AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1999
REGISTRATION NO. 33-87874
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 6 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11
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MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(212) 224-1939
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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DOLORES J. MORRISSEY, PRESIDENT
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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COPY TO:
STANLEY M. LENKOWICZ
SENIOR VICE PRESIDENT, DEPUTY GENERAL COUNSEL AND SECRETARY
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE
NEW YORK, NEW YORK 10022
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the
effective date of the Registration Statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a)(1) of
Rule 485.
[X] on April 30, 1999 pursuant to paragraph (a)(1) of
Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
ITEMS IN
PART A OF
FORM N-1A CAPTION IN FORM N-1A CAPTION OR LOCATION IN PROSPECTUS
- ----------- ----------------------------------------- -----------------------------------------------------
<S> <C> <C>
1 Front and Back Cover Pages .............. Front and Back Covers
2 Risk/Return Summary:
Investments, Risks, and Performance ..... Summary of How Our Funds Invest
3 Risk/Return Summary:
Fee Table ............................... Summary of How Our Funds Invest - Annual Fees and
Expenses
4 Investment Objectives, Principal
Investment Strategies, and Related
Risks ................................... Details about How Our Funds Invest and Related Risks
5 Management's Discussion of Fund
Performance ............................. Not Applicable (Included in Annual Report)
6 Management, Organization, and
Capital Structure ....................... Management of the Funds
7 Shareholder Information ................. Information on Fund Shares
8 Distribution Agreements ................. Not Applicable
9 Financial Highlights Information ........ Financial Highlights
</TABLE>
<TABLE>
<CAPTION>
ITEMS IN
PART B OF CAPTION OR LOCATION IN
FORM N-1A CAPTION IN FORM N-1A STATEMENT OF ADDITIONAL INFORMATION
- ----------- ------------------------------------------ -------------------------------------------------------
<S> <C> <C>
10 Cover Page and Table of Contents ......... Cover
11 Fund History ............................. Investment Company's Form of Operations
12 Description of the Fund and Its
Investments and Risks .................... Investment Strategies and Related Risks; Fundamental
Investment Restrictions; Description of Corporate Bond
Ratings; Use of Standard & Poor's Indices
13 Management of the Fund ................... Management of the Investment Company
14 Control Persons and Principal Holders
of Securities ............................ Investment Company's Form of Operations
15 Investment Advisory and Other
Services ................................. Investment Advisory Arrangements; Administrative
Arrangements; Independent
Auditors; Custodian
16 Brokerage Allocation and Other
Practices ................................ Portfolio Transactions and Brokerage
17 Capital Stock and Other Securities ....... Investment Company's Form of Operations
18 Purchase, Redemption, and Pricing of
Shares ................................... Purchase, Redemption and Pricing of Shares
19 Taxation of the Fund ..................... Taxation of the Investment Company
20 Underwriters ............................. Distribution of Fund Services
21 Calculation of Performance Data .......... Yield and Performance Information
22 Financial Statements ..................... Financial Statements
</TABLE>
<TABLE>
<CAPTION>
ITEMS IN
PART C OF CAPTION IN FORM N-1A AND IN PART C
FORM N-1A OF REGISTRATION STATEMENT
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<S> <C>
23 Exhibits
24 Persons Controlled by or Under
Common Control with the Fund
25 Indemnification
26 Business and Other Connections of
the Investment Adviser
27 Principal Underwriters
28 Location of Accounts and Records
29 Management Services
30 Undertakings
</TABLE>
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022 1-800-914-8716
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Mutual of America Institutional Funds, Inc. is a mutual fund. It has these
four Funds:
o EQUITY INDEX FUND
o ALL AMERICA FUND
o BOND FUND
o MONEY MARKET FUND
Institutional investors, such as endowments, foundations and other
not-for-profit organizations, corporations and municipalities and other
public entities, may purchase shares of the Funds. An initial investment
must be at least $25,000, and each subsequent investment must be at least
$5,000.
There is no sales charge due upon the purchase or sale of Fund shares. An
investor must send the payment price for shares purchased, and will
receive redemption proceeds for shares sold, by wire transfer of Federal
Funds.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS DATED MAY 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
SUMMARY OF HOW OUR FUNDS INVEST ................................... 1
Equity Index Fund ................................................ 1
All America Fund ................................................. 1
Bond Fund ........................................................ 2
Money Market Fund ................................................ 3
Annual Total Returns ............................................. 4
Average Annual Total Returns ..................................... 5
Annual Fees and Expenses ......................................... 5
Performance of Similar Funds ..................................... 6
MANAGEMENT OF THE FUNDS ........................................... 8
The Adviser ...................................................... 8
Subadvisers for a Portion of the All America Fund ................ 8
Portfolio Managers ............................................... 9
Year 2000 Considerations ......................................... 9
DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS .............. 10
Investment Objectives and Strategies:
Equity Index Fund ............................................... 10
All America Fund ................................................ 10
Bond Fund ....................................................... 12
Money Market Fund ............................................... 12
Risks of Investing in a Stock Fund ............................... 13
Risks of Investing in a Bond Fund ................................ 13
Specific Investments or Strategies and Related Risks ............. 14
INFORMATION ON FUND SHARES ........................................ 16
Pricing of Funds' Shares ......................................... 16
Purchases of Fund Shares ......................................... 16
How to Purchase Shares of the Funds .............................. 17
Redemptions of Fund Shares ....................................... 17
Exchanges of Fund Shares ......................................... 18
How to Place a Redemption or Exchange Order ...................... 18
Shareholder Reports and Confirmation Statements .................. 19
Dividends, Capital Gains Distributions and Taxation of Funds ..... 19
Shareholder Taxation ............................................. 20
FINANCIAL HIGHLIGHTS .............................................. 21
YOU MAY OBTAIN MORE INFORMATION ................................... Back cover
</TABLE>
-- AN APPLICATION IS INCLUDED WITH THIS PROSPECTUS --
<PAGE>
SUMMARY OF HOW OUR FUNDS INVEST
Each Fund of Mutual of America Institutional Funds, Inc. (the INVESTMENT
COMPANY) has its own investment objective and tries to achieve its objective
with certain investment strategies. The Funds' different investment
strategies will affect the returns of the Funds and the risks of investing
in each Fund.
A Fund may not achieve its objective, or it may achieve its objective during
some time periods but not during other time periods. The value of an
investment in any of the Funds could decline, or it could increase.
EQUITY INDEX FUND
----------------------------------------------------------------------------
The Fund seeks investment results that correspond to the performance of the
Standard & Poor's Composite Index of 500 Stocks (the S&P 500(R) INDEX). The
Fund invests in the 500 common stocks included in the S&P 500 Index and in
futures contracts on the S&P 500 Index.
o Securities in the S&P 500 Index generally are issued by companies with
large and mid-sized market capitalizations.
o Securities are included in the Index based on industry weightings and
the issuers' leading positions in those industries.
An investment in the Equity Index Fund is subject to market risk and
financial risk. Credit risk should be moderate because of the nature of the
securities included in the S&P 500 Index.
ALL AMERICA FUND
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The Fund attempts to outperform the S&P 500 Index, by investing primarily
in common stocks.
o Approximately 60% of the Fund's assets are invested to replicate the
S&P 500 Index. This portion of the Fund purchases the 500 common stocks
included in the S&P 500 Index and futures contracts on the S&P 500
Index.
o Approximately 40% of the Fund's assets are invested by the Adviser and
three Subadvisers, each having approximately 10% of the Fund's assets,
for capital appreciation and, to a lesser extent, current income. The
Adviser invests primarily in small capitalization value stocks. One
Subadviser invests primarily in small capitalization growth stocks.
Another Subadviser invests primarily in mid- and large capitalization
growth stocks. The third Subadviser invests primarily in large
capitalization value stocks.
DEFINITIONS WE USE
-- MARKET RISK, which refers to how much the value of a security changes
(volatility of price) when conditions in the securities markets change
or the economic environment changes. For debt securities, market risk
includes changes in the overall level of interest rates. For equity
securities, stocks of companies with smaller market capitalizations
generally have more market risk than stocks of companies with larger
market capitalizations.
-- FINANCIAL (OR CREDIT) RISK, which refers to the ability to pay principal
and interest by an issuer of a debt security and to the earning
stability and overall financial soundness of an issuer of an equity
security. Debt securities issued by the U.S. Government or its agencies
are considered to have no or very little financial risk, and debt
securities with higher ratings are considered to have less financial
risk than lower-rated debt securities.
-- CURRENT INCOME VOLATILITY, which refers to how much and how quickly
changes in the overall level of interest rates become reflected in the
level of a fund's current income. When a fund holds a debt security that
matures or prepays, the fund will invest the proceeds at current
interest rates.
-- MARKET CAPITALIZATION, which refers to the aggregate dollar amount of
the equity securities (stock) that a company has issued.
-1-
<PAGE>
An investment in the All America Fund is subject to market risk and
financial risk. Approximately 20% of the All America Fund's assets are
invested in small capitalization growth and value stocks, many of which
trade over-the-counter, and this portion of its portfolio will have more
market and financial risk than the portion invested in mid and large
capitalization stocks. Equity securities that trade over-the-counter may be
more difficult to sell than equity securities that trade on a national
securities exchange.
----------------------------------------------------------------------------
STANDARD & POOR'S(R) (S&P(R)) DOES NOT SPONSOR, ENDORSE, SELL OR PROMOTE THE
EQUITY INDEX FUND. STANDARD & POOR'S, S&P AND THE S&P 500 INDEX ARE
TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE
BY THE INVESTMENT COMPANY. STANDARD & POOR'S HAS NO OBLIGATION OR LIABILITY
FOR THE SALE OR OPERATION OF THE EQUITY INDEX FUND AND ALL AMERICA FUND AND
MAKES NO REPRESENTATION AS TO THE ADVISABILITY OF INVESTING IN THE FUNDS.
BOND FUND
----------------------------------------------------------------------------
The Fund seeks current income, by investing primarily in publicly-traded,
investment grade debt securities.
o The Fund invests in corporate, U.S. Government securities and U.S.
Government agency securities, such as bonds, notes, debentures, zero
coupon securities and mortgage-backed securities.
o The Fund may invest a significant portion of its assets in a particular
type of debt security, such as U.S. Government agency mortgage-backed
securities, U.S. Treasury securities, zero coupon securities or
securities rated BBB.
o The Adviser generally selects securities based on interest income to be
generated and generally does not time purchases and sales based on
interest rate predictions.
Because the Fund purchases primarily investment grade debt securities,
including securities issued by the U.S. Government and its agencies, it
should have a moderate amount of financial risk. Securities rated BBB have
more credit risk than higher-rated investment grade securities.
An investment in the Bond Fund is subject to market risk. Interest rate
increases usually cause a decline in the value of debt securities, while
interest rate decreases usually cause an increase in the value of debt
securities. Generally, the market risk for debt securities increases as the
term to maturity (or expected redemption date) lengthens, and the market
risk for the Bond Fund increases as the average maturity of the Fund's
portfolio lengthens. Lower rated investment grade debt securities may be
subject to a greater market risk than higher rated debt securities, and zero
coupon securities or discount notes may be subject to a greater market risk
than securities that pay interest on a regular basis.
The Fund also has current income volatility risk, with the risk decreasing
as the average maturity of the Fund's portfolio lengthens.
GENERAL PRINCIPLES OF INVESTING
-- As a very general rule, over longer investment periods the investment
returns for stock funds tend to be higher than the returns for bond funds
and money market funds.
-- Stock funds have a higher risk for declines in value, especially over
shorter investment periods, than bond funds and money market funds, and a
stock fund's returns may vary significantly from year-to-year.
-- Money market funds have the lowest risk for a decline in value, but
they tend to have the lowest investment returns over longer investment
periods.
-2-
<PAGE>
MONEY MARKET FUND
----------------------------------------------------------------------------
The Fund seeks current income and preservation of principal by investing in
money market instruments that meet certain requirements for liquidity,
investment quality and stability of capital.
o The average maturity of the instruments the Fund holds will be
short-term -- 90 days or less.
o The Fund will purchase only securities that are highly rated by at
least two rating agencies.
o The Fund will diversify its investments, limiting holdings in the
securities of any one issuer (except the U.S. Government or its
agencies) to 5% of assets.
The Money Market Fund does not operate in a way to maintain a stable net
asset value of $1.00, because it pays dividends of income earned on a
semi-annual basis. The Fund's net asset value will generally rise during the
year as the Fund earns income and will decline when dividends are declared
and income is paid to shareholders.
A shareholder's investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
An investment in the Money Market Fund has a small amount of market risk and
financial risk, because the Fund holds high quality securities with short
terms to maturity. The Fund has a high level of current income volatility,
because its securities holdings are short term and it reinvests as its
holdings mature.
-3-
<PAGE>
ANNUAL TOTAL RETURNS
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The bar charts below show the annual return of each Fund for the life of the
Fund, except that the Equity Index Fund is not included because it began
operations on May 1, 1999. A chart indicates the risks of investing in a
particular Fund by showing changes in the Fund's performance from
year-to-year during the period, but a Fund's past performance does not
necessarily indicate how it will perform in the future.
Next to each chart is the Fund's highest total return for any calendar
quarter during the period covered by the chart, called the BEST QUARTER
RETURN, and the Fund's lowest total return for any calendar quarter during
the period covered, called the WORST QUARTER RETURN. These returns are an
indication of the volatility of a Fund's total returns.
[GRAPHIC GOES HERE]
ALL AMERICA FUND:
1997 1998
26.0% 21% The All America Fund began operations on May 1, 1996.
Best quarter: 22.0% during fourth quarter 1998
Worst quarter: (13.1)% during third quarter 1998
BOND FUND:
1997 1998
8.9% 8.3% The Bond Fund began operations on May 1, 1996.
Best quarter: 4.8% during third quarter 1998
Worst quarter: (0.7)% during first quarter 1997
MONEY MARKET FUND:
1998
5.3% The Money Market Fund began operations on May 1, 1997.
Best quarter: 1.3% during first, second and third
quarters 1998
Worst quarter: 1.2% during fourth quarter 1998
-4-
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DECEMBER 31, 1998)
----------------------------------------------------------------------------
The table below shows the average annual total returns of each Fund for the
past one year period and the return for the period of the Fund's operations,
except that the Equity Index Fund is not included because it began
operations on May 1, 1999. The table indicates the risks of investing in the
Funds by comparing, for the same periods, each Fund's returns to those of a
broad-based, unmanaged index, or to Treasury Bills for money market
investments. A Fund's past performance does not necessarily indicate how it
will perform in the future.
<TABLE>
<CAPTION>
PAST FOR LIFE
FUND/COMPARATIVE INDEX(ES) ONE YEAR OF FUND
<S> <C> <C>
All America Fund .................................................. 21.0% 21.6%*
S&P 500 Index .................................................... 28.6% 29.1%
Bond Fund ......................................................... 8.3% 8.3%*
Lehman Brothers Gov't./Corp. Bond Index .......................... 9.5% 9.5%
Money Market Fund ................................................. 5.3% 5.3%**
90-day Treasury Bill Rate ........................................ 5.1% 5.2%
7-day current yield for period ended 12/29/98 was 4.88%
7-day effective yield (reflecting the compounding of interest)
for period ended 12/29/98 was 5.0%
</TABLE>
* The All America and Bond Funds began operations on May 1, 1996.
** The Money Market Fund began operations on May 1, 1997.
The S&P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a
market value-weighted index of the common stock prices of companies included
in the S&P 500.
The Lehman Brothers Government/Corporate Bond Index is an index of U.S.
Government and corporate bond prices of investment grade bonds with
maturities greater than one year and face values over $1 million.
ANNUAL FEES AND EXPENSES
----------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Funds. Annual operating expenses are shown as a
percentage of average net assets.
<TABLE>
<CAPTION>
EQUITY INDEX ALL AMERICA BOND MONEY MARKET
FUND FUND FUND FUND
-------------- ------------- --------- -------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES ....................... none none none none
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees ........................ .13% .50% .45% .20%
Other Expenses ......................... .60 .34 .52 3.01
----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES
(BEFORE REIMBURSEMENT)* ............... .73% .84% .97% 3.21%
AMOUNT OF REIMBURSEMENT ................ (.40) (.02) (.27) (2.81)
----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES
(AFTER REIMBURSEMENT)** ............... .33% .82% .70% .40%
===== ===== ===== =====
</TABLE>
* The 1999 Other Expenses and Total Operating Expenses of the Equity Index
Fund, which began operations on May 1, 1999, have been estimated by the
Adviser.
** The Adviser has contractually agreed for 1999 to limit each Fund's total
expenses (excluding taxes, brokerage commissions and extraordinary
expenses) to an annual rate of .325% of the net assets of the Equity Index
Fund, .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. The
Adviser's obligation will continue for each following calendar year unless
the Adviser gives notice of termination to the Investment Company at least
two weeks before the next year begins.
-5-
<PAGE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The Example assumes
for each Fund that:
o you make an investment of $10,000,
o you have a 5% annual return on your investment,
o all dividends are reinvested,
o Fund operating expenses during the periods shown are limited by the
Adviser to the contractual limits, and
o you redeem all of your shares at the end of the periods shown.
Although your costs may be higher or lower, your cost based on these
assumptions would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Equity Index Fund ......... $33 $105 -- --
All America Fund .......... $87 $275 $481 $1,096
Bond Fund ................. $72 $226 $396 $ 902
Money Market Fund ......... $41 $129 $226 $ 515
</TABLE>
The expenses used in the Example are those shown in the table above and
reflect the Adviser's contractual obligation to pay the Funds' expenses.
Because the Equity Index Fund is a new fund, the Example covers only a 1
Year and 3 Year period for the Fund.
COMPARISON WITH PRIOR PERFORMANCE OF SIMILAR FUNDS
----------------------------------------------------------------------------
The investment policies, objectives and strategies of the Investment
Company's Equity Index Fund, All America Fund, Bond Fund and Money Market
Fund are substantially identical to those of Mutual of America Investment
Corporation's Equity Index Fund, All America Fund, Bond Fund and Money
Market Fund (called the VP or VARIABLE PRODUCTS Funds). In addition, the
Adviser and Subadvisers for these Variable Products Funds are the same as
for the corresponding Investment Company Fund, and the portfolio managers
are the same.
Shares of the Variable Products Funds are sold only to separate accounts of
Mutual of America Life Insurance Company and its indirect wholly owned
subsidiary, The American Life Insurance Company of New York, as a funding
medium for variable accumulation annuity contracts and variable life
insurance policies issued by these companies.
Below are average annual total returns for the VP Funds, based on
information about the VP Funds that the Adviser has provided, compared to
returns for the Investment Company's Funds for the periods indicated, other
than for the Equity Index Fund which began operations on May 1, 1999. 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 Equity Index, All America,
Bond and Money Market Funds offered under this Prospectus.
AVERAGE ANNUAL TOTAL RETURNS OF THE FUNDS AND THE VP FUNDS
FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE INCEPTION OF
INSTITUTIONAL FUND ONE YEAR FIVE YEARS TEN YEARS INSTITUTIONAL FUND (1)
- ----------------------------- ---------- ------------ -------------- -----------------------
<S> <C> <C> <C> <C>
All America ................. 21.0% N/A N/A 21.6%
Bond ........................ 8.3% N/A N/A 8.3%
Money Market (4) ............ 5.3% N/A N/A 5.3%
- -------------------------------------------------------------------------------------------
VP FUND
- -------------------------------------------------------------------------------------------
VP Equity Index ............. 28.6% 23.8% N/A N/A
VP All America .............. 21.3% N/A(2) N/A(2) 22.3%
VP Bond ..................... 7.2% 7.2% 9.1%(3) 8.8%
VP Money Market (4) ......... 5.4% 5.2% 5.4% 5.5%
</TABLE>
-6-
<PAGE>
(1) For comparison purposes, the average annual total return for the VP All
America Fund and VP Bond Fund are given from May 1, 1996, and average
annual total return for the VP Money Market Fund is given from May 1,
1997.
(2) The VP All America Fund began operations in its current form on May 2,
1994. Since then, its investment policies, objectives and strategies have
been substantially identical to those of the All America Fund. VP All
America Fund's average annual total return for the period May 2, 1994
through December 31, 1998 was 22.9%.
(3) The current portfolio manager of the VP Bond Fund, who has been the
portfolio manager of the Bond Fund since its inception, became the VP Bond
Fund's portfolio manager in February 1991.
(4) For the 7-day period ended December 29, 1998, the Investment Company's
Money Market Fund had a current yield of 4.88% and an effective yield of
5.0%, and the Variable Products Money Market Fund had a current yield of
5.06% and an effective yield of 5.19%. The average maturity of the
portfolio holdings was 17 days for Investment Company's Money Market Fund
and 13 days for the Variable Products Money Market Fund.
Results for the Variable Products Funds are different than the results that
were or would have been obtained for the Investment Company Funds.
o Use of the Investment Company Funds' expenses for the VP Funds would
have lowered performance results. 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
(after reimbursement) of the All America Fund, Bond Fund and Money
Market Fund of the Investment Company were .82%, .70% and .40%,
respectively, of average net assets.
o 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.
o At year end 1998, VP Equity Index Fund had net assets of $411 million,
VP All America Fund had net assets of $732 million, VP Bond Fund had
net assets of $465 million, and VP Money Market Fund had net assets of
$81 million.
-7-
<PAGE>
MANAGEMENT OF THE FUNDS
THE ADVISER
----------------------------------------------------------------------------
Mutual of America Capital Management Corporation, 320 Park Avenue, New York,
New York 10022 (the ADVISER or CAPITAL MANAGEMENT) is the investment adviser
for the Funds of the Investment Company. The Adviser had total assets under
management of approximately $7.7 billion at December 31, 1998, including
$2.3 billion for the Mutual of America Investment Corporation. As Adviser,
Capital Management:
o places orders for the purchase and sale of securities,
o engages in securities research,
o makes recommendations to and reports to the Investment Company's Board
of Directors,
o provides certain administrative services for the Funds, and
o provides the office space, facilities, equipment, material and
personnel necessary to perform its duties.
For its investment management services, the Adviser receives compensation
from each Fund at an annual rate of the Fund's net assets, calculated as a
daily charge. These annual rates, which were applicable during 1998, are:
o Equity Index Fund -- .125%
o All America Fund -- .50%
o Bond Fund -- .45%
o Money Market Fund -- .20%
SUBADVISERS FOR A PORTION OF THE ALL AMERICA FUND
----------------------------------------------------------------------------
The Adviser has delegated its investment advisory responsibilities for a
portion of the All America Fund to three Subadvisers. Each Subadviser
provides investment advice for approximately 10% of the assets of the All
America Fund. The Adviser pays the Subadvisers for their advisory services
to the All America Fund.
o Fred Alger Management, Inc., One World Trade Center, New York, New York
10048, is a small capitalization growth adviser for its portion of the
All America Fund. It provides investment management services to
institutional, corporate and individual clients, including other
registered management investment companies. At December 31, 1998, Alger
Management had assets under management of approximately $10.6 billion.
o Oak Associates, 3875 Embassy Parkway, Suite 250, Akron, Ohio 44333, is
a mid- and large capitalization growth adviser for its portion of the
All America Fund. It provides investment management services for
individual and corporate clients, primarily in connection with
retirement plans. At December 31, 1998, Oak Associates had assets under
management of approximately $11.4 billion.
o Palley-Needelman, 800 Newport Center Drive, Suite 450, Newport Beach,
California 92660, is a large capitalization value adviser for its
portion of the All America Fund. It provides investment management
services to institutional, corporate and individual clients and other
registered investment companies. At December 31, 1998, Palley-Needelman
had assets under management of approximately $3.6 billion.
-8-
<PAGE>
PORTFOLIO MANAGERS
----------------------------------------------------------------------------
The person(s) primarily responsible for the day-to-day management of the
Funds' investment portfolios are listed below. No information is given for
the Money Market Fund because of the type of investments it makes. No
information is given for the Equity Index Fund or the Indexed Assets of the
All America Fund, because the investment objective for each is to replicate
the performance of an index.
ALL AMERICA FUND
THOMAS P. LARSEN, Executive Vice President of the Adviser, is responsible
for managing the Adviser's portion of the actively managed assets of the
Fund. Mr. Larsen joined the Adviser in June 1998, after serving as Senior
Vice President of Desai Capital Management. He has almost 30 years of
experience in selecting securities for and managing equity portfolios.
DAVID D. ALGER, President and Chief Executive Officer of Alger Management,
is primarily responsible for the day-to-day management of the Alger
Management portion of the Fund. He has been employed by Alger Management as
Executive Vice President and Director of Research since 1971 and as
President since 1995, and he serves as portfolio manager for other mutual
funds and investment accounts managed by Alger Management.
JAMES D. OELSCHLAGER is the portfolio manager of the Oak Associates portion
of the Fund. Since establishing Oak Associates in 1985, Mr. Oelschlager has
served as its portfolio manager. Previously, he served as the Assistant
Treasurer of Firestone Tire & Rubber Company, where he was directly
responsible for the management of the company's pension assets. Mr.
Oelschlager is assisted with portfolio management responsibilities by Donna
Barton, trading, Margaret Ballinger, new accounts, and Doug MacKay, equity
research. These individuals have combined experience of over seventy years
in the investment business and play a key role in the day-to-day management
of the firm's portfolios.
CHET J. NEEDELMAN, Chief Executive Officer and Senior Investment Officer of
Palley-Needelman, is responsible for the day-to-day management of the
Palley-Needelman portion of the Fund. Mr. Needelman has over 30 years of
investment experience as a security analyst, research director and portfolio
manager. He has managed funds for foundations, corporations, endowments and
mutual funds. He is the co-founder of Palley-Needelman Asset Management and
its predecessor company, where he held various positions during the last 24
years. All investment decisions for Palley-Needelman Asset Management are
made by an investment committee which includes Mr. Needelman, Mr. Palley and
two other senior investment professionals.
BOND FUND
ANDREW L. HEISKELL, Executive Vice President of the Adviser, has
responsibility for setting the fixed income investment strategy and
overseeing the day-to-day operations of the Bond Fund. Mr. Heiskell has been
the portfolio manager for the Bond Fund of the Mutual of America Investment
Corporation since February 1991 and of its Mid-Term and Short-Term Bond
Funds since their inceptions in 1993. He has more than 30 years of
experience in selecting securities for and managing fixed-income portfolios.
YEAR 2000 CONSIDERATIONS
----------------------------------------------------------------------------
Many computer software programs, as initially developed, could not
distinguish the year 2000 from the year 1900. If not corrected, this
inability could adversely impact the handling of securities trades, the
payment of interest and dividends, pricing, accounting and other
recordkeeping services by the Adviser or the outside service providers for
the Investment Company and the Adviser.
The Adviser has reviewed its computer systems and has made modifications and
replacements to prepare for the year 2000. It has successfully tested the
modified systems and will continue monitoring Year 2000 compliance throughout
1999. The Adviser has received confirmation from the Adviser's and the
Investment Company's service providers that they expect to modify or replace
their systems to prepare for the year 2000. The Investment Company anticipates
that the Adviser's computer systems and those of the providers will be adapted
in time for the year 2000.
It is possible that the Investment Company, or its service providers, could
experience some computer processing problems when the year 2000 arrives. We
have developed written contingency plans to ensure business continuity through
the year 2000. In addition, Year 2000 problems could have a negative impact on
companies in which the Investment Company's Funds invest, which could reduce
the value of these companies' securities and therefore reduce the Funds'
investment returns.
-9-
<PAGE>
DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS
INVESTMENT OBJECTIVES AND STRATEGIES
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EQUITY INDEX FUND: The investment objective of the Equity Index Fund is to
provide investment results that correspond to the price and
yield performance of publicly traded common stocks in the
aggregate, as represented by the S&P 500 Index.
The Fund seeks to achieve its objective primarily by:
o Purchasing shares of the 500 common stocks that are included in the S&P
500 Index.
- Stocks are selected in the order of their weightings in the S&P 500
Index, beginning with the heaviest weighted stocks.
- The percentage of the Fund's assets invested in each of the selected
stocks will be approximately the same as the percentage the stock
represents in the S&P 500 Index.
- The Fund attempts to be fully invested at all times, and at least 80%
of the Fund's net assets will be invested in the stocks that comprise
the S&P 500 Index.
o Purchasing futures contracts on the S&P 500 Index and options on
futures contracts on the S&P 500 Index to invest cash prior to the
purchase of common stocks, in an attempt to have the Fund's performance
more closely correlate with the performance of the S&P 500 Index.
The Adviser uses a computer program to determine which stocks are to be
purchased or sold to copy the S&P 500 Index. From time to time, the Fund
makes adjustments in its portfolio (rebalances) because of changes in the
composition of the S&P 500 Index or in the valuations of the stocks within
the Index relative to other stocks within the Index.
The Fund's investment performance may not precisely duplicate the
performance of the S&P 500 Index, due to cash flows in and out of the Fund
and investment timing considerations. The Fund also pays investment advisory
expenses that are not applicable to an unmanaged index such as the S&P 500
Index.
The Fund's ability to duplicate the performance of the S&P 500 Index depends
to some extent on the size of the Fund's portfolio. Mutual of America Life
Insurance Company (MUTUAL OF AMERICA) the indirect parent corporation of the
Adviser, and an affiliate invested a total of $25 million in the Equity
Index Fund when the Fund began operations. Mutual of America (directly or
through an affiliate) currently intends to maintain an investment in the
Fund so that the Fund's assets are at least $25 million at any time.
ALL AMERICA FUND: The investment objective of the All America Fund is to
outperform the S&P 500 Index by providing a diversified
portfolio of Active Assets with diversified management and a
broad exposure to the market.
At least 65% of the All America Fund's total assets will be invested in
equity securities under normal market conditions. The issuers of at least
80% of the Fund's total assets will be United States corporations or
entities.
INDEXED ASSETS. The Fund invests approximately 60% of its assets to provide
investment results that correspond to the price and yield performance of
publicly traded common stocks in the aggregate, as represented by the S&P
500 Index. This portion of the All America Fund is called the INDEXED
ASSETS. The Fund invests Indexed Assets in the 500 common stocks included in
the S&P 500 Index and in futures contracts on the S&P 500 Index. The Fund
attempts to match the weightings of stocks in the Indexed Assets with the
weightings of those stocks in the S&P 500 Index.
The Indexed Assets are invested in the same manner as the Equity Index Fund,
discussed above. The Fund's ability to duplicate the performance of the S&P
500 Index depends to some extent on the size of the Fund's portfolio. Mutual
of America invested $50 million in the All America Fund when the Fund began
operations. Mutual of America (directly or through an affiliate) currently
intends to maintain an investment in the Fund so that the Fund's assets are
at least $25 million at any time.
-10-
<PAGE>
ACTIVE ASSETS. The Fund invests approximately 40% of its assets to achieve a
high level of total return, through both appreciation of capital and, to a
lesser extent, current income, by means of a diversified portfolio of
primarily common stocks. The Adviser and three Subadvisers actively manage
this portion of the All America Fund, which is called the ACTIVE ASSETS.
The Fund tries to maintain, to the extent possible, approximately equal
amounts of Active Assets with the Adviser and the three Subadvisers. The
Adviser periodically rebalances assets in the All America Fund to retain the
approximate 60%/40% relationship between Indexed Assets and Active Assets.
Adviser. The Adviser generally invests in stocks that it considers
undervalued and with the potential for above average investment returns,
issued by companies with small market capitalizations (small cap value
stocks). Some of the companies whose stocks the Adviser selects may have
limited Wall Street coverage and low institutional ownership, which may make
the stocks more difficult to sell in certain market conditions.
o The Adviser seeks securities with a depressed valuation compared to
their previous valuations or compared to a universe of peer companies.
The Adviser determines depressed valuation primarily through
consideration of earnings, cash flow or net equity.
o Issuers must have executive management that the Adviser considers
strong and capable of executing a clear business strategy for the
company.
The Adviser at times may actively trade the securities in its portion of the
All America Fund, depending on market conditions.
Fred Alger Management, Inc. This Subadviser invests in stocks that it
considers to be fundamentally sound with the potential for strong growth and
for earnings in excess of market expectations, issued by companies with
small market capitalizations (small cap growth stocks).
o The securities of these companies often are traded in the
over-the-counter market.
o Except during temporary defensive periods, at least 65% of the assets
in the Fred Alger portfolio will be invested in equity securities of
companies that, at the time of the Fund's purchase, have total market
capitalization within the range of capitalization of the companies
included in the Russell 2000 Growth Index or the S&P SmallCap 600
Index, updated quarterly.
Fred Alger Management, Inc. actively trades the securities in its portion of
the All America Fund, and its portfolio turnover rate generally will be higher
than the portfolio turnover rate for the other Subadvisers.
Oak Associates, Ltd. This Subadviser invests in mid- and large-sized
capitalization stocks, which often have low current income and the potential
for significant growth (mid- and large capitalization growth stocks). Its
approach is to:
o monitor 400 stocks,
o at any one time to invest in approximately 15-25 common stocks without
regard for market industry weighting, and
o usually hold securities that have appreciated in value, rather than
selling them to realize capital gains.
Palley-Needelman Asset Management, Inc. This Subadviser invests its portion
of Active Assets in stocks it considers to be of high quality with lower
than average price volatility and low price/earning ratios, issued by
companies with large market capitalizations (large cap value stocks).
Companies generally will have:
o below market debt levels,
o earnings growth of 10% or more,
o current yield greater than the average of the S&P 500, and
o market capitalization of at least $5 billion.
Palley-Needelman at times may actively trade the securities in its portion
of the All America Fund, depending on market conditions.
-11-
<PAGE>
BOND FUND: The primary investment objective of the Bond Fund is to provide
as high a level of current income over time as is believed to be
consistent with prudent investment risk. A secondary objective is
preservation of shareholders' capital.
The average maturity of the debt securities held by the Bond Fund will vary
according to market conditions and the stage of the interest rate cycle.
The Fund invests at least 80% of its assets in investment grade debt
obligations issued by U.S. corporations or issued by the U.S. Government or
its agencies.
o The Fund may invest in various types of debt securities, including
bonds, mortgage-backed securities, zero coupon securities and
asset-backed securities,with ratings that range from AAA to BBB.
o The percentage of the Fund's portfolio invested in particular types of
securities will vary, depending on market conditions and the Adviser's
assessment of the income and returns available from corporate
securities in relation to the risks of investing in these securities.
o At December 31, 1998, the Bond Fund had approximately 4% of its assets
invested in zero coupon securities, 24% of its assets in U.S. Treasury
Securities, 11% of its assets in U.S. Government agency mortgage-backed
securities and 26% of its assets in corporate obligations rated BBB.
The Adviser uses a "bottom-up" approach in selecting debt securities for the
Fund. This means that the Adviser evaluates each issuer of securities before
making an investment, rather than selecting securities or industries based
on possible changes in the economy. The Adviser's approach generally is to
purchase securities for income. In selecting an individual security, it
reviews historical financial measures and considers the price and yield
relationship to other securities to determine a proper relative value for
the security.
The Fund generally does not purchase and sell securities in anticipation of
interest rate changes in the economy. The Adviser may sell a security that
it considers to have become overvalued relative to alternative investments,
and reinvest in an alternative security.
MONEY MARKET FUND: The investment objective of the Fund is to realize high
current income to the extent consistent with the
maintenance of liquidity, investment quality and stability
of capital.
In selecting specific investments for the Fund, the Adviser seeks securities
or instruments with the highest yield or income that meet the following
requirements.
o The Fund invests only in high quality money market instruments and
other short-term debt securities, including commercial paper issued by
U.S. corporations and in U.S. Government and U.S. Government agency
securities. At December 31, 1998, more than 80% of the Fund's assets
were invested in commercial paper, with the remainder invested in U.S.
Government agency securities.
o All of the securities the Fund purchases have a rating in one of the
two highest rating categories from at least two nationally recognized
rating agencies, and substantially all (at least 95%) have a rating in
the highest category from at least two of these rating agencies.
o At the time of purchase, a security must mature in 13 months or less
(or 25 months for U.S. Government securities). The dollar-weighted
average maturity of the Fund's securities must be 90 days or less.
o The Fund will not invest more than 5% of its total assets in the
securities of any one issuer, other than U.S. Government or agency
securities.
The Fund does not maintain a stable net asset value. Income the Fund earns
on its portfolio holdings increases the Fund's net asset value per share
until the Fund declares a dividend. The Fund declares a dividend of net
investment income at least semi-annually, and the Fund's net asset value per
share declines as a result of the distribution to its shareholders.
-12-
<PAGE>
The Fund uses the amortized cost method of valuing securities that have a
remaining term to maturity of 60 days or less. Because the Fund uses market
value for securities that mature in more than 60 days, the Fund does not
invest more than 20% of its assets in these securities, to limit the
possibility of a decline in the Fund's net asset value.
An investment in the Fund has little market or financial risk but a
relatively high level of current income volatility, because its portfolio
holdings are high quality instruments that have a short time to maturity.
INVESTMENTS IN THE MONEY MARKET FUND ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER U.S. GOVERNMENT AGENCY.
RISKS OF INVESTING IN A STOCK FUND
----------------------------------------------------------------------------
When you invest in a stock fund, you should consider that:
o The fund is subject to market risk -- the value of your investment will
go up or down, depending on movements in the stock markets. As a
result, you may lose money from your investment, or your investment may
increase in value.
o The investment results for a particular Fund may be better or worse
than the results for the stock markets taken as a whole, depending on
the type of securities in which the Fund invests.
o The investment results for a particular Fund may be better or worse
than the results of other funds that invest in the same types of
securities. In other words, stock selection by a Fund's investment
adviser(s) will impact the Fund's performance.
o The prices and investment performance of stocks that are issued by
companies with smaller market capitalizations may fluctuate more than
the prices and investment performance of stocks that are issued by
companies with larger market capitalizations.
o A Fund may have more difficulty selling a small cap stock or any stock
that trades "over-the-counter", as compared to larger capitalization
stocks or stocks that trade on a national or regional stock exchange.
o Value stocks and growth stocks usually have different investment
results, and either investment style may become out of favor with stock
investors at a given time.
RISKS OF INVESTING IN A BOND FUND
----------------------------------------------------------------------------
When you invest in a bond fund, you should consider that:
o The fund has market risk -- the value of your investment will go up or
down depending on movements in the bond markets. As a result, you may
lose money from your investment, or your investment may increase in
value.
o The investment results for a particular Fund may be better or worse
than the results for the comparable bond market taken as a whole,
depending on the type of debt securities in which the Fund invests.
o The investment results for a particular Fund may be better or worse
than the results of other funds that invest in the same types of
securities. In other words, security selection by a Fund's investment
adviser will impact the Fund's performance.
o Changes in prevailing interest rates usually will impact the value of
debt securities. The longer the time period before the security matures
(or is expected to be redeemed), the more impact interest rate changes
will have on the price of the bond. When interest rates rise, the
prices of outstanding debt securities tend to fall. When interest rates
fall, the prices of outstanding debt securities tend to rise.
o Mortgage-backed securities or certificates are subject to prepayment or
extension risk when interest rates change. When interest rates fall,
the underlying mortgages may be prepaid at a faster rate than
previously assumed in pricing the mortgage-backed security, which would
shorten the period to maturity. When interest rates rise, the
underlying mortgages may be prepaid at a slower rate than previously
assumed, which would lengthen the period to maturity.
-13-
<PAGE>
o In periods of economic uncertainty, investors may favor U.S. government
debt securities over debt securities of corporate issuers, in which
case the value of corporate debt securities would decline in relation
to the value of U.S. government debt securities.
o Zero coupon securities and discount notes do not pay interest, and they
may fluctuate more in market value and be more difficult for a Fund to
resell during periods of interest rate changes than comparable
securities that pay interest in cash at regular intervals. In addition,
the Fund may lose a portion of the principal amount of a zero coupon
security if it sells the security after an increase in interest rates.
o Unrated securities or securities rated below investment grade may be
subject to a greater market risk than higher rated (lower yield)
securities. Since lower rated and unrated securities are generally
issued by corporations that are not as creditworthy or financially
secure as issuers of higher rated securities, there is a greater risk
that issuers of lower rated (higher yield) securities will not be able
to pay the principal and interest due on such securities, especially
during periods of adverse economic conditions.
o The market for debt securities may be subject to significant
volatility, and volatility has generally increased in recent years.
SPECIFIC INVESTMENTS OR STRATEGIES, AND RELATED RISKS
----------------------------------------------------------------------------
This section provides additional information about certain of the principal
investment strategies used by the Funds and additional investment strategies
the Funds may use from time to time.
OPTIONS AND FUTURES CONTRACTS
INVESTMENT STRATEGIES. All of the Funds may purchase and sell put and call
options contracts, futures contracts and options on futures contracts.
Depending on the types of securities in which a Fund invests, the contracts
relate to fixed-income securities (including U.S. Government and agency
securities), equity securities or indexes of securities. All contracts must
be traded on securities or commodities exchanges located in the United
States.
A put option on a security gives the Fund the right to sell the security at
a certain price. The purchase of a put option on a security protects the
Fund against declines in the value of the security. A Fund may buy a put
option contract on a security only if it holds the security in its
portfolio.
A call option on a security gives the Fund the right to buy the security at
a certain price. The purchase of a call option on a security protects the
Fund against increases in the value of the security that it is considering
purchasing. A Fund may sell a call option contract on a security only if it
holds the security in its portfolio (a covered call).
A Fund may use futures contracts, or options on futures contracts, to
protect against general increases or decreases in the levels of securities
prices:
o When a Fund anticipates a general decrease in the market value of
portfolio securities, it may sell futures contracts. If the market
value falls, the decline in the Fund's net asset value may be offset,
in whole or in part, by corresponding gains on the futures position.
o When a Fund projects an increase in the cost of fixed-income securities
or stocks to be acquired in the future, the Fund may purchase futures
contracts on fixed-income securities or stock indexes. If the hedging
transaction is successful, the increased cost of securities
subsequently acquired may be offset, in whole or in part, by gains on
the futures position.
RISKS FROM OPTIONS AND FUTURES CONTRACTS. Risks to a Fund in options and
futures transactions include the
following:
o The securities held in a Fund's portfolio may not exactly duplicate
the security or securities underlying the options, futures contracts or
options on futures contracts traded by the Fund, and as a result the
price of the portfolio securities being hedged will not move in the
same amount or direction as the underlying index, securities or debt
obligation.
o A Fund purchasing an option may lose the entire amount of the premium
plus related transaction costs.
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<PAGE>
o If a Fund has written a covered call option and the price of the
underlying security increases sufficiently, the option may be
exercised. The Fund will be required to sell the security at a price
below current market value, with the loss offset only by the amount of
the premium the Fund received from writing the option.
ZERO COUPON SECURITIES AND DISCOUNT NOTES
The Bond Fund, as well as the All America Fund to the extent it invests in
fixed income securities, may invest in discount notes and zero coupon
securities. Discount notes mature in one year or less from the date of
issuance. Zero coupon securities may be issued by corporations, the U.S.
Government or certain U.S. Government agencies. Discount notes and zero
coupon securities do not pay interest. Instead, they are issued at prices
that are discounted from the principal (par) amount due at maturity.
RISKS FROM ZERO COUPON SECURITIES AND DISCOUNT NOTES. Zero coupon securities
and discount notes may fluctuate more in market value and be more difficult
for a Fund to resell during periods of interest rate changes in the economy
than comparable securities that pay interest in cash at regular intervals.
The market values of outstanding debt securities generally decline when
interest rates are rising, and during such periods a Fund may lose more
investment capital if it sells zero coupon securities prior to their
maturity date or expected redemption date than if it sells comparable
interest-bearing securities. In general, the longer the remaining term to
maturity or expected redemption of a security, the greater the impact on
market value from rising interest rates.
REDEEMABLE SECURITIES
An issuer of debt securities, including zero coupon securities, often has
the right after a period of time to redeem (call) securities prior to their
stated maturity date, either at a specific date or from time to time. When
interest rates rise, an issuer of debt securities generally is less likely
to redeem securities that were issued at a lower interest rate, or for a
lower amount of original issue discount in the case of the zero coupon
securities. In such instance, the period until redemption or maturity of the
security may be longer than the purchaser initially anticipated, and the
market value of the debt security may decline. If an issuer redeems a
security when prevailing interest rates are relatively low, a Fund may be
unable to reinvest proceeds in comparable securities with similar yields.
AMERICAN DEPOSITORY RECEIPTS ("ADRS")
ADRs are dollar-denominated receipts that U.S. banks generally issue. An ADR
represents the deposit with the bank of a security of a foreign issuer. ADRs
are publicly traded on exchanges or are traded over-the-counter in the
United States. An ADR has currency risk, because its value is based on the
value of the security issued by a foreign issuer. The All America Fund
intends to invest a small percentage of its total assets in ADRs.
ADRs are subject to many of the same risks as foreign securities, such as
possible:
o unavailablity of financial information,
o changes in currency or exchange rates,
o lack of Year 2000 preparedness by the issuer, and
o difficulty by the Adviser or a Subadviser in assessing economic or
political trends in a foreign country.
MORTGAGE-BACKED SECURITIES
The Bond Fund, as well as the All America Fund to the extent it invests in
debt securities, may invest in mortgage-backed securities. These securities
represent interests in pools of mortgage loans, or they may be
collateralized mortgage obligations secured by pools of mortgage loans
(CMOS). Holders of mortgage-backed securities receive periodic payments that
consist of both interest and principal from the underlying mortgages.
Some mortgage-backed securities are issued by private corporations.
Mortgage-backed securities also include securities guaranteed by the
Government National Mortgage Association (GINNIE MAES), securities issued by
the Federal National Mortgage Association (FANNIE MAES), participation
certificates issued by the Federal Home Loan Mortgage Corporation (FREDDIE
MACS). The timely payment of principal and interest is backed by the full
faith and credit of the U.S. Government in the case of Ginnie Maes, but
Fannie Maes and Freddie Macs are not full faith and credit obligations.
-15-
<PAGE>
RISKS FROM MORTGAGE BACKED SECURITIES. Characteristics of underlying
mortgage pools will vary, and it is not possible to precisely predict the
realized yield or average life of a particular mortgage-backed security,
because of the principal prepayment feature inherent in the security.
o A decline in interest rates may lead to increased prepayment of the
underlying mortgages, and the securityholder may have to reinvest
proceeds received at lower yields. Unscheduled or early payments on the
underlying mortgages may shorten the effective maturity of a
mortgage-backed security and could negatively affect the yield and
price of the security.
o An increase in interest rates may lead to prepayment of the underlying
mortgages over a longer time period than was assumed when the
mortgage-backed security was purchased, and the securityholder may not
receive payments to reinvest at higher rates of return. Delay in
payments on the underlying mortgages may lengthen the effective
maturity of the security and could negatively affect the price and
yield of the security.
o Mortgage-backed securities issued by private corporations generally
will have more credit risk than securities issued by U.S. Government
agencies. Freddie Mac and Fannie Mae mortgage-backed securities, which
are not full faith and credit obligations, may have more credit risk
than Ginnie Mae securities.
INFORMATION ABOUT FUND SHARES
PRICING OF FUNDS' SHARES
----------------------------------------------------------------------------
The purchase or redemption price of a Fund share is equal to its net asset
value that we next calculate after we receive the purchase or redemption
order. A Fund's net asset value is equal to the sum of the value of the
securities it holds PLUS any cash or other assets (including accrued
interest and dividends), MINUS all liabilities (including accrued expenses).
The Adviser determines a Fund's net asset value as of the close of trading
on the New York Stock Exchange on each day the New York Stock Exchange is
open for trading (a VALUATION DAY). The Exchange usually closes at 4:00 p.m.
Eastern Time but sometimes closes earlier before a holiday.
o In determining a Fund's net asset value, the Adviser uses market value.
o If a money market security has a remaining maturity of 60 days or less,
the Adviser will use the amortized cost method of valuation to
approximate market value (the Adviser assumes constant proportionate
amortization in value until maturity of any discount or premium).
o If there are any equity or debt securities or assets for which market
quotations are not readily available, the Adviser will use fair value
pricing, as determined in good faith by, or under the direction of, the
Board of Directors of the Investment Company.
PURCHASES OF FUND SHARES
----------------------------------------------------------------------------
Only institutional investors may purchase Fund shares. Institutional
investors include endowments, foundations, corporations, not-for-profit
corporations, municipalities and other public entities and trusts. There is
no sales charge for the purchase of Fund shares.
Mutual of America Securities Corporation, 320 Park Avenue, New York, New
York 10022 (the DISTRIBUTOR), is the principal underwriter and distributor
of Fund shares. The Distributor has field offices throughout the United
States for the offering and sale of shares of the Investment Company's
Funds.
A shareholder must pay the purchase amount by wire transfer of Federal
Funds. Wire transfers can be made on any day on which the Investment
Company, Federal Reserve Bank of New York and the Investment Company's
custodian and transfer agent are open and the New York Stock Exchange is
open.
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 for an initial investment or for subsequent
investments.
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<PAGE>
HOW TO PURCHASE SHARES OF THE FUNDS
----------------------------------------------------------------------------
APPLICATION: A prospective purchaser must complete an
application, including any required resolutions,
attached to this Prospectus. You may obtain
additional applications by calling the Investment
Company at 1-800-914-8716.
APPLICATION DELIVERY:
A prospective purchaser should deliver a completed
application to a registered representative of the
Distributor. Registered representatives are
employees of Mutual of America Life Insurance
Company or The American Life Insurance Company of
New York.
APPLICATION APPROVAL: 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.
MINIMUM PURCHASE: A shareholders' initial purchase must total at
least $25,000, and subsequent
purchases must total at least $5,000.
WIRE TRANSFER OF FUNDS: An investor must send all purchase amounts by wire
transfer of Federal Funds to the Investment
Company's account at its transfer agent. Your bank
may charge you a fee for the wire transfer. You may
contact the Investment Company by telephone at
1-800-914-8716 between the hours of 9:00 a.m. 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: Acct. No.:
$ to the Equity Fund; $ to the All America
Fund;
$ to the Bond Fund; $ to the Money Market
Fund
YOUR FUNDS MAY BE RETURNED TO YOU IF THE INVESTMENT
COMPANY OR ITS TRANSFER AGENT DOES NOT HAVE
SUFFICIENT INFORMATION TO INSURE THE CORRECT
PROCESSING OF THE FUNDS OR IF YOUR APPLICATION HAS
NOT YET BEEN APPROVED.
RECEIPT OF ORDER:
Wire transfer funds received by the Investment
Company in its account prior to 4:00 p.m. Eastern
Time will be considered received that day. Purchase
amounts received after 4:00 p.m. Eastern Time will
be considered received on the next Valuation Day.
WIRE TRANSFER DAYS: Wire transfers for the purchase of Fund shares can
be made on days when banks (including the transfer
agent) and the New York Stock Exchange are open for
business. The Investment Company anticipates that
wire transfers cannot be made on Saturdays and
Sundays, and the holidays of Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus
Day, Veterans' Day, Thanksgiving Day, Christmas Day
and New Year's Day.
REDEMPTIONS OF FUND SHARES
----------------------------------------------------------------------------
A shareholder at any time may redeem (sell) shares of the Fund(s) that the
shareholder owns. There is no deferred sales charge when a shareholder
redeems shares of the Funds.
If a shareholder's redemption order is received by 4:00 p.m. Eastern Time on
a Valuation Day, the redemption proceeds usually will be transmitted on a
trade date-plus-one basis (the next Valuation Day). Wire transfers of
-17-
<PAGE>
redemption proceeds cannot be made on days the transfer agent is closed. See
"Wire transfer days" above under "How to Purchase Shares of the Funds".
We pay redemption proceeds normally within seven days of receipt of the
redemption request, unless the Investment Company suspends or delays payment
of redemption proceeds as permitted in accordance with SEC regulations.
A shareholder will receive redemption proceeds in cash deposited to its bank
account, except that the Investment Company reserves the right to redeem
shares by the delivery, in whole or in part, of readily marketable
securities instead of cash when a shareholder's redemption proceeds total
more than 10% of the net asset value of a Fund.
The Investment Company reserves the right to change or waive the minimum
amount for a redemption, which currently is $5,000.
EXCHANGES OF FUND SHARES
----------------------------------------------------------------------------
A shareholder may exchange shares of one Fund for shares of another Fund. An
exchange is the redemption of the shares from one Fund and the application
of the redemption proceeds to the immediate purchase of shares of another
Fund.
The Investment Company may terminate or modify the terms of the exchange
privilege upon 30 days' written notice to shareholders. 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 the exchange would be disruptive to a
Fund.
The Investment Company reserves the right to change or waive the minimum
amount for an exchange, which currently is $5,000. 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.
HOW TO PLACE A REDEMPTION OR EXCHANGE ORDER
----------------------------------------------------------------------------
WHO MAY GIVE AN ORDER: Only a shareholder's authorized person using a
Personal Identification Number ("PIN") that we have
assigned may place a redemption order or exchange
order. A shareholder must list authorized persons in
the initial application to purchase Fund shares, an
amended application, or in another written form that
is acceptable to the Investment Company.
MINIMUM AMOUNT: A redemption or exchange order must be for at least
$5,000.
ORDERS BY TELEPHONE: A shareholder may place a redemption or exchange
order by telephone if the shareholder elected the
option for telephone orders in its initial
application to purchase Fund shares or in an amended
application.
A shareholder should call the Investment Company at
1-800-914-8716 between the hours of 9:00 a.m. and
8:00 p.m. Eastern Time, Monday through Friday on any
Valuation Day to place an order. If a shareholder
places a redemption or exchange order after 4:00
p.m. Eastern Time on a Valuation Day or on a day
that is not a Valuation Day, the order will be
considered received on the next Valuation Day.
The Investment Company will verify the shareholder's
name, the PIN assigned by the Investment Company to
the authorized person calling for the account, the
shareholder's account number, and record telephone
requests.
The Investment Company and the Funds' transfer agent
will not be liable for any losses or expenses
resulting from any telephone redemption or exchange
order reasonably believed to be genuine or for the
inability of a shareholder to make a telephone
request on any particular day. The Investment
Company reserves the right to add to or modify its
procedures in the future.
-18-
<PAGE>
ORDERS IN WRITING: A shareholder may make a redemption or exchange
request in writing. The shareholder must specify the
account name, the account number, the Fund from
which shares are to be redeemed, the dollar amount
or number of shares to be redeemed, and for exchange
orders, the Fund or Funds whose shares will be
purchased with the exchange proceeds.
The necessary authorized person(s) must sign the
order, and each signer should print his or her name
and title under the signature.
A shareholder should send a written request to
Mutual of America Institutional Funds, Inc., 320
Park Avenue, New York, New York 10022. A shareholder
may send a written request to the Regional Office of
the Distributor, which will foward the request to
the Investment Company. The Valuation Day for the
order will be the Valuation Day the Investment
Company receives the request at its 320 Park Avenue
offices.
REDEMPTION PROCEEDS: A shareholder will receive redemption proceeds by
wire transfer of Federal Funds to the bank account
stated in the shareholder's initial application, or
in an amended application. An authorized person may
not specify a different bank account by telephone.
EXCHANGE PROCEEDS: The proceeds from the shares of the Fund being
exchanged are immediately applied for the purchase of
shares in another Fund.
SHAREHOLDER REPORTS AND CONFIRMATION STATEMENTS
----------------------------------------------------------------------------
The Investment Company, on behalf of the Distributor, will send to
shareholders confirmation statements for each purchase, exchange or
redemption transaction. A confirmation statement will show the Fund, number
of shares, order date, net asset value per share and dollar amount for the
transaction. A shareholder must report any error on a confirmation statement
within two weeks after the mailing or other transmission of the statement to
the shareholder.
The Investment Company will send each shareholder a quarterly statement,
which will include Fund shares purchased, exchanged or redeemed during the
month, the net asset value per share and total dollar amount for each
transaction, and the shareholder's account balance in each Fund at the end
of the period.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXATION OF FUNDS
----------------------------------------------------------------------------
For each Fund, the Investment Company declares dividends at the end of June
and end of December to pay out all or substantially all of the Fund's net
investment income (dividends) and declares dividends at the end of December
to pay out substantially all of the Fund's net realized short and long term
capital gains (capital gains distributions). A Fund may make a special
distribution in September of each year to comply with Federal tax law
requirements for mutual funds.
A shareholder may elect, in its application to purchase Fund shares or in
an amended application, to:
o automatically reinvest dividends and distributions from a Fund in
additional shares of the Fund;
o receive dividends and distributions in cash; or
o automatically reinvest dividends from any Fund in shares of the Money
Market Fund.
A Fund is not subject to Federal income tax on ordinary income and net
realized capital gains that it distributes to shareholders, as long as the
Fund satisfies Federal tax law provisions, including certain minimum
distribution requirements. Each Fund is treated as a separate corporation for
Federal income tax purposes and must satisfy the tax requirements
independently.
-19-
<PAGE>
SHAREHOLDER TAXATION
----------------------------------------------------------------------------
Each shareholder should consult its own tax adviser about the Federal, state,
local and, if applicable, foreign tax consequences of investing in Fund
shares, because investors' tax situations will vary. Below are general rules
about Federal income taxation for an investor to consider.
When a shareholder redeems (sells) shares of a Fund, including in an
exchange transaction, the shareholder will have a gain or a loss on its
investment in those shares.
o If the shareholder owned the shares sold for more than a year, it
generally will have a long-term capital gain or loss.
o If the shareholder owned the shares sold for less than a year, any gain
will be short-term capital gain taxable at ordinary income rates, and
any loss may be subject to special tax rules.
When a shareholder receives dividends or distributions from a Fund, the
shareholder (unless it is exempt from taxation) will owe tax on the amount
received, even if the shareholder automatically reinvests the dividend or
distribution in additional Fund shares. A shareholder will receive dividends
or distributions when declared and paid by a Fund, even if the shareholder has
only recently purchased Fund shares.
o Ordinary income rates apply to a Fund's dividends of ordinary income
and net realized short-term capital gains.
o Capital gain rates apply to a Fund's distributions of net realized
long-term capital gains.
o A potential investor, should consider the tax impact of purchasing Fund
shares when the Fund is expected to pay dividends or distributions in
the near future.
WITHHOLDING FOR FEDERAL INCOME TAXES. A shareholder on its application to
purchase Fund shares may make representations and provide information to be
exempt from withholding for Federal income tax on the Investment Company's
distributions and dividends and payment of redemption proceeds. U.S. corporate
shareholders and certain other entities named in the Internal Revenue Code
are exempt from withholding under certain circumstances.
The Investment Company will withhold for Federal income tax if:
o a shareholder has not provided a correct taxpayer identification
number, or
o a shareholder has not made the certifications required to be exempt
from withholding, or
o the Investment Company or the shareholder has been notified by the
Internal Revenue Service that the shareholder is subject to back-up
withholding.
A shareholder may credit any amount withheld by the Investment Company
against the Federal income tax liability
of the shareholder.
Each January, the Investment Company will provide reports to Fund
shareholders of the Federal income tax status of distributions and dividends
made by the Funds during the previous year.
-20-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
Funds' financial performance. They show performance for the period of a
Fund's operations, because the Funds have operated less than five years.
Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate that an investor would
have earned or lost on an investment in the particular Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen LLP, whose report, along with the Investment
Company's financial statements, are included in the annual report, which is
available upon request.
ALL AMERICA FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996(D)
----------- ----------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD ............................... $ 12.65 $ 10.98 $ 10.00
------- -------- ---------
Income From Investment Operations:
Net Investment Income .................................................. .07 .08 .06
Net Gains or Losses on Securities (realized and unrealized) ............ 2.57 2.77 .98
------- -------- ---------
Total From Investment Operations ...................................... 2.64 2.85 1.04
------- -------- ---------
Less Dividend Distributions:
From net investment income ............................................. (.08) (.08) (.06)
From capital gains ..................................................... (.13) (1.10) --
------- -------- ---------
Total Distributions ................................................... (.21) (1.18) (.06)
-------- ---------
NET ASSET VALUE, END OF YEAR/PERIOD ..................................... $ 15.08 $ 12.65 $ 10.98
======= ======== =========
Total Return ............................................................ 21.0% 26.0% 10.4%(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year/Period ($ millions).............................. $ 70.8 $ 56.7 $ 55.5
Ratio of Net Investment Income to Average Net Assets .................... .55% .59% .95%(b)
Ratio of Expenses to Average Net Assets ................................. .84% .84% .87%(b)
Ratio of Expenses to Average Net Assets after Expense Reimbursement ..... .82% .81% .85%(b)
Portfolio Turnover Rate(c) .............................................. 41.25% 35.96% 9.33%
</TABLE>
----------
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover rate excludes short-term securities.
(d) Commenced operations May 1, 1996.
-21-
<PAGE>
BOND FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996(D)
----------- ----------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD $ 10.41 $ 10.13 $ 10.01
------- ------- ---------
Income From Investment Operations:
Net Investment Income .................................................. .61 .59 .38
Net Gains or Losses on Securities (realized and unrealized) ............ .24 .29 .12
------- ------- ---------
Total From Investment Operations ..................................... .85 .88 .50
------- ------- ---------
Less Dividend Distributions:
From net investment income ............................................. (.62) (.59) (.38)
From capital gains ..................................................... (.23) (.01) --
------- ------- ---------
Total Distributions .................................................. (.85) (.60) (.38)
------- ------- ---------
NET ASSET VALUE, END OF YEAR/PERIOD ..................................... $ 10.41 $ 10.41 $ 10.13
======= ======= =========
Total Return ............................................................ 8.3% 8.9% 5.0%(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year/Period ($ millions).............................. $ 25.2 $ 22.1 $ 21.0
Ratio of Net Investment Income to Average Net Assets .................... 5.84% 5.69% 5.63%(b)
Ratio of Expenses to Average Net Assets ................................. .97% 1.00% .90%(b)
Ratio of Expenses to Average Net Assets After Expense Reimbursement ..... .70% .70% .70%(b)
Portfolio Turnover Rate(c) .............................................. 33.32% 56.18% 17.85%
</TABLE>
MONEY MARKET FUND
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997(E)
----------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR/PERIOD ............................... $ 10.15 $ 10.00
------- ---------
Income From Investment Operations:
Net Investment Income .................................................. .52 .35
Net Gains or Losses on Securities (realized and unrealized) ............ -- --
------- ---------
Total From Investment Operations ...................................... .52 .35
------- ---------
Less: Dividend Distributions From Net Investment Income ................. (.44) (.20)
------- ---------
Total Distributions ................................................... (.44) (.20)
------- ---------
NET ASSET VALUE, END OF YEAR/PERIOD ..................................... $ 10.23 $ 10.15
======= =========
Total Return ............................................................ 5.3% 3.5%(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year/Period ($ millions).............................. $ 6.5 $ 7.5
Ratio of Net Investment Income to Average Net Assets .................... 5.14% 5.17%(b)
Ratio of Expenses to Average Net Assets ................................. 3.21% 2.47%(b)
Ratio of Expenses to Average Net Assets after Expense Reimbursement ..... .40% .40%(b)
Portfolio Turnover Rate(c) .............................................. N/A N/A
</TABLE>
----------
(a) Not annualized.
(b) Annualized
(c) Portfolio turnover rate excludes all short-term securities.
(d) Commenced operations May 1, 1996.
(e) Commenced operations May 1, 1997.
N/A Not Applicable
-22-
<PAGE>
Investment Company
Mutual of America Institutional Funds, Inc.
Distributor
Mutual of America Securities Corporation
Investment Adviser
Mutual of America Capital Management Corporation
Subadvisers for a portion of the All America Fund
Fred Alger Management, Inc.
Oak Associates Ltd.
Palley-Needelman Asset Management, Inc.
Independent Auditors
Arthur Andersen LLP
Counsel
Swidler Berlin Shereff Friedman, LLP
Custodian
The Chase Manhattan Bank
Transfer Agent
State Street Bank and Trust Company
The Investment Company sells shares of its Funds only to institutional
investors.
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022 1-800-914-8716
YOU MAY OBTAIN MORE INFORMATION
----------------------------------------------------------------------
REGISTRATION STATEMENT. We have filed with the Securities and Exchange
Commission (the COMMISSION) a Registration Statement about the Investment
Company. The Registration Statement includes this prospectus, a Statement
of Additional Information (the SAI), and exhibits. You may examine and
copy the Registration Statement at the Commission's Public Reference Room
in Washington, DC You may call 1-800-SEC-0330 to learn about the operation
of the Public Reference Room.
STATEMENT OF ADDITIONAL INFORMATION. The SAI contains additional
information about the Investment Company and its Funds. We incorporate the
SAI into this Prospectus by reference.
SEMI-ANNUAL AND ANNUAL REPORTS. Additional information about the Funds'
investments is available in the Investment Company's annual and
semi-annual reports to shareholders. In the annual reports, you will find
a discussion (for all Funds except the Money Market Fund) of the market
conditions and investment strategies that significantly affected the
Funds' performance during its last fiscal year.
HOW TO OBTAIN THE SAI AND REPORTS. You may obtain a free copy of the SAI
or of the Investment Company's most recent annual and semi-annual
financial statements, by:
o writing to us at 320 Park Avenue, New York, NY 10022, Attn:
Institutional Funds,
or
o calling 1-800-914-8716 and asking for the Investment Company.
The Commission has an Internet web site at http://www.sec.gov. You may
obtain the Investment Company's Registration Statement, including the SAI,
and its semi-annual and annual reports through the Commission's Internet
site. You also may obtain copies of these documents, upon your payment of
a duplicating fee, by writing to the Commission's Public Reference
Section, Washington, DC 20549-6009.
WHERE TO DIRECT QUESTIONS. If you have questions about the operations of
the Investment Company, you should contact your representative at Mutual
of America Securities Corporation. You may call 1-800-914-8716 for the
address and phone number of the office nearest you.
Investment Company Act of 1940 Act File Number 811-08922
----------------------------------------------------------------------
PROSPECTUS DATED MAY 1, 1999
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(800) 914-8716
EQUITY INDEX FUND BOND FUND
ALL AMERICA FUND MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
This Statement of Additional Information is not a prospectus. You should
read it in conjunction with the Mutual of America Institutional Funds, Inc.
Prospectus dated May l, 1999, and you should keep it for future use. We
incorporate the Prospectus by reference into this Statement of Additional
Information.
A copy of the Prospectus to which this Statement of Additional Information
relates is available to you at no charge. To obtain the Prospectus, you may
write to Mutual of America Institutional Funds, Inc. at the above address or
call the telephone number listed above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Investment Company's Form of Operations .................... 2
Investment Strategies and Related Risks .................... 3
Additional Permitted Investments ......................... 3
Additional Investment Strategies ......................... 5
Additional Information about Specific Types of Securities 9
Fundamental Investment Restrictions ........................ 13
Management of the Investment Company ....................... 14
Investment Advisory Arrangements ........................... 15
Administrative Arrangements ................................ 17
Portfolio Transactions and Brokerage ....................... 18
Purchase, Redemption and Pricing of Shares ................. 19
Taxation of the Investment Company ......................... 21
Taxation of Shareholders ................................... 21
Yield and Performance Information .......................... 23
Description of Corporate Bond Ratings ...................... 26
Distribution of Fund Shares ................................ 27
Legal Matters .............................................. 27
Independent Auditors ....................................... 27
Custodian .................................................. 27
Use of Standard & Poor's Index ............................. 28
Financial Statements ....................................... 28
</TABLE>
<PAGE>
INVESTMENT COMPANY'S FORM OF OPERATIONS
HISTORY AND OPERATING FORM
----------------------------------------------------------------------------
Mutual of America Institutional Funds, Inc. (the INVESTMENT COMPANY) was
formed on October 27, 1994 as a Maryland corporation. It is a diversified,
open-end management investment company registered under the Investment
Company Act of 1940 (the 1940 ACT).
The Investment Company issues separate classes (or series) of stock, each of
which represents a separate Fund of investments. There are currently four
Funds: the Equity Index Fund, All America Fund, Bond Fund and Money Market
Fund.
OFFERING OF SHARES
----------------------------------------------------------------------------
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 the Investment Company may waive this requirement in its
discretion. The minimum amount for additional purchases of Fund shares
currently is $5,000.
DESCRIPTION OF SHARES
----------------------------------------------------------------------------
The authorized capital stock of the Investment Company consists of one
billion shares of common stock, $.01 par value. The Investment Company
currently has four classes of common stock, and it may establish additional
classes and allocate its authorized shares either to new classes or to one
or more of the existing classes.
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 shares of common stock, of whatever class, are entitled to one vote. The
votes of all classes are cast on an aggregate basis, except that if the
interests of the Funds differ, the voting is on a Fund-by-Fund basis.
Examples of matters that would require a Fund-by-Fund vote are changes in
the fundamental investment policy of a particular Fund and approval of the
Investment Advisory Agreement or a Subadvisory Agreement for the Fund.
The Investment Company is not required to hold annual meetings. It will call
a special meeting of shareholders when a meeting is requested by
shareholders holding at least 25% of the outstanding shares of the
Investment Company entitled to vote at the meeting except that a meeting to
remove one or more directors shall be called when requested by 10% of the
outstanding shares of the Investment Company entitled to vote at the
meeting.
The shares of each Fund, when issued, will be fully paid and nonassessable
and will have no preference, preemptive, conversion, exchange or similar
rights. Shares do not have cumulative voting rights.
Each issued and outstanding share in a Fund is entitled to participate equally
in dividends and distributions declared by such Fund and, upon liquidation or
dissolution, in the net assets of such Fund remaining after satisfaction of
outstanding liabilities. Accrued liabilities which are not allocable to one or
more Funds will generally be allocated among the Funds in proportion to their
relative net assets. In the unlikely event that any Fund incurred liabilities
in excess of its assets, each other Fund could be liable for such excess.
2
<PAGE>
INVESTMENT STRATEGIES AND RELATED RISKS
The Prospectus describes each Fund's principal investment strategy(ies) and
the related risks. You should refer to "Summary of How Our Funds Invest" and
"Details about How Our Funds Invest and Related Risks" in the Prospectus to
learn about those strategies and risks.
ADDITIONAL PERMITTED INVESTMENTS
----------------------------------------------------------------------------
The Investment Company's Funds may use investment strategies and purchase
types of securities in addition to those discussed in the Prospectus.
EQUITY INDEX FUND: In addition to common stocks and futures contracts, the
Fund may invest in:
o money market instruments and
o U.S. Government and U.S. Government agency obligations.
ALL AMERICA FUND -- In addition to common stocks, the Adviser and Subadviser
who manage approximately 40% of the net assets of the All America Fund (the
ACTIVE ASSETS) may invest assets in:
o securities convertible into common stocks, including warrants and
convertible bonds,
o bonds,
o money market instruments,
o U.S. Government and U.S. Government agency obligations,
o foreign securities and ADRs,
o futures and options contracts,
o preferred stock,
o equipment trust certificates, and
o mortgage-backed and asset-backed securities.
The portion of the All America Fund invested to replicate the S&P 500 Index
(the INDEXED ASSETS) may also be invested in:
o money market instruments, and
o U.S. Government and U.S. Government agency obligations.
The Adviser may manage cash allocated to the Active Assets prior to
investment in securities by the Subadvisers.
BOND FUND: In addition to investment grade debt securities of the type
described in the Prospectus, the Bond Fund may invest in :
o asset-backed securities,
o non-investment grade securities, for up to 20% of its assets,
o foreign securities,
o cash and money market instruments,
o stocks acquired either by conversion of fixed-income securities or by
the exercise of warrants attached to fixed income securities,
o preferred stock
o options, futures contracts and options on futures contracts on United
States Treasury securities and Government National Mortgage Association
("Ginnie Mae") securities, and
o equipment trust certificates.
3
<PAGE>
MONEY MARKET FUND: In addition to commercial paper and U.S. Treasury Bills,
the Fund may invest in any of the following kinds of money market instruments,
payable in United States dollars:
o securities issued or guaranteed by the U.S. Government or a U.S.
Government agency or instrumentality;
o negotiable certificates of deposit, bank time deposits, bankers'
acceptances and other short-term debt obligations of domestic banks and
foreign branches of domestic banks and U.S. branches of foreign banks,
which at the time of their most recent annual financial statements show
assets in excess of $5 billion;
o certificates of deposit, time deposits and other short-term debt
obligations of domestic savings and loan associations, which at the
time of their most recent annual financial statements show assets in
excess of $1 billion;
o repurchase agreements covering government securities, certificates of
deposit, commercial paper or bankers' acceptances;
o variable amount floating rate notes; and
o debt securities issued by a corporation.
The Money Market Fund may enter into transactions in options, futures
contracts and options on futures, contracts on United States Treasury
securities.
Under the Money Market Fund's investment policy, MONEY MARKET INSTRUMENTS
AND OTHER SHORT-TERM DEBT SECURITIES means securities that have a remaining
term to maturity of up to 13 months (25 months in the case of government
securities). The dollar-weighted average maturity of the securities held by
the Money Market Fund will not exceed 90 days.
The securities in the Money Market Fund must meet the following quality
requirements --
o All of the securities held by the Money Market Fund must have received
(or be of comparable quality to securities which have received), at the
time of the purchase, a rating in one of the two highest categories by
any two nationally recognized statistical rating agencies; and
o At least 95% of the securities held by the Money Market Fund must have
received (or be of comparable quality to securities which have
received), at the time of purchase, a rating in the highest category by
any two such rating agencies.
The Board of Directors of the Investment Company must approve or ratify the
purchase of any security (other than any U.S. government security) that has
not received a rating or that has been rated by only one rating agency. The
Fund will sell any securities that are subsequently downgraded below the two
highest categories as soon as practicable, unless the Board of Directors
determines that sale of those securities would not be in the best interests
of the Fund.
The Money Market Fund will not invest more than 5% of its total assets in
securities of, or subject to puts from, any one issuer (other than U.S.
government securities and repurchase agreements fully collateralized by U.S.
government securities) provided that (a) the Fund may invest up to 10% of
its total assets in securities issued or guaranteed by a single issuer with
respect to which the Fund has purchased an unconditional put and (b) with
respect to 25% of its total assets the Fund may, with respect to securities
meeting the highest investment criteria, exceed the 5% limit for up to three
business days.
4
<PAGE>
ADDITIONAL INVESTMENT STRATEGIES
----------------------------------------------------------------------------
LENDING OF SECURITIES
The Funds have the authority to lend their securities, under the conditions
described below. The Funds will not lend any securities until the Investment
Company's Board of Directors approves a form of securities lending
agreement.
A Fund may lend its securities, constituting up to 30% of its total assets,
to brokers, dealers and financial institutions, other than any affiliate of
the Investment Company. A Fund may pay reasonable fees to persons
unaffiliated with the Fund for services or for arranging such loans.
Upon lending securities, a Fund must receive as collateral cash, securities
issued or guaranteed by the United States Government or its agencies or
instrumentalities, or letters of credit of certain banks selected by the
Adviser. The collateral amount at all times while the loan is outstanding
must be maintained in amounts equal to at least 100% of the current market
value of the loaned securities.
The Fund will continue to receive interest or dividends on the securities
lent. In addition, it will receive a portion of the income generated by the
short-term investment of cash received as collateral, or, alternatively,
where securities or a letter of credit are used as collateral, a lending fee
paid directly to the Fund by the borrower of the securities. A Fund will
have the right to terminate a securities loan at any time. The Fund will
have the right to regain record ownership of loaned securities in order to
exercise beneficial rights, such as voting rights or subscription rights.
Loans of securities will be made only to firms that the Adviser deems
creditworthy. There are risks of delay in recovery and even loss of rights
in the collateral, however, if the borrower of securities defaults, becomes
the subject of bankruptcy proceedings or otherwise is unable to fulfill its
obligations or fails financially.
REPURCHASE AGREEMENTS
The Funds have the authority to enter into repurchase agreements. A Fund may
not invest more than 10% of its total assets in repurchase agreements or
time deposits that mature in more than seven days. The Funds will not enter
into any repurchase agreements until the Investment Company's Board of
Directors approves a form of Repurchase Agreement and authorizes entities as
counterparties.
Under a repurchase agreement, a Fund acquires underlying debt instruments
for a relatively short period (usually not more than one week and never more
than one year) subject to an obligation of the seller to repurchase (and the
Fund to resell) the instrument at a fixed price and time, thereby
determining the yield during the Fund's holding period. This results in a
fixed rate of return insulated from market fluctuation during such period.
Accrued interest on the underlying security will not be included for
purposes of valuing a Fund's assets.
Repurchase agreements have the characteristics of loans by a Fund and will
be fully collateralized (either with physical securities or evidence of book
entry transfer to the account of the custodian bank) at all times. During
the term of the repurchase agreement, the Fund retains the security subject
to the repurchase agreement as collateral securing the seller's repurchase
obligation, continually monitors the market value of the security subject to
the agreement and requires the Fund's seller to deposit with the Fund
additional collateral equal to any amount by which the market value of the
security subject to the repurchase agreement falls below the resale amount
provided under the repurchase agreement.
The Funds will enter into repurchase agreements only with member banks of
the Federal Reserve System and with dealers in U.S. Government securities
whose creditworthiness has been reviewed and found satisfactory by the
Adviser and the Board of Directors of the Investment Company.
Securities underlying repurchase agreements will be limited to certificates
of deposit, commercial paper, bankers' acceptances, or obligations issued or
guaranteed by the United States Government or its agencies or
instrumentalities, in which the Funds may otherwise invest.
A seller of a repurchase agreement could default and not repurchase from a
Fund the security that is the subject of the agreement. The Fund would look
to the collateral underlying the seller's repurchase agreement, including
the securities subject to the repurchase agreement, for satisfaction of the
seller's obligation to the Fund. In such event, the Fund might incur
disposition costs in liquidating the collateral and might suffer a loss if
the value of the collateral declines. There is a risk that if the issuer of
the repurchase agreement becomes involved in bankruptcy
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proceedings, the Fund might be delayed or prevented from liquidating the
underlying security or otherwise obtaining it for its own purposes, if the
Fund did not have actual or book entry possession of the security.
RULE 144A INVESTMENTS, SECTION 4(2) COMMERCIAL PAPER AND ILLIQUID
SECURITIES
Each Fund, with respect to not more than 10% of its total assets, may
purchase securities that are not readily marketable, or are "illiquid".
Repurchase agreements of more than seven days' duration and variable and
floating rate demand notes not requiring receipt of the principal note
amount within seven days' notice are considered illiquid. A Fund may incur
higher transaction costs and require more time to complete transactions for
the purchase and sale of illiquid securities than for readily marketable
securities. When a Fund determines to sell an illiquid security within a
relatively short time period, it may have to accept a lower sales price than
if the security were readily marketable.
The Adviser will make a factual determination as to whether securities with
contractual or legal restrictions on resale purchased by a Fund are liquid,
based on the frequency of trades and quotes, the number of dealers and
potential purchasers, dealer undertakings to make a market, and the nature
of the security and the marketplace, pursuant to procedures adopted by the
Board of Directors of the Investment Company.
Securities that are eligible for purchase and sale under Rule 144A of the
Securities Act of 1933 (the 1933 ACT) shall be considered liquid, provided
the Adviser has not made a contrary determination regarding liquidity in
accordance with the Board's procedures. Rule 144A permits certain qualified
institutional buyers to trade in securities even though the securities are
not registered under the 1933 Act. In addition, commercial paper privately
placed in accordance with Section 4(2) of the 1933 Act also will be
considered liquid, provided the requirements set forth in the Board's
procedures are satisfied.
OPTIONS AND FUTURES CONTRACTS
Each of the Funds may purchase and sell options and futures contracts, as
described below, as long as the contracts are traded on a domestic exchange.
Each Fund may sell a call option contract on a security it holds in its
portfolio (called a covered call), and it may buy a call option contract on
the security to close out a position created by the sale of a covered call.
o A CALL OPTION is a short-term contract (generally having a duration of
nine months or less) which gives the purchaser of the option the right
to purchase the underlying security at a fixed exercise price at any
time prior to the expiration of the option regardless of the market
price of the security during the option period. As consideration for
writing a covered call option, a Fund (the seller) receives from the
purchaser a premium, which the Fund retains whether or not the option
is exercised.
o The seller of the call option has the obligation, upon the exercise of
the option by the purchaser, to sell the underlying security at the
exercise price at any time during the option period. The selling of a
call option will benefit a Fund if, over the option period, the
underlying security declines in value or does not appreciate above the
aggregate of the exercise price and the premium. However, the Fund
risks an "opportunity loss" of profits if the underlying security
appreciates above the aggregate value of the exercise price and the
premium.
Each Fund may buy a put option contract on a security it holds in its
portfolio, and it may sell a put option contract on the security to close out
a position created by the purchase of the put option contract.
o A PUT OPTION is a similar short-term contract that gives the purchaser
of the option the right to sell the underlying security at a fixed
exercise price at any time prior to the expiration of the option
regardless of the market price of the security during the option
period. As consideration for the put option, a Fund (the purchaser)
pays the seller a premium, which the seller retains whether or not the
option is exercised. The seller of the put option has the obligation,
upon the exercise of the option by the purchaser, to purchase the
underlying security at the exercise price at any time during the option
period. The buying of a covered put contract limits the downside
exposure for the investment in the underlying security to the
combination of the exercise price less the premium paid.
o The risk of purchasing a put is that the market price of the underlying
stock prevailing on the expiration date may be above the option's
exercise price. In that case the option would expire worthless and the
entire premium would be lost.
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Each Fund may purchase and sell futures contracts, and purchase options on
futures contracts, on fixed-income securities or on an index of securities,
such as the Standard & Poor's 100 Index, the Standard & Poor's 500 Index or
the New York Stock Exchange Composite Index.
o A FUTURES CONTRACT ON FIXED INCOME SECURITIES requires the seller to
deliver, and the purchaser to accept delivery of, a stated quantity of
a given type of fixed income security for a fixed price at a specified
time in the future. A futures contract or option on a stock index
provides for the making and acceptance of a cash settlement equal to
the change in value of a hypothetical portfolio of stocks between the
time the contract is entered into and the time it is liquidated, times
a fixed multiplier. Futures contracts may be traded domestically only
on exchanges which have been designated as "contract markets" by the
Commodity Futures Trading Commission, such as the Chicago Board of
Trade.
o An OPTION ON A FUTURES CONTRACT provides the purchaser with the right,
but not the obligation, to enter into a "long" position in the
underlying futures contract (in the case of a call option on a futures
contract), or a "short" position in the underlying futures contract (in
the case of a put option on a futures contract), at a fixed price up to
a stated expiration date. Upon exercise of the option by the holder,
the contract market clearing house establishes a corresponding short
position for the writer of the option, in the case of a call option, or
a corresponding long position in the case of a put option. In the event
that an option is exercised, the parties are subject to all of the
risks associated with the trading of futures contracts, such as payment
of margin deposits.
o A Fund does not pay or receive a payment upon its purchase or sale of a
futures contract. Initially, a Fund will be required to deposit with
the Fund's custodian in the broker's name an amount of cash or U.S.
Treasury bills equal to approximately 5% of the contract amount. This
amount is known as "initial margin."
o While a futures contract is outstanding, there will be subsequent
payments, called "maintenance margin", to and from the broker. These
payments will be made on a daily or intraday basis as the price of the
underlying instrument or stock index fluctuates making, the long and
short positions in the futures contract more or less valuable. This
process is known as "mark to market." At any time prior to expiration
of the futures contract, a Fund may elect to close the position by
taking an opposite position, which will operate to terminate the Fund's
position in the futures contract and may require additional transaction
costs. A final determination of margin is then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain.
A Fund may use futures contracts to protect against general increases or
decreases in the levels of securities prices, in the manner described below.
o When a Fund anticipates a general decrease in the market value of
portfolio securities, it may sell futures contracts. If the market
value falls, the decline in the Fund's net asset value may be offset,
in whole or in part, by corresponding gains on the futures position.
- A Fund may sell futures contracts on fixed-income securities in
anticipation of a rise in interest rates, that would cause a decline
in the value of fixed-income securities held in the Fund's portfolio.
- A Fund may sell stock index futures contracts in anticipation of a
general market wide decline that would reduce the value of its
portfolio of stocks.
o When a Fund projects an increase in the cost of fixed-income securities
or stocks to be acquired in the future, the Fund may purchase futures
contracts on fixed-income securities or stock indexes. If the hedging
transaction is successful, the increased cost of securities
subsequently acquired may be offset, in whole or in part, by gains on
the futures position.
o Instead of purchasing or selling futures contracts, a Fund may purchase
call or put options on futures contracts in order to protect against
declines in the value of portfolio securities or against increases in
the cost of securities to be acquired.
- Purchases of options on futures contracts may present less risk in
hedging a portfolio than the purchase and sale of the underlying
futures contracts, since the potential loss is limited to the amount
of the premium paid for the option, plus related transaction costs.
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- 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.
o The Funds also may purchase put options on securities or stock indexes
for the same types of securities for hedging purposes. The purchase of
a put option on a security or stock index permits a Fund to protect
against declines in the value of the underlying security or securities
in a manner similar to the sale of futures contracts.
o In addition, the Funds may write call options on portfolio securities
or on stock indexes for the purpose of increasing their returns and/or
to protect the value of their portfolios.
- When a Fund writes an option which expires unexercised or is closed
out by the Fund at a profit, it will retain the premium paid for the
option, less related transaction costs, which will increase its gross
income and will offset in part the reduced value of a portfolio
security in connection with which the option may have been written.
- If the price of the security underlying the option moves adversely to
the Fund's position, the option may be exercised and the Fund will be
required to sell the security at a disadvantageous price, resulting
in losses which may be only partially offset by the amount of the
premium.
- A call option on a security written by a Fund will be covered through
ownership of the security underlying the option or through ownership
of an absolute and immediate right to acquire such security upon
conversion or exchange of other securities held in its portfolio.
RISKS IN FUTURES AND OPTIONS TRANSACTIONS INCLUDE THE FOLLOWING:
o There may be a lack of liquidity, which could make it difficult or
impossible for a Fund to close out existing positions and realize gains
or limit losses.
The liquidity of a secondary market in futures contracts or options on
futures contracts may be adversely affected by "daily price fluctuation
limits," established by the exchanges on which such instruments are
traded, which limit the amount of fluctuation in the price of a
contract during a single trading day. Once the limit in a particular
contract has been reached, no further trading in such contract may
occur beyond such limit, thus preventing the liquidation of positions,
and requiring traders to make additional variation margin payments.
Market liquidity in options, futures contracts or options on futures
contracts may also be adversely affected by trading halts, suspensions,
exchange or clearing house equipment failures, government intervention,
insolvency of a brokerage firm or clearing house or other disruptions
of normal trading activity.
o The securities held in a Fund's portfolios may not exactly duplicate
the security or securities underlying the options, futures contracts or
options on futures contracts traded by the Fund, and as a result the
price of the portfolio securities being hedged will not move in the
same amount or direction as the underlying index, securities or debt
obligation.
o A Fund purchasing an option may lose the entire amount of the premium
plus related transaction costs.
o For options on futures contracts, changes in the value of the
underlying futures contract may not be fully reflected in the value of
the option.
o With respect to options and options on futures contracts, the Funds are
subject to the risk of market movements between the time that the
option is exercised and the time of performance thereunder.
o In writing a covered call option on a security or a stock index, a Fund
may incur the risk that changes in the value of the instruments used to
cover the position will not correlate precisely with changes in the
value of the option or underlying the index or instrument.
o The opening of a futures position and the writing of an option are
transactions that involve substantial leverage. As a result, relatively
small movements in the price of the contract can result in substantial
unrealized gains or losses.
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ADDITIONAL INFORMATION ABOUT SPECIFIC TYPES OF SECURITIES
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NON-INVESTMENT GRADE SECURITIES
The Bond Fund may purchase non-investment grade debt securities. In
addition, the Bond Fund and the other Funds that purchase debt securities
may hold a security that becomes non-investment grade as a result of
impairments of the issuer's credit.
Fixed-income securities that are rated in the lower rating categories of the
nationally recognized rating services (Ba or lower by Moody's and BB or
lower by Standard & Poor's), or unrated securities of comparable quality,
are commonly known as non-investment grade securities or "junk bonds". Junk
bonds are regarded as being predominantly speculative as to the issuer's
ability to make payments of principal and interest. Investment in
non-investment grade securities involves substantial risk. Junk bonds may be
issued by less creditworthy companies or by larger, highly leveraged
companies, and are frequently issued in corporate restructurings, such as
mergers and leveraged buy-outs. Such securities are particularly vulnerable
to adverse changes in the issuer's industry and in general economic
conditions. Junk bonds frequently are junior obligations of their issuers,
so that in the event of the issuer's bankruptcy, claims of the holders of
junk bonds will be satisfied only after satisfaction of the claims of senior
security holders.
Non-investment grade bonds tend to be more volatile than higher-rated
fixed-income securities, so that adverse economic events may have a greater
impact on the prices of junk bonds than on higher-rated fixed-income
securities. Junk bonds generally are purchased and sold through dealers who
make a market in such securities for their own accounts. However, there are
fewer dealers in the non-investment grade bond market, and the market may be
less liquid than the market for higher-rated fixed-income securities, even
under normal economic conditions. Also, there may be significant disparities
in the prices quoted for junk bonds by various dealers. Adverse economic
conditions or investor perceptions (whether or not based on economic
fundamentals) may impair the liquidity of this market, and may cause the
prices that a Fund may receive for any non-investment grade bonds to be
reduced, or might cause a Fund to experience difficulty in liquidating a
portion of its portfolio.
The Investment Company currently anticipates than no Fund will invest more
than 5% of its total assets in non-investment grade debt securities.
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY OBLIGATIONS
All of the Funds may invest in U.S. Government and U.S. Government agency
obligations. Some of these securities also may be considered money market
instruments. Some also may be mortgage-backed securities or zero coupon
securities.
U.S. GOVERNMENT OBLIGATIONS: These securities are issued or guaranteed as to
principal and interest by the United States Government. They include a
variety of Treasury securities, which differ only in their interest rates,
maturities and times of issuance. Treasury bills have a maturity of one year
or less. Treasury notes at the time of issuance have maturities of one to
seven years and Treasury bonds generally have a maturity of greater than
five years.
U.S. GOVERNMENT AGENCY OBLIGATIONS: Agencies of the United States Government
that issue or guarantee obligations include, among others, Export-Import
Bank of the United States, Farmers Home Administration, Federal Housing
Administration, Government National Mortgage Association, Student Loan
Marketing Association, Maritime Administration, Small Business
Administration and the Tennessee Valley Authority. Instrumentalities of the
United States Government that issue or guarantee obligations include, among
others, Federal Farm Credit Banks, Federal National Mortgage Association,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks and Banks for Cooperatives.
Some of the securities issued by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer to borrow from the
Treasury, while others are supported only by the credit of the
instrumentality that issued the obligation.
MONEY MARKET INSTRUMENTS
All of the Funds may purchase money market instruments, which include the
following.
CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
TIME DEPOSITS. Time deposits are deposits in a bank or other financial
institution for a specified period of time at fixed interest rate, for which
no negotiable certificate is received.
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BANKERS' ACCEPTANCE. A bankers' acceptance is a draft drawn on a commercial
bank by a borrower usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods).
The borrower is liable for payment as well as the bank, which
unconditionally guarantees to pay the draft at its face amount on the
maturity date. Most acceptances have maturities of six months or less and
are traded in secondary markets prior to maturity.
COMMERCIAL PAPER. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at
the time of issuance not exceeding nine months.
VARIABLE AMOUNT FLOATING RATE NOTES. Variable floating rate notes are
short-term, unsecured promissory notes issued by corporations to finance
short-term credit needs. These are interest-bearing notes on which the
interest rate generally fluctuates on a weekly basis.
CORPORATE DEBT SECURITIES. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are
traded as money market securities.
TREASURY BILLS. See "U.S. Government and U.S. Government Agency
Obligations" above.
Because the Money Market Fund and the other Funds generally will purchase
only money market instruments that are rated high quality and have short
terms to maturity, these money market instruments are considered to have low
levels of market risk and credit risk.
ZERO COUPON SECURITIES AND DISCOUNT NOTES; REDEEMABLE SECURITIES
The Bond Fund, and the All America Fund to the extent it invests in fixed
income securities, may invest in discount notes and zero coupon securities.
Discount notes mature in one year or less from the date of issuance. Zero
coupon securities may be issued by corporations or by certain U.S.
Government agencies.
Discount notes and zero coupon securities do not pay interest. Instead, they
are issued at prices that are discounted from the principal (par) amount due
at maturity. The difference between the issue price and the principal amount
due at maturity (or the amount due at the expected redemption date in some
cases if the securities are callable) is called "original issue discount". A
Fund must accrue original issue discount as income, even if the Fund does
not actually receive any payment under the security during the accrual
period. The purchase price paid for zero coupon securities at the time of
issuance, or upon any subsequent resale, reflects a yield-to-maturity
required by the purchaser from the purchase date to the maturity date (or
expected redemption date).
FOREIGN SECURITIES
In addition to investing in domestic securities, each of the Funds other
than the Equity Index Fund and the Money Market Fund, may invest in
securities of foreign issuers, including securities traded outside the
United States. Foreign issues guaranteed by domestic corporations are
considered to be domestic securities.
The Investment Company has a fundamental investment restriction that limits
foreign securities, including foreign exchange transactions, to 20% of a
Fund's total assets. (See "Fundamental Investment Restrictions", paragraph
2.) The Investment Company currently anticipates that no Fund will invest
more than 10% of its total assets in foreign securities or foreign exchange
transactions.
The Investment Company will consider special factors before investing in
foreign securities. These include:
o Year 2000 preparedness by the issuer and the foreign exchange where the
security is traded,
o changes in currency rates or currency exchange control regulations,
o the possibility of expropriation,
o the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting
standards,
o less liquidity and more volatility in foreign securities markets,
o the impact of political, social or diplomatic developments, and
o the difficulty of assessing economic trends in foreign countries.
The Funds could encounter greater difficulties in bringing legal processes
abroad than would be encountered in the United States. In addition,
transaction costs in foreign securities may be higher.
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AMERICAN DEPOSITARY RECEIPTS
ADRs are dollar-denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign issuer.
ADRs are publicly traded on exchanges or over-the-counter in the United
States. ADRs are not considered foreign securities for purposes of the
restriction on the amount of foreign securities.
The Investment Company will consider special factors before investing in
ADRs: These include:
o Year 2000 preparedness by the issuer,
o changes in currency rates or currency exchange control regulations,
o the possibility of expropriation,
o the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting
standards,
o the impact of political, social or diplomatic developments, and
o the difficulty of assessing economic trends in foreign countries.
CONVERTIBLE SECURITIES
The Bond Fund, as well as the All America Fund to the extent it invests in
debt securities, may invest in convertible debt securities. Convertible
securities can be converted by the holder into common stock of the issuer,
at the price and on the terms set forth by the issuer when the convertible
securities are initially sold. Convertible securities normally provide a
higher yield than the underlying stock but a lower yield than a fixed-income
security without the convertibility feature. The price of the convertible
security normally will vary to some degree with changes in the price of the
underlying stock, although the higher yield tends to make the convertible
security less volatile than the underlying common stock. The price of the
convertible security also will vary to some degree inversely with interest
rates.
EQUIPMENT TRUST CERTIFICATES
The Bond Fund, as well as the All America Fund to the extent it invests in
debt securities, may invest in equipment trust certificates. The proceeds of
those certificates are used to purchase equipment, such as railroad cars,
airplanes or other equipment, which in turn serve as collateral for the
related issue of certificates.
The equipment subject to a trust generally is leased by a railroad, airline
or other business, and rental payments provide the projected cash flow for
the repayment of the equipment trust certificates. Holders of equipment
trust certificates must look to the collateral securing the certificates,
and any guarantee provided by the lessee or any parent corporation for the
payment of lease amounts, in the case of default in the payment of principal
and interest on the certificates.
The Investment Company currently anticipates that no Fund will invest more
than 5% of its total assets in equipment trust certificates.
ASSET-BACKED SECURITIES
The Bond Fund, as well as the All America Fund to the extent it invests in
debt securities, may invest in securities backed by consumer or credit card
loans or other receivables or may purchase interests in pools of such
assets.
Changes in interest rates may significantly affect the value of these
securities, and prepayment rates will impact the yield and price of the
securities. A decline in interest rates may result in increases in
prepayment, and a Fund will have to invest prepayment proceeds at the
prevailing lower interest rates. Asset-backed securities generally are not
expected to prepay to the same extent as mortgage-backed securities in such
circumstances. An increase in interest rates may result in prepayment at a
rate slower than was assumed when the security was purchased. The
creditworthiness of an issuer of asset-backed securities also may impact the
value of they securities.
The Investment Company currently anticipates that no Fund will:
o invest more than 10% of its total assets in asset-backed securities,
o invest in interest-only strips or principal-only strips of asset-backed
securities, or
o purchase the most speculative series or class of asset-backed
securities issues.
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MORTGAGE-BACKED SECURITIES
The Bond Fund, as well as the All America Fund to the extent it invests in
debt securities, may invest in mortgage-backed securities. You should refer
to the discussion of Mortgage-Backed Securities in the Prospectus under
"Details about How Our Funds Invest and Related Risks -- Specific
Investments or Strategies and Related Risks".
The Investment Company currently anticipates that no Fund will:
o invest more than 10% of its total assets in mortgage-backed securities
that are not also considered to be U.S. Government or U.S. Government
agency securities,
o invest in interest-only strips or principal-only strips of
mortgage-backed securities, or
o purchase the most speculative class or series of collateralized
mortgage obligation issues or other mortgage-backed securities issues.
WARRANTS
The All America Fund and Bond Fund may acquire warrants. A warrant is an
option to purchase common stock of an issuer and is issued in conjunction
with another security, such as a debt obligation. A warrant specifies the
price at which the holder may purchase shares of common stock and usually
expires after a period of time. A warrantholder generally may pay cash for
the common stock to be purchased or may surrender principal amount of the
related debt security the warrantholder owns equal to the purchase price for
the stock.
The common stock underlying a warrant may not increase in value after the
date the warrant was issued, or may not increase up to the warrant exercise
price. In this case, the warrant generally would have little value and could
expire unexercised.
The Investment Company currently anticipates that no Fund will invest more
than 5% of its assets in warrants.
PREFERRED STOCK
The All America Fund and Bond Fund may purchase preferred stock. A
corporation may issue a form of equity security called preferred stock.
Compared to common stock, preferred stock has advantages in the receipt of
dividends and in the receipt of the corporation's assets upon liquidation.
Preferred stockholders, however, usually do not have voting rights at
meetings of the corporation's shareholders.
An issuer of preferred stock must pay a dividend to holders of preferred
stock before it distributes a dividend to holders of common stock. When a
corporation issues preferred stock, it sets a dividend rate, or a formula to
determine the rate. If a corporation does not have sufficient earnings to
pay the specified dividend to preferred stockholders, the unpaid dividend
may accrue (cumulate) and become payable when the corporation's earnings
increase. Bondholders, in contrast, are entitled to receive interest and
principal due, regardless of the issuer's earnings.
Some issues of preferred stock give the holder the right to convert the
preferred stock into shares of common stock, when certain conditions are
met. A holder of preferred stock that is not convertible, or of preferred
stock that is convertible but has not met the conditions for conversion,
does not share in the earnings of the issuer other than through the receipt
of dividends on the preferred stock. The market value of convertible
preferred stock generally fluctuates more than the market value of
nonconvertible preferred stock, because the value of the underlying common
stock will affect the price of the convertible stock.
Preferred stock has the risk that a corporation may not have earnings from
which to pay the dividends as they become due. Even if a corporation is
paying dividends, if the dividend rate is fixed (and not variable), changes
in interest rates generally will affect the market value of the preferred
stock in the same manner as for debt obligations.
The Investment Company presently anticipates that no Fund will invest more
than 10% of its assets in preferred stock.
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FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies and may not
be changed without the approval of a majority of the outstanding voting shares
of the affected Fund. No Fund will:
1. purchase or sell options or futures except those listed on a domestic
exchange;
2 trade in foreign exchange, or invest in securities of foreign issuers if
at the time of acquisition more than 20% of its total assets, taken at
market value at the time of the investment, would be invested in such
securities;
3. make an investment in order to exercise control of management over a
company (either singly or together with any other Fund);
4. underwrite the securities of other companies;
5. make short sales, except when the Fund has, by reason of ownership of
other securities, the right to obtain securities of equivalent kind and
amount that will be held so long as they are in a short position;
6. purchase commodities or commodity contracts, except to the extent
described in the Prospectus and herein with respect to futures and related
options;
7. with respect to at least 75% of the value of its total assets, invest
more than 5% of its total assets in the securities of any one issuer
(including repurchase agreements with any one institution), other than
securities issued or guaranteed by the United States Government or its
agencies or instrumentalities;
8. with respect to at least 75% of the value of its total assets, purchase
more than 10% of the outstanding voting securities of an issuer, except
that such restriction shall not apply to securities issued or guaranteed
by the United States Government or its agencies or instrumentalities;
9. issue senior securities, except that each Fund may borrow as described
in restriction 13 below (the issuance and sale of options and futures not
being considered the issuance of senior securities) and except as
permitted by the rules and regulations of the Investment Company Act or an
exemption thereunder and with any required approval of the shareholders of
the Investment Company;
10. make an investment in an industry if that investment would make the
Fund's holding in that industry exceed 25% of the Fund's total assets,
except that this policy does not apply to obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities;
11. purchase real estate or mortgages directly, except that the All America
Fund may buy shares of real estate investment trusts listed on stock
exchanges or reported on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system, and the Bond Fund may buy
mortgage-backed debt issues;
12. purchase any securities issued by any other investment company except as
permitted under the Investment Company Act and in accordance with
applicable state law;
13. purchase any security on margin, except for short-term credit necessary
for clearance of portfolio transactions or in connection with permitted
options and futures contracts, or borrow money, except from banks for
temporary purposes, or pledge its assets unless to secure such borrowing.
The Funds may borrow money from or pledge their assets to banks in order
to transfer funds for various purposes, as required, without interfering
with the orderly liquidation of securities in their portfolios, but not
for leveraging purposes. Such borrowings may not exceed 5% of the value of
a Fund's total assets at market value;
14. make loans, except loans of portfolio securities (not exceeding 30% of
the value of its total assets at market value) or loans through entry into
repurchase agreements (the purchase of publicly traded debt obligations
not being considered the making of a loan);
15. invest more than 10% of its total assets in repurchase agreements or
time deposits maturing in more than seven days or in portfolio securities
not readily marketable; or
16. purchase oil, gas or mineral interests, except that the Funds may
purchase securities of issuers that invest in oil, gas or mineral
interests.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from
a change in values of portfolio securities or amount of net assets will not
be considered a violation.
13
<PAGE>
MANAGEMENT OF THE INVESTMENT COMPANY
The Directors of the Investment Company consist of five individuals, four of
whom are not "interested persons" of the Investment Company as defined in
the Investment Company Act of 1940. The Directors of the Investment Company
are responsible for the overall supervision of the operations of the
Investment Company and perform the various duties imposed on the directors
of investment companies by the Investment Company Act of 1940. The Board of
Directors elects officers of the Investment Company annually.
The Directors and Officers of the Investment Company and their principal
employment are as follows:
<TABLE>
<CAPTION>
POSITION HELD WITH PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE INVESTMENT COMPANY DURING PAST FIVE YEARS
<S> <C> <C>
Kevin M. Kearney, age 46 Director Partner, Wingate, Kearney & Cullen (law
Brooklyn, NY firm)
Dolores J. Morrissey*, age 70 Chairman of the President and Chief Executive Officer of
320 Park Avenue Board, President and Mutual of America Securities Corporation
New York, NY 10022 Director ("Distributor") since August 1996; Executive
Vice President and Assistant to the President
of the Adviser from March 1996 to December
1996; President and Chief Executive Officer
of the Adviser June 1994 to March 1996;
prior thereto, Executive Vice President and
Chief Investment Officer -- General Account
of the Adviser
John T. Sharkey, age 62 Director Vice President -- Corporate National
New York, NY Accounts, MCI Communications
John R. Silber, age 72 Director Chancellor, Boston University.
Boston, MA
Stanley Shmishkiss, age 79 Director Shmishkiss Associates; Chairman Emeritus of
Lynn, MA the Board of Trustees of the American Cancer
Society Foundation
Patrick J. Waide, Jr., age 61 Director President, The Drucker Foundation since
New York, New York January 1999; Chief Operating Officer,
Sullivan & Company, New York, New York
from September 1996 to December 1998;
Executive Vice President and Chief Financial
Officer of the Bessemer Group, Inc., and
Senior Vice President and Chief Financial
Officer of Bessemer Securities, until January
1996.
Manfred Altstadt, age 49 Senior Executive Vice Senior Executive Vice President and Chief
320 Park Avenue President and Financial Officer, Mutual of America Life and
New York, NY 10022 Treasurer American Life.
Patrick A. Burns, age 52 Senior Executive Vice Senior Executive Vice President and General
320 Park Avenue President, General Counsel Counsel of the Adviser, Mutual of America
New York, NY 10022 Life and American Life.
John Greed, age 39 Executive Vice President Executive Vice President and Treasurer,
320 Park Avenue and Chief Financial Officer Mutual of America Life and American Life
New York, NY 10022 since May 1997; Senior Vice President and
Deputy Treasurer from July 1996 to May
1997; prior thereto, Partner, Arthur Andersen,
LLP
Stanley M. Lenkowicz, age 56 Senior Vice President, Senior Vice President and Deputy General
320 Park Avenue Deputy General Counsel, Mutual of America, since March
New York, NY 10022 Counsel and Secretary 1995; prior thereto, Senior Vice President and
Associate General Counsel
</TABLE>
----------
* Ms. Morrissey is an "interested person" within the meaning of the Investment
Company Act.
14
<PAGE>
The officers and directors of the Investment Company own none of its
outstanding shares (as individuals they are not eligible to purchase Fund
shares). The Investment Company has no Audit Committee, and the entire Board
of Directors fulfills the obligations that an Audit Committee would have.
Set forth below is a table showing compensation paid to the directors
during 1998.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR TOTAL COMPENSATION FROM
COMPENSATION FROM RETIREMENT BENEFITS ESTIMATED INVESTMENT COMPANY AND
INVESTMENT ACCRUED AS PART OF BENEFITS OTHER INVESTMENT
NAME OF DIRECTOR COMPANY FUND EXPENSES UPON RETIREMENT COMPANIES IN COMPLEX(3)
<S> <C> <C> <C> <C>
Kevin M. Kearney ....... $ 14,261(2) None None $14,261(2)
Dolores J. Morrissey None(1) None None None(1)
John T. Sharkey ........ $ 15,053(2) None None $15,053(2)
Stanley Shmishkiss ..... $ 8,410(2) None None $ 8,410(2)
John R. Silber ......... $ 16,384(2) None None $16,384(2)
Patrick J. Waide, Jr. .. $ 15,053(2) None None $15,053(2)
</TABLE>
----------
(1) As an employee of an affiliates of the Adviser and an "interested
person" of the Investment Company, Ms. Morrissey serves as director of the
Investment Company and of Mutual of America Investment Corporation without
compensation.
(2) Directors who are not "interested persons" of the Investment Company
receive from the Investment Company an annual retainer of $10,000, a fee
of $1,000 for each Board or Committee meeting attended and business travel
and accident insurance and life insurance. Mr. Shmishkiss was elected as a
director in August 1998.
(3) Directors who are not interested persons do not serve on the Board of
any other investment company in the same complex as the Investment
Company.
At March 31, 1999, Mutual of America Life Insurance Company (MUTUAL OF AMERICA
LIFE ) owned 90.2% of the All America Fund's shares, 92.6% of the Bond Fund's
shares and 13% of the Money Market Fund's shares. As of May 1, 1999 when the
Equity Index Fund began operations, Mutual of America Life Insurance Company
and its wholly-owned subsidiary, The American Life Insurance Company of New
York (AMERICAN LIFE), owned 100% of the Equity Index Fund's shares. Mutual of
America Life and American Life have the right to vote their shares at any
meeting of shareholders. Based on their ownership of shares on the date of
this Statement of Additional Information, Mutual of America Life will control
the outcome of voting by shareholders of the All America Fund, Bond Fund, and
all of the Funds together, and Mutual of America and American Life will
control the outcome of voting by shareholders of the Equity Index Fund. The
address for Mutual of America Life and American Life, both of which are New
York corporations, is 320 Park Avenue, New York, NY 10022.
INVESTMENT ADVISORY ARRANGEMENTS
INVESTMENT ADVISER. The Investment Company's investment adviser is Mutual of
America Capital Management Corporation (the ADVISER or CAPITAL MANAGEMENT),
an indirect wholly-owned subsidiary of Mutual of America Life. The Adviser's
address is 320 Park Avenue, New York, New York 10022. The Adviser is a
registered investment adviser under the Investment Advisers Act of 1940. The
Adviser provides investment management services to the Investment Company,
Mutual of America Investment Corporation and the General Accounts of Mutual
of America Life and American Life.
The Adviser provides advisory services for the Investment Company's Funds,
in accordance with the Funds' investment policies, objectives and
restrictions as set forth in the Prospectus and this Statement of Additional
Information. The Adviser has delegated some of its advisory responsibilities
for a portion of the All America Fund to the Subadvisers named below. The
Adviser's activities are subject at all times to the supervision and
approval of the Investment Company's Board of Directors.
Under the Investment Advisory Agreement, the Adviser agrees to provide
investment management services to the Investment Company. These services
include:
o performing investment research and evaluating pertinent economic,
statistical and financial data;
o consultation with the Investment Company's Board of Directors and
furnishing to the Investment Company's Board of Directors
recommendations with respect to the overall investment plan;
15
<PAGE>
o implementation of the overall investment plan, including carrying out
decisions to acquire or dispose of investments;
o management of investments;
o reporting to the Investment Company's Board of Directors on a regular
basis on the implementation of the investment plan and the management
of investments;
o maintaining all required records;
o making arrangements for the safekeeping of assets; and
o providing office space facilities, equipment, material and personnel
necessary to fulfill its obligations.
The Adviser is responsible for all expenses incurred in performing the
investment advisory services, including compensation of officers and payment
of office expenses, and for providing investment management services.
ADVISORY FEES. As compensation for its services to each of the Funds of the
Investment Company, the Funds pay the Adviser a fee at the following annual
rates of net assets, calculated as a daily charge:
Equity Index Fund -- .125%
All America Fund -- .50%
Bond Fund -- .45%
Money Market Fund -- .20%
INVESTMENT ADVISORY FEES PAID BY FUNDS TO ADVISER*
<TABLE>
<CAPTION>
FUND 1998 1997 1996
<S> <C> <C> <C>
All America $311,258 $291,620 $171,293
Bond $106,164 $ 94,370 $ 60,994
Money Market $ 8,216 $ 3,930 N/A
Total Fees $425,638 $389,920 $232,287
</TABLE>
* Excludes Equity Index Fund, which began operations on May 1, 1999.
OTHER FUND EXPENSES. Each Fund is responsible for paying its advisory fee
and other expenses incurred in its operation, including:
o brokers' commissions, transfer taxes and other fees relating to the
Fund's portfolio transactions,
o directors' fees and expenses,
o fees and expenses of its independent certified public accountants
o fees and expenses of its legal counsel,
o the cost of the printing and mailing semi-annual reports to
shareholders, Proxy Statements, Prospectuses, Prospectus Supplements
and Statements of Additional Information,
o the cost of preparation and filing registration statements and
amendments thereto,
o bank transaction charges and custodian's fees,
o any proxy solicitors' fees and expenses,
o SEC filing fees,
o any federal, state or local income or other taxes,
o any membership or licensing fees of the Investment Company Institute
and similar organizations,
o fidelity bond and directors' liability insurance premiums, and
o any extraordinary expenses, such as indemnification payments or damages
awarded in litigation or settlements made.
16
<PAGE>
CONTRACTUAL AND VOLUNTARY EXPENSE REIMBURSEMENTS BY THE ADVISER. The Adviser
limits the expenses of each Fund, other than for brokers' commissions,
transfer taxes and other fees relating to portfolio transactions and
extraordinary expenses, to an annual rate of .85% of the value of net assets
of the All America Fund, .70% of the value of net assets of the Bond Fund,
.40% of the value of the net assets of the Money Market Fund and .325% of the
value of the net assets of the Equity Index Fund. This expense limitation
obligation of the Adviser is contractual for 1999 and will renew each year
thereafter unless the Adviser notifies the Investment Company of its
termination at least two weeks prior to the new year. The Adviser has
voluntarily limited the Funds' expenses since the inception of each Fund to
the amounts that are now the contractual limits, and the Adviser could
discontinue any voluntary reimbursement obligation at any time.
SUBADVISERS FOR PORTION OF THE ALL AMERICA FUND. For approximately 30% of
the assets of the All America Fund (the ACTIVE ASSETS), the Adviser has
entered into Subadvisory Agreements with Fred Alger Management, Inc. (ALGER
MANAGEMENT), Oak Associates, Ltd. (OAK ASSOCIATES) and Palley-Needelman
Asset Management, Inc. (PALLEY-NEEDELMAN) (each a SUBADVISER, and together
the SUBADVISERS). Each Subadviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
Each of the Subadvisers for its portion of the All America Fund provides
investment advisory services, including research, making recommendations and
regular reports to the Board of Directors of the Investment Company,
maintenance of records, and providing all the office space, facilities,
equipment, material and personnel necessary to fulfill its obligations under
the Subadvisory Agreement. The Subadvisers are subject to the supervision of
the Adviser and the Board of Directors of the Investment Company.
SUBADVISORY FEES. The Adviser, not the Investment Company, pays the
Subadvisers for advisory services they provide to the portion of the All
America Fund they manage at the following annual rates of net assets,
calculated as a daily charge:
o Fred Alger Management -- .45%
o Oak Associates -- .30%
o Palley-Needelman Asset Management -- .30%
FEES PAID BY ADVISER TO SUBADVISERS
FOR PAST THREE YEARS
<TABLE>
<CAPTION>
SUBADVISER 1998 1997 1996
<S> <C> <C> <C>
Fred Alger Management, Inc. $25,762 $23,984 $14,362
Oak Associates, Ltd. $18,433 $17,285 $10,835
Palley-Needelman Asset Management, Inc. $17,917 $17,131 $ 9,910
Total $62,112 $58,400 $35,107
</TABLE>
ADMINISTRATIVE AGREEMENTS
ACCOUNTING AND RECORDKEEPING AGENT
The Adviser serves as accounting and recordkeeping agent for the Funds.
Under its Investment Accounting Agreement with the Investment Company, the
Adviser performs accounting and recordkeeping functions related to portfolio
transactions as required by the Investment Company Act, provides the
Investment Company with accounting and related reports on a periodic basis,
and calculates the net asset value of each Fund in the manner described in
the Prospectus.
As compensation for its services, the Adviser receives from each Fund a
monthly base fee of $500 plus a monthly minimum fee of $2,000, or if an
asset-based fee of .0225% of the Investment Company net assets would result
in a fee greater than the aggregate of the Fund minimums, the Fund's
proportion of the asset-based fee, and is reimbursed for out-of-pocket
expenses it incurs in performing its services to the Investment Company. The
Adviser has entered into an arrangement with Mutual of America for the
provision of investment accounting and recordkeeping, legal and certain
other services in connection with the Investment Company.
17
<PAGE>
TRANSFER AGENT
State Street Bank and Trust Company (STATE STREET) serves as transfer agent
and dividend disbursing agent for Fund shares. Under its Transfer Agency and
Service Agreement with the Investment Company, State Street is obligated to
maintain shareholder accounts to reflect purchases and redemptions of Fund
shares; prepare and transmit payments for dividends and distributions declared
by the Investment Company; mail proxy materials, shareholder reports and
prospectuses to current shareholders; and prepare and mail account and
confirmation statements for shareholders. State Street's address is P.O. Box
1978, Boston, Massachusetts 02105, Attn: Mutual Fund Services.
For its services, State Street receives from each Fund a monthly maintenance
fee based on the number of holders of Fund shares, ranging from a minimum of
$1,000 per month for 0-15 shareholders to $2,500 per month for 51-200
shareholders, and a trade processing fee for each trade and is reimbursed
for out-of-pocket expenses.
PORTFOLIO TRANSACTIONS AND BROKERAGE
SELECTION OF BROKERS AND DEALERS
----------------------------------------------------------------------------
The Adviser and each Subadviser are responsible for decisions to buy and
sell securities for the Funds of the Investment Company for which they
provide services as well as for selecting brokers and, where applicable,
negotiating the amount of the commission rate paid.
o The Adviser and Subadvisers select broker-dealers which, in their best
judgment, provide prompt and reliable execution at favorable security
prices and reasonable commission rates.
o They may select broker-dealers which provide them with research
services and may cause a Fund to pay such broker-dealers commissions
which exceed those other broker-dealers may have charged, if in their
view the commissions are reasonable in relation to the value of the
brokerage and/or research services provided by the broker-dealer.
o When purchasing or selling securities trading on the over-the-counter
market, the Adviser and Subadvisers will generally execute the
transaction with a broker engaged in making a market for such
securities.
o The Adviser and Subadvisers may place certain orders with their
affiliates, subject to the requirements of the 1940 Act.
o No transactions may be effected by a Fund with an affiliate of the
Adviser or a Sub-Adviser acting as principal for its own account.
Brokerage commissions are negotiated, as there are no standard rates. All
brokerage firms provide the service of execution of the order made. Some
brokerage firms routinely provide research and statistical data to their
customers, and some firms customarily provide research reports on particular
companies and industries to customers that place a certain volume of trades
with them.
The Adviser, and each Subadviser, will place orders with brokers providing
useful research and statistical data services if reasonable commissions can
be negotiated for the total services furnished even though lower commissions
may be available from brokers not providing such services. The Adviser, and
each Subadviser, uses these services in connection with all of its
investment activities, and some of the data or services obtained in
connection with the execution of transactions for the Investment Company may
be used in managing other investment accounts. Conversely, data or services
obtained in connection with transactions in other accounts may be used by
the Adviser, and each Subadviser, in providing investment advice to the
Investment Company. To the extent that the Adviser, and each Subadviser,
uses research and statistical data services so obtained, its expenses may be
reduced and such data has therefore been and is one of the factors
considered by the Adviser, and each Subadviser, in determining its fee for
investment advisory services.
At times, transactions for the Investment Company may be executed together
with purchases or sales of the same security for other accounts of the
Adviser or a Subadviser. When making concurrent transactions for several
accounts, an effort is made to allocate executions fairly among them.
Transactions of this type are executed only when the Adviser, or a
Subadviser, believes it to be in the best interests of the affected Fund(s),
as well as any other accounts involved. However, the possibility exists that
concurrent executions may work out to the disadvantage of the Fund(s)
involved.
The Investment Company paid aggregate brokerage commissions of $ 56,490 in
1998, $ 47,705 in 1997 and $ 60,000 in 1996.
18
<PAGE>
COMMISSIONS TO AFFILIATED BROKERS
----------------------------------------------------------------------------
During the past three years, the Investment Company has paid brokerage
commissions to Mutual of America Securities Corporation (SECURITIES
CORPORATION), an affiliate of the Adviser, through an introducing brokerage
arrangement with Bear Stearns Securities Corp., and to Fred Alger & Co.
(FRED ALGER), an affiliate of Alger Management, Inc., as follows:
<TABLE>
<CAPTION>
YEAR OF COMMISSIONS % OF TOTAL % OF AGGREGATE DOLLARS
PAYMENT/BROKER PAID COMMISSIONS PAID OF TRANSACTIONS
<S> <C> <C> <C>
1998 -- Securities Corporation $ 0 0% 0%
1997 -- Securities Corporation $ 2,070 4.15% 4.0%
1996 -- Securities Corporation $ 0 0% 0%
1998 -- Fred Alger $15,470 27.4% 23.0%
1997 -- Fred Alger $18,793 37.6% 30.8%
1996 -- Fred Alger $ 5,490 10.7% 5.8%
</TABLE>
The purchases and sales placed through Fred Alger related primarily to
stocks issued by companies with smaller market capitalizations, for which
execution may be more difficult.
PORTFOLIO TURNOVER
----------------------------------------------------------------------------
The Adviser and the Subadvisers do not consider portfolio turnover rate to
be a limiting factor when they deem it appropriate to purchase or sell
securities for a Fund. The portfolio turnover rate for a Fund in any year
will depend on market conditions, and the rate may increase depending on
market conditions or if a new portfolio manager for a Fund restructures the
Fund's holdings. The Insurance Companies' Separate Accounts do not pay taxes
on the investment gains of the Funds. As a consequence, the Adviser and
Subadvisers do not consider how long a Fund has held a security, or how
capital gain upon sale would be characterized, in deciding whether to sell
that security.
The Equity Index Fund and the Indexed Assets of the All America Fund each
attempt to duplicate the investment results of the S&P 500 Index. As a
result, the Adviser anticipates that these Funds will hold investments
generally for longer periods than actively managed funds.
PURCHASE, REDEMPTION AND PRICING OF SHARES
CALCULATION OF NET ASSET VALUE
----------------------------------------------------------------------------
An investor purchases or redeems shares of a Fund at net asset value. A
Fund's net asset value is equal to:
o the sum of the value of the securities the Fund holds,
19
<PAGE>
o plus any cash or other assets, including interest and dividends
accrued, and
o minus all liabilities, including accrued expenses.
The net asset value of each Fund is determined once daily 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
(generally 4:00 p.m. Eastern Time) on each day during which such Exchange is
open for trading.
A Fund's net asset value per share is equal to the Fund's net asset value
divided by the number of Fund shares outstanding.
PRICING OF SECURITIES HELD BY THE FUNDS
----------------------------------------------------------------------------
In determining a Fund's net asset value, the Adviser must value the
securities and other assets the Fund owns.
1) If market quotations are readily available for an investment, the Adviser
uses market value as follows:
o An equity security will be valued at the last sale price for the
security on the principal exchange on which the security is traded, or
at the last bid price on the principal exchange on which such security
is traded if such bid price is of a more recent day than the last sale
price.
o For any equity security not traded on an exchange but traded in the
over-the-counter market, the value will be the last sale price
available, or if no sale, at the latest available bid price.
o Debt securities will be valued at a composite fair market value,
"evaluated bid," which may be the last sale price, by a valuation
service selected by the Adviser and approved by the Investment
Company's Board of Directors.
2) If there are any portfolio securities or assets for which market
quotations are not readily available, the Adviser will use fair value
pricing, as determined in good faith by or under the direction of the Board
of Directors of the Investment Company.
3) If a money market security has a remaining maturity of 60 days or less,
the Adviser will use the amortized cost method of valuation to approximate
market value, as follows:
o A security is initially valued at cost on the date of purchase (or at
market value on the 61st day prior to maturity if the security had more
than 60 days remaining to maturity at date of purchase by a Fund), and
the Adviser assumes constant proportionate amortization in value until
maturity of any discount or premium.
o The maturity of a variable rate certificate of deposit is deemed to be
the next coupon date on which the interest rate is to be adjusted.
o Market value will be used instead if the amortized cost value is
materially different from the actual market value of the security.
4) For stock options and futures contracts, these valuations apply:
o Stock options written by a Fund are valued at the mean of the last bid
and asked price on the principal exchange where the option is traded,
as of the close of trading on that exchange.
o When a Fund writes a call option, the amount of the premium is included
in the Fund's assets and the market value of the call is included in
its liabilities and adjusted thereafter to current market value.
- If a call expires or if the Fund enters into a closing purchase
transaction, it realizes a gain (or a loss if the cost of the
transaction exceeds the premium received when the call was written)
without regard to any unrealized appreciation or depreciation in the
underlying securities, and the liability related to such call is
extinguished.
- If a call is exercised, the Fund realizes a gain or loss from the
sale of the underlying securities and the proceeds of the sale
increased by the premium originally received.
o A premium a Fund pays on the purchase of a put will be deducted from a
Fund's assets and an equal amount will be included as an investment and
subsequently adjusted to the current market value of the put.
20
<PAGE>
o Futures contracts, and options thereon, traded on commodities exchanges
are valued at their official settlement price as of the close of such
commodities exchanges.
TAXATION OF THE INVESTMENT COMPANY
TAXES ON FUNDS' INVESTMENT EARNINGS AND INCOME
----------------------------------------------------------------------------
Each Fund intends to qualify and elect treatment as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. A Fund will not owe
Federal income tax on the ordinary income and net realized capital gains that
it distributes to shareholders, if it qualifies as a regulated investment
company and satifies certain minimum income distribution rules.
If the Investment Company were to fail to qualify as a regulated investment
company, it would be subject to Federal income tax on the Funds' ordinary
income and net realized capital gains, whether or not it distributes the
income and gains to shareholders. If the Funds were to pay Federal income
tax, their investment performance would be negatively affected.
Section 4982 of the Code imposes an excise tax of 4% on a regulated investment
company that 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, plus certain
undistributed income from previous years. Each Fund 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, which would reduce the investment performance of the
Funds.
INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
----------------------------------------------------------------------------
The Investment Company declares dividend distributions semi-annually (at the
end of June and end of December) in the case of net investment income and
annually (at the end of December) in the case of net realized short or
long-term capital gains. A shareholder's dividend distributions are
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 either (1) to receive dividend distributions in
cash or, (2) in the case of distributions by the Equity Index, All America
and Bond Funds, to purchase shares of the Money Market Fund (in which case
the $5,000 minimum is waived).
Cash dividend distributions are 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.
TAXATION OF SHAREHOLDERS
The discussion below provides information that may be helpful to a
shareholder, but it is not a detailed explanation of the Federal income tax
treatment of a shareholder. In addition, the discussion does not address
state, local or foreign taxation. Potential purchasers of shares of a Fund are
encouraged to consult their tax advisers regarding specific questions as to
Federal, state or local taxes. Foreign investors should consider applicable
foreign taxes in their evaluation of an investment in a Fund as well. Many of
the rules set forth below do not apply to not-for-profit organizations and
other entities that are not subject to Federal income taxation.
CHARACTERIZATION OF FUNDS' DISTRIBUTIONS. 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.
PASSIVE FOREIGN INVESTMENT COMPANY ("PFIC"). Due to investment laws in
certain foreign countries, it is possible that a Fund's investments in
equity securities in such countries may consist of shares of investment
companies (or similar investment entities) organized under foreign law or of
ownership interests in special accounts, trusts or partnerships. If the Fund
purchases shares of an investment company (or similar investment entity)
organized under foreign law, the Fund will be treated as owning shares in a
PFIC for U.S. federal income tax purposes and may be subject to U.S. Federal
income tax law in certain circumstances.
21
<PAGE>
FOREIGN CURRENCY GAINS OR LOSSES. Foreign currency gains or losses from
certain debt instruments are generally treated as ordinary income or loss.
These gains or losses will generally increase or decrease the amount of a
Fund's investment company taxable income available to be distributed to
shareholders as ordinary income. Additionally, if losses of this nature
exceed a Fund's other investment company taxable income during a taxable
year, a Fund would not be able to make any ordinary income dividend
distributions. Any such distribution made before the losses were realized
(but in the same taxable year) would be recharacterized as a return of
capital to a Fund's shareholders, thereby reducing the shareholders' basis
in the Fund's shares, and resulting in a capital gain for any shareholder
who received a distribution greater than that shareholder's basis in the
Fund's shares (assuming the shares were held as capital assets).
TAXATION OF FOREIGN COUNTRY INCOME. Investment income received by a Fund may
be subject to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes. These foreign taxes will reduce the amount of
funds available for distributions by a Fund, but are included in the taxable
income reported by the Fund's shareholders. Since stock and securities of
foreign issuers held by any Fund will be limited, the Fund's shareholders will
not be able to claim a credit or deduction for these foreign taxes paid by a
Fund.
REDEMPTIONS AND EXCHANGES. Redemptions and exchanges of a Fund's shares are
taxable events, and shareholders may realize gains or losses on such events. A
shareholder's loss realized on a sale or exchange of shares of a Fund will be
disallowed if the shareholder acquires other Fund shares (whether through the
automatic reinvestment of dividends or otherwise) within a 61-day period
beginning 30 days before and ending 30 days after the date that the shares are
disposed of. In such a case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss. Any loss upon the sale or exchange of Fund
shares held for six months or less, which is not disallowed, will be treated
as long-term capital loss to the extent of any capital gain dividends received
by the shareholder with respect to such shares.
ORIGINAL ISSUE DISCOUNT. The Funds may purchase debt securities that contain
original issue discount. Original issue discount that accrues in a taxable
year is treated as income earned by a Fund and is subject to the distribution
requirements of the Internal Revenue Code. A Fund, however, generally will not
receive any cash income for the original issue discount income it earns in a
taxable year. Accordingly, there is a risk that the Fund may have to sell
other securities to satisfy distribution requirements under the Internal
Revenue Code. Debt securities that a Fund acquires also may be subject to the
market discount rules.
CAPITAL GAINS RATES FOR ENTITIES OTHER THAN INDIVIDUALS. Capital gains of
corporations are subject to tax at the same rates applicable to ordinary
income. Capital losses may be used only to offset capital gains and excess
net capital loss may be carried back three years and forward five years.
DIVIDENDS RECEIVED DEDUCTIONS. Certain corporations are entitled to a 70%
dividends received deduction for distributions from certain domestic
corporations. The Equity Index Fund and All America Fund will designate the
portion of any distributions that qualify for the 70% dividends received
deduction. The amount designated may not exceed the amount received by the
Equity Index Fund or All America Fund for its taxable year that qualifies
for the dividends received deduction. (Since none of the income of the Bond
Fund or the Money Market Fund is expected to be derived from dividends from
domestic corporations, it is not anticipated that any portion of the
ordinary income dividends of the Bond Fund or the Money Market Fund will
qualify for the dividends received deduction.)
PRIVATE FOUNDATIONS. Private foundations and their managers are subject to
excise taxes under the Code if they invest "any amount in such a manner as
to jeopardize the carrying out of any of the foundation's exempt purposes."
This rule requires a foundation manager, in making an investment, to
exercise "ordinary business care and prudence" under the facts and
circumstances prevailing at the time of making the investment, in providing
for the short-term and long-term needs of the foundation in carrying out its
exempt purposes.
The factors that a foundation manager may take into account in assessing an
investment under this standard include the expected rate of return (both
income and capital appreciation), the risks of rising and falling price
levels, and the need for diversification within the foundation's portfolio. A
substantial percentage of investments of certain "private operating
foundations", as defined in the Code, may be restricted to assets directly
devoted to their tax-exempt purposes. Each manager of a private foundation
should consult the manager's and the foundation's tax advisers regarding the
foregoing considerations.
ENDOWMENT FUNDS. Investment managers of endowment funds should consider
whether the acquisition by such funds of shares in the Funds is legally
permissible. This is not a matter of federal law, but is determined under
applicable state statutes. It should be noted, however, that under the
Uniform Management of Institutional Funds
22
<PAGE>
Act, which has been adopted in various forms by a large number of states,
participation in mutual funds or similar organizations, in which funds are
commingled and investment determinations are made by persons other than the
governing board of the endowment fund, is permitted. Each investment manager
of an endowment fund should consult the endowment fund's counsel regarding the
foregoing considerations.
RETIREMENT TRUSTS, INCLUDING QUALIFIED PLANS. The Funds may accept
investments from tax-qualified pension, profit-sharing or stock bonus plans,
governmental plans and units, and Taft-Hartley plans (all such entities
hereinafter being referred to as "Retirement Trusts"). A fiduciary of a
Retirement Trust other than a governmental plan or unit (a "Qualified Plan")
is subject to certain requirements under the Employee Retirement Income
Security Act of 1974, as amended (ERISA), including the discharge of duties
solely in the interest of, and for the exclusive purpose of providing
benefits to, the Qualified Plan's participants and beneficiaries.
In considering an investment in the Funds of a portion of the assets of any
Qualified Plan, a fiduciary should consider, among other factors: (a)
whether the investment is permitted by the documents and instruments
governing the Qualified Plan; (b) whether the investment satisfies the
diversification requirements of Section 404(a)(1)(C) of ERISA, if
applicable; (c) whether the investment provides sufficient liquidity to
permit benefit payments to be made as they become due; (d) whether the
investment is for the exclusive purpose of providing benefits to
participants and their beneficiaries; and (e) whether the investment may
constitute a "prohibited transaction" (within the meaning of Section 406 of
ERISA and Section 4975(c) of the Code). Each fiduciary of a Qualified Plan
(and any other person subject to ERISA) should consult such person's tax or
other advisers regarding the foregoing considerations.
SHAREHOLDER WITHHOLDING
The Investment Company may be required to withhold for Federal income tax
("back-up withholding") from distributions made and the proceeds of
redemptions to a shareholder who is not exempt from back-up withholding,
because the shareholder has 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.
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.
YIELD AND PERFORMANCE INFORMATION
Performance information is computed separately for each Fund in accordance
with the formulas described below. At any time in the future, total return
and yields may be higher or lower than in the past and there can be no
assurance that any historical results will continue.
YIELD OF THE MONEY MARKET FUND. The Money Market Fund calculates a seven-day
"current yield" (eight days when the seventh prior day has no net asset
value because the Investment Company is closed on that day) based on a
hypothetical shareholder account containing one share at the beginning of
the seven-day period. The return is calculated for the period by determining
the net change in the hypothetical account's value for the period, excluding
capital changes. The net change is divided by the share value at the
beginning of the period to give the base period return. This base period
return is then multiplied by 365/7 to annualize the yield figure, which is
carried to the nearest one-hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation
of the assets of the Money Market Fund are included in the hypothetical
account for the beginning of the period but changes in these items during
the period are not included in the value for the end of the period. Income
other than investment income is excluded for the period. Values also reflect
asset charges (for advisory fees) as well as brokerage fees and other
expenses.
Current yields will fluctuate daily. Accordingly, yields for any given
seven-day period do not necessarily represent future results. It should be
remembered that yield depends on the type, quality, maturities and rates of
return of the Money Market Fund's investments, among other factors. The
Money Market Fund yield does not reflect the cost of insurance and other
insurance company separate account charges. It also should not be compared
to the yield of money market funds made available to the general public
because they may use a different method to
23
<PAGE>
calculate yield. In addition, their yields are usually calculated on the basis
of a constant one dollar price per share and they pay out earnings and
dividends which accrue on a daily basis.
The following is an example of the calculation of the Money Market Fund's
yield for the seven-day period ended December 31, 1998. Yields may fluctuate
substantially from the example shown.
1. Value for December 22, 1998
2. Value for December 29, 1998 (exclusive of capital changes and any
non-investment income)
3. Net change equals Line 1 subtracted from Line 2
4. Base period return equals Line 3 divided by Line 1
5. Current yield equals Line 4 annualized (multiplied by 365/7)
The Money Market Fund calculates effective yield by following Steps 1 - 4
above to obtain a base period return, then compounding the base period
return as follows:
Effective Yield = [(Base Period Return + 1) 365/7] - 1
CALCULATION OF TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN. Total Return
reflects changes in the price of a Fund's shares and assumes that any
dividends or capital gains distributions are reinvested in that Fund's
shares immediately rather than paid to the investor in cash.
Average Annual Total Return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over the periods
shown, according to the following formula (Total Return is then expressed as
a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value. ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED DECEMBER 31, 1998*
<TABLE>
<CAPTION>
FUND ONE YEAR LIFE OF FUND*
- ---------------- ---------- --------------
<S> <C> <C>
All America 21.0% 21.6%
Bond 8.3% 8.3%
Money Market 5.3% 5.3%
</TABLE>
CUMULATIVE TOTAL RETURN FOR
PERIODS ENDED DECEMBER 31, 1998*
<TABLE>
<CAPTION>
FUND ONE YEAR LIFE OF FUND
- ---------------- ---------- -------------
<S> <C> <C>
All America 21.0% 68.4%
Bond 8.3% 23.8%
Money Market 5.3% 9.0%
</TABLE>
----------
* The All America and Bond Funds commenced operations on May 1, 1996, and the
Money Market Fund began operations on May 1, 1997.
24
<PAGE>
YIELD OF THE BOND FUND. Yield of the shares of the Bond Fund will be
computed by annualizing net investment income, as determined by the
Commission's formula, calculated on a per share basis, for a recent
one-month or 30-day period and dividing that amount by the net asset value
per share of the Fund on the last trading day of that period. Net investment
income will reflect amortization of any market value premium or discount of
fixed income securities (except for obligations backed by mortgages or other
assets) over such period and may include recognition of a pro rata portion
of the stated dividend rate of dividend paying portfolio securities. The
Yield of the Fund will vary from time to time depending upon market
conditions, the composition of the portfolio and operating expenses
allocated to the Fund.
PERFORMANCE COMPARISONS. Each Fund may from time to time include the Total
Return, the Average Annual Total Return and Yield of its shares in
advertisements or in information furnished to shareholders. The Money Market
Fund may also from time to time include the Yield and Effective Yield of its
shares in information furnished to shareholders.
Each Fund may from time to time also include the ranking of its performance
figures relative to such figures for groups of mutual funds categorized by
Lipper Analytical Services ("Lipper") as having the same or similar
investment objectives or by similar services that monitor the performance of
mutual funds. Each Fund may also from time to time compare its performance
to average mutual fund performance figures compiled by Lipper in Lipper
Performance Analysis.
Advertisements or information the Investment Company furnishes to current or
prospective investors also may include evaluations of a Fund published by
nationally recognized ranking services and by financial publications that
are nationally recognized. These publications may include BARRON'S, BUSINESS
WEEK, CDA TECHNOLOGIES, INC., CHANGING TIMES, DOW JONES INDUSTRIAL AVERAGE,
FINANCIAL PLANNING, FINANCIAL WORLD, FORBES, FORTUNE, HULBERT'S FINANCIAL
DIGEST, INSTITUTIONAL INVESTOR, INVESTORS DAILY, MONEY, MORNINGSTAR MUTUAL
FUNDS, THE NEW YORK TIMES, STANGER'S INVESTMENT ADVISER, VALUE LINE, THE
WALL STREET JOURNAL, WIESENBERGER INVESTMENT COMPANY SERVICE and USA TODAY.
In reports or other communications to shareholders, the Investment Company
also may describe general economic and market conditions affecting the Funds
and may compare the performance of the Funds with (1) that of mutual funds
included in the rankings prepared by Lipper or similar investment services
that monitor the performance of insurance company separate accounts or
mutual funds, (2) IBC/Donoghue's Money Fund Report, (3) other appropriate
indices of investment securities and averages for peer universe of funds
which are described in this Statement of Additional Information, or (4) data
developed by the Adviser or any of the Subadvisers derived from such indices
or averages.
COMPARATIVE INDICES FOR THE FUNDS
----------------------------------------------------------------------------
The Investment Company compares the performance of each Fund (other than the
Money Market Fund) against a widely recognized index or indices for stock or
bond market performance, based on the type of securities the Fund purchases.
The annual and semi-annual financial reports that the Investment Company
prepares will contain graphs with the Funds' performances compared to their
indices.
It is not possible for an investor to directly invest in an unmanaged index.
Performance comparisons to indices are for informational purposes and do not
reflect any actual investment. The Funds pay investment advisory and other
expenses that are not applicable to unmanaged indices.
EQUITY INDEX FUND AND ALL AMERICA FUND: Performance of each of these Funds
is compared to the Standard & Poor's Composite Index of 500 Stocks (the S&P
500 INDEX).
The S&P 500 Index is a market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 stocks relative to the base
period 1941-43. The S&P 500 Index is composed almost entirely of common
stocks of companies listed on the NYSE, although the common stocks of a few
companies listed on the American Stock Exchange or traded OTC are included.
The 500 companies represented include approximately 400 industrial concerns,
as well as financial services, utility and transportation concerns. The S&P
500 Index represents about 80% of the market value of all issues traded on
the NYSE.
BOND FUND: Performance is compared to the Lehman Brothers Government/Corporate
Bond Index (the LEHMAN GOVERNMENT/CORPORATE INDEX).
25
<PAGE>
The Lehman Government/Corporate Index is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1
million, which have at least one year to maturity and are rated "Baa" or
higher ("investment grade") by a nationally recognized statistical rating
agency.
DESCRIPTION OF CORPORATE BOND RATINGS
Description of Corporate bond ratings of Moody's Investors Services, Inc.:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt-edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
Description of corporate bond ratings of Standard & Poor's Corporation:
AAA- Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is very strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
26
<PAGE>
BBB- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB-B-CCC-CC-Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C - The rating C is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
DISTRIBUTION OF FUND SHARES
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 and Mutual of America Life, whose address is 320
Park Avenue, New York, New York 10022, are affiliates of the Adviser.
The Distributor does not receive compensation for distributing Fund shares,
and it is not obligated to distribute any specific amount 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. Registered representatives of the Distributor, located in 36
field offices throughout the United States, participate in the distribution
of shares of the Funds.
Shares of the Fund are offered on a continuous basis. There is no sales
charge or deferred sales charge for the purchase of Fund shares.
LEGAL MATTERS
The legal validity of the shares described in the Prospectus has been passed
on by Patrick A. Burns, Esq., Senior Executive Vice President and General
Counsel of the Investment Company.
INDEPENDENT AUDITORS
The financial statements included in this Statement of Additional
Information have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report.
Arthur Andersen LLP have been selected as the independent auditors of the
Investment Company for its fiscal year ending December 31, 1999. Their
address is 1345 Avenue of the Americas, New York, New York 10105.
CUSTODIAN
The Chase Manhattan Bank, 1285 Avenue of the Americas, New York, New York
10019, acts as Custodian of the Investment Company's assets.
27
<PAGE>
USE OF STANDARD & POOR'S INDEX
The Equity Index Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (S&P). S&P
makes no representation or warranty, express or implied, to the owners of
the Equity Index Fund or any member of the public regarding the advisability
of investing in securities generally or in the Equity Index Fund
particularly or the ability of the S&P 500 Index to track general stock
market performance. S&P's only relationship to the Licensee 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 Equity
Index Fund. S&P has no obligation to take the needs of the Investment
Company or the owners of the Equity Index Fund into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not
responsible for and has not participated in the determination of the net
asset values of the Equity Index Fund, the amount of the shares of the Fund
or the timing of the issuance or sale of the Fund. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Equity Index Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE INVESTMENT COMPANY, OWNERS
OF THE EQUITY INDEX 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 OR 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
POSSIBILITIES OF SUCH DAMAGES.
FINANCIAL STATEMENTS
Financial statements of the Investment Company for the year ended December 31,
1998 are included as follows:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
President's Message ............................... 29
Portfolio Management Discussions .................. 30
Portfolio of Investments in Securities:
All America Fund ................................. 32
Bond Fund ........................................ 40
Money Market Fund ................................ 42
Statement of Assets and Liabilities ............... 43
Statement of Operations ........................... 44
Statements of Changes in Net Assets ............... 45
Financial Highlights .............................. 46
Notes to Financial Statements ..................... 47
Report of Independent Public Accountants .......... 50
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
320 PARK AVENUE, NEW YORK, NEW YORK 10022
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide Mutual of America Institutional Funds' annual
report to shareholders. The All America Fund and the Bond Fund commenced
operations on May 1, 1996 and the Money Market Fund commenced on May 1,
1997. These funds are designed principally as investment vehicles for
endowments, foundations and other institutional investors. The investment
philosophy of the funds is modeled after similarly named funds available
under annuity contracts and variable universal life insurance policies
issued by Mutual of America Life Insurance Company and The American Life
Insurance Company of New York.
Economic expansion continued in 1998 in what is now the longest peacetime
expansion in history. The economic turmoil in Asia, Brazil and Russia caused
a flight to quality in the U.S. and the Federal Reserve responded by
lowering the interest rate three times.
The equity market remained strong in 1998 despite giving back some of its
monumental gains. Funds are still flowing into the stock market at a rapid
pace and continue to support high valuation levels.
The Bond market has come off its lows and Treasury Securities yields have
inched up. A spike up in interest rates unrelated to domestic cyclical
factors could prove harmful to the continued growth of the economy. The
Federal Reserve will be watching this.
The annual total return performance of each fund for the year ended
December 31, 1998 was as follows:
<TABLE>
<S> <C>
All America Fund .......... +21.0%
Bond Fund ................. +8.3%
Money Market Fund ......... +5.3%
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return
and principal value will fluctuate, so shares, when redeemed, may be worth
more or less than when purchased.
On the pages which immediately follow are brief presentations and graphs for
each fund (except the Money Market Fund) which illustrate each fund's
respective:
o Historical total return achieved over specified periods, expressed as
an average annual rate and as a cumulative rate;
o Equivalent in dollars of a $10,000 hypothetical investment at the
beginning of each specified period; and
o Historical performance compared with appropriate indexes.
The portfolios of each fund and financial statements are presented in the
pages which then follow.
We look forward to participating productively in the equity, fixed income
and money markets throughout 1999.
Sincerely,
/s/ Dolores J. Morrissey
--------------------------------------
Dolores J. Morrissey
Chairman of the Board and President,
Mutual of America Institutional Funds,
Inc.
29
<PAGE>
ALL AMERICA FUND
The All America Fund is approximately 60% invested in the 500 stocks
included in the Standard & Poor's 500 Index; the performance objective of
this portion of the Fund is to replicate the returns of the Index. The
remaining 40% of the Fund is actively managed by three sub-advisors and
Mutual of America Capital Management Corporation. Approximately 20% of the
Fund is invested in small capitalization stocks. Small cap stocks
significantly underperformed larger caps in 1998, as investor preference for
large size companies with high earnings predictability continued throughout
the year. When investor preferences shift back to small cap stocks, this
group's performance should improve. The All America Fund returned 21.0% for
1998. The Standard & Poor's 500 Index returned 28.6% for the year.
GROWTH OF A $10,000 INVESTMENT
[GRAPHIC APPEARS HERE]
ALL AMERICA FUND
----------------
PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- ANNUAL
12/31/98 $10,000 LATIVE AVERAGE
------------------------------------------------
1 Year $12,104 21.0% 21.0%
Since 5/1/96
Inception* $16,835 68.4% 21.6%
S&P 500 INDEX
-------------
PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- ANNUAL
12/31/98 $10,000 LATIVE AVERAGE
------------------------------------------------
1 Year $12,857 28.6% 28.6%
Since 5/1/96
Inception* $19,744 97.4% 29.1%
The line representing the performance return of the All America Fund
includes expenses, such as transaction costs, management fees and expenses,
that reduce returns, while the performance return line of the index does
not.
30
<PAGE>
MONEY MARKET FUND
The investment objective of the Money Market Fund is to realize high current
income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital. Through investing in high
quality commercial paper and other short-term instruments, the Money-Market
Fund returned 5.3% comparing favorably to the Salomon Brothers 3-Month
Treasury Bill Index return of 5.1%. The seven-day annualized effective yield
as of 2/16/99 is 4.55%. As with all past performance reportings, this yield
is not necessarily indicative of future actual yields.
BOND FUND
The Bond Fund seeks a high level of return consistent with preservation of
capital through investment in public debt securities. The fund typically
invests heavily in Corporate and Agency securities, which yield
significantly more than U.S. Treasury securities. In 1998, several events
occurred which caused a "flight to quality" into only the most liquid U.S.
Treasury securities, leading these securities to outperform all other debt
asset classes. Over the longer term, the higher yielding securities would be
expected to outperform U.S. Treasuries. The Bond Fund returned 8.3% for 1998
versus the Lehman Brothers Government/Corporate Bond Index of 9.5%.
GROWTH OF A $10,000 INVESTMENT
[GRAPHIC APPEARS HERE]
BOND FUND
---------
PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- ANNUAL
12/31/98 $10,000 LATIVE AVERAGE
------------------------------------------------
1 Year $10,826 8.3% 8.3%
Since 5/1/96
Inception* $12,379 23.8% 8.3%
LEHMAN BROTHERS GOV'T./CORP. BOND INDEX
---------------------------------------
PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- ANNUAL
12/31/98 $10,000 LATIVE AVERAGE
------------------------------------------------
1 Year $10,947 9.5% 9.5%
Since 5/1/96
Inception* $12,748 27.5% 9.5%
The line representing the performance return of the Bond Fund includes
expenses, such as transaction costs, management fees and expenses, that
reduce returns, while the performance return line of the index does not.
31
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ----------
<S> <C> <C>
INDEXED ASSETS:
COMMON STOCKS
3Com Corp. .............................. 1,512 $ 67,756
Abbott Laboratories ..................... 6,437 315,413
Adobe Systems, Inc. ..................... 288 13,464
Advanced Micro Devices, Inc. ............ 601 17,391
Aeroquip-Vickers, Inc. .................. 126 3,772
AES Corp. ............................... 749 35,483
Aetna, Inc. ............................. 606 47,646
Air Products & Chemicals, Inc. .......... 962 38,480
AirTouch Communications, Inc. ........... 2,426 174,975
Alberto-Culver Co. Cl B ................. 251 6,698
Albertson's, Inc. ....................... 1,035 65,916
Alcan Aluminum Ltd. ..................... 968 26,196
Alcoa, Inc. ............................. 776 57,860
Allegheny Teledyne, Inc. ................ 834 17,044
Allergan, Inc. .......................... 274 17,741
AlliedSignal, Inc. ...................... 2,362 104,666
Allstate Corp. .......................... 3,460 133,642
Alltel Corp. ............................ 1,157 69,203
Alza Corp. .............................. 362 18,914
Amerada Hess Corp. ...................... 384 19,104
Ameren Corp. ............................ 583 24,886
American Electric Power, Inc. ........... 812 38,214
American Express Co. .................... 1,917 196,013
American General Corp. .................. 1,063 82,914
American Greetings Corp. Cl A ........... 310 12,729
American Home Products Corp. ............ 5,590 314,786
American Int'l. Group, Inc. ............. 4,444 429,401
American Stores Co. ..................... 1,164 42,995
Ameritech Corp. ......................... 4,679 296,531
Amgen, Inc. ............................. 1,073 112,195
Amoco Corp. ............................. 4,049 244,458
AMP, Inc. ............................... 928 48,314
AMR Corp. ............................... 773 45,896
Anadarko Petroleum Corp. ................ 500 15,437
Andrew Corp. ............................ 404 6,666
Anheuser-Busch Cos., Inc. ............... 2,016 132,300
Aon Corp. ............................... 707 39,150
Apache Corp. ............................ 405 10,251
Apple Computer, Inc. .................... 559 22,884
Applied Materials, Inc. ................. 1,559 66,549
Archer-Daniels-Midland Co. .............. 2,516 43,243
Armco, Inc. ............................. 480 2,100
Armstrong World Inds., Inc. ............. 166 10,011
Asarco, Inc. ............................ 189 2,846
Ascend Communications, Inc. ............. 915 60,161
Ashland, Inc. ........................... 318 15,383
Associates First Capital Corp. Cl A ..... 3,048 129,159
AT&T Corp. .............................. 7,647 575,436
Atlantic Richfield Co. .................. 1,355 88,413
Autodesk, Inc. .......................... 193 8,238
Automatic Data Processing, Inc .......... 1,274 102,158
AutoZone, Inc. .......................... 649 21,376
Avery Dennison Corp. .................... 494 22,260
Avon Products, Inc. ..................... 1,114 49,294
Baker Hughes, Inc. ...................... 1,358 24,019
Ball Corp. .............................. 135 6,176
Baltimore Gas & Electric Co. ............ 635 19,605
Banc One Corp. .......................... 4,967 253,627
Bank of New York Co., Inc. .............. 3,208 129,122
Bankamerica Corp. ....................... 7,325 440,415
BankBoston Corp. ........................ 1,245 48,477
Bankers Trust New York Corp. ............ 405 34,602
Bard (C.R.), Inc. ....................... 235 11,632
Barrick Gold Corp. ...................... 1,586 30,927
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ----------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Battle Mountain Gold Co. ................ 1,029 $ 4,244
Bausch & Lomb, Inc. ..................... 233 13,980
Baxter International, Inc. .............. 1,206 77,560
BB & T Corp. ............................ 1,243 50,108
Bear Stearns Cos., Inc. ................. 479 17,902
Becton Dickinson & Co. .................. 1,049 44,779
Bell Atlantic Corp. ..................... 6,584 348,952
BellSouth Corp. ......................... 8,294 413,663
Bemis, Inc. ............................. 238 9,029
Berkshire Hathaway Inc Cl A ............. 1 78,400
Bestfoods ............................... 1,205 64,166
Bethlehem Steel Corp. ................... 505 4,229
Biomet, Inc. ............................ 477 19,199
Black & Decker Corp. .................... 365 20,462
Block (H. & R.), Inc. ................... 418 18,810
BMC Software, Inc. ...................... 914 40,730
Boeing Co. .............................. 4,214 137,481
Boise Cascade Corp. ..................... 249 7,719
Boston Scientific Corp. ................. 1,666 44,669
Briggs & Stratton Corp. ................. 97 4,837
Bristol-Myers Squibb Co. ................ 4,206 562,815
Brown-Forman Corp. Cl B ................. 292 22,100
Browning-Ferris Inds., Inc. ............. 739 21,015
Brunswick Corp. ......................... 399 9,875
Burlington Northern Santa Fe Corp. ...... 1,978 66,757
Burlington Resources, Inc. .............. 754 27,002
Cabletron Systems, Inc. ................. 707 5,921
Campbell Soup Co. ....................... 1,889 103,895
Capital One Financial Corp. ............. 279 32,085
Cardinal Health, Inc. ................... 847 64,266
Carolina Power & Light Co. .............. 643 30,261
Case Corp. .............................. 334 7,285
Caterpillar, Inc. ....................... 1,513 69,598
CBS Corp. ............................... 2,978 97,529
Cendant Corp. ........................... 3,598 68,586
Centex Corp. ............................ 260 11,716
Central & South West Corp. .............. 904 24,803
Ceridian Corp. .......................... 304 21,223
Champion International Corp. ............ 406 16,443
Charles Schwab Corp. .................... 1,691 95,013
Chase Manhattan Corp. ................... 3,587 244,140
Chevron Corp. ........................... 2,767 229,488
Chubb Corp. ............................. 691 44,828
CIGNA Corp. ............................. 871 67,339
Cincinnati Financial Corp. .............. 710 26,003
CINergy Corp. ........................... 674 23,168
Circuit City Group, Inc. ................ 417 20,823
Cisco Systems, Inc. ..................... 6,687 620,678
Citigroup Inc. .......................... 9,618 476,091
Clear Channel Communications, Inc. ...... 1,050 57,225
Clorox Co. .............................. 439 51,280
Coastal Corp. ........................... 904 31,583
Coca-Cola Co. ........................... 10,439 698,108
Coca-Cola Enterprises, Inc. ............. 1,653 59,094
Colgate-Palmolive Co. ................... 1,235 114,700
Columbia Energy Group ................... 355 20,501
Columbia/HCA Healthcare Corp. ........... 2,722 67,369
Comcast Corp. Cl A ...................... 1,557 91,376
Comerica, Inc. .......................... 660 45,003
Compaq Computer Corp. ................... 7,210 302,369
Computer Associates Intl., Inc. ......... 2,270 96,758
Computer Sciences Corp. ................. 670 43,173
Conagra, Inc. ........................... 2,064 65,016
Conseco, Inc. ........................... 1,334 40,770
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Consolidated Edison, Inc. .................... 985 $ 52,081
Consolidated Natural Gas Co. ................. 408 22,032
Consolidated Stores Corp. .................... 455 9,185
Cooper Industries, Inc. ...................... 430 20,505
Cooper Tire & Rubber Co. ..................... 353 7,214
Coors (Adolph) Co. Cl B ...................... 166 9,368
Corning Inc. ................................. 980 44,100
Costco Co. ................................... 913 65,907
Countrywide Credit Industries, Inc. .......... 480 24,090
Crane Co. .................................... 309 9,327
Crown Cork & Seal, Inc. ...................... 508 15,652
CSX Corp. .................................... 907 37,640
Cummins Engine Co., Inc. ..................... 171 6,070
CVS Corp. .................................... 1,645 90,475
Cyprus Amax Minerals Co. ..................... 419 4,190
Dana Corp. ................................... 704 28,776
Danaher Corp. ................................ 569 30,903
Darden Restaurants, Inc. ..................... 608 10,944
Data General Corp. ........................... 214 3,517
Dayton-Hudson Corp. .......................... 1,855 100,633
Deere & Co. .................................. 1,014 33,588
Dell Computer Corp. .......................... 5,401 395,285
Delta Air Lines, Inc. ........................ 607 31,564
Deluxe Corp. ................................. 342 12,504
Dillard's Inc. Cl A .......................... 468 13,279
Disney (Walt) Co. ............................ 8,689 260,670
Dollar General Corp. ......................... 768 18,144
Dominion Resources, Inc. ..................... 829 38,755
Donnelley (R.R.) & Sons Co. .................. 564 24,710
Dover Corp. .................................. 949 34,757
Dow Chemical Co. ............................. 933 84,844
Dow Jones & Co., Inc. ........................ 390 18,768
DTE Energy Co. ............................... 617 26,453
Du Pont (E.I.) de Nemours & Co. .............. 4,775 253,373
Duke Energy Corp. ............................ 1,527 97,823
Dun & Bradstreet Corp. ....................... 694 21,904
Eastern Enterprises .......................... 91 3,981
Eastman Chemical Co. ......................... 329 14,722
Eastman Kodak Co. ............................ 1,366 98,352
Eaton Corp. .................................. 304 21,489
Ecolab Inc. .................................. 550 19,903
Edison International ......................... 1,496 41,701
EG&G, Inc. ................................... 205 5,701
Electronic Data Systems Corp. ................ 2,078 104,419
EMC Corp. .................................... 2,128 180,880
Emerson Electric Co. ......................... 1,858 112,409
Engelhard Corp. .............................. 595 11,602
Enron Corp. .................................. 1,395 79,602
Entergy Corp. ................................ 1,049 32,650
Equifax Inc. ................................. 613 20,956
Exxon Corp. .................................. 10,296 752,895
FDX Corp. .................................... 624 55,536
Federated Department Stores, Inc. ............ 851 37,071
Federal Home Loan Mortgage Corp. ............. 2,878 185,451
Fifth Third Bancorp .......................... 1,125 80,226
First Data Corp. ............................. 1,871 59,287
First Union Corp. ............................ 4,202 255,534
FirstEnergy Corp. ............................ 1,008 32,823
Fleet Financial Group, Inc. .................. 2,397 107,115
Fleetwood Enterprises, Inc. .................. 148 5,143
Fluor Corp. .................................. 332 14,130
FMC Corp. .................................... 145 8,120
Federal National Mortgage Association ........ 4,398 325,452
Ford Motor Co. ............................... 5,132 301,184
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Fort James Corp. ............................. 937 $ 37,480
Fortune Brands, Inc. ......................... 727 22,991
Foster Wheeler Corp. ......................... 182 2,400
FPL Group, Inc. .............................. 767 47,266
Franklin Resources, Inc. ..................... 1,073 34,336
Fred Meyer, Inc. ............................. 642 38,680
Freeport-McMoran Copper & Gold Cl B .......... 725 7,567
Frontier Corp. ............................... 736 25,024
Fruit of the Loom, Inc. Cl A ................. 328 4,530
Gannett Co., Inc. ............................ 1,188 76,626
Gap, Inc. .................................... 2,444 137,475
Gateway 2000, Inc. ........................... 649 33,220
General Dynamics Corp. ....................... 539 31,598
General Electric Co. ......................... 13,877 1,416,321
General Instrument Corp. ..................... 695 23,586
General Mills, Inc. .......................... 646 50,226
General Motors Corp. ......................... 2,776 198,657
Genuine Parts Co. ............................ 765 25,579
Georgia-Pacific (Timber Group) ............... 366 21,433
Gillette Co. ................................. 4,705 227,310
Golden West Financial Corp. .................. 242 22,188
Goodrich (B.F.) Co. .......................... 316 11,336
Goodyear Tire & Rubber Co. ................... 663 33,440
GPU, Inc. .................................... 544 24,038
Grainger (W.W.), Inc. ........................ 394 16,400
Great Atlantic & Pac. Tea Inc. ............... 171 5,065
Great Lakes Chemical Corp. ................... 246 9,840
GTE Corp. .................................... 4,093 266,045
Guidant Corp. ................................ 635 70,008
Halliburton Co. .............................. 1,854 54,924
Harcourt General, Inc. ....................... 295 15,690
Harnischfeger Industries, Inc. ............... 221 2,251
Harrah's Entertainment, Inc. ................. 452 7,090
Harris Corp. ................................. 333 12,196
Hartford Financial Services Group ............ 985 54,051
Hasbro, Inc. ................................. 556 20,085
HBO & Co. .................................... 1,966 56,399
HCR Manor Care, Inc. ......................... 485 14,246
HealthSouth Corp. ............................ 1,799 27,772
Heinz (H.J.) Co. ............................. 1,527 86,466
Helmerich & Payne, Inc. ...................... 224 4,340
Hercules, Inc. ............................... 433 11,853
Hershey Food Corp. ........................... 595 37,001
Hewlett-Packard Co. .......................... 4,399 300,506
Hilton Hotels Corp. .......................... 1,120 21,420
Home Depot, Inc. ............................. 6,630 405,673
Homestake Mining Co. ......................... 1,046 9,610
Honeywell, Inc. .............................. 523 39,388
Household International Corp. ................ 2,036 80,676
Houston Industries, Inc. ..................... 1,207 38,774
Humana, Inc. ................................. 734 13,074
Huntington Bancshares, Inc. .................. 897 26,966
Ikon Office Solutions, Inc. .................. 595 5,094
Illinois Tool Works, Inc. .................... 1,055 61,190
IMS Health, Inc. ............................. 677 51,071
Inco Ltd. .................................... 748 7,900
Ingersoll Rand Co. ........................... 699 32,809
Intel Corp. .................................. 7,059 836,932
International Paper Co. ...................... 1,299 58,211
Interpublic Group of Cos., Inc. .............. 589 46,972
International Business Machines Corp. ........ 3,951 729,947
International Flavors & Fragrances, Inc. ..... 441 19,486
ITT Industries, Inc. ......................... 431 17,132
Jefferson-Pilot Corp. ........................ 440 33,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Johnson & Johnson ...................... 5,693 $ 477,500
Johnson Controls, Inc. ................. 360 21,240
Jostens, Inc. .......................... 176 4,608
Kaufman & Broad Home Corp. ............. 174 5,002
Kellogg Co. ............................ 1,709 58,319
Kerr-McGee Corp. ....................... 214 8,185
KeyCorp ................................ 1,920 61,440
Kimberly Clark Corp. ................... 2,285 124,532
King World Productions, Inc. ........... 330 9,714
KLA Tencor Corp. ....................... 375 16,265
Kmart Corp. ............................ 2,096 32,095
Knight-Ridder, Inc. .................... 334 17,075
Kohl's Corp. ........................... 657 40,364
Kroger Co. ............................. 1,081 65,400
Laidlaw, Inc. .......................... 1,370 13,785
Lehman Brothers Holdings, Inc. ......... 482 21,238
Lilly (Eli) & Co. ...................... 4,655 413,713
Limited, Inc. .......................... 969 28,222
Lincoln National Corp. ................. 420 34,361
Liz Claiborne, Inc. .................... 268 8,458
Lockheed Martin Corp. .................. 828 70,173
Loews Corp. ............................ 482 47,356
Longs Drug Stores Corp. ................ 176 6,600
Louisiana-Pacific Corp. ................ 490 8,973
Lowe's Companies, Inc. ................. 1,487 76,115
LSI Logic Corp. ........................ 587 9,465
Lucent Technologies, Inc. .............. 5,567 612,370
Mallinckrodt, Inc. ..................... 303 9,336
Marriott International, Inc. Cl A ...... 1,064 30,856
Marsh & McLennan Cos., Inc. ............ 1,085 63,404
Masco Corp. ............................ 1,439 41,371
Mattel, Inc. ........................... 1,223 27,899
May Department Stores Co. .............. 985 59,469
Maytag Corp. ........................... 374 23,281
MBIA Inc. .............................. 422 27,667
MBNA Corp. ............................. 3,171 79,076
McDermott International, Inc. .......... 271 6,690
McDonald's Corp. ....................... 2,869 219,837
McGraw-Hill Cos., Inc. ................. 409 41,666
MCI WorldCom Inc. ...................... 7,762 556,923
Mead Corp. ............................. 437 12,809
MediaOne Group, Inc. ................... 2,560 120,320
Medtronic, Inc. ........................ 2,080 154,440
Mellon Bank Corp. ...................... 1,101 75,693
Mercantile Bancorporation .............. 654 30,165
Merck & Co., Inc. ...................... 5,044 744,935
Meredith Corp. ......................... 217 8,218
Merrill Lynch & Co., Inc. .............. 1,496 99,858
MGIC Investment Corp. .................. 455 18,114
Micron Technology, Inc. ................ 906 45,809
Microsoft Corp. ........................ 10,560 1,464,730
Milacron, Inc. ......................... 179 3,445
Millipore Corp. ........................ 195 5,545
Minnesota Mining & Mfg. Co. ............ 1,693 120,414
Mirage Resorts, Inc. ................... 801 11,964
Mobil Corp. ............................ 3,308 288,209
Monsanto Co. ........................... 2,642 125,495
Moore Corp., Ltd. ...................... 398 4,378
Morgan (J.P.) & Co., Inc. .............. 737 77,431
Morgan Stanley Dean Witter Co. ......... 2,450 173,950
Morton International, Inc. ............. 531 13,009
Motorola, Inc. ......................... 2,546 155,465
NACCO Industries, Inc. Cl A ............ 37 3,404
Nalco Chemical Co. ..................... 272 8,432
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
National City Corp. .................... 1,395 $ 101,137
National Semiconductor Corp. ........... 690 9,315
National Service Industries ............ 176 6,688
Navistar International Corp. ........... 293 8,350
New Century Energies, Inc. ............. 475 23,156
New York Times Co. Cl A ................ 758 26,293
Newell Co. ............................. 676 27,885
Newmont Mining Corp. ................... 695 12,553
Nextel Communications, Inc. Cl A ....... 1,222 28,869
Niagara Mohawk Power Corp. ............. 778 12,545
Nicor, Inc. ............................ 198 8,365
Nike, Inc. Cl B ........................ 1,210 49,080
Nordstrom, Inc. ........................ 619 21,471
Norfolk Southern Corp. ................. 1,603 50,795
Northern States Power Co. .............. 634 17,593
Northern Telecom, Ltd. ................. 2,750 137,843
Northern Trust Corp. ................... 461 40,251
Northrop Grumman Corp. ................. 286 20,913
Novell, Inc. ........................... 1,497 27,133
Nucor Corp. ............................ 372 16,089
Occidental Petroleum Corp. ............. 1,437 24,249
Omnicom Group, Inc. .................... 701 40,658
Oneok, Inc. ............................ 139 5,021
Oracle Corp. ........................... 4,122 177,761
Oryx Energy Co. ........................ 472 6,342
Owens Corning .......................... 239 8,469
Owens Illinois, Inc. ................... 645 19,753
Paccar, Inc. ........................... 325 13,365
PacifiCorp ............................. 1,264 26,623
Pall Corp. ............................. 527 13,339
Parametric Technology Corp. ............ 1,131 18,520
Parker Hannifin Corp. .................. 463 15,163
Paychex, Inc. .......................... 695 35,749
Peco Energy Co. ........................ 931 38,752
Penney (J.C.) Co., Inc. ................ 1,071 50,203
PennzEnergy Co. ........................ 215 3,507
Pennzoil-Quaker State Co. .............. 215 3,171
Peoples Energy Corp. ................... 157 6,260
Peoplesoft, Inc. ....................... 968 18,331
Pep Boys-Manny, Moe & Jack ............. 283 4,439
PepsiCo, Inc. .......................... 6,223 254,754
Perkin-Elmer Corp. ..................... 207 20,195
Pfizer, Inc. ........................... 5,496 689,404
PG & E Corp. ........................... 1,616 50,904
Pharmacia & Upjohn, Inc. ............... 2,143 121,347
Phelps Dodge Corp. ..................... 254 12,922
Phillip Morris Cos., Inc. .............. 10,310 551,585
Phillips Petroleum Co. ................. 1,080 46,035
Pioneer Hi-Bred Intl., Inc. ............ 1,027 27,729
Pitney Bowes, Inc. ..................... 1,150 75,971
Placer Dome, Inc. ...................... 1,039 11,948
PNC Bank Corp. ......................... 1,269 68,684
Polaroid Corp. ......................... 204 3,812
Potlatch Corp. ......................... 130 4,793
PP&L Resources, Inc. ................... 643 17,923
PPG Industries, Inc. ................... 752 43,804
Praxair, Inc. .......................... 671 23,652
Proctor & Gamble Co. ................... 5,617 512,902
Progressive Corp. of Ohio .............. 307 51,998
Provident Companies, Inc. .............. 575 23,862
Providian Financial Corp. .............. 811 60,825
Public Svc. Enterprise Group, Inc. ..... 948 37,920
Pulte Corp. ............................ 190 5,284
Quaker Oats Co. ........................ 579 34,450
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Ralston Purina Co. .......................... 1,324 $ 42,864
Raychem Corp. ............................... 346 11,180
Raytheon Co. Cl B ........................... 1,421 75,668
Reebok International Ltd. ................... 252 3,748
Regions Financial Corp. ..................... 919 37,047
Republic New York Corp. ..................... 446 20,320
Reynolds Metals Co. ......................... 282 14,857
Rite-Aid Corp. .............................. 1,092 54,122
RJR Nabisco Holdings Corp. .................. 1,350 40,078
Rockwell Intl., Corp. ....................... 794 38,558
Rohm & Haas Co. ............................. 692 20,846
Rowan Cos., Inc. ............................ 388 3,880
Royal Dutch Petro Co. ....................... 9,078 434,609
Rubbermaid, Inc. ............................ 638 20,057
Russell Corp. ............................... 163 3,310
Ryder System, Inc. .......................... 305 7,930
Safeco Corp. ................................ 566 24,302
Safeway, Inc. ............................... 2,050 124,921
Sara Lee Corp. .............................. 3,852 108,578
SBC Communications, Inc. .................... 8,279 443,961
Schering-Plough Corp. ....................... 6,233 344,373
Schlumberger, Ltd. .......................... 2,302 106,179
Scientific-Atlanta, Inc. .................... 347 7,915
Seagate Technology .......................... 1,043 31,550
Seagram, Ltd. ............................... 1,662 63,156
Sealed Air Corp. ............................ 347 17,718
Sears Roebuck & Co. ......................... 1,616 68,680
Sempra Energy ............................... 1,021 25,907
Service Corp. International ................. 1,094 41,640
Shared Medical Systems Corp. ................ 112 5,586
Sherwin-Williams Co. ........................ 731 21,473
Sigma-Aldrich Corp. ......................... 418 12,278
Silicon Graphics, Inc. ...................... 779 10,029
SLM Holding Corp. ........................... 688 33,024
Snap-On, Inc. ............................... 245 8,529
Sonat, Inc. ................................. 484 13,098
Southern Co. ................................ 2,941 85,472
Southwest Airlines Co. ...................... 1,430 32,085
Springs Industries, Inc. .................... 90 3,729
Sprint Corp. (FON Group) .................... 1,827 153,696
Sprint Corp. (PCS Group) .................... 1,766 40,838
St. Jude Medical, Inc. ...................... 375 10,382
St. Paul Companies, Inc. .................... 979 34,020
Stanley Works ............................... 369 10,239
Staples, Inc. ............................... 1,317 57,536
State Street Corp. .......................... 681 47,372
Summit Bancorp .............................. 738 32,241
Sun America, Inc. ........................... 916 74,310
Sun Microsystems, Inc. ...................... 1,605 137,428
Sunoco, Inc. ................................ 389 14,028
Suntrust Banks, Inc. ........................ 884 67,626
Supervalu, Inc. ............................. 512 14,336
Synovus Financial Corp. ..................... 1,137 27,714
Sysco Corp. ................................. 1,388 38,083
Tandy Corp. ................................. 421 17,339
Tektronix, Inc. ............................. 225 6,764
Tele-Communications, Inc. (TCI-Gp. "A") ..... 2,269 125,504
Tellabs, Inc. ............................... 819 56,152
Temple-Inland, Inc. ......................... 236 13,997
Tenet Healthcare Corp. ...................... 1,317 34,571
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
INDEXED ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
Tenneco, Inc. ............................... 723 $ 24,627
Texaco, Inc. ................................ 2,254 119,180
Texas Instruments, Inc. ..................... 1,654 141,520
Texas Utilities Co. ......................... 1,191 55,604
Textron, Inc. ............................... 670 50,878
Thermo Electron Corp. ....................... 660 11,178
Thomas & Betts Corp. ........................ 246 10,654
Time Warner, Inc. ........................... 5,204 322,973
Times Mirror Co. Cl A ....................... 331 18,536
Timken Co. .................................. 282 5,322
TJX Companies ............................... 1,370 39,730
Torchmark Corp. ............................. 596 21,046
Toys R Us, Inc. ............................. 1,111 18,748
Transamerica Corp. .......................... 265 30,607
Tribune Co. ................................. 505 33,330
Tricon Global Restaurants Inc. .............. 649 32,531
TRW, Inc. ................................... 498 27,981
Tupperware Corp. ............................ 274 4,503
Tyco International Ltd. ..................... 2,733 206,170
U.S. Bancorp ................................ 3,061 108,665
U.S. West, Inc. ............................. 2,119 136,940
Unicom Corp. ................................ 902 34,783
Unilever N.V. ............................... 2,715 225,175
Union Camp Corp. ............................ 294 19,845
Union Carbide Corp. ......................... 552 23,460
Union Pacific Corp. ......................... 1,049 47,270
Union Pacific Resources Group, Inc. ......... 1,043 9,452
Union Planters Corp. ........................ 565 25,601
Unisys Corp. ................................ 1,060 36,503
United Healthcare Corp. ..................... 792 34,105
United Technologies Corp. ................... 952 103,530
Unocal Corp. ................................ 1,026 29,946
UNUM Corp. .................................. 588 34,324
US Airways Group, Inc. ...................... 363 18,876
UST, Inc. ................................... 791 27,586
USX-Marathon Group .......................... 1,278 38,499
USX-U.S. Steel Group ........................ 384 8,832
V F Corp. ................................... 510 23,906
Venator Group, Inc. ......................... 605 3,894
Viacom, Inc. Cl B ........................... 1,467 108,558
W.R. Grace & Co. ............................ 333 5,223
Wachovia Corp. .............................. 855 74,759
Wal-Mart Stores, Inc. ....................... 9,540 776,913
Walgreen Co. ................................ 2,103 123,156
Warner-Lambert Co. .......................... 3,484 261,953
Washington Mutual, Inc. ..................... 2,502 95,545
Waste Management, Inc. ...................... 2,422 112,925
Wells Fargo & Company ....................... 6,859 273,931
Wendy's International, Inc. ................. 545 11,887
Westvaco Corp. .............................. 421 11,288
Weyerhaeuser Co. ............................ 844 42,885
Whirlpool Corp. ............................. 316 17,498
Willamette Industries, Inc. ................. 472 15,812
Williams Cos., Inc. ......................... 1,808 56,387
Winn-Dixie Stores, Inc. ..................... 632 28,361
Worthington Industries, Inc. ................ 433 5,412
Wrigley (Wm.) Jr. Co. ....................... 493 44,154
Xerox Corp. ................................. 1,391 164,138
-----------
TOTAL INDEXED ASSETS -- COMMON STOCKS
(Cost: $23,363,581) 60.0% ............................ 42,016,332
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
INDEXED ASSETS (CONTINUED):
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT (0.1%)
U.S. Treasury Bill ...................... 4.55% 02/04/99 $ 55,000 $ 54,761
U.S. Treasury Bill ...................... 4.93 02/04/99 40,000 39,809
-----------
94,570
-----------
COMMERCIAL PAPER (0.2%)
Duke Energy Corp. ....................... 5.25 01/04/99 133,000 132,942
-----------
TOTAL INDEXED SHORT-TERM DEBT SECURITIES (Cost: $227,512) 0.3%........... 227,512
-----------
TOTAL INDEXED ASSETS (Cost: $23,591,093) 60.3%........................... 42,243,844
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
ACTIVE ASSETS:
COMMON STOCKS
BASIC MATERIALS (0.8%)
Barrick Gold Corp. ................... 1,800 $ 35,100
Cabot Corp. .......................... 4,200 117,337
Homestake Mining Co. ................. 2,900 26,643
Lone Star Technologies, Inc.* ........ 7,200 72,900
Newmont Mining Corp. ................. 1,300 23,481
Oregon Steel Mills, Inc. ............. 4,500 53,437
Placer Dome, Inc. .................... 2,600 29,900
Praxair, Inc. ........................ 5,200 183,300
----------
542,098
----------
CONSUMER, CYCLICAL (6.2%)
American Greetings Corp. Cl A ........ 4,000 164,250
ASA Holdings, Inc. ................... 1,400 42,700
Atlantic Coast Airlines, Inc.* ....... 5,600 140,000
Bed Bath & Beyond, Inc.* ............. 6,300 214,987
Bergen Brunswig ...................... 8,400 292,950
BJ's Wholesale Club, Inc. ............ 4,600 213,037
Blyth Industries, Inc.* .............. 3,000 93,750
Borders Group, Inc.* ................. 2,500 62,343
CKE Restaurants, Inc. ................ 781 22,990
Clear Channel Communications ......... 2,176 118,592
Coach USA, Inc.* ..................... 3,400 117,937
Consolidated Graphics, Inc.* ......... 1,500 101,343
Consolidated Stores Corp.* ........... 4,100 82,768
ContinentalAirlines, Inc. Cl. B* ..... 1,500 50,250
Cox Radio, Inc.* ..................... 1,700 71,825
Dollar Tree Stores * ................. 2,100 91,743
Ethan Allen Interiors, Inc. .......... 1,800 73,800
Family Dollar Stores Inc. ............ 6,800 149,600
Furniture Brands Intl., Inc.* ........ 1,000 27,250
Gannett Co., Inc. .................... 2,900 187,050
Jacor Communications, Inc.* .......... 2,600 167,375
Linens'n Things, Inc.* ............... 6,500 257,562
Magna International, Inc. Cl A* ...... 1,500 93,000
Masco Corp. .......................... 6,500 186,875
Mattel, Inc. ......................... 2,300 52,468
Meredith Corp. ....................... 2,300 87,112
Nordstrom, Inc. ...................... 4,300 149,156
Office Depot, Inc.* .................. 5,300 195,768
Outback Steakhouse, Inc.* ............ 3,800 151,525
Outdoor Systems, Inc.* ............... 3,175 95,250
Rent-Way Inc.* ....................... 2,300 55,918
Saks Incorporated* ................... 3,000 94,687
Skywest, Inc. ........................ 5,700 186,318
The Men's Wearhouse, Inc.* ........... 3,300 104,775
Tiffany & Co. ........................ 2,400 124,500
Westpoint Stevens Inc.* .............. 1,600 50,500
----------
4,371,954
----------
CONSUMER, NON-CYCLICAL (5.4%)
Agouron Pharmaceuticals Inc.* ........ 2,400 141,000
Amazon.com, Inc.* .................... 700 224,875
American Home Products Corp. ......... 3,400 191,462
Anesta Corp.* ........................ 2,800 74,550
Baxter International Inc. ............ 1,700 109,331
Biogen Inc. .......................... 400 33,200
Biomet, Inc. ......................... 1,600 64,400
Diageo PLC--Sponsored ADR ............ 2,000 92,500
Dura Pharmaceuticals, Inc.* .......... 5,500 83,531
Earthgrains Co. ...................... 5,800 179,437
Elan Corp Plc -Spons ADR* ............ 1,200 83,475
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
CONSUMER, NON-CYCLICAL (CONTINUED)
Food Lion, Inc. ...................... 10,800 $ 114,750
Forest Laboratories, Inc.* ........... 2,100 111,693
Fort James Corp of Virginia .......... 2,800 112,000
Fred Meyer, Inc.* .................... 2,400 144,600
Health Management Associates* ........ 3,200 69,200
IDEC Pharmaceuticals Corp.* .......... 1,000 47,000
Integrated Health Services ........... 3,200 45,200
Lilly (Eli) & Co. .................... 1,500 133,312
Medimmune, Inc.* ..................... 2,200 218,762
Medquist, Inc.* ...................... 4,300 169,850
Metzler Group, Inc.* ................. 2,100 102,243
Omnicare, Inc. ....................... 4,600 159,850
Phillip Morris Cos., Inc. ............ 5,200 278,200
SangStat Medical Corp.* .............. 2,900 61,625
Starbucks Corp.* ..................... 3,600 202,050
Suiza Foods Corp.* ................... 2,400 122,250
US Foodservice* ...................... 5,200 254,800
Williams-Sonoma Inc.* ................ 4,500 181,406
----------
3,806,552
----------
ENERGY (1.2%)
Amoco Corp.* ......................... 3,200 193,200
Elf Aquitaine--ADR ................... 3,200 181,200
Schlumberger, Ltd. ................... 1,800 83,025
Shell Transport & Trading--ADR ....... 3,400 126,437
USX-Marathon Group ................... 8,100 244,012
----------
827,874
----------
FINANCIAL (7.5%)
American Int'l. Group, Inc. .......... 3,825 369,590
Aon Corp. ............................ 2,100 116,287
Arden Realty Group ................... 4,100 95,068
ARM Financial Group, Inc. ............ 4,500 99,843
BankAmerica Corp. .................... 6,323 380,170
Chicago Title Corp. .................. 2,200 103,262
ChoicePoint, Inc.* ................... 700 45,150
Citigroup Inc. ....................... 9,800 485,100
Commerce Bancshares, Inc. ............ 600 25,512
Cullen/Frost Bankers Inc. ............ 1,600 87,800
Dime Bancorp Inc. .................... 4,400 116,325
Equity Residential Prop. Tr. ......... 2,300 93,006
Finova Group, Inc. ................... 3,000 161,812
First Union Corp. .................... 3,500 212,843
Fleet Financial Group, Inc. .......... 4,500 201,093
Frontier Insurance Group, Inc. ....... 3,200 41,200
Glenborough Realty Trust, Inc. ....... 4,800 97,800
HCC Insurance Holdings, Inc. ......... 5,100 89,887
Heller Financial, Inc. ............... 5,200 152,750
Horace Mann Educators Corp. .......... 3,800 108,300
Household International Corp. ........ 5,279 209,180
Keystone Financial, Inc. ............. 2,200 81,400
Kimco Realty Corp. ................... 2,300 91,281
Loews Corp. .......................... 1,600 157,200
Mack-Cali Realty Corp. ............... 3,000 92,625
Morgan Stanley Dean Witter ........... 2,600 184,600
National City Corp. .................. 2,160 156,600
Natl. Commerce Bancorporation ........ 2,800 52,675
North Fork Bancorporation, Inc. ...... 4,100 98,143
Oriental Financial Group ............. 4,900 153,431
Providian Financial Corp. ............ 1,500 112,500
Public Storage, Inc. ................. 3,000 81,187
</TABLE>
- ---------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
FINANCIAL (CONTINUED)
SL Green Realty Corp. .................. 5,200 $ 112,450
Sovereign Bancorp, Inc. ................ 1,800 25,650
Spieker Pptys Inc. ..................... 2,600 90,025
Summit Bancorp ......................... 2,000 87,375
Telebanc Financial Corp.* .............. 2,200 74,800
Torchmark Corp. ........................ 2,800 98,875
Waddell & Reed Financial, Inc. ......... 542 12,637
Washington Mutual, Inc. ................ 5,500 210,031
-----------
5,265,463
-----------
INDUSTRIAL (2.4%)
AFC Cable Systems, Inc.* ............... 1,500 50,437
BISYS Group, Inc.* ..................... 2,900 149,712
Burlington Northern Santa Fe ........... 5,600 189,000
Covenant Transport, Inc. Cl A* ......... 4,500 80,437
Dycom Industries, Inc.* ................ 1,000 57,125
First Data Corp. ....................... 5,000 158,437
Heico Corp. ............................ 900 28,406
Hooper Holmes, Inc. .................... 4,000 116,000
Kansas City Southern Inds. ............. 2,700 132,806
Pittway Corp. .......................... 900 29,756
QRS Corp.* ............................. 1,400 67,200
Semtech Corp. .......................... 2,400 86,100
Sherwin-Williams Co. ................... 2,000 58,750
Siebel Systems Inc * ................... 1,100 37,331
Swift Transportation Co., Inc.* ........ 3,000 84,093
Tetra Tech, Inc.* ...................... 3,700 100,131
U.S. Xpress Enterprises, Inc. Cl A ..... 3,000 45,000
Williams Cos., Inc. .................... 5,300 165,293
Young & Rubicam Inc.* .................. 900 29,137
-----------
1,665,151
-----------
TECHNOLOGY (12.2%)
3Com Corp.* ............................ 9,400 421,237
Altera Corp.* .......................... 1,300 79,137
Alza Corp.* ............................ 3,900 203,775
Applied Materials, Inc.* ............... 10,400 443,950
Ascend Communications, Inc.* ........... 1,200 78,900
ASM Lithography Holding NV* ............ 2,300 70,150
At Home Corp--Ser A* ................... 1,000 74,250
AT&T Corp. ............................. 2,200 165,550
Atmel Corp.* ........................... 11,900 182,218
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
ACTIVE ASSETS (CONTINUED):
COMMON STOCKS (CONTINUED)
TECHNOLOGY (CONTINUED)
Centocor, Inc.* ........................ 1,800 $ 81,225
Ceridian Corp.* ........................ 2,200 153,587
Ciena Corp.* ........................... 4,400 64,350
Cisco Systems, Inc.* ................... 17,700 1,642,821
Citrix Systems, Inc.* .................. 1,700 165,006
Compaq Computer Corp. .................. 17,200 721,325
Dionex Corp * .......................... 2,700 98,887
Excite, Inc.* .......................... 1,700 71,506
Hewlett-Packard Co. .................... 2,800 191,275
INKTOMI CORP* .......................... 300 38,812
Intel Corp. ............................ 6,900 818,081
Intl. Business Machines Corp. .......... 1,300 240,175
Intuit, Inc.* .......................... 1,100 79,750
Linear Technology Corp. ................ 6,300 564,243
Maxim Integrated Products, Inc.* ....... 9,200 401,925
Maxtor Corp.* .......................... 2,200 30,800
Newbridge Networks Corp.* .............. 900 27,337
Novellus Systems Inc.* ................. 1,500 74,250
Parametric Technology Corp.* ........... 9,800 160,475
Raytheon Co. Cl B ...................... 3,800 202,350
Sanmina Corp.* ......................... 1,100 68,750
Teradyne, Inc. * ....................... 2,100 88,987
Visual Networks, Inc.* ................. 800 30,000
Xerox Corp. ............................ 2,350 277,300
Xilinx, Inc.* .......................... 8,700 566,587
-----------
8,578,971
-----------
UTILITIES (1.3%)
AES Corp.* ............................. 700 33,162
CILCORP Inc. ........................... 600 36,712
Commonwealth Energy System ............. 1,000 40,500
Consolidated Natural Gas Co. ........... 2,100 113,400
Entergy Corp. .......................... 5,700 177,412
MCI WorldCom Inc.* ..................... 3,109 223,072
MDU Resources Group .................... 1,200 31,575
Montana Pwr Co. ........................ 1,200 67,875
SBC Communications, Inc. ............... 3,000 160,875
SIGCORP, Inc. .......................... 1,000 35,750
-----------
920,333
-----------
TOTAL ACTIVE ASSETS -- COMMON STOCKS
(Cost: $19,714,350) 37.0% ....................... 25,978,396
-----------
</TABLE>
- ---------
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (ALL AMERICA FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
ACTIVE ASSETS (CONTINUED):
SHORT-TERM DEBT SECURITIES:
AGENCIES (0.1%)
Federal National Mortgage Association ......... 4.90% 02/05/99 $ 36,000 $ 35,828
-----------
COMMERCIAL PAPER (2.6%)
Centerior Fuel Corp. .......................... 5.05 01/08/99 200,000 199,804
Duke Power Company ............................ 5.25 01/04/99 440,000 439,807
Ford Motor Credit Co. ......................... 6.09 01/04/99 1,209,000 1,208,386
-----------
1,847,997
-----------
TOTAL ACTIVE ASSETS SHORT-TERM DEBT SECURITIES (Cost: $1,883,825) 2.7% .......... 1,883,825
-----------
TOTAL ACTIVE ASSETS (Cost: $21,598,175) 39.7% ................................... 27,862,221
-----------
TOTAL INVESTMENTS (Cost: $45,189,268) 100.0% .................................... $70,106,065
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES:
U.S. GOVERNMENT (23.8%)
U.S. Treasury Note ...................... 6.63% 04/30/02 $ 500,000 $ 529,140
U.S. Treasury Note ...................... 6.50 05/15/05 3,250,000 3,561,805
U.S. Treasury Bond ...................... 7.13 02/15/23 1,500,000 1,848,510
----------
5,939,455
----------
AGENCIES/OTHER GOVERNMENTS (17.7%)
FHLMC ................................... 8.00 07/15/06 265,420 274,543
FHLMC ................................... 6.50 10/15/06 351,883 353,090
FHLMC ................................... 7.00 04/15/17 206,524 206,846
FHLMC ................................... 0.00 05/22/28 5,000,000 664,050
FNMA .................................... 6.80 06/25/05 238,970 238,671
FNMA .................................... 7.00 11/25/05 600,000 604,308
FNMA .................................... 7.00 10/25/07 1,000,000 1,028,120
Republic of Iceland ..................... 6.13 02/01/04 1,000,000 1,036,970
----------
4,406,598
----------
BASIC MATERIALS (5.2%)
Georgia-Pacific Corp. ................... 8.63 04/30/25 250,000 263,455
Lyondell/Arco Petrochemical ............. 10.25 11/01/10 500,000 527,995
Praxair, Inc. ........................... 6.90 11/01/06 500,000 512,230
----------
1,303,680
----------
CONSUMER, CYCLICAL (6.7%)
Fruit of the Loom, Inc. ................. 7.00 03/15/11 250,000 234,415
Fruit of the Loom, Inc. ................. 7.38 11/15/23 250,000 222,408
Polaroid Corp. .......................... 7.25 01/15/07 250,000 233,455
Tommy Hilfiger USA, Inc. ................ 6.50 06/01/03 500,000 492,785
Venator Group, Inc. ..................... 7.00 10/15/02 500,000 489,900
----------
1,672,963
----------
CONSUMER, NON-CYCLICAL (4.0%)
Bausch & Lomb, Inc. ..................... 6.38 08/01/03 500,000 491,105
Bausch & Lomb, Inc. ..................... 6.75 12/15/04 500,000 494,535
----------
985,640
----------
FINANCIAL (24.6%)
Bear Stearns Cos., Inc. ................. 6.63 10/01/04 1,000,000 1,027,460
Chase Manhattan Corp. ................... 6.88 12/12/12 1,000,000 1,043,220
Executive Risk, Inc. .................... 7.13 12/15/07 500,000 540,955
First American Financial ................ 7.55 04/01/28 500,000 515,425
Harleysville Group, Inc. ................ 6.75 11/15/03 250,000 256,898
Lehman Brothers Holdings, Inc. .......... 0.00 07/28/28 1,000,000 115,490
Morgan (J.P.) & Co., Inc. ............... 0.00 04/15/27 2,500,000 317,900
Nationwide Health Properties, Inc. ...... 7.90 11/20/06 500,000 503,635
Rank Group Financial .................... 6.75 11/30/04 500,000 487,785
Rodamco NV .............................. 7.30 05/15/05 1,000,000 1,063,620
Triad Guaranty, Inc. .................... 7.90 01/15/28 250,000 266,396
----------
6,138,784
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (BOND FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FACE
RATE MATURITY AMOUNT VALUE
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES (CONTINUED):
INDUSTRIAL (11.1%)
Clark Equipment Co. ................................... 8.35% 05/15/23 $ 500,000 $ 609,175
Geon Co. .............................................. 7.50 12/15/15 250,000 265,575
Thermo Electron Corp. ................................. 4.25 01/01/03 1,000,000 890,000
Williams Cos., Inc. ................................... 6.50 11/15/02 1,000,000 1,009,530
-----------
2,774,280
-----------
UTILITIES (2.2%)
UtiliCorp United, Inc. ................................ 8.00 03/01/23 500,000 548,295
-----------
TOTAL LONG-TERM DEBT SECURITIES (Cost: $22,787,468) 95.3% 23,769,695
-----------
SHORT-TERM DEBT SECURITIES:
U. S. GOVERNMENT (0.2%)
U.S. Treasury Bill .................................... 4.50 01/21/99 10,000 9,975
U.S. Treasury Bill .................................... 4.09 02/04/99 10,000 9,961
U.S. Treasury Bill .................................... 4.15 02/18/99 30,000 29,832
U.S. Treasury Bill .................................... 3.70 02/18/99 10,000 9,950
-----------
59,718
-----------
AGENCIES (0.8%)
FNMA .................................................. 4.95 02/04/99 60,000 59,719
FNMA .................................................. 5.05 02/05/99 67,000 66,670
FNMA .................................................. 4.91 02/19/99 71,000 70,524
-----------
196,913
-----------
COMMERCIAL PAPER (3.7%)
Heinz (H.J.) Co. ...................................... 5.20 01/14/99 274,000 273,482
Koch Industries ....................................... 5.20 01/04/99 638,000 637,724
-----------
911,206
-----------
</TABLE>
<TABLE>
<S> <C>
TOTAL SHORT-TERM DEBT SECURITIES (Cost: $1,167,837) 4.7%.................................... 1,167,837
---------
TOTAL INVESTMENTS (Cost: $23,955,305) 100.0%................................................ $24,937,532
===========
</TABLE>
- ---------
Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC. (MONEY MARKET FUND)
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
DISCOUNT FACE AMORTIZED
RATING* RATE MATURITY AMOUNT COST
--------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
AGENCIES (16.4%)
FHLB ...................................... 4.50% 01/25/99 $1,000,000 $ 997,000
FHLMC ..................................... 4.88 02/05/99 33,000 32,843
----------
1,029,843
----------
COMMERCIAL PAPER (83.6%)
Albertson's, Inc. ......................... A1/P1 5.22 01/12/99 120,000 119,808
Albertson's, Inc. ......................... A1/P1 5.00 01/12/99 178,000 177,728
Associates Corp. North America ............ A1+/P1 5.30 01/11/99 150,000 149,777
Bell Atlantic Network Funding ............. A1/P1 5.10 01/15/99 200,000 199,601
Bellsouth Telecommunications Corp. ........ A1+/P1 5.05 01/20/99 199,000 198,467
Bemis, Inc. ............................... A1/P1 5.00 01/04/99 127,000 126,947
Bemis, Inc. ............................... A1/P1 5.10 01/14/99 107,000 106,802
Carolina Power & Light Co. ................ A1/P1 5.33 01/28/99 103,000 102,587
Central Illinois Light Co. ................ A1+/P1 5.30 01/14/99 200,000 199,616
Coca-Cola Co. ............................. A1+/P1 5.25 01/15/99 107,000 106,781
Consolidated Natural Gas Co. .............. A1+/P1 5.12 01/28/99 162,000 161,376
Disney (Walt) Co. ......................... A1/P1 5.13 01/05/99 153,000 152,912
Du Pont (E.I.) De Numours & Co., Inc. ..... A1+/P1 5.18 01/15/99 200,000 199,595
Duke Power Company ........................ A1+/P1 5.15 01/14/99 151,000 150,718
Florida Power Corp. ....................... A1+/P1 5.25 01/12/99 200,000 199,677
Ford Motor Credit Co. ..................... A1/P1 5.32 01/08/99 215,000 214,776
GTE Funding Inc. .......................... A1/P1 5.15 02/01/99 200,000 199,110
Heinz (H.J.) Co. .......................... A1/P1 5.20 01/14/99 102,000 101,807
IBM Credit Corp. .......................... A1/P1 5.08 01/20/99 200,000 199,461
International Lease Fin. Corp. ............ A1+/P1 5.18 01/06/99 215,000 214,845
Lucent Technologies, Inc. ................. A1/P1 5.15 01/29/99 200,000 199,196
Merrill Lynch & Co., Inc. ................. A1+/P1 5.16 01/06/99 200,000 199,856
National Rural Utilities Corp. ............ A1+/P1 5.17 01/26/99 200,000 199,280
Northern Ill. Gas Corp. ................... A1+/P1 5.20 01/08/99 125,000 124,873
OGE Energy Corp. .......................... A1/P1 5.95 01/05/99 200,000 199,868
PepsiCo, Inc. ............................. A1/P1 5.05 01/12/99 150,000 149,767
PetroFina Delaware, Inc. .................. A1/P1 5.38 01/05/99 200,000 199,880
PetroFina Delaware, Inc. .................. A1/P1 4.95 01/08/99 100,000 99,904
Proctor & Gamble Co. ...................... A1+/P1 5.20 01/15/99 200,000 199,594
South Carolina Electric & Gas ............. A1/P1 5.40 02/11/99 200,000 198,769
Toyota Credit de Puerto Rico Corp. ........ A1+/P1 5.15 01/08/99 200,000 199,798
----------
5,253,176
----------
</TABLE>
<TABLE>
<S> <C>
TOTAL SHORT-TERM DEBT SECURITIES:
(Cost: $6,283,019) 100.0%............................................................... $6,283,019
==========
</TABLE>
- ---------
* The ratings are provided by Standard & Poor's Corporation/Moody's Investor
Services. Inc.
Abbreviations: FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALL AMERICA BOND MONEY MARKET
FUND FUND FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investments at market value (Notes 1 and 3)
(Cost:
All America Fund -- $45,189,268
Bond Fund -- $23,955,305
Money Market Fund -- $6,283,019)............ $ 70,106,065 $ 24,937,532 $ 6,283,019
Cash and cash equivalents ..................... 1,031,927 590 57,622
Interest and dividends receivable ............. 67,676 292,596 --
Shareholders subscriptions receivable ......... 58,644 12,000 179,117
------------ ------------ ------------
TOTAL ASSETS .................................. 71,264,312 25,242,718 6,519,758
------------ ------------ ------------
LIABILITIES:
Payable for securities purchased .............. 459,931 -- --
Dividends payable to shareholders ............. 4,502 8,051 7,641
Accrued expenses .............................. 355 115 21
------------ ------------ ------------
TOTAL LIABILITIES ............................. 464,788 8,166 7,662
------------ ------------ ------------
NET ASSETS .................................... $ 70,799,524 $ 25,234,552 $ 6,512,096
============ ============ ============
SHARES OUTSTANDING (NOTE 4) ................... 4,693,508 2,425,162 636,338
============ ============ ============
NET ASSET VALUE PER SHARE ..................... $ 15.08 $ 10.41 $ 10.23
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALL AMERICA BOND MONEY MARKET
FUND FUND FUND
--------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME (NOTE 1):
Dividends ......................................................... $ 751,021 $ -- $ --
Interest .......................................................... 105,820 1,551,557 226,327
------------ ----------- -----------
Total Investment Income ............................................ 856,841 1,551,557 226,327
------------ ----------- -----------
EXPENSES (NOTE 2):
Investment management fees ........................................ 311,285 106,164 8,216
Directors' (independent) fees and expenses ........................ 25,619 25,619 25,618
Custodian expenses ................................................ 42,139 4,847 12,403
Accounting expenses ............................................... 30,000 30,000 26,000
Transfer agent fees ............................................... 21,339 16,863 22,954
Registration fees and expenses .................................... 44,621 26,860 29,039
Audit ............................................................. 12,804 6,936 4,260
Printing and other ................................................ 34,477 12,441 2,648
------------ ----------- -----------
Total Expenses before reimbursement ................................ 522,284 229,730 131,138
Expense reimbursement .............................................. (9,555) (63,687) (114,706)
------------ ----------- -----------
Net Expenses ....................................................... 512,729 166,043 16,432
------------ ----------- -----------
NET INVESTMENT INCOME .............................................. 344,112 1,385,514 209,895
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 1):
Net realized gain (loss) on investments:
Net proceeds from sales ........................................... 212,021,596 47,507,019 57,674,403
Cost of securities sold ........................................... 210,903,129 47,354,438 57,674,548
------------ ----------- -----------
Net realized gain (loss) on investments ............................ 1,118,467 152,581 (145)
Net unrealized appreciation (depreciation) of investments .......... 10,652,968 346,222 --
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 11,771,435 498,803 (145)
------------ ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............... $ 12,115,547 $ 1,884,317 $ 209,750
============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALL AMERICA FUND BOND FUND
-------------------------------- -------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income ........................... $ 344,112 $ 344,286 $ 1,385,514 $ 1,196,626
Net realized gain (loss) on investments ......... 1,118,467 5,255,923 152,581 224,653
Net unrealized appreciation (depreciation) of
investments .................................... 10,652,968 8,744,059 346,222 373,683
----------- -------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 12,115,547 14,344,268 1,884,317 1,794,962
----------- -------------- ------------ ------------
Dividend Distributions (Note 5):
From net investment income ...................... (355,096) (342,956) (1,398,540) (1,195,133)
From capital gains .............................. (608,849) (4,524,483) (535,067) (25,567)
----------- -------------- ------------ ------------
Total Distributions ............................. (963,945) (4,867,439) (1,933,607) (1,220,700)
----------- -------------- ------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net Proceeds from sale of shares ................ 2,124,083 2,120,648 1,216,884 1,388,091
Dividend reinvestments .......................... 956,071 4,852,995 1,919,969 1,219,471
Cost of shares redeemed ......................... (105,395) (15,290,000) -- (2,051,357)
----------- -------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ................. 2,974,759 (8,316,357) 3,136,853 556,205
----------- -------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............ 14,126,361 1,160,472 3,087,563 1,130,467
NET ASSETS, BEGINNING OF YEAR/PERIOD ............. 56,673,163 55,512,691 22,146,989 21,016,522
----------- -------------- ------------ ------------
NET ASSETS, END OF YEAR/PERIOD ................... $70,799,524 $ 56,673,163 $ 25,234,552 $ 22,146,989
=========== ============== ============ ============
COMPONENTS OF NET ASSETS:
Paid-in capital ................................. $45,096,275 $ 42,121,516 $ 24,451,023 $ 21,314,170
Accumulated undistributed net investment
income (loss) .................................. (6,652) 4,332 (6,531) 6,495
Accumulated undistributed net realized gain
(loss) on investments .......................... 793,104 283,486 (192,167) 190,319
Unrealized appreciation (depreciation) of
investments .................................... 24,916,797 14,263,829 982,227 636,005
----------- -------------- ------------ ------------
NET ASSETS, END OF YEAR/PERIOD ................... $70,799,524 $ 56,673,163 $ 25,234,552 $ 22,146,989
=========== ============== ============ ============
<CAPTION>
MONEY MARKET FUND
----------------------------------
FOR THE PERIOD
MAY 1, 1997
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
--------------- ------------------
1998 1997
--------------- ------------------
<S> <C> <C>
From Operations:
Net investment income ........................... $ 209,895 $ 102,944
Net realized gain (loss) on investments ......... (145) (43)
Net unrealized appreciation (depreciation) of
investments .................................... -- --
------------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 209,750 102,901
------------- ----------
Dividend Distributions (Note 5):
From net investment income ...................... (209,896) (102,362)
From capital gains .............................. -- --
------------- ----------
Total Distributions ............................. (209,896) (102,362)
------------- ----------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net Proceeds from sale of shares ................ 5,332,372 7,907,064
Dividend reinvestments .......................... 193,670 100,093
Cost of shares redeemed ......................... (6,525,496) (496,000)
------------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ................. (999,454) 7,511,157
------------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ............ (999,600) 7,511,696
NET ASSETS, BEGINNING OF YEAR/PERIOD ............. 7,511,696 --
------------- ----------
NET ASSETS, END OF YEAR/PERIOD ................... $ 6,512,096 $7,511,696
============= ==========
COMPONENTS OF NET ASSETS:
Paid-in capital ................................. $ 6,511,703 $7,511,157
Accumulated undistributed net investment
income (loss) .................................. 581 582
Accumulated undistributed net realized gain
(loss) on investments .......................... (188) (43)
Unrealized appreciation (depreciation) of
investments .................................... -- --
------------- ----------
NET ASSETS, END OF YEAR/PERIOD ................... $ 6,512,096 $7,511,696
============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALL AMERICA FUND BOND FUND
-------------------------------------- --------------------------------------
YEARS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------------- --------------------------------------
1998 1997 1996(E) 1998 1997 1996(E)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR/PERIOD ................................... $ 12.65 $ 10.98 $ 10.00 $ 10.41 $ 10.13 $ 10.01
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income .......................... 0.07 0.08 0.06 0.61 0.59 0.38
Net gains or losses on securities (realized
and unrealized) ............................... 2.57 2.77 0.98 0.24 0.29 0.12
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS ............... 2.64 2.85 1.04 0.85 0.88 0.50
--------- --------- --------- --------- --------- ---------
Less dividend distributions:
From net investment income ..................... ( 0.08) ( 0.08) ( 0.06) ( 0.62) ( 0.59) ( 0.38)
From capital gains ............................. ( 0.13) ( 1.10) -- ( 0.23) ( 0.01) --
--------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS ............................ ( 0.21) ( 1.18) ( 0.06) ( 0.85) ( 0.60) ( 0.38)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF YEAR/PERIOD ............ $ 15.08 $ 12.65 $ 10.98 $ 10.41 $ 10.41 $ 10.13
========= ========= ========= ========= ========= =========
Total return (%) (b) ........................... 21.0 26.0 10.4 8.3 8.9 5.0
Net assets, end of year/period
($ millions) .................................. 70.8 56.7 55.5 25.2 22.1 21.0
Ratio of net investment income to average
net assets (%) ................................ 0.55 0.59 0.95 5.84 5.69 5.63
Ratio of expenses to average net assets (%) 0.84 0.84 0.87 0.97 1.00 0.90
Ratio of expenses to average net assets
after expense reimbursement (%) ............... 0.82 0.81 0.85 0.70 0.70 0.70
Portfolio turnover rate (%) (c) ................ 41.25 35.96 9.33 33.32 56.18 17.85
<CAPTION>
MONEY MARKET FUND
------------------------------
YEARS ENDED
DECEMBER 31,
------------------------------
1998 1997(D)
------------ -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR/PERIOD ................................... $ 10.15 $ 10.00
--------- ----------
Income from investment operations:
Net investment income .......................... 0.52 0.35
Net gains or losses on securities (realized
and unrealized) ............................... -- --
--------- ----------
TOTAL FROM INVESTMENT OPERATIONS ............... 0.52 0.35
--------- ----------
Less dividend distributions:
From net investment income ..................... ( 0.44) ( 0.20)
From capital gains ............................. -- --
--------- ----------
TOTAL DISTRIBUTIONS ............................ ( 0.44) ( 0.20)
--------- ----------
NET ASSET VALUE, END OF YEAR/PERIOD ............ $ 10.23 $ 10.15
========= ==========
Total return (%) (b) ........................... 5.3 3.5
Net assets, end of year/period
($ millions) .................................. 6.5 7.5
Ratio of net investment income to average
net assets (%) ................................ 5.14 5.17 (a)
Ratio of expenses to average net assets (%) 3.21 2.47 (a)
Ratio of expenses to average net assets
after expense reimbursement (%) ............... 0.40 0.40 (a)
Portfolio turnover rate (%) (c) ................ N/A N/A
</TABLE>
- ---------
(a) Annualized.
(b) Total return would have been lower had certain expenses not been reduced
through expense reimbursement (Note 2).
(c) Portfolio turnover rate excludes all short-term securities.
(d) Commenced operations May 1, 1997.
(e) Commenced operations May 1, 1996.
N/A = Not Applicable.
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
Mutual of America Institutional Funds, Inc. (the "Investment Company") was
incorporated on October 27, 1994 under the laws of Maryland and is registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company (a mutual fund) currently issuing three series of common
stock representing shares of the All America Fund, Bond Fund, and Money Market
Fund. Each fund has its own investment objective and policies. Shares of the
funds of the Investment Company are offered on a no-load basis through its
distributor, Mutual of America Securities Corporation, a registered
broker-dealer and affiliate of the Investment Company's investment management
adviser, Mutual of America Capital Management Corporation (the "Adviser").
The Investment Company is designed primarily as an investment vehicle for
endowments, foundations, corporations, municipalities and other public entities
and other institutional investors.
The All America Fund and Bond Fund commenced operations on May 1, 1996.
The Money Market Fund commenced operations on May 1, 1997.
The following is a summary of the significant accounting policies of the
Investment Company:
SECURITY VALUATION -- INVESTMENT SECURITIES ARE VALUED AS FOLLOWS:
Equity securities are valued at the last sales price on the principal
exchange on which the security is traded. If there is no trading volume for a
particular valuation day, the last bid price is used. For any equity securities
traded in the over-the-counter market, the security is valued at the last sale
price, or if no sale, at the latest bid price available.
Short-term securities with a maturity of 60 days or less are valued at
amortized cost, which approximates market value for such securities. Short-term
debt securities maturing in excess of 60 days are stated at market value.
Debt securities are valued at a composite fair market value "evaluated
bid," which may be the last sale price. Securities for which market quotations
are not readily available will be valued at fair value as determined in good
faith by the Adviser under the direction of the Board of Directors of the
Investment Company.
SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date. Realized gain and loss on the sale of short and long-term debt securities
is computed on the basis of amortized cost at the time of sale. Realized gain
and loss on the sale of common stock is based on the identified cost basis of
the security determined on a first-in, first-out ("FIFO") basis.
The All America Fund's indexed assets portfolio, in order to remain more
fully invested in the equity markets while minimizing its transaction costs,
may purchase stock index futures contracts. Initial cash margin deposits
(represented by cash or Treasury bills) are made upon entering into futures
contracts. (This initial margin, maintained in a segregated account, is equal
to approximately 5% of the contract amount, and does not involve the borrowing
of funds to finance the transaction). During the period the futures contract is
outstanding, changes in the value of the contract are recognized as unrealized
gains or losses by "marking-to-market" on a daily basis to reflect the market
value of the contract at the end of each trading day. Futures contracts are
valued at the settlement price established each day by the exchange on which
traded. Depending upon whether unrealized gains or losses are incurred,
variation margin payments are received or made. When the contract is closed, a
realized gain or loss from futures transactions is recorded, equal to the net
variation margin received or paid over the period of the contract.
INVESTMENT INCOME -- Interest income is accrued as earned. Dividend income
is recorded on the ex-dividend date. Foreign source tax withheld from dividends
is recorded as a reduction from dividend income. Should reclamation succeed,
such amounts are recorded as income upon collection.
FEDERAL INCOME TAXES -- The Investment Company intends to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no federal income tax provision is required.
2. EXPENSES AND OTHER TRANSACTIONS WITH AFFILIATES
Organizational expenses of the Investment Company were borne by its
sponsor, Mutual of America Capital Management Corporation, the Investment
Company's Adviser.
47
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. EXPENSES AND OTHER TRANSACTIONS WITH AFFILIATES -- (Continued)
The Investment Company has entered into an Investment Advisory Agreement
with the Adviser. For providing investment management services to the
Investment Company, each fund accrues a fee, calculated as a daily charge, at
the annual rate of .50% of the value of the net assets for the All America
Fund, .45% of the value of the net assets for the Bond Fund, and .20% of the
value of the net assets for the Money Market Fund. Under Sub-Advisory
Agreements for the All America Fund, the Adviser has delegated investment
advisory responsibilities to subadvisers responsible for providing management
services for a portion of the fund's assets. The Adviser (not the fund) is
responsible for compensation payable under such Sub-Advisory Agreements.
Each of the funds of the Investment Company is charged for those expenses
which can be directly attributed to a fund's operation. Expenses which cannot
be so attributed are generally allocated among the funds based on relative net
assets.
The Adviser voluntarily limits the expenses of each fund, other than
brokers' commissions, transfer taxes and fees relating to portfolio
transactions, investment management expenses and extraordinary expenses to an
annual rate of .35% of the value of the net assets of the All America Fund,
.25% of the net assets of the Bond Fund, and .20% of the net assets of the
Money Market Fund. Accrual of these other operating expenses at their
respective specified annual rates is calculated as a daily charge. Settlement
of fees accrued (both investment management and other operating expenses) is
paid by each fund to the Adviser on or about month-end.
The annual rate established for the All America Fund was reduced to .30%
in early August, 1997 and was further reduced to .20% on October 1, 1997 so as
to maintain as close a relationship as possible between the established rate
(charged daily) and the fund's actual expenses, but not to exceed the
respective rates under the Adviser's existing expense limitation agreement. In
January, 1998 this charge was adjusted to .35% in recognition of the fund's
actual expenses, but reduced in December, 1998 to an average annual rate of
.11% to adjust to the fund's actual expenses through year-end.
The Adviser's voluntary agreement to limit each fund's total expenses
(excluding brokerage commissions, transfer taxes/fees and extraordinary
expenses) to an annual rate of .85% of the net assets of the All America Fund,
.70% of the net assets of the Bond Fund, and .40% of the net assets of the
Money Market Fund may be discontinued at any time.
The Investment Company has 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. The compensation paid by the funds for these services is
subject to the voluntary expense reimbursement of the Adviser described above.
A subadviser placed a portion of its portfolio transactions with its
affiliated broker-dealer; such commissions amounted to $15,470 or 27% of the
fund's total commissions and represented 23% of the aggregate amount of
commissionable transactions.
3. PURCHASES AND SALES
The cost of investment purchases and proceeds from sales of investments,
excluding short-term investments and U.S. Government securities, for the year
ended December 31, 1998 was as follows:
<TABLE>
<CAPTION>
ALL AMERICA BOND
FUND FUND
------------- -------------
<S> <C> <C>
Cost of investment purchases .................................. $26,147,953 $8,339,191
=========== ==========
Proceeds from sales of investments ............................ $24,696,925 $ 200,000
=========== ==========
The cost of investment purchases and proceeds from sales of
U.S. Government (excluding short-term) securities was as
follows:
Cost of investment purchases ................................ $ -- $ 627,050
=========== ==========
Proceeds from sales of investments .......................... $ -- $7,323,002
=========== ==========
</TABLE>
For the Money Market Fund, the cost of short-term securities purchases was
$56,298,483. Net proceeds from sales and redemptions was $57,674,403.
48
<PAGE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PURCHASES AND SALES -- (Continued)
At December 31, 1998 the net unrealized appreciation (depreciation) of
investments, based on cost for Federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
ALL AMERICA BOND MONEY MARKET
FUND FUND FUND
--------------- --------------- -------------
<S> <C> <C> <C>
Unrealized appreciation ...................................... $ 26,929,712 $ 1,124,875 $ --
Unrealized (depreciation) .................................... (2,012,915) (142,648) --
------------ ----------- ----------
Net unrealized appreciation (depreciation) ................... $ 24,916,797 $ 982,227 --
============ =========== ==========
Aggregate cost of investments for Federal Income tax purposes $ 45,189,268 $23,955,305 $6,283,019
============ =========== ==========
</TABLE>
4. CAPITAL SHARE ACTIVITY AND OWNERSHIP
At December 31, 1998 one billion shares of common stock has been
authorized for the Investment Company. The Board of Directors has allocated 25
million shares to the All America Fund and 15 million shares each to the Bond
and Money Market funds.
Transactions in shares during the year ending December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
ALL AMERICA BOND MONEY MARKET
FUND FUND FUND
------------- --------- -------------
<S> <C> <C> <C>
Shares issued ..................................... 152,245 114,465 515,796
Shares issued as reinvestment of dividends ........ 67,564 183,287 18,999
Shares redeemed ................................... (7,410) -- (638,681)
------- ------- --------
Net increase (decrease) ........................... 212,399 297,752 (103,886)
======= ======= ========
</TABLE>
As at December 31, 1998, Mutual Of America Life Insurance Company and its
subsidiaries (affiliates of the Adviser) were shareholders of each fund's
outstanding shares as follows:
<TABLE>
<S> <C>
All America Fund .......... 93.2%
Bond Fund ................. 93.4%
Money Market Fund ......... 21.5%
</TABLE>
5. DIVIDENDS
On June 30, 1998 and September 15, 1998 dividend distributions were
declared and paid from accumulated net investment income to shareholders of
record on June 29, 1998, and September 14, 1998. On December 31, 1998, a
dividend distribution consisting of net investment income and capital gains was
declared and paid to shareholders of record on December 30, 1998. Pursuant to
shareholders' instructions, substantially all dividend distributions were
immediately reinvested in additional shares of each fund (see Note 4 above).
<TABLE>
<CAPTION>
ALL AMERICA BOND MONEY MARKET
FUND FUND FUND
------------- --------------- -------------
<S> <C> <C> <C>
Distributions from:
Net investment income ............... $ 355,096 $ 1,398,540 $ 209,896
Net realized capital gains .......... 608,849 535,067 --
--------- ----------- ---------
Total dividend distributions ......... $ 963,945 $ 1,933,607 $ 209,896
========= =========== =========
Dividend amounts per share ........... $ .208486 $ .850965 $ .444223
========= =========== =========
</TABLE>
6. SUBSEQUENT EVENT
During February 1999, Mutual of America Life Insurance Company redeemed
1.1 million shares of the All America Fund realizing proceeds of approximately
$16.6 million, reducing the Fund's net assets by a corresponding amount.
49
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Mutual of America Institutional Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments in securities of Mutual of America
Institutional Funds, Inc. (a Maryland Corporation) comprising the All America,
Bond and Money Market Funds as of December 31, 1998, and the related statement
of operations for the year then ended and the statement of changes in net
assets for each period in the two years then ended and the financial highlights
for each period in the three years then ended. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the All America, Bond and Money Market Funds of Mutual of America Institutional
Funds, Inc. as of December 31, 1998, the results of their operations for the
year then ended and the changes in their net assets for each period in the two
years then ended and their financial highlights for each period in the three
years then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
- -------------------------
New York, New York
February 19, 1999
50
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
<TABLE>
<S> <C>
1(a) Articles of Incorporation of Mutual of America Institutional Funds, Inc. (the Fund), the Registrant(1)
1(b) Articles Supplementary to Fund's Articles of Incorporation
2 By-Laws of the Fund(1)
4(a) Form of Investment Advisory Agreement, as amended effective May 1, 1999, between the Fund
and Mutual of America Capital Management Corporation (the Adviser)
4(b) Form of Subadvisory Agreement between the Adviser and Fred Alger Management, Inc. (3)
4(c) Form of Subadvisory Agreement between the Adviser and Oak Associates, Ltd. (3)
4(d) Form of Subadvisory Agreement between the Adviser and Palley-Needelman Asset
Management, Inc. (3)
5 Form of Distribution Agreement between the Fund and Mutual of America Securities Corporation
(the Distributor)(1)
7 Form of custody Agreement between the Fund and The Chase Manhattan Bank, N.A. (2)
8(a) Form of Transfer Agency and Service Agreement between the Fund and State Street Bank and
Trust Company (2)
8(b) Form of Investment Accounting Agreement between the Fund and Mutual of America Capital
Management Corporation (4)
9 Consent and Opinion of General Counsel
10(a) Consent of Arthur Andersen LLP
10(b) Power of Attorney of Patrick J. Waide, Jr. (4)
10(c) Powers of Attorney of John R. Greed and Stanley Shmishkiss (5)
10(d) Consent of Counsel
27.1-.3 Financial Data Schedules
</TABLE>
- ---------
(1) Included in the Registration Statement filed with the Commission on
December 22, 1994.
(2) Included in the Pre-Effective Amendment No. 2 and No. 3 filed with the
Commission on January 23 and 29, 1996, respectively.
(3) Included in the Pre-Effective Amendment No. 4 filed with the Commission on
March 15, 1996.
(4) Included in Post-Effective Amendment No. 2 filed with the Commission on
February 28, 1997.
(5) Included in Post-Effective Amendment No. 5 filed with the Commission on
February 12, 1999.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Adviser is an indirect wholly-owned subsidiary of Mutual of America
Life Insurance Company (Mutual of America Life). Mutual of America Life is a
New York mutual life insurance company, and as such no person has the direct of
indirect power to control Mutual of America Life except by virtue of a persons
capacity as a director or executive officer. Each holder of an in-force
insurance policy or annuity contract issued by Mutual of America Life has the
right to vote for the election of directors of Mutual of America Life at annual
elections and upon other corporate matters where policyholders' votes are
taken. Set forth on the following page is a diagram of the companies owned
directly or indirectly by Mutual of America Life.
ITEM 25. INDEMNIFICATION
ARTICLES OF INCORPORATION OF THE FUND. The Articles of Incorporation of
the Fund provide in substance that no director or officer of the Fund shall be
liable to the Fund or its shareholders for money damages, unless the director
or officer is subject to liability by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties in the conduct of his or her
office.
C-1
<PAGE>
BY-LAWS OF THE FUND. The By-Laws of the Fund provide for the
indemnification of present and former officers and directors of the Fund
against liability by reason of service to the Fund, unless the officer or
director is subject to liability by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office (Disabling Conduct). No indemnification shall be made to an
officer or director unless there has been a final adjudication on the merits, a
dismissal of a proceeding for insufficiency of evidence of Disabling Conduct,
or a reasonable determination has been made that no Disabling Conduct occurred.
The Fund may advance payment of expenses only if the officer or director to be
indemnified undertakes to repay the advance unless indemnification is made and
if one of the following applies: the officer of director provides a security
for his or her undertaking, the Fund is insured against losses from any lawful
advances, or a reasonable determination has been made that there is reason to
believe the officer or director ultimately will be entitled to indemnification.
INSURANCE. Coverage for officers and director of the Adviser, Distributor
and the Fund is provided under an Investment Management insurance policy issued
by American International Specialty Lines Insurance Company, with excess
coverage by Chubb custom Insurance Company, to Mutual of America Life Insurance
Company et al. The aggregate limit of liability under the policy per year is
$10 million, with a $200,000 deductible per entity insured and a $1,000
deductible for individual insureds.
BY-LAWS OF THE ADVISER. The By-Laws of Mutual of America Capital
Management Corporation, the Fund's Adviser, provide for the indemnification by
the Corporation of present and former directors and officers of the Corporation
and of any organization for which service is rendered at the request of the
Corporation and permits the advance payment of expenses in certain
circumstances for covered persons in connection with suits by third parties and
derivative suits. Each covered person must have acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. If in
connection with a derivative suit a covered person shall have been adjudged to
be liable to the Corporation, indemnification shall not be made unless and only
to the extent that the Delaware Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is entitled to indemnity. Thus, the officers and directors of the
fund and the Adviser are indemnified by the Adviser for their services in
connection with the Fund to the extent set forth in the By-Laws.
BY-LAWS OF THE DISTRIBUTOR. The By-laws of Mutual of America Securities
Corporation, the principal underwriter and distributor for the fund, provide
for the indemnification by the Corporation of present and former directors and
officers of the Corporation and of any organization for which service is
rendered at the request of the Corporation and permits the advance payment of
expenses in certain circumstances for covered persons in connection with suits
by third parties and derivative suits. Each covered person must have acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. If in connection with a derivative suit a covered person shall
have been adjudged to be liable to the Corporation, indemnification shall not
be made unless and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is entitled to indemnity. Thus, the
officers and directors of the Distributor are indemnified by the Distributor
for their services in connection with the Fund to the extent set forth in the
By-Laws.
UNDERTAKING. Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by its it against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Mutual of America Capital Management corporation (the Adviser) is the
investment adviser to the Fund and is registered as an investment adviser under
the Investment Advisers Act of 1940. The names, addresses and positions with
the Adviser of each director and officer of the Adviser are set forth below.
C-2
<PAGE>
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATION
NAME WITH ADVISER DURING PAST TWO YEARS
- ---- ------------ ---------------------
<S> <C> <C>
Thomas J. Moran ................ Director, Chairman of President, Chief Executive Officer and
320 Park Avenue the Board Director, Mutual of America Life
NY, NY 10022
F. Harlan Batrus ............... Director Partner, Lazard Freres
30 Rockefeller Plaza
NY, NY 10020
Roger E. Birk .................. Director Chairman Emeritus, Merrill Lynch & Co. Inc.
Merrill Lynch
77 Broad Street
Red Bank, NJ 07701
Robert X. Chandler ............. Director Director, Development Office, Archdiocese of
Director, Development Office Boston
Archdiocese of Boston
2121 Commonwealth Ave.
Brighton, MA 02135
Nathaniel A. Davis ............. Director Vice President, Network Engineering
17680 Old Meadow Rd. Operations, Nextel Communications
McLean, VA 22102
Anthony F. Earley .............. Director Chairman, President and Chief Operating
Detroit Edison Company Officer, Detroit Edison Co.
2000 Second Avenue
Room 2407 WCB
Detroit, MI 48226
William T. Knowles ............. Director Consultant
Orr's Island, ME 04066
Walter A. McDougal ............. Director Former Chairman and President, Richmond
Garden City, NY 11530 Hill Savings Bank
James E. Quinn ................. Director Vice Chairman, Tiffany & Co.
727 Fifth Avenue
NY, NY 10022
Richard J. Ciecka .............. President and Chief Vice Chairman of the Board, Mutual of
320 Park Avenue Financial Officer; America Life, until October 1998
NY, NY 10022 Director
Manfred Altstadt ............... Senior Executive Vice Senior Executive Vice President and Chief
320 Park Avenue President and Chief Financial Officer of Mutual of America Life
NY, NY 10022 Financial Officer and American Life
Patrick A. Burns ............... Senior Executive Vice Senior Executive Vice President and General
320 Park Avenue President and Counsel of Mutual of America Life and
NY, NY 10022 General Counsel American Life
Amir Lear ...................... Executive Vice Senior Vice President, Mutual of America
320 Park Avenue President and Life, until October 1998
NY, NY 10022 Assistant to the
President and CEO
Andrew L. Heiskell ............. Executive Vice Executive Vice President of the Adviser
320 Park Avenue President
NY, NY 10022
Joseph Brunken ................. Senior President Senior Vice President of the Adviser since
320 Park Avenue November, 1997; prior thereto, Vice
NY, NY 10022 President, Nikko Capital Management
(USA), Inc.
Jon J. LaBerge ................. Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS PRINCIPAL OCCUPATION
NAME WITH ADVISER DURING PAST TWO YEARS
- ---- ------------ ---------------------
<S> <C> <C>
Thomas Larsen ............... Executive Vice Executive Vice President of the Adviser since
320 Park Avenue President June 1998; prior thereto, Senior
NY, NY 10022 Vice President, Desai Capital Management
Stanley M. Lenkowicz ........ Senior Vice President, Senior Vice President and Deputy General
320 Park Avenue Deputy General Counsel, Mutual of America Life
NY, NY 10022 Counsel & Secretary
Nancy McAvey ................ Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Paul Travers ................ Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Gary P. Wetterau ............ Senior Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
David Wood .................. Senior Vice President Senior Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Aline Couture ............... Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Doris Klug .................. Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Jonathan Lee ................ Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
Robert H. Stewart ........... Vice President Vice President of the Adviser
320 Park Avenue
NY, NY 10022
</TABLE>
Each of Palley-Needelman Asset Management, Inc. ("Palley-Needelman"), Oak
Associates, Ltd. ("Oak Associates") and Fred Alger Management, Inc. ("Alger
Management") is a subadviser for a portion of the Active Assets of the All
America Fund allocated to it. Each subadviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The names, addresses and
positions of each director and officer of each subadviser are incorporated by
reference to the Form ADV of the subadviser filed with the Securities and
Exchange Commission, as set forth below.
Palley-Needelman Asset Management, Inc., Form ADV, SEC File No. 801-9755.
Oak Associates, Ltd., Form ADV, SEC File No. 801-23632.
Fred Alger Management, Inc., Form ADV, SEC File No. 801-06709.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Mutual of America Securities Corporation (the "Distributor"), a
Delaware corporation, is the principal underwriter and distributor for Fund
shares.
C-4
<PAGE>
(b) The names of the officers and directors of the Distributor, and their
positions with the Distributor and the Fund, are as follows:
<TABLE>
<CAPTION>
POSITION WITH
NAME DISTRIBUTOR POSITION WITH THE FUND
- ------------------------------ ---------------------------------- ---------------------------------
<S> <C> <C>
Thomas J. Moran .............. Chairman of the Board --
and Director
Dolores J. Morrissey ......... President and CEO President and Director
Amir Lear .................... Senior Vice President and CFO --
Manfred Altstadt ............. Senior Executive Vice Senior Executive Vice President,
President, Treasurer and Treasurer and Director
Director
Patrick A. Burns ............. Senior Executive Vice Senior Executive Vice President,
President, General Counsel and General Counsel and Director
Director
Salvatore R. Curiale ......... Senior Executive Vice --
President and Director
Stanley M. Lenkowicz ......... Senior Vice President, Secretary Senior Vice President, Deputy
and Director General Counsel and Secretary
Howard Lichtenstein .......... Director --
William S. Conway ............ Executive Vice President/ --
Marketing
Paul J. Costagliola .......... Vice President and --
Compliance Officer
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-3 promulgated thereunder, will be maintained
by the Adviser at its offices at 320 Park Avenue, New York, New York 10022 or
with its custodian.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
The Fund hereby undertakes, if requested to do so by the holders of at
least 10% of the Fund's outstanding shares, to call a meeting of shareholders
for the purpose of voting upon the question of removal of a director or
directors and to assist in communications with other shareholders as required
by applicable law and regulations.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant has duly caused this amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York on the 14th day
of April, 1999.
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
(Registrant)
By: /s/ DOLORES J. MORRISSEY
-------------------------------------
TITLE: PRESIDENT
Pursuant to the requirement of the Securities Act of 1933, this amendment
to Registration Statement has been signed below by the following persons in the
capacities indicated on April 14, 1998.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
/s/ DOLORES J. MORRISSEY President and Director
- -------------------------------------- (Principal Executive Officer)
(DOLORES J. MORRISSEY)
* Director
- --------------------------------------
KEVIN M. KEARNEY
* Director
- --------------------------------------
JOHN T. SHARKEY
* Director
- --------------------------------------
JOHN R. SILBER
* Director
- --------------------------------------
STANLEY SHMISHKISS
* Director
- --------------------------------------
PATRICK J. WAIDE, JR.
/s/ JOHN R. GREED Executive Vice President and Chief Financial Officer
- -------------------------------------- (Principal Financial and Accounting Officer)
JOHN R. GREED
* Senior Executive Vice President and General Counsel
- --------------------------------------
PATRICK A. BURNS
*By /s/ DOLORES J. MORRISSEY
----------------------------------
(DOLORES J. MORRISSEY, ATTORNEY-IN-FACT)
</TABLE>
C-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
- ------------ -----
<S> <C> <C>
1(b) Articles Supplementary to Fund's Articles of Incorporation
9 Consent and Opinion of General Counsel
10(a) Consent of Arthur Andersen LLP
10(d) Consent of Counsel
27.1 Financial Data Schedule for the All America Fund
27.2 Financial Data Schedule for the Bond Fund
27.3 Financial Data Schedule for the Money Market Fund
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> INSTITUTIONAL-ALL AMERICA
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 45,189,268
<INVESTMENTS-AT-VALUE> 70,106,065
<RECEIVABLES> 58,644
<ASSETS-OTHER> 67,676
<OTHER-ITEMS-ASSETS> 1,031,927
<TOTAL-ASSETS> 71,264,312
<PAYABLE-FOR-SECURITIES> 459,931
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,857
<TOTAL-LIABILITIES> 464,788
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,096,275
<SHARES-COMMON-STOCK> 4,693,508
<SHARES-COMMON-PRIOR> 4,481,109
<ACCUMULATED-NII-CURRENT> (6,652)
<OVERDISTRIBUTION-NII> (6,652)
<ACCUMULATED-NET-GAINS> 793,104
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,916,797
<NET-ASSETS> 70,799,524
<DIVIDEND-INCOME> 751,021
<INTEREST-INCOME> 105,820
<OTHER-INCOME> 0
<EXPENSES-NET> 512,729
<NET-INVESTMENT-INCOME> 344,112
<REALIZED-GAINS-CURRENT> 1,118,467
<APPREC-INCREASE-CURRENT> 10,652,968
<NET-CHANGE-FROM-OPS> 12,115,547
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 355,096
<DISTRIBUTIONS-OF-GAINS> 608,849
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 152,245
<NUMBER-OF-SHARES-REDEEMED> (7,410)
<SHARES-REINVESTED> 67,564
<NET-CHANGE-IN-ASSETS> 212,399
<ACCUMULATED-NII-PRIOR> 4,332
<ACCUMULATED-GAINS-PRIOR> 283,486
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 311,285
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 522,284
<AVERAGE-NET-ASSETS> 62,389,883
<PER-SHARE-NAV-BEGIN> 12.65
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 2.57
<PER-SHARE-DIVIDEND> (0.08)
<PER-SHARE-DISTRIBUTIONS> (0.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.08
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
</LEGEND>
<SERIES>
<NAME> INSTITUTIONAL-BOND
<NUMBER> 2
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 23,955,305
<INVESTMENTS-AT-VALUE> 24,937,532
<RECEIVABLES> 12,000
<ASSETS-OTHER> 292,596
<OTHER-ITEMS-ASSETS> 590
<TOTAL-ASSETS> 25,242,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,166
<TOTAL-LIABILITIES> 8,166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,451,023
<SHARES-COMMON-STOCK> 2,425,162
<SHARES-COMMON-PRIOR> 2,127,410
<ACCUMULATED-NII-CURRENT> (6,531)
<OVERDISTRIBUTION-NII> (6,531)
<ACCUMULATED-NET-GAINS> (192,167)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 982,227
<NET-ASSETS> 25,234,552
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,551,557
<OTHER-INCOME> 0
<EXPENSES-NET> 166,043
<NET-INVESTMENT-INCOME> 1,385,514
<REALIZED-GAINS-CURRENT> 152,581
<APPREC-INCREASE-CURRENT> 346,222
<NET-CHANGE-FROM-OPS> 1,884,317
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,398,540
<DISTRIBUTIONS-OF-GAINS> 535,067
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114,465
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 183,287
<NET-CHANGE-IN-ASSETS> 297,752
<ACCUMULATED-NII-PRIOR> 6,495
<ACCUMULATED-GAINS-PRIOR> 190,319
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 106,164
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 229,730
<AVERAGE-NET-ASSETS> 23,729,102
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> (0.62)
<PER-SHARE-DISTRIBUTIONS> (0.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.41
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
</LEGEND>
<SERIES>
<NAME> INSTITUTIONAL-MONEY MARKET
<NUMBER> 3
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 6,283,019
<INVESTMENTS-AT-VALUE> 6,283,019
<RECEIVABLES> 179,117
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57,622
<TOTAL-ASSETS> 6,519,758
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,662
<TOTAL-LIABILITIES> 7,662
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,511,703
<SHARES-COMMON-STOCK> 636,338
<SHARES-COMMON-PRIOR> 740,224
<ACCUMULATED-NII-CURRENT> 581
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (188)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,512,096
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 226,327
<OTHER-INCOME> 0
<EXPENSES-NET> 16,432
<NET-INVESTMENT-INCOME> 209,895
<REALIZED-GAINS-CURRENT> (145)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 209,750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 209,896
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 515,796
<NUMBER-OF-SHARES-REDEEMED> (638,681)
<SHARES-REINVESTED> 18,999
<NET-CHANGE-IN-ASSETS> 103,886
<ACCUMULATED-NII-PRIOR> 582
<ACCUMULATED-GAINS-PRIOR> (43)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,216
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 131,138
<AVERAGE-NET-ASSETS> 4,080,040
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.44)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> 3.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
MUTUAL OF AMERICA INSTITUTIONAL FUNDS, INC.
ARTICLES SUPPLEMENTARY
Mutual of America Institutional Funds, Inc., a Maryland corporation (the
CORPORATION), with its principal office c/o Corporation Trust Incorporated, 300
East Lombard Street, Baltimore, Maryland 21202, hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The total number of shares of capital stock of all classes that
the Corporation has authority to issue is one billion (1,000,000,000) shares of
common stock, par value $.01 per share, with an aggregate par value of ten
million dollars ($10,000,000).
SECOND: Pursuant to authority vested in the Board of Directors of the
Corporation by Article V of the Articles of Incorporation of the Corporation
(the ARTICLES) and resolutions adopted by the Board of Directors at meetings
duly held, the Board of Directors has duly designated the following classes of
shares and allocated authorized common stock as follows:
All America Fund - 25,000,000 shares
Bond Fund - 15,000,000 shares
Equity Index Fund - 15,000,000 shares
Money Market Fund - 15,000,000 shares
The relative preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of such classes are as set forth in paragraph (b) of
Section 1 of Article V of the Articles.
THIRD: Pursuant to authority vested in the Board of Directors of the
Corporation by Article V of the Articles and resolutions adopted by the Board of
Directors at meetings duly held, the Board of Directors has authorized
allocation of such additional shares of common stock of each of the Funds, with
the same relative preferences and other rights as then outstanding shares of
such classes as set forth in paragraph (b) of Section 1 of Article V of the
Articles, as are necessary from time to time to permit the issuance of shares
required on a daily basis in the operation of each of the Funds, and the Board
has authorized the officers of the Corporation to specify the amount of such
additional shares as needed, with a report thereon to be made at the next
regularly scheduled meeting of the Board of Directors.
IN WITNESS WHEREOF, the President of the Corporation has signed these
Articles Supplementary in the Corporation's name and on its behalf and
acknowledges that these Articles Supplementary are the act of the Corporation,
and states that to the best of her knowledge, information and belief all matters
and facts set forth therein relating to the authorization and approval of the
Articles Supplementary are true in all material respects and that this statement
is made under the penalties of perjury.
Dated: April 6, 1999
MUTUAL OF AMERICA
INSTITUTIONAL FUNDS, INC.
Attest:
/s/ Dolores J. Morrissey
-------------------------------
/s/ Stanley M. Lenkowicz Dolores J. Morrissey, President
- ------------------------------------
Stanley M. Lenkowicz, Secretary
(seal)
Exhibit 99.9
[Letterhead of Patrick A. Burns, Senior Executive
Vice President and General Counsel]
April 14, 1999
Mutual of America Institutional Funds, Inc.
320 Park Avenue
New York, New York 10022
Dear Sirs/Madams:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A (the "Post-Effective
Amendment") of Mutual of America Institutional Funds, Inc. and the proposed
offering of common shares, par value $.01 per share, of the Equity Index Fund
described in the Post-Effective Amendment.
I have reviewed such documents and records as I have deemed necessary to express
an informed opinion on the matters covered hereby. It is my opinion that the
common shares of the Equity Index Fund, as well as of the All America Fund,
Bond Fund and Money Market Fund, when issued and sold in accordance with
the Post-Effective Amendment and in jurisdictions where such sales have been
authorized, will be legally issued, fully paid and non-assessable.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment and to the reference to my name under the heading "Legal Matters" in
the Statement of Additional Information.
Sincerely,
/s/ Patrick A. Burns
EXHIBIT 99.10(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of registration
statement no. 33-87874.
ARTHUR ANDERSEN LLP
New York, New York
April 15, 1999
EXHIBIT 99.10(d)
CONSENT OF COUNSEL
We hereby consent of the reference to our firm included in the prospectus
filed as part of Registration Statement No.33-87874.
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
New York, New York
April 15, 1999
