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Unprecedented economic and capital market conditions have created an environment that is adversely impacting the performance of all money market funds, including the Mutual of America Money Market Fund.
As the Company has reported in recent newsletters, and as has been widely reported by the media, the financial markets have been in a state of turmoil this past year, particularly in the last four months. In an attempt to address this turmoil, the U.S. Government has implemented a number of initiatives—mainly during the fourth quarter of 2008—which include reducing the Federal Funds rate to historic lows of between 0% and 0.25%. As a result, the high-quality, short-term investments in which money market funds are required to invest ("Eligible Investments") have unusually low yields, well below any historical precedent.
Mutual of America's Separate Account Money Market Fund
As the maturing securities owned by the Mutual of America Money Market Fund are replaced with Eligible Investments that provide significantly lower yields, the fees and expenses related to the Fund are exceeding overall returns of the Fund, resulting in negative net returns. This means that money invested in this Fund is not currently earning a net positive rate of return, resulting in a small loss of principal.
The Prospectus/Brochure of Mutual of America's Separate Accounts (dated May 1, 2009) outlines the risk to the Fund's objectives of capital preservation and current income as a result of the Fund's fees and expenses in an environment of low interest rates. We are now experiencing such a market environment. No one can predict the duration of these highly unusual economic conditions. Any decision regarding current or prospective investments in the Mutual of America Money Market Fund must be made based on an individual's circumstances and needs.
Mutual of America's General Account (Interest Accumulation Account)
Mutual of America's General Account, referred to as the Interest Accumulation Account, is an additional alternative available under Mutual of America's annuity contracts. If you currently have money invested in the Money Market Fund, or if you are considering the transfer of money to this Fund, you may wish to consider the Interest Accumulation Account as an alternative to the Money Market Fund in this environment.
Amounts deposited to the Interest Accumulation Account, including interest after it is credited to the account, are guaranteed by Mutual of America. These guarantees are subject to the financial strength and claims-paying ability of Mutual of America.
Mutual of America sets the interest rate for the Interest Accumulation Account. At its discretion, it may change the current interest rate. However, the effective annual yield cannot go below a guaranteed minimum effective annual yield established for contracts for the 2009 calendar year. For information regarding the interest rate applicable to your contract, you may contact your local Mutual of America Regional Office, or call 1-800-468-3785, Monday through Friday from 9:00 a.m. until 9:00 p.m. ET. You may also obtain this information on this Web site under the My Account page.
Independent Ratings Affirm Financial Strength
Mutual of America is among the strongest companies in the life insurance industry. The Company's financial strength, based on its conservative General Account investment strategies, is reflected in the ratings it has received from the following recognized rating agencies:
- A+ (Superior) by A.M. Best (as of December 2008)
- AA- (Very Strong) by Standard and Poor's (as of September 2008)
- AA- (Very Strong) by Fitch (as of January 2008)
While the ratings provided by these agencies do not apply to the safety or investment performance of the Separate Account investment alternatives available under our annuity contracts, such as the Money Market Fund, the ratings do reflect Mutual of America's ability to fulfill its obligations including its guarantees of amounts placed in the Interest Accumulation Account and annuity pay-outs.
Questions? Contact Your Mutual of America Regional Office
If you have questions regarding the Mutual of America Money Market Fund or your retirement savings plan in general, please contact your local Mutual of America Regional Office, or call 1-800-468-3785.