File Nos. 333- , 811-
As filed with the Securities and Exchange Commission on _____, 1997
U.S. 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.___ [ ]
and
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No.___ [ ]
(Check appropriate box or boxes.)
-----------------------------------
TIAA-CREF Mutual Fund
730 Third Avenue
New York, New York 10017
(800) 842-2733
(Registrant's Exact Name, Address and Telephone Number)
Peter C. Clapman, Esq.
TIAA-CREF Mutual Fund
730 Third Avenue
New York, New York 10017
(Name and Address of Agent for Service)
Copy to:
Steven B. Boehm, Esq.
Sutherland, Asbill & Brennan, L.L.P.
1275 Pennsylvania Avenue, N.W.
Washington, D. C. 20004-2404
Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement.
--------------------------------------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
declares that an indefinite amount of securities is being registered under the
Securities Act of 1933.
-------------------------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
<PAGE>
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
Cross Reference Sheet
Pursuant to Rule 481(a) under the Securities Act of 1933
Showing Location of Information Required by Form N-1A
in Part A (Prospectus) and Part B (Statement of
Additional Information) of the Registration Statement
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Caption(s) in the Statement
Item of Form N-1A Caption(s) in the Prospectus of Additional Information
----------------- ---------------------------- ---------------------------
Part A: Information Required in a Prospectus
<S> <C> <C> <C>
1. Cover Page Cover page
2. Synopsis Expense Information
3. Condensed Financial N/A
Information
4. General Description of The TIAA-CREF Mutual Fund
Registrant
5. Management of the Management of TCMF and
Fund Investment Advisory
Arrangements
5A. Management's N/A
Discussion of Fund
Performance
6. Capital Stock and About TCMF and the Shares
Other Securities
7. Purchase of Securities How to Buy Shares
Being Offered
8. Redemption or How to Redeem Shares
Repurchase
9. Pending Legal General Matters - Legal
Proceedings Proceedings
Part B: Information Required in a Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information N/A
and History
<PAGE>
13. Investment Objectives Investment Objectives, Policies,
and Policies and Restrictions
14. Management of the Management of the Fund
Fund
15. Control Persons and Control Persons
Principal Holders of
Securities
16. Investment Advisory Investment Advisory and Other
and Other Services Services
17. Brokerage Allocation Management of TCMF and
and Other Practices Investment Advisory
Arrangements - Brokerage
Allocation
18. Capital Stock and About TCMF and the Shares
Other Securities
19. Purchase, Redemption Purchase, Redemption and
and Pricing of Pricing of Shares
Securities Being
Offered
20. Tax Status Tax Status
21. Underwriters Underwriters
22. Calculation of Calculation of Performance Data
Performance Data
23. Financial Statements Financial Statements
</TABLE>
Part C: Other Information
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this registration statement.
<PAGE>
PROSPECTUS
Dated ________, 1997
TIAA-CREF Mutual Fund
This prospectus contains information that you should consider before investing
in the TIAA-CREF Mutual Fund. Read it carefully before investing, and keep it
for future reference.
If you have any questions about the TIAA-CREF Mutual Fund or your account,
please call us at 1 800 223-1200.
This prospectus describes the six investment portfolios (the funds) listed
below, each of which is a separate series of the TIAA-CREF Mutual Fund.
The International Equity Fund seeks a favorable long-term return, mainly
through capital appreciation from a broadly diversified portfolio that
consists primarily of foreign common stocks.
The Growth Equity Fund seeks a favorable long-term return, mainly through
capital appreciation, primarily from a diversified portfolio of common
stocks that present the opportunity for exceptional growth.
The Growth & Income Fund seeks a favorable long-term return through
capital appreciation and investment income from a portfolio consisting
primarily of broadly diversified common stocks.
The Managed Allocation Fund seeks favorable returns that reflect the broad
investment performance of the financial markets through capital
appreciation and investment income.
The Bond Plus Fund seeks a favorable long-term return, primarily through
high current income consistent with preserving capital. In addition, we
will use our expertise to invest in some securities which are less liquid
and/or non-investment grade in order to attempt to improve our total
return.
The Money Market Fund seeks high current income to the extent consistent
with maintaining liquidity and preserving capital. An investment in the
Money Market Fund is neither insured nor guaranteed by the U.S.
Government. We will attempt to maintain a stable net asset value of $1.00
per share for this fund, but we can't assure you that we will be able to
do so.
<PAGE>
More information is on file with the Securities and Exchange Commission ("SEC")
in the Statement of Additional Information ("SAI") for TIAA-CREF Mutual Fund
dated __________, 1997. You can get a copy of the SAI by calling 1 800 223-1200
or writing us c/o State Street Bank, P.O. Box 9081, Boston, Massachusetts 02266.
The SAI, as supplemented from time to time, is "incorporated by reference" into
this prospectus; that means it's legally part of this prospectus. The SAI, other
material incorporated by reference, and other information about registrants that
file Registration Statements electronically with the SEC are available through
the SEC's website at http:///www.sec.gov.
LIKE ALL MUTUAL FUND SHARES, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Table of Contents
Expense Information..........................................................
The TIAA-CREF Mutual Fund....................................................
The Equity Funds.......................................................
The International Equity Fund....................................
The Growth Equity Fund...........................................
The Growth & Income Fund.........................................
The Managed Allocation Fund............................................
The Bond Plus Fund.....................................................
The Money Market Fund..................................................
Investment Practices and Risk Considerations.................................
Foreign Securities.....................................................
Depository Receipts....................................................
Currency Transactions..................................................
Swap Agreements .......................................................
Illiquid Securities....................................................
Repurchase Agreements..................................................
Firm Commitment Agreements.............................................
Investment Companies...................................................
Lending Securities ....................................................
Borrowing..............................................................
Non-Investment Grade Bonds.............................................
Mortgage-Backed Securities.............................................
Net Asset Value..............................................................
Shareholder Services.........................................................
Who can Open an Account................................................
Types of Accounts......................................................
How to Buy Shares......................................................
How to Redeem Shares...................................................
How to Exchange Shares.................................................
Other Investor Information.............................................
TIAA-CREF Mutual Fund's Management...........................................
The Board..............................................................
Teachers Advisors......................................................
Fund Managers..........................................................
Performance Information......................................................
i
<PAGE>
Dividends and Distributions..................................................
Taxes........................................................................
General Matters..............................................................
Voting Rights..........................................................
Distributors...........................................................
Administration.........................................................
Custodial Services.....................................................
Legal Proceedings......................................................
This prospectus outlines the terms under which an investment in the TIAA-CREF
Mutual Fund is available. It doesn't constitute an offering in any jurisdiction
where such an offering can't lawfully be made. No dealer, salesman, or anyone
else is authorized to give any information or to make any representation in
connection with this offering other than those contained in this prospectus. If
anyone does offer you such information or representations, you shouldn't rely on
them.
ii
<PAGE>
Expense Information
Shareholder Transaction Expenses (applicable to each investment fund)
Maximum sales load imposed on purchases
(as a percentage of offering price) ............................0%
Maximum sales load imposed on reinvested dividends
(as a percentage of offering price) ............................0%
Deferred sales load
(as a percentage of original purchase price or
redemption proceeds, as applicable) ............................0%
Redemption fee
(as a percentage of amount redeemed, if applicable) ............0%
Exchange fee
(as a percentage of average net assets) ........................0%
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Fees Other Expenses Total Fund Operating Expenses
(after expense (after expense (after expense
reimbursements) reimbursements) reimbursements)
(1) (2) (1)
<S> <C> <C> <C>
The International Equity Fund
The Growth Equity Fund
The Growth & Income Fund
The Managed Allocation
Fund (2)
The Bond Plus Fund
The Money Market Fund
</TABLE>
(1) Based upon a management fee of __% of the average daily net assets of
each fund (other than the Managed Allocation Fund) and an agreement by Teachers
Advisors, Inc. ("Teachers Advisors") to waive such fee to the extent that total
fund operating expenses exceed __% of such fund's average daily net assets.
Absent this waiver, the TIAA-CREF Mutual Fund anticipates that total fund
operating expenses would be __% of each fund's average daily net assets (other
than the Managed Allocation Fund).
(2) These figures are based upon estimated amounts for the current fiscal
year.
(3) Teachers Advisors does not receive a management fee for
its services to the Managed Allocation Fund and has agreed to bear
1
<PAGE>
any other expenses incurred by the Managed Allocation Fund. Thus, the Managed
Allocation Fund operates at a zero expense ratio. However, shareholders in the
Managed Allocation Fund will indirectly bear their pro rata share of the fees
and expenses incurred by the funds in which the Managed Allocation Fund invests.
Example
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, regardless of whether you redeem shares at the end of each time
period.
One Three
Year Years
The International Equity
Fund
The Growth Equity Fund
The Growth & Income Fund
The Managed Allocation
Fund
The Bond Plus Fund
The Money Market Fund
The purpose of this table is to help you understand the various expenses you
would bear directly or indirectly. Remember that these expenses don't represent
actual past or future expenses or investment performance. Actual expenses may be
higher or lower.
2
<PAGE>
Through this prospectus, "we" and "our" refer to the TIAA-CREF Mutual Fund.
"You" and "your" mean any shareholder or any prospective shareholder.
The TIAA-CREF Mutual Fund
The TIAA-CREF Mutual Fund is a Delaware business trust that was organized
on January 15, 1997, and is registered with the U.S. Securities and Exchange
Commission (SEC) as an "open-end" management investment company. Each of the
individual investment portfolios described below is a separate series of the
TIAA-CREF Mutual Fund, with its own distinct investment objective. (This
prospectus will refer to these portfolios as the funds or the investment funds.)
The TIAA-CREF Mutual Fund is part of the TIAA-CREF family of companies. Teachers
Insurance and Annuity Association of America (TIAA) founded in 1918, is a
non-profit stock life insurance company. Its companion organization, the College
Retirement Equities Fund (CREF), founded in 1952, is a non-profit corporation
registered with the SEC as an investment company. Together, through the issuance
of fixed and variable annuity contracts, TIAA and CREF form the principal
retirement system for the nation's education and research communities and the
largest retirement system in the United States based on assets under management.
TIAA and CREF managed a total of $__ billion in assets as of __________, 1997,
with TIAA managing approximately $__ billion and CREF managing approximately $__
billion.
The following section describes each fund's investment objective and the
investment policies and techniques each fund uses to accomplish its objective.
Of course, there's no guarantee that any fund will meet its investment
objective. We cannot change the policies we call "fundamental" for a particular
fund without a vote of that fund's shareholders. All other policies, including
each fund's investment objective, are not fundamental. This means we can change
them without a shareholder vote, although we'll notify you of any changes if
they are material. For a complete listing of the funds' policies and
restrictions, see the SAI.
The funds are subject to several types of risks. One is market risk --
price volatility due to changing conditions in the financial markets and,
particularly for bonds and other debt securities, changes in overall interest
rates. Another kind of risk is financial risk. For stocks or other equity
securities, it comes from the possibility that current earnings will fall or
that overall financial soundness will decline, reducing the security's value.
For bonds and other debt securities, financial risk comes from the possibility
the issuer won't be able to pay principal and interest when due. Finally,
current income
3
<PAGE>
volatility means how much and how quickly overall interest rate changes affect
current income from an investment. Also, the funds have only recently commenced
operations, and therefore have a limited operating history. These and other
risks associated with an investment are discussed below and in the SAI.
The Equity Funds
The International Equity Fund seeks a favorable long-term return, mainly
through capital appreciation from a broadly diversified portfolio that consists
primarily of foreign equity investments. See page for more information about the
special risks of foreign investing.
The fund intends at all times to have at least 65% of its assets invested
in securities of issuers located in at least three different countries, none of
which will be the U.S. The fund allocates investments to particular countries or
regions based on our evaluation of various factors, such as the relative
attractiveness of particular markets.
The Growth Equity Fund seeks a favorable long-term return, mainly through
capital appreciation, primarily from a diversified portfolio of common stocks
that present the opportunity for strong growth.
The fund, under normal conditions, will invest at least 65% of its total
assets in companies that have the potential for capital appreciation. The fund
can invest in companies of all sizes, including companies in new and emerging
areas of the economy and companies with distinctive products or promising market
conditions. We choose individual investments based on a company's prospects
under current or forecasted economic, financial and market conditions, looking
for companies we believe have the potential for strong earnings or sales growth,
or that appear to be undervalued based on current earnings, assets or growth
prospects.
The Growth Equity Fund can also invest in large, well-known, established
companies, particularly when we believe they have new or innovative products,
services, or processes that enhance future earnings prospects. The fund can also
invest in companies in order to benefit from prospective acquisitions,
reorganizations or corporate restructurings or other special situations.
The Growth Equity Fund can buy foreign securities and other instruments if
we believe they have superior investment potential. Depending on investment
opportunities, the fund may have as little as none of its assets in foreign
securities or as
4
<PAGE>
much as 40 percent. (The authorized level may change from time to time.) The
securities will be those traded on foreign exchanges or in other foreign markets
and may be denominated in foreign currencies or other units of account. Foreign
securities often have risks that differ from those of domestic securities. For
more information about the risks of foreign investments, see page __.
Special Risk Considerations. The Growth Equity Fund may involve special
risks not present with our other funds. The fund may at times hold a significant
amounts of stocks of smaller, lesser-known companies. Their stock prices may
fluctuate more than those of larger companies because smaller companies may
depend on narrow product lines, have limited track records, lack depth of
management, or have thinly-traded securities. Also, stocks of companies involved
in reorganizations and other special situations can often involve more risk than
ordinary securities. Accordingly, the Growth Equity Fund will probably be more
volatile than the overall stock market, and it could significantly outperform or
underperform the stock market during any particular period.
The Growth & Income Fund seeks a favorable long-term return through
capital appreciation and investment income, primarily from a broadly diversified
portfolio of common stocks.
Normally, the fund will invest at least 65% of its total assets in
income-producing equity securities selected for their investment potential. The
fund may invest in foreign securities.
Other Investments and Investment Techniques -- Equity Funds
The equity funds will usually use fundamental analysis to select
individual stocks or sectors for investment. To diversify and control
volatility, any of the equity funds may seek to track the U.S., foreign, or
small company equity markets as a whole by investing a portion of its assets in
the stocks that make up a widely used index of that market's performance, such
as the S&P 500 Composite Stock Index, the Morgan Stanley Europe Asia Far East
Index, the Russell 3000(R) (The Russell 3000 is a trademark and a service mark
of the Frank Russell Company) or other appropriate indices.
The equity funds can, in addition to stocks, hold other types of
securities with equity characteristics, such as convertible bonds, preferred
stock, warrants and depository receipts or rights. Pending more permanent
investments or to use cash balances effectively, these funds can hold the same
types of money market instruments the Money Market Fund invests in (see page ),
as well as other short-term instruments.
5
<PAGE>
The equity funds can also hold debt securities that they acquire because
of mergers, recapitalizations or otherwise. When market conditions warrant, the
funds can also invest in debt securities. These investments will be similar to
those authorized for the first segment of the Bond Plus Fund (investment-grade
debt securities).
The equity funds can buy and sell options ("puts" and "calls"), futures
contracts and options on futures to the extent permitted by the SEC and the
Commodity Futures Trading Commission. We intend to use options and futures
primarily as hedging techniques or for cash management, not for speculation, but
they involve special considerations and risks nonetheless.
We trade options or futures only as permitted by applicable regulatory
authorities. To manage currency risk, the equity funds can enter into forward
currency contracts; buy or sell options and futures on foreign currencies, and
buy securities indexed to foreign currencies. For more, see "Investment
Practices and Risk Considerations -- Currency Transactions," page .
The equity funds can also invest in newly developed financial instruments,
such as equity swaps and equity-linked fixed-income securities, so long as these
are consistent with a fund's investment objectives and restrictions. (See SAI)
The Managed Allocation Fund
The Managed Allocation Fund seeks a favorable rate of return that reflects
the broad investment performance of the financial markets through capital
appreciation and investment income. The Managed Allocation Fund will pursue this
goal primarily through investments in TIAA-CREF Mutual Fund's other investment
funds.
Under normal conditions, approximately 60% of the Managed Allocation
Fund's assets will be in shares of the Growth and Income, International Equity
and Growth Equity Funds, and approximately 40% will be in shares of the Bond
Plus Fund. We expect these percentages normally to fluctuate up and down by 15%,
depending on our analysis of market, economic and financial conditions. The
Managed Allocation Fund may occasionally be even more heavily weighted toward
equities or fixed income, if we believe market conditions warrant such a
balance.
For flexibility in meeting redemptions, expenses, and the timing of new
investments, and as a short-term defense during periods of unusual volatility,
the fund can also invest in Government securities (as defined in the Investment
Company Act of 1940, the "1940 Act"), short-term securities, or shares of the
Money Market Fund. For temporary defensive purposes, the Managed
6
<PAGE>
Allocation Fund may invest without limitation in such securities.
The Managed Allocation Fund shares the risks associated with the
investment funds in which it invests.
The Managed Allocation Fund is considered "nondiversified" for purposes of
the 1940 Act because it invests in the securities of a limited number of mutual
funds. However, the underlying funds themselves are considered diversified
investment companies. The Managed Allocation Fund intends to qualify as a
diversified investment company for the purposes of Subchapter M of the Internal
Revenue Code.
The Bond Plus Fund
The Bond Plus Fund seeks a favorable long-term rate of return, primarily
through high current income consistent with preserving capital. In addition, we
will use our expertise to invest a portion of the fund's assets in securities
with special features in an effort to improve the fund's total return.
We divide the fund's portfolio into two segments. The first segment, which
makes up at least 75% of the fund's assets, will be invested primarily in a
broad range of domestic and foreign investment-grade debt securities, such as
bonds, notes, mortgage-backed securities, and money market instruments. The
second segment, comprising the Plus feature, will be invested primarily in (i)
securities or other instruments that provide a spread over the yield curve (such
as private placements) and which may be considered illiquid or (ii)
non-investment grade securities (those rated Ba1 or lower by Moody's or BB+ and
lower by Standard & Poor's). We may use up to 25% of the fund's assets for
investments in this second segment -- although investments in illiquid
securities will not comprise more than 15% of the fund's assets.
The fund may buy and sell options and futures, preferred stock and other
instruments consistent with its investment objective.
The Money Market Fund
The Money Market Fund seeks high current income to the extent consistent
with maintaining liquidity and preserving capital.
We seek to maintain a stable net asset value of $1.00 per share of the
Money Market Fund by investing in assets that present minimal credit risk,
maintaining an average weighted maturity of 90 days or less, and investing all
of the fund's assets in securities or other instruments maturing in 397 days or
7
<PAGE>
less. We can't assure you that we will be able to maintain a stable net asset
value of $1.00 per share for this fund. We value securities held by the fund on
an amortized cost basis (see the SAI).
The fund will invest primarily in:
(1) Commercial paper (short-term "IOUs" issued by corporations and
others) or variable-rate, floating-rate, or variable-amount
securities of domestic or foreign companies;
(2) Obligations of commercial banks, savings banks, savings and loan
associations, and foreign banks whose latest annual financial
statements show more than $1 billion in assets. These obligations
include certificates of deposit, time deposits, bankers'
acceptances, and other short-term debt;
(3) Securities issued by or whose principal and interest
are guaranteed by the U.S. government or one of its
agencies or instrumentalities;
(4) Other debt obligations with a remaining maturity of 397 days or less
issued by domestic or foreign companies;
(5) Repurchase agreements involving securities issued or
guaranteed by the U.S. government or one of its
agencies or instrumentalities, or involving
certificates of deposit, commercial paper, or bankers'
acceptances;
(6) Participation interests in loans banks have made to the issuers of
(2) and (3) above (these may be considered illiquid);
(7) Asset-backed securities issued by domestic corporations
or trusts;
(8) Obligations issued or guaranteed by foreign governments
or their political subdivisions, agencies, or
instrumentalities; and
(9) Obligations of international organizations (and related
government agencies) designated or supported by the
U.S. or foreign government agencies to promote economic
development or international banking.
The Money Market Fund will only purchase money market instruments that at
the time of purchase are "First Tier Securities", that is rated within the
highest category by at
8
<PAGE>
least two nationally recognized statistical rating organizations (NRSROs), or
rated within the highest category by one NRSRO if it is the only NRSRO to have
issued a rating with respect to the security, or unrated securities of
comparable quality. The fund can also invest up to 30% of its assets in
money-market and debt instruments of foreign issuers denominated in U.S.
dollars.
The above list of investments is not exclusive and the fund may make other
investments consistent with its investment objective and policies.
To the extent the law allows, the Money Market Fund can invest in options
and futures contracts. For a more detailed description of types of money market
instruments, see the SAI.
Investment Practices and Risk Considerations
The following is a brief description of the investment practices and risk
considerations of the funds. For more information, see the SAI.
Foreign Investments
Investing in securities traded on foreign exchanges or in foreign markets
can involve risks not ordinarily part of domestic investing. These include: 1)
changes in currency exchange rates; 2) possible imposition of market controls or
currency exchange controls; 3) possible imposition of withholding taxes on
dividends and interest; 4) possible seizure, expropriation, or nationalization
of assets; 5) more limited foreign financial information or difficulty in
interpreting it because of foreign regulations and accounting standards; 6) the
lower liquidity and higher volatility in some foreign markets; 7) the impact of
political, social, or diplomatic events; 8) the difficulty of evaluating some
foreign economic trends; or 9) the possibility that a foreign government could
restrict an issuer from paying principal and interest to investors outside the
country. Brokerage commissions and transaction costs are often higher for
foreign investments, and it may be harder to use foreign laws and courts to
enforce financial or legal obligations.
The risks noted above often increase in emerging countries. For example,
emerging countries may have more unstable governments than developed countries,
and their economies may be based on only a few industries. Because their
securities markets may be very small, share prices may be volatile. In addition,
foreign investors are subject to a variety of special restrictions in many
emerging countries.
9
<PAGE>
Currency Transactions
When investing in foreign securities, the equity funds can use currency
transactions to protect themselves against future exchange rate uncertainties
and to take advantage of exchange rate disparities between countries. The equity
funds can enter into forward currency contracts; buy or sell options and futures
on foreign currencies; and buy securities indexed to foreign currencies. These
transactions are either on a spot (i.e., cash) basis at prevailing rates, or
else through forward contracts to buy or sell currencies at a set price on a
stipulated date in the future. Forward currency contracts are usually with large
commercial banks that participate in the interbank market. The equity funds can
also use currency financial futures and options and can hold part of their
assets in bank deposits denominated in foreign currency. If foreign currency
assets are converted to U.S. dollars, changes in exchange rates and exchange
control regulations may increase or reduce their value.
Foreign currency transactions seek to reduce a fund's exposure to a
decline in the value of investments denominated in foreign currencies; they may
also let us "lock in" exchange rates when buying or selling foreign securities.
These transactions involve special risks. For example, they may limit potential
gains from increases in a currency's value. We don't intend to speculate in
foreign currency exchange transactions or forward currency contracts.
Illiquid Securities
Each fund can invest up to 15 percent of its assets (10 percent for the
Money Market Fund) in investments that may not be readily marketable. It may be
difficult to sell these investments for their fair market value.
Non-Investment Grade Bonds
The Bond Plus Fund can also buy and sell lower rated (non-investment
grade) securities. These are usually called "high-yield" or "junk" bonds.
Lower-rated bonds offer higher returns but also entail higher risks. Their
issuers may be less creditworthy or have a higher risk of becoming insolvent.
Small changes in the issuer's creditworthiness can have more impact on the price
of lower-rated bonds than comparable changes would for investment grade bonds.
Lower-rated bonds can also be harder to value or sell, and their prices can be
more volatile than the prices of higher-quality securities.
Bear in mind that all these risks can also apply to the lower levels of
"investment grade" securities, too--for example,
10
<PAGE>
Moody's Baa and S&P's BBB. Moreover, securities originally rated "investment
grade" are sometimes downgraded later on, should a ratings service believe the
issuer's business outlook or creditworthiness has deteriorated. If that happens
to a security in a fund, it may or may not be sold, depending on our analysis of
the issuer's prospects. However, a fund won't purchase below-investment-grade
securities if that would increase their representation in a fund's portfolio
above our current investment target. We don't rely exclusively on credit ratings
when making investment decisions because they may not alone be an accurate
measure of the risk of lower-rated bonds. Instead, we also do our own credit
analysis, paying particular attention to interest rate trends and other market
events (see SAI).
Repurchase Agreements
Repurchase agreements are one of several short-term vehicles the funds can
use to manage cash balances effectively. In a repurchase agreement, we buy an
underlying debt instrument on condition that the seller agrees to buy it back at
a fixed time (usually a relatively short period) and price. The period from
purchase to repurchase is usually no more than a week and never more than a
year. Repurchase agreements may involve special risks.
Firm Commitment Agreements
The funds can enter "firm commitment" agreements to buy securities at a
fixed price or yield on a specified future date. We expect that these
transactions will be relatively infrequent.
Investment Companies
Each fund other than the Managed Allocation Fund can invest up to 5% of
its assets in any single investment company and up to 10% of its assets in all
other investment companies in the aggregate. However, no fund other than the
Managed Allocation Fund can hold more than 3% of the total outstanding voting
stock of any single investment company. The Managed Allocation Fund, however,
can invest all of its assets in the securities of other investment companies
that are part of the TIAA-CREF Mutual Fund.
Lending Securities
Subject to certain restrictions, the funds can seek additional income by
lending securities to brokers, dealers, and other financial institutions. All
loans will be fully collateralized. If we lend a security, we can call in the
loan at any time.
11
<PAGE>
Borrowing
The funds can borrow money from banks (no more than 33-1/3 percent of the
market value of such fund's assets at the time of borrowing). The funds can also
borrow money from other sources temporarily (no more than 5 percent of the total
market value of its assets at the time of borrowing).
Mortgage-Backed Securities
The Bond Plus Fund can invest in mortgage-backed securities sold by
private, governmental and government-related organizations in the form of
collateralized mortgage obligations ("CMOs"), mortgage-backed bonds or
pass-through securities. CMOs are obligations fully collateralized directly or
indirectly by a pool of mortgages on which payments of principal and interest
are dedicated to payment of principal and interest on the CMOs. Mortgage-backed
bonds are general obligations of the issuer fully collateralized directly or
indirectly by a pool of mortgages. Mortgage pass-through securities are formed
when mortgages are pooled together and interests in the pool are sold to
investors. The cash flow from the underlying mortgages is "passed through" to
investors in periodic principal and interest payments. Fluctuating interest
rates and other factors may affect prepayment schedules and the ultimate return
from these investments and expose the fund to a lower rate of return upon
reinvestment of the principal. (See SAI)
Net Asset Value
We determine the net asset value (NAV) per share (share price) of each
fund when regular trading closes on the New York Stock Exchange (usually 4 p.m.)
on each day the Exchange is open. We compute each fund's NAV by dividing the
value of a fund's assets, less its liabilities, by the number of outstanding
shares of that fund.
Except as noted below, we use market quotations or independent pricing
services to value securities and other instruments. Debt securities maturing in
60 days or less are valued at amortized cost.
If market quotations or independent pricing services aren't readily
available, we'll use fair value, as determined in good faith by or under the
direction of the TIAA-CREF Mutual Fund Board of Trustees.
To calculate the Money Market Fund's net asset value per share, we value
its portfolio securities at their amortized cost. This valuation method does not
take into account unrealized gains
12
<PAGE>
or losses on the Fund's portfolio securities. Amortized cost valuation involves
first valuing a security at cost, and thereafter, assuming an amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the security's market value. While this method provides
certainty in valuation, there may be times when the value of the security, as
determined by amortized cost, may be higher or lower than the price the Money
Market Fund would receive if it sold the security.
The NAV per share of the Managed Allocation Fund will be based on the NAV
per share of each of the underlying funds in which it invests. Therefore,
although we will determine the net asset value per share of the Managed
Allocation Fund as described above, we cannot price the Managed Allocation
Fund's shares until we determine net asset value per share of the underlying
fund or funds.
Shareholder Services
Who Can Open An Account?
Current or retired employees of eligible institutions can open a TIAA-CREF
Mutual Fund account. An eligible institution is a private or public institution
in the United States that is nonproprietary and nonprofit. Private institutions
have to be ruled tax-exempt under Section 501(c)(3) of the Internal Revenue Code
or earlier versions of the section. The main purpose of any eligible institution
must be to offer instruction; conduct research; serve and support education or
research; or perform ancillary functions for such institutions. Spouses and
domestic partners of eligible employees can also open an account. We reserve the
right to change these eligibility requirements at anytime. If you aren't sure if
you're eligible, please call us at 1 800 223-1200.
Types of Accounts
With the TIAA-CREF Mutual Fund, you can establish the types of accounts
listed below, so long as one of the account owners meets the eligibility
requirements explained above.
o Individual accounts (for one person) or joint accounts
(more than one person)
o Trust accounts (you must send a copy of the trust with
your application.) The person establishing the trust
13
<PAGE>
must meet our eligibility requirements.
o Accounts for a minor child under the Uniform Gift to
Minors Act (UGMA) or Uniform Transfer to Minors Act
(UTMA). The person establishing the account must meet
our eligibility requirements.
How To Buy Shares
To open an account you must complete an application and send it to us with
your initial investment. If you have any questions or need help completing the
application, call one of our Counselors at 1 800 223-1200.
The minimum initial investment is $250 per investment fund (or $25 if you
establish an Automatic Investment Plan). Subsequent investments must be for at
least $25. All purchases must be in U.S. dollars and checks must be drawn on
U.S. banks.
We consider all requests for purchases, checks, and other forms of
payments to be received when they are received in good order. (See "Other
Investor Information -- Good Order, page ).
Please send your check and/or application to the following addresses:
First Class Mail: The TIAA-CREF Mutual Fund
c/o State Street Bank
PO Box 9081
Boston, MA 02266-9081
Overnight Mail: The TIAA-CREF Mutual Fund
c/o State Street Bank
Two Heritage Drive
Quincy, MA 02171-2119
You can purchase additional shares in any of the following ways:
By Mail Send a check with an investment coupon from a previous
confirmation statement. If you don't have an investment coupon, use a separate
piece of paper to give us your name, address, account number, and the fund or
funds you want to invest in and the amount to be invested in each fund.
Make your check payable to TIAA-CREF Mutual Fund.
14
<PAGE>
By Automatic Investment Plan You can make subsequent investments
automatically by electing this service on your initial application or later upon
request.
By electing this option you authorize us to take regular, automatic
withdrawals from your bank. To begin this service, send us a voided check or
investment slip from the bank account you want us to make withdrawals from. You
can make automatic investments semi-monthly (on the 1st and 15th of each month
or on the next following business day if those days are not business days),
monthly or quarterly (on the 1st or 15th of the month). Investments must be for
at least $25 per account.
You can change the date or amount of your investment, or terminate the
Automatic Investment Plan, at any time by letter or (with prior authorization)
by telephone. Give us at least 5 business days before the change is effective.
By Telephone This service allows you to make electronic withdrawals from
your designated bank account to buy additional TIAA-CREF Mutual Fund shares over
the telephone.
We take reasonable precautions to make sure that telephone instructions
are genuine. Precautions include requiring you to positively identify yourself,
tape recording the telephone instructions, and providing written confirmations.
We accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, we may be liable for any losses due to unauthorized or
fraudulent transactions.
All shareholders automatically have the right to buy shares by telephone.
If you don't want the telephone purchase option, you can indicate this on the
application or call us at 1 800 223- 1200 any time after opening your account.
By Wire You may make initial or subsequent investments by wire. Be aware
that your bank may charge you a fee to wire funds. The minimum wire purchase is
$5000. Here's what you need to do:
1. send us your application (initial investment only);
2. instruct your bank to wire money to
State Street Bank
ABA Number 011000028
DDA Number 9905-2771
15
<PAGE>
3. specify on the wire:
o The TIAA-CREF Mutual Fund
o Account registration (names of registered owners),
address and Social Security Number(s) or Taxpayer
Identification Number
o Indicate if this is for a new or existing account
(provide account number if existing)
o The amount per fund to be invested
Points to remember for all purchases:
o Your investment must be for a specified dollar amount. We can't accept
purchase requests specifying a certain price, date, or number of shares;
we'll return these investments.
o We reserve the right to reject any application or investment. There may
be circumstances when we will not accept new investments in one or more
of the funds.
o If you have a securities dealer, bank, or other financial institution
handle your transactions, they may charge you a fee.
How to Redeem Shares
You may redeem (sell) your shares at any time. We will make redemptions at
the Net Asset Value (share price) next calculated after your request is received
in good order (See "Other Investment Information -- Good Order, page ).
Redemptions must be for at least $250 or the balance of your investment in a
fund, if less.
Usually, we send your redemption proceeds to you on the second business
day after we receive your request, but not later than seven days afterwards,
assuming the request is in good order. When a redemption occurs shortly after a
recent check purchase, we may hold the redemption proceeds for more than seven
days. However, we'll hold the proceeds only until the purchase check clears,
which can take up to 15 days.
We will send redemption proceeds to the shareholder of record at his/her
address or bank of record. If proceeds are to be sent to someone else, a
different address, or a different bank, we will require a letter of instruction
with signature guarantee. (See page )
We can postpone payment if (a) the New York Stock Exchange
16
<PAGE>
is closed for other than usual weekends or holidays, or trading on the New York
Stock Exchange is restricted; (b) an emergency exists as defined by the SEC, or
the SEC requires that trading be restricted; or (c) the SEC permits a delay for
the protection of investors.
You can redeem shares in any of the following ways:
By Mail or FAX Written redemption requests must include: account number,
transaction amount (in dollars or shares), signatures of all owners exactly as
registered on the account, signature guarantees (if required), and any other
required supporting legal documentation. Once mailed to us, your redemption
request is irrevocable and cannot be modified or canceled.
Redemptions for $50,000 or more must be in writing.
By Telephone You can redeem shares (for less than $50,000) by telephone by
calling us at 1 800 223-1200. Once made, your telephone request cannot be
modified or canceled.
We take reasonable precautions to make sure that your telephone
instructions are genuine (see page [ ].) All shareholders have the telephone
redemption option automatically. If you do not want to be able to redeem by
telephone, indicate this on your application or call us at 1 800 223-1200 any
time after opening your account.
We can send your redemption proceeds in several different ways: by check
to the address of record; by electronic transfer to your bank; or by wire
transfer (minimum of $5000). If you call us before the close of the New York
Stock Exchange, usually 4:00 pm Eastern Standard Time, you will receive the
share price determined as of the close of that business day. See "Net Asset
Value", page [ ]. Before calling, read "Shareholder Services -- Points to
Remember When Redeeming," page [ ].
By Check If you've elected the Money Market Fund's checkwriting privilege,
you can make redemptions from the Money Market Fund by check. All registered
account owners must sign a signature card before the privilege can be exercised.
You can establish checkwriting on your account when you apply or later upon
request.
For joint accounts, we require only the signature of any one owner on a
check. You can write as many checks as you want, as long as each check is for at
least $250. We reserve the right to charge a $10 fee if you write a check for
less than $250; if there are insufficient Money Market Fund shares in your
account to cover the amount of the check; or if you write more than 24
17
<PAGE>
checks a year.
You can't write a check to close your TIAA-CREF Money Market Fund account
because the value of the fund changes daily as dividends are accrued.
By Systematic Redemption Plan You can elect this feature only if the
balance in the investment fund from which you're redeeming is at least $5000.
We'll automatically redeem enough shares in a particular fund each month or
quarter (on the 1st or 15th of the month or on the following business day if
those days are not business days) to provide you with a check or electronic
transfer to your bank. You must specify the dollar amount (minimum $250) of the
redemption and from which fund you want to redeem shares.
If you want to set up a systematic redemption plan, contact us and we'll
send you the necessary forms. All owners of an account must sign the systematic
redemption plan request. Similarly, all owners must sign any request to increase
the amount or frequency of the systematic redemptions or a request for payments
to be sent to an address other than the address of record.
We can terminate the systematic redemption plan option at any time,
although we will notify you if we do. You can terminate the plan or reduce the
amount or frequency of the redemptions by writing or calling us. Requests to
establish, terminate, or change the amount or frequency of redemptions will
become effective within 5 days after we receive your instructions.
Points To Remember When Redeeming
o We can't accept redemption requests specifying a certain price or date;
these requests will be returned.
o If you request a redemption by telephone within 30 days of changing your
address or bank, you must send us your request in writing with a signature
guarantee.
o For redemptions for more than $250,000, we reserve the right to give you
marketable securities instead of cash. For more information, see the SAI.
How To Exchange Shares
You can exchange shares in a fund for shares of any other fund at any
time. An exchange is a sale of shares from one fund and a purchase of shares in
another fund. Exchanges are taxable
18
<PAGE>
events. See "Taxes," page [ ].
The minimum investment amounts that apply to purchases also apply to
exchanges. In other words, for any account, an exchange to a fund in which you
already own shares must be at least $25, and an exchange to a new fund must be
at least $250.
Exchanges between accounts can be made only if the accounts are registered
in the same name(s), address and Social Security or Tax Identification Number.
You can make exchanges in any of the following ways:
By Mail or FAX Send us a letter of instruction with the following
information: your name, address, and the funds and/or accounts you want to
exchange between.
We require requests for exchanges of $50,000 or greater to be in writing.
By Telephone You may exchange shares by telephone by calling us at 1 800
223-1200. Once made, your telephone request cannot be modified or canceled.
TIAA-CREF takes reasonable precautions to make sure that telephone instructions
are genuine (see page [ ]).
By Systematic Exchange You can elect this feature only if the balance of
the fund from which you are transferring shares is at least $5000. We
automatically redeem shares from a specified fund and purchase shares in another
fund each month or quarter (on the 1st or 15th of the month or on the following
business day if those days are not business days). You must specify the dollar
amount and the funds involved in the exchange. An exchange to a fund in which
you already own shares must be for at least $25, and an exchange to a new fund
must be for at least $250.
If you want to set up systematic exchanges, you can contact us and we will
send you the necessary forms. Each owner of the account must sign a systematic
exchange request. Similarly, all account owners must sign any request to
increase the amount or frequency of systematic exchanges. You can terminate the
plan or change the amount or frequency of the exchanges by writing or calling
us. Requests to establish, terminate, or change the amount or frequency of
exchanges will become effective within 5 days after we receive your
instructions.
Points To Remember When Exchanging
o Make sure you understand the investment objective of the
fund you exchange shares into. (See "The TIAA-CREF Mutual
19
<PAGE>
Fund," page .) The exchange option is not designed to allow you to time
the market. It gives you a convenient way to adjust the balance of your
account so that it more closely matches your overall investment objectives
and risk tolerance level.
o To maintain low expense ratios and avoid disrupting the management of each
fund's portfolio, we reserve the right to suspend the exchange privilege
if you have made more than 12 exchanges within a 12-month period. We also
reserve the right to reject any exchange request and to modify or
terminate the exchange option at any time.
Other Investor Information
Good Order Your initial application and later requests for transactions
will not be processed until they are received in good order by our transfer
agent, State Street Bank. Good order means that we have verified that you are an
eligible investor, your application is properly completed or your transaction
request includes your account number, the amount of the transaction (in dollars
or shares), signatures of all owners exactly as registered on the account, and
any other supporting legal documentation that may be required. The share price
we use will be the NAV per share next calculated after State Street Bank
receives your application or request in good order. If this occurs before 4:00
pm, Eastern Standard Time your price will be the NAV per share for that day. If
it's after 4:00 pm, Eastern Standard Time the transaction will be effective on,
and your price will be the NAV per share for, the next business day.
Tax Identification Number You must give us your taxpayer identification
number (which, for most individuals, is your social security number) and tell us
whether or not you are subject to back-up withholding for prior under-reporting.
If you don't furnish your taxpayer identification number, redemptions or
exchanges of shares, as well as dividends and capital gains distributions, will
be subject to federal (and in a few cases state) tax withholding.
Changing Your Address To change the address on your account, please call
us or send us a written notification signed by all registered owners of your
account.
Signature Guarantee For some transaction requests (for example, when
you're redeeming shares within 30 days of changing your address), we require a
signature guarantee of each owner of record of an account. This requirement is
designed to protect you and the TIAA-CREF Mutual Fund from fraud, and to comply
with
20
<PAGE>
rules on stock transfers. You can get a signature guarantee from a bank or trust
company, savings bank, savings and loan association, or a member of a national
stock exchange. A notary public can't provide a signature guarantee.
Transferring Shares You can transfer ownership of your account to another
person or organization or change the name on your account by sending us written
instructions. All registered owners of the account must sign the request and
provide signature guarantees. When you change the name on an account, shares in
that account are transferred to a new account.
Transfer On Death If you live in certain states, you can designate one or
more persons (beneficiaries) to whom your TIAA- CREF Mutual Fund shares can be
transferred upon death. You can set up your account with a Transfer On Death
(TOD) registration upon request. (Call us to get the necessary forms.) A TOD
registration avoids probate if the beneficiary(ies) survives all shareowners.
You maintain total control over your account during your lifetime.
We only offer this option in states where it is permitted which currently
are the following: Alaska, Arizona, Arkansas, California, Colorado, Delaware,
Florida, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Minnesota,
Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Ohio,
Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Virginia, Washington,
West Virginia, Wisconsin, and Wyoming.
Statements and Reports We will send you a variety of statements to help
you monitor activity in your account and prepare income tax returns. If you send
us a written request, we'll send copies of your statements to individuals you
designate. We send you
Confirmation Statements each time you purchase, redeem, or exchange
shares. The statement will show the date and amount of each transaction.
Quarterly Reports immediately following the end of each calendar quarter.
They report the value of your account at the close of the preceding
quarter, and show all distributions, purchases, exchanges, and redemptions
during the quarter. The fourth quarter statement provides a year-to-date
summary of activity.
Tax Forms each January summarizing the previous year's dividend and
capital gains distributions and proceeds from the sale of shares. We mail
these forms to shareholders outside the U.S. no later than March 15, as
required by law.
21
<PAGE>
Average Cost Statements each February reporting the average cost of shares
you sold in the previous year, using the average cost single category
method.
Money Market Checking Statements each month, if you elected the
checkwriting privilege and if you wrote checks during the preceding month.
To reduce costs, we won't return canceled checks to you, but microfilmed
copies of checks are available upon request.
We will also send you annual and semi-annual financial reports on the
TIAA-CREF Mutual Fund's operation and performance and a new prospectus each
year. The SAI will be revised each year but to reduce costs we'll send it only
on request.
Automated Telephone Service
All shareholders can check fund performance, their account balances or
initiate purchases or exchanges automatically by telephone, using our automated
telephone service ("ATS"). Each fund is liable for losses from unauthorized
transactions only if we do not follow reasonable procedures designed to verify
the identity of the person effecting the transaction. TIAA-CREF Mutual Fund
therefore requires the use of personal identification numbers, codes, and other
procedures designed to reasonably confirm that instructions given by telephone
are genuine. However, you should verify the accuracy of your confirmation
statements immediately after you receive them.
If you do not want to be able to effect transactions over the telephone,
call us for instructions.
Contacting TIAA-CREF Mutual Fund
You can contact us in any of the following ways:
By telephone: Call 1-800-223-1200
In writing: TIAA-CREF Mutual Fund
c/o State Street Bank
P.O. Box 9081
Boston, Massachusetts 02266-9081
22
<PAGE>
Electronic Prospectuses
If you received this prospectus electronically and would like a paper
copy, please contact us and we will send one to you. All applications are also
accompanied by a paper prospectus.
TIAA-CREF Mutual Fund's Management
The Board
A Board of Trustees (the Board) oversees TIAA-CREF Mutual Fund's business
affairs and is responsible for major decisions about each fund's investment
objective and policies. The Board delegates the day-to-day management of each of
the funds to Teachers Advisors, Inc., (Teachers Advisors) and its officers (see
below). The Board meets throughout the year to review TIAA- CREF Mutual Fund's
activities, contractual arrangements with companies that provide services to
TIAA-CREF Mutual Fund, and the performance of each individual investment fund.
It is possible that the interests of the Managed Allocation Fund could
diverge from the interests of one or more of the funds in which it invests
(underlying funds). If those interests did diverge, a conflict of interest could
arise between the Managed Allocation Fund and its underlying funds. This
conflict could affect how the Board and TIAA-CREF Mutual Fund's officers fulfill
their fiduciary duties to each fund. The Board believes it has structured each
fund to avoid these concerns. However, a situation could occur where proper
action for the Managed Allocation Fund could hurt the interests of any
underlying fund, or vice versa. If that happens, Teachers Advisors and the Board
and officers of TIAA-CREF Mutual Fund will carefully analyze the situation and
take all steps they believe reasonable to minimize and, where possible,
eliminate the potential conflict. Teachers Advisors and the Board and officers
will in any case closely and continuously monitor each fund's investments to
avoid, insofar as possible, these concerns.
Teachers Advisors
Teachers Advisors manages each Fund's assets, subject to the supervision
of the Board. A wholly-owned indirect subsidiary of TIAA, Teachers Advisors is
registered with the SEC under the Investment Advisers Act of 1940. Its duties
include conducting research, recommending investments, and placing orders to buy
and sell securities. Teachers Advisors and its personnel act consistently with
the investment objectives, policies, and restrictions of each of the individual
investment funds. The personnel of Teachers Advisors who manage the TIAA-CREF
Mutual Fund also manage the investments of the CREF Accounts through an
23
<PAGE>
affiliated investment adviser, TIAA-CREF Investment Management, Inc.
("Investment Management").
Under the terms of an Investment Management Agreement between TIAA-CREF
Mutual Fund and Teachers Advisors, Teachers Advisors is entitled to an annual
fee of % of the average daily net assets of each fund other than the Managed
Allocation Fund. Teachers Advisors currently has voluntarily waived its right to
receive a portion of its fee and as a result will receive % percent of each
fund's average daily net assets.
Under the Investment Management Agreement, Teachers Advisors is also
responsible for providing or obtaining at its own expense, the services
reasonably necessary for the ordinary operation of each fund. These include
custodial, administrative, transfer agency, portfolio accounting, dividend
disbursing, auditing, and ordinary legal services. Teachers Advisors also acts
as liaison among the various service providers to the funds, including
custodians, portfolio accounting agents, portfolio managers, and transfer
agents.
This arrangement makes the TIAA-CREF Mutual Fund distinctive because its
expense structure is simpler and more predictable than most other mutual funds.
Teachers Advisors pays many of the funds' ordinary expenses, whereas most mutual
funds pay for these expenses directly from their own assets. The TIAA-CREF
Mutual Fund pays the funds' brokerage fees or other transactional expenses for
securities or other assets, taxes (if any), interest on borrowing, or
extraordinary expenses, such as litigation or indemnification expenses.
Advisors has agreed not to be paid a management fee for managing the
Managed Allocation Fund. However, Teachers Advisors will receive management fees
for managing the funds in which the Managed Allocation Fund invests.
Pursuant to the Investment Management Agreement between Teachers Advisors
and TIAA-CREF Mutual Fund, Teachers Advisors has agreed to bear any expenses of
the Managed Allocation Fund. Thus, the Managed Allocation Fund will operate at a
zero expense ratio.
Fund Managers
The International Equity Fund is managed by ____________.
The Growth Equity Fund is managed by Scott C. Evans, Second Vice President
of Teachers Advisors. Mr. Evans joined TIAA-CREF in 1985. Mr. Evans is also
responsible for managing the investments of the CREF Growth Account.
24
<PAGE>
The Growth & Income Fund is managed by Carlton N. Martin, Assistant Vice
President of Teachers Advisors. Mr. Martin joined TIAA-CREF in 1980. He is also
responsible for investments in the chemical, paper and forest products as well
as the environmental, engineering and construction industries for certain CREF
Accounts.
The Managed Allocation Fund is managed by James G. Fleischmann and
Michael T. O'Kane. Mr. Fleischmann, Vice President, Teachers Advisors, joined
TIAA-CREF in 1994 and is also responsible for global equity research for the
CREF Accounts. Prior to joining TIAA-CREF, Mr. Fleischmann was a Director of
Salomon Brothers, Inc., and co-portfolio manager of Salomon Brothers Hybrid
Convertible Fund, Salomon Brothers Investors Fund and Salomon Brothers Fund. Mr.
O'Kane, Vice President, Teachers Advisors, joined TIAA-CREF in 1986. Mr. O'Kane
also has supervisory responsibility over investments in CREF's Bond Market and
Money Market Accounts.
The Bond Plus Fund is managed by Elizabeth D. Black, Director, Public
Market Securities, Teachers Advisors. Ms. Black is also responsible for managing
the investments in CREF's Bond Market Account.
Performance Information
This section would normally show how each fund has performed over time.
Because the funds were new when this prospectus was printed, their performance
is not included. At least twice a year, you will receive a report detailing each
fund's recent strategies, performance, and holdings. Contact us for current
performance or a free annual report. Fund performance can also be obtained by
calling our automated telephone service ("ATS").
"Total return" is the change in value of an investment in a fund over a
given period, assuming reinvestment of any dividends and capital gains. A
"cumulative total return" reflects actual performance over a stated period of
time. An "average annual total return" is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as actual
year-by-year results. Average annual total returns covering periods of less than
one year assume that performance will remain constant for the rest of the year.
"Yield" refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield may
not
25
<PAGE>
equal the income actually paid to shareholders. This difference may be
significant for a fund with investments denominated in foreign currencies. Money
Market Fund yields are calculated according to a standard that is required for
all money market funds.
Total returns and yields are based on past results and are not an
indication of future performance.
For more complete information on the calculation of performance data, see
the SAI.
Prior Performance of Certain CREF Accounts
The following table sets forth performance data relating to the historical
performance of the CREF Growth Account since the date indicated. The CREF Growth
Account has investment objectives, policies, strategies and risks substantially
similar to that of the TIAA-CREF Mutual Fund's Growth Equity Fund. The data is
provided to illustrate the past performance of Teachers Advisors' personnel (in
their capacities with Investment Management) in managing a substantially similar
investment portfolio and does not represent the performance of the Growth Equity
Fund. Investors should not consider this performance data as an indication of
future performance of the Growth Equity Fund.
The performance data shown below were calculated as follows:
[methodology in calculating date to follow]
The investment results presented are unaudited and are not intended to
predict or suggest the returns that might be experienced by the Growth Equity
Fund or an individual investing in the Growth Equity Fund. Investors should also
be aware that the use of a methodology different from that used below to
calculate performance could result in different performance data.
[Table showing performance of CREF Growth Account to follow]
Dividends and Distributions
Each fund expects to declare and distribute to shareholders substantially
all of its net investment income and net realized capital gains, if any. The
amount distributed will vary according to the income received from securities
held by the fund and capital gains realized from the sale of securities. The
following table shows how often we pay dividends on each fund:
Fund Dividend Paid
- ---- -------------
26
<PAGE>
The International Equity Fund Annually
The Growth Equity Fund Annually
The Growth & Income Fund Annually
The Managed Allocation Fund Annually
The Bond Plus Fund Quarterly
The Money Market Fund Monthly
Although we pay dividends monthly from the Money Market Fund, these
dividends are calculated daily.
Capital gains from all funds will be paid once a year.
You can elect from among the following distribution options:
1. Reinvestment Option, Same Fund. We'll automatically reinvest your dividend
and capital gain distributions in additional shares of the fund. Unless you
elect otherwise, this will be your distribution option.
2. Reinvestment Option, Different Fund. We'll automatically reinvest your
dividend and capital gain distributions in additional shares of another fund.
3. Income-Earned Option. We'll automatically reinvest your capital gain
distributions, but you will be sent a check for each dividend distribution.
4. Cash Option. We'll send a check for your dividend and capital gain
distributions.
We make distributions for each fund on a per share basis to the
shareholders of record on the fund's distribution date. We do this regardless of
how long the shares have been held. That means if you buy shares just before or
on a record date, you will pay the full price for the shares and then you may
receive a portion of the price back as a taxable distribution. Cash distribution
checks will be mailed within seven days.
Taxes
As with any investment, you should consider how your investment in an Fund
will be taxed.
Taxes on distributions. You must pay federal income tax, and possibly also
state or local taxes, on distributions. If you live outside the United States,
the country in which you reside could also tax distributions. Your distributions
are taxable
27
<PAGE>
when they are paid, whether you take them in cash or reinvest them. However,
distributions declared in October, November or December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, income and short-term capital gain distributions
from a fund are taxed as ordinary income; long-term capital gain distributions
are taxed as long-term capital gains. Every January, we will send you and the
IRS a statement showing the taxable distributions paid to you in the previous
year.
Taxes on transactions. Redemptions -- including exchanges to other funds
- -- are subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you sell them.
(Non-resident aliens will receive these statements later.)
Whenever you sell shares of a fund, we will send you a confirmation
statement showing how many shares you sold and at what price. However, you or
your tax preparer must determine whether this sale resulted in a capital gain
and, if so, the amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in calculating the
amount of your capital gains.
"Buying a dividend." If you buy shares just before a fund deducts a
distribution from its net asset value, you will pay the full price for the
shares and then receive a portion of the price back in the form of a taxable
distribution. This is referred to as "buying a dividend." For example, assume
you bought shares of a fund for $10.00 per share the day before the fund paid a
$0.25 dividend. After the dividend was paid, each share would be worth $9.75,
and you would have to include the $0.25 dividend in your gross income for tax
purposes.
Effect of foreign taxes. Foreign governments may impose taxes on a fund
and its investments and these taxes generally will reduce such fund's
distributions. However, an offsetting tax credit or deduction may be available
to you. If so, your tax statement will show more taxable income than were
actually distributed by the fund, but will also show the amount of the available
offsetting credit or deduction.
There are tax requirements that all mutual funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements, a fund
may have to limit its investment in some types of instruments.
28
<PAGE>
General Matters
Voting Rights
We don't plan to hold annual shareholder meetings. However, we may hold
special meetings to elect trustees, change fundamental policies, approve a
management agreement, or for other purposes. We will mail proxy materials to
Shareholders for these meetings, and we encourage Shareholders who can't attend
to vote by proxy. The number of votes you have on any matter submitted to
Shareholders depends on the dollar value of your investment in the funds.
Distributors
Shares of each fund are offered continuously with no sales load by
Teachers Personal Investors Services, Inc. (TPIS). TPIS is registered with the
SEC as a broker-dealer and is a member of the NASD. TPIS may be considered the
"principal underwriter" for the TIAA-CREF Mutual Fund. Anyone distributing
shares of the TIAA-CREF Mutual Fund must be a registered representative of TPIS.
TPIS' main office is at 730 Third Avenue, New York, New York 10017-3206. TPIS
may enter into selling agreements with one or more broker-dealers which may or
may not be affiliated with TPIS to provide distribution related services to the
TIAA-CREF Mutual Fund.
Administration
Teachers Advisors has retained State Street Bank & Trust Company (the
Administrator) to provide the funds with certain administrative services,
including preparation of each fund's federal, state and local tax returns,
preparation of each fund's financial information, and various other
administrative services. The Administrator also acts as the transfer and
dividend paying agent for the funds. Teachers Advisors, not the TIAA-CREF Mutual
Fund, has agreed to pay the Administrator a fee for such services. The
Administrator is located at 225 Franklin Street Boston, Massachusetts 02209.
Custodial Services
The Administrator also provides custodial services for the funds under a
separate agreement with Teachers Advisors. Teachers Advisors has agreed to pay
the Administrator for these services.
Legal Proceedings
There are no material legal proceedings to which the TIAA-
29
<PAGE>
CREF Mutual Fund is subject, or to which Teachers Advisors, the Administrator,
or the principal underwriter are subject which are likely to have a material
adverse effect on their ability to perform their obligations to the TIAA-CREF
Mutual Fund, or on the TIAA-CREF Mutual Fund itself.
30
<PAGE>
Statement of Additional Information
Dated ________, 1997
TIAA-CREF Mutual Fund
This Statement of Additional Information (SAI) tells you about investing in
the TIAA-CREF Mutual Fund and contains information that you should consider
before investing. It is not a prospectus, although it should be read carefully
in conjunction with the TIAA-CREF Mutual Fund's prospectus dated [ ], 1997 (the
Prospectus), which may be obtained by writing us at TIAA- CREF Mutual Fund, c/o
State Street Bank PO Box 9081, Boston, Massachusetts 02266 or by calling 1 800
223-1200. Terms used in the Prospectus are incorporated in this Statement.
The date of this SAI is _______, 1997.
<PAGE>
Table of Contents
Investment Objectives, Policies, and Restrictions............................
Fundamental Restrictions...............................................
Investment Policies and Risk Considerations............................
Portfolio Turnover.....................................................
Management of the TIAA-CREF Mutual Fund......................................
Trustees and Officers of the TIAA-CREF Mutual Fund.....................
Compensation of Trustees...............................................
Trustee and Officer Compensation.......................................
Compensation Table.....................................................
Control Persons..............................................................
Investment Advisory and Other Services.......................................
About the TIAA-CREF Mutual Fund and the Shares...............................
Indemnification of Shareholders........................................
Indemnification of Trustees............................................
Limitation of TIAA-CREF Mutual Fund Liability..........................
Shareholder Meetings and Voting Rights.................................
Additional Portfolios..................................................
Dividends and Distributions............................................
Pricing of Shares............................................................
Investments for Which Market Quotations Are Readily
Available............................................................
Foreign Investments....................................................
Debt Securities........................................................
Options and Futures....................................................
Investments for Which Market Quotations Are Not Readily
Available............................................................
Special Valuation Procedures for the Money Market Fund.................
Tax Status...................................................................
Brokerage Allocation.........................................................
Calculation of Performance Data..............................................
Total Return Calculations..............................................
Yield Calculations.....................................................
Performance Comparisons................................................
Illustrating Compounding...............................................
Net Asset Value........................................................
Moving Averages........................................................
Financial Statements.........................................................
i
<PAGE>
Investment Objectives, Policies, and Restrictions
The following information is intended to supplement the descriptions of
the investment objective of each of the six investment funds in the TIAA-CREF
Mutual Fund's Prospectus. Under the Investment Company Act of 1940, as amended
(the 1940 Act), any fundamental policy of a fund may not be changed without the
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of that fund. Each investment fund other than the Managed Allocation Fund
will operate as a "diversified company" within the meaning of the 1940 Act. The
non-fundamental investment restrictions contained in "Investment Policies and
Risk Considerations" below, page __, may be changed by the TIAA-CREF Mutual
Fund's Board of Trustees at any time.
Unless stated otherwise, each of the following investment policies and
risk considerations apply to each fund.
Fundamental Policies
The following restrictions are fundamental policies of each fund:
1. The fund will not issue senior securities except as SEC regulations
permit;
2. The fund will not borrow money, except: (a) each fund may purchase
securities on margin, as described in restriction 9 below; and (b)
from banks (only in amounts not in excess of 33 1/3% of the market
value of that fund's assets at the time of borrowing), and, from
other sources, for temporary purposes (only in amounts not exceeding
5% of that fund's total assets taken at market value at the time of
borrowing). Money may be temporarily obtained through bank
borrowing, rather than through the sale of portfolio securities,
when such borrowing appears more attractive for a fund;
3. The fund will not underwrite the securities of other companies,
except to the extent that it may be deemed an underwriter in
connection with the disposition of securities from its portfolio;
4. The fund will not purchase real estate or mortgages directly;
5. The fund will not purchase commodities or commodities contracts,
except to the extent futures are purchased as described herein;
1
<PAGE>
6. The fund will not make loans, except: (a) that a fund may make loans
of portfolio securities not exceeding 33 1/3% of the value of its
total assets, which are collateralized by either cash, United States
Government securities, or other means permitted by applicable law,
equal to at least 100% of the market value of the loaned securities,
as reviewed daily; (b) loans through entry into repurchase
agreements; (c) privately-placed debt securities may be purchased;
or (d) participation interests in loans, and similar investments,
may be purchased;
7. The fund will not purchase any security on margin except that the
fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities); and
The following restrictions are fundamental policies of each fund other
than the Managed Allocation Fund:
8. The fund will not, 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, other than securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities, or hold more than 10% of the outstanding voting
securities of any one issuer;
9. The fund will not invest in an industry if after giving effect to
that investment that fund's holding in that industry would exceed
25% of its total assets; however, this restriction does not apply to
investments in obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities;
The following restriction is a fundamental policy of the Managed
Allocation Fund:
10. The Managed Allocation Fund will not invest in securities other than
securities of other registered investment companies or registered
unit investment trusts that are part of the TIAA-CREF Mutual Fund,
government securities, or short-term paper.
The following restrictions are non-fundamental policies of the funds.
These restrictions may be changed without the approval of the shareholders in
the affected fund. No fund other than the Managed Allocation Fund will:
1. Invest more than 5% of its assets in the securities of any single
investment company or more than 10% of its
2
<PAGE>
assets in the securities of other investment companies in the
aggregate; or
2. Hold more than 3% of the total outstanding voting stock
of any single investment company.
Investment Policies and Risk Considerations
Options and Futures. Each of the funds may engage in options and futures
strategies to the extent permitted by the SEC and Commodity Futures Trading
Commission ("CFTC"). We do not intend for any fund to use options and futures
strategies in a speculative manner but rather we would use them primarily as
hedging techniques or for cash management purposes.
Although the Managed Allocation Fund cannot directly invest in options and
futures, it may, through investments in other funds, indirectly make such
investments.
Option-related activities could include: (1) the sale of covered call
option contracts, and the purchase of call option contracts for the purpose of a
closing purchase transaction; (2) buying covered put option contracts, and
selling put option contracts to close out a position acquired through the
purchase of such options; and (3) selling call option contracts or buying put
option contracts on groups of securities and on futures on groups of securities
and buying similar call option contracts or selling put option contracts to
close out a position acquired through a sale of such options. This list of
options-related activities is not intended to be exclusive, and each fund may
engage in other types of options transactions consistent with its investment
objective and policies and applicable law.
A call option is a short-term contract (generally for nine months or less)
which gives the purchaser of the option the right to purchase the underlying
security at a fixed exercise price at any time prior to the expiration of the
option regardless of the market price of the security during the option period.
As consideration for the call option, the purchaser pays the seller a premium,
which the seller retains whether or not the option is exercised. The seller of a
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. Selling a call option would benefit the seller if,
over the option period, the underlying security declines in value or does not
appreciate above the aggregate of the exercise price and the premium. However,
the seller risks an "opportunity loss" of profits if the underlying security
appreciates above the aggregate value of the exercise price and the premium.
3
<PAGE>
A fund may close out a position acquired through selling a call option by
buying a call option on the same security with the same exercise price and
expiration date as the call option that it had previously sold on that security.
Depending on the premium for the call option purchased by the fund, the fund
will realize a profit or loss on the transaction.
A put option is a similar short-term contract that gives the purchaser of
the option the right to sell the underlying security at a fixed exercise price
at any time prior to the expiration of the option regardless of the market price
of the security during the option period. As consideration for the put option
the purchaser pays the seller a premium, which the seller retains whether or not
the option is exercised. The seller of a put option has the obligation, upon the
exercise of the option by the purchaser, to purchase the underlying security at
the exercise price at any time during the option period. The buying of a covered
put contract limits the downside exposure for the investment in the underlying
security to the combination of the exercise price less the premium paid. The
risk of purchasing a put is that the market price of the underlying stock
prevailing on the expiration date may be above the option's exercise price. In
that case the option would expire worthless and the entire premium would be
lost.
A fund may close out a position acquired through buying a put option by
selling a put option on the same security with the same exercise price and
expiration date as the put option which it had previously bought on the
security. Depending on the premium of the put option sold by the fund, the fund
would realize a profit or loss on the transaction.
In addition to options (both calls and puts) on individual securities,
there are also options on groups of securities, such as the Standard & Poor's
100 Index traded on the Chicago Board Options Exchange. There are also options
on the futures of groups of securities such as the Standard & Poor's 500 Stock
Index and the New York Stock Exchange Composite Index. The selling of such calls
can be used in anticipation of, or in, a general market or market sector decline
that may adversely affect the market value of a fund's portfolio of securities.
To the extent that a fund's portfolio of securities changes in value in
correlation with a given stock index, the sale of call options on the futures of
that index would substantially reduce the risk to the portfolio of a market
decline, and, by so doing, provides an alternative to the liquidation of
securities positions in the portfolio with resultant transaction costs. A risk
in all options, particularly the relatively new options on groups of securities
and on the futures on groups of securities, is a possible lack of liquidity.
This will be a major consideration before a fund deals in any option.
4
<PAGE>
There is another risk in connection with selling a call option on a group
of securities or on the futures of groups of securities. This arises because of
the imperfect correlation between movements in the price of the call option on a
particular group of securities and the price of the underlying securities held
in the portfolio. Unlike a covered call on an individual security, where a large
movement on the upside for the call option will be offset by a similar move on
the underlying stock, a move in the price of a call option on a group of
securities may not be offset by a similar move in the price of securities held
due to the difference in the composition of the particular group and the
portfolio itself.
To the extent permitted by applicable regulatory authorities, each fund
may purchase and sell futures contracts on securities or other instruments, or
on groups or indexes of securities or other instruments. The purpose of hedging
techniques using financial futures is to protect the principal value of a fund
against adverse changes in the market value of securities or instruments in its
portfolio, and to obtain better returns on future investments than actually may
be available at the future time. Since these are hedging techniques, the gains
or losses on the futures contract normally will be offset by losses or gains
respectively on the hedged investment. Futures contracts also may be offset
prior to the future date by executing an opposite futures contract transaction.
A futures contract on an investment is a binding contractual commitment
which, if held to maturity, will result in an obligation to make or accept
delivery, during a particular future month, of the securities or instrument
underlying the contract. By purchasing a futures contract -- assuming a "long"
position -- a fund legally will obligate itself to accept the future delivery of
the underlying security or instrument and pay the agreed price. By selling a
futures contract -- assuming a "short" position -- it legally will obligate
itself to make the future delivery of the security or instrument against payment
of the agreed price.
Positions taken in the futures markets are not normally held to maturity,
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While futures positions taken by a fund usually will be
liquidated in this manner, a fund may instead make or take delivery of the
underlying securities or instruments whenever it appears economically
advantageous to the fund to do so. A clearing corporation associated with the
exchange on which futures are traded assumes responsibility for closing out
positions and guarantees that the sale and purchase obligations will be
performed with regard to all positions that remain open at the termination of
the contract.
5
<PAGE>
A stock index futures contract, unlike a contract on a specific security,
does not provide for the physical delivery of securities, but merely provides
for profits and losses resulting from changes in the market value of the
contract to be credited or debited at the close of each trading day to the
respective accounts of the parties to the contract. On the contract's expiration
date, a final cash settlement occurs and the futures positions are closed out.
Changes in the market value of a particular stock index futures contract reflect
changes in the specified index of equity securities on which the future is
based.
Stock index futures may be used to hedge the equity investments of each
fund with regard to market (systematic) risk (involving the market's assessment
of overall economic prospects), as distinguished from stock specific risk
(involving the market's evaluation of the merits of the issuer of a particular
security). By establishing an appropriate "short" position in stock index
futures, a fund may seek to protect the value of its securities portfolio
against an overall decline in the market for equity securities. Alternatively,
in anticipation of a generally rising market, a fund can seek to avoid losing
the benefit of apparently low current prices by establishing a "long" position
in stock index futures and later liquidating that position as particular equity
securities are in fact acquired. To the extent that these hedging strategies are
successful, a fund will be affected to a lesser degree by adverse overall market
price movements, unrelated to the merits of specific portfolio equity
securities, than would otherwise be the case.
Unlike the purchase or sale of a security, no price is paid or received by
a fund upon the purchase or sale of a futures contract. Initially, the fund will
be required to deposit in a custodial account an amount of cash, United States
Treasury securities, or other permissible assets equal to approximately 5% of
the contract amount. This amount is known as "initial margin." The nature of
initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments to and from the broker, called "variation margin," will be made on a
daily basis as the price of the underlying stock index fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as "marking to the market." For example, when a fund has purchased
a stock index futures contract and the price of the underlying stock index has
risen, that position will have increased in value, and the fund will
6
<PAGE>
receive from the broker a variation margin payment equal to that increase in
value. Conversely, where a fund has purchased a stock index futures contract and
the price of the underlying stock index has declined, the position would be less
valuable and the fund would be required to make a variation margin payment to
the broker. At any time prior to expiration of the futures contract, the fund
may elect to close the position by taking an opposite position which will
operate to terminate the fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the fund, and the fund realizes a loss or a gain.
There are several risks in connection with the use of a futures contract
as a hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the futures contracts and movements in the
securities or instruments which are the subject of the hedge. Each fund will
attempt to reduce this risk by engaging in futures transactions, to the extent
possible, where, in our judgment, there is a significant correlation between
changes in the prices of the futures contracts and the prices of each fund's
portfolio securities or instruments sought to be hedged.
Successful use of futures contracts for hedging purposes also is subject
to the user's ability to predict correctly movements in the direction of the
market. For example, it is possible that, where a fund has sold futures to hedge
its portfolio against declines in the market, the index on which the futures are
written may advance and the values of securities or instruments held in the
fund's portfolio may decline. If this occurred, the fund would lose money on the
futures and also experience a decline in value in its portfolio investments.
However, we believe that over time the value of a fund's portfolio will tend to
move in the same direction as the market indices which are intended to correlate
to the price movements of the portfolio securities or instruments sought to be
hedged. It also is possible that, for example, if a fund has hedged against the
possibility of the decline in the market adversely affecting stocks held in its
portfolio and stock prices increased instead, the fund will lose part or all of
the benefit of increased value of those stocks that it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the fund has insufficient cash, it may have to sell securities or
instruments to meet daily variation margin requirements. Such sales may be, but
will not necessarily be, at increased prices which reflect the rising market.
The fund may have to sell securities or instruments at a time when it may be
disadvantageous to do so.
7
<PAGE>
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures contracts and the
portion of the portfolio being hedged, the prices of futures contracts may not
correlate perfectly with movements in the underlying security or instrument due
to certain market distortions. First, all transactions in the futures market are
subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the index and futures markets. Second, the margin requirements in the
futures market are less onerous than margin requirements in the securities
market, and as a result the futures market may attract more speculators than the
securities market does. Increased participation by speculators in the futures
market also may cause temporary price distortions. Due to the possibility of
price distortion in the futures market and also because of the imperfect
correlation between movements in the futures contracts arid the portion of the
portfolio being hedged, even a correct forecast of general market trends by
Teachers Advisors, Inc. ("Advisors"), the investment advisor for TIAA-CREF
Mutual Fund, still may not result in a successful hedging transaction over a
very short time period.
Each fund may also use futures contracts and options on futures contracts
to manage its cash flow more effectively. To the extent that a fund enters into
non-hedging positions, it will do so only in accordance with certain CFTC
exemptive provisions. Thus, pursuant to CFTC Rule 4.5, the aggregate initial
margin and premiums required to establish non-hedging positions in commodity
futures or commodity options contracts may not exceed 5% of the liquidation
value of the fund's portfolio, after-taking into account unrealized profits and
unrealized losses on any such contracts it has entered into (provided that the
in-the-money amount of an option that is in-the-money when purchased may be
excluded in computing such 5%).
Options and futures transactions may increase a fund's transaction costs
and portfolio turnover rate and will be initiated only when consistent with its
investment objectives.
Firm Commitment Agreements and Purchase of "When-Issued" Securities. Each
fund can enter into firm commitment agreements for the purchase of securities on
a specified future date. When a fund enters into a firm commitment agreement,
liability for the purchase price -- and the rights and risks of ownership of the
securities -- accrues to the fund at the time it becomes obligated to purchase
such securities, although delivery and payment occur at a later date.
Accordingly, if the market price of the security should decline, the effect of
the agreement would be to obligate the fund to purchase the security at a price
above the
8
<PAGE>
current market price on the date of delivery and payment. During the time the
fund is obligated to purchase such securities, it will be required to segregate
assets. See "Segregated Accounts," page .
Pass-Through Securities. The funds may invest in mortgage pass-through
securities such as GNMA certificates or FNMA and FHLMC mortgage-backed
obligations, or modified pass-through securities such as collateralized mortgage
obligations issued by various financial institutions. In connection with these
investments, early repayment of principal arising from prepayments of principal
on the underlying mortgage loans due to the sale of the underlying property, the
refinancing of the loan, or foreclosure may expose a fund to a lower rate of
return upon reinvestment of the principal. Prepayment rates vary widely and may
be affected by changes in market interest rates. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening the actual
average life of the mortgage-related security. Conversely, when interest rates
are rising, the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the mortgage-related security. Accordingly, it is not
possible to accurately predict the average life of a particular pool.
Reinvestment of prepayments may occur at higher or lower rates than the original
yield on the certificates. Therefore, the actual maturity and realized yield on
pass-through or modified pass-through mortgage-related securities will vary
based upon the prepayment experience of the underlying pool of mortgages. For
purposes of calculating the average life of the assets of the relevant fund, the
maturity of each of these securities will be the average life of such securities
based on the most recent or estimated annual prepayment rate.
Lending of Securities. Subject to investment restriction 8(a) on page
(relating to loans of portfolio securities), each fund may lend its securities
to brokers and dealers that are not affiliated with TIAA, are registered with
the SEC and are members of the NASD, and also to certain other financial
institutions. All loans will be fully collateralized. In connection with the
lending of its securities, a fund will receive as collateral cash, securities
issued or guaranteed by the United States Government (i.e., Treasury
securities), or other collateral permitted by applicable law, which at all times
while the loan is outstanding will be maintained in amounts equal to at least
102% of the current market value of the loaned securities, or such lesser
percentage as may be permitted by the Securities and Exchange Commission (SEC)
(not to fall below 100% of the market value of the loaned securities), as
reviewed daily. By lending its securities, a fund will receive amounts equal to
the interest or dividends paid on the securities loaned and in addition will
expect to receive a portion of the income generated by the
9
<PAGE>
short-term investment of cash received as collateral or, alternatively, where
securities or a letter of credit are used as collateral, a lending fee paid
directly to the fund by the borrower of the securities. Such loans will be
terminable by the fund at any time and will not be made to affiliates of TIAA.
The fund may terminate a loan of securities in order to regain record ownership
of, and to exercise beneficial rights related to, the loaned securities,
including but not necessarily limited to voting or subscription rights, and may,
in the exercise of its fiduciary duties, terminate a loan in the event that a
vote of holders of those securities is required on a material matter. The fund
may pay reasonable fees to persons unaffiliated with the fund for services or
for arranging such loans. Loans of securities will be made only to firms deemed
creditworthy. As with any extension of credit, however, there are risks of delay
in recovering the loaned securities, should the borrower of securities default,
become the subject of bankruptcy proceedings, or otherwise be unable to fulfill
its obligations or fail financially.
Repurchase Agreements. Repurchase agreements have the characteristics of
loans, 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 entering into the
agreement 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. Each fund will enter into
repurchase agreements only with member banks of the Federal Reserve System, and
with primary dealers in United States Government securities or their
wholly-owned subsidiaries whose creditworthiness has been reviewed and found
satisfactory by Advisors and who have, therefore, been determined to present
minimal credit risk.
Securities underlying repurchase agreements will be limited to
certificates of deposit, commercial paper, bankers' acceptances, or obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities, in which the fund entering into the agreement may otherwise
invest.
If a seller of a repurchase agreement defaults and does not repurchase the
security subject to the agreement, the fund entering into the agreement would
look to the collateral security underlying the seller's repurchase agreement,
including the securities subject to the repurchase agreement, for satisfaction
of the seller's obligation to the fund; in such event the fund
10
<PAGE>
might incur disposition costs in liquidating the collateral and might suffer a
loss if the value of the collateral declines. In addition, if bankruptcy
proceedings are instituted against a seller of a repurchase agreement,
realization upon the collateral may be delayed or limited.
Swap Transactions. Each fund may, to the extent permitted by the SEC,
enter into privately negotiated "swap" transactions with other financial
institutions in order to take advantage of investment opportunities generally
not available in public markets. In general, these transactions involve
"swapping" a return based on certain securities, instruments, or financial
indices with another party, such as a commercial bank, in exchange for a return
based on different securities, instruments, or financial indices.
By entering into a swap transaction, a fund may be able to protect the
value of a portion of its portfolio against declines in market value. Each fund
may also enter into swap transactions to facilitate implementation of allocation
strategies between different market segments or countries or to take advantage
of market opportunities which may arise from time to time. A fund may be able to
enhance its overall performance if the return offered by the other party to the
swap transaction exceeds the return swapped by the fund. However, there can be
no assurance that the return a fund receives from the counterparty to the swap
transaction will exceed the return it swaps to that party.
While a fund will only enter into swap transactions with counterparties it
considers creditworthy (and will monitor the creditworthiness of parties with
which it enters into swap transactions), a risk inherent in swap transactions is
that the other party to the transaction may default on its obligations under the
swap agreement. If the other party to the swap transaction defaults on its
obligations, the fund entering into the agreement would be limited to the
agreement's contractual remedies. There can be no assurance that a fund will
succeed when pursuing its contractual remedies. To minimize a funds exposure in
the event of default, it will usually enter into swap transactions on a net
basis (i.e., the parties to the transaction will net the payments payable to
each other before such payments are made). When a fund enters into swap
transactions on a net basis, the net amount of the excess, if any, of the fund's
obligations over its entitlements with respect to each such swap agreement will
be accrued on a daily basis and an amount of liquid assets having an aggregate
market value at least equal to the accrued excess will be segregated by the
fund's custodian. To the extent a fund enters into swap transactions other than
on a net basis, the amount segregated will be the full amount of the fund's
obligations, if any, with respect to each such swap
11
<PAGE>
agreement, accrued on a daily basis. See "Segregated Accounts," page .
Swap agreements may be considered illiquid by the SEC staff and subject to
the limitations on illiquid investments. See the Prospectus for more
information.
To the extent that there is an imperfect correlation between the return a
fund is obligated to swap and the securities or instruments representing such
return, the value of the swap transaction may be adversely affected. No fund
therefore will enter into a swap transaction unless it owns or has the right to
acquire the securities or instruments representative of the return it is
obligated to swap with the counterparty to the swap transaction. It is not the
intention of any fund to engage in swap transactions in a speculative manner but
rather primarily to hedge or manage the risks associated with assets held in, or
to facilitate the implementation of portfolio strategies of purchasing and
selling assets for, the fund.
Segregated Accounts. In connection with when-issued securities, firm
commitment agreements, and certain other transactions in which a fund incurs an
obligation to make payments in the future, a fund may be required to segregate
assets with its custodian bank in amounts sufficient to settle the transaction.
To the extent required, such segregated assets can consist of liquid assets,
including equity or other securities, or other instruments such as cash, United
States Government securities or other obligations as may be permitted by law.
Currency Transactions. The value of a fund's assets as measured in United
States dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations, and the fund may incur
costs in connection with conversions between various currencies. To minimize the
impact of such factors on net asset values, the fund may engage in foreign
currency transactions in connection with their investments in foreign
securities. The funds will not speculate in foreign currency exchange, and will
enter into foreign currency transactions only to "hedge" the currency risk
associated with investing in foreign securities. Although such transactions tend
to minimize the risk of loss due to a decline in the value of the hedged
currency, they also may limit any potential gain which might result should the
value of such currency increase.
The funds will conduct their currency exchange transactions either on a
spot (i.e., cash) basis at the rate prevailing in the currency exchange market,
or through forward contracts to purchase or sell foreign currencies. A forward
currency contract
12
<PAGE>
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These contracts are
entered into with large commercial banks or other currency traders who are
participants in the interbank market.
By entering into a forward contract for the purchase or sale of foreign
currency involved in underlying security transactions, a fund is able to protect
itself against possible loss between trade and settlement dates for that
purchase or sale resulting from an adverse change in the relationship between
the U.S. dollar and such foreign currency. This practice is sometimes referred
to as "transaction hedging." In addition, when it appears that a particular
foreign currency may suffer a substantial decline against the U.S. dollar, a
fund may enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of its portfolio securities denominated
in such foreign currency. This practice is sometimes referred to as "portfolio
hedging". Similarly, when it appears that the U.S. dollar may suffer a
substantial decline against a foreign currency, a fund may enter into a forward
contract to buy that foreign currency for a fixed dollar amount.
The funds may also hedge their foreign currency exchange rate risk by
engaging in currency financial futures, options and "cross-hedge" transactions.
In "cross-hedge" transactions, a fund holding securities denominated in one
foreign currency will enter into a forward currency contract to buy or sell a
different foreign currency (one that generally tracks the currency being hedged
with regard to price movements). Such cross-hedges are expected to help protect
a fund against an increase or decrease in the value of the U.S. dollar against
certain foreign currencies.
The funds may hold a portion of their respective assets in bank deposits
denominated in foreign currencies, so as to facilitate investment in foreign
securities as well as protect against currency fluctuations and the need to
convert such assets into U.S. dollars (thereby also reducing transaction costs).
To the extent these monies are converted back into U.S. dollars, the value of
the assets so maintained will be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations.
The forecasting of short-term currency market movement is extremely
difficult and whether a short-term hedging strategy will be successful is highly
uncertain. Moreover, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of a foreign currency
forward contract. Accordingly, a fund may be required to buy or
13
<PAGE>
sell additional currency on the spot market (and bear the expense of such
transaction) if its predictions regarding the movement of foreign currency or
securities markets prove inaccurate. In addition, the use of cross-hedging
transactions may involve special risks, and may leave a fund in a less
advantageous position than if such a hedge had not been established. Because
foreign currency forward contracts are privately negotiated transactions, there
can be no assurance that a fund will have flexibility to roll-over the foreign
currency forward contract upon its expiration if it desires to do so.
Additionally, there can be no assurance that the other party to the contract
will perform its obligations thereunder.
There is no express limitation on the percentage of a fund's assets that
may be committed to foreign currency exchange contracts. A fund will not enter
into foreign currency forward contracts or maintain a net exposure in such
contracts where that fund would be obligated to deliver an amount of foreign
currency in excess of the value of that fund's portfolio securities or other
assets denominated in that currency or, in the case of a cross-hedge
transaction, denominated in a currency or currencies that fund's investment
adviser believes will correlate closely to the currency's price movements. The
funds generally will not enter into forward contracts with terms longer than one
year.
Foreign Investments As described more fully in the Prospectus, certain funds may
invest in foreign securities, including those in emerging markets. In addition
to the general risk factors discussed in "Foreign Investments" on page of the
Prospectus, there are a number of country-or region-specific risks and other
considerations that may affect these investments.
Investment in Europe The total European market (consisting of the European
Union, the European Free Trade Association and Eastern European countries)
contains over 507 million consumers, which makes it much larger than either the
United States or Japanese market. European businesses compete both nationally
and internationally in a wide range of industries, and recent political and
economic changes throughout Europe are likely to further expand the role of
Europe in the global economy. As a result, a great deal of interest and activity
has been generated in the "new" Europe that may result. However, many of the
anticipated changes involve synthesizing or changing a wide array of economic
and political systems, and there can be no guarantee that such changes will
occur as anticipated or will have results that investors would regard as
favorable.
The European Union The European Union ("EU") consists of Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden and the United Kingdom (the "EU Nations"),
with a total
14
<PAGE>
population exceeding 374 million. The EU Nations have undertaken to establish,
among themselves, a single market that is largely free of internal barriers and
hindrances to the free movement of goods, persons, services and capital.
Although it is difficult to predict when this goal will be fully realized, it is
expected that such an achievement will increase efficiency and the ability of
the EU Nations to compete globally by simplifying product distribution networks,
promoting economies of scale, and increasing labor mobility, among other
effects. In addition, efforts to achieve monetary union ("EMU") have effected a
rather dramatic decline in interest rates for some prospective members which is
expected to have important positive consequences for these economies and their
financial markets. Uncertainties with regard to the achievement of these goals,
and their extensive ramifications represent important risk considerations for
investors in these countries.
European Free Trade Association The European Free Trade Association ("EFTA")
consists of Iceland, Liechtenstein, Norway and Switzerland. These entities have
also worked to expand trade through the lowering or abolition of tariffs between
member countries. A major goal of the EFTA countries has been a more structured
partnership with the EU and the formation of a European Economic Area, with the
aim of developing such a partnership to coincide with the establishment of the
EU's unified market.
Eastern Europe A number of Eastern European nations and former republics of the
U.S.S.R. are currently implementing or considering reforms directed at political
and economic liberalization, including efforts to foster multi-party political
systems and to move away from centrally planned, socialist economies towards
free market economies. However, these changes will invariably take time and may
result in a high degree of social, economic, or political unpredictability or
instability over the short- or long-term. Thus, although unique investment
opportunities may be presented, they may entail a high degree of risk.
The Pacific Basin The economies of the Pacific Basin vary widely in their stages
of economic development. Some (such as Japan, Australia, Singapore, and Hong
Kong) are considered advanced by Western standards; others (such as Thailand,
Indonesia, and Malaysia are considered "emerging" -- rapidly shifting from
natural resource and agriculture based systems to more technologically advanced
systems oriented toward manufacturing. The major reform of China's economy and
politics continues to be an important stimulus to economic growth internally,
and, through trade, across the region. Intra-regional trade has become
increasingly important to a number of these economies. Japan, the second largest
economy in the world, is the dominant economy
15
<PAGE>
in the Pacific Basin, with one of the highest per capita incomes in the world.
Its extensive trade relationships also contribute to regional and global
economic growth. Economic growth has historically been relatively strong in the
region, but potential policy miscalculations or other events could pose
important risks to equity investors in any of these economies.
Canada Canada, a country rich in natural resources and a leading industrial
country of the world, is an important trading partner of the United States. The
U.S. and Canada have entered into the U.S.-Canada Free Trade Agreement which,
over a 10-year period from 1989, will remove trade barriers affecting all
important sectors of each country's economy. In addition, the U.S., Canada, and
Mexico have established the North American Free Trade Agreement ("NAFTA"), which
is expected to significantly benefit the economies of both countries.
Uncertainty regarding the longer-run political structure of Canada is an added
risk to investors.
Latin America Latin America (including Mexico, Central and South America and the
Caribbean) has a population of approximately 489 million people and is rich in
natural resources. Important gains in the manufacturing sector have developed in
several of the major countries in the region. A number of countries in the
region have taken steps to reduce impediments to trade, most notably through the
NAFTA agreement, between the U.S., Canada and Mexico and the Mercosur agreement
between Argentina, Brazil, Paraguay and Uraguay, with Chile as an associate
member. Political turmoil, high inflation, restrictions on international capital
flows, intermittent problems with capital flight, and some difficulties in the
repayment of external debt, however, remain important concerns in the region --
exacerbating the risks in these equity markets. As a result Latin American
equity markets have been extremely volatile. Efforts to stimulate these
economies through privatization, and fiscal and monetary reform have been met
with some success with gains in output growth, and slowing rates of inflation.
These efforts may result in attractive investment opportunities. However, there
can be no assurance that these or other changes will bring about results
investors would regard as favorable.
Other Regions There are developments in other regions and countries around the
world which could lead to additional investment opportunities. We will monitor
these developments and may invest when appropriate.
Depository Receipts. The equity funds can invest in American, European and
Global Depository Receipts (ADRs, EDRs and GDRs). They are alternatives to the
purchase of the underlying securities in their national markets and currencies.
Although
16
<PAGE>
their prices are quoted in U.S. dollars, they don't eliminate all the risks of
foreign investing.
ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a foreign correspondent bank. To the extent that
a fund acquires ADRs through banks which do not have a contractual relationship
with the foreign issuer of the security underlying the ADR to issue and service
such ADRs, there may be an increased possibility that the fund would not become
aware of and be able to respond to corporate actions such as stock splits or
rights offerings involving the foreign issuer in a timely manner. In addition,
the lack of information may result in inefficiencies in the valuation of such
instruments. However, by investing in ADRs rather than directly in the stock of
foreign issuers, a Fund will avoid currency risks during the settlement period
for either purchases or sales. In general, there is a large, liquid market in
the U.S. for ADRs quoted on a national securities exchange or the NASD's
national market system. The information available for ADRs is subject to the
accounting, auditing and financial reporting standards of the domestic market or
exchange on which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject.
EDRs and GDRs are receipts evidencing an arrangement with a non-U.S. bank
similar to that for ADRs and are designed for use in non-U.S. securities
markets. EDRs and GDRs are not necessarily quoted in the same currency as the
underlying security.
Other Investment Techniques and Opportunities. Each fund may take certain
actions with respect to merger proposals, tender offers, conversion of
equity-related securities and other investment opportunities with the objective
of enhancing the portfolio's overall return, regardless of how these actions may
affect the weight of the particular securities in the fund's portfolio.
Industry Concentrations. Because of its investment objective and policies,
the Managed Allocation Fund will concentrate more than 25% of its assets in the
mutual fund industry. However, none of the funds in which the Managed Allocation
fund invests will concentrate more than 25% of its total assets in any one
industry.
Portfolio Turnover
The transactions a fund engages in are reflected in its portfolio turnover
rate. The rate of portfolio turnover is calculated by dividing the lesser of the
amount of purchases or sales of portfolio securities during the fiscal year by
the
17
<PAGE>
monthly average of the value of the fund's portfolio securities (excluding from
the computation all securities, including options, with maturities at the time
of acquisition of one year or less). A high rate of portfolio turnover generally
involves correspondingly greater brokerage commission expenses, which must be
borne directly by the fund and ultimately by the fund's shareholders. However,
because portfolio turnover is not a limiting factor in determining whether or
not to sell portfolio securities, a particular investment may be sold at any
time, if investment judgment or account operations make a sale advisable.
None of the funds has a fixed policy on portfolio turnover although,
because a higher portfolio turnover rate will increase brokerage costs, Advisors
will carefully weigh the added costs of short term investment against the gains
anticipated from such transactions.
The Managed Allocation Fund's portfolio turnover is expected to be low.
The Managed Allocation Fund will purchase or sell securities to: (i) accommodate
purchases and sales of its shares; (ii) change the percentages of its assets
invested in each of the underlying fund in response to market conditions; and
(iii) maintain or modify the allocation of its assets among the underlying fund
within the percentage limits described in the Prospectus.
Management of the TIAA-CREF Mutual Fund
Trustees and Officers of the TIAA-CREF Mutual Fund
Trustees who are "interested persons" within the definition set forth in
the Investment Company Act of 1940, as amended, are indicated by an asterisk
(*).
<TABLE>
<CAPTION>
Principal Occupations During Past 5
Trustees Age Years
- -------- --- -----
<S> <C> <C>
Robert H. Atwell 65 President, American Counsel on
American Council on Education Education. Formerly President, Pitzer
Suite 800 College.
One Dupont Circle
Washington, D.C. 20036
Elizabeth E. Bailey 57 John C. Hower Professor of Public Policy
The Wharton School and Management, The Wharton School of
University of Pennsylvania the University of Pennsylvania, since July
Suite 3100 1991. Formerly, Professor, Carnegie
Steinberg Dietrich Hall Mellon University and Dean, Graduate
Philadelphia, Pennsylvania 19104-6372 School of Industrial Administration,
Carnegie Mellon University.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations During Past 5
Trustees Age Years
- -------- --- -----
<S> <C> <C>
Gary P. Brinson 52 Member, Group Executive Board, Swiss
Brinson Partners, Inc. Bank Corporation, since 1995. Chief
209 South LaSalle Street Investment Officer, Swiss Bank
Chicago, Illinois 60604-1295 Corporation, since 1996. President and
Managing Partner, Brinson Partners, Inc.
Joyce A. Fecske 49 Vice President Emerita, DePaul
4800 South Karlov Avenue University since 1994. Formerly, Vice
Chicago, Illinois 60632 President for Human Resources, DePaul
University.
Edes P. Gilbert 64 Head, The Spence School.
The Spence School
22 East 91st Street
New York, New York 10128
Stuart Tse Kong Ho 60 Chairman and President, Capital
Capital Investment of Hawaii, Inc. Investment of Hawaii, Inc.; Chairman,
Suite 1700 Gannett Pacific Corporation.
733 Bishop Street
Honolulu, Hawaii 96813
Nancy L. Jacob 53 President and Managing Director,
Suite 450, The River Forum Windermere Investment Associates, since
4380 S.W. Macadam Avenue January 1997. Chairman and Chief
Portland, Oregon 97201 Executive Officer, CTC Consulting, Inc.
Executive Vice President, U.S. Trust of
the Pacific Northwest. Formerly,
Managing director, Capital Trust
Company.
Marjorie Fine Knowles 57 Professor of Law, Georgia State
College of Law University College of Law.
Georgia State University
University Plaza
Atlanta, Georgia 30303-3092
Jay O. Light 55 Professor of Business Administration,
Harvard Business School Harvard University Graduate School of
Morgan Hall 489 Business Administration.
Soldiers Field
Boston, Massachusetts 02163
Bevis Longstreth 62 Partner, Debevoise & Plimpton, Adjunct
Debevoise & Plimpton Professor, Columbia University School of
875 Third Avenue Law.
New York, New York 10022
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations During Past 5
Trustees Age Years
- -------- --- -----
<S> <C> <C>
Robert M. Lovell, Jr. 66 Founding Partner, First Quadrant L.P.
First Quadrant Corp. Formerly, Chairman and Chief Executive
100 Campus Drive Officer, First Quadrant Corp. (Investment
P.O. Box 939 Management Firm).
Florham Park, New Jersey 07932
Stephen A. Ross 52 Sterling Professor of Economics and
School of Organization and Management Finance, School of Organization and
Yale University Management, Yale University, Co-
52 Hillhouse Avenue Chairman, Roll & Ross Asset
New Haven, Connecticut 06520 Management Corp.
Eugene C. Sit 58 Chairman, Chief Executive and Chief
Sit Investment Associates, Inc. Investment Officer, Sit Investment
4600 Norwest Center Associates, Inc. and Chairman and Chief
90 South Seven Street Executive Officer, Sit-Kim International
Minneapolis, Minnesota 55402 Investment Associates, Inc.
Maceo K. Sloan 46 Chairman, President, and Chief Executive
NCM Capital Management Group, Inc. Officer, Sloan Financial Group, Inc., and
Suite 400 NCM Capital Management Group, Inc.
103 West Main Street
Durham, North Carolina 27701-3638
Harry K. Spindler 67 Retired since 1993. Formerly, Senior
80 Brightonwood Road Vice Chancellor, Division of
Glenmont, New York 12077 Administrative Affairs, State University
of New York System.
David K. Storrs 52 President and Chief Executive Officer,
The Common Fund Alternative Investment Group, L.L.C.,
450 Post Road East since August 1996. Adviser to the
Westport, Connecticut 06881-0909 President, The Common Fund, since
January 1996. Formerly, President and
Chief Executive Officer, The Common
Fund, from 1993 to January 1996.
Formerly Executive Vice President of The
Common Fund.
Robert W. Vishny 38 Eric J. Gleacher Professor of Finance,
1601 Washington University of Chicago, since 1993.
Wilmette, Illinois 60091 Founding Partner, LSV Asset
Management.
</TABLE>
- ----------
[Designate members of various committees with appropriate footnotes]
Officer-Trustees Age Principal Occupations During Past 5 Years
- ---------------- --- -----------------------------------------
20
<PAGE>
John H. Biggs* 60 [Position with TIAA-CREF Mutual Fund],
(1) Chairman and Chief Executive Officer,
CREF and TIAA, since 1993, Formerly,
President and Chief Operating Officer, CREF
and TIAA.
Thomas W. Jones* 47 [Position with TIAA-CREF Mutual Fund],
(1) Vice Chairman, CREF and TIAA, since
1995. President and Chief Operating
Officer, CREF and TIAA, since 1993.
Formerly, Executive Vice President, Finance
and Planning, CREF and TIAA.
Martin L. Leibowitz* 60 [Position with TIAA-CREF Mutual Fund],
(1) Vice Chairman and Chief Investment Officer,
CREF and TIAA, since 1995. Trustee and
President, TIAA-CREF Investment
Management, Inc. ("Investment
Management"), Director and President,
Teachers Advisors, Inc. ("Advisors") and
Executive Vice President, TIAA Separate
Account VA-1 since 1995. Executive Vice
President, CREF and TIAA from June 1995 to
November 1995. Formerly, managing
director-director of research and a member of the
executive committee, Salomon Brothers,
Inc.
Other Officers Principal Occupations During Past 5 Years
- -------------- -----------------------------------------
[to come]
- --------------
(1) The address for all Officers of the TIAA-CREF Mutual Fund is 730 Third
Avenue, New York, New York 10017.
Compensation of Trustees
[to come]
Trustee and Officer Compensation
The following table discloses the aggregate compensation received from the
TIAA-CREF family of companies for each non-officer Trustee for the year ended
December 31, 1996.
21
<PAGE>
Compensation Table
[to be added]
Control Persons
TIAA, as the contributor of the initial capital for each of the funds,
owned 100 percent of the shares of each fund as of ________, 1997.
Investment Advisory and Other Services
As explained in the Prospectus, investment advisory services and related
services for each of the funds are provided by personnel of Teachers Advisors,
Inc. (Advisors). Advisors manages the investment and reinvestment of the assets
of each fund, subject to the direction and control of the Finance Committee of
the Board of Trustees (the Board).
The custodian for the assets of the TIAA-CREF Mutual Fund is State Street
Bank, 225 Franklin Street, Boston, Massachusetts 02209. As described in the
Prospectus, State Street Bank also provides other administrative services for
the TIAA-CREF Mutual
Fund.
The TIAA-CREF Mutual Fund's financial statements are audited by
[auditors].
Teachers Insurance and Annuity Association of America (TIAA) holds all of
the shares of TIAA Holdings, Inc., which in turn holds all the shares of
Advisors and of Teachers Personal Investors Services, Inc., the principal
underwriter for the TIAA- CREF Mutual Fund. TIAA also holds all the shares of
TIAA-CREF Individual & Institutional Services, Inc. ("Services") and TIAA- CREF
Investment Management, Inc. ("Investment Management"). Services acts as the
principal underwriter, and Investment Management provides investment advisory
services, to the College Retirement Equities Fund, a companion organization to
TIAA. All of the foregoing are affiliates of the TIAA-CREF Mutual Fund and
Teachers Advisors.
About the TIAA-CREF Mutual Fund and the Shares
As a Delaware business trust, the TIAA-CREF Mutual Fund's operations are
governed by its Declaration of Trust dated January 13, 1997 (the Declaration). A
copy of the TIAA-CREF Mutual Fund's Certificate of Trust, dated January 15,
1997, is on file with the Office of the Secretary of State of the State of
Delaware. Upon the initial purchase of shares of beneficial
22
<PAGE>
interest in the TIAA-CREF Mutual Fund each shareholder agrees to be bound by the
Declaration, as amended from time to time.
Indemnification of Shareholders
Generally, Delaware business trust shareholders are not personally liable
for obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (DBTA) provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit corporations. The TIAA-CREF Mutual Fund's
Declaration expressly provides that the TIAA-CREF Mutual Fund has been organized
under the DBTA and that the Declaration is to be governed by and interpreted in
accordance with Delaware law. It is nevertheless possible that a Delaware
business trust, such as the TIAA-CREF Mutual Fund, might become a party to an
action in another state whose courts refuse to apply Delaware law, in which case
the TIAA-CREF Mutual Fund's shareholders could possibly be subject to personal
liability.
To guard against this risk, the Declaration (i) contains an express
disclaimer of shareholder liability for acts or obligations of the TIAA-CREF
Mutual Fund and provides that notice of such disclaimer may be given in each
agreement, obligation and instrument entered into or executed by the TIAA-CREF
Mutual Fund or its Trustees, (ii) provides for the indemnification out of Trust
property of any shareholders held personally liable for any obligations of the
TIAA-CREF Mutual Fund or any series of the TIAA-CREF Mutual Fund, and (iii)
provides that the TIAA-CREF Mutual Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
TIAA-CREF Mutual Fund and satisfy any judgment thereon. Thus, the risk of a
Trust shareholder incurring financial loss beyond his or her investment because
of shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refuses to apply Delaware law; (2)
the liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the TIAA-CREF Mutual Fund itself would be
unable to meet its obligations. In the light of DBTA, the nature of the
TIAA-CREF Mutual Fund's business, and the nature of its assets, the risk of
personal liability to an TIAA-CREF Mutual Fund shareholder is remote.
Indemnification of Trustees
The Declaration further provides that the TIAA-CREF Mutual Fund shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or
23
<PAGE>
having been a Trustee or officer of the TIAA-CREF Mutual Fund. The Declaration
does not authorize the TIAA-CREF Mutual Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
Limitation of Fund Liability
All persons dealing with an investment fund must look solely to the
property of that particular fund for the enforcement of any claims against that
fund, as neither the Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of a fund or the fund.
No investment fund is liable for the obligations of any other investment fund.
Since the funds use a combined Prospectus, however, it is possible that one fund
might become liable for a misstatement or omission in the Prospectus regarding
another fund with which its disclosure is combined. The Trustees have considered
this factor in approving the use of the combined Prospectus.
Shareholder Meetings and Voting Rights
Under the Declaration, the TIAA-CREF Mutual Fund is not required to hold
annual meetings to elect Trustees or for other purposes. It is not anticipated
that the TIAA-CREF Mutual Fund will hold shareholders' meetings unless required
by law or the Declaration. The TIAA-CREF Mutual Fund will be required to hold a
meeting to elect Trustees to fill any existing vacancies on the Board if, at any
time, fewer than a majority of the Trustees have been elected by the
shareholders of the TIAA-CREF Mutual Fund.
Shares of the TIAA-CREF Mutual Fund do not entitle their holders to
cumulative voting rights, so that the holders of more than 50% of the net asset
value represented by the outstanding shares of the TIAA-CREF Mutual Fund may
elect all of the Trustees, in which case the holders of the remaining shares
would not be able to elect any Trustees. As determined by the Trustees,
shareholders are entitled to one vote for each dollar of net asset value (number
of shares held times the net asset value of the applicable fund).
Additional Portfolios
24
<PAGE>
Pursuant to the Declaration, the Trustees may establish additional
investment portfolios (technically "series" of shares) in the TIAA-CREF Mutual
Fund. The establishment of additional investment funds would not affect the
interests of current shareholders in the existing six funds. As of the date of
this SAI, the Trustees do not have any plan to establish another fund.
Dividends and Distributions
Each share of a fund is entitled to such dividends and distributions out
of the income earned on the assets belonging to that fund as are declared in the
discretion of the Trustees. In the event of the liquidation or dissolution of
the TIAA-CREF Mutual Fund as a whole or any individual investment fund, shares
of the affected fund are entitled to receive their proportionate share of the
assets which are attributable to such shares and which are available for
distribution as the Trustees in their sole discretion may determine.
Shareholders are not entitled to any preemptive, conversion, or subscription
rights. All shares, when issued, will be fully paid and non-assessable.
Pricing of Shares
The assets of the funds are valued as of the close of each valuation day
in the following manner:
Investments for Which Market Quotations Are Readily
Available
Investments for which market quotations are readily available are valued
at the market value of such investments, determined as follows:
Equity securities listed or traded on the New York Stock Exchange or the
American Stock Exchange are valued based on their sale price on such exchange at
the close of business (usually 4:00 p.m.) on the date of valuation, or at the
mean of the closing bid and asked prices if no sale is reported. Equity
securities which are listed or traded on any other exchange are valued in a
comparable manner on the principal exchange where traded.
Equity securities traded in the United States over-the-counter market are
valued based on the last sale price on the date of valuation for NASDAQ National
Market System securities, or at the mean of the closing bid and asked prices if
no sale is reported. Other U.S. over-the-counter equity securities are valued at
the mean of the closing bid and asked prices.
25
<PAGE>
Foreign Investments
Investments traded on a foreign exchange or in foreign markets are valued
at the closing values of such securities as of the date of valuation under the
generally accepted valuation method in the country where traded, converted to
U.S. dollars at the prevailing rates of exchange on the date of valuation. Since
the trading of investments on a foreign exchange or in foreign markets is
normally completed before the end of a valuation day, such valuation does not
take place contemporaneously with the determination of the valuation of certain
other investments held by the fund. If events materially affecting the value of
foreign investments occur between the time their share price is determined and
the time when a fund's net asset value is calculated, such investments will be
valued at fair value as determined in good faith by the Finance Committee of the
Board and in accordance with the responsibilities of the Board as a whole.
Debt Securities
Debt securities (including money market instruments) for which market
quotations are readily available are valued based on the most recent bid price
or the equivalent quoted yield for such securities (or those of comparable
maturity, quality and type). Values for money market instruments (other than
those in the Money Market Fund) with maturities of one year or less will be
obtained from either one or more of the major market makers or from one or more
of the financial information services for the securities to be valued. For
securities with maturities longer than one year, these values will be derived
utilizing an independent pricing service when such prices are believed to
reflect the fair value of these securities. We use an independent pricing
service to value securities with maturities longer than one year, except when we
believe prices don't accurately reflect the security's fair value.
Special Valuation Procedures for the Money Market Fund
For the Money Market Fund, all of its assets are valued on the basis of
amortized cost in an effort to maintain a constant net asset value per share of
$1.00. The Board has determined that such valuation is in the best interests of
the fund and its shareholders. Under the amortized cost method of valuation,
securities are valued at cost on the date of their acquisition, and thereafter a
constant accretion of any discount or amortization of any premium to maturity is
assumed, regardless of the impact of fluctuating interest rates on the market
value of the security. While this method provides certainty in valuation, it may
result in periods in which value as determined by amortized cost is higher or
lower than the price the fund would
26
<PAGE>
receive if it sold the security. During such periods, the quoted yield to
investors may differ somewhat from that obtained by a similar fund which uses
available market quotations to value all of its securities.
The Board has established procedures reasonably designed, taking into
account current market conditions and the Money Market Fund's investment
objective, to stabilize the net asset value per share for purposes of sales and
redemptions at $1.00. These procedures include review by the Board, at such
intervals as it deems appropriate, to determine the extent, if any, to which the
net asset value per share calculated by using available market quotations
deviates from $1.00 per share. In the event such deviation should exceed one
half of one percent, the Board will promptly consider initiating corrective
action. If the Board believes that the extent of any deviation from a $1.00
amortized cost price per share may result in material dilution or other unfair
results to new or existing shareholders, it will take such steps as it considers
appropriate to eliminate or reduce these consequences to the extent reasonably
practicable. Such steps may include: (1) selling securities prior to maturity;
(2) shortening the average maturity of the fund; (3) withholding or reducing
dividends; or (4) utilizing a net asset value per share determined from
available market quotations. Even if these steps were taken, the Money Market
Fund's net asset value might still decline.
Options and Futures
Portfolio investments underlying options are valued as described above.
Stock options written by a fund are valued at the last quoted sale price, or at
the closing bid price if no sale is reported for the day of valuation as
determined on the principal exchange on which the option is traded. The value of
a fund's net assets will be increased or decreased by the difference between the
premiums received on writing options and the costs of liquidating such positions
measured by the closing price of the options on the date of valuation.
For example, when a fund writes a call option, the amount of the premium
is included in the fund's assets and an equal amount is included in its
liabilities. The liability thereafter is adjusted to the current market value of
the call. Thus, if the current market value of the call exceeds the premium
received, the excess would be unrealized depreciation; conversely, if the
premium exceeds the current market value, such excess would be unrealized
appreciation. If a call expires or if the fund enters into a closing purchase
transaction it realizes a gain (or a loss if the cost of the transaction exceeds
the premium received when the call was written) without regard to any unrealized
appreciation or depreciation in the underlying securities, and
27
<PAGE>
the liability related to such call is extinguished. If a call is exercised, the
fund realizes a gain or loss from the sale of the underlying securities and the
proceeds of the sale increased by the premium originally received.
A premium paid on the purchase of a put will be deducted from a fund's
assets and an equal amount will be included as an investment and subsequently
adjusted to the current market value of the put. For example, if the current
market value of the put exceeds the premium paid, the excess would be unrealized
appreciation; conversely, if the premium exceeds the current market value, such
excess would be unrealized depreciation.
Stock and bond index futures, and options thereon, which are traded on
commodities exchanges, are valued at their last sale prices as of the close of
such commodities exchanges.
Investments for Which Market Quotations Are Not Readily Available
Portfolio securities or other assets for which market quotations are not
readily available will be valued at fair value, as determined in good faith
under the direction of the Trustees.
Tax Status
Although the TIAA-CREF Mutual Fund is organized as a Delaware business
trust, neither the TIAA-CREF Mutual Fund nor the funds will be subject to any
corporate excise or franchise tax in the State of Delaware, nor will they be
liable for Delaware income taxes provided that each fund qualifies as a
regulated investment company for federal income tax purposes and satisfies
certain income source requirements of Delaware law. If each fund so qualifies
and distributes all of its income and capital gains, it will also be exempt from
the New York State franchise tax and the New York City general corporation tax,
except for small minimum taxes.
Each fund intends to qualify as a "regulated investment company" ("RIC")
under Subchapter M of the Code. In general, to qualify as a RIC: (a) at least
90% of the gross income of a fund for the taxable year must be derived from
dividends, interest, payments with respect to loans of securities, gains from
the sale or other disposition of securities, or other income derived with
respect to its business of investing in securities; (b) less than 30% of a
fund's gross income for the taxable year can be attributable to gains (without
deductions for losses) from the sale or other disposition of securities held for
less than three
28
<PAGE>
months; (c) a fund must distribute to its shareholders 90% of its ordinary
income and net short-term capital gains. Moreover, undistributed net income may
be subject to tax at the RIC level; and (d) a fund must diversify its assets so
that, at the close of each quarter of its taxable year, (i) at least 50% of the
fair market value of its total (gross) assets is comprised of cash, cash items,
U.S. Government securities, securities of other regulated investment companies
and other securities limited in respect of any one issuer to no more than 5% of
the fair market value of the fund's total assets and 10% of the outstanding
voting securities of such issuer and (ii) no more than 25% of the fair market
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies) or of two or more issuers controlled by the fund and engaged in the
same, similar, or related trades or businesses.
If, in any taxable year, a fund should not qualify as a RIC under the
Code: (1) that fund would be taxed at normal corporate rates on the entire
amount of its taxable income without deduction for dividends or other
distributions to its shareholders, and (2) that fund's distributions to the
extent made out of that fund's current or accumulated earnings and profits would
be taxable to its shareholders (other than shareholders in tax deferred
accounts) as ordinary dividends (regardless of whether they would otherwise have
been considered capital gains dividends), and may qualify for the deduction for
dividends received by corporations.
Each fund must declare and distribute dividends equal to at least 98% of
its ordinary income (as of the twelve months ended December 31) and
distributions of at least 98% of its net capital gains (as of the twelve months
ended October 31), in order to avoid a federal excise tax. Each fund intends to
make the required distributions, but they cannot guarantee that they will do so.
Dividends attributable to a funds's ordinary income and capital gains
distributions are taxable as such to shareholders in the year in which they are
received except dividends declared in October, November or December and paid in
January. Dividends in the latter category are treated as paid on December 31.
A distribution of net capital gains reflects a fund's excess of net
long-term gains over its net short-term losses. Each fund must designate income
dividends and distributions of net capital gains and must notify shareholders of
these designations within sixty days after the close of the fund's taxable year.
Foreign currency gains and losses, including the portion of gain or loss
on the sale of debt securities attributable to foreign exchange rate
fluctuations are taxable as ordinary income. If the net effect of these
transactions is a gain, the
29
<PAGE>
dividend paid by the fund will be increased; if the result is a loss, the income
dividend paid by the fund will be decreased. Adjustments, to reflect these gains
and losses will be made at the end of each fund's taxable year.
At the time of purchase, each fund's net asset value may reflect
undistributed income or net capital gains. A subsequent distribution to
shareholders of such amounts, although constituting a return of their
investment, would be taxable either as dividends or capital gain distributions.
For federal income tax purposes, each fund is permitted to carry forward its net
realized capital losses, if any, for eight years, and realize net capital gains
up to the amount of such losses without being required to pay taxes on, or
distribute such gains. If a shareholder held shares for six months or less and
during that period received a distribution taxable to such shareholder as a long
term capital gain, any loss realized on the sale of such shares during the six
month period would be a long term loss to the extent of such distribution.
Income received by each fund from sources within various foreign countries
may be subject to foreign income taxes withheld at the source. Under the Code,
if more than 50% of the value of a fund's total assets at the close of its
taxable year comprise securities issued by foreign corporations, the fund may
file an election with the Internal Revenue Service to "pass through" to the
fund's shareholders the amount of any foreign income taxes paid by the fund.
Pursuant to this election, shareholders will be required to: (i) include in
gross income, even though not actually received, their respective pro rata share
of foreign taxes paid by the fund; (ii) treat their pro rata share of foreign
taxes as paid by them; and (iii) either deduct their pro rata share of foreign
taxes in computing their taxable income, or use it as a foreign tax credit
against U.S. income taxes (but not both). No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions.
Each shareholder will be notified within 60 days after the close of each
taxable year of a fund, if that fund will "pass through" foreign taxes paid for
that year, and, if so, the amount of each shareholder's pro rata share (by
country) of (i) the foreign taxes paid, and (ii) the fund's gross income from
foreign sources. Of course, shareholders who are not liable for federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any such "pass through" of foreign tax credits.
Each fund is required by federal law to withhold 31% of reportable payments
(which may include income dividends, capital gains distributions, and share
redemption proceeds) paid to shareholders who have not complied with IRS
regulations. In
30
<PAGE>
order to avoid this back-up withholding requirement, a shareholder must certify
to the fund on the application form or on a separate Internal Revenue Service
W-9 Form, that the shareholder's social security number or tax payer
identification number is correct and that the shareholder is not currently
subject to back-up withholding or is exempt from back-up withholding.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors. For example, each shareholder who is not a U.S.
person should consider the U.S. and foreign tax consequences of ownership of
shares of the funds, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on fund distributions treated as ordinary
dividends.
This discussion of the tax treatment of the funds and their distributions
is based on the federal, Delaware and New York tax laws in effect as of the date
of this SAI. Shareholders should consult their tax advisers to determine the tax
treatment of an investment by him or her in any fund.
Brokerage Allocation
Advisors is responsible for decisions to buy and sell securities for the
funds as well as for selecting brokers and, where applicable negotiating the
amount of the commission rate paid. It is the intention of Advisors to place
brokerage orders with the objective of obtaining the best execution, which
includes such factors as best price, research and available data. When
purchasing or selling securities traded on the over-the-counter market, Advisors
generally will execute the transactions with a broker engaged in making a market
for such securities. When Advisors deems the purchase or sale of a security to
be in the best interests of a fund, its personnel may, consistent with their
fiduciary obligations, decide either to buy or to sell a particular security for
the fund at the same time as for TIAA investment account that it may be
managing, or CREF account that it may also be managing on behalf of TIAA-CREF
Investment Management, Inc. ("Investment Management"), another investment
adviser also affiliated with TIAA. In that event, allocation of the securities
purchased or sold, as well as the expenses incurred in the transaction, will be
made in an equitable manner.
Domestic brokerage commissions are negotiated, as there are no standard
rates. All brokerage firms provide the service of execution of the order made;
some brokerage firms also provide research and statistical data, and research
reports on particular companies and industries are customarily provided by
brokerage firms to large investors. In negotiating commissions,
31
<PAGE>
consideration is given by Advisors to the quality of execution provided and to
the use and value of the data. The valuation of such data may be judged with
reference to a particular order or, alternatively, may be judged in terms of its
value to the overall management of the portfolio.
Advisors 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. Advisors follows guidelines established by
the Board for the placing of orders with the brokers providing such services.
Research or services obtained for the TIAA-CREF Mutual Fund may be used by
personnel of Advisors in managing other investment company accounts, or the CREF
accounts for Investment Management. In such circumstances, the expenses incurred
will be allocated in an equitable manner consistent with the fiduciary
obligations of personnel of Advisors to the TIAA-CREF Mutual Fund.
Calculation of Performance Data
We may quote a fund's performance in various ways. All performance
information in advertising is historical and is not intended to indicate future
returns. A fund's share price, yield, and total return fluctuate in response to
market conditions and other factors, and the value of fund shares when redeemed
may be more or less than their original cost.
Total Return Calculations
Total returns quoted in advertising reflect all aspects of a fund's
returns, including the effect of reinvesting dividends and capital gain
distributions, and any change in the fund's NAV over a stated period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period according to the following formula:
P (1 + T)(n) = ERV
where: P = the hypothetical initial payment
T = average annual total return
n = number of years in the period
ERV = ending redeemable value of the
hypothetical payment made at the
32
<PAGE>
beginning of the one-, five-, or 10-year period at
the end of the one-, five-, or 10-year period (or
fractional portion thereof).
For example, a cumulative return of 100% over ten years would produce an average
annual return of 7.18%, which is the steady annual rate that would equal 100%
growth on a compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that a fund's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as opposed to
the actual year-to-year performance of the fund.
In addition to average annual returns, we may quote a fund's unaveraged or
cumulative total returns reflecting the actual change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, or a series of redemptions, over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted on a before or after tax basis. Total
returns, yields, and other performance information may be quoted numerically or
in a table, graph, or similar illustration.
Yield Calculations
All Funds other than the Money Market Fund. Yields are computed by
dividing the fund's net investment income for a given 30-day or one month
period, by the average number of fund shares, dividing this figure by the fund's
NAV at the end of the period, and annualizing the result (assuming compounding
of income) in order to arrive at an annual percentage rate. Income is calculated
for purposes of yield quotations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is reduced
with respect to bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased with
respect to bonds trading at a discount by adding a portion of the discount to
daily income. For a fund's investments denominated in foreign currencies, income
and expenses are calculated first in their respective currencies, and are then
converted to U.S. dollars, either when they are actually converted or at the end
of the 30-day or one month period, whichever is earlier. Income is adjusted to
reflect gains and losses from principal repayments received by the fund with
respect to mortgage-related securities
33
<PAGE>
and other asset-backed securities. Other capital gains and losses generally are
excluded from the calculation as are gains and losses currently from exchange
rate fluctuations.
Income calculated for the purposes of calculating a fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, a fund's yield may not equal its distribution
rate, the income paid to your account, or the income reported in a fund's
financial statements.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives. However, a
fund's yield fluctuates, unlike investments that pay a fixed interest rate over
a stated period of time. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider. Investors should
also recognize that in periods of declining interest rates a fund's yield will
tend to be somewhat higher than prevailing market rates, and in periods of
rising interest rates a fund's yield will tend to be somewhat lower. Also, when
interest rates are falling, the inflow of net new money to a fund from the
continuous sale of its shares will likely be invested in instruments producing
lower yields than the balance of the fund's holdings, thereby reducing the
fund's current yield. In periods of rising interest rates, the opposite can be
expected to occur.
Yield Information for the Money Market Fund Yield quotations for the Money
Market Fund, including yield quotations based upon the seven-day period ended on
the date of calculation, may also be made available. These yield quotations are
based on a hypothetical pre-existing account with a balance of one share. In
arriving at any such yield quotations, the net change during the period in the
value of that hypothetical account is first determined. Such net change includes
net investment income attributable to portfolio securities but excludes realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation (which are included in the calculation of Net Asset Value). For
this purpose, net investment income includes accrued interest on portfolio
securities, plus or minus amortized premiums or purchase discount (including
original issue discount), less all accrued expenses. Such net change is then
divided by the value of that hypothetical account at the beginning of the period
to obtain the base period return, and then the base period return is multiplied
by 365/7 to annualize the current yield figure which is carried to at least the
nearest hundredth of one percent.
34
<PAGE>
The effective yield of the Money Market Fund for the same seven-day period may
also be disclosed. The effective yield is obtained by adjusting the current
yield to give effect to the compounding nature of the Fund's investments, and is
calculated by the use of the following formula:
Effective Yield = (Base Period Return+1)(365/7) -1
The Money Market Fund's yield fluctuates, unlike many bank deposits or other
investments which pay a fixed yield for a stated period of time. The
annualization of one period's income is not necessarily indicative of future
actual yields. Actual yields will depend on such variables as portfolio quality,
average portfolio maturity, the type of instruments held in the portfolio,
changes in interest rates on money market instruments, portfolio expenses, and
other factors.
Performance Comparisons
Performance information for the funds, may be compared in advertisements,
sales literature, and reports to Shareholders, to the performance information
reported by other investments and to various indices and averages. Such
comparisons may be made with, but are not limited to (1) the S&P 500, (2) the
Dow Jones Industrial Average ("DJIA"), (3) Lipper Analytical Services, Inc.
Mutual Fund Performance Analysis Reports and the Lipper General Equity Funds
Average, (4) Money Magazine Fund Watch, (5) Business Week's Mutual Fund
Scoreboard, (6) SEI Funds Evaluation Services Equity Fund Report, (7) CDA Mutual
Funds Performance Review and CDA Growth Mutual Fund Performance Index, (8) Value
Line Composite Average (geometric), (9) Wilshire Associates indices, (10) Frank
Russell Co. Inc. indices, (11) the Consumer Price Index, published by the U.S.
Bureau of Labor Statistics (measurement of inflation), (12) Morningstar, Inc.,
and (13) the Global Market indicies created by Morgan Stanley, Inc., including
the Europe, Asia, Far East (EAFE) Index, the EAFE+Canada Index and the
International Perspective Index. We may also discuss ratings or rankings
received from these entities, accompanied in some cases by an explanation of
those ratings or rankings, when applicable. In addition, advertisements may
discuss the performance of the indices listed above.
The performance of each of the funds also may be compared to other indices
or averages that measure performance of a pertinent group of securities.
Shareholders should keep in mind that the composition of the investments in the
reported averages will not be identical to that of the fund and that certain
formula calculations (e.g., yield) may differ from index to index. In addition,
there can be no assurance that any of the funds will continue its performance as
compared to such indices.
35
<PAGE>
We may also advertise ratings or rankings the funds receive from various
rating services and organizations, including but not limited to any organization
listed above.
Illustrating Compounding
We may illustrate in advertisements, sales literature and reports to
shareholders the effects of compounding of earnings on an investment in a fund.
We may do this using a hypothetical investment earning a specified rate of
return. To illustrate the effects of compounding, we would show how the total
return from an investment of the same dollar amount, earning the same or a
different rate of return, varies depending on when the investment was made.
Net Asset Value
Charts and graphs using a fund's NAVs, adjusted NAVs, and benchmark
indices may be used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its return. Unless
otherwise indicated, a fund's adjusted NAVs are not adjusted for sales charges,
if any.
Moving Averages
We may illustrate a fund's performance using moving averages. A long-term
moving average is the average of each week's adjusted closing NAV for a
specified period. A short-term moving average is the average of each day's
adjusted closing NAV for a specified period. "Moving Average Activity
Indicators" combine adjusted closing NAVs from the last business day of each
week with moving averages for a specified period to produce indicators showing
when an NAV has crossed, stayed above, or stayed below its moving average.
Financial Statements
[To be added]
36
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements*
(b) Exhibits
(1) Declaration of Trust
(2) Bylaws
(3) N/A
(4) N/A
(5) Investment advisory contract*
(6) (a) Underwriting agreement between Registrant and
TPIS*
(b) Selling agreement between TPIS and Services*
(7) Compensation plans or arrangements*
(8) Custodian agreement*
(9) Contracts with State Street Bank*
(10) Opinion and Consent of Charles Stamm, Esq.*
(11) (A) Consent of Sutherland, Asbill & Brennan, L.L.P.*
(B) Consent of [independent auditors]*
(12) N/A
(13) Seed Money Agreement*
(14) N/A
(15) N/A
(16) N/A
(17) Financial Data Schedule*
(18) N/A
- ----------
* To be filed by amendment.
37
<PAGE>
Item 25. Persons Controlled by or Under Common Control With
Registrant
Teachers Insurance and Annuity Association
College Retirement Equities Fund
TIAA Holdings, Inc.
Teachers Advisors, Inc.
Teachers Personal Investors Services, Inc.
TIAA-CREF Investment Management, Inc.
TIAA-CREF Individual and Institutional Services, Inc.
Item 26. Number of Holders of Securities
Title of Class Number of Record Holders
-------------- ------------------------
Shares of Beneficial Interest 1
Item 27. Indemnification
As a Delaware business trust, Registrant's operations are governed by its
Declaration of Trust dated January 15, 1997 (the Declaration of Trust).
Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the DBTA) provides that a shareholder of a trust shall be
entitled to the same limitation of liability extended to shareholders of private
for-profit Delaware corporations. Registrant's Declaration of Trust expressly
provides that it has been organized under the DBTA and that the Declaration of
Trust is to be governed by Delaware law. It is nevertheless possible that a
Delaware business trust, such as Registrant, might become a party to an action
in another state whose courts refuse to apply Delaware law, in which case
Registrant's shareholders could be subject to personal liability.
To protect Registrant's shareholders against the risk of personal
liability, the Declaration of Trust: (I) contains an express disclaimer of
shareholder liability for acts or obligations of Registrant and provides that
notice of such disclaimer may be given in each agreement, obligation and
instrument entered into or executed by Registrant or its Trustees; (ii) provides
for the indemnification out of Trust property of any shareholders held
personally liable for any obligations of Registrant or any series of Registrant;
and (iii) provides that Registrant shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of Registrant
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to
38
<PAGE>
circumstances in which all of the following factors are present: (I) a court
refuses to apply Delaware law; (ii) the liability arose under tort law or, if
not, no contractual limitation of liability was in effect; and (iii) Registrant
itself would be unable to meet its obligations. In the light of Delaware law,
the nature of Registrant's business and the nature of its assets, the risk of
personal liability to a shareholder is remote.
The Declaration of Trust further provides that Registrant shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of Registrant. The Declaration of Trust does not authorize Registrant to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
[to be completed]
Item 28. Business and Other Connections of Investment Adviser
[to be completed]
Item 29. Principal Underwriters
Teachers Personal Investors Services, Inc. ("TPIS") may be considered the
principal underwriter for the Registrant. The officers of TPIS and their
positions and offices with TPIS and the Registrant are listed in Schedule A of
Form BD as currently
39
<PAGE>
on file with the Commission (File No. 8-47051), the text of which is hereby
incorporated by reference.
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
- ----------------- ---------------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
Teachers N/A N/A N/A [to be completed]
Personal
Investor
Services, Inc.
</TABLE>
Item 30. Location of TIAA-CREF Mutual Fund and Records
[to be completed]
Item 31. Management Services
[to be completed]
Item 32. Undertakings
Registrant undertakes the following:
(a) Not Applicable;
(b) To file a post-effective amendment, using financial statements which
need not be certified, within four to six months from the effective date of this
registration statement;
(c) To furnish each person to whom a prospectus is delivered with a copy
of Registrant's latest annual report to shareholders, upon request and without
charge.
(d) Not Applicable.
40
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant, TIAA-CREF Mutual Fund, has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York, and state of New
York, on the 13th day of February, 1997.
TIAA-CREF MUTUAL FUND
By: /s/ Peter C. Clapman
------------------------
Name Peter C. Clapman
Title President
Pursuant to the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the dates
indicated.
By: /s/ Peter C. Clapman 2/13/97
---------------------------- -------------
Name: Peter C. Clapman
Title: Trustee, President
By: /s/ Lisa Snow 2/13/97
---------------------------- -------------
Name: Lisa Snow
Title: Trustee, Secretary
EXHIBIT INDEX
- -------------
Exhibit Number Description
- -------------- -----------
(1) Declaration of Trust
(2) Bylaws
DECLARATION OF TRUST
OF
TIAA-CREF MUTUAL FUND
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Name and Definitions.............................................1
1.1. Name.............................................................1
1.2. Definitions......................................................1
ARTICLE 2 Nature and Purpose of Trust......................................2
2.1. Nature of Trust..................................................2
2.2. Purpose of Trust.................................................2
2.3. Interpretation of Declaration of Trust...........................3
2.3.1. Governing Instrument.....................................3
2.3.2. No Waiver of Compliance with Applicable Law..............3
2.3.3. Power of the Trustees Generally..........................3
ARTICLE 3 Registered Agent; Principal Place of Business....................3
3.1. Registered Agent.................................................3
3.2. Principal Place of Business......................................3
ARTICLE 4 Beneficial Interest..............................................3
4.1. Shares of Beneficial Interest....................................3
4.2. Number of Authorized Shares......................................3
4.3. Ownership and Certification of Shares............................4
4.4. Status of Shares.................................................4
4.4.1. Fully Paid and Non-assessable............................4
4.4.2. Personal Property........................................4
4.4.3. Party to Declaration of Trust............................4
4.4.4. Death of Shareholder.....................................4
4.4.5. Title to Trust; Right to Accounting......................4
4.5. Determination of Shareholders....................................4
4.6. Shares Held by Trust.............................................4
4.7. Shares Held by Persons Related to Trust..........................4
4.8. Preemptive and Appraisal Rights..................................5
4.9. Series of Shares.................................................5
4.9.1. Classification of Shares.................................5
4.9.2. Establishment and Designation............................5
4.9.3. Separate and Distinct Nature.............................6
4.9.4. Conversion Rights........................................6
4.9.5. Rights and Preferences...................................6
4.9.5.1. Assets and Liabilities "Belonging" to a Series.6
4.9.5.2. Treatment of Particular Items..................7
4.9.5.3. Limitation on Interseries Liabilities..........7
4.9.5.4. Dividends......................................7
4.9.5.5. Redemption by Shareholder......................7
4.9.5.6. Redemption by Trust............................8
- i -
<PAGE>
4.9.5.7. Prevention of Personal Holding Company Status..8
4.9.5.8. Net Asset Value................................8
4.9.5.9. Maintenance of Stable Net Asset Value..........8
4.9.5.10. Transfer of Shares.............................9
4.9.5.11. Equality of Shares.............................9
4.9.5.12. Fractional Shares..............................9
ARTICLE 5 Trustees.........................................................9
5.1. Management of the Trust..........................................9
5.2. Qualification....................................................9
5.3. Number...........................................................9
5.4. Term and Election................................................9
5.5. Composition of the Board of Trustees.............................9
5.6. Resignation and Retirement......................................10
5.7. Removal.........................................................10
5.8. Vacancies.......................................................10
5.9. Ownership of Assets of the Trust................................10
5.10. Powers.........................................................11
5.10.1. Bylaws.................................................11
5.10.2. Officers, Agents, and Employees........................11
5.10.3. Committees.............................................11
5.10.4. Advisers, Administrators, Depositories, and Custodians.11
5.10.5. Compensation...........................................11
5.10.6. Delegation of Authority................................11
5.10.7. Suspension of Sales....................................12
5.11. Certain Additional Powers......................................12
5.11.1. Investments............................................12
5.11.2. Disposition of Assets..................................12
5.11.3. Ownership..............................................12
5.11.4. Subscription...........................................12
5.11.5. Payment of Expenses....................................12
5.11.6. Form of Holding........................................12
5.11.7. Reorganization, Consolidation, or Merger...............13
5.11.8. Compromise.............................................13
5.11.9. Partnerships...........................................13
5.11.10. Borrowing..............................................13
5.11.11. Guarantees.............................................13
5.11.12. Insurance..............................................13
5.11.13. Pensions...............................................13
5.12. Vote of Trustees...............................................14
5.12.1. Quorum.................................................14
5.12.2. Required Vote..........................................14
5.12.3. Consent in Lieu of a Meeting...........................14
- ii -
<PAGE>
ARTICLE 6 Service Providers...............................................14
6.1. Investment Adviser..............................................14
6.2. Underwriter and Transfer Agent..................................14
6.3. Custodians......................................................14
6.4. Administrator...................................................15
6.5. Parties to Contracts............................................15
ARTICLE 7 Shareholders' Voting Powers and Meetings........................15
7.1. Voting Powers...................................................15
7.1.1. Matters Upon Which Shareholders May Vote................15
7.1.2. Separate Voting by Series...............................16
7.1.3. Number of Votes.........................................16
7.1.4. Cumulative Voting.......................................16
7.1.5. Voting of Shares; Proxies...............................16
7.1.6. Actions Prior to the Issuance of Shares.................16
7.2. Meetings of Shareholders........................................16
7.2.1. Annual or Regular Meetings..............................16
7.2.2. Special Meetings........................................17
7.2.3. Notice of Meetings......................................17
7.3. Record Dates....................................................17
7.4. Quorum and Required Vote........................................17
7.5. Adjournments....................................................18
7.6. Actions by Written Consent......................................18
7.7. Inspection of Records...........................................18
7.8. Additional Provisions...........................................18
ARTICLE 8 Limitation of Liability and Indemnification.....................18
8.1. General Provisions..............................................18
8.1.1. General Limitation of Liability.........................18
8.1.2. Notice of Limited Liability.............................18
8.1.3. Liability Limited to Assets of the Trust................19
8.2. Liability of Trustees...........................................19
8.2.1. Liability for Own Actions...............................19
8.2.2. Liability for Actions of Others.........................19
8.2.3. Advice of Experts and Reports of Others.................19
8.2.4. Bond....................................................19
8.2.5. Declaration of Trust Governs Issues of Liability........20
8.3. Liability of Third Persons Dealing with Trustees................20
8.4. Liability of Shareholders.......................................20
8.4.1. Limitation of Liability.................................20
8.4.2. Indemnification of Shareholders.........................20
- iii -
<PAGE>
8.5. Indemnification.................................................20
8.5.1. Indemnification of Covered Persons......................20
8.5.2. Exceptions..............................................21
8.5.3. Rights of Indemnification...............................21
8.5.4. Expenses of Indemnification.............................21
8.5.5. Certain Defined Terms Relating to Indemnification.......22
ARTICLE 9 Termination or Reorganization...................................22
9.1. Termination of Trust or Series..................................22
9.1.1. Termination.............................................22
9.1.2. Distribution of Assets..................................23
9.1.3. Certificate of Cancellation.............................23
9.2. Reorganization..................................................23
9.3. Merger or Consolidation.........................................23
9.3.1. Authority to Merge or Consolidate.......................23
9.3.2. No Shareholder Approval Required........................23
9.3.3. Subsequent Amendments...................................24
9.3.4. Certificate of Merger or Consolidation..................24
ARTICLE 10 Miscellaneous Provisions........................................24
10.1. Signatures......................................................24
10.2. Certified Copies................................................24
10.3. Certain Internal References.....................................24
10.4. Headings........................................................24
10.5. Resolution of Ambiguities.......................................24
10.6. Amendments......................................................25
10.6.1. Generally...............................................25
10.6.2. Certificate of Amendment................................25
10.7. Governing Law...................................................25
10.8. Severability....................................................25
- iv -
<PAGE>
DECLARATION OF TRUST
OF
TIAA-CREF MUTUAL FUND
This DECLARATION OF TRUST is made as of this day, January 13, 1997 by the
Trustees hereunder.
WHEREAS, the Trustees desire to establish a trust for the purpose of
carrying on the business of an open-end management investment company; and
WHEREAS, in furtherance of such purpose, the Trustees and any successor
Trustees elected in accordance with Article 5 hereof are acquiring and may
hereafter acquire assets which they will hold and manage as trustees of a
Delaware business trust in accordance with the provisions hereinafter set forth;
and
WHEREAS, this Trust is authorized to issue its shares of beneficial
interest in one or more separate series, all in accordance with the provisions
set forth in this Declaration of Trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust
all cash, securities, and other assets which they may from time to time acquire
in any manner as Trustees hereunder, and that they will manage and dispose of
the same upon the following terms and conditions for the benefit of the holders
of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE 1
Name and Definitions
Section 1.1. Name. This Trust shall be known as the "TIAA-CREF MUTUAL
FUND" and the Trustees shall conduct the business of the Trust under that name
or any other name or names as they may from time to time determine.
Section 1.2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided below:
(a) The "Trust" shall mean the Delaware business trust established by this
Declaration of Trust, as amended from time to time;
(b) "Trustee" or "Trustees" shall mean each signatory to this Declaration
of Trust so long as such signatory shall continue in office in accordance with
the terms hereof, and all other individuals who at the time in question have
been duly elected or appointed and qualified in accordance with Article 5 hereof
and are then in office;
- 1 -
<PAGE>
(c) "Shares" shall mean the shares of beneficial interest in the Trust
described in Article 4 hereof and shall include fractional and whole Shares;
(d) "Shareholder" shall mean a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time;
(f) The terms "Person," "Interested Person," and "Principal Underwriter"
shall have the meanings given them in the 1940 Act;
(g) The term "Commission" shall mean the United States Securities and
Exchange Commission (or any successor agency thereto);
(h) "Declaration of Trust" or "Declaration" shall mean this Declaration of
Trust as amended or restated from time to time;
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time;
(j) "Series" shall mean any of the separate series of Shares established
and designated under or in accordance with the provisions of Article 4 hereof
and to which the Trustees have allocated assets and liabilities of the Trust in
accordance with Article 4;
(k) The "DBTA" refers to the Delaware Business Trust Act, Chapter 38 of
Title 12 of the Delaware Code (and any successor statute), as amended from time
to time; and
(l) The "Code" refers to the Internal Revenue Code of 1986 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time.
ARTICLE 2
Nature and Purpose of Trust
Section 2.1. Nature of Trust. The Trust is a business trust of the type
referred to in the DBTA. The Trustees shall file a certificate of trust in
accordance with Section 3810 of the DBTA. The Trust is not intended to be, shall
not be deemed to be, and shall not be treated as, a general or a limited
partnership, joint venture, corporation or joint stock company, nor shall the
Trustees or Shareholders or any of them for any purpose be deemed to be, or be
treated in any way whatsoever as though they were, liable or responsible
hereunder as partners or joint venturers.
Section 2.2. Purpose of Trust. The purpose of the Trust is to engage in,
operate and carry on the business of an open-end management investment company
and to do any and all
- 2 -
<PAGE>
acts or things as are necessary, convenient, appropriate, incidental or
customary in connection therewith.
Section 2.3. Interpretation of Declaration of Trust.
Section 2.3.1. Governing Instrument. This Declaration of Trust shall
be the governing instrument of the Trust and shall be governed by and construed
according to the laws of the State of Delaware.
Section 2.3.2. No Waiver of Compliance with Applicable Law. No
provision of this Declaration shall be effective to require a waiver of
compliance with any provision of the Securities Act of 1933, as amended, or the
1940 Act, or of any valid rule, regulation or order of the Commission
thereunder.
Section 2.3.3. Power of the Trustees Generally. Except as otherwise
set forth herein, the Trustees may exercise all powers of trustees under the
DBTA on behalf of the Trust.
ARTICLE 3
Registered Agent; Principal Place of Business
Section 3.1. Registered Agent. The name of the registered agent of the
Trust is The Corporation Trust Company and the registered agent's business
address in Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
Section 3.2. Principal Place of Business. The principal place of business
of the Trust is 730 Third Avenue, New York, New York 10017-3206.
ARTICLE 4
Beneficial Interest
Section 4.1. Shares of Beneficial Interest. The beneficial interests in
the Trust shall be divided into Shares, all without par value and of one class,
but the Trustees shall have the authority from time to time to divide the class
of Shares into two (2) or more separate and distinct series of Shares ("Series")
as provided in Section 4.9 of this Article 4.
Section 4.2. Number of Authorized Shares. The Trustees are authorized to
issue an unlimited number of Shares. The Trustees may issue Shares for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split), all without action or approval of the
Shareholders.
- 3 -
<PAGE>
Section 4.3. Ownership and Certification of Shares. The Secretary of the
Trust, or the Trust's transfer or similar agent, shall record the ownership and
transfer of Shares of each Series separately on the record books of the Trust.
The record books of the Trust, as kept by the Secretary of the Trust or any
transfer or similar agent, shall contain the name and address of and the number
of Shares held by each Shareholder, and such record books shall be conclusive as
to who are the holders of Shares and as to the number of Shares held from time
to time by such Shareholders. No certificates certifying the ownership of Shares
shall be issued except as the Trustees may otherwise determine from time to
time. The Trustees may make such rules as they consider appropriate for the
issuance of share certificates, transfer of Shares, and similar matters for the
Trust or any Series.
Section 4.4. Status of Shares.
Section 4.4.1. Fully Paid and Non-assessable. All Shares when issued
on the terms determined by the Trustees shall be fully paid and non-assessable.
Section 4.4.2. Personal Property. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration of Trust.
Section 4.4.3. Party to Declaration of Trust. Every Person by virtue
of having become registered as a Shareholder shall be held to have expressly
assented and agreed to the terms of this Declaration of Trust and to have become
a party thereto.
Section 4.4.4. Death of Shareholder. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the Trust nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees. The
representative shall be entitled to the same rights as the decedent under this
Trust.
Section 4.4.5. Title to Trust; Right to Accounting. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust property or right to call for a partition or division of the
same or for an accounting.
Section 4.5. Determination of Shareholders. The Trustees may from time to
time close the transfer books or establish record dates and times for the
purposes of determining the Shareholders entitled to be treated as such, to the
extent provided or referred to in Section 7.3.
Section 4.6. Shares Held by Trust. The Trustees may hold as treasury
shares, reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
Section 4.7. Shares Held by Persons Related to Trust. Any Trustee, officer
or other agent of the Trust, and any organization in which any such person is
interested may
- 4 -
<PAGE>
acquire, own, hold and dispose of Shares of the Trust to the same extent as if
such person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase Shares
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of such Shares generally.
Section 4.8. Preemptive and Appraisal Rights. Shareholders shall not, as
Shareholders, have any right to acquire, purchase or subscribe for any Shares or
other securities of the Trust which it may hereafter issue or sell, other than
such right, if any, as the Trustees in their discretion may determine.
Shareholders shall have no appraisal rights with respect to their Shares and,
except as otherwise determined by resolution of the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares. No action may be brought by a Shareholder on behalf of the Trust unless
Shareholders owning no less than a majority of the then outstanding Shares, or
Series thereof, join in the bringing of such action. A Shareholder of Shares in
a particular Series of the Trust shall not be entitled to participate in a
derivative or class action lawsuit on behalf of any other Series or on behalf of
the Shareholders in any other Series of the Trust.
Section 4.9. Series of Shares.
Section 4.9.1. Classification of Shares. The Trustees may classify
or reclassify any unissued Shares or any Shares previously issued and reacquired
of any Series into one or more Series that may be established and designated
from time to time.
Section 4.9.2. Establishment and Designation. The Trustees shall
have exclusive power without the requirement of Shareholder approval to
establish and designate separate and distinct Series of Shares. The
establishment and designation of any Series (in addition to those established
and designated in this Section below) shall be effective upon the execution by a
majority of the Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Shares of such
Series, or as otherwise provided in such instrument. Each such instrument shall
have the status of an amendment to this Declaration of Trust. Without limiting
the authority of the Trustees to establish and designate any further Series, the
Trustees hereby establish and designate the following six initial Series:
Growth & Income Fund;
Money Market Fund;
International Equity Fund;
Bond Plus Fund;
Growth Equity Fund; and
Managed Allocation Fund.
- 5 -
<PAGE>
Section 4.9.3. Separate and Distinct Nature. Each Series, including
without limitation Series specifically established and designated in Section
4.9.2, shall be separate and distinct from any other Series and shall maintain
separate and distinct records on the books of the Trust, and the assets
belonging to any such Series shall be held and accounted for separately from the
assets of the Trust or any other Series.
Section 4.9.4. Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Series shall have the right to convert said Shares
into Shares of one or more other Series in accordance with such requirements and
procedures as may be established by the Trustees.
Section 4.9.5. Rights and Preferences. The Trustees shall have
exclusive power without the requirement of Shareholder approval to fix and
determine the relative rights and preferences as between the Shares of the
separate Series. The initial Series and any further Series that may from time to
time be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have relative rights and preferences as
set forth in this Section 4.9.5.
Section 4.9.5.1. Assets and Liabilities "Belonging" to a
Series. All consideration received by the Trust for the issue or sale of Shares
of a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be held and accounted for separately
from the other assets of the Trust and of every other Series and may be referred
to herein as "assets belonging to" that Series. The assets belonging to a
particular Series shall belong to that Series for all purposes, and to no other
Series, subject only to the rights of creditors of that Series. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the Trustees
shall allocate to and among any one or more of the Series in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Any
General Items so allocated to a particular Series shall belong to that Series.
Each such allocation by the Trustees shall be conclusive and binding upon all
Shareholders for all purposes. The assets belonging to each particular Series
shall be charged with the liabilities in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and
- 6 -
<PAGE>
equitable. Each allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon all Shareholders for all
purposes.
Section 4.9.5.2. Treatment of Particular Items. The Trustees
shall have full discretion, to the extent consistent with the 1940 Act and
consistent with generally accepted accounting principles, to determine which
items shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
Section 4.9.5.3. Limitation on Interseries Liabilities.
Subject to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges or reserves as provided in Section
4.9.5.1, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of any other Series. Notice of this limitation on liabilities between and among
Series shall be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the DBTA, and upon the
giving of such notice in the certificate of trust, the statutory provisions of
Section 3804 of the DBTA relating to limitations on liabilities between and
among series (and the statutory effect under Section 3804 of setting forth such
notice in the certificate of trust) shall become applicable to the Trust and
each Series.
Section 4.9.5.4. Dividends. Dividends and capital gains
distributions on Shares of a particular Series may be paid with such frequency,
in such form, and in such amount as the Trustees may determine by resolution
adopted from time to time, or pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine. All
dividends and distributions on Shares of a particular Series shall be
distributed pro rata to the holders of Shares of that Series in proportion to
the number of Shares of that Series held by such holders at the date and time of
record established for the payment of such dividends or distributions. Such
dividends and distributions may be paid in cash, property or additional Shares
of that Series, or a combination thereof, as determined by the Trustees or
pursuant to any program that the Trustees may have in effect at the time for the
election by each Shareholder of the form in which dividends or distributions are
to be paid to that Shareholder. Any such dividend or distribution paid in Shares
shall be paid at the net asset value thereof as determined in accordance with
Section 4.9.5.8.
Section 4.9.5.5. Redemption by Shareholder. Each Shareholder
shall have the right at such times as may be permitted by the Trust and as
otherwise required by the 1940 Act to require the Trust to redeem all or any
part of such Shareholder's Shares of a Series at a redemption price per Share
equal to the net asset value per Share of such Series next determined in
accordance with Section 4.9.5.8 after the Shares are properly tendered for
redemption, less any charge which may be imposed by the Trust in connection with
such redemption and described in the Trust's then current prospectus. Payment of
the redemption
- 7 -
<PAGE>
price shall be in cash; provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Trust may, subject to the requirements
of the 1940 Act, make payment wholly or partly in securities or other assets
belonging to the Series of which the Shares being redeemed are part at the value
of such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the redemption
price and may suspend the right of the holders of Shares of any Series to
require the Trust to redeem Shares of that Series during any period or at any
time when and to the extent permissible under any applicable provision of the
1940 Act.
Section 4.9.5.6. Redemption by Trust. The Trustees may cause
the Trust to redeem at net asset value the Shares of any Series held by a
Shareholder upon such conditions as may from time to time be determined by the
Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the Trust
shall promptly cause payment of the full redemption price to be made to such
Shareholder for Shares so redeemed.
Section 4.9.5.7. Prevention of Personal Holding Company
Status. The Trust may reject any purchase order, refuse to transfer any Shares,
and compel the redemption of Shares if, in its opinion, any such rejection,
refusal, or redemption would prevent the Trust from becoming a personal holding
company as defined by the Code.
Section 4.9.5.8. Net Asset Value. The net asset value per
Share of any Series shall be determined in accordance with the methods and
procedures established by the Trustees from time to time and, to the extent
required by applicable law, as disclosed in the then current prospectus or
statement of additional information for the Series.
Section 4.9.5.9. Maintenance of Stable Net Asset Value. The
Trustees may determine to maintain the net asset value per Share of any Series
at a designated constant dollar amount and in connection therewith may adopt
procedures not inconsistent with the 1940 Act for the continuing declarations of
income attributable to that Series as dividends payable in additional Shares of
that Series at the designated constant dollar amount and for the handling of any
losses attributable to that Series. Such procedures may provide that in the
event of any loss each Shareholder shall be deemed to have contributed to the
capital of the Trust attributable to that Series his or her pro rata portion of
the total number of Shares required to be canceled in order to permit the net
asset value per Share of that Series to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each Shareholder of the Trust
shall be deemed to have agreed, by his investment in any Series with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss. The Trustees may delegate any of their powers and duties under this
Section 4.9.5.9 with respect to appraisal of assets and liabilities in the
determination of net asset value or with respect to a suspension of the
determination of net asset value to an officer or officers or agent or agents of
the Trust designated from time to time by the Trustees.
- 8 -
<PAGE>
Section 4.9.5.10. Transfer of Shares. Except to the extent
that transferability is limited by applicable law or such procedures as may be
developed from time to time by the Trustees or the appropriate officers of the
Trust, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate, if one is
outstanding, and such evidence of the genuineness of each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust.
Section 4.9.5.11. Equality of Shares. All Shares of each
particular Series shall represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities belonging to that Series),
and each Share of any particular Series shall be equal in this respect to each
other Share of that Series.
Section 4.9.5.12. Fractional Shares. Any fractional Share of
any Series, if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of that Series,
including rights and obligations with respect to voting, receipt of dividends
and distributions, redemption of Shares, and liquidation of the Trust or any
Series.
ARTICLE 5
Trustees
Section 5.1. Management of the Trust. The business and affairs of the
Trust shall be managed by the Trustees, and they shall have all powers necessary
and desirable to carry out that responsibility, including those specifically set
forth in Sections 5.10 and 5.11 herein.
Section 5.2. Qualification. Each Trustee shall be a natural person. A
Trustee need not be a Shareholder, a citizen of the United States, or a resident
of the State of Delaware.
Section 5.3. Number. By the vote or consent of a majority of the Trustees
then in office, the Trustees may fix the number of Trustees at a number not less
than two (2) nor more than twenty-five (25). No decrease in the number of
Trustees shall have the effect of removing any Trustee from office prior to the
expiration of his or her term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to Section 5.7.
Section 5.4. Term and Election. Each Trustee shall hold office until the
next meeting of Shareholders called for the purpose of considering the election
or re-election of such Trustee or of a successor to such Trustee, and until his
or her successor is elected and qualified, and any Trustee who is appointed by
the Trustees in the interim to fill a vacancy as
- 9 -
<PAGE>
provided hereunder shall have the same remaining term as that of his or her
predecessor, if any, or such term as the Trustees may determine.
Section 5.5. Composition of the Board of Trustees. No election or
appointment of any Trustee shall take effect if such election or appointment
would cause the number of Trustees who are Interested Persons to exceed the
number permitted by Section 10 of the 1940 Act.
Section 5.6. Resignation and Retirement. Any Trustee may resign or retire
as a Trustee (without need for prior or subsequent accounting) by an instrument
in writing signed by such Trustee and delivered or mailed to the Chairman, if
any, the President, or the Secretary of the Trust. Such resignation or
retirement shall be effective upon such delivery, or at a later date according
to the terms of the instrument.
Section 5.7. Removal. Any Trustee may be removed with or without cause at
any time: (1) by written instrument signed by two-thirds (2/3) of the number of
Trustees in office prior to such removal, specifying the date upon which such
removal shall become effective, or (2) by the affirmative vote of Shareholders
holding not less than two-thirds (2/3) of Shares outstanding, cast in person or
by proxy at any meeting called for that purpose.
Section 5.8. Vacancies. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees may (but need not unless required by the 1940 Act) be
filled by a majority of the Trustees then in office, subject to the provisions
of Section 16 of the 1940 Act, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine. The
appointment shall be effective upon the acceptance of the person named therein
to serve as a trustee, except that any such appointment in anticipation of a
vacancy occurring by reason of the resignation, retirement, or increase in
number of Trustees to be effective at a later date shall become effective only
at or after the effective date of such resignation, retirement, or increase in
number of Trustees.
Section 5.9. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. Legal title to all the Trust property shall be vested in the Trust as
a separate legal entity under the DBTA, except that the Trustees shall have the
power to cause legal title to any Trust property to be held by or in the name of
one or more of the Trustees or in the name of any other Person on behalf of the
Trust on such terms as the Trustees may determine. In the event that title to
any part of the Trust property is vested in one or more Trustees, the right,
title and interest of the Trustees in the Trust property shall vest
automatically in each person who may hereafter become a Trustee upon his or her
due election and qualification. Upon the resignation, removal or death of a
Trustee he or she shall automatically cease to have any right, title or interest
in any of the Trust property,
- 10 -
<PAGE>
and the right, title and interest of such Trustee in the Trust property shall
vest automatically in the remaining Trustees. To the extent permitted by law,
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered. No Shareholder shall be
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof.
Section 5.10. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or convenient to carry out that responsibility
and the purpose of the Trust including, but not limited to, those enumerated in
this Section 5.10.
Section 5.10.1. Bylaws. The Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders.
Section 5.10.2. Officers, Agents, and Employees. The Trustees may,
as they consider appropriate, elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing.
Section 5.10.3. Committees. The Trustees may appoint from their own
number, and terminate, any one or more committees consisting of two or more
Trustees, including without implied limitation an executive committee, which
may, when the Trustees are not in session (but subject to the 1940 Act),
exercise some or all of the power and authority of the Trustees as the Trustees
may determine.
Section 5.10.4. Advisers, Administrators, Depositories, and
Custodians. The Trustees may, in accordance with Article 6, employ one or more
advisers, administrators, depositories, custodians, and other persons and may
authorize any depository or custodian to employ subcustodians or agents and to
deposit all or any part of such assets in a system or systems for the central
handling of securities and debt instruments, retain transfer, dividend,
accounting or Shareholder servicing agents or any of the foregoing, provide for
the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, and set record dates or times for the
determination of Shareholders.
Section 5.10.5. Compensation. The Trustees may compensate or provide
for the compensation of the Trustees, officers, advisers, administrators,
custodians, other agents, consultants and employees of the Trust or the Trustees
on such terms as they deem appropriate.
Section 5.10.6. Delegation of Authority. In general, the Trustees
may delegate to any officer of the Trust, to any committee of the Trustees and
to any employee,
- 11 -
<PAGE>
adviser, administrator, distributor, depository, custodian, transfer and
dividend disbursing agent, or any other agent or consultant of the Trust such
authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation, the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
Section 5.10.7. Suspension of Sales. The Trustees shall have the
authority to suspend or terminate the sales of Shares of any Series at any time
or for such periods as the Trustees may from time to time decide.
Section 5.11. Certain Additional Powers. Without limiting the foregoing
and to the extent not inconsistent with the 1940 Act, other applicable law, and
the fundamental policies and limitations of the applicable Series, the Trustees
shall have power and authority for and on behalf of the Trust and each separate
Series as enumerated in this Section 5.11.
Section 5.11.1. Investments. The Trustees shall have the power to
invest and reinvest cash and other property, and to hold cash or other property
uninvested without in any event being bound or limited by any present or future
law or custom in regard to investments by trustees.
Section 5.11.2. Disposition of Assets. The Trustees shall have the
power to sell, exchange, lend, pledge, mortgage, hypothecate, write options on
and lease any or all of the assets of the Trust.
Section 5.11.3. Ownership. The Trustees shall have the power to
vote, give assent, or exercise any rights of ownership with respect to
securities or other property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with relation to securities
or other property as the Trustees shall deem proper.
Section 5.11.4. Subscription. The Trustees shall have the power to
exercise powers and rights of subscription or otherwise which in any manner
arise out of ownership of securities.
Section 5.11.5. Payment of Expenses. The Trustees shall have the
power to pay or cause to be paid all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust or any Series, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the Trust's officers,
employees, investment advisers, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.
- 12 -
<PAGE>
Section 5.11.6. Form of Holding. The Trustees shall have the power
to hold any securities or other property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or of any Series or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise.
Section 5.11.7. Reorganization, Consolidation, or Merger. The
Trustees shall have the power to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security of which is or was held in the Trust, and to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer, and
to pay calls or subscriptions with respect to any security held in the Trust.
Section 5.11.8. Compromise. The Trustees shall have the power to
arbitrate or otherwise adjust claims in favor of or against the Trust or any
Series on any matter in controversy, including but not limited to claims for
taxes.
Section 5.11.9. Partnerships. The Trustees shall have the power to
enter into joint ventures, general or limited partnerships and any other
combinations or associations.
Section 5.11.10. Borrowing. The Trustees shall have the power to
borrow funds and to mortgage and pledge the assets of the Trust or any Series or
any part thereof to secure obligations arising in connection with such
borrowing, consistent with the provisions of the 1940 Act.
Section 5.11.11. Guarantees. The Trustees shall have the power to
endorse or guarantee the payment of any notes or other obligations of any
person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property (or
Series property) or any part thereof to secure any of or all such obligations.
Section 5.11.12. Insurance. The Trustees shall have the power to
purchase and pay for entirely out of Trust property such insurance as they may
deem necessary or appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent contractors, or any thereof
(or any person connected therewith), of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in any such capacity, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability.
- 13 -
<PAGE>
Section 5.11.13. Pensions. The Trustees shall have the power to pay
pensions for faithful service, as deemed appropriate by the Trustees, and to
adopt, establish and carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive and benefit plans,
including the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Section 5.12. Vote of Trustees.
Section 5.12.1. Quorum. A majority of the Trustees then in office
being present in person or by proxy shall constitute a quorum.
Section 5.12.2. Required Vote. Except as otherwise provided by the
1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, any
action to be taken by the Trustees on behalf of the Trust or any Series may be
taken by a majority of the Trustees present at a meeting of Trustees at which a
quorum is present, including any meeting held by means of a conference telephone
or other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time.
Section 5.12.3. Consent in Lieu of a Meeting. Except as otherwise
provided by the 1940 Act or other applicable law, the Trustees may, by written
consent of a majority of the Trustees then in office, take any action which may
have been taken at a meeting of the Trustees.
ARTICLE 6
Service Providers
Section 6.1. Investment Adviser. The Trust may enter into written
contracts with one or more persons to act as investment adviser or investment
subadviser to each of the Series, and as such, to perform such functions as the
Trustees may deem reasonable and proper, including, without limitation,
investment advisory, management, research, valuation of assets, clerical and
administrative functions, under such terms and conditions, and for such
compensation, as the Trustees may in their discretion deem advisable.
Section 6.2. Underwriter and Transfer Agent. The Trust may enter into
written contracts with one or more persons to act as underwriter or distributor
whereby the Trust may either agree to sell Shares to the other party or parties
to the contract or appoint such other party or parties its sales agent or agents
for such Shares and with such other provisions as the Trustees may deem
reasonable and proper, and the Trustees may in their discretion from time to
time enter into transfer agency and/or shareholder service contract(s), in each
case with such terms and conditions, and providing for such compensation, as the
Trustees may in their discretion deem advisable.
- 14 -
<PAGE>
Section 6.3. Custodians. The Trust may enter into written contracts with
one or more persons to act as custodian to perform such functions as the
Trustees may deem reasonable and proper, under such terms and conditions, and
for such compensation, as the Trustees may in their discretion deem advisable.
Each such custodian shall be a bank or trust company having an aggregate
capital, surplus, and undivided profits of at least one million dollars
($1,000,000).
Section 6.4. Administrator. The Trust may enter into written contracts
with one or more persons to act as an administrator to perform such functions as
the Trustees may deem reasonable and proper, under such terms and conditions,
and for such compensation, as the Trustees may in their discretion deem
advisable.
Section 6.5. Parties to Contracts. Any contract of the character described
in Sections 6.1, 6.2, 6.3, and 6.4 or in Article 8 hereof may be entered into
with any corporation, firm, partnership, trust or association, including,
without limitation, the investment adviser, any investment subadviser, or any
affiliated person of the investment adviser or investment subadviser, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the contract,
or may otherwise be interested in such contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or be accountable for any profit realized directly or
indirectly therefrom; provided, however, that the contract when entered into was
not inconsistent with the provisions of this Article 6, Article 8, or the
Bylaws. The same person (including a firm, corporation, partnership, trust or
association) may provide more than one of the services identified in this
Article 6.
ARTICLE 7
Shareholders' Voting Powers and Meetings
Section 7.1. Voting Powers. The Shareholders shall have power to vote only
with respect to matters expressly enumerated in Section 7.1.1, 7.1.3 or with
respect to such additional matters relating to the Trust as may be required by
the 1940 Act, this Declaration of Trust, the By-Laws, any registration of the
Trust with the Commission or any state, or as the Trustees may otherwise deem
necessary or desirable.
Section 7.1.1. Matters Upon Which Shareholders May Vote. The
Shareholders shall have power to vote on the following matters:
(a) For the election or removal of Trustees as provided in Sections 5.4
and 5.7;
- 15 -
<PAGE>
(b) With respect to a contract with a third party provider of services as
to which Shareholder approval is required by the 1940 Act;
(c) With respect to a termination or reorganization of the Trust to the
extent and as provided in Sections 9.1 and 9.2;
(d) With respect to an amendment of this Declaration of Trust to the
extent and as may be provided by this Declaration of Trust or applicable law;
and
(e) With respect to any court action, proceeding or claim brought or
maintained derivatively or as a class action on behalf of the Trust, any Series
thereof or the Shareholders of the Trust; provided, however, that a shareholder
of a particular Series shall not be entitled to vote upon a derivative or class
action on behalf of any other Series or shareholder of any other Series.
Section 7.1.2. Separate Voting by Series. On any matter submitted to
a vote of the Shareholders, all Shares shall be voted separately by individual
Series, except (i) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual Series; and (ii) when the Trustees have
determined that the matter affects the interests of more than one Series, then
the Shareholders of all such Series shall be entitled to vote thereon.
Section 7.1.3. Number of Votes. On any matter submitted to a vote of
the Shareholders, each Shareholder shall be entitled to one vote for each dollar
of net asset value standing in such Shareholder's name on the books of each
Series in which such Shareholder owns Shares which are entitled to vote on the
matter.
Section 7.1.4. Cumulative Voting. There shall be no cumulative
voting in the election of Trustees.
Section 7.1.5. Voting of Shares; Proxies. Votes may be cast in
person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving the invalidity of a proxy shall rest on the
challenger.
Section 7.1.6. Actions Prior to the Issuance of Shares. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required by law, this Declaration of Trust or the Bylaws to be taken
by Shareholders.
Section 7.2. Meetings of Shareholders.
- 16 -
<PAGE>
Section 7.2.1. Annual or Regular Meetings. No annual or regular
meetings of Shareholders are required to be held.
Section 7.2.2. Special Meetings. Special meetings of Shareholders
may be called by the President of the Trust or the Trustees from time to time
for the purpose of taking action upon any matter requiring the vote or authority
of the Shareholders as herein provided or upon any other matter upon which
Shareholder approval is deemed by the Trustees to be necessary or desirable.
Section 7.2.3. Notice of Meetings. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing or
transmitting such notice at least ten (10) days before such meeting, postage
prepaid, stating the time, place and purpose of the meeting, to each Shareholder
at the Shareholder's address as it appears on the records of the Trust.
Section 7.3. Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting, or who are entitled to
participate in any dividend or distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days (except at or in connection with the
termination of the Trust), as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date and time not more than one hundred
twenty (120) days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or to be treated as Shareholders of record for
purposes of such other action. Any Shareholder who was a Shareholder at the date
and time so fixed shall be entitled to vote at such meeting or to be treated as
a Shareholder of record for purposes of such other action, even though such
Shareholder has since that date and time disposed of its Shares, and no
Shareholder becoming such after that date and time shall be so entitled to vote
at such meeting or to be treated as a Shareholder of record for purposes of such
other action.
Section 7.4. Quorum and Required Vote. Except as otherwise required by the
1940 Act or other applicable law, this Declaration of Trust, or the By-Laws,
one-tenth (1/10) of the Shares entitled to vote in person or by proxy shall be a
quorum as to any particular matter; provided, however, that any lesser number
shall be sufficient for matters upon which the Shareholders vote at any meeting
called in accordance with Section 7.5. Any matter upon which the Shareholders
vote shall be approved by a majority of the votes cast on such matter at a
meeting of the Shareholders at which a quorum is present, except that Trustees
shall be elected by a plurality of the votes cast at such a meeting.
Section 7.5. Adjournments. If a meeting at which a quorum was present is
adjourned, a meeting may be held within a reasonable time after the date set for
the original
- 17 -
<PAGE>
meeting without the necessity of further notice for the purpose of taking action
upon any matter that would have been acted upon at the original meeting but for
its adjournment.
Section 7.6. Actions by Written Consent. Except as otherwise required by
the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws,
any action taken by Shareholders may be taken without a meeting if Shareholders
entitled to cast at least a majority of all of the votes entitled to be cast on
the matter (or such larger proportion thereof as shall be required by the 1940
Act or by any express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 7.7. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is required for stockholders
of a Delaware business corporation under the Delaware General Corporation Law.
Section 7.8. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE 8
Limitation of Liability and Indemnification
Section 8.1. General Provisions.
Section 8.1.1. General Limitation of Liability. No personal
liability for any debt or obligation of the Trust shall attach to any Trustee of
the Trust. Without limiting the foregoing, a Trustee shall not be responsible
for or liable in any event for any neglect or wrongdoing of any officer, agent,
employee, investment adviser, subadviser, principal underwriter or custodian of
the Trust, nor shall any Trustee be responsible or liable for the act or
omission of any other Trustee. Every note, bond, contract, instrument,
certificate, Share or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any Trustee in
connection with the Trust shall be conclusively deemed to have been executed or
done only in or with respect to their or his or her capacity as Trustees or
Trustee and neither such Trustees or Trustee nor the Shareholders shall be
personally liable thereon.
Section 8.1.2. Notice of Limited Liability. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall recite that the same was executed or made by
or on behalf of the Trust by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are
- 18 -
<PAGE>
binding only upon the assets and property of the Trust or belonging to a Series
thereof, and may contain such further recitals as they or he may deem
appropriate, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually.
Section 8.1.3. Liability Limited to Assets of the Trust. All persons
extending credit to, contracting with or having any claim against the Trust
shall look only to the assets of the Trust or belonging to a Series thereof, as
appropriate, for payment under such credit, contract or claim, and neither the
Shareholders nor the Trustees nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Section 8.2. Liability of Trustees. The exercise by the Trustees of their
powers and discretion hereunder shall be binding upon the Trust, the
Shareholders, and any other person dealing with the Trust. The liability of the
Trustees, however, shall be limited by this Section 8.2.
Section 8.2.1. Liability for Own Actions. A Trustee shall be liable
to the Trust or the Shareholders only for his own willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law.
Section 8.2.2. Liability for Actions of Others. The Trustees shall
not be responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, consultant, adviser, administrative distributor,
principal underwriter, custodian, transfer agent, dividend disbursing agent,
Shareholder servicing agent, or accounting agent of the Trust, nor shall any
Trustee be responsible for any act or omission of any other Trustee.
Section 8.2.3. Advice of Experts and Reports of Others. The Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees hereunder,
and shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. In discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely upon the books of
account of the Trust and upon written reports made to the Trustees by any
officer appointed by them, any independent public accountant and (with respect
to the subject matter of the contract involved) any officer, partner or
responsible employee of any other party to any contract entered into hereunder.
Section 8.2.4. Bond. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
Section 8.2.5. Declaration of Trust Governs Issues of Liability. The
provisions of this Declaration of Trust, to the extent that they restrict the
duties and liabilities
- 19 -
<PAGE>
of the Trustees otherwise existing at law or in equity, are agreed by the
Shareholders and all other Persons bound by this Declaration of Trust to replace
such other duties and liabilities of the Trustees.
Section 8.3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 8.4. Liability of Shareholders. Without limiting the provisions of
this Section 8.4 or the DBTA, the Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations organized for profit under the General Corporation Law of the State
of Delaware.
Section 8.4.1. Limitation of Liability. No personal liability for
any debt or obligation of the Trust shall attach to any Shareholder or former
Shareholder of the Trust, and neither the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind any Shareholder personally or to
call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription for any Shares or otherwise.
Section 8.4.2. Indemnification of Shareholders. In case any
Shareholder or former Shareholder of the Trust shall be held to be personally
liable solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, the Shareholder
or former Shareholder (or, in the case of a natural person, his or her heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the Trust to be held harmless from and indemnified
against all loss and expense arising from such liability; provided, however,
there shall be no liability or obligation of the Trust arising hereunder to
reimburse any Shareholder for taxes paid by reason of such Shareholder's
ownership of any Shares or for losses suffered by reason of any changes in value
of any Trust assets. The Trust shall, upon request by the Shareholder or former
Shareholder, assume the defense of any claim made against the Shareholder for
any act or obligation of the Trust and satisfy any judgment thereon.
Section 8.5. Indemnification.
Section 8.5.1. Indemnification of Covered Persons. Subject to the
exceptions and limitations contained in Section 8.5.2, every person who is, or
has been, a Trustee, officer, employee or agent of the Trust, including persons
who serve at the request of the Trust as directors, trustees, officers,
employees or agents of another organization in which the Trust has an interest
as a shareholder, creditor or otherwise (hereinafter referred to as a
- 20 -
<PAGE>
"Covered Person"), shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.
Section 8.5.2. Exceptions. No indemnification shall be provided
hereunder to a Covered Person:
(a) For any liability to the Trust or its Shareholders arising out of a
final adjudication by the court or other body before which the proceeding was
brought that the Covered Person engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office;
(b) With respect to any matter as to which the Covered Person shall have
been finally adjudicated not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the Trust; or
(c) In the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2)
and resulting in a payment by a Covered Person, unless there has been either a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the settlement or
other disposition, or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he or she did
not engage in such conduct, such determination being made by: (i) a vote of a
majority of the Disinterested Trustees (as such term is defined in Section
8.5.5) acting on the matter (provided that a majority of Disinterested Trustees
then in office act on the matter); or (ii) a written opinion of independent
legal counsel.
Section 8.5.3. Rights of Indemnification. The rights of
indemnification herein provided may be insured against by policies maintained by
the Trust, and shall be severable, shall not affect any other rights to which
any Covered Person may now or hereafter be entitled, shall continue as to a
person who has ceased to be a Covered Person, and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing contained
herein shall affect any rights to indemnification to which Trust personnel other
than Covered Persons may be entitled by contract or otherwise under law.
Section 8.5.4. Expenses of Indemnification. Expenses of preparation
and presentation of a defense to any claim, action, suit or proceeding subject
to a claim for indemnification under this Section 8.5 shall be advanced by the
Trust prior to final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient to repay such amount if
- 21 -
<PAGE>
it is ultimately determined that he or she is not entitled to indemnification
under this Section 8.5, provided that either:
(a) Such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or
(b) A majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to the facts
available upon a full trial), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
Section 8.5.5. Certain Defined Terms Relating to Indemnification. As
used in this Section 8.5, the following words shall have the meanings set forth
below:
(a) A "Disinterested Trustee" is one (i) who is not an Interested Person
of the Trust (including anyone, as such Disinterested Trustee, who has been
exempted from being an Interested Person by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending;
(b) "Claim," "action," "suit" or "proceeding" shall apply to all claims,
actions, suits, proceedings (civil, criminal, administrative or other, including
appeals), actual or threatened; and
(c) "Liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
ARTICLE 9
Termination or Reorganization
Section 9.1. Termination of Trust or Series. Unless terminated as provided
herein, the Trust and each Series designated and established pursuant to this
Declaration of Trust shall continue without limitation of time.
Section 9.1.1. Termination. Subject to approval by a majority of the
affected Shareholders, the Trust or any Series (and the establishment and
designation thereof) may be terminated by an instrument executed by a majority
of the Trustees then in office; provided, however, that no approval of affected
Shareholders is necessary if a majority of the trustees then in office
determines that the continuation of the Trust or Series is not in the best
interests of the Trust, such Series, or the affected Shareholders as a result of
factors or events adversely
- 22 -
<PAGE>
affecting the ability of the Trust or Series to conduct its business and
operations in an economically viable manner.
Section 9.1.2. Distribution of Assets. Upon termination of the Trust
or any Series, after paying or otherwise providing for all charges, taxes,
expenses and liabilities, whether due or accrued or anticipated, as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets of the Trust
to distributable form in cash or other securities, or any combination thereof,
and distribute the proceeds to the affected Shareholders in the manner set forth
by resolution of the Trustees.
Section 9.1.3. Certificate of Cancellation. Upon termination of the
Trust, the Trustees shall file a certificate of cancellation in accordance with
Section 3810 of the DBTA.
Section 9.2. Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Series, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Series of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Series of the
Trust, Shares of such other Series) with such transfer either (i) being made
subject to, or with the assumption by the transferee of, the liabilities
belonging to each Series the assets of which are so transferred, or (ii) not
being made subject to, or not with the assumption of, such liabilities.
Following such transfer, the Trustees shall distribute such cash, Shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred. If all of the assets of the Trust
have been so transferred, the Trust shall be terminated.
Section 9.3. Merger or Consolidation.
Section 9.3.1. Authority to Merge or Consolidate. Pursuant to an
agreement of merger or consolidation, the Trust, or any one or more Series, may
merge or consolidate with or into one or more business trusts or other business
entities formed or organized or existing under the laws of the State of Delaware
or any other state or the United States or any foreign country or other foreign
jurisdiction.
Section 9.3.2. No Shareholder Approval Required. Any merger or
consolidation described in Section 9.3.1 shall not require the vote of the
Shareholders affected thereby, unless such vote is required by the 1940 Act or
other applicable laws, or unless such merger or consolidation would result in an
amendment of this Declaration of Trust which would otherwise require the
approval of such Shareholders.
- 23 -
<PAGE>
Section 9.3.3. Subsequent Amendments. In accordance with Section
3815(f) of DBTA, an agreement of merger or consolidation may effect any
amendment to this Declaration of Trust or the By-Laws or effect the adoption of
a new declaration of trust or By-Laws of the Trust if the Trust is the surviving
or resulting business trust.
Section 9.3.4. Certificate of Merger or Consolidation. Upon
completion of the merger or consolidation, the Trustees shall file a certificate
of merger or consolidation in accordance with Section 3810 of the DBTA.
ARTICLE 10
Miscellaneous Provisions
Section 10.1. Signatures. To the extent permitted by applicable law, any
instrument signed pursuant to a validly executed power of attorney shall be
deemed to have been signed by the Trustee or officer executing the power of
attorney. To the extent permitted by law, any Trustee or officer may, in his or
her discretion, accept a facsimile signature as evidence of a valid signature on
any document.
Section 10.2. Certified Copies. The original or a copy of this Declaration
of Trust and of each amendment hereto shall be kept in the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether or not
any such amendments have been made and as to any matters in connection with the
Trust hereunder, and with the same effect as if it were the original, may rely
on a copy certified by an officer or Trustee of the Trust to be a copy of this
Declaration of Trust or of any such amendments.
Section 10.3. Certain Internal References. In this Declaration of Trust or
in any such amendment, references to this Declaration of Trust, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this Declaration of Trust as a whole and as amended or affected by any such
amendment.
Section 10.4. Headings. Headings are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts, each of which shall be deemed an original.
Section 10.5. Resolution of Ambiguities. The Trustees may construe any of
the provisions of this Declaration insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any such
construction hereof by the Trustees in good faith shall be conclusive as to the
meaning to be given to such provisions. In construing this Declaration, the
presumption shall be in favor of a grant of power to the Trustees.
Section 10.6. Amendments.
- 24 -
<PAGE>
Section 10.6.1. Generally. Except as otherwise specifically provided
herein or as required by the 1940 Act or other applicable law, this Declaration
of Trust may be amended at any time by an instrument in writing signed by a
majority of the Trustees then in office.
Section 10.6.2. Certificate of Amendment. In the event of any
amendment to this Declaration of Trust which affects the Trust's certificate of
trust, the Trustees shall file a certificate of amendment in accordance with
Section 3810 of the DBTA.
Section 10.6.3. Prohibited Retrospective Amendments. No amendment of
this Declaration of Trust or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to Trustees and officers
hereunder with respect to any act or omission occurring prior to such amendment
or repeal.
Section 10.7. Governing Law. This Declaration of Trust is executed and
delivered with reference to DBTA and the laws of the State of Delaware by all of
the Trustees whose signatures appear below, and the rights of all parties and
the validity and construction of every provision hereof shall be subject to and
construed according to DBTA and the laws of the State of Delaware (unless and to
the extent otherwise provided for and/or preempted by the 1940 Act or other
applicable federal securities laws); provided, however, that there shall not be
applicable to the Trust, the Trustees, or this Declaration of Trust (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the DBTA) pertaining to trusts which are inconsistent with the rights,
duties, powers, limitations or liabilities of the Trustees set forth or
referenced in this Declaration of Trust. All references to sections of the DBTA
or the 1940 Act, or any rules or regulations thereunder, refer to such sections,
rules, or regulations in effect as of the date of this Declaration of Trust, or
any successor sections, rules, or regulations thereto.
Section 10.8. Severability. The provisions of this Declaration of Trust
are severable, and if the Trustees shall determine, with the advice of counsel,
that any of such provision is in conflict with the 1940 Act, the DBTA, or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Declaration of Trust; provided,
however, that such determination shall not affect any of the remaining
provisions of this Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination. If any provision of this
Declaration of Trust shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.
- 25 -
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have
executed this Declaration of Trust as of the date first written above.
/s/ Peter C. Clapman
-----------------------------------
Peter C. Clapman, Trustee
/s/ Lisa Snow
-----------------------------------
Lisa Snow, Trustee
BYLAWS
OF
TIAA-CREF MUTUAL FUND
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Offices.......................................................1
1.1. Delaware Office................................................1
1.2. Other Offices..................................................1
ARTICLE 2 Meetings of the Trustees......................................1
2.1. Regular Meetings...............................................1
2.2. Special Meetings...............................................1
2.2.1. Time and Place........................................1
2.2.2. Notice................................................1
2.3. Participation by Telephone.....................................2
2.4. Voting.........................................................2
ARTICLE 3 Officers......................................................2
3.1. Enumeration....................................................2
3.2. Qualification..................................................2
3.3. Election or Appointment........................................2
3.4. Tenure.........................................................3
3.5. Powers.........................................................3
3.6. Titles and Duties..............................................3
3.6.1. Chairman of the Board; President......................3
3.6.2. Vice President........................................3
3.6.3. Treasurer.............................................3
3.6.4. Assistant Treasurer...................................3
3.6.5. Secretary.............................................4
3.6.6. Assistant Secretary...................................4
3.6.7. Temporary Secretary...................................4
3.7. Resignation, Retirement, and Removal...........................4
ARTICLE 4 Share Certificates............................................4
4.1. General........................................................4
4.2. Receipts In Lieu of Certificates...............................5
4.3. Future Issuance of Certificates................................5
4.4. Loss of Certificates...........................................5
4.5. Discontinuance of Issuance of Certificate......................5
ARTICLE 5 Miscellaneous Provisions......................................5
5.1. Committees.....................................................5
5.2. Reports........................................................6
5.3. Fiscal Year....................................................6
5.4. Seal...........................................................6
5.5. Execution of Papers............................................6
5.6. Dealings with Trustees and Officers............................6
5.7. Amendments.....................................................6
<PAGE>
BYLAWS
OF
TIAA-CREF MUTUAL FUND
These BYLAWS, made as of this day, January 16, 1997, shall be subject to
the Declaration of Trust, as from time to time in effect, of the TIAA-CREF
Mutual Fund (the "Trust"), a Delaware business trust formed on January 15, 1997
pursuant to a declaration of trust (the "Declaration of Trust"). In the event of
any inconsistency between the terms hereof and the terms of the Declaration of
Trust, the terms of the Declaration of Trust shall control. Capitalized terms
are used as defined in the Declaration of Trust, except as specifically defined
herein.
ARTICLE 1
Offices
Section 1.1. Delaware Office. In addition to the principal place of
business of the Trust as set forth in Section 3.2 of the Declaration of Trust,
the Trust shall maintain an office within the State of Delaware which, unless
otherwise fixed by the Trustees, shall be identical to the business office of
the Registered Agent of the Trust as set forth in Section 3.1 of the Declaration
of Trust.
Section 1.2. Other Offices. The Trustees may, at any time, establish
branch or subordinate offices at any place or places where the Trust intends to
do business.
ARTICLE 2
Meetings of the Trustees
Section 2.1. Regular Meetings. Regular meetings of the Trustees may be
held without call or notice at such places and at such times as the Trustees may
from time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to Trustees absent at the time
of such determination.
Section 2.2. Special Meetings. Special meetings of the Trustees may be
called by the Chairman of the Board, the President, the Treasurer, or by two or
more Trustees.
Section 2.2.1. Time and Place. Special meetings may be held at any time
and at any place designated in the call of the meeting.
Section 2.2.2. Notice. Sufficient notice of the special meeting must be
given to each Trustee by the Secretary, an Assistant Secretary, or the person or
persons calling the meeting. Notice by First Class mail addressed to a Trustee
at his or her usual or last known
<PAGE>
business or residence address, notice to such Trustee in person or by telephone
at least twenty-four hours before the special meeting, or notice by other means
determined by the Trustees shall be sufficient notice of the special meeting.
Notice of a special meeting need not be given to any Trustee if a written waiver
of such notice, executed by such Trustee before or after the meeting, is filed
with the records of the special meeting. Attendance by a Trustee at a special
meeting shall be deemed to be an effective waiver of notice of such special
meeting, unless such Trustee protests the lack of notice to him or her prior to
or at the commencement of such special meeting. Neither notice of a special
meeting nor a written waiver of notice need specify the purposes of the special
meeting.
Section 2.3. Participation by Telephone. One or more of the Trustees may
participate in a meeting of the Trustees or any committee thereof by means of a
conference telephone or similar communications or video equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting to
the extent permitted by the 1940 Act.
Section 2.4. Voting. Additional requirements as to voting by Trustees
are set forth in Section 5.12 of the Declaration of Trust.
ARTICLE 3
Officers
Section 3.1. Enumeration. The officers of the Trust shall be a Chairman
of the Board, a President, a Treasurer, a Secretary, and such other officers,
including one or more Vice Presidents, Assistant Treasurers, and/or Assistant
Secretaries, as the Trustees from time to time may in their discretion elect.
The Trust may also have such agents as the Trustees from time to time may in
their discretion appoint.
Section 3.2. Qualification. The Chairman of the Board shall be a Trustee
and may, but need not be, a shareholder. Any other officer may, but need not be,
a Trustee or shareholder. Any two or more offices may be held by the same person
except that the same person may not be both President and Treasurer.
Section 3.3. Election or Appointment. The Chairman of the Board, the
President, the Treasurer, and the Secretary shall be elected by the Trustees at
the first meeting of the Trustees. Any vacancy or anticipated vacancy resulting
for any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of such officers may be filled by a majority of the
Trustees then in office through the appointment in writing of such other person
as the Trustees in their discretion shall determine. Other officers, if any, may
be elected or appointed by the Trustees or their designee at any meeting of the
Trustees or at any other time.
- 2 -
<PAGE>
Section 3.4. Tenure. The Chairman of the Board, the President, the
Treasurer, and the Secretary shall hold office until their respective successors
are chosen and qualified, or in each case until he or she sooner dies, resigns,
is removed, or becomes disqualified. Each other officer shall hold office and
each agent shall retain authority at the pleasure of the Trustees.
Section 3.5. Powers. Subject to the other provisions of these Bylaws,
each officer shall have, in addition to the duties and powers set forth herein
and in the Declaration of Trust, such duties and powers as are commonly incident
to the office occupied by such officer as if the Trust were organized as a
Delaware business corporation and such other duties and powers as the Trustees
may from time to time designate.
Section 3.6. Titles and Duties.
Section 3.6.1. Chairman of the Board; President. Unless the
Trustees otherwise provide, the Chairman of the Board, or, in the absence of the
Chairman, the President, shall preside at all meetings of the shareholders and
of the Trustees. Unless the Trustees otherwise provide, the President shall be
the Chief Executive Officer of the Trust. The Chairman of the Board and the
President shall each also perform such other duties and have such other powers
as the Board of Trustees may from time to time prescribe.
Section 3.6.2. Vice President. In the absence of the President or
in the event of his or her inability or refusal to act, the Vice President, or
if there is more than one Vice President, the Vice Presidents in their order of
election or in such other order as determined by the Trustees, shall perform the
duties of the President, and when so acting shall have all the powers of and be
subject to all the restrictions upon the President. The Vice Presidents shall
also perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.
Section 3.6.3. Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser or manager, or transfer,
shareholder servicing or similar agent, be in charge of the valuable papers,
books of account and accounting records of the Trust. The Treasurer shall also
perform such other duties and have such other powers as the Board of Trustees or
the President may from time to time prescribe.
Section 3.6.4. Assistant Treasurer. In the absence of the
Treasurer or in the event of his or her inability or refusal to act, the
Assistant Treasurer, or if there is more than one, the Assistant Treasurers in
their order of election or in such other order as determined by the Trustees,
shall perform the duties of the Treasurer, and when so acting shall have all the
powers of and be subject to all the restrictions upon the Treasurer. The
Assistant Treasurers
- 3 -
<PAGE>
shall also perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.
Section 3.6.5. Secretary. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept for such
purposes, which books or a copy thereof shall be kept at the principal office of
the Trust or at such other place as designated by the Trustees. The Secretary
shall also perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.
Section 3.6.6. Assistant Secretary. In the absence of the
Secretary or in the event of his or her inability or refusal to act, the
Assistant Secretary, or if there is more than one, the Assistant Secretaries in
their order of election or in such other order as determined by the Trustees,
shall perform the duties of the Secretary, and when so acting shall have all the
powers of and be subject to all the restrictions upon the Secretary. The
Assistant Secretaries shall also perform such other duties and have such other
powers as the Board of Trustees or the President may from time to time
prescribe.
Section 3.6.7. Temporary Secretary. In the absence of the
Secretary and all Assistant Secretaries from any meeting of the shareholders or
Trustees, the Trustees may appoint a temporary secretary at such meeting, who
shall perform the duties of the Secretary for the purposes of such meeting.
Section 3.7. Resignation, Retirement, and Removal. Any officer may
resign at any time. Such resignation shall be effective when notice thereof is
received by the Chairman of the Board, President or Secretary, except that a
resignation shall be effective on such date and at such time as is set forth in
writing by the resignee. The Trustees may remove any officer elected by them
with or without cause by the vote or written consent of a majority of the
Trustees then in office. To the extent that any officer or Trustee of the Trust
receives compensation from the Trust and except as may otherwise be expressly
provided in a written agreement with the Trust, no Trustee or officer resigning
and no officer removed shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on account
of such removal.
ARTICLE 4
Share Certificates
Section 4.1. General. No certificates certifying the ownership of shares
in the Trust or in any Series of the Trust are required to be issued, except as
the Trustees may otherwise determine from time to time.
Section 4.2. Receipts In Lieu of Certificates. In lieu of issuing
certificates for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep
- 4 -
<PAGE>
accounts upon the books of the Trust for the record holders of such shares in
accordance with the Declaration of Trust, who shall in either case be deemed,
for all purposes hereunder, to be the holders of certificates for such shares as
if they had accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.
Section 4.3. Future Issuance of Certificates. The Trustees may at any
time authorize the issuance of share certificates to one or more shareholders.
Such certificate shall be in such form prescribed by the Trustees, provided,
however, that such certificate shall state the number of shares it represents
and shall be signed by the President or a Vice President and by the Treasurer or
Assistant Treasurer. Such signatures may be facsimiles if the certificate is
signed by a transfer agent or registrar who is not a Trustee, officer, or
employee of the Trust. In case any officer who has signed such certificate or
whose facsimile signature has been placed on such certificate shall cease to be
an officer before such certificate is issued, it may be issued by the Trust with
the same effect as if he or she were such officer at the time of its issue.
Section 4.4. Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees shall prescribe.
Section 4.5. Discontinuance of Issuance of Certificate. The Trustees may
at any time discontinue the issuance of share certificates and may, by written
notice to each shareholder holding a certificate, require the surrender of share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of shares in the Trust.
ARTICLE 5
Miscellaneous Provisions
Section 5.1. Committees. The Trustees, by vote of a majority of the
Trustees then in office, may elect from their number an Audit Committee,
Executive Committee, Nominating Committee, or any other committee, and may
delegate thereto some or all of their powers except those which by law, by the
Declaration of Trust, or by these Bylaws may not be delegated. Except as the
Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these Bylaws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
- 5 -
<PAGE>
Section 5.2. Reports. The Trustees and officers shall render reports at
the time and in the manner required by the Declaration of Trust or any
applicable law. Officers and committees shall render such additional reports as
they may deem desirable or as may from time to time be required by the Trustees.
Section 5.3. Fiscal Year. The fiscal year of the Trust shall be fixed by
resolution of the Trustees.
Section 5.4. Seal. No official seal of the Trust shall be required to
execute any instruments on behalf of the Trust in accordance with Section 5.5.
Section 5.5. Execution of Papers. Except as the Trustees may generally
or in particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees shall
be signed by the President, any Vice President, Treasurer, any Assistant
Treasurer, Secretary, or any Assistant Secretary, or any officer authorized to
do so by the Trustees or any of the foregoing.
Section 5.6. Dealings with Trustees and Officers. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of shares of the Trust
to the same extent as if he were not a Trustee, officer or agent, and the
Trustees may accept subscriptions to shares or repurchase shares from any firm
or company in which any Trustee, officer or other agent of the Trust may have an
interest.
Section 5.7. Amendments. These Bylaws may be amended or repealed, in
whole or in part, by majority of the Trustees then in office at any meeting of
the Trustees, or by one or more writings signed by such a majority.
- 6 -
<PAGE>
The foregoing Bylaws were adopted by the Board of Trustees on January 16, 1997.
/s/ Lisa Snow
-------------------------
Lisa Snow, Secretary
