SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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TIAA - CREF Institutional Mutual Funds
(Name of Registrant as Specified in its Charter)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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TIAA-CREF INSTITUTIONAL MUTUAL FUNDS
PROXY SOLICITATION PLANS
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Prepared for:
Program Manager/Treasurer's Name
State Program Name
August 2005
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Situation Analysis
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FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Background
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o Since the Funds were established, TIAA-CREF has been committed to
providing high-quality investment management services while remaining a
low-cost provider.
o The extremely low fees currently charged by the advisor are insufficient
to cover the costs of operating the Funds while continuing to provide
high-quality services to shareholders.
o Due to these consistent losses, the advisor cannot continue as an
effective investment manager for the Funds under the current fee
structure.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Overview of Mutual Fund Proposal
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o The long-term success of TIAA-CREF's mutual fund business is a reachable
goal if significant steps are taken to ensure that the Funds are
economically viable, competitively priced and appropriately structured.
o To that end, TIAA-CREF is proposing a plan to 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.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Benefits of the New Investment Management
Agreement
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o The new investment management agreement would:
- Enable the Funds' investment advisor to continue to offer
shareholders the high-quality service expected 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; and
- Help ensure that the TIAA-CREF organization can continue to offer the
Funds while remaining competitive with other low-cost providers in
our industry.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Alternatives if the New Investment Management
Agreement is Not Approved
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o Teachers Advisors has informed the Board that it may no longer be
prepared to continue to operate the Fund or Funds without the increase
in investment management fees
o Alternatives discussed with the Board include
- Closing one or more Funds to new shareholders or potentially to
all new investments (which could lead to a reduction in
economies of scale over time--an increase in expenses as Fund
assets gradually decrease)
- Liquidation of one or more of the Funds
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Overview of Investment Management Fee and Total
Expense Ratio Changes
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FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Impact of New Investment Management Agreement
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o For the actively managed Funds, the new investment management agreement
will raise advisory fees.
- The advisor has agreed to waive the proposed fee increase on the
Growth Equity Fund and the Growth & Income Fund until at least April
2007.
o There would be no increase in advisory fees for the index Funds.
o 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.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Total Expense Ratio Changes -- Institutional Class
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Proposed Total Median Peer Total
Expense Ratio Expense Ratio Difference
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Growth Equity Fund 0.50% 1.05% -0.55% Green
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Growth & Income Fund 0.50% 0.93% -0.43% Green
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International Equity Fund 0.59% 1.19% -0.60% Green
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Large-Cap Value Fund 0.50% 1.07% -0.57% Green
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Mid-Cap Growth Fund 0.55% 1.11% -0.56% Green
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Mid-Cap Value Fund 0.55% 1.07% -0.52% Green
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Small-Cap Equity Fund 0.55% 1.15% -0.60% Green
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Social Choice Equity Fund 0.25% 0.99% -0.74% Green
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Real Estate Securities Fund 0.59% 1.11% -0.52% Green
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Bond Fund 0.34% 0.69% -0.35% Green
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Inflation-Linked Bond Fund 0.35% 0.35% 0.00% Yellow
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Money Market Fund 0.15% 0.43% -0.28% Green
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Legend Below Median of Lipper Peer Group Green
At Median of Lipper Peer Group Yellow
Above Median of Lipper Peer Group Red
Lipper, Inc. is a Reuters company that is an independent provider of investment
company data. The Lipper Expense Universe consists of the TIAA-CREF
Institutional Mutual Funds and similarly-classified funds. Only no-load funds
were considered for inclusion in the group.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Expense Universe Ranking
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Fund Rank Universe Count
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Growth Equity Fund(1) 12 146
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Growth & Income Fund(1) 25 176
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International Equity Fund 14 155
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Large-Cap Value Fund 14 96
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Mid-Cap Growth Fund 1 100
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Mid-Cap Value Fund 1 50
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Small-Cap Equity Fund 5 115
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Social Choice Equity Fund 3 93
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Real Estate Securities Fund 8 40
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Bond Fund 24 121
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Inflation-Linked Bond Fund 6 10
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Money Market Fund 12 249
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(1) Rank before waiver of advisory fees from 0.45% to 0.08%
Lipper, Inc. is a Reuters company that is an independent provider of investment
company data. The Lipper Expense Universe consists of the TIAA-CREF
Institutional Mutual Funds and similarly-classified funds. Only no-load funds
were considered for inclusion in the group.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Investment Management Fee Changes -- Index Funds
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Current Agreement New Agreement
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Large-Cap Growth Index Fund 0.04% 0.04%
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Large-Cap Value Index Fund 0.04% 0.04%
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Mid-Cap Growth Index Fund 0.04% 0.04%
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Mid-Cap Value Index Fund 0.04% 0.04%
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Mid-Cap Blend Index Fund 0.04% 0.04%
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Small-Cap Growth Index Fund 0.04% 0.04%
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Small-Cap Value Index Fund 0.04% 0.04%
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Small-Cap Blend Index Fund 0.04% 0.04%
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International Equity Index Fund 0.04% 0.04%
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S&P 500 Index Fund 0.04% 0.04%
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Equity Index Fund 0.04% 0.04%
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FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Investment Management Fee Changes -- Active Funds
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Current Agreement New Agreement
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Growth Equity Fund 0.08% 0.45% or less(1,2)
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Growth & Income Fund 0.08% 0.45% or less(1,2)
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International Equity Fund 0.09% 0.50% or less(2)
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Large-Cap Value Fund 0.08% 0.45% or less(2)
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Mid-Cap Growth Fund 0.08% 0.48% or less(2)
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Mid-Cap Value Fund 0.08% 0.48% or less(2)
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Small-Cap Equity Fund 0.08% 0.48% or less(2)
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Social Choice Equity Fund 0.04% 0.15%
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Real Estate Securities Fund 0.09% 0.50% or less(2)
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Bond Fund 0.08% 0.30% or less(2)
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Inflation-Linked Bond Fund 0.09% 0.30% or less(2)
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Money Market Fund 0.04% 0.10%
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(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. A full breakpoint schedule is provided as an
Appendix to the TIAA-CREF Institutional Mutual Funds proxy statement.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Impact on the 529 Business and the [______] Plan
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FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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TIAA-CREF'S Commitment to the 529 Business
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o We are proud of the leadership position we have established in the 529
business and value the relationship we have formed with [__________].
o TIAA-CREF has carefully considered the impact of the new investment
management agreement on all of its business lines, and remains supportive
of TIAA-CREF Tuition Financing, Inc. (TFI) and the 529 business. These
increases should not be taken as an indication that we are anything less
than fully committed to this important business and the clients we serve
through it.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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TIAA-CREF Remains a Low-Cost 529 Provider
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o After analyzing the proposed changes to the investment management
agreement and fees associated with 529 programs managed by TFI, Financial
Research Corporation (FRC) has determined that TFI managed plans will
continue to rank below the mean expense ratio of the direct-sold 529 peer
group.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Impact on the [__________] Plan
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o Your state has a unitary pricing structure where the total program is
expressed as a single basis-point charge.
o We are pleased to continue managing a competitively-priced college savings
program for these account owners.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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Next Steps in the Proxy Solicitation Process
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o The proxy statement and voting materials have been delivered to
[__________] to vote on behalf of the [__________].
o The proxy materials will provide a full proxy statement, voting
information and instructions. The special meeting of shareholders will be
held on August 31, 2005, and you are invited to vote as soon as possible
before the meeting even if you plan to attend.
o Because the vote is open only to eligible direct shareholders of the
TIAA-CREF Institutional Mutual Funds, the account owners in your state's
plan will not receive proxy voting materials.
FINANCIAL SERVICES [LOGO] FOR THE GREATER GOOD (TM)
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