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FEBRUARY 1, 2000
AS SUPPLEMENTED JUNE 5, 2000
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
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PROSPECTUS
INSTITUTIONAL INTERNATIONAL EQUITY FUND
INSTITUTIONAL GROWTH EQUITY FUND
INSTITUTIONAL GROWTH AND INCOME FUND
INSTITUTIONAL EQUITY INDEX FUND
INSTITUTIONAL SOCIAL CHOICE EQUITY FUND
INSTITUTIONAL BOND FUND
INSTITUTIONAL MONEY MARKET FUND
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[TIAA CREF LOGO]
Each investment portfolio, or "Fund," currently offers a single class of shares,
which is described in this prospectus. The shares are only available for
purchase by certain intermediaries affiliated with TIAA-CREF ("TIAA-CREF
Intermediaries") or other persons, such as state-sponsored tuition savings
plans, who have entered into a contract with a TIAA-CREF Intermediary that
enables them to purchase shares of the Funds.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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Table of Contents
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SUMMARY INFORMATION........................................ 1
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS.............. 1
Dual Investment Management Strategy(SM)............... 1
General Risks of Investing in the Funds............... 2
Institutional International Equity Fund............... 2
Institutional Growth Equity Fund...................... 3
Institutional Growth and Income Fund.................. 4
Institutional Equity Index Fund....................... 4
Institutional Social Choice Equity Fund............... 5
Institutional Bond Fund............................... 5
Institutional Money Market Fund....................... 6
PAST PERFORMANCE......................................... 7
FEES AND EXPENSES........................................ 8
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS................ 9
EQUITY FUNDS USING THE DUAL INVESTMENT MANAGEMENT
STRATEGY(SM).......................................... 10
Institutional International Equity Fund............... 11
Institutional Growth Equity Fund...................... 12
Institutional Growth and Income Fund.................. 13
OTHER EQUITY FUNDS....................................... 14
Institutional Equity Index Fund....................... 14
Institutional Social Choice Equity Fund............... 15
ADDITIONAL INVESTMENT STRATEGIES FOR THE EQUITY FUNDS.... 17
THE FIXED-INCOME FUNDS................................... 18
Institutional Bond Fund............................... 18
Institutional Money Market Fund....................... 20
RISKS OF INVESTING IN ANY OF THE FUNDS................... 22
General Investment Risks.............................. 22
MANAGEMENT OF THE FUNDS.................................. 23
The Funds' Investment Adviser......................... 23
Prior Performance of Investment Adviser............... 24
Team Management....................................... 27
Service Providers..................................... 28
CALCULATING SHARE PRICE.................................... 28
DIVIDENDS AND DISTRIBUTIONS................................ 29
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<TABLE>
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TAXES...................................................... 30
YOUR ACCOUNT: BUYING, SELLING OR EXCHANGING SHARES......... 32
ELIGIBLE INVESTORS....................................... 32
PURCHASE OF FUND SHARES.................................. 33
Purchases by Eligible Investors....................... 33
Investing through the Trust Company................... 33
Points to Remember for All Purchases.................. 34
In-Kind Purchases of Shares........................... 34
HOW TO REDEEM SHARES..................................... 35
Redemptions by Eligible Investors..................... 35
Redeeming Shares through the Trust Company............ 36
In-Kind Redemptions of Shares......................... 36
HOW TO EXCHANGE SHARES................................... 36
Exchanges by Eligible Investors....................... 36
Making Exchanges through the Trust Company............ 36
OTHER INVESTOR INFORMATION............................... 37
FINANCIAL HIGHLIGHTS....................................... 40
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Summary Information
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
TIAA-CREF Institutional Mutual Funds consists of seven different Funds:
Institutional International Equity Fund
Institutional Growth Equity Fund
Institutional Growth and Income Fund
Institutional Equity Index Fund
Institutional Social Choice Equity Fund
Institutional Bond Fund
Institutional Money Market Fund
DUAL INVESTMENT MANAGEMENT STRATEGY(SM)
Three of the Funds (the Institutional International Equity Fund, the
Institutional Growth Equity Fund, and the Institutional Growth and Income Fund)
use TIAA-CREF's Dual Investment Management Strategy(SM). Each of these Funds has
a "stock selection" and an "enhanced index" segment.
- The stock selection segment holds a relatively small number of stocks that the
Fund manager believes offer superior returns. These stocks are chosen using
fundamental analysis.
- The enhanced index segment seeks to outperform the Fund's benchmark index
while limiting the possibility of significantly underperforming the benchmark.
The Fund manager attempts to outperform the benchmark index by over- or
under-weighting many stocks in the index by small amounts, based on
proprietary scoring models.
The Fund manager has certain flexibilities, using the Dual Investment Management
Strategy, to allocate amounts between the stock selection segment and the
enhanced index segment, based upon investment opportunities that the Fund
manager determines to be available at any particular time. This approach enables
the Funds to stay fully invested even when the Fund manager cannot find
sufficient investment opportunities for the stock selection segment.
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The Institutional Equity Index Fund, the Institutional Social Choice Equity
Fund, the Institutional Bond Fund, and the Institutional Money Market Fund do
not use the Dual Investment Management Strategy. See their descriptions below.
GENERAL RISKS OF INVESTING IN THE FUNDS
The Funds are subject to the following general risks:
- Market Risk--Stock and bond prices in general can decline over short or
extended periods as a result of political or economic events.
- Interest Rate Risk--Bond or stock prices may decline if interest rates change.
- Company Risk--A company's current earnings can fall or its overall financial
soundness may decline. As a result, the price of its securities may go down,
or the company may not be able to pay principal and interest on its bonds when
due.
Special risks associated with particular Funds are discussed in the following
Fund summaries. The use of a particular benchmark index by a Fund is not a
fundamental policy and can be changed.
An investment in TIAA-CREF Institutional Mutual Funds is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. An investor can lose money in any of
the Funds, or the Funds could underperform other investments.
INSTITUTIONAL 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 Fund's stock selection segment, we concentrate on
individual stocks rather than on geographic regions, sectors, or industries. We
look for companies of all sizes that have certain characteristics such as
sustainable growth, consistent cash flow and attractive stock prices based on
current earnings, assets and long-term
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growth prospects. The benchmark index for the Fund is the Morgan Stanley Capital
International ("MSCI") EAFE(R) (Europe, Australasia, Far East) Index.
SPECIAL INVESTMENT RISKS: Changes in currency exchange rates, the possible
imposition of market controls or currency exchange controls, lower liquidity and
higher volatility in some foreign markets and/or political, social or diplomatic
events could reduce the value of the Fund's investments. These risks may be even
more pronounced for the Fund's investments in emerging market countries.
WHO MAY WANT TO INVEST: The Fund may be appropriate for investors who seek
above-average long-term returns, who understand the advantages of
diversification across international markets and are willing to tolerate the
greater risks of international investing.
INSTITUTIONAL 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 companies with distinctive products or
promising market conditions, using the Dual Investment Management Strategy. For
its stock selection segment, the Fund looks primarily 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
also invest in companies to benefit from prospective acquisitions,
reorganizations, or corporate restructurings or other special situations.
Foreign investments may range from 0 to 40 percent of the Fund's 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. This means the Fund will probably be more
volatile than the overall stock market. With foreign investments, changes in
currency exchange rates, the possible imposition of market controls or currency
exchange controls, lower liquidity and
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higher volatility in some foreign markets and/or political, social or diplomatic
events could reduce the value of the Fund's investments.
WHO MAY WANT TO INVEST: The Fund may be appropriate for investors who are
looking for long-term capital appreciation, but who are willing to tolerate
fluctuations in value.
INSTITUTIONAL GROWTH AND 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 segment, the Fund
manager looks primarily for stocks of larger, well-established, mature growth
companies that 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. The Fund may also invest in rapidly growing smaller companies and may
have up to 20 percent of its assets in foreign securities. Normally, at least 80
percent of the Fund's assets will be income-producing equity securities selected
for their investment potential. The benchmark index for the Fund is the Standard
& Poor's 500 ("S&P 500") Index.
SPECIAL INVESTMENT RISKS: Stocks paying relatively high dividends may at times
significantly underperform other stocks during periods of rapid market
appreciation. Changes in currency exchange rates, the possible imposition of
market controls or currency exchange controls, lower liquidity and higher
volatility in some foreign markets and/or political, social or diplomatic events
could reduce the value of the Fund's foreign investments.
WHO MAY WANT TO INVEST: The Fund may be appropriate for investors who want
capital appreciation and current income but who also can accept the risk of
market fluctuations.
INSTITUTIONAL 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.
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PRINCIPAL INVESTMENT STRATEGIES: The Fund is designed to track U.S. equity
markets as a whole and invests in stocks in the Russell 3000(R) 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(R) 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.
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.
INSTITUTIONAL 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 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.
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.
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.
INSTITUTIONAL BOND FUND
INVESTMENT OBJECTIVE: The Fund seeks a favorable long-term return, primarily
through high current income consistent with preserving capital.
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PRINCIPAL INVESTMENT STRATEGIES: The Fund invests primarily in a broad range of
debt securities. The majority of the Fund's portfolio is invested in U.S.
Treasury and Agency securities, corporate bonds, and mortgage-backed or other
asset-backed securities. The Fund holds mainly investment grade securities rated
in the top four credit categories by Moody's or Standard & Poor's. The Fund is
managed to track the duration of the benchmark index for the Fund, 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.) The Fund
will overweight or underweight individual securities or sectors depending on
where we find undervalued, overlooked or misunderstood issues that offer the
potential for superior returns compared to the Lehman index. The Fund may also
invest in non-investment grade securities (also called "high-yield" or "junk"
bonds) or privately placed (non-registered) securities.
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%, the market value of a portfolio with a
duration of 5 years would decline by approximately 5%. Investments in
mortgage-backed securities are subject to prepayment or extension risk. This is
the possibility that a change in interest rates would cause the underlying
mortgages to be paid off sooner or later than expected. If unanticipated
prepayments occur as a result of a declining interest rate environment, the Fund
would have to reinvest the amounts that had been invested in the mortgage-backed
securities, possibly at a lower rate of return. If unanticipated extensions
occur as a result of a rising interest rate environment, the Fund may not have
sufficient cash available for reinvestment when expected. High-yield securities
involve higher risks than investment grade bonds.
WHO MAY WANT TO INVEST: The Fund may be appropriate for those who want to
invest in a general bond fund with a slightly higher level of risk than a
traditional bond fund.
INSTITUTIONAL 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
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that present minimal credit risk and are rated in the highest rating categories
for short-term instruments. The benchmark index for the Fund is the IBC Money
Fund All-Taxable Average.
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 may be lower than those offered by longer-term
fixed-income investments.
An investment in the Institutional Money Market Fund, like the other Funds, is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the Institutional 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.
PAST PERFORMANCE
No performance data for TIAA-CREF Institutional Mutual Funds is included in this
prospectus because none of the Funds has been in operation for one full calendar
year.
Performance information for other registered investment companies managed by the
investment advisory personnel who manage TIAA-CREF Institutional Mutual Funds is
provided on page 26 of this prospectus.
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FEES AND EXPENSES
The following table describes the fees and expenses that you pay if you buy and
hold shares of the Funds.
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SHAREHOLDER FEES (DEDUCTED DIRECTLY FROM GROSS AMOUNT OF TRANSACTION)
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Maximum Sales Charge Imposed on Purchases (percentage of
offering price) 0%
Maximum Deferred Sales Charge 0%
Maximum Sales Charge Imposed on Reinvested Dividends and
Other Distributions 0%
Redemption Fee 0%
Exchange Fee 0%
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ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
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TOTAL FEE WAIVER
ANNUAL AND/OR
MANAGE- OTHER FUND EXPENSE
MENT EXPENSES OPERATING REIMBURSE- NET
FEES (1) EXPENSES MENT (2,3) EXPENSES
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<S> <C> <C> <C> <C> <C>
Institutional International Equity
Fund 0.27% 0.20% 0.47% 0.18% 0.29%
Institutional Growth Equity Fund 0.23% 0.15% 0.38% 0.16% 0.22%
Institutional Growth and Income
Fund 0.23% 0.15% 0.38% 0.16% 0.22%
Institutional Equity Index Fund 0.18% 0.15% 0.33% 0.16% 0.17%
Institutional Social Choice Equity
Fund 0.19% 0.15% 0.34% 0.16% 0.18%
Institutional Bond Fund 0.18% 0.15% 0.33% 0.14% 0.19%
Institutional Money Market Fund 0.15% 0.15% 0.30% 0.14% 0.16%
</TABLE>
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(1) "Other Expenses" is based on estimated amounts for the current fiscal year.
(2) Teachers Advisors, Inc. ("Advisors"), the investment manager for the Funds,
has agreed to waive a portion of the Management Fees equal to, on an annual
basis: 0.09% of the average daily net assets of the Institutional
International Equity Fund; 0.07% of the average daily net assets of each of
the Institutional Growth Equity Fund, the Institutional Growth and Income
Fund, the Institutional Equity Index Fund, and the Institutional Social
Choice Equity Fund; and 0.05% of the average daily net assets of each of the
Institutional Bond Fund and the Institutional Money Market Fund. This waiver
is contractual and will remain in effect until July 1, 2003.
(3) Advisors has agreed to reimburse the Institutional International Equity Fund
so that Other Expenses, which do not include investment management fee
expenses, do not exceed, on an annual basis, 0.11% of its average daily net
assets and to reimburse each of the other Funds so that Other Expenses do
not exceed, on an annual basis, 0.06% of its average daily net assets. This
reimbursement agreement is contractual and will remain in effect until July
1, 2003.
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EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a Fund for the time periods
indicated 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. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
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1 YEAR 3 YEARS
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Institutional International Equity Fund $30 $93
Institutional Growth Equity Fund $23 $71
Institutional Growth and Income Fund $23 $71
Institutional Equity Index Fund $17 $55
Institutional Social Choice Equity Fund $18 $58
Institutional Bond Fund $19 $61
Institutional Money Market Fund $16 $52
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Investment Objectives, Strategies and Risks
Each of the individual investment portfolios, or Funds, described below has its
own investment objective. The following describes each Fund's investment
objective, the principal investment strategies and techniques each Fund uses to
accomplish its objective, and the principal types of securities each Fund
purchases. These policies and techniques are not fundamental and may be changed
by our Board of Trustees without shareholder approval. However, we'll notify you
of any significant changes. For a complete listing of the Funds' policies and
restrictions, see the Statement of Additional Information ("SAI").
There is no guarantee that any Fund will meet its investment objective.
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EQUITY FUNDS USING THE DUAL INVESTMENT MANAGEMENT STRATEGY(SM)
The Institutional International Equity Fund, the Institutional Growth Equity
Fund, and the Institutional Growth and Income Fund use TIAA-CREF's Dual
Investment Management Strategy(SM), which works like this:
Each of these three equity Funds has two separate segments called the
"stock selection" segment and the "enhanced index" segment. The relative
sizes of these two segments vary as the Fund manager shifts money between
them in response to investment opportunities.
The stock selection segment holds a relatively small number of stocks that
the Fund manager believes offer superior returns. The managers of these
equity Funds will usually use fundamental analysis to select individual
stocks or sectors for investment in the stock selection segment. Each
equity Fund's stock selection segment is described further below.
Money that is not invested in an equity Fund's stock selection segment 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' managers 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 does 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 Management Strategy enables the Funds to stay fully invested
even when the Fund manager cannot find sufficient investment opportunities for
the stock selection segment.
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The benchmarks for each Fund's enhanced index segment currently are as follows:
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FUND BENCHMARK
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Institutional International MSCI EAFE(R) (Europe,
Equity Fund Australasia, Far East)
Index
Institutional Growth Equity Fund Russell 3000(R) Growth Index
Institutional Growth and Income S&P 500(R) Index
Fund
</TABLE>
Using these indices is not a fundamental policy of TIAA-CREF Institutional
Mutual Funds, so we can substitute other indices without shareholder approval.
We'll notify you before we make such a change.
INSTITUTIONAL INTERNATIONAL EQUITY FUND
The INSTITUTIONAL 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.
The Fund uses the Dual Investment Management Strategy. The Fund may invest in
companies of all sizes. For the Fund's stock selection segment, we concentrate
on individual stocks rather than on geographic regions, sectors, or industries.
We do, however, regularly monitor the Fund's sector and country exposure in
order to control risk.
In particular, we look for companies of all sizes that have certain
characteristics, such as:
- sustainable growth
- focused management with successful track records
- unique and easy-to-understand franchises (brands)
- undervalued stock prices based on current earnings, assets, and long-term
growth prospects
- consistent generation of free cash flow
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SPECIAL INVESTMENT RISKS: The Fund is subject to the general investment risks
described on page 22. In addition, 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 foreign economic trends; or (9) the
possibility that a foreign government could restrict an issuer from paying
principal and interest to investors outside the country. Brokerage commissions
and transaction costs are often higher for foreign investments, and it may be
harder to use foreign laws and courts to enforce financial or legal obligations.
The risks noted above often increase in 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 will focus its investments primarily in those
countries which are included in the MSCI EAFE Index.
INSTITUTIONAL GROWTH EQUITY FUND
The INSTITUTIONAL 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 its assets in equity securities that have the
potential for capital appreciation.
The Fund uses the Dual Investment Management Strategy. The Fund's stock
selection segment can invest in companies of all sizes, including companies in
new and emerging areas of the economy and companies with distinctive products or
promising market conditions. We choose individual investments based on a
company's prospects under current or forecasted economic, financial and market
conditions, looking for compa-
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nies 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 Institutional 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 page 22. In addition, there are 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 Institutional 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 Fund's foreign holdings are subject to the risks of foreign investments.
These include, among others: changes in currency exchange rates; possible
imposition of market controls or currency exchange controls; possible imposition
of withholding taxes on dividends and interest; and possible seizure,
expropriation, or nationalization of assets.
INSTITUTIONAL GROWTH AND INCOME FUND
The INSTITUTIONAL GROWTH AND INCOME FUND seeks a favorable long-term return
through capital appreciation and investment income, primarily from a
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broadly diversified portfolio of common stocks. Normally, at least 80 percent of
the Fund's assets will be income-producing equity securities selected for their
investment potential.
The Fund invests in a broadly diversified portfolio of common stocks, using the
Dual Investment Management Strategy. The Fund's stock selection segment
concentrates on individual companies rather than sectors or industries. We look
for stocks of larger, well-established companies that 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. In particular, we look
for companies that are leaders in their industries. We also look 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 its assets in foreign securities.
SPECIAL INVESTMENT RISKS: The Fund is subject to the general investments risks
described on page 22.
The Fund's foreign holdings are subject to the risks of foreign investments.
These include, among others: changes in currency exchange rates; possible
imposition of market controls or currency exchange controls; possible imposition
of withholding taxes on dividends and interest; and possible seizure,
expropriation, or nationalization of assets.
OTHER EQUITY FUNDS
INSTITUTIONAL EQUITY INDEX FUND
The INSTITUTIONAL 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(R), 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.
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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 may not always 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% 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.
SPECIAL INVESTMENT RISKS: While the Fund attempts to closely track the Russell
3000 Index and changes are made to its holdings to reflect changes in the index,
the Fund 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. Also,
because the index's returns aren't reduced by investment and other operating
expenses, the Fund's ability to match the index will be adversely affected by
the costs of buying and selling stocks as well as other expenses. The stock
prices of smaller, lesser-known companies, which make up a small portion 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.
INSTITUTIONAL SOCIAL CHOICE EQUITY FUND
The INSTITUTIONAL 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%
of the Fund's assets will be invested in common stocks.
15
<PAGE> 19
The Fund attempts to track the return of the U.S. stock market as represented by
the Standard & Poor's 500 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 social criteria the Fund takes into consideration are non-fundamental
investment policies. They can change without the approval of the Fund's
shareholders. Currently, the Fund invests only in companies that do not:
- have a significant portion of their business in weapons manufacturing;
- produce and market alcoholic beverages or tobacco products;
- have a significant portion of their business in gaming or gambling operations;
- engage in activities that result or are likely to result in significant damage
to the natural environment;
- produce nuclear energy; or
- 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 principals and in
compliance with the Fair Employment Act of 1989 (Northern Ireland).
For the first three criteria, we assess the issuer to decide whether the
activity is a "significant" part of its business--basing our decision on, for
example, how large a part of a company's operation the activity involves or how
much revenue it brings in. In determining whether a particular activity is
significant to a company, we do not rely on strict objective criteria, but
rather make judgments based on the facts and circumstances pertaining to the
company.
The Corporate Governance and Social Responsibility Committee of our Board of
Trustees provides guidance in deciding whether investments meet the social
criteria. It uses information from independent organizations such as the
Investor Responsibility Research Center, Inc. We'll do our best to 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
16
<PAGE> 20
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% 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
While the equity Funds invest primarily in common stocks, each equity Fund can
also invest, to a limited extent, in other equity securities such as preferred
stock, convertible securities, and warrants. Each equity Fund can also hold
short-term debt securities of the same type as those held by the Institutional
Money Market Fund (see page 20) and other kinds of short-term instruments. These
help the Funds maintain liquidity, use cash balances effectively, and take
advantage of attractive investment opportunities. The equity Funds can also hold
fixed-income securities they acquire because of mergers, recapitalizations, or
otherwise.
Similarly, each equity Fund may also buy and sell options, futures contracts,
and options on futures. We intend to use options and futures primarily for
hedging or for cash management. To manage currency risk, the equity Funds can
also enter into forward currency contracts, and buy or sell options and futures
on foreign currencies.
The equity Funds can also invest in newly developed financial instruments, such
as equity swaps (including arrangements where the return is linked to a stock
market index) and equity-linked fixed-income securities, so long as these are
consistent with a Fund's investment objective and restrictions.
17
<PAGE> 21
THE FIXED-INCOME FUNDS
INSTITUTIONAL BOND FUND
The INSTITUTIONAL BOND 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's portfolio is invested primarily in a broad range of debt securities.
The majority is invested in U.S. Treasury and Agency securities, corporate
bonds, and mortgage-backed or other asset-backed securities. The Fund's holdings
are mainly investment grade 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 is managed to track the duration of the benchmark index for the Fund,
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 Lehman Brothers Aggregate
Bond Index was 4.92 years. By keeping the duration of the Fund close to the
duration of the Lehman index, the returns due to changes in interest rates
should be similar between the Fund and the index. 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, overlooked or
misunderstood issues that offer the potential for superior investment returns
compared to the Lehman index. The Fund 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 Fund may also invest in securities with special features in an effort to
enhance its total return. This category of the Fund's portfolio will primarily
consist of privately placed securities (including "Rule 144A" private
placements) or non-investment grade securities (also called "high-yield" or
"junk" bonds, which are rated Ba1 or lower by Moody's or BB+ or lower by
Standard & Poor's). The Fund will not invest more than 25 percent of its assets
in privately placed and high-yield securities.
The Institutional Bond Fund's investments in mortgage-backed securities can
include pass-through securities sold by private, governmental and
government-related organizations and collateralized mortgage obligations
("CMOs"). Mortgage pass-through securities are created when mortgages
18
<PAGE> 22
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 that are fully
collateralized directly or indirectly by a pool of mortgages from which payments
of principal and interest are dedicated to the payment of principal and interest
by the CMOs.
The Fund may use an investment strategy called "mortgage rolls," in which we
"roll over" an investment in a mortgage-backed security before its settlement
date for a similar security with a later settlement date. The Fund may also
engage in duration-neutral relative value trading, a strategy 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 strategies are both designed to enhance the Fund's returns, but
they do increase the Fund's portfolio turnover rate. However, we don't expect
these strategies to significantly raise the Fund's capital gains.
The Fund may make certain other investments, but not as principal strategies.
For example, the Fund may invest in interest-only and principal-only
mortgage-backed securities. These instruments have unique characteristics and
are more sensitive to prepayment and extension risks than traditional
mortgage-backed securities. Similarly, the Fund may also buy and sell options,
futures contracts, and options on futures. We intend to use options and futures
primarily as a hedging technique or for cash management. To manage currency
risk, the Fund can also enter into forward currency contracts, and buy or sell
options and futures on foreign currencies. The Fund can also buy and sell swaps
and options on swaps, so long as these are consistent with the Fund's investment
objective and restrictions.
SPECIAL INVESTMENT RISKS: The Fund is subject to interest rate risk--that is,
prices of portfolio securities held by the Fund may decline if interest rates
rise. For example, if interest rates rise by 1%, the market value of a portfolio
with a duration of 5 years would decline by approximately 5%.
Non-investment-grade securities are usually called "high-yield" or "junk" bonds.
These lower-rated bonds offer higher returns but also entail higher risks. Their
issuers may be less creditworthy or have a higher risk of becoming insolvent.
Small changes in the issuer's creditworthiness can
19
<PAGE> 23
have more impact on the price of lower-rated bonds than would comparable changes
for investment-grade bonds (those rated Baa or higher by Moody's or rated BBB or
higher by S&P). 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.
The above risks of holding high-yield bonds can also apply to the lower levels
of "investment grade" bonds (for example, Moody's Baa and S&P's BBB). Also,
securities originally rated "investment grade" are sometimes downgraded later
on, should a ratings agency like Moody's or S&P believe the issuer's business
outlook or creditworthiness has deteriorated. A downgraded security already held
in the Fund's portfolio may or may not be sold, depending on our analysis of the
issuer's financial prospects. We don't rely exclusively on ratings agencies when
making investment decisions because they may not alone be an accurate measure of
the risk of lower-rated bonds. Instead, we also do our own credit analysis,
paying particular attention to economic trends and other market events.
The Fund can also invest in privately placed debt securities. One risk of
investing in private placements 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
or extension risk, which is the possibility that a change in interest rates may
cause the underlying mortgages to be paid off sooner or later than expected. If
unanticipated prepayment occurs as a result of a declining interest rate
environment, the Fund would then have to reinvest the amounts that had been
invested in the mortgage-backed securities, possibly at a lower rate of return.
If unanticipated extension occurs as a result of a rising interest rate
environment, the Fund may not have sufficient cash available for reinvestment
when expected.
INSTITUTIONAL MONEY MARKET FUND
The INSTITUTIONAL 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
Institutional 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 dollar-denominated securities or
20
<PAGE> 24
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 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;
(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 Institutional Money Market Fund will only purchase money market instruments
that at the time of purchase are "First Tier Securities", that is
21
<PAGE> 25
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 Fund is subject to the risk of current income
volatility--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 below.
RISKS OF INVESTING IN ANY OF THE FUNDS
GENERAL INVESTMENT RISKS
To varying degrees, the Funds are all subject to several general types of risks.
(1) One is market risk--stock and bond price volatility due to changing
conditions in the financial markets.
(2) Another is interest rate risk--the risk that a bond's or stock's value
will decline if interest rates change. For example, a rise in interest
rates usually causes the market value of fixed-rate securities to go
down.
(3) Another kind of risk is company risk. For stocks and bonds, it comes
from the possibility that current earnings will fall or that overall
financial soundness will decline, reducing the security's value. In
addition, for bonds and other debt securities, company risk comes from
the possibility the issuer won't be able to pay principal and interest
when due.
22
<PAGE> 26
MANAGEMENT OF THE FUNDS
THE FUNDS' INVESTMENT ADVISER
Teachers Advisors, Inc. ("Advisors") manages the assets of TIAA-CREF
Institutional Mutual Funds, under the supervision of the Funds' Board of
Trustees (the "Board"). Advisors is an indirect wholly-owned subsidiary of
Teachers Insurance and Annuity Association of America ("TIAA"). It is registered
as an investment adviser with the U.S. Securities and Exchange Commission under
the Investment Advisers Act of 1940. Advisors also manages the investments of
TIAA Separate Account VA-1, the TIAA-CREF Life Funds, the TIAA-CREF Mutual
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 ("Investment Management"), the personnel of Advisors also manage
the investment accounts of the College Retirement Equities Fund ("CREF"). As of
December 31, 1999, Advisors and Investment Management together had $181 billion
of registered investment company assets under management. Advisors is located at
730 Third Avenue, New York, NY 10017.
Advisors' duties include conducting research, recommending investments, and
placing orders to buy and sell securities. Advisors also acts as liaison among
the various service providers to the Funds, including custodians, fund
administrators, and transfer agents.
Under the terms of an Investment Management Agreement between TIAA-CREF
Institutional Mutual Funds and Advisors, Advisors is entitled to an annual fee
of 0.27%, 0.23%, 0.23%, 0.18%, 0.19%, 0.18%, and 0.15% of the average daily net
assets of the Institutional International Equity Fund, the Institutional Growth
Equity Fund, the Institutional Growth and Income Fund, the Institutional Equity
Index Fund, the Institutional Social Choice Equity Fund, the Institutional Bond
Fund, and the Institutional Money Market Fund, respectively. Advisors has agreed
to waive a portion of its investment management fee equal to, on an annual
basis: 0.09% of the average daily net assets of the Institutional International
Equity Fund; 0.07% of the average daily net assets of each of the Institutional
Growth Equity Fund, the Institutional Growth and Income Fund, the Institutional
Equity Index Fund, and the Institutional Social Choice Equity Fund; and 0.05% of
the average daily net assets of each of the Institutional Bond Fund and the
Institutional Money Market Fund. This waiver is contractual and will remain in
effect until July 1, 2003.
23
<PAGE> 27
PRIOR PERFORMANCE OF INVESTMENT ADVISER
Please do not confuse the Funds with other registered investment company
portfolios using very similar or nearly identical names that are offered by
TIAA-CREF Mutual Funds, by CREF, by a separate account of TIAA, or by a mutual
fund dedicated to a separate account of TIAA-CREF Life Insurance Company (a
wholly-owned subsidiary of TIAA). However, the investment objectives and
policies of certain Funds are very similar to the investment objectives and
policies of other registered investment company portfolios that are managed by
Advisors or Investment Management. Nevertheless, the investment performance of
the Funds may be lower, or higher, than the investment results of such other
portfolios. We do not promise that the investment results of any of the Funds
will be comparable to the investment results of any other mutual fund, CREF
account, or separate account portfolio, even if the other portfolio uses a very
similar name, is managed by the same investment advisory personnel, and has the
same investment objective and policies as the applicable Fund.
TIAA-CREF Institutional Mutual Funds commenced operations on June 14, 1999, and
each Fund has a limited performance record. However, the investment objective,
policies, strategies, and risks of each of the Funds (except the Institutional
Social Choice Equity Fund) is substantially similar to one or more other
registered investment company portfolios managed by Advisors or Investment
Management. The performance of these other portfolios may be relevant to
prospective investors in TIAA-CREF Institutional Mutual Funds.
The charts below show historical performance for: the International Equity Fund,
the Growth Equity Fund, the Growth & Income Fund, the Bond Plus Fund, and the
Money Market Fund of TIAA-CREF Mutual Funds (managed by Advisors); the Stock
Index Account of TIAA Separate Account VA-1 (managed by Advisors); the Stock
Index Fund of TIAA-CREF Life Funds (managed by Advisors); and the Growth
Account, the Equity Index Account, and the Money Market Account of CREF (managed
by the same personnel in their capacities with Investment Management). The data
is provided to illustrate the experience of Advisors' personnel in managing
investment portfolios substantially similar to the Institutional International
Equity Fund, the Institutional Growth Equity Fund, the Institutional Growth and
Income Fund, the Institutional Equity Index Fund, the Institutional Bond Fund,
and the Institutional Money Market Fund of TIAA-CREF Institutional Mutual Funds.
(Because CREF's Social Choice Account is a balanced portfolio with
24
<PAGE> 28
both debt and equity components, there exists no investment portfolio managed by
Advisors' personnel that is substantially similar to the Institutional Social
Choice Equity Fund.) The performance of an appropriate broad-based securities
market index, adjusted to reflect the reinvestment of dividends on securities in
the index, is also presented for each Fund.
The historical performance information presented is not intended to predict or
suggest the returns that the corresponding Fund of TIAA-CREF Institutional
Mutual Funds might experience. The results are net of investment management and
other operating expenses of the portfolios.
After taking into account the contractual fee waiver and expense reimbursement
arrangement, each Fund of TIAA-CREF Institutional Mutual Funds has lower total
annual operating expenses than the corresponding portfolios of the TIAA-CREF
Mutual Funds, TIAA-CREF Life Funds (a mutual fund portfolio offered solely to a
separate account of TIAA-CREF Life Insurance Company), TIAA Separate Account
VA-1 (a variable annuity managed account offered solely to TIAA), and CREF
(variable annuity managed accounts) during the periods illustrated.
25
<PAGE> 29
<TABLE>
<CAPTION>
1 YEAR ENDED 5 YEARS ENDED
AVERAGE ANNUAL TOTAL RETURN PERIOD: DEC. 31, 1999 DEC. 31, 1999
---------------------------------------------------------------------------------
<S> <C> <C>
Accounts/Funds similar to: INSTITUTIONAL INTERNATIONAL EQUITY FUND
---------------------------------------------------------------------------------
International Equity Fund of TIAA-CREF Mutual Funds 55.83% N/A
MSCI EAFE Index 26.97% N/A
---------------------------------------------------------------------------------
Accounts/Funds similar to: INSTITUTIONAL GROWTH EQUITY FUND
---------------------------------------------------------------------------------
Growth Equity Fund of TIAA-CREF Mutual Funds 33.00% N/A
Russell 3000 Growth Index 33.82% N/A
Growth Account of CREF 32.52% 30.86%
Russell 3000 Growth Index 33.82% 31.10%
---------------------------------------------------------------------------------
Accounts/Funds similar to: INSTITUTIONAL GROWTH AND INCOME FUND
---------------------------------------------------------------------------------
Growth & Income Fund of TIAA-CREF Mutual Funds 24.46% N/A
S&P 500 Index 21.04% N/A
---------------------------------------------------------------------------------
Accounts/Funds similar to: INSTITUTIONAL BOND FUND
---------------------------------------------------------------------------------
Bond Plus Fund of TIAA-CREF Mutual Funds (1.01)% N/A
Lehman Aggregate Bond Index (.82)% N/A
Bond Market Account of CREF (1.12)% 7.40%
Lehman Aggregate Bond Index (.82)% 7.73%
---------------------------------------------------------------------------------
Accounts/Funds similar to: INSTITUTIONAL EQUITY INDEX FUND
---------------------------------------------------------------------------------
Stock Index Fund of TIAA-CREF Life Funds N/A N/A
Russell 3000 Index 20.90% N/A
Stock Index Account of TIAA Separate Account VA-1 20.21% 26.47%
Russell 3000 Index 20.90% 26.94%
Equity Index Account of CREF 20.82% 26.64%
Russell 3000 Index 20.90% 26.94%
---------------------------------------------------------------------------------
Accounts/Funds similar to: INSTITUTIONAL MONEY MARKET FUND
---------------------------------------------------------------------------------
Money Market Fund of TIAA-CREF Mutual Funds 5.05% N/A
IBC Money Fund All-Taxable Avg. 4.64% N/A
Money Market Account of CREF 4.98% 5.42%
IBC Money Fund All-Taxable Avg. 4.64% 5.57%
---------------------------------------------------------------------------------
<CAPTION>
AS OF DECEMBER 28, 1999: 7-DAY YIELD
---------------------------------------------------------------------------------
<S> <C> <C>
Money Market Fund of TIAA-CREF Mutual Funds 5.67%
Money Market Account of CREF 5.61%
IBC Money Fund All-Taxable Avg. 5.13%
</TABLE>
26
<PAGE> 30
<TABLE>
<CAPTION>
10 YEARS ENDED INCEPTION TO INCEPTION OF
DEC. 31, 1999 DEC. 31, 1999 ACCOUNT/FUND
--------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
N/A 29.16% Sept. 2, 1997
N/A 18.41% Sept. 2, 1997
--------------------------------------------------
--------------------------------------------------
N/A 33.36% Sept. 2, 1997
N/A 32.01% Sept. 2, 1997
N/A 27.74% Apr. 29, 1994
N/A 28.40% Apr. 29, 1994
--------------------------------------------------
--------------------------------------------------
N/A 27.45% Sept. 2, 1997
N/A 25.20% Sept. 2, 1997
--------------------------------------------------
--------------------------------------------------
N/A 5.26% Sept. 2, 1997
N/A 5.22% Sept. 2, 1997
N/A 7.68% Mar. 1, 1990
N/A 7.92% Mar. 1, 1990
--------------------------------------------------
--------------------------------------------------
N/A 21.20% Jan. 4, 1999
N/A 20.90% Jan. 4, 1999
N/A 24.96% Nov. 1, 1994
N/A 30.51% Nov. 1, 1994
N/A 23.82% Apr. 29, 1994
N/A 24.12% Apr. 29, 1994
--------------------------------------------------
--------------------------------------------------
N/A 5.29% Sept. 2, 1997
N/A 5.05% Sept. 2, 1997
5.24% 5.73% Apr. 1, 1988
6.05% 7.17% Apr. 1, 1988
--------------------------------------------------
<CAPTION>
7-DAY EFFECTIVE YIELD
--------------------------------------------------
<S> <C> <C> <C>
5.83%
5.76%
5.26%
</TABLE>
TEAM MANAGEMENT
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.
27
<PAGE> 31
SERVICE PROVIDERS
TIAA-CREF Institutional Mutual Funds may rely on affiliated or unaffiliated
persons for services related to record keeping and other shareholder services
(e.g., unaffiliated transfer agents maintaining individual account records for
omnibus accounts in certain circumstances), may compensate such service
providers, and may reflect these payments as an administrative expense of the
applicable class of shares.
------------------------------------------------------------------------------
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 Funds other than the Institutional Money Market Fund, we usually use market
quotations or independent pricing services to value securities and other
instruments held by the Funds. 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
Institutional Mutual Funds' Board of Trustees. Money market instruments with
maturities of sixty 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 Institutional 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
28
<PAGE> 32
determined by amortized cost, may be higher or lower than the price the
Institutional Money Market Fund would receive if it sold the security.
------------------------------------------------------------------------------
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 plan to pay dividends on each Fund:
<TABLE>
<CAPTION>
FUND DIVIDEND PAID
---------------------------------------------------------------------------
<S> <C>
Institutional International Equity Fund Annually
Institutional Growth Equity Fund Annually
Institutional Growth and Income Fund Quarterly
Institutional Equity Index Fund Annually
Institutional Social Choice Equity Fund Annually
Institutional Bond Fund Monthly
Institutional Money Market Fund Monthly
</TABLE>
Although we pay dividends monthly from the Institutional Money Market Fund,
these dividends are calculated and declared daily.
We intend to pay net capital gains from Funds that have them once a year.
You can elect from among the following distribution options:
1. REINVESTMENT OPTION, SAME FUND. We'll automatically reinvest your dividend
and capital gain distributions in additional shares of the Fund. Unless you
elect otherwise, this will be your distribution option.
2. INCOME-EARNED OPTION. We'll automatically reinvest your capital gain
distributions, but you will be sent a check for each dividend distribution.
3. CAPITAL GAINS OPTION. We'll automatically reinvest your dividend
distributions, but you will be sent a check for each capital gain
distribution.
29
<PAGE> 33
4. 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. (See the discussion of
"buying a dividend" below.) Cash distribution checks will be mailed within seven
days of the distribution date.
------------------------------------------------------------------------------
Taxes
As with any investment, you should consider how your investment in any Fund will
be taxed.
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 each year. 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 may be taxed at a maximum
federal rate of 20 percent to individual investors (or at 10 percent to
individual investors who are in the 15 percent tax bracket).
TAXES ON TRANSACTIONS. Redemptions, including exchanges to other Funds, are
also subject to capital gains tax or capital loss deductions. A capital
30
<PAGE> 34
gain or loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a Fund, we will send you a confirmation statement
showing how many shares you sold and at what price. However, you or your tax
preparer must determine whether this sale resulted in a capital gain or loss and
the amount of tax to be paid on any gain. Be sure to keep your regular account
statements; the information they contain will be essential in calculating the
amount of your capital gains or losses.
BACKUP WITHHOLDING. If you fail to provide a correct taxpayer identification
number or fail to certify that it is correct, we are required by law to withhold
31% of all the taxable distributions and redemption proceeds paid from your
account. We are also required to begin backup withholding if instructed by the
IRS 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 dividend. After the dividend was paid, each share would be worth $9.75,
and you would have to include the $0.25 dividend in your gross income for tax
purposes.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a Fund and its
investments and these taxes generally will reduce such Fund's distributions. If
a Fund qualifies to pass through a credit for such taxes paid and elects to do
so, 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.
OTHER RESTRICTIONS. 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 CERTAIN INSTITUTIONAL INVESTORS. If you are a
corporate investor, a portion of the dividends from net investment income paid
by the Institutional Growth Equity Fund, the Institutional Growth and
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<PAGE> 35
Income Fund, the Institutional Equity Index Fund, and the Institutional Social
Choice Equity Fund will generally qualify for the corporate dividends-received
deduction. However, the portion of the dividends that qualify depends on the
aggregate qualifying dividend income received by each Fund from domestic (U.S.)
sources. Certain holding period and debt financing restrictions may apply to
corporate investors seeking to claim the deduction. We expect that little or
none of the distributions paid by the Institutional International Equity Fund,
the Institutional Bond Fund, and the Institutional Money Market Fund will
qualify for the corporate dividends-received deduction.
CLIENTS OF TIAA-CREF TRUST COMPANY, FSB. If you purchased Fund shares through
TIAA-CREF Trust Company, FSB, it is responsible for providing you with a
statement showing taxable distributions paid to you from each Fund.
------------------------------------------------------------------------------
Your Account: Buying, Selling or
Exchanging Shares
ELIGIBLE INVESTORS
Shares of TIAA-CREF Institutional Mutual Funds are only available for purchase
by certain intermediaries affiliated with TIAA-CREF ("TIAA-CREF
Intermediaries"), such as TIAA-CREF Trust Company, FSB (the "Trust Company"), or
other persons, such as state-sponsored tuition savings plans, who have entered
into a contract with a TIAA-CREF Intermediary that enables them to purchase
shares of the Funds. Collectively with TIAA-CREF Intermediaries, these
contractually eligible investors are referred to as "Eligible Investors" in the
rest of this prospectus.
In the future, TIAA-CREF Institutional Mutual Funds may offer additional classes
of shares (with different shareholder servicing, distribution, administrative,
or other fees and expenses) for some or all of its Funds. For example, we may
introduce another class of shares to be sold directly to investors who do not
have a specific contractual relationship with a TIAA-CREF Intermediary.
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<PAGE> 36
PURCHASE OF FUND SHARES
There is no minimum investment requirement for Eligible Investors. All purchases
must be in U.S. dollars.
We consider all requests for purchases to be received when they are received in
"good order" (see page 38).
There may be circumstances when we will not permit Eligible Investors to invest
in one or more of the Funds. We reserve the right to suspend or terminate the
offering of shares by one or more Funds. We also reserve the right to reject any
specific purchase request.
PURCHASES BY ELIGIBLE INVESTORS
Only Eligible Investors may invest in the Funds. All other prospective investors
should contact their TIAA-CREF Intermediary for applicable purchase
requirements.
To purchase shares, an Eligible Investor should instruct its bank to wire money
to
State Street Bank and Trust Company
ABA Number 011000028
DDA Number 9905-454-6.
Specify on the wire:
(1) TIAA-CREF Institutional Mutual Funds;
(2) account registration (names of registered owners), address and
Social Security Number(s) or Taxpayer Identification Number;
(3) whether the investment is for a new or existing account (provide
Fund account number if existing); and
(4) the Fund or Funds in which you want to invest, and amount to be
invested in each.
INVESTING THROUGH THE TRUST COMPANY
Clients of the Trust Company may invest in TIAA-CREF Institutional Mutual Funds
only through the Trust Company, which is an Eligible Investor and
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<PAGE> 37
serves as the TIAA-CREF Intermediary for its clients. Contact the Trust Company
regarding how investments in Fund shares are held for your benefit. In addition
to the fees and expenses deducted by the Funds, you may be charged a fee by the
Trust Company for the services it provides you.
POINTS TO REMEMBER FOR ALL PURCHASES
- Each investment by an Eligible Investor in TIAA-CREF Institutional Mutual
Funds 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.
- If you invest in TIAA-CREF Institutional Mutual Funds through an Eligible
Investor, the Eligible Investor may charge you a fee in connection with your
investment (in addition to the fees and expenses deducted by the Funds).
Contact the Eligible Investor to learn whether there are any other conditions,
such as a minimum investment requirement, on your transactions. In addition,
Eligible Investors that are not themselves affiliated with TIAA-CREF may be
charged a fee by their TIAA-CREF Intermediary (in addition to the fees and
expenses deducted by the Funds).
- If we do not receive good funds through wire transfer, we will treat this as a
redemption of the shares purchased when your wire transfer is received. You
will be responsible for any resulting loss incurred by any of the Funds. 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.
IN-KIND PURCHASES OF SHARES
Advisors, at its sole discretion, may permit an Eligible Investor to purchase
shares with investment securities (instead of cash), if: (1) Advisors believes
the securities are appropriate investments for the particular Fund; (2) the
securities offered to the Fund are not subject to any restrictions upon their
sale by the Fund under the Securities Act of 1933, or otherwise; and (3) the
securities are permissible holdings under the Fund's investment restrictions. If
the Fund accepts the securities, the Eligible Investor's account will be
credited with Fund shares equal in net asset value to the market value of
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<PAGE> 38
the securities received. Eligible Investors interested in making in-kind
purchases should contact their TIAA-CREF Intermediary.
HOW TO REDEEM SHARES
REDEMPTIONS BY ELIGIBLE INVESTORS
Eligible Investors can redeem (sell) their Fund shares at any time. If your
shares were purchased through an Eligible Investor, contact the Eligible
Investor for applicable redemption requirements. Shares purchased through an
Eligible Investor must be redeemed by the Eligible Investor. For further
information, contact your TIAA-CREF Intermediary.
We will only accept redemption requests that specify a dollar amount or number
of shares to be redeemed. All other requests, including those specifying a
certain price or date, will be returned.
We accept redemption orders through a telephone request made by calling 800
897-9069.
Usually, we send redemption proceeds to the Eligible Investor on the second
business day after we receive a redemption request, but not later than seven
days afterwards, assuming the request is in good order (see page 38). If a
redemption is requested shortly after a recent purchase by check, the redemption
proceeds may not be paid until payment for the purchase is collected. This can
take up to ten days.
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.
We send redemption proceeds to the Eligible Investor at the address or bank
account of record. If proceeds are to be sent elsewhere, we will require a
letter of instruction from the Eligible Investor with a signature guarantee. We
can send the redemption proceeds by check to the address of record or by wire
transfer.
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<PAGE> 39
REDEEMING SHARES THROUGH THE TRUST COMPANY
If you purchased shares through the Trust Company, it is responsible for making
any redemption proceeds available to you. In addition, the Trust Company may
impose its own restrictions on your ability to redeem shares. Please contact the
Trust Company directly for more information.
IN-KIND REDEMPTIONS OF SHARES
Large redemptions by any Eligible Investor that exceed $250,000 or 1% of a
Fund's assets during any 90-day period may be considered detrimental to the
Fund's existing shareholders. Therefore, at its sole discretion, the Fund may
require that you take a "distribution in kind" upon redemption and may give you
portfolio securities instead of cash. The securities you receive in this manner
will need to be sold through a broker, and you may therefore incur transaction
costs when you sell them.
HOW TO EXCHANGE SHARES
EXCHANGES BY ELIGIBLE INVESTORS
Eligible Investors can exchange shares in a Fund for shares of any other Fund at
any time. (An exchange is a simultaneous redemption of shares in one Fund and a
purchase of shares in another Fund.) If you hold shares through a TIAA-CREF
Intermediary or other Eligible Investor, contact the Eligible Investor for
applicable exchange requirements. 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. An exchange is considered a sale of securities, and
therefore is a taxable event.
We reserve the right, at our sole discretion, to reject any exchange request and
to modify, suspend, or terminate the exchange privilege at any time.
Eligible Investors can make an exchange through a telephone request by calling
800 897-9069. Once made, an exchange request cannot be modified or canceled.
MAKING EXCHANGES THROUGH THE TRUST COMPANY
If you purchased shares through the Trust Company, it is responsible for making
any exchanges on your behalf. In addition, the Trust Company may
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<PAGE> 40
impose its own restrictions on your ability to make exchanges. Please contact
the Trust Company directly for more information.
OTHER INVESTOR INFORMATION
GOOD ORDER. Requests for transactions by Eligible Investors will not be
processed until they are received in good order by our transfer agent, Boston
Financial Data Services. "Good order" means that an Eligible Investor's
transaction request includes its Fund account number, the amount of the
transaction (in dollars or shares), signatures of all account owners exactly as
registered on the account, and any other supporting legal documentation that may
be required.
SHARE PRICE. The share price we use for transactions will be the NAV per share
next calculated after Boston Financial Data Services receives an Eligible
Investor's request in good order. If an Eligible Investor purchases or redeems
shares anytime before the New York Stock Exchange closes (usually 4:00 p.m.
Eastern Time), the transaction price will be the NAV per share for that day. If
an Eligible Investor makes a purchase or redemption request after the New York
Stock Exchange closes, the transaction price will be the NAV per share for the
next business day. If you purchased shares through an Eligible Investor, the
Eligible Investor (including the Trust Company) may require you to communicate
to it any purchase, redemption, or exchange request before a specified deadline
earlier than 4:00 p.m. in order to receive that day's NAV per share as the
transaction price.
TAX IDENTIFICATION NUMBER. Each Eligible Investor must provide its Taxpayer
Identification Number (which, for most individuals, is your Social Security
Number) to us and indicate whether or not it is subject to back-up withholding.
If an Eligible Investor doesn't furnish its Taxpayer Identification Number,
redemptions and exchanges of shares, as well as dividends and capital gains
distributions, will be subject to back-up tax withholding.
SIGNATURE GUARANTEE. For some transaction requests by an Eligible Investor, we
may require a letter of instruction from the Eligible Investor with a signature
guarantee. This requirement is designed to protect you and the TIAA-CREF
Institutional Mutual Funds from fraud, and to comply with rules on stock
transfers.
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<PAGE> 41
TRANSFERRING SHARES. An Eligible Investor may transfer ownership of its shares
to another person or organization that also qualifies as an Eligible Investor or
may change the name on its account by sending us written instructions. All
registered owners of the account must sign the request and provide signature
guarantees.
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FINANCIAL HIGHLIGHTS
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
For the Period June 14, 1999 (commencement of operations)
to September 30, 1999
The Financial Highlights table is intended to help you understand the Funds'
financial performance since they began operations on June 14, 1999 through the
period ended September 30, 1999. 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 or lost 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 Institutional Mutual Funds' Annual Report. It is available without
charge upon request.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INTERNATIONAL GROWTH
EQUITY EQUITY
FUND FUND
----------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period................ $ 10.00 $ 10.00
------- -------
Gain (loss) from operations:
Net investment income............................. 0.04 0.02
Net realized and unrealized gain (loss) on
investments..................................... 0.62 0.12
------- -------
Total gain (loss) from operations............. 0.66 0.14
Less distributions from:
Net investment income............................. -- --
------- -------
Total distributions........................... -- --
------- -------
Net asset value, end of period...................... $ 10.66 $ 10.14
======= =======
TOTAL RETURN........................................ 6.60% 1.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets at end of period (in thousands).......... $27,472 $30,535
Ratio of expenses to average net assets before fee
waiver and expense reimbursement.................. 0.39% 0.35%
Ratio of expenses to average net assets after fee
waiver and expense reimbursement.................. 0.09% 0.07%
Ratio of net investment income to average net
assets............................................ 0.45% 0.20%
Portfolio turnover rate............................. 21.35% 21.08%
</TABLE>
The percentages shown above are not annualized.
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<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL INSTITUTIONAL SOCIAL INSTITUTIONAL
GROWTH & EQUITY CHOICE INSTITUTIONAL MONEY
INCOME INDEX EQUITY BOND MARKET
FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 1.00
------- ------- ------- ------- -------
0.04 0.04 0.04 0.17 0.02
(0.25) (0.28) (0.18) (0.03) --
------- ------- ------- ------- -------
(0.21) (0.24) (0.14) 0.14 0.02
(0.03) -- -- (0.17) (0.02)
------- ------- ------- ------- -------
(0.03) -- -- (0.17) (0.02)
------- ------- ------- ------- -------
$ 9.76 $ 9.76 $ 9.86 $ 9.97 $ 1.00
======= ======= ======= ======= =======
(2.05)% (2.40)% (1.40)% 1.42% 1.51%
$25,174 $25,064 $24,731 $30,354 $25,378
0.38% 0.36% 0.37% 0.35% 0.36%
0.07% 0.05% 0.05% 0.06% 0.05%
0.36% 0.39% 0.37% 1.77% 1.52%
10.95% 9.51% 0.06% 173.31% n/a
</TABLE>
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FOR MORE INFORMATION ABOUT TIAA-CREF INSTITUTIONAL
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 U.S.
Securities and Exchange Commission ("SEC") 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. In the Funds'
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected each Fund's performance during
the preceding fiscal year.
REQUESTING DOCUMENTS. You can request a copy of the SAI or these reports
without charge, or contact us for any other purpose, in any of the following
ways:
<TABLE>
<S> <C>
By telephone: Call 800 478-2966
In writing: TIAA-CREF Institutional Mutual Funds
P.O. Box 4674
New York, NY 10164
Over the Internet: www.tiaa-cref.org/mfunds
</TABLE>
Information about TIAA-CREF Institutional Mutual Funds (including the SAI) can
be reviewed and copied at the SEC's public reference room (1-800-SEC-0339) in
Washington, D.C. The reports and other information are also available through
the SEC's internet website at www.sec.gov. 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 begin
mailing only one copy of the TIAA-CREF Institutional Mutual Funds prospectus,
prospectus supplements, annual and semi-annual reports, or any other required
documents, to your household, even if more than one shareholder lives there. If
you would prefer to continue receiving your own copy of any of these documents,
you may call us toll-free at 800 478-2966 or write us.
Investment Company Act File No. 811-9301
[LOGO] Printed on recycled paper TCIMFPOS-2/00
