500 Index, which is composed of 500 selected common stocks, most of which
are listed on the New York Stock Exchange. Standard & Poor's Corporation
chooses the stocks to be included in the S&P 500 Index solely on a statistical
basis. The inclusion of a stock in the S&P 500 Index does not imply an opinion
by Standard & Poor's Corporation that the stock is an attractive investment.
An investment in the Fund involves risks similar to those of investing in
common stocks. The Fund will attempt to be fully invested at all times in the
stocks that comprise the S&P 500 Index and at least 80% of the Fund's net
assets will be so invested.
The weightings of stocks in the S&P 500 Index are based on each stock's
relative total market capitalization; that is, its market price per share
times the number of shares outstanding. Stocks will be selected for the Fund's
portfolio in the order of their weightings in the S&P 500 Index beginning with
the heaviest weighted stocks. The percentage of the Fund's assets invested in
each of the selected stocks will be approximately the same as the percentage
the stock represents in the S&P 500 Index.
The Fund will be managed using a computer program to determine which stocks
are to be purchased or sold to replicate the S&P 500 Index to the extent
feasible. Initially the Fund contemplates executing all transactions through a
single broker. From time to time, administrative adjustments may be made in
the Fund's portfolio because of changes in the composition of the S&P 500
Index, but such changes should be infrequent.
The Fund believes that the indexing approach described above is an effective
method of substantially duplicating percentage changes in the S&P 500 Index.
It is a reasonable expectation that there will be a close correlation between
the Fund's performance and that of the S&P 500 Index in both rising and
falling markets. The Fund will attempt to achieve a correlation
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between the performance of its portfolio and that of the S&P 500 Index of at
least 0.95, without taking into account expenses. A correlation of 1.00 would
indicate perfect correlation, which would be achieved when the Fund's net
asset value, including the value of its dividend and capital gains
distributions, increases or decreases in exact proportion to changes in the
S&P 500 Index. The Fund will invest in stock index futures contracts, options
on stock indices, options on stock index future contracts, puts and calls to
the extent necessary to attempt to achieve this correlation. The Fund's
ability to correlate its performance with the S&P 500 Index, however, may be
affected by, among other things, changes in securities markets, the manner in
which the S&P 500 Index is calculated by Standard & Poor's Corporation and the
timing of purchases and redemptions. In the future, the Board of Directors,
subject to the approval of shareholders, may select another index if such a
standard of comparison is deemed to be more representative of the performance
of common stocks in general.
The Fund's ability to duplicate the performance of the S&P 500 Index also
depends to some extent on the size of the Fund's portfolio and the size of
cash flows into and out of the Fund. Investment changes to accommodate these
cash flows are made to maintain the similarity of the Fund's portfolio to the
S&P 500 Index to the maximum practicable extent.
THE BOND FUND, THE SHORT-TERM BOND FUND AND THE MID-TERM BOND FUND
The three Bond Funds (the Bond Fund, the Short-Term Bond Fund and the Mid-Term
Bond Fund (sometimes collectively referred to as the "Bond Funds" or
singularly as "any" or "each" Bond Fund)) will have the same investment
objectives as described below, but will seek to achieve those objectives
through different policies representing the average maturity of the securities
held in their respective portfolios, as follows:
The Bond Fund will consist of debt securities with average maturities which
will vary according to market conditions and the stage of the interest rate
cycle.
The Short-Term Bond Fund will consist of debt securities which will produce a
portfolio with an average maturity of one to three years.
The Mid-Term Bond Fund will consist of debt securities which will produce a
portfolio with an average maturity of three to seven years.
When interest rates go up, the market value of outstanding debt securities
declines and vice versa. In recent years the volatility of the market for debt
securities has increased significantly and the market value of longer-term
obligations has been subject to wide fluctuations, particularly as contrasted
with short-term instruments. The Bond Funds may realize income to the extent
such realizations are considered advantageous in light of existing market
conditions. The annual rate of portfolio turnover of the Bond Funds is not
expected to average in excess of 200%. A high level of portfolio turnover will
result in an increase in transaction costs and may adversely affect the tax
status of the Investment Company. See "Dividends, Distributions and Taxes."
The primary investment objective of the Bond Funds is to provide as high a
level of current income over time as is believed to be consistent with prudent
investment risk. A secondary objective is preservation of shareholders'
capital. The Bond Funds seek to realize these objectives through careful
selection and, when appropriate, active trading of bonds and other
investments. The Adviser's emphasis generally is on income generation rather
than market timing. The assets of the Bond Funds will consist primarily of
publicly traded debt securities, such as bonds, notes, debentures and
equipment trust certificates. Such securities may carry certain equity
features, such as conversion of exchange rights, or warrants for the
acquisition of stocks of the same or different issuers, or participations
based on revenues, sales or profits.
It is contemplated that at least 80% of each Bond Fund's assets will consist
of (a) domestic debt securities that have at the time of purchase a rating of
at least Baa3 as determined by Moody's Investors Services, Inc. or BBB- as
determined by Standard & Poor's Corporation or equivalent ratings of a similar
nationally recognized rating service; (b) securities issued or guaranteed by
the United States Government or its agencies or instrumentalities; (c) cash or
cash equivalents; and (d) the types of money market instruments in which the
Money Market Fund may invest. These instruments should be subject to little
financial risk, to moderately high levels of market risk and to moderate
current income volatility. The remaining assets of the Bond Funds may be
invested in (1) other securities that are unrated or rated lower than Baa3 or
BBB-, which are sometimes referred to as high yield/high risk securities, (2)
Canadian and other foreign securities and (3) securities issued in foreign
markets by domestic issuers or their overseas subsidiaries if guaranteed by
the parent. Unrated securities or securities rated lower than Baa3 or BBB- may
be subject to greater market and financial risk than higher quality
securities, and it is not currently contemplated that more than 5% of any Bond
Fund's assets will consist of these securities. The instruments described in
this paragraph are more fully described in the Statement of Additional
Information.
The market value of fixed-income debt securities is affected by changes in
general market interest rates. If interest rates fall, the market value of
fixed-income securities tends to rise; however, if interest rates rise, the
value of fixed-income securities
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tends to fall. This market risk affects all fixed income securities, but lower
rated and unrated securities may be subject to a greater market risk than
higher rated (lower yield) securities.
Lower rated and unrated securities are also generally subject to greater
financial risk than higher rated securities. Since lower rated and unrated
securities are generally issued by corporations that are not as creditworthy
or financially secure as issuers of higher rated securities, there is a
greater risk that issuers of lower rated (higher yield) securities will not be
able to pay the principal and interest due on such securities, especially
during periods of adverse economic conditions. Risk factors related to
investments in lower rated and unrated securities are more fully described in
the Statement of Additional Information.
Each of the Bond Funds generally will not acquire securities of companies in
any one industry if, immediately after giving effect to any such acquisition,
more than 25% of the value of its total assets would be invested in such
industry. A Fund would, however, invest more than 25% (but not more than 75%)
of its assets in the electric, gas and/or telephone utility industries
whenever it is determined that the spread between the yields on such industry
securities and Treasury notes and/or bonds is historically high and that
obligations having comparable maturity, yield and quality of issuers in other
industries are not available; provided, however, that in no event will any
Bond Fund invest more than 75% of the value of its total assets in all those
industries. No one "aspect" of the electric, gas or telephone utility
industries will be emphasized.
Investment in companies in these industries involves the risk of unfavorable
action, from an investment viewpoint, by their regulatory authorities.
Concentration in any or all of such industries may increase the investment
risk as a result of adverse circumstances which could affect all companies in
a particular industry simultaneously. In addition, debt securities in
electric, gas and telephone industries tend to have longer maturities than
those of industrial issuers, and unlike industrial debt issues, do not
typically require partial repayment of the principal through a sinking fund
during the life of the securities. As a result, electric, gas and telephone
issues may show more price volatility in periods of changing interest rates
than would industrial issues of like quality. The electric, gas and telephone
utility industries are subject to extensive government regulation as to rates
and services.
The Bond Funds will not directly purchase common stocks. However, a Fund may
have up to 10% of the value of its total assets invested in stocks acquired
either by conversion of fixed-income securities or by the exercise of warrants
attached thereto. In addition, the Bond Funds may purchase preferred stocks,
but no Bond Fund may invest more than 5% of its total assets in preferred
stocks.
The Bond Funds may also enter into transactions in exchange-traded options,
futures contracts and options on futures contracts on United States Treasury
securities and Government National Mortgage Association ("Ginnie Mae")
Securities. To be included in any of the Bond Funds, options and futures must
be traded on a domestic exchange.
THE COMPOSITE FUND
The investment objective of the Composite Fund is to achieve as high a total
rate of return, through both appreciation of capital and current income, as is
consistent with prudent investment risk by means of a diversified portfolio of
publicly traded common stocks, publicly traded debt securities and money
market instruments. The Fund will seek to achieve long-term growth of its
capital and increasing income by investments in common stocks and other
equity-type securities and a high level of current income through investments
in publicly traded debt securities and money market instruments. It is
anticipated that the portion of the assets invested in each type of security
will vary, at the Investment Company's discretion, in accordance with economic
conditions, the general level of common stock prices, interest rates and other
relevant consideration, including the risks associated with each investment
medium. No more than 75% of the value of the Fund's assets may be invested in
either common stock and other equity-type securities, or in debt securities
with a remaining maturity of more than one year. Up to 100% of the Fund's
assets may be invested in money market instruments.
The equity securities invested in by the Fund will consist of the types of
equity securities in which the Active Assets of the All America Fund may be
invested. The publicly traded debt securities will consist of the types of
securities in which any Bond Fund may invest. The money market instruments
will consist of the types of securities in which the Money Market Fund may
invest. The Composite Fund may also engage in the same type of transactions in
options, futures contracts and options on futures contracts as the Stock,
Bond, Short-Term Bond, Mid-Term Bond and Money Market Funds. The Composite
Fund will be subject to varying levels of market and financial risk and
current income volatility, depending upon the "mix" of instruments in which
the Fund is from time to time invested. The Composite Fund will not invest in
debt securities rated below investment grade. Securities which are
subsequently downgraded may continue to be held and will be sold only if, in
the judgment of the Investment Adviser, it is advantageous to do so.
THE AGGRESSIVE EQUITY FUND
The Aggressive Equity Fund will be divided by the Adviser into two segments so
as to utilize two investment styles.
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The investment objective for approximately 50% of the assets of the Fund (the
"Aggressive Growth Portfolio") is to achieve capital appreciation by investing
in companies believed to possess above-average growth potential. Growth can be
in the areas of earnings or gross sales, measured in either dollars or in unit
volume. Growth potential is often sought in smaller, less well-known companies
in new and emerging areas of the economy, but may also be found in larger
companies in mature or declining industries that have been revitalized and
hold a strong industry or market position. The Aggressive Growth Portfolio
also may make investments based on prospective economic or political changes
and may invest in special situations such as corporate restructurings.
The investment objective for the other approximately 50% of the assets of the
Fund (the "Aggressive Value Portfolio") is to achieve capital appreciation by
investing in companies believed to possess valuable assets or whose securities
are undervalued in the marketplace in relation to factors such as the
company's assets, earnings, or growth potential. Such companies will generally
have one or more of the following attributes: (1) valuable fixed assets, such
as complex plant and equipment that has a high replacement cost, real estate
with a current value substantially in excess of book value or large reserves
of exploitable natural resources; or (2) valuable consumer or commercial
franchises, such as well recognized trademarks or product names or potentially
valuable transportation routes. The Aggressive Value Portfolio generally
invests in small to medium capitalization securities which have low prices in
relation to cash flow, profits, sales, book value and real net asset value.
The Fund invests primarily in stocks, but it also may purchase convertible
securities and debt obligations that may produce capital appreciation.
Securities that meet the Fund's criteria may not be popular during certain
market cycles. The Fund can also make substantial temporary investments in
investment-grade debt securities when it believes market conditions warrant.
INVESTMENT RESTRICTIONS
The Investment Company has adopted a number of restrictions and policies
relating to the investment of its assets and its activities which are
fundamental policies and may not be changed without the approval of the
holders of the Investment Company's outstanding voting securities (including a
majority of the shares of each Fund). None of the Funds will: (1) with respect
to at least 75% of the value of its total assets invest more than 5% of its
total assets in the securities of any one issuer (including repurchase
agreements with any one bank), other than securities issued or guaranteed by
the United States Government or its agencies or instrumentalities (see "The
Money Market Fund" for more restrictive policies relating to that fund); (2)
with respect to at least 75% of the value of its total assets, purchase more
than 10% of the outstanding voting securities of an issuer, except that such
restriction shall not apply to securities issued or guaranteed by the United
States Government or its agencies or instrumentalities; (3) make an investment
in an industry if that investment would make the Fund's holding in that
industry exceed 25% of the Fund's total assets except for each of the Bond
Funds, which may invest up to 75% of its total assets in the electric, gas
and/or telephone utilities industries (other than investments by the Money
Market Fund in obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities, certificates of deposit, or
securities issued or guaranteed by domestic branches of domestic banks and
savings and loan associations); or (4) invest more than 10% of its total
assets in repurchase agreements or time deposits maturing in more than seven
days or in portfolio securities not readily marketable. Investors are referred
to the Statement of Additional Information for a complete description of such
restrictions and policies.
OTHER PORTFOLIO STRATEGIES
Lending of Securities
A Fund may lend its securities (but not in excess of 30% of its total assets)
to brokers, dealers and financial institutions and receive as collateral cash,
securities issued or guaranteed by the United States Government or its
agencies or instrumentalities, or letters of credit of certain banks selected
by the investment adviser, which at all times while the loan is outstanding
will be maintained in amounts equal to at least 100% of the current market
value of the loaned securities. The Fund will continue to receive interest or
dividends on the securities lent, and in addition will receive a portion of
the income generated by the short-term investment of cash received as
collateral, or, alternatively, where securities or a letter of credit are used
as collateral, a lending fee paid directly to the Fund by the borrower of the
securities. Such loans will be terminable by the Fund at any time and will not
be made to affiliates of the Fund. The Fund will have the right to regain
record ownership of loaned securities in order to exercise beneficial rights,
such as voting rights or subscription rights. The Fund may pay reasonable fees
to persons unaffiliated with the Fund for services or for arranging such
loans. Loans of securities will be made only to firms that the Investment
Adviser deems creditworthy. As with an extension of credit, however, there are
risks of delay in recovery and even loss of rights in the collateral, should
the borrower of securities default, become the subject of bankruptcy
proceedings or otherwise be unable to fulfill its obligations or fail
financially.
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Repurchase Agreements
Repurchase Agreements are more fully described in the Statement of Additional
Information. If a seller of a repurchase agreement defaults and does not
repurchase the security subject to the agreement, the Fund would look to the
collateral security underlying the sellers' repurchase agreement, including
the securities subject to the repurchase agreement, for satisfaction of the
seller's obligation to the Fund; in such event the Fund might incur
disposition costs in liquidating the collateral and might suffer a loss if the
value of the collateral declines. In addition, there is a risk that, if the
issuer of the repurchase agreement becomes involved in bankruptcy proceedings,
the Fund might be delayed or prevented from liquidating the underlying
security or otherwise obtaining it for its own purposes.
Options and Futures
As noted, the Funds may enter into transactions in options, futures contracts
and options on futures contracts on the types of instruments identified above.
Such transactions will be used for hedging purposes only, and not for
speculation, and could include (1) the selling of call option contracts on
portfolio securities (covered calls), and the buying of call option contracts
on such securities to close out a position acquired through the sale of such
options; (2) the buying of put option contracts on securities owned by a Fund,
and the selling of put option contracts on securities owned by a Fund to close
out a position acquired through the purchase of such options; (3) purchases
and sales of futures contracts, and purchases of options on futures contracts,
on fixed-income securities; and (4) purchases and sales of futures contracts,
and purchases of options on futures contracts, on indexes of securities. If a
hedging transaction in any such instrument is successful, a Fund's losses on
portfolio securities, or the increased cost of securities to be acquired,
should be offset, in whole or part, by corresponding gains on the hedging
position. The Funds will only enter into transactions in options, futures and
options on futures which are traded on securities or commodities exchanges
located in the United States.
A risk in all such transactions is a possible lack of liquidity, which could
make it difficult or impossible to close out existing positions and realize
gains or limit losses. The liquidity of a secondary market in futures
contracts or options on futures contracts may be adversely affected by "daily
price fluctuation limits," established by the exchanges on which such
instruments are traded, which limit the amount of fluctuation in the price of
a contract during a single trading day. Once the limit in a particular
contract has been reached, no further trading in such contract may occur
beyond such limit, thus preventing the liquidation of positions, and requiring
traders to make additional variation margin payments. Market liquidity in
options, futures contracts or options on futures contracts may also be
adversely affected by trading halts, suspensions, exchange or clearing house
equipment failures, government intervention, insolvency of a brokerage firm or
clearing house or other disruptions of normal trading activity.
The Funds are also subject to the risk of imperfect correlation between
securities held in their portfolios and the security or securities underlying
options, futures contracts or options on futures contracts traded. In the case
of options, futures contracts or options on futures based on an index of
securities, a Fund's portfolio will not duplicate the composition of the index
and, in the case of options, futures contracts and options on futures
contracts on fixed income securities, the portfolio securities being hedged
may not be the same as the securities underlying such instruments.
Consequently, the Funds bear the risk that the price of the portfolio
securities being hedged will not move in the same amount or direction as the
underlying index or obligation.
A Fund may sell futures contracts on fixed-income securities in anticipation
of a rise in interest rates, which would cause a decline in the value of
fixed-income securities held in the Fund's portfolio. Similarly, a Fund may
sell stock index futures contracts in anticipation of a general market wide
decline which would reduce the value of its portfolio of stocks. In either
case, if the expected decrease in the value of portfolio securities occurs,
the reduction in net asset value may be offset, in whole or in part, by
corresponding gains on the futures position. Conversely, where a Fund projects
an increase in the cost of fixed-income securities or stocks to be acquired in
the future, the Fund may purchase futures contracts on fixed-income securities
or stock indexes. If the hedging transaction is successful, the increased cost
of securities subsequently acquired should be offset, in whole or in part, by
gains on the futures position.
A Fund may also, instead of purchasing or selling futures contracts, purchase
call or put options on futures contracts in order to protect against declines
in the value of portfolio securities or against increases in the cost of
securities to be acquired. Purchases of options on futures contracts may
present less risk in hedging a portfolio than the purchase and sale of the
underlying futures contracts, since the potential loss is limited to the
amount of the premium paid for the option, plus related transaction costs. As
in the case of purchases and sales of futures contracts, a Fund may be able to
offset declines in the value of portfolio securities, or increases in the cost
of securities acquired, through gains realized on its purchases of options on
futures.
The Funds may also purchase put options on securities or stock indexes for the
same types of hedging purposes. The purchase of a put option on a security or
stock index permits a Fund to protect against declines in the value of the
underlying
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security or securities in a manner similar to the sale of futures contracts.
The maximum risk assumed by a Fund in purchasing an option is the amount of
the premium plus related transaction costs, although this entire amount may be
lost.
In addition, the Funds may write call options on portfolio securities or on
stock indexes for the purpose of increasing their returns and/or to protect
the value of their portfolios. In particular, where a Fund writes an option
which expires unexercised or is closed out by the Fund at a profit, it will
retain the premium paid for the option, less related transaction costs, which
will increase its gross income and will offset in part the reduced value of a
portfolio security in connection with which the option may have been written.
In contrast, however, if the price of the security underlying the option moves
adversely to the Fund's position, the option may be exercised and the Fund
will be required to sell the security at a disadvantageous price, resulting in
losses which may be only partially offset by the amount of the premium. A call
option on a security written by a Fund will be covered through ownership of
the security underlying the option or through ownership of an absolute and
immediate right to acquire such security upon conversion or exchange of other
securities held in its portfolio.
The Funds' hedging transactions and options on futures present certain other
risk factors which are described in the Statement of Additional Information.
Zero Coupon Securities and Discount Notes; Redeemable Securities
The Bond Funds may invest in discount notes (having maturities of one year or
less) and zero coupon securities, some of which may be U.S. Government agency
securities. Discount notes and zero coupon securities do not pay interest, but
rather are issued at prices discounted from the principal (par) amount due at
maturity. The difference between the issue price and the principal amount due
at maturity (or the amount due at the expected redemption date in some cases
if the securities are callable) is called "original issue discount". A Fund
must accrue original issue discount as income, even if the Fund does not
actually receive any payment under the security during the accrual period. The
purchase price paid for zero coupon securities at the time of issuance, or
upon any subsequent resale, reflects a yield-to-maturity required by the
purchaser from the purchase date to the maturity date (or expected redemption
date).
Zero coupon securities and discount notes may fluctuate more in market value
and be more difficult for a Fund to resell during periods of interest rate
changes in the economy than comparable securities that pay interest in cash at
regular intervals. The market values of outstanding debt securities generally
decline when interest rates are rising, and during such periods a Fund may
lose more investment capital if it sells zero coupon securities prior to their
maturity date or expected redemption date than if it sells comparable
interest-bearing securities. In general, the longer the remaining term to
maturity or expected redemption of a security, the greater the impact on
market value from rising interest rates.
An issuer of debt securities, including zero coupon securities, often has the
right after a period of time to redeem (call) securities prior to their stated
maturity date, either at a specific date or from time to time. When interest
rates rise, an issuer of debt securities generally is less likely to redeem
securities that were issued at a lower interest rate, or for a lower amount of
original issue discount in the case of the zero coupon securities. In such
instance, the period until redemption or maturity of the security may be
longer than the purchaser initially anticipated, and the market value of the
debt security may decline. If an issuer redeems a security when prevailing
interest rates are relatively low, a Fund may be unable to reinvest proceeds
in comparable securities with similar yields.
Foreign Securities and ADRs
In addition to investing in domestic securities, the Funds may also invest in
securities of foreign issuers (including such securities traded outside the
United States). None of the Funds will, however, trade in foreign exchange or
invest in securities of foreign issuers, if at the time of acquisition more
than 20% of its total assets, taken at market value at the time of investment,
would be invested in such securities. Because investments in foreign
securities, particularly those of non-governmental issuers, involve
considerations which are not ordinarily associated with investing in domestic
issuers, the Investment Company will consider these special factors before
investing in foreign securities. These considerations include changes in
currency rates, currency exchange control regulations, the possibility of
expropriation, the unavailability of financial information or the difficulty
of interpreting financial information prepared under foreign accounting
standards, less liquidity and more volatility in foreign securities markets,
the impact of political, social or diplomatic developments and the difficulty
of assessing economic trends in foreign countries. If it should become
necessary, the Funds could encounter greater difficulties in involving legal
processes abroad than would be encountered in the United States. In addition,
transaction costs in foreign securities may be higher. The Investment Company
will not invest in foreign securities unless, in its opinion, such investments
will meet the standard and objectives of a particular Fund. No Fund may
concentrate its investments in any particular foreign country except Canada.
Foreign issues guaranteed by domestic corporations are considered to be
domestic securities.
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ADRs are dollar-denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign issuer. ADRs
are publicly traded on exchanges or over-the-counter in the United States.
ADRs are not subject to the percentage limitations contained in the preceding
paragraph.
Mortgage-Backed Securities
The Bond Funds may invest in mortgage-backed securities, some of which are
also considered to be U.S. Government securities. These securities represent
interests in, or are secured by, pools of mortgage loans and provide holders
with payments consisting of both interest and principal as the mortgages in
the underlying mortgage pools are paid off.
Mortgage-backed securities include securities guaranteed by the Government
National Mortgage Association ("Ginnie Maes"), securities issued by the
Federal National Mortgage Association ("Fannie Maes"), participation
certificates issued by the Federal Home Loan Mortgage Corporation ("Freddie
Macs") and collateralized mortgage obligations issued by a Government
instrumentality or agency ("CMOs"). The timely payment of principal and
interest is backed by the full faith and credit of the U.S. Government in the
case of Ginnie Maes but not for Fannie Maes, Freddie Macs or CMOs.
Unscheduled or early payments on the underlying mortgages may shorten the
effective maturities and impact the yield and price of mortgage-backed
securities. A decline in interest rates may lead to increased prepayment of
the underlying mortgages, and the Funds may have to reinvest proceeds received
at lower rates of return. Characteristics of underlying mortgage pools will
vary, and it is not possible to predict completely accurately the realized
yield or average life of a particular mortgage-backed security because of the
principal prepayment feature.
Convertible Securities
Certain Funds may invest in convertible securities, which normally provide a
higher yield than the underlying stock but a lower yield than a fixed-income
security without the convertibility feature. The price of the convertible
security normally will vary to some degree with changes in the price of the
underlying stock, although the higher yield tends to make the convertible
security less volatile than the underlying common stock. The price of the
convertible security also will vary to some degree inversely with interest
rates.
INSURANCE LAW RESTRICTIONS
In order for shares of the Investment Company's Funds to remain eligible
investments for the Separate Accounts, it may be necessary, from time to time,
for a Fund to limit its investments in certain types of securities in
accordance with the insurance laws or regulations of the various states in
which the Contracts are sold. Such laws and restrictions as are currently in
effect may limit the Funds' investments in foreign securities and in debt or
equity securities of certain issuers.
INVESTMENT ADVISORY ARRANGEMENTS
THE ADVISER
Subject to the direction and control of the Board of Directors of the
Investment Company, Mutual of America Capital Management Corporation, 320 Park
Avenue, New York, New York 10022 (the "Adviser"), an indirect wholly-owned
subsidiary of Mutual of America Life, manages the investment and reinvestment
of the assets of each Fund pursuant to the Investment Advisory Agreement (the
"Agreement") between the Investment Company and the Adviser. Prior to November
3, 1993, Mutual of America Life was the investment adviser to the Investment
Company; Mutual of America Life's obligations under the Agreement were assumed
by the Adviser on that date. The Adviser had total assets under management of
approximately $7.6 billion at December 31, 1996.
The Adviser's duties as investment adviser also include research, making
recommendations to the Board of Directors of the Investment Company and
placing orders for the purchase and sale of securities (see "The Funds'
Expenses"). The Adviser is obligated to provide all of the office space,
facilities, equipment, material and personnel necessary to perform its duties
under the Agreement. Under the Subadvisory Agreements, the Adviser has
delegated its investment advisory responsibilities to the Subadvisers and is
responsible for providing management services to the respective Funds. See
"The Subadvisers" below.
As compensation for its investment advisory services to each of the Funds of
the Investment Company, the Adviser will receive a fee calculated as a daily
charge at the annual rates of .125% of the value of the net assets in the
Equity Index Fund; .25% of the value of the net assets in the Money Market
Fund; .50% of the value of the net assets in the All America, Bond, Short-Term
Bond, Mid-Term Bond and Composite Funds; and .85% of the value of the net
assets in the Aggressive Equity Fund. The Adviser pays the Subadvisers for
their investment advisory services. See "The Subadvisers" below. During 1996,
the Adviser paid all of the expenses of the Funds other than investment
advisory fees, brokerage commissions and portfolio transaction costs. See "The
Funds' Expenses."
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THE SUBADVISERS
PALLEY-NEEDELMAN, 800 Newport Center Drive, Suite 450, Newport Beach,
California 92660, serves as Subadviser for approximately 10% of the assets
allocated to the All America Fund. Palley-Needelman is jointly owned by Roger
B. Palley and Chet J. Needelman, both of whom have extensive experience in
investment management. It provides investment management services to
institutional, corporate and individual clients and other registered
investment companies. At December 31, 1997, Palley-Needelman managed
approximately $4.8 billion in assets.
OAK ASSOCIATES, 3875 Embassy Parkway, Suite 250, Akron, Ohio 44333, serves as
Subadviser for approximately 10% of the assets allocated to the All-America
Fund. Oak Associates is an Ohio limited liability company that prior to 1996
was a sole proprietorship of James Dravo Oelschlager doing business as Oak
Associates. It provides investment management services for individual and
corporate clients, primarily in connection with retirement plans. At December
31, 1997, Oak Associates had assets under management of approximately $6.2
billion.
ALGER MANAGEMENT, 75 Maiden Lane, New York, New York 10038, serves as
Subadviser for approximately 10% of the assets allocated to the All America
Fund. Alger Management is a wholly-owned subsidiary of Fred Alger & Company,
Incorporated, which is owned by Alger Associates, Inc. Fred M. Alger III and
David D. Alger are the majority shareholders of Alger Associates, Inc. and may
be deemed to control that company and its subsidiaries. Alger Management
provides investment management services to institutional, corporate and
individual clients, including other registered management investment
companies. At December 31, 1997, Alger Management had approximately $7.7
billion in assets under management.
Under the Subadvisory Agreements, each Subadviser, at its own expense and
subject to the supervision of the Adviser and the Board of Directors of the
Investment Company, renders investment advisory services and assumes the
Adviser's duties including research, making recommendations and regular
reports to the Adviser and the Board of Directors of the Investment Company
and maintenance of certain records. The Subadvisers are also obligated to
provide all of the office space, facilities, equipment, material and personnel
necessary to perform their duties under the Subadvisory Agreements. The
Adviser, and not the Funds, will pay to the Subadvisers an amount calculated
daily at the following annual rates: Palley-Needelman, .30%; Oak Associates,
.30%; and Alger Management, .45%; of the value of the net assets for which the
Subadviser is providing investment advisory services.
PORTFOLIO MANAGERS
Set forth below is information about the person or persons employed by the
Adviser or Subadvisers who are primarily responsible for the day-to-day
management of the Funds' investments. No information is given for the Money
Market Fund, the Equity Index Fund or the Indexed Assets portion of the All
America Fund based on the nature of the investments made by those Funds.
ALL AMERICA FUND. The Active Assets of the All America Fund are managed by
three Subadvisers and the Adviser:
Chet J. Needelman, Chief Executive Officer and Senior Investment Officer of
Palley-Needelman, is responsible for the day-to-day management of the Palley-
Needelman portion of the Fund. Mr. Needelman has over 30 years of investment
experience as a security analyst, research director and portfolio manager. He
has managed funds for foundations, corporations, endowments and mutual funds.
He is the co-founder of Palley-Needelman Asset Management and its predecessor
company, where he held various positions during the last 24 years. All
investment decisions for Palley-Needelman Asset Management are made by an
investment committee which includes Mr. Needelman, Mr. Palley and three other
senior investment professionals.
James D. Oelschlager is the portfolio manager of the Oak Associates portion of
the Fund. Since establishing Oak Associates in 1985, Mr. Oelschlager has
served as its portfolio manager. Previously, he served as the Assistant
Treasurer of Firestone Tire & Rubber Company, where he was directly
responsible for the management of the company's pension assets. Mr.
Oelschlager is assisted with portfolio management responsibilities by Donna
Barton, trading, Margaret Ballinger, new accounts, and Doug MacKay, equity
research. These individuals have combined experience of over seventy years in
the investment business and play a key role in the day-to-day management of
the firm's portfolios.
David D. Alger, President and Chief Executive Officer of Alger Management, is
primarily responsible for the day-to-day management of the Alger Management
portion of the Fund. He has been employed by Alger Management as Executive
Vice President and Director of Research since 1971 and as President since
1995, and he serves as portfolio manager for other mutual funds and investment
accounts managed by Alger Management.
Frederick M. Gallagher, Senior Vice President of the Adviser since June 1995,
is responsible for the investments of the Adviser's portion of the Active
Assets of the Fund. Mr. Gallagher's previous position prior to joining the
Adviser was as Senior Vice President/Equity Investments at Continental Asset
Management Corporation. He has more than 30 years of experience in the
investment management business.
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BOND FUND, SHORT-TERM BOND FUND AND MID-TERM BOND FUND. For each of the Bond
Funds, Andrew L. Heiskell, Executive Vice President of the Adviser, has
responsibility for setting the fixed income investment strategy and overseeing
the Fund's day-to-day operations. He has been the portfolio manager for the
Bond Fund since February 1991 and of the Mid-Term and Short-Term Bond Funds
since their inception. Mr. Heiskell has over 25 years of investment experience
and joined Mutual of America Life in February of 1991, where he was Senior
Vice President until January 1, 1994. Prior to joining Mutual of America Life,
Mr Heiskell was employed by M. D. Sass, Inc.
COMPOSITE FUND. Frederick M. Gallagher, Senior Vice President of the Adviser,
oversees the day-to-day operations of the Fund. Mr. Gallagher, who joined the
Adviser in June 1995 and whose most recent position was as Senior Vice
President/Equity Investments at Continental Asset Management Corporation, has
more than 30 years of investment experience. Andrew L. Heiskell, Executive
Vice President of the Adviser, is responsible for day-to-day operations of the
bond portion of the Fund. Mr. Heiskell, who was Senior Vice President of
Mutual of America from February 1991 until January 1, 1994 and previous
thereto was employed by M.D. Sass, Inc., has over 25 years of investment
experience. Mr. Gallagher and Mr. Heiskell are assisted by a team of research
analysts who identify and recommend securities that meet the Fund's criteria
for purchase or sale and provide quantitative analysis regarding
diversification by industry and capitalization.
AGGRESSIVE EQUITY FUND. Frederick M. Gallagher, Senior Vice President of the
Adviser, has responsibility for setting the investment strategy and overseeing
the day-to-day operations of the Aggressive Value Portfolio and the Aggressive
Growth Portfolio of the Aggressive Equity Fund. He is assisted by a team of
research analysts who identify and recommend securities that meet each
Portfolio's criteria for purchase or sale. Mr. Gallagher, who has more than 30
years of investment experience, joined the Adviser in June 1995, and prior
thereto he was Senior Vice President/Equity Investments at Continental Asset
Management Corporation.
THE FUNDS' EXPENSES
Each Fund is charged with brokers' commissions, transfer taxes and other fees
relating to that Fund's portfolio transactions, pursuant to the Investment
Advisory Agreement between the Investment Company and the Adviser. In
addition, the Fund is responsible for a number of expenses relating to its
operations, including: directors' fees and expenses; the fees and expenses of
its independent certified public accountants and of its legal counsel;
printing and mailing costs of semi-annual reports to shareholders, Proxy
Statements, Prospectuses, Prospectus Supplements and Statements of Additional
Information; printing of registration statements; bank transaction charges and
custodian's fees; proxy solicitors' fees and expenses, SEC filing fees; any
federal, state or local income or other taxes; any membership fees of the
Investment Company Institute and similar organizations; fidelity bond and
directors' liability insurance premiums; and any extraordinary expenses, such
as indemnification payments or damages awarded in litigation or settlements
made. The Adviser voluntarily limits the expenses of each Fund, other than for
brokers' commissions, transfer taxes and other fees relating to portfolio
transactions, to the amount of the investment advisory fee paid by the Fund to
the Adviser. The Adviser may discontinue making such reimbursements or
payments at any time.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities for the
Investment Company as well as for selecting brokers and, where applicable,
negotiating the amount of the commission rate paid. In placing orders, it is
the policy of the Investment Company to obtain the best price and execution
for its contracts.
The Adviser and Subadvisers place orders in connection with the purchase and
sale of approved investments with various brokers, including their affiliates.
As a general matter, the Adviser and each Subadviser select broker-dealers
which, in its best judgment, provide prompt and reliable execution at
favorable security prices and reasonable commission rates. They may select
broker-dealers which provide them with research services and may cause a Fund
to pay such broker-dealers commissions which exceed those other broker-dealers
may have charged, if in their view the commissions are reasonable in relation
to the value of the brokerage and/or research services provided by the broker-
dealer. Brokerage arrangements with affiliates of the Adviser or the Sub-
Advisers will be in accordance with the 1940 Act and the rules and regulations
promulgated thereunder. No transactions may be effected by a Fund with an
affiliate of the Adviser or a Sub-Adviser acting as principal for its own
account. When purchasing or selling securities trading on the over-the-counter
market, the Adviser and Subadvisers will generally execute the transaction
with a broker engaged in making a market for such securities.
PURCHASE OF SHARES
The Investment Company is offering shares in the Funds, without sales charge,
at present only for purchase by the Insurance Companies for allocation to the
Separate Accounts to fund benefits under the Contracts. The Investment Company
continuously offers shares at prices equal to the respective per share net
asset value of the Funds. Net asset value is determined in the manner set
forth below under "Additional Information--Determination of Net Asset Value."
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REDEMPTION OF SHARES
The Investment Company is required to redeem all full and fractional shares of
the Funds for cash. The redemption price is the net asset value per share next
determined after the initial receipt of proper notice of redemption. Payment
upon redemption of Fund shares is normally made within seven days of receipt
of such request (unless redemption is suspended or payment is delayed as
permitted in accordance with SEC regulations).
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Investment Company has in the past elected the special tax treatment
afforded a "regulated investment company" under certain provisions of the
Internal Revenue Code (the "Code"). The Investment Company believes it has
qualified for such treatment and intends to continue to qualify therefor. If
it so qualifies, the Investment Company will not be subject to Federal income
tax on that part of its ordinary income and net realized capital gains which
it distributes to shareholders, thereby avoiding any Federal income tax
liability. Such dividend distributions will be declared and reinvested in
additional full and fractional shares of the Fund to which they relate,
annually, both in the case of net investment income and in the case of net
realized short- or long-term capital gains.
For dividend purposes, the net investment income of each Fund will consist of
dividends received and interest accrued by such Fund, plus or minus any
amortized discount or premium, less the estimated expenses of such Fund. To
qualify for treatment as a regulated investment company, the Investment
Company must, among other things, derive in each taxable year at least 90% of
its gross income from dividends, interest, gains from the sale or other
disposition of stock or securities, including foreign securities, and other
income derived with respect to the business of investing in stock or
securities. In addition, the Investment Company must derive less than 30% of
its gross income in each taxable year from the disposition of options, futures
and forward contracts or financial investments and foreign currencies, as well
as stocks and securities, in each case held for less than three months. For
purposes of these tests, gross income is determined without regard to losses
from the sale or other disposition of stock or securities. Since the
Investment Company has more than one Fund, each Fund will be treated as a
separate corporation for Federal income tax purposes. Therefore, the
investments and results of each Fund must satisfy the foregoing requirements
independently.
Although the Investment Company intends to operate so that it will have no
Federal income tax liability, if any such liability is nevertheless incurred,
the investment performance of the Investment Company will be adversely
affected.
The Investment Company intends to distribute all net realized long- or short-
term capital gains, if any, to the shareholders of the Fund or Funds to which
such gains are attributable. Realized capital gains and losses of each Fund
are computed separately for the purpose of determining capital gain
distributions. The net capital gain of one Fund will not be reduced by any net
capital losses incurred by the other Funds. Each Fund which has a net capital
gain will be entitled to distribute the full amount of that capital gain as a
capital gain distribution. Each Fund which has a net capital loss will be
entitled to a carryover of that loss which it can apply against its capital
gains in future years.
The tax treatment of the Insurance Companies and the Separate Accounts and the
tax implications of an investment in any Contract are described in the
prospectus or brochure for the Contract.
ADDITIONAL INFORMATION
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each Fund (i.e., the sum of the value of
the securities held by that Fund plus any cash or other assets including
interest and dividends accrued minus all liabilities including accrued
expenses) is determined once daily by the Adviser immediately after the
declaration of dividends, if any, and is determined as of the time of the
close of trading on the New York Stock Exchange on each day during which such
Exchange is open for trading ("Valuation Day"). The net asset value per share
of each Fund for any Valuation Period (i.e., the period beginning on the close
of business on the preceding Valuation Day and ending on the close of business
on the next Valuation Day) is the amount obtained by multiplying the net asset
value per share as of the preceding Valuation Period by that Fund's Change
Factor (described below) for the period beginning on the close of business on
the preceding Valuation Day and ending on the close of business on the next
Valuation Day ("Valuation Period").
The Change Factor for each Fund for any Valuation Period is determined as:
(a) the ratio of (i) the net asset value of the Fund at the end of the
current Valuation Period, before any amounts are allocated to or withdrawn
from the Fund with respect to that Valuation Period, to (ii) the net asset
value of the Fund at the end of the preceding Valuation Period, after all
allocations and withdrawals were made for that period, divided by
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(b) 1.00000 plus the component of the annual rate of the Investment
Adviser's fee against a Fund's assets for the number of days from the end
of the preceding Valuation Period to the end of the current Valuation
Period (see "Investment Advisory Arrangements").
The value of the assets held in the Investment Company will be determined in
the following manner. Investments for which market quotations are readily
available are valued at the market value of such investments (except that, as
discussed below, money market securities with a remaining maturity of 60 days
or less may be valued at amortized cost). An equity security will be valued at
the last sale price for such security on the principal exchange on which such
security is traded, or at the last bid price on the principal exchange on
which such security is traded if such bid price is of a more recent day than
the last sale price. For any equity security not traded on an exchange but
traded in the over-the-counter market, the value will be the last sale price
available, or if no sale, at the latest available bid price. Debt securities
will be valued at a composite fair market value, "evaluated bid," which may be
the last sale price, by a valuation service selected by the Adviser. Portfolio
securities or assets for which market quotations are not readily available
will be valued at fair value as determined in good faith by the Investment
Adviser under the direction of the Board of Directors of the Investment
Company.
Money market securities held by the Investment Company with a remaining
maturity of 60 days or less will be valued on an amortized cost basis, which
approximates market value; provided, however, that if the value determined
under the amortized cost method is materially different from the actual market
value, then even such short-term money market securities will be valued at
market value. Under the amortized cost method of valuation, the security is
initially valued at cost on the date of purchase (or in the case of securities
initially purchased with more than 60 days remaining to maturity, the market
value on the 61st day prior to maturity), and thereafter the Investment
Company assumes a constant proportionate amortization in value until maturity
of any discount or premium. For purposes of this method of valuation, the
maturity of a variable rate certificate of deposit is deemed to be the next
coupon date on which the interest rate is to be adjusted.
Portfolio investments underlying options are valued as described above. Stock
options written by a Fund are valued at the mean of the last bid and asked
price on the principal exchange where the option is traded, as of the close of
trading on that exchange. The Fund's net value will be increased or decreased
by the difference between the premiums received on writing options and the
costs of liquidating such positions measured by the closing price of the
option on the exchange where traded.
When a Fund writes a call option, the amount of the premium is included in the
Fund's assets and an amount is included in its liabilities. The liability
thereafter is adjusted to the current market value of the call. For example,
if the current market value of the call exceeds the premium received, the
excess would be unrealized depreciation; conversely, if the premium exceeds
the current market value, such excess would be unrealized appreciation. If a
call expires or if the Fund enters into a closing purchase transaction, it
realizes a gain (or a loss if the cost of the transaction exceeds the premium
received when the call was written) without regard to any unrealized
appreciation or depreciation in the underlying securities, and the liability
related to such call is extinguished. If a call is exercised, the Fund
realizes a gain or loss from the sale of the underlying securities and the
proceeds of the sale increased by the premium originally received.
A premium paid on the purchase of a put will be deducted from a Fund's assets
and an equal amount will be included as an investment and subsequently
adjusted to the current market value of the put. For example, if the current
market value of the put exceeds the premium paid, the excess would be
unrealized appreciation; conversely, if the premium exceeds the current market
value, such excess would be unrealized depreciation.
Futures contracts, and options thereon, which are traded on commodities
exchanges, are valued at their official settlement price as of the close of
such commodities exchanges.
DESCRIPTION OF THE INVESTMENT COMPANY'S SHARES
The authorized capital stock of the Investment Company consists of one billion
shares of common stock, $.01 par value. The shares of common stock are divided
into eight classes of common stock: Money Market Fund, All America Fund,
Equity Index Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund,
Composite Fund and Aggressive Equity Fund. The Investment Company may
establish additional Funds and may allocate its shares either to such new
classes or to one or more of the eight existing classes.
All shares of common stock, of whatever class, are entitled to one vote, and
the votes of all classes are cast on an aggregate basis, except on matters
where the interests of the Funds differ. In such a case, the voting is on a
Fund-by-Fund basis. Approval or disapproval by the shareholders of one Fund on
such a matter would not generally be a prerequisite of approval or disapproval
in another Fund. Shareholders in a Fund not affected by a matter generally
would not be entitled to vote on
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that matter. Examples of matters which would require a Fund-by-Fund vote are
changes in the fundamental investment policy of a particular Fund and approval
of the Investment Advisory Agreement or a Subadvisory Agreement for the Fund.
The shares of each Fund, when issued, will be fully paid and nonassessable and
will have no preference, preemptive, conversion, exchange or similar rights.
Shares do not have cumulative voting rights.
Each issued and outstanding share in a Fund is entitled to participate equally
in dividends and distributions declared by such Fund and in the net assets of
such Fund upon liquidation or dissolution remaining after satisfaction of
outstanding liabilities. Accrued liabilities which are not allocable to one or
more Funds will generally be allocated among the Funds in proportion to their
relative net assets. In the unlikely event that any Fund incurred liabilities
in excess of its assets, the other Funds could be liable for such excess.
INDEPENDENT AUDITORS
Arthur Andersen LLP, Certified Public Accountants, have been selected as the
independent auditors of the Investment Company for its fiscal year ending
December 31, 1998. Arthur Andersen LLP also acts as the independent auditors
of the Insurance Companies.
CUSTODIAN
The Chase Manhattan Bank, New York, New York, acts as Custodian of the
Investment Company's assets for the Funds.
LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman, LLP, New York, New York, has been
selected as counsel for the Investment Company, effective May 1, 1998.
YEAR 2000 COMPLIANCE
Many of the services provided to the Investment Company by the Adviser depend
on the proper functioning of its computer and computer-based systems, as well
as those of its outside service providers. Many computers cannot distinguish
the year 2000 from the year 1900, and this inability could potentially have an
adverse impact on the handling of securities trades, the payment of interest
and dividends, pricing, accounting and other recordkeeping services. The
Adviser has performed a comprehensive review of its computer systems and is in
the process of modifying or replacing any of its systems that cannot recognize
the year 2000. It expects to significantly complete modifications and
replacements by the end of 1998 and to perform appropriate systems testing
during the 1999 calendar year. The Adviser is in the process of confirming
with the Investment Company's outside service providers that their systems
will be similarly modified or replaced to address the year 2000 issue. The
Adviser anticipates that its computer systems and those of its outside
providers will be adapted in time for the year 2000.
REPORTS TO SHAREHOLDERS
The fiscal year of the Investment Company ends on December 31 of each year.
The Investment Company will send to its shareholders at least semiannually
reports showing the Funds' portfolio securities and other information. An
annual report containing financial statements, audited by independent
certified public accountants, will be sent to shareholders each year.
INQUIRIES
All inquiries pertaining to the Investment Company's shares should be made in
writing to Mutual of America Investment Corporation, 320 Park Avenue, New
York, New York 10022.
ADDITIONAL INFORMATION AVAILABLE
This Prospectus does not contain all the information included in the
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940, with
respect to the securities offered hereby, certain portions of which have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission.
The Statement of Additional Information, dated May 1, 1998, which forms a part
of the Registration Statement, is incorporated by reference into this
Prospectus. The Statement of Additional Information may be obtained without
charge as provided on the cover page of this Prospectus. The Registration
Statement, including the exhibits filed therewith, may be examined at the
office of the Securities and Exchange Commission in Washington, D.C.
S & P 500 INDEX
The Equity Index Fund and the Indexed Assets of the All America Fund
(together, the "Indexed Portfolios") are not sponsored, endorsed, sold or
promoted by Standard & Poor's Corporation ("S&P"). S&P makes no representation
or warranty, express or implied, to the owners of the Indexed Portfolios or
any member of the public regarding the advisability
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of investing in securities generally or in the Indexed Portfolios particularly
or the ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the Investment Company is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which is
determined, composed and calculated by S&P without regard to the Indexed. S&P
has no obligation to take the needs of the Indexed Portfolios or the owners of
the Indexed Portfolios into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the calculation of the net asset values of the Indexed
Portfolios, nor is S&P a distributor of the Indexed Portfolios. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Indexed Portfolios.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE INDEXED PORTFOLIOS, OWNERS OF THE INDEXED
PORTFOLIOS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
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MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(212) 224-1600
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Mutual of America Investment Corporation Prospectus
dated May 1, 1998 and retained for future reference.
A copy of the prospectus to which this Statement of Additional Information
relates is available at no charge by writing the Mutual of America Investment
Corporation at the above address or by calling the telephone number listed
above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY............................................ 2
INVESTMENT POLICIES AND LIMITATIONS........................................ 2
INVESTMENT RESTRICTIONS.................................................... 6
MANAGEMENT OF THE INVESTMENT COMPANY....................................... 7
INVESTMENT ADVISORY ARRANGEMENTS........................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 10
PURCHASE AND PRICING OF SECURITIES......................................... 11
YIELD AND PERFORMANCE INFORMATION.......................................... 12
DESCRIPTION OF CORPORATE BOND RATINGS...................................... 14
INDEPENDENT AUDITORS....................................................... 15
LEGAL MATTERS.............................................................. 15
CUSTODIAN.................................................................. 15
DISTRIBUTION ARRANGEMENTS.................................................. 15
FINANCIAL STATEMENTS....................................................... 15
</TABLE>
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GENERAL INFORMATION AND HISTORY
THE INVESTMENT COMPANY
Mutual of America Investment Corporation (the "Investment Company") is a
diversified, open-end management investment company -- a type of company
commonly known as a "mutual fund". It is registered as such under the
Investment Company Act of 1940 (the "Investment Company Act"). The Investment
Company was formed on February 21, 1986 as a Maryland corporation and offers
its shares exclusively to separate accounts of Mutual of America Life
Insurance Company ("Mutual of America Life") and Mutual of America Life's
indirect wholly-owned subsidiary, The American Life Insurance Company of New
York ("American Life"). Mutual of America Life and American Life, together,
hereinafter are sometimes referred to as the "Insurance Companies" and each,
an "Insurance Company". The separate accounts of the Insurance Companies,
together, hereinafter are sometimes referred to as the "Separate Accounts" and
each, a "Separate Account".
As a "series" type of mutual fund, the Investment Company issues separate
classes (or series) of stock, each of which represents a separate Fund of
investments. There are currently eight Funds: the Money Market Fund, the All
America Fund, the Equity Index Fund, the Bond Fund, the Short-Term Bond Fund,
the Mid-Term Bond Fund, the Composite Fund, and the Aggressive Equity Fund. As
stated in the Investment Company's Prospectus, the Investment Company is a
successor to Separate Account No. 2 of Mutual of America Life.
The Investment Company's shares are sold only to the Insurance Companies for
allocation to the Separate Accounts; thus the Insurance Companies are the only
holders of Investment Company shares and control the Investment Company.
INVESTMENT POLICIES AND LIMITATIONS
The following supplements the information contained in the Investment
Company's Prospectus concerning the investment policies and limitations of its
Funds. For information relating to the Funds' investment objectives, see
"Investment Objectives and Policies of the Funds", and for information about
the Adviser and the Subadvisers, see "Investment Advisory Arrangements" in the
Prospectus and in this Statement of Additional Information.
Fixed-income securities which are rated in the lower rating categories of the
nationally recognized rating services (Ba or lower by Moody's and BB or lower
by Standard & Poor's), or unrated securities of comparable quality, in which
the Bond Funds may to a limited extent invest, are commonly known as "junk
bonds." Junk bonds are regarded as being predominantly speculative as to the
issuer's ability to make payments of principal and interest. Investment in
such securities involves substantial risk. Junk bonds may be issued by less
creditworthy companies or by larger, highly leveraged companies, and are
frequently issued in corporate restructurings such as mergers and leveraged
buy-outs. Such securities are particularly vulnerable to adverse changes in
the issuer's industry and in general economic conditions. Junk bonds
frequently are junior obligations of their issuers, so that in the event of
the issuer's bankruptcy, claims of the holders of junk bonds will be satisfied
only after satisfaction of the claims of senior security holders. While the
junk bonds in which the Bond Funds may invest normally would not include
securities which, at the time of investment, are in default or the issuers of
which are in bankruptcy, there can be no assurance that such events would not
occur after the Bond Funds purchase a particular security, in which case the
Bond Funds may experience losses and incur costs.
Junk bonds tend to be more volatile than higher-rated fixed-income securities,
so that adverse economic events may have a greater impact on the prices of
junk bonds than on higher-rated fixed-income securities. Like higher-rated
fixed-income securities, junk bonds generally are purchased and sold through
dealers who make a market in such securities for their own accounts. However,
there are fewer dealers in the junk bond market, which may be less liquid than
the market for higher-rated fixed-income securities, even under normal
economic conditions. Also, there may be significant disparities in the prices
quoted for junk bonds by various dealers. Adverse economic conditions or
investor perceptions (whether or not based on economic fundamentals) may
impair the liquidity of this market, and may cause the prices the Bond Funds
may receive for any junk bonds to be reduced, or might cause the Bond Funds to
experience difficulty in liquidating a portion of its portfolios. Under such
conditions, judgment may play a greater role in valuing certain of the Bond
Funds' securities than in the case of securities trading in a more liquid
market.
While the Funds other than the Bond Funds do not purchase junk bonds, the
fixed-income securities they purchase may become junk bonds as a result of
impairments of the issuer's credit. In such instances, the Fund holding a junk
bond will consider disposing of it if, in management's judgment, it is in the
Fund's best interest to do so.
Reference is made to "Investment Objectives and Policies of the Funds" in the
Prospectus for a more complete discussion of the investment objectives and
policies of the Investment Company. The following is a description of the
money market securities the Money Market Fund may invest in as referred to in
the "Investment Objectives and Policies of the Funds" section of the
Prospectus.
SAI-2
<PAGE>
U.S. Government Obligations. Securities issued or guaranteed as to principal
and interest by the United States Government include a variety of Treasury
securities, which differ only in their interest rates, maturities and times of
issuance. Treasury bills have a maturity of one year or less. Treasury notes
have maturities of one to seven years and Treasury bonds generally have a
maturity of greater than five years.
Agencies of the United States Government which issue or guarantee obligations
include, among others, Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Government National Mortgage
Association, Student Loan Marketing Association, Maritime Administration,
Small Business Administration and the Tennessee Valley Authority. Obligations
of instrumentalities of the United States Government include securities issued
or guaranteed by, among others, Federal Farm Credit Banks, Federal National
Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks and Banks
for Cooperatives. Some of these securities are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer
to borrow from the Treasury, while still others are supported only by the
credit of the instrumentality.
Shares of the Investment Company are not themselves insured or guaranteed by
the United States Government or any agency thereof.
Certificates of Deposit. Certificates of deposit are generally short term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at fixed interest rate of which a
negotiable certificate is not received.
Bankers' Acceptance. A bankers' acceptance is a draft drawn on a commercial
bank by a borrower usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods). The
borrower is liable for payment as well as the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Most
acceptances have maturities of six months or less and are traded in secondary
markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months.
Variable Amount Floating Rate Notes. Variable floating rate notes are short-
term, unsecured promissory notes issued by corporations to finance short-term
credit needs. These are interest-bearing notes on which the interest rate
generally fluctuates on a weekly basis.
Corporate Debt Securities. Corporate debt securities with a remaining maturity
of less than one year tend to become extremely liquid and are traded as money
market securities. Such issues with between one and two years remaining to
maturity tend to have greater liquidity and considerably less market value
fluctuations than longer term issues.
REPURCHASE AGREEMENTS
Under a repurchase agreement, underlying debt instruments are acquired for a
relatively short period (usually not more than one week and never more than
one year) subject to an obligation of the seller to repurchase (and the
appropriate Fund to resell) the instrument at a fixed price and time, thereby
determining the yield during the Fund's holding period. This results in a
fixed rate of return insulated from market fluctuation during such period.
Accrued interest on the underlying security will not be included for purposes
of valuing a Fund's assets.
Repurchase agreements have the characteristics of loans by a Fund, and will be
fully collateralized (either with physical securities or evidence of book
entry transfer to the account of the custodian bank) at all times. During the
term of the repurchase agreement the Fund retains the security subject to the
repurchase agreement as collateral securing the seller's repurchase
obligation, continually monitors the market value of the security subject to
the agreement and requires the Fund's seller to deposit with the Fund
additional collateral equal to any amount by which the market value of the
security subject to the repurchase agreement falls below the resale amount
provided under the repurchase agreement. The Funds enter into repurchase
agreements only with member banks of the Federal Reserve System, and with
primary dealers in U.S. Government securities whose creditworthiness has been
reviewed and found satisfactory by the management of the Investment Company,
and who have, therefore, been determined to present minimal credit risk.
Securities underlying repurchase agreements will be limited to certificates of
deposit, commercial paper, bankers' acceptances, or obligations issued or
guaranteed by the United States Government or its agencies or
instrumentalities, in which the Funds may otherwise invest.
SAI-3
<PAGE>
If a seller of a repurchase agreement defaults and does not repurchase the
security subject to the agreement, the Fund would look to the collateral
security underlying the seller's repurchase agreement, including the
securities subject to the repurchase agreement, for satisfaction of the
seller's obligation to the Fund; in such event the Fund might incur
disposition costs in liquidating the collateral and might suffer a loss if the
value of the collateral declines. In addition, there is a risk that, if the
issuer of the repurchase agreement becomes involved in bankruptcy proceedings,
the Fund might be delayed or prevented from liquidating the underlying
security or otherwise obtaining it for its own purposes.
OPTIONS AND FUTURES
As described in the Prospectus, the Funds may enter into transactions in
options, futures contracts and options on futures contracts on securities and
indexes of securities for hedging purposes only. With respect to options and
futures, the Funds may engage in strategies which include buying and selling
covered calls and puts and buying and selling call options on groups of
securities and on the futures of groups of securities.
A call option is a short-term contract (generally having a duration of nine
months or less) which gives the purchaser of the option the right to purchase
the underlying security at a fixed exercise price at any time prior to the
expiration of the option regardless of the market price of the security during
the option period. As consideration for the call option, the purchaser pays a
Fund (the seller) a premium, which the Fund retains whether or not the option
is exercised. The seller of the call option has the obligation, upon the
exercise of the option by the purchaser, to sell the underlying security at
the exercise price at any time during the option period. The selling of a call
option will benefit a Fund if, over the option period, the underlying security
declines in value or does not appreciate above the aggregate of the exercise
price and the premium. However, the Fund risks an "opportunity loss" of
profits if the underlying security appreciates above the aggregate value of
the exercise price and the premium.
A Fund may close out a position acquired through selling a call option by
buying a call option on the same security with the same exercise price and
expiration date as the call option which it had previously sold on that
security. Depending on the premium for the call option purchased by the Fund,
the Fund will realize a profit or loss on the transaction.
A put option is a similar short-term contract that gives the purchaser of the
option the right to sell the underlying security at a fixed exercise price at
any time prior to the expiration of the option regardless of the market price
of the security during the option period. As consideration for the put option
a Fund (the purchaser) pays the seller a premium, which the seller retains
whether or not the option is exercised. The seller of the put option has the
obligation, upon the exercise of the option by the purchaser, to purchase the
underlying security at the exercise price at any time during the option
period. The buying of a covered put contract limits the downside exposure for
the investment in the underlying security to the combination of the exercise
price less the premium paid. The risk of purchasing a put is that the market
price of the underlying stock prevailing on the expiration date may be above
the option's exercise price. In that case the option would expire worthless
and the entire premium would be lost.
A Fund may close out a position acquired through buying a put option by
selling a put option on the same security with the same exercise price and
expiration date as the put option which it had previously bought on the
security. Depending on the premium of the put option sold by the Fund, the
Fund will realize a profit or loss on the transaction.
In addition to options (both calls and puts) on individual securities, the
Funds may purchase and sell options on indexes of securities such as the
Standard & Poor's 100 Index, the Standard & Poor's 500 Stock Index and the New
York Stock Exchange Composite Index. Options on stock indexes, like options on
individuals securities, are traded on national securities exchanges, regulated
by the Securities and Exchange Commission such as the Chicago Board Options
Exchange, the American Stock Exchange and the New York Stock Exchange. The
Funds may sell futures contracts, and purchase options on futures contracts,
on the same types of stock indexes. Options, futures contracts and options on
futures contracts can be used in anticipation of or in a general market or
market sector decline that may adversely affect the market value of a Fund's
portfolio of securities. To the extent that a Fund's portfolio of securities
changes in value in correlation with a given stock index, hedging transactions
in options, futures contracts or options on futures contracts could reduce the
risk to the portfolio of a market decline, and, by so doing, provide an
alternative to the liquidation of securities' positions in the portfolio with
resultant transactions costs. The stock index underlying an option or futures
contract assigns weighted values to the stocks involved in the index, and the
value of the index fluctuates with changes in the market values of the stocks
so included.
A futures contract on fixed income securities requires the seller to deliver,
and the purchaser to accept delivery of, a stated quantity of a given type of
fixed income security for a fixed price at a specified time in the future. A
futures contract or option on a stock index provides for the making and
acceptance of a cash settlement equal to the change in value of a hypothetical
portfolio of stocks between the time the contract is entered into and the time
it is liquidated, times a fixed multiplier. Futures contracts may be traded
domestically only on exchanges which have been designated as "contract
SAI-4
<PAGE>
markets" by the Commodity Futures Trading Commission ("CFTC"), such as the
Chicago Board of Trade. All transactions are settled through the clearing
house of the contract market, which acts as the guarantor of the performance
of each party to all futures contracts cleared.
An option on a futures contract provides the purchaser with the right, but not
the obligation, to enter into a "long" position in the underlying futures
contract (in the case of a call option on a futures contract), or a "short"
position in the underlying futures contract (in the case of a put option on a
futures contract), at a fixed price up to a stated expiration date. Upon
exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in
the case of a call option, or a corresponding long position in the case of a
put option. In the event that an option is exercised, the parties are subject
to all of the risks associated with the trading of futures contracts, such as
payment of margin deposits.
Options on futures contracts are traded on the same contract markets as the
underlying futures contracts, subject to the performance guarantee of the
contract market clearing house. A futures contract or an option on a futures
contract may be closed out prior to maturity or expiration by entering into a
liquidating transaction in the same instrument on the contract market on which
the original position was established.
Unlike a Fund purchasing or selling a security, no price is paid or received
by a Fund upon the purchase or sale of a futures contract. Initially, a Fund
will be required to deposit with the Fund's custodian in the broker's name an
amount of cash or U.S. Treasury bills equal to approximately 5% of the
contract amount. This amount is known as "initial margin." The nature of
initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to a Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called maintenance margin, to and from the broker, will be made on a
daily or intraday basis as the price of the underlying instrument or stock
index fluctuates making the long and short positions in the futures contract
more or less valuable, a process known as mark to market. For example, when a
Fund has purchased a stock index futures contract and the price of the
underlying stock index has risen, that position will have increased in value
and the Fund will receive from the broker a variation margin payment equal to
that increase in value. Conversely, where a Fund has purchased a stock index
futures contract and the price of the underlying stock index has declined, the
position would be less valuable and the Fund would be required to make a
variation margin payment to the broker. At any time prior to expiration of the
futures contract, a Fund may elect to close the position by taking an opposite
position which will operate to terminate the Fund's position in the futures
contract. A final determination of margin is then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a loss
or a gain.
Transactions in options, futures contracts and options on futures contracts
may increase a Fund's transaction costs and portfolio turnover rate and will
be initiated only when consistent with a Fund's investment objectives.
The trading of options, futures contracts and options on futures contracts
also involves risks, in addition to those set forth in the Prospectus. For
example, the trading of options on futures contracts entails the risk that
changes in the value of the underlying futures contract will not be fully
reflected in the value of the option. Further, the ability to profit from the
purchase of an option and liquidate the underlying futures contract, is
subject to the risks of margin payments and the availability of a liquid
market. With respect to options and options on futures contracts, the Funds
are subject to the risk of market movements between the time that the option
is exercised and the time of performance thereunder. In writing a covered call
option on a security or a stock index, the Funds also incur the risk that
changes in the value of the instruments used to cover the position will not
correlate precisely with changes in the value of the option or underlying the
index or instrument.
The exchanges on which options, futures contracts and options on futures
contracts are traded may impose limitations governing the maximum number of
positions on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting alone or in
concert with others (regardless of whether such contracts are held on the same
or different exchanges or held or written in one or more accounts or through
one or more brokers).
The opening of a futures position and the writing of an option are
transactions which involve substantial leverage. As a result, relatively small
movements in the price of the contract can result in substantial unrealized
gains or losses. Because the Funds will engage in transactions in options,
futures contracts and options on futures contracts on securities and indexes
of securities for hedging purposes only, any losses incurred in connection
with these transactions should, if the hedging strategy is successful, be
offset by increases in the value of securities or other assets held by the
Funds or decreases in the prices of securities or other assets the Fund
intends to acquire. Were a Fund to write options on securities or options on
stock indexes for other than hedging purposes, the margin requirements
associated with such transactions could expose the Fund to greater risk.
SAI-5
<PAGE>
Regulations of the CFTC require that a Fund enter into transactions in futures
contracts and options on futures contracts for hedging purposes only or
otherwise to limit its initial futures margins and related option premiums
paid to an amount not to exceed 5% of the value of the Fund's assets, in order
to assure that the Fund is not deemed to be a "commodity pool" and the
Investment Company is not a "commodity pool operator" as defined in CFTC
regulations.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies and may not be
changed without the approval of a majority of the outstanding voting shares of
the affected Fund. None of the Funds will:
1. purchase or sell options or futures except those listed on a domestic
exchange;
2. trade in foreign exchange, or invest in securities of foreign issuers if
at the time of acquisition more than 20% of its total assets, taken at
market value at the time of the investment, would be invested in such
securities (see "Foreign Securities");
3. make an investment in order to exercise control of management over a
company (either singly or together with other Funds);
4. underwrite the securities of other companies, including purchasing
securities that are restricted under the Securities Act of 1933 ("1933
Act") or rules or regulations issued under the 1933 Act (restricted
securities cannot be sold publicly until they are registered under the
1933 Act);
5. make short sales, except when the Fund has, by reason of ownership of
other securities, the right to obtain securities of equivalent kind and
amount that will be held so long as they are in a short position,
6. purchase commodities or commodity contracts;
7. with respect to at least 75% of the value of its total assets, invest more
than 5% of its total assets in the securities of any one issuer (including
repurchase agreements with any one bank), other than securities issued or
guaranteed by the United States Government or its agencies or
instrumentalities (see the caption entitled "The Money Market Fund" in the
Prospectus for more restrictive policies relating to that fund);
8. with respect to at least 75% of the value of its total assets, purchase
more than 10% of the outstanding voting securities of an issuer, except
that such restriction shall not apply to securities issued or guaranteed
by the United States Government or its agencies or instrumentalities;
9. issue senior securities except that each Fund may borrow as described in
restriction 13 below (the issuance and sale of options and futures not
being considered the issuance of senior securities);
10. make an investment in an industry if that investment would make the Fund's
holding in that industry exceed 25% of the Fund's total assets, except for
the Bond Fund, the Short-Term Bond Fund and the Mid-Term Bond Fund, each
of which may invest up to 75% of its total assets in the electric, gas
and/or telephone utilities industries, as described under the caption
"Investment Objectives and Policies of the Funds--The Bond Fund, the
Short-Term Bond Fund and the Mid-Term Bond Fund" in the Prospectus;
11. purchase real estate or mortgages directly. The All America and Aggressive
Equity Funds may, however, buy shares of real estate investment trusts
listed on stock exchanges or reported on the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system, and the Bond
Fund, the Short-Term Bond Fund and the Mid-Term Bond Fund may each buy
mortgage-backed debt issues;
12. invest more than 5% of its total assets in the securities of any one
registered investment company. A Fund may not own more than 3% of an
investment company's outstanding voting securities, and total holdings of
investment company securities may not exceed 10% of the value of a Fund's
total assets;
13. purchase any security on margin or borrow money, except from banks for
temporary purposes, or pledge its assets unless to secure such borrowing.
The Funds may borrow money from or pledge their assets to banks in order
to transfer funds for various purposes, as required, without interfering
with the orderly liquidation of securities in their portfolios, but not
for leveraging purposes. Such borrowings may not exceed 5% of the value of
a fund's total assets at market value;
14. make loans, except loans of portfolio securities (not exceeding 30% of the
value of its total assets at market value), or loans through entry into
repurchase agreements (the purchase of publicly traded debt obligations
not being considered the making of a loan);
15. invest more than 10% of its total assets in repurchase agreements or time
deposits maturing in more than seven days or in portfolio securities not
readily marketable; or
16. purchase oil and gas interests, except that the Funds may purchase
securities of issuers that invest in oil or gas interests. The Money
Market Fund will not purchase equity securities, voting securities, local
or state government securities, or corporate debt or other than those
types of securities specifically mentioned in its investment objectives.
SAI-6
<PAGE>
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or amount of net assets will not be
considered a violation.
MANAGEMENT OF THE INVESTMENT COMPANY
DIRECTORS AND OFFICERS
The Directors of the Investment Company consist of six individuals, four of
whom are not "interested persons" of the Investment Company as defined in the
Investment Company Act of 1940. The Directors of the Investment Company are
responsible for the overall supervision of the operations of the Investment
Company and perform the various duties imposed on the directors of investment
companies by the Investment Company Act of 1940. The Board of directors elects
officers of the Investment Company annually.
The Directors and Officers of the Investment Company and their principal
employment are as follows:
<TABLE>
<CAPTION>
POSITION HELD WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE INVESTMENT COMPANY DURING PAST 5 YEARS
---------------- ---------------------- ------------------------------------------
<S> <C> <C>
Dolores J. Morrissey* Chairman of the Board, President, Mutual of America Securities
320 Park Avenue President and Director Corporation, since August 1996; Executive
New York, NY 10022 Vice President and Assistant to the
President of the Adviser March 1996 to
December 1996; President and Chief
Executive Officer of the Adviser from June
1994 to March 1996; Executive Vice
President of the Adviser from September
1993 until June, 1994. Executive Vice
President of Mutual of America Life until
January 1994.
Manfred Altstadt* Senior Executive Vice Senior Executive Vice President and Chief
320 Park Avenue President, Chief Financial Financial Officer since September 1993 and
New York, NY 10022 Officer, Treasurer and Director Director since May 1993 of the Adviser.
Senior Executive Vice President and Chief
Financial Officer of Mutual of America
Life and American Life.
Peter J. Flanagan Director President of The Life Insurance Council of
551 Fifth Avenue New York.
New York, NY 10176
George J. Mertz Director Retired; formerly President and CEO of
Ridgewood, NJ 07450 National Industries for the Blind.
James J. Needham Director Business Consultant to corporations on
Bridgehampton, NY financial, planning and regulatory matters
during the past five years. Formerly
United States Ambassador to Japan,
Chairman of the New York Stock Exchange
and Commissioner of the Securities and
Exchange Commission.
Howard J. Nolan Director President and C.P.O., United Way of San
P.O. Box 898 Antonio and Bexar County.
San Antonio, TX 78293
Stanley M. Lenkowicz Secretary Senior Vice President and Deputy General
320 Park Avenue Counsel of Mutual of America Life since
New York, NY 10022 March 1995; prior thereto, Senior Vice
President and Associate General Counsel.
</TABLE>
SAI-7
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE INVESTMENT COMPANY DURING PAST 5 YEARS
---------------- ---------------------- ------------------------------------------
<S> <C> <C>
Patrick A. Burns Senior Executive Vice President Senior Executive Vice President and
320 Park Avenue and General Counsel General Counsel since September 1993 of
New York, NY 10022 the Adviser. Senior Executive Vice
President and General Counsel of Mutual of
America Life and American Life since
February 1994. Prior thereto, Executive
Vice President and General Counsel of
Mutual of America Life and American Life.
</TABLE>
- -------
* Mr. Altstadt and Ms. Morrissey are "interested persons" within the meaning
of the 1940 Act.
The officers and directors of the Investment Company own none of its
outstanding shares. The Investment Company has no Audit Committee.
Pursuant to the terms of the Investment Advisory Agreement described under the
caption "Investment Advisory Arrangements", Mutual of America Capital
Management Corporation (the "Adviser"), as investment adviser, pays all
compensation of officers and employees of the Investment Company as well as
the fees of all directors of the Investment Company who are affiliated persons
of the Adviser or its affiliates. Set forth below is a table showing
compensation paid to the directors during 1997.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL INVESTMENT COMPANY AND
FROM ACCRUED AS PART OF BENEFITS UPON OTHER INVESMENT
NAME OF DIRECTOR INVESTMENT COMPANY FUND EXPENSES RETIREMENT COMPANIES IN COMPLEX
---------------- ---------------------- ------------------- ---------------- -----------------------
<S> <C> <C> <C> <C>
Manfred Altstadt........ None(1) None None None(1)
Dolores J. Morrissey.... None(1) None None None(1)
Peter J. Flanagan....... $14,281(2) None None $14,281(2)
George J. Mertz......... $16,274(2) None None $16,274(2)
James J. Needham........ $17,003(2) None None $17,003(2)
Howard J. Nolan......... $14,735(2) None None $14,735(2)
</TABLE>
- -------
(1) As an employee of the Adviser or its affiliate and as "interested persons"
of the Investment Company, Ms. Morrissey and Mr. Altstadt serve as
directors of the Investment Company without compensation.
(2) Directors who are not "interested persons" of the Investment Company
receive from the Investment Company an annual retainer of $10,000
(previously $5,000) and a fee of $1,000 for each Board or Committee
meeting attended. In addition, business travel and accident insurance and
life insurance of $75,000 is provided.
INVESTMENT ADVISORY ARRANGEMENTS
Investment Adviser. The Investment Company's investment adviser is Mutual of
America Capital Management Corporation (the "Adviser"), an indirect wholly-
owned subsidiary of Mutual of America Life. Prior to November 3, 1993, Mutual
of America Life was the investment adviser to the Investment Company, pursuant
to an investment advisory agreement between the Investment Company and Mutual
of America Life, as investment adviser.
Subject at all times to the supervision and approval of the Investment
Company's Board of Directors and except as discussed below under
"Subadvisers", the Adviser renders investment advisory services with respect
to the Money Market, All America, Equity Index, Bond, Short-Term Bond, Mid-
Term Bond, Composite and Aggressive Equity Funds in a manner consistent with
their stated investment policies, objectives and restrictions. In connection
therewith, the Adviser advises the Investment Company as to what investments
should be purchased and sold and places orders for all such purchases and
sales on behalf of the Investment Company. The Adviser is a registered
investment adviser.
Advisory Fees. As compensation for its investment advisory services to each of
the Funds of the Investment Company, the Adviser will receive a fee calculated
as a daily charge at the annual rates of .125% of the value of the net assets
in the Equity Index Fund; .25% of the value of the net assets in the Money
Market Fund; and .50% of the value of the net assets in the All America, Bond,
Short-Term Bond, Mid-Term Bond and Composite Funds; and .85% of the value of
the net assets in the Aggressive Equity Fund. The total amount of Investment
Advisory fees paid in 1997 by the Investment Company to Mutual of America Life
was $9,331,355, of which $199,652 was paid by the Money Market Fund;
$3,487,086 was paid by the All America Fund; $1,850,985 was paid by the Bond
Fund; $1,464,132 was paid by the Composite Fund; $221,763 was paid by the
Equity Index Fund; $78,795 was paid by the Short-Term Bond Fund; $73,392 was
paid by the Mid-Term Bond Fund; and $1,955,550 was paid by the Aggressive
Equity Fund. The total amount of Investment Advisory fees paid in 1996 by the
Investment Company to the Adviser was $7,181,252, of which $152,048 was paid
by the Money Market Fund;
SAI-8
<PAGE>
$2,924,546 was paid by the All America Fund; $91,790 was paid by the Equity
Index Fund; $1,544,608 was paid by the Bond Fund; $56,971 was paid by the
Short-Term Bond Fund; $163,102 was paid by the Mid-Term Bond Fund; $1,412,746
was paid by the Composite Fund; and $835,441 was paid by the Aggressive Equity
Fund.
Advisory Agreement. The Investment Advisory Agreement (the "Advisory
Agreement") was last approved by a majority of the non-interested members of
the Investment Company's Board of Directors (the "non-interested directors")
on February 23, 1993, and by a majority vote of each Fund's shareholders on
April 13, 1993. Pursuant to an assumption agreement dated November 3, 1993,
the Adviser assumed the rights and duties of Mutual of America Life under the
investment advisory agreement. Supplements to the Advisory Agreement to permit
the Adviser to enter into subadvisory agreements for the All America Fund and
Aggressive Equity Fund were approved by a majority of the non-interested
directors on November 16, 1993. The supplement relating to the All America
Fund was approved by a majority vote of the Fund's shareholders on April 14,
1994, and the supplement relating to the Aggressive Equity Fund was approved
by a vote of the Fund's shareholders on May 1, 1995.
The Advisory Agreement terminates automatically in the event of its assignment
or, with respect to any Fund, upon 60 days' notice given by the Investment
Company's Board of Directors, by the Adviser or by majority vote (as defined
in the Investment Company Act of 1940 and the rules thereunder) of the Fund's
shares. Otherwise, the Advisory Agreement will continue in force with respect
to any Fund so long as its continuance is approved at least annually by (i) a
majority of the members of the Investment Company's Board of Directors, or
(ii) a majority vote (as defined in the Investment Company Act of 1940 and the
rules thereunder) of the Fund's Shareholders; provided that in either event
such continuance will also be approved by the vote of a majority of directors
who are not interested persons (as defined in the Investment Company Act of
1940).
Under the Advisory Agreement, the Adviser agrees to provide investment
management services to the Investment Company. Such services include
performing investment research and evaluating pertinent economic, statistical
and financial data; consultation with the Investment Company's Board of
Directors and furnishing to the Investment Company's Board of Directors
recommendations with respect to the overall investment plan; implementation of
the overall investment plan, including carrying out decisions to acquire or
dispose of investments; management of investments; reporting to the Investment
Company's Board of Directors on a regular basis on the implementation of the
investment plan and the management of investments; maintaining all required
records; making arrangements for the safekeeping of assets; and providing
office space facilities, equipment, material and personnel necessary to
fulfill its obligations.
The Adviser is responsible for all expenses incurred in performing the
investment advisory services, including compensation of officers and payment
of office expenses, trading investment and investment management.
Each Fund will pay all other expenses incurred in its operation, including
brokers' commissions, transfer taxes and other fees relating to the Fund's
portfolio transactions, directors' fees and expenses, fees and expenses of its
independent certified public accountants and of its legal counsel, the cost of
the printing and mailing of semi-annual reports to shareholders, Proxy
Statements, Prospectuses, Prospectus Supplements and Statements of Additional
Information, the printing of registration statements, bank transaction charges
and custodian's fees, any proxy solicitors' fees and expenses, SEC filing
fees, any federal, state or local income or other taxes, any membership fees
of the Investment Company Institute and similar organizations, fidelity bond
and directors' liability insurance premiums, as well as any extraordinary
expenses, such as indemnification payments or damages awarded in litigation or
settlements made. The Adviser voluntarily reimburses or pays all of the
expenses of the Funds other than advisory fees, brokers' commissions, transfer
taxes and other fees relating to the Funds' portfolio transactions and paid
all such expenses in 1995. The payment of expenses results in an increase to
each Fund's yield or total return. The Adviser may discontinue or modify its
policy of paying expenses of the Funds at any time.
The Subadvisers. With respect to the management of a portion of the
approximately 30% of the assets allocated to the All America Fund (the "Active
Assets"), the Adviser engages subadvisory services of three subadvisers--
Palley-Needelman Asset Management, Inc. ("Palley-Needelman"), Oak Associates,
Ltd. ("Oak Associates") and Fred Alger Management, Inc. ("Alger Management"),
(each a "Subadviser", and together the "Subadvisers"). Each Subadviser is
registered as an investment adviser under the Investment Advisers Act of 1940.
Each of the Subadvisers, with respect to the assets for which it acts as
subadviser, shall, subject to the supervision of the Adviser and the Board of
Directors of the Investment Company, render investment advisory services and
assume the
obligations including research, making recommendations and regular reports to
the Board of Directors of the Investment Company, maintenance of records, and
providing all the office space, facilities, equipment, material and personnel
necessary to fulfill its obligations under the Subadvisory Agreement.
SAI-9
<PAGE>
Subadvisory Fees. Each of the Subadvisory Agreements provides that the Adviser
will pay to the Subadviser an amount calculated daily at the following annual
rates: Palley-Needelman, .30%; Oak Associates, .30%; and Alger Management,
.45%; of the value of the net assets for which the Subadviser is providing
investment advisory services.
The fees paid to the Subadvisers during 1996 were as follows: Palley-
Needelman, $175,250; Oak Associates, $183,308; and Alger Management, $243,662.
The fees paid during 1997 by the Adviser to the Subadvisers totalled $711,931,
and the amounts to each Subadviser were Palley-Needelman, $208,284; Oak
Associates, $208,892; Alger Management, $294,755.
Subadvisory Agreements. The Subadvisory Agreements were approved by a majority
of the non-interested directors on February 22, 1994. The Subadvisory
Agreements with the Subadvisers for the All America Fund were approved by a
majority vote of the Fund's shareholders on April 14, 1994.
Each agreement terminates automatically in the event of its assignment or upon
60 days' notice given by the Investment Company's Board of Directors, by the
Adviser or by a majority vote (as defined in the Investment Company Act of
1940 and the rules thereunder) of the related Fund's shares. Otherwise, each
Subadvisory Agreement will continue in force so long as its continuance is
approved at least annually by (i) a majority of the members of the Investment
Company's Board of Directors, or (ii) a majority vote (as defined in the
Investment Company Act of 1940 and the rules thereunder) of the All America
Fund's shareholders; provided that in either event such continuance will also
be approved by the vote of a majority of directors who are not interested
persons (as defined in the Investment Company Act of 1940).
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser and each Subadviser are responsible for decisions to buy and sell
securities for the Funds of the Investment Company for which they provide
services as well as for selecting brokers and, where applicable, negotiating
the amount of the commission rate paid. As a general matter, the Adviser and
Subadvisers select broker-dealers which, in their best judgment, provide
prompt and reliable execution at favorable security prices and reasonable
commission rates. The Adviser and Subadvisers may place certain orders with
their affiliates, subject to the requirements of the 1940 Act.
During 1997, Mutual of America Securities Corporation, an affiliate of the
Adviser, acted as an introducing broker for certain securities transactions.
In connection with such activities, Mutual of America Securities Corporation
received $64,092, which represented 3.14% of the total brokerage commissions
paid by the Investment Company and 3.6% of the aggregate dollars of
transactions effected by the Investment Company. In addition, Fred Alger &
Co., an affiliate of a Subadviser, received brokerage commissions during 1997.
Fred Alger & Co. received $216,495, which represented 10.61% of the total
brokerage commissions paid by the Investment Company and 10.03% of the
aggregate dollars of transactions effected by the Investment Company. During
1996, Mutual of America Securities Corporation, an affiliate of the Adviser,
acted as an introducing broker for certain securities transactions. In
connection with such activities, Mutual of America Securities Corporation
received $70,708, which represented approximately 5.5% of the total brokerage
commissions paid by the Investment Company and approximately 6.25% of the
aggregate dollars of transactions effected by the Investment Company. In
addition, Fred Alger & Co., an affiliate of a Subadviser, received brokerage
commissions during 1996. Fred Alger & Co. received $72,555, which represented
approximately 5.7% of the total brokerage commissions paid by the Investment
Company and approximately 4.7% of the aggregate dollars of transactions
effected by the Investment Company. When purchasing or selling securities
trading on the over-the-counter market, the Adviser, and each Subadviser, will
generally execute the transaction with a broker engaged in making a market for
such securities.
Brokerage commissions are negotiated, as there are no standard rates. All
brokerage firms provide the service of execution of the order made; some
brokerage firms also provide research and statistical data, and research
reports on particular companies and industries are customarily provided by
brokerage firms to large investors. In negotiating commissions, consideration
is given by the Adviser, and each Subadviser, to the use and value of the data
and to the quality of execution provided. The valuation of such data may be
judged with reference to a particular order or, alternatively, may be judged
in terms of its value to the overall management of the Investment Company.
The Adviser, and each Subadviser, will place orders with brokers providing
useful research and statistical data services if reasonable commissions can be
negotiated for the total services furnished even though lower commissions may
be available
SAI-10
<PAGE>
from brokers not providing such services. The Adviser, and each Subadviser,
uses these services in connection with all of its investment activities, and
some of the data or services obtained in connection with the execution of
transactions for the Investment Company may be used in managing other
investment accounts. Conversely, data or services obtained in connection with
transactions in other accounts may be used by the Adviser, and each
Subadviser, in providing investment advice to the Investment Company. To the
extent that the Adviser, and each Subadviser, uses research and statistical
data services so obtained, its expenses may be reduced and such data has
therefore been and is one of the factors considered by the Adviser, and each
Subadviser, in determining its fee for investment advisory services.
At times, transactions for the Investment Company may be executed together
with purchases or sales of the same security for other accounts of the Adviser
or a Subadviser. When making concurrent transactions for several accounts, an
effort is made to allocate executions fairly among them. Transactions of this
type are executed only when the Adviser, or a Subadviser, believes it to be in
the best interests of the affected Fund(s), as well as any other accounts
involved. However, the possibility exists that concurrent executions may work
out to the disadvantage of the Fund(s) involved.
PORTFOLIO TURNOVER
Rate of portfolio turnover will not be a limiting factor when management of
the Investment Company deems it appropriate to purchase or sell securities for
a Fund. The portfolio turnover rate in any year will depend on market
conditions.
The Money Market Fund will seek maximum return on its assets by trading to
take advantage of short-term market variations. For this reason, and because
of the short-term nature of the money market instruments that will be
purchased by the Fund, the Money Market Fund will probably have a high annual
rate of portfolio turnover that cannot be predicted (although the Money Market
Fund may be deemed not to have a calculable turnover rate for reporting
purposes because all or most of its portfolio securities are excluded under
the method of calculation of turnover rate prescribed by the Securities and
Exchange Commission).
The Aggressive Equity Fund and the Active Assets of the All America Fund
generally will not hold all of their investments for an extended period.
Since the Equity Index Fund and the Indexed Assets of the All America Fund
will each attempt to duplicate the investment results of the S&P 500 Index, it
is expected that each will hold investments generally for longer periods.
The Bond Funds may realize short-term gains to the extent such realizations
are considered advantageous in light of existing market conditions.
The types and proportions of the Composite Fund's assets are expected to
change frequently to reflect prevailing market conditions. Within the Fund, it
would be expected that the annual rate of portfolio turnover for the equity
securities invested in the Fund would be similar to the annual rate of
portfolio turnover of the Aggressive Equity Fund and the Active Assets of the
All America Fund, and the annual rate of portfolio turnover for the publicly
traded debt securities invested in by the Fund would be similar to the annual
rate of portfolio turnover of the Bond Funds.
PURCHASE AND PRICING OF SECURITIES
As stated in the Prospectus, the Investment Company will offer and sell its
shares at each Fund's per share net asset value, which will be determined in
the manner set forth below.
The net asset value of the shares of each Fund (i.e., the sum of the value of
the securities held by that Fund plus any cash or other assets including
accrued expenses) is determined once daily by the Investment Adviser
immediately after the declaration of dividends, if any, and is determined as
of the time of the close of trading on the New York Stock Exchange on each day
during which such Exchange is open for trading ("Valuation Day"). The net
asset value per share of each Fund for any Valuation Period (i.e., the period
beginning on the close of business on the preceding Valuation Day and ending
on the close of business on the next Valuation Day), is the amount obtained by
multiplying the net asset value per share as of the preceding Valuation Period
by that Fund's Change Factor (described below) for the period beginning on the
close of business on the preceding Valuation Day and ending on the close of
business on the next Valuation Day ("Valuation Period").
SAI-11
<PAGE>
The Change Factor for each Fund for any Valuation Period is determined as:
(a) the ratio of (i) the net asset value of the Fund at the end of the
current Valuation Period, before any amounts are allocated to or withdrawn
from the Fund with respect to that Valuation Period, to (ii) the net asset
value of the Fund at the end of the preceding Valuation Period, after all
allocations and withdrawals were made for that period, divided by
(b) 1.00000 plus the component of the annual rate of the Investment
Adviser's fee against a Fund's assets for the number of days from the end
of the preceding Valuation Period to the end of the current Valuation
Period (see "Investment Advisory Arrangements").
The methods used to value the assets of each Fund are set forth in the
Prospectus.
YIELD AND PERFORMANCE INFORMATION
Performance information is computed separately for each Fund in accordance
with the formulas described below. At any time in the future, total return and
yields may be higher or lower than in the past and there can be no assurance
that any historical results will continue.
Yield of the Money Market Fund. The Money Market Fund calculates a seven-day
"current yield" (eight days when the seventh prior day has no net asset value
because the Investment Company is closed on that day) based on a hypothetical
shareholder account containing one share at the beginning of the seven-day
period. The return is calculated for the period by determining the net change
in the hypothetical account's value for the period, excluding capital changes.
The net change is divided by the share value at the beginning of the period to
give the base period return. This base period return is then multiplied by
365/7 to annualize the yield figure, which is carried to the nearest one-
hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation
of the assets of the Money Market Fund are included in the hypothetical
account for the beginning of the period but changes during the period are not
included in the value for the end of the period. Values also reflect asset
charges (for advisory fees) as well as brokerage fees and other expenses.
Current yields will fluctuate daily. Accordingly, yields for any given seven-
day period do not necessarily represent future results. It should be
remembered that yield depends on the type, quality, maturities and rates of
return of the Money Market Fund's investments, among other factors. The Money
Market Fund yield does not reflect the cost of insurance and other insurance
company separate account charges. It also should not be compared to the yield
of money market funds made available to the general public because they may
use a different method to calculate yield. In addition, their yields are
usually calculated on the basis of a constant one dollar price per share and
they pay out earnings and dividends which accrue on a daily basis.
The following is an example of the calculation of the Money Market Fund's
yield for the seven-day period ended December 31, 1997. Yields may fluctuate
substantially from the example shown.
1. Value for December 24, 1997
2. Value for December 31, 1997 (exclusive of capital changes)
3. Net change equals Line 1 subtracted from Line 2
4. Base period return equals Line 3 divided by Line 1
5. Current yield equals Line 4 annualized (multiplied by 365//7/)
Calculation of Total Return and Average Annual Total Return. Total Return with
respect to the shares of a Fund is a measure of the change in value of an
investment in a Fund over the period covered, which assumes that any dividends
or capital gains distributions are reinvested in that Fund's shares
immediately rather than paid to the investor in cash. The formula for Total
Return with respect to a Fund's shares used herein includes four steps: (1)
adding to the total number of shares purchased by a hypothetical $1,000
investment the number of shares which would have been purchased if all
dividends and distributions paid or distributed during the period had been
immediately reinvested; (2) calculating the value of the hypothetical initial
investment of $1,000 as of the end of the period by multiplying the total
number of shares on the last trading day of the period by the net asset value
per share on the last trading day of the period; (3) assuming redemption at
the end of the period; and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment. Average Annual Total
Return is measured by annualizing Total Return over the period.
SAI-12
<PAGE>
Yield of the Bond Funds. Yield of the shares of the Bond Funds will be
computed by annualizing net investment income, as determined by the
Commission's formula, calculated on a per share basis, for a recent one-month
or 30-day period and dividing that amount by the net asset value per share of
the Fund on the last trading day of that period. Net investment income will
reflect amortization of any market value premium or discount of fixed income
securities (except for obligations backed by mortgages or other assets) over
such period and may include recognition of a pro rata portion of the stated
dividend rate of dividend paying portfolio securities. The Yield of the Fund
will vary from time to time depending upon market conditions, the composition
of the portfolio and operating expenses allocated to the Fund.
Performance Comparisons. Each Fund may from time to time include the Total
Return, the Average Annual Total Return and Yield of its shares in
advertisements or in information furnished to shareholders. The Money Market
Fund may also from time to time include the Yield and Effective Yield of its
shares in information furnished to shareholders. Any statements of a Fund's
performance will also disclose the performance of the respective separate
account issuing the Contracts.
Each Fund may from time to time also include the ranking of its performance
figures relative to such figures for groups of mutual funds categorized by
Lipper Analytical Services ("Lipper") as having the same or similar investment
objectives or by similar services that monitor the performance of mutual
funds. Each Fund may also from time to time compare its performance to average
mutual fund performance figures compiled by Lipper in Lipper Performance
Analysis. Advertisements or information furnished to present shareholders or
prospective investors may also include evaluations of a Fund published by
nationally recognized ranking services and by financial publications that are
nationally recognized such as Barron's, Business Week, CDA Technologies, Inc.,
Changing Times, Dow Jones Industrial Average, Financial Planning, Financial
World, Forbes, Fortune, Hulbert's Financial Digest, Institutional Investor,
Investors Daily, Money, Morningstar Mutual Funds, The New York Times,
Stanger's Investment Adviser, Value Line, The Wall Street Journal,
Wiesenberger Investment Company Service and USA Today.
The performance figures described above may also be used to compare the
performance of a Fund's shares against certain widely recognized standards or
indices for stock and bond market performance.
The All America Fund and Equity Index Fund will be compared to the Standard &
Poor's Composite Index of 500 Stocks (the "S&P 500 Index"), which is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P 500 Index is
composed almost entirely of common stocks of companies listed on the NYSE,
although the common stocks of a few companies listed on the American Stock
Exchange or traded OTC are included. The 500 companies represented include
approximately 400 industrial concerns, as well as, financial services, utility
and transportation concerns. The S&P 500 Index represents about 80% of the
market value of all issues traded on the NYSE.
The Bond Fund will be compared to the Lehman Brothers Government/Corporate
Bond Index (the "Lehman Government/Corporate Index"), which is a measure of
the market value of approximately 5,300 bonds with a face value currently in
excess of $1 million, which have at least one year to maturity and are rated
"Baa" or higher ("investment grade") by a nationally recognized statistical
rating agency.
The Short-Term Bond Fund will be compared to the Salomon Brothers 1-3 Year
Bond Index, and the Mid-Term Bond Fund will be compared to the Salomon
Brothers 3-7 Year Bond Index, which are comprised of the portion of the
Salomon Brothers Broad Investment-Grade Bond Index ("BIG Index") with the
maturity indicated. The BIG Index includes Treasury, Agency, mortgage and
corporate securities. It is market-capitalization weighted and includes all
fixed-rate bonds with a maturity of one year or longer and a minimum of $50
million amount outstanding at entry which remain in the index until their
amount falls below $25 million ($200 million for mortgage securities).
The Aggressive Equity Fund will be compared to the Russell 2000 Index, which
is a market capitalization weighted index of the 2000 smallest companies in
the Russell 3000 Index. The Russell 2000 companies represent approximately 12%
of the Russell 3000 total market capitalization, and the largest company in
the Russell 2000 Index has a current market value of approximately $1 billion.
The Composite Fund will be compared to the S&P 500 Index, the Lehman
Government/Corporate Index and the 90-day Treasury bill rate.
In reports or other communications to shareholders, the Investment Company may
also describe general economic and market conditions affecting the Funds and
may compare the performance of the Funds with (1) that of mutual funds
included in the rankings prepared by Lipper or similar investment services
that monitor the performance of insurance company separate accounts or mutual
funds, (2) IBC/Donoghue's Money Fund Report, (3) other appropriate indices of
investment securities and averages for peer universe of funds which are
described in this Statement of Additional Information, or (4) data developed
by the Adviser or any of the Subadvisers derived from such indices or
averages.
SAI-13
<PAGE>
DESCRIPTION OF CORPORATE BOND RATINGS
Description of Corporate bond ratings of Moody's Investors Services, Inc.:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt-edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Description of corporate bond ratings of Standard & Poor's Corporation:
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is very strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB--B--CCC--CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C--The rating C is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
SAI-14
<PAGE>
INDEPENDENT AUDITORS
The financial statements included in this Statement of Additional Information
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
LEGAL MATTERS
The legal validity of the shares described in the Prospectus has been passed
on by Patrick A. Burns, Esq., Senior Executive Vice President and General
Counsel of the Investment Company.
CUSTODIAN
The Custodian of the Investment Company's Fund securities and other assets is
The Chase Manhattan Bank, N.A., New York, New York 10019.
DISTRIBUTION ARRANGEMENTS
The Investment Company sells its shares on a continuous basis only to the
Separate Accounts of the Insurance Companies. Such shares are sold at their
respective net asset values and without the imposition of a sales charge.
FINANCIAL STATEMENTS
Financial statements of the Investment Corporation for the year ended December
31, 1997 are included as follows:
<TABLE>
<S> <C>
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
</TABLE>
SAI-15
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
We are pleased to report that performance of the funds offered by Mutual of
America Investment Corporation for the year ended December 31, 1997 was,
overall, quite positive.
The U.S. economy grew briskly in 1997 fueled by the good profit growth which
is anticipated to slow in 1998. The markets responded with another good year
buoyed by the lowest unemployment rate in 25 years coupled with low inflation.
Strong Corporate earnings and cash flows into the equity market have propelled
the S&P 500 up 33.4% for the year. The Dow Jones Industrial Average rose
nearly 25% for the same period. In the debt markets, rates have responded to
the market pressures with the long treasury average yield at its lowest since
1993.
For 1998 we expect some disinflation with prices for goods coming down. The
market place does not feel any Federal Reserve action will be needed to raise
rates and indeed there may be some inclination to lower rates.
TOTAL RETURNS--TWELVE MONTHS TO DECEMBER 31, 1997
<TABLE>
<S> <C>
Money Market Fund................................................... + 5.5%
All American Fund................................................... +26.8%
Equity Index Fund................................................... +33.1%
Bond Fund........................................................... +10.4%
Short-Term Bond Fund................................................ + 6.0%
Mid-Term Bond Fund.................................................. + 7.3%
Composite Fund...................................................... +17.7%
Aggressive Equity Fund.............................................. +21.2%
</TABLE>
Please note that the above total return performance figures do not reflect
the deduction of Separate Account fees and expenses which are imposed by
Mutual of America Life Insurance Company and The American Life Insurance
Company of New York, respectively.
On the pages which immediately follow are brief presentations and graphs for
each fund (except the Money Market Fund) which illustrate each fund's
respective:
. Historical total return achieved over specified periods, expressed as an
average annual rate and as a cumulative rate;
. Equivalent in dollars of a $10,000 hypothetical investment at the
beginning of each specified period; and
. Historical performance compared with appropriate indexes.
The portfolios of each fund and financial statements are presented in the
pages which then follow.
Your participation in these funds is appreciated.
Sincerely,
/s/ Dolores J. Morrissey
Dolores J. Morrissey
Chairman of the Board and President,
Mutual of America Investment Corporation
1
<PAGE>
MONEY MARKET FUND
The Money Market Fund returned 5.5% for 1997, comparing favorably to the
Salomon Brothers three month Treasury Bill Index return of 5.2%. The current
seven day annualized effective yield as of 2/17/98 is 5.74%. As is the case
with all past performance reportings, this yield is not necessarily indicative
of future actual yields.
ALL AMERICA FUND
The investment objective of approximately 60% of this fund's assets is to
provide investment results that, to the extent practical, correspond to the
performance of the Standard & Poor's 500 Index. The investment objective of
the remaining assets is to achieve a high level of return by means of a
diversified portfolio. These assets are actively managed by three sub-advisors
and by Mutual of America Capital Management Corporation.
For the year ended December 31, 1997, the fund's total return of 26.8% was
below that of the S&P 500 Index which returned 33.4%. The performance of the
fund, in relation to the index was hindered by the overall laggard performance
experienced by smaller capitalized companies which comprised approximately
half of the actively managed assets of this fund.
LINE GRAPH
<TABLE>
<CAPTION>
All America Fund S & P 500 Index
---------------- ---------------
<S> <C> <C>
12/87 10,000 10,000
12/88 10,991 11,650
12/89 13,843 15,313
12/90 13,635 14,823
12/91 16,964 19,350
12/92 17,502 20,837
12/93 19,626 22,919
5/94 19,231 22,454
12/94 19,880 23,223
12/95 27,152 31,950
12/96 32,779 39,298
12/97 41,562 52,408
</TABLE>
* Prior to May 2, 1994, the Fund was known as the Stock Fund, had a different
investment objective and did not have any subadvisers. Performance data
which includes periods prior to 5/2/94, reflect performance results achieved
in accordance with the previous objective of the Stock Fund.
The line representing the performance return of the All America Fund
includes expenses (such as transaction costs and management fees) that reduce
returns, while the performance return line of the index does not.
2
<PAGE>
EQUITY INDEX FUND
For the year ended December 31, 1997, the Equity Index Fund returned 33.1%,
which consistent with the objective of this fund, replicated the S&P 500
Index. In recognition of the fund's performance, at year-end, the Morningstar
fund rating service increased the fund's rating from four to five stars, its
highest rating. The S&P 500 Index, enjoyed another year of broad gains in all
major industry groups and sectors.
Although investors experienced greater volatility during the year due to
uncertainty in the economic climate, the fund had a positive return in each of
the four quarters of 1997. The major contributors to performance in 1997 were
financial stocks, communications companies and healthcare stocks. The sectors
which lagged the overall index were basic industry and technology. In a
continuation of a prevalent trend, large capitalization companies generally
outperformed smaller capitalization companies.
<TABLE>
<CAPTION>
Equity Index Fund S&P 500 Index
----------------- -------------
<S> <C> <C>
2/93 10,000 10,000
12/93 10,619 10,700
12/94 10,781 10,839
12/95 14,729 14,904
12/96 18,079 18,332
12/97 24,063 24,447
</TABLE>
Equity Index Fund S & P 500
----------------- ---------
<TABLE>
<CAPTION>
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $13,310 33.1% 33.1% 1 Year $13,336 33.4% 33.4%
Since Since
Inception $24,063 140.6% 19.6% Inception $24,447 144.5% 20.0%
</TABLE>
The line representing the performance return of the Equity Index Fund
includes expenses (such as transaction costs and management fees) that reduce
returns, while the performance return line of the index does not.
3
<PAGE>
BOND FUND
The Bond Fund seeks a high level of return consistent with preservation of
capital through investment in publicly traded debt securities. The fund's
return was enhanced by a focus on corporate and U.S. Agency issues yielding
more than comparable segments of the Lehman Brothers Government/Corporate Bond
Index. For 1997, the fund returned 10.4% versus the Index return of 9.8%.
LINE GRAPH
<TABLE>
<CAPTION>
Bond Fund Lehman Brothers Gov't/Corp. Bond Index
--------- --------------------------------------
<S> <C> <C>
12/87 10,000 10,000
12/88 10,610 10,758
12/89 11,960 12,290
12/90 12,561 13,307
12/91 14,533 15,454
12/92 15,781 16,627
12/93 17,873 18,461
12/94 17,314 17,816
12/95 20,679 21,243
12/96 21,400 21,859
12/97 23,631 23,993
</TABLE>
<TABLE>
<CAPTION>
Bond Fund Lehman Brothers Gov't/Corp. Bond Index
--------- --------------------------------------
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $11,042 10.4% 10.4% 1 Year $10,976 9.8% 9.8%
5 Years $14,974 49.7% 8.4% 5 Years $14,430 44.3% 7.6%
10 Years $23,631 136.3% 9.0% 10 Years $23,993 139.9% 9.1%
</TABLE>
The line representing the performance return of the Bond Fund includes
expenses (such as transaction costs and management fees) that reduce returns,
while the performance return line of the index does not.
4
<PAGE>
SHORT-TERM BOND FUND
The Short-Term Bond Fund maintains an average maturity of between one and
three years. Its objectives are to achieve a high total return within this
maturity constraint and to maintain principle value. For 1997, the Fund
returned 6.0% versus the Salomon Brothers 1-3 year Index return of 6.7%.
LINE GRAPH
<TABLE>
<CAPTION>
Short Term Bond Fund Salomon Brothers 1-3 Year Bond Index
-------------------- ------------------------------------
<S> <C> <C>
2/93 10,000 10,000
12/93 10,449 10,448
12/94 10,600 10,511
12/95 11,421 11,655
12/96 11,985 12,257
12/97 12,705 13,074
</TABLE>
<TABLE>
<CAPTION>
Short Term Bond Fund* Salomon Brothers 1-3 Year Bond Index
-------------------- ------------------------------------
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,601 6.0% 6.0% 1 Year $10,667 6.7% 6.7%
Since Since
Inception $12,705 27.0% 5.0% Inception $13,074 30.7% 5.6%
</TABLE>
The line representing the performance return of the Short-Term Bond Fund
includes expenses (such as transaction costs and management fees) that reduce
returns, while the performance return line of the index does not.
5
<PAGE>
MID-TERM BOND FUND
The average maturity of this fund will be between three and seven years. The
fund attempts to maintain a high average quality relative to its index through
the use of a high percentage of U.S. Government and Agency backed securities.
For 1997, the fund returned 7.3% versus 8.3% for the Salomon Brothers 3-7 year
Index.
LINE GRAPH
<TABLE>
<CAPTION>
Mid-Term Bond Fund Salomon Brothers 3-7 Year Bond Index
------------------ ------------------------------------
<S> <C> <C>
2/93 10,000 10,000
12/93 10,727 10,722
12/94 10,355 10,436
12/95 12,042 12,197
12/96 12,510 12,669
12/97 13,429 13,717
</TABLE>
Mid-Term Bond Fund Salomon Brothers 3-7 Year Bond Index
------------------ ------------------------------------
<TABLE>
<CAPTION>
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,734 7.3% 7.3% 1 Year $10,827 8.3% 8.3%
Since Since
Inception $13,429 34.3% 6.2% Inception $13,717 37.2% 6.7%
</TABLE>
The line representing the performance return of the Mid-Term Bond Fund
includes expenses (such as transaction costs and management fees) that reduce
returns, while the performance return line of the index does not.
6
<PAGE>
COMPOSITE FUND
For the year ended December 31, 1997, the Composite Fund returned 17.7%. A
hypothetical blended index, consisting of 50% stocks (pegged to the S&P), 40%
bonds (pegged to the Lehman Brothers Government/Corporate Bond Index) and 10%
cash equivalents (pegged to the Salomon Brothers 3-month T-bill Index) would
have returned 20.8%. The fixed-income portions of the fund outperformed their
respective indexes, while the equity portion underperformed the S&P index. The
fund's equity portfolio had benefited early in the year from strength in
energy-related stocks and healthcare investments. The fund, however, was
negatively impacted in the last quarter due to poorly performing oil service
and technology stocks.
LINE GRAPH
<TABLE>
<CAPTION>
Composite Lehman Brothers Gov't/Corp Bond Index S&P 500 Index Salomon Brothers 3 month Treasury Bill Index
--------- ------------------------------------- ------------- --------------------------------------------
<S> <C> <C> <C> <C>
12/87 10,000 10,000 10,000 10,000
12/88 10,908 10,758 11,650 10,676
12/89 12,970 12,290 15,313 11,597
12/90 13,358 13,307 14,823 12,516
12/91 15,781 15,454 19,350 13,236
12/92 16,718 16,627 20,837 13,716
12/93 19,589 18,461 22,919 14,139
12/94 18,988 17,816 23,223 14,739
12/95 23,146 21,243 31,950 15,587
12/96 25,899 21,859 39,298 16,406
12/97 30,485 23,993 52,408 17,267
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE FUND S & P 500 Index
-------------- ---------------
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1 Year $11,770 17.7% 17.7% 1 Year $13,336 33.4% 33.4%
5 Years $18,234 82.3% 12.8% 5 Years $25,151 151.5% 20.3%
10 Years $30,485 204.8% 11.8% 10 Years $52,408 424.1% 18.0%
<CAPTION>
Lehman Brothers Gov't/Corp. Bond Index Salomon Bros. 3 Month T-Bill Index
-------------------------------------- ----------------------------------
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
1 Year $10,976 9.8% 9.8% 1 Year $10,525 5.2% 5.2%
5 Years $14,430 44.3% 7.6% 5 Years $12,589 25.9% 4.7%
10 Years $23,993 139.9% 9.1% 10 Years $17,267 72.7% 5.6%
</TABLE>
The line representing the performance return of the Composite Fund includes
expenses (such as transaction costs and management fees) that reduce returns,
while the performance return line of the index does not.
7
<PAGE>
AGGRESSIVE EQUITY FUND
The Aggressive Equity Fund has approximately 50% of its assets in value
stocks and 50% in growth stocks. Overall, the Fund seeks to produce an above
average long-term return, recognizing that at times, value will outperform
growth and vice-versa. Overall results for 1997 showed a total performance
gain of 21.2% compared to a 22.4% gain in the Russell 2000 Index. The gain in
the Value segment of the Fund was 31.5% compared to a gain of 31.8% in the
Russell 2000 Index. The gain in the Growth segment of the Fund was 10.7%,
compared to a gain of 13.0% in the Russell 2000 Growth Index. Positive
contributors to this year's performance included the energy, capital goods and
technology sectors.
LINE GRAPH
<TABLE>
<CAPTION>
Aggressive Equity Russel 2000
----------------- -----------
<S> <C> <C>
5/94 10,000 10,000
12/94 10,597 9,845
12/95 14,640 12,645
12/96 18,608 14,730
12/97 22,556 18,024
</TABLE>
Aggresive Equity Fund Russel 2000 Index
--------------------- -----------------
<TABLE>
<CAPTION>
Total Return Total Return
Period Growth ------------ Period Growth ------------
Ended of Average Ended of Average
12/31/97 $10,000 Cumulative Annual 12/31/97 $10,000 Cumulative Annual
- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $12,121 21.2% 21.2% 1 Year $12,236 22.4% 22.4%
Since Since
Inception $22,556 125.6% 24.8% Inception $18,024 80.2% 17.4%
</TABLE>
The line representing the performance return of the Aggressive Equity Fund
includes expenses (such as transaction costs and management fees) that reduce
returns, while the performance return line of the index does not.
8
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MONEY MARKET FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
DISCOUNT FACE AMORTIZED
RATING* RATE MATURITY AMOUNT COST
------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. Government (0.1%)
U.S. Treasury Bill........... 5.20% 02/26/98 $ 40,000 $ 39,676
-----------
Commercial Paper (99.9%)
Ameritech Capital Funding
Corp........................ A1+/P1 5.54 01/12/98 2,509,000 2,504,711
Archer Daniels Midland Co.... A1+/P1 6.20 01/06/98 1,000,000 999,139
Associates Corp.............. A1+/P1 5.62 01/09/98 2,000,000 1,997,482
Baltimore Gas & Electric Co.. A1/P1 5.75 01/20/98 4,000,000 3,987,816
Banc One Funding Corp........ A1/P1 5.79 02/09/98 1,754,000 1,742,961
Bell Atlantic Financial
Services, Inc............... A1/P1 5.80 01/05/98 4,000,000 3,997,411
Bemis Co..................... A1/P1 5.60 01/05/98 4,000,000 3,997,488
Cargill, Inc................. A1+/P1 5.60 01/08/98 3,495,000 3,491,165
Daimler Benz North Amer.
Corp........................ A1/P1 5.68 01/16/98 764,000 762,180
Daimler Benz North Amer.
Corp........................ A1/P1 5.69 01/16/98 1,845,000 1,840,597
Disney (Walt) Enterprises
Inc. ....................... A1/P1 6.00 01/13/98 1,000,000 997,997
Emerson Electric Co.......... A1+/P1 5.70 01/15/98 770,000 768,286
Ford Motor Credit Co......... A1/P1 5.82 01/09/98 2,000,000 1,997,404
Gannett, Inc. ............... A1/P1 5.55 01/08/98 4,000,000 3,995,646
General Electric Capital
Corp........................ A1+/P1 5.63 01/13/98 4,000,000 3,992,432
General Mills, Inc. ......... A1/P1 5.65 01/09/98 4,000,000 3,994,944
GTE Funding Inc.............. A1/P1 6.00 01/08/98 298,000 297,651
GTE Funding Inc.............. A1/P1 5.98 01/22/98 1,947,000 1,940,175
GTE Funding Inc.............. A1/P1 5.91 01/22/98 1,685,000 1,679,168
IBM Credit Corp.............. A1/P1 5.64 01/09/98 1,095,000 1,093,617
Interstate Power Corp. ...... A1/P1 5.83 01/23/98 1,283,000 1,278,414
Interstate Power Corp. ...... A1/P1 5.77 01/26/98 418,000 416,319
Koch Industries Inc.......... A1+/P1 5.74 01/06/98 3,000,000 2,997,598
Koch Industries Inc.......... A1+/P1 6.65 01/02/98 1,008,000 1,007,814
Merrill Lynch & Co........... A1+/P1 5.62 01/02/98 2,250,000 2,249,645
Petrofina Delaware Inc. ..... A1/P1 5.82 01/12/98 4,000,000 3,992,862
SBC Communications, Inc...... A1/P1 5.61 01/20/98 2,210,000 2,203,414
Sony Capital Corp............ A1/P1 5.85 01/27/98 1,100,000 1,095,330
Toyota Credit Puerto Rico
Corp........................ A1+/P1 5.75 01/29/98 505,000 502,731
Toyota Credit Puerto Rico
Corp........................ A1+/P1 5.78 01/29/98 1,755,000 1,747,081
Wisconsin Electric Fuel...... A1+/P1 5.75 01/27/98 517,000 514,843
Xerox Credit Corp............ A1/P1 5.55 01/06/98 3,380,000 3,377,373
-----------
67,461,694
-----------
TOTAL SHORT-TERM DEBT
SECURITIES:
(Cost: $67,501,370) 100%..... $67,501,370
===========
</TABLE>
- -------
* The ratings are provided by Standard & Poor's Corporation/Moody's Investor
Services, Inc.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
INDEXED ASSETS:
COMMON STOCKS
3Com Corp................................................. 19,189 $ 670,415
Abbott Laboratories....................................... 42,424 2,781,423
Adobe Systems, Inc. ...................................... 4,194 173,002
Advanced Micro Devices, Inc. ............................. 8,110 145,473
Aeroquip-Vickers, Inc. ................................... 1,618 79,383
Aetna, Inc. .............................................. 8,242 581,576
Ahmanson (H.F.) & Co. .................................... 5,237 350,551
Air Products & Chemicals Corp. ........................... 6,079 499,997
Airtouch Communications, Inc. ............................ 27,998 1,163,666
Alberto Culver Co. Cl B................................... 3,229 103,529
Albertson's, Inc.......................................... 13,622 645,342
Alcan Aluminum Ltd. ...................................... 12,602 348,130
Allegheny Teledyne Inc ................................... 9,666 250,107
Allergan, Inc. ........................................... 3,731 125,221
AlliedSignal, Inc. ....................................... 31,290 1,218,354
Allstate Corp. ........................................... 23,784 2,161,371
Alltel Corp. ............................................. 10,280 422,122
Aluminum Co. of America................................... 9,566 673,207
Alza Corp. ............................................... 4,893 155,658
Amerada Hess Corp. ....................................... 5,279 289,685
American Electric Power Co. .............................. 10,517 542,940
American Express Co. ..................................... 25,779 2,300,775
American General Corp. ................................... 13,510 730,384
American Greetings Corp. Cl A............................. 4,330 169,411
American Home Products Corp. ............................. 36,035 2,756,677
American Int'l. Group, Inc. .............................. 38,910 4,231,462
American Stores Co. ...................................... 15,144 311,398
Ameritech Corp. .......................................... 30,353 2,443,416
Amgen, Inc. .............................................. 14,599 790,170
Amoco Corp. .............................................. 27,008 2,299,056
Amp, Inc. ................................................ 12,204 512,568
AMR Corp. ................................................ 5,057 649,824
Anadarko Petroleum Corp. ................................. 3,434 208,400
Andrew Corp. ............................................. 5,191 124,584
Anheuser Busch Cos., Inc. ................................ 27,176 1,195,744
Aon Corp. ................................................ 9,302 545,329
Apache Corp. ............................................. 5,198 182,254
Apple Computer, Inc. ..................................... 7,327 96,166
Applied Materials, Inc. .................................. 20,222 609,187
Archer Daniels Midland Co. ............................... 30,925 670,685
Armco, Inc. .............................................. 6,160 30,415
Armstrong World Inds., Inc. .............................. 2,345 175,288
Asarco, Inc. ............................................. 2,424 54,388
Ashland, Inc. ............................................ 4,297 230,695
AT&T Corp. ............................................... 90,093 5,518,196
Atlantic Richfield Co. ................................... 17,791 1,425,503
Autodesk, Inc. ........................................... 2,757 102,009
Automatic Data Processing, Inc ........................... 16,224 995,748
AutoZone, Inc. ........................................... 8,690 252,010
Avery Dennison Corp. ..................................... 5,934 265,546
Avon Products, Inc. ...................................... 7,322 449,387
Baker Hughes, Inc. ....................................... 9,359 408,286
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Ball Corp. ............................................... 1,736 $ 61,302
Baltimore Gas & Electric Co. ............................. 8,498 289,463
Banc One Corp. ........................................... 33,540 1,821,641
Bank of New York, Inc. ................................... 20,892 1,207,818
BankAmerica Corp. ........................................ 38,463 2,807,799
BankBoston Corp. ......................................... 8,058 756,948
Bankers Trust New York Corp. ............................. 5,433 610,872
Bard (C.R.), Inc. ........................................ 3,304 103,456
Barnett Banks, Inc. ...................................... 10,698 768,918
Barrick Gold Corp. ....................................... 20,675 385,071
Battle Mountain Gold Co. ................................. 13,220 77,667
Bausch & Lomb, Inc. ...................................... 3,189 126,364
Baxter International, Inc. ............................... 15,534 783,496
Bay Networks, Inc. ....................................... 12,143 310,405
BB&T Corp. ............................................... 7,600 486,875
Becton Dickinson & Co. ................................... 6,776 338,800
Bell Atlantic Corp. ...................................... 43,078 3,920,098
BellSouth Corp. .......................................... 55,002 3,097,300
Bemis Co. ................................................ 3,050 134,390
Beneficial Corp. ......................................... 3,060 254,362
Bethlehem Steel Corp. .................................... 6,480 55,890
Biomet, Inc. ............................................. 6,402 164,051
Black & Decker Corp. ..................................... 5,433 212,226
Block (H & R), Inc. ...................................... 5,989 268,382
Boeing Co. ............................................... 55,445 2,713,339
Boise Cascade Corp. ...................................... 3,200 96,800
Boston Scientific Corp. .................................. 10,795 495,220
Briggs & Stratton Corp. .................................. 1,458 70,804
Bristol-Myers Squibb Co. ................................. 55,148 5,218,379
Brown-Forman Corp. Cl B................................... 3,971 219,397
Browning Ferris Inds., Inc. .............................. 10,972 405,964
Brunswick Corp. .......................................... 5,715 173,235
Burlington Northern Santa Fe.............................. 8,663 805,117
Burlington Resources, Inc. ............................... 12,814 574,227
Cabletron Systems, Inc. .................................. 9,074 136,110
Caliber System, Inc ...................................... 2,241 109,108
Campbell Soup Co. ........................................ 25,377 1,475,038
Cardinal Health, Inc. .................................... 6,065 455,633
Carolina Power & Light Co. ............................... 8,339 353,886
Case Corp. ............................................... 4,289 259,216
Caterpillar, Inc. ........................................ 20,649 1,002,767
CBS Corp. ................................................ 39,048 1,149,475
Cendant Corporation....................................... 43,908 1,509,327
Centex Corp. ............................................. 1,670 105,105
Central & South West Corp. ............................... 11,772 318,579
Ceridian Corp. ........................................... 4,345 199,055
Champion International Corp. ............................. 5,520 250,125
Charles Schwab Corp. ..................................... 14,731 617,781
Charming Shoppes, Inc. ................................... 6,085 28,523
Chase Manhattan Corp. .................................... 23,376 2,559,672
Chevron Corp. ............................................ 36,426 2,804,802
Chrysler Corp. ........................................... 36,745 1,292,964
Chubb Corp. .............................................. 9,438 713,748
CIGNA Corp. .............................................. 4,108 710,940
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Cincinnati Financial Corp ................................ 3,048 $ 429,006
Cincinnati Milacron, Inc. ................................ 2,293 59,474
Cinergy Corp. ............................................ 8,746 335,081
Circuit City Group, Inc. ................................. 5,666 201,497
Cisco Systems, Inc. ...................................... 57,756 3,219,897
Citicorp ................................................. 25,338 3,203,673
Clear Channel Communications.............................. 5,440 432,140
Clorox Co. ............................................... 5,732 453,186
Coastal Corp. ............................................ 5,883 364,378
Coca-Cola Co. ............................................ 137,178 9,139,484
Cognizant Corp. .......................................... 8,995 400,839
Colgate-Palmolive Co. .................................... 16,408 1,205,988
Columbia Energy Group..................................... 3,187 250,378
Columbia HCA Healthcare Corp. ............................ 35,917 1,064,041
Comcast Corp. Cl A........................................ 19,357 610,955
Comerica, Inc. ........................................... 5,827 525,886
Compaq Computer Corp. .................................... 41,989 2,369,754
Computer Associates Intl., Inc ........................... 30,323 1,603,328
Computer Sciences Corp. .................................. 4,307 359,634
Conagra, Inc. ............................................ 27,084 888,694
Conseco, Inc. ............................................ 10,451 474,867
Consolidated Edison Inc. ................................. 13,035 534,435
Consolidated Natural Gas Co. ............................. 5,296 320,408
Cooper Industries......................................... 6,712 328,888
Cooper Tire & Rubber Co. ................................. 4,531 110,443
Coors (Adolph) Co. Cl B................................... 2,132 70,889
CPC International......................................... 7978 861,624
CoreStates Financial Corp. ............................... 10,972 878,445
Corning, Inc. ............................................ 12,822 476,016
Costco Co ................................................ 11,788 526,039
Countrywide Credit Industries............................. 6,166 264,367
Crane Co. ................................................ 2,642 114,596
Crown Cork & Seal Co., Inc. .............................. 7,120 356,890
CSX Corp. ................................................ 12,103 653,562
Cummins Engine, Inc. ..................................... 2,201 129,996
CVS Corp. ................................................ 9,552 611,925
Cyprus Amax Minerals Co. ................................. 5,379 82,702
Dana Corp. ............................................... 6,007 285,332
Darden Restaurants, Inc. ................................. 8,804 110,050
Data General Corp. ....................................... 2,754 48,022
Dayton Hudson Corp. ...................................... 12,095 816,412
Deere & Co. .............................................. 13,984 815,442
Dell Computer Corp. ...................................... 18,106 1,520,904
Delta Air Lines, Inc. .................................... 4,105 488,495
Deluxe Corp. ............................................. 4,742 163,599
Digital Equipment Corp. .................................. 8,198 303,326
Dillard Inc. ............................................. 6,135 216,258
Disney (Walt) Co. ........................................ 37,448 3,709,692
Dominion Resources, Inc. ................................. 10,368 441,288
Donnelley (R.R.) & Sons Co. .............................. 8,091 301,389
Dover Corp. .............................................. 12,335 445,601
Dow Chemical Co. ......................................... 12,578 1,276,667
Dow Jones & Co., Inc. .................................... 5,522 296,462
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Dresser Industries, Inc. ................................. 9,729 $ 408,009
DSC Communications Corp. ................................. 6,757 162,168
DTE Energy Co. ........................................... 8,350 289,640
Du Pont (E.I.) De Nemours................................. 62,765 3,769,822
Duke Energy Corp. ........................................ 19,960 1,105,285
Dun & Bradstreet Corp. ................................... 9,444 292,173
Eastern Enterprises....................................... 1,171 52,695
Eastman Chemical Co. ..................................... 4,510 268,626
Eastman Kodak Co. ........................................ 18,021 1,095,902
Eaton Corp. .............................................. 4,277 381,722
Echlin, Inc. ............................................. 3,629 131,324
Echo Bay Mines, Ltd. ..................................... 8,020 19,548
Ecolab, Inc. ............................................. 3,728 206,671
Edison International...................................... 21,157 575,205
EG&G, Inc. ............................................... 2,632 54,778
EMC Corp. ................................................ 27,509 754,778
Emerson Electric Co. ..................................... 24,597 1,388,193
Engelhard Corp. .......................................... 8,305 144,299
Enron Corp. .............................................. 17,656 733,827
Entergy Corp. ............................................ 13,884 415,652
Equifax, Inc. ............................................ 8,330 295,194
Exxon Corp. .............................................. 136,772 8,368,736
Fannie Mae................................................ 58,851 3,358,185
Federal Express Corp. .................................... 6,382 389,700
Federated Department Stores............................... 11,623 500,515
Fifth Third Bancorp....................................... 8,547 698,717
First Chicago NBD Corp. .................................. 16,136 1,347,356
First Data Corp. ......................................... 23,742 694,453
First Union Corp. ........................................ 34,859 1,786,523
FirstEnergy Corp ......................................... 12,774 370,446
Fleet Financial Group, Inc. .............................. 13,879 1,040,057
Fleetwood Enterprises, Inc. .............................. 2,068 87,760
Fluor Corp. .............................................. 4,829 180,483
FMC Corp. ................................................ 2,141 144,116
Ford Motor Co. ........................................... 68,733 3,346,437
Fort James Corp of Virginia............................... 11,593 443,432
Fortune Brands, Inc. ..................................... 9,519 352,797
Foster Wheeler Corp. ..................................... 2,339 63,299
FPL Group, Inc. .......................................... 10,090 597,201
Freddie Mac............................................... 38,550 1,616,690
Freeport-McMoran Copper Cl B.............................. 10,728 168,966
Frontier Corp. ........................................... 9,446 227,294
Fruit of the Loom, Inc. .................................. 4,217 108,060
Gannett, Inc. ............................................ 15,735 972,619
Gap, Inc. ................................................ 22,308 790,539
General Dynamics Corp. ................................... 3,596 310,829
General Electric Co. ..................................... 181,529 13,319,887
General Mills, Inc. ...................................... 8,777 628,652
General Motors Corp. ..................................... 39,229 2,378,258
General Re Corp. ......................................... 4,350 922,200
General Signal Corp. ..................................... 2,896 122,175
Genuine Parts Co. ........................................ 9,912 336,388
Georgia-Pacific (Timber Group)............................ 5,265 319,848
Giant Food, Inc. ......................................... 3,453 116,322
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Gillette Co. ............................................. 31,066 $ 3,120,191
Golden West Financial Corp. .............................. 3,151 308,207
Goodrich (B.F.) Co. ...................................... 3,110 128,870
Goodyear Tire & Rubber Co. ............................... 8,674 551,883
GPU Inc. ................................................. 6,698 282,153
Grainger (W.W.), Inc. .................................... 2,754 267,654
Great Atl. & Pac. Tea Co. ................................ 2,201 65,342
Great Lakes Chemical Corp. ............................... 3,444 154,549
Green Tree Financial Corp. ............................... 7,817 204,707
GTE Corp. ................................................ 53,113 2,775,154
Guidant Corp. ............................................ 8,217 511,508
Halliburton Co. .......................................... 14,589 757,716
Harcourt General, Inc. ................................... 4,071 222,887
Harland (John H.) Co. .................................... 1,782 37,422
Harnischfeger Industries, Inc. ........................... 2,843 100,393
Harrah's Entertainment, Inc. ............................. 5,809 109,644
Harris Corp. ............................................. 4,584 210,291
Hartford Financial Svs Grp, Inc. ......................... 6,548 612,647
Hasbro, Inc. ............................................. 7,307 230,170
HBO & Co. ................................................ 11,392 546,816
HealthSouth Corp. ........................................ 22,265 617,853
Heinz (H.J.) Co. ......................................... 20,367 1,034,898
Helmerich & Payne, Inc. .................................. 1,437 97,536
Hercules, Inc. ........................................... 5,358 268,234
Hershey Foods Corp. ...................................... 7,925 490,854
Hewlett-Packard Co. ...................................... 57,696 3,606,000
Hilton Hotels Corp. ...................................... 13,884 413,049
Home Depot, Inc. ......................................... 40,577 2,388,970
Homestake Mining Co. ..................................... 8,444 74,940
Honeywell, Inc. .......................................... 7,060 483,610
Household International, Inc. ............................ 5,935 757,083
Houston Industries, Inc. ................................. 15,823 422,276
Humana, Inc. ............................................. 9,421 195,485
Huntington Bancshares, Inc. .............................. 10,608 381,888
Ikon Office Solutions..................................... 7,644 214,987
Illinois Tool Works, Inc. ................................ 13,837 831,949
Inco Ltd. ................................................ 9,609 163,353
Ingersoll Rand Co. ....................................... 9,183 371,911
Inland Steel, Inc. ....................................... 2,808 48,087
Intel Corp. .............................................. 93,975 6,601,743
International Paper Co. .................................. 16,767 723,076
Interpublic Group of Cos., Inc. .......................... 7,167 357,006
Intl. Business Machines Corp. ............................ 53,922 5,638,219
Intl. Flavors & Fragrances................................ 6,056 311,884
ITT Corp. ................................................ 6,469 536,118
ITT Industries, Inc. ..................................... 6,816 213,852
Jefferson-Pilot Corp. .................................... 3,930 306,048
Johnson & Johnson......................................... 76,583 5,044,905
Johnson Controls, Inc. ................................... 4,821 230,202
Jostens, Inc. ............................................ 2,254 51,982
Kaufman & Broad Home Corp. ............................... 2,236 50,170
Kellogg Co. .............................................. 22,792 1,131,053
Kerr-McGee Corp. ......................................... 2,743 173,666
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
KeyCorp .................................................. 12,192 $ 863,346
Kimberly Clark Corp. ..................................... 30,361 1,497,176
King World Productions, Inc. ............................. 2,115 122,141
KLA Tencor Corporation.................................... 4,817 186,056
Kmart Corp. .............................................. 27,054 312,811
Knight-Ridder, Inc. ...................................... 4,684 243,568
Kroger Corp. ............................................. 14,137 522,185
Laidlaw, Inc. ............................................ 18,914 257,703
Lilly (Eli) & Co. ........................................ 61,528 4,283,887
Limited (The), Inc. ...................................... 15,082 384,591
Lincoln National Corp. ................................... 5,669 442,890
Liz Claiborne, Inc. ...................................... 3,707 154,998
Lockheed Martin Corp. .................................... 10,782 1,062,027
Loews Corp. .............................................. 6,379 676,971
Longs Drug Stores, Inc. .................................. 2,257 72,506
Louisiana-Pacific Corp. .................................. 6,289 119,491
Lowe's Companies, Inc. ................................... 9,681 461,662
LSI Logic Corp. .......................................... 8,168 161,318
Lucent Technologies, Inc. ................................ 35,593 2,842,990
Mallinckrodt, Inc. ....................................... 4,222 160,436
Manor Care, Inc. ......................................... 3,661 128,135
Marriott International, Inc. ............................. 7,079 490,220
Marsh & McLennan Cos., Inc. .............................. 9,421 702,453
Masco Corp. .............................................. 9,163 466,167
Mattel, Inc. ............................................. 16,125 600,656
May Department Stores Co. ................................ 12,829 675,927
Maytag Corp. ............................................. 5,268 196,562
MBIA Inc. ................................................ 4,957 331,189
MBNA Corp. ............................................... 28,439 776,740
McDermott International Inc. ............................. 3,196 117,053
McDonald's Corp. ......................................... 38,162 1,822,235
McGraw-Hill Cos., Inc. ................................... 5,491 406,334
MCI Communications Corp. ................................. 39,814 1,704,536
Mead Corp. ............................................... 6,020 168,560
Medtronic, Inc. .......................................... 26,015 1,360,909
Mellon Bank Corp. ........................................ 14,479 877,789
Mercantile Stores, Inc. .................................. 2,115 128,750
Merck & Co., Inc. ........................................ 66,462 7,061,587
Meredith Corp. ........................................... 3,080 109,917
Merrill Lynch & Co., Inc. ................................ 18,488 1,348,468
MGIC Investment Corp. .................................... 6,333 421,144
Micron Technology, Inc. .................................. 12,124 315,224
Microsoft Corp. .......................................... 68,960 8,913,080
Millipore Corp. .......................................... 2,506 85,047
Minnesota Mining & Mfg. Co. .............................. 22,667 1,860,110
Mirage Resorts, Inc. ..................................... 10,290 234,097
Mobil Corp. .............................................. 43,509 3,140,805
Monsanto Co. ............................................. 33,924 1,424,808
Moore Corp., Ltd. ........................................ 5,106 77,228
Morgan (J.P.) & Co., Inc. ................................ 9,853 1,112,157
Morgan St Dean Witter Discover............................ 33,779 1,997,183
Morton International, Inc. ............................... 7,659 263,278
Motorola, Inc. ........................................... 33,111 1,889,396
NACCO Industries, Inc. Cl A............................... 469 50,270
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Nalco Chemical Co. ....................................... 3,845 $ 152,117
National City Corp. ...................................... 11,852 779,269
National Semiconductor Corp. ............................. 9,255 240,051
National Service Industries............................... 2,595 128,614
NationsBank Corp. ........................................ 39,445 2,398,749
Navistar International Corp. ............................. 4,202 104,262
New York Times Co. Cl A................................... 5,324 352,049
Newell Co. ............................................... 8,828 375,190
Newmont Mining Corp. ..................................... 8,994 264,198
NextLevel Systems, Inc. .................................. 8,478 151,544
Niagara Mohawk Power Corp. ............................... 8,311 87,265
Nicor, Inc. .............................................. 2,796 117,956
Nike, Inc. Cl B........................................... 16,109 632,278
Nordstrom, Inc. .......................................... 4,444 268,306
Norfolk Southern Corp. ................................... 20,915 644,443
Northern States Power Co. ................................ 4,247 247,387
Northern Telecom, Ltd. ................................... 14,542 1,294,238
Northrop Grumman Corp. ................................... 3,704 425,960
Norwest Corp. ............................................ 43,138 1,666,205
Novell, Inc. ............................................. 20,089 150,667
Nucor Corp. .............................................. 5,056 244,268
Occidental Petroleum Corp. ............................... 19,063 558,784
Omnicom Group, Inc. ...................................... 8,994 381,120
Oneok, Inc. .............................................. 1,721 69,485
Oracle Corp. ............................................. 54,386 1,213,487
Oryx Energy Co. .......................................... 6,066 154,683
Owens Corning............................................. 3,069 104,729
Owens Illinois............................................ 8,075 306,345
Paccar, Inc............................................... 4,479 235,147
Pacific Enterprises....................................... 4,794 180,374
PacifiCorp................................................ 16,449 449,263
Pall Corp. ............................................... 7,321 151,453
Parametric Technology Co. ................................ 7,065 334,704
Parker Hannifin Corp. .................................... 6,428 294,884
Peco Energy Co. .......................................... 12,344 299,342
Penney (J.C.) Co., Inc. .................................. 13,864 836,172
Pennzoil Co. ............................................. 2,716 181,462
Peoples Energy Corp. ..................................... 2,018 79,458
Pep Boys-Manny, Moe & Jack................................ 3,637 86,833
Pepsico, Inc. ............................................ 84,146 3,066,069
Perkin-Elmer Corp. ....................................... 2,520 179,077
Pfizer, Inc. ............................................. 71,733 5,348,591
PG & E Corp. ............................................. 24,320 740,240
Pharmacia & Upjohn, Inc. ................................. 28,145 1,030,810
Phelps Dodge Corp. ....................................... 3,260 202,935
Philip Morris Cos., Inc. ................................. 134,474 6,093,363
Phillips Petroleum Co. ................................... 14,596 709,730
Pioneer Hi-Bred Intl., Inc. .............................. 3,647 391,140
Pitney Bowes, Inc. ....................................... 8,033 722,467
Placer Dome, Inc. ........................................ 13,783 174,871
PNC Bank Corp. ........................................... 16,919 965,440
Polaroid Corp. ........................................... 2,622 127,658
Potlatch Corp. ........................................... 1,664 71,552
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
PP&L Resources, Inc. ..................................... 9,502 $ 227,454
PPG Industries, Inc. ..................................... 9,880 564,395
Praxair, Inc. ............................................ 8,745 393,525
Procter & Gamble Co. ..................................... 74,545 5,949,622
Progressive Corp. of Ohio................................. 4,008 480,459
Providian Financial Corp. ................................ 5,396 243,831
Public Svc. Enterprise Group.............................. 12,866 407,691
Pulte Corp. .............................................. 1,217 50,885
Quaker Oats Co. .......................................... 7,681 405,172
Ralston Purina Co. ....................................... 5,910 549,260
Raychem Corp. ............................................ 4,769 205,365
Raytheon Co. ............................................. 2,676 132,110
Raytheon Co. ............................................. 18,820 950,410
Reebok International Ltd. ................................ 3,238 93,294
Republic New York Corp. .................................. 3,030 345,988
Reynolds Metals Co. ...................................... 4,243 254,580
Rite-Aid Corp. ........................................... 7,075 415,214
Rockwell Intl., Corp. .................................... 11,582 605,159
Rohm & Haas Co. .......................................... 3,395 325,071
Rowan Cos., Inc. ......................................... 4,980 151,890
Royal Dutch Petro Co.--NY Shr............................. 118,938 6,444,952
Rubbermaid, Inc. ......................................... 8,627 215,675
Russell Corp. ............................................ 2,099 55,754
Ryder System, Inc. ....................................... 4,474 146,523
Safeco Corp. ............................................. 7,971 388,586
Safety-Kleen Corp. ....................................... 3,353 91,997
Sara Lee Corp. ........................................... 26,623 1,499,207
SBC Communications, Inc. ................................. 52,595 3,852,583
Schering-Plough Corp. .................................... 40,610 2,522,896
Schlumberger, Ltd. ....................................... 27,459 2,210,449
Scientific-Atlanta, Inc. ................................. 4,462 74,738
Seagate Technology, Inc. ................................. 13,566 261,145
Seagram, Ltd. ............................................ 19,770 638,818
Sears Roebuck & Co. ...................................... 21,743 983,870
Service Corp. International............................... 13,971 516,053
Shared Medical Systems Corp. ............................. 1,436 94,776
Sherwin-Williams Co. ..................................... 9,935 275,696
Sigma-Aldrich Corp. ...................................... 5,769 229,317
Silicon Graphics, Inc. ................................... 10,395 129,287
Snap-On, Inc. ............................................ 3,520 153,560
Sonat, Inc. .............................................. 4,935 225,776
Southern Co. ............................................. 39,412 1,019,785
Southwest Airlines Co. ................................... 12,148 299,144
Springs Industries, Inc. Cl A............................. 1,160 60,320
Sprint Corp. ............................................. 23,840 1,397,620
St. Jude Medical, Inc. ................................... 5,284 161,162
St. Paul Companies (The).................................. 4,639 380,687
Stanley Works............................................. 5,122 241,694
State Street Corp. ....................................... 8,920 519,032
Stone Container Corp. .................................... 5,716 59,660
Sun America, Inc. ........................................ 10,820 462,555
Sun Co., Inc. ............................................ 4,177 175,695
Sun Microsystems, Inc. ................................... 21,228 846,466
Suntrust Banks, Inc. ..................................... 11,695 834,730
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Supervalu, Inc. .......................................... 3,487 $ 146,018
Synovus Financial Corp. .................................. 9,709 317,969
Sysco Corp. .............................................. 9,486 432,205
Tandy Corp. .............................................. 5,734 221,117
Tektronix, Inc. .......................................... 2,883 114,419
Tele-Communications Inc--Cl A............................. 28,132 785,937
Tellabs, Inc. ............................................ 10,066 532,239
Temple-Inland, Inc. ...................................... 3,278 171,480
Tenet Healthcare Corp. ................................... 16,931 560,839
Tenneco, Inc. ............................................ 9,443 372,998
Texaco, Inc. ............................................. 30,428 1,654,522
Texas Instruments, Inc. .................................. 22,064 992,880
Texas Utilities Co. ...................................... 13,838 575,141
Textron, Inc. ............................................ 9,114 569,625
Thermo Electron Corp. .................................... 8,645 384,702
Thomas & Betts Corp. ..................................... 3,163 149,451
Time Warner, Inc. ........................................ 31,052 1,925,224
Times Mirror Co. Cl A..................................... 5,313 326,749
Timken Co. ............................................... 3,623 124,540
TJX Cos., Inc. ........................................... 9,056 311,300
Torchmark Corp. .......................................... 7,965 335,027
Toys R Us, Inc. .......................................... 15,839 497,938
Transamerica Corp. ....................................... 3,485 371,152
Travelers Group, Inc. .................................... 65,837 3,546,968
Tribune Co. .............................................. 6,819 424,482
Tricon Global Restaurants................................. 8,418 244,648
TRW, Inc. ................................................ 6,831 364,604
Tupperware Corp .......................................... 3,525 98,259
Tyco International Ltd. .................................. 29,556 1,331,867
U.S Bancorp .............................................. 13,616 1,524,140
U.S. Surgical Corp. ...................................... 4,222 123,757
U.S. West Media Group..................................... 33,672 972,279
U.S. West Communications Group............................ 27,584 1,244,728
Unicom Corp. ............................................. 12,008 369,246
Unilever N.V. ............................................ 35,508 2,217,030
Union Camp Corp. ......................................... 3,991 214,266
Union Carbide Corp. ...................................... 6,834 293,434
Union Electric Co. ....................................... 5,877 254,180
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Union Pacific Corp. ...................................... 13,712 $ 856,143
Union Pacific Resources Grp............................... 14,079 341,415
Unisys Corp. ............................................. 10,061 139,596
United Healthcare Corp. .................................. 10,447 519,085
United Technologies Corp. ................................ 12,922 940,883
Unocal Corp. ............................................. 13,674 530,722
UNUM Corp. ............................................... 7,697 418,524
US Airways Group Inc. .................................... 5,225 326,562
USF&G Corp. .............................................. 6,383 140,824
UST, Inc. ................................................ 10,221 377,538
USX-Marathon Group ....................................... 15,998 539,932
USX-U.S. Steel Group, Inc. ............................... 4,933 154,156
V F Corp. ................................................ 10,398 477,658
Viacom, Inc. ............................................. 19,591 811,802
W.R. Grace & Co. ......................................... 4,179 336,148
Wachovia Corp. ........................................... 11,330 919,146
Wal-Mart Stores, Inc. .................................... 124,989 4,929,253
Walgreen Co. ............................................. 27,306 856,725
Warner-Lambert Co. ....................................... 15,106 1,873,144
Washington Mutual, Inc. .................................. 14,415 919,844
Waste Management Inc. .................................... 25,239 694,072
Wells Fargo & Co. ........................................ 4,809 1,632,354
Wendy's International, Inc. .............................. 7,579 182,369
Western Atlas, Inc. ...................................... 3,104 229,696
Westvaco Corp. ........................................... 5,868 184,475
Weyerhaeuser Co. ......................................... 11,072 543,220
Whirlpool Corp. .......................................... 4,290 235,950
Whitman Corp. ............................................ 5,845 152,335
Willamette Industries, Inc. .............................. 6,392 205,742
Williams Cos., Inc. ...................................... 17,728 503,032
Winn-Dixie Stores, Inc. .................................. 8,259 360,815
Woolworth Corp. Z......................................... 7,764 158,191
WorldCom, Inc. ........................................... 50,108 1,515,767
Worthington Industries, Inc. ............................. 5,565 91,822
Wrigley (Wm.) Jr. Co. .................................... 6,446 512,859
Xerox Corp. .............................................. 18,076 1,334,234
------------
TOTAL INDEXED ASSETS-- COMMON STOCKS
(Cost: $220,180,322) 60.6%............................... $422,040,356
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- ---------- ------------
<S> <C> <C> <C> <C>
INDEXED ASSETS:
- ---------------
SHORT-TERM DEBT SECURITIES
U.S. Government (0.1%)
U.S. Treasury Bill..................... 5.30% 04/16/98 $1,000,000 $ 984,671
------------
Commercial Paper (1.5%)
Banc One Corp.......................... 6.50 01/02/98 1,996,000 1,995,639
Consolidated Natural Gas............... 6.20 01/07/98 3,412,000 3,408,472
Eaton Corp............................. 6.40 01/05/98 5,215,000 5,211,286
------------
10,615,398
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $11,599,922) 1.6%........................................ 11,600,069
------------
TOTAL INDEXED ASSETS
(Cost: $231,780,244) 62.2%...................................... 433,640,425
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
ACTIVE ASSETS
COMMON STOCKS
Basic Materials (1.3%)
Atchison Casting Corp.*.................................. 48,800 $ 793,000
DEKALB Genetics Corp. Cl B*.............................. 27,150 1,065,637
Essex International Inc.*................................ 9,000 267,750
Lone Star Technologies, Inc.............................. 87,000 2,468,625
Morton International, Inc................................ 51,800 1,780,625
Oregon Steel Mills, Inc.................................. 55,000 1,172,187
Praxair, Inc............................................. 31,000 1,395,000
------------
8,942,824
------------
Consumer, Cyclical (9.1%)
American Greetings Corp. Cl A............................ 49,200 1,924,950
Borg-Warner Automotive, Inc.............................. 29,200 1,518,400
Brylane, Inc.*........................................... 27,150 1,337,137
Callaway Golf Co......................................... 106,000 3,027,625
Central Garden & Pet Co.*................................ 37,400 981,750
Cinar Films, Inc. Cl B*.................................. 26,850 1,043,793
Coach USA, Inc.*......................................... 38,200 1,279,700
Consolidation Capital Corp.*............................. 17,000 345,312
Dan River, Inc.*......................................... 43,600 716,675
Dress Barn, Inc.*........................................ 27,000 766,125
Earthgrains Co........................................... 24,650 1,158,550
Fairfield Communities, Inc.*............................. 57,700 2,553,225
Family Golf Centers, Inc.*............................... 23,900 749,862
Finlay Enterprises, Inc.*................................ 97,800 2,224,950
Flowers Industries, Inc.................................. 17,300 355,731
Fred Meyer, Inc.*........................................ 25,300 920,287
Gannett, Inc............................................. 35,200 2,175,800
General Motors Corp...................................... 26,400 1,600,500
Golden Bear Golf, Inc.*.................................. 81,000 648,000
Interstate Bakeries Corp................................. 15,000 560,625
Jacor Communications, Inc.*.............................. 16,850 895,156
Linens 'n Things, Inc.*.................................. 9,900 431,887
Masco Corp............................................... 39,300 1,999,387
May Department Stores Co................................. 30,100 1,585,893
Michaels Stores, Inc.*................................... 34,700 1,014,975
Midwest Express Holdings, Inc.*.......................... 64,800 2,515,050
Nautica Enterprises, Inc.*............................... 12,750 296,437
Outdoor Systems, Inc.*................................... 36,250 1,395,625
Pillowtex Corp.*......................................... 11,500 401,062
Polo Ralph Lauren Corp.*................................. 12,500 303,906
Ryanair Holdings PLC--ADR*............................... 70,000 1,758,750
Ryder System, Inc........................................ 39,500 1,293,625
St. John Knits, Inc...................................... 146,000 5,840,030
Stage Stores, Inc.*...................................... 17,300 646,587
Suiza Foods Corp.*....................................... 49,705 2,960,554
Sunbeam, Corp............................................ 27,850 1,173,181
The Men's Wearhouse, Inc.*............................... 19,550 679,362
Tiffany & Co............................................. 61,400 2,214,237
Tower Automotive, Inc.*.................................. 76,500 3,217,781
Universal Foods Corp.*................................... 47,700 2,015,325
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Universal Outdoor Holdings*.............................. 17,500 $ 910,000
Wendy's International, Inc............................... 72,000 1,732,500
Xerox Corp............................................... 32,400 2,391,525
------------
63,561,832
------------
Consumer, Non-Cyclical (3.4%)
Advanced Lighting Techs., Inc.*.......................... 55,500 1,054,500
American Home Products Corp.............................. 16,800 1,285,200
American Stores Co....................................... 95,600 1,965,775
Amerisource Health Corp-Cl A*............................ 11,100 646,575
Bed Bath & Beyond, Inc.*................................. 31,700 1,220,450
Bergen Brunswig*......................................... 35,200 1,482,800
Biochem Pharma, Inc.*.................................... 12,650 264,068
Biomet, Inc.*............................................ 29,700 761,062
CKE Restaurants, Inc.*................................... 17,200 724,550
DURA Pharmaceuticals, Inc.*.............................. 13,650 626,193
Elan Corp Plc*........................................... 6,400 327,600
ESC Medical Systems Ltd.*................................ 27,200 1,054,000
Express Scripts, Inc-Cl A*............................... 16,750 1,005,000
I-STAT Corporation*...................................... 35,000 553,437
IDEC Pharmaceuticals Corp.*.............................. 19,600 673,750
JP Foodservice, Inc.*.................................... 19,050 703,659
Keystone Automotive Inds*................................ 17,500 415,625
Lincare Holdings, Inc*................................... 18,400 1,048,800
Medimmune, Inc.*......................................... 3,000 128,625
Mentor Corp.............................................. 24,750 903,375
Omnicare, Inc.*.......................................... 23,000 713,000
Pediatrix Medical Group, Inc.*........................... 15,450 660,487
Philip Morris Cos., Inc.................................. 62,100 2,813,906
Safeskin Corp.*.......................................... 8,650 490,887
Warnaco Group, Inc. Cl A................................. 50,000 1,568,750
Whole Foods Market, Inc.*................................ 15,300 782,212
------------
23,874,286
------------
Energy (3.2%)
Elf Aquitaine--ADR....................................... 45,500 2,667,437
Evi, Inc.*............................................... 12,400 641,700
Global Industries Ltd.*.................................. 26,200 445,400
Kerr-McGee Corp.......................................... 29,200 1,848,725
Mobil Corp............................................... 22,000 1,588,125
Newpark Resources Inc.*.................................. 133,400 2,334,500
Oceaneering Int'l, Inc.*................................. 123,900 2,447,025
Precision Drilling Corp*................................. 102,000 2,486,250
St. Mary Land & Exploration C. .......................... 42,500 1,487,500
Texaco, Inc.............................................. 23,800 1,294,125
Union Pacific Resources Grp.............................. 96,400 2,337,700
Varco International, Inc.*............................... 36,000 771,750
Veritas DGC, Inc.*....................................... 45,000 1,777,500
------------
22,127,737
------------
Financial (6.4%)
Ahmanson (H.F.) & Co..................................... 34,951 2,339,532
American Int'l. Group, Inc............................... 31,400 3,414,750
Aon Corp................................................. 31,500 1,846,687
Associated Banc-Corp..................................... 6,000 330,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
ACTIVE ASSETS (CONT'D)
Beneficial Corp.......................................... 17,000 $ 1,413,125
Checkfree Holdings Corp.................................. 66,700 1,800,900
Citicorp................................................. 39,300 4,968,993
CMAC Investment Corporation.............................. 25,850 1,560,693
Enhance Financial Svcs Group............................. 24,600 1,463,700
Executive Risk, Inc.*.................................... 21,200 1,480,025
First of America Bank Corp............................... 15,400 1,187,725
First Union Corp......................................... 49,000 2,511,250
Fleet Financial Group, Inc............................... 23,300 1,746,043
INMC Mortgage Holdings, Inc.............................. 53,200 1,246,875
Keystone Financial, Inc.................................. 71,250 2,867,812
Loews Corp............................................... 21,900 2,324,137
National Golf Properties, Inc............................ 47,700 1,565,156
NationsBank Corp......................................... 23,100 1,404,768
Oriental Financial Group................................. 50,000 1,478,125
Patriot American Hospitality............................. 27,299 786,552
Providian Financial Corp................................. 29,100 1,314,956
The Money Store, Inc..................................... 35,950 754,950
U.S Bancorp.............................................. 27,800 3,111,862
Vesta Insurance Group, Inc............................... 23,850 1,416,093
------------
44,335,459
------------
Industrial (3.4%)
AGCO Corp................................................ 95,400 2,790,450
American Disposal Serv., Inc.*........................... 13,900 507,350
Applied Materials, Inc.*................................. 66,800 2,012,350
Aviall, Inc.*............................................ 53,700 802,143
Burlington Northern Santa Fe............................. 17,711 1,646,016
Cambridge Tech. Partners, Inc.*.......................... 10,550 439,143
Chart Industries, Inc.*.................................. 47,200 1,076,750
Expeditors Int'l Wash., Inc.............................. 9,100 350,350
First Data Corp.......................................... 47,600 1,392,300
Foster Wheeler Corp...................................... 38,500 1,041,906
Hardinge, Inc............................................ 87,300 3,251,925
Hvide Marine, Inc.*...................................... 14,000 360,500
Keane, Inc.*............................................. 9,450 383,906
Knightsbridge Tankers Ltd.*.............................. 38,000 1,075,875
Knoll, Inc.*............................................. 14,000 449,750
QuickResponse Services, Inc.*............................ 30,400 1,124,800
Union Pacific Corp....................................... 37,100 2,316,431
USA Waste Services, Inc.*................................ 33,472 1,313,776
York International Corp.................................. 32,000 1,266,000
------------
23,601,721
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Technology (9.8%)
3Com Corp.*.............................................. 146,300 $ 5,111,356
Advancrd Fibre Communication*............................ 29,000 844,625
America Online, Inc.*.................................... 8,300 740,256
Atmel Corp.*............................................. 76,200 1,414,462
Avis Rent A Car, Inc.*................................... 40,100 1,280,693
Ballard Medical Products................................. 52,400 1,270,700
Boeing Co................................................ 32,600 1,595,362
Boston Technology Inc*................................... 75,000 1,884,375
CBT Group PLC*........................................... 25,800 2,118,825
Ciena Corp.*............................................. 14,800 904,650
Cisco Systems, Inc.*..................................... 178,200 9,934,650
Citrix Systems, Inc.*.................................... 9,100 691,600
Compaq Computer Corp.*................................... 133,000 7,506,187
Cytyc Corporation*....................................... 35,000 870,625
Hooper Holmes, Inc....................................... 68,250 993,890
INCYTE Pharmaceuticals, Inc.*............................ 35,500 1,597,500
Intel Corp............................................... 105,100 7,383,275
Intl. Business Machines Corp............................. 26,552 2,776,343
Linear Technology Corp................................... 67,400 3,883,925
Maxim Integrated Products, Inc*.......................... 59,200 2,042,400
Parametric Technology Co.*............................... 39,200 1,857,100
Raytheon Co.*............................................ 1,684 83,124
Raytheon Co.*............................................ 48,576 2,453,088
Sun Microsystems, Inc.*.................................. 161,600 6,443,800
Technology Solutions Company*............................ 27,000 712,125
Tellabs, Inc.*........................................... 13,500 713,812
Transaction Network Services*............................ 21,600 372,600
Xilinx, Inc.*............................................ 17,000 596,062
------------
68,077,410
------------
Utilities (0.9%)
Duke Energy Corp......................................... 34,000 1,882,750
Edison International..................................... 38,000 1,033,125
MCI Communications Corp.................................. 48,300 2,067,843
SBC Communications, Inc.................................. 27,000 1,977,750
------------
6,961,468
------------
TOTAL ACTIVE ASSETS--
COMMON STOCKS
(Cost: $184,699,006) 37.5%....................................... 261,482,737
------------
</TABLE>
- -------
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- -------- ------------
<S> <C> <C> <C> <C>
ACTIVE ASSETS (CONT'D):
SHORT-TERM DEBT SECURITIES
Commercial Paper (0.3%)
Banc One Corp............................ 6.50% 01/02/98 $283,000 $ 282,949
Four Winds Funding Corp. ................ 6.06 01/05/98 800,000 799,460
Merrill Lynch............................ 6.05 01/09/98 800,000 798,924
------------
1,881,333
------------
TOTAL ACTIVE ASSETS--SHORT-TERM DEBT SECURITIES
(Cost: $1,881,333) 0.3%......................................... 1,881,333
------------
TOTAL ACTIVE ASSETS
(Cost: $186,580,339) 37.8%...................................... 263,364,070
------------
TOTAL INVESTMENTS
(Cost: $418,360,583) 100.0%..................................... $697,004,495
============
</TABLE>
- -------
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNDERLYING FACE
EXPIRATION DATE AMOUNT AT VALUE UNREALIZED (LOSS)
--------------- --------------- -----------------
<S> <C> <C> <C>
PURCHASED
50 SP 500 Stock Index Futures
Contracts................... March 1998 $12,238,750 $(2500)
=========== ======
</TABLE>
The face value of futures purchased and outstanding as percentage of total
investment in securities: 1.8%
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
INDEXED ASSETS:
COMMON STOCKS
3Com Corp.................................................. 10,409 $ 363,664
Abbott Laboratories........................................ 23,120 1,515,805
Adobe Systems, Inc......................................... 2,201 90,791
Advanced Micro Devices, Inc. .............................. 4,256 76,342
Aeroquip-Vickers, Inc...................................... 849 41,654
Aetna, Inc................................................. 4,525 319,295
Ahmanson (H.F.) & Co....................................... 2,854 191,039
Air Products & Chemicals Corp.............................. 3,310 272,247
Airtouch Communications, Inc............................... 15,213 632,290
Alberto Culver Co. Cl B.................................... 1,695 54,345
Albertson's, Inc........................................... 7,422 351,617
Alcan Aluminum Ltd......................................... 6,856 189,397
Allegheny Teledyne Inc..................................... 5,314 137,499
Allergan, Inc.............................................. 1,958 65,715
AlliedSignal, Inc. ........................................ 17,094 665,597
Allstate Corp. ............................................ 12,962 1,177,921
Alltel Corp................................................ 5,644 231,756
Aluminum Co. of America.................................... 5,253 369,679
Alza Corp.................................................. 2,568 81,694
Amerada Hess Corp.......................................... 2,771 152,058
American Electric Power Co. ............................... 5,714 294,985
American Express Co........................................ 14,049 1,253,873
American General Corp. .................................... 7,363 398,062
American Greetings Corp. Cl A.............................. 2,272 88,892
American Home Products Corp................................ 19,589 1,498,558
American Int'l. Group, Inc................................. 21,179 2,303,216
American Stores Co......................................... 8,224 169,106
Ameritech Corp............................................. 16,542 1,331,631
Amgen, Inc................................................. 8,008 433,433
Amoco Corp................................................. 14,719 1,252,954
Amp, Inc................................................... 6,634 278,628
AMR Corp................................................... 2,777 356,844
Anadarko Petroleum Corp.................................... 1,802 109,358
Andrew Corp................................................ 2,724 65,376
Anheuser Busch Cos., Inc................................... 14,854 653,576
Aon Corp. ................................................. 5,050 296,056
Apache Corp. .............................................. 2,728 95,650
Apple Computer, Inc........................................ 3,846 50,478
Applied Materials, Inc..................................... 11,011 331,706
Archer Daniels Midland Co.................................. 16,916 366,865
Armco, Inc................................................. 3,233 15,962
Armstrong World Inds., Inc................................. 1,231 92,017
Asarco, Inc................................................ 1,272 28,540
Ashland, Inc............................................... 2,255 121,065
AT&T Corp.................................................. 49,062 3,005,047
Atlantic Richfield Co...................................... 9,689 776,331
Autodesk, Inc.............................................. 1,447 53,539
Automatic Data Processing, Inc ............................ 8,844 542,800
AutoZone, Inc. ............................................ 4,561 132,269
Avery Dennison Corp........................................ 3,114 139,351
Avon Products, Inc. ....................................... 3,998 245,377
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
Baker Hughes, Inc.......................................... 5,096 $ 222,313
Ball Corp.................................................. 911 32,169
Baltimore Gas & Electric Co. .............................. 4,460 151,918
Banc One Corp.............................................. 17,742 963,612
Bank of New York, Inc...................................... 11,386 658,253
BankAmerica Corp........................................... 20,961 1,530,153
BankBoston Corp............................................ 4,400 413,325
Bankers Trust New York Corp................................ 2,961 332,927
Bard (C.R.), Inc. ......................................... 1,734 54,295
Barnett Banks, Inc......................................... 5,830 419,031
Barrick Gold Corp.......................................... 11,258 209,680
Battle Mountain Gold Co. .................................. 6,938 40,760
Bausch & Lomb, Inc......................................... 1,674 66,332
Baxter International, Inc.................................. 8,441 425,742
Bay Networks, Inc.......................................... 6,360 162,577
BB&T Corp.................................................. 4,135 264,898
Becton Dickinson & Co...................................... 3,690 184,500
Bell Atlantic Corp. ....................................... 23,445 2,133,495
BellSouth Corp............................................. 29,943 1,686,165
Bemis Co................................................... 1,601 70,544
Beneficial Corp............................................ 1,606 133,498
Bethlehem Steel Corp. ..................................... 3,401 29,333
Biomet, Inc................................................ 3,360 86,100
Black & Decker Corp........................................ 2,852 111,406
Block (H & R), Inc......................................... 3,143 140,845
Boeing Co.................................................. 30,240 1,479,870
Boise Cascade Corp......................................... 1,679 50,789
Boston Scientific Corp..................................... 5,864 269,011
Briggs & Stratton Corp..................................... 765 37,150
Bristol-Myers Squibb Co.................................... 30,054 2,843,859
Brown-Forman Corp. Cl B.................................... 2,084 115,141
Browning Ferris Inds., Inc................................. 5,974 221,038
Brunswick Corp............................................. 2,999 90,907
Burlington Northern Santa Fe............................... 4,698 436,620
Burlington Resources, Inc.................................. 5,317 238,268
Cabletron Systems, Inc..................................... 4,762 71,430
Caliber System, Inc........................................ 1,176 57,256
Campbell Soup Co........................................... 13,830 803,868
Cardinal Health, Inc....................................... 3,278 246,259
Carolina Power & Light Co. ................................ 4,571 193,981
Case Corp.................................................. 2,251 136,044
Caterpillar, Inc........................................... 11,253 546,473
CBS Corp................................................... 21,280 626,430
Cendant Corporation........................................ 23,893 821,317
Centex Corp. .............................................. 876 55,133
Central & South West Corp. ................................ 6,410 173,470
Ceridian Corp.............................................. 2,307 105,689
Champion International Corp................................ 2,897 131,270
Charles Schwab Corp........................................ 7,993 335,206
Charming Shoppes, Inc...................................... 3,194 14,971
Chase Manhattan Corp....................................... 12,739 1,394,920
Chevron Corp............................................... 19,774 1,522,598
Chrysler Corp.............................................. 20,025 704,629
Chubb Corp................................................. 5,144 389,015
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
CIGNA Corp. ............................................... 2,235 $ 386,794
Cincinnati Financial Corp ................................. 1,658 233,363
Cincinnati Milacron, Inc................................... 1,203 31,202
Cinergy Corp............................................... 4,762 182,444
Circuit City Group, Inc.................................... 2,974 105,762
Cisco Systems, Inc. ....................................... 30,414 1,695,580
Citicorp................................................... 13,809 1,745,975
Clear Channel Communications............................... 2,961 235,214
Clorox Co. ................................................ 3,122 246,833
Coastal Corp. ............................................. 3,201 198,261
Coca-Cola Co. ............................................. 74,758 4,980,751
Cognizant Corp. ........................................... 4,959 220,985
Colgate-Palmolive Co....................................... 8,939 657,016
Columbia Energy Group...................................... 1,673 131,435
Columbia HCA Healthcare Corp............................... 19,574 579,879
Comcast Corp. Cl A......................................... 10,536 332,542
Comerica, Inc. ............................................ 3,187 287,626
Compaq Computer Corp....................................... 22,833 1,288,637
Computer Associates Intl., Inc ............................ 16,488 871,803
Computer Sciences Corp. ................................... 2,330 194,555
Conagra, Inc............................................... 14,283 468,660
Conseco, Inc............................................... 5,674 257,812
Consolidated Edison Inc. .................................. 7,099 291,059
Consolidated Natural Gas Co................................ 2,880 174,240
Cooper Industries.......................................... 3,689 180,761
Cooper Tire & Rubber Co. .................................. 2,378 57,963
Coors (Adolph) Co. Cl B.................................... 1,119 37,206
CoreStates Financial Corp.................................. 5,979 478,693
Corning, Inc............................................... 6,969 258,724
Costco Co.................................................. 6,419 286,447
Countrywide Credit Industries.............................. 3,236 138,743
CPC International, Inc..................................... 4,337 468,396
Crane Co................................................... 1,386 60,117
Crown Cork & Seal Co., Inc. ............................... 3,876 194,284
CSX Corp................................................... 6,579 355,266
Cummins Engine, Inc........................................ 1,155 68,217
CVS Corp................................................... 5,194 332,740
Cyprus Amax Minerals Co.................................... 2,823 43,403
Dana Corp. ................................................ 3,153 149,767
Darden Restaurants, Inc. .................................. 4,620 57,750
Data General Corp.......................................... 1,445 25,197
Dayton Hudson Corp......................................... 6,574 443,745
Deere & Co. ............................................... 7,614 443,991
Dell Computer Corp. ....................................... 9,867 828,828
Delta Air Lines, Inc. ..................................... 2,219 264,061
Deluxe Corp................................................ 2,489 85,870
Digital Equipment Corp. ................................... 4,467 165,279
Dillard Inc. .............................................. 3,374 118,933
Disney (Walt) Co. ......................................... 20,391 2,019,983
Dominion Resources, Inc.................................... 5,611 238,818
Donnelley (R.R.) & Sons Co................................. 4,419 164,607
Dover Corp. ............................................... 6,716 242,615
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
Dow Chemical Co............................................ 6,885 $ 698,827
Dow Jones & Co., Inc....................................... 2,898 155,586
Dresser Industries, Inc.................................... 5,288 221,765
DSC Communications Corp.................................... 3,547 85,128
DTE Energy Co.............................................. 4,382 152,000
Du Pont (E.I.) De Nemours.................................. 34,155 2,051,434
Duke Energy Corp........................................... 10,868 601,815
Dun & Bradstreet Corp...................................... 5,149 159,297
Eastern Enterprises........................................ 615 27,675
Eastman Chemical Co........................................ 2,367 140,984
Eastman Kodak Co. ......................................... 9,840 598,395
Eaton Corp. ............................................... 2,335 208,398
Echlin, Inc................................................ 1,904 68,901
Echo Bay Mines, Ltd........................................ 4,209 10,259
Ecolab, Inc. .............................................. 1,956 108,435
Edison International....................................... 11,530 313,471
EG&G, Inc. ................................................ 1,382 28,762
EMC Corp. ................................................. 14,903 408,901
Emerson Electric Co. ...................................... 13,394 755,923
Engelhard Corp. ........................................... 4,359 75,737
Enron Corp................................................. 9,612 399,498
Entergy Corp. ............................................. 7,287 218,154
Equifax, Inc............................................... 4,557 161,488
Exxon Corp................................................. 74,537 4,560,732
Fannie Mae................................................. 32,045 1,828,567
Federal Express Corp....................................... 3,473 212,070
Federated Department Stores................................ 6,316 271,982
Fifth Third Bancorp........................................ 4,654 380,464
First Chicago NBD Corp..................................... 8,794 734,299
First Data Corp............................................ 12,938 378,436
First Union Corp........................................... 18,964 971,905
FirstEnergy Corp........................................... 6,955 201,695
Fleet Financial Group, Inc................................. 7,550 565,778
Fleetwood Enterprises, Inc. ............................... 1,086 46,087
Fluor Corp. ............................................... 2,534 94,708
FMC Corp................................................... 1,124 75,659
Ford Motor Co.............................................. 36,272 1,765,993
Fort James Corp of Virginia................................ 6,312 241,434
Fortune Brands, Inc........................................ 5,175 191,798
Foster Wheeler Corp. ...................................... 1,228 33,232
FPL Group, Inc. ........................................... 5,500 325,531
Freddie Mac................................................ 20,991 880,310
Freeport-McMoran Copper Cl B............................... 6,005 94,578
Frontier Corp. ............................................ 4,957 119,277
Fruit of the Loom, Inc..................................... 2,213 56,708
Gannett, Inc. ............................................. 8,531 527,322
Gap, Inc................................................... 12,147 430,459
General Dynamics Corp. .................................... 1,887 163,107
General Electric Co........................................ 98,887 7,256,017
General Mills, Inc. ....................................... 4,783 342,582
General Motors Corp. ...................................... 21,379 1,296,101
General Re Corp. .......................................... 2,371 502,652
General Signal Corp. ...................................... 1,520 64,125
Genuine Parts Co........................................... 5,439 184,586
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Georgia-Pacific (Timber Group)............................. 2,763 $ 167,852
Giant Food, Inc. .......................................... 1,812 61,041
Gillette Co. .............................................. 16,907 1,698,096
Golden West Financial Corp. ............................... 1,713 167,552
Goodrich (B.F.) Co. ....................................... 1,632 67,626
Goodyear Tire & Rubber Co. ................................ 4,711 299,737
GPU Inc. .................................................. 3,647 153,629
Grainger (W.W.), Inc. ..................................... 1,502 145,975
Great Atl. & Pac. Tea Co................................... 1,155 34,289
Great Lakes Chemical Corp.................................. 1,808 81,134
Green Tree Financial Corp.................................. 4,103 107,447
GTE Corp................................................... 28,879 1,508,927
Guidant Corp............................................... 4,476 278,631
Halliburton Co. ........................................... 7,919 411,293
Harcourt General, Inc...................................... 2,137 117,000
Harland (John H.) Co. ..................................... 935 19,635
Harnischfeger Industries, Inc.............................. 1,492 52,686
Harrah's Entertainment, Inc................................ 3,049 57,549
Harris Corp. .............................................. 2,406 110,375
Hartford Financial Svs Grp, Inc ........................... 3,563 333,363
Hasbro, Inc. .............................................. 3,835 120,802
HBO & Co. ................................................. 5,986 287,328
HealthSouth Corp. ......................................... 11,899 330,197
Heinz (H.J.) Co. .......................................... 11,154 566,762
Helmerich & Payne, Inc..................................... 754 51,177
Hercules, Inc. ............................................ 2,920 146,182
Hershey Foods Corp......................................... 4,315 267,260
Hewlett-Packard Co. ....................................... 31,416 1,963,500
Hilton Hotels Corp. ....................................... 7,552 224,672
Home Depot, Inc............................................ 22,049 1,298,134
Homestake Mining Co. ...................................... 4,432 39,334
Honeywell, Inc. ........................................... 3,851 263,793
Household International, Inc. ............................. 3,226 411,516
Houston Industries, Inc.................................... 8,616 229,939
Humana, Inc. .............................................. 4,944 102,588
Huntington Bancshares, Inc................................. 5,773 207,828
Ikon Office Solutions...................................... 4,012 112,837
Illinois Tool Works, Inc................................... 7,533 452,921
Inco Ltd. ................................................. 5,043 85,731
Ingersoll Rand Co.......................................... 5,011 202,945
Inland Steel, Inc. ........................................ 1,474 25,242
Intel Corp................................................. 49,451 3,473,932
International Paper Co. ................................... 9,134 393,903
Interpublic Group of Cos., Inc. ........................... 3,762 187,394
Intl. Business Machines Corp. ............................. 29,386 3,072,673
Intl. Flavors & Fragrances................................. 3,301 170,001
ITT Corp. ................................................. 3,517 291,471
ITT Industries, Inc........................................ 3,577 112,228
Jefferson-Pilot Corp. ..................................... 2,138 166,496
Johnson & Johnson.......................................... 40,651 2,677,884
Johnson Controls, Inc...................................... 2,530 120,807
Jostens, Inc............................................... 1,293 27,283
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
Kaufman & Broad Home Corp. ................................ 1,173 $ 26,319
Kellogg Co................................................. 12,465 618,575
Kerr-McGee Corp. .......................................... 1,440 91,170
KeyCorp.................................................... 6,561 464,600
Kimberly Clark Corp........................................ 16,546 815,924
King World Productions, Inc. .............................. 1,110 64,102
KLA Tencor Corporation..................................... 2,528 97,644
Kmart Corp................................................. 14,705 170,026
Knight-Ridder, Inc......................................... 2,552 132,704
Kroger Corp. .............................................. 7,683 283,790
Laidlaw, Inc. ............................................. 9,927 135,255
Lilly (Eli) & Co........................................... 33,531 2,334,595
Limited (The), Inc. ....................................... 8,201 209,125
Lincoln National Corp. .................................... 3,079 240,546
Liz Claiborne, Inc. ....................................... 2,020 84,461
Lockheed Martin Corp. ..................................... 5,860 577,210
Loews Corp. ............................................... 3,473 368,572
Longs Drug Stores, Inc..................................... 1,184 38,036
Louisiana-Pacific Corp. ................................... 3,301 62,719
Lowe's Companies, Inc...................................... 5,251 250,407
LSI Logic Corp. ........................................... 4,287 84,668
Lucent Technologies, Inc. ................................. 19,381 1,548,057
Mallinckrodt, Inc. ........................................ 2,216 84,208
Manor Care, Inc............................................ 1,922 67,270
Marriott International, Inc................................ 3,843 266,127
Marsh & McLennan Cos., Inc. ............................... 5,089 379,448
Masco Corp. ............................................... 4,982 253,459
Mattel, Inc................................................ 8,772 326,757
May Department Stores Co. ................................. 7,024 370,077
Maytag Corp. .............................................. 2,871 107,124
MBIA Inc................................................... 2,696 180,126
MBNA Corp. ................................................ 15,137 413,429
McDermott International Inc. .............................. 1,677 61,420
McDonald's Corp. .......................................... 20,780 992,245
McGraw-Hill Cos., Inc. .................................... 2,987 221,038
MCI Communications Corp. .................................. 21,053 901,331
Mead Corp. ................................................ 3,118 87,304
Medtronic, Inc. ........................................... 14,124 738,861
Mellon Bank Corp........................................... 7,695 466,509
Mercantile Stores, Inc. ................................... 1,110 67,571
Merck & Co., Inc........................................... 36,220 3,848,375
Meredith Corp. ............................................ 1,617 57,706
Merrill Lynch & Co., Inc. ................................. 10,008 729,958
MGIC Investment Corp. ..................................... 3,447 229,225
Micron Technology, Inc. ................................... 6,363 165,438
Microsoft Corp............................................. 36,475 4,714,393
Millipore Corp. ........................................... 1,315 44,627
Minnesota Mining & Mfg. Co. ............................... 12,353 1,013,718
Mirage Resorts, Inc........................................ 5,401 122,872
Mobil Corp................................................. 23,736 1,713,442
Monsanto Co. .............................................. 17,924 752,808
Moore Corp., Ltd. ......................................... 2,680 40,535
Morgan (J.P.) & Co., Inc. ................................. 5,370 606,138
Morgan St Dean Witter Discover ............................ 17,907 1,058,751
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Morton International, Inc.................................. 4,021 $ 138,221
Motorola, Inc.............................................. 17,980 1,025,983
NACCO Industries, Inc. Cl A................................ 246 26,368
Nalco Chemical Co.......................................... 2,018 79,837
National City Corp......................................... 6,500 427,375
National Semiconductor Corp. .............................. 4,877 126,497
National Service Industries................................ 1,362 67,504
NationsBank Corp........................................... 21,503 1,307,651
Navistar International Corp. .............................. 2,205 54,711
New York Times Co. Cl A.................................... 2,896 191,498
Newell Co.................................................. 4,805 204,212
Newmont Mining Corp........................................ 4,720 138,650
NextLevel Systems, Inc..................................... 4,449 79,525
Niagara Mohawk Power Corp. ................................ 4,362 45,801
Nicor, Inc................................................. 1,467 61,889
Nike, Inc. Cl B............................................ 8,720 342,260
Nordstrom, Inc............................................. 2,332 140,794
Norfolk Southern Corp...................................... 11,385 350,800
Northern States Power Co. ................................. 2,229 129,839
Northern Telecom, Ltd...................................... 7,918 704,702
Northrop Grumman Corp...................................... 2,014 231,610
Norwest Corp............................................... 22,831 881,847
Novell, Inc................................................ 10,543 79,072
Nucor Corp................................................. 2,654 128,221
Occidental Petroleum Corp. ................................ 10,240 300,160
Omnicom Group, Inc. ....................................... 4,894 207,383
Oneok, Inc. ............................................... 937 37,831
Oracle Corp. .............................................. 29,594 660,316
Oryx Energy Co. ........................................... 3,184 81,192
Owens Corning.............................................. 1,611 54,975
Owens Illinois............................................. 4,238 160,779
Paccar, Inc. .............................................. 2,350 123,375
Pacific Enterprises........................................ 2,516 94,664
PacifiCorp................................................. 8,945 244,310
Pall Corp. ................................................ 3,843 79,502
Parametric Technology Co................................... 3,847 182,251
Parker Hannifin Corp. ..................................... 3,373 154,736
Peco Energy Co............................................. 6,721 162,984
Penney (J.C.) Co., Inc..................................... 7,517 453,369
Pennzoil Co. .............................................. 1,559 104,160
Peoples Energy Corp........................................ 1,059 41,698
Pep Boys-Manny, Moe & Jack................................. 1,909 45,577
Pepsico, Inc. ............................................. 45,857 1,670,914
Perkin-Elmer Corp. ........................................ 1,323 94,015
Pfizer, Inc................................................ 39,040 2,910,920
PG & E Corp................................................ 13,242 403,053
Pharmacia & Upjohn, Inc.................................... 15,334 561,607
Phelps Dodge Corp.......................................... 1,867 113,546
Phillip Morris Cos., Inc. ................................. 73,180 3,315,968
Phillips Petroleum Co...................................... 7,957 386,909
Pioneer Hi-Bred Intl., Inc................................. 1,988 213,213
Pitney Bowes, Inc.......................................... 4,358 391,947
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
Placer Dome, Inc........................................... 7,234 $ 91,781
PNC Bank Corp.............................................. 9,272 529,083
Polaroid Corp.............................................. 1,376 66,994
Potlatch Corp. ............................................ 873 37,539
PP&L Resources, Inc........................................ 4,987 119,376
PPG Industries, Inc. ...................................... 5,415 309,331
Praxair, Inc............................................... 4,772 214,740
Proctor & Gamble Co. ...................................... 40,625 3,242,382
Progressive Corp. of Ohio.................................. 2,177 260,967
Providian Financial Corp. ................................. 2,832 127,971
Public Svc. Enterprise Group............................... 7,006 222,002
Pulte Corp................................................. 639 26,718
Quaker Oats Co. ........................................... 4,149 218,859
Ralston Purina Co. ........................................ 3,218 299,072
Raychem Corp. ............................................. 2,433 104,771
Raytheon Co................................................ 10,238 517,019
Raytheon Co................................................ 1,404 69,336
Reebok International Ltd................................... 1,699 48,952
Republic New York Corp..................................... 1,656 189,094
Reynold's Metals Co........................................ 2,227 133,620
Rite-Aid Corp.............................................. 3,713 217,906
Rockwell Intl., Corp. ..................................... 6,307 329,540
Rohm & Haas Co............................................. 1,860 178,095
Rowan Cos., Inc............................................ 2,613 79,696
Royal Dutch Petro Co.--NY Shr.............................. 64,763 3,509,345
Rubbermaid, Inc............................................ 4,528 113,200
Russell Corp............................................... 1,101 29,245
Ryder System, Inc. ........................................ 2,348 76,897
Safeco Corp. .............................................. 4,266 207,967
Safety-Kleen Corp.......................................... 1,760 48,290
Sara Lee Corp. ............................................ 14,507 816,925
SBC Communications, Inc. .................................. 27,706 2,029,464
Schering-Plough Corp....................................... 22,128 1,374,702
Schlumberger, Ltd.......................................... 14,952 1,203,636
Scientific-Atlanta, Inc. .................................. 2,342 39,228
Seagate Technology, Inc.................................... 7,386 142,180
Seagram, Ltd. ............................................. 10,774 348,134
Sears Roebuck & Co......................................... 11,828 535,217
Service Corp. International................................ 7,598 280,651
Shared Medical Systems Corp. .............................. 754 49,764
Sherwin-Williams Co. ...................................... 5,214 144,688
Sigma-Aldrich Corp......................................... 3,028 120,363
Silicon Graphics, Inc...................................... 5,659 70,383
Snap-On, Inc. ............................................. 1,848 80,619
Sonat, Inc. ............................................... 2,590 118,492
Southern Co. .............................................. 20,860 539,752
Southwest Airlines Co...................................... 6,615 162,894
Springs Industries, Inc. Cl A.............................. 609 31,668
Sprint Corp................................................ 13,000 762,125
St. Jude Medical, Inc...................................... 2,773 84,576
St. Paul Companies (The)................................... 2,533 207,864
Stanley Works.............................................. 2,688 126,840
State Street Corp.......................................... 4,850 282,209
Stone Container Corp. ..................................... 3,000 31,312
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
INDEXED ASSETS (CONT'D):
Sun America, Inc........................................... 5,891 $ 251,840
Sun Co., Inc............................................... 2,192 92,201
Sun Microsystems, Inc...................................... 11,324 451,544
Suntrust Banks, Inc. ...................................... 6,374 454,944
Supervalu, Inc. ........................................... 1,830 76,631
Synovus Financial Corp. ................................... 5,283 173,018
Sysco Corp................................................. 5,170 235,558
Tandy Corp................................................. 3,200 123,400
Tektronix, Inc............................................. 1,513 60,047
Tele-Communications Inc--Cl A.............................. 15,294 427,276
Tellabs, Inc............................................... 5,467 289,067
Temple-Inland, Inc. ....................................... 1,720 89,977
Tenet Healthcare Corp. .................................... 9,146 302,961
Tenneco, Inc............................................... 5,142 203,109
Texaco, Inc................................................ 16,566 900,776
Texas Instruments, Inc. ................................... 11,796 530,820
Texas Utilities Co. ....................................... 7,450 309,640
Textron, Inc. ............................................. 4,983 311,437
Thermo Electron Corp....................................... 4,537 201,896
Thomas & Betts Corp........................................ 1,660 78,435
Time Warner, Inc........................................... 16,908 1,048,296
Times Mirror Co. Cl A...................................... 2,893 177,919
Timken Co.................................................. 1,901 65,346
TJX Cos., Inc.............................................. 4,931 169,503
Torchmark Corp............................................. 4,180 175,821
Toys R Us, Inc............................................. 8,616 270,865
Transamerica Corp.......................................... 1,911 203,521
Travelers Group, Inc....................................... 34,661 1,867,361
Tribune Co................................................. 3,707 230,760
Tricon Global Restaurants.................................. 4,623 134,355
TRW, Inc................................................... 3,722 198,661
Tupperware Corp............................................ 1,850 51,568
Tyco International Ltd..................................... 16,094 725,235
U.S Bancorp................................................ 7,391 827,330
U.S. Surgical Corp......................................... 2,216 64,956
U.S. West Communications Group............................. 14,604 659,005
U.S. West Communications Group............................. 18,315 528,845
Unicom Corp................................................ 6,532 200,859
Unilever N.V............................................... 19,335 1,207,229
Union Camp Corp............................................ 2,094 112,421
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------
<S> <C> <C>
Union Carbide Corp......................................... 3,752 $ 161,101
Union Electric Co.......................................... 3,084 133,383
Union Pacific Corp......................................... 7,462 465,908
Union Pacific Resources Grp................................ 7,665 185,876
Unisys Corp................................................ 5,281 73,273
United Healthcare Corp..................................... 5,665 281,479
United Technologies Corp................................... 7,042 512,745
Unocal Corp................................................ 7,460 289,541
UNUM Corp.................................................. 4,214 229,136
US Airways Group Inc....................................... 2,741 171,312
USF&G Corp................................................. 3,350 73,909
UST, Inc................................................... 5,552 205,077
USX-Marathon Group......................................... 8,700 293,625
USX-U.S. Steel Group, Inc.................................. 2,589 80,906
V F Corp................................................... 3,693 169,647
Viacom, Inc................................................ 10,658 441,640
W.R. Grace & Co............................................ 2,244 180,501
Wachovia Corp.............................................. 6,182 501,514
Wal-Mart Stores, Inc....................................... 68,115 2,686,285
Walgreen Co................................................ 14,868 466,483
Warner-Lambert Co.......................................... 8,196 1,016,304
Washington Mutual, Inc..................................... 7,778 496,333
Waste Management Inc....................................... 13,695 376,612
Wells Fargo & Co........................................... 2,621 889,665
Wendy's International, Inc................................. 3,978 95,720
Western Atlas, Inc......................................... 1,629 120,546
Westvaco Corp.............................................. 3,079 96,796
Weyerhaeuser Co............................................ 6,022 295,454
Whirlpool Corp............................................. 2,252 123,860
Whitman Corp............................................... 3,067 79,933
Willamette Industries, Inc................................. 3,355 107,989
Williams Cos., Inc......................................... 9,602 272,456
Winn-Dixie Stores, Inc..................................... 4,496 196,419
Woolworth Corp............................................. 4,075 83,028
WorldCom, Inc.............................................. 27,244 824,131
Worthington Industries, Inc................................ 2,921 48,196
Wrigley (Wm.) Jr. Co....................................... 3,510 279,264
Xerox Corp................................................. 9,820 724,838
------------
TOTAL INDEXED ASSETS--
COMMON STOCKS
(Cost: $177,912,860) 96.4%....................................... 228,230,697
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- ---------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES
U.S. Government (0.9%)
U.S. Treasury Bill..................... 5.00% 03/05/98 $ 100,000 $ 99,075
U.S. Treasury Bill..................... 5.19 05/28/98 50,000 48,923
U.S. Treasury Bill..................... 5.23 01/22/98 1,000,000 996,927
U.S. Treasury Bill..................... 5.18 01/22/98 1,000,000 996,953
------------
2,141,878
------------
Commercial Paper (2.7%)
Merrill Lynch.......................... 5.85 01/06/98 1,000,000 999,185
Disney (Walt) Enterprises Inc.......... 6.00 01/05/98 850,000 849,432
International Lease Fin Corp........... 6.50 01/02/98 4,427,000 4,426,201
------------
6,274,818
------------
TOTAL -- SHORT-TERM DEBT SECURITIES
(Cost: $8,416,750) 3.6%......................................... 8,416,696
------------
TOTAL INVESTMENTS
(Cost: $186,329,610) 100%....................................... $236,647,393
============
</TABLE>
- -------
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1997:
<TABLE>
<CAPTION>
UNDERLYING FACE UNREALIZED
EXPIRATION DATE AMOUNT AT VALUE (LOSS)
--------------- --------------- ----------
<S> <C> <C> <C>
PURCHASED
33 S&P 500 Stock Index Futures Con-
tracts............................. March 1998 $8,077,575 $(1,950)
========== =======
</TABLE>
The face value of futures purchased and outstanding as percentage of total
investment in securities: 3.4%.
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
----- -------- ----------- ------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES:
U.S. Government (0.1%)
U.S. Treasury Bond................... 6.75% 08/15/26 $ 500,000 $ 550,470
------------
Agencies/Other Governments (56.0%)
City of New York..................... 10.00 08/01/05 2,000,000 2,263,600
City of New York..................... 9.50 06/01/09 5,000,000 5,510,000
Connecticut Housing Fin. Auth. ...... 7.63 05/15/21 2,500,000 2,617,750
FNMA................................. 0.00 07/13/17 200,000,00 43,812,011
Federal Home Loan Bank............... 0.00 07/14/17 25,000,000 5,601,500
Federal Home Loan Bank............... 0.00 07/02/12 90,000,000 29,151,900
Federal Home Loan Bank............... 0.00 07/07/22 50,000,000 7,617,000
Federal Home Loan Bank............... 0.00 08/14/07 10,000,000 5,178,100
Federal Home Loan Bank............... 0.00 08/18/17 50,000,000 10,812,500
Federal Home Loan Bank............... 0.00 07/07/17 125,000,00 28,027,500
Federal Home Loan Bank............... 0.00 06/26/17 50,000,000 11,265,500
Federal Home Loan Mtge. Corp. ....... 0.00 08/26/22 250,000,00 36,250,000
Federal Home Loan Mtge. Corp. ....... 7.50 04/01/07 416,726 420,722
FHLMC................................ 8.50 02/15/21 2,096,737 2,150,455
FHLMC................................ 7.00 12/15/14 1,920,000 1,936,185
FHLMC................................ 7.20 06/15/18 500,000 506,090
FHLMC................................ 7.00 08/15/19 500,000 505,000
FHLMC................................ 7.25 02/15/19 81,599 81,420
FHLMC................................ 7.00 09/15/16 3,097,440 3,119,679
FHLMC................................ 8.00 07/15/06 760,231 793,248
FHLMC................................ 7.00 10/15/06 1,311,499 1,321,741
FHLMC................................ 6.75 05/15/18 500,000 502,030
FHLMC ............................... 7.75 07/15/05 322,292 326,520
FHLMC ............................... 6.38 11/15/06 1,100,000 1,095,182
FNMA................................. 7.50 04/25/20 570,453 570,983
FNMA................................. 7.00 08/25/20 293,108 294,112
FNMA................................. 8.95 09/25/19 274,298 277,211
FNMA................................. 7.50 01/25/19 154,743 154,452
FNMA................................. 9.30 05/25/19 312,032 321,976
FNMA................................. 8.15 08/25/05 725,395 731,285
FNMA................................. 7.00 05/25/20 813,164 816,717
FNMA................................. 7.00 09/25/05 1,000,000 1,006,870
FNMA................................. 7.95 11/25/19 310,998 312,064
FHLMC................................ 7.50 07/15/20 538,290 547,036
Pulaski County Arkansas PFB.......... 7.50 11/01/07 300,042 323,414
Republic of Iceland.................. 6.13 02/01/04 5,000,000 4,990,650
Suffolk County, New York............. 5.80 11/01/04 4,000,000 3,911,560
Suffolk County, New York............. 5.88 11/01/05 4,000,000 3,915,040
Tennessee Valley Authority........... 7.85 06/15/44 10,000,000 10,718,800
------------
229,757,792
------------
Basic Materials (2.6%)
Fletcher Challenge Ltd. ............. 9.00 09/15/99 2,000,000 2,089,100
Inco Ltd. ........................... 9.60 06/15/22 7,500,000 8,585,025
------------
10,674,125
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
----- -------- ----------- ------------
<S> <C> <C> <C> <C>
Consumer, Cyclical (7.3%)
Centex Corp........................... 7.38% 06/01/05 $ 5,000,000 $ 5,151,850
Centex Corp........................... 8.75 03/01/07 2,000,000 2,212,800
Fruit of the Loom, Inc................ 7.38 11/15/23 1,250,000 1,187,675
Fruit of the Loom, Inc................ 7.00 03/15/11 2,500,000 2,397,350
Fruit of the Loom, Inc................ 7.88 10/15/99 1,000,000 1,022,420
Gannett, Inc.......................... 5.85 05/01/00 3,500,000 3,484,810
Shopko Stores, Inc.................... 9.00 11/15/04 5,000,000 5,590,450
V F Corp.............................. 9.25 05/01/22 1,000,000 1,112,430
Valassis Communication, Inc........... 9.55 12/01/03 5,000,000 5,618,000
Woolworth Corp........................ 7.00 10/15/02 2,000,000 2,039,980
------------
29,817,765
------------
Consumer, Non-Cyclical (3.8%)
Ralston Purina Co. ................... 8.63 02/15/22 7,500,000 8,902,650
Rhone-Poulenc S A..................... 7.75 01/15/02 3,000,000 3,139,200
Whitman Corp. ........................ 7.63 06/15/15 3,500,000 3,737,895
------------
15,779,745
------------
Energy (6.3%)
Southern Union Co. ................... 7.60 02/01/24 10,000,000 10,435,300
Tosco Corp............................ 8.25 05/15/03 5,000,000 5,391,450
Williams Cos., Inc.................... 6.50 11/15/02 10,000,000 10,044,500
------------
25,871,250
------------
Financial (13.6%)
Bear Stearns Cos., Inc................ 6.63 10/01/04 2,000,000 2,006,480
Berkley (W.R.) Corp................... 8.70 01/01/22 5,000,000 5,814,850
Citicorp Mortgage Sec. Inc............ 6.25 03/25/24 766,280 763,406
Fairfax Financial Holdings............ 8.25 10/01/15 2,500,000 2,753,200
Progressive Corp. of Ohio............. 10.00 12/15/00 1,500,000 1,647,000
Prudential Home Mtge. Securities...... 7.75 10/25/24 400,000 406,624
Prudential Home Mtge. Secs Co......... 6.85 10/25/23 344,610 345,040
Prudential Home Mtge. Secs Co......... 7.00 06/25/23 3,777,567 3,779,909
Rank Group Financial.................. 6.75 11/30/04 5,000,000 5,005,250
Residential Funding Mtge. Sec I....... 7.25 02/25/26 2,310,632 2,320,560
Rodamco NV............................ 7.75 05/15/15 5,000,000 5,500,200
Rodamco NV............................ 7.30 05/15/05 5,000,000 5,202,750
Roosevelt Fed Svgs & Ln Assn.......... 10.13 04/15/18 3,000,000 3,030,570
Ryland Acceptance Corp................ 7.95 08/20/19 859,049 865,217
Sun America, Inc...................... 9.95 02/01/12 5,000,000 6,335,750
Sun America, Inc...................... 9.00 01/15/99 4,000,000 4,110,920
Vesta Insurance Group, Inc............ 8.75 07/15/25 5,000,000 5,871,000
------------
55,758,726
------------
Industrial (1.4%)
Clark Equipment Co. .................. 8.35 05/15/23 5,000,000 5,844,550
------------
Utilities (2.8%)
New Orleans Public Service............ 8.00 03/01/06 4,000,000 4,055,320
Pacific Gas & Electric Co............. 8.75 01/01/01 2,000,000 2,135,500
Philadelphia Electric Co. ............ 7.13 08/15/23 5,000,000 5,087,800
------------
11,278,620
------------
TOTAL LONG-TERM DEBT SECURITIES
(Cost: $371,334,605) 93.9%...................................... 385,333,054
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- ---------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
Commercial Paper (6.1%)
Archer Daniels Midland Co.............. 6.20% 01/06/98 $6,543,000 $ 6,537,364
Banc One Corp.......................... 6.50 01/02/98 4,910,000 4,909,113
Consolidated Natural Gas............... 6.20 01/07/98 7,000,000 6,992,763
Disney (Walt) Enterprises Inc.......... 6.05 01/06/98 4,760,000 4,755,994
General Electric Capital Corp.......... 5.83 01/09/98 2,000,000 1,997,400
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $25,192,634) 6.1%....................................... 25,192,634
------------
TOTAL INVESTMENTS
(Cost: $396,527,239) 100.0%.................................... $410,525,688
============
</TABLE>
- -------
Abbreviations: FHLMC=Federal Home Loan Mortgage Corporation
FNMA=Federal National Mortgage Association
PFB=Prison Finance Board
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- -------- -----------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT:
U.S. Government (0.7%)
GNMA....................................... 9.50% 12/20/03 $ 93,365 $ 97,412
-----------
Agencies/Other Governments (80.9%)
FHLMC...................................... 7.00 08/15/19 500,000 505,000
FHLMC...................................... 7.75 12/01/02 354,794 360,329
FHLMC...................................... 8.00 04/01/02 337,379 340,918
FHLMC...................................... 7.75 08/15/15 99,286 99,565
FHLMC...................................... 7.25 02/15/19 20,577 20,532
FHLMC...................................... 7.00 03/15/08 596,207 604,774
FHLMC...................................... 6.00 12/15/17 400,000 399,000
FHLMC...................................... 6.00 05/15/22 223,421 220,907
FHLMC...................................... 7.00 11/15/20 443,000 444,661
FHLMC...................................... 7.20 06/15/18 500,000 506,090
FHLMC...................................... 8.00 11/15/05 347,235 350,922
FHLMC ..................................... 8.75 10/15/20 250,000 253,670
FHLMC ..................................... 7.25 12/15/05 185,857 187,251
FHLMC ..................................... 7.95 12/15/20 164,000 168,510
FNMA....................................... 7.00 01/25/21 98,067 98,158
FNMA....................................... 8.95 09/25/19 100,060 101,122
FNMA....................................... 7.50 01/25/19 76,815 76,670
FNMA....................................... 7.00 12/25/19 84,870 84,736
FNMA....................................... 7.95 11/25/19 99,109 99,449
FNMA....................................... 7.50 10/25/19 55,613 55,699
FNMA....................................... 7.00 01/15/18 238,459 239,276
FNMA....................................... 7.00 05/25/16 51,867 51,720
FNMA....................................... 7.75 10/25/18 281,301 283,146
FNMA....................................... 7.00 08/25/20 203,547 204,245
FNMA....................................... 0.00 12/01/01 319,168 290,929
FNMA....................................... 7.00 09/25/05 700,000 704,809
FNMA....................................... 8.00 12/25/05 303,748 307,544
FNMA....................................... 7.00 11/25/05 400,000 405,872
FNMA....................................... 5.00 04/25/20 550,000 534,358
FNMA....................................... 7.00 01/25/02 500,000 504,215
FNMA....................................... 8.25 09/25/05 298,936 304,445
FNMA....................................... 7.25 12/25/05 399,073 401,316
FNMA....................................... 8.25 10/01/05 194,408 197,450
FNMA ...................................... 6.70 01/18/19 600,000 605,639
FNMA ...................................... 5.50 04/25/19 500,000 493,906
FHLMC...................................... 5.00 07/15/05 331,738 327,796
FHLMC...................................... 8.00 12/15/18 383,111 386,222
FHLMC...................................... 7.50 12/15/19 330,000 335,464
Pulaski County Arkansas PFB................ 7.50 11/01/07 186,693 201,235
-----------
11,757,550
-----------
Financial (11.5%)
Citicorp Mortgage Securities Inc. ......... 6.25 03/25/24 311,017 309,850
FBC Mortgage Securities Trust.............. 8.30 08/20/09 146,041 148,732
GE Capital Mtge. Services, Inc............. 6.00 09/25/08 224,099 222,978
Norwest Asset Securities Corp.............. 7.25 11/25/26 191,682 192,992
Prudential Home Mtge. Securities Co........ 6.75 08/25/08 500,000 500,625
Residential Funding Mtge. Securities....... 7.25 02/25/26 292,897 294,155
-----------
1,669,332
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- -------- -----------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT (CONT'D):
Consumer, Cyclical (3.5%)
Woolworth Corp............................ 7.00% 06/01/00 $500,000 $ 506,380
-----------
Utilities (0.7%)
Big Rivers Electric Corp.................. 9.50 02/15/17 100,000 105,260
-----------
TOTAL INTERMEDIATE-TERM DEBT SECURITIES
(Cost $14,078,078) 97.3%......................................... 14,135,934
-----------
SHORT-TERM DEBT SECURITIES:
Commercial Paper (2.7%)
Disney (Walt) Enterprises Inc............. 6.00% 01/05/98 $400,000 399,733
-----------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $399,733) 2.7%............................................ 399,733
-----------
TOTAL INVESTMENTS
(Cost: $14,477,811) 100.0%....................................... $14,535,667
===========
</TABLE>
- -------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
PFB = Prison Finance Board
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- ---------- -----------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT :
U.S. Government (30.1%)
U.S. Treasury Note....................... 5.88% 02/15/04 $1,500,000 $ 1,513,125
U.S. Treasury Note....................... 6.38 09/30/01 2,500,000 2,551,554
U.S. Treasury Note....................... 6.63 04/30/02 250,000 258,202
-----------
4,322,881
-----------
Agencies/Other Governments (26.3%)
City of New York......................... 9.50 06/01/09 350,000 385,700
FHLMC.................................... 8.00 07/15/06 380,116 396,624
FHLMC ................................... 8.00 04/15/03 447,231 464,561
FHLMC ................................... 6.38 11/15/06 590,000 587,415
FNMA..................................... 7.00 04/25/07 600,000 610,122
FNMA..................................... 7.00 11/25/05 100,000 100,468
FNMA..................................... 7.00 03/18/18 500,000 508,750
FNMA .................................... 6.50 11/25/05 420,477 422,709
FHLMC.................................... 7.50 12/15/19 295,000 299,885
-----------
3,776,234
-----------
Consumer, Cyclical (5.3%)
Fruit of the Loom, Inc................... 7.88 10/15/99 250,000 255,605
Woolworth Corp........................... 7.00 10/15/02 500,000 509,995
-----------
765,600
-----------
Financial (18.1%)
Bear Stearns Cos., Inc................... 9.38 06/01/01 250,000 273,087
Bear Stearns Cos., Inc................... 6.63 10/01/04 500,000 501,620
Prudential Home Mtge. Securities......... 7.75 10/25/24 300,000 304,968
Rank Group Financial..................... 6.75 11/30/04 500,000 500,525
Salomon Smith Barney Hldgs., Inc. ....... 6.50 10/15/02 500,000 501,530
Sun America, Inc......................... 9.00 01/15/99 500,000 513,865
-----------
2,595,595
-----------
Industrial (7.2%)
Airborne Freight Corp.................... 8.88 12/15/02 250,000 274,315
Comdisco, Inc............................ 7.75 09/01/99 250,000 255,810
Williams Cos., Inc....................... 6.50 11/15/02 500,000 502,225
-----------
1,032,350
-----------
Utilities (12.0%)
Baltimore Gas & Electric Co. ............ 6.13 07/01/03 250,000 249,457
Big Rivers Electric Corp................. 9.50 02/15/17 200,000 210,520
Commonwealth Edison Co................... 7.50 01/01/01 500,000 503,090
Connecticut Light & Power Co. ........... 5.50 02/01/99 500,000 492,935
Public Svc. Electric & Gas Co............ 7.88 11/01/01 250,000 263,647
-----------
1,719,649
-----------
TOTAL INTERMEDIATE-TERM DEBT SECURITIES
(Cost $14,051,574) 99.0%.......................................... 14,212,309
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---- -------- ---------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
Commercial Paper (1.0%)
Disney (Walt) Enterprises Inc........... 6.10% 01/05/98 $ 150,000 $ 149,898
-----------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $149,898) 1.0%............................................ 149,898
-----------
TOTAL INVESTMENTS
(Cost: $14,201,472) 100.0%....................................... $14,362,207
===========
</TABLE>
- -------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C>
COMMON STOCKS:
Basic Materials (2.0%)
Aluminum Co. of America.................................... 12,200 $ 858,575
Dow Chemical Co. .......................................... 12,200 1,238,300
Du Pont (E.I.) De Nemours.................................. 24,200 1,453,512
Eastman Chemical Co. ...................................... 12,400 738,575
Hercules, Inc. ............................................ 16,700 836,043
Praxair, Inc. ............................................. 18,300 823,500
-----------
5,948,505
-----------
Consumer, Cyclical (8.1%)
Armstrong World Inds., Inc. ............................... 10,000 747,500
Centex Corp. .............................................. 12,000 755,250
Chrysler Corp. ............................................ 34,800 1,224,525
Costco Co.*................................................ 25,000 1,115,625
Dillard Inc. .............................................. 18,500 652,125
Disney (Walt) Co. ......................................... 12,800 1,268,000
Dow Jones & Co., Inc. ..................................... 18,200 977,112
Federated Department Stores*............................... 23,100 994,743
Flowers Industries, Inc. .................................. 32,600 670,337
General Electric Co. ...................................... 62,200 4,563,925
General Motors Corp. ...................................... 27,000 1,636,875
Limited (The), Inc. ....................................... 33,200 846,600
Mattel, Inc. .............................................. 23,500 875,375
Moore Corp., Ltd. ......................................... 45,300 685,162
Nike, Inc. Cl B............................................ 21,100 828,175
Rite-Aid Corp. ............................................ 23,100 1,355,681
Time Warner, Inc. ......................................... 33,400 2,070,800
Timken Co. ................................................ 23,500 807,812
V F Corp. ................................................. 20,000 918,750
Wal-Mart Stores, Inc. ..................................... 46,000 1,814,125
-----------
24,808,497
-----------
Consumer, Non-Cyclical (12.0%)
Abbott Laboratories........................................ 26,600 1,743,962
American Home Products Corp. .............................. 13,700 1,048,050
Anheuser Busch Cos., Inc. ................................. 35,700 1,570,800
Bard (C.R.), Inc. ......................................... 20,600 645,037
Bristol-Myers Squibb Co. .................................. 20,900 1,977,662
Coca-Cola Co. ............................................. 50,300 3,351,258
Heinz (H.J.) Co. .......................................... 33,300 1,692,056
Hormel Foods Corp. ........................................ 37,700 1,234,675
Intl. Flavors & Fragrances................................. 16,300 839,450
Johnson & Johnson.......................................... 37,700 2,483,487
JP Foodservice, Inc.*...................................... 46,500 1,717,593
Lilly (Eli) & Co. ......................................... 34,800 2,422,950
Medtronic, Inc. ........................................... 29,600 1,548,450
Merck & Co., Inc. ......................................... 30,500 3,240,625
Pepsico, Inc. ............................................. 67,300 2,452,243
Pfizer, Inc. .............................................. 39,500 2,945,218
Proctor & Gamble Co. ...................................... 28,800 2,298,600
Safeway, Inc.*............................................. 22,500 1,423,125
Sara Lee Corp. ............................................ 33,600 1,892,100
-----------
36,527,341
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ----------
<S> <C> <C>
Energy (4.7%)
Baker Hughes, Inc. ......................................... 19,300 841,962
Chevron Corp. .............................................. 22,100 1,701,700
Enron Corp. ................................................ 32,400 1,346,625
Exxon Corp. ................................................ 50,400 3,083,850
Halliburton Co. ............................................ 19,600 1,017,975
Mobil Corp. ................................................ 26,000 1,876,875
Phillips Petroleum Co. ..................................... 20,400 991,950
Precision Drilling Corp*.................................... 22,000 536,250
Royal Dutch Petro Co.--NY Shr............................... 57,700 3,126,618
----------
14,523,805
----------
Financial (9.2%)
American Express Co. ....................................... 25,100 2,240,175
American General Corp. ..................................... 29,000 1,567,812
American Int'l. Group, Inc. ................................ 25,800 2,805,750
BankAmerica Corp. .......................................... 32,700 2,387,100
Barnett Banks, Inc. ........................................ 25,500 1,832,812
CCA Prison Realty Trust..................................... 31,000 1,383,375
Chase Manhattan Corp. ...................................... 19,600 2,146,200
Citicorp.................................................... 8,900 1,125,293
Fannie Mae.................................................. 47,800 2,727,588
First Union Corp. .......................................... 36,800 1,886,000
Fleet Financial Group, Inc. ................................ 24,200 1,813,487
KeyCorp..................................................... 27,800 1,968,587
Mack-Cali Realty Corp. ..................................... 26,900 1,102,900
Star Banc Corp. ............................................ 31,200 1,790,100
Unitrin Inc. ............................................... 19,600 1,266,650
----------
28,043,829
----------
Industrial (2.6%)
Burlington Northern Santa Fe................................ 9,000 836,437
Deere & Co. ................................................ 21,400 1,247,887
First Data Corp. ........................................... 40,000 1,170,000
Foster Wheeler Corp. ....................................... 20,600 557,487
PPG Industries, Inc. ....................................... 14,400 822,600
Silicon Valley Group, Inc.*................................. 45,000 1,018,125
Stewart & Stevenson Svcs., Inc ............................. 48,000 1,224,000
Union Pacific Corp. ........................................ 17,000 1,061,437
----------
7,937,973
----------
Technology (8.2%)
3Com Corp.*................................................. 27,900 974,756
AlliedSignal, Inc. ......................................... 33,800 1,316,087
Boeing Co. ................................................. 29,700 1,453,443
Cisco Systems, Inc.*........................................ 20,700 1,154,025
Compaq Computer Corp.*...................................... 15,500 874,781
Hewlett-Packard Co. ........................................ 22,000 1,375,000
Intel Corp. ................................................ 38,400 2,697,600
Intl. Business Machines Corp. .............................. 19,200 2,007,600
Lockheed Martin Corp. ...................................... 12,100 1,191,850
Lucent Technologies, Inc. .................................. 14,000 1,118,250
Micron Technology, Inc.*.................................... 32,000 832,000
Microsoft Corp.*............................................ 7,900 1,021,075
Oracle Corp.*............................................... 53,000 1,182,562
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
COMMON STOCKS (CONT'D):
Pall Corp. ............................................... 43,800 906,112
Qualcomm, Inc.*........................................... 15,500 782,750
Raytheon Co. ............................................. 1,722 85,013
Scientific-Atlanta, Inc. ................................. 58,800 984,900
Seagate Technology, Inc.*................................. 39,700 764,225
Unisys Corp.*............................................. 107,500 1,491,562
United Technologies Corp. ................................ 15,800 1,150,437
Xerox Corp. .............................................. 23,400 1,727,212
------------
25,091,240
------------
Utilities (3.6%)
Ameritech Corp. .......................................... 26,300 2,117,150
FPL Group, Inc. .......................................... 24,200 1,432,337
SBC Communications, Inc. ................................. 36,000 2,637,000
Sprint Corp. ............................................. 30,900 1,811,512
U.S. West Communications Group............................ 39,900 1,800,487
WorldCom, Inc.*........................................... 43,100 1,303,775
------------
11,102,261
------------
TOTAL COMMON STOCKS
(Cost: $153,678,950) 50.4%....................................... $153,983,451
------------
</TABLE>
- -------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
----- -------- ------------ ------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES:
U.S. Government (0.2%)
U.S. Treasury Bond.................. 6.75% 8/15/26 $ 500,000 $ 550,470
------------
Agencies/Other Governments (20.7%)
City of New York.................... 10.00 8/1/05 500,000 565,900
City of New York.................... 9.50 6/1/09 2,000,000 2,204,000
Connecticut Housing Fin. Auth. ..... 7.63 5/15/21 1,000,000 1,047,100
FNMA................................ 0.00 7/13/17 100,000,000 21,906,000
Federal Home Loan Bank.............. 0.00 8/18/17 30,000,000 6,487,500
Federal Home Loan Bank.............. 0.00 7/14/17 25,000,000 5,601,500
Federal Home Loan Bank.............. 0.00 7/2/12 15,000,000 4,858,650
Federal Home Loan Bank.............. 0.00 7/7/17 25,000,000 5,605,500
FHLMC............................... 7.00 4/15/17 1,186,892 1,195,793
FHLMC............................... 7.00 10/15/03 471,605 474,401
FHLMC............................... 6.00 7/15/18 500,000 496,560
FHLMC............................... 8.00 7/15/06 380,116 396,624
FNMA................................ 6.50 7/25/20 500,000 500,625
FNMA................................ 7.00 11/25/05 1,200,000 1,217,616
FNMA................................ 6.65 1/25/17 500,000 503,435
FNMA................................ 6.80 6/25/05 1,440,842 1,444,444
Republic of Iceland................. 6.13 2/1/04 2,500,000 2,495,325
Suffolk County, New York............ 5.88 11/1/05 750,000 734,070
Suffolk County, New York............ 5.80 11/1/04 250,000 244,472
Tennessee Valley Authority.......... 7.85 6/15/44 5,000,000 5,359,400
------------
63,338,915
------------
Basic Materials (0.9%)
Inco Ltd. .......................... 9.60 6/15/22 2,500,000 2,861,675
------------
Consumer, Cyclical (3.1%)
Centex Corp. ....................... 7.38 6/1/05 2,000,000 2,060,740
Fruit of the Loom, Inc. ............ 7.38 11/15/23 500,000 475,070
Fruit of the Loom, Inc. ............ 7.00 3/15/11 1,000,000 958,940
Fruit of the Loom, Inc. ............ 7.88 10/15/99 500,000 511,210
Gannett, Inc. ...................... 5.85 5/1/00 1,000,000 995,660
Shopko Stores, Inc. ................ 9.00 11/15/04 1,000,000 1,118,090
Valassis Communication, Inc. ....... 9.55 12/1/03 2,000,000 2,247,200
Woolworth Corp...................... 7.00 10/15/02 1,000,000 1,019,990
------------
9,386,900
------------
Consumer, Non-Cyclical (1.7%)
Ralston Purina Co. ................. 8.63 2/15/22 2,500,000 2,967,550
Rhone-Poulenc S A................... 7.75 1/15/02 1,000,000 1,046,400
Whitman Corp. ...................... 7.63 6/15/15 1,000,000 1,067,970
------------
5,081,920
------------
Energy (2.6%)
Southern Union Co. ................. 7.60 2/1/24 5,000,000 5,217,650
Tosco Corp.......................... 8.25 5/15/03 2,500,000 2,695,725
------------
7,913,375
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
----- -------- ------------ ------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES (CONT'D):
Financial (5.0%)
Berkley (W.R.) Corp................. 8.70% 1/1/22 $ 1,500,000 $ 1,744,455
Fairfax Financial Holdings.......... 8.25 10/1/15 500,000 550,640
Progressive Corp. of Ohio........... 10.00 12/15/00 500,000 549,000
Prudential Home Mtge. Secs Co....... 6.75 8/25/08 900,000 901,125
Residential Funding Mtge. Sec I..... 7.25 2/25/26 1,171,588 1,176,622
Rodamco NV.......................... 7.75 5/15/15 2,000,000 2,200,080
Rodamco NV.......................... 7.30 5/15/05 2,500,000 2,601,377
Roosevelt Fed Svgs & Ln Assn........ 10.13 4/15/18 1,000,000 1,010,190
Sun America, Inc.................... 9.00 1/15/99 1,000,000 1,027,730
Sun America, Inc.................... 9.95 2/1/12 2,000,000 2,534,300
Vesta Insurance Group, Inc.......... 8.75 7/15/25 1,000,000 1,174,200
------------
15,469,719
------------
Industrial (0.9%)
Clark Equipment Co.................. 8.35 5/15/23 1,500,000 1,753,365
Williams Cos., Inc.................. 6.50 11/15/02 1,000,000 1,004,450
------------
2,757,815
------------
Utilities (1.7%)
Central Telephone Co................ 9.28 11/27/00 1,000,000 1,081,230
New Orleans Public Service.......... 8.00 3/1/06 1,000,000 1,013,830
Pacific Gas & Electric Co........... 8.75 1/1/01 1,000,000 1,067,750
PacifiCorp.......................... 8.73 2/12/98 1,000,000 1,002,560
Philadelphia Electric Co............ 7.13 8/15/23 1,000,000 1,017,560
------------
5,182,930
------------
TOTAL LONG-TERM DEBT SECURITIES
(Cost: $108,435,694) 36.8%...................................... 112,543,719
------------
SHORT-TERM DEBT SECURITIES:
U.S. Government (0.3%)
U.S. Treasury Bill.................. 5.00 2/26/98 500,000 496,056
U.S. Treasury Bill.................. 5.06 1/8/98 500,000 499,500
------------
995,556
------------
Commercial Paper (12.5%)
Consolidated Natural Gas............ 6.20 1/7/98 7,000,000 6,992,764
Disney (Walt) Enterprises Inc....... 5.70 1/6/98 6,865,000 6,859,539
General Electric Capital Corp....... 5.83 1/9/98 725,000 724,057
General Electric Capital Corp....... 5.69 1/20/98 6,130,000 6,111,462
GTE Funding Inc..................... 5.70 2/2/98 4,055,000 4,034,451
International Lease Fin Corp........ 6.50 1/2/98 3,000,000 2,999,458
Petrofina Delaware Inc.............. 5.82 1/12/98 3,195,000 3,189,299
UBS Finance......................... 5.78 1/5/98 4,295,000 4,292,230
Xerox Credit Corp................... 5.75 1/7/98 3,070,000 3,067,047
------------
38,270,307
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $39,265,863) 12.8%....................................... 39,265,863
------------
TOTAL INVESTMENTS
(Cost: $301,380,507) 100%....................................... $305,793,033
============
</TABLE>
- -------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
COMMON STOCKS:
Basic Materials (4.9%)
Birmingham Steel Corp. ................................... 160,000 $ 2,520,000
Boise Cascade Office Prod................................. 60,000 896,250
Commonwealth Industries, Inc.............................. 75,000 1,087,500
Intermet Corp............................................. 50,000 875,000
ISPAT International Plc. Cl A............................. 45,000 973,125
Lone Star Technologies, Inc............................... 80,000 2,270,000
LTV Corp.................................................. 220,000 2,145,000
Nucor Corp................................................ 50,000 2,415,625
Schuff Steel Company...................................... 82,500 897,187
------------
14,079,687
------------
Consumer, Cyclical (22.0%)
Alliance Communications Corp.*............................ 100,000 1,275,000
Baker Hughes, Inc......................................... 115,000 5,016,875
Barbeques Galore Limited.................................. 115,000 848,125
Bob Evans Farms, Inc...................................... 149,000 3,296,625
Brookstone, Inc.*......................................... 103,500 1,293,750
Budget Group, Inc.*....................................... 55,000 1,900,937
Fairfield Communities, Inc.*.............................. 70,000 3,097,500
Friedman's, Inc. Cl A..................................... 120,000 1,635,000
General Motors Corp....................................... 33,000 2,000,625
Grupo Televisa S.A.-Spons GDR*............................ 15,000 580,312
Haggar Corp............................................... 60,000 945,000
Hannaford Brothers Co..................................... 14,800 642,875
Hasbro, Inc............................................... 40,000 1,260,000
Heilig-Meyers Co. ........................................ 155,000 1,860,000
Hollinger International, Inc.............................. 200,000 2,800,000
Home Depot, Inc........................................... 100,000 5,887,500
Home Health Corp. of America*............................. 120,000 1,245,000
Nimbus CD International, Inc.* ........................... 135,000 1,451,250
Pier 1 Imports, Inc....................................... 180,000 4,072,500
Syms Corp.*............................................... 75,000 890,625
Synthetic Industries, Inc.*............................... 65,000 1,608,750
TBC Corp.*................................................ 270,000 2,581,875
Tele-Communications-TCI Group*............................ 79,525 2,221,729
Tele-Communications TCI Ventures Group.................... 45,475 1,287,510
Todd-AO Corp.............................................. 95,000 795,625
Tower Automotive, Inc.*................................... 120,000 5,047,500
United Stationers, Inc.................................... 50,000 2,406,250
Viacom, Inc. Cl B*........................................ 60,000 2,486,250
Wackenhut Corp............................................ 75,500 1,594,937
Wolverine World Wide, Inc................................. 58,500 1,323,562
------------
63,353,487
------------
Consumer, Non-Cyclical (6.7%)
Arrow International, Inc.................................. 63,500 2,349,500
AVECOR Cardiovascular, Inc.*.............................. 175,000 1,115,625
Dominick's Supermarkets, Inc.*............................ 25,000 912,500
I-STAT Corporation*....................................... 180,000 2,846,250
Liposome Company, Inc.*................................... 166,000 767,750
Matria Healthcare, Inc.*.................................. 115,000 646,875
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Medcath, Inc.............................................. 40,000 $ 605,000
Molecular Dynamics, Inc.*................................. 236,800 3,848,000
Mylan Laboratories, Inc................................... 17,600 368,500
Orthodontic Centers of America*........................... 274,000 4,555,250
Trigon Healthcare, Inc.................................... 45,000 1,175,625
------------
19,190,875
------------
Energy (14.5%)
Abacan Resource Corp.*.................................... 940,000 1,468,750
Apache Corp............................................... 50,000 1,753,125
Barrett Resources Corp*................................... 65,000 1,966,250
Brigham Exploration Company*.............................. 90,000 1,316,250
Chieftan International, Inc.*............................. 105,700 2,246,125
Enron Oil & Gas Co. ...................................... 90,000 1,906,875
Global Industries Ltd.*................................... 40,000 680,000
Gulf Canada Resources, Ltd................................ 100,000 700,000
Marine Drilling Companies, Inc*........................... 107,000 2,220,250
Nabors Industries, Inc.*.................................. 164,500 5,171,468
New Jersey Resources Corp................................. 23,700 949,481
Oceaneering Int'l, Inc.* ................................. 140,000 2,765,000
Oryx Energy Co.*.......................................... 40,000 1,020,000
Patina Oil & Gas Corp..................................... 80,000 615,000
Pride International, Inc. ................................ 300,000 7,575,000
R & B Falcon Corp......................................... 65,000 2,279,063
Ranger Oil Ltd............................................ 215,000 1,478,125
Southwest Gas Corp........................................ 38,500 719,468
Unit Corp.*............................................... 200,000 1,925,000
USX-Marathon Group........................................ 55,000 1,856,250
Vintage Petroleum, Inc.................................... 60,000 1,140,000
------------
41,751,480
------------
Financial (6.6%)
Castle & Cooke, Inc.*..................................... 100,000 1,687,500
Delphi Financial Group, Inc.*............................. 47,420 2,133,900
Glenborough Realty Trust, Inc............................. 171,000 5,065,875
Gryphon Holdings, Inc.*................................... 97,500 1,633,125
Lexington Corporate Properties............................ 181,000 2,794,188
Summit Bancorp............................................ 110,000 5,857,500
------------
19,172,088
------------
Industrial (16.3%)
AFC Cable Systems, Inc.*.................................. 130,000 3,867,500
Anixter International, Inc.*.............................. 45,000 742,500
BWAY Corp.*............................................... 97,500 2,230,312
Celadon Group, Inc.*...................................... 37,000 499,500
Chart Industries, Inc..................................... 159,500 3,638,593
Cuno, Inc.*............................................... 57,500 876,875
Dayton Superior Corp.*.................................... 116,500 1,922,250
Dyersburg Corp............................................ 51,000 580,125
Empresas ICA Sociedad ADS................................. 85,000 1,397,187
Howmet International Inc.................................. 130,000 1,950,000
OmniQuip International, Inc.*............................. 125,000 2,492,187
Powell Industries, Inc.*.................................. 125,000 1,906,250
Sea Containers, Ltd. Cl A................................. 45,000 1,440,000
Sealed Air Corp.*......................................... 75,000 4,631,250
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
COMMON STOCKS (CONT'D):
Silicon Valley Group, Inc.*............................... 186,000 $ 4,208,250
Smithway Motor Xpress Corp. Cl A* 60,000 780,000
Stewart & Stevenson Svcs., Inc. .......................... 335,000 8,542,500
Strategic Distribution, Inc.*............................. 140,000 630,000
Vallen Corp.*............................................. 122,000 2,531,500
Zero Corp. ............................................... 70,000 2,073,750
------------
46,940,529
------------
Technology (20.5%)
360 Communications Co.*................................... 180,000 3,633,750
Adelphia Communications Cl A*............................. 60,000 1,110,000
Andrew Corp.*............................................. 125,000 3,000,000
ANTEC Corp. .............................................. 61,000 953,125
Boston Technology Inc.*................................... 120,000 3,015,000
Cellstar Corp. ........................................... 170,000 3,378,750
Comcast Corp. Cl A........................................ 30,000 946,875
Flowserve Corporation..................................... 57,500 1,606,406
GenCorp, Inc. ............................................ 50,000 1,250,000
Hewlett-Packard Co. ...................................... 30,000 1,875,000
Intuit, Inc.*............................................. 82,500 3,403,125
Kimball International, Inc. .............................. 180,000 3,318,750
Lunar Corporation*........................................ 100,000 2,050,000
Maxxim Medical, Inc.*..................................... 75,000 1,631,250
Meridian Diagnostics, Inc. ............................... 118,000 1,194,750
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
Molex Inc., Cl A.......................................... 31,250 $ 898,437
National Instruments Corp................................. 110,000 3,190,000
National Techteam, Inc.*.................................. 247,000 2,223,000
NextLevel Systems, Inc. .................................. 110,000 1,966,250
Raytheon Co. Cl A ........................................ 2,742 135,392
Scientific-Atlanta, Inc. ................................. 200,000 3,350,000
Symantec Corp.*........................................... 120,000 2,632,500
TCA Cable TV, Inc. ....................................... 9,000 414,000
Teltrend, Inc.*........................................... 155,000 2,654,375
UCAR Int'l., Inc.*........................................ 72,500 2,895,468
Unisys Corp.*............................................. 415,000 5,758,125
VLSI Technology, Inc.*.................................... 30,000 708,750
------------
59,193,078
------------
Utilities (3.0%)
Cincinnati Bell, Inc. .................................... 95,000 2,945,000
Citizens Utilities Co. Cl B............................... 80,800 777,700
LCI International, Inc.*.................................. 97,500 2,998,133
Nextel Communications, Inc.*.............................. 75,000 1,950,000
------------
8,670,833
------------
TOTAL COMMON STOCKS (Cost: $251,320,007) 94.5%..................... 272,352,057
------------
</TABLE>
- -------
* Non-income producing security.
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT
---- -------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
Commercial Paper (5.5%)
Ford Motor Credit Co................... 6.09% 01/06/98 $4,695,000 4,691,028
Consolidated Natural Gas Co............ 6.20 01/07/98 4,938,000 4,932,895
International Lease Fin Corp........... 6.50 01/02/98 6,254,000 6,252,871
------------
15,876,794
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $15,876,794) 5.5%........................................ 15,876,794
------------
TOTAL INVESTMENTS
(Cost: $267,196,801) 100.0%..................................... $288,228,851
============
</TABLE>
- -------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES
EXPIRATION EXERCISE SUBJECT
DATE PRICE TO CALL VALUE
---------- -------- ------- ---------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Andrew Corp.............................. 01/17/98 $30.00 14,400 $ (900)
Anixter International, Inc............... 01/17/98 17.50 15,000 (6,562)
Baker Hughes, Inc........................ 01/17/98 42.50 7,500 (18,750)
Baker Hughes, Inc........................ 01/17/98 45.00 7,500 (8,437)
Budget Group, Inc........................ 02/21/98 35.00 5,000 (7,812)
Grupo Televisa S.A.-Spons GDR............ 01/17/98 35.00 15,000 (60,939)
Marine Drilling Companies, Inc........... 02/21/98 30.00 10,000 (6,250)
Molecular Dynamics, Inc.................. 01/17/98 20.00 10,000 (4,375)
Molex Inc., Cl A......................... 01/17/98 36.00 6,250 (586)
Molex Inc., Cl A......................... 01/17/98 32.00 6,250 (781)
National Techteam, Inc................... 02/21/98 17.50 10,000 (20,000)
Pride International, Inc................. 01/17/98 40.00 10,000 (313)
---------
TOTAL OPTIONS WRITTEN
(Premiums Received: ($692,518))..................................... $(135,705)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Assets:
Investments at market
value
(Cost:
Money Market Fund --
$67,501,370
All America Fund --
$418,360,583
Equity Index Fund --
$186,329,610
Bond Fund --
$396,527,239)
(Notes 1 and 3)........ $67,501,370 $697,004,495 $236,647,393 $410,525,688
Cash.................... 688 1,333,184 16,502 1,128
Interest and dividends
receivable............. -- 745,450 300,921 3,236,656
Receivable for
securities sold........ -- 447,466 -- 15,964
----------- ------------ ------------ ------------
Total Assets............ 67,502,058 699,530,595 236,964,816 413,779,436
Payable for securities
purchased.............. -- 2,500 1,950 74,537
Other liabilities....... -- -- -- --
----------- ------------ ------------ ------------
Net Assets.............. $67,502,058 $699,528,095 $236,962,866 $413,704,899
=========== ============ ============ ============
Number of Shares
Outstanding (Note 4)... 57,364,909 258,068,880 114,031,969 289,863,800
=========== ============ ============ ============
Net Asset Values,
offering and redemption
price per share........ $1.18 $2.71 $2.08 $1.43
===== ===== ===== =====
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Assets:
Investments at market
value
(Cost:
Short-Term Bond Fund --
$14,477,811
Mid-Term Bond Fund --
$14,201,472
Composite Fund --
$301,380,507
Aggressive Equity
Fund -- $267,196,801)
(Notes 1 and 3)........ $14,535,667 $ 14,362,207 $305,793,033 $288,228,851
Cash.................... 1,010,200 54,909 24,628 --
Interest and dividends
receivable............. 87,997 229,422 1,350,734 60,847
Receivable for
securities sold........ 11,132 -- 2,157,241 671,447
----------- ------------ ------------ ------------
Total Assets............ 15,644,996 14,646,538 309,325,636 288,961,145
Payable for securities
purchased.............. 1,004,315 -- 4,549,169 1,284,682
Call options written, at
market value
(Premium received:
Aggressive Equity
Fund -- $692,518)..... -- -- -- 135,705
Other liabilities....... -- -- -- 159,914
----------- ------------ ------------ ------------
Net Assets.............. $14,640,681 $ 14,646,538 $304,776,467 $287,380,844
=========== ============ ============ ============
Number of Shares
Outstanding (Note 4)... 14,339,355 16,222,865 187,916,189 178,807,178
=========== ============ ============ ============
Net Asset Values,
offering and redemption
price per share........ $1.02 $0.90 $1.62 $1.61
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income:
Dividends.............. $ -- $ 9,889,801 $ 2,941,447 $ --
Interest............... 4,449,211 436,370 572,731 26,603,562
------------ -------------- -------------- --------------
Total income............ 4,449,211 10,326,171 3,514,178 26,603,562
------------ -------------- -------------- --------------
Expenses:
Investment advisory
fees (Note 2)......... 199,652 3,487,086 221,763 1,850,985
------------ -------------- -------------- --------------
Net Investment Income... 4,249,559 6,839,085 3,292,415 24,752,577
------------ -------------- -------------- --------------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note
1):
Net realized gain (loss)
on investments:
Net proceeds from sales
and maturities........ 959,830,399 1,311,013,612 899,123,506 1,549,413,495
Cost of securities sold
or matured............ 959,834,945 1,223,747,797 885,326,704 1,546,969,894
------------ -------------- -------------- --------------
Net realized gain
(loss)................. (4,546) 87,265,815 13,796,802 2,443,601
Net unrealized
appreciation
(depreciation) of
investments............ -- 72,872,084 29,821,618 10,731,058
------------ -------------- -------------- --------------
Net Realized and
Unrealized Gain (Loss)
on Investments......... (4,546) 160,137,899 43,618,420 13,174,659
------------ -------------- -------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 4,245,013 $ 166,976,984 $ 46,910,835 $ 37,927,236
============ ============== ============== ==============
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
------------ -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income:
Dividends.............. $ -- $ -- $ 1,888,294 $ 1,153,850
Interest............... 994,452 934,223 10,016,920 1,560,897
------------ -------------- -------------- --------------
Total income............ 994,452 934,223 11,905,214 2,714,747
------------ -------------- -------------- --------------
Expenses:
Investment advisory
fees (Note 2)......... 78,795 73,392 1,464,132 1,955,550
------------ -------------- -------------- --------------
Net Investment Income... 915,657 860,831 10,441,082 759,197
------------ -------------- -------------- --------------
Net Realized and
Unrealized Gain (Loss)
on Investments
Net realized gain (loss)
on investments:
Net proceeds from sales
and maturities........ 89,993,773 124,072,025 1,844,026,921 2,121,883,944
Cost of securities sold
or matured............ 89,982,741 124,045,532 1,789,820,686 2,093,985,633
------------ -------------- -------------- --------------
Net realized gain
(loss)................. 11,032 26,493 54,206,235 27,898,311
Net unrealized
appreciation
(depreciation) of
investments (Note 1)... 1,505 136,981 (16,888,109) 9,224,730
------------ -------------- -------------- --------------
Net Realized and
Unrealized Gain (Loss)
on Investments......... 12,537 163,474 37,318,126 37,123,041
------------ -------------- -------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ $ 928,194 $ 1,024,305 $ 47,759,208 $ 37,882,238
============ ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
MONEY MARKET FUND ALL AMERICA FUND EQUITY INDEX FUND
-------------------------- --------------------------- --------------------------
1997 1996 1997 1996 1997 1996
------------ ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income.. $ 4,249,559 $ 3,150,513 $ 6,839,085 $ 7,314,135 $ 3,292,415 $ 1,601,372
Net realized gain
(loss) on investments. (4,546) (161) 87,265,815 22,009,984 13,796,802 1,803,064
Unrealized appreciation
(depreciation) of
investments........... -- -- 72,872,084 80,788,691 29,821,618 11,911,735
------------ ------------ ------------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ 4,245,013 3,150,352 166,976,984 110,112,810 46,910,835 15,316,171
------------ ------------ ------------- ------------ ------------ ------------
Capital Share
Transactions (Note 4):
Net proceeds from sale
of shares............. 31,053,208 61,070,949 51,559,383 67,857,705 103,055,258 60,056,284
Dividends reinvested... 4,207,000 3,165,422 85,851,292 32,301,582 4,983,072 3,473,499
Cost of shares
redeemed.............. (45,576,714) (59,846,394) (155,677,621) (74,455,531) (14,852,042) (16,336,002)
Dividend distributions. (4,207,000) (3,165,422) (85,851,292) (32,301,582) (4,983,072) (3,473,499)
------------ ------------ ------------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets From
Capital Share
Transactions........... (14,523,506) 1,224,555 (104,118,238) (6,597,826) 88,203,216 43,720,282
------------ ------------ ------------- ------------ ------------ ------------
Increase (Decrease) in
Net Assets............. (10,278,493) 4,374,907 62,858,746 103,514,984 135,114,051 59,036,453
Net Assets, Beginning of
Year................... 77,780,551 73,405,644 636,669,349 533,154,365 101,848,815 42,812,362
------------ ------------ ------------- ------------ ------------ ------------
Net Assets, End of Year. $ 67,502,058 $ 77,780,551 $ 699,528,095 $636,669,349 $236,962,866 $101,848,815
============ ============ ============= ============ ============ ============
Components of Net
Assets:
Paid-in capital........ $ 67,381,318 $ 77,697,824 $ 416,381,083 $434,648,029 $174,534,873 $ 81,348,585
Accumulated
undistributed net
investment income
(loss)................ 130,482 87,923 (175,037) (244,122) (14,572) (8,055)
Accumulated
undistributed net
realized gain (loss)
on investments........ (9,742) (5,196) 4,678,137 (3,506,387) 12,124,782 12,120
Unrealized appreciation
(depreciation) of
investments........... -- -- 278,643,912 205,771,829 50,317,783 20,496,165
------------ ------------ ------------- ------------ ------------ ------------
Net Assets, End of Year. $ 67,502,058 $ 77,780,551 $ 699,528,095 $636,669,349 $236,962,866 $101,848,815
============ ============ ============= ============ ============ ============
<CAPTION>
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 Assets:
From Operations:
Net investment income.. $ 24,752,577 $ 20,579,562 $ 915,657 $ 617,247 $ 860,831 $ 1,885,137
Net realized gain
(loss) on investments. 2,443,601 4,996,015 11,032 363 26,493 (744,597)
Unrealized appreciation
(depreciation) of
investments........... 10,731,058 (14,451,071) 1,505 16,737 136,981 (776,280)
------------ ------------ ------------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ 37,927,236 11,124,506 928,194 634,347 1,024,305 364,260
------------ ------------ ------------- ------------ ------------ ------------
Capital Share
Transactions (Note 4):
Net proceeds from sale
of shares............. 129,718,878 63,334,172 4,662,604 14,156,603 7,085,456 33,969,164
Dividends reinvested... 26,570,467 21,664,408 921,469 606,778 911,528 1,825,609
Cost of shares
redeemed.............. (83,214,662) (56,464,268) (6,464,199) (1,789,353) (6,822,743) (45,471,861)
Dividend distributions. (26,570,467) (21,664,408) (921,469) (606,778) (911,528) (1,825,609)
------------ ------------ ------------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets From
Capital Share
Transactions........... 46,504,216 6,869,904 (1,801,595) 12,367,250 262,713 (11,502,697)
------------ ------------ ------------- ------------ ------------ ------------
Increase (Decrease) in
Net Assets............. 84,431,452 17,994,410 (873,401) 13,001,597 1,287,018 (11,138,437)
Net Assets, Beginning of
Year................... 329,273,447 311,279,037 15,514,082 2,512,485 13,359,520 24,497,957
------------ ------------ ------------- ------------ ------------ ------------
Net Assets, End of Year. $413,704,899 $329,273,447 $ 14,640,681 $ 15,514,082 $ 14,646,538 $ 13,359,520
============ ============ ============= ============ ============ ============
Components of Net
Assets:
Paid-in capital........ $403,582,712 $330,508,029 $ 14,583,047 $ 15,463,173 $ 15,795,682 $ 14,621,441
Accumulated
undistributed net
investment income
(loss)................ (816,175) (1,022,752) (841) 4,971 (38,409) 12,288
Accumulated
undistributed net
realized gain (loss)
on investments........ (3,060,087) (3,479,221) 619 (10,413) (1,271,470) (1,297,963)
Net unrealized
appreciation
(depreciation) of
investments........... 13,998,449 3,267,391 57,856 56,351 160,735 23,754
------------ ------------ ------------- ------------ ------------ ------------
Net Assets, End of Year. $413,704,899 $329,273,447 $ 14,640,681 $ 15,514,082 $ 14,646,538 $ 13,359,520
============ ============ ============= ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
COMPOSITE FUND AGGRESSIVE EQUITY FUND
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income. $ 10,441,082 $ 10,191,145 $ 759,197 $ 441,513
Net realized gain
(loss) on
investments.......... 54,206,235 19,809,364 27,898,311 17,987,676
Unrealized
appreciation
(depreciation) of
investments.......... (16,888,109) 1,412,589 9,224,730 4,633,533
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets Resulting
From Operations........ 47,759,208 31,413,098 37,882,238 23,062,722
------------ ------------ ------------ ------------
Capital Share
Transactions (Note 4):
Net proceeds from sale
of shares............ 31,298,846 15,736,097 137,350,976 72,571,512
Dividends reinvested.. 67,460,654 35,621,387 28,638,720 19,399,095
Cost of shares
redeemed............. (57,212,696) (40,509,708) (24,081,133) (18,033,044)
Dividend
distributions........ (67,460,654) (35,621,387) (28,638,720) (19,399,095)
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets From
Capital Share
Transactions........... (25,913,850) (24,773,611) 113,269,843 54,538,468
------------ ------------ ------------ ------------
Increase (Decrease) in
Net Assets............. 21,845,358 6,639,487 151,152,081 77,601,190
Net Assets, Beginning of
Year................... 282,931,109 276,291,622 136,228,763 58,627,573
------------ ------------ ------------ ------------
Net Assets, End of Year. $304,776,467 $282,931,109 $287,380,844 $136,228,763
============ ============ ============ ============
Components of Net
Assets:
Paid-in capital....... $304,788,225 $263,241,421 $264,711,710 $122,803,147
Accumulated
undistributed net
investment income
(loss)............... 635,624 499,542 (3,076) (16,273)
Accumulated
undistributed net
realized gain (loss)
on investments....... (5,059,908) (2,110,489) 1,083,347 1,077,756
Unrealized
appreciation
(depreciation) of
investments.......... 4,412,526 21,300,635 21,588,863 12,364,133
------------ ------------ ------------ ------------
Net Assets, End of Year. $304,776,467 $282,931,109 $287,380,844 $136,228,763
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS
Income from investment operations and distributions per share for a Fund
share outstanding throughout each of the ten years ended December 31, 1997,
or, since the Fund's inception date if in existence less than ten years and
other supplementary data with respect to the Funds are presented below. The
financial highlights for the years 1988 through 1991 are presented from the
perspective of the Separate Accounts, which are the ultimate holders of the
shares of the Investment Company. Effective in 1992 the financial highlights
are presented from the perspective of the Funds.
<TABLE>
<CAPTION>
MONEY MARKET FUND
-----------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $1.19 $ 1.18 $ 1.19 $ 1.17 $ 1.17 $ 1.18 $ 1.23 $ 1.23 $ 1.22 $ 1.25
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income.. 0.07 0.06 0.07 0.03 0.04 0.04 0.12 0.10 0.12 0.08
Net Gains or (Losses)
on Securities realized
and unrealized........ -- -- -- 0.02 -- -- (0.05) -- -- --
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From Investment
Operations............. 0.07 0.06 0.07 0.05 0.04 0.04 0.07 0.10 0.12 0.08
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Less: Dividend
Distributions From Net
Investment Income...... (0.08) (0.05) (0.08) (0.03) (0.04) (0.05) (0.12) (0.10) (0.11) (0.11)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions..... (0.08) (0.05) (0.08) (0.03) (0.04) (0.05) (0.12) (0.10) (0.11) (0.11)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $1.18 $ 1.19 $ 1.18 $ 1.19 $ 1.17 $ 1.17 $ 1.18 $ 1.23 $ 1.23 $ 1.22
===== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (%)........ 5.5 5.3 5.8 4.1 2.9 3.3 4.4 6.8 7.8 5.9
Net Assets, End of Year
($ millions)........... 68 78 73 81 38 39 43 89 81 6
Ratio of Expenses to
Average Net Assets (%). 0.25 0.25 0.25 0.25 0.26 0.40 0.40 0.40 0.40 0.40
Ratio of Net Investment
Income to Average Net
Assets (%)............. 5.32 5.21 5.66 4.15 2.90 3.33 5.73 7.79 8.90 6.85
Portfolio Turnover
Rate(a)................ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
N/A=Not Applicable
43
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
ALL AMERICA FUND(B)
-----------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1997 1996 1995 1994(C) 1993 1992 1991 1990 1989 1988
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 2.44 $ 2.13 $ 1.61 $ 1.80 $ 1.79 $ 1.93 $ 1.70 $ 1.81 $ 1.69 $ 1.82
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
Income From Investment
Operations:
Net Investment Income.. 0.03 0.03 0.03 0.04 0.04 0.04 0.18 0.08 0.28 0.06
Net Gains or (Losses)
on Securities realized
and unrealized........ 0.62 0.41 0.56 (0.01) 0.18 0.03 0.23 (0.11) 0.14 0.10
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
Total From Investment
Operations............. 0.65 0.44 0.59 0.03 0.22 0.07 0.41 (0.03) 0.42 0.16
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
Less Dividend
Distributions:
From Net Investment
Income................ (0.03) (0.03) (0.03) (0.04) (0.04) (0.04) (0.05) (0.06) (0.05) (0.09)
From Capital Gains..... (0.35) (0.10) (0.04) (0.18) (0.17) (0.17) (0.13) (0.02) (0.25) (0.20)
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
Total Distributions..... (0.38) (0.13) (0.07) (0.22) (0.21) (0.21) (0.18) (0.08) (0.30) (0.29)
------ ------ ------ ------- ------ ------- ------- ------- ------- ------
Net Asset Value, End of
Year................... $ 2.71 $ 2.44 $ 2.13 $ 1.61 $ 1.80 $ 1.79 $ 1.93 $ 1.70 $ 1.81 $ 1.69
====== ====== ====== ======= ====== ======= ======= ======= ======= ======
Total Return (%)........ 26.8 20.7 36.6 1.3 12.0 3.2 22.6 (3.8) 24.1 8.7
Net Assets, End of Year
($ millions)........... 700 637 533 375 424 398 434 377 437 40
Ratio of Expenses to
Average Net Assets (%). 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment
Income to Average Net
Assets (%)............. 0.98 1.26 1.57 2.11 1.92 2.02 2.49 3.33 2.54 3.07
Portfolio Turnover Rate
(%)(a)................. 28.64 28.35 33.63 129.80 93.86 129.40 158.35 108.75 117.60 56.94
Average Commission Rate
Paid ($)(d)............ .0364 .0549 -- -- -- -- -- -- -- --
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
(b) Prior to May 2, 1994, this Fund was known as the Stock Fund and had a
different investment objective.
(c) Reflects the combined data of this Fund and that of its predecessor.
(d) Average commission rate paid per share of stock is calculated for years
beginning after 1995.
44
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUND
---------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 1.38 $ 1.43 $ 1.27 $ 1.41 $ 1.41 $ 1.41 $ 1.33 $ 1.37 $ 1.27 $ 1.40
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Income From Investment
Operations:
Net Investment Income.. 0.09 0.09 0.09 0.09 0.09 0.09 0.13 0.09 -- 0.09
Net Gains or (Losses)
on Securities realized
and unrealized........ 0.06 (0.04) 0.16 (0.14) 0.09 0.03 0.08 (0.02) 0.16 (0.01)
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Total From Investment
Operations............. 0.15 0.05 0.25 (0.05) 0.18 0.12 0.21 0.07 0.16 0.08
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Less Dividend
Distributions:
From Net Investment
Income................ (0.09) (0.09) (0.09) (0.09) (0.09) (0.09) (0.11) (0.11) (0.06) (0.21)
From Capital Gains..... (0.01) (0.01) -- -- (0.09) (0.03) (0.02) -- -- --
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Total Distributions..... (0.10) (0.10) (0.09) (0.09) (0.18) (0.12) (0.13) (0.11) (0.06) (0.21)
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Net Asset Value, End of
Year................... $ 1.43 $ 1.38 $ 1.43 $ 1.27 $ 1.41 $ 1.41 $ 1.41 $ 1.33 $ 1.37 $ 1.27
====== ====== ====== ====== ======= ======= ====== ======= ====== ======
Total Return (%)........ 10.4 3.5 19.4 (3.2) 13.1 8.6 14.0 3.5 11.1 6.2
Net Assets, End of Year
($ millions)........... 414 329 311 249 263 233 187 163 109 5
Ratio of Expenses to
Average Net Assets (%). 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment
Income to Average Net
Assets (%)............. 6.69 6.70 6.64 6.32 6.30 6.93 7.59 8.57 8.55 8.25
Portfolio Turnover Rate
(%)(a)................. 57.71 30.14 41.93 51.14 103.16 112.40 95.00 129.02 47.70 75.61
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
45
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND MID-TERM BOND FUND
--------------------------------------- ----------------------------------------
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
--------------------------------------- ----------------------------------------
1997 1996 1995 1994 1993(B) 1997 1996 1995 1994 1993(B)
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period/Year............ $ 1.03 $ 1.02 $ 1.00 $ 1.02 $ 1.00 $ 0.90 $ 1.00 $ 0.91 $ 0.99 $ 1.00
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
Income From Investment
Operations:
Net Investment Income.. 0.07 0.04 0.06 0.04 0.02 0.05 0.14 0.06 0.03 0.04
Net Gains or (Losses)
on Securities realized
and unrealized........ (0.01) 0.01 0.02 (0.02) 0.02 0.01 (0.10) 0.09 (0.07) 0.04
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
Total From Investment
Operations............. 0.06 0.05 0.08 0.02 0.04 0.06 0.04 0.15 (0.04) 0.08
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
Less Dividend
Distributions:
From Net Investment
Income................ (0.07) (0.04) (0.06) (0.04) (0.02) (0.06) (0.14) (0.06) (0.04) (0.04)
From Capital Gains..... -- -- -- -- -- -- -- -- -- (0.05)
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
Total Distributions..... (0.07) (0.04) (0.06) (0.04) (0.02) (0.06) (0.14) (0.06) (0.04) (0.09)
------ ------ ------ ------ ------- ------ ------- ------ ------ -------
Net Asset Value, End of
Period/Year............ $ 1.02 $ 1.03 $ 1.02 $ 1.00 $ 1.02 $ 0.90 $ 0.90 $ 1.00 $ 0.91 $ 0.99
====== ====== ====== ====== ======= ====== ======= ====== ====== =======
Total Return (%)........ 6.0 4.9 7.7 1.4 4.6 7.3 3.9 16.3 (3.7) 7.3
Net Assets, End of
Period/Year
($ millions)........... 15 16 3 2 3 15 13 24 24 19
Ratio of Expenses to
Average Net Assets (%). 0.50 0.50 0.50 0.48 0.45 0.50 0.50 0.50 0.50 0.45
Ratio of Net Investment
Income to Average Net
Assets (%)............. 5.81 5.42 4.65 3.51 3.09 5.87 5.80 5.73 4.71 4.13
Portfolio Turnover Rate
(%)(a)................. 74.95 6.68 16.47 0.00 122.37 12.89 144.55 73.72 7.52 162.03
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
(b) Commenced operations February 5, 1993.
46
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
COMPOSITE FUND
------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 1.77 $ 1.81 $ 1.57 $ 1.71 $ 1.59 $ 1.61 $ 1.53 $ 1.63 $ 1.46 $ 1.60
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
Income From Investment
Operations:
Net Investment Income.. 0.07 0.07 0.08 0.05 0.05 0.06 0.19 0.14 0.11 0.08
Net Gains or (Losses)
on Securities realized
and unrealized........ 0.24 0.14 0.27 (0.10) 0.22 0.03 0.09 (0.09) 0.17 0.05
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
Total From Investment
Operations............. 0.31 0.21 0.35 (0.05) 0.27 0.09 0.28 0.05 0.28 0.13
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
Less Dividend
Distributions:
From Net Investment
Income................ (0.07) (0.08) (0.08) (0.07) (0.05) (0.06) (0.07) (0.10) (0.08) (0.17)
From Capital Gains..... (0.39) (0.17) (0.03) (0.02) (0.10) (0.05) (0.13) (0.05) (0.03) (0.10)
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
Total Distributions..... (0.46) (0.25) (0.11) (0.09) (0.15) (0.11) (0.20) (0.15) (0.11) (0.27)
------- ------ ------ ------- ------- ------- ------- ------- ------ ------
Net Asset Value, End of
Year................... $ 1.62 $ 1.77 $ 1.81 $ 1.57 $ 1.71 $ 1.59 $ 1.61 $ 1.53 $ 1.63 $ 1.46
======= ====== ====== ======= ======= ======= ======= ======= ====== ======
Total Return (%)........ 17.7 11.9 21.9 (3.0) 16.9 5.9 16.4 1.5 17.2 7.9
Net Assets, End of Year
($ millions)........... 305 283 276 233 228 138 111 79 67 51
Ratio of Expenses to
Average Net Assets (%). 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment
Income to Average Net
Assets (%)............. 3.57 3.63 4.30 3.88 3.48 4.01 4.75 6.20 5.48 5.94
Portfolio Turnover Rate
(%)(a)................. 104.04 69.79 76.84 113.86 100.76 107.69 134.91 105.06 87.32 50.88
Average Commission Rate
Paid ($)(b)............ .0471 .0597 -- -- -- -- -- -- -- --
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
(b) Average commission rate paid per share of stock is calculated for years
beginning after 1995.
47
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INDEX FUND AGGRESSIVE EQUITY FUND
--------------------------------------- ---------------------------------
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
--------------------------------------- ---------------------------------
1997 1996 1995 1994 1993(B) 1997 1996 1995 1994(C)
------ ------ ------ ------ ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period/Year............ $ 1.59 $ 1.35 $ 1.02 $ 1.04 $ 1.00 $ 1.47 $ 1.35 $ 1.05 $ 1.00
------ ------ ------ ------ ------ ------ ------- ------- ------
Income From Investment
Operations:
Net Investment Income.. 0.03 0.03 0.02 0.03 0.02 0.01 0.01 0.01 0.01
Net Gains or (Losses)
on Securities realized
and unrealized........ 0.50 0.27 0.36 (0.01) 0.04 0.31 0.36 0.39 0.05
------ ------ ------ ------ ------ ------ ------- ------- ------
Total From Investment
Operations............. 0.53 0.30 0.38 0.02 0.06 0.32 0.37 0.40 0.06
------ ------ ------ ------ ------ ------ ------- ------- ------
Less Dividend
Distributions:
From Net Investment
Income................ (0.03) (0.03) (0.03) (0.03) (0.02) (0.01) (0.01) (0.01) (0.01)
From Capital Gains..... (0.01) (0.03) (0.02) (0.01) -- (0.17) (0.24) (0.09) --
------ ------ ------ ------ ------ ------ ------- ------- ------
Total Distributions..... (0.04) (0.06) (0.05) (0.04) (0.02) (0.18) (0.25) (0.10) (0.01)
------ ------ ------ ------ ------ ------ ------- ------- ------
Net Asset Value, End of
Period/Year............ $ 2.08 $ 1.59 $ 1.35 $ 1.02 $ 1.04 $ 1.61 $ 1.47 $ 1.35 $ 1.05
====== ====== ====== ====== ====== ====== ======= ======= ======
Total Return (%)........ 33.1 22.7 36.6 1.5 6.2 21.2 27.1 38.2 6.0
Net Assets, End of
Period/Year ($
millions).............. 237 102 43 26 27 287 136 59 27
Ratio of Expenses to
Average Net Assets (%). 0.13 0.13 0.13 0.13 0.11 0.85 0.85 0.85 0.56
Ratio of Net Investment
Income to Average Net
Assets (%)............. 1.86 2.19 2.50 2.67 2.43 0.33 0.45 0.65 0.70
Portfolio Turnover Rate
(%)(a)................. 14.17 5.85 13.99 6.59 1.44 80.94 103.68 116.52 60.86
Average Commission Rate
Paid ($)(d)............ .0308 .0388 -- -- -- .0537 .0591 -- --
</TABLE>
- -------
(a) Portfolio turnover rate excludes all short-term securities.
(b) Commenced operations February 5, 1993.
(c) Commenced operations May 2, 1994.
(d) Average commission rate paid per share of stock is calculated for years
beginning after 1995.
48
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
Mutual of America Investment Corporation (the "Investment Company") is a
diversified, open-end management investment company -- a type of company
commonly known as a "mutual fund". It is registered as such under the
Investment Company Act of 1940 (the "Investment Company Act"). The Investment
Company was formed on February 21, 1986 as a Maryland corporation and offers
its shares exclusively to separate accounts of Mutual of America Life
Insurance Company ("Mutual of America Life") and Mutual of America Life's
indirect wholly-owned subsidiary, The American Life Insurance Company of New
York ("American Life"). As a "series" type mutual fund, the Investment Company
issues separate classes (or series) of capital stock, each of which represents
a separate Fund of investments. There are currently eight Funds: the Money
Market Fund, the All America Fund, the Equity Index Fund, the Bond Fund, the
Short-Term Bond Fund, the Mid-Term Bond Fund, the Composite Fund, and the
Aggressive Equity Fund. The Investment Company is a successor to Mutual of
America Life's Separate Account No. 2 Money Market, All America (formerly
Stock) Bond and Composite Funds having exchanged its shares for the respective
net assets of these Separate Account No. 2 Funds in 1986.
The Investment Company shares are sold only to Mutual of America Life and
American Life for allocation to their Separate Accounts as a funding medium
for variable annuity and variable life insurance contracts issued by these
companies. As of December 31, 1997 Mutual of America Life owned 97.7% and
American Life 2.3% of the Investment Company's aggregate outstanding shares.
In January 1989, the net assets of Mutual of America Life's Separate Account
No. 1, available only for qualified pension plans, were invested in the All
America Fund of the Investment Company. Pursuant to this transaction,
approximately 249 million shares of the All America Fund were issued.
Effective February 5, 1993, the Equity Index Fund, Short-Term Bond Fund and
the Mid-Term Bond Fund commenced operations. On May 2, 1994 the Mutual of
America Aggressive Equity Fund commenced operations and the Stock Fund was
renamed the All America Fund with different investment objectives.
The following is a summary of the significant accounting policies of the
Investment Company:
Security Valuation -- Investment securities are valued as follows:
Stocks listed on national security exchanges and certain over-the-counter
issues quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at the last sale price,
or if no sale, at the latest available bid price.
Debt securities are valued at a composite fair market value "evaluated
bid," which may be the last sale price. Securities for which market
quotations are not readily available will be valued at fair value as
determined in good faith by the Investment Adviser under the direction
of the Board of Directors of the Investment Company.
Short-term investments with a maturity of 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt
securities, which mature in more than 60 days, are stated at market
value.
Premiums received by the Investment Company upon writing covered call
options are included in the Investment Company's statement of assets and
liabilities as an asset and an equivalent liability. The liability is
adjusted daily to reflect the market value of the options written based
on the mean of the closing bid and asked price. If an option expires, or
if the Investment Company enters into a closing purchase transaction,
the Investment Company realizes a gain or, if the cost of a closing
purchase transaction exceeds the premium originally received, a loss,
and the liability related to the option is extinguished. If an option is
exercised, the proceeds of the sale of the underlying security are
increased by the premium originally received when the option was
written.
A fund may purchase stock index futures contracts for cash management
purposes to remain more fully invested in the equity markets while
minimizing transaction costs. Initial cash margin deposits (represented
by cash or Treasury bills) are made upon entering into futures
contracts. (This initial margin, equal to approximately 4% of the
contract amount, does not involve the borrowing of funds to finance the
transaction). During the period the futures contract is outstanding,
changes in the value of the contract are recognized as unrealized gains
or losses from futures transactions by "marking-to-market" on a daily
basis to reflect the market value of the contract at the end of each
trading day. Depending upon whether unrealized gains or losses are
incurred, variation margin
49
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
payments are received or made. When the contract is closed, a realized
gain or loss from futures transactions is recorded, equal to the net
variation margin received or paid over the period of the contract. The
"Underlying Face Amount at Value" representing the aggregate of
outstanding contractual amounts under futures contracts reflects the
extent of a fund's exposure to off-balance sheet risk.
Security Transactions -- Security transactions are recorded on the trade
date. Interest income is accrued as earned. Dividend income is recorded
on the ex-dividend date. Foreign source tax withheld from dividends is
recorded as a reduction from dividend income. Should reclamation efforts
succeed, such amounts are recorded as income upon collection.
Realized gains and losses on the sale of short and long-term debt
securities are computed on the basis of amortized cost at the time of
sale. Realized gains and losses on the sale of stock is based on the
identified cost basis of the security, determined on the first-in,
first-out ("FIFO") basis.
Federal Income Taxes -- The Investment Company intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable
income to shareholders. Therefore, no federal income tax provision is
required.
2. EXPENSES
The Investment Company has entered into an Investment Advisory Agreement
with Mutual of America Capital Management Corporation ("the Adviser"), an
indirect wholly-owned subsidiary of Mutual of America Life. For providing
investment management services to each of the Funds of the Investment Company,
the Adviser receives a fee calculated as a daily charge at the annual rate of
.25% of the value of the net assets of the Money Market Fund, and .50% of the
value of the net assets of the All America Fund, Bond Fund, Short-Term Bond
Fund, Mid-Term Bond Fund and Composite Fund, .125% of the value of the net
assets of the Equity Index Fund, and .85% of the value of the net assets of
the Aggressive Equity Fund.
Under Subadvisory Agreements, the Adviser has delegated its investment
advisory responsibilities to such subadvisers, is responsible for providing
management services to the respective funds and pays the subadvisors for their
investment advisory services.
The Adviser voluntarily limits the expenses of each Fund, other than for
brokers' commissions, transfer taxes and other fees relating to portfolio
transactions, to the amount of the advisory fee paid by the funds of the
Investment Company to the Adviser. The Adviser may discontinue this practice
at any time.
Various funds of the Investment Company may place portfolio transactions
through a broker affiliated with the Adviser. The aggregate commissions paid
to this broker for the year ended December 31, 1997 was $64,092 or 3% of total
commissions. In addition, a Sub-Advisor placed a portion of its portfolio
transactions with its affiliated broker-dealer. Such commissions amounted to
$216,495 or 11.0% of the Investment Company's total commissions.
3. PURCHASES AND SALES
The cost of investment purchases and proceeds from sales of investments,
excluding short-term securities, options and futures for the year ended
December 31, 1997 was as follows:
<TABLE>
<CAPTION>
ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
Cost of investment purchases............. $195,522,073 $117,324,506 $262,014,591
============ ============ ============
Proceeds from sales of investments....... $302,071,138 $ 23,510,255 $196,259,574
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Cost of investment purchases.. $11,448,110 $5,613,799 $262,504,994 $272,927,901
=========== ========== ============ ============
Proceeds from sales of
investments.................. $11,170,015 $1,422,146 $256,062,961 $165,909,796
=========== ========== ============ ============
</TABLE>
50
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The cost of short-term security purchases for the Money Market Fund for the
year was $945,106,990. Net proceeds from sales and redemptions for the year
was $959,830,399.
At December 31, 1997, net unrealized appreciation (depreciation) of
investments, based on cost for Federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
MONEY ALL AMERICA EQUITY INDEX BOND
MARKET FUND FUND FUND FUND
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate gross unrealized
appreciation............... $ -- $289,084,728 $ 52,814,835 $ 14,214,454
Aggregate gross unrealized
depreciation............... -- 10,440,816 2,497,052 216,005
----------- ------------ ------------ ------------
Net unrealized appreciation
(depreciation)............. $ -- $278,643,912 $ 50,317,783 $ 13,998,449
=========== ============ ============ ============
Aggregate cost of
investments for Federal
income tax purposes........ $67,501,370 $418,360,583 $186,329,610 $396,527,239
=========== ============ ============ ============
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregate gross unrealized
appreciation............... $ 63,941 $ 177,690 $ 13,241,193 $ 36,821,497
Aggregate gross unrealized
depreciation............... 6,085 16,955 8,828,667 15,232,634
----------- ------------ ------------ ------------
Net unrealized appreciation
(depreciation)............. $ 57,856 $ 160,735 $ 4,412,526 $ 21,588,863
=========== ============ ============ ============
Aggregate cost of
investments for Federal
income tax purposes........ $14,477,811 $ 14,201,472 $301,380,507 $267,196,801
=========== ============ ============ ============
</TABLE>
4. CAPITAL SHARE ACTIVITY
The Investment Company has registered an indefinite number of its capital
shares pursuant to Rule 24F-2 under the Investment Company Act of 1940. Shares
are currently allocated into the eight series of funds as follows:
<TABLE>
<CAPTION>
NAME OF FUND AUTHORIZED NO. OF SHARES
------------ ------------------------
<S> <C>
Money Market Fund..................................... 100,000,000
All America Fund...................................... 500,000,000
Equity Index Fund..................................... 150,000,000
Bond Fund............................................. 325,000,000
Short-Term Bond Fund.................................. 50,000,000
Mid-Term Bond Fund.................................... 75,000,000
Composite Fund........................................ 200,000,000
Aggressive Equity Fund................................ 500,000,000
-------------
Sub Total........................................... 1,900,000,000
Shares to be allocated at the discretion of the Board
of Directors......................................... 1,100,000,000
-------------
Total............................................... 3,000,000,000
=============
</TABLE>
Transactions in shares were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Shares sold.................. 25,436,145 18,307,611 55,500,928 89,348,390
Shares issued to shareholders
as reinvestment of
dividends................... 3,575,177 31,672,092 2,398,380 18,616,691
---------- ---------- ---------- -----------
Total........................ 29,011,322 49,979,703 57,899,308 107,965,081
Shares redeemed.............. 37,008,064 53,217,275 7,724,686 56,494,335
---------- ---------- ---------- -----------
Net increase (decrease)...... (7,996,742) (3,237,572) 50,174,622 51,470,746
========== ========== ========== ===========
</TABLE>
51
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Shares sold............. 4,388,108 7,758,608 16,004,173 82,801,715
Shares issued to
shareholders as
reinvestment of
dividends.............. 902,033 1,007,176 41,594,212 17,718,305
---------- ---------- ---------- -----------
Total................... 5,290,141 8,765,784 57,598,385 100,520,020
Shares redeemed......... 6,050,019 7,440,628 29,544,518 14,247,788
---------- ---------- ---------- -----------
Net increase (decrease). (759,878) 1,325,156 28,053,867 86,272,232
========== ========== ========== ===========
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,1996
--------------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Shares sold............. 50,280,297 29,550,325 40,909,613 44,395,084
Shares issued to
shareholders as
reinvestment of
dividends.............. 2,659,830 13,283,731 2,182,072 15,684,625
---------- ---------- ---------- -----------
Total................... 52,940,127 42,834,056 43,091,685 60,079,709
Shares redeemed......... 49,911,080 32,314,890 11,049,137 39,572,610
---------- ---------- ---------- -----------
Net increase (decrease). 3,029,047 10,519,166 32,042,548 20,507,099
========== ========== ========== ===========
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
------------ ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Shares sold............. 13,761,891 33,684,710 8,501,017 47,625,065
Shares issued to
shareholders as
reinvestment of
dividends.............. 590,553 2,035,806 20,004,080 13,092,538
---------- ---------- ---------- -----------
Total................... 14,352,444 35,720,516 28,505,097 60,717,603
Shares redeemed......... 1,718,816 45,316,254 21,578,442 11,562,121
---------- ---------- ---------- -----------
Net increase (decrease). 12,633,628 (9,595,738) 6,926,655 49,155,482
========== ========== ========== ===========
</TABLE>
5. DIVIDENDS
On December 31, 1997 dividend distributions were declared for each of the
Funds from net realized gains on investment transactions and net investment
income during 1997. Additionally, on September 15, 1997 the remaining required
dividends relating to the 1996 Internal Revenue Sec. 855(a) election were
declared for each of the funds and paid on September 15, 1997 to shareholders
of record on September 15, 1997. Dividends declared on December 31, 1997 were
paid on December 31, 1997 to shareholders of record on December 30, 1997. All
dividend distributions are immediately reinvested in additional shares of each
respective fund.
<TABLE>
<CAPTION>
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net investment income........ $4,207,000 $ 6,770,000 $3,306,638 $24,546,000
Net realized capital gains... -- 79,081,292 1,676,434 2,024,467
---------- ----------- ---------- -----------
Total dividends.............. $4,207,000 $85,851,292 $4,983,072 $26,570,467
========== =========== ========== ===========
Dividend amounts per share... $ .078 $ .379 $ .045 $ .098
========== =========== ========== ===========
Increase in number of shares
per fund.................... 3,575,177 31,672,092 2,398,380 18,616,691
========== =========== ========== ===========
</TABLE>
52
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net investment income............ $921,469 $ 911,528 $10,305,000 $ 1,813,232
Net realized capital gains....... -- -- 57,155,654 26,825,488
-------- ---------- ----------- -----------
Total dividends.................. $921,469 $ 911,528 $67,460,654 $28,638,720
======== ========== =========== ===========
Dividend amounts per share....... $ .069 $ .060 $ .461 $ .178
======== ========== =========== ===========
Increase in number of shares per
fund............................ 902,033 1,007,176 41,594,212 17,718,305
======== ========== =========== ===========
</TABLE>
53
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Mutual of America Investment Corporation:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments in securities, of Mutual of America
Investment Corporation (a Maryland Corporation) comprising, respectively, the
Money Market, All America (formerly the Stock Fund), Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite, and Aggressive Equity Funds as of
December 31, 1997, and the related statement of operations for the year then
ended and 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 six years
in the period then ended. These financial statements and the financial
highlights are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmations of securities
owned as of December 31, 1997 by correspondence with the custodian. 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
the Money Market, All America (formerly the Stock Fund), Equity Index, Bond,
Short-Term Bond, Mid-Term Bond, Composite, and Aggressive Equity Funds of
Mutual of America Investment Corporation as of December 31, 1997, the results
of their operations for the year then ended and the changes in their net
assets for each of the two years in the period then ended and their financial
highlights for each of the six years in the period then ended in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
February 20, 1998
54
