File Nos. 333-21821, 811-08055
As filed with the Securities and Exchange Commission on August 5, 1997
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and
Registration Statement Under the Investment Company Act of 1940 [ ]
Amendment No. 1 [X]
(Check appropriate box or boxes.)
-----------------------------------
TIAA-CREF Mutual Funds
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 Funds
730 Third Avenue
New York, New York 10017
(Name and Address of Agent for Service)
Copy to:
Steven B. Boehm, Esq.
Sutherland, Asbill & Brennan LLP
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
----------------- --------------------------- -------------------------
<S> <C> <C> <C>
Part A: Information Required in a Prospectus
1. Cover Page Cover page
2. Synopsis Expense Information
3. Condensed Financial N/A
Information
4. General Description of The TIAA-CREF Mutual Funds
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>
Caption(s) in the Statement
Item of Form N-1A Caption(s) in the Prospectus of Additional Information
----------------- --------------------------- -------------------------
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 Funds
This prospectus contains information that you should consider before investing
in the TIAA-CREF Mutual Funds. Read it carefully before investing, and keep it
for future reference.
If you have any questions about the TIAA-CREF Mutual Funds 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 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.
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, primarily from a broadly
diversified portfolio of 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 guarantee 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 Funds
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 Funds......................................................
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..................................................
Type of Accounts.........................................................
How to Buy Shares........................................................
How to Redeem Shares.....................................................
How to Exchange Shares...................................................
Other Investor Information...............................................
TIAA-CREF Mutual Funds' 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 Funds 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 Total Fund Operating Expenses
(after fee waiver) Other Expenses (after fee waiver)
(1) (2) (1)
<S> <C> <C> <C> <C>
The International Equity Fund
The Growth Equity Fund
The Growth & Income Fund
The Managed Allocation
Fund (3)
The Bond Plus Fund
The Money Market Fund
</TABLE>
(1) Although Teachers Advisors, Inc. ("Advisors"), the investment advisor
for the funds, is entitled to fees of %, %, %, % and % of the average
daily net assets of the International Equity Fund, the Growth Equity Fund, the
Growth and Income Fund, the Bond Plus Fund and the Money Market Fund,
respectively, it has voluntarily agreed to waive a portion of its fee. This
waiver shall remain in effect until July 1, 2000.
(2) These figures are based upon estimated amounts for the current fiscal
year. TIAA-CREF Mutual Funds expects that any expenses incurred for each Fund
will be less than .01% of that Fund's net assets.
1
<PAGE>
(3) Teachers Advisors does not receive a management fee for its services to
the Managed Allocation Fund. 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 Funds.
"You" and "your" mean any shareholder or any prospective shareholder.
The TIAA-CREF Mutual Funds
The TIAA-CREF Mutual Funds 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 Funds, with its own distinct investment objective. (This
prospectus will refer to these portfolios as the funds or the investment funds.)
The TIAA-CREF Mutual Funds are 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 $199.4 billion in assets as of June
30, 1997, with TIAA managing approximately $89 billion and CREF managing
approximately $110.4 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. Another is
interest rate risk, the risk that a debt instrument's value will decline if
interest rates change. A rise in interest rates usually causes the market value
of fixed-rate securities to go down, while a rate decline usually results in an
increase in the market values of those securities. 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
3
<PAGE>
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 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 80% 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. Foreign securities often have risks that
differ from those of domestic securities. For more information about the risks
of foreign investments, see page .
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 80% of its total
assets in the equity securities of 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,
4
<PAGE>
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 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. 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
amount 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 80% 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
5
<PAGE>
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. (These other
instruments have longer maturities than the instruments allowed in the money
market fund, or else don't meet the requirements for "First Tier Securities"
(see 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 Funds' 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
6
<PAGE>
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 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 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.
Normally, at least 80% of the Fund's total assets will be invested in
bonds. 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) that 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
7
<PAGE>
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
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 (1)
and (4) 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
8
<PAGE>
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 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
9
<PAGE>
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.
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 net 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
10
<PAGE>
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, for example, 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 into "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 Funds.
11
<PAGE>
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.
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).
If a fund borrows money, it could leverage its portfolio by keeping
securities it might otherwise have had to sell. Leveraging exposes a fund to
special risks, including greater fluctuations in net asset value in response to
market changes.
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.
12
<PAGE>
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 Funds 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 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 a 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, and eligible
institutions themselves, can open a TIAA-CREF Mutual Funds account. An eligible
institution is a private or public institution in the United States that is
nonproprietary and nonprofit. (Eligible institutions can open accounts only to
fund deferred compensation plans.) A private institution has to be tax-exempt
under Section 501(c)(3) of the Internal Revenue Code of 1986 (IRC) or earlier
versions of the section and cannot be a "private foundation", as that term is
used in the IRC. 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 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.
13
<PAGE>
Types of Accounts
With the TIAA-CREF Mutual Funds, you can establish the types of accounts
listed below, so long as the account owners meet 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 must meet our
eligibility requirements. We can't accept foreign trust accounts.
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 want an application, or if you have any
questions or need help completing the application, call one of our Counselors at
1 800 223-1200. You can also download and print the application from our
website, which is located at www.TIAA-CREF.org.
The minimum initial investment is $250 per 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 .) We will accept third party checks for
purchases of $10,000 or less.
Please send your check and/or application to the following addresses:
First Class Mail: The TIAA-CREF Mutual Funds
c/o State Street Bank
PO Box 8009
Boston, MA 02266-8009
14
<PAGE>
Overnight Mail: The TIAA-CREF Mutual Funds
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, fund 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 Funds.
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. The change will take effect approximately 5 business days after we
receive your request.
By Telephone This service allows you to make electronic withdrawals from
your designated bank account to buy additional TIAA-CREF Mutual Funds 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.
15
<PAGE>
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
$250. Here's what you need to do:
1. send us your application, then call us to confirm that your account
has been established; (initial investment only);
2. instruct your bank to wire money to
State Street Bank
ABA Number 011000028
DDA Number 9905-2771
3. specify on the wire:
o The TIAA-CREF Mutual Funds
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 fund
account number if existing)
o The fund or funds in which you want to invest, and 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.
16
<PAGE>
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 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
17
<PAGE>
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 $5,000). 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 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. A signature guarantee
is required for this address change.
We can terminate the systematic redemption plan option at any time,
although we will notify you if we do. You can
18
<PAGE>
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 if you would like the proceeds sent to someone else, 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 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
19
<PAGE>
(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 form. 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 Funds," 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.
o An exchange is considered a sale of securities, and therefore may be
subject to capital gains tax.
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,
20
<PAGE>
your application is properly completed or your transaction request includes your
fund 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, bank or bank account
or adding certain new services, such as checkwriting, to an existing account),
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 Funds from
fraud, and to comply with 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. For more information about when a signature
guarantee is required, please contact us.
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 Funds 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)
21
<PAGE>
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. However,
if you're using an automatic investment plan or a systematic redemption or
exchange plan, you'll receive a statement confirming those transactions
immediately following the end of each calendar quarter.
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.
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 audited annual financial statements and semi-annual
financial reports on the TIAA-CREF Mutual Funds' operation and performance, and
a new prospectus each year. The SAI will be revised each year but we'll send it
only on
22
<PAGE>
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 Funds
therefore require 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 Funds
You can contact us in any of the following ways:
By telephone: Call 1-800-223-1200
In writing: TIAA-CREF Mutual Funds
c/o State Street Bank
P.O. Box 8009
Boston, Massachusetts 02266-8009
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 Funds' 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 Funds, and
23
<PAGE>
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 Funds' 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 Funds 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 Funds also manage the investments of the CREF accounts through an
affiliated investment adviser, TIAA-CREF Investment Management, Inc.
("Investment Management"). Teachers Advisors also manages the assets of TIAA
Separate Account VA-1, a segregated investment account of TIAA that funds a
variable annuity.
Under the terms of an Investment Management Agreement between TIAA-CREF
Mutual Funds and Teachers Advisors, Teachers Advisors is entitled to an annual
fee of %, %, %, % and % of the average daily net assets of the
International Equity Fund, the Growth Equity Fund, the Growth and Income Fund,
the Bond Plus Fund and the Money Market Fund. It receives no fee for managing
the Managed Allocation Fund. Teachers Advisors currently has voluntarily waived
its right to receive that portion of its fee equal to % of the average daily
net assets of each fund (other than the Managed Allocation Fund). This waiver is
guaranteed to remain in effect until July 1, 2000.
Under the Investment Management Agreement, Teachers Advisors
24
<PAGE>
is also responsible for providing, or obtaining at its own expense, the services
reasonably necessary for the ordinary operation of each fund. These include
distribution, 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 Funds distinctive because their
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 Funds pay 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.
Teachers 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.
Fund Managers
The International Equity Fund is managed by Chris Semenuk, Director-Global
Portfolio Management, Teachers Advisors. Mr. Semenuk joined TIAA-CREF in 1995.
He is also responsible for company research and analysis for the CREF Global
Equities Account.
The Growth Equity Fund is managed by Scott C. Evans, Managing Director,
Teachers Advisors. Mr. Evans joined TIAA-CREF in 1985. Mr. Evans is also
responsible for managing the investments of the CREF Growth Account.
The Growth & Income Fund is managed by Carlton N. Martin, Managing
Director-Global Research 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, Senior Managing Director-Global Research, 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.
25
<PAGE>
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, Senior Managing Director-Securities, 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, Portfolio
Management, 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 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.
26
<PAGE>
Prior Performance of CREF Growth Account
The following table contains information about the historical performance
of the CREF Growth Account since the date indicated. The CREF Growth Account is
not a mutual fund; rather it funds a variable annuity contract. It has an
investment objective, policies, strategies and risks substantially similar to
those of the TIAA-CREF Mutual Funds' Growth Equity Fund. The data are provided
to illustrate the experience of Teachers Advisors' personnel (in their
capacities with Investment Management) in managing a substantially similar
investment portfolio. It does not represent the performance of the Growth Equity
Fund.
These investment results are unaudited. They aren't intended to predict or
suggest the returns that the Growth Equity Fund or an investor in that fund
might experience. The results are net of investment management and other
operating expenses for CREF. The results would be lower if the Growth Equity
Fund's actual operating expense charges were deducted.
CREF Growth Account Average Annual Rates Cumulative Rates
of Total Return of Total Return
1 year 32.03% 32.03%
(7/1/96 - 6/30/97)
3 years 28.56% 112.49%
(7/1/94 - 6/30/97)
Since inception 26.37% 109.43%
(4/29/94-6/30/97)
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
- ---- -------------
The International Equity Fund Annually
27
<PAGE>
The Growth Equity Fund Annually
The Growth & Income Fund Quarterly
The Managed Allocation Fund Quarterly
The Bond Plus Fund Monthly
The Money Market Fund Monthly
Although we pay dividends monthly from the Money Market Fund, these
dividends are calculated and declared 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 Heinvest your
dividend and capital gain distributions in additional shares of another fund in
which you already hold shares.
3. Income-Earned Option. We'll automatically reinvest your capital gain
distributions, but you will be sent a check for each dividend distribution.
4. Capital Gains Option. We'll automatically reinvest your dividend
distributions, but you will be sent a check for each capital gains distribution.
5. 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 any fund
will be taxed.
28
<PAGE>
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 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 or
loss and the amount of tax to be paid on any gain. Be sure to keep your regular
account statements; the information they contain will be essential in
calculating the amount of your capital gains or losses.
"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.
If a fund qualifies to pass through a credit for such taxes paid, an offsetting
tax credit or deduction may be available to you. If so, your tax statement will
show more taxable income than 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
29
<PAGE>
these requirements, a fund may have to limit its investment in some types of
instruments.
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 Funds. Anyone distributing shares of the
TIAA-CREF Mutual Funds 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 Funds.
Administration
Teachers Advisors has retained State Street Bank & Trust Company ("State
Street") 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.
State Street also acts as the transfer and dividend paying agent for the funds.
Teachers Advisors, not the TIAA-CREF Mutual Funds, has agreed to pay the State
Street a fee for such services. The State Street is located at 225 Franklin
Street Boston, Massachusetts 02209.
Custodial Services
The State Street also provides custodial services for the funds under a
separate agreement with Teachers Advisors. Teachers Advisors has agreed to pay
the State Street for these
30
<PAGE>
services.
Legal Proceedings
There are no material legal proceedings to which the TIAA-CREF Mutual
Funds are subject, or to which Teachers Advisors or TPIS are subject which are
likely to have a material adverse effect on their ability to perform their
obligations to the TIAA-CREF Mutual Funds, or on the TIAA-CREF Mutual Funds
itself.
31
<PAGE>
Statement of Additional Information
Dated , 1997
TIAA-CREF Mutual Funds
This Statement of Additional Information (SAI) tells you about investing in
the TIAA-CREF Mutual Funds 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 Funds' prospectus dated , 1997
(the Prospectus), which may be obtained by writing us at TIAA-CREF Mutual Funds,
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 Funds........................................
Trustees and Officers of the TIAA-CREF Mutual Funds....................
Compensation of Trustees...............................................
Trustee and Officer Compensation.......................................
Compensation Table.....................................................
Control Persons.................................................................
Investment Advisory and Other Services..........................................
About the TIAA-CREF Mutual Funds and the Shares.................................
Indemnification of Shareholders........................................
Indemnification of Trustees............................................
Limitation of TIAA-CREF Mutual Funds 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
Funds' 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 Funds'
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 7 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 and with respect to the
Money Market Fund, to certificates of deposits, or securities issued
or guaranteed by domestic banks and branches of domestic banks and
savings and loan associations and savings banks;
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 Funds,
government securities, or short-term securities.
11. The Managed Allocation Fund may invest 100% of its assets in the
mutual fund industry.
2
<PAGE>
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 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
3
<PAGE>
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.
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 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 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
4
<PAGE>
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 futures on groups of securities, is a possible lack of
liquidity. This will be a major consideration before a fund deals in any option.
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
5
<PAGE>
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.
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
6
<PAGE>
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 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
7
<PAGE>
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.
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 and 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 Funds, 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
8
<PAGE>
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 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
9
<PAGE>
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 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
10
<PAGE>
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 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
11
<PAGE>
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 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
12
<PAGE>
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 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
13
<PAGE>
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 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
14
<PAGE>
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 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
15
<PAGE>
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 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.
16
<PAGE>
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 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
17
<PAGE>
Allocation Fund can invest 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 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 Funds
Trustees and Officers of the TIAA-CREF Mutual Funds
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>
Trustees Age Principal Occupations During Past 5 Years
- -------- --- -----------------------------------------
<S> <C> <C>
Robert H. Atwell (1) 66 President Emeritus, American Counsel on
American Council on Education Education and consultant for A.T.
Suite 800 Kearney since November 1996.
One Dupont Circle Previously, president, American Counsel
Washington, D.C. 20036 on Education.
18
<PAGE>
Trustees Age Principal Occupations During Past 5 Years
- -------- --- -----------------------------------------
Elizabeth E. Bailey 58 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.
John H. Biggs*(3) 61 Chairman and Chief Executive Officer,
TIAA-CREF CREF and TIAA, since 1993, Formerly,
730 Third Avenue President and Chief Operating Officer,
New York, NY 10017 CREF and TIAA.
Gary P. Brinson (3) 53 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 (1) 50 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 65 Head, The Spence School.
The Spence School
22 East 91st Street
New York, New York 10128
Stuart Tse Kong Ho (3) 61 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 (2) 54 President and Managing Partner,
Suite 450, The River Forum Windermere Investment Associates, since
4380 S.W. Macadam Avenue January 1997. Previously, Chairman and
Portland, Oregon 97201 Chief Executive Officer, CTC Consulting,
Inc. and Managing director, Capital Trust
Company.
19
<PAGE>
Trustees Age Principal Occupations During Past 5 Years
- -------- --- -----------------------------------------
Thomas W. Jones* (3) 48 Vice Chairman, CREF and TIAA, since
TIAA-CREF 1995. President and Chief Operating
730 Third Avenue Officer, CREF and TIAA, since 1993.
New York, NY 10017 Formerly, Executive Vice President,
Finance and Planning, CREF and TIAA.
Marjorie Fine Knowles 58 Professor of Law, Georgia State
College of Law University College of Law.
Georgia State University
University Plaza
Atlanta, Georgia 30303-3092
Martin L. Leibowitz* (2) 61 Vice Chairman and Chief Investment
TIAA-CREF Officer, CREF and TIAA, since 1995.
730 Third Avenue President, TIAA-CREF Investment
New York, NY 10017 Management, Inc. ("Investment
Management"), and President, Teachers
Advisors, Inc. ("Advisors"). 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.
Jay O. Light (2) 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 (2) 63 Partner, Debevoise & Plimpton, Adjunct
Debevoise & Plimpton Professor, Columbia University School of
875 Third Avenue Law.
New York, New York 10022
Robert M. Lovell, Jr. (2) 67 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 (3) 53 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.
20
<PAGE>
Trustees Age Principal Occupations During Past 5 Years
- -------- --- -----------------------------------------
Eugene C. Sit (3) 59 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 (2) 47 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 68 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 (2) 53 President and Chief Executive Officer,
Alternative Investment Group Alternative Investment Group, L.L.C.,
65 South Gate Lane since August 1996. Adviser to the
Southport, Connecticut 06490 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 (2) 38 Eric J. Gleacher Professor of Finance,
1601 Washington University of Chicago Graduate School of
Wilmette, Illinois 60091 Business, since 1993. Founding Partner,
LSV Asset Management.
Messrs. Biggs, Jones, Leibowitz and Longstreth are deemed "interest persons" of TIAA-CREF Mutual Funds
within the meaning of the Investment Company Act of 1940.
</TABLE>
- ---------------
(1) Member of Executive Committee
(2) Member of Finance Committee
(3) Member of Executive and Finance Committees
21
<PAGE>
<TABLE>
<CAPTION>
Position with Principal Occupation(s) During
Officers** Age Registrant Past 5 Years
- ---------- --- ------------- --------------
<S> <C> <C> <C>
Thomas G. Walsh 55 President Executive Vice President, TIAA and
(1) CREF, and President, Teachers
Personal Investors Services, Inc.
("TPIS").
Virgil Cumming 52 Executive Executive Vice President, TIAA and
(1) Vice President CREF since May 1996. Previously
Senior Vice President and Director,
Global Active Management, TIAA
and CREF from February 1993 to
May 1996. Previously, Senior Vice
President and Director, International
Investments, TIAA and CREF.
Executive Vice President, Advisors
and Investment Management.
Richard L. Gibbs 50 Executive Executive Vice President, TIAA and
Vice President CREF, since March 1993.
Formerly, Vice President, Finance,
TIAA and CREF. Executive Vice
President, Advisors, Investment
Management, TPIS and TIAA-CREF
Individual & Institutional Services,
Inc. ("Services").
Lisa Snow 41 Secretary Vice President and Chief Counsel,
Corporate, TIAA and CREF since
March 1997. Previously, Chief
Counsel, TIAA and CREF. Chief
Counsel and Assistant Secretary,
Investment Management and
Advisors. Chief Counsel and
Secretary, TPIS and Services.
Richard J. Adamski 54 Vice President Vice President and Treasurer, TIAA
and Treasurer and CREF, Investment Management,
Advisors, TPIS and Services.
</TABLE>
- ----------
* The address for all Officers of the TIAA-CREF Mutual Funds is
730 Third Avenue, New York, New York 10017.
22
<PAGE>
Trustee and Officer Compensation
The following table discloses the expected aggregate compensation to be
received from the TIAA-CREF family of companies for each non-officer Trustee for
the year ended December 31, 1997. We have estimated future payments. The fund
does not compensate its officers. Neither trustees nor officers receive
retirement benefits from TIAA-CREF Mutual Funds.
Aggregate Compensation from the Total Compensation from TIAA-
------------------------------- -----------------------------
Name Fund CREF complex*
- ---- ---- -------------
Atwell
Bailey
Brinson
Fecske
Gilbert
Ho
Jacob
Knowles
Light
Longstreth
Lovell
Ross
Sit
Sloan
Spindler
Storrs
Vishny
*The TIAA-CREF complex consists of three investment companies: College
Retirement Equities Fund, TIAA Separate Account VA-1 and TIAA-CREF Mutual Funds.
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 [August 31], 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
23
<PAGE>
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 Funds 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 Funds.
Ernst & Young, LLP, 787 7th Avenue, New York, New York 10019, has been
selected as independent auditors of the TIAA-CREF Mutual Funds.
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 Funds. 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 Funds and
Advisors.
About the TIAA-CREF Mutual Funds and the Shares
As a Delaware business trust, the TIAA-CREF Mutual Funds' operations are
governed by its Declaration of Trust dated January 13, 1997, as amended (the
Declaration). A copy of the TIAA-CREF Mutual Funds' 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 interest in
the TIAA-CREF Mutual Funds 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 Funds'
Declaration expressly provides that the TIAA-CREF Mutual Funds 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 Funds, might
24
<PAGE>
become a party to an action in another state whose courts refuse to apply
Delaware law, in which case the TIAA-CREF Mutual Funds' 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 Funds 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 Funds 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 Funds or any series of the TIAA-CREF Mutual Funds, and (iii)
provides that the TIAA-CREF Mutual Funds shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
TIAA-CREF Mutual Funds 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 Funds itself would be
unable to meet its obligations. In the light of DBTA, the nature of the
TIAA-CREF Mutual Funds' business, and the nature of its assets, the risk of
personal liability to a TIAA-CREF Mutual Funds shareholder is remote.
Indemnification of Trustees
The Declaration further provides that the TIAA-CREF Mutual Funds 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 the TIAA-CREF Mutual Funds. The Declaration does not authorize the
TIAA-CREF Mutual Funds 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
25
<PAGE>
obligations entered into on behalf of a fund or the TIAA-CREF Mutual 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 Funds are not required to hold
annual meetings to elect Trustees or for other purposes. It is not anticipated
that the TIAA-CREF Mutual Funds will hold shareholders' meetings unless required
by law or the Declaration. The TIAA-CREF Mutual Funds 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 Funds.
Shares of the TIAA-CREF Mutual Funds 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 Funds 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
Pursuant to the Declaration, the Trustees may establish additional
investment portfolios (technically "series" of shares) in the TIAA-CREF Mutual
Funds. 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 Funds 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
26
<PAGE>
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 a national market or exchange are
valued based on their sale price on such market or 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.
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).
27
<PAGE>
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 derived from a pricing matrix that has various types
of money market instruments along one axis and maturities, ranging from
overnight to one year, along the other. This information is derived from one or
more financial information services. 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 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 Funds' 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 by more than 1/2 of 1% from $1.00 per share. In the event such
deviation should exceed 1/2 of 1%, 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
28
<PAGE>
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 written 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 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
29
<PAGE>
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 Funds is organized as a Delaware business
trust, neither the TIAA-CREF Mutual Funds 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
applicable New York State taxes 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 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
30
<PAGE>
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 are taxable as ordinary income. If the
net effect of these transactions is a gain, the 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
throughout 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.
31
<PAGE>
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 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
32
<PAGE>
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 a 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, 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 Funds 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
33
<PAGE>
obligations of personnel of Advisors to the TIAA-CREF Mutual Funds.
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
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
34
<PAGE>
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 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
35
<PAGE>
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.
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.
36
<PAGE>
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.
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
37
<PAGE>
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.
Additional Considerations
Prospective investors in TIAA-CREF Mutual Funds who have accumulations in
TIAA and CREF retirement annuities (RAs) and supplemental retirement annuities
(SRAs), or in the Teachers Personal Annuity (PA) should carefully consider how
TIAA-CREF Mutual Funds fits into their investment portfolio. The tax treatment
is considerably different from the RA, SRA and PA. For example, RAs and SRAs
accept before-tax contributions, and any earnings from them are not taxed until
withdrawn or taken as income. RAs, SRAs, and the PA all have restrictions on
withdrawals before age 59-1/2, including tax penalties. TIAA-CREF Mutual Funds
don't have such restrictions, which means they can be used to invest for a wide
variety of goals in addition to retirement. However, annuities offer the option
of lifetime income on retirement, which mutual funds do not.
Investors should also consider the TIAA-CREF Mutual Funds' expense charges
as compared to the expenses of other mutual funds. The TIAA-CREF Mutual Funds'
expense charges are currently among the lowest in the industry, according to
Morningstar Principia, which tracks mutual fund expense charges.
Financial Statements
[To be added]
38
<PAGE>
PART C
- ------
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements*
---------------------
(b) Exhibits
--------
(1) Declaration of Trust, as amended
(2) Bylaws**
(3) N/A
(4) N/A
(5) Investment Management Agreement between Registrant and
Teachers Advisors, Inc.
(6) (a) Distribution agreement between Registrant and
Teachers Personal Investors Services, Inc.
(b) Selling agreement, as amended, between TPIS and
TIAA-CREF Individual & Institutional Services,
Inc.
(7) N/A
(8) Custodian Agreement between the Registrant, Teachers
Advisors and State Street Bank and Trust
(9) (a) Administration Agreement between State Street Bank
and Trust and Teachers Advisors
(b) Transfer Agency Agreement between State Street
Bank and Trust and Teachers Advisors
(10) Opinion and Consent of Charles Stamm, Esq.*
(11) (a) Consent of Sutherland, Asbill & Brennan, L.L.P.*
(b) Consent of Ernst & Young*
(12) N/A
(13) Seed Money Agreement between TIAA and TIAA-CREF Mutual
Funds
(14) N/A
1
<PAGE>
(15) N/A
(16) N/A
(17) Financial Data Schedule*
(18) N/A
- ----------
*To be filed by amendment.
**Previously filed
Item 25. Persons Controlled by or Under Common Control With
Registrant
The following companies are subsidiaries of TIAA and are included in the
consolidated financial statements of TIAA:
Teachers Insurance and Annuity Association
College Retirement Equities Fund
<TABLE>
<CAPTION>
<S> <C>
AIC Properties, Inc. MRC Properties, Inc.
BT Properties, Inc. ND Properties, Inc.
Chesapeake Investors, Inc. New Jersey Teachers Properties, Inc.
College Credit Trust NMA II Properties, Inc.
Country Commons Doylestown Trust NMA Properties, Inc.
Country Commons Joint Venture Trust One Liberty Place Land, Inc.
DAN Properties, Inc. One Liberty Place Tower, Inc.
Florida Teachers Properties, Inc. Reserve Management, Inc.
HSD Properties, Inc. Rouse-Teachers Properties, Inc.
Illinois Teachers Properties, Inc. Savannah Teachers Properties, Inc.
JV California Two, Inc. T-Investment Properties, Inc.
JV California Three, Inc. T-Land Corp.
JV District of Columbia One, Inc. T-Las Colinas Towers Corp.
JV Florida One, Inc. Teachers Advisors, Inc.
JV Florida Three, Inc. Teachers Boca Properties, Inc.
JV Florida Four, Inc. Teachers Pennsylvania Realty, Inc.
JV Georgia One, Inc. Teachers Personal Investors Services,
JV Indiana Three, Inc. Inc.
JV Maryland One, Inc. Teachers Properties, Inc.
JV Michigan One, Inc. Teachers REA, Inc.
JV Michigan Two, Inc. Teachers Realty Corporation
JV Michigan Three, Inc. Tethys Slu, Inc.
JV Minnesota One, Inc. TIAA-CREF Individual & Institutional
JV Missouri One, Inc. Services, Inc.
JV North Carolina One, Inc. TIAA-CREF Investment Management, Inc.
JV Virginia One, Inc. TIAA FUND EQUITIES, INC.
JV Virginia Two, Inc. TIAA Holdings, Inc.
JV Virginia Three, Inc. TIAA Life Insurance Company
JWL Properties, Inc. TPI Housing, Inc.
Liberty Place Retail, Inc. Washington Teachers Properties I, Inc.
Macallister Holdings, Inc. Washington Teachers Properties II,
Mass. Norwood Properties, Inc. Inc.
MAV Properties, Inc. Windermere Place Joint Venture Trust
McCandless Joint Venture, Inc. Windermere Goshen Trust
Minnesota Teachers Realty Corp. WRC Properties, Inc.
MN Properties, Inc. 730 Properties, Inc.
M.O.A. Enterprises, Inc. 730 Cal Hotel Properties I, Inc.
</TABLE>
2
<PAGE>
730 Cal Hotel Properties II, Inc.
730 Georgia Hotel Properties I, Inc.
730 Mass. Holding I, Inc.
730 Mass. Hotel Properties I, Inc.
730 Minn. Holding I, Inc.
730 Minn. Hotel Properties I, Inc.
730 MO Hotel Properties I, Inc.
730 Penn. Hotel Properties I, Inc.
(1) All subsidiaries are Delaware corporations except as follows:
A) Pennsylvania non-stock, non-profit corporations:
One Liberty Place Land, Inc.
One Liberty Place Tower, Inc.
Liberty Place Retail, Inc.
McCandless Joint Venture, Inc.
Teachers Realty Corporation
B) Minnesota Teachers Realty Corporation is a Minnesota corporation.
C) All Trusts are Pennsylvania business trusts.
(2) All subsidiaries are 100%-owned directly by TIAA, except as follows:
A) M.O.A. Enterprises, Inc., Teachers Properties, Inc., 730 Properties, Inc.,
T-Investment Properties Corp. and T-Land Corp. are 100% owned by
Macallister Holdings, Inc.
B) Chesapeake Investors, Inc. is 95%-owned by Teachers Properties, Inc. and
5%-owned by The Rouse Company. Rouse- Teachers Properties, Inc. is
100%-owned by Chesapeake Investors, Inc.
C) TPI Housing, Inc. is 100%-owned by Teachers Properties, Inc.
D) MaCallister Holdings, Inc., Teachers Personal Investors Services, Inc.,
Teachers Advisors, Inc. and TIAA Life Insurance Company are 100%-owned by
TIAA Holdings, Inc.
E) 730 Cal Hotel Properties I, Inc., 730 Cal Hotel Properties II, Inc., 730
Georgia Hotel Properties I, Inc., 730 Mass Holding I, Inc., 730 Minn.
Holding I, Inc., 730 MO Hotel Properties I, Inc., 730 Penn Hotel Properties
I, Inc. and 730 Mass. Hotel Properties I, Inc. and 730 Minn. Hotel
Properties I, Inc. are directly and directly owned by 730 Properties, Inc.
(3) All subsidiaries have as their sole purpose the ownership of
investments which could, pursuant to New York State Insurance Law, be owned by
TIAA itself, except the following:
3
<PAGE>
A) Teachers Advisors, Inc., which provides investment advice for the
Registrant.
B) Teachers Personal Investors Services, Inc., which provides broker-dealer
services for the Registrant and TIAA Separate Account VA-1.
C) TIAA-CREF Investment Management, Inc., which provides investment advice for
College Retirement Equities Fund.
D) TIAA-CREF Individual & Institutional Services, Inc., which provides
broker-dealer and administrative services for College Retirement Equities
Fund.
E) Reserve Management, Inc., which is intended to be used by TIAA as a vehicle
for short-term borrowing.
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
4
<PAGE>
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 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.
Item 28. Business and Other Connections of Investment Adviser
Teachers Advisors, Inc. (Advisors) also provides investment management
service to TIAA Separate Account VA-1. All officers of Advisors are also
officers of TIAA-CREF Investment Management, Inc. (Investment Management) and
are employees of TIAA. John
5
<PAGE>
Biggs is also a trustee of TIAA, CREF, TIAA-CREF Individual & Institutional
Services, Inc. ("Services") and Investment Management, and a director of
Teachers Personal Investor Services, Inc. ("TPIS"). He is Chief Executive
Officer of TIAA and CREF. Thomas W. Jones is a trustee of TIAA, CREF, Services
and Investment Management, and a director of TPIS. He is President of TIAA and
CREF. Martin L. Leibowitz is a trustee of TIAA, CREF and Investment Management.
He is Vice Chairman and Chief Investment Officer of CREF and TIAA. Charles Stamm
is a trustee of Investment Management and Services, and a director of TPIS. He
is General Counsel of CREF and TIAA. Richard Adamski is also Treasurer of TPIS
and Services. Richard Gibbs is also Executive Vice President of TPIS and
Services. The principal business address of Investment Management, Services and
TPIS is 730 Third Avenue, New York, NY 10017.
Mr. Biggs is also a director of Ralston Purina Company, Checkerboard Square, St.
Louis, Missouri 63164; and The Boeing Company, 7755 East Marginal Way South,
Seattle, Washington 98108. Thomas Jones is also a director of Thomas & Betts
Corporation, 1555 Lynnfield Road, Memphis, TN 38119; Federal Home Loan Mortgage
Corp., 8200 Jones Branch Drive, McLean, VA 22102; and Travelers Group, 388
Greenwich Street, New York, NY 10013.
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 on file with the Commission (File No. 8-47051), the text of
which is hereby incorporated by reference.
Item 30. Location of TIAA-CREF Mutual Funds Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder will be
maintained at the Registrant's home office, 730 Third Avenue, New York New York
10017, at other offices of the Registrant located at 750 Third Avenue and 485
Lexington Avenue, both in New York, New York 10017, and at the offices of the
Registrant's custodian, State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110. In addition, certain duplicated records are
maintained at Pierce Leahy Archives, 64 Leone Lane, Chester, New York 10918.
Item 31. Management Services
6
<PAGE>
State Street Bank and Trust Company, a Massachusetts trust company ("State
Street") will provide certain management-related services to the Registrant
pursuant to a Custodian Contract between the Registrant, State Street and
Teachers Advisors, Inc. ("Advisors"), the investment advisor to the Registrant.
Under the Custodian Contract, State Street will, among other things, act as
custodian of the assets of the portfolios of the Registrant, keep the
Registrant's books of account and compute the net asset value per share of the
outstanding shares of each of the Registrant's portfolios. These services will
be rendered pursuant to instructions received by State Street from Advisors or
the Registrant in the ordinary course of business.
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) Not Applicable.
7
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant, TIAA-CREF Mutual Funds, 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 4th day of August, 1997.
TIAA-CREF MUTUAL FUNDS
By: /s/ Lisa Snow
---------------------------------
Name Lisa Snow
Title Vice President and Secretary
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.
Signature Title Date
- --------- ----- ----
/s/ Thomas G. Walsh President August 4, 1997
------------------- (Principal Executive Officer)
Thomas G. Walsh
/s/ Virgil H. Cumming Executive Vice President August 4, 1997
------------------- (Principal Financial Officer)
/s/ Richard L. Gibbs Executive Vice President August 4, 1997
------------------- (Principal Accounting Officer)
8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE OF TRUSTEE DATE SIGNATURE OF TRUSTEE DATE
- -------------------- ---- -------------------- ----
<S> <C> <C> <C>
/s/ Robert H. Atwell August 4, 1997 /s/ Bevis Longstreth August 4, 1997
- ------------------------- -------------------------
Robert H. Atwell Bevis Longstreth
/s/ Elizabeth E. Bailey August 4, 1997 /s/ Robert M. Lovell, Jr. August 4, 1997
- ------------------------- -------------------------
Elizabeth E. Bailey Robert M. Lovell, Jr.
/s/ Stephen A. Ross August 4, 1997
- ------------------------- -------------------------
Gary P. Brinson Stephen A. Ross
/s/ Joyce A. Fescke August 4, 1997
- ------------------------- -------------------------
Joyce A. Fescke Eugene C. Sit
/s/ Edes P. Gilbert August 4, 1997 /s/ Maceo K. Sloan August 4, 1997
- ------------------------- -------------------------
Edes P. Gilbert Maceo K. Sloan
/s/ Stuart Tse Kong Ho August 4, 1997 /s/ Harry K. Spindler August 4, 1997
- ------------------------- -------------------------
Stuart Tse Kong Ho Harry K. Spindler
/s/ David K. Storrs August 4, 1997
- ------------------------- -------------------------
Nancy L. Jacob David K. Storrs
/s/ Marjorie Fine Knowles August 4, 1997 /s/ Robert W. Vishny August 4, 1997
- ------------------------- -------------------------
Marjorie Fine Knowles Robert W. Vishny
/s/ Jay O. Light August 4, 1997
- -------------------------
Jay O. Light
</TABLE>
9
<PAGE>
Exhibit Index
99.B1 Declaration of Trust, as amended
99.B5 Investment Management Agreement
99.B6a Distribution Agreement
99.B6b Selling Agreement, as amended
99.B8 Custodian Agreement
99B.9a Administration Agreement
99B.9b Transfer Agency Agreement
99.B13 Seed Money Agreement
10
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TIAA-CREF MUTUAL FUNDS
<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............................ 10
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...................................... 13
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............................................ 14
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....................................................... 15
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............................. 17
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..................................................... 17
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...... 19
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....................................................... 24
10.6.1. Generally............................................. 25
10.6.2. Certificate of Amendment.............................. 25
10.7. Governing Law.................................................... 25
10.8. Severability..................................................... 25
- iv -
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TIAA-CREF MUTUAL FUNDS
This DECLARATION OF TRUST, originally made on January 13, 1997, is amended
and restated as of this day, May 12, 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
FUNDS" 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;
<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, each of which shall have a par value of
One-Ten Thousandth of a Dollar ($0.0001) and all 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 Amended and Restated Declaration of Trust as of the date first
written above.
/s/ Peter C. Clapman, Trustee
-----------------------------------
Peter C. Clapman, Trustee
/s/ Lisa Snow, Trustee
-----------------------------------
Lisa Snow, Trustee
- 26 -
INVESTMENT MANAGEMENT AGREEMENT
FOR TIAA-CREF MUTUAL FUNDS
--------------------------
THIS AGREEMENT is made this 1st day of July, 1997, by and between TIAA-CREF
Mutual Funds (the "Fund"), a Delaware business trust, and Teachers Advisors,
Inc. ("Advisors"), a Delaware corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and currently consists of six series (known as the Growth & Income Fund, Money
Market Fund, International Equity Fund, Bond Plus Fund, Growth Equity Fund, and
Managed Allocation Fund) (the "Current Funds"), and may consist of additional
series in the future (collectively, with the Current Funds, the "Funds");
WHEREAS, Advisors is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Fund desires to retain Advisors to provide or to arrange to
provide overall management of the Fund and the Funds, including, but not limited
to, investment management, custody, transfer agency, dividend disbursing, legal,
accounting, and administrative services, in the manner and on the terms and
conditions set forth in this Agreement; and
WHEREAS, Advisors is willing to provide or to arrange to provide overall
management of the Fund and the Funds, including, but not limited to, investment
management, custody, transfer agency, dividend disbursing, legal, accounting,
and administrative services, in the manner and on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Fund and Advisors hereby agree as follows:
1. Duties of Advisors.
-------------------
(a) Generally.
(i) The Fund hereby engages Advisors to act as the Fund's general
manager to provide or to arrange to provide directly or through third parties,
investment management, custody, transfer agency, dividend disbursing, legal,
accounting, and administrative services to each Fund; and to provide or to
arrange to provide the above services subject to the supervision of the board of
trustees of the Fund (the "Board"), for the period and on the terms and
conditions set forth in this Agreement. Advisors hereby accepts such engagement
and agrees during such period, at its own expense, to provide or to arrange to
provide such investment advisory and general management services and to assume
the obligations set forth in this Agreement for the compensation provided for
herein.
<PAGE>
(ii) Subject to the provisions of the 1940 Act and the Advisers
Act, Advisors may retain any affiliated or unaffiliated parties including, but
not limited to, investment adviser(s) and/or investment sub-adviser(s),
custodian(s), transfer agent(s), dividend-disbursing agent(s), attorney(s), and
accountant(s) to perform any or all of the services set forth in this Agreement
(any such party is hereafter referred to as a "Service Provider"). Advisors
shall provide the Fund with reasonable notice of its intention to retain each
such Service Provider and shall not retain a Service Provider if, within 10 days
after Advisors provides such notice to the Fund with respect to such Service
Provider, the Fund notifies Advisors of its disapproval of such Service
Provider.
(iii) Advisors and each Service Provider shall, for all purposes
herein, be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Fund or a Fund in any way or otherwise be deemed an agent of the Fund or a Fund.
(iv) Advisors shall, for purposes of this Agreement, have and
exercise full investment discretion and authority to act as agent for the Fund
in buying, selling or otherwise disposing of or managing the Fund's investments,
directly or through sub-advisers, subject to supervision by the Board.
(v) Advisors and each Service Provider shall be subject to: (1)
the restrictions of the Declaration of Trust and Bylaws of the Fund, as amended
from time to time; (2) the provisions of the 1940 Act and the Advisers Act; (3)
the statements relating to the Funds' investment objectives, investment policies
and investment restrictions as set forth in the currently effective (and as
amended from time to time) registration statement of the Fund (the "registration
statement") under the Securities Act of 1933, as amended (the "1933 Act") and
the 1940 Act; and (4) any applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code").
(b) Investment Advisory Services.
(i) Advisors shall provide the Fund directly or through
sub-advisers with such investment research, advice and supervision as the Fund
may from time to time consider necessary for the proper management of the assets
of each Fund, shall furnish continuously an investment program for each Fund,
shall determine which securities or other investments shall be purchased, sold
or exchanged and what portions of each Fund shall be held in the various
securities or other investments or cash, and shall take such steps as are
necessary to implement an overall investment plan for each Fund, including
providing or obtaining such services as may be necessary in managing, acquiring
or disposing of securities, cash or other investments.
(ii) The Fund has furnished or will furnish Advisors (who is
authorized to furnish any Service Provider) with copies of the Fund's
registration statement, Declaration of Trust, and Bylaws as currently in effect
and agrees during the continuance of this Agreement
-2-
<PAGE>
to furnish Advisors with copies of any amendments or supplements thereto before
or at the time the amendments or supplements become effective. Advisors and each
Service Provider will be entitled to rely on all documents furnished by the
Fund.
(iii) Advisors shall take, on behalf of each Fund, all actions
which it deems necessary to implement the investment policies of such Fund, and
in particular, to place all orders for the purchase or sale of portfolio
investments for the account of each Fund with brokers, dealers, futures
commission merchants or banks selected by Advisors. Advisors also is authorized
as the agent of the Fund to give instructions to any Service Provider serving as
custodian of the Fund as to deliveries of securities and payments of cash for
the account of each Fund. In selecting brokers or dealers and placing purchase
and sale orders with respect to assets of a Fund, Advisors is directed at all
times to seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the current registration statement.
Subject to this requirement and the provisions of the 1940 Act, the Advisers
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and other
applicable provisions of law, Advisors may select brokers or dealers that are
affiliated with Advisors or the Fund.
(iv) In addition to seeking the best price and execution,
Advisors may also take into consideration research and statistical information,
wire, quotation and other services provided by brokers and dealers to Advisors.
Advisors is also authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if
Advisors determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage, research and other services provided
by such broker or dealer, viewed in terms of either that particular transaction
or Advisors's overall responsibilities with respect to each Fund. The policies
with respect to brokerage allocation, determined from time to time by the Board
are those disclosed in the currently effective registration statement. The
execution of such transactions shall not be deemed to represent an unlawful act
or breach of any duty created by this Agreement or otherwise. Advisors will
periodically evaluate the statistical data, research and other investment
services provided to it by brokers and dealers. Such services may be used by
Advisors in connection with the performance of its obligations under this
Agreement or in connection with other advisory or investment operations
including using such information in managing its own accounts.
(v) As part of carrying out its obligations to manage the
investment and reinvestment of the assets of each Fund consistent with the
requirements under the 1940 Act, Advisors shall:
(1) Perform research and obtain and analyze pertinent
economic, statistical, and financial data relevant to
the investment policies of each Fund as set forth in
the Fund's registration statement;
(2) Consult with the Board and furnish to the Board
recommendations with respect to an overall investment
-3-
<PAGE>
strategy for each Fund for approval, modification, or
rejection by the Board;
(3) Seek out and implement specific investment
opportunities, consistent with any investment
strategies approved by the Board;
(4) Take such steps as are necessary to implement any
overall investment strategies approved by the Board for
each Fund, including making and carrying out day-to-day
decisions to acquire or dispose of permissible
investments, managing investments and any other
property of the Fund, and providing or obtaining such
services as may be necessary in managing, acquiring or
disposing of investments;
(5) Regularly report to the Board with respect to the
implementation of any approved overall investment
strategy and any other activities in connection with
management of the assets of each Fund;
(6) Maintain all required accounts, records, memoranda,
instructions or authorizations relating to the
acquisition or disposition of investments for each Fund
and the Fund;
(7) Furnish any personnel, office space, equipment and
other facilities necessary for the operation of each
Fund as contemplated in this Agreement;
(8) Provide the Fund with such accounting or other data
concerning the Fund's investment activities as shall be
necessary or required to prepare and to file all
periodic financial reports or other documents required
to be filed with the Securities and Exchange Commission
and any other regulatory entity;
(9) Assist in determining each business day the net asset
value of the shares of each Fund in accordance with
applicable law; and
(10) Enter into any written investment advisory or
investment sub-advisory contract with another
affiliated or unaffiliated party, subject to any
approvals required by Section 15 of the 1940 Act,
pursuant to which such party will carry out some or all
of Advisors's responsibilities (as specified in
-4-
<PAGE>
such investment advisory or investment sub-advisory
contract) listed above.
(c) General Management Services. Advisors shall provide or arrange to
provide all custody, transfer agency, dividend disbursing, legal, accounting,
and administrative services necessary for the operation of the Fund, including,
without limitation, the following services:
(i) Custody services including, but not limited to:
(1) placing and maintaining each Fund's securities, cash or
other investments pursuant to the requirements of
Section 17(f) of the 1940 Act and the rules thereunder;
(2) holding and segregating for the Fund's account, all of
the Fund's assets, including securities that the Fund
desires to be held in places within the United States
("domestic securities") or in places outside the United
States ("foreign securities");
(3) releasing and delivering domestic securities owned by
the Fund only upon receipt of instructions from persons
and by means authorized by the Board;
(4) assuring that all domestic securities held are
registered in the name of the Fund or in the name of
any nominee of the Fund or of any nominee of Advisors
or any Service Provider acting as custodian which
nominee shall be assigned exclusively to the Fund,
unless the Fund has provided written authorization to
use a nominee not meeting the above requirement;
(5) maintaining a separate bank account(s) in the United
States in the name of the Fund, and holding all cash
received by it from or for the account of the Fund in
such account;
(6) collecting on a timely basis all income and other
payments with respect to securities to which the Fund
shall be entitled either by law or pursuant to custom
in the securities business;
(7) paying out monies of the Fund upon receipt of
instructions from persons and by means authorized by
the Board;
-5-
<PAGE>
(8) appointing or removing, in its discretion, any other
entity qualified under the 1940 Act to act as a
custodian, as its agent to carry out any custody duties
so long as such other entity is approved by the Board;
(9) employing, in the discretion of Advisors or a Service
Provider employed by Advisors, other parties as
sub-custodians for the Fund's domestic securities or
foreign securities. With respect to the Fund's foreign
securities, such employment shall be effected and such
foreign securities shall be maintained in accordance
with the provisions of Rule 17f-5 under the 1940 Act,
as such provisions may be amended from time to time,
provided that Advisors or a Service Provider employed
by Advisors shall furnish annually to the Fund,
information concerning the Service Provider or
sub-custodians employed by Advisors or other Service
Provider;
(10) creating and maintaining all records relating to its
activities and obligations under any contract relating
to the Fund or a Fund thereof in accordance with the
provisions of Section 31 of the 1940 Act and Rules
31a-1 and 31a-2 under the 1940 Act. Such records shall
be the property of the Fund and shall at all times
during the regular business hours of Advisors (or
separate Service Provider acting as custodian) be open
for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the
Securities and Exchange Commission; and
(11) performing or arranging for the performance of any
other usual duties and functions of a custodian for a
registered investment company;
(ii) Transfer agency services, including, but not limited to:
(1) receiving for acceptance, orders for the purchase of
Fund shares, and promptly delivering payment and
appropriate documentation thereof to Advisors or any
Service Provider acting as custodian;
(2) issuing, pursuant to purchase orders, the appropriate
number of the Fund's shares and holding such shares in
the appropriate account;
-6-
<PAGE>
(3) receiving for acceptance redemption requests and
redemption directions and delivering the appropriate
documentation to Advisors or any Service Provider
acting as custodian;
(4) effecting transfers of Fund shares by the registered
owners thereof upon receipt of appropriate
instructions;
(5) preparing and transmitting payments for dividends and
distributions declared by the Fund;
(6) maintaining records of accounts for shareholders and
advising the Fund and its shareholders as to the
foregoing;
(7) handling shareholder relations, and providing reports
and other information and services related to the
maintenance of shareholder accounts;
(8) recording the issuance of shares of the Fund and
maintaining pursuant to Rule 17Ad-10(e) under the 1934
Act a record of the total number of shares of the Fund
that are authorized, based upon data provided by the
Fund, and issued and outstanding; and
(9) performing or arranging for the performance of any
other customary services of a transfer agent or
dividend-disbursing agent for a registered investment
company;
(iii) The calculation of the net asset value of each Fund and the
net asset value per share of each class of shares at such times and in such
manner as specified in the Fund's current registration statement and at such
other times upon which the parties hereto may from time to time agree;
(iv) The creation and maintenance of such records relating to the
business of the Fund as the Fund may from time to time reasonably request;
(v) Portfolio accounting services to maintain the portfolio
accounting records for each Fund;
(vi) The preparation of all federal, state, and local tax
returns and reports relating to each Fund;
(vii) The preparation, filing and arranging for the distribution
of proxy materials and periodic reports to shareholders of each Fund;
-7-
<PAGE>
(viii) The preparation and filing of the Fund's registration
statements and other documents with the Securities and Exchange Commission and
other federal and state regulatory authorities as may be required by applicable
law;
(xiv) The preparation and filing of state registrations of the
Fund's shares; and
(x) Other services for the ordinary operation of the Fund.
Advisors may contract with qualified Service Providers for the provision of any
of the services necessary for the operation of the Fund as described in this
Section (c). Where Advisors engages separate Service Providers, Advisors shall
also, on behalf of the Fund, coordinate the activities of such Service
Providers, as well as other agents, attorneys, brokers and dealers, insurers,
sub-advisers and such other persons in any such other capacity deemed to be
necessary or desirable. Advisors shall make reports to the Board of its
performance hereunder and shall furnish advice and recommendations with respect
to such other aspects of the business and affairs of the Fund as the Board or
Advisors shall consider desirable.
2. Allocation of Charges and Expenses.
-----------------------------------
(a) Advisors.
---------
(i) Advisors assumes the expense of and shall pay for maintaining
the staff and personnel necessary to perform its obligations under this
Agreement, and shall at its own expense provide the office space, equipment and
facilities that it is obligated to provide under this Agreement, and shall pay
all compensation of officers of the Fund and all trustees of the Fund who are
affiliated persons of Advisors, except as otherwise specified in this Agreement.
(ii) Except for those expenses assumed by the Fund as provided in
Section 2(b) below, Advisors shall bear all of the Fund's expenses including,
but not limited to: custodian fees; transfer agent fees; pricing costs
(including the daily calculation of net asset value); portfolio accounting
service fees; ordinary legal fees (except extraordinary litigation expenses);
expenses of shareholders' and/or trustees' meetings; bookkeeping expenses
related to shareholder accounts; cost of printing and mailing shareholder
reports and proxy statements; costs of printing and mailing registration
statements and updated prospectuses to current shareholders; costs in connection
with the registration of the Fund's shares with federal and state securities
authorities and the continued qualification of the Fund's shares for sale;
expenses of all audits by the Fund's independent accountants, costs of filing
reports with regulatory bodies; costs of the maintenance of the Fund's fidelity
bond required by Section 17(g) of the 1940 Act, or other insurance premiums; and
the fees of any trade association of which the Fund is a member.
(iii) Advisors agrees that neither it nor any Service Provider
will make any separate charge to any shareholder or his individual account for
any services rendered to
-8-
<PAGE>
said shareholder or the Fund unless such charge for special services is
specifically approved by the Board including a majority of the directors who are
not "interested persons" (as such term is defined in the 1940 Act) of Advisors.
No special charge will be levied retroactively or without appropriate notice to
affected shareholders.
(b) The Fund. The Fund assumes and shall pay or cause to be paid the
following expenses of the Fund, including, without limitation: compensation of
Advisors under this Agreement; fees and expenses of trustees who are not
"interested persons" (as such term is defined in the 1940 Act) of the Fund (the
"disinterested trustees"); brokerage commissions, dealer markups and other
expenses incurred in the acquisition or disposition of any securities or other
investments; costs, including the interest expense, of borrowing money; taxes;
and extraordinary expenses (including extraordinary litigation expenses and
extraordinary consulting expenses).
3. Compensation of Advisors.
(a) For the services rendered, the facilities furnished and expenses
assumed by Advisors, the Fund shall pay to Advisors at the end of each calendar
month a fee calculated as a percentage of the average value of the net assets
each day for each Fund during that month at the following annual rates:
Growth & Income Fund........................................ 0.93%
Money Market Fund........................................... 0.79%
International Equity Fund................................... 0.99%
Bond Plus Fund.............................................. 0.80%
Growth Equity Fund.......................................... 0.95%
Managed Allocation Fund..................................... 0.00%
Advisors acknowledges that it shall render the same services to the Managed
Allocation Fund that it renders to all other Funds, notwithstanding that it may
not receive an advisory fee for such services.
(b) Advisors's fee shall be accrued daily proportionately at 1/365th
(1/366th for a leap year) of the applicable annual rate set forth above. For the
purpose of accruing compensation, the net assets of each Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of the Fund and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined.
-9-
<PAGE>
(c) In the event of termination of this Agreement, all compensation
due through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within fifteen business days of the
date of termination.
(d) During any period when the determination of net asset value is
suspended, the net asset value of a Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
4. Limitation of Liability of Advisors. Advisors shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the management of the Fund, except for
(i) willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
hereunder, and (ii) to the extent specified in section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation.
5. Activities of Advisors.
(a) The services of Advisors are not deemed to be exclusive, and
Advisors is free to render services to others, so long as Advisors's services
under this Agreement are not impaired. It is understood that trustees, officers,
employees and shareholders of the Fund are or may become interested persons of
Advisors, as directors, officers, employees and shareholders or otherwise, and
that directors, officers, employees and shareholders of Advisors are or may
become similarly interested persons of the Fund, and that Advisors may become
interested in the Fund as a shareholder or otherwise.
(b) It is agreed that Advisors may use any supplemental investment
research obtained for the benefit of the Fund in providing investment advice to
its other investment advisory accounts. Advisors or its affiliates may use such
information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for Advisors or other entities
advised by Advisors will be considered by and may be useful to Advisors in
carrying out its obligations to the Fund.
(c) Nothing in this Agreement shall preclude the aggregation of
orders for the sale or purchase of securities or other investments by two or
more Funds of the Fund or by the Fund and other mutual funds, separate accounts,
or other accounts (collectively, "Advisory Clients") managed by Advisors,
provided that:
(i) Advisors' actions with respect to the aggregation of orders
for multiple Advisory Clients, including the Fund, are consistent with the
then-current positions in this regard taken by the Securities and Exchange
Commission or its staff through releases, "no-action" letters, or otherwise; and
-10-
<PAGE>
(ii) Advisors' policies with respect to the aggregation of orders
for multiple Advisory Clients have been previously submitted and approved by the
Board of Trustees of the Fund.
Neither Advisors, nor any of its directors, officers, or personnel, nor any
person, firm, or corporation controlling, controlled by, or under common control
with it shall act as a principal or receive any commission as agent in
connection with the purchase or sale of assets for a Fund, except as may be
permitted under applicable law.
6. Books and Records.
(a) Advisors hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 and Rule 2a-7 under the 1940 Act, all
records relating to the Fund's investments that are required to be maintained by
the Fund pursuant to the requirements of Rule 31a-1 and Rule 2a-7 of the 1940
Act.
(b) Advisors agrees that all books and records which it or any other
Service Provider maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund any such books, records or information
upon the Fund's request. All such books and records shall be made available,
within five business days of a written request, to the Fund's accountants or
auditors during regular business hours at Advisors's offices. The Fund or its
authorized representative shall have the right to copy any records in the
possession of Advisors or a Service Provider that pertain to the Fund. Such
books, records, information or reports shall be made available to properly
authorized government representatives consistent with state and federal law
and/or regulations. In the event of the termination of this Agreement, all such
books, records or other information shall be returned to the Fund free from any
claim or assertion of rights by Advisors.
(c) Advisors further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if the Fund has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
7. Duration and Termination of this Agreement.
(a) This Agreement shall not become effective unless and until it is
approved by the Board, including a majority of trustees who are not parties to
this Agreement or interested persons of any such party, and by the vote of a
majority of the outstanding voting shares of each Fund. This Agreement shall
come into full force and effect on the date which it is so approved, provided
that it shall not become effective as to any subsequently created Fund until it
has been approved by the Board specifically for such Fund. As to each Fund, the
Agreement shall continue in effect for two years from the date on which it
becomes effective and shall thereafter continue in effect from year to year so
long as such continuance is specifically approved for such
-11-
<PAGE>
Fund at least annually by: (i) the Board, or by the vote of a majority of the
outstanding votes attributable to the shares of such Fund; and (ii) a majority
of those trustees who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated at any time as to any Fund or to
all Funds, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding votes attributable to the shares of the applicable
Fund, or by Advisors, on 60 days written notice to the other party. If this
Agreement is terminated only with respect to one or more, but less than all, of
the Funds, or if a different adviser is appointed with respect to a new Fund,
the Agreement shall remain in effect with respect to the remaining Fund(s).
(c) This Agreement shall automatically terminate in the event of its
assignment.
8. Amendments of this Agreement. This Agreement may be amended as to each
Fund by the parties only if such amendment is specifically approved by (i) the
vote of a majority of outstanding votes attributable to the shares of the Fund,
and (ii) a majority of those trustees who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
9. Definitions of Certain Terms. The terms "assignment," "affiliated
person," and "interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act. The term "majority of the
outstanding votes" attributable to the shares of a Fund means the lesser of (a)
67% or more of the votes attributable to such Fund present at a meeting if the
holders of more than 50% of such votes are present or represented by proxy, or
(b) more than 50% of the votes attributable to shares of the Fund.
10. Governing Law. This Agreement shall be construed in accordance with
laws of the State of New York, and applicable provisions of the 1940 Act, the
Advisers Act, and the 1934 Act.
11. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
-12-
<PAGE>
13. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand or mailed first class,
postage prepaid, addressed as follows:
(a) If to the Fund -
TIAA-CREF Mutual Funds
730 Third Avenue
New York, New York 10017-3206
Attention: Thomas Walsh
------------------
(b) If to Advisors -
Teachers Advisors, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Virgil Cumming
------------------
or to such other address as the Fund or Advisors shall designate by written
notice to the other.
14. No Liability of Shareholders. This Agreement is executed by the
Trustees of the Fund, not individually, but rather in their capacity as Trustees
under the Declaration of Trust made January 13, 1997, as amended. None of the
shareholders of the Fund, Trustees, officers, employees, or agents of the Fund
shall be personally bound or liable under this Agreement, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder but only to the property of the Fund and, if the obligation or claim
relates to the property held by the Fund for the benefit of one or more but
fewer than all Funds, then only to the property held for the benefit of the
affected Fund.
15. Miscellaneous. Captions in this Agreement are included for convenience
or reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
-13-
<PAGE>
IN WITNESS WHEREOF, the Fund and Advisors have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers on the day and year first above written.
TIAA-CREF MUTUAL FUNDS
By: /s/ Thomas G. Walsh Attest: /s/ Laura Bramson
---------------------------- ----------------------
Title: President Title: Assistant Secretary
------------------------ ----------------------
TEACHERS ADVISORS, INC.
By: /s/ Virgil H. Cumming Attest: /s/ Laura Bramson
---------------------------- ----------------------
Title: Executive Vice President Title: Assistant Secretary
------------------------ ----------------------
-14-
DISTRIBUTION AGREEMENT
FOR TIAA-CREF MUTUAL FUNDS
--------------------------
THIS AGREEMENT is made this 1st day of July, 1997, by and between
TIAA-CREF Mutual Funds (the "Fund"), a Delaware business trust, and Teachers
Personal Investor Services, Inc. ("TPIS"), a Delaware corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and currently consists of six series (known as the Growth & Income Fund, Money
Market Fund, International Equity Fund, Bond Plus Fund, Growth Equity Fund, and
Managed Allocation Fund), and may consist of additional series in the future
(collectively, the "Funds");
WHEREAS, TPIS is engaged principally in the business of distributing
variable insurance products and investment company shares, and is registered as
a broker-dealer under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and is a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, the Fund has registered its shares of beneficial interest (the
"Shares") under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to retain TPIS to distribute the Shares and TPIS
is willing to distribute the Shares in the manner and on the terms set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Fund and TPIS hereby agree as follows:
1. Distribution of the Shares.
(a) Right to Sell Shares. The Fund hereby grants to TPIS the
right, subject to the requirements of the 1933 Act, the 1934 Act, and the 1940
Act, and the terms set forth herein, to distribute the Shares during the term of
this Agreement. The rights granted to TPIS shall be nonexclusive in that the
Fund reserves the right to sell its Shares to investors pursuant to applications
received and accepted by the Fund or its transfer agent. Further, the Fund
reserves the right to issue Shares in connection with the merger or
consolidation of any other investment company, trust or personal holding company
with the Fund or the Fund's acquisition by the purchase or otherwise, of all or
substantially all of the assets of an investment company, trust or personal
holding company. Any right granted to TPIS to accept orders for Shares, or to
make sales on behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or consolidation of any
other investment company with the Fund or its acquisition by purchase or
otherwise, of all or substantially all of the assets of any investment company,
trust or personal holding company, or substantially all of the outstanding
shares or interests of any such entity, and such right shall not apply to Shares
that may be offered by the Fund to shareholders by virtue of their being
shareholders of the Fund.
<PAGE>
TPIS is hereby authorized to enter into written sales or service
agreements, on such terms and conditions as TPIS may determine are not
inconsistent with this Agreement, with broker-dealers that are registered as
such under the 1934 Act and are members of the NASD and agree to participate in
the distribution of the Shares.
(b) Registration; Compliance with NASD. To the extent necessary to
offer and sell the Shares, TPIS shall be duly registered or otherwise qualified
under the securities laws of any state or other jurisdiction in which such
Shares may lawfully be sold and in which TPIS is licensed or otherwise
authorized to sell the Shares. TPIS shall be responsible for the training,
supervision and control of its registered representatives for the purpose of the
NASD Rules of Fair Practice and federal and state securities law requirements
applicable in connection with the offering and sale of the Shares. In this
connection, TPIS shall retain written supervisory procedures in compliance with
Conduct Rule 3010 of the NASD Rules of the Association.
(c) Fund Documents. TPIS agrees to offer the Shares for sale in
accordance with the then-current prospectus and statement of additional
information ("SAI") therefor filed with the Securities and Exchange Commission
(the "Commission"). The Fund shall furnish TPIS with copies of all prospectuses,
SAIs, financial statements and other documents which TPIS reasonably requires
for use in connection with the distribution of the Shares. TPIS will be entitled
to rely on all documentation and information furnished to it by the Fund's
management.
(d) Offering Price. All Shares sold by TPIS pursuant to this
Agreement shall be sold at the net asset value per share, as determined in the
manner provided in the Fund's Declaration of Trust in effect at the time of such
determination (and as reflected in the Fund's then-current prospectus), next
determined after the order is accepted by TPIS.
(e) Suspension of Sales. If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no further
orders for Shares shall be accepted by TPIS except unconditional orders placed
with TPIS before it had knowledge of the suspension. In addition, the Fund
reserves the right to suspend sales and TPIS's authority to accept orders for
Shares on behalf of the Fund if, in the judgment of the Board of Trustees of the
Fund (the "Board"), it is in the best interests of the Fund to do so, such
suspension to continue for such period as may be determined by the Board; and in
that event, no orders to purchase Shares shall be processed or accepted by TPIS
on behalf of the Fund while such suspension remains in effect except for Shares
necessary to cover unconditional orders accepted by TPIS before it had knowledge
of the suspension, unless otherwise directed by the Board.
2. Books and Records
(a) The Fund and TPIS shall cause to be maintained and preserved
all books of account and related financial records as are required by the 1934
Act, the NASD,
2
<PAGE>
and any other applicable laws and regulations. All the books and records
maintained by the Fund (on behalf of TPIS), or by any person on behalf of the
Fund, in connection with the offer and sale of the Shares shall be maintained
and preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under
the 1934 Act or the corresponding provisions of any future federal securities
laws or regulations. All such books and records shall be maintained and held by
the Fund or by any person on behalf of the Fund on behalf of and as agent for
TPIS, whose property they are and shall remain. Such books and records shall be
at all times subject to inspection by the Commission in accordance with Section
17(a) of the 1934 Act.
(b) TPIS shall have the responsibility for maintaining the records
of sales representatives licensed, registered and otherwise qualified to sell
the Shares.
3. Reports. TPIS shall cause the Fund to be furnished with such reports
as either or both may reasonably request for the purpose of meeting reporting
and record keeping requirements under the laws of the State of New York and any
other applicable states or jurisdictions.
4. Expenses.
(a) TPIS shall be responsible for all expenses relating to the
distribution of the Shares, including but not limited to:
(i) the costs and expenses of providing the necessary
facilities, personnel, office equipment and supplies, telephone service, and
other utility service necessary to carry out its obligations hereunder;
(ii) charges and expenses of outside legal counsel retained
with respect to activities related to the distribution of the Shares;
(iii) the costs and expenses of printing and delivery of
definitive prospectuses and statements of additional information and any
supplements thereto for prospective purchasers;
(iv) expenses incurred in connection with TPIS's registration
as a broker or dealer or in the registration or qualification of its officers,
directors or representatives under federal and state securities laws;
(v) the costs of promotional, sales and advertising
material; and
(vi) any other expenses incurred by TPIS or its
representatives in connection with performing the obligations of TPIS under this
Agreement.
3
<PAGE>
5. Non-Exclusivity; Authorized Representations.
(a) The Fund agrees that the services to be provided by TPIS
hereunder are not to be deemed exclusive and TPIS is free to act as distributor
of other variable insurance products or investment company shares issued by the
Fund or any entity affiliated therewith. TPIS shall, for all purposes herein, be
deemed to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund other than in furtherance of its duties
and responsibilities as set forth in this Agreement.
(b) The Fund is not authorized by TPIS to give, on behalf of TPIS,
any information or to make any representations other than the information and
representations contained in a registration statement or prospectus filed with
the Commission under the 1933 Act and/or the 1940 Act covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time. TPIS is not authorized by the Fund to give on behalf of the Fund any
information or to make any representations in connection with the sale of Shares
other than the information and representations contained in a registration
statement or prospectus filed with the Commission under the 1933 Act and/or the
1940 Act covering Shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or contained in shareholder reports
or other material that may be prepared by or on behalf of the Fund for TPIS's
use. This shall not be construed to prevent TPIS from preparing and distributing
tombstone advertisements and sales literature or other material as it may deem
appropriate. No person other than TPIS is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Fund.
6. Liability. TPIS will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates. Nothing herein contained shall be
construed to protect TPIS against any liability resulting from the willful
misfeasance, bad faith, or gross negligence of TPIS in the performance of its
obligations and duties or from reckless disregard of its obligations and duties
under this Agreement or by virtue of violation of any applicable law.
7. Regulation.
(a) This Agreement shall be subject to the provisions of the 1940
Act, the 1934 Act and the rules, regulation, and rulings thereunder, and of the
NASD, as in effect from time to time, including such exemptions and other relief
as the Commission, its staff, or the NASD may grant, and the terms hereof shall
be interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transactions exempted from Section 15(b)(2) of the 1940 Act.
(b) TPIS shall submit to all regulatory and administrative bodies
having jurisdiction over the present and future operations of the Fund, any
information, reports or other material which any such body by reason of this
Agreement may request or require
4
<PAGE>
pursuant to applicable laws or regulations. Without limiting the generality of
the foregoing, TPIS shall furnish the Commission and/or the Secretary of State
for the State of New York with any information or reports which the Commission
and/or the Secretary of State may request in order to ascertain whether the
operations of the Fund are being conducted in a manner consistent with
applicable laws or regulations.
8. Investigation and Proceedings.
(a) The Fund and TPIS agree to cooperate fully in any regulatory
inspection, inquiry, investigation, or proceeding or any judicial proceeding
with respect to the Fund or TPIS, their affiliates and their representatives to
the extent that such inspection, inquiry, investigation or proceeding is in
connection with the Shares distributed under this Agreement.
(b) In the case of a customer complaint, the Fund and TPIS will
cooperate in investigating such complaint and shall arrive at a mutually
satisfactory response.
9. Duration and Termination of the Agreement.
(a) This Agreement shall become effective with respect to the
Shares as of the date first written above. It shall become effective as to any
subsequently offered Shares when it has been approved by the Board (including a
majority of members thereof who are not parties to this Agreement nor interested
persons of any such parties) specifically for such Shares. "Subsequently offered
Shares" means Shares issued subsequent to the initial effective date of this
Agreement.
(b) This Agreement shall continue in effect for two years from the
date of its execution and thereafter from year to year, but only so long as such
continuance is specifically approved at least annually by (i) the Board, or by
the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a vote of a majority of those members of the Board who are not parties to
this Agreement nor interested persons of any such parties, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated, without the payment of any
penalty, by the Fund or TPIS on sixty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its assignment.
(d) Upon termination of this Agreement, all authorizations, rights
and obligations shall cease except the obligation to settle accounts hereunder
and the agreements contained in paragraph 8 hereunder.
10. Definitions. The terms "assignment," "interested person," and
"majority of the outstanding voting securities," when used in this Agreement,
shall have the respective meanings specified under the 1940 Act and rules
thereunder.
5
<PAGE>
11. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
12. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New York, as at the
time in effect, and the applicable provisions of the 1940 Act and rules
thereunder or other federal laws and regulations which may be applicable. To the
extent that the applicable law of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act and
rules thereunder or other federal laws and regulations which may be applicable,
the latter shall control.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
14. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand or mailed first class,
postage prepaid, addressed as follows:
(a) If to the Fund -
TIAA-CREF Mutual Funds
730 Third Avenue
New York, New York 10017-3206
Attention: Thomas Walsh
----------------
(b) If to TPIS -
Teachers Personal Investors Services, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Ronald McPhee
-----------------
or to such other address as the Fund or TPIS shall designate by written notice
to the other.
15. No Liability of Shareholders. This Agreement is executed by the
Trustees of the Fund, not individually, but rather in their capacity as Trustees
under the Declaration of Trust made January 13, 1997, as amended. None of the
shareholders of the Fund, Trustees, officers, employees, or agents of the Fund
shall be personally bound or liable under this Agreement, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder but only to the property of the Fund and, if the obligation or claim
relates to the property held by the Fund for the benefit of one or more but
fewer than all Funds, then only to the property held for the benefit of the
affected Fund.
6
<PAGE>
16. Miscellaneous. Captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Fund and TPIS have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officer on the day and year first above written.
TIAA-CREF MUTUAL FUNDS
By: /s/ Thomas G. Walsh Attest: /s/ Lisa Snow
------------------------ -------------------
Title: President Title: Secretary
--------------------- -------------------
TEACHERS PERSONAL INVESTORS SERVICES, INC.
By: /s/ Ronald P. McPhee Attest: /s/ Laura Bramson
------------------------ -------------------
Title: Senior Vice President Title: Assistant Secretary
--------------------- -------------------
SELLING AGREEMENT
FOR THE CONTRACTS FUNDED BY
TIAA SEPARATE ACCOUNT VA-1
--------------------------
THIS AGREEMENT made this 31st day of May, 1995, by and between Teachers
Personal Investors Services, Inc. ("TPIS"), a Delaware corporation, and
TIAA-CREF Individual & Institutional Services, Inc. ("T-C Services"), a Delaware
nonprofit corporation.
WITNESSETH:
WHEREAS, TPIS has entered into an agreement with Teachers Insurance and
Annuity Association of America ("TIAA") and TIAA Separate Account VA-1 (the
"Separate Account"), pursuant to which it serves as the distributor of the
Teachers Personal Annuity, an individual flexible premium deferred annuity
funded by the Separate Account (the "Contracts"); and
WHEREAS, TPIS proposes to have T-C Services sell, and T-C Services is
willing to sell, the Contracts; and
WHEREAS, each of TPIS and T-C Services is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and each
is a member of the National Association of Securities Dealers, Inc. ("NASD").
NOW, THEREFORE, TPIS and T-C Services hereby mutually agree as follows:
<PAGE>
1. Appointment of T-C Services
(a) TPIS hereby appoints T-C Services to distribute the Contracts,
subject to the requirements of the Securities Act of 1933 (the "1933 Act"), the
1934 Act and the Investment Company Act of 1940 (the "1940 Act") during the term
of this Agreement. T-C Services agrees to distribute the Contracts and to advise
owners of Contracts in connection therewith, in each case subject to the
direction of and any limitation imposed by TPIS.
(b) To the extent necessary to offer the Contracts, T-C Services
shall be duly registered or otherwise qualified under the securities laws of any
state or other jurisdiction. The sales representatives of T-C Services shall be
duly and appropriately licensed, registered or otherwise qualified for the sale
of such Contracts under the federal securities laws, any applicable state
insurance laws and securities laws of each state or other jurisdiction in which
such Contracts may lawfully be sold and in which T-C Services is licensed or
otherwise authorized to sell the Contracts. T-C Services shall be responsible
for the training, supervision and control of its registered representatives for
the purpose of the NASD Rules of Fair Practice and federal and state securities
law requirements applicable in connection with the offering and sale of the
Contracts.
- 2 -
<PAGE>
(c) T-C Services agrees to offer the Contracts for sale in
accordance with the then-current prospectus and statement of additional
information ("SAI") therefor filed with the Securities and Exchange Commission
(the "Commission").
(d) TPIS shall be responsible for furnishing T-C Services with
copies of all prospectuses, SAIs, financial statements and other documents which
T-C Services reasonably requires for use in connection with the distribution of
the Contracts. T-C Services will be entitled to rely on all documentation and
information furnished to it by TPIS.
2. Books and Records
(a) T-C Services shall cause to be maintained and preserved all
required books of account and related financial records as are required by the
1934 Act, the NASD and any other applicable laws and regulations in connection
with its distribution of the Contracts. All such books and records maintained by
or on behalf of T-C Services shall be maintained and preserved in conformity
with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act or the
corresponding provisions of any future federal securities laws or regulations,
to the extent that such requirements are applicable to the Contracts operations.
Such books and records shall be at all times subject to inspection by the
Commission in accordance with Section 17(a)
- 3 -
<PAGE>
of the 1934 Act.
(b) T-C Services shall have the responsibility for maintaining the
records of sales representatives licensed, registered and otherwise qualified to
sell the Contracts.
3. Reports
T-C Services shall cause TIAA and/or the Separate Account to be furnished
with such reports as either or both may reasonably request for the purpose of
meeting reporting and recordkeeping requirements under the insurance laws of the
State of New York and any other applicable states or jurisdictions.
4. Staff, Facilities, and Services
T-C Services shall be responsible for the maintenance of staff, facilities
and services necessary to meet its obligations hereunder in connection with the
distribution of the Contracts.
5. Expenses and Reimbursement
(a) T-C Services shall be responsible for all expenses relating to
its activities in connection with the distribution of the Contracts pursuant to
the terms of this Agreement.
- 4 -
<PAGE>
(b) TPIS shall reimburse T-C Services for those expenses T-C
Services incurs solely in connection with its distribution of the Contracts
pursuant to this Agreement. Reimbursement shall be made quarterly by means of a
single payment made within 30 days following the end of each quarter. These
expenses include, but are not limited to expenses incurred in connection with
T-C Services' registration as a broker or dealer or in the registration or
qualification of its officers, trustees or representatives under federal and
state securities laws.
6. Non-Exclusivity
TPIS understands and agrees that the services to be provided by T-C
Services hereunder are not to be deemed exclusive and T-C Services is free to
act as distributor of other variable insurance products or investment company
shares issued by TIAA, the College Retirement Equities Fund, or any entity
affiliated therewith. T-C Services shall, for all purposes herein, be deemed to
be an independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent TPIS in any way or otherwise be deemed
an agent of TPIS other than in furtherance of its duties and responsibilities as
set forth in this Agreement.
- 5 -
<PAGE>
7. Liability
T-C Services will not be liable for any error of judgment or mistake of
law or for any loss suffered by TPIS in connection with the matters to which
this Agreement relates. Nothing herein contained shall be construed to protect
T-C Services against any liability resulting from the willful misfeasance, bad
faith, or gross negligence of T-C Services in the performance of its obligations
and duties, or from reckless disregard of its obligations and duties under this
Agreement or by virtue of violation of any applicable law.
8. Regulation
(a) This Agreement shall be subject to the provisions of the 1940
Act, the 1934 Act and the rules, regulations and rulings thereunder, and of the
NASD, as in effect from time to time, including such exemptions and other relief
as the Commission, its staff, or the NASD may grant, and the terms hereof shall
be interpreted and construed in accordance therewith.
(b) T-C Services shall submit to all regulatory and administrative
bodies having jurisdiction over the present and future operations of the
Separate Account, any information, reports or other material which any such body
by reason of this
- 6 -
<PAGE>
Agreement may request or require pursuant to applicable laws or regulations.
Without limiting the generality of the foregoing, T-C Services shall furnish the
SEC, the State of New York Secretary of State and/or the Superintendent of
Insurance with any information or reports which the SEC, the Secretary of State
and/or the Superintendent of Insurance may request in order to ascertain whether
the operations of the Separate Account are being conducted in a manner
consistent with applicable laws or regulations.
9. Investigation and Proceedings
(a) TPIS and T-C Services agree to cooperate fully in any
insurance or securities regulatory inspection, inquiry, investigation, or
proceeding or any judicial proceeding with respect to TIAA, the Separate
Account, TPIS or T-C Services, their affiliates and their representatives to the
extent that such inspection, inquiry, investigation or proceeding is in
connection with the Contracts distributed under this Agreement.
(b) In the case of a customer complaint, T-C Services and TPIS
will cooperate in investigating such complaint and shall arrive at a mutually
satisfactory response.
- 7 -
<PAGE>
10. Duration and Termination of the Agreement
(a) This Agreement shall become effective with respect to the
Contracts as of July 1, 1995 and shall continue in effect indefinitely.
(b) This Agreement may be terminated, without the payment of any
penalty, by T-C Services or TPIS on sixty days' written notice to the other
parties. This Agreement shall automatically terminate in the event of its
assignment. Without limiting the generality of the foregoing, the term
"assigned" shall not include any transactions exempted from Section 15(b)(2) of
the 1940 Act. Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligation to settle accounts hereunder and
the agreements contained in paragraph 9 hereunder.
11. Definitions
The terms "Assignment", "interested person", and "majority of the
outstanding shares", when used in this Agreement, shall have the respective
meanings specified under the 1940 Act and rules thereunder.
- 8 -
<PAGE>
12. Further Actions
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
13. Governing Law
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, as at the time in effect, and
the applicable provisions of the 1940 Act and rules thereunder or other federal
laws and regulations which may be applicable. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act and rules thereunder or other federal laws
and regulations which may be applicable, the latter shall control.
14. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument.
- 9 -
<PAGE>
15. Notices
All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage prepaid,
addressed as follows:
(a) If to TPIS -
Teachers Personal Investors Services, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Ronald P. McPhee
(b) If to T-C Services
TIAA-CREF Individual & Institutional Services, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: John McCormack
or to such other address as T-C Services or TPIS shall designate by written
notice to the others.
16. Miscellaneous
Captions in this Agreement are included for convenience or reference only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
In WITNESS WHEREOF, TPIS and T-C Services have caused this Agreement to be
executed in their names and on their behalf by
- 10 -
<PAGE>
and through their duly authorized officers on the day and year first above
written.
TEACHERS PERSONAL INVESTORS SERVICES, INC.
By: /s/ Thomas G. Walsh Attest: /s/ Lisa Snow
--------------------- ------------------
Title: President Title: Assistant Secretary
------------------ -------------------
TIAA-CREF INDIVIDUAL & INSTITUTIONAL SERVICES, INC.
By: /s/ John J. McCormack Attest: /s/ Lisa Snow
--------------------- ------------------
Title: President Title: Assistant Secretary
------------------ -------------------
- 11 -
<PAGE>
AMENDMENT TO THE SELLING AGREEMENT
for the
CONTRACTS FUNDED BY
TIAA SEPARATE ACCOUNT VA-1
Amendment to the Selling Agreement for the Contracts Funded by the
TIAA Separate Account VA-1 dated May 31, 1995, by and between Teachers Personal
Investors Services, Inc. ("TPIS") and TIAA-CREF Individual & Institutional
Services, Inc. ("T-C Services"). T-C Services and TPIS mutually agree that upon
execution of this Amendment, the Agreement shall be amended as set forth below:
1. The title of the Agreement is hereby amended to read as follows:
"Selling Agreement for the Contracts Funded by the TIAA Separate
Account VA-1 and the Shares Issued by TIAA-CREF Mutual Funds.
2. The first Whereas clause is hereby amended to read as follows:
"WHEREAS, TPIS has entered into agreements with the Teachers
Insurance and Annuity Association of America ("TIAA"), TIAA
Separate Account VA-1 ("VA-1") and TIAA-CREF Mutual Funds (the
"Fund") pursuant to which it serves as the principal underwriter
of the variable annuity Contracts (the "Contracts") issued by
VA-1 and the shares issued by the Fund (the "Shares"); and
3. Sections 1 through 16 of the Agreement are hereby amended to
replace every reference to "the Contracts" with "the Contracts
and/or the Shares".
IN WITNESS WHEREOF, T-C Services and TPIS have caused this Amendment
to the Agreement to be executed in their names and on their behalf as of this
30th day of June, 1997 by and through their duly authorized officers.
TIAA-CREF Individual & Institutional Services, Inc.
By: /s/ David Shunk Attest: /s/ Laura Bramson
------------------- --------------------------
Title: President Title: Assistant Secretary
Teachers Personal Investors Services, Inc.
By: /s/ Thomas G. Walsh Attest: /s/ Laura Bramson
------------------- --------------------------
Title: President Title: Assistant Secretary
CUSTODIAN CONTRACT
Between
TIAA-CREF MUTUAL FUNDS,
TEACHERS ADVISORS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Employment of Custodian and Property to be Held By It.................... 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States................... 2
2.1 Holding Securities.............................................. 2
2.2 Delivery of Securities.......................................... 2
2.3 Registration of Securities...................................... 4
2.4 Bank Accounts................................................... 4
2.5 Availability of Federal Funds................................... 4
2.6 Collection of Income and Dividends.............................. 5
2.7 Payment of Fund Monies.......................................... 5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased................................. 6
2.9 Appointment of Agents........................................... 6
2.10 Deposit of Fund Assets in U.S. Securities System................ 6
2.11 Fund Assets Held in the Custodian's Direct
Paper System.................................................... 7
2.12 Segregated Account.............................................. 8
2.13 Ownership Certificates for Tax Purposes......................... 9
2.14 Proxies......................................................... 9
2.15 Communications Relating to Portfolio Securities................. 9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States............................... 9
3.1 Appointment of Foreign Sub-Custodians........................... 9
3.2 Assets to be Held............................................... 9
3.3 Foreign Securities Systems...................................... 9
3.4 Holding Securities.............................................. 10
3.5 Agreements with Foreign Banking Institutions.................... 10
3.6 Access of Independent Accountants of the Fund................... 10
3.7 Reports by Custodian............................................ 10
3.8 Transactions in Foreign Custody Account......................... 10
3.9 Liability of Foreign Sub-Custodians............................. 11
3.10 Liability of Custodian.......................................... 12
3.11 Monitoring Responsibilities..................................... 12
3.12 Branches of U.S. Banks.......................................... 12
3.13 Tax Law......................................................... 12
3.14 Proxies......................................................... 13
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund.................................................... 13
<PAGE>
5. Proper Instructions...................................................... 13
6. Actions Permitted Without Express Authority.............................. 14
7. Evidence of Authority.................................................... 14
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income........................ 14
9. Records ................................................................ 15
10. Opinion of Fund's Independent Accountants................................ 15
11. Reports to Fund by Independent Public Accountants........................ 15
12. Compensation of Custodian................................................ 15
13. Responsibility of Custodian, Indemnification............................. 16
13.1 Standard of Care................................................ 16
13.2 Liability of Custodian for Actions of Other Persons............. 17
13.3 Indemnification................................................. 18
13.4 Fund's Right to Proceed......................................... 20
14. Effective Period, Termination and Assignment............................. 20
15. Successor Custodian...................................................... 21
16. Amendments............................................................... 22
17. Interpretive and Additional Provisions................................... 22
18. Additional Funds......................................................... 22
19. Massachusetts Law to Apply............................................... 22
20. Prior Contracts.......................................................... 22
21. Reproduction of Documents................................................ 22
22. Shareholder Communications............................................... 23
23. No Liability of Shareholders............................................. 23
<PAGE>
CUSTODIAN CONTRACT
This Contract between TIAA-CREF Mutual Funds, a business trust organized
and existing under the laws of Delaware, having its principal place of business
at 730 Third Avenue, New York, New York 10017 hereinafter called the "Fund",
Teachers Advisors, Inc., a corporation organized under the laws of Delaware,
having its principal place of business at 730 Third Avenue, New York, New York
10017 hereinafter called "Advisors" and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in six series, the
International Equity Fund, Growth Equity Fund, Growth & Income Fund, Managed
Allocation Fund, Bond Plus Fund and Money Market Fund (such series together with
all other series subsequently established by the Fund and made subject to this
Contract in accordance with Article 17, being herein referred to as the
"Portfolio(s)");
WHEREAS, Advisors and the Fund have entered into an investment management
agreement pursuant to which Advisors will provide or arrange to provide overall
management to the Fund, including investment management and custody; and
WHEREAS, the Fund and Advisors desire to appoint the Custodian as
custodian on behalf of each of its Portfolios in accordance with the provisions
of the Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations thereunder, under the terms and conditions set forth in
this Contract, and the Custodian has agreed so to act as custodian.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's governing
documents. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall be responsible for all
securities, cash and other property owned or held by the fund which is received
by the Custodian in accordance with the provisions of Article 13. The Custodian
shall not be responsible for any property of a Portfolio held or received by the
Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf
<PAGE>
of the applicable Portfolio(s), and provided that the Custodian shall have not
more or less responsibility to the Fund on account of any actions or omissions
of any sub-custodian so employed than any sub-custodian has to the Custodian,
and further provided that the Custodian shall not release the sub-custodian from
any responsibility or liability unless mutually agreed upon by the parties in
writing. The Custodian may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
2
<PAGE>
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's failure to act in accordance with its duties as
set forth in Section 13;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities or such other property as mutually agreed upon by
the parties.
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
3
<PAGE>
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective prospectus
and statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other corporate purpose, but only upon receipt of, Proper
Instructions from the Fund on behalf of the applicable Portfolio.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on
such securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such bank
or trust company and the funds to be deposited with each such bank or
trust company shall on behalf of each applicable Portfolio be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
4
<PAGE>
2.6 Collection of Income and Dividends. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder to
which each Portfolio shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. Unless otherwise
agreed to in writing, the Custodian will have no duty or responsibility in
connection therewith, other than to provide the Fund with such information
or data as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is properly
entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of
title to such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Portfolio or
in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
5
<PAGE>
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses of
the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For repayment of a loan upon redelivery of pledged securities and
upon surrender of the loan note(s), if any, evidencing the loan;
8) For any other corporate purpose, but only upon receipt of Proper
Instructions from the Fund on behalf of the Portfolio.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
6
<PAGE>
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the Fund
on behalf of the Portfolio;
7
<PAGE>
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other corporate purposes,
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio.
8
<PAGE>
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the Custodian to
take such action prior to the time agreed to by the Custodian and the
Fund.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities, cash and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Article 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in Rule 17f-5 under the Investment
Company Act of 1940, (b) cash and cash equivalents in such amounts as the
Fund may determine; and (c) other assets as are mutually agreed by the
parties. The Custodian shall identify on its books as belonging to the
Fund, the foreign securities, cash and other assets of the Fund held by
each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside
9
<PAGE>
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems
and U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
the Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities,
cash and other assets of the Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of entities having
possession of the Portfolio(s) securities, cash and other assets and
advices or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the
Custodian on behalf of each applicable Portfolio indicating, as to
securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians.
10
<PAGE>
(b) In the case of the purchase of securities, the settlement of
which occurs outside of the United States of America: (i) the Custodian
may make payment therefor and receive delivery of such securities in
accordance with local custom and practice generally accepted by
Institutional Clients (as hereinafter defined) in the country in which the
settlement occurs, but in all events subject to the standard of care set
forth in Section 13 hereof; (ii) in the case of the purchase of securities
in which, in accordance with standard industry custom and practice
generally accepted by Institutional Clients with respect to such
securities, the receipt of such securities and the payment therefor take
place in different countries, the Custodian may receive delivery of such
securities and make payment therefor in accordance with standard industry
custom and practice for such securities generally accepted by
Institutional Clients, but in all events subject to the standard of Care
set forth in Section 13 hereof.
In the case of the sale of securities, the settlement of which
occurs outside of the United States of America: (i) such securities shall
be delivered and paid for in accordance with local custom and practice
generally accepted by Institutional Clients in the country in which the
settlement occurs, but in all events subject to the standard of care set
forth in Section 13 hereof; (ii) in the case of the sale of securities in
which, in accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the
delivery of such securities and receipt of payment therefor take place in
different countries, the Custodian may deliver such securities and receive
payment therefor in accordance with standard industry custom and practice
for such securities generally accepted by Institutional Clients, but in
all events subject to the standard of care set forth in Section 13 hereof;
and (iii) in the case of securities held in physical form, such securities
shall be delivered and paid for in accordance with "street delivery
custom" to a broker or its clearing agent, against delivery to the
Custodian of a receipt for such securities, prompt collection of the
payment for, or the return of, such securities by the broker or its
clearing agent, and provided further that the Custodian shall not be
responsible for the selection of or the failure or inability to perform of
such broker or its clearing agent.
For purposes of this Contract , an "Institutional Client" shall mean
a major commercial bank, corporation, insurance company or substantially
similar institution, which, as a substantial part of its business
operations, purchases or sells securities and makes use of custodial
services.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same extent
as set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign
sub-custodian, other than a branch or subsidiary of the Custodian, shall
require the institution to exercise reasonable care in the performance of
its duties and to indemnify, and hold harmless, the Custodian and each
Fund from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's performance of such
obligations. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim. A
11
<PAGE>
foreign sub-custodian which is a branch or subsidiary of the Custodian
shall be held to the standard of care set forth in Section 13 for the
Custodian.
3.10 Liability of Custodian. Except as provided in paragraph 3.9 hereof with
respect to a branch or subsidiary of the Custodian, the Custodian shall be
liable for the acts or omissions of a foreign banking institution to the
same extent as set forth with respect to sub-custodians generally in this
Contract and, regardless of whether assets are maintained in the custody
of a foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating custody duties
to State Street London Ltd., or other branches or subsidiaries of the
Custodian, the Custodian shall not be relieved of any responsibility to
the Fund for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street London
Ltd. have exercised the standard of care set forth in Article 13 hereof.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, or such other periods as the parties may
agree, information concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of this
Contract. In addition, the Custodian will promptly inform the Fund in the
event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange Commission
is notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will not meet the
requirements of Rule 17f-5 under the Investment Company Act of 1940 for
custodians of an investment company.
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b) Cash
held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other
12
<PAGE>
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
3.14 Proxies. The Custodian will generally, with respect to foreign securities
held under this Article 3, use best efforts accepted by Institutional
Clients to facilitate the exercise of voting and other shareholder proxy
rights, subject always to the laws, regulations and practical constraints
that may obtain in the jurisdiction where such securities are issued. The
Fund acknowledges that local conditions may have the effect of severely
limiting the ability of the Fund to exercise shareholder rights.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means (a) with
respect to the purchase and sale of short-term debt securities with a maturity
of less than one year when value is exchanged, written instructions from the
Fund by any one individual authorized by the Board of Trustees and specified in
a separate list for this purpose which will be furnished to the Custodian from
time to time signed by the treasurer or any associate treasurer or any assistant
treasurer and by the secretary or any assistant secretary as certified under the
corporate seal of the Fund (an "Authorized Person"); (b) with respect to other
transaction, written instructions from the Fund signed by any two Authorized
Persons ; and (c) notwithstanding (a) and (b) above of this Article 5, with
respect to "Free of Payment" deliveries, a writing manually signed by any two
Authorized Persons who are officers of the Fund with the title Chairman,
President, Executive Vice President, or Treasurer. Upon receipt of a writing
manually signed by any two Authorized Persons who are officers of the Fund with
the title Chairman, President, Executive Vice President, or Treasurer
accompanied by a detailed description of procedures approved by such writing,
13
<PAGE>
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Fund and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Fund's assets. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, unless otherwise directed in
writing to do so by the Fund on behalf of the Portfolio, shall itself keep such
books of account and/or compute such net asset value per share. Until otherwise
directed in writing, the Custodian shall also calculate daily the net income of
the Portfolio as described in the Fund's currently effective prospectus related
to such Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such
14
<PAGE>
net income and, if instructed in writing by an officer of the Fund to do so,
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of each Portfolio shall be made in accordance with and at
the time or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio and in accordance with the procedures
agreed to in writing between the Fund and the Custodian and shall at all times
comply with the standard of care set forth in Section 13 hereof.
9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon in writing from time to time
between Advisors and the Custodian and initially set forth in the fee schedule
included in the Transfer Agency and Service Agreement between the Custodian and
Advisors of even date herewith.
15
<PAGE>
13. Responsibility of Custodian, Indemnification
13.1 Standard of Care
1) General Standard of Care. The Custodian shall exercise reasonable
care and diligence in carrying out all of its duties and obligations
under this Contract, and shall be liable to the Fund on behalf of
the applicable Portfolio(s), for all loss, damage and expense
suffered or incurred by such Portfolio resulting from the failure of
the Custodian to exercise such reasonable care and diligence.
2) Actions Prohibited by Applicable Law, etc. Except as may arise from
the Custodian's own negligence, misfeasance or willful misconduct or
the negligence, misfeasance or willful misconduct of a domestic
sub-custodian or foreign banking institution acting as foreign
sub-custodian or agent, the Custodian shall be without liability to
the Fund for any loss, liability, claim or expense resulting from or
caused by: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof
or of any court of competent jurisdiction; (ii) any act of God or
war or other similar circumstance beyond the control of the
Custodian, including, without limitation, nationalization or
expropriation, imposition of currency controls or restrictions, the
interruption, suspension or restriction of trading on or the closure
of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications
disruptions, acts of terrorism, riots, revolutions or work
stoppages; (iii) errors by the Fund or the Investment Advisor in
their instructions to the Custodian provided such instructions have
been in accordance with this Contract; (iv) the insolvency of or
acts or omissions by a Securities System; (v) any delay or failure
of any broker or agent selected by the Fund, or an intermediary or
agent of such broker, or any central bank or other commercially
prevalent payment or clearing system outside of the United States to
deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with
securities sold provided that the subcustodians or agents have acted
in accordance with the terms of this contract; (vi) any delay or
failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vii) delays or
inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities
System. In no event shall the Custodian be liable for indirect,
special or consequential damages.
3) Reliance on Instruments, etc. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property
or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon
any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be
16
<PAGE>
signed by the proper party or parties, including any futures
commission merchant acting pursuant to the terms of a three-party
futures or options agreement.
4) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to any Portfolio (i)
the Custodian shall, (ii) the Custodian shall cause State Street
London Ltd. to and (iii) the Custodian shall use all reasonable
efforts to cause any applicable Subcustodian (other than State
Street London Ltd.) appointed to hold assets in the U.S. or Foreign
banking institutions acting as a foreign subcustodian to, use all
reasonable efforts and take all reasonable steps under the
circumstances to mitigate the efforts of such event and to avoid
continuing harm to the Fund and the Portfolios.
5) Advice of Counsel. The Custodian shall be entitled to rely on and
act upon advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action reasonably
taken or omitted in good faith pursuant to such advice; provided,
however, with respect to the performance of any action or omission
of any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth herein.
6) Expenses of Fund. In addition to the liability of the Custodian
under this Section 13, the Custodian shall be liable to the Fund and
each applicable Portfolio for all reasonable out-of-pocket costs and
expenses incurred by the Fund in connection with any claim by the
Fund against the Custodian arising from the obligations of the
Custodian hereunder, including, without limitation, all reasonable
attorneys' fees and expenses incurred by the Fund in asserting any
such claim, and out-of-pocket expenses incurred by the Fund in
connection with any lawsuits or proceedings relating to such claim;
provided, that the Fund has recovered from the Custodian for such
claim.
13.2 Liability of Custodian for Actions of Other Persons
1) Subcustodians located in the United States and Foreign banking
institutions acting as foreign subcustodians. The Custodian shall be
liable for the actions or omissions of any subcustodian located in
the United States or any foreign banking institution acting as a
foreign subcustodian to the same extent as if such action or
omission were performed by the Custodian itself taking into account
standards applicable to custodians in the relevant market.
2) Securities System. Notwithstanding the provisions of Section 13 to
the contrary, the Custodian shall not be liable to the Fund or any
applicable Portfolio for any loss, damage or expense suffered or
incurred by the Fund or any of its Portfolios resulting from the use
by the Custodian or a subcustodian located in the United States or
foreign banking institution acting as a foreign subcustodian, of a
Securities System including, without limitation, the insolvency of a
Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian or a subcustodian located in the United States or foreign
banking institution acting as a foreign subcustodian; provided,
however, that in the event of any such loss, damage or
17
<PAGE>
expense, the Custodian shall take all reasonable steps to enforce
such rights as it or a subcustodian located in the United States or
foreign banking institution acting as a foreign subcustodian may
have against the Securities System to protect the interests of the
Fund and the Portfolios.
3) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of such Fund in connection with the fulfillment
of its obligations under this Section 13; provided, however, that
such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the
Custodian.
13.3 Indemnification
1) Indemnification Obligations. Subject to the limitations set forth in
this Agreement, the Fund hereby indemnifies and holds harmless the
Custodian and its nominees from all loss, damage and expense
(including reasonable attorneys' fees) suffered or incurred by the
Custodian or its nominees caused by or arising from actions taken or
omitted by the Custodian on behalf of the Fund in the performance of
its duties and obligations under this Contract; provided, however,
that such indemnity shall not apply to loss, damage and expense
arising from the negligence, misfeasance or misconduct of the
Custodian or its nominee. In addition, the Fund hereby indemnifies
the Custodian, any subcustodian, Securities System, or their
respective nominees against any liability incurred by reason of
taxes assessed to such person, or other loss, damage or expenses
incurred by such person, resulting from the fact that securities and
other property of such Fund's Portfolios are registered in the name
of such person; provided, however, that in no event shall such
indemnification be applicable to income, franchise or similar taxes
which may be imposed or assessed against any person. Furthermore, if
the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment
of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund or the
Portfolio being liable for the payment of money or incurring
liability of some other form, the Fund on behalf of the Portfolio,
as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but
not limited to securities settlements, foreign exchange contracts
and assumed settlement) or in the event that the Custodian or its
nominees shall incur or be assessed any taxes, charges, expenses or
assessments in connection with the performance of this Contract or
from any actions taken or omitted by the Custodian or its nominees
on behalf of the Fund in the performance of its duties under this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act, misfeasance or willful
misconduct, any property at any time held for the account of the
applicable Portfolio shall be security therefor and should the Fund
fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
2) Notice of Litigation, Right to Prosecute, etc. If a person seeking
indemnification pursuant to Section 13.3(1) hereof fails to promptly
notify the Fund in writing of the commencement of any litigation or
any proceeding brought against such person (a "Proceeding"), the
Fund shall not be liable for indemnification under this Contract
with respect to such Proceeding to the extent that the Fund's
ability to defend is prejudiced by such failure.
With respect to claims in a Proceeding for which indemnity by the
Fund may be sought, the Fund shall be entitled to participate at its
own expense in the defense, or, if it so elects, to assume the
control of the defense of any Proceeding. In the event the Fund
elects to assume the control of the defense of any Proceeding, the
persons seeking indemnification pursuant to Section 13.3(1) hereof
involved in such Proceeding may retain additional counsel for
purposes of the Proceeding but shall bear all fees and expenses of
such retention of such counsel, unless (i) the Fund shall have
specifically authorized the retention of such counsel, or (ii) if
the Fund and such indemnified persons agree that the retention of
such counsel is required as a result of a conflict of interest. If
the Fund assumes control of any Proceeding hereunder, the Fund shall
keep the persons seeking indemnification pursuant to Section 13.3(1)
hereof notified of the progress of such Proceeding and, upon
request, consult with such persons and their counsel concerning such
Proceeding. The Fund will, upon request by the persons seeking
indemnification pursuant to Section 13.3(1) hereof, either pay in
the first instance or reimburse such persons for any expenses
subject to indemnity hereunder.
The Fund shall not settle or compromise any Proceeding without the
prior written consent of each person seeking indemnification
pursuant to Section 13.3(1) hereof involved in such Proceeding,
which consent shall not be unreasonably upheld, unless (i) such
settlement or compromise involves no admission of guilt, wrongdoing,
or misconduct by any such person, (ii) such settlement or compromise
does not impose any obligations or restrictions on any such person
other than obligations to pay money that are subject to the
indemnity under this Contract, and (iii) the Fund shall have paid,
or made arrangements satisfactory to such person for payment of, all
amounts payable by each such person in connection with such
settlement.
Except as part of a settlement or compromise by the Fund in
accordance with the provisions of the immediately preceding
paragraph, no person seeking indemnification pursuant to Section
13.3(1) hereof may consent to the entry of any judgment or settle
any Proceeding subject to indemnity hereunder without providing the
Fund with at least 15 days prior written notice of any such judgment
or settlement and without the prior written consent of the Fund,
which consent will not be reasonably withheld (to the extent such
Proceeding relates to such person).
Each person seeking indemnification pursuant to Section 13.3(1)
hereof shall submit written evidence to the Fund with respect to any
cost or expense for which such person is seeking indemnification in
such form and detail as the Fund may reasonably request.
19
<PAGE>
13.4 Fund's Right to Proceed. Notwithstanding anything to the contrary
contained herein, the Fund shall have, at its election upon
reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's right against any subcustodians, Securities System, or
other person for loss, damage or expense caused the Fund by such
subcustodian, Securities System, or other person, and shall be
entitled to enforce the rights of the Custodian with respect to any
claim against such subcustodian, Securities System, or other person,
which the Custodian may have as a consequence of any such loss,
damage or expense, if and to the extent that the Fund has not been
made whole for any such loss or damage. If the Custodian makes the
Fund whole for any such loss or damage, the Custodian shall retain
the ability to enforce its rights directly against such
subcustodian, Securities System or other person. Upon the Fund's
election to enforce any rights of the Custodian under this Section
13.4, the Fund shall reasonably prosecute all actions and
proceedings directly relating to the rights of the Custodian in
respect of the loss, damage or expense incurred by the Fund;
provided that, so long as the Fund has acknowledged in writing its
obligation to indemnify fully the Custodian under Section 13.3
hereof with respect to such claim, the Fund shall retain the right
to settle, compromise and/or terminate any action or proceeding in
respect of the loss, damage or expense incurred by the Fund without
the Custodian's consent and provided further, that if the Fund has
not made an acknowledgment of its obligation to indemnify, the Fund
shall not settle, compromise or terminate any such action or
proceeding without the written consent of the Custodian. The
Custodian agrees to cooperate with the Fund and take all actions
reasonably requested by such Fund in connection with the Fund's
enforcement of any rights of the Custodian. The Fund agrees to
reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of the Fund in connection with
the fulfillment of its obligations under this Section 13.4;
provided, however, that such reimbursement shall not apply to
expenses occasioned by or resulting from the negligence, misfeasance
or misconduct of the Custodian.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Assignment
This Contract shall become effective as of its execution and shall
continue in full force and effect until terminated by either party by an
instrument in writing, hand delivered or sent by certified mail, such
termination to take effect not sooner than sixty (60) days after the date of
such delivery or mailing; provided, however that the Custodian shall not with
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Fund has approved the initial use of a particular
Securities System by such Portfolio, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Portfolio act under Section 2.11 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System by
such Portfolio; provided further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Articles of Incorporation, and further
provided, that the Fund on behalf of one or more of the Portfolios may at any
time by action of its Board of Trustees (i) substitute another bank or trust
company for the
20
<PAGE>
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
This Contract may not be assigned by either party without the consent of
the other party, which consent in the case of the Fund shall be authorized or
approved by a resolution of the Board of Trustees of the Fund.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
21
<PAGE>
16. Amendments
This Contract may be amended at any time by mutual agreement of the
parties hereto; provided that no amendment or change to this Contract shall be
authorized by the Fund on behalf of its Accounts without the written consent
signed by an officer with the title of either Chairman, Vice Chairman or
President and any officer with the title of Executive Vice President or
Treasurer and accepted in writing by any Vice President or Managing Director of
the Bank.
17. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
18. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to International Equity Fund, Growth Equity Fund, Growth & Income Fund,
Managed Allocation Fund, Bond Plus Fund and Money Market Fund with respect to
which it desires to have the Custodian render services as custodian under the
terms hereof, it shall so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
19. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
21. Reproduction of Documents
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
22
<PAGE>
22. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or do not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
23. No Liability of Shareholders.
This Contract is executed by the Trustees of the Fund, not individually,
but rather in their capacity as Trustees under the Declaration of Trust made
January 13, 1997, as amended. None of the shareholders of the Fund, Trustees,
officers, employees, or agents of the Fund shall be personally bound or liable
under this Contract, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder but only to the property of
the Fund, and if the obligation or claim relates to the property held by the
Fund for the benefit of one or more but fewer than all Funds, then only to the
property held for the benefit of the affected Fund.
23
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 16th day of July, 1997.
ATTEST TIAA-CREF MUTUAL FUNDS
/s/ Stewart Greene By: /s/ Thomas G. Walsh
- ---------------------------- -------------------------------
By: /s/ Richard J. Adamski
-------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Danielle Hayes By /s/ Ronald E. Logue
- ---------------------------- -------------------------------
Executive Vice President
ATTEST TEACHERS ADVISORS, INC.
/s/ Stewart Greene By: /s/ Virgil H. Cumming
- ---------------------------- -------------------------------
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors/Board of Trustees of
for use as sub-custodians for the Fund's securities and other assets:
Schedule A
----------
17f-5 Approval
The Board of Directors/Trustees of TIAA-CREF Mutual Funds has approved
certain foreign banking institutions and foreign securities depositories within
State Street's Global custody Network for use as subcustodians for the Fund's
securities, cash and cash equivalents held outside of the United States. Board
approval is as indicated by the Fund's Authorized Officer:
<TABLE>
<CAPTION>
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
/s/ RA State Street's entire Global Custody Network listed below
______ Argentina Citibank, N.A. Caja de Valores S.A.
______ Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
______ Austria GiroCredit Bank Aktiengesellschaft Oesterreichische Kontrollbank AG
der Sparkassen (Wertpapiersammelbank Division)
______ Bangladesh Standard Chartered Bank None
______ Belgium Generale Bank Caisse Interprofessionnelle de Depots
et de Virements de Titres S.A. (CIK);
Banque Nationale de Belgique
______ Botswana Barclays Bank of Botswana Limited None
______ Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo (Bovespa);
Banco Central do Brasil,
Systema Especial de Liquidacao e
Custodia (SELIC)
______ Canada Canada Trustco Mortgage Company The Canadian Depository
for Securities Limited (CDS)
<PAGE>
Schedule A: 17f-5 Approval
Page 2
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
______ Chile Citibank, N.A. None
Co., Ltd. (SSCC)
______ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporation Limited, Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing
Co., Ltd. (SSCC)
______ Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
______ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
______ Czech Republic Ceskoslovenska Obchodni Stredisko cennych papirfi (SCP);
Banka A.S.
Czech National Bank (CNB)
______ Denmark Den Danske Bank Vaerdipapircentralen - The Danish
Securities Center (VP)
______ Ecuador Citibank, N.A. None
______ Egypt National Bank of Egypt Misr Company for Clearing, Settlement
and Central Depository (MCSD)
______ Finland Merita Bank Limited The Central Share Register of
Finland
______ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
______ Germany Dresdner Bank AG The Deutscher Kassenverein AG
______ Ghana Barclays Bank of Ghana Limited None
<PAGE>
Schedule A: 17f-5 Approval
Page 3
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
______ Greece National Bank of Greece S.A. The Central Securities Depository
(Apothetirion Titlon A.E.)
______ Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
______ Hungary Citibank Budapest Rt. The Central Depository and Clearing
House (Budapest) Ltd. (KELER Ltd.)
______ India Deutsche Bank AG None
______ The Hongkong and Shanghai None
Banking Corporation Limited
______ Indonesia Standard Chartered Bank None
______ Ireland Bank of Ireland None
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
______ Italy Bank Paribas Monte Titoli S.p.A.;
Banca d'Italia
______ Ivory Coast Societe Generale de Banques None
en Cote d'Ivoire
______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center (JASDEC);
Bank of Japan Net System
______ The Fuji Bank, Limited Japan Securities Depository
Center (JASDEC);
Bank of Japan Net System
______ The Sumitomo Trust Japan Securities Depository
& Banking Co., Ltd. Center (JASDEC)
Bank of Japan Net System
<PAGE>
Schedule A: 17f-5 Approval
Page 4
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
______ Jordan The British Bank of the Middle East None
______ Kenya Barclays Bank of Kenya Limited None
______ Republic of Korea SEOULBANK Korea Securities Depository (KSD)
______ Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
Malaysia Berhad Bhd. (MCD)
______ Mauritius The Hongkong and Shanghai The Central Depository & Settlement
Banking Corporation Limited Co. Ltd. (CDS)
______ Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
Banco de Mexico
______ Morocco Banque Commerciale du Maroc None
______ Netherlands MeesPierson N.V. Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
______ New Zealand NAZ Banking Group New Zealand Central Securities
(New Zealand) Limited Depository Limited (NZCSD)
______ Norway Christiania Bank og Verdipapirsentralen - The Norwegian
Kreditkasse Registry of Securities (VPS)
______ Pakistan Deutsche Bank AG None
______ Peru Citibank, N.A. Caja de Valores (CAVAL)
______ Philippines Standard Chartered Bank The Philippines Central Depository
Inc. (PCD);
The Book-Entry-System (BES) of Bangko
Sentral ng Pilipinas, the Central Bank;
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury,
Department of Finance.
<PAGE>
Schedule A: 17f-5 Approval
Page 5
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
______ Poland Citibank Poland S.A. The National Depository of Securities
(Krajowy Depozyt Papierow
Wartosciowych);
National Bank of Poland
______ Portugal Banco Comercial Portugues Central de Valores Mobiliarios (Central)
______ Russia Credit Suisse First Boston, Zurich None
via Credit Suisse First Boston, Ltd.
Moscow
______ Singapore The Development Bank The Central Depository (Pte)
of Singapore Ltd. Limited (CDP)
______ Slovak Republic Ceskoslovenska Obchodna Stredisko Cennych Papierov (SCP);
Banka A.S.
National Bank of Slovakia
______ South Africa Standard Bank of South Africa Limited The Central Depository Limited
______ Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores, S.A. (SCLV);
Banco de Espana
Anotaciones en Cuenta
______ Sri Lanka The Hongkong and Shanghai Central Depository System
Banking Corporation Limited (Pvt) Limited
______ Swaziland Barclays Bank of Swaziland Limited None
______ Sweden Skandinaviska Enskilda Banken Vardepapperscentralen VPC AB -
The Swedish Central Securities Depository
______ Switzerland Union Bank of Switzerland Schweizerische Effekten - Giro AG
(SEGA)
______ Taiwan - R.O.C. Central Trust of China The Taiwan Securities Central
or Depository Company, Ltd. (TSCD)
______ ________________________________
(Client Designated Subcustodian)
<PAGE>
Schedule A: 17f-5 Approval
Page 6
Fund
Officer
Initials Country Subcustodian Central Depository
- -------- ------- ------------ ------------------
______ Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
______ Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S.
(TAKASBANK);
Central Bank of Trukey
______ United Kingdom State Street Bank and Trust Company None;
The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO)
______ Uruguay Citibank, N.A. None
______ Venezuela Citibank, N.A. None
______ Zambia Barclays Bank of Zambia Limited Lusaka Central Depository (LCD)
______ Zimbabwe Barclays Bank of Zimbabwe Limited None
______ Euroclear (The Euroclear System)/State Street London Limited
______ Cedel (Cedel Bank, societe anonyme)/State Street London Limited
</TABLE>
Certified by:
/s/ Richard J. Adamski 5/28/97
- ------------------------- -------
Fund's Authorized Officer Date
ADMINISTRATION AGREEMENT
Agreement dated as of July 16, 1997 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and
Teachers Advisors, Inc. ("Advisors").
WHEREAS, Advisors is the investment manager to TIAA-CREF Mutual
Funds (the "Fund"), an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Advisors and the Fund have entered into an investment
management agreement pursuant to which Advisors will provide or arrange to
provide overall management to the Fund, including investment management,
custody, transfer agency, dividend disbursing, legal, accounting and
administrative services; and
WHEREAS, Advisors desires to retain the Administrator to furnish
certain administrative services to the Fund on its behalf, and the Administrator
is willing to furnish such services, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
Advisors hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Fund will initially consist of the portfolios (each an
"Investment Fund") listed in Schedule A to this Agreement. In the event that the
Fund establishes one or more additional Investment Funds with respect to which
Advisors wishes to retain the Administrator to act as administrator hereunder,
Advisors shall notify the Administrator in writing and such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except with respect to compensation as otherwise
provided in the Fee Schedule included in the Transfer Agency and Service
Agreement between the parties dated July 16, 1997 ("Transfer Agency Agreement").
2. DELIVERY OF DOCUMENTS
Advisors will promptly deliver to the Administrator copies of each
of the following documents and all future amendments and supplements, if any:
a. The Fund's Declaration of Trust and by-laws;
<PAGE>
b. The Fund's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and
the 1940 Act and the Fund's Prospectus(es) and Statement(s) of
Additional Information relating to all Investment Funds and
all amendments and supplements thereto as in effect from time
to time;
c. Certified copies of the resolutions of either the Board of
Trustees of the Fund (the "Board") or Advisors approving (1)
Advisor entering into this Agreement and (2) certain
individuals on behalf of the Fund to (a) give instructions to
the Administrator pursuant to this Agreement and (b) pay
expenses;
d. A copy of the investment management agreement between the Fund
and Advisors; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its
duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to Advisors that:
a. It is a Massachusetts trust company, duly organized, existing
and in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement;
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it;
f. It has and will continue to have and maintain to the
reasonable satisfaction of Advisors the necessary facilities,
equipment and personnel to perform its duties and obligations
under this Agreement; and
g. Prior to the initial offering of the Fund's shares to the
public, the Administrator will have made all the necessary
Notice and any other state securities law filings
2
<PAGE>
to offer the Fund's shares in the states in which the
Administrator was instructed to do so by Advisors pursuant to
Schedules B and C of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF ADVISORS
Advisors represents and warrants to the Administrator that:
a. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
b. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
c. The Fund is a business trust, duly organized and existing and
in good standing under the laws of the State of Delaware;
d. The Fund is an investment company properly registered under
the 1940 Act;
e. A registration statement under the 1933 Act and the 1940 Act
has been filed by the Fund and will be effective prior to the
initial offering of the Fund's shares to the public and will
remain effective while the Fund's shares are offered to the
public;
f. No legal or administrative proceedings have been instituted or
threatened which would impair Advisors' ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of Advisors or any law or regulation applicable to
it; and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue shares of beneficial interest, and
it will initially offer shares, in the authorized amounts as
set forth in Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each
case, subject to the control and direction of Advisors and the review and
comment by the Fund's independent accountants and legal counsel and in
accordance with procedures which may be established from time to time between
Advisors and the Administrator:
a. Oversee the determination and publication of the Fund's net
asset value in accordance with the Fund's policy as adopted
from time to time by the Board;
3
<PAGE>
b. Oversee the maintenance by the Fund's custodian of certain
books and records of the Fund as required under Rule 31a-1(b)
of the 1940 Act;
c. Prepare the Fund's federal, state and local income and excise
tax returns for review by Advisors and the Fund's independent
accountants and officers and filing by a Fund officer or
representative;
d. Review calculation and appropriateness, submit for approval by
officers of the Fund and arrange for payment of the Fund's
expenses;
e. Prepare for review and approval by Advisors and officers of
the Fund financial information for the Fund's semi-annual and
annual reports, proxy statements and other communications
required or otherwise to be sent to Fund shareholders, and
consult with Advisors regarding arrangements for the printing
and dissemination of such reports and communications to
shareholders;
f. Prepare for review by Advisors and officers of and legal
counsel for the Fund: (1) the Fund's periodic financial
reports required to be filed with the U.S. Securities and
Exchange Commission ("SEC") on Form N-SAR and file thereafter;
and (2) financial information required by Form N-1A and such
other reports, forms or filings as may be mutually agreed
upon;
g. Prepare and distribute reports to Advisors and officers of the
Fund relating to the business and affairs of the Fund as may
be mutually agreed upon;
h. Make such reports and recommendations to the Board concerning
the performance of the independent accountants as the Board
may reasonably request or deems appropriate;
i. Make such reports and recommendations to the Board concerning
the performance and fees of the Fund's custodian and transfer
and dividend disbursing agent ("Transfer Agent") as the Board
may reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to and any
out-of-pocket expenses charged by the Fund's investment
manager, custodian and Transfer Agent;
k. Consult with the Fund's officers, independent accountants,
legal counsel, custodian and Transfer Agent in establishing
the accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to, or refer to the Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
4
<PAGE>
n. Provide periodic testing of portfolios as may be mutually
agreed upon, to assist the Fund's investment manager in
complying with Internal Revenue Code mandatory qualification
requirements, the requirements of the 1940 Act and Fund
prospectus limitations, prepare and disseminate to the
officers of the Fund and Advisors reports providing the
results of such testing, prepare and distribute to Advisors
and officers of the Fund for review, reports determining the
amount, if any, of the Fund's required annual distribution to
shareholders and prepare and disseminate to the officers of
the Fund and Advisors such other reports as may be agreed upon
from time to time and as are set forth in Schedule D to this
Agreement. Details of the scope of the services provided by
the Administrator hereunder shall be documented in the Fund
Profile as agreed to by Advisors and the Administrator from
time to time;
o. Arrange for the filing with the SEC by means of the electronic
data gathering and receiving system ("EDGAR") amendments to
the Fund's registration statement, including updates to the
Prospectus and Statement of Additional Information and proxy
material, where applicable. Unless otherwise agreed upon
between Advisors and the Administrator, the Administrator's
sole responsibility with respect to such filings will be to
deliver the documents to be filed to a financial printer or
other service provider selected or approved by Advisors and to
communicate to such financial printer or service provider
Advisors' instructions with respect to such filings. Any such
financial printer or service provider shall not be deemed to
be employed by or associated with the Administrator for
purposes of Section 6 of this Agreement and the Administrator
shall have no responsibility for the acts or omissions of such
financial printer or service provider;
Subject to review and comment by the Fund's legal counsel:
p. Make Board presentations where appropriate;
q. Prepare for review by Advisors and officers of the Fund and
file or assist in filing thereafter Rule 24f-2 notices with
the SEC;
r. Prepare and file all state Notice and any other filings in
connection with the offer or sale of the Fund's shares
pursuant to the specific instructions of Advisors as detailed
in Schedules B and C to this Agreement and as such Schedule C
is amended from time to time and provide Advisors with reports
on the sale of the Fund's shares in each respective state such
shares are offered or sold;
s. File by means of EDGAR or other appropriate means annual and
semi-annual shareholder reports with the appropriate
regulatory agencies; and
t. Assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters.
5
<PAGE>
The Administrator shall provide the office facilities and the personnel
required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from Advisors such compensation for
the Administrator's services provided pursuant to this Agreement as may be
mutually agreed to by the parties from time to time in the Fee Schedule included
in the Transfer Agency Agreement.
Advisors agrees to promptly reimburse the Administrator for any
equipment and supplies specially ordered by the Administrator upon Advisors'
written request or approval and for any other expenses not contemplated by this
Agreement that the Administrator may incur on the Fund's behalf at Advisors'
written request or approval.
The Administrator will bear all expenses that are incurred in the
performance of its duties under this Agreement and not specifically assumed by
Advisors. Except as noted herein, expenses to be borne by Advisors are: cost of
services of the Fund's independent accountants and outside legal and tax counsel
(including such counsel's review of the Fund's registration statement, proxy
materials, federal and state tax qualification as a regulated investment company
and other reports and materials prepared by the Administrator under this
Agreement); cost of any services contracted for by Advisors directly from
parties other than the Administrator; cost of trading operations and brokerage
fees, commissions and transfer taxes in connection with the purchase and sale of
securities for the Fund (which costs shall be borne by the Fund); investment
management fees (which costs shall be borne by the Fund); taxes (which shall be
borne by the Fund), insurance premiums and other fees and expenses applicable to
the Fund's operation; costs incidental to any meetings of the Fund's
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings (except for fees and expenses of
the Fund's Trustees who are not "interested persons" as such term is defined in
the 1940 Act, which fees and expenses shall be borne by the Fund); the salary
and expenses of any officer or employee of the Fund; costs incidental to the
preparation, filing, printing and distribution of the Fund's registration
statements and any amendments thereto and shareholder reports; cost of
typesetting and printing of prospectuses; cost of preparation and filing of the
Fund's tax returns, Forms N-1A and N-SAR, and all notices, registrations and
amendments associated with applicable federal and state tax and securities laws;
all applicable registration fees and filing fees required under federal and
state securities laws; and fidelity bond and directors' and officers' liability
insurance.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to Advisors or to the Fund
for the acts or omissions of any such person or persons as it is for its own
acts or omissions.
6
<PAGE>
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to authorized officers of
the Fund or Advisors for instructions and may consult with in-house legal
counsel for the Fund or the independent accountants for the Fund or at its own
cost may consult with its own legal counsel, with respect to any matter arising
in connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
Advisors, for any action taken or omitted by it in good faith and with
reasonable care and without negligence in reliance upon any such instructions or
advice or upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons; provided however, with
respect to the performance of any action or omission of any action upon such
legal advice by its own counsel, the Administrator shall be required to conform
to the standard of care set forth herein and further provided that the
Administrator shall follow the advice of the Fund's in-house legal counsel in
instances where the advice of the Fund's in-house legal counsel and the
Administrator's legal counsel differ. The Administrator shall not be held to
have notice of any change of authority of any person until receipt of written
notice thereof from Advisors. Nothing in this paragraph shall be construed as
imposing upon the Administrator any obligation to seek such instructions or
advice, or to act in accordance with such advice when received.
8. STANDARD OF CARE, LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall exercise reasonable care and diligence in
carrying out the provisions of this Agreement. The Administrator shall be
responsible for the performance of only such duties as are set forth in this
Agreement and, except as otherwise provided under Section 6, shall have no
responsibility for the actions or activities of any other party, including other
service providers. The Administrator shall have no liability for any error of
judgment or mistake of law or for any loss or damage resulting from the
performance of or failure to perform its duties hereunder unless caused by or
resulting from the negligence, willful misconduct or bad faith of the
Administrator, its officers, employees or others provided under Section 6. The
Administrator shall not be liable for any special, indirect, incidental, or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, for any
liability or loss suffered by the Fund including, but not limited to, any
liability relating to qualification of the Fund as a regulated investment
company or any liability relating to the Fund's compliance with any federal or
state tax or securities statute, regulation or ruling, the Administrator's
liability under this Agreement shall be limited to its total annual compensation
earned by and fees paid to the Administrator hereunder during the twelve months
preceding the date of the agreement of settlement of the claim or date of entry
of final judgment, provided that in the event that such compensation is less
than two million dollars and liabilities or losses suffered by the Fund exceed
such compensation, the Administrator shall be liable for up to two million
dollars of such liabilities or losses, and further provided that in the event
that both such compensation and liabilities or losses exceed ten million
dollars, the Administrator's liability hereunder shall be limited to ten million
dollars.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement caused by acts
of God, equipment or transmission failure or by other circumstances reasonably
beyond its control, except to the extent that the Administrator shall have
failed to use its best efforts to undertake commercially reasonable efforts to
minimize the
7
<PAGE>
likelihood of occurrence of such circumstances or to mitigate any loss or damage
caused to Advisors or the Fund by such circumstances.
Advisors shall indemnify and hold the Administrator harmless from
all loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by the Administrator in the performance of its duties
hereunder, or as a result of acting upon any instructions reasonably believed by
it to have been duly authorized by authorized officers of Advisors or the Fund,
provided that this indemnification shall not apply to actions or omissions of
the Administrator, its officers or employees in cases of its or their own
negligence, willful misconduct or bad faith.
Advisors will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event Advisors elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) Advisors shall have specifically
authorized the retaining of such counsel or (ii) Advisors and the Administrator
agree that the retention of such counsel is required as a result of a conflict
of interest. The Administrator shall not settle any action, suit, claim or
demand which indemnity may be sought hereunder without the prior written
approval of Advisors, which approval shall not be unreasonably withheld.
In addition to the liability of the Administrator under this Section
8, the Administrator shall also be liable to Advisors for all reasonable
out-of-pocket costs and expenses incurred by Advisors in connection with any
claim by Advisors against the Administrator arising from the obligations of the
Administrator hereunder, including, without limitation, all reasonable
attorneys' fees and expenses incurred by Advisors in asserting any such claim,
and out-of-pocket expenses incurred by Advisors in connection with any lawsuits
or proceedings relating to such claim, provided that Advisors has recovered from
the Administrator for such claim.
The indemnification provisions contained herein shall survive the
termination of this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law
or in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to Advisors and the Fund or its shareholders or shareholder
accounts and will not disclose the same to any person except at the request or
with the written consent of Advisors or the Fund. The Administrator further
agrees that it shall use such records and information solely for the purposes
authorized in this Agreement.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
Without derogating any of the Administrator's responsibilities under
this Agreement, Advisors assumes full responsibility for complying with all
securities, tax, commodities and other laws,
8
<PAGE>
rules and regulations applicable to the Fund. In performing all services under
this Agreement, the Administrator shall act in conformity with the Fund's
Declaration of Trust and any amendments thereto, Board authorizations and
determinations and the fundamental policies of the Fund as reflected in the
Fund's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Administrator agrees that all records which it maintains for the Fund
shall at all times remain the property of the Fund, shall be readily accessible
during normal business hours, and shall be promptly surrendered upon the
termination of the Agreement or otherwise on written request. The Administrator
further agrees that all records which it maintains for the Fund pursuant to Rule
31a-1 under the 1940 Act will be preserved for the periods prescribed by Rule
31a-2 under the 1940 Act unless any such records are earlier surrendered as
provided above. Records shall be surrendered in usable machine-readable form or
such other formats as reasonably requested by Advisors or the Fund.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to Advisors are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others; provided however that the Administrator shall equitably allocate its
resources in supplying services to Advisors and others. The Administrator shall
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by Advisors from time to time, have no authority
to act or represent Advisors or the Fund in any way or otherwise be deemed an
agent of either Advisors or of the Fund.
12. INSPECTION AND AUDITS
The Administrator shall permit Advisors or the Fund, during the term
of this Agreement, upon reasonable prior notice, to conduct periodic inspections
of any properties, documents, books, reports workpapers and other records of the
Fund or Advisors in the possession of the Administrator relating to any service,
product or work provided to Advisors or the Fund by the Administrator in
connection with this Agreement.
The Administrator agrees to provide reasonable notice to Advisors or
the Fund of any meeting between the Administrator and the Fund's independent
accountants and to allow representatives of Advisors or the Fund to attend any
such meeting.
The Administrator agrees to furnish to Advisors or the Fund annual
reports under SAS 70 prepared by an independent auditing firm.
13. NOTIFICATION OF CONTACTS BY REGULATORS
The Administrator shall promptly notify Advisors or the Fund of any
and all legal notices received by or served on the Administrator with respect to
the Fund. The Administrator shall promptly notify Advisors or the Fund of all
other contacts received by the Administrator from any regulatory department or
agency or other governmental authority purporting to regulate Advisors or the
Fund and not the Administrator, regarding the Administrator's duties and
activities under this Agreement. The
9
<PAGE>
Administrator will cooperate with Advisors and the Fund in responding to these
contacts, with Advisors responsible for the costs and expenses thereof.
14. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective as of the date first written
above. The Agreement shall remain in effect for a period of five (5) years from
the effective date provided, however, that: (i) either party may terminate this
Agreement without prejudice to any other remedy it may have, upon the material
breach of this Agreement provided, however, that the non-breaching party shall
have given the breaching party written notice of such breach and that the
breaching party cannot or shall not have cured to the reasonable satisfaction of
the non-breaching party any such breach within thirty (30) days of such notice;
and (ii) the Administrator shall have the right to terminate this Agreement upon
the termination by Advisors or the Fund of the Custodian Contract between the
Administrator, Advisors and the Fund dated July 16, 1997 within the first five
years of effectiveness of the Custodian Contract. Termination shall become
effective in 120 days after the end of the 30 day cure period in the case of (i)
above and concurrently with effective termination of the Custodian Contract in
the case of (ii) above. This Agreement shall automatically continue in effect
after such five year period unless terminated by Advisors on ninety (90) days'
prior written notice to the Administrator, or by the Administrator on one
hundred eighty (180) days' prior written notice to Advisors, with such
termination to be effective at the time specified in the written notice.
Termination of this Agreement with respect to any given Investment Fund shall in
no way affect the continued validity of this Agreement with respect to any other
Investment Fund. Administrator shall, at Advisors expense, transfer all records
maintained by the Administrator under this Agreement and shall cooperate in the
transfer of its duties and responsibilities under this Agreement. This Agreement
may be modified or amended from time to time by mutual written agreement of the
parties hereto.
15. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to
Advisors: Teachers Advisors, Inc., 730 Third Avenue, New York, New York 10017,
Attn: Peter C. Clapman, Esq., Senior Vice President, Secretary and Chief
Counsel, Investments, fax: (212) 916-5813; if to the Administrator: State Street
Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171,
Attn: Mutual Funds Legal Division, fax: (617) 985-2497.
16. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party.
17. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
Advisors and the Administrator and their respective permitted assigns.
10
<PAGE>
18. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
19. WAIVER
The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
20. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
21. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first written
above.
TEACHERS ADVISORS, INC.
By: /s/ Virgil H. Cumming
--------------------------------
Name: Virgil H. Cumming
----------------------------
Title: Executive Vice President
----------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------------
Name: Ronald E. Logue
----------------------------
Title: Executive Vice President
----------------------------
12
<PAGE>
ADMINISTRATION AGREEMENT
TIAA-CREF Mutual Funds
SCHEDULE A
Listing of Investment Funds and Authorized Shares
Investment Fund Authorized Shares
International Equity Fund unlimited number of shares
Growth Equity Fund authorized for all Investment
Growth & Income Fund Funds
Managed Allocation Fund
Bond Plus Fund
Money Market Fund
13
<PAGE>
ADMINISTRATION AGREEMENT
TIAA-CREF Mutual Funds
SCHEDULE B
Notice Filings, Renewals and
Amendments of Fund Shares with
State Securities Administrators
("Blue Sky Services")
The Administrator will prepare required documentation, including Notice
Filings, Renewals and Amendments in accordance with the securities laws of each
jurisdiction in which Fund shares are to be offered or sold pursuant to
instructions given to the Administrator by Advisors. Advisors' initial
instructions are included in Schedule C to this Agreement.
Advisors shall be responsible for the determination (i) of those
jurisdictions in which Notice Filings are to be submitted and (ii) the number of
Fund shares to be offered in each such jurisdiction. The Administrator shall
provide Advisors with reports as frequently as requested by Advisors, indicating
the number of Fund shares offered in each jurisdiction and the number of Fund
shares sold in each jurisdiction. The Administrator shall provide Advisors with
immediate telephone notification, followed up with written notification, upon
the sale of 65% (or such other amount as may be mutually agreed upon) of Fund
shares offered for sale in a particular jurisdiction. In the event that the
Administrator becomes aware of (a) the sale of Fund shares in a jurisdiction in
which no Notice Filing has been made; (b) the sale of Fund shares in excess of
the number of Fund shares offered for sale in such jurisdiction; or (c) any
failure to comply with a jurisdiction's filing, reporting or other requirements,
the Administrator shall immediately report such information to Advisors, and it
shall be Advisors' responsibility to determine appropriate corrective action and
instruct the Administrator with respect thereto.
The Blue Sky Services to be provided by the Administrator shall consist of
the following:
1. Filing of the Fund's initial Notice Filings, as directed by
Advisors;
2. Filing of the Fund's Renewals and Amendment Filings, as required;
3. Filing of amendments to the Fund's registration statement;
4. Filing Fund sales reports, where required;
5. Payment, at Advisors' expense, of the filing fees;
6. Filing the Fund's Prospectuses and Statements of Additional
Information and any amendments or supplements thereto, where
required;
7. Filing the Fund's annual reports and proxy statements where
required; and
14
<PAGE>
8. The performance of such additional services as the Administrator and
Advisors may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky
Services by the Administrator shall not include determining the availability of
exemptions under a jurisdiction's blue sky law. Any such determination shall be
made by Advisors or the Fund or its legal counsel. However, at Advisors'
request, the Administrator shall make available to Advisors all of its
collective advice and resources in seeking such exemptions. In connection with
the services described herein, Advisors, on behalf of the Fund, shall issue in
favor of the Administrator a power of attorney to submit Notice Filings,
Renewals and Amendments on behalf of the Fund, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
15
<PAGE>
ADMINISTRATION AGREEMENT
TIAA-CREF Mutual Funds
SCHEDULE C
Blue Sky Service - State Filings
16
<PAGE>
Schedule C
TIAA-CREF
BLUE SKY REGISTRATION AMOUNTS
Alabama (Blue Chip) Registration Amount
- ------- -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
Alaska Registration Amount
- ------ -------------------
International Equity Fund 100,000
-------------------
Growth Equity Fund 100,000
-------------------
Growth & Income Fund 200,000
-------------------
Managed Allocation Fund 100,000
-------------------
Bond Plus Fund 200,000
-------------------
Money Market Fund 200,000
-------------------
- --------------------------------------------------------------------------------
Arkansas Registration Amount
- -------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Arizona Registration Amount
- ------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
California Registration Amount
- ---------- -------------------
TIAA-CREF Indefinite
16-1
<PAGE>
COLORADO (Blue Chip) Registration Amount
- -------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Connecticut Registration Amount
- ----------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Delaware Registration Amount
- -------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Florida Registration Amount
- ------- -------------------
TIAA-CREF Exempt
-------------------
- --------------------------------------------------------------------------------
Georgia Registration Amount
- ------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Hawaii (Blue Chip) Registration Amount
- ------ -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
16-2
<PAGE>
Idaho Registration Amount
- ----- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Illinois Registration Amount
- -------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Indiana Registration Amount
- ------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Iowa Registration Amount
- ---- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Kansas (Blue Chip) Registration Amount
- ------ -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
Kentucky Registration Amount
- -------- -------------------
TIAA-CREF Indefinite
16-3
<PAGE>
Louisiana Registration Amount
- --------- -------------------
TIAA-CREF Indefinite
-------------------
- --------------------------------------------------------------------------------
Maine Registration Amount
- ----- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Maryland Registration Amount
- -------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Massachusetts Registration Amount
- ------------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Michigan (Blue Chip) Registration Amount
- -------- -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
16-4
<PAGE>
Minnesota Registration Amount
- --------- -------------------
TIAA-CREF $5,000,000
-------------------
- --------------------------------------------------------------------------------
Mississippi Registration Amount
- ----------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Missouri Registration Amount
- -------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Montana Registration Amount
- ------- -------------------
International Equity Fund 500,000
-------------------
Growth Equity Fund 500,000
-------------------
Growth & Income Fund 500,000
-------------------
Managed Allocation Fund 500,000
-------------------
Bond Plus Fund 500,000
-------------------
Money Market Fund 500,000
-------------------
- --------------------------------------------------------------------------------
Nebraska Registration Amount
- -------- -------------------
International Equity Fund 500,000
-------------------
Growth Equity Fund 500,000
-------------------
Growth & Income Fund 1,000,000
-------------------
Managed Allocation Fund 500,000
-------------------
Bond Plus Fund 1,000,000
-------------------
Money Market Fund 1,000,000
-------------------
16-5
<PAGE>
Nevada (Blue Chip) Registration Amount
- ------ -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
New Hampshire Registration Amount
- ------------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
New Jersey (Blue Chip) Registration Amount
- ---------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
New Mexico (Blue Chip) Registration Amount
- ---------- -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
New York Registration Amount
- -------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
16-6
<PAGE>
North Carolina Registration Amount
- -------------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
North Dakota Registration Amount
- ------------ -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Ohio
- ----
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Oklahoma Registration Amount
- -------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Oregon (Blue Chip) Registration Amount
- ------ -------------------
TIAA-CREF Blue Chip
- --------------------------------------------------------------------------------
Pennsylvania Registration Amount
- ------------ -------------------
TIAA-CREF 99,000,000
- --------------------------------------------------------------------------------
Puerto Rico Registration Amount
- ----------- -------------------
International Equity Fund 500,000
-------------------
Growth Equity Fund 500,000
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund 500,000
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
16-7
<PAGE>
Rhode Island (Blue Chip) Registration Amount
-------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
South Carolina Registration Amount
-------------------
International Equity Fund $900,000,000
-------------------
Growth Equity Fund $900,000,000
-------------------
Growth & Income Fund $900,000,000
-------------------
Managed Allocation Fund $900,000,000
-------------------
Bond Plus Fund $900,000,000
-------------------
Money Market Fund $900,000,000
-------------------
- --------------------------------------------------------------------------------
South Dakota (Blue Chip) Registration Amount
- ------------ -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
Tennessee Registration Amount
- --------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
16-8
<PAGE>
Texas Registration Amount
- ----- -------------------
International Equity Fund 1,500,000
-------------------
Growth Equity Fund 1,500,000
-------------------
Growth & Income Fund 4,000,000
-------------------
Managed Allocation Fund 1,500,000
-------------------
Bond Plus Fund 4,000,000
-------------------
Money Market Fund 4,000,000
-------------------
- --------------------------------------------------------------------------------
Utah (Blue Chip) Registration Amount
- ---- -------------------
TIAA-CREF Indefinite or
Blue Chip
- --------------------------------------------------------------------------------
Vermont Registration Amount
- ------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Virginia Registration Amount
- -------- -------------------
TIAA-CREF Indefinite
- --------------------------------------------------------------------------------
Washington Registration Amount
- ---------- -------------------
International Equity Fund 2,000,000
-------------------
Growth Equity Fund 2,000,000
-------------------
Growth & Income Fund 5,000,000
-------------------
Managed Allocation Fund 2,000,000
-------------------
Bond Plus Fund 5,000,000
-------------------
Money Market Fund 5,000,000
-------------------
- --------------------------------------------------------------------------------
16-9
<PAGE>
West Virginia Registration Amount
- -------------- -------------------
International Equity Fund Blue Chip
-------------------
Growth Equity Fund Blue Chip
-------------------
Growth & Income Fund Blue Chip
-------------------
Managed Allocation Fund Blue Chip
-------------------
Bond Plus Fund Blue Chip
-------------------
Money Market Fund Blue Chip
-------------------
- --------------------------------------------------------------------------------
Wisconsin Registration Amount
- --------- -------------------
International Equity Fund Indefinite
-------------------
Growth Equity Fund Indefinite
-------------------
Growth & Income Fund Indefinite
-------------------
Managed Allocation Fund Indefinite
-------------------
Bond Plus Fund Indefinite
-------------------
Money Market Fund Indefinite
-------------------
- --------------------------------------------------------------------------------
Wyoming Registration Amount
- ------- -------------------
TIAA-CREF Exemption
Approved: /s/ Carol L. Schor
----------------------------
Carol L. Schor
Date: 7/16/97
--------------------------------
16-10
<PAGE>
SCHEDULE D
TIAA-CREF
Listing of Reports Prepared by
State Street Fund Administration Department
Report Name Frequency
- ----------- ---------
Reports on Compliance with SEC and IRS
Restrictions in accordance with the Fund Profile Monthly or more frequently,
if requested and agreed
to by the parties.
Annual and Semi-Annual Financial Statements Bi-Annually
Form N-SAR Bi-Annually
24f-2 Filing Report Annually
Form 1099 Misc. Annually
Form 1096 Annually
Form 1042 and 1042S Annually
Form 1902-AP Annually
Form 1902-b Annually
Form 8613 Annually
Form 2758 As needed
Form 1120 RIC Annually
Form 7004 As needed
Sec. 852(b)(3)(C) Notification As needed
17
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of , 199_ that TEACHERS ADVISORS, INC.
("Advisors') with principal offices at 730 Third Avenue, New York, New York
10017 (on behalf of TIAA-CREF Mutual Funds, "Fund") makes, constitutes, and
appoints STATE STREET BANK AND TRUST COMPANY (the "Administrator") with
principal offices at 225 Franklin Street, Boston, Massachusetts its lawful
attorney-in-fact for it to do as if it were itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund notices, applications, including without limitation,
applications to register shares, consents, including consents to service
of process, reports, including without limitation, all periodic reports,
claims for exemption, or other documents and instruments now or hereafter
required or appropriate in the judgment of the Administrator in connection
with the registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney,
individuals holding the titles of Officer, Blue Sky Manager, or Senior
Blue Sky Administrator at the Administrator shall have authority to act on
behalf of Advisors with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of Advisors or the Fund.
IN WITNESS WHEREOF, Advisors has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
TEACHERS ADVISORS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
18
TRANSFER AGENCY AND SERVICE AGREEMENT
between
TEACHERS ADVISORS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Terms of Appointment: Duties of the Bank............................... 1
2. Provision by the Bank of Computer Software and Hardware................ 4
3. Fees and Expenses...................................................... 7
4. Representations and Warranties of the Bank............................. 7
5. Representations and Warranties of Advisors............................. 8
6. Data Access and Proprietary Information................................ 9
7. Indemnification........................................................ 10
8. Standard of Care....................................................... 11
9. Covenants of Advisors and the Bank..................................... 11
10. Termination of Agreement............................................... 14
11. Additional Funds....................................................... 14
12. Assignment............................................................. 14
13. Amendment.............................................................. 15
14. New York Law to Apply.................................................. 15
15. Force Majeure.......................................................... 15
16. Consequential Damages.................................................. 15
17. Merger of Agreement.................................................... 15
18. Counterparts........................................................... 16
19. Notices................................................................ 16
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 16th Day of July, 1997, by and between Teachers
Advisors, Inc. ("Advisors"), having its principal office and place of business
at 730 Third Avenue, New York, NY 10017, on behalf of TIAA-CREF Mutual Funds
(the "Fund") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Fund intends to initially offer shares in six series, the Growth
and Income Series, Money Market Series, Growth Equity Series, International
Equity Series, Bond Plus Series, Managed Allocation Series, (each such series,
together with all other series subsequently established by the Fund and made
subject to this Agreement in accordance with Article 11, being herein referred
to as a "Portfolio", and collectively as the "Portfolios");
WHEREAS, Advisors is the investment manager to the Fund;
WHEREAS, Advisors and the Fund have entered into an investment management
agreement pursuant to which Advisors will provide or arrange to provide overall
management to the Fund, including investment management, custody, transfer
agency, dividend disbursing, legal, accounting, and administrative services; and
WHEREAS, Advisors, on behalf of the Fund and the Portfolios, desires to appoint
the Bank as the Fund's transfer agent, dividend disbursing agent and agent in
connection with certain other activities, and the Bank desires to accept such
appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. TERMS OF APPOINTMENT: DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, Advisors,
on behalf of the Fund and its Portfolios, hereby employs and appoints the
Bank to act as, and the Bank agrees to act as transfer agent for the
Fund's authorized and issued shares of beneficial interest ("Shares"),
dividend disbursing agent, and agent in connection with any accumulation,
open-account or similar plans provided to shareholders of each of the
respective Portfolios of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio,
including without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between
<PAGE>
Advisors, on behalf of the Fund and each of the Portfolios, as
applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of the Fund authorized by the
Trustees of the Fund pursuant to the Declaration of Trust of
the Fund (the "Custodian"). In connection with the acceptance
of orders for the purchase of Fund Shares, the Bank is
authorized to negotiate and process only those checks made
payable to the Bank, Boston Financial Data Services, Inc.
("BFDS"), the Fund or Advisors and those checks not made
payable to the order of the Bank, BFDS the Fund or Advisors,
which checks are tendered to the Bank for the purchase of
Fund Shares (i.e., checks made payable to prospective or
existing Shareholders, such checks are commonly known as
"third party checks") in amounts up to and no greater than
$10,000;
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account(s);
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholder(s);
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(vii) Provide, on behalf of the Fund, timely, accurate and factual
responses to Shareholder inquiries received over the phone,
by mail, by facsimile, or by other electronic means. Also,
maintain copies of written correspondence received, and
produce, deliver, and maintain copies of correspondence
generated in response to such inquiries;
(viii) Maintain records of account for and advise the Fund and its
Shareholders as to items (i) through (vii) and;
(ix) Record the issuance of Shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of Shares of the Fund which are authorized, based upon data
provided to it by Advisors, on behalf of the Fund,
2
<PAGE>
and issued and outstanding. The Bank shall also provide
Advisors or the Fund on a regular basis with the total number
of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of
Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of
Advisors or the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing and
tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding, depositing and reporting taxes on
U.S. resident and non-resident alien accounts, preparing, filing
and issuing U.S. Treasury Department and IRS Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders and
maintaining appropriate records in compliance with all applicable
regulatory requirements, preparing and mailing confirmation forms
and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable Advisors and/or its designee
to monitor the total number of Fund Shares sold in each State. Such
system shall include the generation and delivery to Advisors and/or
its designee of a daily report detailing the sale of Fund Shares for
the previous day in each of the States Fund Shares are sold.
(c) In connection with state tax reporting services to be provided by
the Bank pursuant to this Agreement, the Bank and Advisors shall
mutually agree on state tax reporting obligations on an annual or
other mutually agreeable periodic basis.
(d) In addition, Advisors and/or its designee shall: (i) identify to the
Bank in writing those transactions and assets to be treated as
exempt from blue sky reporting for each State; and (ii) verify the
establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State.
The responsibility of the Bank for the Fund's blue sky registration
status is solely limited to the initial establishment of
transactions and the reporting of such transactions as provided
above.
(e) Procedures as to who shall provide certain of these services in this
Section 1 may be established from time to time by agreement between
Advisors on behalf of the Fund and each Portfolio and the Bank per
the attached service responsibility schedule. The Bank may at times
perform only a portion of these services and Advisors or its agent
may perform these services on the Fund's behalf.
3
<PAGE>
(f) The Bank shall provide additional services on behalf of the Fund
(i.e., services pertaining to escheatments, garnishment orders,
bankruptcy and divorce proceedings, IRS or State tax authority tax
levies and summonses, and U.S. Treasury Office of Foreign Assets
Control and all matters relating to the foregoing) which may be
agreed upon in writing between Advisors and the Bank.
(g) The Bank shall provide trained telephone customer service staff who
will process Shareholder telephone transaction requests including
but not limited to those described in Section 1.2 (a) above. The
Bank and Advisors understand and agree that such staff will be
considered to be dedicated to providing services primarily to the
Fund, but may, from time to time, during periods of exceptional
business volume, be utilized to provide services to one or another
of the Bank's other clients. Such individuals will be appropriately
licensed by the National Association of Securities Dealers ("NASD")
(Series 6 and 63). Any such individuals engaged in a supervisory
capacity over such licensed telephone customer service staff
representatives shall also be appropriately licensed by the NASD to
serve in that capacity (Series 26). While such individuals will
provide services on behalf of the Fund, it is understood that these
individuals will be Registered Representatives of the Bank. Customer
Service staff will be available to accept telephone calls during the
hours of 8:00 a.m. to 11:00 p.m. Eastern Standard Time, during all
business days the New York Stock Exchange is open.
(h) The Bank shall provide trained customer transaction processing staff
who will process Shareholder transaction requests, other that
telephone requests referenced in Section 1.2 (g) above, including
but not limited to those described in Section 1.2 (a) above. The
Bank and Advisors understand and agree that such staff will be
considered to be dedicated to providing services primarily to the
Fund, but may, from time to time, during periods of exceptional
business volume, be utilized to provide services to one or another
of the Bank's other clients.
2. PROVISION BY THE BANK OF COMPUTER SOFTWARE AND HARDWARE
2.1 The Bank will provide computer software and hardware, or arrange for it to
be provided, and provide for the maintenance of such software and
hardware, for the purposes of performing its duties as described herein,
specifically including, but not limited to establishing electronic
interfaces with Advisors and the Fund as necessary to provide daily file
transfers from the Bank to Advisors and the Fund and vice-versa.
Specifically, but not by way of limitation, the Bank will make available
to Advisors on behalf of the Fund and each Portfolio the following
systems:
a. DST TA/2000 System and its peripheral applications
b. DST AWD and AWD/View Manager Systems
c. DST Investor System
d. DST CSW/ISW
4
<PAGE>
2.2 The Bank will insure that on-line environments are available each business
day between the hours of 7:00 a.m. and 8:00 p.m. Eastern Standard Time and
the Automated Telephone System (ATS) environment supporting voice response
applications, and the environment supporting World Wide Web applications
are available 24 hours a day, each day of the year with the exception of
once a week on Sunday mornings for maintenance.
2.3 The Bank will provide Advisors with full documentation of all computer
software and hardware to be utilized for the purposes of administering its
duties as described herein, including but without limitation,
applications, interfaces, database structures, hardware architecture and
communication links etc.
2.4 The Bank will notify Advisors, in writing, at least sixty (60) days in
advance of the implementation of any and all changes to software and
hardware that will materially affect the administration of its duties
and/or the interfaces established with Advisors and the Fund. Further, the
Bank will plan and execute, to the reasonable satisfaction of Advisors,
appropriate levels of unit and acceptance testing of any such changes
before implementing them into the production environment(s) utilized to
meet its responsibilities to Advisors and the Fund as described herein.
2.5 The Bank agrees to take all reasonable steps necessary to remedy
production problems with the operation of the software and hardware,
including but without limitation, those related to programming errors and
operating environment malfunctions, until such problems have been remedied
as mutually agreed to by Advisors and the Bank.
2.6 The Bank will maintain commercially reasonable security protocols for all
software and hardware utilized in meeting its administrative duties as
described herein; including but without limitation, those related to
applications, data centers, systems, networks, telecommunication links,
tape management facilities, and virus control mechanisms. The Bank, upon
its knowledge of any material violation of the established security
protocols, shall notify, by telephone, Advisors' Manager of Technical
Services, within twenty-four (24) hours following the discovery of said
violation(s). Further, the Bank will comply, within one (1) business day,
with any request from Advisors for a security lock out of any employee of
Advisors or Officer of the Fund.
2.7 The Bank will provide for back-up of the computer software and hardware,
maintain Advisors' and the Fund's data files in a manner so as to minimize
risk of damage or loss and will provide for daily back-up of those data
files. The Bank will maintain a comprehensive disaster recovery plan and
will maintain back-up processing facilities, and will provide for
transition to such back-up processing sites in the event that computer
software or hardware downtime at the Bank's offices, or those of its
subcontractors exceeds twenty-four (24) consecutive hours.
5
<PAGE>
2.8 The Bank agrees to provide Advisors with a copy of its Disaster Recovery
Plan upon request and further agrees to annually provide Advisors and the
Fund with audited copies of SAS 70 reports.
2.9 The Bank further agrees to provide connectivity for on-line access,
transmissions of data files, and all other functions as described herein
to Advisors in New York City, New York, White Plains, New York, Denver,
Colorado, Advisors' back-up site in Sterling Forest, NY and such
additional sites to be mutually agreed upon by the parties . In the event
that Advisors or the Fund must invoke their own disaster recovery plans,
the Bank agrees to work with them to make alternative site access
available for use within a forty-eight hour time period from the time of a
disaster declaration by Advisors or the Fund and to reasonably accommodate
daily processing outside of a regular business day in the event of an
emergency situation incurred by Advisors or the Fund.
2.10 As part of Advisors' implementation plan, the Bank will provide Advisors'
employees, including end-users and technical staff, with training on all
systems that are proprietary to the Bank and that will be utilized by
employees of Advisors in connection with this Agreement. Such training
will take place at the Advisors' New York offices at times agreed to by
the parties. Similarly, the Bank will provide training required as a
result of administrative, systems or operating changes initiated by the
Bank. However, training requested by Advisors for new employees, or for
changes initiated by Advisors, will be provided on a schedule and in a
location mutually agreed to in writing by the parties and the Bank's costs
related to such subsequent training shall be billed to Advisors as an
out-of-pocket expense.
2.11 The Bank will ensure that technical support services from DST Systems,
Inc. ("DST") are available to Advisors and the Fund 24 hours a day each
day of the year. BFDS technical support staff will be made available each
business day between the hours of 7:00 a.m. and 11:00 p.m. Eastern
Standard Time. The Bank will provide a list of contact staff and phone
numbers, including those of unit/shift managers at BFDS and DST, to
Advisors' Director, Technical Services.
2.12 The Bank will conduct batch processing of all Shareholder transactions
each business day. Transactions received by 4:00 p.m. Eastern Standard
Time will be applied to the current business day. The Bank will ensure
that batch processing files are available for electronic transmission to
Advisors and the Fund between the hours of 3:00 a.m. and no later than
5:00 a.m. Eastern Standard Time each day. The Bank will ensure monitoring
of batch on-line transmissions and will immediately notify Advisors'
Production Processing staff in the event that production/transmission
problems occur or when batch transmission windows are anticipated to be
exceeded.
2.13 The Bank will provide Advisors and the Fund with five (5)AWD/CSW
compatible workstations for its use. The parties shall mutually agree upon
any provision by the Bank to Advisors of any additional connectivity and
workstations requested by Advisors and any
6
<PAGE>
additional charges resulting therefrom. Each workstation will be
configured to be fully compatible with BFDS/DST applications utilized to
provide teleservicing/transaction capabilities.
2.14 Upon request, the Bank will provide Advisors with connectivity to all
appropriate computer or other systems for use by Advisors in servicing
Shareholders at locations designated by Advisors in a mutually agreeable
system configuration.
3. FEES AND EXPENSES
3.1 For the services rendered by the Bank pursuant to this Agreement, and the
other Agreements referenced in such fee schedule, Advisors agrees on
behalf of the Fund and each of the Portfolios to compensate the Bank by
paying the Bank the fees set out in the fee schedule attached hereto.
Advisors also agrees to pay the Communication Link Expense charges and
Customer Service Staff Telephonic Overflow Support charges set forth in
the fee schedule. Such fees, charges, and out-of-pocket expenses
referenced under Section 3.2 below may be changed from time to time
subject to mutual written agreement between Advisors and the Bank.
3.2 In addition to the fees and charges referenced under Section 3.1 above,
Advisors agrees on behalf of the Fund and each of the Portfolios to
reimburse the Bank for reasonable out-of-pocket expenses as reflected in
the fee schedule attached hereto.
3.3 Advisors agrees on behalf of the Fund and each of the Portfolios to pay
all fees and reimbursable expenses within thirty (30) days following the
receipt of the monthly billing notice. Upon the termination of this
Agreement before the end of any month, the fee for the part of the month
before such termination shall be prorated according to the proportion
which such part bears to the full monthly period and shall be payable
within thirty (30) days following the receipt of the billing notice.
4. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to Advisors that:
4.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts;
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts;
4.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement;
4.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
7
<PAGE>
4.5 It has and will continue to have access to, and will take the commercially
reasonable steps necessary to ensure appropriate maintenance of, the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
4.6 It will comply with all applicable regulatory requirements.
5. REPRESENTATIONS AND WARRANTIES OF ADVISORS
Advisors represents and warrants to the Bank that:
5.1 The Fund is a business trust organized and existing and in good standing
under the laws of the State of Delaware;
5.2 The Fund is empowered under applicable laws and by its Declaration of
Trust and By-Laws to receive services pursuant to this Agreement;
5.3 The Fund has performed all requisite corporate proceedings to receive
services pursuant to this Agreement;
5.4 The Fund is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended;
5.5 A registration statement under the Securities Act of 1933, as amended, on
behalf of each of the Portfolios will be effective upon or prior to the
initial offering of the Fund's Shares to the public and will remain
effective while the Fund's Shares are offered to the public, and
appropriate State securities law filings have been or will be made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale;
5.6 Advisors is a corporation organized and existing and in good standing
under the laws of the State of Delaware;
5.7 Advisors is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
5.8 Advisors has taken all requisite corporate proceedings to authorize it to
enter into and perform this Agreement;
5.9 Advisors is authorized to act on behalf of the Fund in entering into and
performing this Agreement; and
5.10 Advisors is individually liable for all duties and obligations under this
Agreement on behalf of itself and the Fund, including, without limitation,
the payment of fees.
8
<PAGE>
6. DATA ACCESS AND PROPRIETARY INFORMATION
6.1 Advisors acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to Advisors by the Bank as part of Advisors ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank ("Data Access
Services") constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial value
to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. Advisors agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees that
it shall not divulge to any person or organization except as may be
provided hereunder. Without limiting the foregoing, Advisors agrees for
itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Bank and agreed to by Advisors and solely in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other
location, except with the prior written consent of the Bank;
(e) that Advisors shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under
other federal or State law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 6. The obligations of this Section shall
survive any earlier termination of this Agreement.
6.2 If the transactions available to Advisors on behalf of the Fund include
the ability to originate electronic instructions to the Bank in order to
(i) effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event the Bank
shall be entitled to rely on the validity and authenticity of such
instruction without undertaking any further inquiry as long as such
instruction is undertaken in conformity with security procedures
established by Advisors and the Bank from time to time.
9
<PAGE>
7. INDEMNIFICATION
7.1 The Bank shall not be responsible for, and Advisors on behalf of the Fund
shall indemnify and hold the Bank harmless from any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and with reasonable care and without negligence
or willful misconduct;
(b) Advisors' lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of
Advisors hereunder;
(c) The reliance on or use by the Bank or its agents or subcontractors
of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have
been prepared, maintained or performed by Advisors or any other
person or firm on behalf of Advisors;
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any written instructions or request of Advisors on
behalf of the Fund and the applicable Portfolio; and
(e) The negotiation and processing by the Bank of only those "third
party" checks referenced in Section 1.2 (a) (i) of this Agreement.
7.2 At any time the Bank may apply to an authorized officer of Advisors or the
Fund for instructions, or may consult with the Fund's in-house legal
counsel or may at its own expense consult with its own legal counsel with
respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by Advisors
for any action taken or omitted by it in good faith and with reasonable
care and without negligence in reliance upon such instructions from an
authorized officer of Advisors or of the Fund or the opinion of the Fund's
in-house counsel or the Bank's legal counsel, provided however, with
respect to the performance of any action or omission of any action upon
such legal advice by the Bank's legal counsel, the Bank shall be required
to conform to the standard of care set forth herein and further provided
that the Bank shall follow the advice of the Fund's in-house legal counsel
in any and all instances where the advice of the Fund's in-house legal
counsel and the Bank's legal counsel differ. The Bank, its agents and
subcontractors shall be protected and indemnified in acting in good faith
and with reasonable care and without negligence upon any paper or document
furnished by or on behalf of Advisors or the Fund, reasonably believed to
be genuine and to have been signed by duly authorized person or persons,
or upon any instruction, information, data, records or documents provided
to the Bank or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by Advisors or the
Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from Advisors.
10
<PAGE>
7.3 In order that the indemnification provisions contained in this Section 7
shall apply, upon the assertion of a suit for which Advisors may be
required to indemnify the Bank, the Bank shall promptly notify Advisors of
such assertion, and shall keep Advisors advised with respect to all
developments concerning such suit. Advisors on behalf of the Fund, will be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any liability
subject to the indemnification provided above. In the event Advisors
elects to assume the defense of any such suit and retain counsel, the Bank
or any of its affiliated persons, named as defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses
of such counsel unless Advisors shall have specifically authorized in
writing the retaining of such counsel. The Bank shall not settle any
action, suit, claim, or demand, for which indemnity may be sought
hereunder without the prior written approval of Advisors, which approval
shall not be unreasonably withheld. The indemnification provisions
contained herein shall survive the termination of this Agreement.
8. STANDARD OF CARE
8.1 The Bank shall at all times act in good faith and with reasonable care and
agrees to use its best efforts to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct or that of its
employees, agents, or subcontractors.
8.2 In addition to the liability of the Bank under this Section 8, the Bank
shall also be liable to Advisors for all reasonable out-of-pocket costs
and expenses incurred by Advisors in connection with any claim by Advisors
against the Bank, its agents or subcontractors arising from the
obligations of the Bank hereunder, including, without limitation, all
reasonable attorneys' fees and expenses incurred by Advisors in asserting
any such claim, and out-of-pocket expenses incurred by Advisors in
connection with any lawsuits or proceedings relating to such claim,
provided that Advisors has recovered from the Bank for such claim.
9. COVENANTS OF ADVISORS AND THE BANK
9.1 Advisors shall on behalf of the Fund and each of the Portfolios promptly
furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund approving this Agreement;
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto; and
(c) A copy of the resolution of the Board of Advisors authorizing
entering into this Agreement.
11
<PAGE>
9.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to Advisors and the Fund for safekeeping of check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such forms and devices.
9.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable provided that
it is in compliance with all applicable regulatory requirements and it is
consistent with prevailing industry standards for transfer agents. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the rules thereunder, the Bank agrees that all such records
prepared or maintained by the Bank relating to the services to be
performed by the Bank hereunder are the property of the Fund and will be
preserved, maintained and make available in accordance with such Section
and Rules, and will be surrendered promptly to Advisors and the Fund in
accordance with their request. Advisors on behalf of the Fund may, at any
time and from time to time, reasonably request copies of such records and
the Bank will provide same.
9.4 The Bank and Advisors agree that all books, records, information and data
pertaining to the business of the other party or the Fund which are
exchanged or received pursuant to the negotiation or the carrying out of
this Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
9.5 The Bank shall maintain reasonable safeguards for maintaining any
Shareholder records which are furnished by or on behalf of the Fund to the
Bank in the form of computer tapes, data transmissions or any other
medium. The Bank shall not, at any time, use such records or any
information contained therein for any purpose other than as specifically
authorized by this Agreement, or in writing by Advisors or the Fund. No
such record or any part thereof shall be disclosed or provided to any
other person, except as specifically authorized by this Agreement, or upon
the prior written consent of an authorized officer of Advisors or the Fund
or as otherwise required by law.
9.6 The Bank shall maintain reasonable safeguards for maintaining in
confidence any and all documentation and information obtained in
connection with this Agreement furnished to it by or on behalf of the Fund
or by any Shareholder or related to the Fund or any Shareholder, and all
records created from that documentation and information (collectively, the
"Mutual Fund Information"). The Bank shall not make use of or disclose the
Mutual Fund Information nor authorize its use or disclose the same to any
person or entity, other than Advisors and the Fund, except as specifically
authorized by this Agreement, or upon the prior written consent of an
authorized officer of Advisors or the Fund or as otherwise required by
law. Copies of such documentation and information shall remain the
property of the Fund and upon termination of the Agreement or otherwise
requested by Advisors such documentation and information furnished to the
Bank by Advisors, the Fund, or a Shareholder shall be promptly returned to
Advisors, or the Bank will certify to Advisors that all such information
has been destroyed.
12
<PAGE>
9.7 The Bank shall promptly notify an authorized officer of Advisors in
writing of any and all legal actions received by or served on the Bank and
shall use its best efforts to promptly notify Advisors of all contacts
and/or correspondence received by the Bank from any regulatory department
or agency or other governmental authority purporting to regulate Advisors
or the Fund and not the Bank, regarding the Bank's duties and activities
performed
in connection with this Agreement, and will cooperate with Advisors or the
Fund in responding to these contacts and any necessary correspondence.
9.8 The Bank shall permit Advisors or the Fund, during the term of this
Agreement, through any person(s) designated by Advisors or the Fund, at
such reasonable times during normal business hours and as often as
Advisors or the Fund may reasonably deem appropriate but not so often as
to place unreasonable burden on the Bank, within ten (10) business day's
prior written notice to an Authorized Officer of the Bank, to conduct an
inspection. As a matter of clarification, Advisors on behalf of the Fund
acknowledges and agrees that no such inspection shall include any visits,
inspections, examinations, audits, or verification of any of the
properties, documents, books, reports, work papers and other records
belonging to, or in the possession of the Bank, involving any service,
product or work the Bank does or possess other than those relating
directly to this Agreement and the service performed by the Bank in
connection therewith.
9.9 The Bank will cause BFDS, the record-keeping transfer agent hereunder, to
provide Advisors with copies of audit reports filed with governmental
authorities.
9.10 The Bank will provide Advisors with copies of all policies and procedure
manuals utilized by any and all of the Bank's operating units performing
duties related to the Bank's responsibilities to Advisors on behalf of the
Fund as described herein.
9.11 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, that arise from persons other than authorized
officers of Advisors or the Fund, the Bank will immediately notify
Advisors and secure instructions from an authorized officer of Advisors as
to such inspection.
9.12 With respect to the Bank's performance of the services as outlined herein,
the Bank agrees to work in concert with Advisors to establish and document
performance measurement standards for such services. The Bank and Advisors
shall mutually agree as to the frequency, type, and format of reports
which document the Bank's performance relative to those standards. These
standards may be modified from time to time subject to mutual written
agreement between Advisors and the Bank.
9.13 Notwithstanding the restrictions on confidentiality in Section 9 herein,
when required by law the Bank will disclose Shareholder records (e.g.,
subpoena for divorce) and Fund records (e.g., SEC inspection powers).
Advisors and the Bank will agree on procedures regarding such mandatory
disclosure and the Bank will make every reasonable effort to notify
Advisors of requests for such information by the SEC or any other federal
or State securities regulatory agencies prior to the release of such
records.
13
<PAGE>
10. TERMINATION OF AGREEMENT
10.1 This Agreement shall become effective as of the date first written above.
The Agreement shall remain in effect for a period of 5 years from the
effective date provided, however, that either party may terminate this
Agreement without prejudice to any other remedy it may have, upon the
material breach of this Agreement provided, however, that the
non-breaching party shall have given the breaching party written notice of
such breach and that the breaching party cannot or shall not have cured to
the reasonable satisfaction of the non-breaching party any such breach
within 30 days of such notice. Termination shall become effective 120 days
after the end of the 30 day cure period. A material breach of this
Agreement will include, without limitation, the failure by the Bank to
conform to the performance measurements standards, which standards shall
be mutually agreed to in writing by the Bank and Advisors within 45 days
of the date of this Agreement and when mutually agreed to made a part of
this Agreement by schedule. The parties agree that the failure to agree
upon such standards within such 45 day period will enable either party to
terminate this Agreement upon written notice to the other party, subject
to the notice periods that are described herein that would otherwise apply
to a termination of this Agreement. The parties further understand and
agree that the party causing a "recurring problem" as such term is defined
in the standards shall not be entitled to the aforementioned right to cure
within 30 days. This Agreement shall automatically continue in effect
after such five year period unless terminated by Advisors on ninety (90)
days' prior written notice to the Bank, or by the Bank on one hundred
eighty (180) days' prior written notice to Advisors, with such termination
to be effective at the time specified in the written notice.
10.2 Should Advisors exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and
material will be borne by the Advisors on behalf of the applicable
Portfolio(s).
10.3 If this Agreement is terminated, both parties will act in good faith to
cooperate in an orderly transition.
11 ADDITIONAL FUNDS
11.1 In the event that the Fund establishes one or more series of Shares in
addition to those described in the preamble of this Agreement with respect
to which Advisors desires to have the Bank render services as transfer
agent for such series of Fund Shares under the terms hereof, Advisors
shall so notify the Bank in writing, and such series of Shares shall
become a Portfolio hereunder.
12 ASSIGNMENT
12.1 Except as provided in Section 12.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
14
<PAGE>
12.2 The Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted assigns.
12.3 The Bank may, without further consent on the part of Advisors, subcontract
for the performance hereof with (i) BFDS, a Massachusetts corporation
which is duly registered as a transfer agent pursuant to Section 17A(c)(2)
of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"),
(ii) a BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(2) or (iii) a BFDS affiliate duly registered as a transfer
agent under 17A(c)(2); provided, however, that the Bank shall be as fully
responsible to Advisors for the acts and omissions of any subcontractor or
agent as it is for its own acts and omissions.
13. AMENDMENT
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. NEW YORK LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of New York
15. FORCE MAJEURE
The Bank shall not be liable for any damages to Advisors or the Fund
resulting from the Bank's failure to perform under this Agreement or for
the loss of all or part of any records or proprietary information of
Advisors or of the Fund maintained or preserved by it pursuant to this
Agreement or for any delays or errors occurring because of acts of God,
equipment or transmission failure, or damage reasonably beyond its control
except to the extent that the Bank shall have failed to undertake
commercially reasonable efforts to minimize the likelihood of occurrence
of such circumstances or to mitigate any loss or damage caused to Advisors
or the Fund by such circumstances.
16. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15
<PAGE>
18. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
19. NOTICES
Any notice or other instrument in writing authorized or required by this
Agreement to be given to Advisors or the Fund shall be sufficiently given
if addressed to Advisors and mailed by registered or certified mail or
delivered to it or delivery refused therefore, at its offices at:
Teachers Advisors, Inc.
730 Third Avenue
New York, NY 10017
Attention: Mutual Fund Product Manager
cc: Lisa Snow, Esq.
Law Dept., 9th Floor
TIAA-CREF
730 Third Avenue
New York, NY 10017
or at such other place as Advisors may from time to time designate in
writing.
Any notice or other instrument in writing authorized or required by this
Agreement to be given to the Bank shall be sufficiently given if addressed
to the Bank and mailed by registered or certified mail or delivered to it
or delivery refused therefor, at its offices at:
President
Boston Data Financial Services, Inc.
2 Heritage Drive
Quincy, MA 02021
or at such other place as the Bank may from time to time designate in
writing.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
TEACHERS ADVISORS, INC.
BY: /s/ Virgil H. Cumming
-----------------------------------
Executive Vice President
ATTEST:
/s/ Ilana R. Marcus
- ------------------------------
STATE STREET BANK AND TRUST
COMPANY
BY: /s/ Ronald E. Logue
-----------------------------------
Executive Vice President
ATTEST:
/s/ S. Cesso
- -----------------------------
17
<PAGE>
STATE STREET BANK & TRUST COMPANY FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Advisors
---- --------
1. Receive orders for the purchase
of Shares. X
2. Issue Shares and hold Shares in
Shareholder accounts. X
3. Receive redemption requests. X
4. Pay over monies to redeeming
Shareholders. X
5. Effect transfers of Shares. X
6. Prepare and transmit dividends
and distributions. X
7. Maintain records of account. X
8. Maintain and keep a current and
account control book for the Fund and
each series thereof. X
9. Mail and tabulate proxies. X
10. Mail Shareholder reports. X
11. Mail prospectuses to current
Shareholders. X
12. Withhold, deposit and report taxes
on U.S. resident and non-resident
alien accounts. X
13. Prepare and file and issue U.S. Treasury
Department, IRS and other forms. X
18
<PAGE>
14. Prepare and mail account and
confirmation statement for
Shareholders. X
15. Provide Shareholder account
information. X
16. Blue sky reporting. X
17. Reporting of abandoned property and other
Services pursuant to Section 1.2 (f) X
18. Provide trained telephone customer service
staff pursuant to Section 1.2 (g) to respond
to Shareholder inquiries and process
Shareholder transaction requests and
customer transaction processing staff
pursuant to Section 1.2 (h) to process
Shareholder transaction requests. X
* Such services are more full described in Section 1.2 (a), (b), (c),
(e), (f), (g), and (h) of the Agreement.
TEACHERS ADVISORS, INC.
BY: /s/ Virgil H. Cumming
-------------------------------
Executive Vice President
ATTEST:
/s/ Ilana R. Marcus
- -----------------------------------
STATE STREET BANK AND TRUST
COMPANY
BY: /s/ Ronald E. Logue
-------------------------------
Executive Vice President
ATTEST:
/s/ S. Cesso
- ------------------------------------
19
SEED MONEY AGREEMENT
SEED MONEY AGREEMENT (the "Agreement") made as of this 1st day of
July, 1997 by and between Teachers Insurance and Annuity Association of America
("TIAA"), a nonprofit corporation existing under the laws of the State of New
York, and TIAA-CREF Mutual Funds ("Mutual Fund"), a Delaware Business Trust.
1. TIAA hereby agrees to invest in the Mutual Fund the sum of
$250,000,000 on July 14 or as soon thereafter as practicable.
2. In consideration for such investment and without deduction of
any charges, the Mutual Fund shall credit TIAA with such shares, of which TIAA
shall be the owner, in each Series of the Mutual Fund in such amounts as shall
be mutually agreed upon. Such shares will share pro rata in the investment
performance of each Series and shall be subject to the same valuation procedures
and the same periodic deductions as are other shares in that Series. The value
of such shares in each series other than the Money Market Fund on the day the
initial investment is made shall be $10.00. The value of a share in the Money
Market Fund shall be $1.00.
3. TIAA represents that the shares acquired under this Agreement
are being, and will be, acquired for investment (and not with a view to
distribution or resale to the public) and can be disposed of only by redemption.
<PAGE>
- 2 -
4. Shares acquired under this Agreement will be held by TIAA for
its own account until redeemed by TIAA. Amounts will be redeemed at prices equal
to the respective net asset value of shares of the applicable series of the
Mutual Fund next determined after the Mutual Fund receives TIAA's proper notice
of redemption.
5. TIAA may purchase, and the Mutual Fund may issue, additional
shares as the parties may agree.
6. This Agreement will be construed and enforced in accordance
with and governed by the provisions of the Investment Company Act of 1940 and
the laws of the State of New York.
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
By /s/ John A. Somers
---------------------------------
Executive Vice President
TIAA-CREF MUTUAL FUNDS
By /s/ Thomas G. Walsh
---------------------------------
President
