UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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|_| Preliminary Proxy Statement.
|_| Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2)).
|X| Definitive Proxy Statement.
|_| Definitive Additional Materials.
|_| Soliciting Material Pursuant to ss. 240.14a-12.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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|X| No fee required.
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---------------------------------------------
IMPORTANT VOTING
INFORMATION FOR
SHAREHOLDERS
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
SPECIAL SHAREHOLDER MEETING - AUGUST 31, 2005
---------------------------------------------
Please read this material carefully
before voting.
[LOGO] TIAA
CREF
FINANCIAL SERVICES
FOR THE GREATER GOOD(SM)
[LOGO] TIAA
CREF
FINANCIAL SERVICES
FOR THE GREATER GOOD(SM)
Dear Shareholder:
A special meeting of shareholders of the TIAA-CREF Institutional Mutual Funds
will be held on August 31, 2005, to vote on important proposals affecting the
Funds. As a shareholder, you are entitled to vote on these proposals. Details
and instructions for voting are enclosed. We urge you to read this information
carefully and to vote your shares so that your voice is heard.
Among the important proposals you are being asked to approve is a new investment
management agreement with Teachers Advisors, Inc., the current investment
advisor to the Funds, which would result in an increase in advisory fees on the
actively managed Funds. As a shareholder of the Retail Class of the Funds, you
are also being asked to approve the adoption of a distribution plan for this
class of shares.
We, the Funds' Board of Trustees, unanimously recommend that you vote "FOR" the
proposals, and we want you to understand the context and rationale for each
item.
Since the Funds were established, the advisor has been committed to providing
high-quality investment management services while remaining a low-cost provider.
With the benefit of hindsight, however, it has become clear that the extremely
low fees currently charged by the advisor are insufficient to cover the costs of
providing services to the Funds while continuing to provide high-quality
services to shareholders. The advisor has informed us that it has consistently
incurred losses and cannot continue as an effective investment manager for the
Funds under the current fee structure.
Given these challenges, the advisor presented us with a comprehensive, long-term
plan to enable the advisor to
www.tiaa-cref org. 730 Third Avenue, New York, NY 10017
continue managing mutual funds for shareholders. This plan would accomplish the
following:
> Maintain overall fees that keep the Funds among the lower-priced offerings in
the industry while implementing a fee increase for actively managed funds that
fairly reflects the advisor's operating expenses;
> Adopt a distribution plan for the Retail Class of the Funds that fairly
reflects the expenses of offering funds to retail investors while positioning
the Funds for future growth to benefit shareholders; and
> Consolidate TIAA-CREF Institutional Mutual Funds and TIAA-CREF Mutual Funds
into a single, more efficient fund family offering expanded investment choices
to shareholders.
Fee increases are never contemplated or proposed lightly. We, the Funds' Board
of Trustees, take very seriously our obligation to protect the interests of
shareholders by ensuring that all fees are appropriate, fair and conducive to
the efficient and effective operation of the Funds. We believe the proposals you
are now being asked to approve meet these criteria, and will enable the Funds'
advisor to continue to offer high-quality investment management and outstanding
service to you and other shareholders.
If the new agreement is not approved, however, we may be forced to explore other
options, including closing certain of the Funds to new investments or
liquidating some or all of the Funds. We do not believe that this would serve
shareholder interests.
Finally, we want you to know that the Board will continue to work closely with
the advisor to ensure that fees reflect TIAA-CREF's historical commitment to
high-value investment products and services. Your approval of these proposals is
an essential first step in our effort to restructure TIAA-CREF's mutual fund
offerings so that they remain fairly and competitively priced for shareholders
and continue to serve shareholder needs.
The following pages provide additional important information about the specific
proposals you are being asked to consider. Please give this material your full
attention so that you can cast an informed vote. Thank you.
The Board of Trustees
TIAA-CREF Institutional Mutual Funds
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
SPECIAL SHAREHOLDER MEETING o AUGUST 31, 2005
IMPORTANT VOTING INFORMATION FOR SHAREHOLDERS
The TIAA-CREF Institutional Mutual Funds will hold a special shareholder meeting
on August 31, 2005, to consider and vote on important proposals affecting the
Funds. As a shareholder, you are entitled to vote on these proposals, and your
Board of Trustees urges you to do so.
YOUR VOTE IS IMPORTANT
The following Q&A provides a summary of the proposals and describes the
convenient options available for voting your shares. (For a complete discussion
of the proposals, please see the enclosed proxy statement.)
To help reach the level of shareholder participation required, and to ensure
that your Funds do not incur additional expenses associated with follow-up
communications, please vote today, even if you plan to attend the special
meeting on August 31. Simply follow the instructions on the enclosed proxy
card(s) and choose the voting method that works best for you-- Internet,
telephone or mail. Your prompt action will ensure your voice is heard, so vote
your shares now!
4 o TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o
AUGUST 31, 2005
1. WHAT PROPOSALS AM I BEING ASKED TO CONSIDER?
The Funds are asking you to consider and approve the following items:
1. Election of Trustees;
2. Ratification of PricewaterhouseCoopers LLP as the Funds' independent
registered public accounting firm for the fiscal year ended September 30,
2005;
3. Adoption of a new investment management agreement for each Fund; and
4. Adoption of a distribution (12b-1) plan for each Fund in the Retail
Class.
2. HAS THE BOARD OF TRUSTEES APPROVED THESE PROPOSED CHANGES?
Yes. At a meeting held on May 17, 2005, the Board of Trustees of the
TIAA-CREF Institutional Mutual Funds unanimously approved all of the
proposals listed above and described in full in the enclosed proxy
statement.
3. HOW DOES THE BOARD OF TRUSTEES SUGGEST THAT I VOTE?
The Board unanimously recommends that all eligible shareholders vote "FOR"
each proposal.
4. I HAVE OTHER ACCOUNTS WITH TIAA-CREF. WILL THEY BE AFFECTED?
No. The specific proposals affect only the TIAA-CREF Institutional Mutual
Funds. They do not affect any of the following TIAA-CREF products:
> College Retirement Equities Fund (CREF) investment accounts;
> TIAA Real Estate Account;
> TIAA Traditional Annuity;
> After-tax annuities; or
> Variable life insurance products.
While not the subject of this proxy vote, the advisor is expected to
recommend that the TIAA-CREF Mutual Funds--a separate fund family designed
primarily for retail investors--be consolidated with the TIAA-CREF
Institutional Mutual Funds in the near future. If and when this proposed
consolidation is approved, the TIAA-CREF Mutual Funds would be merged into a
corresponding TIAA-CREF Institutional Mutual Fund and would become subject
to the fee and expense structure of that Fund.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o AUGUST 31,
2005 o 5
5. WHY IS THE INVESTMENT MANAGEMENT AGREEMENT BEING CHANGED?
Since the Funds were established, Teachers Advisors, Inc., the investment
advisor to the Funds, has been committed to providing high-quality
investment management services at a low cost to shareholders. However, it
has become clear that the advisor set its fees too low to continue to cover
its costs of operating the Funds. As a result, the advisor has always
operated the Funds at a loss. Despite these annual losses, the advisor has
not requested a fee increase since the Funds' inception in 1999. It has
become clear that this situation cannot be sustained, particularly in light
of continued escalating costs related to increased compliance, regulatory,
and reporting requirements, as well as intensified competition for
investment management talent.
The new investment management agreement with the advisor is designed to
provide a reasonable and sustainable fee and expense structure for the Funds
that reflects the true costs associated with operating the Funds, while
maintaining overall expenses at levels that are competitive with those of
other low-cost providers in the mutual fund industry.
6. HOW WILL THE NEW INVESTMENT MANAGEMENT AGREEMENT AFFECT THE FUNDS?
> For the actively managed Funds--including Growth Equity; Growth & Income;
International Equity; Large-Cap Value; Mid-Cap Growth; Mid-Cap Value;
Small-Cap Equity; Real Estate Securities; Social Choice Equity; Bond;
Inflation-Linked Bond; and Money Market Funds--the new investment
management agreement will raise advisory fees. At the Board's request,
the advisor has agreed to waive the proposed fee increase on the Growth
Equity Fund and Growth & Income Fund until at least April 2007.
> There would be no increase in advisory fees for the index Funds:
Large-Cap Growth Index; Large-Cap Value Index; Equity Index; S&P500
Index; Mid-Cap Growth Index; Mid-Cap Value Index; Mid-Cap Blend Index;
Small-Cap Growth Index; Small-Cap Value Index; Small-Cap Blend Index; and
International Equity Index Funds.
> There would be no increase in advisory fees for the Lifecycle Funds.
However, the indirect expenses (such as the expenses for the Funds in
which the Lifecycle Funds invest) would increase, resulting in a higher
total expense ratio for Lifecycle Funds shareholders.
6 o TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o
AUGUST 31, 2005
> At the Board's request, the new investment management agreement would
include a breakpoint pricing schedule for most of the actively managed
Funds, which would modestly reduce the advisory fees on those Funds as
total asset levels increase.
7. HOW WILL TIAA-CREF'S PROPOSED FUND FEES COMPARE TO THOSE OF OTHER COMPANIES?
Even after adopting the higher fees, the Funds would remain among the
lower-priced offerings in the industry. (Please see pages 33-34 of the proxy
statement for a comparison of each Fund's total expenses to those of similar
funds in its industry peer group.)
8. IS TIAA-CREF STILL COMMITTED TO BEING A LOW-COST, HIGH-VALUE PROVIDER?
The TIAA-CREF organization remains committed to the values and practices
that have set it apart for 85 years--including value, integrity, sound
investment management and a high level of service. For this reason, the
proposal to raise advisory fees on the actively managed Institutional Mutual
Funds was made only after thorough and deliberate consideration of
shareholders' interests by the Funds' Board of Trustees. The Board was
persuaded that the current level of fees being charged was too low for the
advisor to sustain. It then determined that the proposed increase in fees
would not unduly benefit the advisor at the expense of Fund shareholders. As
part of its ongoing oversight of the Funds, the Board of Trustees will
annually monitor the level of fees and the advisor's profits generated by
the new agreement to ensure that they are reasonable.
9. AS A SHAREHOLDER, HOW WILL I BENEFIT FROM THE NEW INVESTMENT MANAGEMENT
AGREEMENT?
The Board of Trustees has determined that the new investment management
agreement is fair and reasonable to the Funds and to shareholders because it
would:
> Enable the Funds' investment advisor to continue to offer you and other
shareholders the high-quality service you have come to expect from
TIAA-CREF, and to expand these shareholder services;
> Allow the Funds to continue to retain and attract talented investment
professionals, and add new investment management personnel, which would
benefit the Funds' overall investment management program;
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o AUGUST 31,
2005 o 7
> Help ensure that the TIAA-CREF organization can continue to offer the
Funds while remaining competitive with other low-cost providers in our
industry.
10. WHAT WILL HAPPEN IF SHAREHOLDERS DO NOT APPROVE THE NEW INVESTMENT
MANAGEMENT AGREEMENT?
The advisor has indicated that it will not be able to continue in its
advisory role to the Funds unless the new investment management agreement is
approved, since the fees under the current agreement are not adequate to
cover the costs of operating the Funds. If the new agreement is not
approved, the advisor would be forced to recommend to the Board of Trustees
other courses of action, including closing certain of the Funds to new
investments or liquidating some or all of the Funds.
11. WHAT DOES THE PROPOSED DISTRIBUTION PLAN DO?
The Board of Trustees is proposing the adoption of a distribution plan
(commonly called a "12b-1" plan) that would apply to Retail Class shares of
the TIAA-CREF Institutional Mutual Funds. Under the proposed plan, Retail
Class shares of each Fund may reimburse the Funds' distributor for certain
service and distribution expenses, up to a maximum of 0.25% of the average
daily net asset value of shares of the Fund, on an annualized basis.
The Funds' distributor has agreed not to seek any reimbursement under the
proposed 12b-1 plan until April 2007 if the plan is approved. This means
that Retail Class shares of the Funds would not pay any 12b-1 fees until
that time. Additionally, management has agreed to cap total expenses of
Retail Class shares of the Funds until April 2007.
12. AS A SHAREHOLDER, HOW WILL I BENEFIT FROM THE PROPOSED DISTRIBUTION PLAN?
The enhanced distribution of these shares under the proposed distribution
plan is expected to lead to steadier inflows of cash into the Funds, which,
in turn, would make it easier to manage the Funds and help reduce the number
of occasions on which portfolio securities would need to be sold to meet
redemptions.
In addition, the plan is expected to attract new shareholders and fund
assets, allowing the Retail Class to grow. Growth in asset levels would
ultimately benefit shareholders because it would give the Funds the ability
to achieve greater economies of scale and potentially lower overall expense
ratios by spreading expenses over a larger asset base.
8 o TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o
AUGUST 31, 2005
Without the new inflows that the distribution plan is expected to generate,
the Funds' assets could shrink, likely resulting in higher expenses for
shareholders.
13. WHAT WILL HAPPEN IF SHAREHOLDERS DO NOT APPROVE THE DISTRIBUTION PLAN FOR
THE RETAIL CLASS?
If the distribution plan is not approved, it is unlikely that the Retail
Class of the Funds would be able to increase assets to a level sufficient to
generate economies of scale. The advisor has indicated that without the
plan, it will not be able to bear the cost of distribution and may no longer
be able to promote or distribute shares of the Retail Class.
14. IN ADDITION TO THESE SPECIFIC PROPOSALS, DOES TIAA-CREF HAVE AN OVERALL
LONG-TERM PLAN FOR ITS MUTUAL FUND OFFERINGS?
TIAA-CREF is committed to operating low-cost, high-value mutual funds for
all shareholders. Approval of the new investment management agreement and
the distribution plan is an essential first step in a broader effort to
restructure and enhance TIAA-CREF's mutual fund offerings so that the funds
remain fairly and competitively priced for shareholders and continue to
serve shareholder needs.
Assuming the new investment management agreement and distribution plan are
approved, a planned second step, while not part of this proxy vote, would be
the consolidation of the TIAA-CREF Mutual Funds into the TIAA-CREF
Institutional Mutual Funds in the near future. If and when this proposed
consolidation is approved, it would result in a streamlined fund family with
greater efficiency, consistent pricing and improved economies of scale--all
of which would permit the Funds to better serve your investment needs.
Another step that will be implemented, but is not within the scope of this
proxy vote, is the adoption of a nominal fee on Retail Class account
balances of under $2,500. This fee will be an important step toward reducing
administrative costs associated with maintaining these smaller accounts,
which would further increase the efficiency of the Funds' operations.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o AUGUST 31,
2005 o 9
15. WHEN WILL THE PROPOSED CHANGES TAKE EFFECT?
If approved by shareholders, changes to the investment management agreement
and the adoption of the distribution plan would likely be implemented in the
fourth quarter of 2005.
16. WHAT LEVEL OF SHAREHOLDER SUPPORT IS NEEDED TO APPROVE THE PROPOSALS?
> Election of each Trustee requires a plurality of the votes cast at the
shareholder meeting, either in person or by proxy.
> Ratification of the Funds' independent registered public accounting firm
requires a majority of the votes cast at the shareholder meeting, either
in person or by proxy.
> Approval of both the new investment management agreement and the 12b-1
distribution plan requires the lesser of (1) more than 50 percent of the
total outstanding shares of the respective Funds or (2) at least 67
percent of the shares present at the respective shareholders' meetings,
either in person or by proxy, if more than 50 percent of the outstanding
shares are represented.
17. WHO IS ENTITLED TO VOTE ON THESE CHANGES?
All TIAA-CREF Institutional Mutual Fund shareholders of record as of May 31,
2005, are eligible to vote on these proposals and are urged to do so.
18. WHEN AND WHERE IS THE SPECIAL SHAREHOLDERS' MEETING?
The special meeting of the shareholders of the TIAA-CREF Institutional
Mutual Funds has been scheduled for August 31, 2005, at 9:00 a.m., at 730
Third Avenue, 17th Floor, New York, New York.
19. WHAT METHOD OF VOTING MAY I USE?
Simply select the voting format that you find most convenient:
> Telephone (automated service):
Call the toll-free number shown on your proxy card(s) and follow the
recorded instructions
> Telephone (to speak to a representative of D.F. King & Co., the Funds'
proxy solicitor):
800 755-7250 (toll free)
> Internet:
Access the Web site shown on your proxy card(s) and follow the online
instructions
10 o TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o
AUGUST 31, 2005
> Mail:
Complete and return the enclosed proxy card(s)
> In person:
Attend the special shareholder meeting on August 31
Whichever method you choose, please be sure to cast your vote as soon as
possible. Even if you plan to attend the special shareholder meeting, you
can vote in advance using one of the other methods.
20. WHO SHOULD I CALL IF I HAVE ADDITIONAL QUESTIONS?
If you have questions related to the proxy material or need assistance in
voting your shares, please contact D.F. King & Co., the Funds' proxy
solicitor, toll free at 800 755-7250.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS SPECIAL SHAREHOLDER MEETING o AUGUST 31,
2005 o 11
(C)2005 Teachers Insurance and Annuity Association-College Retirement Equities
Fund (TIAA-CREF), New York, NY 10017
Retail
A11028
[GRAPHIC] Printed on recycled paper (7/05)
[LOGO] TIAA
CREF
FINANCIAL SERVICES
FOR THE GREATER GOOD
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
730 Third Avenue
New York, New York 10017-3206
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 31, 2005
The TIAA-CREF Institutional Mutual Funds (the "Institutional Funds") will hold a
special meeting of the shareholders of its investment portfolios (the "Funds")
on August 31, 2005, at 9:00 a.m. at 730 Third Avenue, New York, New York (17th
floor). The agenda for the meeting is:
1. To elect Trustees of the Institutional Funds to serve until each of their
successors is elected and qualified.
2. To ratify the selection by the Board of Trustees of PricewaterhouseCoopers
LLP to serve as the Institutional Funds' independent registered public
accounting firm for the fiscal year ending September 30, 2005.
3. To approve a new investment management agreement between the Institutional
Funds and Teachers Advisors, Inc.
4. To approve the adoption of a Distribution Plan with respect to the Retail
Class shares of the Institutional Funds.
5. To address any other business that may properly come before the meeting or
any adjournments thereof.
The Board of Trustees of the Institutional Funds has set May 31, 2005 as the
record date for determining the number of votes entitled to be cast at the
meeting or any adjournments thereof. You may vote at the meeting (or any
adjournments of the meeting) only if you were a shareholder of one or more of
the Funds as of May 31, 2005.
By Order of the Board of Trustees,
/s/ E. Laverne Jones
E. Laverne Jones
Secretary
Please vote as soon as possible before the meeting, even if you plan to attend
the meeting. You can vote quickly and easily over the Internet, by telephone, or
by mail. Just follow the simple instructions that appear on your enclosed proxy
card(s). A separate proxy card is provided for each Fund in which you own
shares. Since we cannot hold the meeting unless a quorum is reached, please help
the Funds avoid the expense of a follow-up mailing by voting today!
If you plan to attend the meeting, please call 1 877-535-3910, ext. 2440 to
obtain an admission pass. In accordance with TIAA-CREF's security procedures, a
pass and appropriate picture identification will be required to enter the
special meeting. Please note that no laptop computers, recording equipment or
cameras will be permitted, and please read the instructions on the pass for
additional information.
July 5, 2005
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
730 Third Avenue
New York, New York 10017-3206
PROXY STATEMENT
Special Meeting of Shareholders
to be held on August 31, 2005
The Board of Trustees (the "Board") of the TIAA-CREF Institutional Mutual Funds
(the "Institutional Funds") has called a special meeting of the shareholders of
each of its investment portfolios (each, a "Fund" and collectively, the "Funds")
to be held on August 31, 2005, at 9:00a.m. at 730 Third Avenue, New York, New
York (17th floor). At the special meeting, shareholders will vote on whether to:
1. Elect Trustees of the Institutional Funds to serve until each of their
successors is elected and qualified;
2. Ratify the selection by the Board of Trustees of PricewaterhouseCoopers
LLP to serve as the Funds' independent registered public accounting firm
for the fiscal year ending September 30, 2005;
3. Approve a new investment management agreement between the Funds and
Teachers Advisors, Inc. (the "Advisor");
4. Approve the adoption of a distribution plan ("Distribution Plan") pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"1940 Act"), with respect to the Retail Class shares of the Funds; and
5. Address any other business that may properly come before the meeting or
any adjournments thereof.
At this time, the Board does not know of any other matters being presented at
the meetings or any adjournments thereof.
The accompanying proxy forms will be used to vote at the meeting of the Funds
(or any adjournments of the meeting) being held on August 31, 2005, at 730 Third
Avenue, New York, New York at 9:00 a.m. This proxy statement will first be
mailed to shareholders on or about July 5, 2005.
1
The Institutional Funds consist of the:
o "Actively Managed Funds," which include the Growth Equity Fund, Growth &
Income Fund, International Equity Fund, Large-Cap Value Fund, Mid-Cap Growth
Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real Estate Securities Fund,
Social Choice Equity Fund, Bond Fund, Inflation-Linked Bond Fund and Money
Market Fund.
o "Index Funds," which include the Large-Cap Growth Index Fund, Large-Cap Value
Index Fund, Equity Index Fund, S&P 500 Index Fund, Mid-Cap Growth Index Fund,
Mid-Cap Value Index Fund, Mid-Cap Blend Index Fund, Small-Cap Growth Index
Fund, Small-Cap Value Index Fund, Small-Cap Blend Index Fund and
International Equity Index Fund.
o "Lifecycle Funds," which include the Lifecycle Fund - 2010 Fund, Lifecycle
Fund - 2015 Fund, Lifecycle Fund - 2020 Fund, Lifecycle Fund - 2025 Fund,
Lifecycle Fund - 2030 Fund, Lifecycle Fund - 2035 Fund and Lifecycle Fund -
2040 Fund.
The following table shows which items the shareholders of each Fund will be
asked to consider:
Item Funds
- ---------------------------------------------------------------------------------------
1 Shareholders of all Funds voting together
- ---------------------------------------------------------------------------------------
2 Shareholders of all Funds voting together
- ---------------------------------------------------------------------------------------
3 Shareholders of each Fund voting separately for their Fund
- ---------------------------------------------------------------------------------------
4 Shareholders of Retail Class shares of the Large-Cap Value Fund, Mid-Cap
Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real Estate
Securities Fund and Inflation-Linked Bond Fund, each Retail Class shareholder
voting separately for their Fund
- ---------------------------------------------------------------------------------------
VOTING INFORMATION
How Do I Vote?
(1) By marking, signing, and mailing the enclosed proxy card in the
postage-paid envelope provided;
(2) By logging on to the Internet site shown on your proxy card(s) and follow
the on-screen instructions;
(3) By dialing the toll free telephone number shown on your proxy card(s) and
follow the recorded instructions; and
(4) By voting in person at the special meeting.
You must complete a separate proxy form for each Fund in which you own shares.
2
Can I Cancel or Change My Vote?
You may cancel or change your vote by simply voting again by: (1) executing and
returning later-dated proxy forms, (2) voting over the telephone; (3) voting
through the Internet, or (4) voting in person at the meeting. If you return the
proxy form or vote by telephone or through the Internet, your vote must be
received by 12:00 noon ET on August 31, 2005. If you vote in person at the
meeting, you may vote any time up until the voting results are announced.
How Does a Proxy Work?
When you vote by proxy, you are appointing the persons named on the proxy form
as your agents to vote on your behalf at a meeting or any adjournments thereof.
Unless you instruct them otherwise, they will vote FOR the election of each of
the nominees for Trustee of the Funds, FOR the ratification of the selection of
PricewaterhouseCoopers LLP to serve as independent registered public accounting
firm, FOR the approval of the new investment management agreement as it applies
to your Fund(s), and FOR the approval of the adoption of the Distribution Plan
with respect to the Retail Class shares of your Fund(s). Although we are unaware
of any other matters to be presented at the meeting, if other matters are
brought before the meeting or any adjournments thereof, the proxies will vote
your shares using their own best judgment. All proxies solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to the
meeting, and are not revoked, will be voted at the meeting.
Who May Vote; How Many Votes Do I Get?
Shareholders of each of the Funds as of May 31, 2005 (the "Record Date") will be
eligible to vote at the meeting (or any adjournments thereof). Each outstanding
full share of a Fund is entitled to one vote and each outstanding fractional
share is entitled to a proportionate fractional share of one vote. Therefore,
the number of votes you will have at the meeting will depend upon how many
shares you own in the respective Fund on the Record Date. All shareholders of
record on the Record Date are entitled to vote. As of the Record Date, there
were 805,373,322.52 aggregate shares outstanding in the Institutional Mutual
Funds.
Below is the number of shares of each Class of each Fund as of the Record Date:
Actively Managed Funds and Index Funds
============================================================================================
Fund Retail Class Institutional Class Retirement Class
============================================================================================
Growth Equity Fund -- 16,328,1281.49 --
- --------------------------------------------------------------------------------------------
Growth & Income Fund -- 18,122,798.27 5,837,583.54
- --------------------------------------------------------------------------------------------
International Equity Fund -- 54,105,522.16 16,342,901.94
- --------------------------------------------------------------------------------------------
Large-Cap Value Fund 12,547,012.12 14,544,078.16 10,106,655.68
- --------------------------------------------------------------------------------------------
(continued on next page)
3
Actively Managed Funds and Index Funds
==================================================================================================
Fund Retail Class Institutional Class Retirement Class
==================================================================================================
Mid-Cap Growth Fund 3,496,980.91 1,238,473.96 6,556,086.10
- --------------------------------------------------------------------------------------------------
Mid-Cap Value Fund 4,666,898.69 1,501,735.32 12,245,778.72
- --------------------------------------------------------------------------------------------------
Small-Cap Equity Fund 4,502,858.92 7,258,791.26 10,256,090.72
- --------------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- 37,622,091.86 1,873,911.80
- --------------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- 27,766,517.71 37,623.76
- --------------------------------------------------------------------------------------------------
Equity Index Fund -- 61,262,876.86 --
- --------------------------------------------------------------------------------------------------
S&P 500 Index Fund -- 33,775,146.33 6,341,305.23
- --------------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- 2,017,822.41 30,009.29
- --------------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- 2,787,573.50 16,992.65
- --------------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- 3,678,421.67 303,438.36
- --------------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- 5,261,566.08 90,084.21
- --------------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- 5,001,943.55 80,032.28
- --------------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- 9,589,714.63 27,011.24
- --------------------------------------------------------------------------------------------------
International Equity Index Fund -- 10,284,949.96 37,998.60
- --------------------------------------------------------------------------------------------------
Real Estate Securities Fund 10,332,969.24 15,817,406.47 8,787,899.09
- --------------------------------------------------------------------------------------------------
Social Choice Equity Fund -- 9,600,840.56 4,447,029.03
- --------------------------------------------------------------------------------------------------
Bond Fund -- 130,949,369.43 --
- --------------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund 6,326,951.48 27,172,970.32 --
- --------------------------------------------------------------------------------------------------
Money Market Fund -- 183,390,244.53 --
- --------------------------------------------------------------------------------------------------
Lifecycle Funds
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2010 Fund 257,722.99
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2015 Fund 421,057.29
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2020 Fund 194,924.43
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2025 Fund 302,990.10
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2030 Fund 198,883.26
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2035 Fund 198,587.53
- --------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2040 Fund 153,826.69
- --------------------------------------------------------------------------------------------------
How Many Votes Must Be Present for a Quorum or to Pass a Vote?
In order to hold the meeting and vote on the items on the agenda, we will need
to have a quorum of shareholders present (in person or by proxy) at the meeting.
A quorum means 10% of the votes that are entitled to be cast. In determining
whether a quorum has been reached, abstentions and broker non-votes are counted
as being present at the meeting.
4
If a quorum is not present at the meeting, or if a quorum is present at the
meeting but sufficient votes to approve one or more of the proposed items is not
received, or if other matters arise requiring shareholder attention, the persons
named as proxy agents may propose and vote for one or more adjournments of the
meeting in order to permit the solicitation of additional votes. Any of the
proposals in this proxy statement may be voted on prior to any adjournment if
sufficient votes have been received for a proposal and such vote is otherwise
appropriate.
Votes to elect the Trustees and to ratify the selection of independent
registered public accounting firm under Proposals 1 and 2 will be counted for
the Funds collectively as a group and not on a Fund-by-Fund basis. Each Trustee
will be elected if he or she receives more "for" votes than the number of votes
that are "withheld" and the selection of the independent registered public
accounting firm will be ratified if this proposal receives more votes "for" than
"against." Abstentions and broker non-votes are not counted as a vote for or
against one or more nominees for Trustee or for or against ratification of the
independent registered public accounting firm, which means they will have no
effect on these proposals.
In contrast to the election of Trustees and ratification of the independent
registered public accounting firm, the investment management agreement under
Proposal 3 must be approved by shareholders of each individual Fund, and will
require the affirmative vote of either (1) more than 50% of the eligible votes
of the Fund, or (2) 67% or more of the votes present (in person or by proxy) at
the meeting, if more than 50% of the eligible votes are present at the meeting
in person or by proxy. Abstentions and broker non-votes will not count towards
the number of votes in favor of the investment management agreement, which means
they will have the effect of a vote against this proposal.
Similarly, the adoption of the Distribution Plan for the Retail Class Funds
under Proposal 4, must be approved by shareholders of each individual Fund
affected. Only Retail Class shareholders of each Fund will be able to vote to
adopt the Distribution Agreement with respect to such Fund. For each Retail
Class Fund, the approval of the adoption of the Distribution Plan will require
the affirmative vote of either (1) more than 50% of the eligible votes of the
Retail Class shares of the Fund, or (2) 67% or more of the votes present (in
person or by proxy) at the meeting, if more than 50% of the eligible votes are
present at the meeting in person or by proxy. Abstentions and broker non-votes
will not count towards the number of votes in favor of the Distribution Plan,
which means they will have the effect of a vote against this proposal.
5
PROPOSAL 1 -- ELECTION OF TRUSTEES
The Board of Trustees, which is composed entirely of Trustees who are not
interested persons of the Institutional Funds or of the Advisor, unanimously
recommends that the shareholders of the Funds vote for the election of all of
the nominated Trustees.
We are holding elections of the Trustees in order to give you an opportunity to
evaluate the people who oversee the Funds. We are also electing Trustees at this
time in order to ensure that a sufficient number of Trustees have been elected
by shareholders. (Generally, shareholders must have elected at least two-thirds
of the Trustees.) At the meeting, you will be asked to elect the following
nominees as members of the Board to serve until their successors are elected and
qualified: Nancy L. Jacob, Willard T. Carleton, Eugene Flood, Jr., Howell E.
Jackson, Bevis Longstreth, Bridget A. Macaskill, Maceo K. Sloan and Ahmed H.
Zewail. The terms of the elected Trustees will be indefinite and the Board may
appoint one or more new Trustees to fill vacancies on the Board that occur after
this election, subject to certain limitations under the Investment Company Act
of 1940, as amended (the "1940 Act").
Information Concerning the Nominees
Below is information about the nominees. All of the nominees except for Eugene
Flood, Jr. and Howell E. Jackson currently serve as Trustees of the
Institutional Funds and of the College Retirement Equities Fund ("CREF"),
TIAA-CREF Mutual Funds, TIAA Separate Account VA-1, and TIAA-CREF Life Funds
(collectively, the "TIAA-CREF Fund Complex").
(PICTURE)
Nancy L. Jacob, 62, has been President and Managing Principal of Windermere
Investment Associates since 1997. She is also a member of the board of directors
and the chairman of the investment committee of the Okabena Company. She was
previously Chairman and Chief Executive Officer of CTC Consulting, Inc. (1994 -
1997) and Executive Vice President, U.S. Trust of the Pacific Northwest (1993 -
1996). Dr. Jacob received a B.A. from the University of Washington and a Ph.D.
from the University of California, Irvine. Dr. Jacob has served as a Trustee
since 1979, and as chairman of the Board of Trustees since 2005.
6
(PICTURE)
Willard T. Carleton, 71, has been Professor of Finance Emeritus at the College
of Business and Public Administration of the University of Arizona since 2001.
From 1999 to 2001, he was the Donald R. Diamond Professor of Finance, and from
1984 to 1999 he was the Karl L. Eller Professor of Finance, at the University of
Arizona. Dr. Carleton earned an A.B. and M.B.A. at Dartmouth College and an M.A.
and Ph.D. from the University of Wisconsin. Dr. Carleton served as a trustee of
Teachers Insurance and Annuity Association of America ("TIAA") from 1984-2003,
and has served as a Trustee since 2003.
(PICTURE)
Eugene Flood, Jr., 49, has been President and Chief Executive Officer (since
2000) and a director (since 1994) of Smith Breeden Associates, Inc. Prior to
joining Smith Breeden as President and CEO in 2000, he was a Portfolio Manager
at Morgan Stanley Asset Management. Dr. Flood serves on the Visiting Committee
for the Economics Department and the Dean's Advisory Committee of the
Massachusetts Institute of Technology's Sloan School of Management, the Board of
Visitors of the Fuqua School of Business of Duke University, Board of Visitors
of the University of North Carolina at Chapel Hill and the Board of Directors of
the Society of Quantitative Analysts. Dr. Flood has a Bachelor of Arts in
Economics from Harvard University, and a Ph.D. in Economics from the
Massachusetts Institute of Technology. Dr. Flood, whose nomination was
recommended by a current Trustee, is a first-time nominee to the Board.
(PICTURE)
Howell E. Jackson, 51, has been on the faculty of the Harvard Law School since
1989, and has been James S. Reid, Jr. Professor of Law since 2004 and Vice Dean
for Administration and Budget since 2003. Dr. Jackson has a B.A. degree from
Brown University and a joint J.D./M.B.A. degree from Harvard University. Dr.
Jackson, whose nomination was recommended by a current trustee, is a first-time
nominee to the Board.
7
(PICTURE)
Bevis Longstreth, 71, is a retired partner of the law firm of Debevoise &
Plimpton. Until 1997, he was a partner of the same firm, and from 1998 to 2001
he was Of Counsel to that firm. Mr. Longstreth served as a commissioner of the
U.S. Securities and Exchange Commission from 1981 to 1984, and as an adjunct
professor at Columbia University School of Law from 1994 to 1999. Mr. Longstreth
is a member of the board of directors of AMVESCAP, PLC, and of Grantham, Mayo &
Von Otterloo & Co., LLC (GMO). He is a member of the Standing Advisory Group of
the Public Company Accounting Oversight Board (PCAOB) and a member of the
finance committee of the Rockefeller Family Fund. He serves as a trustee of the
New School University, and the Textile Museum, and is a member of the Advisory
Board of the Center for Public Integrity. Mr. Longstreth received a B.S.E. from
Princeton University and a J.D. from Harvard University. Mr. Longstreth has
served as a Trustee since 1996.
(PICTURE)
Bridget A. Macaskill, 56, was formerly the Chairman and Chief Executive Officer
of Oppenheimer Funds, Inc. She joined Oppenheimer Funds, Inc. in 1983 and served
in various capacities at that firm, being appointed Chief Operating Officer in
1989, President in 1991, Chief Executive Officer in 1995 and Chairman in 2000.
Ms. Macaskill serves on the boards of directors of J Sainsbury plc and
Prudential plc, and on the boards of a number of not-for-profit organizations.
She also serves as Independent Consultant to Merrill Lynch, appointed under the
terms of the Global Research Settlement, since 2003. She received a B.S with
honors from the University of Edinburgh. Ms. Macaskill has served as a Trustee
since 2003.
(PICTURE)
Maceo K. Sloan, 55, has been the Chairman, President and CEO of Sloan Financial
Group, Inc. since 1991, Chairman, CEO and CIO of NCM Capital Management Group,
Inc., since 1991, and Chairman and CEO, NCM Capital Advisers Inc., since 2003.
Mr. Sloan is a director of SCANA Corporation and M&F Bancorp, Inc. Mr. Sloan
received a B.A. from Morehouse College, an M.B.A. from Georgia State University,
and a J.D. from North Carolina Central University School of Law. Mr. Sloan has
served as a Trustee since 1991.
8
(PICTURE)
Ahmed H. Zewail, 59, has been the Linus Pauling Professor of Chemistry and
Professor of Physics since 1996 and the Director of the NSF Laboratory for
Molecular Sciences at the California Institute of Technology (Caltech), Pasadena
since 1995. He serves on the boards of various national and international
foundations and universities, and holds the Honorary Chair at the United Nations
University. Dr. Zewail was awarded the 1999 Nobel Prize for his groundbreaking
work in the development of femtoscience. He received a B.S. and M.S. from
Alexandria University, a Ph.D. from the University of Pennsylvania, and numerous
honorary degrees. Dr. Zewail has served as a Trustee since 2004.
Each of the nominees has consented to serve if elected. If any nominee is
unavailable to serve when the meeting is held, the persons designated as proxies
may cast your votes for a substitute chosen by the current Board of Trustees.
Current Trustees and Executive Officers
The following tables include certain information about the current Trustees and
officers of the Institutional Funds, including positions currently held with the
Institutional Funds, the length of office and time served, and principal
occupations in the last five years. The table also includes the number of
portfolios in the TIAA-CREF Fund Complex overseen by each Trustee and certain
other directorships held by each of them. The table also includes information on
the nominees for election as Trustees that have never served on the Board
before. The first table includes information about the Trustees and nominees and
the second table includes information about the Institutional Funds' officers.
9
Trustees
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Nancy L. Jacob Chairman Indefinite President and Managing Principal, Windermere 60 Director and
Windermere of the term. Trustee Investment Associates, 1997 - present. Chairman of the
Investment Associates Board, since 1999. Formerly, Chairman and Chief Executive Investment
121 S.W. Morrison Street Trustee Officer, CTC Consulting, Inc., 1994 - 1997, Committee of the
Suite 925 and Executive Vice President, U.S. Okabena Company
Portland, OR 97204 Institutional Funds of the Pacific Northwest, (financial
Age: 62 1993 - 1998. services).
Willard T. Carleton Trustee Indefinite Professor of Finance Emeritus, University of 60 None
4911 E. Parade Ground term. Trustee Arizona, College of Business and Public
Loop since 2003 Administration, 2001 - present. Formerly,
Tucson, AZ 85712-6623 Donald R. Diamond Professor of Finance,
Age: 71 University of Arizona, 1999 - 2001, and Karl
L. Eller Professor of Finance, University of
Arizona, 1984 - 1999. Trustee of TIAA, 1984 -
2003.
Eugene Flood, Jr. Nominee Nominated President, Chief Executive Officer (since N/A None
Smith Breeden for for an 2000) and a Director (since 1994) of Smith
Associates, Inc. Trustee indefinite Breeden Associates, Inc. (investment
Chapel Hill, term. advisor).
North Carolina 27517
Age: 49
10
Trustees continued
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Howell E. Jackson Nominee Nominated James S. Reid, Jr. Professor of Law (since N/A None
Harvard Law School for for an 2004) and Vice Dean for Administration and
Griswold 5 South Trustee indefinite Budget (since 2003) and on the faculty (since
1525 Massachusetts term. 1989) of Harvard Law School.
Avenue
Cambridge, Massachusetts
02138
Age: 51
Bevis Longstreth Trustee Indefinite Retired Partner, Debevoise & Plimpton. 60 Member of Board
Debevoise & Plimpton term. Trustee Formerly, Partner (1970 - 1981, 1984 - 1997) of Directors of
919 Third Avenue since 1999. and Of Counsel (1998 - 2001) of Debevoise & AMVESCAP, PLC
New York, NY 10022-6225 Plimpton, Adjunct Professor at Columbia and Grantham,
Age: 71 University School of Law, 1994 - 1999 and Mayo & Von
Commissioner of the U.S. Securities and Otterloo & Co.,
Exchange Commission, 1981 - 1984. LLC (GMO)
(investment
management) and
a member of the
Standing Advisory
Group of the
Public Company
Accounting
Oversight Board
(PCAOB) and the
Finance Committee
of the Rockefeller
Family Fund.
Bridget A. Macaskill Trustee Indefinite Independent Consultant to Merrill Lynch. 60 Director, J
160 East 81st Street term. Trustee Appointed under the terms of the Global Sainsbury plc
New York, NY 10028 since 2003. Research Settlement, since 2003, and (food retailer),
Age: 56 principal, BAM Consulting. Formerly, Prudential plc,
Chairman, Oppenheimer Funds, Inc., 2000 - and International
2001. Chief Executive Officer, 1995 - 2001; Advisory Board,
President, 1991 - 2000; and Chief Operating British-American
Officer, 1989 - 1995 of that firm. Business Council.
11
Trustees continued
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Maceo K. Sloan Trustee Indefinite Chairman, President and Chief Executive 60 Director, SCANA
NCM Capital term. Trustee Officer, Sloan Financial Group, Inc., since Corporation
Management Group, Inc. since 1999. 1991; Chairman, CEO and CIO, NCM Capital (energy holding
2634 Durham-Chapel Management Group, Inc., since 1991; and company) and
Hill Boulevard Chairman and CEO, NCM Capital Advisers Inc., M&F Bancorp, Inc.
Suite 206 since 2003.
Durham, NC 27707
Age: 55
Ahmed H. Zewail Trustee Indefinite Linus Pauling Chair Professor of Chemistry 60 None
California Institute term. Trustee and Professor of Physics, Caltech, since
Of Technology since 2004. 1996; and Director, NSF Laboratory for
Arthur Amos Noyes Molecular Sciences (LMS), Caltech, since
Laboratory of 1995.
Chemical Physics
Mail Code 127-72
1200 East California
Boulevard
Pasadena, CA 91125
Age: 59
12
Officers
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Herbert M. Allison, Jr. President and Indefinite term. Chairman, President and Chief Executive Officer of TIAA since
TIAA-CREF Chief Executive President and 2002. President and Chief Executive Officer of CREF, TIAA-CREF
730 Third Avenue Officer Chief Executive Mutual Funds, TIAA-CREF Institutional Mutual Funds, TIAA-CREF
New York, NY 10017-3206 Officer since Life funds and TIAA Separate Account VA-1 (these funds are
Age: 61 2002. collectively referred to as the "TIAA- CREF Funds") since
2002. Formerly, President and Chief Executive Officer of
Alliance for LifeLong Learning, Inc., 2000 - 2002. President,
Chief Operating Officer and Member of the Board of Directors
of Merrill Lynch & Co., Inc., 1997-1999. Member of the Board
of Directors, New York Stock Exchange.
Gary Chinery Vice President Indefinite term. Vice President and Treasurer of TIAA and the TIAA-CREF Funds
TIAA-CREF and Treasurer Vice President since 2004. Vice President and Treasurer of Advisors,
730 Third Avenue and Treasurer TIAA-CREF Investment Management, LLC ("Investment
New York, NY 10017-3206 since 2004. Management"), TIAA-CREF Individual and Institutional Services,
Age: 55 LLC ("Services"), Teachers Personal Investors Services, Inc.
("TPIS"), TIAA-CREF Tuition Financing, Inc. ("Tuition
Financing") and TIAA-CREF Life Insurance Company ("TIAA-CREF
Life").
Scott C. Evans Executive Vice Indefinite term. Executive Vice President and Chief Investment Officer of TIAA
TIAA-CREF President and Executive Vice since 2004 and the TIAA-CREF Funds since 2003. President and
730 Third Avenue Chief President since Chief Executive Officer of Investment Management and Advisors.
New York, NY 10017-3206 Investment 1999. Chief Director of Advisors and TIAA-CREF Life. Formerly, Executive
Age: 45 Officer Investment Officer Vice President, CREF Investments.
since 2004.
13
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
I. Steven Goldstein Executive Vice Indefinite term. Executive Vice President, Public Affairs, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Formerly, Advisor for McKinsey &
730 Third Avenue President since Company, 2003; Vice President, Corporate Communications for
New York, NY 10017-3206 2003. Dow Jones & Co. and The Wall Street Journal, 2001 - 2002; and
Age: 52 Senior Vice President and Chief Communications Officer for
Insurance Information Institute, 1993 - 2001.
E. Laverne Jones Vice President Indefinite term. Vice President and Corporate Secretary
TIAA-CREF and Corporate Vice President of TIAA and the TIAA-CREF Funds
730 Third Avenue Secretary and Corporate since 1998.
New York, NY 10017-3206 Secretary since
Age: 56 1999.
Susan S. Kozik Executive Vice Indefinite term. Executive Vice President and Chief Technology Officer of TIAA
TIAA-CREF President Executive Vice and the TIAA-CREF Funds since 2003. Formerly, Vice President
730 Third Avenue President since of IT Operations and Services, Lucent Technologies, 2000 -
New York, NY 10017-3206 2003. 2003; and Senior Vice President and Chief Technology Officer,
Age: 47 Penn Mutual Life Insurance Company, 1997 - 2000.
George W. Madison Executive Vice Indefinite term. Executive Vice President and General Counsel of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Formerly, Executive Vice
730 Third Avenue President since President, Corporate Secretary, and General Counsel of
New York, NY 10017-3206 2003. Comerica Incorporated, 1997 - 2003.
Age: 51
Erwin W. Martens Executive Vice Indefinite term. Executive Vice President, Risk Management, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Director of Advisors, Services,
730 Third Avenue President since TPIS, Tuition Financing and TIAA-CREF Life and Manager of
New York, NY 10017-3206 2003. Investment Management. Formerly, Managing Director and Chief
Age: 49 Risk Officer, Putnam Investments, 1999 - 2003; and Head and
Deputy Head of Global Market Risk Management, 1997 - 1999.
14
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Frances Nolan Executive Vice Indefinite term. Executive Vice President, Client Services, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2000. President, Chief Executive Officer
730 Third Avenue President since and Manager of Services. Director of TPIS, Tuition Financing
New York, NY 10017-3206 2000. and TIAA-CREF Life. Formerly, Executive Vice President,
Age: 47 Retirement Services, CREF and TIAA, 2000 - 2003; Vice
President, Eastern Division, 1994 - 2000.
Russell Noles Vice President Indefinite term. Vice President and Acting Chief Financial Officer of TIAA and
TIAA-CREF and Acting Acting Chief the TIAA-CREF Funds, Vice President of Advisors, TPIS, Tuition
730 Third Avenue Chief Financial Financial Officer Financing and Investment Management and Services since 2005.
New York, New York Officer* since 2005. Director of Advisors, TPIS, Tuition Financing and Manager of
10017-3206 Investment Management and Services since 2005. Formerly Vice
Age: 46 President, Internal Audit of TIAA and the TIAA-CREF Funds,
2004 - 2005; Vice President of Internal Audit of the St. Paul
Companies, 2001 - 2004, of Quest Communications, 2000 - 2001
and of US WEST, Inc., 1998 - 2000.
Dermot J. O'Brien Executive Vice Indefinite term. Executive Vice President, Human Resources, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Director, TIAA-CREF Life.
730 Third Avenue President since Formerly, First Vice President and Head of Human Resources,
NY 10017-3206 2003. International Private Client Division, Merrill Lynch & Co.,
Age: 39 1999 - 2003; and Vice President and Head of Human Resources,
Japan Morgan Stanley, 1998 - 1999.
* Elizabeth A. Monrad, Executive Vice President and Chief Financial Officer, is
currently on unpaid leave of absence.
15
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Bertram L. Scott Executive Vice Indefinite term. Executive Vice President, Product Management, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Chairman of the Board, President
730 Third Avenue President since and Chief Executive Officer of TIAA-CREF Life. Director of
New York, NY 10017-3206 2000. TPIS; Manager of Services; President and Director of Tuition
Age: 54 Financing. Member of the Board of Directors of Becton,
Dickenson Co.; Trustee of the University of North Carolina
Charlotte; President and Chief Executive Officer, Horizon
Mercy, 1996 - 2000.
Trustee Equity Ownership
The following table includes information relating to equity securities
beneficially owned by all current Trustees and nominees in the Funds and in all
registered investment companies in the same "family of investment companies" as
the Funds as of May 20, 2005. This family of investment companies includes all
of the members of the TIAA-CREF Fund Complex.
Aggregate Dollar Range of
Dollar Range of Equity Securities in All
Equity Securities in the Registered Investment Companies
Name Institutional Funds in Family of Investment Companies
=======================================================================================================
Nancy L. Jacob None Over $100,000
- -------------------------------------------------------------------------------------------------------
Willard T. Carleton None Over $100,000
- -------------------------------------------------------------------------------------------------------
Eugene Flood, Jr. None None
- -------------------------------------------------------------------------------------------------------
Howell E. Jackson None Over $100,000
- -------------------------------------------------------------------------------------------------------
Bevis Longstreth International Equity Fund -- Retirement Over $100,000
Class -- Over $100,000
- -------------------------------------------------------------------------------------------------------
Bridget A. Macaskill International Equity Fund -- Retirement $50,001-$100,000
Class -- $10,001 - $50,000
Large-Cap Value Fund -- Retirement
Class -- $10,001 - $50,000
Mid-Cap Value Fund -- Retirement
Class -- $10,001 - $50,000
Mid-Cap Growth Fund -- Retirement
Class -- $10,001 - $50,000
Small-Cap Equity Fund -- Retirement
Class -- $10,001 - $50,000
- -------------------------------------------------------------------------------------------------------
Maceo K. Sloan None Over $100,000
- -------------------------------------------------------------------------------------------------------
Ahmed H. Zewail None Over $100,000
- -------------------------------------------------------------------------------------------------------
16
Trustee Compensation
The following table sets forth the compensation paid to the Trustees for their
service to the Funds and the TIAA-CREF Fund Complex for the fiscal year ended
September 30, 2004.
Aggregate Pension or Retirement Total Compensation
Compensation from Benefits Accrued as from TIAA-CREF
Name the Institutional Funds Part of Fund Expenses Fund Complex1
=================================================================================================
Nancy L. Jacob $2,505.09 $1,440.26 $ 79,250.00
- -------------------------------------------------------------------------------------------------
Willard T. Carleton $2,868.63 $1,133.44 $ 91,250.00
- -------------------------------------------------------------------------------------------------
Martin J. Gruber(2) $3,230.98 $1,440.26 $102.500.00
- -------------------------------------------------------------------------------------------------
Bevis Longstreth(3) $2,590.01 $1,440.26 $ 81,250.00
- -------------------------------------------------------------------------------------------------
Bridget A. Macaskill $1,885.32 $1,133.44 $ 62,250.00
- -------------------------------------------------------------------------------------------------
Stephen A. Ross(2)(3) $3,110.32 $1,440.26 $ 98,250.00
- -------------------------------------------------------------------------------------------------
Maceo K. Sloan(3) $2,985.97 $1,440.26 $ 94,000.00
- -------------------------------------------------------------------------------------------------
Robert W. Vishny(2) $1,435.86 $1,049.52 $ 45,250.00
- -------------------------------------------------------------------------------------------------
Ahmed H. Zewail(3)(4) $ 891.91 $ 781.49 $ 29,000.00
- -------------------------------------------------------------------------------------------------
(1) Includes a portion of fees attributed to service on the CREF, TIAA-CREF
Mutual Funds and TIAA-CREF Life Funds Boards and the Management Committee of
TIAA Separate Account VA-1.
(2) These are former Trustees.
(3) This compensation, or a portion of it, was not actually paid based upon the
prior election of the Trustee to defer receipt of payment in accordance with
the provisions of deferred compensation plans for non-officer Trustees.
Excluding this year's deferrals, a total of $1,525,564.49 earned across the
fund complex has been deferred for prior years' service, including interest
through September 30, 2004, for all Trustees who had elected to defer their
compensation.
(4) Dr. Zewail was appointed as a Trustee on June 16, 2004.
The Funds have a long-term compensation plan for non-officer Trustees.
Currently, under this unfunded plan, annual contributions equal to 125% of the
basic annual Trustee retainer are allocated to notional CREF and TIAA annuity
accounts chosen by the Trustee. Benefits will be paid after the Trustee leaves
the Board in a lump sum or in annual installments over 5, 10, 15 or 20 years, as
requested by the Trustee. The Board may waive the mandatory retirement policy
for the Trustees, which would delay the commencement of benefit payments until
the Trustee eventually retires from the Board. Pursuant to a separate deferred
compensation plan, non-officer Trustees also have the option to defer payment of
their basic retainer, additional retainers, and/or meeting fees and allocate
these amounts to notional TIAA and CREF accounts chosen by the individual
Trustee. Benefits under that plan are also paid in a lump sum or annual
installments over 5, 10, 15 or 20 years, as requested by the Trustee, after the
Trustee leaves the Board. The compensation table above does not reflect any
payments under the long-term compensation plan.
The Board recently approved an increase in Trustee compensation, to become
effective July 1, 2005, at the following rates: an annual retainer of $45,000; a
Board and
17
committee meeting fee of $1,800; an annual long-term compensation contribution
of $75,000 (replacing the 125% of the retainer formula described above); a
committee chair fee of $10,000; a Board chair fee of $15,000; and an Audit
Committee member fee of $5,000. Trustee compensation reflects service to all of
the investment companies within the TIAA-CREF Fund Complex and is pro-rated to
those companies based upon assets under management. The level of compensation is
evaluated regularly and is based on a study of compensation at comparable
companies, the time and responsibilities required of the Trustees, and the need
to retain and attract well-qualified Board members.
Committees
The Board has appointed the following standing committees, each with specific
responsibilities for aspects of the Funds' operations:
1. An Audit Committee, which audits and examines the records and affairs of the
Institutional Funds, as it deems necessary, using the Funds' independent
registered public accounting firm or others. The Audit Committee is charged
with, among other things, approving the appointment, compensation, retention
(or termination) and oversight of the work of the independent registered
public accounting firm. The Audit Committee has adopted a formal written
charter that is available upon request. During 2004, the Audit Committee held
seven meetings. The current members of the Audit Committee are Mr. Sloan
(chair), Dr. Carleton, and Ms. Macaskill. Mr. Sloan serves as the audit
committee financial expert.
2. A Finance Committee, which oversees the management of the Institutional
Funds' investments subject to appropriate oversight by the full Board of
Trustees. During 2004, the Finance Committee held four meetings. The current
members of the Finance Committee are Dr. Jacob (chair), Dr. Carleton, Mr.
Longstreth, Ms. Macaskill, Mr. Sloan and Dr. Zewail.
3. A Corporate Governance and Social Responsibility Committee, which addresses
all corporate social responsibility and corporate governance issues,
including the voting of proxies of portfolio companies of the Funds and the
initiation of appropriate shareholder resolutions. During 2004, the Corporate
Governance and Social Responsibility Committee held three meetings. The
current members of the Corporate Governance and Social Responsibility
Committee are Mr. Longstreth (chair), Dr. Carleton, and Dr. Zewail.
4. An Executive Committee, which generally is vested with full Board powers
between Board meetings on matters not specifically addressed by the full
Board. During 2004, the Executive Committee held no meetings. The current
members of the Executive Committee are Dr. Jacob (chair), Mr. Longstreth, and
Mr. Sloan.
5. A Nominating and Governance Committee, which nominates certain officers and
the members of the standing committees of the Board, and recommends
candidates for
18
election as Trustees. The Committee was established in June 2004 as a
successor to the Nominating and Personnel Committee. During 2004, the
Nominating and Personnel Committee held five meetings and the Nominating and
Governance Committee held three meetings. The current members of the
Nominating and Governance Committee are Dr. Jacob (chair) and Mr. Longstreth.
Board Meetings
There were 12 meetings of the Board during 2004 and an additional 6 meetings
from January 1, 2005 to May 17, 2005. All current Trustees attended at least 75%
of the meetings of the Board and of the meetings of the Board committees on
which they serve.
Trustee Nomination Process
Institutional Funds solicits names of candidates for the Board of Trustees from
various sources as the Nominating and Governance Committee may determine
appropriate. Those names are transmitted to the Nominating and Governance
Committee for its review and consideration. The Committee may, from time to
time, retain third party search firms to identify nominee candidates whose
competencies meet criteria the Board deems important to the Funds. In addition,
the Committee will entertain recommendations from current Trustees, Fund
shareholders and others.
The Committee reviews the information submitted on the backgrounds and
qualifications of those persons recommended. In considering current Trustees for
renomination to the Board, the Committee will evaluate each Trustee's Board and
committee participation, contributions to the management of Institutional Funds
and attendance at Board and committee meetings. In preparing a slate of Trustee
candidates, the Nominating and Governance Committee seeks to ensure broad,
diverse representation of academic, business and professional views. Once the
Committee reviews the candidates, it submits final nominations to the Board of
Trustees.
As vacancies arose on the Board this year, a third-party search firm was
retained to assist the Nominating and Governance Committee in identifying
candidates with qualifications appropriate to the Board's current and future
needs. In addition to candidates identified by the search firm, the Committee
also considered candidates suggested by the Trustees and obtained by other
means. The two new 2005 nominees, Eugene Flood, Jr. and Howell E. Jackson, were
each recommended by current Trustees.
Recommendations From Shareholders Regarding Nominations
Shareholders may submit recommendations for candidates to the Board by
forwarding the names and backgrounds of nominees to the Corporate Secretary's
office at 730 Third Avenue, New York, NY 10017-3206. These communications will
be forwarded to the
19
Board in accordance with policies concerning shareholder communications that
have been approved by a majority of the Trustees.
Trustee Qualifications
The Board of Trustees has determined that the Board should be comprised of
individuals who can contribute sound business judgment to board deliberations
and decisions, based on their relevant business, management, professional,
academic or governmental service experience. Candidates for the Board should
have reached a senior level in their chosen field, be of uncompromised
integrity, and be able to fulfill their responsibilities as Trustees without
conflict. The Board should reflect diversity of gender, race, age and experience
and at least one Trustee should qualify as a financial expert for service on the
Audit Committee. Each Trustee should be prepared to devote substantial time and
effort to Board duties and should limit the number of their other board
memberships in order to provide such service to the Institutional Funds.
Candidates for the Board should be individuals with an understanding of and
affinity for academia, and a demonstrated ability to work in a constructive
manner with other Trustees and management.
When seeking to fill a specific opening on the Board, the Nominating and
Governance Committee will consider the specific needs of the Board at the time
to assure an overall balance and range of specialized knowledge, skills,
expertise and diversity to provide the foundation for a successful Board.
A candidate for service as an independent Trustee must not be an "interested
person" of Institutional Funds, Advisors or Advisors' affiliates as that term is
defined in the 1940 Act, and must otherwise meet the independence requirements
of the New York Stock Exchange or applicable rules. Each candidate must provide
such information requested by Institutional Funds as may be reasonably necessary
to enable the Board to assess the candidate's eligibility.
Shareholder Communications With Trustees
Letters or e-mails from participants addressed to the Board of Trustees or
individual Trustees may be sent to the Corporate Secretary's office at 730 Third
Avenue, New York, NY 10017-3206. These communications will be forwarded to the
Institutional Funds' Chairman in accordance with policies concerning shareholder
communications that have been approved by a majority of the independent
Trustees.
20
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees has unanimously approved the selection of
PricewaterhouseCoopers as the Funds' Independent Registered Public Accounting
Firm, and recommends that the shareholders of the Funds ratify the selection
thereof.
Ernst & Young LLP ("Ernst & Young") served as independent registered public
accounting firm to the Institutional Funds for the fiscal year ended September
30, 2004. On February 28, 2005, the Board and the Audit Committee determined,
and Ernst & Young agreed, that the relationship between Ernst & Young and the
Institutional Funds would cease. Ernst & Young, the Board, and the Audit
Committee concur that such a decision constitutes an indication by Ernst & Young
that it declined to stand for re-appointment to serve as the Funds' independent
registered public accounting firm for the current fiscal year. At its February
28, 2005 meeting, the Board, including a majority of the independent Trustees,
selected PricewaterhouseCoopers LLP ("PWC") to serve as independent registered
public accountants for the Institutional Funds for the fiscal year ending
September 30, 2005. PWC was selected following a competitive bidding process
that had been initiated in November 2004 by TIAA and the TIAA-CREF Fund Complex.
In making their selection, the Board discussed with PWC all issues involving
relationships among PWC, TIAA and the TIAA-CREF Funds, and their affiliates,
that could reasonably be thought to bear on PWC's independence, and concluded
that PWC was independent. PWC confirmed its independence to the Board. As part
of this process, the Board considered that while PWC would also serve as the
independent registered public accounting firm for TIAA and the Advisor, this
would not compromise PWC's independence. They considered that this arrangement
would produce a more cost-effective audit and received an agreement from PWC
that the Board would be informed if any unprivileged material issues arose in
the course of the audit of TIAA and its subsidiaries. Additionally, the Board
took into consideration that the Funds' and TIAA's audits would be overseen by
different PWC audit partners.
As the Institutional Funds' independent registered public accounting firm, PWC
will perform audits of the Institutional Funds' financial statements. To
maintain independence and avoid even the appearance of conflicts of interest,
the Institutional Funds, as a policy, does not engage PWC for management
advisory or consulting services.
Representatives of PWC will attend the meeting and be available at the meeting
to respond to questions, but it is not expected that they will make any
statement at the meeting. It is not expected that representatives of Ernst &
Young will attend the meeting.
The reports of Ernst & Young for the two most recent fiscal years and the
subsequent interim period through February 28, 2005 for the Funds contained no
adverse opinion or
21
a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.
In connection with its audits for the two most recent fiscal years and the
subsequent interim period through February 28, 2005: (i) there were no
disagreements with Ernst & Young on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Ernst & Young, would have
caused them to make reference to the subject matter of the disagreements in
connection with its report on the financial statements for such fiscal years:
and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of
Regulation S-K. Ernst & Young has been provided a copy of the above disclosures,
which is made in response to Item 304(a) of Regulation S-K under the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
and Ernst & Young agrees with such disclosures.
Audit Fees
Ernst & Young's fees for professional services rendered for the audit of the
Institutional Funds' annual financial statements for the fiscal years ended
September 30, 2004 and September 30, 2003 were approximately $624,300 and
$335,900, respectively.
Audit-Related Fees
No fees were paid to Ernst & Young for audit-related services rendered to the
Funds for the fiscal years ended September 30, 2004 and September 30, 2003.
Tax Fees
Ernst & Young's fees for professional services rendered to the Funds for tax
compliance, tax advice, and tax planning for the fiscal years ended September
30, 2004 and September 30, 2003 were approximately $115,100 and $110,000,
respectively.
All Other Fees
Ernst & Young had no additional fees with respect to the Funds.
Pre-Approval Policy
The Audit Committee has adopted a Pre-Approval Policy for External Audit Firm
Services (the "Policy"). The Policy describes the types of services that may be
provided by the independent registered public accounting firm to the Funds
without impairing the firm's independence. Under the Policy, the Audit Committee
is required to pre-approve services to be performed by the
22
Institutional Funds' independent registered public accounting firm in order to
ensure that such services do not impair the accounting firm's independence.
The Policy requires the Audit Committee to: (i) appoint the independent
registered public accounting firm to perform the financial statement audit for
the Funds and certain of its affiliates, including approving the terms of the
engagement; and (ii) pre-approve the audit, audit-related and tax services to be
provided by the independent registered public accounting firm and the fees to be
charged for provision of such services from year to year.
All services provided by the independent registered public accounting firm to
the Institutional Funds, the Advisor, or its affiliates for the fiscal years
ended September 30, 2004 and September 30, 2003 were pre-approved by the Audit
Committee pursuant to the Policy.
Auditor Fees for Related Entities
The aggregate non-audit fees by Ernst & Young for services rendered to the
Funds, the Advisor or affiliates of the Advisor performing on-going services to
the Funds, including TIAA, for the year ended December 31, 2004 were $319,800,
and for the year ended December 31, 2003 were $281,000.
Ernst & Young's aggregate fees for professional services rendered in connection
with the audit of financial statements for TIAA and CREF and their affiliated
entities for the year ended December 31, 2004 were $7,703,700, and for the year
ended December 31, 2003 were $3,955,300. Ernst & Young's aggregate fees for
audit related-services provided to TIAA and CREF and their affiliated entities
for the year ended December 31, 2004 were $204,800, and for the year ended
December 31, 2003 were $171,000. Ernst & Young's aggregate fees for tax services
provided to TIAA and CREF and their affiliated entities for the year ended
December 31, 2004 were $250,600, and for the year ended December 31, 2003 were
$229,900.
23
PROPOSAL 3 -- APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
The Board has unanimously approved, and recommends that the shareholders of each
Fund vote for the approval of, a new investment management agreement with
respect to their Fund.
The Advisor currently manages each of the Funds under an investment management
agreement, dated June 1, 1999, as amended September 3, 2002 and October 1, 2004
(the "Current Agreement"). In hindsight, it has become clear that the extremely
low level of fees that the Advisor has been charging under the Current Agreement
has been too low to cover its costs for operating the Funds, while sustaining a
high quality of service for shareholders. In light of its ongoing losses, the
Advisor has proposed a new investment management agreement for each Fund (the
"Proposed Agreement"). After thorough and deliberate consideration of
shareholders' interests, the Board of Trustees now is recommending that
shareholders approve the Proposed Agreement. The Proposed Agreement will:
o Restructure the pricing and the services to be provided by the Advisor under
the Current Agreement, which will increase the level of advisory fees on the
Actively Managed Funds. See page __ for details on the fees to be charged
under the Proposed Agreement. The "Actively Managed Funds" include the Growth
Equity Fund, Growth & Income Fund, International Equity Fund, Large-Cap Value
Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real
Estate Securities Fund, Social Choice Equity Fund, Bond Fund,
Inflation-Linked Bond Fund and Money Market Fund.
o At the Board's request, introduce a breakpoint schedule for the Actively
Managed Funds (except for Money Market Fund and Social Choice Equity Fund),
which will modestly reduce the advisory fee rates on those Funds as total
asset levels increase.
o Include provisions that will be applicable to all of the Funds making the
Advisor responsible for providing certain additional management and
administrative services necessary for the operation of the Funds, including
providing office space, equipment and facilities for maintaining its
operations and supervising relations with the Funds' other service providers.
Many of these services are currently paid for by the Funds as "other
expenses" under a service agreement with the Advisor, which will be
discontinued if shareholders approve the Proposed Agreement (except with
respect to retirement plan platform fees for the Retirement Class and the
Lifecycle Funds). See page __ for more details.
This proposal was designed to provide the Advisor with a sustainable fee and
expense structure for operating the Institutional Funds, so that overall
expenses would continue to be competitive with the lower cost providers in the
industry. This proposal is part of a larger effort to restructure TIAA-CREF's
mutual fund offerings so that they will remain more fairly and competitively
priced and continue to serve shareholder needs. If the Proposed Agreement
24
is approved, a second step in the restructuring is expected to be the merger of
the TIAA-CREF Retail Mutual Funds into the TIAA-CREF Institutional Funds,
thereby creating one larger, consistently priced fund family. The details of why
the Advisor is seeking shareholder approval of the Proposed Agreement are
discussed below. The factors considered by the Board in determining the
reasonableness and fairness of the Proposed Agreement are described starting on
page 31 under the heading "What did the Board of Trustees Consider in Approving
the Proposed Agreement?" The Proposed Agreement is attached as Exhibit A.
Why is the Advisor Seeking to Restructure the Pricing of the Funds?
Since the Funds were established in 1999, the Advisor has been committed to
providing quality services to the Funds at the lowest possible cost to
shareholders. In hindsight, it has become clear that the extremely low level of
fees that the Advisor has been charging to shareholders has been too low to
cover its increasing costs for operating the Funds, while sustaining the level
and quality of service shareholders deserve.
The Advisor is requesting a management fee increase on the Actively Managed
Funds to enable the Advisor to continue to manage the Funds and provide high
quality services to shareholders at low prices. It has become increasingly
expensive to operate mutual funds due to higher compliance and regulatory costs
and intensified competition for talented portfolio managers and other key
investment management and administrative personnel. With the proposed new
management fee rates, the Advisor will be able to:
o Continue to manage the day-to-day business affairs of the Funds
o Cover the costs of operating mutual funds
o Retain and attract highly qualified investment professionals
o Increase the capacity of its investment management staff and expand the depth
and scope of its analysts' coverage
o Continue to offer a high level of service to our shareholders and take steps
to enhance those services.
Even with the proposed fee increase, the Actively Managed Funds would continue
to be among the lower-priced offerings in the industry.
If a Fund's shareholders approve the Proposed Agreement, its terms, including
the increased fees, are expected to go into effect for that Fund on November 1,
2005.
What will happen if certain Fund shareholders do not approve the Proposed
Agreement?
If shareholders do not approve the Proposed Agreement for any Fund, the Advisor
has informed the Board that it may no longer be prepared to continue to operate
that Fund. The Board may then be forced to consider alternative options,
including closing the Fund to new investments or liquidating the Fund.
25
Who is the Advisor?
The Advisor is Teachers Advisors, Inc. (the "Advisor"), a direct wholly owned
subsidiary of TIAA-CREF Enterprises, Inc. and an indirect wholly owned
subsidiary of Teachers Insurance and Annuity Association of America ("TIAA").
TIAA and the Advisor are located at 730 Third Avenue, New York, New York 10017.
A chart attached as Exhibit B lists the name, address, and principal occupation
of each principal executive officer and director of the Advisor.
The Advisor currently manages each of the Funds under the Current Agreement. The
Advisor also serves as the investment adviser to TIAA Separate Account VA-1,
TIAA-CREF Life Funds, and TIAA-CREF Mutual Funds. Both TIAA-CREF Mutual Funds
and TIAA-CREF Life Funds are series investment companies comprised of a number
of investment portfolios. The Advisor, through its TIAA-CREF Asset Management
("TCAM") division, also manages large institutional client assets through
unregistered commingled funds and on a separate account basis. A table setting
forth the net assets of those investment portfolios in the TIAA-CREF Mutual
Funds, TIAA Separate Account VA-1 and the TIAA-CREF Life Funds that have
investment objectives similar to one of the Funds, and the management fee rate
paid by each such portfolio to the Advisor, is attached hereto as Exhibit C.
In addition to the investment management agreement, the Funds currently have in
place a service agreement (the "Service Agreement") with the Advisor, whereby
the Advisor provides or arranges for the provision of a variety of services for
the ordinary operation of each Class of the Funds, including transfer agency,
accounting, and administrative services. If the Proposed Agreement is approved,
the Advisor plans to terminate the current Service Agreement, since many of
these services will be provided under the Proposed Agreement, while others, such
as custody services, transfer agency services and regulatory fees, will be paid
directly by each Fund. A new services agreement between the Advisor and the
Funds will be implemented solely for Retirement Class shares (and for the sole
class of the Lifecycle Funds) to cover the account servicing expenses associated
with this Class being offered on retirement plan platforms (the "Retirement
Class Service Agreement"). Please see Exhibit E for the amounts paid by the
Funds to the Advisor under the Service Agreement for the 12-month period ended
December 31, 2004 and the pro forma amounts that would have been paid under the
Retirement Class Service Agreement over this same period.
To control the total expenses charged to shareholders, the Advisor has agreed
with the Funds to reimburse each Fund for other expenses (i.e., non-investment
management fees) or for total expenses (in the case of the Retail Class) that
are above a certain level. Please see Exhibit E for more details on these
expense reimbursements.
26
What are the terms of the Current Agreement with the Advisor, and how does the
Proposed Agreement differ?
Under the Current Agreement, the Advisor manages the investments and the
investment strategy of each Fund and provides related general management
services. Specifically, the Advisor is authorized, subject to the control of the
Board, to determine the selection, amount, and time to buy or sell securities
for each Fund. The Advisor also maintains the Funds' books and records,
prepares, on request, reports for the Board; makes available its officers to the
Board for consultation and discussions regarding the management of the Funds,
and provides certain general management services to the Funds. The fees paid to
the Advisor under the Current Agreement are set forth below in a chart comparing
current and proposed investment management fees.
The Current Agreement was last submitted to a shareholder vote when the Funds
were first organized in 1999 and was last approved by the Board on April 5,
2005. The Advisor substantially decreased the contractual fees payable under the
Current Agreement in September 2002.
Other than the services that the Advisor provides for the Funds, the Funds are
responsible for all other expenses incurred in their operations including any
taxes, brokerage commissions on portfolio transactions, expenses of issuance and
redemption of shares, costs of preparing and distributing proxy material,
auditing and legal expenses, certain expenses of registering and qualifying
shares for sale, fees of trustees who are not interested persons (not
affiliated) of TIAA, costs of printing and mailing the prospectus, statements of
additional information, and financial reports to existing shareholders, and any
other charges or fees not specifically enumerated in the Current Agreement or
the Service Agreement. During the fiscal year ended September 30, 2004, the
Funds did not pay any brokerage commissions to an affiliated broker/dealer.
In order for it to continue in effect, the Current Agreement must be
specifically approved at least annually by: (i) the Board, or by the vote of a
majority of the outstanding voting shares of such Fund; and (ii) a majority of
those trustees who are not interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Current
Agreement may be terminated at any time with respect to any Fund by that Fund or
by the Advisor, without penalty, on 60 days' written notice. The Current
Agreement will terminate automatically in the event of its assignment.
The Proposed Agreement contains terms that are substantially the same as the
Current Agreement, except for the following important differences:
o The Proposed Agreement provides for an increase in the management fees for
the Actively Managed Funds, as described below. There are no changes to the
management fees for the Index Funds and the Lifecycle Funds at the levels
specified under the Current Agreement.
27
o At the Board's request, the Proposed Agreement introduces a breakpoint
schedule for most of the Actively Managed Funds, which will modestly reduce
the advisory fees on those Funds as total asset levels increase.
o The Proposed Agreement includes provisions making the Advisor responsible for
providing certain additional management and administrative services necessary
for the operation of the Funds, including providing office space, equipment
and facilities for maintaining its operations and supervising relations with
the Funds' other service providers. Many of these services are currently paid
for by the Funds as "other expenses" under a service agreement with the
Advisor, which will be discontinued (except with respect to retirement plan
platform fees for the Retirement Class and the Lifecycle Funds) if
shareholders approve the Proposed Agreement.
The management fees under the Proposed Agreement do not cover certain expenses
necessary to the Funds' ordinary operation, including: custody services,
transfer agency services, sub-transfer agency services, and regulatory fees.
These charges are borne by the Fund directly and paid out of Fund assets. Also,
while under the current arrangements, administrative services are provided by
the Advisor pursuant to a separate Service Agreement, under the Proposed
Agreement the expense of most of those services will be paid for out of the
Advisor's management fee, thereby reducing those other direct Fund expenses. In
addition, the Advisor is agreeing to cap those expenses through expense
reimbursement arrangements. Please see Exhibit D for more details on these
expense reimbursements.
What are the proposed fees under the Proposed Agreement? How do they differ from
the Current Agreement?
Under both the Current Agreement and Proposed Agreement, each Fund pays the
Advisor a management fee that is calculated as a percentage of the average daily
net assets for each Fund over each month at the annual rates set forth in the
table below (not all of these Funds offer all three share classes):
FUND CURRENT AGREEMENT NEW AGREEMENT
================================================================================
GROWTH EQUITY FUND 0.08% 0.45% or less(1,2)
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND 0.08% 0.45% or less(1,2)
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 0.09% 0.50% or less(2)
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND 0.08% 0.45% or less(2)
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND 0.04% 0.15%
- --------------------------------------------------------------------------------
(Continued on next page)
28
FUND CURRENT AGREEMENT NEW AGREEMENT
================================================================================
REAL ESTATE SECURITIES FUND 0.09% 0.50% or less(2)
- --------------------------------------------------------------------------------
BOND FUND 0.08% 0.30% or less(2)
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND 0.09% 0.30% or less(2)
- --------------------------------------------------------------------------------
MONEY MARKET FUND 0.04% 0.10%
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
S&P 500 INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
EQUITY INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2010 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
(1) The Board obtained the Advisor's agreement to waive the increased management
fees for these Funds under the Proposed Agreement for two years. Therefore,
the management fees of these Funds will remain at 0.08% of average daily net
assets until at least April 2007. See page for a discussion of the Board's
review of the performance of these particular Funds.
(2) At the Board's request, the management fees of these Funds have breakpoints
that gradually reduce the fee rates from the amounts indicated in the chart
as each Fund's assets grow. To see the full breakpoint schedule for these
Funds please see Exhibit A.
(3) The Board obtained the Advisor's agreement to waive all the Lifecycle Funds'
investment management fees if the fee increases on the Institutional Funds
in which the Lifecycle Funds invest are approved by shareholders.
29
During the year ended December 31, 2004 (and from inception to December 31, 2004
for the Lifecycle Funds), the Funds paid an aggregate of $3,818,050 in
management fees to the Advisor. Had the Proposed Agreement been in effect during
the same period, the Funds would have paid an aggregate of $16,091,025 in
management fees. The table below shows the amount of management fees paid during
the year ended December 31, 2004 on a per Fund basis, along with the amounts
that would have been paid during the same period had the Proposed Agreement been
in effect ("Pro Forma"), and the percentage increase that the pro forma fees
represent. (See Exhibit E for a comparison of the Funds' current and pro forma
payments under its service arrangements for the 12-month period ended December
31, 2004.)
FUND CURRENT FEES PRO FORMA FEES % INCREASE
===================================================================================
GROWTH EQUITY FUND $ 79,987 $ 449,927 462.5%
- -----------------------------------------------------------------------------------
GROWTH & INCOME FUND $537,485 $3,023,353 462.5%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND $519,437 $2,885,761 455.6%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE FUND $167,917 $ 944,533 462.5%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH FUND $100,239 $ 601,434 500.0%
- -----------------------------------------------------------------------------------
MID-CAP VALUE FUND $ 97,757 $ 586,542 500.0%
- -----------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND $167,424 $1,004,544 500.0%
- -----------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND $ 40,941 $ 153,529 275.0%
- -----------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND $273,632 $1,520,178 455.6%
- -----------------------------------------------------------------------------------
BOND FUND $757,785 $2,841,694 275.0%
- -----------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND $385,466 $1,284,887 233.3%
- -----------------------------------------------------------------------------------
MONEY MARKET FUND $ 69,776 $ 174,440 150.0%
- -----------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND $ 17,352 $ 17,352 0.0%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND $ 52,571 $ 52,571 0.0%
- -----------------------------------------------------------------------------------
EQUITY INDEX FUND $297,043 $ 297,043 0.0%
- -----------------------------------------------------------------------------------
S&P 500 INDEX FUND $ 73,091 $ 73,091 0.0%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND $ 9,927 $ 9,927 0.0%
- -----------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND $ 14,632 $ 14,632 0.0%
- -----------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND $ 20,194 $ 20,194 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND $ 27,447 $ 27,447 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND $ 25,282 $ 25,282 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND $ 51,541 $ 51,541 0.0%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND $ 31,124 $ 31,124 0.0%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND -- 2010 FUND $ 286 $ 286 0.0%
- -----------------------------------------------------------------------------------
(Continued on next page)
30
FUND CURRENT FEES PRO FORMA FEES % INCREASE
================================================================================
LIFECYCLE FUND -- 2015 FUND $463 $463 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND $263 $263 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND $288 $288 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND $250 $250 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND $249 $249 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND $251 $251 0.0%
- --------------------------------------------------------------------------------
While the new fees shown above would represent a substantial increase in
management fee revenue to the Advisor, the increase is not expected to result in
undue profits to the Advisor for the foreseeable future, due to the expenses
that the Advisor has incurred and continues to incur to operate the Funds, and
the expense reimbursements committed to by the Advisor. In addition, even with
the new fees, the Funds would remain among the low-priced funds in the industry.
See page [33] for a comparison of each Fund's total expense ratio with the
median expense ratios of its peers.
For information about the overall impact of the proposed new pricing structure
on the Funds' total expense ratios, see "What Is the Overall Impact of the
Proposal On the Funds' Total Expense Ratios?" below.
What Factors Did the Board Consider in Approving the Proposed Agreement?
The proposal to approve the Proposed Agreement and present it to shareholders
for their approval was carefully considered by the Board of Trustees at meetings
held on December 7, 2004, January 19, 2005, February 15, 2005, April 5, 2005,
April 21, 2005 and May 17, 2005. At each of these meetings, the Board, which was
advised by independent counsel, deliberated over the Advisor's comprehensive
plan to restructure the Funds to help ensure their continuing operation. In
particular, the Board assessed the Advisor's proposal to increase advisory fees
significantly for certain Funds in light of ongoing losses sustained by the
Advisor. Before and at these meetings, the Board received information relating
to the Proposed Agreement and was given the opportunity to ask questions and
request additional information from the Advisor. After full and deliberate
consideration, and after balancing the costs and benefits to shareholders, on
May 17, 2005, the Board determined that the arrangements under the Proposed
Agreement were reasonable and fair to the Funds and shareholders. Therefore, the
Board voted unanimously to approve the Proposed Agreement, and submit the
Proposed Agreement to shareholders for approval.
The Board considered that since the Funds were established, the Advisor had set
its fees at extremely low levels, making it difficult for the Advisor to sustain
the level and quality of management and service shareholders expect in this
competitive environment. They also considered that despite ongoing losses to the
Advisor and the fact that its fees were much lower than most of its peers, the
Advisor had never previously asked for a fee
31
increase. In fact, in 2002, the Advisor decreased its fees, even as costs were
rising, resulting in increased losses to the Advisor. The Board considered that,
over that time, it has become increasingly expensive to operate mutual funds due
to the intensified competition for talented portfolio managers and other key
investment management and administrative personnel and higher compliance and
regulatory costs.
The Board considered that the new proposed management fee rates would enhance
the Advisor's ability to manage the day-to-day business affairs of the Funds,
cover the increasing costs of offering mutual funds, attract and retain highly
qualified personnel, increase the capacity and scope of coverage of the
investment management staff and maintain and improve the quality of services to
shareholders.
Significantly, they considered that while the magnitude of the fee increase
requested by the Advisor was large, even after the fee increase, most Funds
would earn only a modest profit for the Advisor, especially after the Advisor's
reimbursements, and would continue to be among the lower-priced offerings in the
industry.
As part of its deliberations, the Board reviewed detailed information provided
by the Advisor relating to the nature, extent and quality of the services
currently provided by the Advisor and to be provided by the Advisor under the
Proposed Agreement. In particular, the Board reviewed detailed independent
analysis of comparative expenses and performance data for each class of shares
of each of the Funds, prepared by Lipper, Inc., a Reuters company that is an
independent provider of investment company data ("Lipper"). In addition, the
Board received financial information about the Advisor and its affiliated
companies, including an analysis of the profitability of the Advisor's
operations, and the effect the proposed new arrangements would have on the
short-term and long-term financial condition of the Advisor. For details about
each Fund, see the Fund-by-Fund synopsis of the factors the Board considered in
Exhibit E.
In determining whether to approve the Proposed Agreement, the Board reviewed the
following specific factors:
The Nature and Quality of Services. The Board considered that the Advisor is an
experienced investment advisor that has managed the Institutional Funds since
1999 and the TIAA-CREF Mutual Funds since 1997, and that the investment
professionals of the Advisor also manage various accounts of CREF. The Board
considered that the Advisor has carried out its responsibilities for managing
the assets of the Funds in a professional manner. In the course of their review
of the quality of the Advisor's services, the Board examined the long-term
performance of the Funds in general, and concluded that it was within an
acceptable range when compared with fund benchmarks and peers, or that, in the
case of underperforming Funds, the Advisor was taking affirmative steps to
enhance its investment approach and personnel.
Performance. The Board considered the performance of each Fund over the
one-year, three-year, five-year (where applicable), and since inception periods
and the Funds' performance as compared to their peer groups and benchmark
indices. The Board
32
considered the comparative performance data for each Fund prepared by Lipper, an
independent third party, for each class of each pertinent Fund, as well as each
Fund's performance against its performance benchmark. In looking at this data,
the Board considered that most of the Funds met their benchmarks over the
one-year, three-year, five-year and since inception periods, as applicable (when
factoring in the effect of expenses), and ranked in the first, second, or third
quintiles versus their peers, with some limited exceptions. (This means, with
certain exceptions, the Funds were in the first, second or third of five groups,
in terms of performance, with first being the best.)
The Board considered that in those cases in which Funds were underperforming,
the Advisor took remedial action, including replacing the portfolio management
team for the Growth Equity and Growth & Income Funds. Importantly, the Trustees
concluded that in light of the long-term performance of the Growth Equity and
Growth & Income Funds, they would only approve the Proposed Agreement if the
Advisor agreed to waive the fee increases for those Funds until at least April
2007, at which time the Board could consider whether these Funds' performance
had improved. For details about each Fund, see the Fund-by-Fund synopsis of the
factors the Board considered in Exhibit E.
Fees Charged by Other Advisers. An important factor that the Board considered
was the level of fees paid to other advisers for managing similar funds, as
analyzed by Lipper. The Board determined that the fees under the Current
Agreement were significantly lower than those of competitors, and that even with
the proposed increase in advisory fees and increase in total expense ratios,
each Fund would continue to be very competitively priced and below the pricing
of the average fund within the universe of mutual funds in its competitive peer
group. They considered that the new management fees for almost all of the
repriced Funds would continue to be in the lowest quintile as compared with
Institutional class funds in the competitive peer group and universe identified
by Lipper. (The lowest quintile means that a fund is in the best of five groups,
i.e., the group with the lowest expenses.) Significantly, the Board considered
that under the Proposed Agreement, each Fund's total expense ratio (except
Inflation-Linked Bond Fund) would be less than the median expense ratio for its
peer group of mutual funds, and, in some cases, significantly less. The table
below compares the estimated total expense ratio (not including any waivers or
reimbursements) of each existing class of each Fund that would be subject to an
increased fee under the Proposed Agreement should Proposal 3 be approved, with
the Lipper median total expense ratio for the Fund's appropriate category.
Proposed Median
Total Peer Total
Expense Expense
Fund Ratio Ratio Difference
================================================================================
GROWTH EQUITY FUND -- Institutional 0.50% 1.05% -0.55%
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND -- Institutional 0.50% 0.93% -0.43%
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND -- Retirement 0.75% 0.93% -0.18%
- --------------------------------------------------------------------------------
(Continued on next page)
33
Proposed Median
Total Peer Total
Expense Expense
Fund Ratio Ratio Difference
========================================================================================
INTERNATIONAL EQUITY FUND -- Institutional 0.59% 1.19% -0.60%
- ----------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND -- Retirement 0.80% 1.19% -0.39%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Institutional 0.50% 1.07% -0.57%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Retirement 0.75% 1.07% -0.32%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Retail 0.99% 1.05% -0.06%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Institutional 0.55% 1.11% -0.56%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Retirement 0.78% 1.11% -0.33%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Retail 1.08% 1.28% -0.20%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Institutional 0.55% 1.07% -0.52%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Retirement 0.78% 1.07% -0.29%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Retail 1.02% 1.23% -0.21%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Institutional 0.55% 1.15% -0.60%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Retirement 0.78% 1.15% -0.37%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Retail 1.16% 1.26% -0.10%
- ----------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND -- Institutional 0.25% 0.99% -0.74%
- ----------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND -- Retirement 0.48% 0.99% -0.51%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Institutional 0.59% 1.11% -0.52%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Retirement 0.80% 1.11% -0.31%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Retail 0.99% 1.18% -0.19%
- ----------------------------------------------------------------------------------------
BOND FUND -- Institutional 0.34% 0.69% -0.35%
- ----------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND -- Institutional 0.35% 0.35% 0.00%
- ----------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND -- Retail 0.80% 0.72% +0.08%
- ----------------------------------------------------------------------------------------
MONEY MARKET FUND -- Institutional 0.15% 0.43% -0.28%
- ----------------------------------------------------------------------------------------
Cost and Profitability. The Board considered that the Advisor is losing money
managing the mutual funds business overall. The Board reviewed financial and
profitability data for 2004 and profitability on a pro forma basis assuming the
proposed management fee increase had been in effect--showing data for both
before and after distribution expenditures. The Board considered that very few
Funds currently are profitable to the Advisor, and most are operating at a loss
to the Advisor. The Board also considered that even after repricing, most Funds
would earn only a modest profit for the Advisor, especially after
reimbursements. The Board determined that the Proposed Agreement would permit
the Advisor to operate for the foreseeable future at reasonable profit margins,
which would also enable the Advisor to maintain and improve the quality of
services provided to shareholders. The Board also considered that it would be
able to
34
review the profitability levels of the Advisor annually during its yearly review
of the Funds' management arrangements to ensure that the Advisor's fees remained
fair and reasonable and that its profits for managing the Funds were not
excessive.
The Board further considered that the costs and anticipated costs of operating
mutual funds have increased, including additional disclosure and compliance
requirements, such as the USA Patriot Act requirements, Sarbanes-Oxley
requirements, and the requirement that mutual funds have a chief compliance
officer. The Board considered that the proposed fee increase would enhance the
Advisor's ability to attract and retain highly qualified investment and
administrative professionals in a competitive investment management environment.
Heightened competition from traditional asset managers, banks, insurance
companies and, particularly in recent years, hedge funds, has driven up the
costs of attracting and retaining key personnel and the cost of technology to
update and maintain necessary systems for effective investment management
operations continues to grow. The Board also considered that the Advisor would
like the flexibility and means to increase the capacity of its investment
management staff and expand the depth and scope of analyst coverage, to enhance
its investment management services to the Funds.
Economies of Scale. The Board considered whether the Advisor has or would
experience economies of scale on any of the Funds, and whether the proposed fees
should contain breakpoints. The Board carefully considered whether the proposed
breakpoints would have any real effect on Fund fees. They determined that
although the breakpoints discounts appeared to be low compared to those of
competitors, this was because the stated fees under the Proposed Agreement were
already at low levels. The Board ultimately determined that imposing a modest
breakpoint schedule on the majority of the Actively Managed Funds would allow
some of the savings gained from the growth of assets and economies of scale to
be passed on to Fund shareholders. The Board expects to review the level of
breakpoints as Fund assets grow.
Comparisons with Other Clients of the Advisor. The Board considered that the
Advisor provides similar investment management services to each of the
Institutional Funds, the TIAA-CREF Mutual Funds, TIAA-CREF Life Funds, and TIAA
Separate Account VA-1, although channels for distribution of interests in such
funds differ among them. In addition, the Advisor, through its TCAM division,
manages large institutional client assets through unregistered commingled funds
and separate accounts with similar investment strategies and investment staff.
The Board considered the schedule of fees for each of the comparable funds, and
determined that while the management fees may not be precisely the same for
comparable funds, there were good reasons for the divergent pricing. The Board
also considered the assurances of the Advisor that the pricing on those
affiliated funds that was not in line with the proposed advisory fees would be
revisited.
Other Benefits. At the Board's request, the Advisor agreed to continue to be
willing to cap "other expenses" of the Funds and to waive a portion of its fees
on the Growth Equity and Growth & Income Funds, until such time as their
performance improves. The Board also considered that the fee increase would help
ensure that the expenses for
35
running the Funds that are paid by the Advisor are not indirectly borne (in the
form of reduced declared dividends) by the TIAA participant base, some of who
are shareholders of the Funds. Finally, the Board considered that with the
Proposed Agreement, the Advisor would have the flexibility to support multiple
opportunities to expand the channels through which the Funds are distributed,
thereby increasing asset growth and enabling expenses to be spread over a wider
asset base.
Based on its evaluation of all material factors and with the assistance of
independent counsel, the Board concluded that the proposed advisory fee
structure is fair and reasonable to each of the Funds, its shareholders, and to
the Advisor.
What Is The Overall Impact Of The Proposal On The Funds' Total Expense Ratios?
The tables below provide data concerning each Fund's fees and expenses (for each
share class) as a percentage of average net assets for each Fund's most recent
full fiscal year ended September 30, 2004 under the Current Agreement and if the
Proposed Agreement had been in effect during the same period. Note that, as
indicated above, if the new arrangements had been in effect for the most
recently completed fiscal years, each Fund's total expense ratio would have been
less than the median expense ratio for its peer group of mutual funds, and, in
some cases, significantly less.
INSTITUTIONAL CLASS
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
GROWTH EQUITY FUND
Current 0.08% 0.07% 0.15% 0.01% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.07% 0.52% 0.39% 0.13%
- ----------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND
Current 0.08% 0.06% 0.14% -- 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.05% 0.50% 0.37% 0.13%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current 0.09% 0.11% 0.20% -- 0.20%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.06% 0.56% -- 0.56%
- ----------------------------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Current 0.08% 0.09% 0.17% 0.03% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.03% 0.48% -- 0.48%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.09% 0.17% 0.02% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.14% 0.62% 0.07% 0.55%
- ----------------------------------------------------------------------------------------------------
36
INSTITUTIONAL CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
MID-CAP VALUE FUND
Current 0.08% 0.09% 0.17% 0.02% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.11% 0.59% 0.04% 0.55%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.12% 0.20% 0.05% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.08% 0.56% 0.01% 0.55%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
EQUITY INDEX FUND
Current 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
S&P 500 INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.11% 0.15% 0.07% 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current 0.04% 0.05% 0.09% 0.01% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.08% 0.12% 0.04% 0.08%
- ----------------------------------------------------------------------------------------------------
37
INSTITUTIONAL CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
SMALL-CAP BLEND INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.10% 0.14% 0.06% 0.08%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current 0.04% 0.11% 0.15% -- 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.12% 0.16% 0.01% 0.15%
- ----------------------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current 0.04% 0.06% 0.10% -- 0.10%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.15% 0.05% 0.20% -- 0.20%
- ----------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current 0.09% 0.07% 0.16% -- 0.16%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.06% 0.56% 0.01% 0.55%
- ----------------------------------------------------------------------------------------------------
BOND FUND
Current 0.08% 0.06% 0.14% -- 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.03% 0.33% -- 0.33%
- ----------------------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current 0.09% 0.06% 0.15% 0.01% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.04% 0.34% -- 0.34%
- ----------------------------------------------------------------------------------------------------
MONEY MARKET FUND
Current 0.04% 0.05% 0.09% -- 0.09%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.15% -- 0.15%
- ----------------------------------------------------------------------------------------------------
RETIREMENT CLASS
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
GROWTH & INCOME FUND
Current 0.08% 0.45% 0.53% 0.09% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 4.22% 4.67% 4.29% 0.38%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current 0.09% 0.49% 0.58% 0.03% 0.55%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.37% 0.87% 0.07% 0.80%
- ----------------------------------------------------------------------------------------------------
38
RETIREMENT CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
LARGE-CAP VALUE FUND
Current 0.08% 0.43% 0.51% 0.03% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.34% 0.79% 0.04% 0.75%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.46% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.35% 0.83% 0.05% 0.78%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current 0.08% 0.44% 0.52% 0.04% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.34% 0.82% 0.04% 0.78%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.46% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.37% 0.85% 0.07% 0.78%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current 0.04% 0.48% 0.52% 0.10% 0.42%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.45% 0.49% 0.15% 0.34%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current 0.04% 0.93% 0.97% 0.53% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 4.37% 4.41% 4.07% 0.34%
- ----------------------------------------------------------------------------------------------------
S&P 500 INDEX FUND
Current 0.04% 0.44% 0.48% 0.04% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.35% 0.39% 0.05% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current 0.04% 0.69% 0.73% 0.29% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 5.34% 5.38% 5.04% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current 0.04% 0.96% 1.00% 0.56% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 8.02% 8.06% 7.72% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current 0.04% 0.62% 0.66% 0.22% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.82% 0.86% 0.52% 0.34%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current 0.04% 0.63% 0.67% 0.23% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 1.99% 2.03% 1.69% 0.34%
- ----------------------------------------------------------------------------------------------------
39
RETIREMENT CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
SMALL-CAP VALUE INDEX FUND
Current 0.04% 0.87% 0.91% 0.47% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 2.47% 2.51% 2.17% 0.34%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current 0.04% 0.73% 0.77% 0.33% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 5.44% 5.48% 5.14% 0.34%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX
FUND
Current 0.04% 0.46% 0.50% -- 0.50%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 3.88% 3.92% 3.51% 0.41%
- ----------------------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current 0.04% 0.48% 0.52% 0.08% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.15% 0.39% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current 0.09% 0.41% 0.50% 0.03% 0.47%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.34% 0.84% 0.03% 0.81%
- ----------------------------------------------------------------------------------------------------
RETAIL CLASS
Total Annual Net Annual
Fund Fund
Management Distribution Other Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Reimbursement Expenses
======================================================================================================================
LARGE-CAP VALUE FUND
Current 0.08% 0.00% 0.41% 0.49% 0.05% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.25% 0.29% 0.99% 0.19% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.00% 0.43% 0.51% 0.07% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.35% 0.29% 1.08% 0.23% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current 0.08% 0.00% 0.43% 0.51% 0.07% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.25% 0.29% 1.02% 0.17% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.00% 0.30% 0.38% 0.08% 0.30%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.25% 0.43% 1.16% 0.31% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current 0.09% 0.00% 0.41% 0.50% 0.05% 0.45%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.25% 0.24% 0.99% 0.09% 0.90%
- ----------------------------------------------------------------------------------------------------------------------
40
RETAIL CLASS continued
Total Annual Net Annual
Fund Fund
Management Distribution Other Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Reimbursement Expenses
======================================================================================================================
INFLATION-LINKED BOND FUND
Current 0.09% 0.00% 0.24% 0.33% 0.03% 0.30%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.25% 0.25% 0.80% 0.30% 0.50%
- ----------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUNDS*
Gross Annual
Total Annual Underlying Net Annual
Fund Fund Fund
Management Distribution Other Operating Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Expenses Reimbursement Expenses
====================================================================================================================================
LIFECYCLE FUND -- 2010 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.19% 0.05% 0.60%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.35% 0.10% 0.71%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.19% 0.04% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.11% 0.71%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.10% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.10% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.21% 0.06% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.21% 0.06% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
* The "Other Expenses" of the Lifecycle Funds include the expenses of the
underlying Funds in which they invest, which are reduced by the waivers noted
above.
Note that the Board obtained the Advisor's agreement to waive the Lifecycle
Funds' investment management fees if the fee increases on the Institutional
Funds in which the Lifecycle Funds invest are approved by shareholders.
41
The following example indicates the expenses you would pay under the current and
proposed expense structures, assuming an initial investment of $10,000, a 5%
total annual return each year, and redemption at the end of each period. This
example also assumes that there will be no expense reimbursement in place after
one year, except for the Index Funds, which will have their current expense
reimbursement in place for five years. Your actual cost may be higher or lower.
INSTITUTIONAL CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
GROWTH EQUITY FUND
Current $14 $ 47 $ 84 $191
- --------------------------------------------------------------------------------
Pro Forma $13 $128 $ 254 $626
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Current $14 $ 45 $ 79 $179
- --------------------------------------------------------------------------------
Pro Forma $13 $123 $ 244 $602
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current $20 $ 64 $ 113 $255
- --------------------------------------------------------------------------------
Pro Forma $57 $179 $ 313 $701
- --------------------------------------------------------------------------------
LARGE-CAP VALUE FUND
Current $14 $ 52 $ 93 $214
- --------------------------------------------------------------------------------
Pro Forma $49 $154 $ 269 $604
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $15 $ 53 $ 94 $215
- --------------------------------------------------------------------------------
Pro Forma $56 $192 $ 339 $770
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $15 $ 53 $ 94 $215
- --------------------------------------------------------------------------------
Pro Forma $56 $185 $ 326 $735
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current $15 $ 59 $ 108 $250
- --------------------------------------------------------------------------------
Pro Forma $56 $178 $ 312 $701
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Current $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
42
INSTITUTIONAL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
S&P 500 INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 41 $ 78 $185
- --------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current $ 8 $ 28 $ 50 $114
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 35 $ 64 $150
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 39 $ 73 $174
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current $15 $ 48 $ 85 $192
- --------------------------------------------------------------------------------
Pro Forma $15 $ 51 $ 89 $204
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $16 $ 52 $ 90 $205
- --------------------------------------------------------------------------------
Pro Forma $56 $178 $312 $701
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current $10 $ 32 $ 56 $128
- --------------------------------------------------------------------------------
Pro Forma $20 $ 64 $113 $255
- --------------------------------------------------------------------------------
BOND FUND
Current $14 $ 45 $ 79 $179
- --------------------------------------------------------------------------------
Pro Forma $34 $106 $185 $418
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current $14 $ 47 $ 84 $191
- --------------------------------------------------------------------------------
Pro Forma $35 $109 $191 $431
- --------------------------------------------------------------------------------
43
INSTITUTIONAL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
MONEY MARKET FUND
Current $ 9 $29 $ 51 $115
- --------------------------------------------------------------------------------
Pro Forma $15 $48 $ 85 $192
- --------------------------------------------------------------------------------
RETIREMENT CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
GROWTH & INCOME FUND
Current $45 $ 161 $ 287 $ 656
- --------------------------------------------------------------------------------
Pro Forma $39 $1,062 $2,181 $5,465
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current $56 $ 183 $ 321 $ 723
- --------------------------------------------------------------------------------
Pro Forma $82 $ 271 $ 476 $1,069
- --------------------------------------------------------------------------------
LARGE-CAP VALUE FUND
Current $49 $ 161 $ 282 $ 638
- --------------------------------------------------------------------------------
Pro Forma $77 $ 248 $ 435 $ 976
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $49 $ 167 $ 296 $ 671
- --------------------------------------------------------------------------------
Pro Forma $80 $ 260 $ 456 $1,023
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $49 $ 163 $ 287 $ 649
- --------------------------------------------------------------------------------
Pro Forma $80 $ 258 $ 451 $1,012
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current $49 $ 167 $ 296 $ 671
- --------------------------------------------------------------------------------
Pro Forma $80 $ 264 $ 465 $1,046
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current $43 $ 157 $ 281 $ 643
- --------------------------------------------------------------------------------
Pro Forma $35 $ 142 $ 260 $ 605
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current $45 $ 256 $ 485 $1,141
- --------------------------------------------------------------------------------
Pro Forma $35 $1,001 $2,060 $5,170
- --------------------------------------------------------------------------------
S&P 500 INDEX FUND
Current $45 $ 150 $ 265 $ 600
- --------------------------------------------------------------------------------
Pro Forma $35 $ 120 $ 214 $ 489
- --------------------------------------------------------------------------------
MID-CAP-GROWTH INDEX FUND
Current $45 $ 204 $ 377 $ 879
- --------------------------------------------------------------------------------
Pro Forma $35 $1,214 $2,506 $6,300
- --------------------------------------------------------------------------------
44
RETIREMENT CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
MID-CAP VLUE INDEX FUND
Current $45 $ 263 $ 498 $1,174
- --------------------------------------------------------------------------------
Pro Forma $35 $1,801 $3,737 $9,421
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current $45 $ 189 $ 346 $ 802
- --------------------------------------------------------------------------------
Pro Forma $35 $ 223 $ 430 $1,036
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current $45 $ 191 $ 350 $ 813
- --------------------------------------------------------------------------------
Pro Forma $35 $ 480 $ 967 $2,399
- --------------------------------------------------------------------------------
SMALL-CAP VLUE INDEX FUND
Current $45 $ 243 $ 458 $1,076
- --------------------------------------------------------------------------------
Pro Forma $35 $ 585 $1,188 $2,958
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current $45 $ 213 $ 395 $ 923
- --------------------------------------------------------------------------------
Pro Forma $35 $1,236 $2,552 $6,416
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current $51 $ 160 $ 280 $ 628
- --------------------------------------------------------------------------------
Pro Forma $42 $ 900 $1,839 $4,589
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current $45 $ 159 $ 283 $ 645
- --------------------------------------------------------------------------------
Pro Forma $49 $ 167 $ 296 $ 673
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $48 $ 157 $ 277 $ 625
- --------------------------------------------------------------------------------
Pro Forma $83 $ 265 $ 463 $1,036
- --------------------------------------------------------------------------------
RETAIL CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
LARGE-CAP VALUE FUND
Current $45 $152 $269 $ 611
- --------------------------------------------------------------------------------
Pro Forma $82 $297 $530 $1,205
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $45 $156 $278 $ 634
- --------------------------------------------------------------------------------
Pro Forma $87 $321 $575 $1,309
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $45 $156 $278 $ 634
- --------------------------------------------------------------------------------
Pro Forma $87 $308 $548 $1,241
- --------------------------------------------------------------------------------
45
RETAIL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
SMALL-CAP EQUITY FUND
Current $31 $114 $205 $ 473
- --------------------------------------------------------------------------------
Pro Forma $87 $339 $612 $1,400
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $46 $155 $275 $ 623
- --------------------------------------------------------------------------------
Pro Forma $92 $307 $539 $1,209
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current $31 $103 $182 $ 415
- --------------------------------------------------------------------------------
Pro Forma $51 $226 $417 $ 975
- --------------------------------------------------------------------------------
LIFECYCLE FUNDS
1 Year 3 Years 5 Years 10 Years
================================================================================
LIFECYCLE FUND -- 2010 FUND
Current $61 $203 $358 $ 809
- --------------------------------------------------------------------------------
Pro Forma $73 $249 $441 $ 997
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND
Current $62 $204 $359 $ 808
- --------------------------------------------------------------------------------
Pro Forma $73 $251 $445 $1,008
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND
Current $62 $206 $363 $ 819
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $446 $1,009
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND
Current $62 $206 $363 $ 819
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $446 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND
Current $62 $206 $363 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $451 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND
Current $62 $208 $368 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $254 $451 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND
Current $62 $208 $368 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $254 $451 $1,020
- --------------------------------------------------------------------------------
46
PROPOSAL 4 -- APPROVAL OF DISTRIBUTION PLAN
The Board has unanimously approved, and recommends that the Retail Class
shareholders of each Retail Class Fund vote for the approval of, the
distribution plan with respect to their shares
The Board is recommending that Retail Class shareholders of the Large-Cap Value
Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real
Estate Securities Fund and Inflation-Linked Bond Fund (collectively, the "Retail
Class Funds") approve a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act
with respect to the Retail Class shares of these Funds. Rule 12b-1 requires that
any direct payments of distribution expenses by funds may only occur pursuant to
a distribution plan adopted in compliance with the Rule. The Distribution Plan
will enable the Funds to reimburse Teachers Personal Investors Services, Inc.
("TPIS"), the Funds' distributor, for its efforts in promoting and distributing
Retail Class shares, which is expected to help increase assets in these Funds.
An increase in assets of the Retail Class Funds will allow the Funds to achieve
greater economies of scale and lower overall expense ratios by spreading
expenses over a wider asset base.
A copy of the Distribution Plan is attached to this Proxy Statement as Exhibit
G.
What are the Terms of the Distribution Plan?
Under the terms of the Distribution Plan, TPIS can be reimbursed for all or part
of certain expenses that it incurs in connection with the promotion and
distribution of the Retail Class shares, as approved by the Board, up to an
annual rate of 0.25% of the average daily net asset value of shares of the
Retail Class. Reimbursements by the Retail Class shares under the Distribution
Plan are calculated daily and paid monthly. The expenses eligible for
reimbursement under the Distribution Plan include, but are not limited to,
compensation of dealers and others for the expenses of their various activities
primarily intended to promote the sale of its shares, and for providing personal
and account maintenance services to holders of shares and salaries and other
expenses relating to account servicing efforts. To see the effect of the
proposed fees under the Distribution Plan, please see the expense charts on
pages 40-41.
Pursuant to the Distribution Plan, at least quarterly, TPIS will provide the
Institutional Funds with a written report of the amounts expended under the
Distribution Plan and the purpose for those expenditures. The Trustees will
review these reports to determine their continued appropriateness.
The Distribution Plan provides that it continues in effect only so long as its
continuance is approved at least annually by a majority of the Trustees who are
not "interested persons" of the Institutional Funds. The Distribution Plan
provides that it may be terminated without penalty with respect to the Retail
Class shares of a Fund at any time: (a) by vote
47
of a majority of the Trustees who are not "interested persons" of the
Institutional Funds; or (b) by a vote of a majority of the votes attributable to
the Retail Class shares of the Retail Class Fund. The Distribution Plan further
provides that it may not be amended to increase materially the maximum amount of
the fees specified therein with respect to the Retail Class shares without
shareholder approval. In addition, the Distribution Plan provides that no
material amendment to the Distribution Plan will, in any event, be effective
unless it is approved by a majority vote of the Trustees who are not "interested
persons" of the Institutional Funds.
If the Distribution Plan is approved by shareholders of a Retail Class Fund, it
is contemplated that the Distribution Plan will become effective on November 1,
2005.
What Factors Did the Board Consider in Approving the Distribution Plan?
The Distribution Plan was unanimously approved by the Trustees in person at a
meeting held on May 17, 2005. None of the Trustees have a direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements related to the Distribution Plan.
In approving the Distribution Plan, the Board considered whether adoption of the
Distribution Plan is reasonably likely to benefit Retail Class shareholders and
the Funds, and weighed the anticipated benefits to shareholders against the
level of fees charged by the Distribution Plan. The Board noted that the ability
to successfully distribute Retail Class shares was an important part of the
overarching effort to restructure and reposition the Funds. The Trustees
considered that the Advisor did not have adequate revenues to continue to pay
for the promotion and distribution of Retail Class shares. They considered that
promotion and distribution efforts were critical to increasing Fund assets,
which could produce economies and scale and allow the Funds to reach
breakpoints. This would help lower overall expense ratios for the Retail Class
Funds. Additionally, the enhanced distribution of Retail Class shares under the
Distribution Plan is expected to lead to steadier inflows of cash into the
Funds, which would, in turn, make it easier to manage the Funds and lessen the
occasions where portfolio securities would need to be sold to meet redemptions.
The Board also considered the following:
o The Distribution Plan is a reimbursement plan, in which the Board has annual
control on the amount to pay out - up to the maximum stated in the
Distribution Plan.
o Management is proposing that the Plan be phased in gradually. During the
first two years, TPIS would not ask for any reimbursement of distribution
expenses for Retail Class shares; and after that, the reimbursements would be
increased incrementally until all Retail Class distribution expenses (up to
25 basis points) would be paid for by the Funds.
o The Distribution Plan's maximum fees are within the same range as or lower
than fees of other comparable funds, which range from approximately 10 to 100
basis points.
48
o At the Board's suggestion, management has proposed methods to limit the
expenses of the Retail Class. In particular, the Advisor has agreed to cap
the total expenses of the Funds, including distribution fees, until April
2007 and to impose a fee on small accounts that would target those accounts
responsible for some of the high costs to the Funds. In addition, TPIS has
agreed not to ask for reimbursements of its distribution expenses until April
2007.
After considering these factors, the Trustees concluded that there was a
reasonable likelihood that the Distribution Plan would benefit each Retail Class
Fund and its respective Retail Class shareholders, and unanimously approved the
adoption of the Distribution Plan.
ADDITIONAL INFORMATION
Beneficial Ownership
Except as set forth in Exhibit H, as of May 31, 2005, Institutional Funds does
not know of any person who owns beneficially or of record 5% or more of the
outstanding shares of any class of any Fund. As of that same date, the Trustees
and officers of Institutional Funds, individually and in the aggregate, owned
less than 1% of any class of any Fund, except as noted below.
Name Fund and Class Shares Percentage
================================================================================================
Herbert M. Allison, Jr. Large-Cap Value Fund (Retail Class) 95,206.65 2.11%
- -------------------------------------------------------------------------------------------------
Scott C. Evans Lifecycle Fund - 2025 Fund 55,981.47 28.01%
Distributor
The shares of the Funds are distributed by TPIS, a subsidiary of TIAA that is
registered as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. The TIAA Board of Overseers, a New York membership
corporation, owns all of the stock of TIAA. The address for TPIS is 730 Third
Avenue, New York, New York 10017-3206.
OTHER MATTERS
Means of Soliciting Proxies
This proxy solicitation will be conducted mainly by mail, telephone, and the
Internet, but it may also be by any other method of electronic communication or
by personal interview. The Funds have retained D. F. King & Co., Inc. of New
York, NY ("DF King") to assist in the solicitation of proxies. The costs of
retaining DF King, which are anticipated to be $98,000, and other expenses
incurred in connection with the drafting, printing and mailing
49
of this proxy statement, the solicitation of proxies and the holding of the
special meeting, will be borne by the Advisor, and not by any of the Funds.
Proposals of Persons with Voting Rights
As a general matter, Institutional Funds does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of Institutional Funds' shareholders should send
such proposals to the Funds' Secretary. Proposals must be received a reasonable
amount of time prior to any meeting to be included in the proxy materials.
Moreover, inclusion of such proposals is subject to limitations under the
federal securities laws. Persons named as proxies for any subsequent
shareholders' meeting will vote in their discretion with respect to proposals
submitted on an untimely basis.
ANNUAL REPORTS
IF YOU WOULD LIKE A FREE COPY OF THE INSTITUTIONAL FUNDS' MOST RECENT
SEMI-ANNUAL AND ANNUAL REPORTS, YOU CAN VISIT THE TIAA-CREF WEB SITE AT
WWW.TIAA-CREF.ORG OR USE OUR ON-LINE REQUEST FORM TO REQUEST MAILED VERSIONS.
ALTERNATIVELY, YOU CAN CALL 1 877 518-9161 OR WRITE TO US AT 730 THIRD AVENUE,
NEW YORK, NEW YORK 10017-3206 TO REQUEST COPIES OF THESE DOCUMENTS.
50
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT FOR TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
THIS AGREEMENT is made this [___] day of [__], 2005, by and between
TIAA-CREF Institutional Mutual Funds (the "Trust"), a Delaware statutory trust,
and Teachers Advisors, Inc. (the "Advisor"), a Delaware corporation.
WHEREAS, Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
currently consists of several series divided into various classes (listed on
Appendix A hereto), and may consist of additional series or classes in the
future (collectively, the "Funds");
WHEREAS, Advisor is engaged principally in the business of rendering
investment advisory and management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act");
WHEREAS, Trust desires to retain Advisor to render investment advisory and
management services to the Funds, in the manner and on the terms and conditions
set forth in this Agreement;
WHEREAS, Advisor is willing to provide investment advisory and management
services to the Funds in the manner and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Trust and Advisor hereby agree as follows:
1. Appointment.
Trust hereby appoints Advisor to act as the Funds' investment adviser and
manager for the periods and on the terms set forth herein. Advisor hereby
accepts the appointment as investment adviser and manager, and agrees, subject
to the supervision of the board of trustees of Trust (the "Board"), to furnish
the services and assume the obligations set forth in this Agreement for the
compensation provided for herein.
2. Generally.
(a) As the Funds' investment adviser and manager, Advisor shall be
subject to: (1) the restrictions of the Declaration of Trust of Trust, as
amended from time to time; (2) the provisions of the 1940 Act and the Advisers
Act; (3) the statements relating to the Funds' investment objectives, investment
policies and investment restrictions as set forth in the currently effective
(and as amended from time to time) registration statement of Trust under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act; (4) any
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"); and such other limitations as Trust shall communicate to Advisor in
writing.
A-1
(b) Advisor shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent Trust or a Fund in any way
or otherwise be deemed an agent of Trust or a Fund.
(c) Advisor shall, for purposes of this Agreement, have and exercise
full investment discretion and authority to act as agent for the Funds in
buying, selling or otherwise disposing of or managing the Funds' investments,
directly or through sub-advisers, subject to supervision by the Board.
3. Investment Advisory Services
(a) Advisor shall provide the Funds with such investment research,
advice and supervision as Advisor may from time to time consider necessary or
appropriate for the proper management of the assets of each Fund, shall furnish
continuously an investment program for each Fund, shall determine which
securities or other investments shall be purchased, sold or exchanged and what
portions of each Fund shall be held in the various securities or other
investments or cash, and shall take such steps as are necessary to implement an
overall investment plan for each Fund, including providing or obtaining such
services as may be necessary in managing, acquiring or disposing of securities,
cash or other investments.
(b) Trust has furnished or will furnish Advisor with copies of Trust's
registration statement and Declaration of Trust, as currently in effect and
agrees during the continuance of this Agreement to furnish Advisor with copies
of any amendments or supplements thereto before or at the time the amendments or
supplements become effective. Advisor will be entitled to rely on all documents
furnished by Trust.
(c) Advisor shall take, on behalf of each Fund, all actions that it
deems necessary to implement the investment policies of such Fund, and in
particular, to place all orders for the purchase or sale of portfolio
investments for the account of each Fund with brokers, dealers, futures
commission merchants or banks selected by Advisor. Advisor also is authorized as
the agent of Trust to give instructions to any service provider serving as
custodian of the Funds as to deliveries of securities and payments of cash for
the account of each Fund. In selecting brokers or dealers and placing purchase
and sale orders with respect to assets of a Fund, Advisor is directed at all
times to seek to obtain best execution within the policy guidelines determined
by the Board and set forth in the current registration statement. Subject to
this requirement and the provisions of the 1940 Act, the Advisers Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and other
applicable provisions of law, Advisor may select brokers or dealers that are
affiliated with Advisor or Trust.
(d) Consistent with Advisor's obligation to provide best execution,
Advisor may also take into consideration research and statistical information,
wire, quotation and other services provided by brokers and dealers to Advisor.
Advisor is also authorized to effect individual securities transactions at
commission rates in excess of the minimum
A-2
commission rates available, if Advisor determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage, research
and other services provided by such broker or dealer, viewed in terms of either
that particular transaction or Advisor's overall responsibilities with respect
to each Fund. The policies with respect to brokerage allocation, determined from
time to time by the Board are those disclosed in the currently effective
registration statement. Advisor will periodically evaluate the statistical data,
research and other investment services provided to it by brokers and dealers.
Such services may be used by Advisor in connection with the performance of its
obligations under this Agreement or in connection with other advisory or
investment operations including using such information in managing its own
accounts.
(e) As part of carrying out its obligations to manage the investment
and reinvestment of the assets of each Fund consistent with the requirements
under the 1940 Act, Advisor shall:
(1) Perform research and obtain and analyze pertinent economic,
statistical, and financial data relevant to the investment
policies of each Fund as set forth in Trust's registration
statement;
(2) Consult with the Board and furnish to the Board
recommendations with respect to an overall investment strategy
for each Fund for approval, modification, or rejection by the
Board;
(3) Seek out and implement specific investment opportunities,
consistent with any investment strategies approved by the Board;
(4) Take such steps as are necessary to implement any overall
investment strategies approved by the Board for each Fund,
including making and carrying out day-to-day decisions to acquire
or dispose of permissible investments, managing investments and
any other property of the Fund, and providing or obtaining such
services as may be necessary in managing, acquiring or disposing
of investments;
(5) Regularly report to the Board with respect to the performance
of the Funds, the implementation of any approved overall
investment strategy and any other activities in connection with
management of the assets of each Fund;
(6) Maintain all required books, accounts, records, memoranda,
instructions or authorizations with respect to the
investment-related activities of the Funds;
(7) Furnish any personnel, office space, equipment and other
facilities necessary for the investment-related activities of the
Funds;
(8) Provide the Funds with such accounting or other data
concerning the Funds' investment-related activities as shall be
necessary or required to
A-3
prepare and to file all periodic financial reports or other
documents required to be filed with the Securities and Exchange
Commission and any other regulatory entity;
(9) Assist in determining each business day the net asset value
of the shares of each Fund in accordance with applicable law; and
(10) Enter into any written investment advisory or investment
sub-advisory contract with another affiliated or unaffiliated
party, subject to any approvals required by Section 15 of the
1940 Act, pursuant to which such party will carry out some or all
of Advisor's responsibilities (as specified in such investment
advisory or investment sub-advisory contract) listed above.
4. General Management Services.
(a) Advisor shall manage or supervise all aspects of the Funds'
operations, including transfer agency, dividend disbursing, legal, accounting,
administrative and shareholder services. These services may be provided by
Advisor or by third-party service providers, such as custodians, transfer agents
and fund administrators. Advisor's general management services shall include,
but be limited to:
(1) Supervising the performance of custodians, transfer agents,
fund administrators, and other persons in any capacity deemed to
be necessary to a Fund's operations;
(2) Furnishing or overseeing the furnishing of any personnel,
office space, equipment and other facilities necessary for the
non-investment-related operations of the Fund;
(3) Calculating or monitoring the calculation of the net asset
value of each Fund at such times and in such manner as specified
in Trust's current registration statement and at such other times
upon which the parties hereto may from time to time agree;
(4) Providing or overseeing the provision of customary accounting
and auditing services for registered investment companies and
their series, including portfolio accounting, dividend and
distribution determinations, and the calculation and preparation
of any financial information or schedules, for Trust and the
Funds;
(5) Preparing and filing or supervising the preparation and
filing of all federal, state, and local tax returns and reports
relating to each Fund;
(6) Preparing and filing or supervising the preparation and
filing of any documents required to be filed on behalf of Trust
or the Funds with the Securities Exchange Commission and/or other
federal, state and local authorities as may be required by
applicable law, including proxy
A-4
materials, registration statements and post-effective amendments
thereto, shareholder reports, and Rule 24f-2 notices;
(7) Preparing and filing or supervising the preparation and
filing of notices to qualify the Funds' shares to be offered in
such states;
(8) Maintaining or overseeing the maintenance of such
non-investment activity-related books and records of the Funds as
may be required by applicable law;
(9) Providing or overseeing the organization and recordkeeping
for meetings of the Board, including preparing such materials and
reports and making its officers and employees available to the
Board for consultation and discussions regarding the operations
and management of the Funds;
(10) Developing and implementing or overseeing the development
and implementation of a program to monitor Trust's and the Funds'
compliance with regulatory requirements and the Funds' own
limitations and public statements; and
(11) Supervising or providing any other services necessary for
the ordinary operation of Trust and the Funds.
(b) Nothing in this Agreement shall be deemed to diminish the
obligations of any agent of Trust or other person not a party to this Agreement
that is obligated to provide services to the Funds.
5. Allocation of Charges and Expenses.
(a) Advisor. Advisor assumes the expense of and shall pay for the
performance of its investment-related obligations under Section 3 of the
Agreement, including the fees payable to any investment adviser or sub-adviser
engaged pursuant to Section 3(e)(10) of this Agreement, and its operational
oversight obligations under Section 4 of this Agreement, but Advisor does not
assume any of the expense of and shall not pay for any Fund's direct operational
expenses (as detailed in Section 5(b)). Advisor shall at its own expense provide
the office space, equipment and facilities that is necessary to provide the
investment-related and operational oversight services described under Sections 3
and 4, respectively, of this Agreement, and shall pay all compensation of
officers of Trust and all trustees of Trust who are affiliated persons of
Advisor, except as otherwise specified in this Agreement.
(b) Fund. Except as provided in Section 5(a), each Fund shall bear all
of its operational expenses including, but not limited to: compensation of
Advisor under this Agreement, custodian fees; transfer agent fees; pricing costs
(including the daily calculation of net asset value); fund accounting fees;
legal fees; expenses of shareholders' and/or trustees' meetings; cost of
printing and mailing shareholder reports
A-5
and proxy statements; maintenance of non-investment-related books and records,
compliance program development and implementation costs, costs of preparing,
printing and mailing registration statements and updated prospectuses to current
shareholders; costs in connection with the registration or qualification of
shares with federal and state securities authorities and the continued
qualification of shares for sale; expenses of all audits by Trust's independent
accountants, costs of preparing and filing reports with regulatory bodies; costs
of the maintenance of Trust's fidelity bond required by Section 17(g) of the
1940 Act, or other insurance premiums; the fees of any trade association of
which the Funds are members; fees and expenses of trustees who are not
"interested persons" (as such term is defined in the 1940 Act) of Trust (the
"disinterested trustees"); brokerage commissions, dealer markups and other
expenses incurred in the acquisition or disposition of any securities or other
investments; costs, including the interest expense, of borrowing money;
preparing and filing tax returns, the payment of any taxes; and extraordinary
expenses (including extraordinary litigation expenses and extraordinary
consulting expenses).
(c) Allocation Procedures. At least annually, within [60] days of the
Trust's fiscal year end, or more frequently at the request of the Board, Advisor
will submit to the Board for review and approval at the Board's next
regularly-scheduled meeting, the allocations of all charges and expenses covered
by this Section 5 and the methodology and rationale therefore, including all
such allocations between the Trust and Advisor and between and among the Funds.
6. Compensation of Advisor.
(a) For the services rendered, the facilities furnished and expenses
assumed by Advisor, the Fund shall pay to Advisor at the end of each calendar
month an annualized fee calculated as a percentage of the average value of the
net assets each day for each Fund during that month at the annual rates set
forth at Appendix A hereto.
(b) Advisor's fee shall be accrued daily proportionately at 1/365th
(1/366th for a leap year) of the applicable annual rate set forth above. For the
purpose of accruing compensation, the net assets of each Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of Trust and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined.
(c) In the event of termination of this Agreement, all compensation
due through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within fifteen business days of the
date of termination.
(d) During any period when the determination of net asset value is
suspended, the net asset value of a Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
A-6
7. Limitation of Liability.
(a) Advisor shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the management of Trust or any Fund, except (i) for willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties hereunder, and (ii) to the extent
specified in Section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation.
(b) Advisor is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust and agrees that
obligations assumed by Trust or each Fund pursuant to this Agreement shall be
limited in all cases to Trust or that Fund and its respective assets. Advisor
agrees that it shall not seek satisfaction of any such obligation from the
shareholders of Trust, nor from the trustees, officers, employees or agents of
Trust.
8. Activities of Advisor.
(a) The services of Advisor are not deemed to be exclusive, and
Advisor is free to render services to others, so long as Advisor's services
under this Agreement are not impaired. It is understood that trustees, officers,
employees and shareholders of Trust are or may become interested persons of
Advisor, as directors, officers, employees and shareholders or otherwise, and
that directors, officers, employees and shareholders of Advisor are or may
become similarly interested persons of Trust, and that Advisor may become
interested in Trust or the Funds as a shareholder or otherwise.
(b) It is agreed that Advisor may use any supplemental investment
research obtained for the benefit of the Funds in providing investment advice to
its other investment advisory accounts. Advisor or its affiliates may use such
information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for Advisor or other entities
advised by Advisor will be considered by and may be useful to Advisor in
carrying out its obligations to the Funds.
(c) Nothing in this Agreement shall preclude the aggregation of orders
for the sale or purchase of securities or other investments by two or more Funds
or by the Funds and other mutual funds, separate accounts, or other accounts
(collectively, "Advisory Clients") managed by Advisor, provided that:
(1) Advisor's actions with respect to the aggregation of orders
for multiple Advisory Clients, including the Funds, are
consistent with the then-current positions in this regard taken
by the Securities and Exchange Commission or its staff through
releases, "no-action" letters, or otherwise; and
(2) Advisor's policies with respect to the aggregation of orders
for multiple Advisory Clients have been previously submitted and
periodically approved by the Board of Trustees.
A-7
(d) Neither Advisor, nor any of its directors, officers, or personnel,
nor any person, firm, or corporation controlling, controlled by, or under common
control with it shall act as a principal or receive any commission as agent in
connection with the purchase or sale of assets for a Fund, except as may be
permitted under applicable law.
9. Books and Records.
(a) Advisor hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 and Rule 2a-7 under the 1940 Act, all
records that are required to be maintained by Trust pursuant to the requirements
of Rule 31a-1 and Rule 2a-7 of the 1940 Act.
(b) Advisor agrees that all books and records which it maintains for
Trust are the property of Trust and further agrees to surrender promptly to
Trust any such books, records or information upon Trust's request. All such
books and records shall be made available, within five business days of a
written request, to Trust's accountants or independent registered public
accounting firm during regular business hours at Advisor's offices. Trust or its
authorized representative shall have the right to copy any records in the
possession of Advisor that pertain to Trust or the Funds. Such books, records,
information or reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to Trust free from any claim or assertion of
rights by Advisor.
(c) Advisor further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if Trust has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
10. Duration and Termination of this Agreement.
(a) This Agreement shall not become effective with respect to a Fund
unless and until it is approved by the Board, including a majority of trustees
who are not parties to this Agreement or interested persons of any such party,
and by the vote of a majority of the outstanding voting shares of such Fund.
This Agreement shall come into full force and effect on the date that it is so
approved, provided that it shall not become effective as to any subsequently
created Fund until it has been approved by the Board specifically for such Fund.
As to each Fund, the Agreement shall continue in effect for two years from the
date on which it becomes effective and shall thereafter continue in effect from
year to year so long as such continuance is specifically approved for such Fund
at least annually by: (i) the Board, or by the vote of a majority of the
outstanding voting shares of such Fund; and (ii) a majority of those trustees
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
A-8
(b) This Agreement may be terminated at any time as to any Fund or to
all Funds, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding voting shares of the applicable Fund, or by Advisor,
on 60 days' written notice to the other party. If this Agreement is terminated
only with respect to one or more, but less than all, of the Funds, or if a
different investment adviser is appointed with respect to a new Fund, the
Agreement shall remain in effect with respect to the remaining Fund(s).
(c) This Agreement shall automatically terminate in the event of its
assignment.
11. Amendments of this Agreement. This Agreement may be amended as to each
Fund only in accordance with the provisions of the 1940 Act.
12. Definitions of Certain Terms. The terms "assignment," "affiliated
person," "interested person," and "majority of the outstanding voting shares"
when used in this Agreement, shall have the respective meanings specified in the
1940 Act.
13. Governing Law. This Agreement shall be construed in accordance with
laws of the State of New York, and applicable provisions of the 1940 Act, the
Advisers Act, and the 1934 Act.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
16. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand or mailed first class,
postage prepaid, addressed as follows:
(a) If to Trust or the Funds --
TIAA-CREF Institutional Mutual Funds
730 Third Avenue
New York, New York 10017-3206
Attention: [ ]
(b) If to Advisor --
Teachers Advisors, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Scott Evans
A-9
or to such other address as Trust or Advisor shall designate by written notice
to the other.
17. Miscellaneous. Captions in this Agreement are included for convenience
or reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
A-10
IN WITNESS WHEREOF, Trust and Advisor have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers on the day and year first above written.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
By:___________________________________ Attest:________________________________
Title:________________________________ Title:_________________________________
TEACHERS ADVISORS, INC.
By:___________________________________ Attest:________________________________
Title:________________________________ Title:_________________________________
A-11
APPENDIX A
International Equity Fund
Real Estate Securities Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $1.0 0.50%
Over $1.0 - $2.5 0.48%
Over $2.5 - $4.0 0.46%
Over $4.0 0.44%
Growth Equity Fund
Growth & Income Fund
Large-Cap Value Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $1.0 0.45%
Over $1.0 - $2.5 0.43%
Over $2.5 - $4.0 0.41%
Over $4.0 0.39%
Mid-Cap Growth Fund
Mid-Cap Value Fund
Small-Cap Equity Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $0.5 0.48%
Over $0.5 - $0.75 0.46%
Over $0.75 - $1.00 0.44%
Over $1.0 0.42%
High-Yield Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $1.0 0.35%
Over $1.0 - $2.5 0.34%
Over $2.5 - $4.0 0.33%
Over $4.0 0.32%
Bond Fund
Bond Plus Fund
Inflation-Linked Bond Fund
Tax-Exempt Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $1.0 0.30%
Over $1.0 - $2.5 0.29%
Over $2.5 - $4.0 0.28%
Over $4.0 0.27%
Short-Term Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
$0.0 - $1.0 0.25%
Over $1.0 - $2.5 0.24%
Over $2.5 - $4.0 0.23%
Over $4.0 0.22%
Large-Cap Growth Index Fund
Large-Cap Value Index Fund
Equity Index Fund
S&P 500 Index Fund
Mid-Cap Growth Index Fund
Mid-Cap Value Index Fund
Mid-Cap Blend Index Fund
Small-Cap Growth Index Fund
Small-Cap Value Index Fund
Small-Cap Blend Index Fund
International Equity Index Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
All Assets 0.04%
Social Choice Equity Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
All Assets 0.15%
Managed Allocation Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
All Assets 0.00%
Money Market Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
All Assets 0.10%
Lifecycle Fund -- 2010 Fund
Lifecycle Fund -- 2015 Fund
Lifecycle Fund -- 2020 Fund
Lifecycle Fund -- 2025 Fund
Lifecycle Fund -- 2030 Fund
Lifecycle Fund -- 2035 Fund
Lifecycle Fund -- 2040 Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
- --------------------------------------------------------------------------------------------------------
All Assets 0.10%
A-12
EXHIBIT B
Information Regarding Directors and Principal Officer
of the Advisor
Position
with the Principal
Name and Address Advisor Occupation
==========================================================================================================
Scott C. Evans Director, President and Chief Director Executive Vice President and Chief
TIAA-CREF Executive Officer Investment Officer of TIAA and the TIAA-CREF
730 Third Avenue Funds; President and Chief Executive Officer of
New York, NY Investment Management and Advisors; and
10017-3206 Director of TIAA-CREF Life.
Erwin W. Martens Director Executive Vice President, Risk Management, of
TIAA-CREF TIAA and the TIAA-CREF Funds; Director of
730 Third Avenue Services, TPIS, Tuition Financing and TIAA-
New York, NY CREF Life; and Manager of Investment
10017-3206 Management
Russell Noles Director Vice President and Acting Chief Financial
TIAA-CREF Officer of TIAA and the TIAA-CREF Funds; Vice
730 Third Avenue President of Advisors, TPIS, Tuition Financing
New York, NY and Investment Management and Services;
10017-3206 Director of TPIS, Tuition Financing; and
Manager of Investment Management and
Services.
B-1
EXHIBIT C
Rate of Waivers or
Name of Fund Net Assets(1) Compensation(2)(3) Reimbursements
===============================================================================================
TIAA-CREF Life Funds
Growth & Income Fund $ 46,687,734 0.23% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Growth Equity Fund $ 26,749,924 0.25% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
International Equity Fund $ 54,356,079 0.29% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Large-Cap Value Fund $ 44,669,334 0.24% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Small-Cap Equity Fund $ 45,514,066 0.10% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds Real
Estate Securities Fund $ 64,171,802 0.25% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Stock Index Fund $142,898,809 0.06% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Social Choice Equity Fund $ 27,829,820 0.07% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds Bond Fund $ 62,120,852 0.10% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Money Market Fund $ 31,359,347 0.06% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
International Equity Fund $357,215,755 0.49% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Growth Equity Fund $541,723,644 0.45% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Growth & Income Fund $512,843,301 0.43% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Social Choice Equity Fund $131,929,828 0.27% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Equity Index Fund $350,281,375 0.26% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Money Market Fund $601,850,550 0.29% None
- -----------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Bond Plus Fund $475,639,913 0.30% None
- -----------------------------------------------------------------------------------------------
TIAA Separate Account VA-1 $895,287,922 0.30% Waived down to 0.07%
- -----------------------------------------------------------------------------------------------
(1) As of May 27, 2005.
(2) As a percentage of average daily net assets.
(3) The fees paid to the Advisor by the Funds in this chart are unitary fees and
include expenses other than management fees.
C-1
EXHIBIT D
Advisor's Caps on "Other Expenses" for Retirement
and Institutional Class Shares
Institutional Class Retirement Class
================================================================================
Growth Equity Fund 0.05% 0.30%
- --------------------------------------------------------------------------------
Growth & Income Fund 0.05% 0.30%
- --------------------------------------------------------------------------------
International Equity Fund 0.10% 0.30%
- --------------------------------------------------------------------------------
Large-Cap Value Fund 0.05% 0.30%
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund 0.07% 0.30%
- --------------------------------------------------------------------------------
Mid-Cap Value Fund 0.07% 0.30%
- --------------------------------------------------------------------------------
Small-Cap Equity Fund 0.07% 0.30%
- --------------------------------------------------------------------------------
Large-Cap Growth Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Large-Cap Value Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Equity Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
S&P 500 Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Mid-Cap Growth Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Mid-Cap Value Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Mid-Cap Blend Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Small-Cap Growth Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Small-Cap Value Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
Small-Cap Blend Index Fund 0.04% 0.30%
- --------------------------------------------------------------------------------
International Equity Index Fund 0.11% 0.37%
- --------------------------------------------------------------------------------
Social Choice Equity Fund 0.05% 0.33%
- --------------------------------------------------------------------------------
Real Estate Securities Fund 0.05% 0.31%
- --------------------------------------------------------------------------------
Bond Fund 0.05% 0.20%
- --------------------------------------------------------------------------------
Inflation-Linked Bond Fund 0.05% 0.25%
- --------------------------------------------------------------------------------
Money Market Fund 0.05% 0.25%
- --------------------------------------------------------------------------------
D-1
Advisor's Caps on "Total Expenses" for Retail Class Shares
Retail Class
================================================================================
Large-Cap Value Fund 0.80%
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund 0.85%
- --------------------------------------------------------------------------------
Mid-Cap Value Fund 0.85%
- --------------------------------------------------------------------------------
Small-Cap Equity Fund 0.85%
- --------------------------------------------------------------------------------
Real Estate Securities Fund 0.90%
- --------------------------------------------------------------------------------
Inflation-Linked Bond Fund 0.50%
- --------------------------------------------------------------------------------
D-2
EXHIBIT E
Service Agreement Payments
(for the 12 months ended December 31, 2004)
FUND CURRENT FEES PRO FORMA FEES* % DECREASE
===================================================================================
GROWTH EQUITY FUND $ 39,993 - 0.0%
- -----------------------------------------------------------------------------------
GROWTH & INCOME FUND $358,700 $ 74,965 79.10%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND $384,412 $170,371 55.68%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE FUND $614,984 $140,783 77.11%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH FUND $410,722 $182,839 55.48%
- -----------------------------------------------------------------------------------
MID-CAP VALUE FUND $389,756 $199,304 48.86%
- -----------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND $498,825 $273,443 45.18%
- -----------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND $100,318 $ 62,382 37.82%
- -----------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND $585,400 $156,118 73.33%
- -----------------------------------------------------------------------------------
BOND FUND $378,893 - 0.0%
- -----------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND $235,644 - 0.0%
- -----------------------------------------------------------------------------------
MONEY MARKET FUND $ 52,334 - 0.0%
- -----------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND $ 26,994 $ 14,312 46.98%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND $ 26,929 $ 504 98.13%
- -----------------------------------------------------------------------------------
EQUITY INDEX FUND $148,508 - 0.0%
- -----------------------------------------------------------------------------------
S&P 500 INDEX FUND $182,646 $114,143 37.51%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND $ 6,100 $ 889 85.43%
- -----------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND $ 7,938 $ 487 93.86%
- -----------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND $ 11,828 $ 1,353 88.56%
- -----------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND $ 15,221 $ 1,171 92.31%
- -----------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND $ 13,516 $ 685 94.93%
- -----------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND $ 26,832 $ 831 96.90%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND $ 25,179 $ 1,480 94.12%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2010 FUND $ 887 $ 715 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2015 FUND $ 1,435 $ 1,157 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2020 FUND $ 815 $ 657 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2025 FUND $ 892 $ 719 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2030 FUND $ 775 $ 625 19.40%
- -----------------------------------------------------------------------------------
E-1
FUND CURRENT FEES PRO FORMA FEES* % DECREASE
===================================================================================
LIFECYCLE FUND--2035 FUND $772 $623 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2040 FUND $777 $627 19.40%
- -----------------------------------------------------------------------------------
* Since a new Retirement Class Service Agreement would replace the current
Service Agreement if the new investment management arrangements are approved,
this column reflects pro forma payments by the Retirement Class only (and the
sole class of the Lifecycle Funds) since the Institutional Class and Retail
Class would no longer be subject to a Service Agreement.
E-2
EXHIBIT F
The Trustees considered the following specific factors during their
determination to approve the new investment management agreement for each Fund
listed below. Note that for purposes of this discussion, if a Fund is in the
"first" quintile, it is in the best of five groups (i.e., the group has the best
performance, or the lowest expenses, as the case may be).
Growth Equity Fund
o The Fund's new management fees would be in the first quintile of the universe
of comparable funds identified by Lipper for expense comparison purposes
("Expense Universe") (ranking 12 out of 146 funds) (for this purpose, rank
reference is to the Institutional Class for all funds)
o The Fund outperformed its benchmark for the one-year period ended 12/31/04,
but underperformed the benchmark over the three-year, five-year and since
inception periods.
o For both the one- and three-year periods ended 12/31/04, the Fund was in the
third quintile of the universe of comparable funds identified by Lipper for
performance comparison purposes ("Performance Universe") (ranking 293 out of
539 funds for the three year period). For the five-year period ended
12/31/04, the Fund was in the fourth quintile of the Performance Universe
(ranking 305 out of 420 funds).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of two stars for the period
ended 12/31/04.
Growth & Income Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 25 of 176 funds).
o The Fund underperformed its benchmark for the one-, three- and five-year and
since inception periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 289 of 914 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (ranking 335 of 772 funds and 310
out of 592 funds, respectively).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of two stars for the period
ended 12/31/04.
F-1
o Due to underperformance against its benchmark, the Advisor replaced the
portfolio management team, and assigned new interim management until they
hired a new portfolio manager in February 2005.
Large-Cap Value Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 14 out of 96 funds).
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the first quintile of
its Performance Universe (ranking 20 out of 470 funds). (The Fund has not
been in operation for three years.)
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
Mid-Cap Growth Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 1 out of 100 funds).
o For the one-year period ended 12/31/04, the Fund was in the first quintile of
its Performance Universe (ranking 140 out of 527 funds). (The Fund has not
been in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor had a modest net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Value Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 1 out of 50 funds).
o For the one-year period ended 12/31/04, the Fund was in the first quintile of
its Performance Universe (ranking 4 out of 224 funds). (The Fund has not been
in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
F-2
Small-Cap Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 5 out of 115 funds).
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 198 out of 560 funds). (The Fund has not
been in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
Social Choice Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 3 out of 93 funds).
o The Fund outperformed its benchmark for the one-, three- and five-year
periods ended 12/31/04, underperformed its benchmark since inception through
12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 229 out of 697 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (ranking 203 out of 501 funds and
202 out of 338 funds, respectively).
o The Fund received an Overall Morningstar Rating of three stars for the period
ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Real Estate Securities Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 8 out of 40 funds).
o The Fund slightly underperformed its benchmark for the one-year period and
outperformed its benchmark in the three-year period.
o For the one-year period ended 12/31/04, the Fund was in the third quintile of
its Performance Universe (ranking 88 out of 211 funds). (The Fund has not
been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-3
International Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 14 out of 155 funds).
o The Fund underperformed its benchmark for the one- and five-year periods, and
outperformed its benchmark for the three-year and since inception periods.
o For the one-year period ended 12/31/04, the Fund was in the third quintile of
its Performance Universe (ranking 151 out of 263 funds).
o For the three-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe. (ranking 58 out of 226 funds)
o For the five-year period ended 12/31/04, the Fund was in the fourth quintile
of its Performance Universe. (ranking 101 out of 162 funds)
o The Fund received an Overall Morningstar Rating of three stars for the period
ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Inflation-Linked Bond Fund
o The Fund's new management fees would be in the third quintile of its Expense
Universe (ranking 6 out of 10 funds).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 12 out of 54 funds). (The Fund has not
been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Bond Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 24 out of 121 funds).
o The Fund slightly underperformed its benchmark for the one-year period and
outperformed its benchmark in the three-year, five-year and since inception
periods.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 149 out of 458 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
first quintile of its Performance Universe (ranking 64 out of 379 funds and
46 out of 268 funds).
F-4
o The Fund received an Overall Morningstar Rating of four stars for the period
ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Money Market Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 12 of 249 funds).
o The Fund outperformed its benchmark for the one-year, three-year, five-year
and since inception periods.
o For the one, three- and five-year periods ended 12/31/04, the Fund was in the
first quintile of its Performance Universe (ranking 14 out of 295 funds; 31
out of 254 funds; and 37 out of 197 funds, respectively).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
International Equity Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 2 out of 11 funds -- Institutional Class) and fourth quintile
(Ranking 8 out of 11 -- Retirement Class) of its Expense Universe.
o The Fund slightly underperformed its benchmark for the one-year period and
since inception periods.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the third quintile of its Performance Universe (Ranking 10 out of 20
funds). (The Fund has not been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
S&P 500 Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 4 out of 54 funds -- Institutional Class) and fifth quintile
(Ranking 49 out of 54 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the first quintile of its Performance Universe (Ranking 5 out of 171
funds).
o For the one-year period ended 12/31/04, the Retirement Class of the Fund was
in the third quintile of its Performance Universe. (The Fund has not been in
operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-5
Equity Index Fund
o The Fund's existing and proposed management fees are in the first quintile of
its Expense Universe (Ranking 4 out of 32 funds).
o The Fund slightly underperformed its benchmark for the one- and three-year
periods ended 12/31/04.
o For both the one- and three-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (Ranking 232 out of 502 funds for
the three year period).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of three stars for the period
ended 12/31/04.
Large-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile of
its Expense Universe (Ranking 1 out of 37 funds).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the third quintile of its Performance Universe.
o For the one-year period ended 12/31/04, the Retirement Class of the Fund was
in the fourth quintile of its Performance Universe. (The Fund has not been in
operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Large-Cap Value Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Institutional Class -- Ranking 3 out of 37 Funds) and fourth quintile
(Retirement Class -- Ranking 27 out of 37 Funds) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the second quintile of their
Performance Universes (The Institutional Funds -- Ranking 138 out of 478
funds). (The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-6
Mid-Cap Blend Index Fund
o The Fund's existing and proposed management fees are in the first quintile --
43 out of 297 funds. (Institutional Class) and fourth quintile (Retirement
Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the first quintile of their
Performance Universes (Ranking 144 out of 507). (The Fund has not been in
operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Institutional Class -- Ranking 1 out of 38 funds) and fourth quintile
(Retirement Class -- Ranking 26 of 38 funds) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the second quintile of their
Performance Universes (Ranking 148 out of 527 funds). (The Fund has not been
in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Value Index Fund
o The Fund's Institutional and Retirement Class existing and proposed
management fees are both in the first quintile of the Expense Universe
(Ranking 3 out of 36 funds -- Institutional, or 1 out of 36 funds --
Retirement, respectively).
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the first quintile of their
Performance Universes (Ranking 31 of 221 funds). (The Fund has not been in
operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-7
Small-Cap Blend Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 2 out of 34 funds -- Institutional Class) and fourth quintile
(Ranking 24 out of 34 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the third quintile of their
Performance Universes (Ranking 300 out of 556 funds). (The Fund has not been
in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Small-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 2 out of 37 funds -- Institutional Class) and second quintile
(Ranking 10 of 37 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the second quintile of its Performance Universe (Ranking 144 out of
507).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Small-Cap Value Index Fund
o The Fund's Institutional and Retirement Class existing and proposed
management fees are both in the first quintile of the Expense Universe
(Ranking 3 out of 38 funds -- Institutional Class; Ranking 1 out of 38 --
Retirement Class).
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the third quintile of their
Performance Universes (Ranking 100 out of 231 funds). (The Fund has not been
in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-8
Due to the fact that the advisory fees for the Lifecycle Funds would not
change under the Proposed Agreement and to the limited operating history of the
Lifecycle Funds, the Board relied upon its analysis for the initial approval of
the Lifecycle Funds' advisory arrangements in conducting its review of the
Proposed Agreement with respect to the Lifecycle Funds. During this initial
review, the Board considered that the proposed advisory fee to be paid to the
Advisor for its services to each Lifecycle Fund was within the range of the
advisory fees charged to other comparable fund of funds.
F-9
EXHIBIT G
DISTRIBUTION PLAN
TIAA-CREF Institutional Mutual Funds
Retail Class
[ ], 2005
A. TIAA-CREF Institutional Mutual Funds (the "Institutional Fund"), an open-end
management investment company registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"), has adopted this distribution plan (the "Plan") in accordance with Rule
12b-1 under the 1940 Act.
B. The Plan pertains to the Retail Class shares of beneficial interest
("Shares") of the series of the Institutional Fund listed on Schedule A hereto,
as such Schedule may be amended from time to time (each a "Fund" and
collectively, the "Funds").
1. Each Fund may reimburse Teachers Personal Investors Services, Inc. (the
"principal underwriter") for all or part of certain expenses described in
paragraph 2 herein that are incurred in connection with the promotion and
distribution of Shares (such expenses, the "Fund Distribution Expenses").
Reimbursements by a Fund under the Plan may be paid monthly up to a rate or
rates approved from time to time by the Board of Trustees of the Institutional
Fund (the "Board"), provided that no rate approved by the Board for any Fund may
exceed the annual rate of 0.25% of the average daily net asset value of Shares
of such Fund (the "Maximum Distribution Fee"). Reimbursements paid during a
month may include Fund Distribution Expenses not previously reimbursed that were
accrued during any month in the immediately-preceding twelve-month period,
subject to the annual rate approved by the Board. For purposes of determining
the reimbursements payable under the Plan, the net asset value of the Shares of
a Fund is computed in accordance with the Declaration of Trust of the
Institutional Fund.
2. A Fund may reimburse the principal underwriter for Fund Distribution
Expenses up to the amount of the Maximum Distribution Fee, for expenses it
incurs to finance any activity that is primarily intended to promote the sale of
Shares and/or provide ongoing servicing and maintenance of the accounts of
shareholders of the Funds, including, but not limited to, compensation of
dealers and others for the expenses of their various activities primarily
intended to promote the sale of Shares and for providing personal and account
maintenance services to Fund shareholders, and salaries and other expenses
(including overhead) of the principal underwriter relating to the distribution
and account servicing efforts. Without limiting the generality of the foregoing,
categories of Fund Distribution Expenses include:
(a) expenses incurred for the preparation and distribution of sales
literature and advertising used in connection with the offering of Fund Shares;
G-1
(b) the cost of printing and distributing the Funds' prospectus and
statement of additional information (or supplements thereto) used in connection
with the offering of Fund Shares;
(c) the cost of printing and distributing additional copies, for use
as sales literature for the Fund Shares, of annual reports and other
communications prepared for the Funds;
(d) the cost of holding seminars and sales meetings designed to
promote the sale of Fund Shares; and
(e) the cost of any other activity that the Board determines is
primarily intended to promote the sale of Fund Shares.
3. Agreements between the principal underwriter and selected broker-dealers
or other persons may provide for payment of fees to such broker-dealers or other
persons in connection with the sale of Fund Shares and the provision of services
to holders of Fund Shares. This Plan shall not be construed as requiring the
Institutional Fund to make any payment to any party or to have any obligations
to any party in connection with services relating to the Fund Shares. The
principal underwriter undertakes that any agreement entered into between the
principal underwriter and any other party relating to sales of Fund Shares shall
provide that such other party shall look solely to the principal underwriter for
compensation for its services thereunder, and that in no event shall such party
seek any payment from a Fund or the Institutional Fund.
4. Nothing contained in this Plan shall be deemed to require the
Institutional Fund to take any action contrary to its Declaration of Trust or
any applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of the responsibility for
and control of the conduct of the affairs of the Institutional Fund.
5. This Plan is effective with respect to a Fund upon approval by a vote of
a majority of the Board and a vote of a majority of the trustees who are not
"interested persons" (as this term is defined in the 1940 Act) of the
Institutional Fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the "qualified
disinterested trustees"), such votes having been cast in person at a meeting
called for the purpose of voting on the Plan.
6. This Plan will remain in effect with respect to a Fund beyond the first
anniversary of its effective date only if its continuance is specifically
approved at least annually by a vote of both a majority of the Board and a
majority of the qualified disinterested trustees. In connection with the annual
review and approval of this Plan, the principal underwriter shall furnish the
Board with such information as the Board may request as may reasonably be
necessary in order to enable the Board to make an informed determination of
whether the Plan should be continued. This Plan shall expire on the last day of
the Fund's fiscal year in any year in which such approval is not obtained.
G-2
7. The Trust and the principal underwriter shall provide the Board, and the
Board shall review, at least quarterly, a written report of the amounts expended
under this Plan and the purposes for which such expenditures were made. In the
event that any such expenses are not entirely attributable to the Shares of any
particular Fund, the principal underwriter may allocate such expenses to the
Shares of each Fund deemed to be reasonably likely to benefit therefrom based
upon the ratio of the average daily net assets of each Fund during the previous
period to the aggregate average daily net assets for such period of all Funds
and all other affiliated investment companies and series thereof deemed to be
reasonably likely to benefit therefrom. Any such allocation is subject to such
adjustments as the principal underwriter, with approval from the Board, shall
deem appropriate to render the allocation fair and equitable under the
circumstances.
8. This Plan may be amended at any time by the Board, provided that (i) it
may not be amended to increase materially the amount that may be spent for
distribution and servicing of a Fund's Shares without the approval of holders of
a "majority of the outstanding voting securities" (as this phrase is defined in
the 1940 Act) of the Fund and without the approval of a majority of both the
Board and the qualified disinterested trustees, and (ii) any material amendment
shall be approved by a majority of both the Board and the qualified
disinterested trustees. This Plan may be terminated for any Fund at any time by
a vote of a majority of the qualified disinterested trustees or by a vote of the
holders of a majority of the outstanding voting securities of the Fund.
9. In the event of termination or expiration of the Plan, the Funds may
nevertheless, within twelve months of such termination or expiration, reimburse
the principal underwriter for any Fund Distribution Expense accrued prior to
such termination or expiration (subject to the Maximum Distribution Fee set
forth in paragraph 1 above for the post-termination period), provided that any
post-termination payments are specifically approved by the Board, including a
majority of the qualified disinterested trustees.
10. While this Plan is in effect, the selection and nomination of trustees
who are not "interested persons" of the Institutional Fund shall be committed to
the discretion of the sitting disinterested trustees.
11. Any agreement related to this Plan shall be in writing and shall
provide in substance that: (a) such agreement, with respect to any Fund, may be
terminated at any time, without the payment of any penalty, by vote of a
majority of the qualified disinterested trustees or by vote of a "majority of
the outstanding voting securities" of that Fund, on not more than sixty (60)
days' written notice to any other party to the agreement; and (b) such agreement
shall terminate automatically in the event of its assignment.
12. The Institutional Fund shall preserve copies of this Plan, each
agreement related hereto, and each report referred to in paragraph 7 hereof, for
a period of not less than
G-3
six (6) years from the date of such Plan, agreement or report. For the first two
(2) years of such period, each such record or document shall be kept in an
easily accessible place.
13. This Plan shall be construed in accordance with the laws of the State
of Delaware and the applicable provisions of the 1940 Act.
14. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
15. Neither this Plan nor any other transaction pursuant to this Plan shall
be invalidated or in any way affected by the fact that certain of the trustees,
officers, shareholders, or other representatives of the Institutional Fund are
or may be interested persons of the principal underwriter, or any successor or
assignee thereof, or that certain of the directors, officers, or other
representatives of the principal underwriter are or may be interested persons of
the Institutional Fund, except as otherwise may be provided in the 1940 Act.
16. The Trustees and the shareholders of each Fund are not liable for any
obligations of the Institutional Fund or a Fund under this Plan.
G-4
Schedule A
Maximum Distribution Fee
(expressed as an annual
rate of the average daily
Name of Fund net assets of each Fund)
================================================================================
International Equity Fund 0.25%
- --------------------------------------------------------------------------------
Growth Equity Fund 0.25%
- --------------------------------------------------------------------------------
Growth & Income Fund 0.25%
- --------------------------------------------------------------------------------
Equity Index Fund 0.25%
- --------------------------------------------------------------------------------
Large-Cap Value Fund 0.25%
- --------------------------------------------------------------------------------
Mid-Cap Value Fund 0.25%
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund 0.25%
- --------------------------------------------------------------------------------
Small-Cap Equity Fund 0.25%
- --------------------------------------------------------------------------------
Real Estate Securities Fund 0.25%
- --------------------------------------------------------------------------------
Social Choice Equity Fund 0.25%
- --------------------------------------------------------------------------------
Managed Allocation Fund 0.25%
- --------------------------------------------------------------------------------
Bond Plus Fund 0.25%
- --------------------------------------------------------------------------------
Bond Fund 0.25%
- --------------------------------------------------------------------------------
Short-Term Bond Fund 0.25%
- --------------------------------------------------------------------------------
High-Yield Bond Fund 0.25%
- --------------------------------------------------------------------------------
Inflation-Linked Bond Fund 0.25%
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund 0.25%
- --------------------------------------------------------------------------------
Money Market Fund 0.25%
- --------------------------------------------------------------------------------
G-5
EXHIBIT H
Principal Holders of Fund Shares
The following is a list of all shareholders known by Institutional Funds to own
of record or beneficially 5% or more of any class of any of the Funds:
SEI Private Trust Company ("SEI")
One Freedom Valley Drive
Oaks, PA 19456
* The following shares are held for the benefit of customers of TIAA-CREF Trust
Company, FSB. If any particular customer individually own 5% or more of a
class of a Fund, they are also reported separately below under their own name.
Fund Percent of Holdings Shares
=============================================================================================
Bond Fund -- Institutional Class 26.97% 27,199,119
- ---------------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 16.79% 15,518,011
- ---------------------------------------------------------------------------------------------
Growth & Income -- Institutional Class 8.66% 7,045,819
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 21.93% 3,463,939
- ---------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund -- Institutional Class 6.91% 2,863,362
- ---------------------------------------------------------------------------------------------
International Equity Fund -- Institutional Class 30.08% 16,839,204
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 46.35% 2,620,859
- ---------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- Institutional Class 41.59% 1,418,577
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 83.28% 2,272,823
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 14.32% 1,771,057
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 74.22% 2,653,454
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 99.11% 302,480
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 6.13% 124,232
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 100.00% 607,482
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 7.91% 220,646
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 43.99% 5,621,270
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 74.10% 10,363,421
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 16.04% 1,564,797
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 99.14% 3,631,761
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 10.49% 533,780
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 62.14% 6,806,173
- ---------------------------------------------------------------------------------------------
H-1
TIAA-CREF Trust Company, FSB
One Metropolitan Square
211 North Broadway, Suite 1000
St. Louis, MO 63102
* These shares are held for the benefit of customers of the Trust Company by SEI
and are included in the ownership totals for SEI noted above. The Trust
Company holds these shares in a fiduciary capacity for its clients and has
investment discretion over them.
Fund Percent of Holdings Shares
=============================================================================================
International Equity Fund -- Institutional Class 32.85% 17,771,084
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 22.13% 3,612,761
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 28.40% 2,726,522
- ---------------------------------------------------------------------------------------------
Growth & Income -- Institutional Class 54.23% 9,827,551
- ---------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund -- Institutional Class 14.94% 4,060,175
- ---------------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 15.06% 9,226,508
- ---------------------------------------------------------------------------------------------
Bond Fund -- Institutional Class 18.42% 24,116,740
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 53.09% 3,853,571
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 41.33% 620,736
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 25.63% 317,448
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 35.50% 5,615,132
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 18.57% 2,700,676
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 33.23% 11,224,976
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 19.30% 1,985,622
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 8.68% 2,411,446
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 76.01% 2,795,977
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 7.84% 218,606
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 5.80% 117,046
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 8.90% 445,274
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 19.15% 1,836,220
- ---------------------------------------------------------------------------------------------
H-2
California Golden State Scholarshare College Savings Trust (529 Plan)
CA State Treasurer Office
915 Capitol Mall, Room 110
Sacramento, CA 95814
Fund Percent of Holdings Shares
=============================================================================================
International Equity Fund -- Institutional Class 8.37% 4,527,699
- ---------------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 28.09% 51,787,960
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 44.54% 4,276,556
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 40.56% 5,898,446
- ---------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- Institutional Class 37.91% 14,262,324
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 19.88% 5,522,121
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 14.98% 1,087,420
- ---------------------------------------------------------------------------------------------
CHET (529 Plan)
Office of the Treasurer
55 Elm Street
Hartford, CT 06106
Fund Percent of Holdings Shares
=============================================================================================
Growth & Income -- Institutional Class 14.99% 2,716,254
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 12.07% 1,754,970
- ---------------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 12.90% 23,798,276
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 5.08% 368,560
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 19.74% 3,222,923
- ---------------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 13.99% 8,568,462
- ---------------------------------------------------------------------------------------------
Georgia Higher Education Savings Plan (529 Plan)
PO Box 105307
Atlanta, GA 30348-5307
Fund Percent of Holdings Shares
=============================================================================================
Equity Index Fund -- Institutional Class 6.98% 4,273,567
- ---------------------------------------------------------------------------------------------
The Kentucky Education Savings Plan Trust (529 Plan)
PO Box 8100
Boston, MA 02266-8100
Fund Percent of Holdings Shares
=============================================================================================
Growth & Income Fund -- Institutional Class 7.70% 1,396,290
- ---------------------------------------------------------------------------------------------
H-3
Michigan Education Savings Program (529 Plan)
Executive Director--Met
Director of Treasury
PO Box 30198
Lansing, MI 48909
Fund Percent of Holdings Shares
- -------------------------------------------------------- --------------------- -----------
Inflation-Linked Bond Fund -- Institutional Class 10.61% 2,882,639
- ---------------------------------------------------------------------------------------------
International Equity Fund -- Institutional Class 8.13% 4,399,368
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 5.60% 1,555,930
- ---------------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 19.75% 36,408,679
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 73.96% 915,975
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 58.32% 875,780
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 29.78% 10,056,598
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 36.35% 3,739,471
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 15.92% 1,155,354
- ---------------------------------------------------------------------------------------------
Missouri Saving For Tuition (529 Plan)
Missouri's State Treasurer's Office
Capitol Building, Room 229
201 West Capitol Avenue
Jefferson City, MO 65101
Fund Percent of Holdings Shares
=============================================================================================
International Equity Fund -- Institutional Class 5.92% 3,201,075
- ---------------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 12.78% 23,565,522
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 7.91% 1,251,613
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 5.27% 505,346
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 24.13% 3,509,154
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 9.41% 682,820
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 44.48% 7,263,237
- ---------------------------------------------------------------------------------------------
The Minnesota College Savings Plan (529 Plan)
PO Box 64028
St. Paul, MN 55164-0028
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Growth Index Fund -- Institutional Class 6.28% 2,361,990
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 6.69% 1,857,721
- ---------------------------------------------------------------------------------------------
H-4
Teachers Insurance and Annuity Association of America
(a New York stock life insurance company)
730 Third Avenue
New York, NY 10017
Fund Percent of Holdings Shares
=============================================================================================
Real Estate Securities Fund -- Retail Class 10.26% 1,060,343
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Retirement Class 29.20% 10,987
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 23.92% 879,737
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 94.20% 1,900,766
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 41.87% 12,565
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 92.16% 2,568,958
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 66.53% 11,304
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 11.92% 1,143,133
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 41.52% 11,215
- ---------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Institutional Class 96.17% 5,059,876
- ---------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 13.11% 11,812
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 91.01% 4,552,147
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 15.49% 12,393
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 6.05% 622,744
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Retirement Class 27.60% 10,487
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2010 Fund 39.82% 102,617
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2015 Fund 24.40% 102,754
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2020 Fund 52.80% 102,927
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2025 Fund 34.01% 103,054
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2030 Fund 51.90% 103,220
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2035 Fund 52.05% 103,370
- ---------------------------------------------------------------------------------------------
Lifecycle Fund--2040 Fund 67.28% 103,499
- ---------------------------------------------------------------------------------------------
TIAA-CREF Managed Allocation Fund
730 Third Avenue
New York, NY 10017
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Equity Fund -- Retail Class 23.41% 1,054,293
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Retail Class 68.18% 8,554,985
- ---------------------------------------------------------------------------------------------
H-5
National Financial Services LLC
For the Exclusive Benefit of our Customers
PO Box 770001
Cincinnati, OH 45277
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Growth Fund -- Retail Class 8.89% 310,896
- ---------------------------------------------------------------------------------------------
JPMorgan Retirement Plans Program
C/O JPMorgan Chase Bank
Attn: DC Plan Service Team
3 Metrotech Ctr
Brooklyn, NY 11245-0001
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 52.39% 19,711
- ---------------------------------------------------------------------------------------------
Large Cap Value Fund -- Retirement Class 9.35% 944,628
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Retirement Class 12.42% 37,673
- ---------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 28.08% 25,298
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Retirement Class 71.27% 27,081
- ---------------------------------------------------------------------------------------------
International Equity Fund -- Retirement Class 7.66% 1,252,076
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Retirement Class 10.30% 675,533
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Retirement Class 9.59% 1,190,603
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Retirement Class 10.38% 912,371
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Retirement Class 7.14% 452,453
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 57.42% 45,951
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Retirement Class 10.33% 1,059,712
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2010 Fund 39.82% 102,617
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2015 Fund 75.60% 318,302
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2020 Fund 47.20% 91,997
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2025 Fund 65.97% 199,886
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2030 Fund 47.95% 95,366
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2035 Fund 47.95% 95,217
- ---------------------------------------------------------------------------------------------
Lifecycle Fund -- 2040 Fund 32.72% 50,327
- ---------------------------------------------------------------------------------------------
H-6
Community Funds, Inc.
2 Park Avenue
New York, NY 10016
* These shares are also reported under the totals for SEI above, because they
are held through the Trust Company.
Fund Percent of Holdings Shares
=============================================================================================
Equity Index Fund -- Institutional Class 7.97% 4,883,156
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 6.92% 712,230
- ---------------------------------------------------------------------------------------------
Church of the Nazarene
6401 The Paseo
Kansas City, MO 64131
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=============================================================================================
Social Choice Equity Fund -- Institutional Class 5.07% 486,861
- ---------------------------------------------------------------------------------------------
James S. McDonnell Foundation
1034 South Brentwood Boulevard, Suite 1860
St. Louis, MO 63117
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=============================================================================================
International Equity Fund -- Institutional Class 8.60% 4,652,759
- ---------------------------------------------------------------------------------------------
Bank of America
MFO 8559
PO Box 831575
Dallas, TX 75283-157
* These shares are also reported under the totals for SEI above, because they
are held through the Trust Company.
Fund Percent of Holdings Shares
=============================================================================================
Social Choice Equity Fund -- Institutional Class 9.45% 907,552
- ---------------------------------------------------------------------------------------------
H-7
Kentucky Foundation for Women
1215 Heyburn Building - 322 West Broadway
Louisville, KY 40202
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=============================================================================================
Social Choice Equity Fund -- Institutional Class 7.43% 713,199
- ---------------------------------------------------------------------------------------------
Newspaper Guild of New York
830 Bear Tavern Road
PO Box 1028
Trenton, NJ 08628-0230
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=============================================================================================
Social Choice Equity Fund -- Institutional Class 7.70% 739,005
- ---------------------------------------------------------------------------------------------
University of Cincinnati
51 Goodman Avenue, Suite 100
Cincinnati, OH 45219-0970
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Fund -- Institutional Class 6.22% 93,443
- ---------------------------------------------------------------------------------------------
Una J. Walker
5604 NE Issler Street
Vancouver, WA 98661
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 12.65% 718
- ---------------------------------------------------------------------------------------------
H-8
Carolyn G. Holland
7254 Mallard Drive
West Chester, OH 45069
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 12.49% 1,971
- ---------------------------------------------------------------------------------------------
Joyce A. Hiatt
11408 NW 28th Street
Vancouver, WA 98685
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 7.40% 420
- ---------------------------------------------------------------------------------------------
Lynn R. Halsey
15804 NE 30th Avenue
Vancouver, WA 98686
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 11.80% 670
- ---------------------------------------------------------------------------------------------
Ronald L. Golson
14416 NE 29th Street
Vancouver, WA 98686
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 21.20% 1,203
- ---------------------------------------------------------------------------------------------
Eleanor J. Canos
1362 Pennsbury Drive
Cincinnati, OH 45238
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 25.60% 4,041
- ---------------------------------------------------------------------------------------------
H-9
Jan E. Allen
2725 NE 96th Avenue
Vancouver, WA 98662
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 6.91% 1,205
- ---------------------------------------------------------------------------------------------
Leslie A. Uyeji
PO Box 2927
Vancouver, WA 98662-7455
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 11.21% 2,985
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 22.91% 3,994
- ---------------------------------------------------------------------------------------------
June Ilene Berry
3914 NE 55th Street
Vancouver, WA 98661
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 22.80% 3,975
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 7.84% 445
- ---------------------------------------------------------------------------------------------
Clifford R. Price
22802 NE 169th Street
Brush Prairie, WA 98606
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 15.04% 2,622
- ---------------------------------------------------------------------------------------------
Diane S. Price
22802 NE 169th Street
Brush Prairie, WA 98606
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 7.14% 1,901
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 6.78% 1,181
- ---------------------------------------------------------------------------------------------
H-10
Prema Venkateswaran
1204 Hidden Wood Place
Cincinnati, OH 45208
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 7.55% 1,191
- ---------------------------------------------------------------------------------------------
Linda L. Waliser
204 SE 101st Avenue
Vancouver, WA 98664
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 10.04% 569
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 5.26% 830
- ---------------------------------------------------------------------------------------------
Donald Robert Kurtz
1950 SW Palm City RD #1103
Stuart, FL 34994-4313
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 17.49% 4,811
- ---------------------------------------------------------------------------------------------
Sidney M. Moon
104 Mohican CT
W Lafayette, IN 47906-2113
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 6.01% 1,600
- ---------------------------------------------------------------------------------------------
Carolyn A. Percifield
400 Overlook DR
W Lafayette, IN 47906-1210
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 17.52% 4,666
- ---------------------------------------------------------------------------------------------
H-11
Gary Calvin Lelvis
12107 Burgoyne Drive
Houston, TX 77077-6033
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 15.65% 4,517
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 7.04% 4,574
- ---------------------------------------------------------------------------------------------
Larry M. Madson
18517 NE Cedar DR
Battle Ground, WA 98604-7344
Fund Percent of Holdings Shares
=============================================================================================
Mid-Cap Value Index Fund -- Retirement Class 20.31% 1,153
- ---------------------------------------------------------------------------------------------
Richard W. Caudell
PO Box 42405
Cincinnati, OH 45242-0405
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 12.47% 1,968
- ---------------------------------------------------------------------------------------------
Alan Joseph Schwartz
10761 Weatherstone Court
Loveland, OH 45140-7402
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 5.15% 813
- ---------------------------------------------------------------------------------------------
William E. Hurford
9250 Given Road
Cincinnati, OH 45243-1146
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Blend Index Fund -- Retirement Class 5.00% 788
- ---------------------------------------------------------------------------------------------
H-12
David K. Schmidt
19100 Rosewood Way
Monument, CO 80132-8948
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Growth Index Fund -- Retirement Class 14.17% 5,244
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 8.61% 5,592
- ---------------------------------------------------------------------------------------------
Gary Fredrick Lee
9282 N Waldron Rd.
Rossville, IN 46065-9551
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Value Index Fund -- Retirement Class 5.06% 3,289
- ---------------------------------------------------------------------------------------------
Wayne Yungchang Chen
910 Kennedy Avenue
Schererville, IN 46375-1326
Fund Percent of Holdings Shares
=============================================================================================
Small-Cap Value Index Fund -- Retirement Class 5.72% 3,718
- ---------------------------------------------------------------------------------------------
Robert L. Nowack
2225 Huron Road
W. Lafayette, IN 47906-1921
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 15.65% 4,304
- ---------------------------------------------------------------------------------------------
James S. Quasney
1580 Foulis Court
Chesterton, IN 46304-8935
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 8.15% 2,242
- ---------------------------------------------------------------------------------------------
H-13
M.D. Raftery 2131 Kestral Blvd.
W. Lafayette, IN 47906-6519
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 7.32% 2,014
- ---------------------------------------------------------------------------------------------
Craig D. Williams
5221 Laura Lynne Lane
Indianapolis, IN 46217-4928
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 5.41% 1,487
- ---------------------------------------------------------------------------------------------
Richard Madison Weaver
2605 E. 191st Street
Westfield, IN 46074-9247
Fund Percent of Holdings Shares
=============================================================================================
International Equity Index Fund -- Retirement Class 5.41% 1,487
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 5.26% 3,418
- ---------------------------------------------------------------------------------------------
Stuart A. Dye
8146 E. 600 N
Lafayette, IN 47905-9781
Fund Percent of Holdings Shares
=============================================================================================
Large-Cap Value Index Fund -- Retirement Class 6.02% 1,602
- ---------------------------------------------------------------------------------------------
Keith Harold Hawks
7218 N. 300E
Battle Ground, IN 47920-9410
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2010 Fund 55.66% 86,326
- ---------------------------------------------------------------------------------------------
H-14
Benedict A. Liuzzo
14911 Long Bow Ln.
Huntersville, NC 28078-3310
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2010 Fund 13.65% 21,169
- ---------------------------------------------------------------------------------------------
Richard O. Jindra
2808 N. 925 W
W. Lafayette, IN 47920-9410
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2010 Fund 9.39% 14,563
- ---------------------------------------------------------------------------------------------
Randolph Llewellyn Walker
5343 S. Picadilly Way
Aurora, CO 80015-5014
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2010 Fund 6.84% 10,602
- ---------------------------------------------------------------------------------------------
Marsha A. Tuthill
170 Herons Gate Dr.
Mooresville, NC 28117-6417
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2010 Fund 5.31% 8,243
- ---------------------------------------------------------------------------------------------
Lowell Wayne Beineke
4529 Bradwood Terrace
Fort Wayne, IN 46815-6028
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2015 Fund 61.82% 196,783
- ---------------------------------------------------------------------------------------------
H-15
Terry Steven Trepper
7137 Knickerbocker Parkway
Hammond, IN 46323-2030
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2015 Fund 15.22% 48,440
- ---------------------------------------------------------------------------------------------
David James Sammons
3300 Elkhart St.
W. Lafayette, IN 47906-1160
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2015 Fund 7.34% 23,365
- ---------------------------------------------------------------------------------------------
Wesley Kim Lukoshus
8835 Northcote
Munster, IN 46321-2727
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2015 Fund 5.77% 18,366
- ---------------------------------------------------------------------------------------------
George I. Spindell
1518 Windy Ridge Rd.
Charlotte, NC 28270-1139
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2020 Fund 31.88% 29,297
- ---------------------------------------------------------------------------------------------
Kevin Paul Green
3515 Hamilton St.
W. Lafayette, IN 47906-1286
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2020 Fund 18.26% 16,776
- ---------------------------------------------------------------------------------------------
H-16
Kenneth Emery Alling
18 Rainbow Dr.
Rossville, IN 46065-9599
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2020 Fund 7.70% 7,072
- ---------------------------------------------------------------------------------------------
John Lyon Obermeyer
3000 Georgton Rd.
W. Lafayette, IN 47906-4819
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2020 Fund 7.43% 6,830
- ---------------------------------------------------------------------------------------------
Mark JT Smith
465 Northwestern Ave., #122
W. Lafayette, IN 47907-2035
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2020 Fund 5.76% 5,293
- ---------------------------------------------------------------------------------------------
Scott C. Evans
100 Holly Branch Rd.
Katonah, NY 10536-3528
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2025 Fund 28.01% 55,981
- ---------------------------------------------------------------------------------------------
John Abraham
3200 Elkhart St.
W. Lafayette, IN 47906-1151
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2025 Fund 8.50% 16,999
- ---------------------------------------------------------------------------------------------
H-17
Gary Scott Yates
7708 Amanda Ln.
W. Lafayette, IN 47906-8530
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2025 Fund 7.25% 14,490
- ---------------------------------------------------------------------------------------------
Martin Joseph Matustik
922 W. Winona St., #3E
Chicago, IL 60640-3229
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2025 Fund 5.31% 10,618
- ---------------------------------------------------------------------------------------------
Paul Joseph Yakoboski
317 E. Monroe Ave.
Alexandria, VA 22301
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2030 Fund 40.18% 38,313
- ---------------------------------------------------------------------------------------------
Samir B. Dave
13 Orchid St.
Edison, NJ 08820-4307
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2030 Fund 7.95% 7,583
- ---------------------------------------------------------------------------------------------
Joseph D. Delgrande
46 Cedar St.
Nutley, NJ 07110-2120
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2035 Fund 41.00% 39,035
- ---------------------------------------------------------------------------------------------
H-18
Stephen McDonald
38 Iron Horse Ln.
Walnut Creek, CA 94597-6951
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2035 Fund 8.27% 7,871
- ---------------------------------------------------------------------------------------------
Brian J. Knoy
6110 Maderia Ln.
Lafayette, IN 47905-8259
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2035 Fund 6.13% 5,838
- ---------------------------------------------------------------------------------------------
Blaine Bennett
2400 Bobolink Dr.
W. Lafayette, IN 47906-6648
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2035 Fund 6.04% 5,753
- ---------------------------------------------------------------------------------------------
Scott J. Budde
235 W. 56th St., #31M
NY, NY 10019-4335
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2040 Fund 42.70% 21,489
- ---------------------------------------------------------------------------------------------
Ernest Stalnaker
3321 Webster St.
W. Lafayette, IN 47906-7222
Fund Percent of Holdings Shares
=============================================================================================
Lifecycle Fund -- 2040 Fund 7.88% 3,966
- ---------------------------------------------------------------------------------------------
H-19
TIAA-CREF Individual & Institutional Services, Inc.
For the Exclusive Benefit of Customers
730 Third Avenue
New York, NY 10017
* These shares generally are held on behalf of retirement plan participants. If
any such participants individually own 5% or more of a class of a Fund, they
are also reported separately under their own name.
Fund Percent of Holdings Shares
- ---------------------------------------------------------------------------------------------
Growth & Income Fund -- Retirement Class 95.01% 5,546,454
- ---------------------------------------------------------------------------------------------
International Equity Fund -- Retirement Class 92.34% 15,090,223
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Retirement Class 90.65% 9,162,018
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Retirement Class 90.41% 11,222,380
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Retirement Class 99.33% 9,196,369
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund--Retirement Class 89.67% 10,038,568
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Retirement Class 89.47% 7,862,555
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Retirement Class 89.70% 5,880,543
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Retirement Class 92.86% 5,888,843
- ---------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- Retirement Class 99.36% 1,861,850
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Retirement Class 18.38% 6,916
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 58.10% 17,434
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 33.42% 5,679
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Retirement Class 83.97% 254,803
- ---------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 58.79% 52,964
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 23.79% 19,038
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 58.45% 15,786
- ---------------------------------------------------------------------------------------------
H-20
[LOGO] TIAA TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
CREF 730 Third Avenue
FINANCIAL SERVICES New York, New York 10017-3206
FOR THE GREATER GOOD(SM)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 31, 2005
The TIAA-CREF Institutional Mutual Funds (the "Institutional Funds") will hold a
special meeting of the shareholders of its investment portfolios (the "Funds")
on August 31, 2005, at 9:00 a.m. at 730 Third Avenue, New York, New York (17th
floor). The agenda for the meeting is:
1. To elect Trustees of the Institutional Funds to serve until each of their
successors is elected and qualified.
2. To ratify the selection by the Board of Trustees of PricewaterhouseCoopers
LLP to serve as the Institutional Funds' independent registered public
accounting firm for the fiscal year ending September 30, 2005.
3. To approve a new investment management agreement between the Institutional
Funds and Teachers Advisors, Inc.
4. To address any other business that may properly come before the meeting or
any adjournments thereof.
The Board of Trustees of the Institutional Funds has set May 31, 2005 as the
record date for determining the number of votes entitled to be cast at the
meeting or any adjournments thereof. You may vote at the meeting (or any
adjournments of the meeting) only if you were a shareholder of one or more of
the Funds as of May 31, 2005.
By Order of the Board of Trustees,
/s/ E. Laverne Jones
E. Laverne Jones
Secretary
Please vote as soon as possible before the meeting, even if you plan to attend
the meeting. You can vote quickly and easily over the Internet, by telephone, or
by mail. Just follow the simple instructions that appear on your enclosed proxy
card(s). A separate proxy card is provided for each Fund in which you own
shares. Since we cannot hold the meeting unless a quorum is reached, please help
the Funds avoid the expense of a follow-up mailing by voting today!
If you plan to attend the meeting, please call 1 877-535-3910, ext. 2440 to
obtain an admission pass. In accordance with TIAA-CREF's security procedures, a
pass and appropriate picture identification will be required to enter the
special meeting. Please note that no laptop computers, recording equipment or
cameras will be permitted, and please read the instructions on the pass for
additional information.
July 5, 2005
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
730 Third Avenue
New York, New York 10017-3206
PROXY STATEMENT
Special Meeting of Shareholders
to be held on August 31, 2005
The Board of Trustees (the "Board") of the TIAA-CREF Institutional Mutual Funds
(the "Institutional Funds") has called a special meeting of the shareholders of
each of its investment portfolios (each, a "Fund" and collectively, the "Funds")
to be held on August 31, 2005, at 9:00a.m. at 730 Third Avenue, New York, New
York (17th floor). At the special meeting, shareholders will vote on whether to:
1. Elect Trustees of the Institutional Funds to serve until each of their
successors is elected and qualified;
2. Ratify the selection by the Board of Trustees of PricewaterhouseCoopers
LLP to serve as the Funds' independent registered public accounting firm
for the fiscal year ending September 30, 2005;
3. Approve a new investment management agreement between the Funds and
Teachers Advisors, Inc. (the "Advisor"); and
4. Address any other business that may properly come before the meeting or
any adjournments thereof.
At this time, the Board does not know of any other matters being presented at
the meetings or any adjournments thereof.
The accompanying proxy forms will be used to vote at the meeting of the Funds
(or any adjournments of the meeting) being held on August 31, 2005, at 730 Third
Avenue, New York, New York at 9:00 a.m. This proxy statement will first be
mailed to shareholders on or about July 5, 2005.
1
The Institutional Funds consist of the:
o "Actively Managed Funds," which include the Growth Equity Fund, Growth &
Income Fund, International Equity Fund, Large-Cap Value Fund, Mid-Cap Growth
Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real Estate Securities Fund,
Social Choice Equity Fund, Bond Fund, Inflation-Linked Bond Fund and Money
Market Fund.
o "Index Funds," which include the Large-Cap Growth Index Fund, Large-Cap Value
Index Fund, Equity Index Fund, S&P 500 Index Fund, Mid-Cap Growth Index Fund,
Mid-Cap Value Index Fund, Mid-Cap Blend Index Fund, Small-Cap Growth Index
Fund, Small-Cap Value Index Fund, Small-Cap Blend Index Fund and
International Equity Index Fund.
o "Lifecycle Funds," which include the Lifecycle Fund - 2010 Fund, Lifecycle
Fund - 2015 Fund, Lifecycle Fund - 2020 Fund, Lifecycle Fund - 2025 Fund,
Lifecycle Fund - 2030 Fund, Lifecycle Fund - 2035 Fund and Lifecycle Fund -
2040 Fund.
The following table shows which items the shareholders of each Fund will be
asked to consider:
Item Funds
- --------------------------------------------------------------------------------
1 Shareholders of all Funds voting together
- --------------------------------------------------------------------------------
2 Shareholders of all Funds voting together
- --------------------------------------------------------------------------------
3 Shareholders of each Fund voting separately for their Fund
- --------------------------------------------------------------------------------
VOTING INFORMATION
How Do I Vote?
(1) By marking, signing, and mailing the enclosed proxy card in the
postage-paid envelope provided;
(2) By logging on to the Internet site shown on your proxy card(s) and follow
the on-screen instructions;
(3) By dialing the toll free telephone number shown on your proxy card(s) and
follow the recorded instructions; and
(4) By voting in person at the special meeting.
You must complete a separate proxy form for each Fund in which you own shares.
2
Can I Cancel or Change My Vote?
You may cancel or change your vote by simply voting again by: (1) executing and
returning later-dated proxy forms, (2) voting over the telephone; (3) voting
through the Internet, or (4) voting in person at the meeting. If you return the
proxy form or vote by telephone or through the Internet, your vote must be
received by 12:00 noon ET on August 31, 2005. If you vote in person at the
meeting, you may vote any time up until the voting results are announced.
How Does a Proxy Work?
When you vote by proxy, you are appointing the persons named on the proxy form
as your agents to vote on your behalf at a meeting or any adjournments thereof.
Unless you instruct them otherwise, they will vote FOR the election of each of
the nominees for Trustee of the Funds, FOR the ratification of the selection of
PricewaterhouseCoopers LLP to serve as independent registered public accounting
firm, and FOR the approval of the new investment management agreement as it
applies to your Fund(s). Although we are unaware of any other matters to be
presented at the meeting, if other matters are brought before the meeting or any
adjournments thereof, the proxies will vote your shares using their own best
judgment. All proxies solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the meeting, and are not
revoked, will be voted at the meeting.
Who May Vote; How Many Votes Do I Get?
Shareholders of each of the Funds as of May 31, 2005 (the "Record Date") will be
eligible to vote at the meeting (or any adjournments thereof). Each outstanding
full share of a Fund is entitled to one vote and each outstanding fractional
share is entitled to a proportionate fractional share of one vote. Therefore,
the number of votes you will have at the meeting will depend upon how many
shares you own in the respective Fund on the Record Date. All shareholders of
record on the Record Date are entitled to vote. As of the Record Date, there
were 805,373,322.52 aggregate shares outstanding in the Institutional Mutual
Funds.
Below is the number of shares of each Class of each Fund as of the Record Date:
Actively Managed Funds and Index Funds
============================================================================================
Fund Retail Class Institutional Class Retirement Class
============================================================================================
Growth Equity Fund -- 16,328,281.49 --
- --------------------------------------------------------------------------------------------
Growth & Income Fund -- 18,122,798.27 5,837,583.54
- --------------------------------------------------------------------------------------------
International Equity Fund -- 54,105,522.16 16,342,901.94
- --------------------------------------------------------------------------------------------
Large-Cap Value Fund 12,547,012.12 14,544,078.16 10,106,655.68
- --------------------------------------------------------------------------------------------
(continued on next page)
3
Actively Managed Funds and Index Funds
=================================================================================================
Fund Retail Class Institutional Class Retirement Class
=================================================================================================
Mid-Cap Growth Fund 3,496,980.91 1,238,473.96 6,556,086.10
- -------------------------------------------------------------------------------------------------
Mid-Cap Value Fund 4,666,898.69 1,501,735.32 12,245,778.72
- -------------------------------------------------------------------------------------------------
Small-Cap Equity Fund 4,502,858.92 7,258,791.26 10,256,090.72
- -------------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- 37,622,091.86 1,873,911.80
- -------------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- 27,766,517.71 37,623.76
- -------------------------------------------------------------------------------------------------
Equity Index Fund -- 61,262,876.86 --
- -------------------------------------------------------------------------------------------------
S&P 500 Index Fund -- 33,775,146.33 6,341,305.23
- -------------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- 2,017,822.41 30,009.29
- -------------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- 2,787,573.50 16,992.65
- -------------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- 3,678,421.67 303,438.36
- -------------------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- 5,261,566.08 90,084.21
- -------------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- 5,001,943.55 80,032.28
- -------------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- 9,589,714.63 27,011.24
- -------------------------------------------------------------------------------------------------
International Equity Index Fund -- 10,284,949.96 37,998.60
- -------------------------------------------------------------------------------------------------
Real Estate Securities Fund 10,332,969.24 15,817,406.47 8,787,899.09
- -------------------------------------------------------------------------------------------------
Social Choice Equity Fund -- 9,600,840.56 4,447,029.03
- -------------------------------------------------------------------------------------------------
Bond Fund -- 130,949,369.43 --
- -------------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund 6,326,951.48 27,172,970.32 --
- -------------------------------------------------------------------------------------------------
Money Market Fund -- 183,390,244.53 --
- -------------------------------------------------------------------------------------------------
Lifecycle Funds
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2010 Fund 257,722.99
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2015 Fund 421,057.29
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2020 Fund 194,924.43
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2025 Fund 302,990.10
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2030 Fund 198,883.26
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2035 Fund 198,587.53
- -------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2040 Fund 153,826.69
- -------------------------------------------------------------------------------------------------
How Many Votes Must Be Present for a Quorum or to Pass a Vote? In order to hold
the meeting and vote on the items on the agenda, we will need to have a quorum
of shareholders present (in person or by proxy) at the meeting. A quorum means
10% of the votes that are entitled to be cast. In determining whether a quorum
has been reached, abstentions and broker non-votes are counted as being present
at the meeting.
4
If a quorum is not present at the meeting, or if a quorum is present at the
meeting but sufficient votes to approve one or more of the proposed items is not
received, or if other matters arise requiring shareholder attention, the persons
named as proxy agents may propose and vote for one or more adjournments of the
meeting in order to permit the solicitation of additional votes. Any of the
proposals in this proxy statement may be voted on prior to any adjournment if
sufficient votes have been received for a proposal and such vote is otherwise
appropriate.
Votes to elect the Trustees and to ratify the selection of independent
registered public accounting firm under Proposals 1 and 2 will be counted for
the Funds collectively as a group and not on a Fund-by-Fund basis. Each Trustee
will be elected if he or she receives more "for" votes than the number of votes
that are "withheld" and the selection of the independent registered public
accounting firm will be ratified if this proposal receives more votes "for" than
"against." Abstentions and broker non-votes are not counted as a vote for or
against one or more nominees for Trustee or for or against ratification of the
independent registered public accounting firm, which means they will have no
effect on these proposals.
In contrast to the election of Trustees and ratification of the independent
registered public accounting firm, the investment management agreement under
Proposal 3 must be approved by shareholders of each individual Fund, and will
require the affirmative vote of either (1) more than 50% of the eligible votes
of the Fund, or (2) 67% or more of the votes present (in person or by proxy) at
the meeting, if more than 50% of the eligible votes are present at the meeting
in person or by proxy. Abstentions and broker non-votes will not count towards
the number of votes in favor of the investment management agreement, which means
they will have the effect of a vote against this proposal.
5
PROPOSAL 1 -- ELECTION OF TRUSTEES
The Board of Trustees, which is composed entirely of Trustees who are not
interested persons of the Institutional Funds or of the Advisor, unanimously
recommends that the shareholders of the Funds vote for the election of all of
the nominated Trustees.
We are holding elections of the Trustees in order to give you an opportunity to
evaluate the people who oversee the Funds. We are also electing Trustees at this
time in order to ensure that a sufficient number of Trustees have been elected
by shareholders. (Generally, shareholders must have elected at least two-thirds
of the Trustees.) At the meeting, you will be asked to elect the following
nominees as members of the Board to serve until their successors are elected and
qualified: Nancy L. Jacob, Willard T. Carleton, Eugene Flood, Jr., Howell E.
Jackson, Bevis Longstreth, Bridget A. Macaskill, Maceo K. Sloan and Ahmed H.
Zewail. The terms of the elected Trustees will be indefinite and the Board may
appoint one or more new Trustees to fill vacancies on the Board that occur after
this election, subject to certain limitations under the Investment Company Act
of 1940, as amended (the "1940 Act").
Information Concerning the Nominees
Below is information about the nominees. All of the nominees except for Eugene
Flood, Jr. and Howell E. Jackson currently serve as Trustees of the
Institutional Funds and of the College Retirement Equities Fund ("CREF"),
TIAA-CREF Mutual Funds, TIAA Separate Account VA-1, and TIAA-CREF Life Funds
(collectively, the "TIAA-CREF Fund Complex").
(PICTURE)
Nancy L. Jacob, 62, has been President and Managing Principal of Windermere
Investment Associates since 1997. She is also a member of the board of directors
and the chairman of the investment committee of the Okabena Company. She was
previously Chairman and Chief Executive Officer of CTC Consulting, Inc. (1994 -
1997) and Executive Vice President, U.S. Trust of the Pacific Northwest (1993 -
1996). Dr. Jacob received a B.A. from the University of Washington and a Ph.D.
from the University of California, Irvine. Dr. Jacob has served as a Trustee
since 1979, and as chairman of the Board of Trustees since 2005.
6
(PICTURE)
Willard T. Carleton, 71, has been Professor of Finance Emeritus at the College
of Business and Public Administration of the University of Arizona since 2001.
From 1999 to 2001, he was the Donald R. Diamond Professor of Finance, and from
1984 to 1999 he was the Karl L. Eller Professor of Finance, at the University of
Arizona. Dr. Carleton earned an A.B. and M.B.A. at Dartmouth College and an M.A.
and Ph.D. from the University of Wisconsin. Dr. Carleton served as a trustee of
Teachers Insurance and Annuity Association of America ("TIAA") from 1984-2003,
and has served as a Trustee since 2003.
(PICTURE)
Eugene Flood, Jr., 49, has been President and Chief Executive Officer (since
2000) and a director (since 1994) of Smith Breeden Associates, Inc. Prior to
joining Smith Breeden as President and CEO in 2000, he was a Portfolio Manager
at Morgan Stanley Asset Management. Dr. Flood serves on the Visiting Committee
for the Economics Department and the Dean's Advisory Committee of the
Massachusetts Institute of Technology's Sloan School of Management, the Board of
Visitors of the Fuqua School of Business of Duke University, Board of Visitors
of the University of North Carolina at Chapel Hill and the Board of Directors of
the Society of Quantitative Analysts. Dr. Flood has a Bachelor of Arts in
Economics from Harvard University, and a Ph.D. in Economics from the
Massachusetts Institute of Technology. Dr. Flood, whose nomination was
recommended by a current Trustee, is a first-time nominee to the Board.
(PICTURE)
Howell E. Jackson, 51, has been on the faculty of the Harvard Law School since
1989, and has been James S. Reid, Jr. Professor of Law since 2004 and Vice Dean
for Administration and Budget since 2003. Dr. Jackson has a B.A. degree from
Brown University and a joint J.D./M.B.A. degree from Harvard University. Dr.
Jackson, whose nomination was recommended by a current trustee, is a first-time
nominee to the Board.
7
(PICTURE)
Bevis Longstreth, 71, is a retired partner of the law firm of Debevoise &
Plimpton. Until 1997, he was a partner of the same firm, and from 1998 to 2001
he was Of Counsel to that firm. Mr. Longstreth served as a commissioner of the
U.S. Securities and Exchange Commission from 1981 to 1984, and as an adjunct
professor at Columbia University School of Law from 1994 to 1999. Mr. Longstreth
is a member of the board of directors of AMVESCAP, PLC, and of Grantham, Mayo &
Von Otterloo & Co., LLC (GMO). He is a member of the Standing Advisory Group of
the Public Company Accounting Oversight Board (PCAOB) and a member of the
finance committee of the Rockefeller Family Fund. He serves as a trustee of the
New School University, and the Textile Museum, and is a member of the Advisory
Board of the Center for Public Integrity. Mr. Longstreth received a B.S.E. from
Princeton University and a J.D. from Harvard University. Mr. Longstreth has
served as a Trustee since 1996.
(PICTURE)
Bridget A. Macaskill, 56, was formerly the Chairman and Chief Executive Officer
of Oppenheimer Funds, Inc. She joined Oppenheimer Funds, Inc. in 1983 and served
in various capacities at that firm, being appointed Chief Operating Officer in
1989, President in 1991, Chief Executive Officer in 1995 and Chairman in 2000.
Ms. Macaskill serves on the boards of directors of J Sainsbury plc and
Prudential plc, and on the boards of a number of not-for-profit organizations.
She also serves as Independent Consultant to Merrill Lynch, appointed under the
terms of the Global Research Settlement, since 2003. She received a B.S with
honors from the University of Edinburgh. Ms. Macaskill has served as a Trustee
since 2003.
(PICTURE)
Maceo K. Sloan, 55, has been the Chairman, President and CEO of Sloan Financial
Group, Inc. since 1991, Chairman, CEO and CIO of NCM Capital Management Group,
Inc., since 1991, and Chairman and CEO, NCM Capital Advisers Inc., since 2003.
Mr. Sloan is a director of SCANA Corporation and M&F Bancorp, Inc. Mr. Sloan
received a B.A. from Morehouse College, an M.B.A. from Georgia State University,
and a J.D. from North Carolina Central University School of Law. Mr. Sloan has
served as a Trustee since 1991.
8
(PICTURE)
Ahmed H. Zewail, 59, has been the Linus Pauling Professor of Chemistry and
Professor of Physics since 1996 and the Director of the NSF Laboratory for
Molecular Sciences at the California Institute of Technology (Caltech), Pasadena
since 1995. He serves on the boards of various national and international
foundations and universities, and holds the Honorary Chair at the United Nations
University. Dr. Zewail was awarded the 1999 Nobel Prize for his groundbreaking
work in the development of femtoscience. He received a B.S. and M.S. from
Alexandria University, a Ph.D. from the University of Pennsylvania, and numerous
honorary degrees. Dr. Zewail has served as a Trustee since 2004.
Each of the nominees has consented to serve if elected. If any nominee is
unavailable to serve when the meeting is held, the persons designated as proxies
may cast your votes for a substitute chosen by the current Board of Trustees.
Current Trustees and Executive Officers
The following tables include certain information about the current Trustees and
officers of the Institutional Funds, including positions currently held with the
Institutional Funds, the length of office and time served, and principal
occupations in the last five years. The table also includes the number of
portfolios in the TIAA-CREF Fund Complex overseen by each Trustee and certain
other directorships held by each of them. The table also includes information on
the nominees for election as Trustees that have never served on the Board
before. The first table includes information about the Trustees and nominees and
the second table includes information about the Institutional Funds' officers.
9
Trustees
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Nancy L. Jacob Chairman Indefinite President and Managing Principal, Windermere 60 Director and
Windermere of the term. Trustee Investment Associates, 1997 - present. Chairman of the
Investment Associates Board, since 1999. Formerly, Chairman and Chief Executive Investment
121 S.W. Morrison Street Trustee Officer, CTC Consulting, Inc., 1994 - 1997, Committee of the
Suite 925 and Executive Vice President, U.S. Okabena Company
Portland, OR 97204 Institutional Funds of the Pacific Northwest, (financial
Age: 62 1993 - 1998. services).
Willard T. Carleton Trustee Indefinite Professor of Finance Emeritus, University of 60 None
4911 E. Parade Ground term. Trustee Arizona, College of Business and Public
Loop since 2003 Administration, 2001 - present. Formerly,
Tucson, AZ 85712-6623 Donald R. Diamond Professor of Finance,
Age: 71 University of Arizona, 1999 - 2001, and Karl
L. Eller Professor of Finance, University of
Arizona, 1984 - 1999. Trustee of TIAA, 1984 -
2003.
Eugene Flood, Jr. Nominee Nominated President, Chief Executive Officer (since N/A None
Smith Breeden for for an 2000) and a Director (since 1994) of Smith
Associates, Inc. Trustee indefinite Breeden Associates, Inc. (investment
Chapel Hill, term. advisor).
North Carolina 27517
Age: 49
10
Trustees continued
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Howell E. Jackson Nominee Nominated James S. Reid, Jr. Professor of Law (since N/A None
Harvard Law School for for an 2004) and Vice Dean for Administration and
Griswold 5 South Trustee indefinite Budget (since 2003) and on the faculty (since
1525 Massachusetts term. 1989) of Harvard Law School.
Avenue
Cambridge, Massachusetts
02138
Age: 51
Bevis Longstreth Trustee Indefinite Retired Partner, Debevoise & Plimpton. 60 Member of Board
Debevoise & Plimpton term. Trustee Formerly, Partner (1970 - 1981, 1984 - 1997) of Directors of
919 Third Avenue since 1999. and Of Counsel (1998 - 2001) of Debevoise & AMVESCAP, PLC
New York, NY 10022-6225 Plimpton, Adjunct Professor at Columbia and Grantham,
Age: 71 University School of Law, 1994 - 1999 and Mayo & Von
Commissioner of the U.S. Securities and Otterloo & Co.,
Exchange Commission, 1981 - 1984. LLC (GMO)
(investment
management) and
a member of the
Standing Advisory
Group of the
Public Company
Accounting
Oversight Board
(PCAOB) and the
Finance Committee
of the Rockefeller
Family Fund.
Bridget A. Macaskill Trustee Indefinite Independent Consultant to Merrill Lynch. 60 Director, J
160 East 81st Street term. Trustee Appointed under the terms of the Global Sainsbury plc
New York, NY 10028 since 2003. Research Settlement, since 2003, and (food retailer),
Age: 56 principal, BAM Consulting. Formerly, Prudential plc,
Chairman, Oppenheimer Funds, Inc., 2000 - and International
2001. Chief Executive Officer, 1995 - 2001; Advisory Board,
President, 1991 - 2000; and Chief Operating British-American
Officer, 1989 - 1995 of that firm. Business Council.
11
Trustees continued
Number of
Portfolios
in Fund
Position(s) Term of Office Complex Other
Held with and Length of Principal Occupation(s) During Overseen Directorships
Name, Address and Age Fund Time Served Past 5 Years by Trustee Held by Trustees
====================================================================================================================================
Maceo K. Sloan Trustee Indefinite Chairman, President and Chief Executive 60 Director, SCANA
NCM Capital term. Trustee Officer, Sloan Financial Group, Inc., since Corporation
Management Group, Inc. since 1999. 1991; Chairman, CEO and CIO, NCM Capital (energy holding
2634 Durham-Chapel Management Group, Inc., since 1991; and company) and
Hill Boulevard Chairman and CEO, NCM Capital Advisers Inc., M&F Bancorp, Inc.
Suite 206 since 2003.
Durham, NC 27707
Age: 55
Ahmed H. Zewail Truste Indefinite Linus Pauling Chair Professor of Chemistry 60 None
California Institute term. Trustee and Professor of Physics, Caltech, since
Of Technology since 2004. 1996; and Director, NSF Laboratory for
Arthur Amos Noyes Molecular Sciences (LMS), Caltech, since
Laboratory of 1995.
Chemical Physics
Mail Code 127-72
1200 East California
Boulevard
Pasadena, CA 91125
Age: 59
12
Officers
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Herbert M. Allison, Jr. President and Indefinite term. Chairman, President and Chief Executive Officer of TIAA
TIAA-CREF Chief Executive President and since 2002. President and Chief Executive Officer of CREF,
730 Third Avenue Officer Chief Executive TIAA-CREF Mutual Funds, TIAA-CREF Institutional Mutual
New York, NY 10017-3206 Officer since Funds, TIAA-CREF Life funds and TIAA Separate Account VA-1
Age: 61 2002. (these funds are collectively referred to as the "TIAA- CREF
Funds") since 2002. Formerly, President and Chief Executive
Officer of Alliance for LifeLong Learning, Inc., 2000 -
2002. President, Chief Operating Officer and Member of the
Board of Directors of Merrill Lynch & Co., Inc., 1997-1999.
Member of the Board of Directors, New York Stock Exchange.
Gary Chinery Vice President Indefinite term. Vice President and Treasurer of TIAA and the TIAA-CREF Funds
TIAA-CREF and Treasurer Vice President since 2004. Vice President and Treasurer of Advisors,
730 Third Avenue and Treasurer TIAA-CREF Investment Management, LLC ("Investment
New York, NY 10017-3206 since 2004. Management"), TIAA-CREF Individual and Institutional
Age: 55 Services, LLC ("Services"), Teachers Personal Investors
Services, Inc. ("TPIS"), TIAA-CREF Tuition Financing, Inc.
("Tuition Financing") and TIAA-CREF Life Insurance Company
("TIAA-CREF Life").
Scott C. Evans Executive Vice Indefinite term. Executive Vice President and Chief Investment Officer of
TIAA-CREF President and Executive Vice TIAA since 2004 and the TIAA-CREF Funds since 2003.
730 Third Avenue Chief President since President and Chief Executive Officer of Investment
New York, NY 10017-3206 Investment 1999. Chief Management and Advisors. Director of Advisors and TIAA-CREF
Age: 45 Officer Investment Officer Life. Formerly, Executive Vice President, CREF Investments.
since 2004.
13
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
I. Steven Goldstein Executive Vice Indefinite term. Executive Vice President, Public Affairs, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Formerly, Advisor for McKinsey &
730 Third Avenue President since Company, 2003; Vice President, Corporate Communications for
New York, NY 10017-3206 2003. Dow Jones & Co. and The Wall Street Journal, 2001 - 2002; and
Age: 52 Senior Vice President and Chief Communications Officer for
Insurance Information Institute, 1993 - 2001.
E. Laverne Jones Vice President Indefinite term. Vice President and Corporate Secretary of TIAA and the
TIAA-CREF and Corporate Vice President TIAA-CREF Funds since 1998.
730 Third Avenue Secretary and Corporate
New York, NY 10017-3206 Secretary since
Age: 56 1999.
Susan S. Kozik Executive Vice Indefinite term. Executive Vice President and Chief Technology Officer of TIAA
TIAA-CREF President Executive Vice and the TIAA-CREF Funds since 2003. Formerly, Vice President
730 Third Avenue President since of IT Operations and Services, Lucent Technologies, 2000 -
New York, NY 10017-3206 2003. 2003; and Senior Vice President and Chief Technology Officer,
Age: 47 Penn Mutual Life Insurance Company, 1997 - 2000.
George W. Madison Executive Vice Indefinite term. Executive Vice President and General Counsel of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Formerly, Executive Vice
730 Third Avenue President since President, Corporate Secretary, and General Counsel of
New York, NY 10017-3206 2003. Comerica Incorporated, 1997 - 2003.
Age: 51
Erwin W. Martens Executive Vice Indefinite term. Executive Vice President, Risk Management, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Director of Advisors, Services,
730 Third Avenue President since TPIS, Tuition Financing and TIAA-CREF Life and Manager of
New York, NY 10017-3206 2003. Investment Management. Formerly, Managing Director and Chief
Age: 49 Risk Officer, Putnam Investments, 1999 - 2003; and Head and
Deputy Head of Global Market Risk Management, 1997 - 1999.
14
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Frances Nolan Executive Vice Indefinite term. Executive Vice President, Client Services, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2000. President, Chief Executive
730 Third Avenue President since Officer and Manager of Services. Director of TPIS, Tuition
New York, NY 10017-3206 2000. Financing and TIAA-CREF Life. Formerly, Executive Vice
Age: 47 President, Retirement Services, CREF and TIAA, 2000 - 2003;
Vice President, Eastern Division, 1994 - 2000.
Russell Noles Vice President Indefinite term. Vice President and Acting Chief Financial Officer of TIAA
TIAA-CREF and Acting Acting Chief and the TIAA-CREF Funds, Vice President of Advisors, TPIS,
730 Third Avenue Chief Financial Financial Officer Tuition Financing and Investment Management and Services
New York, New York Officer* since 2005. since 2005. Director of Advisors, TPIS, Tuition Financing
10017-3206 and Manager of Investment Management and Services since
Age: 46 2005. Formerly Vice President, Internal Audit of TIAA and
the TIAA-CREF Funds, 2004 - 2005; Vice President of Internal
Audit of the St. Paul Companies, 2001 - 2004, of Quest
Communications, 2000 - 2001 and of US WEST, Inc., 1998 -
2000.
Dermot J. O'Brien Executive Vice Indefinite term. Executive Vice President, Human Resources, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Director, TIAA-CREF Life.
730 Third Avenue President since Formerly, First Vice President and Head of Human Resources,
NY 10017-3206 2003. International Private Client Division, Merrill Lynch & Co.,
Age: 39 1999 - 2003; and Vice President and Head of Human Resources,
Japan Morgan Stanley, 1998 - 1999.
* Elizabeth A. Monrad, Executive Vice President and Chief Financial Officer, is
currently on unpaid leave of absence.
15
Officers continued
Term of Office
Name, Address Position(s) Held and Length of Principal Occupation(s) During
and Age with Fund Time Served Past 5 Years
====================================================================================================================================
Bertram L. Scott Executive Vice Indefinite term. Executive Vice President, Product Management, of TIAA and the
TIAA-CREF President Executive Vice TIAA-CREF Funds since 2003. Chairman of the Board, President
730 Third Avenue President since and Chief Executive Officer of TIAA-CREF Life. Director of
New York, NY 10017-3206 2000. TPIS; Manager of Services; President and Director of Tuition
Age: 54 Financing. Member of the Board of Directors of Becton,
Dickenson Co.; Trustee of the University of North Carolina
Charlotte; President and Chief Executive Officer, Horizon
Mercy, 1996 - 2000.
Trustee Equity Ownership
The following table includes information relating to equity securities
beneficially owned by all current Trustees and nominees in the Funds and in all
registered investment companies in the same "family of investment companies" as
the Funds as of May 20, 2005. This family of investment companies includes all
of the members of the TIAA-CREF Fund Complex.
Aggregate Dollar Range of
Dollar Range of Equity Securities in All
Equity Securities in the Registered Investment Companies
Name Institutional Funds in Family of Investment Companies
========================================================================================================
Nancy L. Jacob None Over $100,000
- --------------------------------------------------------------------------------------------------------
Willard T. Carleton None Over $100,000
- --------------------------------------------------------------------------------------------------------
Eugene Flood, Jr. None None
- --------------------------------------------------------------------------------------------------------
Howell E. Jackson None Over $100,000
- --------------------------------------------------------------------------------------------------------
Bevis Longstreth International Equity Fund -- Retirement Over $100,000
Class -- Over $100,000
- --------------------------------------------------------------------------------------------------------
Bridget A. Macaskill International Equity Fund -- Retirement $50,001-$100,000
Class -- $10,001 - $50,000
Large-Cap Value Fund -- Retirement
Class -- $10,001 - $50,000
Mid-Cap Value Fund -- Retirement
Class -- $10,001 - $50,000
Mid-Cap Growth Fund -- Retirement
Class -- $10,001 - $50,000
Small-Cap Equity Fund -- Retirement
Class -- $10,001 - $50,000
- --------------------------------------------------------------------------------------------------------
Maceo K. Sloan None Over $100,000
- --------------------------------------------------------------------------------------------------------
Ahmed H. Zewail None Over $100,000
- --------------------------------------------------------------------------------------------------------
16
Trustee Compensation
The following table sets forth the compensation paid to the Trustees for their
service to the Funds and the TIAA-CREF Fund Complex for the fiscal year ended
September 30, 2004.
Aggregate Pension or Retirement Total Compensation
Compensation from Benefits Accrued as from TIAA-CREF
Name the Institutional Funds Part of Fund Expenses Fund Complex(1)
=================================================================================================
Nancy L. Jacob $2,505.09 $1,440.26 $ 79,250.00
- -------------------------------------------------------------------------------------------------
Willard T. Carleton $2,868.63 $1,133.44 $ 91,250.00
- -------------------------------------------------------------------------------------------------
Martin J. Gruber(2) $3,230.98 $1,440.26 $102.500.00
- -------------------------------------------------------------------------------------------------
Bevis Longstreth(3) $2,590.01 $1,440.26 $ 81,250.00
- -------------------------------------------------------------------------------------------------
Bridget A. Macaskill $1,885.32 $1,133.44 $ 62,250.00
- -------------------------------------------------------------------------------------------------
Stephen A. Ross(2)(3) $3,110.32 $1,440.26 $ 98,250.00
- -------------------------------------------------------------------------------------------------
Maceo K. Sloan(3) $2,985.97 $1,440.26 $ 94,000.00
- -------------------------------------------------------------------------------------------------
Robert W. Vishny(2) $1,435.86 $1,049.52 $ 45,250.00
- -------------------------------------------------------------------------------------------------
Ahmed H. Zewail(3)(4) $ 891.91 $ 781.49 $ 29,000.00
- -------------------------------------------------------------------------------------------------
(1) Includes a portion of fees attributed to service on the CREF, TIAA-CREF
Mutual Funds and TIAA-CREF Life Funds Boards and the Management Committee
of TIAA Separate Account VA-1.
(2) These are former Trustees.
(3) This compensation, or a portion of it, was not actually paid based upon the
prior election of the Trustee to defer receipt of payment in accordance
with the provisions of deferred compensation plans for non-officer
Trustees. Excluding this year's deferrals, a total of $1,525,564.49 earned
across the fund complex has been deferred for prior years' service,
including interest through September 30 2004, for all Trustees who had
elected to defer their compensation.
(4) Dr. Zewail was appointed as a Trustee on June 16, 2004.
The Funds have a long-term compensation plan for non-officer Trustees.
Currently, under this unfunded plan, annual contributions equal to 125% of the
basic annual Trustee retainer are allocated to notional CREF and TIAA annuity
accounts chosen by the Trustee. Benefits will be paid after the Trustee leaves
the Board in a lump sum or in annual installments over 5, 10, 15 or 20 years, as
requested by the Trustee. The Board may waive the mandatory retirement policy
for the Trustees, which would delay the commencement of benefit payments until
the Trustee eventually retires from the Board. Pursuant to a separate deferred
compensation plan, non-officer Trustees also have the option to defer payment of
their basic retainer, additional retainers, and/or meeting fees and allocate
these amounts to notional TIAA and CREF accounts chosen by the individual
Trustee. Benefits under that plan are also paid in a lump sum or annual
installments over 5, 10, 15 or 20 years, as requested by the Trustee, after the
Trustee leaves the Board. The compensation table above does not reflect any
payments under the long-term compensation plan.
The Board recently approved an increase in Trustee compensation, to become
effective July 1, 2005, at the following rates: an annual retainer of $45,000; a
Board and
17
committee meeting fee of $1,800; an annual long-term compensation contribution
of $75,000 (replacing the 125% of the retainer formula described above); a
committee chair fee of $10,000; a Board chair fee of $15,000; and an Audit
Committee member fee of $5,000. Trustee compensation reflects service to all of
the investment companies within the TIAA-CREF Fund Complex and is pro-rated to
those companies based upon assets under management. The level of compensation is
evaluated regularly and is based on a study of compensation at comparable
companies, the time and responsibilities required of the Trustees, and the need
to retain and attract well-qualified Board members.
Committees
The Board has appointed the following standing committees, each with specific
responsibilities for aspects of the Funds' operations:
1. An Audit Committee, which audits and examines the records and affairs of
the Institutional Funds, as it deems necessary, using the Funds' independent
registered public accounting firm or others. The Audit Committee is charged
with, among other things, approving the appointment, compensation, retention
(or termination) and oversight of the work of the independent registered
public accounting firm. The Audit Committee has adopted a formal written
charter that is available upon request. During 2004, the Audit Committee
held seven meetings. The current members of the Audit Committee are Mr.
Sloan (chair), Dr. Carleton, and Ms. Macaskill. Mr. Sloan serves as the
audit committee financial expert.
2. A Finance Committee, which oversees the management of the Institutional
Funds' investments subject to appropriate oversight by the full Board of
Trustees. During 2004, the Finance Committee held four meetings. The current
members of the Finance Committee are Dr. Jacob (chair), Dr. Carleton, Mr.
Longstreth, Ms. Macaskill, Mr. Sloan and Dr. Zewail.
3. A Corporate Governance and Social Responsibility Committee, which addresses
all corporate social responsibility and corporate governance issues,
including the voting of proxies of portfolio companies of the Funds and the
initiation of appropriate shareholder resolutions. During 2004, the
Corporate Governance and Social Responsibility Committee held three
meetings. The current members of the Corporate Governance and Social
Responsibility Committee are Mr. Longstreth (chair), Dr. Carleton, and Dr.
Zewail.
4. An Executive Committee, which generally is vested with full Board powers
between Board meetings on matters not specifically addressed by the full
Board. During 2004, the Executive Committee held no meetings. The current
members of the Executive Committee are Dr. Jacob (chair), Mr. Longstreth,
and Mr. Sloan.
5. A Nominating and Governance Committee, which nominates certain officers and
the members of the standing committees of the Board, and recommends
candidates for
18
election as Trustees. The Committee was established in June 2004 as a
successor to the Nominating and Personnel Committee. During 2004, the
Nominating and Personnel Committee held five meetings and the Nominating
and Governance Committee held three meetings. The current members of the
Nominating and Governance Committee are Dr. Jacob (chair) and Mr.
Longstreth.
Board Meetings
There were 12 meetings of the Board during 2004 and an additional 6 meetings
from January 1, 2005 to May 17, 2005. All current Trustees attended at least 75%
of the meetings of the Board and of the meetings of the Board committees on
which they serve.
Trustee Nomination Process
Institutional Funds solicits names of candidates for the Board of Trustees from
various sources as the Nominating and Governance Committee may determine
appropriate. Those names are transmitted to the Nominating and Governance
Committee for its review and consideration. The Committee may, from time to
time, retain third party search firms to identify nominee candidates whose
competencies meet criteria the Board deems important to the Funds. In addition,
the Committee will entertain recommendations from current Trustees, Fund
shareholders and others.
The Committee reviews the information submitted on the backgrounds and
qualifications of those persons recommended. In considering current Trustees for
renomination to the Board, the Committee will evaluate each Trustee's Board and
committee participation, contributions to the management of Institutional Funds
and attendance at Board and committee meetings. In preparing a slate of Trustee
candidates, the Nominating and Governance Committee seeks to ensure broad,
diverse representation of academic, business and professional views. Once the
Committee reviews the candidates, it submits final nominations to the Board of
Trustees.
As vacancies arose on the Board this year, a third-party search firm was
retained to assist the Nominating and Governance Committee in identifying
candidates with qualifications appropriate to the Board's current and future
needs. In addition to candidates identified by the search firm, the Committee
also considered candidates suggested by the Trustees and obtained by other
means. The two new 2005 nominees, Eugene Flood, Jr. and Howell E. Jackson, were
each recommended by current Trustees.
Recommendations From Shareholders Regarding Nominations
Shareholders may submit recommendations for candidates to the Board by
forwarding the names and backgrounds of nominees to the Corporate Secretary's
office at 730 Third Avenue, New York, NY 10017-3206. These communications will
be forwarded to the
19
Board in accordance with policies concerning shareholder communications that
have been approved by a majority of the Trustees.
Trustee Qualifications
The Board of Trustees has determined that the Board should be comprised of
individuals who can contribute sound business judgment to board deliberations
and decisions, based on their relevant business, management, professional,
academic or governmental service experience. Candidates for the Board should
have reached a senior level in their chosen field, be of uncompromised
integrity, and be able to fulfill their responsibilities as Trustees without
conflict. The Board should reflect diversity of gender, race, age and experience
and at least one Trustee should qualify as a financial expert for service on the
Audit Committee. Each Trustee should be prepared to devote substantial time and
effort to Board duties and should limit the number of their other board
memberships in order to provide such service to the Institutional Funds.
Candidates for the Board should be individuals with an understanding of and
affinity for academia, and a demonstrated ability to work in a constructive
manner with other Trustees and management.
When seeking to fill a specific opening on the Board, the Nominating and
Governance Committee will consider the specific needs of the Board at the time
to assure an overall balance and range of specialized knowledge, skills,
expertise and diversity to provide the foundation for a successful Board.
A candidate for service as an independent Trustee must not be an "interested
person" of Institutional Funds, Advisors or Advisors' affiliates as that term is
defined in the 1940 Act, and must otherwise meet the independence requirements
of the New York Stock Exchange or applicable rules. Each candidate must provide
such information requested by Institutional Funds as may be reasonably necessary
to enable the Board to assess the candidate's eligibility.
Shareholder Communications With Trustees
Letters or e-mails from participants addressed to the Board of Trustees or
individual Trustees may be sent to the Corporate Secretary's office at 730 Third
Avenue, New York, NY 10017-3206. These communications will be forwarded to the
Institutional Funds' Chairman in accordance with policies concerning shareholder
communications that have been approved by a majority of the independent
Trustees.
20
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees has unanimously approved the selection of
PricewaterhouseCoopers as the Funds' Independent Registered Public Accounting
Firm, and recommends that the shareholders of the Funds ratify the selection
thereof.
Ernst & Young LLP ("Ernst & Young") served as independent registered public
accounting firm to the Institutional Funds for the fiscal year ended September
30, 2004. On February 28, 2005, the Board and the Audit Committee determined,
and Ernst & Young agreed, that the relationship between Ernst & Young and the
Institutional Funds would cease. Ernst & Young, the Board, and the Audit
Committee concur that such a decision constitutes an indication by Ernst & Young
that it declined to stand for re-appointment to serve as the Funds' independent
registered public accounting firm for the current fiscal year. At its February
28, 2005 meeting, the Board, including a majority of the independent Trustees,
selected PricewaterhouseCoopers LLP ("PWC") to serve as independent registered
public accountants for the Institutional Funds for the fiscal year ending
September 30, 2005. PWC was selected following a competitive bidding process
that had been initiated in November 2004 by TIAA and the TIAA-CREF Fund Complex.
In making their selection, the Board discussed with PWC all issues involving
relationships among PWC, TIAA and the TIAA-CREF Funds, and their affiliates,
that could reasonably be thought to bear on PWC's independence, and concluded
that PWC was independent. PWC confirmed its independence to the Board. As part
of this process, the Board considered that while PWC would also serve as the
independent registered public accounting firm for TIAA and the Advisor, this
would not compromise PWC's independence. They considered that this arrangement
would produce a more cost-effective audit and received an agreement from PWC
that the Board would be informed if any unprivileged material issues arose in
the course of the audit of TIAA and its subsidiaries. Additionally, the Board
took into consideration that the Funds' and TIAA's audits would be overseen by
different PWC audit partners.
As the Institutional Funds' independent registered public accounting firm, PWC
will perform audits of the Institutional Funds' financial statements. To
maintain independence and avoid even the appearance of conflicts of interest,
the Institutional Funds, as a policy, does not engage PWC for management
advisory or consulting services.
Representatives of PWC will attend the meeting and be available at the meeting
to respond to questions, but it is not expected that they will make any
statement at the meeting. It is not expected that representatives of Ernst &
Young will attend the meeting.
The reports of Ernst & Young for the two most recent fiscal years and the
subsequent interim period through February 28, 2005 for the Funds contained no
adverse opinion or
21
a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.
In connection with its audits for the two most recent fiscal years and the
subsequent interim period through February 28, 2005: (i) there were no
disagreements with Ernst & Young on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Ernst & Young, would have
caused them to make reference to the subject matter of the disagreements in
connection with its report on the financial statements for such fiscal years:
and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of
Regulation S-K. Ernst & Young has been provided a copy of the above disclosures,
which is made in response to Item 304(a) of Regulation S-K under the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
and Ernst & Young agrees with such disclosures.
Audit Fees
Ernst & Young's fees for professional services rendered for the audit of the
Institutional Funds' annual financial statements for the fiscal years ended
September 30, 2004 and September 30, 2003 were approximately $624,300 and
$335,900, respectively.
Audit-Related Fees
No fees were paid to Ernst & Young for audit-related services rendered to the
Funds for the fiscal years ended September 30, 2004 and September 30, 2003.
Tax Fees
Ernst & Young's fees for professional services rendered to the Funds for tax
compliance, tax advice, and tax planning for the fiscal years ended September
30, 2004 and September 30, 2003 were approximately $115,100 and $110,000,
respectively.
All Other Fees
Ernst & Young had no additional fees with respect to the Funds.
Pre-Approval Policy
The Audit Committee has adopted a Pre-Approval Policy for External Audit Firm
Services (the "Policy"). The Policy describes the types of services that may be
provided by the independent registered public accounting firm to the Funds
without impairing the firm's independence. Under the Policy, the Audit Committee
is required to pre-approve services
22
to be performed by the Institutional Funds' independent registered public
accounting firm in order to ensure that such services do not impair the
accounting firm's independence.
The Policy requires the Audit Committee to: (i) appoint the independent
registered public accounting firm to perform the financial statement audit for
the Funds and certain of its affiliates, including approving the terms of the
engagement; and (ii) pre-approve the audit, audit-related and tax services to be
provided by the independent registered public accounting firm and the fees to be
charged for provision of such services from year to year.
All services provided by the independent registered public accounting firm to
the Institutional Funds, the Advisor, or its affiliates for the fiscal years
ended September 30, 2004 and September 30, 2003 were pre-approved by the Audit
Committee pursuant to the Policy.
Auditor Fees for Related Entities
The aggregate non-audit fees by Ernst & Young for services rendered to the
Funds, the Advisor or affiliates of the Advisor performing on-going services to
the Funds, including TIAA, for the year ended December 31, 2004 were $319,800,
and for the year ended December 31, 2003 were $281,000.
Ernst & Young's aggregate fees for professional services rendered in connection
with the audit of financial statements for TIAA and CREF and their affiliated
entities for the year ended December 31, 2004 were $7,703,700, and for the year
ended December 31, 2003 were $3,955,300. Ernst & Young's aggregate fees for
audit related-services provided to TIAA and CREF and their affiliated entities
for the year ended December 31, 2004 were $204,800, and for the year ended
December 31, 2003 were $171,000. Ernst & Young's aggregate fees for tax services
provided to TIAA and CREF and their affiliated entities for the year ended
December 31, 2004 were $250,600, and for the year ended December 31, 2003 were
$229,900.
23
PROPOSAL 3 -- APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
The Board has unanimously approved, and recommends that the shareholders of each
Fund vote for the approval of, a new investment management agreement with
respect to their Fund.
The Advisor currently manages each of the Funds under an investment management
agreement, dated June 1, 1999, as amended September 3, 2002 and October 1, 2004
(the "Current Agreement"). In hindsight, it has become clear that the extremely
low level of fees that the Advisor has been charging under the Current Agreement
has been too low to cover its costs for operating the Funds, while sustaining a
high quality of service for shareholders. In light of its ongoing losses, the
Advisor has proposed a new investment management agreement for each Fund (the
"Proposed Agreement"). After thorough and deliberate consideration of
shareholders' interests, the Board of Trustees now is recommending that
shareholders approve the Proposed Agreement. The Proposed Agreement will:
o Restructure the pricing and the services to be provided by the Advisor under
the Current Agreement, which will increase the level of advisory fees on the
Actively Managed Funds. See pages 28-29 for details on the fees to be charged
under the Proposed Agreement. The "Actively Managed Funds" include the Growth
Equity Fund, Growth & Income Fund, International Equity Fund, Large-Cap Value
Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Real
Estate Securities Fund, Social Choice Equity Fund, Bond Fund,
Inflation-Linked Bond Fund and Money Market Fund.
o At the Board's request, introduce a breakpoint schedule for the Actively
Managed Funds (except for Money Market Fund and Social Choice Equity Fund),
which will modestly reduce the advisory fee rates on those Funds as total
asset levels increase.
o Include provisions that will be applicable to all of the Funds making the
Advisor responsible for providing certain additional management and
administrative services necessary for the operation of the Funds, including
providing office space, equipment and facilities for maintaining its
operations and supervising relations with the Funds' other service providers.
Many of these services are currently paid for by the Funds as "other
expenses" under a service agreement with the Advisor, which will be
discontinued if shareholders approve the Proposed Agreement (except with
respect to retirement plan platform fees for the Retirement Class and the
Lifecycle Funds). See page 28 for more details.
This proposal was designed to provide the Advisor with a sustainable fee and
expense structure for operating the Institutional Funds, so that overall
expenses would continue to be competitive with the lower cost providers in the
industry. This proposal is part of a larger effort to restructure TIAA-CREF's
mutual fund offerings so that they will remain more fairly and competitively
priced and continue to serve shareholder needs. If the Proposed Agreement
24
is approved, a second step in the restructuring is expected to be the merger of
the TIAA-CREF Retail Mutual Funds into the TIAA-CREF Institutional Funds,
thereby creating one larger, consistently priced fund family. The details of why
the Advisor is seeking shareholder approval of the Proposed Agreement are
discussed below. The factors considered by the Board in determining the
reasonableness and fairness of the Proposed Agreement are described starting on
page 31 under the heading "What did the Board of Trustees Consider in Approving
the Proposed Agreement?" The Proposed Agreement is attached as Exhibit A.
Why is the Advisor Seeking to Restructure the Pricing of the Funds?
Since the Funds were established in 1999, the Advisor has been committed to
providing quality services to the Funds at the lowest possible cost to
shareholders. In hindsight, it has become clear that the extremely low level of
fees that the Advisor has been charging to shareholders has been too low to
cover its increasing costs for operating the Funds, while sustaining the level
and quality of service shareholders deserve.
The Advisor is requesting a management fee increase on the Actively Managed
Funds to enable the Advisor to continue to manage the Funds and provide high
quality services to shareholders at low prices. It has become increasingly
expensive to operate mutual funds due to higher compliance and regulatory costs
and intensified competition for talented portfolio managers and other key
investment management and administrative personnel. With the proposed new
management fee rates, the Advisor will be able to:
o Continue to manage the day-to-day business affairs of the Funds
o Cover the costs of operating mutual funds
o Retain and attract highly qualified investment professionals
o Increase the capacity of its investment management staff and expand the depth
and scope of its analysts' coverage
o Continue to offer a high level of service to our shareholders and take steps
to enhance those services.
Even with the proposed fee increase, the Actively Managed Funds would continue
to be among the lower-priced offerings in the industry.
If a Fund's shareholders approve the Proposed Agreement, its terms, including
the increased fees, are expected to go into effect for that Fund on November 1,
2005.
What will happen if certain Fund shareholders do not approve the Proposed
Agreement?
If shareholders do not approve the Proposed Agreement for any Fund, the Advisor
has informed the Board that it may no longer be prepared to continue to operate
that Fund. The Board may then be forced to consider alternative options,
including closing the Fund to new investments or liquidating the Fund.
25
Who is the Advisor?
The Advisor is Teachers Advisors, Inc. (the "Advisor"), a direct wholly owned
subsidiary of TIAA-CREF Enterprises, Inc. and an indirect wholly owned
subsidiary of Teachers Insurance and Annuity Association of America ("TIAA").
TIAA and the Advisor are located at 730 Third Avenue, New York, New York 10017.
A chart attached as Exhibit B lists the name, address, and principal occupation
of each principal executive officer and director of the Advisor.
The Advisor currently manages each of the Funds under the Current Agreement. The
Advisor also serves as the investment adviser to TIAA Separate Account VA-1,
TIAA-CREF Life Funds, and TIAA-CREF Mutual Funds. Both TIAA-CREF Mutual Funds
and TIAA-CREF Life Funds are series investment companies comprised of a number
of investment portfolios. The Advisor, through its TIAA-CREF Asset Management
("TCAM") division, also manages large institutional client assets through
unregistered commingled funds and on a separate account basis. A table setting
forth the net assets of those investment portfolios in the TIAA-CREF Mutual
Funds, TIAA Separate Account VA-1 and the TIAA-CREF Life Funds that have
investment objectives similar to one of the Funds, and the management fee rate
paid by each such portfolio to the Advisor, is attached hereto as Exhibit C.
In addition to the investment management agreement, the Funds currently have in
place a service agreement (the "Service Agreement") with the Advisor, whereby
the Advisor provides or arranges for the provision of a variety of services for
the ordinary operation of each Class of the Funds, including transfer agency,
accounting, and administrative services. If the Proposed Agreement is approved,
the Advisor plans to terminate the current Service Agreement, since many of
these services will be provided under the Proposed Agreement, while others, such
as custody services, transfer agency services and regulatory fees, will be paid
directly by each Fund. A new services agreement between the Advisor and the
Funds will be implemented solely for Retirement Class shares (and for the sole
class of the Lifecycle Funds) to cover the account servicing expenses associated
with this Class being offered on retirement plan platforms (the "Retirement
Class Service Agreement"). Please see Exhibit E for the amounts paid by the
Funds to the Advisor under the Service Agreement for the 12-month period ended
December 31, 2004 and the pro forma amounts that would have been paid under the
Retirement Class Service Agreement over this same period.
To control the total expenses charged to shareholders, the Advisor has agreed
with the Funds to reimburse each Fund for other expenses (i.e., non-investment
management fees) or for total expenses (in the case of the Retail Class) that
are above a certain level. Please see Exhibit D for more details on these
expense reimbursements.
26
What are the terms of the Current Agreement with the Advisor, and how does the
Proposed Agreement differ?
Under the Current Agreement, the Advisor manages the investments and the
investment strategy of each Fund and provides related general management
services. Specifically, the Advisor is authorized, subject to the control of the
Board, to determine the selection, amount, and time to buy or sell securities
for each Fund. The Advisor also maintains the Funds' books and records,
prepares, on request, reports for the Board; makes available its officers to the
Board for consultation and discussions regarding the management of the Funds,
and provides certain general management services to the Funds. The fees paid to
the Advisor under the Current Agreement are set forth below in a chart comparing
current and proposed investment management fees.
The Current Agreement was last submitted to a shareholder vote when the Funds
were first organized in 1999 and was last approved by the Board on April 5,
2005. The Advisor substantially decreased the contractual fees payable under the
Current Agreement in September 2002.
Other than the services that the Advisor provides for the Funds, the Funds are
responsible for all other expenses incurred in their operations including any
taxes, brokerage commissions on portfolio transactions, expenses of issuance and
redemption of shares, costs of preparing and distributing proxy material,
auditing and legal expenses, certain expenses of registering and qualifying
shares for sale, fees of trustees who are not interested persons (not
affiliated) of TIAA, costs of printing and mailing the prospectus, statements of
additional information, and financial reports to existing shareholders, and any
other charges or fees not specifically enumerated in the Current Agreement or
the Service Agreement. During the fiscal year ended September 30, 2004, the
Funds did not pay any brokerage commissions to an affiliated broker/dealer.
In order for it to continue in effect, the Current Agreement must be
specifically approved at least annually by: (i) the Board, or by the vote of a
majority of the outstanding voting shares of such Fund; and (ii) a majority of
those trustees who are not interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Current
Agreement may be terminated at any time with respect to any Fund by that Fund or
by the Advisor, without penalty, on 60 days' written notice. The Current
Agreement will terminate automatically in the event of its assignment.
The Proposed Agreement contains terms that are substantially the same as the
Current Agreement, except for the following important differences:
o The Proposed Agreement provides for an increase in the management fees for
the Actively Managed Funds, as described below. There are no changes to the
management fees for the Index Funds and the Lifecycle Funds at the levels
specified under the Current Agreement.
27
o At the Board's request, the Proposed Agreement introduces a breakpoint
schedule for most of the Actively Managed Funds, which will modestly reduce
the advisory fees on those Funds as total asset levels increase.
o The Proposed Agreement includes provisions making the Advisor responsible for
providing certain additional management and administrative services necessary
for the operation of the Funds, including providing office space, equipment
and facilities for maintaining its operations and supervising relations with
the Funds' other service providers. Many of these services are currently paid
for by the Funds as "other expenses" under a service agreement with the
Advisor, which will be discontinued (except with respect to retirement plan
platform fees for the Retirement Class and the Lifecycle Funds) if
shareholders approve the Proposed Agreement.
The management fees under the Proposed Agreement do not cover certain expenses
necessary to the Funds' ordinary operation, including: custody services,
transfer agency services, sub-transfer agency services, and regulatory fees.
These charges are borne by the Fund directly and paid out of Fund assets. Also,
while under the current arrangements, administrative services are provided by
the Advisor pursuant to a separate Service Agreement, under the Proposed
Agreement the expense of most of those services will be paid for out of the
Advisor's management fee, thereby reducing those other direct Fund expenses. In
addition, the Advisor is agreeing to cap those expenses through expense
reimbursement arrangements. Please see Exhibit D for more details on these
expense reimbursements.
What are the proposed fees under the Proposed Agreement? How do they differ from
the Current Agreement?
Under both the Current Agreement and Proposed Agreement, each Fund pays the
Advisor a management fee that is calculated as a percentage of the average daily
net assets for each Fund over each month at the annual rates set forth in the
table below (not all of these Funds offer all three share classes):
FUND CURRENT AGREEMENT NEW AGREEMENT
================================================================================
GROWTH EQUITY FUND 0.08% 0.45% or less(1,2)
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND 0.08% 0.45% or less(1,2)
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 0.09% 0.50% or less(2)
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND 0.08% 0.45% or less(2)
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND 0.08% 0.48% or less(2)
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND 0.04% 0.15%
- --------------------------------------------------------------------------------
(Continued on next page)
28
FUND CURRENT AGREEMENT NEW AGREEMENT
================================================================================
REAL ESTATE SECURITIES FUND 0.09% 0.50% or less(2)
- --------------------------------------------------------------------------------
BOND FUND 0.08% 0.30% or less(2)
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND 0.09% 0.30% or less(2)
- --------------------------------------------------------------------------------
MONEY MARKET FUND 0.04% 0.10%
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
S&P 500 INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
EQUITY INDEX FUND 0.04% 0.04%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2010 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND 0.10% 0.10%(3)
- --------------------------------------------------------------------------------
(1) The Board obtained the Advisor's agreement to waive the increased management
fees for these Funds under the Proposed Agreement for two years. Therefore,
the management fees of these Funds will remain at 0.08% of average daily net
assets until at least April 2007. See page 33 for a discussion of the
Board's review of the performance of these particular Funds.
(2) At the Board's request, the management fees of these Funds have breakpoints
that gradually reduce the fee rates from the amounts indicated in the chart
as each Fund's assets grow. To see the full breakpoint schedule for these
Funds please see Exhibit A.
(3) The Board obtained the Advisor's agreement to waive all the Lifecycle Funds'
investment management fees if the fee increases on the Institutional Funds
in which the Lifecycle Funds invest are approved by shareholders.
29
During the year ended December 31, 2004 (and from inception to December 31, 2004
for the Lifecycle Funds), the Funds paid an aggregate of $3,818,050 in
management fees to the Advisor. Had the Proposed Agreement been in effect during
the same period, the Funds would have paid an aggregate of $16,091,025 in
management fees. The table below shows the amount of management fees paid during
the year ended December 31, 2004 on a per Fund basis, along with the amounts
that would have been paid during the same period had the Proposed Agreement been
in effect ("Pro Forma"), and the percentage increase that the pro forma fees
represent. (See Exhibit E for a comparison of the Funds' current and pro forma
payments under its service arrangements for the 12-month period ended December
31, 2004.)
FUND CURRENT FEES PRO FORMA FEES % INCREASE
===================================================================================
GROWTH EQUITY FUND $ 79,987 $ 449,927 462.5%
- -----------------------------------------------------------------------------------
GROWTH & INCOME FUND $537,485 $3,023,353 462.5%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND $519,437 $2,885,761 455.6%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE FUND $167,917 $ 944,533 462.5%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH FUND $100,239 $ 601,434 500.0%
- -----------------------------------------------------------------------------------
MID-CAP VALUE FUND $ 97,757 $ 586,542 500.0%
- -----------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND $167,424 $1,004,544 500.0%
- -----------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND $ 40,941 $ 153,529 275.0%
- -----------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND $273,632 $1,520,178 455.6%
- -----------------------------------------------------------------------------------
BOND FUND $757,785 $2,841,694 275.0%
- -----------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND $385,466 $1,284,887 233.3%
- -----------------------------------------------------------------------------------
MONEY MARKET FUND $ 69,776 $ 174,440 150.0%
- -----------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND $ 17,352 $ 17,352 0.0%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND $ 52,571 $ 52,571 0.0%
- -----------------------------------------------------------------------------------
EQUITY INDEX FUND $297,043 $ 297,043 0.0%
- -----------------------------------------------------------------------------------
S&P 500 INDEX FUND $ 73,091 $ 73,091 0.0%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND $ 9,927 $ 9,927 0.0%
- -----------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND $ 14,632 $ 14,632 0.0%
- -----------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND $ 20,194 $ 20,194 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND $ 27,447 $ 27,447 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND $ 25,282 $ 25,282 0.0%
- -----------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND $ 51,541 $ 51,541 0.0%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND $ 31,124 $ 31,124 0.0%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND -- 2010 FUND $ 286 $ 286 0.0%
- -----------------------------------------------------------------------------------
(Continued on next page)
30
FUND CURRENT FEES PRO FORMA FEES % INCREASE
================================================================================
LIFECYCLE FUND -- 2015 FUND $463 $463 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND $263 $263 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND $288 $288 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND $250 $250 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND $249 $249 0.0%
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND $251 $251 0.0%
- --------------------------------------------------------------------------------
While the new fees shown above would represent a substantial increase in
management fee revenue to the Advisor, the increase is not expected to result in
undue profits to the Advisor for the foreseeable future, due to the expenses
that the Advisor has incurred and continues to incur to operate the Funds, and
the expense reimbursements committed to by the Advisor. In addition, even with
the new fees, the Funds would remain among the low-priced funds in the industry.
See pages 33-34 for a comparison of each Fund's total expense ratio with the
median expense ratios of its peers.
For information about the overall impact of the proposed new pricing structure
on the Funds' total expense ratios, see "What Is the Overall Impact of the
Proposal On the Funds' Total Expense Ratios?" below.
What Factors Did the Board Consider in Approving the Proposed Agreement?
The proposal to approve the Proposed Agreement and present it to shareholders
for their approval was carefully considered by the Board of Trustees at meetings
held on December 7, 2004, January 19, 2005, February 15, 2005, April 5, 2005,
April 21, 2005 and May 17, 2005. At each of these meetings, the Board, which was
advised by independent counsel, deliberated over the Advisor's comprehensive
plan to restructure the Funds to help ensure their continuing operation. In
particular, the Board assessed the Advisor's proposal to increase advisory fees
significantly for certain Funds in light of ongoing losses sustained by the
Advisor. Before and at these meetings, the Board received information relating
to the Proposed Agreement and was given the opportunity to ask questions and
request additional information from the Advisor. After full and deliberate
consideration, and after balancing the costs and benefits to shareholders, on
May 17, 2005, the Board determined that the arrangements under the Proposed
Agreement were reasonable and fair to the Funds and shareholders. Therefore, the
Board voted unanimously to approve the Proposed Agreement, and submit the
Proposed Agreement to shareholders for approval.
The Board considered that since the Funds were established, the Advisor had set
its fees at extremely low levels, making it difficult for the Advisor to sustain
the level and quality of management and service shareholders expect in this
competitive environment. They also considered that despite ongoing losses to the
Advisor and the fact that its fees were much lower than most of its peers, the
Advisor had never previously asked for a fee
31
increase. In fact, in 2002, the Advisor decreased its fees, even as costs were
rising, resulting in increased losses to the Advisor. The Board considered that,
over that time, it has become increasingly expensive to operate mutual funds due
to the intensified competition for talented portfolio managers and other key
investment management and administrative personnel and higher compliance and
regulatory costs.
The Board considered that the new proposed management fee rates would enhance
the Advisor's ability to manage the day-to-day business affairs of the Funds,
cover the increasing costs of offering mutual funds, attract and retain highly
qualified personnel, increase the capacity and scope of coverage of the
investment management staff and maintain and improve the quality of services to
shareholders.
Significantly, they considered that while the magnitude of the fee increase
requested by the Advisor was large, even after the fee increase, most Funds
would earn only a modest profit for the Advisor, especially after the Advisor's
reimbursements, and would continue to be among the lower-priced offerings in the
industry.
As part of its deliberations, the Board reviewed detailed information provided
by the Advisor relating to the nature, extent and quality of the services
currently provided by the Advisor and to be provided by the Advisor under the
Proposed Agreement. In particular, the Board reviewed detailed independent
analysis of comparative expenses and performance data for each class of shares
of each of the Funds, prepared by Lipper, Inc., a Reuters company that is an
independent provider of investment company data ("Lipper"). In addition, the
Board received financial information about the Advisor and its affiliated
companies, including an analysis of the profitability of the Advisor's
operations, and the effect the proposed new arrangements would have on the
short-term and long-term financial condition of the Advisor. For details about
each Fund, see the Fund-by-Fund synopsis of the factors the Board considered in
Exhibit F.
In determining whether to approve the Proposed Agreement, the Board reviewed the
following specific factors:
The Nature and Quality of Services. The Board considered that the Advisor is an
experienced investment advisor that has managed the Institutional Funds since
1999 and the TIAA-CREF Mutual Funds since 1997, and that the investment
professionals of the Advisor also manage various accounts of CREF. The Board
considered that the Advisor has carried out its responsibilities for managing
the assets of the Funds in a professional manner. In the course of their review
of the quality of the Advisor's services, the Board examined the long-term
performance of the Funds in general, and concluded that it was within an
acceptable range when compared with fund benchmarks and peers, or that, in the
case of underperforming Funds, the Advisor was taking affirmative steps to
enhance its investment approach and personnel.
Performance. The Board considered the performance of each Fund over the
one-year, three-year, five-year (where applicable), and since inception periods
and the Funds' performance as compared to their peer groups and benchmark
indices. The Board considered the
32
comparative performance data for each Fund prepared by Lipper, an independent
third party, for each class of each pertinent Fund, as well as each Fund's
performance against its performance benchmark. In looking at this data, the
Board considered that most of the Funds met their benchmarks over the one-year,
three-year, five-year and since inception periods, as applicable (when factoring
in the effect of expenses), and ranked in the first, second, or third quintiles
versus their peers, with some limited exceptions. (This means, with certain
exceptions, the Funds were in the first, second or third of five groups, in
terms of performance, with first being the best.)
The Board considered that in those cases in which Funds were underperforming,
the Advisor took remedial action, including replacing the portfolio management
team for the Growth Equity and Growth & Income Funds. Importantly, the Trustees
concluded that in light of the long-term performance of the Growth Equity and
Growth & Income Funds, they would only approve the Proposed Agreement if the
Advisor agreed to waive the fee increases for those Funds until at least April
2007, at which time the Board could consider whether these Funds' performance
had improved. For details about each Fund, see the Fund-by-Fund synopsis of the
factors the Board considered in Exhibit F.
Fees Charged by Other Advisers. An important factor that the Board considered
was the level of fees paid to other advisers for managing similar funds, as
analyzed by Lipper. The Board determined that the fees under the Current
Agreement were significantly lower than those of competitors, and that even with
the proposed increase in advisory fees and increase in total expense ratios,
each Fund would continue to be very competitively priced and below the pricing
of the average fund within the universe of mutual funds in its competitive peer
group. They considered that the new management fees for almost all of the
repriced Funds would continue to be in the lowest quintile as compared with
Institutional class funds in the competitive peer group and universe identified
by Lipper. (The lowest quintile means that a fund is in the best of five groups,
i.e., the group with the lowest expenses.) Significantly, the Board considered
that under the Proposed Agreement, each Fund's total expense ratio would be less
than the median expense ratio for its peer group of mutual funds, and, in some
cases, significantly less. The table below compares the estimated total expense
ratio (not including any waivers or reimbursements) of each existing class of
each Fund that would be subject to an increased fee under the Proposed Agreement
should Proposal 3 be approved, with the Lipper median total expense ratio for
the Fund's appropriate category.
Proposed Median
Total Peer Total
Expense Expense
Fund Ratio Ratio Difference
================================================================================
GROWTH EQUITY FUND -- Institutional 0.50% 1.05% -0.55%
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND -- Institutional 0.50% 0.93% -0.43%
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND -- Retirement 0.75% 0.93% -0.18%
- --------------------------------------------------------------------------------
(Continued on next page)
33
Proposed Median
Total Peer Total
Expense Expense
Fund Ratio Ratio Difference
========================================================================================
INTERNATIONAL EQUITY FUND -- Institutional 0.59% 1.19% -0.60%
- ----------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND -- Retirement 0.80% 1.19% -0.39%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Institutional 0.50% 1.07% -0.57%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Retirement 0.75% 1.07% -0.32%
- ----------------------------------------------------------------------------------------
LARGE-CAP VALUE FUND -- Retail 0.99% 1.05% -0.06%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Institutional 0.55% 1.11% -0.56%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Retirement 0.78% 1.11% -0.33%
- ----------------------------------------------------------------------------------------
MID-CAP GROWTH FUND -- Retail 1.08% 1.28% -0.20%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Institutional 0.55% 1.07% -0.52%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Retirement 0.78% 1.07% -0.29%
- ----------------------------------------------------------------------------------------
MID-CAP VALUE FUND -- Retail 1.02% 1.23% -0.21%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Institutional 0.55% 1.15% -0.60%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Retirement 0.78% 1.15% -0.37%
- ----------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND -- Retail 1.16% 1.26% -0.10%
- ----------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND -- Institutional 0.25% 0.99% -0.74%
- ----------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND -- Retirement 0.48% 0.99% -0.51%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Institutional 0.59% 1.11% -0.52%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Retirement 0.80% 1.11% -0.31%
- ----------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND -- Retail 0.99% 1.18% -0.19%
- ----------------------------------------------------------------------------------------
BOND FUND -- Institutional 0.34% 0.69% -0.35%
- ----------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND -- Institutional 0.35% 0.35% 0.00%
- ----------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND -- Retail 0.80% 0.72% +0.08%
- ----------------------------------------------------------------------------------------
MONEY MARKET FUND -- Institutional 0.15% 0.43% -0.28%
- ----------------------------------------------------------------------------------------
Cost and Profitability. The Board considered that the Advisor is losing money
managing the mutual funds business overall. The Board reviewed financial and
profitability data for 2004 and profitability on a pro forma basis assuming the
proposed management fee increase had been in effect--showing data for both
before and after distribution expenditures. The Board considered that very few
Funds currently are profitable to the Advisor, and most are operating at a loss
to the Advisor. The Board also considered that even after repricing, most Funds
would earn only a modest profit for the Advisor, especially after
reimbursements. The Board determined that the Proposed Agreement would permit
the Advisor to operate for the foreseeable future at reasonable profit margins,
which would also enable the Advisor to maintain and improve the quality of
services provided to shareholders. The Board also considered that it would be
able to
34
review the profitability levels of the Advisor annually during its yearly review
of the Funds' management arrangements to ensure that the Advisor's fees remained
fair and reasonable and that its profits for managing the Funds were not
excessive.
The Board further considered that the costs and anticipated costs of operating
mutual funds have increased, including additional disclosure and compliance
requirements, such as the USA Patriot Act requirements, Sarbanes-Oxley
requirements, and the requirement that mutual funds have a chief compliance
officer. The Board considered that the proposed fee increase would enhance the
Advisor's ability to attract and retain highly qualified investment and
administrative professionals in a competitive investment management environment.
Heightened competition from traditional asset managers, banks, insurance
companies and, particularly in recent years, hedge funds, has driven up the
costs of attracting and retaining key personnel and the cost of technology to
update and maintain necessary systems for effective investment management
operations continues to grow. The Board also considered that the Advisor would
like the flexibility and means to increase the capacity of its investment
management staff and expand the depth and scope of analyst coverage, to enhance
its investment management services to the Funds.
Economies of Scale. The Board considered whether the Advisor has or would
experience economies of scale on any of the Funds, and whether the proposed fees
should contain breakpoints. The Board carefully considered whether the proposed
breakpoints would have any real effect on Fund fees. They determined that
although the breakpoints discounts appeared to be low compared to those of
competitors, this was because the stated fees under the Proposed Agreement were
already at low levels. The Board ultimately determined that imposing a modest
breakpoint schedule on the majority of the Actively Managed Funds would allow
some of the savings gained from the growth of assets and economies of scale to
be passed on to Fund shareholders. The Board expects to review the level of
breakpoints as Fund assets grow.
Comparisons with Other Clients of the Advisor. The Board considered that the
Advisor provides similar investment management services to each of the
Institutional Funds, the TIAA-CREF Mutual Funds, TIAA-CREF Life Funds, and TIAA
Separate Account VA-1, although channels for distribution of interests in such
funds differ among them. In addition, the Advisor, through its TCAM division,
manages large institutional client assets through unregistered commingled funds
and separate accounts with similar investment strategies and investment staff.
The Board considered the schedule of fees for each of the comparable funds, and
determined that while the management fees may not be precisely the same for
comparable funds, there were good reasons for the divergent pricing. The Board
also considered the assurances of the Advisor that the pricing on those
affiliated funds that was not in line with the proposed advisory fees would be
revisited.
Other Benefits. At the Board's request, the Advisor agreed to continue to be
willing to cap "other expenses" of the Funds and to waive a portion of its fees
on the Growth Equity and Growth & Income Funds, until such time as their
performance improves. The Board also considered that the fee increase would help
ensure that the expenses for
35
running the Funds that are paid by the Advisor are not indirectly borne (in the
form of reduced declared dividends) by the TIAA participant base, some of who
are shareholders of the Funds. Finally, the Board considered that with the
Proposed Agreement, the Advisor would have the flexibility to support multiple
opportunities to expand the channels through which the Funds are distributed,
thereby increasing asset growth and enabling expenses to be spread over a wider
asset base.
Based on its evaluation of all material factors and with the assistance of
independent counsel, the Board concluded that the proposed advisory fee
structure is fair and reasonable to each of the Funds, its shareholders, and to
the Advisor.
What Is The Overall Impact Of The Proposal On The Funds' Total Expense Ratios?
The tables below provide data concerning each Fund's fees and expenses (for each
share class) as a percentage of average net assets for each Fund's most recent
full fiscal year ended September 30, 2004 under the Current Agreement and if the
Proposed Agreement had been in effect during the same period. Note that, as
indicated above, if the new arrangements had been in effect for the most
recently completed fiscal years, each Fund's total expense ratio would have been
less than the median expense ratio for its peer group of mutual funds, and, in
some cases, significantly less.
INSTITUTIONAL CLASS
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
GROWTH EQUITY FUND
Current 0.08% 0.07% 0.15% 0.01% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.07% 0.52% 0.39% 0.13%
- ----------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND
Current 0.08% 0.06% 0.14% -- 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.05% 0.50% 0.37% 0.13%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current 0.09% 0.11% 0.20% -- 0.20%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.06% 0.56% -- 0.56%
- ----------------------------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Current 0.08% 0.09% 0.17% 0.03% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.03% 0.48% -- 0.48%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.09% 0.17% 0.02% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.14% 0.62% 0.07% 0.55%
- ----------------------------------------------------------------------------------------------------
36
INSTITUTIONAL CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
MID-CAP VALUE FUND
Current 0.08% 0.09% 0.17% 0.02% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.11% 0.59% 0.04% 0.55%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.12% 0.20% 0.05% 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.08% 0.56% 0.01% 0.55%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
EQUITY INDEX FUND
Current 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
S&P 500 INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.04% 0.08% -- 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current 0.04% 0.07% 0.11% 0.03% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.11% 0.15% 0.07% 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current 0.04% 0.05% 0.09% 0.01% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.09% 0.13% 0.05% 0.08%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.08% 0.12% 0.04% 0.08%
- ----------------------------------------------------------------------------------------------------
37
INSTITUTIONAL CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
SMALL-CAP BLEND INDEX FUND
Current 0.04% 0.06% 0.10% 0.02% 0.08%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.10% 0.14% 0.06% 0.08%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current 0.04% 0.11% 0.15% -- 0.15%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.12% 0.16% 0.01% 0.15%
- ----------------------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current 0.04% 0.06% 0.10% -- 0.10%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.15% 0.05% 0.20% -- 0.20%
- ----------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current 0.09% 0.07% 0.16% -- 0.16%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.06% 0.56% 0.01% 0.55%
- ----------------------------------------------------------------------------------------------------
BOND FUND
Current 0.08% 0.06% 0.14% -- 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.03% 0.33% -- 0.33%
- ----------------------------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current 0.09% 0.06% 0.15% 0.01% 0.14%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.04% 0.34% -- 0.34%
- ----------------------------------------------------------------------------------------------------
MONEY MARKET FUND
Current 0.04% 0.05% 0.09% -- 0.09%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.15% -- 0.15%
- ----------------------------------------------------------------------------------------------------
RETIREMENT CLASS
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
GROWTH & INCOME FUND
Current 0.08% 0.45% 0.53% 0.09% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 4.22% 4.67% 4.29% 0.38%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current 0.09% 0.49% 0.58% 0.03% 0.55%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.37% 0.87% 0.07% 0.80%
- ----------------------------------------------------------------------------------------------------
38
RETIREMENT CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
LARGE-CAP VALUE FUND
Current 0.08% 0.43% 0.51% 0.03% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.34% 0.79% 0.04% 0.75%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.46% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.35% 0.83% 0.05% 0.78%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current 0.08% 0.44% 0.52% 0.04% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.34% 0.82% 0.04% 0.78%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.46% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.37% 0.85% 0.07% 0.78%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current 0.04% 0.48% 0.52% 0.10% 0.42%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.45% 0.49% 0.15% 0.34%
- ----------------------------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current 0.04% 0.93% 0.97% 0.53% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 4.37% 4.41% 4.07% 0.34%
- ----------------------------------------------------------------------------------------------------
S&P 500 INDEX FUND
Current 0.04% 0.44% 0.48% 0.04% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.35% 0.39% 0.05% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current 0.04% 0.69% 0.73% 0.29% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 5.34% 5.38% 5.04% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current 0.04% 0.96% 1.00% 0.56% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 8.02% 8.06% 7.72% 0.34%
- ----------------------------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current 0.04% 0.62% 0.66% 0.22% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 0.82% 0.86% 0.52% 0.34%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current 0.04% 0.63% 0.67% 0.23% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 1.99% 2.03% 1.69% 0.34%
- ----------------------------------------------------------------------------------------------------
39
RETIREMENT CLASS continued
Total Annual Net Annual
Fund Fund
Management Other Operating Expense Operating
Fees Expenses Expenses Reimbursement Expenses
====================================================================================================
SMALL-CAP VALUE INDEX FUND
Current 0.04% 0.87% 0.91% 0.47% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 2.47% 2.51% 2.17% 0.34%
- ----------------------------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current 0.04% 0.73% 0.77% 0.33% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 5.44% 5.48% 5.14% 0.34%
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current 0.04% 0.46% 0.50% -- 0.50%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.04% 3.88% 3.92% 3.51% 0.41%
- ----------------------------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current 0.04% 0.48% 0.52% 0.08% 0.44%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.15% 0.39% 0.54% 0.06% 0.48%
- ----------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current 0.09% 0.41% 0.50% 0.03% 0.47%
- ----------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.34% 0.84% 0.03% 0.81%
- ----------------------------------------------------------------------------------------------------
RETAIL CLASS
Total Annual Net Annual
Fund Fund
Management Distribution Other Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Reimbursement Expenses
======================================================================================================================
LARGE-CAP VALUE FUND
Current 0.08% 0.00% 0.41% 0.49% 0.05% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.45% 0.25% 0.29% 0.99% 0.19% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current 0.08% 0.00% 0.43% 0.51% 0.07% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.35% 0.29% 1.08% 0.23% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current 0.08% 0.00% 0.43% 0.51% 0.07% 0.44%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.25% 0.29% 1.02% 0.17% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current 0.08% 0.00% 0.30% 0.38% 0.08% 0.30%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.48% 0.25% 0.43% 1.16% 0.31% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIE S FUND
Current 0.09% 0.00% 0.41% 0.50% 0.05% 0.45%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.50% 0.25% 0.24% 0.99% 0.09% 0.90%
- ----------------------------------------------------------------------------------------------------------------------
40
RETAIL CLASS continued
Total Annual Net Annual
Fund Fund
Management Distribution Other Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Reimbursement Expenses
======================================================================================================================
INFLATION-LINKED BOND FUND
Current 0.09% 0.00% 0.24% 0.33% 0.03% 0.30%
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma 0.30% 0.25% 0.25% 0.80% 0.30% 0.50%
- ----------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUNDS*
Gross Annual
Total Annual Underlying Net Annual
Fund Fund Fund
Management Distribution Other Operating Operating Expense Operating
Fees (12b-1) Fees Expenses Expenses Expenses Reimbursement Expenses
====================================================================================================================================
LIFECYCLE FUND -- 2010 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.19% 0.05% 0.60%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.35% 0.10% 0.71%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.19% 0.04% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.11% 0.71%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.10% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.36% 0.10% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.20% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.21% 0.06% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND
Current 0.10% 0.05% 0.31% 0.46% 0.21% 0.06% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma 0.10% 0.05% 0.31% 0.46% 0.37% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------------------
* The "Other Expenses" of the Lifecycle Funds include the expenses of the
underlying Funds in which they invest, which are reduced by the waivers noted
above.
Note that the Board obtained the Advisor's agreement to waive the Lifecycle
Funds' investment management fees if the fee increases on the Institutional
Funds in which the Lifecycle Funds invest are approved by shareholders.
41
The following example indicates the expenses you would pay under the current and
proposed expense structures, assuming an initial investment of $10,000, a 5%
total annual return each year, and redemption at the end of each period. This
example also assumes that there will be no expense reimbursement in place after
one year, except for the Index Funds, which will have their current expense
reimbursement in place for five years. Your actual cost may be higher or lower.
INSTITUTIONAL CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
GROWTH EQUITY FUND
Current $14 $ 47 $ 84 $191
- --------------------------------------------------------------------------------
Pro Forma $13 $128 $ 254 $626
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Current $14 $ 45 $ 79 $179
- --------------------------------------------------------------------------------
Pro Forma $13 $123 $ 244 $602
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current $20 $ 64 $ 113 $255
- --------------------------------------------------------------------------------
Pro Forma $57 $179 $ 313 $701
- --------------------------------------------------------------------------------
LARGE-CAP VALUE FUND
Current $14 $ 52 $ 93 $214
- --------------------------------------------------------------------------------
Pro Forma $49 $154 $ 269 $604
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $15 $ 53 $ 94 $215
- --------------------------------------------------------------------------------
Pro Forma $56 $192 $ 339 $770
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $15 $ 53 $ 94 $215
- --------------------------------------------------------------------------------
Pro Forma $56 $185 $ 326 $735
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current $15 $ 59 $ 108 $250
- --------------------------------------------------------------------------------
Pro Forma $56 $178 $ 312 $701
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Current $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
42
INSTITUTIONAL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
S&P 500 INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 26 $ 45 $103
- --------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND
Current $ 8 $ 32 $ 59 $138
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 41 $ 78 $185
- --------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND
Current $ 8 $ 28 $ 50 $114
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 37 $ 68 $162
- --------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 35 $ 64 $150
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current $ 8 $ 30 $ 54 $126
- --------------------------------------------------------------------------------
Pro Forma $ 8 $ 39 $ 73 $174
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current $15 $ 48 $ 85 $192
- --------------------------------------------------------------------------------
Pro Forma $15 $ 51 $ 89 $204
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $16 $ 52 $ 90 $205
- --------------------------------------------------------------------------------
Pro Forma $56 $178 $312 $701
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current $10 $ 32 $ 56 $128
- --------------------------------------------------------------------------------
Pro Forma $20 $ 64 $113 $255
- --------------------------------------------------------------------------------
BOND FUND
Current $14 $ 45 $ 79 $179
- --------------------------------------------------------------------------------
Pro Forma $34 $106 $185 $418
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current $14 $ 47 $ 84 $191
- --------------------------------------------------------------------------------
Pro Forma $35 $109 $191 $431
- --------------------------------------------------------------------------------
43
INSTITUTIONAL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
MONEY MARKET FUND
Current $ 9 $29 $ 51 $115
- --------------------------------------------------------------------------------
Pro Forma $15 $48 $ 85 $192
- --------------------------------------------------------------------------------
RETIREMENT CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
GROWTH & INCOME FUND
Current $45 $ 161 $ 287 $ 656
- --------------------------------------------------------------------------------
Pro Forma $39 $1,062 $2,181 $5,465
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Current $56 $ 183 $ 321 $ 723
- --------------------------------------------------------------------------------
Pro Forma $82 $ 271 $ 476 $1,069
- --------------------------------------------------------------------------------
LARGE-CAP VALUE FUND
Current $49 $ 161 $ 282 $ 638
- --------------------------------------------------------------------------------
Pro Forma $77 $ 248 $ 435 $ 976
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $49 $ 167 $ 296 $ 671
- --------------------------------------------------------------------------------
Pro Forma $80 $ 260 $ 456 $1,023
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $49 $ 163 $ 287 $ 649
- --------------------------------------------------------------------------------
Pro Forma $80 $ 258 $ 451 $1,012
- --------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND
Current $49 $ 167 $ 296 $ 671
- --------------------------------------------------------------------------------
Pro Forma $80 $ 264 $ 465 $1,046
- --------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND
Current $43 $ 157 $ 281 $ 643
- --------------------------------------------------------------------------------
Pro Forma $35 $ 142 $ 260 $ 605
- --------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND
Current $45 $ 256 $ 485 $1,141
- --------------------------------------------------------------------------------
Pro Forma $35 $1,001 $2,060 $5,170
- ------------- --- ------ ------ ------
S&P 500 INDEX FUND
Current $45 $ 150 $ 265 $ 600
- --------------------------------------------------------------------------------
Pro Forma $35 $ 120 $ 214 $ 489
- --------------------------------------------------------------------------------
MID-CAP-GROWTH INDEX FUND
Current $45 $ 204 $ 377 $ 879
- --------------------------------------------------------------------------------
Pro Forma $35 $1,214 $2,506 $6,300
- --------------------------------------------------------------------------------
44
RETIREMENT CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
MID-CAP VALUE INDEX FUND
Current $45 $ 263 $ 498 $1,174
- --------------------------------------------------------------------------------
Pro Forma $35 $1,801 $3,737 $9,421
- --------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND
Current $45 $ 189 $ 346 $ 802
- --------------------------------------------------------------------------------
Pro Forma $35 $ 223 $ 430 $1,036
- --------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND
Current $45 $ 191 $ 350 $ 813
- --------------------------------------------------------------------------------
Pro Forma $35 $ 480 $ 967 $2,399
- --------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND
Current $45 $ 243 $ 458 $1,076
- --------------------------------------------------------------------------------
Pro Forma $35 $ 585 $1,188 $2,958
- --------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND
Current $45 $ 213 $ 395 $ 923
- --------------------------------------------------------------------------------
Pro Forma $35 $1,236 $2,552 $6,416
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Current $51 $ 160 $ 280 $ 628
- --------------------------------------------------------------------------------
Pro Forma $42 $ 900 $1,839 $4,589
- --------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND
Current $45 $ 159 $ 283 $ 645
- --------------------------------------------------------------------------------
Pro Forma $49 $ 167 $ 296 $ 673
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $48 $ 157 $ 277 $ 625
- --------------------------------------------------------------------------------
Pro Forma $83 $ 265 $ 463 $1,036
- --------------------------------------------------------------------------------
RETAIL CLASS
1 Year 3 Years 5 Years 10 Years
================================================================================
LARGE-CAP VALUE FUND
Current $45 $152 $269 $ 611
- --------------------------------------------------------------------------------
Pro Forma $82 $297 $530 $1,205
- --------------------------------------------------------------------------------
MID-CAP GROWTH FUND
Current $45 $156 $278 $ 634
- --------------------------------------------------------------------------------
Pro Forma $87 $321 $575 $1,309
- --------------------------------------------------------------------------------
MID-CAP VALUE FUND
Current $45 $156 $278 $ 634
- --------------------------------------------------------------------------------
Pro Forma $87 $308 $548 $1,241
- --------------------------------------------------------------------------------
45
RETAIL CLASS continued
1 Year 3 Years 5 Years 10 Years
================================================================================
SMALL-CAP EQUITY FUND
Current $31 $114 $205 $ 473
- --------------------------------------------------------------------------------
Pro Forma $87 $339 $612 $1,400
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
Current $46 $155 $275 $ 623
- --------------------------------------------------------------------------------
Pro Forma $92 $307 $539 $1,209
- --------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND
Current $31 $103 $182 $ 415
- --------------------------------------------------------------------------------
Pro Forma $51 $226 $417 $ 975
- --------------------------------------------------------------------------------
LIFECYCLE FUNDS
1 Year 3 Years 5 Years 10 Years
================================================================================
LIFECYCLE FUND -- 2010 FUND
Current $61 $203 $358 $ 809
- --------------------------------------------------------------------------------
Pro Forma $73 $249 $441 $ 997
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2015 FUND
Current $62 $204 $359 $ 808
- --------------------------------------------------------------------------------
Pro Forma $73 $251 $445 $1,008
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2020 FUND
Current $62 $206 $363 $ 819
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $446 $1,009
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2025 FUND
Current $62 $206 $363 $ 819
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $446 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2030 FUND
Current $62 $206 $363 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $252 $451 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2035 FUND
Current $62 $208 $368 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $254 $451 $1,020
- --------------------------------------------------------------------------------
LIFECYCLE FUND -- 2040 FUND
Current $62 $208 $368 $ 831
- --------------------------------------------------------------------------------
Pro Forma $74 $254 $451 $1,020
- --------------------------------------------------------------------------------
46
ADDITIONAL INFORMATION
Beneficial Ownership
Except as set forth in Exhibit G, as of May 31, 2005, Institutional Funds does
not know of any person who owns beneficially or of record 5% or more of the
outstanding shares of any class of any Fund. As of that same date, the Trustees
and officers of Institutional Funds, individually and in the aggregate, owned
less than 1% of any class of any Fund, except as noted below.
Name Fund and Class Shares Percentage
================================================================================================
Herbert M. Allison, Jr. Large-Cap Value Fund (Retail Class) 95,206.65 2.11%
- ------------------------------------------------------------------------------------------------
Scott C. Evans Lifecycle Fund - 2025 Fund 55,981.47 28.01%
- ------------------------------------------------------------------------------------------------
Distributor
The shares of the Funds are distributed by TPIS, a subsidiary of TIAA that is
registered as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. The TIAA Board of Overseers, a New York membership
corporation, owns all of the stock of TIAA. The address for TPIS is 730 Third
Avenue, New York, New York 10017-3206.
OTHER MATTERS
Means of Soliciting Proxies
This proxy solicitation will be conducted mainly by mail, telephone, and the
Internet, but it may also be by any other method of electronic communication or
by personal interview. The Funds have retained D. F. King & Co., Inc. of New
York, NY ("DF King") to assist in the solicitation of proxies. The costs of
retaining DF King, which are anticipated to be $98,000, and other expenses
incurred in connection with the drafting, printing and mailing of this proxy
statement, the solicitation of proxies and the holding of the special meeting,
will be borne by the Advisor, and not by any of the Funds.
Proposals of Persons with Voting Rights
As a general matter, Institutional Funds does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of Institutional Funds' shareholders should send
such proposals to the Funds' Secretary. Proposals must be received a reasonable
amount of time prior to any meeting to be included in the proxy materials.
Moreover, inclusion of such proposals is subject to limitations under the
federal securities laws. Persons named as proxies for any subsequent
shareholders' meeting will vote in their discretion with respect to proposals
submitted on an untimely basis.
47
Annual Reports
If you would like a free copy of the Institutional Funds' most recent
semi-annual and annual reports, you can visit the TIAA-CREF web site at
www.tiaa-cref.org or use our on-line request form to request mailed versions.
Alternatively, you can call 1 877 518-9161 or write to us at 730 Third Avenue,
New York, New York 10017-3206 to request copies of these documents.
48
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT FOR TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
THIS AGREEMENT is made this [___] day of [__], 2005, by and between
TIAA-CREF Institutional Mutual Funds (the "Trust"), a Delaware statutory trust,
and Teachers Advisors, Inc. (the "Advisor"), a Delaware corporation.
WHEREAS, Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
currently consists of several series divided into various classes (listed on
Appendix A hereto), and may consist of additional series or classes in the
future (collectively, the "Funds");
WHEREAS, Advisor is engaged principally in the business of rendering
investment advisory and management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act");
WHEREAS, Trust desires to retain Advisor to render investment advisory and
management services to the Funds, in the manner and on the terms and conditions
set forth in this Agreement;
WHEREAS, Advisor is willing to provide investment advisory and management
services to the Funds in the manner and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Trust and Advisor hereby agree as follows:
1. Appointment.
Trust hereby appoints Advisor to act as the Funds' investment adviser and
manager for the periods and on the terms set forth herein. Advisor hereby
accepts the appointment as investment adviser and manager, and agrees, subject
to the supervision of the board of trustees of Trust (the "Board"), to furnish
the services and assume the obligations set forth in this Agreement for the
compensation provided for herein.
2. Generally.
(a) As the Funds' investment adviser and manager, Advisor shall be
subject to: (1) the restrictions of the Declaration of Trust of Trust, as
amended from time to time; (2) the provisions of the 1940 Act and the Advisers
Act; (3) the statements relating to the Funds' investment objectives, investment
policies and investment restrictions as set forth in the currently effective
(and as amended from time to time) registration statement of Trust under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act; (4) any
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"); and such other limitations as Trust shall communicate to Advisor in
writing.
A-1
(b) Advisor shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent Trust or a Fund in any way
or otherwise be deemed an agent of Trust or a Fund.
(c) Advisor shall, for purposes of this Agreement, have and exercise
full investment discretion and authority to act as agent for the Funds in
buying, selling or otherwise disposing of or managing the Funds' investments,
directly or through sub-advisers, subject to supervision by the Board.
3. Investment Advisory Services
(a) Advisor shall provide the Funds with such investment research,
advice and supervision as Advisor may from time to time consider necessary or
appropriate for the proper management of the assets of each Fund, shall furnish
continuously an investment program for each Fund, shall determine which
securities or other investments shall be purchased, sold or exchanged and what
portions of each Fund shall be held in the various securities or other
investments or cash, and shall take such steps as are necessary to implement an
overall investment plan for each Fund, including providing or obtaining such
services as may be necessary in managing, acquiring or disposing of securities,
cash or other investments.
(b) Trust has furnished or will furnish Advisor with copies of Trust's
registration statement and Declaration of Trust, as currently in effect and
agrees during the continuance of this Agreement to furnish Advisor with copies
of any amendments or supplements thereto before or at the time the amendments or
supplements become effective. Advisor will be entitled to rely on all documents
furnished by Trust.
(c) Advisor shall take, on behalf of each Fund, all actions that it
deems necessary to implement the investment policies of such Fund, and in
particular, to place all orders for the purchase or sale of portfolio
investments for the account of each Fund with brokers, dealers, futures
commission merchants or banks selected by Advisor. Advisor also is authorized as
the agent of Trust to give instructions to any service provider serving as
custodian of the Funds as to deliveries of securities and payments of cash for
the account of each Fund. In selecting brokers or dealers and placing purchase
and sale orders with respect to assets of a Fund, Advisor is directed at all
times to seek to obtain best execution within the policy guidelines determined
by the Board and set forth in the current registration statement. Subject to
this requirement and the provisions of the 1940 Act, the Advisers Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and other
applicable provisions of law, Advisor may select brokers or dealers that are
affiliated with Advisor or Trust.
(d) Consistent with Advisor's obligation to provide best execution,
Advisor may also take into consideration research and statistical information,
wire, quotation and other services provided by brokers and dealers to Advisor.
Advisor is also authorized to effect individual securities transactions at
commission rates in excess of the minimum
A-2
commission rates available, if Advisor determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage, research
and other services provided by such broker or dealer, viewed in terms of either
that particular transaction or Advisor's overall responsibilities with respect
to each Fund. The policies with respect to brokerage allocation, determined from
time to time by the Board are those disclosed in the currently effective
registration statement. Advisor will periodically evaluate the statistical data,
research and other investment services provided to it by brokers and dealers.
Such services may be used by Advisor in connection with the performance of its
obligations under this Agreement or in connection with other advisory or
investment operations including using such information in managing its own
accounts.
(e) As part of carrying out its obligations to manage the investment
and reinvestment of the assets of each Fund consistent with the requirements
under the 1940 Act, Advisor shall:
(1) Perform research and obtain and analyze pertinent economic,
statistical, and financial data relevant to the investment
policies of each Fund as set forth in Trust's registration
statement;
(2) Consult with the Board and furnish to the Board
recommendations with respect to an overall investment strategy
for each Fund for approval, modification, or rejection by the
Board;
(3) Seek out and implement specific investment opportunities,
consistent with any investment strategies approved by the Board;
(4) Take such steps as are necessary to implement any overall
investment strategies approved by the Board for each Fund,
including making and carrying out day-to-day decisions to
acquire or dispose of permissible investments, managing
investments and any other property of the Fund, and providing or
obtaining such services as may be necessary in managing,
acquiring or disposing of investments;
(5) Regularly report to the Board with respect to the
performance of the Funds, the implementation of any approved
overall investment strategy and any other activities in
connection with management of the assets of each Fund;
(6) Maintain all required books, accounts, records, memoranda,
instructions or authorizations with respect to the
investment-related activities of the Funds;
(7) Furnish any personnel, office space, equipment and other
facilities necessary for the investment-related activities of
the Funds;
(8) Provide the Funds with such accounting or other data
concerning the Funds' investment-related activities as shall be
necessary or required to
A-3
prepare and to file all periodic financial reports or other
documents required to be filed with the Securities and Exchange
Commission and any other regulatory entity;
(9) Assist in determining each business day the net asset value of the
shares of each Fund in accordance with applicable law; and
(10) Enter into any written investment advisory or investment
sub-advisory contract with another affiliated or unaffiliated party, subject to
any approvals required by Section 15 of the 1940 Act, pursuant to which such
party will carry out some or all of Advisor's responsibilities (as specified in
such investment advisory or investment sub-advisory contract) listed above.
4. General Management Services.
(a) Advisor shall manage or supervise all aspects of the Funds'
operations, including transfer agency, dividend disbursing, legal, accounting,
administrative and shareholder services. These services may be provided by
Advisor or by third-party service providers, such as custodians, transfer agents
and fund administrators. Advisor's general management services shall include,
but not be limited to:
(1) Supervising the performance of custodians, transfer agents,
fund administrators, and other persons in any capacity deemed to
be necessary to a Fund's operations;
(2) Furnishing or overseeing the furnishing of any personnel,
office space, equipment and other facilities necessary for the
non-investment-related operations of the Fund;
(3) Calculating or monitoring the calculation of the net asset
value of each Fund at such times and in such manner as specified
in Trust's current registration statement and at such other
times upon which the parties hereto may from time to time agree;
(4) Providing or overseeing the provision of customary
accounting and auditing services for registered investment
companies and their series, including portfolio accounting,
dividend and distribution determinations, and the calculation
and preparation of any financial information or schedules, for
Trust and the Funds;
(5) Preparing and filing or supervising the preparation and
filing of all federal, state, and local tax returns and reports
relating to each Fund;
(6) Preparing and filing or supervising the preparation and
filing of any documents required to be filed on behalf of Trust
or the Funds with the Securities Exchange Commission and/or
other federal, state and local authorities as may be required by
applicable law, including proxy
A-4
materials, registration statements and post-effective amendments
thereto, shareholder reports, and Rule 24f-2 notices;
(7) Preparing and filing or supervising the preparation and
filing of notices to qualify the Funds' shares to be offered in
such states;
(8) Maintaining or overseeing the maintenance of such
non-investment activity-related books and records of the Funds
as may be required by applicable law;
(9) Providing or overseeing the organization and recordkeeping
for meetings of the Board, including preparing such materials
and reports and making its officers and employees available to
the Board for consultation and discussions regarding the
operations and management of the Funds;
(10) Developing and implementing or overseeing the development
and implementation of a program to monitor Trust's and the
Funds' compliance with regulatory requirements and the Funds'
own limitations and public statements; and
(11) Supervising or providing any other services necessary for
the ordinary operation of Trust and the Funds.
(b) Nothing in this Agreement shall be deemed to diminish the
obligations of any agent of Trust or other person not a party to this Agreement
that is obligated to provide services to the Funds.
5. Allocation of Charges and Expenses.
(a) Advisor. Advisor assumes the expense of and shall pay for the
performance of its investment-related obligations under Section 3 of the
Agreement, including the fees payable to any investment adviser or sub-adviser
engaged pursuant to Section 3(e)(10) of this Agreement, and its operational
oversight obligations under Section 4 of this Agreement, but Advisor does not
assume any of the expense of and shall not pay for any Fund's direct operational
expenses (as detailed in Section 5(b)). Advisor shall at its own expense provide
the office space, equipment and facilities that is necessary to provide the
investment-related and operational oversight services described under Sections 3
and 4, respectively, of this Agreement, and shall pay all compensation of
officers of Trust and all trustees of Trust who are affiliated persons of
Advisor, except as otherwise specified in this Agreement.
(b) Fund. Except as provided in Section 5(a), each Fund shall bear all
of its operational expenses including, but not limited to: compensation of
Advisor under this Agreement, custodian fees; transfer agent fees; pricing costs
(including the daily calculation of net asset value); fund accounting fees;
legal fees; expenses of shareholders' and/or trustees' meetings; cost of
printing and mailing shareholder reports
A-5
and proxy statements; maintenance of non-investment-related books and records,
compliance program development and implementation costs, costs of preparing,
printing and mailing registration statements and updated prospectuses to current
shareholders; costs in connection with the registration or qualification of
shares with federal and state securities authorities and the continued
qualification of shares for sale; expenses of all audits by Trust's independent
accountants, costs of preparing and filing reports with regulatory bodies; costs
of the maintenance of Trust's fidelity bond required by Section 17(g) of the
1940 Act, or other insurance premiums; the fees of any trade association of
which the Funds are members; fees and expenses of trustees who are not
"interested persons" (as such term is defined in the 1940 Act) of Trust (the
"disinterested trustees"); brokerage commissions, dealer markups and other
expenses incurred in the acquisition or disposition of any securities or other
investments; costs, including the interest expense, of borrowing money;
preparing and filing tax returns, the payment of any taxes; and extraordinary
expenses (including extraordinary litigation expenses and extraordinary
consulting expenses).
(c) Allocation Procedures. At least annually, within [60] days of the
Trust's fiscal year end, or more frequently at the request of the Board, Advisor
will submit to the Board for review and approval at the Board's next
regularly-scheduled meeting, the allocations of all charges and expenses covered
by this Section 5 and the methodology and rationale therefore, including all
such allocations between the Trust and Advisor and between and among the Funds.
6. Compensation of Advisor.
(a) For the services rendered, the facilities furnished and expenses
assumed by Advisor, the Fund shall pay to Advisor at the end of each calendar
month an annualized fee calculated as a percentage of the average value of the
net assets each day for each Fund during that month at the annual rates set
forth at Appendix A hereto.
(b) Advisor's fee shall be accrued daily proportionately at 1/365th
(1/366th for a leap year) of the applicable annual rate set forth above. For the
purpose of accruing compensation, the net assets of each Fund shall be
determined in the manner and on the dates set forth in the Declaration of Trust
or the current registration statement of Trust and, on days on which the net
assets are not so determined, the net asset value computation to be used shall
be as determined on the immediately preceding day on which the net assets were
determined.
(c) In the event of termination of this Agreement, all compensation
due through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within fifteen business days of the
date of termination.
(d) During any period when the determination of net asset value is
suspended, the net asset value of a Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
A-6
7. Limitation of Liability.
(a) Advisor shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the management of Trust or any Fund, except (i) for willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties hereunder, and (ii) to the extent
specified in Section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation.
(b) Advisor is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust and agrees that
obligations assumed by Trust or each Fund pursuant to this Agreement shall be
limited in all cases to Trust or that Fund and its respective assets. Advisor
agrees that it shall not seek satisfaction of any such obligation from the
shareholders of Trust, nor from the trustees, officers, employees or agents of
Trust.
8. Activities of Advisor.
(a) The services of Advisor are not deemed to be exclusive, and
Advisor is free to render services to others, so long as Advisor's services
under this Agreement are not impaired. It is understood that trustees, officers,
employees and shareholders of Trust are or may become interested persons of
Advisor, as directors, officers, employees and shareholders or otherwise, and
that directors, officers, employees and shareholders of Advisor are or may
become similarly interested persons of Trust, and that Advisor may become
interested in Trust or the Funds as a shareholder or otherwise.
(b) It is agreed that Advisor may use any supplemental investment
research obtained for the benefit of the Funds in providing investment advice to
its other investment advisory accounts. Advisor or its affiliates may use such
information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for Advisor or other entities
advised by Advisor will be considered by and may be useful to Advisor in
carrying out its obligations to the Funds.
(c) Nothing in this Agreement shall preclude the aggregation of orders
for the sale or purchase of securities or other investments by two or more Funds
or by the Funds and other mutual funds, separate accounts, or other accounts
(collectively, "Advisory Clients") managed by Advisor, provided that:
(1) Advisor's actions with respect to the aggregation of orders
for multiple Advisory Clients, including the Funds, are
consistent with the then-current positions in this regard taken
by the Securities and Exchange Commission or its staff through
releases, "no-action" letters, or otherwise; and
(2) Advisor's policies with respect to the aggregation of orders
for multiple Advisory Clients have been previously submitted and
periodically approved by the Board of Trustees.
A-7
(d) Neither Advisor, nor any of its directors, officers, or personnel,
nor any person, firm, or corporation controlling, controlled by, or under common
control with it shall act as a principal or receive any commission as agent in
connection with the purchase or sale of assets for a Fund, except as may be
permitted under applicable law.
9. Books and Records.
(a) Advisor hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 and Rule 2a-7 under the 1940 Act, all
records that are required to be maintained by Trust pursuant to the requirements
of Rule 31a-1 and Rule 2a-7 of the 1940 Act.
(b) Advisor agrees that all books and records which it maintains for
Trust are the property of Trust and further agrees to surrender promptly to
Trust any such books, records or information upon Trust's request. All such
books and records shall be made available, within five business days of a
written request, to Trust's accountants or independent registered public
accounting firm during regular business hours at Advisor's offices. Trust or its
authorized representative shall have the right to copy any records in the
possession of Advisor that pertain to Trust or the Funds. Such books, records,
information or reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to Trust free from any claim or assertion of
rights by Advisor.
(c) Advisor further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if Trust has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
10. Duration and Termination of this Agreement.
(a) This Agreement shall not become effective with respect to a Fund
unless and until it is approved by the Board, including a majority of trustees
who are not parties to this Agreement or interested persons of any such party,
and by the vote of a majority of the outstanding voting shares of such Fund.
This Agreement shall come into full force and effect on the date that it is so
approved, provided that it shall not become effective as to any subsequently
created Fund until it has been approved by the Board specifically for such Fund.
As to each Fund, the Agreement shall continue in effect for two years from the
date on which it becomes effective and shall thereafter continue in effect from
year to year so long as such continuance is specifically approved for such Fund
at least annually by: (i) the Board, or by the vote of a majority of the
outstanding voting shares of such Fund; and (ii) a majority of those trustees
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
A-8
(b) This Agreement may be terminated at any time as to any Fund or to
all Funds, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding voting shares of the applicable Fund, or by Advisor,
on 60 days' written notice to the other party. If this Agreement is terminated
only with respect to one or more, but less than all, of the Funds, or if a
different investment adviser is appointed with respect to a new Fund, the
Agreement shall remain in effect with respect to the remaining Fund(s).
(c) This Agreement shall automatically terminate in the event of its
assignment.
11. Amendments of this Agreement. This Agreement may be amended as to each
Fund only in accordance with the provisions of the 1940 Act.
12. Definitions of Certain Terms. The terms "assignment," "affiliated
person," "interested person," and "majority of the outstanding voting shares"
when used in this Agreement, shall have the respective meanings specified in the
1940 Act.
13. Governing Law. This Agreement shall be construed in accordance with
laws of the State of New York, and applicable provisions of the 1940 Act, the
Advisers Act, and the 1934 Act.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
16. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand or mailed first class,
postage prepaid, addressed as follows:
(a) If to Trust or the Funds --
TIAA-CREF Institutional Mutual Funds 730 Third Avenue New York, New
York 10017-3206 Attention: [ ]
(b) If to Advisor --
Teachers Advisors, Inc.
730 Third Avenue
New York, New York 10017-3206
Attention: Scott Evans
A-9
or to such other address as Trust or Advisor shall designate by written notice
to the other.
17. Miscellaneous. Captions in this Agreement are included for convenience
or reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
A-10
IN WITNESS WHEREOF, Trust and Advisor have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers on the day and year first above written.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
By:_________________________________ Attest:___________________________________
Title:______________________________ Title:____________________________________
TEACHERS ADVISORS, INC.
By:_________________________________ Attest:___________________________________
Title:______________________________ Title:____________________________________
A-11
APPENDIX A
International Equity Fund
Real Estate Securities Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $1.0 0.50%
- --------------------------------------------------------------------------------------------------------
Over $1.0 - $2.5 0.48%
- --------------------------------------------------------------------------------------------------------
Over $2.5 - $4.0 0.46%
- --------------------------------------------------------------------------------------------------------
Over $4.0 0.44%
- --------------------------------------------------------------------------------------------------------
Growth Equity Fund
Growth & Income Fund
Large-Cap Value Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $1.0 0.45%
- --------------------------------------------------------------------------------------------------------
Over $1.0 - $2.5 0.43%
- --------------------------------------------------------------------------------------------------------
Over $2.5 - $4.0 0.41%
- --------------------------------------------------------------------------------------------------------
Over $4.0 0.39%
- --------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Mid-Cap Value Fund
Small-Cap Equity Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $0.5 0.48%
- --------------------------------------------------------------------------------------------------------
Over $0.5 - $0.75 0.46%
- --------------------------------------------------------------------------------------------------------
Over $0.75 - $1.00 0.44%
- --------------------------------------------------------------------------------------------------------
Over $1.0 0.42%
- --------------------------------------------------------------------------------------------------------
High-Yield Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $1.0 0.35%
- --------------------------------------------------------------------------------------------------------
Over $1.0 - $2.5 0.34%
- --------------------------------------------------------------------------------------------------------
Over $2.5 - $4.0 0.33%
- --------------------------------------------------------------------------------------------------------
Over $4.0 0.32%
- --------------------------------------------------------------------------------------------------------
Bond Fund
Bond Plus Fund
Inflation-Linked Bond Fund
Tax-Exempt Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $1.0 0.30%
- --------------------------------------------------------------------------------------------------------
Over $1.0 - $2.5 0.29%
- --------------------------------------------------------------------------------------------------------
Over $2.5 - $4.0 0.28%
- --------------------------------------------------------------------------------------------------------
Over $4.0 0.27%
- --------------------------------------------------------------------------------------------------------
Short-Term Bond Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
$0.0 - $1.0 0.25%
- --------------------------------------------------------------------------------------------------------
Over $1.0 - $2.5 0.24%
- --------------------------------------------------------------------------------------------------------
Over $2.5 - $4.0 0.23%
- --------------------------------------------------------------------------------------------------------
Over $4.0 0.22%
- --------------------------------------------------------------------------------------------------------
Large-Cap Growth Index Fund
Large-Cap Value Index Fund
Equity Index Fund
S&P 500 Index Fund
Mid-Cap Growth Index Fund
Mid-Cap Value Index Fund
Mid-Cap Blend Index Fund
Small-Cap Growth Index Fund
Small-Cap Value Index Fund
Small-Cap Blend Index Fund
International Equity Index Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
All Assets 0.04%
- --------------------------------------------------------------------------------------------------------
Social Choice Equity Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
All Assets 0.15%
- --------------------------------------------------------------------------------------------------------
Managed Allocation Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
All Assets 0.00%
- --------------------------------------------------------------------------------------------------------
Money Market Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
All Assets 0.10%
- --------------------------------------------------------------------------------------------------------
Lifecycle Fund -- 2010 Fund
Lifecycle Fund -- 2015 Fund
Lifecycle Fund -- 2020 Fund
Lifecycle Fund -- 2025 Fund
Lifecycle Fund -- 2030 Fund
Lifecycle Fund -- 2035 Fund
Lifecycle Fund -- 2040 Fund
Assets Under Management (Billions) Fee Rate (average daily net assets)
========================================================================================================
All Assets 0.10%
- --------------------------------------------------------------------------------------------------------
A-12
EXHIBIT B
Information Regarding Directors and Principal Officer
of the Advisor
Position
with the Principal
Name and Address Advisor Occupation
=======================================================================================================
Scott C. Evans Director, President and Chief Director Executive Vice President and Chief
TIAA-CREF Executive Officer Investment Officer of TIAA and the TIAA-CREF
730 Third Avenue Funds; President and Chief Executive Officer of
New York, NY Investment Management and Advisors; and
10017-3206 Director of TIAA-CREF Life.
Erwin W. Martens Director Executive Vice President, Risk Management, of
TIAA-CREF TIAA and the TIAA-CREF Funds; Director of
730 Third Avenue Services, TPIS, Tuition Financing and TIAA-
New York, NY CREF Life; and Manager of Investment
10017-3206 Management
Russell Noles Director Vice President and Acting Chief Financial
TIAA-CREF Officer of TIAA and the TIAA-CREF Funds; Vice
730 Third Avenue President of Advisors, TPIS, Tuition Financing
New York, NY and Investment Management and Services;
10017-3206 Director of TPIS, Tuition Financing; and
Manager of Investment Management and
Services.
B-1
EXHIBIT C
Rate of Waivers or
Name of Fund Net Assets(1) Compensation(2)(3) Reimbursements
=======================================================================================================
TIAA-CREF Life Funds
Growth & Income Fund $ 46,687,734 0.23% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Growth Equity Fund $ 26,749,924 0.25% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
International Equity Fund $ 54,356,079 0.29% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Large-Cap Value Fund $ 44,669,334 0.24% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Small-Cap Equity Fund $ 45,514,066 0.10% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds Real
Estate Securities Fund $ 64,171,802 0.25% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Stock Index Fund $142,898,809 0.06% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Social Choice Equity Fund $ 27,829,820 0.07% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds Bond Fund $ 62,120,852 0.10% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Life Funds
Money Market Fund $ 31,359,347 0.06% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
International Equity Fund $357,215,755 0.49% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Growth Equity Fund $541,723,644 0.45% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Growth & Income Fund $512,843,301 0.43% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Social Choice Equity Fund $131,929,828 0.27% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Equity Index Fund $350,281,375 0.26% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Money Market Fund $601,850,550 0.29% None
- -------------------------------------------------------------------------------------------------------
TIAA-CREF Mutual Funds
Bond Plus Fund $475,639,913 0.30% None
- -------------------------------------------------------------------------------------------------------
TIAA Separate Account VA-1 $895,287,922 0.30% Waived down to 0.07%
- -------------------------------------------------------------------------------------------------------
(1) As of May 27, 2005.
(2) As a percentage of average daily net assets.
(3) The fees paid to the Advisor by the Funds in this chart are unitary fees
and include expenses other than management fees.
C-1
EXHIBIT D
Advisor's Caps on "Other Expenses" for Retirement
and Institutional Class Shares
Institutional Class Retirement Class
=============================================================================
Growth Equity Fund 0.05% 0.30%
- -----------------------------------------------------------------------------
Growth & Income Fund 0.05% 0.30%
- -----------------------------------------------------------------------------
International Equity Fund 0.10% 0.30%
- -----------------------------------------------------------------------------
Large-Cap Value Fund 0.05% 0.30%
- -----------------------------------------------------------------------------
Mid-Cap Growth Fund 0.07% 0.30%
- -----------------------------------------------------------------------------
Mid-Cap Value Fund 0.07% 0.30%
- -----------------------------------------------------------------------------
Small-Cap Equity Fund 0.07% 0.30%
- -----------------------------------------------------------------------------
Large-Cap Growth Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Large-Cap Value Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Equity Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
S&P 500 Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Mid-Cap Growth Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Mid-Cap Value Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Mid-Cap Blend Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Small-Cap Growth Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Small-Cap Value Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
Small-Cap Blend Index Fund 0.04% 0.30%
- -----------------------------------------------------------------------------
International Equity Index Fund 0.11% 0.37%
- -----------------------------------------------------------------------------
Social Choice Equity Fund 0.05% 0.33%
- -----------------------------------------------------------------------------
Real Estate Securities Fund 0.05% 0.31%
- -----------------------------------------------------------------------------
Bond Fund 0.05% 0.20%
- -----------------------------------------------------------------------------
Inflation-Linked Bond Fund 0.05% 0.25%
- -----------------------------------------------------------------------------
Money Market Fund 0.05% 0.25%
- -----------------------------------------------------------------------------
D-1
Advisor's Caps on "Total Expenses" for Retail Class Shares
Retail Class
==========================================================================
Large-Cap Value Fund 0.80%
- --------------------------------------------------------------------------
Mid-Cap Growth Fund 0.85%
- --------------------------------------------------------------------------
Mid-Cap Value Fund 0.85%
- --------------------------------------------------------------------------
Small-Cap Equity Fund 0.85%
- --------------------------------------------------------------------------
Real Estate Securities Fund 0.90%
- --------------------------------------------------------------------------
Inflation-Linked Bond Fund 0.50%
- --------------------------------------------------------------------------
D-2
EXHIBIT E
Service Agreement Payments
(for the 12 months ended December 31, 2004)
FUND CURRENT FEES PRO FORMA FEES* % DECREASE
===================================================================================
GROWTH EQUITY FUND $ 39,993 - 0.0%
- -----------------------------------------------------------------------------------
GROWTH & INCOME FUND $358,700 $ 74,965 79.10%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND $384,412 $170,371 55.68%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE FUND $614,984 $140,783 77.11%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH FUND $410,722 $182,839 55.48%
- -----------------------------------------------------------------------------------
MID-CAP VALUE FUND $389,756 $199,304 48.86%
- -----------------------------------------------------------------------------------
SMALL-CAP EQUITY FUND $498,825 $273,443 45.18%
- -----------------------------------------------------------------------------------
SOCIAL CHOICE EQUITY FUND $100,318 $ 62,382 37.82%
- -----------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND $585,400 $156,118 73.33%
- -----------------------------------------------------------------------------------
BOND FUND $378,893 - 0.0%
- -----------------------------------------------------------------------------------
INFLATION-LINKED BOND FUND $235,644 - 0.0%
- -----------------------------------------------------------------------------------
MONEY MARKET FUND $ 52,334 - 0.0%
- -----------------------------------------------------------------------------------
LARGE-CAP GROWTH INDEX FUND $ 26,994 $ 14,312 46.98%
- -----------------------------------------------------------------------------------
LARGE-CAP VALUE INDEX FUND $ 26,929 $ 504 98.13%
- -----------------------------------------------------------------------------------
EQUITY INDEX FUND $148,508 - 0.0%
- -----------------------------------------------------------------------------------
S&P 500 INDEX FUND $182,646 $114,143 37.51%
- -----------------------------------------------------------------------------------
MID-CAP GROWTH INDEX FUND $ 6,100 $ 889 85.43%
- -----------------------------------------------------------------------------------
MID-CAP VALUE INDEX FUND $ 7,938 $ 487 93.86%
- -----------------------------------------------------------------------------------
MID-CAP BLEND INDEX FUND $ 11,828 $ 1,353 88.56%
- -----------------------------------------------------------------------------------
SMALL-CAP GROWTH INDEX FUND $ 15,221 $ 1,171 92.31%
- -----------------------------------------------------------------------------------
SMALL-CAP VALUE INDEX FUND $ 13,516 $ 685 94.93%
- -----------------------------------------------------------------------------------
SMALL-CAP BLEND INDEX FUND $ 26,832 $ 831 96.90%
- -----------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND $ 25,179 $ 1,480 94.12%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2010 FUND $ 887 $ 715 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2015 FUND $ 1,435 $ 1,157 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2020 FUND $ 815 $ 657 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2025 FUND $ 892 $ 719 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2030 FUND $ 775 $ 625 19.40%
- -----------------------------------------------------------------------------------
E-1
FUND CURRENT FEES PRO FORMA FEES* % DECREASE
===================================================================================
LIFECYCLE FUND--2035 FUND $772 $623 19.40%
- -----------------------------------------------------------------------------------
LIFECYCLE FUND--2040 FUND $777 $627 19.40%
- -----------------------------------------------------------------------------------
* Since a new Retirement Class Service Agreement would replace the current
Service Agreement if the new investment management arrangements are approved,
this column reflects pro forma payments by the Retirement Class only (and the
sole class of the Lifecycle Funds) since the Institutional Class and Retail
Class would no longer be subject to a Service Agreement.
E-2
EXHIBIT F
The Trustees considered the following specific factors (among others) during
their determination to approve the new investment management agreement for each
Fund listed below. Note that for purposes of this discussion, if a Fund is in
the "first" quintile, it is in the best of five groups (i.e., the group has the
best performance, or the lowest expenses, as the case may be).
Growth Equity Fund
o The Fund's new management fees would be in the first quintile of the
universe of comparable funds identified by Lipper for expense comparison
purposes ("Expense Universe") (ranking 12 out of 146 funds) (for this
purpose, rank reference is to the Institutional Class for all funds)
o The Fund outperformed its benchmark for the one-year period ended 12/31/04,
but underperformed the benchmark over the three-year, five-year and since
inception periods.
o For both the one- and three-year periods ended 12/31/04, the Fund was in the
third quintile of the universe of comparable funds identified by Lipper for
performance comparison purposes ("Performance Universe") (ranking 293 out of
539 funds for the three year period). For the five-year period ended
12/31/04, the Fund was in the fourth quintile of the Performance Universe
(ranking 305 out of 420 funds).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of two stars for the period
ended 12/31/04.
Growth & Income Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 25 of 176 funds).
o The Fund underperformed its benchmark for the one-, three- and five-year and
since inception periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 280 of 914 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (ranking 335 of 772 funds and 310
out of 592 funds, respectively).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of two stars for the period
ended 12/31/04.
F-1
o Due to underperformance against its benchmark, the Advisor replaced the
portfolio management team, and assigned new interim management until they
hired a new portfolio manager in February 2005.
Large-Cap Value Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 14 out of 96 funds).
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the first quintile
of its Performance Universe (ranking 20 out of 470 funds). (The Fund has not
been in operation for three years.)
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
Mid-Cap Growth Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 1 out of 100 funds).
o For the one-year period ended 12/31/04, the Fund was in the first quintile
of its Performance Universe (ranking 140 out of 527 funds). (The Fund has
not been in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor had a modest net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Value Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 1 out of 50 funds).
o For the one-year period ended 12/31/04, the Fund was in the first quintile
of its Performance Universe (ranking 4 out of 224 funds). (The Fund has not
been in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
F-2
Small-Cap Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 5 out of 115 funds).
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 198 out of 560 funds). (The Fund has
not been in operation for three years.)
o The Fund outperformed its benchmark for the one-year and since inception
periods ended 12/31/04.
o The Advisor earned a modest profit on the Fund for the one-year period ended
12/31/04.
Social Choice Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 3 out of 93 funds).
o The Fund outperformed its benchmark for the one-, three- and five-year
periods ended 12/31/04, underperformed its benchmark since inception through
12/31/04.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 229 out of 697 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (ranking 203 out of 501 funds and
202 out of 338 funds, respectively).
o The Fund received an Overall Morningstar Rating of three stars for the
period ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Real Estate Securities Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 8 out of 40 funds).
o The Fund slightly underperformed its benchmark for the one-year period and
outperformed its benchmark in the three-year period.
o For the one-year period ended 12/31/04, the Fund was in the third quintile
of its Performance Universe (ranking 88 out of 211 funds). (The Fund has not
been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-3
International Equity Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 14 out of 155 funds).
o The Fund underperformed its benchmark for the one- and five-year periods,
and outperformed its benchmark for the three-year and since inception
periods.
o For the one-year period ended 12/31/04, the Fund was in the third quintile
of its Performance Universe (ranking 151 out of 263 funds).
o For the three-year period ended 12/31/04, the Fund was in the second
quintile of its Performance Universe. (ranking 58 out of 226 funds)
o For the five-year period ended 12/31/04, the Fund was in the fourth quintile
of its Performance Universe. (ranking 101 out of 162 funds)
o The Fund received an Overall Morningstar Rating of three stars for the
period ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Inflation-Linked Bond Fund
o The Fund's new management fees would be in the third quintile of its Expense
Universe (ranking 6 out of 10 funds).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 12 out of 54 funds). (The Fund has not
been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Bond Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 24 out of 121 funds).
o The Fund slightly underperformed its benchmark for the one-year period and
outperformed its benchmark in the three-year, five-year and since inception
periods.
o For the one-year period ended 12/31/04, the Fund was in the second quintile
of its Performance Universe (ranking 149 out of 458 funds).
o For the three- and five-year periods ended 12/31/04, the Fund was in the
first quintile of its Performance Universe (ranking 64 out of 379 funds and
46 out of 268 funds).
F-4
o The Fund received an Overall Morningstar Rating of four stars for the period
ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Money Market Fund
o The Fund's new management fees would be in the first quintile of its Expense
Universe (ranking 12 of 249 funds).
o The Fund outperformed its benchmark for the one-year, three-year, five-year
and since inception periods.
o For the one, three- and five-year periods ended 12/31/04, the Fund was in
the first quintile of its Performance Universe (ranking 14 out of 295 funds;
31 out of 254 funds; and 37 out of 197 funds, respectively).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
International Equity Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 2 out of 11 funds -- Institutional Class) and fourth quintile
(ranking 8 out of 11 -- Retirement Class) of its Expense Universe.
o The Fund slightly underperformed its benchmark for the one-year period and
since inception periods.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the third quintile of its Performance Universe (ranking 10 out of 20
funds). (The Fund has not been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
S&P 500 Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Ranking 4 out of 54 funds -- Institutional Class) and fifth quintile
(ranking 49 out of 54 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the first quintile of its Performance Universe (ranking 5 out of 171
funds).
o For the one-year period ended 12/31/04, the Retirement Class of the Fund was
in the third quintile of its Performance Universe (ranking 81 out of 171
funds). (The Fund has not been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-5
Equity Index Fund
o The Fund's existing and proposed management fees are in the first quintile
of its Expense Universe (ranking 4 out of 32 funds).
o The Fund slightly underperformed its benchmark for the one-, three-, and
five-year and since inception periods ended 12/31/04.
o For both the one- and three-year periods ended 12/31/04, the Fund was in the
third quintile of its Performance Universe (ranking 283 out of 698 funds for
the three year period).
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
o The Fund received an Overall Morningstar Rating of three stars for the
period ended 12/31/04.
Large-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile
of its Expense Universe (ranking 1 out of 37 funds) for the Institutional
Class, and in the third quartile for the Retirement Class (ranking 21 out of
37 funds).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the third quintile of its Performance Universe (ranking 387 out of
648 funds).
o For the one-year period ended 12/31/04, the Retirement Class of the Fund was
in the fourth quintile of its Performance Universe (ranking 424 out of 648
funds). (The Fund has not been in operation for three years.)
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Large-Cap Value Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Institutional Class -- ranking 3 out of 37 Funds) and fourth quintile
(Retirement Class -- ranking 27 out of 37 Funds) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the second quintile of their
Performance Universes (The Institutional Class ranked 151 out of 478 funds).
(The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-6
Mid-Cap Blend Index Fund
o The Fund's existing and proposed management fees are in the first quintile
-- 1 out of 34 funds (Institutional Class) and fourth quintile -- 23 out of
34 funds (Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the first quintile of their
Performance Universes (ranking 43 and 47, respectively, out of 297 funds).
(The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(Institutional Class -- ranking 1 out of 38 funds) and fourth quintile
(Retirement Class -- ranking 26 of 38 funds) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the second quintile of their
Performance Universes (ranking 148 and 146, respectively, out of 527 funds).
(The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Mid-Cap Value Index Fund
o The Fund's Institutional and Retirement Class existing and proposed
management fees are both in the first quintile of the Expense Universe
(ranking 3 out of 36 funds -- Institutional and 1 out of 36 funds --
Retirement).
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the first quintile of their
Performance Universes (ranking 31 and 37, respectively, of 221 funds). (The
Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-7
Small-Cap Blend Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(ranking 2 out of 34 funds -- Institutional Class) and fourth quintile
(ranking 24 out of 34 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the third quintile of their
Performance Universes (ranking 300 and 332, respectively, out of 556 funds).
(The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Small-Cap Growth Index Fund
o The Fund's existing and proposed management fees are in the first quintile
(ranking 2 out of 37 funds -- Institutional Class) and second quintile
(ranking 10 of 37 funds -- Retirement Class) of its Expense Universe.
o For the one-year period ended 12/31/04, the Institutional Class of the Fund
was in the second quintile of its Performance Universe (ranking 144 out of
507). For this same period, the Retirement Class was in the first quintile
of its Performance Universe (ranking 38 out of 507 funds).
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
Small-Cap Value Index Fund
o The Fund's Institutional and Retirement Class existing and proposed
management fees are both in the first quintile of the Expense Universe
(ranking 3 out of 38 funds -- Institutional Class; ranking 1 out of 38 --
Retirement Class).
o For the one-year period ended 12/31/04, the Institutional Class and
Retirement Class of the Fund were both in the third quintile of their
Performance Universes (ranking 100 and 105, respectively, out of 231 funds).
(The Fund has not been in operation for three years.)
o The Fund slightly underperformed its benchmark for the one-year and since
inception periods ended 12/31/04.
o The Advisor had a net loss on the Fund for the one-year period ended
12/31/04.
F-8
Due to the fact that the advisory fees for the Lifecycle Funds would not
change under the Proposed Agreement and to the limited operating history of the
Lifecycle Funds, the Board relied upon its analysis for the initial approval of
the Lifecycle Funds' advisory arrangements in conducting its review of the
Proposed Agreement with respect to the Lifecycle Funds. During this initial
review, the Board considered that the proposed advisory fee to be paid to the
Advisor for its services to each Lifecycle Fund was within the range of the
advisory fees charged to other comparable fund of funds.
F-9
EXHIBIT G
Principal Holders of Fund Shares
The following is a list of all shareholders known by Institutional Funds to own
of record or beneficially 5% or more of any class of any of the Funds:
SEI Private Trust Company ("SEI")
One Freedom Valley Drive
Oaks, PA 19456
* The following shares are held for the benefit of customers of TIAA-CREF Trust
Company, FSB. If any particular customer individually own 5% or more of a
class of a Fund, they are also reported separately below under their own name.
Fund Percent of Holdings Shares
=============================================================================================
Bond Fund -- Institutional Class 22.26% 29,159,662
- ---------------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 24.11% 14,773,792
- ---------------------------------------------------------------------------------------------
Growth & Income -- Institutional Class 57.34% 10,392,036
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 24.41% 3,986,135
- ---------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund -- Institutional Class 14.97% 4,068,574
- ---------------------------------------------------------------------------------------------
International Equity Fund -- Institutional Class 35.08% 18,982,198
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 26.27% 2,702,816
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 18.74% 2,725,946
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 8.68% 2,411,446
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 76.08% 2,798,675
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 26.03% 322,489
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 5.80% 117,046
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 41.68% 625,945
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 7.84% 218,606
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 38.19% 6,040,815
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 32.16% 10,863,984
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 19.14% 1,835,767
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 53.05% 3,851,197
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 8.99% 449,786
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 55.45% 5,324,280
- ---------------------------------------------------------------------------------------------
G-1
TIAA-CREF Trust Company, FSB
One Metropolitan Square
211 North Broadway, Suite 1000
St. Louis, MO 63102
* These shares are held for the benefit of customers of the Trust Company by SEI
and are included in the ownership totals for SEI noted above. The Trust
Company holds these shares in a fiduciary capacity for its clients and has
investment discretion over them.
Fund Percent of Holdings Shares
=============================================================================================
International Equity Fund -- Institutional Class 32.85% 17,771,084
- ---------------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 22.13% 3,612,761
- ---------------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 28.40% 2,726,522
- ---------------------------------------------------------------------------------------------
Growth & Income -- Institutional Class 54.23% 9,827,551
- ---------------------------------------------------------------------------------------------
Inflation-Linked Bond Fund -- Institutional Class 14.94% 4,060,175
- ---------------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 15.06% 9,226,508
- ---------------------------------------------------------------------------------------------
Bond Fund -- Institutional Class 18.42% 24,116,740
- ---------------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 53.09% 3,853,571
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 41.33% 620,736
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 25.63% 317,448
- ---------------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 35.50% 5,615,132
- ---------------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 18.57% 2,700,676
- ---------------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 33.23% 11,224,976
- ---------------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 19.30% 1,985,622
- ---------------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 8.68% 2,411,446
- ---------------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 76.01% 2,795,977
- ---------------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 7.84% 218,606
- ---------------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 5.80% 117,046
- ---------------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 8.90% 445,274
- ---------------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 19.15% 1,836,220
- ---------------------------------------------------------------------------------------------
G-2
California Golden State Scholarshare College Savings Trust (529 Plan)
CA State Treasurer Office
915 Capitol Mall, Room 110
Sacramento, CA 95814
Fund Percent of Holdings Shares
=========================================================================================
International Equity Fund -- Institutional Class 8.37% 4,527,699
- -----------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 28.09% 51,787,960
- -----------------------------------------------------------------------------------------
Social Choice Equity Fund -- Institutional Class 44.54% 4,276,556
- -----------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 40.56% 5,898,446
- -----------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- Institutional Class 37.91% 14,262,324
- -----------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 19.88% 5,522,121
- -----------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 14.98% 1,087,420
- -----------------------------------------------------------------------------------------
CHET (529 Plan)
Office of the Treasurer
55 Elm Street
Hartford, CT 06106
Fund Percent of Holdings Shares
=========================================================================================
Growth & Income -- Institutional Class 14.99% 2,716,254
- -----------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 12.07% 1,754,970
- -----------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 12.90% 23,798,276
- -----------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 5.08% 368,560
- -----------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 19.74% 3,222,923
- -----------------------------------------------------------------------------------------
Equity Index Fund -- Institutional Class 13.99% 8,568,462
- -----------------------------------------------------------------------------------------
Georgia Higher Education Savings Plan (529 Plan)
PO Box 105307
Atlanta, GA 30348-5307
Fund Percent of Holdings Shares
=========================================================================================
Equity Index Fund -- Institutional Class 6.98% 4,273,567
- -----------------------------------------------------------------------------------------
The Kentucky Education Savings Plan Trust (529 Plan)
PO Box 8100
Boston, MA 02266-8100
Fund Percent of Holdings Shares
=========================================================================================
Growth & Income Fund -- Institutional Class 7.70% 1,396,290
- -----------------------------------------------------------------------------------------
G-3
Michigan Education Savings Program (529 Plan)
Executive Director--Met
Director of Treasury
PO Box 30198
Lansing, MI 48909
Fund Percent of Holdings Shares
=========================================================================================
Inflation-Linked Bond Fund -- Institutional Class 10.61% 2,882,639
- -----------------------------------------------------------------------------------------
International Equity Fund -- Institutional Class 8.13% 4,399,368
- -----------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 5.60% 1,555,930
- -----------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 19.75% 36,408,679
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Institutional Class 73.96% 915,975
- -----------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Institutional Class 58.32% 875,780
- -----------------------------------------------------------------------------------------
S&P 500 Index Fund -- Institutional Class 29.78% 10,056,598
- -----------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 36.35% 3,739,471
- -----------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 15.92% 1,155,354
- -----------------------------------------------------------------------------------------
Missouri Saving For Tuition (529 Plan)
Missouri's State Treasurer's Office
Capitol Building, Room 229
201 West Capitol Avenue
Jefferson City, MO 65101
Fund Percent of Holdings Shares
=========================================================================================
International Equity Fund -- Institutional Class 5.92% 3,201,075
- -----------------------------------------------------------------------------------------
Money Market Fund -- Institutional Class 12.78% 23,565,522
- -----------------------------------------------------------------------------------------
Real Estate Securities Fund -- Institutional Class 7.91% 1,251,613
- -----------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 5.27% 505,346
- -----------------------------------------------------------------------------------------
Large-Cap Value Fund -- Institutional Class 24.13% 3,509,154
- -----------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Institutional Class 9.41% 682,820
- -----------------------------------------------------------------------------------------
Growth Equity Fund -- Institutional Class 44.48% 7,263,237
- -----------------------------------------------------------------------------------------
The Minnesota College Savings Plan (529 Plan)
PO Box 64028
St. Paul, MN 55164-0028
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Growth Index Fund -- Institutional Class 6.28% 2,361,990
- -----------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Institutional Class 6.69% 1,857,721
- -----------------------------------------------------------------------------------------
G-4
Teachers Insurance and Annuity Association of America
(a New York stock life insurance company)
730 Third Avenue
New York, NY 10017
Fund Percent of Holdings Shares
=========================================================================================
Real Estate Securities Fund -- Retail Class 10.26% 1,060,343
- -----------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Retirement Class 29.20% 10,987
- -----------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Institutional Class 23.92% 879,737
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Institutional Class 94.20% 1,900,766
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 41.87% 12,565
- -----------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Institutional Class 92.16% 2,568,958
- -----------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 66.53% 11,304
- -----------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Institutional Class 11.92% 1,143,133
- -----------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 41.52% 11,215
- -----------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Institutional Class 96.17% 5,059,876
- -----------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 13.11% 11,812
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Institutional Class 91.01% 4,552,147
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 15.49% 12,393
- -----------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 6.05% 622,744
- -----------------------------------------------------------------------------------------
International Equity Index Fund -- Retirement Class 27.60% 10,487
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2010 Fund 39.82% 102,617
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2015 Fund 24.40% 102,754
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2020 Fund 52.80% 102,927
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2025 Fund 34.01% 103,054
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2030 Fund 51.90% 103,220
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2035 Fund 52.05% 103,370
- -----------------------------------------------------------------------------------------
Lifecycle Fund--2040 Fund 67.28% 103,499
- -----------------------------------------------------------------------------------------
TIAA-CREF Managed Allocation Fund
730 Third Avenue
New York, NY 10017
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Equity Fund -- Retail Class 23.41% 1,054,293
- -----------------------------------------------------------------------------------------
Large-Cap Value Fund -- Retail Class 68.18% 8,554,985
- -----------------------------------------------------------------------------------------
G-5
National Financial Services LLC
For the Exclusive Benefit of our Customers
PO Box 770001
Cincinnati, OH 45277
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Growth Fund -- Retail Class 8.89% 310,896
- -----------------------------------------------------------------------------------------
JPMorgan Retirement Plans Program
C/O JPMorgan Chase Bank
Attn: DC Plan Service Team
3 Metrotech Ctr
Brooklyn, NY 11245-0001
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 52.39% 19,711
- -----------------------------------------------------------------------------------------
Large Cap Value Fund -- Retirement Class 9.35% 944,628
- -----------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Retirement Class 12.42% 37,673
- -----------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 28.08% 25,298
- -----------------------------------------------------------------------------------------
International Equity Index Fund -- Retirement Class 71.27% 27,081
- -----------------------------------------------------------------------------------------
International Equity Fund -- Retirement Class 7.66% 1,252,076
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Retirement Class 10.30% 675,533
- -----------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Retirement Class 9.59% 1,190,603
- -----------------------------------------------------------------------------------------
Real Estate Securities Fund -- Retirement Class 10.38% 912,371
- -----------------------------------------------------------------------------------------
S&P 500 Index Fund -- Retirement Class 7.14% 452,453
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 57.42% 45,951
- -----------------------------------------------------------------------------------------
Small-Cap Equity Fund -- Retirement Class 10.33% 1,059,712
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2010 Fund 39.82% 102,617
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2015 Fund 75.60% 318,302
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2020 Fund 47.20% 91,997
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2025 Fund 65.97% 199,886
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2030 Fund 47.95% 95,366
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2035 Fund 47.95% 95,217
- -----------------------------------------------------------------------------------------
Lifecycle Fund -- 2040 Fund 32.72% 50,327
- -----------------------------------------------------------------------------------------
G-6
Community Funds, Inc.
2 Park Avenue
New York, NY 10016
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=========================================================================================
Equity Index Fund -- Institutional Class 7.97% 4,883,156
- -----------------------------------------------------------------------------------------
International Equity Index Fund -- Institutional Class 6.92% 712,230
- -----------------------------------------------------------------------------------------
Church of the Nazarene
6401 The Paseo
Kansas City, MO 64131
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=========================================================================================
Social Choice Equity Fund -- Institutional Class 5.07% 486,861
- -----------------------------------------------------------------------------------------
James S. McDonnell Foundation
1034 South Brentwood Boulevard, Suite 1860
St. Louis, MO 63117
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=========================================================================================
International Equity Fund -- Institutional Class 8.60% 4,652,759
- -----------------------------------------------------------------------------------------
Bank of America
MFO 8559
PO Box 831575
Dallas, TX 75283-157
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=========================================================================================
Social Choice Equity Fund -- Institutional Class 9.45% 907,552
- -----------------------------------------------------------------------------------------
G-7
Kentucky Foundation for Women
1215 Heyburn Building - 322 West Broadway
Louisville, KY 40202
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=========================================================================================
Social Choice Equity Fund -- Institutional Class 7.43% 713,199
- -----------------------------------------------------------------------------------------
Newspaper Guild of New York
830 Bear Tavern Road
PO Box 1028
Trenton, NJ 08628-0230
* These shares are also reported under the totals for SEI above because they are
held through the Trust Company.
Fund Percent of Holdings Shares
=========================================================================================
Social Choice Equity Fund -- Institutional Class 7.70% 739,005
- -----------------------------------------------------------------------------------------
University of Cincinnati
51 Goodman Avenue, Suite 100
Cincinnati, OH 45219-0970
* As the Trust Company has investment discretion over these shares, they are
also reported under the totals for SEI and the Trust Company above.
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Fund -- Institutional Class 6.22% 93,443
- -----------------------------------------------------------------------------------------
Una J. Walker
5604 NE Issler Street
Vancouver, WA 98661
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 12.65% 718
- -----------------------------------------------------------------------------------------
G-8
Carolyn G. Holland
7254 Mallard Drive
West Chester, OH 45069
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 12.49% 1,971
- -----------------------------------------------------------------------------------------
Joyce A. Hiatt
11408 NW 28th Street
Vancouver, WA 98685
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 7.40% 420
- -----------------------------------------------------------------------------------------
Lynn R. Halsey
15804 NE 30th Avenue
Vancouver, WA 98686
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 11.80% 670
- -----------------------------------------------------------------------------------------
Ronald L. Golson
14416 NE 29th Street
Vancouver, WA 98686
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 21.20% 1,203
- -----------------------------------------------------------------------------------------
Eleanor J. Canos
1362 Pennsbury Drive
Cincinnati, OH 45238
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 25.60% 4,041
- -----------------------------------------------------------------------------------------
Jan E. Allen
2725 NE 96th Avenue
Vancouver, WA 98662
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 6.91% 1,205
- -----------------------------------------------------------------------------------------
G-9
Leslie A. Uyeji
PO Box 2927
Vancouver, WA 98662-7455
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 11.21% 2,985
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 22.91% 3,994
- -----------------------------------------------------------------------------------------
June Ilene Berry
3914 NE 55th Street
Vancouver, WA 98661
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 22.80% 3,975
- -----------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 7.84% 445
- -----------------------------------------------------------------------------------------
Clifford R. Price
22802 NE 169th Street
Brush Prairie, WA 98606
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Growth Index Fund -- Retirement Class 15.04% 2,622
- -----------------------------------------------------------------------------------------
Diane S. Price
22802 NE 169th Street
Brush Prairie, WA 98606
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 7.14% 1,901
- -----------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 6.78% 1,181
- -----------------------------------------------------------------------------------------
Prema Venkateswaran
1204 Hidden Wood Place
Cincinnati, OH 45208
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 7.55% 1,191
- -----------------------------------------------------------------------------------------
G-10
Linda L. Waliser
204 SE 101st Avenue
Vancouver, WA 98664
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 10.04% 569
- -----------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 5.26% 830
- -----------------------------------------------------------------------------------------
Donald Robert Kurtz
1950 SW Palm City RD #1103
Stuart, FL 34994-4313
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 17.49% 4,811
- -----------------------------------------------------------------------------------------
Sidney M. Moon
104 Mohican CT
W Lafayette, IN 47906-2113
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 6.01% 1,600
- -----------------------------------------------------------------------------------------
Carolyn A. Percifield
400 Overlook DR
W Lafayette, IN 47906-1210
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 17.52% 4,666
- -----------------------------------------------------------------------------------------
Gary Calvin Lelvis
12107 Burgoyne Drive
Houston, TX 77077-6033
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 15.65% 4,517
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 7.04% 4,574
- -----------------------------------------------------------------------------------------
G-11
Larry M. Madson
18517 NE Cedar DR
Battle Ground, WA 98604-7344
Fund Percent of Holdings Shares
=========================================================================================
Mid-Cap Value Index Fund -- Retirement Class 20.31% 1,153
- -----------------------------------------------------------------------------------------
Richard W. Caudell
PO Box 42405
Cincinnati, OH 45242-0405
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 12.47% 1,968
- -----------------------------------------------------------------------------------------
Alan Joseph Schwartz
10761 Weatherstone Court
Loveland, OH 45140-7402
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 5.15% 813
- -----------------------------------------------------------------------------------------
William E. Hurford
9250 Given Road
Cincinnati, OH 45243-1146
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Blend Index Fund -- Retirement Class 5.00% 788
- -----------------------------------------------------------------------------------------
David K. Schmidt
19100 Rosewood Way
Monument, CO 80132-8948
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Growth Index Fund -- Retirement Class 14.17% 5,244
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 8.61% 5,592
- -----------------------------------------------------------------------------------------
G-12
Gary Fredrick Lee
9282 N Waldron Rd.
Rossville, IN 46065-9551
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Value Index Fund -- Retirement Class 5.06% 3,289
- -----------------------------------------------------------------------------------------
Wayne Yungchang Chen
910 Kennedy Avenue
Schererville, IN 46375-1326
Fund Percent of Holdings Shares
=========================================================================================
Small-Cap Value Index Fund -- Retirement Class 5.72% 3,718
- -----------------------------------------------------------------------------------------
Robert L. Nowack
2225 Huron Road
W. Lafayette, IN 47906-1921
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 15.65% 4,304
- -----------------------------------------------------------------------------------------
James S. Quasney
1580 Foulis Court
Chesterton, IN 46304-8935
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 8.15% 2,242
- -----------------------------------------------------------------------------------------
M.D. Raftery
2131 Kestral Blvd.
W. Lafayette, IN 47906-6519
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 7.32% 2,014
- -----------------------------------------------------------------------------------------
Craig D. Williams
5221 Laura Lynne Lane
Indianapolis, IN 46217-4928
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 5.41% 1,487
- -----------------------------------------------------------------------------------------
G-13
Richard Madison Weaver
2605 E. 191st Street
Westfield, IN 46074-9247
Fund Percent of Holdings Shares
=========================================================================================
International Equity Index Fund -- Retirement Class 5.41% 1,487
- -----------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 5.26% 3,418
- -----------------------------------------------------------------------------------------
Stuart A. Dye
8146 E. 600 N
Lafayette, IN 47905-9781
Fund Percent of Holdings Shares
=========================================================================================
Large-Cap Value Index Fund -- Retirement Class 6.02% 1,602
- -----------------------------------------------------------------------------------------
Keith Harold Hawks
7218 N. 300E
Battle Ground, IN 47920-9410
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2010 Fund 55.66% 86,326
- -----------------------------------------------------------------------------------------
Benedict A. Liuzzo
14911 Long Bow Ln.
Huntersville, NC 28078-3310
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2010 Fund 13.65% 21,169
- -----------------------------------------------------------------------------------------
Richard O. Jindra
2808 N. 925 W
W. Lafayette, IN 47920-9410
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2010 Fund 9.39% 14,563
- -----------------------------------------------------------------------------------------
G-14
Randolph Llewellyn Walker
5343 S. Picadilly Way
Aurora, CO 80015-5014
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2010 Fund 6.84% 10,602
- -----------------------------------------------------------------------------------------
Marsha A. Tuthill
170 Herons Gate Dr.
Mooresville, NC 28117-6417
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2010 Fund 5.31% 8,243
- -----------------------------------------------------------------------------------------
Lowell Wayne Beineke
4529 Bradwood Terrace
Fort Wayne, IN 46815-6028
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2015 Fund 61.82% 196,783
- -----------------------------------------------------------------------------------------
Terry Steven Trepper
7137 Knickerbocker Parkway
Hammond, IN 46323-2030
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2015 Fund 15.22% 48,440
- -----------------------------------------------------------------------------------------
David James Sammons
3300 Elkhart St.
W. Lafayette, IN 47906-1160
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2015 Fund 7.34% 23,365
- -----------------------------------------------------------------------------------------
Wesley Kim Lukoshus
8835 Northcote
Munster, IN 46321-2727
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2015 Fund 5.77% 18,366
- -----------------------------------------------------------------------------------------
G-15
George I. Spindell
1518 Windy Ridge Rd.
Charlotte, NC 28270-1139
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2020 Fund 31.88% 29,297
- -----------------------------------------------------------------------------------------
Kevin Paul Green
3515 Hamilton St.
W. Lafayette, IN 47906-1286
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2020 Fund 18.26% 16,776
- -----------------------------------------------------------------------------------------
Kenneth Emery Alling
18 Rainbow Dr.
Rossville, IN 46065-9599
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2020 Fund 7.70% 7,072
- -----------------------------------------------------------------------------------------
John Lyon Obermeyer
3000 Georgton Rd.
W. Lafayette, IN 47906-4819
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2020 Fund 7.43% 6,830
- -----------------------------------------------------------------------------------------
Mark JT Smith
465 Northwestern Ave., #122
W. Lafayette, IN 47907-2035
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2020 Fund 5.76% 5,293
- -----------------------------------------------------------------------------------------
Scott C. Evans
100 Holly Branch Rd.
Katonah, NY 10536-3528
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2025 Fund 28.01% 55,981
- -----------------------------------------------------------------------------------------
G-16
John Abraham
3200 Elkhart St.
W. Lafayette, IN 47906-1151
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2025 Fund 8.50% 16,999
- -----------------------------------------------------------------------------------------
Gary Scott Yates
7708 Amanda Ln.
W. Lafayette, IN 47906-8530
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2025 Fund 7.25% 14,490
- -----------------------------------------------------------------------------------------
Martin Joseph Matustik
922 W. Winona St., #3E
Chicago, IL 60640-3229
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2025 Fund 5.31% 10,618
- -----------------------------------------------------------------------------------------
Paul Joseph Yakoboski
317 E. Monroe Ave.
Alexandria, VA 22301
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2030 Fund 40.18% 38,313
- -----------------------------------------------------------------------------------------
Samir B. Dave
13 Orchid St.
Edison, NJ 08820-4307
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2030 Fund 7.95% 7,583
- -----------------------------------------------------------------------------------------
Joseph D. Delgrande
46 Cedar St.
Nutley, NJ 07110-2120
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2035 Fund 41.00% 39,035
- -----------------------------------------------------------------------------------------
G-17
Stephen McDonald
38 Iron Horse Ln.
Walnut Creek, CA 94597-6951
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2035 Fund 8.27% 7,871
- -----------------------------------------------------------------------------------------
Brian J. Knoy
6110 Maderia Ln.
Lafayette, IN 47905-8259
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2035 Fund 6.13% 5,838
- -----------------------------------------------------------------------------------------
Blaine Bennett
2400 Bobolink Dr.
W. Lafayette, IN 47906-6648
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2035 Fund 6.04% 5,753
- -----------------------------------------------------------------------------------------
Scott J. Budde
235 W. 56th St., #31M
NY, NY 10019-4335
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2040 Fund 42.70% 21,489
- -----------------------------------------------------------------------------------------
Ernest Stalnaker
3321 Webster St.
W. Lafayette, IN 47906-7222
Fund Percent of Holdings Shares
=========================================================================================
Lifecycle Fund -- 2040 Fund 7.88% 3,966
- -----------------------------------------------------------------------------------------
G-18
TIAA-CREF Individual & Institutional Services, Inc.
For the Exclusive Benefit of Customers
730 Third Avenue
New York, NY 10017
* These shares generally are held on behalf of retirement plan participants. If
any such participants individually own 5% or more of a class of a Fund, they
are also reported separately under their own name.
Fund Percent of Holdings Shares
======================================================================================
Growth & Income Fund -- Retirement Class 95.01% 5,546,454
- --------------------------------------------------------------------------------------
International Equity Fund -- Retirement Class 92.34% 15,090,223
- --------------------------------------------------------------------------------------
Large-Cap Value Fund -- Retirement Class 90.65% 9,162,018
- --------------------------------------------------------------------------------------
Mid-Cap Value Fund -- Retirement Class 90.41% 11,222,380
- --------------------------------------------------------------------------------------
Mid-Cap Growth Fund -- Retirement Class 99.33% 9,196,369
- --------------------------------------------------------------------------------------
Small-Cap Equity Fund--Retirement Class 89.67% 10,038,568
- --------------------------------------------------------------------------------------
Real Estate Securities Fund -- Retirement Class 89.47% 7,862,555
- --------------------------------------------------------------------------------------
Social Choice Equity Fund -- Retirement Class 89.70% 5,880,543
- --------------------------------------------------------------------------------------
S&P 500 Index Fund -- Retirement Class 92.86% 5,888,843
- --------------------------------------------------------------------------------------
Large-Cap Growth Index Fund -- Retirement Class 99.36% 1,861,850
- --------------------------------------------------------------------------------------
Large-Cap Value Index Fund -- Retirement Class 18.38% 6,916
- --------------------------------------------------------------------------------------
Mid-Cap Growth Index Fund -- Retirement Class 58.10% 17,434
- --------------------------------------------------------------------------------------
Mid-Cap Value Index Fund -- Retirement Class 33.42% 5,679
- --------------------------------------------------------------------------------------
Mid-Cap Blend Index Fund -- Retirement Class 83.97% 254,803
- --------------------------------------------------------------------------------------
Small-Cap Growth Index Fund -- Retirement Class 58.79% 52,964
- --------------------------------------------------------------------------------------
Small-Cap Value Index Fund -- Retirement Class 23.79% 19,038
- --------------------------------------------------------------------------------------
Small-Cap Blend Index Fund -- Retirement Class 58.45% 15,786
- --------------------------------------------------------------------------------------
G-19
Notes
Notes
Notes
Inst MF A11031 (07/05)
THREE EASY WAYS TO VOTE YOUR PROXY.
----------------------- ----------------------------- ------------------------
To vote by Telephone To vote by Internet To vote by Mail
[LOGO] TIAA 1) Read the Proxy 1) Read the Proxy
CREF Statement and have Statement and have 1) Read the Proxy
FINANCIAL SERVICES P.O. BOX 9132 this Proxy card at this Proxy card at Statement.
FOR THE GREATER GOOD(SM) HINGHAM, MA 02043-9132 hand. hand. 2) Check the appropriate
2) Call 1-888-221-0697. 2) Go to Website box on the reverse
3) Follow the recorded www.proxyweb.com/TIAA-CREF side.
instructions. 3) Follow the on-screen 3) Sign and date the
instructions. Proxy card.
4) Return the Proxy card
in the envelope
- ------------------ provided.
999 999 999 999 99 --> ----------------------- ----------------------------- ------------------------
- ------------------ --> IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
TIAA-CREF INSTITUTIONAL MUTUAL FUNDS PROXY
FUND NAME PRINTS HERE SOLICITED BY THE BOARD OF TRUSTEES
By signing this form, I authorize Willard T. Carleton, E. Laverne Jones, and
Maceo K. Sloan, singly or together, with power of substitution in each, to
represent me and cast my vote at the TIAA-CREF Institutional Mutual Funds'
special meeting to be held on August 31, 2005 at 9:00 a.m. at 730 Third Avenue,
New York, New York, and any adjournment or postponement thereof. They will vote
as I instruct. If no directions are given, or if the instructions are
contradictory, the proxies will vote (i) FOR the election of all listed
nominees; (ii) FOR the ratification of independent registered public accounting
firm; (iii) FOR the approval of a new investment management agreement; (iv) FOR
the adoption of a distribution plan with respect to the Retail Class shares; and
(v) at their discretion on any other matters that may properly come before the
special meeting or if a nominee is not available for election.
\/
Date _______________________, 2005
----------------------------------
----------------------------------
Signature (Sign in the Box)
When signing as attorney, executor,
administrator, trustee, guardian,
or corporate officer, please
indicate your full name and title.
\/ Retail IMF - jl
\/
\/ Please fill in box(es) as shown using black or blue ink or number 2 pencil. |x| \/
PLEASE DO NOT USE FINE POINT PENS.
Unless you have voted by Internet or telephone, please sign and date this ballot on the reverse side and return it in
the enclosed postage-paid envelope to MIS, TIAA-CREF's tabulator, at 60 Research Road, Hingham, MA 02043. MIS has been
engaged to tabulate ballots returned by mail to preserve the confidentiality of your ballot. If you vote by Internet or
phone, your vote authorizes the proxies named on the front of your proxy card to cast your votes in the same manner as
if you marked, signed, and returned your card. All votes cast by Internet, phone, or proxy card must be received by
12:00 noon (eastern time) on August 31, 2005. If you vote via the Internet or phone, please do NOT mail back your proxy
card.
The Board of Trustees Recommends a Vote FOR all proposals.
1. To elect Trustees to serve until their successors are elected and qualified. FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(01) Nancy L. Jacob, (02) Willard T. Carleton, (03) Eugene Flood, Jr.,
(04) Howell E. Jackson, (05) Bevis Longstreth, (06) Bridget A. Macaskill, [ ] [ ] [ ]
(07) Maceo K. Sloan, (08) Ahmed H. Zewail
*(INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
the box "FOR ALL EXCEPT" and write the number(s) of the nominee(s) on the line
provided below.)
- -------------------------------------------------------------------------------- FOR
ALL AGAINST ABSTAIN
2. To ratify the selection by the Board of Trustees of PricewaterhouseCoopers
LLP to serve as the Funds' independent registered public accounting firm for [ ] [ ] [ ]
the fiscal year ending September 30, 2005.
3. To approve a new investment management agreement between the Funds and
Teachers Advisors, Inc.
4. To approve the adoption of a distribution plan with respect to the Retail
Class shares of the Funds.
5. To address any other business that may properly come before the meeting or
any adjournment thereof.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
MANAGEMENT INFORMATION SERVICES
STANDARD EZ VOTE SCRIPT FOR TELEPHONE VOTING
(888) 221-0697
OPENING:
When connected to the toll-free number, shareholder will hear:
- --------------------------------------------------------------------------------
"Welcome. Please enter the control number located on the upper portion of your
proxy card."
- --------------------------------------------------------------------------------
When shareholder enters an EZ Vote control number, he/she will hear:
- --------------------------------------------------------------------------------
"You have entered your EZ Vote consolidated control number. This allows you to
cast one consolidated vote for all of your accounts. All accounts will be voted
in the same manner based on your voting instructions. To cast a consolidated
vote for all of your accounts, press 1 now. To vote each of your accounts
separately, press 0 now."
- --------------------------------------------------------------------------------
If a shareholder presses 0 they will hear the following language followed by the
script for an individual control number. The script from this point on will be
repeated , from the "We are now ready..." speech, for each individual control
number associated with the EZ Vote consolidated control number.
- --------------------------------------------------------------------------------
"You have elected to vote each of your accounts separately. You will find these
accounts on the back of your EzVote ballot and on additional pages if necessary.
Please note that each account has its own control number." (There will be a
slight pause here.) "We are now ready to accept your vote for control number xxx
xxx xxx xxx xx."
- --------------------------------------------------------------------------------
If a shareholder has pressed 1 above, therefore electing to vote all holdings
exactly the same, they will hear the script for an individual control number as
follows:
- --------------------------------------------------------------------------------
"To vote as the Board recommends on all proposals, press 1 now. To vote on each
proposal separately, press 0 now."
- --------------------------------------------------------------------------------
OPTION 1: VOTING ALL PROPOSALS AS MANAGEMENT RECOMMENDS
If the shareholder elects to vote as management recommends on all proposals,
he/she will hear:
- --------------------------------------------------------------------------------
"You have voted as the Board recommended. If this is correct, press 1. If
incorrect, press 0."
- --------------------------------------------------------------------------------
If the shareholder is voting each control number individually and presses 1,
he/she will hear will then be returned to "We are now ready to accept your vote
for control number..." speech.
If the shareholder presses 0 to indicate an incorrect vote, he/she will be
returned to the "To vote as the ..." Speech.
MANAGEMENT INFORMATION SERVICES
6/28/2005
last modified: January 14, 2002
If the shareholder is voting all holdings exactly the same, or has completed
voting all individual control numbers, and presses 1 he/she will hear:
- --------------------------------------------------------------------------------
"Thank you for voting."
- --------------------------------------------------------------------------------
Call is terminated.
OPTION 2: VOTING EACH PROPOSAL SEPARATELY
If shareholder elects to vote each proposal separately, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 1: To vote FOR all nominees, press 1. To WITHHOLD from all nominees,
press 9. To WITHHOLD from an individual nominee, press 0. Make your selection
now."
- --------------------------------------------------------------------------------
If the shareholder votes FOR all nominees or WITHHOLDS from all nominees, the
script moves to Proposal 2. If the shareholder elects to withhold from a
specific nominee, he/she will hear:
- --------------------------------------------------------------------------------
"Enter the two-digit number that appears in front of the nominee's name you DO
NOT wish to vote for."
- --------------------------------------------------------------------------------
And then,
- --------------------------------------------------------------------------------
"Press 1 to withhold from another nominee or Press 0 if you have completed
voting on nominees."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 1, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 2, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 3, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 4: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on all proposals, he/she will hear:
- --------------------------------------------------------------------------------
"Your votes have been cast as follows (vote for each proposal is given). If this
is correct, press 1. If incorrect, press 0."
- --------------------------------------------------------------------------------
If the shareholder is voting each control number individually and presses 1,
he/she will hear will then be returned to "We are now ready to accept your vote
for control number..." speech.
If the shareholder presses 0 to indicate an incorrect vote, he/she will be
returned to the "To vote as the ..." Speech.
MANAGEMENT INFORMATION SERVICES
6/28/2005
last modified: January 14, 2002
If the shareholder is voting all holdings exactly the same or has completed
voting all individual control numbers and presses 1, he/she will hear :
- --------------------------------------------------------------------------------
"Thank you for voting."
- --------------------------------------------------------------------------------
Call is terminated.
MANAGEMENT INFORMATION SERVICES
6/28/2005
last modified: January 14, 2002
MANAGEMENT INFORMATION SERVICES
TOUCH TONE VOTING SCRIPT
(888) 221-0697
OPENING:
When connected to the toll-free number, shareholder will hear:
- --------------------------------------------------------------------------------
"Welcome. Please enter the control number located on the upper LEFT portion of
your VOTER CARD.
- --------------------------------------------------------------------------------
When shareholder enters the control number, he/she will hear:
- --------------------------------------------------------------------------------
"Please enter the last 4 digits of your social security number "
- --------------------------------------------------------------------------------
When shareholder enters the last 4 digits of their social security number,
he/she will hear:
- --------------------------------------------------------------------------------
"To vote as the ** Board recommends, press 1 now. To vote otherwise, press 0
now."
- --------------------------------------------------------------------------------
OPTION 1: VOTING AS MANAGEMENT RECOMMENDS
If shareholder elects to vote as management recommends on all proposals, he/she
will hear:
- --------------------------------------------------------------------------------
"You have voted as the Board recommended. If this is correct, press 1. If
incorrect, press 0."
- --------------------------------------------------------------------------------
If the shareholder presses 1, he/she will hear:
- --------------------------------------------------------------------------------
"If you have received more than one proxy card, you must vote each card
separately. If you would like to vote another proxy, press 1 now. To end this
call, press 0 now."
- --------------------------------------------------------------------------------
If shareholder presses 0 to indicate an incorrect vote, he/she will hear:
- --------------------------------------------------------------------------------
"To vote as the ** Board recommends, press 1 now. To vote otherwise, press 0
now."
- --------------------------------------------------------------------------------
If shareholder elects to vote another proxy, he/she is returned to the "Please
enter the control number" speech (above). If shareholder elects to end the call,
he/she will hear:
- --------------------------------------------------------------------------------
"Thank you for voting."
- --------------------------------------------------------------------------------
Call is terminated.
MANAGEMENT INFORMATION SERVICES
6/28/2005
OPTION 2: VOTING OTHERWISE
If shareholder elects to vote the proposal separately, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 1: To vote FOR all nominees, press 1. To WITHHOLD from all nominees,
press 9. To WITHHOLD from an individual nominee, press 0. Make your selection
now."
- --------------------------------------------------------------------------------
If the shareholder votes FOR all nominees or WITHHOLDS from all nominees, the
script moves to Proposal 2. If the shareholder elects to withhold from a
specific nominee, he/she will hear:
- --------------------------------------------------------------------------------
"Enter the two-digit number that appears in front of the nominee's name you DO
NOT wish to vote for."
- --------------------------------------------------------------------------------
And then,
- --------------------------------------------------------------------------------
"Press 1 to withhold from another nominee or Press 0 if you have completed
voting on nominees."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 1, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 2, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 3, he/she will hear:
- --------------------------------------------------------------------------------
"Proposal 4: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0."
- --------------------------------------------------------------------------------
When the shareholder has finished voting on Proposal 4, he/she will hear:
- --------------------------------------------------------------------------------
"Your vote has been cast as follows (vote is given). If this is correct, press
1. If incorrect, press 0."
- --------------------------------------------------------------------------------
If the shareholder presses 1, he/she will hear:
- --------------------------------------------------------------------------------
"If you have received more than one proxy card, you must vote each card
separately. If you would like to vote another proxy, press 1 now. To end this
call, press 0 now."
- --------------------------------------------------------------------------------
If shareholder presses 0 to indicate an incorrect vote, he/she will hear:
- --------------------------------------------------------------------------------
"To vote as the ** Board recommends, press 1 now. To vote otherwise, press 0
now."
- --------------------------------------------------------------------------------
If shareholder elects to vote another proxy, he/she is returned to the "Please
enter the control number" speech (above). If shareholder elects to end the call,
he/she will hear:
- --------------------------------------------------------------------------------
"Thank you for voting."
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION SERVICES
6/28/2005
Call is terminated.
MANAGEMENT INFORMATION SERVICES
6/28/2005
[LOGO] TIAA Internet Proxy Voting Service
CREF Proxy Voting Form
FINANCIAL SERVICES TIAA-CREF INSTITUTIONAL MUTUAL
FOR THE GREATER GOOD(SM) FUNDS
TIAA-CREF INFLATION-LINKED BOND
FUND
I authorize Willard T. Carleton, E. Laverne Jones, and Maceo K. Sloan, singly or
together, with power of substitution in each, to represent me and cast my vote
at the TIAA-CREF Institutional Mutual Funds' special meeting to be held on
August 31, 2005 at 9:00 a.m. at 730 Third Avenue, New York, New York, and any
adjournment or postponement thereof. They will vote as I instruct. If no
directions are given, or if the instructions are contradictory, the proxies will
vote (i) FOR the election of all listed nominees; (ii) FOR the ratification of
auditors; (iii) FOR an approval on a new investment management agreement; and
(iv) at their discretion on any other matters that may properly come before the
special meeting or if a nominee is not available for election.
To review the election materials please click Proxy Statement
The Board of Trustees Recommends a Vote FOR all proposals.
Proposal 1. To elect Trustees to serve until their successors are elected and
qualified.
[ ] FOR all nominees [ ] WITHHOLD ALL
[ ] FOR all nominees (Except as indicated)
(01) [ ] Nancy L. Jacob (02) [ ] Willard T. Carleton
(03) [ ] Eugene Flood, Jr. (04) [ ] Howell E. Jackson
(05) [ ] Bevis Longstreth (06) [ ] Bridget A. Macaskill
(07) [ ] Maceo K. Sloan (08) [ ] Ahmed H. Zewail
- --------------------------------------------------------------------------------------------------------------------
Proposal 2. To ratify the selection by the Board of Trustees of [ ] FOR [ ] AGAINST [ ] ABSTAIN
PricewaterhouseCoopers LLP to serve as the Funds' independent
auditors for the fiscal year ending September 30, 2005.
- --------------------------------------------------------------------------------------------------------------------
Proposal 3. To approve a new investment management agreement between the Funds [ ] FOR [ ] AGAINST [ ] ABSTAIN
and Teachers Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------
Proposal 4. To approve the adoption of a distribution plan with respect to the [ ] FOR [ ] AGAINST [ ] ABSTAIN
Retail Class shares of the Funds.
- --------------------------------------------------------------------------------------------------------------------
Proposal 5. To address any other business that may properly come before the [ ] FOR [ ] AGAINST [ ] ABSTAIN
meeting or any adjournment thereof.
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
To receive an optional email confirmation, enter your email address here: __________________
Press this button to [SUBMIT] your Proxy Vote.
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