<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1996
Registration No. 33-87874
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
---
Post-Effective Amendment No.___ [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2
---
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
320 Park Avenue, New York, New York 10022
(Address of Registrant's Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, including Area Code: (212) 224-
PATRICK A. BURNS
Senior Executive Vice President and General Counsel
Mutual of America Institutional Funds, Inc.
320 Park Avenue, New York, New York 10022
(Name and Address of Agent for Service)
Copies to:
Stanley M. Lenkowicz Robert S. Schneider
Senior Vice President & Deputy General Counsel Graham & James LLP
Mutual of America Life Insurance Company 885 Third Avenue
320 Park Avenue New York, New York 10022
New York, New York 10022
----------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Pursuant to Rule 24f-2(a)(1) of the Investment Company Act of 1940, the
Registrant is registering an indefinite number or amount of its securities under
the Securities Act of 1933. A filing fee of $500 was enclosed with the initial
Registration Statement.
----------------------------
The Registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) ofthe Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
PROSPECTUS
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022
Mutual of America Institutional Funds, Inc. (the "Investment Company") is an
open-end management investment company (a mutual fund) currently issuing two
series of common stock representing SHARES of the Equity Fund and the Bond Fund.
Each Fund has its own investment objective and policies. Shares of the Funds of
the Investment Company are offered on a no-load basis. ALL PURCHASES AND
REDEMPTIONS OF FUND SHARES ARE REQUIRED TO BE MADE BY WIRE TRANSFER OF FEDERAL
FUNDS.
The Investment Company is designed primarily as an investment vehicle for
endowments, foundations, corporations, municipalities and other public entities
and other institutional investors. The minimum initial investment currently
required is $25,000, except that the Investment Company may waive this
requirement for certain institutional investors, AND THE MINIMUM AMOUNT FOR
ADDITIONAL PURCHASES CURRENTLY IS $5,000.
The EQUITY FUND's investment objective is to achieve a combination of growth and
income by focusing on stocks with above average yields and below average
price/earnings ratios that are listed on national securities exchanges or on the
NASDAQ system OR TRADED OVER-THE-COUNTER. The BOND FUND's primary investment
objective is to provide a high level of current income, with preservation of
shareholders' capital a secondary objective, by investing primarily in publicly
traded, investment grade debt securities. SEE "INVESTMENT OBJECTIVES AND
POLICIES OF THE FUNDS", BEGINNING ON PAGE 3.
Mutual of America Capital Management Corporation (the "Adviser") is the
investment adviser for the Funds, and shares of the Funds are distributed by
Mutual of America Securities Corporation (the "Distributor"), an affiliate of
the Adviser. An application to purchase Fund shares is attached at the back of
this Prospectus. FOR INFORMATION ABOUT HOW TO MAKE INITIAL AND SUBSEQUENT
PURCHASES OF FUND SHARES AND HOW TO REDEEM OR EXCHANGE FUND SHARES OWNED, REFER
TO "PURCHASE OF SHARES" ON PAGE 13 AND "REDEMPTION AND EXCHANGE OF SHARES" ON
PAGE 14 OF THIS PROSPECTUS.
This Prospectus describes the investment objectives and policies of the Funds
and sets forth information about the Investment Company that a potential
investor should know before making an investment in Fund shares. A Statement of
Additional Information dated February , 1996 has been filed with the Securities
and Exchange Commission. The Statement of Additional Information is incorporated
by reference into this Prospectus and is available at no charge by writing to
the Investment Company at the above address or by calling 1-800- .
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
YOU SHOULD READ THIS PROSPECTUS CAREFULLY BEFORE INVESTING AND KEEP IT FOR
FUTURE REFERENCE.
PROSPECTUS DATED FEBRUARY , 1996
<PAGE>
TABLE OF CONTENTS
Page
----
Annual Fees and Expenses................................................. 2
General Description of the Investment Company............................ 3
Investment Objectives and Policies of the Funds.......................... 3
Investment Advisory and Administrative Arrangements...................... 11
The Funds' Expenses...................................................... 12
Portfolio Transactions................................................... 12
Purchase of Shares....................................................... 13
Redemption and Exchange of Shares........................................ 14
Dividends, Distributions and Taxes....................................... 15
Additional Information................................................... 17
An Application is included at the end of this Prospectus
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in
connection with the offer contained in this Prospectus, and, if
given or made, such other information or representation must not
be relied upon as having been authorized by the Investment
Company, the Adviser or the Distributor. This Prospectus
does not constitute an offering in any state in which
such offering may not lawfully be made.
ANNUAL FEES AND EXPENSES
EQUITY FUND BOND FUND
----------- ---------
SHAREHOLDER TRANSACTION EXPENSES none none
ANNUAL FUND OPERATING EXPENSES (l)
(as a percentage of average net assets)
Investment Advisory Fees .50% .45%
Other Expenses (after expense reimbursement)(2) .35% .25%
--- ---
TOTAL OPERATING EXPENSES (AFTER EXPENSE REIMBURSEMENT)(2) .85% .70%
(l) The Investment Company had not commenced operations as of the date of this
Prospectus, and "Other Expenses" have been estimated.
(2) The Adviser has voluntarily agreed to limit the total expenses (excluding
taxes, brokerage commissions and extraordinary expenses) of the Funds to an
annual rate of .85% of net assets for the Equity Fund and .70% of net assets
for the Bond Fund. If this policy were not in effect, the estimated Other
Expenses and Total Operating Expenses as a percentage of average net assets
would be .61% and 1.11% for the Equity Fund and .61% and 1.06% for the Bond
Fund. See "Investment Advisory and Administrative Arrangements."
-2-
<PAGE>
EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
1 Year 3 Years
------ -------
Equity Fund $8.85 $29.04
Bond Fund $7.30 $23.97
The information in the table above is an estimate based on the Funds' expected
expenses after expense reimbursements and is provided for purposes of assisting
you in understanding the various costs and expenses that an investor in the
Funds will bear, directly or indirectly. THE 5% HYPOTHETICAL ANNUAL RETURN AND
ESTIMATED ANNUAL EXPENSES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF
FUTURE FUND PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY BE GREATER OR LESSER THAN
SHOWN. For a more detailed discussion of the Funds' fees and expenses, see
"Investment Advisory and Administrative Arrangements."
GENERAL DESCRIPTION OF THE INVESTMENT COMPANY
The Investment Company was formed as a Maryland corporation on October 27, 1994.
It is a diversified, open-end management investment company as those terms are
defined in the Investment Company Act of 1940 (the "1940 Act"). Its investment
adviser is Mutual of America Capital Management Corporation (the "Adviser").
Shares of the Funds are offered on a no-load basis.
As a "series" type of mutual fund, the Investment Company issues separate
classes (or series) of stock, each representing a separate portfolio of
securities ("Fund"). Currently, the Investment Company consists of the Equity
Fund and the Bond Fund. Additional Funds may be established in the future. The
Investment Company does not issue certificates for shares of Funds purchased.
The Investment Company is designed primarily as an investment vehicle for
endowments, foundations, corporations, municipalities or other public entities
and other institutional investors. Currently, the Investment Company requires a
minimum initial investment of $25,000, except that this requirement may be
waived by the Investment Company in its discretion for certain institutional
investors. At the discretion of the Investment Company, individuals who satisfy
the Investment Company's initial minimum investment requirement also may
purchase Fund shares. The minimum amount for additional purchases of Fund shares
currently is $5,000.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
INVESTMENT OBJECTIVES
Each Fund of the Investment Company has a different investment objective which
it pursues through separate investment policies. The investment objectives of
each Fund may not be changed without the approval of the holders of a majority
of the outstanding shares of each Fund affected. There can be no assurance that
a Fund will meet its objectives. The investment objectives and policies of each
Fund are discussed below. Particular types of securities in which the Funds may
invest and any applicable percentage limitations for such securities are
discussed below under "Other Portfolio Strategies and Associated Risk Factors."
The differences in objectives and policies between the Funds can be expected to
affect the return of each Fund and the degree of market and financial risk to
which each Fund is subject. As used in the following discussion, "market risk"
refers to the volatility of the reaction of the price of a security to changes
in conditions in the securities markets in general and, with particular
reference to debt securities, changes in the overall level of interest rates;
"financial risk" refers to the ability of an
-3-
<PAGE>
issuer of a debt security to pay principal and interest on that security and to
the earning stability and overall financial soundness of an issuer of an equity
security; and "current income volatility" refers to the degree and rapidity with
which changes in the overall level of interest rates become reflected in the
level of current income of a Fund.
Equity Fund
The investment objective of the Equity Fund is to achieve a combination of
growth and income by focusing on stocks with above average yields and below
average price/earnings ratios. The Equity Fund will invest primarily in a
diversified portfolio of common stocks listed on national securities exchanges
or on the NASDAQ system, stocks that are traded over-the-counter and in other
equity securities, namely preferred stock, convertible preferred stock,
convertible bonds, warrants and American Depository Receipts ("ADRs"). Under
normal market conditions, at least 65% of the Equity Fund's total assets will be
invested in equity securities. The Equity Fund seeks to outperform the Standard
& Poor's 500 Composite Index, although there is no assurance this goal will be
realized.
The Equity Fund may invest from time to time in foreign equity securities. A
portion of the Equity Fund's assets may be invested in money market instruments,
pending more permanent investment or to effectively utilize cash reserves. If,
in light of economic conditions and/or the general level of common stock prices,
the Adviser considers that the Equity Fund's investment objectives will not be
met by using most of its assets to buy equities or their equivalents, assets may
be invested for temporary defensive purposes in high-grade debt securities or
maintained in cash. The Equity Fund will not invest in debt securities rated
below investment grade. Securities which are subsequently downgraded may
continue to be held and will be sold only if, in the judgment of the Adviser, it
is advantageous to do so.
The Equity Fund also may enter into transactions in options on securities and
options, futures contracts and options on futures contracts on indexes of
securities, and engage in the buying and selling of options (both puts and
calls): (1) on individual securities, (2) on groups of securities and (3) on
futures of groups of securities. Any option or future purchased or sold by the
Fund will be listed on a domestic exchange.
Because the Equity Fund invests primarily in common stocks, the Fund is expected
to be subject to moderately high levels of market risk and moderate levels of
financial risk.
BOND FUND
The primary investment objective of the Bond Fund is to provide a high level of
current income. A secondary objective is preservation of shareholders' capital.
The Bond Fund seeks to realize these objectives through careful selection and,
when appropriate, active trading of bonds and other investments. The assets of
the Bond Fund will consist primarily of publicly traded debt securities, such as
bonds, notes and debentures, and may include mortgage-backed securities and
asset-backed securities, subject to the limitations set forth below under "Other
Portfolio Strategies and Associated Risk Factors". Debt securities may carry
certain equity features, such as conversion or exchange rights, or warrants for
the acquisition of stocks of the same or different issuers, or participations
based on revenues, sales or profits. Average maturities of securities held by
the Bond Fund will vary according to market conditions and the stage of the
interest rate cycle. Under normal market conditions, at least 65% of the Bond
Fund's total assets will be invested in debt securities.
It is contemplated that at least 80% of the Bond Fund's assets will consist of
(1) domestic debt securities that have at the time of purchase a rating of at
least Baa3 as determined by Moody's Investors Services, Inc. or BBB- as
determined by Standard & Poor's Corporation or equivalent
-4-
<PAGE>
ratings of a similar nationally recognized rating service, which are investment
grade securities; (2) securities issued or guaranteed by the United States
Government or its agencies or instrumentalities; (3) cash; and (4) money market
instruments. These instruments should be subject to little financial risk, to
moderately high levels of market risk and to moderate current income volatility.
(A description of corporate bond ratings is set forth in the Investment
Company's Statement of Additional Information.)
The remaining assets of the Bond Fund may be invested in (1) other debt
securities that are unrated or rated lower than Baa3 or BBB-, which are
sometimes referred to as high yield/high risk securities or "junk bonds", (2)
Canadian and other foreign debt securities, and (3) debt securities issued in
foreign markets by domestic issuers or their overseas subsidiaries if guaranteed
by the parent.
The market value of fixed-income debt securities is affected by changes in
general market interest rates. If interest rates fall, the market value of
fixed-income securities tends to rise; however, if interest rates rise, the
market value of fixed-income securities tends to fall. In recent years the
volatility of the market for debt securities has increased significantly, and
the market value of longer-term obligations has been subject to wide
fluctuations, particularly as contrasted with short-term instruments. The Bond
Fund may sell securities and realize gain or income to the extent such
realizations are considered advantageous in light of existing market conditions.
It is not currently contemplated that more than 5% of the Bond Fund's total
assets will consist of unrated securities or securities rated lower than Baa3 or
BBB- ("junk bonds"). These securities may be subject to greater market and
financial risk than higher quality (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. Risk factors related to
investments in lower rated and unrated securities are more fully described in
the Statement of Additional Information.
The Bond Fund will not directly purchase common stocks. However, the Bond Fund
may have up to 10% of the value of its total assets invested in stocks acquired
either by conversion of fixed-income securities or by the exercise of warrants
attached thereto.
The Bond Fund may enter into transactions in options, futures contracts and
options on futures contracts on United States Treasury securities and Government
National Mortgage Association ("GNMA") Securities. To be included in the Bond
Fund, options and futures must be traded on a domestic exchange.
INVESTMENT RESTRICTIONS
The Investment Company has adopted a number of restrictions and policies
relating to the investment of its assets and its activities which are
fundamental policies and may not be changed without the approval of the holders
of the Investment Company's outstanding voting securities (including a majority
of the shares of each Fund). No Fund will: (1) with respect to at least 75% of
the value of its total assets, invest more than 5% of its total assets in the
securities of any one issuer (including repurchase agreements with any one
institution), other than securities issued or guaranteed by the United States
Government or its agencies or instrumentalities; (2) with respect to at least
75% of the value of its total assets, purchase more than 5% of the outstanding
voting securities of an issuer, except that such restriction shall not apply to
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities; (3) make an investment in an industry if that investment
would make the Fund's holding in that industry exceed 25% of the Fund's total
assets; or
-5-
<PAGE>
(4) invest more than 10% of its total assets in repurchase agreements
or time deposits maturing in more than seven days or in portfolio securities not
readily marketable. An investor should refer to the Statement of Additional
Information for a complete description of such restrictions and policies.
OTHER PORTFOLIO STRATEGIES AND ASSOCIATED RISK FACTORS
Lending of Securities
A Fund may lend its securities, but not in excess of 30% of its total assets, to
brokers, dealers and financial institutions and receive as collateral cash,
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities, or letters of credit of certain banks selected by the
Adviser, which at all times while the loan is outstanding will be maintained in
amounts equal to at least 100% of the current market value of the loaned
securities. The Fund will continue to receive interest or dividends on the
securities lent, and in addition will receive a portion of the income generated
by the short-term investment of cash received as collateral, or, alternatively,
where securities or a letter of credit are used as collateral, a lending fee
paid directly to the Fund by the borrower of the securities. Such loans will be
terminable by the Fund at any time and will not be made to affiliates of the
Fund. The Fund will have the right to regain record ownership of loaned
securities in order to exercise beneficial rights, such as voting rights or
subscription rights. The Fund may pay reasonable fees to persons unaffiliated
with the Fund for services or for arranging such loans. Loans of securities
will be made only to firms that the Adviser deems creditworthy. As with an
extension of credit, however, there are risks of delay in recovery and even loss
of rights in the collateral, should the borrower of securities default, become
the subject of bankruptcy proceedings or otherwise be unable to fulfill its
obligations or fail financially.
Borrowing
A Fund may borrow money from banks for temporary purposes, such as meeting
redemption requests, and may pledge assets to secure such borrowings. The
aggregate amount borrowed by a Fund may not exceed 5% of its total assets.
Repurchase Agreements
Repurchase Agreements are more fully described in the Statement of Additional
Information. If a seller of a repurchase agreement defaults and does not
repurchase the security subject to the agreement, the Fund would look to the
collateral security underlying the seller's repurchase agreement, including the
securities subject to the repurchase agreement, for satisfaction of the seller's
obligation to the Fund; in such event the Fund might incur disposition costs in
liquidating the collateral and might suffer a loss if the value of the
collateral declines. In addition, there is a risk that, if the issuer of the
repurchase agreement becomes involved in bankruptcy proceedings, the Fund might
be delayed or prevented from liquidating the underlying security or otherwise
obtaining it for its own purposes.
Foreign Securities and ADRs
In addition to investing in domestic securities, each Fund may invest in
securities of foreign issuers, including such securities traded outside the U.S.
No Fund, however, will trade in foreign exchange or invest in securities of
foreign issuers if, at the time of acquisition, more than 20% of its total
assets taken at market value at the time of investment would be invested in
foreign securities.
Because investments in foreign securities, particularly those of non-
governmental issuers, involve considerations which are not ordinarily associated
with investing in domestic issuers, the Investment Company will consider these
special factors before investing in foreign securities. These
-6-
<PAGE>
considerations include changes in currency rates, currency exchange control
regulations, the possibility of expropriation, the unavailability of financial
information or the difficulty of interpreting financial information prepared
under foreign accounting standards, less liquidity and more volatility in
foreign securities markets, the impact of political, social or diplomatic
developments and the difficulty of assessing economic trends in foreign
countries. If it should become necessary, the Funds could encounter greater
difficulties involving legal processes abroad than would be encountered in the
United States. In addition, transaction costs in foreign securities may be
higher. The Investment Company will not invest in foreign securities unless, in
its opinion, such investments will meet the standard and objectives of a
particular Fund. No Fund may concentrate its investments in any particular
foreign country except Canada. Foreign issues guaranteed by domestic
corporations are considered to be domestic securities.
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. No
Fund will purchase ADRs if the transaction would cause more than 10% of the
Fund's total assets to be invested in ADRs.
Money Market Instruments
The Equity Fund and the Bond Fund may invest in money market instruments. Money
market instruments, which are payable in United States dollars, include (1)
securities issued or guaranteed by the United States Government or one of its
agencies or instrumentalities ("government securities"); (2) negotiable
certificates of deposit, bank time deposits, bankers' acceptances and other
short-term debt obligations of domestic banks and foreign branches of domestic
banks and U.S. branches of foreign banks (see "Foreign Securities and ADRs"
above), which at the time of their most recent annual financial statements show
assets in excess of $1 billion; (3) certificates of deposit, time deposits and
other short-term debt obligations of domestic savings and loan associations,
each of which at the time of its most recent annual financial statements shows
assets in excess of $1 billion; (4) repurchase agreements covering government
securities, certificates of deposit, commercial paper or bankers' acceptances;
(5) commercial paper; (6) variable amount floating rate notes; and (7) debt
securities issued by a corporation. These instruments are more fully described
in the Statement of Additional Information. Money market instruments may have a
remaining maturity of up to 13 months (25 months in the case of government
securities).
Convertible Securities
The Equity Fund may invest in convertible securities, which normally provide a
higher yield than the underlying stock but a lower yield than a fixed-income
security without the convertibility feature. The price of the convertible
security normally will vary to some degree with changes in the price of the
underlying stock, although the higher yield tends to make the convertible
security less volatile than the underlying common stock. The price of the
convertible security also will vary to some degree inversely with interest
rates.
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 which are not readily marketable, or "illiquid", including 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. 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.
-7-
<PAGE>
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 and regularly reviewed by
the Board of Directors of the Investment Company. Securities which 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.
"Derivative Securities"
Each Fund may invest in certain securities referred to as "derivatives",
although there is no clear definition of which instruments constitute
derivatives. In general, derivatives are investments whose values are based
upon, or derived from, some underlying security or other asset, index or
currency. For example, mortgage and other asset backed securities, options and
futures contracts, and equipment trust certificates may be considered to be
derivatives. The Funds do not invest in derivatives for speculative purposes.
Each Fund may purchase derivatives that are debt securities to the extent
consistent with its investment objectives and policies and may purchase options
and futures contracts and options on futures contracts for hedging purposes,
subject to the limitations set forth below.
Mortgage-Backed and Other Asset-Backed Securities
The Funds may invest in mortgage-backed securities, some of which are also
considered to be U.S. Government securities. Some of these securities, such as
pass-through certificates and participation certificates, represent interests in
pools of mortgage loans and provide holders with payments consisting of both
interest and principal as the mortgages in the underlying mortgage pools are
paid off. Collateralized mortgage obligations ("CMOs") are mortgage-backed
bonds secured by the cash flow of pools of mortgages, with the principal and
interest payments on the underlying mortgages separated into different payment
streams for different classes of bonds.
Mortgage-backed securities include securities guaranteed by the Government
National Mortgage Association ("Ginnie Maes"), securities issued by the Federal
National Mortgage Association ("Fannie Maes"), participation certificates issued
by the Federal Home Loan Mortgage Corporation ("Freddie Macs") and CMOs issued
by a Government instrumentality or agency. The timely payment of principal and
interest is backed by the full faith and credit of the U.S. Government for
Ginnie Maes but not for Fannie Maes, Freddie Macs or CMOs. The Funds also may
invest in mortgage-backed securities of private corporations or other private
issuers.
Unscheduled or early payments on the mortgages underlying a mortgage-backed
security may shorten the effective maturities and impact the yield and price of
the security. A decline in interest rates may lead to increased prepayment of
the underlying mortgages, and a Fund holding mortgage-backed securities may have
to reinvest proceeds received at lower rates of return. An increase in interest
rates usually will cause the price of existing mortgage-backed securities issues
to decline. Characteristics of underlying mortgage pools will vary, and it is
not possible to predict completely accurately the realized yield or average life
of a particular mortgage-backed security because of the principal prepayment
feature.
-8-
<PAGE>
The Funds also may invest in securities backed by consumer or credit card loans
or other receivables or 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, although asset-backed
securities generally are not expected to prepay to the same extent as mortgage-
backed securities in such circumstances. The creditworthiness of an issuer of
asset-backed securities also may impact the value of such securities. Because
of these factors, it is not possible to predict completely accurately the
realized yield or average life of a particular asset-backed security.
No Fund will invest more than 10% of its total assets in mortgage-backed
securities, and no Fund will invest more than 10% of its total assets in other
asset-backed securities. In addition, no Fund will invest in interest-only
strips or principal-only strips ("IOs" or "POs") of mortgage or other asset
backed issues and will not purchase the final or most speculative tranche of CMO
or other asset-backed securities issues.
Equipment Trust Certificates
The Bond Fund may invest in equipment trust certificates. The proceeds of these
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. No Fund will invest more than 5% of
its total assets in equipment trust certificates.
Options and Futures
The Funds may enter into transactions in options, futures contracts and options
on futures contracts. Such transactions will be used for hedging purposes only
and not for speculation, and could include (1) the selling of call option
contracts on portfolio securities (covered calls), and the buying of call option
contracts on such securities to close out a position acquired through the sale
of such options; (2) the buying of put option contracts on securities owned by a
Fund, and the selling of put option contracts on securities owned by a Fund to
close out a position acquired through the purchase of such options; (3)
purchases and sales of futures contracts, and purchases of options on futures
contracts, on fixed-income securities; and (4) purchases and sales of options on
futures contracts, and purchases of options on futures contracts, on indexes of
securities. If a hedging transaction in any such instrument is successful, a
Fund's losses on portfolio securities, or the increased cost of securities to be
acquired, should be offset, in whole or part, by corresponding gains on the
hedging position. The Funds will only enter into transactions in options,
futures and options on futures which are traded on securities or commodities
exchanges located in the United States.
No Fund will purchase a put or call option, including straddles or spreads, if
the value of its premium, when aggregated with the premiums on all other options
held by the Fund, would exceed 5% of the Fund's total assets. No Fund will
enter into futures contracts or purchase or write related options if the sum of
the aggregate initial margin deposits on futures contracts and premiums paid for
related options exceeds 5% of the market value of the Fund's total assets,
calculated in accordance with Commodity Futures Trading Commission regulations.
A risk in all options, futures and options on futures transactions is a possible
lack of liquidity, which could make it difficult or impossible to close out
existing positions and realize gains or limit losses. The liquidity of a
secondary market in futures contracts or options on futures contracts may be
-9-
<PAGE>
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
also may be adversely affected by trading halts, suspensions, exchange or
clearing house equipment failures, government intervention, insolvency of a
brokerage firm or clearing house or other disruptions of normal trading
activity.
The Funds also are subject to the risk of imperfect correlation between
securities held in their portfolios and the security or securities underlying
options, futures contracts or options on futures contracts traded. In the case
of options, futures contracts or options on futures contracts based on an index
of securities, a Fund's portfolio will not duplicate the composition of the
index and, in the case of options, futures contracts and options on futures
contracts on fixed-income securities, the portfolio securities being hedged may
not be the same as the securities underlying such instruments. Consequently,
the Funds bear the risk that the price of the portfolio securities being hedged
will not move in the same amount or direction as the underlying index or
obligation.
A Fund may sell futures contracts on fixed-income securities in anticipation of
a rise in interest rates, which would cause a decline in the value of fixed-
income securities held in the Fund's portfolio. Similarly, a Fund may sell
stock index futures contracts in anticipation of a general market wide decline
which would reduce the value of its portfolio of stocks. In either case, if
the expected decrease in the value of portfolio securities occurs, the reduction
in net asset value may be offset, in whole or in part, by corresponding gains on
the futures position. Conversely, where a Fund projects an increase in the cost
of fixed-income securities or stocks to be acquired in the future, the Fund may
purchase futures contracts on fixed-income securities or stock indexes. If the
hedging transaction is successful, the increased cost of securities subsequently
acquired should be offset, in whole or in part, by gains on the futures
position.
A Fund, instead of purchasing or selling futures contracts, also 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. A Fund may also
purchase put options on securities or stock indexes for the same types of
hedging purposes. The purchase of a put option on a security or stock index
permits a Fund to protect against declines in the value of the underlying
security or securities in a manner similar to the sale of futures contracts.
The maximum risk assumed by a Fund in purchasing an option is the amount of the
premium plus related transaction costs, although this entire amount may be lost.
In addition, the Funds may write call options on portfolio securities or on
stock indexes to protect the value of their portfolios. In particular, 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. In contrast, however, if the price of the security
underlying the option moves adversely to the Fund's position, the option may be
exercised and the Fund will be required to sell the security at a
disadvantageous price, resulting in losses which may be only partially offset by
the amount of the premium. A call option on a security written by a Fund will
be covered through ownership of the security underlying the option
-10-
<PAGE>
or through ownership of an absolute and immediate right to acquire such security
upon conversion or exchange of other securities held in its portfolio.
The Funds' hedging transactions and options on futures present certain other
risk factors, which are described in the Statement of Additional Information.
INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS
THE ADVISER
Subject to the direction and control of the Board of Directors of the Investment
Company, Mutual of America Capital Management Corporation, 320 Park Avenue, New
York, New York 10022 (the "Adviser"), an indirect wholly-owned subsidiary of
Mutual of America Life Insurance Company ("Mutual of America Life") that
commenced operations in September 1993, manages the investment and reinvestment
of the assets of each Fund pursuant to the Investment Advisory Agreement (the
"Advisory Agreement") between the Investment Company and the Adviser. The
Adviser had total assets under management of approximately $ billion at
December 31, 1995, including assets of almost $ billion of the Mutual of
America Investment Corporation, a registered management investment company.
The Adviser's duties as investment adviser also include research and placing
orders for the purchase and sale of securities. The Adviser is obligated to
provide all of the office space, facilities, equipment, material and personnel
necessary to perform its duties under the Advisory Agreement. See "The Funds'
Expenses" below.
As compensation for its investment advisory services to each of the Funds of the
Investment Company, the Adviser will receive a fee calculated as a daily charge
at the annual rate of .50% of the value of the net assets in the Equity Fund
and .45% of the value of the net assets in the Bond Fund. See "The Funds'
Expenses" below.
PORTFOLIO MANAGERS
Set forth below is information about the persons employed by the Adviser who are
primarily responsible for the day-to-day management of the Funds' investments.
EQUITY FUND. Frederick M. Gallagher, Senior Vice President of the Adviser since
- -----------
June 1995, is responsible for the investments of the Fund. He also is
responsible for the management of the small capitalization portion of the All
America Fund of the Mutual of America Investment Corporation. Mr. Gallagher's
previous position prior to joining the Adviser was as Senior Vice
President/Equity Investments at Continental Asset Management Corporation. He
has more than 30 years of experience in the investment management business.
BOND FUND. Andrew L. Heiskell, Executive Vice President of the Adviser, has
- ---------
responsibility for setting the Fund's fixed income investment strategy and
overseeing the Fund's day-to-day operations. He has been an Executive Vice
President of the Adviser since March 1, 1994 and served as Senior Vice President
of the Adviser from March 1, 1993 to March 1, 1994. Mr. Heiskell has over 25
years of investment experience. He joined Mutual of America Life in February of
1991, where he was Senior Vice President until January 1, 1994. He has been
the portfolio manager of the Mutual of America Investment Corporation's Bond
Fund since 1991 and of the Mid-Term Bond and Short-Term Bond Funds since their
inceptions in 1993. Prior to joining Mutual of America Life, Mr. Heiskell was
employed by M. D. Sass, Inc.
-11-
<PAGE>
ACCOUNTING AND RECORDKEEPING AGENT; TRANSFER AGENT
The Investment Company has entered into an Investment Accounting Agreement with
Investors Fiduciary Trust Company ("IFTC"), pursuant to which IFTC has agreed to
serve as investment accounting and recordkeeping agent for the Funds and to
calculate the net asset values of the Funds. The Investment Company has entered
into a Transfer Agency and Service Agreement with State Street Bank and Trust
Company ("State Street"), pursuant to which State Street will serve as the
transfer agent and dividend disbursing agent for Fund shares. The Funds will
pay IFTC and State Street for their services, and the compensation paid by the
Funds is subject to the voluntary expense reimbursement of the Adviser. See
"The Funds' Expenses" below.
THE FUNDS' EXPENSES
Each Fund is charged with brokers' commissions, transfer taxes and other fees
relating to that Fund's portfolio transactions, pursuant to the Advisory
Agreement. In addition, each Fund is responsible for a number of expenses
relating to its operations, including: investment advisory fees; fees and
expenses of independent directors; the fees and expenses of its independent
certified public accountants and of its legal counsel; filing fees and expenses
for the registration of the Investment Company or Fund shares under federal and
state securities laws; printing and mailing costs of semi-annual reports to
shareholders, proxy statements, prospectuses and statements of additional
information and supplements thereto for existing shareholders; costs of
providing to the Distributor camera ready copies of the Investment Company's
prospectuses and statements of additional information and supplements thereto;
costs of meetings of shareholders; costs and fees of custodians, transfer agents
and accounting, recordkeeping and other agents; any federal, state or local
income or other taxes; any membership fees of the Investment Company Institute
and similar organizations; fidelity bond and directors' and officers' liability
insurance premiums; and any extraordinary expenses, such as indemnification
payments or damages awarded in litigation or settlements made. The Adviser
voluntarily limits the expenses of each Fund, other than for brokers'
commissions, transfer taxes and other fees relating to portfolio transactions
and extraordinary expenses, to an annual rate of .85% of the value of average
net assets of the Equity Fund and .70% of the value of average net assets of the
Bond Fund. The Adviser may discontinue such policy at any time.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities for the
Investment Company as well as for selecting brokers and, where applicable,
negotiating the amount of the commission rate paid. In placing orders, it is the
policy of the Investment Company to obtain the best price and execution.
The Adviser places orders in connection with the purchase and sale of approved
investments with various brokers, including affiliates. As a general matter,
the Adviser selects broker-dealers which, in its best judgment, provide prompt
and reliable execution at favorable security prices and reasonable commission
rates. It may select broker-dealers which provide it 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 the Adviser's view, the commissions are
reasonable in relation to the value of the brokerage and/or research services
provided by the broker-dealer. Brokerage arrangements with affiliates of the
Adviser will be in accordance with the 1940 Act and the rules and regulations
promulgated thereunder. No transactions may be effected by a Fund with an
affiliate of the Adviser acting as principal for its own account. When
purchasing or selling securities trading on the over-the-counter market, the
Adviser will generally execute the transaction with a broker engaged in making a
market for such securities.
-12-
<PAGE>
PURCHASE OF SHARES
Shares of the Funds are purchased without a sales charge. Currently, the
minimum initial required investment is $25,000 and the minimum required for each
subsequent investment is $5,000. The Investment Company reserves the right to
increase or decrease these minimums. The Investment Company continuously offers
shares at prices equal to the respective per share net asset value of the Funds.
Orders are executed at the net asset value per share next determined after an
order has been received. Net asset value is determined in the manner set forth
below under "Additional Information--Determination of Net Asset Value." The
Investment Company reserves the right to reject any purchase order, to increase
or decrease the minimum required initial and subsequent investments and to waive
the minimum initial investment for certain institutional investors. The
Investment Company also reserves the right to make shares of the Fund available
for purchase by individual investors who satisfy the minimum investment
requirements.
A prospective purchaser of Fund shares must complete an application, including
any required resolutions, attached to this Prospectus. An application also may
be obtained by writing to the Investment Company at the address on the cover
page of the Prospectus. A prospective purchaser should fax a draft application
to the Distributor at the number shown on the cover of the Prospectus. When
notified by the Distributor that the application is acceptable in form, the
purchaser should send the completed, signed application to the Distributor at
320 Park Avenue, New York, New York 10022. After the Investment Company and
Distributor have approved an application, the Distributor will notify the
prospective purchaser that the account has been established and will provide the
purchaser with an account number for purposes of transmitting the initial
purchase amount.
Initial and subsequent purchase transactions are generally made on a trade date-
plus-one basis. All purchase orders received by the Distributor prior to 4:00
pm Eastern Time will be considered received that day. All purchase orders
received after 4:00 pm on any day will be considered received on the next
business day. The purchase price will be the net asset value of the applicable
Funds next determined (normally as of the close of business that day). The
purchase amount should be transmitted on the morning of the following business
day to the account specified below.
"Business day" for wire transfer purposes means any day on which the Investment
Company, Federal Reserve Bank of New York, State Street and The Chase Manhattan
Bank, N.A. (the custodian for the Investment Company) are open for business. It
is currently anticipated that wire transfers will not be available on Saturdays
and Sundays; the holidays of Martin Luther King Jr.'s Birthday, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, Christmas Day and New Year's Day; and the Friday following
Thanksgiving. For 1996, wire transfers also will not be available on Friday,
July 5 and Election Day, Tuesday, November 5.
All purchases must be made by wire transfer of Federal funds to the account
specified below. Your bank may charge you a fee for the wire transfer. TO
PURCHASE SHARES, YOU MUST FIRST CONTACT THE DISTRIBUTOR AT LEAST ONE BUSINESS
DAY PRIOR TO THE TRANSMITTAL DATE TO ESTABLISH A RECORD OF INFORMATION. Your
funds may be returned to you if the Investment Company does not have sufficient
information to insure the correct processing of such funds. YOU CAN REACH THE
DISTRIBUTOR BY TELEPHONE AT 1-800- between the hours of am and
pm Eastern Time. You also may fax purchase orders to the Distributor. Your
bank should wire funds according to these instructions:
State Street Bank and Trust Company
Boston, Massachusetts
ABA #011-000028
Account: Mutual of America Institutional Funds, Inc., Acct.#49097181
Further credit:
$____________ to the Equity Fund; and/or $____________ to the Bond Fund
-13-
<PAGE>
REDEMPTION AND EXCHANGE OF SHARES
REDEMPTIONS
The redemption price is the net asset value per share next determined after the
receipt of proper notice of redemption. See "Additional Information--
Determination of Net Asset Value" below. The minimum amount for any redemption
currently is $5,000, and the Investment Company reserves the right to increase
or decrease the minimum. Redemption proceeds will be paid by wire transfer of
Federal funds to the account specified in the shareholder's initial application
or to such other account specified in writing to the Investment Company, in a
form acceptable to the Investment Company, by an authorized person of the
shareholder.
Payment upon redemption of Fund shares is normally made within seven days of
receipt of such request (unless redemption is suspended or payment is delayed as
permitted in accordance with SEC regulations). Redemption proceeds for a
redemption order received by 4:00 pm Eastern Time on a business day usually will
be transmitted on a trade date-plus-one basis, so that proceeds are transmitted
on the next business day. "Business day" for wire transfer purposes has the
meaning set forth under "Purchase of Shares" above.
Redemption requests must be made in the manner specified below. The Investment
Company reserves the right to redeem, upon not less than 30 days' written
notice, all shares in a shareholder's Fund account when the aggregate value of
the shares is less than $5,000. All redemptions will be paid in cash, except
that the Investment Company reserves the right to redeem shares by the delivery,
in whole or in part, of readily marketable securities in lieu of cash when a
Fund redemption request by a shareholder totals more than 10% of the net asset
value of the Fund.
EXCHANGES
A shareholder may exchange shares of one Fund for shares of another Fund. The
minimum amount for an exchange currently is $5,000. Exchange orders are
processed at the Funds' net asset values next determined after the exchange
order is received. The Investment Company may terminate or modify the terms of
the exchange privilege upon 30 days' written notice to shareholders, and the
Investment Company may refuse to implement the purchase side of any exchange
request that it concludes is based on a market timing or asset allocation
strategy if the Investment Company determines such exchange would be disruptive
to a Fund. An exchange is taxable as a sale of a security. Exchanges are
available only in those states where the shares of the Fund to be purchased may
be legally offered for sale.
REQUESTS FOR REDEMPTIONS AND EXCHANGES
Redemption and exchange requests may be made by telephone if the shareholder
elects this option on its application or an amendment to the application.
Requests should be made to the Investment Company at 1-800-[___
____] between the hours of am and pm Eastern Time. Neither the Investment
Company nor the Transfer Agent will be liable for any loss, damage or other
expense resulting from any telephone exchange effected upon instructions
reasonably believed to be genuine or for the inability of a shareholder to make
a telephone request on any particular day. The Investment Company has instituted
procedures it believes are reasonably designed to insure that redemption and
exchange instructions are genuine, and it could be liable for losses caused by
unauthorized or fraudulent instructions if those procedures are not followed.
Procedures include verification of the shareholder's name, taxpayer
identification number, account number and, if applicable, that the person
calling is an authorized person for the account, and telephone exchange requests
are recorded.
-14-
<PAGE>
The Investment Company reserves the right to add to or modify its procedures in
the future. If a shareholder for any reason on a particular day is unable to
make a telephone request to the Investment Company, the shareholder may follow
the procedure for written requests described below.
Redemption and exchange requests also may be made in writing and must specify
the account name and number and the dollar amount or number of shares to be
redeemed, and must set forth all necessary signatures. Written requests should
be sent by first class mail to the Investment Company at 320 Park Avenue, New
York, New York 10022, Attn: Mutual of America Institutional Funds, Inc. Written
requests also may be made by facsimile transmission to the Investment Company at
[_______________], and receipt shall be immediately confirmed by telephone call-
back or other procedure established by the Investment Company. The Investment
Company reserves the right to terminate at any time the privilege to make
redemption and exchange requests by facsimile transmission by notice to
shareholders. The Investment Company may request signature guarantees for any
redemption request that specifies the wiring of redemption proceeds to a
shareholder account other than the account specified in the shareholder's
application.
AUTHORIZED PERSONS
Only authorized persons of a shareholder may make redemption or exchange
requests to the Investment Company on behalf of the shareholder. Authorized
officers or agents of a prospective purchaser of Fund shares must be specified
in the application and any appropriate resolution completed and certified, as
set forth in the application. The list of authorized persons may be amended
only by written notice received by the Investment Company from the shareholder,
certified by the corporate secretary or otherwise in a form acceptable to the
Investment Company.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividend distributions will be declared semi-annually both in the case of net
investment income and in the case of net realized short or long-term capital
gains. Dividend distributions will be automatically reinvested in full or
fractional shares of the Fund to which they relate unless the shareholder elects
on its application or an amendment to the application to have dividend
distributions paid to it in cash. Cash dividend distributions will be paid by
wire transfer of Federal funds. Payment of dividends normally will be made on
the first business day of the following month at the net asset value as of the
last business day of the month in which the dividend distribution is declared.
Dividends and other distributions are taxable to a Fund's shareholders even
though they are reinvested in additional shares of the Fund. Only shares for
which the purchase price has been properly transmitted in Federal funds by the
close of business on the record date are eligible for the dividend declared on
that record date.
The Investment Company intends to elect the special tax treatment afforded a
"regulated investment company" under certain provisions of the Internal Revenue
Code (the "Code"). The Investment Company believes it will qualify for such
treatment. If it so qualifies, the Investment Company will not be subject to
Federal income tax on that part of its ordinary income and net realized capital
gains which it distributes to shareholders, thereby avoiding any Federal income
tax liability on the distributed amounts. Since the Investment Company has more
than one Fund, each Fund will be treated as a separate corporation for Federal
income tax purposes. Therefore, the investments and results of each Fund must
qualify independently. Although the Investment Company intends to operate each
Fund so that it will have no Federal income tax liability, if any such liability
is nevertheless incurred, the investment performance of that Fund will be
adversely affected.
Section 4982 of the Code imposes an excise tax of 4% on each regulated
investment company which does not make a "required distribution" to shareholders
of 98% of its ordinary income for each
-15-
<PAGE>
calendar year and 98% of its capital gain income for the one year period ending
October 31 of each year. The Investment Company intends to make the "required
distributions" and to thereby avoid the excise tax. If a Fund were to distribute
less than the required amount, then the 4% excise tax would apply to the
deficiency.
For dividend purposes, the net investment income of each Fund will consist of
dividends received, interest accrued and certain other income received by such
Fund, plus or minus any amortized discount or premium, less the estimated
expenses of such Fund. To qualify for treatment as a regulated investment
company, a Fund must, among other things, derive in each taxable year at least
90% of its gross income from dividends, interest, gains from the sale or other
disposition of stock or securities, including foreign securities, and other
income derived with respect to the business of investing in stock or securities.
In addition, a Fund must derive less than 30% of its gross income in each
taxable year from the disposition of options, futures and forward contracts or
financial investments and foreign currencies, as well as stocks and securities,
in each case held for less than three months. For purposes of these tests,
gross income is determined without regard to losses from the sale or other
disposition of stock or securities.
The Investment Company intends to distribute all net realized long and short-
term capital gains, if any, to the shareholders of the Fund or Funds to which
such gains are attributable. Realized capital gains and losses of each Fund are
computed separately for the purpose of determining capital gain distributions.
The net capital gain of one Fund will not be reduced by any net capital losses
incurred by any other Fund. Each Fund which has a net capital gain will be
entitled to distribute the full amount of that capital gain as a capital gain
distribution. Each Fund which has a net capital loss will be entitled to a
carryover of that loss which it can apply against its capital gains in future
years.
SHAREHOLDER TAXATION: Each investor should consult its own tax adviser as to
the tax consequences of an investment in Fund shares. "Additional Discussion of
Dividends, Distributions and Taxes" in the Statement of Additional Information
contains further information that may be applicable to certain investors.
Dividends paid by a Fund out of its ordinary income and distributions of a
Fund's net realized short-term capital gains (jointly, the "ordinary income
dividends") are taxable to its shareholders as ordinary income. Distributions
made from a Fund's net realized long-term capital gains, including long-term
gains from certain transactions in futures and options, (the "capital gain
dividends") are taxable to the Fund's shareholders as long-term capital gain.
A potential investor in a Fund should consider the impact of dividends or
capital gains distributions which are expected to be declared in the near future
or have been declared but not yet paid. It is anticipated that a portion of the
dividends paid by the Equity Fund, but not the Bond Fund, will qualify for the
dividends-received deduction available to corporations.
SHAREHOLDER WITHHOLDING AND REPORTING: The Investment Company may be required
to withhold for Federal income tax ("back-up withholding") from distributions
made and the proceeds of redemptions to shareholders who have not provided a
correct taxpayer identification number or made required certifications, or when
the Investment Company or the shareholder has been notified by the Internal
Revenue Service that the shareholder is subject to back-up withholding.
Corporate shareholders and certain other entities named in the Internal Revenue
Code are exempt from back-up withholding under certain circumstances. Any
amount withheld by the Investment Company may be credited against the U.S.
federal income tax liability of the shareholder.
Ordinary income dividends paid by a Fund to a shareholder that is a nonresident
alien or a foreign entity will be subject to a 30% U.S. withholding tax
applicable to foreign persons, unless a reduced
-16-
<PAGE>
rate of withholding or a withholding exemption is provided under applicable law
or an applicable tax convention between the United States and a particular
foreign country. Foreign shareholders are urged to consult their own tax
advisers concerning the applicability of the U.S. withholding tax.
The Investment Company will provide annual reports to shareholders of the
Federal income tax status of distributions made by the Funds invested in by the
shareholders. Distributions also may be subject to state and local taxes. Each
shareholder should consult its own tax adviser regarding the Federal, state and
local tax consequences of the ownership and sale of Fund shares.
ADDITIONAL INFORMATION
DETERMINATION OF NET ASSET VALUE: The net asset value of each Fund (i.e., the
sum of the value of the securities held by that Fund plus any cash or other
assets including interest and dividends accrued minus all liabilities including
accrued expenses) is determined once daily by the Adviser immediately after the
declaration of dividends, if any, and is determined as of the time of the close
of the regular trading session on the New York Stock Exchange (currently 4:00 pm
Eastern Time) on each day during which such Exchange is open for trading, with
the exception of the Friday following Thanksgiving and, for 1996, Friday July 5
when the Investment Company is closed, and on each other day on which there is a
sufficient degree of trading in any Fund's securities affecting materially the
value of such securities when the Fund receives a request to redeem its shares
that day.
The net asset value per share of a Fund is determined by dividing the Fund's net
asset value by the number of Fund shares outstanding.
The value of the assets held in the Investment Company will be determined in the
following manner. Investments for which market quotations are readily available
are valued at the market value of such investments (except that, as discussed
below, money market securities with a remaining maturity of 60 days or less may
be valued at amortized cost). An equity security will be valued at the last
sale price for such security on the principal exchange on which such security is
traded, or at the last bid price on the principal exchange on which such
security is traded if such bid price is of a more recent day than the last sale
price. For any equity security not traded on an exchange but traded in the
over-the-counter market, the value will be the last sale price, or if no sale,
at the latest bid price available. Securities which are primarily traded on
foreign securities exchanges generally are valued at the preceding closing
values of such securities on their respective exchanges where primarily traded.
Debt securities will be valued at a composite fair market value, "evaluated
bid," which may be the last sale price, by a valuation service selected by the
Adviser. Portfolio securities or assets for which market quotations are not
readily available will be valued at fair value as determined in good faith by
the Adviser under the direction of the Board of Directors of the Investment
Company.
Money market securities held by the Investment Company with a remaining maturity
of 60 days or less will be valued on an amortized cost basis, which approximates
market value; provided, however, that if the value determined under the
amortized cost method is materially different from the actual market value, then
even such short-term money market securities will be valued at market value.
Under the amortized cost method of valuation, the security is initially valued
at cost on the date of purchase (or in the case of securities initially
purchased with more than 60 days remaining to maturity, the market value on the
61st day prior to maturity), and thereafter the Investment Company assumes a
constant proportionate amortization in value until maturity of any discount or
premium. For purposes of this method of valuation, the maturity of a variable
rate certificate of deposit is deemed to be the next coupon date on which the
interest rate is to be adjusted.
Portfolio investments underlying options are valued as described above. Stock
options written by a Fund are valued at the last sale price or, if there has
been no sale that day, at the mean of the last bid
-17-
<PAGE>
and asked price on the principal exchange where the option is traded, as of the
close of trading on that exchange. The Fund's net value will be increased or
decreased by the difference between the premiums received on writing options and
the costs of liquidating such positions measured by the value, as determined
above, of the option on the exchange where traded.
When a Fund writes a call option, the amount of the premium is included in the
Fund's assets and an amount is included in its liabilities. The liability
thereafter is adjusted to the current market value of the call. For example, if
the current market value of the call exceeds the premium received, the excess
would be unrealized depreciation; conversely, if the premium exceeds the current
market value, such excess would be unrealized appreciation. If a call expires or
if the Fund enters into a closing purchase transaction, it realizes a gain (or a
loss if the cost of the transaction exceeds the premium received when the call
was written) without regard to any unrealized appreciation or depreciation in
the underlying securities, and the liability related to such call is
extinguished. If a call is exercised, the Fund realizes a gain or loss from the
sale of the underlying securities and the proceeds of the sale increased by the
premium originally received.
A premium paid on the purchase of a put will be deducted from a Fund's assets
and an equal amount will be included as an investment and subsequently adjusted
to the current market value of the put. For example, if the current market
value of the put exceeds the premium paid, the excess would be unrealized
appreciation; conversely, if the premium exceeds the current market value, such
excess would be unrealized depreciation.
Futures contracts, and options thereon, which are traded on commodities
exchanges, are valued at their official settlement price as of the close of such
commodities exchanges.
PERFORMANCE INFORMATION: Each Fund may include total return information, and
the Bond Fund may include its yield, in advertisements or reports to
shareholders. Average total return will be stated in terms of average annual
compounded rate of return on a hypothetical investment in a Fund over periods of
1, 5 and 10 years (up to the life of the Fund) and will reflect the deduction of
a proportional share of Investment Company expenses, on an annual basis, and the
assumption that all dividends and distributions are reinvested when paid. Total
return may be stated in terms of the cumulative value of an investment in a Fund
over the period. Yield will be based on the investment income per share during a
particular 30 day (or one month) period (including dividends and interest), less
expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the net asset value per share on
the last day of the period. See the Investment Company's Statement of Additional
Information for a description of methods used to calculate total return and
yield for the Funds.
DESCRIPTION OF THE INVESTMENT COMPANY'S SHARES: The authorized capital stock of
the Investment Company consists of one billion shares of common stock, $.01 par
value per share. The Investment Company does not issue certificates for Fund
shares purchased. The shares of common stock of the Investment Company
currently are divided into two classes of common stock: Equity Fund and Bond
Fund. The Investment Company may establish additional Funds and may allocate
its shares either to such new classes or to one or more of the existing classes.
As of the date of this Prospectus, all of the outstanding shares of the Funds
were owned by the Adviser, which made the initial investment for the Investment
Company's operations.
All shares of common stock, of whatever class, are entitled to one vote, and the
votes of all classes are cast on an aggregate basis, except on matters where the
interests of the Funds differ. In such a case, the voting is on a Fund-by-Fund
basis. Approval or disapproval by the shareholders of one Fund on such a matter
would not generally be a prerequisite of approval or disapproval in another
-18-
<PAGE>
Fund. Shareholders in a Fund not affected by a matter generally would not be
entitled to vote on that matter. Examples of matters which would require a Fund-
by-Fund vote are changes in the fundamental investment policy of a particular
Fund and approval of the Investment Advisory Agreement for the Fund. The
Investment Company is not required to hold annual meetings. It will call a
special meeting of shareholders when a meeting is requested by shareholders
holding at least 25% of the outstanding shares of the Investment Company
entitled to vote at the meeting except that a meeting to remove one or more
directors shall be called when requested by 10% of the outstanding shares of the
Investment Company entitled to vote at the meeting.
The shares of each Fund, when issued, will be fully paid and nonassessable and
will have no preference, preemptive, conversion, exchange or similar rights.
Shares do not have cumulative voting rights. Each issued and outstanding share
in a Fund is entitled to participate equally in dividends and distributions
declared by such Fund and, upon liquidation or dissolution, in the net assets of
such Fund remaining after satisfaction of outstanding liabilities. Accrued
liabilities which are not allocable to one or more Funds will generally be
allocated among the Funds in proportion to their relative net assets. In the
unlikely event that any Fund incurred liabilities in excess of its assets, each
other Fund could be liable for such excess.
DISTRIBUTOR: Mutual of America Securities Corporation, 320 Park Avenue, New
York, New York 10022 (the "Distributor"), an indirect, wholly-owned subsidiary
of Mutual of America Life, serves as the principal underwriter and distributor
of Fund shares. The Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. Under the Distribution Agreement between the
Distributor and the Investment Company, the Distributor serves without
compensation and is not obligated to distribute any specific amount of Fund
shares.
INDEPENDENT AUDITORS: Arthur Andersen LLP, Certified Public Accountants, have
been selected as the independent auditors of the Investment Company for its
fiscal year ending December 31, 1996. Arthur Andersen LLP also acts as the
independent auditors of the Adviser.
CUSTODIAN: The Chase Manhattan Bank, N.A., New York, New York, acts as
Custodian of the Investment Company's assets.
LEGAL COUNSEL: Graham & James LLP, New York, New York, is counsel for the
Investment Company.
REPORTS TO SHAREHOLDERS: The fiscal year of the Investment Company ends on
December 31 of each year. The Investment Company will send to its shareholders
at least semiannually reports showing the Funds' portfolio securities and other
information. An annual report containing financial statements, audited by
independent certified public accountants, will be sent to shareholders each
year.
INQUIRIES: All inquiries pertaining to the Investment Company's shares should
be made in writing to Mutual of America Institutional Funds, Inc., 320 Park
Avenue, New York, New York 10022.
ADDITIONAL INFORMATION AVAILABLE: This Prospectus does not contain all the
information included in the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933 and the 1940 Act with
respect to the securities offered hereby, certain portions of which have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The Statement of Additional Information, incorporated by reference
into this Prospectus, may be obtained without charge as provided on the cover
page of this Prospectus. The Registration Statement, including the exhibits
filed therewith, may be examined at the office of the Securities and Exchange
Commission in Washington, D.C.
-19-
<PAGE>
<TABLE>
<CAPTION>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. Fax draft & mail completed application to:
APPLICATION AND AUTHORIZATION FORM [ ] Amendment Mutual of America Securities Corporation
320 Park Avenue, New York , NY 10022
Fax No. 212-
<S> <C>
1. ACCOUNT REGISTRATION --Please print (attach pages if needed)--
--------------------------
[Account Number Assigned]
- ----------------------------------------------------------- ------------------------------
Full legal name of institution (owner of account) Telephone Number
- ----------------------------------------------------------- ------------------------------
Address Fax Number
- ----------------------------------------------------------- ------------------------------
City State Zip Code Taxpayer I.D. Number
- ----------------------------------------------------------- ------------------------------
To the Attention of (Name and Title) Date and State of Formation
</TABLE>
- --------------------------------------------------------------------------------
Name, Title and Address of Person to Receive (Tax Reports) (Duplicate
Confirmations) circle one
2. NATURE OF APPLICANT --Check applicable boxes and attach authorization
if not covered by Item 9--
[ ] Endowment [ ] Foundation [ ] Trust [ ] Partnership (general)(limited)
circle one
[ ] For Profit Corporation [ ] Not-for-Profit Corporation [ ]Government Entity/
Agency
[ ] Other ____________________________________________________________________
Total Assets of at least: [ ] $250,000; [ ] $500,000; [ ] $1 million;
[ ] $5 million; [ ] $15 million
If applicant is an Individual: Net Worth is $ ; Annual Income is $
Fund shares are a suitable investment based on applicant's financial needs and
situation: [ ] Yes [ ] No
3. INITIAL INVESTMENT --Minimum $25,000 unless waived by Mutual of America
Institutional Funds, Inc.--
Investment (by wire only) $ ____________ --Do Not Wire Until Notified That
Application Is Approved--
Amounts to Portfolios: Equity Fund $ _____________ Bond Fund
$_____________
4. DIVIDENDS AND DISTRIBUTIONS --Payments will be reinvested if no box is
checked--
[_] Reinvest all dividends and capital gains distributions in additional Fund
shares
[_] Pay all dividends and capital gains distributions in cash to owner by wire
transfer of funds to account specified in Item 5 of this application.
5. PAYMENT OF PROCEEDS TO OWNER --May be changed by amendment to Application--
All redemption proceeds, and dividend and capital gains distributions if the
applicant has elected above to receive such distributions in cash, are to be
wire transferred to applicant as follows:
Bank Name & Address:____________________________________________________________
ABA No.__________ Account Name & No. ___________________________________________
6. TELEPHONE REDEMPTION AND EXCHANGE REQUESTS --If box is not checked,
redemptions and exchanges may be made in writing or by signed fax only--
[_] Redemption and exchange requests may be made by telephone by Authorized
Persons (Item 7 below) or any person reasonably believed by Mutual of America
Institutional Funds, Inc. ("Fund"), State Street Bank and Trust Company or
Mutual of America Securities Corporation ("Distributor") to be an Authorized
Person.
<PAGE>
7. AUTHORIZED PERSONS --May be changed by amendment to Application--
The following persons have the right and authority to give instructions and to
take actions as Authorized Persons as contemplated in this Application and the
prospectus of the Fund, each Authorized Person has been duly elected or
appointed and legally holds the office or position specified, and the signature
set forth opposite the name of each Authorized Person is a true and correct
specimen. --attach pages if necessary--
Name and Title --Please print-- Signature
- ------------------------------------------------ --------------------------
- ------------------------------------------------ --------------------------
- ------------------------------------------------ --------------------------
- ------------------------------------------------ --------------------------
8. Tax Certification --Strike out phrase 2 if appropriate and check
applicable box--
Applicant certifies under penalties of perjury that (1) the number shown in Item
1 is applicant's correct tax identification number and (2) applicant is not
subject to backup withholding because (a) applicant is exempt from backup
withholding, or (b) applicant has not been notified by the IRS that it is
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified the applicant that it is no longer
subject to backup withholding. Important: If applicant is for any reason
subject to backup withholding, strike out phrase (2) in this Item 8 before
signing in Item 10. Applicant is a tax-exempt organization: [ ] Yes; [ ]
No
9. CERTIFICATE OF AUTHORITY --Check appropriate box and fill in blanks if
applicable--
[_] For corporations or other entities with a Board of Directors or Board of
Trustees:
As Secretary of the applicant, I certify that at a meeting held on
at which a quorum was present and acting throughout, the Board of Directors
(Trustees) duly adopted a resolution, which is in full force and effect and in
accordance with applicant's charter (trust documents) and bylaws, that
authorizes (1) the officers (trustees) executing this Application (or amendment)
to do so on behalf of applicant, (2) the persons listed as Authorized Persons in
Item 7 to effect securities transactions for the purchase and redemption of Fund
shares, (3) the Secretary from time to time to notify the Fund of and to certify
any changes in the list of Authorized Persons, and (4) the Secretary to certify
that such a resolution has been adopted and will remain in full force and effect
until the Fund receives a subsequent certification or Application amendment
revoking or modifying the resolution.
[_] For partnerships, trusts (even if a sole trustee) or other unincorporated
entities:
The undersigned certify(ies) that (he)(she)(they) are (general
partners)(officers of the general partner) (trustees) of applicant and that
under applicant's (partnership agreement)(limited partnership agreement) (trust
document) (____________________) or pursuant to authority granted in accordance
therewith (1) the undersigned have the authority to execute this Application (or
amendment) on behalf of applicant, (2) the persons listed as Authorized Persons
in Item 7 are authorized to effect securities transactions for the purchase and
redemption of Fund shares, (3) the undersigned are authorized from time to time
to notify the Fund of and to certify changes in the list of Authorized Persons,
and (4) applicant will not be in violation of any agreements, covenants or
statutes/regulations applicable to it as a consequence of its purchase and
redemption of Fund shares.
- --circle applicable references or strike out inapplicable references--
10. Acceptance and Signatures --for corporate entity, must be signed by
President or Vice President and Secretary or Assistant Secretary, with seal--
The applicant affirms that: it has received the prospectus for the Fund and
understands the Fund's investment objectives; the information and certifications
set forth in this Application (amendment) are true and correct; and the Fund,
State Street Bank and Trust Company, as transfer agent, and the Distributor are
entitled to rely thereon until the Fund receives actual written notice in
accordance with its procedures of any change to such information and/or
certifications. Each of the undersigned certifies that (he)(she) is duly
authorized to sign this Application (or amendment) on behalf of applicant. --
attach pages if necessary--
By:____________________________________ By:_____________________________
Name/Title: Date Name/Title: Date
By:____________________________________ By:_____________________________
Name/Title: Date Name/Title: Date
(seal)
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 Park Avenue, New York, New York 10022
(800) -______
STATEMENT OF ADDITIONAL INFORMATION
February , 1996
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Mutual of America Institutional Funds, Inc. Prospectus
dated February , 1996 and retained for future reference.
A copy of the Prospectus to which this Statement of Additional Information
relates is available at no charge by writing Mutual of America Institutional
Funds, Inc. at the above address or by calling the telephone number listed
above.
TABLE OF CONTENTS
Page
----
GENERAL INFORMATION AND HISTORY.............................. SAI-2
INVESTMENT POLICIES AND LIMITATIONS.......................... SAI-2
INVESTMENT RESTRICTIONS...................................... SAI-8
MANAGEMENT OF THE INVESTMENT COMPANY......................... SAI-9
INVESTMENT ADVISORY ARRANGEMENTS............................. SAI-11
ADMINISTRATIVE AGREEMENTS.................................... SAI-12
PORTFOLIO TRANSACTIONS AND BROKERAGE......................... SAI-13
PURCHASE AND PRICING OF SECURITIES........................... SAI-14
YIELD AND PERFORMANCE INFORMATION............................ SAI-15
DESCRIPTION OF CORPORATE BOND RATINGS........................ SAI-16
ADDITIONAL DISCUSSION OF DIVIDENDS, DISTRIBUTIONS AND TAXES.. SAI-18
INDEPENDENT AUDITORS......................................... SAI-21
LEGAL MATTERS................................................ SAI-21
CUSTODIAN.................................................... SAI-21
BALANCE SHEET................................................ SAI-21
<PAGE>
GENERAL INFORMATION AND HISTORY
Mutual of America Institutional Funds, Inc. (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 October 27, 1994 as a Maryland corporation. As a
"series" type of mutual fund, the Investment Company issues separate classes (or
series) of stock, each of which represents a separate fund of investments.
There are currently two funds: the Equity Fund and the Bond Fund.
INVESTMENT POLICIES AND LIMITATIONS
The following supplements the information contained in the Investment Company's
Prospectus concerning the investment policies and limitations of its Funds. For
information relating to the Funds' investment objectives, see "Investment
Objectives and Policies of the Funds", and for information about the Adviser,
see "Investment Advisory and Administrative Arrangements" in the Prospectus and
"Investment Advisory Arrangements" in this Statement of Additional Information.
NON-INVESTMENT GRADE DEBT SECURITIES ("JUNK BONDS")
The Bond Fund may, to a limited extent, invest in fixed-income securities which
are rated in the lower rating categories of the nationally recognized rating
services (Ba or lower by Moody's and BB or lower by Standard & Poor's), or
unrated securities of comparable quality, sometimes referred to as high
yield/high risk securities or as "junk bonds". Non-investment grade bonds are
regarded as being predominantly speculative as to the issuer's ability to make
payments of principal and interest. Investment in such securities involves
substantial risk. Non-investment grade 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. Non-investment grade bonds
frequently are junior obligations of their issuers, so that in the event of the
issuer's bankruptcy, claims of the holders of non-investment grade bonds will be
satisfied only after satisfaction of the claims of senior security holders.
While the non-investment grade bonds in which the Bond Fund may invest normally
would not include securities which, at the time of investment, are in default or
the issuers of which are in bankruptcy, there can be no assurance that such
events would not occur after the Bond Fund purchases a particular security, in
which case the Bond Fund may experience losses and incur costs.
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 non-investment grade bonds than on higher-rated fixed-income
securities. Like higher-rated fixed-income securities, non-investment grade
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, which may be less liquid than the market for
higher-rated fixed-income securities, even under normal economic conditions.
Also, there may be significant disparities in the prices quoted for non-
investment grade bonds by various dealers. Adverse economic conditions or
investor perceptions (whether or not based on economic fundamentals) may impair
the liquidity of this market, and may cause the prices the Bond Fund may receive
for
SAI-2
<PAGE>
any non-investment grade bonds to be reduced, or might cause the Bond Fund
to experience difficulty in liquidating a portion of its portfolio. Under such
conditions, judgment may play a greater role in valuing certain of the Bond
Fund's portfolio securities than in the case of securities trading in a more
liquid market.
While the Equity Fund does not purchase non-investment grade bonds, the Fund may
invest to a limited extent in fixed-income securities that could subsequently
become non-investment grade bonds as a result of impairment of the issuer's
credit. In such instances, the Equity Fund will consider disposing of the non-
investment grade bonds if, in management's judgment, it is in the Fund's best
interest to do so.
Reference is made to "Investment Objectives and Policies of the Funds" in the
Prospectus for a more complete discussion of the investment objectives and
policies of the Investment Company.
MONEY MARKET INSTRUMENTS
U.S. Government Obligations. Securities issued or guaranteed as to principal
- ---------------------------
and interest by the United States Government include a variety of Treasury
securities, which differ only in their interest rates, maturities and times of
issuance. Treasury bills have a maturity of one year or less. Treasury notes
have maturities of one to seven years and Treasury bonds generally have a
maturity of greater than five years.
Agencies of the United States Government which issue or guarantee obligations
include, among others, Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Government National Mortgage
Association, Student Loan Marketing Association, Maritime Administration, Small
Business Administration and the Tennessee Valley Authority. Obligations of
instrumentalities of the United States Government include securities issued or
guaranteed by, among others, Federal Farm Credit Banks, Federal National
Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks and Banks for
Cooperatives. Some of these securities are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury, while still others are supported only by the credit of
the instrumentality.
Shares of the Investment Company are not themselves insured or guaranteed by the
United States Government or any agency thereof.
Certificates of Deposit. Certificates of deposit are generally short-term,
- -----------------------
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
- -------------
institution for a specified period of time at a fixed interest rate of which a
negotiable certificate is not received.
Bankers' Acceptance. A bankers' acceptance is a draft drawn on a commercial
- -------------------
bank by a borrower usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods). The
borrower is liable for payment as well as the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Most
acceptances have maturities of six months or less and are traded in secondary
markets prior to maturity.
SAI-3
<PAGE>
Commercial Paper. Commercial paper refers to short-term, unsecured promissory
- ----------------
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months.
Variable Amount Floating Rate Notes. Variable floating rate notes are short-
- -----------------------------------
term, unsecured promissory notes issued by corporations to finance short-term
credit needs. These are interest-bearing notes on which the interest rate
generally fluctuates on a weekly basis.
Corporate Debt Securities. Corporate debt securities with a remaining maturity
- -------------------------
of less than one year tend to become extremely liquid and are traded as money
market securities. Such issues with between one and two years remaining to
maturity tend to have greater liquidity and considerably less market value
fluctuations than longer term issues.
REPURCHASE AGREEMENTS
Under a repurchase agreement, underlying debt instruments are acquired for a
relatively short period (usually not more than one week and never more than one
year) subject to an obligation of the seller to repurchase (and the appropriate
Fund to resell) the instrument at a fixed price and time, thereby determining
the yield during the Fund's holding period. This results in a fixed rate of
return insulated from market fluctuation during such period. Accrued interest on
the underlying security will not be included for purposes of valuing a Fund's
assets.
Repurchase agreements have the characteristics of loans by a Fund, and will be
fully collateralized (either with physical securities or evidence of book entry
transfer to the account of the custodian bank) at all times. During the term of
the repurchase agreement the Fund retains the security subject to the repurchase
agreement as collateral securing the seller's repurchase obligation, continually
monitors the market value of the security subject to the agreement and requires
the Fund's seller to deposit with the Fund additional collateral equal to any
amount by which the market value of the security subject to the repurchase
agreement falls below the resale amount provided under the repurchase agreement.
The Funds enter into repurchase agreements only with member banks of the Federal
Reserve System, and with primary dealers in U.S. Government securities whose
creditworthiness has been reviewed and found satisfactory by the management of
the Investment Company, and who have, therefore, been determined to present
minimal credit risk.
Securities underlying repurchase agreements will be limited to certificates of
deposit, commercial paper, bankers' acceptances, or obligations issued or
guaranteed by the United States Government or its agencies or instrumentalities,
in which the Funds may otherwise invest.
If a seller of a repurchase agreement defaults and does not repurchase the
security subject to the agreement, the Fund would look to the collateral
security underlying the seller's repurchase agreement, including the securities
subject to the repurchase agreement, for satisfaction of the seller's obligation
to the Fund; in such event the Fund might incur disposition costs in liquidating
the collateral and might suffer a loss if the value of the collateral declines.
OPTIONS AND FUTURES
As described in the Prospectus, the Funds may enter into transactions in
options, futures contracts and options on futures contracts on securities and
indexes of securities for hedging
SAI-4
<PAGE>
purposes only. With respect to options and futures, the Funds may engage in
strategies which include buying and selling covered calls and puts and buying
and selling call options on groups of securities and on the futures of groups of
securities.
PUT AND CALL OPTIONS
A call option is a short-term contract (generally having a duration of nine
months or less) which gives the purchaser of the option the right to purchase
the underlying security at a fixed exercise price at any time prior to the
expiration of the option regardless of the market price of the security during
the option period. As consideration for the call option, the purchaser pays a
Fund (the seller) a premium, which the Fund retains whether or not the option is
exercised. The seller of the call option has the obligation, upon the exercise
of the option by the purchaser, to sell the underlying security at the exercise
price at any time during the option period. The selling of a call option will
benefit a Fund if, over the option period, the underlying security declines in
value or does not appreciate above the aggregate of the exercise price and the
premium. However, the Fund risks an "opportunity loss" of profits if the
underlying security appreciates above the aggregate value of the exercise price
and the premium.
A Fund may close out a position acquired through selling a call option by buying
a call option on the same security with the same exercise price and expiration
date as the call option which it had previously sold on that security.
Depending on the premium for the call option purchased by the Fund, the Fund
will realize a profit or loss on the transaction.
A put option is a similar short-term contract that gives the purchaser of the
option the right to sell the underlying security at a fixed exercise price at
any time prior to the expiration of the option regardless of the market price of
the security during the option period. As consideration for the put option a
Fund (the purchaser) pays the seller a premium, which the seller retains whether
or not the option is exercised. The seller of the put option has the
obligation, upon the exercise of the option by the purchaser, to purchase the
underlying security at the exercise price at any time during the option period.
The buying of a covered put contract limits the downside exposure for the
investment in the underlying security to the combination of the exercise price
less the premium paid. The risk of purchasing a put is that the market price of
the underlying stock prevailing on the expiration date may be above the option's
exercise price. In that case the option would expire worthless and the entire
premium would be lost.
A Fund may close out a position acquired through buying a put option by selling
a put option on the same security with the same exercise price and expiration
date as the put option which it had previously bought on the security.
Depending on the premium of the put option sold by the Fund, the Fund will
realize a profit or loss on the transaction.
INDEX OPTIONS, FUTURES AND OPTIONS ON FUTURES
Index options, futures contracts and options on futures contracts can be used in
anticipation of or in a general market or market sector decline that may
adversely affect the market value of a Fund's portfolio of securities. To the
extent that a Fund's portfolio of securities changes in value in correlation
with a given stock index, hedging transactions in options, futures contracts or
options on futures contracts could reduce the risk to the portfolio of a market
decline, and, by so doing, provide an alternative to the liquidation of
securities' positions in the portfolio with resultant transactions costs. The
stock index underlying an option or futures contract assigns
SAI-5
<PAGE>
weighted values to the stocks involved in the index, and the value of the index
fluctuates with changes in the market values of the stocks so included.
Options on stock indexes are based on indexes of securities such as the Standard
& Poor's 100 Index, the Standard & Poor's 500 Stock Index and the New York Stock
Exchange Composite Index. Options on stock indexes, like options on individuals
securities, are traded on national securities exchanges regulated by the
Securities and Exchange Commission such as the Chicago Board Options Exchange,
the American Stock Exchange and the New York Stock Exchange.
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 ("CFTC"), such as the Chicago Board
of Trade. All transactions are settled through the clearing house of the
contract market, which acts as the guarantor of the performance of each party to
all futures contracts cleared.
An option on a futures contract provides the purchaser with the right, but not
the obligation, to enter into a "long" position in the underlying futures
contract (in the case of a call option on a futures contract), or a "short"
position in the underlying futures contract (in the case of a put option on a
futures contract), at a fixed price up to a stated expiration date. Upon
exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties are subject to
all of the risks associated with the trading of futures contracts, such as
payment of margin deposits.
Options on futures contracts are traded on the same contract markets as the
underlying futures contracts, subject to the performance guarantee of the
contract market clearing house. A futures contract or an option on a futures
contract may be closed out prior to maturity or expiration by entering into a
liquidating transaction in the same instrument on the contract market on which
the original position was established.
Unlike a Fund purchasing or selling a security, no price is paid or received by
a Fund upon the purchase or sale of a futures contract. Initially, a Fund will
be required to deposit with the Fund's custodian in the broker's name an amount
of cash or U.S. Treasury bills equal to approximately 5% of the contract amount.
This amount is known as "initial margin". The nature of initial margin in
futures transactions is different from that of margin in securities transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to a Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
maintenance margin, to and from the broker, will be made on a daily or intraday
basis as the price of the underlying instrument or stock index fluctuates making
the long and short positions in the futures contract more or less valuable, a
process known as mark to market. For example, when a Fund has purchased a stock
index futures contract and the price of the underlying stock index has risen,
that position will have increased in value and the Fund will receive from the
broker a variation margin payment equal to that increase in value. Conversely,
where a Fund has
SAI-6
<PAGE>
purchased a stock index futures contract and the price of the underlying stock
index has declined, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. At any time prior to
expiration of the futures contract, a Fund may elect to close the position by
taking an opposite position which will operate to terminate the Fund's position
in the futures contract. A final determination of margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or a gain.
RISKS ASSOCIATED WITH OPTIONS AND FUTURES
Transactions in options, futures contracts and options on futures contracts may
increase a Fund's transaction costs and portfolio turnover rate and will be
initiated only when consistent with a Fund's investment objectives.
The trading of options, futures contracts and options on futures contracts also
involves risks, in addition to those set forth in the Prospectus. For example,
the trading of options on futures contracts entails the risk that changes in the
value of the underlying futures contract will not be fully reflected in the
value of the option. Further, the ability to profit from the purchase of an
option and liquidate the underlying futures contract, is subject to the risks of
margin payments and the availability of a liquid market. With respect to
options and options on futures contracts, the Funds are subject to the risk of
market movements between the time that the option is exercised and the time of
performance thereunder. In writing a covered call option on a security or a
stock index, the Funds also incur the risk that changes in the value of the
instruments used to cover the position will not correlate precisely with changes
in the value of the option or underlying the index or instrument.
The exchanges on which options, futures contracts and options on futures
contracts are traded may impose limitations governing the maximum number of
positions on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting alone or in
concert with others (regardless of whether such contracts are held on the same
or different exchanges or held or written in one or more accounts or through one
or more brokers).
The opening of a futures position and the writing of an option are transactions
which involve substantial leverage. As a result, relatively small movements in
the price of the contract can result in substantial unrealized gains or losses.
Because the Funds will engage in transactions in options, futures contracts and
options on futures contracts on securities and indexes of securities for hedging
purposes only, any losses incurred in connection with these transactions should,
if the hedging strategy is successful, be offset by increases in the value of
securities or other assets held by the Funds or decreases in the prices of
securities or other assets the Fund intends to acquire. Were a Fund to write
options on securities or options on stock indexes for other than hedging
purposes, the margin requirements associated with such transactions could expose
the Fund to greater risk.
Regulations of the CFTC require that a Fund enter into transactions in futures
contracts and options on futures contracts for hedging purposes only or
otherwise to limit its initial futures margins and related option premiums paid
to an amount not to exceed 5% of the value of the Fund's assets, in order to
assure that the Fund is not deemed to be a "commodity pool" and the Investment
Company is not a "commodity pool operator" as defined in CFTC regulations.
SAI-7
<PAGE>
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies and may not be
changed without the approval of a majority of the outstanding voting shares of
the affected Fund. No Fund 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" in the Prospectus);
3. make an investment in order to exercise control of management over a
company (either singly or together with any other Fund);
4. underwrite the securities of other companies;
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, except to the extent described
in the Prospectus and herein with respect to futures and related options;
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 institution), other than securities
issued or guaranteed by the United States Government or its agencies or
instrumentalities;
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) and except as permitted
by the rules and regulations of the Investment Company Act or an exemption
thereunder and with any required approval of the shareholders of the
Investment Company;
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 that
this policy does not apply to obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
11. purchase real estate or mortgages directly, except that the Equity Fund may
buy shares of real estate investment trusts listed on stock exchanges or
reported on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system, and the Bond Fund may buy mortgage-backed debt
issues;
SAI-8
<PAGE>
12. purchase any securities issued by any other investment company except as
permitted under the Investment Company Act and in accordance with
applicable state law;
13. purchase any security on margin, except for short-term credit necessary for
clearance of portfolio transactions or in connection with permitted options
and futures contracts, 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, gas or mineral interests, except that the Funds may purchase
securities of issuers that invest in oil, gas or mineral interests.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or amount of net assets will not be
considered a violation.
MANAGEMENT OF THE INVESTMENT COMPANY
Directors and Officers
- ----------------------
The Directors of the Investment Company consist of five individuals, three of
whom are not "interested persons" of the Investment Company as defined in the
Investment Company Act of 1940. [Messrs. Kearney, Perrotta, Sharkey and Silber
will be elected as directors of the Investment Company prior to the
organizational meeting of the Board of Directors, and Messrs. Altstadt and Burns
will resign at that time.] The Directors of the Investment Company are
responsible for the overall supervision of the operations of the Investment
Company and perform the various duties imposed on the directors of investment
companies by the Investment Company Act of 1940. The Board of Directors elects
officers of the Investment Company annually.
The Directors and Officers of the Investment Company and their principal
employment are as follows:
SAI-9
<PAGE>
Position Held with Principal Occupations
Name and Address the Investment Company During Past Five Years
- ---------------- --------------------- ----------------------
Kevin M. Kearney Director Partner, Hurley, Kearney &
Brooklyn, NY Lane (law firm).
Dolores J. Morrissey* Chairman of the President and Chief
Mutual of America Capital Board, President and Executive Officer since
Management Corporation Director June 1994 of the Adviser;
320 Park Avenue Executive Vice President
New York, NY 10022 and Chief Investment
Officer - General Account
of the Adviser from
September 1993 until June
1994. Executive Vice
President of Mutual of
America Life Insurance
Company ("Mutual of
America Life") until
January 1994.
Fioravante G. Perrotta** Director Retired; Partner, Rogers &
New York, New York Wells, law firm, until
January 1996.
John T. Sharkey Director Vice President--Corporate
New York, NY National Accounts, MCI
Communications.
John R. Silber Director President, Boston
Boston, MA University
Manfred Altstadt Senior Executive Vice Senior Executive Vice
Mutual of America Life President, Chief President and Chief
Insurance Company Financial Officer, Financial Officer since
320 Park Avenue Treasurer and September 1993 and
New York, NY 10022 Director [Director Director since May 1993 of
until organizational the Adviser. Senior
Board meeting] Executive Vice President
and Chief Financial
Officer of Mutual of
America Life and The
American Life Insurance
Company of New York
("American Life") since
February 1992. Executive
Vice President and Chief
Financial Officer of
Mutual of America Life
from January 1991 to
February 1992. Prior
thereto, Executive Vice
President and Treasurer of
Mutual of America Life.
Patrick A. Burns Senior Executive Vice Senior Executive Vice
Mutual of America Life President, General President and General
Insurance Company Counsel and Director Counsel since September
320 Park Avenue [Director until 1993 of the Adviser.
New York, NY 10022 organizational Board Senior Executive Vice
meeting] President and General
Counsel of Mutual of
America Life and American
Life since February 1994.
Prior thereto, Executive
Vice President and General
Counsel of Mutual of
America Life and American
Life.
Stanley M. Lenkowicz Senior Vice Senior Vice President and
Mutual of America Life President, Associate Deputy General Counsel
Insurance Company General Counsel and since March 1995 of Mutual
320 Park Avenue Secretary of America Life; Senior
New York, NY 10022 Vice President and
Associate General Counsel
from October 1992 to March
1995. Prior thereto, Vice
President and Counsel of
Home Life Insurance
Company.
- -------------------
SAI-10
<PAGE>
- --------------------
* Ms. Morrissey is an "interested person" within the meaning of the Investment
Company Act.
**Rogers & Wells has provided legal services to Mutual of America Life within
the last two fiscal years, and consequently Mr. Perrotta may be deemed an
"interested person" within the meaning of the Investment Company Act.
The officers and directors of the Investment Company own none of its outstanding
shares. The Investment Company has no Audit Committee.
Pursuant to the terms of the Investment Advisory Agreement described under the
caption "Investment Advisory Arrangements", Mutual of America Capital Management
Corporation, as investment adviser (the "Adviser"), pays all compensation of
officers and employees, if any, of the Investment Company. All directors of the
Investment Company who are affiliated persons of the Adviser or its affiliates
serve without compensation. Set forth below is a table showing the compensation
to be paid to the directors of the Investment Company.
<TABLE>
<CAPTION>
Pension or Estimated Annual Total Compensation From
Aggregate Compensation Retirement Benefits Benefits Upon Investment Company and
from Investment Company Accrued as Part of Retirement Other Investment
Fund Expenses Companies in Complex
Name of Director
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kevin M. Kearney $13,000 (2) None None $13,000 (2)
Dolores J. Morrissey None (1) None None None (1)
Fioravante G. Perrotta None (2) None None None (2)
John T. Sharkey $13,000 (2) None None $13,000 (2)
John R. Silber $13,000 (2) None None $13,000 (2)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As an employee of the Adviser and an "interested person" of the Investment
Company,
Ms. Morrissey serves as director of the Investment Company and of Mutual of
America Investment Corporation 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 $750
for each Board or Committee meeting attended. The figures shown are
estimated for the first year of the Investment Company's operations. Mr.
Perrotta, who is not an officer or employee of the Adviser or Mutual of
America Life, will receive such retainer and meeting fee from the Adviser
for so long as he may be deemed an "interested person" of the Investment
Company.
As of the date of this Prospectus, the Adviser owned all of the outstanding
shares of the Equity and Bond Funds. The Adviser has the right to vote its
shares at any meeting of shareholders.
SAI-11
<PAGE>
INVESTMENT ADVISORY ARRANGEMENTS
The Investment Company's investment adviser is Mutual of America Capital
Management Corporation (the "Adviser"), an indirect wholly-owned subsidiary of
Mutual of America Life, 320 Park Avenue, New York, New York 10022, a New York
corporation.
Subject at all times to the supervision and approval of the Investment Company's
Board of Directors, the Adviser renders investment advisory services with
respect to the Equity Fund and Bond Fund in a manner consistent with the stated
investment policies, objectives and restrictions of the Funds. In connection
therewith, the Adviser advises the Investment Company as to what investments
should be purchased and sold and places orders for all such purchases and sales
on behalf of the Investment Company. The Adviser is a registered investment
adviser under the Investment Advisers Act of 1940.
As compensation for its investment advisory services to each of the Funds of the
Investment Company, the Adviser will receive a fee calculated as a daily charge
at the annual rates of .50% of the value of the net assets of the Equity Fund;
and .45% of the value of the net assets of the Bond Fund.
The Investment Advisory Agreement (the "Advisory Agreement") was approved by a
majority of the non-interested members of the Investment Company's Board of
Directors (the "non-interested directors") on January , 1996, and by a vote
of the Adviser, as the Fund's sole shareholder, on January , 1996. The
Advisory Agreement will be submitted to a vote of the Investment Company's
shareholders at the first meeting of shareholders following the effectiveness of
the Registration Statement.
The Advisory Agreement terminates automatically in the event of its assignment
or, with respect to any Fund, upon 60 days' notice given by the Investment
Company's Board of Directors, by the Adviser or by majority vote (as defined in
the Investment Company Act of 1940 and the rules thereunder) of the Fund's
shares. Otherwise, the Advisory Agreement will continue in force with respect
to any Fund for two years from its execution and thereafter so long as its
continuance is approved at least annually by (i) a majority of the members of
the Investment Company's Board of Directors, or (ii) a majority vote (as defined
in the Investment Company Act of 1940 and the rules thereunder) of the Fund's
shareholders; provided that in either event such continuance will also be
approved by the vote of a majority of directors who are not interested persons
(as defined in the Investment Company Act of 1940).
Under the Advisory Agreement, the Adviser agrees to provide investment
management services to the Investment Company. Such services include performing
investment research and evaluating pertinent economic, statistical and financial
data; consultation with the Investment Company's Board of Directors and
furnishing to the Investment Company's Board of Directors recommendations with
respect to the overall investment plan; implementation of the overall investment
plan, including carrying out decisions to acquire or dispose of investments;
management of investments; reporting to the Investment Company's Board of
Directors on a regular basis on the implementation of the investment plan and
the management of investments; maintaining all required records; making
arrangements for the safekeeping of assets; and providing office space
facilities, equipment, material and personnel necessary to fulfill its
obligations. The Adviser is responsible for all expenses incurred in performing
the investment advisory services, including compensation of officers and payment
of office expenses.
SAI-12
<PAGE>
Each Fund will pay all other expenses incurred in its operation, including
brokers' commissions, transfer taxes and other fees relating to the Fund's
portfolio transactions, independent directors' fees and expenses, fees and
expenses of its independent certified public accountants and of its legal
counsel, filing fees and expenses for the registration of the Investment Company
or Fund shares under federal or state securities laws, the cost of the printing
and mailing of semi-annual reports to shareholders, proxy statements,
prospectuses, prospectus supplements and statements of additional information
for existing shareholders and the costs of providing to the Distributor camera
ready copies of such documents, the costs of meetings of shareholders, costs and
fees of custodians, transfer agents, recordkeeping and other agents, any
federal, state or local income or other taxes, any membership fees of the
Investment Company Institute and similar organizations, fidelity bond and
directors' and officers' liability insurance premiums, as well as any
extraordinary expenses, such as indemnification payments or damages awarded in
litigation or settlements made. The Adviser voluntarily limits the expenses of
each Fund, other than for brokers' commissions, transfer taxes and other fees
relating to portfolio transactions and extraordinary expenses, to an annual rate
of .85% of the value of net assets of the Equity Fund and .70% of the value of
net assets of the Bond Fund. The Adviser may discontinue such policy at any
time.
ADMINISTRATIVE AGREEMENTS
ACCOUNTING AND RECORDKEEPING AGENT
Investors Fiduciary Trust Company, Kansas City, Missouri ("IFTC") serves as
accounting and recordkeeping agent for the Funds. Under its Investment
Accounting Agreement with the Investment Company, IFTC performs accounting and
recordkeeping functions related to portfolio transactions as required by the
Investment Company Act, provides the Investment Company with accounting and
related reports on a periodic basis, and calculates the net asset value of each
Fund in the manner described in the Prospectus. As compensation for its
services, IFTC receives from each Fund a monthly base fee of $500 plus a monthly
minimum fee of $2,000, or if an asset-based fee of .0225% of the Investment
Company net assets would result in a fee greater than the aggregate of the Fund
minimums, the Fund's proportion of the asset-based fee, and is reimbursed for
out-of-pocket expenses it incurs in performing its services to the Investment
Company.
TRANSFER AGENT
State Street Bank and Trust Company, Boston, Massachusetts ("State Street")
serves as transfer agent and dividend disbursing agent for Fund shares. Under
its Transfer Agency and Service Agreement with the Investment Company, State
Street is obligated to maintain shareholder accounts to reflect purchases and
redemptions of Fund shares; prepare and transmit payments for dividends and
distributions declared by the Investment Company; mail proxy materials,
shareholder reports and prospectuses to current shareholders; and prepare and
mail account and confirmation statements for shareholders. For its services,
State Street receives from each Fund a monthly maintenance fee based on the
number of holders of Fund shares, ranging from a minimum of $1,000 per month for
0-15 shareholders to $2,500 per month for 51-200 shareholders, and a trade
processing fee for each trade and is reimbursed for out-of-pocket expenses.
SAI-13
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities for the
Funds of the Investment Company as well as for selecting brokers and, where
applicable, negotiating the amount of the commission rate paid. As a general
matter, the Adviser selects broker-dealers which, in its best judgment, provide
prompt and reliable execution at favorable security prices and reasonable
commission rates. The Adviser may place certain orders with its affiliates,
subject to the requirements of the Investment Company Act of 1940. When
purchasing or selling securities trading on the over-the-counter market, the
Adviser will generally execute the transaction with a broker engaged in making a
market for such securities.
Brokerage commissions are negotiated, as there are no standard rates. All
brokerage firms provide the service of execution of the order made; some
brokerage firms also provide research and statistical data, and research reports
on particular companies and industries are customarily provided by brokerage
firms to large investors. In negotiating commissions, consideration is given by
the Adviser to the use and value of the data and to the quality of execution
provided. The valuation of such data may be judged with reference to a
particular order or, alternatively, may be judged in terms of its value to the
overall management of the Investment Company.
The Adviser 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 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 in providing investment advice to the
Investment Company. To the extent that the Adviser 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, 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. 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 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.
Rate of portfolio turnover will not be a limiting factor when the Adviser deems
it appropriate to purchase or sell securities for a Fund. The Bond Fund may
realize short-term gains to the extent the Adviser considers such realizations
to be advantageous in light of existing market conditions, which will increase
portfolio turnover. The portfolio turnover rate in any year will depend on
market conditions.
PURCHASE AND PRICING OF SECURITIES
The Investment Company will offer and sell its shares at each Fund's per share
net asset value, determined in the manner set forth in the Prospectus. The
methods used to value the assets of each Fund also are set forth in the
Prospectus.
SAI-14
<PAGE>
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.
Calculation of Total Return and Average Annual Total Return. Total Return with
- -----------------------------------------------------------
respect to the shares of a Fund is a measure of the change in value of an
investment in a Fund over the period covered, which assumes that any dividends
or capital gains distributions are reinvested in that Fund's shares immediately
rather than paid to the investor in cash. The formula for Total Return with
respect to a Fund's shares used herein includes four steps: (1) adding to the
total number of shares purchased by a hypothetical $1,000 investment to the
number of shares which would have been purchased if all dividends and
distributions paid or distributed during the period had been immediately
reinvested; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of shares on
the last trading day of the period by the net asset value per share on the last
trading day of the period; (3) assuming redemption at the end of the period; and
(4) dividing this account value for the hypothetical investor by the initial
$1,000 investment. Average Annual Total Return is measured by annualizing Total
Return over the period.
Calculation of Yield. Yield of the shares of a Fund will be computed by
- --------------------
annualizing net investment income, as determined by the SEC's formula,
calculated on a per share basis, for a recent 30-day (or one month) 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 a 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.
Each Fund may from time to time also include the ranking of its performance
figures relative to such figures for groups of mutual funds categorized by
Lipper Analytical Services ("Lipper") as having the same or similar investment
objectives or by similar services that monitor the performance of mutual funds.
Each Fund may also from time to time compare its performance to average mutual
fund performance figures compiled by Lipper in Lipper Performance Analysis.
Advertisements or information furnished to present shareholders or prospective
investors may also include evaluations of a Fund published by nationally
recognized ranking services and by financial publications that are nationally
recognized such as Barron's, Business Week, CDA Technologies, Inc., Changing
Times, Dow Jones Industrial Average, Financial Planning, Financial World,
Forbes, Fortune, Hulbert's Financial Digest, Institutional Investor, Investors
Daily, Money, Morningstar Mutual Funds, The New York Times, Stanger's Investment
Adviser, Value Line, The Wall Street Journal, Wiesenberger Investment Company
Service and USA Today.
SAI-15
<PAGE>
The performance figures described above may also be used to compare the
performance of a Fund's shares against certain widely recognized standards or
indices for stock and bond market performance, as described below.
The Equity Fund will be compared to the Standard & Poor's Composite Index of 500
Stocks (the "S&P 500 Index"), which is a market value-weighted and unmanaged
index showing the changes in the aggregate market value of 500 stocks relative
to the base period 1941-43. The S&P 500 Index is composed almost entirely of
common stocks of companies listed on the NYSE, although the common stocks of a
few companies listed on the American Stock Exchange or traded OTC are included.
The 500 companies represented at any one time are from a group that includes
approximately 400 industrial, 60 utility and transportation and 50 financial
services concerns. The S&P 500 Index represents about 80% of the market value
of all issues traded on the NYSE.
The Bond Fund will be compared to the Lehman Brothers Government/Corporate Bond
Index (the "Lehman Government/Corporate Index"), which is a measure of the
market value of approximately 5,300 bonds each 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.
In reports or other communications to shareholders, the Investment Company may
also describe general economic and market conditions affecting the Funds and may
compare the performance of the Funds with (1) that of mutual funds included in
the rankings prepared by Lipper or similar investment services that monitor the
performance of mutual funds, (2) IBC/Donoghue's Money Fund Report, (3) other
appropriate indices of investment securities and averages for a peer universe of
funds which are described in this Statement of Additional Information, or (3)
data developed by the Adviser derived from such indices or averages.
DESCRIPTION OF CORPORATE BOND RATINGS
Description of Corporate bond ratings of Moody's Investors Services, Inc.:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear
SAI-16
<PAGE>
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.
SAI-17
<PAGE>
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.
ADDITIONAL DISCUSSION OF DIVIDENDS, DISTRIBUTIONS AND TAXES
The discussion below supplements the discussion in the Prospectus under
"Dividends, Distributions and Taxes", which an investor should also read. No
attempt has been made to present a detailed explanation of the federal, state or
local income tax treatment of a Fund or its shareholders, and the tax discussion
contained in the Prospectus and this Statement of Additional Information is not
intended as a substitute for careful tax planning. Potential purchasers of
shares of a Fund are urged to consult their tax advisers regarding specific
questions as to federal, foreign state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in a Fund
as well.
Due to investment laws in certain foreign countries, it is anticipated that a
Fund's investments in equity securities in such countries may consist of shares
of investment companies (or similar investment entities) organized under foreign
law or of ownership interests in special accounts, trusts or partnerships. If
the Fund purchases shares of an investment company (or similar investment
entity) organized under foreign law, the Fund will be treated as owning shares
in a passive foreign investment company ("PFIC") for U.S. federal income tax
purposes. The Fund may be subject to U.S. federal income tax, and an additional
tax in the nature of interest, on a portion of distributions from such company
and on gain from the disposition of such shares (collectively referred to as
"excess distributions"), even if such excess distributions are paid by the Fund
as a dividend to its shareholders. The Fund may be eligible to make an election
with respect to certain PFICs in which it owns shares that will allow it to
avoid the taxes on excess distributions. However, such election may cause the
Fund to recognize income in a particular year in excess of the distributions
received from such PFICs. Alternatively, under proposed regulations the Fund
would be able to elect to "mark to market" at the end of each taxable year all
shares that it holds in PFICs. If it made this election, the Fund would
recognize as ordinary income any increase in the value of such shares.
Unrealized losses, however, would not be recognized. By making the mark-to-
market election, the Fund could avoid imposition of the interest charge with
respect to its distributions from PFICs, but in any particular year might be
required to recognize income in excess of the distributions it received from
PFICs and its proceeds from dispositions of PFIC stock.
Foreign currency gains or losses from certain debt instruments are generally
treated as ordinary income or loss. These gains or losses will generally
increase or decrease the amount of a Fund's investment company taxable income
available to be distributed to shareholders as ordinary income. Additionally,
if losses of this nature exceed a Fund's other investment company taxable income
during a taxable year, a Fund would not be able to make any ordinary income
dividend distributions. Any such distribution made before the losses were
realized (but in the same taxable year) would be recharacterized as a return of
capital to a Fund's shareholders, thereby reducing the shareholders' basis in
the Fund's shares, and resulting in a capital gain for any shareholder who
received a distribution greater than that shareholder's basis in the Fund's
shares (assuming the shares were held as capital assets).
SAI-18
<PAGE>
Individuals are subject to graduated federal tax rates of 15%, 28%, 31%, 36%
and 39.6% of their taxable incomes. Further, the marginal tax rate may be in
excess of 39.6% due to adjustments that reduce or eliminate the benefit of the
personal exemption and itemized deductions for individuals with gross income in
excess of certain threshold amounts.
Capital gains of individuals are subject to tax at the same rates applicable to
ordinary income; however, the tax rate on capital gains of individuals cannot
exceed 28%. Capital losses may be used to offset capital gains. In addition,
individuals may deduct up to $3,000 of net capital loss each year to offset
ordinary income. Excess net capital loss may be carried forward to future
years.
Federal taxable income of corporations in excess of $75,000 up to $10 million is
subject to a 34% tax rate; however, because the benefit of lower tax rates on a
corporation's taxable income of less than $75,000 is phased out for corporations
with income in excess of $100,000 but lower than $335,000, a maximum marginal
tax rate of 39% may result. Federal taxable income of corporations in excess of
$10 million is subject to a tax rate of 35%. Further, a corporation's federal
taxable income in excess of $15 million is subject to an additional tax equal to
3% of taxable income over $15 million, subject to a maximum additional tax of
$100,000.
Capital gains of corporations are subject to tax at the same rates applicable to
ordinary income. Capital losses may be used only to offset capital gains and
excess net capital loss may be carried back three years and forward five years.
Certain corporations are entitled to a 70% dividends received deduction for
distributions from certain domestic corporations. The Equity Fund will
designate the portion of any distributions which qualify for the 70% dividends
received deduction. The amount so designated may not exceed the amount received
by the Equity Fund for its taxable year that qualifies for the dividends
received deduction. (Since all of the Bond Fund's ordinary income dividends is
expected to be derived from earned interest and short-term capital gains, it is
not anticipated that any portion of the ordinary income dividends of the Bond
Fund will qualify for the dividends received deduction.)
Ordinary income dividends paid by a Fund to a shareholder that is nonresident
alien or a foreign entity will be subject to a 30% U.S. withholding tax
applicable to foreign persons, unless a reduced rate of withholding or a
withholding exemption is provided under applicable law or an applicable tax
convention between the United States and a particular foreign country.
Dividends and interest received by a Fund may be subject to withholding and
other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes.
These foreign taxes will reduce the amount of funds available for distributions
by a Fund, but are included in the taxable income reported by the Fund's
shareholders. Since stock and securities of foreign issuers will account for
less than 50% of the assets of each Fund, the Fund's shareholders will not be
able to claim a credit or deduction for these foreign taxes paid by a Fund.
A Fund may be required to withhold a 31% tax on ordinary income dividends,
capital gains dividends and redemption payments made to certain shareholders
("backup withholding"). Generally, backup withholding will apply to a
shareholder that has not furnished the Fund with a certified taxpayer
identification number, that has furnished an incorrect taxpayer identification
SAI-19
<PAGE>
number, or in respect of which the Internal Revenue Service has notified the
Fund that backup withholding is required.
Information set forth in the Prospectus and this Statement of Additional
Information which relates to federal taxation is only a summary of some of the
important federal tax considerations generally affecting purchasers of shares of
a Fund. In addition, the tax discussion in the Prospectus and this Statement of
Additional Information is based on tax laws and regulations which are in effect
on the date of the Prospectus and this Statement of Additional Information; such
laws and regulations may be changed by legislative or administrative action.
In addition, ordinary income and capital gain dividends may also be subject to
state and local taxes. Certain states exempt from state income taxation
dividends paid by regulated investment companies which are derived from interest
on U.S. Government obligations. State law varies as to whether dividend income
attributable to U.S. Government obligations is exempt from state income tax.
PRIVATE FOUNDATIONS: Private foundations and their managers are subject to
excise taxes under the Code if they invest "any amount in such a manner as to
jeopardize the carrying out of any of the foundation's exempt purposes." This
rule requires a foundation manager, in making an investment, to exercise
"ordinary business care and prudence" under the facts and circumstances
prevailing at the time of making the investment, in providing for the short-term
and long-term needs of the foundation in carrying out its exempt purposes. The
factors which a foundation manager may take into account in assessing an
investment under this standard include the expected rate of return (both income
and capital appreciation), the risks of rising and falling price levels, and the
need for diversification within the foundation's portfolio.
A substantial percentage of investments of certain "private operating
foundations", as defined in the Code, may be restricted to assets directly
devoted to their tax-exempt purposes. Otherwise, generally, rules similar to
those discussed above govern their operations.
Each manager of a private foundation should consult the manager's and the
foundation's tax advisers regarding the foregoing considerations.
ENDOWMENT FUNDS: Investment managers of endowment funds should consider
whether the acquisition by such funds of shares in the Funds is legally
permissible. This is not a matter of federal law, but is determined under
applicable state statutes. It should be noted, however, that under the Uniform
Management of Institutional Funds Act, which has been adopted in various forms
by a large number of states, participation in mutual funds or similar
organizations, in which funds are commingled and investment determinations are
made by persons other than the governing board of the endowment fund, is
permitted.
Each investment manager of an endowment fund should consult the endowment fund's
counsel regarding the foregoing considerations.
RETIREMENT TRUSTS
General: The Funds may accept investments from tax-qualified pension, profit-
- -------
sharing or stock bonus plans, individuals retirement accounts ("IRAs"),
governmental plans and units, and Taft-Hartley plans (all such entities
hereinafter being referred to as "Retirement Trusts"). A fiduciary of a
Retirement Trust other than a governmental plan or unit or an IRA (a "Qualified
Plan") is
SAI-20
<PAGE>
subject to certain requirements under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including the discharge of duties
solely in the interest of, and for the exclusive purpose of providing benefits
to, the Qualified Plan's participants and beneficiaries. A fiduciary of a
Qualified Plan is required to perform the fiduciary's duties with the care,
skill, prudence and diligence under the then prevailing circumstances of a
prudent person acting in a like capacity and familiar with such matters, to
diversify investments so as to minimize the risk of large losses and to act in
accordance with the Qualified Plan's governing documents where not inconsistent
with ERISA. ERISA permits the Department of Labor to assess a civil penalty
against a fiduciary of a Qualified Plan involved in a breach of fiduciary
responsibility of up to 20% of the amount received by the Qualified Plan in
connection therewith.
Prohibited Transactions: ERISA also prohibits certain transactions between an
- -----------------------
employee benefit plan and the parties in interest with respect to such plan
(including fiduciaries). Under the Code, similar prohibitions apply to IRAs and
all Qualified Plans. Furthermore, ERISA and the Code prohibit parties in
interest (including fiduciaries) of a Qualified Plan or IRA from engaging in
various acts of self-dealing such as dealing with assets of a Qualified Plan or
an IRA for their own account or interest.
Investment Considerations: In considering an investment in the Funds of a
- -------------------------
portion of the assets of any Qualified Plan or IRA, a fiduciary should consider,
among other factors: (a) whether the investment is permitted by the documents
and instruments governing the Qualified Plan or IRA; (b) whether the investment
satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA, if
applicable; (c) whether the investment provides sufficient liquidity to permit
benefit payments to be made as they become due; (d) whether the investment is
for the exclusive purpose of providing benefits to participants and their
beneficiaries; and (e) whether the investment may constitute a "prohibited
transaction" (within the meaning of Section 406 of ERISA and Section 4975(c) of
the Code).
Each fiduciary of a Qualified Plan or IRA (and any other person subject to
ERISA) should consult such person's tax or other advisers regarding the
foregoing considerations.
INDEPENDENT AUDITORS
The balance sheet included in this Statement of Additional Information has been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in giving said report.
LEGAL MATTERS
The legal validity of the shares described in the Prospectus has been passed on
by Graham & James LLP, counsel for the Investment Company.
CUSTODIAN
The Chase Manhattan Bank, N.A., New York, New York, acts as Custodian of the
Investment Company's assets.
BALANCE SHEET
[TO BE FILED BY AMENDMENT]
SAI-21
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
--------------------
Balance Sheet as of February , 1996, included
in the Statement of Additional Information*
(b) Exhibits:
--------
1. Articles of Incorporation of Mutual of America
Institutional Funds, Inc. (the Fund), the
Registrant**
2. By-Laws of the Fund**
3. Not applicable
4. Not applicable
5. Form of Investment Advisory Agreement between the
Fund and Mutual of America Investment Corporation
(the Adviser)**
6. Form of Distribution Agreement between the Fund
and Mutual of America Securities Corporation (the
Distributor)**
7. Not applicable
8. Form of Custody Agreement between the Fund and The
Chase Manhattan Bank, N.A.
9(a) Form of Transfer Agency and Service Agreement
between the Fund and State Street Bank and Trust
Company
(b) Form of Investment Accounting Agreement between
the Fund and Investors Fiduciary Trust Company***
10. Form of Opinion and Consent of Graham & James LLP*
11(a) Consent of Arthur Andersen LLP*
11(b) Powers of Attorney*
12. Not applicable
<PAGE>
13. *
14. Not applicable
15. Not applicable
16. Not applicable
- --------------------
* To be filed by Pre-Effective Amendment.
** Included in the Registration Statement filed with the Commission on
December 22, 1994.
*** Included in Pre-Effective Amendment No. 1 filed with the Commission on
March 20, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
The Adviser is an indirect wholly-owned subsidiary of Mutual of America Life
Insurance Company (Mutual of America Life). The Adviser will own all of the
outstanding shares of common stock of Registrant at the time the Registrant
commences operations. Mutual of America Life is a New York mutual life
insurance company, and as such no person has the direct or indirect power to
control Mutual of America Life except by virtue of a person's capacity as a
director or executive officer. Each holder of an in-force insurance policy or
annuity contract issued by Mutual of America Life has the right to vote for the
election of directors of Mutual of America Life at annual elections and upon
other corporate matters where policyholders' votes are taken. Set forth on the
following page is a diagram of the companies owned directly or indirectly by
Mutual of America Life.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
-------------------------------
As of the date hereof, there were no record owners of securities registered
pursuant to this Registration Statement.
ITEM 27. INDEMNIFICATION
---------------
Articles of Incorporation of the Fund. The Articles of Incorporation of the
- -------------------------------------
Fund provide in substance that no director or officer of the Fund shall be
liable to the Fund or its shareholders for money damages, unless the director or
officer is subject to liability by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties in the conduct of his or her
office.
By-Laws of the Fund. The By-Laws of the Fund provide for the indemnification of
- -------------------
present and former officers and directors of the Fund against liability by
reason of service to the Fund, unless the officer or director is subject to
liability by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
(Disabling Conduct). No indemnification shall be made to an officer or director
unless there has been a final adjudication on the merits, a dismissal of a
proceeding for insufficiency of evidence of Disabling Conduct, or a reasonable
determination has been made that no Disabling Conduct
C-2
<PAGE>
occurred. The Fund may advance payment of expenses only if the officer or
director to be indemnified undertakes to repay the advance unless
indemnification is made and if one of the following applies: the officer or
director provides a security for his or her undertaking, the Fund is insured
against losses from any lawful advances, or a reasonable determination has been
made that there is reason to believe the officer or director ultimately will be
entitled to indemnification.
Insurance. Coverage for officers and directors of the Adviser, Distributor and
- ---------
the Fund is provided under an Investment Management Insurance policy issued by
American International Specialty Lines Insurance Company, with excess coverage
by Chubb Custom Insurance Company, to Mutual of America Life Insurance Company
et al. The aggregate limit of liability under the policy per year is $10
million, with a $200,000 deductible per entity insured and a $1,000 deductible
for individual insureds.
By-Laws of the Adviser. The By-Laws of Mutual of America Capital Management
- ----------------------
Corporation, the Fund's Adviser, provide for the indemnification by the
Corporation of present and former directors and officers of the Corporation and
of any organization for which service is rendered at the request of the
Corporation and permits the advance payment of expenses in certain circumstances
for covered persons in connection with suits by third parties and derivative
suits. Each covered person must have acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. If in connection with a
derivative suit a covered person shall have been adjudged to be liable to the
Corporation, indemnification shall not be made unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
entitled to indemnity. Thus, the officers and directors of the Fund and the
Adviser are indemnified by the Adviser for their services in connection with the
Fund to the extent set forth in the By-Laws.
By-Laws of the Distributor. The By-Laws of Mutual of America Securities
- --------------------------
Corporation, the principal underwriter and distributor for the Fund, provide for
the indemnification by the Corporation of present and former directors and
officers of the Corporation and of any organization for which service is
rendered at the request of the Corporation and permits the advance payment of
expenses in certain circumstances for covered persons in connection with suits
by third parties and derivative suits. Each covered person must have acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. If in connection with a derivative suit a covered person shall
have been adjudged to be liable to the Corporation, indemnification shall not be
made unless and only to the extent that the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is entitled to indemnity. Thus, the
officers and directors of the Distributor are indemnified by the Distributor for
their services in connection with the Fund to the extent set forth in the By-
Laws.
C-3
<PAGE>
Undertaking
- -----------
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
Mutual of America Capital Management Corporation (the Adviser) is the investment
adviser to the Fund 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 are set forth below.
Positions with Principal Occupation
Name Adviser During Past Two Years
- --------------------------- ------------------- ------------------------------
Thomas J. Moran Director, Chairman President and Director,
320 Park Avenue of the Board Mutual of America Life; Chief
NY, NY 10022 Executive Officer, Mutual of
America Life, since October
1994
Manfred Altstadt Senior Executive Senior Executive Vice
320 Park Avenue Vice President and President and Chief Financial
NY, NY 10022 Chief Financial Officer of Mutual of America
Officer Life and American Life
F. Harlan Batrus Director Partner, Lazard Freres
30 Rockefeller Plaza
NY, NY 10020
Roger E. Birk Director Past President and Director,
Merrill Lynch Federal National Mortgage
77 Broad Street Association; Chairman
Red Bank, NJ 07701 Emeritus, Merrill Lynch & Co.
Inc.
C-4
<PAGE>
Robert X. Chandler Director Retired; formerly President,
National Retiree United Way of Massachusetts
Center Volunteer Bay, Inc.
Weston, MA 02193
Anthony F. Earley Director President and Chief Operating
Detroit Edison Company Officer, Detroit Edison;
2000 Second Avenue prior thereto, President and
Room 2407 WCB Chief Operating Officer, Long
Detroit, MI 48226 Island Lighting Company
(LILCO)
Dolores J. Morrissey President and Executive Vice President and
320 Park Avenue Chief Executive Chief Investment Officer -
NY, NY 10022 Officer General Account of the
Adviser until June 1994;
prior thereto, Executive Vice
President of Mutual of
America Life until January
1994
William H. Gates Director Partner, Preston Gates &
5500 Columbia Center Ellis, Attorneys
701 Fifth Avenue
Seattle, WA 98104
William T. Knowles Director Consultant
Orr's Island, ME 04066
Walter A. McDougal Director Former Chairman and
Garden City, NY 11530 President, Richmond Hill
Savings Bank
Patrick A. Burns Senior Executive Senior Executive Vice
320 Park Avenue Vice President and General Counsel
NY, NY 10022 President and of Mutual of America Life and
General Counsel American Life
Stephanie J. Kopp Executive Vice Executive Vice President and
320 Park Avenue President and Secretary of Mutual of
NY, NY 10022 Corporate Secretary America Life and American
Life
Andrew L. Heiskell Executive Vice Senior Vice President of the
320 Park Avenue President Adviser from January 1994 to
NY, NY 10022 March 1994; Senior Vice
President, Mutual of America
Life, until January 1994
C-5
<PAGE>
Roger C. Ferrara Senior Vice Senior Vice President, Mutual
320 Park Avenue President of America Life
NY, NY 10022
Frederick M. Gallagher Senior Vice Senior Vice President of the
320 Park Avenue President Adviser since July 1995;
NY, NY 10022 prior thereto, consultant
Nancy McAvey Senior Vice Vice President of the Adviser
320 Park Avenue President until September 1994; prior
NY, NY 10022 thereto, Vice President,
Mutual of America Life, until
January 1994
John E. Manley Senior Vice Senior Vice President, Mutual
320 Park Avenue President of America Life
NY, NY 10022
I. Charles Rinaldi Senior Vice Vice President of the Adviser
320 Park Avenue President until July 1995; Vice
NY, NY 10022 President, Mutual of America
Life, until January 1994
David Wood Senior Vice Vice President of the Adviser
320 Park Avenue President until July 1995; Vice
NY, NY 10022 President, Mutual of America
Life, until January 1994
Aline Couture Vice President Vice President, Mutual of
320 Park Avenue America Life, until January
NY, NY 10022 1994
Charles McCaghey Vice President Second Vice President, Mutual
320 Park Avenue of America Life, until
NY, NY 10022 January 1994
Alfred Otero Vice President Second Vice President of the
320 Park Avenue Adviser until February 1995;
NY, NY 10022 Real Estate Investment
Analyst, Mutual of America
Life, until January 1994
Robert H. Stewart Vice President Vice President, Mutual of
320 Park Avenue America Life, until January
NY, NY 10022 1994
Joseph Tito Vice President, Vice President/Compliance,
320 Park Avenue Compliance Whale Security Company, until
NY, NY 10022 February 1995
C-6
<PAGE>
Paul Travers Vice President Vice President, Mutual of
320 Park Avenue America Life
NY, NY 10022
Gary P. Wetterau Vice President Vice President of the Adviser
320 Park Avenue since August 1995; prior
NY, NY 10022 thereto, Portfolio Manager at
M.D. Sass Investors Services,
Inc.
ITEM 29. PRINCIPAL UNDERWRITERS
----------------------
(a) Mutual of America Securities Corporation (the "Distributor"), a Delaware
corporation, is the principal underwriter and distributor for Fund shares.
(b) The names of the officers and directors of the Distributor, and their
positions with the Distributor and the Fund, are as follows:
Name Position with Distributor Position with the Fund
- --------------------------- ------------------------- ------------------------
Dolores J. Morrissey Chairman of the Board President and Director
and Director
Amir Lear President, CEO and CFO ----
Manfred Altstadt Senior Executive Vice Senior Executive Vice
President, Treasurer and President, Chief
Director Financial Officer,
Treasurer and Director
Patrick A. Burns Senior Executive Vice Senior Executive Vice
President, General President, General
Counsel and Director Counsel and Director
Stephanie J. Kopp Executive Vice President, Executive Vice President
Secretary and Director
Howard Lichtenstein Director ----
Thomas J. Moran Director ----
Joseph J. Tito Compliance Officer ----
(c) Not applicable.
C-7
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, will be maintained
by the Adviser at its offices at 320 Park Avenue, New York, New York 10022 or
with its custodian.
ITEM 31. MANAGEMENT SERVICES Not applicable
-------------------
ITEM 32. UNDERTAKINGS
------------
The Fund hereby undertakes to file a post-effective amendment, using financial
statements which need not be certified, within four to six months from the
effective date of this registration statement under the Securities Act of 1933.
The Fund hereby undertakes to submit to a vote of shareholders of the Fund the
election of directors of the Fund, ratification of the selection of accountants
and approval of the Investment Advisory Agreement at the first regular or
special meeting of shareholders following the offering of shares of the Fund.
The Fund hereby undertakes, if requested to do so by the holders of at least 10%
of the Fund's outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or directors and to
assist in communications with other shareholders as required by applicable law
and regulations.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York on the 29th day
of January, 1996.
MUTUAL OF AMERICA
INSTITUTIONAL FUNDS, INC.
(Registrant)
By: /s/ Dolores J. Morrissey
------------------------
Title: President
Pursuant to the requirement of the Securities Act of 1933, this amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
- --------------------------- -------------------------------- ----------------
/s/ Dolores J. Morrissey President and Director January 29, 1996
- --------------------------- (Principal Executive Officer)
Dolores J. Morrissey
Senior Executive Vice
President, Chief January 29, 1996
Financial Officer, Treasurer
/s/ Manfred Altstadt and Director
- --------------------------- (Principal Financial and
Manfred Altstadt Accounting Officer)
/s/ Patrick A. Burns Senior Executive Vice President, January 29, 1996
- --------------------------- General Counsel and Director
Patrick A. Burns
C-9
<PAGE>
EXHIBIT INDEX
Exhibit No.
-----------
Page
----
8 Form of Custody Agreement between the Fund and The
Chase Manhattan Bank, N.A.
9(a) Form of Transfer Agency and Service Agreement
between the Fund and State Street Bank and Trust
Company
C-10
<PAGE>
CHASE
[LOGO] EXHIBIT 8
[FORM OF]
DOMESTIC AND GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective , 1996, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and MUTUAL OF AMERICA INSTITUTIONAL
FUNDS, INC. (the "Customer").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for any
and all stocks, shares, bonds, debentures, notes, mortgages or other obligations
for the payment of money, bullion, coin and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase or subscribe for
the same or evidencing or representing any other rights or interests therein,
including options, futures contracts and options on futures contracts, and other
similar property whether certificated or uncertificated or publicly or privately
issued as may be received by the Bank or its Subcustodian (as defined in Section
3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for any
and all cash in any currency received by the Bank or its Subcustodian for the
account of the Customer. which cash shall not be subiect to withdrawal by draft
or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver equivalent securities
of the same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional Accounts
may be established and separately accounted for as additional Accounts under the
terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to the
Bank:
1
<PAGE>
(a) Securities will be held in the country or other jurisdiction in which the
principal trading market for such Securities is located, where such Securities
are to be presented for payment or where such Securities are acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction in
which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency. To the extent
Instructions are issued and the Bank can comply with such Instructions, the Bank
is authorized to maintain cash balances on deposit for the Customer with itself
or one of its affiliates at such reasonable rates of interest as may from time
to time be paid on such accounts, or in non-interest bearing accounts as the
Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement in the countries and through the
subcustodians listed in Schedule A of this Agreement with which the Bank has
entered into subcustodial agreements ("Subcustodians"). The Customer authorizes
the Bank to hold Assets in the Accounts in accounts which the Bank has
established with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in their account with
any securities depository in which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians. The
Customer will be given reasonable notice by the Bank of any amendment to
Schedule A regarding Subcustodians. Upon request by the Customer, the Bank will
identify the name, address and principal place of business of any Subcustodian
of the Customer's Assets and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such Subcustodian.
Countries may be added or removed from Schedule A by the written agreement of
the Bank and the Customer, but the Bank reserves the right to remove
Subcustodians from Schedule A upon reasonable notice.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
2
<PAGE>
(c) Any Assets in the Accounts held by a Subcustodian will be subject only to
the instructions of the Bank or its agent. Any Securities held in a securities
depository for the account of a Subcustodian will be subject only to the
instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit Account
upon receipt of Instructions which include all information required by the Bank.
(b) In the event that any payment to be made under this Section 5 exceeds the
funds available in the Deposit Account, the Bank, in its discretion, may advance
the Customer such excess amount which shall be deemed a loan payable on demand,
bearing interest at the rate customarily charged by the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at any time
prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings, file a claim or
a proof of claim in any insolvency proceeding or take any other action with
respect to the collection of such amount, but may act for the Customer upon
Instructions after consultation with the Customer. With respect to domestic U.S.
and Canadian Securities (the latter if held in DTC), the "Autocredit" procedures
described in this subsection (c) shall apply.
6. CUSTODY ACCOUNT TRANSACFFONS.
(a) Securities will be transferred, exchanged or delivered by the Bank or its
Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery.
3
<PAGE>
Delivery of Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion and upon notice to the Customer if the related transaction fails to
settle within a reasonable period, determined by the Bank in its discretion,
after the contractual settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are returned by
the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction within a reasonable time following the return.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or retired
or otherwise become payable and all coupons and other income items which call
for payment upon presentation, to the extent that the Bank or Subcustodian is
actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other certificates
as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the Securities,
including, without limitation, affiliates of the Bank or any Subcustodian.
(e) Issue monthly statements to the Customer, and at other times mutually
agreed upon, identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. Unless the
Customer sends the Bank a written exception or objection to any Bank statement
within sixty (60) days of receipt, the Customer shall be deemed to have approved
such statement. In such event, or where the Customer has otherwise approved any
such statement, the Bank shall, to the extent permitted by law, be released,
relieved and discharged with respect to all matters set forth in such statement
or reasonably implied therefrom as though it had been settled by the decree of a
court of competent jurisdiction in an action where
4
<PAGE>
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect of
Securities in the Custody Account shall be made at the risk of the Customer. The
Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.
8. CORPORATE ACTIONS; PROXIES; TAX RECLAILNS.
(a) Corporate Actions.
-----------------
(i) Domestic U.S. and Canadian Securities (the latter if held in DTC). The
----------------------------------------------------------------
Bank will send to the Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of the Bank's
nominee or the nominee of a central depository) and communications with
respect to Securities in the Custody Account as call for voting or relate
to legal proceedings within a reasonable time after sufficient copies are
received by the Bank for forwarding to its customers. In addition, the Bank
will follow coupon payments, redemptions, exchanges or similar matters with
respect to Securities in the Custody Account and advise the Customer or the
Authorized Person for such Account of rights issued, tender offers or any
other discretionary rights with respect to such Securities, in each case,
of which the Bank has received notice from the issuer of or offeror for the
Securities, or as to which notice is published in publications routinely
utilized by the Bank for this purpose.
(ii) Foreign Securities. Whenever the Bank receives information concerning
------------------
the Securities which requires discretionary action by the beneficial owner of
the Securities (other than a proxy), such as subscription rights, bonus
issues, stock repurchase plans and rights offerings, or legal notices or
other material intended to be transmitted to securities holders ("Corporate
Actions"), the Bank will give the Customer notice of such Corporate Actions
to the extent that the Bank's central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers. When a
rights entitlement or a fractional interest resulting from a rights issue,
stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from
the Customer or its Authorized Person, but if Instructions are not received
in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to
credit the Deposit Account with the proceeds or take any other action it
deems, in good faith, to be appropriate in which case it shall be held
harmless for any such action.
(b) Foreign Proxy Voting. As to non-U.S. Securities and Canadian Securities
--------------------
not held in DTC, the Bank will provide proxy voting services only pursuant to a
separate agreement.
5
<PAGE>
Proxy voting services may be provided by the Bank or, in whole or in part, by
one or more third parties appointed by the Bank (which may be affiliates of the
Bank).
(C) TAX RECLAIMS.
------------
(i) Subject to the provisions hereof, the Bank will apply for a reduction of
withholding tax and any refund of any tax paid or tax credits which apply in
each applicable market in respect of income payments on Securities for the
benefit of the Customer which the Bank believes may be available to such
Customer.
(ii) The provision of tax reclaim services by the Bank is conditional upon the
Bank receiving from the beneficial owner of Securities (A) a declaration of its
identity and place of residence and (B) certain other documentation (pro forma
copies of which shall be provided by the Bank). The Customer acknowledges that,
if the Bank does not receive such declarations, documentation and information,
additional United Kingdom taxation will be deducted from all income received in
respect of Securities issued outside the United Kingdom and that U.S. non-
resident alien tax or U.S. backup withholding tax will be deducted from U.S.
source income. The Customer shall provide to the Bank such documentation and
information as the Bank may reasonably require in connection with taxation, and
warrants that, when given, this information shall be true and correct in every
material respect, not misleading in any way, and contain all material
information. The Customer undertakes to notify the Bank immediately if any such
information requires updating or amendment.
(iii) The Bank shall not be liable to the Customer or any third party for any
tax, fines or penalties payable by the Bank or the Customer, and shall be
indemnified accordingly, whether these result from the inaccurate completion of
documents by the Customer or any third party, or as a result of the provision to
the Bank or any third party of inaccurate or misleading information or the
withholding of material information by the Customer or any other third party, or
as a result of any delay of any revenue authority or any other matter beyond the
control of the Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from any cash
received or credited to the Cash Account any taxes or levies required by any
revenue or governmental authority for whatever reason in respect of the
Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to taxation
levied by the revenue authorities of the countries notified to the Customer from
time to time and the Bank may, by notification in writing, at its absolute
discretion, supplement or amend the markets in which the tax
6
<PAGE>
reclaim services are offered. Other than as expressly provided in this
subclause, the bank shall have no responsibility with regard to the Customer's
tax position or status in any jurisdiction.
(vi) The Customer confirms that the Bank is authorised to disclose any
information requested by any revenue authority or any governmental body in
relation to the Customer or the Securities and/or Cash held for the Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or in part,
by one or more third parties appointed by the Bank (which may be affiliates of
the Bank); provided that the Bank shall be liable for the performance of any
such third party to the same extent as the Bank would have been if it performed
such services itself.
9. NOMINEES.
Securities which are ordinarily held in registered form may be registered in a
nominee name of the Bank, Subcustodian or securities depository, as the case may
be. The Bank may, with notice to the Customer, cause any such Securities to
cease to be registered in the name of any such nominee and to be registered in
the name of the Customer. In the event that any Securities registered in a
nominee name are called for partial redemption by the issuer, the Bank may allot
the called portion to the respective beneficial holders of such class of
security in any manner the Bank deems to be fair and equitable. The Customer
agrees to hold the Bank, Subcustodians, and their respective nominees harmless
from any liability arising directly or indirectly from their status as a mere
record holder of Securities in the Custody Account.
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer, attested to or certified by its Secretary or Assistant
Secretary with the Corporate Seal affixed, or its designated agent to act on
behalf of the Customer under this Agreement. Such persons shall continue to be
Authorized Persons until such time as the Bank receives Instructions from the
Customer or its designated agent that any such employee or agent is no longer an
Authorized Person.
11. INSTRUCTIONS.
Except as provided below, the term "Instructions" means written instructions
of any Authorized Person received by the Bank, via telex, TWX, facsimile
transmission, bank wire or other teleprocess or instructions given by an
electronic or trade information system acceptable to the Bank which the Bank
believes in good faith to have been given by Authorized Persons or which are
transmitted with proper testing or authentication pursuant to terms and
conditions which the Bank may specify. Unless otherwise expressly provided, all
Instructions shall continue in full force and effect until canceled or
superseded. The Customer shall be responsible
7
<PAGE>
for safeguarding any testkeys, identification codes or other security devices
which the Bank shall make available to the Customer or its Authorized Persons.
The Bank shall make test keys, identification codes or other security devices
available only to the persons specified on Schedule B hereto, as modified from
time to time by the written agreement of the Customer and the Bank.
Oral Instructions may only be given for transfers between Accounts and the
Bank may rely upon such Instructions if it believes in good faith that the
Instruction was issued by an Authorized Person. The Bank may electronically
record any Instructions given by telephone, and any other telephone discussions
with respect to the Custody Account.
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations under
this Agreement and the safekeeping of Assets by exercising the same degree
of care with respect to the Assets as it would with respect to its own
securities and property and will indemnify the Customer and hold the
Customer harmless from any loss or liability (including, without
limitation, the reasonable fees and disbursements of outside counsel)
incurred by the Customer by reason of the negligence (whether through
action or inaction) or willful misconduct of the Bank. The Bank shall be
liable to the Customer for any loss which shall occur as the result of the
failure of a Subcustodian to exercise reasonable care with respect to the
safekeeping of such Assets to the same extent that the Bank would be liable
to the Customer if the Bank were holding such Assets in New York. In the
event of any loss to the Customer by reason of the failure of the Bank or
its Subcustodian to utilize reasonable care, the Bank shall be liable to
the Customer only to the extent of the Customer's direct damages, to be
determined based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without reference to
any special conditions or circumstances. The Bank will not be responsible
for the insolvency of any Subcustodian which is not a branch or affiliate
of Bank.
(ii) The Bank will not be responsible for any act, omission, default or the
solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.
(iii) The Bank shall be without liability to the Customer for any action
taken or omitted by the Bank whether pursuant to Instructions or otherwise
within the scope of this Agreement if such act or omission was in good
faith, without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
8
<PAGE>
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes
or other governmental charges, and any related expenses with respect to
income from or Assets in the Accounts, other than taxes imposed as a
consequence of the Bank's failure to perform the services set forth in
Section 8(c) of this Agreement.
(v) The Bank shall be entitled to rely, and may act, upon the written
advice of counsel (who may be counsel for the Customer) on all matters and
shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions which
prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(ix) The Customer agrees to indemnify the Bank and to hold the Bank
harmless from any loss or liability (including, without limitation, the
reasonable fees and disbursements of outside counsel) incurred by the Bank
arising out of or related to this Agreement and services performed
hereunder, except such loss or liabilty that results from the Bank's
failure to exercise the standard of care set forth in paragraph (a)(i) of
this Section 12. The Customer shall be liable to the Bank only to the
extent of the Bank's direct damages, without reference to any special
conditions or circumstances.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or the
retention of Securities;
9
<PAGE>
(iii) advise the Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided
in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this Agreement
such amount set forth in Schedule C hereto, as modified from time to time by the
written agreement of the Bank and the Customer, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement. In case of any dispute between the Customer and the Bank as to
an amount owed, no lien shall be applicable and no charge shall be made until
the dispute has been settled, adjudicated or arbitrated.
14. MISCELLANEOUS.
(a) Foreign Exchange Transactions. To facilitate the administration of the
------------------------------
Customer's trading and investment activity, the Bank is authorized to enter into
spot or forward foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
10
<PAGE>
(b) Certification of Residency, etc. The Customer certifies that it is a
--------------------------------
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
------------------
public accountants reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Any representative of an appropriate
regulatory body shall be entitled to the same access as the Customer's
independent public accountants, but only when an appropriate officer of the
Customer has furnished the Bank with written instructions to that effect.
Subject to restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public accountants reasonable
access to the records of any Subcustodian which has physical possession of any
Assets as may be required in connection with the examination of the Customer's
books and records. Upon reasonable request by the Customer, the Bank will
furnish copies of documents filed in connection with tax reclaims.
(d) Governing Law; Successors and Assigns. This Agreement shall be
--------------------------------------
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer and Bank agree that the
------------------------------------
following Riders are made a part of this Agreement:
X ERISA
---
X MUTUAL FUND
---
X SPECIAL TERMS AND CONDITIONS
---
The following Schedules are part of this Agreement:
Schedule A - List of Countries, Subcustodians and Securities Depositories;
----------
Schedule B - Customer Personnel to Receive Security Information; and
----------
Schedule C - Fees of Bank.
----------
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
11
<PAGE>
(f) Severability. In the event that one or more provisions of this
-------------
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure or
-------
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
--------
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
110 West 52nd Street
New York, NY 10019
Attention: John K Breitweig
or facsimile: (212) 554-2905
Customer: Mutual of America Institutional Funds, Inc.
320 Park Avenue
New York, NY 10022
Attention: Allen Bruckheimer
or facsimile: (212) 224-2535
(i) Termination. This Agreement may be terminated by the Customer or the
------------
Bank by giving sixty (60) days written notice to the other. If notice of
termination is given, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names of
the persons to whom the Bank shall deliver the Assets. The Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty
(60) days following receipt of a notice of termination by either party, the Bank
does not receive Instructions from the Customer specifying the names of the
persons to whom the Bank shall deliver the Assets, the Bank, at its election,
may deliver the Assets to a bank or trust company doing business in the State of
New York, with aggregate capital and undivided profits (as shown by its last
published report) of not less than two million dollars ($2,000,000), to be held
and disposed of pursuant to
12
<PAGE>
the provisions of this Agreement, or may continue to hold the Assets until
Instructions are provided to the Bank.
MUTUAL OF AMERICA INSTITUTIONAL
FUNDS, INC.
By:______________________________________
Title:
Date:
THE CHASE MANHATTAN BANK, N.A.
By:______________________________________
Title:
Date:
13
<PAGE>
STATE OF NEW YORK)
: ss.
COUNTY OF NEW YORK)
On this day of , 1996, before me personally came,
to me known, who being by me duly sworn, did depose and say that he/she
resides in
at ; that he/she
is of MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC., the entity
described in and which executed the foregoing instrument; that he/she knows the
seal of said entity, that the seal affixed to said instrument is such seal, that
it was so affixed by order of said entity, and that he/she signed his/her name
thereto by like order.
Sworn to before me this ______________
day of ______________, 19_____.
Notary
14
<PAGE>
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,1996, before me personally came
, to me known, who being by me duly sworn, did depose and say that
he/she resides in at ; that
he/she is a Vice President of THE CHASE MANHATTAN BANK, (National
Association), the corporation described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation, that the seal
affixed to said instrument is such corporate seal, that it was so affixed by
order of the Board of Directors of said corporation, and that he/she signed
his/her name thereto by like order.
Sworn to before me this ___________________
day of ________________, 19________.
Notary
15
<PAGE>
ERISA Rider to Domestic and Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Mutual of America Institutional Funds, Inc.
effective ______________, 1996
Customer represents that some of the Assets being placed in the Bank's
custody are subject to ERISA. It is understood that in connection therewith the
Bank is a service provider and not a fiduciary of the plan and trust to which
the assets are related. The Bank shall not be considered a party to the
underlying plan and trust and the Customer hereby assumes all responsibility to
assure that Instructions issued under this Agreement are in compliance with such
plan and trust and ERISA.
This Agreement will be interpreted as being in compliance with the
Department of Labor Regulations Section 2550.404b-1 concerning the maintenance
of indicia of ownership of plan assets outside of the jurisdiction of the
district courts of the United States.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
------------------------------------------
Add the following language to the end of Section 3:
As used in this Agreement, the term Subcustodian and the term securities
depositories include a branch of the Bank, a branch of a qualified U.S. bank, an
eligible foreign custodian, or an eligible foreign securities depository, where
such terms shall mean:
<PAGE>
(a) "qualified U.S. bank" shall mean a U.S. bank as described in paragraph
(a)(2)(ii)(A)(1) of the Department of Labor Regulations Section
2550.404b-1;
(b) "eligible foreign custodian" shall mean a banking institution
incorporated or organized under the laws of a country other than the
United States which is supervised or regulated by that country's
government or an agency thereof or other regulatory authority in the
foreign jurisdiction having authority over banks; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws
of a country other than the United States, which is supervised or
regulated by that country's government or an agency thereof or other
regulatory authority in the foreign jurisdiction having authority over
such depositories or clearing agencies and which is described in
paragraph (c)(2) of the Department of Labor Regulations Section
2550.404b-1.
Section 4. Use of Subcustodian.
--------------------
Subsection (d) of this section is modified by deleting the last sentence.
Section 5. Deposit Account Payments.
-------------------------
Subsection (b) is amended to read as follows:
(b) In the event that any payment made under this Section 5 exceeds the
funds available in the Deposit Account, such discretionary advance
shall be deemed a service provided by the Bank under this Agreement for
which it is entitled to recover its costs as may be determined by the
Bank in good faith.
2
<PAGE>
Section 10. Authorized Persons.
-------------------
Add the following paragraph at the end of Section 10:
Customer represents that to the extent that Assets are subject to ERISA: a)
Instructions will only be issued by or for a fiduciary pursuant to
Department of Labor Regulation Section 404b-1 (a)(2)(i) and b) if
Instructions are to be issued by an investment manager, such entity will
meet the requirements of Section 3(38) of ERISA and will have been
designated by the Customer to manage assets held in the Customer Accounts
("Investment Manager"). An Investment Manager may designate certain of its
employees to act as Authorized Persons under this Agreement.
Section 14(a). Foreign Exchange Transactions.
------------------------------
Add the following paragraph at the end of Subsection 14(a):
Instructions to execute foreign exchange transactions with the Bank, its
subsidiaries, affiliates or Subcustodians will include (1) the time period
in which the transaction must be completed; (2) the location i.e., Chase
New York,
Chase London, etc. or the Subcustodian with whom the contract is to be
executed and (3) such additional information and guidelines as may be
deemed necessary; and, if the Instruction is a standing Instruction, a
provision allowing such Instruction to be overridden by specific contrary
Instructions.
3
<PAGE>
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Mutual of America Institutional Funds, Inc.
effective __________________
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or under
the authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
-----------------------------------------
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
<PAGE>
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's
government or an agency thereof and that has shareholders' equity in excess
of $200 million in U.S. currency (or a foreign currency equivalent
thereof), (ii) a majority owned direct or indirect subsidiary of a
qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States and that
has shareholders' equity in excess of $100 million in U.S. currency (or a
foreign currency equivalent thereof) or (iii) any other entity that shall
have been so qualified by exemptive order, rule or other appropriate action
of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of
a country other than the United States, which operates (i) the central
system for handling securities or equivalent book-entries in that country,
or (ii) a transnational system for the central handling of securities or
equivalent book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through _____ of Schedule A, and further represents that its Board
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Fund(s) and
its (their) shareholders. The Bank will supply the Customer with any amendment
to Schedule A for approval. The Customer has supplied or will supply the Bank
with certified copies of its Board of Directors resolution(s) with respect to
the foregoing prior to placing Assets with any Subcustodian so approved.
Section 6. Custody Account Transactions.
-----------------------------
2
<PAGE>
Add the following language to the end of Section 6:
(c) Unless the Custodian gives the Customer reasonable notice to the
contrary, the Custodian will execute, or cause a subcustodian or agent to
execute, an escrow receipt relating to any covered call option written by
Customer and will deliver such escrow receipt against payment of the premium
thereof. The Custodian shall maintain a segregated margin account as necessary
in connection with put or call options purchased or sold by the Customer.
(d) If the Customer purchases or sells puts, calls or futures contracts
traded on any commodity exchange, the Custodian shall establish a segregated
margin account in the name of each futures commission merchant ("FCM"), pursuant
to a safekeeping agreement among the Custodian, the Customer and the FCM.
Section 11. Instructions.
-------------
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is
to be made and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions applicable
to the Customer by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
3
<PAGE>
(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank,
its Subcustodian or the Customer's transfer agent, such shares to be
purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of
such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing
4
<PAGE>
Corporation and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions issued by
an officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section 14(i).
Section 12. Standard of Care; Liabilities.
------------------------------
Add the following subsection (d) to Section 12:
5
<PAGE>
(d) The Bank hereby warrants to the Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its branches, each
branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
Section 14. Access to Records.
------------------
Add the following language to the end of Section 14(c):
- -------------------------------------------------------
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar reports
as it may reasonably request with respect to each Subcustodian and securities
depository holding the Customer's assets.
6
<PAGE>
Special Terms and Conditions Rider to
Domestic and Global Custody Agreement
between
The Chase Manhattan Bank, N.A.
and
Mutual of America Institutional Funds, Inc.
effective , 1996
The following accounts are to be maintained under the Custody Agreement:
Title of Account Account Number
- ---------------- --------------
Equity Fund
Bond Fund
This Rider may be amended from time to time by Customer and the Bank.
7
<PAGE>
EXHIBIT 9(a)
[FORM OF]
TRANSFER AGENCY AND SERVICE AGREEMENT
between
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Terms of Appointment; Duties of the Bank.....................1
2. Fees and Expenses............................................4
3. Representations and Warranties of the Bank...................5
4. Representations and Warranties of the Fund...................5
5. Data Access and Proprietary Information......................6
6. Indemnification..............................................7
7. Standard of Care.............................................9
8. Covenants of the Fund and the Bank...........................9
9. Termination of Agreement.....................................10
10. Additional Funds.............................................10
11. Assignment...................................................10
12. Amendment....................................................11
13. Massachusetts Law to Apply...................................11
14. Force Majeure................................................11
15. Consequential Damages........................................11
16. Merger of Agreement..........................................11
17. Counterparts.................................................11
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the day of , 1996, by and between
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC., a Maryland corporation, having its
principal office and place of business at 320 Park Avenue, New York, New York
10022 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in two (2) series, the Bond
Fund and the Equity Fund (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. Terms of Appointment; Duties of the Bank
----------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolios, hereby employs and appoints the Bank to act
as, and the Bank agrees to act as, its transfer agent for the authorized
and issued shares of capital stock of the Fund ("Shares"), dividend
disbursing agent and agent in connection with any accumulation, open-
account or similar plans provided to the shareholders of each of the
respective Portfolios of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio,
including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable, and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of
<PAGE>
the Fund authorized pursuant to the Articles
of Incorporation of the Fund or by resolution of the Board of
Directors of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue or record the appropriate
number of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with Mutual
of America Securities Corporation who shall thereby be deemed to
be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) To the extent that any Portfolio has certificated Shares,
issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank
and the Fund, and the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing;
(x) Record the issuance of Shares and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number of Shares which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Bank shall also provide the Fund on
a regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to monitor
2
<PAGE>
the issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund;
(xi) Report abandoned property to the various states as authorized
by the Fund in accordance with policies agreed upon by the
Fund and the Bank;
(xii) Maintain computer back-up facilities for the recordation and
transmission of Fund data in the event the Bank's normal
operations are interrupted by natural or other disaster.
(xiii) To perform such other services as may be mutually agreed
upon by the parties hereto from time to time.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxy
materials, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts, preparing and
filing U.S. Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and distributions by federal
authorities for all Shareholders and appropriate forms required by
state and local authorities to certain shareholders identified by the
Fund, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each
State based on reports delivered by Bank.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
3
<PAGE>
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only
a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. Fees and Expenses
-----------------
2.01 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.02 below may be changed from time to
time subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for reasonable out-
of-pocket expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, tabulating proxies,
records storage, or advances incurred by the Bank for the items set out in
the fee schedule attached hereto. In addition, any other expenses
incurred by the Bank at the request or with the consent of the Fund, will
be reimbursed by the Fund on behalf of the applicable Portfolio.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within fourteen (14) days following the receipt of
the respective billing notice. Postage for mailing of dividends, proxies,
Fund reports and other mailings to all shareholder accounts shall be
advanced to the Bank by the Fund at least seven (7) days prior to the
mailing date of such materials.
3. Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
4
<PAGE>
3.03 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment (including software), and personnel to perform its duties and
obligations under this Agreement.
4. Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good standing under
the laws of the State of Maryland.
4.02 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale.
5. Data Access and Proprietary Information
---------------------------------------
5.01 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
parties ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information, except as such information has come into
the public domain other than by action of the Fund or its investment
advisor (collectively, "Proprietary Information") of substantial value to
the Bank or other third party. In no event shall Proprietary Information
be deemed Customer Data. The Fund agrees to treat all
5
<PAGE>
Proprietary Information as proprietary to the Bank and further agrees that
it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder or as required by
applicable law. Without limiting the foregoing, the Fund agrees for itself
and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation or written instructions;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under
other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no
claim against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE
BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN
6
<PAGE>
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely
on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by the Bank from time to
time and consented to by the Fund, such consent not to be unreasonably
withheld.
6. Indemnification
---------------
6.01 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, reasonable outside
counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The good faith reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which
(i) are received by the Bank or its agents or subcontractors, and
(ii) have been prepared, maintained or performed by the Fund or any
other person or firm on behalf of the Fund including but not limited
to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of, any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
7
<PAGE>
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Bank
under this Agreement, and the Bank and its agents or subcontractors shall
not be liable and shall be indemnified by the Fund on behalf of the
applicable Portfolio for any action taken or omitted by it in reliance
upon such instructions or upon the written opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Fund. The
Bank, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers
of the Fund, and the proper countersignature of any former transfer agent
or former registrar, or of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in
which the Fund may be required to indemnify the Bank except with the
Fund's prior written consent.
7. Standard of Care
----------------
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct or that of its
employees, subcontractors or agents.
8. Covenants of the Fund and the Bank
----------------------------------
8.01 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
8
<PAGE>
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms, facsimile signature imprinting devices, if any, Fund
stationery and confirmation and other forms; and for the preparation or
use, and for keeping account of, such certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to be performed
hereunder as required by Rule 31 of the Investment Company Act of 1940, as
amended (the "1940 Act"), in the form and manner as it may deem advisable.
To the extent required by Section 31 of the 1940 Act, and the Rules
thereunder, the Bank agrees that all such records prepared or maintained
by the Bank relating to the services to be performed by the Bank hereunder
are the property of the Fund and will be preserved, maintained and made
available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.04 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
9. Termination of Agreement
------------------------
9.01 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate, all reasonable out-of-
pocket expenses associated with such termination and the movement of
records and material will be borne by the Fund on behalf of the applicable
Portfolio(s). The Bank agrees to cooperate with the Fund in the event of
the Fund's appointment of a successor transfer agent.
9
<PAGE>
10. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to the Bond Fund and the Equity Fund with respect to which it
desires to have the Bank render services as transfer agent under the terms
hereof, it shall so notify the Bank in writing, and if the Bank agrees in
writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
11. Assignment
----------
11.01 Except as provided in Section 11.03 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
11.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.03 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc.,
a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary
duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii)
a BFDS affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as
it is for its own acts and omissions.
12. Amendment
---------
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Directors of the Fund.
13. Massachusetts Law to Apply
--------------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of
Massachusetts.
14. Force Majeure
-------------
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party
10
<PAGE>
shall not be liable for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.
15. Consequential Damages
------------- -------
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. Merger of Agreement
-------------------
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
17. Counterparts
------------
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
MUTUAL OF AMERICA INSTITUTIONAL
FUNDS, INC.
By:____________________________
Name:__________________________
Title:_________________________
STATE STREET BANK AND TRUST COMPANY
By:_______________________________
Name: Ronald E. Logue
-----------------------------
Title: Executive Vice President
--------------------------
12
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
----------------- -------------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares. X
2. Issue Shares and hold Shares in
Shareholders accounts. X
3. Receive redemption requests. X
4. Effect transactions 1-3 above
directly with broker-dealers. X
5. Pay over monies to redeeming
Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends X
and distributions.
8. Issue Replacement Certificates. N/A
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and
accurate control book for each
issue of securities. N/A
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident
and non-resident alien accounts. X
<PAGE>
Service Performed Responsibility
- ------------------- --------------
Bank Fund
---- ----
16. Prepare and file U.S. Treasury
Department forms. X
17. Prepare and mail account and
confirmation statements for
Shareholders. X
18. Provide Shareholder account
information. X
19. Blue sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
