APRIL 3, 2000
TIAA-CREF Mutual Funds
P R O S P E C T U S
| INTERNATIONAL EQUITY FUND
| GROWTH EQUITY FUND
| GROWTH & INCOME FUND
| EQUITY INDEX FUND
| SOCIAL CHOICE EQUITY FUND
| MANAGED ALLOCATION FUND
| BOND PLUS FUND
| SHORT-TERM BOND FUND
| HIGH-YIELD BOND FUND
| TAX-EXEMPT BOND FUND
| MONEY MARKET FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
FUNDS' SHARES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
[TIAA CREF LOGO]
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TABLE OF CONTENTS
SUMMARY INFORMATION
Investment Objectives,
Strategies and Risks 3
The Dual Investment
Management Strategy 3
Past Performance 13
Fees and Expenses 16
MORE INFORMATION ABOUT
THE FUNDS
General Investment Risks 18
The Equity Funds 19
The Dual Investment
Management Strategy 19
The International Equity Fund 20
The Growth Equity Fund 20
The Growth & Income Fund 21
The Equity Index Fund 22
The Social Choice Equity Fund 23
Additional Investment Strategies
for the Equity Funds 24
The Managed Allocation Fund 24
The Bond Funds 26
The Bond Plus Fund 26
The Short-Term Bond Fund 27
The High-Yield Bond Fund 28
The Tax-Exempt Bond Fund 30
Additional Investment Strategies
for the Bond Funds 31
The Money Market Fund 32
TIAA-CREF MUTUAL FUNDS'
MANAGEMENT 34
CALCULATING SHARE PRICE 35
DIVIDENDS AND DISTRIBUTIONS 36
TAXES 37
YOUR ACCOUNT: BUYING, SELLING OR
EXCHANGING SHARES
Types of Accounts 39
How to Open an Account and Make
Subsequent Investments 39
How to Redeem Shares 41
How to Exchange Shares 43
Other Investor Information 44
ELECTRONIC PROSPECTUSES 46
FINANCIAL HIGHLIGHTS 48
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SUMMARY INFORMATION
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
TIAA-CREF Mutual Funds has 11 investment portfolios. An investor can lose money
in any of these funds, or the funds could underperform other investments.
The funds have a number of principal investment risks in common. The funds are
all subject to:
o Market Risk - Prices of securities in general can decline over short or
extended periods as a result of political or economic events.
The funds that invest in equities are subject to:
o Company Risk - A company's current earnings can fall or its overall
financial soundness may decline. As a result, the price of its stock may go
down.
The funds that invest in fixed income securities are subject to:
o Credit Risk - A decline in a company's overall financial soundness may make
it unable to pay principal and interest bonds when due.
o Current Income Risk - This is the risk that falling interest rates will
cause the fund's income to decline.
o Interest Rate Risk - Bond prices may fall as interest rates rise.
The funds that make foreign investments are subject to:
o Foreign Investment Risk - Investing in securities traded on foreign
exchanges or in foreign markets can involve special risks. For example,
changes in currency exchange rates, the possible imposition of market
controls, currency exchange controls or foreign taxes, lower liquidity and
higher volatility in some foreign markets and/or political, social or
diplomatic events could reduce the value of a fund's investments.
Investments in the funds are not deposits of the TIAA-CREF Trust Company FSB and
aren't insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC)
or any other government agency.
The TIAA-CREF Mutual Funds are not appropriate for market timing. You should not
invest in the funds if you are a market timer.
Special risks associated with particular funds are discussed in the following
summaries of each fund's objectives, strategies and policies.
THE DUAL INVESTMENT MANAGEMENT STRATEGY(SM)
Three of the equity funds, the Growth Equity, Growth & Income, and International
Equity Funds, use TIAA-CREF's Dual Investment Management Strategy. Each fund has
a "Stock Selection" and an "Enhanced Index" subportfolio. The Stock Selection
subport-
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folio holds a relatively small number of stocks that we believe offer superior
returns. These stocks are chosen using fundamental analysis. The rest of the
fund is invested in the Enhanced Index subportfolio, which seeks to outperform
each fund's benchmark index, while limiting the possibility of underperforming
the benchmark. The funds' management teams attempt to outperform the benchmark
indexes by over- or under- weighting many stocks in the index by small amounts,
based on proprietary stock scoring models. Using the Dual Investment Strategy,
we have the flexibility to allocate amounts between the Stock Selection
subportfolio and the Enhanced Index subportfolio, based upon investment
opportunities that we determine to be available at any particular time. This
approach enables the funds to stay invested even when we cannot find sufficient
investment opportunities for the Stock Selection subportfolio.
INTERNATIONAL EQUITY FUND
INVESTMENT OBJECTIVE: The fund seeks favorable long-term returns, mainly through
capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests in a broadly diversified
portfolio of primarily foreign equity investments, using the Dual Investment
Management Strategy. For the Stock Selection subportfolio, the fund selects
individual stocks, and lets the fund's country and regional asset allocation
evolve from its stock selection. The fund looks for companies of all sizes that
meet a number of criteria including sustainable growth, consistent cash flow and
attractive stock prices based on current earnings, assets and long-term growth
prospects. The benchmark index for the fund is the Morgan Stanley Capital
International EAFE(R) (Europe, Australasia, Far East) Index.
SPECIAL INVESTMENT RISKS: Foreign investment risk is the most important risk of
investing in this fund. This risk may be even more pronounced for the fund's
investments in emerging market countries. The fund may sometimes hold a
significant amount of stocks of smaller, lesser-known companies whose stock
prices may fluctuate more than those of larger companies.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who seek
above-average long-term returns, understand the advantages of diversification
across international markets and are willing to tolerate the greater risks of
international investing. The risk of investing in the fund is moderate to high.
GROWTH EQUITY FUND
INVESTMENT OBJECTIVE: The 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.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests in stocks of companies in new
and emerging areas of the economy, and compa-
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nies with distinctive products or promising market conditions, using the Dual
Investment Management Strategy. These include Internet infrastructure companies,
semiconductor manufacturing companies and computer-related companies. For its
Stock Selection subportfolio, the fund looks for companies that 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. It can invest
in companies to benefit from prospective acquisitions, reorganizations, or
corporate restructurings or other special situations. Foreign investments can be
up to 40 percent of the portfolio. The benchmark index for the fund is the
Russell 3000(R) Growth Index (Russell 3000 is a trademark and a service mark of
the Frank Russell Company).
SPECIAL INVESTMENT RISKS: The fund may sometimes hold a significant amount of
stocks of smaller, lesser-known companies whose stock prices may fluctuate more
than those of larger companies. Also, stocks of companies involved in
reorganizations and other special situations can often involve more risk than
ordinary securities. This means the fund will probably be more volatile than the
overall stock market.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who are
looking for long-term capital appreciation and a favorable long-term return, but
are willing to tolerate fluctuations in value. The risk of investing in the fund
is moderate to high.
GROWTH & INCOME FUND
INVESTMENT OBJECTIVE: The fund seeks a favorable long-term return through
capital appreciation and investment income.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests in a broadly diversified
portfolio of common stocks selected for their investment potential, using the
Dual Investment Management Strategy. For its Stock Selection subportfolio, the
fund looks primarily for stocks of larger, well-established, mature growth
companies which we believe are attractively priced, show the potential to grow
faster than the rest of the market, and offer a growing stream of dividend
income. 80 percent of the fund's assets are in income-producing equity
securities. The fund may also invest in a few rapidly growing smaller companies
and may have up to 20 percent of assets in foreign securities. The benchmark
index for the fund is the S&P 500 Composite Stock Index.
SPECIAL INVESTMENT RISKS: Stocks paying relatively high dividends may
significantly underperform other stocks during periods of rapid market
appreciation.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who want
capital appreciation and current income but also can accept the risk of market
fluctuations. The risk of investing in the fund is moderate.
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Equity Index Fund
INVESTMENT OBJECTIVE: The fund seeks a favorable long-term rate of return from a
diversified portfolio selected to track the overall market for common stocks
publicly traded in the U.S., as represented by a broad stock market index.
PRINCIPAL INVESTMENT STRATEGIES: The fund is designed to track U.S. equity
markets as a whole and invests in stocks in the Russell 3000 Index. The fund
uses a sampling approach to create a portfolio that closely matches the overall
investment characteristics (for example, yield and industry weight) of the index
without actually investing in all 3,000 stocks in the index.
SPECIAL INVESTMENT RISKS: While the fund attempts to closely track the Russell
3000 Index, it does not invest in all 3,000 stocks in the index. Thus there is
no guarantee that the performance of the fund will match that of the index.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who seek a
fund that tracks the return of a broad U.S. equity market index. The risk of
investing in the fund is moderate.
Social Choice Equity Fund
INVESTMENT OBJECTIVE: The fund seeks a favorable long-term rate of return that
tracks the investment performance of the U.S. stock market while giving special
consideration to certain social criteria.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests primarily in a diversified set
of common stocks. The fund attempts to track the return of the U.S. stock market
as represented by the S&P 500 Composite Stock Index, while investing only in
companies whose activities are consistent with the fund's social criteria. It
does this primarily by investing in S&P 500 companies that are not excluded by
the fund's social criteria, so that the fund's portfolio approaches the overall
investment characteristics (e.g., yield and industry weight) of the S&P 500.
Currently, the fund invests only in companies that do not:
o engage in activities that result or are likely to result in significant
damage to the natural environment;
o have a significant portion of their business in weapons manufacturing;
o produce and market alcoholic beverages or tobacco products;
o produce nuclear energy; or
o have operations in Northern Ireland and have not adopted the MacBride
Principles (a fair employment code for U.S. firms operating in Northern
Ireland) or have not operated consistently with such principles and in
compliance with the Fair Employment Act of 1989 (Northern Ireland).
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SPECIAL INVESTMENT RISKS: Because its social criteria exclude some investments,
this fund may not be able to take advantage of the same opportunities or market
trends as do the funds that don't use such criteria.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who seek an
equity investment that is generally broad-based but excludes companies that
engage in certain activities. The risk of investing in the fund is moderate.
Managed Allocation Fund
INVESTMENT OBJECTIVE: The fund seeks a return that reflects the broad investment
performance of the financial markets through capital appreciation and investment
income.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests in the TIAA-CREF Mutual Funds'
other investment funds. Usually, the fund will invest approximately 60 percent
of its assets in the Growth & Income, International Equity and Growth Equity
Funds and approximately 40 percent in the Bond Plus, Short Term or High-Yield
Bond Funds. The Growth & Income Fund invests in a broadly diversified portfolio
of stocks selected for their investment potential. The International Equity Fund
invests in a broadly diversified portfolio of primarily foreign equity
investments. The Growth Equity Fund invests in stocks of companies in new and
emerging areas of the economy and companies with distinctive products or
promising market conditions. The Bond Plus Fund divides its portfolio into two
segments, one of which invests in a broad range of investment-grade debt
securities, and the other of which seeks enhanced returns through investments in
illiquid or non-investment grade securities. The Short-Term Bond Fund invests in
a broad range of U.S. Treasury and Agency securities and corporate bonds with
maturities from 1-5 years. The High-Yield Bond Fund invests primarily in
lower-rated, higher-yielding fixed-income securities.
As a result of its investments in these funds, the Managed Allocation Fund holds
a mix of domestic stocks of companies of all sizes, foreign stocks, and bonds of
varying maturities and credit qualities. When changes in financial and economic
conditions affect the relative attractiveness of the markets in which those
underlying funds are invested, we will adjust these percentages up and down by
up to 15 percent. For example, we would increase the fund's fixed income
holdings whenever we believe the equity markets will decline, or reduce the
fund's holdings in the International Equity Fund when we believe foreign markets
are unusually volatile.
SPECIAL INVESTMENT RISKS: The fund shares the risks of the funds it invests in.
For its investments in the International Equity Fund, it is subject to the
special risks of foreign investing. The fund's investments in the Growth Equity
Fund are subject to the risk that stocks of smaller, lesser-known companies
whose stock prices may fluctuate more than those of larger companies.
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Investments in the Growth & Income Fund are subject to the risk that stocks
paying relatively high dividends may significantly underperform other stocks
during periods of rapid market appreciation. For the fund's investments in the
Bond PLUS and High-Yield Bond Funds, it is subject to the risks of investments
in non-investment grade securities (also called "high-yield" or "junk" bonds).
Investments in non-investment grade bonds are subject to above-average interest
rate risk and credit risk. For the fund's investments in the Bond PLUS and
Short-Term Bond Funds, it is subject to prepayment and extension risk. The
Managed Allocation Fund is considered "nondiversified" for purposes of the 1940
Act, because it invests in the shares of only a small number of other issuers
(funds). However, the funds in which the Managed Allocation Fund invests are
themselves considered diversified investment companies.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who prefer to
have their asset allocation decisions made by professional money managers. The
fund is suitable for investors with medium to long-term time horizons and who
seek broad diversification. The risk of investing in the fund is moderate.
Bond PLUS Fund
INVESTMENT OBJECTIVE: The fund seeks a favorable long-term return, primarily
through high current income consistent with preserving capital.
PRINCIPAL INVESTMENT STRATEGIES: The fund's portfolio is divided into two
segments. The first segment, which makes up at least 75 percent of the fund, is
invested primarily in a broad range of the debt securities in the Lehman
Brothers Aggregate Bond Index. The majority of this segment is invested in U.S.
Treasury and Agency securities, corporate bonds and mortgage-backed securities.
The fund is managed to track the duration of the Lehman Index. (Duration is a
measure of the change in the value of a bond portfolio in response to a change
in interest rates.) The fund holds mainly investment grade securities rated in
the top four credit categories by Moody's Investors Services, Inc. ("Moody's")
or Standard & Poor's Corporation ("Standard & Poor's"). The fund will overweight
or underweight individual securities or sectors as compared to their weight in
the Lehman Index depending on where we find undervalued or overlooked issues
that we believe offer the potential for superior returns. The fund's second
segment seeks enhanced returns through investments in illiquid securities (such
as "Rule 144A" private placements) or non-investment grade securities, but
investments in illiquid securities won't be more than 15 percent of the fund's
net assets.
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SPECIAL INVESTMENT RISKS: The fund is subject to general interest rate risk,
credit risk and current income risk for fixed income securities. Interest rate
risk is the possibility that prices of bonds held by the fund may decline if
interest rates rise. For example, if interest rates rise by 1 percent, the
market value of a portfolio with a duration of 5 years would decline by
approximately 5 percent. Investments in mortgage-backed securities are subject
to extension and prepayment risk. Extension risk is the risk that an unexpected
rise in prevailing interest rates will extend the life of an outstanding
mortgage-backed security by reducing the expected number of mortgage
prepayments, typically reducing the security's value. Prepayment risk is the
possibility that a decline in interest rates causes the holders of the
underlying mortgages to pay off their mortgage loans sooner than expected. If
that happened, the fund would have to reinvest the amounts that had been
invested in the mortgage-backed securities, possibly at a lower rate of return.
Non-investment grade securities (also called "high-yield" or "junk" bonds)
involve higher risks than investment grade bonds. Their issuers may be less
creditworthy and/or have a higher risk of becoming insolvent. The fund's
investments in illiquid securities may be difficult to sell for their fair
market value.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for more conservative
investors who want to invest in a general bond fund and can accept a slightly
higher level of risk than a traditional bond fund. The risk of investing in the
fund is low to moderate.
SHORT-TERM BOND FUND
INVESTMENT OBJECTIVE: The fund seeks high current income consistent with
preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests primarily in a broad range of
investment grade debt securities that make up the Lehman Brothers Mutual Fund
Short (1-5 year) Government/Corporate Index. These are primarily U.S. Treasury
and Agency securities and corporate bonds with 1-5 year maturities. The fund can
also hold domestic and foreign corporate bonds, debentures, notes,
mortgage-backed securities, asset-backed securities, convertible securities and
preferred stocks. The fund is managed to track the duration of the Lehman Index,
which was 2.37 years as of December 31, 1999. (Duration is a measure of the
change in the value of a bond portfolio in response to a change in interest
rates.) The fund may overweight or underweight individual securities or sectors
as compared to their weight in the Lehman Index, or hold securities not in the
index, depending on where we find undervalued or overlooked issues that we
believe offer the potential for superior returns.
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SPECIAL INVESTMENT RISKS: The fund is subject to general interest rate risk,
credit risk and current income risk for fixed income securities. Interest rate
risk is the possibility that prices of bonds held by the fund may decline if
interest rates rise. For example, if interest rates rise by 1 percent, the
market value of a portfolio with a duration of 2.5 years would decline by
approximately 2.5 percent. Current income risk, the risk that income from the
fund's investments will decline if prevailing interest rates decline, is
particularly significant for this fund. The fund's investments in
mortgage-backed securities are subject to extension and prepayment risk.
Extension risk is the risk that an unexpected rise in prevailing interest rates
will extend the life of an outstanding mortgage-backed security by reducing the
expected number of mortgage prepayments, typically reducing the security's
value. Prepayment risk is the possibility that a decline in interest rates
causes the holders of the underlying mortgages to pay off their mortgage loans
sooner than expected. If that happened, the fund would have to reinvest the
amounts that had been invested in the mortgage-backed securities, possibly at a
lower rate of return.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for more conservative
investors who seek to minimize volatility of changes in principal value. The
risk of investing in the fund is low.
High-Yield Bond Fund
INVESTMENT OBJECTIVE: The fund seeks high current income and, when consistent
with its primary objective, capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests primarily in lower-rated,
higher-yielding fixed income securities, such as domestic and foreign corporate
bonds, debentures, loans and notes, as well as convertible securities and
preferred stocks. Under normal market conditions, the fund invests at least 80
percent of its assets in securities rated lower than investment grade (and their
unrated equivalents) or other high-yielding securities. These are often called
"junk bonds". Most of these investments will be rated in the BB or B categories
by Standard & Poor's, or in the Ba or B categories by Moody's. The fund may
invest up to 20 percent of its assets in the following other types of
instruments: payment in kind or deferred interest obligations, defaulted
securities, asset-backed securities, securities rated below B- and illiquid
securities. The fund can also hold U.S. Treasury and Agency securities whenever
suitable corporate securities aren't available or we want to increase the fund's
liquidity. Up to 20 percent of the fund's assets can be invested in securities
of foreign issuers. Investments in illiquid securities will never be more than
15 percent of the fund's assets. The securities the fund owns will usually have
maturities of ten years or less.
SPECIAL INVESTMENT RISKS: The fund is subject to above-average interest rate
risk and credit risk. Investors should expect greater fluctuations in share
price, yield and total
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return compared to mutual funds holding bonds and other income bearing
securities with higher credit ratings and/or shorter maturities. These
fluctuations, whether positive or negative, may be sharp and unanticipated.
During the periods when the market for high-yield securities is volatile, it may
be difficult for the fund to buy or sell its securities. This fund entails a
significantly higher level of risk of loss of invested funds than bond funds
that don't invest primarily in lower-rated debt securities.
Issuers of "junk" bonds are typically in weak financial or operational health
and their ability to pay interest and principal is uncertain. Compared to
issuers of investment grade securities, they are more likely to encounter
financial difficulties and to be materially affected by these difficulties when
they do encounter them. "Junk" bond markets may react strongly to adverse news
about an issuer or the economy, or to the perception or expectation of adverse
news.
Current income risk can also be significant for this fund. The fund's
investments in illiquid securities may be difficult to sell for their fair
market value.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for less conservative
investors who want to invest in an income fund that invests in high-yield
securities and who are willing to accept a significantly higher level of risk
than with traditional bond funds. The fund may also be appropriate for investors
who seek additional diversification for their portfolios, since in the past the
returns for high-yield bonds have not correlated closely with the returns from
other types of assets. The risk of investing in the fund is moderate.
TAX-EXEMPT BOND FUND
INVESTMENT OBJECTIVE: The fund seeks a high level of current income that is
exempt from regular federal income tax, consistent with preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests primarily in investment grade
municipal securities, the interest on which is exempt from regular federal
income tax (i.e., excludable from gross income for individuals for federal
income tax purposes). Under normal market conditions, the fund invests almost
all of its assets in municipal securities. It can invest up to 20 percent of its
assets in private activity bonds. The interest from private activity bonds and
the fund's distribution of that interest may be a preference item for purposes
of the federal alternative minimum tax. The fund invests in intermediate and
long-term securities with remaining maturities at the time of purchase from
three to thirty years. We expect the fund to maintain an average duration of
approximately 7 years. (Duration is a measure of the change in the value of a
bond portfolio in response to a change in interest rates.) The fund may invest
up to 20 percent of its assets in non-investment grade securities such as "junk"
bonds or in nonrated securities.
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SPECIAL INVESTMENT RISKS: The fund is subject to interest rate risk - that is,
prices of bonds held by the fund may decline if interest rates rise. For
example, if interest rates rise by 1 percent, the market value of a portfolio
with a duration of 7 years would decline by approximately 7 percent. Because of
their tax-exempt status, the yields and market values of municipal securities
may be hurt more by changes in tax rates and policies than similar taxable
income bearing securities. Non-investment grade securities involve higher risks
than investment grade bonds. Their issuers may be less creditworthy and/or have
a higher risk of becoming insolvent.
The fund's investments in mortgage-backed securities are subject to extension
and prepayment risk. Extension risk is the risk that an unexpected rise in
prevailing interest rates will extend the life of an outstanding mortgage-backed
security by reducing the expected number of mortgage prepayments, typically
reducing the security's value. Prepayment risk is the possibility that a decline
in interest rates may cause the holders of the underlying mortgages to pay off
their mortgage loans sooner than expected. If that happened, the fund would have
to reinvest the amounts that had been invested in the mortgage-backed
securities, possibly at a lower rate of return.
As with any mutual fund, you can lose money by investing in this fund.
WHO MAY WANT TO INVEST: The fund may be appropriate for investors who seek
tax-free income and capital appreciation and can assume a higher level of risk
than with traditional income funds. The risk of investing in the fund is low to
moderate.
MONEY MARKET FUND
INVESTMENT OBJECTIVE: The fund seeks high current income consistent with
maintaining liquidity and preserving capital.
PRINCIPAL INVESTMENT STRATEGIES: The fund invests primarily in high quality
short-term money market instruments. It limits its investments to securities
that present minimal credit risk and are rated in the highest rating categories
for short-term instruments.
SPECIAL INVESTMENT RISKS: The fund is subject to current income volatility -
that is, the income received by the fund may decrease as a result of a decline
in interest rates.
WHO MAY WANT TO INVEST: The fund may be suitable for conservative investors who
are looking for a high degree of principal stability and liquidity and are
willing to accept returns that are lower than those offered by longer-term
investments. The risk of investing in the fund is very low.
AN INVESTMENT IN THE MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE MONEY MARKET FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
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PAST PERFORMANCE
The bar charts and performance table help illustrate some of the risks of
investing in the funds, and how investment performance varies. (We have not
provided any information for the new funds, which don't yet have a performance
history.) The bar charts show each fund's performance in 1998 and 1999, and
below the chart we note each fund's best and worst returns for a calendar
quarter in 1998 and 1999. The performance table shows each fund's returns over
the 1999 calendar year and since inception, and how those returns compare to
those of broad-based securities market indexes. How the funds have performed in
the past is not necessarily an indication of how they will perform in the
future.
INTERNATIONAL EQUITY FUND
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 19.27%
1999 ................... 55.83%
Best quarter: 36.65%, for the quarter ended December 1999. Worst quarter:
- -16.06%, for the quarter ended September 1998.
GROWTH EQUITY FUND
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 35.97%
1999 ................... 33.00%
Best quarter: 28.36%, for the quarter ended December 1998. Worst quarter:
- -12.27%, for the quarter ended September 1998.
GROWTH & INCOME FUND
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 30.51%
1999 ................... 24.46%
Best quarter: 22.99%, for the quarter ended December 1998. Worst quarter:
- -10.98%, for the quarter ended September 1998.
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MANAGED ALLOCATION FUND
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 21.24%
1999 ................... 19.20%
Best quarter: 14.01%, for the quarter ended December 1998. Worst quarter:
- -5.69%, for the quarter ended September 1998.
Bond Plus Fund
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 8.94%
1999 ................... -1.01%
Best quarter: 4.46%, for the quarter ended September 1998. Worst quarter:
- -1.18%, for the quarter ended June 1999.
MONEY MARKET FUND
[BAR GRAPH REPRESENTED BELOW IN ITS PRINTED PIECE.]
1998 ................... 5.45%
1999 ................... 5.05%
Best quarter: 1.36%, for the quarter ended December 1999. Worst quarter: 1.17%,
for the quarter ended June 1999.
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AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
One year Since inception
(January 1, 1999 to (September 2, 1997 to
December 31, 1999) December 31, 1998)
<S> <C> <C>
International Equity Fund 55.83% 29.16%
Morgan Stanley Capital International EAFE
(Europe, Australasia, and
Far East) Index 26.97% 18.41%
Growth Equity Fund 33.00% 33.36%
Russell 3000 Growth Index 33.82% 32.01%
Growth & Income Fund 24.46% 27.45%
S&P 500 Composite Stock Index 21.04% 25.20%
Managed Allocation Fund 19.20% 19.78%
Morgan Stanley Capital International
EAFE Index 26.97% 18.41%
S&P 500 Composite Stock Index 21.04% 25.20%
Lehman Brothers Aggregate Bond Index -.82% 5.22%
Composite Index (12% Morgan Stanley EAFE,
48% S&P 500 Composite Stock Index and
40% Lehman Brothers Aggregate Bond Index) 13.01% 16.89%
Bond PLUS Fund -1.01% 5.26%
Lehman Brothers Aggregate Bond Index -.82% 5.22%
Money Market Fund 5.05% 5.29%
IBC Money Fund Report - All Taxable Average 4.64% 5.05%
</TABLE>
For the Money Market Fund's most current 7-day yield, please call us at
800 223-1200.
15
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you pay if you buy and hold
shares of the funds. The TIAA-CREF Mutual Funds do not have a 12b-1 fee.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ................................... 0%
Maximum Deferred Sales Charge ........................................... 0%
Maximum Sales Charge Imposed on Reinvested Dividends .................... 0%
Redemption Fee .......................................................... 0%
Exchange Fee ............................................................ 0%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
TOTAL FUND NET
MANAGEMENT OTHER OPERATING FEE CURRENT
FEE EXPENSES EXPENSES WAIVER(1) FEES
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Equity Fund 0.99% 0 0.99% 0.50% 0.49%
- ------------------------------------------------------------------------------------------------------------------------------
Growth Equity Fund 0.95% 0 0.95% 0.50% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------
Growth & Income Fund 0.93% 0 0.93% 0.50% 0.43%
Equity Index Fund 0.76% 0 0.76% 0.50% 0.26%
- ------------------------------------------------------------------------------------------------------------------------------
Social Choice Equity Fund 0.77% 0 0.77% 0.50% 0.27%
- ------------------------------------------------------------------------------------------------------------------------------
Managed Allocation Fund(2) 0.89% 0 0.89% 0.50% 0.39%
Bond Plus Fund 0.80% 0 0.80% 0.50% 0.30%
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund 0.80% 0 0.80% 0.50% 0.30%
- ------------------------------------------------------------------------------------------------------------------------------
High-Yield Bond Fund 0.84% 0 0.84% 0.50% 0.34%
Tax-Exempt Bond Fund 0.80% 0 0.80% 0.50% 0.30%
- ------------------------------------------------------------------------------------------------------------------------------
Money Market Fund 0.79% 0 0.79% 0.50% 0.29%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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). This
waiver is contractual and will remain in effect until July 1, 2003.
(2) 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. The
expenses in the table are based on a typical asset mix for the Managed
Allocation Fund: 24 percent Growth Equity Fund, 24 percent Growth & Income
Fund, 12 percent International Equity Fund and 40 percent Bond PLUS Fund.
16
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the
TIAA-CREF Mutual Funds with the cost of investing in other mutual funds. This
example assumes that you invest $10,000 in a fund for the time periods indicated
beginning on April 3, 2000 and then redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5 percent
return each year and that the funds' operating expenses remain the same. A
portion of the investment management fee has been waived through July 1, 2003.
The example reflects the expiration of the waiver at that time. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Equity Fund $50 $157 $378 $1,054
- ------------------------------------------------------------------------------------------------------------
Growth Equity Fund $46 $144 $356 $1,007
- ------------------------------------------------------------------------------------------------------------
Growth & Income Fund $44 $138 $345 $ 983
- ------------------------------------------------------------------------------------------------------------
Equity Index Fund $27 $ 84 -- --
- ------------------------------------------------------------------------------------------------------------
Social Choice Equity Fund $28 $ 87 -- --
- ------------------------------------------------------------------------------------------------------------
Managed Allocation Fund (1) $40 $125 $323 $ 936
- ------------------------------------------------------------------------------------------------------------
Bond Plus Fund $31 $ 97 $273 $ 828
- ------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $31 $ 97 -- --
- ------------------------------------------------------------------------------------------------------------
High-Yield Bond Fund $35 $109 -- --
- ------------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund $31 $ 97 -- --
- ------------------------------------------------------------------------------------------------------------
Money Market Fund $30 $ 93 $268 $ 816
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Managed Allocation Fund itself has no expense charges. 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. The expenses in the table are based on a
typical asset mix for the Managed Allocation Fund: 24 percent Growth Equity
Fund, 24 percent Growth & Income Fund, 12 percent International Equity Fund
and 40 percent Bond PLUS Fund.
17
<PAGE>
MORE INFORMATION ABOUT THE FUNDS
Each fund is a separate series of the TIAA-CREF Mutual Funds, with its own
distinct investment objective. The following section provides more information
about the investment objectives, the principal investment strategies and
techniques each fund uses to accomplish its objective, the principal types of
securities each fund plans to purchase, and the risks involved in an investment
in a fund. These policies and techniques are not fundamental and may be changed
by the Board of Trustees without shareholder approval. However, we'll notify you
of any significant changes. For more details about the funds' policies and
restrictions, see the Statement of Additional Information (SAI).
There's no guarantee that any fund will meet its investment objective.
GENERAL INVESTMENT RISKS
The funds have a number of principal investment risks in common.
All the funds are subject to:
o Market risk - volatility in the prices of securities due to changing
conditions in the financial markets.
The funds that invest in equities are subject to:
o Company risk - the possibility that current earnings will fall or that
overall financial soundness will decline, reducing the security's value.
The funds that invest in fixed income securities are subject to:
o 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.
o Current income risk - the possibility that falling interest rates will
cause the fund's income to decline.
o Credit risk - the possibility the issuer of a fixed income security won't
be able to pay principal and interest when due.
The funds that invest in foreign securities are subject to:
o Foreign investment risk. Investing in securities traded on foreign
exchanges or in foreign markets can involve risks beyond those 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
18
<PAGE>
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 EQUITY FUNDS
THE DUAL INVESTMENT MANAGEMENT STRATEGY(SM)
The International Equity Fund, Growth Equity Fund and Growth & Income Fund use
TIAA-CREF's Dual Investment Management Strategy. The Dual Investment Management
Strategy works like this:
We divide a fund into two separate subportfolios called the "Stock Selection"
subportfolio and the "Enhanced Index" subportfolio. The relative sizes of these
two segments vary as we shift money between them in response to investment
opportunities.
The Stock Selection subportfolio holds a relatively small number of stocks that
we believe offer superior returns. We will usually use fundamental analysis to
select individual stocks or sectors for investment in the Stock Selection
subportfolio. Each fund's stock selection subportfolio is described further
below.
Money that is not invested in a fund's Stock Selection subportfolio goes to its
Enhanced Index segment. Here the goal is two-fold: (1) to outperform each fund's
benchmark index and (2) to limit the possibility of significantly
underperforming that benchmark. The funds' management teams attempt to
outperform the benchmark indexes by over- or under-weighting many stocks in the
index by small amounts, based on proprietary stock scoring models. In other
words, a fund will hold more or less of some stocks than its benchmark index.
The managers attempt to control the risk of underperforming the benchmarks by
maintaining the same overall financial characteristics (such as volatility,
dividend yield and industry weights) as the benchmarks.
The Dual Investment Strategy enables the funds to stay invested even when we
cannot find sufficient investment opportunities for the Stock Selection
portfolio.
The benchmarks for each fund's Enhanced Index subportfolio currently are as
follows:
Growth & Income S&P 500 Composite
Stock Index
International Equity Morgan Stanley EAFE
(Europe, Australasia,
Far East) Index
Growth Equity Russell 3000 Growth
Index
19
<PAGE>
Using these indexes is not a fundamental policy of the TIAA-CREF Mutual Funds,
so we can substitute other indexes without shareholder approval. We'll notify
you before we make such a change.
THE INTERNATIONAL EQUITY FUND
The INTERNATIONAL EQUITY FUND seeks a favorable long-term return, mainly through
capital appreciation, from a broadly diversified portfolio that consists
primarily of foreign equity investments. The fund intends to always have at
least 80 percent of its assets in equity securities of companies located in at
least three different countries, other than the United States.
For the Stock Selection subportfolio, we select individual stocks and let the
fund's country and regional asset allocation evolve from that stock selection.
We do, however, regularly monitor the fund's sector and country exposure in
order to control risk.
The fund looks for companies of all sizes with
o sustainable growth
o focused management with successful track records
o unique and easy to understand franchises (brands)
o stock prices that don't fully reflect the stock's inherent value, based on
the company's current earnings, assets, and long-term growth prospects
o consistent generation of free cash flow
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. Foreign investment risk is the most significant
risk for this fund. The risks associated with foreign investment often increase
in countries with emerging markets. For example, these 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. The fund's exposure
to emerging markets is currently limited to those investments that the Enhanced
Index subportfolio uses to track the performance of the emerging markets segment
of the Morgan Stanley EAFE Index. The fund may sometimes hold a significant
amount of stocks of smaller, lesser-known companies whose stock prices may
fluctuate more than those of larger companies.
THE GROWTH EQUITY FUND
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. Normally, the fund will
have at least 80 percent of total assets in equity securities that have the
potential for capital appreciation.
The fund uses the Dual Investment Management Strategy. The fund's Stock
Selection subportfolio can invest in companies of all sizes,
20
<PAGE>
including companies in new and emerging areas of the economy and companies with
distinctive products or promising markets. 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 fund can also invest in large, well-known, established companies,
particularly when we believe they have new or innovative products, services, or
processes that enhance future earnings prospects. The fund can also invest in
companies in order to benefit from prospective acquisitions, reorganizations, or
corporate restructurings or other special situations.
The Growth Equity Fund can buy foreign securities and other instruments if we
believe they have superior investment potential. Depending on investment
opportunities, the fund may have from 0 to 40 percent of its assets in foreign
securities. 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.
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. There are also special risks to investing in
growth stocks. 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
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, at least 80 percent of the fund's
portfolio will be in income-producing equity securities selected for their
investment potential.
The fund invests in a broadly diversified portfolio of common stocks. The fund's
Stock Selection subportfolio concentrates on individual companies rather than
sectors or industries. The fund looks for stocks of larger, well-established,
mature growth companies, which we believe are fairly priced, show the potential
to grow faster than the rest of the market, and offer a growing stream of
dividend income. In particular, we look for companies that are leaders in their
industries, with premium product lines. We also look
21
<PAGE>
for companies with shareholder-oriented managements dedicated to creating
shareholder value. The fund may also invest in rapidly growing smaller
companies. It can have up to 20 percent of assets in foreign securities.
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. In addition, there are special risks associated
with investments in stocks paying relatively high dividends. These stocks may
significantly underperform other stocks during periods of rapid market
appreciation.
THE EQUITY INDEX FUND
The EQUITY INDEX FUND seeks a favorable long-term rate of return from a
diversified portfolio selected to track the overall market for common stocks
publicly traded in the U.S., as represented by the Russell 3000, a broad market
index.
Although the fund invests in stocks in the Russell 3000 Index, it doesn't invest
in all 3,000 stocks in the index. Rather, we use a sampling approach to create a
portfolio that closely matches the overall investment characteristics (for
example, yield and industry weight) of the index. This means that a company can
remain in the fund even if it performs poorly, unless the company is removed
from the Russell 3000. The management team uses proprietary quantitative models
to replicate the broad market exposure and characteristics of the Russell 3000
Index.
Using the Russell 3000 Index isn't fundamental to the fund's investment
objective and policies. We can change the index used in this fund at any time
and will notify you if we do so.
The fund can also invest in securities and other instruments, such as futures,
whose return depends on stock market prices. We select these instruments to
attempt to match the total return of the Russell 3000, but we may not always be
able to do so.
The Russell 3000 Index is an unmanaged index of stocks of the 3,000 largest
publicly traded U.S. companies, based on market capitalization. Russell 3000
companies represent about 98 percent of the total market capitalization of the
publicly traded U.S. equity market. The market capitalization of the individual
companies in the index ranged from $178 million to $407.2 billion with an
average of $5.34 billion as of December 31, 1999. The Frank Russell Company
determines the composition of the index based only on market capitalization and
can change its composition at any time. The Russell 3000 Index is not a mutual
fund and you cannot invest directly in the index. The Equity Index Fund isn't
promoted, endorsed, sponsored or sold by or affiliated with the Frank Russell
Company.
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. In addition, there are special risks associated
with indexed investing. The fund attempts to closely track the Russell 3000
Index and changes are made to
22
<PAGE>
its holdings to reflect changes in the index. However, the fund doesn't invest
in all 3,000 stocks in the index, so we can't guarantee that the performance of
the fund will match that of the index. Also, the fund's returns, unlike those of
the index, are reduced by investment and other operating expenses. The stock
prices of smaller, lesser-known companies, which make up a small part of the
index, 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.
THE SOCIAL CHOICE EQUITY FUND
The SOCIAL CHOICE EQUITY FUND seeks a favorable long-term rate of return that
reflects the investment performance of the U.S. stock market while giving
special consideration to certain social criteria. Normally, at least 80 percent
of the fund's assets will be invested in common stocks.
The fund attempts to track the return of the U.S. stock market as represented by
the S&P 500 Composite Stock Index. It does this primarily by investing in S&P
500 companies that are not excluded by the fund's social criteria, so that the
fund's portfolio approaches the overall investment characteristics (e.g., yield
and industry weight) of the S&P 500.
The fund's social criteria are non-fundamental investment policies. Advisors can
change them without the approval of the fund's shareholders. Currently, the fund
invests only in companies that do not:
o engage in activities that result or are likely to result in significant
damage to the natural environment;
o have a significant portion of their business in weapons manufacturing;
o produce and market alcoholic beverages or tobacco products;
o produce nuclear energy; or
o have operations in Northern Ireland and have not adopted the MacBride
Principles (a fair employment code for U.S. firms operating in Northern
Ireland) or have not operated consistently with such principles and in
compliance with the Fair Employment Act of 1989 (Northern Ireland).
For the first three criteria, we assess the issuer to decide whether the
activity is a "significant" part of its business - basing our decision on, for
example, how large a part of a company's operation the activity involves or how
much revenue it brings in. In determining whether a particular activity is
significant to a company, we do not rely on strict objective criteria, but
rather make judgments based on the facts and circumstances pertaining to the
company.
The Corporate Governance and Social Responsibility Committee of our Board of
Trustees provides guidance in deciding whether investments meet the social
criteria. It uses information from independent organizations such as the
Investor Responsibility Research Center, Inc. We'll do our best to
23
<PAGE>
make sure the fund's investments meet the social criteria, but we can't
guarantee that every holding will always do so. Even if an investment is not
excluded by the social criteria, we have the option of excluding it if we decide
it is not suitable.
The fund isn't restricted from investing in any securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities. The fund can also
invest in securities issued by other countries or their agencies and
instrumentalities as approved by the Committee on Corporate Governance and
Social Responsibility. The fund can also invest up to 15 percent of its assets
in foreign securities.
SPECIAL INVESTMENT RISKS: Because its social criteria exclude some investments,
this fund may not be able to take advantage of the same opportunities or market
trends as do the funds that don't use such criteria.
ADDITIONAL INVESTMENT STRATEGIES FOR THE EQUITY FUNDS
Each equity fund may also buy and sell options, futures contracts, and options
on futures. We intend to use options and futures primarily for hedging or for
cash management. To manage currency risk, the equity funds can also enter into
forward currency contracts, and buy or sell options and futures on foreign
currencies.
The equity funds can also invest in newly developed financial instruments, such
as equity swaps (including arrangements where the return is linked to a stock
market index) and equity-linked fixed-income securities, so long as these are
consistent with a fund's investment objective and restrictions.
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, each of
which is described in this prospectus.
Normally, about 60 percent of the Managed Allocation Fund's assets will be in
shares of the Growth & Income, International Equity and Growth Equity Funds, and
about 40 percent will be in shares of the Bond Plus, Short-Term Bond and
High-Yield Bond Funds. The Growth & Income Fund invests in a broadly diversified
portfolio of stocks selected for their investment potential. The International
Equity Fund invests in a broadly diversified portfolio of primarily foreign
equity investments. The Growth Equity Fund invests in stocks of companies in new
and emerging areas of the economy and companies with distinctive products or
promising market conditions. The Bond Plus Fund divides its portfolio into two
segments, one of which invests in a broad range of investment-grade debt
securities, and the other of which seeks enhanced return through investments in
illiquid or non-
24
<PAGE>
investment grade securities. The Short-Term Bond Fund invests in a broad range
of U.S. Treasury and Agency securities, and corporate bonds with maturities from
1-5 years. The High-Yield Bond Fund invests primarily in lower-rated,
higher-yielding fixed-income securities.
As a result, the Managed Allocation Fund's returns reflect investments in a mix
of domestic stocks of companies of all sizes, foreign equities, and a variety of
fixed income instruments of varying maturities and credit qualities. To maintain
an appropriate allocation among the underlying funds, we monitor the foreign and
domestic equity markets, as well as overall financial and economic conditions.
If the relative attractiveness of the markets in which the underlying funds are
invested changes, we can adjust the percentage investments in the underlying
funds up and down by up to 15 percent.
The composition of the fund's fixed income portion will vary depending on the
shape of the yield curve. This means that when there is not much difference
between the yield on short term and longer term bonds, the fund will increase
its investments in the Short-Term Bond Fund. The fund will have less than 5
percent of assets in the High-Yield Bond Fund.
The fund might sometimes be even more heavily weighted toward equities or fixed
income, if we believe market conditions warrant it. For example, we might
increase the fund's holdings in the fixed income funds in periods where we
believe the equity markets will decline, or reduce the fund's holdings in the
International Equity Fund when we believe foreign markets are unusually
volatile.
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. We can't guarantee that this
strategy will be successful.
INVESTMENT RISKS: The Managed Allocation Fund shares the risks of the funds it
invests in. For more about these risks, see the "Investment Risks" sections of
the International Equity, Growth Equity, Bond Plus, Short-Term Bond and
High-Yield Bond Fund descriptions, as well as the general investment risks
described on pages 18 and 19.
Because the Managed Allocation Fund invests in the securities of a limited
number of other mutual funds, it is considered "nondiversified" for purposes of
the 1940 Act. Sometimes nondiversified funds have special risks. However, the
funds in which the Managed Allocation Fund invests are themselves considered
diversified investment companies.
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). That could
25
<PAGE>
create a conflict of interest between the Managed Allocation Fund and its
underlying funds, in which case it could be difficult for the TIAA-CREF Mutual
Funds Board of Trustees and officers to fulfill their fiduciary duties to each
fund. The Board believes it has structured each fund to avoid these concerns.
However, it is still possible that sometimes 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 TIAA-CREF Mutual Funds' Board and officers
will in any case closely and continuously monitor each fund's investments to
avoid these concerns as much as possible.
THE BOND FUNDS
THE BOND PLUS FUND
The BOND PLUS FUND seeks a favorable long-term return, primarily through high
current income consistent with preserving capital. Normally, at least 80 percent
of the fund's assets will be invested in bonds.
The fund is managed to track the duration of the Lehman Brothers Aggregate Bond
Index. Duration is a measurement of the change in the value of a bond portfolio
in response to a change in interest rates. As of December 31, 1999, the duration
of the index was 4.92 years. By keeping the fund's duration close to the Lehman
Index's duration, the fund's returns due to changes in interest rates should be
similar to the index's returns due to changes in interest rates.
The fund's portfolio is divided into two segments. The first segment, which
makes up at least 75 percent of the fund, is invested primarily in a broad range
of the debt securities in the Lehman Index. The majority of this segment is
invested in U.S. Treasury and Agency securities, corporate bonds and
mortgage-backed securities. The fund's holdings are mainly high-quality
securities rated in the top four credit categories by Moody's or Standard &
Poor's, or that we determine are of comparable quality. The fund will overweight
or underweight individual securities or sectors as compared to their weight in
the Lehman Index depending on where we find undervalued or overlooked issues
that we believe offer the potential for superior returns compared to the Lehman
index. This segment can make foreign investments, but we don't expect them to
exceed 15 percent of the fund's assets. The fund can also invest in money market
instruments.
The other segment of the fund is invested in securities with special features,
in an effort to improve the fund's total return. This segment primarily will be
invested in illiquid securities (such as "Rule 144A" private placements) or
non-investment grade securities (those rated Ba1 or lower by Moody's or BB+ or
lower by Standard & Poor's). Currently this part of the fund has less than 5
percent of the fund's
<PAGE>
assets, but if market conditions warrant it could grow as large as 25 percent.
However, investments in illiquid securities will never be more than 15 percent
of the fund's assets.
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. In addition, non-investment grade securities,
which are usually called "high-yield" or "junk" 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
would comparable changes 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 Standard &Poor's
BBB. Also, 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
the Bond Plus Fund, it may or may not be sold, depending on our analysis of the
issuer's prospects. However, the fund won't purchase below-investment-grade
securities if that would increase their amount in the 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 creditanalysis,
paying particular attention to economic trends and other market events.
The fund can hold illiquid securities. The risk of investing in illiquid
securities is that they may be difficult to sell for their fair market value.
The fund's investments in mortgage-backed securities are subject to prepayment
and extension risk. Prepayment risk is the possibility that a change in interest
rates causes the holders of the underlying mortgages to pay off their mortgage
loans sooner than expected. If that happened, the fund would have to reinvest
the amounts that had been invested in the mortgage-backed securities, possibly
at a lower rate of return. Extension risk is the risk that an unexpected rise in
prevailing interest rates will extend the life of an outstanding mortgage-backed
security by reducing the expected number of mortgage prepayments, typically
reducing the security's value.
THE SHORT-TERM BOND FUND
The SHORT-TERM BOND FUND seeks high current income consistent with preservation
of capital. The fund invests primarily in a broad range of debt securities
comprising the Lehman Brothers Mutual Fund Short (1-5 year) Government/Corporate
Index. These are primarily U.S. Treasury and Agency securities, and corporate
bonds with maturities from 1 to 5 years. It can also hold other fixed-income
securities. These include foreign corporate
<PAGE>
bonds, debentures and notes, mortgage-backed securities, asset-backed
securities, convertible securities, and preferred stocks. The fund may
overweight or underweight individual securities or sectors as compared to their
weight in the index where we find undervalued or overlooked issues that we
believe offer the potential for superior returns. The fund may also invest in
securities that aren't in the index because we believe they offer the potential
for superior returns.
The fund generally seeks to maintain an average duration equal to that of its
benchmark, plus or minus 6 months. Duration is a measurement of the change in
the value of a bond portfolio in response to a change in interest rates. By
keeping the duration of the fund close to the index's duration, the fund's
returns due to changes in interest rates should be similar to the index's
returns due to changes in interest rates. As of December 31, 1999, the duration
of the index was 2.37 years.
The Short-Term Bond Fund also may invest up to 15 percent of its assets in the
securities of foreign issuers. The fund may invest in mortgage-backed securities
including pass-through certificates and collateralized mortgage obligations
(CMOs).
SPECIAL INVESTMENT RISKS: The fund is subject to general interest rate risk and
credit risk for debt and other fixed income securities as described on page 18.
Mortgage-backed securities in which the fund may invest are subject to extension
risk and prepayment risk. Extension risk is the risk that an unexpected rise in
prevailing interest rates will extend the life of an outstanding mortgage-backed
security by reducing the expected number of mortgage prepayments, typically
reducing the security's value. Prepayment risk is the possibility that a change
in interest rates causes the holders of the underlying mortgages to pay off
their mortgage loans sooner than expected. If that happened, the fund would have
to reinvest the amounts that had been invested in the mortgage-backed
securities, possibly at a lower rate of return.
THE HIGH-YIELD BOND FUND
The HIGH-YIELD BOND FUND primarily seeks high current income and, when
consistent with its primary objective, capital appreciation. The fund invests
primarily in lower-rated, higher-yielding fixed income securities, such as
domestic and foreign corporate bonds, debentures, and notes, as well as
convertible securities and preferred stocks. Under normal market conditions, the
fund invests at least 80 percent of its assets in debt and other fixed income
securities rated lower than investment grade (and their unrated equivalents) or
other high-yielding securities. (These are often called "junk" bonds). Most of
these will be securities rated in the BB or B categories by Standard & Poor's,
or in the Ba or B categories by Moody's. The fund may invest up to 20 percent of
its assets in the following other types of instruments: payment in kind or
deferred interest obligations, defaulted
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securities, asset-backed securities, securities rated lower than B- or B3, and
securities having limited liquidity.
The fund can make foreign investments, but we don't expect them to be over 20
percent of the fund's assets. The fund can have up to 15 percent of its assets
in illiquid securities. The fund can also invest in U.S. Treasury and Agency
securities or other short-term instruments when other suitable investment
opportunities aren't available, or when we want to build the portfolio's
liquidity.
The premise of the High-Yield Bond Fund is that over long periods of time, a
broadly diversified portfolio of lower-rated, higher-yielding securities should,
net of capital losses, provide a higher net return than a similarly diversified
portfolio of higher-rated, lower-yielding securities of similar duration. We
attempt to minimize the risks of investing in lower-rated securities by:
o Doing our own credit analysis (independent of the rating agencies). We will
buy securities of issuers with a balance of operational and financial risks
that we believe make it likely that they will be able to meet their
financial obligations
o Constructing a portfolio of securities diversified by industry, geography,
maturity, duration and credit quality
o Buying or selling particular securities to take advantage of anticipated
changes and trends in the economy and financial markets
Our judgment of the value of any particular security is a function of our
experience with lower-rated securities, evaluation of general economic and
securities market conditions and the financial condition of the security's
issuer. Under some market conditions, the fund may sacrifice potential yield in
order to adopt a defensive posture designed to preserve capital. Teachers
Advisors, the fund's investment advisor, may from time to time share investment
research and ideas about high-yield securities with its affiliate, Teachers
Insurance and Annuity Association (TIAA). While the fund believes that such
sharing of information provides benefits to the fund and its shareholders, the
fund may at times be prevented from buying or selling certain securities or may
need to sell certain securities before it might otherwise do so, in order to
comply with the federal securities laws.
SPECIAL INVESTMENT RISKS: The fund is subject to the general investment risks
described on pages 18 and 19. In addition, the fund is subject to above-average
interest rate risk and credit risk. Investors should expect greater fluctuations
in share price, yield and total return compared to mutual funds holding bonds
and other income bearing securities with higher credit ratings and/or shorter
maturities. These fluctuations, whether positive or negative, may be sharp and
unanticipated. During the periods when the market for high-yield securities is
volatile, it may be difficult for the fund to buy or sell its securi-
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ties. An investment in this fund is much riskier than an investment in bond
funds that don't invest primarily in lower-rated debt securities.
Issuers of "junk" bonds are typically in weak financial health and their ability
to pay interest and principal is uncertain. Compared to issuers of investment
grade securities, they are more likely to encounter financial difficulties and
to be materially affected by these difficulties when they do encounter them.
"Junk" bond markets may react strongly to adverse news about an issuer or the
economy, or to the perception or expectation of adverse news.
The fund can hold illiquid securities. Illiquid securities may be difficult to
sell for their fair market value.
Current income risk can also be significant for this fund.
THE TAX-EXEMPT BOND FUND
The TAX-EXEMPT BOND FUND seeks a high level of current income that is exempt
from regular federal income tax, consistent with preservation of capital. Under
normal market conditions, the fund invests almost all of its assets in municipal
securities. Municipal securities include bonds, notes, commercial paper and
other instruments (including participation interests in such securities) issued
by or on behalf of the states, territories and possessions of the United States
(including the District of Columbia) and their political subdivisions, agencies
and instrumentalities, the interest on which, in the opinion of bond counsel for
the issuers, is exempt from regular federal income tax (i.e., excludable from
gross income for individuals for federal income tax purposes but not necessarily
exempt from state or local taxes).
We pursue superior returns using yield spread and credit analysis to identify
and invest in undervalued market sectors and individual securities. We usually
sell investments that we believe are overvalued. We generally seek to maintain
an average duration in the fund equal to that of its benchmark, the Lehman
Brothers 10 Year Municipal Bond Index, of approximately 7 years. Duration is a
measure of the change in the value of a bond portfolio in response to a change
in interest rates.
Municipal securities are often issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, housing, hospitals, mass transportation facilities,
schools, streets and public utilities such as water and sewer works. Municipal
securities include private activity bonds, municipal leases, certificates of
participation, municipal obligation components and municipal custody receipts.
The fund can invest up to 20 percent of its assets in private activity bonds.
Private activity bonds are tax-exempt bonds whose proceeds are used to fund
private, for-profit organizations. The interest on these securities (including
the fund's distribution of that interest) may be a preference item for purposes
of the federal alternative minimum tax (AMT). The AMT is a special tax system
that ensures that
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individuals and certain corporations pay at least some federal taxes. Income
from securities that are a preference item is included in the computation of the
AMT.
All of the fund's assets are dollar-denominated securities. The fund may invest
up to 20 percent of assets in unrated instruments and in lower-rated,
higher-yielding securities, such as "junk" bonds.
SPECIAL INVESTMENT RISKS: The fund is subject to general interest rate risk and
credit risk for debt and other fixed income securities as described on page 18.
The fund also is subject to current income volatility and the related risk that
falling interest rates will cause the fund's income to fall as it invests assets
at progressively lower rates. As with most income funds, the fund is subject to
"call" risk arising from the possibility that during periods of declining
interest rates, an issuer of a municipal obligation may call (i.e., retire) a
high yielding obligation before its maturity date. This often creates an
unanticipated capital gain liability for shareholders and requires the fund to
reinvest the proceeds at the lower prevailing interest rate.
Because of their tax-exempt status, the yields and market values of municipal
securities may be hurt more by changes in tax rates and policies than similar
taxable income bearing securities.
Obligations of the issuer to pay the principal and interest on a municipal
obligation are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Act, and laws that may be enacted by Congress or state legislatures
extending the time for payment of principal or interest or imposing other
constraints on the enforcement of those obligations. There is also the
possibility that litigation or other conditions may materially affect the power
or ability of the issuer to pay the principal or interest on a municipal
obligation when due. Municipal lease obligations and certificates of
participation are subject to the added risk that a government lessee will fail
to appropriate funds to enable it to make lease payments.
This may not be an appropriate investment in connection with tax-favored
arrangements like IRAs, or if you are in a low tax-bracket.
ADDITIONAL INVESTMENT STRATEGIES FOR THE BOND FUNDS
The bond funds can invest in mortgage-backed securities. These can include
pass-through securities sold by private, governmental and government-related
organizations and collateralized mortgage obligations (CMOs). 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. 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.
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The bond funds may use a trading technique called "mortgage rolls", in which we
"roll over" an investment in a mortgage-backed security before its settlement
date in exchange for a similar security with a later settlement date. The bond
funds may also engage in duration-neutral relative value trading, a technique in
which we buy and sell government bonds of identical credit quality but different
maturity dates in an attempt to take advantage of spread differentials along the
yield curve. These techniques are designed to enhance a fund's returns, but they
do increase the fund's portfolio turnover rate. However, we don't expect these
techniques to significantly raise a fund's capital gains. There are no
commissions on purchases and sales of fixed income securities, so increased
trading will not raise the fund's expenses.
The bond funds can invest in interest-only and principal-only mortgage-backed
securities. These instruments have unique characteristics, and interest-only
mortgage-backed securities are particularly sensitive to prepayment risk, which
may also include actual loss of invested funds.
Each bond fund may also buy and sell options, futures contracts, and options on
futures. We intend to use options and futures primarily for hedging or for cash
management. To manage currency risk, the fixed income funds can also enter into
forward currency contracts, and buy or sell options and futures on foreign
currencies.
The bond funds can also invest in recently developed financial instruments, such
as swaps and options on swaps ("swaptions"), so long as these are consistent
with a fund's investment objective and restrictions.
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.
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
dollar-denominated 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 include certificates of deposit,
time deposits, bankers' acceptances, and other short-term debt;
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(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 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 percent 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.
SPECIAL INVESTMENT RISKS: The principal risk of investing in the Money Market
Fund is current income risk - that is, the income the fund receives may fall as
a result of a decline in interest rates. To a lesser extent, the fund is also
subject to the general risks described above on pages 18 and 19.
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TIAA-CREF Mutual Funds' Management
Teachers Advisors manages the assets of the TIAA-CREF Mutual Funds, under the
supervision of the Funds' Board of Trustees (the Board). Teachers Advisors is a
wholly-owned indirect subsidiary of Teachers Insurance and Annuity Association
of America (TIAA). It is registered as an investment adviser with the Securities
and Exchange Commission under the Investment Advisers Act of 1940. Teachers
Advisors also manages the investments of TIAA-CREF Institutional Mutual Funds,
TIAA Separate Account VA-1, the TIAA-CREF Life Funds and the investment
portfolio of New York State's College Choice Tuition Savings Plan. Through an
affiliated investment adviser, TIAA-CREF Investment Management, LLC, the
personnel of Teachers Advisors also manage the investment accounts of the
College Retirement Equities Fund. Teachers Advisors is located at 730 Third
Avenue, New York, NY 10017.
Teachers Advisors' duties include conducting research, recommending investments,
and placing orders to buy and sell securities. Teachers Advisors is also
responsible for providing, or obtaining at its own expense, the services needed
for the day-to-day 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.
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 percent, 0.95 percent, 0.93 percent, 0.76 percent, 0.77 percent, 0.80
percent, 0.80 percent, 0.84 percent, 0.80 percent and 0.79 percent of the
average daily net assets of the International Equity Fund, the Growth Equity
Fund, the Growth & Income Fund, the Equity Index Fund, the Social Choice Equity
Fund, the Bond Plus Fund, the Short-Term Bond Fund, the High-Yield Bond Fund,
the Tax-Exempt Bond 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
percent 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,
2003.
Each fund is managed by a team of fund managers, whose members are jointly
responsible for the day-to-day management of the fund, with expertise in the
area(s) applicable to the fund's investments.
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CALCULATING SHARE PRICE
We determine the net asset value (NAV) per share, or share price, of a fund on
each day the New York Stock Exchange is open for business. We do this when
trading closes on all U.S. national exchanges where securities or other
investments of a fund are principally traded. We will not price fund shares on
days that the New York Stock Exchange is closed. We compute a fund's NAV by
dividing the value of the fund's assets, less its liabilities, by the number of
outstanding shares of that fund.
For all funds except the Money Market Fund, we usually use market quotations or
independent pricing services to value securities and other instruments. 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. Money market
instruments with maturities of 60 days or less are valued at amortized cost. We
may also use fair value if events that have a significant effect on the value of
an investment (as determined in our sole discretion) occur between the time when
its price is determined and the time a fund's net asset value is calculated.
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 the NAV per share of the underlying funds.
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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 Equity Index Fund Annually
The Social Choice Equity Fund Annually
The Bond Plus Fund Monthly
The High-Yield Bond Fund Monthly
The Short-Term Bond Fund Monthly
The Tax-Exempt Bond Fund Monthly
The Money Market Fund Monthly
Although we pay dividends monthly from the Money Market Fund, these dividends
are calculated and declared daily.
We intend to pay net capital gains from all funds that have them 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. However, the information about taxes in this prospectus is general. It
won't apply to you if you are investing through a tax-deferred account such as
an IRA. Consult your tax advisor if you need more information.
TAXES ON DISTRIBUTIONS. Unless you are tax-exempt or hold fund shares in a
tax-deferred account, you must pay federal income tax, and possibly also state
or local taxes, on 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.
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
from each fund. Long-term capital gain distributions are taxed at a maximum rate
of 20 percent to all individual investors. Individuals in the 15 percent tax
bracket pay 10 percent tax on their long-term capital gains. Whether or not a
capital gain distribution is considered long-term or short-term depends on how
long the fund held the securities the sale of which led to the gain.
SPECIAL CONSIDERATIONS FOR TAX-EXEMPT BOND FUND SHAREHOLDERS. The Tax-Exempt
Bond Fund expects to distribute "exempt-interest dividends." These dividends
will be exempt income for regular federal income tax purposes. However, any
distributions derived from the fund's net long-term capital gains will
ordinarily be taxable to shareholders as long-term capital gains. Any
distributions derived from taxable interest income, net short-term capital gains
and certain net realized foreign exchange gains will be taxable to shareholders
as ordinary income.
If you borrow money to purchase or hold Tax-Exempt Bond Fund shares, the
interest on the money you borrow usually will not be deductible for federal
income tax purposes.
Some of the exempt-interest dividends that the Tax-Exempt Bond Fund pays come
from its investments in private activity bonds. These dividends may be an item
of tax preference in determining your federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other elements of
adjusted gross income in determining whether or not any Social Security or
railroad retirement payments you may receive are subject to federal income
taxes.
If you hold shares in the Tax-Exempt Bond Fund for six months or less, and you
sell or exchange them for a loss, you can't claim the full amount of the loss
for federal income tax purposes if you have received an exempt interest dividend
from the fund. The dividend amount must be deducted from the loss you claim.
TAXES ON SALES OR REDEMPTIONS. When you sell shares in a fund (including
exchanges to
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other funds) you will usually have a capital gain or loss equal to the
difference between your adjusted cost basis in the shares and the cash (or fair
market value of other property) you receive from the sale.
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.
BACKUP WITHHOLDING. If you provide us with the wrong taxpayer identification
number, or fail to certify that the number is correct, we are required to
withhold 31 percent of the taxable distributions and redemption proceeds from
your account. We also may be required to begin backup withholding, if the IRS
instructs us to do so.
"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 per share
dividend. After the dividend was paid, each share would be worth $9.75, and you
would have to include the $0.25 per share 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 or deduction 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 was 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.
SPECIAL CONSIDERATIONS FOR CORPORATE/INSTITUTIONAL ACCOUNTS. If you are a
corporate investor, some of the dividends from net investment income paid by the
Growth Equity Fund, Growth & Income Fund, Equity Index Fund and Social Choice
Equity Fund usually will qualify for the corporate dividends-received deduction.
How much of those dividends qualifies depends on how much qualifying dividend
income each fund receives from U.S. sources. Corporate investors seeking to
claim this deduction may have to satisfy certain holding period and debt
financing restrictions. We expect that little or none of the distributions paid
by the other TIAA-CREF Mutual Funds portfolios will qualify for the corporate
dividends-received deduction.
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YOUR ACCOUNT:BUYING, SELLING OR EXCHANGING SHARES
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 Traditional IRAs and Roth IRAs. These accounts let you shelter investment
income from federal income tax while saving for retirement.
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.
o Corporate/institutional accounts.
For more information about opening an IRA or corporate/institutional account,
please call us.
HOW TO OPEN AN ACCOUNT AND
MAKE SUBSEQUENT INVESTMENTS
To open an account, send us a completed application 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 consultants at 800 223-1200.
You can also download and print the application from our website at
www.tiaa-cref.org/mfunds.
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 page 44.) We won't
accept third party checks for over $10,000.
TO OPEN AN ACCOUNT BY MAIL: Send your check, made payable to TIAA-CREF Mutual
Funds, and/or application to:
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
TO OPEN AN ACCOUNT BY WIRE: Send us your application by mail, then call us to
confirm that your account has been established. Instruct your bank to wire money
to:
State Street Bank
ABA Number 011000028
DDA Number 99052771
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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
You can purchase additional shares in any of the following ways:
BY MAIL: Send a check to either of the addresses listed above 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.
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 savings account
investment slip. It will take us about 10 days from the time we receive it 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 by telephone. The change will take
effect approximately 5 business days after we receive your request.
BY TELEPHONE: Call 800 223-1200. You can 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 canceled.
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 personally selected Personal
Identification Number (PIN) and social security number.
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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. If you don't have a
personally selected PIN, call us to get one.
BY WIRE: To buy additional shares by wire, follow the instructions above for
opening an account by wire. (You do not have to send us an application again.)
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 (including a mutual fund "supermarket"),
bank, or other financial institution handle your transactions, they may
charge you a fee. Contact them to find out if they impose any other
conditions, such as a higher minimum investment requirement, on your
transaction.
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 can redeem (sell) your shares at any time. 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 (see page 44). If you request a redemption
of shares shortly after you have purchased those shares by check or automatic
investment plan, we will process your redemption but will hold your redemption
proceeds for up to 10 calendar days to allow the check or automatic investment
to clear.
We 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 45). 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
41
<PAGE>
transfer (minimum of $5,000). Before calling, read "Points to Remember When
Redeeming," below.
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: Send your written request to either of the addresses listed in the "How
to Open an Account and Make Subsequent Investments" section. 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.
BY TELEPHONE: Call 800 223-1200 to redeem shares in amounts under $50,000. Once
made, your telephone request cannot be modified or canceled.
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 any time after opening your account.
Telephone redemptions are not available for IRA accounts.
BY CHECK: If you've elected the Money Market Fund's check writing 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 check writing 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 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. You also
cannot write a check to redeem shares from the Money Market Fund for 10 days
after you have sent us a check or automatic investment plan payment to purchase
Money Market Fund shares if your Money Market Fund Account does not otherwise
have a sufficient balance to support the redemption check.
42
<PAGE>
BY SYSTEMATIC REDEMPTION PLAN: You can elect this feature only from funds with
balances of 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.
o For redemptions of more than $250,000, we reserve the right to give you
marketable securities instead of cash.
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.
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: Send a letter of instruction to either of the addresses in the "How to
Open an Account and Make Subsequent Investments" section. The letter must
include your name, address, and the funds and/or accounts you want to exchange
between.
43
<PAGE>
BY TELEPHONE: Call 800 223-1200. Once made, your telephone request cannot be
modified or canceled.
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 canceled.
BY SYSTEMATIC EXCHANGE: You can elect this feature only if the balance of the
fund from which you are transferring shares is at least $5,000. 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 a systematic exchange, you can contact us and we will send
you the necessary forms. All owners of an account must sign the 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. 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 from any fund
except the International Equity Fund and the High-Yield Bond Fund. For
those funds we reserve the right to suspend the exchange privilege if you
make more than 6 exchanges in 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 is taxable.
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
44
<PAGE>
owners exactly as registered on the account, and any other supporting legal
documentation that may be required.
SHARE PRICE: If you buy shares from us directly, the share price we use will be
the NAV per share next calculated after Boston Financial Data Services receives
your application or request in good order. If you buy shares through an
intermediary, such as a securities dealer (including a mutual fund
"supermarket"), bank or investment adviser, the share price we use will be the
NAV per share next calculated after the intermediary accepts the order. If this
occurs before the New York Stock Exchange closes (usually 4:00 p.m., Eastern
Time) your price will be the NAV per share for that day. If it's after the New
York Stock Exchange closes, your price will be the NAV per share for the next
business day. An intermediary could require you to place an order before 4:00
p.m. to get the NAV per share for that day.
MINIMUM ACCOUNT SIZE: Due to the relatively high cost of maintaining smaller
accounts, we reserve the right to redeem shares in any account if, as the result
of redemptions, the value of that account drops below $100. You will be allowed
at least 60 days, after written notice, to make an additional investment to
bring your account value up to at least the specified minimum before the
redemption is processed.
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 check writing, 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 guar-
45
<PAGE>
antees. 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 shareholders.
You maintain total control over your account during your lifetime. Currently,
all states except Louisiana, New York and North Carolina allow transfer on
death. Transfer on death is also currently unavailable in the District of
Columbia.
TELEPHONE AND INTER/ACT TRANSACTIONS: The funds aren't liable for losses from
unauthorized telephone and Inter/ACT transactions so long as we follow
reasonable procedures designed to verify the identity of the person effecting
the transaction. We therefore take the following precautions to ensure your
instructions are genuine: we 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. We also tape record
telephone instructions and provide written confirmations. We accept all
telephone instructions we reasonably believe are genuine and accurate. 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.
ADVICE ABOUT YOUR ACCOUNT: Representatives of Teachers Personal Investors
Services, Inc. (TPIS) may recommend that you buy fund shares. TPIS, a TIAA
subsidiary, is considered the principal underwriter for the funds. TPIS
representatives are only authorized to recommend securities of TIAA or its
affiliates. They get no commissions for these recommendations.
ELECTRONIC PROSPECTUSES
If you received this prospectus electronically and would like a paper copy,
please contact us and we will send one to you.
46
<PAGE>
This page intentionally left blank.
47
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights table is intended to help you understand the funds'
financial performance since they began operations on July 17, 1997. Certain
information reflects financial results for a single share of a fund. The total
returns in the table show the rates that an investor would have earned on an
investment in a fund (assuming reinvestment of all dividends and distributions).
The information has been audited by Ernst & Young LLP, independent auditors.
Their report appears in TIAA-CREF Mutual Funds' Annual Report, which contains
additional information about the funds. It is available without charge upon
request.
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA July 17, 1997
(Commence-
YEAR YEAR ment of
ENDED ENDED Operations)
DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.54 $8.92 $10.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.11 0.09 0.07
Net realized and unrealized gain (loss)
on investments 5.77 1.63 (1.07)
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations 5.88 1.72 (1.00)
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.11) (0.08) (0.07)
In excess of net investment income -- (0.02) (0.01)
Net realized gains (0.23) -- --
- ------------------------------------------------------------------------------------------------
Total distributions (0.34) (0.10) (0.08)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $16.08 $10.54 $8.92
- ------------------------------------------------------------------------------------------------
TOTAL RETURN 55.83% 19.27% (10.09)%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $255,819 $118,555 $47,758
Ratio of expenses to average net assets
before expense waiver 0.99% 0.99% 0.46%
Ratio of expenses to average net assets
after expense waiver 0.49% 0.49% 0.23%
Ratio of net investment income
to average net assets 1.03% 1.23% 0.56%
Portfolio turnover rate 74.16% 27.20% 4.56%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The percentages shown for this period are not annualized.
48
<PAGE>
<TABLE>
<CAPTION>
GROWTH EQUITY
FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA JULY 17, 1997
(Commence-
YEAR YEAR ment of
ENDED ENDED Operations)
DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $13.65 $10.12 $10.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.02 0.03 0.06
Net realized and unrealized gain (loss)
on investments 4.47 3.61 0.28
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations 4.49 3.64 0.34
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.02) (0.03) (0.06)
In excess of net investment income -- -- --
Net realized gains (0.93) (0.08) (0.16)
- ------------------------------------------------------------------------------------------------
Total distributions (0.95) (0.11) (0.22)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $17.19 $13.65 $10.12
- ------------------------------------------------------------------------------------------------
TOTAL RETURN 33.00% 35.97% 3.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $696,272 $296,362 $64,487
Ratio of expenses to average net assets
before expense waiver 0.95% 0.95% 0.44%
Ratio of expenses to average net assets
after expense waiver 0.45% 0.45% 0.21%
Ratio of net investment income
to average net assets 0.16% 0.37% 0.68%
Portfolio turnover rate 69.56% 49.91% 29.44%
- ------------------------------------------------------------------------------------------------
<CAPTION>
GROWTH & INCOME
FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA JULY 17, 1997
(Commence-
YEAR YEAR ment of
ENDED ENDED Operations)
DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $13.33 $10.32 $10.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.11 0.10 0.07
Net realized and unrealized gain (loss)
on investments 3.13 3.04 0.32
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations 3.24 3.14 0.39
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.11) (0.10) (0.07)
In excess of net investment income -- -- --
Net realized gains (0.53) (0.03) --
- ------------------------------------------------------------------------------------------------
Total distributions (0.64) (0.13) (0.07)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $15.93 $13.33 $10.32
- ------------------------------------------------------------------------------------------------
TOTAL RETURN 24.46% 30.51% 3.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $541,718 $232,625 $61,822
Ratio of expenses to average net assets
before expense waiver 0.93% 0.93% 0.43%
Ratio of expenses to average net assets
after expense waiver 0.43% 0.43% 0.20%
Ratio of net investment income
to average net assets 0.82% 0.97% 0.76%
Portfolio turnover rate 39.35% 71.49% 1.46%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The percentages shown for this period are not annualized.
49
<PAGE>
<TABLE>
<CAPTION>
MANAGED ALLOCATION
FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA July 17, 1997
(Commence-
Year Year ment of
Ended Ended Operations)
Dec. 31 Dec. 31, to Dec. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.79 $10.01 $10.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.38 0.34 0.23
Net realized and unrealized gain (loss)
on investments 1.85 1.76 0.01
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations 2.23 2.10 0.24
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.38) (0.32) (0.23)
In excess of net investment income -- -- --
Net realized gains (0.05) -- --
- ------------------------------------------------------------------------------------------------
Total distributions (0.43) (0.32) (0.23)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $13.59 $11.79 $10.01
TOTAL RETURN 19.20% 21.24% 2.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $244,372 $162,867 $59,087
Ratio of expenses to average net assets
before expense waiver 0.00% 0.00% 0.00%
Ratio of expenses to average net assets
after expense waiver 0.00% 0.00% 0.00%
Ratio of net investment income
to average net assets 5.19% 2.80% 2.46%
Portfolio turnover rate 3.90% 4.78% 0.00%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The percentages shown for this period are not annualized.
50
<PAGE>
<TABLE>
<CAPTION>
BOND PLUS
FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA July 17, 1997
(Commence-
Year Year ment of
Ended Ended Operations)
Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.30 $10.09 $10.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.56 0.56 0.27
Net realized and unrealized gain (loss)
on investments (0.66) 0.32 0.20
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations (0.10) 0.88 0.47
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.56) (0.56) (0.27)
In excess of net investment income (0.01) -- --
Net realized gains -- (0.11) (0.11)
- ------------------------------------------------------------------------------------------------
Total distributions (0.57) (0.67) (0.38)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $9.63 $10.30 $10.09
- ------------------------------------------------------------------------------------------------
TOTAL RETURN (1.01)% 8.94% 4.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $204,346 $155,034 $58,403
Ratio of expenses to average net assets
before expense waiver 0.80% 0.80% 0.37%
Ratio of expenses to average net assets
after expense waiver 0.30% 0.30% 0.14%
Ratio of net investment income
to average net assets 5.75% 5.66% 2.72%
Portfolio turnover rate 652.82% 531.92% 143.61%
- ------------------------------------------------------------------------------------------------
<CAPTION>
MONEY MARKET
FUND
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA July 17, 1997
(Commence-
Year Year ment of
Ended Ended Operations)
Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------
Gain (loss) from investment operations:
Net investment income 0.05 0.05 0.02
Net realized and unrealized gain (loss)
on investments -- -- --
- ------------------------------------------------------------------------------------------------
Total gain (loss) from investment operations 0.05 0.05 0.02
- ------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.05) (0.05) (0.02)
In excess of net investment income -- -- --
Net realized gains -- -- --
- ------------------------------------------------------------------------------------------------
Total distributions (0.05) (0.05) (0.02)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------
5.05% 5.45% 2.51%
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $394,965 $225,187 $63,605
Ratio of expenses to average net assets
before expense waiver 0.79% 0.79% 0.36%
Ratio of expenses to average net assets
after expense waiver 0.29% 0.29% 0.13%
Ratio of net investment income
to average net assets 4.97% 5.28% 2.49%
Portfolio turnover rate n/a n/a n/a
- ------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
FOR MORE INFORMATION ABOUT TIAA-CREF MUTUAL FUNDS
The following documents contain more information about the funds and are
available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI contains more information
about all aspects of the funds. A current SAI has been filed with the Securities
and Exchange Commission and is incorporated in this prospectus by reference.
ANNUAL AND SEMI-ANNUAL REPORTS. The funds' annual and semi-annual reports
provide additional information about the funds' investments. The annual report
for the fiscal year ended December 31, 1999 contains a discussion of the market
conditions and investment strategies that significantly affected each existing
fund's performance during the last fiscal year.
REQUESTING DOCUMENTS. You can request a copy of the SAI or these reports, or
contact us for any other purpose, 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/mfunds.
Information about TIAA-CREF Mutual Funds (including the SAI) can be reviewed and
copied at the Securities and Exchange Commission's (SEC) public reference room
(202 942-8090) in Washington, D.C. The information is also available through the
SEC's internet website at www.sec.gov or by e-mail to [email protected]. Copies
of the information can also be obtained, upon payment of a duplicating fee, by
writing the SEC's Public Reference Section, Washington, D.C. 20549-6009.
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 or write us.
TCMFPROS-4/00 811-08055
<PAGE>
S T A T E M E N T
O F A D D I T I O N A L
I N F O R M A T I O N
- --------------------------------------------------------------------------------
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 April 3, 2000 (the
Prospectus), which may be obtained by writing us at TIAA-CREF Mutual Funds, c/o
State Street Bank, P.O. Box 9081, Boston, MA 02266 or by calling 800 223-1200.
Terms used in the Prospectus are incorporated in this Statement.
The date of this SAI is April 3, 2000.
[TIAA-CREF MUTUAL FUNDS
LOGO] ------------
Ensuring the future for those who shape it.(SM)
<PAGE>
- ----------------------
Table of Contents
- ----------------------
INVESTMENT OBJECTIVES, POLICIES, AND RESTRICTIONS .............. 2
Fundamental Policies ...................................... 2
Investment Policies and Risk Considerations ............... 3
MANAGEMENT OF THE TIAA-CREF MUTUAL FUNDS ....................... 18
Trustees and Officers of the TIAA-CREF Mutual Funds ....... 18
Trustee Compensation ...................................... 21
PRINCIPAL HOLDERS OF SECURITIES ................................ 22
INVESTMENT ADVISORY AND OTHER SERVICES ......................... 22
ABOUT THE TIAA-CREF MUTUAL FUNDS AND THE SHARES ................ 23
Indemnification of Shareholders ........................... 23
Indemnification of Trustees ............................... 23
Limitation of Fund Liability .............................. 23
Shareholder Meetings and Voting Rights .................... 23
Additional Portfolios ..................................... 23
Dividends and Distributions ............................... 24
PRICING OF SHARES .............................................. 24
Investments for Which Market Quotations Are
Readily Available .................................... 24
Foreign Investments ....................................... 24
Debt Securities ........................................... 24
Special Valuation Procedures for the
Money Market Fund .................................... 24
Options and Futures ....................................... 25
Investments for Which Market Quotations Are
Not Readily Available ................................ 25
TAX STATUS ..................................................... 25
BROKERAGE ALLOCATION ........................................... 27
UNDERWRITERS ................................................... 29
CALCULATION OF PERFORMANCE DATA ................................ 29
Total Return Calculations ................................. 29
Yield Calculations ........................................ 30
All Funds Other Than The Money Market Fund ................ 30
Yield Information For The Money Market Fund ............... 30
Total Return .............................................. 30
Performance Comparisons ................................... 31
Illustrating Compounding .................................. 31
Net Asset Value ........................................... 31
Moving Averages ........................................... 31
VOTING RIGHTS .................................................. 32
LEGAL MATTERS .................................................. 32
EXPERTS ........................................................ 32
ADDITIONAL CONSIDERATIONS ...................................... 32
FINANCIAL STATEMENTS ........................................... 32
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INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
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The following information is intended to supplement the descriptions of the
investment objective of each of the eleven investment funds in the TIAA-CREF
Mutual Funds' Prospectus. Under the Investment Company Act of 1940 (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. However, the funds' investment objectives, policies and strategies
described in the prospectus, as well as the investment restrictions contained in
"Investment Policies and Risk Considerations" below, may be changed by the
TIAA-CREF Mutual Funds' Board of Trustees at any time. Each investment fund
other than the Managed Allocation Fund will operate as a "diversified company"
within the meaning of the 1940 Act.
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 percent 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
percent 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;
6. 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.
The following is a fundamental policy of each fund other than the Equity Index
Fund, the Social Choice Equity Fund, the Short-Term Bond Fund, the High-Yield
Bond Fund and the Tax-Exempt Bond Fund (the "2000 Funds"):
7. The fund will not make loans, except: (a) that a fund may make loans of
portfolio securities not exceeding 33 1/3 percent 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 percent 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.
The following is a fundamental policy of the 2000 Funds:
8. The Fund will not lend any security or make any other loan if, as a
result, more than 33 1/3 percent of its total assets would be lent to
other parties, but this limit does not apply to repurchase agreements.
The following restriction is a fundamental policy of each fund other than the
Managed Allocation Fund:
9. The fund will not, with respect to at least 75 percent of the value of
its total assets, invest more than 5 percent 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 percent of the outstanding
voting securities of any one issuer.
The following restriction is a fundamental policy of each fund other than the
Managed Allocation Fund and the Money Market Fund.
10. 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 percent
of its total assets.
The following restriction is a fundamental policy of the Money Market Fund:
11. The fund may invest more than 25 percent of its assets in obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities; the fund will not otherwise invest in an industry if
after giving effect to that investment the fund's holding in that
industry would exceed 25 percent of its total assets.
The following restrictions are fundamental policies of the Managed Allocation
Fund:
12. 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.
13. The Managed Allocation Fund will concentrate in the mutual fund
industry. Accordingly, it may invest up to 100 percent of its assets in
securities issued by mutual funds and other investment companies.
The following restriction is a fundamental policy of the Tax-Exempt Bond Fund:
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14. The fund may invest more than 25 percent of its assets in tax-exempt
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or by a state or local government or a political
subdivision of any of the foregoing; the fund will not otherwise invest
in an industry if after giving effect to that investment the fund's
holding in that industry would exceed 25 percent of its total assets.
15. The fund will invest at least 80 percent of assets in municipal
securities the interest on which is not subject to Federal alternative
minimum tax.
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 percent of its assets in the securities of any
single investment company or more than 10 percent of its assets in the
securities of other investment companies in the aggregate; or
2. Hold more than 3 percent of the total outstanding voting stock of any
single investment company.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
NON-EQUITY INVESTMENTS OF THE EQUITY FUNDS. 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.
These investments will be similar to those in the first segment of the Bond Plus
Fund. 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 Prospectus, page 32), 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 Prospectus, page 33).
When market conditions warrant, the equity funds can invest directly in debt
securities similar to those in the first segment of the Bond Plus Fund (see
Prospectus page 8). The equity funds can also hold debt securities that they
acquire because of mergers, recapitalizations or otherwise.
EQUITY-TYPE INVESTMENTS OF THE FIXED INCOME FUNDS. The fixed income funds can
invest in debentures with detachable warrants and common stock received upon
exercise of such warrants, upon conversion of convertible debentures, or
otherwise in exchange for securities already held by a fund.
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.
FEDERALLY TAXABLE SECURITIES. Under normal conditions, the Tax-Exempt Bond Fund
intends to invest only in federally tax-exempt securities. However, we may
invest in securities that are federally taxable on a temporary basis. In that
case, the investments would be limited to securities that we determine to be
high quality, such as those issued or guaranteed by the U.S. Government.
ILLIQUID SECURITIES. Each fund can invest up to 15 percent of its assets (10
percent for the Money Market Fund) in investments that may not be readily
marketable. It may be difficult to sell these investments for their fair market
value.
LOWER-QUALITY MUNICIPAL SECURITIES. Because the market for certain municipal
securities is thin, we may encounter difficulties in disposing of lower-quality
securities. At our option, we may pursue litigation or other remedies in order
to protect the fund's interests.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities may be
adversely affected by legal uncertainties regarding legislative proposals
involving the taxation of municipal securities or rights of securities holders
in the event of bankruptcy. From time to time, these uncertainties may affect
the municipal securities market or certain parts thereof, having a significant
impact on the prices of securities in the Tax-Exempt Bond Fund.
PREFERRED STOCK. The funds can invest in preferred stock consistent with their
investment objectives.
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) selling 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 (American style) or at a set time
(European style) prior to the expiration of the option
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regardless of the market price of the security during the option period. As
consideration for the call option, the purchaser pays the seller a premium,
which the seller retains whether or not the option is exercised. The seller of a
call option has the obligation, upon the exercise of the option by the
purchaser, to sell the underlying security at the exercise price at any time
during the option period. Selling a call option would benefit the seller if,
over the option period, the underlying security declines in value or does not
appreciate above the aggregate of the exercise price and the premium. However,
the seller risks an "opportunity loss" of profits if the underlying security
appreciates above the aggregate value of the exercise price and the premium.
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 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 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 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 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
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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
percent of the contract amount. This amount is known as "initial margin." The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
the borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments to and from the broker, called "variation margin," will be made on a
daily basis as the price of the underlying stock index fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as "marking to the market." For example, when a fund has purchased
a stock index futures contract and the price of the underlying stock index has
risen, that position will have increased in value, and the fund will receive
from the broker a variation margin payment equal to that increase in value.
Conversely, where a fund has purchased a stock index futures contract and the
price of the underlying stock index has declined, the position would be less
valuable and the fund would be required to make a variation margin payment to
the broker. At any time prior to expiration of the futures contract, the fund
may elect to close the position by taking an opposite position which will
operate to terminate the fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the fund, and the fund realizes a loss or a gain.
There are several risks in connection with the use of a futures contract as a
hedging device. One risk arises because of the imperfect correlation between
movements in the prices of the futures contracts and movements in the securities
or instruments which are the subject of the hedge. Each fund will attempt to
reduce this risk by engaging in futures transactions, to the extent possible,
where, in our judgment, there is a significant correlation between changes in
the prices of the futures contracts and the prices of each fund's portfolio
securities or instruments sought to be hedged.
Successful use of futures contracts for hedging purposes also is subject to the
user's ability to predict correctly movements in the direction of the market.
For example, it is possible that, where a fund has sold futures to hedge its
portfolio against declines in the market, the index on which the futures are
written may advance and the values of securities or instruments held in the
fund's portfolio may decline. If this occurred, the fund would lose money on the
futures and also experience a decline in value in its portfolio investments.
However, we believe that over time the value of a fund's portfolio will tend to
move in the same direction as the market indices which are intended to correlate
to the price movements of the portfolio securities or instruments sought to be
hedged. It also is possible that, for example, if a fund has hedged against the
possibility of the decline in the market adversely affecting stocks held in its
portfolio and stock prices increased instead, the fund will lose part or all of
the benefit of increased value of those stocks that it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the fund has insufficient cash, it may have to sell securities or
instruments to meet daily variation margin requirements. Such sales may be, but
will not necessarily be, at increased prices which reflect the rising market.
The fund may have to sell securities or instruments at a time when it may be
disadvantageous to do so.
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 require-
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ments 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 percent 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 percent).
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.
INVESTMENT COMPANIES. Each fund other than the Managed Allocation Fund can
invest up to 5 percent of its assets in any single investment company and up to
10 percent 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
percent 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 the other funds that are part of the TIAA-CREF Mutual Funds.
FIRM COMMITMENT AGREEMENTS AND PURCHASE OF "WHEN-ISSUED" SECURITIES. Each fund
can enter into firm commitment agreements for the purchase of securities on a
specified future date. When a fund enters into a firm commitment agreement,
liability for the purchase price -- and the rights and risks of ownership of the
securities -- accrues to the fund at the time it becomes obligated to purchase
such securities, although delivery and payment occur at a later date.
Accordingly, if the market price of the security should decline, the effect of
the agreement would be to obligate the fund to purchase the security at a price
above the 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 below, "Segregated Accounts."
LENDING OF SECURITIES. Subject to investment restrictions 7(a) and 8 on page 2
(relating to loans of portfolio securities), each fund may lend its securities
to brokers and dealers that are not affiliated with TIAA, are registered with
the SEC and are members of the NASD, and also to certain other financial
institutions. All loans will be fully collateralized. In connection with the
lending of its securities, a fund will receive as collateral cash, securities
issued or guaranteed by the United States Government (i.e., Treasury
securities), or other collateral permitted by applicable law, which at all times
while the loan is outstanding will be maintained in amounts equal to at least
102 percent 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 percent 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
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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.
For the Tax-Exempt Bond Fund, income earned during the term of a repurchase
agreement may not be tax-exempt.
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 fund's exposure in
the event of default, it will usually enter into swap transactions on a net
basis (i.e., the parties to the transaction will net the payments payable to
each other before such payments are made). When a fund enters into swap
transactions on a net basis, the net amount of the excess, if any, of the fund's
obligations over its entitlements with respect to each such swap agreement will
be accrued on a daily basis and an amount of liquid assets having an aggregate
market value at least equal to the accrued excess will be segregated by the
fund's custodian. To the extent a fund enters into swap transactions other than
on a net basis, the amount segregated will be the full amount of the fund's
obligations, if any, with respect to each such swap agreement, accrued on a
daily basis. See "Segregated Accounts," below.
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 securities as may be permitted by law.
DEBT INSTRUMENTS GENERALLY
A debt instrument held by a fund will be affected by general changes in interest
rates that will in turn result in increases or decreases in the market value of
the instrument. The market value of non-convertible debt instruments in a fund's
portfolio can be expected to vary inversely to changes in prevailing interest
rates. In periods of declining interest rates, the yield of a fund holding a
significant amount of debt instruments will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates, the fund's
yield will tend to be somewhat lower. In addition, when interest rates are
falling, money received by such a fund from the continuous sale of its shares
will likely be invested in portfolio instruments producing lower yields than the
balance of its portfolio, thereby reducing the fund's current yield. In periods
of rising interest rates, the opposite result can be expected to occur.
RATINGS AS INVESTMENT CRITERIA. Nationally recognized statistical rating
organization (NRSRO) ratings represent the opinions of those organizations as to
the quality of securities that they rate. Although these ratings, which are
relative and subjective and are not absolute standards of quality, are used by
Advisors as initial criteria for the selection of port-
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folio securities on behalf of the funds, Advisors also relies upon its own
analysis to evaluate potential investments.
Subsequent to its purchase by a fund, an issue of securities may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the fund. Although neither event will require the sale of the securities by a
fund, other than the Money Market Fund, Advisors will consider the event in its
determination of whether the fund should continue to hold the securities. In the
event the rating of a security held by the Money Market Fund falls below the
minimum acceptable rating or the issuer of the security defaults, the Money
Market Fund will dispose of the security as soon as practicable, unless the
Board of Trustees determines that disposal of the security would not be in the
best interests of the Money Market Fund. To the extent that a NRSRO's ratings
change as a result of a change in the NRSRO or its rating system, the funds will
attempt to use comparable ratings as standards for their investments in
accordance with their investment objectives and policies.
CERTAIN INVESTMENT GRADE DEBT SECURITIES. Although securities rated BB by
Standard & Poor's Corporation ("S&P" or "Standard & Poor's") or Baa by Moody's
Investors Service, Inc. ("Moody's") are considered investment grade, they may be
viewed as being subject to greater risks than other investment grade
obligations. Obligations rated BB by S&P are regarded as having only an adequate
capacity to pay principal and interest and those rated Baa by Moody's are
considered medium-grade obligations that have speculative characteristics.
U.S. GOVERNMENT DEBT SECURITIES. Each of the funds may invest in U.S. Government
securities. These include debt obligations of varying maturities issued by the
U.S. Treasury or issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association ("GNMA"),
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Federal Deposit Insurance Corporation, Maritime Administration,
Tennessee Valley Authority, District of Columbia Armory Board, Student Loan
Marketing Association, and Resolution Trust Corporation. Direct obligations of
the U.S. Treasury include a variety of securities that differ in their interest
rates, maturities and issue dates. Certain of the foregoing U.S. Government
securities are supported by the full faith and credit of the United States,
whereas others are supported by the right of the agency or instrumentality to
borrow an amount limited to a specific line of credit from the U.S. Treasury or
by the discretionary authority of the U.S. Government or GNMA to purchase
financial obligations of the agency or instrumentality. In contrast, certain of
the foregoing U.S. Government securities are only supported by the credit of the
issuing agency or instrumentality. Because the U.S. Government is not obligated
by law to support an agency or instrumentality that it sponsors, a Fund only
invests in U.S. Government securities when Advisors determines that the credit
risk associated with the obligation is suitable for the fund.
CUSTODY RECEIPTS. Each of the funds may also acquire U.S. Government securities
in the form of custody receipts. Such receipts evidence ownership of future
interest payments, principal payments or both on certain U.S. Government
securities. For certain securities law purposes, custody receipts are not
considered U.S. Government securities.
LOWER-RATED, LOWER QUALITY INSTRUMENTS. Up to 100 percent of the assets of the
High-Yield Bond Fund; 20 percent of the assets of the Tax-Exempt Bond Fund, 15
percent of the assets of the Short-Term Bond Fund; 25 percent of the assets of
the Bond Plus Fund; and 5 percent of the assets of the International Equity
Fund, Growth Equity Fund, Social Choice Equity Fund, and the Equity Index Fund
may be invested in debt instruments that are unrated or are rated lower than the
four highest rating categories assigned by Moody's or Standard & Poor's. Up to
10 percent of the total assets of the High-Yield Bond Fund may be invested in
debt instruments that are rated Ca or lower. Furthermore, debt instruments that
are rated in the four highest categories assigned by Moody's or Standard &
Poor's (i.e., investment grade debt instruments), and especially those which are
unrated or are rated lower than the four highest categories by such rating
organizations may, after purchase by a fund, have their ratings lowered due to
the deterioration of the issuer's financial position. Advisors may determine
that an unrated security is of comparable quality to securities with a
particular rating. Such unrated securities are treated as if they carried the
rating of securities with which Advisors compares them.
RISKS OF LOWER-RATED, LOWER QUALITY DEBT INSTRUMENTS. Lower-rated debt
securities (i.e., those rated Ba or lower by Moody's or BB or lower by Standard
& Poor's) are considered, on balance, predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation and will generally involve more credit risk than securities in the
higher rated categories. Reliance on credit ratings entails greater risks with
regard to lower-rated securities than it does with regard to higher-rated
securities and Advisors' success is more dependent upon its own credit analysis
with regard to lower-rated securities than is the case with regard to
higher-rated securities. The market values of such securities tend to reflect
individual corporate developments to a greater extent than do higher-rated
securities, which react primarily to fluctuations in the general level of
interest rates. Such lower-rated securities also tend to be more sensitive to
economic conditions than are higher-rated securities. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, regarding
lower-rated bonds may depress prices and liquidity for such securities. To the
extent a fund invests in these securities, factors adversely affecting the
market value of lower-rated securities will adversely affect the fund's net
asset value. In addition, a fund may incur additional expenses to the extent it
is
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required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings. Although some risk is inherent in all securities
ownership, holders of debt securities have a claim on the assets of the issuer
prior to the holders of common stock. Therefore, an investment in debt
securities generally entails less risk than an investment in common stock of the
same issuer.
Lower-rated securities may be issued by corporations in the growth stage of
their development. They may also be issued in connection with a corporate
reorganization or as a part of a corporate takeover. Companies that issue such
lower-rated securities are often highly leveraged and may not have available to
them more traditional methods of financing. Therefore, the risk associated with
acquiring the securities of such issuers generally is greater than is the case
with higher rated securities. For example, during an economic downturn or a
sustained period of rising interest rates, highly leveraged issuers of
lower-rated securities may experience financial stress. During such periods,
such issuers may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations may also be
adversely affected by specific corporate developments, the issuer's inability to
meet specific projected business forecasts, or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower-rated securities because such securities are
generally unsecured and are often subordinated to other creditors of the issuer.
Lower-rated securities frequently have call or buy-back features that would
permit an issuer to call or repurchase the security from a fund. If a call were
exercised by the issuer during a period of declining interest rates, the fund
would likely have to replace such called security with a lower yielding
security, thus decreasing the net investment income to the fund.
A fund may have difficulty disposing of certain lower-rated securities for which
there is a thin trading market. Because not all dealers maintain markets in a
lower-rated securities, there is no established retail secondary market for many
of these securities, and TIAA-CREF Mutual Funds anticipates that they could be
sold only to a limited number of dealers or institutional investors. To the
extent there is a secondary trading market for lower-rated securities, it is
generally not as liquid as that for higher-rated securities. The lack of a
liquid secondary market for certain securities may make it more difficult for
TIAA-CREF Mutual Funds to obtain accurate market quotations for purposes of
valuing a fund's assets. Market quotations are generally available on many
lower-rated issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. When market
quotations are not readily available, lower-rated securities must be valued by
(or under the direction of) TIAA-CREF Mutual Fund's Board of Trustees. This
valuation is more difficult and judgment plays a greater role in such valuation
when there is less reliable objective data available.
The market for lower-rated securities has not weathered a major economic
recession, and it is not known how one might affect that market. It is likely,
however, that any such recession could severely affect the market for and the
values of such securities, as well as the ability of the issuers of such
securities to repay principal and pay interest thereon.
The Funds, other than the Money Market Fund, may acquire lower-rated securities
that are sold without registration under the federal securities laws and
therefore carry restrictions on resale. These funds may incur special costs in
disposing of such securities, but will generally incur no costs when the issuer
is responsible for registering the securities. These funds also may acquire
lower-rated securities during an initial underwriting. Such securities involve
special risks because they are new issues. TIAA-CREF Mutual Funds has no
arrangement with any person concerning the acquisition of such securities, and
Advisors will carefully review the credit and other characteristics pertinent to
such new issues.
ZERO COUPON BONDS. The funds may invest in zero coupon bonds. Zero coupon bonds
generally pay no cash interest (or dividends in the case of preferred stock) to
their holders prior to maturity. Accordingly, such securities usually are issued
and traded at a deep discount from their face or par value and generally are
subject to greater fluctuations of market value in response to changing interest
rates than securities of comparable maturities and credit quality that pay cash
interest (or dividends in the case of preferred stock) on a current basis.
Although each of these funds will receive no payments on its zero coupon bonds
prior to their maturity or disposition, it will be required for federal income
tax purposes generally to include in its dividends each year an amount equal to
the annual income that accrues on its zero coupon securities. Such dividends
will be paid from the cash assets of the fund, from borrowings or by liquidation
of portfolio securities, if necessary, at a time that the fund otherwise would
not have done so. To the extent the funds are required to liquidate thinly
traded securities, they may be able to sell such securities only at prices lower
than if such securities were more widely traded. The risks associated with
holding securities that are not readily marketable may be accentuated at such
time. To the extent the proceeds from any such dispositions are used by the
funds to pay distributions, each of the funds will not be able to purchase
additional income-producing securities with such proceeds, and as a result its
current income ultimately may be reduced.
FLOATING AND VARIABLE RATE INSTRUMENTS. The funds may invest in floating and
variable rate instruments. Income securities may provide for floating or
variable rate interest or dividend payments. The floating or variable rate may
be determined by reference to a known lending rate, such as a bank's prime rate,
a certificate of deposit rate or the London InterBank Offered Rate (LIBOR).
Alternatively, the rate may be determined through an auction or remarketing
process. The rate also may be indexed to changes in the values of interest rate
or securities indexes, currency exchange rate or other commodities. Variable and
floating
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rate securities tend to be less sensitive than fixed rate securities to interest
rate changes and to have higher yields when interest rates increase. However,
during periods of rising interest rates, changes in the interest rate of an
adjustable rate security may lag changes in market rates. The amount by which
the rates paid on an income security may increase or decrease may be subject to
periodic or lifetime caps. Fluctuations in interest rates above these caps could
cause adjustable rate securities to behave more like fixed rate securities in
response to extreme movements in interest rates.
Floating and variable rate income securities include securities whose rates vary
inversely with changes in market rates of interest. Such securities may also pay
a rate of interest determined by applying a multiple to the variable rate. The
extent of increases and decreases in the value of securities whose rates vary
inversely with changes in market rates of interest generally will be larger than
comparable changes in the value of an equal principal amount of a fixed-rate
security having similar credit quality, redemption provisions and maturity.
STRUCTURED OR INDEXED SECURITIES. The Bond Plus Fund, Short-Term Bond Fund,
High-Yield Bond Fund, and Tax-Exempt Bond Fund (collectively, the "Bond Funds")
may invest in structured or indexed securities. The value of the principal of
and/or interest on such securities is determined by reference to changes in the
value of specific currencies, interest rates, commodities, indices or other
financial indicators (the "Reference") or the relative change in two or more
References. The interest rate or the principal amount payable upon maturity or
redemption may be increased or decreased depending upon changes in the
applicable Reference. The terms of the structured or indexed securities may
provide that in certain circumstances no principal is due at maturity and,
therefore, may result in a loss of the fund's investment. Structured or indexed
securities may be positively or negatively indexed, so that appreciation of the
Reference may produce an increase or a decrease in the interest rate or value of
the security at maturity. In addition, changes in interest rates or the value of
the security at maturity may be some multiple of the change in the value of the
Reference. Consequently, structured or indexed securities may entail a greater
degree of market risk than other types of debt securities because a fund bears
the risk of the Reference. Structured or indexed securities may also be more
volatile, less liquid and more difficult to accurately price than less complex
securities.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES GENERALLY. The Bond Funds may invest
in mortgage-backed and asset-backed securities, which represent direct or
indirect participation in, or are collateralized by and payable from, mortgage
loans secured by real property or instruments derived from such loans.
Mortgage-backed securities include various types of mortgage-related securities
such as government stripped mortgage-related securities, adjustable rate
mortgage-related securities and collateralized mortgage obligations. These are
described below. The Bond Funds may also invest in asset-backed securities,
which represent participation in, or are secured by and payable from, assets
such as motor vehicle installment sales contracts, installment loan contracts,
leases of various types of real and personal property, receivables from
revolving credit (i.e., credit card) agreements and other categories of
receivables. Such assets are securitized through the use of trusts and special
purpose corporations. Payments or distributions of principal and interest may be
guaranteed up to certain amounts and for certain time periods by letters of
credit or pool insurance policies issued by a financial institution unaffiliated
with the trust or corporation. Other credit enhancements also may exist.
Mortgage-related securities represent pools of mortgage loans assembled for sale
to investors by various governmental agencies, such as GNMA, by
government-related organizations, such as FNMA and FHLMC, as well as by private
issuers, such as commercial banks, savings and loan institutions and mortgage
bankers.
The average maturity of pass-through pools of mortgage-related securities in
which certain of the funds may invest varies with the maturities of the
underlying mortgage instruments. In addition, a pool's stated maturity may be
shortened by unscheduled payments on the underlying mortgages. Factors affecting
mortgage prepayments include the level of interest rates, general economic and
social conditions, the location of the mortgaged property and age of the
mortgage. Because prepayment rates of individual mortgage pools vary widely, the
average life of a particular pool cannot be predicted accurately.
Mortgage-related securities may be classified as private, government or
government-related, depending on the issuer or guarantor. Private
mortgage-related securities represent pass-through pools consisting principally
of conventional residential mortgage loans created by non-government issuers,
such as commercial banks and savings and loan associations and private mortgage
insurance companies. Government mortgage-related securities are backed by the
full faith and credit of the United States. GNMA, the principal U.S. guarantor
of these securities, is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development. Government-related mortgage-related
securities are not backed by the full faith and credit of the United States.
Issuers include FNMA and FHLMC. FNMA is a government-sponsored corporation owned
entirely by private stockholders, which is subject to general regulation by the
Secretary of Housing and Urban Development. Pass-through securities issued by
FNMA are guaranteed as to timely payment of principal and interest by FNMA.
FHLMC is a corporate instrumentality of the United States, the stock of which is
owned by the Federal Home Loan Banks. Participation certificates representing
interests in mortgages from FHLMC's national portfolio are guaranteed as to the
timely payment of interest and ultimate collection of principal by FHLMC.
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Private, government or government-related entities may create mortgage loan
pools offering pass-through investments in addition to those described above.
The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may be shorter than previously customary.
Advisors assesses new types of mortgage-related securities as they are developed
and offered to determine their appropriateness for investment by the relevant
Fund.
Mortgage-backed and asset-backed securities are often subject to more rapid
repayment than their stated maturity date would indicate as a result of the
pass-through of prepayments of principal on the underlying loans. Prepayments of
principal by mortgagors or mortgage foreclosures shorten the term of the
mortgage pool underlying the mortgage security. The occurrence of mortgage
prepayments is a function of several factors including the level of interest
rates, general economic conditions, the location and age of the mortgage and
other social and demographic conditions. A fund's ability to maintain positions
in such securities is affected by the reductions in the principal amount of such
securities resulting from prepayments, and its ability to reinvest prepayments
of principal at comparable yield is subject to generally prevailing interest
rates at that time. The values of mortgage-backed or asset-backed securities
varies with changes in market interest rates generally and the differentials in
yields among various kinds of U.S. Government securities and other
mortgage-backed and asset-backed securities. In periods of rising interest
rates, the rate of prepayment tends to decrease, thereby lengthening the average
life of a pool of mortgages supporting a mortgage-backed security. Conversely,
in periods of falling interest rates, the rate of prepayment tends to increase
thereby shortening the average life of such a pool. Because prepayments of
principal generally occur when interest rates are declining, an investor, such
as a fund, generally has to reinvest the proceeds of such prepayments at lower
interest rates than those at which its assets were previously invested.
Therefore, mortgage-backed securities have less potential for capital
appreciation in periods of falling interest rates than other income-bearing
securities of comparable maturity, although such other income-bearing securities
may have a comparable risk of capital depreciation during periods of rising
interest rates.
Because asset-backed securities generally do not have the benefit of a security
interest in collateral that is comparable to mortgage assets, asset-backed
securities present certain additional risks that are not present with
mortgage-backed securities. Revolving credit receivables are generally unsecured
and the debtors on such receivables are entitled to the protection of a number
of state and federal consumer credit laws, many of which give debtors the right
to set-off certain amounts owed, thereby reducing the balance due. Automobile
receivables generally are secured, but by automobiles rather than by real
property. Most issuers of automobile receivables permit the loan servicers to
retain possession of the underlying obligations. If the servicer sells these
obligations to another party, there is the risk that the purchaser could acquire
an interest superior to that of holders of the asset-backed securities. In
addition, because of the large number of vehicles involved in a typical issue of
asset-backed securities and technical requirements under state law, the trustee
for the holders of the automobile receivables may not have a proper security
interest in the automobiles. Therefore, there is the possibility that recoveries
on repossessed collateral may not be available to support payments on these
securities.
GOVERNMENT STRIPPED MORTGAGE-RELATED SECURITIES. The Bond Funds may invest in
government stripped mortgage-related securities. These securities represent
beneficial ownership interests in either period principal distributions
("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by the Government National Mortgage
Association ("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), or
the Federal National Mortgage Association ("FNMA"). The certificates underlying
the government stripped mortgage-related securities represent all or part of the
beneficial interest in pools of mortgage loans.
Investing in government stripped mortgage-related securities involves all of the
risks of investing in mortgage-backed securities and U.S. Government securities
generally. In addition, the yields on these instruments are extremely sensitive
to the prepayment experience of the mortgage loans making up the pool underlying
the certificates. If a decline in the level of prevailing current interest rates
results in a rate of principal prepayments that is higher than anticipated when
the certificate was created, then distributions of principal will accelerate
thereby reducing the yield to maturity of interest-only securities from that
certificate and increasing the yield to maturity of principal-only securities
from that certificate. Sufficiently high prepayment rates could result in a fund
not recovering its investment in interest-only securities. Where a certificate
represents only a part of the beneficial interest in a pool, the sensitivity of
an interest-only security of that certificate to interest rate fluctuations, may
be greater than of other interest-only securities derived from other
certificates supported by the same underlying pool because of the particular
character of the principal portion of the pool that the certificate represents.
Government stripped mortgage-related securities are currently traded over the
counter in a market maintained by several investment banking firms. No one can
be certain that a fund will be able to purchase or sell a government stripped
mortgage-related security at any time in the future. The funds only purchase
such securities if a secondary market exists for the securities at the time of
purchase.
ADJUSTABLE RATE MORTGAGE-RELATED SECURITIES. The Bond Funds may invest in
adjustable rate mortgage-related securities. Adjustable rate mortgage-related
securities ("ARMs") have interest rates that reset at periodic intervals.
Acquiring ARMs permits a fund to participate in increases in prevailing current
interest rates through periodic adjustments in the coupons of mortgages
underlying the pool on which
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certificates are based. Such certificates generally have higher current yield
and lower price fluctuations than is the case with more traditional fixed-income
debt securities of comparable rating and maturity. In addition, when prepayments
of principal are made on the underlying mortgages during periods of rising
interest rates, a fund can reinvest the proceeds of such prepayments at rates
higher than that at which they were previously invested. Mortgages underlying
most ARMs, however, have limits on the allowable annual or lifetime increases
that can be made in the interest rate that the mortgagor pays. Therefore, if
current interest rates rise above such limits over the period of the limitation,
a fund holding an ARM does not benefit from further increases in interest rates.
Moreover, when interest rates are in excess of coupon rates (i.e., the rates
being paid by mortgagors) of the mortgages, ARMs behave more like fixed-income
securities and less like adjustable rate securities. In addition, during periods
of rising interest rates, increases in the coupon rate of adjustable rate
mortgages generally lag current market interest rates slightly, thereby creating
the potential for capital depreciation on such securities.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Bond Funds may invest in collateralized
mortgage obligations ("CMOs"). CMOs are obligations fully collateralized by a
portfolio of mortgages or mortgage-backed securities. Payments of principal and
interest on the mortgages are passed through to the holders of the CMOs on the
same schedule as they are received, although certain classes of CMOs have
priority over other classes with respect to the receipt of prepayments on the
mortgages. Therefore, depending upon the type of CMO in which a fund invests,
the investment is subject to a greater or lesser risk of prepayment than other
types of mortgage-backed securities.
ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. The Bond Funds may invest in
asset-backed and receivable-backed securities. To date, several types of
asset-backed and receivable-backed securities have been offered to investors
including those backed by home equity loans, manufacturing loans, credit card
receivables and Certificates for Automobile Receivables ("CARs"). Consistent
with each of these Funds' investment objective and policies, these Funds may
also invest in other types of asset-backed and receivable-backed securities.
MORTGAGE ROLLS. The Bond Funds may enter into mortgage "rolls" in which a fund
sells securities for delivery in the current month and simultaneously contracts
with the same counterparty to repurchase similar (same type, coupon and
maturity) but not identical securities on a specified future date. The fund
loses the right to receive principal and interest paid on the securities sold.
However, the fund would benefit to the extent of any price received for the
securities sold and the lower forward price for the future purchase (often
referred to as the "drop") or fee income plus the interest earned on the cash
proceeds of the securities sold until the settlement date of the forward
purchase. Unless such benefits exceed the income, capital appreciation and gain
or loss due to mortgage repayments that would have been realized on the
securities sold as part of the mortgage roll, the use of this technique will
diminish the investment performance of the fund compared with what such
performance would have been without the use of mortgage rolls. The fund will
hold and maintain in a segregated account until the settlement date cash or
liquid assets in an amount equal to the forward purchase price. The benefits
derived from the use of mortgage rolls may depend upon Advisors' ability to
predict correctly mortgage prepayments and interest rates. There is no assurance
that mortgage rolls can be successfully employed.
For financial reporting and tax purposes, each of these funds proposes to treat
mortgage rolls as two separate transactions: one involving the purchase of a
security and a separate transaction involving a sale. The funds do not currently
intend to enter into mortgage rolls that are accounted for as a financing.
RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS
Advisors is responsible for determining the value and liquidity of investments
held by each fund. Investments may be illiquid because of the absence of a
trading market, making it difficult to value them or dispose of them promptly at
an acceptable price. The Money Market Fund will not purchase or otherwise
acquire any investment, if as a result, more than 10 percent of its net assets
(taken at current value) would be invested in illiquid investments. The other
Funds will each not purchase or otherwise acquire any investment, if as a
result, more than 15 percent of their net assets (taken at current value) would
be invested in illiquid investments.
Illiquid investments include most repurchase agreements maturing in more than
seven days, currency swaps, time deposits with a notice or demand period of more
than seven days, certain over-the-counter option contracts (and segregated
assets used to cover such options), participation interests in loans, and
certain restricted securities. A restricted security is one that has a
contractual restriction on resale or cannot be resold publicly until it is
registered under the Securities Act of 1933 (the "1933 Act") or is exempt from
registration under the 1933 Act.
The Funds may invest in restricted securities. Restricted securities are not,
however, considered illiquid if they are eligible for sale to qualified
institutional purchasers in reliance upon Rule 144A under the 1933 Act and that
are determined to be liquid by the TIAA-CREF's Board of Trustees, or by Advisors
under board-approved procedures. Such guidelines would take into account trading
activity for such securities and the availability of reliable pricing
information, among other factors. To the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities,
a fund's holdings of those securities may become illiquid. Purchases by these
funds of securities of foreign issuers offered and sold outside the United
States in reliance upon the exemption from registration provided by Regulation S
under the 1933 Act also may be liquid even though they are restricted for sale
in the United States.
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MUNICIPAL SECURITIES.
The Tax-Exempt Bond Fund invests in "municipal securities". The term "municipal
securities" as used in the Prospectus and this SAI means debt obligations issued
by, or on behalf of, states, territories and possessions of the United States
and the District of Columbia and their political subdivisions, agencies and
instrumentalities or multi state agencies or authorities, the interest from
which debt obligations is, in the opinion of the issuer's counsel, excluded from
gross income for federal income tax purposes (but not necessarily exempt from
federal alternative minimum tax or from state or local taxes). Municipal
securities generally are understood to include debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities, refunding of outstanding obligations, payment of general
operating expenses and extensions of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance privately operated facilities are considered to be
municipal securities if, in the opinion of the issuer's counsel, the interest
paid on them qualifies as excluded from gross income (but not necessarily from
alternative minimum taxable income) for federal income tax purposes. Interest on
certain "private activity" bonds is subject to the federal alternative minimum
tax. Interest from private activity bonds will be considered tax-exempt for
purposes of the Tax-Exempt Bond Fund's policy of investing so that at least 80
percent of its income distributions is exempt from federal income tax. Interest
from private activity bonds is a tax preference item for the purposes of
determining whether a taxpayer is subject to the AMT and the amount of AMT to be
paid, if any. Opinions relating to the validity of municipal securities and to
the exemption of interest on them from federal income taxes are rendered by bond
counsel for each issuer at the time of issue. These opinions are generally based
on covenants by the issuers or others regarding continuing compliance with the
federal tax laws. In the event that the issuer fails to comply, the interest
distributions to shareholders may retroactively become federally taxable.
Neither TIAA-CREF Mutual Funds nor Advisors will review the proceedings relating
to the issuance of municipal securities or the basis for opinions of issuer's
counsel.
Municipal securities may be issued to finance life care facilities, which are an
alternative form of long-term housing for the elderly that offer residents the
independence of a condominium life-style and, if needed, the comprehensive care
of nursing home services. Bonds to finance these facilities have been issued by
various state industrial development authorities. Because the bonds are secured
only by the revenues of each facility and not by state or local government tax
payments, they are subject to a wide variety of risks, including a drop in
occupancy levels, the difficulty of maintaining adequate financial reserves to
secure estimated actuarial liabilities, the possibility of regulatory cost
restrictions applied to health care delivery and competition from alternative
health care or conventional housing facilities.
Even though municipal securities are interest-bearing investments that promise a
stable flow of income, their prices are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. The values of municipal securities with longer remaining
maturities typically fluctuate more than those of similarly rated municipal
securities with shorter remaining maturities. The values of fixed income
securities also may be affected by changes in the credit rating or financial
condition of the issuing entities.
Tax legislation in recent years has included several provisions that may affect
the supply of, and the demand for, municipal securities, as well as the
tax-exempt nature of interest paid on those securities. Neither TIAA-CREF Mutual
Funds nor Advisors can predict with certainty the effect of recent tax law
changes upon the municipal obligation market, including the availability of
instruments for investment by a Fund. In addition, neither TIAA-CREF Mutual
Funds nor Advisors can predict whether additional legislation adversely
affecting the municipal obligation market will be enacted in the future.
Advisors monitors legislative developments and considers whether changes in the
objective or policies of a fund need to be made in response to those
developments. If any laws are enacted that would reduce the availability of
municipal securities for investment by the Tax-Exempt Bond Fund so as to affect
the fund's shareholders adversely, TIAA-CREF Mutual Funds will reevaluate the
fund's investment objective and policies and might submit possible changes in
the fund's structure to the fund's shareholders for their consideration. If
legislation were enacted that would treat a type of municipal obligation as
taxable for federal income tax purposes, TIAA-CREF Mutual Funds would treat the
security as a permissible taxable money market instrument for the fund within
the applicable limits set forth in the Prospectus.
MUNICIPAL INSURANCE. The Tax-Exempt Bond Fund may invest its assets in municipal
bonds whose principal and interest payments are guaranteed by a private
insurance company. This insurance may be (1) purchased by the bond issuer at the
time of issuance; (2) purchased by TIAA-CREF to guarantee specific bonds only
while held by the fund; or (3) purchased by an investor after the bond has been
issued to guarantee the bond until its maturity date.
MUNICIPAL LEASES. Municipal leases are municipal securities that may take the
form of a lease or an installment purchase contract issued by state and local
governmental authorities to obtain funds to acquire a wide variety of equipment
and facilities such as fire and sanitation vehicles, computer equipment and
other capital assets. Interest payments on qualifying municipal leases are
exempt from federal income taxes and state income taxes within the state of
issuance. Although municipal lease obligations do not normally constitute
general obligations of the municipality, a lease obligation is ordinarily backed
by the municipality's agreement to make the payments due under the lease
obligation. These obligations have evolved to make it possible for state and
local government authorities to acquire property and equipment without meeting
constitutional and statuto-
13
<PAGE>
ry requirements for the issuance of debt. Thus, municipal leases have special
risks not normally associated with municipal securities. These securities
frequently contain "non-appropriation" clauses that provide that the
governmental issuer of the obligation has no obligation to make future payments
under the lease or contract unless money is appropriated for those purposes by
the legislative body on a yearly or other periodic basis. In addition to the
non-appropriation risk, municipal leases represent a type of financing that has
not yet developed the depth of marketability associated with other municipal
securities. Some municipal lease obligations may be, and could become, illiquid.
Moreover, although municipal leases will be secured by the leased equipment, the
disposition of the equipment in the event of foreclosure might prove to be
difficult.
Municipal lease obligations may be deemed to be illiquid as determined by or in
accordance with methods adopted by the Board of Trustees. In determining the
liquidity and appropriate valuation of a municipal lease obligation, the
following factors relating to the security are considered, among others: (1) the
frequency of trades and quotes; (2) the number of dealers willing to purchase or
sell the security; (3) the willingness of dealers to undertake to make a market;
(4) the nature of the marketplace trades; and (5) the likelihood that the
obligation will remain marketable based on the credit quality of the
municipality or relevant obligor.
Municipal leases will be considered illiquid securities unless the Board of
Trustees determines on an ongoing basis that the leases are readily marketable.
An unrated municipal lease with a non-appropriation risk that is backed by an
irrevocable bank letter of credit or an insurance policy issued by a bank or
insurer deemed by Advisors to be of high quality and minimal credit risk, will
not be deemed to be illiquid solely because the underlying municipal lease is
unrated, if Advisors determines that the lease is readily marketable because it
is backed by the letter of credit or insurance policy.
Municipal leases can be both rated and unrated. Rated leases that may be held by
a fund include those rated investment grade at the time of investment or those
issued by issuers whose senior debt is rated investment grade at the time of
investment. A fund may acquire unrated issues that Advisors deems to be
comparable in quality to rated issues in which a fund is authorized to invest. A
determination that an unrated lease obligation is comparable in quality to a
rated lease obligation and that there is a reasonable likelihood that the lease
will not be canceled will be subject to oversight and approval by the Board of
Trustees.
To limit the risks associated with municipal leases, the Tax-Exempt Bond Fund
will invest no more than 15 percent of its assets in such leases. In addition, a
fund will purchase lease obligations that contain non-appropriation clauses when
the lease payments will commence amortization of principal at an early date
resulting in an average life of five years or less for the lease obligation.
FLOATING AND VARIABLE RATE DEMAND INSTRUMENTS. Floating and variable rate demand
bonds and notes are municipal securities ordinarily having stated maturities in
excess of one year but which permit their holder to demand payment of principal
at any time or at specified intervals. Variable rate demand notes include master
demand notes, which are securities that permit a fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the fund, as lender, and the borrower. These securities have interest
rates that fluctuate from time to time and frequently are secured by letters of
credit or other credit support arrangements provided by banks. Use of letters of
credit or other credit support arrangements generally will not adversely affect
the tax-exempt status of variable rate demand notes. Because they are direct
lending arrangements between the lender and borrower, variable rate demand notes
generally will not be traded and no established secondary market generally
exists for them, although they are redeemable at face value. If variable rate
demand notes are not secured by letters of credit or other credit support
arrangements, the right to demand payment on them will be dependent on the
ability of the borrower to pay principal and interest on demand. Each obligation
purchased by a fund will meet the quality criteria established by Advisors for
the purchase of municipal securities. Advisors considers on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
securities in the relevant fund's portfolio.
PARTICIPATION INTERESTS. A participation interest in a municipal security gives
the purchaser an undivided interest in the municipal obligation in the
proportion that the fund's participation interest bears to the total principal
amount of the municipal obligation. These instruments may have fixed, floating
or variable rates of interest. If the participation interest is unrated, or has
been given a rating below one that is otherwise permissible for purchase by a
fund, the participation interest will be backed by an irrevocable letter of
credit or guarantee of a bank that the Board of Trustees has determined meets
certain quality standards, or the payment obligation otherwise will be
collateralized by Government Securities. The Tax-Exempt Bond Fund will have the
right, with respect to certain participation interests, to demand payment, on a
specified number of days' notice, for all or any part of the fund's
participation interest in the municipal obligation, plus accrued interest. The
fund intends to exercise its right to demand payment only upon a default under
the terms of the municipal obligation, or to maintain or improve the quality of
its investment portfolio. The Tax-Exempt Bond Fund will invest no more than 5
percent of the value of its assets in participation interests.
MUNICIPAL OBLIGATION COMPONENTS. The interest payments on municipal securities
can be divided into two different and variable components, which together result
in a fixed interest rate. Typically, the first of the components (the "Auction
Component") pays an interest rate that is reset periodically through an auction
process, whereas the second of the components (the "Residual Component") pays a
residual interest rate based on the difference between the
14
<PAGE>
total interest paid by the issuer on the municipal obligation and the auction
rate paid on the Auction Component. The components can be purchased separately.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate municipal obligation having similar credit quality, redemption provisions
and maturity.
MUNICIPAL CUSTODY RECEIPTS. The Tax-Exempt Bond Fund also may acquire custodial
receipts or certificates underwritten by securities dealers or banks that
evidence ownership of future interest payments, principal payments, or both, on
certain municipal securities. The underwriter of these certificates or receipts
typically purchases municipal securities and deposits the securities in an
irrevocable trust or custody account with a custodian bank, which then issues
receipts or certificates that evidence ownership of the periodic unmatured
coupon payments and the final principal payment on the securities. Custody
receipts evidencing specific coupon or principal payments have the same general
attributes as zero coupon municipal securities described above. Although under
the terms of a custody receipt a fund would be typically authorized to assert
its rights directly against the issuer of the underlying obligation, the fund
could be required to assert through the custodian bank those rights as may exist
against the underlying issuers. Thus, in the event the underlying issuer fails
to pay principal and/or interest when due, a fund may be subject to delays,
expenses and risks that are greater than those that would have been involved if
the fund had purchased a direct obligation of the issuer. In addition, in the
event that the trust or custody account in which the underlying security has
been deposited is determined to be an association taxable as a corporation,
instead of a non-taxable entity, the yield on the underlying security would be
reduced in recognition of any taxes paid.
CURRENCY TRANSACTIONS AND FOREIGN INVESTMENTS
CURRENCY TRANSACTIONS. The value of a fund's assets as measured in United States
dollars may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and the fund may incur costs in
connection with conversions between various currencies. To minimize the impact
of such factors on net asset values, the fund may engage in foreign currency
transactions in connection with their investments in foreign securities. The
funds will not speculate in foreign currency exchange, and will enter into
foreign currency transactions only to "hedge" the currency risk associated with
investing in foreign securities. Although such transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, they also may
limit any potential gain which might result should the value of such currency
increase.
The funds will conduct their currency exchange transactions either on a spot
(i.e., cash) basis at the rate prevailing in the currency exchange market, or
through forward contracts to purchase or sell foreign currencies. A forward
currency contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are entered into with large commercial banks or other currency
traders who are participants in the interbank market.
By entering into a forward contract for the purchase or sale of foreign currency
involved in underlying security transactions, a fund is able to protect itself
against possible loss between trade and settlement dates for that purchase or
sale resulting from an adverse change in the relationship between the U.S.
dollar and such foreign currency. This practice is sometimes referred to as
"transaction hedging." In addition, when it appears that a particular foreign
currency may suffer a substantial decline against the U.S. dollar, a fund may
enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of its portfolio securities denominated
in such foreign currency. This practice is sometimes referred to as "portfolio
hedging." Similarly, when it appears that the U.S. dollar may suffer a
substantial decline against a foreign currency, a fund may enter into a forward
contract to buy that foreign currency for a fixed dollar amount.
The funds may also hedge their foreign currency exchange rate risk by engaging
in currency financial futures, options and "cross-hedge" transactions. In
"cross-hedge" transactions, a fund holding securities denominated in one foreign
currency will enter into a forward currency contract to buy or sell a different
foreign currency (one that generally tracks the currency being hedged with
regard to price movements). Such cross-hedges are expected to help protect a
fund against an increase or decrease in the value of the U.S. dollar against
certain foreign currencies.
The funds may hold a portion of their respective assets in bank deposits
denominated in foreign currencies, so as to facilitate investment in foreign
securities as well as protect against currency fluctuations and the need to
convert such assets into U.S. dollars (thereby also reducing transaction costs).
To the extent these monies are converted back into U.S. dollars, the value of
the assets so maintained will be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations.
The forecasting of short-term currency market movement is extremely difficult
and whether a short-term hedging strategy will be successful is highly
uncertain. Moreover, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of a foreign currency
forward contract. Accordingly, a fund may be required to buy or sell additional
currency on the spot market (and bear the expense of such transaction) if its
predic-
15
<PAGE>
tions 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 services 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 the 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 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 450 million consumers, a market larger than either the United
States or Japan. European business compete both intra-regionally and globally in
a wide range of industries, and recent political and economic changes throughout
Europe are likely further to expand the role of Europe in the global economy. As
a result, a great deal of interest and activity has been generated aimed at
understanding and benefitting from the "new" Europe that may result. The
incipient aspects of major developments in Europe as well as other
considerations means that there can be no guarantee that outcomes will be 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 370 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, macro and micro-economic adjustments already in train are indicative
of significant increases in 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. The
establishment of the eleven country European Monetary Union, a subset of the
European Union countries, with its own central bank, the European Central Bank;
and its own currency, the Euro; and a single interest rate structure represents
a new economic entity, the Euro-area. While authority for monetary policy thus
shifts from national hands to an independent supranational body, sovereignty
elsewhere remains largely at the national level. Uncertainties with regard to
balancing of monetary policy against national fiscal and other political issues
and their extensive ramifications represent important risk considerations for
investors in these countries.
INVESTMENT IN THE PACIFIC BASIN. The economies of the Pacific Basin vary widely
in their stages of economic development. Some (such as Japan, Australia,
Singapore, and Hong Kong) are considered advanced by Western standards; others
(such as Thailand, Indonesia, and Malaysia are considered "emerging" -- rapidly
shifting from natural resource and agriculture based systems to more
technologically advanced systems oriented toward manufacturing and services. The
major reform of China's economy and polity continues to be an important
influence on 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 expectations for
regional and global economic growth. Economic growth has historically been
relatively strong in the region, but recent economic turmoil among the emerging
economies, and unmitigated recessionary impulses in Japan in the recent past
have raised important questions with regard to prospective longer-term outcomes.
Potential policy miscalculations or other events could pose important risks to
equity investors in any of these economies.
INVESTMENT IN CANADA. Canada, a country rich in natural resources and a leading
industrial country of the world, is by far the most important trading partner of
the United States. The U.S., Canada, and Mexico have established the North
American Free Trade Agreement ("NAFTA"), which is expected to significantly
benefit the economies of each of the countries through the more rational
allocation of resources and production over the region. Uncertainty regarding
the longer-run political structure of Canada is an added risk to investors,
along with highly volatile commodity prices.
INVESTMENT IN LATIN AMERICA. Latin America (including Mexico and Central
America) has a population of approximately 455 million 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 Uruguay, with Chile as an associate
member.
16
<PAGE>
Restrictions on international capital flows, intermittent problems with capital
flight, and some potential 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 restructure these economies through
privatization, and fiscal and monetary reform have met with some success with
gains in output growth, and slowing rates of inflation. These efforts may result
in attractive investment opportunities. However, recent events have shown that
large shifts in sentiment in markets elsewhere on the globe may very quickly
reverberate among these markets, adding greater risk to already volatile
markets. There can be no assurance that attempted reforms will ultimately be
successful or will bring about results investors would regard as favorable.
OTHER REGIONS There are developments in other regions and countries around the
world which could lead to additional investment opportunities. We will monitor
these developments and may invest when appropriate.
DEPOSITORY RECEIPTS. The equity funds can invest in American, European and
Global Depository Receipts (ADRs, EDRs and GDRs). They are alternatives to the
purchase of the underlying securities in their national markets and currencies.
Although 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
CORPORATE ACTIONS. 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 percent of its assets in
the mutual fund industry. However, none of the funds in which the Managed
Allocation Fund can invest will concentrate more than 25 percent of its total
assets in any one industry.
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<PAGE>
- ----------------------------------------
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) 69 President Emeritus, American Counsel on
447 Bird Key Drive Education and senior consultant for A.T.
Sarasota, FL 34236 Kearney, since November 1996.
Previously, President, American Counsel
on Education.
Elizabeth E. Bailey (1) 61 John C. Hower Professor of Public Policy and Management,
The Wharton School The Wharton School of the University of Pennsylvania.
University of Pennsylvania
Suite 3100
Steinberg-Dietrich Hall
Philadelphia, PA 19104-6372
John H. Biggs* (3) 63 Chairman, Chief Executive Officer, and President, CREF and
TIAA-CREF TIAA, since 1997. Previously, Chairman and Chief Executive
730 Third Avenue Officer, CREF and TIAA.
New York, NY 10017
Joyce A. Fecske (1) 53 Vice President Emerita, DePaul University, since 1994.
4800 South Karlov Avenue
Chicago, IL 60632
Edes P. Gilbert 68 Consultant, Independent Education
Independent Education Services Services, since 1998. Formerly, Head,
49 East 78th Street The Spence School.
New York, NY 10021
Stuart Tse Kong Ho (3) 64 Chairman and President, Capital Investment of Hawaii, Inc.;
Capital Investment of Hawaii, Inc. Chairman, Gannett Pacific Corporation.
Suite 1700
733 Bishop Street
Honolulu, HI 96813
Nancy L. Jacob (2) 57 President and Managing Principal, Windermere
Windermere Investment Associates Investment Associates, since January 1997. Previously
121 S.W. Morrison Street Chairman and Chief Executive Officer, CTC Consulting,
Portland, OR 97204 Inc. and Managing Director, Capital Trust Company.
Marjorie Fine Knowles (2) 60 Professor of Law, Georgia State University College of Law.
College of Law
Georgia State University
University Plaza
Atlanta, GA 30303-3092
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Trustees Age Principal Occupations During Past 5 Years
- ------- --- ----------------------------------
<S> <C> <C>
Martin L. Leibowitz* (3) 63 Vice Chairman and Chief Investment Officer, CREF and TIAA,
TIAA-CREF since 1995. President, TIAA-CREF Investment Management, Inc.
730 Third Avenue (Investment Management), and President, Teachers Advisors, Inc.
New York, NY 10017 (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.
Bevis Longstreth* (3) 66 Of Counsel, Debevoise & Plimpton, since 1998. Formerly,
Debevoise & Plimpton Partner, Debevoise & Plimpton. Adjunct Professor of Law,
875 Third Avenue Columbia University.
New York, NY 10022
Robert M. Lovell, Jr. (2) 69 Founding Partner, First Quadrant L.P. Formerly, Chairman and
First Quadrant L.P. Chief Executive Officer, First Quadrant Corp. (Investment
100 Campus Drive Management Firm).
P.O. Box 939
Florham Park, NJ 07932
Stephen A. Ross (2) 56 Franco Modigliani Professor of Finance and Management,
Sloan School of Management Sloan School of Management, Massachusetts Institute of
Massachusetts Institute of Technology Technology, since 1998. Co-Chairman, Roll & Ross Asset
77 Massachusetts Avenue Management Corp. Formerly, Sterling Professor of
Cambridge, MA 02139 Economics and Finance, Yale School of Management.
Eugene C. Sit (3) 61 Chairman, Chief Executive and Chief Investment Executive
Sit Investment Associates, Inc. Officer, Sit Investment Associates, Inc. and Sit/Kim
4600 Norwest Center International Investment Associates, Inc.
90 South Seventh Street
Minneapolis, MN 55402
Maceo K. Sloan (2) 50 Chairman, President, and Chief Executive Officer, Sloan
NCM Capital Management Group, Inc. Financial Group, Inc., and NCM Capital Management Group, Inc.
Suite 400
103 West Main Street
Durham, NC 27701-3638
David K. Storrs (2) 54 President and Chief Executive Officer, Alternative Investment
Alternative Investment Group, LLC Group, L.L.C., since August 1996. Adviser to the President, The
65 South Gate Lane Common Fund, since January 1996. Formerly, President and
Southport, CT 06490 Chief Executive Officer, The Common Fund.
Robert W. Vishny (2) 40 Eric J. Gleacher Professor of Finance, University of Chicago
Graduate School of Business Graduate School of Business. Founding Partner, LSV Asset
University of Chicago Management.
1101 East 58th Street
Chicago, IL 60637
</TABLE>
- --------
(1) Member of the Executive Committee. The Executive Committee has authority to
act during intervals between board meetings.
(2) Member of the Finance Committee. The Finance Committee oversees the
investments of the TIAA-CREF Mutual Funds.
(3) Member of the Executive and Finance Committees.
19
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
OFFICERS* AGE REGISTRANT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ------- --- ----------- ------------------------------------
<S> <C> <C> <C>
Martin E. Galt, III 58 President President, Investment Products, TIAA and CREF,
since January 2000. Previously, Executive Vice
President, Bank of America since 1997. Previously,
Chairman, President and Chief Executive Officer,
Boatmen's Trust Company.
Scott C. Evans 40 Executive Executive Vice President, TIAA and CREF,
Vice President Advisors and Investment Management since September
1997. Previously, Managing Director,
TIAA, CREF, Advisors and Investment Management
from March 1997 to September 1997. Previously,
Second Vice President, TIAA and CREF, Advisors and
Investment Management.
Richard L. Gibbs 53 Executive Executive Vice President, TIAA and CREF,
Vice President since March 1993. Executive Vice President,
Advisors, Investment Management, TPIS and TIAA-CREF
Individual & Institutional Services, Inc.
("Services").
E. Laverne Jones 51 Secretary Vice President and Corporate Secretary,
TIAA and CREF, since August 1998. Previously,
Senior Counsel, TIAA and CREF.
Richard J. Adamski 58 Vice President Vice President and Treasurer, TIAA and CREF,
and Treasurer Investment Management, Advisors, TPIS and Services.
</TABLE>
- -----------
*THE ADDRESS FOR ALL OFFICERS OF THE TIAA-CREF MUTUAL FUNDS IS 730 THIRD AVENUE,
NEW YORK, NY 10017-3206
20
<PAGE>
TRUSTEE COMPENSATION
The following table shows the compensation received from the Funds and the
TIAA-CREF fund complex for each non-officer Trustee for the year ended December
31, 1999. The Funds' officers receive no compensation from any fund in the
TIAA-CREF Fund complex. The TIAA-CREF complex consists of: College Retirement
Equities Fund, ("CREF"), TIAA Separate Account VA-1, TIAA-CREF Life Funds,
TIAA-CREF Institutional Mutual Funds and TIAA-CREF Mutual Funds, each a
registered investment company.
TIAA-CREF Mutual Funds has a long-term performance deferred compensation plan
for non-employee trustees. Under this unfunded plan, annual contributions equal
to half the amount of the basic annual trustee stipend are allocated to notional
CREF and TIAA annuity accounts chosen by the individual trustee. Benefits will
be paid after the trustee leaves the board in a lump sum or in annual
installments over 5 to 20 years, as requested by the trustee. Pursuant to a
separate deferred compensation plan, non-employee trustees also have the option
to defer payment of their basic stipend, additional stipends, and/or meeting
fees and allocate these amounts to notional TIAA and CREF accounts chosen by the
individual trustee. Benefits under that plan are also paid in a lump sum or
annual installments over 5 to 20 years, as requested by the trustee, after the
trustee leaves the board.
<TABLE>
<CAPTION>
LONG TERM PERFORMANCE
AGGREGATE DEFERRED COMPENSATION TOTAL COMPENSATION
COMPENSATION CONTRIBUTION FROM TIAA-CREF
NAME FROM THE FUND AS PART OF EXPENSES(1) COMPLEX
- ----- ------------- ---------------------- -----------------
<S> <C> <C> <C>
Robert H. Atwell ........... $489 $113 $56,500
Elizabeth E. Bailey ........ $507 $113 $59,500
Gary P. Brinson ............ $ 53 $ 11 $ 7,750
Joyce A. Fecske ............ $439 $113 $50,500
Edes P. Gilbert ............ $549 $113 $64,000
Stuart Tse Kong Ho ......... $362 $113 $41,500
Nancy L. Jacob ............. $410 $113 $47,500
Marjorie Fine Knowles ...... $393 $113 $44,500
Jay O. Light ............... $287 $113 $34,000
Bevis Longstreth ........... $410 $113 $46,000
Robert M. Lovell, Jr. ...... $381 $113 $47,500
Stephen A. Ross ............ $389 $113 $44,500
Eugene C. Sit .............. $475 $113 $55,000
Maceo K. Sloan ............. $395 $113 $46,000
David K. Storrs ............ $397 $113 $46,000
Robert W. Vishny ........... $440 $113 $50,500
</TABLE>
- ------------------
(1) This compensation, or a portion of it, was not actually paid based on the
trustee's election to defer receipt of payment in accordance with the
provisions of a deferred compensation plan for non-officer trustees.
21
<PAGE>
- -------------------------------
PRINCIPAL HOLDERS OF SECURITIES
- -------------------------------
TIAA, as the contributor of the initial capital for each of the funds, owned the
following percentages of the shares of the following funds as of March 13, 2000:
International Equity 17%
Tax-Exempt Bond 100%
Bond Plus 13%
Equity Index 100%
Short-Term Bond 100%
Social Choice 100%
High-Yield Bond 100%
- --------------------------
INVESTMENT ADVISORY AND
OTHER SERVICES
- --------------------------
As explained in the Prospectus, investment advisory and related services for
each of the funds are provided by personnel of Teachers Advisors, Inc.
(Advisors). Advisors manages the investment and reinvestment of the assets of
each fund, subject to the direction and control of the Finance Committee of the
Board of Trustees. As the prospectus describes, Advisors has agreed to waive a
portion of its fee for managing each fund.
Personal Trading Policy. Personnel of Teachers Advisors and members of their
households are limited in trading for their own accounts pursuant to the
TIAA-CREF Mutual Funds' Personal Trading Policy (the "Policy"). Some
transactions they make must be reported and approved, and they must send
duplicates of all confirmation statements and other account reports to a special
compliance unit for review. The Policy can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information about the Public Reference
Room may be obtained by calling the SEC at 1-202-942-8090. The Policy is also
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of the Policy may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] , or by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
Advisory Fees. Advisory fees are payable monthly to Advisors. They are
calculated as a percentage of the average value of the net assets each day for
each Fund, and are accrued daily proportionately at 1/365th (1/366th in a leap
year) of the rates set forth in the Prospectus. During 1997, 1998 and 1999, the
total dollar amounts of expenses for each Fund, before and after the waiver,
attributable to advisory fees were as follows (there are no investment advisory
fees payable for the Managed Allocation Account):
<TABLE>
<CAPTION>
GROSS WAIVED NET
-------------------------------- ------------------------------ -------------------------------
1997 1998 1999 1997 1998 1999 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Equity Fund $215,768 $ 784,003 $1,538,309 $108,974 $395,961 $ 776,924 $106,794 $388,042 $ 761,385
Growth Equity Fund $229,041 $1,511,154 $4,467,978 $120,548 $795,344 $2,351,567 $108,493 $715,810 $2,116,411
Growth & Income Fund $222,604 $1,302,642 $3,588,335 $119,679 $700,345 $1,929,212 $102,925 $602,297 $1,659,123
Bond Plus Fund $190,656 $ 836,888 $1,526,959 $119,160 $523,055 $ 954,349 $ 71,496 $313,833 $ 572,610
Money Market Fund $191,153 $1,044,565 $2,461,787 $120,983 $661,117 $1,558,093 $ 70,170 $383,448 $ 903,694
</TABLE>
Pursuant to the terms of a contract with Advisors, State Street Bank, 225
Franklin Street, Boston, MA 02209 acts as custodian for the TIAA-CREF Mutual
Funds. Advisors has agreed to pay State Street for these services.
Ernst & Young, LLP, 787 7th Avenue, New York, NY 10019, serves as independent
auditors of the TIAA-CREF Mutual Funds.
Advisors has retained State Street Bank & Trust Company ("State Street") to
provide the funds with certain administrative services, including 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.
Advisors, not the TIAA-CREF Mutual Funds, has agreed to pay State Street a fee
for such services.
Teachers Insurance and Annuity Association of America (TIAA), an insurance
company, holds all of the shares of TIAA-CREF Enterprises, 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, LLC ("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.
22
<PAGE>
- -----------------------------------------------
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, as amended, 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 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 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 percent 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. As
authorized, in February 2000 the Trustees established five additional investment
portfolios: the Equity Index Fund, the Social Choice Equity Fund, the Short-Term
Bond Fund, the High-Yield Bond Fund and the Tax-Exempt Bond Fund. Furthermore,
the Trustees may establish additional funds in the future. The establishment of
additional investment funds would not affect the interests of current
shareholders in the existing eleven funds.
23
<PAGE>
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,
shareholders of the affected fund are entitled to receive their proportionate
share of the assets which are attributable to their shares and which are
available for distribution as the Trustees in their sole discretion may
determine. Shareholders are not entitled to any preemptive, conversion, or
subscription rights. All shares, when issued, will be fully paid and
non-assessable.
- -----------------
PRICING OF SHARES
- -----------------
The assets of the funds are valued as of the close of each valuation day in the
following manner:
INVESTMENTS FOR WHICH MARKET QUOTATIONS ARE READILY AVAILABLE
Investments for which market quotations are readily available are valued at the
market value of such investments, determined as follows:
Equity securities listed or traded on 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. Such an equity security may also be
valued at fair value as determined in good faith by the Finance Committee of the
Board of Trustees if events materially affecting its value occur between the
time its price is determined and the time a Fund's net asset value is
calculated.
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 (excluding 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). These values will be derived utilizing an independent pricing
service, except when we believe the prices don't accurately reflect the
security's fair value.
Values for money market instruments (other than those in the Money Market Fund)
with maturities of sixty days or less are valued at amortized cost, which
approximates fair value. Values for money market instruments (other than those
in the Money Market Fund) with maturities of more than sixty days are valued in
the same manner as debt securities stated in the preceding paragraph, or derived
from a pricing matrix that has various types of money market instruments along
one axis and various maturities along the other.
All debt securities may also be valued at fair value as determined in good faith
by the Finance Committee of the Board of Trustees.
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. 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 percent from $1.00 per share. In the event such deviation should exceed
1/2 of 1 percent, the Board will promptly consider initiating corrective action.
If the Board believes that the extent of any deviation from a $1.00 amortized
cost price per share may result in material dilution or other unfair results to
new or existing shareholders, it will take such steps as it considers
appropriate to eliminate or reduce these consequences to the extent reasonably
practicable. Such steps may include: (1) selling securities prior to maturity;
(2) shortening the average
24
<PAGE>
maturity of the fund; (3) withholding or reducing dividends; or (4) utilizing a
net asset value per share determined from available market quotations. Even if
these steps were taken, the Money Market Fund's net asset value might still
decline.
OPTIONS AND FUTURES
Portfolio investments underlying options are valued as described above. Stock
options written by a fund are valued at the last quoted sale price, or at the
closing bid price if no sale is reported for the day of valuation as determined
on the principal exchange on which the option is traded. The value of a fund's
net assets will be increased or decreased by the difference between the premiums
received on 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 are increased by the premium originally received.
A premium paid on the purchase of a put will be deducted from a fund's assets
and an equal amount will be included as an investment and subsequently adjusted
to the current market value of the put. For example, if the current market value
of the put exceeds the premium paid, the excess would be unrealized
appreciation; conversely, if the premium exceeds the current market value, such
excess would be unrealized depreciation.
Stock and bond index futures, and options thereon, which are traded on
commodities exchanges, are valued at their last sale prices as of the close of
such commodities exchanges.
INVESTMENTS FOR WHICH MARKET QUOTATIONS
ARE NOT READILY AVAILABLE
Portfolio securities or other assets for which market quotations are not readily
available will be valued at fair value, as determined in good faith under the
direction of the Trustees.
- ----------
TAX STATUS
- ----------
The following is a brief summary of some of the principal U.S. federal income,
and certain state and local, tax considerations pertaining to investments in the
funds. This summary does not address special tax rules applicable to certain
classes of investors, such as tax exempt entities. Each prospective shareholder
is urged to consult his or her own tax adviser with respect to specific federal,
state, local and foreign tax consequences of investing in the funds. This
summary is based on the laws in effect on the date of this SAI, which are
subject to change.
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 existing fund qualifies as a "regulated investment company" ("RIC") under
Subchapter M of the Code. In general, to qualify as a RIC: (a) at least 90
percent 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 foreign currencies, or other
income derived with respect to its business of investing in securities; (b) a
fund must distribute to its shareholders 90 percent of its ordinary income and
net short-term capital gains (undistributed net income may be subject to tax at
the fund level); and (c) a fund must diversify its assets so that, at the close
of each quarter of its taxable year, (i) at least 50 percent 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 percent
of the fair market value of the fund's total assets and 10 percent of the
outstanding voting securities of such issuer and (ii) no more than 25 percent 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. Each new fund
intends to qualify as a RIC.
If, in any taxable year, a fund should not qualify as a RIC under the Code: (1)
that fund would be taxed at normal corporate rates on the entire amount of its
taxable income without deduction for dividends or other distributions to its
shareholders, and (2) that fund's distributions to the extent made out of that
fund's current or accumulated earnings and profits would be taxable to its
shareholders
25
<PAGE>
(other than tax-exempt shareholders and 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 percent of
its ordinary income (as of the twelve months ending December 31) and at least 98
percent of its capital gain net income (as of the twelve months ending 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 fund'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, which dividends are treated as paid on the prior December 31.
A distribution of net capital gains reflects a fund's excess of net long-term
capital gains over its net short-term capital losses. Each fund will 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.
For federal income tax purposes, each fund is permitted to carry forward a net
capital loss in any year to offset its own capital gains, if any, during the
eight years following the year of the loss. At December 31, 1999, the Bond Plus
Fund had approximately $4.5 million of capital loss carryforwards and the Money
Market Fund had approximately $7 thousand of capital loss carryforwards, both of
which will begin to expire in 2006. These amounts are available to be carried
forward to offset future capital gains to the extent permitted by the Code and
applicable tax regulations.
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. Additionally, any loss
realized on a sale or redemption of shares of any fund may be disallowed under
the "wash sale" rules to the extent the shares sold or redeemed are replaced
with other shares of the same fund within a period of 61 days beginning 30 days
before and ending 30 days after the shares are sold or redeemed.
The Tax-Exempt Bond Fund expects to qualify to pay "exempt-interest dividends"
which may be treated by shareholders as items of interest that is exempt from
regular federal income tax. (Distributions derived from net long-term capital
gains of the Tax-Exempt Bond Fund will ordinarily be taxable to shareholders as
long-term capital gains and any distributions derived from taxable interest
income, net short-term capital gains, and certain net realized foreign exchange
gains will be taxable to shareholders as ordinary income.) The recipient of
exempt-interest dividends is required to report such income on his or her
federal income tax return and interest on indebtedness incurred or continued to
purchase or carry shares of the Tax-Exempt Bond Fund is not deductible. In
addition, exempt-interest dividends will be taken into account in determining
the extent to which a shareholder's Social Security or certain railroad
retirement benefits are taxable. Any losses realized by shareholders who dispose
of shares of the Tax-Exempt Bond Fund with a tax holding period of six months or
less are disallowed to the extent of any exempt-interest dividends received with
respect to such shares.
The Tax-Exempt Bond Fund may invest a portion of its assets in private activity
bonds, the interest from which (including the Fund's distributions attributable
to such interest) may be a preference item for purposes of the federal
alternative minimum tax (AMT), both individual and corporate. Income from
securities that are a preference item is included in the computation of the AMT
and, in the case of corporations, all exempt-interest income, whether or not
attributable to private activity bond interest, may increase a corporate
shareholder's liability, if any, for AMT. Shareholders who have not held shares
of the Tax-Exempt Bond Fund for such fund's full taxable year may have
designated as tax-exempt interest or as a tax preference item a percentage of
distributions which is not equal to the actual amount of tax-exempt income or
tax preference income earned by the fund during the period of their investment.
A portion of the dividends to shareholders from the Tax-Exempt Bond Fund may be
exempt from state and local taxes. Income from investments in the shareholder's
state of residence is generally tax-exempt. The Tax-Exempt Bond Fund will direct
the Transfer Agent to send shareholders a breakdown of income from each state in
order to aid them in preparing tax returns.
For corporate investors, a portion of the dividends from net investment income
paid by the Growth Equity Fund, Growth & Income Fund, Equity Index Fund and
Social Choice Equity Fund will ordinarily qualify for the corporate
dividends-received deduction. Eligible dividends are limited to those a fund
receives from U.S. domestic corporations and, accordingly, it is not expected
that a substantial portion of distributions made by other funds will qualify for
the dividends-received deduction. Corporations seeking to claim the dividends
received deduction must satisfy certain
26
<PAGE>
holding period requirements and debt financing restrictions. Capital gain
dividends are not eligible for the dividends-received deduction for
corporations.
Income received by any 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 percent of the value of a fund's total assets at the close of its
taxable year consists of 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
benefit from any such "pass through" of foreign tax deductions or credits.
The International Equity Fund, the Growth Equity Fund and the Growth & Income
Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75 percent of its gross income is passive; or (2)
an average of at least 50 percent of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a fund will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain on disposition of that stock
(collectively, "PFIC income"), plus interest thereon, even if the fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the fund's investment company
taxable income and, accordingly, will not be taxable to the extent that income
is distributed to its shareholders. If a fund invests in a PFIC and elects to
treat the PFIC as a "qualified electing fund," that in lieu of the foregoing tax
and interest obligation, the fund will be required to include in income each
year its pro rata share of the qualified electing fund's annual ordinary
earnings and net capital gain (the excess of net long-term capital gain over net
short-term capital loss). This will occur even if such income and gains are not
distributed to the fund, and those amounts would be subject to the RIC
distribution requirements described above. In most instances, it will be very
difficult to make this election because of certain requirements thereof. In
addition, another election may be available that would involve marking to market
a fund's PFIC stock at the end of each taxable year (and on certain other dates
prescribed in the Code), with the result that unrealized gains are treated as
though they were realized, although such gains will be ordinary income rather
than capital gain. If this election were made, tax at the fund level under the
excess distribution rules would be eliminated, but a fund could, in limited
circumstances, incur nondeductible interest charges. The funds may limit and/or
manage their investments in PFICs to minimize their tax liability or maximize
their return from these investments. A fund's intention to qualify annually as a
RIC may limit a fund's election with respect to PFIC stock.
Each fund is required by federal law to withhold 31 percent 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 taxpayer 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 percent (or at a lower rate
under an applicable income tax treaty) on fund distributions treated as ordinary
dividends. Shareholders who are not U.S. persons should consult their tax
advisers regarding the U.S. and non-U.S. tax consequences of ownership of shares
of and receipt of distributions from the funds.
IRA accounts are subject to special tax treatment. Federal income tax earnings
is deferred, and there are restrictions on the amounts that can be contributed
each year. Investors in these accounts may also have to pay a penalty for
withdrawals prior to age 59-1/2 Shareholders should consult their tax advisers
for more information.
This discussion of the tax treatment of the funds and their distributions is
based on the federal, Delaware and New York tax laws in effect as of the date of
this SAI. Shareholders should consult their tax advisers to determine the tax
treatment of an investment by him or her in any fund, including state and local
taxes.
- --------------------
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
27
<PAGE>
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 other
funds it may be managing, or that may be managed by its affiliate, TIAA-CREF
Investment Management, Inc. ("Investment Management"), another investment
adviser subsidiary of 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. In
1999, the aggregate amount of brokerage commissions paid by the International
Equity, Growth Equity and Growth & Income Funds as a result of such allocations
was $123,000, $181,400, and $213,700, respectively.
Research or service obtained for one Fund may be used by Advisors in managing
the other Funds. In such circumstances, the expenses incurred will be allocated
equitably consistent with Advisors' fiduciary duty to the other Funds.
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
obligations of personnel of Advisors to the TIAA-CREF Mutual Funds.
The aggregate amount of brokerage commissions paid by the Funds during 1997 was
as follows:
Fund Commissions
- ---- -----------
Growth & Income $ 8,614
International Equity $229,055
Growth Equity $ 13,817
The aggregate amount of brokerage commissions paid by the Funds during 1998 was
as follows:
Fund Commissions
- ---- -----------
Growth & Income $203,003
International Equity $179,866
Growth Equity $191,941
The aggregate amount of brokerage commissions paid by the Funds during 1999 was
as follows:
Fund Commissions
- ---- -----------
Growth & Income $264,949
International Equity $480,885
Growth Equity $426,194
During 1999, certain of the Funds acquired securities of certain of the regular
brokers or dealers or their parents. These entities and the value of a Fund's
aggregate holdings in the securities of those entities on December 31, 1999 are
set forth below:
Regular Broker or Dealer Based on Brokerage Commissions Paid:
<TABLE>
<CAPTION>
FUND BROKER PARENT HOLDINGS (US$)
- ---- ------ ------ -------------
<S> <C> <C> <C>
International Equity Fund ABN-AMRO ABN-AMRO Holdings NV 260,590
CS First Boston Credit Suisse Group 377,684
Deutsche Bank Securities Inc. Deutsche Bank AG 266,575
Nomura Securities Nomura Securities Co. Ltd. 230,864
Dresdner Bank Dresdner Bank AG 157,750
HSBC HSBC Holdings PLC (UK) 673,151
Growth Equity Fund Goldman Sachs Goldman Sachs Group Inc. 47,093
Knight Securities Knight/Trimark Group, Inc. 128,800
Jeffries Jeffries Group, Inc. 15,400
Growth and Income Fund Morgan (JP) Securities Corp. Morgan (J.P.) & Co., Inc. 405,200
Bear Stearns Bear Stearns Co., Inc. 40,441
Lehman Brothers Lehman Brothers Holdings, Inc. 237,125
Merrill Lynch & Co., Inc. Merrill Lynch & Co., Inc. 601,200
Morgan Stanley & Co., Inc. Morgan Stanley, Dean Witter & Co., Inc. 3,708,074
Paine Webber Paine Webber Group, Inc. 58,218
Charles Schwab Schwab (Charles) , Inc. 775,175
</TABLE>
28
<PAGE>
Regular Broker or Dealer based on entities acting as principal:
<TABLE>
<CAPTION>
FUND BROKER PARENT HOLDINGS (US$)
- ---- ------ ------ --------------
<S> <C> <C> <C>
International Equity Fund CS First Boston Credit Suisse Group 377,684
ABN Amro ABN Amro Holdings NV 260,590
Deutsche Bank Securities Inc. Deutsche Bank AG 424,325
Nomura Securities Nomura Securities Co., Ltd. 230,864
UBS Securities UBS AG 392,406
Growth Equity Fund Goldman Sachs Goldman Sachs Group Inc. 47,093
Growth and Income Fund Chase Manhattan Bank Chase Manhattan Corp. 4,078,826
Morgan (J.P.) Securities Corp. Morgan (J.P.) & Co., Inc. 405,200
Bear Stearns Bear Stearns Co., Inc. 40,441
Lehman Brothers Lehman Brothers Holdings, Inc. 237,125
Merrill Lynch Merrill Lynch & Co., Inc. 601,200
Morgan Stanley & Co., Inc. Morgan Stanley, Dean Witter & Co., Inc. 3,708,074
Paine Webber Paine Webber Group, Inc. $58218
Charles Schwab Schwab (Charles) Inc. 775,175
Bond Plus Morgan (J.P.) Securities Corp. Morgan (J.P.) & Co., Inc. 1,941,140
Salomon Smith Barney Salomon Smith Barney Holdings 2,908,200
</TABLE>
- ------------
UNDERWRITERS
- ------------
Teachers Personal Investors Services, Inc. (TPIS) may be considered the
"principal underwriter" for the TIAA-CREF Mutual Funds. Shares of the TIAA-CREF
Mutual Funds are offered on a continuous basis with no sales load. Pursuant to a
Distribution Agreement with the TIAA-CREF Mutual Funds, TPIS has the right to
distribute shares of the TIAA-CREF Mutual Funds for the two-year period
beginning July 1, 1997, and thereafter from year to year subject to approval by
the Funds' Board of Trustees. Under a Distribution Compensation Agreement
between TPIS and Advisors, Advisors has agreed to pay TPIS monthly for
distribution of Fund shares an amount equal to .40 percent of the aggregate
amount of purchase payments for shares of the Funds during each month. TPIS was
paid $5,091,702 for services to the Funds in 1999. TPIS receives no other
compensation for its activities as distributor of TIAA-CREF Mutual Fund shares.
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. Currently, TPIS has entered into a Selling Agreement
with TIAA-CREF Individual & Institutional Services ("Services") that permits
Services to distribute the shares of the Mutual Funds on a limited basis.
- -------------------------------
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:
n
P (1 + T) = 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 percent over ten years would produce an
average annual return of 7.18 percent, which is the steady annual rate that
would equal 100 percent growth on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant over time,
but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of the fund.
In addition to average annual returns, we may quote a fund's unaveraged or
cumulative total returns reflecting the actual change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be
29
<PAGE>
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 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 and income other than investment income (which are included in the
calculation of NAV). 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:
365/7
Effective Yield = (Base Period Return+1) -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.
TOTAL RETURN
Set forth below is total return information for the Funds, which reflects all
expense deductions from Fund assets, applied to a hypothetical investment of
$1,000 in each Fund:
INTERNATIONAL EQUITY FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to 55.83%
December 31, 1999)
Since inception
(September 2, 1997 to 29.16%
December 31, 1999)
30
<PAGE>
GROWTH EQUITY FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to 33.00%
December 31, 1999)
Since inception
(September 2, 1997 to 33.36%
December 31, 1999)
GROWTH & INCOME FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to 24.46%
December 31, 1999)
Since inception
(September 2, 1997 to 27.45%
December 31, 1999)
MANAGED ALLOCATION FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to 19.20%
December 31, 1999)
Since inception
(September 2, 1997 to 19.78%
December 31, 1999)
BOND PLUS FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to -1.01%
December 31, 1999)
Since inception
(September 2, 1997 to 5.26%
December 31, 1999)
MONEY MARKET FUND
PERIOD AVERAGE ANNUAL RETURN
- ------ --------------------
1 Year (January 1, 1999 to 5.05%
December 31, 1999)
Since inception
(September 2, 1997 to 5.29%
December 31, 1999)
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., (13) Lehman
Brothers indices and (14) the Global Market indices created by Morgan Stanley,
Inc., including the Europe, Australasia, 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
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. Currently
there are no sales charges.
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.
31
<PAGE>
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.
LEGAL MATTERS
All matters of applicable state law pertaining to the Funds have been passed
upon by Charles H. Stamm, Executive Vice President and General Counsel of the
TIAA-CREF Mutual Funds (and TIAA and CREF). Legal matters relating to the
federal securities laws have been passed upon by Sutherland Asbill & Brennan
LLP, Washington, DC.
EXPERTS
The financial statements incorporated by reference in this Statement of
Additional Information have been audited by Ernst & Young LLP, independent
auditors, as stated in their report appearing herein and have been so included
in reliance upon the report of such firm given upon its authority as experts in
accounting and auditing.
ADDITIONAL CONSIDERATIONS
The TIAA-CREF Mutual Funds are part of the TIAA-CREF family of companies. TIAA
founded in 1918, is a non-profit stock life insurance company. Its companion
organization, CREF, founded in 1952, is a non-profit corporation registered with
the Securities and Exchange Commission 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.
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) or the Teachers Personal
Annuity Select (PA Select) should carefully consider how TIAA-CREF Mutual Funds
fit into their investment portfolio. The tax treatment is considerably different
from the RA, SRA, PA and PA Select. 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 PAs 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 (unless they are being used to Fund an IRA account).
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.
When deciding how to invest in mutual funds, it's important for investors to
determine their investment goals so they can choose the mutual fund(s) whose
objective closely matches it. They should also determine their time horizon,
I.E., the period of time they plan to keep money invested in the fund. Time
horizon affects how much risk an investor may be willing to take. Risk tolerance
in turn affects asset allocation decisions. For example, an aggressive investor
who is willing to accept a high level of risk in return for potentially greater
returns over the long term, probably would invest more heavily in equity funds.
To preserve the current value of an investment and avoid losses of principal, an
investor might invest more heavily in non-equity funds.
FINANCIAL STATEMENTS
The audited financial statements for the existing TIAA-CREF Mutual Funds are
incorporated herein by reference to the Funds' Annual Report for the year ended
December 31, 1999, which has been filed with the Securities and Exchange
Commission and provided to all shareholders. We will furnish you, without
charge, another copy of the Annual Report on request. The audited financial
statements for the Equity Index, Social Choice Equity, Short-Term Bond,
High-Yield Bond and Tax-Exempt Bond Funds follow.
31
<PAGE>
[TIAA-CREF lOGO]
- --------------------------------------------------------------------------------
REPORT OF MANAGEMENT RESPONSIBILITY
To the Shareholder of
TIAA-CREF Mutual Funds:
The accompanying financial statements of the Equity Index, Social Choice Equity
and Short-Term Bond Funds of TIAA-CREF Mutual Funds (the "Funds") are the
responsibility of management. They have been prepared in accordance with
accounting principles generally accepted in the United States and have been
presented fairly and objectively in accordance with such principles.
The Funds have established and maintain a strong system of internal controls
designed to provide reasonable assurance that assets are properly safeguarded
and transactions are properly executed in accordance with management's
authorization, and to carry out the ongoing responsibilities of management for
reliable financial statements. In addition, the Funds' internal audit personnel
provide a continuing review of the internal controls and operations of the
Funds, and the internal Auditor regularly reports to the Audit Committee of the
Funds' Board of Trustees.
The accompanying financial statements have been audited by the independent
auditing firm of Ernst & Young LLP. The independent auditors' report, which
appears on the following page, expresses an independent opinion on the fairness
of presentation of these financial statements.
The Audit Committee of the Funds' Board of Trustees, consisting of trustees who
are not officers of TIAA-CREF Mutual Funds, meets regularly with management,
representatives of Ernst & Young LLP and internal audit personnel to review
matters relating to financial reporting, internal controls and auditing. In
addition to the annual audit of the financial statements of the Funds by the
independent auditing firm, the Securities and Exchange Commission performs
periodic examinations of the Funds' operations.
/s/ Martin E. Galt, III
---------------------------
President
/s/ Richard L. Gibbs
---------------------------
Executive Vice President and
Principal Accounting Officer
33
<PAGE>
[] ERNST & YOUNG LLP [] 787 Seventh Avenue [] Phone: 212 773 3000
New York, New York 10019
REPORT OF INDEPENDENT AUDITORS
To the Shareholder and Board of Trustees of
TIAA-CREF Mutual Funds:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of the Equity Index, Social Choice Equity and
Short-Term Bond Funds (three of the Funds constituting TIAA-CREF Mutual Funds)
(the "Funds") as of March 10, 2000, and the related statements of operations and
changes in net assets and financial highlights for the period from March 1, 2000
(commencement of operations) to March 10, 2000. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 10, 2000 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Equity Index, Social Choice Equity and Short-Term Bond Funds of TIAA-CREF Mutual
Funds at March 10, 2000 and the results of their operations, the changes in
their net assets and the financial highlights for the period from March 1, 2000
to March 10, 2000, in conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP
March 23, 2000
34
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 10, 2000
<TABLE>
<CAPTION>
EQUITY SOCIAL CHOICE SHORT TERM
INDEX EQUITY BOND
FUND FUND FUND
------------ ------------- ------------
<S> <C> <C> <C>
ASSETS
Investments, at cost ................................ 50,053,547 $ 25,026,417 $ 24,727,568
Net unrealized depreciation of
investments ....................................... (397,177) (338,056) (52,232)
------------ ------------ ------------
Investments, at value ............................... 49,656,370 24,688,361 24,675,336
Cash ................................................ 938 813 813
Dividends and interest receivables .................. 13,875 4,616 312,859
------------ ------------ ------------
TOTAL ASSETS 49,671,183 24,693,790 24,989,008
------------ ------------ ------------
LIABILITIES
Accrued expenses .................................... 3,533 1,830 2,051
------------ ------------ ------------
TOTAL LIABILITIES 3,533 1,830 2,051
------------ ------------ ------------
NET ASSETS $ 49,667,650 $ 24,691,960 $ 24,986,957
============ ============ ============
Net assets consist of:
Paid in capital ..................................... $ 50,000,000 $ 25,000,000 $ 25,000,000
Accumulated undistributed net investment income ..... 64,820 30,016 39,189
Accumulated undistributed net realized gain
on investments .................................... 7 -- --
Accumulated net unrealized depreciation on
investments ....................................... (397,177) (338,056) (52,232)
------------ ------------ ------------
NET ASSETS $ 49,667,650 $ 24,691,960 $ 24,986,957
============ ============ ============
Outstanding shares of beneficial interest, unlimited
shares authorized ($.0001 par value) .............. 5,000,000 2,500,000 2,500,000
============ ============ ============
Net asset value per share ........................... $ 9.93 $ 9.88 $ 9.99
============ ============ ============
</TABLE>
See notes to financial statements.
35
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 10, 2000
<TABLE>
<CAPTION>
EQUITY SOCIAL CHOICE SHORT-TERM
INDEX EQUITY BOND
FUND FUND FUND
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest ........................................... $ 54,452 $ 27,205 $ 41,240
Dividends .......................................... 13,901 4,641 --
--------- --------- ---------
Total income ....................................... 68,353 31,846 41,240
--------- --------- ---------
EXPENSES
Management fees .................................... 10,315 5,214 5,464
Trustee fees and expenses .......................... 4 2 2
--------- --------- ---------
Total expenses before waiver ....................... 10,319 5,216 5,466
Less expenses waived by the advisor ................ (6,786) (3,386) (3,415)
--------- --------- ---------
Net expenses ....................................... 3,533 1,830 2,051
--------- --------- ---------
Net investment income .............................. 64,820 30,016 39,189
--------- --------- ---------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS
Net realized gain on investments ................... 7 -- --
Net change in unrealized depreciation
on investments ................................... (397,177) (338,056) (52,232)
--------- --------- ---------
Net realized and unrealized loss on investments .... (397,170) (338,056) (52,232)
--------- --------- ---------
Net decrease in net assets resulting from operations $(332,350) $(308,040) $ (13,043)
========= ========= =========
</TABLE>
See notes to financial statements.
36
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 10, 2000
<TABLE>
<CAPTION>
EQUITY SOCIAL CHOICE SHORT-TERM
INDEX EQUITY BOND
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income .............................. $ 64,820 $ 30,016 $ 39,189
Net realized gain on investments ................... 7 -- --
Net change in unrealized depreciation on investments (397,177) (338,056) (52,232)
------------ ------------ ------------
Net decrease from operations ....................... (332,350) (308,040) (13,043)
------------ ------------ ------------
SHAREHOLDER TRANSACTIONS:
Seed money contributed by TIAA ..................... 50,000,000 25,000,000 25,000,000
------------ ------------ ------------
Net increase from shareholder transactions ......... 50,000,000 25,000,000 25,000,000
------------ ------------ ------------
NET ASSETS, end of period .......................... $ 49,667,650 $ 24,691,960 $ 24,986,957
============ ============ ============
</TABLE>
See notes to financial statements.
37
<PAGE>
TIAA-CREF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 10, 2000
<TABLE>
<CAPTION>
EQUITY SOCIAL CHOICE SHORT-TERM
INDEX EQUITY BOND
FUND FUND FUND
---------- ----------- ----------
<S> <C> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period ............... $ 10.00 $ 10.00 $ 10.00
---------- ---------- ----------
Loss from investment operations:
Net investment income .............................. 0.01 0.01 0.02
Net realized and unrealized loss on investments .... (0.08) (0.13) (0.03)
---------- ---------- ----------
Total loss from investment operations .............. (0.07) (0.12) (0.01)
---------- ---------- ----------
Net asset value, end of period ..................... $ 9.93 9.88 $ 9.99
========== ========== ==========
TOTAL RETURN ....................................... (0.70)% (1.20)% (0.10)%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) ......... $ 49,668 $ 24,692 $ 24,987
Ratio of expenses to average net assets
before expense waiver ............................ 0.02% 0.02% 0.02%
Ratio of expenses to average net assets
after expense waiver ............................. 0.01% 0.01% 0.01%
Ratio of net investment income to average net assets 0.15% 0.14% 0.17%
Portfolio turnover rate ............................ 0.00% 0.00% 0.00%
</TABLE>
The percentages shown above are not annualized
See notes to financial statements.
38
<PAGE>
TIAA-CREF MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 10, 2000
NOTE 1. ORGANIZATION
TIAA-CREF Mutual Funds is a Delaware business trust that was organized on
January 13, 1997 and is registered with the Securities and Exchange Commission
("Commission") under the Investment Company Act of 1940 as an open-end
management investment company. It currently consists of eleven series, the Money
Market Fund which invests primarily in high quality short-term money market
instruments; the Bond Plus Fund which invests primarily in a broad range of debt
securities; the Short-Term Bond Fund which invests primarily in a broad range of
short-term debt securities; the High-Yield Bond Fund which invests primarily in
lower rated, high-yielding income bearing debt securities; the Tax-Exempt Bond
Fund which invests primarily in investment grade municipal securities; the
Growth & Income Fund which invests in a broadly diversified portfolio of common
stocks selected for their investment potential; the Growth Equity Fund which
invests in stocks of companies in new or emerging areas of the economy and
companies with distinctive products or promising market conditions; the Equity
Index Fund which is designed to track the United States equity market as a
whole; the Social Choice Equity Fund which invests primarily in a diversified
set of common stocks and attempts to track the return of the Untied States stock
market while investing only in companies whose activities are consistent with
the fund's social criteria; the International Equity Fund which invests in a
broadly diversified portfolio of primarily foreign equity securities; and the
Managed Allocation Fund which invests in the TIAA-CREF Mutual Funds' other
investment funds.
These financial statements include the Equity Index, Social Choice Equity and
Short-Term Bond Funds, (the "Funds") each of which commenced operations with an
investment by Teachers Insurance and Annuity Association of America ("TIAA") on
March 1, 2000 of $50,000,000, $25,000,000 and $25,000,000, respectively. Upon
becoming effective with the Commission, the Funds intend to publicly offer their
shares, without a sales load, through their distributor, Teachers Personal
Investors Services, Inc. ("TPIS"), a wholly-owned indirect subsidiary of TIAA,
which is registered with the Commission as a broker-dealer and is a member of
the National Association of Securities Dealers, Inc. Teachers Advisors, Inc.
("Advisors"), a wholly-owned indirect subsidiary of TIAA, which is registered
with the Commission as an investment adviser, provides investment management
services for the Funds and is also responsible for providing, or obtaining at
its own expense, the services reasonably necessary for the ordinary operation of
the Funds. Advisors has borne any costs necessary to organize the Funds.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements may require management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, income,
expenses and related disclosures. Actual results may differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Funds, which are in conformity with accounting principles
generally accepted in the United States.
VALUATION OF INVESTMENTS: 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 on the date of valuation, or at the mean of the closing bid
and asked prices if no sale is reported, except for bonds which are valued at
the most recent bid price or the equivalent quoted yield of such bonds. Money
market instruments are valued at fair market value, except for such instruments
within 60 days to maturity, which are valued at amortized cost, which
approximates market value. The amortized cost method initially values securities
at original cost and assumes a constant amortization to maturity of any discount
or premium. Portfolio securities for which market quotations are not readily
available (including restricted securities) are valued at fair value, as
determined in good faith under the direction of the Board of Trustees.
ACCOUNTING FOR INVESTMENTS: Securities transactions are accounted for as of the
date the securities are purchased or sold (trade date). Realized gains and
losses are based upon the specific identification method for both financial
statement and federal income tax purposes. Interest income is recognized on the
accrual basis, and discounts and premiums on short term money market instruments
are amortized using the effective yield method. Dividend income is recorded on
the ex-dividend date.
39
<PAGE>
SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS: The Funds may
purchase securities on a when-issued or delayed delivery basis. In addition to
the normal market risks, this exposes the Funds to the risk that the transaction
may not be consummated. The price and interest rate of such securities is fixed
at trade date. For when-issued purchases, a Fund does not earn interest on such
security until settlement date.
RESTRICTED SECURITIES: Restricted securities held by the Funds, if any, may not
be sold except in exempt transactions or in a public offering registered under
the Securities Act of 1933. The risk of investing in such securities is
generally greater than the risk of investing in securities which are widely held
and publicly traded.
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income, if any, for the
Short-Term Bond Fund are declared and paid monthly; and for the Equity Index and
Social Choice Equity Funds are declared and paid annually. Distributions from
realized gains, if any, are declared and paid annually for each of the Funds.
Undistributed net investment income and accumulated undistributed net realized
gain (loss) on total investments may include temporary book and tax differences
which will reverse in a subsequent period. Any permanent book and tax basis
differences relating to shareholder distributions will result in
reclassifications among the respective components of net assets.
FEDERAL INCOME TAXES: The Funds intend to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code, and will therefore
not be subject to income taxes to the extent that they distribute substantially
all taxable income each year.
NOTE 3. MANAGEMENT AGREEMENT
Under the terms of an Investment Management Agreement, each Fund pays a fee for
the management and administration of the Funds, based on the average daily net
assets of each Fund. Advisors has currently waived its right to receive a
portion of its fee from each Fund until July 1, 2003. As a result, during such
waiver period, Advisors will receive the following annual percentages of each
Fund's average daily net assets:
MANAGEMENT MANAGEMENT FEE
FEE WAIVER AFTER WAIVER
---------- ------ -------------
Equity Index Fund 0.76% 0.50% 0.26%
Social Choice Equity Fund 0.77% 0.50% 0.27%
Short-Term Bond Fund 0.80% 0.50% 0.30%
NOTE 4. INVESTMENTS
At March 10, 2000, net unrealized depreciation of portfolio investments,
consisting of gross unrealized appreciation and gross unrealized depreciation,
was as follows:
GROSS UNREALIZED NET UNREALIZED
APPRECIATION DEPRECIATION DEPRECIATION
------------ ----------- --------------
Equity Index Fund $1,322,011 $1,719,188 $(397,177)
Social Choice
Equity Fund 536,675 874,731 (338,056)
Short-Term
Bond Fund 1,762 53,994 (52,232)
Purchases and sales of portfolio securities, other than short-term money market
instruments, for the Funds, for the period from March 1, 2000 (commencement of
operation) to March 10, 2000, were as follows:
Purchases Sales
------------ ------------
Equity Index Fund $ 49,903,592 $ 4,005
Social Choice
Equity Fund 24,870,465 --
Short-Term
Bond Fund 23,473,884 --
NOTE 5. TRUSTEE FEES
Each of the Funds pays the Trustees who are not also officers or affiliated
persons of the Funds certain remuneration for their services, plus travel and
other expenses incurred in attending Board meetings. Trustees who are also
officers or affiliated persons receive no remuneration for their services as
Trustees from the Funds.
40
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS EQUITY INDEX FUND
MARCH 10, 2000
- --------------------------------------------------------------------------------
VALUE %
- --------------------------------------------------------------------------------
COMMONSTOCK
AGRICULTURAL PRODUCTION-CROPS $ 3,416 0.01%
AGRICULTURAL SERVICES 2,124 0.01
AMUSEMENT AND RECREATION SERVICES 63,784 0.13
APPAREL AND ACCESSORY STORES 211,096 0.43
APPAREL AND OTHER TEXTILE PRODUCTS 42,074 0.09
AUTO REPAIR, SERVICES AND PARKING 13,336 0.03
AUTOMOTIVE DEALERS AND SERVICE STATIONS 30,421 0.06
BUILDING MATERIALS AND GARDEN SUPPLIES 527,809 1.06
BUSINESS SERVICES 6,543,625 13.18
CHEMICALS AND ALLIED PRODUCTS 4,717,319 9.50
COAL MINING 507 0.00
COMMUNICATIONS 6,031,060 12.14
DEPOSITORY INSTITUTIONS 2,431,705 4.90
EATING AND DRINKING PLACES 277,482 0.56
EDUCATIONAL SERVICES 18,807 0.04
ELECTRIC, GAS, AND SANITARY SERVICES .. 1,289,946 2.60
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT 7,271,173 14.64
ENGINEERING AND MANAGEMENT SERVICES 135,713 0.27
FABRICATED METAL PRODUCTS 240,040 0.48
FISHING, HUNTING, AND TRAPPING 296 0.00
FOOD AND KINDRED PRODUCTS 1,167,978 2.35
FOOD STORES 201,546 0.41
FORESTRY 11,217 0.02
FURNITURE AND FIXTURES 71,091 0.14
FURNITURE AND HOMEFURNISHINGS STORES .. 130,509 0.26
GENERAL BUILDING CONTRACTORS 31,573 0.06
GENERAL MERCHANDISE STORES 913,681 1.84
HEALTH SERVICES 148,394 0.30
HEAVY CONSTRUCTION, EXCEPT BUILDING 25,703 0.05
HOLDING AND OTHER INVESTMENT OFFICES .. 367,884 0.74
HOTELS AND OTHER LODGING PLACES 51,681 0.10
INDUSTRIAL MACHINERY AND EQUIPMENT 5,273,969 10.62
INSTRUMENTS AND RELATED PRODUCTS 1,173,373 2.36
INSURANCE AGENTS, BROKERS AND SERVICE . 90,793 0.18
INSURANCE CARRIERS 1,718,287 3.46
LEATHER AND LEATHER PRODUCTS 6,963 0.01
LEGAL SERVICES 2,080 0.00
LOCAL AND INTERURBAN PASSENGER TRANSIT 603 0.00
LUMBER AND WOOD PRODUCTS 84,080 0.17
METAL MINING 50,202 0.10
MISCELLANEOUS MANUFACTURING INDUSTRIES 173,893 0.35
MISCELLANEOUS REPAIR SERVICES 813 0.00
MISCELLANEOUS RETAIL 319,779 0.64
MOTION PICTURES 676,750 1.36
NONDEPOSITORY INSTITUTIONS 720,860 1.45
NONMETALLIC MINERALS, EXCEPT FUELS 22,405 0.05
OIL AND GAS EXTRACTION 422,826 0.85
PAPER AND ALLIED PRODUCTS 301,270 0.61
PERSONAL SERVICES 36,526 0.07
PETROLEUM AND COAL PRODUCTS 1,612,886 3.25
PRIMARY METAL INDUSTRIES 184,520 0.37
PRINTING AND PUBLISHING 311,656 0.63
RAILROAD TRANSPORTATION 147,655 0.30
REAL ESTATE 28,801 0.06
RUBBER AND MISCELLANEOUS
PLASTIC PRODUCTS 121,998 0.25
SECURITY AND COMMODITY BROKERS 807,002 1.62
SOCIAL SERVICES 3,028 0.01
SPECIAL TRADE CONTRACTORS 8,959 0.02
STONE, CLAY, AND GLASS PRODUCTS 223,873 0.45
TEXTILE MILL PRODUCTS 21,753 0.04
TOBACCO PRODUCTS 189,103 0.38
TRANSPORTATION BY AIR 167,814 0.34
TRANSPORTATION EQUIPMENT 1,087,454 2.19
TRANSPORTATION SERVICES 27,506 0.06
TRUCKING AND WAREHOUSING 25,770 0.05
WATER TRANSPORTATION 15,882 0.03
WHOLESALE TRADE-DURABLE GOODS .. 148,787 0.30
WHOLESALE TRADE-NONDURABLE GOODS 319,508 0.64
----------- ------
TOTAL COMMON STOCK
(COST $49,899,594) 49,502,417 99.67
----------- ------
SHORT TERM INVESTMENT
U.S. GOVERNMENT AGENCY 153,953 0.31
----------- ------
TOTAL SHORT TERM INVESTMENT
(COST $153,953) 153,953 0.31
----------- ------
TOTAL PORTFOLIO
(COST $50,053,547) 49,656,370 99.98
OTHER ASSETS & LIABILITIES, NET 11,280 0.02
----------- ------
NET ASSETS $49,667,650 100.00%
=========== ======
41
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS EQUITY INDEX FUND
MARCH 10, 2000
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 99.67%
AGRICULTURAL PRODUCTION-CROPS -- 0.01%
145 DELTA & PINE LAND CO $ 2,773
83 * HINES HORTICULTURE, INC 643
--------
3,416
--------
AGRICULTURAL SERVICES -- 0.01%
132 * CADIZ, INC 1,188
81 * VETERINARY CENTERS OF AMERICA, INC 936
--------
2,124
--------
AMUSEMENT AND RECREATION SERVICES -- 0.13%
315 * AMF BOWLING, INC 767
27 * ANCHOR GAMING CO 1,061
73 * ARGOSY GAMING CORP 1,012
90 * BALLY TOTAL FITNESS HOLDINGS CORP 2,205
120 * BOCA RESORTS, INC (CLASS A) 1,035
136 * BOYD GAMING CORP 714
37 * CHAMPIONSHIP AUTO RACING TEAMS, INC 777
32 CHURCHILL DOWNS, INC 688
51 DOVER DOWNS ENTERTAINMENT, INC 605
79 * FAMILY GOLF CENTERS, INC 91
484 * HARRAH'S ENTERTAINMENT, INC 9,740
101 INTERNATIONAL SPEEDWAY CORP (CLASS A) 4,204
727 * MIRAGE RESORTS, INC 13,086
88 * PINNACLE ENTERTAINMENT, INC 1,831
105 * PLAYERS INTERNATIONAL, INC 866
295 * PREMIER PARKS, INC 5,752
212 * SFX ENTERTAINMENT, INC (CLASS A) 7,645
51 * SPEEDWAY MOTORSPORTS, INC 1,357
90 * STATION CASINOS, INC 1,738
129 * WESTWOOD ONE, INC 8,610
--------
63,784
--------
APPAREL AND ACCESSORY STORES -- 0.43%
364 * ABERCROMBIE & FITCH CO (CLASS A) 5,551
79 * AMERICAN EAGLE OUTFITTERS, INC 2,128
82 * ANN TAYLOR STORES CORP 1,962
10 * BEBE STORES, INC 117
30 * BUCKLE, INC 476
68 BURLINGTON COAT FACTORY WAREHOUSE CORP 828
57 CATO CORP (CLASS A) 612
371 * CHARMING SHOPPES, INC 2,086
50 * CHICOS FAS, INC 668
64 * CHILDRENS PLACE RETAIL STORES 896
156 CLAIRES STORES, INC 2,642
31 * DAVID'S BRIDAL, INC 259
13 DEB SHOPS, INC 227
59 * DRESS BARN, INC 851
65 * FINISH LINE, INC (CLASS A) 394
73 * FOOTSTAR, INC 1,560
2,454 GAP, INC 113,190
85 * GENESCO, INC 839
71 * GOODY'S FAMILY CLOTHING, INC 514
80 * GYMBOREE CORP 327
159 INTIMATE BRANDS, INC (CLASS A) 5,038
609 LIMITED, INC 20,706
96 * MEN'S WEARHOUSE, INC 2,280
403 NORDSTROM, INC 8,916
104 * PACIFIC SUNWEAR CALIFORNIA, INC 2,587
119 * PAYLESS SHOESOURCE, INC 5,726
333 ROSS STORES, INC 5,473
32 * SHOE CARNIVAL, INC 270
106 * STEIN MART, INC 636
43 TALBOTS, INC 1,725
1,168 TJX COS, INC 17,812
87 * TOO, INC 2,370
50 * UNITED RETAIL GROUP, INC 550
38 * URBAN OUTFITTERS, INC 465
41 * WET SEAL, INC (CLASS A) 415
--------
211,096
--------
APPAREL AND OTHER TEXTILE PRODUCTS -- 0.09%
33 * COLUMBIA SPORTSWEAR CO 618
50 * DONNA KARAN INTERNATIONAL, INC 343
28 * GUESS ?, INC 656
393 * JONES APPAREL GROUP, INC 10,021
104 KELLWOOD CO 1,761
223 LIZ CLAIBORNE, INC 10,202
117 * NAUTICA ENTERPRISES, INC 1,374
33 OSHKOSH B'GOSH, INC (CLASS A) 589
24 OXFORD INDUSTRIES, INC 406
85 PHILLIPS VAN HEUSEN CORP 584
34 PILLOWTEX CORP 140
210 * POLO RALPH LAUREN CORP 3,320
81 * QUIKSILVER, INC 1,113
20 TARRANT APPAREL GROUP 133
17 * TROPICAL SPORTSWARE INTERNATIONAL CORP 187
360 VF CORP 8,302
209 WARNACO GROUP, INC (CLASS A) 2,325
--------
42,074
--------
AUTO REPAIR, SERVICES AND PARKING -- 0.03%
25 * AUTOWEB.COM, INC 187
83 * AVIS RENT A CAR, INC 1,265
99 * BUDGET GROUP, INC 513
46 * CENTRAL PARKING CORP 684
91 * DOLLAR THRIFTY AUTOMOTIVE GROUP, INC 1,035
78 HERTZ CORP (CLASS A) 2,232
61 MIDAS, INC 1,460
176 ROLLINS TRUCK LEASING CORP 1,408
242 RYDER SYSTEM, INC 4,552
--------
13,336
--------
AUTOMOTIVE DEALERS AND SERVICE STATIONS -- 0.06%
1,396 * AUTONATION, INC 10,295
560 * AUTOZONE, INC 12,215
138 * COPART, INC 2,337
71 * CSK AUTO CORP 891
34 * DISCOUNT AUTO PARTS, INC 301
59 * GROUP 1 AUTOMOTIVE, INC 752
26 * LITHIA MOTORS, INC (CLASS A) 375
128 * O'REILLY AUTOMOTIVE, INC 1,280
174 PEP BOYS MANNY, MOE, & JACK CO 1,076
81 * UNITED AUTO GROUP, INC 612
30 * WEST MARINE, INC 287
--------
30,421
--------
42
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
BUILDING MATERIALS AND GARDEN SUPPLIES -- 1.06%
105 FASTENAL CO $ 3,990
8,669 HOME DEPOT, INC 465,416
1,288 LOWES COS, INC 57,960
25 * TRACTOR SUPPLY CO 443
--------
527,809
--------
BUSINESS SERVICES -- 13.18%
55 * 24/7 MEDIA, INC 3,203
67 AARON RENTS, INC 971
61 ABM INDUSTRIES, INC 1,578
15 * ABOUT.COM, INC 1,393
155 * ACCLAIM ENTERTAINMENT, INC 794
44 ACKERLEY GROUP, INC 574
203 * ACNEILSEN CORP 3,933
37 * ACT NETWORKS INC 513
96 * ACTIVISION, INC 1,374
93 * ACTUATE CORP 6,271
221 * ACXIOM CORP 7,817
34 * ADMINSTAFF, INC 1,415
466 ADOBE SYSTEMS, INC 38,794
32 * ADVANTAGE LEARNING SYSTEMS, INC 496
47 * ADVENT SOFTWARE, INC 5,334
69 * ADVO, INC 1,759
134 * AFFILIATED COMPUTER SERVICES, INC(CLASS A) 4,262
25 * ALLAIRE CORP 4,418
8,417 * AMERICA ONLINE, INC 498,181
158 * AMERICAN MANAGEMENT SYSTEMS, INC 6,468
80 ANALYSTS INTERNATIONAL CORP 880
102 * ANSWERTHINK CONSULTING GROUP 2,703
18 * APPLIEDTHEORY CORP 625
94 * ASHTON TECHNOLOGY GROUP, INC 951
86 * ASPECT DEVELOPMENT, INC 14,620
95 * ASPEN TECHNOLOGY, INC 3,990
32 * AUTOBYTEL.COM, INC 325
207 AUTODESK, INC 11,359
2,354 AUTOMATIC DATA PROCESSING, INC 103,870
145 * AVANT CORP 2,093
93 * AVT CORP 2,999
61 * AWARE, INC 3,027
105 * AXENT TECHNOLOGIES, INC 3,202
92 * BANYAN SYSTEMS, INC 1,897
42 * BARRA, INC 1,525
596 * BEA SYSTEMS, INC 79,864
90 * BEYOND.COM CORP 540
145 * BILLING CONCEPTS CORP 1,277
125 * BINDVIEW DEVELOPMENT CORP 5,210
103 * BISYS GROUP, INC 5,510
919 * BMC SOFTWARE, INC 47,730
27 * BOTTOMLINE TECHNOLOGIES, INC 1,181
68 * BRIO TECHNOLOGY, INC 2,720
210 * BROADVISION, INC 54,232
25 * BROCADE COMMUNICATIONS SYSTEMS, INC 8,325
42 * BURNS INTERNATIONAL SERVICES CORP 462
35 * CACI INTERNATIONAL, INC (CLASS A) 955
917 * CADENCE DESIGN SYSTEMS, INC 20,288
27 * CAIS INTERNET, INC 732
193 * CAMBRIDGE TECHNOLOGY PARTNERS, INC 2,629
18 * CAREERBUILDER, INC 103
59 * CATALINA MARKETING CORP 4,952
82 * CCC INFORMATION SERVICES GROUP, INC 2,234
42 * CDI CORP 819
2,677 * CENDANT CORP 48,520
267 * CENTURY BUSINESS SERVICES, INC 909
478 * CERIDIAN CORP 9,022
99 * CERNER CORP 3,217
137 * CHECKFREE HOLDINGS CORP 12,141
111 * CHOICEPOINT, INC 4,592
170 * CIBER, INC 3,910
636 * CITRIX SYSTEMS, INC 68,370
80 * CLARIFY, INC 12,880
725 * CMGI, INC 98,917
12 * COGNIZANT TECHNOLOGY SOLUTIONS CORP 1,474
434 COMDISCO, INC 23,002
89 * COMPLETE BUSINESS SOLUTIONS, INC 2,180
1,569 COMPUTER ASSOCIATES INTERNATIONAL, INC 104,338
117 * COMPUTER HORIZONS CORP 2,910
88 * COMPUTER NETWORK TECHNOLOGY CORP 1,996
569 * COMPUTER SCIENCES CORP 45,982
61 COMPUTER TASK GROUP, INC 808
1,170 * COMPUWARE CORP 27,933
54 * CONCORD COMMUNICATIONS, INC 2,230
51 * CONCUR TECHNOLOGIES, INC 1,163
50 * CONVERGYS CORP 1,887
24 * COSTAR GROUP, INC 1,152
44 * COTELLIGENT, INC 255
74 * CRITICAL PATH, INC 8,429
181 * CSG SYSTEMS INTERNATIONAL, INC 11,063
33 * CTC COMMUNICATIONS GROUP, INC 2,778
66 * CYBERCASH, INC 899
113 * DATA BROADCASTING CORP 1,031
60 * DATASTREAM SYSTEMS, INC 2,606
37 * DBT ONLINE, INC 779
114 * DENDRITE INTERNATIONAL, INC 2,408
60 * DIGITAL RIVER, INC 1,882
55 * DOCUMENTUM, INC 5,266
27 * DOUBLECLICK, INC 3,175
95 * DSP GROUP, INC 5,320
140 * DST SYSTEMS, INC 7,787
267 * EARTHLINK, INC 6,341
24 * EARTHWEB, INC 682
112 * EBAY, INC 21,644
70 * ECHELON CORP 6,335
132 * ECLIPSYS CORP 3,786
54 * ELECTRO RENT CORP 573
238 * ELECTRONIC ARTS, INC 22,089
1,314 ELECTRONIC DATA SYSTEMS CORP 80,811
185 * ELECTRONICS FOR IMAGING, INC 11,712
162 * ELOYALTY CORP 4,619
45 * ENGINEERING ANIMATION, INC 716
60 * ENTRUST TECHNOLOGIES, INC 7,691
154 * EPICOR SOFTWARE CORP 1,294
533 EQUIFAX, INC 11,759
43 * EXCALIBUR TECHNOLOGIES CORP 1,569
44 * EXCHANGE APPLICATIONS, INC 4,427
520 * EXCITE AT HOME 14,852
73 FACTSET RESEARCH SYSTEMS, INC 2,249
38 FAIR ISSAC & CO, INC 1,776
24 * FIDELITY HOLDINGS, INC 568
122 * FILENET CORP 4,956
1,615 FIRST DATA CORP 67,628
43
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
BUSINESS SERVICES -- (continued)
462 * FISERV, INC $ 15,765
21 * FORRESTER RESEARCH, INC 1,107
74 GERBER SCIENTIFIC, INC 1,581
110 * GETTY IMAGES, INC 5,266
209 * GO.COM 5,042
86 * GO2 NET, INC 7,315
38 * GREAT PLAINS SOFTWARE, INC 2,052
135 * GT INTERACTIVE SOFTWARE CORP 540
142 * GTECH HOLDINGS CORP 2,751
146 * HARBINGER CORP 5,046
88 * HEALTHEON/WEBMD CORP 3,608
42 * HEARME, INC 921
55 * HEIDRICK & STRUGGLES INTERNATIONAL,INC 2,048
92 * HNC SOFTWARE 10,877
121 * HYPERION SOLUTIONS CORP 6,836
52 * I2 TECHNOLOGIES, INC 10,816
53 * IDX SYSTEMS CORP 1,828
132 * IGATE CAPITAL CORP 7,953
137 * IMATION CORP 3,818
74 * IMRGLOBAL CORP 1,165
1,159 IMS HEALTH, INC 24,556
162 * INACOM CORP 496
110 * INFOCURE CORP 1,821
64 * INFORMATICA CORP 6,288
106 * INFORMATION RESOURCES, INC 708
948 * INFORMIX CORP 19,434
179 * INFOSPACE.COM, INC 43,843
85 * INFOUSA, INC 1,296
268 * INKTOMI CORP 45,375
163 * INTERGRAPH CORP 1,151
206 * INTERIM SERVICES, INC 5,587
49 INTERPOOL, INC 300
1,057 INTERPUBLIC GROUP OF COS, INC 39,109
34 * INTERVU, INC 5,701
537 * INTUIT, INC 31,380
96 * ISS GROUP, INC 12,006
62 * IVILLAGE, INC 1,480
163 * J.D. EDWARDS & CO 7,233
51 * JACK HENRY & ASSOCIATES, INC 1,995
77 * JDA SOFTWARE GROUP, INC 1,342
25 * JUNO ONLINE SERVICES, INC 496
212 * KEANE, INC 5,432
67 KELLY SERVICES, INC (CLASS A) 1,582
83 * KORN FERRY INTERNATIONAL 2,868
134 * LABOR READY, INC 1,130
199 * LAMAR ADVERTISING CO (CLASS A) 10,770
168 * LEARN2.COM, INC 1,018
284 * LEGATO SYSTEMS, INC 10,206
90 * LHS GROUP, INC 3,960
297 * LYCOS, INC 21,755
161 * MACROMEDIA, INC 14,469
50 * MACROVISION CORP 5,603
16 * MANHATTAN ASSOCIATES, INC 348
286 MANPOWER, INC 7,936
77 * MANUGISTICS GROUP, INC 4,143
66 * MAPICS, INC 1,295
18 * MAPQUEST.COM, INC 328
51 * MARIMBA, INC 2,862
12 * MARKETWATCH.COM, INC 528
34 MCGRATH RENTCORP 578
13 * MEDIA METRIX, INC 571
47 * MEDICONSULT.COM, INC 264
135 * MEDQUIST, INC 3,459
46 * MEMBERWORKS, INC 2,535
242 * MENTOR GRAPHICS CORP 3,509
289 * MERCURY INTERACTIVE CORP 33,198
109 * MESSAGEMEDIA, INC 1,526
129 * METAMOR WORLDWIDE, INC 2,362
25 * METRO INFORMATION SERVICES, INC 528
79 * MICROMUSE, INC 14,269
14,338 * MICROSOFT CORP 1,448,138
290 * MICROSTRATEGY, INC 90,770
111 * MIDWAY GAMES, INC 2,233
23 * MODEM MEDIA POPPE TYSON, INC 1,216
341 * MODIS PROFESSIONAL SERVICES, INC 5,562
51 * MULTEX.COM, INC 1,491
121 * NATIONAL COMPUTER SYSTEMS, INC 5,997
128 NATIONAL DATA CORP 3,744
90 * NATIONAL EQUIPMENT SERVICES, INC 545
153 * NATIONSRENT, INC 755
44 * NBC INTERNET, INC 2,464
45 * NCO GROUP, INC 1,220
44 * NEFF CORP 313
26 * NEON SYSTEMS, INC 1,040
40 * NET PERCEPTIONS, INC 2,300
23 * NETOBJECTS, INC 920
29 * NETOPIA, INC 2,287
495 * NETWORK APPLIANCE, INC 117,253
48 * NETWORK PERIPHERALS, INC 2,976
50 * NETWORK SOLUTIONS, INC 24,453
524 * NETWORKS ASSOCIATES, INC 16,342
91 * NEW ERA OF NETWORKS, INC 7,757
214 * NOVA CORP (GEORGIA) 5,149
1,254 * NOVELL, INC 39,344
264 OLSTEN CORP 3,118
16 * OMEGA RESEARCH, INC 92
668 OMNICOM GROUP, INC 55,903
41 * ON ASSIGNMENT, INC 1,765
72 * ONEMAIN.COM, INC 837
58 * ONHEALTH NETWORK CO 424
50 * ONYX SOFTWARE CORP 1,900
127 * OPEN MARKET, INC 7,675
8,212 * ORACLE CORP 670,304
932 * PARAMETRIC TECHNOLOGY CORP 28,775
724 PAYCHEX, INC 36,833
9 * PCORDER.COM, INC 270
71 * PEGASUS SYSTEMS, INC 1,686
109 * PEGASYSTEMS, INC 2,670
710 * PEOPLESOFT, INC 17,483
105 * PER SE TECHNOLOGIES, INC 682
194 * PEREGRINE SYSTEMS, INC 14,598
193 * PEROT SYSTEMS CORP (CLASS A) 4,342
97 * PERSONNEL GROUP OF AMERICA, INC 636
59 * PERVASIVE SOFTWARE, INC 881
89 * PHOENIX TECHNOLOGIES LTD 2,436
180 PITTSTON BRINKS GROUP CO 2,745
134 * POLICY MANAGEMENT SYSTEMS CORP 1,080
56 * PORTAL SOFTWARE, INC 4,350
115 * PRICELINE.COM, INC 10,867
44
<PAGE>
- -
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
BUSINESS SERVICES -- (continued)
39 * PRIMARK CORP $ 804
17 * PRIVATE BUSINESS, INC 68
43 * PRODIGY COMMUNICATIONS CORP 819
14 * PROFESSIONAL DETAILING, INC 350
117 * PROGRESS SOFTWARE CORP 2,413
49 * PROJECT SOFTWARE & DEVELOPMENT, INC 4,385
74 * PROTECTION ONE, INC 124
78 * PROXICOM, INC 3,841
68 * PROXYMED, INC 677
43 * PSINET, INC 2,402
41 * QRS CORP 4,691
95 * QUADRAMED CORP 653
38 * RADIANT SYSTEMS, INC 2,740
38 * RADISYS CORP 2,280
189 * RARE MEDIUM GROUP, INC 13,852
334 * RATIONAL SOFTWARE CORP 29,037
53 * RAZORFISH, INC 1,908
243 * REALNETWORKS, INC 19,834
20 * REDBACK NETWORKS, INC 7,641
95 * REMEDY CORP 5,450
63 * RENT WAY, INC 1,094
66 * RENT-A-CENTER, INC 1,006
338 * ROBERT HALF INTERNATIONAL, INC 13,541
64 ROLLINS, INC 984
153 * ROMAC INTERNATIONAL, INC 2,199
136 * RSA SECURITY, INC 11,857
17 * RWD TECHNOLOGIES, INC 149
87 * SABRE GROUP HOLDINGS CORP 4,154
243 * SAFETY-KLEEN CORP 455
108 * SAGA SYSTEMS, INC 3,766
49 * SAGENT TECHNOLOGY, INC 1,898
13 * SALESLOGIX CORP 418
48 * SANCHEZ COMPUTER ASSOCIATES, INC 2,217
69 * SANTA CRUZ OPERATION, INC 1,185
100 * SAPIENT CORP 11,406
24 * SCIENT CORP 2,904
47 SEI INVESTMENT CO 4,570
33 * SERENA SOFTWARE, INC 1,926
94 SHARED MEDICAL SYSTEMS CORP 5,469
515 * SIEBEL SYSTEMS, INC 83,880
13 * SILKNET SOFTWARE, INC 3,549
164 * SITEL CORP 1,363
205 * SNYDER COMMUNICATIONS, INC 4,958
71 * SOFTNET SYSTEMS, INC 2,458
156 SOTHEBYS HOLDINGS, INC (CLASS A) 3,344
51 * SOURCE MEDIA, INC 879
61 * SPORTSLINE.COM 3,522
30 * SPSS, INC 900
64 * SPYGLASS, INC 5,208
41 * SS&C TECHNOLOGIES, INC 230
111 * STAFFMARK, INC 1,172
29 * STARMEDIA NETWORK, INC 1,450
27 * STARTEK, INC 1,225
298 * STERLING COMMERCE, INC 13,000
260 * STERLING SOFTWARE, INC 9,197
135 * STRUCTURAL DYNAMICS RESEARCH CORP 2,328
5,882 * SUN MICROSYSTEMS, INC 554,010
449 * SUNGARD DATA SYSTEMS, INC 13,919
14 * SUNQUEST INFORMATION SYSTEMS, INC 126
92 * SVI HOLDINGS, INC 954
307 * SYBASE, INC 8,634
84 * SYKES ENTERPRISES, INC 1,590
196 * SYMANTEC CORP 15,839
239 * SYNOPSYS, INC 10,351
19 * SYNTEL, INC 359
121 * SYSTEMS & COMPUTER TECHNOLOGY CORP 2,904
162 * TECHNOLOGY SOLUTIONS CO 1,468
83 * TELETECH HOLDINGS, INC 3,247
18 * TENFOLD CORP 1,048
42 * THEGLOBE.COM, INC 336
22 * THESTREET.COM 276
67 * THQ, INC 1,314
85 * TICKETMASTER ONLINE-CITYSEARCH, INC 2,805
204 * TMP WORLDWIDE, INC 18,564
142 TOTAL SYSTEM SERVICES, INC 2,254
54 * TOWNE SERVICES, INC 114
47 * TRACK DATA CORP 352
123 * TRANSACTION SYSTEM ARCHITECTURE 4,412
47 * TRAVELOCITY.COM, INC 2,150
162 * TRUE NORTH COMMUNICATIONS, INC 6,480
58 * TSI INTERNATIONAL SOFTWARE LTD 8,236
161 * TYLER TECHNOLOGIES, INC 955
19 * UNIGRAPHICS SOLUTIONS, INC 552
117 * UNITED RENTALS, INC 1,703
55 * USINTERNETWORKING, INC 5,135
212 * VALASSIS COMMUNICATIONS, INC 6,876
256 * VERIO, INC 14,336
289 * VERISIGN, INC 69,341
1,453 * VERITAS SOFTWARE CORP 245,102
117 * VERITY, INC 6,486
134 * VERTICALNET, INC 36,607
91 * VIGNETTE CORP 27,027
31 * VOLT INFORMATION SCIENCES, INC 900
49 WACKENHUT CORP SERIES A 646
152 * WAVE SYSTEMS CORP (CLASS A) 6,013
50 * WEBTRENDS CORP 3,412
35 * WEST TELESERVICES CORP 875
198 * WIND RIVER SYSTEMS, INC 9,850
50 * XTRA CORP 1,912
928 * YAHOO, INC 165,242
127 YOUNG & RUBICAM, INC 5,286
52 * ZIFF-DAVIS, INC -ZDNET 1,547
----------
6,543,625
----------
CHEMICALS AND ALLIED PRODUCTS -- 9.50%
5,731 ABBOTT LABORATORIES CO 177,302
34 * ABGENIX, INC 12,197
798 AIR PRODUCTS & CHEMICALS, INC 19,900
23 * ALBANY MOLECULAR RESEARCH, INC 1,598
92 ALBEMARLE CORP 1,472
129 ALBERTO CULVER CO (CLASS B) 2,523
45 * ALGOS PHARMACEUTICAL CORP 720
91 * ALKERMES, INC 13,001
510 ALLERGAN, INC 24,288
73 ALPHARMA, INC (CLASS A) 2,764
329 * ALZA CORP 12,090
4,916 AMERICAN HOME PRODUCTS CORP 243,342
3,846 * AMGEN, INC 229,077
65 * ANDRX CORP 6,483
45 * ANESTA CORP 945
45
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
CHEMICALS AND ALLIED PRODUCTS -- (Continued)
82 ARCH CHEMICALS, INC $ 1,419
51 * AVIRON, INC 2,027
912 AVON PRODUCTS, INC 23,940
50 * BARR LABORATORIES, INC 2,187
199 * BIO-TECHNOLOGY GENERAL CORP 3,146
566 * BIOGEN, INC 47,579
55 * BIOMATRIX, INC 1,471
56 * BLOCK DRUG, INC (CLASS A) 1,673
7,469 BRISTOL MYERS SQUIBB CO 391,188
383 CABOT CORP 10,364
128 * CALGON CARBON CORP 960
88 * CAMBREX CORP 3,195
751 * CAREMARK RX, INC 2,957
81 CARTER WALLACE, INC 1,442
76 * CELL PATHWAYS, INC 2,916
115 * CEPHALON, INC 7,273
37 * CHATTEM, INC 566
68 CHEMFIRST, INC 1,317
52 * CHIREX, INC 1,235
86 * CHIRON CORP 5,154
146 CHURCH & DWIGHT CO, INC 2,180
435 CK WITCO CORP 4,295
882 CLOROX CO 26,349
2,195 COLGATE PALMOLIVE CO 93,836
87 * COLUMBIA LABORATORIES, INC 1,533
86 * COR THERAPEUTICS, INC 7,541
56 * CORIXA CORP 3,297
63 * COULTER PHARMACEUTICALS, INC 2,709
83 * CYGNUS, INC 1,473
161 * CYTEC INDUSTRIES, INC 4,306
87 DEXTER CORP 3,730
42 DIAGNOSTIC PRODUCTS CORP 955
357 DIAL CORP 3,927
826 DOW CHEMICAL CO 80,948
3,693 DU PONT (E.I.) DE NEMOURS & CO 169,647
167 * DURA PHARMACEUTICALS, INC 2,463
82 * DURAMED PHARMACEUTICALS, INC 717
295 EASTMAN CHEMICAL CO 10,656
425 ECOLAB, INC 12,909
139 * ENZON, INC 9,234
235 ETHYL CORP 719
133 FERRO CORP 2,477
99 * FMC CORP 4,764
315 * FOREST LABORATORIES, INC 22,286
50 FULLER (H.B.) CO 2,575
50 * GELTEX PHARMACEUTICALS, INC 1,056
317 * GENZYME CORP (GENERAL DIVISION) 18,267
79 GEON CO 1,471
117 GEORGIA GULF CORP 2,369
165 * GILEAD SCIENCES, INC 11,828
249 * GRACE W.R. & CO 2,552
192 GREAT LAKES CHEMICAL CORP 5,400
87 * GUILFORD PHARMACEUTICALS, INC 3,191
184 HANNA (M.A.) CO 1,909
92 * HEMISPHERX BIOPHARMA, INC 1,627
400 HERCULES, INC 6,200
175 * HUMAN GENOME SCIENCES, INC 30,187
295 ICN PHARMACEUTICALS, INC 7,319
145 * ICOS CORP 7,014
159 * IDEC PHARMACEUTICALS CORP 20,560
138 * IDEXX LABORATORIES, INC 3,855
37 * IGEN INTERNATIONAL, INC 1,165
376 IMC GLOBAL, INC 4,864
107 * IMCLONE SYSTEMS, INC 14,445
284 * IMMUNEX CORP 60,563
51 * INHALE THERAPEUTIC SYSTEMS 6,171
56 * INTERNATIONAL SPECIALTY PRODUCTS, INC 336
396 INTERNATIONAL FLAVORS & FRAGRANCES, INC 12,375
24 * INVITROGEN CORP 1,860
116 * ISIS PHARMACEUTICALS, INC 2,784
525 * IVAX CORP 14,765
5,239 JOHNSON & JOHNSON CO 370,986
206 JONES PHARMACEUTICAL, INC 8,304
104 * KING PHARMACEUTICALS, INC 4,849
45 * KV PHARMACEUTICAL CO (CLASS B) 1,454
329 LAUDER (ESTEE) CO (CLASS A) 13,077
170 * LIGAND PHARMACEUTICALS CO (CLASS A) 3,145
3,445 LILLY (ELI) & CO 210,790
86 LILLY INDUSTRIES, INC (CLASS A) 962
147 * LIPOSOME CO, INC 2,149
206 LUBRIZOL CORP 5,072
410 LYONDELL CHEMICAL CO 4,484
58 MACDERMID, INC 1,816
79 * MACROCHEM CORP (DELAWARE) 540
262 MALLINCKRODT, INC 6,238
23 * MANNATECH, INC 109
107 * MEDICIS PHARMACEUTICAL CORP (CLASS A) 5,243
210 * MEDIMMUNE, INC 40,306
8,801 MERCK & CO, INC 524,209
257 MILLENNIUM CHEMICAL, INC 3,951
140 * MILLENNIUM PHARMACEUTICALS, INC 32,970
71 MINERALS TECHNOLOGIES, INC 2,755
98 MISSISSIPPI CHEMICAL CORP 679
2,390 MONSANTO CO 95,002
487 MYLAN LABORATORIES, INC 13,575
52 NATURES SUNSHINE PRODUCTS, INC 464
208 * NBTY, INC 2,613
10 NCH CORP 431
45 * NEUROGEN CORP 2,022
82 NL INDUSTRIES, INC 1,189
45 * OCTEL CORP 438
152 OLIN CORP 2,479
90 OM GROUP, INC 3,217
124 OMNOVA SOLUTIONS, INC 674
115 * ORGANOGENESIS, INC 2,077
62 * PATHOGENESIS CORP 1,860
232 * PERRIGO CO 1,718
14,577 PFIZER, INC 512,017
65 * PHARMACEUTICAL RESOURCES, INC 442
1,952 PHARMACIA & UPJOHN, INC 101,504
57 * PHARMACYCLICS, INC 4,207
654 PPG INDUSTRIES, INC 30,533
599 PRAXAIR, INC 20,066
4,948 PROCTER & GAMBLE CO 262,553
70 * PROTEIN DESIGN LABORATORIES, INC 18,760
61 * REGENERON PHARMACEUTICALS, INC 2,440
75 * REVLON, INC (CLASS A) 778
128 * REXALL SUNDOWN, INC 1,904
29 * ROGERS CORP 1,928
46
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
CHEMICALS AND ALLIED PRODUCTS -- (Continued)
361 ROHM & HAAS CO $ 12,838
407 RPM, INC 4,222
34 * SAFESCIENCE, INC 537
58 * SANGSTAT MEDICAL CORP 2,262
19 * SCHEIN PHARMACEUTICAL, INC 286
5,532 SCHERING-PLOUGH CORP 207,104
116 SCHULMAN (A.), INC 1,506
69 * SCOTTS CO (CLASS A) 2,070
254 * SEPRACOR, INC 28,511
72 * SEROLOGICALS CORP 648
532 SHERWIN-WILLIAMS CO 10,074
334 * SICOR, INC 3,611
80 SIGMA ALDRICH CORP 1,770
22 STEPAN CO 475
72 * SUPERGEN, INC 4,756
76 * TECHNE CORP 5,861
99 * THERAGENICS CORP 1,534
75 * TRANSKARYOTIC THERAPIES, INC 5,207
123 * TRIANGLE PHARMACEUTICALS, INC 1,929
86 * TWINLAB CORP 548
448 UNION CARBIDE CORP 21,336
341 USEC, INC 1,236
146 VALSPAR CORP 4,872
62 * VENTIV HEALTH, INC 581
97 * VERTEX PHARMACEUTICALS, INC 6,408
61 * VICAL, INC 2,937
633 WARNER-LAMBERT CO 58,473
361 * WATSON PHARMACEUTICALS, INC 13,560
128 * WELLMAN, INC 2,552
48 WEST PHARMACEUTICAL SERVICES 1,266
-----------
4,717,319
-----------
COAL MINING -- 0.00%
63 ARCH COAL, INC 507
---------
COMMUNICATIONS -- 12.14%
56 * ADELPHIA BUSINESS SOLUTIONS, INC 3,780
203 * ADELPHIA COMMUNICATIONS CORP (CLASS A) 10,111
91 * ADVANCED RADIO TELECOM CORP 3,975
61 * AERIAL COMMUNICATIONS, INC 3,213
367 * ALLEGIANCE TELECOM, INC 36,287
1,132 ALLTEL CORP 77,046
69 * AMERICAN MOBILE SATELLITE CORP 2,781
578 * AMFM, INC 32,946
112 * ASCENT ENTERTAINMENT GROUP, INC 1,687
12,032 AT & T CORP 653,488
4,851 * AT & T CORP - LIBERTY MEDIA Group (CLASS A) 255,283
5,847 BELL ATLANTIC CORP 335,106
7,088 BELLSOUTH CORP 330,921
17 BHC COMMUNICATIONS, INC (CLASS A) 2,550
519 BROADWING, INC 20,208
465 * CABLEVISION SYSTEMS CORP (CLASS A) 27,958
125 * CAPROCK COMMUNICATIONS CORP 6,500
2,871 * CBS CORP 164,723
525 CENTURYTEL, INC 17,489
49 CFW COMMUNICATIONS CO 1,923
61 * CHRIS CRAFT INDUSTRIES, INC 4,121
85 * CITADEL COMMUNICATIONS CORP 3,410
1,007 * CLEAR CHANNEL COMMUNICATIONS, INC 62,371
64 * COM21, INC 4,512
2,795 COMCAST CORP (CLASS A) SPECIAL 113,022
39 * COMMONWEALTH TELEPHONE ENTERPRISES 1,974
84 * COMSAT CORP 1,375
159 * CONCENTRIC NETWORK CORP 9,132
341 * COVAD COMMUNICATIONS GROUP 33,119
552 * COX COMMUNICATIONS, INC (CLASS A) 24,874
34 * COX RADIO, INC (CLASS A) 2,178
317 * CROWN CASTLE INTERNATIONAL CORP 13,155
35 * CT COMMUNICATIONS, INC 2,196
68 * CUMULUS MEDIA, INC 1,738
192 * E.SPIRE COMMUNICATIONS, INC 2,772
33 * ELECTRIC LIGHTWAVE, INC (CLASS A) 759
172 * EMMIS COMMUNICATIONS (CLASS A) 5,998
89 * ENTERCOM COMMUNICATIONS CORP 4,082
624 * EXODUS COMMUNICATIONS, INC 102,687
36 * FLASHNET 231
507 * FOX ENTERTAINMENT GROUP, INC 12,991
68 GAYLORD ENTERTAINMENT CO 1,836
142 * GENERAL COMMUNICATION (CLASS A) 923
678 * GLOBAL TELESYSTEMS GROUP, INC 20,594
48 GRAY COMMUNICATIONS SYSTEMS, INC 726
3,659 GTE CORP 246,067
81 * HEARST-ARGYLE TELEVISION, INC 1,675
157 * HISPANIC BROADCASTING CORP 15,974
179 * ICG COMMUNICATIONS, INC 6,365
75 * IDT CORP 2,596
1,095 * INFINITY BROADCASTING CORP (CLASS A) 36,271
181 * INTERMEDIA COMMUNICATIONS, INC 13,450
88 * INTERNATIONAL FIBERCOM, INC 2,552
54 * INTRAWARE, INC 4,009
182 * ITC DELTACOM, INC 7,609
11 * LATITUDE COMMUNICATIONS, INC 274
36 * LAUNCH MEDIA, INC 756
76 * LEAP WIRELESS INTERNATIONAL, INC 6,849
1,008 * LEVEL 3 COMMUNICATIONS, INC 131,229
172 * LIBERTY DIGITAL, INC (CLASS A) 9,051
12,002 LUCENT TECHNOLOGIES, INC 811,635
10,687 * MCI WORLDCOM, INC 498,949
410 * MCLEODUSA, INC (CLASS A) 42,845
2,304 * MEDIA ONE GROUP, INC 180,000
406 * METROMEDIA FIBER NETWORK (CLASS A) 33,901
65 * MGC COMMUNICATIONS, INC 4,440
607 * NEXTEL COMMUNICATIONS, INC (CLASS A) 96,892
501 * NEXTLINK COMMUNICATIONS, INC 61,779
56 * NORTH PITTSBURGH SYSTEMS, INC 740
19 * NORTHEAST OPTIC NETWORK, INC 1,995
57 * NORTHPOINT COMMUNICATIONS GROUP, INC 1,681
496 * NTL, INC 52,111
54 * PACIFIC GATEWAY EXCHANGE, INC 1,130
353 * PAGING NETWORK, INC 1,742
160 * PANAMSAT CORP 8,810
112 * PAXSON COMMUNICATIONS CORP 1,064
41 * PEGASUS COMMUNICATIONS CORP 5,745
93 * POWERTEL, INC 8,230
163 * PRICE COMMUNICATIONS CORP 3,973
108 * PRIMUS TELECOMMUNICATIONS GROUP, INC 5,109
177 * PTEK HOLDINGS, INC 1,628
459 * QWEST COMMUNICATIONS INTERNATIONAL , INC 24,183
32 * RADIO ONE, INC 2,104
155 * RCN CORP 10,385
47
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMUNICATIONS -- (Continued)
238 * RHYTHMS NETCONNECTIONS, INC $ 9,609
29 * SAGA COMMUNICATIONS, INC (CLASS A) 514
12,845 SBC COMMUNICATIONS, INC 539,490
94 * SINCLAIR BROADCASTING GROUP, INC (CLASS A) 834
61 * SIRIUS SATELLITE RADIO, INC 3,614
2,582 SPRINT CORP (FON GROUP) 158,470
1,678 * SPRINT CORP (PCS GROUP) 100,155
136 * STAR TELECOMMUNICATIONS, INC 943
153 * TALK.COM, INC 2,314
205 TELEPHONE & DATA SYSTEMS, INC 21,730
83 * TELIGENT, INC 7,553
71 * TIME WARNER TELECOM, INC 6,341
142 * TV GUIDE, INC 8,320
62 * U.S. CELLULAR CORP 4,274
39 * U.S. LEC CORP (CLASS A) 1,779
1,903 U.S. WEST, INC 133,923
407 * U.S.A. NETWORKS, INC 9,437
15 UNITED TELEVISION, INC 1,935
312 * UNITEDGLOBALCOM, INC (CLASS A) 34,008
297 * UNIVISION COMMUNICATIONS, INC 28,474
1,900 * VIACOM, INC (CLASS B) 102,718
53 * VIATEL, INC 3,713
530 * VOICESTREAM WIRELESS CORP 62,208
81 * WAVO CORP 627
171 * WESTERN WIRELESS CORP (CLASS A) 9,405
207 * WINSTAR COMMUNICATIONS, INC 11,385
41 * WORLDGATE COMMUNICATIONS, INC 1,427
45 * WORLDPAGES.COM, INC 458
35 * YOUNG BROADCASTING, INC (CLASS A) 853
-----------
6,031,060
-----------
DEPOSITORY INSTITUTIONS -- 4.90%
36 ALABAMA NATIONAL BANCORP 594
39 * ALLIANCE BANCORP 641
106 AMCORE FINANCIAL, INC 2,086
1,473 AMSOUTH BANCORP 19,609
95 ANCHOR BANCORP WISCONSIN, INC 1,276
30 * ANCHOR FINANCIAL CORP 952
25 ANDOVER BANCORP, INC 631
45 AREA BANCSHARES CORP 877
241 ASSOCIATED BANC-CORP 5,452
205 ASTORIA FINANCIAL CORP 4,561
15 BANCFIRST CORP 403
25 BANCFIRST OHIO CORP 512
31 BANCO SANTANDER (Puerto Rico) SAN JUAN 403
215 BANCORPSOUTH, INC 3,493
190 BANCWEST CORP 2,873
6,504 BANK OF AMERICA CORP 278,859
43 BANK OF GRANITE CORP 774
2,773 BANK OF NEW YORK CO, INC 88,042
4,322 BANK ONE CORP 105,889
122 BANK UNITED CORP (CLASS A) 3,172
160 BANKATLANTIC BANCORP, INC (CLASS B) 877
88 BANKNORTH GROUP, INC 1,644
94 BAY VIEW CAPITAL CORP 722
1,256 BB&T CORP 28,338
45 * BOK FINANCIAL CORP 742
62 BRENTON BANKS, INC 530
50 * BROOKLINE BANCORP, INC 470
31 BSB BANCORP, INC 527
63 BT FINANCIAL CORP 945
21 * CAPITAL CITY BANK GROUP, INC 384
44 CAPITOL FEDERAL FINANCIAL 409
97 CAROLINA FIRST CORP 1,461
34 CATHAY BANCORP, INC 1,455
152 CCB FINANCIAL CORP 5,139
74 * CENTENNIAL BANCORP 689
151 CENTURA BANKS, INC 5,209
39 CENTURY SOUTH BANKS, INC 904
74 * CFS BANCORP, INC 564
653 CHARTER ONE FINANCIAL, INC 10,448
3,134 CHASE MANHATTAN CORP 246,606
53 CHEMICAL FINANCIAL CORP 1,338
106 CHITTENDEN CORP 2,809
153 CITIZENS BANKING CORP (MICHIGAN) 2,486
63 CITY HOLDINGS CO 797
146 CITY NATIONAL CORP 3,850
366 COLONIAL BANCGROUP, INC 3,294
589 COMERICA, INC 20,062
110 COMMERCE BANCORP, INC 3,492
236 COMMERCE BANCSHARES, INC 6,416
228 COMMERCIAL FEDERAL CORP 2,850
45 COMMONWEALTH BANCORP, INC 638
177 COMMUNITY FIRST BANKSHARES, INC 2,455
42 COMMUNITY TRUST BANCORP, INC 756
428 COMPASS BANCSHARES, INC 6,821
770 * CONCORD EFS, INC 12,801
35 CORUS BANKSHARES, INC 853
32 * CPB, INC 780
201 CULLEN FROST BANKERS, INC 3,944
54 CVB FINANCIAL CORP 756
417 DIME BANCORP, INC 6,333
48 DIME COMMUNITY BANCORP, INC 672
77 DOWNEY FINANCIAL CORP 1,482
35 F & M BANCORP, INC (MARYLAND) 616
87 F & M NATIONAL CORP 1,957
76 F.N.B. CORP 1,463
24 FARMERS CAPITAL BANK CORP 732
40 * FCNB CORP 610
921 FIFTH THIRD BANCORP 42,250
88 FIRST BANCORP (PUERTO RICO) 1,518
41 * FIRST BUSEY CORP 796
59 FIRST CHARTER CORP 792
20 FIRST CITIZENS BANCSHARES, INC (CLASS A) 1,232
21 FIRST COMMERCE BANCSHARES, INC 723
233 FIRST COMMONWEALTH FINANCIAL CORP 2,271
58 FIRST FEDERAL CAPITAL CORP 645
134 FIRST FINANCIAL BANCORP 2,370
38 FIRST FINANCIAL BANKSHARES, INC 959
23 FIRST FINANCIAL CORP (INDIANA) 782
50 FIRST FINANCIAL HOLDINGS, INC 743
35 FIRST INDIANA CORP 616
41 FIRST MERCHANTS CORP 989
134 FIRST MIDWEST BANCORP, INC 2,847
36 * FIRST REPUBLIC BANK 612
737 FIRST SECURITY CORP 8,890
150 FIRST SENTINEL BANCORP, INC 1,190
42 FIRST SOURCE CORP 787
489 FIRST TENNESSEE NATIONAL CORP 7,885
3,719 FIRST UNION CORP 118,543
48
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
DEPOSITORY INSTITUTIONS --(Continued)
95 FIRST UNITED BANCSHARES, INC $ 1,045
187 FIRST VIRGINIA BANKS, INC 5,645
43 FIRST WASHINGTON BANCORP, INC 591
3,691 FIRSTAR CORP 64,823
69 * FIRSTFED FINANCIAL CORP 832
4 FIRSTMERIT CORP 56
27 FLAGSTAR BANCORP, INC 347
3,447 FLEETBOSTON FINANCIAL CORP 88,544
55 FRONTIER FINANCIAL CORP 1,051
259 FULTON FINANCIAL CORP 4,176
40 GBC BANCORP 850
33 * GLACIER BANCORP, INC 420
255 GOLDEN STATE BANCORP, INC 3,171
521 GOLDEN WEST FINANCIAL CORP 14,490
58 GRAND PREMIER FINANCIAL, INC 580
25 GREAT SOUTHERN BANCORP 489
51 GREATER BAY BANCORP 1,918
328 GREENPOINT FINANCIAL CORP 5,166
32 * HAMILTON BANCORP, INC 468
35 HANCOCK HOLDINGS CO 1,189
48 HARBOR FLORIDA BANCSHARES, INC 501
30 HARLEYSVILLE NATIONAL CORP 795
33 HARRIS FINANCIAL, INC 204
604 HIBERNIA CORP (CLASS A) 5,398
62 HUDSON RIVER BANCORP, INC 616
190 HUDSON UNITED BANCORP 3,669
767 HUNTINGTON BANCSHARES, INC 14,237
140 * IMPERIAL BANCORP 3,718
200 INDEPENDENCE COMMUNITY BANK CORP 2,000
44 INDEPENDENT BANK CORP 426
47 INTERNATIONAL BANCSHARES CORP 1,785
60 INTERWEST BANCORP, INC 990
41 IRWIN FINANCIAL CORP 656
183 KEYSTONE FINANCIAL, INC 2,687
77 * LOCAL FINANCIAL CORP 591
29 M & T BANK CORP 10,838
91 MAF BANCORP, INC 1,490
357 MARSHALL & ILSLEY CORP 16,221
2,627 MBNA CORP 57,958
1,915 MELLON FINANCIAL CORP 52,782
260 MERCANTILE BANKSHARES CORP 6,646
72 MERCHANTS NEW YORK BANCORP, INC 1,179
10 * MICHIGAN FINANCIAL CORP 220
32 MID-AMERICA BANCORP 768
42 * MID-STATE BANCSHARES 1,013
31 * MIDWEST BANC HOLDING, INC 465
24 MISSISSIPPI VY BANCSHARES 540
661 MORGAN (J.P.) & CO, INC 70,107
56 NATIONAL BANCORP OF ALASKA, INC 1,645
67 NATIONAL CITY BANCSHARES, INC 1,691
1,900 NATIONAL CITY CORP 32,893
322 NATIONAL COMMERCE BANCORP 5,453
67 NATIONAL PENN BANCSHARES, INC 1,373
28 * NATIONAL PROCESSING, INC 236
68 NBT BANCORP, INC 935
89 * NETBANK, INC 1,079
47 NIAGARA BANCORP, INC 423
551 NORTH FORK BANCORP, INC 8,092
783 NORTHERN TRUST CORP 40,960
55 NORTHWEST BANCORP, INC 398
50 * OCEANFIRST FINANCIAL CORP 787
143 * OCWEN FINANCIAL CORP 938
413 OLD KENT FINANCIAL CORP 10,041
182 OLD NATIONAL BANCORP 4,413
33 OMEGA FINANCIAL CORP 829
126 ONE VALLEY BANCORP, INC 3,528
43 ORIENTAL FINANCIAL GROUP 795
92 PACIFIC CAPITAL BANCORP 2,300
302 PACIFIC CENTURY FINANCIAL CORP 4,945
32 PARK NATIONAL CORP 3,136
98 PEOPLES BANK OF BRIDGEPORT CO 1,702
384 PEOPLES HERITAGE FINANCIAL GROUP, INC 4,032
23 PEOPLES HOLDINGS CO 563
49 PFF BANCORP, INC 689
1,108 PNC BANK CORP 41,480
511 POPULAR, INC 9,828
64 PREMIER NATIONAL BANCORP 704
96 PROVIDENT BANKSHARES CORP 1,536
80 PROVIDENT FINANCIAL GROUP 2,270
535 PROVIDIAN FINANCIAL CORP 34,708
63 QUEENS COUNTY BANCORP, INC 1,181
823 REGIONS FINANCIAL CORP 15,688
171 REPUBLIC BANCORP, INC 1,442
22 REPUBLIC BANCORP, INC (KENTUCKY) 177
21 REPUBLIC BANCSHARES, INC 228
187 REPUBLIC SECURITY FINANCIAL CORP 1,168
116 RICHMOND COUNTY FINANCIAL CORP 2,008
72 RIGGS NATIONAL CORP 859
200 ROSLYN BANCORP, INC 3,087
101 S & T BANCORP, INC 1,767
141 S1 CORP 14,805
36 SANDY SPRING BANCORP, INC 702
100 SEACOAST FINANCIAL SERVICES CORP 925
40 * SECOND BANCORP, INC 795
37 SHORELINE FINANCIAL CORP 573
74 * SILICON VALLEY BANCSHARES 6,419
28 SIMMONS FIRST NATIONAL CORP (CLASS A) 612
200 SKY FINANCIAL GROUP, INC 2,887
600 SOUTHTRUST CORP 12,862
105 * SOUTHWEST BANCORP OF TEXAS, INC 1,870
682 SOVEREIGN BANCORP, INC 4,816
32 ST. FRANCIS CAPITAL CORP 460
602 STATE STREET CORP 40,710
149 STATEN ISLAND BANCORP, INC 2,579
98 STERLING BANCSHARES, INC 857
30 * STERLING FINANCIAL CORP 536
654 SUMMIT BANCORP 15,001
1,205 SUNTRUST BANKS, INC 57,086
139 SUSQUEHANNA BANCSHARES, INC 1,876
905 SYNOVUS FINANCIAL CORP 13,518
312 TCF FINANCIAL CORP 5,830
54 TEXAS REGIONAL BANCSHARES, INC (CLASS A) 1,221
61 TRUST CO OF NEW JERSEY 1,166
202 TRUSTCO BANK CORP 2,272
240 TRUSTMARK CORP 3,750
2,740 U.S. BANCORP 49,320
70 U.S. TRUST CORP 12,276
36 U.S.B. HOLDINGS CO, INC 513
65 UMB FINANCIAL CORP 2,185
49
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
DEPOSITORY INSTITUTIONS -- (Continued)
531 UNION PLANTERS CORP $ 13,673
121 UNIONBANCAL CORP 3,569
161 UNITED BANKSHARES, INC 2,837
133 UNITED COMMUNITY FINANCIAL CORP (OHIO) 914
60 UNITED NATIONAL BANCORP 1,012
50 USBANCORP, INC 418
228 VALLEY NATIONAL BANCORP 4,973
159 W HOLDING CO, INC 1,351
763 WACHOVIA CORP 41,488
206 WASHINGTON FEDERAL, INC 3,090
2,174 WASHINGTON MUTUAL, INC 47,420
143 WEBSTER FINANCIAL CORP 2,886
6,206 WELLS FARGO CO 199,755
75 WESBANCO, INC 1,659
58 WEST COAST BANCORP (OREGON) 616
142 WESTAMERICA BANCORP 3,159
34 WESTCORP 442
85 WHITNEY HOLDINGS CORP 2,746
123 WILMINGTON TRUST CORP 5,258
322 ZIONS BANCORP 11,994
-----------
2,431,705
-----------
EATING AND DRINKING PLACES -- 0.56%
123 * ADVANTICA RESTAURANT GROUP, INC 172
92 APPLEBEES INTERNATIONAL, INC 2,403
65 AVADO BRANDS, INC 186
145 BOB EVANS FARMS, INC 1,866
246 * BRINKER INTERNATIONAL, INC 5,750
158 * BUFFETS, INC 1,402
221 CBRL GROUP, INC 1,888
102 * CEC ENTERTAINMENT, INC 2,524
195 CKE RESTAURANTS, INC 1,230
90 * CONSOLIDATED PRODUCTS, INC 855
495 DARDEN RESTAURANTS, INC 6,404
44 * DAVE & BUSTERS, INC 368
750 HOST MARRIOTT CORP (NEW) 6,750
76 * IHOP CORP (NEW) 1,049
155 * JACK IN THE BOX, INC 3,148
97 * LANDRYS SEAFOOD RESTAURANTS, INC 666
125 * LONE STAR STEAKHOUSE & SALOON, INC 1,125
84 LUBYS, INC 861
729 MARRIOTT INTERNATIONAL (CLASS A) 19,637
5,098 MCDONALD'S CORP 162,498
46 MORRISON MANAGEMENT SPECIALISTS, INC 1,052
37 * NPC INTERNATIONAL, INC 289
53 * OCHARLEYS, INC 609
257 * OUTBACK STEAKHOUSE, INC 6,714
23 * P. F. CHANGS CHINA BISTRO, INC 756
85 * PAPA JOHNS INTERNATIONAL, INC 2,333
117 RUBY TUESDAY, INC 1,930
136 * RYANS FAMILY STEAK HOUSES, INC 1,326
119 SODEXHO MARRIOTT SERVICES, INC 1,301
69 * SONIC CORP 1,707
65 * THE CHEESECAKE FACTORY CO 2,043
581 * TRICON GLOBAL RESTAURANTS, INC 16,122
281 * U.S. FOODSERVICE, INC 7,095
331 VIAD CORP 7,095
394 WENDY'S INTERNATIONAL, INC 6,328
---------
277,482
---------
EDUCATIONAL SERVICES -- 0.04%
289 * APOLLO GROUP, INC (CLASS A) 6,448
10 * BERLITZ INTERNATIONAL, INC 154
28 * CAREER EDUCATION CORP 1,008
17 * CORINTHIAN COLLEGES, INC 344
226 * DEVRY, INC 4,477
72 * EDUCATION MANAGEMENT CORP 1,012
55 * ITT EDUCATIONAL SERVICES, INC 800
41 * LEARNING TREE INTERNATIONAL, INC 1,240
28 * STRAYER EDUCATION, INC 689
166 * SYLVAN LEARNING SYSTEMS, INC 2,635
---------
18,807
---------
ELECTRIC, GAS, AND SANITARY SERVICES -- 2.60%
543 * AES CORP 39,639
214 AGL RESOURCES, INC 3,704
432 ALLEGHENY ENERGY, INC 10,368
295 ALLIANT ENERGY CORP 8,352
711 * ALLIED WASTE INDUSTRIES, INC 4,177
517 AMEREN CORP 14,540
731 AMERICAN ELECTRIC POWER CO, INC 19,051
34 AMERICAN STATES WATER CO 969
365 AMERICAN WATER WORKS CO, INC 7,140
117 ATMOS ENERGY CORP 1,828
138 AVISTA CORP 4,407
80 BLACK HILLS CORP 1,835
44 CALIFORNIA WATER SERVICE GROUP 1,105
237 * CALPINE CORP 26,307
601 CAROLINA POWER & LIGHT CO 17,353
42 CASCADE NATURAL GAS CORP 588
38 * CASELLA WASTE SYSTEMS, INC (CLASS A) 275
801 CENTRAL & SOUTH WEST CORP 12,665
63 CH ENERGY GROUP, INC 1,775
564 CINERGY CORP 11,385
981 * CITIZENS UTILITIES CO (CLASS B) 15,941
85 CLECO CORP 2,682
122 CMP GROUP, INC 3,446
390 CMS ENERGY CORP 6,703
673 COASTAL CORP 31,168
309 COLUMBIA ENERGY GROUP 17,535
310 CONECTIV, INC 4,378
832 CONSOLIDATED EDISON CO OF NEW YORK,INC 22,828
563 CONSTELLATION ENERGY GROUP 16,784
33 CTG RESOURCES, INC 1,167
806 DOMINION RESOURCES, INC 29,267
597 DPL, INC 11,492
278 DQE, INC 13,118
546 DTE ENERGY CO 16,789
1,377 DUKE ENERGY CORP 63,858
475 DYNEGY, INC 28,084
102 EASTERN ENTERPRISES CO 5,826
77 EASTERN UTILITIES ASSOCIATION CO 2,382
1,307 EDISON INTERNATIONAL CO 20,013
224 * EL PASO ELECTRIC CO 2,156
743 EL PASO ENERGY CORP 29,394
65 EMPIRE DISTRICT ELECTRIC CO 1,300
101 ENERGEN CORP 1,502
494 ENERGY EAST CORP 9,324
909 ENTERGY CORP 16,305
124 EQUITABLE RESOURCES, INC 5,006
33 ETOWN CORP 2,134
50
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRIC, GAS, AND SANITARY SERVICES -- (Continued)
877 FIRSTENERGY CORP $ 16,060
345 FLORIDA PROGRESS CORP 15,115
675 FPL GROUP, INC 29,531
465 GPU, INC 11,160
121 HAWAIIAN ELECTRIC INDUSTRIES, INC 3,440
142 IDACORP, INC 4,588
112 INDIANA ENERGY, INC 2,044
290 IPALCO ENTERPRISES, INC 4,857
233 KANSAS CITY POWER & LIGHT CO 5,548
504 KEYSPAN CORP 10,804
384 KINDER MORGAN, INC 10,512
71 LACLEDE GAS CO 1,384
488 LOUISVILLE GAS & ELECTRIC ENERGY CORP 10,736
61 MADISON GAS & ELECTRIC CO 1,059
323 MCN ENERGY GROUP, INC 8,054
215 MDU RESOURCES GROUP, INC 3,923
15 * MIDAMERICAN ENERGY HOLDINGS CO 5,465
277 MINNESOTA POWER, INC 4,241
415 MONTANA POWER CO 22,928
146 NATIONAL FUEL GAS CO 5,986
435 NEW CENTURY ENERGIES, INC 10,875
223 NEW ENGLAND ELECTRIC SYSTEMS CO 11,972
67 NEW JERSEY RESOURCES CORP 2,533
260 * NEWPARK RESOURCES, INC 1,885
705 * NIAGARA MOHAWK HOLDINGS, INC 7,887
177 NICOR, INC 5,332
471 NISOURCE, INC 6,917
495 NORTHEAST UTILITIES CO 9,838
583 NORTHERN STATES POWER CO 9,692
94 NORTHWEST NATURAL GAS CO 1,762
87 NORTHWESTERN CORP 1,990
257 NSTAR 10,087
48 NUI CORP 1,128
293 OGE ENERGY CORP 4,981
119 ONEOK, INC 2,833
45 OTTER TAIL POWER CO 1,665
700 PECO ENERGY CO 26,775
134 PEOPLES ENERGY CORP 3,685
1,446 PG&E CORP 30,727
134 PHILADELPHIA SUBURBAN CORP 2,261
117 PIEDMONT NATURAL GAS CO, INC 2,917
319 PINNACLE WEST CAPITAL CORP 8,353
446 POTOMAC ELECTRIC POWER CO 8,808
541 PPL CORP 10,414
136 PUBLIC SERVICE CO OF NEW MEXICO 2,099
823 PUBLIC SERVICE ENTERPRISE GROUP, INC 21,500
318 PUGET SOUND ENERGY, INC 6,340
310 QUESTAR CORP 4,514
920 RELIANT ENERGY, INC 19,435
238 * REPUBLIC SERVICES, INC (CLASS A) 2,603
137 RGS ENERGY GROUP, INC 2,654
67 SEMCO ENERGY, INC 770
905 SEMPRA ENERGY 15,780
295 SIERRA PACIFIC RESOURCES (NEW) 4,093
89 SIG CORP, INC 2,158
8 SJW CORP 900
30 SOUTH JERSEY INDUSTRIES, INC 855
2,534 SOUTHERN CO 53,530
135 * SOUTHERN UNION CO 1,797
116 SOUTHWEST GAS CORP 2,059
94 SOUTHWESTERN ENERGY CO 646
51 * STERICYCLE, INC 1,020
487 TECO ENERGY, INC 8,674
1,041 TEXAS UTILITIES CO 27,716
8 * THERMO ECOTEK CORP 83
47 TNP ENTERPRISES, INC 2,035
22 * TRIGEN ENERGY CORP 514
50 * U.S. LIQUIDS, INC 284
120 UGI CORP 2,190
819 UNICOM CORP 30,763
122 * UNISOURCE ENERGY CORP HOLDINGS CO 1,723
54 UNITED ILLUMINATING CO 2,133
105 UNITED WATER RESOURCES, INC 3,609
350 UTILICORP UNITED, INC 5,753
175 WASHINGTON GAS LIGHT CO 4,189
59 * WASTE CONNECTIONS, INC 645
11 * WASTE INDUSTRIES, INC 110
1,900 WASTE MANAGEMENT, INC 26,600
57 WESTERN GAS RESOURCES, INC 929
256 WESTERN RESOURCES, INC 4,416
142 WICOR, INC 4,366
1,637 WILLIAMS COS, INC 79,701
444 WISCONSIN ENERGY CORP 7,603
101 WPS RESOURCES CORP 2,360
----------
1,289,946
----------
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT -- 14.64%
77 * ACTEL CORP 2,670
136 * ACTV, INC 4,479
60 * ADAPTIVE BROADBAND CORP 12,446
1,130 * ADC TELECOMMUNICATIONS, INC 60,737
75 * ADTRAN, INC 5,962
39 * ADVANCED ENERGY INDUSTRIES, INC 2,771
272 * ADVANCED FIBRE COMMUNICATIONS, INC 21,709
556 * ADVANCED MICRO DEVICES, INC 29,329
69 * AEROFLEX, INC 4,830
104 * ALLEN TELECOM, INC 1,592
92 * ALLIANCE SEMICONDUCTOR CORP 2,116
63 * ALPHA INDUSTRIES, INC 8,568
670 * ALTERA CORP 63,189
611 * AMERICAN POWER CONVERSION CORP 20,315
58 * AMERICAN SUPERCONDUCTOR CORP 2,639
431 * AMERICAN TOWER SYSTEMS (CLASS A) 23,624
62 * AMERICAN XTAL TECHNOLOGY, INC 2,511
121 AMETEK, INC 2,026
341 * AMKOR TECHNOLOGY, INC 17,305
168 * AMPEX CORP (CLASS A) 598
61 * AMPHENOL CORP (CLASS A) 5,253
101 * ANADIGICS, INC 10,314
657 * ANALOG DEVICES, INC 113,619
103 * ANCOR COMMUNICATIONS, INC 5,652
309 * ANDREW CORP 8,825
90 * ANTEC CORP 4,185
191 * APPLIED MICRO CIRCUITS CORP 55,581
41 * ARGUSS HOLDINGS, INC 702
126 * ARTESYN TECHNOLOGIES, INC 2,567
179 * ASPECT TELECOMMUNICATIONS CORP 10,919
755 * ATMEL CORP 41,100
81 AVX CORP 5,882
122 BALDOR ELECTRIC CO 2,043
51
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT -- (Continued)
61 * BENCHMARK ELECTRONICS, INC $ 2,074
103 BMC INDUSTRIES, INC 521
403 * BROADCOM CORP (CLASS A) 97,954
41 * BROOKTROUT, INC 1,985
145 * BURR BROWN CORP 8,627
48 C&D TECHNOLOGIES, INC 2,355
93 * C-COR.NET CORP 3,999
36 * CARRIER ACCESS CORP 2,517
18 * CATAPULT COMMUNICATIONS CORP 244
108 * CHECKPOINT SYSTEMS, INC 945
517 * CIENA CORP 84,206
181 * COMMSCOPE, INC 7,737
263 * COMVERSE TECHNOLOGY, INC 61,443
617 * CONEXANT SYSTEMS, INC 54,334
309 * COOPER INDUSTRIES, INC 9,656
31 * COPPER MOUNTAIN NETWORKS, INC 3,348
95 * CREE, INC 18,430
104 CTS CORP 5,590
395 * CYPRESS SEMICONDUCTOR CORP 19,009
221 DALLAS SEMICONDUCTOR CORP 9,958
256 * DIGITAL MICROWAVE CORP 10,112
138 * DII GROUP, INC 15,723
123 * E-TEK DYNAMICS, INC 35,055
302 * ECHOSTAR COMMUNICATIONS CORP (CLASS A) 41,676
99 * ELECTRO SCIENTIFIC INDUSTRIES, INC 6,336
237 * ELOT, INC 1,688
38 * EMCORE CORP 5,795
1,636 EMERSON ELECTRIC CO 67,280
16 * ESHARE TECHNOLOGIES, INC 280
98 * ESS TECHNOLOGY, INC 1,862
66 * EXAR CORP 5,725
72 EXIDE CORP 904
17 FRANKLIN ELECTRIC CO, INC 1,094
12,344 GENERAL ELECTRIC CO 1,625,550
114 * GENERAL SEMICONDUCTOR, INC 2,280
46 * GENLYTE GROUP, INC 914
234 * GLENAYRE TECHNOLOGIES, INC 6,435
62 * GLOBIX CORP 3,844
51 * HADCO CORP 2,757
61 HARMAN INTERNATIONAL INDUSTRIES, INC 3,679
38 HARMON INDUSTRIES, INC 629
100 * HARMONIC LIGHTWAVES, INC 14,206
298 HARRIS CORP 10,914
84 HELIX TECHNOLOGY CORP 6,111
26 * HI/FN, INC 2,203
192 HUBBELL, INC (CLASS B) 4,296
93 * HUTCHINSON TECHNOLOGY, INC 1,583
22 * INET TECHNOLOGIES, INC 1,383
56 INNOVEX, INC 591
319 * INTEGRATED DEVICE TECHNOLOGY, INC 13,921
12,583 INTEL CORP 1,512,319
78 INTER-TEL, INC 3,358
183 * INTERDIGITAL COMMUNICATIONS CORP 5,890
188 * INTERNATIONAL RECTIFIER CORP 8,107
121 * INTERVOICE-BRITE, INC 4,507
31 * IPC COMMUNICATIONS, INC 8,804
32 * ITI TECHNOLOGIES, INC 948
188 * JABIL CIRCUIT, INC 16,779
851 * JDS UNIPHASE CORP 234,876
144 * KEMET CORP 9,810
246 * KOMAG, INC 799
113 * KOPIN CORP 9,322
123 * L-3 COMMUNICATIONS HOLDINGS, INC 5,481
67 * LASERSIGHT, INC 623
171 * LATTICE SEMICONDUCTOR CORP 13,519
576 LINEAR TECHNOLOGY CO 58,500
74 * LITTLEFUSE, INC 2,654
38 LSI INDUSTRIES, INC 598
1,120 * LSI LOGIC CORP 98,840
91 * MAGNETEK, INC 773
15 * MAKER COMMUNICATIONS, INC 867
929 * MAXIM INTEGRATED PRODUCTS 65,146
36 * MAXWELL TECHNOLOGIES, INC 573
318 MAYTAG CO 8,784
125 * MEMC ELECTRONIC MATERIALS, INC 2,367
136 METHODE ELECTRONICS, INC (CLASS A) 7,752
57 * METRICOM, INC 4,225
108 * MICREL, INC 13,020
288 * MICROCHIP TECHNOLOGY, INC 19,926
808 * MICRON TECHNOLOGY, INC 86,153
119 * MMC NETWORKS, INC 6,455
383 MOLEX, INC 24,003
16 * MOOG, INC (CLASS A) 275
2,100 MOTOROLA, INC 361,331
89 MRV COMMUNICATIONS, INC 16,420
28 NATIONAL PRESTO INDUSTRIES, INC 878
646 * NATIONAL SEMICONDUCTOR CORP 45,220
152 NATIONAL SERVICE INDUSTRIES, INC 3,201
95 * NEOMAGIC CORP 522
64 * NVIDIA CORP 7,584
243 * P-COM, INC 5,680
255 * PAIRGAIN TECHNOLOGIES, INC 4,876
35 PARK ELECTROCHEMICAL CORP 872
26 * PARKERVISION, INC 832
81 * PHOTRONICS, INC 3,483
153 * PICTURETEL CORP 1,969
62 * PLANTRONICS, INC 5,122
66 * PLEXUS CORP 4,360
49 * PLX TECHNOLOGY, INC 1,678
513 * PMC-SIERRA, INC 125,909
81 * POLYCOM, INC 9,477
83 * POWER INTEGRATIONS, INC 4,938
55 * POWER-ONE, INC 3,368
54 * POWERWAVE TECHNOLOGIES, INC 9,871
275 * QLOGIC CORP 49,173
2,381 * QUALCOMM, INC 324,113
70 * RAMBUS, INC 29,470
104 * RAYOVAC CORP 1,976
173 * READ RITE CORP 821
81 * REMEC, INC 4,374
194 * RF MICRO DEVICES, INC 32,337
287 * S3, INC 6,708
34 * SALTON, INC 1,374
240 * SANMINA CORP 30,495
92 * SAWTEK, INC 4,715
545 * SCI SYSTEMS, INC 25,070
296 SCIENTIFIC-ATLANTA, INC 40,089
47 * SCM MICROSYSTEMS, INC 5,405
122 * SDL, INC 52,116
52
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT -- (Continued)
120 * SEMTECH CORP $ 7,927
265 * SENSORMATIC ELECTRONICS CORP 5,084
22 * SILICONIX, INC 3,077
68 * SIPEX CORP 2,439
69 * SLI, INC 901
1,734 * SOLECTRON CORP 61,990
105 STEWART & STEVENSON SERVICES, INC 997
348 * SUNBEAM CORP 1,413
44 TECHNITROL, INC 2,458
104 * TEKELEC 5,011
1,268 * TELLABS, INC 72,276
57 * TERAYON COMMUNICATION SYSTEMS, INC 15,190
2,984 TEXAS INSTRUMENTS, INC 543,088
218 THOMAS & BETTS CORP 4,687
60 THOMAS INDUSTRIES, INC 1,087
190 * TITAN CORP 8,205
145 * TRANSWITCH CORP 14,654
111 * TRIQUINT SEMICONDUCTOR, INC 12,265
44 * TUT SYSTEMS, INC 2,777
170 * UCAR INTERNATIONAL, INC 2,613
117 * VARIAN SEMICONDUCTOR
EQUIPMENT ASSOCIATES, INC 7,729
70 * VICOR CORP 1,430
274 * VISHAY INTERTECHNOLOGY, INC 15,463
593 * VITESSE SEMICONDUCTOR CORP 51,924
139 * WEBLINK WIRELESS, INC 2,753
64 * WESTELL TECHNOLOGIES, INC (CLASS A) 2,496
280 * WHIRLPOOL CORP 14,017
85 * WINDMERE-DURABLE HOLDINGS, INC 1,269
31 WOODWARD GOVERNOR CO 740
170 * WORLD ACCESS, INC 4,568
1,035 * XILINX, INC 86,228
48 * YOUTHSTREAM MEDIA NETWORKS, INC 1,026
58 * ZIXIT CORP 3,215
41 * ZOMAX, INC 2,480
----------
7,271,173
----------
ENGINEERING AND MANAGEMENT SERVICES -- 0.27%
30 * AHL SERVICES, INC 330
217 * CATALYTICA, INC 2,410
65 * CELGENE CORP 10,952
27 * CHARLES RIVER ASSOCIATES, INC 772
36 * CORNELL CORRECTIONS, INC 321
32 * CORPORATE EXECUTIVE BOARD CO 1,760
221 * COVANCE, INC 2,320
38 * DATA TRANSMISSION NETWORK CORP 1,097
47 * DIAMOND TECH PARTNERS, INC (CLASS A) 4,688
606 DUN & BRADSTREET CORP 15,793
51 * ENTREMED, INC 3,746
45 * F.Y.I., INC 1,428
64 * FIRST CONSULTING GROUP, INC 1,168
307 GARTNER GROUP, INC (CLASS A) 4,317
92 * INCYTE PHARMACEUTICALS, INC 18,699
44 * INSPIRE INSURANCE SOLUTIONS, INC 156
86 * IT GROUP, INC 602
83 * JACOBS ENGINEERING GROUP, INC 2,308
30 LANDAUER, INC 545
71 * LASON, INC 615
69 * MARKETING SERVICES GROUP 1,362
43 * MAXIMUS, INC 1,588
140 * NAVIGANT CONSULTING CO 1,452
36 * NEXTERA ENTERPRISES, INC 355
68 * NFO WORLDWIDE, INC 1,207
95 * PAREXEL INTERNATIONAL CORP 866
69 * PHARMACEUTICAL PRODUCT DEVELOPMENT 1,173
55 * PROBUSINESS SERVICES, INC 1,454
135 * PROFIT RECOVERY GROUP INTERNATIONAL 2,885
133 * QUINTILES TRANSNATIONAL CORP 2,551
138 * RENAISSANCE WORLDWIDE, INC 853
1,169 SERVICEMASTER CO 13,954
65 * STAFF LEASING, INC 394
34 STONE & WEBSTER, INC 452
27 * SUPERIOR CONSULTANT HOLDINGS CORP 432
25 TEJON RANCH CO 587
92 * TELEDYNE TECHNOLOGIES, INC 856
129 * TETRA TECH, INC 3,225
48 * URS CORP 615
90 * VALENCE TECHNOLOGY, INC 3,060
38 * WACKENHUT CORRECTIONS CORP 372
417 * WHITTMAN HART, INC 20,433
48 * XCEED, INC 1,560
---------
135,713
---------
FABRICATED METAL PRODUCTS -- 0.48%
32 * ALLIANT TECHSYSTEMS, INC 1,718
25 * ALLTRISTA CORP 576
114 BALL CORP 3,241
64 BARNES GROUP, INC 808
20 BUTLER MANUFACTURING CO 518
61 CHART INDUSTRIES, INC 224
226 CRANE CO 4,477
487 CROWN CORK & SEAL CO, INC 6,635
4,039 GILLETTE CO 120,917
115 * GRIFFON CORP 955
151 HARSCO CORP 3,944
175 MARK IV INDUSTRIES, INC 3,554
1,669 MASCO CORP 30,667
114 * METALS U.S.A., INC 869
69 * NCI BUILDING SYSTEMS, INC 1,203
36 * NORTEK, INC 756
422 PARKER-HANNIFIN CORP 14,981
16 * PITT-DES MOINES, INC 357
33 PRIMEX TECHNOLOGIES, INC 684
580 ROCKWELL INTERNATIONAL CORP 22,765
41 * SILGAN HOLDINGS, INC 543
31 * SIMPSON MANUFACTURING CO, INC 1,375
220 SNAP-ON, INC 5,348
48 * SPS TECHNOLOGIES, INC 1,599
260 STANLEY WORKS CO 6,305
73 STRUM, RUGER & CO, INC 679
151 * TOWER AUTOMOTIVE, INC 2,019
35 * U.S. CAN CORP 455
66 VALMONT INDUSTRIES 990
63 WATTS INDUSTRIES, INC (CLASS A) 878
---------
240,040
---------
FISHING, HUNTING, AND TRAPPING -- 0.00%
51 * ZAPATA CORP 296
---------
FOOD AND KINDRED PRODUCTS -- 2.35%
39 * AGRIBRANDS INTERNATIONAL, INC 1,430
69 * AMERICAN ITALIAN PASTA CO (CLASS A) 1,250
53
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
FOOD AND KINDRED PRODUCTS -- (Continued)
1,752 ANHEUSER BUSCH COS, INC $ 99,426
2,291 ARCHER DANIELS MIDLAND CO 21,907
66 * AURORA FOODS, INC 297
69 * BERINGER WINE ESTATES
HOLDINGS, INC (CLASS B) 2,285
1,050 BESTFOODS, INC 40,490
188 BROWN FORMAN, INC (CLASS B) 8,025
23 * BUSH BOAKE ALLEN, INC 644
1,244 CAMPBELL SOUP CO 35,998
61 * CANANDAIGUA BRANDS, INC (CLASS A) 2,619
157 CHIQUITA BRANDS INTERNATIONAL, INC 667
8,591 COCA COLA CO 383,910
901 COCA COLA ENTERPRISES, INC 18,921
1,843 CONAGRA, INC 28,796
134 COORS (ADOLPH) CO (CLASS B) 5,343
140 * CORN PRODUCTS INTERNATIONAL, INC 3,272
147 DEAN FOODS CO 3,629
196 * DEL MONTE FOODS CO 1,972
176 DOLE FOOD, INC 2,420
52 DREYERS GRAND ICE CREAM, INC 988
160 EARTHGRAINS CO 2,200
377 FLOWERS INDUSTRIES, INC 4,618
618 FORTUNE BRANDS, INC 13,750
1,148 GENERAL MILLS, INC 36,018
68 * HAIN FOOD GROUP, INC 1,865
1,348 HEINZ (H.J.) CO 45,410
360 HERSHEY FOODS CORP 14,400
303 HORMEL FOODS CORP 4,431
276 IBP, INC 3,243
119 IMPERIAL SUGAR CO 238
92 * INTERNATIONAL HOME FOODS, INC 1,460
152 INTERSTATE BAKERIES CORP 1,995
23 * J & J SNACK FOODS CORP 444
76 * KEEBLER FOODS CO 1,890
826 KELLOGG CO 18,946
129 LANCASTER COLONY CORP 3,595
91 LANCE, INC 995
261 MCCORMICK & CO, INC (NON-VOTE) 6,900
54 MICHAEL FOODS, INC 1,201
1,228 NABISCO GROUP HOLDINGS 10,745
192 NABISCO HOLDINGS CORP (CLASS A) 5,400
376 PEPSI BOTTLING GROUP, INC 7,449
5,481 PEPSICO, INC 168,198
61 PILGRIMS PRIDE CORP (CLASS B) 404
450 QUAKER OATS CO 21,009
108 * RALCORP HOLDINGS, INC 1,613
1,218 RALSTON PURINA CO 29,764
27 RIVIANA FOODS, INC 442
32 * ROBERT MONDAVI CORP (CLASS A) 1,086
22 * SANDERSON FARMS, INC 181
3,325 SARA LEE CORP 48,420
171 * SMITHFIELD FOODS, INC 2,736
97 SMUCKER, (J.M.) CO (CLASS A) 1,618
117 * SUIZA FOODS CORP 4,526
126 TOOTSIE ROLL INDUSTRIES, INC 3,567
61 * TRIARC COS, INC 1,220
472 TYSON FOODS, INC 4,425
177 UNIVERSAL FOODS CORP 3,031
107 * VLASIC FOODS INTERNATIONAL, INC 240
532 WHITMAN CORP 5,985
292 * WRIGLEY (WM) JR CO 18,031
----------
1,167,978
----------
FOOD STORES -- 0.41%
439 * 7-ELEVEN, INC 1,536
1,595 ALBERTSONS, INC 38,280
454 DELHAIZE AMERICA, INC (CLASS B) 7,491
113 * GRAND UNION CO 427
65 * GREAT ATLANTIC & PACIFIC TEA CO, INC 1,324
118 HANNAFORD BROTHERS, INC 8,333
36 * INGLES MARKETS, INC (CLASS A) 355
3,123 * KROGER CO 46,064
114 RUDDICK CORP 1,268
1,799 * SAFEWAY, INC 63,077
588 * STARBUCKS CORP 20,947
59 WEIS MARKETS, INC 2,050
99 * WHOLE FOODS MARKET, INC 3,990
63 * WILD OATS MARKETS, INC 1,118
337 WINN DIXIE STORES, INC 5,286
----------
201,546
----------
FORESTRY -- 0.02%
325 GEORGIA-PACIFIC CORP (TIMBER GROUP) 7,332
105 RAYONIER, INC 3,885
----------
11,217
----------
FURNITURE AND FIXTURES -- 0.14%
46 BASSETT FURNITURE INDUSTRIES, INC 661
34 BUSH INDUSTRIES, INC (CLASS A) 471
154 ETHAN ALLEN INTERIORS, INC 3,493
177 * FURNITURE BRANDS INTERNATIONAL, INC 2,832
227 HON INDUSTRIES, INC 3,632
120 KIMBALL INTERNATIONAL, INC (CLASS B) 1,725
197 LA-Z-BOY, INC 3,028
252 * LEAR CORP 6,520
739 LEGGETT & PLATT, INC 12,563
298 MILLER (HERMAN), INC 6,146
1,062 NEWELL RUBBERMAID, INC 22,833
68 * SELECT COMFORT CORP 391
228 STEELCASE, INC 2,721
338 U.S. INDUSTRIES, INC 3,823
21 VIRCO MANUFACTURING 252
----------
71,091
----------
FURNITURE AND HOMEFURNISHING STORES -- 0.26%
435 * BED BATH & BEYOND, INC 10,276
629 * BEST BUY, INC 39,273
137 * BOMBAY, INC 505
59 * CDNOW, INC 556
764 CIRCUIT CITY STORES-CIRCUIT CITY GROUP 32,661
19 * CREATIVE COMPUTERS, INC 266
55 * CYBERIAN OUTPOST, INC 563
21 * ELECTRONICS BOUTIQUE HOLDINGS CORP 363
83 * GUITAR CENTER, INC 767
68 HAVERTY FURNITURE COS, INC 709
228 HEILIG MEYERS CO 669
107 * INTERTAN, INC 1,370
149 * LINENS 'N THINGS, INC 3,156
114 * MUSICLAND STORES CORP 790
364 PIER 1 IMPORTS, INC 3,025
54
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
FURNITURE AND HOMEFURNISHING STORES -- (Continued)
51 * RESTORATION HARDWARE, INC $ 315
728 TANDY CORP 29,029
122 * TRANS WORLD ENTERTAINMENT CORP 1,265
40 * TWEETER HOME ENTERTAINMENT GROUP, INC 1,010
38 * VALUE AMERICA, INC 231
164 * WILLIAMS-SONOMA, INC 3,710
--------
130,509
--------
GENERAL BUILDING CONTRACTORS -- 0.06%
116 * BLOUNT INTERNATIONAL, INC 1,479
223 CENTEX CORP 4,041
27 * CROSSMAN COMMUNITIES, INC 428
181 HILLENBRAND INDUSTRIES, INC 5,407
190 HORTON (D.R.), INC 2,196
180 KAUFMAN & BROAD HOME CORP 3,228
176 LENNAR CORP 2,970
84 MDC HOLDINGS, INC 1,228
38 * NVR, INC 1,695
121 PULTE CORP 1,920
54 RYLAND GROUP, INC 924
95 STANDARD-PACIFIC CORP 932
78 * TOLL BROTHERS, INC 1,345
48 * U.S. HOME CORP 1,671
159 WALTER INDUSTRIES, INC 1,311
57 * WEBB (DEL) CORP 798
--------
31,573
--------
GENERAL MERCHANDISE STORES -- 1.84%
45 * 99 CENTS ONLY STORES 1,448
110 * AMES DEPARTMENT STORES, INC 1,938
262 * BJS WHOLESALE CLUB, INC 7,745
199 CASEYS GENERAL STORES, INC 1,691
415 * CONSOLIDATED STORES CORP 4,720
77 * COST PLUS, INC 1,549
1,654 * COSTCO WHOLESALE CORP 72,982
389 DILLARDS, INC (CLASS A) 5,567
524 DOLLAR GENERAL CORP 10,414
234 * DOLLAR TREE STORES, INC 9,374
47 * FACTORY 2-U STORES, INC 1,401
549 FAMILY DOLLAR STORES, INC 8,852
790 * FEDERATED DEPARTMENT STORES, INC 27,896
194 HARCOURT GENERAL, INC 6,753
126 * HOMEBASE, INC 338
1,864 * K MART CORP 16,310
555 * KOHLS CORP 46,134
1,249 MAY DEPARTMENT STORES CO 31,225
166 * NEIMAN MARCUS GROUP, INC (CLASS A) 3,600
872 PENNEY, (J.C.) CO, INC 12,153
545 * SAKS, INC 7,119
1,285 SEARS ROEBUCK & CO 35,658
114 * SHOPKO STORES, INC 2,023
1,659 * TARGET CORP 100,887
29 * TUESDAY MORNING CORP 335
54 * VALUE CITY DEPARTMENT STORES, INC 776
518 * VENATOR GROUP, INC 3,626
10,246 WAL-MART STORES, INC 491,167
--------
913,681
--------
HEALTH SERVICES -- 0.30%
18 * ACCREDO HEALTH, INC 526
71 * ADVANCE PARADIGM, INC 825
83 * ALTERRA HEALTHCARE CORP 482
65 * AMERICAN RETIREMENT CORP 528
81 * AMERIPATH, INC 804
37 * APPLIED ANALYTICAL INDUSTRIES, INC 413
196 * APRIA HEALTHCARE GROUP, INC 2,572
354 * BEVERLY ENTERPRISES, INC 1,172
37 * CAREMATRIX CORP 63
2,045 COLUMBIA/HCA HEALTHCARE CORP 42,817
223 * COVENTRY HEALTH CARE, INC 1,728
83 * ENZO BIOCHEMICAL, INC 7,184
79 * EXPRESS SCRIPTS, INC 2,686
954 * HEALTH MANAGEMENT ASSOCIATES, INC
(CLASS A) NEW 11,328
1,454 * HEALTHSOUTH CORP 7,360
109 HOOPER HOLMES, INC 3,706
30 * IMPATH, INC 1,156
246 * LABORATORY CORP OF AMERICA HOLDINGS 984
95 * LASER VISION CENTERS, INC 837
110 * LCA-VISION, INC 632
117 * LIFEPOINT HOSPITALS, INC 1,806
145 * LINCARE HOLDINGS, INC 3,153
120 * MAGELLAN HEALTH SERVICES, INC 712
271 * MANOR CARE, INC 3,590
138 * MATRIA HEALTHCARE, INC 845
152 * ORTHODONTIC CENTERS OF AMERICA, INC 3,021
59 * PEDIATRIX MEDICAL GROUP, INC 472
277 * PHYCOR, INC 424
46 * PROVINCE HEALTHCARE CO 977
152 * QUEST DIAGNOSTICS, INC 5,595
266 * QUORUM HEALTH GROUP, INC 2,352
168 * RENAL CARE GROUP, INC 3,433
54 * STANCORP FINANCIAL GROUP, INC 1,390
1,172 * TENET HEALTHCARE CORP 24,245
283 * TOTAL RENAL CARE HOLDINGS, INC 866
128 * TRIAD HOSPITALS, INC 1,888
58 * UNITED PAYORS & UNITED PROVIDERS, INC 1,544
87 * UNIVERSAL HEALTH SERVICES, INC 3,436
214 * US ONCOLOGY, INC 842
--------
148,394
--------
HEAVY CONSTRUCTION, EXCEPT BUILDING -- 0.05%
144 * DYCOM INDUSTRIES, INC 7,227
286 FLUOR CORP 7,722
153 FOSTER WHEELER CORP 841
71 GRANITE CONSTRUCTION, INC 1,819
75 * INSITUFORM TECHNOLOGIES, INC (CLASS A) 2,071
77 * MASTEC, INC 5,183
120 * MORRSION KNUDSEN CORP 840
--------
25,703
--------
HOLDING AND OTHER INVESTMENT OFFICES -- 0.74%
44 ALEXANDRIA REAL ESTATE EQUITIES, INC 1,325
279 AMB PROPERTY CORP 5,632
32 * AMERCO 548
67 AMERICAN INDUSTRIAL PROPERTIES REIT 753
55 AMLI RESIDENTIAL PROPERTIES TRUST 1,093
251 APARTMENT INVESTMENT & MANAGEMENT CO 9,318
321 ARCHSTONE COMMUNITIES TRUST 6,239
62 ASSOCIATED ESTATES REALTY CORP 577
248 AVALONBAY COMMUNITIES, INC 8,540
77 BEDFORD PROPERTY INVESTORS, INC 1,284
196 BOSTON PROPERTIES, INC 5,953
55
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
HOLDING AND OTHER INVESTMENT OFFICES -- (Continued)
64 BOYKIN LODGING CO $ 736
91 BRADLEY REAL ESTATE, INC 1,473
133 BRANDYWINE REALTY TRUST 2,111
168 BRE PROPERTIES, INC (CLASS A) 4,032
121 BURNHAM PACIFIC PROPERTIES, INC 915
151 CAMDEN PROPERTY TRUST 4,010
81 CAPITAL AUTOMOTIVE REIT 946
62 CAPSTEAD MORTGAGE CORP 228
252 CARRAMERICA REALTY CORP 5,197
85 CBL & ASSOCIATES PROPERTIES, INC 1,785
90 CENTER TRUST, INC 540
78 CENTERPOINT PROPERTIES CORP 2,686
74 CHARLES E. SMITH RESIDENTIAL REALTY 2,543
80 CHATEAU PROPERTIES, INC 1,975
59 CHELSEA GCA REALTY, INC 1,655
98 COLONIAL PROPERTIES TRUST 2,345
114 COMMERCIAL NET LEASE REALTY, INC 1,140
315 CORNERSTONE PROPERTIES, INC 5,335
147 CORNERSTONE REALTY INCOME TRUST, INC 1,414
91 COUSINS PROPERTIES, INC 3,293
403 CRESCENT REAL ESTATE EQUITIES CO 6,674
87 CROWN AMERICAN REALTY TRUST 478
225 DEVELOPERS DIVERSIFIED REALTY CORP 2,728
471 DUKE-WEEKS REALTY CORP 8,478
84 EAST WEST BANCORP, INC 971
60 EASTGROUP PROPERTIES, INC 1,192
56 ENTERTAINMENT PROPERTIES TRUST 672
140 EQUITY INNS, INC 892
950 EQUITY OFFICE PROPERTIES TRUST 23,334
476 EQUITY RESIDENTIAL PROPERTIES TRUST CO 18,742
68 ESSEX PROPERTY TRUST, INC 2,443
152 FEDERAL REALTY INVESTMENT TRUST 2,850
218 FELCOR LODGING TRUST, INC 3,651
143 FIRST INDUSTRIAL REALTY TRUST, INC 3,718
31 * FIRST WASHINGTON REALTY TRUST, INC 596
211 FRANCHISE FINANCE CORP OF AMERICA 4,971
96 GABLES RESIDENTIAL TRUST 2,076
195 GENERAL GROWTH PROPERTIES, INC 5,557
29 GETTY REALTY HOLDINGS CORP 300
117 GLENBOROUGH REALTY TRUST, INC 1,689
89 GLIMCHER REALTY TRUST 1,101
29 * GOLF TRUST OF AMERICA, INC 498
62 GREAT LAKES REIT, INC 922
188 HEALTH CARE PROPERTY INVESTORS, INC 4,606
107 HEALTH CARE REIT, INC 1,638
151 HEALTHCARE REALTY TRUST, INC 2,387
234 HIGHWOODS PROPERTIES, INC 4,840
73 HOME PROPERTIES OF NEW YORK, INC 1,884
190 HOSPITALITY PROPERTIES TRUST 3,633
494 HRPT PROPERTIES TRUST 3,828
98 IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP 1,127
269 INDYMAC MORTGAGE HOLDINGS, INC 3,950
131 INNKEEPERS U.S.A. TRUST 1,039
125 IRT PROPERTY CO 984
127 JDN REALTY CORP 1,333
48 JP REALTY, INC 846
105 KILROY REALTY CORP 2,086
179 KIMCO REALTY CORP 6,175
101 KOGER EQUITY, INC 1,685
116 KONOVER PROPERTY TRUST, INC 587
45 LASALLE HOTEL PROPERTIES 540
65 LEXINGTON CORPORATE PROPERTIES TRUST 637
252 LIBERTY PROPERTY TRUST CO 5,670
103 LTC PROPERTIES, INC 572
114 MACERICH CO (THE) 2,237
220 MACK-CALI REALTY CORP 5,115
76 MANUFACTURED HOME COMMUNITIES, INC 1,743
469 MEDITRUST CORP PAIRED 1,348
180 MERISTAR HOSPITALITY CORP 2,711
52 MGI PROPERTIES, INC 266
69 MID-AMERICA APARTMENT COMMUNITIES, INC 1,530
57 MILLS CORP 972
47 NATIONAL GOLF PROPERTIES, INC 1,001
92 NATIONAL HEALTH INVESTORS, INC 1,092
174 NATIONWIDE HEALTH PROPERTIES, INC 1,859
333 NEW PLAN EXCEL REALTY TRUST 4,453
75 OMEGA HEALTHCARE INVESTORS, INC 464
67 PACIFIC GULF PROPERTIES, INC 1,306
33 PAN PACIFIC RETAIL PROPERTIES, INC 598
38 PARKWAY PROPERTIES, INC 1,035
45 PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 725
146 POST PROPERTIES, INC 5,438
142 PRENTISS PROPERTIES TRUST 2,866
34 PRIME GROUP REALTY TRUST 469
163 PRIME RETAIL, INC 529
446 PRISON REALTY TRUST, INC 1,923
340 PROLOGIS TRUST 6,205
89 PS BUSINESS PARKS, INC 1,902
322 PUBLIC STORAGE, INC 6,762
101 REALTY INCOME CORP 2,089
152 RECKSON ASSOCIATES REALTY CORP 2,698
28 REDWOOD TRUST, INC 364
133 REGENCY REALTY CORP 2,618
94 RFS HOTEL INVESTORS, INC 963
271 ROUSE CO 5,691
40 SAUL CENTERS, INC 577
98 SENIOR HOUSING PROPERTIES TRUST 826
109 SHURGARD STORAGE CENTERS, INC 2,622
477 SIMON PROPERTY GROUP, INC 10,971
81 SL GREEN REALTY CORP 1,782
47 SOVRAN SELF STORAGE, INC 878
231 SPIEKER PROPERTIES, INC 9,442
324 STARWOOD FINANCIAL TRUST 5,568
106 STORAGE U.S.A., INC 3,193
86 SUMMIT PROPERTIES, INC 1,639
66 SUN COMMUNITIES, INC 1,914
20 TANGER FACTORY OUTLET CENTERS, INC 377
130 TAUBMAN CENTERS, INC 1,405
48 * TELESCAN, INC 1,149
81 THORNBURG MORTGAGE ASSET CORP 582
59 TOWN & COUNTRY TRUST 973
51 * U.S. FRANCHISE SYSTEMS, INC (CLASS A) 331
58 U.S. RESTAURANT PROPERTIES, INC 750
388 UNITED DOMINION REALTY TRUST, INC 3,807
38 URBAN SHOPPING CENTERS, INC 1,056
205 VENTAS, INC 653
324 VORNADO REALTY TRUST 9,882
134 WASHINGTON REAL ESTATE INVESTMENT TRUST 2,026
56
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
HOLDING AND OTHER INVESTMENT OFFICES -- (Continued)
101 WEINGARTEN REALTY INVESTORS, INC $ 3,610
77 * WELLSFORD REAL PROPERTIES, INC 596
65 WESTERN PROPERTIES TRUST 617
109 WESTFIELD AMERICA, INC 1,485
----------
367,884
----------
HOTELS AND OTHER LODGING PLACES -- 0.10%
150 * AZTAR CORP 1,565
207 * CHOICE HOTELS INTERNATIONAL, INC 3,389
70 * CRESTLINE CAPITAL CORP 1,155
269 * EXTENDED STAY AMERICA, INC 1,883
1,142 HILTON HOTELS CORP 7,565
90 * LODGIAN, INC 331
267 * MANDALAY RESORT GROUP 3,571
85 MARCUS CORP 759
86 * MGM GRAND, INC 1,736
988 * PARK PLACE ENTERTAINMENT CORP 10,250
184 * PRIME HOSPITALITY CORP 1,426
712 STARWOOD HOTELS & RESORTS WORLDWIDE 14,907
136 * SUNTERRA CORP 382
14 * TRENDWEST RESORTS, INC 317
84 * VAIL RESORTS, INC 1,459
509 * WYNDHAM INTERNATIONAL, INC 986
----------
51,681
----------
INDUSTRIAL MACHINERY AND EQUIPMENT -- 10.62%
1,299 * 3COM CORP 89,549
78 * 3DFX INTERACTIVE, INC 979
36 * A.S.V., INC 596
84 * ADAPTEC, INC 3,722
76 * ADVANCED DIGITAL INFORMATION CORP 6,849
224 AGCO CORP 2,324
266 * AMERICAN STANDARD COS, INC 9,492
69 * APEX, INC 3,010
506 * APPLE COMPUTER, INC 275,114
147 APPLIED POWER, INC (CLASS A) 3,757
55 * ASTEC INDUSTRIES, INC 1,381
113 * ASYST TECHNOLOGIES, INC 6,667
76 * ATMI, INC 4,279
104 * AUSPEX SYSTEMS, INC 1,573
1,111 BAKER HUGHES, INC 30,274
56 * BELL & HOWELL CO 1,792
327 BLACK & DECKER CORP 10,443
72 * BLACK BOX CORP 5,224
42 * BROOKS AUTOMATION, INC 3,108
346 BRUNSWICK CORP 5,384
153 * C-CUBE MICROSYSTEMS, INC 14,994
600 * CABLETRON SYSTEMS, INC 28,762
1,335 CATERPILLAR, INC 47,642
247 * CIRRUS LOGIC, INC 5,403
12,882 * CISCO SYSTEMS, INC 1,756,782
70 * CMI CORP 341
47 * COLUMBUS MCKINNON CORP 652
6,401 COMPAQ COMPUTER CORP 182,428
195 * CONCURRENT COMPUTER CORP 3,802
202 * COOPER CAMERON CORP 12,852
158 CUMMINS ENGINE CO, INC 5,056
61 * CUNO, INC 1,650
59 * CYBEX COMPUTER PRODUCTS CORP 2,371
880 DEERE & CO 31,240
7,939 * DELL COMPUTER CORP 406,873
32 DETROIT DIESEL CORP 550
267 DIEBOLD, INC 6,491
152 DONALDSON CO, INC 3,581
767 DOVER CORP 32,022
35 * DRIL-QUIP, INC 1,389
32 * EFAX.COM 210
75 * ELECTROGLAS, INC 3,121
3,831 * EMC CORP 499,706
123 * EMULEX CORP 26,506
65 * ESTERLINE CORP 637
81 * ETEC SYSTEMS, INC 10,059
86 * EXTREME NETWORKS, INC 9,637
113 FEDDERS CORP 593
141 FLOWSERVE CORP 1,603
93 * FSI INTERNATIONAL, INC 2,127
48 * GARDNER DENVER, INC 828
566 * GATEWAY, INC 35,375
22 GENERAL BINDING CORP 159
25 * GLOBAL IMAGING SYSTEMS, INC 195
55 GRACO, INC 1,629
2,600 HEWLETT-PACKARD CO 381,550
192 HUSSMANN INTERNATIONAL, INC 2,436
46 * HYPERCOM CORP 750
112 IDEX CORP 2,863
85 * IN FOCUS SYSTEMS, INC 2,672
616 INGERSOLL-RAND CO 22,176
6,789 * INTERNATIONAL BUSINESS MACHINES CORP 713,269
1,016 * IOMEGA CORP 4,000
61 * IONICS, INC 1,509
61 * IRI INTERNATIONAL CORP 366
166 JLG INDUSTRIES, INC 1,286
116 KAYDON CORP 2,726
106 KENNAMETAL, INC 2,590
44 * KRONOS, INC 2,112
89 * KULICHE & SOFFA INDUSTRIES, INC 7,375
149 * LAM RESEARCH CORP 24,203
481 * LEXMARK INTERNATIONAL GROUP (CLASS A) 62,109
141 LINCOLN ELECTRIC HOLDINGS CO 2,608
47 LINDSAY MANUFACTURING CO 696
98 MANITOWOC, INC 2,560
257 * MAXTOR CORP 2,987
77 * MERCURY COMPUTER SYSTEMS, INC 3,821
11 * MESTEK, INC 180
132 * MICRON ELECTRONICS, INC 2,541
62 * MICROS SYSTEMS, INC 3,258
139 MILACRON, INC 1,919
44 * MIPS TECHNOLOGIES, INC 3,245
115 * MTI TECHNOLOGY CORP 5,850
24 NACCO INDUSTRIES, INC (CLASS A) 1,011
91 * NATIONAL INSTRUMENTS CORP 4,248
81 * NETWORK EQUIPMENT TECHNOLOGIES, INC 870
53 NORDSON CORP 2,357
440 * NOVELLUS SYSTEMS, INC 30,772
467 PALL CORP 10,186
161 PENTAIR, INC 5,987
999 PITNEY BOWES, INC 46,078
103 * PRESSTEK, INC 2,472
75 * PRI AUTOMATION, INC 6,571
57
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY AND EQUIPMENT -- (Continued)
45 * PROXIM, INC $ 7,335
620 * QUANTUM CORP -DLT & STORAGE SYSTEM GROUP 7,478
315 * QUANTUM CORP -HARD DISK DRIVE GROUP 2,795
30 ROBBINS & MYERS, INC 592
114 ROPER INDUSTRIES, INC 3,626
184 * SANDISK CORP 23,149
45 SAUER, INC 382
784 * SEAGATE TECHNOLOGY, INC 50,372
692 * SILICON GRAPHICS, INC 8,520
126 * SILICON VALLEY GROUP, INC 3,504
184 * SMITH INTERNATIONAL, INC 11,868
46 * SPECIALTY EQUIPMENT COS, INC 885
93 * SPEEDFAM-IPEC, INC 2,574
44 STANDEX INTERNATIONAL CORP 660
25 STARRETT (L.S.) CO (CLASS A) 543
351 * STORAGE TECHNOLOGY CORP 4,212
333 SYMBOL TECHNOLOGIES, INC 32,946
67 TECUMSEH PRODUCTS CO (CLASS A) 3,086
34 TENNANT CO 1,075
128 * TENNECO AUTOMOTIVE, INC 944
93 * TEREX CORP 1,110
23 * THERMO FIBERTEK, INC 161
190 TIMKEN CO 2,850
43 TORO CO 1,338
81 * ULTRATECH STEPPER, INC 1,382
1,167 * UNISYS CORP 31,436
160 * UNOVA, INC 2,070
230 * VARCO INTERNATIONAL, INC 2,975
93 * VISUAL NETWORKS, INC 7,707
486 * WESTERN DIGITAL CORP 2,521
100 * XIRCOM, INC 4,550
147 YORK INTERNATIONAL CORP 2,912
92 * ZEBRA TECHNOLOGY CORP 5,790
----------
5,273,969
----------
INSTRUMENTS AND RELATED PRODUCTS -- 2.36%
77 * ACUSON CORP 972
65 * AFFYMETRIX, INC 16,745
47 * ALARIS MEDICAL, INC 102
42 * ANACOMP, INC 761
23 ANALOGIC CORP 1,150
43 ARROW INTERNATIONAL, INC 1,588
84 * AVID TECHNOLOGIES, INC 2,058
18 * BACOU U.S.A., INC 270
193 BARD (C.R.), INC 7,104
205 BAUSCH & LOMB, INC 10,724
1,095 BAXTER INTERNATIONAL, INC 61,388
102 BECKMAN COULTER, INC 5,316
943 BECTON DICKINSON & CO 30,176
32 * BIO-RAD LABORATORIES, INC (CLASS A) 944
378 BIOMET, INC 11,765
1,026 * BOSTON SCIENTIFIC CORP 21,738
38 * BRITESMILE, INC 384
24 * CLOSURE MEDICAL CORP 553
131 * COGNEX CORP 7,147
93 * COHERENT, INC 7,719
75 COHU, INC 4,303
58 * CONMED CORP 1,620
52 COOPER COS, INC 1,335
81 * CREDENCE SYSTEMS CORP 11,248
20 CUBIC CORP 460
67 * CYBERONICS, INC 1,507
106 * CYMER, INC 6,148
136 * CYTYC CORP 7,735
46 DATASCOPE CORP 1,653
169 DENTSPLY INTERNATIONAL, INC 4,277
83 DIONEX CORP 2,671
1,188 * EASTMAN KODAK CO 64,152
71 * ECLIPSE SURGICAL TECHNOLOGY, INC 687
53 * FOSSIL, INC 1,053
101 * GENRAD, INC 1,546
36 * GLIATECH, INC 801
1,138 * GUIDANT CORP 80,726
97 * HAEMONETICS CORP 2,303
72 * HANGER ORTHOPEDIC GROUP, INC 355
170 INPUT/OUTPUT, INC 1,041
90 * INVACARE CORP 2,143
321 JOHNSON CONTROLS, INC 15,608
677 * KLA-TENCOR CORP 61,691
123 * LITTON INDUSTRIES, INC 3,536
160 * LTX CORP 7,940
29 * MECHANICAL TECHNOLOGY, INC 2,610
132 * MEDICAL MANAGER CORP 8,175
4,419 MEDTRONIC, INC 225,921
78 * MENTOR CORP 2,291
145 * METTLER-TOLEDO INTERNATIONAL, INC 5,437
170 MILLIPORE CORP 10,486
12 MINE SAFETY APPLIANCE CO 744
78 * MINIMED, INC 9,477
25 * MKS INSTRUMENTS INC 1,537
36 * MOLECULAR DEVICES CORP 3,609
34 MOVADO GROUP, INC 592
79 MTS SYSTEMS CORP 614
53 * NOVOSTE CORP 2,033
109 * OAKLEY, INC 981
59 * OCULAR SCIENCES, INC 1,010
53 * OSTEOTECH, INC 838
197 * PE CORP-CELERA GENOMICS GROUP 39,830
781 PE CORP-PE BIOSYSTEMS GROUP 89,766
174 PERKINELMER, INC 12,625
73 * PINNACLE SYSTEMS, INC 4,448
168 POLAROID CORP 4,746
1,274 RAYTHEON CO (CLASS B) 22,613
56 * RESMED, INC 4,200
124 * RESPIRONICS, INC 1,922
55 * SCOTT TECHNOLOGIES, INC 962
94 * SOLA INTERNATIONAL, INC 540
317 * ST. JUDE MEDICAL, INC 8,083
254 * STERIS CORP 2,603
269 STRYKER CORP 14,341
176 * SUMMIT TECHNOLOGY, INC 1,584
84 * SUNRISE MEDICAL, INC 362
174 * SUNRISE TECHNOLOGY INTERNATIONAL, INC 1,315
392 * SYBRON INTERNATIONAL CORP 10,118
167 TEKTRONIX, INC 11,262
143 TELEFLEX, INC 4,111
644 * TERADYNE, INC 57,960
67 * THERMEDICS, INC 732
7 * THERMO BIOANALYSIS CORP 192
59 * THERMO CARDIOSYSTEMS, INC 885
58
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
INSTRUMENTS AND RELATED PRODUCTS -- (Continued)
596 * THERMO ELECTRON CORP $ 15,384
74 * THERMO INSTRUMENT SYSTEMS, INC 1,692
15 * THERMO OPTEK CORP 221
23 * THERMOQUEST CORP 385
32 * TREX MEDICAL CORP 144
80 * TRIMBLE NAVIGATION LTD 2,360
115 * VARIAN MEDICAL SYSTEMS, INC 5,060
117 * VARIAN, INC 5,038
37 * VEECO INSTRUMENTS, INC 3,700
51 * VENTANA MEDICAL SYSTEMS, INC 2,658
213 * VISX, INC 3,434
24 VITAL SIGNS, INC 540
234 * WATERS CORP 23,707
66 * WESLEY JESSEN VISIONCARE, INC 1,703
2,501 XEROX CORP 60,649
----------
1,173,373
----------
INSURANCE AGENTS, BROKERS AND SERVICE -- 0.18%
50 * BALDWIN & LYONS, INC (CLASS B) 825
50 BLANCH (E.W.) HOLDINGS, INC 2,518
40 BROWN & BROWN, INC 1,320
137 CRAWFORD & CO (CLASS B) 1,763
185 * FIRST HEALTH GROUP CORP 4,786
69 GALLAGHER (ARTHUR J.) & CO 3,290
49 HILB, ROGAL & HAMILTON CO 1,356
1,005 MARSH & MCLENNAN COS, INC 74,935
---------
90,793
---------
INSURANCE CARRIERS -- 3.46%
328 21ST CENTURY INSURANCE GROUP 5,514
44 * ACCEPTANCE INSURANCE COS, INC 176
564 AETNA, INC 31,584
1,001 AFLAC, INC 35,160
149 ALFA CORP 2,393
18 * ALLEGHANY CORP (DELAWARE) 3,321
204 ALLMERICA FINANCIAL CORP 7,395
3,033 ALLSTATE CORP 54,404
263 AMBAC FINANCIAL GROUP, INC 10,914
30 AMERICAN ANNUITY GROUP, INC 459
143 AMERICAN FINANCIAL GROUP, INC 2,904
938 AMERICAN GENERAL CORP 44,320
4,885 AMERICAN INTERNATIONAL GROUP, INC 405,760
39 AMERICAN NATIONAL INSURANCE CO 2,086
57 AMERUS LIFE HOLDINGS, INC (CLASS A) 997
849 AON CORP 18,306
63 ARGONAUT GROUP, INC 1,134
700 AXA FINANCIAL, INC 19,162
64 BERKLEY (W.R.) CORP 960
53 CHICAGO TITLE CORP 2,742
663 CHUBB CORP 30,042
700 CIGNA CORP 44,625
579 CINCINNATI FINANCIAL CORP 15,560
12,717 CITIGROUP, INC 622,338
65 * CNA FINANCIAL CORP 1,694
62 CNA SURETY CORP 682
96 COMMERCE GROUP, INC 2,868
1,231 CONSECO, INC 15,310
57 DELPHI FINANCIAL GROUP, INC 1,457
102 ENHANCE FINANCIAL SERVICES GROUP, INC 1,204
246 ERIE INDEMNITY CO (CLASS A) 7,472
21 FARM FAMILY HOLDINGS, INC 695
89 FIDELITY NATIONAL FINANCIAL, INC 1,362
73 FINANCIAL SECURITY ASSURANCE HOLDINGS LTD 3,859
210 FIRST AMERICAN FINANCIAL CORP 2,270
374 * FOUNDATION HEALTH SYSTEMS (CLASS A) 3,085
37 * FPIC INSURANCE GROUP, INC 592
219 FREMONT GENERAL CORP 1,245
114 FRONTIER INSURANCE GROUP, INC 228
50 HARLEYSVILLE GROUP, INC 631
834 HARTFORD FINANCIAL SERVICES GROUP, INC 25,437
98 HARTFORD LIFE, INC (CLASS A) 2,976
151 HCC INSURANCE HOLDINGS, INC 1,840
37 * HEALTHAXIS, INC 666
154 HORACE MANN EDUCATORS CORP 2,040
110 HSB GROUP, INC 2,481
596 * HUMANA, INC 3,836
394 JEFFERSON-PILOT CORP 20,094
26 KANSAS CITY LIFE INSURANCE CO 656
53 LANDAMERICA FINANCIAL GROUP, INC 1,053
61 LIBERTY CORP 2,028
50 LIBERTY FINANCIAL COS, INC 971
736 LINCOLN NATIONAL CORP 18,446
276 LOEWS CORP 11,057
16 * MARKEL CORP 1,856
375 MBIA, INC 14,742
89 * MEDICAL ASSURANCE, INC 1,529
101 MERCURY GENERAL CORP 2,222
398 MGIC INVESTMENT CORP 13,258
171 * MID ATLANTIC MEDICAL SERVICES, INC 1,624
17 MIDLAND CO 393
68 MMI COS, INC 663
178 MONY GROUP, INC 4,817
8 * NATIONAL WESTERN LIFE INSURANCE CO 576
90 NATIONWIDE FINANCIAL SERVICES, INC (CLASS A) 1,884
226 OHIO CASUALTY CORP 2,627
475 OLD REPUBLIC INTERNATIONAL CORP 5,284
7 * OXFORD HEALTH PLANS, INC 102
141 * PACIFICARE HEALTH SYSTEMS, INC (CLASS A) 6,697
22 * PENN TREATY AMERICAN CORP 299
32 * PHILADELPHIA CONSOLIDATED HOLDINGS CORP 466
38 * PICO HOLDINGS, INC 425
66 PMA CAPITAL CORP (CLASS A) 1,146
114 PMI GROUP, INC 3,868
88 PRESIDENTIAL LIFE CORP 1,149
34 * PROFESSIONALS GROUP, INC 633
200 PROGRESSIVE CORP 9,950
194 PROTECTIVE LIFE CORP 4,219
137 RADIAN GROUP, INC 4,949
72 REINSURANCE GROUP OF AMERICA, INC 1,233
240 RELIANCE GROUP HOLDINGS, INC 825
316 RELIASTAR FINANCIAL CORP 8,018
33 * RISK CAPITAL HOLDINGS, INC 492
30 RLI CORP 800
490 SAFECO CORP 9,095
45 SCPIE HOLDINGS, INC 1,350
103 SELECTIVE INSURANCE GROUP, INC 1,590
101 * SIERRA HEALTH SERVICES, INC 599
849 ST. PAUL COS, INC 19,527
52 * STATE AUTO FINANCIAL CORP 409
44 STEWART INFORMATION SERVICES CORP 599
59
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
INSURANCE CARRIERS -- (Continued)
495 TORCHMARK CORP $ 9,466
67 TRANSATLANTIC HOLDINGS, INC 4,631
237 TRAVELERS PROPERTY CASUALTY CORP 7,154
38 TRENWICK GROUP, INC 486
50 * TRIAD GUARANTY, INC 796
148 * TRIGON HEALTHCARE, INC 4,393
143 * UICI 947
26 * UNITED FIRE & CASULTY CO 468
570 UNITED HEALTHCARE CORP 28,998
183 UNITRIN, INC 6,033
787 UNUMPROVIDENT CORP 9,689
240 * WELLPOINT HEALTH NETWORKS, INC 14,085
36 ZENITH NATIONAL INSURANCE CORP 735
----------
1,718,287
----------
LEATHER AND LEATHER PRODUCTS -- 0.01%
69 BROWN SHOE CO, INC 793
19 * GLOBAL SPORTS, INC 394
62 JUSTIN INDUSTRIES, INC 1,069
24 * K-SWISS, INC (CLASS A) 256
173 STRIDE RITE CORP 1,005
37 * TIMBERLAND CO 1,780
155 WOLVERINE WORLD WIDE, INC 1,666
---------
6,963
---------
LEGAL SERVICES -- 0.00%
73 * PREPAID LEGAL SERVICES, INC 2,080
---------
LOCAL AND INTERURBAN PASSENGER TRANSIT -- 0.00%
36 * CAREY INTERNATIONAL, INC 603
---------
LUMBER AND WOOD PRODUCTS -- 0.17%
18 * AMERICAN WOODMARK CORP 310
153 * CHAMPION ENTERPRISES, INC 841
403 CLAYTON HOMES, INC 3,400
47 DELTIC TIMBER CORP 1,028
644 GEORGIA-PACIFIC CORP (PACKING GROUP) 22,982
401 LOUISIANA PACIFIC CORP 4,586
177 OAKWOOD HOMES CORP 464
69 PALM HARBOR HOMES, INC 875
34 SKYLINE CORP 686
55 UNIVERSAL FOREST PRODUCTS, INC 622
887 WEYERHAEUSER CO 48,286
---------
84,080
---------
METAL MINING -- 0.10%
493 * BATTLE MOUNTAIN GOLD CO 1,016
42 CLEVELAND CLIFFS, INC 984
526 * FREEPORT-MCMORAN COPPER & GOLD,
INC (CLASS B) 6,870
877 HOMESTAKE MINING CO 5,590
631 NEWMONT MINING CORP 14,670
282 PHELPS DODGE CORP 13,518
95 SOUTHERN PERU COPPER CORP 1,306
142 * STILLWATER MINING CO 6,248
---------
50,202
---------
MISCELLANEOUS MANUFACTURING INDUSTRIES -- 0.35%
131 * BLYTH INDUSTRIES, INC 2,922
79 BRADY CORP (CLASS A) 2,133
286 CALLAWAY GOLF CO 3,753
33 DIRECT FOCUS, INC 874
730 HASBRO, INC 10,448
56 * HEXCEL CORP 273
86 * IDENTIX, INC 1,935
298 INTERNATIONAL GAME TECHNOLOGY CO 5,773
57 * JAKKS PACIFIC, INC 933
126 JOSTENS, INC 3,016
59 * LYDALL, INC 416
30 * MARVEL ENTERPRISES 168
1,582 MATTEL, INC 14,238
1,519 MINNESOTA MINING & MANUFACTURING CO 123,798
52 ONEIDA LTD 815
44 * RACING CHAMPIONS CORP 162
39 RUSS BERRIE & CO, INC 653
33 * STEINWAY MUSICAL INSTRUMENTS, INC 594
86 * WMS INDUSTRIES, INC 989
---------
173,893
---------
MISCELLANEOUS REPAIR SERVICES -- 0.00%
124 * ENCOMPASS SERVICES CORP 813
---------
MISCELLANEOUS RETAIL -- 0.64%
667 * AMAZON.COM, INC 44,605
203 * BARNES & NOBLE, INC 3,565
110 * BARNESANDNOBLE.COM, INC 990
294 * BORDERS GROUP, INC 4,189
96 CASH AMERICA INTERNATIONAL, INC 1,200
92 * CDW COMPUTER CENTERS, INC 5,870
10 * COLDWATER CREEK, INC 168
1,475 CVS CORP 44,895
28 * DELIA*S, INC 171
65 * DUANE READE, INC 1,430
63 * E4L, INC 137
83 * EGGHEAD.COM, INC 804
51 ENESCO GROUP, INC 344
37 * ETOYS, INC 483
12 * FATBRAIN.COM, INC 190
448 * HANOVER DIRECT, INC 1,176
77 * INSIGHT ENTERPRISES, INC 2,338
18 * ITURF, INC 204
61 * JO-ANN STORES, INC (CLASS A) 537
50 * LANDS END, INC 1,865
117 LONGS DRUG STORES CORP 2,025
105 * MICHAELS STORES, INC 3,898
1,239 * OFFICE DEPOT, INC 12,932
427 * OFFICEMAX, INC 2,668
344 OMNICARE, INC 3,590
14 * PC CONNECTION, INC 309
79 * PETCO ANIMAL SUPPLIES, INC 928
420 * PETSMART, INC 1,378
975 RITE AID CORP 5,971
90 * SCHEIN (HENRY), INC 1,462
99 * SHOP AT HOME, INC 977
61 * SPIEGEL, INC (CLASS A) 507
1,769 * STAPLES, INC 34,274
154 * SUNGLASS HUT INTERNATIONAL, INC 1,078
135 * SYSTEMAX, INC 1,223
223 TIFFANY & CO 14,913
904 * TOYS R US, INC 10,452
138 * U.S. OFFICE PRODUCTS CO 284
9 * UBID, INC 313
141 * VALUEVISION INTERNATIONAL, INC 6,538
60
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
MISCELLANEOUS RETAIL -- (Continued)
3,778 WALGREEN CO $ 92,561
60 * WHITEHALL JEWELLERS, INC 1,192
133 * ZALE CORP 5,145
----------
319,779
----------
MOTION PICTURES -- 1.36%
68 * AMC ENTERTAINMENT, INC 446
35 * CARMIKE CINEMAS, INC (CLASS A) 258
160 * CNET NETWORKS, INC 10,840
8,037 DISNEY (WALT) CO 282,299
21 * GC COS, INC 698
119 * HOLLYWOOD ENTERTAINMENT CORP 944
52 * LOWES CINEPLEX ENTERTAINMENT CORP 217
57 * METRO-GOLDWYN-MAYER, INC 1,563
195 * METROMEDIA INTERNATIONAL GROUP, INC 1,852
37 * ON COMMAND CORP 638
45 * PIXAR, INC 1,704
4,414 TIME WARNER, INC 375,190
13 * VALLEY MEDIA, INC 101
----------
676,750
----------
NONDEPOSITORY INSTITUTIONS -- 1.45%
75 ADVANTA CORP (CLASS A) 1,401
235 ALLIED CAPITAL CORP 3,950
1,686 AMERICAN EXPRESS CO 213,595
282 * AMERICREDIT CORP 3,243
184 * AMRESCO, INC 368
149 * ARCADIA FINANCIAL LTD 707
2,742 ASSOCIATES FIRST CAPITAL CORP 44,214
742 CAPITAL ONE FINANCIAL CORP 27,314
77 CHARTER MUNICIPAL MORTGAGE ACCEPTANCE 909
204 CIT GROUP, INC (CLASS A) 2,805
29 * COMPUCREDIT CORP 1,002
425 COUNTRYWIDE CREDIT INDUSTRIES, INC 10,332
83 * CREDIT ACCEPTANCE CORP 394
17 * CREDITRUST CORP 70
120 DORAL FINANCIAL CORP 1,072
37 * DVI, INC 647
29 * FEDERAL AGRICULTURE MORTGAGE CORP 482
4,251 FEDERAL NATIONAL MORTGAGE ASSOCIATION 212,815
41 * FINANCIAL FEDERAL CORP 766
223 * FINET.COM, INC 480
231 FINOVA GROUP, INC 5,760
2,612 FREDDIE MAC 98,439
158 HELLER FINANCIAL, INC 2,883
1,770 HOUSEHOLD INTERNATIONAL, INC 57,967
97 * IMPERIAL CREDIT INDUSTRIES, INC 478
150 LEUCADIA NATIONAL CORP 3,178
42 MEDALLION FINANCIAL CORP 721
145 METRIS COS, INC 3,951
37 * NEW CENTURY FINANCIAL CORP 259
20 * NEXTCARD, INC 373
88 RESOURCE AMERICA, INC (CLASS A) 591
75 RESOURCE BANCSHARES MORTGAGE GROUP, INC 309
62 * SIERRACITIES, INC 1,042
599 SLM HOLDINGS CORP 17,670
201 * UNICAPITAL CORP 427
16 * WFS FINANCIAL, INC 246
----------
720,860
----------
NONMETALLIC MINERALS, EXCEPT FUELS -- 0.05%
101 AMCOL INTERNATIONAL CORP 1,395
113 JOHNS MANVILLE CORP 861
176 MARTIN MARIETTA MATERIALS, INC 6,996
340 VULCAN MATERIALS CO 13,153
----------
22,405
----------
OIL AND GAS EXTRACTION -- 0.85%
407 ANADARKO PETROLEUM CORP 12,617
384 APACHE CORP 15,648
40 * ATWOOD OCEANICS, INC 2,332
54 * BASIN EXPLORATION, INC 607
35 * BELCO OIL & GAS CORP 293
68 BERRY PETROLEUM CO (CLASS A) 1,113
240 * BJ SERVICES CO 15,945
122 * BROWN (TOM), INC 2,005
819 BURLINGTON RESOURCES, INC 25,798
86 CABOT OIL & GAS CORP (CLASS A) 1,483
22 * CAL DIVE INTERNATIONAL, INC 858
289 * CHESAPEAKE ENERGY CORP 812
85 CONSOL ENERGY, INC 966
184 CROSS TIMBERS OIL CO 2,116
165 DEVON ENERGY CORP (NEW) 7,270
248 * DIAMOND OFFSHORE DRILLING, INC 8,370
160 * EEX CORP 540
517 ENSCO INTERNATIONAL, INC 15,833
206 EOG RESOURCES, INC 3,823
47 * EVERGREEN RESOURCES, INC 1,092
123 * FOREST OIL CORP 1,122
109 * FRIEDE GOLDMAN HALTER, INC 708
229 * GLOBAL INDUSTRIES LTD 3,134
602 * GLOBAL MARINE, INC 13,582
622 * GREY WOLF, INC 2,604
1,663 HALLIBURTON CO 65,792
108 * HANOVER COMPRESSOR CO 5,670
505 * HARKEN ENERGY CORP 631
186 HELMERICH & PAYNE, INC 5,022
31 * HOUSTON EXPLORATION CO 468
63 * HS RESOURCES, INC 1,118
326 KERR-MCGEE CORP 17,176
312 * KEY ENERGY SERVICES, INC 3,237
73 * LOUIS DREYFUS NATURAL GAS CORP 1,797
215 * MARINE DRILLING CO, INC 4,945
48 * MCMORAN EXPLORATION CO 888
100 * MERIDIAN RESOURCE CORP 375
77 MITCHELL ENERGY & DEVELOPMENT
CORP (CLASS A) 1,751
417 * NABORS INDUSTRIES, INC 15,220
139 * NEWFIELD EXPLORATION CO 4,865
215 NOBLE AFFILIATES, INC 5,885
495 * NOBLE DRILLING CORP 18,902
62 * NUEVO ENERGY CO 1,348
1,384 OCCIDENTAL PETROLEUM CORP 24,133
628 * OCEAN ENERGY, INC (NEW) 7,536
79 * OCEANEERING INTERNATIONAL, INC 1,501
246 * PARKER DRILLING CO 1,045
123 * PATTERSON ENERGY, INC 3,198
378 * PIONEER NATURAL RESOURCES CO 3,378
151 * POGO PRODUCING CO 4,020
227 * PRIDE INTERNATIONAL, INC 3,986
643 * R & B FALCON CORP 11,131
61
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
OIL AND GAS EXTRACTION -- (Continued)
273 * ROWAN COS, INC $ 7,183
50 RPC, INC 459
694 SANTA FE SNYDER CORP 6,246
91 * SEITEL, INC 716
42 * ST. MARY LAND & EXPLORATION CO 1,299
62 * STONE ENERGY CORP 3,100
74 * SWIFT ENERGY CO 943
101 * SYNTROLEUM CORP 2,177
99 * TRANSMONTAIGNE, INC 507
110 * TUBOSCOPE, INC 2,000
949 UNION PACIFIC RESOURCES GROUP, INC 10,676
52 * UTI ENERGY CORP 1,855
65 VASTAR RESOURCES, INC 3,997
96 * VERITAS DGC, INC 2,514
167 * VINTAGE PETROLEUM, INC 2,734
407 * WEATHERFORD INTERNATIONAL, INC 20,731
----------
422,826
----------
PAPER AND ALLIED PRODUCTS -- 0.61%
53 * ACX TECHNOLOGIES, INC 228
365 AVERY DENNISON CORP 22,082
181 BEMIS, INC 5,407
198 BOISE CASCADE CORP 5,581
195 BOWATER, INC 8,592
95 * BUCKEYE TECHNOLOGIES, INC 1,549
96 CARAUSTAR INDUSTRIES, INC 1,314
361 CHAMPION INTERNATIONAL CORP 17,418
80 CHESAPEAKE CORP 1,775
213 * CONSOLIDATED PAPERS, INC 7,188
100 * EARTHSHELL CORP 518
815 * FORT JAMES CORP 15,485
201 GAYLORD CONTAINER CO 1,218
97 GLATFELTER (P.H.) CO 1,115
1,559 INTERNATIONAL PAPER CO 56,318
79 * IVEX PACKAGING CORP 464
1,700 KIMBERLY-CLARK CORP 80,750
195 LONGVIEW FIBRE CO 2,620
145 * MAIL-WELL, INC 1,078
386 MEAD CORP 11,917
108 * PLAYTEX PRODUCTS, INC 1,181
98 POTLATCH CORP 3,815
36 REPUBLIC GROUP, INC 380
46 ROCK-TENN CO (CLASS A) 393
56 SCHWEITZER-MAUDUIT INTERNATIONAL, INC 703
79 * SHOREWOOD PACKAGING CORP 1,649
438 * SMURFIT-STONE CONTAINER CORP 6,433
384 SONOCO PRODUCTS CO 7,032
122 ST. JOE CO 3,179
181 TEMPLE-INLAND, INC 8,167
194 WAUSAU-MOSINEE PAPER CORP 2,570
328 WESTVACO CORP 9,471
384 WILLAMETTE INDUSTRIES, INC 13,680
----------
301,270
----------
PERSONAL SERVICES -- 0.07%
369 BLOCK (H&R), INC 15,843
43 * CARRIAGE SERVICES, INC (CLASS A) 177
429 CINTAS CORP 11,877
76 * COINSTAR, INC 1,078
30 CPI CORP 735
72 G & K SERVICES, INC (CLASS A) 1,170
112 REGIS CORP 1,652
1,024 SERVICE CORP INTERNATIONAL 3,584
40 UNIFIRST CORP 410
----------
36,526
----------
PETROLEUM AND COAL PRODUCTS -- 3.25%
297 AMERADA HESS CORP 17,003
272 ASHLAND, INC 8,636
1,215 ATLANTIC RICHFIELD CO 99,705
2,470 CHEVRON CORP 197,136
1,900 CONOCO, INC (CLASS B) 44,412
74 ELCOR CORP 2,229
13,034 EXXON MOBIL CORP 1,003,618
169 MURPHY OIL CORP 9,495
294 PENNZOIL-QUAKER STATE CO 2,590
797 PHILLIPS PETROLEUM CO 31,830
340 SUNOCO, INC 9,520
122 * TESORO PETROLEUM CORP 1,143
2,082 TEXACO, INC 101,497
542 TOSCO CORP 15,209
326 ULTRAMAR DIAMOND SHAMROCK CORP 7,905
913 UNOCAL CORP 25,564
1,163 USX-MARATHON GROUP, INC 29,075
186 * VALERO ENERGY CORP 5,370
52 WD-40 CO 949
----------
1,612,886
----------
PRIMARY METAL INDUSTRIES -- 0.37%
192 AK STEEL HOLDINGS CORP 1,812
1,380 ALCOA, INC 92,460
324 ALLEGHENY TECHNOLOGIES, INC 5,730
50 ALPINE GROUP, INC 506
92 BELDEN, INC 2,162
494 * BETHLEHEM STEEL CORP 3,241
61 BRUSH WELLMAN, INC 1,017
106 * CABLE DESIGN TECHNOLOGIES CO 3,551
69 CARPENTER TECHNOLOGY CORP 1,552
19 CURTISS WRIGHT CORP 739
323 ENGELHARD CORP 4,380
116 GENERAL CABLE CORP 1,073
28 GIBRALTAR STEEL CORP 432
55 IMCO RECYCLING, INC 546
85 INTERMET CORP 815
110 * KAISER ALUMINUM CORP 618
85 * LONE STAR TECHNOLOGIES, INC 3,384
376 LTV CORP 1,175
55 MATTHEWS INTERNATIONAL CORP (CLASS A) 1,333
67 * MAVERICK TUBE CORP 1,834
16 * MAXXAM, INC 432
132 * MUELLER INDUSTRIES, INC 3,564
76 NATIONAL STEEL CORP (CLASS B) 541
328 NUCOR CORP 15,764
9 * OPTICAL CABLE CORP 486
97 OREGON STEEL MILLS, INC 381
92 PRECISION CAST PARTS CORP 2,363
54 QUANEX CORP 1,063
222 REYNOLDS METALS CO 13,042
33 ROUGE INDUSTRIES, INC (CLASS A) 226
57 * RTI INTERNATIONAL METALS 402
51 RYERSON TULL, INC 663
62
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
PRIMARY METAL INDUSTRIES -- (Continued)
160 * STEEL DYNAMICS, INC $ 2,090
38 SUPERIOR TELECOM, INC 491
79 TEXAS INDUSTRIES, INC 2,384
60 TITAN INTERNATIONAL, INC 457
67 TITANIUM METALS CORP 326
333 USX-US STEEL GROUP, INC 7,242
48 * WOLVERINE TUBE, INC 621
280 WORTHINGTON INDUSTRIES, INC 3,622
--------
184,520
--------
PRINTING AND PUBLISHING -- 0.63%
225 AMERICAN GREETINGS CORP (CLASS A) 3,740
61 * APPLIED GRAPHICS TECHNOLOGIES, INC 377
100 BANTA CORP 1,756
341 BELO (A.H.) CORP SERIES A 4,411
139 BOWNE & CO, INC 1,807
106 CENTRAL NEWSPAPERS, INC (CLASS A) 3,080
48 * CONSOLIDATED GRAPHICS, INC 588
23 * CSS INDUSTRIES, INC 439
276 DELUXE CORP 6,831
354 DONNELLEY (R.R.) & SONS CO 6,814
175 DOW JONES & CO, INC 11,331
77 * FRANKLIN COVEY CO 644
1,050 GANNETT CO, INC 68,840
114 HARLAND (JOHN H.) CO 1,503
169 HARTE-HANKS, INC 3,432
27 HOLLINGER INTERNATIONAL, INC 298
103 HOUGHTON MIFFLIN CO 4,087
12 * IDG BOOKS WORLDWIDE, INC 166
17 * INFORMATION HOLDINGS, INC 684
175 * JOURNAL REGISTER CO 2,581
316 KNIGHT-RIDDER, INC 14,259
166 LEE ENTERPRISES, INC 3,548
72 MCCLATCHY CO (CLASS A) 2,308
738 MCGRAW HILL COS, INC 36,162
84 MEDIA GENERAL, INC (CLASS A) 4,231
139 MEREDITH CORP 3,118
46 NEW ENGLAND BUSINESS SERVICES, INC 770
642 NEW YORK TIMES CO (CLASS A) 26,763
158 * PAXAR CORP 1,510
80 PENTON MEDIA, INC 2,035
75 * PLAYBOY ENTERPRISES, INC (CLASS B) 1,621
547 * PRIMEDIA, INC 14,290
27 PULITZER, INC 1,015
126 * R.H. DONNELLEY CORP 2,016
343 READER'S DIGEST ASSOCIATION, INC.
(CLASS A) (NON-VOTE) 11,340
275 REYNOLDS & REYNOLDS CO (CLASS A) 7,218
34 SCHAWK, INC (CLASS A) 259
52 * SCHOLASTIC CORP 2,730
37 * SCIENTIFIC GAMES HOLDINGS CORP 698
99 SCRIPPS (E.W.) CO (CLASS A) 4,207
47 STANDARD REGISTER, INC 622
178 TIMES MIRROR CO SERIES A 8,532
164 * TOPPS, INC 1,235
703 TRIBUNE CO 26,142
147 WALLACE COMPUTER SERVICES, INC 1,635
12 WASHINGTON POST CO (CLASS B) 5,712
176 WILEY (JOHN) & SONS, INC (CLASS A) 2,453
100 * ZIFF-DAVIS, INC 1,818
--------
311,656
--------
RAILROAD TRANSPORTATION -- 0.30%
1,721 BURLINGTON NORTHERN SANTA FE CORP 33,882
820 CSX CORP 18,245
117 FLORIDA EAST COAST INDUSTRIES, INC 5,104
416 KANSAS CITY SOUTHERN INDUSTRIES, INC 36,478
1,433 NORFOLK SOUTHERN CORP 18,897
936 UNION PACIFIC CORP 32,818
193 * WISCONSIN CENTRAL TRANSIT CORP 2,231
--------
147,655
--------
REAL ESTATE -- 0.06%
209 ARDEN REALTY GROUP, INC 4,219
50 * CASTLE & COOKE, INC 631
403 * CATELLUS DEVELOPMENT CORP 4,911
78 * CB RICHARD ELLIS SERVICES GROUP, INC 872
168 * FAIRFIELD COMMUNITIES, INC 1,323
59 FOREST CITY ENTERPRISES, INC (CLASS A) 1,475
67 * INSIGNIA FINANCIAL GROUP, INC 946
114 * JONES LANG LA SALLE 1,439
94 LNR PROPERTY CORP 1,744
105 * PINNACLE HOLDINGS, INC 8,058
152 * SECURITY CAPITAL GROUP, INC (CLASS B) 1,995
39 STEWART ENTERPRISES, INC (CLASS A) 153
91 * TRAMMELL CROW CO 1,035
--------
28,801
--------
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS -- 0.25%
13 * AEP INDUSTRIES, INC 375
119 APTARGROUP, INC 2,692
135 ARMSTRONG WORLD INDUSTRIES, INC 2,219
48 BANDAG, INC 1,140
113 CARLISLE COS, INC 3,700
254 COOPER TIRE & RUBBER CO 2,508
589 GOODYEAR TIRE & RUBBER CO 12,295
953 ILLINOIS TOOL WORKS, INC 51,819
12 * LIQUI-BOX CORP 552
58 MYERS INDUSTRIES, INC 761
321 NIKE, INC (CLASS B) 8,626
634 * PACTIV CORP 4,992
174 * REEBOK INTERNATIONAL LTD 1,576
314 * SEALED AIR CORP 14,051
415 SOLUTIA, INC 4,928
57 SPARTECH CORP 1,710
76 TREDEGAR CORP 2,299
16 * TREX CO, INC 460
217 TUPPERWARE CORP 3,526
119 * U.S. PLASTIC LUMBER CORP 1,037
54 WYNNS INTERNATIONAL, INC 732
--------
121,998
--------
SECURITY AND COMMODITY BROKERS -- 1.62%
28 ADVEST GROUP, INC 497
87 * AFFILIATED MANAGERS GROUP, INC 3,409
241 * AMERITRADE HOLDINGS CORP (CLASS A) 5,181
427 BEAR STEARNS COS, INC 17,587
51 CONNING CORP 627
47 DAIN RAUSCHER CORP 2,711
60 * DLJ DIRECT 776
63
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SECURITY AND COMMODITY BROKERS -- (Continued)
128 DONALDSON, LUFKIN & JENRETTE, INC $ 6,592
17 DUFF & PHELPS CREDIT RATING CO 1,668
789 * E TRADE GROUP, INC 20,908
113 EATON VANCE CORP 4,675
347 EDWARDS (A.G.), INC 11,581
214 FEDERATED INVESTORS, INC 5,095
625 FRANKLIN RESOURCES, INC 16,406
58 FREEDOM SECURITIES CORP 790
87 * FRIEDMAN, BILLINGS, RAMSEY GROUP, INC 1,468
45 INVESTMENT TECHNOLOGY GROUP, INC 1,788
55 INVESTORS FINANCIAL SERVICES CORP 2,354
80 JEFFERIES GROUP, INC (NEW) 1,860
27 JOHN NUVEEN CO (CLASS A) 945
262 * KNIGHT/TRIMARK GROUP, INC 12,985
215 LEGG MASON, INC 8,734
452 LEHMAN BROTHERS HOLDINGS, INC 37,120
1,376 MERRILL LYNCH & CO, INC 144,394
108 MORGAN KEEGAN, INC 1,377
3,400 MORGAN STANLEY DEAN WITTER & CO 294,950
40 * NATIONAL DISCOUNT BROKERS GROUP, INC 1,812
537 PAINE WEBBER GROUP, INC 21,211
165 PHOENIX INVESTMENT PARTNERS LTD 1,144
100 * PIONEER GROUP, INC 2,148
87 PRICE (T. ROWE) ASSOCIATES, INC 2,789
38 * R&G FINANCIAL CORP (CLASS B) 308
152 RAYMOND JAMES FINANCIAL CORP 2,888
2,485 SCHWAB (CHARLES) CORP 129,841
44 SOUTHWEST SECURITIES GROUP, INC 2,007
233 THE GOLDMAN SACHS GROUP, INC 26,052
198 UNITED ASSET MANAGEMENT CORP 3,056
7 VALUE LINE, INC 252
218 WADDELL & REED FINANCIAL,INC (CLASS A) 7,016
--------
807,002
--------
SOCIAL SERVICES -- 0.01%
46 * BRIGHT HORIZONS FAMILY SOLUTIONS, INC 897
41 * CAPITAL SENIOR LIVING CORP 166
35 * PROVANT, INC 240
73 * RES-CARE, INC 636
70 * SUNRISE ASSISTED LIVING, INC 1,089
--------
3,028
--------
SPECIAL TRADE CONTRACTORS -- 0.02%
105 APOGEE ENTERPRISES, INC 459
113 * COMFORT SYSTEMS U.S.A., INC 861
32 * EMCOR GROUP, INC 600
116 * INTEGRATED ELECTRICAL SERVICES, INC 645
126 * QUANTA SERVICES, INC 6,394
--------
8,959
--------
STONE, CLAY, AND GLASS PRODUCTS -- 0.45%
18 CARBO CERAMICS, INC 454
31 CENTEX CONSTRUCTION PRODUCTS, INC 713
978 CORNING, INC 187,287
205 DAL-TILE INTERNATIONAL, INC 1,537
63 DEPARTMENT 56, INC 850
18 * DUPONT PHOTOMASKS, INC 1,167
71 FLORIDA ROCK INDUSTRIES, INC 2,396
124 LAFARGE CORP 2,410
60 LIBBEY, INC 1,571
26 MIKASA, INC 255
189 OWENS CORNING CO 2,764
565 * OWENS ILLINOIS, INC 9,181
142 SOUTHDOWN, INC 7,313
186 USG CORP 5,975
--------
223,873
--------
TEXTILE MILL PRODUCTS -- 0.04%
71 * ALBANY INTERNATIONAL CORP (CLASS A) NEW 931
194 * BURLINGTON INDUSTRIES, INC 788
233 COLLINS & AIKMAN CORP 1,223
58 * DAN RIVER, INC (CLASS A) 319
60 GUILFORD MILLS, INC 476
155 INTERFACE, INC (CLASS A) 658
168 * MOHAWK INDUSTRIES, INC 3,328
78 POLYMER GROUP, INC 970
82 * PUBLICARD, INC 1,050
104 RUSSELL CORP 1,430
439 SHAW INDUSTRIES, INC 4,966
40 SPRING INDUSTRIES, INC 1,472
223 * UNIFI, INC 1,867
140 WESTPOINT STEVENS, INC 2,275
--------
21,753
--------
TOBACCO PRODUCTS -- 0.38%
46 * BROOKE GROUP LTD 500
28 * GENERAL CIGAR HOLDINGS, INC (CLASS A) 414
8,909 PHILIP MORRIS COS, INC 169,827
413 RJR REYNOLDS TOBACCO HOLDINGS, INC 7,253
644 UST, INC 11,109
--------
189,103
--------
TRANSPORTATION BY AIR -- 0.34%
183 AIRBORNE FREIGHT CORP 3,339
212 * AIRTRAN HOLDINGS, INC 834
93 * ALASKA AIR GROUP, INC 2,499
124 * AMERICA WEST HOLDINGS CORP (CLASS B) 1,650
558 * AMR CORP 31,736
13 * AMTRAN, INC 204
43 * ATLANTIC COAST AIRLINES HOLDINGS 817
53 * ATLAS AIR, INC 1,434
69 * AVIALL, INC 569
163 * CONTINENTAL AIRLINES, INC (CLASS B) 5,735
500 DELTA AIRLINES, INC 23,906
58 * EGL, INC 1,450
1,092 * FEDEX CORP 36,650
66 * FRONTIER AIRLINES, INC 717
114 * MESA AIR GROUP, INC 691
46 * MESABA HOLDINGS, INC 506
53 * MIDWEST EXPRESS HOLDINGS, INC 1,344
95 * NORTHWEST AIRLINES CORP (CLASS A) 1,686
79 * OFFSHORE LOGISTICS, INC 957
186 OGDEN CORP 2,127
79 SKYWEST, INC 2,498
1,899 SOUTHWEST AIRLINES CO 35,487
221 * TRANS WORLD AIRLINES, INC 538
256 * U.S. AIRWAYS GROUP, INC 5,344
108 * UAL CORP 5,096
--------
167,814
--------
TRANSPORTATION EQUIPMENT -- 2.19%
72 * ABC RAIL PRODUCTS CORP 801
64
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION EQUIPMENT -- (Continued)
77 * AFTERMARKET TECHNOLOGY CORP $ 991
36 * AMERICAN AXLE & MANUFACTURE HOLDINGS 481
68 ARCTIC CAT, INC 680
97 ARVIN INDUSTRIES, INC 1,830
384 AUTOLIV, INC 9,648
88 * BE AEROSPACE, INC 792
3,519 BOEING CO 113,927
94 BORG-WARNER AUTOMOTIVE, INC 2,984
90 CLARCOR, INC 1,620
63 COACHMEN INDUSTRIES, INC 763
49 COMMERCIAL INTERTECH CORP 878
138 CORDANT TECHNOLOGIES, INC 3,993
619 DANA CORP 13,347
357 DANAHER CORP 13,722
81 * DELCO REMY INTERNATIONAL, INC (CLASS A) 567
2,112 DELPHI AUTOMOTIVE SYSTEMS CORP 34,188
277 EATON CORP 21,086
174 FEDERAL SIGNAL CORP 2,707
278 FEDERAL-MOGUL CORP 4,378
126 FLEETWOOD ENTERPRISES, INC 1,858
4,281 FORD MOTOR CO 175,788
126 GENCORP, INC 889
621 GENERAL DYNAMICS CORP 24,413
1,900 GENERAL MOTORS CORP 147,843
509 * GENERAL MOTORS CORP (CLASS H) 66,010
57 * GENTEK, INC 773
276 GENTEX CORP 9,435
391 GOODRICH (B.F.) CO 10,361
570 HARLEY DAVIDSON, INC 39,686
67 * HAYES LEMMERZ INTERNATIONAL, INC 1,323
19 HEICO CORP 288
2,972 HONEYWELL INTERNATIONAL, INC 134,854
143 * HOWMET INTERNATIONAL, INC 2,654
331 ITT INDUSTRIES, INC 8,047
85 KAMAN CORP (CLASS A) 775
45 * KELLSTROM INDUSTRIES, INC 292
43 * KROLL- O'GARA CO 709
1,288 LOCKHEED MARTIN CORP 21,654
139 MASCOTECH, INC 1,772
260 MERITOR AUTOMOTIVE, INC 3,786
150 * MILLER INDUSTRIES, INC 571
84 MODINE MANUFACTURING CO 2,010
65 * MONACO COACH CORP 1,044
32 * NATIONAL R.V. HOLDINGS, INC 516
246 * NAVISTAR INTERNATIONAL CORP 8,241
117 NEWPORT NEWS SHIPBUILDING, INC 3,341
262 NORTHROP GRUMMAN CORP 12,330
78 * OEA, INC 550
141 * ORBITAL SCIENCES CORP 2,194
54 OSHKOSH TRUCK CORP 1,302
270 PACCAR, INC 11,491
92 POLARIS INDUSTRIES, INC 2,725
79 REGAL-BELOIT CORP 1,402
39 * SEQUA CORP (CLASS A) 1,360
68 SIMPSON INDUSTRIES, INC 616
79 SMITH (A.O.) CORP 1,259
117 SPX CORP 13,608
30 STANDARD MOTOR PRODUCTS, INC (CLASS A) 406
46 * STONERIDGE, INC 437
74 SUPERIOR INDUSTRIES INTERNATIONAL, INC 1,850
472 TEXTRON, INC 24,809
26 THOR INDUSTRIES, INC 630
149 TRINITY INDUSTRIES, INC 2,961
44 * TRIUMPH GROUP, INC 1,259
380 TRW, INC 20,401
1,718 UNITED TECHNOLOGIES CORP 83,967
81 WABASH NATIONAL CORP 1,139
160 WESTINGHOUSE AIR BRAKE CO 1,440
54 WINNEBAGO INDUSTRIES, INC 1,002
---------
1,087,454
---------
TRANSPORTATION SERVICES -- 0.06%
155 C.H. ROBINSON WORLDWIDE, INC 7,662
17 * CHEAP TICKETS, INC 221
47 CIRCLE INTERNATIONAL GROUP, INC 1,180
180 * EXPEDITORS INTERNATIONAL OF WASHINGTON 6,412
54 * FORWARD AIR CORP 1,316
75 * FRITZ COS, INC 703
197 GALILEO INTERNATIONAL, INC 3,730
185 GATX CORP 5,758
24 * HUB GROUP, INC (CLASS A) 384
23 * U.S. EXPRESS ENTERPRISES, INC (CLASS A) 140
---------
27,506
---------
TRUCKING AND WAREHOUSING -- 0.05%
81 * AMERICAN FREIGHTWAYS CORP 1,123
71 ARNOLD INDUSTRIES, INC 871
172 CNF TRANSPORTATION, INC 5,278
75 * CONSOLIDATED FREIGHTWAYS CORP 457
29 * COVENANT TRANSPORT, INC (CLASS A) 311
65 * HEARTLAND EXPRESS, INC 901
80 HUNT (J.B.) TRANSPORT SERVICES, INC 1,030
125 * IRON MOUNTAIN, INC 3,921
25 * KNIGHT TRANSPORTATION, INC 398
36 * LANDSTAR SYSTEM, INC 1,928
35 * M.S. CARRIERS, INC 800
48 ROADWAY EXPRESS, INC 942
139 * SWIFT TRANSPORTATION CO, INC 2,032
100 USFREIGHTWAYS CORP 2,825
116 WERNER ENTERPRISES, INC 1,464
94 * YELLOW CORP 1,489
---------
25,770
---------
WATER TRANSPORTATION -- 0.03%
162 ALEXANDER & BALDWIN, INC 2,997
33 * AMERICAN CLASSIC VOYAGES CO 841
92 * KIRBY CORP 1,725
95 OVERSEAS SHIPHOLDING GROUP, INC 2,244
42 * SEACOR SMIT, INC 2,184
209 TIDEWATER, INC 5,891
---------
15,882
---------
WHOLESALE TRADE-DURABLE GOODS -- 0.30%
103 AAR CORP 2,169
56 * ACTION PERFORMANCE COS, INC 497
95 * ANICOM, INC 724
80 * ANIXTER INTERNATIONAL, INC 1,575
79 APPLIED INDUSTRIAL TECHNOLOGIES, INC 1,347
361 * ARROW ELECTRONICS, INC 12,025
43 * AVIATION SALES CO 373
158 AVNET, INC 10,023
65
<PAGE>
TIAA-CREF MUTUAL FUNDS EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
WHOLESALE TRADE-DURABLE GOODS -- (Continued)
202 * BOYDS COLLECTION LTD $ 1,338
87 BRIGGS & STRATTON CORP 2,724
201 * BRIGHTPOINT, INC 2,763
41 CASTLE (A.M.) & CO 499
129 * CELLSTAR CORP 1,183
188 * CHS ELECTRONICS, INC 176
47 COMMERCIAL METALS CO 1,122
179 * COMPUCOM SYSTEMS, INC 1,219
8 COMPX INTERNATIONAL, INC 152
58 * DURA AUTOMOTIVE SYSTEMS, INC 761
59 * FAIRCHILD CORP (CLASS A) 376
151 * FISHER SCIENTIFIC INTERNATIONAL, INC 7,248
670 GENUINE PARTS CO 13,860
280 GRAINGER (W.W.), INC 11,095
156 * HA-LO INDUSTRIES, INC 1,628
105 * HANDLEMAN CO 951
88 HUGHES SUPPLY, INC 1,584
561 IKON OFFICE SOLUTIONS, INC 3,646
230 * INGRAM MICRO, INC (CLASS A) 2,932
16 * JLK DIRECT DISTRIBUTION, INC (CLASS A) 149
106 * KENT ELECTRONICS CORP 3,504
58 * KEYSTONE AUTOMOTIVE INDUSTRIES, INC 308
313 * LANIER WORLDWIDE, INC 821
22 LAWSON PRODUCTS, INC 503
102 * MERISEL, INC 255
37 * MIAMI COMPUTER SUPPLY CORP 1,156
102 * MSC INDUSTRIAL DIRECT CO (CLASS A) 1,459
184 * NATIONAL-OILWELL, INC 4,554
48 * NAVARRE CORP 216
123 OWENS & MINOR, INC 1,353
91 * PATTERSON DENTAL CO 3,082
86 PIONEER-STANDARD ELECTRONICS, INC 1,472
267 * PSS WORLD MEDICAL, INC 1,768
71 RELIANCE STEEL & ALUMINUM CO 1,362
131 * SAFEGUARD SCIENTIFICS, INC 35,566
38 * SCP POOL CORP 1,111
196 * TECH DATA CORP 4,630
64 WATSCO, INC 608
115 * WESCO INTERNATIONAL, INC 920
---------
148,787
---------
WHOLESALE TRADE-NONDURABLE GOODS -- 0.64%
235 * AIRGAS, INC 1,586
183 * AMERISOURCE HEALTH CORP (CLASS A) 2,379
108 * BARNETT RESOURCES CORP 2,470
505 BERGEN BRUNSWIG CORP (CLASS A) 2,367
102 BINDLEY WESTERN INDUSTRIES, INC 1,600
47 * BOISE CASCADE OFFICE PRODUCTS CORP 713
1,055 CARDINAL HEALTH, INC 44,112
76 * CENTRAL GARDEN & PET CO 646
34 CHEMED CORP 1,022
65 * DAISYTEK INTERNATIONAL CORP 1,478
168 DIMON, INC 420
2,695 ENRON CORP 184,764
50 HERBALIFE INTERNATIONAL, INC (CLASS B) 650
64 INTERNATIONAL MULTIFOODS CORP 644
1,061 MCKESSON HBOC, INC 19,694
53 * NCS HEALTHCARE, INC (CLASS A) 115
172 * NU SKIN ENTERPRISES, INC (CLASS A) 1,569
47 * PERFORMANCE FOOD GROUP CO 987
60 * PLAINS RESOURCES, INC 862
15 * PRIORITY HEALTHCARE CORP (CLASS B) 817
66 * SCHOOL SPECIALTY, INC 1,150
28 * SMART & FINAL, INC 197
451 SUPERVALU, INC 6,511
37 * SYNCOR INTERNATIONAL CORP 904
1,240 SYSCO CORP 35,650
123 TERRA INDUSTRIES, INC 269
33 * UNITED NATURAL FOODS, INC 420
122 * UNITED STATIONERS, INC 3,492
117 UNIVERSAL CORP 1,681
30 VALHI, INC 339
---------
319,508
---------
TOTAL COMMON STOCK
(COST $ 49,899,594) 49,502,417
-----------
PRINCIPAL
- ---------
SHORT TERM INVESTMENT- 0.31%
U.S. GOVERNMENT AGENCY -- 0.31%
FEDERAL HOME LOAN BANK (FHLB)
$ 154,000 5.540%, 03/13/00 153,953
-----------
TOTAL SHORT TERM INVESTMENT
(COST $153,953) 153,953
-----------
TOTAL PORTFOLIO
(COST $50,053,547) $49,656,370
===========
- -------------
* NON-INCOME PRODUCING
THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE
SAME AS THE AMOUNT DISCLOSED ABOVE.
66
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS SOCIAL CHOICE EQUITY FUND
MARCH 10, 2000 SUMMARY BY INDUSTRY
- --------------------------------------------------------------------------------
SHARES VALUE %
- --------------------------------------------------------------------------------
COMMON STOCK
APPAREL AND ACCESSORY STORES $ 87,222 0.35%
APPAREL AND OTHER TEXTILE PRODUCTS 15,667 0.06
AUTO REPAIR, SERVICES AND PARKING 1,279 0.01
BUILDING MATERIALS AND GARDEN SUPPLIES 342,104 1.39
BUSINESS SERVICES 2,834,310 11.48
CHEMICALS AND ALLIED PRODUCTS 2,526,981 10.23
COMMUNICATIONS 3,175,355 12.86
DEPOSITORY INSTITUTIONS 1,393,638 5.64
EATING AND DRINKING PLACES 156,814 0.63
ELECTRIC, GAS, AND SANITARY SERVICES 753,582 3.05
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT 2,338,501 9.47
ENGINEERING AND MANAGEMENT SERVICES 19,389 0.08
FABRICATED METAL PRODUCTS 156,842 0.63
FOOD AND KINDRED PRODUCTS 872,367 3.53
FOOD STORES 95,924 0.39
FURNITURE AND FIXTURES 33,690 0.14
FURNITURE AND HOMEFURNISHINGS STORES 18,621 0.08
GENERAL BUILDING CONTRACTORS 7,498 0.03
GENERAL MERCHANDISE STORES 661,028 2.68
HEALTH SERVICES 74,920 0.30
HOLDING AND OTHER INVESTMENT OFFICES 52,704 0.21
INDUSTRIAL MACHINERY AND EQUIPMENT 3,187,226 12.91
INSTRUMENTS AND RELATED PRODUCTS 459,045 1.86
INSURANCE AGENTS, BROKERS AND SERVICE 100,584 0.41
INSURANCE CARRIERS 1,028,489 4.16
MISCELLANEOUS MANUFACTURING INDUSTRIES 229,837 0.93
MISCELLANEOUS RETAIL 102,974 0.42
MOTION PICTURES 503,376 2.04
NONDEPOSITORY INSTITUTIONS 664,974 2.69
OIL AND GAS EXTRACTION 688,421 2.79
PAPER AND ALLIED PRODUCTS 149,791 0.61
PETROLEUM AND COAL PRODUCTS 91,164 0.37
PRIMARY METAL INDUSTRIES 88,028 0.36
PRINTING AND PUBLISHING 260,694 1.06
RAILROAD TRANSPORTATION 52,552 0.21
RUBBER AND MISCELLANEOUS
PLASTIC PRODUCTS 116,057 0.47
SECURITY AND COMMODITY BROKERS 533,302 2.16
STONE, CLAY, AND GLASS PRODUCTS 154,923 0.63
TRANSPORTATION BY AIR 118,315 0.48
TRANSPORTATION EQUIPMENT 13,703 0.06
TRUCKING AND WAREHOUSING 3,487 0.01
WHOLESALE TRADE-DURABLE GOODS 84,257 0.34
WHOLESALE TRADE-NONDURABLE GOODS 282,774 1.14
----------- ------
TOTAL COMMON STOCK
(COST $24,870,465) 24,532,409 99.35
----------- ------
SHORT TERM INVESTMENT
U.S. GOVERNMENT AGENCY 155,952 0.63%
----------- ------
TOTAL SHORT TERM INVESTMENT
(COST $155,952) 155,952 0.63
----------- ------
TOTAL PORTFOLIO
(COST $25,026,417) 24,688,361 99.98
OTHER ASSETS & LIABILITIES, NET 3,599 0.02
----------- ------
NET ASSETS $24,691,960 100.00%
=========== ======
67
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS SOCIAL CHOICE EQUITY FUND
MARCH 10, 2000
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 99.35%
APPAREL AND ACCESSORY STORES -- 0.35%
1,891 GAP, INC $ 87,222
----------
APPAREL AND OTHER TEXTILE PRODUCTS -- 0.06%
162 LIZ CLAIBORNE, INC 7,411
358 VF CORP 8,256
----------
15,667
----------
AUTO REPAIR, SERVICES AND PARKING -- 0.01%
68 RYDER SYSTEM, INC 1,279
----------
BUILDING MATERIALS AND GARDEN SUPPLIES -- 1.39%
5,684 HOME DEPOT, INC 305,159
821 LOWES COS, INC 36,945
----------
342,104
----------
BUSINESS SERVICES -- 11.48%
5,119 * AMERICA ONLINE, INC 302,980
2,883 AUTOMATIC DATA PROCESSING, INC 127,212
1,299 COMPUTER ASSOCIATES INTERNATIONAL, INC 86,383
1,368 ELECTRONIC DATA SYSTEMS CORP 84,132
959 FIRST DATA CORP 40,158
103 * IMATION CORP 2,871
1,175 IMS HEALTH, INC 24,895
10,800 * MICROSOFT CORP 1,090,800
853 * NOVELL, INC 26,762
505 OMNICOM GROUP, INC 42,262
6,000 * ORACLE CORP 489,750
3,400 * SUN MICROSYSTEMS, INC 320,237
1,100 * YAHOO, INC 195,868
----------
2,834,310
----------
CHEMICALS AND ALLIED PRODUCTS -- 10.23%
1,913 AIR PRODUCTS & CHEMICALS, INC 47,705
495 ALLERGAN, INC 23,574
470 * ALZA CORP 17,272
2,100 * AMGEN, INC 125,081
1,025 * AVON PRODUCTS, INC 26,906
5,555 BRISTOL MYERS SQUIBB CO 290,943
825 CABOT CORP 22,326
1,123 CLOROX CO 33,549
2,203 COLGATE PALMOLIVE CO 94,178
144 * FOREST LABORATORIES, INC 10,188
234 FULLER (H.B.) CO 12,051
120 * GENZYME CORP (GENERAL DIVISION) 6,915
63 * GENZYME SURGICAL PRODUCTS 803
154 * GENZYME-MOLECULAR ONCOLOGY 4,774
1,055 HANNA (M.A.) CO 10,945
723 INTERNATIONAL FLAVORS & FRAGRANCES, INC 22,593
192 * IVAX CORP 5,400
4,246 JOHNSON & JOHNSON CO 300,669
2,500 LILLY (ELI) & CO 152,968
414 MALLINCKRODT, INC 9,858
6,287 MERCK & CO, INC 374,469
205 MYLAN LABORATORIES, INC 5,714
214 NCH CORP 9,242
8,952 PFIZER, INC 314,439
1,040 PHARMACIA & UPJOHN, INC 54,080
2,104 PPG INDUSTRIES, INC 98,230
1,375 PRAXAIR, INC 46,062
4,285 PROCTER & GAMBLE CO 227,372
4,062 SCHERING-PLOUGH CORP 152,071
846 SCHULMAN (A.), INC 10,984
706 SIGMA ALDRICH CORP 15,620
----------
2,526,981
----------
COMMUNICATIONS -- 12.86%
651 ALLTEL CORP 44,308
8,022 AT & T CORP 435,694
465 * AT & T CORP - LIBERTY MEDIA GROUP (CLASS A) 24,470
4,276 BELL ATLANTIC CORP 245,068
5,532 BELLSOUTH CORP 258,275
1,627 * CBS CORP 93,349
676 * CLEAR CHANNEL COMMUNICATIONS, INC 41,869
1,700 COMCAST CORP (CLASS A) SPECIAL 68,743
651 * COX COMMUNICATIONS, INC (CLASS A) 29,335
1,400 * GLOBAL CROSSING LTD 81,200
7,440 LUCENT TECHNOLOGIES, INC 503,130
5,900 * MCI WORLDCOM, INC 275,456
1,747 * MEDIA ONE GROUP, INC 136,484
622 * NEXTEL COMMUNICATIONS, INC (CLASS A) 99,286
9,148 SBC COMMUNICATIONS, INC 384,216
2,115 SPRINT CORP (FON GROUP) 129,808
1,779 * SPRINT CORP (PCS GROUP) 106,184
1,648 U.S. WEST, INC 115,978
1,896 * VIACOM, INC (CLASS B) 102,502
----------
3,175,355
----------
DEPOSITORY INSTITUTIONS -- 5.64%
5,181 BANK OF AMERICA CORP 222,135
2,460 BANK OF NEW YORK CO, INC 78,105
3,484 BANK ONE CORP 85,358
2,517 CHASE MANHATTAN CORP 198,056
543 FIFTH THIRD BANCORP 24,910
3,310 FIRST UNION CORP 105,506
1,700 FIRSTAR CORP 29,856
2,385 FLEETBOSTON FINANCIAL CORP 61,264
836 KEYCORP 13,428
2,881 MBNA CORP 63,562
1,077 MELLON FINANCIAL CORP 29,684
699 MORGAN (J.P.) & CO, INC 74,137
1,760 NATIONAL CITY CORP 30,470
1,049 PNC BANK CORP 39,271
474 PROVIDIAN FINANCIAL CORP 30,750
1,058 SUNTRUST BANKS, INC 50,122
2,040 U.S. BANCORP 36,720
645 WACHOVIA CORP 35,071
1,260 WASHINGTON MUTUAL, INC 27,483
4,901 WELLS FARGO CO 157,750
----------
1,393,638
----------
EATING AND DRINKING PLACES -- 0.63%
662 DARDEN RESTAURANTS, INC 8,564
4,651 MCDONALD'S CORP 148,250
----------
156,814
----------
ELECTRIC, GAS, AND SANITARY SERVICES -- 3.05%
696 AGL RESOURCES, INC 12,049
1,378 COLUMBIA ENERGY GROUP 78,201
1,942 * EL PASO ENERGY CORP 76,830
68
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS SOCIAL CHOICE EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRIC, GAS, AND SANITARY SERVICES -- (Continued)
1,044 EQUITABLE RESOURCES, INC $ 42,151
857 IDACORP, INC 27,691
2,545 KEYSPAN CORP 54,558
1,824 LOUISVILLE GAS & ELECTRIC ENERGY CORP 40,128
866 MCN ENERGY GROUP, INC 21,595
1,066 NICOR, INC 32,113
2,567 NISOURCE, INC 37,702
2,087 OGE ENERGY CORP 35,479
879 PEOPLES ENERGY CORP 24,172
2,773 POTOMAC ELECTRIC POWER CO 54,766
1,759 PUGET SOUND ENERGY, INC 35,070
200 * SOUTHERN UNION CO 2,662
2,568 TECO ENERGY, INC 45,742
2,725 WILLIAMS COS, INC 132,673
---------
753,582
---------
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT -- 9.47%
653 * ADVANCED MICRO DEVICES, INC 34,445
461 BALDOR ELECTRIC CO 7,721
2,878 EMERSON ELECTRIC CO 118,357
350 * GLENAYRE TECHNOLOGIES, INC 9,625
7,300 INTEL CORP 877,368
766 * MICRON TECHNOLOGY, INC 81,674
638 MOLEX, INC 39,984
654 * NATIONAL SEMICONDUCTOR CORP 45,780
3,050 NORTEL NETWORKS CORP (U.S.) 376,484
1,400 * QUALCOMM, INC 190,575
370 * SENSORMATIC ELECTRONICS CORP 7,099
1,588 * SOLECTRON CORP 56,771
1,180 * TELLABS, INC 67,260
2,037 TEXAS INSTRUMENTS, INC 370,734
438 THOMAS & BETTS CORP 9,417
393 * VISHAY INTERTECHNOLOGY, INC 22,179
460 WHIRLPOOL CORP 23,028
---------
2,338,501
---------
ENGINEERING AND MANAGEMENT SERVICES -- 0.08%
717 DUN & BRADSTREET CORP 18,686
50 GARTNER GROUP, INC (CLASS A) 703
---------
19,389
---------
FABRICATED METAL PRODUCTS -- 0.63%
2,764 CROWN CORK & SEAL CO, INC 37,659
2,914 GILLETTE CO 87,237
281 MARK IV INDUSTRIES, INC 5,707
1,428 MASCO CORP 26,239
---------
156,842
---------
FOOD AND KINDRED PRODUCTS -- 3.53%
1,267 BESTFOODS, INC 48,858
1,703 CAMPBELL SOUP CO 49,280
6,539 COCA COLA CO 292,211
1,062 COCA COLA ENTERPRISES, INC 22,302
1,634 GENERAL MILLS, INC 51,266
1,908 HEINZ (H.J.) CO 64,275
682 HERSHEY FOODS CORP 27,280
1,564 KELLOGG CO 35,874
112 MCCORMICK & CO, INC (NON-VOTE) 2,961
641 NABISCO GROUP HOLDINGS 5,608
50 PEPSI BOTTLING GROUP, INC 990
4,410 PEPSICO, INC 135,331
815 QUAKER OATS CO 38,050
1,484 UNILEVER NV (NEW YORK SHS) 61,215
313 WHITMAN CORP 3,521
540 WRIGLEY (WM) JR CO 33,345
---------
872,367
---------
FOOD STORES -- 0.39%
1,394 ALBERTSONS, INC 33,456
1,839 * KROGER CO 27,125
1,008 * SAFEWAY, INC 35,343
---------
95,924
---------
FURNITURE AND FIXTURES -- 0.14%
1,567 NEWELL RUBBERMAID, INC 33,690
---------
FURNITURE AND HOMEFURNISHINGS STORES -- 0.08%
467 TANDY CORP 18,621
---------
GENERAL BUILDING CONTRACTORS -- 0.03%
251 HILLENBRAND INDUSTRIES, INC 7,498
---------
GENERAL MERCHANDISE STORES -- 2.68%
793 * COSTCO WHOLESALE CORP 34,991
204 * FEDERATED DEPARTMENT STORES, INC 7,203
1,064 * K MART CORP 9,310
619 MAY DEPARTMENT STORES CO 15,475
575 PENNEY, (J.C.) CO, INC 8,014
1,059 SEARS ROEBUCK & CO 29,387
927 * TARGET CORP 56,373
10,436 WAL-MART STORES, INC 500,275
---------
661,028
---------
HEALTH SERVICES -- 0.30%
2,250 COLUMBIA/HCA HEALTHCARE CORP 47,109
62 * LIFEPOINT HOSPITALS, INC 957
1,214 * TENET HEALTHCARE CORP 25,114
118 * TRIAD HOSPITALS, INC 1,740
---------
74,920
---------
HOLDING AND OTHER INVESTMENT OFFICES -- 0.21%
80 CARRAMERICA REALTY CORP 1,650
517 CRESCENT REAL ESTATE EQUITIES CO 8,562
284 DUKE-WEEKS REALTY CORP 5,112
50 FIRST INDUSTRIAL REALTY TRUST, INC 1,300
77 LIBERTY PROPERTY TRUST CO 1,732
97 ROUSE CO 2,037
392 SIMON PROPERTY GROUP, INC 9,016
88 SPIEKER PROPERTIES, INC 3,597
551 WEINGARTEN REALTY INVESTORS, INC 19,698
---------
52,704
---------
INDUSTRIAL MACHINERY AND EQUIPMENT -- 12.91%
749 * 3COM CORP 51,634
497 * APPLE COMPUTER, INC 62,497
1,067 * APPLIED MATERIALS, INC 205,997
7,300 * CISCO SYSTEMS, INC 995,537
4,566 COMPAQ COMPUTER CORP 130,131
334 CUMMINS ENGINE CO, INC 10,688
1,367 DEERE & CO 48,528
5,700 * DELL COMPUTER CORP 292,125
152 DIEBOLD, INC 3,695
2,521 * EMC CORP 328,832
755 * GATEWAY, INC 47,187
69
<PAGE>
TIAA-CREF MUTUAL FUNDS SOCIAL CHOICE EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY AND EQUIPMENT -- (Continued)
329 GRACO, INC $ 9,746
2,583 HEWLETT-PACKARD CO 379,055
844 INGERSOLL-RAND CO 30,384
4,521 * INTERNATIONAL BUSINESS MACHINES CORP 474,987
238 NORDSON CORP 10,587
1,247 PITNEY BOWES, INC 57,517
472 * SMITH INTERNATIONAL, INC 30,444
1,177 TIMKEN CO 17,655
-----------
3,187,226
-----------
INSTRUMENTS AND RELATED PRODUCTS -- 1.86%
283 BAUSCH & LOMB, INC 14,804
827 BAXTER INTERNATIONAL, INC 46,363
1,239 BECTON DICKINSON & CO 39,648
498 BIOMET, INC 15,500
1,149 * BOSTON SCIENTIFIC CORP 24,344
1,060 * GUIDANT CORP 75,193
3,540 MEDTRONIC, INC 180,982
183 * ST. JUDE MEDICAL, INC 4,666
2,373 XEROX CORP 57,545
-----------
459,045
-----------
INSURANCE AGENTS, BROKERS AND SERVICE -- 0.41%
1,349 MARSH & MCLENNAN COS, INC 100,584
-----------
INSURANCE CARRIERS -- 4.16%
2,551 ALLSTATE CORP 45,758
1,430 AMERICAN GENERAL CORP 67,567
4,459 AMERICAN INTERNATIONAL GROUP, INC 370,375
659 CHUBB CORP 29,860
691 CIGNA CORP 44,051
8,932 CITIGROUP, INC 437,109
120 * CNA FINANCIAL CORP 3,127
689 CONSECO, INC 8,569
210 JEFFERSON-PILOT CORP 10,710
176 SAFECO CORP 3,267
352 ST. PAUL COS, INC 8,096
-----------
1,028,489
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES -- 0.93%
887 HASBRO, INC 12,695
1,642 MATTEL, INC 14,778
2,483 MINNESOTA MINING & MANUFACTURING CO 202,364
-----------
229,837
-----------
MISCELLANEOUS RETAIL -- 0.42%
957 CVS CORP 29,128
422 * TOYS R US, INC 4,879
2,815 WALGREEN CO 68,967
-----------
102,974
-----------
MOTION PICTURES -- 2.04%
5,929 DISNEY (WALT) CO 208,256
3,472 TIME WARNER, INC 295,120
-----------
503,376
-----------
NONDEPOSITORY INSTITUTIONS -- 2.69%
1,851 AMERICAN EXPRESS CO 234,498
2,434 ASSOCIATES FIRST CAPITAL CORP 39,248
3,926 FEDERAL NATIONAL MORTGAGE ASSOCIATION 196,545
2,575 FREDDIE MAC 97,045
2,188 HOUSEHOLD INTERNATIONAL, INC 71,657
150 LEUCADIA NATIONAL CORP 3,178
773 SLM HOLDINGS CORP 22,803
-----------
664,974
-----------
OIL AND GAS EXTRACTION -- 2.79%
2,089 ANADARKO PETROLEUM CORP 64,759
1,645 APACHE CORP 67,033
581 * BJ SERVICES CO 38,600
2,392 BURLINGTON RESOURCES, INC 75,348
1,404 HELMERICH & PAYNE, INC 37,908
1,201 MITCHELL ENERGY & DEVELOPMENT
CORP (CLASS A) 27,322
941 * NABORS INDUSTRIES, INC 34,346
1,385 NOBLE AFFILIATES, INC 37,914
912 * NOBLE DRILLING CORP 34,827
1,564 * PARKER DRILLING CO 6,647
1,259 * ROWAN COS, INC 33,127
3,499 * SANTA FE SNYDER CORP 31,491
1,307 * TRANSOCEAN SEDCO FOREX, INC 57,834
3,917 UNION PACIFIC RESOURCES GROUP, INC 44,066
1,009 VASTAR RESOURCES, INC 62,053
690 * WEATHERFORD INTERNATIONAL, INC 35,146
-----------
688,421
-----------
PAPER AND ALLIED PRODUCTS -- 0.61%
1,323 AVERY DENNISON CORP 80,041
1,160 CONSOLIDATED PAPERS, INC 39,150
1,671 SONOCO PRODUCTS CO 30,600
-----------
149,791
-----------
PETROLEUM AND COAL PRODUCTS -- 0.37%
1,553 MURPHY OIL CORP 87,259
214 WD-40 CO 3,905
-----------
91,164
-----------
PRIMARY METAL INDUSTRIES -- 0.36%
1,062 BIRMINGHAM STEEL CORP 3,650
1,298 NUCOR CORP 62,385
1,700 WORTHINGTON INDUSTRIES, INC 21,993
-----------
88,028
-----------
PRINTING AND PUBLISHING -- 1.06%
442 DELUXE CORP 10,939
519 DOW JONES & CO, INC 33,605
1,396 GANNETT CO, INC 91,525
299 KNIGHT-RIDDER, INC 13,492
1,299 MCGRAW HILL COS, INC 63,651
625 NEW YORK TIMES CO (CLASS A) 26,054
447 TIMES MIRROR CO SERIES A 21,428
-----------
260,694
-----------
RAILROAD TRANSPORTATION -- 0.21%
3,985 NORFOLK SOUTHERN CORP 52,552
-----------
RUBBER AND MISCELLANEOUS PLASTIC PRODUCTS -- 0.47%
67 BANDAG, INC 1,591
1,601 ILLINOIS TOOL WORKS, INC 87,054
1,020 NIKE, INC (CLASS B) 27,412
-----------
116,057
-----------
SECURITY AND COMMODITY BROKERS -- 2.16%
103 BEAR STEARNS COS, INC 4,242
70
<PAGE>
TIAA-CREF Mutual Funds SOCIAL CHOICE EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SECURITY AND COMMODITY BROKERS -- (Continued)
1,182 MERRILL LYNCH & CO, INC $ 124,036
3,177 MORGAN STANLEY, DEAN WITTER, & CO 275,604
180 PAINE WEBBER GROUP, INC 7,110
2,037 SCHWAB (CHARLES) CORP 106,433
142 THE GOLDMAN SACHS GROUP, INC 15,877
-----------
533,302
-----------
STONE, CLAY, AND GLASS PRODUCTS -- 0.63%
809 CORNING, INC 154,923
-----------
TRANSPORTATION BY AIR -- 0.48%
659 * AMR CORP 37,480
404 DELTA AIRLINES, INC 19,316
946 * FEDEX CORP 31,750
1,593 SOUTHWEST AIRLINES CO 29,769
-----------
118,315
-----------
TRANSPORTATION EQUIPMENT -- 0.06%
328 FEDERAL-MOGUL CORP 5,166
105 FLEETWOOD ENTERPRISES, INC 1,548
292 MODINE MANUFACTURING CO 6,989
-----------
13,703
-----------
TRUCKING AND WAREHOUSING -- 0.01%
284 ARNOLD INDUSTRIES, INC 3,487
-----------
WHOLESALE TRADE-DURABLE GOODS -- 0.34%
248 AVNET, INC 15,732
2,130 GENUINE PARTS CO 44,064
524 GRAINGER (W.W.), INC 20,763
569 IKON OFFICE SOLUTIONS, INC 3,698
-----------
84,257
-----------
WHOLESALE TRADE-NONDURABLE GOODS -- 1.14%
50 BERGEN BRUNSWIG CORP (CLASS A) 234
829 CARDINAL HEALTH, INC 34,662
2,903 ENRON CORP 197,922
605 MCKESSON HBOC, INC 11,230
1,347 SYSCO CORP 38,726
-----------
282,774
-----------
TOTAL COMMON STOCK
(COST $24,870,465) 24,532,409
-----------
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENT -- 0.63%
U.S. GOVERNMENT AGENCY -- 0.63%
FEDERAL HOME LOAN BANK (FHLB)
$156,000 5.540%, 03/13/00 $ 155,952
-----------
TOTAL SHORT TERM INVESTMENT
(COST $155,952) 155,952
-----------
TOTAL PORTFOLIO
(COST $25,026,417) $24,688,361
===========
- ----------
* NON-INCOME PRODUCING
THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE
SAME AS THE AMOUNT DISCLOSED ABOVE.
71
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS SHORT-TERM BOND FUND
MARCH 10, 2000 SUMMARY BY INDUSTRY
- --------------------------------------------------------------------------------
VALUE %
- --------------------------------------------------------------------------------
BONDS
CORPORATE BONDS
ASSET BACKED $ 2,475,185 9.91%
BUSINESS SERVICES 484,030 1.94
COMMUNICATIONS 1,974,700 7.90
ELECTRIC, GAS, AND SANITARY SERVICES 2,147,614 8.59
FOOD AND KINDRED PRODUCTS 484,705 1.94
FOOD STORES 989,240 3.96
GENERAL MERCHANDISE STORES 494,655 1.98
INSTRUMENTS AND RELATED PRODUCTS 499,175 2.00
NONDEPOSITORY INSTITUTIONS 3,419,750 13.69
PETROLEUM AND COAL PRODUCTS 708,900 2.84
SECURITY AND COMMODITY BROKERS 495,075 1.98
TRANSPORTATION EQUIPMENT 491,939 1.96
----------- ------
TOTAL CORPORATE BONDS
(COST $14,707,399) 14,664,968 58.69
----------- ------
GOVERNMENT BONDS
AGENCY SECURITIES 3,776,260 15.11
FOREIGN GOVERNMENT BOND 96,509 0.39
U.S. TREASURY SECURITIES 4,884,985 19.55
----------- ------
TOTAL GOVERNMENT BONDS
(COST $8,767,555) 8,757,754 35.05
----------- ------
TOTAL BONDS
(COST $23,474,954) 23,422,722 93.74
----------- ------
SHORT TERM INVESTMENT
U.S. GOVERNMENT AGENCY 1,252,614 5.01
----------- ------
TOTAL SHORT TERM INVESTMENT
(COST $1,252,614) 1,252,614 5.01
----------- ------
TOTAL PORTFOLIO
(COST $24,727,568) 24,675,336 98.75
OTHER ASSETS & LIABILITIES, NET 311,621 1.25
----------- ------
NET ASSETS $24,986,957 100.00%
=========== ======
72
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS SHORT-TERM BOND FUND
MARCH 10, 2000
- --------------------------------------------------------------------------------
PRINCIPAL RATINGS+ VALUE
- --------------------------------------------------------------------------------
BONDS -- 93.74%
CORPORATE BONDS -- 58.69%
ASSET BACKED -- 9.91%
ADVANTA MORTGAGE LOAN TRUST
SERIES 1998-1 (CLASS A3)
$1,500,000 6.270%, 12/25/17 AAA $1,477,065
CONSECO FINANCE SECURITIZATIONS
CORP SERIES 2000-1 (CLASS A2)
1,000,000 7.190%, 05/01/31 AAA 998,120
----------
2,475,185
----------
BUSINESS SERVICES -- 1.94%
COMDISCO, INC (SR NOTE)
500,000 6.000%, 01/30/02 BAA1 484,030
----------
COMMUNICATIONS -- 7.90%
U.S. WEST CAPITAL FUNDING, INC
(GUARANTEE NOTE)
1,000,000 6.875%, 08/15/01 BAA1 987,270
MCI WORLDCOM, INC (SR NOTE)
1,000,000 6.125%, 08/15/01 A3 987,430
----------
1,974,700
----------
ELECTRIC, GAS, AND SANITARY SERVICES -- 8.59%
DUKE CAPITAL CORP (SR NOTE)
200,000 7.250%, 10/01/04 A3 198,244
K N ENERGY, INC (SR NOTE)
1,000,000 6.450%, 11/30/01 BAA2 980,780
WILLIAMS COS, INC
1,000,000 6.200%, 08/01/02 BAA2 968,590
-----------
2,147,614
-----------
FOOD AND KINDRED PRODUCTS -- 1.94%
DIAGEO CAPITAL PLC NOTE
500,000 6.625%, 06/24/04 A1 484,705
--------
FOOD-STORES -- 3.96%
SAFEWAY STORES, INC NOTE
1,000,000 7.000%, 09/15/02 BAA2 989,240
-----------
GENERAL MERCHANDISE STORES -- 1.98%
WAL-MART STORES, INC (SR NOTE)
500,000 6.150%, 08/10/01 AA2 494,655
-----------
INSTRUMENTS AND RELATED PRODUCTS -- 2.00%
RAYTHEON CO NOTE
500,000 ^ 7.900%, 03/01/03 BAA2 499,175
-----------
NONDEPOSITORY INSTITUTIONS -- 13.69%
DAIMLER-CHRYSLER NA HOLDINGS
(MEDIUM TERM NOTE)
500,000 6.670%, 02/15/02 A1 494,880
FORD MOTOR CREDIT CO NOTE
500,000 6.550%, 09/10/02 A1 489,895
500,000 6.700%, 07/16/04 A1 483,655
GENERAL ELECTRIC CAPITAL CORP
(MEDIUM TERM NOTE)
500,000 6.650%, 09/03/02 AAA 494,340
GENERAL MOTORS ACCEPTANCE
CORP NOTE
500,000 6.850%, 06/17/04 A2 486,490
GENERAL MOTORS ACCEPTANCE
CORP NOTE
500,000 6.750%, 12/10/02 A2 490,810
HOUSEHOLD FINANCE CORP NOTE
500,000 5.875%, 11/01/02 A2 479,680
-----------
3,419,750
-----------
PETROLEUM AND COAL PRODUCTS -- 2.84%
CONOCO, INC (SR NOTE)
750,000 5.900%, 04/15/04 A3 708,900
-----------
SECURITY AND COMMODITY BROKERS -- 1.98%
MORGAN STANLEY DEAN WITTER
500,000 7.125%, 01/15/03 AA3 495,075
-----------
TRANSPORTATION EQUIPMENT -- 1.96%
BOMBARDIER CAPITOL, INC NOTE
500,000 ^ 7.300%, 12/15/02 A3 491,939
-----------
TOTAL CORPORATE BONDS
(COST $14,707,399) 14,664,968
-----------
GOVERNMENT BONDS -- 35.05%
AGENCY SECURITIES -- 15.11%
FEDERAL HOME LOAN
MORTGAGE CORP (FHLMC)
2,000,000 5.750%, 07/15/03 1,925,320
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
2,000,000 4.750%, 11/14/03 1,850,940
-----------
3,776,260
-----------
FOREIGN GOVERNMENT BOND -- 0.39%
CANADA GOVERNMENT
100,000 6.375%, 11/30/04 AA2 96,509
-----------
U.S. TREASURY SECURITIES -- 19.55%
U.S. TREASURY NOTES
1,500,000 6.250%, 02/15/03 1,486,170
3,500,000 5.875%, 11/15/04 3,398,815
-----------
4,884,985
-----------
TOTAL GOVERNMENT BONDS
(COST $8,767,555)
8,757,754
-----------
TOTAL BONDS
(COST $23,474,954) 23,422,722
-----------
SHORT TERM INVESTMENT -- 5.01%
U.S. GOVERNMENT AGENCY -- 5.01%
FEDERAL HOME LOAN BANK (FHLB)
1,253,000 5.540%, 03/13/00 1,252,614
-----------
TOTAL SHORT TERM INVESTMENT
(COST $1,252,614) 1,252,614
-----------
TOTAL PORTFOLIO
(COST $24,727,568) $24,675,336
===========
- ----------
+ AS PROVIDED BY MOODY'S INVESTORS SERVICES (UNAUDITED)
^ SECURITY IS EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933 AND MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION TO QUALIFIED
INSTITUTIONAL BUYERS.AT MARCH 10, 2000, THE VALUE OF THESE SECURITIES
AMOUNTED TO $991,114 OR 3.97% OF NET ASSETS.
73
<PAGE>
TIAA-CREF MUTUAL FUNDS SHORT-TERM BOND FUND
- -----------------
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value of
investment in debt securities, is as follows:
MOODY'S RATINGS (Unaudited)
AAA, AA, A 42.06%
BAA 20.96%
U.S. Government obligations represent 36.98% of the long-term debt portfolio
value and are not reflected in the above ratings.
The cost of investments for federal income tax purposes is substantially the
same as the amount disclosed above.
74
<PAGE>
[TIAA CREF LOGO]
- --------------------------------------------------------------------------------
REPORT OF MANAGEMENT RESPONSIBILITY
To the Shareholder of
TIAA-CREF Mutual Funds:
The accompanying financial statements of the High-Yield Bond and Tax-Exempt Bond
Funds of TIAA-CREF Mutual Funds (the "Funds") are the responsibility of
management. They have been prepared in accordance with accounting principles
generally accepted in the United States and have been presented fairly and
objectively in accordance with such principles.
The Funds have established and maintain a strong system of internal controls
designed to provide reasonable assurance that assets are properly safeguarded
and transactions are properly executed in accordance with management's
authorization, and to carry out the ongoing responsibilities of management for
reliable financial statements. In addition, the Funds' internal audit personnel
provide a continuing review of the internal controls and operations of the
Funds, and the internal Auditor regularly reports to the Audit Committee of the
Funds' Board of Trustees.
The accompanying financial statements have been audited by the independent
auditing firm of Ernst & Young LLP. The independent auditors' report, which
appears on the following page, expresses an independent opinion on the fairness
of presentation of these financial statements.
The Audit Committee of the Funds' Board of Trustees, consisting of trustees who
are not officers of TIAA-CREF Mutual Funds, meets regularly with management,
representatives of Ernst & Young LLP and internal audit personnel to review
matters relating to financial reporting, internal controls and auditing. In
addition to the annual audit of the financial statements of the Funds by the
independent auditing firm, the Securities and Exchange Commission performs
periodic examinations of the Funds' operations.
/s/ Martin E. Galt, III
------------------------------
President
/s/ Richard L. Gibbs
------------------------------
Executive Vice President and
Principal Accounting Officer
75
<PAGE>
[] ERNST & YOUNG LLP [] 787 Seventh Avenue [] Phone: 212 773 3000
New York, New York 10019
REPORT OF INDEPENDENT AUDITORS
To the Shareholder and Board of Trustees of
TIAA-CREF Mutual Funds:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of the High-Yield Bond and Tax-Exempt Bond Funds
(two of the Funds constituting TIAA-CREF Mutual Funds) (the "Funds") as of March
17, 2000 and the related statements of operations and changes in net assets and
financial highlights for the period from March 1, 2000 (commencement of
operations) to March 17, 2000. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 17, 2000 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
High-Yield Bond and Tax-Exempt Bond Funds of TIAA-CREF Mutual Funds at March 17,
2000 and the results of their operations, the changes in their net assets and
the financial highlights for the period from March 1, 2000 to March 17, 2000, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
March 23, 2000
76
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 17, 2000
High-Yield Tax-Exempt
Bond Fund Bond Fund
------------ -----------
ASSETS
Investments, at cost ............................. $ 53,072,662 $28,515,977
Net unrealized appreciation (depreciation)
of investments ................................. (213,172) 153,250
------------ -----------
Investments, at value ............................ 52,859,490 28,669,227
Cash ............................................. 5,923 224,518
Interest receivable .............................. 979,433 285,321
------------ -----------
TOTAL ASSETS 53,844,846 29,179,066
------------ -----------
LIABILITIES
Accrued expenses ................................. 7,899 3,493
Payable for securities transactions .............. 3,890,266 3,974,888
------------ -----------
TOTAL LIABILITIES 3,898,165 3,978,381
------------ -----------
NET ASSETS $ 49,946,681 $25,200,685
============ ===========
Net assets consist of:
Paid in capital .................................. $ 50,000,000 $25,000,000
Accumulated undistributed
net investment income .......................... 159,853 47,435
Accumulated net unrealized appreciation
(depreciation) on investments .................. (213,172) 153,250
------------ -----------
NET ASSETS $ 49,946,681 $25,200,685
============ ===========
Outstanding shares of beneficial
interest, unlimited shares authorized
($.0001 par value) ............................. 5,000,000 2,500,000
============ ===========
Net asset value per share ........................ $ 9.99 $ 10.08
============ ===========
See notes to financial statements.
77
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 17, 2000
High-Yield Tax-Exempt
Bond Fund Bond Fund
------------ -----------
INVESTMENT INCOME
Interest ........................................ $ 167,752 $ 50,928
------------ -----------
Total income .................................... 167,752 50,928
------------ -----------
EXPENSES
Management fees ................................. 19,498 9,307
Trustee fees and expenses ....................... 7 3
------------ -----------
Total expenses before waiver .................... 19,505 9,310
Less expenses waived by the advisor ............. (11,606) (5,817)
------------ -----------
Net expenses .................................... 7,899 3,493
------------ -----------
Net investment income ........................... 159,853 47,435
------------ -----------
NET UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Change in unrealized appreciation
(depreciation) on investments ................. (213,172) 153,250
------------ -----------
Net change in unrealized appreciation
(depreciation) on investments ................. (213,172) 153,250
------------ -----------
Net increase (decrease) in net assets
resulting from operations ..................... $ (53,319) $ 200,685
============ ===========
See notes to financial statements.
78
<PAGE>
TIAA-CREF MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 17, 2000
High-Yield Tax-Exempt
Bond Fund Bond Fund
------------ -----------
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income ............................ $ 159,853 $ 47,435
Net change in unrealized appreciation
(depreciation) on investments .................. (213,172) 153,250
------------ -----------
Net increase (decrease) from operations .......... (53,319) 200,685
------------ -----------
SHAREHOLDER TRANSACTIONS:
Seed money contributed by TIAA ................... 50,000,000 25,000,000
------------ -----------
Net increase from shareholder transactions ....... 50,000,000 25,000,000
------------ -----------
NET ASSETS, end of period ........................ $ 49,946,681 $25,200,685
============ ===========
See notes to financial statements.
79
<PAGE>
TIAA-CREF MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FOR THE PERIOD MARCH 1, 2000
(COMMENCEMENT OF OPERATIONS)
TO MARCH 17, 2000
High-Yield Tax-Exempt
Bond Fund Bond Fund
------------ -----------
SELECTED PER SHARE DATA
Net asset value, beginning of period ............. $10.00 $10.00
------ ------
Gain (loss) from investment operations:
Net investment income ............................ .03 .02
Net unrealized gain (loss) on investments ........ (.04) .06
------ ------
Total gain (loss) from investment operations ..... (.01) .08
------ ------
Net asset value, end of period ................... $9.99 $10.08
====== ======
TOTAL RETURN ..................................... (0.10%) 0.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands) ....... $49,947 $25,201
Ratio of expenses to average net assets
before expense waiver .......................... 0.04% 0.04%
Ratio of expenses to average net assets
after expense waiver ........................... 0.02% 0.02%
Ratio of net investment income to
average net assets .............................. 0.34% 0.20%
Portfolio turnover rate .......................... 0.00% 0.00%
The percentages shown above are not annualized
See notes to financial statements.
80
<PAGE>
TIAA-CREF MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 17, 2000
NOTE 1. ORGANIZATION
TIAA-CREF Mutual Funds is a Delaware business trust that was organized on
January 13, 1997 and is registered with the Securities and Exchange Commission
("Commission") under the Investment Company Act of 1940 as an open-end
management investment company. It currently consists of eleven series, the Money
Market Fund which invests primarily in high quality short-term money market
instruments; the Bond PLUS Fund which invests primarily in a broad range of debt
securities; the Short-Term Bond Fund which invests primarily in a broad range of
short-term debt securities; the High-Yield Bond Fund which invests primarily in
lower rated, high-yielding income bearing debt securities; the Tax-Exempt Bond
Fund which invests primarily in investment grade municipal securities; the
Growth & Income Fund which invests in a broadly diversified portfolio of common
stocks selected for their investment potential; the Growth Equity Fund which
invests in stocks of companies in new or emerging areas of the economy and
companies with distinctive products or promising market conditions; the Equity
Index Fund which is designed to track the United States equity market as a
whole; the Social Choice Equity Fund which invests primarily in a diversified
set of common stocks and attempts to track the return of the United States stock
market while investing only in companies whose activities are consistent with
the fund's social criteria; the International Equity Fund which invests in a
broadly diversified portfolio of primarily foreign equity securities; and the
Managed Allocation Fund which invests in the TIAA-CREF Mutual Funds' other
investment funds.
These financial statements include the High-Yield Bond and Tax-Exempt Bond Funds
(the "Funds"), each of which commenced operations with an investment by Teachers
Insurance and Annuity Association of America ("TIAA") on March 1, 2000 of
$50,000,000 and $25,000,000, respectively. Upon becoming effective with the
Commission, the Funds intend to publicly offer their shares, without a sales
load, through their distributor, Teachers Personal Investors Services, Inc.
("TPIS"), a wholly-owned indirect subsidiary of TIAA, which is registered with
the Commission as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. Teachers Advisors, Inc. ("Advisors"), a wholly-owned
indirect subsidiary of TIAA, which is registered with the Commission as an
investment adviser, provides investment management services for the Funds and is
also responsible for providing, or obtaining at its own expense, the services
reasonably necessary for the ordinary operation of the Funds. Advisors has borne
any costs necessary to organize the Funds.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements may require management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, income,
expenses and related disclosures. Actual results may differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Funds, which are in conformity with accounting principles
generally accepted in the United States.
VALUATION OF INVESTMENTS: 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 on the date of valuation, or at the mean of the closing bid
and asked prices if no sale is reported, except for bonds which are valued at
the most recent bid price or the equivalent quoted yield of such bonds. Money
Market instruments are valued at fair market value, except for such instruments
within 60 days to maturity, which are valued at amortized cost, which
approximates market value. The amortized cost method initially values securities
at original cost and assumes a constant amortization to maturity of any discount
or premium. Portfolio securities for which market quotations are not readily
available (including restricted securities) are valued at fair value, as
determined in good faith under the direction of the Board of Trustees.
ACCOUNTING FOR INVESTMENTS: Securities transactions are accounted for as of the
date the securities are purchased or sold (trade date). Realized gains and
losses are based upon the specific identification method for both financial
statement and federal income tax purposes. Interest income is recognized on the
accrual basis, and discounts and premiums on short term money market instruments
are amortized using the effective yield method.
SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS: The Funds may
purchase securities on a when-issued or delayed delivery basis. In addition to
the normal market risks, this exposes the Funds to the risk that the transaction
may not be consummated. The price and interest rate of such securities is fixed
at trade date. For when-issued purchases, a Fund does not earn interest on such
security until settlement date.
81
<PAGE>
RESTRICTED SECURITIES: Restricted securities held by the Funds, if any, may not
be sold except in exempt transactions or in a public offering registered under
the Securities Act of 1933. The risk of investing in such securities is
generally greater than the risk of investing in securities which are widely held
and publicly traded.
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income, if any, for the
Funds are declared and paid monthly. Distributions from realized gains, if any,
are declared and paid annually for each of the Funds. Undistributed net
investment income and accumulated undistributed net realized gain (loss) on
total investments may include temporary book and tax differences which will
reverse in a subsequent period. Any permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications among the
respective components of net assets.
FEDERAL INCOME TAXES: The Funds intend to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code and will therefore not
be subject to income taxes to the extent that they distribute substantially all
taxable income each year.
NOTE 3. MANAGEMENT AGREEMENT
Under the terms of an Investment Management Agreement, each Fund pays a fee for
the management and administration of the Funds, based on the average daily net
assets of each Fund. Advisors has currently waived its right to receive a
portion of its fee from each Fund until July 1, 2003. As a result, during such
waiver period, Advisors will receive the following annual percentages of each
Fund's average daily net assets:
Management Management Fee
Fee Waiver After Waiver
---------- ------- -------------
High-Yield Bond Fund 0.84% 0.50% 0.34%
Tax-Exempt Bond Fund 0.80% 0.50% 0.30%
NOTE 4. INVESTMENTS
As of March 17, 2000, net unrealized appreciation (depreciation) of investments,
consisting of gross unrealized appreciation and gross unrealized depreciation,
was as follows:
Net Unrealized
Gross Unrealized Appreciation
Appreciation Depreciation (Depreciation)
------------ ----------- --------------
High-Yield Bond Fund $111,066 $324,238 ($213,172)
Tax-Exempt Bond Fund 157,699 4,449 153,250
Purchases and sales of portfolio securities, other than short-term money market
instruments, for the Funds for the period from March 1, 2000 (commencement of
operations) to March 17, 2000, were as follows:
Purchases Sales
---------- -----------
High-Yield Bond Fund $40,674,469 $ 252,813
Tax-Exempt Bond Fund 49,216,811 20,700,000
NOTE 5. TRUSTEE FEES
Each Fund pays the Trustees who are not also officers or affiliated persons of
the Funds, certain remuneration for their services, plus travel and other
expenses incurred in attending Board meetings. Trustees who are also officers or
affiliated persons receive no remuneration for their services as Trustees from
the Funds.
82
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS HIGH-YIELD BOND FUND
March 17, 2000 SUMMARY BY INDUSTRY
- --------------------------------------------------------------------------------
VALUE %
- --------------------------------------------------------------------------------
BONDS
CORPORATE BONDS
AMUSEMENT AND RECREATION SERVICES $ 3,036,250 6.08%
AUTO REPAIR, SERVICES AND PARKING 751,251 1.50
BUSINESS SERVICES 1,417,500 2.84
CHEMICALS AND ALLIED PRODUCTS 1,925,000 3.85
COAL MINING 908,750 1.82
COMMUNICATIONS 8,971,875 17.96
DEPOSITORY INSTITUTIONS 1,249,955 2.50
ELECTRIC, GAS, AND SANITARY SERVICES 2,568,750 5.14
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT 1,130,625 2.26
FOOD AND KINDRED PRODUCTS 263,250 0.53
FOOD STORES 1,010,000 2.02
FURNITURE AND FIXTURES 931,250 1.86
GENERAL BUILDING CONTRACTORS 452,890 0.91
HEALTH SERVICES 3,138,677 6.28
HOTELS AND OTHER LODGING PLACES 987,500 1.98
LEATHER AND LEATHER PRODUCTS 211,250 0.42
MISCELLANEOUS MANUFACTURING INDUSTRIES 932,500 1.87
OIL AND GAS EXTRACTION 1,224,375 2.45
PAPER AND ALLIED PRODUCTS 1,253,750 2.51
PERSONAL SERVICES 501,250 1.00
PRIMARY METAL INDUSTRIES 1,662,500 3.33
PRINTING AND PUBLISHING 2,332,500 4.67
TEXTILE MILL PRODUCTS 491,250 0.99
TRANSPORTATION EQUIPMENT 2,004,915 4.03
WHOLESALE TRADE-NONDURABLE GOODS 131,250 0.26
------------ ------
TOTAL CORPORATE BONDS
(COST $39,698,210) 39,489,063 79.06
------------ ------
TOTAL BONDS
(COST $39,698,210) 39,489,063 79.06
------------ ------
PREFERRED STOCK
COMMUNICATIONS 501,250 1.00
PRINTING AND PUBLISHING 475,000 0.95
------------ ------
TOTAL PREFERRED STOCK
(COST $980,275) 976,250 1.95
------------ ------
SHORT TERM INVESTMENT
U.S. GOVERNMENT AGENCY 12,394,177 24.82
------------ ------
TOTAL SHORT TERM INVESTMENT
(COST $12,394,177) 12,394,177 24.82
------------ ------
TOTAL PORTFOLIO
(COST $53,072,662) 52,859,490 105.83
OTHER ASSETS & LIABILITIES, NET (2,912,809) (5.83)
------------ ------
NET ASSETS $ 49,946,681 100.00%
============ ======
83
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS HIGH-YIELD BOND FUND
March 17, 2000
- --------------------------------------------------------------------------------
PRINCIPAL RATINGS+ VALUE
- --------------------------------------------------------------------------------
BONDS -- 79.06%
CORPORATE BONDS -- 79.06%
AMUSEMENT AND RECREATION SERVICES -- 6.08%
BOYD GAMING CORP
(GUARANTEE NOTE)
$ 250,000 9.250%, 10/01/03 BA3 $ 247,500
250,000 9.500%, 07/15/07 B1 233,125
HARRAH'S OPERATING CO,INC
(GUARANTEE NOTE)
500,000 7.875%, 12/15/05 BA2 466,250
PREMIER PARKS, INC
(SR NOTE)
1,000,000 9.750%, 06/15/07 B3 955,000
250,000 10.000%, 04/01/08 B3 162,500
SIX FLAGS ENTERTAINMENT
(GUARANTEE NOTE)
500,000 8.875%, 04/01/06 B2 472,500
YANKEENETS LLC
(SR NOTE)
500,000 ^ 12.750%, 03/01/07 B1 499,375
---------
3,036,250
---------
AUTO REPAIR, SERVICES AND PARKING -- 1.50%
AVIS RENT A CAR,INC
(GUARANTEE NOTE)
500,000 11.000%, 05/01/09 B2 500,000
TENNECO AUTOMOTIVE, INC
(SR NOTE)
250,000 11.625%, 10/15/09 B2 251,251
---------
751,251
---------
BUSINESS SERVICES -- 2.84%
LAMAR MEDIA CORP
(GUARANTEE NOTE)
1,000,000 8.625%, 09/15/07 B1 960,000
UNITED RENTALS, INC
(GUARANTEE NOTE)
500,000 9.250%, 01/15/09 B1 457,500
---------
1,417,500
---------
CHEMICALS AND ALLIED PRODUCTS -- 3.85%
BORDEN CHEMICAL & PLASTICS NOTE
500,000 9.500%, 05/01/05 B1 475,000
GEORGIA GULF CORP (SR NOTE)
500,000 ^ 10.375%, 11/01/07 B1 511,250
LYONDELL CHEMICAL CO (SR NOTE)
250,000 9.625%, 05/01/07 BA3 236,250
250,000 10.875%, 05/01/09 B2 235,000
SCOTTS CO (SR NOTE)
500,000 8.625%, 01/15/09 B2 467,500
---------
1,925,000
---------
+ AS PROVIDED BY MOODY'S INVESTORS SERVICES (UNAUDITED)
COAL MINING -- 1.82%
P&L COAL HOLDINGS
(GUARANTEE NOTE)
1,000,000 9.625%, 05/15/08 B2 908,750
---------
COMMUNICATIONS -- 17.96%
ADELPHIA COMMUNICATIONS
(SR NOTE)
500,000 7.750%, 01/15/09 B1 432,500
ADVANSTAR COMMUNICATIONS
(GUARANTEE NOTE)
500,000 9.250%, 05/01/08 B2 462,500
ALLBRITTON COMMUNICATIONS
(SR NOTE)
500,000 8.875%, 02/01/08 B3 462,500
CENTURY COMMUNICATIONS
(SR NOTE)
250,000 0.000%, 01/15/08 B1 105,000
CHANCELLOR MEDIA AMFM, INC
(GUARANTEE NOTE)
1,000,000 8.000%, 11/01/08 A2 985,000
CHARTER COMMUNICATIONS HOLDINGS
(SR NOTE)
500,000 8.625%, 04/01/09 B2 452,500
FLAG TELECOMMUNICATION HOLDINGS LTD
(SR NOTE)
1,000,000 ^ 11.625%, 03/30/10 B2 985,000
GLOBAL CROSSING HOLDINGS LTD
(SR NOTE)
1,000,000 9.500%, 11/15/09 A2 992,500
GRAY COMMUNICATIONS SYSTEMS, INC
(GUARANTEE NOTE)
500,000 10.625%, 10/01/06 B3 505,000
HYPERION TELECOMMUNICATIONS
(SR NOTE)
1,000,000 13.000%, 04/15/03 B3 922,500
NEXTEL COMMUNICATIONS
(SR NOTE)
1,250,000 9.375%, 11/15/09 B1 1,221,875
PIERCE LEAHY COMMUNICATIONS
(GUARANTEE NOTE)
500,000 8.125%, 05/15/08 B3 435,000
WILLIAMS COMMUNICATIONS GROUP, INC
(SR NOTE)
1,000,000 10.875%, 10/01/09 B2 1,010,000
---------
8,971,875
---------
DEPOSITORY INSTITUTIONS -- 2.50%
DR HORTON, INC
(SR NOTE)
500,000 10.500%, 04/01/05 BA1 498,050
SOVEREIGN BANCORP
(SR NOTE)
750,000 10.250%, 05/15/04 BA3 751,905
---------
1,249,955
---------
ELECTRIC, GAS, AND SANITARY SERVICES -- 5.14%
ALLIED WASTE NA
(GUARANTEE NOTE)
250,000 10.000%, 08/01/09 B2 195,000
84
<PAGE>
TIAA-CREF MUTUAL FUNDS HIGH-YIELD BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL RATINGS+ VALUE
- --------------------------------------------------------------------------------
ELECTRIC, GAS, AND SANITARY SERVICES -- (Continued)
$1,000,000 7.625%, 01/01/06 BA3 $ 850,000
AZURIX CORP (SR NOTE)
500,000 ^ 10.750%, 02/15/10 BA3 502,500
LEVIATHAN GAS PIPE CORP
(GUARANTEE NOTE)
500,000 10.375%, 06/01/09 B2 511,250
STERICYCLE, INC
(GUARANTEE NOTE)
500,000 12.375%, 11/15/09 B3 510,000
-----------
2,568,750
-----------
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT -- 2.26%
UNITED PAN-EUROPE COMMUNICATIONS
(SR NOTE)
1,000,000 ^ 11.250%, 02/01/10 B2 1,000,000
250,000 ^ 13.750%, 02/01/10 B2 130,625
-----------
1,130,625
-----------
FOOD AND KINDRED PRODUCTS -- 0.53%
PACKAGED ICE, INC
(GUARANTEE NOTE)
300,000 9.750%, 02/01/05 B3 263,250
-----------
FOOD STORES -- 2.02%
SBARRO, INC (SR NOTE)
1,000,000 ^ 11.000%, 09/15/09 BA3 1,010,000
-----------
FURNITURE AND FIXTURES -- 1.86%
LEAR CORP (SR NOTE)
1,000,000 8.110%, 05/15/09 BA1 931,250
-----------
GENERAL BUILDING CONTRACTORS -- 0.91%
LENNAR CORP (SR NOTE)
500,000 7.625%, 03/01/09 BA1 452,890
-----------
HEALTH SERVICES -- 6.28%
COLUMBIA/HCA
(MEDIUM TERM NOTE)
1,000,000 8.120%, 08/04/03 BA2 962,270
EXPRESS SCRIPTS, INC (SR NOTE)
500,000 9.625%, 06/15/09 BA2 475,000
HEALTHSOUTH CORP (SR NOTE)
750,000 9.500%, 04/01/01 BA2 746,407
TENET HEALTHCARE CORP
(SR NOTE)
1,000,000 8.000%, 01/15/05 BA1 955,000
-----------
3,138,677
-----------
HOTELS AND OTHER LODGING PLACES -- 1.98%
PARK PLACE ENTERTAINMENT
(SR NOTE)
1,000,000 ^ 9.375%, 02/15/07 BA2 987,500
-----------
LEATHER AND LEATHER PRODUCTS -- 0.42%
SAMSONITE CORP (SR NOTE)
250,000 10.750%, 06/15/08 CAA1 211,250
-----------
MISCELLANEOUS MANUFACTURING
INDUSTRIES -- 1.87%
INTERNATIONAL GAME TECHNOLOGY
(SR NOTE)
500,000 7.875%, 05/15/04 BA1 471,250
500,000 8.375%, 05/15/09 BA1 461,250
-----------
932,500
-----------
OIL AND GAS EXTRACTION -- 2.45%
CHESAPEAKE ENERGY CORP
(GUARANTEE NOTE)
750,000 ^ 9.625%, 05/01/05 B3 718,125
EOTT ENERGY PARTNERS
(GUARANTEE NOTE)
500,000 11.000%, 10/01/09 BA2 506,250
-----------
1,224,375
-----------
PAPER AND ALLIED PRODUCTS -- 2.51%
BUHRMANN, INC (SR NOTE)
750,000 ^ 12.250%, 11/01/09 B2 772,500
TEMBEC INDUSTRIES, INC
(GUARANTEE NOTE)
500,000 8.625%, 06/30/09 BA2 481,250
-----------
1,253,750
-----------
PERSONAL SERVICES -- 1.00%
COINMACH CORP (SR NOTE)
500,000 11.750%, 11/15/05 B2 501,250
-----------
PRIMARY METAL INDUSTRIES -- 3.33%
AK STEEL CORP
(SR NOTE)
250,000 9.125%, 12/15/06 BA2 246,250
1,000,000 7.875%, 02/15/09 BA2 920,000
LTV CORP (SR NOTE)
500,000 11.750%, 11/15/09 BA3 496,250
---------
1,662,500
---------
PRINTING AND PUBLISHING -- 4.67%
HOLLINGER INTERNATIONAL PUBLISHING
(GUARANTEE NOTE)
1,000,000 9.250%, 02/01/06 BA3 942,500
500,000 9.250%, 03/15/07 BA3 472,500
LIBERTY GROUP OPERATING
(GUARANTEE NOTE)
500,000 9.375%, 02/01/08 B3 465,000
PRIMEDIA, INC
(GUARANTEE NOTE)
500,000 7.625%, 04/01/08 BA3 452,500
-----------
2,332,500
-----------
+ AS PROVIDED BY MOODY'S INVESTORS SERVICES (UNAUDITED)
85
<PAGE>
TIAA-CREF MUTUAL FUNDS HIGH-YIELD BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL RATINGS+ VALUE
- --------------------------------------------------------------------------------
TEXTILE MILL PRODUCTS -- 0.99%
COLLINS & AIKMAN PRODUCTS
(GUARANTEE NOTE)
$ 500,000 11.500%, 04/15/06 B2 $ 491,250
-----------
TRANSPORTATION EQUIPMENT -- 4.03%
FEDERAL MOGUL CORP
(GUARANTEE NOTE)
1,000,000 7.500%, 01/15/09 BA2 845,540
SEQUA CORP (SR NOTE)
1,250,000 9.000%, 08/01/09 BA2 1,159,375
-----------
2,004,915
-----------
WHOLESALE TRADE-NONDURABLE GOODS -- 0.26%
APP CHINA GROUP LTD NOTE
150,000 ^ 14.000%, 03/15/10 B3 131,250
-----------
TOTAL CORPORATE BONDS
(COST $39,698,210) 39,489,063
-----------
TOTAL BONDS
(COST $39,698,210) 39,489,063
-----------
+ AS PROVIDED BY MOODY'S INVESTORS SERVICES.
- --------------------------------------------------------------------------------
SHARES/PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 1.95%
COMMUNICATIONS -- 1.00%
5,000 GLOBAL CROSSING HOLDINGS LTD $ 501,250
-----------
PRINTING AND PUBLISHING -- 0.95%
5,000 PRIMEDIA, INC 475,000
-----------
TOTAL PREFERRED STOCK
(COST $980,275)
976,250
-----------
SHORT TERM INVESTMENT-- 24.82%
U.S. GOVERNMENT AGENCY -- 24.82%
FEDERAL HOME LOAN MORTGAGE CORP
(FHLMC)
$12,398,000 5.550%, 03/20/00 12,394,177
-----------
TOTAL SHORT TERM INVESTMENT
(COST $12,394,177) 12,394,177
-----------
TOTAL PORTFOLIO
(COST $53,072,662) $52,859,490
===========
------------------------------
^ SECURITY IS EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933 AND MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION NORMALLY TO
QUALIFIED INSTITUTIONAL BUYERS. AT MARCH 17, 2000, THE VALUE OF THESE
SECURITIES AMOUNTED TO $7,248,125 OR 14.51% OF NET ASSETS.
-----------------
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value of
investment in debt securities, is as follows:
MOODY'S RATINGS (Unaudtied)
BA 49.39%
B 50.07%
CAA 0.54%
The cost of investments for federal income tax purposes is substantially the
same as the amount disclosed above.
86
<PAGE>
TIAA-CREF MUTUAL FUNDS STATEMENT OF INVESTMENTS TAX-EXEMPT BOND FUND
MARCH 17, 2000
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
- --------------------------------------------------------------------------------
BONDS -- 113.76%
MUNICIPAL BONDS -- 113.76%
ALABAMA -- 4.34%
WEST JEFFERSON AMUSEMENT &
PUBLIC PARK AUTHORITY
$ 1,000,000 7.500%, 12/01/08 $1,093,090
----------
ARKANSAS -- 4.12%
ARKANSAS STATE DEVELOPMENT AUTHORITY
(MORTGAGE REVENUE)
1,000,000 6.600%, 07/01/17 1,037,710
----------
CONNECTICUT -- 4.13%
CONNECTICUT STATE HEALTH & EDUCATIONAL FACILITY
(AUTHORITY REVENUE)
1,000,000 6.750%, 07/01/12 1,040,150
----------
DISTRICT OF COLUMBIA -- 8.17%
DISTRICT OF COLUMBIA
1,000,000 5.500%, 06/01/10 1,007,980
DISTRICT OF COLUMBIA (HOSPITAL REVENUE)
1,000,000 6.000%, 08/15/10 1,052,130
----------
2,060,110
----------
FLORIDA -- 3.99%
CLAY COUNTY FLORIDA SCHOOL BOARD
(CERT PARTICIPATION)
1,000,000 5.375%, 07/01/12 1,005,810
----------
ILLINOIS -- 4.19%
CHICAGO CITY COLLEGES CAPITAL IMPROVEMENT
1,000,000 6.000%, 01/01/11 1,055,560
----------
KENTUCKY -- 3.58%
KENTUCKY STATE TURNPIKE AUTHORITY TOLL
870,000 6.000%, 07/01/11 906,357
----------
MASSACHUSETTS -- 12.49%
HOLDEN MASSACHUSETTS
(GENERAL OBLIGATION)
1,000,000 6.000%, 03/01/13 1,048,710
MASSACHUSETTS STATE CONSTRUCTION
(GENERAL OBLIGATION)
1,000,000 6.000%, 02/01/11 1,058,450
MASSACHUSETTS STATE PORT AUTHORITY
1,000,000 5.750%, 07/01/11 1,040,800
----------
3,147,960
----------
MISSISSIPPI -- 3.66%
PERRY COUNTY POLLUTION CONTROL
(LEAF RIVER FOREST PROJECT)
1,000,000 5.200%, 10/01/12 921,250
----------
MISSOURI -- 3.99%
MISSOURI STATE ENVIRONMENTAL
IMPROVEMENT & ENERGY RESOURCES
1,000,000 5.800%, 09/01/09 1,005,930
----------
NEVADA -- 3.58%
CLARK COUNTY NEVADA POLLUTION CONTROL
REVENUE
1,000,000 5.300%, 10/01/11 902,850
----------
NEW JERSEY -- 3.97%
NEW JERSEY ECONOMIC DEVELOPMENT
(AUTHORITY REVENUE)
$ 1,000,000 3.400%, 12/01/21 $1,000,000
----------
NEW YORK -- 13.08%
NEW YORK STATE DORM AUTHORITY
(FHA & PRESBYTERIAN HOSPITAL)
1,000,000 5.500%, 02/01/11 1,012,560
NEW YORK ADJ-SUBSER B-2
(GENERAL OBLIGATION)
1,000,000 3.400%, 08/15/18 1,000,000
NEW YORK CITY MUNICIPAL
WATER FINANCE AUTHORITY
300,000 3.400%, 06/15/25 300,000
SUFFOLK COUNTY NEW YORK WATERWORK
(AUTHORITY REVENUE)
1,000,000 5.000%, 06/01/10 983,010
----------
3,295,570
----------
NORTH CAROLINA -- 4.16%
NORTH CAROLINA MUNICIPAL POWER AGENCY
(CATAWBA ELECTRIC REVENUE)
1,000,000 6.000%, 01/01/11 1,048,850
----------
OHIO -- 8.05%
MONTGOMERY COUNTY OHIO REVENUE
(CATHOLIC HEALTH)
1,000,000 6.000%, 12/01/10 1,028,750
OHIO STATE AIR QUALITY DEVELOPMENT
(AUTHORITY REVENUE)
1,000,000 3.400%, 12/01/15 1,000,000
----------
2,028,750
----------
TEXAS -- 8.04%
HOUSTON TEXAS AIRPORT (SYSTEMS REVENUE)
1,000,000 5.800%, 07/01/10 1,027,660
RICHARDSON TEXAS
(HOTEL OCCUPANCY CERTIFICATE)
1,000,000 5.450%, 02/15/12 997,820
----------
2,025,480
----------
UTAH -- 4.00%
JORDAN UTAH SCHOOL DISTRICT
1,000,000 5.250%, 06/15/09 1,007,930
----------
VIRGINIA -- 3.97%
ROANOKE VIRGINIA INDUSTRIAL DEVELOPMENT
AUTHORITY (HOSPITAL REVENUE)
1,000,000 3.450%, 07/01/27 1,000,000
----------
WASHINGTON -- 8.27%
WASHINGTON STATE PUBLIC POWER SUPPLY SYSTEM
(NUCLEAR PROJECT)
1,000,000 5.750%, 07/01/09 1,026,870
WASHINGTON STATE
(GENERAL OBLIGATION)
1,000,000 6.000%, 01/01/10 1,056,210
----------
2,083,080
----------
87
<PAGE>
TIAA-CREF MUTUAL FUNDS TAX-EXEMPT BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
- --------------------------------------------------------------------------------
WEST VIRGINIA -- 3.98%
KANAWHA COUNTY WEST VIRGINIA POLLUTION
(CONTROL REVENUE)
$ 1,000,000 5.400%, 09/01/07 $ 1,002,790
-----------
TOTAL MUNICIPAL BONDS
(COST $28,515,977) 28,669,227
-----------
TOTAL PORTFOLIO
(COST $28,515,977) 28,669,227
OTHER ASSETS AND LIABILITIES-- (13.76%) (3,468,542)
-----------
NET ASSETS $25,200,685
===========
- ----------
THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE
SAME AS THE AMOUNT DISCLOSED ABOVE.
88
