-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DVtFiutTpVVJ5d8mvAPazzmmfUSu2zaqqqfVrh75liL2OikEzQP+7ANOW0K7oBgJ ZrCOLwRSHcs8Nb2ecRvYFQ== 0000950168-99-001207.txt : 19990416 0000950168-99-001207.hdr.sgml : 19990416 ACCESSION NUMBER: 0000950168-99-001207 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19990415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUTUAL OF AMERICA INVESTMENT CORP CENTRAL INDEX KEY: 0000795259 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 033-06486 FILM NUMBER: 99595094 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-05084 FILM NUMBER: 99595095 BUSINESS ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: 320 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: (212)224-1600 MAIL ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: 320 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 485APOS 1 MUTUAL OF AMERICA INVESTMENT CORPORATION 485APOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1999 REGISTRATION NO. 33-6486 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] PRE-EFFECTIVE AMENDMENT NO. [ ] POST-EFFECTIVE AMENDMENT NO. 16 [X] AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] AMENDMENT NO. 17 --------------- MUTUAL OF AMERICA INVESTMENT CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) --------------- 320 PARK AVENUE NEW YORK, NEW YORK 10022 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)(ZIP CODE) (212) 224-1600 (DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE) --------------- DOLORES J. MORRISSEY, PRESIDENT MUTUAL OF AMERICA INVESTMENT CORPORATION 320 PARK AVENUE NEW YORK, NEW YORK 10022 (NAME AND ADDRESS OF AGENT FOR SERVICE) --------------- COPY TO: STANLEY M. LENKOWICZ, ESQ. SENIOR VICE PRESIDENT, DEPUTY GENERAL COUNSEL & SECRETARY MUTUAL OF AMERICA INVESTMENT CORPORATION 320 PARK AVENUE NEW YORK, NEW YORK 10022 --------------- APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the effective date of the Registration Statement. IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE: (CHECK APPROPRIATE SPACE) [ ] immediately upon filing pursuant to paragraph (b). [ ] on (date) pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [X] on April 30, 1999 pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of Rule 485 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MUTUAL OF AMERICA INVESTMENT CORPORATION CROSS-REFERENCE SHEET
ITEMS IN PART A OF FORM N-1A CAPTION IN FORM N-1A CAPTION OR LOCATION IN PROSPECTUS - ----------- ---------------------------------------------- ----------------------------------------------------- 1 Front and Back Cover Pages ................... Front and Back Covers 2 Risk/Return Summary: Investments, Risks, and Performance .......... Summary of How Our Funds Invest 3 Risk/Return Summary: Fee Table .................................... Not Applicable (shares only to Separate Accounts) 4 Investment Objectives, Principal Investment Strategies, and Related Risks ........................................ Details about How Our Funds Invest and Related Risks 5 Management's Discussion of Fund Performance .................................. Not Applicable (Included in Annual Report) 6 Management, Organization, and Capital Structure ............................ Management of the Funds 7 Shareholder Information ...................... Information on Fund Shares 8 Distribution Agreements ...................... Not Applicable 9 Financial Highlights Information ............. Financial Highlights
ITEMS IN PART B OF CAPTION OR LOCATION IN FORM N-1A CAPTION IN FORM N-1A STATEMENT OF ADDITIONAL INFORMATION - ----------- --------------------------------------------- ------------------------------------------------------- 10 Cover Page and Table of Contents ............ Cover 11 Fund History ................................ Investment Company's Form of Operations 12 Description of the Fund and Its Investments and Risks ....................... Investment Strategies and Related Risks; Fundamental Investment Restrictions; Description of Corporate Bond Ratings; Use of Standard & Poor's Indices 13 Management of the Fund ...................... Management of the Investment Company 14 Control Persons and Principal Holders of Securities ............................... Investment Company's Form of Operations 15 Investment Advisory and Other Services .................................... Investment Advisory Arrangements; Independent Auditors; Legal Matters; Custodian 16 Brokerage Allocation and Other Practices ................................... Portfolio Transactions and Brokerage 17 Capital Stock and Other Securities .......... Investment Company's Form of Operations 18 Purchase, Redemption, and Pricing of Shares ...................................... Purchase, Redemption and Pricing of Shares 19 Taxation of the Fund ........................ Taxation of the Investment Company 20 Underwriters ................................ Distribution Arrangements 21 Calculation of Performance Data ............. Yield and Performance Information 22 Financial Statements ........................ Financial Statements
ITEMS IN PART C OF CAPTION IN FORM N-1A AND IN PART C FORM N-1A OF REGISTRATION STATEMENT - ----------- ------------------------------------ 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
MUTUAL OF AMERICA INVESTMENT CORPORATION 320 PARK AVENUE, NEW YORK, NEW YORK 10022 ---------------------------------------------------------------------- Mutual of America Investment Corporation is a mutual fund. It currently has these nine Funds: o EQUITY INDEX FUND o ALL AMERICA FUND o MID-CAP EQUITY INDEX FUND o AGGRESSIVE EQUITY FUND o COMPOSITE FUND o BOND FUND o MID-TERM BOND FUND o SHORT-TERM BOND FUND o MONEY MARKET FUND The Funds serve as investment vehicles for account balances under variable accumulation annuity contracts and variable life insurance policies issued by Mutual of America Life Insurance Company and The American Life Insurance Company of New York (the INSURANCE COMPANIES). Separate Accounts of the Insurance Companies purchase Fund shares. This Prospectus has information a contractholder or policyowner should know before allocating account balance to the Separate Account Funds that invest in shares of the Funds. You should read this Prospectus carefully and keep it for future reference. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------------------------------------------------------- PROSPECTUS DATED MAY 1, 1999 TABLE OF CONTENTS
PAGE ----------- SUMMARY OF HOW OUR FUNDS INVEST ............................. 1 Equity Index Fund ......................................... 1 All America Fund .......................................... 1 Mid-Cap Equity Index Fund ................................. 2 Aggressive Equity Fund .................................... 2 Composite Fund ............................................ 2 Bond Fund ................................................. 3 Mid-Term Bond Fund ........................................ 3 Short-Term Bond Fund ...................................... 3 Money Market Fund ......................................... 4 Annual Total Returns ...................................... 5 Average Annual Total Returns .............................. 8 MANAGEMENT OF THE FUNDS ..................................... 9 The Adviser ............................................... 9 Subadvisers for a Portion of the All America Fund ......... 9 Portfolio Managers ........................................ 10 Year 2000 Considerations .................................. 11 DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS ........ 12 Investment Objectives and Strategies. ..................... 12 Equity Index Fund ........................................ 12 All America Fund ......................................... 12 Mid-Cap Equity Index Fund ................................ 14 Aggressive Equity Fund ................................... 14 Composite Fund ........................................... 15 Bond Fund ................................................ 15 Mid-Term Bond Fund ....................................... 16 Short-Term Bond Fund ..................................... 16 Money Market Fund ........................................ 16 Risks of Investing in Stock Funds ......................... 17 Risks of Investing in Bond Funds .......................... 18 Specific Investments or Strategies, and Related Risks ..... 19 INFORMATION ABOUT FUND SHARES ............................... 21 Pricing of Funds' Shares .................................. 21 Purchase of Shares ........................................ 21 Redemption of Shares ...................................... 21 Dividends, Capital Gains Distributions and Taxes .......... 21 FINANCIAL HIGHLIGHTS ........................................ 22 YOU MAY OBTAIN MORE INFORMATION ............................. Back cover
SUMMARY OF HOW OUR FUNDS INVEST Each Fund of Mutual of America Investment Corporation (the INVESTMENT COMPANY) has its own investment objective and tries to achieve its objective with certain investment strategies. The Funds' different investment strategies will affect the return of the Funds and the risks of investing in each Fund. A Fund may not achieve its objective, or it may achieve its objective during some time periods but not during other time periods. The value of an investment in any of the Funds could decline, or it could increase. EQUITY INDEX FUND ---------------------------------------------------------------------------- The Fund seeks investment results that correspond to the performance of the Standard & Poor's Composite Index of 500 Stocks (the S&P 500(R) INDEX). The Fund invests in the 500 common stocks included in the S&P 500 Index and in futures contracts on the S&P 500 Index. o Securities in the S&P 500 Index generally are issued by companies with large and mid-sized market capitalizations. o Securities are included in the Index based on industry weightings and the issuers' leading positions in those industries. An investment in the Equity Index Fund is subject to market risk and financial risk. Financial risk should be moderate because of the nature of the securities included in the S&P 500 Index. ALL AMERICA FUND ---------------------------------------------------------------------------- The Fund attempts to outperform the S&P 500 Index, by investing primarily in common stocks. o Approximately 60% of the Fund's assets are invested to replicate the S&P 500 Index. This portion of the Fund purchases the 500 common stocks included in the S&P 500 Index and futures contracts on the S&P 500 Index. o Approximately 40% of the Fund's assets are invested by the Adviser and three Subadvisers, each having approximately 10% of the Fund's assets, with an objective of capital appreciation and, to a lesser extent, current income. The Adviser invests primarily in small capitalization value stocks. One Subadviser invests primarily in small capitalization growth stocks. Another Subadviser invests primarily in mid- and large capitalization growth stocks. The third Subadviser invests primarily in large capitalization value stocks. DEFINITIONS WE USE -- MARKET RISK, which refers to how much the value of a security changes (volatility of price) when conditions in the securities markets change or the economic environment changes. For debt securities, market risk includes changes in the overall level of interest rates. For equity securities, stocks of companies with smaller market capitalizations generally have more market risk than stocks of companies with larger market capitalizations. -- FINANCIAL (OR CREDIT) RISK, which refers to the ability to pay principal and interest by an issuer of a debt security and to the earning stability and overall financial soundness of an issuer of an equity security. Debt securities issued by the U.S. Government or its agencies are considered to have no or very little financial risk, and debt securities with higher ratings have less financial risk than lower-rated debt securities. -- CURRENT INCOME VOLATILITY, which refers to how much and how quickly changes in the overall level of interest rates become reflected in the level of a fund's current income. When a fund holds a security that matures or prepays, the fund will invest the proceeds at current interest rates. -- MARKET CAPITALIZATION, which refers to the aggregate market value of the equity securities stock that a company has issued. -1- An investment in the All America Fund is subject to market and financial risk. Approximately 20% of the All America Fund's assets are invested in small capitalization growth and value stocks, many of which trade over-the-counter, and this portion of its portfolio will have more market and financial risk than the portion invested in mid and large capitalization stocks. Equity securities that trade over-the-counter may be more difficult to sell than equity securities that trade on a national securities exchange. MID-CAP EQUITY INDEX FUND ---------------------------------------------------------------------------- The Fund seeks investment results that correspond to the performance of the S&P MidCap 400 Index. o The Fund invests in the 400 common stocks included in the S&P MidCap 400 Index and in futures contracts on the S&P MidCap 400 Index. o These stocks are issued by companies with mid-sized market capitalizations. An investment in the MidCap Equity Index Fund is subject to market and financial risk. ---------------------------------------------------------------------------- STANDARD & POOR'S(R) (S&P(R)) DOES NOT SPONSOR, ENDORSE, SELL OR PROMOTE THE EQUITY INDEX FUND, ALL AMERICA FUND OR MID-CAP EQUITY INDEX FUND. STANDARD & POOR'S, S&P, THE S&P 500 INDEX AND THE S&P MIDCAP 400 INDEX ARE TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY THE INVESTMENT COMPANY. STANDARD & POOR'S HAS NO OBLIGATION OR LIABILITY FOR THE SALE OR OPERATION OF THE EQUITY INDEX FUND, ALL AMERICA FUND OR MID-CAP EQUITY INDEX FUND AND MAKES NO REPRESENTATION AS TO THE ADVISABILITY OF INVESTING IN THE FUNDS. AGGRESSIVE EQUITY FUND ---------------------------------------------------------------------------- The Fund seeks capital appreciation by investing primarily in common stocks, many of which are issued by companies that have small market capitalizations and are traded over-the-counter. The Fund uses two different investment styles to seek its investment objective: o The Fund invests approximately 50% of its assets in growth stocks, issued by companies the Adviser believes to possess above-average growth potential. o The Fund invests the other approximately 50% of its assets in value stocks, issued by companies the Adviser believes to possess valuable assets or to be undervalued in the marketplace in relation to factors such as the company's assets, earnings, or growth potential. An investment in the Aggressive Equity Fund is subject to market and financial risk. The Aggressive Equity Fund has more market risk and financial risk than our other stock funds, because it generally invests in small capitalization growth and value equity securities that often trade over-the-counter. COMPOSITE FUND ---------------------------------------------------------------------------- The Fund seeks capital appreciation by investing in common stocks, and it seeks current income by primarily investing in publicly-traded, investment grade debt securities and money market instruments. The portion of the Fund's assets invested in each category of securities will vary, based on the Adviser's view of current economic and market conditions. GENERAL PRINCIPLES OF INVESTING -- As a very general rule, over longer investment periods the investment returns for stock funds tend to be higher than the returns for bond funds and money market funds. -- Stock funds have a higher risk for declines in value, especially over shorter investment periods, than bond funds and money market funds, and a stock fund's returns may vary significantly from year-to-year. -- Money market funds have the lowest risk for a decline in value, but they tend to have the lowest investment returns over longer investment periods. -2- o The current investment strategy for the equity portion on the Fund is to invest in approximately 25 stocks in the S&P 500 Index that are the largest in the Index by market capitalization, and in approximately 75 more stocks that also are included in the S&P 500 Index, as selected by the Adviser. o The current investment strategy for the fixed income portion of the Fund is to invest primarily in investment grade debt securities issued by U.S. corporations or by the U.S. Government or its agencies, including mortgage-backed securities. An investment in the Composite Fund has market risk. By investing in equity securities and debt securities, the Fund tries to reduce the market risk that would exist for an investment in either a stock fund or a bond fund. An investment in the Composite Fund has moderate financial risk, based on the Fund's purchase of equity securities included in the S&P 500 Index and its purchase of investment grade debt securities. BOND FUND ---------------------------------------------------------------------------- The Fund seeks current income, by investing primarily in publicly-traded, investment grade debt securities that will have an average maturity which varies according to the Adviser's view of current market conditions. o The Fund invests in corporate, U.S. Government securities and U.S. Government agency securities, such as bonds, notes, debentures, zero coupon securities and mortgage-backed securities. o The Fund may have a significant portion of its assets invested in a particular type of debt security, such as U.S. Government or agency mortgage-backed securities, zero coupon securities or securities rated BBB. o The Adviser generally selects securities based on interest income to be generated and does not time purchases and sales based on interest rate predictions. You should refer to "Risks of Investing in any of the Bond Funds" below. MID-TERM BOND FUND ---------------------------------------------------------------------------- The Fund seeks current income by investing primarily in publicly-traded, investment grade debt securities that have an average maturity of three to seven years. o The Fund invests in corporate, U.S. Government securities and U.S. Government agency securities, such as bonds, notes, debentures, zero coupon securities and mortgage-backed securities. o The Fund may have a significant portion of its assets invested in a particular type of debt security, such as U.S. Government agency mortgage-backed securities, zero coupon securities or securities rated BBB. o The Adviser generally selects securities based on interest income to be generated and does not time purchases and sales based on interest rate predictions. You should refer to "Risks of Investing in any of the Bond Funds" below. SHORT-TERM BOND FUND ---------------------------------------------------------------------------- The Fund seeks current income by investing primarily in publicly-traded, investment grade debt securities that have an average maturity of one to three years. o The Fund invests in corporate, U.S. Government securities, U.S. Government agency securities and money market instruments, such as bonds, notes, zero coupon securities, mortgage-backed securities and commercial paper. o The Fund may have a significant portion of its assets invested in a particular debt security, such as U.S. Government or agency securities, which also may be mortgage-backed securities. o The Adviser selects securities based on income to be generated and does not time purchases and sales based on interest rate predictions. You should refer to "Risks of Investing in any of the Bond Funds" below. -3- RISKS OF INVESTING IN ANY OF THE BOND FUNDS An investment in any of the Bond Funds is subject to market risk. Interest rate increases usually cause a decline in the value of debt securities, while interest rate decreases usually cause an increase in the value of debt securities. Generally, the market risk for debt securities increases as the term to maturity (or expected redemption date) lengthens. The market risk for a Fund increases as the average maturity of the Fund's portfolio lengthens. Lower rated investment grade debt securities may be subject to a greater market risk than higher rated debt securities, and zero coupon securities or discount notes may be subject to a greater market risk than securities that pay interest on a regular basis. The Funds also have current income volatility risk. The risk decreases as the average maturity of a Fund's portfolio lengthens. Because the Funds purchase primarily investment grade debt securities, including securities issued by the U.S. Government and its agencies, they should have a moderate amount of financial risk. Securities rated BBB have more credit risk than higher-rated investment grade securities. MONEY MARKET FUND ---------------------------------------------------------------------------- The Fund seeks current income and preservation of principal by investing in money market instruments that meet certain requirements for liquidity, investment quality and stability of capital. o The average maturity of the instruments the Fund holds will be short-term -- 90 days or less. o The Fund will purchase only securities that are highly rated by at least two rating agencies. o The Fund will diversify its investments, limiting holdings in the securities of any one issuer (except the U.S. Government or its agencies) to 5% of assets. The Money Market Fund does not operate in a way to maintain a stable net asset value of $1.00, because it pays dividends of income earned on an annual basis. The Fund's net asset value will generally rise during the year as the Fund earns income and will decline when dividends are declared and income is paid to shareholders. A shareholder's investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation, the U.S. Government or any other government agency. An investment in the Money Market Fund has a small amount of market risk and financial risk, because the Fund holds high quality securities with short terms to maturity. The Fund has a high level of current income volatility, because its securities holdings are short term and it reinvests as its holdings mature. -4- ANNUAL TOTAL RETURNS ---------------------------------------------------------------------------- The bar charts below show the annual return of each Fund for the past ten years, or for the years the Fund has been in operation if less than ten years. The Mid-Cap Equity Index Fund is not included because it began operations on May 1, 1999. A chart indicates the risks of investing in a particular Fund by showing changes in the Fund's performance from year-to-year during the period., but a Fund's past performance does not necessarily indicate how it will perform in the future. Below each chart is the Fund's highest total return for any calendar quarter during the period covered by the chart, called the BEST QUARTER RETURN, and the Fund's lowest total return for any calendar quarter during the period covered, called the WORST QUARTER RETURN. These returns are an indication of the volatility of a Fund's total returns. The numbers in parentheses are negative, representing a loss of principal. The total returns shown do not include charges against the assets of the Separate Accounts that purchase Fund shares. If these charges were reflected, returns would be less than those shown. [EQUITY INDEX FUND CHART APPEARS HERE] 1994 1995 1996 1997 1998 - ------------------------------------- 1.5% 36.6% 22.7% 33.1% 28.6% Best quarter return: 21.4% during fourth quarter 1998 Worst quarter return: (9.9%) during third quarter 1998 [ALL AMERICA FUND CHART APPEARS HERE] 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ----------------------------------------------------------------------------- 24.1% (3.8%) 22.6% 3.2% 12.0% 1.3% 36.6% 20.7% 26.8% 21.3% Best quarter return: 22.1% during fourth quarter 1998 Worst quarter return: (14.3%) during third quarter 1998 -5- [AGGRESSIVE EQUITY FUND CHART APPEARS HERE] 1995 1996 1997 1998 - ----------------------------- 38.2% 27.1% 21.2% (5.1%) Best quarter return: 26.9% during fourth quarter 1998 Worst quarter return: (26.2%) during third quarter 1998 [COMPOSITE FUND CHART APPEARS HERE] 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ---------------------------------------------------------------------------- 17.2% 1.5% 16.4% 5.9% 16.9% 3.0% 21.9% 11.9% 17.7% 14.5% Best quarter return: 8.8% during fourth quarter 1998 Worst quarter return: (6.9%) during third quarter 1990 [BOND FUND CHART APPEARS HERE] 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ---------------------------------------------------------------------------- 11.1% 3.5% 14.0% 8.6% 13.1% (3.2%) 19.4% 3.5% 10.4% 7.2% Best quarter return: 7.0% during second quarter 1995 Worst quarter return: (2.9%) during first quarter 1994 -6- [MID-TERM BOND FUND CHART APPEARS HERE] 1994 1995 1996 1997 1998 - ------------------------------------ (3.7%) 16.3% 3.9% 7.3% 6.4% Best quarter return: 6.1% during second quarter 1995 Worst quarter return: (3.0%) during first quarter 1994 [SHORT-TERM BOND FUND CHART APPEARS HERE] 1994 1995 1996 1997 1998 -------------------------------------- 1.4% 7.7% 4.9% 6.0% 5.7% Best quarter return: 2.6% during second quarter 1995 Worst quarter return: (0.3%) during first quarter 1994 [MONEY MARKET FUND CHART APPEARS HERE] 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ---------------------------------------------------------------------------- 7.8% 6.8% 4.4% 3.3% 2.9% 4.1% 5.8% 5.3% 5.5% 5.4% Best quarter return: 2.3% during second quarter 1989 Worst quarter return: 0.7% during second quarter 1993 -7- AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DECEMBER 31, 1998) ---------------------------------------------------------------------------- The table below shows the average annual total returns of each Fund for the past one, five and ten years, if the Fund was operating for those periods, and the return for the period of the Fund's operations, except that the Mid-Cap Equity Index Fund is not included because it began operations on May 1, 1999. The table indicates the risks of investing in the Funds by comparing, for the same periods, each Fund's returns to those of a broad-based, unmanaged index, or to Treasury Bills for money market investments. A Fund's past performance does not necessarily indicate how it will perform in the future. The average annual total returns shown do not include charges against the assets of the Separate Accounts that purchase Fund shares. If these charges were reflected, returns would be less than those shown.
PAST PAST PAST FOR LIFE FUND/COMPARATIVE INDEX(ES) ONE YEAR FIVE YEARS TEN YEARS OF FUND* - ----------------------------------------------------------- ---------- ------------ ----------- --------- Equity-Index Fund ....................................... 28.6% 23.8% N/A 21.1% S&P 500 Index .......................................... 28.6% 24.1% 21.5% - ----------------------------------------------------------- ---- ---- ---- All America Fund** ...................................... 21.3% 20.8% 16.4% 16.7% S&P 500 Index .......................................... 28.6% 24.1% 19.2% 18.7% - ----------------------------------------------------------- ---- ---- ---- ---- Aggressive Equity Fund .................................. (5.1)% N/A N/A 17.7% Russell 2000 Index ..................................... (2.6)% 12.8% - ----------------------------------------------------------- ---- ---- Composite Fund .......................................... 14.5% 12.2% 12.3% 12.6% S&P 500 Index .......................................... 28.6% 24.1% 19.2% 18.7% Lehman Brothers Gov't./Corp. Bond Index ................ 9.5% 7.3% 9.3% 9.9% 90-day Treasury Bill Rate .............................. 5.1% 5.1% 5.4% 5.8% - ----------------------------------------------------------- ---- ----- ---- ---- Bond Fund ............................................... 7.2% 7.2% 9.1% 9.0% Lehman Brothers Gov't./Corp. Bond Index ................ 9.5% 7.3% 9.3% 9.9% - ----------------------------------------------------------- ---- ----- ---- ---- Mid-Term Bond Fund ...................................... 6.4% 5.9% N/A 6.2% Salomon Brothers 3-7 Year Bond Index ................... 8.9% 6.9% 7.0% - ----------------------------------------------------------- ---- ----- ---- Short-Term Bond Fund .................................... 5.7% 5.1% N/A 5.1% Salomon Brothers 1-3 Year Bond Index ................... 7.0% 6.0% 5.8% - ----------------------------------------------------------- ---- ----- ---- Money Market Fund ....................................... 5.4% 5.2% 5.4% 5.9% 90-day Treasury Bill Rate .............................. 5.1% 5.1% 5.4% 5.8% 7-day current yield for period ended 12/29/98 was 5.06% 7-day effective yield (reflecting the compounding of interest) for period ended 12/29/98 was 5.19% - ------------------------------------------------------------
N/A = Not applicable * The Funds commenced operations on the following dates: All America, Composite, Bond and Money Market Funds -- January 1, 1985; Equity Index, Mid-Term Bond and Short-Term Bond Funds -- February 5, 1993; and Aggressive Equity Fund -- May 2, 1994. ** Prior to May 2, 1994, the All America Fund was known as the Stock Fund, had a different investment objective and did not have any subadvisers. The S&P 500 Index is the Standard & Poor's Composite Index of 500 Stocks, a market value-weighted index of the common stock prices of companies included in the S&P 500. The Lehman Brothers Government/Corporate Bond Index is an index of U.S. Government and corporate bond prices of investment grade bonds with maturities greater than one year and face values over $1 million. The Russell 2000 Index is a market capitalization-weighted index of common stock prices of the smallest 2000 companies in the Russell 3000, generally with capitalizations of $1 billion or less. The Salomon Brothers Bond Index, for 1-3 years and for 3-7 years, is a market capitalization-weighted index of Treasury, Agency, mortgage and corporate bonds in the Salomon Brothers Broad Investment-Grade Bond Index with the same maturities and values of $25-$50 million (at least $200 million for mortgage-backed bonds). -8- 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. As Adviser, Capital Management: o places orders for the purchase and sale of securities, o engages in securities research, o makes recommendations to and reports to the Investment Company's Board of Directors, o supplies administrative, accounting and recordkeeping services for the Funds, and o provides the office space, facilities, equipment, material and personnel necessary to perform its duties. For its investment management services, the Adviser receives compensation from each Fund at an annual rate of the Fund's net assets, calculated as a daily charge. These annual rates, which were applicable during 1998, are: o All America, Composite, Bond, Mid-Term Bond and Short-Term Bond Funds -- .50% o Aggressive Equity Fund -- .85% o Equity Index and Mid-Cap Equity Index Funds -- .125% o Money Market Fund -- .25% The Adviser voluntarily limits the expenses of each Fund, other than for brokers' commissions, transfer taxes and other fees relating to portfolio transactions, to the amount of the investment advisory fee paid by the Fund to the Adviser. The Adviser may discontinue this expense limitation at any time. SUBADVISERS FOR A PORTION OF THE ALL AMERICA FUND ---------------------------------------------------------------------------- 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. -9- 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, the Indexed Assets of the All America Fund or the Mid-Cap Equity Index Fund, because the investment objective for each is to replicate the performance of an index. ALL AMERICA FUND THOMAS P. LARSEN, Executive Vice President of the Adviser, is responsible for managing the Adviser's portion of the actively managed assets of the Fund. Mr. Larsen joined the Adviser in June 1998 from his position as Senior Vice President of Desai Capital Management. He has almost 30 years of experience in selecting securities for and managing equity portfolios. DAVID D. ALGER, President and Chief Executive Officer of Alger Management, is primarily responsible for the day-to-day management of the Alger Management portion of the Fund. He has been employed by Alger Management as Executive Vice President and Director of Research since 1971 and as President since 1995, and he serves as portfolio manager for other mutual funds and investment accounts managed by Alger Management. JAMES D. OELSCHLAGER is the portfolio manager of the Oak Associates portion of the Fund. Since establishing Oak Associates in 1985, Mr. Oelschlager has served as its portfolio manager. Previously, he served as the Assistant Treasurer of Firestone Tire & Rubber Company, where he was directly responsible for the management of the company's pension assets. Mr. Oelschlager is assisted with portfolio management responsibilities by Donna Barton, trading, Margaret Ballinger, new accounts, and Doug MacKay, equity research. These individuals have combined experience of over seventy years in the investment business and play a key role in the day-to-day management of the firm's portfolios. CHET J. NEEDELMAN, Chief Executive Officer and Senior Investment Officer of Palley-Needelman, is responsible for the day-to-day management of the Palley-Needelman portion of the Fund. Mr. Needelman has over 30 years of investment experience as a security analyst, research director and portfolio manager. He has managed funds for foundations, corporations, endowments and mutual funds. He is the co-founder of Palley-Needelman Asset Management and its predecessor company, where he held various positions during the last 24 years. All investment decisions for Palley-Needelman Asset Management are made by an investment committee which includes Mr. Needelman, Mr. Palley and two other senior investment professionals. AGGRESSIVE EQUITY FUND THOMAS P. LARSEN, Executive Vice President of the Adviser, has responsibility for managing the Fund. Mr. Larsen, who has almost 30 years of experience in selecting securities for and managing equity portfolios, joined the Adviser in June 1998 and before that was Senior Vice President of Desai Capital Management. COMPOSITE FUND THOMAS P. LARSEN, Executive Vice President of the Adviser, is responsible for managing the equity portion of the Fund. Mr. Larsen, who joined the Adviser in June 1998 and whose most recent prior position was as Senior Vice President of Desai Capital Management. He has almost 30 years of experience in selecting securities for and managing equity portfolios. ANDREW L. HEISKELL, Executive Vice President of the Adviser, is responsible for managing the fixed income portion of the Fund. Mr. Heiskell has more than 30 years of experience in selecting securities for and managing fixed-income portfolios. BOND FUND, MID-TERM BOND FUND AND SHORT-TERM BOND FUND ANDREW L. HEISKELL, Executive Vice President of the Adviser, has responsibility for setting the fixed income investment strategy and overseeing the day-to-day operations of the Bond Fund, the Mid-Term Bond Fund and the Short-Term Bond Fund. He has been the portfolio manager for the Bond Fund since February 1991 and of the Mid-Term and Short-Term Bond Funds since their inception in 1993. Mr. Heiskell has more than 30 years of experience in selecting securities for and managing fixed-income portfolios. -10- YEAR 2000 CONSIDERATIONS ---------------------------------------------------------------------------- Many computer software programs, as originally developed, could not distinguish the year 2000 from the year 1900. If not corrected, this inability could adversely impact the handling of securities trades, the payment of interest and dividends, pricing, accounting and other recordkeeping services by the Adviser or the service providers for the Investment Company and the Adviser. The Adviser has reviewed its computer systems and has made modifications and replacements to prepare for the year 2000. It has successfully tested the modified systems and will continue monitoring Year 2000 compliance throughout 1999. The Adviser has received confirmation from the Adviser's and the Investment Company's service providers that they expect to modify or replace their systems to prepare for the year 2000. The Investment Company anticipates that the Adviser's computer systems and those of the providers will be adapted in time for the year 2000. It is possible that the Investment Company, or its service providers, could experience some computer processing problems when the year 2000 arrives. We have developed written contingency plans to ensure business continuity through the year 2000. In addition, Year 2000 problems could have a negative impact on companies in which the Investment Company's Funds invest, which could reduce the value of these companies' securities and therefore reduce the Funds' investment returns. -11- DETAILS ABOUT HOW OUR FUNDS INVEST AND RELATED RISKS INVESTMENT OBJECTIVES AND STRATEGIES ---------------------------------------------------------------------------- EQUITY INDEX FUND: The investment objective of the Equity Index Fund is to provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the S&P 500 Index. The Fund seeks to achieve its objective primarily by: o Purchasing shares of the 500 common stocks that are included in the S&P 500 Index. - Stocks are selected in the order of their weightings in the S&P 500 Index, beginning with the heaviest weighted stocks. - The percentage of the Fund's assets invested in each of the selected stocks will be approximately the same as the percentage the stock represents in the S&P 500 Index. - The Fund attempts to be fully invested at all times, and at least 80% of the Fund's net assets will be invested in the stocks that comprise the S&P 500 Index. o Purchasing futures contracts on the S&P 500 Index and options on futures contracts on the S&P 500 Index to invest cash prior to the purchase of common stocks, in an attempt to have the Fund's performance more closely correlate with the performance of the S&P 500 Index. The Adviser uses a computer program to determine which stocks are to be purchased or sold to copy the S&P 500 Index. From time to time, the Fund makes adjustments in its portfolio (rebalances) because of changes in the composition of the S&P 500 Index or in the valuations of the stocks within the Index relative to other stocks within the Index. The Fund's investment performance may not precisely duplicate the performance of the S&P 500 Index, due to cash flows in and out of the Fund and investment timing considerations. The Fund also pays investment advisory expenses that are not applicable to an unmanaged index such as the S&P 500 Index. ALL AMERICA FUND: The investment objective of the All America Fund is to outperform the S&P 500 Index by providing a diversified portfolio of Active Assets with diversified management and a broad exposure to the market. At least 65% of the All America Fund's total assets will be invested in equity securities under normal market conditions. The issuers of at least 80% of the Fund's total assets will be United States corporations or entities. INDEXED ASSETS. The Fund invests approximately 60% of its assets to provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the S&P 500 Index. This portion of the All America Fund is called the INDEXED ASSETS. The Fund invests Indexed Assets in the 500 common stocks included in the S&P 500 Index and in futures contracts on the S&P 500 Index. The Fund attempts to match the weightings of stocks in the Indexed Assets with the weightings of those stocks in the S&P 500 Index. The Indexed Assets are invested in the same manner as the Equity Index Fund, discussed above. ACTIVE ASSETS. The Fund invests approximately 40% of its assets to achieve a high level of total return, through both appreciation of capital and, to a lesser extent, current income, by means of a diversified portfolio of primarily common stocks. The Adviser and three Subadvisers actively manage this portion of the All America Fund, which is called the ACTIVE ASSETS. The Fund tries to maintain, to the extent possible, approximately equal amounts of Active Assets with the Adviser and the three Subadvisers. The Adviser periodically rebalances assets in the All America Fund to retain the approximate 60%/40% relationship between Indexed Assets and Active Assets. Adviser. The Adviser generally invests in stocks that it considers undervalued and with the potential for above average investment returns, issued by companies with small market capitalizations (small cap value stocks). Some of the companies whose stocks the Adviser selects may have limited Wall Street coverage and low institutional ownership, which may make the stocks more difficult to sell in certain market conditions. -12- o The Adviser seeks securities with a depressed valuation compared to their previous valuations or compared to a universe of peer companies. The Adviser determines depressed valuation primarily through consideration of earnings, cash flow or net equity. o Issuers must have executive management that the Adviser considers strong and capable of executing a clear business strategy for the company. The Adviser may at times actively trade the securities in its portion of the All America Fund, depending on market conditions. Fred Alger Management, Inc. This Subadviser invests in stocks that it considers to be fundamentally sound with the potential for strong growth and for earnings in excess of market expectations, issued by companies with small market capitalizations (small cap growth stocks). o The securities of these companies often are traded in the over-the-counter market. o Except during temporary defensive periods, at least 65% of the assets in the Fred Alger portfolio will be invested in equity securities of companies that, at the time of the Fund's purchase, have total market capitalization within the range of capitalization of the companies included in the Russell 2000 Growth Index or the S&P SmallCap 600 Index, updated quarterly. Fred Alger Management, Inc. actively trades the securities in its portion of the All America Fund, and its portfolio turnover rate generally will be higher than the portfolio turnover rate for the other Subadvisers. Oak Associates, Ltd. This Subadviser invests in mid- and large-sized capitalization stocks, which often have low current income and the potential for significant growth (mid- and large capitalization growth stocks). Its approach is to: o monitor 400 stocks, o at any one time to invest in approximately 15-25 common stocks without regard for market industry weighting, and o usually hold securities that have appreciated in value, rather than selling them to realize capital gains. Palley-Needelman Asset Management, Inc. This Subadviser invests its portion of Active Assets in stocks it considers to be of high quality with lower than average price volatility and low price/earning ratios, issued by companies with large market capitalizations (large cap value stocks). Companies generally will have: o below market debt levels, o earnings growth of 10% or more, o current yield greater than the average of the S&P 500, and o market capitalization of at least $5 billion. Palley-Needelman may at times actively trade the securities in its portion of the All America Fund, depending on market conditions. -13- MID-CAP EQUITY INDEX FUND: The investment objective of the Mid-Cap Equity Index Fund is to provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the S&P MidCap 400 Index. The Fund seeks to achieve its objective primarily by: o Purchasing shares of the 400 common stocks that are part of the S&P MidCap 400 Index. - Stocks are selected in the order of their weightings in the S&P MidCap 400 Index, beginning with the heaviest weighted stocks. - The percentage of the Fund's assets invested in each of the selected stocks will be approximately the same as the percentage the stock represents in the S&P MidCap 400 Index. - The Fund attempts to be fully invested at all times, and at least 80% of the Fund's net assets will be invested in the stocks that comprise the S&P MidCap 400 Index. o Purchasing futures contracts on the S&P MidCap 400 Index and options on futures contracts on the S&P 400 Index to invest cash prior to the purchase of common stocks, in an attempt to have the Fund's performance more closely correlate with the performance of the S&P MidCap 400 Index. The Adviser uses a computer program to determine which stocks are to be purchased or sold to copy the S&P MidCap 400 Index. From time to time, the Fund makes adjustments in its portfolio (rebalances) because of changes in the composition of the S&P MidCap 400 Index or in the valuations of the stocks within the Index relative to other stocks within the Index. There is a risk that the Fund's investment performance may not precisely duplicate the performance of the S&P MidCap 400 Index, due to cash flows in and out of the Fund and investment timing considerations. The Fund also pays investment advisory expenses that are not applicable to an unmanaged index such as the S&P MidCap 400 Index. AGGRESSIVE EQUITY FUND: The investment objective of the Aggressive Equity Fund is capital growth, by investing approximately 50% of its assets in growth stocks and approximately 50% of its assets in value stocks. The Adviser anticipates that the percentage of the Fund's assets invested in growth stocks or value stocks will range between 40% and 60% of the Fund's assets invested in equity securities. At least 85% of the All America Fund's total assets will be invested in equity securities under normal market conditions. o Growth stocks are stocks that the Adviser considers to have above-average growth potential, based on earnings, sales or prospective economic or political changes. o Value stocks are stocks that the Adviser views as undervalued, based on the issuer's assets, earnings or growth potential. The Adviser uses a "bottom-up" approach in selecting stocks for the Fund (see definition below). The Adviser continually reviews the universe of companies with small market capitalization to identify securities with growth or value characteristics that meet its requirements. In evaluating an individual security, the Adviser determines the security's valuation relative to other securities in the same sector or industry. Some of the stocks the Fund purchases have small market capitalizations and may be traded-over-the counter instead of on an exchange. During different market cycles, either growth or value stocks may be out of favor with investors and may have more market risk (price volatility) than larger capitalization stocks. - -------------------------------------------------------------------------------- DEFINITION WE USE -- BOTTOM-UP INVESTING means that the Adviser evaluates an issuer of securities before purchasing those securities for the Fund, without taking into account possible changes in the general economy. -14- COMPOSITE FUND: The investment objective of the Composite Fund is to achieve as high a total rate of return, through both appreciation of capital and current income, as is consistent with prudent investment risk by means of a diversified portfolio of common stocks, debt securities and money market instruments. The Adviser varies the portion of the Fund's assets invested in each category of securities, based on economic conditions, the general level of common stock prices, interest rates and other relevant considerations. o The Fund invests in publicly-traded common stocks for long-term growth of capital and, to a lesser extent, income from dividends. o It invests in publicly-traded, investment grade debt securities and money market instruments for current income. o At December 31, 1998, the Fund's assets were 44% invested in equity securities, 42% invested in fixed-income securities and 14% invested in money market instruments. For defensive purposes, the Fund may invest up to 75% of its assets in common stock and other equity-type securities, or up to 75% of its assets in debt securities with a remaining maturity of more than one year, or 100% of its assets in money market instruments. The Fund's current strategy for its equity investments is to invest in approximately 100 stocks, all of which are included in the S&P 500 Index. o The Fund selects approximately 25 stocks of companies with the largest market capitalizations and invests in those stocks in approximately the same percentage by market weight as the S&P 500 Index. o The Adviser selects approximately 75 additional stocks, based on its stock selection analysis. The Fund invests in these stocks in approximately the same economic sector weightings as the S&P 500 Index. The Fund's current strategy for its fixed income investments is to invest primarily in investment grade debt securities of U.S. corporations, the U.S. Government and U.S. Government agencies. The Adviser manages this portion of the Composite Fund in substantially the same way as it manages the Bond Fund, described below. BOND FUND: The primary investment objective of the Bond Fund is to provide as high a level of current income over time as is believed to be consistent with prudent investment risk. A secondary objective is preservation of shareholders' capital. The average maturity of the debt securities held by the Bond Fund will vary according to market conditions and the stage of the interest rate cycle. The average maturity for the Bond Fund will be longer than the average maturity of the debt securities held by the Mid-Term Bond Fund or Short-Term Bond Fund. The Fund invests at least 80% of its assets in investment grade debt obligations issued by U.S. corporations or by the U.S. Government or its agencies. o The Fund invests in various types of debt securities, including bonds, mortgage-backed securities, zero coupon securities and asset-backed securities, with ratings that range from AAA to BBB. o The percentage of the Fund's portfolio invested in corporate securities and the percentage invested in U.S. Government and agency securities will vary, depending on market conditions and the Adviser's assessment of the income and returns available from corporate securities in relation to the risks of investing in these securities. o At December 31, 1998, the Bond Fund had approximately 34% of its assets invested in zero coupon securities, 3% of its assets in U.S. Government agency mortgage-backed securities, and 35% of its assets in corporate obligations rated BBB. Zero coupon securities do not bear interest payable to the holder. When interest rates increase, zero coupon securities may decline in value more than debt securities that bear interest payable at regular intervals. The Adviser uses a "bottom-up" approach in selecting debt securities for the Fund (see definition on page 14). The Adviser's approach generally is to purchase securities for income. In selecting an individual security, it -15- reviews historical financial measures and considers the price and yield relationship to other securities to determine a proper relative value for the security. The Fund does not generally purchase and sell securities in anticipation of interest rate changes in the economy. The Adviser may sell a security that it considers to have become overvalued relative to alternative investments, and reinvest in an alternative security. MID-TERM BOND FUND: The primary investment objective of the Fund is to provide as high a level of current income over time as is believed to be consistent with prudent investment risk. A secondary objective is preservation of shareholders' capital. The average maturity of the Fund's securities holdings will be between three and seven years. The Fund invests at least 80% of its assets in investment grade debt obligations issued by United States corporations or issued by the U.S. Government or its agencies. o The Fund invests in various types of debt securities, including bonds, mortgage-backed securities, zero coupon securities and asset-backed securities, with ratings that range from AAA to BBB. o The percentage of the Fund's portfolio invested in corporate securities and the percentage invested in U.S. Government and agency securities will vary, depending on market conditions and the Adviser's assessment of the income and returns available from corporate securities in relation to the risks of investing in these securities. o At December 31, 1998, the Mid-Term Bond Fund had no investment in zero coupon securities, and approximately 20% of its assets in U.S. Government agency mortgage-backed securities and 30% of its assets in corporate obligations rated BBB. The Adviser uses a "bottom-up" approach in selecting securities for the Mid-Term Bond Fund. Its approach generally is to purchase securities for income. In selecting an individual security, the Adviser reviews historical financial measures and considers the price and yield relationship to other securities to determine a proper relative value for the security. The Fund generally does not purchase and sell securities in anticipation of interest rate changes in the economy. The Adviser may sell a security in the Fund's portfolio that the Adviser considers to have become overvalued relative to alternative investments. SHORT-TERM BOND FUND: The primary investment objective of the Fund is to provide as high a level of current income over time as is believed to be consistent with prudent investment risk. A secondary objective is preservation of shareholders' capital. The average maturity of the Fund's securities holdings will be between one and three years. The Fund invests at least 80% of its assets in investment grade debt obligations issued by United States corporations or by the U.S. Government or its agencies and in money market instruments of the type that the Money Market Fund purchases. o At times, the Fund may invest a significant portion of its assets in mortgage-backed securities. o At December 31, 1998, the Short-Term Bond Fund had approximately 17% of its assets in U.S. Government securities and 75% of its assets in U.S. Government agency mortgage-backed securities. Most of the mortgage-backed securities the Fund purchases are considered to be U.S. Government agency securities, with issuers such as Ginnie Mae and Fannie Mae. U.S. Government and agency securities have little financial risk, but mortgage-backed securities do have market risk and the prepayment risks specific to mortgage-backed securities. When interest rates change, mortgage-backed securities may prepay at a faster or slower rate than originally anticipated, which may negatively affect their yield and price. MONEY MARKET FUND: The investment objective of the Fund is to realize high current income to the extent consistent with the maintenance of liquidity, investment quality and stability of capital. -16- In selecting specific investments for the Fund, the Adviser seeks securities or instruments with the highest yield or income that meet the following requirements. o The Fund invests only in high quality money market instruments and other short-term debt securities including commercial paper issued by U.S. corporations and Treasury securities issued by the U.S. Government. At December 31, 1998, the Fund was 100% invested in commercial paper. o All of the securities the Fund purchases have a rating in one of the two highest rating categories from at least two nationally recognized rating agencies, and sustantially all (at least 95%) have a rating in the highest category from at least two of these rating agencies. o At the time of purchase, a security must mature in 13 months or less (or 25 months for U.S. Government securities). The dollar-weighted average maturity of the Fund's securities must be 90 days or less. o The Fund will not invest more than 5% of its total assets in the securities of any one issuer, other than U.S. Government or agency securities. The Fund does not maintain a stable net asset value. The Fund does not declare dividends daily, and income the Fund earns on its portfolio holdings increases the Fund's net asset value per share until the Fund declares a dividend. At least yearly the Fund distributes investment income to its shareholders, and the Fund's net asset value per share declines as a result of the distribution. The Fund uses the amortized cost method of valuing securities that have a remaining term to maturity of 60 days or less. Because the Fund uses market value for securities that mature in more than 60 days, the Fund does not invest more than 20% of its assets in these securities, to limit the possibility of a decline in the Fund's net asset value. An investment in the Fund has little market or financial risk but a relatively high level of current income volatility, because its portfolio holdings are high quality instruments that have a short time to maturity. INVESTMENTS IN THE MONEY MARKET FUND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER U.S. GOVERNMENT AGENCY. RISKS OF INVESTING IN STOCK FUNDS ---------------------------------------------------------------------------- When you invest in a stock fund, and for the equity portion of a composite fund, you should consider that: o The fund is subject to market risk -- the value of your investment will go up or down, depending on movements in the stock markets. As a result, you may lose money from your investment, or your investment may increase in value. o The investment results for a particular Fund may be better or worse than the results for the stock markets taken as a whole, depending on the type of securities in which the Fund invests. o The investment results for a particular Fund may be better or worse than the results of other funds that invest in the same types of securities. In other words, stock selection by a Fund's investment adviser(s) will impact the Fund's performance. o The prices and investment performance of stocks that are issued by companies with smaller market capitalizations may fluctuate more than the prices and investment performance of stocks that are issued by companies with larger market capitalizations. o A Fund may have more difficulty selling a small cap stock or any stock that trades "over-the-counter", as compared to larger capitalization stocks or stocks that trade on a national or regional stock exchange. o Value stocks and growth stocks usually have different investment results, and either investment style may become out of favor with stock investors at a given time. -17- RISKS OF INVESTING IN BOND FUNDS ---------------------------------------------------------------------------- When you invest in a bond fund, and for the debt securities portion of a composite fund, you should consider that: o The fund has market risk -- the value of your investment will go up or down depending on movements in the bond markets. As a result, you may lose money from your investment, or your investment may increase in value. o The investment results for a particular Fund may be better or worse than the results for the comparable bond market taken as a whole, depending on the type of debt securities in which the Fund invests. o The investment results for a particular Fund may be better or worse than the results of other funds that invest in the same types of securities. In other words, security selection by a Fund's investment adviser will impact the Fund's performance. o Changes in prevailing interest rates usually will impact the value of debt securities. The longer the time period before the security matures (or is expected to be redeemed), the more impact interest rate changes will have on the price of the bond. When interest rates rise, the prices of outstanding debt securities tend to fall. When interest rates fall, the prices of outstanding debt securities tend to rise. o Mortgage-backed securities or certificates are subject to prepayment or extension risk when interest rates change. When interest rates fall, the underlying mortgages may be prepaid at a faster rate than previously assumed in pricing the mortgage-backed security, which would shorten the period to maturity of the security. When interest rates rise, the underlying mortgages may be prepaid at a slower rate than previously assumed, which would lengthen the period to maturity of the security. o In periods of economic uncertainty, investors may favor U.S. government debt securities over debt securities of corporate issuers, in which case the value of corporate debt securities would decline in relation to the value of U.S. government debt securities. o Zero coupon securities and discount notes do not pay interest, and they may fluctuate more in market value and be more difficult for a Fund to resell during periods of interest rate changes than comparable securities that pay interest in cash at regular intervals. In addition, the Fund may lose a portion of the principal amount of a zero coupon security if it sells the security after an increase in interest rates. o Unrated securities or securities rated below investment grade may be subject to a greater market risk than higher rated (lower yield) securities. Since lower rated and unrated securities are generally issued by corporations that are not as creditworthy or financially secure as issuers of higher rated securities, there is a greater risk that issuers of lower rated (higher yield) securities will not be able to pay the principal and interest due on such securities, especially during periods of adverse economic conditions. o The market for debt securities may be subject to significant volatility, and volatility has generally increased in recent years. -18- 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 portfolios may not exactly duplicate the security or securities underlying the options, futures contracts or options on futures contracts traded by the Fund, and as a result the price of the portfolio securities being hedged will not move in the same amount or direction as the underlying index, securities or debt obligation. o A Fund purchasing an option may lose the entire amount of the premium plus transaction costs. o If a Fund has written a covered call option and the price of the underlying security increases sufficiently, the option may be exercised. The Fund will be required to sell the security at a price below current market value with the loss offset only by the amount of the premium the Fund received from writing the option. ZERO COUPON SECURITIES AND DISCOUNT NOTES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America Fund and the Aggressive Equity Fund to the extent they invest in fixed income securities, may invest in discount notes and zero coupon securities. Discount notes mature in one year or less from the date of issuance. Zero coupon securities may be issued by corporations, the U.S. Government or certain U.S. Government agencies. Discount notes and zero coupon securities do not pay interest. Instead, they are issued at prices that are discounted from the principal (par) amount due at maturity. RISKS FROM ZERO COUPON SECURITIES AND DISCOUNT NOTES. Zero coupon securities and discount notes may fluctuate more in market value and be more difficult for a Fund to resell during periods of interest rate changes in the economy than comparable securities that pay interest in cash at regular intervals. The market values of outstanding debt securities generally decline when interest rates are rising, and during such periods a Fund may lose more investment capital if it sells zero coupon securities prior to their maturity date or expected redemption date than if it sells comparable interest-bearing securities. In general, the longer the remaining term to maturity or expected redemption of a security, the greater the impact on market value from rising interest rates. -19- REDEEMABLE SECURITIES An issuer of debt securities, including zero coupon securities, often has the right after a period of time to redeem (call) securities prior to their stated maturity date, either at a specific date or from time to time. When interest rates rise, an issuer of debt securities generally is less likely to redeem securities that were issued at a lower interest rate, or for a lower amount of original issue discount in the case of zero coupon securities. In such instance, the period until redemption or maturity of the security may be longer than the purchaser initially anticipated, and the market value of the debt security may decline. If an issuer redeems a security when prevailing interest rates are relatively low, a Fund may be unable to reinvest proceeds in comparable securities with similar yields. AMERICAN DEPOSITORY RECEIPTS ("ADRS") ADRs are dollar-denominated receipts that U.S. banks generally issue. An ADR represents the deposit with the bank of a security of a foreign issuer. ADRs are publicly traded on exchanges or are traded over-the-counter in the United States. An ADR has currency risk, because its value is based on the value of the security issued by a foreign issuer. The All America Fund and Aggressive Equity Fund intend to invest a small percentage of their total assets in ADRs. ADRs are subject to many of the same risks as foreign securities, such as possible: o unavailability of financial information, o changes in currency or exchange rates, o lack of Year 2000 preparedness by the issuer, and o difficulty by the Adviser or a Subadviser in assessing economic or political trends in a foreign country. MORTGAGE-BACKED SECURITIES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America and Aggressive Equity Funds to the extent they invest in debt securities, may invest in mortgage-backed securities. These securities represent interests in pools of mortgage loans, or they may be collateralized mortgage obligations secured by pools of mortgage loans (CMOS). Holders of mortgage-backed securities receive periodic payments that consist of both interest and principal from the underlying mortgages. Some mortgage-backed securities are issued by private corporations. Mortgage-backed securities also include securities guaranteed by the Government National Mortgage Association (GINNIE MAES), securities issued by the Federal National Mortgage Association (FANNIE MAES), and participation certificates issued by the Federal Home Loan Mortgage Corporation (FREDDIE MACS). The timely payment of principal and interest is backed by the full faith and credit of the U.S. Government in the case of Ginnie Maes, but Fannie Maes and Freddie Macs are not full faith and credit obligations. RISKS FROM MORTGAGE-BACKED SECURITIES. Characteristics of underlying mortgage pools will vary, and it is not possible to precisely predict the realized yield or average life of a particular mortgage-backed security, because of the principal prepayment feature inherent in the security. o A decline in interest rates may lead to increased prepayment of the underlying mortgages, and the securityholder may have to reinvest proceeds received at lower yields. Unscheduled or early payments on the underlying mortgages may shorten the effective maturity of a mortgage-backed security and impact the yield and price of the security. o An increase in interest rates may lead to prepayment of the underlying mortgages over a longer time period than was assumed when the mortgage-backed security was purchased, and the securityholder may not receive payments to reinvest at higher rates of return. Delay in payments on the underlying mortgages may lengthen the effective maturity of the security and impact the price and yield of the security. o Mortgage-backed securities issued by private corporations generally will have more credit risk than securities issued by U.S. Government agencies. Fannie Mae and Freddie Mac mortgage-backed securities, which are not full faith and credit obligations, may have more credit risk than Ginnie Mae securities. -20- INFORMATION ABOUT FUND SHARES PRICING OF FUNDS' SHARES ---------------------------------------------------------------------------- The purchase or redemption price of a Fund share is equal to its net asset value that we calculate after we receive the purchase or redemption order. A Fund's net asset value is equal to the sum of the value of the securities it holds PLUS any cash or other assets (including accrued interest and dividends), MINUS all liabilities (including accrued expenses). The Adviser determines a Fund's net asset value as of the close of trading on the New York Stock Exchange on each day the New York Stock Exchange is open for trading (a VALUATION DAY). In determining a Fund's net asset value, the Adviser uses market value. If a money market security has a remaining maturity of 60 days or less, the Adviser will use the amortized cost method of valuation to approximate market value (the Adviser assumes constant proportionate amortization in value until maturity of any discount or premium). If there are any equity or debt securities or assets for which market quotations are not readily available, the Adviser will use fair value pricing, as determined in good faith by, or under the direction of, the Board of Directors of the Investment Company or its Valuation Committee. PURCHASE OF SHARES ---------------------------------------------------------------------------- The Investment Company offers shares in the Funds, without sales charge, only to the Insurance Companies for allocation to their Separate Accounts. Acceptance by an Insurance Company of an order for allocating account balance to one of the Separate Account Funds constitutes a purchase order for shares of the corresponding Fund of the Investment Company. REDEMPTION OF SHARES ---------------------------------------------------------------------------- The Investment Company redeems all full and fractional shares of the Funds for cash. The redemption price is the net asset value per share we next determine. We do not impose any deferred sales charge on redemptions. We pay redemption proceeds normally within seven days of receipt of the redemption request, unless the Investment Company suspends or delays payment of redemption proceeds as permitted in accordance with SEC regulations. Acceptance by an Insurance Company of an order for withdrawal of account balance from one of the Separate Account Funds constitutes a redemption order for shares of the corresponding Fund of the Investment Company. DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES ---------------------------------------------------------------------------- For each Fund, the Investment Company declares dividends at least annually to pay out substantially all of the Fund's net investment income (dividends) and net realized short and long term capital gains (capital gains distributions). All dividends and capital gains distributions are reinvested in additional shares of the distributing Fund. The Investment Company is not subject to Federal income tax on ordinary income and net realized capital gains that it distributes to shareholders, as long as the distributions meet Federal tax law requirements for amount and source of income. Each Fund is treated as a separate corporation for Federal income tax purposes and must satisfy the tax requirements independently. The Insurance Companies, through the Separate Accounts, are the shareholders of the Investment Company's Funds. Under current Federal tax law, the Separate Accounts do not pay taxes on the net investment income and realized capital gains they receive through ownership of the Investment Company's shares. A contractholder or policyowner should refer to the Contract prospectus or brochure for a summary discussion of the tax consequences for increases in account balance and distributions under the Contract. -21- FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand the Funds' financial performance for the past 5 years, or for the period of a Fund's operations if shorter. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the particular Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with the Investment Company's financial statements, are included in the annual report, which is available upon request. The total returns shown below do not include charges and expenses imposed at the Separate Account level. Therefore, the returns do not represent the rate that a contractholder or policyowner would have earned or lost on the portion of the account balance allocated to the corresponding Separate Account Fund. ALL AMERICA FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, --------------------------------------------------------- 1998 1997 1996 1995 1994 ---------- ---------- ----------- ---------- ------------ NET ASSET VALUE, BEGINNING OF YEAR ................. $ 2.71 $ 2.44 $ 2.13 $ 1.61 $ 1.80 ------ ------ ------- ------ ------- Income From Investment Operations: Net Investment Income ............................. .03 .03 .03 .03 .04 Net Gains or Losses on Securities (realized and unrealized) ..................................... .54 .62 .41 .56 ( .01) ------ ------ ------- ------ ------- Total From Investment Operations ................ .57 .65 .44 .59 .03 ------ ------ ------- ------ ------- Less Dividend Distributions: From net investment income ........................ ( .03) ( .03) ( .03) ( .03) ( .04) From capital gains ................................ ( .35) ( .35) ( .10) ( .04) ( .18) ------ ------- ------- ------- ------- Total Distributions ............................. ( .38) ( .38) ( .13) ( .07) ( .22) ------ ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR ....................... $ 2.90 $ 2.71 $ 2.44 $ 2.13 $ 1.61 ====== ======= ======= ======= ======= Total Return ....................................... 21.3% 26.8% 20.7% 36.6% 1.3%* RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions)................ $ 732 $ 700 $ 637 $ 533 $ 375 Ratio of Expenses to Average Net Assets ............ .50% .50% .50% .50% .50% Ratio of Net Income to Average Net Assets .......... .84% .98% 1.26% 1.57% 2.11% Portfolio Turnover Rate(a) ......................... 40.47% 28.64% 28.35% 33.63% 129.80%
---------- * Reflects the combined data of this Fund and that of its predecessor. Effective May 1, 1994, the Fund was renamed the All America Fund, its investment objective and policies were changed and subadvisers were added. -22- EQUITY INDEX FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 2.08 $ 1.59 $ 1.35 $ 1.02 $ 1.04 ------ ------ ------ ------ ------ Income From Investment Operations: Net Investment Income ........................................... .03 .03 .03 .02 .03 Net Gains or Losses on Securities (realized and unrealized) ..... .55 .50 .27 .36 ( .01) ------ ------ ------ ------ ------ Total From Investment Operations .............................. .58 .53 .30 .38 .02 ------ ------ ------ ------ ------ Less Dividend Distributions From net investment income ...................................... ( .03) ( .03) ( .03) ( .03) ( .03) From capital gains .............................................. ( .17) ( .01) ( .03) ( .02) ( .01) ------ ------- ------- ------- ------ Total Distributions ........................................... ( .20) ( .04) ( .06) ( .05) ( .04) ------ ------- ------- ------- ------ NET ASSET VALUE, END OF YEAR ..................................... $ 2.45 $ 2.08 $ 1.59 $ 1.35 $ 1.02 ====== ======= ======= ======= ====== Total Return ..................................................... 28.6% 33.1% 22.7% 36.6% 1.5% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions).............................. $ 411 $ 237 $ 102 $ 43 $ 26 Ratio of Expenses to Average Net Assets .......................... .13% .13% .13% .13% .13% Ratio of Net Income to Average Net Assets ........................ 1.57% 1.86% 2.19% 2.50% 2.67% Portfolio Turnover Rate(a) ....................................... 11.68% 14.17% 5.85% 13.99% 6.59%
AGGRESSIVE EQUITY FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------- 1998 1997 1996 1995 1994* ------------ ---------- ---------- ---------- ----------------- NET ASSET VALUE, BEGINNING OF YEAR/PERIOD .......... $ 1.61 $ 1.47 $ 1.35 $ 1.05 $ 1.00 ------- ------ ------- ------- -------- Income From Investment Operations: Net Investment Income ............................. -- .01 .01 .01 .01 Net Gains or Losses on Securities (realized and unrealized) ..................................... ( .09) .31 .36 .39 .05 ------- ------ ------- ------- -------- Total From Investment Operations ................ ( .09) .32 .37 .40 .06 ------- ------ ------- ------- -------- Less Dividend Distributions: From net investment income ........................ -- ( .01) ( .01) ( .01) ( .01) From capital gains ................................ ( .01) ( .17) ( .24) ( .09) -- ------- ------- -------- -------- -------- Total Distributions ............................. ( .01) ( .18) ( .25) ( .10) ( .01) ------- ------- -------- -------- -------- NET ASSET VALUE, END OF YEAR/PERIOD ................ $ 1.51 $ 1.61 $ 1.47 $ 1.35 $ 1.05 ======= ======= ======== ======== ======== Total Return ....................................... ( 5.1)% 21.2% 27.1% 38.2% 6.0%** RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year/Period ($ millions)......... $ 205 $ 287 $ 136 $ 59 $ 27 Ratio of Expenses to Average Net Assets ............ .85% .85% .85% .85% .56% Ratio of Net Income to Average Net Assets .......... .18% .33% .45% .65% .70% Portfolio Turnover Rate(a) ......................... 144.05% 80.94% 103.68% 116.52% 60.86%
---------- * The Fund commenced operations on May 2, 1994. ** The Fund's Total Return for 1994 is not annualized. -23- COMPOSITE FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, -------------------------------------------------------- 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF YEAR ................. $ 1.62 $ 1.77 $ 1.81 $ 1.57 $ 1.71 ------ ------- ------ ------ ------- Income From Investment Operations: Net Investment Income ............................. .07 .07 .07 .08 .05 Net Gains or Losses on Securities (realized and unrealized) ..................................... .17 .24 .14 .27 ( .10) ------ ------- ------ ------ ------- Total From Investment Operations ................ .24 .31 .21 .35 ( .05) ------ ------- ------ ------ ------- Less Dividend Distributions: From net investment income ........................ ( .07) ( .07) ( .08) ( .08) ( .07) From capital gains ................................ ( .01) ( .39) ( .17) ( .03) ( .02) ------- -------- ------- ------- ------- Total Distributions ............................. ( .08) ( .46) ( .25) ( .11) ( .09) ------- -------- ------- ------- ------- NET ASSET VALUE, END OF YEAR ....................... $ 1.78 $ 1.62 $ 1.77 $ 1.81 $ 1.57 ====== ======== ======= ======= ======= Total Return ....................................... 14.5% 17.7% 11.9% 21.9% ( 3.0%) RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions)................ $ 336 $ 305 $ 283 $ 276 $ 233 Ratio of Expenses to Average Net Assets ............ .50% .50% .50% .50% .50% Ratio of Net Income to Average Net Assets .......... 3.68% 3.57% 3.63% 4.30% 3.88% Portfolio Turnover Rate(a) ......................... 73.85% 104.04% 69.79% 76.84% 113.86%
BOND FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ------------------------------------------------------- 1998 1997 1996 1995 1994 ---------- ---------- ----------- ---------- ---------- NET ASSET VALUE, BEGINNING OF YEAR ............................. $ 1.43 $ 1.38 $ 1.43 $ 1.27 $ 1.41 ------ ------ ------- ------ ------ Income From Investment Operations: Net Investment Income ......................................... .10 .09 .09 .09 .09 Net Gains or Losses on Securities (realized and unrealized).... -- .06 ( .04) .16 ( .14) ------ ------ ------- ------ ------ Total From Investment Operations ............................. .10 .15 .05 .25 ( .05) ------ ------ ------- ------ ------ Less Dividend Distributions: From net investment income .................................... ( .10) ( .09) ( .09) ( .09) ( .09) From capital gains ............................................ ( .01) ( .01) ( .01) -- -- ------ ------ ------- ------ ------ Total Distributions .......................................... ( .11) ( .10) ( .10) ( .09) ( .09) ------ ------ ------- ------- ------ NET ASSET VALUE, END OF YEAR ................................... $ 1.42 $ 1.43 $ 1.38 $ 1.43 $ 1.27 ====== ====== ======= ====== ====== Total Return ................................................... 7.2% 10.4% 3.5% 19.4% (3.2%) RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period ($ millions).......................... $ 465 $ 414 $ 329 $ 311 $ 249 Ratio of Expenses to Average Net Assets ........................ .50% .50% .50% .50% .50% Ratio of Net Income to Average Net Assets ...................... 6.73% 6.69% 6.70% 6.64% 6.32% Portfolio Turnover Rate(a) ..................................... 21.60% 57.71% 30.14% 41.93% 51.14%
-24- MID-TERM BOND FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1998 1997 1996 1995 1994 ----------- ----------- ------------ --------- ----------- NET ASSET VALUE, BEGINNING OF YEAR ............................. $ .90 $ .90 $ 1.00 $ .91 $ .99 ------ ------ ------- ------ ------ Income From Investment Operations: Net Investment Income ......................................... .05 .05 .14 .06 .03 Net Gains or Losses on Securities (realized and unrealized) .01 .01 ( .10) .09 ( .07) ------ ------ ------- ------ ------ Total From Investment Operations ............................. .06 .06 .04 .15 ( .04) ------ ------ ------- ------ ------ Less Dividend Distributions: From net investment income .................................... ( .05) ( .06) ( .14) ( .06) ( .04) From capital gains ............................................ -- -- -- -- -- ------ ------ ------- ------- ------ Total Distributions .......................................... ( .05) ( .06) ( .14) ( .06) ( .04) ------ ------ ------- ------- ------ NET ASSET VALUE, END OF YEAR ................................... $ .91 $ .90 $ .90 $ 1.00 $ 0.91 ====== ====== ======= ======= ====== Total Return ................................................... 6.4% 7.3% 3.9% 16.3% (3.7)% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions)............................ $ 15 $ 15 $ 13 $ 24 $ 24 Ratio of Expenses to Average Net Assets ........................ .50% .50% .50% .50% .50% Ratio of Net Income to Average Net Assets ...................... 5.76% 5.87% 5.80% 5.73% 4.71% Portfolio Turnover Rate(a) ..................................... 23.09% 12.89% 144.55% 73.72% 7.52%
SHORT-TERM BOND FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 1.02 $ 1.03 $ 1.02 $ 1.00 $ 1.02 ------ ------ ------ ------ ------ Income From Investment Operations: Net Investment Income ........................................... .05 .07 .04 .06 .04 Net Gains or Losses on Securities (realized and unrealized) ..... .01 ( .01) .01 .02 ( .02) ------ ------ ------ ------ ------ Total From Investment Operations ............................... .06 .06 .05 .08 .02 ------ ------ ------ ------ ------ Less Dividend Distributions: From net investment income ...................................... ( .05) ( .07) ( .04) ( .06) ( .04) From capital gains .............................................. -- -- -- -- -- ------ ------ ------ ------ ------ Total Distributions ............................................ ( .05) ( .07) ( .04) ( .06) ( .04) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF YEAR ..................................... $ 1.03 $ 1.02 $ 1.03 $ 1.02 $ 1.00 ====== ====== ====== ====== ====== Total Return ..................................................... 5.7% 6.0% 4.9% 7.7% 1.4% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions).............................. $ 22 $ 15 $ 16 $ 3 $ 2 Ratio of Expenses to Average Net Assets .......................... .50% .50% .50% .50% .48% Ratio of Net Income to Average Net Assets ........................ 5.46% 5.81% 5.42% 4.65% 3.51% Portfolio Turnover Rate(a) ....................................... 91.35% 74.95% 6.68% 16.47% 0.00%
-25- MONEY MARKET FUND ----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, ------------------------------------------------------- 1998 1997 1996 1995 1994 ---------- ---------- ----------- ---------- ---------- NET ASSET VALUE, BEGINNING OF YEAR ............................... $ 1.18 $ 1.19 $ 1.18 $ 1.19 $ 1.17 ------ ------ ------- ------ ------ Income From Investment Operations: Net Investment Income ........................................... .06 .07 .06 .07 .03 Net Gains or Losses on Securities (realized and unrealized) ..... -- -- -- -- .02 ------ ------ ------- ------ ------ Total From Investment Operations .............................. .06 .07 .06 .07 .05 ------ ------ ------- ------ ------ Less: Dividend Distributions From Net Investment Income .......... ( .06) ( .08) ( .05) ( .08) ( .03) ------ ------ ------- ------ ------ Total Distributions ........................................... ( .06) ( .08) ( .05) ( .08) ( .03) ------ ------ ------- ------ ------ NET ASSET VALUE, END OF YEAR ..................................... $ 1.18 $ 1.18 $ 1.19 $ 1.18 $ 1.19 ====== ====== ======= ====== ====== Total Return ..................................................... 5.4% 5.5% 5.3% 5.8% 4.1% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Year ($ millions).............................. $ 81 $ 68 $ 78 $ 73 $ 81 Ratio of Expenses to Average Net Assets .......................... .25% .25% .25% .25% .25% Ratio of Net Income to Average Net Assets ........................ 5.26% 5.32% 5.21% 5.66% 4.15% Portfolio Turnover Rate(a) ....................................... N/A N/A N/A N/A N/A
---------- (a) Portfolio turnover rate excludes all short-term securities. N/A = Not Applicable -26- Investment Company -------------------- Mutual of America Investment Corporation Investment Adviser ------------------ Mutual of America Capital Management Corporation Subadvisers for a portion of the All America Fund -------------------------------------------------- Fred Alger Management, Inc. Oak Associates Ltd. Palley-Needelman Asset Management, Inc. Independent Auditors -------------------- Arthur Andersen LLP Counsel ---------- Swidler Berlin Shereff Friedman, LLP Custodian ---------- The Chase Manhattan Bank The Investment Company sells shares of its Funds only to the Separate Accounts of Mutual of America Life Insurance Company and The American Life Insurance Company of New York for the variable accumulation annuity and variable universal life insurance products they issue. MUTUAL OF AMERICA INVESTMENT CORPORATION 320 PARK AVENUE, NEW YORK, NEW YORK 10022 YOU MAY OBTAIN MORE INFORMATION ---------------------------------------------------------------------------- REGISTRATION STATEMENT. We have filed with the Securities and Exchange Commission (the COMMISSION) a Registration Statement about the Investment Company. The Registration Statement includes this prospectus, a Statement of Additional Information (the SAI), and exhibits. You may examine and copy the Registration Statement at the Commission's Public Reference Room in Washington, DC You may call 1-800-SEC-0330 to learn about the operation of the Public Reference Room. STATEMENT OF ADDITIONAL INFORMATION. The SAI contains additional information about the Investment Company and its Funds. We incorporate the SAI into this Prospectus by reference. SEMI-ANNUAL AND ANNUAL REPORTS. Additional information about the Funds' investments is available in the Investment Company's annual and semi-annual reports to shareholders. In the annual reports, you will find a discussion (for all Funds except the Money Market Fund) of the market conditions and investment strategies that significantly affected the Funds' performance during its last fiscal year. HOW TO OBTAIN THE SAI AND REPORTS. You may obtain a free copy of the SAI or of the Investment Company's most recent annual and semi-annual financial statements, by: o writing to us at 320 Park Avenue, New York, NY 10022, Attn: Investment Company, or o calling 1-212-224-1600 and asking for the Investment Company. The Commission has an Internet web site at http://www.sec.gov. You may obtain the Investment Company's Registration Statement, including the SAI, and its semi-annual and annual reports through the Commission's Internet site. You also may obtain copies of these documents, upon your payment of a duplicating fee, by writing to the Commission's Public Reference Section, Washington, DC 20549-6009. WHERE TO DIRECT QUESTIONS. If you have questions about the operations of the Investment Company, you should contact your representative at Mutual of America Life Insurance Company or The American Life Insurance Company of New York. Investment Company Act of 1940 Act File Number 811-5084 ---------------------------------------------------------------------------- PROSPECTUS DATED MAY 1, 1999 MUTUAL OF AMERICA INVESTMENT CORPORATION 320 PARK AVENUE, NEW YORK, NEW YORK 10022 (212) 224-1600 EQUITY INDEX FUND BOND FUND ALL AMERICA FUND MID-TERM BOND FUND MID-CAP EQUITY INDEX FUND SHORT-TERM BOND FUND AGGRESSIVE EQUITY FUND MONEY MARKET FUND COMPOSITE FUND STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1999 This Statement of Additional Information is not a prospectus. You should read it in conjunction with the Mutual of America Investment Corporation Prospectus dated May 1, 1999, and you should keep it for future use. We incorporate the Prospectus by reference into this Statement of Additional Information. A copy of the Prospectus is available to you at no charge. To obtain a copy, you may write to the Mutual of America Investment Corporation at the above address or call the telephone number listed above. TABLE OF CONTENTS
PAGE ----- Investment Company's Form of Operations ................... 2 Investment Strategies and Related Risks ................... 2 Additional Permitted Investments ......................... 2 Additional Investment Strategies ......................... 5 Additional Information about Specific Types of Securities 9 Insurance Law Restrictions ............................... 13 Fundamental Investment Restrictions ....................... 13 Management of the Investment Company ...................... 15 Investment Advisory Arrangements .......................... 16 Portfolio Transactions and Brokerage ...................... 18 Purchase, Redemption and Pricing of Shares ................ 20 Taxation of the Investment Company ........................ 21 Distribution Arrangements ................................. 22 Yield and Performance Information ......................... 22 Description of Corporate Bond Ratings ..................... 24 Independent Auditors ...................................... 26 Legal Matters ............................................. 26 Custodian ................................................. 26 Use of Standard & Poor's Indices .......................... 26 Financial Statements ...................................... 27
INVESTMENT COMPANY'S FORM OF OPERATIONS HISTORY AND OPERATING FORM ---------------------------------------------------------------------------- Mutual of America Investment Corporation (the INVESTMENT COMPANY) was formed on February 21, 1986 as a Maryland corporation. It is a diversified, open-end management investment company registered under the Investment Company Act of 1940 (the 1940 ACT). The Investment Company is a successor to Separate Account No. 2 of Mutual of America Life Insurance Company (MUTUAL OF AMERICA). The Investment Company issues separate classes (or series) of stock, each of which represents a separate Fund of investments. There are currently nine Funds: the Equity Index Fund, All America Fund, Mid-Cap Equity Index Fund, Aggressive Equity Fund, Composite Fund, Bond Fund, Mid-Term Bond Fund, Short-Term Bond Fund and Money Market Fund. Prior to May 1, 1994, the All America Fund was known as the Stock Fund, had different investment objectives and did not have any subadvisers. OFFERING OF SHARES ---------------------------------------------------------------------------- The Investment Company offers Fund shares only to separate accounts of Mutual of America and Mutual of America's indirect wholly-owned subsidiary, The American Life Insurance Company of New York (AMERICAN LIFE). In this Statement of Additional Information, Mutual of America and American Life are referred to as the INSURANCE COMPANIES and the separate accounts of the Insurance Companies are referred to as the Separate Accounts. Contractholders, participants and policyowners of variable annuity contracts and variable life policies issued by the Insurance Companies allocate their contributions and premiums to funds of the Separate Accounts. Each Separate Account has nine Funds that purchase shares in the corresponding Funds of the Investment Company. The Insurance Companies are the record holders of the Investment Company Funds' shares. DESCRIPTION OF SHARES ---------------------------------------------------------------------------- The authorized capital stock of the Investment Company consists of one billion shares of common stock, $.01 par value. The Investment Company currently has nine classes of common stock, with each class representing a Fund. The Investment Company may establish additional Funds and may allocate its authorized shares either to new classes or to one or more of the existing classes. All shares of common stock, of whatever class, are entitled to one vote. The votes of all classes are cast on an aggregate basis, except that if the interests of the Funds differ, the voting is on a Fund-by-Fund basis. Examples of matters that would require a Fund-by-Fund vote are changes in the fundamental investment policy of a particular Fund and approval of the Investment Advisory Agreement or a Subadvisory Agreement for the Fund. The shares of each Fund, when issued, will be fully paid and nonassessable and will have no preference, preemptive, conversion, exchange or similar rights. Shares do not have cumulative voting rights. Each issued and outstanding share in a Fund is entitled to participate equally in dividends and distributions declared by the Fund and in the net assets of that Fund upon liquidation or dissolution remaining after satisfaction of outstanding liabilities. Accrued liabilities that are not allocable to one or more Funds will generally be allocated among the Funds in proportion to their relative net assets. In the unlikely event that any Fund incurred liabilities in excess of its assets, the other Funds could be liable for the excess. INVESTMENT STRATEGIES AND RELATED RISKS The Prospectus describes each Fund's principal investment strategy(ies) and the related risks. You should refer to "Summary of How Our Funds Invest" and "Details about How Our Funds Invest and Related Risks" in the Prospectus to learn about those strategies and risks. ADDITIONAL PERMITTED INVESTMENTS ---------------------------------------------------------------------------- The Investment Company's Funds may use investment strategies and purchase types of securities in addition to those discussed in the Prospectus. 2 EQUITY INDEX FUND AND MID-CAP EQUITY INDEX FUND: In addition to common stocks and futures contracts, the Funds may invest in: o money market instruments and o U.S. Government and U.S. Government agency obligations. ALL AMERICA FUND: In addition to common stocks, the Adviser and three Subadvisers who manage approximately 40% of the net assets of the All America Fund (the ACTIVE ASSETS) may invest assets in: o securities convertible into common stocks, including warrants and convertible bonds, o bonds, o money market instruments, o U.S. Government and U.S. Government agency obligations, o foreign securities and ADRs, o futures and options contracts, o preferred stock, o equipment trust certificates, and o mortgage-backed and asset-backed securities. The portion of the All America Fund invested to replicate the S&P 500 Index (the INDEXED ASSETS) also may be invested in: o money market instruments, and o U.S. Government and U.S. Government agency obligations. The Adviser may manage cash allocated to the Active Assets prior to investment in securities by the Subadvisers. AGGRESSIVE EQUITY FUND: In addition to common stocks, the Aggressive Equity Fund may invest in: o securities convertible into common stocks, including warrants and convertible bonds, o bonds, o money market instruments, o U.S. Government and U.S. Government agency obligations, o foreign securities and ADRs, o futures and options contracts, o preferred stock, o equipment trust certificates, and o mortgage-backed and asset-backed securities. COMPOSITE FUND: In addition to common stocks, the equity portion of the Composite Fund may be invested in: o securities convertible into common stocks, including warrants, o preferred stock, o money market instruments, o U.S. Government and U.S. Government agency obligations, o foreign securities and ADRs, and o futures and options contracts. In addition to investment grade debt securities of the type described in the Prospectus, the fixed-income portion of the Composite Fund may be invested in: o asset-backed securities, o money market instruments, o non-investment grade securities, o foreign securities, o options, futures contracts and options on futures contracts on United States Treasury securities and Government National Mortgage Association ("Ginnie Mae") securities, and o equipment trust certificates. BOND FUND, MID-TERM BOND FUND AND SHORT-TERM BOND FUND (THE "BOND FUNDS"): In addition to investment grade debt securities of the type described in the Prospectus, each Bond Fund may invest in: o asset-backed securities, o non-investment grade securities, for up to 20% of its assets, o foreign securities, 3 o cash and money market instruments, o stocks acquired either by conversion of fixed-income securities or by the exercise of warrants attached to fixed income securities, o preferred stock, o options, futures contracts and options on futures contracts on United States Treasury securities and Government National Mortgage Association ("Ginnie Mae") securities, and o equipment trust certificates. Each of the Bond Funds may invest up to 75% of its assets in securities issued by companies in the electric, gas and telephone utility industries. Currently, none of the Bond Funds anticipates that it will concentrate in utility industry securities. These industries are subject to extensive government regulation as to rates and services, and investments in the utility industry(ies) involve the risk of unfavorable action by regulatory authorities. If a Bond Fund were to concentrate in one of the utility industries, adverse circumstances could affect all companies in that industry simultaneously. In addition, debt securities in electric, gas and telephone industries tend to have longer maturities than those of industrial issuers and often do not require partial repayment of the principal through a sinking fund, as do corporate debt securities. As a result, electric, gas and telephone securities may show more price volatility in periods of changing interest rates than debt securities of corporate issuers. MONEY MARKET FUND: In addition to commercial paper and U.S. Treasury Bills, the Fund may invest in any of the following kinds of money market instruments, payable in United States dollars: o securities issued or guaranteed by the U.S. Government or a U.S. Government agency or instrumentality; o negotiable certificates of deposit, bank time deposits, bankers' acceptances and other short-term debt obligations of domestic banks and foreign branches of domestic banks and U.S. branches of foreign banks, which at the time of their most recent annual financial statements show assets in excess of $5 billion; o certificates of deposit, time deposits and other short-term debt obligations of domestic savings and loan associations, which at the time of their most recent annual financial statements show assets in excess of $1 billion; o repurchase agreements covering government securities, certificates of deposit, commercial paper or bankers' acceptances; o variable amount floating rate notes; and o debt securities issued by a corporation. The Money Market Fund may enter into transactions in options, futures contracts and options on futures contracts on United States Treasury securities. Under the Money Market Fund's investment policy, MONEY MARKET INSTRUMENTS AND OTHER SHORT-TERM DEBT SECURITIES means securities that have a remaining term to maturity of up to 13 months (25 months in the case of government securities). The dollar-weighted average maturity of the securities held by the Money Market Fund will not exceed 90 days. The securities in the Money Market Fund must meet the following quality requirements -- o All of the securities held by the Money Market Fund must have received (or be of comparable quality to securities which have received), at the time of the purchase, a rating in one of the two highest categories by any two nationally recognized statistical rating agencies; and o At least 95% of the securities held by the Money Market Fund must have received (or be of comparable quality to securities which have received), at the time of purchase, a rating in the highest category by any two such rating agencies. The Board of Directors of the Investment Company must approve or ratify the purchase of any security (other than any U.S. government security) that has not received a rating or that has been rated by only one rating agency. The Fund will sell any securities that are subsequently downgraded below the two highest categories as soon as practicable, unless the Board of Directors determines that sale of those securities would not be in the best interests of the Fund. The Money Market Fund will not invest more than 5% of its total assets in securities of, or subject to puts from, any one issuer (other than U.S. government securities and repurchase agreements fully collateralized by U.S. 4 government securities) provided that (a) the Fund may invest up to 10% of its total assets in securities issued or guaranteed by a single issuer with respect to which the Fund has purchased an unconditional put and (b) with respect to 25% of its total assets the Fund may, with respect to securities meeting the highest investment criteria, exceed the 5% limit for up to three business days. ADDITIONAL INVESTMENT STRATEGIES ---------------------------------------------------------------------------- LENDING OF SECURITIES The Funds have the authority to lend their securities, under the conditions described below. The Funds will not lend any securities until the Investment Company's Board of Directors approves a form of securities lending agreement. A Fund may lend its securities, constituting up to 30% of its total assets, to brokers, dealers and financial institutions, other than any affiliate of the Investment Company. A Fund may pay reasonable fees to persons unaffiliated with the Fund for services or for arranging such loans. Upon lending securities, a Fund must receive as collateral cash, securities issued or guaranteed by the United States Government or its agencies or instrumentalities, or letters of credit of certain banks selected by the Adviser. The collateral amount at all times while the loan is outstanding must be maintained in amounts equal to at least 100% of the current market value of the loaned securities. The Fund will continue to receive interest or dividends on the securities lent. In addition, it will receive a portion of the income generated by the short-term investment of cash received as collateral, or, alternatively, where securities or a letter of credit are used as collateral, a lending fee paid directly to the Fund by the borrower of the securities. A Fund will have the right to terminate a securities loan at any time. The Fund will have the right to regain record ownership of loaned securities in order to exercise beneficial rights, such as voting rights or subscription rights. Loans of securities will be made only to firms that the Adviser deems creditworthy. There are risks of delay in recovery and even loss of rights in the collateral, however, if the borrower of securities defaults, becomes the subject of bankruptcy proceedings or otherwise is unable to fulfill its obligations or fails financially. REPURCHASE AGREEMENTS The Funds have the authority to enter into repurchase agreements. A Fund may not invest more than 10% of its total assets in repurchase agreements or time deposits that mature in more than seven days. The Funds will not enter into any repurchase agreements until the Investment Company's Board of Directors approves a form of Repurchase Agreement and authorizes entities as counterparties. Under a repurchase agreement, a Fund acquires underlying debt instruments for a relatively short period (usually not more than one week and never more than one year) subject to an obligation of the seller to repurchase (and the Fund to resell) the instrument at a fixed price and time, thereby determining the yield during the Fund's holding period. This results in a fixed rate of return insulated from market fluctuation during such period. Accrued interest on the underlying security will not be included for purposes of valuing a Fund's assets. Repurchase agreements have the characteristics of loans by a Fund and will be fully collateralized (either with physical securities or evidence of book entry transfer to the account of the custodian bank) at all times. During the term of the repurchase agreement, the Fund retains the security subject to the repurchase agreement as collateral securing the seller's repurchase obligation, continually monitors the market value of the security subject to the agreement and requires the Fund's seller to deposit with the Fund additional collateral equal to any amount by which the market value of the security subject to the repurchase agreement falls below the resale amount provided under the repurchase agreement. The Funds will enter into repurchase agreements only with member banks of the Federal Reserve System and with dealers in U.S. Government securities whose creditworthiness has been reviewed and found satisfactory by the Adviser and the Board of Directors of the Investment Company. Securities underlying repurchase agreements will be limited to certificates of deposit, commercial paper, bankers' acceptances, or obligations issued or guaranteed by the United States Government or its agencies or instrumentalities, in which the Funds may otherwise invest. 5 A seller of a repurchase agreement could default and not repurchase from a Fund the security that is the subject of the agreement. The Fund would look to the collateral underlying the seller's repurchase agreement, including the securities subject to the repurchase agreement, for satisfaction of the seller's obligation to the Fund. In such event, the Fund might incur disposition costs in liquidating the collateral and might suffer a loss if the value of the collateral declines. There is a risk that if the issuer of the repurchase agreement becomes involved in bankruptcy proceedings, the Fund might be delayed or prevented from liquidating the underlying security or otherwise obtaining it for its own purposes, if the Fund did not have actual or book entry possession of the security. RULE 144A INVESTMENTS, SECTION 4(2) COMMERCIAL PAPER AND ILLIQUID SECURITIES Each Fund, with respect to not more than 10% of its total assets, may purchase securities that are not readily marketable, or are "illiquid". Repurchase agreements of more than seven days' duration and variable and floating rate demand notes not requiring receipt of the principal note amount within seven days' notice are considered illiquid. A Fund may incur higher transaction costs and require more time to complete transactions for the purchase and sale of illiquid securities than for readily marketable securities. When a Fund determines to sell an illiquid security within a relatively short time period, it may have to accept a lower sales price than if the security were readily marketable. The Adviser will make a factual determination as to whether securities with contractual or legal restrictions on resale purchased by a Fund are liquid, based on the frequency of trades and quotes, the number of dealers and potential purchasers, dealer undertakings to make a market, and the nature of the security and the marketplace, pursuant to procedures adopted by the Board of Directors of the Investment Company. Securities that are eligible for purchase and sale under Rule 144A of the Securities Act of 1933 (the 1933 ACT) shall be considered liquid, provided the Adviser has not made a contrary determination regarding liquidity in accordance with the Board's procedures. Rule 144A permits certain qualified institutional buyers to trade in securities even though the securities are not registered under the 1933 Act. In addition, commercial paper privately placed in accordance with Section 4(2) of the 1933 Act also will be considered liquid, provided the requirements set forth in the Board's procedures are satisfied. OPTIONS AND FUTURES CONTRACTS Each of the Funds may purchase and sell options and futures contracts, as described below, as long as the contracts are traded on a domestic exchange. Each Fund may sell a call option contract on a security it holds in its portfolio (called a covered call), and it may buy a call option contract on the security to close out a position created by the sale of a covered call. o A CALL OPTION is a short-term contract (generally having a duration of nine months or less) which gives the purchaser of the option the right to purchase the underlying security at a fixed exercise price at any time prior to the expiration of the option regardless of the market price of the security during the option period. As consideration for writing a covered call option, a Fund (the seller) receives from the purchaser a premium, which the Fund retains whether or not the option is exercised. The seller of the call option has the obligation, upon the exercise of the option by the purchaser, to sell the underlying security at the exercise price at any time during the option period. Each Fund may buy a put option contract on a security it holds in its portfolio, and it may sell a put option contract on the security to close out a position created by the purchase of the put option contract. o A PUT OPTION is a similar short-term contract that gives the purchaser of the option the right to sell the underlying security at a fixed exercise price at any time prior to the expiration of the option regardless of the market price of the security during the option period. As consideration for the put option, a Fund (the purchaser) pays the seller a premium, which the seller retains whether or not the option is exercised. The seller of the put option has the obligation, upon the exercise of the option by the purchaser, to purchase the underlying security at the exercise price at any time during the option period. The buying of a covered put contract limits the downside exposure for the investment in the underlying security to the combination of the exercise price less the premium paid. Each Fund may purchase and sell futures contracts, and purchase options on futures contracts, on fixed-income securities or on an index of securities, such as the Standard & Poor's 100 Index, the Standard & Poor's 500 Index or the New York Stock Exchange Composite Index. 6 o A FUTURES CONTRACT ON FIXED INCOME SECURITIES requires the seller to deliver, and the purchaser to accept delivery of, a stated quantity of a given type of fixed income security for a fixed price at a specified time in the future. A futures contract or option on a stock index provides for the making and acceptance of a cash settlement equal to the change in value of a hypothetical portfolio of stocks between the time the contract is entered into and the time it is liquidated, times a fixed multiplier. Futures contracts may be traded domestically only on exchanges which have been designated as "contract markets" by the Commodity Futures Trading Commission, such as the Chicago Board of Trade. o An OPTION ON A FUTURES CONTRACT provides the purchaser with the right, but not the obligation, to enter into a "long" position in the underlying futures contract (in the case of a call option on a futures contract), or a "short" position in the underlying futures contract (in the case of a put option on a futures contract), at a fixed price up to a stated expiration date. Upon exercise of the option by the holder, the contract market clearing house establishes a corresponding short position for the writer of the option, in the case of a call option, or a corresponding long position in the case of a put option. In the event that an option is exercised, the parties are subject to all of the risks associated with the trading of futures contracts, such as payment of margin deposits. o A Fund does not pay or receive a payment upon its purchase or sale of a futures contract. Initially, a Fund will be required to deposit with the Fund's custodian in the broker's name an amount of cash or U.S. Treasury bills equal to approximately 5% of the contract amount. This amount is known as "initial margin." o While a futures contract is outstanding, there will be subsequent payments, called "maintenance margin", to and from the broker. These payments will be made on a daily or intraday basis as the price of the underlying instrument or stock index fluctuates making, the long and short positions in the futures contract more or less valuable. This process is known as "mark to market". At any time prior to expiration of the futures contract, a Fund may elect to close the position by taking an opposite position, which will operate to terminate the Fund's position in the futures contract and may require additional transaction costs. A final determination of margin is then made, additional cash is required to be paid by or released to the Fund, and the Fund realizes a loss or gain. A Fund may use futures contracts to protect against general increases or decreases in the levels of securities prices, in the manner described below. o When a Fund anticipates a general decrease in the market value of portfolio securities, it may sell futures contracts. If the market value falls, the decline in the Fund's net asset value may be offset, in whole or in part, by corresponding gains on the futures position. - A Fund may sell futures contracts on fixed-income securities in anticipation of a rise in interest rates, that would cause a decline in the value of fixed-income securities held in the Fund's portfolio. - A Fund may sell stock index futures contracts in anticipation of a general market wide decline that would reduce the value of its portfolio of stocks. o When a Fund projects an increase in the cost of fixed-income securities or stocks to be acquired in the future, the Fund may purchase futures contracts on fixed-income securities or stock indexes. If the hedging transaction is successful, the increased cost of securities subsequently acquired may be offset, in whole or in part, by gains on the futures position. o Instead of purchasing or selling futures contracts, a Fund may purchase call or put options on futures contracts in order to protect against declines in the value of portfolio securities or against increases in the cost of securities to be acquired. - Purchases of options on futures contracts may present less risk in hedging a portfolio than the purchase and sale of the underlying futures contracts, since the potential loss is limited to the amount of the premium paid for the option, plus related transaction costs. - As in the case of purchases and sales of futures contracts, a Fund may be able to offset declines in the value of portfolio securities, or increases in the cost of securities acquired, through gains realized on its purchases of options on futures. 7 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. 8 ADDITIONAL INFORMATION ABOUT SPECIFIC TYPES OF SECURITIES ---------------------------------------------------------------------------- NON-INVESTMENT GRADE SECURITIES The Bond Funds may purchase non-investment grade debt securities. In addition, the Bond Funds and the other Funds that purchase debt securities may hold a security that becomes non-investment grade as a result of impairments of the issuer's credit. Fixed-income securities that are rated in the lower rating categories of the nationally recognized rating services (Ba or lower by Moody's and BB or lower by Standard & Poor's), or unrated securities of comparable quality, are commonly known as non-investment grade securities or "junk bonds". Junk bonds are regarded as being predominantly speculative as to the issuer's ability to make payments of principal and interest. Investment in non-investment grade securities involves substantial risk. Junk bonds may be issued by less creditworthy companies or by larger, highly leveraged companies, and are frequently issued in corporate restructurings, such as mergers and leveraged buy-outs. Such securities are particularly vulnerable to adverse changes in the issuer's industry and in general economic conditions. Junk bonds frequently are junior obligations of their issuers, so that in the event of the issuer's bankruptcy, claims of the holders of junk bonds will be satisfied only after satisfaction of the claims of senior security holders. Non-investment grade bonds tend to be more volatile than higher-rated fixed-income securities, so that adverse economic events may have a greater impact on the prices of junk bonds than on higher-rated fixed-income securities. Junk bonds generally are purchased and sold through dealers who make a market in such securities for their own accounts. However, there are fewer dealers in the non-investment grade bond market, and the market may be less liquid than the market for higher-rated fixed-income securities, even under normal economic conditions. Also, there may be significant disparities in the prices quoted for junk bonds by various dealers. Adverse economic conditions or investor perceptions (whether or not based on economic fundamentals) may impair the liquidity of this market, and may cause the prices that a Fund may receive for any non-investment grade bonds to be reduced, or might cause a Fund to experience difficulty in liquidating a portion of its portfolio. The Investment Company currently anticipates that no Fund will invest more than 5% of its total assets in non-investment grade debt securities. U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY OBLIGATIONS All of the Funds may invest in U.S. Government and U.S. Government agency obligations. Some of these securities also may be considered money market instruments. Some also may be mortgage-backed securities or zero coupon securities. U.S. GOVERNMENT OBLIGATIONS: These securities are issued or guaranteed as to principal and interest by the United States Government. They include a variety of Treasury securities, which differ only in their interest rates, maturities and times of issuance. Treasury bills have a maturity of one year or less. Treasury notes at the time of issuance have maturities of one to seven years and Treasury bonds generally have a maturity of greater than five years. U.S. GOVERNMENT AGENCY OBLIGATIONS: Agencies of the United States Government that issue or guarantee obligations include, among others, Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, Government National Mortgage Association, Student Loan Marketing Association, Maritime Administration, Small Business Administration and the Tennessee Valley Authority. Instrumentalities of the United States Government that issue or guarantee obligations include, among others, Federal Farm Credit Banks, Federal National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land Banks and Banks for Cooperatives. Some of the securities issued by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others are supported by the right of the issuer to borrow from the Treasury, while others are supported only by the credit of the instrumentality that issued the obligation. 9 MONEY MARKET INSTRUMENTS All of the Funds may purchase money market instruments, which include the following. CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short term, interest-bearing negotiable certificates issued by banks or savings and loan associations against funds deposited in the issuing institution. TIME DEPOSITS. Time deposits are deposits in a bank or other financial institution for a specified period of time at fixed interest rate, for which no negotiable certificate is received. BANKERS' ACCEPTANCE. A bankers' acceptance is a draft drawn on a commercial bank by a borrower usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods). The borrower is liable for payment as well as the bank, which unconditionally guarantees to pay the draft at its face amount on the maturity date. Most acceptances have maturities of six months or less and are traded in secondary markets prior to maturity. COMMERCIAL PAPER. Commercial paper refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. Commercial paper is usually sold on a discount basis and has a maturity at the time of issuance not exceeding nine months. VARIABLE AMOUNT FLOATING RATE NOTES. Variable floating rate notes are short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. These are interest-bearing notes on which the interest rate generally fluctuates on a weekly basis. CORPORATE DEBT SECURITIES. Corporate debt securities with a remaining maturity of less than one year tend to become extremely liquid and are traded as money market securities. TREASURY BILLS. See "U.S. Government and U.S. Government Agency Obligations" above. Because the Money Market Fund and the other Funds generally will purchase only money market instruments that are rated high quality and have short terms to maturities, these money market instruments are considered to have low levels of market risk and credit risk. ZERO COUPON SECURITIES AND DISCOUNT NOTES; REDEEMABLE SECURITIES The Bond Funds and the fixed income portion of the Composite Fund, and the All America Fund and Aggressive Equity Fund to the extent they invest in fixed income securities, may invest in discount notes and zero coupon securities. Discount notes mature in one year or less from the date of issuance. Zero coupon securities may be issued by corporations or by certain U.S. Government agencies. Discount notes and zero coupon securities do not pay interest. Instead, they are issued at prices that are discounted from the principal (par) amount due at maturity. The difference between the issue price and the principal amount due at maturity (or the amount due at the expected redemption date in some cases if the securities are callable) is called "original issue discount". A Fund must accrue original issue discount as income, even if the Fund does not actually receive any payment under the security during the accrual period. The purchase price paid for zero coupon securities at the time of issuance, or upon any subsequent resale, reflects a yield-to-maturity required by the purchaser from the purchase date to the maturity date (or expected redemption date). FOREIGN SECURITIES In addition to investing in domestic securities, each of the Funds other than the Equity Index Fund, Mid-Cap Equity Index Fund and the Money Market Fund may invest in securities of foreign issuers, including securities traded outside the United States. Foreign issues guaranteed by domestic corporations are considered to be domestic securities. The Investment Company has a fundamental investment restriction that limits foreign securities, including foreign exchange transactions, to 20% of a Fund's total assets. (See "Fundamental Investment Restrictions", paragraph 2.) The Investment Company currently anticipates that no Fund will invest more than 10% of its total assets in foreign securities or foreign exchange transactions. The Investment Company will consider special factors before investing in foreign securities. These include: o Year 2000 preparedness by the issuer and the foreign exchange where the security is traded, o changes in currency rates or currency exchange control regulations, o the possibility of expropriation, 10 o the unavailability of financial information or the difficulty of interpreting financial information prepared under foreign accounting standards, o less liquidity and more volatility in foreign securities markets, o the impact of political, social or diplomatic developments, and o the difficulty of assessing economic trends in foreign countries. The Funds could encounter greater difficulties in bringing legal processes abroad than would be encountered in the United States. In addition, transaction costs in foreign securities may be higher. AMERICAN DEPOSITORY RECEIPTS ADRs are dollar-denominated receipts issued generally by domestic banks and representing the deposit with the bank of a security of a foreign issuer. ADRs are publicly traded on exchanges or over-the-counter in the United States. ADRs are not considered foreign securities for purposes of the restriction on the amount of foreign securities -- see Fundamental Investment Restrictions. The Investment Company will consider special factors before investing in ADRs: These include: o Year 2000 preparedness by the issuer, o changes in currency rates or currency exchange control regulations, o the possibility of expropriation, o the unavailability of financial information or the difficulty of interpreting financial information prepared under foreign accounting standards, o the impact of political, social or diplomatic developments, and o the difficulty of assessing economic trends in foreign countries. CONVERTIBLE SECURITIES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America and Aggressive Equity Funds to the extent they invest in debt securities, may invest in convertible securities. Convertible securities can be converted by the holder into common stock of the issuer, at the price and on the terms set forth by the issuer when the convertible securities are initially sold. Convertible securities normally provide a higher yield than the underlying stock but a lower yield than a fixed-income security without the convertibility feature. The price of the convertible security normally will vary to some degree with changes in the price of the underlying stock, although the higher yield tends to make the convertible security less volatile than the underlying common stock. The price of the convertible security also will vary to some degree inversely with interest rates. EQUIPMENT TRUST CERTIFICATES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America and Aggressive Equity Funds to the extent they invest in debt securities, may invest in equipment trust certificates. The proceeds of those certificates are used to purchase equipment, such as railroad cars, airplanes or other equipment, which in turn serve as collateral for the related issue of certificates. The equipment subject to a trust generally is leased by a railroad, airline or other business, and rental payments provide the projected cash flow for the repayment of the equipment trust certificates. Holders of equipment trust certificates must look to the collateral securing the certificates, and any guarantee provided by the lessee or any parent corporation for the payment of lease amounts, in the case of default in the payment of principal and interest on the certificates. The Investment Company currently anticipates that no Fund will invest more than 5% of its total assets in equipment trust certificates. ASSET-BACKED SECURITIES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America and Aggressive Equity Funds to the extent they invest in debt securities, may invest in securities backed by consumer or credit card loans or other receivables or may purchase interests in pools of such assets. Changes in interest rates may significantly affect the value of these securities, and prepayment rates will impact the yield and price of the securities. A decline in interest rates may result in increases in prepayment, and a Fund will have to invest prepayment proceeds at the prevailing lower interest rates. Asset-backed securities generally are not expected to prepay to the same extent as mortgage-backed securities in such circumstances. An increase 11 in interest rates may result in prepayment at a rate slower than was assumed when the security was purchased. The creditworthiness of an issuer of asset-backed securities also may impact the value of they securities. The Investment Company currently anticipates that no Fund will: o invest more than 10% of its total assets in asset-backed securities, o invest in interest-only strips or principal-only strips of asset-backed securities, or o purchase the most speculative series or class of asset-backed securities issues. MORTGAGE-BACKED SECURITIES The Bond Funds and the fixed income portion of the Composite Fund, as well as the All America and Aggressive Equity Funds to the extent they invest in debt securities, may invest in mortgage-backed securities. You should refer to the discussion of Mortgage-Backed Securities in the Prospectus under "Details about How Our Funds Invest and Related Risks -- Specific Investments or Strategies and Related Risks". The Investment Company currently anticipates that no Fund will: o invest more than 10% of its total assets in mortgage-backed securities that are not also considered to be U.S. Government or U.S. Government agency securities, o invest in interest-only strips or principal-only strips of mortgage-backed securities, or o purchase the most speculative series or class of collateralized mortgage obligation issues or other mortgage-backed securities issues. WARRANTS The All America Fund and Bond Fund may acquire warrants. A warrant is an option to purchase common stock of an issuer and is issued in conjunction with another security, such as a debt obligation. A warrant specifies the price at which the holder may purchase shares of common stock and usually expires after a period of time. A warrantholder generally may pay cash for the common stock to be purchased or may surrender principal amount of the related debt security the warrantholder owns equal to the purchase price for the stock. The common stock underlying a warrant may not increase in value after the date the warrant was issued, or may not increase up to the warrant exercise price. In this case, the warrant generally would have little value and could expire unexercised. The Investment Company currently anticipates that no Fund will invest more than 5% of its assets in warrants. PREFERRED STOCK The All America Fund and Bond Fund may purchase preferred stock. A corporation may issue a form of equity security called preferred stock. Compared to common stock, preferred stock has advantages in the receipt of dividends and in the receipt of the corporation's assets upon liquidation. Preferred stockholders, however, usually do not have voting rights at meetings of the corporation's shareholders. An issuer of preferred stock must pay a dividend to holders of preferred stock before it distributes a dividend to holders of common stock. When a corporation issues preferred stock, it sets a dividend rate, or a formula to determine the rate. If a corporation does not have sufficient earnings to pay the specified dividend to preferred stockholders, the unpaid dividend may accrue (cumulate) and become payable when the corporation's earnings increase. Bondholders, in contrast, are entitled to receive interest and principal due, regardless of the issuer's earnings. Some issues of preferred stock give the holder the right to convert the preferred stock into shares of common stock, when certain conditions are met. A holder of preferred stock that is not convertible, or of preferred stock that is convertible but has not met the conditions for conversion, does not share in the earnings of the issuer other than through the receipt of dividends on the preferred stock. The market value of convertible preferred stock generally fluctuates more than the market value of nonconvertible preferred stock, because the value of the underlying common stock will affect the price of the convertible stock. 12 Preferred stock has the risk that a corporation may not have earnings from which to pay the dividends as they become due. Even if a corporation is paying dividends, if the dividend rate is fixed (and not variable), changes in interest rates generally will affect the market value of the preferred stock in the same manner as for debt obligations. The Investment Company currently anticipates that no Fund will invest more than 10% of its assets in preferred stock. INSURANCE LAW RESTRICTIONS ---------------------------------------------------------------------------- Insurance laws and regulations in States where the Insurance Companies operate govern investments by Separate Accounts. If necessary in order for shares of the Investment Company's Funds to remain eligible investments for the Separate Accounts, a Fund may from time to time limit the amount of its investments in certain types of securities, such as foreign securities and debt or equity securities of certain issuers. FUNDAMENTAL INVESTMENT RESTRICTIONS The following investment restrictions are fundamental policies. The Funds may not change these policies unless a majority of the outstanding voting shares of the affected Fund(s) approves the change. None of the Funds will: 1. purchase or sell options or futures except those listed on a domestic exchange; 2. trade in foreign exchange, or invest in securities of foreign issuers if at the time of acquisition more than 20% of its total assets, taken at market value at the time of the investment, would be invested in such securities (see "Foreign Securities"); 3. make an investment in order to exercise control of management over a company (either singly or together with other Funds); 4. underwrite the securities of other companies, including purchasing securities that are restricted under the Securities Act of 1933 ("1933 Act") or rules or regulations issued under the 1933 Act (restricted securities cannot be sold publicly until they are registered under the 1933 Act); 5. make short sales, except when the Fund has, by reason of ownership of other securities, the right to obtain securities of equivalent kind and amount that will be held so long as they are in a short position, 6. purchase commodities or commodity contracts; 7. with respect to at least 75% of the value of its total assets, invest more than 5% of its total assets in the securities of any one issuer (including repurchase agreements with any one bank), other than securities issued or guaranteed by the United States Government or its agencies or instrumentalities (see the caption entitled "The Money Market Fund" in the Prospectus for more restrictive policies relating to that fund); 8. with respect to at least 75% of the value of its total assets, purchase more than 10% of the outstanding voting securities of an issuer, except that such restriction shall not apply to securities issued or guaranteed by the United States Government or its agencies or instrumentalities; 9. issue senior securities except that each Fund may borrow as described in restriction 13 below (the issuance and sale of options and futures not being considered the issuance of senior securities); 10.make an investment in an industry if that investment would make the Fund's holding in that industry exceed 25% of the Fund's total assets, except for the Bond Fund, the Short-Term Bond Fund and the Mid-Term Bond Fund, each of which may invest up to 75% of its total assets in the electric, gas and/or telephone utilities industries, as described under the caption "Investment Objectives and Policies of the Funds -- The Bond Fund, the Short-Term Bond Fund and the Mid-Term Bond Fund" in the Prospectus; 11.purchase real estate or mortgages directly. The All America and Aggressive Equity Funds may, however, buy shares of real estate investment trusts listed on stock exchanges or reported on the National Association of Securities Dealers Automated Quotations ("NASDAQ") system, and the Bond Fund, the Short-Term Bond Fund and the Mid-Term Bond Fund may each buy mortgage-backed debt issues; 12.invest more than 5% of its total assets in the securities of any one registered investment company. A Fund may not own more than 3% of an investment company's outstanding voting securities, and total holdings of investment company securities may not exceed 10% of the value of a Fund's total assets; 13 13. purchase any security on margin or borrow money, except from banks for temporary purposes, or pledge its assets unless to secure such borrowing. The Funds may borrow money from or pledge their assets to banks in order to transfer funds for various purposes, as required, without interfering with the orderly liquidation of securities in their portfolios, but not for leveraging purposes. Such borrowings may not exceed 5% of the value of a fund's total assets at market value; 14. make loans, except loans of portfolio securities (not exceeding 30% of the value of its total assets at market value), or loans through entry into repurchase agreements (the purchase of publicly traded debt obligations not being considered the making of a loan); 15. invest more than 10% of its total assets in repurchase agreements or time deposits maturing in more than seven days or in portfolio securities not readily marketable; or 16. purchase oil and gas interests, except that the Funds may purchase securities of issuers that invest in oil or gas interests. The Money Market Fund will not purchase equity securities, voting securities, local or state government securities, or corporate debt or other than those types of securities specifically mentioned in its investment objectives. If a Fund complies with a percentage restriction at the time it makes an investment, a later increase that results from a change in the values of portfolio securities or the Fund's net assets will not be considered a violation. 14 MANAGEMENT OF THE INVESTMENT COMPANY The Directors of the Investment Company consist of six individuals, four of whom are not "interested persons" of the Investment Company as defined in the 1940 Act. The Directors are responsible for the overall supervision of the Investment Company's operations and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Directors elect officers of the Investment Company. The Directors and Officers of the Investment Company and their principal employment are as follows:
POSITION HELD WITH THE PRINCIPAL OCCUPATIONS NAME, ADDRESS AND AGE INVESTMENT COMPANY DURING PAST 5 YEARS Dolores J. Morrissey*, age 70 Chairman of the Board, President, Mutual of America Securities 320 Park Avenue President and Director Corporation, since August 1996; Executive New York, NY 10022 Vice President and Assistant to the President of the Adviser March 1996 to December 1996; President and Chief Executive Officer of the Adviser from June 1994 to March 1996; Executive Vice President of the Adviser from September 1993 until June, 1994. Executive Vice President of Mutual of America Life until January 1994 Manfred Altstadt*, age 49 Senior Executive Vice Senior Executive Vice President and Chief 320 Park Avenue President, Chief Financial Financial Officer of the Adviser, Mutual of New York, NY 10022 Officer, Treasurer and Director America Life and American Life Peter J. Flanagan, age 68 Director President of The Life Insurance Council of 551 Fifth Avenue New York New York, NY 10176 George J. Mertz, age 70 Director Retired; formerly President and CEO of Ridgewood, NJ 07450 National Industries for the Blind James J. Needham, age 72 Director Business Consultant to corporations on Bridgehampton, NY 11932 financial, planning and regulatory matters during the past five years. Formerly United States Ambassador to Japan, Chairman of the New York Stock Exchange and Commissioner of the Securities and Exchange Commission Howard J. Nolan, age 62 Director President and C.P.O., United Way of San P.O. Box 898 Antonio and Bexar County San Antonio, TX 78293 Patrick A. Burns, age 52 Senior Executive Vice Senior Executive Vice President and General 320 Park Avenue President and General Counsel of the Adviser; Senior Executive Vice New York, NY 10022 Counsel President and General Counsel of Mutual of America Life and American Life Stanley M. Lenkowicz, age 56 Senior Vice President, Senior Vice President and Deputy General 320 Park Avenue Deputy General Counsel Counsel of Mutual of America Life since New York, NY 10022 and Secretary March 1995; prior thereto, Senior Vice President and Associate General Counsel
---------- * Mr. Altstadt and Ms. Morrissey are "interested persons" within the meaning of the 1940 Act. The officers and directors of the Investment Company own none of its outstanding shares. The Investment Company has no Audit Committee, and the entire Board of Directors fulfills the obligations that an Audit Committee would have. Officers and Directors who are participants under group or individual variable accumulation annuity contracts issued by Mutual of America Life or American Life may allocate portions of their account balances to one or more of the Investment Company's Funds. Mutual of America Life and its subsidiary American Life, through their Separate Accounts, own 100% of the shares of the Funds. 15 Set forth below is a table showing compensation paid to the directors during 1998.
AGGREGATE PENSION OR ESTIMATED TOTAL COMPENSATION FROM COMPENSATION FROM RETIREMENT BENEFITS BENEFITS INVESTMENT COMPANY AND INVESTMENT ACCRUED AS PART OF UPON OTHER INVESTMENT NAME OF DIRECTOR COMPANY FUND EXPENSES RETIREMENT COMPANIES IN COMPLEX(3) - ----------------------------------------------------------------------------------------------------------- Manfred Altstadt ...... None (1) None None None (1) Dolores J. Morrissey .. None (1) None None None (1) Peter J. Flanagan ..... $15,890(2) None None $15,890(2) George J. Mertz ....... $15,890(2) None None $15,890(2) James J. Needham ...... $17,384(2) None None $17,384(2) Howard J. Nolan ....... $15,053(2) None None $15,053(2)
---------- (1) As employees of the Adviser's affiliates and as "interested persons" of the Investment Company, Ms. Morrissey and Mr. Altstadt serve as directors of the Investment Company without compensation. (2) Directors who are not "interested persons" of the Investment Company receive from the Investment Company an annual retainer of $10,000 and a fee of $1,000 for each Board or Committee meeting they attend. In addition, they receive business travel and accident insurance and life insurance coverage of $75,000. (3) Directors who are not interested persons of the Investment Company do not serve on the Board of any other investment company in the same complex as the Investment Company. INVESTMENT ADVISORY ARRANGEMENTS INVESTMENT ADVISER. The Investment Company's investment adviser is Mutual of America Capital Management Corporation (the ADVISER or CAPITAL MANAGEMENT), an indirect wholly-owned subsidiary of Mutual of America Life. The Adviser's address is 320 Park Avenue, New York, New York 10022. The Adviser is a registered investment adviser under the Investment Advisers Act of 1940. Capital Management has served as Adviser since November 1993, when it assumed investment management obligations for the Investment Company from Mutual of America Life. The Adviser provides investment management services to the Investment Company, Mutual of America Institutional Funds, Inc. and the General Accounts of Mutual of America Life and American Life. The Adviser provides advisory services for the Investment Company's Funds, in accordance with the Funds' investment policies, objectives and restrictions as set forth in the Prospectus and this Statement of Additional Information. The Adviser has delegated some of its advisory responsibilities for a portion of the All America Fund to the Subadvisers named below. The Adviser's activities are subject at all times to the supervision and approval of the Investment Company's Board of Directors. Under the Investment Advisory Agreement, the Adviser agrees to provide investment management services to the Investment Company. These services include: o performing investment research and evaluating pertinent economic, statistical and financial data; o consultation with the Investment Company's Board of Directors and furnishing to the Investment Company's Board of Directors recommendations with respect to the overall investment plan; o implementation of the overall investment plan, including carrying out decisions to acquire or dispose of investments; o management of investments; o reporting to the Investment Company's Board of Directors on a regular basis on the implementation of the investment plan and the management of investments; o maintaining all required records; o making arrangements for the safekeeping of assets; and o providing office space facilities, equipment, material and personnel necessary to fulfill its obligations. The Adviser is responsible for all expenses incurred in performing the investment advisory services, including compensation of officers and payment of office expenses, and for providing investment management services. 16 The Adviser has entered into an arrangement with Mutual of America for the provision of investment accounting and recordkeeping, legal and certain other services. ADVISORY FEES. As compensation for its services to each of the Funds of the Investment Company, the Funds pay the Adviser a fee at the following annual rates of net assets, calculated as a daily charge: Equity Index and Mid-Cap Equity Index Funds -- .125% All America, Composite, Bond, Mid-Term Bond and Short-Term Bond Funds -- .50% Aggressive Equity Fund -- .85% Money Market Fund -- .25% INVESTMENT ADVISORY FEES PAID BY FUNDS TO ADVISER FOR PAST THREE YEARS*
FUND 1998 1997 1996 Equity Index $ 412,769 $ 221,763 $ 91,790 All America $ 3,559,615 $3,487,086 $2,924,546 Aggressive Equity $ 2,007,629 $1,955,550 $ 835,441 Composite $ 1,601,894 $1,464,132 $1,412,746 Bond $ 2,245,279 $1,850,985 $1,544,608 Mid-Term Bond $ 68,431 $ 73,392 $ 163,102 Short-Term Bond $ 91,736 $ 78,795 $ 56,971 Money Market $ 173,091 $ 199,652 $ 152,048 Total Fees $10,160,444 $9,331,355 $7,181,252
* Excludes Mid-Cap Equity Index Fund, which began operations on May 1, 1999. OTHER FUND EXPENSES. Each Fund is responsible for paying its advisory fee and other expenses incurred in its operation, including: o brokers' commissions, transfer taxes and other fees relating to the Fund's portfolio transactions, o directors' fees and expenses, o fees and expenses of its independent certified public accountants o fees and expenses of its legal counsel, o the cost of the printing and mailing semi-annual reports to shareholders, Proxy Statements, Prospectuses, Prospectus Supplements and Statements of Additional Information, o the cost of preparation and filing registration statements and amendments thereto, o bank transaction charges and custodian's fees, o any proxy solicitors' fees and expenses, o SEC filing fees, o any federal, state or local income or other taxes, o any membership or licensing fees of the Investment Company Institute and similar organizations, o fidelity bond and directors' liability insurance premiums, and o any extraordinary expenses, such as indemnification payments or damages awarded in litigation or settlements made. EXPENSE REIMBURSEMENT BY THE ADVISER. The Adviser voluntarily limits the expenses of each Fund, other than for brokers' commissions, transfer taxes and other fees relating to the Fund's portfolio transactions, to the amount 17 of the investment advisory fee paid by the Fund to the Adviser. The Adviser may discontinue or modify its policy of paying expenses of the Funds at any time. SUBADVISERS FOR PORTION OF THE ALL AMERICA FUND. For approximately 30% of the assets of the All America Fund (the ACTIVE ASSETS), the Adviser has entered into Subadvisory Agreements with Fred Alger Management, Inc. (ALGER MANAGEMENT), Oak Associates, Ltd. (OAK ASSOCIATES) and Palley-Needelman Asset Management, Inc. (PALLEY-NEEDELMAN) (each a SUBADVISER, and together the SUBADVISERS). Each Subadviser is registered as an investment adviser under the Investment Advisers Act of 1940. Each of the Subadvisers for its portion of the All America Fund provides investment advisory services, including research, making recommendations and regular reports to the Board of Directors of the Investment Company, maintenance of records, and providing all the office space, facilities, equipment, material and personnel necessary to fulfill its obligations under the Subadvisory Agreement. The Subadvisers are subject to the supervision of the Adviser and the Board of Directors of the Investment Company. SUBADVISORY FEES. The Adviser, not the Investment Company, pays the Subadvisers for advisory services they provide to the portion of the All America Fund they manage at the following annual rates of net assets under management, calculated as a daily charge: o Fred Alger Management -- .45% o Oak Associates -- 30% o Palley-Needelman Asset Management -- .30% FEES PAID BY ADVISER TO SUBADVISERS FOR PAST THREE YEARS
SUBADVISER 1998 1997 1996 Fred Alger Management, Inc. $317,439 $294,755 $243,662 Oak Associates, Ltd. $204,454 $208,892 $183,308 Palley-Needelman Asset Management, Inc. $221,149 $208,284 $175,250 Total $743,042 $711,931 $602,220
PORTFOLIO TRANSACTIONS AND BROKERAGE SELECTION OF BROKERS AND DEALERS ---------------------------------------------------------------------------- The Adviser and each Subadviser are responsible for decisions to buy and sell securities for the Funds of the Investment Company for which they provide services as well as for selecting brokers and, where applicable, negotiating the amount of the commission rate paid. o The Adviser and Subadvisers select broker-dealers which, in their best judgment, provide prompt and reliable execution at favorable security prices and reasonable commission rates. o They may select broker-dealers which provide them with research services and may cause a Fund to pay such broker-dealers commissions which exceed those other broker-dealers may have charged, if in their view the commissions are reasonable in relation to the value of the brokerage and/or research services provided by the broker-dealer. o When purchasing or selling securities trading on the over-the-counter market, the Adviser and Subadvisers will generally execute the transaction with a broker engaged in making a market for such securities. o The Adviser and Subadvisers may place certain orders with their affiliates, subject to the requirements of the 1940 Act. o No transactions may be effected by a Fund with an affiliate of the Adviser or a Sub-Adviser acting as principal for its own account. 18 Brokerage commissions are negotiated, as there are no standard rates. All brokerage firms provide the service of execution of the order made. Some brokerage firms routinely provide research and statistical data to their customers, and some firms customarily provide research reports on particular companies and industries to customers that place a certain volume of trades with them. The Adviser, and each Subadviser, will place orders with brokers providing useful research and statistical data services if reasonable commissions can be negotiated for the total services furnished even though lower commissions may be available from brokers not providing such services. The Adviser, and each Subadviser, uses these services in connection with all of its investment activities, and some of the data or services obtained in connection with the execution of transactions for the Investment Company may be used in managing other investment accounts. Conversely, data or services obtained in connection with transactions in other accounts may be used by the Adviser, and each Subadviser, in providing investment advice to the Investment Company. To the extent that the Adviser, and each Subadviser, uses research and statistical data services so obtained, its expenses may be reduced and such data has therefore been and is one of the factors considered by the Adviser, and each Subadviser, in determining its fee for investment advisory services. At times, transactions for the Investment Company may be executed together with purchases or sales of the same security for other accounts of the Adviser or a Subadviser. When making concurrent transactions for several accounts, an effort is made to allocate executions fairly among them. Transactions of this type are executed only when the Adviser, or a Subadviser, believes it to be in the best interests of the affected Fund(s), as well as any other accounts involved. However, the possibility exists that concurrent executions may work out to the disadvantage of the Fund(s) involved. The Investment Company paid aggregate brokerage commissions of $2,040,381 in 1998, $1,920,465 in 1997 and $1,240,202 in 1996. COMMISSIONS TO AFFILIATED BROKERS ---------------------------------------------------------------------------- During the past three years, the Investment Company has paid brokerage commissions to Mutual of America Securities Corporation (SECURITIES CORPORATION), an affiliate of the Adviser, through an introducing brokerage arrangement with Bear Stearns Securities Corp., and to Fred Alger & Co. (FRED ALGER), an affiliate of Alger Management, Inc., as follows:
YEAR OF COMMISSIONS % OF TOTAL % OF AGGREGATE DOLLARS PAYMENT/BROKER PAID COMMISSIONS PAID OF TRANSACTIONS 1998 -- Securities Corporation $ 50,136 2.5% 2.3% 1997 -- Securities Corporation $ 64,092 3.14% 3.6% 1996 -- Securities Corporation $ 70,708 5.5% 6.25% 1998 -- Fred Alger $180,054 8.8% 7.3% 1997 -- Fred Alger $216,495 10.61% 10.03% 1996 -- Fred Alger $ 72,555 5.7% 4.7%
The purchases and sales placed through Fred Alger related primarily to smaller capitalization stocks, for which execution may be more difficult. PORTFOLIO TURNOVER ---------------------------------------------------------------------------- In 1998, the portfolio turnover rate for the Aggressive Equity Fund was 144%, compared to turnover rates of 81% in 1997 and 104% in 1996. The 1998 rate was higher due to a change in the Fund's portfolio manager during the year and the subsequent restructuring of the Fund's portfolio by the new manager. The Fund anticipates that its 1999 portfolio turnover rate will be comparable to the rates for 1997 and 1996. The Adviser and the Subadvisers do not consider portfolio turnover rate to be a limiting factor when they deem it appropriate to purchase or sell securities for a Fund. The portfolio turnover rate for a Fund in any year will depend on market conditions, and the rate may increase depending on market conditions or if a new portfolio 19 manager for a Fund restructures the Fund's holdings. The Insurance Companies' Separate Accounts do not pay taxes on the investment gains of the Funds. As a consequence, the Adviser and Subadvisers do not consider how long a Fund has held a security, or how capital gain upon sale would be characterized, in deciding whether to sell that security. The Equity Index Fund, the Indexed Assets of the All America Fund and the Mid-Cap Equity Index Fund each attempt to duplicate the investment results of an S&P Index. As a result, the Adviser anticipates that these Funds will hold investments generally for longer periods than actively managed funds. PURCHASE, REDEMPTION AND PRICING OF SHARES CALCULATION OF NET ASSET VALUE ---------------------------------------------------------------------------- A Separate Account purchases or redeems shares of a Fund at net asset value. A Fund's net asset value is equal to: o the sum of the value of the securities the Fund holds, o plus any cash or other assets, including interest and dividends accrued, and o minus all liabilities, including accrued expenses. Net asset value is determined once daily immediately after the declaration of dividends, if any, as of the time of the close of the regular trading session on the New York Stock Exchange (generally 4:00 p.m. Eastern Standard Time) on each day the Exchange is open for trading (a Valuation Day). A Valuation Period for calculation of a Fund's net asset value per share is the period after the close of a Valuation Day and ending at the close of the next Valuation Day. The Investment Company determines the net asset value for a Valuation Period by multiplying a Fund's net asset value per share as of the preceding Valuation Period by that Fund's Change Factor (described below) for the current Valuation Period. The Change Factor for a Fund for any Valuation Period is determined as: (a) the ratio of (i) the net asset value of the Fund at the end of the current Valuation Period, before any amounts are allocated to or withdrawn from the Fund for that Valuation Period, to (ii) the net asset value of the Fund at the end of the preceding Valuation Period, after all allocations and withdrawals were made for that period, divided by (b) 1.00000 plus the component of the annual rate of the Adviser's fee against a Fund's assets for the number of days from the end of the preceding Valuation Period to the end of the current Valuation Period. PRICING OF SECURITIES HELD BY THE FUNDS ---------------------------------------------------------------------------- In determining a Fund's net asset value, the Adviser must value the securities and other assets the Fund owns. 1) If market quotations are readily available for an investment, the Adviser uses market value as follows: o An equity security will be valued at the last sale price for the security on the principal exchange on which the security is traded, or at the last bid price on the principal exchange on which such security is traded if such bid price is of a more recent day than the last sale price. o For any equity security not traded on an exchange but traded in the over-the-counter market, the value will be the last sale price available, or if no sale, at the latest available bid price. 20 o Debt securities will be valued at a composite fair market value, "evaluated bid," which may be the last sale price, by a valuation service selected by the Adviser and approved by the Investment Company's Board of Directors. 2) If there are any portfolio securities or assets for which market quotations are not readily available, the Adviser will use fair value pricing, as determined in good faith by or under the direction of the Board of Directors of the Investment Company. 3) If a money market security has a remaining maturity of 60 days or less, the Adviser will use the amortized cost method of valuation to approximate market value, as follows: o A security is initially valued at cost on the date of purchase (or at market value on the 61st day prior to maturity if the security had more than 60 days remaining to maturity at date of purchase by a Fund), and the Adviser assumes constant proportionate amortization in value until maturity of any discount or premium. o The maturity of a variable rate certificate of deposit is deemed to be the next coupon date on which the interest rate is to be adjusted. o Market value will be used instead if the amortized cost value is materially different from the actual market value of the security. 4) For stock options and futures contracts, these valuations apply: o Stock options written by a Fund are valued at the mean of the last bid and asked price on the principal exchange where the option is traded, as of the close of trading on that exchange. o When a Fund writes a call option, the amount of the premium is included in the Fund's assets and the market value of the call is included in its liabilities and adjusted thereafter to current market value. - If a call expires or if the Fund enters into a closing purchase transaction, it realizes a gain (or a loss if the cost of the transaction exceeds the premium received when the call was written) without regard to any unrealized appreciation or depreciation in the underlying securities, and the liability related to such call is extinguished. - If a call is exercised, the Fund realizes a gain or loss from the sale of the underlying securities and the proceeds of the sale increased by the premium originally received. o A premium a Fund pays on the purchase of a put will be deducted from a Fund's assets and an equal amount will be included as an investment and subsequently adjusted to the current market value of the put. o Futures contracts, and options thereon, traded on commodities exchanges are valued at their official settlement price as of the close of such commodities exchanges. TAXATION OF THE INVESTMENT COMPANY TAXES ON FUNDS' INVESTMENT EARNINGS AND INCOME ---------------------------------------------------------------------------- The Investment Company has in the past elected the special tax treatment afforded a "regulated investment company" under Subchapter M of the Internal Revenue Code, and it intends to continue to qualify under Subchapter M. The Investment Company will not owe Federal income tax on the ordinary income and net realized capital gains that it distributes to shareholders, if it qualifies as a regulated investment company. If the Investment Company were to fail to qualify as a regulated investment company, it would be subject to Federal income tax on the Funds' ordinary income and net realized capital gains, whether or not it distributes the income and gains to shareholders. If the Funds were to pay Federal income tax, their investment performance would be negatively affected. INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS ---------------------------------------------------------------------------- Funds of the Investment Company declare dividend and other distributions at least annually. The dividends and distributions are 100% reinvested in additional full and fractional shares of the Fund to which they relate, both 21 for net investment income and net realized short- or long-term capital gains. For each Fund, the Investment Company intends to distribute all net realized long- or short-term capital gains, if any, and net investment income to the shareholders of the Fund. The tax treatment of the Insurance Companies and the Separate Accounts and the tax implications of an investment in any Contract are described in the prospectus or brochure for the Contract. DISTRIBUTION ARRANGEMENTS The Investment Company sells shares of its Funds on a continuous basis, and it sells only to the Separate Accounts of the Insurance Companies. The shares are sold at their respective net asset values, without the imposition of a sales charge. The Investment Company has entered into a Distribution Agreement with Mutual of America, as principal underwriter, for the distribution of the Funds' shares. Mutual of America is a registered broker-dealer with the National Association of Securities Dealers, Inc. YIELD AND PERFORMANCE INFORMATION Performance information is computed separately for each Fund in accordance with the formulas described below. At any time in the future, total return and yields may be higher or lower than in the past and there can be no assurance that any historical results will continue. YIELD OF THE MONEY MARKET FUND. The Money Market Fund calculates a seven-day "current yield" (eight days when the seventh prior day has no net asset value because the Investment Company is closed on that day) based on a hypothetical shareholder account containing one share at the beginning of the seven-day period. The return is calculated for the period by determining the net change in the hypothetical account's value for the period, excluding capital changes. The net change is divided by the share value at the beginning of the period to give the base period return. This base period return is then multiplied by 365/7 to annualize the yield figure, which is carried to the nearest one-hundredth of one percent. Realized capital gains or losses and unrealized appreciation or depreciation of the assets of the Money Market Fund are included in the hypothetical account for the beginning of the period but changes in these items during the period are not included in the value for the end of the period. Income other than investment income is excluded for the period. Values also reflect asset charges (for advisory fees) as well as brokerage fees and other expenses. Current yields will fluctuate daily. Accordingly, yields for any given seven-day period do not necessarily represent future results. It should be remembered that yield depends on the type, quality, maturities and rates of return of the Money Market Fund's investments, among other factors. The Money Market Fund yield does not reflect the cost of insurance and other insurance company separate account charges. It also should not be compared to the yield of money market funds made available to the general public because they may use a different method to calculate yield. In addition, their yields are usually calculated on the basis of a constant one dollar price per share and they pay out earnings and dividends which accrue on a daily basis. The following is an example of the calculation of the Money Market Fund's yield for the seven-day period ended December 31, 1998. Yields may fluctuate substantially from the example shown. 1. Value for December 22, 1998 2. Value for December 29, 1998 (exclusive of capital changes and any non-investment income) 3. Net change equals Line 1 subtracted from Line 2 4. Base period return equals Line 3 divided by Line 1 5. Current yield equals Line 4 annualized (multiplied by 365/7) The Money Market Fund calculates effective yield by following steps 1-4 above to obtain a base period return, then compounding the base period return as follows: Effective Yield = [(Base Period Return + 1) 365/7] - 1 CALCULATION OF TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN. Total Return reflects changes in the price of a Fund's shares and assumes that any dividends or capital gains distributions are reinvested in that Fund's shares immediately rather than paid to the investor in cash. 22 Average Annual Total Return is calculated by finding the average annual compounded rates of return of a hypothetical investment over the periods shown, according to the following formula (Total Return is then expressed as a percentage): T = (ERV/P)1/n - 1 Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value. ERV is the value, at the end of the applicable period, of a hypothetical $1,000 investment made at the beginning of the applicable period. YIELD OF THE BOND FUNDS. Yield of the shares of the Bond Funds will be computed by annualizing net investment income, as determined by the Commission's formula, calculated on a per share basis, for a recent one-month or 30-day period and dividing that amount by the net asset value per share of the Fund on the last trading day of that period. Net investment income will reflect amortization of any market value premium or discount of fixed income securities (except for obligations backed by mortgages or other assets) over such period and may include recognition of a pro rata portion of the stated dividend rate of dividend paying portfolio securities. The Yield of the Fund will vary from time to time depending upon market conditions, the composition of the portfolio and operating expenses allocated to the Fund. PERFORMANCE COMPARISONS. Each Fund may from time to time include the Total Return, the Average Annual Total Return and Yield of its shares in advertisements or in information furnished to shareholders. The Money Market Fund may also from time to time include the Yield and Effective Yield of its shares in information furnished to shareholders. Any statements of a Fund's performance will also disclose the performance of the respective separate account issuing the Contracts. Each Fund may from time to time also include the ranking of its performance figures relative to such figures for groups of mutual funds categorized by Lipper Analytical Services ("Lipper") as having the same or similar investment objectives or by similar services that monitor the performance of mutual funds. Each Fund may also from time to time compare its performance to average mutual fund performance figures compiled by Lipper in Lipper Performance Analysis. Advertisements or information the Investment Company furnishes to current or prospective investors also may include evaluations of a Fund published by nationally recognized ranking services and by financial publications that are nationally recognized. These publications may include BARRON'S, BUSINESS WEEK, CDA TECHNOLOGIES, INC., CHANGING TIMES, DOW JONES INDUSTRIAL AVERAGE, FINANCIAL PLANNING, FINANCIAL WORLD, FORBES, FORTUNE, HULBERT'S FINANCIAL DIGEST, INSTITUTIONAL INVESTOR, INVESTORS DAILY, MONEY, MORNINGSTAR MUTUAL FUNDS, THE NEW YORK TIMES, STANGER'S INVESTMENT ADVISER, VALUE LINE, THE WALL STREET JOURNAL, WIESENBERGER INVESTMENT COMPANY SERVICE and USA TODAY. In reports or other communications to shareholders, the Investment Company also may describe general economic and market conditions affecting the Funds and may compare the performance of the Funds with (1) that of mutual funds included in the rankings prepared by Lipper or similar investment services that monitor the performance of insurance company separate accounts or mutual funds, (2) IBC/Donoghue's Money Fund Report, (3) other appropriate indices of investment securities and averages for peer universe of funds which are described in this Statement of Additional Information, or (4) data developed by the Adviser or any of the Subadvisers derived from such indices or averages. COMPARATIVE INDICES FOR THE FUNDS ---------------------------------------------------------------------------- The Investment Company compares the performance of each Fund (other than the Money Market Fund) against a widely recognized index or indices for stock or bond market performance, based on the type of securities the Fund purchases. The annual and semi-annual financial reports that the Investment Company prepares will contain graphs with the Funds' performances compared to their indices. It is not possible for an investor to directly invest in an unmanaged index. Performance comparisons to indices are for informational purposes and do not reflect any actual investment. The Funds pay investment advisory and other expenses that are not applicable to unmanaged indices. 23 EQUITY INDEX FUND AND ALL AMERICA FUND: Performance of each of these Funds is compared to the Standard & Poor's Composite Index of 500 Stocks (the S&P 500 INDEX). The S&P 500 Index is a market value-weighted and unmanaged index showing the changes in the aggregate market value of 500 stocks relative to the base period 1941-43, with an average market value of approximately $9 billion. The S&P 500 Index is composed almost entirely of common stocks of companies listed on the NYSE, although the common stocks of a few companies listed on the American Stock Exchange or traded OTC are included. The 500 companies represented include approximately 400 industrial concerns, as well as financial services, utility and transportation concerns. The S&P 500 Index represents about 80% of the market value of all issues traded on the NYSE. MID-CAP EQUITY INDEX FUND: Performance is compared to the Standard & Poor's MidCap 400 Index (the S&P MIDCAP 400 INDEX). The S&P Mid-Cap 400 Index is a market value weighted and unmanaged index showing the changes in the aggregate market value of 400 stocks issued by U.S. companies with medium market capitalizations, generally between $300 million and $5 billion and with an average market value of approximately $1.5 billion. Almost 70% of the stocks are listed on the New York Stock Exchange and approximately 30% are traded on the Nasdaq National Market (over-the-counter). AGGRESSIVE EQUITY FUND: Performance is compared to the Russell 2000 Index. The Russell 2000 Index is a market capitalization weighted index of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 companies represent approximately 12% of the Russell 3000 total market capitalization, and the largest company in the Russell 2000 Index has a current market value of approximately $1 billion. COMPOSITE FUND: Performance is compared to the S&P 500 Index, the Lehman Government/Corporate Index and the 90-day Treasury bill rate. See "Equity Index Fund and All America Fund" above and "Bond Fund" below). These three indices represent the three asset allocation categories in which the Composite Fund invests. BOND FUND: Performance is compared to the Lehman Brothers Government/Corporate Bond Index (the LEHMAN GOVERNMENT/CORPORATE INDEX). The Lehman Government/Corporate Index is a measure of the market value of approximately 5,300 bonds with a face value currently in excess of $1 million, which have at least one year to maturity and are rated "Baa" or higher (investment grade) by a nationally recognized statistical rating agency. SHORT-TERM BOND FUND: Performance is compared to the Salomon Brothers 1-3 Year Bond Index. MID-TERM BOND FUND: Performance is compared to the Salomon Brothers 3-7 Year Bond Index. The Salomon Brothers 1-3 Year Bond Index and the 3-7 Year Bond Index are comprised of the portion of the Salomon Brothers Broad Investment-Grade Bond Index (BIG INDEX) with the maturity indicated. The BIG Index includes Treasury, Agency, mortgage and corporate securities. It is market-capitalization weighted and includes all fixed-rate bonds with a maturity of one year or longer and a minimum of $50 million amount outstanding at entry which remain in the index until their amount falls below $25 million ($200 million for mortgage securities). DESCRIPTION OF CORPORATE BOND RATINGS Description of Corporate bond ratings of Moody's Investors Services, Inc.: Aaa-Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge". Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa-Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. 24 A - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa - Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba - Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B - Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa - Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca - Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C - Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. Description of corporate bond ratings of Standard & Poor's Corporation: AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is very strong. AA - Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree. A - Debt rated A has a strong capacity to pay interest and repay principal, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories. BB-B-CCC-CC - Debt rated BB, B, CCC and CC is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and CC the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. C - The rating C is reserved for income bonds on which no interest is being paid. D - Debt rated D is in default, and payment of interest and/or repayment of principal is in arrears. Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. 25 INDEPENDENT AUDITORS The financial statements included in this Statement of Additional Information have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto and are included herein in reliance upon the authority of said firm as experts in giving audit reports. Arthur Andersen LLP have been selected as the independent auditors of the Investment Company for its fiscal year ending December 31, 1999. Arthur Andersen LLP also acts as the independent auditors of the Insurance Companies. Their address is 1345 Avenue of the Americas, New York, New York. LEGAL MATTERS The legal validity of the shares described in the Prospectus has been passed on by Patrick A. Burns, Esq., Senior Executive Vice President and General Counsel of the Investment Company. CUSTODIAN The Custodian of the securities and other assets held by the Investment Company's Funds is The Chase Manhattan Bank, 1285 Avenue of the Americas, New York, New York 10019. USE OF STANDARD & POOR'S INDICES The Equity Index Fund, the Indexed Assets of the All America Fund and the Mid-Cap Equity Index Fund (together, the INDEXED PORTFOLIOS) are not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation (S&P). S&P makes no representation or warranty, express or implied, to the owners of the Indexed Portfolios or any member of the public regarding the advisability of investing in securities generally or in the Indexed Portfolios particularly or the ability of the S&P 500 Index or the S&P MidCap 400 Index to track general stock market performance. S&P's only relationship to the Investment Company is the licensing of certain trademarks and trade names of S&P and of the S&P 500 Index and the S&P MidCap 400 Index which is determined, composed and calculated by S&P without regard to the Indexed Portfolios. S&P has no obligation to take the needs of the Indexed Portfolios or the owners of the Indexed Portfolios into consideration in determining, composing or calculating the S&P 500 Index or the S&P MidCap 400 Index. S&P is not responsible for and has not participated in the calculation of the net asset values of the Indexed Portfolios, the amount of the shares of the Indexed Portfolios or the timing of the issuance or sale of the Indexed Portfolios. S&P has no obligation or liability in connection with the administration, marketing or trading of the Indexed Portfolios. S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE INDEXED PORTFOLIOS, OWNERS OF THE INDEXED PORTFOLIOS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. 26 FINANCIAL STATEMENTS Financial statements of the Investment Corporation for the year ended December 31, 1998 are included as follows:
PAGE ----- President's Message ............................... 28 Portfolio Management Discussions .................. 29 Portfolio of Investments in Securities: Money Market Fund ................................ 38 All America Fund ................................. 39 Equity Index Fund ................................ 47 Bond Fund ........................................ 52 Short-Term Bond Fund ............................. 55 Mid-Term Bond Fund ............................... 57 Composite Fund ................................... 59 Aggressive Equity Fund ........................... 63 Statement of Assets and Liabilities ............... 65 Statement of Operations ........................... 66 Statements of Changes in Net Assets ............... 67 Financial Highlights .............................. 70 Notes to Financial Statements ..................... 76 Report of Independent Public Accountants .......... 81
27 MUTUAL OF AMERICA INVESTMENT CORPORATION We are pleased to report that performance of the funds offered by Mutual of America Investment Corporation for the year ended December 31, 1998 was, overall, positive. Economic expansion continued in 1998 in what is now the longest peacetime expansion in history. The economic turmoil in Asia, Brazil and Russia caused a flight to quality in the U.S. and the Federal Reserve responded by lowering the interest rate three times. The equity market remained strong in 1998 despite giving back some of its monumental gains. Funds are still flowing into the stock market at a rapid pace and continue to support high valuation levels. The Bond market has come off its lows and Treasury Securities yields have inched up. A spike up in interest rates unrelated to domestic cyclical factors could prove harmful to the continued growth of the economy. TOTAL RETURNS -- TWELVE MONTHS TO DECEMBER 31, 1998 Money Market Fund .............. +5.4% All American Fund .............. +21.3% Equity Index Fund .............. +28.6% Bond Fund ...................... +7.2% Short-Term Bond Fund ........... +5.7% Mid-Term Bond Fund ............. +6.4% Composite Fund ................. +14.5% Aggressive Equity Fund ......... -5.1%
Please note that the above total return performance figures do not reflect the deduction of Separate Account fees and expenses which are imposed by Mutual of America Life Insurance Company and The American Life Insurance Company of New York, respectively. On the pages which immediately follow are brief presentations and graphs for each fund (except the Money Market Fund) which illustrate each fund's respective: o Historical total return achieved over specified periods, expressed as an average annual rate and as a cumulative rate; o Equivalent in dollars of a $10,000 hypothetical investment at the beginning of each specified period; and o Historical performance compared with appropriate indexes. The portfolios of each fund and financial statements are presented in the pages which then follow. Your participation in these funds is appreciated. Sincerely, /s/ DELORES J. MORRISSEY -------------------------- Dolores J. Morrissey Chairman of the Board and President, Mutual of America Investment Corporation 28 MONEY MARKET FUND The investment objective of the Money Market Fund is to realize high current income to the extent consistent with the maintenance of liquidity, investment quality and stability of capital. Through investing in high quality commercial paper and other short-term instruments, the Money-Market Fund returned 5.4% comparing favorably to the Salomon Brothers 3-Month Treasury Bill Index return of 5.1%. ALL AMERICA FUND The All America Fund is approximately 60% invested in the 500 stocks included in the Standard & Poor's 500 Index; the performance objective of this portion of the Fund is to replicate the returns of the Index. The remaining 40% of the Fund is actively managed by three sub-advisors and Mutual of America Capital Management Corporation. Approximately 20% of the Fund is invested in small capitalization stocks. Small cap stocks significantly underperformed larger caps in 1998, as investor preference for large size companies with high earnings predictability continued throughout the year. When investor preferences shift back to small cap stocks, this group's performance should improve. The All America Fund returned 21.3% for 1998. The Standard & Poor's 500 Index returned 28.6% for the year. 29 [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] All American Fund* ----------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $12,126 21.3% 21.3% Since 5/2/94 $26,206 162.1% 22.9% 5 Years $25,674 156.7% 20.8% 10 Years $45,854 358.5% 16.4% S&P 500 Index - ------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $12,857 28.6% 28.6% Since 5/2/94 $30,009 200.1% 26.6% 5 Years $29,400 194.0% 24.1% 10 Years $57,839 478.4% 19.2% * Prior to May 2, 1994, the Fund was known as the Stock Fund, had a different investment objective and did not have any subadvisers. Performance data which includes periods prior to 5/2/94 reflect performance results achieved in accordance with the previous objective of the Stock Fund. The line representing the performance return of the All America Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the performance return line of the index does not. 30 EQUITY INDEX FUND The Equity Index Fund invests in the 500 stocks included in the S&P 500 Index. The Fund's net return for 1998 was 28.6%, equaling the performance of the S&P 500 Index. This was the fourth straight year of positive double digit returns for the Index, a feat equaled only once in the post-war period. Performance was mainly driven by multiple expansion in an environment of low inflation and declining interest rates. Investor preference for larger-capitalized companies with high earnings predictability was another factor driving performance in this Index, which is dominated by large and mid-cap companies. The best performing sectors within the Index were Technology, Communication Services, Health Care and Consumer Cyclicals. The worst performing sector was Energy. [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Equity Index Fund - ----------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $12,858 28.6% 28.6% 5 Years $29,136 191.4% 23.8% Since 2/5/93 Inception* $30,940 209.4% 21.1% S&P 500 Index - ------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $12,857 28.6% 28.6% 5 Years $29,400 194.0% 24.1% Since 2/5/93 Inception* $31,543 215.4% 21.1% The line representing the performance return of the Equity Index Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the performance return line of the index does not. 31 BOND FUND The Bond Fund seeks a high level of return consistent with preservation of capital through investment in public debt securities. The fund typically invests heavily in Corporate and Agency securities, which yield significantly more than U.S. Treasury securities. In 1998, several events occurred which caused a "flight to quality" into only the most liquid U.S. Treasury securities, leading these securities to outperform all other debt asset classes. Over the longer term, the higher yielding securities would be expected to outperform U.S. Treasuries. The Bond Fund returned 7.2% for 1998 versus the Lehman Brothers Government/Corporate Bond Index of 9.5%. [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Bond Fund - ---------- Total Return Period Growth ------------------- Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,715 7.2% 7.2% 5 Years $14,168 41.7% 7.2% 10 Years $23,864 136.6% 9.1% Lehman Bros. Gov't/Corp. Bond Index - ------------------------------------ Total Return Period Growth ------------------- Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,947 9.5% 9.5% 5 Years $14,227 42.3% 7.3% 10 Years $24,413 144.1% 9.3% The line representing the perfomance return of the Bond Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the perfomance return line of the index does not. 32 SHORT-TERM BOND FUND The Short-Term Bond Fund seeks a high level of return consistent with preservation of capital through investment in public debt securities. The fund typically invests heavily in Corporate, Agency and Mortgage Backed securities, which yield significantly more than U.S. Treasury securities. In 1998, several events occurred which caused a "flight to quality" into only the most liquid U.S. Treasury securities, leading these securities to outperform all other debt asset classes. Over the longer term, the higher yielding securities would be expected to outperform U.S. Treasuries. The Short-Term Bond Fund returned 5.7% for 1998 versus the Salomon Brothers 1-3 year Bond Index of 7.0%. [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Short-Term Bond Fund - --------------------- Total Return Period Growth ------------------- Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,566 5.7% 5.7% 5 Years $12,848 28.5% 5.1% Since 2/5/93 Inception* $13,425 34.2% 5.1% Salomon Bros. 1-3 Yr Bond Index - ------------------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,697 7.0% 7.0% 5 Years $13,386 33.9% 6.0% Since 2/5/93 Inception* $13,985 39.9% 5.8% The line representing the perfomance return of the Short-Term Bond Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the perfomance return line of the index does not. 33 MID-TERM BOND FUND The Mid-Term Bond Fund seeks a high level of return consistent with preservation of capital through investment in public debt securities. The fund typically invests heavily in Corporate and Agency securities, which yield significantly more than U.S. Treasury securities. In 1998, several events occurred which caused a "flight to quality" into only the most liquid U.S. Treasury securities, leading these securities to outperform all other debt asset classes. Over the longer term, the higher yielding securities would be expected to outperform U.S. Treasuries. The Mid-Term Bond Fund returned 6.4% for 1998 versus the Salomon Brothers 3-7 year Bond Index of 8.9%. [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Mid-Term Bond Fund - ------------------ Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,635 6.4% 6.4% 5 Years $13,314 33.1% 5.9% Since 2/5/93 Inception* $14,282 42.8% 6.2% Salomon Bros. 3-7 Year Bond Index - -------------------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,891 8.9% 8.9% 5 Years $13,933 39.3% 6.9% Since 2/5/93 Inception* $14,939 49.4% 7.0% The line representing the perfomance return of the Mid-Term Bond Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the perfomance return line of the index does not. 34 COMPOSITE FUND The Composite Fund invests in approximately 100 of the stocks listed in the Standard & Poor's 500 Index, along with publicly-traded debt securities and money market instruments. The objective of the Fund is to achieve as high a total rate of return, through both appreciation of capital and current income, as is consistent with prudent investment risk by means of a diversified portfolio. During 1998, the benchmark for the Fund was a blend of 50% stocks (as represented by the S&P 500 Index), 40% bonds (as represented by the Lehman Brothers Government/Corporate Bond Index) and 10% cash (as represented by the Salomon Brothers 3-month Treasury Bill Index.) The equity portion of the Index underperformed its benchmark, in part, due to stock selection from within the S&P 500 Index universe. Performance of the Index was primarily driven by the largest capitalized companies while other companies within the Index did not fare as well. The Fund's investment in these less dominant companies, on a market capitalized basis, had a negative impact on performance. The bond portion underperformed its index due to an intentional overweight in corporate securities versus the Index. In normal times this process will provide favorable income and yield to the Fund; however, the many uncertainties in the capital markets during the year results in Treasury securities rallying strongly and corporate securities lagging. As the factors that are unsettling the market are resolved, spreads between treasuries and corporate securities should trend back to historical levels. Investing in high quality commercial paper enabled the money market portion of the Fund to outperform the Salomon Treasury Bill Index. 35 [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Composite Fund - -------------- Total Return Period Growth ------------------- Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $11,446 14.5% 14.5% 5 Years $17,812 78.1% 12.2% 10 Years $31,988 219.9% 12.3% Lehman Bros. Gov't/Corp. Bond Index - ----------------------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,947 9.5% 9.5% 5 Years $14,227 42.3% 7.3% 10 Years $24,413 144.1% 9.3% S&P 500 Index - -------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $12,857 28.6% 28.6% 5 Years $29,400 194.0% 24.1% 10 Years $57,839 478.4% 19.2% Salomon Bros. 3 Month T-Bill Index - ---------------------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $10,505 5.1% 5.1% 5 Years $12,829 28.3% 5.1% 10 Years $16,991 69.9% 5.4% The line representing the performance return of the Composite Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the performance return lines of the indices do not. 36 AGGRESSIVE EQUITY FUND The investment objective of the Aggressive Equity Fund is capital growth, by investing in both value and growth companies. During 1998, the Fund was invested approximately 50% in growth stocks and 50% in value stocks. The Fund's performance for the year of -5.1% lagged the Russell 2000 Index's performance of -2.6%. The underperformance of the Russell 2000 reflects investors' preference for larger capitalized companies, which significantly outperformed their small cap counterparts. For a portion of the year, the Fund was over-weighted in the energy sector, the worst performing sector within the Russell 2000 during 1998. This overweighting had a negative impact on Fund performance. This sector's performance should improve as worldwide demand for energy stabilizes and global economies improve. Positive contributors to Fund performance included technology and consumer staples. [GROWTH OF A $10,000 INVESTMENT CHART APPEARS HERE] Aggressive Equity Fund - ---------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $ 9,486 (5.1)% (5.1)% Since 5/2/94 Inception* $21,395 114.0% 17.7% Russell 2000 Index - ---------------------- Total Return Period Growth ------------------ Ended of Cumu- Annual 12/31/98 $10,000 lative Average - ------------------------------------------------------------------------ 1 Year $ 9,745 (2.6)% (2.6)% Since 5/2/94 Inception* $17,564 75.6% 12.8% The line representing the performance return of the Aggressive Equity Fund includes expenses, such as transaction costs and management fees, that reduce returns, while the performance return line of the index does not. 37 MUTUAL OF AMERICA INVESTMENT CORPORATION (MONEY MARKET FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
DISCOUNT FACE AMORTIZED RATING* RATE MATURITY AMOUNT COST --------- ---------- ---------- ------------- ------------- SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER (100%) Albertson's, Inc. ........................... A1/P1 5.25% 01/12/99 $1,910,000 $ 1,906,926 Albertson's, Inc. ........................... A1/P1 5.22 01/12/99 1,539,000 1,536,538 Allied Signal, Inc. ......................... A1/P1 5.55 01/19/99 490,000 488,631 Allied Signal, Inc. ......................... A1/P1 5.55 01/21/99 1,510,000 1,505,293 Allied Signal, Inc. ......................... A1/P1 5.35 01/29/99 680,000 677,158 American Express Credit Corp. ............... A1/P1 4.25 01/07/99 200,000 199,858 Atlantic Richfield Corp. .................... A1/P1 5.25 01/15/99 3,500,000 3,492,832 Bemis, Inc. ................................. A1/P1 5.08 01/14/99 3,000,000 2,994,464 Bemis, Inc. ................................. A1/P1 5.25 01/14/99 865,000 863,355 Central Illinois Light Co. .................. A1+/P1 5.35 01/19/99 2,885,000 2,877,247 Consolidated Natural Gas Co. ................ A1+/P1 5.10 01/19/99 223,000 222,428 Du Pont (E.I.) De Numours & Co. ............. A1+/P1 5.27 01/06/99 3,240,000 3,237,611 Duke Power Company .......................... A1/P1 5.65 01/15/99 1,000,000 997,801 Eaton Corp. ................................. A1/P1 5.25 01/22/99 3,500,000 3,489,242 Export Development Corp. .................... A1+/P1 5.25 01/12/99 3,500,000 3,494,345 Florida Power Corp. ......................... A1+/P1 5.25 01/12/99 3,000,000 2,995,153 Ford Motor Credit Co. ....................... A1/P1 5.20 01/04/99 2,025,000 2,024,115 Ford Motor Credit Co. Puerto Rico, Inc. ..... A1/P1 5.35 01/08/99 2,000,000 1,997,911 GTE Funding, Inc. ........................... A1/P1 5.15 02/01/99 3,500,000 3,484,423 General Electric Capital Corp. .............. A1+/P1 5.32 01/12/99 940,000 938,461 General Electric Capital Corp. .............. A1+/P1 5.33 01/14/99 3,000,000 2,994,206 Heinz (H.J.) Co. ............................ A1/P1 5.50 01/06/99 1,750,000 1,748,661 Heinz (H.J.) Co. ............................ A1/P1 5.20 01/14/99 2,090,000 2,086,050 IBM Credit Corp. ............................ A1/P1 5.25 01/08/99 1,000,000 998,972 International Business Machines ............. A1/P1 5.27 01/08/99 2,500,000 2,497,418 Lucent Technologies, Inc. ................... A1/P1 5.20 01/11/99 1,400,000 1,397,970 Lucent Technologies, Inc. ................... A1/P1 5.10 01/15/99 2,830,000 2,824,357 Merrill Lynch & Co, Inc. .................... A1+/P1 5.08 01/04/99 818,000 817,650 Merrill Lynch & Co, Inc. .................... A1+/P1 5.08 01/08/99 1,520,000 1,518,482 Merrill Lynch & Co, Inc. .................... A1+/P1 5.33 01/29/99 1,530,000 1,523,631 PepsiCo, Inc. ............................... A1/P1 5.10 01/14/99 2,165,000 2,160,997 PetroFina Delaware, Inc. .................... A1/P1 5.07 01/08/99 2,000,000 1,998,007 PetroFina Delaware, Inc. .................... A1/P1 5.40 01/08/99 2,212,000 2,209,668 Proctor & Gamble Co. ........................ A1+/P1 5.00 01/06/99 1,400,000 1,399,022 Proctor & Gamble Co. ........................ A1+/P1 5.13 01/19/99 1,500,000 1,496,137 Sony Capital Corp. .......................... A1/P1 5.35 01/04/99 3,890,000 3,888,260 Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.31 01/06/99 1,725,000 1,723,717 Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.09 01/08/99 605,000 604,395 Toyota Credit de Puerto Rico Corp. .......... A1+/P1 5.05 01/13/99 2,000,000 1,996,596 Wisconsin Energy Corp. ...................... A1+/P1 5.10 01/12/99 1,500,000 1,497,650 Xerox Credit Corp. .......................... A1+/P1 5.23 01/12/99 2,300,000 2,296,308 Xerox Credit Corp. .......................... A1+/P1 5.00 01/12/99 1,667,000 1,664,453 ----------- TOTAL SHORT-TERM DEBT SECURITIES: (Cost: $80,766,399) 100%................................................................. $80,766,399 ===========
- --------- * The ratings are provided by Standard & Poor's Corporation/Moody's Investor Services. Inc. The accompanying notes are an integral part of these financial statements. 38 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS: COMMON STOCKS 3Com Corp. .............................. 15,469 $ 693,204 Abbott Laboratories ..................... 65,029 3,186,421 Adobe Systems, Inc. ..................... 2,982 139,408 Advanced Micro Devices, Inc. ............ 6,384 184,737 Aeroquip-Vickers, Inc. .................. 1,253 37,511 AES Corp. ............................... 7,805 369,761 Aetna, Inc. ............................. 6,125 481,578 Air Products & Chemicals, Inc. .......... 9,983 399,320 AirTouch Communications, Inc. ........... 24,513 1,768,000 Alberto-Culver Co. Cl B ................. 2,446 65,277 Albertson's, Inc. ....................... 10,591 674,514 Alcan Aluminum Ltd. ..................... 9,754 263,967 Alcoa, Inc. ............................. 7,866 586,508 Allegheny Teledyne, Inc. ................ 8,743 178,685 Allergan, Inc. .......................... 2,901 187,839 AlliedSignal, Inc. ...................... 24,158 1,070,501 Allstate Corp. .......................... 35,157 1,357,939 Alltel Corp. ............................ 11,838 708,060 Alza Corp. .............................. 3,842 200,744 Amerada Hess Corp. ...................... 4,036 200,791 Ameren Corp. ............................ 5,880 251,002 American Electric Power, Inc. ........... 8,254 388,453 American Express Co. .................... 19,372 1,980,787 American General Corp. .................. 10,872 848,015 American Greetings Corp. Cl A ........... 3,134 128,689 American Home Products Corp. ............ 56,476 3,180,304 American Int'l. Group, Inc. ............. 44,990 4,347,158 American Stores Co. ..................... 11,956 441,624 Ameritech Corp. ......................... 47,273 2,995,926 Amgen, Inc. ............................. 10,979 1,147,991 Amoco Corp. ............................. 40,906 2,469,699 AMP, Inc. ............................... 9,529 496,103 AMR Corp. ............................... 7,941 471,496 Anadarko Petroleum Corp. ................ 5,329 164,532 Andrew Corp. ............................ 3,821 63,046 Anheuser-Busch Cos., Inc. ............... 20,479 1,343,934 Aon Corp. ............................... 7,336 406,231 Apache Corp. ............................ 4,376 110,767 Apple Computer, Inc. .................... 5,975 244,601 Applied Materials, Inc. ................. 15,941 680,481 Archer-Daniels-Midland Co. .............. 25,420 436,906 Armco, Inc. ............................. 4,787 20,943 Armstrong World Inds., Inc. ............. 1,776 107,115 Asarco, Inc. ............................ 1,760 26,510 Ascend Communications, Inc. ............. 9,358 615,288 Ashland, Inc. ........................... 3,393 164,136 Associates First Capital Corp. .......... 31,303 1,326,464 AT&T Corp. .............................. 77,400 5,824,350 Atlantic Richfield Co. .................. 13,856 904,104 Autodesk, Inc. .......................... 2,086 89,046 Automatic Data Processing, Inc .......... 13,031 1,044,923 AutoZone, Inc. .......................... 6,778 223,250 Avery Dennison Corp. .................... 4,982 224,501 Avon Products, Inc. ..................... 11,257 498,122 Baker Hughes, Inc. ...................... 14,098 249,358 Ball Corp. .............................. 1,353 61,899 Baltimore Gas & Electric Co. ............ 6,597 203,682 Banc One Corp. .......................... 50,177 2,562,163 Bank of New York Co., Inc. .............. 32,812 1,320,683 Bankamerica Corp. ....................... 74,157 4,458,689 BankBoston Corp. ........................ 12,831 499,607 Bankers Trust New York Corp. ............ 4,163 355,676 Bard (C.R.), Inc. ....................... 2,312 114,444 Barrick Gold Corp. ...................... 16,090 313,755
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Battle Mountain Gold Co. ................ 10,197 $ 42,062 Bausch & Lomb, Inc. ..................... 2,480 148,800 Baxter International, Inc. .............. 12,337 793,423 BB & T Corp. ............................ 12,811 516,443 Bear Stearns Cos., Inc. ................. 4,824 180,297 Becton Dickinson & Co. .................. 10,665 455,262 Bell Atlantic Corp. ..................... 66,514 3,525,242 BellSouth Corp. ......................... 83,796 4,179,325 Bemis, Inc. ............................. 2,369 89,873 Berkshire Hathaway, Inc Cl A ............ 12 812,000 Bestfoods ............................... 12,326 656,359 Bethlehem Steel Corp. ................... 5,752 48,173 Biomet, Inc. ............................ 4,975 200,243 Black & Decker Corp. .................... 3,893 218,251 Block (H. & R.), Inc. ................... 4,455 200,475 BMC Software, Inc. ...................... 9,297 414,297 Boeing Co. .............................. 42,812 1,396,741 Boise Cascade Corp. ..................... 2,500 77,500 Boston Scientific Corp. ................. 16,949 454,445 Briggs & Stratton Corp. ................. 1,070 53,366 Bristol-Myers Squibb Co. ................ 42,574 5,696,933 Brown-Forman Corp. Cl B ................. 3,048 230,695 Browning-Ferris Inds., Inc. ............. 7,711 219,281 Brunswick Corp. ......................... 4,396 108,801 Burlington Northern Santa Fe ............ 20,235 682,931 Burlington Resources, Inc. .............. 7,594 271,960 Cabletron Systems, Inc. ................. 7,297 61,112 Campbell Soup Co. ....................... 19,325 1,062,875 Capital One Financial Corp. ............. 2,857 328,555 Cardinal Health, Inc. ................... 8,601 652,600 Carolina Power & Light Co. .............. 6,528 307,224 Case Corp. .............................. 3,304 72,068 Caterpillar, Inc. ....................... 15,472 711,712 CBS Corp. ............................... 30,459 997,532 Cendant Corp. ........................... 36,798 701,461 Centex Corp. ............................ 2,645 119,190 Central & South West Corp. .............. 9,110 249,955 Ceridian Corp. .......................... 3,086 215,441 Champion International Corp. ............ 4,244 171,882 Charles Schwab Corp. .................... 17,295 971,734 Chase Manhattan Corp. ................... 36,241 2,466,653 Chevron Corp. ........................... 27,957 2,318,683 Chubb Corp. ............................. 7,029 456,006 CIGNA Corp. ............................. 8,907 688,622 Cincinnati Financial Corp. .............. 7,154 262,015 CiNergy Corp. ........................... 7,035 241,828 Circuit City Group, Inc. ................ 4,438 221,622 Cisco Systems, Inc. ..................... 67,661 6,279,786 Citigroup, Inc. ......................... 97,352 4,818,924 Clear Channel Communications ............ 10,838 590,671 Clorox Co. .............................. 4,436 518,180 Coastal Corp. ........................... 9,174 320,516 Coca-Cola Co. ........................... 105,628 7,063,872 Coca-Cola Enterprises, Inc. ............. 16,794 600,385 Colgate-Palmolive Co. ................... 12,630 1,173,011 Columbia Energy Group ................... 3,700 213,675 Columbia/HCA Healthcare Corp. ........... 27,844 689,139 Comcast Corp. Cl A ...................... 15,923 934,481 Comerica, Inc. .......................... 6,709 457,469 Compaq Computer Corp. ................... 72,844 3,054,895 Computer Associates Intl., Inc. ......... 23,218 989,667 Computer Sciences Corp. ................. 6,836 440,494 Conagra, Inc. ........................... 20,967 660,460 Conseco, Inc. ........................... 13,564 414,549
The accompanying notes are an integral part of these financial statements. 39 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Consolidated Edison, Inc. ........................ 9,992 $ 528,327 Consolidated Natural Gas Co. ..................... 4,255 229,770 Consolidated Stores Corp. ........................ 4,852 97,949 Cooper Industries, Inc. .......................... 4,584 218,599 Cooper Tire & Rubber Co. ......................... 3,437 70,243 Coors (Adolph) Co. Cl B .......................... 1,611 90,920 Corning, Inc. .................................... 10,082 453,690 Costco Co. ....................................... 9,338 674,086 Countrywide Credit Industries .................... 4,928 247,324 Crane Co. ........................................ 3,052 92,117 Crown Cork & Seal, Inc. .......................... 5,521 170,115 CSX Corp. ........................................ 9,416 390,764 Cummins Engine Co., Inc. ......................... 1,708 60,634 CVS Corp. ........................................ 16,821 925,155 Cyprus Amax Minerals Co. ......................... 4,156 41,560 Dana Corp. ....................................... 7,093 289,926 Danaher Corp. .................................... 5,731 311,264 Darden Restaurants, Inc. ......................... 6,176 111,168 Data General Corp. ............................... 2,197 36,113 Dayton-Hudson Corp. .............................. 18,977 1,029,502 Deere & Co. ...................................... 10,288 340,790 Dell Computer Corp. .............................. 54,569 3,993,768 Delta Air Lines, Inc. ............................ 6,159 320,268 Deluxe Corp. ..................................... 3,585 131,076 Dillard's Inc. Cl A .............................. 4,608 130,752 Disney (Walt) Co. ................................ 87,785 2,633,550 Dollar General Corp. ............................. 8,201 193,748 Dominion Resources, Inc. ......................... 8,535 399,011 Donnelley (R.R.) & Sons Co. ...................... 5,946 260,509 Dover Corp. ...................................... 9,624 352,479 Dow Chemical Co. ................................. 9,548 868,271 Dow Jones & Co., Inc. ............................ 4,159 200,151 DTE Energy Co. ................................... 6,216 266,511 Du Pont (E.I.) de Nemours & Co ................... 48,242 2,559,841 Duke Energy Corp. ................................ 15,614 1,000,271 Dun & Bradstreet Corp. ........................... 7,300 230,406 Eastern Enterprises .............................. 957 41,868 Eastman Chemical Co. ............................. 3,516 157,341 Eastman Kodak Co. ................................ 13,974 1,006,128 Eaton Corp. ...................................... 3,168 223,938 Ecolab, Inc. ..................................... 5,753 208,186 Edison International ............................. 15,383 428,801 EG&G, Inc. ....................................... 2,039 56,709 Electronic Data Systems Corp. .................... 21,255 1,068,063 EMC Corp. ........................................ 21,504 1,827,840 Emerson Electric Co. ............................. 18,999 1,149,439 Engelhard Corp. .................................. 6,413 125,053 Enron Corp. ...................................... 14,266 814,053 Entergy Corp. .................................... 10,637 331,076 Equifax, Inc. .................................... 6,360 217,432 Exxon Corp. ...................................... 104,177 7,617,943 FDX Corp. ........................................ 6,323 562,747 Federated Department Stores, Inc. ................ 8,839 385,048 Federal Home Loan Mortgage Corp. ................. 29,078 1,873,713 Fifth Third Bancorp .............................. 11,507 820,592 First Data Corp. ................................. 19,094 605,041 First Union Corp. ................................ 42,453 2,581,673 FirstEnergy Corp. ................................ 10,226 332,984 Fleet Financial Group, Inc. ...................... 24,515 1,095,514 Fleetwood Enterprises, Inc. ...................... 1,528 53,098 Fluor Corp. ...................................... 3,305 140,669 FMC Corp. ........................................ 1,532 85,792 Federal National Mortgage Association ............ 44,431 3,287,894 Ford Motor Co. ................................... 51,848 3,042,829
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Fort James Corp. ................................. 9,510 $ 380,400 Fortune Brands, Inc. ............................. 7,377 233,297 Foster Wheeler Corp. ............................. 1,808 23,843 FPL Group, Inc. .................................. 7,751 477,655 Franklin Resources, Inc. ......................... 11,020 352,640 Fred Meyer, Inc. ................................. 6,664 401,506 Freeport-McMoran Copper & Gold, Inc. Cl B .......................................... 7,220 75,358 Frontier Corp. ................................... 7,610 258,740 Fruit of the Loom, Inc. Cl A ..................... 3,199 44,186 Gannett Co., Inc. ................................ 12,147 783,481 Gap, Inc. ........................................ 24,830 1,396,687 Gateway 2000, Inc. ............................... 6,742 345,106 General Dynamics Corp. ........................... 5,466 320,444 General Electric Co. ............................. 140,410 14,330,595 General Instrument Corp. ......................... 7,417 251,714 General Mills, Inc. .............................. 6,553 509,495 General Motors Corp. ............................. 28,044 2,006,898 Genuine Parts Co. ................................ 7,929 265,125 Georgia-Pacific (Timber Group) ................... 3,898 228,276 Gillette Co. ..................................... 47,533 2,296,438 Golden West Financial Corp. ...................... 2,455 225,092 Goodrich (B.F.) Co. .............................. 3,283 117,777 Goodyear Tire & Rubber Co. ....................... 6,799 342,924 GPU, Inc. ........................................ 5,483 242,280 Grainger (W.W.), Inc. ............................ 4,096 170,496 Great Atlantic & Pac. Tea, Inc. .................. 1,697 50,273 Great Lakes Chemical Corp. ....................... 2,621 104,840 GTE Corp. ........................................ 41,354 2,688,010 Guidant Corp. .................................... 6,498 716,404 Halliburton Co. .................................. 18,839 558,105 Harcourt General, Inc. ........................... 3,145 167,274 Harnischfeger Industries, Inc. ................... 2,120 21,597 Harrah's Entertainment, Inc. ..................... 4,495 70,515 Harris Corp. ..................................... 3,550 130,018 Hartford Financial Services Group ................ 10,003 548,914 Hasbro, Inc. ..................................... 5,837 210,861 HBO & Co. ........................................ 20,260 581,208 HCR Manor Care, Inc. ............................. 4,815 141,440 HealthSouth Corp. ................................ 18,128 279,851 Heinz (H.J.) Co. ................................. 15,617 884,312 Helmerich & Payne, Inc. .......................... 2,232 43,245 Hercules, Inc. ................................... 4,196 114,865 Hershey Food Corp. ............................... 6,175 384,007 Hewlett-Packard Co. .............................. 44,440 3,035,807 Hilton Hotels Corp. .............................. 11,562 221,123 Home Depot, Inc. ................................. 66,979 4,098,277 Homestake Mining Co. ............................. 10,591 97,304 Honeywell, Inc. .................................. 5,432 409,097 Household International Corp. .................... 20,826 825,230 Houston Industries, Inc. ......................... 12,271 394,205 Humana, Inc. ..................................... 7,408 131,955 Huntington Bancshares, Inc. ...................... 9,105 273,719 Ikon Office Solutions, Inc. ...................... 6,015 51,503 Illinois Tool Works, Inc. ........................ 10,787 625,646 IMS Health, Inc. ................................. 6,908 521,122 Inco Ltd. ........................................ 7,369 77,835 Ingersoll Rand Co. ............................... 7,093 332,927 Intel Corp. ...................................... 71,430 8,468,919 International Paper Co. .......................... 13,168 590,091 Interpublic Group of Cos., Inc. .................. 6,043 481,929 International Business Machines Corp. ............ 39,981 7,386,489 International Flavors & Fragrances, Inc. ......... 4,547 200,920 ITT Industries, Inc. ............................. 4,599 182,810
The accompanying notes are an integral part of these financial statements. 40 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Jefferson-Pilot Corp. ...................... 4,572 $ 342,900 Johnson & Johnson .......................... 57,618 4,832,709 Johnson Controls, Inc. ..................... 3,758 221,722 Jostens, Inc. .............................. 1,634 42,790 Kaufman & Broad Home Corp. ................. 1,769 50,858 Kellogg Co. ................................ 17,483 596,607 Kerr-McGee Corp. ........................... 2,119 81,051 KeyCorp. ................................... 19,505 624,160 Kimberly Clark Corp. ....................... 23,375 1,273,937 King World Productions, Inc. ............... 3,247 95,583 KLA Tencor Corp. ........................... 3,855 167,210 Kmart Corp. ................................ 21,122 323,430 Knight-Ridder, Inc. ........................ 3,498 178,835 Kohl's Corp. ............................... 6,824 419,249 Kroger Co. ................................. 11,052 668,646 Laidlaw, Inc. .............................. 14,634 147,254 Lehman Brothers Holdings, Inc. ............. 5,051 222,559 Lilly (Eli) & Co. .......................... 47,121 4,187,878 Limited, Inc. .............................. 9,764 284,376 Lincoln National Corp. ..................... 4,358 356,538 Liz Claiborne, Inc. ........................ 2,930 92,478 Lockheed Martin Corp. ...................... 8,466 717,493 Loews Corp. ................................ 4,872 478,674 Longs Drug Stores Corp. .................... 1,727 64,762 Louisiana-Pacific Corp. .................... 4,871 89,200 Lowe's Companies, Inc. ..................... 15,206 778,357 LSI Logic Corp. ............................ 6,254 100,845 Lucent Technologies, Inc. .................. 56,346 6,198,059 Mallinckrodt, Inc. ......................... 3,247 100,048 Marriott International, Inc. ............... 10,790 312,910 Marsh & McLennan Cos., Inc. Cl A ........... 11,099 648,597 Masco Corp. ................................ 14,774 424,752 Mattel, Inc. ............................... 12,594 287,300 May Department Stores Co. .................. 10,077 608,398 Maytag Corp. ............................... 3,918 243,895 MBIA, Inc. ................................. 4,257 279,099 MBNA Corp. ................................. 32,429 808,698 McDermott International, Inc. .............. 2,627 64,854 McDonald's Corp. ........................... 28,990 2,221,358 McGraw-Hill Cos., Inc. ..................... 4,216 429,505 MCI WorldCom, Inc. ......................... 78,561 5,636,751 Mead Corp. ................................. 4,608 135,072 MediaOne Group, Inc. ....................... 26,179 1,230,413 Medtronic, Inc. ............................ 21,012 1,560,141 Mellon Bank Corp. .......................... 11,264 774,400 Mercantile Bancorporation .................. 6,787 313,050 Merck & Co., Inc. .......................... 51,036 7,537,379 Meredith Corp. ............................. 2,343 88,741 Merrill Lynch & Co., Inc. .................. 15,301 1,021,341 MGIC Investment Corp. ...................... 4,795 190,900 Micron Technology, Inc. .................... 9,209 465,630 Microsoft Corp. ............................ 106,848 14,818,482 Milacron, Inc. ............................. 1,741 33,514 Millipore Corp. ............................ 1,946 55,339 Minnesota Mining & Mfg. Co. ................ 17,312 1,231,316 Mirage Resorts, Inc. ....................... 7,976 119,141 Mobil Corp. ................................ 33,416 2,911,369 Monsanto Co. ............................... 27,025 1,283,687 Moore Corp., Ltd. .......................... 3,925 43,175 Morgan (J.P.) & Co., Inc. .................. 7,541 792,276 Morgan Stanley Dean Witter Co. ............. 24,753 1,757,463 Morton International, Inc. ................. 5,377 131,736 Motorola, Inc. ............................. 25,717 1,570,344 NACCO Industries, Inc. Cl A ................ 362 33,304
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Nalco Chemical Co. ......................... 2,924 $ 90,644 National City Corp. ........................ 14,267 1,034,357 National Semiconductor Corp. ............... 7,288 98,388 National Service Industries ................ 1,839 69,882 Navistar International Corp. ............... 2,976 84,816 New Century Energies, Inc. ................. 4,942 240,922 New York Times Co. Cl A .................... 7,814 271,048 Newell Co. ................................. 6,969 287,471 Newmont Mining Corp. ....................... 7,420 134,023 Nextel Communications, Inc. Cl A ........... 12,678 299,517 Niagara Mohawk Power Corp. ................. 8,314 134,063 Nicor, Inc. ................................ 2,119 89,527 Nike, Inc. Cl B ............................ 12,269 497,661 Nordstrom, Inc. ............................ 6,602 229,006 Norfolk Southern Corp. ..................... 16,249 514,890 Northern States Power Co. .................. 6,719 186,452 Northern Telecom, Ltd. ..................... 27,944 1,400,672 Northern Trust Corp. ....................... 4,836 422,243 Northrop Grumman Corp. ..................... 3,053 223,250 Novell, Inc. ............................... 15,188 275,282 Nucor Corp. ................................ 3,908 169,021 Occidental Petroleum Corp. ................. 15,146 255,588 Omnicom Group, Inc. ........................ 7,370 427,460 Oneok, Inc. ................................ 1,399 50,538 Oracle Corp. ............................... 41,646 1,795,983 Oryx Energy Co. ............................ 4,714 63,344 Owens Corning .............................. 2,397 84,943 Owens Illinois, Inc. ....................... 6,894 211,128 Paccar, Inc. ............................... 3,467 142,580 PacifiCorp. ................................ 12,741 268,357 Pall Corp. ................................. 5,502 139,269 Parametric Technology Corp. ................ 12,080 197,810 Parker Hannifin Corp. ...................... 4,907 160,704 Paychex, Inc. .............................. 7,054 362,840 Peco Energy Co. ............................ 9,664 402,264 Penney (J.C.) Co., Inc. .................... 10,882 510,093 PennzEnergy Co. ............................ 2,119 34,566 Pennzoil-Quaker State Co. .................. 2,119 31,255 Peoples Energy Corp. ....................... 1,570 62,603 Peoplesoft, Inc. ........................... 10,226 193,654 Pep Boys-Manny, Moe & Jack ................. 2,830 44,395 PepsiCo, Inc. .............................. 62,870 2,573,740 Perkin-Elmer Corp. ......................... 2,180 212,686 Pfizer, Inc. ............................... 55,610 6,975,579 PG & E Corp. ............................... 16,391 516,316 Pharmacia & Upjohn, Inc. ................... 21,915 1,240,936 Phelps Dodge Corp. ......................... 2,604 132,478 Phillip Morris Cos., Inc. .................. 104,324 5,581,334 Phillips Petroleum Co. ..................... 10,911 465,081 Pioneer Hi-Bred Intl., Inc. ................ 10,352 279,504 Pitney Bowes, Inc. ......................... 11,761 776,961 Placer Dome, Inc. .......................... 11,095 127,592 PNC Bank Corp. ............................. 12,979 702,488 Polaroid Corp. ............................. 1,957 36,571 Potlatch Corp. ............................. 1,287 47,458 PP&L Resources, Inc. ....................... 6,712 187,097 PPG Industries, Inc. ....................... 7,643 445,204 Praxair, Inc. .............................. 7,019 247,419 Proctor & Gamble Co. ....................... 56,854 5,191,480 Progressive Corp. of Ohio .................. 3,106 526,078 Provident Companies, Inc. .................. 5,998 248,917 Providian Financial Corp. .................. 8,216 616,200 Public Svc. Enterprise Group, Inc. ......... 9,779 391,160 Pulte Corp. ................................ 1,913 53,205
The accompanying notes are an integral part of these financial statements. 41 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Quaker Oats Co. ................................. 5,877 $ 349,681 Ralston Purina Co. .............................. 13,598 440,235 Raychem Corp. ................................... 3,447 111,381 Raytheon Co. Cl B ............................... 14,535 773,988 Reebok International Ltd. ....................... 2,505 37,261 Regions Financial Corp. ......................... 9,540 384,581 Republic New York Corp. ......................... 4,597 209,450 Reynolds Metals Co. ............................. 2,856 150,475 Rite-Aid Corp. .................................. 11,076 548,954 RJR Nabisco Holdings Corp. ...................... 14,011 415,951 Rockwell Intl., Corp. ........................... 8,247 400,494 Rohm & Haas Co. ................................. 7,377 222,232 Rowan Cos., Inc. ................................ 3,779 37,790 Royal Dutch Petroleum Co. ....................... 91,882 4,398,850 Rubbermaid, Inc. ................................ 6,654 209,185 Russell Corp. ................................... 1,607 32,642 Ryder System, Inc. .............................. 3,249 84,474 Safeco Corp. .................................... 6,038 259,256 Safeway, Inc. ................................... 20,973 1,278,042 Sara Lee Corp. .................................. 39,402 1,110,643 SBC Communications, Inc. ........................ 83,814 4,494,525 Schering-Plough Corp. ........................... 62,972 3,479,203 Schlumberger, Ltd. .............................. 23,548 1,086,151 Scientific-Atlanta, Inc. ........................ 3,498 79,798 Seagate Technology .............................. 10,509 317,897 Seagram, Ltd. ................................... 16,891 641,858 Sealed Air Corp. ................................ 3,695 188,675 Sears Roebuck & Co. ............................. 16,525 702,312 Sempra Energy ................................... 10,284 260,956 Service Corp. International ..................... 11,124 423,407 Shared Medical Systems Corp. .................... 1,178 58,752 Sherwin-Williams Co. ............................ 7,368 216,435 Sigma-Aldrich Corp. ............................. 4,464 131,130 Silicon Graphics, Inc. .......................... 8,378 107,866 SLM Holding Corp. ............................... 7,255 348,240 Snap-On, Inc. ................................... 2,623 91,313 Sonat, Inc. ..................................... 4,883 132,146 Southern Co. .................................... 30,076 874,083 Southwest Airlines Co. .......................... 14,509 325,545 Springs Industries, Inc. ........................ 819 33,937 Sprint Corp. (FON Group) ........................ 18,457 1,552,695 Sprint Corp. (PCS Group) ........................ 17,800 411,625 St. Jude Medical, Inc. .......................... 3,735 103,412 St. Paul Companies, Inc. ........................ 10,169 353,372 Stanley Works ................................... 3,939 109,307 Staples, Inc. ................................... 13,356 583,490 State Street Corp. .............................. 6,877 478,381 Summit Bancorp .................................. 7,488 327,132 Sun America, Inc. ............................... 9,365 759,735 Sun Microsystems, Inc. .......................... 16,308 1,396,372 Sunoco, Inc. .................................... 4,148 149,587 Suntrust Banks, Inc. ............................ 9,040 691,560 Supervalu, Inc. ................................. 5,368 150,304 Synovus Financial Corp. ......................... 11,687 284,870 Sysco Corp. ..................................... 14,315 392,767 Tandy Corp. ..................................... 4,241 174,676 Tektronix, Inc. ................................. 2,234 67,159 Tele-Communications, Inc. (TCI Gp. "A") ......... 23,205 1,283,526 Tellabs, Inc. ................................... 8,324 570,714 Temple-Inland, Inc. ............................. 2,467 146,323 Tenet Healthcare Corp. .......................... 13,268 348,285
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Tenneco, Inc. ................................... 7,528 $ 256,422 Texaco, Inc. .................................... 23,057 1,219,138 Texas Instruments, Inc. ......................... 16,707 1,429,492 Texas Utilities Co. ............................. 12,179 568,607 Textron, Inc. ................................... 6,900 523,968 Thermo Electron Corp. ........................... 6,851 116,038 Thomas & Betts Corp. ............................ 2,517 109,017 Time Warner, Inc. ............................... 52,575 3,262,935 Times Mirror Co. Cl A ........................... 3,526 197,456 Timken Co. ...................................... 2,766 52,208 TJX Companies ................................... 14,074 408,146 Torchmark Corp. ................................. 6,224 219,785 Toys R Us, Inc. ................................. 11,597 195,699 Transamerica Corp. .............................. 2,690 310,695 Tribune Co. ..................................... 5,123 338,118 Tricon Global Restaurants Inc. .................. 6,579 329,772 TRW, Inc. ....................................... 5,243 294,591 Tupperware Corp. ................................ 2,561 42,096 Tyco International Ltd. ......................... 27,608 2,082,678 U.S. Bancorp .................................... 31,304 1,111,292 U.S. West, Inc. ................................. 21,532 1,391,505 Unicom Corp. .................................... 9,368 361,253 Unilever N.V. ................................... 27,431 2,275,058 Union Camp Corp. ................................ 3,077 207,697 Union Carbide Corp. ............................. 5,796 246,330 Union Pacific Corp. ............................. 10,789 486,179 Union Pacific Resources Group, Inc. ............. 11,143 100,983 Union Planters Corp. ............................ 5,830 264,171 Unisys Corp. .................................... 11,008 379,088 United Healthcare Corp. ......................... 8,033 345,921 United Technologies Corp. ....................... 9,741 1,059,333 Unocal Corp. .................................... 10,412 303,900 UNUM Corp. ...................................... 5,969 348,440 US Airways Group, Inc. .......................... 3,873 201,396 UST, Inc. ....................................... 7,968 277,884 USX-Marathon Group .............................. 13,268 399,698 USX-U.S. Steel Group ............................ 3,909 89,907 V F Corp. ....................................... 5,173 242,484 Venator Group, Inc. ............................. 6,003 38,644 Viacom, Inc. Cl B ............................... 15,004 1,110,296 W.R. Grace & Co. ................................ 3,368 52,835 Wachovia Corp. .................................. 8,746 764,728 Wal-Mart Stores, Inc. ........................... 96,533 7,861,406 Walgreen Co. .................................... 21,369 1,251,422 Warner-Lambert Co. .............................. 35,197 2,646,374 Washington Mutual, Inc. ......................... 25,590 977,218 Waste Management, Inc. .......................... 24,776 1,155,181 Wells Fargo & Company ........................... 69,294 2,767,614 Wendy's International, Inc. ..................... 5,647 123,175 Westvaco Corp. .................................. 4,496 120,549 Weyerhaeuser Co. ................................ 8,584 436,174 Whirlpool Corp. ................................. 3,372 186,724 Willamette Industries, Inc. ..................... 4,945 165,657 Williams Cos., Inc. ............................. 18,452 575,471 Winn-Dixie Stores, Inc. ......................... 6,364 285,584 Worthington Industries, Inc. .................... 4,289 53,612 Wrigley (Wm.) Jr. Co. ........................... 5,013 448,976 Xerox Corp. ..................................... 14,051 1,658,018 ----------- TOTAL INDEXED ASSETS -- COMMON STOCKS (Cost: $188,724,813) 58.2% ...................... 427,093,187 -----------
The accompanying notes are an integral part of these financial statements. 42 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- ------------ --------------- INDEXED ASSETS (CONTINUED): SHORT-TERM DEBT SECURITIES: U. S. GOVERNMENT (0.1%) U.S. Treasury Bill ............ 3.97% 04/08/99 $ 610,000 $ 602,703 U.S. Treasury Bill(a) ......... 4.00 03/25/99 200,000 197,964 ------------ 800,667 ------------ COMMERCIAL PAPER (0.5%) Ford Motor Credit Co. ......... 6.09 01/04/99 2,000,000 1,998,984 Koch Industries ............... 5.20 01/04/99 1,432,000 1,431,379 ------------ 3,430,363 ------------ TOTAL SHORT-TERM DEBT SECURITIES (Cost: $4,231,921) 0.6% ........................................ 4,231,030 ------------ TOTAL INDEXED ASSETS (Cost: $192,956,734) 58.8% ..................................... $431,324,217 ============
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1998:
UNDERLYING FACE EXPIRATION DATE AMOUNT AT VALUE UNREALIZED GAIN ----------------- ----------------- ---------------- PURCHASED 13 S&P 500 Stock Index Futures Contracts .. March 1999 $ 4,047,875 $ 69,875 =========== ========
The face value of futures purchased and outstanding as percentage of total investment in securities: 0.6%. - --------- (a) This security has been segregated by the Custodian to cover initial margin requirements on open futures contracts. The accompanying notes are an integral part of these financial statements. 43 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- ----------------- ACTIVE ASSETS: COMMON STOCK BASIC MATERIALS Barrick Gold Corp. ...................... 22,300 $ 434,850 Cabot Corp. ............................. 50,000 1,396,875 Homestake Mining Co. .................... 35,900 329,831 Lone Star Technologies, Inc.* ........... 92,000 931,500 Newmont Mining Corp. .................... 16,100 290,806 Oregon Steel Mills, Inc. ................ 55,000 653,125 Placer Dome, Inc. ....................... 32,200 370,300 Praxair, Inc. ........................... 38,800 1,367,700 ---------- 5,774,987 ---------- CONSUMER, CYCLICAL (6.6%) American Greetings Corp. Cl A ........... 47,700 1,958,681 ASA Holdings, Inc. ...................... 17,400 530,700 Atlantic Coast Airlines, Inc.* .......... 74,000 1,850,000 Bed Bath & Beyond, Inc.* ................ 66,300 2,262,487 Bergen Brunswig ......................... 87,800 3,062,025 BJ's Wholesale Club, Inc.* .............. 49,300 2,283,206 Blyth Industries, Inc.* ................. 37,000 1,156,250 Borders Group, Inc.* .................... 27,700 690,768 CKE Restaurants, Inc. ................... 9,592 282,364 Clear Channel Communications* ........... 23,450 1,278,025 Coach USA, Inc.* ........................ 35,000 1,214,062 Consolidated Graphics, Inc.* ............ 18,500 1,249,906 Consolidated Stores Corp.* .............. 51,000 1,029,562 ContinentalAirlines, Inc. Cl.B* ......... 19,100 639,850 Cox Radio, Inc.* ........................ 17,000 718,250 Dollar Tree Stores* ..................... 26,000 1,135,875 Ethan Allen Interiors, Inc. ............. 19,300 791,300 Family Dollar Stores Inc. ............... 72,300 1,590,600 Furniture Brands Intl., Inc.* ........... 12,800 348,800 Gannett Co., Inc. ....................... 34,100 2,199,450 Jacor Communications, Inc.* ............. 27,850 1,792,843 Linens'n Things, Inc.* .................. 72,800 2,884,700 Masco Corp. ............................. 76,200 2,190,750 Mattel, Inc. ............................ 28,100 641,031 Meredith Corp. .......................... 29,000 1,098,375 Nordstrom, Inc. ......................... 38,500 1,335,468 Office Depot, Inc.* ..................... 55,000 2,031,562 Outback Steakhouse, Inc.* ............... 39,400 1,571,075 Outdoor Systems, Inc.* .................. 33,662 1,009,860 Rent-Way, Inc.* ......................... 24,100 585,931 Saks Incorporated* ...................... 38,000 1,199,375 Skywest, Inc. ........................... 59,800 1,954,712 The Men's Wearhouse, Inc.* .............. 42,000 1,333,500 Tiffany & Co. ........................... 30,000 1,556,250 Westpoint Stevens, Inc.* ................ 20,100 634,406 ---------- 48,091,999 ---------- CONSUMER, NON-CYCLICAL (6.0%) Agouron Pharmaceuticals, Inc.* .......... 30,000 1,762,500 Amazon.com, Inc.* ....................... 7,700 2,473,625 American Home Products Corp. ............ 32,600 1,835,787 Anesta Corp.* ........................... 35,000 931,875 Baxter International, Inc. .............. 18,000 1,157,625 Bestfoods ............................... 20,000 1,065,000 Biogen, Inc.* ........................... 4,600 381,800 Biomet, Inc. ............................ 18,300 736,575 Diageo PLC--Sponsored ADR ............... 26,000 1,202,500 Dura Pharmaceuticals, Inc.* ............. 69,000 1,047,937 Earthgrains Co. ......................... 60,500 1,871,718 Elan Corp Plc -Spons ADR* ............... 12,800 890,400 ------------------- * Non-income producing security.
SHARES VALUE --------------- ----------------- ACTIVE ASSETS (CONTINUED): CONSUMER, NON-CYCLICAL (6.0%) (CONTINUED) Food Lion, Inc. ......................... 114,500 $1,216,562 Forest Laboratories, Inc.* .............. 21,700 1,154,168 Fort James Corp of Virginia ............. 35,000 1,400,000 Fred Meyer, Inc.* ....................... 25,300 1,524,325 Health Management Associates* ........... 32,200 696,325 IDEC Pharmaceuticals Corp.* ............. 13,000 611,000 Integrated Health Services* ............. 40,000 565,000 Lilly (Eli) & Co. ....................... 22,500 1,999,687 Medimmune, Inc.* ........................ 23,900 2,376,556 Medquist, Inc.* ......................... 53,700 2,121,150 Metzler Group, Inc.* .................... 26,000 1,265,875 Omnicare, Inc. .......................... 49,500 1,720,125 Phillip Morris Cos., Inc. ............... 60,200 3,220,700 SangStat Medical Corp.* ................. 36,000 765,000 Starbucks Corp.* ........................ 37,700 2,115,912 Suiza Foods Corp.* ...................... 30,000 1,528,125 US Foodservice* ......................... 90,650 2,971,850 Williams-Sonoma, Inc.* .................. 47,300 1,906,781 ---------- 44,516,483 ---------- ENERGY (1.2%) Amoco Corp. ............................. 33,000 1,992,375 Elf Aquitaine--ADR ...................... 44,000 2,491,500 Schlumberger, Ltd. ...................... 23,300 1,074,712 Shell Transport & Trading-ADR ........... 42,700 1,587,906 USX-Marathon Group ...................... 67,700 2,039,462 ---------- 9,185,955 ---------- FINANCIAL (8.3%) American Int'l. Group, Inc. ............. 42,700 4,125,887 Aon Corp. ............................... 30,600 1,694,475 Arden Realty Group ...................... 54,100 1,254,443 ARM Financial Group, Inc. ............... 56,000 1,242,500 Bankamerica Corp. ....................... 46,863 2,817,637 Chicago Title Corp. ..................... 28,000 1,314,250 ChoicePoint, Inc.* ...................... 8,200 528,900 Citigroup Inc. .......................... 112,100 5,548,950 Commerce Bancshares, Inc. ............... 7,604 323,161 Cullen/Frost Bankers, Inc. .............. 20,000 1,097,500 Dime Bancorp, Inc. ...................... 46,800 1,237,275 Equity Residential Prop. Tr. ............ 28,600 1,156,512 Finova Group, Inc ....................... 32,400 1,747,575 First Union Corp. ....................... 41,400 2,517,637 Fleet Financial Group, Inc. ............. 45,200 2,019,875 Frontier Insurance Group, Inc. .......... 40,000 515,000 Glenborough Realty Trust, Inc. .......... 60,000 1,222,500 HCC Insurance Holdings, Inc. ............ 64,000 1,128,000 Heller Financial, Inc. .................. 65,000 1,909,375 Horace Mann Educators Corp. ............. 48,000 1,368,000 Household International Corp. ........... 50,598 2,004,945 Keystone Financial, Inc. ................ 28,000 1,036,000 Kimco Realty Corp ....................... 29,000 1,150,937 Loews Corp. ............................. 20,100 1,974,825 Mack-Cali Realty Corp. .................. 38,000 1,173,250 Morgan Stanley Dean Witter .............. 40,000 2,840,000 National City Corp. ..................... 17,980 1,303,550 Natl. Commerce Bancorporation ........... 35,000 658,437 North Fork Bancorporation, Inc. ......... 51,000 1,220,812 Oriental Financial Group ................ 62,400 1,953,900 Providian Financial Corp. ............... 24,300 1,822,500 Public Storage, Inc. .................... 40,000 1,082,500 SL Green Realty Corp. ................... 66,000 1,427,250
The accompanying notes are an integral part of these financial statements. 44 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE ---------- -------------- ACTIVE ASSETS (CONTINUED): FINANCIAL (8.3%) (CONTINUED) Sovereign Bancorp, Inc. ................. 23,000 $ 327,750 Spieker Pptys, Inc ...................... 33,000 1,142,625 Summit Bancorp .......................... 25,000 1,092,187 Telebanc Financial Corp.* ............... 28,000 952,000 Torchmark Corp. ......................... 22,100 780,406 Waddell & Reed Financial, Inc. .......... 6,665 155,501 Washington Mutual, Inc. ................. 47,629 1,818,832 ------------ 60,687,659 ------------ INDUSTRIAL (2.6%) AFC Cable Systems, Inc.* ................ 20,100 675,862 BISYS Group, Inc.* ...................... 30,400 1,569,400 Burlington Northern Santa Fe ............ 51,633 1,742,613 Covenant Transport, Inc. Cl A* .......... 57,000 1,018,875 Dycom Industries, Inc.* ................. 10,500 599,812 First Data Corp. ........................ 47,600 1,508,325 Heico Corp. ............................. 10,800 340,875 Hooper Holmes, Inc. ..................... 41,750 1,210,750 Kansas City Southern Inds. .............. 33,200 1,633,025 Pittway Corp. ........................... 12,000 396,750 QRS Corp.* .............................. 17,800 854,400 Semtech Corp.* .......................... 30,000 1,076,250 Sherwin-Williams Co. .................... 43,200 1,269,000 Siebel Systems, Inc.* ................... 13,400 454,762 Swift Transportation Co., Inc.* ......... 37,000 1,037,158 Tetra Tech, Inc.* ....................... 45,900 1,242,168 U.S. Xpress Enterprises, Inc. Cl A* ..... 38,000 570,000 Williams Cos., Inc. ..................... 40,000 1,247,500 Young & Rubicam, Inc.* .................. 11,500 372,312 ------------ 18,819,837 ------------ TECHNOLOGY (12.9%) 3Com Corp.* ............................. 110,000 4,929,375 Altera Corp.* ........................... 16,000 974,000 Alza Corp.* ............................. 41,400 2,163,150 Applied Materials, Inc.* ................ 66,800 2,851,525 Ascend Communications, Inc.* ............ 12,000 789,000 ASM Lithography Holding NV* ............. 22,800 695,400 At Home Corp--Ser A* .................... 12,100 898,425 AT&T Corp. .............................. 18,000 1,354,500 Atmel Corp.* ............................ 76,200 1,166,812 Centocor, Inc.* ......................... 19,300 870,912
SHARES VALUE ---------- -------------- ACTIVE ASSETS (CONTINUED): TECHNOLOGY (12.9%) (CONTINUED) Ceridian Corp.* ......................... 22,700 $ 1,584,743 Ciena Corp.* ............................ 69,000 1,009,125 Cisco Systems, Inc.* .................... 240,000 22,275,000 Citrix Systems, Inc.* ................... 17,600 1,708,300 Compaq Computer Corp. ................... 235,000 9,855,312 Dionex Corp.* ........................... 33,000 1,208,625 Excite, Inc.* ........................... 18,600 782,362 Hewlett-Packard Co. ..................... 30,500 2,083,531 INKTOMI CORP* ........................... 2,600 336,375 Intel Corp. ............................. 90,000 10,670,625 Intl. Business Machines Corp. ........... 15,852 2,928,657 Intuit, Inc.* ........................... 11,300 819,250 Linear Technology Corp. ................. 63,900 5,723,043 Maxim Integrated Products, Inc.* ........ 79,200 3,460,050 Maxtor Corp.* ........................... 27,800 389,200 Newbridge Networks Corp.* ............... 11,800 358,425 Novellus Systems, Inc.* ................. 19,000 940,500 Parametric Technology Corp.* ............ 78,400 1,283,800 Raytheon Co. Cl B ....................... 48,076 2,560,047 Sanmina Corp.* .......................... 12,900 806,250 Teradyne, Inc.* ......................... 27,000 1,144,125 Visual Networks, Inc.* .................. 10,000 375,000 Xerox Corp. ............................. 31,000 3,658,000 Xilinx, Inc.* ........................... 32,000 2,084,000 ------------ 94,737,444 ------------ UTILITIES (1.4%) AES Corp.* .............................. 9,000 426,375 CILCORP, Inc. ........................... 8,000 489,500 Commonwealth Energy System .............. 12,000 486,000 Consolidated Natural Gas Co. ............ 21,000 1,134,000 Entergy Corp. ........................... 61,300 1,907,962 MCI WorldCom, Inc.* ..................... 37,441 2,686,391 MDU Resources Group ..................... 15,000 394,688 Montana Pwr. Co. ........................ 15,000 848,437 SBC Communications, Inc. ................ 27,400 1,469,352 SIGCORP, Inc. ........................... 12,000 429,000 ------------ 10,271,705 ------------ TOTAL ACTIVE ASSETS -- COMMON STOCKS (Cost: $200,677,628) 39.8%........................ 292,086,069 ------------
- --------- * Non-income producing security. The accompanying notes are an integral part of these financial statements. 45 MUTUAL OF AMERICA INVESTMENT CORPORATION (ALL AMERICA FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
RATE MATURITY FACE AMOUNT VALUE ---------- ---------- ------------- -------------- ACTIVE ASSETS (CONTINUED): SHORT-TERM DEBT SECURITIES: U.S. GOVERNMENT (0.3%) U.S. Treasury Bill ............................. 4.42% 01/21/99 $ 200,000 $ 199,508 U.S. Treasury Bill ............................. 4.45 01/21/99 1,400,000 1,396,527 ------------ 1,596,035 ------------ COMMERCIAL PAPER (1.1%) Duke Energy Corp ............................... 5.25 01/04/99 185,000 184,919 Ford Motor Credit Co. .......................... 6.09 01/04/99 2,000,000 1,998,984 Grainger (WW) .................................. 5.00 01/07/99 400,000 399,667 Koch Industries ................................ 5.20 01/04/99 5,765,000 5,762,502 ------------ 8,346,072 ------------ TOTAL ACTIVE ASSETS -- SHORT-TERM DEBT SECURITIES (Cost: $9,942,107) 1.4%........................................................... 9,942,107 ------------ TOTAL ACTIVE ASSETS (Cost: $210,619,735) 41.2%........................................................ 302,028,176 ------------ TOTAL INVESTMENTS (Cost: $403,576,469) 100.0%....................................................... $733,352,393 ============
The accompanying notes are an integral part of these financial statements. 46 MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS: COMMON STOCKS 3Com Corp. ................................. 13,802 $ 618,502 Abbott Laboratories ........................ 58,812 2,881,788 Adobe Systems, Inc. ........................ 2,586 120,896 Advanced Micro Devices, Inc. ............... 5,564 161,008 Aeroquip-Vickers, Inc. ..................... 1,095 32,782 AES Corp. .................................. 6,826 323,382 Aetna, Inc. ................................ 5,540 435,583 Air Products & Chemicals, Inc. ............. 9,090 363,600 AirTouch Communications, Inc. .............. 22,216 1,602,329 Alberto-Culver Co. Cl B .................... 2,207 58,899 Albertson's, Inc. .......................... 9,540 607,579 Alcan Aluminum Ltd. ........................ 8,827 238,881 Alcoa, Inc. ................................ 7,114 530,438 Allegheny Teledyne, Inc. ................... 7,631 155,959 Allergan, Inc. ............................. 2,551 165,177 AlliedSignal, Inc. ......................... 21,704 961,759 Allstate Corp. ............................. 31,796 1,228,121 Alltel Corp. ............................... 10,640 636,405 Alza Corp. ................................. 3,354 175,247 Amerada Hess Corp. ......................... 3,547 176,463 Ameren Corp. ............................... 5,325 227,311 American Electric Power, Inc. .............. 7,391 347,839 American Express Co. ....................... 17,520 1,791,420 American General Corp. ..................... 9,845 767,910 American Greetings Corp. Cl A .............. 2,825 116,002 American Home Products Corp. ............... 51,107 2,877,963 American Int'l. Group, Inc. ................ 40,730 3,935,536 American Stores Co. ........................ 10,608 391,833 Ameritech Corp. ............................ 42,711 2,706,810 Amgen, Inc. ................................ 9,861 1,031,091 Amoco Corp. ................................ 37,032 2,235,807 AMP, Inc. .................................. 8,516 443,364 AMR Corp. .................................. 7,077 420,197 Anadarko Petroleum Corp. ................... 4,658 143,816 Andrew Corp. ............................... 3,436 56,694 Anheuser-Busch Cos., Inc. .................. 18,521 1,215,441 Aon Corp. .................................. 6,545 362,429 Apache Corp. ............................... 3,827 96,871 Apple Computer, Inc. ....................... 5,163 211,360 Applied Materials, Inc. .................... 14,215 606,803 Archer-Daniels-Midland Co. ................. 23,250 399,609 Armco, Inc. ................................ 4,186 18,314 Armstrong World Inds., Inc. ................ 1,554 93,726 Asarco, Inc. ............................... 1,539 23,181 Ascend Communications, Inc. ................ 8,385 551,314 Ashland, Inc. .............................. 2,948 142,610 Associates First Capital Corp. ClA ......... 28,004 1,186,670 AT&T Corp. ................................. 70,001 5,267,575 Atlantic Richfield Co. ..................... 12,453 812,558 Autodesk, Inc. ............................. 1,815 77,478 Automatic Data Processing, Inc ............. 11,683 936,831 AutoZone, Inc. ............................. 5,921 195,023 Avery Dennison Corp. ....................... 4,552 205,125 Avon Products, Inc. ........................ 10,226 452,501 Baker Hughes, Inc. ......................... 12,328 218,052 Ball Corp. ................................. 1,178 53,894 Baltimore Gas & Electric Co. ............... 5,739 177,192 Banc One Corp. ............................. 45,293 2,312,774 Bank of New York Co., Inc. ................. 29,478 1,186,490 Bankamerica Corp. .......................... 67,068 4,032,464 BankBoston Corp. ........................... 11,398 443,810 Bankers Trust New York Corp. ............... 3,693 315,521 Bard (C.R.), Inc. .......................... 2,204 109,098 Barrick Gold Corp. ......................... 14,476 282,282
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Battle Mountain Gold Co. ................... 8,919 $ 36,791 Bausch & Lomb, Inc. ........................ 2,158 129,480 Baxter International, Inc. ................. 11,077 712,390 BB & T Corp. ............................... 11,399 459,522 Bear Stearns Cos., Inc. .................... 4,415 165,011 Becton Dickinson & Co. ..................... 9,556 407,922 Bell Atlantic Corp. ........................ 60,249 3,193,197 BellSouth Corp. ............................ 75,786 3,779,827 Bemis, Inc. ................................ 2,072 78,607 Berkshire Hathaway, Inc. Cl A .............. 10 718,900 Bestfoods .................................. 11,208 596,826 Bethlehem Steel Corp. ...................... 4,979 41,699 Biomet, Inc. ............................... 4,345 174,886 Black & Decker Corp. ....................... 3,405 190,893 Block (H. & R.), Inc. ...................... 4,068 183,060 BMC Software, Inc. ......................... 8,352 372,186 Boeing Co. ................................. 38,719 1,263,207 Boise Cascade Corp. ........................ 2,186 67,766 Boston Scientific Corp. .................... 15,090 404,601 Briggs & Stratton Corp. .................... 936 46,683 Bristol-Myers Squibb Co. ................... 38,504 5,152,317 Brown-Forman Corp. Cl B .................... 2,672 202,237 Browning-Ferris Inds., Inc. ................ 6,744 191,783 Brunswick Corp. ............................ 3,859 95,510 Burlington Northern Santa Fe Corp. ......... 18,348 619,245 Burlington Resources, Inc. ................. 6,873 246,139 Cabletron Systems, Inc. .................... 6,140 51,423 Campbell Soup Co. .......................... 17,428 958,540 Capital One Financial Corp. ................ 2,545 292,675 Cardinal Health, Inc. ...................... 7,770 589,549 Carolina Power & Light Co. ................. 5,874 276,445 Case Corp. ................................. 2,896 63,169 Caterpillar, Inc. .......................... 13,900 639,400 CBS Corp. .................................. 27,364 896,171 Cendant Corp. .............................. 33,037 629,768 Centex Corp. ............................... 2,308 104,004 Central & South West Corp. ................. 8,239 226,058 Ceridian Corp. ............................. 2,819 196,801 Champion International Corp. ............... 3,733 151,187 Charles Schwab Corp. ....................... 15,540 873,154 Chase Manhattan Corp. ...................... 32,777 2,230,885 Chevron Corp. .............................. 25,284 2,096,992 Chubb Corp. ................................ 6,315 409,686 CIGNA Corp. ................................ 8,002 618,655 Cincinnati Financial Corp .................. 6,472 237,037 CINergy Corp. .............................. 6,123 210,478 Circuit City Group, Inc. ................... 3,832 191,361 Cisco Systems, Inc. ........................ 61,193 5,679,475 Citigroup Inc. ............................. 88,046 4,358,277 Clear Channel Communications, Inc. ......... 9,622 524,399 Clorox Co. ................................. 4,032 470,988 Coastal Corp. .............................. 8,245 288,060 Coca-Cola Co. .............................. 95,530 6,388,569 Coca-Cola Enterprises, Inc. ................ 15,188 542,971 Colgate-Palmolive Co. ...................... 11,347 1,053,853 Columbia Energy Group ...................... 3,232 186,648 Columbia/HCA Healthcare Corp. .............. 24,975 618,131 Comcast Corp. Cl A ......................... 14,312 839,936 Comerica, Inc. ............................. 6,078 414,444 Compaq Computer Corp. ...................... 65,880 2,762,843 Computer Associates Intl., Inc ............. 20,859 889,115 Computer Sciences Corp. .................... 6,051 389,911 Conagra, Inc. .............................. 18,963 597,335 Conseco, Inc. .............................. 12,023 367,453
The accompanying notes are an integral part of these financial statements. 47 MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Consolidated Edison, Inc. ........................ 9,139 $ 483,225 Consolidated Natural Gas Co. ..................... 3,718 200,772 Consolidated Stores Corp. ........................ 4,181 84,404 Cooper Industries, Inc. .......................... 4,009 191,179 Cooper Tire & Rubber Co. ......................... 3,057 62,477 Coors (Adolph) Co. Cl B .......................... 1,408 79,464 Corning Inc. ..................................... 9,007 405,315 Costco Co. ....................................... 8,370 604,209 Countrywide Credit Industries Inc. ............... 4,213 211,440 Crane Co. ........................................ 2,662 80,359 Crown Cork & Seal, Inc. .......................... 4,829 148,794 CSX Corp. ........................................ 8,503 352,875 Cummins Engine Co., Inc. ......................... 1,490 52,895 CVS Corp. ........................................ 15,112 831,160 Cyprus Amax Minerals Co. ......................... 3,635 36,350 Dana Corp. ....................................... 6,401 261,641 Danaher Corp. .................................... 5,191 281,936 Darden Restaurants, Inc. ......................... 5,540 99,720 Data General Corp. ............................... 1,907 31,346 Dayton-Hudson Corp. .............................. 16,965 920,351 Deere & Co. ...................................... 9,243 306,174 Dell Computer Corp. .............................. 49,352 3,611,950 Delta Air Lines, Inc. ............................ 5,534 287,768 Deluxe Corp. ..................................... 3,137 114,697 Dillard's Inc. Cl A .............................. 4,178 118,551 Disney (Walt) Co. ................................ 79,375 2,381,250 Dollar General Corp. ............................. 6,983 164,973 Dominion Resources, Inc. ......................... 7,592 354,926 Donnelley (R.R.) & Sons Co. ...................... 5,263 230,585 Dover Corp. ...................................... 8,654 316,953 Dow Chemical Co. ................................. 8,578 780,062 Dow Jones & Co., Inc. ............................ 3,615 173,972 DTE Energy Co. ................................... 5,630 241,386 Du Pont (E.I.) de Nemours & Co ................... 43,631 2,315,170 Duke Energy Corp. ................................ 13,988 896,106 Dun & Bradstreet Corp. ........................... 6,662 210,269 Eastern Enterprises .............................. 793 34,694 Eastman Chemical Co. ............................. 3,071 137,427 Eastman Kodak Co. ................................ 12,524 901,728 Eaton Corp. ...................................... 2,771 195,875 Ecolab Inc. ...................................... 4,997 180,829 Edison International ............................. 13,668 380,996 EG&G, Inc. ....................................... 1,763 49,033 Electronic Data Systems Corp. .................... 19,083 958,921 EMC Corp. ........................................ 19,448 1,653,080 Emerson Electric Co. ............................. 17,182 1,039,511 Engelhard Corp. .................................. 5,610 109,395 Enron Corp. ...................................... 12,749 727,490 Entergy Corp. .................................... 9,563 297,648 Equifax, Inc. .................................... 5,740 196,236 Exxon Corp. ...................................... 94,217 6,889,618 FDX Corp. ........................................ 5,710 508,190 Federated Department Stores, Inc. ................ 7,941 345,930 Federal Home Loan Mortgage Corp. ................. 26,337 1,697,090 Fifth Third Bancorp .............................. 10,397 741,436 First Data Corp. ................................. 17,328 549,081 First Union Corp. ................................ 38,395 2,334,896 FirstEnergy Corp. ................................ 9,187 299,152 Fleet Financial Group, Inc. ...................... 22,058 985,717 Fleetwood Enterprises, Inc. ...................... 1,508 52,403 Fluor Corp. ...................................... 2,936 124,964 FMC Corp. ........................................ 1,346 75,376 Federal National Mortgage Association ............ 40,243 2,977,982 Ford Motor Co. ................................... 46,892 2,751,974
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Fort James Corp. ................................. 8,554 $ 342,160 Fortune Brands, Inc. ............................. 6,713 212,299 Foster Wheeler Corp. ............................. 1,581 20,849 FPL Group, Inc. .................................. 7,043 434,025 Franklin Resources, Inc. ......................... 9,818 314,176 Fred Meyer, Inc. ................................. 5,936 357,644 Freeport-McMoran Copper & Gold. Inc. Cl B .............................................. 7,021 73,282 Frontier Corp. ................................... 6,645 225,930 Fruit of the Loom, Inc. Cl A ..................... 2,792 38,565 Gannett Co., Inc. ................................ 10,913 703,889 Gap, Inc. ........................................ 22,456 1,263,150 Gateway 2000, Inc. ............................... 6,039 309,121 General Dynamics Corp. ........................... 4,905 287,556 General Electric Co. ............................. 127,068 12,968,878 General Instrument Corp. ......................... 6,487 220,153 General Mills, Inc. .............................. 5,927 460,824 General Motors Corp. ............................. 25,390 1,816,972 Genuine Parts Co. ................................ 6,946 232,257 Georgia-Pacific Group ............................ 3,409 199,640 Gillette Co. ..................................... 42,989 2,076,906 Golden West Financial Corp. ...................... 2,223 203,821 Goodrich (B.F.) Co. .............................. 2,830 101,526 Goodyear Tire & Rubber Co. ....................... 6,103 307,820 GPU, Inc. ........................................ 4,963 219,303 Grainger (W.W.), Inc. ............................ 3,793 157,884 Great Atlantic & Pac. Tea Inc. ................... 1,485 43,993 Great Lakes Chemical Corp. ....................... 2,291 91,640 GTE Corp. ........................................ 37,358 2,428,270 Guidant Corp. .................................... 5,853 645,293 Halliburton Co. .................................. 17,018 504,158 Harcourt General, Inc. ........................... 2,750 146,266 Harnischfeger Industries, Inc. ................... 1,855 18,898 Harrah's Entertainment, Inc. ..................... 3,924 61,558 Harris Corp. ..................................... 3,105 113,721 Hartford Financial Services Group ................ 9,147 501,942 Hasbro, Inc. ..................................... 5,156 186,261 HBO & Co. ........................................ 18,027 517,150 HCR Manor Care, Inc. ............................. 4,210 123,669 HealthSouth Corp. ................................ 16,342 252,280 Heinz (H.J.) Co. ................................. 14,030 794,449 Helmerich & Payne, Inc. .......................... 1,952 37,820 Hercules, Inc. ................................... 3,683 100,822 Hershey Food Corp. ............................... 5,555 345,452 Hewlett-Packard Co. .............................. 40,201 2,746,231 Hilton Hotels Corp. .............................. 10,106 193,277 Home Depot, Inc. ................................. 60,575 3,706,433 Homestake Mining Co. ............................. 9,263 85,104 Honeywell, Inc. .................................. 4,896 368,730 Household International Corp. .................... 18,710 741,384 Houston Industries, Inc. ......................... 11,024 354,146 Humana, Inc. ..................................... 6,460 115,069 Huntington Bancshares, Inc. ...................... 8,210 246,813 Ikon Office Solutions, Inc. ...................... 5,255 44,996 Illinois Tool Works, Inc. ........................ 9,698 562,484 IMS Health, Inc. ................................. 6,207 468,241 Inco Ltd. ........................................ 6,443 68,054 Ingersoll Rand Co. ............................... 6,423 301,480 Intel Corp. ...................................... 64,601 7,659,256 International Paper Co. .......................... 11,934 534,792 Interpublic Group of Cos., Inc. .................. 5,293 422,117 International Business Machines Corp. ............ 36,159 6,680,375 International Flavors & Fragrances, Inc. ......... 4,182 184,792 ITT Industries, Inc. ............................. 4,022 159,875
The accompanying notes are an integral part of these financial statements. 48 MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Jefferson-Pilot Corp. ...................... 4,129 $ 309,675 Johnson & Johnson .......................... 52,187 4,377,185 Johnson Controls, Inc. ..................... 3,284 193,756 Jostens, Inc. .............................. 1,546 37,605 Kaufman & Broad Home Corp. ................. 1,522 43,758 Kellogg Co. ................................ 15,881 541,939 Kerr-McGee Corp. ........................... 1,852 70,839 KeyCorp .................................... 17,640 564,480 Kimberly Clark Corp. ....................... 21,000 1,144,500 King World Productions, Inc. ............... 2,838 83,544 KLA Tencor Corp. ........................... 3,372 146,261 Kmart Corp. ................................ 18,937 289,973 Knight-Ridder, Inc. ........................ 3,045 155,676 Kohl's Corp. ............................... 6,129 376,550 Kroger Co. ................................. 9,938 601,249 Laidlaw, Inc. .............................. 12,756 128,357 Lehman Brothers Holdings, Inc. ............. 4,600 202,688 Lilly (Eli) & Co. .......................... 42,617 3,787,586 Limited, Inc. .............................. 8,810 256,591 Lincoln National Corp. ..................... 3,899 318,987 Liz Claiborne, Inc. ........................ 2,563 80,895 Lockheed Martin Corp. ...................... 7,589 643,168 Loews Corp. ................................ 4,463 438,490 Longs Drug Stores Corp. .................... 1,499 56,213 Louisiana-Pacific Corp. .................... 4,262 78,048 Lowe's Companies, Inc. ..................... 13,576 694,922 LSI Logic Corp. ............................ 5,463 88,091 Lucent Technologies, Inc. .................. 51,035 5,613,850 Mallinckrodt, Inc. ......................... 2,840 87,508 Marriott International, Inc. Cl A .......... 9,915 287,535 Marsh & McLennan Cos., Inc. ................ 9,960 582,038 Masco Corp. ................................ 13,194 379,328 Mattel, Inc. ............................... 11,391 259,857 May Department Stores Co. .................. 8,960 540,960 Maytag Corp. ............................... 3,487 217,066 MBIA Inc. .................................. 3,789 248,416 MBNA Corp. ................................. 29,176 727,577 McDermott International, Inc. .............. 2,343 57,843 McDonald's Corp. ........................... 26,219 2,009,031 McGraw-Hill Cos., Inc. ..................... 3,862 393,441 MCI WorldCom, Inc. ......................... 71,051 5,097,909 Mead Corp. ................................. 4,039 118,393 MediaOne Group, Inc. ....................... 23,631 1,110,657 Medtronic, Inc. ............................ 19,003 1,410,973 Mellon Bank Corp. .......................... 10,099 694,306 Mercantile Bancorporation .................. 6,098 281,270 Merck & Co., Inc. .......................... 46,157 6,816,812 Meredith Corp. ............................. 2,049 77,606 Merrill Lynch & Co., Inc. .................. 13,746 917,546 MGIC Investment Corp. ...................... 4,429 176,330 Micron Technology, Inc. .................... 8,256 417,444 Microsoft Corp. ............................ 96,690 13,409,653 Milacron, Inc. ............................. 1,534 29,530 Millipore Corp. ............................ 1,700 48,344 Minnesota Mining & Mfg. Co. ................ 15,553 1,106,207 Mirage Resorts, Inc. ....................... 6,968 104,085 Mobil Corp. ................................ 30,221 2,633,005 Monsanto Co. ............................... 24,279 1,153,253 Moore Corp., Ltd. .......................... 3,433 37,763 Morgan (J.P.) & Co., Inc. .................. 6,775 711,798 Morgan Stanley Dean Witter Co. ............. 22,386 1,589,406 Morton International, Inc. ................. 4,702 115,199 Motorola, Inc. ............................. 23,196 1,416,406 NACCO Industries, Inc. Cl A ................ 317 29,164
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Nalco Chemical Co. ......................... 2,569 $ 79,639 National City Corp. ........................ 12,738 923,505 National Semiconductor Corp. ............... 6,374 86,049 National Service Industries ................ 1,647 62,586 Navistar International Corp. ............... 2,678 76,323 New Century Energies, Inc. ................. 4,322 210,698 New York Times Co. Cl A .................... 7,067 245,137 Newell Co. ................................. 6,184 255,090 Newmont Mining Corp. ....................... 6,489 117,208 Nextel Communications, Inc. Cl A ........... 11,088 261,954 Niagara Mohawk Power Corp. ................. 7,270 117,229 Nicor, Inc. ................................ 1,862 78,670 Nike, Inc. Cl B ............................ 11,167 452,961 Nordstrom, Inc. ............................ 5,919 205,315 Norfolk Southern Corp. ..................... 14,699 465,775 Northern States Power Co. .................. 5,850 162,338 Northern Telecom, Ltd. ..................... 25,369 1,271,631 Northern Trust Corp. ....................... 4,328 377,889 Northrop Grumman Corp. ..................... 2,627 192,099 Novell, Inc. ............................... 13,647 247,352 Nucor Corp. ................................ 3,417 147,785 Occidental Petroleum Corp. ................. 13,701 231,204 Omnicom Group, Inc. ........................ 6,607 383,206 Oneok, Inc. ................................ 1,225 44,253 Oracle Corp. ............................... 37,781 1,629,306 Oryx Energy Co. ............................ 4,120 55,363 Owens Corning .............................. 2,095 74,242 Owens Illinois, Inc. ....................... 5,987 183,352 Paccar, Inc. ............................... 3,031 124,650 PacifiCorp ................................. 11,537 242,998 Pall Corp. ................................. 4,816 121,905 Parametric Technology Corp. ................ 10,500 171,938 Parker Hannifin Corp. ...................... 4,292 140,563 Paychex, Inc. .............................. 6,333 325,754 Peco Energy Co. ............................ 8,637 359,515 Penney (J.C.) Co., Inc. .................... 9,741 456,609 PennzEnergy Co. ............................ 1,851 30,194 Pennzoil-Quaker State Co. .................. 1,851 27,302 Peoples Energy Corp. ....................... 1,370 54,629 Peoplesoft, Inc. ........................... 8,943 169,358 Pep Boys-Manny, Moe & Jack ................. 2,463 38,638 PepsiCo, Inc. .............................. 56,860 2,327,706 Perkin-Elmer Corp. ......................... 1,906 185,954 Pfizer, Inc. ............................... 50,293 6,308,628 PG & E Corp. ............................... 14,805 466,358 Pharmacia & Upjohn, Inc. ................... 19,716 1,116,419 Phelps Dodge Corp. ......................... 2,277 115,842 Phillip Morris Cos., Inc. .................. 94,285 5,044,248 Phillips Petroleum Co. ..................... 9,867 420,581 Pioneer Hi-Bred Intl., Inc. ................ 9,479 255,933 Pitney Bowes, Inc. ......................... 10,617 701,386 Placer Dome, Inc. .......................... 9,703 111,585 PNC Bank Corp. ............................. 11,675 631,909 Polaroid Corp. ............................. 1,721 32,161 Potlatch Corp. ............................. 1,126 41,521 PP&L Resources, Inc. ....................... 5,844 162,902 PPG Industries, Inc. ....................... 6,884 400,993 Praxair, Inc. .............................. 6,125 215,906 Proctor & Gamble Co. ....................... 51,419 4,695,197 Progressive Corp. of Ohio .................. 2,814 476,621 Provident Companies, Inc. .................. 5,251 217,917 Providian Financial Corp. .................. 7,333 549,975 Public Svc. Enterprise Group, Inc. ......... 9,002 360,080 Pulte Corp. ................................ 1,655 46,030
The accompanying notes are an integral part of these financial statements. 49 MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Quaker Oats Co. ................................. 5,377 $ 319,932 Ralston Purina Co. .............................. 12,295 398,051 Raychem Corp. ................................... 3,254 105,145 Raytheon Co. Cl B ............................... 13,149 700,184 Reebok International Ltd. ....................... 2,186 32,517 Regions Financial Corp. ......................... 8,571 345,518 Republic New York Corp. ......................... 4,192 190,998 Reynolds Metals Co. ............................. 2,498 131,613 Rite-Aid Corp. .................................. 10,006 495,922 RJR Nabisco Holdings Corp. ...................... 12,607 374,270 Rockwell Intl., Corp. ........................... 7,409 359,800 Rohm & Haas Co. ................................. 6,452 194,367 Rowan Cos., Inc. ................................ 3,372 33,720 Royal Dutch Petroleum Co. ....................... 83,221 3,984,205 Rubbermaid, Inc. ................................ 5,814 182,778 Russell Corp. ................................... 1,410 28,641 Ryder System, Inc. .............................. 2,884 74,984 Safeco Corp. .................................... 5,280 226,710 Safeway, Inc. ................................... 18,870 1,149,891 Sara Lee Corp. .................................. 35,398 997,781 SBC Communications, Inc. ........................ 75,914 4,070,888 Schering-Plough Corp. ........................... 56,948 3,146,377 Schlumberger, Ltd. .............................. 21,092 972,869 Scientific-Atlanta, Inc. ........................ 3,059 69,783 Seagate Technology .............................. 9,433 285,348 Seagram, Ltd. ................................... 15,276 580,488 Sealed Air Corp. ................................ 3,241 165,494 Sears Roebuck & Co. ............................. 14,846 630,955 Sempra Energy ................................... 9,286 235,632 Service Corp. International ..................... 9,935 378,151 Shared Medical Systems Corp. .................... 1,021 50,922 Sherwin-Williams Co. ............................ 6,734 197,811 Sigma-Aldrich Corp. ............................. 3,903 114,651 Silicon Graphics, Inc. .......................... 7,327 94,335 SLM Holding Corp. ............................... 6,422 308,256 Snap-On, Inc. ................................... 2,297 79,964 Sonat, Inc. ..................................... 4,271 115,584 Southern Co. .................................... 27,066 786,606 Southwest Airlines Co. .......................... 12,991 291,486 Springs Industries, Inc. ........................ 740 30,664 Sprint Corp. (PCS Group) ........................ 16,098 372,266 Sprint Corp. (FON Group) ........................ 16,709 1,405,645 St. Jude Medical, Inc. .......................... 3,260 90,261 St. Paul Companies, Inc. ........................ 9,104 316,364 Stanley Works ................................... 3,444 95,571 Staples, Inc. ................................... 12,079 527,701 State Street Corp. .............................. 6,257 435,253 Summit Bancorp .................................. 6,890 301,007 Sun America, Inc. ............................... 8,413 682,505 Sun Microsystems, Inc. .......................... 14,702 1,258,859 Sunoco, Inc. .................................... 3,640 131,268 Suntrust Banks, Inc. ............................ 8,193 626,765 Supervalu, Inc. ................................. 4,666 130,648 Synovus Financial Corp. ......................... 10,209 248,844 Sysco Corp. ..................................... 13,102 359,486 Tandy Corp. ..................................... 3,931 161,908 Tektronix, Inc. ................................. 1,961 58,953 Tele-Communications, Inc. (TCI Gp. "A") ......... 20,848 1,153,155 Tellabs, Inc. ................................... 7,506 514,630 Temple-Inland, Inc. ............................. 2,176 129,064 Tenet Healthcare Corp. .......................... 11,963 314,029
SHARES VALUE --------------- --------------- INDEXED ASSETS (CONTINUED): COMMON STOCKS (CONTINUED) Tenneco, Inc. ................................... 6,584 $ 224,268 Texaco, Inc. .................................... 20,797 1,099,641 Texas Instruments, Inc. ......................... 15,156 1,296,785 Texas Utilities Co. ............................. 10,847 506,419 Textron, Inc. ................................... 6,140 466,256 Thermo Electron Corp. ........................... 6,184 104,742 Thomas & Betts Corp. ............................ 2,144 92,862 Time Warner, Inc. ............................... 47,549 2,951,010 Times Mirror Co. Cl A ........................... 3,084 172,704 Timken Co. ...................................... 2,411 45,508 TJX Companies ................................... 12,395 359,455 Torchmark Corp. ................................. 5,443 192,206 Toys R Us, Inc. ................................. 10,142 171,146 Transamerica Corp. .............................. 2,443 282,167 Tribune Co. ..................................... 4,602 303,732 Tricon Global Restaurants Inc. .................. 5,911 296,289 TRW, Inc. ....................................... 4,760 267,453 Tupperware Corp. ................................ 2,420 39,779 Tyco International Ltd. ......................... 24,892 1,877,790 U.S. Bancorp .................................... 28,123 998,367 U.S. West, Inc. ................................. 19,467 1,258,055 Unicom Corp. .................................... 8,418 324,619 Unilever N.V. ................................... 24,845 2,060,582 Union Camp Corp. ................................ 2,689 181,508 Union Carbide Corp. ............................. 5,286 224,655 Union Pacific Corp. ............................. 9,598 432,510 Union Pacific Resources Group, Inc. ............. 9,744 88,305 Union Planters Corp. ............................ 5,273 238,933 Unisys Corp. .................................... 9,757 336,007 United Healthcare Corp. ......................... 7,217 310,782 United Technologies Corp. ....................... 8,751 951,671 Unocal Corp. .................................... 9,368 273,429 UNUM Corp. ...................................... 5,366 313,240 US Airways Group, Inc. .......................... 3,387 176,124 UST, Inc. ....................................... 7,204 251,240 USX-Marathon Group .............................. 11,937 359,602 USX-U.S. Steel Group ............................ 3,370 77,510 V F Corp. ....................................... 4,722 221,344 Venator Group, Inc. ............................. 5,237 33,713 Viacom, Inc. Cl B ............................... 13,480 997,520 W.R. Grace & Co. ................................ 2,946 46,215 Wachovia Corp. .................................. 7,857 686,996 Wal-Mart Stores, Inc. ........................... 87,305 7,109,901 Walgreen Co. .................................... 19,276 1,128,851 Warner-Lambert Co. .............................. 31,805 2,391,338 Washington Mutual, Inc. ......................... 23,003 878,427 Waste Management, Inc. .......................... 22,191 1,034,655 Wells Fargo & Company ........................... 62,850 2,510,072 Wendy's International, Inc. ..................... 5,095 111,135 Westvaco Corp. .................................. 3,937 105,561 Weyerhaeuser Co. ................................ 7,722 392,374 Whirlpool Corp. ................................. 2,932 162,360 Willamette Industries, Inc. ..................... 4,323 144,821 Williams Cos., Inc. ............................. 16,454 513,159 Winn-Dixie Stores, Inc. ......................... 5,765 258,704 Worthington Industries, Inc. .................... 3,754 46,925 Wrigley (Wm.) Jr. Co. ........................... 4,510 403,927 Xerox Corp. ..................................... 12,739 1,503,202 ----------- TOTAL INDEXED ASSETS -- COMMON STOCKS (Cost: $261,989,198) 93.8% .................... 384,971,838 -----------
The accompanying notes are an integral part of these financial statements. 50 MUTUAL OF AMERICA INVESTMENT CORPORATION (EQUITY INDEX FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- ------------ --------------- ACTIVE PORTION: SHORT-TERM DEBT SECURITIES: U.S. GOVERNMENT (0.3%) U.S. Treasury Bill(a) ............. 4.18% 02/18/99 $ 500,000 $ 497,183 U.S. Treasury Bill(a) ............. 4.29 02/04/99 500,000 497,964 U.S. Treasury Bill(a) ............. 4.35 04/01/99 150,000 148,368 ------------ 1,143,515 ------------ COMMERCIAL PAPER (5.9%) Abbott Laboratories ............... 5.50 01/08/99 4,437,000 4,432,249 IBM Credit Corp. .................. 5.65 01/05/99 5,190,000 5,186,736 Lucent Technologies, Inc. ......... 4.95 01/07/99 7,317,000 7,310,963 SBC Communications, Inc. .......... 5.95 01/04/99 7,236,000 7,232,410 ------------ 24,162,358 ------------ TOTAL SHORT-TERM DEBT SECURITIES (Cost: $25,305,873) 6.2% ........................................... 25,305,873 ------------ TOTAL INVESTMENTS (Cost: $287,295,071) 100.0% ........................................ $410,277,711 ============
FUTURES CONTRACTS OUTSTANDING AS OF DECEMBER 31, 1998
UNDERLYING FACE UNREALIZED EXPIRATION DATE AMOUNT AT VALUE GAIN ----------------- ----------------- ------------- PURCHASED 82 S&P 500 Stock Index Futures Contracts .. March 1999 $ 25,532,750 $1,215,938 ============ ==========
The face value of futures purchased and outstanding as percentage of total investment in securities: 6.2%. - --------- (a) This security has been segregated by the Custodian to cover initial margin requirements on open futures contracts. The accompanying notes are an integral part of these financial statements. 51 MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- --------------- --------------- LONG-TERM DEBT SECURITIES: U.S. GOVERNMENT (2.4%) U.S. Treasury Note ..................... 6.50% 08/15/05 $ 10,000,000 $ 10,990,600 ------------ AGENCIES/OTHER GOVERNMENTS (43.2%) Connecticut Housing Fin. Auth. ......... 7.63 05/15/21 2,500,000 2,574,443 FHLB ................................... 0.00 07/14/17 25,000,000 6,062,500 FHLB ................................... 0.00 07/07/22 50,000,000 8,539,000 FHLB ................................... 0.00 06/26/17 50,000,000 12,015,500 FHLB ................................... 0.00 07/07/17 125,000,000 30,351,250 FHLMC .................................. 6.50 04/15/08 775,000 780,324 FHLMC .................................. 7.75 07/15/05 73,428 73,474 FHLMC .................................. 7.00 10/15/06 473,325 473,917 FHLMC .................................. 6.38 11/15/06 1,100,000 1,101,716 FHLMC .................................. 6.00 04/15/08 500,000 500,155 FHLMC .................................. 7.00 09/15/16 1,380,361 1,382,087 FHLMC .................................. 0.00 05/22/28 60,000,000 7,968,600 FHLMC .................................. 0.00 08/26/22 250,000,000 39,415,000 FHLMC .................................. 7.50 07/15/20 126,157 126,354 FHLMC .................................. 5.00 08/15/19 1,250,000 1,236,325 FHLMC .................................. 8.00 07/15/06 530,841 549,086 FHLMC .................................. 7.00 12/15/14 179,657 179,319 FHLMC .................................. 7.00 05/15/06 1,000,000 1,005,930 FHLMC .................................. 7.50 04/01/07 214,232 214,541 FHLMC .................................. 8.50 02/15/21 651,300 653,944 FHLMC .................................. 8.50 08/01/02 388,949 397,972 FNMA ................................... 0.00 07/13/17 200,000,000 46,406,000 FNMA ................................... 5.00 04/25/21 600,000 588,558 FNMA ................................... 6.25 01/25/20 850,000 855,576 FNMA ................................... 7.00 12/25/18 500,000 502,030 FNMA ................................... 6.00 06/25/19 900,000 898,587 FNMA ................................... 7.00 10/25/05 1,236,162 1,243,109 FNMA ................................... 8.15 08/25/05 27,775 27,670 FNMA ................................... 9.30 05/25/19 60,778 60,930 FNMA ................................... 7.00 09/25/05 419,064 418,540 New York City .......................... 10.00 08/01/05 1,000,000 2,255,093 New York City .......................... 9.50 06/01/09 5,000,000 5,629,684 Pulaski County Arkansas PFB ............ 7.50 01/01/07 50,679 56,788 Republic of Iceland .................... 6.13 02/01/04 5,000,000 5,184,850 Suffolk County, New York ............... 5.88 11/01/05 4,000,000 4,119,200 Suffolk County, New York ............... 5.80 11/01/04 4,000,000 4,113,360 Tennessee Valley Authority ............. 7.85 06/15/44 10,000,000 10,722,300 ------------ 198,683,712 ------------ BASIC MATERIALS (6.7%) Fletcher Challenge Ltd. ................ 9.00 09/15/99 2,000,000 2,028,060 Georgia-Pacific Corp. .................. 8.63 04/30/25 7,000,000 7,376,740 Inco Ltd. .............................. 9.60 06/15/22 7,500,000 8,369,250
The accompanying notes are an integral part of these financial statements. 52 MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ----------- ---------- -------------- -------------- LONG-TERM DEBT SECURITIES (CONTINUED): BASIC MATERIALS (CONTINUED) Lyondell/Arco Petrochemical .............. 10.25% 11/01/10 $ 7,500,000 $ 7,919,925 Praxair, Inc. ............................ 6.90 11/01/06 5,000,000 5,122,300 30,816,275 CONSUMER, CYCLICAL (8.8%) Centex Corp. ............................. 8.75 03/01/07 2,000,000 2,143,820 Centex Corp. ............................. 7.38 06/01/05 5,000,000 5,062,450 Fruit of the Loom, Inc. .................. 7.88 10/15/99 1,000,000 1,002,280 Fruit of the Loom, Inc. .................. 7.00 03/15/11 2,500,000 2,344,150 Fruit of the Loom, Inc. .................. 7.38 11/15/23 1,250,000 1,112,038 Gannett Co., Inc. ........................ 5.85 05/01/00 3,500,000 3,526,740 Neiman Marcus Group, Inc. ................ 7.13 06/01/28 2,500,000 2,335,475 Polaroid Corp. ........................... 7.25 01/15/07 3,750,000 3,501,825 Shopko Stores, Inc. ...................... 9.00 11/15/04 5,000,000 5,671,350 Tommy Hilfiger USA, Inc. ................. 6.50 06/01/03 5,000,000 4,927,850 V. F Corp. ............................... 9.25 05/01/22 1,000,000 1,130,040 Valassis Communication, Inc. ............. 9.55 12/01/03 5,000,000 5,736,250 Venator Group, Inc. ...................... 7.00 10/15/02 2,000,000 1,959,600 ----------- 40,453,868 ----------- CONSUMER, NON-CYCLICAL (6.9%) Bausch & Lomb, Inc. ...................... 6.15 08/01/01 5,000,000 4,935,000 Bausch & Lomb, Inc. ...................... 6.38 08/01/03 5,250,000 5,156,603 Bausch & Lomb, Inc. ...................... 6.75 12/15/04 5,000,000 4,945,350 Panamerican Beverages, Inc. .............. 7.25 07/01/09 5,000,000 4,581,470 Ralston Purina Co. ....................... 8.63 02/15/22 7,500,000 9,094,050 Rhone-Poulenc S. A ....................... 7.75 01/15/02 3,000,000 3,121,680 ----------- 31,834,153 ----------- ENERGY (3.4%) Southern Union Co. ....................... 7.60 02/01/24 10,000,000 10,469,900 Tosco Corp. .............................. 8.25 05/15/03 5,000,000 5,398,850 ----------- 15,868,750 ----------- FINANCIAL (14.8%) Bear Stearns Cos., Inc. .................. 6.63 10/01/04 2,000,000 2,054,920 Berkley (W.R.) Corp. ..................... 8.70 01/01/22 5,000,000 5,969,600 Chase Manhattan Corp. .................... 6.88 12/12/12 5,000,000 5,216,100 Citicorp Mortgage Sec., Inc. ............. 6.25 03/25/24 358,687 357,790 Executive Risk, Inc. ..................... 7.13 12/15/07 5,000,000 5,409,550 Fairfax Financial Holdings LTD ........... 8.25 10/01/15 2,500,000 2,574,750 First American Financial ................. 7.55 04/01/28 1,500,000 1,546,275 Harleysville Group Inc. .................. 6.75 11/15/03 2,500,000 2,568,975 Lehman Brothers Holdings, Inc. ........... 0.00 07/28/28 10,000,000 1,154,900 Morgan (J.P.) & Co., Inc. ................ 0.00 04/15/27 32,500,000 4,132,700 Nationwide Health Properties, Inc. ....... 7.90 11/20/06 5,000,000 5,036,350 Progressive Corp. of Ohio ................ 10.00 12/15/00 1,500,000 1,617,465 Prudential Home Mtg. Secs Co. ............ 6.85 10/25/23 60,866 60,618
The accompanying notes are an integral part of these financial statements. 53 MUTUAL OF AMERICA INVESTMENT CORPORATION (BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- -------------- -------------- LONG-TERM DEBT SECURITIES (CONTINUED): FINANCIAL (CONTINUED) Rank Group Financial .................... 6.75% 11/30/04 $ 5,000,000 $ 4,877,850 Rodamco NV .............................. 7.30 05/15/05 5,000,000 5,318,100 Rodamco NV .............................. 7.75 05/15/15 5,000,000 5,400,800 Sun America, Inc. ....................... 9.95 02/01/12 5,000,000 6,882,750 Triad Guaranty, Inc. .................... 7.90 01/15/28 3,250,000 3,463,158 Vesta Insurance Group, Inc. ............. 8.75 07/15/25 5,000,000 4,404,250 ------------ 68,046,901 ------------ INDUSTRIAL (7.6%) Clark Equipment Co. ..................... 8.35 05/15/23 5,000,000 6,091,750 Geon Co. ................................ 7.50 12/15/15 3,750,000 3,983,625 Thermo Electron Corp. ................... 4.25 01/01/03 7,500,000 6,675,000 Thermo Instrument Systems, Inc .......... 4.00 01/15/05 10,000,000 8,162,500 Williams Cos., Inc. ..................... 6.50 11/15/02 10,000,000 10,095,300 ------------ 35,008,175 ------------ UTILITIES (4.9%) New Orleans Public Service .............. 8.00 03/01/06 4,000,000 4,172,800 Pacific Gas & Electric Co. .............. 8.75 01/01/01 2,000,000 2,135,060 Philadelphia Electric Co. ............... 7.13 08/15/23 5,000,000 5,213,800 UtiliCorp United, Inc. .................. 8.00 03/01/23 10,000,000 10,965,900 ------------ 22,487,560 ------------ TOTAL LONG-TERM DEBT SECURITIES (Cost: $440,233,067) 98.7% .................. 454,189,994 ------------ SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER (1.3%) .................. Koch Industries ......................... 5.20 01/04/99 3,071,000 3,069,669 PetroFina Delaware, Inc. ................ 5.53 01/05/99 3,000,000 2,998,152 ------------ TOTAL SHORT-TERM DEBT SECURITIES (Cost: $6,067,821) 1.3% .................... 6,067,821 ------------ TOTAL INVESTMENTS (Cost: $446,300,888) 100.0% ............................... $460,257,815 ============
- --------- Abbreviations: FHLB = Federal Home Loan Bank FHLMC = Federal Home Loan Mortgage Corporation FNMA = Federal National Mortgage Association PFB = Prison Finance Board The accompanying notes are an integral part of these financial statements. 54 MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- -------------- -------------- INTERMEDIATE-TERM DEBT: U.S. GOVERNMENT (16.1%) U.S. Treasury Note ......... 6.13% 07/31/00 $ 1,250,000 $ 1,277,538 U.S. Treasury Note ......... 5.38 02/15/01 2,200,000 2,233,682 ----------- 3,511,220 ----------- AGENCIES/OTHER (71.4%) FHLB ....................... 6.89 06/25/02 82,457 82,685 FHLMC ...................... 7.00 04/15/01 250,000 253,202 FHLMC ...................... 8.02 04/01/02 223,947 228,041 FHLMC ...................... 8.02 05/01/02 363,297 367,580 FHLMC ...................... 8.50 08/01/02 431,084 441,085 FHLMC ...................... 7.75 12/01/02 226,740 229,796 FHLMC ...................... 5.00 07/15/05 80,073 79,823 FHLMC ...................... 7.25 12/15/05 38,159 38,135 FHLMC ...................... 7.00 05/15/06 500,000 502,965 FHLMC ...................... 6.50 09/15/06 500,000 501,875 FHLMC ...................... 7.00 10/15/06 750,000 759,607 FHLMC ...................... 7.50 09/01/07 459,915 468,602 FHLMC ...................... 7.00 03/15/08 441,050 443,114 FHLMC ...................... 6.50 04/15/08 725,000 729,981 FHLMC ...................... 6.00 04/15/08 500,000 500,155 FHLMC ...................... 6.00 09/15/08 198,367 198,119 FHLMC ...................... 8.25 10/01/09 356,410 369,701 FHLMC ...................... 6.00 12/15/17 309,340 309,241 FHLMC ...................... 5.00 08/15/19 600,000 593,436 FHLMC ...................... 7.00 11/15/20 6,401 6,387 FHLMC ...................... 7.95 12/15/20 83,753 84,381 FHLMC ...................... 6.50 05/15/21 157,655 158,838 FHLMC ...................... 6.00 05/15/22 159,978 160,127 FNMA ....................... 0.00 12/01/01 190,337 179,318 FNMA ....................... 8.25 09/25/05 133,476 134,601 FNMA ....................... 7.00 09/25/05 293,345 292,978 FNMA ....................... 8.25 10/01/05 107,090 108,931 FNMA ....................... 7.00 10/25/05 529,784 532,761 FNMA ....................... 7.00 11/25/05 400,000 402,872 FNMA ....................... 8.00 12/25/05 73,330 73,238 FNMA ....................... 7.25 12/25/05 67,537 67,326 FNMA ....................... 7.50 02/25/07 250,000 256,250 FNMA ....................... 6.50 12/18/17 650,000 657,715 FNMA ....................... 6.30 09/25/18 305,000 307,382 FNMA ....................... 6.50 12/25/18 523,171 521,533 FNMA ....................... 7.00 12/25/18 500,000 502,030 FNMA ....................... 6.70 01/18/19 600,000 600,372 FNMA ....................... 5.50 04/25/19 396,644 395,157 FNMA ....................... 6.00 06/25/19 800,000 798,744 FNMA ....................... 6.25 01/25/20 650,000 654,264 FNMA ....................... 5.00 04/25/20 172,316 171,454 FNMA ....................... 6.00 12/25/20 500,000 499,215
The accompanying notes are an integral part of these financial statements. 55 MUTUAL OF AMERICA INVESTMENT CORPORATION (SHORT-TERM BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- ------------ -------------- INTERMEDIATE-TERM DEBT (CONTINUED): AGENCIES/OTHER (CONTINUED) FNMA ....................................... 5.00% 04/25/21 $ 620,000 $ 608,177 FNMA ....................................... 6.10 08/25/21 178,841 178,618 GNMA ....................................... 9.50 12/20/03 59,743 62,168 Pulaski County Arkansas PFB ................ 7.50 11/01/07 31,533 35,335 ----------- 15,547,315 ----------- CONSUMER, CYCLICAL (2.3%) Venator Group, Inc. ........................ 7.00 06/01/00 500,000 498,850 ----------- FINANCIAL (3.9%) Citicorp Mortgage Sec. Inc. ................ 6.25 03/25/24 145,583 145,219 FBC Mortgage Secur. Trust .................. 8.30 08/20/09 83,105 83,728 GE Capital Mtge. Services, Inc. ............ 6.00 09/25/08 122,762 122,186 Norwest Asset Securities Corp. ............. 7.25 11/25/26 14,595 14,541 Prudential Home Mtge. Services Co. ......... 6.75 08/25/08 477,824 477,074 ----------- 842,748 ----------- TOTAL INTERMEDIATE-TERM DEBT SECURITIES (Cost: $20,364,333) 93.7% ................................................... 20,400,133 ----------- SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER (6.3%) Duke Power Co. ............................. 5.25 01/04/99 534,000 533,767 OGE Energy Corp. ........................... 5.95 01/06/99 447,000 446,630 Toyota Motor Credit Corp. .................. 5.64 01/06/99 380,000 379,702 ----------- TOTAL SHORT-TERM DEBT SECURITIES (Cost: $1,360,099) 6.3% ..................................................... 1,360,099 ----------- TOTAL INVESTMENTS (Cost: 21,724,432) 100.0% ................................................... $21,760,232 ===========
- --------- Abbreviations: FHLB = Federal Home Loan Bank FHLMC = Federal Home Loan Mortgage Corporation FNMA = Federal National Mortgage Association GNMA = Government National Mortgage Association PFB = Prison Finance Board The accompanying notes are an integral part of these financial statements. 56 MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- ------------- -------------- INTERMEDIATE-TERM DEBT: U.S. GOVERNMENT (6.9%) U.S. Treasury Note ......................... 5.88% 02/15/04 $1,000,000 $ 1,055,000 ----------- AGENCIES/OTHER GOVERNMENTS (23.1%) FHLMC ...................................... 8.00 04/15/03 375,918 386,605 FHLMC ...................................... 8.00 07/15/06 265,420 274,543 FHLMC ...................................... 6.38 11/15/06 590,000 590,920 FNMA ....................................... 7.00 11/25/04 96,629 97,867 FNMA ....................................... 6.50 11/25/05 378,318 383,399 FNMA ....................................... 7.00 04/25/07 600,000 611,058 FNMA ....................................... 7.00 03/18/18 500,000 501,250 FNMA ....................................... 6.50 12/25/18 294,283 293,362 New York City Taxable ...................... 9.50 06/01/09 350,000 394,078 ----------- 3,533,082 ----------- CONSUMER, CYCLICAL (8.1%) Fruit of the Loom, Inc. .................... 7.88 10/15/99 250,000 250,570 Tommy Hilfiger USA, Inc. ................... 6.50 06/01/03 500,000 492,785 Venator Group, Inc. ........................ 7.00 10/15/02 500,000 489,900 ----------- 1,233,255 ----------- CONSUMER, NON-CYCLICAL (3.2%) Bausch & Lomb, Inc. ........................ 6.38 08/01/03 250,000 245,552 Bausch & Lomb, Inc. ........................ 6.75 12/15/04 250,000 247,267 ----------- 492,819 ----------- FINANCIAL (15.0%) Bear Stearns Cos., Inc. .................... 9.38 06/01/01 250,000 269,760 Bear Stearns Cos., Inc. .................... 6.63 10/01/04 500,000 513,730 Harleysville Group Inc. .................... 6.75 11/15/03 250,000 256,898 Nationwide Health Properties, Inc. ......... 7.90 11/20/06 250,000 251,818 Rank Group Financial ....................... 6.75 11/30/04 500,000 487,785 Salomon Smith Barney Hldgs. Inc. ........... 6.50 10/15/02 500,000 510,930 ----------- 2,290,921 ----------- INDUSTRIAL (11.3%) Airborne Freight Corp. ..................... 8.88 12/15/02 250,000 271,393 Crown Cork & Seal, Inc. .................... 6.75 04/15/03 500,000 503,920 Thermo Electron Corp. ...................... 4.25 01/01/03 500,000 445,000 Williams Cos., Inc. ........................ 6.50 11/15/02 500,000 504,765 ----------- 1,725,078 ----------- UTILITIES (6.7%) Baltimore Gas & Electric Co. ............... 6.13 07/01/03 250,000 256,968 Commonwealth Edison Co. .................... 7.50 01/01/01 500,000 502,020 Public Svc. Electric & Gas Co. ............. 7.88 11/01/01 250,000 266,583 ----------- 1,025,571 ----------- TOTAL INTERMEDIATE-TERM DEBT SECURITIES (COST: $11,232,676) 74.3% ............. 11,355,726 -----------
The accompanying notes are an integral part of these financial statements. 57 MUTUAL OF AMERICA INVESTMENT CORPORATION (MID-TERM BOND FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- ------------ -------------- SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER (25.7%) Albertson's, Inc. .......................... 5.25% 01/12/99 $ 362,000 $ 361,417 Bellsouth Telecommunications Corp. ......... 5.65 01/05/99 315,000 314,802 Carolina Power & Light Co. ................. 5.50 01/25/99 322,000 320,819 Duke Power Co. ............................. 5.25 01/04/99 408,000 407,822 Ford Motor Credit Co. ...................... 5.78 01/06/99 300,000 299,759 General Electric Capital Corp. ............. 5.50 01/28/99 490,000 487,978 IBM Credit Corp. ........................... 5.30 01/05/99 250,000 249,852 Merrill Lynch & Co., Inc. .................. 5.35 01/13/99 432,000 431,227 PetroFina Delaware, Inc. ................... 5.35 01/06/99 360,000 359,732 Proctor & Gamble Co. ....................... 5.25 01/21/99 295,000 294,137 Toyota Credit de Puerto Rico Corp. ......... 5.31 01/06/99 395,000 394,706 ----------- TOTAL SHORT-TERM DEBT SECURITIES (COST: $3,922,251) 25.7% .................... 3,922,251 ----------- TOTAL INVESTMENTS (Cost: $15,154,927) 100.0% ................................. $15,277,977 ===========
- --------- Abbreviations: FHLMC = Federal Home Loan Mortgage Corporation FNMA = Federal National Mortgage Association The accompanying notes are an integral part of these financial statements. 58 MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
SHARES VALUE -------- -------------- COMMON STOCKS: BASIC MATERIALS (1.4%) ................. Du Pont (E.I.) de Nemours & Co ....... 39,500 $ 2,095,968 Phelps Dodge Corp. ................... 10,000 508,750 Union Carbide Corp. .................. 17,200 731,000 Weyerhaeuser Co. ..................... 15,000 762,188 Willamette Industries, Inc. .......... 18,700 626,450 ------------ 4,724,356 ------------ CONSUMER, CYCLICAL (7.6%) .............. Armstrong World Inds., Inc. .......... 12,600 759,938 Corning Inc. ......................... 24,500 1,102,500 Costco Co.* .......................... 30,000 2,165,625 Dayton-Hudson Corp. .................. 19,000 1,030,750 Disney (Walt) Co. .................... 32,400 972,000 Eastman Kodak Co. .................... 16,800 1,209,600 Federated Department Stores* ......... 28,300 1,232,819 Gap, Inc. ............................ 19,050 1,071,563 General Electric Co. ................. 48,300 4,929,619 General Motors Corp. ................. 22,500 1,610,156 Home Depot, Inc. ..................... 25,900 1,584,756 May Department Stores Co. ............ 20,700 1,249,763 Rite-Aid Corp. ....................... 37,100 1,838,769 Tricon Global Restaurants, Inc.* ..... 33,600 1,684,200 Wal-Mart Stores, Inc. ................ 34,500 2,809,594 ------------ 25,251,652 ------------ CONSUMER, NON-CYCLICAL (10.4%) ......... American Home Products Corp. ......... 21,500 1,210,719 American Stores Co. .................. 50,100 1,850,568 Anheuser-Busch Cos., Inc. ............ 35,000 2,296,875 Bristol-Myers Squibb Co. ............. 15,100 2,020,569 Coca-Cola Co. ........................ 36,800 2,461,000 Columbia/HCA Healthcare Corp. ........ 40,000 990,000 Great Atlantic & Pac. Tea, Inc. ...... 26,500 785,063 Johnson & Johnson .................... 20,100 1,685,888 Kimberly Clark Corp. ................. 20,000 1,090,000 Lilly (Eli) & Co. .................... 16,900 1,501,988 Medtronic, Inc. ...................... 10,000 742,500 Merck & Co., Inc. .................... 18,300 2,702,681 PepsiCo, Inc. ........................ 66,600 2,726,437 Pfizer, Inc. ......................... 19,300 2,420,943 Pharmacia & Upjohn, Inc. ............. 34,500 1,953,563 Proctor & Gamble Co. ................. 20,100 1,835,381 Quaker Oats Co. ...................... 18,100 1,076,950 Sara Lee Corp. ....................... 76,000 2,142,250 Schering-Plough Corp. ................ 23,400 1,292,850 Warner-Lambert Co. ................... 26,800 2,015,025 ------------ 34,801,250 ------------ ENERGY (2.6%) .......................... Exxon Corp. .......................... 36,700 2,683,688 Mobil Corp. .......................... 22,000 1,916,750 Phillips Petroleum Co. ............... 26,600 1,133,825 Royal Dutch Petroleum Co. ............ 32,200 1,541,575 Sempra Energy ........................ 24,600 624,225 Texaco, Inc. ......................... 16,800 888,300 ------------ 8,788,363 ------------ FINANCIAL (6.8%) Aetna, Inc. .......................... 18,000 1,415,250 American General Corp. ............... 30,300 2,363,400 American Int'l. Group, Inc. .......... 16,000 1,546,000
SHARES VALUE -------- -------------- COMMON STOCKS (CONTINUED): FINANCIAL (continued) Banc One Corp. ......................... 16,700 $ 852,744 BankAmerica Corp. ...................... 25,900 1,557,237 Chase Manhattan Corp. .................. 47,800 3,253,387 CIGNA Corp. ............................ 33,600 2,597,700 Citigroup Inc. ......................... 35,500 1,757,250 Household International Corp. .......... 25,300 1,002,513 KeyCorp ................................ 37,000 1,184,000 National City Corp. .................... 14,400 1,044,000 St. Paul Companies, Inc. ............... 48,310 1,678,773 UNUM Corp. ............................. 21,700 1,266,737 Wells Fargo & Company .................. 30,800 1,230,075 ------------ 22,749,066 ------------ INDUSTRIAL (1.3%) Burlington Northern Santa Fe ......... 39,300 1,326,375 Emerson Electric Co. ................. 18,000 1,089,000 Parker Hannifin Corp. ................ 24,200 792,550 Tyco International Ltd. .............. 15,000 1,131,563 ------------ 4,339,488 ------------ TECHNOLOGY (9.8%) 3Com Corp.* .......................... 45,100 2,021,044 AT&T Corp. ........................... 27,400 2,061,850 Cisco Systems, Inc.* ................. 24,500 2,273,906 Dell Computer Corp.* ................. 21,000 1,536,938 Hewlett-Packard Co. .................. 12,200 833,413 Intel Corp. .......................... 26,400 3,130,050 Intl. Business Machines Corp. ........ 14,800 2,734,300 Johnson Controls, Inc. ............... 15,100 890,900 Lucent Technologies, Inc. ............ 20,600 2,266,000 Microsoft Corp.* ..................... 38,600 5,353,333 Minnesota Mining & Mfg. Co. .......... 18,000 1,280,250 Northern Telecom, Ltd. ............... 31,300 1,568,913 Oracle Corp.* ........................ 49,900 2,151,937 Unisys Corp. * ....................... 77,700 2,675,793 United Technologies Corp. ............ 7,200 783,000 Xerox Corp. .......................... 11,600 1,368,800 ------------ 32,930,427 ------------ UTILITIES (4.0%) AES Corp.* ........................... 7,800 369,525 Bell Atlantic Corp. .................. 23,200 1,229,600 BellSouth Corp. ...................... 29,200 1,456,350 CINergy Corp. ........................ 10,000 343,750 DTE Energy Co. ....................... 14,200 608,825 Duke Energy Corp. .................... 10,200 653,438 Edison International ................. 22,400 624,400 FPL Group, Inc. ...................... 9,700 597,763 MCI WorldCom Inc.* ................... 27,300 1,958,775 Nextel Communications, Inc.* ......... 52,600 1,242,675 SBC Communications, Inc. ............. 27,100 1,453,238 Southern Co. ......................... 21,100 613,219 Sprint Corp. (FON Group) ............. 22,900 1,926,463 Sprint Corp. (PCS Group)* ............ 11,450 264,781 ------------ 13,342,802 ------------ TOTAL COMMON STOCKS (Cost: $118,572,952) 43.9% ......... 146,927,404 ------------
- --------- * Non-income producing security. The accompanying notes are an integral part of these financial statements. 59 MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
RATE MATURITY FACE AMOUNT VALUE ---------- ---------- ------------- ------------- LONG-TERM DEBT SECURITIES: U.S. GOVERNMENT (0.5%) U.S. Treasury Bond ..................... 6.75% 08/15/26 $ 500,000 $ 598,985 U.S. Treasury Bond ..................... 6.38 08/15/27 1,000,000 1,149,370 ----------- 1,748,355 ----------- AGENCIES/OTHER GOVERNMENTS (16.5%) Connecticut Housing Fin. Auth. ......... 7.63 05/15/21 1,000,000 1,029,777 FHLB ................................... 0.00 07/07/17 25,000,000 6,070,250 FHLB ................................... 0.00 07/14/17 25,000,000 6,062,500 FHLMC .................................. 7.00 10/15/03 234,422 234,787 FHLMC .................................. 8.00 07/15/06 265,420 274,542 FHLMC .................................. 7.00 04/15/17 536,963 537,800 FHLMC .................................. 6.00 07/15/18 500,000 499,685 FHLMC .................................. 0.00 05/22/28 20,000,000 2,656,200 FNMA ................................... 6.80 06/25/05 687,448 686,589 FNMA ................................... 7.00 11/25/05 1,200,000 1,208,616 FNMA ................................... 6.65 01/25/17 465,372 467,261 FNMA ................................... 0.00 07/13/17 100,000,00 23,203,000 FNMA ................................... 6.50 07/25/20 500,000 500,465 New York City Taxable .................. 10.00 08/01/05 500,000 563,689 New York City Taxable .................. 9.50 06/01/09 2,000,000 2,251,874 Republic of Iceland .................... 6.13 02/01/04 2,500,000 2,592,425 Suffolk County, New York ............... 5.80 11/01/04 250,000 257,085 Suffolk County, New York ............... 5.88 11/01/05 750,000 772,350 Tennessee Valley Authority ............. 7.85 06/15/44 5,000,000 5,361,150 ----------- 55,230,045 ----------- BASIC MATERIALS (3.0%) .................. Georgia-Pacific Corp. .................. 8.63 04/30/25 2,000,000 2,107,640 Inco Ltd. .............................. 9.60 06/15/22 2,500,000 2,789,750 Lyondell/Arco Petrochemical ............ 10.25 11/01/10 2,500,000 2,639,975 Praxair, Inc. .......................... 6.90 11/01/06 2,500,000 2,561,150 ----------- 10,098,515 ----------- CONSUMER, CYCLICAL (4.6%) Centex Corp. ........................... 7.38 06/01/05 2,000,000 2,024,980 Fruit of the Loom, Inc. ................ 7.88 10/15/99 500,000 501,140 Fruit of the Loom, Inc. ................ 7.00 03/15/11 1,000,000 937,660 Fruit of the Loom, Inc. ................ 7.38 11/15/23 500,000 444,815 Gannett Co., Inc. ...................... 5.85 05/01/00 1,000,000 1,007,640 Neiman Marcus Group Inc. ............... 7.13 06/01/28 2,500,000 2,335,475 Polaroid Corp. ......................... 7.25 01/15/07 1,000,000 933,820 Shopko Stores, Inc. .................... 9.00 11/15/04 1,000,000 1,134,270 Tommy Hilfiger USA, Inc. ............... 6.50 06/01/03 2,850,000 2,808,874 Valassis Communication, Inc. ........... 9.55 12/01/03 2,000,000 2,294,500 Venator Group, Inc. .................... 7.00 10/15/02 1,000,000 979,800 ----------- 15,402,974 -----------
The accompanying notes are an integral part of these financial statements. 60 MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
RATE MATURITY FACE AMOUNT VALUE ---------- ---------- ------------- -------------- LONG-TERM DEBT SECURITIES (CONTINUED): CONSUMER, NON-CYCLICAL (2.7%) Bausch & Lomb, Inc. ..................... 6.38% 08/01/03 $ 2,500,000 $ 2,455,525 Bausch & Lomb, Inc. ..................... 6.75 12/15/04 2,500,000 2,472,675 Ralston Purina Co. ...................... 8.63 02/15/22 2,500,000 3,031,350 Rhone-Poulenc S.A. ...................... 7.75 01/15/02 1,000,000 1,040,560 ------------ 9,000,110 ------------ ENERGY (2.4%) Southern Union Co. ...................... 7.60 02/01/24 5,000,000 5,234,950 Tosco Corp. ............................. 8.25 05/15/03 2,500,000 2,699,425 ------------ 7,934,375 ------------ FINANCIAL (7.7%) Berkley (W.R.) Corp. .................... 8.70 01/01/22 1,500,000 1,790,880 Chase Manhattan Corp. ................... 6.88 12/12/12 2,500,000 2,608,050 Executive Risk, Inc. .................... 7.13 12/15/07 1,000,000 1,081,910 Fairfax Financial Holdings LTD .......... 8.25 10/01/15 500,000 514,950 First American Financial ................ 7.55 04/01/28 2,250,000 2,319,412 Harleysville Group, Inc. ................ 6.75 11/15/03 1,000,000 1,027,590 Lehman Brothers Holdings, Inc. .......... 0.00 07/28/28 3,250,000 375,342 Morgan (J.P.) & Co., Inc. ............... 0.00 04/15/27 10,000,000 1,271,600 Nationwide Health Properties ............ 7.90 11/20/06 5,000,000 5,036,350 Progressive Corp. of Ohio ............... 10.00 12/15/00 500,000 539,155 Prudential Home Mtg Secs Co. ............ 6.75 08/25/08 860,083 858,732 Rodamco NV .............................. 7.75 05/15/15 2,000,000 2,160,320 Rodamco NV .............................. 7.30 05/15/05 2,500,000 2,659,050 Sun America, Inc. ....................... 9.95 02/01/12 2,000,000 2,753,100 Vesta Insurance Group, Inc. ............. 8.75 07/15/25 1,000,000 880,850 ------------ 25,877,291 ------------ INDUSTRIAL (1.8%) Clark Equipment Co. ..................... 8.35 05/15/23 1,500,000 1,827,525 Geon Co. ................................ 7.50 12/15/15 1,000,000 1,062,300 Thermo Electron Corp. ................... 4.25 01/01/03 2,500,000 2,225,000 Williams Cos., Inc. ..................... 6.50 11/15/02 1,000,000 1,009,530 ------------ 6,124,355 ------------ UTILITIES (2.3%) Central Telephone Co. ................... 9.28 11/27/00 1,000,000 1,072,130 New Orleans Public Service .............. 8.00 03/01/06 1,000,000 1,043,200 PG & E Corp. ............................ 8.75 01/01/01 1,000,000 1,067,530 Philadelphia Electric Co. ............... 7.13 08/15/23 1,000,000 1,042,760 UtiliCorp United, Inc. .................. 8.00 03/01/23 3,000,000 3,289,776 ------------ 7,515,396 ------------ TOTAL LONG-TERM DEBT SECURITIES (Cost: $134,793,785) 41.5% ................. 138,931,416 ------------
The accompanying notes are an integral part of these financial statements. 61 MUTUAL OF AMERICA INVESTMENT CORPORATION (COMPOSITE FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
RATE MATURITY FACE AMOUNT VALUE ---------- ---------- ------------- -------------- SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER: (14.6%) Abbott Laboratories ......................... 5.50% 01/08/99 $ 7,000,000 $ 6,992,505 Consolidated Natural Gas Co. ................ 5.05 01/22/99 6,225,000 6,206,554 Ford Motor Credit Co. Puerto Rico, Inc. ..... 5.84 01/04/99 6,822,000 6,818,679 General Electric Capital Corp. .............. 5.33 01/04/99 4,565,000 4,562,964 Lucent Technology, Inc. ..................... 4.95 01/07/99 8,308,000 8,301,144 Merrill Lynch & Co., Inc .................... 5.35 01/06/99 7,840,000 7,834,134 PetroFina Delaware, Inc. .................... 5.53 01/05/99 8,000,000 7,995,073 ------------ TOTAL SHORT-TERM DEBT SECURITIES (Cost: $48,711,053) 14.6% ..................... 48,711,053 ------------ TOTAL INVESTMENTS (Cost: $302,077,790) 100.0% .................................. $334,569,873 ============
- --------- Abbreviations: FHLB = Federal Home Loan Bank FHLMC = Federal Home Loan Mortgage Corporation FNMA = Federal National Mortgage Association The accompanying notes are an integral part of these financial statements. 62 MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
SHARES VALUE ---------- -------------- COMMON STOCKS: BASIC MATERIALS (2.3%) Barrick Gold Corp. ................ 74,700 $ 1,456,650 Homestake Mining Co. .............. 120,100 1,103,419 Newmont Mining Corp. .............. 53,900 973,569 Placer Dome, Inc. ................. 107,800 1,239,700 ------------ 4,773,338 ------------ CONSUMER, CYCLICAL (15.1%) Atlantic Coast Airlines, Inc.* .... 70,000 1,750,000 Consolidated Graphics, Inc.* ...... 30,000 2,026,875 Consolidated Stores Corp.* ........ 100,000 2,018,750 Dollar Tree Stores, Inc. * ........ 55,000 2,402,813 Linens'n Things, Inc.* ............ 85,000 3,368,125 Men's Wearhouse, Inc.* ............ 100,000 3,175,000 Meredith Corp. .................... 60,000 2,272,500 P.F. Changs China Bistro, Inc.* ... 1,000 22,750 Pacific Sunwear of California, Inc.* .......................... 75,000 1,228,125 Saks, Inc.* ....................... 85,000 2,682,812 Skywest, Inc. ..................... 63,000 2,059,313 Tiffany & Co. ..................... 75,000 3,890,625 Viacom, Inc. Cl B* ................ 55,000 4,070,000 ------------ 30,967,688 ------------ CONSUMER, NON-CYCLICAL (14.4%) Agouron Pharmaceutical, Inc.* ..... 100,000 5,875,000 Anesta Corp.* ..................... 100,000 2,662,500 Dura Pharmaceuticals, Inc.* ....... 195,000 2,961,562 Metzler Group, Inc.* .............. 65,000 3,164,687 Omnicare, Inc. .................... 60,000 2,085,000 Orthodontic Centers of America, Inc* ........................... 235,000 4,567,812 Pathogenesis Corp.* ............... 35,000 2,030,000 SangStat Medical Corp.* ........... 115,000 2,443,750 Total Renal Care Holdings, Inc.* 60,000 1,773,750 Wet Seal, Inc. Cl A* .............. 70,000 2,113,125 ------------ 29,677,186 ------------ ENERGY (3.5%) Barrett Resources Corp.* .......... 90,000 2,160,000 Devon Energy Corp. ................ 70,200 2,154,263 OGE Energy Corp. .................. 100,000 2,900,000 ------------ 7,214,263 ------------ FINANCIAL (13.7%) Arden Realty Group, Inc. .......... 105,500 2,446,281 Compass Bancshares, Inc. .......... 52,000 1,979,250 Equity Residential Prop. Tr. ...... 55,400 2,240,238 First Midwest Bancorp, Inc. ....... 15,500 589,968 Glenborough Realty Trust, Inc. .... 136,000 2,771,000 Heller Financial, Inc. Cl A ....... 60,000 1,762,500 Horace Mann Educators Corp. ....... 64,000 1,824,000
SHARES VALUE ---------- -------------- COMMON STOCKS (CONTINUED): FINANCIAL (CONTINUED) North Fork Bancorporation, Inc. 108,000 $ 2,585,250 Peoples Heritage Financial Group, Inc. .................... 96,000 1,920,000 SL Green Realty Corp. ............. 113,200 2,447,950 Summit Bancorp .................... 48,000 2,097,000 Telebanc Financial Corp.* ......... 100,000 3,400,000 UST Corp. ......................... 88,000 2,073,500 ------------ 28,136,937 ------------ INDUSTRIAL (17.7%) AFC Cable Systems, Inc.* .......... 85,000 2,858,125 Applied Micro Circuits Corp.* ..... 105,000 3,566,719 Applied Power, Inc. Cl A .......... 59,500 2,246,125 CSG Systems International, Inc.* 47,500 3,752,500 Dayton Superior Corp.* ............ 116,500 2,242,625 DuPont Photomasks, Inc.* .......... 20,000 848,750 ETEC Systems, Inc.* ............... 48,500 1,940,000 Heico Corp. ....................... 29,000 915,313 PRI Automation, Inc.* ............. 63,000 1,638,000 Sea Containers, Ltd. Cl A ......... 65,000 1,945,938 Semtech Corp.* .................... 65,000 2,331,875 Tetra Tech, Inc.* ................. 246,000 6,657,375 Vallen Corp.* ..................... 122,000 2,440,000 Verisign, Inc.* ................... 50,000 2,956,250 ------------ 36,339,595 ------------ TECHNOLOGY (29.4%) Altera Corp.* ..................... 65,000 3,956,875 Brightpoint, Inc.* ................ 140,000 1,925,000 Centocor, Inc.* ................... 90,000 4,061,250 Hyperion Solutions, Corp.* ........ 51,000 918,000 Legato Systems, Inc.* ............. 65,000 4,285,937 Linear Technology Corp. ........... 50,000 4,478,125 Maxim Integrated Products, Inc.* .......................... 73,000 3,189,187 Millipore Corp. ................... 80,000 2,275,000 National Instruments Corp.* ....... 130,000 4,436,250 Network Associates, Inc.* ......... 57,000 3,776,250 Novellus Systems, Inc.* ........... 36,000 1,782,000 Photronics Inc.* .................. 78,000 1,869,563 Saville Systems Sp ADR* ........... 175,000 3,325,000 SCI Systems, Inc.* ................ 38,000 2,194,500 Teltrend, Inc.* ................... 165,000 3,155,625 Teradyne, Inc.* ................... 54,000 2,288,250 Unisys Corp.* ..................... 240,000 8,265,000 Xilinx, Inc.* ..................... 65,000 4,233,125 ------------ 60,414,937 ------------ TOTAL COMMON STOCKS (Cost: $166,353,395) 96.1% ................... 197,523,944 ------------
- --------- * Non-income producing security. The accompanying notes are an integral part of these financial statements. 63 MUTUAL OF AMERICA INVESTMENT CORPORATION (AGGRESSIVE EQUITY FUND) PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 1998
FACE RATE MATURITY AMOUNT VALUE ---------- ---------- -------------- -------------- SHORT-TERM DEBT SECURITIES: COMMERCIAL PAPER (3.9%) Duke Power Co. .......................... 5.25% 01/04/99 $ 4,906,000 $ 4,903,853 Koch Industries ......................... 5.20 01/04/99 3,153,000 3,151,634 ------------ TOTAL SHORT-TERM DEBT SECURITIES (Cost: $8,055,487) 3.9% .................... 8,055,487 ------------ TOTAL INVESTMENTS (Cost: $174,408,882) 100.0% ............................... $205,579,431 ============
The accompanying notes are an integral part of these financial statements. 64 MUTUAL OF AMERICA INVESTMENT CORPORATION STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
MONEY MARKET ALL AMERICA EQUITY INDEX BOND FUND FUND FUND FUND ---------------- ----------------- ----------------- ----------------- ASSETS: Investments at market value (Cost: Money Market Fund -- $80,766,399 All America Fund -- $403,576,469 Equity Index Fund -- $287,295,071 Bond Fund -- $446,300,888) (Notes 1 and 3) .................................. $ 80,766,399 $ 733,352,393 $ 410,277,711 $ 460,257,815 Cash .............................................. 3,279 2,434,656 10,326 2,658 Interest and dividends receivable ................. -- 729,575 406,944 4,925,577 Receivable for securities sold .................... -- 11,050 71,818 142,942 ------------ ------------- ------------- ------------- TOTAL ASSETS ...................................... 80,769,678 736,527,674 410,766,799 465,328,992 Payable for securities purchased .................. -- 4,178,559 448 -- ------------ ------------- ------------- ------------- NET ASSETS ........................................ $ 80,769,678 $ 732,349,115 $ 410,766,351 $ 465,328,992 ============ ============= ============= ============= NUMBER OF SHARES OUTSTANDING (Note 4) ............. 68,195,147 252,884,422 167,559,906 326,640,323 ============ ============= ============= ============= NET ASSET VALUES, offering and redemption price per share ........................................ $ 1.18 $ 2.90 $ 2.45 $ 1.42 ============ ============= ============= =============
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY BOND FUND BOND FUND FUND FUND ---------------- ---------------- ----------------- ------------------ ASSETS: Investments at market value (Cost: Short-Term Bond Fund -- $21,724,432 Mid-Term Bond Fund -- $15,154,927 Composite Fund -- $302,077,790 Aggressive Equity Fund -- $174,408,882) (Notes 1 and 3) .................................. $ 21,760,232 $ 15,277,977 $ 334,569,873 $ 205,579,431 Cash .............................................. 972 738 10,084 6,063 Interest and dividends receivable ................. 167,126 151,589 1,621,390 205,460 Receivable for securities sold .................... 49,150 -- -- -- ------------ ------------ ------------- ------------- TOTAL ASSETS ...................................... 21,977,480 15,430,304 336,201,347 205,790,954 Payable for securities purchased .................. 2,292 -- -- 378,125 ------------ ------------ ------------- ------------- NET ASSETS ........................................ $ 21,975,188 $ 15,430,304 $ 336,201,347 $ 205,412,829 ============ ============ ============= ============= NUMBER OF SHARES OUTSTANDING (Note 4) ............. 21,351,075 16,952,106 188,998,726 136,169,705 ============ ============ ============= ============= NET ASSET VALUES, offering and redemption price per share ........................................ $ 1.03 $ 0.91 $ 1.78 $ 1.51 ============ ============ ============= =============
The accompanying notes are an integral part of these financial statements. 65 MUTUAL OF AMERICA INVESTMENT CORPORATION STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
MONEY MARKET ALL AMERICA EQUITY INDEX BOND FUND FUND FUND FUND -------------- ---------------- ---------------- ---------------- INVESTMENT INCOME AND EXPENSES: Income: Dividends ....................................... $ -- $ 8,564,603 $ 4,641,412 $ -- Interest ........................................ 3,817,397 1,000,865 938,913 32,467,679 ------------ -------------- -------------- -------------- Total income ...................................... 3,817,397 9,565,468 5,580,325 32,467,679 ------------ -------------- -------------- -------------- Expenses: Investment advisory fees (Note 2) ............... 173,091 3,559,615 412,769 2,245,279 ------------ -------------- -------------- -------------- NET INVESTMENT INCOME ............................. 3,644,306 6,005,853 5,167,556 30,222,400 ------------ -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 1): Net realized gain (loss) on investments: Net proceeds from sales and maturities .......... 946,512,623 2,084,303,112 1,590,946,259 1,654,195,275 Cost of securities sold or matured .............. 946,513,714 2,009,275,002 1,586,636,965 1,653,447,468 ------------ -------------- -------------- -------------- Net realized gain (loss) .......................... (1,091) 75,028,110 4,309,294 747,807 Net unrealized appreciation (depreciation) of investments ..................................... -- 51,132,012 72,664,856 (41,522) ------------ -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ..................................... (1,091) 126,160,122 76,974,150 706,285 ------------ -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. $ 3,643,215 $ 132,165,975 $ 82,141,706 $ 30,928,685 ============ ============== ============== ==============
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE EQUITY BOND FUND BOND FUND FUND FUND -------------- -------------- ---------------- ------------------ INVESTMENT INCOME AND EXPENSES: Income: Dividends ....................................... $ -- $ -- $ 2,163,375 $ 1,752,545 Interest ........................................ 1,093,898 858,591 11,211,064 680,420 ------------ ------------ -------------- -------------- Total income ...................................... 1,093,898 858,591 13,374,439 2,432,965 ------------ ------------ -------------- -------------- Expenses: Investment advisory fees (Note 2) ............... 91,736 68,431 1,601,894 2,007,629 ------------ ------------ -------------- -------------- NET INVESTMENT INCOME ............................. 1,002,162 790,160 11,772,545 425,336 ------------ ------------ -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 1): Net realized gain (loss) on investments: Net proceeds from sales and maturities .......... 133,917,702 129,793,379 1,918,062,049 2,427,289,632 Cost of securities sold or matured .............. 133,902,700 129,708,405 1,914,798,019 2,450,911,467 ------------ ------------ -------------- -------------- Net realized gain (loss) .......................... 15,002 84,974 3,264,030 (23,621,835) Net unrealized appreciation (depreciation) of investments ..................................... (22,056) (37,685) 28,079,557 9,581,686 ------------ ------------ -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ..................................... (7,054) 47,289 31,343,587 (14,040,149) ------------ ------------ -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................................. $ 995,108 $ 837,449 $ 43,116,132 $ (13,614,813) ============ ============ ============== ==============
The accompanying notes are an integral part of these financial statements. 66 MUTUAL OF AMERICA INVESTMENT CORPORATION STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
MONEY MARKET FUND --------------------------------- 1998 1997 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income ................. $ 3,644,306 $ 4,249,559 Net realized gain (loss) on investments .......................... (1,091) (4,546) Unrealized appreciation (depreciation) of investments ........ -- -- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... 3,643,215 4,245,013 -------------- -------------- CAPITAL SHARE TRANSACTIONS (Note 4): Net proceeds from sale of shares ...... 49,564,634 31,053,208 Dividends reinvested .................. 3,649,927 4,207,000 Cost of shares redeemed ............... (39,940,229) (45,576,714) Dividend distributions ................ (3,649,927) (4,207,000) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ................... 9,624,405 (14,523,506) -------------- -------------- INCREASE (DECREASE) IN NET ASSETS ..... 13,267,620 (10,278,493) NET ASSETS, BEGINNING OF YEAR ......... 67,502,058 77,780,551 -------------- -------------- NET ASSETS, END OF YEAR ............... $ 80,769,678 $ 67,502,058 ============== ============== COMPONENTS OF NET ASSETS: Paid-in capital ....................... $ 80,655,650 $ 67,381,318 Accumulated undistributed net investment income (loss) ............. 124,861 130,482 Accumulated undistributed net realized gain (loss) on investments .......................... (10,833) (9,742) Unrealized appreciation (depreciation) of investments ........ -- -- -------------- -------------- NET ASSETS, END OF YEAR ............... $ 80,769,678 $ 67,502,058 ============== ============== ALL AMERICA FUND EQUITY INDEX FUND ----------------------------------- --------------------------------- 1998 1997 1998 1997 ----------------- ----------------- ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income ................. $ 6,005,853 $ 6,839,085 $ 5,167,556 $ 3,292,415 Net realized gain (loss) on investments .......................... 75,028,110 87,265,815 4,309,294 13,796,802 Unrealized appreciation (depreciation) of investments ........ 51,132,012 72,872,084 72,664,856 29,821,618 --------------- --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... 132,165,975 166,976,984 82,141,706 46,910,835 --------------- --------------- ------------- ------------- CAPITAL SHARE TRANSACTIONS (Note 4): Net proceeds from sale of shares ...... 8,745,724 51,559,383 111,027,460 103,055,258 Dividends reinvested .................. 87,022,298 85,851,292 31,568,403 4,983,072 Cost of shares redeemed ............... (108,090,679) (155,677,621) (19,365,681) (14,852,042) Dividend distributions ................ (87,022,298) (85,851,292) (31,568,403) (4,983,072) --------------- --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ................... (99,344,955) (104,118,238) 91,661,779 88,203,216 --------------- --------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS ..... 32,821,020 62,858,746 173,803,485 135,114,051 NET ASSETS, BEGINNING OF YEAR ......... 699,528,095 636,669,349 236,962,866 101,848,815 --------------- --------------- ------------- ------------- NET ASSETS, END OF YEAR ............... $ 732,349,115 $ 699,528,095 $ 410,766,351 $ 236,962,866 =============== =============== ============= ============= COMPONENTS OF NET ASSETS: Paid-in capital ....................... $ 404,058,426 $ 416,381,083 $ 297,765,055 $ 174,534,873 Accumulated undistributed net investment income (loss) ............. (368,798) (175,037) 25,162 (14,572) Accumulated undistributed net realized gain (loss) on investments .......................... (1,116,437) 4,678,137 (10,006,505) 12,124,782 Unrealized appreciation (depreciation) of investments ........ 329,775,924 278,643,912 122,982,639* 50,317,783 --------------- --------------- ------------- ------------- NET ASSETS, END OF YEAR ............... $ 732,349,115 $ 699,528,095 $ 410,766,351 $ 236,962,866 =============== =============== ============= =============
The accompanying notes are an integral part of these financial statements. 67 MUTUAL OF AMERICA INVESTMENT CORPORATION STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
SHORT-TERM MID-TERM BOND FUND BOND FUND BOND FUND --------------------------------- ------------------------------- ------------------------------- 1998 1997 1998 1997 1998 1997 ---------------- ---------------- --------------- --------------- --------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income .......... $ 30,222,400 $ 24,752,577 $ 1,002,162 $ 915,657 $ 790,160 $ 860,831 Net realized gain (loss) on investments ................... 747,807 2,443,601 15,002 11,032 84,974 26,493 Unrealized appreciation (depreciation) of investments ................... (41,522) 10,731,058 (22,056) 1,505 (37,685) 136,981 ------------- ------------- ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............... 30,928,685 37,927,236 995,108 928,194 837,449 1,024,305 ------------- ------------- ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS (Note 4): Net proceeds from sale of shares ........................ 52,595,906 129,718,878 8,314,584 4,662,604 5,884,740 7,085,456 Dividends reinvested ........... 31,972,263 26,570,467 1,010,825 921,469 805,870 911,528 Cost of shares redeemed ........ (31,900,498) (83,214,662) (1,975,185) (6,464,199) (5,938,423) (6,822,743) Dividend distributions ......... (31,972,263) (26,570,467) (1,010,825) (921,469) (805,870) (911,528) ------------- ------------- ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ............ 20,695,408 46,504,216 6,339,399 (1,801,595) (53,683) 262,713 ------------- ------------- ------------ ------------ ------------ ------------ INCREASE (DECREASE) IN NET ASSETS .................... 51,624,093 84,431,452 7,334,507 (873,401) 783,766 1,287,018 NET ASSETS, BEGINNING OF YEAR .......................... 413,704,899 329,273,447 14,640,681 15,514,082 14,646,538 13,359,520 ------------- ------------- ------------ ------------ ------------ ------------ NET ASSETS, END OF YEAR ........ $ 465,328,992 $ 413,704,899 $ 21,975,188 $ 14,640,681 $ 15,430,304 $ 14,646,538 ============= ============= ============ ============ ============ ============ COMPONENTS OF NET ASSETS: Paid-in capital ................ $ 456,250,383 $ 403,582,712 $ 21,933,271 $ 14,583,047 $ 16,547,869 $ 15,795,682 Accumulated undistributed net investment income (loss) ........................ (876,674) (816,175) 13,225 (841) (54,119) (38,409) Accumulated undistributed net realized gain (loss) on investments ................... (4,001,644) (3,060,087) (7,108) 619 (1,186,496) (1,271,470) Unrealized appreciation (depreciation) of investments ................... 13,956,927 13,998,449 35,800 57,856 123,050 160,735 ------------- ------------- ------------ ------------ ------------ ------------ NET ASSETS, END OF YEAR ........ $ 465,328,992 $ 413,704,899 $ 21,975,188 $ 14,640,681 $ 15,430,304 $ 14,646,538 ============= ============= ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 68 MUTUAL OF AMERICA INVESTMENT CORPORATION STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
COMPOSITE FUND AGGRESSIVE EQUITY FUND --------------------------------- --------------------------------- 1998 1997 1998 1997 ---------------- ---------------- ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income .................................... $ 11,772,545 $ 10,441,082 $ 425,336 $ 759,197 Net realized gain (loss) on investments .................. 3,264,030 54,206,235 (23,621,835) 27,898,311 Unrealized appreciation (depreciation) of investments 28,079,557 (16,888,109) 9,581,686 9,224,730 ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................................... 43,116,132 47,759,208 (13,614,813) 37,882,238 ------------- ------------- ------------- ------------- CAPITAL SHARE TRANSACTIONS (Note 4): Net proceeds from sale of shares ......................... 2,920,925 31,298,846 15,703,714 137,350,976 Dividends reinvested ..................................... 14,045,609 67,460,654 1,800,942 28,638,720 Cost of shares redeemed .................................. (14,612,177) (57,212,696) (84,056,916) (24,081,133) Dividend distributions ................................... (14,045,609) (67,460,654) (1,800,942) (28,638,720) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....................................... (11,691,252) (25,913,850) (68,353,202) 113,269,843 ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS ......................... 31,424,880 21,845,358 (81,968,015) 151,152,081 NET ASSETS, BEGINNING OF YEAR ............................. 304,776,467 282,931,109 287,380,844 136,228,763 ------------- ------------- ------------- ------------- NET ASSETS, END OF YEAR ................................... $ 336,201,347 $ 304,776,467 $ 205,412,829 $ 287,380,844 ============= ============= ============= ============= COMPONENTS OF NET ASSETS: Paid-in capital .......................................... $ 307,142,582 $ 304,788,225 $ 198,159,450 $ 264,711,710 Accumulated undistributed net investment income (loss) ................................................. 761,149 635,624 (10,452) (3,076) Accumulated undistributed net realized gain (loss) on investments ............................................ (4,194,467) (5,059,908) (23,906,718) 1,083,347 Unrealized appreciation (depreciation) of investments 32,492,083 4,412,526 31,170,549 21,588,863 ------------- ------------- ------------- ------------- NET ASSETS, END OF YEAR ................................... $ 336,201,347 $ 304,776,467 $ 205,412,829 $ 287,380,844 ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 69 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS Income from investment operations and distributions per share for a fund share outstanding throughout each of the five years ended December 31, 1998, (or since the fund's inception date if in existence less than five years) and other supplementary data with respect to the funds are presented below.
MONEY MARKET FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year .............................. $ 1.18 $ 1.19 $ 1.18 $ 1.19 $ 1.17 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income .......................................... 0.06 0.07 0.06 0.07 0.03 Net Gains or (Losses) on Securities realized and unrealized .... -- -- -- -- 0.02 ------- ------- ------- ------- ------- Total From Investment Operations ................................ 0.06 0.07 0.06 0.07 0.05 ------- ------- ------- ------- ------- Less: Dividend Distributions From Net Investment Income ......... (0.06) (0.08) (0.05) (0.08) (0.03) ------- ------- ------- ------- ------- Total Distributions ............................................. (0.06) (0.08) (0.05) (0.08) (0.03) ------- ------- ------- ------- ------- Net Asset Value, End of Year .................................... $ 1.18 $ 1.18 $ 1.19 $ 1.18 $ 1.19 ------- ------- ------- ------- ------- Total Return (%) ................................................ 5.4 5.5 5.3 5.8 4.1 Net Assets, End of Year ($ millions) ............................ 81 68 78 73 81 Ratio of Expenses to Average Net Assets (%) ..................... 0.25 0.25 0.25 0.25 0.25 Ratio of Net Investment Income to Average Net Assets (%) ........ 5.26 5.32 5.21 5.66 4.15 Portfolio Turnover Rate(a) ...................................... N/A N/A N/A N/A N/A
- --------- (a) Portfolio turnover rate excludes all short-term securities. N/A = Not Applicable The accompanying notes are an integral part of these financial statements. 70 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (CONTINUED)
ALL AMERICA FUND(A) ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994(B) ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year ............................... $ 2.71 $ 2.44 $ 2.13 $ 1.61 $ 1.80 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ........................................... 0.03 0.03 0.03 0.03 0.04 Net Gains or (Losses) on Securities realized and unrealized ..... 0.54 0.62 0.41 0.56 ( 0.01) ------- ------- ------- ------- ------- Total From Investment Operations ................................. 0.57 0.65 0.44 0.59 0.03 ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ...................................... (0.03) (0.03) (0.03) (0.03) ( 0.04) From Capital Gains .............................................. (0.35) (0.35) (0.10) (0.04) ( 0.18) ------- ------- ------- ------- ------- Total Distributions .............................................. (0.38) (0.38) (0.13) (0.07) ( 0.22) ------- ------- ------- ------- ------- Net Asset Value, End of Year ..................................... $ 2.90 $ 2.71 $ 2.44 $ 2.13 $ 1.61 ======= ======= ======= ======= ======= Total Return (%) ................................................. 21.3 26.8 20.7 36.6 1.3 Net Assets, End of Year ($ millions) ............................. 732 700 637 533 375 Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50 Ratio of Net Investment Income to Average Net Assets (%) ......... 0.84 0.98 1.26 1.57 2.11 Portfolio Turnover Rate (%)(c) ................................... 40.47 28.64 28.35 33.63 129.80
- --------- (a) Prior to May 2, 1994, this Fund was known as the Stock Fund and had a different investment objective. (b) Reflects the combined data of this Fund and that of its predecessor. (c) Portfolio turnover rate excludes all short-term securities. The accompanying notes are an integral part of these financial statements. 71 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (CONTINUED)
BOND FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year ............................... $ 1.43 $ 1.38 $ 1.43 $ 1.27 $ 1.41 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ........................................... 0.10 0.09 0.09 0.09 0.09 Net Gains or (Losses) on Securities realized and unrealized ..... -- 0.06 (0.04) 0.16 (0.14) ------- ------- ------- ------- ------- Total From Investment Operations ................................. 0.10 0.15 0.05 0.25 (0.05) ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ...................................... (0.10) (0.09) (0.09) (0.09) (0.09) From Capital Gains .............................................. (0.01) (0.01) (0.01) -- -- ------- ------- ------- ------- ------- Total Distributions .............................................. (0.11) (0.10) (0.10) (0.09) (0.09) ------- ------- ------- ------- ------- Net Asset Value, End of Year ..................................... $ 1.42 $ 1.43 $ 1.38 $ 1.43 $ 1.27 ======= ======= ======= ======= ======= Total Return (%) ................................................. 7.2 10.4 3.5 19.4 (3.2) Net Assets, End of Year ($ millions) ............................. 465 414 329 311 249 Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50 Ratio of Net Investment Income to Average Net Assets (%) ......... 6.73 6.69 6.70 6.64 6.32 Portfolio Turnover Rate (%)(a) ................................... 21.60 57.71 30.14 41.93 51.14
- --------- (a) Portfolio turnover rate excludes all short-term securities. The accompanying notes are an integral part of these financial statements. 72 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (CONTINUED)
SHORT-TERM BOND FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year $ 1.02 $ 1.03 $ 1.02 $ 1.00 $ 1.02 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ................ 0.05 0.07 0.04 0.06 0.04 Net Gains or (Losses) on Securities realized and unrealized ......................... 0.01 (0.01) 0.01 0.02 (0.02) ------- ------- ------- ------- ------- Total From Investment Operations ...... 0.06 0.06 0.05 0.08 0.02 ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ........... (0.05) (0.07) (0.04) (0.06) (0.04) From Capital Gains ................... -- -- -- -- -- ------- ------- ------- ------- ------- Total Distributions ................... (0.05) (0.07) (0.04) (0.06) (0.04) ------- ------- ------- ------- ------- Net Asset Value, End of Year .......... $ 1.03 $ 1.02 $ 1.03 $ 1.02 $ 1.00 ======= ======= ======= ======= ======= Total Return (%) ...................... 5.7 6.0 4.9 7.7 1.4 Net Assets, End of Year ($ millions) ......................... 22 15 16 3 2 Ratio of Expenses to Average Net Assets (%) ........................... 0.50 0.50 0.50 0.50 0.48 Ratio of Net Investment Income to Average Net Assets (%) ............... 5.46 5.81 5.42 4.65 3.51 Portfolio Turnover Rate (%)(a) ........ 91.35 74.95 6.68 16.47 0.00 MID-TERM BOND FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year $ 0.90 $ 0.90 $ 1.00 $ 0.91 $ 0.99 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ................ 0.05 0.05 0.14 0.06 0.03 Net Gains or (Losses) on Securities realized and unrealized ......................... 0.01 0.01 ( 0.10) 0.09 (0.07) ------- ------- ------- ------- ------- Total From Investment Operations ...... 0.06 0.06 0.04 0.15 (0.04) ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ........... (0.05) (0.06) ( 0.14) (0.06) (0.04) From Capital Gains ................... -- -- -- -- -- ------- ------- ------- ------- ------- Total Distributions ................... (0.05) (0.06) ( 0.14) (0.06) (0.04) ------- ------- ------- ------- ------- Net Asset Value, End of Year .......... $ 0.91 $ 0.90 $ 0.90 $ 1.00 $ 0.91 ======= ======= ======= ======= ======= Total Return (%) ...................... 6.4 7.3 3.9 16.3 (3.7) Net Assets, End of Year ($ millions) ......................... 15 15 13 24 24 Ratio of Expenses to Average Net Assets (%) ........................... 0.50 0.50 0.50 0.50 0.50 Ratio of Net Investment Income to Average Net Assets (%) ............... 5.76 5.87 5.80 5.73 4.71 Portfolio Turnover Rate (%)(a) ........ 23.09 12.89 144.55 73.72 7.52
- --------- (a) Portfolio turnover rate excludes all short-term securities. The accompanying notes are an integral part of these financial statements. 73 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (CONTINUED)
COMPOSITE FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year ............................... $ 1.62 $ 1.77 $ 1.81 $ 1.57 $ 1.71 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ........................................... 0.07 0.07 0.07 0.08 0.05 Net Gains or (Losses) on Securities realized and unrealized ..... 0.17 0.24 0.14 0.27 ( 0.10) ------- ------- ------- ------- ------- Total From Investment Operations ................................. 0.24 0.31 0.21 0.35 ( 0.05) ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ...................................... (0.07) ( 0.07) (0.08) (0.08) ( 0.07) From Capital Gains .............................................. (0.01) ( 0.39) (0.17) (0.03) ( 0.02) ------- ------- ------- ------- ------- Total Distributions .............................................. (0.08) ( 0.46) (0.25) (0.11) ( 0.09) ------- ------- ------- ------- ------- Net Asset Value, End of Year ..................................... $ 1.78 $ 1.62 $ 1.77 $ 1.81 $ 1.57 ======= ======= ======= ======= ======= Total Return (%) ................................................. 14.5 17.7 11.9 21.9 ( 3.0) Net Assets, End of Year ($ millions) ............................. 336 305 283 276 233 Ratio of Expenses to Average Net Assets (%) ...................... 0.50 0.50 0.50 0.50 0.50 Ratio of Net Investment Income to Average Net Assets (%) ......... 3.68 3.57 3.63 4.30 3.88 Portfolio Turnover Rate (%)(a) ................................... 73.85 104.04 69.79 76.84 113.86
- --------- (a) Portfolio turnover rate excludes all short-term securities. The accompanying notes are an integral part of these financial statements. 74 MUTUAL OF AMERICA INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (CONTINUED)
EQUITY INDEX FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year/Period ....................... $ 2.08 $ 1.59 $ 1.35 $ 1.02 $ 1.04 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ............. 0.03 0.03 0.03 0.02 0.03 Net Gains or (Losses) on Securities realized and unrealized ....................... 0.55 0.50 0.27 0.36 (0.01) ------- ------- ------- ------- ------- Total From Investment Operations ........................ 0.58 0.53 0.30 0.38 0.02 ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ........ (0.03) (0.03) (0.03) (0.03) (0.03) From Capital Gains ................ (0.17) (0.01) (0.03) (0.02) (0.01) ------- ------- ------- ------- ------- Total Distributions ................ (0.20) (0.04) (0.06) (0.05) (0.04) ------- ------- ------- ------- ------- Net Asset Value, End of Year/Period ....................... $ 2.45 $ 2.08 $ 1.59 $ 1.35 $ 1.02 ======= ======= ======= ======= ======= Total Return (%) ................... 28.6 33.1 22.7 36.6 1.5 Net Assets, End of Year/Period ($ millions) ...................... 411 237 102 43 26 Ratio of Expenses to Average Net Assets (%) .................... 0.13 0.13 0.13 0.13 0.13 Ratio of Net Investment Income to Average Net Assets (%) ......... 1.57 1.86 2.19 2.50 2.67 Portfolio Turnover Rate (%)(a) ..... 11.68 14.17 5.85 13.99 6.59 AGGRESSIVE EQUITY FUND ------------------------------------------------------ YEARS ENDED DECEMBER 31, ------------------------------------------------------ 1998 1997 1996 1995 1994(B) ---------- ---------- ---------- ---------- ---------- Net Asset Value, Beginning of Year/Period ....................... $ 1.61 $ 1.47 $ 1.35 $ 1.05 $ 1.00 ------- ------- ------- ------- ------- Income From Investment Operations: Net Investment Income ............. -- 0.01 0.01 0.01 0.01 Net Gains or (Losses) on Securities realized and unrealized ....................... ( 0.09) 0.31 0.36 0.39 0.05 ------- ------- ------- ------- ------- Total From Investment Operations ........................ ( 0.09) 0.32 0.37 0.40 0.06 ------- ------- ------- ------- ------- Less Dividend Distributions: From Net Investment Income ........ -- (0.01) ( 0.01) ( 0.01) (0.01) From Capital Gains ................ ( 0.01) (0.17) ( 0.24) ( 0.09) -- ------- ------- ------- ------- ------- Total Distributions ................ ( 0.01) (0.18) ( 0.25) ( 0.10) (0.01) ------- ------- ------- ------- ------- Net Asset Value, End of Year/Period ....................... $ 1.51 $ 1.61 $ 1.47 $ 1.35 $ 1.05 ======= ======= ======= ======= ======= Total Return (%) ................... ( 5.1) 21.2 27.1 38.2 6.0 Net Assets, End of Year/Period ($ millions) ...................... 205 287 136 59 27 Ratio of Expenses to Average Net Assets (%) .................... 0.85 0.85 0.85 0.85 0.56 Ratio of Net Investment Income to Average Net Assets (%) ......... 0.18 0.33 0.45 0.65 0.70 Portfolio Turnover Rate (%)(a) ..... 144.05 80.94 103.68 116.52 60.86
- --------- (a) Portfolio turnover rate excludes all short-term securities. (b) Commenced operations May 2, 1994. The accompanying notes are an integral part of these financial statements. 75 MUTUAL OF AMERICA INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION Mutual of America Investment Corporation (the "Investment Company") is a diversified, open-end management investment company -- a type of company commonly known as a "mutual fund". It is registered as such under the Investment Company Act of 1940 (the "Investment Company Act"). The Investment Company was formed on February 21, 1986 as a Maryland corporation and offers its shares exclusively to separate accounts of Mutual of America Life Insurance Company ("Mutual of America Life") and Mutual of America Life's indirect wholly-owned subsidiary, The American Life Insurance Company of New York ("American Life"). As a "series" type mutual fund, the Investment Company issues separate classes (or series) of capital stock, each of which represents a separate Fund of investments. There are currently eight Funds: the Money Market Fund, the All America Fund, the Equity Index Fund, the Bond Fund, the Short-Term Bond Fund, the Mid-Term Bond Fund, the Composite Fund, and the Aggressive Equity Fund. Investment Company shares are sold only to Mutual of America Life and American Life for allocation to their Separate Accounts as a funding medium for variable annuity and variable life insurance contracts issued by these companies. As of December 31, 1998, Mutual of America Life owned 97% and American Life 3% of the Investment Company's aggregate outstanding shares. The following is a summary of the significant accounting policies of the Investment Company: SECURITY VALUATION -- Investment securities are valued as follows: Stocks listed on national security exchanges and certain over-the-counter issues quoted on the National Association of Securities Dealers Automated Quotation ("NASDAQ") system are valued at the last sale price, or if no sale, at the latest available bid price. Debt securities are valued at a composite fair market value "evaluated bid," which may be the last sale price. Securities for which market quotations are not readily available will be valued at fair value as determined in good faith by the Investment Adviser under the direction of the Board of Directors of the Investment Company. Short-term investments with a maturity of 60 days or less are valued at amortized cost, which approximates market value. Short-term debt securities, which mature in more than 60 days, are stated at market value. Premiums received by the Investment Company upon writing covered call options are included in the Investment Company's statement of assets and liabilities as an asset and an equivalent liability. The liability is adjusted daily to reflect the market value of the options written based on the mean of the closing bid and asked price. If an option expires, or if the Investment Company enters into a closing purchase transaction, the Investment Company realizes a gain or, if the cost of a closing purchase transaction exceeds the premium originally received, a loss, and the liability related to the option is extinguished. If an option is exercised, the proceeds of the sale of the underlying security are increased by the premium originally received when the option was written. Certain equity-type funds with an indexed portfolio component may, in order to remain more fully invested in the equity markets while minimizing its transaction costs, purchase stock index futures contracts. Initial cash margin deposits (represented by cash or Treasury bills) are made upon entering into futures contracts. (This initial margin, maintained in a segregated account, is equal to approximately 5% of the contract amount, and does not involve the borrowing of funds to finance the transaction). During the period the futures contract is outstanding, changes in the value of the contract are recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each trading day. Futures contracts are valued at the settlement price established each day by the exchange on which traded. Depending upon whether unrealized gains or losses are incurred, variation margin payments are received or made. When the contract is closed, a realized gain or loss from futures transactions is recorded, equal to the net variation margin received or paid over the period of the contract. The "Underlying Face Amount at Value" representing the aggregate of outstanding contractual amounts under futures contracts reflects the extent of the fund's exposure to off-balance sheet risk. SECURITY TRANSACTIONS -- Security transactions are recorded on the trade date. Realized gains and losses on the sale of short and long-term debt securities are computed on the basis of amortized cost at the time of sale. Realized gains and losses on the sale of stock is based on the identified cost basis of the security, determined on the first-in, first-out ("FIFO") basis. 76 MUTUAL OF AMERICA INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION -- (Continued) INVESTMENT INCOME -- Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Foreign source tax withheld from dividends is recorded as a reduction from dividend income. Should reclamation efforts succeed, such amounts are recorded as income upon collection. FEDERAL INCOME TAXES -- The Investment Company intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income tax provision is required. 2. EXPENSES The Investment Company has an Investment Advisory Agreement with Mutual of America Capital Management Corporation ("the Adviser"), an indirect wholly-owned subsidiary of Mutual of America Life. For providing investment management services to each of the funds of the Investment Company, the Adviser receives a fee, calculated as a daily charge, at the annual rate of .25% of the value of the net assets of the Money Market Fund, .50% of the value of the net assets of the All America Fund, Bond Fund, Short-Term Bond Fund, Mid-Term Bond Fund and Composite Fund, .125% of the value of the net assets of the Equity Index Fund, and, .85% of the value of the net assets of the Aggressive Equity Fund. Under Sub-Advisory Agreements, the Adviser has delegated a portion of its investment advisory responsibilities for the All America Fund to subadvisers and pays the subadvisers directly for their investment advisory services. The Adviser (not the fund) is responsible for compensation payable under such Sub-Advisory Agreements. The Adviser voluntarily limits the expenses of each fund, other than for brokers' commissions, transfer taxes and other fees relating to portfolio transactions, to the amount of the advisory fee paid by the funds of the Investment Company to the Adviser. The Adviser may discontinue this practice at any time. Various funds of the Investment Company may place portfolio transactions through a broker affiliated with the Adviser. The aggregate commissions paid to this broker for the year ended December 31, 1998 was $50,136 or 2.5% of total commissions. In addition, a Sub-Advisor placed a portion of its portfolio transactions with its affiliated broker-dealer. Such commissions amounted to $180,054 or 8.8% of the Investment Company's total commissions. 3. PURCHASES AND SALES The cost of investment purchases and proceeds from sales of investments, excluding short-term securities, options and futures for the year ended December 31, 1998 was as follows:
ALL AMERICA EQUITY INDEX BOND FUND FUND FUND --------------- -------------- --------------- Cost of investment purchases ............... $278,732,574 $103,256,977 $148,576,348 ============ ============ ============ Proceeds from sales of investments ......... $368,105,259 $ 36,042,643 $ 93,327,472 ============ ============ ============
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE BOND FUND BOND FUND FUND EQUITY FUND --------------- -------------- --------------- --------------- Cost of investment purchases ........... $ 22,016,177 $ 2,726,474 $207,305,442 $322,042,470 ============ =========== ============ ============ Proceeds from sales of investments ..... $ 15,714,467 $ 5,619,565 $230,573,876 $415,789,936 ============ =========== ============ ============
The cost of short-term security purchases for the Money Market Fund for the period was $955,961,402. Net proceeds from sales and redemptions for the period was $946,512,623. 77 MUTUAL OF AMERICA INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 3. PURCHASES AND SALES -- (Continued) At December 31, 1998, net unrealized appreciation (depreciation) of investments, based on cost for Federal income tax purposes, was as follows:
MONEY ALL AMERICA EQUITY INDEX BOND MARKET FUND FUND FUND FUND ------------- --------------- -------------- --------------- Aggregate gross unrealized appreciation ............ $ -- $347,941,669 $130,864,562 $ 16,612,958 Aggregate gross unrealized depreciation ............ -- 18,165,745 7,881,923 2,656,031 ----------- ------------ ------------ ------------ Net unrealized appreciation (depreciation) ......... $ -- $329,775,924 $122,982,639 $ 13,956,927 =========== ============ ============ ============ Aggregate cost of investments for Federal income tax purposes .......................................... $80,766,399 $403,576,469 $287,295,071 $446,300,888 =========== ============ ============ ============
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE BOND FUND BOND FUND FUND EQUITY FUND -------------- --------------- --------------- --------------- Aggregate gross unrealized appreciation ............ $ 85,982 $ 173,695 $ 36,223,647 $ 40,554,935 Aggregate gross unrealized depreciation ............ 50,182 50,645 3,731,565 9,384,386 ----------- ------------ ------------ ------------ Net unrealized appreciation (depreciation) ......... $ 35,800 $ 123,050 $ 32,492,082 $ 31,170,549 =========== ============ ============ ============ Aggregate cost of investments for Federal income tax purposes ......................................... $21,724,432 $ 15,154,927 $302,077,790 $174,408,882 =========== ============ ============ ============
4. CAPITAL SHARE ACTIVITY The Investment Company has registered an indefinite number of its capital shares pursuant to Rule 24f-2 under the Investment Company Act of 1940. Shares are currently allocated into the eight series of funds as follows:
NAME OF FUND AUTHORIZED NO. OF SHARES - ------------------------------------------------------------------- ------------------------- Money Market Fund ................................................. 100,000,000 All America Fund .................................................. 500,000,000 Equity Index Fund ................................................. 275,000,000 Bond Fund ......................................................... 425,000,000 Short-Term Bond Fund .............................................. 50,000,000 Mid-Term Bond Fund ................................................ 75,000,000 Composite Fund .................................................... 300,000,000 Aggressive Equity Fund ............................................ 500,000,000 ----------- Sub-Total ........................................................ 2,225,000,000 Shares to be allocated at the discretion of the Board of Directors 775,000,000 ------------- Total ............................................................ 3,000,000,000 =============
Transactions in shares were as follows for the year ended December 31, 1998:
FOR THE YEAR ENDED DECEMBER 31, 1998 ----------------------------------------------------------- MONEY MARKET ALL AMERICA EQUITY INDEX BOND FUND FUND FUND FUND -------------- --------------- -------------- ------------- Shares issued ............................................. 65,030,676 16,550,567 99,314,538 77,260,563 Shares issued to shareholders as reinvestment of dividends 3,080,576 30,263,002 13,563,464 22,419,396 ---------- ---------- ---------- ---------- Total ..................................................... 68,111,252 46,813,569 112,878,002 99,679,959 Shares redeemed ........................................... 57,281,015 51,998,029 59,350,065 62,903,436 ---------- ---------- ----------- ---------- Net increase (decrease) ................................... 10,830,237 (5,184,460) 53,527,937 36,776,523 ========== ========== =========== ==========
78 MUTUAL OF AMERICA INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 4. CAPITAL SHARE ACTIVITY -- (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1998 --------------------------------------------------------- SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE BOND FUND BOND FUND FUND EQUITY FUND ------------ ------------- ------------- ---------------- Shares issued ............................................. 11,305,009 9,542,507 9,518,911 46,769,027 Shares issued to shareholders as reinvestment of dividends 981,938 884,933 7,895,857 1,397,187 ---------- --------- --------- ---------- Total ..................................................... 12,286,947 10,427,440 17,414,768 48,166,214 Shares redeemed ........................................... 5,275,226 9,698,201 16,332,231 90,803,686 ---------- ---------- ---------- ---------- Net increase (decrease) ................................... 7,011,721 729,239 1,082,537 (42,637,472) ========== ========== ========== ===========
FOR THE YEAR ENDED DECEMBER 31, 1997 ----------------------------------------------------------- MONEY MARKET ALL AMERICA EQUITY INDEX BOND FUND FUND FUND FUND -------------- --------------- -------------- ------------- Shares issued ............................................. 25,436,145 18,307,611 55,500,928 89,348,390 Shares issued to shareholders as reinvestment of dividends 3,575,177 31,672,092 2,398,380 18,616,691 ---------- ---------- ---------- ---------- Total ..................................................... 29,011,322 49,979,703 57,899,308 107,965,081 Shares redeemed ........................................... 37,008,064 53,217,275 7,724,686 56,494,335 ---------- ---------- ---------- ----------- Net increase (decrease) ................................... (7,996,742) (3,237,572) 50,174,622 51,470,746 ========== ========== ========== ===========
FOR THE YEAR ENDED DECEMBER 31, 1997 ---------------------------------------------------- SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE BOND FUND BOND FUND FUND EQUITY FUND ------------ ----------- ------------ -------------- Shares issued ............................................. 4,388,108 7,758,608 16,004,173 82,801,715 Shares issued to shareholders as reinvestment of dividends 902,033 1,007,176 41,594,212 17,718,305 --------- --------- ---------- ---------- Total ..................................................... 5,290,141 8,765,784 57,598,385 100,520,020 Shares redeemed ........................................... 6,050,019 7,440,628 29,544,518 14,247,788 --------- --------- ---------- ----------- Net increase (decrease) ................................... (759,878) 1,325,156 28,053,867 86,272,232 ========= ========= ========== ===========
79 MUTUAL OF AMERICA INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 5. DIVIDENDS On December 31,1998 dividend distributions were declared for each of the Funds from net realized gains on investment transactions and net investment income during 1998. Additionally, on September 15, 1998 the remaining required dividends relating to the 1997 Internal Revenue Sec. 855(a) election were declared for each of the funds and paid on September 15, 1998 to shareholders of record on September 14, 1998. Dividends were declared and paid on December 31, 1998 to shareholders of record on December 30, 1998. All dividend distributions are immediately reinvested in additional shares of each respective fund.
MONEY MARKET ALL AMERICA EQUITY INDEX BOND FUND FUND FUND FUND ---------------- ---------------- ---------------- ---------------- Net investment income .................. $ 3,649,927 $ 6,199,614 $ 15,127,822 $ 30,282,899 Net realized capital gains ............. -- 80,822,684 26,440,581 1,689,364 ------------ ------------ ------------ ------------ Total dividends ........................ $ 3,649,927 $ 87,022,298 $ 31,568,403 $ 31,972,263 ============ ============ ============ ============ Dividend amounts per share ............. $ 0.056 $ 0.384 $ 0.204 $ 0.105 ============ ============ ============ ============ Increase in number of shares per fund .. 3,080,576 30,263,002 13,563,464 22,419,396 ============ ============ ============ ============
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE FUND BOND FUND FUND FUND ---------------- -------------- ---------------- ---------------- Net investment income ................ $ 988,096 $ 805,870 $ 11,647,020 $ 432,712 Net realized capital gains ........... 22,729 -- 2,398,589 1,368,230 ------------ ---------- ------------ ------------ Total dividends ...................... $ 1,010,825 $ 805,870 $ 14,045,609 $ 1,800,942 ============ ========== ============ ============ Dividend amounts per share ........... $ 0.049 $ 0.050 $ 0.078 $ 0.014 ============ ========== ============ ============ Increase in number of shares per fund 981,938 884,933 7,895,857 1,397,187 ============ ========== ============ ============
80 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Mutual of America Investment Corporation: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments in securities, of Mutual of America Investment Corporation (a Maryland Corporation) comprising, respectively, the Money Market, All America (formerly the Stock Fund), Equity Index, Bond, Short-Term Bond, Mid-Term Bond, Composite, and Aggressive Equity Funds as of December 31, 1998, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and the financial highlights are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1998 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Money Market, All America (formerly the Stock Fund), Equity Index, Bond, Short-Term Bond, Mid-Term Bond, Composite, and Aggressive Equity Funds of Mutual of America Investment Corporation as of December 31, 1998, the results of their operations for the year then ended and the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP New York, New York February 19, 1999 81 PART C. OTHER INFORMATION ITEM 23. EXHIBITS Exhibit 1(b). Articles Supplementary to Articles of Incorporation. Exhibit 9. Consent and Opinion of General Counsel. Exhibit 10(a). Consent of Independent Public Accountants. Exhibit 10(b). Consent of Counsel. Exhibit 27.1-.8. Financial Data Schedules. ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER Mutual of America Capital Management Corporation (the "Adviser") is the investment adviser to the Investment Company, and is registered as an investment adviser under the Investment Advisers Act of 1940. The names, addresses and positions with the Adviser of each Director and officer of the Adviser is set forth below.
POSITIONS PRINCIPAL OCCUPATION NAME WITH ADVISER DURING PAST TWO YEARS - ---------------------------- --------------------------- ------------------------------------ Thomas J. Moran ............ Director, Chairman of the President, Chief Executive Officer 320 Park Avenue Board and Director of Mutual of America NY, NY 10022 Life F. Harlan Batrus ........... Director Partner, Lazard Freres & Co. 30 Rockefeller Plaza NY, NY 10020 Roger E. Birk .............. Director Chairman Emeritus, Merrill Lynch & Merrill Lynch Co., Inc. 77 Broad Street Red Bank, NJ 07701 Robert X. Chandler ......... Director Director, Development Office, Director, Development Office Archdiocese of Boston Archdiocese of Boston 2121 Commonwealth Avenue Brighton, MA 02135 Nathaniel A. Davis ......... Director Vice President, Network Engineering 17680 Old Meadow Rd. Operations, Nextel McLean, VA 22102 Communications Anthony F. Earley .......... Director Chairman, President and Chief Detroit Edison Company Operating Officer, Detroit 2000 Second Avenue Edison Co. Room 2407 WCB Detroit, MI 48226 William T. Knowles ......... Director Consultant Orr's Island, ME 04066 Walter A. McDougal ......... Director Former Chairman and President, Garden City, NY 11530 Richmond Hill Savings Bank James E. Quinn ............. Director Vice Chairman, Tiffany & Co. 757 Fifth Avenue NY, NY 10022 Richard J. Ciecka .......... President, Chief Vice Chairman of the Board, Mutual 320 Park Avenue Executive Officer of America Life, until October NY, NY 10022 and Director 1998 Manfred Altstadt ........... Senior Executive Vice Senior Executive Vice President and 320 Park Avenue President and Chief Chief Financial Officer of Mutual NY, NY 10022 Financial Officer of America Life and American Life
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POSITIONS PRINCIPAL OCCUPATION NAME WITH ADVISER DURING PAST TWO YEARS - ------------------------------ -------------------------- ------------------------------------- Patrick A. Burns ............. Senior Executive Vice Senior Executive Vice President and 320 Park Avenue President and General General Counsel of Mutual of NY, NY 10022 Counsel America Life and American Life Amir Lear .................... Executive Vice President Senior Vice President, Mutual of 320 Park Avenue and Assistant to the America Life, until October 1998 NY, NY 10022 President and Chief Executive Officer Andrew L. Heiskell ........... Executive Vice President Executive Vice President of the 320 Park Avenue Adviser NY, NY 10022 Thomas J. Larsen ............. Executive Vice President Executive Vice President of the 320 Park Avenue Adviser since June 1998; prior NY, NY 10022 thereto, Senior Vice President, Desai Capital Management Joseph Brunken ............... Senior Vice President Senior Vice President of the Adviser 320 Park Avenue since November 1997; prior NY, NY 10022 thereto, Vice President, Nikko Capital Management (USA), Inc. Jon J. LaBerge ............... Senior Vice President Senior Vice President of the Adviser 320 Park Avenue NY, NY 10022 Stanley M. Lenkowicz ......... Senior Vice President, Senior Vice President and Deputy 320 Park Avenue Deputy General General Counsel, Mutual of NY, NY 10022 Counsel and Secretary America Life and American Life Nancy McAvey ................. Senior Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022 Paul Travers ................. Senior Vice President Senior Vice President of the Adviser 320 Park Avenue NY, NY 10022 Gary P. Wetterau ............. Senior Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022 David Wood ................... Senior Vice President Senior Vice President of the Adviser 320 Park Avenue NY, NY 10022 Aline Couture ................ Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022 Doris Klug ................... Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022 Jonathan Lee ................. Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022 Phillip McMahon .............. Vice President Equity Securities Analyst until 320 Park Avenue November 1998 NY, NY 10022
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POSITIONS PRINCIPAL OCCUPATION NAME WITH ADVISER DURING PAST TWO YEARS - --------------------------- ---------------- ------------------------------ Robert H. Stewart ......... Vice President Vice President of the Adviser 320 Park Avenue NY, NY 10022
Each of Palley-Needelman Asset Management, Inc. ("Palley-Needelman"), Oak Associates, Ltd. ("Oak Associates") and Fred Alger Management, Inc. ("Alger Management") is a subadviser for a portion of the Active Assets of the All America Fund allocated to it. Each subadviser is registered as an investment adviser under the Investment Advisers Act of 1940. The names, addresses and positions of each director and officer of each subadviser are incorporated by reference to the Form ADV of the subadviser filed with the Securities and Exchange Commission, as set forth below. Palley-Needleman Asset Management Inc., Form ADV, SEC File No. 801-9755. Oak Associates, Ltd., Form ADV, SEC File No. 801-23632. Fred Alger Management, Inc., Form ADV, SEC File No. 801-06709. ITEM 27. PRINCIPAL UNDERWRITERS (a) Mutual of America Life Insurance Company, the principal underwriter of the Registrant, acts as depositor and principal underwriter of Mutual of America Separate Account No. 2, and as principal underwriter of The American Separate Account No. 2 and The American Separate Account No. 3 of The American Life Insurance Company of New York. (b) The name, business address and position of each senior officer and director of Mutual of America are as follows:
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER - ------------------------------- --------------------------- DIRECTORS Clifford L. Alexander, Jr. Director Washington, D.C. Patricia A. Cahill Director Denver, Colorado Roselyn P. Epps, M.D. Director Bethesda, Maryland Dudley H. Hafner Director Dallas, Texas Earle H. Harbison, Jr. Director St. Louis, Missouri Frances R. Hesselbein Director New York, New York William Kahn Director St. Louis, Missouri LaSalle D. Leffall, Jr., M.D. Director Washington, D.C. Michael A. Pelavin Director Flint, Michigan Fioravante G. Perrotta Director New York, New York Francis H. Schott Director New York, New York
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NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER - ------------------------- ---------------------------------------------------------------------- O. Stanley Smith, Jr. Director Columbia, South Carolina Sheila M. Smythe Director Valhalla, New York Elie Wiesel Director New York, New York OFFICERS-DIRECTORS William J. Flynn Chairman of the Board Thomas J. Moran President and Chief Executive Officer Manfred Altstadt Senior Executive Vice President and Chief Financial Officer Patrick A. Burns Senior Executive Vice President and General Counsel Salvatore R. Curiale Senior Executive Vice President, Technical Operations OTHER OFFICERS Diane Aramony Senior Vice President, Corporate Secretary and Assistant to the Chairman Meyer Baruch Senior Vice President, State Compliance and Government Regulations since July 1996; prior thereto, Assistant Chief of the Life Insurance and Companies Bureau of The New York State Insurance Department Deborah Swinford Becker Senior Vice President and Associate General Counsel Nicholas Branchina Senior Vice President and Associate Treasurer William Breneisen Executive Vice President, Office of Technology Jeremy J. Brown Executive Vice President and Chief Actuary since April 1997; prior thereto Consulting Actuary with Milliman & Robertson Allen J. Bruckheimer Senior Vice President and Associate Treasurer Patrick Burke Senior Vice President, Special Markets Sean Carroll Senior Vice President, Facilities Management William Conway Executive Vice President, Marketing and Corporate Communications William A. DeMilt Executive Vice President, Real Estate Management Warren A. Essner Senior Vice President, Corporate Services James Flynn Senior Vice President, Marketing Michael Gallagher Senior Vice President, Direct Response and Technical Boca Raton, FL Communications Harold J. Gannon Senior Vice President, Corporate Tax Gordon Gaspard Senior Vice President, Technical Services Robert Giaquinto Senior Vice President, MIS Operations Thomas E. Gilliam Executive Vice President and Assistant to the President and Chief Executive Officer
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NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER - ----------------------- ------------------------------------------------------------------- John R. Greed Executive Vice President and Treasurer since May 1997; Senior Vice President and Deputy Treasurer July 1996 to May 1997; prior thereto, partner, Arthur Andersen LLP Thomas A. Harwood Senior Vice President, Competition and Asset Retention Sandra Hersko Senior Vice President, Technical Administration Edward J.T. Kenney Senior Vice President and Assistant to the President and Chief Executive Officer Gregory A. Kleva, Jr. Executive Vice President and Deputy General Counsel Robert Kordecki Senior Vice President, National Accounts Stanley M. Lenkowicz Senior Vice President and Deputy General Counsel Daniel LeSaffre Senior Vice President, Human Resources and Training Robert W. Maull Senior Vice President and Corporate Actuary George L. Medlin Executive Vice President, Internal Audit Lynn M. Nadler Senior Vice President, Training -- Boca Raton Boca Raton, FL Roger F. Napoleon Senior Vice President and Associate General Counsel James Peterson Senior Vice President, Training -- New York and Leadership Development William Rose Senior Vice President, Field Operations Dennis J. Routledge Senior Vice President, LAN/Telecommunications Robert W. Ruane Senior Vice President, Corporate Communications and Direct Response William G. Shannon Senior Vice President, Individual Financial Planning Walter W. Siegel Senior Vice President and Actuary Joan M. Squires Senior Vice President, Business Applications Eldon Wonacott Senior Vice President, Field Administration Raymond Yeager Senior Vice President, MIS Operations Boca Raton, FL
The business address of all officers and directors is 320 Park Avenue, New York, New York 10022, unless otherwise noted. C-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the registrant had duly caused this post-effective amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, the State of New York, the 14th day of April, 1999. MUTUAL OF AMERICA INVESTMENT CORPORATION By: /s/ DOLORES J. MORRISSEY -------------------------------- DOLORES J. MORRISSEY PRESIDENT Pursuant to the requirements of the Securities Act of 1933, this post-effective amendment to its Registration Statement has been signed below by the following persons in the capacities on April 14, 1999. PRINCIPAL EXECUTIVE OFFICER: By: /s/ DOLORES J. MORRISSEY -------------------------- DOLORES J. MORRISSEY PRESIDENT PRINCIPAL FINANCIAL OFFICER and PRINCIPAL ACCOUNTING OFFICER: /s/ MANFRED ALTSTADT - ----------------------------- MANFRED ALTSTADT DIRECTORS: /s/ MANFRED ALTSTADT - ----------------------------- MANFRED ALTSTADT /s/ DOLORES J. MORRISSEY - ----------------------------- DOLORES J. MORRISSEY * - ----------------------------- PETER J. FLANAGAN * - ----------------------------- GEORGE J. MERTZ * - ----------------------------- JAMES J. NEEDHAM * - ----------------------------- HOWARD J. NOLAN *By: /s/ MANFRED ALTSTADT ------------------------- ATTORNEY-IN-FACT C-6 EXHIBIT INDEX
NO. PAGE - --------------- ----- 27.1 Financial Data Schedule for Equity Index Fund 27.2 Financial Data Schedule for All America Fund 27.3 Financial Data Schedule for Aggressive Equity Fund 27.4 Financial Data Schedule for Composite Fund 27.5 Financial Data Schedule for Bond Fund 27.6 Financial Data Schedule for Mid-Term Bond Fund 27.7 Financial Data Schedule for Short-Term Bond Fund 27.8 Financial Data Schedule for Money Market Fund 99.1 (b) Articles Supplementary to Articles of Incorporation 99.9 Consent and Opinion of General Counsel 99.10(a) Consent of Independent Public Accountants 99.10(b) Consent of Counsel
EX-27.1 2 INVESTMENT CORP. - EQUITY INDEX 27.1
6 3 EQUITY INDEX FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 287,295,071 410,277,711 71,818 406,944 10,326 410,766,799 448 0 0 448 0 297,765,055 167,559,906 114,031,969 25,162 0 (10,006,505) 0 122,982,639 410,766,351 4,641,412 938,913 0 412,769 5,167,556 4,309,294 72,664,856 82,141,706 0 15,127,822 26,440,581 0 99,314,538 59,350,065 13,563,464 53,527,937 (14,572) 12,124,782 0 0 412,769 0 412,769 329,642,151 2.08 0.03 0.55 (0.03) (0.17) 0 2.45 0.13 0 0
EX-27.2 3 INVESTMENT CORP. - ALL AMERICA 27.2
6 2 ALL AMERICA FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 403,576,469 733,352,393 11,050 729,575 2,434,656 736,527,674 4,178,559 0 0 4,178,559 0 404,058,426 252,884,422 258,068,880 (368,798) 0 (1,116,437) 0 329,775,924 732,349,115 8,564,603 1,000,865 0 3,559,615 6,005,853 75,028,110 51,132,012 132,165,975 0 6,199,614 80,822,684 0 16,550,567 51,998,029 30,263,002 (5,184,460) (175,037) 4,678,137 0 0 3,559,615 0 3,559,615 711,469,584 2.71 0.03 0.54 (0.03) (0.35) 0 2.90 0.50 0 0
EX-27.3 4 INVESTMENT CORP. - AGGRESSIVE EQUITY 27.3
6 8 AGGRESSIVE EQUITY FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 174,408,882 205,579,431 0 205,460 6,063 205,790,954 378,125 0 0 378,125 0 198,159,450 136,169,705 178,807,178 (10,452) 0 (23,906,718) 0 31,170,549 205,412,829 1,752,545 680,420 0 2,007,629 425,336 (23,621,835) 9,581,686 (13,614,813) 0 432,712 1,368,230 0 46,769,027 90,803,686 1,397,187 (42,637,472) (3,076) 1,083,347 0 0 2,007,629 0 2,007,629 236,448,041 1.61 0 (0.09) 0 (0.01) 0 1.51 0.85 0 0
EX-27.4 5 INVESTMENT CORP. - COMPOSITE FUND 27.4
6 7 COMPOSITE FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 302,077,790 334,569,873 0 1,621,390 10,084 336,201,347 0 0 0 0 0 307,142,582 188,998,726 187,916,189 761,149 0 (4,194,467) 0 32,492,083 336,201,347 2,163,375 11,211,064 0 1,601,894 11,772,545 3,264,030 28,079,557 43,116,132 0 11,647,020 2,398,589 0 9,518,911 16,332,231 7,895,857 1,082,537 635,624 (5,059,908) 0 0 1,601,894 0 1,601,894 320,099,577 1.62 0.07 0.17 (0.07) (0.01) 0 1.78 0.50 0 0
EX-27.5 6 INVESTMENT CORP. - BOND FUND 27.5
6 4 BOND FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 446,300,888 460,257,815 142,942 4,925,577 2,658 465,328,992 0 0 0 0 0 456,250,383 326,640,323 289,863,800 (876,674) 0 (4,001,644) 0 13,956,927 465,328,992 0 32,467,679 0 2,245,279 30,222,400 747,807 (41,522) 30,928,685 0 30,282,899 1,689,364 0 77,260,563 62,903,436 22,419,396 36,776,523 (816,175) (3,060,087) 0 0 2,245,279 0 2,245,279 449,078,884 1.43 0.10 0 (0.10) (0.01) 0 1.42 0.50 0 0
EX-27.6 7 INVESTMENT CORP. - MID-TERM BOND 27.6
6 6 MID-TERM BOND FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 15,154,927 15,277,977 0 738 151,589 15,430,304 0 0 0 0 0 16,547,869 16,952,106 16,222,865 (54,119) 0 (1,186,496) 0 123,050 15,430,304 0 858,591 0 68,431 790,160 84,974 (37,685) 837,449 0 805,870 0 0 9,542,507 9,698,201 884,933 729,239 (38,409) (1,271,470) 0 0 68,431 0 68,431 13,707,244 0.90 0.05 0.01 (0.05) 0 0 0.91 0.50 0 0
EX-27.7 8 INVESTMENT CORP. - SHORT-TERM BOND 27.7
6 5 SHORT-TERM BOND FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 21,724,432 21,760,232 49,150 167,126 972 21,977,480 2,292 0 0 2,292 0 21,933,271 21,351,075 14,339,355 13,225 0 (7,108) 0 35,800 21,975,188 0 1,093,898 0 91,736 1,002,162 15,002 (22,056) 995,108 0 988,096 22,729 0 11,305,009 5,275,226 981,938 7,011,721 (841) 619 0 0 91,736 0 91,736 18,348,525 1.02 0.05 0.01 (0.05) 0 0 1.03 0.50 0 0
EX-27.8 9 INVESTMENT CORP. - MONEY MARKET FUND 27.8
6 1 MONEY MARKET FUND 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 80,766,399 80,766,399 0 0 3,279 80,769,678 0 0 0 0 0 80,655,650 68,195,147 57,364,909 124,861 0 (10,833) 0 0 80,769,678 0 3,817,397 0 173,091 3,644,306 (1,091) 0 3,643,215 0 3,649,927 0 0 65,030,676 57,281,015 3,080,576 10,830,237 130,482 (9,742) 0 0 173,091 0 173,091 69,261,855 1.18 0.06 0 (0.06) 0 0 1.18 0.25 0 0
EX-99 10 EXHIBIT 99.1(B) MUTUAL OF AMERICA INVESTMENT CORPORATION ARTICLES SUPPLEMENTARY TO THE CHARTER Mutual of America Investment Corporation, a Maryland corporation (the CORPORATION), with its principal office c/o Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The total number of shares of capital stock of all classes that the Corporation has authority to issue is three billion (3,000,000,000) shares of common stock, par value $.01 per share, with an aggregate par value of thirty million dollars ($30,000,000). SECOND: Pursuant to authority vested in the Board of Directors of the Corporation by Section 5.1 of the Articles of Incorporation of the Corporation (the ARTICLES) and resolutions adopted by the Board of Directors at meetings duly held, the Board of Directors has duly designated the following classes of shares and allocated authorized common stock as follows:
Aggressive Equity Fund -500 million shares Mid-Cap Equity Index Fund - 150 million shares All America Fund -500 million shares Mid-Term Bond Fund - 75 million shares Bond Fund -425 million shares Money Market Fund - 100 million shares Composite Fund -300 million shares Short-Term Bond Fund - 50 million shares Equity Index Fund -275 million shares
The relative preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of each such class are as set forth in Section 5.3 of Article V of the Articles. THIRD: Pursuant to authority vested in the Board of Directors of the Corporation by Article V of the Articles and resolutions adopted by the Board of Directors at meetings duly held, the Board of Directors has authorized allocation of such additional shares of common stock of each of the Funds, with the same relative preferences and other rights as then outstanding shares of such classes as set forth in Section 5.3 of the Articles, as are necessary from time to time to permit the issuance of shares required on a daily basis in the operation of each of the Funds, and the Board has authorized the officers of the Corporation to specify the amount of such additional shares as needed, with a report thereon to be made at the next regularly scheduled meeting of the Board of Directors. IN WITNESS WHEREOF, the President of the Corporation has signed these Articles Supplementary in the Corporation's name and on its behalf and acknowledges that these Articles Supplementary are the act of the Corporation, and states that to the best of her knowledge, information and belief all matters and facts set forth therein relating to the authorization and approval of the Articles Supplementary are true in all material respects and that this statement is made under the penalties of perjury. Dated: April 6, 1999 MUTUAL OF AMERICA INVESTMENT CORPORATION Attest: /s/ Dolores J. Morrissey ------------------------------- /s/ Stanley M. Lenkowicz Dolores J. Morrissey, President - ------------------------------------ Stanley M. Lenkowicz, Secretary (seal) EX-99 11 EXHIBIT 99.9 Exhibit 99.9 [Letterhead of Patrick A. Burns, Senior Executive Vice President and General Counsel] April 14, 1999 Mutual of America Investment Corporation 320 Park Avenue New York, New York 10022 Dear Sirs/Madams: This opinion is furnished in connection with the filing of Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A (the "Post-Effective Amendment") of Mutual of America Investment Corporation and the proposed offering of common shares, par value $.01 per share, of the Mid-Cap Equity Index Fund described in the Post-Effective Amendment. I have reviewed such documents and records as I have deemed necessary to express an informed opinion on the matters covered hereby. It is my opinion that the common shares of the Mid-Cap Equity Index Fund, when issued and sold in accordance with the Post-Effective Amendment and in jurisdictions where such sales have been authorized, will be legally issued, fully paid and non-assessable. I hereby consent to the use of this opinion as an exhibit to the Post-Effective Amendment and to the reference to my name under the heading "Legal Matters" in the Statement of Additional Information. Sincerely, /s/ Patrick A. Burns EX-99 12 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. 33-6486. ARTHUR ANDERSEN LLP New York, New York April 15, 1999 EX-99.10(B) 13 CONSENT OF COUNSEL EXHIBIT 99.10(b) CONSENT OF COUNSEL We hereby consent to the reference to our firm included in the prospectus filed as part of Registration Statement No. 33-6486. SWIDLER BERLIN SHEREFF FRIEDMAN, LLP New York, New York April 15, 1999 -----END PRIVACY-ENHANCED MESSAGE-----