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PROSPECTUS
April 1, 1998
As Supplemented August 10, 1998
and March 12, 1999
INTERNATIONAL EQUITY FUND
GROWTH EQUITY FUND
GROWTH & INCOME FUND
MANAGED ALLOCATION FUND
BOND PLUS FUND
MONEY MARKET FUND
[TIAA MUTUAL FUNDS
CREF ------------
LOGO]
Ensuring the future for those who shape it.SM
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PROSPECTUS
DATED APRIL 1, 1998
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 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.
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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 April 1, 1998. You can get a copy of the SAI by calling 800 223-1200 or
writing us c/o State Street Bank, P.O. Box 9081, Boston, MA 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.
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TABLE OF CONTENTS
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EXPENSE INFORMATION ...................................................... 5
FINANCIAL HIGHLIGHTS ..................................................... 7
THE TIAA-CREF MUTUAL FUNDS ............................................... 8
The Equity Funds ...................................................... 9
THE INTERNATIONAL EQUITY FUND ...................................... 9
THE GROWTH EQUITY FUND ............................................. 9
THE GROWTH & INCOME FUND ........................................... 10
Other Investments and Investment Techniques -- Equity Funds ........... 10
The Managed Allocation Fund ........................................... 11
The Bond PLUS Fund .................................................... 12
The Money Market Fund ................................................. 13
INVESTMENT PRACTICES AND RISK CONSIDERATIONS ............................. 14
Foreign Investments ................................................... 14
Currency Transactions ................................................. 15
Illiquid Securities ................................................... 15
Non-Investment Grade Bonds ............................................ 16
Repurchase Agreements ................................................. 16
Firm Commitment Agreements ............................................ 16
Investment Companies .................................................. 16
Lending Securities .................................................... 17
Borrowing ............................................................. 17
Mortgage-Backed Securities ............................................ 17
NET ASSET VALUE .......................................................... 18
SHAREHOLDER SERVICES ..................................................... 19
Types of Accounts ..................................................... 19
How to Buy Shares ..................................................... 19
How to Redeem Shares .................................................. 22
How to Exchange Shares ................................................ 25
Other Investor Information ............................................ 26
TIAA-CREF MUTUAL FUNDS' MANAGEMENT ....................................... 30
The Board ............................................................. 30
Teachers Advisors ..................................................... 30
Fund Managers ......................................................... 32
PERFORMANCE INFORMATION .................................................. 32
DIVIDENDS AND DISTRIBUTIONS .............................................. 33
TAXES .................................................................... 34
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GENERAL MATTERS .......................................................... 36
Voting Rights ......................................................... 36
Year 2000 Issues ...................................................... 36
Distributors .......................................................... 36
Administration ........................................................ 36
Custodial Services .................................................... 37
Legal Proceedings ..................................................... 37
Householding........................................................... 37
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 PROVIDE YOU SUCH INFORMATION OR MAKE SUCH REPRESENTATIONS, YOU
SHOULDN'T RELY ON THEM.
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EXPENSE INFORMATION
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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>
TOTAL FUND
MANAGEMENT FEES OPERATING EXPENSES
(AFTER FEE WAIVER) OTHER EXPENSES (AFTER FEE WAIVER)
(1) (2) (1)
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<S> <C> <C> <C>
The International Equity Fund 0.49% 0 0.49%
The Growth Equity Fund 0.45% 0 0.45%
The Growth & Income Fund 0.43% 0 0.43%
The Managed Allocation Fund (3) 0.00% 0 0.00%
The Bond PLUS Fund 0.30% 0 0.30%
The Money Market Fund 0.29% 0 0.29%
</TABLE>
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(1) TEACHERS ADVISORS, INC. ("ADVISORS"), THE INVESTMENT ADVISOR FOR THE FUNDS,
HAS AGREED TO WAIVE A PORTION OF ITS FEE FOR MANAGING EACH FUND (OTHER THAN
THE MANAGED ALLOCATION FUND, WHICH DOESN'T PAY A MANAGEMENT FEE). WITHOUT
THE WAIVER, MANAGEMENT FEES AND TOTAL OPERATING EXPENSES FOR THE
INTERNATIONAL EQUITY FUND, THE GROWTH EQUITY FUND, THE GROWTH & INCOME FUND,
THE BOND PLUS FUND AND THE MONEY MARKET FUND WOULD HAVE BEEN 0.99%, 0.95%,
0.93%, 0.80% AND 0.79% OF EACH FUND'S AVERAGE DAILY NET ASSETS,
RESPECTIVELY. THIS WAIVER SHALL REMAIN IN EFFECT UNTIL JULY 1, 2000.
(2) THESE FIGURES ARE BASED UPON ANNUALIZED AMOUNTS INCURRED FOR THE FISCAL
PERIOD ENDED DECEMBER 31, 1997.
(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.
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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 FIVE TEN
YEAR YEARS YEARS YEARS
----- ----- ----- -----
The International Equity Fund $5 $16 $27 $62
The Growth Equity Fund $5 $14 $25 $57
The Growth & Income Fund $4 $14 $24 $54
The Managed Allocation Fund $0 $ 0 $ 0 $ 0
The Bond PLUS Fund $3 $10 $17 $38
The Money Market Fund $3 $ 9 $16 $37
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.
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FINANCIAL HIGHLIGHTS
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The Financial Highlights presented below for the period ending December 31, 1997
have been audited by Ernst & Young LLP, independent auditors. Their report
appears in TIAA-CREF Mutual Funds' Annual Report, which is incorporated by
reference into the SAI. The Annual Report contains additional information about
the funds. It is available without charge upon request.
TIAA-CREF MUTUAL FUNDS FINANCIAL HIGHLIGHTS
FOR THE PERIOD JULY 17, 1997 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
INTER-
MONEY BOND GROWTH & GROWTH NATIONAL MANAGED
MARKET PLUS INCOME EQUITY EQUITY ALLOCATION
FUND FUND FUND FUND FUND FUND
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<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period $1.00 $10.00 $10.00 $10.00 $10.00 $10.00
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Gain (loss) from investment operations:
Net investment income 0.02 0.27 0.07 0.06 0.07 0.23
Net realized and unrealized gains
(losses) on investments 0.00 0.20 0.32 0.28 (1.07) 0.01
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Total gain (loss) from
investment operations 0.02 0.47 0.39 0.34 (1.00) 0.24
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Less distributions from:
Net investment income (0.02) (0.27) (0.07) (0.06) (0.07) (0.23)
In excess of net investment income -- -- -- -- (0.01) --
Net realized gains -- (0.11) -- (0.16) -- --
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Total distributions (0.02) (0.38) (0.07) (0.22) (0.08) (0.23)
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Net asset value, end of period $1.00 $10.09 $10.32 $10.12 $ 8.92 $10.01
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TOTAL RETURN 2.51% 4.79% 3.96% 3.44% (10.09)% 2.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period
(in thousands) $63,605 $58,403 $61,822 $64,487 $47,758 $59,087
Ratio of expenses to average
net assets before expense waiver 0.36% 0.37% 0.43% 0.44% 0.46% 0.00%
Ratio of expenses to average
net assets after expense waiver 0.13% 0.14% 0.20% 0.21% 0.23% 0.00%
Ratio of net investment income
to average net assets 2.49% 2.72% 0.76% 0.68% 0.56% 2.46%
Portfolio turnover rate n/a 143.61% 1.46% 29.44% 4.56% 0.00%
Average brokerage commissions
paid per share n/a n/a $0.0509 $0.0210 $0.0522 n/a
The percentages shown above are not annualized.
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</TABLE>
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Throughout this prospectus, "we" and "our" refer to the TIAA-CREF Mutual Funds.
"You" and "your" mean any shareholder or any prospective shareholder.
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THE TIAA-CREF MUTUAL FUNDS
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The TIAA-CREF Mutual Funds is a Delaware business trust that was organized on
January 15, 1997. It 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 $213.5 billion in assets as of
December 31, 1997, with TIAA managing approximately $93.8 billion and CREF
managing approximately $119.7 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
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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 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.
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 14.
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 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.
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The fund can also invest in companies in order to benefit from prospective
acquisitions, reorganizations or corporate restructurings or other special
situations.
The Growth Equity Fund can buy foreign securities and other instruments if we
believe they have superior investment potential. Depending on investment
opportunities, the fund may have as little as none of its assets in foreign
securities or as 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
14.
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 up to 20% of its total assets 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.
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The equity funds can, in addition to stocks, hold other types of securities with
equity characteristics, such as convertible bonds, preferred stock, warrants and
depository receipts or rights. Pending more permanent investments or to use cash
balances effectively, these funds can hold the same types of money market
instruments the Money Market Fund invests in (see page 13), as well as other
short-term instruments. These other instruments are the same type of instruments
the Money Market Fund holds, but they 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 14).
When market conditions warrant, the funds can invest directly in debt
securities. The equity funds can also hold debt securities that they acquire
because of mergers, recapitalizations or otherwise. 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 15.
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 the SAI.)
THE MANAGED ALLOCATION FUND
The MANAGED ALLOCATION FUND seeks favorable returns that reflect 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.
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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 up to
15%, depending on our analysis of market, economic and financial conditions. The
Managed Allocation Fund may occasionally be even more heavily weighted toward
equities or fixed income, if we believe market conditions warrant such a
balance.
For flexibility in meeting redemptions, expenses, and the timing of new
investments, and as a short-term defense during periods of unusual volatility,
the fund can also invest in government securities, as defined in the Investment
Company Act of 1940 (the "1940 Act"), short-term paper, 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 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 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 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. We don't expect
foreign investments to exceed 15% of the fund's assets.
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
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by Moody's or BB+ or lower by Standard & Poor's). We may use up to 25% of the
fund's assets for investments in this second segment -- although investments in
illiquid securities will not comprise more than 15% of the fund's assets.
The fund may buy and sell options and futures, preferred stock and other
instruments consistent with its investment objective.
THE MONEY MARKET FUND
The MONEY MARKET FUND seeks high current income to the extent consistent with
maintaining liquidity and preserving capital.
We seek to maintain a stable net asset value of $1.00 per share of the Money
Market Fund by investing in assets that present minimal credit risk, maintaining
an average weighted maturity of 90 days or less, and investing all of the fund's
assets in securities or other instruments maturing in 397 days or 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);
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(7) Asset-backed securities issued by domestic corporations or trusts;
(8) Obligations issued or guaranteed by foreign governments or their political
subdivisions, agencies, or instrumentalities; and
(9) Obligations of international organizations (and related government
agencies) designated or supported by the U.S. or foreign government
agencies to promote economic development or international banking.
The Money Market Fund will only purchase money market instruments that at the
time of purchase are "First Tier Securities", that is rated within the highest
category by at 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 for 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.
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INVESTMENT PRACTICES AND
RISK CONSIDERATIONS
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The following is a brief description of the funds' investment practices and risk
considerations. 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
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paying principal and interest to investors outside the country. Brokerage
commissions and transaction costs are often higher for foreign investments, and
it may be harder to use foreign laws and courts to enforce financial or legal
obligations.
The risks noted above often increase in emerging countries. For example,
emerging countries may have more unstable governments than developed countries,
and their economies may be based on only a few industries. Because their
securities markets may be very small, share prices may be volatile. In addition,
foreign investors are subject to a variety of special restrictions in many
emerging countries. For more about the risks of investing in these countries,
see the SAI.
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.
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NON-INVESTMENT GRADE BONDS
The Bond Plus Fund can buy and sell lower-rated (non-investment grade)
securities. These are usually called "high-yield" or "junk" bonds. Lower-rated
bonds offer higher returns but also entail higher risks. Their issuers may be
less creditworthy or have a higher risk of becoming insolvent. Small changes in
the issuer's creditworthiness can have more impact on the price of lower-rated
bonds than comparable changes would for investment grade bonds. Lower-rated
bonds can also be harder to value or sell, and their prices can be more volatile
than the prices of higher-quality securities.
Bear in mind that all these risks can also apply to the lower levels of
"investment grade" securities, 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 the
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
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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.
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 in the form of
collateralized mortgage obligations ("CMOs"), mortgage-backed bonds or
pass-through securities sold by private, governmental and government-related
organizations. 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 the SAI.)
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NET ASSET VALUE
- ----------------
We determine the net asset value (NAV) per share (share price) of each fund when
regular trading closes on the New York Stock Exchange (usually 4 p.m.) on each
day the Exchange is open. We compute each fund's NAV by dividing the value of a
fund's assets, less its liabilities, by the number of outstanding shares of that
fund.
Except as noted below, we use market quotations or independent pricing services
to value securities and other instruments. Debt securities maturing in 60 days
or less are valued at amortized cost.
If market quotations or independent pricing services aren't readily available,
we'll use a security's "fair value", as determined in good faith by or under the
direction of the TIAA-CREF Mutual Funds Board of Trustees. We also may use fair
value in certain other circumstances. For more, see the SAI.
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.
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- ---------------------
SHAREHOLDER SERVICES
- ---------------------
TYPES OF ACCOUNTS
o Individual accounts (for one person) or joint accounts (more than one
person).
o Trust accounts (other than foreign trust accounts).
o Accounts for a minor child under the Uniform Gift to Minors Act (UGMA) or
Uniform Transfer to Minors Act (UTMA).
o Retirement Accounts: Traditional IRAs and Roth IRAs. These accounts let you
shelter investment income from federal income tax while saving for
retirement. For more information, call us. These will be available beginning
late March, 1999.
o Education IRAs. This account lets you shelter investment income from federal
income tax while saving to pay qualified higher education expenses of a
designated beneficiary. For more information, call us.
o Corporate/institutional accounts. Please call us for more information about
opening this type of account.
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 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 26.) We will accept third party checks for
purchases of $10,000 or less.
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Please send your check and/or application to the following addresses:
First Class Mail: The TIAA-CREF Mutual Funds
c/o State Street Bank
P.O. Box 8009
Boston, MA 02266-8009
Overnight Mail: The TIAA-CREF Mutual Funds
c/o State Street Bank
66 Brooks Drive
Braintree, MA 02184-3839
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. It will take us
about 10 days from the time we receive this information to set up your automatic
investment plan. 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. There is a $100,000 limit on these purchases. Telephone requests
can't be modified or cancelled.
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We take reasonable precautions to make sure that telephone instructions are
genuine. Precautions include requiring you to positively identify yourself, tape
recording the telephone instructions, and providing written confirmations. We
accept all telephone instructions we reasonably believe to be accurate and
genuine. Any losses arising from communication errors are your responsibility.
If reasonable procedures are not used to confirm that instructions communicated
by telephone are genuine, we may be liable for any losses due to unauthorized or
fraudulent transactions.
All shareholders automatically have the right to buy shares by telephone (except
for Education IRA accounts). If you don't want the telephone purchase option,
you can indicate this on the application or call us at 800 223-1200 any time
after opening your account.
OVER THE INTERNET With TIAA-CREF's Inter/ACT system, you can make electronic
withdrawals from your designated bank account to buy additional shares over the
Internet. There is a $100,000 limit on these purchases. Inter/ACT can be
accessed through TIAA-CREF's homepage at www.tiaa-cref.org.
Before you can use Inter/ACT, you must enter your Personal Identification Number
(PIN) and social security number. Inter/ACT will lead you through the
transaction process, and we will use reasonable procedures to confirm that the
instructions given are genuine. All transactions over Inter/ACT are recorded
electronically.
BY WIRE You may make initial or subsequent investments by wire. Be aware that
your bank may charge you a fee to wire funds. 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
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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.
o If your purchase check does not clear or payment on it is stopped, or if
we do not receive good funds through electronic funds transfer, we will
treat this as a redemption of the shares purchased when your check or
electronic funds were received. You will be responsible for any resulting
loss incurred by any of the funds or Teachers Advisors. If you are already
a shareholder, we can redeem shares from any of your account(s) as
reimbursement for all losses. We also reserve the right to restrict you
from making future purchases in any of the funds. There is a $15 fee for
all returned items, including checks and electronic funds transfers.
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 Investor Information -- Good Order," page 26).
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 or automatic investment plan purchase, we may hold the redemption
proceeds for more than seven days. However, we'll hold the proceeds only until
your payment 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
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else, a different address, or a different bank, we will require a letter of
instruction with signature guarantee (see page 27).
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, and cannot be sent to us by
fax.
BY TELEPHONE You can redeem shares (for less than $50,000) by telephone by
calling us at 800 223-1200. Once made, your telephone request cannot be modified
or canceled. (Telephone redemptions are not available for Education IRA
accounts.)
We take reasonable precautions to make sure that your telephone instructions are
genuine (see page 21). 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 800 223-1200 any time after opening your
account.
We can send your redemption proceeds in several different ways: by check to the
address of record; by electronic transfer to your bank; or by wire transfer
(minimum of $5,000). If you call us before the close of the New York Stock
Exchange, usually 4:00 p.m. Eastern Standard Time, you will receive the share
price determined as of the close of that business day. See "Net Asset Value,"
page 18. Before calling, read "Points to Remember When Redeeming," page 24.
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.
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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 for each check you write if you have already
written 24 checks in one 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. If you
write a check to redeem shares from the Money Market Fund shortly after you have
sent us a check to purchase Money Market Fund shares, we may refuse payment on
your redemption check if your purchase check has not yet cleared and your Money
Market Fund Account does not otherwise have a sufficient balance to support the
redemption check.
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 $5,000. 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 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.
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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 34.
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.
BY TELEPHONE You may exchange shares by telephone by calling us at 800 223-1200.
Once made, your telephone request cannot be modified or canceled. TIAA-CREF
takes reasonable precautions to make sure that telephone instructions are
genuine (see page 21).
OVER THE INTERNET You can exchange shares using TIAA-CREF's Inter/ACT system,
which can be accessed through TIAA-CREF's homepage at www.tiaa-cref.org. Once
made, your Inter/ACT transaction cannot be modified or cancelled. TIAA-CREF
takes reasonable precautions to make sure that Inter/ACT transactions are
genuine. For more about Inter/ACT, see page 29.
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.
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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 8.) 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 ex-change 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 taxation.
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, Boston
Financial Data Services. Good order means that 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 the New York Stock Exchange closes
(usually 4:00 p.m., Eastern Standard Time) your price will be the NAV per share
for that day. If it's after the New York Stock Exchange closes, the transaction
will be effective on, and your price will be the NAV per share for, the next
business day.
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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) 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
include the following: Alaska, Arizona, Arkansas, California, Colorado,
Delaware, Florida, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland,
Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, North
Dakota, Ohio, Oklahoma, Oregon, Pennsylvania,
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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.
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' operations and performance, and
a new prospectus each year. The SAI will be revised each year but we'll send it
only on request.
We reserve the right to correct mistakes made in any report, form or statement
we send you.
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AUTOMATED TELEPHONE AND INTERNET SERVICES
All shareholders can check fund performance, their account balances or initiate
purchases or exchanges automatically by telephone, using our automated telephone
service ("ATS") or over the Internet, using our Inter/ACT System. 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 or through Inter/ACT 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 800 223-1200
In writing: TIAA-CREF Mutual Funds
c/o State Street Bank
P.O. Box 8009
Boston, MA 02266-8009
Over the Internet: www.tiaa-cref.org.
ELECTRONIC PROSPECTUSES
If you received this prospectus electronically and would like a paper copy,
please contact us and we will send one to you.
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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 Funds'
activities, contractual arrangements with companies that provide services to
TIAA-CREF Mutual Funds, and the performance of each individual investment fund.
It is possible that the interests of the Managed Allocation Fund could diverge
from the interests of one or more of the funds in which it invests (underlying
funds). If those interests did diverge, a conflict of interest could arise
between the Managed Allocation Fund and its underlying funds. This conflict
could affect how the Board and TIAA-CREF Mutual 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, LLC ("Investment
Management"). Teachers Advisors also manages the assets
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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
0.99%, 0.95%, 0.93%, 0.80% and 0.79% of the average daily net assets of the
International Equity Fund, the Growth Equity Fund, the Growth & Income Fund, the
Bond Plus Fund and the Money Market Fund, respectively. 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 0.50%
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 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.
Anyone at Teachers Advisors who has direct responsibility and authority for
making investment decisions for TIAA-CREF Mutual Funds is restricted from
trading for his or her own account. The restriction also applies to members of
their households. They must send duplicate confirmation statements and other
brokerage account reports to a special compliance unit, and their transactions
must be approved.
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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 Jeffrey Siegel, Managing Director, Teachers
Advisors. Mr. Siegel joined TIAA-CREF in 1988. Mr. Siegel is also responsible
for managing the investments of the CREF Growth Account and the CREF Global
Equities 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 Edward J.
Grzybowski. 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. 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. Grzybowski is a Managing Director of Teachers Advisors. He
joined TIAA-CREF in 1987. Mr. Grzybowski 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 joined TIAA-CREF in 1987. Ms. Black is
also responsible for managing the investments in CREF's Bond Market Account.
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PERFORMANCE INFORMATION
- ------------------------
From time to time, we may advertise total return and/or yield for the funds. 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").
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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 about the Funds' past performance and how we
calculate performance data, see the SAI.
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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
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
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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 reinvest 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 gain
distribution.
5. CASH OPTION. We'll send a check for your dividend and each capital gain
distribution.
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.
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TAXES
- -----
As with any investment, you should consider how your investment in any fund will
be taxed.
TAXES ON DISTRIBUTIONS. You must pay federal income tax, and possibly also state
or local taxes, on distributions. If you live outside the United States, the
country in which you reside could also tax distributions. Your distributions are
taxable 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 of the prior year.
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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.
Capital gains may be taxed at one of several different rates. We expect to
designate each year the portions of the TIAA-CREF Mutual Funds' capital gain
distributions that are taxable at these different rates. (Non-resident aliens
will receive these statements later.)
TAXES ON TRANSACTIONS. Redemptions -- including exchanges to other funds -- are
also 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.
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 were actually distributed by the fund, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all mutual funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may have
to limit its investment in some types of instruments.
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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.
YEAR 2000 ISSUES
Like other mutual funds, financial and business organizations, and individuals
around the world, TIAA-CREF Mutual Funds could be adversely affected if the
computer systems used by Teachers Advisors and other service providers (see
below) do not properly process and calculate information and data involving
dates from and after January 1, 2000. Teachers Advisors and the Fund are taking
steps that we believe are reasonably designed to address issues involving the
Year 2000 for the computer systems we use. We are also seeking reasonable
assurances that our service providers are taking comparable steps. However,
currently we can't assure you that these steps will be sufficient to avoid any
adverse impact on the Funds.
DISTRIBUTORS
Shares of each fund are offered continuously with no sales load by Teachers
Personal Investors Services, Inc. (TPIS), a wholly-owned indirect subsidiary of
TIAA. 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. TPIS' main office is at 730 Third Avenue, New York, NY 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,
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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 State Street a fee for such services. State Street is located
at 225 Franklin Street, Boston, MA 02209.
CUSTODIAL SERVICES
State Street also provides custodial services for the funds under a separate
agreement with Teachers Advisors. Teachers Advisors has agreed to pay State
Street for these 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.
HOUSEHOLDING
To lower costs and eliminate duplicate documents sent to your home, we may, if
the SEC allows, begin mailing only one copy of the TIAA-CREF Mutual Funds
prospectus, prospectus supplements, annual and semi-annual reports, or any other
required documents, to your household, even if more than one shareholder lives
there. If you would prefer to continue receiving your own copy of any of these
documents, you may call us toll-free at 800 223-1200 or write us.
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[TIAA TEACHERS INSURANCE AND ANNUITY ASSOCIATION
CREF COLLEGE RETIREMENT EQUITIES FUND
LOGO] 730 Third Avenue, New York, NY 10017-3206
1 800 223-1200 www.tiaa-cref.org/mfunds
TCMFPROS-3/99
