<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 1996
Registration No. 33-87874
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SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 4 [X]
---
Post-Effective Amendment No.___ [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4
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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>
[ART TO COME]
PROSPECTUS AND APPLICATION
MUTUAL OF AMERICA
INSTITUTIONAL
FUNDS, INC.
- -- ALL AMERICA FUND
- -- BOND FUND
APRIL , 1996
<PAGE>
PROSPECTUS
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MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022
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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 All America 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 ALL AMERICA FUND'S investment objective for approximately 60% of its
assets is to provide investment results that to the extent practical
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's Composite Index of
500 Stocks (the "S&P 500 Index"), and the investment objective for the
remaining approximately 40% of its assets is to achieve a high level of total
return, through both appreciation of capital and, to a lesser extent, current
income, by means of a diversified portfolio of securities that may include
common stocks, securities convertible into common stocks, bonds and money
market instruments. The All America Fund may invest in foreign securities and
American Depositary Receipts to the extent set forth in this Prospectus. 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 4.
Mutual of America Capital Management Corporation (the "Adviser") is the
investment adviser for the Funds, and Fred Alger Management, Inc., Oak
Associates, Ltd., and Palley-Needelman Asset Management, Inc. each serve as a
subadviser for a portion of the actively managed assets of the All America
Fund. 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 to 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 16 AND
"REDEMPTION AND EXCHANGE OF SHARES" ON PAGE 17 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 April , 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-
914-8716.
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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.
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You should read this Prospectus carefully before investing and keep it for
future reference.
Prospectus dated April , 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Annual Fees and Expenses............. 2
Performance of Similar Funds......... 3
General Description of the Investment
Company............................. 3
Investment Objectives and Policies of
the Funds........................... 4
Investment Advisory, Subadvisory and
Administrative Arrangements......... 13
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Funds' Expenses................................................... 15
Portfolio Transactions................................................ 15
Purchase of Shares.................................................... 16
Redemption and Exchange of Shares..................................... 17
Dividends, Distributions and Taxes.................................... 18
Additional Information................................................ 20
</TABLE>
An Application is included with 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
<TABLE>
<CAPTION>
ALL AMERICA BOND
FUND FUND
----------- ------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES........................... none none
ANNUAL FUND OPERATING EXPENSES(l) (as a percentage of aver-
age net assets)
Investment Advisory Fees................................... .50% .45%
Other Expenses (after expense reimbursement)(2)............ .35% .25%
---- ----
TOTAL OPERATING EXPENSES (after expense reimbursement)(2).. .85% .70%
==== ====
</TABLE>
- --------
(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 All America 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 All America Fund and
.61% and 1.06% for the Bond Fund. See "Investment Advisory and
Administrative Arrangements."
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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
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<S> <C> <C>
All America Fund............................................ $8.85 $29.04
Bond Fund................................................... $7.30 $23.97
</TABLE>
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, Subadvisory and Administrative
Arrangements."
2
<PAGE>
PERFORMANCE OF SIMILAR FUNDS
Although the Investment Company funds do not yet have their own performance
records, the investment policies and objectives of the All America Fund and
the Bond Fund of the Investment Company are substantially identical to those
of the All America Fund and the Bond Fund of the Mutual of America Investment
Corporation (the "Corporation"). In addition, the Adviser and Subadvisers for
the Corporation's All America Fund and Bond Fund are the same as for the
Investment Company's All America Fund and Bond Fund, and the portfolio
managers are the same. See "Investment Advisory, Subadvisory and
Administrative Arrangements" in this Prospectus. Shares of the Corporation's
funds are sold only to separate accounts of Mutual of America Life Insurance
Company and its indirect wholly owned subsidiary, The American Life Insurance
Company of New York, as a funding medium for variable accumulation annuity
contracts and variable life insurance policies issued by such companies.
The Adviser has provided the following information. For the Bond Fund of the
Corporation, total return was 19.4% for the one year ended December 31, 1995
and average annual total return was 10.5% for the five years ended December
31, 1995. For the All America Fund of the Corporation, total return was 36.6%
for the one year ended December 31, 1995 and average annual total return was
22.9% for the period from May 2, 1994 (commencement of operations) through
December 31, 1995. Past performance of the Funds is not predictive of future
performance. Investors should not consider performance data for the
Corporation as an indication of the future performance of the All America Fund
and the Bond Fund offered under this Prospectus.
Results for the All America Fund and the Bond Fund of the Corporation are
different than the results that would have been obtained for the All America
Fund and the Bond Fund of the Investment Company. The total operating expenses
for each of the All America Fund and Bond Fund of the Corporation were .50% of
average net assets during the periods shown above (additional expenses were
paid at the separate account level), while the annual total operating expenses
of the All America Fund and Bond Fund of the Investment Company are estimated
as .85% and .70%, respectively, of average net assets. Also, Andrew Heiskell
has been the portfolio manager of the Bond Fund of the Corporation since
February 1991, and there was a different portfolio manager during the earlier
portion of 1991. With respect to the All America Fund of the Corporation, from
May 1994 until June 1995 there was a Subadviser for approximately 10% of the
Fund's assets currently managed by the Adviser. In addition, the assets of the
All America Fund and the Bond Fund of the Corporation at year end 1995 were
$533 million and $311 million, respectively, while the assets of the All
America Fund and Bond Fund of the Investment Company will be less than such
amounts when the Funds commence operations.
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 All
America 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.
3
<PAGE>
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 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.
ALL AMERICA FUND
INDEXED ASSETS. The investment objective for approximately 60% of the assets
of the All America Fund (the "Indexed Assets") is to provide investment
results that to the extent practical correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the Standard & Poor's Composite Index of 500 Stocks (the "S&P 500 Index").
The Adviser will attempt to duplicate the investment results of the S&P 500
Index, which is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. Standard & Poor's Corporation chooses
the stocks to be included in the S&P 500 Index solely on a statistical basis.
The inclusion of a stock in the S&P 500 Index does not imply an opinion by
Standard & Poor's Corporation that the stock is an attractive investment. An
investment in the Fund involves risks similar to those of investing in common
stocks. The Adviser will attempt to fully invest the Indexed Assets at all
times in the stocks that comprise the S&P 500 Index, and at least 80% of the
Indexed Assets will be so invested. The weightings of stocks in the S&P 500
Index are based on each stock's relative total market capitalization; that is,
its market price per share times the number of shares outstanding. Stocks will
be selected for the Fund's portfolio in the order of their weightings in the
S&P 500 Index beginning with the heaviest weighted stocks. The percentage of
the Fund's assets invested in each of the selected stocks will be
approximately the same as the percentage the stock represents in the S&P 500
Index.
The Adviser will manage the Indexed Assets using a computer program to
determine which stocks are to be purchased or sold to replicate the S&P 500
Index to the extent feasible. Initially the Fund contemplates executing all
transactions through a single broker. From time to time, administrative
adjustments may be made in the Fund's portfolio because of changes in the
composition of the S&P 500 Index, but such changes should be infrequent.
The Adviser believes that the indexing approach described above is an
effective method of substantially duplicating percentage changes in the S&P
500 Index. It is a reasonable expectation that there will be a close
correlation between the Indexed Assets' performance and that of the S&P 500
Index in both rising and falling
4
<PAGE>
markets. The Adviser will attempt to achieve a correlation between the
performance of the Indexed Assets and that of the S&P 500 Index of at least
0.95, without taking into account expenses. A correlation of 1.00 would
indicate perfect correlation, which would be achieved when the Indexed Assets'
net asset value, including the value of its dividend and capital gains
distributions, increases or decreases in exact proportion to changes in the
S&P 500 Index. The Fund will invest in stock index futures contracts, options
on stock indices, options on stock index future contracts, puts and calls to
the extent necessary to attempt to achieve this correlation. The Adviser's
ability to correlate the Indexed Assets' performance with the S&P 500 Index,
however, may be affected by, among other things, changes in securities
markets, the manner in which the S&P 500 Index is calculated by Standard &
Poor's Corporation and the timing of purchases and redemptions. In the future,
the Board of Directors, subject to the approval of shareholders, may select
another index if such a standard of comparison is deemed to be more
representative of the performance of common stocks in general.
The Adviser's ability to duplicate the performance of the S&P 500 Index also
depends to some extent on the size of the Fund's portfolio and the size of
cash flows into and out of the Fund. Investment changes to accommodate these
cash flows are made to maintain the similarity of the Fund's portfolio to the
S&P 500 Index to the maximum practicable extent. The Adviser, or its indirect
parent corporation, Mutual of America Life Insurance Company, will invest $50
million in the All America Fund prior to the commencement of the Fund's
operations and will endeavor to maintain a minimum asset balance in the Fund
(including its investments and the investments of shareholders) which is at
least $25 million at any time, but does not guarantee to do so. As
shareholders invest in the Fund, over time each of the Adviser and Mutual of
America Life reserves the right to reduce its investment in the Fund
consistent with the above Fund target minimum balance.
ACTIVE ASSETS. The investment objective for the remaining approximately 40% of
the assets (the "Active Assets") is to achieve a high level of total return,
through both appreciation of capital and, to a lesser extent, current income,
by means of a diversified portfolio of securities that may include common
stocks, securities convertible into common stocks, bonds and money market
instruments. The Active Assets will be invested by three subadvisers (each a
"Subadviser", and together the "Subadvisers"), under a subadvisory agreement
(each a "Subadvisory Agreement") between the Adviser and each of the
Subadvisers, and the Adviser. The Adviser will allocate the Active Assets to
maintain, to the extent practicable under current market conditions,
approximately equal amounts with the Subadvisers and the Adviser. The
Subadvisers are Fred Alger Management, Inc. ("Alger Management"), Oak
Associates, Ltd. ("Oak Associates"), and Palley-Needelman Asset Management,
Inc. ("Palley-Needelman"). See "Investment Advisory Arrangements--The
Subadvisers".
Palley-Needelman will invest its portion of Active Assets in stocks that
Palley-Needelman considers to be of high quality with lower than average price
volatility and low price/earning ratios. Companies generally will have below
market debt levels, earnings growth of 10% or more, current yield of 3% or
more and market capitalization of $500 million or more. Oak Associates will
invest in mid-sized capitalization stocks that have low current income and the
potential for significant growth. Oak Associates monitors 400 stocks and will
invest its portion of the Fund in approximately 25 common stocks without
regard for market industry weighting. Alger Management will invest in stocks
with capitalization generally below $1 billion, which Alger Management
considers to be fundamentally sound with the potential for strong growth and
for earnings in excess of market expectations. Except during temporary
defensive periods, at least 85% of the Alger Management portion will be
invested in equity securities. The Adviser generally will invest in stocks
that it considers undervalued. Its approach is to identify companies with
strong financials, substantial cash flow, conservative accounting, usually low
debt-to-equity ratios and average market capitalization generally below $1
billion. Some of the companies whose stocks are purchased by Oak Associates,
or by the Adviser for its portion of the Active Assets, may have limited Wall
Street coverage and low institutional ownership.
5
<PAGE>
Each of the Subadvisers and the Adviser will seek to achieve the investment
objective of the Active Assets by investing in such securities that, based on
certain fundamental and/or technical standards of selection, it determines
offer attractive opportunities for total return through capital appreciation
and, to a lesser degree, income. Assets in the All America Fund will be
rebalanced periodically to retain the approximate 60%/40% relationship between
Indexed Assets and Active Assets. The Adviser may manage cash allocated to the
Active Assets prior to investment in securities by the Subadvisers.
The Investment Company believes that the combination of the Indexed Assets and
the Active Assets will provide a reasonable opportunity for the Fund to
outperform the S&P 500 Index by providing a diversified portfolio of Active
Assets with diversified management and a broad exposure to the market. Under
normal market conditions, at least 65% of the All America Fund's total assets
will be invested in equity securities.
The Active Assets of the All America Fund may be invested from time to time in
foreign equity securities. A portion of the All America 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 or a Subadviser
considers that the All America Fund's investment objectives will not be met by
using most of its portion of the Active 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 All America 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 or a Subadviser, it is advantageous to do so.
The All America 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 All America Fund invests primarily in common stocks or in futures
contracts with respect thereto, 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 bonds. "Bonds" for this purpose means bonds and other types of debt
securities, such as 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 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
6
<PAGE>
should be subject to little financial risk, to moderately high levels of
market risk and to moderate current income volatility. Instruments rated in
the lowest category of investment grade debt (BBB or Baa) may have speculative
characteristics, and adverse changes in economic conditions or other adverse
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than would be the case with higher rated investment
grade instruments. (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 (4) invest more than 10% of
its total assets in repurchase agreements or time deposits maturing in more
than seven days or in portfolio
7
<PAGE>
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 15% 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
considerations include changes in currency rates, currency exchange control
regulations, the possibility of expropriation, the unavailability of financial
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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. ADRs
are not subject to the percentage limitations contained in the preceding
paragraph. No Fund will purchase ADRs if the transaction would cause more than
20% of the Fund's total assets to be invested in ADRs.
Money Market Instruments
The All America 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 All America 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.
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.
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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 instruments 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.
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.
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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 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.
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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
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.
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INVESTMENT ADVISORY, SUBADVISORY 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 $7.8
billion at December 31, 1995, including assets of $1.3 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 All
America Fund and .45% of the value of the net assets in the Bond Fund. See "The
Funds' Expenses" below.
THE SUBADVISERS
Fred Alger Management, Inc., 75 Maiden Lane, New York, New York 10038, serves
as Subadviser for approximately 10% of the assets of the All America Fund.
Alger Management is a wholly-owned subsidiary of Fred Alger & Company,
Incorporated, which is owned by Alger Associates, Inc. Fred M. Alger III and
David D. Alger are the majority shareholders of Alger Associates, Inc. and may
be deemed to control that company and its subsidiaries. Alger Management
provides investment management services to institutional, corporate and
individual clients, including other registered management investment companies,
and serves as subadviser for approximately 10% of the assets of the All America
Fund of the Mutual of America Investment Corporation. At December 31, 1995,
Alger Management had approximately $4.8 billion in assets under management.
Oak Associates, Ltd., 3875 Embassy Parkway, Suite 250, Akron, Ohio 44333,
serves as Subadviser for approximately 10% of the assets of the All-America
Fund. Oak Associates is an Ohio limited liability company that prior to 1996
was a sole proprietorship of James Dravo Oelschlager doing business as Oak
Associates. It provides investment management services for individual and
corporate clients, primarily in connection with retirement plans, and serves as
subadviser for approximately 10% of the assets of the All America Fund of the
Mutual of America Investment Corporation. At December 31, 1995, Oak Associates
had assets under management of approximately $3 billion.
Palley-Needelman Asset Management, Inc., 800 Newport Center Drive, Suite 450,
Newport Beach, California 92660, serves as Subadviser for approximately 10% of
the assets of the All America Fund. Palley-Needelman is jointly owned by Roger
B. Palley and Chet J. Needelman, both of whom have extensive experience in
investment management. It provides investment management services to
institutional, corporate and individual clients and other registered investment
companies, and serves as subadviser for approximately 10% of the assets of the
All America Fund of the Mutual of America Investment Corporation. At December
31, 1995, Palley-Needelman managed approximately $3.4 billion in assets.
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Under the Subadvisory Agreements, each Subadviser, at its own expense and
subject to the supervision of the Adviser and the Board of Directors of the
Investment Company, renders investment advisory services and assumes the
Adviser's duties including research, making recommendations and regular reports
to the Adviser and the Board of Directors of the Investment Company and
maintenance of certain records. The Subadvisers are also obligated to provide
all of the office space, facilities, equipment, material and personnel
necessary to perform their duties under the Subadvisory Agreements. The
Adviser, and not the All America Fund, will pay to the Subadvisers an amount
calculated daily at the following annual rates: Palley-Needelman, .30%; Oak
Associates, .30%; and Alger Management, .45%, of the value of the net assets
for which the Subadviser is providing investment advisory services.
PORTFOLIO MANAGERS
Set forth below is information about the persons employed by the Adviser or
Subadvisers who are primarily responsible for the day-to-day management of the
Funds' investments.
ALL AMERICA FUND. The Active Assets of the All America Fund are managed by
three Subadvisers and the Adviser.
David D. Alger, President of Alger Management, is primarily responsible for the
day-to-day management of the Alger Management portion of the Fund. He has been
employed by Alger Management as Executive Vice President and Director of
Research since 1971 and as President since 1995, and he serves as portfolio
manager for other mutual funds and investment accounts managed by Alger
Management.
James D. Oelschlager is the portfolio manager of the Oak Associates portion of
the Fund. Since establishing Oak Associates in 1985, Mr. Oelschlager has served
as its portfolio manager. Previously, he served as the Assistant Treasurer of
Firestone Tire & Rubber Company, where he was directly responsible for the
management of the company's pension assets. Mr. Oelschlager is assisted with
portfolio management responsibilities by Donna Barton, trading, Margaret
Ballinger, new accounts, and Doug MacKay, equity research. These individuals
have combined experience of over sixty years in the investment business and
play a key role in the day-to-day management of the firm's portfolios.
Chet J. Needelman, Chief Executive Officer and Senior Investment Officer of
Palley-Needelman, is responsible for the day-to-day management of the Palley-
Needelman portion of the Fund. Mr. Needelman has over 27 years of investment
experience as a security analyst, research director and portfolio manager. He
has managed funds for foundations, corporations, endowments and mutual funds.
He is the co-founder of Palley-Needelman Asset Management and its predecessor
company, where he held various positions during the last 20 years. All
investment decisions for Palley-Needelman Asset Management are made by an
investment committee which includes Mr. Needelman, Mr. Palley and three other
senior investment professionals.
Frederick M. Gallagher, Senior Vice President of the Adviser since June 1995,
is responsible for the investments of the Adviser's portion of the Active
Assets of the Fund. 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
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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.
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 All America 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
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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.
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 1-800-914-8715. 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
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funds. You can reach the Distributor by telephone at 1-800-914-8716 between
the hours of 9:00 am and 5:00 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 All America Fund; and/or $ to the Bond Fund
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 1-800-914-8716 between
the hours of 9:00 am and 5:00 pm Eastern Time. Neither the Investment Company
nor the
17
<PAGE>
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.
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 1-800-914-8715, 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
18
<PAGE>
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 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 All America 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
19
<PAGE>
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 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
20
<PAGE>
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 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: All America 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
21
<PAGE>
Fund-by-Fund basis. Approval or disapproval by the shareholders of one Fund on
such a matter would not generally be a prerequisite of approval or disapproval
in another Fund. Shareholders in a Fund not affected by a matter generally
would not be entitled to vote on 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.
22
<PAGE>
MUTUAL OF AMERICA
INSTITUTIONAL FUNDS, INC.
- --ALL AMERICA FUND
- -- BOND FUND
DISTRIBUTED BY:
Mutual of America Securities Corporation
320 Park Avenue
New York, New York 10022
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Mutual of America Capital Management Corporation
TRANSFER AND SHAREHOLDER SERVICES AGENT
State Street Bank and Trust Company
INVESTMENT ACCOUNTING AGENT
Investors Fiduciary Trust Company
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
CUSTODIAN
The Chase Manhattan Bank, N.A.
[Document No. ]
<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. 800-914-8715
<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: All America 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 11. Applicant is a tax-exempt organization: [ ] Yes; [ ] No
9. CONFIRMS, STATEMENTS, TELEPHONE RECORDING
Each report of the execution of an order and statement of the account
shall be conclusive if aplicant does not notify the Fund of any error within two
weeks after the mailing or other transmission of such document to applicant.
Applicant authorizes the Fund, State Street and the Distributor, each in their
discretion and without prior notice to applicant, to record and/or monitor
telphone conversations in connection wih applicant's account and transactions in
Fund shares.
10. 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--
11. 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
April , 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 April , 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 AND SUBADVISORY ARRANGEMENTS............. SAI-12
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 All America 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 All America 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 All America 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. 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 Executive Vice President
Mutual of America Capital Board, President and and Assistant to the
Management Corporation Director President of the Adviser
320 Park Avenue since March 1996;
New York, NY 10022 President and Chief
Executive Officer of the
Adviser June 1994 - March
1996; Executive Vice
President 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 September 1993 and
New York, NY 10022 Director since May 1993 of
the Adviser. Senior
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.
Patrick A. Burns Senior Executive Vice Senior Executive Vice
Mutual of America Life President, General President and General
Insurance Company Counsel Counsel since September
320 Park Avenue 1993 of the Adviser.
New York, NY 10022 Senior Executive Vice
President and General
Counsel of Mutual of
America Life and American
Life since February 1994.
Prior thereto, Executive
Vice President and General
Counsel of Mutual of
America Life and American
Life.
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 $13,315 (2) None None $13,315 (2)
Dolores J. Morrissey None (1) None None None (1)
Fioravante G. Perrotta None (2) None None None (2)
John T. Sharkey $14,485 (2) None None $14,485 (2)
John R. Silber $16,375 (2) None None $16,375 (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, a fee of $750 for
each Board or Committee meeting attended and business travel and accident
insurance and life insurance. 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, meeting fee and insurance coverage (the premium for which
totals $2,142) 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 All America and Bond Funds. The Adviser has the right to vote its
shares at any meeting of shareholders.
SAI-11
<PAGE>
INVESTMENT ADVISORY AND SUBADVISORY ARRANGEMENTS
Investment Adviser. The Investment Company's investment adviser is Mutual of
- ------------------
America Capital Management Corporation (the "Adviser"), an indirect wholly-owned
subsidiary of Mutual of America Life, 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 and except as discussed below under "Subadvisers", the
Adviser renders investment advisory services with respect to the All America
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.
Advisory Fees. As compensation for its investment advisory services to each of
- -------------
the Funds of the Investment Company, the Adviser will receive a fee calculated
as a daily charge at the annual rates of .50% of the value of the net assets of
the All America Fund; and .45% of the value of the net assets of the Bond Fund.
Advisory Agreement. 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 February 8,
1996 with respect tot he Bond Fund and on March 12, 1996 with respect to the All
America Fund. The Advisory Agreement was approved by a vote of the Adviser, as
the Fund's sole shareholder, on March __, 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 All America Fund and .70% of the value
of net assets of the Bond Fund. The Adviser may discontinue such policy at any
time.
The Subadvisers. With respect to the management of approximately 30% of the
- ---------------
assets of the All America Fund (the "Active Assets"), the Adviser engages
subadvisory services of three subadvisers--Palley-Needelman Asset Management,
Inc. ("Palley-Needelman"), Oak Associates, Ltd., and Fred Alger Management, Inc.
("Alger Management"). Each Subadviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
Each of the Subadvisers, with respect to the assets for which it acts as
subadviser, shall, subject to the supervision of the Adviser and the Board of
Directors of the Investment Company, render investment advisory services and
assume the obligations including research, making recommendations and regular
reports to the Board of Directors of the Investment Company, maintenance of
records, and providing all the office space, facilities, equipment, material and
personnel necessary to fulfull its obligations under the Subadvisory Agreement.
Subadvisory Fees. Each of the Subadvisory Agreements provides that the Adviser
- ----------------
will pay to the Subadviser an amount calculated daily at the following annual
rates: Palley-Needelman, .30%; Oak Associates, .30%; and Alger Management, .45%
of the value of the net assets for which the Subadviser is providing investment
advisory services.
Subadvisory Agreements. The Subadvisory Agreements were approved by a majority
- ----------------------
of the non-interested directors on March 12, 1996. The Subadvisory Agreements
with the Subadvisers for the All America Fund were approved by the Adviser, as
the Fund's sole shareholder on March , 1996.
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 All America Fund will be compared to a blended index comprised of 80% the
Standard & Poor's Composite Index of 500 Stocks (the "S&P 500 Index"), 10% the
Russell 2500 Index and 10% the Wilshire Small Company Growth Index. The S&P 500
Index is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. 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 Russell 2500 Index comprises the bottom 500 stocks in the
Russell 1000 Index as ranked by total market capitalization and all the stocks
in the Russell 2000 Index. Average market capitalization is almost $475 million
and the largest security in the index has an appropriate market capitalization
of $1 billion. the Wilshire Small Company Growth Index is composed of 1750
securities and extends down to approximately the $100 million market
capitalization level.
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 All America 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 All America 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 provided by amendment
SAI-21
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
-------------------------------------------
BALANCE SHEET - MARCH , 1996
------------- --------------
ASSETS:
Cash $100,000
________
Total assets $100,000
LIABILITIES:
None
_________
NET ASSETS (Note 3)
(amount paid in on 10,000 shares of Bond Fund
outstanding) $100,000
========
NET ASSET VALUE, offering and redemption price
per share $10.00
=====
The accompanying notes are an integral part of this balance sheet.
SAI-22
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENT
1. SIGNIFICANT ACCOUNTING POLICIES
Mutual of America Institutional Funds, Inc. (the "Corporation") was
incorporated on October 27, 1994 under the laws of Maryland and is being
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. Since October 27, 1994, the Corporation's
activities have been limited to organizational matters. The Fund intends to
qualify under Subchapter M of the Internal Revenue Code of 1986, as amended.
All of the Fund's initial shares outstanding at March 27, 1996 are owned by
Mutual of America Capital Management Corporation (the "Adviser").
The costs incurred by the Corporation in connection with its organization
and initial registration of shares have been paid by the Adviser or its indirect
parent company, Mutual of America Life Insurance Company.
The following is a summary of the significant accounting policies of the
Corporation:
Security Valuation - Investment securities are valued as follows:
Stocks listed on national security exchanges and certain over-the-counter
issues quoted on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system are valued at the last sale price, or if no sale, at
the latest available bid price.
Debt securities are valued at a composite fair market value "evaluation
bid," which may be the last sale price. Securities for which market quotations
are not readily available will be valued at fair value as determined in good
faith by the Adviser under the direction of the Board of Directors of the
Corporation.
Short-term investments with a maturity of 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt securities,
which mature in more than 60 days, are stated at market value.
SAI-23
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENT (CONCLUDED)
Security Transactions - Security transactions are recorded on the trade
date. Interest income is accrued as earned. Dividend income is recorded on the
ex-dividend date.
Realized gains and losses on the sale of short and long-term debt
securities are computed on the basis of amortized cost at the time of sale.
Realized gains and losses on the sale of common and preferred stocks are based
on the identified cost basis of the security.
Federal Income Taxes - The Corporation intends to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no federal income tax provision is required.
2. EXPENSES
The Corporation has entered into an Investment Advisory Agreement with the
Adviser. For providing investment advisory services to each of the Funds of the
Corporation, the Adviser receives a fee calculated as a daily charge at the
annual rate of .50% of the value of the net assets of the All America Fund and
.45% of the value of the net assets of the Bond Fund.
The Adviser has voluntarily agreed to limit the expenses of the Funds. The
Adviser will limit or otherwise reduce other operating expenses, except for
brokers' commissions, transfer taxes and other fees relating to portfolio
transactions, so that the total expenses of the Funds are limited to .85% of
average net assets for the All America Fund and .70% of average net assets for
the Bond Fund.
3. CAPITAL SHARES
At March , 1996, there were 1 billion shares of $.01 par value common
stock authorized for the Corporation. The All America Fund and Bond Fund have
been designated as classes of shares with 3,000,000 shares authorized for each
Fund. As of March , 1996, there were issued and outstanding 10,000 shares of
the Bond Fund.
SAI-24
<PAGE>
[ARTHUR ANDERSEN LLP]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder and the Board of Directors
Mutual of America Institutional Funds, Inc.
We have audited the accompanying balance sheet of Mutual of America
Institutional Funds, Inc., a Maryland corporation, as of March , 1996. This
financial statement is the responsibility of the Corporation's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used in significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Mutual of America Institutional
Funds, Inc. as of March , 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
March , 1996
SAI-25
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
--------------------
Balance Sheet as of March , 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(a) Form of Investment Advisory Agreement between the
Fund and Mutual of America Investment Corporation
(the Adviser)**
5(b) Form of Subadvisory Agreement between the Adviser
and Fred Alger Management, Inc.
5(c) Form of Subadvisory Agreement between the Adviser
and Oak Associates, Ltd.
5(d) Form of Subadvisory Agreement between the Adviser
and Palley-Needelman Asset Management, Inc.
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. 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.
**** Included in Pre-Effective Amendment No. 2 and No. 3 filed with the
Commission on January 23 and 29, 1996, respectively.
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 ADVISERS
-----------------------------------------------------
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
Nathaniel A. Davis Director Chief Operating Officer, MCI
8521 Leesburg Pike Metro
Vienna, VA 22182
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)
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
John W. Davidson President and Chief President and Chief Executive
320 Park Avenue Executive Officer Officer of the Adviser since
NY, NY 10022 March 1996; President and
Chief Executive Officer,
Munich Re Capital Management
Co., March 1994 to January
1995; prior thereto, Vice
President, Fixed Income
Portfolios, Bankers Trust
Company
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
Dolores J. Morrissey Executive President President and Chief Executive
320 Park Avenue and Assistant to Officer of the Adviser from
NY, NY 10022 the President June 1994 to March 1996;
prior thereto, Executive Vice
President and Chief
Investment Officer - General
Account of the Adviser
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 Executive Vice President of
320 Park Avenue President the Adviser
NY, NY 10022
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
Paul Travers Senior Vice Vice President of the Adviser
320 Park Avenue President until March 1996
NY, NY 10022
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 of the Adviser
320 Park Avenue
NY, NY 10022
Charles McCaghey Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
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 of the Adviser
320 Park Avenue
NY, NY 10022
C-6
<PAGE>
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.
Each of Palley-Needelman Asset Management, Inc. ("Palley-Needelman"), Oak
Associates, Ltd. ("Oak Associates") and Fred Alger Management, Inc. ("Alger
Management") is a subadviser for a portion of the Active Assets of the All
America Fund allocated to it. Each subadviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The names, addresses and
positions of each director and officer of each subadviser are incorporated by
reference to the Form ADV of the subadviser filed with the Securities and
Exchange Commission, as set forth below.
Palley-Needelman Asset Management, Inc., Form ADV, SEC File No. 801-9755.
Oak Associates, Ltd., Form ADV, SEC File No. 801-23632.
Fred Alger Management, Inc., Form ADV, SEC File No. 801-06709.
ITEM 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, ----
Secretary and Director
Howard Lichtenstein Director ----
Thomas J. Moran Director ----
(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 15th day
of March, 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 indicated on March 15, 1996.
Signatures Title
- --------------------------- --------------------------------
/s/ Dolores J. Morrissey President and Director
- --------------------------- (Principal Executive Officer)
Dolores J. Morrissey
/s/ Kevin M. Kearney Director
- ---------------------------
Kevin M. Kearney
/s/ Fioravante G. Perrotta Director
- ---------------------------
Fioravante G. Perrotta
/s/ John T. Sharkey Director
- ---------------------------
John T. Sharkey
/s/ John R. Silber Director
- ---------------------------
John R. Silber
Senior Executive Vice
President, Chief
Financial Officer and
/s/ Manfred Altstadt Treasurer
- --------------------------- (Principal Financial and
Manfred Altstadt Accounting Officer)
/s/ Patrick A. Burns Senior Executive Vice President
- --------------------------- and General Counsel
Patrick A. Burns
C-9
<PAGE>
EXHIBIT INDEX
Exhibit No.
-----------
Page
----
5(b) Form of Subadvisory Agreement between the Adviser
and Fred Alger Management, Inc.
5(c) Form of Subadvisory Agreement between the Adviser
and Oak Associates, Ltd.
5(d) Form of Subadvisory Agreement between the Adviser
and Palley-Needelman Asset Management, Inc.
11(b) Powers of Attorney
C-10
<PAGE>
EXHIBIT 99.5(B)
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, made this _____ day of ___________, 1996, by and
between Mutual of America Capital Management Corporation, a Delaware corporation
(the "Adviser"), and Fred Alger Management, Inc., a New York corporation (the
"Subadviser").
W I T N E S S E T H
WHEREAS, Mutual of America Institutional Funds, Inc. (the "Investment
Company") intends to engage in business as a diversified open-end management
investment company and is registering as such under the Investment Company Act
of 1940 (the "Investment Company Act"); and
WHEREAS, the Investment Company is comprised of two separate Funds, one of
which is designated, and is hereinafter referred to, as the "All America Fund";
and
WHEREAS, the Adviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Investment Company entered into an investment advisory agreement
dated ___________, 1996 (the "Investment Advisory Agreement") with Mutual of
America Capital Management Corporation (the "Adviser"); and
WHEREAS, the Adviser renders investment advisory and supervisory services and
corporate administration services to the Investment Company, on the terms and
conditions set forth in the Investment Advisory Agreement; and
WHEREAS, the Subadviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Adviser desires to retain the Subadviser to render investment
advisory services to the Adviser in connection with the Adviser's
responsibilities to the All America Fund with respect to such assets of the All
America Fund as shall be allocated to the Subadviser (the "Allocated Assets") in
the manner and on the terms hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Adviser and the Subadviser agree as follows:
1. General. For the period and on the terms set forth in this Agreement, the
-------
Subadviser shall manage the investment and reinvestment of the Allocated Assets
of the All America Fund. The Subadviser agrees during such period, at its own
expense and subject to the supervision of the Adviser and the Board of Directors
of the Investment Company, to render the investment
<PAGE>
advisory services and assume the obligations herein set forth, for the
compensation provided by this Agreement.
2. Investment Management Services. In carrying out its obligations to manage
------------------------------
the investment and reinvestment of the Allocated Assets of the All America Fund,
the Subadviser shall as appropriate and consistent with the limitations set
forth in Paragraph 3 hereof:
(a) perform research and obtain and evaluate pertinent economic, statistical
and financial data relevant to the investment policies of the All America Fund
as set forth in the then effective registration statement for the Investment
Company, as amended from time to time, filed with the Securities and Exchange
Commission (the "Registration Statement");
(b) review with the Adviser and the Board of Directors of the Investment
Company the overall investment plan for the Allocated Assets of the All America
Fund;
(c) make investments, consistent with any overall investment plans previously
approved by the Adviser and the Board of Directors of the Investment Company;
(d) take such steps as are necessary to implement any overall investment
plans approved by the Adviser and the Board of Directors of the Investment
Company, including making and carrying out decisions to acquire or dispose of
permissible investments, management of investments and any other property
constituting the Allocated Assets of the All America Fund, and providing or
obtaining such services as may be necessary in managing, acquiring or disposing
of investments;
(e) regularly report to the Adviser and the Board of Directors of the
Investment Company with respect to all investment activity associated with the
management of the Allocated Assets of the All America Fund;
(f) maintain all required accounts, records, memoranda, instructions or
authorizations relating to the acquisition or disposition of investments for the
All America Fund; and
(g) provide all the office space, facilities, equipment, material and
personnel necessary to fulfill its obligations under this Agreement.
3. Limitations on Management Services. The Subadviser shall render investment
----------------------------------
advisory services with respect to the Allocated Assets of the All America Fund
and effect all purchases and sales of investments for the Allocated Assets of
the All America Fund in a manner consistent with:
(a) the investment objectives, policies and restrictions for the Allocated
Assets of the All America Fund as stated in the Registration Statement;
(b) the procedures and guidelines adopted by the Board of Directors of the
Investment Company; and
2
<PAGE>
(c) the provisions of the Investment Company Act.
Any investment program undertaken by the Subadviser pursuant to this Agreement
shall at all times be subject to any directives of the Adviser and the Board of
Directors of the Investment Company or any duly constituted committee thereof
acting pursuant to like authority.
4. Brokerage and Research Services. The Subadviser shall, with respect to the
-------------------------------
Allocated Assets of the All America Fund, subject to the supervision of the
Adviser and the Board of Directors of the Investment Company, arrange for the
placement of orders for the All America Fund, either directly with the issuer,
with any broker-dealer or underwriter that specializes in the securities for
which the order is made or with any other broker or dealer selected by the
Subadviser, subject to the following limitations.
The Subadviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities constituting the
Allocated Assets of the All America Fund and will use its best efforts to obtain
the most favorable net results, taking into account all appropriate factors,
including price, dealer spread or commission, if any, size of the transaction
and difficulty of execution. However, in selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, the Subadviser may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to All America Fund and/or other accounts over which the Subadviser or
an affiliate exercises investment direction. The Subadviser will periodically
evaluate the statistical data, research and other investment services provided
by brokers and dealers to it. Such services may be used by the Subadviser in
connection with the performance of its obligations under this Agreement or in
connection with other advisory activities or investment operations.
5. Compensation. As compensation for its investment advisory services to the
------------
Adviser, the Subadviser shall receive an amount calculated daily at the annual
rate of .45% of the value of the net assets constituting the Allocated Assets of
the All America Fund.
6. Expenses. The Subadviser shall be responsible for all expenses incurred in
--------
performing the investment advisory services herein set forth, including costs of
compensating and furnishing office space for officers and employees of the
Subadviser connected with investment and economic research, trading and
investment management for the All America Fund. All brokers' commissions,
transfer taxes and other fees relating to purchases and sales of investments for
the All America Fund shall be paid out of assets of the All America Fund.
7. Services Not Exclusive. The services rendered by the Subadviser pursuant
----------------------
to this Agreement are not to be deemed exclusive, and the Subadviser may render
similar services to other entities so long as its services under this Agreement
are not impaired or interfered with.
It is understood that the Subadviser or its affiliates may use any investment
research obtained for the benefit of the All America Fund in providing
investment advice to its other investment
3
<PAGE>
advisory accounts or for use in managing their own accounts. Conversely, such
supplemental information obtained by the placement of business for the All
America Fund or other entities advised by the Subadviser may be considered by
and may be useful to the Subadviser in carrying out its obligations to the All
America Fund.
When the Subadviser deems the purchase or sale of a security to be in the best
interests of the All America Fund as well as other accounts or companies, it
may, to the extent permitted by applicable laws and regulations but will not be
obligated to, aggregate the securities to be sold or purchased for the All
America Fund with those to be sold or purchased for other accounts or companies
in order to obtain favorable execution and low brokerage commissions. In that
event, allocation of the securities purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
the All America Fund and to such other accounts or companies. The Investment
Company recognizes that in some cases this procedure may adversely affect the
price paid or received by All America Fund or the size of the position
obtainable or disposable for the All America Fund.
8. Term of Agreement. This Agreement will continue from year to year but only
-----------------
so long as such continuance is specifically approved at least annually either
(i) by the Board of Directors of the Investment Company or (ii) by a vote of a
majority of the outstanding voting securities of the All America Fund, provided
that in either event such continuance will also be approved by the vote of a
majority of the directors who are not interested persons (as defined in the
Investment Company Act) of the Investment Company, the Adviser, or the
Subadviser, cast in person at a meeting called for the purpose of voting on such
approval. In connection with such approvals, the Adviser and the Board of
Directors of the Investment Company shall request and evaluate, and the
Subadviser shall furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement. This Agreement:
(a) shall be subject to termination, without the payment of any penalty, by
the Subadviser on one hundred eighty days' written notice to the Adviser and the
Investment Company;
(b) shall be subject to termination, without the payment of any penalty, by
the Adviser or the Board of Directors of the Investment Company, or by vote of a
majority of the outstanding shares of the All America Fund, in each case on
sixty days' written notice to the Subadviser;
(c) shall not be amended without specific approval of such amendment by the
Adviser and (i) the Board of Directors of the Investment Company, or by the vote
of a majority of the outstanding shares of the All America Fund, and (ii) a
majority of those members of the Board of Directors of the Investment Company
who are not parties to this Agreement or interested persons of such a party,
cast in person at a meeting called for the purpose of voting on such approval;
and
(d) shall automatically terminate upon assignment by either party.
9. Recordkeeping. The Subadviser agrees that all accounts and records that it
-------------
maintains for the Investment Company shall be the property of the Investment
Company and that it will
4
<PAGE>
surrender promptly to the designated officers of the Investment Company any or
all such accounts and records upon request. The Subadviser further agrees to
preserve for the period prescribed by the rules and regulations of the
Securities and Exchange Commission all such records and accounts as are required
to be maintained pursuant to said rules. The Subadviser also agrees that it will
maintain all records and accounts regarding the investment activities with
respect to the Allocated Assets of the All America Fund in a confidential
manner. All such accounts or records shall be made available, within five (5)
business days of a written request, to the Investment Company's accountants or
auditors during regular business hours at the Subadviser's offices. In addition,
the Subadviser will provide any materials as are required to be maintained
pursuant to said rules. The Subadviser also agrees that it will maintain all
records and accounts reasonably related to the investment advisory services
provided hereunder, as may reasonably be requested in writing by the Adviser or
the members of the Board of Directors of the Investment Company or as may be
required by any governmental agency having jurisdiction over the Adviser, the
Subadviser, or the Investment Company.
10. Interested and Affiliated Persons. It is understood that members,
---------------------------------
officers, employees or agents of the Investment Company or the Adviser may also
be interested in the Subadviser as directors, officers, employees, agents or
otherwise.
11. Liability of the Subadviser. In the absence of willful misfeasance, bad
---------------------------
faith, gross negligence or reckless disregard of obligations or duties on the
part of the Subadviser (or its officers, directors, agents, employees,
controlling persons, and any other person or entity affiliated with the
Subadviser or retained by it to perform or assist in the performance of its
obligations under this Agreement), neither the Subadviser nor any of its
officers, directors, employees or agents shall be subject to liability to the
Investment Company or any shareholder of the Investment Company for any act or
omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law, or for
any loss suffered by the Investment Company or any shareholder of the Investment
Company in connection with the matters to which this Agreement relates, except
to the extent specified in the Investment Company Act concerning loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services.
12. Governing Law. This Agreement is subject to the provisions of the
-------------
Investment Company Act, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder, including such exemptions
therefrom as the Securities and Exchange Commission may grant. Words and
phrases used herein shall be interpreted in accordance with that Act and those
rules and regulations, and such exemptions.
13. Miscellaneous. The Subadviser shall submit to all regulatory and
-------------
administrative bodies having jurisdiction over the operations of the Adviser,
the Subadviser or the Investment Company, present or future, any materials,
reasonably related to the investment advisory services provided hereunder, as
may be reasonably requested in writing by the Adviser or the Board of
5
<PAGE>
Directors of the Investment Company or as may be required by any governmental
agency having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Subadvisory Agreement
to be duly executed as of the day and year first above written.
MUTUAL OF AMERICA CAPITAL
MANAGEMENT CORPORATION
By:____________________________
Name:
Title:
FRED ALGER MANAGEMENT, INC.
By:____________________________
Name:
Title:
6
<PAGE>
EXHIBIT 99.5(C)
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, made this ____ day of __________, 1996, by and between
Mutual of America Capital Management Corporation, a Delaware corporation (the
"Adviser"), and Oak Associates, Ltd., an Ohio limited liability company (the
"Subadviser").
W I T N E S S E T H
WHEREAS, Mutual of America Institutional Funds, Inc. (the "Investment
Company") intends to engage in business as a diversified open-end management
investment company and is registering as such under the Investment Company Act
of 1940 (the "Investment Company Act"); and
WHEREAS, the Investment Company is comprised of two separate Funds, one of
which is designated, and is hereinafter referred to, as the "All America Fund";
and
WHEREAS, the Adviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Investment Company entered into an investment advisory agreement
dated __________, 1996 (the "Investment Advisory Agreement") with Mutual of
America Capital Management Corporation (the "Adviser"); and
WHEREAS, the Adviser renders investment advisory and supervisory services and
corporate administration services to the Investment Company, on the terms and
conditions et forth in the Investment Advisory Agreement; and
WHEREAS, the Subadviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Adviser desires to retain the Subadviser to render investment
advisory services to the Adviser in connection with the Adviser's
responsibilities to the All America Fund with respect to such assets of the All
America Fund as shall be allocated to the Subadviser (the "Allocated Assets") in
the manner and on the terms hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Adviser and the Subadviser agree as follows:
1. General. For the period and on the terms set forth in this Agreement, the
-------
Subadviser shall manage the investment and reinvestment of the Allocated Assets
of the All America Fund. The Subadviser agrees during such period, at its own
expense and subject to the supervision of the Adviser and the Board of Directors
of the Investment Company, to render the investment advisory services and assume
the obligations herein set forth, for the compensation provided by this
Agreement.
<PAGE>
2. Investment Management Services. In carrying out its obligations to manage
------------------------------
the investment and reinvestment of the Allocated Assets of the All America Fund,
the Subadviser shall as appropriate and consistent with the limitations set
forth in Paragraph 3 hereof:
(a) perform research and obtain and evaluate pertinent economic, statistical
and financial data relevant to the investment policies of the All America Fund
as set forth in the then effective registration statement for the Investment
Company, as amended from time to time, filed with the Securities and Exchange
Commission (the "Registration Statement");
(b) review with the Adviser and the Board of Directors of the Investment
Company the overall investment plan for the Allocated Assets of the All America
Fund;
(c) make investments, consistent with any overall investment plans previously
approved by the Adviser and the Board of Directors of the Investment Company;
(d) take such steps as are necessary to implement any overall investment
plans approved by the Adviser and the Board of Directors of the Investment
Company, including making and carrying out decisions to acquire or dispose of
permissible investments, management of investments and any other property
constituting the Allocated Assets of the All America Fund, and providing or
obtaining such services as may be necessary in managing, acquiring or disposing
of investments;
(e) regularly report to the Adviser and the Board of Directors of the
Investment Company with respect to all investment activity associated with the
management of the Allocated Assets of the All America Fund;
(f) maintain all required accounts, records, memoranda, instructions or
authorizations relating to the acquisition or disposition of investments for the
All America Fund; and
(g) provide all the office space, facilities, equipment, material and
personnel necessary to fulfill its obligations under this Agreement.
3. Limitations on Management Services. The Subadviser shall render investment
----------------------------------
advisory services with respect to the Allocated Assets of the All America Fund
and effect all purchases and sales of investments for the Allocated Assets of
the All America Fund in a manner consistent with:
(a) the investment objectives, policies and restrictions for the Allocated
Assets of the All America Fund as stated in the Registration Statement;
(b) the procedures and guidelines adopted by the Board of Directors of the
Investment Company; and
(c) the provisions of the Investment Company Act.
2
<PAGE>
Any investment program undertaken by the Subadviser pursuant to this Agreement
shall at all times be subject to any directives of the Adviser and the Board of
Directors of the Investment Company or any duly constituted committee thereof
acting pursuant to like authority.
4. Brokerage and Research Services. The Subadviser shall, with respect to the
-------------------------------
Allocated Assets of the All America Fund, subject to the supervision of the
Adviser and the Board of Directors of the Investment Company, arrange for the
placement of orders for the All America Fund, either directly with the issuer,
with any broker-dealer or underwriter that specializes in the securities for
which the order is made or with any other broker or dealer selected by the
Subadviser, subject to the following limitations.
The Subadviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities constituting the
Allocated Assets of the All America Fund and will use its best efforts to obtain
the most favorable net results, taking into account all appropriate factors,
including price, dealer spread or commission, if any, size of the transaction
and difficulty of execution. However, in selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, the Subadviser may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to All America Fund and/or other accounts over which the Subadviser or
an affiliate exercises investment direction. The Subadviser will periodically
evaluate the statistical data, research and other investment services provided
by brokers and dealers to it. Such services may be used by the Subadviser in
connection with the performance of its obligations under this Agreement or in
connection with other advisory activities or investment operations.
5. Compensation. As compensation for its investment advisory services to the
------------
Adviser, the Subadviser shall receive an amount calculated daily at the annual
rate of .30% of the value of the net assets constituting the Allocated Assets of
the All America Fund.
6. Expenses. The Subadviser shall be responsible for all expenses incurred in
--------
performing the investment advisory services herein set forth, including costs of
compensating and furnishing office space for officers and employees of the
Subadviser connected with investment and economic research, trading and
investment management for the All America Fund. All brokers' commissions,
transfer taxes and other fees relating to purchases and sales of investments for
the All America Fund shall be paid out of assets of the All America Fund.
7. Services Not Exclusive. The services rendered by the Subadviser pursuant
----------------------
to this Agreement are not to be deemed exclusive, and the Subadviser may render
similar services to other entities so long as its services under this Agreement
are not impaired or interfered with.
It is understood that the Subadviser or its affiliates may use any investment
research obtained for the benefit of the All America Fund in providing
investment advice to its other investment advisory accounts or for use in
managing their own accounts. Conversely, such supplemental information obtained
by the placement of business for the All America Fund or other entities advised
by the Subadviser may be considered by and may be useful to the Subadviser in
carrying out its obligations to the All America Fund.
3
<PAGE>
When the Subadviser deems the purchase or sale of a security to be in the best
interests of the All America Fund as well as other accounts or companies, it
may, to the extent permitted by applicable laws and regulations but will not be
obligated to, aggregate the securities to be sold or purchased for the All
America Fund with those to be sold or purchased for other accounts or companies
in order to obtain favorable execution and low brokerage commissions. In that
event, allocation of the securities purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
the All America Fund and to such other accounts or companies. The Investment
Company recognizes that in some cases this procedure may adversely affect the
price paid or received by All America Fund or the size of the position
obtainable or disposable for the All America Fund.
8. Term of Agreement. This Agreement will continue from year to year but only
-----------------
so long as such continuance is specifically approved at least annually either
(i) by the Board of Directors of the Investment Company or (ii) by a vote of a
majority of the outstanding voting securities of the All America Fund, provided
that in either event such continuance will also be approved by the vote of a
majority of the directors who are not interested persons (as defined in the
Investment Company Act) of the Investment Company, the Adviser, or the
Subadviser, cast in person at a meeting called for the purpose of voting on such
approval. In connection with such approvals, the Adviser and the Board of
Directors of the Investment Company shall request and evaluate, and the
Subadviser shall furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement. This Agreement:
(a) shall be subject to termination, without the payment of any penalty, by
the Subadviser on one hundred eighty days' written notice to the Adviser and the
Investment Company;
(b) shall be subject to termination, without the payment of any penalty, by
the Adviser or the Board of Directors of the Investment Company, or by vote of a
majority of the outstanding shares of the All America Fund, in each case on
sixty days' written notice to the Subadviser;
(c) shall not be amended without specific approval of such amendment by the
Adviser and (i) the Board of Directors of the Investment Company, or by the vote
of a majority of the outstanding shares of the All America Fund, and (ii) a
majority of those members of the Board of Directors of the Investment Company
who are not parties to this Agreement or interested persons of such a party,
cast in person at a meeting called for the purpose of voting on such approval;
and
(d) shall automatically terminate upon assignment by either party.
9. Recordkeeping. The Subadviser agrees that all accounts and records that it
-------------
maintains for the Investment Company shall be the property of the Investment
Company and that it will surrender promptly to the designated officers of the
Investment Company any or all such accounts and records upon request. The
Subadviser further agrees to preserve for the period prescribed by the rules and
regulations of the Securities and Exchange Commission all such records and
accounts as are required to be maintained pursuant to said rules. The
Subadviser also agrees that it will maintain all records and accounts regarding
the investment activities with respect to the Allocated Assets of the All
America Fund in a confidential manner. All such accounts or records shall be
made available, within five (5) business days of a written request, to
4
<PAGE>
the Investment Company's accountants or auditors during regular business hours
at the Subadviser's offices. In addition, the Subadviser will provide any
materials as are required to be maintained pursuant to said rules. The
Subadviser also agrees that it will maintain all records and accounts reasonably
related to the investment advisory services provided hereunder, as may
reasonably be requested in writing by the Adviser or the members of the Board of
Directors of the Investment Company or as may be required by any governmental
agency having jurisdiction over the Adviser, the Subadviser, or the Investment
Company.
10. Interested and Affiliated Persons. It is understood that members,
---------------------------------
officers, employees or agents of the Investment Company or the Adviser may also
be interested in the Subadviser as directors, officers, employees, agents or
otherwise.
11. Liability of the Subadviser. In the absence of willful misfeasance, bad
---------------------------
faith, gross negligence or reckless disregard of obligations or duties on the
part of the Subadviser (or its officers, directors, agents, employees,
controlling persons, and any other person or entity affiliated with the
Subadviser or retained by it to perform or assist in the performance of its
obligations under this Agreement), neither the Subadviser nor any of its
officers, directors, employees or agents shall be subject to liability to the
Investment Company or any shareholder of the Investment Company for any act or
omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law, or for
any loss suffered by the Investment Company or any shareholder of the Investment
Company in connection with the matters to which this Agreement relates, except
to the extent specified in the Investment Company Act concerning loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services.
12. Governing Law. This Agreement is subject to the provisions of the
-------------
Investment Company Act, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder, including such exemptions
therefrom as the Securities and Exchange Commission may grant. Words and
phrases used herein shall be interpreted in accordance with that Act and those
rules and regulations, and such exemptions.
13. Miscellaneous. The Subadviser shall submit to all regulatory and
-------------
administrative bodies having jurisdiction over the operations of the Adviser,
the Subadviser or the Investment Company, present or future, any materials,
reasonably related to the investment advisory services provided hereunder, as
may be reasonably requested in writing by the Adviser or the Board of
5
<PAGE>
Directors of the Investment Company or as may be required by any governmental
agency having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Subadvisory Agreement
to be duly executed as of the day and year first above written.
MUTUAL OF AMERICA CAPITAL
MANAGEMENT CORPORATION
By:____________________________
Name:
Title:
OAK ASSOCIATES, LTD.
By:_____________________________
Name:
Title:
6
<PAGE>
EXHIBIT 99.5(D)
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, made this ____ day of _________, 1996, by and between
Mutual of America Capital Management Corporation, a Delaware corporation (the
"Adviser"), and Palley-Needelman Asset Management, Inc., a California
corporation (the "Subadviser").
W I T N E S S E T H
WHEREAS, Mutual of America Institutional Funds, Inc. (the "Investment
Company") intends to engage in business as a diversified open-end management
investment company and is registering as such under the Investment Company Act
of 1940 (the "Investment Company Act"); and
WHEREAS, the Investment Company is comprised of two separate Funds, one of
which is designated, and is hereinafter referred to, as the "All America Fund";
and
WHEREAS, the Adviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Investment Company entered into an investment advisory agreement
dated __________, 1996 (the "Investment Advisory Agreement") with Mutual of
America Capital Management Corporation (the "Adviser"); and
WHEREAS, the Adviser renders investment advisory and supervisory services and
corporate administration services to the Investment Company, on the terms and
conditions set forth in the Investment Advisory Agreement; and
WHEREAS, the Subadviser renders advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Adviser desires to retain the Subadviser to render investment
advisory and corporate administration services to the Adviser in connection with
the Adviser's responsibilities to the All America Fund with respect to such
assets of the All America Fund as shall be allocated to the Subadviser (the
"Allocated Assets") in the manner and on the terms hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Adviser and the Subadviser agree as follows:
1. General. For the period and on the terms set forth in this Agreement, the
-------
Subadviser shall manage the investment and reinvestment of the Allocated Assets
of the All America Fund. The Subadviser agrees during such period, at its own
expense and subject to the supervision of the Adviser and the Board of Directors
of the Investment Company, to render the investment
<PAGE>
advisory services and assume the obligations herein set forth, for the
compensation provided by this Agreement.
2. Investment Management Services. In carrying out its obligations to manage
------------------------------
the investment and reinvestment of the Allocated Assets of the All America Fund,
the Subadviser shall as appropriate and consistent with the limitations set
forth in Paragraph 4 hereof:
(a) perform research and obtain and evaluate pertinent economic, statistical
and financial data relevant to the investment policies of the All America Fund
as set forth in the then effective registration statement for the Investment
Company, as amended from time to time, filed with the Securities and Exchange
Commission (the "Registration Statement");
(b) consult with the Adviser and the Board of Directors of the Investment
Company and furnish to the Adviser and the Board of Directors of the Investment
Company recommendations with respect to an overall investment plan for the
Allocated Assets of the All America Fund for approval, modification or rejection
by the Adviser or the Board of Directors of the Investment Company;
(c) seek out, present and recommend specific investment opportunities,
consistent with any overall investment plans approved by the Adviser and the
Board of Directors of the Investment Company;
(d) take such steps as are necessary to implement any overall investment plans
approved by the Adviser and the Board of Directors of the Investment Company,
including making and carrying out decisions to acquire or dispose of permissible
investments, management of investments and any other property constituting the
Allocated Assets of the All America Fund, and providing or obtaining such
services as may be necessary in managing, acquiring or disposing of investments;
(e) regularly report to the Adviser and the Board of Directors of the
Investment Company with respect to the implementation of any approved overall
investment plans and any other activities in connection with the management of
the Allocated Assets of the All America Fund;
(f) maintain all required accounts, records, memoranda, instructions or
authorizations relating to the acquisition or disposition of investments for the
All America Fund; and
(g) provide all the office space, facilities, equipment, material and
personnel necessary to fulfill its obligations under this Agreement.
3. Supplemental Information. If, in the judgment of the Subadviser, the
------------------------
Allocated Assets of the All America Fund would be benefited by supplemental
investment research from other persons or entities, outside the context of a
specific brokerage transaction, the Subadviser is authorized to obtain and pay a
reasonable flat fee for such information. Supplemental investment research shall
be limited to statistical and other factual information, advice regarding
economic factors and trends and advice as to occasional transactions in specific
securities, and shall not
2
<PAGE>
involve general advice or recommendations regarding the purchase or sale of
securities. The expenses of the Subadviser may not necessarily be reduced as a
result of receipt of such supplemental information.
4. Limitations on Management Services. The Subadviser shall render investment
----------------------------------
advisory services with respect to the Allocated Assets of the All America Fund
and effect all purchases and sales of investments for the Allocated Assets of
the All America Fund in a manner consistent with:
(a) the investment objectives, policies and restrictions for the All America
Fund as stated in the Registration Statement;
(b) the Rules and Regulations of the Investment Company; and
(c) the provisions of the Investment Company Act.
Any investment program undertaken by the Subadviser pursuant to this Agreement
shall at all times be subject to any directives of the Adviser and the Board of
Directors of the Investment Company or any duly constituted committee thereof
acting pursuant to like authority.
5. Brokerage and Research Services. The Subadviser shall, with respect to the
-------------------------------
Allocated Assets of the All America Fund, subject to the supervision of the
Adviser and the Board of Directors of the Investment Company, arrange for the
placement of orders for the All America Fund, either directly with the issuer,
with any broker-dealer or underwriter that specializes in the securities for
which the order is made or with any other broker or dealer selected by the
Subadviser, subject to the following limitations.
The Subadviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities constituting the
Allocated Assets of the All America Fund and will use its best efforts to obtain
the most favorable net results, taking into account all appropriate factors,
including price, dealer spread or commission, if any, size of the transaction
and difficulty of execution. However, in addition to seeking the best price and
execution, the Subadviser may also take into consideration research and
statistical information and wire and other quotation services provided to the
Subadviser. In any event, the Subadviser shall select only brokers whose
commissions it believes are reasonable. The Subadviser will periodically
evaluate the statistical data, research and other investment services provided
by brokers and dealers to it. Such services may be used by the Subadviser in
connection with the performance of its obligations under this Agreement or in
connection with other advisory activities or investment operations.
6. Compensation. As compensation for its investment advisory services to the
------------
Adviser, the Subadviser shall receive an amount calculated daily at the annual
rate of .30% of the value of the net assets constituting the Allocated Assets of
the All America Fund.
3
<PAGE>
7. Expenses. The Subadviser shall be responsible for all expenses incurred in
--------
performing the investment advisory services herein set forth, including costs of
compensating and furnishing office space for officers and employees of the
Subadviser connected with investment and economic research, trading and
investment management for the All America Fund. All brokers' commissions,
transfer taxes and other fees relating to purchases and sales of investments for
the All America Fund shall be paid out of assets of the All America Fund.
8. Services Not Exclusive. The services rendered by the Subadviser pursuant
----------------------
to this Agreement are not to be deemed exclusive, and the Subadviser may render
similar services to other entities so long as its services under this Agreement
are not impaired or interfered with.
It is understood that the Subadviser or its affiliates may use any investment
research obtained for the benefit of the All America Fund in providing
investment advice to its other investment advisory accounts or for use in
managing their own accounts. Conversely, such supplemental information obtained
by the placement of business for the All America Fund or other entities advised
by the Subadviser may be considered by and may be useful to the Subadviser in
carrying out its obligations to the All America Fund.
When the Subadviser deems the purchase or sale of a security to be in the best
interests of the All America Fund as well as other accounts or companies, it
may, to the extent permitted by applicable laws and regulations but will not be
obligated to, aggregate the securities to be sold or purchased for the All
America Fund with those to be sold or purchased for other accounts or companies
in order to obtain favorable execution and low brokerage commissions. In that
event, allocation of the securities purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
the All America Fund and to such other accounts or companies. The Investment
Company recognizes that in some cases this procedure may adversely affect the
size of the position obtainable for the All America Fund.
9. Term of Agreement. This Agreement will continue from year to year but only
-----------------
so long as such continuance is specifically approved at least annually either
(i) by the Board of Directors of the Investment Company or (ii) by a vote of a
majority of the outstanding voting securities of the All America Fund, provided
that in either event such continuance will also be approved by the vote of a
majority of the directors who are not interested persons (as defined in the
Investment Company Act) of the Investment Company, the Adviser, or the
Subadviser, cast in person at a meeting called for the purpose of voting on such
approval. In connection with such approvals, the Adviser and the Board of
Directors of the Investment Company shall request and evaluate, and the
Subadviser shall furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement. This Agreement:
(a) shall not be terminated by the Subadviser without the prior approval of a
new subadvisory agreement with respect to the Allocated Assets of the All
America Fund by vote of a majority of the outstanding shares of the All America
Fund;
4
<PAGE>
(b) shall be subject to termination, without the payment of any penalty, by
the Adviser or the Board of Directors of the Investment Company, or by vote of a
majority of the outstanding shares of the All America Fund, in each case on
sixty days' written notice to the Subadviser;
(c) shall not be amended without specific approval of such amendment by the
Adviser and (i) the Board of Directors of the Investment Company, or by the vote
of a majority of the outstanding shares of the All America Fund, and (ii) a
majority of those members of the Board of Directors of the Investment Company
who are not parties to this Agreement or interested persons of such a party,
cast in person at a meeting called for the purpose of voting on such approval;
and
(d) shall automatically terminate upon assignment by either party.
10. Recordkeeping. The Subadviser agrees that all accounts and records that it
-------------
maintains for the Investment Company shall be the property of the Investment
Company and that it will surrender promptly to the designated officers of the
Investment Company any or all such accounts and records upon request. The
Subadviser further agrees to preserve for the period prescribed by the rules and
regulations of the Securities and Exchange Commission all such records and
accounts as are required to be maintained pursuant to said rules. The Subadviser
also agrees that it will maintain all records and accounts regarding the
investment activities with respect to the Allocated Assets of the All America
Fund in a confidential manner. All such accounts or records shall be made
available, within five (5) business days of a written request, to the Investment
Company's accountants or auditors during regular business hours at the
Subadviser's offices. In addition, the Subadviser will provide any materials as
are required to be maintained pursuant to said rules. The Subadviser also
agrees that it will maintain all records and accounts reasonably related to the
investment advisory services provided hereunder, as may reasonably be requested
in writing by the Adviser or the members of the Board of Directors of the
Investment Company or as may be required by any governmental agency having
jurisdiction over the Adviser, the Subadviser, or the Investment Company.
11. Interested and Affiliated Persons. It is understood that members,
---------------------------------
officers, employees or agents of the Investment Company or the Adviser may also
be interested in the Subadviser as directors, officers, employees, agents or
otherwise.
12. Liability of the Subadviser. In the absence of willful misfeasance, bad
---------------------------
faith, gross negligence or reckless disregard of obligations or duties on the
part of the Subadviser (or its officers, directors, agents, employees,
controlling persons, and any other person or entity affiliated with the
Subadviser or retained by it to perform or assist in the performance of its
obligations under this Agreement), neither the Subadviser nor any of its
officers, directors, employees or agents shall be subject to liability to the
Investment Company or any shareholder of the Investment Company for any act or
omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law, or for
any loss suffered by the Investment Company or any shareholder of the Investment
Company in connection with the matters to which this Agreement relates, except
to the extent specified in Section 36(b) of the Investment Company Act
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services.
5
<PAGE>
13. Governing Law. This Agreement is subject to the provisions of the
-------------
Investment Company Act, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder, including such exemptions
therefrom as the Securities and Exchange Commission may grant. Words and phrases
used herein shall be interpreted in accordance with that Act and those rules and
regulations, and such exemptions. Without limiting the generality of the
foregoing, (a) the term "assigned" shall not include any transaction exempted
from Section 15(a)(4) of the Investment Company Act by an order of the
Securities and Exchange Commission, and (b) as used with respect to the
Investment Company or the All America Fund, the term "majority of the
outstanding shares" means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares.
14. Miscellaneous. The Subadviser shall submit to all regulatory and
-------------
administrative bodies having jurisdiction over the operations of the Adviser,
the Subadviser or the Investment Company, present or future, any materials,
reasonably related to the investment advisory services provided hereunder, as
may be reasonably requested in writing by the Adviser or the Board of Directors
of the Investment Company or as may be required by any governmental agency
having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Subadvisory Agreement
to be duly executed as of the day and year first above written.
MUTUAL OF AMERICA CAPITAL
MANAGEMENT CORPORATION
By:______________________________
Name:
Title:
PALLEY-NEEDELMAN ASSET MANAGEMENT, INC.
By:_______________________________
Name:
Title:
6
<PAGE>
EXHIBIT 99.11(B)
POWER OF ATTORNEY
The undersigned Director of Mutual of America Institutional Funds,
Inc., a Maryland corporation, hereby constitutes and appoints Dolores J.
Morrissey, Manfred Altstadt, Patrick A. Burns and Stanley M. Lenkowicz, and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the Acts): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand, this 8th day of February, 1996.
original signed by Fioravante G. Perrotta
-------------------------------------------
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Mutual of America Institutional Funds,
Inc., a Maryland corporation, hereby constitutes and appoints Dolores J.
Morrissey, Manfred Altstadt, Patrick A. Burns and Stanley M. Lenkowicz, and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the Acts): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand, this 8th day of February, 1996.
original signed by John R. Silber
----------------------------------------------
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Mutual of America Institutional Funds,
Inc., a Maryland corporation, hereby constitutes and appoints Dolores J.
Morrissey, Manfred Altstadt, Patrick A. Burns and Stanley M. Lenkowicz, and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the Acts): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand, this 8th day of February, 1996.
original signed by Kevin M. Kearney
---------------------------------------
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Mutual of America Institutional Funds,
Inc., a Maryland corporation, hereby constitutes and appoints Dolores J.
Morrissey, Manfred Altstadt, Patrick A. Burns and Stanley M. Lenkowicz, and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the Acts): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand, this 8th day of February, 1996.
original signed by John T. Sharkey
--------------------------------------
<PAGE>
POWER OF ATTORNEY
The undersigned Senior Executive Vice President, Chief Financial
Officer and Treasurer of Mutual of America Institutional Funds, Inc., a Maryland
corporation, hereby constitutes and appoints Dolores J. Morrissey, Patrick A.
Burns and Stanley M. Lenkowicz, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 or the Investment Company Act
of 1940 (the Acts): registration statements on any form or forms under the Acts,
and any and all amendments and supplements thereto (including post-effective
amendments), with all exhibits and all agreements, consents, exemptive
applications and other documents and instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand, this 22nd day of February, 1996.
original signed by Manfred Altstadt
--------------------------------------
<PAGE>
POWER OF ATTORNEY
The undersigned Director and President of Mutual of America
Institutional Funds, Inc., a Maryland corporation, hereby constitutes and
appoints Manfred Altstadt, Patrick A. Burns and Stanley M. Lenkowicz, and each
of them (with full power to each of them to act alone), her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for her and
on her behalf and in her name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the Acts): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set her hand, this 22nd day of February, 1996.
original signed by Dolores Morrissey
---------------------------------------
