AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1999
REGISTRATION NO. 33-6486
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 16 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 17
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MUTUAL OF AMERICA INVESTMENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)(ZIP CODE)
(212) 224-1600
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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DOLORES J. MORRISSEY, PRESIDENT
MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE
NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------
COPY TO:
STANLEY M. LENKOWICZ, ESQ.
SENIOR VICE PRESIDENT,
DEPUTY GENERAL COUNSEL & SECRETARY
MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE
NEW YORK, NEW YORK 10022
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE: (CHECK
APPROPRIATE SPACE)
[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on April 30, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
ITEMS IN
PART A OF
FORM N-1A CAPTION IN FORM N-1A CAPTION OR LOCATION IN PROSPECTUS
- ----------- ---------------------------------------------- -----------------------------------------------------
<S> <C> <C>
1 Front and Back Cover Pages ................... Front and Back Covers
2 Risk/Return Summary:
Investments, Risks, and Performance .......... Summary of How Our Funds Invest
3 Risk/Return Summary:
Fee Table .................................... Not Applicable (shares only to Separate Accounts)
4 Investment Objectives, Principal
Investment Strategies, and Related
Risks ........................................ Details about How Our Funds Invest and Related Risks
5 Management's Discussion of Fund
Performance .................................. Not Applicable (Included in Annual Report)
6 Management, Organization, and
Capital Structure ............................ Management of the Funds
7 Shareholder Information ...................... Information on Fund Shares
8 Distribution Agreements ...................... Not Applicable
9 Financial Highlights Information ............. Financial Highlights
</TABLE>
<TABLE>
<CAPTION>
ITEMS IN
PART B OF CAPTION OR LOCATION IN
FORM N-1A CAPTION IN FORM N-1A STATEMENT OF ADDITIONAL INFORMATION
- ----------- --------------------------------------------- -------------------------------------------------------
<S> <C> <C>
10 Cover Page and Table of Contents ............ Cover
11 Fund History ................................ Investment Company's Form of Operations
12 Description of the Fund and Its
Investments and Risks ....................... Investment Strategies and Related Risks; Fundamental
Investment Restrictions; Description of Corporate Bond
Ratings; Use of Standard & Poor's Indices
13 Management of the Fund ...................... Management of the Investment Company
14 Control Persons and Principal Holders
of Securities ............................... Investment Company's Form of Operations
15 Investment Advisory and Other
Services .................................... Investment Advisory Arrangements; Independent
Auditors; Legal Matters; Custodian
16 Brokerage Allocation and Other
Practices ................................... Portfolio Transactions and Brokerage
17 Capital Stock and Other Securities .......... Investment Company's Form of Operations
18 Purchase, Redemption, and Pricing of
Shares ...................................... Purchase, Redemption and Pricing of Shares
19 Taxation of the Fund ........................ Taxation of the Investment Company
20 Underwriters ................................ Distribution Arrangements
21 Calculation of Performance Data ............. Yield and Performance Information
22 Financial Statements ........................ Financial Statements
</TABLE>
<TABLE>
<CAPTION>
ITEMS IN
PART C OF CAPTION IN FORM N-1A AND IN PART C
FORM N-1A OF REGISTRATION STATEMENT
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<S> <C>
23 Exhibits
24 Persons Controlled by or Under
Common Control with the Fund
25 Indemnification
26 Business and Other Connections of
the Investment Adviser
27 Principal Underwriters
28 Location of Accounts and Records
29 Management Services
30 Undertakings
</TABLE>
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE, NEW YORK, NEW YORK 10022
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Mutual of America Investment Corporation is a mutual fund. It currently
has these nine Funds:
o EQUITY INDEX FUND
o ALL AMERICA FUND
o MID-CAP EQUITY INDEX FUND
o AGGRESSIVE EQUITY FUND
o COMPOSITE FUND
o BOND FUND
o MID-TERM BOND FUND
o SHORT-TERM BOND FUND
o MONEY MARKET FUND
The Funds serve as investment vehicles for account balances under variable
accumulation annuity contracts and variable life insurance policies issued
by Mutual of America Life Insurance Company and The American Life
Insurance Company of New York (the INSURANCE COMPANIES). Separate Accounts
of the Insurance Companies purchase Fund shares.
This Prospectus has information a contractholder or policyowner should
know before allocating account balance to the Separate Account Funds that
invest in shares of the Funds. You should read this Prospectus carefully
and keep it for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS DATED MAY 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
SUMMARY OF HOW OUR FUNDS INVEST ............................. 1
Equity Index Fund ......................................... 1
All America Fund .......................................... 1
Mid-Cap Equity Index Fund ................................. 2
Aggressive Equity Fund .................................... 2
Composite Fund ............................................ 2
Bond Fund ................................................. 3
Mid-Term Bond Fund ........................................ 3
Short-Term Bond Fund ...................................... 3
Money Market Fund ......................................... 4
Annual Total Returns ...................................... 5
Average Annual Total Returns .............................. 8
MANAGEMENT OF THE FUNDS ..................................... 9
The Adviser ............................................... 9
Subadvisers for a Portion of the All America Fund ......... 9
Portfolio Managers ........................................ 10
Year 2000 Considerations .................................. 11
DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS ........ 12
Investment Objectives and Strategies. ..................... 12
Equity Index Fund ........................................ 12
All America Fund ......................................... 12
Mid-Cap Equity Index Fund ................................ 14
Aggressive Equity Fund ................................... 14
Composite Fund ........................................... 15
Bond Fund ................................................ 15
Mid-Term Bond Fund ....................................... 16
Short-Term Bond Fund ..................................... 16
Money Market Fund ........................................ 16
Risks of Investing in Stock Funds ......................... 17
Risks of Investing in Bond Funds .......................... 18
Specific Investments or Strategies, and Related Risks ..... 19
INFORMATION ABOUT FUND SHARES ............................... 21
Pricing of Funds' Shares .................................. 21
Purchase of Shares ........................................ 21
Redemption of Shares ...................................... 21
Dividends, Capital Gains Distributions and Taxes .......... 21
FINANCIAL HIGHLIGHTS ........................................ 22
YOU MAY OBTAIN MORE INFORMATION ............................. Back cover
</TABLE>
<PAGE>
SUMMARY OF HOW OUR FUNDS INVEST
Each Fund of Mutual of America Investment Corporation (the INVESTMENT
COMPANY) has its own investment objective and tries to achieve its objective
with certain investment strategies. The Funds' different investment
strategies will affect the return of the Funds and the risks of investing in
each Fund.
A Fund may not achieve its objective, or it may achieve its objective during
some time periods but not during other time periods. The value of an
investment in any of the Funds could decline, or it could increase.
EQUITY INDEX FUND
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The Fund seeks investment results that correspond to the performance of the
Standard & Poor's Composite Index of 500 Stocks (the S&P 500(R) INDEX). The
Fund invests in the 500 common stocks included in the S&P 500 Index and in
futures contracts on the S&P 500 Index.
o Securities in the S&P 500 Index generally are issued by companies with
large and mid-sized market capitalizations.
o Securities are included in the Index based on industry weightings and
the issuers' leading positions in those industries.
An investment in the Equity Index Fund is subject to market risk and financial
risk. Financial risk should be moderate because of the nature of the
securities included in the S&P 500 Index.
ALL AMERICA FUND
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The Fund attempts to outperform the S&P 500 Index, by investing primarily
in common stocks.
o Approximately 60% of the Fund's assets are invested to replicate the
S&P 500 Index. This portion of the Fund purchases the 500 common stocks
included in the S&P 500 Index and futures contracts on the S&P 500
Index.
o Approximately 40% of the Fund's assets are invested by the Adviser and
three Subadvisers, each having approximately 10% of the Fund's assets,
with an objective of capital appreciation and, to a lesser extent,
current income. The Adviser invests primarily in small capitalization
value stocks. One Subadviser invests primarily in small capitalization
growth stocks. Another Subadviser invests primarily in mid- and large
capitalization growth stocks. The third Subadviser invests primarily in
large capitalization value stocks.
DEFINITIONS WE USE
-- MARKET RISK, which refers to how much the value of a security changes
(volatility of price) when conditions in the securities markets change or
the economic environment changes. For debt securities, market risk
includes changes in the overall level of interest rates. For equity
securities, stocks of companies with smaller market capitalizations
generally have more market risk than stocks of companies with larger
market capitalizations.
-- FINANCIAL (OR CREDIT) RISK, which refers to the ability to pay
principal and interest by an issuer of a debt security and to the earning
stability and overall financial soundness of an issuer of an equity
security. Debt securities issued by the U.S. Government or its agencies
are considered to have no or very little financial risk, and debt
securities with higher ratings have less financial risk than lower-rated
debt securities.
-- CURRENT INCOME VOLATILITY, which refers to how much and how quickly
changes in the overall level of interest rates become reflected in the
level of a fund's current income. When a fund holds a security that
matures or prepays, the fund will invest the proceeds at current interest
rates.
-- MARKET CAPITALIZATION, which refers to the aggregate market value of
the equity securities stock that a company has issued.
-1-
<PAGE>
An investment in the All America Fund is subject to market and financial risk.
Approximately 20% of the All America Fund's assets are invested in small
capitalization growth and value stocks, many of which trade over-the-counter,
and this portion of its portfolio will have more market and financial risk
than the portion invested in mid and large capitalization stocks. Equity
securities that trade over-the-counter may be more difficult to sell than
equity securities that trade on a national securities exchange.
MID-CAP EQUITY INDEX FUND
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The Fund seeks investment results that correspond to the performance of
the S&P MidCap 400 Index.
o The Fund invests in the 400 common stocks included in the S&P MidCap
400 Index and in futures contracts on the S&P MidCap 400 Index.
o These stocks are issued by companies with mid-sized market
capitalizations.
An investment in the MidCap Equity Index Fund is subject to market and
financial risk.
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STANDARD & POOR'S(R) (S&P(R)) DOES NOT SPONSOR, ENDORSE, SELL OR PROMOTE THE
EQUITY INDEX FUND, ALL AMERICA FUND OR MID-CAP EQUITY INDEX FUND. STANDARD &
POOR'S, S&P, THE S&P 500 INDEX AND THE S&P MIDCAP 400 INDEX ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY THE
INVESTMENT COMPANY. STANDARD & POOR'S HAS NO OBLIGATION OR LIABILITY FOR THE
SALE OR OPERATION OF THE EQUITY INDEX FUND, ALL AMERICA FUND OR MID-CAP
EQUITY INDEX FUND AND MAKES NO REPRESENTATION AS TO THE ADVISABILITY OF
INVESTING IN THE FUNDS.
AGGRESSIVE EQUITY FUND
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The Fund seeks capital appreciation by investing primarily in common stocks,
many of which are issued by companies that have small market capitalizations
and are traded over-the-counter. The Fund uses two different investment
styles to seek its investment objective:
o The Fund invests approximately 50% of its assets in growth stocks,
issued by companies the Adviser believes to possess above-average
growth potential.
o The Fund invests the other approximately 50% of its assets in value
stocks, issued by companies the Adviser believes to possess valuable
assets or to be undervalued in the marketplace in relation to factors
such as the company's assets, earnings, or growth potential.
An investment in the Aggressive Equity Fund is subject to market and
financial risk. The Aggressive Equity Fund has more market risk and
financial risk than our other stock funds, because it generally invests in
small capitalization growth and value equity securities that often trade
over-the-counter.
COMPOSITE FUND
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The Fund seeks capital appreciation by investing in common stocks, and it
seeks current income by primarily investing in publicly-traded, investment
grade debt securities and money market instruments. The portion of the
Fund's assets invested in each category of securities will vary, based on
the Adviser's view of current economic and market conditions.
GENERAL PRINCIPLES OF INVESTING
-- As a very general rule, over longer investment periods the investment
returns for stock funds tend to be higher than the returns for bond funds
and money market funds.
-- Stock funds have a higher risk for declines in value, especially over
shorter investment periods, than bond funds and money market funds, and a
stock fund's returns may vary significantly from year-to-year.
-- Money market funds have the lowest risk for a decline in value, but they
tend to have the lowest investment returns over longer investment periods.
-2-
<PAGE>
o The current investment strategy for the equity portion on the Fund is
to invest in approximately 25 stocks in the S&P 500 Index that are the
largest in the Index by market capitalization, and in approximately 75
more stocks that also are included in the S&P 500 Index, as selected by
the Adviser.
o The current investment strategy for the fixed income portion of the
Fund is to invest primarily in investment grade debt securities issued
by U.S. corporations or by the U.S. Government or its agencies,
including mortgage-backed securities.
An investment in the Composite Fund has market risk. By investing in equity
securities and debt securities, the Fund tries to reduce the market risk
that would exist for an investment in either a stock fund or a bond fund. An
investment in the Composite Fund has moderate financial risk, based on the
Fund's purchase of equity securities included in the S&P 500 Index and its
purchase of investment grade debt securities.
BOND FUND
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The Fund seeks current income, by investing primarily in publicly-traded,
investment grade debt securities that will have an average maturity which
varies according to the Adviser's view of current market conditions.
o The Fund invests in corporate, U.S. Government securities and U.S.
Government agency securities, such as bonds, notes, debentures, zero
coupon securities and mortgage-backed securities.
o The Fund may have a significant portion of its assets invested in a
particular type of debt security, such as U.S. Government or agency
mortgage-backed securities, zero coupon securities or securities rated
BBB.
o The Adviser generally selects securities based on interest income to be
generated and does not time purchases and sales based on interest rate
predictions.
You should refer to "Risks of Investing in any of the Bond Funds" below.
MID-TERM BOND FUND
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The Fund seeks current income by investing primarily in publicly-traded,
investment grade debt securities that have an average maturity of three to
seven years.
o The Fund invests in corporate, U.S. Government securities and U.S.
Government agency securities, such as bonds, notes, debentures, zero
coupon securities and mortgage-backed securities.
o The Fund may have a significant portion of its assets invested in a
particular type of debt security, such as U.S. Government agency
mortgage-backed securities, zero coupon securities or securities rated
BBB.
o The Adviser generally selects securities based on interest income to be
generated and does not time purchases and sales based on interest rate
predictions.
You should refer to "Risks of Investing in any of the Bond Funds" below.
SHORT-TERM BOND FUND
----------------------------------------------------------------------------
The Fund seeks current income by investing primarily in publicly-traded,
investment grade debt securities that have an average maturity of one to
three years.
o The Fund invests in corporate, U.S. Government securities, U.S.
Government agency securities and money market instruments, such as
bonds, notes, zero coupon securities, mortgage-backed securities and
commercial paper.
o The Fund may have a significant portion of its assets invested in a
particular debt security, such as U.S. Government or agency securities,
which also may be mortgage-backed securities.
o The Adviser selects securities based on income to be generated and does
not time purchases and sales based on interest rate predictions.
You should refer to "Risks of Investing in any of the Bond Funds" below.
-3-
<PAGE>
RISKS OF INVESTING IN ANY OF THE BOND FUNDS
An investment in any of the Bond Funds is subject to market risk. Interest
rate increases usually cause a decline in the value of debt securities,
while interest rate decreases usually cause an increase in the value of debt
securities. Generally, the market risk for debt securities increases as the
term to maturity (or expected redemption date)
lengthens. The market risk for a Fund increases as the average maturity of
the Fund's portfolio lengthens. Lower rated investment grade debt securities
may be subject to a greater market risk than higher rated debt securities,
and zero coupon securities or discount notes may be subject to a greater
market risk than securities that pay interest on a regular basis.
The Funds also have current income volatility risk. The risk decreases as
the average maturity of a Fund's portfolio lengthens.
Because the Funds purchase primarily investment grade debt securities,
including securities issued by the U.S. Government and its agencies, they
should have a moderate amount of financial risk. Securities rated BBB have
more credit risk than higher-rated investment grade securities.
MONEY MARKET FUND
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The Fund seeks current income and preservation of principal by investing in
money market instruments that meet certain requirements for liquidity,
investment quality and stability of capital.
o The average maturity of the instruments the Fund holds will be
short-term -- 90 days or less.
o The Fund will purchase only securities that are highly rated by at
least two rating agencies.
o The Fund will diversify its investments, limiting holdings in the
securities of any one issuer (except the U.S. Government or its
agencies) to 5% of assets.
The Money Market Fund does not operate in a way to maintain a stable net
asset value of $1.00, because it pays dividends of income earned on an
annual basis. The Fund's net asset value will generally rise during the year
as the Fund earns income and will decline when dividends are declared and
income is paid to shareholders.
A shareholder's investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation, the U.S. Government or any other
government agency.
An investment in the Money Market Fund has a small amount of market risk and
financial risk, because the Fund holds high quality securities with short
terms to maturity. The Fund has a high level of current income volatility,
because its securities holdings are short term and it reinvests as its
holdings mature.
-4-
<PAGE>
ANNUAL TOTAL RETURNS
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The bar charts below show the annual return of each Fund for the past ten
years, or for the years the Fund has been in operation if less than ten
years. The Mid-Cap Equity Index Fund is not included because it began
operations on May 1, 1999. A chart indicates the risks of investing in a
particular Fund by showing changes in the Fund's performance from
year-to-year during the period., but a Fund's past performance does not
necessarily indicate how it will perform in the future.
Below each chart is the Fund's highest total return for any calendar quarter
during the period covered by the chart, called the BEST QUARTER RETURN, and
the Fund's lowest total return for any calendar quarter during the period
covered, called the WORST QUARTER RETURN. These returns are an indication of
the volatility of a Fund's total returns. The numbers in parentheses are
negative, representing a loss of principal.
The total returns shown do not include charges against the assets of the
Separate Accounts that purchase Fund shares. If these charges were
reflected, returns would be less than those shown.
[EQUITY INDEX FUND CHART APPEARS HERE]
1994 1995 1996 1997 1998
- -------------------------------------
1.5% 36.6% 22.7% 33.1% 28.6%
Best quarter return: 21.4% during fourth quarter 1998
Worst quarter return: (9.9%) during third quarter 1998
[ALL AMERICA FUND CHART APPEARS HERE]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------
24.1% (3.8%) 22.6% 3.2% 12.0% 1.3% 36.6% 20.7% 26.8% 21.3%
Best quarter return: 22.1% during fourth quarter 1998
Worst quarter return: (14.3%) during third quarter 1998
-5-
<PAGE>
[AGGRESSIVE EQUITY FUND CHART APPEARS HERE]
1995 1996 1997 1998
- -----------------------------
38.2% 27.1% 21.2% (5.1%)
Best quarter return: 26.9% during fourth quarter 1998
Worst quarter return: (26.2%) during third quarter 1998
[COMPOSITE FUND CHART APPEARS HERE]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------
17.2% 1.5% 16.4% 5.9% 16.9% 3.0% 21.9% 11.9% 17.7% 14.5%
Best quarter return: 8.8% during fourth quarter 1998
Worst quarter return: (6.9%) during third quarter 1990
[BOND FUND CHART APPEARS HERE]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------
11.1% 3.5% 14.0% 8.6% 13.1% (3.2%) 19.4% 3.5% 10.4% 7.2%
Best quarter return: 7.0% during second quarter 1995
Worst quarter return: (2.9%) during first quarter 1994
-6-
<PAGE>
[MID-TERM BOND FUND CHART APPEARS HERE]
1994 1995 1996 1997 1998
- ------------------------------------
(3.7%) 16.3% 3.9% 7.3% 6.4%
Best quarter return: 6.1% during second quarter 1995
Worst quarter return: (3.0%) during first quarter 1994
[SHORT-TERM BOND FUND CHART APPEARS HERE]
1994 1995 1996 1997 1998
--------------------------------------
1.4% 7.7% 4.9% 6.0% 5.7%
Best quarter return: 2.6% during second quarter 1995
Worst quarter return: (0.3%) during first quarter 1994
[MONEY MARKET FUND CHART APPEARS HERE]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------
7.8% 6.8% 4.4% 3.3% 2.9% 4.1% 5.8% 5.3% 5.5% 5.4%
Best quarter return: 2.3% during second quarter 1989
Worst quarter return: 0.7% during second quarter 1993
-7-
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DECEMBER 31, 1998)
----------------------------------------------------------------------------
The table below shows the average annual total returns of each Fund for the
past one, five and ten years, if the Fund was operating for those periods,
and the return for the period of the Fund's operations, except that the
Mid-Cap Equity Index Fund is not included because it began operations on May
1, 1999.
The table indicates the risks of investing in the Funds by comparing, for
the same periods, each Fund's returns to those of a broad-based, unmanaged
index, or to Treasury Bills for money market investments. A Fund's past
performance does not necessarily indicate how it will perform in the future.
The average annual total returns shown do not include charges against the
assets of the Separate Accounts that purchase Fund shares. If these charges
were reflected, returns would be less than those shown.
<TABLE>
<CAPTION>
PAST PAST PAST FOR LIFE
FUND/COMPARATIVE INDEX(ES) ONE YEAR FIVE YEARS TEN YEARS OF FUND*
- ----------------------------------------------------------- ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Equity-Index Fund ....................................... 28.6% 23.8% N/A 21.1%
S&P 500 Index .......................................... 28.6% 24.1% 21.5%
- ----------------------------------------------------------- ---- ---- ----
All America Fund** ...................................... 21.3% 20.8% 16.4% 16.7%
S&P 500 Index .......................................... 28.6% 24.1% 19.2% 18.7%
- ----------------------------------------------------------- ---- ---- ---- ----
Aggressive Equity Fund .................................. (5.1)% N/A N/A 17.7%
Russell 2000 Index ..................................... (2.6)% 12.8%
- ----------------------------------------------------------- ---- ----
Composite Fund .......................................... 14.5% 12.2% 12.3% 12.6%
S&P 500 Index .......................................... 28.6% 24.1% 19.2% 18.7%
Lehman Brothers Gov't./Corp. Bond Index ................ 9.5% 7.3% 9.3% 9.9%
90-day Treasury Bill Rate .............................. 5.1% 5.1% 5.4% 5.8%
- ----------------------------------------------------------- ---- ----- ---- ----
Bond Fund ............................................... 7.2% 7.2% 9.1% 9.0%
Lehman Brothers Gov't./Corp. Bond Index ................ 9.5% 7.3% 9.3% 9.9%
- ----------------------------------------------------------- ---- ----- ---- ----
Mid-Term Bond Fund ...................................... 6.4% 5.9% N/A 6.2%
Salomon Brothers 3-7 Year Bond Index ................... 8.9% 6.9% 7.0%
- ----------------------------------------------------------- ---- ----- ----
Short-Term Bond Fund .................................... 5.7% 5.1% N/A 5.1%
Salomon Brothers 1-3 Year Bond Index ................... 7.0% 6.0% 5.8%
- ----------------------------------------------------------- ---- ----- ----
Money Market Fund ....................................... 5.4% 5.2% 5.4% 5.9%
90-day Treasury Bill Rate .............................. 5.1% 5.1% 5.4% 5.8%
7-day current yield for period ended 12/29/98 was 5.06%
7-day effective yield (reflecting the compounding of
interest) for period ended 12/29/98 was 5.19%
- ------------------------------------------------------------
</TABLE>
N/A = Not applicable
* The Funds commenced operations on the following dates: All America,
Composite, Bond and Money Market Funds -- January 1, 1985; Equity Index,
Mid-Term Bond and Short-Term Bond Funds -- February 5, 1993; and
Aggressive Equity Fund -- May 2, 1994.
** Prior to May 2, 1994, the All America Fund was known as the Stock Fund,
had a different investment objective and did not have any subadvisers.
The S&P 500 Index is the Standard & Poor's Composite Index of 500 Stocks, a
market value-weighted index of the common stock prices of companies included
in the S&P 500.
The Lehman Brothers Government/Corporate Bond Index is an index of U.S.
Government and corporate bond prices of investment grade bonds with
maturities greater than one year and face values over $1 million.
The Russell 2000 Index is a market capitalization-weighted index of common
stock prices of the smallest 2000 companies in the Russell 3000, generally
with capitalizations of $1 billion or less.
The Salomon Brothers Bond Index, for 1-3 years and for 3-7 years, is a
market capitalization-weighted index of Treasury, Agency, mortgage and
corporate bonds in the Salomon Brothers Broad Investment-Grade Bond Index
with the same maturities and values of $25-$50 million (at least $200
million for mortgage-backed bonds).
-8-
<PAGE>
MANAGEMENT OF THE FUNDS
THE ADVISER
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Mutual of America Capital Management Corporation, 320 Park Avenue, New York,
New York 10022 (the ADVISER or CAPITAL MANAGEMENT) is the investment adviser
for the Funds of the Investment Company. The Adviser had total assets under
management of approximately $7.7 billion at December 31, 1998. As Adviser,
Capital Management:
o places orders for the purchase and sale of securities,
o engages in securities research,
o makes recommendations to and reports to the Investment Company's Board
of Directors,
o supplies administrative, accounting and recordkeeping services for the
Funds, and
o provides the office space, facilities, equipment, material and
personnel necessary to perform its duties.
For its investment management services, the Adviser receives compensation
from each Fund at an annual rate of the Fund's net assets, calculated as a
daily charge. These annual rates, which were applicable during 1998, are:
o All America, Composite, Bond, Mid-Term Bond and Short-Term Bond Funds
-- .50%
o Aggressive Equity Fund -- .85%
o Equity Index and Mid-Cap Equity Index Funds -- .125%
o Money Market Fund -- .25%
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 this expense limitation at any
time.
SUBADVISERS FOR A PORTION OF THE ALL AMERICA FUND
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The Adviser has delegated its investment advisory responsibilities for a
portion of the All America Fund to three Subadvisers. Each Subadviser
provides investment advice for approximately 10% of the assets of the All
America Fund. The Adviser pays the Subadvisers for their advisory services
to the All America Fund.
o Fred Alger Management, Inc., One World Trade Center, New York, New York
10048, is a small capitalization growth adviser for its portion of the
All America Fund. It provides investment management services to
institutional, corporate and individual clients, including other
registered management investment companies. At December 31, 1998, Alger
Management had assets under management of approximately $10.6 billion.
o Oak Associates, 3875 Embassy Parkway, Suite 250, Akron, Ohio 44333, is
a mid- and large capitalization growth adviser for its portion of the
All America Fund. It provides investment management services for
individual and corporate clients, primarily in connection with
retirement plans. At December 31, 1998, Oak Associates had assets under
management of approximately $11.4 billion.
o Palley-Needelman, 800 Newport Center Drive, Suite 450, Newport Beach,
California 92660, is a large capitalization value adviser for its
portion of the All America Fund. It provides investment management
services to institutional, corporate and individual clients and other
registered investment companies. At December 31, 1998, Palley-Needelman
had assets under management of approximately $3.6 billion.
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PORTFOLIO MANAGERS
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The person(s) primarily responsible for the day-to-day management of the
Funds' investment portfolios are listed below. No information is given for
the Money Market Fund because of the type of investments it makes. No
information is given for the Equity Index Fund, the Indexed Assets of the
All America Fund or the Mid-Cap Equity Index Fund, because the investment
objective for each is to replicate the performance of an index.
ALL AMERICA FUND
THOMAS P. LARSEN, Executive Vice President of the Adviser, is responsible
for managing the Adviser's portion of the actively managed assets of the
Fund. Mr. Larsen joined the Adviser in June 1998 from his position as Senior
Vice President of Desai Capital Management. He has almost 30 years of
experience in selecting securities for and managing equity 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.
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.
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
two other senior investment professionals.
AGGRESSIVE EQUITY FUND
THOMAS P. LARSEN, Executive Vice President of the Adviser, has
responsibility for managing the Fund. Mr. Larsen, who has almost 30 years of
experience in selecting securities for and managing equity portfolios,
joined the Adviser in June 1998 and before that was Senior Vice President of
Desai Capital Management.
COMPOSITE FUND
THOMAS P. LARSEN, Executive Vice President of the Adviser, is responsible
for managing the equity portion of the Fund. Mr. Larsen, who joined the
Adviser in June 1998 and whose most recent prior position was as Senior Vice
President of Desai Capital Management. He has almost 30 years of experience
in selecting securities for and managing equity portfolios.
ANDREW L. HEISKELL, Executive Vice President of the Adviser, is responsible
for managing the fixed income portion of the Fund. Mr. Heiskell has more
than 30 years of experience in selecting securities for and managing
fixed-income portfolios.
BOND FUND, MID-TERM BOND FUND AND SHORT-TERM BOND FUND
ANDREW L. HEISKELL, Executive Vice President of the Adviser, has
responsibility for setting the fixed income investment strategy and
overseeing the day-to-day operations of the Bond Fund, the Mid-Term Bond
Fund and the Short-Term Bond Fund. 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 in 1993. Mr. Heiskell has more than 30 years of
experience in selecting securities for and managing fixed-income portfolios.
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YEAR 2000 CONSIDERATIONS
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Many computer software programs, as originally developed, could not
distinguish the year 2000 from the year 1900. If not corrected, this
inability could adversely impact the handling of securities trades, the
payment of interest and dividends, pricing, accounting and other
recordkeeping services by the Adviser or the service providers for the
Investment Company and the Adviser.
The Adviser has reviewed its computer systems and has made modifications and
replacements to prepare for the year 2000. It has successfully tested the
modified systems and will continue monitoring Year 2000 compliance throughout
1999. The Adviser has received confirmation from the Adviser's and the
Investment Company's service providers that they expect to modify or replace
their systems to prepare for the year 2000. The Investment Company anticipates
that the Adviser's computer systems and those of the providers will be adapted
in time for the year 2000.
It is possible that the Investment Company, or its service providers, could
experience some computer processing problems when the year 2000 arrives. We
have developed written contingency plans to ensure business continuity through
the year 2000. In addition, Year 2000 problems could have a negative impact on
companies in which the Investment Company's Funds invest, which could reduce
the value of these companies' securities and therefore reduce the Funds'
investment returns.
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DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS
INVESTMENT OBJECTIVES AND STRATEGIES
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EQUITY INDEX FUND: The investment objective of the Equity Index Fund is to
provide investment results that correspond to the price and
yield performance of publicly traded common stocks in the
aggregate, as represented by the S&P 500 Index.
The Fund seeks to achieve its objective primarily by:
o Purchasing shares of the 500 common stocks that are included in the S&P
500 Index.
- Stocks are selected 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 attempts to be fully invested at all times, and at least 80%
of the Fund's net assets will be invested in the stocks that comprise
the S&P 500 Index.
o Purchasing futures contracts on the S&P 500 Index and options on
futures contracts on the S&P 500 Index to invest cash prior to the
purchase of common stocks, in an attempt to have the Fund's performance
more closely correlate with the performance of the S&P 500 Index.
The Adviser uses a computer program to determine which stocks are to be
purchased or sold to copy the S&P 500 Index. From time to time, the Fund
makes adjustments in its portfolio (rebalances) because of changes in the
composition of the S&P 500 Index or in the valuations of the stocks within
the Index relative to other stocks within the Index.
The Fund's investment performance may not precisely duplicate the
performance of the S&P 500 Index, due to cash flows in and out of the Fund
and investment timing considerations. The Fund also pays investment advisory
expenses that are not applicable to an unmanaged index such as the S&P 500
Index.
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. The issuers of at least
80% of the Fund's total assets will be United States corporations or
entities.
INDEXED ASSETS. The Fund invests approximately 60% of its assets to provide
investment results that correspond to the price and yield performance of
publicly traded common stocks in the aggregate, as represented by the S&P
500 Index. This portion of the All America Fund is called the INDEXED
ASSETS. The Fund invests Indexed Assets in the 500 common stocks included in
the S&P 500 Index and in futures contracts on the S&P 500 Index. The Fund
attempts to match the weightings of stocks in the Indexed Assets with the
weightings of those stocks in the S&P 500 Index.
The Indexed Assets are invested in the same manner as the Equity Index
Fund, discussed above.
ACTIVE ASSETS. The Fund invests approximately 40% of its assets to achieve a
high level of total return, through both appreciation of capital and, to a
lesser extent, current income, by means of a diversified portfolio of
primarily common stocks. The Adviser and three Subadvisers actively manage
this portion of the All America Fund, which is called the ACTIVE ASSETS.
The Fund tries to maintain, to the extent possible, approximately equal
amounts of Active Assets with the Adviser and the three Subadvisers. The
Adviser periodically rebalances assets in the All America Fund to retain the
approximate 60%/40% relationship between Indexed Assets and Active Assets.
Adviser. The Adviser generally invests in stocks that it considers
undervalued and with the potential for above average investment returns,
issued by companies with small market capitalizations (small cap value
stocks). Some of the companies whose stocks the Adviser selects may have
limited Wall Street coverage and low institutional ownership, which may make
the stocks more difficult to sell in certain market conditions.
-12-
<PAGE>
o The Adviser seeks securities with a depressed valuation compared to
their previous valuations or compared to a universe of peer companies.
The Adviser determines depressed valuation primarily through
consideration of earnings, cash flow or net equity.
o Issuers must have executive management that the Adviser considers
strong and capable of executing a clear business strategy for the
company.
The Adviser may at times actively trade the securities in its portion of the
All America Fund, depending on
market conditions.
Fred Alger Management, Inc. This Subadviser invests in stocks that it
considers to be fundamentally sound with the potential for strong growth and
for earnings in excess of market expectations, issued by companies with
small market capitalizations (small cap growth stocks).
o The securities of these companies often are traded in the
over-the-counter market.
o Except during temporary defensive periods, at least 65% of the assets
in the Fred Alger portfolio will be invested in equity securities of
companies that, at the time of the Fund's purchase, 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.
Fred Alger Management, Inc. actively trades the securities in its portion of
the All America Fund, and its portfolio
turnover rate generally will be higher than the portfolio turnover rate for
the other Subadvisers.
Oak Associates, Ltd. This Subadviser invests in mid- and large-sized
capitalization stocks, which often have low current income and the potential
for significant growth (mid- and large capitalization growth stocks). Its
approach is to:
o monitor 400 stocks,
o at any one time to invest in approximately 15-25 common stocks without
regard for market industry weighting, and
o usually hold securities that have appreciated in value, rather than
selling them to realize capital gains.
Palley-Needelman Asset Management, Inc. This Subadviser invests its portion
of Active Assets in stocks it considers to be of high quality with lower
than average price volatility and low price/earning ratios, issued by
companies with large market capitalizations (large cap value stocks).
Companies generally will have:
o below market debt levels,
o earnings growth of 10% or more,
o current yield greater than the average of the S&P 500, and
o market capitalization of at least $5 billion.
Palley-Needelman may at times actively trade the securities in its portion
of the All America Fund, depending on market conditions.
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MID-CAP EQUITY INDEX FUND: The investment objective of the Mid-Cap Equity
Index Fund is to provide investment results that
correspond to the price and yield performance of
publicly traded common stocks in the aggregate, as
represented by the S&P MidCap 400 Index.
The Fund seeks to achieve its objective primarily by:
o Purchasing shares of the 400 common stocks that are part of the S&P
MidCap 400 Index.
- Stocks are selected in the order of their weightings in the S&P
MidCap 400 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 MidCap 400 Index.
- The Fund attempts to be fully invested at all times, and at least 80%
of the Fund's net assets will be invested in the stocks that comprise
the S&P MidCap 400 Index.
o Purchasing futures contracts on the S&P MidCap 400 Index and options on
futures contracts on the S&P 400 Index to invest cash prior to the
purchase of common stocks, in an attempt to have the Fund's performance
more closely correlate with the performance of the S&P MidCap 400
Index.
The Adviser uses a computer program to determine which stocks are to be
purchased or sold to copy the S&P MidCap 400 Index. From time to time, the
Fund makes adjustments in its portfolio (rebalances) because of changes in
the composition of the S&P MidCap 400 Index or in the valuations of the
stocks within the Index relative to other stocks within the Index.
There is a risk that the Fund's investment performance may not precisely
duplicate the performance of the S&P MidCap 400 Index, due to cash flows in
and out of the Fund and investment timing considerations. The Fund also pays
investment advisory expenses that are not applicable to an unmanaged index
such as the S&P MidCap 400 Index.
AGGRESSIVE EQUITY FUND: The investment objective of the Aggressive Equity
Fund is capital growth, by investing approximately 50%
of its assets in growth stocks and approximately 50%
of its assets in value stocks.
The Adviser anticipates that the percentage of the Fund's assets invested in
growth stocks or value stocks will range between 40% and 60% of the Fund's
assets invested in equity securities. At least 85% of the All America Fund's
total assets will be invested in equity securities under normal market
conditions.
o Growth stocks are stocks that the Adviser considers to have
above-average growth potential, based on earnings, sales or prospective
economic or political changes.
o Value stocks are stocks that the Adviser views as undervalued, based on
the issuer's assets, earnings or growth potential.
The Adviser uses a "bottom-up" approach in selecting stocks for the Fund (see
definition below). The Adviser continually reviews the universe of companies
with small market capitalization to identify securities with growth or value
characteristics that meet its requirements. In evaluating an individual
security, the Adviser determines the security's valuation relative to other
securities in the same sector or industry.
Some of the stocks the Fund purchases have small market capitalizations and
may be traded-over-the counter instead of on an exchange. During different
market cycles, either growth or value stocks may be out of favor with
investors and may have more market risk (price volatility) than larger
capitalization stocks.
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DEFINITION WE USE
-- BOTTOM-UP INVESTING means that the Adviser evaluates an issuer of
securities before purchasing those securities for the Fund, without
taking into account possible changes in the general economy.
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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 common
stocks, debt securities and money market instruments.
The Adviser varies the portion of the Fund's assets invested in each
category of securities, based on economic conditions, the general level of
common stock prices, interest rates and other relevant considerations.
o The Fund invests in publicly-traded common stocks for long-term growth
of capital and, to a lesser extent, income from dividends.
o It invests in publicly-traded, investment grade debt securities and
money market instruments for current income.
o At December 31, 1998, the Fund's assets were 44% invested in equity
securities, 42% invested in fixed-income securities and 14% invested in
money market instruments.
For defensive purposes, the Fund may invest up to 75% of its assets in
common stock and other equity-type securities, or up to 75% of its assets in
debt securities with a remaining maturity of more than one year, or 100% of
its assets in money market instruments.
The Fund's current strategy for its equity investments is to invest in
approximately 100 stocks, all of which are included in the S&P 500 Index.
o The Fund selects approximately 25 stocks of companies with the largest
market capitalizations and invests in those stocks in approximately the
same percentage by market weight as the S&P 500 Index.
o The Adviser selects approximately 75 additional stocks, based on its
stock selection analysis. The Fund invests in these stocks in
approximately the same economic sector weightings as the S&P 500 Index.
The Fund's current strategy for its fixed income investments is to invest
primarily in investment grade debt securities of U.S. corporations, the U.S.
Government and U.S. Government agencies. The Adviser manages this portion of
the Composite Fund in substantially the same way as it manages the Bond
Fund, described below.
BOND FUND: The primary investment objective of the Bond Fund is to provide
as high a level of current income over time as is believed to be
consistent with prudent investment risk. A secondary objective is
preservation of shareholders' capital.
The average maturity of the debt securities held by the Bond Fund will vary
according to market conditions and the stage of the interest rate cycle. The
average maturity for the Bond Fund will be longer than the average maturity
of the debt securities held by the Mid-Term Bond Fund or Short-Term Bond
Fund.
The Fund invests at least 80% of its assets in investment grade debt
obligations issued by U.S. corporations or by the U.S. Government or its
agencies.
o The Fund invests in various types of debt securities, including bonds,
mortgage-backed securities, zero coupon securities and asset-backed
securities, with ratings that range from AAA to BBB.
o The percentage of the Fund's portfolio invested in corporate securities
and the percentage invested in U.S. Government and agency securities
will vary, depending on market conditions and the Adviser's assessment
of the income and returns available from corporate securities in
relation to the risks of investing in these securities.
o At December 31, 1998, the Bond Fund had approximately 34% of its assets
invested in zero coupon securities, 3% of its assets in U.S. Government
agency mortgage-backed securities, and 35% of its assets in corporate
obligations rated BBB.
Zero coupon securities do not bear interest payable to the holder. When
interest rates increase, zero coupon
securities may decline in value more than debt securities that bear interest
payable at regular intervals.
The Adviser uses a "bottom-up" approach in selecting debt securities for the
Fund (see definition on page 14). The Adviser's approach generally is to
purchase securities for income. In selecting an individual security, it
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<PAGE>
reviews historical financial measures and considers the price and yield
relationship to other securities to determine a proper relative value for
the security.
The Fund does not generally purchase and sell securities in anticipation of
interest rate changes in the economy. The Adviser may sell a security that
it considers to have become overvalued relative to alternative investments,
and reinvest in an alternative security.
MID-TERM BOND FUND: The primary investment objective of the Fund is to
provide as high a level of current income over time as is
believed to be consistent with prudent investment risk. A
secondary objective is preservation of shareholders'
capital. The average maturity of the Fund's securities
holdings will be between three and seven years.
The Fund invests at least 80% of its assets in investment grade debt
obligations issued by United States corporations or issued by the U.S.
Government or its agencies.
o The Fund invests in various types of debt securities, including bonds,
mortgage-backed securities, zero coupon securities and asset-backed
securities, with ratings that range from AAA to BBB.
o The percentage of the Fund's portfolio invested in corporate securities
and the percentage invested in U.S. Government and agency securities
will vary, depending on market conditions and the Adviser's assessment
of the income and returns available from corporate securities in
relation to the risks of investing in these securities.
o At December 31, 1998, the Mid-Term Bond Fund had no investment in zero
coupon securities, and approximately 20% of its assets in U.S.
Government agency mortgage-backed securities and 30% of its assets in
corporate obligations rated BBB.
The Adviser uses a "bottom-up" approach in selecting securities for the
Mid-Term Bond Fund. Its approach generally is to purchase securities for
income. In selecting an individual security, the Adviser reviews historical
financial measures and considers the price and yield relationship to other
securities to determine a proper relative value for the security.
The Fund generally does not purchase and sell securities in anticipation of
interest rate changes in the economy. The Adviser may sell a security in the
Fund's portfolio that the Adviser considers to have become overvalued
relative to alternative investments.
SHORT-TERM BOND FUND: The primary investment objective of the Fund is to
provide as high a level of current income over time as is
believed to be consistent with prudent investment risk. A
secondary objective is preservation of shareholders'
capital. The average maturity of the Fund's securities
holdings will be between one and three years.
The Fund invests at least 80% of its assets in investment grade debt
obligations issued by United States corporations or by the U.S. Government
or its agencies and in money market instruments of the type that the Money
Market Fund purchases.
o At times, the Fund may invest a significant portion of its assets in
mortgage-backed securities.
o At December 31, 1998, the Short-Term Bond Fund had approximately 17% of
its assets in U.S. Government securities and 75% of its assets in U.S.
Government agency mortgage-backed securities.
Most of the mortgage-backed securities the Fund purchases are considered to
be U.S. Government agency securities, with issuers such as Ginnie Mae and
Fannie Mae. U.S. Government and agency securities have little financial
risk, but mortgage-backed securities do have market risk and the prepayment
risks specific to mortgage-backed securities. When interest rates change,
mortgage-backed securities may prepay at a faster or slower rate than
originally anticipated, which may negatively affect their yield and price.
MONEY MARKET FUND: The investment objective of the Fund is to realize high
current income to the extent consistent with the maintenance
of liquidity, investment quality and stability of capital.
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In selecting specific investments for the Fund, the Adviser seeks securities
or instruments with the highest yield or income that meet the following
requirements.
o The Fund invests only in high quality money market instruments and
other short-term debt securities including commercial paper issued by
U.S. corporations and Treasury securities issued by the U.S.
Government. At December 31, 1998, the Fund was 100% invested in
commercial paper.
o All of the securities the Fund purchases have a rating in one of the
two highest rating categories from at least two nationally recognized
rating agencies, and sustantially all (at least 95%) have a rating in
the highest category from at least two of these rating agencies.
o At the time of purchase, a security must mature in 13 months or less
(or 25 months for U.S. Government securities). The dollar-weighted
average maturity of the Fund's securities must be 90 days or less.
o The Fund will not invest more than 5% of its total assets in the
securities of any one issuer, other than U.S. Government or agency
securities.
The Fund does not maintain a stable net asset value. The Fund does not
declare dividends daily, and income the Fund earns on its portfolio holdings
increases the Fund's net asset value per share until the Fund declares a
dividend. At least yearly the Fund distributes investment income to its
shareholders, and the Fund's net asset value per share declines as a result
of the distribution.
The Fund uses the amortized cost method of valuing securities that have a
remaining term to maturity of 60 days or less. Because the Fund uses market
value for securities that mature in more than 60 days, the Fund does not
invest more than 20% of its assets in these securities, to limit the
possibility of a decline in the Fund's net asset value.
An investment in the Fund has little market or financial risk but a
relatively high level of current income volatility, because its portfolio
holdings are high quality instruments that have a short time to maturity.
INVESTMENTS IN THE MONEY MARKET FUND ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER U.S. GOVERNMENT AGENCY.
RISKS OF INVESTING IN STOCK FUNDS
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When you invest in a stock fund, and for the equity portion of a composite
fund, you should consider that:
o The fund is subject to market risk -- the value of your investment will
go up or down, depending on movements in the stock markets. As a
result, you may lose money from your investment, or your investment may
increase in value.
o The investment results for a particular Fund may be better or worse
than the results for the stock markets taken as a whole, depending on
the type of securities in which the Fund invests.
o The investment results for a particular Fund may be better or worse
than the results of other funds that invest in the same types of
securities. In other words, stock selection by a Fund's investment
adviser(s) will impact the Fund's performance.
o The prices and investment performance of stocks that are issued by
companies with smaller market capitalizations may fluctuate more than
the prices and investment performance of stocks that are issued by
companies with larger market capitalizations.
o A Fund may have more difficulty selling a small cap stock or any stock
that trades "over-the-counter", as compared to larger capitalization
stocks or stocks that trade on a national or regional stock exchange.
o Value stocks and growth stocks usually have different investment
results, and either investment style may become out of favor with stock
investors at a given time.
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RISKS OF INVESTING IN BOND FUNDS
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When you invest in a bond fund, and for the debt securities portion of a
composite fund, you should consider that:
o The fund has market risk -- the value of your investment will go up or
down depending on movements in the bond markets. As a result, you may
lose money from your investment, or your investment may increase in
value.
o The investment results for a particular Fund may be better or worse
than the results for the comparable bond market taken as a whole,
depending on the type of debt securities in which the Fund invests.
o The investment results for a particular Fund may be better or worse
than the results of other funds that invest in the same types of
securities. In other words, security selection by a Fund's investment
adviser will impact the Fund's performance.
o Changes in prevailing interest rates usually will impact the value of
debt securities. The longer the time period before the security matures
(or is expected to be redeemed), the more impact interest rate changes
will have on the price of the bond. When interest rates rise, the
prices of outstanding debt securities tend to fall. When interest rates
fall, the prices of outstanding debt securities tend to rise.
o Mortgage-backed securities or certificates are subject to prepayment or
extension risk when interest rates change. When interest rates fall,
the underlying mortgages may be prepaid at a faster rate than
previously assumed in pricing the mortgage-backed security, which would
shorten the period to maturity of the security. When interest rates
rise, the underlying mortgages may be prepaid at a slower rate than
previously assumed, which would lengthen the period to maturity of the
security.
o In periods of economic uncertainty, investors may favor U.S. government
debt securities over debt securities of corporate issuers, in which
case the value of corporate debt securities would decline in relation
to the value of U.S. government debt securities.
o Zero coupon securities and discount notes do not pay interest, and they
may fluctuate more in market value and be more difficult for a Fund to
resell during periods of interest rate changes than comparable
securities that pay interest in cash at regular intervals. In addition,
the Fund may lose a portion of the principal amount of a zero coupon
security if it sells the security after an increase in interest rates.
o Unrated securities or securities rated below investment grade may be
subject to a greater market risk than higher rated (lower yield)
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.
o The market for debt securities may be subject to significant
volatility, and volatility has generally increased in recent years.
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SPECIFIC INVESTMENTS OR STRATEGIES, AND RELATED RISKS
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This section provides additional information about certain of the principal
investment strategies used by the Funds and additional investment strategies
the Funds may use from time to time.
OPTIONS AND FUTURES CONTRACTS
INVESTMENT STRATEGIES. All of the Funds may purchase and sell put and call
options contracts, futures contracts and options on futures contracts.
Depending on the types of securities in which a Fund invests, the contracts
relate to fixed-income securities (including U.S. Government and agency
securities), equity securities or indexes of securities. All contracts must
be traded on securities or commodities exchanges located in the United
States.
A put option on a security gives the Fund the right to sell the security at
a certain price. The purchase of a put option on a security protects the
Fund against declines in the value of the security. A Fund may buy a put
option contract on a security only if it holds the security in its
portfolio.
A call option on a security gives the Fund the right to buy the security at
a certain price. The purchase of a call option on a security protects the
Fund against increases in the value of the security that it is considering
purchasing. A Fund may sell a call option contract on a security only if it
holds the security in its portfolio (a covered call).
A Fund may use futures contracts, or options on futures contracts, to
protect against general increases or decreases in the levels of securities
prices:
o When a Fund anticipates a general decrease in the market value of
portfolio securities, it may sell futures contracts. If the market
value falls, the decline in the Fund's net asset value may be offset,
in whole or in part, by corresponding gains on the futures position.
o When 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 may be offset, in whole or in part, by gains on
the futures position.
RISKS FROM OPTIONS AND FUTURES CONTRACTS. Risks to a Fund in options and
futures transactions include the
following:
o The securities held in a Fund's portfolios may not exactly duplicate
the security or securities underlying the options, futures contracts or
options on futures contracts traded by the Fund, and as a result the
price of the portfolio securities being hedged will not move in the
same amount or direction as the underlying index, securities or debt
obligation.
o A Fund purchasing an option may lose the entire amount of the premium
plus transaction costs.
o If a Fund has written a covered call option and the price of the
underlying security increases sufficiently, the option may be
exercised. The Fund will be required to sell the security at a price
below current market value with the loss offset only by the amount of
the premium the Fund received from writing the option.
ZERO COUPON SECURITIES AND DISCOUNT NOTES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America Fund and the Aggressive Equity Fund to the extent they
invest in fixed income securities, may invest in discount notes and zero
coupon securities. Discount notes mature in one year or less from the date
of issuance. Zero coupon securities may be issued by corporations, the U.S.
Government or certain U.S. Government agencies. Discount notes and zero
coupon securities do not pay interest. Instead, they are issued at prices
that are discounted from the principal (par) amount due at maturity.
RISKS FROM ZERO COUPON SECURITIES AND DISCOUNT NOTES. 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.
-19-
<PAGE>
REDEEMABLE SECURITIES
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 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.
AMERICAN DEPOSITORY RECEIPTS ("ADRS")
ADRs are dollar-denominated receipts that U.S. banks generally issue. An ADR
represents the deposit with the bank of a security of a foreign issuer. ADRs
are publicly traded on exchanges or are traded over-the-counter in the
United States. An ADR has currency risk, because its value is based on the
value of the security issued by a foreign issuer. The All America Fund and
Aggressive Equity Fund intend to invest a small percentage of their total
assets in ADRs.
ADRs are subject to many of the same risks as foreign securities, such as
possible:
o unavailability of financial information,
o changes in currency or exchange rates,
o lack of Year 2000 preparedness by the issuer, and
o difficulty by the Adviser or a Subadviser in assessing economic or
political trends in a foreign country.
MORTGAGE-BACKED SECURITIES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America and Aggressive Equity Funds to the extent they invest in
debt securities, may invest in mortgage-backed securities. These securities
represent interests in pools of mortgage loans, or they may be
collateralized mortgage obligations secured by pools of mortgage loans
(CMOS). Holders of mortgage-backed securities receive periodic payments that
consist of both interest and principal from the underlying mortgages.
Some mortgage-backed securities are issued by private corporations.
Mortgage-backed securities also include securities guaranteed by the
Government National Mortgage Association (GINNIE MAES), securities issued by
the Federal National Mortgage Association (FANNIE MAES), and participation
certificates issued by the Federal Home Loan Mortgage Corporation (FREDDIE
MACS). 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
Fannie Maes and Freddie Macs are not full faith and credit obligations.
RISKS FROM MORTGAGE-BACKED SECURITIES. Characteristics of underlying
mortgage pools will vary, and it is not possible to precisely predict the
realized yield or average life of a particular mortgage-backed security,
because of the principal prepayment feature inherent in the security.
o A decline in interest rates may lead to increased prepayment of the
underlying mortgages, and the securityholder may have to reinvest
proceeds received at lower yields. Unscheduled or early payments on the
underlying mortgages may shorten the effective maturity of a
mortgage-backed security and impact the yield and price of the
security.
o An increase in interest rates may lead to prepayment of the underlying
mortgages over a longer time period than was assumed when the
mortgage-backed security was purchased, and the securityholder may not
receive payments to reinvest at higher rates of return. Delay in
payments on the underlying mortgages may lengthen the effective
maturity of the security and impact the price and yield of the
security.
o Mortgage-backed securities issued by private corporations generally
will have more credit risk than securities issued by U.S. Government
agencies. Fannie Mae and Freddie Mac mortgage-backed securities, which
are not full faith and credit obligations, may have more credit risk
than Ginnie Mae securities.
-20-
<PAGE>
INFORMATION ABOUT FUND SHARES
PRICING OF FUNDS' SHARES
----------------------------------------------------------------------------
The purchase or redemption price of a Fund share is equal to its net asset
value that we calculate after we receive the purchase or redemption order. A
Fund's net asset value is equal to the sum of the value of the securities it
holds PLUS any cash or other assets (including accrued interest and
dividends), MINUS all liabilities (including accrued expenses). The Adviser
determines a Fund's net asset value as of the close of trading on the New
York Stock Exchange on each day the New York Stock Exchange is open for
trading (a VALUATION DAY).
In determining a Fund's net asset value, the Adviser uses market value. If a
money market security has a remaining maturity of 60 days or less, the
Adviser will use the amortized cost method of valuation to approximate
market value (the Adviser assumes constant proportionate amortization in
value until maturity of any discount or premium).
If there are any equity or debt securities or assets for which market
quotations are not readily available, the Adviser will use fair value
pricing, as determined in good faith by, or under the direction of, the
Board of Directors of the Investment Company or its Valuation Committee.
PURCHASE OF SHARES
----------------------------------------------------------------------------
The Investment Company offers shares in the Funds, without sales charge,
only to the Insurance Companies for allocation to their Separate Accounts.
Acceptance by an Insurance Company of an order for allocating account
balance to one of the Separate Account Funds constitutes a purchase order
for shares of the corresponding Fund of the Investment Company.
REDEMPTION OF SHARES
----------------------------------------------------------------------------
The Investment Company redeems all full and fractional shares of the Funds
for cash. The redemption price is the net asset value per share we next
determine. We do not impose any deferred sales charge on redemptions.
We pay redemption proceeds normally within seven days of receipt of the
redemption request, unless the Investment Company suspends or delays payment
of redemption proceeds as permitted in accordance with SEC regulations.
Acceptance by an Insurance Company of an order for withdrawal of account
balance from one of the Separate Account Funds constitutes a redemption
order for shares of the corresponding Fund of the Investment Company.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
----------------------------------------------------------------------------
For each Fund, the Investment Company declares dividends at least annually
to pay out substantially all of the Fund's net investment income (dividends)
and net realized short and long term capital gains (capital gains
distributions). All dividends and capital gains distributions are reinvested
in additional shares of the distributing Fund.
The Investment Company is not subject to Federal income tax on ordinary
income and net realized capital gains that it distributes to shareholders,
as long as the distributions meet Federal tax law requirements for amount
and source of income. Each Fund is treated as a separate corporation for
Federal income tax purposes and must satisfy the tax requirements
independently.
The Insurance Companies, through the Separate Accounts, are the shareholders
of the Investment Company's Funds. Under current Federal tax law, the
Separate Accounts do not pay taxes on the net investment income and realized
capital gains they receive through ownership of the Investment Company's
shares.
A contractholder or policyowner should refer to the Contract prospectus or
brochure for a summary discussion of the tax consequences for increases in
account balance and distributions under the Contract.
-21-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
Funds' financial performance for the past 5 years, or for the period of a
Fund's operations if shorter. Certain information reflects financial results
for a single Fund share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in the
particular Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by Arthur Andersen LLP, whose report,
along with the Investment Company's financial statements, are included in
the annual report, which is available upon request.
The total returns shown below do not include charges and expenses imposed at
the Separate Account level. Therefore, the returns do not represent the rate
that a contractholder or policyowner would have earned or lost on the
portion of the account balance allocated to the corresponding Separate
Account Fund.
ALL AMERICA FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ................. $ 2.71 $ 2.44 $ 2.13 $ 1.61 $ 1.80
------ ------ ------- ------ -------
Income From Investment Operations:
Net Investment Income ............................. .03 .03 .03 .03 .04
Net Gains or Losses on Securities (realized and
unrealized) ..................................... .54 .62 .41 .56 ( .01)
------ ------ ------- ------ -------
Total From Investment Operations ................ .57 .65 .44 .59 .03
------ ------ ------- ------ -------
Less Dividend Distributions:
From net investment income ........................ ( .03) ( .03) ( .03) ( .03) ( .04)
From capital gains ................................ ( .35) ( .35) ( .10) ( .04) ( .18)
------ ------- ------- ------- -------
Total Distributions ............................. ( .38) ( .38) ( .13) ( .07) ( .22)
------ ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR ....................... $ 2.90 $ 2.71 $ 2.44 $ 2.13 $ 1.61
====== ======= ======= ======= =======
Total Return ....................................... 21.3% 26.8% 20.7% 36.6% 1.3%*
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions)................ $ 732 $ 700 $ 637 $ 533 $ 375
Ratio of Expenses to Average Net Assets ............ .50% .50% .50% .50% .50%
Ratio of Net Income to Average Net Assets .......... .84% .98% 1.26% 1.57% 2.11%
Portfolio Turnover Rate(a) ......................... 40.47% 28.64% 28.35% 33.63% 129.80%
</TABLE>
----------
* Reflects the combined data of this Fund and that of its predecessor.
Effective May 1, 1994, the Fund was renamed the All America Fund, its
investment objective and policies were changed and subadvisers were added.
-22-
<PAGE>
EQUITY INDEX FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 2.08 $ 1.59 $ 1.35 $ 1.02 $ 1.04
------ ------ ------ ------ ------
Income From Investment Operations:
Net Investment Income ........................................... .03 .03 .03 .02 .03
Net Gains or Losses on Securities (realized and unrealized) ..... .55 .50 .27 .36 ( .01)
------ ------ ------ ------ ------
Total From Investment Operations .............................. .58 .53 .30 .38 .02
------ ------ ------ ------ ------
Less Dividend Distributions
From net investment income ...................................... ( .03) ( .03) ( .03) ( .03) ( .03)
From capital gains .............................................. ( .17) ( .01) ( .03) ( .02) ( .01)
------ ------- ------- ------- ------
Total Distributions ........................................... ( .20) ( .04) ( .06) ( .05) ( .04)
------ ------- ------- ------- ------
NET ASSET VALUE, END OF YEAR ..................................... $ 2.45 $ 2.08 $ 1.59 $ 1.35 $ 1.02
====== ======= ======= ======= ======
Total Return ..................................................... 28.6% 33.1% 22.7% 36.6% 1.5%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions).............................. $ 411 $ 237 $ 102 $ 43 $ 26
Ratio of Expenses to Average Net Assets .......................... .13% .13% .13% .13% .13%
Ratio of Net Income to Average Net Assets ........................ 1.57% 1.86% 2.19% 2.50% 2.67%
Portfolio Turnover Rate(a) ....................................... 11.68% 14.17% 5.85% 13.99% 6.59%
</TABLE>
AGGRESSIVE EQUITY FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994*
------------ ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD .......... $ 1.61 $ 1.47 $ 1.35 $ 1.05 $ 1.00
------- ------ ------- ------- --------
Income From Investment Operations:
Net Investment Income ............................. -- .01 .01 .01 .01
Net Gains or Losses on Securities (realized and
unrealized) ..................................... ( .09) .31 .36 .39 .05
------- ------ ------- ------- --------
Total From Investment Operations ................ ( .09) .32 .37 .40 .06
------- ------ ------- ------- --------
Less Dividend Distributions:
From net investment income ........................ -- ( .01) ( .01) ( .01) ( .01)
From capital gains ................................ ( .01) ( .17) ( .24) ( .09) --
------- ------- -------- -------- --------
Total Distributions ............................. ( .01) ( .18) ( .25) ( .10) ( .01)
------- ------- -------- -------- --------
NET ASSET VALUE, END OF YEAR/PERIOD ................ $ 1.51 $ 1.61 $ 1.47 $ 1.35 $ 1.05
======= ======= ======== ======== ========
Total Return ....................................... ( 5.1)% 21.2% 27.1% 38.2% 6.0%**
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year/Period ($ millions)......... $ 205 $ 287 $ 136 $ 59 $ 27
Ratio of Expenses to Average Net Assets ............ .85% .85% .85% .85% .56%
Ratio of Net Income to Average Net Assets .......... .18% .33% .45% .65% .70%
Portfolio Turnover Rate(a) ......................... 144.05% 80.94% 103.68% 116.52% 60.86%
</TABLE>
----------
* The Fund commenced operations on May 2, 1994.
** The Fund's Total Return for 1994 is not annualized.
-23-
<PAGE>
COMPOSITE FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ................. $ 1.62 $ 1.77 $ 1.81 $ 1.57 $ 1.71
------ ------- ------ ------ -------
Income From Investment Operations:
Net Investment Income ............................. .07 .07 .07 .08 .05
Net Gains or Losses on Securities (realized and
unrealized) ..................................... .17 .24 .14 .27 ( .10)
------ ------- ------ ------ -------
Total From Investment Operations ................ .24 .31 .21 .35 ( .05)
------ ------- ------ ------ -------
Less Dividend Distributions:
From net investment income ........................ ( .07) ( .07) ( .08) ( .08) ( .07)
From capital gains ................................ ( .01) ( .39) ( .17) ( .03) ( .02)
------- -------- ------- ------- -------
Total Distributions ............................. ( .08) ( .46) ( .25) ( .11) ( .09)
------- -------- ------- ------- -------
NET ASSET VALUE, END OF YEAR ....................... $ 1.78 $ 1.62 $ 1.77 $ 1.81 $ 1.57
====== ======== ======= ======= =======
Total Return ....................................... 14.5% 17.7% 11.9% 21.9% ( 3.0%)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions)................ $ 336 $ 305 $ 283 $ 276 $ 233
Ratio of Expenses to Average Net Assets ............ .50% .50% .50% .50% .50%
Ratio of Net Income to Average Net Assets .......... 3.68% 3.57% 3.63% 4.30% 3.88%
Portfolio Turnover Rate(a) ......................... 73.85% 104.04% 69.79% 76.84% 113.86%
</TABLE>
BOND FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............................. $ 1.43 $ 1.38 $ 1.43 $ 1.27 $ 1.41
------ ------ ------- ------ ------
Income From Investment Operations:
Net Investment Income ......................................... .10 .09 .09 .09 .09
Net Gains or Losses on Securities (realized and unrealized).... -- .06 ( .04) .16 ( .14)
------ ------ ------- ------ ------
Total From Investment Operations ............................. .10 .15 .05 .25 ( .05)
------ ------ ------- ------ ------
Less Dividend Distributions:
From net investment income .................................... ( .10) ( .09) ( .09) ( .09) ( .09)
From capital gains ............................................ ( .01) ( .01) ( .01) -- --
------ ------ ------- ------ ------
Total Distributions .......................................... ( .11) ( .10) ( .10) ( .09) ( .09)
------ ------ ------- ------- ------
NET ASSET VALUE, END OF YEAR ................................... $ 1.42 $ 1.43 $ 1.38 $ 1.43 $ 1.27
====== ====== ======= ====== ======
Total Return ................................................... 7.2% 10.4% 3.5% 19.4% (3.2%)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($ millions).......................... $ 465 $ 414 $ 329 $ 311 $ 249
Ratio of Expenses to Average Net Assets ........................ .50% .50% .50% .50% .50%
Ratio of Net Income to Average Net Assets ...................... 6.73% 6.69% 6.70% 6.64% 6.32%
Portfolio Turnover Rate(a) ..................................... 21.60% 57.71% 30.14% 41.93% 51.14%
</TABLE>
-24-
<PAGE>
MID-TERM BOND FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............................. $ .90 $ .90 $ 1.00 $ .91 $ .99
------ ------ ------- ------ ------
Income From Investment Operations:
Net Investment Income ......................................... .05 .05 .14 .06 .03
Net Gains or Losses on Securities (realized and unrealized) .01 .01 ( .10) .09 ( .07)
------ ------ ------- ------ ------
Total From Investment Operations ............................. .06 .06 .04 .15 ( .04)
------ ------ ------- ------ ------
Less Dividend Distributions:
From net investment income .................................... ( .05) ( .06) ( .14) ( .06) ( .04)
From capital gains ............................................ -- -- -- -- --
------ ------ ------- ------- ------
Total Distributions .......................................... ( .05) ( .06) ( .14) ( .06) ( .04)
------ ------ ------- ------- ------
NET ASSET VALUE, END OF YEAR ................................... $ .91 $ .90 $ .90 $ 1.00 $ 0.91
====== ====== ======= ======= ======
Total Return ................................................... 6.4% 7.3% 3.9% 16.3% (3.7)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions)............................ $ 15 $ 15 $ 13 $ 24 $ 24
Ratio of Expenses to Average Net Assets ........................ .50% .50% .50% .50% .50%
Ratio of Net Income to Average Net Assets ...................... 5.76% 5.87% 5.80% 5.73% 4.71%
Portfolio Turnover Rate(a) ..................................... 23.09% 12.89% 144.55% 73.72% 7.52%
</TABLE>
SHORT-TERM BOND FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 1.02 $ 1.03 $ 1.02 $ 1.00 $ 1.02
------ ------ ------ ------ ------
Income From Investment Operations:
Net Investment Income ........................................... .05 .07 .04 .06 .04
Net Gains or Losses on Securities (realized and unrealized) ..... .01 ( .01) .01 .02 ( .02)
------ ------ ------ ------ ------
Total From Investment Operations ............................... .06 .06 .05 .08 .02
------ ------ ------ ------ ------
Less Dividend Distributions:
From net investment income ...................................... ( .05) ( .07) ( .04) ( .06) ( .04)
From capital gains .............................................. -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions ............................................ ( .05) ( .07) ( .04) ( .06) ( .04)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR ..................................... $ 1.03 $ 1.02 $ 1.03 $ 1.02 $ 1.00
====== ====== ====== ====== ======
Total Return ..................................................... 5.7% 6.0% 4.9% 7.7% 1.4%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions).............................. $ 22 $ 15 $ 16 $ 3 $ 2
Ratio of Expenses to Average Net Assets .......................... .50% .50% .50% .50% .48%
Ratio of Net Income to Average Net Assets ........................ 5.46% 5.81% 5.42% 4.65% 3.51%
Portfolio Turnover Rate(a) ....................................... 91.35% 74.95% 6.68% 16.47% 0.00%
</TABLE>
-25-
<PAGE>
MONEY MARKET FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 1.18 $ 1.19 $ 1.18 $ 1.19 $ 1.17
------ ------ ------- ------ ------
Income From Investment Operations:
Net Investment Income ........................................... .06 .07 .06 .07 .03
Net Gains or Losses on Securities (realized and unrealized) ..... -- -- -- -- .02
------ ------ ------- ------ ------
Total From Investment Operations .............................. .06 .07 .06 .07 .05
------ ------ ------- ------ ------
Less: Dividend Distributions From Net Investment Income .......... ( .06) ( .08) ( .05) ( .08) ( .03)
------ ------ ------- ------ ------
Total Distributions ........................................... ( .06) ( .08) ( .05) ( .08) ( .03)
------ ------ ------- ------ ------
NET ASSET VALUE, END OF YEAR ..................................... $ 1.18 $ 1.18 $ 1.19 $ 1.18 $ 1.19
====== ====== ======= ====== ======
Total Return ..................................................... 5.4% 5.5% 5.3% 5.8% 4.1%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year ($ millions).............................. $ 81 $ 68 $ 78 $ 73 $ 81
Ratio of Expenses to Average Net Assets .......................... .25% .25% .25% .25% .25%
Ratio of Net Income to Average Net Assets ........................ 5.26% 5.32% 5.21% 5.66% 4.15%
Portfolio Turnover Rate(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
-26-
<PAGE>
Investment Company
--------------------
Mutual of America Investment Corporation
Investment Adviser
------------------
Mutual of America Capital Management Corporation
Subadvisers for a portion of the All America Fund
--------------------------------------------------
Fred Alger Management, Inc.
Oak Associates Ltd.
Palley-Needelman Asset Management, Inc.
Independent Auditors
--------------------
Arthur Andersen LLP
Counsel
----------
Swidler Berlin Shereff Friedman, LLP
Custodian
----------
The Chase Manhattan Bank
The Investment Company sells shares of its Funds only to the Separate
Accounts of Mutual of America Life Insurance Company and The American Life
Insurance Company of New York for the variable accumulation annuity and
variable universal life insurance products they issue.
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE, NEW YORK, NEW YORK 10022
YOU MAY OBTAIN MORE INFORMATION
----------------------------------------------------------------------------
REGISTRATION STATEMENT. We have filed with the Securities and Exchange
Commission (the COMMISSION) a Registration Statement about the Investment
Company. The Registration Statement includes this prospectus, a Statement of
Additional Information (the SAI), and exhibits. You may examine and copy the
Registration Statement at the Commission's Public Reference Room in
Washington, DC You may call 1-800-SEC-0330 to learn about the operation of
the Public Reference Room.
STATEMENT OF ADDITIONAL INFORMATION. The SAI contains additional information
about the Investment Company and its Funds. We incorporate the SAI into this
Prospectus by reference.
SEMI-ANNUAL AND ANNUAL REPORTS. Additional information about the Funds'
investments is available in the Investment Company's annual and semi-annual
reports to shareholders. In the annual reports, you will find a discussion
(for all Funds except the Money Market Fund) of the market conditions and
investment strategies that significantly affected the Funds' performance
during its last fiscal year.
HOW TO OBTAIN THE SAI AND REPORTS. You may obtain a free copy of the SAI or
of the Investment Company's most recent annual and semi-annual financial
statements, by:
o writing to us at 320 Park Avenue, New York, NY 10022, Attn: Investment
Company, or
o calling 1-212-224-1600 and asking for the Investment Company.
The Commission has an Internet web site at http://www.sec.gov. You may
obtain the Investment Company's Registration Statement, including the SAI,
and its semi-annual and annual reports through the Commission's Internet
site. You also may obtain copies of these documents, upon your payment of a
duplicating fee, by writing to the Commission's Public Reference Section,
Washington, DC 20549-6009.
WHERE TO DIRECT QUESTIONS. If you have questions about the operations of the
Investment Company, you should contact your representative at Mutual of
America Life Insurance Company or The American Life Insurance Company of New
York.
Investment Company Act of 1940 Act File Number 811-5084
----------------------------------------------------------------------------
PROSPECTUS DATED MAY 1, 1999
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(212) 224-1600
EQUITY INDEX FUND BOND FUND
ALL AMERICA FUND MID-TERM BOND FUND
MID-CAP EQUITY INDEX FUND SHORT-TERM BOND FUND
AGGRESSIVE EQUITY FUND MONEY MARKET FUND
COMPOSITE FUND
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
This Statement of Additional Information is not a prospectus. You should
read it in conjunction with the Mutual of America Investment Corporation
Prospectus dated May 1, 1999, and you should keep it for future use. We
incorporate the Prospectus by reference into this Statement of Additional
Information.
A copy of the Prospectus is available to you at no charge. To obtain a copy,
you may write to the Mutual of America Investment Corporation at the above
address or call the telephone number listed above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Investment Company's Form of Operations ................... 2
Investment Strategies and Related Risks ................... 2
Additional Permitted Investments ......................... 2
Additional Investment Strategies ......................... 5
Additional Information about Specific Types of Securities 9
Insurance Law Restrictions ............................... 13
Fundamental Investment Restrictions ....................... 13
Management of the Investment Company ...................... 15
Investment Advisory Arrangements .......................... 16
Portfolio Transactions and Brokerage ...................... 18
Purchase, Redemption and Pricing of Shares ................ 20
Taxation of the Investment Company ........................ 21
Distribution Arrangements ................................. 22
Yield and Performance Information ......................... 22
Description of Corporate Bond Ratings ..................... 24
Independent Auditors ...................................... 26
Legal Matters ............................................. 26
Custodian ................................................. 26
Use of Standard & Poor's Indices .......................... 26
Financial Statements ...................................... 27
</TABLE>
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INVESTMENT COMPANY'S FORM OF OPERATIONS
HISTORY AND OPERATING FORM
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Mutual of America Investment Corporation (the INVESTMENT COMPANY) was formed
on February 21, 1986 as a Maryland corporation. It is a diversified,
open-end management investment company registered under the Investment
Company Act of 1940 (the 1940 ACT). The Investment Company is a successor to
Separate Account No. 2 of Mutual of America Life Insurance Company (MUTUAL
OF AMERICA).
The Investment Company issues separate classes (or series) of stock, each of
which represents a separate Fund of investments. There are currently nine
Funds: the Equity Index Fund, All America Fund, Mid-Cap Equity Index Fund,
Aggressive Equity Fund, Composite Fund, Bond Fund, Mid-Term Bond Fund,
Short-Term Bond Fund and Money Market Fund. Prior to May 1, 1994, the All
America Fund was known as the Stock Fund, had different investment
objectives and did not have any subadvisers.
OFFERING OF SHARES
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The Investment Company offers Fund shares only to separate accounts of
Mutual of America and Mutual of America's indirect wholly-owned subsidiary,
The American Life Insurance Company of New York (AMERICAN LIFE). In this
Statement of Additional Information, Mutual of America and American Life are
referred to as the INSURANCE COMPANIES and the separate accounts of the
Insurance Companies are referred to as the Separate Accounts.
Contractholders, participants and policyowners of variable annuity contracts
and variable life policies issued by the Insurance Companies allocate their
contributions and premiums to funds of the Separate Accounts. Each Separate
Account has nine Funds that purchase shares in the corresponding Funds of
the Investment Company. The Insurance Companies are the record holders of
the Investment Company Funds' shares.
DESCRIPTION OF SHARES
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The authorized capital stock of the Investment Company consists of one
billion shares of common stock, $.01 par value. The Investment Company
currently has nine classes of common stock, with each class representing a
Fund. The Investment Company may establish additional Funds and may allocate
its authorized shares either to new classes or to one or more of the
existing classes.
All shares of common stock, of whatever class, are entitled to one vote. The
votes of all classes are cast on an aggregate basis, except that if the
interests of the Funds differ, the voting is on a Fund-by-Fund basis.
Examples of matters that 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 the Fund and in the net
assets of that Fund upon liquidation or dissolution remaining after
satisfaction of outstanding liabilities. Accrued liabilities that 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 the excess.
INVESTMENT STRATEGIES AND RELATED RISKS
The Prospectus describes each Fund's principal investment strategy(ies) and
the related risks. You should refer to "Summary of How Our Funds Invest" and
"Details about How Our Funds Invest and Related Risks" in the Prospectus to
learn about those strategies and risks.
ADDITIONAL PERMITTED INVESTMENTS
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The Investment Company's Funds may use investment strategies and purchase
types of securities in addition to those discussed in the Prospectus.
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EQUITY INDEX FUND AND MID-CAP EQUITY INDEX FUND: In addition to common
stocks and futures contracts, the Funds may invest in:
o money market instruments and
o U.S. Government and U.S. Government agency obligations.
ALL AMERICA FUND: In addition to common stocks, the Adviser and three
Subadvisers who manage approximately
40% of the net assets of the All America Fund (the ACTIVE ASSETS) may invest
assets in:
o securities convertible into common stocks, including warrants and
convertible bonds,
o bonds,
o money market instruments,
o U.S. Government and U.S. Government agency obligations,
o foreign securities and ADRs,
o futures and options contracts,
o preferred stock,
o equipment trust certificates, and
o mortgage-backed and asset-backed securities.
The portion of the All America Fund invested to replicate the S&P 500 Index
(the INDEXED ASSETS) also may be
invested in:
o money market instruments, and
o U.S. Government and U.S. Government agency obligations.
The Adviser may manage cash allocated to the Active Assets prior to
investment in securities by the Subadvisers.
AGGRESSIVE EQUITY FUND: In addition to common stocks, the Aggressive
Equity Fund may invest in:
o securities convertible into common stocks, including warrants and
convertible bonds,
o bonds,
o money market instruments,
o U.S. Government and U.S. Government agency obligations,
o foreign securities and ADRs,
o futures and options contracts,
o preferred stock,
o equipment trust certificates, and
o mortgage-backed and asset-backed securities.
COMPOSITE FUND: In addition to common stocks, the equity portion of the
Composite Fund may be invested in:
o securities convertible into common stocks, including warrants,
o preferred stock,
o money market instruments,
o U.S. Government and U.S. Government agency obligations,
o foreign securities and ADRs, and
o futures and options contracts.
In addition to investment grade debt securities of the type described in the
Prospectus, the fixed-income portion of the Composite Fund may be invested in:
o asset-backed securities,
o money market instruments,
o non-investment grade securities,
o foreign securities,
o options, futures contracts and options on futures contracts on United
States Treasury securities and Government National Mortgage Association
("Ginnie Mae") securities, and
o equipment trust certificates.
BOND FUND, MID-TERM BOND FUND AND SHORT-TERM BOND FUND (THE "BOND FUNDS"):
In addition to investment grade debt securities of the type described in the
Prospectus, each Bond Fund may invest in:
o asset-backed securities,
o non-investment grade securities, for up to 20% of its assets,
o foreign securities,
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o cash and money market instruments,
o stocks acquired either by conversion of fixed-income securities or by
the exercise of warrants attached to fixed income securities,
o preferred stock,
o options, futures contracts and options on futures contracts on United
States Treasury securities and Government National Mortgage Association
("Ginnie Mae") securities, and
o equipment trust certificates.
Each of the Bond Funds may invest up to 75% of its assets in securities
issued by companies in the electric, gas and telephone utility industries.
Currently, none of the Bond Funds anticipates that it will concentrate in
utility industry securities. These industries are subject to extensive
government regulation as to rates and services, and investments in the
utility industry(ies) involve the risk of unfavorable action by regulatory
authorities. If a Bond Fund were to concentrate in one of the utility
industries, adverse circumstances could affect all companies in that
industry simultaneously. In addition, debt securities in electric, gas and
telephone industries tend to have longer maturities than those of industrial
issuers and often do not require partial repayment of the principal through
a sinking fund, as do corporate debt securities. As a result, electric, gas
and telephone securities may show more price volatility in periods of
changing interest rates than debt securities of corporate issuers.
MONEY MARKET FUND: In addition to commercial paper and U.S. Treasury Bills,
the Fund may invest in any of the following kinds of money market
instruments, payable in United States dollars:
o securities issued or guaranteed by the U.S. Government or a U.S.
Government agency or instrumentality;
o 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,
which at the time of their most recent annual financial statements show
assets in excess of $5 billion;
o 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;
o repurchase agreements covering government securities, certificates of
deposit, commercial paper or bankers' acceptances;
o variable amount floating rate notes; and
o debt securities issued by a corporation.
The Money Market Fund may enter into transactions in options, futures
contracts and options on futures contracts
on United States Treasury securities.
Under the Money Market Fund's investment policy, MONEY MARKET INSTRUMENTS
AND OTHER SHORT-TERM DEBT SECURITIES means securities that have a remaining
term to 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 securities in the Money Market Fund must meet the following quality
requirements --
o All of the securities held by the Money Market Fund must 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
o At least 95% of the securities held by the Money Market Fund must have
received (or be of comparable quality to securities which have
received), at the time of purchase, a rating in the highest category 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 U.S. government security) that has
not received a rating or that has been rated by only one rating agency. The
Fund will sell any securities that are subsequently downgraded below the two
highest categories as soon as practicable, unless the Board of Directors
determines that sale of those securities 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 U.S.
government securities and repurchase agreements fully collateralized by U.S.
4
<PAGE>
government securities) provided that (a) 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 purchased an unconditional put and (b) 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.
ADDITIONAL INVESTMENT STRATEGIES
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LENDING OF SECURITIES
The Funds have the authority to lend their securities, under the conditions
described below. The Funds will not lend any securities until the Investment
Company's Board of Directors approves a form of securities lending
agreement.
A Fund may lend its securities, constituting up to 30% of its total assets,
to brokers, dealers and financial institutions, other than any affiliate of
the Investment Company. A Fund may pay reasonable fees to persons
unaffiliated with the Fund for services or for arranging such loans.
Upon lending securities, a Fund must 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
Adviser. The collateral amount at all times while the loan is outstanding
must 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. In addition, it 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. A Fund will
have the right to terminate a securities loan at any time. 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.
Loans of securities will be made only to firms that the Adviser deems
creditworthy. There are risks of delay in recovery and even loss of rights
in the collateral, however, if the borrower of securities defaults, becomes
the subject of bankruptcy proceedings or otherwise is unable to fulfill its
obligations or fails financially.
REPURCHASE AGREEMENTS
The Funds have the authority to enter into repurchase agreements. A Fund may
not invest more than 10% of its total assets in repurchase agreements or
time deposits that mature in more than seven days. The Funds will not enter
into any repurchase agreements until the Investment Company's Board of
Directors approves a form of Repurchase Agreement and authorizes entities as
counterparties.
Under a repurchase agreement, a Fund acquires underlying debt instruments
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
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 will enter into repurchase agreements only with member banks of
the Federal Reserve System and with dealers in U.S. Government securities
whose creditworthiness has been reviewed and found satisfactory by the
Adviser and the Board of Directors of the Investment Company.
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.
5
<PAGE>
A seller of a repurchase agreement could default and not repurchase from a
Fund the security that is the subject of the agreement. The Fund would look
to the collateral 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. 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, if the Fund did not have
actual or book entry possession of the security.
RULE 144A INVESTMENTS, SECTION 4(2) COMMERCIAL PAPER AND ILLIQUID
SECURITIES
Each Fund, with respect to not more than 10% of its total assets, may
purchase securities that are not readily marketable, or are "illiquid".
Repurchase agreements of more than seven days' duration and variable and
floating rate demand notes not requiring receipt of the principal note
amount within seven days' notice are considered illiquid. A Fund may incur
higher transaction costs and require more time to complete transactions for
the purchase and sale of illiquid securities than for readily marketable
securities. When a Fund determines to sell an illiquid security within a
relatively short time period, it may have to accept a lower sales price than
if the security were readily marketable.
The Adviser will make a factual determination as to whether securities with
contractual or legal restrictions on resale purchased by a Fund are liquid,
based on the frequency of trades and quotes, the number of dealers and
potential purchasers, dealer undertakings to make a market, and the nature
of the security and the marketplace, pursuant to procedures adopted by the
Board of Directors of the Investment Company.
Securities that are eligible for purchase and sale under Rule 144A of the
Securities Act of 1933 (the 1933 ACT) shall be considered liquid, provided
the Adviser has not made a contrary determination regarding liquidity in
accordance with the Board's procedures. Rule 144A permits certain qualified
institutional buyers to trade in securities even though the securities are
not registered under the 1933 Act. In addition, commercial paper privately
placed in accordance with Section 4(2) of the 1933 Act also will be
considered liquid, provided the requirements set forth in the Board's
procedures are satisfied.
OPTIONS AND FUTURES CONTRACTS
Each of the Funds may purchase and sell options and futures contracts, as
described below, as long as the contracts are traded on a domestic exchange.
Each Fund may sell a call option contract on a security it holds in its
portfolio (called a covered call), and it may buy a call option contract on
the security to close out a position created by the sale of a covered call.
o 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
writing a covered call option, a Fund (the seller) receives from the
purchaser 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.
Each Fund may buy a put option contract on a security it holds in its
portfolio, and it may sell a put option
contract on the security to close out a position created by the purchase of
the put option contract.
o 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.
Each Fund may purchase and sell futures contracts, and purchase options on
futures contracts, on fixed-income securities or on an index of securities,
such as the Standard & Poor's 100 Index, the Standard & Poor's 500 Index or
the New York Stock Exchange Composite Index.
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o 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 markets" by the
Commodity Futures Trading Commission, such as the Chicago Board of
Trade.
o 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.
o A Fund does not pay or receive a payment upon its 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."
o While a futures contract is outstanding, there will be subsequent
payments, called "maintenance margin", to and from the broker. These
payments 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. This
process is known as "mark to market". 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 and may require additional transaction
costs. 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 gain.
A Fund may use futures contracts to protect against general increases or
decreases in the levels of securities prices, in the manner described below.
o When a Fund anticipates a general decrease in the market value of
portfolio securities, it may sell futures contracts. If the market
value falls, the decline in the Fund's net asset value may be offset,
in whole or in part, by corresponding gains on the futures position.
- A Fund may sell futures contracts on fixed-income securities in
anticipation of a rise in interest rates, that would cause a decline
in the value of fixed-income securities held in the Fund's portfolio.
- A Fund may sell stock index futures contracts in anticipation of a
general market wide decline that would reduce the value of its
portfolio of stocks.
o When 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 may be offset, in whole or in part, by gains on
the futures position.
o Instead of purchasing or selling futures contracts, a Fund may 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.
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<PAGE>
o The Funds also may purchase put options on securities or stock indexes
for the same types of securities for 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 security or securities
in a manner similar to the sale of futures contracts.
o 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.
- When 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.
- 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.
RISKS IN FUTURES AND OPTIONS TRANSACTIONS INCLUDE THE FOLLOWING:
o There may be a lack of liquidity, which could make it difficult or
impossible for a Fund 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.
o The securities held in a Fund's portfolios may not exactly duplicate
the security or securities underlying the options, futures contracts or
options on futures contracts traded by the Fund, and as a result the
price of the portfolio securities being hedged will not move in the
same amount or direction as the underlying index, securities or debt
obligation.
o A Fund purchasing an option may lose the entire amount of the premium
plus related transaction costs.
o For options on futures contracts, changes in the value of the
underlying futures contract may not be fully reflected in the value of
the option.
o 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.
o In writing a covered call option on a security or a stock index, a Fund
may 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.
o The opening of a futures position and the writing of an option are
transactions that involve substantial leverage. As a result, relatively
small movements in the price of the contract can result in substantial
unrealized gains or losses.
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ADDITIONAL INFORMATION ABOUT SPECIFIC TYPES OF SECURITIES
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NON-INVESTMENT GRADE SECURITIES
The Bond Funds may purchase non-investment grade debt securities. In
addition, the Bond Funds and the other Funds that purchase debt securities
may hold a security that becomes non-investment grade as a result of
impairments of the issuer's credit.
Fixed-income securities that 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,
are commonly known as non-investment grade securities or "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
non-investment grade 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.
Non-investment grade 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. 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 non-investment grade bond market, and the market 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 that a Fund may receive for any non-investment grade bonds to be
reduced, or might cause a Fund to experience difficulty in liquidating a
portion of its portfolio.
The Investment Company currently anticipates that no Fund will invest more
than 5% of its total assets in non-investment grade debt securities.
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY OBLIGATIONS
All of the Funds may invest in U.S. Government and U.S. Government agency
obligations. Some of these securities also may be considered money market
instruments. Some also may be mortgage-backed securities or zero coupon
securities.
U.S. GOVERNMENT OBLIGATIONS: These securities are issued or guaranteed as to
principal and interest by the United States Government. They 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 at the time of issuance have maturities of one to
seven years and Treasury bonds generally have a maturity of greater than
five years.
U.S. GOVERNMENT AGENCY OBLIGATIONS: Agencies of the United States Government
that 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. Instrumentalities of the
United States Government that issue or guarantee obligations include, 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 the securities issued by U.S. Government agencies and
instrumentalities 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 others are supported only by the credit of the
instrumentality that issued the obligation.
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MONEY MARKET INSTRUMENTS
All of the Funds may purchase money market instruments, which include the
following.
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, for which
no negotiable certificate is 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.
TREASURY BILLS. See "U.S. Government and U.S. Government Agency
Obligations" above.
Because the Money Market Fund and the other Funds generally will purchase
only money market instruments that are rated high quality and have short
terms to maturities, these money market instruments are considered to have
low levels of market risk and credit risk.
ZERO COUPON SECURITIES AND DISCOUNT NOTES; REDEEMABLE SECURITIES
The Bond Funds and the fixed income portion of the Composite Fund, and the
All America Fund and Aggressive Equity Fund to the extent they invest in
fixed income securities, may invest in discount notes and zero coupon
securities. Discount notes mature in one year or less from the date of
issuance. Zero coupon securities may be issued by corporations or by certain
U.S. Government agencies.
Discount notes and zero coupon securities do not pay interest. Instead, they
are issued at prices that are 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).
FOREIGN SECURITIES
In addition to investing in domestic securities, each of the Funds other
than the Equity Index Fund, Mid-Cap Equity Index Fund and the Money Market
Fund may invest in securities of foreign issuers, including securities
traded outside the United States. Foreign issues guaranteed by domestic
corporations are considered to be domestic securities.
The Investment Company has a fundamental investment restriction that limits
foreign securities, including foreign exchange transactions, to 20% of a
Fund's total assets. (See "Fundamental Investment Restrictions", paragraph
2.) The Investment Company currently anticipates that no Fund will invest
more than 10% of its total assets in foreign securities or foreign exchange
transactions.
The Investment Company will consider special factors before investing in
foreign securities. These include:
o Year 2000 preparedness by the issuer and the foreign exchange where the
security is traded,
o changes in currency rates or currency exchange control regulations,
o the possibility of expropriation,
10
<PAGE>
o the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting
standards,
o less liquidity and more volatility in foreign securities markets,
o the impact of political, social or diplomatic developments, and
o the difficulty of assessing economic trends in foreign countries.
The Funds could encounter greater difficulties in bringing legal processes
abroad than would be encountered in the United States. In addition,
transaction costs in foreign securities may be higher.
AMERICAN DEPOSITORY RECEIPTS
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 considered foreign securities for purposes of the
restriction on the amount of foreign securities -- see Fundamental
Investment Restrictions.
The Investment Company will consider special factors before investing in
ADRs: These include:
o Year 2000 preparedness by the issuer,
o changes in currency rates or currency exchange control regulations,
o the possibility of expropriation,
o the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting
standards,
o the impact of political, social or diplomatic developments, and
o the difficulty of assessing economic trends in foreign countries.
CONVERTIBLE SECURITIES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America and Aggressive Equity Funds to the extent they invest in
debt securities, may invest in convertible securities. Convertible
securities can be converted by the holder into common stock of the issuer,
at the price and on the terms set forth by the issuer when the convertible
securities are initially sold. Convertible securities 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.
EQUIPMENT TRUST CERTIFICATES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America and Aggressive Equity Funds to the extent they invest in
debt securities, may invest in equipment trust certificates. The proceeds of
those certificates are used to purchase equipment, such as railroad cars,
airplanes or other equipment, which in turn serve as collateral for the
related issue of certificates.
The equipment subject to a trust generally is leased by a railroad, airline
or other business, and rental payments provide the projected cash flow for
the repayment of the equipment trust certificates. Holders of equipment
trust certificates must look to the collateral securing the certificates,
and any guarantee provided by the lessee or any parent corporation for the
payment of lease amounts, in the case of default in the payment of principal
and interest on the certificates.
The Investment Company currently anticipates that no Fund will invest more
than 5% of its total assets in equipment trust certificates.
ASSET-BACKED SECURITIES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America and Aggressive Equity Funds to the extent they invest in
debt securities, may invest in securities backed by consumer or credit card
loans or other receivables or may purchase interests in pools of such
assets.
Changes in interest rates may significantly affect the value of these
securities, and prepayment rates will impact the yield and price of the
securities. A decline in interest rates may result in increases in
prepayment, and a Fund will have to invest prepayment proceeds at the
prevailing lower interest rates. Asset-backed securities generally are not
expected to prepay to the same extent as mortgage-backed securities in such
circumstances. An increase
11
<PAGE>
in interest rates may result in prepayment at a rate slower than was assumed
when the security was purchased. The creditworthiness of an issuer of
asset-backed securities also may impact the value of they securities.
The Investment Company currently anticipates that no Fund will:
o invest more than 10% of its total assets in asset-backed securities,
o invest in interest-only strips or principal-only strips of asset-backed
securities, or
o purchase the most speculative series or class of asset-backed
securities issues.
MORTGAGE-BACKED SECURITIES
The Bond Funds and the fixed income portion of the Composite Fund, as well
as the All America and Aggressive Equity Funds to the extent they invest in
debt securities, may invest in mortgage-backed securities. You should refer
to the discussion of Mortgage-Backed Securities in the Prospectus under
"Details about How Our Funds Invest and Related Risks -- Specific
Investments or Strategies and Related Risks".
The Investment Company currently anticipates that no Fund will:
o invest more than 10% of its total assets in mortgage-backed securities
that are not also considered to be U.S. Government or U.S. Government
agency securities,
o invest in interest-only strips or principal-only strips of
mortgage-backed securities, or
o purchase the most speculative series or class of collateralized
mortgage obligation issues or other mortgage-backed securities issues.
WARRANTS
The All America Fund and Bond Fund may acquire warrants. A warrant is an
option to purchase common stock of an issuer and is issued in conjunction
with another security, such as a debt obligation. A warrant specifies the
price at which the holder may purchase shares of common stock and usually
expires after a period of time. A warrantholder generally may pay cash for
the common stock to be purchased or may surrender principal amount of the
related debt security the warrantholder owns equal to the purchase price for
the stock.
The common stock underlying a warrant may not increase in value after the
date the warrant was issued, or may not increase up to the warrant exercise
price. In this case, the warrant generally would have little value and could
expire unexercised.
The Investment Company currently anticipates that no Fund will invest more
than 5% of its assets in warrants.
PREFERRED STOCK
The All America Fund and Bond Fund may purchase preferred stock. A
corporation may issue a form of equity security called preferred stock.
Compared to common stock, preferred stock has advantages in the receipt of
dividends and in the receipt of the corporation's assets upon liquidation.
Preferred stockholders, however, usually do not have voting rights at
meetings of the corporation's shareholders.
An issuer of preferred stock must pay a dividend to holders of preferred
stock before it distributes a dividend to holders of common stock. When a
corporation issues preferred stock, it sets a dividend rate, or a formula to
determine the rate. If a corporation does not have sufficient earnings to
pay the specified dividend to preferred stockholders, the unpaid dividend
may accrue (cumulate) and become payable when the corporation's earnings
increase. Bondholders, in contrast, are entitled to receive interest and
principal due, regardless of the issuer's earnings.
Some issues of preferred stock give the holder the right to convert the
preferred stock into shares of common stock, when certain conditions are
met. A holder of preferred stock that is not convertible, or of preferred
stock that is convertible but has not met the conditions for conversion,
does not share in the earnings of the issuer other than through the receipt
of dividends on the preferred stock. The market value of convertible
preferred stock generally fluctuates more than the market value of
nonconvertible preferred stock, because the value of the underlying common
stock will affect the price of the convertible stock.
12
<PAGE>
Preferred stock has the risk that a corporation may not have earnings from
which to pay the dividends as they become due. Even if a corporation is
paying dividends, if the dividend rate is fixed (and not variable), changes
in interest rates generally will affect the market value of the preferred
stock in the same manner as for debt obligations.
The Investment Company currently anticipates that no Fund will invest more
than 10% of its assets in preferred stock.
INSURANCE LAW RESTRICTIONS
----------------------------------------------------------------------------
Insurance laws and regulations in States where the Insurance Companies
operate govern investments by Separate Accounts. If necessary in order for
shares of the Investment Company's Funds to remain eligible investments for
the Separate Accounts, a Fund may from time to time limit the amount of its
investments in certain types of securities, such as foreign securities and
debt or equity securities of certain issuers.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies. The Funds may
not change these policies unless a majority of the outstanding voting shares
of the affected Fund(s) approves the change. 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
<PAGE>
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.
If a Fund complies with a percentage restriction at the time it makes an
investment, a later increase that results from a change in the values of
portfolio securities or the Fund's net assets will not be considered a
violation.
14
<PAGE>
MANAGEMENT OF THE INVESTMENT COMPANY
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 1940 Act. The Directors are responsible for the overall supervision of
the Investment Company's operations and perform the various duties imposed
on the directors of investment companies by the 1940 Act. The Directors
elect officers of the Investment Company.
The Directors and Officers of the Investment Company and their principal
employment are as follows:
<TABLE>
<CAPTION>
POSITION HELD WITH THE PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE INVESTMENT COMPANY DURING PAST 5 YEARS
<S> <C> <C>
Dolores J. Morrissey*, age 70 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*, age 49 Senior Executive Vice Senior Executive Vice President and Chief
320 Park Avenue President, Chief Financial Financial Officer of the Adviser, Mutual of
New York, NY 10022 Officer, Treasurer and Director America Life and American Life
Peter J. Flanagan, age 68 Director President of The Life Insurance Council of
551 Fifth Avenue New York
New York, NY 10176
George J. Mertz, age 70 Director Retired; formerly President and CEO of
Ridgewood, NJ 07450 National Industries for the Blind
James J. Needham, age 72 Director Business Consultant to corporations on
Bridgehampton, NY 11932 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, age 62 Director President and C.P.O., United Way of San
P.O. Box 898 Antonio and Bexar County
San Antonio, TX 78293
Patrick A. Burns, age 52 Senior Executive Vice Senior Executive Vice President and General
320 Park Avenue President and General Counsel of the Adviser; Senior Executive Vice
New York, NY 10022 Counsel President and General Counsel of Mutual of
America Life and American Life
Stanley M. Lenkowicz, age 56 Senior Vice President, Senior Vice President and Deputy General
320 Park Avenue Deputy General Counsel Counsel of Mutual of America Life since
New York, NY 10022 and Secretary March 1995; prior thereto, Senior Vice
President and Associate General Counsel
</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, and the
entire Board of Directors fulfills the obligations that an Audit Committee
would have.
Officers and Directors who are participants under group or individual
variable accumulation annuity contracts issued by Mutual of America Life or
American Life may allocate portions of their account balances to one or more
of the Investment Company's Funds. Mutual of America Life and its subsidiary
American Life, through their Separate Accounts, own 100% of the shares of
the Funds.
15
<PAGE>
Set forth below is a table showing compensation paid to the directors during
1998.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR ESTIMATED TOTAL COMPENSATION FROM
COMPENSATION FROM RETIREMENT BENEFITS BENEFITS INVESTMENT COMPANY AND
INVESTMENT ACCRUED AS PART OF UPON OTHER INVESTMENT
NAME OF DIRECTOR COMPANY FUND EXPENSES RETIREMENT COMPANIES IN COMPLEX(3)
- -----------------------------------------------------------------------------------------------------------
<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 ..... $15,890(2) None None $15,890(2)
George J. Mertz ....... $15,890(2) None None $15,890(2)
James J. Needham ...... $17,384(2) None None $17,384(2)
Howard J. Nolan ....... $15,053(2) None None $15,053(2)
</TABLE>
----------
(1) As employees of the Adviser's affiliates 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 and a
fee of $1,000 for each Board or Committee meeting they attend. In
addition, they receive business travel and accident insurance and life
insurance coverage of $75,000.
(3) Directors who are not interested persons of the Investment Company do
not serve on the Board of any other investment company in the same complex
as the Investment Company.
INVESTMENT ADVISORY ARRANGEMENTS
INVESTMENT ADVISER. The Investment Company's investment adviser is Mutual of
America Capital Management Corporation (the ADVISER or CAPITAL MANAGEMENT),
an indirect wholly-owned subsidiary of Mutual of America Life. The Adviser's
address is 320 Park Avenue, New York, New York 10022. The Adviser is a
registered investment adviser under the Investment Advisers Act of 1940.
Capital Management has served as Adviser since November 1993, when it
assumed investment management obligations for the Investment Company from
Mutual of America Life. The Adviser provides investment management services
to the Investment Company, Mutual of America Institutional Funds, Inc. and
the General Accounts of Mutual of America Life and American Life.
The Adviser provides advisory services for the Investment Company's Funds,
in accordance with the Funds' investment policies, objectives and
restrictions as set forth in the Prospectus and this Statement of Additional
Information. The Adviser has delegated some of its advisory responsibilities
for a portion of the All America Fund to the Subadvisers named below. The
Adviser's activities are subject at all times to the supervision and
approval of the Investment Company's Board of Directors.
Under the Investment Advisory Agreement, the Adviser agrees to provide
investment management services to the Investment Company. These services
include:
o performing investment research and evaluating pertinent economic,
statistical and financial data;
o 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;
o implementation of the overall investment plan, including carrying out
decisions to acquire or dispose of investments;
o management of investments;
o 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;
o maintaining all required records;
o making arrangements for the safekeeping of assets; and
o 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, and for providing investment management services.
16
<PAGE>
The Adviser has entered into an arrangement with Mutual of America for the
provision of investment accounting and recordkeeping, legal and certain
other services.
ADVISORY FEES. As compensation for its services to each of the Funds of the
Investment Company, the Funds pay the Adviser a fee at the following annual
rates of net assets, calculated as a daily charge:
Equity Index and Mid-Cap Equity Index Funds -- .125%
All America, Composite, Bond, Mid-Term Bond and Short-Term Bond Funds --
.50%
Aggressive Equity Fund -- .85%
Money Market Fund -- .25%
INVESTMENT ADVISORY FEES PAID BY FUNDS TO ADVISER
FOR PAST THREE YEARS*
<TABLE>
<CAPTION>
FUND 1998 1997 1996
<S> <C> <C> <C>
Equity Index $ 412,769 $ 221,763 $ 91,790
All America $ 3,559,615 $3,487,086 $2,924,546
Aggressive Equity $ 2,007,629 $1,955,550 $ 835,441
Composite $ 1,601,894 $1,464,132 $1,412,746
Bond $ 2,245,279 $1,850,985 $1,544,608
Mid-Term Bond $ 68,431 $ 73,392 $ 163,102
Short-Term Bond $ 91,736 $ 78,795 $ 56,971
Money Market $ 173,091 $ 199,652 $ 152,048
Total Fees $10,160,444 $9,331,355 $7,181,252
</TABLE>
* Excludes Mid-Cap Equity Index Fund, which began operations on May 1,
1999.
OTHER FUND EXPENSES. Each Fund is responsible for paying its advisory fee
and other expenses incurred in its operation, including:
o brokers' commissions, transfer taxes and other fees relating to the
Fund's portfolio transactions,
o directors' fees and expenses,
o fees and expenses of its independent certified public accountants
o fees and expenses of its legal counsel,
o the cost of the printing and mailing semi-annual reports to
shareholders, Proxy Statements, Prospectuses, Prospectus Supplements
and Statements of Additional Information,
o the cost of preparation and filing registration statements and
amendments thereto,
o bank transaction charges and custodian's fees,
o any proxy solicitors' fees and expenses,
o SEC filing fees,
o any federal, state or local income or other taxes,
o any membership or licensing fees of the Investment Company Institute
and similar organizations,
o fidelity bond and directors' liability insurance premiums, and
o any extraordinary expenses, such as indemnification payments or damages
awarded in litigation or settlements made.
EXPENSE REIMBURSEMENT BY THE ADVISER. The Adviser voluntarily limits the
expenses of each Fund, other than for brokers' commissions, transfer taxes and
other fees relating to the Fund's portfolio transactions, to the amount
17
<PAGE>
of the investment advisory fee paid by the Fund to the Adviser. The Adviser
may discontinue or modify its policy of paying expenses of the Funds at any
time.
SUBADVISERS FOR PORTION OF THE ALL AMERICA FUND. For approximately 30% of
the assets of the All America Fund (the ACTIVE ASSETS), the Adviser has
entered into Subadvisory Agreements with Fred Alger Management, Inc. (ALGER
MANAGEMENT), Oak Associates, Ltd. (OAK ASSOCIATES) and Palley-Needelman
Asset Management, Inc. (PALLEY-NEEDELMAN) (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 for its portion of the All America Fund provides
investment advisory services, 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. The Subadvisers are subject to the supervision of
the Adviser and the Board of Directors of the Investment Company.
SUBADVISORY FEES. The Adviser, not the Investment Company, pays the
Subadvisers for advisory services they provide to the portion of the All
America Fund they manage at the following annual rates of net assets under
management, calculated as a daily charge:
o Fred Alger Management -- .45%
o Oak Associates -- 30%
o Palley-Needelman Asset Management -- .30%
FEES PAID BY ADVISER TO SUBADVISERS
FOR PAST THREE YEARS
<TABLE>
<CAPTION>
SUBADVISER 1998 1997 1996
<S> <C> <C> <C>
Fred Alger Management, Inc. $317,439 $294,755 $243,662
Oak Associates, Ltd. $204,454 $208,892 $183,308
Palley-Needelman Asset Management, Inc. $221,149 $208,284 $175,250
Total $743,042 $711,931 $602,220
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
SELECTION OF BROKERS AND DEALERS
----------------------------------------------------------------------------
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.
o 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.
o 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.
o 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.
o The Adviser and Subadvisers may place certain orders with their
affiliates, subject to the requirements of the 1940 Act.
o 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.
18
<PAGE>
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 routinely provide research and statistical data to their
customers, and some firms customarily provide research reports on particular
companies and industries to customers that place a certain volume of trades
with them.
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 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.
The Investment Company paid aggregate brokerage commissions of $2,040,381 in
1998, $1,920,465 in 1997 and $1,240,202 in 1996.
COMMISSIONS TO AFFILIATED BROKERS
----------------------------------------------------------------------------
During the past three years, the Investment Company has paid brokerage
commissions to Mutual of America Securities Corporation (SECURITIES
CORPORATION), an affiliate of the Adviser, through an introducing brokerage
arrangement with Bear Stearns Securities Corp., and to Fred Alger & Co.
(FRED ALGER), an affiliate of Alger Management, Inc., as follows:
<TABLE>
<CAPTION>
YEAR OF COMMISSIONS % OF TOTAL % OF AGGREGATE DOLLARS
PAYMENT/BROKER PAID COMMISSIONS PAID OF TRANSACTIONS
<S> <C> <C> <C>
1998 -- Securities Corporation $ 50,136 2.5% 2.3%
1997 -- Securities Corporation $ 64,092 3.14% 3.6%
1996 -- Securities Corporation $ 70,708 5.5% 6.25%
1998 -- Fred Alger $180,054 8.8% 7.3%
1997 -- Fred Alger $216,495 10.61% 10.03%
1996 -- Fred Alger $ 72,555 5.7% 4.7%
</TABLE>
The purchases and sales placed through Fred Alger related primarily to smaller
capitalization stocks, for which execution may be more difficult.
PORTFOLIO TURNOVER
----------------------------------------------------------------------------
In 1998, the portfolio turnover rate for the Aggressive Equity Fund was
144%, compared to turnover rates of 81% in 1997 and 104% in 1996. The 1998
rate was higher due to a change in the Fund's portfolio manager during the
year and the subsequent restructuring of the Fund's portfolio by the new
manager. The Fund anticipates that its 1999 portfolio turnover rate will be
comparable to the rates for 1997 and 1996.
The Adviser and the Subadvisers do not consider portfolio turnover rate to
be a limiting factor when they deem it appropriate to purchase or sell
securities for a Fund. The portfolio turnover rate for a Fund in any year
will depend on market conditions, and the rate may increase depending on
market conditions or if a new portfolio
19
<PAGE>
manager for a Fund restructures the Fund's holdings. The Insurance
Companies' Separate Accounts do not pay taxes on the investment gains of the
Funds. As a consequence, the Adviser and Subadvisers do not consider how
long a Fund has held a security, or how capital gain upon sale would be
characterized, in deciding whether to sell that security.
The Equity Index Fund, the Indexed Assets of the All America Fund and the
Mid-Cap Equity Index Fund each attempt to duplicate the investment results
of an S&P Index. As a result, the Adviser anticipates that these Funds will
hold investments generally for longer periods than actively managed funds.
PURCHASE, REDEMPTION AND PRICING OF SHARES
CALCULATION OF NET ASSET VALUE
----------------------------------------------------------------------------
A Separate Account purchases or redeems shares of a Fund at net asset value.
A Fund's net asset value is equal to:
o the sum of the value of the securities the Fund holds,
o plus any cash or other assets, including interest and dividends
accrued, and
o minus all liabilities, including accrued expenses.
Net asset value is determined once daily immediately after the declaration
of dividends, if any, as of the time of the close of the regular trading
session on the New York Stock Exchange (generally 4:00 p.m. Eastern Standard
Time) on each day the Exchange is open for trading (a Valuation Day). A
Valuation Period for calculation of a Fund's net asset value per share is
the period after the close of a Valuation Day and ending at the close of the
next Valuation Day. The Investment Company determines the net asset value
for a Valuation Period by multiplying a Fund's net asset value per share as
of the preceding Valuation Period by that Fund's Change Factor (described
below) for the current Valuation Period.
The Change Factor for a 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 for 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 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.
PRICING OF SECURITIES HELD BY THE FUNDS
----------------------------------------------------------------------------
In determining a Fund's net asset value, the Adviser must value the
securities and other assets the Fund owns.
1) If market quotations are readily available for an investment, the Adviser
uses market value as follows:
o An equity security will be valued at the last sale price for the
security on the principal exchange on which the 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.
o 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.
20
<PAGE>
o 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 and approved by the Investment
Company's Board of Directors.
2) If there are any portfolio securities or assets for which market
quotations are not readily available, the Adviser will use fair value
pricing, as determined in good faith by or under the direction of the Board
of Directors of the Investment Company.
3) If a money market security has a remaining maturity of 60 days or less,
the Adviser will use the amortized cost method of valuation to approximate
market value, as follows:
o A security is initially valued at cost on the date of purchase (or at
market value on the 61st day prior to maturity if the security had more
than 60 days remaining to maturity at date of purchase by a Fund), and
the Adviser assumes constant proportionate amortization in value until
maturity of any discount or premium.
o 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.
o Market value will be used instead if the amortized cost value is
materially different from the actual market value of the security.
4) For stock options and futures contracts, these valuations apply:
o 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.
o When a Fund writes a call option, the amount of the premium is included
in the Fund's assets and the market value of the call is included in
its liabilities and adjusted thereafter to current market value.
- 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.
o A premium a Fund pays 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.
o Futures contracts, and options thereon, traded on commodities exchanges
are valued at their official settlement price as of the close of such
commodities exchanges.
TAXATION OF THE INVESTMENT COMPANY
TAXES ON FUNDS' INVESTMENT EARNINGS AND INCOME
----------------------------------------------------------------------------
The Investment Company has in the past elected the special tax treatment
afforded a "regulated investment company" under Subchapter M of the Internal
Revenue Code, and it intends to continue to qualify under Subchapter M. The
Investment Company will not owe Federal income tax on the ordinary income
and net realized capital gains that it distributes to shareholders, if it
qualifies as a regulated investment company.
If the Investment Company were to fail to qualify as a regulated investment
company, it would be subject to Federal income tax on the Funds' ordinary
income and net realized capital gains, whether or not it distributes the
income and gains to shareholders. If the Funds were to pay Federal income
tax, their investment performance would be negatively affected.
INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
----------------------------------------------------------------------------
Funds of the Investment Company declare dividend and other distributions at
least annually. The dividends and distributions are 100% reinvested in
additional full and fractional shares of the Fund to which they relate, both
21
<PAGE>
for net investment income and net realized short- or long-term capital
gains. For each Fund, the Investment Company intends to distribute all net
realized long- or short-term capital gains, if any, and net investment
income to the shareholders of the Fund.
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.
DISTRIBUTION ARRANGEMENTS
The Investment Company sells shares of its Funds on a continuous basis, and
it sells only to the Separate Accounts of the Insurance Companies. The
shares are sold at their respective net asset values, without the imposition
of a sales charge. The Investment Company has entered into a Distribution
Agreement with Mutual of America, as principal underwriter, for the
distribution of the Funds' shares. Mutual of America is a registered
broker-dealer with the National Association of Securities Dealers, Inc.
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 in these items during
the period are not included in the value for the end of the period. Income
other than investment income is excluded for 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, 1998. Yields may fluctuate
substantially from the example shown.
1. Value for December 22, 1998
2. Value for December 29, 1998 (exclusive of capital changes and any
non-investment income)
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)
The Money Market Fund calculates effective yield by following steps 1-4
above to obtain a base period return, then compounding the base period
return as follows:
Effective Yield = [(Base Period Return + 1) 365/7] - 1
CALCULATION OF TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN. Total Return
reflects changes in the price of a Fund's shares and assumes that any
dividends or capital gains distributions are reinvested in that Fund's
shares immediately rather than paid to the investor in cash.
22
<PAGE>
Average Annual Total Return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over the periods
shown, according to the following formula (Total Return is then expressed as
a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value. ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
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 the Investment Company furnishes to current or
prospective investors also may include evaluations of a Fund published by
nationally recognized ranking services and by financial publications that
are nationally recognized. These publications may include 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.
In reports or other communications to shareholders, the Investment Company
also may 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.
COMPARATIVE INDICES FOR THE FUNDS
----------------------------------------------------------------------------
The Investment Company compares the performance of each Fund (other than the
Money Market Fund) against a widely recognized index or indices for stock or
bond market performance, based on the type of securities the Fund purchases.
The annual and semi-annual financial reports that the Investment Company
prepares will contain graphs with the Funds' performances compared to their
indices.
It is not possible for an investor to directly invest in an unmanaged index.
Performance comparisons to indices are for informational purposes and do not
reflect any actual investment. The Funds pay investment advisory and other
expenses that are not applicable to unmanaged indices.
23
<PAGE>
EQUITY INDEX FUND AND ALL AMERICA FUND: Performance of each of these Funds
is compared to the Standard & Poor's Composite Index of 500 Stocks (the S&P
500 INDEX).
The S&P 500 Index 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, with an average market value of approximately $9 billion.
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.
MID-CAP EQUITY INDEX FUND: Performance is compared to the Standard & Poor's
MidCap 400 Index (the S&P MIDCAP 400 INDEX).
The S&P Mid-Cap 400 Index is a market value weighted and unmanaged index
showing the changes in the aggregate market value of 400 stocks issued by
U.S. companies with medium market capitalizations, generally between $300
million and $5 billion and with an average market value of approximately
$1.5 billion. Almost 70% of the stocks are listed on the New York Stock
Exchange and approximately 30% are traded on the Nasdaq National Market
(over-the-counter).
AGGRESSIVE EQUITY FUND: Performance is compared to the Russell 2000 Index.
The Russell 2000 Index 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.
COMPOSITE FUND: Performance is compared to the S&P 500 Index, the Lehman
Government/Corporate Index and the 90-day Treasury bill rate. See "Equity
Index Fund and All America Fund" above and "Bond Fund" below).
These three indices represent the three asset allocation categories in
which the Composite Fund invests.
BOND FUND: Performance is compared to the Lehman Brothers
Government/Corporate Bond Index (the LEHMAN GOVERNMENT/CORPORATE INDEX).
The Lehman Government/Corporate Index 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.
SHORT-TERM BOND FUND: Performance is compared to the Salomon Brothers 1-3
Year Bond Index.
MID-TERM BOND FUND: Performance is compared to the Salomon Brothers 3-7
Year Bond Index.
The Salomon Brothers 1-3 Year Bond Index and the 3-7 Year Bond Index 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).
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.
24
<PAGE>
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.
25
<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 audit reports.
Arthur Andersen LLP have been selected as the independent auditors of the
Investment Company for its fiscal year ending December 31, 1999. Arthur
Andersen LLP also acts as the independent auditors of the Insurance
Companies. Their address is 1345 Avenue of the Americas, New York, New York.
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 securities and other assets held by the Investment
Company's Funds is The Chase Manhattan Bank, 1285 Avenue of the Americas, New
York, New York 10019.
USE OF STANDARD & POOR'S INDICES
The Equity Index Fund, the Indexed Assets of the All America Fund and the
Mid-Cap Equity Index 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 of investing in securities generally or in the Indexed
Portfolios particularly or the ability of the S&P 500 Index or the S&P
MidCap 400 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 and the S&P
MidCap 400 Index which is determined, composed and calculated by S&P without
regard to the Indexed Portfolios. 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 or
the S&P MidCap 400 Index. S&P is not responsible for and has not
participated in the calculation of the net asset values of the Indexed
Portfolios, the amount of the shares of the Indexed Portfolios or the timing
of the issuance or sale 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 THE S&P MIDCAP 400 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, THE S&P MIDCAP 400 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, THE S&P MIDCAP 400 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.
26
<PAGE>
FINANCIAL STATEMENTS
Financial statements of the Investment Corporation for the year ended
December 31, 1998 are included as follows:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
President's Message ............................... 28
Portfolio Management Discussions .................. 29
Portfolio of Investments in Securities:
Money Market Fund ................................ 38
All America Fund ................................. 39
Equity Index Fund ................................ 47
Bond Fund ........................................ 52
Short-Term Bond Fund ............................. 55
Mid-Term Bond Fund ............................... 57
Composite Fund ................................... 59
Aggressive Equity Fund ........................... 63
Statement of Assets and Liabilities ............... 65
Statement of Operations ........................... 66
Statements of Changes in Net Assets ............... 67
Financial Highlights .............................. 70
Notes to Financial Statements ..................... 76
Report of Independent Public Accountants .......... 81
</TABLE>
27
<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, 1998 was,
overall, positive.
Economic expansion continued in 1998 in what is now the longest peacetime
expansion in history. The economic turmoil in Asia, Brazil and Russia caused a
flight to quality in the U.S. and the Federal Reserve responded by lowering
the interest rate three times.
The equity market remained strong in 1998 despite giving back some of its
monumental gains. Funds are still flowing into the stock market at a rapid
pace and continue to support high valuation levels.
The Bond market has come off its lows and Treasury Securities yields have
inched up. A spike up in interest rates unrelated to domestic cyclical
factors could prove harmful to the continued growth of the economy.
TOTAL RETURNS -- TWELVE MONTHS TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Money Market Fund .............. +5.4%
All American Fund .............. +21.3%
Equity Index Fund .............. +28.6%
Bond Fund ...................... +7.2%
Short-Term Bond Fund ........... +5.7%
Mid-Term Bond Fund ............. +6.4%
Composite Fund ................. +14.5%
Aggressive Equity Fund ......... -5.1%
</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:
o Historical total return achieved over specified periods, expressed as
an average annual rate and as a cumulative rate;
o Equivalent in dollars of a $10,000 hypothetical investment at the
beginning of each specified period; and
o 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/ DELORES J. MORRISSEY
--------------------------
Dolores J. Morrissey
Chairman of the Board and President,
Mutual of America Investment Corporation
28
<PAGE>
MONEY MARKET FUND
The investment objective of the Money Market Fund is to realize high current
income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. Through investing in high
quality commercial paper and other short-term instruments, the Money-Market
Fund returned 5.4% comparing favorably to the Salomon Brothers 3-Month
Treasury Bill Index return of 5.1%.
ALL AMERICA FUND
The All America Fund is approximately 60% invested in the 500 stocks
included in the Standard & Poor's 500 Index; the performance objective of
this portion of the Fund is to replicate the returns of the Index. The
remaining 40% of the Fund is actively managed by three sub-advisors and
Mutual of America Capital Management Corporation. Approximately 20% of the
Fund is invested in small capitalization stocks. Small cap stocks
significantly underperformed larger caps in 1998, as investor preference for
large size companies with high earnings predictability continued throughout
the year. When investor preferences shift back to small cap stocks, this
group's performance should improve. The All America Fund returned 21.3% for
1998. The Standard & Poor's 500 Index returned 28.6% for the year.
29
<PAGE>
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
All American Fund*
----------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $12,126 21.3% 21.3%
Since 5/2/94 $26,206 162.1% 22.9%
5 Years $25,674 156.7% 20.8%
10 Years $45,854 358.5% 16.4%
S&P 500 Index
- -------------
Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $12,857 28.6% 28.6%
Since 5/2/94 $30,009 200.1% 26.6%
5 Years $29,400 194.0% 24.1%
10 Years $57,839 478.4% 19.2%
* 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.
30
<PAGE>
EQUITY INDEX FUND
The Equity Index Fund invests in the 500 stocks included in the S&P 500
Index. The Fund's net return for 1998 was 28.6%, equaling the performance of
the S&P 500 Index. This was the fourth straight year of positive double
digit returns for the Index, a feat equaled only once in the post-war
period. Performance was mainly driven by multiple expansion in an
environment of low inflation and declining interest rates. Investor
preference for larger-capitalized companies with high earnings
predictability was another factor driving performance in this Index, which
is dominated by large and mid-cap companies. The best performing sectors
within the Index were Technology, Communication Services, Health Care and
Consumer Cyclicals. The worst performing sector was Energy.
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Equity Index Fund
- -----------------
Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $12,858 28.6% 28.6%
5 Years $29,136 191.4% 23.8%
Since 2/5/93
Inception* $30,940 209.4% 21.1%
S&P 500 Index
- -------------
Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $12,857 28.6% 28.6%
5 Years $29,400 194.0% 24.1%
Since 2/5/93
Inception* $31,543 215.4% 21.1%
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.
31
<PAGE>
BOND FUND
The Bond Fund seeks a high level of return consistent with preservation of
capital through investment in public debt securities. The fund typically
invests heavily in Corporate and Agency securities, which yield
significantly more than U.S. Treasury securities. In 1998, several events
occurred which caused a "flight to quality" into only the most liquid U.S.
Treasury securities, leading these securities to outperform all other debt
asset classes. Over the longer term, the higher yielding securities would be
expected to outperform U.S. Treasuries. The Bond Fund returned 7.2% for 1998
versus the Lehman Brothers Government/Corporate Bond Index of 9.5%.
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Bond Fund
- ---------- Total Return
Period Growth -------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,715 7.2% 7.2%
5 Years $14,168 41.7% 7.2%
10 Years $23,864 136.6% 9.1%
Lehman Bros. Gov't/Corp. Bond Index
- ------------------------------------ Total Return
Period Growth -------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,947 9.5% 9.5%
5 Years $14,227 42.3% 7.3%
10 Years $24,413 144.1% 9.3%
The line representing the perfomance return of the Bond Fund includes
expenses, such as transaction costs and management fees, that reduce returns,
while the perfomance return line of the index does not.
32
<PAGE>
SHORT-TERM BOND FUND
The Short-Term Bond Fund seeks a high level of return consistent with
preservation of capital through investment in public debt securities. The
fund typically invests heavily in Corporate, Agency and Mortgage Backed
securities, which yield significantly more than U.S. Treasury securities. In
1998, several events occurred which caused a "flight to quality" into only
the most liquid U.S. Treasury securities, leading these securities to
outperform all other debt asset classes. Over the longer term, the higher
yielding securities would be expected to outperform U.S. Treasuries. The
Short-Term Bond Fund returned 5.7% for 1998 versus the Salomon Brothers 1-3
year Bond Index of 7.0%.
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Short-Term Bond Fund
- --------------------- Total Return
Period Growth -------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,566 5.7% 5.7%
5 Years $12,848 28.5% 5.1%
Since 2/5/93
Inception* $13,425 34.2% 5.1%
Salomon Bros. 1-3 Yr Bond Index
- ------------------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,697 7.0% 7.0%
5 Years $13,386 33.9% 6.0%
Since 2/5/93
Inception* $13,985 39.9% 5.8%
The line representing the perfomance return of the Short-Term Bond Fund
includes expenses, such as transaction costs and management fees, that reduce
returns, while the perfomance return line of the index does not.
33
<PAGE>
MID-TERM BOND FUND
The Mid-Term Bond Fund seeks a high level of return consistent with
preservation of capital through investment in public debt securities. The
fund typically invests heavily in Corporate and Agency securities, which
yield significantly more than U.S. Treasury securities. In 1998, several
events occurred which caused a "flight to quality" into only the most liquid
U.S. Treasury securities, leading these securities to outperform all other
debt asset classes. Over the longer term, the higher yielding securities
would be expected to outperform U.S. Treasuries. The Mid-Term Bond Fund
returned 6.4% for 1998 versus the Salomon Brothers 3-7 year Bond Index of
8.9%.
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Mid-Term Bond Fund
- ------------------ Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,635 6.4% 6.4%
5 Years $13,314 33.1% 5.9%
Since 2/5/93
Inception* $14,282 42.8% 6.2%
Salomon Bros. 3-7 Year Bond Index
- -------------------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,891 8.9% 8.9%
5 Years $13,933 39.3% 6.9%
Since 2/5/93
Inception* $14,939 49.4% 7.0%
The line representing the perfomance return of the Mid-Term Bond Fund includes
expenses, such as transaction costs and management fees, that reduce returns,
while the perfomance return line of the index does not.
34
<PAGE>
COMPOSITE FUND
The Composite Fund invests in approximately 100 of the stocks listed in the
Standard & Poor's 500 Index, along with publicly-traded debt securities and
money market instruments. The objective of the 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. During 1998, the benchmark for the Fund was a blend
of 50% stocks (as represented by the S&P 500 Index), 40% bonds (as
represented by the Lehman Brothers Government/Corporate Bond Index) and 10%
cash (as represented by the Salomon Brothers 3-month Treasury Bill Index.)
The equity portion of the Index underperformed its benchmark, in part, due
to stock selection from within the S&P 500 Index universe. Performance of
the Index was primarily driven by the largest capitalized companies while
other companies within the Index did not fare as well. The Fund's investment
in these less dominant companies, on a market capitalized basis, had a
negative impact on performance. The bond portion underperformed its index
due to an intentional overweight in corporate securities versus the Index.
In normal times this process will provide favorable income and yield to the
Fund; however, the many uncertainties in the capital markets during the year
results in Treasury securities rallying strongly and corporate securities
lagging. As the factors that are unsettling the market are resolved, spreads
between treasuries and corporate securities should trend back to historical
levels. Investing in high quality commercial paper enabled the money market
portion of the Fund to outperform the Salomon Treasury Bill Index.
35
<PAGE>
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Composite Fund
- -------------- Total Return
Period Growth -------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $11,446 14.5% 14.5%
5 Years $17,812 78.1% 12.2%
10 Years $31,988 219.9% 12.3%
Lehman Bros. Gov't/Corp. Bond Index
- ----------------------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,947 9.5% 9.5%
5 Years $14,227 42.3% 7.3%
10 Years $24,413 144.1% 9.3%
S&P 500 Index
- -------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $12,857 28.6% 28.6%
5 Years $29,400 194.0% 24.1%
10 Years $57,839 478.4% 19.2%
Salomon Bros. 3 Month T-Bill Index
- ---------------------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $10,505 5.1% 5.1%
5 Years $12,829 28.3% 5.1%
10 Years $16,991 69.9% 5.4%
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 lines of the indices do not.
36
<PAGE>
AGGRESSIVE EQUITY FUND
The investment objective of the Aggressive Equity Fund is capital growth, by
investing in both value and growth companies. During 1998, the Fund was
invested approximately 50% in growth stocks and 50% in value stocks. The
Fund's performance for the year of -5.1% lagged the Russell 2000 Index's
performance of -2.6%. The underperformance of the Russell 2000 reflects
investors' preference for larger capitalized companies, which significantly
outperformed their small cap counterparts. For a portion of the year, the
Fund was over-weighted in the energy sector, the worst performing sector
within the Russell 2000 during 1998. This overweighting had a negative
impact on Fund performance. This sector's performance should improve as
worldwide demand for energy stabilizes and global economies improve.
Positive contributors to Fund performance included technology and consumer
staples.
[GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE]
Aggressive Equity Fund
- ---------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $ 9,486 (5.1)% (5.1)%
Since 5/2/94
Inception* $21,395 114.0% 17.7%
Russell 2000 Index
- ---------------------- Total Return
Period Growth ------------------
Ended of Cumu- Annual
12/31/98 $10,000 lative Average
- ------------------------------------------------------------------------
1 Year $ 9,745 (2.6)% (2.6)%
Since 5/2/94
Inception* $17,564 75.6% 12.8%
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.
37
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MONEY MARKET FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
DISCOUNT FACE AMORTIZED
RATING* RATE MATURITY AMOUNT COST
--------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER (100%)
Albertson's, Inc. ........................... A1/P1 5.25% 01/12/99 $1,910,000 $ 1,906,926
Albertson's, Inc. ........................... A1/P1 5.22 01/12/99 1,539,000 1,536,538
Allied Signal, Inc. ......................... A1/P1 5.55 01/19/99 490,000 488,631
Allied Signal, Inc. ......................... A1/P1 5.55 01/21/99 1,510,000 1,505,293
Allied Signal, Inc. ......................... A1/P1 5.35 01/29/99 680,000 677,158
American Express Credit Corp. ............... A1/P1 4.25 01/07/99 200,000 199,858
Atlantic Richfield Corp. .................... A1/P1 5.25 01/15/99 3,500,000 3,492,832
Bemis, Inc. ................................. A1/P1 5.08 01/14/99 3,000,000 2,994,464
Bemis, Inc. ................................. A1/P1 5.25 01/14/99 865,000 863,355
Central Illinois Light Co. .................. A1+/P1 5.35 01/19/99 2,885,000 2,877,247
Consolidated Natural Gas Co. ................ A1+/P1 5.10 01/19/99 223,000 222,428
Du Pont (E.I.) De Numours & Co. ............. A1+/P1 5.27 01/06/99 3,240,000 3,237,611
Duke Power Company .......................... A1/P1 5.65 01/15/99 1,000,000 997,801
Eaton Corp. ................................. A1/P1 5.25 01/22/99 3,500,000 3,489,242
Export Development Corp. .................... A1+/P1 5.25 01/12/99 3,500,000 3,494,345
Florida Power Corp. ......................... A1+/P1 5.25 01/12/99 3,000,000 2,995,153
Ford Motor Credit Co. ....................... A1/P1 5.20 01/04/99 2,025,000 2,024,115
Ford Motor Credit Co. Puerto Rico, Inc. ..... A1/P1 5.35 01/08/99 2,000,000 1,997,911
GTE Funding, Inc. ........................... A1/P1 5.15 02/01/99 3,500,000 3,484,423
General Electric Capital Corp. .............. A1+/P1 5.32 01/12/99 940,000 938,461
General Electric Capital Corp. .............. A1+/P1 5.33 01/14/99 3,000,000 2,994,206
Heinz (H.J.) Co. ............................ A1/P1 5.50 01/06/99 1,750,000 1,748,661
Heinz (H.J.) Co. ............................ A1/P1 5.20 01/14/99 2,090,000 2,086,050
IBM Credit Corp. ............................ A1/P1 5.25 01/08/99 1,000,000 998,972
International Business Machines ............. A1/P1 5.27 01/08/99 2,500,000 2,497,418
Lucent Technologies, Inc. ................... A1/P1 5.20 01/11/99 1,400,000 1,397,970
Lucent Technologies, Inc. ................... A1/P1 5.10 01/15/99 2,830,000 2,824,357
Merrill Lynch & Co, Inc. .................... A1+/P1 5.08 01/04/99 818,000 817,650
Merrill Lynch & Co, Inc. .................... A1+/P1 5.08 01/08/99 1,520,000 1,518,482
Merrill Lynch & Co, Inc. .................... A1+/P1 5.33 01/29/99 1,530,000 1,523,631
PepsiCo, Inc. ............................... A1/P1 5.10 01/14/99 2,165,000 2,160,997
PetroFina Delaware, Inc. .................... A1/P1 5.07 01/08/99 2,000,000 1,998,007
PetroFina Delaware, Inc. .................... A1/P1 5.40 01/08/99 2,212,000 2,209,668
Proctor & Gamble Co. ........................ A1+/P1 5.00 01/06/99 1,400,000 1,399,022
Proctor & Gamble Co. ........................ A1+/P1 5.13 01/19/99 1,500,000 1,496,137
Sony Capital Corp. .......................... A1/P1 5.35 01/04/99 3,890,000 3,888,260
Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.31 01/06/99 1,725,000 1,723,717
Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.09 01/08/99 605,000 604,395
Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.05 01/13/99 2,000,000 1,996,596
Wisconsin Energy Corp. ...................... A1+/P1 5.10 01/12/99 1,500,000 1,497,650
Xerox Credit Corp. .......................... A1+/P1 5.23 01/12/99 2,300,000 2,296,308
Xerox Credit Corp. .......................... A1+/P1 5.00 01/12/99 1,667,000 1,664,453
-----------
TOTAL SHORT-TERM DEBT SECURITIES:
(Cost: $80,766,399) 100%................................................................. $80,766,399
===========
</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.
38
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS:
COMMON STOCKS
3Com Corp. .............................. 15,469 $ 693,204
Abbott Laboratories ..................... 65,029 3,186,421
Adobe Systems, Inc. ..................... 2,982 139,408
Advanced Micro Devices, Inc. ............ 6,384 184,737
Aeroquip-Vickers, Inc. .................. 1,253 37,511
AES Corp. ............................... 7,805 369,761
Aetna, Inc. ............................. 6,125 481,578
Air Products & Chemicals, Inc. .......... 9,983 399,320
AirTouch Communications, Inc. ........... 24,513 1,768,000
Alberto-Culver Co. Cl B ................. 2,446 65,277
Albertson's, Inc. ....................... 10,591 674,514
Alcan Aluminum Ltd. ..................... 9,754 263,967
Alcoa, Inc. ............................. 7,866 586,508
Allegheny Teledyne, Inc. ................ 8,743 178,685
Allergan, Inc. .......................... 2,901 187,839
AlliedSignal, Inc. ...................... 24,158 1,070,501
Allstate Corp. .......................... 35,157 1,357,939
Alltel Corp. ............................ 11,838 708,060
Alza Corp. .............................. 3,842 200,744
Amerada Hess Corp. ...................... 4,036 200,791
Ameren Corp. ............................ 5,880 251,002
American Electric Power, Inc. ........... 8,254 388,453
American Express Co. .................... 19,372 1,980,787
American General Corp. .................. 10,872 848,015
American Greetings Corp. Cl A ........... 3,134 128,689
American Home Products Corp. ............ 56,476 3,180,304
American Int'l. Group, Inc. ............. 44,990 4,347,158
American Stores Co. ..................... 11,956 441,624
Ameritech Corp. ......................... 47,273 2,995,926
Amgen, Inc. ............................. 10,979 1,147,991
Amoco Corp. ............................. 40,906 2,469,699
AMP, Inc. ............................... 9,529 496,103
AMR Corp. ............................... 7,941 471,496
Anadarko Petroleum Corp. ................ 5,329 164,532
Andrew Corp. ............................ 3,821 63,046
Anheuser-Busch Cos., Inc. ............... 20,479 1,343,934
Aon Corp. ............................... 7,336 406,231
Apache Corp. ............................ 4,376 110,767
Apple Computer, Inc. .................... 5,975 244,601
Applied Materials, Inc. ................. 15,941 680,481
Archer-Daniels-Midland Co. .............. 25,420 436,906
Armco, Inc. ............................. 4,787 20,943
Armstrong World Inds., Inc. ............. 1,776 107,115
Asarco, Inc. ............................ 1,760 26,510
Ascend Communications, Inc. ............. 9,358 615,288
Ashland, Inc. ........................... 3,393 164,136
Associates First Capital Corp. .......... 31,303 1,326,464
AT&T Corp. .............................. 77,400 5,824,350
Atlantic Richfield Co. .................. 13,856 904,104
Autodesk, Inc. .......................... 2,086 89,046
Automatic Data Processing, Inc .......... 13,031 1,044,923
AutoZone, Inc. .......................... 6,778 223,250
Avery Dennison Corp. .................... 4,982 224,501
Avon Products, Inc. ..................... 11,257 498,122
Baker Hughes, Inc. ...................... 14,098 249,358
Ball Corp. .............................. 1,353 61,899
Baltimore Gas & Electric Co. ............ 6,597 203,682
Banc One Corp. .......................... 50,177 2,562,163
Bank of New York Co., Inc. .............. 32,812 1,320,683
Bankamerica Corp. ....................... 74,157 4,458,689
BankBoston Corp. ........................ 12,831 499,607
Bankers Trust New York Corp. ............ 4,163 355,676
Bard (C.R.), Inc. ....................... 2,312 114,444
Barrick Gold Corp. ...................... 16,090 313,755
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Battle Mountain Gold Co. ................ 10,197 $ 42,062
Bausch & Lomb, Inc. ..................... 2,480 148,800
Baxter International, Inc. .............. 12,337 793,423
BB & T Corp. ............................ 12,811 516,443
Bear Stearns Cos., Inc. ................. 4,824 180,297
Becton Dickinson & Co. .................. 10,665 455,262
Bell Atlantic Corp. ..................... 66,514 3,525,242
BellSouth Corp. ......................... 83,796 4,179,325
Bemis, Inc. ............................. 2,369 89,873
Berkshire Hathaway, Inc Cl A ............ 12 812,000
Bestfoods ............................... 12,326 656,359
Bethlehem Steel Corp. ................... 5,752 48,173
Biomet, Inc. ............................ 4,975 200,243
Black & Decker Corp. .................... 3,893 218,251
Block (H. & R.), Inc. ................... 4,455 200,475
BMC Software, Inc. ...................... 9,297 414,297
Boeing Co. .............................. 42,812 1,396,741
Boise Cascade Corp. ..................... 2,500 77,500
Boston Scientific Corp. ................. 16,949 454,445
Briggs & Stratton Corp. ................. 1,070 53,366
Bristol-Myers Squibb Co. ................ 42,574 5,696,933
Brown-Forman Corp. Cl B ................. 3,048 230,695
Browning-Ferris Inds., Inc. ............. 7,711 219,281
Brunswick Corp. ......................... 4,396 108,801
Burlington Northern Santa Fe ............ 20,235 682,931
Burlington Resources, Inc. .............. 7,594 271,960
Cabletron Systems, Inc. ................. 7,297 61,112
Campbell Soup Co. ....................... 19,325 1,062,875
Capital One Financial Corp. ............. 2,857 328,555
Cardinal Health, Inc. ................... 8,601 652,600
Carolina Power & Light Co. .............. 6,528 307,224
Case Corp. .............................. 3,304 72,068
Caterpillar, Inc. ....................... 15,472 711,712
CBS Corp. ............................... 30,459 997,532
Cendant Corp. ........................... 36,798 701,461
Centex Corp. ............................ 2,645 119,190
Central & South West Corp. .............. 9,110 249,955
Ceridian Corp. .......................... 3,086 215,441
Champion International Corp. ............ 4,244 171,882
Charles Schwab Corp. .................... 17,295 971,734
Chase Manhattan Corp. ................... 36,241 2,466,653
Chevron Corp. ........................... 27,957 2,318,683
Chubb Corp. ............................. 7,029 456,006
CIGNA Corp. ............................. 8,907 688,622
Cincinnati Financial Corp. .............. 7,154 262,015
CiNergy Corp. ........................... 7,035 241,828
Circuit City Group, Inc. ................ 4,438 221,622
Cisco Systems, Inc. ..................... 67,661 6,279,786
Citigroup, Inc. ......................... 97,352 4,818,924
Clear Channel Communications ............ 10,838 590,671
Clorox Co. .............................. 4,436 518,180
Coastal Corp. ........................... 9,174 320,516
Coca-Cola Co. ........................... 105,628 7,063,872
Coca-Cola Enterprises, Inc. ............. 16,794 600,385
Colgate-Palmolive Co. ................... 12,630 1,173,011
Columbia Energy Group ................... 3,700 213,675
Columbia/HCA Healthcare Corp. ........... 27,844 689,139
Comcast Corp. Cl A ...................... 15,923 934,481
Comerica, Inc. .......................... 6,709 457,469
Compaq Computer Corp. ................... 72,844 3,054,895
Computer Associates Intl., Inc. ......... 23,218 989,667
Computer Sciences Corp. ................. 6,836 440,494
Conagra, Inc. ........................... 20,967 660,460
Conseco, Inc. ........................... 13,564 414,549
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Consolidated Edison, Inc. ........................ 9,992 $ 528,327
Consolidated Natural Gas Co. ..................... 4,255 229,770
Consolidated Stores Corp. ........................ 4,852 97,949
Cooper Industries, Inc. .......................... 4,584 218,599
Cooper Tire & Rubber Co. ......................... 3,437 70,243
Coors (Adolph) Co. Cl B .......................... 1,611 90,920
Corning, Inc. .................................... 10,082 453,690
Costco Co. ....................................... 9,338 674,086
Countrywide Credit Industries .................... 4,928 247,324
Crane Co. ........................................ 3,052 92,117
Crown Cork & Seal, Inc. .......................... 5,521 170,115
CSX Corp. ........................................ 9,416 390,764
Cummins Engine Co., Inc. ......................... 1,708 60,634
CVS Corp. ........................................ 16,821 925,155
Cyprus Amax Minerals Co. ......................... 4,156 41,560
Dana Corp. ....................................... 7,093 289,926
Danaher Corp. .................................... 5,731 311,264
Darden Restaurants, Inc. ......................... 6,176 111,168
Data General Corp. ............................... 2,197 36,113
Dayton-Hudson Corp. .............................. 18,977 1,029,502
Deere & Co. ...................................... 10,288 340,790
Dell Computer Corp. .............................. 54,569 3,993,768
Delta Air Lines, Inc. ............................ 6,159 320,268
Deluxe Corp. ..................................... 3,585 131,076
Dillard's Inc. Cl A .............................. 4,608 130,752
Disney (Walt) Co. ................................ 87,785 2,633,550
Dollar General Corp. ............................. 8,201 193,748
Dominion Resources, Inc. ......................... 8,535 399,011
Donnelley (R.R.) & Sons Co. ...................... 5,946 260,509
Dover Corp. ...................................... 9,624 352,479
Dow Chemical Co. ................................. 9,548 868,271
Dow Jones & Co., Inc. ............................ 4,159 200,151
DTE Energy Co. ................................... 6,216 266,511
Du Pont (E.I.) de Nemours & Co ................... 48,242 2,559,841
Duke Energy Corp. ................................ 15,614 1,000,271
Dun & Bradstreet Corp. ........................... 7,300 230,406
Eastern Enterprises .............................. 957 41,868
Eastman Chemical Co. ............................. 3,516 157,341
Eastman Kodak Co. ................................ 13,974 1,006,128
Eaton Corp. ...................................... 3,168 223,938
Ecolab, Inc. ..................................... 5,753 208,186
Edison International ............................. 15,383 428,801
EG&G, Inc. ....................................... 2,039 56,709
Electronic Data Systems Corp. .................... 21,255 1,068,063
EMC Corp. ........................................ 21,504 1,827,840
Emerson Electric Co. ............................. 18,999 1,149,439
Engelhard Corp. .................................. 6,413 125,053
Enron Corp. ...................................... 14,266 814,053
Entergy Corp. .................................... 10,637 331,076
Equifax, Inc. .................................... 6,360 217,432
Exxon Corp. ...................................... 104,177 7,617,943
FDX Corp. ........................................ 6,323 562,747
Federated Department Stores, Inc. ................ 8,839 385,048
Federal Home Loan Mortgage Corp. ................. 29,078 1,873,713
Fifth Third Bancorp .............................. 11,507 820,592
First Data Corp. ................................. 19,094 605,041
First Union Corp. ................................ 42,453 2,581,673
FirstEnergy Corp. ................................ 10,226 332,984
Fleet Financial Group, Inc. ...................... 24,515 1,095,514
Fleetwood Enterprises, Inc. ...................... 1,528 53,098
Fluor Corp. ...................................... 3,305 140,669
FMC Corp. ........................................ 1,532 85,792
Federal National Mortgage Association ............ 44,431 3,287,894
Ford Motor Co. ................................... 51,848 3,042,829
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Fort James Corp. ................................. 9,510 $ 380,400
Fortune Brands, Inc. ............................. 7,377 233,297
Foster Wheeler Corp. ............................. 1,808 23,843
FPL Group, Inc. .................................. 7,751 477,655
Franklin Resources, Inc. ......................... 11,020 352,640
Fred Meyer, Inc. ................................. 6,664 401,506
Freeport-McMoran Copper & Gold, Inc.
Cl B .......................................... 7,220 75,358
Frontier Corp. ................................... 7,610 258,740
Fruit of the Loom, Inc. Cl A ..................... 3,199 44,186
Gannett Co., Inc. ................................ 12,147 783,481
Gap, Inc. ........................................ 24,830 1,396,687
Gateway 2000, Inc. ............................... 6,742 345,106
General Dynamics Corp. ........................... 5,466 320,444
General Electric Co. ............................. 140,410 14,330,595
General Instrument Corp. ......................... 7,417 251,714
General Mills, Inc. .............................. 6,553 509,495
General Motors Corp. ............................. 28,044 2,006,898
Genuine Parts Co. ................................ 7,929 265,125
Georgia-Pacific (Timber Group) ................... 3,898 228,276
Gillette Co. ..................................... 47,533 2,296,438
Golden West Financial Corp. ...................... 2,455 225,092
Goodrich (B.F.) Co. .............................. 3,283 117,777
Goodyear Tire & Rubber Co. ....................... 6,799 342,924
GPU, Inc. ........................................ 5,483 242,280
Grainger (W.W.), Inc. ............................ 4,096 170,496
Great Atlantic & Pac. Tea, Inc. .................. 1,697 50,273
Great Lakes Chemical Corp. ....................... 2,621 104,840
GTE Corp. ........................................ 41,354 2,688,010
Guidant Corp. .................................... 6,498 716,404
Halliburton Co. .................................. 18,839 558,105
Harcourt General, Inc. ........................... 3,145 167,274
Harnischfeger Industries, Inc. ................... 2,120 21,597
Harrah's Entertainment, Inc. ..................... 4,495 70,515
Harris Corp. ..................................... 3,550 130,018
Hartford Financial Services Group ................ 10,003 548,914
Hasbro, Inc. ..................................... 5,837 210,861
HBO & Co. ........................................ 20,260 581,208
HCR Manor Care, Inc. ............................. 4,815 141,440
HealthSouth Corp. ................................ 18,128 279,851
Heinz (H.J.) Co. ................................. 15,617 884,312
Helmerich & Payne, Inc. .......................... 2,232 43,245
Hercules, Inc. ................................... 4,196 114,865
Hershey Food Corp. ............................... 6,175 384,007
Hewlett-Packard Co. .............................. 44,440 3,035,807
Hilton Hotels Corp. .............................. 11,562 221,123
Home Depot, Inc. ................................. 66,979 4,098,277
Homestake Mining Co. ............................. 10,591 97,304
Honeywell, Inc. .................................. 5,432 409,097
Household International Corp. .................... 20,826 825,230
Houston Industries, Inc. ......................... 12,271 394,205
Humana, Inc. ..................................... 7,408 131,955
Huntington Bancshares, Inc. ...................... 9,105 273,719
Ikon Office Solutions, Inc. ...................... 6,015 51,503
Illinois Tool Works, Inc. ........................ 10,787 625,646
IMS Health, Inc. ................................. 6,908 521,122
Inco Ltd. ........................................ 7,369 77,835
Ingersoll Rand Co. ............................... 7,093 332,927
Intel Corp. ...................................... 71,430 8,468,919
International Paper Co. .......................... 13,168 590,091
Interpublic Group of Cos., Inc. .................. 6,043 481,929
International Business Machines Corp. ............ 39,981 7,386,489
International Flavors & Fragrances, Inc. ......... 4,547 200,920
ITT Industries, Inc. ............................. 4,599 182,810
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Jefferson-Pilot Corp. ...................... 4,572 $ 342,900
Johnson & Johnson .......................... 57,618 4,832,709
Johnson Controls, Inc. ..................... 3,758 221,722
Jostens, Inc. .............................. 1,634 42,790
Kaufman & Broad Home Corp. ................. 1,769 50,858
Kellogg Co. ................................ 17,483 596,607
Kerr-McGee Corp. ........................... 2,119 81,051
KeyCorp. ................................... 19,505 624,160
Kimberly Clark Corp. ....................... 23,375 1,273,937
King World Productions, Inc. ............... 3,247 95,583
KLA Tencor Corp. ........................... 3,855 167,210
Kmart Corp. ................................ 21,122 323,430
Knight-Ridder, Inc. ........................ 3,498 178,835
Kohl's Corp. ............................... 6,824 419,249
Kroger Co. ................................. 11,052 668,646
Laidlaw, Inc. .............................. 14,634 147,254
Lehman Brothers Holdings, Inc. ............. 5,051 222,559
Lilly (Eli) & Co. .......................... 47,121 4,187,878
Limited, Inc. .............................. 9,764 284,376
Lincoln National Corp. ..................... 4,358 356,538
Liz Claiborne, Inc. ........................ 2,930 92,478
Lockheed Martin Corp. ...................... 8,466 717,493
Loews Corp. ................................ 4,872 478,674
Longs Drug Stores Corp. .................... 1,727 64,762
Louisiana-Pacific Corp. .................... 4,871 89,200
Lowe's Companies, Inc. ..................... 15,206 778,357
LSI Logic Corp. ............................ 6,254 100,845
Lucent Technologies, Inc. .................. 56,346 6,198,059
Mallinckrodt, Inc. ......................... 3,247 100,048
Marriott International, Inc. ............... 10,790 312,910
Marsh & McLennan Cos., Inc. Cl A ........... 11,099 648,597
Masco Corp. ................................ 14,774 424,752
Mattel, Inc. ............................... 12,594 287,300
May Department Stores Co. .................. 10,077 608,398
Maytag Corp. ............................... 3,918 243,895
MBIA, Inc. ................................. 4,257 279,099
MBNA Corp. ................................. 32,429 808,698
McDermott International, Inc. .............. 2,627 64,854
McDonald's Corp. ........................... 28,990 2,221,358
McGraw-Hill Cos., Inc. ..................... 4,216 429,505
MCI WorldCom, Inc. ......................... 78,561 5,636,751
Mead Corp. ................................. 4,608 135,072
MediaOne Group, Inc. ....................... 26,179 1,230,413
Medtronic, Inc. ............................ 21,012 1,560,141
Mellon Bank Corp. .......................... 11,264 774,400
Mercantile Bancorporation .................. 6,787 313,050
Merck & Co., Inc. .......................... 51,036 7,537,379
Meredith Corp. ............................. 2,343 88,741
Merrill Lynch & Co., Inc. .................. 15,301 1,021,341
MGIC Investment Corp. ...................... 4,795 190,900
Micron Technology, Inc. .................... 9,209 465,630
Microsoft Corp. ............................ 106,848 14,818,482
Milacron, Inc. ............................. 1,741 33,514
Millipore Corp. ............................ 1,946 55,339
Minnesota Mining & Mfg. Co. ................ 17,312 1,231,316
Mirage Resorts, Inc. ....................... 7,976 119,141
Mobil Corp. ................................ 33,416 2,911,369
Monsanto Co. ............................... 27,025 1,283,687
Moore Corp., Ltd. .......................... 3,925 43,175
Morgan (J.P.) & Co., Inc. .................. 7,541 792,276
Morgan Stanley Dean Witter Co. ............. 24,753 1,757,463
Morton International, Inc. ................. 5,377 131,736
Motorola, Inc. ............................. 25,717 1,570,344
NACCO Industries, Inc. Cl A ................ 362 33,304
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Nalco Chemical Co. ......................... 2,924 $ 90,644
National City Corp. ........................ 14,267 1,034,357
National Semiconductor Corp. ............... 7,288 98,388
National Service Industries ................ 1,839 69,882
Navistar International Corp. ............... 2,976 84,816
New Century Energies, Inc. ................. 4,942 240,922
New York Times Co. Cl A .................... 7,814 271,048
Newell Co. ................................. 6,969 287,471
Newmont Mining Corp. ....................... 7,420 134,023
Nextel Communications, Inc. Cl A ........... 12,678 299,517
Niagara Mohawk Power Corp. ................. 8,314 134,063
Nicor, Inc. ................................ 2,119 89,527
Nike, Inc. Cl B ............................ 12,269 497,661
Nordstrom, Inc. ............................ 6,602 229,006
Norfolk Southern Corp. ..................... 16,249 514,890
Northern States Power Co. .................. 6,719 186,452
Northern Telecom, Ltd. ..................... 27,944 1,400,672
Northern Trust Corp. ....................... 4,836 422,243
Northrop Grumman Corp. ..................... 3,053 223,250
Novell, Inc. ............................... 15,188 275,282
Nucor Corp. ................................ 3,908 169,021
Occidental Petroleum Corp. ................. 15,146 255,588
Omnicom Group, Inc. ........................ 7,370 427,460
Oneok, Inc. ................................ 1,399 50,538
Oracle Corp. ............................... 41,646 1,795,983
Oryx Energy Co. ............................ 4,714 63,344
Owens Corning .............................. 2,397 84,943
Owens Illinois, Inc. ....................... 6,894 211,128
Paccar, Inc. ............................... 3,467 142,580
PacifiCorp. ................................ 12,741 268,357
Pall Corp. ................................. 5,502 139,269
Parametric Technology Corp. ................ 12,080 197,810
Parker Hannifin Corp. ...................... 4,907 160,704
Paychex, Inc. .............................. 7,054 362,840
Peco Energy Co. ............................ 9,664 402,264
Penney (J.C.) Co., Inc. .................... 10,882 510,093
PennzEnergy Co. ............................ 2,119 34,566
Pennzoil-Quaker State Co. .................. 2,119 31,255
Peoples Energy Corp. ....................... 1,570 62,603
Peoplesoft, Inc. ........................... 10,226 193,654
Pep Boys-Manny, Moe & Jack ................. 2,830 44,395
PepsiCo, Inc. .............................. 62,870 2,573,740
Perkin-Elmer Corp. ......................... 2,180 212,686
Pfizer, Inc. ............................... 55,610 6,975,579
PG & E Corp. ............................... 16,391 516,316
Pharmacia & Upjohn, Inc. ................... 21,915 1,240,936
Phelps Dodge Corp. ......................... 2,604 132,478
Phillip Morris Cos., Inc. .................. 104,324 5,581,334
Phillips Petroleum Co. ..................... 10,911 465,081
Pioneer Hi-Bred Intl., Inc. ................ 10,352 279,504
Pitney Bowes, Inc. ......................... 11,761 776,961
Placer Dome, Inc. .......................... 11,095 127,592
PNC Bank Corp. ............................. 12,979 702,488
Polaroid Corp. ............................. 1,957 36,571
Potlatch Corp. ............................. 1,287 47,458
PP&L Resources, Inc. ....................... 6,712 187,097
PPG Industries, Inc. ....................... 7,643 445,204
Praxair, Inc. .............................. 7,019 247,419
Proctor & Gamble Co. ....................... 56,854 5,191,480
Progressive Corp. of Ohio .................. 3,106 526,078
Provident Companies, Inc. .................. 5,998 248,917
Providian Financial Corp. .................. 8,216 616,200
Public Svc. Enterprise Group, Inc. ......... 9,779 391,160
Pulte Corp. ................................ 1,913 53,205
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Quaker Oats Co. ................................. 5,877 $ 349,681
Ralston Purina Co. .............................. 13,598 440,235
Raychem Corp. ................................... 3,447 111,381
Raytheon Co. Cl B ............................... 14,535 773,988
Reebok International Ltd. ....................... 2,505 37,261
Regions Financial Corp. ......................... 9,540 384,581
Republic New York Corp. ......................... 4,597 209,450
Reynolds Metals Co. ............................. 2,856 150,475
Rite-Aid Corp. .................................. 11,076 548,954
RJR Nabisco Holdings Corp. ...................... 14,011 415,951
Rockwell Intl., Corp. ........................... 8,247 400,494
Rohm & Haas Co. ................................. 7,377 222,232
Rowan Cos., Inc. ................................ 3,779 37,790
Royal Dutch Petroleum Co. ....................... 91,882 4,398,850
Rubbermaid, Inc. ................................ 6,654 209,185
Russell Corp. ................................... 1,607 32,642
Ryder System, Inc. .............................. 3,249 84,474
Safeco Corp. .................................... 6,038 259,256
Safeway, Inc. ................................... 20,973 1,278,042
Sara Lee Corp. .................................. 39,402 1,110,643
SBC Communications, Inc. ........................ 83,814 4,494,525
Schering-Plough Corp. ........................... 62,972 3,479,203
Schlumberger, Ltd. .............................. 23,548 1,086,151
Scientific-Atlanta, Inc. ........................ 3,498 79,798
Seagate Technology .............................. 10,509 317,897
Seagram, Ltd. ................................... 16,891 641,858
Sealed Air Corp. ................................ 3,695 188,675
Sears Roebuck & Co. ............................. 16,525 702,312
Sempra Energy ................................... 10,284 260,956
Service Corp. International ..................... 11,124 423,407
Shared Medical Systems Corp. .................... 1,178 58,752
Sherwin-Williams Co. ............................ 7,368 216,435
Sigma-Aldrich Corp. ............................. 4,464 131,130
Silicon Graphics, Inc. .......................... 8,378 107,866
SLM Holding Corp. ............................... 7,255 348,240
Snap-On, Inc. ................................... 2,623 91,313
Sonat, Inc. ..................................... 4,883 132,146
Southern Co. .................................... 30,076 874,083
Southwest Airlines Co. .......................... 14,509 325,545
Springs Industries, Inc. ........................ 819 33,937
Sprint Corp. (FON Group) ........................ 18,457 1,552,695
Sprint Corp. (PCS Group) ........................ 17,800 411,625
St. Jude Medical, Inc. .......................... 3,735 103,412
St. Paul Companies, Inc. ........................ 10,169 353,372
Stanley Works ................................... 3,939 109,307
Staples, Inc. ................................... 13,356 583,490
State Street Corp. .............................. 6,877 478,381
Summit Bancorp .................................. 7,488 327,132
Sun America, Inc. ............................... 9,365 759,735
Sun Microsystems, Inc. .......................... 16,308 1,396,372
Sunoco, Inc. .................................... 4,148 149,587
Suntrust Banks, Inc. ............................ 9,040 691,560
Supervalu, Inc. ................................. 5,368 150,304
Synovus Financial Corp. ......................... 11,687 284,870
Sysco Corp. ..................................... 14,315 392,767
Tandy Corp. ..................................... 4,241 174,676
Tektronix, Inc. ................................. 2,234 67,159
Tele-Communications, Inc. (TCI Gp. "A") ......... 23,205 1,283,526
Tellabs, Inc. ................................... 8,324 570,714
Temple-Inland, Inc. ............................. 2,467 146,323
Tenet Healthcare Corp. .......................... 13,268 348,285
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Tenneco, Inc. ................................... 7,528 $ 256,422
Texaco, Inc. .................................... 23,057 1,219,138
Texas Instruments, Inc. ......................... 16,707 1,429,492
Texas Utilities Co. ............................. 12,179 568,607
Textron, Inc. ................................... 6,900 523,968
Thermo Electron Corp. ........................... 6,851 116,038
Thomas & Betts Corp. ............................ 2,517 109,017
Time Warner, Inc. ............................... 52,575 3,262,935
Times Mirror Co. Cl A ........................... 3,526 197,456
Timken Co. ...................................... 2,766 52,208
TJX Companies ................................... 14,074 408,146
Torchmark Corp. ................................. 6,224 219,785
Toys R Us, Inc. ................................. 11,597 195,699
Transamerica Corp. .............................. 2,690 310,695
Tribune Co. ..................................... 5,123 338,118
Tricon Global Restaurants Inc. .................. 6,579 329,772
TRW, Inc. ....................................... 5,243 294,591
Tupperware Corp. ................................ 2,561 42,096
Tyco International Ltd. ......................... 27,608 2,082,678
U.S. Bancorp .................................... 31,304 1,111,292
U.S. West, Inc. ................................. 21,532 1,391,505
Unicom Corp. .................................... 9,368 361,253
Unilever N.V. ................................... 27,431 2,275,058
Union Camp Corp. ................................ 3,077 207,697
Union Carbide Corp. ............................. 5,796 246,330
Union Pacific Corp. ............................. 10,789 486,179
Union Pacific Resources Group, Inc. ............. 11,143 100,983
Union Planters Corp. ............................ 5,830 264,171
Unisys Corp. .................................... 11,008 379,088
United Healthcare Corp. ......................... 8,033 345,921
United Technologies Corp. ....................... 9,741 1,059,333
Unocal Corp. .................................... 10,412 303,900
UNUM Corp. ...................................... 5,969 348,440
US Airways Group, Inc. .......................... 3,873 201,396
UST, Inc. ....................................... 7,968 277,884
USX-Marathon Group .............................. 13,268 399,698
USX-U.S. Steel Group ............................ 3,909 89,907
V F Corp. ....................................... 5,173 242,484
Venator Group, Inc. ............................. 6,003 38,644
Viacom, Inc. Cl B ............................... 15,004 1,110,296
W.R. Grace & Co. ................................ 3,368 52,835
Wachovia Corp. .................................. 8,746 764,728
Wal-Mart Stores, Inc. ........................... 96,533 7,861,406
Walgreen Co. .................................... 21,369 1,251,422
Warner-Lambert Co. .............................. 35,197 2,646,374
Washington Mutual, Inc. ......................... 25,590 977,218
Waste Management, Inc. .......................... 24,776 1,155,181
Wells Fargo & Company ........................... 69,294 2,767,614
Wendy's International, Inc. ..................... 5,647 123,175
Westvaco Corp. .................................. 4,496 120,549
Weyerhaeuser Co. ................................ 8,584 436,174
Whirlpool Corp. ................................. 3,372 186,724
Willamette Industries, Inc. ..................... 4,945 165,657
Williams Cos., Inc. ............................. 18,452 575,471
Winn-Dixie Stores, Inc. ......................... 6,364 285,584
Worthington Industries, Inc. .................... 4,289 53,612
Wrigley (Wm.) Jr. Co. ........................... 5,013 448,976
Xerox Corp. ..................................... 14,051 1,658,018
-----------
TOTAL INDEXED ASSETS -- COMMON STOCKS
(Cost: $188,724,813) 58.2% ...................... 427,093,187
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C>
INDEXED ASSETS (CONTINUED):
SHORT-TERM DEBT SECURITIES:
U. S. GOVERNMENT (0.1%)
U.S. Treasury Bill ............ 3.97% 04/08/99 $ 610,000 $ 602,703
U.S. Treasury Bill(a) ......... 4.00 03/25/99 200,000 197,964
------------
800,667
------------
COMMERCIAL PAPER (0.5%)
Ford Motor Credit Co. ......... 6.09 01/04/99 2,000,000 1,998,984
Koch Industries ............... 5.20 01/04/99 1,432,000 1,431,379
------------
3,430,363
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $4,231,921) 0.6% ........................................ 4,231,030
------------
TOTAL INDEXED ASSETS
(Cost: $192,956,734) 58.8% ..................................... $431,324,217
============
</TABLE>
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1998:
<TABLE>
<CAPTION>
UNDERLYING FACE
EXPIRATION DATE AMOUNT AT VALUE UNREALIZED GAIN
----------------- ----------------- ----------------
<S> <C> <C> <C>
PURCHASED
13 S&P 500 Stock Index Futures Contracts .. March 1999 $ 4,047,875 $ 69,875
=========== ========
</TABLE>
The face value of futures purchased and outstanding as percentage of total
investment in securities: 0.6%.
- ---------
(a) This security has been segregated by the Custodian to cover initial margin
requirements on open futures contracts.
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- -----------------
<S> <C> <C>
ACTIVE ASSETS:
COMMON STOCK
BASIC MATERIALS
Barrick Gold Corp. ...................... 22,300 $ 434,850
Cabot Corp. ............................. 50,000 1,396,875
Homestake Mining Co. .................... 35,900 329,831
Lone Star Technologies, Inc.* ........... 92,000 931,500
Newmont Mining Corp. .................... 16,100 290,806
Oregon Steel Mills, Inc. ................ 55,000 653,125
Placer Dome, Inc. ....................... 32,200 370,300
Praxair, Inc. ........................... 38,800 1,367,700
----------
5,774,987
----------
CONSUMER, CYCLICAL (6.6%)
American Greetings Corp. Cl A ........... 47,700 1,958,681
ASA Holdings, Inc. ...................... 17,400 530,700
Atlantic Coast Airlines, Inc.* .......... 74,000 1,850,000
Bed Bath & Beyond, Inc.* ................ 66,300 2,262,487
Bergen Brunswig ......................... 87,800 3,062,025
BJ's Wholesale Club, Inc.* .............. 49,300 2,283,206
Blyth Industries, Inc.* ................. 37,000 1,156,250
Borders Group, Inc.* .................... 27,700 690,768
CKE Restaurants, Inc. ................... 9,592 282,364
Clear Channel Communications* ........... 23,450 1,278,025
Coach USA, Inc.* ........................ 35,000 1,214,062
Consolidated Graphics, Inc.* ............ 18,500 1,249,906
Consolidated Stores Corp.* .............. 51,000 1,029,562
ContinentalAirlines, Inc. Cl.B* ......... 19,100 639,850
Cox Radio, Inc.* ........................ 17,000 718,250
Dollar Tree Stores* ..................... 26,000 1,135,875
Ethan Allen Interiors, Inc. ............. 19,300 791,300
Family Dollar Stores Inc. ............... 72,300 1,590,600
Furniture Brands Intl., Inc.* ........... 12,800 348,800
Gannett Co., Inc. ....................... 34,100 2,199,450
Jacor Communications, Inc.* ............. 27,850 1,792,843
Linens'n Things, Inc.* .................. 72,800 2,884,700
Masco Corp. ............................. 76,200 2,190,750
Mattel, Inc. ............................ 28,100 641,031
Meredith Corp. .......................... 29,000 1,098,375
Nordstrom, Inc. ......................... 38,500 1,335,468
Office Depot, Inc.* ..................... 55,000 2,031,562
Outback Steakhouse, Inc.* ............... 39,400 1,571,075
Outdoor Systems, Inc.* .................. 33,662 1,009,860
Rent-Way, Inc.* ......................... 24,100 585,931
Saks Incorporated* ...................... 38,000 1,199,375
Skywest, Inc. ........................... 59,800 1,954,712
The Men's Wearhouse, Inc.* .............. 42,000 1,333,500
Tiffany & Co. ........................... 30,000 1,556,250
Westpoint Stevens, Inc.* ................ 20,100 634,406
----------
48,091,999
----------
CONSUMER, NON-CYCLICAL (6.0%)
Agouron Pharmaceuticals, Inc.* .......... 30,000 1,762,500
Amazon.com, Inc.* ....................... 7,700 2,473,625
American Home Products Corp. ............ 32,600 1,835,787
Anesta Corp.* ........................... 35,000 931,875
Baxter International, Inc. .............. 18,000 1,157,625
Bestfoods ............................... 20,000 1,065,000
Biogen, Inc.* ........................... 4,600 381,800
Biomet, Inc. ............................ 18,300 736,575
Diageo PLC--Sponsored ADR ............... 26,000 1,202,500
Dura Pharmaceuticals, Inc.* ............. 69,000 1,047,937
Earthgrains Co. ......................... 60,500 1,871,718
Elan Corp Plc -Spons ADR* ............... 12,800 890,400
-------------------
* Non-income producing security.
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- -----------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
CONSUMER, NON-CYCLICAL (6.0%) (CONTINUED)
Food Lion, Inc. ......................... 114,500 $1,216,562
Forest Laboratories, Inc.* .............. 21,700 1,154,168
Fort James Corp of Virginia ............. 35,000 1,400,000
Fred Meyer, Inc.* ....................... 25,300 1,524,325
Health Management Associates* ........... 32,200 696,325
IDEC Pharmaceuticals Corp.* ............. 13,000 611,000
Integrated Health Services* ............. 40,000 565,000
Lilly (Eli) & Co. ....................... 22,500 1,999,687
Medimmune, Inc.* ........................ 23,900 2,376,556
Medquist, Inc.* ......................... 53,700 2,121,150
Metzler Group, Inc.* .................... 26,000 1,265,875
Omnicare, Inc. .......................... 49,500 1,720,125
Phillip Morris Cos., Inc. ............... 60,200 3,220,700
SangStat Medical Corp.* ................. 36,000 765,000
Starbucks Corp.* ........................ 37,700 2,115,912
Suiza Foods Corp.* ...................... 30,000 1,528,125
US Foodservice* ......................... 90,650 2,971,850
Williams-Sonoma, Inc.* .................. 47,300 1,906,781
----------
44,516,483
----------
ENERGY (1.2%)
Amoco Corp. ............................. 33,000 1,992,375
Elf Aquitaine--ADR ...................... 44,000 2,491,500
Schlumberger, Ltd. ...................... 23,300 1,074,712
Shell Transport & Trading-ADR ........... 42,700 1,587,906
USX-Marathon Group ...................... 67,700 2,039,462
----------
9,185,955
----------
FINANCIAL (8.3%)
American Int'l. Group, Inc. ............. 42,700 4,125,887
Aon Corp. ............................... 30,600 1,694,475
Arden Realty Group ...................... 54,100 1,254,443
ARM Financial Group, Inc. ............... 56,000 1,242,500
Bankamerica Corp. ....................... 46,863 2,817,637
Chicago Title Corp. ..................... 28,000 1,314,250
ChoicePoint, Inc.* ...................... 8,200 528,900
Citigroup Inc. .......................... 112,100 5,548,950
Commerce Bancshares, Inc. ............... 7,604 323,161
Cullen/Frost Bankers, Inc. .............. 20,000 1,097,500
Dime Bancorp, Inc. ...................... 46,800 1,237,275
Equity Residential Prop. Tr. ............ 28,600 1,156,512
Finova Group, Inc ....................... 32,400 1,747,575
First Union Corp. ....................... 41,400 2,517,637
Fleet Financial Group, Inc. ............. 45,200 2,019,875
Frontier Insurance Group, Inc. .......... 40,000 515,000
Glenborough Realty Trust, Inc. .......... 60,000 1,222,500
HCC Insurance Holdings, Inc. ............ 64,000 1,128,000
Heller Financial, Inc. .................. 65,000 1,909,375
Horace Mann Educators Corp. ............. 48,000 1,368,000
Household International Corp. ........... 50,598 2,004,945
Keystone Financial, Inc. ................ 28,000 1,036,000
Kimco Realty Corp ....................... 29,000 1,150,937
Loews Corp. ............................. 20,100 1,974,825
Mack-Cali Realty Corp. .................. 38,000 1,173,250
Morgan Stanley Dean Witter .............. 40,000 2,840,000
National City Corp. ..................... 17,980 1,303,550
Natl. Commerce Bancorporation ........... 35,000 658,437
North Fork Bancorporation, Inc. ......... 51,000 1,220,812
Oriental Financial Group ................ 62,400 1,953,900
Providian Financial Corp. ............... 24,300 1,822,500
Public Storage, Inc. .................... 40,000 1,082,500
SL Green Realty Corp. ................... 66,000 1,427,250
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
FINANCIAL (8.3%) (CONTINUED)
Sovereign Bancorp, Inc. ................. 23,000 $ 327,750
Spieker Pptys, Inc ...................... 33,000 1,142,625
Summit Bancorp .......................... 25,000 1,092,187
Telebanc Financial Corp.* ............... 28,000 952,000
Torchmark Corp. ......................... 22,100 780,406
Waddell & Reed Financial, Inc. .......... 6,665 155,501
Washington Mutual, Inc. ................. 47,629 1,818,832
------------
60,687,659
------------
INDUSTRIAL (2.6%)
AFC Cable Systems, Inc.* ................ 20,100 675,862
BISYS Group, Inc.* ...................... 30,400 1,569,400
Burlington Northern Santa Fe ............ 51,633 1,742,613
Covenant Transport, Inc. Cl A* .......... 57,000 1,018,875
Dycom Industries, Inc.* ................. 10,500 599,812
First Data Corp. ........................ 47,600 1,508,325
Heico Corp. ............................. 10,800 340,875
Hooper Holmes, Inc. ..................... 41,750 1,210,750
Kansas City Southern Inds. .............. 33,200 1,633,025
Pittway Corp. ........................... 12,000 396,750
QRS Corp.* .............................. 17,800 854,400
Semtech Corp.* .......................... 30,000 1,076,250
Sherwin-Williams Co. .................... 43,200 1,269,000
Siebel Systems, Inc.* ................... 13,400 454,762
Swift Transportation Co., Inc.* ......... 37,000 1,037,158
Tetra Tech, Inc.* ....................... 45,900 1,242,168
U.S. Xpress Enterprises, Inc. Cl A* ..... 38,000 570,000
Williams Cos., Inc. ..................... 40,000 1,247,500
Young & Rubicam, Inc.* .................. 11,500 372,312
------------
18,819,837
------------
TECHNOLOGY (12.9%)
3Com Corp.* ............................. 110,000 4,929,375
Altera Corp.* ........................... 16,000 974,000
Alza Corp.* ............................. 41,400 2,163,150
Applied Materials, Inc.* ................ 66,800 2,851,525
Ascend Communications, Inc.* ............ 12,000 789,000
ASM Lithography Holding NV* ............. 22,800 695,400
At Home Corp--Ser A* .................... 12,100 898,425
AT&T Corp. .............................. 18,000 1,354,500
Atmel Corp.* ............................ 76,200 1,166,812
Centocor, Inc.* ......................... 19,300 870,912
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
TECHNOLOGY (12.9%) (CONTINUED)
Ceridian Corp.* ......................... 22,700 $ 1,584,743
Ciena Corp.* ............................ 69,000 1,009,125
Cisco Systems, Inc.* .................... 240,000 22,275,000
Citrix Systems, Inc.* ................... 17,600 1,708,300
Compaq Computer Corp. ................... 235,000 9,855,312
Dionex Corp.* ........................... 33,000 1,208,625
Excite, Inc.* ........................... 18,600 782,362
Hewlett-Packard Co. ..................... 30,500 2,083,531
INKTOMI CORP* ........................... 2,600 336,375
Intel Corp. ............................. 90,000 10,670,625
Intl. Business Machines Corp. ........... 15,852 2,928,657
Intuit, Inc.* ........................... 11,300 819,250
Linear Technology Corp. ................. 63,900 5,723,043
Maxim Integrated Products, Inc.* ........ 79,200 3,460,050
Maxtor Corp.* ........................... 27,800 389,200
Newbridge Networks Corp.* ............... 11,800 358,425
Novellus Systems, Inc.* ................. 19,000 940,500
Parametric Technology Corp.* ............ 78,400 1,283,800
Raytheon Co. Cl B ....................... 48,076 2,560,047
Sanmina Corp.* .......................... 12,900 806,250
Teradyne, Inc.* ......................... 27,000 1,144,125
Visual Networks, Inc.* .................. 10,000 375,000
Xerox Corp. ............................. 31,000 3,658,000
Xilinx, Inc.* ........................... 32,000 2,084,000
------------
94,737,444
------------
UTILITIES (1.4%)
AES Corp.* .............................. 9,000 426,375
CILCORP, Inc. ........................... 8,000 489,500
Commonwealth Energy System .............. 12,000 486,000
Consolidated Natural Gas Co. ............ 21,000 1,134,000
Entergy Corp. ........................... 61,300 1,907,962
MCI WorldCom, Inc.* ..................... 37,441 2,686,391
MDU Resources Group ..................... 15,000 394,688
Montana Pwr. Co. ........................ 15,000 848,437
SBC Communications, Inc. ................ 27,400 1,469,352
SIGCORP, Inc. ........................... 12,000 429,000
------------
10,271,705
------------
TOTAL ACTIVE ASSETS -- COMMON STOCKS
(Cost: $200,677,628) 39.8%........................ 292,086,069
------------
</TABLE>
- ---------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
RATE MATURITY FACE AMOUNT VALUE
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
ACTIVE ASSETS (CONTINUED):
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT (0.3%)
U.S. Treasury Bill ............................. 4.42% 01/21/99 $ 200,000 $ 199,508
U.S. Treasury Bill ............................. 4.45 01/21/99 1,400,000 1,396,527
------------
1,596,035
------------
COMMERCIAL PAPER (1.1%)
Duke Energy Corp ............................... 5.25 01/04/99 185,000 184,919
Ford Motor Credit Co. .......................... 6.09 01/04/99 2,000,000 1,998,984
Grainger (WW) .................................. 5.00 01/07/99 400,000 399,667
Koch Industries ................................ 5.20 01/04/99 5,765,000 5,762,502
------------
8,346,072
------------
TOTAL ACTIVE ASSETS -- SHORT-TERM DEBT SECURITIES
(Cost: $9,942,107) 1.4%........................................................... 9,942,107
------------
TOTAL ACTIVE ASSETS
(Cost: $210,619,735) 41.2%........................................................ 302,028,176
------------
TOTAL INVESTMENTS
(Cost: $403,576,469) 100.0%....................................................... $733,352,393
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS:
COMMON STOCKS
3Com Corp. ................................. 13,802 $ 618,502
Abbott Laboratories ........................ 58,812 2,881,788
Adobe Systems, Inc. ........................ 2,586 120,896
Advanced Micro Devices, Inc. ............... 5,564 161,008
Aeroquip-Vickers, Inc. ..................... 1,095 32,782
AES Corp. .................................. 6,826 323,382
Aetna, Inc. ................................ 5,540 435,583
Air Products & Chemicals, Inc. ............. 9,090 363,600
AirTouch Communications, Inc. .............. 22,216 1,602,329
Alberto-Culver Co. Cl B .................... 2,207 58,899
Albertson's, Inc. .......................... 9,540 607,579
Alcan Aluminum Ltd. ........................ 8,827 238,881
Alcoa, Inc. ................................ 7,114 530,438
Allegheny Teledyne, Inc. ................... 7,631 155,959
Allergan, Inc. ............................. 2,551 165,177
AlliedSignal, Inc. ......................... 21,704 961,759
Allstate Corp. ............................. 31,796 1,228,121
Alltel Corp. ............................... 10,640 636,405
Alza Corp. ................................. 3,354 175,247
Amerada Hess Corp. ......................... 3,547 176,463
Ameren Corp. ............................... 5,325 227,311
American Electric Power, Inc. .............. 7,391 347,839
American Express Co. ....................... 17,520 1,791,420
American General Corp. ..................... 9,845 767,910
American Greetings Corp. Cl A .............. 2,825 116,002
American Home Products Corp. ............... 51,107 2,877,963
American Int'l. Group, Inc. ................ 40,730 3,935,536
American Stores Co. ........................ 10,608 391,833
Ameritech Corp. ............................ 42,711 2,706,810
Amgen, Inc. ................................ 9,861 1,031,091
Amoco Corp. ................................ 37,032 2,235,807
AMP, Inc. .................................. 8,516 443,364
AMR Corp. .................................. 7,077 420,197
Anadarko Petroleum Corp. ................... 4,658 143,816
Andrew Corp. ............................... 3,436 56,694
Anheuser-Busch Cos., Inc. .................. 18,521 1,215,441
Aon Corp. .................................. 6,545 362,429
Apache Corp. ............................... 3,827 96,871
Apple Computer, Inc. ....................... 5,163 211,360
Applied Materials, Inc. .................... 14,215 606,803
Archer-Daniels-Midland Co. ................. 23,250 399,609
Armco, Inc. ................................ 4,186 18,314
Armstrong World Inds., Inc. ................ 1,554 93,726
Asarco, Inc. ............................... 1,539 23,181
Ascend Communications, Inc. ................ 8,385 551,314
Ashland, Inc. .............................. 2,948 142,610
Associates First Capital Corp. ClA ......... 28,004 1,186,670
AT&T Corp. ................................. 70,001 5,267,575
Atlantic Richfield Co. ..................... 12,453 812,558
Autodesk, Inc. ............................. 1,815 77,478
Automatic Data Processing, Inc ............. 11,683 936,831
AutoZone, Inc. ............................. 5,921 195,023
Avery Dennison Corp. ....................... 4,552 205,125
Avon Products, Inc. ........................ 10,226 452,501
Baker Hughes, Inc. ......................... 12,328 218,052
Ball Corp. ................................. 1,178 53,894
Baltimore Gas & Electric Co. ............... 5,739 177,192
Banc One Corp. ............................. 45,293 2,312,774
Bank of New York Co., Inc. ................. 29,478 1,186,490
Bankamerica Corp. .......................... 67,068 4,032,464
BankBoston Corp. ........................... 11,398 443,810
Bankers Trust New York Corp. ............... 3,693 315,521
Bard (C.R.), Inc. .......................... 2,204 109,098
Barrick Gold Corp. ......................... 14,476 282,282
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Battle Mountain Gold Co. ................... 8,919 $ 36,791
Bausch & Lomb, Inc. ........................ 2,158 129,480
Baxter International, Inc. ................. 11,077 712,390
BB & T Corp. ............................... 11,399 459,522
Bear Stearns Cos., Inc. .................... 4,415 165,011
Becton Dickinson & Co. ..................... 9,556 407,922
Bell Atlantic Corp. ........................ 60,249 3,193,197
BellSouth Corp. ............................ 75,786 3,779,827
Bemis, Inc. ................................ 2,072 78,607
Berkshire Hathaway, Inc. Cl A .............. 10 718,900
Bestfoods .................................. 11,208 596,826
Bethlehem Steel Corp. ...................... 4,979 41,699
Biomet, Inc. ............................... 4,345 174,886
Black & Decker Corp. ....................... 3,405 190,893
Block (H. & R.), Inc. ...................... 4,068 183,060
BMC Software, Inc. ......................... 8,352 372,186
Boeing Co. ................................. 38,719 1,263,207
Boise Cascade Corp. ........................ 2,186 67,766
Boston Scientific Corp. .................... 15,090 404,601
Briggs & Stratton Corp. .................... 936 46,683
Bristol-Myers Squibb Co. ................... 38,504 5,152,317
Brown-Forman Corp. Cl B .................... 2,672 202,237
Browning-Ferris Inds., Inc. ................ 6,744 191,783
Brunswick Corp. ............................ 3,859 95,510
Burlington Northern Santa Fe Corp. ......... 18,348 619,245
Burlington Resources, Inc. ................. 6,873 246,139
Cabletron Systems, Inc. .................... 6,140 51,423
Campbell Soup Co. .......................... 17,428 958,540
Capital One Financial Corp. ................ 2,545 292,675
Cardinal Health, Inc. ...................... 7,770 589,549
Carolina Power & Light Co. ................. 5,874 276,445
Case Corp. ................................. 2,896 63,169
Caterpillar, Inc. .......................... 13,900 639,400
CBS Corp. .................................. 27,364 896,171
Cendant Corp. .............................. 33,037 629,768
Centex Corp. ............................... 2,308 104,004
Central & South West Corp. ................. 8,239 226,058
Ceridian Corp. ............................. 2,819 196,801
Champion International Corp. ............... 3,733 151,187
Charles Schwab Corp. ....................... 15,540 873,154
Chase Manhattan Corp. ...................... 32,777 2,230,885
Chevron Corp. .............................. 25,284 2,096,992
Chubb Corp. ................................ 6,315 409,686
CIGNA Corp. ................................ 8,002 618,655
Cincinnati Financial Corp .................. 6,472 237,037
CINergy Corp. .............................. 6,123 210,478
Circuit City Group, Inc. ................... 3,832 191,361
Cisco Systems, Inc. ........................ 61,193 5,679,475
Citigroup Inc. ............................. 88,046 4,358,277
Clear Channel Communications, Inc. ......... 9,622 524,399
Clorox Co. ................................. 4,032 470,988
Coastal Corp. .............................. 8,245 288,060
Coca-Cola Co. .............................. 95,530 6,388,569
Coca-Cola Enterprises, Inc. ................ 15,188 542,971
Colgate-Palmolive Co. ...................... 11,347 1,053,853
Columbia Energy Group ...................... 3,232 186,648
Columbia/HCA Healthcare Corp. .............. 24,975 618,131
Comcast Corp. Cl A ......................... 14,312 839,936
Comerica, Inc. ............................. 6,078 414,444
Compaq Computer Corp. ...................... 65,880 2,762,843
Computer Associates Intl., Inc ............. 20,859 889,115
Computer Sciences Corp. .................... 6,051 389,911
Conagra, Inc. .............................. 18,963 597,335
Conseco, Inc. .............................. 12,023 367,453
</TABLE>
The accompanying notes are an integral part of these financial statements.
47
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Consolidated Edison, Inc. ........................ 9,139 $ 483,225
Consolidated Natural Gas Co. ..................... 3,718 200,772
Consolidated Stores Corp. ........................ 4,181 84,404
Cooper Industries, Inc. .......................... 4,009 191,179
Cooper Tire & Rubber Co. ......................... 3,057 62,477
Coors (Adolph) Co. Cl B .......................... 1,408 79,464
Corning Inc. ..................................... 9,007 405,315
Costco Co. ....................................... 8,370 604,209
Countrywide Credit Industries Inc. ............... 4,213 211,440
Crane Co. ........................................ 2,662 80,359
Crown Cork & Seal, Inc. .......................... 4,829 148,794
CSX Corp. ........................................ 8,503 352,875
Cummins Engine Co., Inc. ......................... 1,490 52,895
CVS Corp. ........................................ 15,112 831,160
Cyprus Amax Minerals Co. ......................... 3,635 36,350
Dana Corp. ....................................... 6,401 261,641
Danaher Corp. .................................... 5,191 281,936
Darden Restaurants, Inc. ......................... 5,540 99,720
Data General Corp. ............................... 1,907 31,346
Dayton-Hudson Corp. .............................. 16,965 920,351
Deere & Co. ...................................... 9,243 306,174
Dell Computer Corp. .............................. 49,352 3,611,950
Delta Air Lines, Inc. ............................ 5,534 287,768
Deluxe Corp. ..................................... 3,137 114,697
Dillard's Inc. Cl A .............................. 4,178 118,551
Disney (Walt) Co. ................................ 79,375 2,381,250
Dollar General Corp. ............................. 6,983 164,973
Dominion Resources, Inc. ......................... 7,592 354,926
Donnelley (R.R.) & Sons Co. ...................... 5,263 230,585
Dover Corp. ...................................... 8,654 316,953
Dow Chemical Co. ................................. 8,578 780,062
Dow Jones & Co., Inc. ............................ 3,615 173,972
DTE Energy Co. ................................... 5,630 241,386
Du Pont (E.I.) de Nemours & Co ................... 43,631 2,315,170
Duke Energy Corp. ................................ 13,988 896,106
Dun & Bradstreet Corp. ........................... 6,662 210,269
Eastern Enterprises .............................. 793 34,694
Eastman Chemical Co. ............................. 3,071 137,427
Eastman Kodak Co. ................................ 12,524 901,728
Eaton Corp. ...................................... 2,771 195,875
Ecolab Inc. ...................................... 4,997 180,829
Edison International ............................. 13,668 380,996
EG&G, Inc. ....................................... 1,763 49,033
Electronic Data Systems Corp. .................... 19,083 958,921
EMC Corp. ........................................ 19,448 1,653,080
Emerson Electric Co. ............................. 17,182 1,039,511
Engelhard Corp. .................................. 5,610 109,395
Enron Corp. ...................................... 12,749 727,490
Entergy Corp. .................................... 9,563 297,648
Equifax, Inc. .................................... 5,740 196,236
Exxon Corp. ...................................... 94,217 6,889,618
FDX Corp. ........................................ 5,710 508,190
Federated Department Stores, Inc. ................ 7,941 345,930
Federal Home Loan Mortgage Corp. ................. 26,337 1,697,090
Fifth Third Bancorp .............................. 10,397 741,436
First Data Corp. ................................. 17,328 549,081
First Union Corp. ................................ 38,395 2,334,896
FirstEnergy Corp. ................................ 9,187 299,152
Fleet Financial Group, Inc. ...................... 22,058 985,717
Fleetwood Enterprises, Inc. ...................... 1,508 52,403
Fluor Corp. ...................................... 2,936 124,964
FMC Corp. ........................................ 1,346 75,376
Federal National Mortgage Association ............ 40,243 2,977,982
Ford Motor Co. ................................... 46,892 2,751,974
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Fort James Corp. ................................. 8,554 $ 342,160
Fortune Brands, Inc. ............................. 6,713 212,299
Foster Wheeler Corp. ............................. 1,581 20,849
FPL Group, Inc. .................................. 7,043 434,025
Franklin Resources, Inc. ......................... 9,818 314,176
Fred Meyer, Inc. ................................. 5,936 357,644
Freeport-McMoran Copper & Gold. Inc. Cl
B .............................................. 7,021 73,282
Frontier Corp. ................................... 6,645 225,930
Fruit of the Loom, Inc. Cl A ..................... 2,792 38,565
Gannett Co., Inc. ................................ 10,913 703,889
Gap, Inc. ........................................ 22,456 1,263,150
Gateway 2000, Inc. ............................... 6,039 309,121
General Dynamics Corp. ........................... 4,905 287,556
General Electric Co. ............................. 127,068 12,968,878
General Instrument Corp. ......................... 6,487 220,153
General Mills, Inc. .............................. 5,927 460,824
General Motors Corp. ............................. 25,390 1,816,972
Genuine Parts Co. ................................ 6,946 232,257
Georgia-Pacific Group ............................ 3,409 199,640
Gillette Co. ..................................... 42,989 2,076,906
Golden West Financial Corp. ...................... 2,223 203,821
Goodrich (B.F.) Co. .............................. 2,830 101,526
Goodyear Tire & Rubber Co. ....................... 6,103 307,820
GPU, Inc. ........................................ 4,963 219,303
Grainger (W.W.), Inc. ............................ 3,793 157,884
Great Atlantic & Pac. Tea Inc. ................... 1,485 43,993
Great Lakes Chemical Corp. ....................... 2,291 91,640
GTE Corp. ........................................ 37,358 2,428,270
Guidant Corp. .................................... 5,853 645,293
Halliburton Co. .................................. 17,018 504,158
Harcourt General, Inc. ........................... 2,750 146,266
Harnischfeger Industries, Inc. ................... 1,855 18,898
Harrah's Entertainment, Inc. ..................... 3,924 61,558
Harris Corp. ..................................... 3,105 113,721
Hartford Financial Services Group ................ 9,147 501,942
Hasbro, Inc. ..................................... 5,156 186,261
HBO & Co. ........................................ 18,027 517,150
HCR Manor Care, Inc. ............................. 4,210 123,669
HealthSouth Corp. ................................ 16,342 252,280
Heinz (H.J.) Co. ................................. 14,030 794,449
Helmerich & Payne, Inc. .......................... 1,952 37,820
Hercules, Inc. ................................... 3,683 100,822
Hershey Food Corp. ............................... 5,555 345,452
Hewlett-Packard Co. .............................. 40,201 2,746,231
Hilton Hotels Corp. .............................. 10,106 193,277
Home Depot, Inc. ................................. 60,575 3,706,433
Homestake Mining Co. ............................. 9,263 85,104
Honeywell, Inc. .................................. 4,896 368,730
Household International Corp. .................... 18,710 741,384
Houston Industries, Inc. ......................... 11,024 354,146
Humana, Inc. ..................................... 6,460 115,069
Huntington Bancshares, Inc. ...................... 8,210 246,813
Ikon Office Solutions, Inc. ...................... 5,255 44,996
Illinois Tool Works, Inc. ........................ 9,698 562,484
IMS Health, Inc. ................................. 6,207 468,241
Inco Ltd. ........................................ 6,443 68,054
Ingersoll Rand Co. ............................... 6,423 301,480
Intel Corp. ...................................... 64,601 7,659,256
International Paper Co. .......................... 11,934 534,792
Interpublic Group of Cos., Inc. .................. 5,293 422,117
International Business Machines Corp. ............ 36,159 6,680,375
International Flavors & Fragrances, Inc. ......... 4,182 184,792
ITT Industries, Inc. ............................. 4,022 159,875
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Jefferson-Pilot Corp. ...................... 4,129 $ 309,675
Johnson & Johnson .......................... 52,187 4,377,185
Johnson Controls, Inc. ..................... 3,284 193,756
Jostens, Inc. .............................. 1,546 37,605
Kaufman & Broad Home Corp. ................. 1,522 43,758
Kellogg Co. ................................ 15,881 541,939
Kerr-McGee Corp. ........................... 1,852 70,839
KeyCorp .................................... 17,640 564,480
Kimberly Clark Corp. ....................... 21,000 1,144,500
King World Productions, Inc. ............... 2,838 83,544
KLA Tencor Corp. ........................... 3,372 146,261
Kmart Corp. ................................ 18,937 289,973
Knight-Ridder, Inc. ........................ 3,045 155,676
Kohl's Corp. ............................... 6,129 376,550
Kroger Co. ................................. 9,938 601,249
Laidlaw, Inc. .............................. 12,756 128,357
Lehman Brothers Holdings, Inc. ............. 4,600 202,688
Lilly (Eli) & Co. .......................... 42,617 3,787,586
Limited, Inc. .............................. 8,810 256,591
Lincoln National Corp. ..................... 3,899 318,987
Liz Claiborne, Inc. ........................ 2,563 80,895
Lockheed Martin Corp. ...................... 7,589 643,168
Loews Corp. ................................ 4,463 438,490
Longs Drug Stores Corp. .................... 1,499 56,213
Louisiana-Pacific Corp. .................... 4,262 78,048
Lowe's Companies, Inc. ..................... 13,576 694,922
LSI Logic Corp. ............................ 5,463 88,091
Lucent Technologies, Inc. .................. 51,035 5,613,850
Mallinckrodt, Inc. ......................... 2,840 87,508
Marriott International, Inc. Cl A .......... 9,915 287,535
Marsh & McLennan Cos., Inc. ................ 9,960 582,038
Masco Corp. ................................ 13,194 379,328
Mattel, Inc. ............................... 11,391 259,857
May Department Stores Co. .................. 8,960 540,960
Maytag Corp. ............................... 3,487 217,066
MBIA Inc. .................................. 3,789 248,416
MBNA Corp. ................................. 29,176 727,577
McDermott International, Inc. .............. 2,343 57,843
McDonald's Corp. ........................... 26,219 2,009,031
McGraw-Hill Cos., Inc. ..................... 3,862 393,441
MCI WorldCom, Inc. ......................... 71,051 5,097,909
Mead Corp. ................................. 4,039 118,393
MediaOne Group, Inc. ....................... 23,631 1,110,657
Medtronic, Inc. ............................ 19,003 1,410,973
Mellon Bank Corp. .......................... 10,099 694,306
Mercantile Bancorporation .................. 6,098 281,270
Merck & Co., Inc. .......................... 46,157 6,816,812
Meredith Corp. ............................. 2,049 77,606
Merrill Lynch & Co., Inc. .................. 13,746 917,546
MGIC Investment Corp. ...................... 4,429 176,330
Micron Technology, Inc. .................... 8,256 417,444
Microsoft Corp. ............................ 96,690 13,409,653
Milacron, Inc. ............................. 1,534 29,530
Millipore Corp. ............................ 1,700 48,344
Minnesota Mining & Mfg. Co. ................ 15,553 1,106,207
Mirage Resorts, Inc. ....................... 6,968 104,085
Mobil Corp. ................................ 30,221 2,633,005
Monsanto Co. ............................... 24,279 1,153,253
Moore Corp., Ltd. .......................... 3,433 37,763
Morgan (J.P.) & Co., Inc. .................. 6,775 711,798
Morgan Stanley Dean Witter Co. ............. 22,386 1,589,406
Morton International, Inc. ................. 4,702 115,199
Motorola, Inc. ............................. 23,196 1,416,406
NACCO Industries, Inc. Cl A ................ 317 29,164
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Nalco Chemical Co. ......................... 2,569 $ 79,639
National City Corp. ........................ 12,738 923,505
National Semiconductor Corp. ............... 6,374 86,049
National Service Industries ................ 1,647 62,586
Navistar International Corp. ............... 2,678 76,323
New Century Energies, Inc. ................. 4,322 210,698
New York Times Co. Cl A .................... 7,067 245,137
Newell Co. ................................. 6,184 255,090
Newmont Mining Corp. ....................... 6,489 117,208
Nextel Communications, Inc. Cl A ........... 11,088 261,954
Niagara Mohawk Power Corp. ................. 7,270 117,229
Nicor, Inc. ................................ 1,862 78,670
Nike, Inc. Cl B ............................ 11,167 452,961
Nordstrom, Inc. ............................ 5,919 205,315
Norfolk Southern Corp. ..................... 14,699 465,775
Northern States Power Co. .................. 5,850 162,338
Northern Telecom, Ltd. ..................... 25,369 1,271,631
Northern Trust Corp. ....................... 4,328 377,889
Northrop Grumman Corp. ..................... 2,627 192,099
Novell, Inc. ............................... 13,647 247,352
Nucor Corp. ................................ 3,417 147,785
Occidental Petroleum Corp. ................. 13,701 231,204
Omnicom Group, Inc. ........................ 6,607 383,206
Oneok, Inc. ................................ 1,225 44,253
Oracle Corp. ............................... 37,781 1,629,306
Oryx Energy Co. ............................ 4,120 55,363
Owens Corning .............................. 2,095 74,242
Owens Illinois, Inc. ....................... 5,987 183,352
Paccar, Inc. ............................... 3,031 124,650
PacifiCorp ................................. 11,537 242,998
Pall Corp. ................................. 4,816 121,905
Parametric Technology Corp. ................ 10,500 171,938
Parker Hannifin Corp. ...................... 4,292 140,563
Paychex, Inc. .............................. 6,333 325,754
Peco Energy Co. ............................ 8,637 359,515
Penney (J.C.) Co., Inc. .................... 9,741 456,609
PennzEnergy Co. ............................ 1,851 30,194
Pennzoil-Quaker State Co. .................. 1,851 27,302
Peoples Energy Corp. ....................... 1,370 54,629
Peoplesoft, Inc. ........................... 8,943 169,358
Pep Boys-Manny, Moe & Jack ................. 2,463 38,638
PepsiCo, Inc. .............................. 56,860 2,327,706
Perkin-Elmer Corp. ......................... 1,906 185,954
Pfizer, Inc. ............................... 50,293 6,308,628
PG & E Corp. ............................... 14,805 466,358
Pharmacia & Upjohn, Inc. ................... 19,716 1,116,419
Phelps Dodge Corp. ......................... 2,277 115,842
Phillip Morris Cos., Inc. .................. 94,285 5,044,248
Phillips Petroleum Co. ..................... 9,867 420,581
Pioneer Hi-Bred Intl., Inc. ................ 9,479 255,933
Pitney Bowes, Inc. ......................... 10,617 701,386
Placer Dome, Inc. .......................... 9,703 111,585
PNC Bank Corp. ............................. 11,675 631,909
Polaroid Corp. ............................. 1,721 32,161
Potlatch Corp. ............................. 1,126 41,521
PP&L Resources, Inc. ....................... 5,844 162,902
PPG Industries, Inc. ....................... 6,884 400,993
Praxair, Inc. .............................. 6,125 215,906
Proctor & Gamble Co. ....................... 51,419 4,695,197
Progressive Corp. of Ohio .................. 2,814 476,621
Provident Companies, Inc. .................. 5,251 217,917
Providian Financial Corp. .................. 7,333 549,975
Public Svc. Enterprise Group, Inc. ......... 9,002 360,080
Pulte Corp. ................................ 1,655 46,030
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Quaker Oats Co. ................................. 5,377 $ 319,932
Ralston Purina Co. .............................. 12,295 398,051
Raychem Corp. ................................... 3,254 105,145
Raytheon Co. Cl B ............................... 13,149 700,184
Reebok International Ltd. ....................... 2,186 32,517
Regions Financial Corp. ......................... 8,571 345,518
Republic New York Corp. ......................... 4,192 190,998
Reynolds Metals Co. ............................. 2,498 131,613
Rite-Aid Corp. .................................. 10,006 495,922
RJR Nabisco Holdings Corp. ...................... 12,607 374,270
Rockwell Intl., Corp. ........................... 7,409 359,800
Rohm & Haas Co. ................................. 6,452 194,367
Rowan Cos., Inc. ................................ 3,372 33,720
Royal Dutch Petroleum Co. ....................... 83,221 3,984,205
Rubbermaid, Inc. ................................ 5,814 182,778
Russell Corp. ................................... 1,410 28,641
Ryder System, Inc. .............................. 2,884 74,984
Safeco Corp. .................................... 5,280 226,710
Safeway, Inc. ................................... 18,870 1,149,891
Sara Lee Corp. .................................. 35,398 997,781
SBC Communications, Inc. ........................ 75,914 4,070,888
Schering-Plough Corp. ........................... 56,948 3,146,377
Schlumberger, Ltd. .............................. 21,092 972,869
Scientific-Atlanta, Inc. ........................ 3,059 69,783
Seagate Technology .............................. 9,433 285,348
Seagram, Ltd. ................................... 15,276 580,488
Sealed Air Corp. ................................ 3,241 165,494
Sears Roebuck & Co. ............................. 14,846 630,955
Sempra Energy ................................... 9,286 235,632
Service Corp. International ..................... 9,935 378,151
Shared Medical Systems Corp. .................... 1,021 50,922
Sherwin-Williams Co. ............................ 6,734 197,811
Sigma-Aldrich Corp. ............................. 3,903 114,651
Silicon Graphics, Inc. .......................... 7,327 94,335
SLM Holding Corp. ............................... 6,422 308,256
Snap-On, Inc. ................................... 2,297 79,964
Sonat, Inc. ..................................... 4,271 115,584
Southern Co. .................................... 27,066 786,606
Southwest Airlines Co. .......................... 12,991 291,486
Springs Industries, Inc. ........................ 740 30,664
Sprint Corp. (PCS Group) ........................ 16,098 372,266
Sprint Corp. (FON Group) ........................ 16,709 1,405,645
St. Jude Medical, Inc. .......................... 3,260 90,261
St. Paul Companies, Inc. ........................ 9,104 316,364
Stanley Works ................................... 3,444 95,571
Staples, Inc. ................................... 12,079 527,701
State Street Corp. .............................. 6,257 435,253
Summit Bancorp .................................. 6,890 301,007
Sun America, Inc. ............................... 8,413 682,505
Sun Microsystems, Inc. .......................... 14,702 1,258,859
Sunoco, Inc. .................................... 3,640 131,268
Suntrust Banks, Inc. ............................ 8,193 626,765
Supervalu, Inc. ................................. 4,666 130,648
Synovus Financial Corp. ......................... 10,209 248,844
Sysco Corp. ..................................... 13,102 359,486
Tandy Corp. ..................................... 3,931 161,908
Tektronix, Inc. ................................. 1,961 58,953
Tele-Communications, Inc. (TCI Gp. "A") ......... 20,848 1,153,155
Tellabs, Inc. ................................... 7,506 514,630
Temple-Inland, Inc. ............................. 2,176 129,064
Tenet Healthcare Corp. .......................... 11,963 314,029
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Tenneco, Inc. ................................... 6,584 $ 224,268
Texaco, Inc. .................................... 20,797 1,099,641
Texas Instruments, Inc. ......................... 15,156 1,296,785
Texas Utilities Co. ............................. 10,847 506,419
Textron, Inc. ................................... 6,140 466,256
Thermo Electron Corp. ........................... 6,184 104,742
Thomas & Betts Corp. ............................ 2,144 92,862
Time Warner, Inc. ............................... 47,549 2,951,010
Times Mirror Co. Cl A ........................... 3,084 172,704
Timken Co. ...................................... 2,411 45,508
TJX Companies ................................... 12,395 359,455
Torchmark Corp. ................................. 5,443 192,206
Toys R Us, Inc. ................................. 10,142 171,146
Transamerica Corp. .............................. 2,443 282,167
Tribune Co. ..................................... 4,602 303,732
Tricon Global Restaurants Inc. .................. 5,911 296,289
TRW, Inc. ....................................... 4,760 267,453
Tupperware Corp. ................................ 2,420 39,779
Tyco International Ltd. ......................... 24,892 1,877,790
U.S. Bancorp .................................... 28,123 998,367
U.S. West, Inc. ................................. 19,467 1,258,055
Unicom Corp. .................................... 8,418 324,619
Unilever N.V. ................................... 24,845 2,060,582
Union Camp Corp. ................................ 2,689 181,508
Union Carbide Corp. ............................. 5,286 224,655
Union Pacific Corp. ............................. 9,598 432,510
Union Pacific Resources Group, Inc. ............. 9,744 88,305
Union Planters Corp. ............................ 5,273 238,933
Unisys Corp. .................................... 9,757 336,007
United Healthcare Corp. ......................... 7,217 310,782
United Technologies Corp. ....................... 8,751 951,671
Unocal Corp. .................................... 9,368 273,429
UNUM Corp. ...................................... 5,366 313,240
US Airways Group, Inc. .......................... 3,387 176,124
UST, Inc. ....................................... 7,204 251,240
USX-Marathon Group .............................. 11,937 359,602
USX-U.S. Steel Group ............................ 3,370 77,510
V F Corp. ....................................... 4,722 221,344
Venator Group, Inc. ............................. 5,237 33,713
Viacom, Inc. Cl B ............................... 13,480 997,520
W.R. Grace & Co. ................................ 2,946 46,215
Wachovia Corp. .................................. 7,857 686,996
Wal-Mart Stores, Inc. ........................... 87,305 7,109,901
Walgreen Co. .................................... 19,276 1,128,851
Warner-Lambert Co. .............................. 31,805 2,391,338
Washington Mutual, Inc. ......................... 23,003 878,427
Waste Management, Inc. .......................... 22,191 1,034,655
Wells Fargo & Company ........................... 62,850 2,510,072
Wendy's International, Inc. ..................... 5,095 111,135
Westvaco Corp. .................................. 3,937 105,561
Weyerhaeuser Co. ................................ 7,722 392,374
Whirlpool Corp. ................................. 2,932 162,360
Willamette Industries, Inc. ..................... 4,323 144,821
Williams Cos., Inc. ............................. 16,454 513,159
Winn-Dixie Stores, Inc. ......................... 5,765 258,704
Worthington Industries, Inc. .................... 3,754 46,925
Wrigley (Wm.) Jr. Co. ........................... 4,510 403,927
Xerox Corp. ..................................... 12,739 1,503,202
-----------
TOTAL INDEXED ASSETS -- COMMON STOCKS
(Cost: $261,989,198) 93.8% .................... 384,971,838
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C>
ACTIVE PORTION:
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT (0.3%)
U.S. Treasury Bill(a) ............. 4.18% 02/18/99 $ 500,000 $ 497,183
U.S. Treasury Bill(a) ............. 4.29 02/04/99 500,000 497,964
U.S. Treasury Bill(a) ............. 4.35 04/01/99 150,000 148,368
------------
1,143,515
------------
COMMERCIAL PAPER (5.9%)
Abbott Laboratories ............... 5.50 01/08/99 4,437,000 4,432,249
IBM Credit Corp. .................. 5.65 01/05/99 5,190,000 5,186,736
Lucent Technologies, Inc. ......... 4.95 01/07/99 7,317,000 7,310,963
SBC Communications, Inc. .......... 5.95 01/04/99 7,236,000 7,232,410
------------
24,162,358
------------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $25,305,873) 6.2% ........................................... 25,305,873
------------
TOTAL INVESTMENTS
(Cost: $287,295,071) 100.0% ........................................ $410,277,711
============
</TABLE>
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNDERLYING FACE UNREALIZED
EXPIRATION DATE AMOUNT AT VALUE GAIN
----------------- ----------------- -------------
<S> <C> <C> <C>
PURCHASED
82 S&P 500 Stock Index Futures Contracts .. March 1999 $ 25,532,750 $1,215,938
============ ==========
</TABLE>
The face value of futures purchased and outstanding as percentage of total
investment in securities: 6.2%.
- ---------
(a) This security has been segregated by the Custodian to cover initial margin
requirements on open futures contracts.
The accompanying notes are an integral part of these financial statements.
51
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES:
U.S. GOVERNMENT (2.4%)
U.S. Treasury Note ..................... 6.50% 08/15/05 $ 10,000,000 $ 10,990,600
------------
AGENCIES/OTHER GOVERNMENTS (43.2%)
Connecticut Housing Fin. Auth. ......... 7.63 05/15/21 2,500,000 2,574,443
FHLB ................................... 0.00 07/14/17 25,000,000 6,062,500
FHLB ................................... 0.00 07/07/22 50,000,000 8,539,000
FHLB ................................... 0.00 06/26/17 50,000,000 12,015,500
FHLB ................................... 0.00 07/07/17 125,000,000 30,351,250
FHLMC .................................. 6.50 04/15/08 775,000 780,324
FHLMC .................................. 7.75 07/15/05 73,428 73,474
FHLMC .................................. 7.00 10/15/06 473,325 473,917
FHLMC .................................. 6.38 11/15/06 1,100,000 1,101,716
FHLMC .................................. 6.00 04/15/08 500,000 500,155
FHLMC .................................. 7.00 09/15/16 1,380,361 1,382,087
FHLMC .................................. 0.00 05/22/28 60,000,000 7,968,600
FHLMC .................................. 0.00 08/26/22 250,000,000 39,415,000
FHLMC .................................. 7.50 07/15/20 126,157 126,354
FHLMC .................................. 5.00 08/15/19 1,250,000 1,236,325
FHLMC .................................. 8.00 07/15/06 530,841 549,086
FHLMC .................................. 7.00 12/15/14 179,657 179,319
FHLMC .................................. 7.00 05/15/06 1,000,000 1,005,930
FHLMC .................................. 7.50 04/01/07 214,232 214,541
FHLMC .................................. 8.50 02/15/21 651,300 653,944
FHLMC .................................. 8.50 08/01/02 388,949 397,972
FNMA ................................... 0.00 07/13/17 200,000,000 46,406,000
FNMA ................................... 5.00 04/25/21 600,000 588,558
FNMA ................................... 6.25 01/25/20 850,000 855,576
FNMA ................................... 7.00 12/25/18 500,000 502,030
FNMA ................................... 6.00 06/25/19 900,000 898,587
FNMA ................................... 7.00 10/25/05 1,236,162 1,243,109
FNMA ................................... 8.15 08/25/05 27,775 27,670
FNMA ................................... 9.30 05/25/19 60,778 60,930
FNMA ................................... 7.00 09/25/05 419,064 418,540
New York City .......................... 10.00 08/01/05 1,000,000 2,255,093
New York City .......................... 9.50 06/01/09 5,000,000 5,629,684
Pulaski County Arkansas PFB ............ 7.50 01/01/07 50,679 56,788
Republic of Iceland .................... 6.13 02/01/04 5,000,000 5,184,850
Suffolk County, New York ............... 5.88 11/01/05 4,000,000 4,119,200
Suffolk County, New York ............... 5.80 11/01/04 4,000,000 4,113,360
Tennessee Valley Authority ............. 7.85 06/15/44 10,000,000 10,722,300
------------
198,683,712
------------
BASIC MATERIALS (6.7%)
Fletcher Challenge Ltd. ................ 9.00 09/15/99 2,000,000 2,028,060
Georgia-Pacific Corp. .................. 8.63 04/30/25 7,000,000 7,376,740
Inco Ltd. .............................. 9.60 06/15/22 7,500,000 8,369,250
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
----------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES (CONTINUED):
BASIC MATERIALS (CONTINUED)
Lyondell/Arco Petrochemical .............. 10.25% 11/01/10 $ 7,500,000 $ 7,919,925
Praxair, Inc. ............................ 6.90 11/01/06 5,000,000 5,122,300
30,816,275
CONSUMER, CYCLICAL (8.8%)
Centex Corp. ............................. 8.75 03/01/07 2,000,000 2,143,820
Centex Corp. ............................. 7.38 06/01/05 5,000,000 5,062,450
Fruit of the Loom, Inc. .................. 7.88 10/15/99 1,000,000 1,002,280
Fruit of the Loom, Inc. .................. 7.00 03/15/11 2,500,000 2,344,150
Fruit of the Loom, Inc. .................. 7.38 11/15/23 1,250,000 1,112,038
Gannett Co., Inc. ........................ 5.85 05/01/00 3,500,000 3,526,740
Neiman Marcus Group, Inc. ................ 7.13 06/01/28 2,500,000 2,335,475
Polaroid Corp. ........................... 7.25 01/15/07 3,750,000 3,501,825
Shopko Stores, Inc. ...................... 9.00 11/15/04 5,000,000 5,671,350
Tommy Hilfiger USA, Inc. ................. 6.50 06/01/03 5,000,000 4,927,850
V. F Corp. ............................... 9.25 05/01/22 1,000,000 1,130,040
Valassis Communication, Inc. ............. 9.55 12/01/03 5,000,000 5,736,250
Venator Group, Inc. ...................... 7.00 10/15/02 2,000,000 1,959,600
-----------
40,453,868
-----------
CONSUMER, NON-CYCLICAL (6.9%)
Bausch & Lomb, Inc. ...................... 6.15 08/01/01 5,000,000 4,935,000
Bausch & Lomb, Inc. ...................... 6.38 08/01/03 5,250,000 5,156,603
Bausch & Lomb, Inc. ...................... 6.75 12/15/04 5,000,000 4,945,350
Panamerican Beverages, Inc. .............. 7.25 07/01/09 5,000,000 4,581,470
Ralston Purina Co. ....................... 8.63 02/15/22 7,500,000 9,094,050
Rhone-Poulenc S. A ....................... 7.75 01/15/02 3,000,000 3,121,680
-----------
31,834,153
-----------
ENERGY (3.4%)
Southern Union Co. ....................... 7.60 02/01/24 10,000,000 10,469,900
Tosco Corp. .............................. 8.25 05/15/03 5,000,000 5,398,850
-----------
15,868,750
-----------
FINANCIAL (14.8%)
Bear Stearns Cos., Inc. .................. 6.63 10/01/04 2,000,000 2,054,920
Berkley (W.R.) Corp. ..................... 8.70 01/01/22 5,000,000 5,969,600
Chase Manhattan Corp. .................... 6.88 12/12/12 5,000,000 5,216,100
Citicorp Mortgage Sec., Inc. ............. 6.25 03/25/24 358,687 357,790
Executive Risk, Inc. ..................... 7.13 12/15/07 5,000,000 5,409,550
Fairfax Financial Holdings LTD ........... 8.25 10/01/15 2,500,000 2,574,750
First American Financial ................. 7.55 04/01/28 1,500,000 1,546,275
Harleysville Group Inc. .................. 6.75 11/15/03 2,500,000 2,568,975
Lehman Brothers Holdings, Inc. ........... 0.00 07/28/28 10,000,000 1,154,900
Morgan (J.P.) & Co., Inc. ................ 0.00 04/15/27 32,500,000 4,132,700
Nationwide Health Properties, Inc. ....... 7.90 11/20/06 5,000,000 5,036,350
Progressive Corp. of Ohio ................ 10.00 12/15/00 1,500,000 1,617,465
Prudential Home Mtg. Secs Co. ............ 6.85 10/25/23 60,866 60,618
</TABLE>
The accompanying notes are an integral part of these financial statements.
53
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES (CONTINUED):
FINANCIAL (CONTINUED)
Rank Group Financial .................... 6.75% 11/30/04 $ 5,000,000 $ 4,877,850
Rodamco NV .............................. 7.30 05/15/05 5,000,000 5,318,100
Rodamco NV .............................. 7.75 05/15/15 5,000,000 5,400,800
Sun America, Inc. ....................... 9.95 02/01/12 5,000,000 6,882,750
Triad Guaranty, Inc. .................... 7.90 01/15/28 3,250,000 3,463,158
Vesta Insurance Group, Inc. ............. 8.75 07/15/25 5,000,000 4,404,250
------------
68,046,901
------------
INDUSTRIAL (7.6%)
Clark Equipment Co. ..................... 8.35 05/15/23 5,000,000 6,091,750
Geon Co. ................................ 7.50 12/15/15 3,750,000 3,983,625
Thermo Electron Corp. ................... 4.25 01/01/03 7,500,000 6,675,000
Thermo Instrument Systems, Inc .......... 4.00 01/15/05 10,000,000 8,162,500
Williams Cos., Inc. ..................... 6.50 11/15/02 10,000,000 10,095,300
------------
35,008,175
------------
UTILITIES (4.9%)
New Orleans Public Service .............. 8.00 03/01/06 4,000,000 4,172,800
Pacific Gas & Electric Co. .............. 8.75 01/01/01 2,000,000 2,135,060
Philadelphia Electric Co. ............... 7.13 08/15/23 5,000,000 5,213,800
UtiliCorp United, Inc. .................. 8.00 03/01/23 10,000,000 10,965,900
------------
22,487,560
------------
TOTAL LONG-TERM DEBT SECURITIES (Cost: $440,233,067) 98.7% .................. 454,189,994
------------
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER (1.3%) ..................
Koch Industries ......................... 5.20 01/04/99 3,071,000 3,069,669
PetroFina Delaware, Inc. ................ 5.53 01/05/99 3,000,000 2,998,152
------------
TOTAL SHORT-TERM DEBT SECURITIES (Cost: $6,067,821) 1.3% .................... 6,067,821
------------
TOTAL INVESTMENTS (Cost: $446,300,888) 100.0% ............................... $460,257,815
============
</TABLE>
- ---------
Abbreviations: FHLB = Federal Home Loan Bank
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.
54
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT:
U.S. GOVERNMENT (16.1%)
U.S. Treasury Note ......... 6.13% 07/31/00 $ 1,250,000 $ 1,277,538
U.S. Treasury Note ......... 5.38 02/15/01 2,200,000 2,233,682
-----------
3,511,220
-----------
AGENCIES/OTHER (71.4%)
FHLB ....................... 6.89 06/25/02 82,457 82,685
FHLMC ...................... 7.00 04/15/01 250,000 253,202
FHLMC ...................... 8.02 04/01/02 223,947 228,041
FHLMC ...................... 8.02 05/01/02 363,297 367,580
FHLMC ...................... 8.50 08/01/02 431,084 441,085
FHLMC ...................... 7.75 12/01/02 226,740 229,796
FHLMC ...................... 5.00 07/15/05 80,073 79,823
FHLMC ...................... 7.25 12/15/05 38,159 38,135
FHLMC ...................... 7.00 05/15/06 500,000 502,965
FHLMC ...................... 6.50 09/15/06 500,000 501,875
FHLMC ...................... 7.00 10/15/06 750,000 759,607
FHLMC ...................... 7.50 09/01/07 459,915 468,602
FHLMC ...................... 7.00 03/15/08 441,050 443,114
FHLMC ...................... 6.50 04/15/08 725,000 729,981
FHLMC ...................... 6.00 04/15/08 500,000 500,155
FHLMC ...................... 6.00 09/15/08 198,367 198,119
FHLMC ...................... 8.25 10/01/09 356,410 369,701
FHLMC ...................... 6.00 12/15/17 309,340 309,241
FHLMC ...................... 5.00 08/15/19 600,000 593,436
FHLMC ...................... 7.00 11/15/20 6,401 6,387
FHLMC ...................... 7.95 12/15/20 83,753 84,381
FHLMC ...................... 6.50 05/15/21 157,655 158,838
FHLMC ...................... 6.00 05/15/22 159,978 160,127
FNMA ....................... 0.00 12/01/01 190,337 179,318
FNMA ....................... 8.25 09/25/05 133,476 134,601
FNMA ....................... 7.00 09/25/05 293,345 292,978
FNMA ....................... 8.25 10/01/05 107,090 108,931
FNMA ....................... 7.00 10/25/05 529,784 532,761
FNMA ....................... 7.00 11/25/05 400,000 402,872
FNMA ....................... 8.00 12/25/05 73,330 73,238
FNMA ....................... 7.25 12/25/05 67,537 67,326
FNMA ....................... 7.50 02/25/07 250,000 256,250
FNMA ....................... 6.50 12/18/17 650,000 657,715
FNMA ....................... 6.30 09/25/18 305,000 307,382
FNMA ....................... 6.50 12/25/18 523,171 521,533
FNMA ....................... 7.00 12/25/18 500,000 502,030
FNMA ....................... 6.70 01/18/19 600,000 600,372
FNMA ....................... 5.50 04/25/19 396,644 395,157
FNMA ....................... 6.00 06/25/19 800,000 798,744
FNMA ....................... 6.25 01/25/20 650,000 654,264
FNMA ....................... 5.00 04/25/20 172,316 171,454
FNMA ....................... 6.00 12/25/20 500,000 499,215
</TABLE>
The accompanying notes are an integral part of these financial statements.
55
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT (CONTINUED):
AGENCIES/OTHER (CONTINUED)
FNMA ....................................... 5.00% 04/25/21 $ 620,000 $ 608,177
FNMA ....................................... 6.10 08/25/21 178,841 178,618
GNMA ....................................... 9.50 12/20/03 59,743 62,168
Pulaski County Arkansas PFB ................ 7.50 11/01/07 31,533 35,335
-----------
15,547,315
-----------
CONSUMER, CYCLICAL (2.3%)
Venator Group, Inc. ........................ 7.00 06/01/00 500,000 498,850
-----------
FINANCIAL (3.9%)
Citicorp Mortgage Sec. Inc. ................ 6.25 03/25/24 145,583 145,219
FBC Mortgage Secur. Trust .................. 8.30 08/20/09 83,105 83,728
GE Capital Mtge. Services, Inc. ............ 6.00 09/25/08 122,762 122,186
Norwest Asset Securities Corp. ............. 7.25 11/25/26 14,595 14,541
Prudential Home Mtge. Services Co. ......... 6.75 08/25/08 477,824 477,074
-----------
842,748
-----------
TOTAL INTERMEDIATE-TERM DEBT SECURITIES
(Cost: $20,364,333) 93.7% ................................................... 20,400,133
-----------
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER (6.3%)
Duke Power Co. ............................. 5.25 01/04/99 534,000 533,767
OGE Energy Corp. ........................... 5.95 01/06/99 447,000 446,630
Toyota Motor Credit Corp. .................. 5.64 01/06/99 380,000 379,702
-----------
TOTAL SHORT-TERM DEBT SECURITIES
(Cost: $1,360,099) 6.3% ..................................................... 1,360,099
-----------
TOTAL INVESTMENTS
(Cost: 21,724,432) 100.0% ................................................... $21,760,232
===========
</TABLE>
- ---------
Abbreviations: FHLB = Federal Home Loan Bank
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.
56
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM DEBT:
U.S. GOVERNMENT (6.9%)
U.S. Treasury Note ......................... 5.88% 02/15/04 $1,000,000 $ 1,055,000
-----------
AGENCIES/OTHER GOVERNMENTS (23.1%)
FHLMC ...................................... 8.00 04/15/03 375,918 386,605
FHLMC ...................................... 8.00 07/15/06 265,420 274,543
FHLMC ...................................... 6.38 11/15/06 590,000 590,920
FNMA ....................................... 7.00 11/25/04 96,629 97,867
FNMA ....................................... 6.50 11/25/05 378,318 383,399
FNMA ....................................... 7.00 04/25/07 600,000 611,058
FNMA ....................................... 7.00 03/18/18 500,000 501,250
FNMA ....................................... 6.50 12/25/18 294,283 293,362
New York City Taxable ...................... 9.50 06/01/09 350,000 394,078
-----------
3,533,082
-----------
CONSUMER, CYCLICAL (8.1%)
Fruit of the Loom, Inc. .................... 7.88 10/15/99 250,000 250,570
Tommy Hilfiger USA, Inc. ................... 6.50 06/01/03 500,000 492,785
Venator Group, Inc. ........................ 7.00 10/15/02 500,000 489,900
-----------
1,233,255
-----------
CONSUMER, NON-CYCLICAL (3.2%)
Bausch & Lomb, Inc. ........................ 6.38 08/01/03 250,000 245,552
Bausch & Lomb, Inc. ........................ 6.75 12/15/04 250,000 247,267
-----------
492,819
-----------
FINANCIAL (15.0%)
Bear Stearns Cos., Inc. .................... 9.38 06/01/01 250,000 269,760
Bear Stearns Cos., Inc. .................... 6.63 10/01/04 500,000 513,730
Harleysville Group Inc. .................... 6.75 11/15/03 250,000 256,898
Nationwide Health Properties, Inc. ......... 7.90 11/20/06 250,000 251,818
Rank Group Financial ....................... 6.75 11/30/04 500,000 487,785
Salomon Smith Barney Hldgs. Inc. ........... 6.50 10/15/02 500,000 510,930
-----------
2,290,921
-----------
INDUSTRIAL (11.3%)
Airborne Freight Corp. ..................... 8.88 12/15/02 250,000 271,393
Crown Cork & Seal, Inc. .................... 6.75 04/15/03 500,000 503,920
Thermo Electron Corp. ...................... 4.25 01/01/03 500,000 445,000
Williams Cos., Inc. ........................ 6.50 11/15/02 500,000 504,765
-----------
1,725,078
-----------
UTILITIES (6.7%)
Baltimore Gas & Electric Co. ............... 6.13 07/01/03 250,000 256,968
Commonwealth Edison Co. .................... 7.50 01/01/01 500,000 502,020
Public Svc. Electric & Gas Co. ............. 7.88 11/01/01 250,000 266,583
-----------
1,025,571
-----------
TOTAL INTERMEDIATE-TERM DEBT SECURITIES (COST: $11,232,676) 74.3% ............. 11,355,726
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
57
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER (25.7%)
Albertson's, Inc. .......................... 5.25% 01/12/99 $ 362,000 $ 361,417
Bellsouth Telecommunications Corp. ......... 5.65 01/05/99 315,000 314,802
Carolina Power & Light Co. ................. 5.50 01/25/99 322,000 320,819
Duke Power Co. ............................. 5.25 01/04/99 408,000 407,822
Ford Motor Credit Co. ...................... 5.78 01/06/99 300,000 299,759
General Electric Capital Corp. ............. 5.50 01/28/99 490,000 487,978
IBM Credit Corp. ........................... 5.30 01/05/99 250,000 249,852
Merrill Lynch & Co., Inc. .................. 5.35 01/13/99 432,000 431,227
PetroFina Delaware, Inc. ................... 5.35 01/06/99 360,000 359,732
Proctor & Gamble Co. ....................... 5.25 01/21/99 295,000 294,137
Toyota Credit de Puerto Rico Corp. ......... 5.31 01/06/99 395,000 394,706
-----------
TOTAL SHORT-TERM DEBT SECURITIES (COST: $3,922,251) 25.7% .................... 3,922,251
-----------
TOTAL INVESTMENTS (Cost: $15,154,927) 100.0% ................................. $15,277,977
===========
</TABLE>
- ---------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
58
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS (1.4%) .................
Du Pont (E.I.) de Nemours & Co ....... 39,500 $ 2,095,968
Phelps Dodge Corp. ................... 10,000 508,750
Union Carbide Corp. .................. 17,200 731,000
Weyerhaeuser Co. ..................... 15,000 762,188
Willamette Industries, Inc. .......... 18,700 626,450
------------
4,724,356
------------
CONSUMER, CYCLICAL (7.6%) ..............
Armstrong World Inds., Inc. .......... 12,600 759,938
Corning Inc. ......................... 24,500 1,102,500
Costco Co.* .......................... 30,000 2,165,625
Dayton-Hudson Corp. .................. 19,000 1,030,750
Disney (Walt) Co. .................... 32,400 972,000
Eastman Kodak Co. .................... 16,800 1,209,600
Federated Department Stores* ......... 28,300 1,232,819
Gap, Inc. ............................ 19,050 1,071,563
General Electric Co. ................. 48,300 4,929,619
General Motors Corp. ................. 22,500 1,610,156
Home Depot, Inc. ..................... 25,900 1,584,756
May Department Stores Co. ............ 20,700 1,249,763
Rite-Aid Corp. ....................... 37,100 1,838,769
Tricon Global Restaurants, Inc.* ..... 33,600 1,684,200
Wal-Mart Stores, Inc. ................ 34,500 2,809,594
------------
25,251,652
------------
CONSUMER, NON-CYCLICAL (10.4%) .........
American Home Products Corp. ......... 21,500 1,210,719
American Stores Co. .................. 50,100 1,850,568
Anheuser-Busch Cos., Inc. ............ 35,000 2,296,875
Bristol-Myers Squibb Co. ............. 15,100 2,020,569
Coca-Cola Co. ........................ 36,800 2,461,000
Columbia/HCA Healthcare Corp. ........ 40,000 990,000
Great Atlantic & Pac. Tea, Inc. ...... 26,500 785,063
Johnson & Johnson .................... 20,100 1,685,888
Kimberly Clark Corp. ................. 20,000 1,090,000
Lilly (Eli) & Co. .................... 16,900 1,501,988
Medtronic, Inc. ...................... 10,000 742,500
Merck & Co., Inc. .................... 18,300 2,702,681
PepsiCo, Inc. ........................ 66,600 2,726,437
Pfizer, Inc. ......................... 19,300 2,420,943
Pharmacia & Upjohn, Inc. ............. 34,500 1,953,563
Proctor & Gamble Co. ................. 20,100 1,835,381
Quaker Oats Co. ...................... 18,100 1,076,950
Sara Lee Corp. ....................... 76,000 2,142,250
Schering-Plough Corp. ................ 23,400 1,292,850
Warner-Lambert Co. ................... 26,800 2,015,025
------------
34,801,250
------------
ENERGY (2.6%) ..........................
Exxon Corp. .......................... 36,700 2,683,688
Mobil Corp. .......................... 22,000 1,916,750
Phillips Petroleum Co. ............... 26,600 1,133,825
Royal Dutch Petroleum Co. ............ 32,200 1,541,575
Sempra Energy ........................ 24,600 624,225
Texaco, Inc. ......................... 16,800 888,300
------------
8,788,363
------------
FINANCIAL (6.8%)
Aetna, Inc. .......................... 18,000 1,415,250
American General Corp. ............... 30,300 2,363,400
American Int'l. Group, Inc. .......... 16,000 1,546,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED):
FINANCIAL (continued)
Banc One Corp. ......................... 16,700 $ 852,744
BankAmerica Corp. ...................... 25,900 1,557,237
Chase Manhattan Corp. .................. 47,800 3,253,387
CIGNA Corp. ............................ 33,600 2,597,700
Citigroup Inc. ......................... 35,500 1,757,250
Household International Corp. .......... 25,300 1,002,513
KeyCorp ................................ 37,000 1,184,000
National City Corp. .................... 14,400 1,044,000
St. Paul Companies, Inc. ............... 48,310 1,678,773
UNUM Corp. ............................. 21,700 1,266,737
Wells Fargo & Company .................. 30,800 1,230,075
------------
22,749,066
------------
INDUSTRIAL (1.3%)
Burlington Northern Santa Fe ......... 39,300 1,326,375
Emerson Electric Co. ................. 18,000 1,089,000
Parker Hannifin Corp. ................ 24,200 792,550
Tyco International Ltd. .............. 15,000 1,131,563
------------
4,339,488
------------
TECHNOLOGY (9.8%)
3Com Corp.* .......................... 45,100 2,021,044
AT&T Corp. ........................... 27,400 2,061,850
Cisco Systems, Inc.* ................. 24,500 2,273,906
Dell Computer Corp.* ................. 21,000 1,536,938
Hewlett-Packard Co. .................. 12,200 833,413
Intel Corp. .......................... 26,400 3,130,050
Intl. Business Machines Corp. ........ 14,800 2,734,300
Johnson Controls, Inc. ............... 15,100 890,900
Lucent Technologies, Inc. ............ 20,600 2,266,000
Microsoft Corp.* ..................... 38,600 5,353,333
Minnesota Mining & Mfg. Co. .......... 18,000 1,280,250
Northern Telecom, Ltd. ............... 31,300 1,568,913
Oracle Corp.* ........................ 49,900 2,151,937
Unisys Corp. * ....................... 77,700 2,675,793
United Technologies Corp. ............ 7,200 783,000
Xerox Corp. .......................... 11,600 1,368,800
------------
32,930,427
------------
UTILITIES (4.0%)
AES Corp.* ........................... 7,800 369,525
Bell Atlantic Corp. .................. 23,200 1,229,600
BellSouth Corp. ...................... 29,200 1,456,350
CINergy Corp. ........................ 10,000 343,750
DTE Energy Co. ....................... 14,200 608,825
Duke Energy Corp. .................... 10,200 653,438
Edison International ................. 22,400 624,400
FPL Group, Inc. ...................... 9,700 597,763
MCI WorldCom Inc.* ................... 27,300 1,958,775
Nextel Communications, Inc.* ......... 52,600 1,242,675
SBC Communications, Inc. ............. 27,100 1,453,238
Southern Co. ......................... 21,100 613,219
Sprint Corp. (FON Group) ............. 22,900 1,926,463
Sprint Corp. (PCS Group)* ............ 11,450 264,781
------------
13,342,802
------------
TOTAL COMMON STOCKS
(Cost: $118,572,952) 43.9% ......... 146,927,404
------------
</TABLE>
- ---------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
59
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
RATE MATURITY FACE AMOUNT VALUE
---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES:
U.S. GOVERNMENT (0.5%)
U.S. Treasury Bond ..................... 6.75% 08/15/26 $ 500,000 $ 598,985
U.S. Treasury Bond ..................... 6.38 08/15/27 1,000,000 1,149,370
-----------
1,748,355
-----------
AGENCIES/OTHER GOVERNMENTS (16.5%)
Connecticut Housing Fin. Auth. ......... 7.63 05/15/21 1,000,000 1,029,777
FHLB ................................... 0.00 07/07/17 25,000,000 6,070,250
FHLB ................................... 0.00 07/14/17 25,000,000 6,062,500
FHLMC .................................. 7.00 10/15/03 234,422 234,787
FHLMC .................................. 8.00 07/15/06 265,420 274,542
FHLMC .................................. 7.00 04/15/17 536,963 537,800
FHLMC .................................. 6.00 07/15/18 500,000 499,685
FHLMC .................................. 0.00 05/22/28 20,000,000 2,656,200
FNMA ................................... 6.80 06/25/05 687,448 686,589
FNMA ................................... 7.00 11/25/05 1,200,000 1,208,616
FNMA ................................... 6.65 01/25/17 465,372 467,261
FNMA ................................... 0.00 07/13/17 100,000,00 23,203,000
FNMA ................................... 6.50 07/25/20 500,000 500,465
New York City Taxable .................. 10.00 08/01/05 500,000 563,689
New York City Taxable .................. 9.50 06/01/09 2,000,000 2,251,874
Republic of Iceland .................... 6.13 02/01/04 2,500,000 2,592,425
Suffolk County, New York ............... 5.80 11/01/04 250,000 257,085
Suffolk County, New York ............... 5.88 11/01/05 750,000 772,350
Tennessee Valley Authority ............. 7.85 06/15/44 5,000,000 5,361,150
-----------
55,230,045
-----------
BASIC MATERIALS (3.0%) ..................
Georgia-Pacific Corp. .................. 8.63 04/30/25 2,000,000 2,107,640
Inco Ltd. .............................. 9.60 06/15/22 2,500,000 2,789,750
Lyondell/Arco Petrochemical ............ 10.25 11/01/10 2,500,000 2,639,975
Praxair, Inc. .......................... 6.90 11/01/06 2,500,000 2,561,150
-----------
10,098,515
-----------
CONSUMER, CYCLICAL (4.6%)
Centex Corp. ........................... 7.38 06/01/05 2,000,000 2,024,980
Fruit of the Loom, Inc. ................ 7.88 10/15/99 500,000 501,140
Fruit of the Loom, Inc. ................ 7.00 03/15/11 1,000,000 937,660
Fruit of the Loom, Inc. ................ 7.38 11/15/23 500,000 444,815
Gannett Co., Inc. ...................... 5.85 05/01/00 1,000,000 1,007,640
Neiman Marcus Group Inc. ............... 7.13 06/01/28 2,500,000 2,335,475
Polaroid Corp. ......................... 7.25 01/15/07 1,000,000 933,820
Shopko Stores, Inc. .................... 9.00 11/15/04 1,000,000 1,134,270
Tommy Hilfiger USA, Inc. ............... 6.50 06/01/03 2,850,000 2,808,874
Valassis Communication, Inc. ........... 9.55 12/01/03 2,000,000 2,294,500
Venator Group, Inc. .................... 7.00 10/15/02 1,000,000 979,800
-----------
15,402,974
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
60
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
RATE MATURITY FACE AMOUNT VALUE
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES (CONTINUED):
CONSUMER, NON-CYCLICAL (2.7%)
Bausch & Lomb, Inc. ..................... 6.38% 08/01/03 $ 2,500,000 $ 2,455,525
Bausch & Lomb, Inc. ..................... 6.75 12/15/04 2,500,000 2,472,675
Ralston Purina Co. ...................... 8.63 02/15/22 2,500,000 3,031,350
Rhone-Poulenc S.A. ...................... 7.75 01/15/02 1,000,000 1,040,560
------------
9,000,110
------------
ENERGY (2.4%)
Southern Union Co. ...................... 7.60 02/01/24 5,000,000 5,234,950
Tosco Corp. ............................. 8.25 05/15/03 2,500,000 2,699,425
------------
7,934,375
------------
FINANCIAL (7.7%)
Berkley (W.R.) Corp. .................... 8.70 01/01/22 1,500,000 1,790,880
Chase Manhattan Corp. ................... 6.88 12/12/12 2,500,000 2,608,050
Executive Risk, Inc. .................... 7.13 12/15/07 1,000,000 1,081,910
Fairfax Financial Holdings LTD .......... 8.25 10/01/15 500,000 514,950
First American Financial ................ 7.55 04/01/28 2,250,000 2,319,412
Harleysville Group, Inc. ................ 6.75 11/15/03 1,000,000 1,027,590
Lehman Brothers Holdings, Inc. .......... 0.00 07/28/28 3,250,000 375,342
Morgan (J.P.) & Co., Inc. ............... 0.00 04/15/27 10,000,000 1,271,600
Nationwide Health Properties ............ 7.90 11/20/06 5,000,000 5,036,350
Progressive Corp. of Ohio ............... 10.00 12/15/00 500,000 539,155
Prudential Home Mtg Secs Co. ............ 6.75 08/25/08 860,083 858,732
Rodamco NV .............................. 7.75 05/15/15 2,000,000 2,160,320
Rodamco NV .............................. 7.30 05/15/05 2,500,000 2,659,050
Sun America, Inc. ....................... 9.95 02/01/12 2,000,000 2,753,100
Vesta Insurance Group, Inc. ............. 8.75 07/15/25 1,000,000 880,850
------------
25,877,291
------------
INDUSTRIAL (1.8%)
Clark Equipment Co. ..................... 8.35 05/15/23 1,500,000 1,827,525
Geon Co. ................................ 7.50 12/15/15 1,000,000 1,062,300
Thermo Electron Corp. ................... 4.25 01/01/03 2,500,000 2,225,000
Williams Cos., Inc. ..................... 6.50 11/15/02 1,000,000 1,009,530
------------
6,124,355
------------
UTILITIES (2.3%)
Central Telephone Co. ................... 9.28 11/27/00 1,000,000 1,072,130
New Orleans Public Service .............. 8.00 03/01/06 1,000,000 1,043,200
PG & E Corp. ............................ 8.75 01/01/01 1,000,000 1,067,530
Philadelphia Electric Co. ............... 7.13 08/15/23 1,000,000 1,042,760
UtiliCorp United, Inc. .................. 8.00 03/01/23 3,000,000 3,289,776
------------
7,515,396
------------
TOTAL LONG-TERM DEBT SECURITIES (Cost: $134,793,785) 41.5% ................. 138,931,416
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
61
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
RATE MATURITY FACE AMOUNT VALUE
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER: (14.6%)
Abbott Laboratories ......................... 5.50% 01/08/99 $ 7,000,000 $ 6,992,505
Consolidated Natural Gas Co. ................ 5.05 01/22/99 6,225,000 6,206,554
Ford Motor Credit Co. Puerto Rico, Inc. ..... 5.84 01/04/99 6,822,000 6,818,679
General Electric Capital Corp. .............. 5.33 01/04/99 4,565,000 4,562,964
Lucent Technology, Inc. ..................... 4.95 01/07/99 8,308,000 8,301,144
Merrill Lynch & Co., Inc .................... 5.35 01/06/99 7,840,000 7,834,134
PetroFina Delaware, Inc. .................... 5.53 01/05/99 8,000,000 7,995,073
------------
TOTAL SHORT-TERM DEBT SECURITIES (Cost: $48,711,053) 14.6% ..................... 48,711,053
------------
TOTAL INVESTMENTS (Cost: $302,077,790) 100.0% .................................. $334,569,873
============
</TABLE>
- ---------
Abbreviations: FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
62
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS (2.3%)
Barrick Gold Corp. ................ 74,700 $ 1,456,650
Homestake Mining Co. .............. 120,100 1,103,419
Newmont Mining Corp. .............. 53,900 973,569
Placer Dome, Inc. ................. 107,800 1,239,700
------------
4,773,338
------------
CONSUMER, CYCLICAL (15.1%)
Atlantic Coast Airlines, Inc.* .... 70,000 1,750,000
Consolidated Graphics, Inc.* ...... 30,000 2,026,875
Consolidated Stores Corp.* ........ 100,000 2,018,750
Dollar Tree Stores, Inc. * ........ 55,000 2,402,813
Linens'n Things, Inc.* ............ 85,000 3,368,125
Men's Wearhouse, Inc.* ............ 100,000 3,175,000
Meredith Corp. .................... 60,000 2,272,500
P.F. Changs China Bistro, Inc.* ... 1,000 22,750
Pacific Sunwear of California,
Inc.* .......................... 75,000 1,228,125
Saks, Inc.* ....................... 85,000 2,682,812
Skywest, Inc. ..................... 63,000 2,059,313
Tiffany & Co. ..................... 75,000 3,890,625
Viacom, Inc. Cl B* ................ 55,000 4,070,000
------------
30,967,688
------------
CONSUMER, NON-CYCLICAL (14.4%)
Agouron Pharmaceutical, Inc.* ..... 100,000 5,875,000
Anesta Corp.* ..................... 100,000 2,662,500
Dura Pharmaceuticals, Inc.* ....... 195,000 2,961,562
Metzler Group, Inc.* .............. 65,000 3,164,687
Omnicare, Inc. .................... 60,000 2,085,000
Orthodontic Centers of America,
Inc* ........................... 235,000 4,567,812
Pathogenesis Corp.* ............... 35,000 2,030,000
SangStat Medical Corp.* ........... 115,000 2,443,750
Total Renal Care Holdings, Inc.* 60,000 1,773,750
Wet Seal, Inc. Cl A* .............. 70,000 2,113,125
------------
29,677,186
------------
ENERGY (3.5%)
Barrett Resources Corp.* .......... 90,000 2,160,000
Devon Energy Corp. ................ 70,200 2,154,263
OGE Energy Corp. .................. 100,000 2,900,000
------------
7,214,263
------------
FINANCIAL (13.7%)
Arden Realty Group, Inc. .......... 105,500 2,446,281
Compass Bancshares, Inc. .......... 52,000 1,979,250
Equity Residential Prop. Tr. ...... 55,400 2,240,238
First Midwest Bancorp, Inc. ....... 15,500 589,968
Glenborough Realty Trust, Inc. .... 136,000 2,771,000
Heller Financial, Inc. Cl A ....... 60,000 1,762,500
Horace Mann Educators Corp. ....... 64,000 1,824,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED):
FINANCIAL (CONTINUED)
North Fork Bancorporation, Inc. 108,000 $ 2,585,250
Peoples Heritage Financial
Group, Inc. .................... 96,000 1,920,000
SL Green Realty Corp. ............. 113,200 2,447,950
Summit Bancorp .................... 48,000 2,097,000
Telebanc Financial Corp.* ......... 100,000 3,400,000
UST Corp. ......................... 88,000 2,073,500
------------
28,136,937
------------
INDUSTRIAL (17.7%)
AFC Cable Systems, Inc.* .......... 85,000 2,858,125
Applied Micro Circuits Corp.* ..... 105,000 3,566,719
Applied Power, Inc. Cl A .......... 59,500 2,246,125
CSG Systems International, Inc.* 47,500 3,752,500
Dayton Superior Corp.* ............ 116,500 2,242,625
DuPont Photomasks, Inc.* .......... 20,000 848,750
ETEC Systems, Inc.* ............... 48,500 1,940,000
Heico Corp. ....................... 29,000 915,313
PRI Automation, Inc.* ............. 63,000 1,638,000
Sea Containers, Ltd. Cl A ......... 65,000 1,945,938
Semtech Corp.* .................... 65,000 2,331,875
Tetra Tech, Inc.* ................. 246,000 6,657,375
Vallen Corp.* ..................... 122,000 2,440,000
Verisign, Inc.* ................... 50,000 2,956,250
------------
36,339,595
------------
TECHNOLOGY (29.4%)
Altera Corp.* ..................... 65,000 3,956,875
Brightpoint, Inc.* ................ 140,000 1,925,000
Centocor, Inc.* ................... 90,000 4,061,250
Hyperion Solutions, Corp.* ........ 51,000 918,000
Legato Systems, Inc.* ............. 65,000 4,285,937
Linear Technology Corp. ........... 50,000 4,478,125
Maxim Integrated Products,
Inc.* .......................... 73,000 3,189,187
Millipore Corp. ................... 80,000 2,275,000
National Instruments Corp.* ....... 130,000 4,436,250
Network Associates, Inc.* ......... 57,000 3,776,250
Novellus Systems, Inc.* ........... 36,000 1,782,000
Photronics Inc.* .................. 78,000 1,869,563
Saville Systems Sp ADR* ........... 175,000 3,325,000
SCI Systems, Inc.* ................ 38,000 2,194,500
Teltrend, Inc.* ................... 165,000 3,155,625
Teradyne, Inc.* ................... 54,000 2,288,250
Unisys Corp.* ..................... 240,000 8,265,000
Xilinx, Inc.* ..................... 65,000 4,233,125
------------
60,414,937
------------
TOTAL COMMON STOCKS
(Cost: $166,353,395) 96.1% ................... 197,523,944
------------
</TABLE>
- ---------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
63
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER (3.9%)
Duke Power Co. .......................... 5.25% 01/04/99 $ 4,906,000 $ 4,903,853
Koch Industries ......................... 5.20 01/04/99 3,153,000 3,151,634
------------
TOTAL SHORT-TERM DEBT SECURITIES (Cost: $8,055,487) 3.9% .................... 8,055,487
------------
TOTAL INVESTMENTS (Cost: $174,408,882) 100.0% ............................... $205,579,431
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
64
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<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 -- $80,766,399
All America Fund -- $403,576,469
Equity Index Fund -- $287,295,071
Bond Fund -- $446,300,888)
(Notes 1 and 3) .................................. $ 80,766,399 $ 733,352,393 $ 410,277,711 $ 460,257,815
Cash .............................................. 3,279 2,434,656 10,326 2,658
Interest and dividends receivable ................. -- 729,575 406,944 4,925,577
Receivable for securities sold .................... -- 11,050 71,818 142,942
------------ ------------- ------------- -------------
TOTAL ASSETS ...................................... 80,769,678 736,527,674 410,766,799 465,328,992
Payable for securities purchased .................. -- 4,178,559 448 --
------------ ------------- ------------- -------------
NET ASSETS ........................................ $ 80,769,678 $ 732,349,115 $ 410,766,351 $ 465,328,992
============ ============= ============= =============
NUMBER OF SHARES OUTSTANDING (Note 4) ............. 68,195,147 252,884,422 167,559,906 326,640,323
============ ============= ============= =============
NET ASSET VALUES, offering and redemption price
per share ........................................ $ 1.18 $ 2.90 $ 2.45 $ 1.42
============ ============= ============= =============
</TABLE>
<TABLE>
<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 -- $21,724,432
Mid-Term Bond Fund -- $15,154,927
Composite Fund -- $302,077,790
Aggressive Equity Fund -- $174,408,882)
(Notes 1 and 3) .................................. $ 21,760,232 $ 15,277,977 $ 334,569,873 $ 205,579,431
Cash .............................................. 972 738 10,084 6,063
Interest and dividends receivable ................. 167,126 151,589 1,621,390 205,460
Receivable for securities sold .................... 49,150 -- -- --
------------ ------------ ------------- -------------
TOTAL ASSETS ...................................... 21,977,480 15,430,304 336,201,347 205,790,954
Payable for securities purchased .................. 2,292 -- -- 378,125
------------ ------------ ------------- -------------
NET ASSETS ........................................ $ 21,975,188 $ 15,430,304 $ 336,201,347 $ 205,412,829
============ ============ ============= =============
NUMBER OF SHARES OUTSTANDING (Note 4) ............. 21,351,075 16,952,106 188,998,726 136,169,705
============ ============ ============= =============
NET ASSET VALUES, offering and redemption price
per share ........................................ $ 1.03 $ 0.91 $ 1.78 $ 1.51
============ ============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
65
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME AND EXPENSES:
Income:
Dividends ....................................... $ -- $ 8,564,603 $ 4,641,412 $ --
Interest ........................................ 3,817,397 1,000,865 938,913 32,467,679
------------ -------------- -------------- --------------
Total income ...................................... 3,817,397 9,565,468 5,580,325 32,467,679
------------ -------------- -------------- --------------
Expenses:
Investment advisory fees (Note 2) ............... 173,091 3,559,615 412,769 2,245,279
------------ -------------- -------------- --------------
NET INVESTMENT INCOME ............................. 3,644,306 6,005,853 5,167,556 30,222,400
------------ -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain (loss) on investments:
Net proceeds from sales and maturities .......... 946,512,623 2,084,303,112 1,590,946,259 1,654,195,275
Cost of securities sold or matured .............. 946,513,714 2,009,275,002 1,586,636,965 1,653,447,468
------------ -------------- -------------- --------------
Net realized gain (loss) .......................... (1,091) 75,028,110 4,309,294 747,807
Net unrealized appreciation (depreciation) of
investments ..................................... -- 51,132,012 72,664,856 (41,522)
------------ -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ..................................... (1,091) 126,160,122 76,974,150 706,285
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 3,643,215 $ 132,165,975 $ 82,141,706 $ 30,928,685
============ ============== ============== ==============
</TABLE>
<TABLE>
<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 ....................................... $ -- $ -- $ 2,163,375 $ 1,752,545
Interest ........................................ 1,093,898 858,591 11,211,064 680,420
------------ ------------ -------------- --------------
Total income ...................................... 1,093,898 858,591 13,374,439 2,432,965
------------ ------------ -------------- --------------
Expenses:
Investment advisory fees (Note 2) ............... 91,736 68,431 1,601,894 2,007,629
------------ ------------ -------------- --------------
NET INVESTMENT INCOME ............................. 1,002,162 790,160 11,772,545 425,336
------------ ------------ -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain (loss) on investments:
Net proceeds from sales and maturities .......... 133,917,702 129,793,379 1,918,062,049 2,427,289,632
Cost of securities sold or matured .............. 133,902,700 129,708,405 1,914,798,019 2,450,911,467
------------ ------------ -------------- --------------
Net realized gain (loss) .......................... 15,002 84,974 3,264,030 (23,621,835)
Net unrealized appreciation (depreciation) of
investments ..................................... (22,056) (37,685) 28,079,557 9,581,686
------------ ------------ -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ..................................... (7,054) 47,289 31,343,587 (14,040,149)
------------ ------------ -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 995,108 $ 837,449 $ 43,116,132 $ (13,614,813)
============ ============ ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
66
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ................. $ 3,644,306 $ 4,249,559
Net realized gain (loss) on
investments .......................... (1,091) (4,546)
Unrealized appreciation
(depreciation) of investments ........ -- --
-------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS ...................... 3,643,215 4,245,013
-------------- --------------
CAPITAL SHARE TRANSACTIONS
(Note 4):
Net proceeds from sale of shares ...... 49,564,634 31,053,208
Dividends reinvested .................. 3,649,927 4,207,000
Cost of shares redeemed ............... (39,940,229) (45,576,714)
Dividend distributions ................ (3,649,927) (4,207,000)
-------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ................... 9,624,405 (14,523,506)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS ..... 13,267,620 (10,278,493)
NET ASSETS, BEGINNING OF YEAR ......... 67,502,058 77,780,551
-------------- --------------
NET ASSETS, END OF YEAR ............... $ 80,769,678 $ 67,502,058
============== ==============
COMPONENTS OF NET ASSETS:
Paid-in capital ....................... $ 80,655,650 $ 67,381,318
Accumulated undistributed net
investment income (loss) ............. 124,861 130,482
Accumulated undistributed net
realized gain (loss) on
investments .......................... (10,833) (9,742)
Unrealized appreciation
(depreciation) of investments ........ -- --
-------------- --------------
NET ASSETS, END OF YEAR ............... $ 80,769,678 $ 67,502,058
============== ==============
<CAPTION>
ALL AMERICA FUND EQUITY INDEX FUND
----------------------------------- ---------------------------------
1998 1997 1998 1997
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ................. $ 6,005,853 $ 6,839,085 $ 5,167,556 $ 3,292,415
Net realized gain (loss) on
investments .......................... 75,028,110 87,265,815 4,309,294 13,796,802
Unrealized appreciation
(depreciation) of investments ........ 51,132,012 72,872,084 72,664,856 29,821,618
--------------- --------------- ------------- -------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS ...................... 132,165,975 166,976,984 82,141,706 46,910,835
--------------- --------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS
(Note 4):
Net proceeds from sale of shares ...... 8,745,724 51,559,383 111,027,460 103,055,258
Dividends reinvested .................. 87,022,298 85,851,292 31,568,403 4,983,072
Cost of shares redeemed ............... (108,090,679) (155,677,621) (19,365,681) (14,852,042)
Dividend distributions ................ (87,022,298) (85,851,292) (31,568,403) (4,983,072)
--------------- --------------- ------------- -------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ................... (99,344,955) (104,118,238) 91,661,779 88,203,216
--------------- --------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ..... 32,821,020 62,858,746 173,803,485 135,114,051
NET ASSETS, BEGINNING OF YEAR ......... 699,528,095 636,669,349 236,962,866 101,848,815
--------------- --------------- ------------- -------------
NET ASSETS, END OF YEAR ............... $ 732,349,115 $ 699,528,095 $ 410,766,351 $ 236,962,866
=============== =============== ============= =============
COMPONENTS OF NET ASSETS:
Paid-in capital ....................... $ 404,058,426 $ 416,381,083 $ 297,765,055 $ 174,534,873
Accumulated undistributed net
investment income (loss) ............. (368,798) (175,037) 25,162 (14,572)
Accumulated undistributed net
realized gain (loss) on
investments .......................... (1,116,437) 4,678,137 (10,006,505) 12,124,782
Unrealized appreciation
(depreciation) of investments ........ 329,775,924 278,643,912 122,982,639* 50,317,783
--------------- --------------- ------------- -------------
NET ASSETS, END OF YEAR ............... $ 732,349,115 $ 699,528,095 $ 410,766,351 $ 236,962,866
=============== =============== ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
67
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
--------------------------------- ------------------------------- -------------------------------
1998 1997 1998 1997 1998 1997
---------------- ---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income .......... $ 30,222,400 $ 24,752,577 $ 1,002,162 $ 915,657 $ 790,160 $ 860,831
Net realized gain (loss) on
investments ................... 747,807 2,443,601 15,002 11,032 84,974 26,493
Unrealized appreciation
(depreciation) of
investments ................... (41,522) 10,731,058 (22,056) 1,505 (37,685) 136,981
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS ............... 30,928,685 37,927,236 995,108 928,194 837,449 1,024,305
------------- ------------- ------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS
(Note 4):
Net proceeds from sale of
shares ........................ 52,595,906 129,718,878 8,314,584 4,662,604 5,884,740 7,085,456
Dividends reinvested ........... 31,972,263 26,570,467 1,010,825 921,469 805,870 911,528
Cost of shares redeemed ........ (31,900,498) (83,214,662) (1,975,185) (6,464,199) (5,938,423) (6,822,743)
Dividend distributions ......... (31,972,263) (26,570,467) (1,010,825) (921,469) (805,870) (911,528)
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ............ 20,695,408 46,504,216 6,339,399 (1,801,595) (53,683) 262,713
------------- ------------- ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN
NET ASSETS .................... 51,624,093 84,431,452 7,334,507 (873,401) 783,766 1,287,018
NET ASSETS, BEGINNING OF
YEAR .......................... 413,704,899 329,273,447 14,640,681 15,514,082 14,646,538 13,359,520
------------- ------------- ------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR ........ $ 465,328,992 $ 413,704,899 $ 21,975,188 $ 14,640,681 $ 15,430,304 $ 14,646,538
============= ============= ============ ============ ============ ============
COMPONENTS OF NET ASSETS:
Paid-in capital ................ $ 456,250,383 $ 403,582,712 $ 21,933,271 $ 14,583,047 $ 16,547,869 $ 15,795,682
Accumulated undistributed
net investment income
(loss) ........................ (876,674) (816,175) 13,225 (841) (54,119) (38,409)
Accumulated undistributed
net realized gain (loss) on
investments ................... (4,001,644) (3,060,087) (7,108) 619 (1,186,496) (1,271,470)
Unrealized appreciation
(depreciation) of
investments ................... 13,956,927 13,998,449 35,800 57,856 123,050 160,735
------------- ------------- ------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR ........ $ 465,328,992 $ 413,704,899 $ 21,975,188 $ 14,640,681 $ 15,430,304 $ 14,646,538
============= ============= ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
68
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
COMPOSITE FUND AGGRESSIVE EQUITY FUND
--------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income .................................... $ 11,772,545 $ 10,441,082 $ 425,336 $ 759,197
Net realized gain (loss) on investments .................. 3,264,030 54,206,235 (23,621,835) 27,898,311
Unrealized appreciation (depreciation) of investments 28,079,557 (16,888,109) 9,581,686 9,224,730
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ............................................... 43,116,132 47,759,208 (13,614,813) 37,882,238
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS (Note 4):
Net proceeds from sale of shares ......................... 2,920,925 31,298,846 15,703,714 137,350,976
Dividends reinvested ..................................... 14,045,609 67,460,654 1,800,942 28,638,720
Cost of shares redeemed .................................. (14,612,177) (57,212,696) (84,056,916) (24,081,133)
Dividend distributions ................................... (14,045,609) (67,460,654) (1,800,942) (28,638,720)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ....................................... (11,691,252) (25,913,850) (68,353,202) 113,269,843
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ......................... 31,424,880 21,845,358 (81,968,015) 151,152,081
NET ASSETS, BEGINNING OF YEAR ............................. 304,776,467 282,931,109 287,380,844 136,228,763
------------- ------------- ------------- -------------
NET ASSETS, END OF YEAR ................................... $ 336,201,347 $ 304,776,467 $ 205,412,829 $ 287,380,844
============= ============= ============= =============
COMPONENTS OF NET ASSETS:
Paid-in capital .......................................... $ 307,142,582 $ 304,788,225 $ 198,159,450 $ 264,711,710
Accumulated undistributed net investment income
(loss) ................................................. 761,149 635,624 (10,452) (3,076)
Accumulated undistributed net realized gain (loss) on
investments ............................................ (4,194,467) (5,059,908) (23,906,718) 1,083,347
Unrealized appreciation (depreciation) of investments 32,492,083 4,412,526 31,170,549 21,588,863
------------- ------------- ------------- -------------
NET ASSETS, END OF YEAR ................................... $ 336,201,347 $ 304,776,467 $ 205,412,829 $ 287,380,844
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
69
<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 five years ended December 31, 1998,
(or since the fund's inception date if in existence less than five years) and
other supplementary data with respect to the funds are presented below.
<TABLE>
<CAPTION>
MONEY MARKET FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year .............................. $ 1.18 $ 1.19 $ 1.18 $ 1.19 $ 1.17
------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income .......................................... 0.06 0.07 0.06 0.07 0.03
Net Gains or (Losses) on Securities realized and unrealized .... -- -- -- -- 0.02
------- ------- ------- ------- -------
Total From Investment Operations ................................ 0.06 0.07 0.06 0.07 0.05
------- ------- ------- ------- -------
Less: Dividend Distributions From Net Investment Income ......... (0.06) (0.08) (0.05) (0.08) (0.03)
------- ------- ------- ------- -------
Total Distributions ............................................. (0.06) (0.08) (0.05) (0.08) (0.03)
------- ------- ------- ------- -------
Net Asset Value, End of Year .................................... $ 1.18 $ 1.18 $ 1.19 $ 1.18 $ 1.19
------- ------- ------- ------- -------
Total Return (%) ................................................ 5.4 5.5 5.3 5.8 4.1
Net Assets, End of Year ($ millions) ............................ 81 68 78 73 81
Ratio of Expenses to Average Net Assets (%) ..................... 0.25 0.25 0.25 0.25 0.25
Ratio of Net Investment Income to Average Net Assets (%) ........ 5.26 5.32 5.21 5.66 4.15
Portfolio Turnover Rate(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
The accompanying notes are an integral part of these financial statements.
70
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
ALL AMERICA FUND(A)
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994(B)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ............................... $ 2.71 $ 2.44 $ 2.13 $ 1.61 $ 1.80
------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income ........................................... 0.03 0.03 0.03 0.03 0.04
Net Gains or (Losses) on Securities realized and unrealized ..... 0.54 0.62 0.41 0.56 ( 0.01)
------- ------- ------- ------- -------
Total From Investment Operations ................................. 0.57 0.65 0.44 0.59 0.03
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ...................................... (0.03) (0.03) (0.03) (0.03) ( 0.04)
From Capital Gains .............................................. (0.35) (0.35) (0.10) (0.04) ( 0.18)
------- ------- ------- ------- -------
Total Distributions .............................................. (0.38) (0.38) (0.13) (0.07) ( 0.22)
------- ------- ------- ------- -------
Net Asset Value, End of Year ..................................... $ 2.90 $ 2.71 $ 2.44 $ 2.13 $ 1.61
======= ======= ======= ======= =======
Total Return (%) ................................................. 21.3 26.8 20.7 36.6 1.3
Net Assets, End of Year ($ millions) ............................. 732 700 637 533 375
Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment Income to Average Net Assets (%) ......... 0.84 0.98 1.26 1.57 2.11
Portfolio Turnover Rate (%)(c) ................................... 40.47 28.64 28.35 33.63 129.80
</TABLE>
- ---------
(a) Prior to May 2, 1994, this Fund was known as the Stock Fund and had a
different investment objective.
(b) Reflects the combined data of this Fund and that of its predecessor.
(c) Portfolio turnover rate excludes all short-term securities.
The accompanying notes are an integral part of these financial statements.
71
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
BOND FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ............................... $ 1.43 $ 1.38 $ 1.43 $ 1.27 $ 1.41
------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income ........................................... 0.10 0.09 0.09 0.09 0.09
Net Gains or (Losses) on Securities realized and unrealized ..... -- 0.06 (0.04) 0.16 (0.14)
------- ------- ------- ------- -------
Total From Investment Operations ................................. 0.10 0.15 0.05 0.25 (0.05)
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ...................................... (0.10) (0.09) (0.09) (0.09) (0.09)
From Capital Gains .............................................. (0.01) (0.01) (0.01) -- --
------- ------- ------- ------- -------
Total Distributions .............................................. (0.11) (0.10) (0.10) (0.09) (0.09)
------- ------- ------- ------- -------
Net Asset Value, End of Year ..................................... $ 1.42 $ 1.43 $ 1.38 $ 1.43 $ 1.27
======= ======= ======= ======= =======
Total Return (%) ................................................. 7.2 10.4 3.5 19.4 (3.2)
Net Assets, End of Year ($ millions) ............................. 465 414 329 311 249
Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment Income to Average Net Assets (%) ......... 6.73 6.69 6.70 6.64 6.32
Portfolio Turnover Rate (%)(a) ................................... 21.60 57.71 30.14 41.93 51.14
</TABLE>
- ---------
(a) Portfolio turnover rate excludes all short-term securities.
The accompanying notes are an integral part of these financial statements.
72
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 1.02 $ 1.03 $ 1.02 $ 1.00 $ 1.02
------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income ................ 0.05 0.07 0.04 0.06 0.04
Net Gains or (Losses) on
Securities realized and
unrealized ......................... 0.01 (0.01) 0.01 0.02 (0.02)
------- ------- ------- ------- -------
Total From Investment Operations ...... 0.06 0.06 0.05 0.08 0.02
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ........... (0.05) (0.07) (0.04) (0.06) (0.04)
From Capital Gains ................... -- -- -- -- --
------- ------- ------- ------- -------
Total Distributions ................... (0.05) (0.07) (0.04) (0.06) (0.04)
------- ------- ------- ------- -------
Net Asset Value, End of Year .......... $ 1.03 $ 1.02 $ 1.03 $ 1.02 $ 1.00
======= ======= ======= ======= =======
Total Return (%) ...................... 5.7 6.0 4.9 7.7 1.4
Net Assets, End of Year
($ millions) ......................... 22 15 16 3 2
Ratio of Expenses to Average Net
Assets (%) ........................... 0.50 0.50 0.50 0.50 0.48
Ratio of Net Investment Income to
Average Net Assets (%) ............... 5.46 5.81 5.42 4.65 3.51
Portfolio Turnover Rate (%)(a) ........ 91.35 74.95 6.68 16.47 0.00
<CAPTION>
MID-TERM BOND FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 0.90 $ 0.90 $ 1.00 $ 0.91 $ 0.99
------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income ................ 0.05 0.05 0.14 0.06 0.03
Net Gains or (Losses) on
Securities realized and
unrealized ......................... 0.01 0.01 ( 0.10) 0.09 (0.07)
------- ------- ------- ------- -------
Total From Investment Operations ...... 0.06 0.06 0.04 0.15 (0.04)
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ........... (0.05) (0.06) ( 0.14) (0.06) (0.04)
From Capital Gains ................... -- -- -- -- --
------- ------- ------- ------- -------
Total Distributions ................... (0.05) (0.06) ( 0.14) (0.06) (0.04)
------- ------- ------- ------- -------
Net Asset Value, End of Year .......... $ 0.91 $ 0.90 $ 0.90 $ 1.00 $ 0.91
======= ======= ======= ======= =======
Total Return (%) ...................... 6.4 7.3 3.9 16.3 (3.7)
Net Assets, End of Year
($ millions) ......................... 15 15 13 24 24
Ratio of Expenses to Average Net
Assets (%) ........................... 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment Income to
Average Net Assets (%) ............... 5.76 5.87 5.80 5.73 4.71
Portfolio Turnover Rate (%)(a) ........ 23.09 12.89 144.55 73.72 7.52
</TABLE>
- ---------
(a) Portfolio turnover rate excludes all short-term securities.
The accompanying notes are an integral part of these financial statements.
73
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
COMPOSITE FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ............................... $ 1.62 $ 1.77 $ 1.81 $ 1.57 $ 1.71
------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income ........................................... 0.07 0.07 0.07 0.08 0.05
Net Gains or (Losses) on Securities realized and unrealized ..... 0.17 0.24 0.14 0.27 ( 0.10)
------- ------- ------- ------- -------
Total From Investment Operations ................................. 0.24 0.31 0.21 0.35 ( 0.05)
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ...................................... (0.07) ( 0.07) (0.08) (0.08) ( 0.07)
From Capital Gains .............................................. (0.01) ( 0.39) (0.17) (0.03) ( 0.02)
------- ------- ------- ------- -------
Total Distributions .............................................. (0.08) ( 0.46) (0.25) (0.11) ( 0.09)
------- ------- ------- ------- -------
Net Asset Value, End of Year ..................................... $ 1.78 $ 1.62 $ 1.77 $ 1.81 $ 1.57
======= ======= ======= ======= =======
Total Return (%) ................................................. 14.5 17.7 11.9 21.9 ( 3.0)
Net Assets, End of Year ($ millions) ............................. 336 305 283 276 233
Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50
Ratio of Net Investment Income to Average Net Assets (%) ......... 3.68 3.57 3.63 4.30 3.88
Portfolio Turnover Rate (%)(a) ................................... 73.85 104.04 69.79 76.84 113.86
</TABLE>
- ---------
(a) Portfolio turnover rate excludes all short-term securities.
The accompanying notes are an integral part of these financial statements.
74
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INDEX FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year/Period ....................... $ 2.08 $ 1.59 $ 1.35 $ 1.02 $ 1.04
------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income ............. 0.03 0.03 0.03 0.02 0.03
Net Gains or (Losses) on
Securities realized and
unrealized ....................... 0.55 0.50 0.27 0.36 (0.01)
------- ------- ------- ------- -------
Total From Investment
Operations ........................ 0.58 0.53 0.30 0.38 0.02
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ........ (0.03) (0.03) (0.03) (0.03) (0.03)
From Capital Gains ................ (0.17) (0.01) (0.03) (0.02) (0.01)
------- ------- ------- ------- -------
Total Distributions ................ (0.20) (0.04) (0.06) (0.05) (0.04)
------- ------- ------- ------- -------
Net Asset Value, End of
Year/Period ....................... $ 2.45 $ 2.08 $ 1.59 $ 1.35 $ 1.02
======= ======= ======= ======= =======
Total Return (%) ................... 28.6 33.1 22.7 36.6 1.5
Net Assets, End of Year/Period
($ millions) ...................... 411 237 102 43 26
Ratio of Expenses to Average
Net Assets (%) .................... 0.13 0.13 0.13 0.13 0.13
Ratio of Net Investment Income
to Average Net Assets (%) ......... 1.57 1.86 2.19 2.50 2.67
Portfolio Turnover Rate (%)(a) ..... 11.68 14.17 5.85 13.99 6.59
<CAPTION>
AGGRESSIVE EQUITY FUND
------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994(B)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year/Period ....................... $ 1.61 $ 1.47 $ 1.35 $ 1.05 $ 1.00
------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income ............. -- 0.01 0.01 0.01 0.01
Net Gains or (Losses) on
Securities realized and
unrealized ....................... ( 0.09) 0.31 0.36 0.39 0.05
------- ------- ------- ------- -------
Total From Investment
Operations ........................ ( 0.09) 0.32 0.37 0.40 0.06
------- ------- ------- ------- -------
Less Dividend Distributions:
From Net Investment Income ........ -- (0.01) ( 0.01) ( 0.01) (0.01)
From Capital Gains ................ ( 0.01) (0.17) ( 0.24) ( 0.09) --
------- ------- ------- ------- -------
Total Distributions ................ ( 0.01) (0.18) ( 0.25) ( 0.10) (0.01)
------- ------- ------- ------- -------
Net Asset Value, End of
Year/Period ....................... $ 1.51 $ 1.61 $ 1.47 $ 1.35 $ 1.05
======= ======= ======= ======= =======
Total Return (%) ................... ( 5.1) 21.2 27.1 38.2 6.0
Net Assets, End of Year/Period
($ millions) ...................... 205 287 136 59 27
Ratio of Expenses to Average
Net Assets (%) .................... 0.85 0.85 0.85 0.85 0.56
Ratio of Net Investment Income
to Average Net Assets (%) ......... 0.18 0.33 0.45 0.65 0.70
Portfolio Turnover Rate (%)(a) ..... 144.05 80.94 103.68 116.52 60.86
</TABLE>
- ---------
(a) Portfolio turnover rate excludes all short-term securities.
(b) Commenced operations May 2, 1994.
The accompanying notes are an integral part of these financial statements.
75
<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.
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, 1998, Mutual of America Life owned 97% and
American Life 3% of the Investment Company's aggregate outstanding shares.
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.
Certain equity-type funds with an indexed portfolio component may, in
order to remain more fully invested in the equity markets while
minimizing its transaction costs, purchase stock index futures contracts.
Initial cash margin deposits (represented by cash or Treasury bills) are
made upon entering into futures contracts. (This initial margin,
maintained in a segregated account, is equal to approximately 5% of the
contract amount, and 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 by "marking-to-market" on a daily basis to reflect the market
value of the contract at the end of each trading day. Futures contracts
are valued at the settlement price established each day by the exchange
on which traded. Depending upon whether unrealized gains or losses are
incurred, variation margin 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 the fund's exposure to
off-balance sheet risk.
SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date. 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.
76
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION -- (Continued)
INVESTMENT INCOME -- 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.
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 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, .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 Sub-Advisory Agreements, the Adviser has delegated a portion of its
investment advisory responsibilities for the All America Fund to subadvisers
and pays the subadvisers directly for their investment advisory services. The
Adviser (not the fund) is responsible for compensation payable under such
Sub-Advisory Agreements.
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, 1998 was $50,136 or 2.5% of total
commissions. In addition, a Sub-Advisor placed a portion of its portfolio
transactions with its affiliated broker-dealer. Such commissions amounted to
$180,054 or 8.8% 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, 1998 was as follows:
<TABLE>
<CAPTION>
ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND
--------------- -------------- ---------------
<S> <C> <C> <C>
Cost of investment purchases ............... $278,732,574 $103,256,977 $148,576,348
============ ============ ============
Proceeds from sales of investments ......... $368,105,259 $ 36,042,643 $ 93,327,472
============ ============ ============
</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 ........... $ 22,016,177 $ 2,726,474 $207,305,442 $322,042,470
============ =========== ============ ============
Proceeds from sales of investments ..... $ 15,714,467 $ 5,619,565 $230,573,876 $415,789,936
============ =========== ============ ============
</TABLE>
The cost of short-term security purchases for the Money Market Fund for
the period was $955,961,402. Net proceeds from sales and redemptions for the
period was $946,512,623.
77
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PURCHASES AND SALES -- (Continued)
At December 31, 1998, 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 ............ $ -- $347,941,669 $130,864,562 $ 16,612,958
Aggregate gross unrealized depreciation ............ -- 18,165,745 7,881,923 2,656,031
----------- ------------ ------------ ------------
Net unrealized appreciation (depreciation) ......... $ -- $329,775,924 $122,982,639 $ 13,956,927
=========== ============ ============ ============
Aggregate cost of investments for Federal income tax
purposes .......................................... $80,766,399 $403,576,469 $287,295,071 $446,300,888
=========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Aggregate gross unrealized appreciation ............ $ 85,982 $ 173,695 $ 36,223,647 $ 40,554,935
Aggregate gross unrealized depreciation ............ 50,182 50,645 3,731,565 9,384,386
----------- ------------ ------------ ------------
Net unrealized appreciation (depreciation) ......... $ 35,800 $ 123,050 $ 32,492,082 $ 31,170,549
=========== ============ ============ ============
Aggregate cost of investments for Federal income tax
purposes ......................................... $21,724,432 $ 15,154,927 $302,077,790 $174,408,882
=========== ============ ============ ============
</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 ................................................. 275,000,000
Bond Fund ......................................................... 425,000,000
Short-Term Bond Fund .............................................. 50,000,000
Mid-Term Bond Fund ................................................ 75,000,000
Composite Fund .................................................... 300,000,000
Aggressive Equity Fund ............................................ 500,000,000
-----------
Sub-Total ........................................................ 2,225,000,000
Shares to be allocated at the discretion of the Board of Directors 775,000,000
-------------
Total ............................................................ 3,000,000,000
=============
</TABLE>
Transactions in shares were as follows for the year ended December 31, 1998:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
-------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Shares issued ............................................. 65,030,676 16,550,567 99,314,538 77,260,563
Shares issued to shareholders as reinvestment of dividends 3,080,576 30,263,002 13,563,464 22,419,396
---------- ---------- ---------- ----------
Total ..................................................... 68,111,252 46,813,569 112,878,002 99,679,959
Shares redeemed ........................................... 57,281,015 51,998,029 59,350,065 62,903,436
---------- ---------- ----------- ----------
Net increase (decrease) ................................... 10,830,237 (5,184,460) 53,527,937 36,776,523
========== ========== =========== ==========
</TABLE>
78
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. CAPITAL SHARE ACTIVITY -- (Continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
------------ ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares issued ............................................. 11,305,009 9,542,507 9,518,911 46,769,027
Shares issued to shareholders as reinvestment of dividends 981,938 884,933 7,895,857 1,397,187
---------- --------- --------- ----------
Total ..................................................... 12,286,947 10,427,440 17,414,768 48,166,214
Shares redeemed ........................................... 5,275,226 9,698,201 16,332,231 90,803,686
---------- ---------- ---------- ----------
Net increase (decrease) ................................... 7,011,721 729,239 1,082,537 (42,637,472)
========== ========== ========== ===========
</TABLE>
<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 issued ............................................. 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>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
------------ ----------- ------------ --------------
<S> <C> <C> <C> <C>
Shares issued ............................................. 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
========= ========= ========== ===========
</TABLE>
79
<PAGE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. DIVIDENDS
On December 31,1998 dividend distributions were declared for each of the
Funds from net realized gains on investment transactions and net investment
income during 1998. Additionally, on September 15, 1998 the remaining required
dividends relating to the 1997 Internal Revenue Sec. 855(a) election were
declared for each of the funds and paid on September 15, 1998 to shareholders
of record on September 14, 1998. Dividends were declared and paid on December
31, 1998 to shareholders of record on December 30, 1998. 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 .................. $ 3,649,927 $ 6,199,614 $ 15,127,822 $ 30,282,899
Net realized capital gains ............. -- 80,822,684 26,440,581 1,689,364
------------ ------------ ------------ ------------
Total dividends ........................ $ 3,649,927 $ 87,022,298 $ 31,568,403 $ 31,972,263
============ ============ ============ ============
Dividend amounts per share ............. $ 0.056 $ 0.384 $ 0.204 $ 0.105
============ ============ ============ ============
Increase in number of shares per fund .. 3,080,576 30,263,002 13,563,464 22,419,396
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
FUND BOND FUND FUND FUND
---------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net investment income ................ $ 988,096 $ 805,870 $ 11,647,020 $ 432,712
Net realized capital gains ........... 22,729 -- 2,398,589 1,368,230
------------ ---------- ------------ ------------
Total dividends ...................... $ 1,010,825 $ 805,870 $ 14,045,609 $ 1,800,942
============ ========== ============ ============
Dividend amounts per share ........... $ 0.049 $ 0.050 $ 0.078 $ 0.014
============ ========== ============ ============
Increase in number of shares per fund 981,938 884,933 7,895,857 1,397,187
============ ========== ============ ============
</TABLE>
80
<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, 1998, 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 five 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 confirmation of securities owned as of
December 31, 1998 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, 1998, 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 five years in the period then ended in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
February 19, 1999
81
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
Exhibit 1(b). Articles Supplementary to Articles of Incorporation.
Exhibit 9. Consent and Opinion of General Counsel.
Exhibit 10(a). Consent of Independent Public Accountants.
Exhibit 10(b). Consent of Counsel.
Exhibit 27.1-.8. Financial Data Schedules.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Mutual of America Capital Management Corporation (the "Adviser") is the
investment adviser to the Investment Company, and is registered as an
investment adviser under the Investment Advisers Act of 1940. The names,
addresses and positions with the Adviser of each Director and officer of the
Adviser is set forth below.
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATION
NAME WITH ADVISER DURING PAST TWO YEARS
- ---------------------------- --------------------------- ------------------------------------
<S> <C> <C>
Thomas J. Moran ............ Director, Chairman of the President, Chief Executive Officer
320 Park Avenue Board and Director of Mutual of America
NY, NY 10022 Life
F. Harlan Batrus ........... Director Partner, Lazard Freres & Co.
30 Rockefeller Plaza
NY, NY 10020
Roger E. Birk .............. Director Chairman Emeritus, Merrill Lynch &
Merrill Lynch Co., Inc.
77 Broad Street
Red Bank, NJ 07701
Robert X. Chandler ......... Director Director, Development Office,
Director, Development Office Archdiocese of Boston
Archdiocese of Boston
2121 Commonwealth Avenue
Brighton, MA 02135
Nathaniel A. Davis ......... Director Vice President, Network Engineering
17680 Old Meadow Rd. Operations, Nextel
McLean, VA 22102 Communications
Anthony F. Earley .......... Director Chairman, President and Chief
Detroit Edison Company Operating Officer, Detroit
2000 Second Avenue Edison Co.
Room 2407 WCB
Detroit, MI 48226
William T. Knowles ......... Director Consultant
Orr's Island, ME 04066
Walter A. McDougal ......... Director Former Chairman and President,
Garden City, NY 11530 Richmond Hill Savings Bank
James E. Quinn ............. Director Vice Chairman, Tiffany & Co.
757 Fifth Avenue
NY, NY 10022
Richard J. Ciecka .......... President, Chief Vice Chairman of the Board, Mutual
320 Park Avenue Executive Officer of America Life, until October
NY, NY 10022 and Director 1998
Manfred Altstadt ........... Senior Executive Vice Senior Executive Vice President and
320 Park Avenue President and Chief Chief Financial Officer of Mutual
NY, NY 10022 Financial Officer of America Life and American Life
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATION
NAME WITH ADVISER DURING PAST TWO YEARS
- ------------------------------ -------------------------- -------------------------------------
<S> <C> <C>
Patrick A. Burns ............. Senior Executive Vice Senior Executive Vice President and
320 Park Avenue President and General General Counsel of Mutual of
NY, NY 10022 Counsel America Life and American Life
Amir Lear .................... Executive Vice President Senior Vice President, Mutual of
320 Park Avenue and Assistant to the America Life, until October 1998
NY, NY 10022 President and Chief
Executive Officer
Andrew L. Heiskell ........... Executive Vice President Executive Vice President of the
320 Park Avenue Adviser
NY, NY 10022
Thomas J. Larsen ............. Executive Vice President Executive Vice President of the
320 Park Avenue Adviser since June 1998; prior
NY, NY 10022 thereto, Senior Vice President,
Desai Capital Management
Joseph Brunken ............... Senior Vice President Senior Vice President of the Adviser
320 Park Avenue since November 1997; prior
NY, NY 10022 thereto, Vice President, Nikko
Capital Management (USA), Inc.
Jon J. LaBerge ............... Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Stanley M. Lenkowicz ......... Senior Vice President, Senior Vice President and Deputy
320 Park Avenue Deputy General General Counsel, Mutual of
NY, NY 10022 Counsel and Secretary America Life and American Life
Nancy McAvey ................. Senior Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Paul Travers ................. Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Gary P. Wetterau ............. Senior Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
David Wood ................... Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Aline Couture ................ Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Doris Klug ................... Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Jonathan Lee ................. Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Phillip McMahon .............. Vice President Equity Securities Analyst until
320 Park Avenue November 1998
NY, NY 10022
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATION
NAME WITH ADVISER DURING PAST TWO YEARS
- --------------------------- ---------------- ------------------------------
<S> <C> <C>
Robert H. Stewart ......... Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
</TABLE>
Each of Palley-Needelman Asset Management, Inc. ("Palley-Needelman"), Oak
Associates, Ltd. ("Oak Associates") and Fred Alger Management, Inc. ("Alger
Management") is a subadviser for a portion of the Active Assets of the All
America Fund allocated to it. Each subadviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The names, addresses and
positions of each director and officer of each subadviser are incorporated by
reference to the Form ADV of the subadviser filed with the Securities and
Exchange Commission, as set forth below.
Palley-Needleman Asset Management Inc., Form ADV, SEC File No. 801-9755.
Oak Associates, Ltd., Form ADV, SEC File No. 801-23632.
Fred Alger Management, Inc., Form ADV, SEC File No. 801-06709.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Mutual of America Life Insurance Company, the principal underwriter of
the Registrant, acts as depositor and principal underwriter of Mutual of
America Separate Account No. 2, and as principal underwriter of The American
Separate Account No. 2 and The American Separate Account No. 3 of The American
Life Insurance Company of New York.
(b) The name, business address and position of each senior officer and
director of Mutual of America are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER
- ------------------------------- ---------------------------
<S> <C>
DIRECTORS
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
Denver, Colorado
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
New York, New York
William Kahn Director
St. Louis, Missouri
LaSalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Fioravante G. Perrotta Director
New York, New York
Francis H. Schott Director
New York, New York
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER
- ------------------------- ----------------------------------------------------------------------
<S> <C>
O. Stanley Smith, Jr. Director
Columbia, South Carolina
Sheila M. Smythe Director
Valhalla, New York
Elie Wiesel Director
New York, New York
OFFICERS-DIRECTORS
William J. Flynn Chairman of the Board
Thomas J. Moran President and Chief Executive Officer
Manfred Altstadt Senior Executive Vice President and Chief Financial Officer
Patrick A. Burns Senior Executive Vice President and General Counsel
Salvatore R. Curiale Senior Executive Vice President, Technical Operations
OTHER OFFICERS
Diane Aramony Senior Vice President, Corporate Secretary and Assistant to the
Chairman
Meyer Baruch Senior Vice President, State Compliance and Government Regulations
since July 1996; prior thereto, Assistant Chief of the Life Insurance
and Companies Bureau of The New York State Insurance
Department
Deborah Swinford Becker Senior Vice President and Associate General Counsel
Nicholas Branchina Senior Vice President and Associate Treasurer
William Breneisen Executive Vice President, Office of Technology
Jeremy J. Brown Executive Vice President and Chief Actuary since April 1997; prior
thereto Consulting Actuary with Milliman & Robertson
Allen J. Bruckheimer Senior Vice President and Associate Treasurer
Patrick Burke Senior Vice President, Special Markets
Sean Carroll Senior Vice President, Facilities Management
William Conway Executive Vice President, Marketing and Corporate Communications
William A. DeMilt Executive Vice President, Real Estate Management
Warren A. Essner Senior Vice President, Corporate Services
James Flynn Senior Vice President, Marketing
Michael Gallagher Senior Vice President, Direct Response and Technical
Boca Raton, FL Communications
Harold J. Gannon Senior Vice President, Corporate Tax
Gordon Gaspard Senior Vice President, Technical Services
Robert Giaquinto Senior Vice President, MIS Operations
Thomas E. Gilliam Executive Vice President and Assistant to the President and Chief
Executive Officer
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER
- ----------------------- -------------------------------------------------------------------
<S> <C>
John R. Greed Executive Vice President and Treasurer since May 1997; Senior Vice
President and Deputy Treasurer July 1996 to May 1997; prior
thereto, partner, Arthur Andersen LLP
Thomas A. Harwood Senior Vice President, Competition and Asset Retention
Sandra Hersko Senior Vice President, Technical Administration
Edward J.T. Kenney Senior Vice President and Assistant to the President and Chief
Executive Officer
Gregory A. Kleva, Jr. Executive Vice President and Deputy General Counsel
Robert Kordecki Senior Vice President, National Accounts
Stanley M. Lenkowicz Senior Vice President and Deputy General Counsel
Daniel LeSaffre Senior Vice President, Human Resources and Training
Robert W. Maull Senior Vice President and Corporate Actuary
George L. Medlin Executive Vice President, Internal Audit
Lynn M. Nadler Senior Vice President, Training -- Boca Raton
Boca Raton, FL
Roger F. Napoleon Senior Vice President and Associate General Counsel
James Peterson Senior Vice President, Training -- New York and Leadership
Development
William Rose Senior Vice President, Field Operations
Dennis J. Routledge Senior Vice President, LAN/Telecommunications
Robert W. Ruane Senior Vice President, Corporate Communications and Direct
Response
William G. Shannon Senior Vice President, Individual Financial Planning
Walter W. Siegel Senior Vice President and Actuary
Joan M. Squires Senior Vice President, Business Applications
Eldon Wonacott Senior Vice President, Field Administration
Raymond Yeager Senior Vice President, MIS Operations
Boca Raton, FL
</TABLE>
The business address of all officers and directors is 320 Park Avenue, New
York, New York 10022, unless otherwise noted.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant had duly caused this post-effective
amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, the State of
New York, the 14th day of April, 1999.
MUTUAL OF AMERICA INVESTMENT CORPORATION
By: /s/ DOLORES J. MORRISSEY
--------------------------------
DOLORES J. MORRISSEY
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to its Registration Statement has been signed below by
the following persons in the capacities on April 14, 1999.
PRINCIPAL EXECUTIVE OFFICER:
By: /s/ DOLORES J. MORRISSEY
--------------------------
DOLORES J. MORRISSEY
PRESIDENT
PRINCIPAL FINANCIAL OFFICER and PRINCIPAL ACCOUNTING OFFICER:
/s/ MANFRED ALTSTADT
- -----------------------------
MANFRED ALTSTADT
DIRECTORS:
/s/ MANFRED ALTSTADT
- -----------------------------
MANFRED ALTSTADT
/s/ DOLORES J. MORRISSEY
- -----------------------------
DOLORES J. MORRISSEY
*
- -----------------------------
PETER J. FLANAGAN
*
- -----------------------------
GEORGE J. MERTZ
*
- -----------------------------
JAMES J. NEEDHAM
*
- -----------------------------
HOWARD J. NOLAN
*By: /s/ MANFRED ALTSTADT
-------------------------
ATTORNEY-IN-FACT
C-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. PAGE
- --------------- -----
<S> <C> <C>
27.1 Financial Data Schedule for Equity Index Fund
27.2 Financial Data Schedule for All America Fund
27.3 Financial Data Schedule for Aggressive Equity Fund
27.4 Financial Data Schedule for Composite Fund
27.5 Financial Data Schedule for Bond Fund
27.6 Financial Data Schedule for Mid-Term Bond Fund
27.7 Financial Data Schedule for Short-Term Bond Fund
27.8 Financial Data Schedule for Money Market Fund
99.1 (b) Articles Supplementary to Articles of Incorporation
99.9 Consent and Opinion of General Counsel
99.10(a) Consent of Independent Public Accountants
99.10(b) Consent of Counsel
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> EQUITY INDEX FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 287,295,071
<INVESTMENTS-AT-VALUE> 410,277,711
<RECEIVABLES> 71,818
<ASSETS-OTHER> 406,944
<OTHER-ITEMS-ASSETS> 10,326
<TOTAL-ASSETS> 410,766,799
<PAYABLE-FOR-SECURITIES> 448
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 297,765,055
<SHARES-COMMON-STOCK> 167,559,906
<SHARES-COMMON-PRIOR> 114,031,969
<ACCUMULATED-NII-CURRENT> 25,162
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,006,505)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,982,639
<NET-ASSETS> 410,766,351
<DIVIDEND-INCOME> 4,641,412
<INTEREST-INCOME> 938,913
<OTHER-INCOME> 0
<EXPENSES-NET> 412,769
<NET-INVESTMENT-INCOME> 5,167,556
<REALIZED-GAINS-CURRENT> 4,309,294
<APPREC-INCREASE-CURRENT> 72,664,856
<NET-CHANGE-FROM-OPS> 82,141,706
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,127,822
<DISTRIBUTIONS-OF-GAINS> 26,440,581
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 99,314,538
<NUMBER-OF-SHARES-REDEEMED> 59,350,065
<SHARES-REINVESTED> 13,563,464
<NET-CHANGE-IN-ASSETS> 53,527,937
<ACCUMULATED-NII-PRIOR> (14,572)
<ACCUMULATED-GAINS-PRIOR> 12,124,782
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 412,769
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 412,769
<AVERAGE-NET-ASSETS> 329,642,151
<PER-SHARE-NAV-BEGIN> 2.08
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.55
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (0.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.45
<EXPENSE-RATIO> 0.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> ALL AMERICA FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 403,576,469
<INVESTMENTS-AT-VALUE> 733,352,393
<RECEIVABLES> 11,050
<ASSETS-OTHER> 729,575
<OTHER-ITEMS-ASSETS> 2,434,656
<TOTAL-ASSETS> 736,527,674
<PAYABLE-FOR-SECURITIES> 4,178,559
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 4,178,559
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 404,058,426
<SHARES-COMMON-STOCK> 252,884,422
<SHARES-COMMON-PRIOR> 258,068,880
<ACCUMULATED-NII-CURRENT> (368,798)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,116,437)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 329,775,924
<NET-ASSETS> 732,349,115
<DIVIDEND-INCOME> 8,564,603
<INTEREST-INCOME> 1,000,865
<OTHER-INCOME> 0
<EXPENSES-NET> 3,559,615
<NET-INVESTMENT-INCOME> 6,005,853
<REALIZED-GAINS-CURRENT> 75,028,110
<APPREC-INCREASE-CURRENT> 51,132,012
<NET-CHANGE-FROM-OPS> 132,165,975
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,199,614
<DISTRIBUTIONS-OF-GAINS> 80,822,684
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,550,567
<NUMBER-OF-SHARES-REDEEMED> 51,998,029
<SHARES-REINVESTED> 30,263,002
<NET-CHANGE-IN-ASSETS> (5,184,460)
<ACCUMULATED-NII-PRIOR> (175,037)
<ACCUMULATED-GAINS-PRIOR> 4,678,137
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,559,615
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,559,615
<AVERAGE-NET-ASSETS> 711,469,584
<PER-SHARE-NAV-BEGIN> 2.71
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.54
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (0.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.90
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> AGGRESSIVE EQUITY FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 174,408,882
<INVESTMENTS-AT-VALUE> 205,579,431
<RECEIVABLES> 0
<ASSETS-OTHER> 205,460
<OTHER-ITEMS-ASSETS> 6,063
<TOTAL-ASSETS> 205,790,954
<PAYABLE-FOR-SECURITIES> 378,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 378,125
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,159,450
<SHARES-COMMON-STOCK> 136,169,705
<SHARES-COMMON-PRIOR> 178,807,178
<ACCUMULATED-NII-CURRENT> (10,452)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (23,906,718)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,170,549
<NET-ASSETS> 205,412,829
<DIVIDEND-INCOME> 1,752,545
<INTEREST-INCOME> 680,420
<OTHER-INCOME> 0
<EXPENSES-NET> 2,007,629
<NET-INVESTMENT-INCOME> 425,336
<REALIZED-GAINS-CURRENT> (23,621,835)
<APPREC-INCREASE-CURRENT> 9,581,686
<NET-CHANGE-FROM-OPS> (13,614,813)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 432,712
<DISTRIBUTIONS-OF-GAINS> 1,368,230
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46,769,027
<NUMBER-OF-SHARES-REDEEMED> 90,803,686
<SHARES-REINVESTED> 1,397,187
<NET-CHANGE-IN-ASSETS> (42,637,472)
<ACCUMULATED-NII-PRIOR> (3,076)
<ACCUMULATED-GAINS-PRIOR> 1,083,347
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,007,629
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,007,629
<AVERAGE-NET-ASSETS> 236,448,041
<PER-SHARE-NAV-BEGIN> 1.61
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.51
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> COMPOSITE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 302,077,790
<INVESTMENTS-AT-VALUE> 334,569,873
<RECEIVABLES> 0
<ASSETS-OTHER> 1,621,390
<OTHER-ITEMS-ASSETS> 10,084
<TOTAL-ASSETS> 336,201,347
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 307,142,582
<SHARES-COMMON-STOCK> 188,998,726
<SHARES-COMMON-PRIOR> 187,916,189
<ACCUMULATED-NII-CURRENT> 761,149
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,194,467)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,492,083
<NET-ASSETS> 336,201,347
<DIVIDEND-INCOME> 2,163,375
<INTEREST-INCOME> 11,211,064
<OTHER-INCOME> 0
<EXPENSES-NET> 1,601,894
<NET-INVESTMENT-INCOME> 11,772,545
<REALIZED-GAINS-CURRENT> 3,264,030
<APPREC-INCREASE-CURRENT> 28,079,557
<NET-CHANGE-FROM-OPS> 43,116,132
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,647,020
<DISTRIBUTIONS-OF-GAINS> 2,398,589
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,518,911
<NUMBER-OF-SHARES-REDEEMED> 16,332,231
<SHARES-REINVESTED> 7,895,857
<NET-CHANGE-IN-ASSETS> 1,082,537
<ACCUMULATED-NII-PRIOR> 635,624
<ACCUMULATED-GAINS-PRIOR> (5,059,908)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,601,894
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,601,894
<AVERAGE-NET-ASSETS> 320,099,577
<PER-SHARE-NAV-BEGIN> 1.62
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.78
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 446,300,888
<INVESTMENTS-AT-VALUE> 460,257,815
<RECEIVABLES> 142,942
<ASSETS-OTHER> 4,925,577
<OTHER-ITEMS-ASSETS> 2,658
<TOTAL-ASSETS> 465,328,992
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 456,250,383
<SHARES-COMMON-STOCK> 326,640,323
<SHARES-COMMON-PRIOR> 289,863,800
<ACCUMULATED-NII-CURRENT> (876,674)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,001,644)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,956,927
<NET-ASSETS> 465,328,992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 32,467,679
<OTHER-INCOME> 0
<EXPENSES-NET> 2,245,279
<NET-INVESTMENT-INCOME> 30,222,400
<REALIZED-GAINS-CURRENT> 747,807
<APPREC-INCREASE-CURRENT> (41,522)
<NET-CHANGE-FROM-OPS> 30,928,685
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 30,282,899
<DISTRIBUTIONS-OF-GAINS> 1,689,364
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 77,260,563
<NUMBER-OF-SHARES-REDEEMED> 62,903,436
<SHARES-REINVESTED> 22,419,396
<NET-CHANGE-IN-ASSETS> 36,776,523
<ACCUMULATED-NII-PRIOR> (816,175)
<ACCUMULATED-GAINS-PRIOR> (3,060,087)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,245,279
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,245,279
<AVERAGE-NET-ASSETS> 449,078,884
<PER-SHARE-NAV-BEGIN> 1.43
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.42
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MID-TERM BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 15,154,927
<INVESTMENTS-AT-VALUE> 15,277,977
<RECEIVABLES> 0
<ASSETS-OTHER> 738
<OTHER-ITEMS-ASSETS> 151,589
<TOTAL-ASSETS> 15,430,304
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,547,869
<SHARES-COMMON-STOCK> 16,952,106
<SHARES-COMMON-PRIOR> 16,222,865
<ACCUMULATED-NII-CURRENT> (54,119)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,186,496)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 123,050
<NET-ASSETS> 15,430,304
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 858,591
<OTHER-INCOME> 0
<EXPENSES-NET> 68,431
<NET-INVESTMENT-INCOME> 790,160
<REALIZED-GAINS-CURRENT> 84,974
<APPREC-INCREASE-CURRENT> (37,685)
<NET-CHANGE-FROM-OPS> 837,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 805,870
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,542,507
<NUMBER-OF-SHARES-REDEEMED> 9,698,201
<SHARES-REINVESTED> 884,933
<NET-CHANGE-IN-ASSETS> 729,239
<ACCUMULATED-NII-PRIOR> (38,409)
<ACCUMULATED-GAINS-PRIOR> (1,271,470)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 68,431
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68,431
<AVERAGE-NET-ASSETS> 13,707,244
<PER-SHARE-NAV-BEGIN> 0.90
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0.91
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> SHORT-TERM BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 21,724,432
<INVESTMENTS-AT-VALUE> 21,760,232
<RECEIVABLES> 49,150
<ASSETS-OTHER> 167,126
<OTHER-ITEMS-ASSETS> 972
<TOTAL-ASSETS> 21,977,480
<PAYABLE-FOR-SECURITIES> 2,292
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 2,292
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,933,271
<SHARES-COMMON-STOCK> 21,351,075
<SHARES-COMMON-PRIOR> 14,339,355
<ACCUMULATED-NII-CURRENT> 13,225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,108)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 35,800
<NET-ASSETS> 21,975,188
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,093,898
<OTHER-INCOME> 0
<EXPENSES-NET> 91,736
<NET-INVESTMENT-INCOME> 1,002,162
<REALIZED-GAINS-CURRENT> 15,002
<APPREC-INCREASE-CURRENT> (22,056)
<NET-CHANGE-FROM-OPS> 995,108
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 988,096
<DISTRIBUTIONS-OF-GAINS> 22,729
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,305,009
<NUMBER-OF-SHARES-REDEEMED> 5,275,226
<SHARES-REINVESTED> 981,938
<NET-CHANGE-IN-ASSETS> 7,011,721
<ACCUMULATED-NII-PRIOR> (841)
<ACCUMULATED-GAINS-PRIOR> 619
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91,736
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 91,736
<AVERAGE-NET-ASSETS> 18,348,525
<PER-SHARE-NAV-BEGIN> 1.02
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.03
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 80,766,399
<INVESTMENTS-AT-VALUE> 80,766,399
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,279
<TOTAL-ASSETS> 80,769,678
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 80,655,650
<SHARES-COMMON-STOCK> 68,195,147
<SHARES-COMMON-PRIOR> 57,364,909
<ACCUMULATED-NII-CURRENT> 124,861
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,833)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 80,769,678
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,817,397
<OTHER-INCOME> 0
<EXPENSES-NET> 173,091
<NET-INVESTMENT-INCOME> 3,644,306
<REALIZED-GAINS-CURRENT> (1,091)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,643,215
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,649,927
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,030,676
<NUMBER-OF-SHARES-REDEEMED> 57,281,015
<SHARES-REINVESTED> 3,080,576
<NET-CHANGE-IN-ASSETS> 10,830,237
<ACCUMULATED-NII-PRIOR> 130,482
<ACCUMULATED-GAINS-PRIOR> (9,742)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 173,091
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173,091
<AVERAGE-NET-ASSETS> 69,261,855
<PER-SHARE-NAV-BEGIN> 1.18
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.18
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
MUTUAL OF AMERICA INVESTMENT CORPORATION
ARTICLES SUPPLEMENTARY TO THE CHARTER
Mutual of America Investment Corporation, a Maryland corporation (the
CORPORATION), with its principal office c/o Corporation Trust Incorporated, 300
East Lombard Street, Baltimore, Maryland 21202, hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The total number of shares of capital stock of all classes that
the Corporation has authority to issue is three billion (3,000,000,000) shares
of common stock, par value $.01 per share, with an aggregate par value of thirty
million dollars ($30,000,000).
SECOND: Pursuant to authority vested in the Board of Directors of the
Corporation by Section 5.1 of the Articles of Incorporation of the Corporation
(the ARTICLES) and resolutions adopted by the Board of Directors at meetings
duly held, the Board of Directors has duly designated the following classes of
shares and allocated authorized common stock as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aggressive Equity Fund -500 million shares Mid-Cap Equity Index Fund - 150 million shares
All America Fund -500 million shares Mid-Term Bond Fund - 75 million shares
Bond Fund -425 million shares Money Market Fund - 100 million shares
Composite Fund -300 million shares Short-Term Bond Fund - 50 million shares
Equity Index Fund -275 million shares
</TABLE>
The relative preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of each such class are as set forth in Section 5.3 of
Article V of the Articles.
THIRD: Pursuant to authority vested in the Board of Directors of the
Corporation by Article V of the Articles and resolutions adopted by the Board of
Directors at meetings duly held, the Board of Directors has authorized
allocation of such additional shares of common stock of each of the Funds, with
the same relative preferences and other rights as then outstanding shares of
such classes as set forth in Section 5.3 of the Articles, as are necessary from
time to time to permit the issuance of shares required on a daily basis in the
operation of each of the Funds, and the Board has authorized the officers of the
Corporation to specify the amount of such additional shares as needed, with a
report thereon to be made at the next regularly scheduled meeting of the Board
of Directors.
IN WITNESS WHEREOF, the President of the Corporation has signed these
Articles Supplementary in the Corporation's name and on its behalf and
acknowledges that these Articles Supplementary are the act of the Corporation,
and states that to the best of her knowledge, information and belief all matters
and facts set forth therein relating to the authorization and approval of the
Articles Supplementary are true in all material respects and that this statement
is made under the penalties of perjury.
Dated: April 6, 1999
MUTUAL OF AMERICA
INVESTMENT CORPORATION
Attest:
/s/ Dolores J. Morrissey
-------------------------------
/s/ Stanley M. Lenkowicz Dolores J. Morrissey, President
- ------------------------------------
Stanley M. Lenkowicz, Secretary
(seal)
Exhibit 99.9
[Letterhead of Patrick A. Burns, Senior Executive
Vice President and General Counsel]
April 14, 1999
Mutual of America Investment Corporation
320 Park Avenue
New York, New York 10022
Dear Sirs/Madams:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A (the "Post-Effective
Amendment") of Mutual of America Investment Corporation and the proposed
offering of common shares, par value $.01 per share, of the Mid-Cap Equity Index
Fund described in the Post-Effective Amendment.
I have reviewed such documents and records as I have deemed necessary to express
an informed opinion on the matters covered hereby. It is my opinion that the
common shares of the Mid-Cap Equity Index Fund, when issued and sold in
accordance with the Post-Effective Amendment and in jurisdictions where such
sales have been authorized, will be legally issued, fully paid and
non-assessable.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment and to the reference to my name under the heading "Legal Matters" in
the Statement of Additional Information.
Sincerely,
/s/ Patrick A. Burns
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of Registration
Statement No. 33-6486.
ARTHUR ANDERSEN LLP
New York, New York
April 15, 1999
EXHIBIT 99.10(b)
CONSENT OF COUNSEL
We hereby consent to the reference to our firm included in the prospectus
filed as part of Registration Statement No. 33-6486.
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
New York, New York
April 15, 1999
