-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jn0C4BBkWoaquCBROkYsENgS/8J4i04fi/E3X5w9Cn0LdQd7RDeXisPKKTRc/gut SCav9Twuld9kxuK84zbPWQ== 0000950123-98-010551.txt : 19981210 0000950123-98-010551.hdr.sgml : 19981210 ACCESSION NUMBER: 0000950123-98-010551 CONFORMED SUBMISSION TYPE: N-1A/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19981209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIAA CREF LIFE FUND CENTRAL INDEX KEY: 0001068204 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-1A/A SEC ACT: SEC FILE NUMBER: 333-61759 FILM NUMBER: 98766549 FILING VALUES: FORM TYPE: N-1A/A SEC ACT: SEC FILE NUMBER: 811-08961 FILM NUMBER: 98766550 BUSINESS ADDRESS: STREET 1: 730 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124909000 MAIL ADDRESS: STREET 1: 730 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 N-1A/A 1 AMENDMENT NO. 1 TO FORM N-1A 1 File Nos. 333-61759, 811-08961 As filed with the Securities and Exchange Commission on December 9, 1998 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A Registration Statement Under the Securities Act of 1933 [X] Pre-Effective Amendment No. 1 [X] Post-Effective Amendment No. [ ] and Registration Statement Under the Investment Company Act of 1940 [X] Amendment No. 1 [X] (Check appropriate box or boxes) ----------------------------------- TIAA-CREF LIFE FUNDS 730 Third Avenue New York, New York 10017 (800) 842-2733 (Registrant's Exact Name, Address and Telephone Number) Peter C. Clapman, Esq. TIAA-CREF Life Funds 730 Third Avenue New York, New York 10017 (Name and Address of Agent for Service) Copy to: Steven B. Boehm, Esq. Sutherland, Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D. C. 20004-2415 Approximate Date of Proposed Public Offering: As soon as practicable after effectiveness of the Registration Statement. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), SHALL DETERMINE. 2 PROSPECTUS DATED JANUARY 4, 1999 TIAA-CREF LIFE FUNDS STOCK INDEX FUND THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE TIAA-CREF LIFE FUNDS, MUTUAL FUNDS AVAILABLE ONLY THROUGH THE PURCHASE OF A VARIABLE ANNUITY OR OTHER VARIABLE INSURANCE CONTRACT ISSUED BY TIAA-CREF LIFE INSURANCE COMPANY (TIAA-CREF LIFE). PLEASE READ THIS PROSPECTUS, ALONG WITH THE PROSPECTUS DESCRIBING THE CONTRACT, BEFORE INVESTING AND KEEP BOTH PROSPECTUSES FOR FUTURE REFERENCE. The TIAA-CREF Life Funds currently offers the investment portfolio (fund) listed below. The STOCK INDEX FUND seeks to increase the value of your investment over the long-term by investing in a diversified portfolio of common stocks selected to track the overall U.S. stock market, as represented by a broad stock market index. TIAA-CREF Life Insurance Company and the TIAA-CREF Life Funds are part of the TIAA-CREF group of companies. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 3 TABLE OF CONTENTS The Stock Index Fund -- In Brief........................................... 3 Investment Objective and Principal Investment Strategies................... 4 Investment Objective........................................... 4 Principal Investment Strategies................................ 4 The Russell 3000 Index......................................... 5 Other Investments.............................................. 5 Fund Management............................................................ 6 Related Fund Performance Information....................................... 6 Pricing of Fund Shares..................................................... 7 Offering, Purchasing and Redeeming Shares.................................. 7 Dividends, Distributions and Taxes......................................... 8 Financial Highlights Information........................................... 8 General Matters............................................................ 9
This prospectus outlines the terms of the fund. It doesn't constitute an offering in any jurisdiction where such an offering can't lawfully be made. No dealer, salesman, or anyone else is authorized to give any information or to make any representation in connection with this offering other than those contained in this prospectus. If anyone does offer you such information or representations, you shouldn't rely on them. An investment in the Fund is not a deposit of the TIAA-CREF Trust Company, FSB, and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. 4 The TIAA-CREF Life Funds are mutual funds available only to separate accounts of TIAA-CREF Life Insurance Company (TIAA-CREF Life) to fund individual variable annuity or other variable insurance contracts (the contract). This prospectus describes the Stock Index Fund, the only investment portfolio (fund) currently offered by the TIAA-CREF Life Funds. Throughout this prospectus, "we" and "our" refer to the TIAA-CREF Life Funds or the Stock Index Fund. "You" and "your" means any contractowner or any prospective contractowner. THE STOCK INDEX FUND - IN BRIEF WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Stock Index Fund seeks to increase the value of your investment over the long-term by investing in a diversified portfolio of common stocks selected to track the overall U.S. stock market, as represented by a broad stock market index. WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES? The Stock Index Fund attempts to track the U.S. stock market as a whole by investing substantially all of its assets in stocks included in the Russell 3000(R) index, an index consisting of the 3,000 largest publicly-traded U.S. corporations. The fund doesn't try to match the Russell 3000 precisely by holding all 3,000 stocks. Rather, we use sampling to try to emulate the index's overall investment characteristics. The portfolio won't be managed in the traditional sense of picking individual securities based on economic, financial, and market analysis, which means that a company may remain in the portfolio even if it performs poorly. We will, however, use certain techniques to attempt to slightly outperform the Russell 3000. WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND? The Stock Index Fund's returns will fluctuate, so you could lose money on your investment. Normally, we expect that when the overall U.S. stock market is rising, the fund's value will rise, and when the stock market is falling, the fund's value will fall. Stock values will rise and fall in response to changes in overall market and economic conditions, and the financial condition of individual companies. Stocks in general are subject to the following types of risks: - Market risk -- price volatility due to changing conditions in the financial markets and, in some cases, changes in overall interest rates. - Financial risk -- the possibility that a company's current earnings will fall or that overall financial soundness will decline, reducing the stock's value. We also can't guarantee that the fund will be able to match the returns of the Russell 3000 or the stock market in general. - 3 - 5 HOW HAS THE FUND PERFORMED? Because the fund has been operating only for a short time, we have not included past performance information for the fund. For a discussion of the performance of the TIAA Stock Index Account, an investment company managed by the same adviser as the fund, see the "Related Fund Performance Information" section of this prospectus. INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES This section describes the Stock Index Fund's investment objective and the principal investment policies and techniques it uses to accomplish its objective. For a complete listing of the fund's policies and restrictions, see the SAI. INVESTMENT OBJECTIVE The Stock Index Fund seeks to increase the value of your investment over the long-term by investing in a diversified portfolio of common stocks selected to track the overall U.S. stock market, as represented by a broad stock market index. There's no guarantee that the fund will meet this investment objective. We can change the fund's investment objective without a shareholder vote, although we'll notify you of any change if it is material. PRINCIPAL INVESTMENT STRATEGIES The fund attempts to track the U.S. stock market as a whole by investing substantially all of its assets in stocks included in the Russell 3000 Index(R) (See "The Russell 3000 Index," below). The fund doesn't try to match the Russell 3000 precisely by holding all 3,000 stocks. Rather, we use sampling to try to emulate the index's overall investment characteristics. The portfolio won't be managed in the traditional sense of picking individual securities based on economic, financial, and market analysis. This means that a company can remain in the portfolio even if it performs poorly, unless the company is removed from the Russell 3000. We will, however, use proprietary quantitative scoring and trading techniques to attempt to slightly outperform the Russell 3000. We expect that in periods when the overall U.S. stock market is rising, the fund's net asset value will also rise, while in market declines, the fund's net asset value will likewise decline. We won't match the index precisely. However, we expect the fund to closely track the index. The fund seeks to track the index by calculating daily a correlation coefficient using the fund's returns from the most recent 30 trading days and the index's returns for the same period. We expect the correlation coefficient usually to be above 0.99 and, in any case, never to fall below 0.98. If it approaches 0.98, we'll rebalance the portfolio--a process which involves realigning portfolio weights and/or adding more stocks to the fund's portfolio. Since the index's returns aren't reduced by operating or investment expenses, the fund may not be able to match - 4 - 6 the index because of the costs of buying and selling stocks and other expenses. However, we expect investment expenses to be low compared to an actively managed stock portfolio. THE RUSSELL 3000 INDEX The Russell 3000 is an index of the 3,000 largest publicly traded U.S. corporations, based on the value of their outstanding stock. According to the Frank Russell Company, Russell 3000 companies account for about 98% of the total market capitalization of the publicly-traded U.S. equity market. The market capitalization of individual companies in the Russell 3000 ranged from $10 million to $304.22 billion, with an average of $3.96 billion as of November 30, 1998. The Frank Russell Company includes stocks in the index solely on their market capitalization and weights them by relative market value. The Frank Russell Company can change stocks and their weightings in the index. We'll adjust the fund's portfolio to reflect the changes as appropriate. The Russell 3000 is a trademark and service mark of the Frank Russell Company. The fund isn't promoted, endorsed, sponsored or sold by and isn't affiliated with the Frank Russell Company. A stock's presence in the Russell 3000 doesn't mean that the Frank Russell Company believes that it's an attractive investment. The Frank Russell Company isn't responsible for any literature about the fund and makes no representations or warranties about its content. Using the Russell 3000 as the measure of the U.S. equity market isn't a fundamental investment policy, so we can substitute other indices without shareholder approval. We'll notify you, however, before making any change in the target index. OTHER INVESTMENTS The fund can hold other investments in seeking to achieve its investment objective. These include: - investments whose return depends on stock market prices, such as stock index futures contracts, stock options and options (puts and calls) on futures contracts, and debt securities whose prices or interest rates are linked to the return of a recognized stock market index; - investments with equity characteristics, such as bonds convertible into common stock, warrants, preferred stock, and depository receipts for such securities; and - short-term debt securities and other money market instruments, including those denominated in foreign currencies, for cash management purposes; and - 5 - 7 - options, futures contracts, options on futures, and other financial contracts. The fund will make these types of investments for cash management or hedging purposes, rather than for speculation. For more information about these and other permitted fund investments and their risks, see the SAI. FUND MANAGEMENT Teachers Advisors, Inc. (Advisors) manages the Stock Index Fund's assets, under the supervision of the Board of Trustees of TIAA-CREF Life Funds, and is a wholly-owned indirect subsidiary of Teachers Insurance and Annuity Association of America (TIAA). Advisors is registered with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. The personnel of Advisors who manage the fund also manage the investments of TIAA Separate Account VA-1 and TIAA-CREF Mutual Funds and, through an affiliated investment adviser, TIAA-CREF Investment Management, LLC, the investment accounts of the College Retirement Equities Fund (CREF). Advisors is located at 730 Third Avenue, New York, New York 10017. Under its investment management agreement with TIAA-CREF Life Funds, Advisors is entitled to an annual fee of 0.30% of the average daily net assets of the Stock Index Fund for managing that fund. Advisors has voluntarily agreed to waive a portion of its fee, so that the current investment advisory charge is 0.07% of fund's average daily net assets. Advisors duties include conducting research, recommending investments, and placing orders to buy and sell securities. Advisors is also responsible for providing or obtaining at its own expense the services necessary to operate the TIAA-CREF Life Funds on a day-to-day basis. These include custodial, administrative, portfolio accounting, dividend disbursing, auditing, and ordinary legal services. RELATED FUND PERFORMANCE INFORMATION The following table contains information about the historical performance of the TIAA Separate Account VA-1 Stock Index Account (the "TIAA Stock Index Account"), the only other existing stock index portfolio managed by Advisors, as of September 30, 1998. The TIAA Stock Index Account is not a mutual fund; rather it funds a variable annuity contract. It has an investment objective, policies, strategies and risks substantially the same as those of the TIAA-CREF Life Funds' Stock Index Fund. The data is provided to illustrate the experience of Advisors' personnel in managing a substantially similar investment portfolio. It doesn't represent the performance of the Stock Index Fund described in this prospectus. These investment results are unaudited. They aren't intended to predict or suggest the returns that either the Stock Index Fund or TIAA Stock Index Account might experience in the future. The results are net of investment management and other operating expenses (including - 6 - 8 separate account charges of 0.30%) for the TIAA Stock Index Account and reflect the waiver by Advisors of 0.23% of its 0.30% investment management fee. The Stock Index Fund has been designed to have similar investment management expense charges and waivers. Note that no separate account charges are deducted at the fund level for the Stock Index Fund, although comparable charges will be deducted at the separate account contract level.
================================================================================= TIAA Stock Index Account Average Annual Rates of Cumulative Rates of (as of September 30, 1998) Total Return Total Return - --------------------------------------------------------------------------------- 1 year 4.34% 4.34% - --------------------------------------------------------------------------------- 3 years 19.64% 71.26% - --------------------------------------------------------------------------------- Since inception (11/1/94) 21.84% 116.76% =================================================================================
PRICING OF FUND SHARES We determine the net asset value (NAV) per share (share price) of a fund on each day the New York Stock Exchange is open for business, when trading closes on all U.S. national exchanges where securities or other investments of the fund are principally traded. We will not price fund shares on days that the New York Stock Exchange is closed. We compute the fund's NAV by dividing the value of a fund's assets, less its liabilities, by the number of outstanding shares of that fund. Except as noted below, we use market quotations or independent pricing services to value securities and other instruments. If market quotations or independent pricing services aren't readily available, we'll use a security's "fair value", as determined in good faith by or under the direction of the TIAA-CREF Life Funds' Board of Trustees. We also may use fair value if events materially affecting the value of an investment (as determined in our sole discretion) occur between the time when its price is determined and the time the fund's net asset value is calculated. OFFERING, PURCHASING AND REDEEMING SHARES Shares of the Stock Index Fund are not sold directly to you, but rather are sold in a continuous offering to TIAA-CREF Life separate accounts to fund variable annuity or other insurance contracts. Your premiums under the contracts are placed in the appropriate investment account of the separate account, and the assets of the investment account are invested in the shares of the Stock Index Fund. The separate account purchases and redeems shares of the fund for net asset value without sales or redemption charges. - 7 - 9 For each day on which the fund's net asset value is calculated, the separate account transmits to the fund any orders to purchase or redeem shares of the fund based on the purchase payments, redemption requests, death benefits, contract charges, and transfer requests from contractowners and beneficiaries that have been processed on that day. The separate account purchases and redeems shares of the fund at the fund's net asset value per share calculated as of that same day. For more information about investing in the fund, see the prospectus describing the contract, which can be obtained by calling us toll-free at 800 842-2733, extension 5509. DIVIDENDS, DISTRIBUTIONS AND TAXES The tax status of your investment in the fund depends upon your contract. For a complete discussion of the tax status of your contract, please refer to the prospectus describing the contract. Shares in the Stock Index Fund may only be held through a variable annuity or other variable insurance contract. Under current tax law, any dividend or capital gains distributions from the fund will be exempt from current taxation if left to accumulate within your variable contract. Withdrawals from your contract may be taxed as ordinary income. You may also be subject to a 10% penalty tax if a withdrawal is made before age 59 1/2. The fund expects to declare and distribute to its shareholders (i.e., separate accounts) substantially all of its net investment income and net realized capital gains. Normally, the fund will distribute dividends and capital gains annually. In addition, the fund may occasionally be required to make supplemental dividend or capital gains distributions at some other time during the year. All dividend and capital gains distributions from a fund will be automatically reinvested by the separate account in additional shares of the fund. The fund intends to qualify for taxation as a "regulated investment company" under the Internal Revenue Code so that it will not be subject to federal income tax to the extent its income is distributed to shareholders. In addition, the fund intends to qualify under the Internal Revenue Code with respect to the diversification requirements related to the tax-deferred status of insurance company separate accounts. FINANCIAL HIGHLIGHTS INFORMATION Because the fund has limited operating history, no financial highlights information is included in this prospectus. Financial statements for the fund are in the SAI, which is available free upon request. - 8 - 10 GENERAL MATTERS VOTING RIGHTS We don't plan to hold annual shareholder meetings. However, we may hold special meetings to elect trustees, change fundamental policies, approve a management agreement, or for other purposes. Each share (including fractional shares) is entitled to one vote for each dollar of net asset value represented by that share on all matters to which shareholders are entitled to vote. You should refer to the SAI, as well as the separate prospectus describing your contract and the separate account, which accompanies this prospectus, for more information on your voting rights. YEAR 2000 ISSUES Many computer software systems in use today cannot recognize the year 2000 and may revert to 1900 or some other date because of the way in which dates were encoded and calculated. The TIAA-CREF Life Funds could be adversely affected if its computer systems or those of its external service providers do not properly process and calculate date-related information and data on and after January 1, 2000. TIAA-CREF Life Funds, along with Advisors, have been actively working on necessary changes to its computer systems to prepare for the Year 2000 and have also obtained reasonable assurances from our service providers that they are taking comparable steps for their computer systems. However, the steps we are taking do not guarantee complete success or eliminate the possibility that interaction with outside computer systems may have an adverse impact on the TIAA-CREF Life Funds. ELECTRONIC PROSPECTUSES If you received this or the contract prospectus electronically and would like a paper copies, please call 800 842-2733, extension 5509, and we will send paper copies to you. HOUSEHOLDING To lower costs and eliminate duplicate documents sent to your home, we may, if the SEC allows, begin mailing only one copy of this and the contract prospectus, prospectus supplements, annual and semi-annual reports, or any other required documents, to your household, even if more than one participant lives there. If you would prefer to continue receiving your own copy of any of these documents, you may call us toll-free at 800 842-2733, extension 5509, or write us. - 9 - 11 [back cover] IF YOU HAVE ANY QUESTIONS ABOUT THE TIAA-CREF LIFE FUND'S STOCK INDEX FUND OR THE VARIABLE CONTRACT, PLEASE CALL US AT 800 223-1200. More information about TIAA-CREF Life Funds can be found in the Statement of Additional Information (SAI) for the funds dated January 4, 1999. When available, the TIAA-CREF Life Funds will also provide more information about its investments in its annual and semi-annual reports to shareholders. You can get copies of the SAI and annual and semi-annual reports without charge by calling 800-842-2733, extension 5509 or writing us at TIAA-CREF Life Funds, 730 Third Avenue, New York, New York 10017-3206. The SAI is "incorporated by reference" into this prospectus - - that means it's legally part of the prospectus. Information about TIAA-CREF Life Funds (including the SAI) can be reviewed and copied at the Securities and Exchange Commission's (SEC) public reference room (1-800-SEC-0330) in Washington, D.C. The information is also available through the SEC's internet website at www.sec.gov. Copies of the information can also be obtained, upon payment of a duplicating fee, by writing the SEC's Public Reference Section , Washington, DC 20549-6009. January 4, 1999 SEC File Nos. 333-61759, 811-08961 - 10 - 12 STATEMENT OF ADDITIONAL INFORMATION TIAA-CREF LIFE FUNDS STOCK INDEX FUND This Statement of Additional Information (SAI) is not a prospectus, although it should be read carefully in conjunction with the TIAA-CREF Life Funds' prospectus dated January 4, 1999 (the prospectus). A copy of the prospectus may be obtained by writing us at TIAA-CREF Life Funds, 730 Third Avenue, New York, New York 10017-3206 or by calling 800 842-2733, extension 5509. Terms used in the prospectus are incorporated in this SAI. The date of this SAI is January 4, 1999. 13 TABLE OF CONTENTS Investment Policies, Strategies and Restrictions.......................... Management of the Fund.................................................... Control Persons........................................................... Investment Advisory and Other Services.................................... Fund History and Description of the Fund.................................. Valuation of Assets....................................................... Brokerage Allocation...................................................... Performance Information................................................... Tax Status................................................................ Underwriters.............................................................. Legal Matters............................................................. Experts................................................................... Financial Statements......................................................
i 14 For purposes of this SAI, the term "fund" shall refer to the TIAA-CREF Life Funds' Stock Index Fund. INVESTMENT POLICIES, STRATEGIES AND RESTRICTIONS The following information is intended to supplement the description of the investment objective and policies of the fund in the prospectus. Under the Investment Company Act of 1940, as amended (the 1940 Act), any of the fund's fundamental policies may not be changed without the vote of a majority of the fund's outstanding voting securities (as defined in the 1940 Act). The non-fundamental investment restrictions contained in "Non-Principal Investment Strategies and Risk Considerations" below, may be changed by the TIAA-CREF Life Funds' Board of Trustees at any time. FUNDAMENTAL POLICIES The following restrictions are fundamental policies of the fund: 1. The fund will not issue senior securities except as SEC regulations permit; 2. The fund will not borrow money, except: (a) it may purchase securities on margin, as described in restriction 9 below; and (b) from banks (only in amounts not in excess of 33-1/3% of the market value of the fund's assets at the time of borrowing), and, from other sources, for temporary purposes (only in amounts not exceeding 5% of the fund's total assets taken at market value at the time of borrowing); 3. The fund will not underwrite the securities of other companies, except to the extent that it may be deemed an underwriter in connection with the disposition of securities from its portfolio; 4. The fund will not, with respect to at least 75% of the value of its total assets, invest more than 5% of its total assets in the securities of any one issuer, other than securities issued or guaranteed by the United States Government, its agencies or instrumentalities; 5. The fund will not invest in an industry if after giving effect to that investment the fund's holding in that industry would exceed 25% of its total assets; however, this restriction does not apply to investments in obligations issued or guaranteed by the United States Government, its agencies or instrumentalities; 6. The fund will not purchase real estate or mortgages directly; 7. The fund will not purchase commodities or commodities contracts, except to the extent financial contracts (such as futures) are purchased as described herein; 15 8. The fund will not make loans, except: (a) that the fund may make loans of portfolio securities not exceeding 33-1/3% of the value of its total assets, which are collateralized by either cash, United States Government securities, or other means permitted by applicable law, equal to at least the market value of the loaned securities, as reviewed daily; (b) loans through entry into repurchase agreements; (c) privately-placed debt securities may be purchased; (d) participation interests in loans, and similar investments, may be purchased; or (e) through an interfund loan program with affiliated investment companies, to the extent permitted by applicable SEC regulations; and 9. The fund will not purchase any security on margin except that the fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities). If a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage beyond the specified limit resulting from a change of values of portfolio securities will not be considered a violation. NON-PRINCIPAL INVESTMENT STRATEGIES AND RISKS General Besides equities, the fund can hold stock index futures contracts, options (puts and calls) on futures contracts, and debt securities whose prices or interest rates are linked to the return of a recognized stock market index, or swap arrangements where the return is linked to a recognized stock market index. The fund would make such investments in order to seek to match the total return of Russell 3000. However, they might not track the return of the Russell 3000 in all cases and can involve additional credit risks. Investing in options or futures contracts and entering into equity swaps involve special risks. These are discussed below. Such investing by the fund is subject to any necessary regulatory approvals. The fund can hold other types of securities with equity characteristics, such as bonds convertible into common stock, warrants, preferred stock, and depository receipts for such securities. These securities are generally subject to the same types of market and financial risks that are described under "What are the Principal Risks of Investing in the Fund?" in the Prospectus. The fund can hold fixed-income securities that it acquires because of mergers, recapitalizations, or otherwise. For liquidity, the fund can also invest in short-term debt securities and other money-market instruments, including those denominated in foreign currencies. Fixed-income securities, including short-term debt securities and other money market instruments, are subject to interest rate risks and financial risks. Interest rate risks are the risks that the instrument's value will decline if interest rates change. A rise in interest rates usually causes the market value of fixed-rate securities to go down, while rate deductions usually result in a market - 2 - 16 value increase. Financial risks come from the possibility the issuer won't be able to pay principal and interest when due. The fund also can invest in options and futures, as well as newly developed financial instruments, such as equity swaps and equity-linked fixed-income securities, so long as these are consistent with its investment objective and regulatory requirements. These investments and other fund investment strategies are discussed in detail below. Options and Futures The fund can buy and sell options (puts and calls) and futures to the extent permitted by the New York State Insurance Department, the SEC, and the Commodity Futures Trading Commission ("CFTC"). We do not intend to use options and futures strategies in a speculative manner but rather we would use them primarily as hedging techniques or for cash management purposes. Options and futures transactions may increase the fund's transaction costs and portfolio turnover rate and will be initiated only when consistent with its investment objectives. Options. Option-related activities could include: (1) the sale of covered call option contracts, and the purchase of call option contracts for the purpose of a closing purchase transaction; (2) buying covered put option contracts, and selling put option contracts to close out a position acquired through the purchase of such options; and (3) selling call option contracts or buying put option contracts on groups of securities and on futures on groups of securities and buying similar call option contracts or selling put option contracts to close out a position acquired through a sale of such options. This list of options-related activities is not intended to be exclusive, and the fund may engage in other types of options transactions consistent with its investment objective and policies and applicable law. A call option is a short-term contract (generally for nine months or less) which gives the purchaser of the option the right to purchase the underlying security at a fixed exercise price at any time prior to the expiration of the option regardless of the market price of the security during the option period. As consideration for the call option, the purchaser pays the seller a premium, which the seller retains whether or not the option is exercised. The seller of a call option has the obligation, upon the exercise of the option by the purchaser, to sell the underlying security at the exercise price at any time during the option period. Selling a call option would benefit the seller if, over the option period, the underlying security declines in value or does not appreciate above the aggregate of the exercise price and the premium. However, the seller risks an "opportunity loss" of profits if the underlying security appreciates above the aggregate value of the exercise price and the premium. The fund may close out a position acquired through selling a call option by buying a call option on the same security with the same exercise price and expiration date as the call option that - 3 - 17 it had previously sold on that security. Depending on the premium for the call option purchased by the fund, the fund will realize a profit or loss on the transaction. A put option is a similar short-term contract that gives the purchaser of the option the right to sell the underlying security at a fixed exercise price at any time prior to the expiration of the option regardless of the market price of the security during the option period. As consideration for the put option the purchaser pays the seller a premium, which the seller retains whether or not the option is exercised. The seller of a put option has the obligation, upon the exercise of the option by the purchaser, to purchase the underlying security at the exercise price at any time during the option period. The buying of a covered put contract limits the downside exposure for the investment in the underlying security to the combination of the exercise price less the premium paid. The risk of purchasing a put is that the market price of the underlying stock prevailing on the expiration date may be above the option's exercise price. In that case the option would expire worthless and the entire premium would be lost. The fund may close out a position acquired through buying a put option by selling a put option on the same security with the same exercise price and expiration date as the put option which it had previously bought on the security. Depending on the premium of the put option sold by the fund, the fund would realize a profit or loss on the transaction. In addition to options (both calls and puts) on individual securities, there are also options on groups of securities, such as the Standard & Poor's 100 Index traded on the Chicago Board Options Exchange. There are also options on the futures of groups of securities such as the Standard & Poor's 500 Stock Index and the New York Stock Exchange Composite Index. The selling of such calls can be used in anticipation of, or in, a general market or market sector decline that may adversely affect the market value of the fund's portfolio of securities. To the extent that the fund's portfolio of securities changes in value in correlation with a given stock index, the sale of call options on the futures of that index would substantially reduce the risk to the portfolio of a market decline, and, by so doing, provides an alternative to the liquidation of securities positions in the portfolio with resultant transaction costs. A risk in all options, particularly the relatively new options on groups of securities and on the futures on groups of securities, is a possible lack of liquidity. This will be a major consideration before the fund deals in any option. There is another risk in connection with selling a call option on a group of securities or on the futures of groups of securities. This arises because of the imperfect correlation between movements in the price of the call option on a particular group of securities and the price of the underlying securities held in the portfolio. Unlike a covered call on an individual security, where a large movement on the upside for the call option will be offset by a similar move on the underlying stock, a move in the price of a call option on a group of securities may not be offset by a similar move in the price of securities held due to the difference in the composition of the particular group and the portfolio itself. Futures. To the extent permitted by applicable regulatory authorities, the fund may purchase and sell futures contracts on securities or other instruments, or on groups or indexes of - 4 - 18 securities or other instruments. The purpose of hedging techniques using financial futures is to protect the principal value of the fund against adverse changes in the market value of securities or instruments in its portfolio, and to obtain better returns on future investments than actually may be available at the future time. Since these are hedging techniques, the gains or losses on the futures contract normally will be offset by losses or gains respectively on the hedged investment. Futures contracts also may be offset prior to the future date by executing an opposite futures contract transaction. A futures contract on an investment is a binding contractual commitment which, if held to maturity, will result in an obligation to make or accept delivery, during a particular future month, of the securities or instrument underlying the contract. By purchasing a futures contract --assuming a "long" position -- the fund legally will obligate itself to accept the future delivery of the underlying security or instrument and pay the agreed price. By selling a futures contract --assuming a "short" position -- it legally will obligate itself to make the future delivery of the security or instrument against payment of the agreed price. Positions taken in the futures markets are not normally held to maturity, but are instead liquidated through offsetting transactions which may result in a profit or a loss. While futures positions taken by the fund usually will be liquidated in this manner, the fund may instead make or take delivery of the underlying securities or instruments whenever it appears economically advantageous to the fund to do so. A clearing corporation associated with the exchange on which futures are traded assumes responsibility for closing out positions and guarantees that the sale and purchase obligations will be performed with regard to all positions that remain open at the termination of the contract. A stock index futures contract, unlike a contract on a specific security, does not provide for the physical delivery of securities, but merely provides for profits and losses resulting from changes in the market value of the contract to be credited or debited at the close of each trading day to the respective accounts of the parties to the contract. On the contract's expiration date, a final cash settlement occurs and the futures positions are closed out. Changes in the market value of a particular stock index futures contract reflect changes in the specified index of equity securities on which the future is based. Stock index futures may be used to hedge the equity investments of the fund with regard to market (systematic) risk (involving the market's assessment of overall economic prospects), as distinguished from stock specific risk (involving the market's evaluation of the merits of the issuer of a particular security). By establishing an appropriate "short" position in stock index futures, the fund may seek to protect the value of its securities portfolio against an overall decline in the market for equity securities. Alternatively, in anticipation of a generally rising market, the fund can seek to avoid losing the benefit of apparently low current prices by establishing a "long" position in stock index futures and later liquidating that position as particular equity securities are in fact acquired. To the extent that these hedging strategies are successful, the fund will be affected to a lesser degree by adverse overall market price movements, unrelated to the merits of specific portfolio equity securities, than would otherwise be the case. - 5 - 19 Unlike the purchase or sale of a security, no price is paid or received by the fund upon the purchase or sale of a futures contract. Initially, the fund will be required to deposit in a custodial account an amount of cash, United States Treasury securities, or other permissible assets equal to approximately 5% of the contract amount. This amount is known as "initial margin." The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds by the customer to finance the transactions. Rather, the initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the fund upon termination of the futures contract assuming all contractual obligations have been satisfied. Subsequent payments to and from the broker, called "variation margin," will be made on a daily basis as the price of the underlying stock index fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." For example, when the fund has purchased a stock index futures contract and the price of the underlying stock index has risen, that position will have increased in value, and the fund will receive from the broker a variation margin payment equal to that increase in value. Conversely, where the fund has purchased a stock index futures contract and the price of the underlying stock index has declined, the position would be less valuable and the fund would be required to make a variation margin payment to the broker. At any time prior to expiration of the futures contract, the fund may elect to close the position by taking an opposite position which will operate to terminate the fund's position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the fund, and the fund realizes a loss or a gain. There are several risks in connection with the use of a futures contract as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the futures contracts and movements in the securities or instruments which are the subject of the hedge. The fund will attempt to reduce this risk by engaging in futures transactions, to the extent possible, where, in our judgment, there is a significant correlation between changes in the prices of the futures contracts and the prices of the fund's portfolio securities or instruments sought to be hedged. Successful use of futures contracts for hedging purposes also is subject to the user's ability to predict correctly movements in the direction of the market. For example, it is possible that, where the fund has sold futures to hedge its portfolio against declines in the market, the index on which the futures are written may advance and the values of securities or instruments held in the fund's portfolio may decline. If this occurred, the fund would lose money on the futures and also experience a decline in value in its portfolio investments. However, we believe that over time the value of the fund's portfolio will tend to move in the same direction as the market indices which are intended to correlate to the price movements of the portfolio securities or instruments sought to be hedged. It also is possible that, for example, if the fund has hedged against the possibility of the decline in the market adversely affecting stocks held in its portfolio and stock prices increased instead, the fund will lose part or all of the benefit of increased value of those stocks that it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the fund has insufficient cash, it may have to sell securities or instruments to meet daily variation margin requirements. Such sales may be, but will not necessarily be, at - 6 - 20 increased prices which reflect the rising market. The fund may have to sell securities or instruments at a time when it may be disadvantageous to do so. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the futures contracts and the portion of the portfolio being hedged, the prices of futures contracts may not correlate perfectly with movements in the underlying security or instrument due to certain market distortions. First, all transactions in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the index and futures markets. Second, the margin requirements in the futures market are less onerous than margin requirements in the securities market, and as a result the futures market may attract more speculators than the securities market does. Increased participation by speculators in the futures market also may cause temporary price distortions. Due to the possibility of price distortion in the futures market and also because of the imperfect correlation between movements in the futures contracts arid the portion of the portfolio being hedged, even a correct forecast of general market trends by Advisors, the investment advisor for the fund, still may not result in a successful hedging transaction over a very short time period. The fund may also use futures contracts and options on futures contracts to manage its cash flow more effectively. To the extent that the fund enters into non-hedging positions, it will do so only in accordance with certain CFTC exemptive provisions. Thus, pursuant to CFTC Rule 4.5, the aggregate initial margin and premiums required to establish non-hedging positions in commodity futures or commodity options contracts may not exceed 5% of the liquidation value of the fund's portfolio, after-taking into account unrealized profits and unrealized losses on any such contracts it has entered into (provided that the in-the-money amount of an option that is in-the-money when purchased may be excluded in computing such 5%). Firm Commitment Agreements and Purchase of "When-Issued" Securities The fund can enter into firm commitment agreements for the purchase of securities on a specified future date. We expect that these transactions will be relatively infrequent. When the fund enters into a firm commitment agreement, liability for the purchase price -- and the rights and risks of ownership of the securities -- accrues to the fund at the time it becomes obligated to purchase such securities, although delivery and payment occur at a later date. Accordingly, if the market price of the security should decline, the effect of the agreement would be to obligate the fund to purchase the security at a price above the current market price on the date of delivery and payment. During the time the fund is obligated to purchase such securities, it will be required to segregate assets. See "Segregated Accounts," below. Securities Lending Subject to investment restriction 8(a) (relating to loans of portfolio securities) set forth above, the fund may lend its securities to brokers and dealers that are not affiliated with TIAA-CREF Life Insurance Company, are registered with the SEC and are members of the NASD, and - 7 - 21 also to certain other financial institutions. All loans will be fully collateralized. In connection with the lending of its securities, the fund will receive as collateral cash, securities issued or guaranteed by the United States Government (i.e., Treasury securities), or other collateral permitted by applicable law, which at all times while the loan is outstanding will be maintained in amounts equal to at least 102% of the current market value of the loaned securities, or such lesser percentage as may be permitted by the Securities and Exchange Commission (SEC) (not to fall below 100% of the market value of the loaned securities), as reviewed daily. By lending its securities, the fund will receive amounts equal to the interest or dividends paid on the securities loaned and in addition will expect to receive a portion of the income generated by the short-term investment of cash received as collateral or, alternatively, where securities or a letter of credit are used as collateral, a lending fee paid directly to the fund by the borrower of the securities. Such loans will be terminable by the fund at any time and will not be made to affiliates of TIAA. The fund may terminate a loan of securities in order to regain record ownership of, and to exercise beneficial rights related to, the loaned securities, including but not necessarily limited to voting or subscription rights, and may, in the exercise of its fiduciary duties, terminate a loan in the event that a vote of holders of those securities is required on a material matter. The fund may pay reasonable fees to persons unaffiliated with the fund for services or for arranging such loans. Loans of securities will be made only to firms deemed creditworthy. As with any extension of credit, however, there are risks of delay in recovering the loaned securities, or in liquidating collateral, should the borrower of securities default, become the subject of bankruptcy proceedings, or otherwise be unable to fulfill its obligations or fail financially. Illiquid Securities The fund can invest up to 15 percent of its assets in investments that may not be readily marketable. It may be difficult to sell these investments for their fair market value. Repurchase Agreements Repurchase agreements are one of several short-term vehicles the fund can use to manage cash balances effectively. In a repurchase agreement, we buy an underlying debt instrument on condition that the seller agrees to buy it back at a fixed time (usually a relatively short period) and price. The period from purchase to repurchase is usually no more than a week and never more than a year. Repurchase agreements have the characteristics of loans, and will be fully collateralized (either with physical securities or evidence of book entry transfer to the account of the custodian bank) at all times. During the term of the repurchase agreement, the fund retains the security subject to the repurchase agreement as collateral securing the seller's repurchase obligation, continually monitors the market value of the security subject to the agreement, and requires the fund's seller to deposit with the fund additional collateral equal to any amount by which the market value of the security subject to the repurchase agreement falls below the resale amount provided under the repurchase agreement. The fund will enter into repurchase agreements only with member banks of the Federal Reserve System, and with primary dealers in United States Government securities or their wholly-owned subsidiaries whose creditworthiness has been reviewed and found satisfactory by Advisors and who have, therefore, been determined to present minimal credit risk. - 8 - 22 Securities underlying repurchase agreements will be limited to certificates of deposit, commercial paper, bankers' acceptances, or obligations issued or guaranteed by the United States Government or its agencies or instrumentalities, in which the fund entering into the agreement may otherwise invest. If a seller of a repurchase agreement defaults and does not repurchase the security subject to the agreement, the fund entering into the agreement would look to the collateral security underlying the seller's repurchase agreement, including the securities subject to the repurchase agreement, for satisfaction of the seller's obligation to the fund; in such event the fund might incur disposition costs in liquidating the collateral and might suffer a loss if the value of the collateral declines. In addition, if bankruptcy proceedings are instituted against a seller of a repurchase agreement, realization upon the collateral may be delayed or limited. Swap Transactions The fund may, to the extent permitted by the SEC, enter into privately negotiated "swap" transactions with other financial institutions in order to take advantage of investment opportunities generally not available in public markets. In general, these transactions involve "swapping" a return based on certain securities, instruments, or financial indices with another party, such as a commercial bank, in exchange for a return based on different securities, instruments, or financial indices. By entering into a swap transaction, the fund may be able to protect the value of a portion of its portfolio against declines in market value. The fund may also enter into swap transactions to facilitate implementation of allocation strategies between different market segments or countries or to take advantage of market opportunities which may arise from time to time. The fund may be able to enhance its overall performance if the return offered by the other party to the swap transaction exceeds the return swapped by the fund. However, there can be no assurance that the return the fund receives from the counterparty to the swap transaction will exceed the return it swaps to that party. While the fund will only enter into swap transactions with counterparties it considers creditworthy (and will monitor the creditworthiness of parties with which it enters into swap transactions), a risk inherent in swap transactions is that the other party to the transaction may default on its obligations under the swap agreement. If the other party to the swap transaction defaults on its obligations, the fund entering into the agreement would be limited to the agreement's contractual remedies. There can be no assurance that the fund will succeed when pursuing its contractual remedies. To minimize the fund's exposure in the event of default, it will usually enter into swap transactions on a net basis (i.e., the parties to the transaction will net the payments payable to each other before such payments are made). When the fund enters into swap transactions on a net basis, the net amount of the excess, if any, of the fund's obligations over its entitlements with respect to each such swap agreement will be accrued on a daily basis and an amount of liquid assets having an aggregate market value at least equal to the accrued excess will be segregated by the fund's custodian. To the extent the fund enters into swap transactions other than on a net basis, the amount segregated will be the full amount of the fund's obligations, if any, - 9 - 23 with respect to each such swap agreement, accrued on a daily basis. See "Segregated Accounts," below. Swap agreements may be considered illiquid by the SEC staff and subject to the limitations on illiquid investments. See "Illiquid Securities" above. To the extent that there is an imperfect correlation between the return the fund is obligated to swap and the securities or instruments representing such return, the value of the swap transaction may be adversely affected. No fund therefore will enter into a swap transaction unless it owns or has the right to acquire the securities or instruments representative of the return it is obligated to swap with the counterparty to the swap transaction. It is not the intention of any fund to engage in swap transactions in a speculative manner but rather primarily to hedge or manage the risks associated with assets held in, or to facilitate the implementation of portfolio strategies of purchasing and selling assets for, the fund. Segregated Accounts In connection with when-issued securities, firm commitment agreements, and certain other transactions in which the fund incurs an obligation to make payments in the future, the fund may be required to segregate assets with its custodian bank in amounts sufficient to settle the transaction. To the extent required, such segregated assets can consist of liquid assets, including equity or other securities, or other instruments such as cash, United States Government securities or other obligations as may be permitted by law. Investment Companies The fund can invest up to 10 percent of its assets in other investment companies. Borrowing The fund can borrow money from banks (no more than 33-1/3 percent of the market value of its assets at the time of borrowing), rather than through the sale of portfolio securities, when such borrowing appears more attractive for the fund. It can also borrow money from other sources temporarily (no more than 5 percent of the total market value of its assets at the time of borrowing), when, for example, the fund needs to meet liquidity requirements caused by greater than anticipated redemptions. See "Fundamental Policies" above. Other Investment Techniques and Opportunities The fund may take certain actions with respect to merger proposals, tender offers, conversion of equity-related securities and other investment opportunities with the objective of enhancing the portfolio's overall return, regardless of how these actions may affect the weight of the particular securities in the fund's portfolio. It is not our policy to select investments based primarily on the possibility of one or more of these investment techniques and opportunities being presented. - 10 - 24 PORTFOLIO TURNOVER The transactions the fund engages in are reflected in its portfolio turnover rate. The rate of portfolio turnover is calculated by dividing the lesser of the amount of purchases or sales of portfolio securities during the fiscal year by the monthly average of the value of the fund's portfolio securities (excluding from the computation all securities, including options, with maturities at the time of acquisition of one year or less). A high rate of portfolio turnover generally involves correspondingly greater brokerage commission expenses, which must be borne directly by the fund and ultimately by the fund's shareholders. However, because portfolio turnover is not a limiting factor in determining whether or not to sell portfolio securities, a particular investment may be sold at any time, if investment judgment or account operations make a sale advisable. The fund does not have a fixed policy on portfolio turnover although, because a higher portfolio turnover rate will increase brokerage costs, Advisors will carefully weigh the added costs of short term investment against the gains anticipated from such transactions. MANAGEMENT OF THE FUND THE BOARD A Board of Trustees (the Board) oversees the TIAA-CREF Life Funds' business affairs and is responsible for major decisions about its investment objective and policies. The Board delegates the day-to-day management of the fund to Advisors and its officers (see below). The Board meets periodically to review the fund's activities, contractual arrangements with companies that provide services to the fund, and the performance of the investment portfolio. TRUSTEES AND OFFICERS OF THE TIAA-CREF LIFE FUNDS
POSITION(S) HELD NAME AND ADDRESS* AGE WITH REGISTRANT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ---------------- --- ----------------- ------------------------------------------ Laurence W. Franz 58 Trustee Vice President, Business and Finance, and Canisius College Treasurer, Canisius College 2001 Main Street Buffalo, New York 14208 Jeanmarie C. Grisi 39 Trustee Treasurer, Carnegie Corporation of New York Carnegie Corporation of New York (a philanthropic grantmaking foundation) 437 Madison Avenue New York, New York 10022 Richard M. Norman 53 Trustee Vice President for Administration and Rutgers University Associate Treasurer, Rutgers, The State Old Queens Building, Room 101 University of New Jersey Somerset-George Street New Brunswick, New Jersey 08903
- 11 - 25 Thomas G. Walsh** 56 Chairman of the President, Teachers Personal Investors Board and Services, Inc. ("TPIS"), since February 1994, President and Executive Vice President, TIAA and CREF John J. McCormack** 54 Trustee and Executive Vice President, TIAA and CREF, Executive Vice since November 1983 and President, TIAA- President CREF Enterprises, since June 1998 Richard L. Gibbs 51 Executive Vice Executive Vice President, TIAA, CREF, President TIAA-CREF Investment Management, LLC ("Investment Management") and TIAA-CREF Individual & Institutional Services, Inc. ("Services"), since 1993 Peter C. Clapman 62 Senior Vice Senior Vice President and Chief Counsel, President, Investments, TIAA and CREF Secretary and Chief Counsel, Investments Richard J. Adamski 56 Vice President Vice President and Treasurer, Investment and Treasurer Management and Services, since January 1992 and TPIS, since 1994, and Vice President and Treasurer, TIAA and CREF
* The address for all officers of the TIAA-CREF Life Funds is 730 Third Avenue, New York, New York 10017-3206. ** This Trustee is or may be an "interested person" within the meaning of the Investment Company Act of 1940. COMPENSATION OF TRUSTEES Trustees who are not active officers of Teachers Insurance and Annuity Association (TIAA) each receive a total of $5,000 per year, plus $1,000 for each meeting of the Board of Trustees attended, for their service to both the TIAA-CREF Life Funds and TIAA Separate Account VA-1 (the "Fund Complex"). Compensation is allocated between the companies in the Fund Complex based on assets. Trustees who are active officers of TIAA do not receive any additional compensation for their services as trustees. (See "Advisors and TIAA" below). The following table sets forth the expected compensation to be paid to the TIAA-CREF Life Funds' trustees for the year ended December 31, 1998: - 12 - 26
(1) (2) (3) (4) (5) Aggregate Estimated Compensation Pension or Retirement Annual Total NAME OF PERSON, From TIAA-CREF Benefits Accrued As Benefits Upon Compensation From POSITION Life Funds Part of Fund Expenses Retirement Fund Complex** -------- ---------- --------------------- ---------- -------------- Laurence W. Franz, $ 20 $-0- $-0- $5,500 Trustee Jeanmarie C. Grisi, $-0-* $-0- $-0-* $ -0- Trustee Richard M. Norman, $ 20 $-0- $-0- $5,500 Trustee
* Ms. Grisi has declined to accept compensation for her services. ** For purposes of this information, the Fund Complex consists of the TIAA-CREF Life Funds and TIAA Separate Account VA-1. CONTROL PERSONS Teachers Insurance and Annuity Association (TIAA), as the contributor of the initial capital for the TIAA-CREF Life Funds, owned 99.6% of the shares of the fund as of December 31, 1998. INVESTMENT ADVISORY AND OTHER SERVICES INVESTMENT ADVISORY SERVICES As explained in the prospectus, investment advisory services and related services for the TIAA-CREF Life Funds are provided by personnel of Advisors, which is registered under the Investment Advisers Act of 1940. Advisors manages the investment and reinvestment of the assets of the TIAA-CREF Life Funds, subject to the direction and control of the TIAA-CREF Life Funds' Board of Trustees. Advisors' will perform all research, make recommendations, and place orders for the purchase and sale of securities. Advisors also provides for portfolio accounting, custodial, and related services for the assets of the TIAA-CREF Life Funds. As described in the prospectus, the investment management agreement between Advisors and the TIAA-CREF Life Funds provides for payment of an investment advisory fee of 0.30% of net assets annually for managing the Stock Index Fund. Currently, with Advisors waiving a portion of that fee, a daily deduction from the net assets of the Stock Index Fund is made at an annual rate of 0.07% for expenses related to the management of the assets of the Stock Index Fund. - 13 - 27 ADVISORS AND TIAA Advisors is a wholly-owned indirect subsidiary of TIAA. The main offices of both TIAA and Advisors are at 730 Third Avenue, New York, New York 10017-3206. TIAA is a stock life insurance company, organized under the laws of New York State. It was founded on March 4, 1918, by the Carnegie Foundation for the Advancement of Teaching. TIAA is the companion organization of the College Retirement Equities Fund (CREF), the first company in the United States to issue a variable annuity. Together, TIAA and CREF form the principal retirement system for the nation's education and research communities and the largest retirement system in the world, based on assets under management. TIAA-CREF serves approximately two million people. As of September 30, 1998, TIAA's assets were approximately $100.3 billion; the combined assets for TIAA and CREF totalled approximately $222.1 billion. TIAA holds all of the shares of TIAA-CREF Enterprises, Inc., which in turn holds all the shares of Advisors, TIAA-CREF Life Insurance Company, and Teachers Personal Investors Services, Inc., the principal underwriter for the TIAA-CREF Life Funds and the TIAA-CREF Life Insurance Company variable annuity contracts funded by the TIAA-CREF Life Funds. TIAA also holds all the shares of TIAA-CREF Investment Management, LLC ("Investment Management"). Investment Management provides investment advisory services to the College Retirement Equities Fund, TIAA's companion organization. All of the foregoing are affiliates of the TIAA-CREF Life Funds and Advisors. CUSTODIAN The custodian for the assets of the fund is State Street Bank & Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts 02209. ADMINISTRATIVE SERVICES Teachers Advisors has retained State Street to provide the TIAA-CREF Life Funds with certain administrative services, including preparation of each fund's federal, state and local tax returns, preparation of fund financial information, and various other administrative services. Advisors, not the TIAA-CREF Life Funds, has agreed to pay State Street a fee for such services. AUDITORS The financial statements of TIAA-CREF Life Funds are audited by Ernst & Young LLP. The principal business address of Ernst & Young LLP is 787 Seventh Avenue, New York, New York 10019. - 14 - 28 FUND HISTORY AND DESCRIPTION OF THE FUND TIAA-CREF Life Funds is a Delaware business trust organized on August 13, 1998, and is registered with the U.S. Securities and Exchange Commission (SEC) as a diversified "open-end" management investment company. It currently has only one investment portfolio, the Stock Index Fund (fund). As a Delaware business trust, the fund's operations are governed by its Declaration of Trust dated August 13, 1998, as amended (the Declaration). A copy of the fund's Certificate of Trust, dated August 13, 1998, is on file with the Office of the Secretary of State of the State of Delaware. SHAREHOLDERS MEETINGS AND VOTING RIGHTS Under the Declaration, the TIAA-CREF Life Funds are not required to hold annual meetings to elect Trustees or for other purposes, and therefore, we do not anticipate that the fund will hold shareholders' meetings unless required by law. The TIAA-CREF Life Funds will be required to hold a meeting to elect Trustees to fill any existing vacancies on the Board if, at any time, fewer than a majority of the Trustees have been elected by the shareholders of the TIAA-CREF Life Funds. With regard to matters for which the Investment Company Act of 1940 requires a shareholder vote, the separate account which issues the variable contracts funded by the TIAA-CREF Life Funds, as the legal owner of the TIAA-CREF Life Funds shares, typically votes fund shares in accordance with instructions received from contractowners (or annuitants or beneficiaries thereunder) having a voting interest in the separate account. Shares held by the separate account for which no instructions are received are generally voted by the separate account for or against any proposition, or in abstention, in the same proportion as the shares for which instructions have been received. You should refer to the separate prospectus, which accompanies this prospectus, describing your contract and the separate account, for more information on your voting rights. SHARES The fund is authorized to issue an unlimited number of shares of beneficial interest in the fund, all without par value. Shares are divided into and may be issued in a designated series representing beneficial interests in one of the fund's investment portfolios. There is currently one series of shares and one investment portfolio. Each share of a series issued and outstanding is entitled to participate equally in dividends and distributions declared by such series and, upon liquidation or dissolution, in net assets allocated to such series remaining after satisfaction of outstanding liabilities. The shares of each series, when issued, will be fully paid and non-assessable and have no preemptive or conversion rights. - 15 - 29 Each share (including fractional shares) is entitled to one vote for each dollar of net asset value represented by the share on all matters to which the holder of that share is entitled to vote. The shares do not have cumulative voting rights. Teachers Insurance and Annuity Association of America (TIAA) provided the initial capital for the fund by purchasing $25 million of shares of the Stock Index Fund. A separate account of TIAA-CREF Life Insurance Company invested an additional $100,000 in the fund. Such shares were acquired for investment and can only be disposed of by redemption. ADDITIONAL PORTFOLIOS The TIAA-CREF Life Funds currently consists of a single investment portfolio, or fund. Pursuant to the Declaration, the Trustees may establish additional investment funds (technically "series" of shares). VALUATION OF ASSETS The assets of the TIAA-CREF Life Funds are valued as of the close of each valuation day in the following manner: EQUITY SECURITIES Investments for which market quotations are readily available are valued at the market value of such investments, determined as follows: Equity securities listed or traded on the New York Stock Exchange or the American Stock Exchange are valued based on their last sale price on such exchange on the date of valuation, or at the mean of the closing bid and asked prices if no sale is reported. Equity securities which are listed or traded on any other exchange are valued in a comparable manner on the principal exchange where traded. Equity securities traded in the United States over-the-counter market are valued based on the last sale price on the date of valuation for NASDAQ National Market System securities, or at the mean of the closing bid and asked prices if no sale is reported. Other U.S. over-the-counter equity securities are valued at the mean of the closing bid and asked prices. Equity securities may be valued at fair value as determined in good faith under the direction of the Board of Trustees if events materially affecting the value of an investment (as determined in our sole discretion) occur between the time when its price is determined and the time the fund's net asset value is calculated. - 16 - 30 MONEY MARKET INSTRUMENTS Money market instruments for which market quotations are readily available are valued based on the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality, and type). Values for money market instruments will be obtained either from one or more of the major market makers or from one or more of the financial information services for the securities to be valued. OPTIONS Portfolio investments underlying options are valued as described above. Stock options written by the fund are valued at the last quoted sale price, or at the closing bid price if no sale is reported for the day of valuation as determined on the principal exchange on which the option is traded. The value of the fund's net assets will be increased or decreased by the difference between the premiums received on writing options and the costs of liquidating such positions measured by the closing price of the options on the date of valuation. For example, when the fund writes a call option, the amount of the premium is included in the fund's assets and an equal amount is included in its liabilities. The liability thereafter is adjusted to the current market value of the call. Thus, if the current market value of the call exceeds the premium received, the excess would be unrealized depreciation; conversely, if the premium exceeds the current market value, such excess would be unrealized appreciation. If a call expires or if the fund enters into a closing purchase transaction it realizes a gain (or a loss if the cost of the transaction exceeds the premium received when the call was written) without regard to any unrealized appreciation or depreciation in the underlying securities, and the liability related to such call is extinguished. If a call is exercised, the fund realizes a gain or loss from the sale of the underlying securities and the proceeds of the sale increased by the premium originally received. A premium paid on the purchase of a put will be deducted from the fund's assets and an equal amount will be included as an investment and subsequently adjusted to the current market value of the put. For example, if the current market value of the put exceeds the premium paid, the excess would be unrealized appreciation; conversely, if the premium exceeds the current market value, such excess would be unrealized depreciation. Stock and bond index futures, and options thereon, which are traded on commodities exchanges, are valued at their last sale prices as of the close of such commodities exchanges. INVESTMENTS FOR WHICH MARKET QUOTATIONS ARE NOT READILY AVAILABLE Portfolio securities or other assets for which market quotations are not readily available will be valued at fair value as determined in good faith under the direction of the Board of Trustees. - 17 - 31 BROKERAGE ALLOCATION Advisors is responsible for decisions to buy and sell securities for the fund as well as for selecting brokers and, where applicable, negotiating the amount of the commission rate paid. It is the intention of Advisors to place brokerage orders with the objective of obtaining the best execution, which includes such factors as best price, research and available data. When purchasing or selling securities traded on the over-the-counter market, Advisors generally will execute the transactions with a broker engaged in making a market for such securities. When Advisors deems the purchase or sale of a security to be in the best interests of the fund, its personnel may, consistent with their fiduciary obligations, decide either to buy or to sell a particular security for the fund at the same time as for TIAA Separate Account VA-1, TIAA-CREF Mutual Funds or any other investment account that it may be managing, or at the same time as for a CREF account or other account that it may also be managing on behalf of Investment Management, the other investment adviser affiliated with TIAA. In that event, allocation of the securities purchased or sold, as well as the expenses incurred in the transaction, will be made in an equitable manner. Domestic brokerage commissions are negotiated, as there are no standard rates. All brokerage firms provide the service of execution of the order made; some brokerage firms also provide research and statistical data, and research reports on particular companies and industries are customarily provided by brokerage firms to large investors. In negotiating commissions, consideration is given by Advisors to the quality of execution provided and to the use and value of the data. The valuation of such data may be judged with reference to a particular order or, alternatively, may be judged in terms of its value to the overall management of the portfolio. Advisors will place orders with brokers providing useful research and statistical data services if reasonable commissions can be negotiated for the total services furnished even though lower commissions may be available from brokers not providing such services. Advisors follows guidelines established by the Board for the placing of orders with the brokers providing such services. Research or services obtained for the fund may be used by personnel of Advisors in managing other investment company accounts, or the CREF accounts for Investment Management. In such circumstances, the expenses incurred will be allocated in an equitable manner consistent with the fiduciary obligations of personnel of Advisors to the fund. PERFORMANCE INFORMATION From time to time, we will advertise the total return and average annual total return of the fund. Total return is computed on a per share basis and assumes the reinvestment of dividends and distributions. Total return generally is expressed as a percentage rate which is calculated by combining the income and principal changes for a specified period and dividing by the net asset value per share at the beginning of the period. Advertisements may include - 18 - 32 the percentage rate of total return or may include the value of a hypothetical investment at the end of the period, which assumes the application of the percentage rate of total return. Average annual total return is calculated pursuant to a standardized formula which assumes that an investment in the fund was purchased with an initial payment of $1,000 and that the investment was redeemed at the end of a stated period of time, after giving effect to the reinvestment of dividends and distributions during the period. The return is expressed as a percentage rate which, if applied on a compounded annual basis, would result in the redeemable value of the investment at the end of the period. Advertisements of the fund's performance will include the fund's average annual total return for one-, five- and ten-year periods (and occasionally other periods as well). All performance figures are based on past investment results. They aren't a guarantee that the fund will perform equally or similarly in the future. Write or call us for current performance figures for the fund. CALCULATION OF PERFORMANCE DATA We may quote the fund's performance in various ways. All performance information in advertising is historical and is not intended to indicate future returns. The fund's share price, yield, and total return fluctuate in response to market conditions and other factors, and the value of fund shares when redeemed may be more or less than their original cost. Performance of the fund will be presented net of any separate account fees and charges. TOTAL RETURN CALCULATIONS Total returns quoted in advertising reflect all aspects of the fund's returns, including the effect of reinvesting dividends and capital gain distributions, and any change in the fund's NAV over a stated period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical historical investment in the fund over a stated period, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period according to the following formula: n P (1 + T) = ERV where: P = the hypothetical initial payment T = average annual total return n = number of years in the period ERV = ending redeemable value of the hypothetical payment made at the beginning of the one-, five-, or 10-year period at the end of the one-, five-, or 10-year period (or fractional portion thereof). - 19 - 33 For example, a cumulative return of 100% over ten years would produce an average annual return of 7.18%, which is the steady annual rate that would equal 100% growth on a compounded basis in ten years. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that the fund's performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of the fund. In addition to average annual returns, we may quote the fund's unaveraged or cumulative total returns reflecting the actual change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns may be quoted on a before or after tax basis. Total returns, yields, and other performance information may be quoted numerically or in a table, graph, or similar illustration. PERFORMANCE COMPARISONS Performance information for the fund may be compared in advertisements, sales literature, and reports to Shareholders, to the performance information reported by other investments and to various indices and averages. Such comparisons may be made with, but are not limited to (1) Frank Russell Co. Inc. indices, (2) the S&P 500, (3) the Dow Jones Industrial Average ("DJIA"), (4) Lipper Analytical Services, Inc. Mutual Fund Performance Analysis Reports and the Lipper General Equity Funds Average, (5) Money Magazine Fund Watch, (6) Business Week's Mutual Fund Scoreboard, (7) SEI Funds Evaluation Services Equity Fund Report, (8) CDA Mutual Funds Performance Review and CDA Growth Mutual Fund Performance Index, (9) Value Line Composite Average (geometric), (10) Wilshire Associates indices, (11) the Consumer Price Index, published by the U.S. Bureau of Labor Statistics (measurement of inflation), (12) Morningstar, Inc., and (13) VARDS. We may also discuss ratings or rankings received from these entities, accompanied in some cases by an explanation of those ratings or rankings, when applicable. In addition, advertisements may discuss the performance of the indices listed above. The performance of the fund also may be compared to other indices or averages that measure performance of a pertinent group of securities. You should keep in mind that the composition of the investments in the reported averages will not be identical to that of the fund and that certain formula calculations (e.g., yield) may differ from index to index. In addition, there can be no assurance that any of the funds will continue its performance as compared to such indices. We may also advertise ratings or rankings the fund receives from various rating services and organizations, including but not limited to any organization listed above. - 20 - 34 The fund is not promoted, sponsored, endorsed, or sold by, nor affiliated with, Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the fund literature or publications and makes no representation or warranty, express or implied, as to their accuracy, completeness, or otherwise. Frank Russell Company reserves the right, at any time and without notice, to change or terminate the Russell 3000 Index. Frank Russell Company has no obligation to take the needs of the fund or the separate account contractowners into consideration in determining the index. Frank Russell Company's publication of the Russell 3000 Index in no way suggests or implies an opinion by Frank Russell Company as to the attractiveness or appropriateness of investment in any or all of the securities upon which the Index is based. Frank Russell Company makes no representation, warranty, or guarantee as to the accuracy, completeness or reliability of the Index or any data included in the Index. Frank Russell Company makes no representation or warranty regarding the use, or the results of use, of the Index or any securities comprising the Index. FRANK RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND OR NATURE, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA OR SECURITIES INCLUDED THEREIN. ILLUSTRATING COMPOUNDING, TAX DEFERRAL, AND EXPENSE DEDUCTIONS We may illustrate in advertisements, sales literature, and reports to contractowners or annuitants the effects of tax deferral and/or compounding of earnings on an investment in the TIAA-CREF Life Funds. We may do this using a hypothetical investment earning a specified rate of return. To illustrate the effects of compounding, we would show how the total return from an investment of the same dollar amount, earning the same or different interest rate, varies depending on when the investment was made. To illustrate the effects of tax deferral, we will show how the total return from an investment of the same dollar amount, earning the same or different interest rates, for individuals in the same tax bracket, would vary between tax-deferred and taxable investments. We may also illustrate in advertisements, sales literature, and reports to contractowners or annuitants the effect of an investment fund's expenses on total return over time. We may do this using a hypothetical investment earning a specified rate of return. We would show how the total return, net of expenses, from an investment of the same dollar amount in funds with the same investment results but different expense deductions varies increasingly over time. In the alternative, we would show the difference in the dollar amount of total expense charges paid over time by an investor in two or more different funds that have the same annual total return but different asset-based expense charges. We may also compare the TIAA-CREF Life Funds' expense charges to those of other investment products. - 21 - 35 NET ASSET VALUE Charts and graphs using the fund's NAVs, adjusted NAVs, and benchmark indices may be used to exhibit performance. An adjusted NAV includes any distributions paid by the fund and reflects all elements of its return. MOVING AVERAGES We may illustrate the fund's performance using moving averages. A long-term moving average is the average of each week's adjusted closing NAV for a specified period. A short-term moving average is the average of each day's adjusted closing NAV for a specified period. "Moving Average Activity Indicators" combine adjusted closing NAVs from the last business day of each week with moving averages for a specified period to produce indicators showing when an NAV has crossed, stayed above, or stayed below its moving average. TAX STATUS Although the TIAA-CREF Life Funds are organized as a Delaware business trust, neither the TIAA-CREF Life Funds nor the fund will be subject to any corporate excise or franchise tax in the State of Delaware, nor will it be liable for Delaware income taxes provided that the fund and any additional fund added qualifies as a "regulated investment company" ("RIC") for federal income tax purposes and satisfies certain income source requirements of Delaware law. If the fund or any additional fund so qualifies and distributes all of its income and capital gains, it will also be exempt from the New York State franchise tax and the New York City general corporation tax, except for small minimum taxes. The fund intends to qualify as a RIC under Subchapter M of the Code. In general, to qualify as a RIC: (a) at least 90% of the gross income of the fund for the taxable year must be derived from dividends, interest, payments with respect to loans of securities, gains from the sale or other disposition of securities, or other income derived with respect to its business of investing in securities; (b) the fund must distribute to its shareholders 90% of its ordinary income and net short-term capital gains. Moreover, undistributed net income may be subject to tax at the RIC level; and (c) the fund must diversify its assets so that, at the close of each quarter of its taxable year, (i) at least 50% of the fair market value of its total (gross) assets is comprised of cash, cash items, U.S. Government securities, securities of other regulated investment companies and other securities limited in respect of any one issuer to no more than 5% of the fair market value of the fund's total assets and 10% of the outstanding voting securities of such issuer and (ii) no more than 25% of the fair market value of its total assets is invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies) or of two or more issuers controlled by the fund and engaged in the same, similar, or related trades or businesses. If, in any taxable year, the fund should not qualify as a RIC under the Code: (1) the fund would be taxed at normal corporate rates on the entire amount of its taxable income without deduction for dividends or other distributions to its shareholders, and (2) the fund's distributions to the extent made out of the fund's current or accumulated earnings and profits - 22 - 36 would be taxable to its shareholders (other than shareholders in tax deferred accounts) as ordinary dividends (regardless of whether they would otherwise have been considered capital gains dividends), and may qualify for the deduction for dividends received by corporations. The fund must declare and distribute dividends equal to at least 98% of its ordinary income (as of the twelve months ended December 31) and distributions of at least 98% of its net capital gains (as of the twelve months ended October 31), in order to avoid a federal excise tax. The fund intends to make the required distributions, but they cannot guarantee that they will do so. Dividends attributable to the funds's ordinary income and capital gains distributions are taxable as such to shareholders in the year in which they are received except dividends declared in October, November or December and paid in January. Dividends in the latter category are treated as paid on December 31. A distribution of net capital gains reflects the fund's excess of net long-term gains over its net short-term losses. The fund must designate income dividends and distributions of net capital gains and must notify shareholders of these designations within sixty days after the close of the fund's taxable year. At the time of a share purchase, the fund's net asset value may reflect undistributed income or net capital gains. A subsequent distribution to shareholders of such amounts, although constituting a return of their investment, would be taxable either as dividends or capital gain distributions. For federal income tax purposes, the fund is permitted to carry forward its net realized capital losses, if any, for eight years, and realize net capital gains up to the amount of such losses without being required to pay taxes on, or distribute such gains. If a shareholder held shares for six months or less and during that period received a distribution taxable to such shareholder as a long term capital gain, any loss realized on the sale of such shares during the six month period would be a long term loss to the extent of such distribution. This discussion of the tax treatment of the funds and their distributions is based on the federal, Delaware and New York tax laws in effect as of the date of this SAI. Shareholders should consult their tax advisers to determine the tax treatment of an investment by him or her in any fund. UNDERWRITERS The shares of the TIAA-CREF Life Funds are offered continuously by Teachers Personal Investors Services, Inc. (TPIS), which is registered with the SEC as a broker-dealer and is a member of the NASD. TPIS may be considered the "principal underwriter" for the shares of the fund. No commissions are paid in connection with the distribution of the shares of the TIAA-CREF Life Funds. The principal business address of TPIS is 730 Third Avenue, New York, New York 10017. - 23 - 37 LEGAL MATTERS All matters of applicable state law have been passed upon by Charles H. Stamm, Executive Vice President and General Counsel of TIAA and CREF. Legal matters relating to the federal securities laws have been passed upon by Sutherland, Asbill & Brennan LLP, Washington, D.C. EXPERTS The financial statements of the TIAA-CREF Life Funds included in this Statement of Additional Information have been audited by Ernst & Young LLP, independent auditors, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. OTHER INFORMATION This Statement of Additional Information and the Prospectus for the fund do not contain all the information set forth in the registration statement and exhibits relating thereto (including the Declaration of Trust), which the fund has filed with the SEC, to which reference is hereby made. FINANCIAL STATEMENTS [TO BE FILED BY AMENDMENT] - 24 - 38 PART C OTHER INFORMATION ITEM 23. EXHIBITS (a) Amended and Restated Declaration of Trust (b) N/A (c) N/A (d) Investment advisory contract (e) Participation/Distribution Agreement between Registrant, TIAA-CREF Life Insurance Company and TPIS (f) N/A (g) Custodian agreement (h) (1) Administration Agreement with State Street (2) Participation/Distribution Agreement (see Exhibit (e) above) (i) Opinion and Consent of Charles H. Stamm, Esq.* (j) (1) Consent of Sutherland, Asbill & Brennan LLP* (2) Consent of Ernst & Young LLP* (k) N/A (l) Seed Money Agreement (m) N/A (n) Financial Data Schedule* (o) N/A - ------------------- * - To be filed by Amendment. ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT Teachers Insurance and Annuity Association (TIAA) College Retirement Equities Fund - 1 - 39 The following companies are subsidiaries of Teachers Insurance and Annuity Association (TIAA) and are included in the consolidated financial statements of TIAA. All TIAA subsidiary companies are Delaware corporations, except as indicated. All Trusts are Pennsylvania business trusts. AIC Properties, Inc. BT Properties, Inc. College Credit Trust Country Commons Doylestown Trust Country Commons Joint Venture Trust DAN Properties, Inc. ETC Repackaging, Inc. Illinois Teachers Properties, LLC JV California Two, Inc. JV California Three, Inc. JV Florida One, Inc. JV Florida Four, Inc. JV Georgia One, Inc. JV Maryland One, Inc. JV Michigan One, Inc. JV Michigan Two, Inc. JV Michigan Three, Inc. JV Minnesota One, Inc. JV Missouri One, Inc. JV North Carolina One, Inc. JWL Properties, Inc. Liberty Place Retail, Inc. Light Street Partners, LLP - Maryland Macallister Holdings, Inc. Minnesota Teachers Realty Corp. - Minnesota MN Properties, Inc. M.O.A. Enterprises, Inc. MRC Properties, Inc. ND Properties, Inc. New York State College Choice Tuition LLC - New York Rouse-Teachers Holding Company - Nevada Rouse-Teachers Land Holding, Inc. - Maryland Savannah Teachers Properties, Inc. T-Investment Properties Corp. T-Land Corp. T-Las Colinas Towers Corp. TCT Holdings, Inc. Teachers Advisors, Inc. Teachers Boca Properties II, Inc. Teachers Pennsylvania Realty, Inc. - Pennsylvania Teachers Personal Investors Services, Inc. Teachers Properties, Inc. Teachers REA, Inc. Teachers REA II, LLC Teachers REA II, Inc. - Pennsylvania Teachers REA III, LLC Teachers Realty Corporation - Pennsylvania TEO-NP, LLC - Pennsylvania Tethys Slu, Inc. TIAA-CREF Individual & Institutional Services, Inc. TIAA-CREF Investment Management, LLC TIAA-CREF Life Insurance Company TIAA-CREF Tuition Financing, Inc. TIAA Timberlands I, LLC TIAA-Fund Equities, Inc. TIAA Holdings, Inc. TIAA Realty, Inc. TPI Housing, Inc. Washington Teachers Properties I, Inc. Washington Teachers Properties II, Inc. Windermere Goshen Trust Windermere Place Joint Venture Trust WRC Properties, Inc. 730 Properties, Inc. 730 Cal Hotel Properties I, Inc. 730 Cal Hotel Properties II, Inc. 730 Georgia Hotel Properties I, Inc. 730 Mass. Holding I, Inc. 730 Mass. Hotel Properties I, Inc. 730 Minn. Holding I, Inc. 730 Minn. Hotel Properties I, Inc. 730 MO Hotel Properties I, Inc. 730 Penn. Hotel Properties I, Inc. TEO-NP, LLC 485 Properties, LLC - 2 - 40 (1) All subsidiaries are 100%-owned directly by TIAA, except as follows: A) TCT Holdings, Inc., Teachers Personal Investors Services, Inc., Teachers Advisors, Inc., TIAA-CREF Life Insurance Company and TIAA-CREF Tuition Financing, Inc. are 100%-owned by TIAA-CREF Enterprises, Inc. B) TIAA-CREF Trust Company, FSB is 100% owned by TCT Holdings, Inc. C) T-Investment Properties Corp. and T-Land Corp. are 100% owned by Macallister Holdings, Inc. D) RTHC is 95%-owned by Teachers Properties, Inc. and 5%-owned by The Rouse Company. RTLH is 100%-owned by RTHC. E) TPI Housing, Inc. is 100%-owned by Teachers Properties, Inc. F) 730 Cal Hotel Properties I, Inc., 730 Cal Hotel Properties II, Inc., 730 Georgia Hotel Properties I, Inc., 730 Mass Holding I, Inc., 730 Minn. Holding I, Inc., 730 MO Hotel Properties I, Inc., 730 Penn Hotel Properties I, Inc. are 100%-owned by 730 Properties, Inc. G) 730 Minn. Hotel Properties I, Inc. is 100% owned by 730 Minn. Holding I, Inc. H) 730 Mass. Hotel Properties I, Inc. is 100% owned by 730 Mass. Holding I, Inc. (2) All subsidiaries have as their sole purpose the ownership of investments which could, pursuant to New York State Insurance Law, be owned by TIAA itself, except the following: A) Teachers Advisors, Inc., which provides investment advice for the Registrant. B) Teachers Personal Investors Services, Inc., which provides broker- dealer services for the Registrant. C) TIAA-CREF Investment Management, LLC, which provides investment advice for College Retirement Equities Fund. - 3 - 41 D) TIAA-CREF Individual & Institutional Services, Inc., which provides broker-dealer and administrative services for College Retirement Equities Fund. E) TCT Holdings, Inc., which is a unitary thrift holding company, was formed for the sole purpose of holding stock of a federal chartered savings bank. F) TIAA-CREF Life Insurance Company, which is a subsidiary life insurance company of TIAA, is licensed under the State of New York to market certain life insurance products not currently offered by TIAA. G) TIAA-CREF Trust Company, FSB which is a federal chartered savings bank. H) TIAA-CREF Tuition Financing, LLC, which services various state tuition savings plans. ITEM 25. INDEMNIFICATION As a Delaware business trust, Registrant's operations are governed by its Declaration of Trust dated August 13, 1998, as amended (the Declaration of Trust). Generally, Delaware business trust shareholders are not personally liable for obligations of the Delaware business trust under Delaware law. The Delaware Business Trust Act (the DBTA) provides that a shareholder of a trust shall be entitled to the same limitation of liability extended to shareholders of private for-profit Delaware corporations. Registrant's Declaration of Trust expressly provides that it has been organized under the DBTA and that the Declaration of Trust is to be governed by Delaware law. It is nevertheless possible that a Delaware business trust, such as Registrant, might become a party to an action in another state whose courts refuse to apply Delaware law, in which case Registrant's shareholders could be subject to personal liability. To protect Registrant's shareholders against the risk of personal liability, the Declaration of Trust: (i) contains an express disclaimer of shareholder liability for acts or obligations of Registrant and provides that notice of such disclaimer may be given in each agreement, obligation and instrument entered into or executed by Registrant or its Trustees; (ii) provides for the indemnification out of Trust property of any shareholders held personally liable for any obligations of Registrant or any series of Registrant; and (iii) provides that Registrant shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of Registrant and satisfy any judgment thereon. Thus, the risk of a shareholder incurring financial loss beyond his or her investment because of shareholder liability is limited to circumstances in which all of the following factors are present: (i) a court refuses to apply Delaware law; (ii) the liability arose under tort law or, if not, no contractual limitation of liability was in effect; and (iii) Registrant itself would be unable to - 4 - 42 meet its obligations. In the light of Delaware law, the nature of Registrant's business and the nature of its assets, the risk of personal liability to a shareholder is remote. The Declaration of Trust further provides that Registrant shall indemnify each of its Trustees and officers against liabilities and expenses reasonably incurred by them, in connection with, or arising out of, any action, suit or proceeding, threatened against or otherwise involving such Trustee or officer, directly or indirectly, by reason of being or having been a Trustee or officer of Registrant. The Declaration of Trust does not authorize Registrant to indemnify any Trustee or officer against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person's duties. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons, or otherwise, Registrant has been advised that in the opinion of the Commission such indemnification may be against public policy as expressed in the Act and may be, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a Trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER Teachers Advisors, Inc. (Advisors) also provides investment management service to TIAA-CREF Mutual Funds and TIAA Separate Account VA-1. All officers of Advisors are also officers of TIAA-CREF Investment Management, LLC (Investment Management) and are employees of TIAA. John Biggs is also a trustee of TIAA, CREF, TIAA-CREF Individual & Institutional Services, Inc. (Services) and Investment Management, and a director of Teachers Personal Investor Services, Inc. (TPIS). He is Chief Executive Officer of TIAA and CREF. Martin L. Leibowitz is a trustee of TIAA, CREF and Investment Management. He is Vice Chairman and Chief Investment Officer of CREF and TIAA. Charles Stamm is a trustee of Investment Management and Services, and a director of TPIS. He is General Counsel of CREF and TIAA. Richard Adamski is also Treasurer of TPIS and Services. Richard Gibbs is also Executive Vice President of TPIS and Services. The principal business address of Investment Management, Services and TPIS is 730 Third Avenue, New York, NY 10017-3206. - 5 - 43 ITEM 27. PRINCIPAL UNDERWRITER Teachers Personal Investors Services, Inc. ("TPIS") may be considered the principal underwriter for the Registrant. The officers of TPIS and their positions and offices with TPIS and the Registrant are listed in Schedule A of Form BD as currently on file with the Commission (File No. 8-47051), the text of which is hereby incorporated by reference. ITEM 28. LOCATION OF TIAA-CREF LIFE FUNDS' ACCOUNTS AND RECORDS All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder will be maintained at the Registrant's home office, 730 Third Avenue, New York, NY 10017-3206, at other offices of the Registrant located at 750 Third Avenue and 485 Lexington Avenue, both in New York, NY 10017-3206, and at the offices of the Registrant's custodian, Bankers Trust Company, 16 Wall Street, New York, New York 10015. In addition, certain duplicated records are maintained at Pierce Leahy Archives, 64 Leone Lane, Chester, NY 10918. ITEM 29. MANAGEMENT SERVICES State Street Bank and Trust Company, a Massachusetts trust company ("State Street") will provide certain management-related services to the Registrant pursuant to an agreement between the Registrant, State Street and Advisors, the investment advisor to the Registrant. Under the agreement, State Street will, among other things, keep the Registrant's books of account and compute the net asset value per share of the outstanding shares of each of the Registrant's portfolio. These services will be rendered pursuant to instructions received by State Street from Advisors or the Registrant in the ordinary course of business. ITEM 30. UNDERTAKINGS Not applicable. - 6 - 44 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, Registrant, TIAA-CREF Life Funds, has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of New York, and State of New York, on the 9th day of December, 1998. TIAA-CREF LIFE FUNDS By: /s/ Thomas G. Walsh -------------------------------------- Name: Thomas G. Walsh Title: Chairman of the Board and President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Thomas G. Walsh Chairman of the Board and 12/9/98 - ------------------------ President (Principal Thomas G. Walsh Executive Officer) and Trustee /s/ Richard L. Gibbs Executive Vice President 12/9/98 - ------------------------ (Principal Financial and Richard L. Gibbs Accounting Officer)
45
Signature of Trustee Date - -------------------- ---- /s/ John J. McCormack 12/9/98 - ------------------------ John J. McCormack /s/ Laurence W. Franz 12/9/98 - ------------------------ Laurence W. Franz /s/ Jeanmarie C. Grisi 12/9/98 - ------------------------ Jeanmarie C. Grisi /s/ Richard M. Norman 12/9/98 - ------------------------ Richard M. Norman
46 EXHIBIT INDEX
Exhibit Number Description - -------------- ----------- (a) Amended and Restated Declaration of Trust (d) Investment advisory contract (e) Participation/Distribution Agreement between Registrant, TIAA-CREF Life Insurance Company and TPIS (g) Custodian agreement (h) Administration Agreement with State Street (l) Seed Money Agreement
EX-99.A 2 AMENDED AND RESTATED DECLARATION OF TRUST 1 Exhibit 99.a AMENDED AND RESTATED DECLARATION OF TRUST OF TIAA-CREF LIFE FUNDS 2 TABLE OF CONTENTS
ARTICLE 1 Name and Definitions.....................................................................................1 1.1. Name...............................................................................................1 1.2. Definitions........................................................................................1 ARTICLE 2 Nature and Purpose of Trust..............................................................................2 2.1. Nature of Trust....................................................................................2 2.2. Purpose of Trust...................................................................................3 2.3. Interpretation of Declaration of Trust.............................................................3 2.3.1. Governing Instrument....................................................................3 2.3.2. No Waiver of Compliance with Applicable Law.............................................3 2.3.3. Power of the Trustees Generally.........................................................3 ARTICLE 3 Registered Agent; Offices................................................................................3 3.1. Registered Agent...................................................................................3 ARTICLE 4 Shares of Beneficial Interest............................................................................3 4.1. Shares of Beneficial Interest......................................................................3 4.2. Number of Authorized Shares........................................................................4 4.3. Ownership and Certification of Shares..............................................................4 4.4. Status of Shares...................................................................................4 4.4.1. Fully Paid and Non-Assessable...........................................................4 4.4.2. Personal Property.......................................................................4 4.4.3. Party to Declaration of Trust...........................................................4 4.4.4. Death of Shareholder....................................................................4 4.4.5. Title to Trust; Right to Accounting.....................................................4 4.5. Determination of Shareholders......................................................................4 4.6. Shares Held by Trust...............................................................................5 4.7. Shares Held by Persons Related to Trust............................................................5 4.8. Preemptive and Appraisal Rights....................................................................5 4.9. Series and Classes of Shares.......................................................................5 4.9.1. Generally...............................................................................5 4.9.2. Establishment and Designation...........................................................5 4.9.3. Conversion Rights.......................................................................6 4.9.4. Separate and Distinct Nature............................................................6 4.9.5. Rights and Preferences of Series........................................................6 4.9.5.1. Assets and Liabilities "Belonging" to a Series...............................6
ii 3
4.9.5.2. Treatment of Particular Items................................................7 4.9.5.3. Limitation on Interseries Liabilities........................................7 4.9.5.4. Dividends....................................................................7 4.9.5.5. Redemption by Shareholder....................................................7 4.9.5.6. Redemption by Trust..........................................................8 4.9.5.7. Prevention of Personal Holding Company Status................................8 4.9.5.8. Net Asset Value..............................................................8 4.9.5.9. Maintenance of Stable Net Asset Value........................................8 4.9.5.10. Transfer of Shares..........................................................9 4.9.5.11. Equality of Shares..........................................................9 4.9.5.12. Fractional Shares...........................................................9 4.9.6. Rights and Preferences of Classes.......................................................9 ARTICLE 5 Trustees................................................................................................10 5.1. Management of the Trust...........................................................................10 5.2. Qualification.....................................................................................10 5.3. Number............................................................................................10 5.4. Term and Election.................................................................................10 5.5. Composition of the Board of Trustees..............................................................11 5.6. Resignation and Retirement........................................................................11 5.7. Removal...........................................................................................11 5.8. Vacancies.........................................................................................11 5.9. Ownership of Assets of the Trust..................................................................11 5.10. Powers...........................................................................................12 5.10.1. By-Laws...............................................................................12 5.10.2. Officers, Agents, and Employees.......................................................12 5.10.3. Committees............................................................................12 5.10.3.1. Generally..................................................................12 5.10.3.2. Executive Committee........................................................12 5.10.4. Advisers, Administrators, Depositories, and Custodians................................13 5.10.5. Compensation..........................................................................13 5.10.6. Delegation of Authority...............................................................13 5.10.7. Suspension of Sales...................................................................13 5.11. Certain Additional Powers........................................................................13 5.11.1. Investments...........................................................................13 5.11.2. Disposition of Assets.................................................................13 5.11.3. Ownership.............................................................................14 5.11.4. Subscription..........................................................................14 5.11.5. Payment of Expenses...................................................................14 5.11.6. Form of Holding.......................................................................14 5.11.7. Reorganization, Consolidation, or Merger..............................................14 5.11.8. Compromise............................................................................14
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5.11.9. Partnerships..........................................................................14 5.11.10. Borrowing............................................................................14 5.11.11. Guarantees...........................................................................15 5.11.12. Insurance............................................................................15 5.11.13. Pensions.............................................................................15 5.12. Meetings and Vote of Trustees....................................................................15 5.12.1. Regular Meetings......................................................................15 5.12.2. Special Meetings......................................................................15 5.12.3. Telephonic Meetings...................................................................15 5.12.4. Quorum................................................................................16 5.12.5. Required Vote.........................................................................16 5.12.6. Consent in Lieu of a Meeting..........................................................16 ARTICLE 6 Service Providers.......................................................................................16 6.1. Investment Adviser................................................................................16 6.2. Underwriter and Transfer Agent....................................................................16 6.3. Custodians........................................................................................16 6.4. Administrator.....................................................................................17 6.5. Other Contracts...................................................................................17 6.6. Parties to Contracts..............................................................................17 ARTICLE 7 Shareholders' Voting Powers and Meetings................................................................17 7.1. Voting Powers.....................................................................................17 7.1.2. Separate Voting by Series and Class....................................................18 7.1.3. Number of Votes........................................................................18 7.1.4. Cumulative Voting......................................................................18 7.1.5. Voting of Shares; Proxies..............................................................18 7.1.6. Actions Prior to the Issuance of Shares................................................18 7.2. Meetings of Shareholders..........................................................................19 7.2.1. Annual or Regular Meetings.............................................................19 7.2.2. Special Meetings.......................................................................19 7.2.3. Notice of Meetings.....................................................................19 7.2.4. Call of Meetings.......................................................................19 7.3. Record Dates.............................................................................19 7.4. Quorum...................................................................................19 7.5. Required Vote.....................................................................................20 7.6. Adjournments......................................................................................20 7.7. Actions by Written Consent........................................................................20 7.8. Inspection of Records.............................................................................20 7.9. Additional Provisions.............................................................................20
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ARTICLE 8 Limitation of Liability and Indemnification.............................................................20 8.1. General Provisions................................................................................20 8.1.1. General Limitation of Liability........................................................20 8.1.2. Notice of Limited Liability............................................................21 8.1.3. Liability Limited to Assets of the Trust...............................................21 8.2. Liability of Trustees.............................................................................21 8.2.1. Liability for Own Actions..............................................................21 8.2.2. Liability for Actions of Others........................................................21 8.2.3. Advice of Experts and Reports of Others................................................21 8.2.4. Bond...................................................................................22 8.2.5. Declaration of Trust Governs Issues of Liability.......................................22 8.3. Liability of Third Persons Dealing with Trustees..................................................22 8.4. Liability of Shareholders.........................................................................22 8.4.1. Limitation of Liability................................................................22 8.4.2. Indemnification of Shareholders........................................................22 8.5. Indemnification...................................................................................23 8.5.1. Indemnification of Covered Persons.....................................................23 8.5.2. Exceptions.............................................................................23 8.5.3. Rights of Indemnification..............................................................23 8.5.4. Expenses of Indemnification............................................................24 8.5.5. Certain Defined Terms Relating to Indemnification......................................24 ARTICLE 9 Termination or Reorganization...........................................................................24 9.1. Termination of Trust or Series....................................................................24 9.1.1. Termination............................................................................25 9.1.2. Distribution of Assets.................................................................25 9.1.3. Certificate of Cancellation............................................................25 9.2. Reorganization....................................................................................25 9.3. Merger or Consolidation...........................................................................25 9.3.1. Authority to Merge or Consolidate......................................................25 9.3.2. No Shareholder Approval Required.......................................................26 9.3.3. Subsequent Amendments..................................................................26 9.4.4. Certificate of Merger or Consolidation.................................................26 ARTICLE 10.......................................................................................................26 Amendments..............................................................................................26 10.1. Generally........................................................................................26 10.2. Certificate of Amendment.........................................................................26 10.3. Prohibited Retrospective Amendments..............................................................26
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ARTICLE 11 Miscellaneous Provisions................................................................................27 11.1. Certified Copies.................................................................................27 11.2. Certain Internal References......................................................................27 11.3. Headings.........................................................................................27 11.4. Resolution of Ambiguities........................................................................27 11.5. Signatures.......................................................................................27 11.6. Governing Law....................................................................................27 11.7. Severability.....................................................................................28
vi 7 AMENDED AND RESTATED DECLARATION OF TRUST OF TIAA-CREF LIFE FUNDS This AMENDED AND RESTATED DECLARATION OF TRUST is made as of this day, August 13, 1998, by the Trustees hereunder. WHEREAS, the Trustees desire to establish a trust for the purpose of carrying on the business of an open-end management investment company; and WHEREAS, in furtherance of such purpose, the Trustees and any successor Trustees elected in accordance with Article 5 hereof are acquiring and may hereafter acquire assets which they will hold and manage as trustees of a Delaware business trust in accordance with the provisions hereinafter set forth; and WHEREAS, this Trust is authorized to issue its shares of beneficial interest in one or more separate series and classes of series, in accordance with the provisions set forth in this Declaration of Trust; NOW, THEREFORE, the Trustees hereby declare that they will hold in trust all cash, securities, and other assets which they may from time to time acquire in any manner as Trustees hereunder, and that they will manage and dispose of the same upon the following terms and conditions for the benefit of the holders of shares of beneficial interest in this Trust as hereinafter set forth. ARTICLE 1 NAME AND DEFINITIONS SECTION 1.1. NAME. This Trust shall be known as the "TIAA-CREF LIFE FUNDS" and the Trustees shall conduct the business of the Trust under that name or any other name or names as they may from time to time determine. SECTION 1.2. DEFINITIONS. Whenever used herein, unless otherwise required by the context or specifically provided below: (a) The "Trust" shall mean the Delaware business trust established by this Declaration of Trust, as amended from time to time; (b) "Trustee" and "Trustees" shall mean each signatory to this Declaration of Trust so long as such signatory shall continue in office in accordance with the terms hereof, and all other individuals who at the time in question have been duly elected or appointed and qualified in accordance with Article 5 hereof and are then in office; 8 (c) "Shares" shall mean the shares of beneficial interest in the Trust described in Article 4 hereof and shall include fractional and whole Shares; (d) "Shareholder" shall mean a beneficial owner of Shares, except that with regard to Shares owned by insurance company separate accounts or trusts established in connection with employee benefit plans, "Shareholder" shall mean the separate account or trust; (e) The "1940 Act" refers to the Investment Company Act of 1940 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time; (f) "Person," "Interested Person," and "Principal Underwriter" shall have the meanings given them in the 1940 Act; (g) "Commission" shall mean the United States Securities and Exchange Commission (or any successor agency thereto); (h) "Declaration of Trust" or "Declaration" shall mean this Declaration of Trust as amended or restated from time to time; (i) "By-Laws" shall mean the By-Laws of the Trust, if any, as amended from time to time; (j) "Series" shall mean any of the separate series of Shares established and designated under or in accordance with the provisions of Article 4 and to which the Trustees have allocated assets and liabilities of the Trust in accordance with Article 4; (k) "DBTA" refers to the Delaware Business Trust Act, Chapter 38 of Title 12 of the Delaware Code (and any successor statute), as amended from time to time; and (l) "Code" refers to the Internal Revenue Code of 1986 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time. ARTICLE 2 NATURE AND PURPOSE OF TRUST SECTION 2.1. NATURE OF TRUST. The Trust is a business trust of the type referred to in the DBTA. The Trustees shall file a certificate of trust in accordance with Sections 3810-3812 of the DBTA. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as, a general or a limited partnership, joint venture, corporation or joint stock company, nor shall the Trustees or Shareholders or any of them for any purpose be deemed to be, or be treated in any way whatsoever as though they were, liable or responsible hereunder as partners or joint venturers. 2 9 SECTION 2.2. PURPOSE OF TRUST. The purpose of the Trust is to engage in, operate and carry on the business of an open-end management investment company and to do any and all acts or things as are necessary, convenient, appropriate, incidental or customary in connection therewith. SECTION 2.3. INTERPRETATION OF DECLARATION OF TRUST. SECTION 2.3.1. GOVERNING INSTRUMENT. This Declaration of Trust shall be the governing instrument of the Trust and shall be governed by and construed according to the laws of the State of Delaware. SECTION 2.3.2. NO WAIVER OF COMPLIANCE WITH APPLICABLE LAW. No provision of this Declaration shall be effective if it is deemed to require a waiver of compliance with any provision of the Securities Act of 1933, as amended, or the 1940 Act, or of any valid rule, regulation or order of the Commission thereunder. SECTION 2.3.3. POWER OF THE TRUSTEES GENERALLY. Except as otherwise set forth herein, the Trustees may exercise all powers of trustees under the DBTA on behalf of the Trust. ARTICLE 3 REGISTERED AGENT; OFFICES SECTION 3.1. REGISTERED AGENT. The name of the registered agent of the Trust is The Corporation Trust Company and the registered agent's business address in Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. SECTION 3.2. OFFICES. The Trust shall maintain an office within the State of Delaware which shall be identical to the business office of the registered agent of the Trust as set forth in Section 3.1. The Trustees may, at any time, establish branch or subordinate offices at any place or places where the Trust intends to do business. ARTICLE 4 SHARES OF BENEFICIAL INTEREST SECTION 4.1. SHARES OF BENEFICIAL INTEREST. The beneficial interests in the Trust shall be divided into Shares, each of which shall have a par value of One-Ten Thousandth of a Dollar ($0.0001). The Trustees shall have the authority from time to time to divide the Shares into two (2) or more separate and distinct series of Shares ("Series") as provided in Section 4.9 of this Article 4 and to divide each such Series of Shares into two (2) or more classes of Shares ("Classes"). 3 10 SECTION 4.2. NUMBER OF AUTHORIZED SHARES. The Trustees are authorized to issue an unlimited number of Shares. The Trustees may issue Shares for such consideration and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split), all without action or approval of the Shareholders. SECTION 4.3. OWNERSHIP AND CERTIFICATION OF SHARES. The Secretary of the Trust, or the Trust's transfer or similar agent, shall record the ownership and transfer of Shares of each Series and Class separately on the record books of the Trust. The record books of the Trust, as kept by the Secretary of the Trust or any transfer or similar agent, shall contain the name and address of and the number of Shares held by each Shareholder, and such record books shall be conclusive as to who are the holders of Shares and as to the number of Shares held from time to time by such Shareholders. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of share certificates, transfer of Shares, and similar matters for the Trust or any Series. SECTION 4.4. STATUS OF SHARES. SECTION 4.4.1. FULLY PAID AND NON-ASSESSABLE. All Shares when issued on the terms determined by the Trustees shall be fully paid and non-assessable. SECTION 4.4.2. PERSONAL PROPERTY. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust. SECTION 4.4.3. PARTY TO DECLARATION OF TRUST. Every Person by virtue of having become registered as a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and to have become a party thereto. SECTION 4.4.4. DEATH OF SHAREHOLDER. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the Trust nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees. The representative shall be entitled to the same rights as the decedent under this Trust. SECTION 4.4.5. TITLE TO TRUST; RIGHT TO ACCOUNTING. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting. SECTION 4.5. DETERMINATION OF SHAREHOLDERS. The Trustees may from time to time close the transfer books or establish record dates and times for the purposes of determining the Shareholders entitled to be treated as such, to the extent provided or referred to in Section 7.3. 4 11 SECTION 4.6. SHARES HELD BY TRUST. The Trustees may hold as treasury shares, reissue for such consideration and on such terms as they may determine, or cancel, at their discretion from time to time, any Shares of any Series or Class reacquired by the Trust. SECTION 4.7. SHARES HELD BY PERSONS RELATED TO TRUST. Any Trustee, officer or other agent of the Trust, and any organization in which any such person is interested may acquire, own, hold and dispose of Shares of the Trust to the same extent as if such person were not a Trustee, officer or other agent of the Trust; and the Trust may issue and sell or cause to be issued and sold and may purchase Shares from any such person or any such organization subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of such Shares generally. SECTION 4.8. PREEMPTIVE AND APPRAISAL RIGHTS. Shareholders shall not, as Shareholders, have any right to acquire, purchase or subscribe for any Shares or other securities of the Trust which it may hereafter issue or sell, other than such right, if any, as the Trustees in their discretion may determine. Shareholders shall have no appraisal rights with respect to their Shares and, except as otherwise determined by resolution of the Trustees in their sole discretion, shall have no exchange or conversion rights with respect to their Shares. No action may be brought by a Shareholder on behalf of the Trust unless Shareholders owning no less than a majority of the then outstanding Shares, or Series or Class thereof, join in the bringing of such action. A Shareholder shall not be entitled to participate in a derivative or class action lawsuit on behalf of any other Series or any other Class on behalf of the Shareholders in any other Series or any other Class of the Trust than the Series or Class owned by such Shareholder. SECTION 4.9. SERIES AND CLASSES OF SHARES. SECTION 4.9.1. GENERALLY. In addition to the Series and Class established and designated in Section 4.9.2, the Shares of the Trust shall be divided into one or more separate and distinct Series or Classes of a Series as the Trustees shall from time to time establish and designate. SECTION 4.9.2. ESTABLISHMENT AND DESIGNATION. The Trustees shall have exclusive power without the requirement of Shareholder approval to establish and designate separate and distinct Series of Shares and with respect to any Series of Shares, to establish and designate separate and distinct Classes of Shares. The establishment and designation of any Series (in addition to those established and designated in this Section below) or Class shall be effective upon the execution by a majority of the Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series or Class, or as otherwise provided in such instrument. Each such instrument shall have 5 12 the status of an amendment to this Declaration of Trust. Without limiting the authority of the Trustees to establish and designate any further Series or Classes, the Trustees hereby establish and designate the following initial Series, the Shares of which shall all be of one Class: Stock Index Fund. SECTION 4.9.3. CONVERSION RIGHTS. Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide that holders of Shares of any Series or Class within a Series shall have the right to convert such Shares into Shares of one or more other Series or Classes in accordance with such requirements and procedures as may be established by the Trustees. SECTION 4.9.4. SEPARATE AND DISTINCT NATURE. Each Series, including without limitation Series specifically established in Section 4.9.2, shall be separate and distinct from any other Series and shall maintain separate and distinct records on the books of the Trust, and the assets belonging to any such Series shall be held and accounted for separately from the assets of the Trust or any other Series. SECTION 4.9.5. RIGHTS AND PREFERENCES OF SERIES. The Trustees shall have exclusive power without the requirement of Shareholder approval to fix and determine the relative rights and preferences as between the Shares of the separate Series. The initial Series and any further Series that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Series at the time of establishing and designating the same) have relative rights and preferences as set forth in this Section 4.9.5. SECTION 4.9.5.1. ASSETS AND LIABILITIES "BELONGING" TO A SERIES. All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Series and may be referred to herein as "assets belonging to" that Series. The assets belonging to a particular Series shall belong to that Series for all purposes, and to no other Series, subject only to the rights of creditors of that Series. Such consideration, assets, income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments which are not readily identifiable as belonging to any particular Series (collectively "General Items"), the Trustees shall allocate to and among any one or more of the Series in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Any General Items so allocated to a particular Series shall belong to that Series. Each such allocation by the Trustees shall be conclusive and binding upon all Shareholders for all purposes. The assets belonging to each particular Series shall be charged with the liabilities 6 13 in respect of that Series and all expenses, costs, charges and reserves attributable to that Series, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series shall be allocated and charged by the Trustees to and among any one or more of the Series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon all Shareholders for all purposes. SECTION 4.9.5.2. TREATMENT OF PARTICULAR ITEMS. The Trustees shall have full discretion, to the extent consistent with the 1940 Act and consistent with generally accepted accounting principles, to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders. SECTION 4.9.5.3. LIMITATION ON INTERSERIES LIABILITIES. Subject to the right of the Trustees in their discretion to allocate general liabilities, expenses, costs, charges or reserves as provided in Section 4.9.5.1, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable against the assets of such Series only, and not against the assets of any other Series. Notice of this limitation on liabilities between and among Series shall be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the DBTA, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the DBTA relating to limitations on liabilities between and among series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series. SECTION 4.9.5.4. DIVIDENDS. Dividends and capital gains distributions on Shares of a particular Series may be paid with such frequency, in such form, and in such amount as the Trustees may determine by resolution adopted from time to time, or pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine. All dividends and distributions on Shares of a particular Series shall be distributed pro rata to the holders of Shares of that Series in proportion to the number of Shares of that Series held by such holders at the date and time of record established for the payment of such dividends or distributions. Such dividends and distributions may be paid in cash, property or additional Shares of that Series, or a combination thereof, as determined by the Trustees or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the form in which dividends or distributions are to be paid to that Shareholder. Any such dividend or distribution paid in Shares shall be paid at the net asset value thereof as determined in accordance with Section 4.9.5.8. SECTION 4.9.5.5. REDEMPTION BY SHAREHOLDER. Each Shareholder shall have the right at such times as may be permitted by the Trust and as otherwise required by the 7 14 1940 Act to require the Trust to redeem all or any part of such Shareholder's Shares of a Series at a redemption price per Share equal to the net asset value per Share of such Series next determined in accordance with Section 4.9.5.8 after the Shares are properly tendered for redemption, less any charge which may be imposed by the Trust in connection with such redemption as may be established by the Trustees in their sole discretion and as described in the Trust's then current prospectus. Payment of the redemption price shall be in cash; provided, however, that the Trust may, subject to the requirements of the 1940 Act, make payment wholly or partly in securities or other assets belonging to the Series of which the Shares being redeemed are part at the value of such securities or assets used in such determination of net asset value. Notwithstanding the foregoing, the Trust may postpone payment of the redemption price and may suspend the right of the holders of Shares of any Series to require the Trust to redeem Shares of that Series during any period or at any time when and to the extent permissible under any applicable provision of the 1940 Act. SECTION 4.9.5.6. REDEMPTION BY TRUST. The Trustees may cause the Trust to redeem at net asset value the Shares of any Series held by a Shareholder upon such conditions as may from time to time be determined by the Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the Trust shall promptly cause payment of the full redemption price to be made to such Shareholder for Shares so redeemed. SECTION 4.9.5.7. PREVENTION OF PERSONAL HOLDING COMPANY STATUS. The Trust may reject any purchase order, refuse to transfer any Shares, and compel the redemption of Shares if, in its opinion, any such rejection, refusal, or redemption would prevent the Trust from becoming a personal holding company as defined by the Code. SECTION 4.9.5.8. NET ASSET VALUE. The net asset value per Share of any Series shall be determined in accordance with the methods and procedures established by the Trustees from time to time and, to the extent required by applicable law, as disclosed in the then current prospectus or statement of additional information for the Series. SECTION 4.9.5.9. MAINTENANCE OF STABLE NET ASSET VALUE. The Trustees may determine to maintain the net asset value per Share of any Series at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the 1940 Act for the continuing declarations of income attributable to that Series as dividends payable in additional Shares of that Series at the designated constant dollar amount and for the handling of any losses attributable to that Series. Such procedures may provide that in the event of any loss each Shareholder shall be deemed to have contributed to the capital of the Trust attributable to that Series his or her pro rata portion of the total number of Shares required to be canceled in order to permit the net asset value per Share of that Series to be maintained, after reflecting such loss, at the designated constant dollar amount. Each Shareholder of the Trust shall be deemed to have agreed, by his investment in any Series with respect to which the Trustees shall have adopted any such procedure, to make the contribution referred to in the preceding sentence in the event of any such loss. The Trustees may delegate 8 15 any of their powers and duties under this Section 4.9.5.9 with respect to appraisal of assets and liabilities in the determination of net asset value or with respect to a suspension of the determination of net asset value to an officer or officers or agent or agents of the Trust designated from time to time by the Trustees. SECTION 4.9.5.10. TRANSFER OF SHARES. Except to the extent that transferability is limited by applicable law or such procedures as may be developed from time to time by the Trustees or the appropriate officers of the Trust, Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing, upon delivery to the Trustees or the Trust's transfer agent of a duly executed instrument of transfer, together with a Share certificate, if one is outstanding, and such evidence of the genuineness of each such execution and authorization and of such other matters as may be required by the Trustees. Upon such delivery the transfer shall be recorded on the register of the Trust. SECTION 4.9.5.11. EQUALITY OF SHARES. All Shares of each particular Series shall represent an equal proportionate interest in the assets belonging to that Series (subject to the liabilities belonging to that Series), and each Share of any particular Series shall be equal in this respect to each other Share of that Series. This Section 4.9.5.11. Shall not restrict any distributions otherwise permissible under this Declaration of Trust with respect to any Classes within a Series. SECTION 4.9.5.12. FRACTIONAL SHARES. Any fractional Share of any Series, if any such fractional Share is outstanding, shall carry proportionately all the rights and obligations of a whole Share of that Series, including rights and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust or any Series. SECTION 4.9.6. RIGHTS AND PREFERENCES OF CLASSES. The Trustees shall have exclusive power without the requirement of Shareholder approval to fix and determine the relative rights and preferences as between the separate Classes within any Series. The initial Class and any further Classes that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Class at the time of establishing and designating the same) have relative rights and preferences as set forth in this Section 4.9.6. If a Series is divided into multiple Classes, the Classes may be invested with one or more other Classes in the common investment portfolio comprising the Series. Notwithstanding the provisions of Section 4.9.5, if two or more Classes are invested in a common investment portfolio, the shares of each such Class shall be subject to the following preferences, conversion and other rights, voting powers, restrictions, conditions of redemption, and, if there are other Classes invested in a different investment portfolio comprising a different Series, shall also be subject to the provisions of Section 4.9.5 at the Series level as if the Classes invested in the common investment portfolio were one Class: 9 16 (a) The income and expenses of the Series shall be allocated among the Classes comprising the Series in such manner as may be determined by the Trustees in accordance with applicable law; (b) As more fully set forth in this Section 4.9.6, the liabilities and expenses of the Classes comprising the Series shall be determined separately from those of each other and, accordingly, the net asset values, the dividends and distributions payable to Shareholders, and the amounts distributable in the event of liquidation of the Trust or termination of a Series to Shareholders may vary within the classes comprising the Series. Except for these differences and certain other differences set forth in this Section 4.9.6 or elsewhere in this Declaration of Trust, the Classes comprising a Series shall have the same preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption; and (c) The dividends and distributions of investment income and capital gains with respect to the Classes comprising a Series shall be in such amounts as may be declared from time to time by the Trustees, and such dividends and distributions may vary among the Classes comprising the Series to reflect differing allocations of the expenses and liabilities of the Trust among the Classes and any resultant differences between the net asset values per Share of the Classes, to such extent and for such purposes as the Trustees may deem appropriate. The allocation of investment income, capital gains, expenses, and liabilities of the Trust among the Classes comprising a Series shall be determined by the Trustees in a manner that is consistent with applicable law. ARTICLE 5 TRUSTEES SECTION 5.1. MANAGEMENT OF THE TRUST. The business and affairs of the Trust shall be managed by the Trustees, and they shall have all powers necessary and desirable to carry out that responsibility, including those specifically set forth in Sections 5.10 and 5.11 herein. SECTION 5.2. QUALIFICATION. Each Trustee shall be a natural person. A Trustee need not be a Shareholder, a citizen of the United States, or a resident of the State of Delaware. SECTION 5.3. NUMBER. By the vote or consent of a majority of the Trustees then in office, the Trustees may fix the number of Trustees at a number not less than two (2) nor more than twenty-five (25). No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his or her term, but the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to Section 5.7. 10 17 SECTION 5.4. TERM AND ELECTION. Each Trustee shall hold office until the next meeting of Shareholders called for the purpose of considering the election or re-election of such Trustee or of a successor to such Trustee, and until his or her successor is elected and qualified, and any Trustee who is appointed by the Trustees in the interim to fill a vacancy as provided hereunder shall have the same remaining term as that of his or her predecessor, if any, or such term as the Trustees may determine. SECTION 5.5. COMPOSITION OF THE BOARD OF TRUSTEES. No election or appointment of any Trustee shall take effect if such election or appointment would cause the number of Trustees who are Interested Persons to exceed the number permitted by Section 10 of the 1940 Act. SECTION 5.6. RESIGNATION AND RETIREMENT. Any Trustee may resign or retire as a Trustee (without need for prior or subsequent accounting) by an instrument in writing signed by such Trustee and delivered or mailed to the Chairman, if any, the President, or the Secretary of the Trust. Such resignation or retirement shall be effective upon such delivery, or at a later date according to the terms of the instrument. SECTION 5.7. REMOVAL. Any Trustee may be removed with or without cause at any time: (1) by written instrument signed by two-thirds (2/3) of the number of Trustees in office prior to such removal, specifying the date upon which such removal shall become effective, or (2) by the affirmative vote of Shareholders holding not less than two-thirds (2/3) of Shares outstanding, cast in person or by proxy at any meeting called for that purpose. SECTION 5.8. VACANCIES. Any vacancy or anticipated vacancy resulting for any reason, including without limitation the death, resignation, retirement, removal, or incapacity of any of the Trustees, or resulting from an increase in the number of Trustees may (but need not unless required by the 1940 Act) be filled by a majority of the Trustees then in office, subject to the provisions of Section 16 of the 1940 Act, through the appointment in writing of such other person as such remaining Trustees in their discretion shall determine. The appointment shall be effective upon the written acceptance of the person named therein to serve as a Trustee and agreement by such person to be bound by the provisions of this Declaration of Trust, except that any such appointment in anticipation of a vacancy occurring by reason of the resignation, retirement, or increase in number of Trustees to be effective at a later date shall become effective only at or after the effective date of such resignation, retirement, or increase in number of Trustees. SECTION 5.9. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title to all the Trust property shall be vested in the Trust as a separate legal entity under the DBTA, except that the Trustees shall have the power to cause legal title to any Trust property to be held by or in the name of one or more of the Trustees or in the name of any other Person on behalf of the Trust on such terms 11 18 as the Trustees may determine. In the event that title to any part of the Trust property is vested in one or more Trustees, the right, title and interest of the Trustees in the Trust property shall vest automatically in each person who may hereafter become a Trustee upon his or her due election and qualification. Upon the resignation, removal or death of a Trustee he or she shall automatically cease to have any right, title or interest in any of the Trust property, and the right, title and interest of such Trustee in the Trust property shall vest automatically in the remaining Trustees. To the extent permitted by law, such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or any right of partition or possession thereof. SECTION 5.10. POWERS. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility and the purpose of the Trust including, but not limited to, those enumerated in this Section 5.10. SECTION 5.10.1. BY-LAWS. The Trustees may adopt By-Laws not inconsistent with this Declaration of Trust providing for the conduct of the business and affairs of the Trust and may amend and repeal them to the extent that such By-Laws do not reserve that right to the Shareholders. SECTION 5.10.2. OFFICERS, AGENTS, AND EMPLOYEES. The Trustees may, as they consider appropriate, elect and remove officers and appoint and terminate agents and consultants and hire and terminate employees, any one or more of the foregoing of whom may be a Trustee, and may provide for the compensation of all of the foregoing. SECTION 5.10.3. COMMITTEES. SECTION 5.10.3.1. GENERALLY. The Trustees, by a vote of a majority of the Trustees then in office, may elect from their number, an Audit Committee, Executive Committee, Nominating Committee, or any other committee and may delegate thereto some or all of their powers except those which by law, by this Declaration of Trust, or by the By-Laws may not be delegated. Except as the Trustees may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Trustees or in such rules, its business shall be conducted so far as possible in the same manner as is provided by this Declaration of Trust or the By-Laws of the Trust for the Trustees themselves. All members of such committees shall hold such offices at the pleasure of the Trustees. The Trustees may abolish any committee at any time. Any committee to which the Trustees delegate any of their powers or duties shall keep records of its meetings and shall report its actions to the Trustees. The Trustees shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect. 12 19 SECTION 5.10.3.2. EXECUTIVE COMMITTEE. The Executive Committee, if there shall be one, shall have all of the powers and authority of the Trustees that may lawfully be exercised by an executive committee, except the power to: (i) declare dividends or distributions on Shares; (ii) issue Shares; (iii) recommend to the Shareholders any action which requires the Shareholders' approval; or (iv) approve any merger, reorganization, or share exchange which does not require Shareholder approval. Notwithstanding the foregoing, the Trustees may limit the powers and authority of the Executive Committee at any time. SECTION 5.10.4. ADVISERS, ADMINISTRATORS, DEPOSITORIES, AND CUSTODIANS. The Trustees may, in accordance with Article 6, employ one or more advisers, administrators, depositories, custodians, and other persons and may authorize any depository or custodian to employ subcustodians or agents and to deposit all or any part of such assets in a system or systems for the central handling of securities and debt instruments, retain transfer, dividend, accounting or Shareholder servicing agents or any of the foregoing, provide for the distribution of Shares by the Trust through one or more distributors, principal underwriters or otherwise, and set record dates or times for the determination of Shareholders. SECTION 5.10.5. COMPENSATION. The Trustees may compensate or provide for the compensation of the Trustees, officers, advisers, administrators, custodians, other agents, consultants and employees of the Trust or the Trustees on such terms as they deem appropriate. SECTION 5.10.6. DELEGATION OF AUTHORITY. In general, the Trustees may delegate to any officer of the Trust, to any committee of the Trustees and to any employee, adviser, administrator, distributor, depository, custodian, transfer and dividend disbursing agent, or any other agent or consultant of the Trust such authority, powers, functions and duties as they consider desirable or appropriate for the conduct of the business and affairs of the Trust, including without implied limitation, the power and authority to act in the name of the Trust and of the Trustees, to sign documents and to act as attorney-in-fact for the Trustees. SECTION 5.10.7. SUSPENSION OF SALES. The Trustees shall have the authority to suspend or terminate the sales of Shares of any Series or Class at any time or for such periods as the Trustees may from time to time decide. SECTION 5.11. CERTAIN ADDITIONAL POWERS. Without limiting the foregoing and to the extent not inconsistent with the 1940 Act, other applicable law, and the fundamental policies and limitations of the applicable Series or Class, the Trustees shall have power and authority for and on behalf of the Trust and each separate Series or Class as enumerated in this Section 5.11. SECTION 5.11.1. INVESTMENTS. The Trustees shall have the power to invest and reinvest cash and other property, and to hold cash or other property uninvested without in any 13 20 event being bound or limited by any present or future law or custom in regard to investments by trustees. SECTION 5.11.2. DISPOSITION OF ASSETS. The Trustees shall have the power to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust. SECTION 5.11.3. OWNERSHIP. The Trustees shall have the power to vote, give assent, or exercise any rights of ownership with respect to securities or other property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or other property as the Trustees shall deem proper. SECTION 5.11.4. SUBSCRIPTION. The Trustees shall have the power to exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities. SECTION 5.11.5. PAYMENT OF EXPENSES. The Trustees shall have the power to pay or cause to be paid all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or any Series or Class thereof, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the Trust's officers, employees, investment advisers, administrator, distributor, principal underwriter, auditor, counsel, depository, custodian, transfer agent, dividend disbursing agent, accounting agent, shareholder servicing agent, and such other agents, consultants, and independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur. SECTION 5.11.6. FORM OF HOLDING. The Trustees shall have the power to hold any securities or other property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or of any Series or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise. SECTION 5.11.7. REORGANIZATION, CONSOLIDATION, OR MERGER. The Trustees shall have the power to consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust, and to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust. SECTION 5.11.8. COMPROMISE. The Trustees shall have the power to arbitrate or otherwise adjust claims in favor of or against the Trust, any Series, or Class on any matter in controversy, including but not limited to claims for taxes. 14 21 SECTION 5.11.9. PARTNERSHIPS. The Trustees shall have the power to enter into joint ventures, general or limited partnerships and any other combinations or associations. SECTION 5.11.10. BORROWING. The Trustees shall have the power to borrow funds and to mortgage and pledge the assets of the Trust or any Series or any part thereof to secure obligations arising in connection with such borrowing, consistent with the provisions of the 1940 Act. SECTION 5.11.11. GUARANTEES. The Trustees shall have the power to endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property (or Series property) or any part thereof to secure any of or all such obligations. SECTION 5.11.12. INSURANCE. The Trustees shall have the power to purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including, without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, consultants, investment advisers, managers, administrators, distributors, principal underwriters, or independent contractors, or any thereof (or any person connected therewith), of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person in any such capacity, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability. SECTION 5.11.13. PENSIONS. The Trustees shall have the power to pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust. SECTION 5.12. MEETINGS AND VOTE OF TRUSTEES. SECTION 5.12.1. REGULAR MEETINGS. The Trustees from time to time may provide for the holding of regular meetings of the Trustees and fix their time and place. SECTION 5.12.2. SPECIAL MEETINGS. Special meetings of the Trustees may be called by the President of the Trust on twenty-four (24) hours notice to each Trustee, either personally, by mail, by telegram, or by facsimile transmission. Special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of 15 22 a majority of the Trustees then in office or a majority of the members of any executive (or comparable) committee of the Trustees. SECTION 5.12.3. TELEPHONIC MEETINGS. Trustees may participate in a meeting of the Trustees by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Except to the extent that the 1940 Act has been interpreted otherwise, participation by such means shall constitute presence in person at the meeting. SECTION 5.12.4. QUORUM. A majority of the Trustees then in office being present in person or by proxy shall constitute a quorum. SECTION 5.12.5. REQUIRED VOTE. Except as otherwise provided by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, any action to be taken by the Trustees on behalf of the Trust or any Series or Class may be taken by a majority of the Trustees present at a meeting of Trustees at which a quorum is present. SECTION 5.12.6. CONSENT IN LIEU OF A MEETING. Except as otherwise provided by the 1940 Act or other applicable law, the Trustees may, by unanimous written consent of the Trustees then in office, take any action which may have been taken at a meeting of the Trustees or any committee thereof. ARTICLE 6 SERVICE PROVIDERS SECTION 6.1. INVESTMENT ADVISER. The Trust may enter into written contracts with one or more persons to act as investment adviser or investment subadviser to each of the Series, and as such, to perform such functions as the Trustees may deem reasonable and proper, including, without limitation, investment advisory, management, research, valuation of assets, clerical and administrative functions, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable. SECTION 6.2. UNDERWRITER AND TRANSFER AGENT. The Trust may enter into written contracts with one or more persons to act as principal underwriter or underwriter or distributor whereby the Trust may either agree to sell Shares to the other party or parties to the contract or appoint such other party or parties its sales agent or agents for such Shares and with such other provisions as the Trustees may deem reasonable and proper, and the Trustees may in their discretion from time to time enter into transfer agency, dividend disbursement, and/or shareholder service contract(s), in each case with such terms and conditions, and providing for such compensation, as the Trustees may in their discretion deem advisable. 16 23 SECTION 6.3. CUSTODIANS. The Trust may enter into written contracts with one or more persons to act as custodian to perform such functions as the Trustees may deem reasonable and proper, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable. Each such custodian shall be a bank or trust company having an aggregate capital, surplus, and undivided profits of at least one million dollars ($1,000,000). SECTION 6.4. ADMINISTRATOR. The Trust may enter into written contracts with one or more persons to act as an administrator to perform such functions, including accounting functions, as the Trustees may deem reasonable and proper, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable. SECTION 6.5. OTHER CONTRACTS. The Trust may enter into such other written contracts as the Trustees deem necessary and desirable, including contracts with one or more persons for the coordination or supervision of persons providing services to the Trust under one or more of the contracts described in Sections 6.1, 6.2, 6.3 and 6.4. SECTION 6.6. PARTIES TO CONTRACTS. Any contract of the character described in Sections 6.1, 6.2, 6.3, and 6.4 or in Article 8 hereof may be entered into with any corporation, firm, partnership, trust or association, including, without limitation, the investment adviser, any investment subadviser, or any affiliated person of the investment adviser or investment subadviser, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, or may otherwise be interested in such contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or be accountable for any profit realized directly or indirectly therefrom; provided, however, that the contract when entered into was not inconsistent with the provisions of this Article 6, Article 8, or the ByLaws. The same person (including a firm, corporation, partnership, trust or association) may provide more than one of the services identified in this Article 6. ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS SECTION 7.1. VOTING POWERS. The Shareholders shall have power to vote only with respect to matters expressly enumerated in Section 7.1.1, with respect to such additional matters relating to the Trust as may be required by the 1940 Act, this Declaration of Trust, the By-Laws, any registration of the Trust with the Commission or any state, or as the Trustees may otherwise deem necessary or desirable. 17 24 SECTION 7.1.1. MATTERS REQUIRING SHAREHOLDERS ACTION. Action by the Shareholders shall be required as to the following matters: (a) The election or removal of Trustees as provided in Sections 5.4 and 5.7; (b) The approval to a contract with a third party provider of services as to which Shareholder approval is required by the 1940 Act; (c) The termination or reorganization of the Trust to the extent and as provided in Sections 9.1 and 9.2; (d) The amendment of this Declaration of Trust to the extent and as may be provided by this Declaration of Trust or applicable law; and (e) Any court action, proceeding or claim brought or maintained derivatively or as a class action on behalf of the Trust, any Series or Class thereof or the Shareholders of the Trust; provided, however, that a shareholder of a particular Series or Class shall not be entitled to vote upon a derivative or class action on behalf of any other Series or Class or shareholder of any other Series or Class. SECTION 7.1.2. SEPARATE VOTING BY SERIES AND CLASS. On any matter submitted to a vote of the Shareholders, all Shares shall be voted separately by individual Series, except: (i) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual Series or Class; and (ii) when the Trustees have determined that the matter affects the interests of more than one Series, then the Shareholders of all such Series shall be entitled to vote thereon. The Trustees may also determine that a matter affects only the interests of one or more Classes within a Series, in which case any such matter shall only be voted on by such Class or Classes. SECTION 7.1.3. NUMBER OF VOTES. On any matter submitted to a vote of the Shareholders, each Shareholder shall be entitled to one vote for each dollar of net asset value standing in such Shareholder's name on the books of each Series and Class in which such Shareholder owns Shares which are entitled to vote on the matter. SECTION 7.1.4. CUMULATIVE VOTING. There shall be no cumulative voting in the election of Trustees. SECTION 7.1.5. VOTING OF SHARES; PROXIES. Votes may be cast in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving the invalidity of a proxy shall rest on the challenger. 18 25 No proxy shall be valid more than eleven months after its date, unless it provides for a longer period. SECTION 7.1.6. ACTIONS PRIOR TO THE ISSUANCE OF SHARES. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the By-Laws to be taken by Shareholders. SECTION 7.2. MEETINGS OF SHAREHOLDERS. SECTION 7.2.1. ANNUAL OR REGULAR MEETINGS. No annual or regular meetings of Shareholders are required to be held. SECTION 7.2.2. SPECIAL MEETINGS. Special meetings of Shareholders may be called by the President of the Trust or the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders as herein provided or upon any other matter upon which Shareholder approval is deemed by the Trustees to be necessary or desirable. A special meeting shall be called by the Secretary of the Trust upon (i) the request of a majority of the Trustees then in office, or (ii) as may be required under the 1940 Act. SECTION 7.2.3. NOTICE OF MEETINGS. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing or transmitting such notice not less than ten (10) nor more than ninety (90) days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder at the Shareholder's address as it appears on the records of the Trust. SECTION 7.2.4. CALL OF MEETINGS. The Trustees shall promptly call and give notice of a meeting of Shareholders for the purpose of voting upon removal of any Trustee of the Trust when requested to do so in writing by Shareholders holding not less than ten percent (10%) of the Shares of the Trust then outstanding. For all other matters, the Trustees shall call or give notice of a meeting within thirty (30) days after written application by Shareholders entitled to cast at least ten percent (10%) of all of the votes entitled to be cast on the matter requesting a meeting be called. SECTION 7.3. RECORD DATES. For the purpose of determining the Shareholders who are entitled to vote or act at any meeting or any adjournment thereof, or who are entitled to participate in any dividend or distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding thirty (30) days (except at or in connection with the termination of the Trust), as the Trustees may determine; or without closing the transfer books the Trustees may fix a date and time not more than one hundred twenty (120) days prior to the date of any meeting of Shareholders or other action as the date and time of record for the determination of Shareholders entitled to vote at such meeting or any adjournment thereof or to be treated as Shareholders of record for purposes of 19 26 such other action. Any Shareholder who was a Shareholder at the date and time so fixed shall be entitled to vote at such meeting or any adjournment thereof or to be treated as a Shareholder of record for purposes of such other action, even though such Shareholder has since that date and time disposed of its Shares, and no Shareholder becoming such after that date and time shall be so entitled to vote at such meeting or any adjournment thereof or to be treated as a Shareholder of record for purposes of such other action. SECTION 7.4. QUORUM. Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, one-tenth (1/10) of the Shares entitled to vote in person or by proxy shall be a quorum as to any particular matter; provided, however, that any lesser number shall be sufficient for matters upon which the Shareholders vote at any meeting called in accordance with Section 7.6. Any matter upon which the Shareholders vote shall be approved by a majority of the votes cast on such matter at a meeting of the Shareholders at which a quorum is present, except that Trustees shall be elected by a plurality of the votes cast at such a meeting. SECTION 7.5. REQUIRED VOTE. Notwithstanding any provision of the law requiring the authorization of any matter by a greater proportion, any matter upon which the Shareholders vote shall be approved by the affirmative vote of a majority of the votes cast on such matter at a meeting of the shareholders at which a quorum is present, except that Trustees shall be elected by the affirmative vote of a plurality of the votes cast at such a meeting. SECTION 7.6. ADJOURNMENTS. Adjourned meetings may be held within a reasonable time after the date set for the original meeting without the necessity of further notice. SECTION 7.7. ACTIONS BY WRITTEN CONSENT. Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, any action taken by Shareholders may be taken without a meeting if Shareholders entitled to cast at least a majority of all of the votes entitled to be cast on the matter (or such larger proportion thereof as shall be required by the 1940 Act or by any express provision of this Declaration of Trust or the By-Laws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. SECTION 7.8. INSPECTION OF RECORDS. The records of the Trust shall be open to inspection by Shareholders to the same extent as is required for stockholders of a Delaware business corporation under the Delaware General Corporation Law. SECTION 7.9. ADDITIONAL PROVISIONS. The By-Laws may include further provisions for Shareholders' votes and meetings and related matters not inconsistent with the provisions hereof. 20 27 ARTICLE 8 LIMITATION OF LIABILITY AND INDEMNIFICATION SECTION 8.1. GENERAL PROVISIONS. SECTION 8.1.1. GENERAL LIMITATION OF LIABILITY. No personal liability for any debt or obligation of the Trust shall attach to any Trustee of the Trust. Without limiting the foregoing, a Trustee shall not be responsible for or liable in any event for any neglect or wrongdoing of any officer, agent, employee, investment adviser, subadviser, principal underwriter or custodian of the Trust, nor shall any Trustee be responsible or liable for the act or omission of any other Trustee. Every note, bond, contract, instrument, certificate, Share or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any Trustee in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee and neither such Trustees or Trustee nor the Shareholders shall be personally liable thereon. SECTION 8.1.2. NOTICE OF LIMITED LIABILITY. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officers or officer shall recite that the same was executed or made by or on behalf of the Trust by them as Trustees or Trustee or as officers or officer and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust or belonging to a Series thereof, and may contain such further recitals as they or he may deem appropriate, but the omission thereof shall not operate to bind any Trustees or Trustee or officers or officer or Shareholders or Shareholder individually. SECTION 8.1.3. LIABILITY LIMITED TO ASSETS OF THE TRUST. All persons extending credit to, contracting with or having any claim against the Trust shall look only to the assets of the Trust or belonging to a Series thereof, as appropriate, for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. SECTION 8.2. LIABILITY OF TRUSTEES. The exercise by the Trustees of their powers and discretion hereunder shall be binding upon the Trust, the Shareholders, and any other person dealing with the Trust. The liability of the Trustees, however, shall be limited by this Section 8.2. SECTION 8.2.1. LIABILITY FOR OWN ACTIONS. A Trustee shall be liable to the Trust or the Shareholders only for his own willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. 21 28 SECTION 8.2.2. LIABILITY FOR ACTIONS OF OTHERS. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, consultant, adviser, administrative distributor, principal underwriter, custodian, transfer agent, dividend disbursing agent, Shareholder servicing agent, or accounting agent of the Trust, nor shall any Trustee be responsible for any act or omission of any other Trustee. SECTION 8.2.3. ADVICE OF EXPERTS AND REPORTS OF OTHERS. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust and their duties as Trustees hereunder, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. In discharging their duties, the Trustees, when acting in good faith, shall be entitled to rely upon the books of account of the Trust and upon written reports made to the Trustees by any officer appointed by them, any independent public accountant and (with respect to the subject matter of the contract involved) any officer, partner or responsible employee of any other party to any contract entered into hereunder. SECTION 8.2.4. BOND. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. SECTION 8.2.5. DECLARATION OF TRUST GOVERNS ISSUES OF LIABILITY. The provisions of this Declaration of Trust, to the extent that they restrict the duties and liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Shareholders and all other Persons bound by this Declaration of Trust to replace such other duties and liabilities of the Trustees. SECTION 8.3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. SECTION 8.4. LIABILITY OF SHAREHOLDERS. Without limiting the provisions of this Section 8.4 or the DBTA, the Shareholders shall be entitled to the same limitation of personal liability extended to stockholders of private corporations organized for profit under the General Corporation Law of the State of Delaware. SECTION 8.4.1. LIMITATION OF LIABILITY. No personal liability for any debt or obligation of the Trust shall attach to any Shareholder or former Shareholder of the Trust, and neither the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. 22 29 SECTION 8.4.2. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or former Shareholder of the Trust shall be held to be personally liable solely by reason of being or having been a Shareholder and not because of such Shareholder's acts or omissions or for some other reason, the Shareholder or former Shareholder (or, in the case of a natural person, his or her heirs, executors, administrators or other legal representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets of the Trust to be held harmless from and indemnified against all loss and expense arising from such liability; provided, however, there shall be no liability or obligation of the Trust arising hereunder to reimburse any Shareholder for taxes paid by reason of such Shareholder's ownership of any Shares or for losses suffered by reason of any changes in value of any Trust assets. The Trust shall, upon request by the Shareholder or former Shareholder, assume the defense of any claim made against the Shareholder for any act or obligation of the Trust and satisfy any judgment thereon. SECTION 8.5. INDEMNIFICATION. SECTION 8.5.1. INDEMNIFICATION OF COVERED PERSONS. Subject to the exceptions and limitations contained in Section 8.5.2, every person who is, or has been, a Trustee, officer, employee or agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person"), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof. SECTION 8.5.2. EXCEPTIONS. No indemnification shall be provided hereunder to a Covered Person: (a) For any liability to the Trust or its Shareholders arising out of a final adjudication by the court or other body before which the proceeding was brought that the Covered Person engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office; (b) With respect to any matter as to which the Covered Person shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust; or (c) In the event of a settlement or other disposition not involving a final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2) and resulting in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties 23 30 involved in the conduct of his office by the court or other body approving the settlement or other disposition, or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he or she did not engage in such conduct, such determination being made by: (i) a vote of a majority of the Disinterested Trustees (as such term is defined in Section 8.5.5) acting on the matter (provided that a majority of Disinterested Trustees then in office act on the matter); or (ii) a written opinion of independent legal counsel. SECTION 8.5.3. RIGHTS OF INDEMNIFICATION. The rights of indemnification herein provided may be insured against by policies maintained by the Trust, and shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person, and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law. SECTION 8.5.4. EXPENSES OF INDEMNIFICATION. Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under this Section 8.5 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he or she is not entitled to indemnification under this Section 8.5, provided that either: (a) Such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising out of any such advances; or (b) A majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to the facts available upon a full trial), that there is reason to believe that the recipient ultimately will be found entitled to indemnification. SECTION 8.5.5. CERTAIN DEFINED TERMS RELATING TO INDEMNIFICATION. As used in this Section 8.5, the following words shall have the meanings set forth below: (a) A "Disinterested Trustee" is one (i) who is not an Interested Person of the Trust (including anyone, as such Disinterested Trustee, who has been exempted from being an Interested Person by any rule, regulation or order of the Commission), and (ii) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending; 24 31 (b) "Claim," "action," "suit" or "proceeding" shall apply to all claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and (c) "Liability" and "expenses" shall include without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. ARTICLE 9 TERMINATION OR REORGANIZATION SECTION 9.1. TERMINATION OF TRUST OR SERIES. Unless terminated as provided herein, the Trust and each Series designated and established pursuant to this Declaration of Trust shall continue without limitation of time. SECTION 9.1.1. TERMINATION. Subject to approval by the affected Shareholders, the Trust, any Series, or any Class (and the establishment and designation thereof) may be terminated by an instrument executed by a majority of the Trustees then in office; provided, however, that no approval of affected Shareholders is necessary if a majority of the trustees then in office determines that the continuation of the Trust, Series, or Class is not in the best interests of the Trust, such Series, such Class, or the affected Shareholders as a result of factors or events adversely affecting the ability of the Trust, Series, or Class to conduct its business and operations in an economically viable manner. SECTION 9.1.2. DISTRIBUTION OF ASSETS. Upon termination of the Trust or any Series or Class, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, as may be determined by the Trustees, the Trust shall, in accordance with such procedures as the Trustees consider appropriate, reduce the remaining assets of the Trust to distributable form in cash or other securities, or any combination thereof, and distribute the proceeds to the affected Shareholders in the manner set forth by resolution of the Trustees. To the extent permitted by the 1940 Act or other applicable law, the Trustees may require affected Shareholders to receive Shares of any remaining Series or Class in lieu of such proceeds. SECTION 9.1.3. CERTIFICATE OF CANCELLATION. Upon termination of the Trust, the Trustees shall file a certificate of cancellation in accordance with Section 3810 of the DBTA. SECTION 9.2. REORGANIZATION. The Trustees may sell, convey, merge and transfer the assets of the Trust, or the assets belonging to any one or more Series, to another trust, partnership, association or corporation organized under the laws of any state of the United States, or to the Trust to be held as assets belonging to another Series of the Trust, in exchange for cash, shares or other securities (including, in the case of a transfer to another Series of the 25 32 Trust, Shares corresponding to such other Series) with such transfer either (i) being made subject to, or with the assumption by the transferee of, the liabilities belonging to each Series the assets of which are so transferred, or (ii) not being made subject to, or not with the assumption of, such liabilities. Following such transfer, the Trustees shall distribute such cash, Shares or other securities (giving due effect to the assets and liabilities belonging to and any other differences among the various Series the assets belonging to which have so been transferred) among the Shareholders of the Series corresponding to the Series the assets belonging to which have been so transferred. If all of the assets of the Trust have been so transferred, the Trust shall be terminated. SECTION 9.3. MERGER OR CONSOLIDATION. SECTION 9.3.1. AUTHORITY TO MERGE OR CONSOLIDATE. The Trust, or any one or more Series, may, either as the successor, survivor, or non-survivor, (i) consolidate with one or more other trusts, partnerships, associations or corporations organized under the laws of the State of Delaware or any other state of the United States to form a new consolidated trust, partnership, association or corporation under the laws of the State of Delaware or any other sate of the United States, or have one or more such trusts, partnerships, associations or corporations merged into it, any such consolidation or merger to be upon such terms and conditions as are specified in an agreement and plan of reorganization entered into by the Trust, or one or more Series as the case may be, in connection therewith. The terms "merge" or "merger" as used herein shall also include the purchase or acquisition of any assets of any other trust, partnership, association or corporation which is an investment company organized under the laws of the State of Delaware or any other state of the United States. SECTION 9.3.2. NO SHAREHOLDER APPROVAL REQUIRED. Any such consolidation or merger shall not require the vote of the Shareholders affected thereby, unless such vote is required by the 1940 Act or other applicable laws, or unless such merger or consolidation would result in an amendment of this Declaration of Trust which would otherwise require the approval of such Shareholders. SECTION 9.3.3. SUBSEQUENT AMENDMENTS. In accordance with Section 3815(f) of DBTA, an agreement of merger or consolidation may effect any amendment to this Declaration of Trust or the By-Laws or effect the adoption of a new declaration of trust or By-Laws of the Trust if the Trust is the surviving or resulting business trust. SECTION 9.4.4. CERTIFICATE OF MERGER OR CONSOLIDATION. Upon completion of the merger or consolidation, the Trustees shall file a certificate of merger or consolidation in accordance with Section 3810 of the DBTA. 26 33 ARTICLE 10 AMENDMENTS SECTION 10.1. GENERALLY. Except as otherwise specifically provided herein or as required by the 1940 Act or other applicable law, this Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the Trustees then in office. SECTION 10.2. CERTIFICATE OF AMENDMENT. In the event any of the amendment to this Declaration of Trust which affects the certificate of trust filed by the Trust in accordance with Section 2.1, the Trustees shall file a certificate of amendment in accordance with Section 3810 of the DBTA. SECTION 10.3. PROHIBITED RETROSPECTIVE AMENDMENTS. No amendment of this Declaration of Trust or repeal of any of its provisions shall limit or eliminate the limitation of liability provided to Trustees and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal. ARTICLE 11 MISCELLANEOUS PROVISIONS SECTION 11.1. CERTIFIED COPIES. The original or a copy of this Declaration of Trust and of each amendment hereto shall be kept in the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and with the same effect as if it were the original, may rely on a copy certified by an officer or Trustee of the Trust to be a copy of this Declaration of Trust or of any such amendments. SECTION 11.2. CERTAIN INTERNAL REFERENCES. In this Declaration of Trust or in any such amendment, references to this Declaration of Trust, and all expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to this Declaration of Trust as a whole and as amended or affected by any such amendment. SECTION 11.3. HEADINGS. Headings are placed herein for convenience of reference only, and in case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts, each of which shall be deemed an original. SECTION 11.4. RESOLUTION OF AMBIGUITIES. The Trustees may construe any of the provisions of this Declaration insofar as the same may appear to be ambiguous or inconsistent with any other provisions hereof, and any such construction hereof by the Trustees in good 27 34 faith shall be conclusive as to the meaning to be given to such provisions. In construing this Declaration, the presumption shall be in favor of a grant of power to the Trustees. SECTION 11.5. SIGNATURES. To the extent permitted by applicable law, any instrument signed pursuant to a validly executed power of attorney shall be deemed to have been signed by the Trustee or officer executing the power of attorney. SECTION 11.6. GOVERNING LAW. This Declaration of Trust is executed and delivered with reference to DBTA and the laws of the State of Delaware by all of the Trustees whose signatures appear below, and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to DBTA and the laws of the State of Delaware (unless and to the extent otherwise provided for and/or preempted by the 1940 Act or other applicable federal securities laws); provided, however, that there shall not be applicable to the Trust, the Trustees, or this Declaration of Trust (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the DBTA) pertaining to trusts which are inconsistent with the rights, duties, powers, limitations or liabilities of the Trustees set forth or referenced in this Declaration of Trust. All references to sections of the DBTA or the 1940 Act, or any rules or regulations thereunder, refer to such sections, rules, or regulations in effect as of the date of this Declaration of Trust, or any successor sections, rules, or regulations thereto. SECTION 11.7. SEVERABILITY. The provisions of this Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provision is in conflict with the 1940 Act, the DBTA, or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration of Trust; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration of Trust in any jurisdiction. 28 35 IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have executed this Amended and Restated Declaration of Trust as of the date first written above. /s/ Peter C. Clapman -------------------------- Peter C. Clapman, Trustee /s/ Lisa Snow -------------------------- Lisa Snow, Trustee 29 EX-99.D 3 INVESTMENT ADVISORY CONTRACT 1 Exhibit 99.d INVESTMENT MANAGEMENT AGREEMENT FOR TIAA-CREF LIFE FUNDS THIS AGREEMENT is made this 30th day of November, 1998, by and between TIAA-CREF Life Funds (the "Fund"), a Delaware business trust, and Teachers Advisors, Inc. ("Advisors"), a Delaware corporation. WHEREAS, the Fund 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 one series (known as the Stock Index Fund) (the "Current Fund"), and may consist of additional series in the future (collectively, with the Current Fund, the "Funds"); WHEREAS, Advisors is engaged principally in the business of rendering investment management services and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"); WHEREAS, the Fund desires to retain Advisors to provide or to arrange to provide overall management of the Fund and the Funds, including, but not limited to, investment management, custody, transfer agency, dividend disbursing, legal, accounting, and administrative services, in the manner and on the terms and conditions set forth in this Agreement; and WHEREAS, Advisors is willing to provide or to arrange to provide overall management of the Fund and the Funds, including, but not limited to, investment management, custody, transfer agency, dividend disbursing, legal, accounting, and administrative services, 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, the Fund and Advisors hereby agree as follows: 1. Duties of Advisors. (a) Generally. (i) The Fund hereby engages Advisors to act as the Fund's general manager to provide or to arrange to provide directly or through third parties, investment management, custody, transfer agency, dividend disbursing, legal, accounting, and administrative services to each Fund; and to provide or to arrange to provide the above services subject to the supervision of the board of trustees of the Fund (the "Board"), for the period and on the terms and conditions set forth in this Agreement. Advisors hereby accepts such engagement and agrees during such period, at its own expense, to provide or to arrange to provide such investment advisory and general management services and to assume the obligations set forth in this Agreement for the compensation provided for herein. (ii) Subject to the provisions of the 1940 Act and the Advisers Act, Advisors may retain any affiliated or unaffiliated parties including, but not limited to, investment 2 adviser(s) and/or investment sub-adviser(s), custodian(s), transfer agent(s), dividend-disbursing agent(s), attorney(s), and accountant(s) to perform any or all of the services set forth in this Agreement (any such party is hereafter referred to as a "Service Provider"). Advisors shall provide the Fund with reasonable notice of its intention to retain each such Service Provider and shall not retain a Service Provider if, within 10 days after Advisors provides such notice to the Fund with respect to such Service Provider, the Fund notifies Advisors of its disapproval of such Service Provider. (iii) Advisors and each Service Provider 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 the Fund or a Fund in any way or otherwise be deemed an agent of the Fund or a Fund. (iv) Advisors shall, for purposes of this Agreement, have and exercise full investment discretion and authority to act as agent for the Fund in buying, selling or otherwise disposing of or managing the Fund's investments, directly or through sub-advisers, subject to supervision by the Board. (v) Advisors and each Service Provider shall be subject to: (1) the restrictions of the Declaration of Trust Fund, 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 the Fund (the "registration statement") under the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act; and (4) any applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"). (b) Investment Advisory Services. (i) Advisors shall provide the Fund directly or through sub-advisers with such investment research, advice and supervision as the Fund may from time to time consider necessary 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. (ii) The Fund has furnished or will furnish Advisors (who is authorized to furnish any Service Provider) with copies of the Fund's registration statement, and Declaration of Trust, as currently in effect and agrees during the continuance of this Agreement to furnish Advisors with copies of any amendments or supplements thereto before or at the time -2- 3 the amendments or supplements become effective. Advisors and each Service Provider will be entitled to rely on all documents furnished by the Fund. (iii) Advisors shall take, on behalf of each Fund, all actions which 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 Advisors. Advisors also is authorized as the agent of the Fund to give instructions to any Service Provider serving as custodian of the Fund 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, Advisors is directed at all times to seek to obtain best execution and price 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, Advisors may select brokers or dealers that are affiliated with Advisors or the Fund. (iv) In addition to seeking the best price and execution, Advisors may also take into consideration research and statistical information, wire, quotation and other services provided by brokers and dealers to Advisors. Advisors is also authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if Advisors 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 Advisors'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. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty created by this Agreement or otherwise. Advisors will periodically evaluate the statistical data, research and other investment services provided to it by brokers and dealers. Such services may be used by Advisors 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. (v) 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, Advisors 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 the Fund's registration statement; (2) Consult with the Board and furnish to the Board recommendations with respect to an overall investment -3- 4 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 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 accounts, records, memoranda, instructions or authorizations relating to the acquisition or disposition of investments for each Fund and the Fund; (7) Furnish any personnel, office space, equipment and other facilities necessary for the operation of each Fund as contemplated in this Agreement; (8) Provide the Fund with such accounting or other data concerning the Fund's investment activities as shall be necessary or required to 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 Advisors's responsibilities (as specified in -4- 5 such investment advisory or investment sub-advisory contract) listed above. (c) General Management Services. Advisors shall provide or arrange to provide all custody, transfer agency, dividend disbursing, legal, accounting, and administrative services necessary for the operation of the Fund, including, without limitation, the following services: (i) Custody services including, but not limited to: (1) placing and maintaining each Fund's securities, cash or other investments pursuant to the requirements of Section 17(f) of the 1940 Act and the rules thereunder; (2) holding and segregating for the Fund's account, all of the Fund's assets, including securities that the Fund desires to be held in places within the United States ("domestic securities") or in places outside the United States ("foreign securities"); (3) releasing and delivering domestic securities owned by the Fund only upon receipt of instructions from persons and by means authorized by the Board; (4) assuring that all domestic securities held are registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of Advisors or any Service Provider acting as custodian which nominee shall be assigned exclusively to the Fund, unless the Fund has provided written authorization to use a nominee not meeting the above requirement; (5) maintaining a separate bank account(s) in the United States in the name of the Fund, and holding all cash received by it from or for the account of the Fund in such account; (6) collecting on a timely basis all income and other payments with respect to securities to which the Fund shall be entitled either by law or pursuant to custom in the securities business; (7) paying out monies of the Fund upon receipt of instructions from persons and by means authorized by the Board; -5- 6 (8) appointing or removing, in its discretion, any other entity qualified under the 1940 Act to act as a custodian, as its agent to carry out any custody duties so long as such other entity is approved by the Board; (9) employing, in the discretion of Advisors or a Service Provider employed by Advisors, other parties as sub-close custodians for the Fund's domestic securities or foreign securities. With respect to the Fund's foreign securities, if any, such employment shall be effected and such foreign securities shall be maintained in accordance with the provisions of Rule 17f-5 under the 1940 Act, as such provisions may be amended from time to time, provided that Advisors or a Service Provider employed by Advisors shall furnish annually to the Fund, information concerning the Service Provider or sub-custodians employed by Advisors or other Service Provider; (10) creating and maintaining all records relating to its activities and obligations under any contract relating to the Fund or a Fund thereof in accordance with the provisions of Section 31 of the 1940 Act and Rules 31a-1 and 31a-2 under the 1940 Act. Such records shall be the property of the Fund and shall at all times during the regular business hours of Advisors (or separate Service Provider acting as custodian) be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission; and (11) performing or arranging for the performance of any other usual duties and functions of a custodian for a registered investment company; (ii) Transfer agency services, including, but not limited to: (1) receiving for acceptance, orders for the purchase of Fund shares, and promptly delivering payment and appropriate documentation thereof to Advisors or any Service Provider acting as custodian; (2) issuing, pursuant to purchase orders, the appropriate number of the Fund's shares and holding such shares in the appropriate account; -6- 7 (3) receiving for acceptance redemption requests and redemption directions and delivering the appropriate documentation to Advisors or any Service Provider acting as custodian; (4) effecting transfers of Fund shares by the registered owners thereof upon receipt of appropriate instructions; (5) preparing and transmitting payments for dividends and distributions declared by the Fund; (6) maintaining records of accounts for shareholders and advising the Fund and its shareholders as to the foregoing; (7) recording the issuance of shares of the Fund and maintaining pursuant to Rule 17Ad-10(e) under the 1934 Act a record of the total number of shares of the Fund that are authorized, based upon data provided by the Fund, and issued and outstanding; and (8) performing or arranging for the performance of any other customary services of a transfer agent or dividend-disbursing agent for a registered investment company; (iii) The calculation of the net asset value of each Fund and the net asset value per share of each class of shares at such times and in such manner as specified in the Fund's current registration statement and at such other times upon which the parties hereto may from time to time agree; (iv) The creation and maintenance of such records relating to the business of the Fund as the Fund may from time to time reasonably request; (v) Portfolio accounting services to maintain the portfolio accounting records for each Fund; (vi) The preparation of all federal, state, and local tax returns and reports relating to each Fund; (vii) The preparation, filing and arranging for the distribution of proxy materials and periodic reports to shareholders of each Fund; (viii) The preparation and filing of the Fund's registration statements and other documents with the Securities and Exchange Commission and other federal and state regulatory authorities as may be required by applicable law; -7- 8 (xiv) The preparation and filing of state registrations of the Fund's shares; and (x) Other services for the ordinary operation of the Fund. Advisors may contract with qualified Service Providers for the provision of any of the services necessary for the operation of the Fund as described in this Section (c). Where Advisors engages separate Service Providers, Advisors shall also, on behalf of the Fund, coordinate the activities of such Service Providers, as well as other agents, attorneys, brokers and dealers, insurers, sub-advisers and such other persons in any such other capacity deemed to be necessary or desirable. Advisors shall make reports to the Board of its performance hereunder and shall furnish advice and recommendations with respect to such other aspects of the business and affairs of the Fund as the Board or Advisors shall consider desirable. 2. Allocation of Charges and Expenses. (a) Advisors. (i) Advisors assumes the expense of and shall pay for maintaining the staff and personnel necessary to perform its obligations under this Agreement, and shall at its own expense provide the office space, equipment and facilities that it is obligated to provide under this Agreement, and shall pay all compensation of officers of the Fund and all trustees of the Fund who are affiliated persons of Advisors, except as otherwise specified in this Agreement. (ii) Except for those expenses assumed by the Fund as provided in Section 2(b) below, Advisors shall bear all of the Fund's expenses including, but not limited to: custodian fees; transfer agent fees; pricing costs (including the daily calculation of net asset value); portfolio accounting service fees; ordinary legal fees (except extraordinary litigation expenses); expenses of shareholders' and/or trustees' meetings; bookkeeping expenses related to shareholder accounts; cost of printing and mailing shareholder reports and proxy statements; costs of printing and mailing registration statements and updated prospectuses to current shareholders; costs in connection with the registration of the Fund's shares with federal and state securities authorities and the continued qualification of the Fund's shares for sale; expenses of all audits by the Fund's independent accountants, costs of filing reports with regulatory bodies; costs of the maintenance of the Fund's fidelity bond required by Section 17(g) of the 1940 Act, or other insurance premiums; and the fees of any trade association of which the Fund is a member. (iii) Advisors agrees that neither it nor any Service Provider will make any separate charge to any shareholder or his individual account for any services rendered to said shareholder or the Fund unless such charge for special services is specifically approved by the Board including a majority of the directors who are not "interested persons" (as such term is defined in the 1940 Act) of Advisors. No special charge will be levied retroactively or without appropriate notice to affected shareholders. -8- 9 (b) The Fund. The Fund assumes and shall pay or cause to be paid the following expenses of the Fund, including, without limitation: compensation of Advisors under this Agreement; fees and expenses of trustees who are not "interested persons" (as such term is defined in the 1940 Act) of the Fund (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; taxes; and extraordinary expenses (including extraordinary litigation expenses and extraordinary consulting expenses). 3. Compensation of Advisors. (a) For the services rendered, the facilities furnished and expenses assumed by Advisors, the Fund shall pay to Advisors at the end of each calendar month a fee calculated as a percentage of the average value of the net assets each day for each Fund during that month at the following annual rates: Stock Index Fund...........................................0.30% (b) Advisors'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 the Fund 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. 4. Limitation of Liability of Advisors. Advisors 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 the Fund, except for (i) willful misfeasance, bad faith or gross 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. -9- 10 5. Activities of Advisors. (a) The services of Advisors are not deemed to be exclusive, and Advisors is free to render services to others, so long as Advisors's services under this Agreement are not impaired. It is understood that trustees, officers, employees and shareholders of the Fund are or may become interested persons of Advisors, as directors, officers, employees and shareholders or otherwise, and that directors, officers, employees and shareholders of Advisors are or may become similarly interested persons of the Fund, and that Advisors may become interested in the Fund as a shareholder or otherwise. (b) It is agreed that Advisors may use any supplemental investment research obtained for the benefit of the Fund in providing investment advice to its other investment advisory accounts. Advisors or its affiliates may use such information in managing their own accounts. Conversely, such supplemental information obtained by the placement of business for Advisors or other entities advised by Advisors will be considered by and may be useful to Advisors in carrying out its obligations to the Fund. (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 of the Fund or by the Fund and other mutual funds, separate accounts, or other accounts (collectively, "Advisory Clients") managed by Advisors, provided that: (i) Advisors' actions with respect to the aggregation of orders for multiple Advisory Clients, including the Fund, 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 (ii) Advisors' policies with respect to the aggregation of orders for multiple Advisory Clients have been previously submitted and approved by the Board of Trustees of the Fund. Neither Advisors, 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. 6. Books and Records. (a) Advisors hereby undertakes and agrees to maintain, in the form and for the period required by Rule 31a-2 and, if the Fund adds a money market account, Rule 2a-7 under the 1940 Act, all records relating to the Fund's investments that are required to be maintained by the Fund pursuant to the requirements of Rule 31a-1 and Rule 2a-7 of the 1940 Act. -10- 11 (b) Advisors agrees that all books and records which it or any other Service Provider maintains for the Fund are the property of the Fund and further agrees to surrender promptly to the Fund any such books, records or information upon the Fund's request. All such books and records shall be made available, within five business days of a written request, to the Fund's accountants or auditors during regular business hours at Advisors's offices. The Fund or its authorized representative shall have the right to copy any records in the possession of Advisors or a Service Provider that pertain to the Fund. 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 the Fund free from any claim or assertion of rights by Advisors. (c) Advisors 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 the Fund has authorized such disclosure, or if such disclosure is required by federal or state regulatory authorities. 7. Duration and Termination of this Agreement. (a) This Agreement shall not become effective 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 each Fund. This Agreement shall come into full force and effect on the date which 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 votes attributable to the 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. (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 votes attributable to the shares of the applicable Fund, or by Advisors, 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 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- 12 8. Amendments of this Agreement. This Agreement may be amended as to each Fund by the parties only if such amendment is specifically approved by (i) the vote of a majority of outstanding votes attributable to the shares of the 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. 9. Definitions of Certain Terms. The terms "assignment," "affiliated person," and "interested person," when used in this Agreement, shall have the respective meanings specified in the 1940 Act. The term "majority of the outstanding votes" attributable to the shares of a Fund means the lesser of (a) 67% or more of the votes attributable to such Fund present at a meeting if the holders of more than 50% of such votes are present or represented by proxy, or (b) more than 50% of the votes attributable to shares of the Fund. 10. 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. 11. 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. 12. 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. -12- 13 13. 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 the Fund - TIAA-CREF Life Funds 730 Third Avenue New York, New York 10017-3206 Attention: Thomas G. Walsh (b) If to Advisors - Teachers Advisors, Inc. 730 Third Avenue New York, New York 10017-3206 Attention: Scott C. Evans or to such other address as the Fund or Advisors shall designate by written notice to the other. 14. No Liability of Shareholders. This Agreement is executed by the Trustees of the Fund, not individually, but rather in their capacity as Trustees under the Declaration of Trust made August 13, 1998, as amended. None of the shareholders of the Fund, Trustees, officers, employees, or agents of the Fund shall be personally bound or liable under this Agreement, nor shall resort be had to their private property for the satisfaction of any obligation or claim hereunder but only to the property of the Fund and, if the obligation or claim relates to the property held by the Fund for the benefit of one or more but fewer than all Funds, then only to the property held for the benefit of the affected Fund. 15. 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. -13- 14 IN WITNESS WHEREOF, the Fund and Advisors 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 LIFE FUNDS By: /s/ Thomas G. Walsh Attest:/s/ Mark L. Serlen ------------------------------------ ----------------------- Thomas G. Walsh Chairman of the Board and President Title: Assistant Secretary ----------------------- TEACHERS ADVISORS, INC. By: /s/ Scott C. Evans Attest:/s/ Mark L. Serlen ------------------------------------ ----------------------- Scott C. Evans Executive Vice President Title: Assistant Secretary ----------------------- -14- 15 [TIAA CREF LOGO] WAIVER Continuation of Exhibit 99.d November 30, 1998 The Board of Trustees TIAA-CREF Life Funds 730 Third Avenue New York, New York 10071-3206 Ladies and Gentlemen: This is to inform you that Teachers Advisors, Inc. ("Advisors") has voluntarily chosen to waive a portion of the fee it is otherwise entitled to receive for managing the assets of TIAA-CREF Life Funds (the "Fund") under the Investment Management Agreement dated November 30, 1998, by and between the Fund and Advisors. The waiver shall operate from the date of this letter until we notify you otherwise in writing. The waiver will be based on an effective annual rate of twenty-three one-hundredths of one percent (0.23%) of the net assets of The Stock Index Fund portfolio with the result that the fee due to Advisors during the covered period shall be based on an effective annual rate of .07% We will provide you with not less than 30 days written notice if we determine to modify or terminate this waiver, unless it is otherwise agreed by you and us. Sincerely, TEACHERS ADVISORS, INC. By:/s/ Scott C. Evans ------------------------------------- Scott C. Evans Executive Vice President TEACHERS ADVISORS, INC. EX-99.E 4 PARTICIPATION/DISTRIBUTION AGREEMENT 1 Exhibit 99.e PARTICIPATION/DISTRIBUTION AGREEMENT THIS AGREEMENT is entered into on this 20th day of November, 1998, between TIAA-CREF Life Insurance Company ("TCL"), a life insurance company organized under the laws of the State of New York, for itself and on behalf of TIAA-CREF Life Separate Account VA-1 (the "Account"), a separate account established by TCL in accordance with the laws of the State of New York; TIAA-CREF Life Funds (the "Company"), an open-end management investment company organized under the laws of the State of Delaware, and Teachers Personal Investors Services, Inc. ("TPIS"), a Delaware corporation operating as a broker-dealer. WITNESSETH: WHEREAS, the Account has been established by TCL pursuant to the insurance laws of the State of New York in connection with certain variable annuity contracts ("Contracts") proposed to be issued to the public by TCL; WHEREAS, the Account has been registered as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the income, if any, and gains and losses, realized and unrealized, from assets allocated to the Account are, in accordance with the applicable contracts, to be credited to or charged against the Account without regard to other income, gains or losses of TCL or any other separate account thereof; WHEREAS, the Account currently consists of a single investment account and may in the future be subdivided into various investment accounts (each a "subaccount") as to which income, if any, and gains and losses, realized and unrealized, from assets allocated to each such subaccount would be credited to or charged against such subaccounts without regard to other income, gains or losses of other subaccounts; WHEREAS, the Company is registered with the Securities and Exchange Commission under the 1940 Act as an open-end management investment company; WHEREAS, the Company currently consists of a single investment portfolio and may in the future be subdivided into various investment portfolios (each a "Fund"), each of which may be subject to certain investment policies and restrictions that may not be changed without a majority vote of the shareholders of such Fund; and 1 2 WHEREAS, the shares of each Fund will be offered to a corresponding subaccount; and WHEREAS, TPIS is the principal underwriter for the Contracts and is a broker-dealer registered as such under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers ("NASD"); NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and conditions set forth herein TCL, the Account, TPIS and the Company hereby agree as follows: 1. The Contracts funded through the Account will provide for the allocation of purchase payments among certain subaccounts for investment in such shares of the Funds as may be offered from time to time in the prospectus for the Contracts. The selection of the particular subaccount is to be made by the contract owner and such selection may be changed or the cash value may be transferred among or between subaccounts in accordance with the terms of the Contracts. 2. The Company hereby appoints TPIS as its principal underwriter and exclusive distributor to sell its shares to the Account, and TPIS accepts such appointment. TPIS shall offer shares of the Company only on the terms set forth in the Company's currently effective registration statement. The Company reserves the right to sell its shares to other persons and to appoint additional underwriters and distributors. 3. The Company agrees to sell to TCL, on behalf of the Account, those shares of the Funds of the Company which the Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Company or its designated agent of the order for the shares of the Company. For purposes of this Section, TCL or its designated agent shall be the designated agent of the Company for receipt of such orders from contract owners and receipt by such designated agent shall constitute receipt by the Company; provided that the Company's transfer agent receives notice of such order by 9:30 a.m. New York time on the next following business day. "Business day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Company calculates the net asset value of the Funds as described in its registration statement. The Company agrees to make shares of each Fund available indefinitely for purchase at the applicable net asset value per share by the Account on those days on which the Company calculates its net asset value as described in its registration statement and the Company shall use reasonable efforts to calculate such net asset value on each business day as defined above. Notwithstanding the foregoing, the Board of Trustees of the Company (hereinafter the "Board") may refuse to sell shares of any Fund to TCL, or suspend or terminate the offering of shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties 2 3 under federal and any applicable state laws, necessary in the best interests of the shareholders of such Fund or contract owners indirectly invested in such Fund. TCL shall pay for such shares by 9:30 a.m. New York time on the next business day after an order to purchase shares is made in accordance with the provisions of this Section 5. Payment shall be in federal funds transmitted by wire to the Company's transfer agent or by a credit for any shares redeemed. 4. The Company agrees to redeem for cash, on TCL's request, any full or fractional shares of the Company held by TCL, executing such requests on a daily basis at the net asset value next computed after receipt by the Company or its designated agents of the request for redemption by Contract owners. For purposes of this Section, TCL or or its designated agent shall be the designated agent of the Company for receipt of requests for redemption from Contract owners and receipt by such designated agent shall constitute receipt by the Company; provided that the Company receives notice of such request for redemption by 9:30 a.m. New York time on the next following business day. The Company ordinarily shall make payment to TCL for shares redeemed on the day the Company receives notice from TCL or its designated agent, but the Company may delay payment for up to seven calendar days after the request is received. Payment shall be in federal funds transmitted by wire or by a credit for any shares purchased. 5. Transfer of shares shall be by book entry. No stock certificates will be issued to the Account. Shares of each Fund will be recorded with an appropriate identifier for the corresponding subaccount on the books of TCL. If, however, state law requires transfer other than by book entry, then the Company agrees to provide the required form of transfer. 6. The Company shall make the net asset value per share for each Fund available to TCL or its designated agent on a daily basis as soon as reasonably practicable after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available to TCL or its designated agent by 7 p.m. New York time. 7. The Company or its transfer agent shall furnish notice on the ex-dividend date to TCL or its designated agent of any dividend or distribution payable on any shares to the Account. All of such dividends and distributions as are payable on shares of a Fund shall be automatically reinvested in additional shares of that Fund. The Company shall notify TCL or its designated agent of the number of shares so issued. 8. The Company shall pay all of its expenses incidental to its performance under this Agreement. The Company shall take all reasonable steps to ensure that all of its shares are registered and authorized for issue in accordance with applicable federal and state laws prior to their purchase by TCL for the Account. The Company shall bear the expenses for the cost of registration of its shares, preparation of its prospectus, proxy materials and reports, the printing 3 4 and distribution of such items to each Contract owner who has allocated net amounts to any subaccount, the preparation of all statements and notices required by any federal or state law, and taxes imposed upon the Company on the issue or transfer of the Company's shares subject to this Agreement. The parties shall cooperate in the printing of the prospectuses of the Contracts and the Company. The Company shall provide TCL with a reasonable quantity of Company prospectuses and reports to be sent to existing Contract owners. 9. The Company does not charge a load or redemption fee in connection with the sale or redemption of its shares and TPIS will not charge any load or redemption fee in connection with the sale of shares to or redemption of shares from the Account. Notwithstanding this, TPIS assumes and will pay, from its own resources, all expenses related to distribution of the Company's shares and will bear other costs and expenses attributable to any activity primarily intended to result in the sale of shares. Such expenses include, but are not limited to: a. printing and distribution of the Company's prospectus to prospective investors; b. preparation, printing and distribution of advertising and sales literature for use in the offering of the Company's shares (in connection with the offering of the Contracts or otherwise) and printing and distribution of reports to shareholders used as sales literature; and c. the qualification of TPIS as a distributor or broker or dealer under any applicable federal or state securities laws; 10. In selling shares of the Company, TPIS shall use its best efforts in all respects duly to conform with the requirements of all federal and state laws and regulations and the rules of the NASD, relating to the sales of the Company's shares or the Contracts. 11. TPIS shall act as an independent contractor and nothing contained herein shall be construed to make it, its agents or representatives, or any employees, employees of the Company. In addition, TPIS shall remain fully responsible for its own conduct and that of its agents, representatives and employees under applicable law. 12. TCL and TPIS shall make no representations concerning the Company or its shares except those contained in the then-current prospectus of the Company and in printed information subsequently issued on behalf of the Company and approved by the Company as supplemental to such prospectus, or otherwise approved by the Company. 13. The Company represents that each Fund of the Company shall comply with Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations issued thereunder (Reg. Section 1.817-5), relating to the diversification requirements 4 5 for variable annuity contracts and any amendments or other modifications to such Section or regulations. The Company represents that each Fund of the Company is currently qualified or will be qualified as a Regulated Investment Company under Subchapter M of the Code and that every effort will be made to maintain such qualification under Subchapter M or under any successor or similar provision, and that the Company will notify TCL orally (followed by written notice) or by wire immediately upon having a reasonable basis for believing that any Series might not so qualify in the future. 14. It is understood among the parties to this Agreement that, subject to obtaining any applicable regulatory approvals that may be conditioned on the parties complying with certain requirements, shares of each Fund may be offered in the future to the separate accounts of various insurance companies in addition to TCL and in connection with variable life insurance contracts or variable annuity contracts other than the Contracts. It is also understood among the parties that shares of each Fund only may be offered to the other persons identified in paragraph (f) of Regulation Section 1.817-5. 15. The Company represents and warrants that all of its officers, employees, investment advisers, and other individuals or entities having access to the assets of the Company are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Company in an amount not less than the minimal coverage as required currently by Section 17(g) of the 1940 Act and Rule 17g-1 or related provisions as may be promulgated from time to time. 16. This Agreement shall terminate: (a) at any time on six months written notice by the Company to TCL and TPIS or on six months' written notice by TCL to the Company and TPIS or on six months' written notice by TPIS to TCL and the Company without the payment of any penalty (provided, however, that if TCL is not able, acting in good faith, to obtain suitable substitute investment media within six months, this Agreement shall terminate one year from the date of the notice of termination); or (b) at the option of any party hereto upon institution of formal enforcement proceedings against the Company, the Company's investment manager, TCL or TPIS by the Securities and Exchange Commission, or if TCL or the Company is determined by the other to have failed to perform its obligations under this Agreement in a satisfactory manner; or (c) upon a vote of the holders of a majority of the votes attributable to the shares supporting the Contracts having an interest in a particular subaccount to substitute the shares of another investment company or Fund for the Company shares then being held by that 5 6 subaccount in accordance with the terms of the Contracts. TCL will give 60 days' prior written notice to the Company upon becoming aware of a proposed Contract owner vote; or (d) in the event the shares of the Company are not registered, issued, or sold in accordance with applicable state and/or federal law or such law prohibits the use of such shares as an underlying investment for the Contracts issued or to be issued by TCL. Prompt notice of such an event shall be given by each party to the other in the event the conditions of this provision occur; or (e) upon assignment of this Agreement, at the option of any party not assigning this Agreement. 17. Each notice required by this Agreement shall be given in writing to: Attn: Thomas G. Walsh TIAA-CREF Life Insurance Company 730 Third Avenue New York, New York 10017-3206 Attn: Thomas G. Walsh TIAA-CREF Life Funds 730 Third Avenue New York, New York 10017-3206 Attn: Lisa Snow Teachers Personal Investors Services, Inc. 730 Third Avenue New York, New York 10017-3206 18. Each party hereto shall cooperate with each other party and all appropriate government authorities and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. The Company agrees that all records and other data pertaining to the Contracts are the exclusive property of TCL and that any such records and other data shall be furnished to TCL by the Company upon termination of this Agreement for any reason whatsoever. TCL shall have the right to inspect, audit and copy all pertinent records pertaining to the Contracts. This shall not preclude the Company from keeping copies of such data or records for its own files subject to the provisions of this section. 19. TCL, the Account and TPIS agree to look solely to the assets of the Company for the satisfaction of any liability of the Company, with respect to this agreement and 6 7 will not seek recourse against the members of the Board or its officers, employees, agents, or shareholders, or any of them, or any of their personal assets for such satisfaction. 20. The Company agrees to indemnify and hold harmless TCL, each member of its Board of Directors, each of its officers, and any person that controls TCL within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act") against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses) to which TCL may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements arise as a result of TCL's reliance on any information contained in a then current prospectus, statement of additional information, or report of the Company; or any current information communicated to TCL in writing by the Company. The Company shall, at all times, have the right, but not the obligation, to take over and conduct, in the name of TCL, the Account and/or TPIS, the investigation and defense of any claim by a third party for which indemnification may be sought, and in such event, TCL, the Account and/or TPIS shall cooperate in every way with the Company. 21. The Company agrees to indemnify and hold harmless TPIS, each member of its Board of Directors, each of its officers, and any person that controls TPIS within the meaning of Section 15 of the 1933 Act against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses) to which TPIS may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements arise as a result of TPIS's reliance on any information contained in a then current prospectus, statement of additional information, or report of the Company; or any current information communicated to TPIS in writing by the Company. The Company shall, at all times, have the right, but not the obligation, to take over and conduct, in the name of TPIS, or any controlling person of TPIS, the investigation and defense of any claim by a third party for which indemnification may be sought, and in such event, TPIS shall cooperate in every way with the Company. 22. TCL agrees to indemnify and hold harmless the Company, each member of its Board, each of its officers, and each person that controls the Company within the meaning of Section 15 of the 1933 Act against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of TCL) or litigation (including legal and other expenses) to which the Company may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements arise as a result of the Company's reliance on any information contained in the then current prospectus, statement of additional information, or contract of the Account; or any information communicated to the Company in writing by TCL. 7 8 TCL shall, at all times, have the right, but not the obligation, to take over and conduct, in the name of the Company, the investigation and defense of any claim by a third party for which indemnification may be sought, and in such event, the Company shall cooperate in every way with TCL. 23. TPIS agrees to indemnify and hold harmless the Company, each member of its Board, each of its officers, and each person that controls the Company within the meaning of Section 15 of the 1933 Act against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of TPIS) or litigation (including legal and other expenses) to which the Company may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements arise as a result of the Company's reliance on any information communicated to the Company in writing by TPIS (for inclusion in the Company's registration statement or otherwise), as a result of any misrepresentation or omission to state a material fact by TPIS (or any agent or employee of TPIS) unless such misrepresentation or omission was made in reliance on written information furnished by the Company or as a result of TPIS's wilful misconduct or failure to exercise reasonable care and diligence (including supervision of its agents representatives and employees) in providing the services the Company specified herein. TPIS shall, at all times, have the right, but not the obligation, to take over and conduct, in the name of the Company, the investigation and defense of any claim by a third party for which indemnification may be sought, and in such event, the Company shall cooperate in every way with TPIS. 24. This Agreement shall be construed in accordance with the laws of the State of New York. 25. This Agreement shall be subject to the provisions of the 1933 Act, the 1940 Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations and rulings thereunder, including such exemptions form those statutes, rules and regulations as the Securities and Exchange Commission may grant and the terms hereof shall be interpreted and construed in accordance therewith. 8 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested as of the date shown on the First page. TIAA-CREF LIFE INSURANCE COMPANY ON BEHALF OF ITSELF AND TIAA-CREF LIFE SEPARATE ACCOUNT VA-1 Attest: /s/ Mark L. Serlen By: /s/ Thomas G. Walsh - ----------------------------------- --------------------------------------- Thomas G. Walsh Assistant Secretary President TIAA-CREF LIFE FUNDS Attest: /s/ Mark L. Serlen By: /s/ Scott C. Evans - ----------------------------------- ------------------------------------- Scott C. Evans Assistant Secretary Executive Vice President TEACHERS PERSONAL INVESTORS SERVICES, INC. Attest: /s/ Mark L. Serlen By: /s/ Lisa Snow - ----------------------------------- ------------------------------------- Lisa Snow Assistant Secretary Vice President, Chief Counsel and Secretary 9 EX-99.G 5 CUSTODIAN AGREEMENT 1 Exhibit 99.g CUSTODIAN CONTRACT Between TIAA-CREF LIFE FUNDS, TEACHERS ADVISORS, INC. and STATE STREET BANK AND TRUST COMPANY 2 TABLE OF CONTENTS Page 1. Employment of Custodian and Property to be Held By It....................................................................1 2. Duties of the Custodian with Respect to Property of the Fund Held by the Custodian in the United States................2 2.1 Holding Securities...........................................2 2.2 Delivery of Securities.......................................2 2.3 Registration of Securities...................................4 2.4 Bank Accounts................................................4 2.5 Availability of Federal Funds................................4 2.6 Collection of Income and Dividends...........................5 2.7 Payment of Fund Monies.......................................5 2.8 Liability for Payment in Advance of Receipt of Securities Purchased..............................6 2.9 Appointment of Agents........................................6 2.10 Deposit of Fund Assets in U.S. Securities System.............6 2.11 Fund Assets Held in the Custodian's Direct Paper System.................................................7 2.12 Segregated Account...........................................8 2.13 Ownership Certificates for Tax Purposes......................9 2.14 Proxies......................................................9 2.15 Communications Relating to Portfolio Securities..............9 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States............................9 3.1 Appointment of Foreign Sub-Custodians........................9 3.2 Assets to be Held............................................9 3.3 Foreign Securities Systems...................................9 3.4 Holding Securities..........................................10 3.5 Agreements with Foreign Banking Institutions................10 3.6 Access of Independent Accountants of the Fund...............10 3.7 Reports by Custodian........................................10 3.8 Transactions in Foreign Custody Account.....................10 3.9 Liability of Foreign Sub-Custodians.........................11 3.10 Liability of Custodian......................................12 3.11 Monitoring Responsibilities.................................12 3.12 Branches of U.S. Banks......................................12 3.13 Tax Law.....................................................12 3.14 Proxies.....................................................13 4. Payments for Sales or Repurchase or Redemptions of Shares of the Fund................................................13 3 5. Proper Instructions..................................................13 6. Actions Permitted Without Express Authority..........................14 7. Evidence of Authority................................................14 8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value and Net Income........................14 9. Records ............................................................15 10. Opinion of Fund's Independent Accountants............................15 11. Reports to Fund by Independent Public Accountants....................15 12. Compensation of Custodian............................................15 13. Responsibility of Custodian, Indemnification.........................16 13.1 Standard of Care............................................16 13.2 Liability of Custodian for Actions of Other Persons.........17 13.3 Indemnification.............................................18 13.4 Fund's Right to Proceed.....................................20 14. Effective Period, Termination and Assignment.........................20 15. Successor Custodian..................................................21 16. Amendments...........................................................22 17. Interpretive and Additional Provisions...............................22 18. Additional Funds.....................................................22 19. Massachusetts Law to Apply...........................................22 20. Prior Contracts......................................................22 21. Reproduction of Documents............................................22 22. Shareholder Communications...........................................23 23. No Liability of Shareholders.........................................23 4 CUSTODIAN CONTRACT This Contract between TIAA-CREF Life Funds, a business trust organized and existing under the laws of Delaware, having its principal place of business at 730 Third Avenue, New York, New York 10017 hereinafter called the "Fund", Teachers Advisors, Inc., a corporation organized under the laws of Delaware, having its principal place of business at 730 Third Avenue, New York, New York 10017 hereinafter called "Advisors" and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the "Custodian", WITNESSETH: WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in one series, the Stock Index Fund (such series together with all other series subsequently established by the Fund and made subject to this Contract in accordance with Article 18, being herein referred to as the "Portfolio(s)"); WHEREAS, Advisors and the Fund have entered into an investment management agreement pursuant to which Advisors will provide or arrange to provide overall management to the Fund, including investment management and custody; and WHEREAS, the Fund and Advisors desire to appoint the Custodian as custodian on behalf of each of its Portfolios in accordance with the provisions of the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder, under the terms and conditions set forth in this Contract, and the Custodian has agreed so to act as custodian. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It The Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities") pursuant to the provisions of the Fund's governing documents. The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of capital stock of the Fund representing interests in the Portfolios, ("Shares") as may be issued or sold from time to time. The Custodian shall be responsible for all securities, cash and other property owned or held by the fund which is received by the Custodian in accordance with the provisions of Article 13. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to the Custodian. Upon receipt of "Proper Instructions" (within the meaning of Article 5), the Custodian shall on behalf of the applicable Portfolio(s) from time to time employ one or more sub-custodians, located in the United States but only in accordance with an applicable vote by the Board of Trustees of the Fund on behalf of the applicable Portfolio(s), and provided that the Custodian shall have not more or less 5 responsibility to the Fund on account of any actions or omissions of any sub-custodian so employed than any sub-custodian has to the Custodian, and further provided that the Custodian shall not release the sub-custodian from any responsibility or liability unless mutually agreed upon by the parties in writing. The Custodian may employ as sub-custodian for the Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designated in Schedule A hereto but only in accordance with the provisions of Article 3. 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States 2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States including all domestic securities owned by such Portfolio, other than (a) securities which are maintained pursuant to Section 2.10 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies (each, a "U.S. Securities System") and (b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian (the "Direct Paper System") pursuant to Section 2.11. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio; 3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof; 4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any 5 6 sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; 7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's failure to act in accordance with its duties as set forth in Section 13; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities or such other property as mutually agreed upon by the parties. 11) For delivery as security in connection with any borrowings by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed; 12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund; 13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures 6 7 Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund; 14) Upon receipt of instructions from the transfer agent ("Transfer Agent") for the Fund, for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund, related to the Portfolio ("Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and 15) For any other corporate purpose, but only upon receipt of, Proper Instructions from the Fund on behalf of the applicable Portfolio. 2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of the Portfolio under the terms of this Contract shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. 2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act of 1940 and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board of Trustees of the Fund. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions 7 8 from the Fund on behalf of a Portfolio, make federal funds available to such Portfolio as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Portfolio which are deposited into the Portfolio's account. 2.6 Collection of Income and Dividends. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. Unless otherwise agreed to in writing, the Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled. 2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only: 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.11; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Portfolio or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions 8 9 from the Fund as defined in Article 5; 2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of Shares issued by the Portfolio as set forth in Article 4 hereof; 4) For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends on Shares of the Portfolio declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 7) For repayment of a loan upon redelivery of pledged securities and upon surrender of the loan note(s), if any, evidencing the loan; 8) For any other corporate purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the Portfolio. 2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Portfolio is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund on behalf of such Portfolio to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian. 2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the Investment Company Act of 1940, as amended, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. 2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may deposit and/or maintain securities owned by a Portfolio in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies, collectively referred to herein as "U.S. Securities System" in accordance 9 10 with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: 1) The Custodian may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account ("Account") of the Custodian in the U.S. Securities System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Custodian with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio; 3) The Custodian shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the U.S. Securities System for the account of the Portfolio. 4) The Custodian shall provide the Fund for the Portfolio with any report obtained by the Custodian on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S. Securities System; 5) The Custodian shall have received from the Fund on behalf of the Portfolio the initial or annual certificate, as the case may be, required by Article 14 hereof; 6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for 10 11 any such loss or damage. 2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may deposit and/or maintain securities owned by a Portfolio in the Direct Paper System of the Custodian subject to the following provisions: 1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the Fund on behalf of the Portfolio; 2) The Custodian may keep securities of the Portfolio in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 3) The records of the Custodian with respect to securities of the Portfolio which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Portfolio; 4) The Custodian shall pay for securities purchased for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Portfolio; 5) The Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transaction in the U.S. Securities System for the account of the Portfolio; 6) The Custodian shall provide the Fund on behalf of the Portfolio with any report on its system of internal accounting control as the Fund may reasonably request from time to time. 2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other 11 12 arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other corporate purposes, upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio. 12 13 2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities. 2.14 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities. 2.15 Communications Relating to Portfolio Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Portfolio shall notify the Custodian to take such action prior to the time agreed to by the Custodian and the Fund. 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States 3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Portfolio's securities, cash and other assets maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Article 5 of this Contract, together with a certified resolution of the Fund's Board of Trustees, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may instruct the Custodian to cease the employment of any one or more such sub-custodians for maintaining custody of the Portfolio's assets. 3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in Rule 17f-5 under the Investment Company Act of 1940, (b) cash and cash equivalents in such amounts as the Fund may determine; and (c) other assets as are mutually agreed by the parties. The Custodian shall identify on its books as belonging to the Fund, the foreign securities, cash and other assets of the Fund held by each foreign sub-custodian. 13 14 3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in writing by the Custodian and the Fund, assets of the Portfolios shall be maintained in a clearing agency which acts as a securities depository or in a book-entry system for the central handling of securities located outside of the United States (each a "Foreign Securities System") only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof (Foreign Securities Systems and U.S. Securities Systems are collectively referred to herein as the "Securities Systems"). Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof. 3.4 Holding Securities. The Custodian may hold securities and other non-cash property for all of its customers, including the Fund, with a foreign sub-custodian in a single account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to securities and other non-cash property of the Fund which are maintained in such account shall identify by book-entry those securities and other non-cash property belonging to the Fund and (ii) the Custodian shall require that securities and other non-cash property so held by the foreign sub-custodian be held separately from any assets of the foreign sub-custodian or of others. 3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign banking institution shall provide that: (a) the assets of each Portfolio will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the foreign banking institution or its creditors or agent, except a claim of payment for their safe custody or administration; (b) beneficial ownership for the assets of each Portfolio will be freely transferable without the payment of money or value other than for custody or administration; (c) adequate records will be maintained identifying the assets as belonging to each applicable Portfolio; (d) officers of or auditors employed by, or other representatives of the Custodian, including to the extent permitted under applicable law the independent public accountants for the Fund, will be given access to the books and records of the foreign banking institution relating to its actions under its agreement with the Custodian; and (e) assets of the Portfolios held by the foreign sub-custodian will be subject only to the instructions of the Custodian or its agents. 3.6 Access of Independent Accountants of the Fund. Upon request of the Fund, the Custodian will use its best efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian. 3.7 Reports by Custodian. The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities, cash and other assets of the Portfolio(s) held by foreign sub-custodians, including but not limited to an identification of entities having possession of the Portfolio(s) securities, cash and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of each applicable Portfolio indicating, as to securities acquired for a Portfolio, the identity of the entity having physical possession of such securities. 14 15 3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign securities of the Fund held outside the United States by foreign sub-custodians. (b) In the case of the purchase of securities, the settlement of which occurs outside of the United States of America: (i) the Custodian may make payment therefor and receive delivery of such securities in accordance with local custom and practice generally accepted by Institutional Clients (as hereinafter defined) in the country in which the settlement occurs, but in all events subject to the standard of care set forth in Section 13 hereof; (ii) in the case of the purchase of securities in which, in accordance with standard industry custom and practice generally accepted by Institutional Clients with respect to such securities, the receipt of such securities and the payment therefor take place in different countries, the Custodian may receive delivery of such securities and make payment therefor in accordance with standard industry custom and practice for such securities generally accepted by Institutional Clients, but in all events subject to the standard of Care set forth in Section 13 hereof. In the case of the sale of securities, the settlement of which occurs outside of the United States of America: (i) such securities shall be delivered and paid for in accordance with local custom and practice generally accepted by Institutional Clients in the country in which the settlement occurs, but in all events subject to the standard of care set forth in Section 13 hereof; (ii) in the case of the sale of securities in which, in accordance with standard industry custom and practice generally accepted by Institutional Clients with respect to such securities, the delivery of such securities and receipt of payment therefor take place in different countries, the Custodian may deliver such securities and receive payment therefor in accordance with standard industry custom and practice for such securities generally accepted by Institutional Clients, but in all events subject to the standard of care set forth in Section 13 hereof; and (iii) in the case of securities held in physical form, such securities shall be delivered and paid for in accordance with "street delivery custom" to a broker or its clearing agent, against delivery to the Custodian of a receipt for such securities, prompt collection of the payment for, or the return of, such securities by the broker or its clearing agent, and provided further that the Custodian shall not be responsible for the selection of or the failure or inability to perform of such broker or its clearing agent. For purposes of this Contract , an "Institutional Client" shall mean a major commercial bank, corporation, insurance company or substantially similar institution, which, as a substantial part of its business operations, purchases or sells securities and makes use of custodial services. (c) Securities maintained in the custody of a foreign sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities. 3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a 15 16 foreign banking institution as a foreign sub-custodian, other than a branch or subsidiary of the Custodian, shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and each Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. A foreign sub-custodian which is a branch or subsidiary of the Custodian shall be held to the standard of care set forth in Section 13 for the Custodian. 3.10 Liability of Custodian. Except as provided in paragraph 3.9 hereof with respect to a branch or subsidiary of the Custodian, the Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub-custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 3.10, in delegating custody duties to State Street London Ltd., or other branches or subsidiaries of the Custodian, the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or (b) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised the standard of care set forth in Article 13 hereof. 3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the Fund, during the month of June, or such other periods as the parties may agree, information concerning the foreign sub-custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform the Fund in the event that the Custodian learns of a material adverse change in the financial condition of a foreign sub-custodian or any material loss of the assets of the Fund or in the case of any foreign sub-custodian not the subject of an exemptive order from the Securities and Exchange Commission is notified by such foreign sub-custodian that there appears to be a substantial likelihood that its shareholders' equity will not meet the requirements of Rule 17f-5 under the Investment Company Act of 1940 for custodians of an investment company. 3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract, the provisions hereof shall not apply where the custody of the Portfolios assets are maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the qualification set forth in Section 26(a) of said Act. The appointment of any 16 17 such branch as a sub-custodian shall be governed by paragraph 1 of this Contract. (b) Cash held for each Portfolio of the Fund in the United Kingdom shall be maintained in an interest bearing account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both. 3.13 Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund or the Custodian as custodian of the Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which the Fund has provided such information. 3.14 Proxies. The Custodian will generally, with respect to foreign securities held under this Article 3, use best efforts accepted by Institutional Clients to facilitate the exercise of voting and other shareholder proxy rights, subject always to the laws, regulations and practical constraints that may obtain in the jurisdiction where such securities are issued. The Fund acknowledges that local conditions may have the effect of severely limiting the ability of the Fund to exercise shareholder rights. 4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of the Fund and deposit into the account of the appropriate Portfolio such payments as are received for Shares of that Portfolio issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio. From such funds as may be available for the purpose but subject to the limitations of the Articles of Incorporation and any applicable votes of the Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between the Fund and the Custodian. 5. Proper Instructions 17 18 Proper Instructions as used throughout this Contract means (a) with respect to the purchase and sale of short-term debt securities with a maturity of less than one year when value is exchanged, written instructions from the Fund by any one individual authorized by the Board of Trustees and specified in a separate list for this purpose which will be furnished to the Custodian from time to time signed by the treasurer or any associate treasurer or any assistant treasurer and by the secretary or any assistant secretary as certified under the corporate seal of the Fund (an "Authorized Person"); (b) with respect to other transaction, written instructions from the Fund signed by any two Authorized Persons; and (c) notwithstanding (a) and (b) above of this Article 5, with respect to "Free of Payment" deliveries, a writing manually signed by any two Authorized Persons who are officers of the Fund with the title Chairman, President, Executive Vice President, or Treasurer. Upon receipt of a writing manually signed by any two Authorized Persons who are officers of the Fund with the title Chairman, President, Executive Vice President, or Treasurer accompanied by a detailed description of procedures approved by such writing, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Fund and the Custodian are satisfied that such procedures afford adequate safeguards for the Fund's assets. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.12. 6. Actions Permitted without Express Authority The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund on behalf of the Portfolio; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the Board of Trustees of the Fund. 7. Evidence of Authority The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a vote of the Board of 18 19 Trustees of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Trustees pursuant to the Declaration of Trust as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Trustees of the Fund to keep the books of account of each Portfolio and/or compute the net asset value per share of the outstanding shares of each Portfolio or, unless otherwise directed in writing to do so by the Fund on behalf of the Portfolio, shall itself keep such books of account and/or compute such net asset value per share. Until otherwise directed in writing, the Custodian shall also calculate daily the net income of the Portfolio as described in the Fund's currently effective prospectus related to such Portfolio and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of each Portfolio shall be made in accordance with and at the time or times described from time to time in the Fund's currently effective prospectus related to such Portfolio and in accordance with the procedures agreed to in writing between the Fund and the Custodian and shall at all times comply with the standard of care set forth in Section 13 hereof. 9. Records The Custodian shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the Investment Company Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 10. Opinion of Fund's Independent Accountant The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 11. Reports to Fund by Independent Public Accountants 19 20 The Custodian shall provide the Fund, on behalf of each of the Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 12. Compensation of Custodian The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon in writing from time to time between Advisors and the Custodian. 20 21 13. Responsibility of Custodian, Indemnification 13.1 Standard of Care 1) General Standard of Care. The Custodian shall exercise reasonable care and diligence in carrying out all of its duties and obligations under this Contract, and shall be liable to the Fund on behalf of the applicable Portfolio(s), for all loss, damage and expense suffered or incurred by such Portfolio resulting from the failure of the Custodian to exercise such reasonable care and diligence. 2) Actions Prohibited by Applicable Law, etc. Except as may arise from the Custodian's own negligence, misfeasance or willful misconduct or the negligence, misfeasance or willful misconduct of a domestic sub-custodian or foreign banking institution acting as foreign sub-custodian or agent, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by: (i) any provision of any present or future law or regulation or order of the United States of America, or any state thereof, or of any foreign country, or political subdivision thereof or of any court of competent jurisdiction; (ii) any act of God or war or other similar circumstance beyond the control of the Custodian, including, without limitation, nationalization or expropriation, imposition of currency controls or restrictions, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, acts of terrorism, riots, revolutions or work stoppages; (iii) errors by the Fund or the Investment Advisor in their instructions to the Custodian provided such instructions have been in accordance with this Contract; (iv) the insolvency of or acts or omissions by a Securities System; (v) any delay or failure of any broker or agent selected by the Fund, or an intermediary or agent of such broker, or any central bank or other commercially prevalent payment or clearing system outside of the United States to deliver to the Custodian's sub-custodian or agent securities purchased or in the remittance or payment made in connection with securities sold provided that the subcustodians or agents have acted in accordance with the terms of this contract; (vi) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vii) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System. In no event shall the Custodian be liable for indirect, special or consequential damages. 3) Reliance on Instruments, etc. So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper 21 22 party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. 4) Mitigation by Custodian. Upon the occurrence of any event which causes or may cause any loss, damage or expense to any Portfolio (i) the Custodian shall, (ii) the Custodian shall cause State Street London Ltd. to and (iii) the Custodian shall use all reasonable efforts to cause any applicable Subcustodian (other than State Street London Ltd.) appointed to hold assets in the U.S. or Foreign banking institutions acting as a foreign subcustodian to, use all reasonable efforts and take all reasonable steps under the circumstances to mitigate the efforts of such event and to avoid continuing harm to the Fund and the Portfolios. 5) Advice of Counsel. The Custodian shall be entitled to rely on and act upon advice of counsel (who may be counsel for the Fund) on all matters and shall be without liability for any action reasonably taken or omitted in good faith pursuant to such advice; provided, however, with respect to the performance of any action or omission of any action upon such advice, the Custodian shall be required to conform to the standard of care set forth herein. 6) Expenses of Fund. In addition to the liability of the Custodian under this Section 13, the Custodian shall be liable to the Fund and each applicable Portfolio for all reasonable out-of-pocket costs and expenses incurred by the Fund in connection with any claim by the Fund against the Custodian arising from the obligations of the Custodian hereunder, including, without limitation, all reasonable attorneys' fees and expenses incurred by the Fund in asserting any such claim, and out-of-pocket expenses incurred by the Fund in connection with any lawsuits or proceedings relating to such claim; provided, that the Fund has recovered from the Custodian for such claim. 13.2 Liability of Custodian for Actions of Other Persons 1) Subcustodians located in the United States and Foreign banking institutions acting as foreign subcustodians. The Custodian shall be liable for the actions or omissions of any subcustodian located in the United States or any foreign banking institution acting as a foreign subcustodian to the same extent as if such action or omission were performed by the Custodian itself taking into account standards applicable to custodians in the relevant market. 2) Securities System. Notwithstanding the provisions of Section 13 to the contrary, the Custodian shall not be liable to the Fund or any applicable Portfolio for any loss, damage or expense suffered or incurred by the Fund or any of its Portfolios resulting from the use by the Custodian or a subcustodian located in the United States or foreign banking institution acting as a foreign subcustodian, of a Securities System including, without limitation, the insolvency of a Securities System, unless such loss, damage or expense is caused by, or results from, the negligence, misfeasance or misconduct of the Custodian or 22 23 a subcustodian located in the United States or foreign banking institution acting as a foreign subcustodian; provided, however, that in the event of any such loss, damage or expense, the Custodian shall take all reasonable steps to enforce such rights as it or a subcustodian located in the United States or foreign banking institution acting as a foreign subcustodian may have against the Securities System to protect the interests of the Fund and the Portfolios. 3) Reimbursement of Expenses. The Fund agrees to reimburse the Custodian for all reasonable out-of-pocket expenses incurred by the Custodian on behalf of such Fund in connection with the fulfillment of its obligations under this Section 13; provided, however, that such reimbursement shall not apply to expenses occasioned by or resulting from the negligence, misfeasance or misconduct of the Custodian. 13.3 Indemnification 1) Indemnification Obligations. Subject to the limitations set forth in this Agreement, the Fund hereby indemnifies and holds harmless the Custodian and its nominees from all loss, damage and expense (including reasonable attorneys' fees) suffered or incurred by the Custodian or its nominees caused by or arising from actions taken or omitted by the Custodian on behalf of the Fund in the performance of its duties and obligations under this Contract; provided, however, that such indemnity shall not apply to loss, damage and expense arising from the negligence, misfeasance or misconduct of the Custodian or its nominee. In addition, the Fund hereby indemnifies the Custodian, any subcustodian, Securities System, or their respective nominees against any liability incurred by reason of taxes assessed to such person, or other loss, damage or expenses incurred by such person, resulting from the fact that securities and other property of such Fund's Portfolios are registered in the name of such person; provided, however, that in no event shall such indemnification be applicable to income, franchise or similar taxes which may be imposed or assessed against any person. Furthermore, if the Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that the Custodian or its nominees shall incur or be assessed any taxes, charges, expenses or assessments in connection with the performance of this Contract or from any actions taken or omitted by the Custodian or its nominees on behalf of the Fund in the performance of its duties under this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act, misfeasance or willful misconduct, any property at any time held 23 24 for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement. 2) Notice of Litigation, Right to Prosecute, etc. If a person seeking indemnification pursuant to Section 13.3(1) hereof fails to promptly notify the Fund in writing of the commencement of any litigation or any proceeding brought against such person (a "Proceeding"), the Fund shall not be liable for indemnification under this Contract with respect to such Proceeding to the extent that the Fund's ability to defend is prejudiced by such failure. With respect to claims in a Proceeding for which indemnity by the Fund may be sought, the Fund shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the control of the defense of any Proceeding. In the event the Fund elects to assume the control of the defense of any Proceeding, the persons seeking indemnification pursuant to Section 13.3(1) hereof involved in such Proceeding may retain additional counsel for purposes of the Proceeding but shall bear all fees and expenses of such retention of such counsel, unless (i) the Fund shall have specifically authorized the retention of such counsel, or (ii) if the Fund and such indemnified persons agree that the retention of such counsel is required as a result of a conflict of interest. If the Fund assumes control of any Proceeding hereunder, the Fund shall keep the persons seeking indemnification pursuant to Section 13.3(1) hereof notified of the progress of such Proceeding and, upon request, consult with such persons and their counsel concerning such Proceeding. The Fund will, upon request by the persons seeking indemnification pursuant to Section 13.3(1) hereof, either pay in the first instance or reimburse such persons for any expenses subject to indemnity hereunder. The Fund shall not settle or compromise any Proceeding without the prior written consent of each person seeking indemnification pursuant to Section 13.3(1) hereof involved in such Proceeding, which consent shall not be unreasonably upheld, unless (i) such settlement or compromise involves no admission of guilt, wrongdoing, or misconduct by any such person, (ii) such settlement or compromise does not impose any obligations or restrictions on any such person other than obligations to pay money that are subject to the indemnity under this Contract, and (iii) the Fund shall have paid, or made arrangements satisfactory to such person for payment of, all amounts payable by each such person in connection with such settlement. Except as part of a settlement or compromise by the Fund in accordance with the provisions of the immediately preceding paragraph, no person seeking indemnification pursuant to Section 13.3(1) hereof may consent to the entry of any judgment or settle any Proceeding subject to indemnity hereunder without providing the Fund with at least 15 days prior written notice of any such judgment or settlement and without the prior written consent of the Fund, which consent will not be reasonably withheld (to the extent such Proceeding relates to such person). 24 25 Each person seeking indemnification pursuant to Section 13.3(1) hereof shall submit written evidence to the Fund with respect to any cost or expense for which such person is seeking indemnification in such form and detail as the Fund may reasonably request. 13.4 Fund's Right to Proceed. Notwithstanding anything to the contrary contained herein, the Fund shall have, at its election upon reasonable notice to the Custodian, the right to enforce, to the extent permitted by any applicable agreement and applicable law, the Custodian's right against any subcustodians, Securities System, or other person for loss, damage or expense caused the Fund by such subcustodian, Securities System, or other person, and shall be entitled to enforce the rights of the Custodian with respect to any claim against such subcustodian, Securities System, or other person, which the Custodian may have as a consequence of any such loss, damage or expense, if and to the extent that the Fund has not been made whole for any such loss or damage. If the Custodian makes the Fund whole for any such loss or damage, the Custodian shall retain the ability to enforce its rights directly against such subcustodian, Securities System or other person. Upon the Fund's election to enforce any rights of the Custodian under this Section 13.4, the Fund shall reasonably prosecute all actions and proceedings directly relating to the rights of the Custodian in respect of the loss, damage or expense incurred by the Fund; provided that, so long as the Fund has acknowledged in writing its obligation to indemnify fully the Custodian under Section 13.3 hereof with respect to such claim, the Fund shall retain the right to settle, compromise and/or terminate any action or proceeding in respect of the loss, damage or expense incurred by the Fund without the Custodian's consent and provided further, that if the Fund has not made an acknowledgment of its obligation to indemnify, the Fund shall not settle, compromise or terminate any such action or proceeding without the written consent of the Custodian. The Custodian agrees to cooperate with the Fund and take all actions reasonably requested by such Fund in connection with the Fund's enforcement of any rights of the Custodian. The Fund agrees to reimburse the Custodian for all reasonable out-of-pocket expenses incurred by the Custodian on behalf of the Fund in connection with the fulfillment of its obligations under this Section 13.4; provided, however, that such reimbursement shall not apply to expenses occasioned by or resulting from the negligence, misfeasance or misconduct of the Custodian. In no event shall the Custodian be liable for indirect, special or consequential damages. 14. Effective Period, Termination and Assignment This Contract shall become effective as of its execution and shall continue in full force and effect until terminated by either party by an instrument in writing, hand delivered or sent by certified mail, such termination to take effect not sooner than sixty (60) days after the date of such delivery or mailing; provided, however that the Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Trustees of the Fund has approved the initial use of a particular Securities System by such Portfolio, as 25 26 required by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Trustees has approved the initial use of the Direct Paper System by such Portfolio; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Articles of Incorporation, and further provided, that the Fund on behalf of one or more of the Portfolios may at any time by action of its Board of Trustees (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. This Contract may not be assigned by either party without the consent of the other party, which consent in the case of the Fund shall be authorized or approved by a resolution of the Board of Trustees of the Fund. 15. Successor Custodian If a successor custodian for the Fund, of one or more of the Portfolios shall be appointed by the Board of Trustees of the Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Board of Trustees of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board of Trustees shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act of 1940, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Portfolio and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. 26 27 In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board of Trustees to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 27 28 16. Amendments This Contract may be amended at any time by mutual agreement of the parties hereto; provided that no amendment or change to this Contract shall be authorized by the Fund on behalf of its Accounts without the written consent signed by an officer with the title of either Chairman, Vice Chairman or President and any officer with the title of Executive Vice President or Treasurer and accepted in writing by any Vice President or Managing Director of the Bank. 17. Interpretive and Additional Provisions In connection with the operation of this Contract, the Custodian and the Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Declaration of Trust of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 18. Additional Funds In the event that the Fund establishes one or more series of Shares in addition to the Stock Index Fund with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 19. Massachusetts Law to Apply This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 20. Prior Contracts This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund on behalf of each of the Portfolios and the Custodian relating to the custody of the Fund's assets. 21. Reproduction of Documents This Contract and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 28 29 22. Shareholder Communications Securities and Exchange Commission Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether the Fund authorizes the Custodian to provide the Fund's name, address, and share position to requesting companies whose stock the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or do not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consent or object by checking one of the alternatives below. YES [ ] The Custodian is authorized to release the Fund's name, address, and share positions. NO [ ] The Custodian is not authorized to release the Fund's name, address, and share positions. 23. No Liability of Shareholders. This Contract is executed by the Trustees of the Fund, not individually, but rather in their capacity as Trustees under the Declaration of Trust made August 12, 1998, as amended. None of the shareholders of the Fund, Trustees, officers, employees, or agents of the Fund shall be personally bound or liable under this Contract, nor shall resort be had to their private property for the satisfaction of any obligation or claim hereunder but only to the property of the Fund, and if the obligation or claim relates to the property held by the Fund for the benefit of one or more but fewer than all Funds, then only to the property held for the benefit of the affected Fund. 29 30 IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the nineteenth day of November, 1998. ATTEST TIAA-CREF LIFE FUNDS /s/ STEWART P. GREENE By: /s/ THOMAS G. WALSH - --------------------------------- ---------------------------------- By: /s/ RICHARD J. ADAMSKI ---------------------------------- ATTEST STATE STREET BANK AND TRUST COMPANY /s/ MARC L. PARSONS By /s/ - - - - --------------------------------- ---------------------------------- Executive Vice President ATTEST TEACHERS ADVISORS, INC. /s/ STEWART P. GREENE By: /s/ SCOTT C. EVANS - --------------------------------- ---------------------------------- 31 Schedule A The following foreign banking institutions and foreign securities depositories have been approved by the Board of Directors/Board of Trustees of for use as sub-custodians for the Fund's securities and other assets: (Insert banks and securities depositories) Certified: - ---------------------------- Fund's Authorized Officer Date: ----------------------- EX-99.H 6 ADMINISTRATION AGREEMENT WITH STATE STREET 1 EXHIBIT 99.h ADMINISTRATION AGREEMENT Agreement dated as of November 30, 1998 by and between State Street Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and Teachers Advisors, Inc. ("Advisors"). WHEREAS, Advisors is the investment manager to TIAA-CREF Life Funds (the "Funds"), an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, Advisors and the Fund have entered into an investment management agreement pursuant to which Advisors will provide or arrange to provide overall management to the Fund, including investment management, custody, transfer agency, dividend disbursing, legal, accounting and administrative services; and WHEREAS, Advisors desires to retain the Administrator to furnish certain administrative services to the Fund on its behalf, and the Administrator is willing to furnish such services, on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: 1. APPOINTMENT OF ADMINISTRATOR Advisors hereby appoints the Administrator to act as administrator with respect to the Fund for purposes of providing certain administrative services for the period and on the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to render the services stated herein. The Fund will initially consist of the portfolios (each an "Investment Fund") listed in Schedule A to this Agreement. In the event that the Fund establishes one or more additional Investment Funds with respect to which Advisors wishes to retain the Administrator to act as administrator hereunder, Advisors shall notify the Administrator in writing and such Investment Fund shall become subject to the provisions of this Agreement to the same extent as the existing Investment Funds, except with respect to compensation as otherwise provided in the Fee Schedule. 2. DELIVERY OF DOCUMENTS Advisors will promptly deliver to the Administrator copies of each of the following documents and all future amendments and supplements, if any: a. The Fund's Declaration of Trust; 2 b. The Fund's registration statement under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act and the Fund's Prospectus(es) and Statement(s) of Additional Information relating to all Investment Funds and all amendments and supplements thereto as in effect from time to time; c. Certified copies of the resolutions of either the Board of Trustees of the Fund (the "Board") or Advisors approving (1) Advisors entering into this Agreement and (2) certain individuals on behalf of the Fund to (a) give instructions to the Administrator pursuant to this Agreement and (b) pay expenses; d. A copy of the investment management agreement between the Fund and Advisors; and e. Such other certificates, documents or opinions which the Administrator may, in its reasonable discretion, deem necessary or appropriate in the proper performance of its duties. 3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR The Administrator represents and warrants to Advisors that: a. It is a Massachusetts trust company, duly organized, existing and in good standing under the laws of The Commonwealth of Massachusetts; b. It has the corporate power and authority to carry on its business in The Commonwealth of Massachusetts; c. All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement; d. No legal or administrative proceedings have been instituted or threatened which would impair the Administrator's ability to perform its duties and obligations under this Agreement; e. Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Administrator or any law or regulation applicable to it; f. It has and will continue to have and maintain to the reasonable satisfaction of Advisors the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement; and g. Prior to the initial offering of the Fund's shares to the public, the Administrator 2 3 will have made all the necessary Notice and any other state securities law filings to offer the Fund's shares in the states in which the Administrator was instructed to do so by Advisors pursuant to Schedules B and C of this Agreement. 4. REPRESENTATIONS AND WARRANTIES OF ADVISORS Advisors represents and warrants to the Administrator that: a. It has the corporate power and authority under applicable laws and by its charter and by-laws to enter into and perform this Agreement; b. All requisite proceedings have been taken to authorize it to enter into and perform this Agreement; c. The Fund is a business trust, duly organized and existing and in good standing under the laws of the State of Delaware; d. The Fund is an investment company properly registered under the 1940 Act; e. A registration statement under the 1933 Act and the 1940 Act has been filed by the Fund and will be effective prior to the initial offering of the Fund's shares to the public and will remain effective while the Fund's shares are offered to the public; f. No legal or administrative proceedings have been instituted or threatened which would impair Advisors' ability to perform its duties and obligations under this Agreement; g. Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of Advisors or any law or regulation applicable to it; and h. As of the date of this Agreement, the Fund is authorized to issue shares of beneficial interest, and it will initially offer shares, in the authorized amounts as set forth in Schedule A to this Agreement. 5. ADMINISTRATION SERVICES The Administrator shall provide the following services, in each case, subject to the control and direction of Advisors and the review and comment by the Fund's independent accountants and legal counsel and in accordance with procedures which may be established from time to time between Advisors and the Administrator: 3 4 a. Oversee the determination and publication of the Fund's net asset value in accordance with the Fund's policy as adopted from time to time by the Board; b. Oversee the maintenance by the Fund's custodian of certain books and records of the Fund as required under Rule 31a-1(b) of the 1940 Act; c. Prepare the Fund's federal, state and local income and excise tax returns for review by Advisors and the Fund's independent accountants and officers and filing by a Fund officer or representative; d. Review calculation and appropriateness, submit for approval by officers of the Fund and arrange for payment of the Fund's expenses; e. Prepare for review and approval by Advisors and officers of the Fund financial information for the Fund's semi-annual and annual reports, proxy statements and other communications required or otherwise to be sent to Fund shareholders, and consult with Advisors regarding arrangements for the printing and dissemination of such reports and communications to shareholders; f. Prepare for review by Advisors and officers of and legal counsel for the Fund: (1) the Fund's periodic financial reports required to be filed with the U.S. Securities and Exchange Commission ("SEC") on Form N-SAR and file thereafter; and (2) financial information required by Form N-1A and such other reports, forms or filings as may be mutually agreed upon; g. Prepare and distribute reports to Advisors and officers of the Fund relating to the business and affairs of the Fund as may be mutually agreed upon; h. Make such reports and recommendations to the Board concerning the performance of the independent accountants as the Board may reasonably request or deems appropriate; i. Make such reports and recommendations to the Board concerning the performance and fees of the Fund's custodian as the Board may reasonably request or deems appropriate; j. Oversee and review calculations of fees paid to and any out-of-pocket expenses charged by the Fund's investment manager and custodian; k. Consult with the Fund's officers, independent accountants, legal counsel, custodian and transfer and dividend disbursing agent ("Transfer Agent") in establishing the accounting policies of the Fund; 4 5 l. Review implementation of any dividend reinvestment programs authorized by the Board; m. Provide periodic testing of portfolios as may be mutually agreed upon, to assist the Fund's investment manager in complying with Internal Revenue Code mandatory qualification requirements, the requirements of the 1940 Act and Fund prospectus limitations, prepare and disseminate to the officers of the Fund and Advisors reports providing the results of such testing, prepare and distribute to Advisors and officers of the Fund for review, reports determining the amount, if any, of the Fund's required annual distribution to shareholders and prepare and disseminate to the officers of the Fund and Advisors such other reports as may be agreed upon from time to time and as are set forth in Schedule B to this Agreement. Details of the scope of the services provided by the Administrator hereunder shall be documented in the Fund Profile as agreed to by Advisors and the Administrator from time to time; n. Arrange for the filing with the SEC by means of the electronic data gathering and receiving system ("EDGAR") amendments to the Fund's registration statement, including updates to the Prospectus and Statement of Additional Information and proxy material, where applicable. Unless otherwise agreed upon between Advisors and the Administrator, the Administrator's sole responsibility with respect to such filings will be to deliver the documents to be filed to a financial printer or other service provider selected or approved by Advisors and to communicate to such financial printer or service provider Advisors' instructions with respect to such filings. Any such financial printer or service provider shall not be deemed to be employed by or associated with the Administrator for purposes of this Agreement and the Administrator shall have no responsibility for the acts or omissions of such financial printer or service provider; Subject to review and comment by the Fund and the Fund's legal counsel: o. Make Board presentations where appropriate; p. Prepare for review by Advisors and officers of the Fund and file or assist in filing thereafter Rule 24f-2 notices with the SEC; q. File by means of EDGAR or other appropriate means annual and semi-annual shareholder reports with the appropriate regulatory agencies; and r. Assist the Fund in the handling of routine regulatory examinations and work closely with the Fund's legal counsel in response to any non-routine regulatory matters. 5 6 The Administrator shall provide the office facilities and the personnel required by it to perform the services contemplated herein. 6. FEES; EXPENSES; EXPENSE REIMBURSEMENT The Administrator shall receive from Advisors such compensation for the Administrator's services provided pursuant to this Agreement as may be mutually agreed to by the parties from time to time in a separate fee schedule (the "Fee Schedule"). Advisors agrees to promptly reimburse the Administrator for any equipment and supplies specially ordered by the Administrator upon Advisors' written request or approval and for any other expenses not contemplated by this Agreement that the Administrator may incur on the Fund's behalf at Advisors' written request or approval. The Administrator will bear all expenses that are incurred in the performance of its duties under this Agreement and not specifically assumed by Advisors. Except as noted herein, expenses to be borne by Advisors are: cost of services of the Fund's independent accountants and outside legal and tax counsel (including such counsel's review of the Fund's registration statement, proxy materials, federal and state tax qualification as a regulated investment company and other reports and materials prepared by the Administrator under this Agreement); cost of any services contracted for by Advisors directly from parties other than the Administrator; cost of trading operations and brokerage fees, commissions and transfer taxes in connection with the purchase and sale of securities for the Fund (which costs shall be borne by the Fund); investment management fees (which costs shall be borne by the Fund); taxes (which shall be borne by the Fund), insurance premiums and other fees and expenses applicable to the Fund's operation; costs incidental to any meetings of the Fund's shareholders including, but not limited to, legal and accounting fees, proxy filing fees and the costs of preparation, printing and mailing of any proxy materials; costs incidental to Board meetings (except for fees and expenses of the Fund's Trustees who are not "interested persons" as such term is defined in the 1940 Act, which fees and expenses shall be borne by the Fund); the salary and expenses of any officer or employee of the Fund; costs incidental to the preparation, filing, printing and distribution of the Fund's registration statements and any amendments thereto and shareholder reports; cost of typesetting and printing of prospectuses; cost of preparation and filing of the Fund's tax returns, Forms N-1A and N-SAR, and all notices, registrations and amendments associated with applicable federal and state tax and securities laws; all applicable registration fees and filing fees required under federal and state securities laws; and fidelity bond and directors' and officers' liability insurance. The Administrator is authorized to and may employ or associate with such person or persons as the Administrator may deem desirable to assist it in performing its duties under this Agreement; provided, however, that the compensation of such person or persons shall be paid by the Administrator and that the Administrator shall be as fully responsible to Advisors or to the Fund for the acts or omissions of any such person or persons as it is for its own acts or omissions. 6 7 7. INSTRUCTIONS AND ADVICE At any time, the Administrator may apply to authorized officers of the Fund or Advisors for instructions and may consult with in-house legal counsel for the Fund or the independent accountants for the Fund or at its own cost may consult with its own legal counsel, with respect to any matter arising in connection with the services to be performed by the Administrator under this Agreement. The Administrator shall not be liable, and shall be indemnified by Advisors, for any action taken or omitted by it in good faith and with reasonable care and without negligence in reliance upon any such instructions or advice or upon any paper or document reasonably believed by it to be genuine and to have been signed by the proper person or persons; provided however, with respect to the performance of any action or omission of any action upon such legal advice by its own counsel, the Administrator shall be required to conform to the standard of care set forth herein and further provided that the Administrator shall follow the advice of the Fund's in-house legal counsel in instances where the advice of the Fund's in-house legal counsel and the Administrator's legal counsel differ. The Administrator shall not be held to have notice of any change of authority of any person until receipt of written notice thereof from Advisors. Nothing in this paragraph shall be construed as imposing upon the Administrator any obligation to seek such instructions or advice, or to act in accordance with such advice when received. 8. STANDARD OF CARE, LIMITATION OF LIABILITY AND INDEMNIFICATION The Administrator shall exercise reasonable care and diligence in carrying out the provisions of this Agreement. The Administrator shall be responsible for the performance of only such duties as are set forth in this Agreement and, except as otherwise provided under Section 6, shall have no responsibility for the actions or activities of any other party, including other service providers. The Administrator shall have no liability for any error of judgment or mistake of law or for any loss or damage resulting from the performance of or failure to perform its duties hereunder unless caused by or resulting from the negligence, willful misconduct or bad faith of the Administrator, its officers, employees or others provided under Section 6. The Administrator shall not be liable for any special, indirect, incidental, or consequential damages of any kind whatsoever (including, without limitation, attorneys' fees) under any provision of this Agreement or for any such damages arising out of any act or failure to act hereunder. In any event, for any liability or loss suffered by the Fund including, but not limited to, any liability relating to qualification of the Fund as a regulated investment company or any liability relating to the Fund's compliance with any federal or state tax or securities statute, regulation or ruling, the Administrator's liability under this Agreement shall be limited to its total annual compensation earned by and fees paid to the Administrator hereunder during the twelve months preceding the date of the agreement of settlement of the claim or date of entry of final judgment, provided that in the event that such compensation is less than two million dollars and liabilities or losses suffered by the Fund exceed such compensation, the Administrator shall be liable for up to two million dollars of such liabilities or losses, and further provided that in the event that both such compensation and liabilities or losses exceed ten million dollars, the Administrator's liability hereunder shall be limited to ten million dollars. The Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement caused by acts of God, by equipment or transmission 7 8 failure reasonably beyond its control or by other circumstances reasonably beyond its control, except to the extent that the Administrator shall have failed to use its best efforts to undertake commercially reasonable efforts to minimize the likelihood of occurrence of such circumstances or to mitigate any loss or damage caused to Advisors or the Fund by such circumstances. Advisors shall indemnify and hold the Administrator harmless from all loss, cost, damage and expense, including reasonable fees and expenses for counsel, incurred by the Administrator resulting from any claim, demand, action or suit in connection with the Administrator's acceptance of this Agreement, any action or omission by the Administrator in the performance of its duties hereunder, or as a result of acting upon any instructions reasonably believed by it to have been duly authorized by authorized officers of Advisors or the Fund, provided that this indemnification shall not apply to actions or omissions of the Administrator, its officers or employees in cases of its or their own negligence, willful misconduct or bad faith. Advisors will be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any liability subject to the indemnification provided above. In the event Advisors elects to assume the defense of any such suit and retain counsel, the Administrator or any of its affiliated persons, named as defendant or defendants in the suit, may retain additional counsel but shall bear the fees and expenses of such counsel unless (i) Advisors shall have specifically authorized the retaining of such counsel or (ii) Advisors and the Administrator agree that the retention of such counsel is required as a result of a conflict of interest. The Administrator shall not settle any action, suit, claim or demand which indemnity may be sought hereunder without the prior written approval of Advisors, which approval shall not be unreasonably withheld. In addition to the liability of the Administrator under this Section 8, the Administrator shall also be liable to Advisors for all reasonable out-of-pocket costs and expenses incurred by Advisors in connection with any claim by Advisors against the Administrator arising from the obligations of the Administrator hereunder, including, without limitation, all reasonable attorneys' fees and expenses incurred by Advisors in asserting any such claim, and out-of-pocket expenses incurred by Advisors in connection with any lawsuits or proceedings relating to such claim, provided that Advisors has recovered from the Administrator for such claim. The indemnification provisions contained herein shall survive the termination of this Agreement. 9. CONFIDENTIALITY The Administrator agrees that, except as otherwise required by law or in connection with any required disclosure to a banking or other regulatory authority, it will keep confidential all records and information in its possession relating to Advisors and the Fund or its shareholders or shareholder accounts and will not disclose the same to any person except at the request or with the written consent of Advisors or the Fund. The Administrator further agrees that it shall use such records and information solely for the purposes authorized in this Agreement. 8 9 10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS Without derogating any of the Administrator's responsibilities under this Agreement, Advisors assumes full responsibility for complying with all securities, tax, commodities and other laws, rules and regulations applicable to the Fund. In performing all services under this Agreement, the Administrator shall act in conformity with the Fund's Declaration of Trust and any amendments thereto, Board authorizations and determinations and the fundamental policies of the Fund as reflected in the Fund's registration statement. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator agrees that all records which it maintains for the Fund shall at all times remain the property of the Fund, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request. The Administrator further agrees that all records which it maintains for the Fund pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered as provided above. Records shall be surrendered in usable machine-readable form or such other formats as reasonably requested by Advisors or the Fund. 11. SERVICES NOT EXCLUSIVE The services of the Administrator to Advisors are not to be deemed exclusive, and the Administrator shall be free to render similar services to others; provided however that the Administrator shall equitably allocate its resources in supplying services to Advisors and others. The Administrator shall be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by Advisors from time to time, have no authority to act or represent Advisors or the Fund in any way or otherwise be deemed an agent of either Advisors or of the Fund. 12. INSPECTION AND AUDITS The Administrator shall permit Advisors or the Fund, during the term of this Agreement, upon reasonable prior notice, to conduct periodic inspections of any properties, documents, books, reports workpapers and other records of the Fund or Advisors in the possession of the Administrator relating to any service, product or work provided to Advisors or the Fund by the Administrator in connection with this Agreement. The Administrator agrees to provide reasonable notice to Advisors or the Fund of any meeting between the Administrator and the Fund's independent accountants and to allow representatives of Advisors or the Fund to attend any such meeting. The Administrator agrees to furnish to Advisors or the Fund annual reports under SAS 70 prepared by an independent auditing firm. 9 10 13. NOTIFICATION OF CONTACTS BY REGULATORS The Administrator shall promptly notify Advisors or the Fund of any and all legal notices received by or served on the Administrator with respect to the Fund. The Administrator shall promptly notify Advisors or the Fund of all other contacts received by the Administrator from any regulatory department or agency or other governmental authority purporting to regulate Advisors or the Fund and not the Administrator, regarding the Administrator's duties and activities under this Agreement. The Administrator will cooperate with Advisors and the Fund in responding to these contacts, with Advisors responsible for the costs and expenses thereof. 14. TERM, TERMINATION AND AMENDMENT This Agreement shall become effective as of the date first written above. The Agreement shall remain in effect until July 16, 2002 provided, however, that: (i) either party may terminate this Agreement without prejudice to any other remedy it may have, upon the material breach of this Agreement provided, however, that the non-breaching party shall have given the breaching party written notice of such breach and that the breaching party cannot or shall not have cured to the reasonable satisfaction of the non-breaching party any such breach within thirty (30) days of such notice; and (ii) the Administrator shall have the right to terminate this Agreement upon the termination by Advisors or the Fund of the Custodian Contract between the Administrator, Advisors and the Fund dated November 19, 1998 within the first five years of effectiveness of the Custodian Contract. Termination shall become effective in 120 days after the end of the 30 day cure period in the case of (i) above and concurrently with effective termination of the Custodian Contract in the case of (ii) above. This Agreement shall automatically continue in effect after such five year period unless terminated by Advisors on ninety (90) days' prior written notice to the Administrator, or by the Administrator on one hundred eighty (180) days' prior written notice to Advisors, with such termination to be effective at the time specified in the written notice. Termination of this Agreement with respect to any given Investment Fund shall in no way affect the continued validity of this Agreement with respect to any other Investment Fund. Administrator shall, at Advisors expense, transfer all records maintained by the Administrator under this Agreement and shall cooperate in the transfer of its duties and responsibilities under this Agreement. This Agreement may be modified or amended from time to time by mutual written agreement of the parties hereto. 15. YEAR 2000 The Administrator will take reasonable steps to ensure that its products (and those of its third-party suppliers) reflect the available state of the art technology to offer products that are Year 2000 compliant, including, but not limited to, century recognition of dates, calculations that correctly compute same century and multi century formulas and date values, and interface values that reflect the date issues arising between now and the next one-hundred years, and if any changes are required, the Administrator will make the changes to its products at no cost to Advisors and in a commercially reasonable time frame and will require third-party suppliers to do likewise. 10 11 16. NOTICES Any notice or other communication authorized or required by this Agreement to be given to either party shall be in writing and deemed to have been given when delivered in person or by confirmed facsimile, or posted by certified mail, return receipt requested, to the following address (or such other address as a party may specify by written notice to the other): if to Advisors: Teachers Advisors, Inc., 730 Third Avenue, New York, New York 10017, Attn: Peter C. Clapman, Esq., Senior Vice President, Secretary and Chief Counsel, Investments, fax: (212) 916-5813; if to the Administrator: State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, Attn: Mutual Funds Legal Division, fax: (617) 985-2497. 17. NON-ASSIGNABILITY This Agreement shall not be assigned by either party hereto without the prior consent in writing of the other party. 18. SUCCESSORS This Agreement shall be binding on and shall inure to the benefit of Advisors and the Administrator and their respective permitted assigns. 19. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all previous representations, warranties or commitments regarding the services to be performed hereunder whether oral or in writing. 20. WAIVER The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party. 21. SEVERABILITY If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances. 11 12 22. GOVERNING LAW This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. 23. REPRODUCTION OF DOCUMENTS THIS AGREEMENT AND ALL SCHEDULES, EXHIBITS, ATTACHMENTS AND AMENDMENTS HERETO MAY BE REPRODUCED BY ANY PHOTOGRAPHIC, PHOTOSTATIC, MICROFILM, MICRO-CARD, MINIATURE PHOTOGRAPHIC OR OTHER SIMILAR PROCESS. THE PARTIES HERETO ALL/EACH AGREE THAT ANY SUCH REPRODUCTION SHALL BE ADMISSIBLE IN EVIDENCE AS THE ORIGINAL ITSELF IN ANY JUDICIAL OR ADMINISTRATIVE PROCEEDING, WHETHER OR NOT THE ORIGINAL IS IN EXISTENCE AND WHETHER OR NOT SUCH REPRODUCTION WAS MADE BY A PARTY IN THE REGULAR COURSE OF BUSINESS, AND THAT ANY ENLARGEMENT, FACSIMILE OR FURTHER REPRODUCTION OF SUCH REPRODUCTION SHALL LIKEWISE BE ADMISSIBLE IN EVIDENCE. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above. TEACHERS ADVISORS, INC. By: /s/ Scott C. Evans Name: Scott C. Evans Title: Executive Vice President STATE STREET BANK AND TRUST COMPANY By: /s/ Kathleen Cuowlo Name: Kathleen Cuowlo Title: Senior Vice President 12 13 ADMINISTRATION AGREEMENT TIAA-CREF LIFE FUNDS SCHEDULE A LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES Investment Fund Authorized Shares Stock Index Fund unlimited number of shares authorized for all Investment Funds 14 SCHEDULE B TIAA-CREF LISTING OF REPORTS PREPARED BY STATE STREET FUND ADMINISTRATION DEPARTMENT REPORT NAME FREQUENCY Reports on Compliance with SEC and IRS Restrictions in accordance with the Fund Profile Monthly or more frequently, if requested and agreed to by the parties. Annual and Semi-Annual Financial Statements Bi-Annually Form N-SAR Bi-Annually 24f-2 Filing Report Annually Form 1099 Misc. Annually Form 1096 Annually Form 1042 and 1042S Annually Form 1902-AP Annually Form 1902-b Annually Form 8613 Annually Form 2758 As needed Form 1120 RIC Annually Form 7004 As needed Form 6847 As needed Sec. 852(b)(3)(C) Notification As needed State and local income and excise tax filings As needed EX-99.L 7 SEED MONEY AGREEMENT 1 EXHIBIT 99.L SEED MONEY AGREEMENT SEED MONEY AGREEMENT (the "Agreement") made this 30th day of November, 1998 by and between Teachers Insurance and Annuity Association of America ("TIAA"), a nonprofit corporation existing under the laws of the State of New York, and TIAA-CREF Life Funds (the "Fund"), a segregated investment account of TIAA. 1. TIAA hereby agrees to invest in the Fund the sum of $25,000,000 on December 1st or as soon thereafter as practicable. 2. In consideration for such investment and without deduction of any charges, the Fund shall credit TIAA with such shares, of which TIAA shall be the owner, of the Stock Index Fund of the Fund in such amounts as shall be mutually agreed upon. Such shares will share pro rata in the investment performance of the Stock Index Fund and shall be subject to the same valuation procedures and the same periodic deductions as are other shares in that portfolio. The value of such shares on the day the initial investment is made shall be $25.00. 3. TIAA represents that the shares acquired under this Agreement are being, and will be, acquired for investment (and not with a view to distribution or resale to the public) and can be disposed of only by redemption. 4. Shares acquired under this Agreement will be held by TIAA for its own account until redeemed by TIAA. Amounts will be redeemed at prices equal to the respective net asset value of shares of the applicable series of the Fund next determined after 2 the Fund receives TIAA's proper notice of redemption. 5. TIAA may purchase, and the Fund may issue, additional shares as the parties may agree. 6. This Agreement will be construed and enforced in accordance with and governed by the provisions of the Investment Company Act of 1940 and the laws of the State of New York. TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By: /s/ Peter C. Clapman Peter C. Clapman Senior Vice President and Chief Counsel, Investments TIAA-CREF LIFE FUNDS By: /s/ Thomas G. Walsh Thomas G. Walsh Chairman of the Board and President -----END PRIVACY-ENHANCED MESSAGE-----