APRIL 3, 2000
AS SUPPLEMENTED JUNE 5, 2000
TIAA-CREF Mutual Funds
Prospectus
| 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 have a significant portion of their business in weapons manufacturing;
o produce and market alcoholic beverages or tobacco products;
o have a significant portion of their business in gaming or gambling
operations;
o engage in activities that result or are likely to result in significant
damage to the natural environment;
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
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and in compliance with the Fair Employment Act of 1989 (Northern Ireland).
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
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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.
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 CHART OMITTED]
1998 1999
---- ----
19.27% 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 CHART OMITTED]
1998 1999
---- ----
35.97% 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 CHART OMITTED]
1998 1999
---- ----
30.51% 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 CHART OMITTED]
1998 1999
---- ----
21.24% 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 CHART OMITTED]
1998 1999
---- ----
8.94% -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 CHART OMITTED]
1998 1999
---- ----
5.45% 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
One year Since inception
(January 1, 1999 September 2, 1997 to
to December 31, 1999) December 31, 1998)
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%
For the Money Market Fund's most current 7-day yield, please call us at 800
223-1200.
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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)
TOTAL FUND NET
MANAGEMENT OTHER OPERATING FEE CURRENT
FEE EXPENSES EXPENSES WAIVER(1) FEES
================================================================================
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%
--------------------------------------------------------------------------------
(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.
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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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
================================================================================
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
--------------------------------------------------------------------------------
(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 have a significant portion of their business in weapons manufacturing;
o produce and market alcoholic beverages or tobacco products;
o have a significant portion of their business in gaming or gambling
operations;
o engage in activities that result or are likely to result in significant
damage to the natural environment;
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
23
<PAGE>
Research Center, Inc. We'll do our best to 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
asequity 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
secu-
24
<PAGE>
rities, and the other of which seeks enhanced return 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, 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
25
<PAGE>
which it invests (underlying funds). That could 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
26
<PAGE>
fund has less than 5 percent of the fund's 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-
27
<PAGE>
income securities. These include foreign corporate 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 addi tional 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
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<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.
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<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.
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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
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<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-
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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
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This page intentionally left blank.
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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.
INTERNATIONAL
EQUITY FUND
================================================================================
SELECTED PER SHARE DATA JULY 17, 1997
COMMENCE-
YEAR YEAR MENT OF
ENDED ENDED OERATIONS)
DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1)
--------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------
(1) The percentages shown for this period are not annualized.
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<PAGE>
GROWTH EQUITY GROWTH & INCOME
FUND FUND
================================================================================
JULY 17, 1997 JULY 17, 1997
(COMMENCE- (COMMENCE-
YEAR YEAR MENT OF YEAR YEAR MENT OF
ENDED ENDED OPERATIONS) ENDED ENDED OPERATIONS)
DEC. 31, DEC. 31, TO DEC. 31, DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1) 1999 1998 1997(1)
--------------------------------------------------------------------------------
$ 13.65 $ 10.12 $ 10.00 $ 13.33 $ 10.32 $ 10.00
--------------------------------------------------------------------------------
0.02 0.03 0.06 0.11 0.10 0.07
4.47 3.61 0.28 3.13 3.04 0.32
--------------------------------------------------------------------------------
4.49 3.64 0.34 3.24 3.14 0.39
--------------------------------------------------------------------------------
(0.02) (0.03) (0.06) (0.11) (0.10) (0.07)
-- -- -- -- -- --
(0.93) (0.08) (0.16) (0.53) (0.03) --
--------------------------------------------------------------------------------
(0.95) (0.11) (0.22) (0.64) (0.13) (0.07)
--------------------------------------------------------------------------------
$ 17.19 $ 13.65 $ 10.12 $ 15.93 $ 13.33 $ 10.32
--------------------------------------------------------------------------------
33.00% 35.97% 3.44% 24.46% 30.51% 3.96%
$696,272 $296,362 $ 64,487 $541,718 $232,625 $ 61,822
0.95% 0.95% 0.44% 0.93% 0.93% 0.43%
0.45% 0.45% 0.21% 0.43% 0.43% 0.20%
0.16% 0.37% 0.68% 0.82% 0.97% 0.76%
69.56% 49.91% 29.44% 39.35% 71.49% 1.46%
--------------------------------------------------------------------------------
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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)
--------------------------------------------------------------------------------
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 2.70% 2.80% 2.46%
Portfolio turnover rate 3.90% 4.78% 0.00%
--------------------------------------------------------------------------------
(1) The percentages shown for this period are not annualized.
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BOND PLUS MONEY MARKET
FUND FUND
================================================================================
JULY 17, 1997 JULY 17, 1997
(COMMENCE- (COMMENCE-
YEAR YEAR MENT OF YEAR YEAR MENT OF
ENDED ENDED OPERATIONS) ENDED ENDED OPERATIONS)
DEC. 31, DEC. 31, TO DEC. 31, DEC. 31, DEC. 31, TO DEC. 31,
1999 1998 1997(1) 1999 1998 1997(1)
--------------------------------------------------------------------------------
$ 10.30 $ 10.09 $ 10.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------
0.56 0.56 0.27 0.05 0.05 0.02
(0.66) 0.32 0.20 -- -- --
--------------------------------------------------------------------------------
(0.10) 0.88 0.47 0.05 0.05 0.02
--------------------------------------------------------------------------------
(0.56) (0.56) (0.27) (0.05) (0.05) (0.02)
(0.01) -- -- -- -- --
-- (0.11) (0.11) -- -- --
--------------------------------------------------------------------------------
(0.57) (0.67) (0.38) (0.05) (0.05) (0.02)
--------------------------------------------------------------------------------
$ 9.63 $ 10.30 $ 10.09 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------
(1.01)% 8.94% 4.79% 5.05% 5.45% 2.51%
$204,346 $155,034 $ 58,403 $394,965 $225,187 $ 63,605
0.80% 0.80% 0.37% 0.79% 0.79% 0.36%
0.30% 0.30% 0.14% 0.29% 0.29% 0.13%
5.75% 5.66% 2.72% 4.97% 5.28% 2.49%
652.82% 531.92% 143.61% n/a n/a n/a
--------------------------------------------------------------------------------
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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-9/00 811-08055
