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Prospectus and Application
Mutual of America
Institutional
Funds, Inc.
All America Fund
[GRAPHIC]
Bond Fund
Money Market Fund
May 1, 1997
(supplemented August 13, 1997)
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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 three
series of common stock. 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 is to outperform the Standard &
Poor's Composite Index of 500 Stocks (the "S&P 500 Index") by providing a
diversified portfolio of assets with diversified management and a broad
exposure to the market. The 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 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.
The MONEY MARKET FUND'S investment objective is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital by investing in money market
instruments and other short-term debt securities. The Fund declares and pays
dividends of net investment income semi-annually, and as a result the Fund
does not maintain a stable net asset value per share. INVESTMENTS IN THE MONEY
MARKET FUND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
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 18 AND
"REDEMPTION AND EXCHANGE OF SHARES" ON PAGE 19 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 May 1, 1997 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 May 1, 1997, as supplemented August 13, 1997
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TABLE OF CONTENTS
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PAGE
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Annual Fees and Expenses............. 2
Financial Highlights................. 3
Performance of Similar Funds......... 4
General Description of the Investment
Company............................. 4
Investment Objectives and Policies of
the Funds........................... 5
Investment Advisory, Subadvisory and
Administrative Arrangements......... 15
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The Funds' Expenses................................................... 17
Portfolio Transactions................................................ 18
Purchase of Shares.................................................... 18
Redemption and Exchange of Shares..................................... 19
Dividends, Distributions and Taxes.................................... 21
Additional Information................................................ 23
An Application is included with this Prospectus
</TABLE>
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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.
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ANNUAL FEES AND EXPENSES
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ALL AMERICA BOND MONEY
FUND FUND MARKET FUND
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SHAREHOLDER TRANSACTION EXPENSES................ none none none
ANNUAL FUND OPERATING EXPENSES(l)
(as a percentage of average net assets)
Investment Advisory Fees........................ .50% .45% .20%
Other Expenses (after expense reimbursement)(2). .35% .25% .20%
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursement)(2).............................. .85% .70% .40%
==== ==== ====
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(l) The Money Market Fund 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, .70% of net
assets for the Bond Fund and .40% of net assets for the Money Market Fund.
If this policy were not in effect, the Other Expenses and Total Operating
Expenses as a percentage of average net assets would have been .37% and
.87% for the All America Fund and .45% and .90% for the Bond Fund for the
period May 1, 1996 through December 31, 1996. Without the expense
reimbursement, the estimated Other Expenses and Total Operating Expenses
as a percentage of net assets are .70% and .90% for the Money Market 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.
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1 YEAR 3 YEARS
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All America Fund............................................ $ 9 $29
Bond Fund................................................... $ 7 $24
Money Market Fund........................................... $ 4 $14
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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."
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FINANCIAL HIGHLIGHTS
Income and capital changes per share for an All America Fund share and a Bond
Fund share outstanding throughout the period May 1, 1996 (commencement of
operations) to December 31, 1996 and other supplementary data are set forth
below. The data has been audited by the Fund's independent auditor, Arthur
Andersen LLP. The financial statements of the Investment Company, along with
the report of Arthur Andersen thereon, as of and for the period ended December
31, 1996 are set forth in the Investment Company's Statement of Additional
Information, dated May 1, 1997. Further information about the performance of
the Funds, including management's discussion of performance, is contained in
the Investment Company's annual report to shareholders, which may be obtained
without charge by request to the Investment Company.
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ALL AMERICA FUND BOND FUND
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NET ASSET VALUE, BEGINNING OF PERIOD............. $10.00 $10.01
Income From Investment Operations
Net Investment Income.......................... .06 .38
Net Gains or Losses on Securities (realized and
unrealized)................................... .98 .12
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Total From Investment Operations............. 1.04 .50
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Less Dividend Distributions
From net investment income..................... (.06) (.38)
From capital gains............................. -- --
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Total Distributions.......................... (.06) (.38)
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NET ASSET VALUE, END OF PERIOD................... $10.98 $10.13
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Total Return(a).................................. 10.4% 5.0%
Net Assets, End of Period (millions)............. $ 55.5 $ 21.0
Ratio of Net Investment Income to Average Net
Assets(b)....................................... .95% 5.63%
Ratio of Expenses to Average Net Assets(b)....... .87% .90%
Ratio of Expenses to Average Net Assets After
Expense Reimbursement(b)........................ .85% .70%
Portfolio Turnover Rate(b)(c).................... 9.33% 17.85%
Average Commission Rate Paid(d).................. $.0483 N/A
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(a) Not annualized. Total return would have been lower had certain expenses
not been reimbursedby the Adviser.
(b) Annualized.
(c) Portfolio turnover rate excludes all U.S. Government and short-term
securities.
(d) Average commission rate paid per share of common and preferred stock.
N/A = Not applicable
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PERFORMANCE OF SIMILAR FUNDS
The investment policies and objectives of the All America Fund, the Bond Fund
and the Money Market Fund of the Investment Company, described herein, are
substantially identical to those of the All America Fund, the Bond Fund and
the Money Market Fund (herein called the "VP" or "Variable Products" Funds) of
the Mutual of America Investment Corporation. In addition, the Adviser and
Subadvisers for the Variable Products All America, Bond and Money Market Funds
are the same as for the Investment Company's All America, Bond and Money
Market Funds, and the portfolio managers are the same. See "Investment
Advisory, Subadvisory and Administrative Arrangements" in this Prospectus.
Shares of the Mutual of America Investment Corporation's funds are sold only
to separate accounts of Mutual of America Life Insurance Company ("Mutual of
America") 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 VP All America, VP Bond and VP Money Market Funds are the
respective successors, pursuant to a reorganization effected on October 31,
1986, of Mutual of America's Separate Account No. 2 Stock, Bond and Money
Market Funds, which commenced operations in January 1985.
For the Bond Fund and All America Fund of the Investment Company, total return
for the period May 1, 1996 (commencement of operations) through December 31,
1996 was 5.0% and 10.4%, respectively. For the VP Bond Fund and VP All America
Fund, total return for the period May 1, 1996 through December 31, 1996 was
5.9% and 11.3%, respectively.
The Adviser has provided the following information. For the VP Bond Fund,
total return was 3.5% for the one year ended December 31, 1996, and average
annual total return was 8.0% for the five years ended December 31, 1996 and
7.7% for the ten years ended December 31, 1996. For the VP All America Fund,
total return was 20.7% for the one year ended December 31, 1996, and average
annual total return was 22.2% for the period from May 2, 1994 (the date the
Fund's current name and investment policies and objectives were adopted and
subadvisers were added) through December 31, 1996. For the VP Money Market
Fund, total return was 5.3% for the one year ended December 31, 1996, and
current yield for the seven day period ended December 31, 1996 was 5.37%. Past
performance of the Variable Products Funds is not predictive of future
performance. Investors should not consider performance data for the VP Funds
as an indication of the future performance of the All America, Bond and Money
Market Funds offered under this Prospectus.
Results for the VP All America Fund, VP Bond Fund and VP Money Market Fund are
different than the results that were or would have been obtained for the All
America Fund, Bond Fund and Money Market Fund of the Investment Company. The
total operating expenses for each of the VP All America Fund and VP Bond Fund
were .50% of average net assets during the periods shown above and for the VP
Money Market Fund were .25% of average net assets (additional expenses were
paid at the separate account level), while the annual total operating expenses
of the All America Fund, Bond Fund and Money Market Fund of the Investment
Company are estimated as .85%, .70% and .40%, respectively, of average net
assets. The VP All America Fund, from May 1994 until June 1995, had a
Subadviser for approximately 10% of the Fund's assets currently managed by the
Adviser. In addition, the assets of the VP All America Fund, VP Bond Fund and
VP Money Market Fund at year end 1996 were $637 million, $329 million and $78
million, respectively.
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.
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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, the Bond Fund and the Money Market 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. The minimum amount for additional purchases of Fund shares
currently is $5,000.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
INVESTMENT OBJECTIVES
Each Fund of the Investment Company has a different investment objective which
it pursues through separate investment policies. The investment objectives of
each Fund may not be changed without the approval of the holders of a majority
of the outstanding shares of each Fund affected. There can be no assurance
that a Fund will meet its objectives. The investment objectives and policies
of each Fund are discussed below. Particular types of securities in which the
Funds may invest and any applicable percentage limitations for such securities
are discussed below under "Other Portfolio Strategies and Associated Risk
Factors."
The differences in objectives and policies among the Funds can be expected to
affect the return of each Fund and the degree of market and financial risk to
which each Fund is subject. As used in the following discussion, "market risk"
refers to the volatility of the reaction of the price of 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
(prices decline when interest rates rise); "financial risk" refers to the
ability of an issuer of a debt security to pay principal and interest on that
security and to the earning stability and overall financial soundness of an
issuer of an equity security; and "current income volatility" refers to the
degree and rapidity with which changes in the overall level of interest rates
become reflected in the level of current income of a Fund.
ALL AMERICA FUND
The investment objective of the All America Fund is to outperform the Standard
& Poor's Composite Index of 500 Stocks (the "S&P 500 Index") by providing a
diversified portfolio of assets with diversified management and a broad
exposure to the market. At least 65% of the All America Fund's total assets
will be invested in equity securities under normal market conditions, and the
issuers of at least 80% of the Fund's total assets will be United States
corporations or entities.
INDEXED ASSETS. The investment objective for approximately 60% of the assets
of the All America Fund (the "Indexed Assets") is to provide investment
results that to the extent practical correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as represented
by the 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
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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 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 indexes, 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. Mutual of America Life
Insurance Company, the indirect parent corporation of the Adviser, invested
$50 million in the All America Fund in connection with the commencement of the
Fund's operations and will endeavor, itself or through an affiliate, to
maintain a minimum asset balance in the Fund (including its investments and
the investments of other 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 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 the Adviser and 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. 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".
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The Subadvisers and the Adviser each follow a different approach for the
investment of the Active Assets. Palley-Needelman invests its portion of
Active Assets in stocks that Palley-Needelman considers to be of high quality
with lower than average price volatility and low price/earning ratios.
Companies generally will have below market debt levels, earnings growth of 10%
or more, current yield greater than the average of the S&P 500, and market
capitalization of $1 billion or more. Oak Associates invests in mid- and large
sized capitalization stocks that have low current income and the potential for
significant growth. Oak Associates monitors 400 stocks and at any one time
invests its portion of the Fund in approximately 15-25 common stocks without
regard for market industry weighting. Alger Management invests in stocks that
it considers to be fundamentally sound with the potential for strong growth
and for earnings in excess of market expectations. The securities of these
companies often are traded in the over-the-counter market. Except during
temporary defensive periods, the Alger Management portion of the Fund will
invest at least 65% of its assets in equity securities of companies that, at
the time of the Fund's purchase of the securities, have total market
capitalization within the range of capitalization of the companies included in
the Russell 2000 Growth Index or the S&P SmallCap 600 Index, updated
quarterly. The Adviser generally invests in stocks that it considers
undervalued. Its approach is to identify companies with strong financials,
substantial cash flow, conservative accounting, usually low debt-to-equity
ratios and average market capitalization generally below $1 billion. Some of
the companies whose stocks are purchased by Oak Associates, or by the Adviser
for its portion of the Active Assets, may have limited Wall Street coverage
and low institutional ownership.
Each of the Subadvisers and the Adviser will seek to achieve the investment
objective of the Active Assets by investing in such securities that, based on
certain fundamental and/or technical standards of selection, it determines
offer attractive opportunities for total return through capital appreciation
and, to a lesser degree, income. Assets in the All America Fund will be
rebalanced periodically to retain the approximate 60%/40% relationship between
Indexed Assets and Active Assets. The Adviser may manage cash allocated to the
Active Assets prior to investment in securities by the Subadvisers.
The 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. (See "Money Market Fund" below for a
discussion of money market instruments.) 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
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selection and, when appropriate, active trading of bonds and other
investments. The Adviser's emphasis generally is on income generation rather
than market timing. The assets of the Bond 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) the types of money market
instruments in which the Money Market Fund may invest. These instruments
should be subject to little financial risk, to moderately high levels of
market risk and to moderate current income volatility. 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. In addition, the Bond Fund may purchase preferred
stocks, limited to 5% of the Bond Fund's total assets.
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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 ("Ginnie Mae") Securities. To be
included in the Bond Fund, options and futures must be traded on a domestic
exchange.
MONEY MARKET FUND
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. The Fund will invest only in
money market instruments and other short-term debt securities.
Specifically, the Money Market Fund will invest only in the following kinds of
money market instruments, payable in United States dollars: (1) securities
issued or guaranteed by the United States Government or one of its agencies or
instrumentalities ("government securities"); (2) negotiable certificates of
deposit, bank time deposits, bankers' acceptances and other short-term debt
obligations of domestic banks and foreign branches of domestic banks and U.S.
branches of foreign banks (see "Other Portfolio Strategies and Associated Risk
Factors--Foreign Securities and ADRs"), which at the time of their most recent
annual financial statements show assets in excess of $5 billion; (3)
certificates of deposit, time deposits and other short-term debt obligations
of domestic savings and loan associations, which at the time of their most
recent annual financial statements show assets in excess of $5 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.
The Money Market Fund may also enter into transactions in options, futures
contracts and options on futures, contracts on United States Treasury
securities and Eurodollar deposits. Such transactions and instruments are more
fully described below and in the Statement of Additional Information.
The Money Market Fund declares dividends of net investment income on a semi-
annual basis (see "Dividends, Distributions and Taxes"). Its net asset value
per share will reflect income that has been earned but not yet paid as a
dividend, until the income is distributed on the next dividend payment date.
Accordingly, the Fund does not maintain a stable net asset value per share.
For purposes of the Money Market Fund's investment policy only, "money market
instruments and other short-term debt securities" shall mean securities having
a remaining maturity of up to 13 months. The dollar-weighted average maturity
of the securities held by the Money Market Fund will not exceed 90 days.
All of the securities held by the Money Market Fund will have received (or be
of comparable quality to securities which have received), at the time of the
purchase, a rating in one of the two highest categories by any two nationally
recognized statistical rating agencies and at least 95% of the securities held
by the Money Market Fund will have received (or be of comparable quality to
securities which have received), at the time of purchase, the highest rating
by any two such rating agencies. (The Board of Directors of the Investment
Company must approve or ratify the purchase of any security (other than any
government security) which has received no rating or which has been rated by
only one rating agency.) Securities which are subsequently downgraded below
the two highest categories will be disposed of as soon as practicable absent a
finding by the Board of Directors that this would not be in the best interests
of the Fund.
The Money Market Fund will not invest more than 5% of its total assets in
securities of, or subject such assets to puts from, any one issuer (other than
government securities and repurchase agreements fully collateralized by
government securities) provided that (x) the Fund may invest up to 10% of its
total assets in securities issued or
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guaranteed by a single issuer with respect to which the Fund has an
unconditional put and (y) with respect to 25% of its total assets the Fund
may, with respect to securities meeting the highest investment criteria,
exceed the 5% limit for up to three business days.
The Money Market Fund should be subject to relatively little market or
financial risk but a relatively high level of current income volatility.
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 (other than investments by the
Money Market Fund in obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities); or (4) invest more than 10% of
its total assets in repurchase agreements or time deposits maturing in more
than seven days or in portfolio securities not readily marketable. 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.
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Repurchase Agreements
Repurchase Agreements are more fully described in the Statement of Additional
Information. If a seller of a repurchase agreement defaults and does not
repurchase the security subject to the agreement, the Fund would look to the
collateral security underlying the 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
United States. 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
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.
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
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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. 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,
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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.
No Fund will invest more than 10% of its total assets in mortgage-backed
securities that are not U.S. Government or agency 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
As noted, 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.
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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.
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
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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.
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 $7.6
billion at December 31, 1996, including assets of $1.6 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, .45% of the value of the net assets in the Bond Fund and .20% of
the value of the net assets in the Money Market 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, 1996, Alger Management had approximately $7.2 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
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Mutual of America Investment Corporation. At December 31, 1996, Oak Associates
had assets under management of approximately $5 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, 1996, Palley-Needelman managed approximately $4.1
billion in assets.
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. No information is given for the Money Market Fund, based
on the nature of the investments made by that Fund.
ALL AMERICA FUND. The Active Assets of the All America Fund are managed by
three Subadvisers and the Adviser.
David D. Alger, President and Chief Executive Officer of Alger Management, is
primarily responsible for the day-to-day management of the Alger Management
portion of the Fund. He has been employed by Alger Management as Executive
Vice President and Director of Research since 1971 and as President since
1995, and he serves as portfolio manager for other mutual funds and investment
accounts managed by Alger Management.
James D. Oelschlager is the portfolio manager of the Oak Associates portion of
the Fund. Since establishing Oak Associates in 1985, Mr. Oelschlager has
served as its portfolio manager. Previously, he served as the Assistant
Treasurer of Firestone Tire & Rubber Company, where he was directly
responsible for the management of the company's pension assets. Mr.
Oelschlager is assisted with portfolio management responsibilities by Donna
Barton, trading, Margaret Ballinger, new accounts, and Doug MacKay, equity
research. These individuals have combined experience of over 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 30 years of investment
experience as a security analyst, research director and portfolio manager. He
has managed funds for foundations, corporations, endowments and mutual funds.
He is the co-founder of Palley-Needelman Asset Management and its predecessor
company, where he held various positions during the last 23 years. All
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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 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 the Adviser, pursuant to which the Adviser has agreed to serve as
investment accounting and recordkeeping agent for the Funds and to calculate
the net asset values of the Funds, effective January 2, 1997. 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 the Adviser and State Street for these 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
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expenses, to an annual rate of .85% of the value of average net assets of the
All America Fund, .70% of the value of average net assets of the Bond Fund and
.40% of the value of average net assets of the Money Market Fund. The Adviser
may discontinue such policy at any time.
PORTFOLIO TRANSACTIONS
The Adviser, and the Subadvisers with respect to their portion of the All
America Fund, are 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 and Subadvisers place orders in connection with the purchase and
sale of approved investments with various brokers, including affiliates. As a
general matter, the Adviser and Subadvisers select broker-dealers which, in
their best judgment, provide prompt and reliable execution at favorable
security prices and reasonable commission rates. The Adviser or a Subadviser
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 or Subadviser's view, the
commissions are reasonable in relation to the value of the brokerage and/or
research services provided by the broker-dealer. Brokerage arrangements with
affiliates of the Adviser or a Subadviser will be in accordance with the 1940
Act and the rules and regulations promulgated thereunder. No transactions may
be effected by a Fund with an affiliate of the Adviser or a Subadviser acting
as principal for its own account. When purchasing or selling securities
trading on the over-the-counter market, the Adviser or a Subadviser 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 the wire transfer is received by the Investment Company.
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.
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 deliver a completed
application to a registered representative of the Distributor. After the
Investment Company and Distributor have approved an application, the
registered representative (or the Investment Company) will notify the
prospective purchaser that the account has been established and that the
purchaser may transmit the initial purchase amount.
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All purchase amounts received by the Investment Company prior to 4:00 pm
Eastern Time will be considered received that day. All purchase amounts
received after 4:00 pm Eastern Time will be considered received on the next
business day. The purchase price for a Fund's shares will be the net asset
value of the Fund next determined following receipt by the Fund of the
purchase amount in its account at State Street (normally as of the close of
business that day).
Wire transfers of Federal funds may be made on 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, and 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.
All purchases must be made by wire transfer of Federal funds to the account
specified below, accompanied by the identifying information noted below. Your
bank may charge you a fee for the wire transfer. You may contact the
Investment Company be telephone at 1-800-914-8716 between the hours of 9:00 am
and 8:00 p.m. Eastern Time, Monday through Friday on any business day, to
advise of an anticipated wire transfer. Your bank should wire funds according
to these instructions:
State Street Bank and Trust Company
Boston, Massachusetts 02101
ABA #011-000028
BNF= AC-49097181, Mutual Funds F/B/O Mutual of America
OBI= Purchaser: [Name] Acct. No.: [Shareholder's Tax I.D. Number]
$ to the All America Fund; $ to the Bond Fund; and/or $ to the
Money Market Fund
Your funds may be returned to you if the Investment Company does not have
sufficient information to insure the correct processing of such funds or if
your application has not yet been approved.
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. Wire transfers for redemptions can be
made on the same days as for purchases, described 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
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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 are available 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 8:00 pm Eastern Time, Monday through Friday on any
business day. Requests received after 4:00 pm Eastern Time will be considered
received the next business day.
Neither the Investment Company nor the Transfer Agent will be liable for any
loss, damage or other expense resulting from any telephone exchange effected
upon instructions reasonably believed to be genuine or for the inability of a
shareholder to make a telephone request on any particular day. The Investment
Company has instituted procedures it believes are reasonably designed to
insure that redemption and exchange instructions are genuine, and it could be
liable for losses caused by unauthorized or fraudulent instructions if those
procedures are not followed. Procedures include verification of the
shareholder's name, the personal identification number ("PIN") assigned by the
Investment Company to the authorized person calling for the account, and the
shareholder's account number (normally the tax identification number).
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 may 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.
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 as
amended.
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
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<PAGE>
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 in the case of net
investment income and annually 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 or, in the case of the All America Fund and
the Bond Fund, applied to purchase shares of the Money Market Fund (in which
case the $5,000 minimum is waived). 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.
The Investment Company has elected the special tax treatment afforded a
"regulated investment company" under certain provisions of the Internal
Revenue Code (the "Code"). If it so qualifies, the Investment Company will not
be subject to Federal income tax on that part of its ordinary income and net
realized capital gains which it distributes to shareholders, thereby avoiding
any Federal income tax liability on the distributed amounts. Since the
Investment Company has more than one Fund, each Fund will be treated as a
separate corporation for Federal income tax purposes. Therefore, the
investments and results of each Fund must qualify independently. Although the
Investment Company intends to operate each Fund so that it will have no
Federal income tax liability, if any such liability is nevertheless incurred,
the investment performance of that Fund will be adversely affected.
Section 4982 of the Code imposes an excise tax of 4% on each regulated
investment company which does not make a "required distribution" to
shareholders of 98% of its ordinary income for each 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
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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 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.
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<PAGE>
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.
The net asset value per share of a Fund is determined by dividing the Fund's
net asset value by the number of Fund shares outstanding.
The value of the assets held in the Investment Company will be determined in
the following manner. Investments for which market quotations are readily
available are valued at the market value of such investments (except that, as
discussed below, money market securities with a remaining maturity of 60 days
or less may be valued at amortized cost). An equity security will be valued at
the last sale price for such security on the principal exchange on which such
security is traded, or at the last bid price on the principal exchange on
which such security is traded if such bid price is of a more recent day than
the last sale price. For any equity security not traded on an exchange but
traded in the over-the-counter market, the value will be the last sale price,
or if no sale, at the latest bid price available. Securities which are
primarily traded on foreign securities exchanges generally are valued at the
preceding closing values of such securities on their respective exchanges
where primarily traded. Debt securities will be valued at a composite fair
market value, "evaluated bid," which may be the last sale price, by a
valuation service selected by the Adviser. Portfolio securities or assets for
which market quotations are not readily available will be valued at fair value
as determined in good faith by the Adviser under the direction of the Board of
Directors of the Investment Company.
Money market securities held by the Investment Company with a remaining
maturity of 60 days or less will be valued on an amortized cost basis, which
approximates market value; provided, however, that if the value determined
under the amortized cost method is materially different from the actual market
value, then even such short-term money market securities will be valued at
market value. Under the amortized cost method of valuation, the security is
initially valued at cost on the date of purchase (or in the case of securities
initially purchased with more than 60 days remaining to maturity, the market
value on the 61st day prior to maturity), and thereafter the Investment
Company assumes a constant proportionate amortization in value until maturity
of any discount or premium. For purposes of this method of valuation, the
maturity of a variable rate certificate of deposit is deemed to be the next
coupon date on which the interest rate is to be adjusted.
Portfolio investments underlying options are valued as described above. Stock
options written by a Fund are valued at the 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
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<PAGE>
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 and the Money Market its current 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. Current yield will refer to the annualized net investment
income (without reinvestment of income) generated by the Money Market Fund
over a specified seven day 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 three classes of common stock: All America Fund,
Bond Fund and Money Market 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,
substantially all of the outstanding shares of the Funds were owned by Mutual
of America Life Insurance Company, the indirect parent corporation of the
Adviser, which made the initial investment for the Investment Company's
operations.
All shares of common stock, of whatever class, are entitled to one vote, and
the votes of all classes are cast on an aggregate basis, except on matters
where the interests of the Funds differ. In such a case, the voting is on a
Fund-by-Fund basis. Approval or disapproval by the shareholders of one Fund on
such a matter would not generally be a prerequisite of approval or disapproval
in another 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.
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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. Registered representatives of the Distributor, located in 36 field
offices throughout the United States, participate in the distribution of
shares of the Funds.
INDEPENDENT AUDITOR: Arthur Andersen LLP, Certified Public Accountants, have
been selected as the independent auditor of the Investment Company for its
fiscal year ending December 31, 1997. Arthur Andersen LLP also acts as the
independent auditor 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 or to a registered representative of Mutual
of America Securities Corporation at any one of its offices.
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.
S&P 500 INDEX: The Indexed Assets of the All America Fund are not sponsored,
endorsed, sold or promoted by Standard & Poor's Corporation ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of shares of
the All America Fund or any member of the public regarding the advisability of
investing in securities generally or in the Indexed Assets particularly or the
ability of the S&P 500 Index to track general
25
<PAGE>
stock market performance. S&P's only relationship to the Investment Company is
the licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to
the Indexed Assets. S&P has no obligation to take the needs of the Indexed
Assets or the owners of shares of the All America Fund into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not
responsible for and does not participate in the calculation of the net asset
value of the Indexed Assets, nor is S&P a distributor of shares of the All
America Fund, and S&P has no obligation or liability in connection with the
administration, marketing or trading of the All America Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE INDEXED ASSETS, OWNERS OF SHARES OF THE
ALL AMERICA FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
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Mutual of America
Institutional
Funds, Inc.
All America Fund
Bond Fund
Money Market Fund
Distributed by:
Mutual of America Securities Corporation
320 Park Avenue
New York, NY 10022-6839
................................................
Investment Adviser
Mutual of America Capital Management Corporation
Transfer and Shareholder Services Agent
State Street Bank and Trust Company
Investment Accounting Agent
Mutual of America Capital Management Corporation
Independent Accountants
Arthur Andersen LLP
Custodian
The Chase Manhattan Bank, N.A. [GRAPHIC]
