As filed with the Securities and Exchange
Commission on February 2, 2011
File Nos. 333-76651, 811-09301
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM N-1A |
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. 37 |
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and/or |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
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Amendment No. 40 |
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(Check appropriate box or boxes) |
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TIAA-CREF Funds |
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(Exact Name of Registrant as Specified in Charter) |
730 Third Avenue
New York, New York 10017-3206
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (800) 842-2733
Stewart P. Greene, Esq.
TIAA-CREF Funds
730 Third Avenue
New York, New York 10017-3206
(Name and Address of Agent for Service)
Copy to:
Jeffrey S. Puretz, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, D.C. 20006-2401
Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
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Immediately upon filing pursuant to paragraph (b) |
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On (date) pursuant to paragraph (b) |
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60 days after filing pursuant to paragraph (a)(1) |
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75 days after filing pursuant to paragraph (a)(2) |
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On (date) pursuant to paragraph (a)(1) |
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On May 1, 2011 pursuant to paragraph (a)(2) of rule 485 |
If appropriate, check the following box:
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This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
PROSPECTUS
FEBRUARY 1, 2011
TIAA-CREF LIFECYCLE FUNDS
of the TIAA-CREF Funds
Fund Class Ticker: | Retail | Retirement | Premier | Institutional |
§ Lifecycle Retirement Income Fund | TLRRX | TLIRX | TPILX | TLRIX |
§ Lifecycle 2010 Fund | — | TCLEX | TCTPX | TCTIX |
§ Lifecycle 2015 Fund | — | TCLIX | TCFPX | TCNIX |
§ Lifecycle 2020 Fund | — | TCLTX | TCWPX | TCWIX |
§ Lifecycle 2025 Fund | — | TCLFX | TCQPX | TCYIX |
§ Lifecycle 2030 Fund | — | TCLNX | TCHPX | TCRIX |
§ Lifecycle 2035 Fund | — | TCLRX | TCYPX | TCIIX |
§ Lifecycle 2040 Fund | — | TCLOX | TCZPX | TCOIX |
§ Lifecycle 2045 Fund | — | TTFRX | TTFPX | TTFIX |
§ Lifecycle 2050 Fund | — | TLFRX | TCLPX | TFTIX |
§ Lifecycle 2055 Fund | — | — | — | — |
This Prospectus describes the Retirement, Premier and Institutional Class shares offered by 11 investment portfolios (each, a “Fund”) of the TIAA-CREF Funds (the “Trust”). The Lifecycle Retirement Income Fund also offers Retail Class shares. These Funds comprise the TIAA-CREF Lifecycle Funds (the “Lifecycle Funds”), a sub-family of funds offered by the Trust.
An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. An investor can lose money in any of the Funds and the Funds could perform more poorly than other investments.
The Securities and Exchange Commission (the “SEC”) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE RETIREMENT INCOME FUND
of the TIAA-CREF Funds
The Lifecycle Retirement Income Fund seeks high total return over time primarily through income, with a secondary emphasis on capital appreciation.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retail Class | Retirement | Premier | Institutional | |||||
Maximum Sales Charge Imposed on Purchases (percentage of offering price) | 0% | 0% | 0% | 0% | ||||
Maximum Deferred Sales Charge | 0% | 0% | 0% | 0% | ||||
Maximum Sales Charge Imposed on Reinvested Dividends and Other Distributions | 0% | 0% | 0% | 0% | ||||
Redemption or Exchange Fee | 0% | 0% | 0% | 0% | ||||
Account Maintenance Fee (annual fee on accounts under $2,000) | $15 | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retail Class |
| Retirement Class |
| Premier Class |
| Institutional Class |
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Management Fees | 0.10% | 0.10% | 0.10% | 0.10% | ||||
Distribution (Rule 12b-1) Fees1 | 0.13% | 0.05% | 0.15% | — | ||||
Other Expenses | 0.34% | 0.55% | 0.33% | 0.31% | ||||
Acquired Fund Fees and Expenses2 | 0.38% | 0.38% | 0.38% | 0.38% | ||||
Total Annual Fund Operating Expenses | 0.95% | 1.08% | 0.96% | 0.79% | ||||
Waivers and Expense Reimbursements3 | 0.32% | 0.45% | 0.43% | 0.41% | ||||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.63% |
| 0.63% |
| 0.53% |
| 0.38% |
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1 The Retail Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and
6 Prospectus ■ TIAA-CREF Lifecycle Funds
shareholder services to the Retail Class shares at the annual rate of up to 0.25% of average daily net assets attributable to Retail Class shares. Because reimbursements are currently below the Retail Plan’s maximum rate, the fees shown in the chart for the Plan are estimated reimbursements for the current year. The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, TPIS, for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (‘”Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retail Class shares; (ii) 0.25% of average daily net assets for Retirement Class shares; (iii) 0.15% of average daily net assets for Premier Class shares; and (iv) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retail Class |
| Retirement Class |
| Premier Class |
| Institutional Class |
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1 Year | $ | 64 | $ | 64 | $ | 54 | $ | 39 | ||||
3 Years | $ | 249 | $ | 267 | $ | 232 | $ | 183 | ||||
5 Years | $ | 473 | $ | 521 | $ | 459 | $ | 370 | ||||
10 Years | $ | 1,117 |
| $ | 1,248 |
| $ | 1,111 |
| $ | 913 |
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The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 33% of the average value of its portfolio.
TIAA-CREF Lifecycle Funds ■ Prospectus 7
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). The Fund invests in Underlying Funds according to a relatively fixed, more conservative asset allocation strategy that will not gradually adjust over time and is designed for investors who are already in or entering retirement (i.e., have already passed their retirement year).
The Fund expects to allocate approximately 40.00% of its assets to equity Underlying Funds and 60.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations may be changed and actual allocations may vary up to 10% from the targets. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which may change, are approximately as follows: U.S. Equity: 30.00%; International Equity: 10.00%; Fixed-Income: 40.00%; Short-Term Fixed-Income: 10.00%; and Inflation-Protected Assets: 10.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change. The Fund is designed to maintain a stable conservative allocation among the Underlying Funds and is therefore designed for shareholders already in or entering retirement.
8 Prospectus ■ TIAA-CREF Lifecycle Funds
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 40.36% | U.S. Equity | 30.30% | · Enhanced Large-Cap Growth Index Fund | 6.18% | ||
· Enhanced Large-Cap Value Index Fund | 6.03% | ||||||
· Large-Cap Value Fund | 5.20% | ||||||
· Large-Cap Growth Fund | 5.18% | ||||||
· Growth & Income Fund | 4.45% | ||||||
· Small-Cap Equity Fund | 2.48% | ||||||
· Mid-Cap Value Fund | 0.41% | ||||||
· Mid-Cap Growth Fund | 0.37% | ||||||
International Equity | 10.06% | · International Equity Fund | 4.59% | ||||
· Enhanced International Equity Index Fund | 4.52% | ||||||
· Emerging Markets Equity Fund | 0.95% | ||||||
FIXED-INCOME | 59.64% | Fixed-Income | 39.56% | · Bond Fund | 38.41% | ||
· High-Yield Fund | 0.66% | ||||||
· Bond Plus Fund | 0.49% | ||||||
Short-Term | 10.26% | · Short-Term Bond Fund |
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· Money Market Fund | 0.43% | ||||||
Inflation-Protected | 9.82% | · Inflation-Linked Bond Fund | 9.82% | ||||
Total | 100.00% | 100.00% | 100.00% |
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
TIAA-CREF Lifecycle Funds ■ Prospectus 9
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-
10 Prospectus ■ TIAA-CREF Lifecycle Funds
sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition
TIAA-CREF Lifecycle Funds ■ Prospectus 11
of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional, Premier and Retail Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past
12 Prospectus ■ TIAA-CREF Lifecycle Funds
performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component.
In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle Retirement Income Fund
Best quarter: 8.88%, for the quarter ended September 30, 2009. Worst quarter: -7.81%, for the quarter ended December 31, 2008.
TIAA-CREF Lifecycle Funds ■ Prospectus 13
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
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| Since Inception |
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Retirement Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 10.44 | % | 1.84 | % | ||
Return After Taxes on Distributions | 9.59 | % | 0.87 | % | ||
Return After Taxes on Distributions and Sale of | ||||||
Fund Shares | 6.87 | % | 1.02 | % | ||
Barclays Capital U.S. Aggregate Bond Index | 6.54 | % | 5.83 | % | ||
Lifecycle Retirement Income Fund Composite Index | 10.01 | % | 2.60 | % | ||
Institutional Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 10.69 | % | 2.09 | % | ||
Retail Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 10.53 | % | 2.02 | % | ||
Premier Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 10.54 | % | 1.88 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Premier Class that is prior to its inception date is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect lower expenses of the Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2007 | since 2007 | since 2007 |
PURCHASE AND SALE OF FUND SHARES
Retail Class shares are available for purchase through certain financial intermediaries or by contacting the Fund directly at 800 223-1200 or www.tiaa-cref.org. Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or
14 Prospectus ■ TIAA-CREF Lifecycle Funds
accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· The minimum initial investment for Retail Class shares is $2,000 for Traditional IRA, Roth IRA and Coverdell accounts and $2,500 for all other account types. Subsequent investments for all account types must be at least $100.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another
TIAA-CREF Lifecycle Funds ■ Prospectus 15
investment. Ask your salesperson or visit your financial intermediary’s website for more information.
16 Prospectus ■ TIAA-CREF Lifecycle Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2010 FUND
of the TIAA-CREF Funds
The Lifecycle 2010 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.40% | 0.40% | 0.40% | |||
Total Annual Fund Operating Expenses | 0.86% | 0.71% | 0.56% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.65% |
| 0.55% |
| 0.40% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
TIAA-CREF Lifecycle Funds ■ Prospectus 17
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 66 | $ | 56 | $ | 41 | |||
3 Years | $ | 239 | $ | 199 | $ | 152 | |||
5 Years | $ | 442 | $ | 368 | $ | 285 | |||
10 Years | $ | 1,028 |
| $ | 857 |
| $ | 675 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 24% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
18 Prospectus ■ TIAA-CREF Lifecycle Funds
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2010.
The Fund expects to allocate approximately 49.00% of its assets to equity Underlying Funds and 51.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2010 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2017 to 2020. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 36.75%; International Equity: 12.25%; Fixed-Income: 38.20%; Short-Term Fixed-Income: 6.40%; and Inflation-Protected Assets: 6.40%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
TIAA-CREF Lifecycle Funds ■ Prospectus 19
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 49.94% | U.S. Equity | 37.59% | · Enhanced Large-Cap Growth Index Fund | 8.09% | ||
· Enhanced Large-Cap Value Index Fund | 7.90% | ||||||
· Large-Cap Value Fund | 6.16% | ||||||
· Large-Cap Growth Fund | 6.11% | ||||||
· Growth & Income Fund | 5.24% | ||||||
· Small-Cap Equity Fund | 3.15% | ||||||
· Mid-Cap Value Fund | 0.49% | ||||||
· Mid-Cap Growth Fund | 0.45% | ||||||
International Equity | 12.35% | · International Equity Fund | 5.89% | ||||
· Enhanced International Equity Index Fund | 5.76% | ||||||
· Emerging Markets Equity Fund | 0.70% | ||||||
FIXED-INCOME | 50.06% | Fixed-Income | 37.77% | · Bond Fund | 34.43% | ||
· High-Yield Fund | 2.43% | ||||||
· Bond Plus Fund | 0.91% | ||||||
Short-Term | 6.38% | · Short-Term Bond Fund |
| ||||
· Money Market Fund | 0.52% | ||||||
Inflation-Protected Assets | 5.91% | · Inflation-Linked Bond Fund | 5.91% | ||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
20 Prospectus ■ TIAA-CREF Lifecycle Funds
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed
TIAA-CREF Lifecycle Funds ■ Prospectus 21
countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
22 Prospectus ■ TIAA-CREF Lifecycle Funds
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
TIAA-CREF Lifecycle Funds ■ Prospectus 23
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets)
24 Prospectus ■ TIAA-CREF Lifecycle Funds
and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2010 Fund
Best quarter: 10.87%, for the quarter ended June 30, 2009. Worst quarter: -11.04%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 11.53 | % | 3.79 | % | 4.79 | % | |||
Return After Taxes on Distributions | 10.74 | % | 3.01 | % | 3.89 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 7.62 | % | 2.86 | % | 3.66 | % | |||
Barclays Capital U.S. Aggregate Bond Index | 6.54 | % | 5.80 | % | 5.12 | % | |||
Lifecycle 2010 Fund Composite Index | 10.88 | % | 4.01 | % | 5.05 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 11.84 | % | 3.99 | %* | 4.96 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 11.67 | % | 3.81 | %* | 4.81 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
TIAA-CREF Lifecycle Funds ■ Prospectus 25
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of
26 Prospectus ■ TIAA-CREF Lifecycle Funds
the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
TIAA-CREF Lifecycle Funds ■ Prospectus 27
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2015 FUND
of the TIAA-CREF Funds
The Lifecycle 2015 Fund seeks high total return over time primarily through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.41% | 0.41% | 0.41% | |||
Total Annual Fund Operating Expenses | 0.87% | 0.72% | 0.57% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.66% |
| 0.56% |
| 0.41% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
28 Prospectus ■ TIAA-CREF Lifecycle Funds
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 67 | $ | 57 | $ | 42 | |||
3 Years | $ | 242 | $ | 203 | $ | 155 | |||
5 Years | $ | 447 | $ | 373 | $ | 291 | |||
10 Years | $ | 1,040 |
| $ | 869 |
| $ | 687 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 19% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
TIAA-CREF Lifecycle Funds ■ Prospectus 29
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2015.
The Fund expects to allocate approximately 56.40% of its assets to equity Underlying Funds and 43.60% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2015 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2022 to 2025. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 42.30%; International Equity: 14.10%; Fixed-Income: 34.80%; Short-Term Fixed-Income: 4.40%; and Inflation-Protected Assets: 4.40%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
30 Prospectus ■ TIAA-CREF Lifecycle Funds
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 57.69% | U.S. Equity | 43.41% | · Enhanced Large-Cap Growth Index Fund | 9.43% | ||
· Enhanced Large-Cap Value Index Fund | 9.19% | ||||||
· Large-Cap Value Fund | 7.09% | ||||||
· Large-Cap Growth Fund | 7.04% | ||||||
· Growth & Income Fund | 6.02% | ||||||
· Small-Cap Equity Fund | 3.56% | ||||||
· Mid-Cap Value Fund | 0.57% | ||||||
· Mid-Cap Growth Fund | 0.51% | ||||||
International Equity | 14.28% | · International Equity Fund | 6.72% | ||||
· Enhanced International Equity Index Fund | 6.53% | ||||||
· Emerging Markets Equity Fund | 1.03% | ||||||
FIXED-INCOME | 42.31% | Fixed-Income | 34.27% | · Bond Fund | 29.54% | ||
· High-Yield Fund | 2.94% | ||||||
· Bond Plus Fund | 1.79% | ||||||
Short-Term
| 4.03% | · Short-Term Bond Fund |
| ||||
Inflation-Protected Assets | 4.01% | · Inflation-Linked Bond Fund | 4.01% | ||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals
TIAA-CREF Lifecycle Funds ■ Prospectus 31
in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of
32 Prospectus ■ TIAA-CREF Lifecycle Funds
issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
TIAA-CREF Lifecycle Funds ■ Prospectus 33
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in
34 Prospectus ■ TIAA-CREF Lifecycle Funds
the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1,
TIAA-CREF Lifecycle Funds ■ Prospectus 35
2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2015 Fund
Best quarter: 12.39%, for the quarter ended June 30, 2009. Worst quarter: -12.97%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 12.36 | % | 3.58 | % | 4.80 | % | |||
Return After Taxes on Distributions | 11.63 | % | 2.86 | % | 3.93 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 8.18 | % | 2.71 | % | 3.69 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2015 Fund Composite Index | 11.54 | % | 3.78 | % | 5.00 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 12.69 | % | 3.80 | %* | 4.97 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 12.41 | % | 3.60 | %* | 4.81 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
36 Prospectus ■ TIAA-CREF Lifecycle Funds
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
TIAA-CREF Lifecycle Funds ■ Prospectus 37
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
38 Prospectus ■ TIAA-CREF Lifecycle Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2020 FUND
of the TIAA-CREF Funds
The Lifecycle 2020 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.42% | 0.42% | 0.42% | |||
Total Annual Fund Operating Expenses | 0.88% | 0.73% | 0.58% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.67% |
| 0.57% |
| 0.42% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
TIAA-CREF Lifecycle Funds ■ Prospectus 39
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 68 | $ | 58 | $ | 43 | |||
3 Years | $ | 245 | $ | 206 | $ | 158 | |||
5 Years | $ | 453 | $ | 379 | $ | 296 | |||
10 Years | $ | 1,051 |
| $ | 881 |
| $ | 699 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 16% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
40 Prospectus ■ TIAA-CREF Lifecycle Funds
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2020.
The Fund expects to allocate approximately 64.40% of its assets to equity Underlying Funds and 35.60% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2020 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2027 to 2030. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 48.30%; International Equity: 16.10%; Fixed-Income: 30.80%; Short-Term Fixed-Income: 2.40%; and Inflation-Protected Assets: 2.40%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
TIAA-CREF Lifecycle Funds ■ Prospectus 41
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 65.70% | U.S. Equity | 49.53% | · Enhanced Large-Cap Growth Index Fund | 10.93% | ||
· Enhanced Large-Cap Value Index Fund | 10.65% | ||||||
· Large-Cap Value Fund | 8.00% | ||||||
· Large-Cap Growth Fund | 7.95% | ||||||
· Growth & Income Fund | 6.80% | ||||||
· Small-Cap Equity Fund | 3.98% | ||||||
· Mid-Cap Value Fund | 0.64% | ||||||
· Mid-Cap Growth Fund | 0.58% | ||||||
International Equity | 16.17% | · International Equity Fund | 7.65% | ||||
· Enhanced International Equity Index Fund | 7.33% | ||||||
· Emerging Markets Equity Fund | 1.19% | ||||||
FIXED-INCOME | 34.30% | Fixed-Income | 30.11% | · Bond Fund | 23.38% | ||
· Bond Plus Fund | 3.42% | ||||||
· High-Yield Fund | 3.31% | ||||||
Short-Term
| 2.10% | · Short-Term Bond Fund |
| ||||
Inflation-Protected Assets | 2.09% | · Inflation-Linked Bond Fund | 2.09% | ||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals
42 Prospectus ■ TIAA-CREF Lifecycle Funds
in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of
TIAA-CREF Lifecycle Funds ■ Prospectus 43
issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
44 Prospectus ■ TIAA-CREF Lifecycle Funds
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in
TIAA-CREF Lifecycle Funds ■ Prospectus 45
the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component.
46 Prospectus ■ TIAA-CREF Lifecycle Funds
In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2020 Fund
Best quarter: 13.85%, for the quarter ended June 30, 2009. Worst quarter: -14.95%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 13.15 | % | 3.17 | % | 4.59 | % | |||
Return After Taxes on Distributions | 12.48 | % | 2.52 | % | 3.78 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 8.72 | % | 2.41 | % | 3.56 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2020 Fund Composite Index | 12.21 | % | 3.38 | % | 4.78 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 13.45 | % | 3.37 | %* | 4.75 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 13.27 | % | 3.22 | %* | 4.63 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown
TIAA-CREF Lifecycle Funds ■ Prospectus 47
are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt
48 Prospectus ■ TIAA-CREF Lifecycle Funds
shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
TIAA-CREF Lifecycle Funds ■ Prospectus 49
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2025 FUND
of the TIAA-CREF Funds
The Lifecycle 2025 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.43% | 0.43% | 0.43% | |||
Total Annual Fund Operating Expenses | 0.89% | 0.74% | 0.59% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.68% |
| 0.58% |
| 0.43% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
50 Prospectus ■ TIAA-CREF Lifecycle Funds
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 69 | $ | 59 | $ | 44 | |||
3 Years | $ | 248 | $ | 209 | $ | 161 | |||
5 Years | $ | 458 | $ | 384 | $ | 302 | |||
10 Years | $ | 1,063 |
| $ | 893 |
| $ | 712 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 15% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
TIAA-CREF Lifecycle Funds ■ Prospectus 51
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2025.
The Fund expects to allocate approximately 72.40% of its assets to equity Underlying Funds and 27.60% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2025 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2032 to 2035. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 54.30%; International Equity: 18.10%; Fixed-Income: 26.80%; Short-Term Fixed-Income: 0.40%; and Inflation-Protected Assets: 0.40%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
52 Prospectus ■ TIAA-CREF Lifecycle Funds
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 73.49% | U.S. Equity | 55.34% | · Enhanced Large-Cap Growth Index Fund | 12.19% | ||
· Enhanced Large-Cap Value Index Fund | 11.87% | ||||||
· Large-Cap Value Fund | 8.95% | ||||||
· Large-Cap Growth Fund | 8.89% | ||||||
· Growth & Income Fund | 7.61% | ||||||
· Small-Cap Equity Fund | 4.46% | ||||||
· Mid-Cap Value Fund | 0.73% | ||||||
· Mid-Cap Growth Fund | 0.64% | ||||||
International Equity | 18.15% | · International Equity Fund | 8.57% | ||||
· Enhanced International Equity Index Fund | 8.19% | ||||||
· Emerging Markets Equity Fund | 1.39% | ||||||
FIXED-INCOME | 26.51% | Fixed-Income | 26.25% | · Bond Fund | 19.05% | ||
· High-Yield Fund | 3.70% | ||||||
· Bond Plus Fund | 3.50% | ||||||
Short-Term
| 0.13% | · Short-Term Bond Fund |
| ||||
Inflation-Protected Assets | 0.13% | · Inflation-Linked Bond Fund | 0.13% | ||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals
TIAA-CREF Lifecycle Funds ■ Prospectus 53
in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of
54 Prospectus ■ TIAA-CREF Lifecycle Funds
issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
TIAA-CREF Lifecycle Funds ■ Prospectus 55
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in
56 Prospectus ■ TIAA-CREF Lifecycle Funds
the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component.
TIAA-CREF Lifecycle Funds ■ Prospectus 57
In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2025 Fund
Best quarter: 15.33%, for the quarter ended June 30, 2009. Worst quarter: -16.97%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 13.88 | % | 2.77 | % | 4.42 | % | |||
Return After Taxes on Distributions | 13.25 | % | 2.16 | % | 3.63 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 9.20 | % | 2.10 | % | 3.43 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2025 Fund Composite Index | 12.86 | % | 2.98 | % | 4.57 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 13.99 | % | 2.97 | %* | 4.58 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 13.82 | % | 2.77 | %* | 4.42 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
58 Prospectus ■ TIAA-CREF Lifecycle Funds
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
TIAA-CREF Lifecycle Funds ■ Prospectus 59
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
60 Prospectus ■ TIAA-CREF Lifecycle Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2030 FUND
of the TIAA-CREF Funds
The Lifecycle 2030 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.44% | 0.44% | 0.44% | |||
Total Annual Fund Operating Expenses | 0.90% | 0.75% | 0.60% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.69% |
| 0.59% |
| 0.44% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
TIAA-CREF Lifecycle Funds ■ Prospectus 61
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 70 | $ | 60 | $ | 45 | |||
3 Years | $ | 251 | $ | 212 | $ | 164 | |||
5 Years | $ | 464 | $ | 390 | $ | 307 | |||
10 Years | $ | 1,075 |
| $ | 904 |
| $ | 724 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 14% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
62 Prospectus ■ TIAA-CREF Lifecycle Funds
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2030.
The Fund expects to allocate approximately 80.40% of its assets to equity Underlying Funds and 19.60% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2030 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2037 to 2040. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 60.30%; International Equity: 20.10%; Fixed-Income: 19.60%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
TIAA-CREF Lifecycle Funds ■ Prospectus 63
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | |||
EQUITY | 81.24% | U.S. Equity | 61.27% | · Enhanced Large-Cap Growth Index Fund | 13.44% | |||
· Enhanced Large-Cap Value Index Fund | 13.09% | |||||||
· Large-Cap Value Fund | 9.95% | |||||||
· Large-Cap Growth Fund | 9.90% | |||||||
· Growth & Income Fund | 8.46% | |||||||
· Small-Cap Equity Fund | 4.90% | |||||||
· Mid-Cap Value Fund | 0.81% | |||||||
· Mid-Cap Growth Fund | 0.72% | |||||||
International Equity | 19.97% | · International Equity Fund | 9.41% | |||||
· Enhanced International Equity Index Fund | 9.02% | |||||||
· Emerging Markets Equity Fund | 1.54% | |||||||
FIXED-INCOME | 18.76% | Fixed-Income | 18.76% | · Bond Fund | 12.24% | |||
· High-Yield Fund | 3.68% | |||||||
· Bond Plus Fund | 2.84% | |||||||
Total | 100.00% | 100.00% | 100.00% | |||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the
64 Prospectus ■ TIAA-CREF Lifecycle Funds
value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition,
TIAA-CREF Lifecycle Funds ■ Prospectus 65
foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
66 Prospectus ■ TIAA-CREF Lifecycle Funds
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more
TIAA-CREF Lifecycle Funds ■ Prospectus 67
complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component.
68 Prospectus ■ TIAA-CREF Lifecycle Funds
In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2030 Fund
Best quarter: 16.62%, for the quarter ended June 30, 2009. Worst quarter: -19.05%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 14.39 | % | 2.37 | % | 4.13 | % | |||
Return After Taxes on Distributions | 13.83 | % | 1.80 | % | 3.39 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 9.56 | % | 1.79 | % | 3.21 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2030 Fund Composite Index | 13.41 | % | 2.57 | % | 4.35 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 14.74 | % | 2.57 | %* | 4.31 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 14.44 | % | 2.38 | %* | 4.14 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
TIAA-CREF Lifecycle Funds ■ Prospectus 69
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
70 Prospectus ■ TIAA-CREF Lifecycle Funds
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
TIAA-CREF Lifecycle Funds ■ Prospectus 71
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2035 FUND
of the TIAA-CREF Funds
The Lifecycle 2035 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.31% | 0.06% | 0.06% | |||
Acquired Fund Fees and Expenses2 | 0.45% | 0.45% | 0.45% | |||
Total Annual Fund Operating Expenses | 0.91% | 0.76% | 0.61% | |||
Waivers and Expense Reimbursements3 | 0.21% | 0.16% | 0.16% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.70% |
| 0.60% |
| 0.45% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
72 Prospectus ■ TIAA-CREF Lifecycle Funds
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 72 | $ | 61 | $ | 46 | |||
3 Years | $ | 254 | $ | 215 | $ | 168 | |||
5 Years | $ | 469 | $ | 395 | $ | 313 | |||
10 Years | $ | 1,087 |
| $ | 916 |
| $ | 736 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 11% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
TIAA-CREF Lifecycle Funds ■ Prospectus 73
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2035.
The Fund expects to allocate approximately 88.40% of its assets to equity Underlying Funds and 11.60% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2035 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2042 to 2045. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 66.30%; International Equity: 22.10%; Fixed-Income: 11.60%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
74 Prospectus ■ TIAA-CREF Lifecycle Funds
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 89.27% | U.S. Equity | 67.38% | · Enhanced Large-Cap Growth Index Fund | 14.61% | ||
· Enhanced Large-Cap Value Index Fund | 14.23% | ||||||
· Large-Cap Value Fund | 11.05% | ||||||
· Large-Cap Growth Fund | 11.04% | ||||||
· Growth & Income Fund | 9.41% | ||||||
· Small-Cap Equity Fund | 5.36% | ||||||
· Mid-Cap Value Fund | 0.88% | ||||||
· Mid-Cap Growth Fund | 0.80% | ||||||
International Equity | 21.89% | · International Equity Fund | 10.26% | ||||
· Enhanced International Equity Index Fund | 9.87% | ||||||
· Emerging Markets Equity Fund | 1.76% | ||||||
FIXED-INCOME | 10.73% | Fixed-Income | 10.73% | · Bond Fund | 5.39% | ||
· High-Yield Fund | 3.58% | ||||||
· Bond Plus Fund | 1.76% | ||||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the
TIAA-CREF Lifecycle Funds ■ Prospectus 75
value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition,
76 Prospectus ■ TIAA-CREF Lifecycle Funds
foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
TIAA-CREF Lifecycle Funds ■ Prospectus 77
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more
78 Prospectus ■ TIAA-CREF Lifecycle Funds
complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the
TIAA-CREF Lifecycle Funds ■ Prospectus 79
Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2035 Fund
Best quarter: 17.55%, for the quarter ended June 30, 2009. Worst quarter: -20.30%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 15.02 | % | 2.39 | % | 4.27 | % | |||
Return After Taxes on Distributions | 14.52 | % | 1.85 | % | 3.53 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 9.98 | % | 1.82 | % | 3.34 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2035 Fund Composite Index | 13.98 | % | 2.57 | % | 4.47 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 15.26 | % | 2.60 | %* | 4.44 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 15.20 | % | 2.45 | %* | 4.32 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a),
80 Prospectus ■ TIAA-CREF Lifecycle Funds
401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account
TIAA-CREF Lifecycle Funds ■ Prospectus 81
are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
82 Prospectus ■ TIAA-CREF Lifecycle Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2040 FUND
of the TIAA-CREF Funds
The Lifecycle 2040 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.30% | 0.06% | 0.05% | |||
Acquired Fund Fees and Expenses2 | 0.45% | 0.45% | 0.45% | |||
Total Annual Fund Operating Expenses | 0.90% | 0.76% | 0.60% | |||
Waivers and Expense Reimbursements3 | 0.20% | 0.16% | 0.15% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.70% |
| 0.60% |
| 0.45% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
TIAA-CREF Lifecycle Funds ■ Prospectus 83
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 72 | $ | 61 | $ | 46 | |||
3 Years | $ | 253 | $ | 215 | $ | 184 | |||
5 Years | $ | 466 | $ | 395 | $ | 327 | |||
10 Years | $ | 1,077 |
| $ | 916 |
| $ | 743 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 10% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
84 Prospectus ■ TIAA-CREF Lifecycle Funds
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2040.
The Fund expects to allocate approximately 90.00% of its assets to equity Underlying Funds and 10.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2040 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2047 to 2050. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 67.50%; International Equity: 22.50%; Fixed-Income: 10.00%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
TIAA-CREF Lifecycle Funds ■ Prospectus 85
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 89.95% | U.S. Equity | 67.98% | · Enhanced Large-Cap Growth Index Fund | 14.73% | ||
· Enhanced Large-Cap Value Index Fund | 14.34% | ||||||
· Large-Cap Value Fund | 11.16% | ||||||
· Large-Cap Growth Fund | 11.14% | ||||||
· Growth & Income Fund | 9.50% | ||||||
· Small-Cap Equity Fund | 5.42% | ||||||
· Mid-Cap Value Fund | 0.89% | ||||||
· Mid-Cap Growth Fund | 0.80% | ||||||
International Equity | 21.97% | · International Equity Fund | 10.28% | ||||
· Enhanced International Equity Index Fund | 9.91% | ||||||
· Emerging Markets Equity Fund | 1.78% | ||||||
FIXED-INCOME | 10.05% | Fixed-Income | 10.05% | · Bond Fund | 5.07% | ||
· High-Yield Fund | 3.58% | ||||||
· Bond Plus Fund | 1.40% | ||||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the
86 Prospectus ■ TIAA-CREF Lifecycle Funds
value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition,
TIAA-CREF Lifecycle Funds ■ Prospectus 87
foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
88 Prospectus ■ TIAA-CREF Lifecycle Funds
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more
TIAA-CREF Lifecycle Funds ■ Prospectus 89
complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the
90 Prospectus ■ TIAA-CREF Lifecycle Funds
Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2040 Fund
Best quarter: 17.54%, for the quarter ended June 30, 2009. Worst quarter: -20.27%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Five Years |
|
| Since Inception |
|
|
Retirement Class (Inception: October 15, 2004) | |||||||||
Return Before Taxes | 15.21 | % | 2.68 | % | 4.63 | % | |||
Return After Taxes on Distributions | 14.72 | % | 2.14 | % | 3.89 | % | |||
Return After Taxes on Distributions and Sale of | |||||||||
Fund Shares | 10.11 | % | 2.07 | % | 3.66 | % | |||
Russell 3000® Index | 16.93 | % | 2.74 | % | 4.88 | % | |||
Lifecycle 2040 Fund Composite Index | 14.07 | % | 2.78 | % | 4.76 | % | |||
Institutional Class (Inception: January 17, 2007) | |||||||||
Return Before Taxes | 15.45 | % | 2.88 | %* | 4.80 | %* | |||
Premier Class (Inception: September 30, 2009) | |||||||||
Return Before Taxes | 15.27 | % | 2.70 | %* | 4.65 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Institutional Class and Premier Class that is prior to their inception dates is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect the lower expenses of the Institutional Class and Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a),
TIAA-CREF Lifecycle Funds ■ Prospectus 91
401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2006 | since 2006 | since 2006 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account
92 Prospectus ■ TIAA-CREF Lifecycle Funds
are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
TIAA-CREF Lifecycle Funds ■ Prospectus 93
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2045 FUND
of the TIAA-CREF Funds
The Lifecycle 2045 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.49% | 0.25% | 0.25% | |||
Acquired Fund Fees and Expenses2 | 0.45% | 0.45% | 0.45% | |||
Total Annual Fund Operating Expenses | 1.09% | 0.95% | 0.80% | |||
Waivers and Expense Reimbursements3 | 0.39% | 0.35% | 0.35% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.70% |
| 0.60% |
| 0.45% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
94 Prospectus ■ TIAA-CREF Lifecycle Funds
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 72 | $ | 61 | $ | 46 | |||
3 Years | $ | 281 | $ | 244 | $ | 196 | |||
5 Years | $ | 536 | $ | 468 | $ | 386 | |||
10 Years | $ | 1,269 |
| $ | 1,112 |
| $ | 935 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 18% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
TIAA-CREF Lifecycle Funds ■ Prospectus 95
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2045.
The Fund expects to allocate approximately 90.00% of its assets to equity Underlying Funds and 10.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2045 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2052 to 2055. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 67.50%; International Equity: 22.50%; Fixed-Income: 10.00%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
96 Prospectus ■ TIAA-CREF Lifecycle Funds
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 89.94% | U.S. Equity | 67.68% | · Enhanced Large-Cap Growth Index Fund | 13.33% | ||
· Enhanced Large-Cap Value Index Fund | 12.95% | ||||||
· Large-Cap Growth Fund | 12.06% | ||||||
· Large-Cap Value Fund | 11.91% | ||||||
· Growth & Income Fund | 10.19% | ||||||
· Small-Cap Equity Fund | 5.44% | ||||||
· Mid-Cap Value Fund | 0.95% | ||||||
· Mid-Cap Growth Fund | 0.85% | ||||||
International Equity | 22.26% | · International Equity Fund | 9.96% | ||||
· Enhanced International Equity Index Fund | 9.93% | ||||||
· Emerging Markets Equity Fund | 2.37% | ||||||
FIXED-INCOME | 10.06% | Fixed-Income | 10.06% | · Bond Fund | 4.70% | ||
· High-Yield Fund | 3.38% | ||||||
· Bond Plus Fund | 1.98% | ||||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the
TIAA-CREF Lifecycle Funds ■ Prospectus 97
value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition,
98 Prospectus ■ TIAA-CREF Lifecycle Funds
foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
TIAA-CREF Lifecycle Funds ■ Prospectus 99
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more
100 Prospectus ■ TIAA-CREF Lifecycle Funds
complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the
TIAA-CREF Lifecycle Funds ■ Prospectus 101
Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2045 Fund
Best quarter: 17.33%, for the quarter ended June 30, 2009. Worst quarter: -21.15%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Since Inception |
|
|
Retirement Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 15.10 | % | –3.35 | % | ||
Return After Taxes on Distributions | 14.62 | % | –3.96 | % | ||
Return After Taxes on Distributions and Sale of | ||||||
Fund Shares | 10.04 | % | –3.09 | % | ||
Russell 3000® Index | 16.93 | % | –2.15 | % | ||
Lifecycle 2045 Fund Composite Index | 14.07 | % | –2.31 | % | ||
Institutional Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 15.40 | % | –3.11 | % | ||
Premier Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 15.21 | % | –3.30 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Premier Class that is prior to its inception date is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect lower expenses of the Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a),
102 Prospectus ■ TIAA-CREF Lifecycle Funds
401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2007 | since 2007 | since 2007 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
TIAA-CREF Lifecycle Funds ■ Prospectus 103
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
104 Prospectus ■ TIAA-CREF Lifecycle Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2050 FUND
of the TIAA-CREF Funds
The Lifecycle 2050 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 0.68% | 0.45% | 0.44% | |||
Acquired Fund Fees and Expenses2 | 0.45% | 0.45% | 0.45% | |||
Total Annual Fund Operating Expenses | 1.28% | 1.15% | 0.99% | |||
Waivers and Expense Reimbursements3 | 0.58% | 0.55% | 0.54% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.70% |
| 0.60% |
| 0.45% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
TIAA-CREF Lifecycle Funds ■ Prospectus 105
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 72 | $ | 61 | $ | 46 | |||
3 Years | $ | 308 | $ | 272 | $ | 224 | |||
5 Years | $ | 607 | $ | 542 | $ | 457 | |||
10 Years | $ | 1,458 |
| $ | 1,313 |
| $ | 1,129 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 24% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for
106 Prospectus ■ TIAA-CREF Lifecycle Funds
approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2050.
The Fund expects to allocate approximately 90.00% of its assets to equity Underlying Funds and 10.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2050 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2057 to 2060. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 67.50%; International Equity: 22.50%; Fixed-Income: 10.00%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
TIAA-CREF Lifecycle Funds ■ Prospectus 107
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 89.95% | U.S. Equity | 67.59% | · Enhanced Large-Cap Growth Index Fund | 13.20% | ||
· Enhanced Large-Cap Value Index Fund | 12.84% | ||||||
· Large-Cap Growth Fund | 12.10% | ||||||
· Large-Cap Value Fund | 11.95% | ||||||
· Growth & Income Fund | 10.23% | ||||||
· Small-Cap Equity Fund | 5.46% | ||||||
· Mid-Cap Value Fund | 0.95% | ||||||
· Mid-Cap Growth Fund | 0.86% | ||||||
International Equity | 22.36% | · International Equity Fund | 10.01% | ||||
· Enhanced International Equity Index Fund | 9.98% | ||||||
· Emerging Markets Equity Fund | 2.37% | ||||||
FIXED-INCOME | 10.05% | Fixed-Income | 10.05% | · Bond Fund | 4.73% | ||
· High-Yield Fund | 3.40% | ||||||
· Bond Plus Fund | 1.92% | ||||||
Total | 100.00% | 100.00% | 100.00% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the
108 Prospectus ■ TIAA-CREF Lifecycle Funds
value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition,
TIAA-CREF Lifecycle Funds ■ Prospectus 109
foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
110 Prospectus ■ TIAA-CREF Lifecycle Funds
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more
TIAA-CREF Lifecycle Funds ■ Prospectus 111
complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods up to February 1, 2010, the Composite Index has four market sector index components: U.S. Equity, International Equity, Fixed-Income (which includes Inflation-Protected Assets) and Short-Term Fixed-Income. The performance of the Composite Index shown in the table below reflects these four market sector indexes. For performance during periods commencing February 1, 2010, the Composite Index includes an Inflation-Protected Assets index as a separate fifth market sector index component. In addition, for performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the
112 Prospectus ■ TIAA-CREF Lifecycle Funds
Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle 2050 Fund
Best quarter: 17.30%, for the quarter ended June 30, 2009. Worst quarter: -21.79%, for the quarter ended December 31, 2008.
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Since Inception |
|
|
Retirement Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 15.03 | % | –3.44 | % | ||
Return After Taxes on Distributions | 14.43 | % | –4.06 | % | ||
Return After Taxes on Distributions and Sale of | ||||||
Fund Shares | 10.14 | % | –3.17 | % | ||
Russell 3000® Index | 16.93 | % | –2.15 | % | ||
Lifecycle 2050 Fund Composite Index | 14.07 | % | –2.31 | % | ||
Institutional Class (Inception: November 30, 2007) | ||||||
Return Before Taxes | 15.32 | % | –3.19 | % | ||
Premier Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 15.13 | % | –3.43 | %* |
Current performance of the Fund’s shares may be higher or lower than that shown above.
* The performance shown for the Premier Class that is prior to its inception date is based on performance of the Fund’s Retirement Class. The performance for these periods has not been restated to reflect lower expenses of the Premier Class.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a),
TIAA-CREF Lifecycle Funds ■ Prospectus 113
401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2007 | since 2007 | since 2007 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
114 Prospectus ■ TIAA-CREF Lifecycle Funds
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
TIAA-CREF Lifecycle Funds ■ Prospectus 115
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE 2055 FUND
of the TIAA-CREF Funds
The Lifecycle 2055 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | XX% | XX% | XX% | |||
Distribution (Rule 12b-1) Fees1 | XX% | XX% | XX% | |||
Other Expenses2 | XX% | XX% | XX% | |||
Acquired Fund Fees and Expenses3 | XX% | XX% | XX% | |||
Total Annual Fund Operating Expenses | XX% | XX% | XX% | |||
Waivers and Expense Reimbursements4 | XX% | XX% | XX% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | XX% |
| XX% |
| XX% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that reimburses the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
116 Prospectus ■ TIAA-CREF Lifecycle Funds
2 Other Expenses are estimates for the current fiscal year because the Fund is newly operational.
3 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the estimated expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
4 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retirement Class shares; (ii) 0.15% of average daily net assets for Premier Class shares; and (iii) 0.00% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012 unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | XX | $ | XX | $ | XX | |||
3 Years | $ | XX | $ | XX | $ | XX | |||
5 Years | $ | XX | $ | XX | $ | XX | |||
10 Years | $ | XX |
| $ | XX |
| $ | XX |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. The Fund has not experienced portfolio turnover in a prior fiscal year because the Fund is newly operational.
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more
TIAA-CREF Lifecycle Funds ■ Prospectus 117
conservative over time as a target retirement year approaches and for approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2055.
The Fund expects to allocate approximately 90.00% of its assets to equity Underlying Funds and 10.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2055 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2062 to 2065. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, short-term fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 67.50%; International Equity: 22.50%; Fixed-Income: 10.00%; Short-Term Fixed-Income: 0.00%; and Inflation-Protected Assets: 0.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Growth & Income Fund, Large-Cap Growth Fund, Large-Cap Value Fund, Mid-Cap Growth Fund, Mid-Cap Value Fund, Small-Cap Equity Fund, Enhanced Large-Cap Growth Index Fund and Enhanced Large-Cap Value Index Fund (U.S. Equity); International Equity Fund, Enhanced International Equity Index Fund and Emerging Markets Equity Fund (International Equity); Bond Fund, Bond Plus Fund and High-Yield Fund (Fixed-Income); Short-Term Bond Fund and Money Market Fund (Short-Term Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
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The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are listed in the chart below and are expected to be as of June 30 of the current year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | XX.X% | U.S. Equity | XX.X% | · Growth & Income Fund | XX.X% | ||
· Large-Cap Growth Fund | XX.X% | ||||||
· Large-Cap Value Fund | XX.X% | ||||||
· Mid-Cap Growth Fund | XX.X% | ||||||
· Mid-Cap Value Fund | XX.X% | ||||||
· Small-Cap Equity Fund | XX.X% | ||||||
· Enhanced Large-Cap Growth Index Fund | XX.X% | ||||||
· Enhanced Large-Cap Value Index Fund | XX.X% | ||||||
International Equity | XX.X% | · International Equity Fund |
| ||||
· Enhanced International Equity Index Fund | XX.X% | ||||||
· Emerging Markets Equity Fund | XX.X% | ||||||
FIXED-INCOME | XX.X% | Fixed-Income | XX.X% | · Bond Fund | XX.X% | ||
· Bond Plus Fund | XX.X% | ||||||
· High-Yield Fund | XX.X% | ||||||
Total | XX.X% | XX.X% | XX.X% | ||||
The following chart shows how the investment glidepath for the Fund is expected to gradually move the Fund’s target allocations over time between the different target market sector allocations. The actual market sector allocations of the Fund may differ from this chart. The Fund seeks to achieve its final target market sector allocations seven to ten years following the target date.
The Fund is designed to accommodate investors who invest in a fund up to their target retirement date, and plan to make gradual systematic withdrawals in retirement. In addition, investors should note that the Fund will continue to
TIAA-CREF Lifecycle Funds ■ Prospectus 119
have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund depending on the performance of the equity markets generally.
Approximately seven to ten years after the Fund enters its target retirement year, the Board of Trustees may authorize the merger of the Fund into the Lifecycle Retirement Income Fund or other similar fund. Fund shareholders will receive prior notice of any such merger. The Lifecycle Retirement Income Fund is designed to maintain a stable conservative allocation among the Underlying Funds. More detailed information about the Lifecycle Retirement Income Fund is contained in the prospectus for that fund.
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to
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determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Style Risk—The risk that use of a particular investing style (such as growth or value investing) may fall out of favor in the marketplace for various periods of time and result in underperformance relative to the broader market sector or significant declines in the value of the Underlying Funds’ portfolio securities.
· Risks of Growth Investing—The risks that growth stocks can perform differently from the market as a whole and other types of stocks. Growth stocks can also be more volatile, and experience sharper price fluctuations, than other stocks.
· Risks of Value Investing—The risks that value stocks can perform differently from the market as a whole and other types of stocks. Value stocks can also continue to be undervalued by the market for long periods of time.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
TIAA-CREF Lifecycle Funds ■ Prospectus 121
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that stocks selected by the Fund or the Underlying Fund’s investment adviser using quantitative modeling and analysis could perform differently from the market as a whole.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in
122 Prospectus ■ TIAA-CREF Lifecycle Funds
the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
Performance information is not available for the Fund because the Fund is newly operational. Once the Fund has completed one calendar year of operations, its performance information will become available.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2011 | since 2011 | since 2011 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $1 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
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Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND
OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS
ADDITIONAL INFORMATION ABOUT THE FUNDS
Each of the Funds is a “fund of funds” and diversifies its assets by investing in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially other investment pools or investment products (the “Underlying Funds”). In general, each Fund (except the Lifecycle Retirement Income Fund) is designed for investors who have a specific target retirement year in mind, and each Fund’s investments are adjusted from more aggressive to more conservative as a target retirement year approaches and for approximately seven to ten years afterwards. Generally, this means that each Fund’s investments (except the investments of the Lifecycle Retirement Income Fund) will gradually be reallocated to reduce weightings in Underlying Funds investing primarily in equity securities (stocks) and to increase weightings in Underlying
124 Prospectus ■ TIAA-CREF Lifecycle Funds
Funds investing primarily in fixed-income securities (bonds) or money market instruments.
The Lifecycle Retirement Income Fund is not designed for investors who have a specific retirement year in mind and its allocations will not gradually adjust over time. Instead, the Lifecycle Retirement Income Fund is designed for investors who are already in or entering retirement (i.e., have already passed their target retirement year). The Lifecycle Retirement Income Fund has relatively fixed asset allocations between Underlying Funds that invest primarily in equity securities and those that invest primarily in fixed-income (including money market) securities.
The use of a particular index as a Fund’s benchmark index is not a fundamental policy and can be changed without shareholder approval.
The Funds are not appropriate for market timing. You should not invest in the Funds if you are a market timer.
No one can assure that the Funds will achieve their investment objective and investors should not consider any one fund to be a complete investment program.
Please see the Glossary towards the end of this Prospectus for certain defined terms used in this Prospectus.
MORE ABOUT THE FUNDS’ STRATEGY
General Information About the Funds
This Prospectus describes the shares of 11 Lifecycle Funds, a sub-family of funds offered by the Trust. Each Fund is a separate investment portfolio or mutual fund, and has its own investment objective, investment strategies, restrictions and associated risks. An investor should consider each Fund separately to determine if it is an appropriate investment. Allocations for the Funds are based on historical risk/return characteristics and Advisors’ assumptions. If an asset class, market sector or Underlying Fund should perform in a fashion that varies from historical characteristics and/or Advisors’ assumptions, then the allocations may not achieve the intended risk/return characteristics. The investment objective of each Fund and its non-fundamental investment restrictions may be changed by the Board of Trustees of the Trust without shareholder approval. Certain investment restrictions described in the Statement of Additional Information (“SAI”) are fundamental and may only be changed with shareholder approval. Each Fund is diversified under the Investment Company Act of 1940, as amended (“1940 Act”).
Investment Glidepath and Target Allocations
The target allocations along the investment glidepath for each Fund (except the Lifecycle Retirement Income Fund) will gradually become more conservative (i.e., invest less in Underlying Funds holding primarily equity securities and invest more in Underlying Funds holding primarily fixed-income
TIAA-CREF Lifecycle Funds ■ Prospectus 125
securities) over time as the target retirement year of the Fund approaches and is passed.
Investors should plan to fund their investment in a Fund up to their target retirement date. In the event that investors stop funding their investment in a Fund prior to their target retirement date, they should re-think whether they need to be in a different Fund. In addition, investors should note that each Fund will continue to have a significant level of equity exposure up to, through and after its target retirement date, and this exposure could cause significant fluctuations in the value of the Fund, depending on performance of the equity markets generally.
The following chart shows how the investment glidepath for each Fund (except the Lifecycle Retirement Income Fund) is expected to gradually move the Fund’s target allocations over time between the equity and fixed-income asset classes. The Lifecycle Retirement Income Fund has relatively fixed asset allocations that will not gradually adjust over time. The actual asset allocations of any particular Fund may differ from this chart.
The Funds’ Investment Glidepath
Future Potential Investments
A portion of each Fund may be invested in certain annuity or other contracts issued by Teachers Insurance and Annuity Association of America (“TIAA”), to the extent that it is determined that they are appropriate in light of the Funds’ desired levels of risk and potential return at the particular time, and provided that the Funds have received the necessary exemptive relief from the SEC.
Rebalancing
In order to maintain its target allocations, each of the Funds will invest incoming monies from share purchases to underweighted Underlying Funds. If cash flows are not sufficient to reestablish the current target allocation for a particular Fund, the Fund will typically rebalance its allocation among the
126 Prospectus ■ TIAA-CREF Lifecycle Funds
Underlying Funds by buying and selling Underlying Fund shares. To minimize the amount of disruption to the Funds’ portfolios, rebalancings, reallocations or adjustments to the investment glidepath may occur gradually depending on Advisors’ assessment of, among other things, fund flows and market conditions.
ADDITIONAL INFORMATION ABOUT THE FUNDS’ COMPOSITE BENCHMARK INDEX
The composite benchmark index for each of the Funds is a composite of five unmanaged benchmark indices that represent the five market sectors in which the Funds invest across the equity and fixed-income asset classes. The composite benchmark is created by applying the performance of the benchmark indices in proportion to each Fund’s target allocations across the market sectors. As a result, each Fund’s composite benchmark changes over time with changes in the Fund’s target allocations.
The five market sectors and the related benchmark indices for the Lifecycle Funds are as follows: U.S. Equity (Russell 3000® Index); International Equity (MSCI EAFE® + EM Index); Fixed-Income (Barclays Capital U.S. Aggregate Bond Index); Short-Term Fixed-Income (Barclays Capital 1-5 Year U.S. Government/Credit Index) and Inflation-Protected Assets (Barclays Capital U.S. Treasury Inflation-Protected Securities (TIPS) Index (Series –L)).
The benchmark indices for the Lifecycle Funds are described below.
Russell 3000® Index (U.S. Equity)
The Russell 3000® Index represents the 3,000 largest publicly-traded U.S. companies, based on market capitalization (according to the Russell Investment Group). Russell 3000 companies represent about 98% of the total market capitalization of the publicly-traded U.S. equity market. As of November 30, 2010, the market capitalization of companies in the Russell 3000® Index ranged from $24 million to $354.5 billion, with a mean market capitalization of $68.1 billion and a median market capitalization of $924 million. The Russell Investment Group determines the composition of the index based only on market capitalization and can change its composition at any time.
MSCI EAFE® + EM Index (International Equity)
Beginning February 1, 2011, the MSCI EAFE®+ EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector component for International Equity. The MSCI EAFE® + EM Index tracks the performance of the leading stocks in 22 MSCI developed countries outside of North America—in Europe, Australasia and the Far East – and in 21 MSCI emerging countries. The MSCI EAFE® + EM Index constructs indices country by country, then assembles the country indices into regional indices. To construct an MSCI country index, the MSCI EAFE® Index analyzes each stock in that country’s market based on its market capitalization, trading volume and significant owners.
TIAA-CREF Lifecycle Funds ■ Prospectus 127
The stocks are sorted by free float adjusted market capitalization, and the largest stocks (meeting liquidity and trading volume requirements) are selected until approximately 85% of the free float adjusted market representation of each country’s market is reached. When combined as the MSCI EAFE® + EM Index, the regional index captures approximately 85% of the free float adjusted market capitalization of 22 developed and 21 emerging countries around the world.
The MSCI EAFE® + EM Index primarily includes securities of large- and mid-cap issuers. MSCI Barra determines the composition of the index based on a combination of factors including regional/country exposure, price, trading volume and significant owners, and can change its composition at any time.
Barclays Capital U.S. Aggregate Bond Index (Fixed-Income)
The Barclays Capital U.S. Aggregate Bond Index covers the U.S. investment-grade fixed-rate bond market, including government and corporate securities, agency mortgage pass through securities, asset-backed securities, and commercial mortgage-backed securities. This index contains approximately 8,216 issues. The Barclays Capital U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. To be selected for inclusion in the Barclays Capital U.S. Aggregate Bond Index, the securities must have a minimum maturity of one year and a minimum par amount outstanding of $250 million, and the securities must be rated investment-grade or higher using the middle rating of Moody’s, S&P, and Fitch after dropping the highest and lowest available ratings.
Barclays Capital 1-5 Year U.S. Government/Credit Index (Short-Term Fixed-Income)
The Barclays Capital 1-5 Year U.S. Government/Credit Index tracks the performance primarily of U.S. Treasury and agency securities and corporate bonds with 1-5 year maturities.
Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L) (Inflation-Protected Assets)
The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L) measures the return of fixed-income securities with fixed-rate coupon payments that adjust for inflation as measured by the Consumer Price Index for all Urban Consumers (“CPI-U”). To be selected for inclusion in the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L), the securities must have a minimum maturity of one year and a minimum issue size of $500 million.
ADDITIONAL INFORMATION ABOUT THE UNDERLYING FUNDS
The following is a description of the investment objectives and principal investment strategies of the Underlying Funds of the Trust in which the Funds currently invest. For a discussion of the risks associated with these investments, see the “Additional Information on Principal Investment Risks of the Funds and
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the Underlying Funds” section. For a more detailed discussion of the investment strategies and risks of the Underlying Funds of the Trust, see the Prospectus for the Institutional Class of the TIAA-CREF Funds at www.tiaa-cref.org/prospectuses.
Fund | Investment Objective and Strategies/Benchmark | |
Growth & Income Fund | Seeks a favorable long-term total return through both capital appreciation and investment income, primarily from income-producing equity securities. Under normal circumstances, the Fund will invest primarily in (1) income- producing equity securities or (2) other securities defined by its benchmark index, the Standard & Poor’s 500® Index. | |
International Equity Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of foreign issuers. Under normal circumstances, the Fund will invest primarily in equity securities of foreign issuers in at least three countries other than the United States. The Fund’s benchmark index is the MSCI EAFE® Index. | |
Large-Cap Growth Fund | Seeks a favorable long-term return, mainly through capital appreciation, primarily from equity securities. Under normal circumstances, the Fund will invest primarily in large-cap equity securities that Advisors believes present the opportunity for growth. The Fund’s benchmark index is the Russell 1000® Growth Index. | |
Large-Cap Value Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of large domestic companies. Under normal circumstances, the Fund will invest primarily in equity securities of large domestic companies that Advisors believes appear undervalued by the market based on an evaluation of their potential worth. The Fund’s benchmark index is the Russell 1000® Value Index. | |
Mid-Cap Growth Fund | Seeks a favorable long-term total return mainly through capital appreciation, primarily from equity securities of medium-sized domestic companies. Under normal circumstances, the Fund will invest primarily in equity securities of medium-sized domestic companies as defined by its benchmark index, the Russell Midcap® Growth Index, a growth-oriented subset of the Russell Midcap Index, which represents the 800 U.S. equity securities following the top 200 U.S. equity securities based on market capitalization. | |
Mid-Cap Value Fund | Seeks a favorable long-term total return mainly through capital appreciation, primarily from equity securities of medium-sized domestic companies. Under normal circumstances, the Fund will invest primarily in equity securities of medium-sized domestic companies as defined by its benchmark index, the Russell Midcap® Value Index, a value-oriented subset of the Russell Midcap® Index. | |
Small-Cap Equity Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of smaller domestic companies. Under normal circumstances, the Fund Invests primarily in equity securities of smaller domestic companies across a wide range of sectors, growth rates and valuations, that appear to have favorable prospects for significant long-term capital appreciation. The Fund’s benchmark index is the Russell 2000® Index, which represents the largest 2,000 U.S. equities in market capitalization following the top 1,000 U.S. equities in market capitalization. |
TIAA-CREF Lifecycle Funds ■ Prospectus 129
Fund | Investment Objective and Strategies/Benchmark | |
Enhanced Large-Cap Growth Index Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of large domestic companies. Under normal circumstances, the Fund will follow an enhanced index management strategy. Advisors actively uses quantitative analysis to attempt to enhance the Fund’s performance relative to its benchmark index, the Russell 1000® Growth Index, while retaining a similar risk profile, instead of passively holding a representative basket of securities designed to match this index. The Russell 1000® Index represents the top 1,000 U.S. equity securities in market capitalization, and the Russell 1000® Growth Index represents securities within the Russell 1000® Index that have higher relative forecasted growth rates and price-to-book ratios. | |
Enhanced Large-Cap Value Index Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of large domestic companies. Under normal circumstances, the Fund will follow an enhanced index management strategy. Advisors actively uses quantitative analysis to attempt to enhance the Fund’s performance relative to its benchmark index, the Russell 1000® Value Index, while retaining a similar risk profile, instead of passively holding a representative basket of securities designed to match this index. The Russell 1000® Value Index includes companies with lower price-to-book ratios and lower expected growth values. | |
Enhanced International Equity Index Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of foreign issuers. Under normal circumstances, the Fund will follow an enhanced index management strategy. Advisors actively uses quantitative analysis to attempt to enhance the Fund’s performance relative to its benchmark index, the MSCI EAFE® Index, while retaining a similar risk profile, instead of passively holding a representative basket of securities designed to match this index. | |
Emerging Markets Equity Fund | Seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of emerging market issuers. Under normal circumstances, the Fund invests primarily in equity securities of emerging market issuers or in instruments with economic characteristics similar to emerging market equity securities. The Fund’s benchmark index is the MSCI Emerging Markets Index. | |
Bond Fund | Seeks as favorable a long-term total return through income as is consistent with preserving capital, primarily from investment-grade fixed-income securities. The Fund’s benchmark index is the Barclays Capital U.S. Aggregate Bond Index, which covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. |
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Fund | Investment Objective and Strategies/Benchmark | |
Bond Plus Fund | Seeks a favorable long-term return, primarily through high current income consistent with preserving capital. The Fund’s benchmark index is the Barclays Capital U.S. Aggregate Bond Index. The Fund’s portfolio is divided into two segments. The first segment, which makes up at least 70% of the Fund’s assets, is invested primarily in a broad-range of investment-grade bonds and fixed-income securities, including, but not limited to, corporate bonds, U.S. Treasury and agency securities and mortgage-backed and asset-backed securities. The second segment, which will not exceed 30% of the Fund’s assets, is invested in fixed-income securities and bonds with special features (such as non-investment-grade securities, emerging market fixed-income securities and convertible and preferred securities) in an effort to improve the Fund’s total return. | |
Short-Term Bond Fund | Seeks high current income consistent with preservation of capital by investing primarily in U.S. Treasury and agency securities and corporate bonds with maturities of less than 5 years. The Fund’s benchmark index is the Barclays Capital 1-5 Year U.S. Government/Credit Index. | |
High-Yield Fund | Seeks high current income and, when consistent with its primary objective, capital appreciation. Invests primarily in lower-rated, higher-yielding fixed-income securities (often called “junk” bonds), such as domestic and foreign corporate bonds, debentures, loan participations and assignments and notes, as well as convertible securities and preferred stocks. The Fund’s benchmark index is the BofA Merrill Lynch BB-B U.S. Cash Pay High Yield Constrained Index, which tracks the performance of debt securities that pay interest in cash, and have a credit rating of BB or B. | |
Inflation-Linked Bond Fund | Seeks a long-term rate of return that outpaces inflation, primarily through investment in inflation-linked bonds. Under normal circumstances, the Fund invests primarily in fixed-income securities whose returns are designed to track a specified inflation index, the Consumer Price Index for All Urban Consumers, over the life of the security. Typically, the Fund will invest in U.S. Treasury Inflation-Indexed Securities. The Fund’s benchmark index is the Barclays Capital U.S. Treasury Inflation Protected Securities Index (series L), which measures the return of fixed-income securities with fixed-rate coupon payments that adjust for inflation as measured by the Consumer Price Index for All Urban Consumers. | |
Money Market Fund | Seeks high current income consistent with maintaining liquidity and preserving capital. The Fund invests primarily in high-quality, short-term money market instruments. Generally, the Fund seeks to maintain a share value of $1.00 per share. The Fund’s benchmark index is the iMoneyNet Money Fund Report AveragesTM—All Taxable. |
ADDITIONAL INFORMATION ON PRINCIPAL INVESTMENT RISKS OF THE FUNDS AND UNDERLYING FUNDS
The assets of each of the Funds are normally allocated among Underlying Funds investing primarily in equity securities and Underlying Funds investing primarily in fixed-income securities. Each Fund is subject to asset allocation risk and, depending on the allocation of Fund assets among Underlying Funds, proportionately subject to the risks of equity securities and the risks of fixed-
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income securities. Because certain Underlying Funds use derivatives to a limited degree, the Funds have limited exposure to the risks of derivatives. Each of these risks, alone or in combination with other risks, has the potential to impact Fund performance.
Asset Allocation
The Funds may not achieve their target allocations and the selection of market sectors and Underlying Funds and the allocations among them may result in a Fund underperforming other similar funds or cause an investor to lose money. Although the allocation decisions of Advisors are intended to result in each Fund meeting its investment objective, Underlying Fund and asset class performance may differ in the future from the historical performance and assumptions upon which Advisors’ decisions are based, which could cause a Fund to not meet its investment objective. A Fund will typically rebalance its allocation among the Underlying Funds by buying and selling Underlying Fund shares. Periodic rebalancing of a Fund’s allocation can sometimes cause the Fund and the Underlying Funds to incur transactional expenses. These expenses can adversely affect performance of the Funds and the Underlying Funds.
Equity Securities
Each of the Funds invests to some degree, at different levels depending on where it is on the investment glidepath, in equity securities through certain Underlying Funds. In general, the value of equity securities fluctuates in response to the fortune of individual companies and in response to general market and economic conditions. Therefore, the value of the Funds may increase or decrease as a result of their investments in equity securities. More specifically, the Funds, or any of the Funds’ portfolio securities, typically are subject to the following principal investment risks:
· Market Risk—The risk that the price of equity securities may decline in response to general market and economic conditions or events, including conditions and developments outside of the equity markets such as significant changes in interest and inflation rates and the availability of credit. Accordingly, the value of the equity securities that an Underlying Fund holds may decline over short or extended periods of time. Any stock is subject to the risk that the stock market as a whole may decline in value, thereby depressing the stock’s price. Equity markets tend to be cyclical, with periods when prices generally rise and periods when prices generally decline. Foreign equity markets tend to reflect local economic and financial conditions and, therefore, trends often vary from country to country and region to region. During periods of unusual volatility or turmoil in the equity markets, the Funds may undergo an extended period of decline.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the security’s value over short or extended periods of time. In
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times of market turmoil, perceptions of a company’s credit risk can quickly change and even large, well-established companies may deteriorate rapidly with little or no warning.
· Style Risk—Some of the Underlying Funds in which the Lifecycle Funds invest use either a growth or value investing style. A fund that uses either a growth investing or a value investing style entails the risk that equity securities representing either style may be out of favor in the marketplace for various periods of time, and result in underperformance relative to the broader market sector or significant declines in an Underlying fund’s portfolio value.
· Risks of Growth Investing—Underlying Funds with a growth investing style, like the Large-Cap Growth Fund or the Enhanced Large-Cap Growth Index Fund, may be invested in growth stocks. Due to their relatively high valuations, growth stocks are typically more volatile than value stocks. For example, the price of a growth stock may experience a larger decline on a forecast of lower earnings, or a negative event or market development, than would a value stock. Because the value of growth companies is often a function of their expected earnings growth, there is a risk that such earnings growth may not occur or cannot be sustained.
· Risks of Value Investing—Underlying Funds with a value investing style, like the Large-Cap Value Fund or the Enhanced Large-Cap Value Index Fund, may be invested in securities believed to be undervalued. Securities believed to be undervalued are subject to the risks that: (1) the issuer’s potential business prospects are not realized; (2) their potential values are never recognized by the market; and (3) due to unanticipated or unforeseen problems associated with the issuer or industry, they were appropriately priced (or over-priced) when acquired and therefore do not perform as anticipated.
· Large-Cap Risk—The risk that, by focusing on securities of larger companies, an Underlying Fund may have fewer opportunities to identify securities that the market misprices and that these companies may grow more slowly than the economy as a whole or not at all. Also, larger companies may fall out of favor with the investing public for market, political and economic conditions, including for reasons unrelated to their businesses or economic fundamentals.
· Mid-Cap Risk—Securities of medium-sized companies may experience greater fluctuations in price than the securities of larger companies. From time to time, medium-sized company securities may have to be sold at a discount from their current market prices or in small lots over an extended period, since they may be harder to sell than larger-cap securities. In addition, it may sometimes be difficult to find buyers for securities of medium-sized companies that an Underlying Fund wishes to sell when the
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company is not perceived favorably in the marketplace or during periods of poor economic or market conditions. Such companies may be subject to certain business risks due to their smaller size, limited markets and financial resources, narrow product lines and frequent lack of depth of management. The costs of purchasing and selling securities of medium-sized companies are sometimes greater than those of more widely traded securities.
· Small-Cap Risk—Securities of small-sized companies may experience greater fluctuations in price than the securities of larger companies. From time to time, small-sized company securities may have to be sold at a discount from their current market prices or in small lots over an extended period, since they may be harder to sell than larger-cap securities. In addition, it may sometimes be difficult to find buyers for securities of small-sized companies that an Underlying Fund wishes to sell when the company is not perceived favorably in the marketplace or during periods of poor economic or market conditions. Such companies may be subject to certain business risks due to their smaller size, limited markets and financial resources, narrow product lines and frequent lack of depth of management. The costs of purchasing and selling securities of small-sized companies are sometimes greater than those of more widely traded securities.
· Foreign Investment Risk—Each of the Lifecycle Funds may include an allocation to the International Equity Fund, Enhanced International Equity Index Fund and the Emerging Markets Equity Fund. Each of these Underlying Funds invests primarily in foreign securities. Foreign investments, which may include securities of foreign issuers, securities or contracts traded or acquired in non-U.S. markets or on non-U.S. exchanges, or securities or contracts payable or denominated in non-U.S. currencies, can involve special risks that arise from one or more of the following events or circumstances: (1) changes in currency exchange rates; (2) possible imposition of market controls or currency exchange controls; (3) possible imposition of withholding taxes on dividends and interest; (4) possible seizure, expropriation or nationalization of assets; (5) more limited foreign financial information or difficulties interpreting it because of foreign regulations and accounting standards; (6) lower liquidity and higher volatility in some foreign markets; (7) the impact of political, social or diplomatic events; (8) the difficulty of evaluating some foreign economic trends; and (9) the possibility that a foreign government could restrict an issuer from paying principal and interest to investors outside the country. Brokerage commissions and custodial and transaction costs are often higher for foreign investments, and it may be harder to use foreign laws and courts to enforce financial or legal obligations. The risks described above often increase in countries with emerging markets
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have
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more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Index Risk—Each of the Lifecycle Funds may invest in the Enhanced International Equity Index Fund, the Enhanced Large-Cap Growth Index Fund, and the Enhanced Large-Cap Value Index Fund (the "Enhanced Index Funds") or in the other Underlying Funds that may be managed to a specified index (each, an "Underlying Index Fund" and collectively, the "Underlying Index Funds".) Index risk is the risk that the performance of an Underlying Index Fund will not correspond to, or may underperform, its benchmark index for any period of time. Although each Underlying Index Fund generally attempts to use the investment performance of its respective index as a baseline, it may not duplicate the exact composition of that index. In addition, unlike a mutual fund, the returns of an index are not reduced by investment and other operating expenses, and therefore, the ability of an Underlying Index Fund to match the performance of its index is adversely affected by the costs of buying and selling investments as well as other expenses. Seeking enhanced results relative to an index may cause an Enhanced Index Fund to actually underperform its index. Therefore, none of the Underlying Index Funds can guarantee that its performance will match or exceed its index for any period of time.
· Enhanced Index Risk— Certain Underlying Funds that are enhanced index funds may also underperform their benchmark indices due to differences between the Underlying fund and the benchmark index.
· Active Management Risk—The risk that the performance of Underlying Funds that are actively managed, in whole or in part, reflects in part the ability of the portfolio manager(s) to make active, qualitative investment decisions that are suited to achieving the Underlying Funds' investment objective. As a result of securities selection, the Underlying Funds could underperform its benchmark or other mutual funds with similar investment objectives.
· Quantitative Analysis Risk—The risk that securities selected for Underlying Funds that are actively managed, in whole or in part, according to a quantitative analysis methodology can perform differently from the market as a whole based on the model and the factors used in the analysis, the weight placed on each factor and changes in the factor’s historical trends.
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Fixed-Income Securities
A portion of each of the Funds is allocated to Underlying Funds investing primarily in fixed-income securities. An investment in fixed-income securities typically will be subject to the following investment risks described below:
· Income Volatility Risk—Income volatility refers to the degree and speed with which changes in prevailing market interest rates diminish the level of current income from a portfolio of fixed-income securities. The risk of income volatility is that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
• Credit Risk (a type of Company Risk)—The risk that a decline in a company’s financial position may prevent it from making principal and interest payments on fixed-income securities when due. Credit risk relates to the possibility that the issuer could default on its obligations, thereby causing an Underlying Fund to lose its investment in the security. Credit risk is heightened in times of market turmoil when perceptions of a company’s credit risk can quickly change and even large, well-established companies may deteriorate rapidly with little or no warning. Credit risk is also heightened in the case of investments in lower-rated, high-yield fixed-income securities because their issuers are typically in weak financial health and their ability to pay interest and principal is uncertain. Compared to issuers of investment-grade securities, they are more likely to encounter financial difficulties and to be materially affected by such difficulties. High-yield securities may also be relatively more illiquid, therefore they may be more difficult to purchase or sell.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—Trading activity in fixed-income securities in which the Underlying invest may be dramatically reduced or cease at any time, whether due to general market turmoil, problems experienced by a single company or a market sector or other factors. In such cases, it may be difficult for the Underlying to properly value assets represented by such securities. In addition, the Underlying may not be able to purchase or sell a security at a price deemed to be attractive, if at all.
· Call Risk—The risk that an issuer will redeem a fixed-income security prior to maturity. This often happens when prevailing interest rates are lower than the rate specified for the fixed-income security. If a fixed-income security is called early, an Underlying Fund may not be able to benefit fully from the increase in value that other fixed-income securities experience when interest rates decline. Additionally, an Underlying Fund would likely have to reinvest the payoff proceeds at current yields, which are likely to be lower than the fixed-income security in which the Fund originally invested.
· Interest Rate Risk (a type of Market Risk)—The risk that the value or yield of fixed-income securities may decline if interest rates change. In general, when prevailing interest rates decline, the market value of fixed-income securities (particularly those paying a fixed rate of interest) tends to
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increase. Conversely, when prevailing interest rates increase, the market value of fixed-income securities (particularly those paying a fixed rate of interest) tends to decline. Depending on the timing of the purchase of a fixed-income security and the price paid for it, changes in prevailing interest rates may increase or decrease the security’s yield. Fixed-income securities with longer durations tend to be more sensitive to interest rate changes than shorter-term securities.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing an Underlying Fund to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in income. These risks are normally present in mortgage-backed securities and other asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can shorten depending on homeowner prepayment activity. A rise in the prepayment rate and the resulting decline in duration of fixed-income securities held by an Underlying Fund can result in losses to investors in an Underlying Fund.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates, resulting in less income than potentially available. These risks are normally present in mortgage-backed securities and other asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can lengthen depending on homeowner prepayment activity. A decline in the prepayment rate and the resulting increase in duration of fixed-income securities held by an Underlying Fund can result in losses to investors in an Underlying Fund.
· Special Risks Relating to Inflation-Indexed Bonds—The risk that market values of inflation-indexed bonds held by an Underlying Fund may be adversely affected by a number of factors, including changes in the market’s inflation expectations, changes in real rates of interest or declines in inflation (or deflation). There is a risk that interest payments in inflation-indexed bonds fall because of a decline in inflation (or deflation). In addition, the CPI-U may not accurately reflect the true rate of inflation. If the market perceives that any of these events have occurred, then the market value of those bonds could be adversely affected.
· Active Management Risk—The risk that the performance of Underlying Funds that are actively managed, in whole or in part, reflects in part the ability of the portfolio manager(s) to make active, qualitative investment decisions that are suited to achieving the Underlying Funds' investment objective. As a result of securities selection, the Underlying Funds could underperform its benchmark or other mutual funds with similar investment objectives.
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Derivatives
· Derivatives Risk—The risks associated with investing in derivatives by the Underlying Funds may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. Derivatives such as swaps are subject to risks such as liquidity risk, interest rate risk, market risk, and credit risk. These derivatives involve the risk of mispricing or improper valuation and the risk that the prices of certain options, futures, swaps and other types of derivative instruments, and their prices, may not correlate perfectly with the prices or performance of the underlying security, currency, rate, index or other asset. Certain derivatives present the risk of default by the other party to the contract, and some derivatives are, or may suddenly become, illiquid. Some of these risks exist for futures and options which may trade on established markets. Unanticipated changes in interest rates, securities prices or currency exchange rates may result in poorer overall performance of the Underlying Funds than if it had not entered into derivatives transactions. The potential for loss as a result of investing in derivatives, and the speed at which such losses can be realized, are greater than investing directly in the underlying security or other instrument.
In addition to the principal investment risks set forth above, there are other risks associated with investing in the Funds and in fixed-income and equity securities that are discussed in the “Summary Information” sections above and in the Fund’s SAI, which risks may include some of the risks previously identified for fixed-income and equity securities.
No one can assure that the Fund or an Underlying Fund will achieve its investment objective and investors should not consider any one fund to be a complete investment program. As with all mutual funds, there is a risk that an investor could lose money by investing in a Fund.
NON-PRINCIPAL INVESTMENT STRATEGIES OF UNDERLYING FUNDS
The Equity Funds
The Underlying Funds of the Trust that invest primarily in equity securities—the Growth & Income Fund, the Mid-Cap Growth Fund, the Mid-Cap Value Fund, the Enhanced Large-Cap Growth Index Fund, the Enhanced Large-Cap Value Index Fund, the Large-Cap Growth Fund, the Large-Cap Value Fund, the Small-Cap Equity Fund, the International Equity Fund, the Enhanced International Equity Index Fund, and the Emerging Markets Equity Fund (collectively, the “Equity Funds”)—may also invest in short-term debt securities of the same type as those held by the TIAA-CREF Money Market Fund and other kinds of short-term instruments. These short-term investments help the Equity Funds maintain liquidity, use cash balances effectively, and take advantage of attractive investment opportunities. The Equity Funds also may invest up to 20% of their assets in fixed-income securities. The Equity Funds
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may also manage cash by investing in money market funds or other short-term investment company securities.
Each Equity Fund also may buy and sell (1) put and call options on securities of the types they each may invest in and on securities indices composed of such securities, (2) futures contracts on securities indices composed of securities of the types in which each may invest, and (3) put and call options on such futures contracts. The Equity Funds may use such options and futures contracts for hedging, cash management and increasing total return. Futures contracts permit an Underlying Fund to gain exposure to groups of securities and thereby have the potential to earn returns that are similar to those that would be earned by direct investments in those securities or instruments. To manage currency risk, the Equity Funds also may enter into forward currency contracts and currency swaps and may buy or sell put and call options and futures contracts on foreign currencies.
Where appropriate futures contracts do not exist, or if Advisors deems advisable for other reasons, an Equity Fund may invest in investment company securities, such as ETFs. The Lifecycle Funds may also invest in ETFs, as well as ETNs, for investment exposure, cash management hedging or short-term defensive purposes. ETFs and ETNs will be subject to the risks associated with the types of asset classes, securities or sectors that they track, while ETNs, which are structured as fixed-income obligations, will also be subject to the general risks of fixed-income securities, including credit risk. When the Equity Funds or the Funds invest in ETFs, ETNs or other Underlying Funds that are not offered by the Trust (“Unaffiliated Underlying Funds”), they will bear a proportionate share of expenses charged by these pools or products to their investors.
The Equity Funds may also invest in derivatives and other similar financial instruments, such as equity swaps (including contracts for difference ("CFDs"), an arrangement where the return is linked to the price movement of an underlying security or a stock market index) and equity-linked fixed-income securities, so long as these derivatives and financial instruments are consistent with a particular Fund’s investment objective, restrictions and policies, as well as current regulations.
The Fixed-Income Funds
The Underlying Funds of the Trust that invest primarily in fixed-income securities—the Bond Fund, the Bond Plus Fund, the Inflation-Linked Bond, the High-Yield Fund and the Short-Term Bond Fund (collectively, the “Fixed-Income Funds”)—may make certain other investments, but not as principal strategies. For example, these Funds may invest in interest-only and principal-only mortgage-backed securities. These instruments have unique characteristics and are more sensitive to prepayment risk and extension risk than traditional mortgage-backed securities. Similarly, the Fixed-Income Funds may also buy and sell put and call options, futures contracts, and options on
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futures. The Fixed-Income Funds intend to use options and futures primarily as a hedging technique or for cash management as well as risk management. In seeking to manage currency risk, these Fixed-Income Funds can also enter into forward currency contracts, and buy or sell options and futures on foreign currencies, or enter into foreign currency contracts. The Fixed-Income Funds can also buy and sell swaps and options on swaps, so long as these are consistent with each Fixed-Income Fund’s investment objective, restrictions and policies, as well as current regulations.
Investments for Temporary Defensive Purposes
Each Underlying Fund may, for temporary defensive purposes, invest all of its assets in cash and money market instruments. In doing so, the Underlying Fund may be successful in reducing market losses but may otherwise fail to achieve its investment objective.
A description of the Funds’ policies and procedures with respect to the disclosure of their portfolio holdings is available in the Funds’ SAI.
While each Fund will normally seek to invest in Underlying Funds for the long term, it may frequently rebalance those holdings with the goal of staying close to its projected target allocation. Therefore, a Fund may sell shares of Underlying Funds regardless of how long they have been held. Although a Fund bears no brokerage commissions when it buys or sells shares of Underlying Funds of the Trust, it may bear brokerage commissions or other transaction costs when it transacts in shares of Unaffiliated Underlying Funds. A “high portfolio turnover rate” for a Fund with respect to its holdings of Unaffiliated Underlying Funds generally will result in greater brokerage commission expenses or other transaction costs borne by the Fund and, ultimately, by shareholders. The portfolio turnover rate of the Fund during recent fiscal periods is provided in the Financial Highlights. The Funds are not subject to a specific limitation on portfolio turnover and are generally not managed to minimize tax burdens of shareholders.
An Underlying Fund that engages in active and frequent trading of portfolio securities will have a correspondingly higher “portfolio turnover rate.” A high portfolio turnover rate for an Underlying Fund generally will result in greater brokerage commission expenses borne by the Fund and, ultimately, by shareholders. Also, Underlying Funds with high turnover rates may be more likely to generate capital gains that must be distributed to the Fund, and ultimately to shareholders, as taxable income. None of the Underlying Funds of the Trust are subject to a specific limitation on portfolio turnover, and securities of each Underlying Fund may be sold at any time such sale is deemed advisable for investment or operational reasons.
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Each Fund offers Retirement, Premier and Institutional Class shares in this Prospectus. The Lifecycle Retirement Income Fund also offers Retail Class shares. Each Fund’s investments are held by the Fund as a whole, not by a particular share class, so an investor’s money will be invested the same way no matter which class of shares is held. However, there are differences among the fees and expenses associated with each class and not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Please contact the Funds’ distributor, Teachers Personal Investors Services, Inc., if you have questions or would like assistance in determining which class is right for you.
Advisors manages the assets of the Trust, under the supervision of the Board of Trustees. Advisors is an indirect wholly owned subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching and is the companion organization of College Retirement Equities Fund (“CREF”), the first company in the United States to issue a variable annuity. Advisors is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940. Advisors also manages the investments of TIAA Separate Account VA-1 and the TIAA-CREF Life Funds. Through an affiliated investment adviser, TIAA-CREF Investment Management, LLC (“Investment Management”), the personnel of Advisors also manage the investment accounts of CREF. As of December 31, 2010, Advisors and Investment Management together had approximately $225 billion of registered investment company assets under management. Advisors is located at 730 Third Avenue, New York, NY 10017-3206.
TIAA-CREF entities sponsor an array of financial products for retirement and other investment goals. For some of these products, for example, the investment accounts of CREF, TIAA or its subsidiaries perform services “at cost.” The Funds offered in the Prospectus, however, pay the management fees and other expenses that are described in the table on Fees and Expenses in the Prospectus. The management fees paid by the Fund to Advisors are intended to compensate Advisors for its services to the Fund and are not limited to the reimbursement of Advisors’ costs. Thus, under this arrangement, Advisors can earn a profit or incur a loss on the services which it renders to the Fund. The Fund also pays Advisors for certain administrative services that Advisors provides to the Fund on an at-cost basis.
Advisors manages the assets of the Fund pursuant to an investment management agreement with the Trust that was approved by shareholders of
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the Fund (the “Management Agreement”). Advisors’ duties include, among other things, providing the Fund with investment research, advice and supervision, furnishing an investment program for the Fund, determining which securities or other investments to purchase, sell or exchange and providing or obtaining any other necessary services to manage, acquire or dispose of securities, cash or other investments. Advisors also supervises and acts as liaison among the various service providers to the Fund, such as the custodian and transfer agent.
Under the terms of an Investment Management Agreement between the Trust and Advisors, Advisors is entitled to a fee at an annual rate of 0.10% of the average daily net assets of each Lifecycle Fund. Advisors has contractually agreed to waive this management fee on the Lifecycle Funds. This waiver will remain in effect until September 30, 2012 unless changed with approval of the Board of Trustees. Due to these waivers, Advisors received no management fees from the Lifecycle Funds during the 2010 fiscal year. Advisors also receives management fees as the investment adviser to the Underlying Funds.
In addition, Advisors has contractually agreed to reimburse each Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.25% of average daily net assets for Retail Class shares; (ii) 0.25% of average daily net assets for Retirement Class shares; (iii) 0.15% of average daily net assets for Premier Class shares; and (iv) 0.00% of average daily net assets for Institutional Class shares of the Funds. These expense reimbursement arrangements will continue through at least September 30, 2012, unless changed with approval of the Board of Trustees. Each Fund also pays Advisors for certain administrative services Advisors provides to the Funds on at at-cost basis.
A discussion regarding the basis for the Board of Trustees’ most recent approval of the Funds’ Management Agreement is available in the Funds’ semiannual shareholder report for the fiscal period ended March 31, 2010. For a free copy of the Funds’ shareholder report, please call 800 842-2776, visit the Funds’ website at www.tiaa-cref.org or visit the SEC’s website at www.sec.gov.
The Funds are managed by a team of managers, whose members are responsible for the day-to-day management of the Fund, with expertise in the area(s) applicable to the Fund’s investments. Certain team members are, for example, principally responsible for selecting appropriate investments for the Fund and others are principally responsible for asset allocation. The following is a list of members of the management team primarily responsible for managing the Fund’s investments, along with their relevant experience. The members of the team may change from time to time.
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Name & Title | Portfolio Role/ | Experience Over | Total
Experience | ||
At |
| On | |||
LIFECYCLE FUNDS | |||||
John M. Cunniff, CFA | Asset Allocation | Advisors, TIAA and its affiliates— | 2006 | 1992 | 2006 |
Hans L. Erickson, CFA | Asset
Allocation | Advisors, TIAA and its affiliates— | 1996 | 1988 | 2006 |
Pablo
Mitchell | Asset Allocation | Advisors, TIAA and its affiliates— | 2004 | 2002 | 2006 |
The Funds’ SAI provides additional disclosure about the compensation structure of each of the Funds’ portfolio managers, the other accounts they manage, total assets in those accounts and potential conflicts of interest, as well as the portfolio managers’ ownership of shares of the Funds they manage.
OTHER SERVICES
Under the terms of the Management Agreement, responsibility for payment of administrative expenses, including transfer agency, dividend disbursing, accounting, administrative and shareholder services, is allocated either directly to the Fund or to Advisors.
The Funds have a separate service agreement with Advisors (the “Retirement Class Service Agreement”) pursuant to which Advisors provides or arranges for the provision of administrative and shareholder services for Retirement Class shares, including services associated with the maintenance of Retirement Class shares on retirement plan or other platforms. Under the Retirement Class Service Agreement, the Retirement Class of each Fund pays a monthly fee to Advisors at an annual rate of 0.25% of average daily net assets, which is reflected as part of “other expenses” in the Fee and Expenses section of this Prospectus. Advisors may rely on affiliated or unaffiliated persons to fulfill its obligations under the Retirement Class Service Agreement.
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DISTRIBUTION AND SERVICES ARRANGEMENTS
ALL CLASSES
Teachers Personal Investors Services, Inc. (“TPIS”) distributes the different classes of the Funds’ shares. TPIS may enter into agreements with other intermediaries, including its affiliated broker/dealer, TIAA-CREF Individual & Institutional Services, LLC (“Services”), to sell shares of the Funds. For Premier Class and Retail Class shares, TPIS may utilize some or all of the 12b-1 fees it receives from Premier Class and Retail Class shares to pay such other intermediaries for expenses incurred in connection with the sale, promotion and/or servicing of Premier Class and Retail Class shares. In addition TPIS, Services or Advisors may pay intermediaries out of its own assets to support the distribution and/or servicing of Fund shares. Payments to intermediaries may include payments to certain third-party broker/dealers and financial advisors, including fund supermarkets, to provide access to their fund distribution platforms, as well as to provide transaction processing or administrative services.
RETAIL CLASS
TPIS distributes the Funds’ Retail Class shares. The Funds have adopted a distribution plan under Rule 12b-1 with respect to Retail Class shares that allows the Funds to reimburse TPIS and other entities for expenses related to the sale and promotion of Retail Class shares.
Under the plan, the Funds may reimburse TPIS or another entity up to 0.25% of average daily net assets attributable to Retail Class shares for distribution and promotion-related expenses as well as shareholder services. Advisors, TPIS and their affiliates, at their own expense, may also continue to pay for distribution expenses of Retail Class shares. Because Rule 12b-1 plan fees are paid out of the Funds’ assets on an ongoing basis, over time they will increase the cost of your investment in the Fund.
More information about the Funds’ distribution and services arrangements for Retail Class shares appears in the Funds’ SAI.
RETIREMENT CLASS
TPIS distributes the Funds’ Retirement Class shares. The Funds have adopted a distribution plan under Rule 12b-1 with respect to Retirement Class shares that allows the Funds to reimburse TPIS for expenses related to the sale and promotion of Retirement Class shares and providing ongoing servicing and maintenance of accounts of the Funds’ shareholders, including sales and other expenses relating to the servicing efforts.
Under the plan, the Funds may reimburse TPIS up to 0.05% of average daily net assets attributable to Retirement Class shares for distribution and promotion-related expenses as well as shareholder services. Because Rule 12b-1 plan fees are paid out of the Funds’ assets on an ongoing basis, over time they
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will increase the cost of your investment in the Funds. TPIS has contractually agreed not to seek any reimbursements from the Funds under the Distribution Plan through at least September 30, 2012. This agreement may be amended or terminated at any time by TPIS with the approval of the Board of Trustees.
More information about the Funds’ distribution and services arrangements for Retirement Class shares appears in the Funds’ SAI.
PREMIER CLASS
TPIS distributes the Funds’ Premier Class shares. The Funds have adopted a distribution plan under Rule 12b-1 with respect to Premier Class under which the Funds pay TPIS an annual fee to compensate TPIS for TPIS’ services related to the sale, promotion and/or servicing of Premier Class shares.
Under the plan, the Funds pay TPIS at the annual rate of 0.15% of average daily net assets attributable to Premier Class shares for distribution and promotion-related activities, as well as shareholder and account maintenance services. Advisors, TPIS and their affiliates, at their own expense, may also continue to pay for distribution, promotional and shareholder account maintenance expenses of Premier Class shares. Because Rule 12b-1 plan fees are paid out of the Funds’ assets on an ongoing basis, over time they will increase the cost of your investment in the Fund.
More information about the Funds’ distribution and services arrangements for Premier Class shares appears in the Funds’ SAI.
INSTITUTIONAL CLASS
TPIS distributes the Funds’ Institutional Class shares. More information about the Funds’ distribution and services arrangements for Institutional Class shares appears in the Funds’ SAI.
Each Fund determines its net asset value (“NAV”) per share, or share price, on each day the New York Stock Exchange (the “NYSE”) is open for business. The NAV for each Fund is calculated as of the time when regular trading closes on the NYSE (generally, 4:00 p.m. Eastern Time or at such earlier time that regular trading on the NYSE closes prior to 4 p.m. Eastern Time). The Funds do not price their shares on days that the NYSE is closed. The NAV per share for each class is determined by dividing the value of the Fund’s assets attributable to such class, less all liabilities attributable to such class, by the total number of shares of the class outstanding. The assets of each Fund consist primarily of shares of the Underlying Funds, which are valued at their respective NAVs in the case of mutual funds. The values of any shares of Unaffiliated Underlying Funds held by a Fund are based on the market value of the shares. Therefore, the share price of each of the Funds is determined based on the NAV per share or market value per share of each of the Underlying Funds (and the value of any
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other assets and liabilities of the Funds), subject to the fair value pricing procedures described below.
To value securities and other instruments held by the Underlying Funds of the Trust (other than for the Money Market Fund), such Underlying Funds generally use market quotations or values obtained from independent pricing services to value such assets. Fixed-income securities with remaining maturities of 60 days or less that are held by the Underlying Funds of the Trust are generally valued using their amortized cost. If market quotations or values from independent pricing services are not readily available or are not considered reliable, the Underlying Funds of the Trust will use a security’s “fair value,” as determined in good faith using procedures approved by the Board of Trustees. Such Underlying Funds may also use fair value if events that have a significant effect on the value of an investment (as determined in Advisors’ sole discretion) occur between the time when its price is determined and the time a Fund’s NAV is calculated. Like the Funds, the Underlying Funds of the Trust do not price their shares on dates when the NYSE is closed. This remains the case for Underlying Funds of the Trust that invest in foreign securities that are primarily listed on foreign exchanges that trade on days when such Underlying Funds do not price their shares, even though such securities may continue to trade and their values may fluctuate when the NYSE is closed. For example, the Underlying Funds of the Trust might use a domestic security’s fair value when the exchange on which the security is principally traded closes early or when trading in the security is halted and does not resume before an Underlying Fund’s NAV is calculated. The use of fair value pricing can involve reliance on quantitative models or individual judgment, and may result in changes to the prices of portfolio securities that are used to calculate the NAV of an Underlying Fund of the Trust. Although the Underlying Funds of the Trust fair value portfolio securities on a security-by-security basis, those that hold foreign portfolio securities may see more of their portfolio securities fair valued more frequently than other Underlying Funds that do not hold foreign securities.
Fair value pricing most commonly occurs with securities that are primarily traded outside of the United States. Fair value pricing may occur, for instance, when there are market movements in the U.S. after foreign markets have closed, and there is the expectation that securities traded on foreign markets will adjust based on market movements in the U.S. when their markets open the next day. In these cases, the Underlying Funds of the Trust may fair value certain foreign securities when it is believed that the last traded price on the foreign market does not reflect the value of that security at 4:00 p.m. Eastern Time. This may have the effect of decreasing the ability of market timers to engage in “stale price arbitrage,” which takes advantage of the perceived difference in price from a foreign market closing price. For these foreign securities, the Underlying Fund uses a fair value pricing service approved by the Underlying Fund's Board of Trustees. This pricing service employs quantitative models to value foreign equity securities in order to adjust for stale pricing,
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which may occur between the close of certain foreign exchanges and the close of the NYSE. Fair value pricing is subjective in nature and the use of fair value pricing by the Underlying Fund may cause the NAV of the Underlying Fund’s shares to differ significantly from the NAV that would have been calculated using market prices at the close of the foreign exchange on which a portfolio security is primarily traded.
While using a fair value price for foreign securities decreases the ability of market timers to make money by exchanging into or out of an affected Underlying Fund to the detriment of longer-term shareholders, it may reduce some of the certainty in pricing obtained by using actual market close prices.
The values of any securities of unaffiliated Underlying Funds held by a Fund are based on the market value of the securities. The Funds use fair value pricing to value these securities under the same circumstances that the Underlying Funds use fair value pricing to value their portfolio securities, as described above. The use of fair value pricing can involve reliance on quantitative models or individual judgment, and may result in changes to the prices of portfolio securities that are used to calculate a Fund’s NAV.
Money market instruments (other than those held by a money market Underlying Fund) with maturities of more than 60 days are valued using market quotations or independent pricing sources or derived from a pricing matrix that has various types of money market instruments along one axis and various maturities along the other.
Each Fund expects to declare and distribute to shareholders substantially all of its net investment income and net realized capital gains, if any. The amount distributed will vary according to the income received from securities held by the Fund and capital gains realized from the sale of securities. Each Fund plans to pay dividends on an annual basis (except for the Retirement Income Fund, which plans to pay dividends on a quarterly basis). Each Fund intends to pay net capital gains, if any, annually.
Dividends and capital gain distributions paid to Premier Class and Retirement Class shareholders who hold their shares through a TIAA-CREF administered plan or custody account will automatically be reinvested in additional same class shares of the particular Fund. All other Premier and Retirement Class shareholders, as well as Institutional and Retail Class shareholders, may elect from the following distribution options (barring any restrictions from the intermediary or plan through which such shares are held):
1. Reinvestment Option, Same Fund. Your dividend and capital gain distributions are automatically reinvested in additional shares of the Fund. Unless you elect otherwise, this will be your default distribution option.
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2. Reinvestment Option, Different Fund. Your dividend and capital gain distributions are automatically reinvested in additional shares of another Fund in which you already hold shares.
3. Income-Earned Option. Your long-term capital gain distributions are automatically reinvested, but you will be sent a check for each dividend and short-term capital gain distribution.
4. Capital Gains Option. Your dividend and short-term capital gain distributions are automatically reinvested, but you will be sent a check for each long-term capital gain distribution.
5. Cash Option. A check will be sent for your dividend and each capital gain distribution.
On each Fund’s distribution date, the Fund makes distributions on a per share basis to the shareholders who hold and have paid for Fund shares on the record date. The Funds do this regardless of how long the shares have been held. This means that if you buy shares just before or on a record date, you will pay the full price for the shares and then you may receive a portion of the price back as a taxable distribution (see the discussion of “Buying a dividend” below under “Taxes”). Cash distribution checks will be mailed within seven days of the distribution date.
Shareholders who hold their shares through a variable insurance or annuity product, an employee benefit plan or through an intermediary may be subject to restrictions on their distribution payment options imposed by the product, plan or intermediary. Please contact the variable insurance or annuity product issuer or your plan sponsor or intermediary for more details.
As with any investment, you should consider how your investment in any Fund will be taxed.
Taxes on dividends and distributions. Unless you are tax-exempt or hold Fund shares in a tax-deferred account, you are subject to federal income tax on dividends and taxable distributions each year. Your dividends and taxable distributions generally are taxable when they are paid, whether you take them in cash or reinvest them. However, distributions declared in October, November or December of a year and paid in January of the following year are taxable as if they were paid on December 31 of the prior year.
For federal tax purposes, income and short-term capital gain distributions from a Fund are taxed as ordinary income, and long-term capital gain distributions are taxed as long-term capital gains. Every January, a statement showing the taxable distributions paid to you in the previous year from the Fund will be sent to you and the Internal Revenue Service (“IRS”) . Long-term capital gain distributions generally may be taxed at a maximum federal rate of 15% to individual investors (or at 0% to individual investors who are in the 10% or 15% tax bracket). These rates are currently scheduled to apply through 2012.
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Whether or not a capital gain distribution is considered long-term or short-term depends on how long the Fund held the securities the sale of which led to the gain.
A portion of ordinary income dividends paid by a Fund to individual investors may constitute “qualified dividend income” that is subject to the same maximum tax rates as long-term capital gains. The portion of a dividend that will qualify for this treatment will depend on the aggregated qualified dividend income received by a Fund. Notwithstanding this, certain holding period requirements with respect to a shareholder’s shares in a Fund may apply to prevent the shareholder from treating any portion of a dividend as “qualified dividend income.” The favorable treatment of qualified dividends is currently scheduled to expire after 2012. Additional information about this can be found in the Funds’ SAI.
Taxes on transactions. Unless a transaction involves Fund shares held in a tax-deferred account, redemptions (sales), including exchanges to other funds, may also give rise to capital gains or losses. The amount of any capital gain or loss will be the difference, if any, between the adjusted cost basis of your shares and the price you receive when you sell or exchange them. In general, a capital gain or loss will be treated as a long-term capital gain or loss if you have held your shares for more than one year.
Whenever you sell shares of a Fund, you will be sent a confirmation statement showing how many shares you sold and at what price. However, you or your tax preparer must determine whether this sale resulted in a capital gain or loss and the amount of tax to be paid on any gain. Be sure to keep your regular account statements; the information they contain will be essential in calculating the amount of your capital gains or losses.
Backup withholding. If you fail to provide a correct taxpayer identification number or fail to certify that it is correct, the Funds are required by law to withhold 28% of all the distributions and redemption proceeds paid from your account. The Funds are also required to begin backup withholding if instructed by the IRS to do so.
Buying a dividend. If you buy shares just before a Fund deducts a distribution from its net asset value, you will pay the full price for the shares and then receive a portion of the price back in the form of a taxable distribution. This is referred to as “buying a dividend.” For example, assume you bought shares of a Fund for $10.00 per share the day before the Fund paid a $0.25 dividend. After the dividend was paid, each share would be worth $9.75, and, unless you hold your shares through a tax-deferred arrangement such as 401(a), 401(k) or 403(b) plans or IRAs, you would have to include the $0.25 dividend in your gross income for tax purposes.
Effect of foreign taxes. Foreign governments may impose taxes on the Fund and its Underlying Funds and its investments and these taxes generally will reduce the Fund’s distributions. If the Fund qualifies to pass through a credit for such taxes paid and elects to do so, an offsetting tax credit or deduction may be
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available to you if you maintain a taxable account. If so, your tax statement will show more taxable income than was actually distributed by the Fund, but will also show the amount of the available offsetting credit or deduction.
Other restrictions. There are tax requirements that all mutual funds must follow in order to avoid federal taxation. In its effort to adhere to these requirements, a Fund or an Underlying Fund may have to limit its investment in some types of instruments.
Special considerations for certain institutional investors. If you are a corporate investor, a portion of the dividends from net investment income paid by a Fund may qualify for the corporate dividends-received deduction. The portion of the dividends that will qualify for this treatment will depend on the aggregate qualifying dividend income that the Fund receives from the Underlying Funds. Certain holding period and debt financing restrictions may apply to corporate investors seeking to claim the deduction.
Taxes related to Employee Benefit Plans or IRAs. Generally, individuals are not subject to federal income tax in connection with shares held (or that are held on their behalf) in participant or custody accounts under Code section 401(a) employee benefit plans (including 401(k) and Keogh plans), Code section 403(b) or 457 employee benefit plans, or IRAs. Distributions from such plan participant or custody accounts may, however, be subject to ordinary income taxation in the year of the distribution. For information about the tax aspects of your plan or IRA or Keogh account, please consult your plan administrator, TIAA-CREF or your tax advisor.
Other Tax Matters. Certain investments of the Funds, including certain debt instruments, foreign securities and shares of other investment funds could affect the amount, timing and character of distributions you receive and could cause a Fund to recognize taxable income in excess of the cash generated by such investments (which may require a Fund to liquidate other investments in order to make required distributions).
This information is only a brief summary of certain federal income tax information about your investment in a Fund. The investment may have state, local or foreign tax consequences, and you should consult your tax advisor about the effect of your investment in a Fund in your particular situation. Additional tax information can be found in the Funds’ SAI.
YOUR ACCOUNT: PURCHASING, REDEEMING
OR EXCHANGING
SHARES
Types of Accounts
Retail Class shares of the Fund are available for purchase in the following types of accounts:
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· Individual accounts (for one person) or Joint accounts (more than one person) including Transfer on Death (TOD) accounts (see below for more details).
· Financial advisor accounts.
· Trust accounts (other than foreign trust accounts).
· Accounts for a minor child under the Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA).
· Traditional IRAs and Roth IRAs. These accounts let you shelter investment income from federal income tax while saving for retirement.
· Coverdell Education Savings Accounts (“Coverdell” accounts, formerly Education IRAs). These accounts let you shelter investment income from federal income tax while saving to pay qualified higher education expenses of a designated beneficiary.
· Corporate and Institutional accounts.
· Omnibus accounts held by financial intermediaries, platforms, programs, plans and other similar entities (collectively, “financial intermediaries”) on behalf of other investors.
· Registered and unregistered investment company accounts.
The Fund will only accept accounts with a U.S. address of record; the Fund will not accept accounts with a foreign address of record. Additionally, the Fund will not accept a P.O. Box as the address of record.
For more information about opening an IRA or corporate or institutional account, please call the Fund at 800 223-1200, Monday through Friday, from 8:00 a.m. to 10:00 p.m. Eastern Time.
Purchasing Shares – Retail Class
How to Open an Account and Make Subsequent Investments
To open an account, send the Fund a completed application with your initial investment. If you want an application, or if you have any questions or need help completing the application, call one of the Funds’ consultants at 800 223-1200. You can also download and print the application from our website at www.tiaa-cref.org. If you intend to hold your shares indirectly through a financial intermediary, please contact the intermediary about initiating purchases of Fund shares or making additional purchases.
The minimum initial investment for Traditional IRA, Roth IRA and Coverdell accounts is $2,000 per Fund account. The minimum initial investment for all other accounts, including custodial (UGMA/UTMA) accounts is $2,500 per Fund account.
Subsequent investments for all account types must be at least $100 per Fund account. Financial intermediaries may enforce their own minimum initial and subsequent investment minimums. The Funds have the discretion to waive or otherwise change the initial or subsequent minimum investment requirements at any time without any prior notice to shareholders. All purchases must be in
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U.S. dollars and all checks must be drawn on U.S. banks. The Fund will not accept payment in the following forms: travelers checks, money orders, credit card convenience checks, cashier’s checks, cash or starter checks. The Fund will not accept corporate checks for investment into non-corporate accounts. The Funds will not accept third-party checks. (Any check not made payable directly to TIAA-CREF Lifecycle Funds-Retail Class will be considered a third-party check). The Funds cannot accept checks made out to you or other parties and signed over to the Fund.
The Funds consider all purchase requests to be received when they are received in “good order” by the Fund’s transfer agent (or other authorized Fund agent). Financial intermediaries may have their own independent good order and eligibility requirements. (See below.)
To Open An Account On-Line: Please visit the Funds’ Web Center at www.tiaa-cref.org and click on Mutual Funds. You can establish an individual, joint, or custodian (UGMA or UTMA) account. For assistance in completing these transactions, please call 800 223-1200. Once completed, your transaction cannot be modified or canceled.
To Open An Account By Mail: Send your check, made payable to TIAA-CREF Lifecycle Funds—Retail Class, and application to:
First Class Mail: The TIAA-CREF Lifecycle Funds—Retail Class
c/o Boston Financial Data Services
P.O. Box 8009
Boston, MA 02266-8009
Overnight Mail: The TIAA-CREF Lifecycle Funds—Retail Class
c/o Boston Financial Data Services
30 Dan Road
Canton, MA 02021-2809
Once submitted, your transaction cannot be modified or canceled.
To Open An Account By Wire: Send a completed and signed application by mail, then call the Fund to confirm that your account has been established. Instruct your bank to wire money to:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA Number 011000028
DDA Number 99052771
Specify on the wire:
· The TIAA-CREF Lifecycle Funds—Retail Class;
· Account registration (names of registered owners), address and Social Security number or taxpayer identification number;
· Indicate if this is for a new or existing account (provide Fund account number if existing); and
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· The Fund and amount to be invested.
You can purchase additional shares in any of the following ways:
By Mail: Send a check to either of the addresses listed above with an investment coupon from a previous confirmation statement. If you do not have an investment coupon, use a separate piece of paper to give us your name, address, Fund account number, the Fund you want to invest in and the amount to be invested in the Fund.
By Automatic Investment Plan (AIP): You can make subsequent investments automatically by electing to utilize the Automatic Investment Plan on your initial application or later upon request. By electing this option you authorize the Funds to take regular, automatic withdrawals from your bank account.
To begin this service, send the Funds a voided checking or savings account investment slip. It will take the Funds up to 10 days from the time it is received to set up your Automatic Investment Plan. You can make automatic investments semi-monthly or monthly (on the 1st and 15th of each month or on the next business day if those days are not business days). Investments must be made for at least $100 per Fund account.
You can change the date or amount of your investment, or terminate the Automatic Investment Plan, at any time by letter or by telephone. The change will take effect approximately 5 business days after the Funds receive your request.
By Telephone: Call 800 223-1200. You can make electronic withdrawals from your designated bank account to buy additional Retail Class shares of the Funds over the telephone. There is a $100,000 limit on these purchases. Telephone requests cannot be modified or canceled.
All shareholders automatically have the right to buy shares by telephone provided bank account information and a voided check were provided at the time the account was established. If you do not want the telephone purchase option, you can indicate this on the application or call the Funds at 800 223-1200 any time after opening your account. You may add this privilege after the account has been established by completing an Account Services Form, which you can request by calling 800 223-1200, or you may download it from the Funds’ website.
Over the Internet: With TIAA-CREF’s Web Center, you can make electronic withdrawals from your designated bank account to buy additional shares over the Internet. There is a $100,000 limit on these purchases. TIAA-CREF’s Web Center can be accessed through TIAA-CREF’s homepage at www.tiaa-cref.org.
Before you can use TIAA-CREF’s Web Center, you must enter your Social Security number, date of birth and active account number. You will then be given an opportunity to create a user name and password. TIAA-CREF’s Web Center will lead you through the transaction process, and the Funds will use reasonable procedures to confirm that the instructions given are genuine. All
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transactions over TIAA-CREF’s Web Center are recorded electronically. Once made, your transactions cannot be modified or canceled.
By Wire: To buy additional shares by wire, follow the instructions above for opening an account by wire (please note that there is no need to forward another account application once the account has been established and you are making a subsequent investment).
Note that if you hold Fund shares through a financial intermediary, you must contact the intermediary to purchase additional shares.
Points to Remember for All Purchases
· Your investment must be for a specified dollar amount. The Funds cannot accept purchase requests specifying a certain price, date, or number of shares. These types of requests will be deemed to be not in “good order” (see below) and the money you sent will be returned to you.
· The Funds reserve the right to reject any application, investment or purchase request. There may be circumstances when the Fund will not accept new investments without prior notice to shareholders.
· Your ability to purchase shares may be restricted due to limitations on purchases or exchanges, including limitations under the Funds’ Market Timing/Excessive Trading Policy (see below).
· If you hold your shares through a financial intermediary, it may charge you additional fees. Contact your financial intermediary to find out if it imposes any other conditions, such as a higher minimum investment requirement, on your transactions.
· If your purchase check does not clear or payment on it is stopped, or if the Funds do not receive good funds through wire transfer or electronic funds transfer, the Funds will treat this as a redemption of the shares purchased when your check or electronic funds were received. You will be responsible for any resulting loss incurred by any of the Funds or Advisors and you may be subject to tax consequences on such a redemption. If you are already a shareholder, the Funds can redeem shares from any of your account(s) as reimbursement for all losses. The Funds also reserve the right to restrict you from making future purchases in any of the Funds or any other series of the Trust. There is a $25 fee for all returned items, including checks and electronic funds transfers. Please note that there is a 10-calendar day hold on all purchases by check, or through electronic funds transfer.
· Federal law requires the Funds to obtain, verify and record information that identifies each person who opens an account. Until the Funds receive such information, it may not be able to open an account or effect transactions for you. Furthermore, if the Funds are unable to verify your identity, or that of another person authorized to act on your behalf, or if it is believed potential criminal activity has been identified, the Funds reserve the right to take such action as deemed appropriate, which may include closing your account.
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· The Funds are not responsible for any losses due to unauthorized or fraudulent instructions so long as the Funds follow reasonable security procedures to verify your identity. It is your responsibility to review and verify the accuracy of your confirmation statements immediately after you receive them.
In-Kind Purchases of Shares
Advisors, at its sole discretion, may permit a shareholder to purchase Retail Class shares with investment securities (instead of cash), if: (1) Advisors believes the securities are appropriate investments for the particular Fund; (2) the securities offered to the Fund are not subject to any restrictions upon their sale by the Fund under the Securities Act of 1933, or otherwise; and (3) the securities are permissible holdings under the Fund’s investment policies and restrictions. If the Fund accepts the securities, the shareholder’s account will be credited with Retail Class shares equal in net asset value to the market value of the securities received. Shareholders who are investing through a financial intermediary or plan who are interested in making in-kind purchases should contact the Fund or their intermediary or plan sponsor directly. Otherwise, shareholders interested in making in-kind purchases should contact the Fund directly.
Redeeming Shares – Retail Class
You can redeem (sell) your Retail Class shares of the Funds at any time. If you hold your Fund shares through a financial intermediary, please contact the intermediary to sell your shares. Your intermediary may have different requirements and restrictions on redemptions than the Fund. Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
Usually, the Funds send your redemption proceeds to you on the next business day after the Funds receive your request, but not later than seven days afterwards, assuming the request is received in good order by the Funds’ transfer agent (or other authorized Fund agent) (see below). If a redemption of shares is requested shortly after you have purchased those shares by check or automatic investment plan, it will take 10 calendar days for your check or automatic investment to clear and for your shares to be available for redemption.
The Funds send redemption proceeds to the shareholder of record at his/her address or bank of record. If proceeds are to be sent to someone else, a different address, or a different bank, the Funds generally will require a letter of instruction with a Medallion Signature Guarantee for each account holder (see below). The Funds can send your redemption proceeds by check to the address of record; by electronic transfer to your bank; or by wire transfer (minimum of $5,000). Before calling, read “Points to Remember When Redeeming,” below.
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The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors.
You Can Redeem Shares In Any Of The Following Ways:
By Mail: Send your written request to either of the addresses listed in the “How to Open an Account and Make Subsequent Investments” section. Requests must include: account number, transaction amount (in dollars or shares), signatures of all owners exactly as registered on the account, Medallion Signature Guarantees (if required), and any other required supporting legal documentation. Once mailed to the Funds, your redemption request is irrevocable and cannot be modified or canceled.
By Telephone: Call 800 223-1200 to redeem shares in amounts under $50,000. Once made, your telephone request cannot be modified or canceled.
All shareholders automatically receive the telephone redemption option. If you do not want to be able to redeem by telephone, indicate this on your application or call the Funds any time after opening your account. Telephone redemptions are not available for IRA accounts.
By Systematic Redemption Plan: You can elect this feature only from accounts with balances of at least $5,000. The Funds will automatically redeem shares in a Fund each month or quarter (on the 1st or 15th of the month or on the following business day if those days are not business days) and provide you with a check or electronic transfer to your bank. You must specify the dollar amount of the redemption.
If you want to set up a systematic redemption plan, contact the Funds and they will send the necessary forms to you. All owners of an account must sign the systematic redemption plan request. Similarly, all owners must sign any request to increase the amount or frequency of the systematic redemptions or a request for payments to be sent to an address other than the address of record. A Medallion Signature Guarantee is required for this address change.
The Funds can terminate the systematic redemption plan option at any time, although the Funds will notify you if this occurs. You can terminate the plan or reduce the amount or frequency of the redemptions by writing or calling the Fund. Requests to establish, terminate, or change the amount or frequency of redemptions will become effective within 5 days after the Funds receive your instructions.
Points To Remember When Redeeming:
· The Funds cannot accept redemption requests specifying a certain price or date; these requests will be deemed to be not in “good order” (see below) and will be returned.
· If you request a redemption by telephone within 30 days of changing your address, or if you would like the proceeds sent to someone else, you must
156 Prospectus ■ TIAA-CREF Lifecycle Funds
send the Funds your request in writing with a Medallion Signature Guarantee of all owners exactly as registered on the account.
In-Kind Redemptions of Shares
Certain large redemptions of Fund shares may be detrimental to a Funds’ other shareholders because such redemptions can adversely affect a portfolio manager’s ability to implement its investment strategy by causing premature sale of portfolio securities that would otherwise be held. Consequently, if, in any 90-day period, a shareholder redeems (sells) shares in an amount that exceeds the lesser of (i) $250,000 or (ii) 1% of a Funds’ assets, then the Fund, at its sole discretion, has the right (without prior notice) to satisfy the difference between the redemption amount and the lesser of the two previously mentioned figures with securities from the Fund’s portfolio (which may consist of either Institutional Class shares of the Underlying Funds or actual securities originally held by the Underlying Funds) instead of cash. This is referred to as a “distribution in-kind” redemption and the securities you receive in this manner represent a portion of the Fund’s or an Underlying Fund entire portfolio. The securities you receive will be selected by the Funds in their discretion. The shareholder receiving the securities will be responsible for disposing of the securities and bearing any associated costs.
Exchanging Shares – Retail Class
Investors holding Retail Class shares of the Funds are accorded certain exchange privileges involving their Retail Class shares of the Fund. For purposes of making an exchange involving Retail Class shares, an “exchange” means:
• a sale (redemption) of Retail Class shares of the Fund and the use of the proceeds to purchase Retail Class shares of another fund or series of the TIAA-CREF Funds.
In each case, these exchanges may be made at any time, subject to the exchange privilege limitations described below and in the section below entitled “Market Timing/Excessive Trading Policy.” The minimum investment amounts that apply to purchases also apply to exchanges. In other words, for any account, an exchange into a Fund in which you already own shares must be at least $50. An exchange to a new fund account must meet the account minimums as stated by account type above (i.e., $2,000 per Fund account for Traditional IRA, Roth IRA or Coverdell accounts and $2,500 per fund account for all other accounts, including custodial (UGMA/UTMA) accounts).
Exchanges between funds can be made only if the accounts are registered identically in the same name(s), address and Social Security number or taxpayer identification number.
If you hold your shares through a financial intermediary, please contact the intermediary to exchange Fund shares. Please note that financial intermediaries may have their own limitations, restrictions or fees on exchange requests.
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You Can Make Exchanges In Any Of The Following Ways:
By Mail: Send a letter of instruction to either of the addresses in the “How to Open an Account and Make Subsequent Investments” section. The letter must include your name, address, and the funds and accounts you want to exchange between.
By Telephone: Call 800 223-1200. Once made, your telephone request cannot be modified or canceled.
Over the Internet: You can exchange
shares using TIAA-CREF’s Web Center, which can be accessed through TIAA-CREF’s homepage at
www.tiaa-cref.org.
Once made, your transaction cannot be modified or canceled.
By Systematic Exchange: You can elect this feature only if the balance of the Fund account from which you are transferring shares is at least $5,000. The Funds automatically redeems Retail Class shares from the Funds and purchases Retail Class shares in another fund or series of the TIAA-CREF Funds each month or quarter (on the 1st or 15th of the month or on the following business day if those days are not business days). You must specify the dollar amount and the funds involved in the exchange. An exchange into a fund in which you already own shares must be for at least $50, and an exchange into a new fund account must meet the account minimums as stated by account type above (i.e., $2,000 per fund account for Traditional IRA, Roth IRA or Coverdell accounts and $2,500 per fund account for all other accounts, including custodial (UGMA/UTMA) accounts).
If you want to set up a systematic exchange, you can contact the Funds and they will send you the necessary forms. All owners of an account must sign the systematic exchange request. Similarly, all account owners must sign any request to increase the amount or frequency of systematic exchanges. You can terminate the plan or change the amount or frequency of the exchanges by writing or calling the Funds. Requests to establish, terminate, or change the amount or frequency of exchanges will become effective within 5 days after the Funds receive your instructions.
Points To Remember When Exchanging:
· Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the funds into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
· The Funds reserve the right to reject any exchange request and to modify or terminate the exchange option at any time without prior notice to shareholders. The Fund may do this, in particular, when your transaction activity is deemed to be harmful to the Fund, including if it is considered to be market timing activity.
· An exchange is considered a sale of securities, and therefore is taxable.
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Eligibility – Retirement Class
Retirement Class shares of the Funds are (or may be made) available by or through
• accounts established by or on behalf of employers, or the trustees of plans sponsored by employers, in connection with certain employee benefit plans (the “plan(s)”), such as plans described in sections 401(a) (including 401(k) and Keogh plans), 403(b)(7) and 457 of the Code, that are sponsored or administered by TIAA-CREF.
• certain custody accounts sponsored or administered by TIAA-CREF that are established by individuals as IRAs pursuant to section 408 of the Code.
• certain intermediaries who have entered into a contract or arrangement with the Funds, or their investment adviser or distributor that enables them to purchase shares on behalf of their clients.
· other accounts, entities and categories of shareholders as may be approved by the Fund from time to time.
Definition of Eligible Investor for Retirement Class
Collectively, intermediaries that are unaffiliated with TIAA-CREF and/or that do not provide custodial services to plans administered by TIAA-CREF, but that have contracted with the Trust or its affiliates to offer Retirement Class shares of the Funds are referred to as “Eligible Investors” in the rest of this “Retirement Class” section of this Prospectus.
Purchasing Shares – Retirement Class
Purchasing Shares—For Participants Purchasing Shares through a Plan or Account Administered by TIAA-CREF:
If you are a participant in such a plan and your employer or plan trustee has established a plan account, then you may direct the purchase of Retirement Class shares of the Funds offered under the plan for your account. You should contact your employer to learn how to enroll in the plan. Your employer must notify TIAA-CREF that you are eligible to enroll. In many cases, you will be able to use TIAA-CREF Web Center’s online enrollment feature at www.tiaa-cref.org.
You may direct the purchase of Retirement Class shares of the Funds by allocating single or ongoing retirement plan contribution amounts made on your behalf by your employer pursuant to the terms of your plan or through a currently effective salary or payroll reduction agreement with your employer to a particular Fund or Funds offering Retirement Class shares (see “Allocating Retirement Contributions to a Fund” below). You may also direct the purchase of Retirement Class shares of the Funds by reinvesting retirement plan proceeds that were previously invested in another investment vehicle available under your employer’s plan.
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The Funds impose no minimum investment requirement for Retirement Class shares. The Funds also do not currently restrict the frequency of investments made in the Funds by participant accounts, although the Funds reserve the right to impose such restrictions in the future. Your employer’s plan may limit the amount that you may invest in your participant account. In addition, the Code limits total annual contributions to most types of plans. All purchases must be in U.S. dollars and all checks must be drawn on U.S. banks. The Funds will only accept accounts with a U.S. address of record. The Funds will not accept a P.O. Box as an account’s address of record. Each investment in your participant account must be for a specified dollar amount. All other requests, including those specifying a certain price, date, or number of shares, will not be deemed to be in “good order” (see below) and will not be accepted by the Funds.
The Funds have the right to reject your custody application and to refuse to sell additional Retirement Class shares of the Funds to any investor for any reason. The Funds treat all orders to purchase Retirement Class shares as being received when they are received in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below). The Funds may suspend or terminate the offering of Retirement Class shares of one or more of the Funds to your employer’s plan.
Allocating Retirement Contributions to the Fund—For Participants Purchasing Shares through a Plan or Account Administered by TIAA-CREF
If you are just starting out and are initiating contributions to your employer’s plan, you may allocate single or ongoing contribution amounts to Retirement Class shares of the Funds by completing an account application or enrollment form (paper or online) and selecting the Funds and the amounts you wish to contribute to the Funds. You may be able to change your allocation for future contributions by:
· using the TIAA-CREF Web Center at www.tiaa-cref.org;
· calling the Funds’ Automated Telephone Service (available 24 hours a day) at 800 842-2252;
· calling a TIAA-CREF representative (available weekdays from 8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· faxing the Funds at: 800 914-8922; or
· writing to the Funds at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
Opening an IRA or Keogh Account
Any plan participant or person eligible to participate in a plan may open an IRA or Keogh custody account and purchase Retirement Class shares for their account. For more information about opening an IRA, please call the Funds’ Telephone Counseling Center at 800 842-2888 or go to the TIAA-CREF Web
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Center at www.tiaa-cref.org. The Funds reserve the right to limit the ability of IRA and Keogh accounts to purchase the Retirement Class of certain Funds.
Purchasing Shares—For Eligible Investors and Their Clients:
Eligible Investors may invest directly in the Funds. All other prospective investors should contact their intermediary or plan sponsor for applicable purchase requirements. All purchases must be in U.S. dollars and all checks must be drawn on U.S. banks. The Funds will only accept accounts with a U.S. address of record. The Funds will not accept a P.O. Box as the address of record.
There may be circumstances when the Funds will not accept new investments in one or more of the Funds. The Funds reserve the right to suspend or terminate the offering of their shares at any time without prior notice. The Funds also reserve the right to reject any application or investment or any other specific purchase request.
The Funds do not impose minimum investment requirements. However, investors purchasing Retirement Class shares through Eligible Investors (like financial intermediaries or employee benefit plans) may purchase shares only in accordance with instructions and limitations pertaining to their account at the intermediary or plan. These Eligible Investors may set different minimum investment requirements for their customers’ investments in Retirement Class shares. Please contact your intermediary or plan sponsor for more information.
The Funds consider all purchase requests to be received when they are received in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below). The Funds will not accept third-party checks. (The Funds consider any check not made payable directly to TIAA-CREF Funds as a third-party check.) The Funds cannot accept checks made out to you or other parties and signed over to the Funds. The Funds will not accept payment in the following forms: travelers’ checks, money orders, credit card convenience checks, cashier’s checks, cash or starter checks. The Funds will not accept corporate checks for investment into non-corporate accounts.
To open an account or purchase shares by wire:
Eligible Investors should instruct their bank to wire money to:
State Street Bank
225 Franklin Street
Boston, MA 02110
ABA Number 011000028
DDA Number 99054546
Specify on the wire:
· The TIAA-CREF Lifecycle Funds—Retirement Class;
· Account registration (names of registered owners), address and Social Security number or taxpayer identification number;
· Indicate if this is for a new or existing account (provide Fund account number if existing); and
TIAA-CREF Lifecycle Funds ■ Prospectus 161
· The Fund or Funds in which you want to invest and amount per Fund to be invested.
To buy additional shares by wire, Eligible Investors should follow the instructions above for opening an account or purchasing shares by wire. Once a Fund account has been opened, shareholders do not have to send the Funds an application again.
Points to Remember for All Purchases by Eligible Investors:
· Each investment by an Eligible Investor in Retirement Class shares of the Funds must be for a specified dollar amount. The Funds cannot accept purchase requests specifying a certain price, date, or number of shares; such requests will be deemed to be not in “good order” (see below) and the Funds will return these investments.
· If you invest in the Retirement Class of the Funds through an Eligible Investor, the Eligible Investor may charge you a fee in connection with your investment (in addition to the fees and expenses deducted by the Funds). Contact the Eligible Investor to learn whether there are any other conditions, such as a minimum investment requirement, on your transactions.
· If the Funds do not receive good funds through wire transfer, the Fund will treat this as a redemption of the shares purchased when your wire transfer is received. You will be responsible for any resulting loss incurred by any of the Funds or Advisors and you may be subject to investment losses and tax consequences on such a redemption. If you are already a shareholder, the Funds can redeem shares from any of your account(s) as reimbursement for all losses. The Funds also reserve the right to restrict you from making future purchases in any of the Funds.
· Federal law requires the Funds to obtain, verify and record information that identifies each person who opens an account. Until the Funds receive such information, the Funds may not be able to open an account or effect transactions for you. Furthermore, if the Funds are unable to verify your identity, or that of another person authorized to act on your behalf, or if it is believed potential criminal activity has been identified, the Funds reserve the right to take such action as deemed appropriate, which may include closing your account.
· Your ability to purchase shares may be restricted due to limitations on exchanges, including limitations related to the Funds’ Market Timing/Excessive Trading Policy (see below).
· The Funds are not responsible for any losses due to unauthorized or fraudulent instructions so long as the Funds follow reasonable security procedures to verify your identity. It is your responsibility to review and verify the accuracy of your confirmation statements immediately after you receive them.
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In-Kind Purchases of Shares by Eligible Investors
Advisors, at its sole discretion, may permit Eligible Investors or their clients to purchase Retirement Class shares with investment securities (instead of cash), if: (1) Advisors believes the securities are appropriate investments for the Fund; (2) the securities offered to the Fund are not subject to any restrictions upon their sale by the Fund under the Securities Act of 1933, or otherwise; and (3) the securities are permissible holdings under the Fund’s investment policies and restrictions. If the Fund accepts the securities, the Eligible Investor’s account will be credited with Retirement Class shares equal in net asset value to the market value of the securities received. Eligible Investors interested in making in-kind purchases should contact the Funds, and interested clients should contact their Eligible Investor (i.e., their intermediary or plan sponsor).
Redeeming Shares – Retirement Class
Redeeming Shares—For Participants Holding Shares through a Plan or Account Administered by TIAA-CREF:
TIAA-CREF participants may redeem (sell) their Retirement Class shares at any time, subject to the terms of their employer’s plan, and Eligible Investors can redeem (sell) their Retirement Class shares at any time. A redemption can be part of an exchange. Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
To request a redemption, you can do one of the following:
· using the TIAA-CREF Web Center at www.tiaa-cref.org;
· call a TIAA-CREF representative (available weekdays from 8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· fax the Fund at: 800 914-8922; or
· write to the Fund at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
You may be required to complete and return certain forms to effect your redemption. Before you complete your redemption request, please make sure you understand the possible federal and other income tax consequences of a redemption.
Pursuant to a TIAA-CREF participant’s instructions, the Funds reinvest redemption proceeds in (1) Retirement Class shares of other funds or series of the TIAA-CREF Funds available under the participant’s plan, or (2) shares of other mutual funds available under the participant’s plan. Redemptions are effected as of the day that the Funds’ transfer agent (or other authorized Fund agent) receives your request in “good order” (see below), and your participant or IRA account will be credited within seven days thereafter. If a redemption is requested after a recent purchase of Retirement Class shares by check, the Funds may delay payment of the redemption proceeds until the check clears.
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This can take up to ten days. If you request a distribution of redemption proceeds from your participant account, the Funds will send the proceeds by check to the address of record, or by wire to the bank account, of record. If you want to send the redemption proceeds elsewhere, you must instruct the Funds by letter and generally include a Medallion Signature Guarantee for each shareholder.
The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors. If you hold shares through an Eligible Investor, like a plan or intermediary, please contact the Eligible Investor for redemption requests.
Redeeming Shares—For Eligible Investors and Their Clients:
Eligible Investors can redeem (sell) their Retirement Class shares at any time. Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
If your shares are held through an Eligible Investor, contact the Eligible Investor for applicable redemption requirements. Shares held through an Eligible Investor must be redeemed by the Eligible Investor. For further information, contact your intermediary or plan sponsor. Redemption requests generally must include: account number, transaction amount (in dollars or shares), signatures of all owners exactly as registered on the account, Medallion Signature Guarantees of each owner on the account (if required), and any other required supporting legal documentation.
The Funds will only accept redemption requests that specify a dollar amount or number of shares to be redeemed. All other requests, including those specifying a certain price or date, will not be deemed to be in “good order” (see below) and will be returned.
If you hold shares through an Eligible Investor, like a plan or intermediary, please contact the Eligible Investor for redemption requests.
Usually, the Funds send redemption proceeds to the Eligible Investor on the next business day after the Funds receive a redemption request in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below), but not later than seven days afterwards. If a redemption is requested shortly after a recent purchase by check, it may take 10 calendar days for your check to clear and for your shares to be available for redemption.
The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors.
The Funds generally send redemption proceeds to the Eligible Investor at the address of record or bank account of record. If proceeds are to be sent to someone else, a different address or a different bank or if an Eligible Investor
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requests a redemption within 30 days of changing its address, the Funds generally may require a letter of instruction from the Eligible Investor with a Medallion Signature Guarantee for each account holder or for all owners exactly as registered on the account, as appropriate (see below). The Funds can send the redemption proceeds by check to the address of record or by wire transfer.
In-Kind Redemptions of Shares
Certain large redemptions of Fund shares may be detrimental to the Fund’s other shareholders because such redemptions can adversely affect a portfolio manager’s ability to implement its investment strategy by causing premature sale of portfolio securities that would otherwise be held. Consequently, if, in any 90-day period, an Eligible Investor redeems (sells) shares in an amount that exceeds the lesser of (i) $250,000 or (ii) 1% of a Fund’s assets, then the Fund, at its sole discretion, has the right (without prior notice) to satisfy the difference between the redemption amount and the lesser of the two previously mentioned figures with securities from the Fund’s portfolio (which may consist of either Institutional Class shares of the Underlying Funds or actual securities originally held by the Underlying Funds) instead of cash. This is referred to as a “distribution in-kind” redemption and the securities you receive in this manner represent a portion of the Fund or an Underlying Fund’s entire portfolio. The securities you receive will be selected by the Fund in its discretion. The Eligible Investor receiving the securities will be responsible for disposing of the securities and bearing any associated costs.
Exchanging Shares – Retirement Class
Exchanging Shares—For Participants Purchasing Shares through a Plan or Account Administered by TIAA-CREF:
Subject to the limitations outlined below and any limitations under your employer’s plan, you may exchange Retirement Class shares of a Fund for Retirement Class shares of another fund available under the plan (including other funds or series of the TIAA-CREF Funds, if available). An “exchange” means:
· a sale of Retirement Class shares of the Fund held in your participant or IRA account and the use of the proceeds to purchase Retirement Class shares of another fund for your account;
· a sale of interests in a CREF Account, the TIAA Real Estate Account, or the TIAA Traditional Annuity, and the use of the proceeds to purchase an equivalent dollar amount of Retirement Class shares of the Fund for your participant, IRA or Annuity account;
· a sale of Retirement Class shares held in a participant account and the use of the proceeds to purchase an interest in a CREF Account, the TIAA Real Estate Account, or the TIAA Traditional Annuity. Because interests in a CREF Account, the TIAA Real Estate Account, and the TIAA Traditional Annuity are not offered through participant accounts, you must withdraw
TIAA-CREF Lifecycle Funds ■ Prospectus 165
redemption proceeds held in your participant account and use them to purchase one of these investments.
You can make exchanges in any of the following ways:
· using the TIAA-CREF Web Center at www.tiaa-cref.org;
· calling the Funds’ Automated Telephone Service (available 24 hours a day) at 800 842-2252;
· calling a TIAA-CREF representative (available weekdays from 8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· faxing the Funds at: 800 914-8922; or
· writing to the Fund at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
The Funds reserve the right to reject any exchange request and to modify, suspend or terminate the exchange privilege for any shareholder or class of shareholders. This may be done, in particular, when your transaction activity is deemed to be harmful to a Fund, including if it is considered to be market-timing activity.
Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the fund into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
Exchanging Shares—For Eligible Investors and Their Clients:
Eligible Investors can exchange Retirement Class shares in a Fund for Retirement Class shares of any other fund or Retirement Class shares of any other fund or series of the TIAA-CREF Funds at any time, subject to the limitations described in the Funds’ Market Timing/Excessive Trading Policy below. (An exchange is a simultaneous redemption of shares in one fund and a purchase of shares in another fund.)
Exchanges between accounts can be made only if the accounts are registered in the same name(s), address and Social Security number or taxpayer identification number. An exchange is considered a sale of securities, and therefore may be a taxable event.
The Funds reserve the right to reject any exchange request and to modify, suspend or terminate the exchange privilege for any shareholder or class of shareholders. This may be done, in particular, when your transaction activity is deemed to be harmful to the Fund, including if it is considered to be market-timing activity.
Shareholders who hold shares through an Eligible Investor, like a plan or intermediary, should contact the Eligible Investor for exchange requests. Once made, an exchange request cannot be modified or canceled.
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Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the fund into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
Premier Class shares of the Fund are available for purchase by or through
· certain intermediaries or entities affiliated with TIAA-CREF including
· registered investment companies,
· state-sponsored tuition savings plans or healthcare saving accounts (“HSAs”), or
· insurance company separate accounts advised by or affiliated with Advisors;
· other non-affiliated persons, entities or intermediaries including
· investment companies,
· state-sponsored tuition savings plans or prepaid plans or insurance company separate accounts,
· employer-sponsored employee benefit plans who have entered into a contract or arrangement that enables them to purchase shares of the Fund,
· through accounts established by employers, or the trustees of plans sponsored by employers, through TIAA-CREF in connection with certain employee benefit plans, such as 401(a) (including 401(k) plans), 403(a), 403(b) and 457 plans. Shareholders investing through such a plan may have to pay additional expenses related to the administration of such plans,
· other affiliates of TIAA-CREF, or
· Other accounts, entities and categories of shareholders as may be approved by the Fund from time to time.
The Fund reserves the right to determine in its sole discretion whether any person, intermediary, or entity is eligible to purchase Premier Class shares.
Definition of Eligible Investor for Premier Class
Collectively, all investors in the Fund, except for investors through an employer–sponsored employee benefit plan sponsored or administered by TIAA-CREF, are referred to as “Eligible Investors” in the rest of this “Premier Class” section of this Prospectus.
Account Minimums (Not Applicable At the Participant Level)
With respect to the categories of investors listed below, the aggregate plan sizes related to these investors must be at least $100 million:
TIAA-CREF Lifecycle Funds ■ Prospectus 167
· Accounts established by employers or the trustees of plans sponsored by employers in connection with certain employee benefit plans, such as 401(a) (including 401(k) plans), 403(a), 403(b) and 457 plans, profit-sharing plans, defined benefit plans and non-qualified deferred compensation plans where such accounts are established on a plan-level or omnibus basis; or
· Other affiliates of Advisors or other persons or entities that the Funds may approve from time to time.
With respect to the categories of investors listed below, in addition to the $100 million minimum aggregate plan size noted above, an initial minimum investment of $1 million with respect to each Fund is required:
· Certain financial intermediaries that have entered into an appropriate agreement with the Funds, Advisors and/or TPIS directly or via their trading agent, including:
· Financial intermediaries affiliated with Advisors;
· Other financial intermediaries, platforms and programs, including registered investment adviser (“RIA”) programs, wrap programs and other advisory programs whose clients pay asset-based fees to such entities for investment advisory, management or other services;
· Trust companies that are not sponsored by an affiliate of Advisors;
· Registered investment companies, including funds of funds that are not advised or administered by Advisors or its affiliates;
· State-sponsored tuition savings plans and HSAs that are not sponsored by an affiliate of Advisors;
· Insurance company separate accounts that are sponsored or administered by insurance companies that are not affiliated with Advisors;
· Any unaffiliated individual retirement plan or group retirement plan, or those retirement plans not held in an omnibus manner and for which the plan sponsor, trustee, other financial intermediary or other entity provides services to investors who hold Fund shares through such entities, including, but not limited to, shareholder servicing or sub-accounting services; or
· Other persons or entities that the Funds may approve from time to time.
Please note that the $100 million aggregate plan size and the initial minimum investment requirements noted above must be met at the time of initial investment or, as approved by the Fund, over a reasonable period of time. At its sole discretion, each Fund reserves the right to convert any Premier Class shareholder’s shares to another class of shares of the same Fund for which the shareholder is otherwise eligible if the plan size or initial minimum investment requirements are not met in a reasonable period of time, or if the aggregate plan size falls below $100 million. Please see the section entitled “Conversion of Shares” below for more information on such mandatory conversions.
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Investors may be subject to additional expenses or eligibility requirements imposed by the financial intermediary, plan, platform, program or other entity through which they hold their shares.
The Fund reserves the right to waive or modify eligibility requirements for the Premier Class at any time for any investor or financial intermediary.
Purchasing Shares – Premier Class
Purchasing Shares—For Participants Purchasing Shares through a Plan or Account Sponsored or Administered by TIAA-CREF:
If you are a participant in such a plan and your employer or plan trustee has established a plan account, then you may direct the purchase of Premier Class shares of the Funds offered under the plan for your account. You should contact your employer to learn how to enroll in the plan. Your employer must notify TIAA-CREF that you are eligible to enroll. In many cases, you will be able to use TIAA-CREF Web Center’s online enrollment feature at www.tiaa-cref.org.
You may direct the purchase of Premier Class shares of the Fund by allocating single or ongoing retirement plan contribution amounts made on your behalf by your employer pursuant to the terms of your plan or through a currently effective salary or payroll reduction agreement with your employer to a particular Fund or Funds offering Premier Class shares (see “Allocating Retirement Contributions to a Fund” below). You may also direct the purchase of Premier Class shares of the Fund by reinvesting retirement plan proceeds that were previously invested in another investment vehicle available under your employer’s plan.
No Minimum Investment Requirements are imposed at the Participant Level.
The Funds impose no minimum investment requirements for Premier Class shares on the participant level (however, see above for minimums on aggregate plan/account sizes). The Funds also do not currently restrict the frequency of investments made in the Funds by participant accounts, although the Funds reserve the right to impose such restrictions in the future. Your employer’s plan may limit the amount that you may invest in your participant account. In addition, the Code limits total annual contributions to most types of plans. All purchases must be in U.S. dollars and all checks must be drawn on U.S. banks. The Funds will only accept accounts with a U.S. address of record. The Funds will not accept a P.O. Box as an account’s address of record. Each investment in your participant account must be for a specified dollar amount. All other requests, including those specifying a certain price, date, or number of shares, will not be deemed to be in “good order” (see below) and will not be accepted by the Funds.
The Funds have the right to reject your application and to refuse to sell additional Premier Class shares of any Funds to any investor for any reason. The Funds treat all orders to purchase Premier Class shares as being received when they are received in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below). The Funds may suspend or terminate the
TIAA-CREF Lifecycle Funds ■ Prospectus 169
offering of Premier Class shares of one or more of the Funds to your employer’s plan.
Allocating Retirement Contributions to a Fund—For Participants Purchasing through
a Plan or Account Sponsored or Administered
by TIAA-CREF:
If you are just starting out and are initiating contributions to your employer’s plan, you may allocate single or ongoing contribution amounts to Premier Class shares of the Funds by completing an account application or enrollment form (paper or online) and selecting the Lifecycle Funds you wish to invest in and the amounts you wish to contribute to the Funds. You may be able to change your allocation for future contributions by:
· using the TIAA-CREF Web Center at www.tiaa-cref.org;
· calling the Funds’ Automated Telephone Service (available 24 hours a day) at 800 842-2252;
· calling a TIAA-CREF representative (available weekdays from
8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from
9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· faxing the Funds at: 800 914-8922; or
· writing to the Funds at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
Purchasing Shares—For Eligible Investors and Their Clients:
Eligible Investors may invest directly in the Funds. All other prospective investors should contact their intermediary or plan sponsor for applicable purchase requirements. All purchases must be in U.S. dollars and all checks must be drawn on U.S. banks. The Funds will only accept accounts with a U.S. address of record. The Funds will not accept a P.O. Box as the address of record.
There may be circumstances when the Funds will not accept new investments in one or more of the Funds. The Funds reserve the right to suspend or terminate the offering of shares by one or more of the Funds at any time without prior notice. The Funds also reserve the right to reject any application or investment or any other specific purchase request.
See above for certain minimum investment limits on purchases of the Funds by certain investors and certain aggregate minimum plan/account sizes. Additionally, investors purchasing Premier Class shares through Eligible Investors (like financial intermediaries or employee benefit plans) may purchase shares only in accordance with instructions and limitations pertaining to their account at the intermediary or plan. These Eligible Investors may set different minimum investment requirements for their customers’ investments in Premier Class shares. Please contact your intermediary or plan sponsor for more information.
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The Funds consider all purchase requests to be received when they are received in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below). The Funds will not accept third-party checks. (The Funds consider any check not made payable directly to TIAA-CREF Lifecycle Funds as a third-party check.) The Funds cannot accept checks made out to you or other parties and signed over to the Funds. The Funds will not accept payment in the following forms: travelers’ checks, money orders, credit card convenience checks, cashier’s checks, cash or starter checks. The Funds will not accept corporate checks for investment into non-corporate accounts.
Opening an account or purchasing shares by wire—Eligible Investors:
Eligible Investors should instruct their bank to wire money to:
State Street Bank
225 Franklin Street
Boston, MA 02110
ABA Number 011000028
DDA Number 99054546
Specify on the wire:
· The TIAA-CREF Lifecycle Funds – Premier Class;
· Account registration (names of registered owners), address and Social Security number or taxpayer identification number;
· Indicate if this is for a new or existing account (provide Fund account number if existing); and
· The Fund or Funds in which you want to invest and amount per Fund to be invested.
To buy additional shares by wire, Eligible Investors should follow the instructions above for opening an account or purchasing shares by wire. Once a Fund account has been opened, shareholders do not have to send the Funds an application again.
Points to Remember for All Purchases by Eligible Investors:
· Each investment by an Eligible Investor in Premier Class shares of the Funds must be for a specified dollar amount. The Funds cannot accept purchase requests specifying a certain price, date, or number of shares; such requests will be deemed to be not in “good order” (see below) and the Funds will return the money you sent.
· If you invest in the Premier Class of the Funds through an Eligible Investor, the Eligible Investor may charge you a fee in connection with your investment (in addition to the fees and expenses deducted by the Funds). Contact the Eligible Investor to learn whether there are any other conditions, such as a minimum investment requirement, on your transactions.
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· If the Funds do not receive good funds through wire transfer, they will treat this as a redemption of the shares purchased when your wire transfer is received. You will be responsible for any resulting loss incurred by any of the Funds or Advisors and you may be subject to investment losses and tax consequences on such a redemption. If you are already a shareholder, the Funds can redeem shares from any of your account(s) as reimbursement for all losses. The Funds also reserve the right to restrict you from making future purchases in any of the Funds.
· Federal law requires the Funds to obtain, verify and record information that identifies each person who opens an account. Until the Funds receive such information, the Funds may not be able to open an account or effect transactions for you. Furthermore, if the Funds are unable to verify your identity, or that of another person authorized to act on your behalf, or if it is believed potential criminal activity has been identified, the Funds reserve the right to take such action as deemed appropriate, which may include closing your account.
· Your ability to purchase shares may be restricted due to limitations on exchanges, including limitations related to the Funds’ Market Timing/Excessive Trading Policy (see below).
· The Funds are not responsible for any losses due to unauthorized or fraudulent instructions so long as the Funds follow reasonable security procedures to verify your identity. It is your responsibility to review and verify the accuracy of your confirmation statements immediately after you receive them.
In-Kind Purchases of Shares by Eligible Investors
Advisors, at its sole discretion, may permit Eligible Investors or their clients to purchase Premier Class shares with investment securities (instead of cash) if: (1) Advisors believes the securities are appropriate investments for the Fund; (2) the securities offered to the Fund are not subject to any restrictions upon their sale by the Fund under the Securities Act of 1933, or otherwise; and (3) the securities are permissible holdings under the Fund’s investment policies and restrictions. If the Fund accepts the securities, the Eligible Investor’s account will be credited with Premier Class shares equal in net asset value to the market value of the securities received. Eligible Investors interested in making in-kind purchases should contact the Funds, and interested clients should contact their Eligible Investor (i.e., their intermediary or plan sponsor).
Redeeming Shares – Premier Class
Redeeming Shares—For Participants Holding Shares through a Plan or Account Administered by TIAA-CREF:
TIAA-CREF participants may redeem (sell) their Premier Class shares at any time, subject to the terms of their employer’s plan and Eligible Investors can redeem (sell) their Premier Class shares at any time. A redemption can be part
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of an exchange. Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
To request a redemption, you can do one of the following:
· use the TIAA-CREF Web Center at www.tiaa-cref.org;
· call a TIAA-CREF representative (available weekdays from 8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· fax the Funds at: 800 914-8922; or
· write to the Funds at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
You may be required to complete and return certain forms to effect your redemption. Before you complete your redemption request, please make sure you understand the possible federal and other income tax consequences of a redemption.
Pursuant to a TIAA-CREF participant’s instructions, the Funds reinvest redemption proceeds in (1) Premier Class shares of other funds or series of the TIAA-CREF Funds available under the participant’s plan, or (2) shares of other mutual funds available under the participant’s plan. Redemptions are effected as of the day that the Fund’s transfer agent (or other authorized Fund agent) receives your request in “good order” (see below), and your participant will be credited within seven days thereafter. If a redemption is requested after a recent purchase of Premier Class shares by check, the Funds may delay payment of the redemption proceeds until the check clears. This can take up to ten days. If you request a distribution of redemption proceeds from your participant account, the Funds will send the proceeds by check to the address of record, or by wire to the bank account of record. If you want to send the redemption proceeds elsewhere, you must instruct the Funds by letter and generally include a Medallion Signature Guarantee for each shareholder.
The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors.
Redeeming Shares—For Eligible Investors and Their Clients:
Eligible Investors can redeem (sell) their Premier Class shares at any time.
Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
If your shares are held through an Eligible Investor, contact the Eligible Investor for applicable redemption requirements. Shares held through an Eligible Investor must be redeemed by the Eligible Investor. For further information, contact your intermediary or plan sponsor. Redemption requests generally must include: account number, transaction amount (in dollars or shares), signatures of all owners exactly as registered on the account, Medallion
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Signature Guarantees of each owner on the account (if required), and any other required supporting legal documentation.
The Funds will only accept redemption requests that specify a dollar amount or number of shares to be redeemed. All other requests, including those specifying a certain price or date, will not be deemed to be in “good order” (see below) and will be returned.
If you hold shares through an Eligible Investor, like a plan or intermediary, please contact the Eligible Investor for redemption requests.
Usually, the Funds send redemption proceeds to the Eligible Investor on the next business day after the Funds receive a redemption request in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below), but not later than seven days afterwards. If a redemption is requested shortly after a recent purchase by check, it may take 10 calendar days for your check to clear and for your shares to be available for redemption.
The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors.
The Funds generally send redemption proceeds to the Eligible Investor at the address of record or bank account of record. If proceeds are to be sent to someone else, a different address or a different bank or if an Eligible Investor requests a redemption within 30 days of changing its address, the Funds generally may require a letter of instruction from the Eligible Investor with a Medallion Signature Guarantee for each account holder or for all owners exactly as registered on the account, as appropriate (see below). The Funds can send the redemption proceeds by check to the address of record or by wire transfer.
In-Kind Redemptions of Shares
Certain large redemptions of Fund shares may be detrimental to the Fund’s other shareholders because such redemptions can adversely affect a portfolio manager’s ability to implement its investment strategy by causing premature sale of portfolio securities that would otherwise be held. Consequently, if, in any 90-day period, an Eligible Investor redeems (sells) shares in an amount that exceeds the lesser of (i) $250,000 or (ii) 1% of a Fund’s assets, then the Fund, at its sole discretion, has the right (without prior notice) to satisfy the difference between the redemption amount and the lesser of the two previously mentioned figures with securities from the Fund’s portfolio (which may consist of either Institutional Class shares of the Underlying Funds or actual securities originally held by the Underlying Funds) instead of cash. This is referred to as a “distribution in-kind” redemption and the securities you receive in this manner represent a portion of the Fund or an Underlying Fund’s entire portfolio. The securities you receive will be selected by the Fund in its discretion. The Eligible Investor receiving the securities will be responsible for disposing of the securities and bearing any associated costs.
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Exchanging Shares – Premier Class
Exchanging Shares—For Participants Holding Shares through a Plan or Account Administered by TIAA-CREF:
Subject to the limitations outlined below and any limitations under your employer’s plan, you may exchange Premier Class shares of a Fund for Premier Class shares of another fund available under the plan (including other funds or series of the TIAA-CREF Funds, if available). An “exchange” means:
· a sale of Premier Class shares of a Fund held in your participant account and the use of the proceeds to purchase Premier Class shares of another Fund or other fund or series of the TIAA-CREF Funds for your account;
· a sale of interests in a CREF Account, the TIAA Real Estate Account, or the TIAA Traditional Annuity, and the use of the proceeds to purchase an equivalent dollar amount of Premier Class shares of a Fund for your participant or Annuity account;
· a sale of Premier Class shares held in a participant account and the use of the proceeds to purchase an interest in a CREF Account, the TIAA Real Estate Account, or the TIAA Traditional Annuity. Because interests in a CREF Account, the TIAA Real Estate Account, and the TIAA Traditional Annuity are not offered through participant accounts, you must withdraw redemption proceeds held in your participant account and use them to purchase one of these investments.
You can make exchanges in any of the following ways:
· using the TIAA-CREF Web Center at www.tiaa-cref.org;
· calling the Funds’ Automated Telephone Service (available 24 hours a day) at 800 842-2252;
· calling a TIAA-CREF representative (available weekdays from 8:00 a.m. Eastern Time to 10:00 p.m. Eastern Time and Saturdays from 9:00 a.m. Eastern Time to 6:00 p.m. Eastern Time) at 800 842-2776;
· faxing the Funds at: 800 914-8922; or
· writing to the Funds at: TIAA-CREF Lifecycle Funds, P.O. Box 1259, Charlotte, NC 28201.
The Funds reserve the right to reject any exchange request and to modify, suspend or terminate the exchange privilege for any shareholder or class of shareholders. This may be done, in particular, when your transaction activity is deemed to be harmful to a Fund, including if it is considered to be market-timing activity.
Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the fund into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
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Exchanging Shares—For Eligible Investors and Their Clients:
Eligible Investors can exchange Premier Class shares in a Fund for Premier Class shares of any other Fund or Premier Class shares of any other fund or series of the TIAA-CREF Funds at any time, subject to the limitations described in the Funds’ Market Timing/Excessive Trading Policy below. (An exchange is a simultaneous redemption of shares in one fund and a purchase of shares in another fund.)
If you hold shares through an intermediary, plan sponsor or other Eligible Investor, contact the Eligible Investor for applicable exchange requirements.
Exchanges between accounts can be made only if the accounts are registered in the same name(s), address and Social Security number or taxpayer identification number. An exchange is considered a sale of securities, and therefore, may be a taxable event.
The Funds reserve the right to reject any exchange request and to modify, suspend or terminate the exchange privilege for any shareholder or class of shareholders. This may be done, in particular, when your transaction activity is deemed to be harmful to a Funds, including if it is considered to be market-timing activity.
Shareholders who hold shares through an Eligible Investor like a plan or intermediary should contact the Eligible Investor for exchange requests. Once made, an exchange request cannot be modified or canceled.
Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the fund into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
Eligibility – Institutional Class
Institutional Class shares of the Funds are available for purchase by or through:
• certain intermediaries affiliated with TIAA-CREF,
• or other non-affiliated persons or intermediaries who have entered into a contract or arrangement that enables them to purchase shares of the Fund, or other affiliates of TIAA-CREF, such as
• state-sponsored tuition savings plans or prepaid plans,
• insurance company separate accounts,
• employer-sponsored employee benefit plans,
• accounts established by employers, or the trustees of plans sponsored by employers, through TIAA-CREF in connection with certain employee benefit plans, such as 401(a) (including 401(k) and Keogh plans), 403(a), 403(b) and 457 plans, or through custody accounts established by individuals through TIAA-CREF as IRAs. Shareholders
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investing through such a plan may have to pay additional expenses related to the administration of such plans, or
• other accounts, entities and categories of shareholders as may be approved by the Fund from time to time.
Definition of Eligible Investor
Collectively, investors that have contracted with the Trust or its affiliates to offer Institutional Class shares of the Fund and entities that are affiliated with the Trust, Advisors or TPIS are referred to as “Eligible Investors” in this “Institutional Class” section of this Prospectus.
Under certain circumstances, Institutional Class shares of the Fund may be offered directly to certain eligible individuals or institutions (each, a “Direct Purchaser”).
Account Minimums—Certain Eligible Investors
No minimum initial investment is required to purchase Institutional Class shares of the Fund by or through the following categories of Eligible Investors:
· Certain financial intermediaries that have entered into an appropriate agreement with the Funds, Advisors and/or TPIS directly or via their trading agent, including:
· Financial intermediaries affiliated with Advisors;
· Other financial intermediaries, platforms and programs, including registered investment adviser (“RIA”) programs, wrap programs and other advisory programs: (1) whose clients pay asset-based fees to such entities for investment advisory, management or other services; and (2) which are not compensated by the Funds for any services provided to clients who hold Fund shares through such entities;
· Trust companies, including both those affiliated with Advisors, such as TIAA-CREF Trust Company, FSB (the “Trust Company”) and other trust companies that are not affiliated with Advisors;
· Registered investment companies advised by or affiliated with Advisors, including funds of funds;
· State-sponsored tuition savings plans and healthcare savings accounts (“HSAs”) sponsored by Advisors or its affiliates;
· Insurance company separate accounts sponsored or administered by an insurance company that is affiliated with Advisors;
· Accounts established by employers or the trustees of plans sponsored by employers in connection with certain employee benefit plans, such as 401(a) (including 401(k) and Keogh plans), 403(a), 403(b) and 457 plans, profit-sharing plans, defined benefit plans and non-qualified deferred compensation plans where: (1) such accounts are established on a plan-level or omnibus basis; and (2) the plan, plan sponsor, any financial intermediary
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or any other entity is not compensated by the Funds for any services provided to investors who hold Fund shares through such entities; or
· Other affiliates of Advisors or other persons or entities that the Funds may approve from time to time.
Account Minimums—Other Investors
With respect to the categories of investors listed below, a $2 million minimum initial investment amount for purchases of Institutional Class shares of the Funds is applicable:
· Individual or institutional investors, including financial institutions, corporations, partnerships, foundations, banks, trusts, endowments, government entities or other similar entities, that invest directly in a Fund (such Direct Purchasers will be subject to a $1,000 minimum subsequent investment requirement);
· Registered investment companies, including funds of funds that are not advised or administered by Advisors or its affiliates;
· State-sponsored tuition savings plans and HSAs that are not sponsored by an affiliate of Advisors;
· Insurance company separate accounts that are sponsored or administered by insurance companies that are not affiliated with Advisors;
· Financial intermediaries that have entered into an appropriate agreement with the Funds, Advisors and/or TPIS directly or via their trading agent and which receive compensation from the Funds for services provided to investors who hold Fund shares through such entities, including, but not limited to, shareholder servicing or sub-accounting services; or
· Any individual retirement plan or group retirement plan that is not held in an omnibus manner and for which the plan sponsor, trustee, other financial intermediary or other entity receives compensation from the Funds for services provided to investors who hold Fund shares through such entities, including, but not limited to, shareholder servicing or sub-accounting services.
Please note that the initial minimum investment requirement must be met at the time of initial investment or, as approved by the Fund, over a reasonable period of time. At its sole discretion, each Fund reserves the right to convert any Institutional Class shareholder’s shares to another class of shares of the same Fund for which the shareholder is otherwise eligible if the initial minimum investment requirement is not met in a reasonable period of time. Please see the section entitled “Conversion of Shares” below for more information on such mandatory conversions.
Investors who do not hold their Institutional Class shares directly with the Funds may be subject to additional expenses or eligibility requirements imposed by the financial intermediary, plan, platform, program or other entity through which they hold their shares. Eligible Investors (like financial intermediaries or employee benefit plans) may set different minimum investment requirements for their customers’
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investments in Institutional Class shares and investors purchasing Institutional Class shares through Eligible Investors may purchase shares only in accordance with such requirements.
The Fund reserves the right to waive or modify eligibility requirements for the Institutional Class at any time for any investor or financial intermediary.
Purchasing Shares – Institutional Class
Eligible Investors and Direct Purchasers may invest directly in the Institutional Class shares of the Funds. All other prospective investors should contact their intermediary or plan sponsor for applicable purchase requirements. All purchases must be in U.S. dollars and all checks must be drawn on U.S. banks. The Funds will only accept accounts with a U.S. address of record. The Funds will not accept a P.O. Box as the address of record.
There may be circumstances when the Funds will not accept new investments in one or more of the Funds. The Funds reserve the right to suspend or terminate the offering of their shares at any time without prior notice. The Funds also reserve the right to reject any application or investment or any other specific purchase request.
As described above, the Funds impose minimum investment requirements for certain Eligible Investors and Direct Purchasers. However, Eligible Investors (like financial intermediaries or employee benefit plans) may purchase shares only in accordance with instructions and limitations pertaining to their account at the intermediary or plan. These Eligible Investors may set different minimum investment requirements for their customers’ investments in Institutional Class shares and investors purchasing Institutional Class shares through Eligible Investors may purchase shares only in accordance with such requirements. Please contact your intermediary or plan sponsor for more information.
The Funds consider all purchase requests to be received when they are received in “good order” by the Funds’ transfer agent (or other authorized Fund agent) (see below). The Funds will not accept third-party checks. (The Funds consider any check not made payable directly to TIAA-CREF Funds as a third-party check.) The Funds cannot accept checks made out to you or other parties and signed over to the Funds. The Funds will not accept payment in the following forms: travelers’ checks, money orders, credit card convenience checks, cashier’s checks, cash or starter checks. The Funds will not accept corporate checks for investment into non-corporate accounts.
To open an account or purchase shares by wire (Direct Purchasers and Eligible Investors):
Direct Purchasers should request an application from their Relationship Manager, who can help a Direct Purchaser complete the application or answer any questions that a Direct Purchaser may have about the application. A Direct Purchaser should send the Fund its application by mail, then call its Relationship Manager or the Fund directly to confirm that its account has been
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established. Or, the Direct Purchaser may forward its application and request for an account number directly to its Relationship Manager.
Eligible Investors or Direct Purchasers should instruct their bank to wire money to:
State Street Bank
225 Franklin Street
Boston, MA 02110
ABA Number 011000028
DDA Number 99054546
Specify on the wire:
· The TIAA-CREF Lifecycle Funds—Institutional Class;
· Account registration (names of registered owners), address and Social Security number or taxpayer identification number;
· Indicate if this is for a new or existing account (provide Fund account number if existing); and
· The Fund or Funds in which you want to invest and the amount per Fund to be invested.
To buy additional shares by wire, Direct Purchasers and Eligible Investors should follow the instructions above for opening an account or purchasing shares by wire, except that existing investors need not forward another account application.
To open an account or purchase shares by mail (Direct Purchasers Only):
Send your check, made payable to TIAA-CREF Funds, and application to:
First Class Mail: The TIAA-CREF Lifecycle Funds—Institutional Class
c/o Boston Financial Data Services
P.O. Box 8009
Boston, MA 02266-8009
Overnight Mail: The TIAA-CREF Lifecycle Funds—Institutional Class
c/o Boston Financial Data Services
30 Dan Road
Canton, MA 02021-2809
To purchase additional shares by mail, send a check to either of the addresses listed above with the registration of the account, Fund account number, and the amount to be invested in each Fund.
Points to Remember for All Purchases—All Investors:
· Each investment must be for a specified dollar amount. The Funds cannot accept purchase requests specifying a certain price, date, or number of shares; such requests will be deemed to be not in “good order” (see below) and the Funds will return these investments.
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· If you invest in the Institutional Class of the Funds through an Eligible Investor, the Eligible Investor may charge you a fee in connection with your investment (in addition to the fees and expenses deducted by the Funds). Contact the Eligible Investor to learn whether there are any other conditions, such as a minimum investment requirement, on your transactions. In addition, Eligible Investors that are not themselves affiliated with TIAA-CREF may be charged a fee by their intermediary or plan sponsor (in addition to the fees and expenses deducted by the Funds).
· If your purchase check does not clear or payment on it is stopped, or if the Funds do not receive good funds through wire transfer or electronic funds transfer, the Funds will treat this as a redemption of the shares purchased. You will be responsible for any resulting loss incurred by any of the Funds or Advisors and you may be subject to investment losses and tax consequences on such a redemption. If you are already a shareholder, the Funds can redeem shares from any of your account(s) as reimbursement for all losses. The Funds also reserve the right to restrict you from making future purchases in any of the Funds. There is a $25 fee for all returned items, including checks and electronic funds transfers. Please note that there is a 10-calendar day hold on all purchases by check.
· Federal law requires the Funds to obtain, verify and record information that identifies each person who opens an account. Until the Funds receive such information, the Funds may not be able to open an account or effect transactions for you. Furthermore, if the Funds are unable to verify your identity, or that of another person authorized to act on your behalf, or if it is believed potential criminal activity has been identified, the Funds reserve the right to take such action as deemed appropriate, which may include closing your account.
· An investor’s ability to purchase shares may be restricted due to limitations on exchanges, including limitations related to the Funds’ Market Timing/Excessive Trading Policy (see below).
· The Funds are not responsible for any losses due to unauthorized or fraudulent instructions so long as the Funds follow reasonable security procedures to verify your identity. It is your responsibility to review and verify the accuracy of your confirmation statements immediately after you receive them.
In-Kind Purchases of Shares
Advisors, at its sole discretion, may permit an Eligible Investor or Direct Purchaser to purchase Institutional Class shares with investment securities (instead of cash), if: (1) Advisors believes the securities are appropriate investments for the Fund; (2) the securities offered to the Fund are not subject to any restrictions upon their sale by the Fund under the Securities Act of 1933, or otherwise; and (3) the securities are permissible holdings under the Fund’s investment policies and restrictions. If the Fund accepts the securities, the
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Eligible Investor’s or Direct Purchaser’s account will be credited with Fund shares equal in net asset value to the market value of the securities received. Eligible Investors interested in making in-kind purchases should contact the Funds or their intermediary or plan sponsor and Direct Purchasers interested in making in-kind purchases should contact either their Relationship Manager or the Funds directly.
Redeeming Shares – Institutional Class
Eligible Investors and Direct Purchasers can redeem (sell) their Institutional Class shares at any time. Certain redemptions of shares of the Fund will be subject to the Redemption Fee (see the section entitled “Redemption or Exchange Fee” below).
Redeeming Shares—For Shares Held Through an Eligible Investor
If your shares are held through an Eligible Investor, contact the Eligible Investor for applicable redemption requirements. Shares held through an Eligible Investor must be redeemed by the Eligible Investor. For further information, contact your intermediary or plan sponsor.
Redeeming Shares—For Shares Held By Direct Purchasers
If you are a Direct Purchaser, either contact your Relationship Manager or send your written request to one of the addresses listed in the “To open an account or purchase shares by mail (Direct Purchasers Only)” section for applicable redemption requirements. Requests must include: account number, transaction amount (in dollars or shares), signatures of all owners exactly as registered on the account, Medallion Signature Guarantees of each owner on the account (if required), and any other required supporting legal documentation.
Direct Purchasers wishing to make redemption orders by telephone should call their Relationship Manager.
Points to Remember—For All Redemptions
The Funds will only accept redemption requests that specify a dollar amount or number of shares to be redeemed. All other requests, including those specifying a certain price or date, will not be deemed to be in “good order” (see below) and will be returned.
Redemption Proceeds—All Investors
Usually, the Funds send redemption proceeds on the next business day after the Funds receive a redemption request in “good order” by the Funds’ transfer agent (or other authorized Fund agent ) (see below), but not later than seven days afterwards. If a redemption is requested shortly after a recent purchase by check, it may take 10 calendar days for your check to clear and for your shares to be available for redemption.
The Funds can postpone payment if: (a) the NYSE is closed for other than usual weekends or holidays, or trading on the NYSE is restricted; (b) an
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emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or (c) the SEC permits a delay for the protection of investors.
The Funds generally send redemption proceeds to the address of record or bank account of record. If proceeds are to be sent to someone else, a different address or a different bank or if the investor requests a redemption within 30 days of changing its address, the Funds generally will require a letter of instruction from the investor with a Medallion Signature Guarantee for each account holder or for all owners exactly as registered on the account, as appropriate (see below). The Funds can send the redemption proceeds by check to the address of record; by electronic transfer to your bank (Direct Purchasers only); or by wire transfer.
In-Kind Redemptions of Shares
Certain large redemptions of Fund shares may be detrimental to the Fund’s other shareholders because such redemptions can adversely affect a portfolio manager’s ability to implement its investment strategy by causing premature sale of portfolio securities that would otherwise be held. Consequently, if, in any 90-day period, an investor redeems (sells) shares in an amount that exceeds the lesser of (i) $250,000 or (ii) 1% of a Fund’s assets, then the Fund, at its sole discretion, has the right (without prior notice) to satisfy the difference between the redemption amount and the lesser of the two previously mentioned figures with securities from the Fund’s portfolio (which may consist of either Institutional Class shares of the Underlying Funds or actual securities originally held by the Underlying Funds) instead of cash. This is referred to as a “distribution in-kind” redemption and the securities you receive in this manner represent a portion of the Fund or an Underlying Fund’s entire portfolio. The securities you receive will be selected by the Fund in its discretion. The investor receiving the securities will be responsible for disposing of the securities and bearing any associated costs.
Exchanging Shares – Institutional Class
Investors can exchange Institutional Class shares in a Fund for Institutional Class shares of any other fund or Institutional Class shares of any other fund or series of the TIAA-CREF Funds at any time, subject to the limitations described in the Funds’ Market Timing/Excessive Trading Policy below. (An exchange is a simultaneous redemption of shares in a Fund and a purchase of shares in another fund.)
Exchanging Shares—Eligible Investors
If you hold shares through an intermediary, plan sponsor or other Eligible Investor, contact the Eligible Investor for applicable exchange requirements. Eligible Investors can make an exchange through a telephone request by calling their Relationship Manager.
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Exchanging Shares—Direct Purchasers
If you are a Direct Purchaser and would like to make an exchange, you may either call your Relationship Manager or send a letter of instruction to either of the addresses in the “To open an account or purchase shares by mail (Direct Purchasers Only)” section. The letter must include your name, address, and the Funds and/or accounts you want to exchange between.
Exchange Requirements—All Investors
Exchanges between accounts can be made only if the accounts are registered in the same name(s), address and Social Security number or taxpayer identification number. An exchange is considered a sale of securities, and therefore may be a taxable event. Any applicable minimum investment amounts on purchases also apply to exchanges.
The Funds reserve the right to reject any exchange request and to modify, suspend or terminate the exchange privilege for any shareholder or class of shareholders. This may be done, in particular, when your transaction activity is deemed to be harmful to a Fund, including if it is considered to be market-timing activity.
Once made, an exchange request cannot be modified or canceled.
Make sure you understand the investment objective, policies, strategies and risks disclosed in the prospectus of the fund into which you exchange shares. The exchange option is not designed to allow you to time the market. It gives you a convenient way to adjust the balance of your account so that it more closely matches your overall investment objectives and risk tolerance level.
CONVERSION OF SHARES – APPLICABLE TO ALL INVESTORS
A share conversion is a transaction where shares of one class of a Fund are exchanged for shares of another class of the Fund. Share conversions can occur between each share class of a Fund. Generally, share conversions occur where a shareholder becomes eligible for another share class of a Fund or no longer meets the eligibility of the share class they own (and another class exists for which they would be eligible). Please note that a share conversion is generally a non-taxable event, but please consult with your personal tax advisor on your particular circumstances.
A request for a share conversion will not be processed until it is received in “good order” (as defined below) by the Funds’ transfer agent (or other authorized Fund agent). Conversion requests received in “good order” prior to the close of the NYSE (generally 4:00 p.m. Eastern Time) on a day the NYSE is open will receive the NAV of the new class calculated that day. Please note that because the NAVs of each class of the Funds will generally vary due to differences in expenses, you will receive a different number of shares in the new class than you held in the old class, but the total value of your holdings will remain the same.
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The Funds’ market timing policies will not be applicable to share conversions. If you hold your shares through an Eligible Investor like an intermediary or plan sponsor, please contact the Eligible Investor for more information on share conversions. Please note that certain intermediaries or plan sponsors may not permit all types of share conversions. The Funds reserve the right to terminate, suspend or modify the share conversion privilege for any shareholder or group of shareholders.
Voluntary Conversions
If you believe that you are eligible to convert your Fund shares to another class, you may place an order for a share conversion by contacting your Relationship Manager. If you hold your shares through an Eligible Investor like a plan or intermediary, please contact the Eligible Investor regarding conversions. Please be sure to read the applicable sections of the prospectus for the new class in which you wish to convert prior to such a conversion in order to learn more about its different features, performance and expenses. Neither the Funds nor Advisors have any responsibility for reviewing accounts and/or contacting shareholders to apprise them that they may qualify to request a voluntary conversion. Some Eligible Investors may not allow investors who own Fund shares through them to make share conversions.
Mandatory Conversions
The Funds reserve the right to automatically convert shareholders from one class to another if they either no longer qualify as eligible for their existing class or if they become eligible for another class. Such mandatory conversions may be as a result of a change in value of an account due to market movements, exchanges or redemptions. The Funds will notify affected shareholders in writing prior to any mandatory conversion.
IMPORTANT TRANSACTION INFORMATION
Good Order. Purchase, redemption and exchange requests are not processed until received in good order by the Funds’ transfer agent at its processing center (or by another authorized Fund agent). “Good order” means actual receipt of the order along with all information and supporting legal documentation necessary to effect the transaction by the Funds’ transfer agent (or other authorized Fund agent). This information and documentation generally includes the Fund account number, the transaction amount (in dollars or shares), signatures of all account owners exactly as registered on the account and any other information or supporting documentation as the Funds, their transfer agent or other authorized Fund agent may require. With respect to purchase requests, “good order” also generally includes receipt of sufficient funds by the Funds’ transfer agent (or other authorized Fund agent) to effect the purchase. The Funds, their transfer agent or any other authorized Fund agent may, in their sole discretion, determine whether any particular transaction request is in good order and reserve the right to change or waive any good order requirement at any time.
TIAA-CREF Lifecycle Funds ■ Prospectus 185
Financial intermediaries or plan sponsors may have their own requirements for considering transaction requests to be in “good order.” If you hold your shares through a financial intermediary or plan sponsor, please contact them for their specific “good order” requirements.
Share Price. If the Funds’ transfer agent (or other authorized Fund agent) receives an order to purchase, redeem or exchange shares that is in good order anytime before close of regular trading on the NYSE (usually 4:00 p.m. Eastern Time), the transaction price will be the NAV per share for that day. If the Funds’ transfer agent (or other authorized Fund agent) receives an order to purchase, redeem or exchange shares that is in good order anytime after the NYSE closes, the transaction price will be the NAV per share calculated the next business day.
If you hold Institutional, Premier or Retirement Class shares through an Eligible Investor, the Eligible Investor may require you to communicate to it any purchase, redemption or exchange request by a specified deadline earlier than 4:00 p.m. Eastern Time in order to receive that day’s NAV per share as the transaction price.
If you hold Retail Class shares through a financial intermediary, the intermediary may require you to communicate to it any purchase, redemption or exchange request by a specified deadline earlier than 4:00 p.m. Eastern Time in order to receive that day’s NAV per share as the transaction price.
Large Redemptions—Applicable to All Investors. Please contact the Funds before attempting to redeem a large dollar amount of shares (including exchange requests since they include redemption transactions). Large redemptions of Fund shares may be detrimental to the Funds’ other shareholders because such transactions can adversely affect a portfolio manager’s ability to efficiently manage the Fund. By contacting the Fund before you attempt to redeem a large dollar amount, you may avoid in-kind payment of your request.
Minimum Account Size.
· Retail Class. Due to the relatively high cost of maintaining smaller accounts, the Funds reserve the right to redeem shares in any account if the value of that account drops below $1,500. You will be allowed at least 60 days, after written notice, to make an additional investment to bring your account value up to at least the specified minimum before the redemption is processed. The Funds reserve the right to waive or reduce the minimum account size for a Fund account at any time. Additionally, the Funds may increase, terminate or revise the terms of the minimum account size requirements at any time without advance notice to shareholders.
· Premier and Retirement Class. Except as noted above under “Eligibility - Premier Class.” there is currently no minimum account size for Premier or Retirement Class shares. The Funds reserve the right, without prior notice, to establish a minimum amount required to open, maintain or add to an account.
186 Prospectus ■ TIAA-CREF Lifecycle Funds
· Institutional Class. While there is currently no minimum account size for maintaining an Institutional Class account, the Funds reserve the right, without prior notice, to establish a minimum amount required to maintain an account.
Small Account Maintenance Fee—Retail Class. The Funds charge an annual Small Account Maintenance Fee of $15.00 per Retail Class account (applicable to both retirement and nonretirement accounts) in order to allocate shareholder servicing costs equitably if your Fund balance falls below $2,000 (for any reason, including a decrease in market value). Investors cannot pay this fee by any other means besides an automatic deduction of the fee from their account.
The annual Small Account Maintenance Fee will not apply to the following types of Retail Class Fund accounts: accounts held through retirement or employee benefit plans; accounts held through intermediaries and their supermarkets and platforms (i.e., omnibus accounts); accounts that are registered under a taxpayer identification number (or Social Security number) that have aggregated non-retirement or non-employee benefit plan assets held in accounts for the Fund or other series of the Trust of $25,000 or more; accounts currently enrolled in the Fund’s automatic investment plan (AIP); and accounts held through tuition (529) programs. However, the annual Small Account Maintenance Fee will apply to IRAs and Coverdell education savings accounts. The Funds reserve the right to waive or reduce the annual Small Account Maintenance Fee for any Fund account at any time. Additionally, the Funds may increase, terminate or revise the terms of the annual Small Account Maintenance Fee at any time without advance notice to shareholders.
Taxpayer Identification Number. Regardless of whether you hold your Fund shares directly or through a financial intermediary, you must give the Fund your taxpayer identification number (which, for most individuals, is your Social Security number) and tell the Funds whether or not you are subject to back-up withholding. If you do not furnish your taxpayer identification number, redemptions or exchanges of shares, as well as dividends and capital gains distributions, will be subject to back-up tax withholding. In addition, if you hold Fund shares directly and do not furnish your taxpayer identification number, then your account application will be rejected and returned.
Changing Your Address.
· Retail Class. To change the address on your account, please call the Funds or send the Funds a written notification signed by all registered owners of your account. If you hold your shares through a financial intermediary, please contact the intermediary to change your address.
· Premier and Retirement Class. To change the address on an Eligible Investor account, please send the Funds a written notification.
· Institutional Class. To change the address on an account, please contact your Relationship Manager (for Direct Purchasers) or send the Funds a written notification.
TIAA-CREF Lifecycle Funds ■ Prospectus 187
Medallion Signature Guarantee. For some transaction requests (for example, when you are redeeming shares within 30 days of changing your address, bank or bank account or adding certain new services to an existing account), the Funds may require a Medallion Signature Guarantee of each owner of record of an account. This requirement is designed to protect you and the Funds from fraud, and to comply with rules on stock transfers. A Medallion Signature Guarantee is a written endorsement from an eligible guarantor institution that the signature(s) on the written request is (are) valid. Certain commercial banks, trust companies, savings associations, credit unions and members of U.S. stock exchanges participate in the Medallion Signature Guarantee program. No other form of signature verification will be accepted. A notary public cannot provide a signature guarantee. For more information about when a Medallion Signature Guarantee may be required, please contact the Funds or your Relationship Manager (for Direct Purchasers).
Transferring Shares. You can transfer ownership of your account to another person or organization that also qualifies to own the class of shares or change the name on your account by sending the Funds written instructions. Generally, each registered owner of the account must sign the request and provide Medallion Signature Guarantees. When you change the name on an account, shares in that account are transferred to a new account.
Limitations. Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require the Funds to block an account owner’s ability to make certain transactions and thereby refuse to accept a purchase order or any request for transfers or withdrawals, until instructions are received from the appropriate regulator. The Funds may also be required to provide additional information about you and your account to government regulators.
Advice About Your Account—Direct Purchasers Only. TPIS, a TIAA subsidiary, is considered the principal underwriter for the Funds and Services, a TIAA subsidiary, has entered into an agreement with TPIS to sell Fund shares. TPIS representatives are only authorized to recommend securities of TIAA or its affiliates. Neither TPIS nor Services receives commissions for these recommendations.
Customer Complaints. Customer complaints may be directed to TIAA-CREF Lifecycle Funds, 730 Third Avenue, New York, NY 10017-3206, Mail Stop 730/06/41, Attention: Director, Distribution Operation Services.
Transfer On Death—Retail Class. If you live in certain states and hold Retail Class shares, you can designate one or more persons (“beneficiaries”) to whom your Fund shares can be transferred upon death. You can set up your account with a Transfer On Death (“TOD”) registration upon request. (Call us to get the necessary forms.) A TOD registration avoids probate if the beneficiary(ies) survives all shareholders. You maintain total control over your account during your lifetime.
188 Prospectus ■ TIAA-CREF Lifecycle Funds
TIAA-CREF Web Center and Telephone Transactions. The Funds are not liable for losses from unauthorized TIAA-CREF Web Center and telephone transactions so long as reasonable procedures designed to verify the identity of the person effecting the transaction are followed. The Funds require the use of personal identification numbers, codes and other procedures designed to reasonably confirm that instructions given through TIAA-CREF’s Web Center or by telephone are genuine. The Funds also tape record telephone instructions and provide written confirmations of such instructions. The Funds accept all telephone instructions that are reasonably believed to be genuine and accurate. However, you should verify the accuracy of your confirmation statements immediately after you receive them. The Funds may suspend or terminate Internet or telephone transaction facilities at any time, for any reason. If you do not want to be able to effect transactions over the telephone, call the Funds for instructions.
MARKET TIMING/EXCESSIVE TRADING
POLICY—
APPLICABLE TO ALL INVESTORS
There are shareholders who may try to profit from making transactions back and forth among the Funds and other funds in an effort to “time” the market. As money is shifted in and out of a Fund, the Fund may incur transaction costs, including, among other things, expenses for buying and selling securities. These costs are borne by all Fund shareholders, including long-term investors who do not generate these costs. In addition, market timing can interfere with efficient portfolio management and cause dilution, if timers are able to take advantage of pricing inefficiencies. Consequently, the Funds are not appropriate for such market timing and you should not invest in the Funds if you want to engage in market timing activity.
The Board of Trustees has adopted policies and procedures to discourage this market timing activity. Under these policies and procedures, if, within a 60-calendar day period, a shareholder redeems or exchanges any monies out of a Fund, subsequently purchases or exchanges any monies back into the Fund and then redeems or exchanges any monies out of the Fund, the shareholder will not be permitted to transfer back into the Fund through a purchase or exchange for 90 calendar days.
These market timing policies and procedures will not be applied to certain types of transactions like reinvestments of dividends and capital gains distributions, systematic withdrawals, systematic purchases, automatic rebalancings, death and hardship withdrawals, certain transactions made within a retirement or employee benefit plan, such as contributions, mandatory distributions, loans and plan sponsor-initiated transactions, and other types of transactions specified by the Fund. In addition, the market timing policies and procedures will not apply to certain tuition (529) programs, funds of funds, wrap programs, asset allocation programs and other similar programs that are approved by the Fund. The Fund may also waive the market timing policies and
TIAA-CREF Lifecycle Funds ■ Prospectus 189
procedures when it is believed that such waiver is in a Fund’s best interests, including but not limited to when it is determined that enforcement of these policies and procedures is not necessary to protect the Fund from the effects of short-term trading.
The Funds also reserve the right to reject any purchase or exchange request, including when it is believed that a request would be disruptive to a Funds’ efficient portfolio management. The Funds also may suspend or terminate your ability to transact by telephone, fax or Internet for any reason, including the prevention of market timing. A purchase or exchange request could be rejected or electronic trading privileges could be suspended because of the timing or amount of the investment or because of a history of excessive trading by the investor. Because the Funds have discretion in applying this policy, it is possible that similar transaction activity could be handled differently because of the surrounding circumstances.
The Funds’ portfolio securities are fair valued, as necessary (most frequently with respect to international holdings), to help ensure that a portfolio security’s true value is reflected in the Funds’ NAVs, thereby minimizing any potential stale price arbitrage.
The Funds seek to apply their specifically defined market timing policies and procedures uniformly to all shareholders, and not to make exceptions with respect to these policies and procedures (beyond the exemptions noted above). The Funds make reasonable efforts to apply these policies and procedures to shareholders who own shares through omnibus accounts. At times, the Funds may agree to defer to an intermediary’s market timing policy if the Fund believes that the intermediary’s policy provides comparable protection of Fund shareholders’ interests. The Funds have the right to modify their market timing policies and procedures at any time without advance notice. These efforts may include requesting transaction data from intermediaries from time to time to verify whether a Fund’s policies are being followed and/or to instruct intermediaries to take action against shareholders who have violated a Fund’s market timing policies.
The Funds are not appropriate for market timing. You should not invest in the Funds if you want to engage in market timing activity.
Shareholders seeking to engage in market timing may deploy a variety of strategies to avoid detection, and, despite efforts to discourage market timing, there is no guarantee that the Funds or their agents will be able to identify such shareholders or curtail their trading practices.
If you invest in the Funds through an intermediary, including through a retirement or employee benefit plan, you may be subject to additional market timing or excessive trading policies implemented by the intermediary or plan. Please contact your intermediary or plan sponsor for more details.
190 Prospectus ■ TIAA-CREF Lifecycle Funds
If you received this Prospectus electronically and would like a paper copy, please contact the Funds and one will be sent to you.
ADDITIONAL INFORMATION ABOUT INDEX PROVIDERS
The Russell 3000® Index is a trademark/service mark of the Russell Investment Group. The Russell Investment Group is the owner of the copyrights relating to the Russell Indexes and is the source and owner of the data contained or reflected in the performance values relating to the Russell Indexes. The Funds are not promoted by, nor in any way affiliated with, the Russell Investment Group. The Russell Investment Group is not responsible for and has not reviewed the Funds nor any associated literature or publications and the Russell Investment Group makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise.
Code: The Internal Revenue Code of 1986, as amended, including any applicable regulations and Revenue Rulings.
Duration: Duration is a measure of volatility in the price of a bond in response to a change in prevailing interest rates, with a longer duration indicating more volatility. It can be understood as the weighted average of the time to each coupon and principal payment of such a security. For an investment portfolio of fixed-income securities, duration is the weighted average of each security’s duration.
Equity Securities: Primarily, common stock, preferred stock and securities convertible or exchangeable into common stock, including convertible debt securities, convertible preferred stock and warrants or rights to acquire common stock.
Fixed-Income or Fixed-Income Securities: Primarily, bonds and notes (such as corporate and government debt obligations), mortgage-backed securities, asset-backed securities, and structured securities that generally pay fixed or variable rates of interest; debt obligations issued at a discount from face value (i.e., that have an imputed rate of interest); non-interest bearing debt securities (i.e., zero coupon bonds) and other non-equity securities that pay dividends.
Foreign Investments: Foreign investments may include securities of foreign issuers, securities or contracts traded or acquired in non-U.S. markets or on non-U.S. exchanges, or securities or contracts payable or denominated in non-U.S. currencies. Obligations issued by U.S. companies in non-U.S. currencies are not considered to be foreign investments.
TIAA-CREF Lifecycle Funds ■ Prospectus 191
Foreign
Issuers: Foreign issuers generally include (1) companies whose securities are principally traded
outside of the United States, (2) companies having their principal business operations outside of the
United States,
(3) companies organized outside the United States, and (4) foreign governments and
agencies or instrumentalities of foreign governments.
High-Yield Bond: A bond that has been rated lower than investment-grade by rating agencies or is deemed as such by Advisors and that generally pays a higher yield to compensate for its greater risk of default.
Investment Glidepath: The general movement of the target allocations of the Funds (other than the Lifecycle Retirement Income Fund) from Underlying Funds that invest in equity securities to Underlying Funds that invest in fixed-income securities as a Fund’s target retirement year approaches, as well as after that target retirement year is reached.
Investment-Grade: A fixed-income security is investment-grade if it is rated in the four highest categories by a nationally recognized statistical rating organization (“NRSRO”) or unrated securities that Advisors determines are of comparable quality.
Short-Term Fixed Income: Fixed Income Securities with maturities from less than one year to five years.
U. S. Government Securities: Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities.
192 Prospectus ■ TIAA-CREF Lifecycle Funds
The Financial Highlights table is intended to help you understand the financial performance of each class of shares of the Lifecycle Funds for the past five years (or, if the class has not been in operation for five years, since commencement of operations of that class). Certain information reflects financial results for a single share of the Fund. The total returns in the table show the rates that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions).
PricewaterhouseCoopers LLP serves as the Funds’ independent registered public accounting firm and has audited the financial statements of the Fund for each of the periods presented. Their report appear in the Trust’s Annual Report, which is available without charge upon request.
TIAA-CREF Lifecycle Funds ■ Prospectus 193
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE RETIREMENT INCOME FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (b) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 8.84 |
| $ | 8.65 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (e) | 0.18 | 0.21 | 0.31 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.58 |
|
| 0.19 |
|
| (1.34 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.76 |
|
| 0.40 |
|
| (1.03 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.19 | ) | (0.21 | ) | (0.32 | ) | ||||
Net realized gains | — | — | — | |||||||
Total distributions |
| (0.19 | ) |
| (0.21 | ) |
| (0.32 | ) | |
Net asset value, | ||||||||||
end of period | $ | 9.41 |
| $ | 8.84 |
| $ | 8.65 |
| |
TOTAL RETURN |
| 8.65 | % |
| 4.86 | % |
| (10.49 | )%(f) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $39,682 | $19,384 | $4,800 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (g) | 0.70 | % | 1.01 | % | 1.79 | %(h) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (g) | 0.25 | % | 0.25 | % | 0.25 | %(h) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 2.04 | % | 2.59 | % | 4.00 | %(h) | ||||
Portfolio turnover rate |
| 33 | % |
| 38 | % |
| 26 | %(f) | |
194 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE RETIREMENT INCOME FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (a) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 8.85 |
| $ | 8.65 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (e) | 0.21 | 0.23 | 0.34 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.58 |
|
| 0.19 |
|
| (1.36 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.79 |
|
| 0.42 |
|
| (1.02 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.21 | ) | (0.22 | ) | (0.33 | ) | ||||
Net realized gains | — | — | — | |||||||
Total distributions |
| (0.21 | ) |
| (0.22 | ) |
| (0.33 | ) | |
Net asset value, | ||||||||||
end of period | $ | 9.43 |
| $ | 8.85 |
| $ | 8.65 |
| |
TOTAL RETURN |
| 9.01 | % |
| 5.19 | % |
| (10.37 | )%(f) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $11,111 | $5,554 | $2,691 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (g) | 0.41 | % | 0.73 | % | 1.49 | %(h) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (g) | 0.00 | % | 0.00 | % | 0.00 | %(h) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 2.27 | % | 2.86 | % | 4.30 | %(h) | ||||
Portfolio turnover rate |
| 33 | % |
| 38 | % |
| 26 | %(f) | |
TIAA-CREF Lifecycle Funds ■ Prospectus 195
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE RETIREMENT INCOME FUND ■ FOR THE PERIOD OR YEAR ENDED
Retail Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (c) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 8.85 |
| $ | 8.65 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (e) | 0.19 | 0.23 | 0.32 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.58 |
|
| 0.19 |
|
| (1.34 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.77 |
|
| 0.42 |
|
| (1.02 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.20 | ) | (0.22 | ) | (0.33 | ) | ||||
Net realized gains | — | — | — | |||||||
Total distributions |
| (0.20 | ) |
| (0.22 | ) |
| (0.33 | ) | |
Net asset value, | ||||||||||
end of period | $ | 9.42 |
| $ | 8.85 |
| $ | 8.65 |
| |
TOTAL RETURN |
| 8.76 | % |
| 5.16 | % |
| (10.37 | )%(f) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $16,652 | $8,460 | $6,171 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (g) | 0.55 | % | 0.97 | % | 1.72 | %(h) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (g) | 0.15 | % | 0.05 | % | 0.00 | %(h) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 2.14 | % | 2.92 | % | 4.09 | %(h) | ||||
Portfolio turnover rate |
| 33 | % |
| 38 | % |
| 26 | %(f) | |
196 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE RETIREMENT INCOME FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (d) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 8.85 |
| $ | 8.85 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (e) | 0.17 | 0.00 | (i) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.61 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.78 |
|
| 0.00 | (i) | ||
Less distributions from: | |||||||
Net investment income | (0.20 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.20 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 9.43 |
| $ | 8.85 |
| |
TOTAL RETURN |
| 8.86 | % |
| 0.00 | %(f) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $1,453 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (g) | 0.58 | % | 220.71 | %(h) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (g) | 0.15 | % | 0.15 | %(h) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 1.91 | % | 0.00 | %(h) | |||
Portfolio turnover rate |
| 33 | % |
| 38 | % | |
(a) | The Institutional Class commenced operations on November 30, 2007. |
(b) | The Retirement Class commenced operations on November 30, 2007. |
(c) | The Retail Class commenced operations on November 30, 2007. |
(d) | The Premier Class commenced operations on September 30, 2009. |
(e) | Based on average shares outstanding. |
(f) | The percentages shown for this period are not annualized. |
(g) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.38% for the period ended September 30, 2010. |
(h) | The percentages shown for this period are annualized. |
(i) | Amount represents less than $0.01 per share. |
TIAA-CREF Lifecycle Funds ■ Prospectus 197
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2010 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 10.05 |
| $ | 10.06 |
| $ | 12.04 |
| $ | 10.99 |
| $ | 10.61 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.21 | 0.24 | 0.37 | 0.34 | 0.36 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.70 |
|
| 0.05 |
|
| (1.95 | ) |
| 0.98 |
|
| 0.29 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.91 |
|
| 0.29 |
|
| (1.58 | ) |
| 1.32 |
|
| 0.65 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.20 | ) | (0.21 | ) | (0.34 | ) | (0.24 | ) | (0.25 | ) | ||||||
Net realized gains | — | (0.09 | ) | (0.06 | ) | (0.03 | ) | (0.02 | ) | |||||||
Total distributions |
| (0.20 | ) |
| (0.30 | ) |
| (0.40 | ) |
| (0.27 | ) |
| (0.27 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.76 |
| $ | 10.05 |
| $ | 10.06 |
| $ | 12.04 |
| $ | 10.99 |
| |
TOTAL RETURN |
| 9.23 | % |
| 3.36 | % |
| (13.59 | )% |
| 12.21 | % |
| 6.32 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $469,156 | $395,514 | $351,907 | $255,875 | $59,699 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.51 | % | 0.46 | % | 0.48 | % | 0.69 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 2.07 | % | 2.76 | % | 3.27 | % | 2.93 | % | 3.32 | % | ||||||
Portfolio turnover rate |
| 24 | % |
| 60 | % |
| 26 | % |
| 12 | % |
| 13 | % | |
198 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2010 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 8.97 |
| $ | 9.02 |
| $ | 10.83 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.20 | 0.23 | 0.32 | 0.22 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.63 |
|
| 0.05 |
|
| (1.71 | ) |
| 0.61 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.83 |
|
| 0.28 |
|
| (1.39 | ) |
| 0.83 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.22 | ) | (0.24 | ) | (0.36 | ) | — | ||||||
Net realized gains | — | (0.09 | ) | (0.06 | ) | — | |||||||
Total distributions |
| (0.22 | ) |
| (0.33 | ) |
| (0.42 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 9.58 |
| $ | 8.97 |
| $ | 9.02 |
| $ | 10.83 |
| |
TOTAL RETURN |
| 9.48 | % |
| 3.63 | % |
| (13.37 | )% |
| 8.30 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $38,539 | $17,753 | $9,649 | $3,735 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.21 | % | 0.17 | % | 0.31 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 2.20 | % | 2.90 | % | 3.24 | % | 3.04 | %(f) | |||||
Portfolio turnover rate |
| 24 | % |
| 60 | % |
| 26 | % |
| 12 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 199
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2010 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 8.97 |
| $ | 8.97 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.14 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.68 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.82 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.22 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.22 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 9.57 |
| $ | 8.97 |
| |
TOTAL RETURN |
| 9.32 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $27,054 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 1.50 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 24 | % |
| 60 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.40% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
200 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2015 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.94 |
| $ | 9.99 |
| $ | 12.26 |
| $ | 11.06 |
| $ | 10.66 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.20 | 0.22 | 0.35 | 0.32 | 0.31 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.72 |
|
| (0.02 | ) |
| (2.23 | ) |
| 1.16 |
|
| 0.40 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.92 |
|
| 0.20 |
|
| (1.88 | ) |
| 1.48 |
|
| 0.71 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.19 | ) | (0.21 | ) | (0.32 | ) | (0.26 | ) | (0.26 | ) | ||||||
Net realized gains | — | (0.04 | ) | (0.07 | ) | (0.02 | ) | (0.05 | ) | |||||||
Total distributions |
| (0.19 | ) |
| (0.25 | ) |
| (0.39 | ) |
| (0.28 | ) |
| (0.31 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.67 |
| $ | 9.94 |
| $ | 9.99 |
| $ | 12.26 |
| $ | 11.06 |
| |
TOTAL RETURN |
| 9.36 | % |
| 2.49 | % |
| (15.83 | )% |
| 13.60 | % |
| 6.80 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $580,270 | $456,392 | $295,996 | $201,246 | $53,660 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.51 | % | 0.47 | % | 0.49 | % | 0.61 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.96 | % | 2.57 | % | 3.08 | % | 2.74 | % | 2.91 | % | ||||||
Portfolio turnover rate |
| 19 | % |
| 34 | % |
| 22 | % |
| 15 | % |
| 6 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 201
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2015 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 8.75 |
| $ | 8.84 |
| $ | 10.88 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.18 | 0.20 | 0.33 | 0.18 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.65 |
|
| (0.02 | ) |
| (1.96 | ) |
| 0.70 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.83 |
|
| 0.18 |
|
| (1.63 | ) |
| 0.88 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.21 | ) | (0.23 | ) | (0.34 | ) | — | ||||||
Net realized gains | — | (0.04 | ) | (0.07 | ) | — | |||||||
Total distributions |
| (0.21 | ) |
| (0.27 | ) |
| (0.41 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 9.37 |
| $ | 8.75 |
| $ | 8.84 |
| $ | 10.88 |
| |
TOTAL RETURN |
| 9.62 | % |
| 2.66 | % |
| (15.57 | )% |
| 8.80 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $50,118 | $18,419 | $6,896 | $3,525 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.21 | % | 0.17 | % | 0.32 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 2.03 | % | 2.59 | % | 3.36 | % | 2.37 | %(f) | |||||
Portfolio turnover rate |
| 19 | % |
| 34 | % |
| 22 | % |
| 15 | % | |
202 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2015 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 8.75 |
| $ | 8.75 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.12 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.69 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.81 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.20 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.20 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 9.36 |
| $ | 8.75 |
| |
TOTAL RETURN |
| 9.47 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $31,743 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 1.36 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 19 | % |
| 34 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.41% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
TIAA-CREF Lifecycle Funds ■ Prospectus 203
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2020 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.74 |
| $ | 9.87 |
| $ | 12.48 |
| $ | 11.18 |
| $ | 10.71 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.18 | 0.20 | 0.32 | 0.29 | 0.29 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.72 |
|
| (0.11 | ) |
| (2.52 | ) |
| 1.28 |
|
| 0.48 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.90 |
|
| 0.09 |
|
| (2.20 | ) |
| 1.57 |
|
| 0.77 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.17 | ) | (0.17 | ) | (0.32 | ) | (0.26 | ) | (0.27 | ) | ||||||
Net realized gains | — | (0.05 | ) | (0.09 | ) | (0.01 | ) | (0.03 | ) | |||||||
Total distributions |
| (0.17 | ) |
| (0.22 | ) |
| (0.41 | ) |
| (0.27 | ) |
| (0.30 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.47 |
| $ | 9.74 |
| $ | 9.87 |
| $ | 12.48 |
| $ | 11.18 |
| |
TOTAL RETURN |
| 9.36 | % |
| 1.40 | % |
| (18.21 | )% |
| 14.23 | % |
| 7.30 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $672,342 | $479,735 | $277,700 | $181,152 | $45,193 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.51 | % | 0.48 | % | 0.50 | % | 0.70 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.32 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.80 | % | 2.41 | % | 2.87 | % | 2.42 | % | 2.66 | % | ||||||
Portfolio turnover rate |
| 16 | % |
| 27 | % |
| 20 | % |
| 20 | % |
| 1 | % | |
204 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2020 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 8.43 |
| $ | 8.58 |
| $ | 10.89 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.16 | 0.18 | 0.28 | 0.13 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.64 |
|
| (0.09 | ) |
| (2.16 | ) |
| 0.76 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.80 |
|
| 0.09 |
|
| (1.88 | ) |
| 0.89 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.19 | ) | (0.19 | ) | (0.34 | ) | — | ||||||
Net realized gains | — | (0.05 | ) | (0.09 | ) | — | |||||||
Total distributions |
| (0.19 | ) |
| (0.24 | ) |
| (0.43 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 9.04 |
| $ | 8.43 |
| $ | 8.58 |
| $ | 10.89 |
| |
TOTAL RETURN |
| 9.63 | % |
| 1.66 | % |
| (17.95 | )% |
| 8.90 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $51,076 | $16,959 | $5,618 | $1,472 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.21 | % | 0.19 | % | 0.43 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 1.86 | % | 2.45 | % | 2.91 | % | 1.83 | %(f) | |||||
Portfolio turnover rate |
| 16 | % |
| 27 | % |
| 20 | % |
| 20 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 205
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2020 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 8.43 |
| $ | 8.43 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.10 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.70 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.80 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.19 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.19 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 9.04 |
| $ | 8.43 |
| |
TOTAL RETURN |
| 9.59 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $38,234 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 1.16 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 16 | % |
| 27 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.42% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
206 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2025 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.51 |
| $ | 9.75 |
| $ | 12.62 |
| $ | 11.24 |
| $ | 10.75 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.16 | 0.18 | 0.30 | 0.26 | 0.25 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.74 |
|
| (0.21 | ) |
| (2.78 | ) |
| 1.42 |
|
| 0.55 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.90 |
|
| (0.03 | ) |
| (2.48 | ) |
| 1.68 |
|
| 0.80 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.16 | ) | (0.15 | ) | (0.31 | ) | (0.28 | ) | (0.28 | ) | ||||||
Net realized gains | — | (0.06 | ) | (0.08 | ) | (0.02 | ) | (0.03 | ) | |||||||
Total distributions |
| (0.16 | ) |
| (0.21 | ) |
| (0.39 | ) |
| (0.30 | ) |
| (0.31 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.25 |
| $ | 9.51 |
| $ | 9.75 |
| $ | 12.62 |
| $ | 11.24 |
| |
TOTAL RETURN |
| 9.55 | % |
| 0.08 | % |
| (20.25 | )% |
| 15.18 | % |
| 7.59 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $630,705 | $447,297 | $246,043 | $143,559 | $34,164 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.52 | % | 0.49 | % | 0.53 | % | 0.73 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.67 | % | 2.27 | % | 2.64 | % | 2.12 | % | 2.25 | % | ||||||
Portfolio turnover rate |
| 15 | % |
| 22 | % |
| 17 | % |
| 25 | % |
| 3 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 207
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2025 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 8.17 |
| $ | 8.41 |
| $ | 10.93 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.14 | 0.16 | 0.26 | 0.11 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.65 |
|
| (0.17 | ) |
| (2.37 | ) |
| 0.82 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.79 |
|
| (0.01 | ) |
| (2.11 | ) |
| 0.93 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.18 | ) | (0.17 | ) | (0.33 | ) | — | ||||||
Net realized gains | — | (0.06 | ) | (0.08 | ) | — | |||||||
Total distributions |
| (0.18 | ) |
| (0.23 | ) |
| (0.41 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 8.78 |
| $ | 8.17 |
| $ | 8.41 |
| $ | 10.93 |
| |
TOTAL RETURN |
| 9.76 | % |
| 0.37 | % |
| (20.04 | )% |
| 9.30 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $50,809 | $17,434 | $5,096 | $2,204 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.22 | % | 0.19 | % | 0.38 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 1.72 | % | 2.21 | % | 2.63 | % | 1.45 | %(f) | |||||
Portfolio turnover rate |
| 15 | % |
| 22 | % |
| 17 | % |
| 25 | % | |
208 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2025 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 8.17 |
| $ | 8.17 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.08 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.68 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.76 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.17 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.17 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 8.76 |
| $ | 8.17 |
| |
TOTAL RETURN |
| 9.47 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $36,184 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 0.97 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 15 | % |
| 22 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.43% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
TIAA-CREF Lifecycle Funds ■ Prospectus 209
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2030 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.28 |
| $ | 9.65 |
| $ | 12.81 |
| $ | 11.30 |
| $ | 10.74 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.14 | 0.16 | 0.28 | 0.24 | 0.23 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.73 |
|
| (0.34 | ) |
| (3.03 | ) |
| 1.55 |
|
| 0.63 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.87 |
|
| (0.18 | ) |
| (2.75 | ) |
| 1.79 |
|
| 0.86 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.14 | ) | (0.15 | ) | (0.32 | ) | (0.26 | ) | (0.27 | ) | ||||||
Net realized gains | — | (0.04 | ) | (0.09 | ) | (0.02 | ) | (0.03 | ) | |||||||
Total distributions |
| (0.14 | ) |
| (0.19 | ) |
| (0.41 | ) |
| (0.28 | ) |
| (0.30 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.01 |
| $ | 9.28 |
| $ | 9.65 |
| $ | 12.81 |
| $ | 11.30 |
| |
TOTAL RETURN |
| 9.51 | % |
| (1.41 | )% |
| (22.21 | )% |
| 16.07 | % |
| 8.20 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $607,051 | $429,188 | $222,388 | $128,768 | $29,807 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.52 | % | 0.50 | % | 0.55 | % | 0.85 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.50 | % | 2.05 | % | 2.43 | % | 1.94 | % | 2.06 | % | ||||||
Portfolio turnover rate |
| 14 | % |
| 18 | % |
| 17 | % |
| 29 | % |
| 0 | %(g) | |
210 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2030 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 7.87 |
| $ | 8.22 |
| $ | 10.96 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.12 | 0.14 | 0.26 | 0.02 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.64 |
|
| (0.28 | ) |
| (2.58 | ) |
| 0.94 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.76 |
|
| (0.14 | ) |
| (2.32 | ) |
| 0.96 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.16 | ) | (0.17 | ) | (0.33 | ) | — | ||||||
Net realized gains | — | (0.04 | ) | (0.09 | ) | — | |||||||
Total distributions |
| (0.16 | ) |
| (0.21 | ) |
| (0.42 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 8.47 |
| $ | 7.87 |
| $ | 8.22 |
| $ | 10.96 |
| |
TOTAL RETURN |
| 9.80 | % |
| (1.14 | )% |
| (21.99 | )% |
| 9.60 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $45,757 | $15,396 | $4,003 | $1,735 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.22 | % | 0.19 | % | 0.46 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 1.52 | % | 2.11 | % | 2.68 | % | 0.33 | %(f) | |||||
Portfolio turnover rate |
| 14 | % |
| 18 | % |
| 17 | % |
| 29 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 211
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2030 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 7.87 |
| $ | 7.87 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.06 | 0.00 | (h) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.68 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.74 |
|
| 0.00 | (h) | ||
Less distributions from: | |||||||
Net investment income | (0.16 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.16 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 8.45 |
| $ | 7.87 |
| |
TOTAL RETURN |
| 9.50 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $32,600 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 0.75 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 14 | % |
| 18 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.44% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Percentage is less than 1%. |
(h) | Amount represents less than $0.01 per share. |
212 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2035 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.24 |
| $ | 9.68 |
| $ | 12.98 |
| $ | 11.38 |
| $ | 10.78 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.13 | 0.14 | 0.25 | 0.21 | 0.19 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.72 |
|
| (0.38 | ) |
| (3.16 | ) |
| 1.68 |
|
| 0.73 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.85 |
|
| (0.24 | ) |
| (2.91 | ) |
| 1.89 |
|
| 0.92 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.13 | ) | (0.16 | ) | (0.31 | ) | (0.27 | ) | (0.28 | ) | ||||||
Net realized gains | — | (0.04 | ) | (0.08 | ) | (0.02 | ) | (0.04 | ) | |||||||
Total distributions |
| (0.13 | ) |
| (0.20 | ) |
| (0.39 | ) |
| (0.29 | ) |
| (0.32 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 9.96 |
| $ | 9.24 |
| $ | 9.68 |
| $ | 12.98 |
| $ | 11.38 |
| |
TOTAL RETURN |
| 9.33 | % |
| (1.94 | )% |
| (23.10 | )% |
| 16.91 | % |
| 8.62 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $598,803 | $421,832 | $197,256 | $102,014 | $19,426 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.46 | % | 0.51 | % | 0.51 | % | 0.60 | % | 1.03 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.33 | % | 1.86 | % | 2.22 | % | 1.72 | % | 1.76 | % | ||||||
Portfolio turnover rate |
| 11 | % |
| 15 | % |
| 17 | % |
| 24 | % |
| 1 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 213
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2035 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 7.75 |
| $ | 8.16 |
| $ | 11.00 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.11 | 0.12 | 0.23 | 0.07 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.63 |
|
| (0.31 | ) |
| (2.66 | ) |
| 0.93 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.74 |
|
| (0.19 | ) |
| (2.43 | ) |
| 1.00 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.15 | ) | (0.18 | ) | (0.33 | ) | — | ||||||
Net realized gains | — | (0.04 | ) | (0.08 | ) | — | |||||||
Total distributions |
| (0.15 | ) |
| (0.22 | ) |
| (0.41 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 8.34 |
| $ | 7.75 |
| $ | 8.16 |
| $ | 11.00 |
| |
TOTAL RETURN |
| 9.67 | % |
| (1.67 | )% |
| (22.94 | )% |
| 10.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $42,535 | $14,247 | $3,569 | $1,432 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.16 | % | 0.21 | % | 0.21 | % | 0.55 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 1.33 | % | 1.87 | % | 2.35 | % | 0.90 | %(f) | |||||
Portfolio turnover rate |
| 11 | % |
| 15 | % |
| 17 | % |
| 24 | % | |
214 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2035 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 7.75 |
| $ | 7.75 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.04 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.69 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.73 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.15 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.15 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 8.33 |
| $ | 7.75 |
| |
TOTAL RETURN |
| 9.50 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $37,314 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 0.51 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 11 | % |
| 15 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.45% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
TIAA-CREF Lifecycle Funds ■ Prospectus 215
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2040 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 |
| 09/30/06 |
| |||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||||||||
Net asset value, | ||||||||||||||||
beginning of period | $ | 9.40 |
| $ | 9.83 |
| $ | 13.16 |
| $ | 11.45 |
| $ | 10.81 |
| |
Gain (loss) from investment operations: | ||||||||||||||||
Net investment | ||||||||||||||||
income (c) | 0.13 | 0.15 | 0.26 | 0.20 | 0.17 | |||||||||||
Net realized and | ||||||||||||||||
unrealized gain (loss) | ||||||||||||||||
on total investments |
| 0.75 |
|
| (0.38 | ) |
| (3.21 | ) |
| 1.82 |
|
| 0.79 |
| |
Total gain (loss) from | ||||||||||||||||
investment operations | 0.88 |
|
| (0.23 | ) |
| (2.95 | ) |
| 2.02 |
|
| 0.96 |
| ||
Less distributions from: | ||||||||||||||||
Net investment income | (0.14 | ) | (0.16 | ) | (0.31 | ) | (0.28 | ) | (0.27 | ) | ||||||
Net realized gains | — | (0.04 | ) | (0.07 | ) | (0.03 | ) | (0.05 | ) | |||||||
Total distributions |
| (0.14 | ) |
| (0.20 | ) |
| (0.38 | ) |
| (0.31 | ) |
| (0.32 | ) | |
Net asset value, | ||||||||||||||||
end of period | $ | 10.14 |
| $ | 9.40 |
| $ | 9.83 |
| $ | 13.16 |
| $ | 11.45 |
| |
TOTAL RETURN |
| 9.42 | % |
| (1.91 | )% |
| (23.09 | )% |
| 17.93 | % |
| 9.04 | % | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
Net assets at end of | ||||||||||||||||
period (in thousands) | $893,915 | $639,490 | $285,171 | $141,996 | $21,093 | |||||||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
before expense waiver | ||||||||||||||||
and reimbursement (e) | 0.45 | % | 0.50 | % | 0.48 | % | 0.57 | % | 1.19 | % | ||||||
Ratio of expenses to | ||||||||||||||||
average net assets | ||||||||||||||||
after expense waiver | ||||||||||||||||
and reimbursement (e) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.33 | % | ||||||
Ratio of net investment | ||||||||||||||||
income to average | ||||||||||||||||
net assets | 1.35 | % | 1.84 | % | 2.21 | % | 1.59 | % | 1.50 | % | ||||||
Portfolio turnover rate |
| 10 | % |
| 14 | % |
| 16 | % |
| 18 | % |
| 17 | % | |
216 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2040 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | |||||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 |
| 09/30/07 | (a) | ||||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||||||||
Net asset value, | |||||||||||||
beginning of period | $ | 7.81 |
| $ | 8.21 |
| $ | 11.04 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | |||||||||||||
Net investment | |||||||||||||
income (c) | 0.11 | 0.12 | 0.23 | 0.06 | |||||||||
Net realized and | |||||||||||||
unrealized gain (loss) | |||||||||||||
on total investments |
| 0.63 |
|
| (0.31 | ) |
| (2.67 | ) |
| 0.98 |
| |
Total gain (loss) from | |||||||||||||
investment operations | 0.74 |
|
| (0.19 | ) |
| (2.44 | ) |
| 1.04 |
| ||
Less distributions from: | |||||||||||||
Net investment income | (0.15 | ) | (0.17 | ) | (0.32 | ) | — | ||||||
Net realized gains | — | (0.04 | ) | (0.07 | ) | — | |||||||
Total distributions |
| (0.15 | ) |
| (0.21 | ) |
| (0.39 | ) |
| — |
| |
Net asset value, | |||||||||||||
end of period | $ | 8.40 |
| $ | 7.81 |
| $ | 8.21 |
| $ | 11.04 |
| |
TOTAL RETURN |
| 9.65 | % |
| (1.66 | )% |
| (22.87 | )% |
| 10.40 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||||||||
Net assets at end of | |||||||||||||
period (in thousands) | $60,554 | $21,359 | $5,714 | $2,414 | |||||||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
before expense waiver | |||||||||||||
and reimbursement (e) | 0.15 | % | 0.20 | % | 0.18 | % | 0.44 | %(f) | |||||
Ratio of expenses to | |||||||||||||
average net assets | |||||||||||||
after expense waiver | |||||||||||||
and reimbursement (e) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | %(f) | |||||
Ratio of net investment | |||||||||||||
income to average | |||||||||||||
net assets | 1.32 | % | 1.86 | % | 2.39 | % | 0.78 | %(f) | |||||
Portfolio turnover rate |
| 10 | % |
| 14 | % |
| 16 | % |
| 18 | % | |
TIAA-CREF Lifecycle Funds ■ Prospectus 217
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2040 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (b) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 7.81 |
| $ | 7.81 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (c) | 0.04 | 0.00 | (g) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.70 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.74 |
|
| 0.00 | (g) | ||
Less distributions from: | |||||||
Net investment income | (0.15 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.15 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 8.40 |
| $ | 7.81 |
| |
TOTAL RETURN |
| 9.61 | % |
| 0.00 | %(d) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $49,852 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (e) | 0.31 | % | 220.71 | %(f) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (e) | 0.15 | % | 0.15 | %(f) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 0.50 | % | 0.00 | %(f) | |||
Portfolio turnover rate |
| 10 | % |
| 14 | % | |
(a) | The Institutional Class commenced operations on January 17, 2007. |
(b) | The Premier Class commenced operations on September 30, 2009. |
(c) | Based on average shares outstanding. |
(d) | The percentages shown for this period are not annualized. |
(e) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.45% for the period ended September 30, 2010. |
(f) | The percentages shown for this period are annualized. |
(g) | Amount represents less than $0.01 per share. |
218 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2045 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (b) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 7.14 |
| $ | 7.56 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (d) | 0.09 | 0.07 | 0.16 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.57 |
|
| (0.33 | ) |
| (2.38 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.66 |
|
| (0.26 | ) |
| (2.22 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.10 | ) | (0.12 | ) | (0.22 | ) | ||||
Net realized gains | — | (0.04 | ) | — | ||||||
Total distributions |
| (0.10 | ) |
| (0.16 | ) |
| (0.22 | ) | |
Net asset value, | ||||||||||
end of period | $ | 7.70 |
| $ | 7.14 |
| $ | 7.56 |
| |
TOTAL RETURN |
| 9.32 | % |
| (2.93 | )% |
| (22.69 | )%(e) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $84,309 | $30,587 | $3,287 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (f) | 0.64 | % | 0.98 | % | 6.60 | %(g) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (f) | 0.25 | % | 0.25 | % | 0.25 | %(g) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 1.17 | % | 1.21 | % | 2.23 | %(g) | ||||
Portfolio turnover rate |
| 18 | % |
| 8 | % |
| 27 | %(e) | |
TIAA-CREF Lifecycle Funds ■ Prospectus 219
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2045 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (a) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 7.16 |
| $ | 7.57 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (d) | 0.09 | 0.12 | 0.26 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.59 |
|
| (0.37 | ) |
| (2.47 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.68 |
|
| (0.25 | ) |
| (2.21 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.11 | ) | (0.12 | ) | (0.22 | ) | ||||
Net realized gains | — | (0.04 | ) | — | ||||||
Total distributions |
| (0.11 | ) |
| (0.16 | ) |
| (0.22 | ) | |
Net asset value, | ||||||||||
end of period | $ | 7.73 |
| $ | 7.16 |
| $ | 7.57 |
| |
TOTAL RETURN |
| 9.58 | % |
| (2.68 | )% |
| (22.57 | )%(e) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $7,970 | $2,039 | $780 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (f) | 0.35 | % | 0.70 | % | 6.40 | %(g) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (f) | 0.00 | % | 0.00 | % | 0.00 | %(g) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 1.29 | % | 1.95 | % | 3.55 | %(g) | ||||
Portfolio turnover rate |
| 18 | % |
| 8 | % |
| 27 | %(e) | |
220 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2045 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (c) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 7.16 |
| $ | 7.16 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (d) | 0.06 | 0.00 | (h) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.61 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.67 |
|
| 0.00 | (h) | ||
Less distributions from: | |||||||
Net investment income | (0.11 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.11 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 7.72 |
| $ | 7.16 |
| |
TOTAL RETURN |
| 9.39 | % |
| 0.00 | %(e) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $2,975 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (f) | 0.50 | % | 220.71 | %(g) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (f) | 0.15 | % | 0.15 | %(g) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 0.79 | % | 0.00 | %(g) | |||
Portfolio turnover rate |
| 18 | % |
| 8 | % | |
(a) | The Institutional Class commenced operations on November 30, 2007. |
(b) | The Retirement Class commenced operations on November 30, 2007. |
(c) | The Premier Class commenced operations on September 30, 2009. |
(d) | Based on average shares outstanding. |
(e) | The percentages shown for this period are not annualized. |
(f) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.45% for the period ended September 30, 2010. |
(g) | The percentages shown for this period are annualized. |
(h) | Amount represents less than $0.01 per share. |
TIAA-CREF Lifecycle Funds ■ Prospectus 221
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2050 FUND ■ FOR THE PERIOD OR YEAR ENDED
Retirement Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (b) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 7.15 |
| $ | 7.62 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (d) | 0.09 | 0.08 | 0.20 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.57 |
|
| (0.42 | ) |
| (2.36 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.66 |
|
| (0.34 | ) |
| (2.16 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.10 | ) | (0.13 | ) | (0.22 | ) | ||||
Net realized gains | — | 0.00 | (e) | — | ||||||
Total distributions |
| (0.10 | ) |
| (0.13 | ) |
| (0.22 | ) | |
Net asset value, | ||||||||||
end of period | $ | 7.71 |
| $ | 7.15 |
| $ | 7.62 |
| |
TOTAL RETURN |
| 9.38 | % |
| (4.08 | )% |
| (22.08 | )%(f) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $40,745 | $14,383 | $1,973 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (g) | 0.83 | % | 1.45 | % | 7.70 | %(h) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (g) | 0.25 | % | 0.25 | % | 0.25 | %(h) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 1.16 | % | 1.35 | % | 2.75 | %(h) | ||||
Portfolio turnover rate |
| 24 | % |
| 18 | % |
| 73 | %(f) | |
222 Prospectus ■ TIAA-CREF Lifecycle Funds
FINANCIAL HIGHLIGHTS (continued)
LIFECYCLE 2050 FUND ■ FOR THE PERIOD OR YEAR ENDED
Institutional Class | ||||||||||
|
| 09/30/10 |
| 09/30/09 |
| 09/30/08 | (a) | |||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | ||||||||||
Net asset value, | ||||||||||
beginning of period | $ | 7.18 |
| $ | 7.64 |
| $ | 10.00 |
| |
Gain (loss) from investment operations: | ||||||||||
Net investment | ||||||||||
income (d) | 0.10 | 0.12 | 0.27 | |||||||
Net realized and | ||||||||||
unrealized gain (loss) | ||||||||||
on total investments |
| 0.58 |
|
| (0.45 | ) |
| (2.41 | ) | |
Total gain (loss) from | ||||||||||
investment operations | 0.68 |
|
| (0.33 | ) |
| (2.14 | ) | ||
Less distributions from: | ||||||||||
Net investment income | (0.11 | ) | (0.13 | ) | (0.22 | ) | ||||
Net realized gains | — | 0.00 | (e) | — | ||||||
Total distributions |
| (0.11 | ) |
| (0.13 | ) |
| (0.22 | ) | |
Net asset value, | ||||||||||
end of period | $ | 7.75 |
| $ | 7.18 |
| $ | 7.64 |
| |
TOTAL RETURN |
| 9.63 | % |
| (3.81 | )% |
| (21.86 | )%(f) | |
RATIOS AND SUPPLEMENTAL DATA | ||||||||||
Net assets at end of | ||||||||||
period (in thousands) | $5,599 | $1,633 | $783 | |||||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
before expense waiver | ||||||||||
and reimbursement (g) | 0.54 | % | 1.18 | % | 7.46 | %(h) | ||||
Ratio of expenses to | ||||||||||
average net assets | ||||||||||
after expense waiver | ||||||||||
and reimbursement (g) | 0.00 | % | 0.00 | % | 0.00 | %(h) | ||||
Ratio of net investment | ||||||||||
income to average | ||||||||||
net assets | 1.35 | % | 2.04 | % | 3.55 | %(h) | ||||
Portfolio turnover rate |
| 24 | % |
| 18 | % |
| 73 | %(f) | |
TIAA-CREF Lifecycle Funds ■ Prospectus 223
FINANCIAL HIGHLIGHTS (concluded)
LIFECYCLE 2050 FUND ■ FOR THE PERIOD OR YEAR ENDED
Premier Class | |||||||
|
| 09/30/10 |
| 09/30/09 | (c) | ||
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD | |||||||
Net asset value, | |||||||
beginning of period | $ | 7.18 |
| $ | 7.18 |
| |
Gain (loss) from investment operations: | |||||||
Net investment | |||||||
income (d) | 0.08 | 0.00 | (e) | ||||
Net realized and | |||||||
unrealized gain (loss) | |||||||
on total investments |
| 0.59 |
|
| — |
| |
Total gain (loss) from | |||||||
investment operations | 0.67 |
|
| 0.00 | (e) | ||
Less distributions from: | |||||||
Net investment income | (0.11 | ) | — | ||||
Net realized gains | — | — | |||||
Total distributions |
| (0.11 | ) |
| — |
| |
Net asset value, | |||||||
end of period | $ | 7.74 |
| $ | 7.18 |
| |
TOTAL RETURN |
| 9.45 | % |
| 0.00 | %(f) | |
RATIOS AND SUPPLEMENTAL DATA | |||||||
Net assets at end of | |||||||
period (in thousands) | $1,100 | $250 | |||||
Ratio of expenses to | |||||||
average net assets | |||||||
before expense waiver | |||||||
and reimbursement (g) | 0.70 | % | 220.71 | %(h) | |||
Ratio of expenses to | |||||||
average net assets | |||||||
after expense waiver | |||||||
and reimbursement (g) | 0.15 | % | 0.15 | %(h) | |||
Ratio of net investment | |||||||
income to average | |||||||
net assets | 1.09 | % | 0.00 | %(h) | |||
Portfolio turnover rate |
| 24 | % |
| 18 | % | |
(a) | The Institutional Class commenced operations on November 30, 2007. |
(b) | The Retirement Class commenced operations on November 30, 2007. |
(c) | The Premier Class commenced operations on September 30, 2009. |
(d) | Based on average shares outstanding. |
(e) | Amount represents less than $0.01 per share. |
(f) | The percentages shown for this period are not annualized. |
(g) | The Fund's expenses do not include the expenses of the Underlying Funds. The annualized weighted average expense ratio of the Underlying Funds was 0.45% for the period ended September 30, 2010. |
(h) | The percentages shown for this period are annualized. |
224 Prospectus ■ TIAA-CREF Lifecycle Funds
FOR MORE INFORMATION ABOUT TIAA-CREF FUNDS
Statement of Additional Information (“SAI”). The Funds’ SAI contains more information about certain aspects of the Funds. A current SAI has been filed with the SEC and is incorporated into this Prospectus by reference. This means that the Funds’ SAI is legally a part of the Prospectus.
Annual and Semiannual Reports. The Funds’ annual and semiannual reports provide additional information about the Funds’ investments. In the Funds’ annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds’ performance during the preceding fiscal year. The audited financial statements in the Funds’ annual shareholder report dated September 30, 2010 are also incorporated into this Prospectus by reference.
Requesting documents. You can request a copy of the Funds’ SAI or these reports without charge, or contact the Funds for any other purpose, in any of the following ways:
By telephone:
Call 877 518-9161
In writing:
TIAA-CREF Funds
P.O. Box 1259
Charlotte, NC 28201
Over the Internet:
www.tiaa-cref.org
Information about the Trust (including the Funds’ SAI) can be reviewed and copied at the SEC’s public reference room (202 551-8090) in Washington, DC. The reports and other information are also available through the EDGAR Database on the SEC’s Internet website at www.sec.gov. Copies of the information can also be obtained, upon payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, DC 20549.
To lower costs and eliminate duplicate documents sent to your home, the Funds may mail only one copy of the Funds’ Prospectus, prospectus supplements, annual and semiannual reports, or any other required documents, to your household, even if more than one shareholder lives there. If you would prefer to continue receiving your own copy of any of these documents, you may call the Funds toll-free or write to the Funds as follows:
By telephone:
Call 877 518-9161
In writing:
TIAA-CREF Funds
P.O. Box 1259
Charlotte, NC 28201
Important Information about procedures for opening a new account
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions, including the Funds, to obtain, verify and record information that identifies each person who opens an account.
What this means for you: When you open an account, the Funds will ask for your name, address, date of birth, social security number and other information that will allow the Funds to identify you, such as your home telephone number. Until you provide the Funds with the information they need, the Funds may not be able to open an account or effect any transactions for you.
1940 Act File No. 811-9301 | A12013 (2/11) |
PROSPECTUS
FEBRUARY 1, 2011
TIAA-CREF LIFECYCLE INDEX FUNDS
of the TIAA-CREF Funds
Fund Class Ticker: | Retirement | Premier | Institutional |
§ Lifecycle Index Retirement Income Fund | TRCIX | TLIPX | TRILX |
§ Lifecycle Index 2010 Fund | TLTRX | TLTPX | TLTIX |
§ Lifecycle Index 2015 Fund | TLGRX | TLFPX | TLFIX |
§ Lifecycle Index 2020 Fund | TLWRX | TLWPX | TLWIX |
§ Lifecycle Index 2025 Fund | TLQRX | TLVPX | TLQIX |
§ Lifecycle Index 2030 Fund | TLHRX | TLHPX | TLHIX |
§ Lifecycle Index 2035 Fund | TLYRX | TLYPX | TLYIX |
§ Lifecycle Index 2040 Fund | TLZRX | TLPRX | TLZIX |
§ Lifecycle Index 2045 Fund | TLMRX | TLMPX | TLXIX |
§ Lifecycle Index 2050 Fund | TLLRX | TLLPX | TLLIX |
§ Lifecycle Index 2055 Fund | — | — | — |
This Prospectus describes the Retirement, Premier and Institutional Class shares offered by 11 investment portfolios (each, a “Fund”) of the TIAA-CREF Funds (the “Trust”). These Funds comprise the TIAA-CREF Lifecycle Index Funds (the “Lifecycle Index Funds”), a sub-family of funds offered by the Trust.
An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. An investor can lose money in any of the Funds and the Funds could perform more poorly than other investments.
The Securities and Exchange Commission (the “SEC”) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE INDEX RETIREMENT INCOME FUND
of the TIAA-CREF Funds
The Lifecycle Index Retirement Income Fund seeks high total return over time primarily through income, with a secondary emphasis on capital appreciation.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 1.92% | 1.66% | 1.64% | |||
Acquired Fund Fees and Expenses2 | 0.13% | 0.13% | 0.13% | |||
Total Annual Fund Operating Expenses | 2.20% | 2.04% | 1.87% | |||
Waivers and Expense Reimbursements3,4 | 1.76% | 1.70% | 1.68% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.44% |
| 0.34% |
| 0.19% |
|
6 Prospectus ■ TIAA-CREF Lifecycle Index Funds
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that compensates the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.35% of average daily net assets for Retirement Class shares; (ii) 0.25% of average daily net assets for Premier Class shares; and (iii) 0.10% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012, unless changed with approval of the Board of Trustees.
4 In addition to the expense reimbursement arrangements, Advisors has contractually agreed to waive a portion of the Fund’s Management Fees equal to, on an annual basis, 0.04%. This waiver will remain in effect through September 30, 2012, unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 45 | $ | 35 | $ | 20 | |||
3 Years | $ | 398 | $ | 358 | $ | 308 | |||
5 Years | $ | 905 | $ | 831 | $ | 744 | |||
10 Years | $ | 2,300 |
| $ | 2,139 |
| $ | 1,958 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 39% of the average value of its portfolio.
TIAA-CREF Lifecycle Index Funds ■ Prospectus 7
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). The Fund invests in Underlying Funds according to a relatively fixed, more conservative asset allocation strategy that will not gradually adjust over time and is designed for investors who are already in or entering retirement (i.e., have already passed their retirement year). The Fund has a policy of investing at least 80% of its assets (net assets, plus the amount of any borrowings for investment purposes) in Underlying Funds that are managed to seek investment returns that track particular market indices.
The Fund expects to allocate approximately 40.00% of its assets to equity Underlying Funds and 60.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations may be changed and actual allocations may vary up to 10% from the targets. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income, and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which may change, are approximately as follows: U.S. Equity: 30.00%; International Equity: 10.00%; Fixed-Income: 50.00%; and Inflation-Protected Assets: 10.00%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Equity Index Fund (U.S. Equity); International Equity Index Fund and Emerging Markets Equity Index Fund (International Equity); Bond Index Fund (Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change. The Fund is designed to maintain a stable conservative allocation among the Underlying Funds and is therefore designed for shareholders already in or entering retirement.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are
8 Prospectus ■ TIAA-CREF Lifecycle Index Funds
listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 40.36% | U.S. Equity | 30.25% | · Equity Index Fund | 30.25% | ||
International Equity | 10.11% | · International Equity Index Fund | 10.11% | ||||
FIXED-INCOME | 59.64% | Fixed-Income | 49.70% | · Bond Index Fund | 49.70% | ||
Inflation-Protected Assets | 9.94% | · Inflation-Linked Bond Fund | 9.94% | ||||
Total | 100.00% | 100.00% | 100.00% |
You could lose money over short or long periods by investing in this Fund. Accordingly, an investment in the Fund, or the Fund’s portfolio securities, typically is subject to the following principal investment risks:
· Asset Allocation Risk—The risk that the Fund may not achieve its target allocations. In addition, there is the risk that the asset allocations may not achieve the desired risk-return characteristic or that the selection of Underlying Funds and the allocations among them will result in the Fund underperforming other similar funds or cause an investor to lose money.
· Index Risk—The risk that the Underlying Fund’s performance will not correspond to its benchmark index for any period of time and may underperform such index or the overall stock market. Additionally, to the extent that the Underlying Fund’s investments vary from the composition of its benchmark index, the Underlying Fund’s performance could potentially vary from the index’s performance to a greater extent than if the Underlying Fund merely attempted to replicate the index.
· Equity Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in equity securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in equity securities.
· Market Risk—The risk that market prices of securities held by the Underlying Fund may fall rapidly or unpredictably due to a variety of factors, including changing economic, political or market conditions.
· Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the value of the security over short or extended periods of time.
· Foreign Investment Risk—Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, currency, market or economic developments and can result in greater price volatility and perform differently from securities of
TIAA-CREF Lifecycle Index Funds ■ Prospectus 9
U.S. issuers. This risk may be heightened in emerging or developing markets.
· Emerging Markets Risk—The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices of issuers in emerging market countries may be volatile and difficult to determine. Securities of issuers in these countries may be less liquid than securities of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.
· Large-Cap Risk—The risk that large-capitalization companies are more mature and may grow more slowly than the economy as a whole and tend to go in and out of favor based on market and economic conditions.
· Mid-Cap Risk—The risk that the stocks of mid-capitalization companies often have greater price volatility, lower trading volume, and less liquidity than the stocks of larger, more established companies.
· Small-Cap Risk—The risk that the stocks of small-capitalization companies often experience greater price volatility than large- or mid-sized companies because small-cap companies are often newer or less established than larger companies and are likely to have more limited resources, products and markets. Securities of small-cap companies are often less liquid than securities of larger companies as a result of there being a smaller market for their securities.
· Fixed-Income Securities Risk—A portion of the assets of the Fund is allocated to Underlying Funds investing primarily in fixed-income securities. Therefore, the value of the Fund may increase or decrease as a result of its indirect interest in fixed-income securities.
· Interest Rate Risk (a type of Market Risk)—The risk that increases in interest rates can cause the prices of fixed-income securities to decline.
· Income Volatility Risk—The risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.
· Credit Risk (a type of Company Risk)—The risk that the issuer of bonds may not be able to meet interest or principal payments when the bonds become due.
· Market Volatility, Liquidity and Valuation Risk (types of Market Risk)—The risk that volatile or dramatic reductions in trading activity make it difficult for the Underlying Fund to properly value the portfolio
10 Prospectus ■ TIAA-CREF Lifecycle Index Funds
securities in which it invests and that the Underlying Fund may not be able to purchase or sell a security at an attractive price, if at all.
· Call Risk—The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Underlying Fund’s income.
· Prepayment Risk—The risk that during periods of falling interest rates, borrowers pay off their mortgage loans sooner than expected, forcing the Underlying Fund to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income.
· Extension Risk—The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing an Underlying Fund from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available.
· Special Risks for Inflation-Indexed Bonds—The risk that interest payments on, or market values of, inflation-indexed bonds decline because of a decline in inflation (or deflation) or changes in investors’ inflation expectations. In addition, inflation indices may not reflect the true rate of inflation.
· Active Management Risk—The risk that securities selection by the Fund or an Underlying Fund’s investment adviser could cause the Fund or an Underlying Fund to underperform its benchmark index or mutual funds with similar investment objectives.
· Derivatives Risk—The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Underlying Funds may use futures and options, and the Underlying Funds may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk.
There can be no assurances that the Fund or an Underlying Fund will achieve its investment objective. You should not consider the Fund to be a complete investment program. Please see the non-summary portion of the prospectus for more detailed information about the risks described above.
The following chart and table help illustrate some of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year. The bar chart shows the annual total returns of the Retirement Class of the Fund, before taxes, in each full calendar year since inception of the class. Because the expenses vary across share classes, the performance of the Retirement Class will vary from the other share classes. Below the bar chart are the best and worst returns for a calendar quarter since inception of the Retirement Class. The performance table following the bar chart shows the Fund’s average annual total returns for the Retirement, Institutional and Premier Classes over the one-
TIAA-CREF Lifecycle Index Funds ■ Prospectus 11
year, five-year, ten-year and since-inception periods (where applicable) ended December 31, 2010, and how those returns compare to those of broad-based securities market indices and a composite index based on the Fund’s target allocations. After-tax performance is shown only for the Retirement Class shares, and after-tax returns for the other Classes of shares will vary from the after-tax returns presented for Retirement Class shares.
The returns shown below reflect previous agreements by the Fund’s investment adviser to waive or reimburse the Fund and certain Underlying Funds for certain fees and expenses. Without these waivers and reimbursements, the returns of the Fund would have been lower. Past performance of the Fund (before and after taxes) is not necessarily an indication of how it will perform in the future. The benchmark indices listed below are unmanaged, and you cannot invest directly in an index. The returns for the indices reflect no deduction for fees, expenses or taxes. Market indices representing the market sectors in the equity and fixed-income asset classes described above are used to formulate a composite benchmark index for the Fund (the Composite Index), based on the Fund’s target allocations among the market sectors. For performance during periods commencing February 1, 2011, the MSCI EAFE® + EM Index is replacing the MSCI EAFE® Index in the Composite Index as the market sector index component for International Equity.
For current performance information of each share class, including performance to the most recent month-end, please visit www.tiaa-cref.org.
ANNUAL TOTAL RETURNS FOR THE RETIREMENT CLASS SHARES (%)
Lifecycle Index Retirement Income Fund
Best quarter: 6.74%, for the quarter ended September 30, 2010. Worst quarter: -2.99%, for the quarter ended June 30, 2010.
12 Prospectus ■ TIAA-CREF Lifecycle Index Funds
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended December 31, 2010
| One Year |
|
| Since Inception |
|
|
Retirement Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 9.70 | % | 9.44 | % | ||
Return After Taxes on Distributions | 8.93 | % | 8.66 | % | ||
Return After Taxes on Distributions and Sale of | ||||||
Fund Shares | 6.43 | % | 7.66 | % | ||
Barclays Capital U.S. Aggregate Bond Index | 6.54 | % | 5.36 | % | ||
Lifecycle Index Retirement Income Fund Composite Index | 10.28 | % | 10.10 | % | ||
Institutional Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 9.96 | % | 9.70 | % | ||
Premier Class (Inception: September 30, 2009) | ||||||
Return Before Taxes | 9.81 | % | 9.55 | % |
Current performance of the Fund’s shares may be higher or lower than that shown above.
After-tax returns are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements such as 401(a), 401(k) or 403(b) plans or Individual Retirement Accounts (IRAs). After-tax returns are shown for only one class and after-tax returns for other classes will vary.
Investment Adviser. The Fund’s investment adviser is Teachers Advisors, Inc.
Portfolio Managers. The following persons manage the Fund on a day-to-day basis:
Name: | Hans Erickson, CFA | John Cunniff, CFA | Pablo Mitchell |
Title: | Managing Director | Managing Director | Director |
Experience on Fund: | since 2009 | since 2009 | since 2009 |
PURCHASE AND SALE OF FUND SHARES
Retirement Class and Premier Class shares are generally available for purchase through employee benefit plans or other types of savings plans or accounts. Institutional Class shares are available for purchase directly from the Fund by certain eligible investors or through financial intermediaries.
· There is no minimum initial or subsequent investment for Retirement Class shares. Retirement Class shares are primarily offered through employer-sponsored employee benefit plans.
· There is a $100 million aggregate plan size and $5 million initial minimum plan-level investment requirement for Premier Class shares. Premier Class
TIAA-CREF Lifecycle Index Funds ■ Prospectus 13
shares are offered through certain financial intermediaries and employer-sponsored employee benefit plans.
· The minimum initial investment is $2 million and the minimum subsequent investment is $1,000 for Institutional Class shares, unless an investor purchases shares by or through financial intermediaries that have entered into an appropriate agreement with the Fund or its affiliates.
Redeeming Shares. You can redeem (sell) your shares of the Fund at any time. If your shares are held through a third party, please contact that person for applicable redemption requirements. If your shares are held directly with the Fund, contact the Fund directly in writing or by telephone.
Exchanging Shares. You can exchange shares of the Fund for the same class of shares of any other funds offered by the TIAA-CREF Funds at any time, subject to the limitations described in the Market Timing/Excessive Trading Policy section in the statutory prospectus or any limitations imposed by a third party when shares are held through a third party. Exchanges involving shares of the Fund held less than 60 calendar days may be subject to the Redemption Fee addressed in “Fees and Expenses” above.
The Fund intends to make distributions to shareholders that may be taxed as ordinary income or capital gains. Distributions made to tax-exempt shareholders or shareholders who hold Fund shares in a tax-deferred account are generally not subject to income tax in the current year, but redemptions made from tax-deferred accounts may be subject to income tax.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARY COMPENSATION
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
14 Prospectus ■ TIAA-CREF Lifecycle Index Funds
SUMMARY INFORMATION
TIAA-CREF LIFECYCLE INDEX 2010 FUND
of the TIAA-CREF Funds
The Lifecycle Index 2010 Fund seeks high total return over time through a combination of capital appreciation and income.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (deducted directly from gross amount of transaction)
Retirement | Premier | Institutional | ||||
Maximum Sales Charge Imposed on Purchases | 0% | 0% | 0% | |||
Maximum Deferred Sales Charge | 0% | 0% | 0% | |||
Maximum
Sales Charge Imposed on Reinvested | 0% | 0% | 0% | |||
Redemption or Exchange Fee | 0% | 0% | 0% | |||
Maximum Account Fee | 0% | 0% | 0% |
ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment)
Retirement Class |
| Premier Class |
| Institutional Class |
| |
Management Fees | 0.10% | 0.10% | 0.10% | |||
Distribution (Rule 12b-1) Fees1 | 0.05% | 0.15% | — | |||
Other Expenses | 1.07% | 0.79% | 0.70% | |||
Acquired Fund Fees and Expenses2 | 0.12% | 0.12% | 0.12% | |||
Total Annual Fund Operating Expenses | 1.34% | 1.16% | 0.92% | |||
Waivers and Expense Reimbursements3,4 | 0.90% | 0.82% | 0.73% | |||
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement | 0.44% |
| 0.34% |
| 0.19% |
|
1 The Retirement Class of the Fund has adopted a Distribution (12b-1) Plan that compensates the Fund’s distributor, Teachers Personal Investors Services, Inc. (“TPIS”), for providing distribution, promotional and/or shareholder services to the Retirement Class shares at the annual rate of 0.05% of average daily
TIAA-CREF Lifecycle Index Funds ■ Prospectus 15
net assets attributable to Retirement Class shares. In addition, TPIS has contractually agreed not to seek payment of this fee under the Plan for Retirement Class shares through September 30, 2012. This agreement may not be continued after that date.
2 “Acquired Fund Fees and Expenses” are the Fund’s proportionate amount of the expenses of the underlying funds in which the Fund invests. These expenses are not paid directly by Fund shareholders. Instead, Fund shareholders bear these expenses indirectly because the expenses reduce the performance of the underlying funds in which the Fund invests.
3 Teachers Advisors, Inc. (“Advisors”), the Fund’s investment adviser, has contractually agreed to reimburse the Fund for any Total Annual Fund Operating Expenses (excluding Acquired Fund Fees and Expenses and extraordinary expenses) that exceed: (i) 0.35% of average daily net assets for Retirement Class shares; (ii) 0.25% of average daily net assets for Premier Class shares; and (iii) 0.10% of average daily net assets for Institutional Class shares of the Fund. These expense reimbursement arrangements will continue through at least September 30, 2012, unless changed with approval of the Board of Trustees.
4 In addition to the expense reimbursement arrangements, Advisors has contractually agreed to waive a portion of the Fund’s Management Fees equal to, on an annual basis, 0.03%. This waiver will remain in effect through September 30, 2012, unless changed with approval of the Board of Trustees.
This example is intended to help you compare the cost of investing in shares of the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses, before expense reimbursements, remain the same. The example assumes that the Fund’s fee waiver agreement and expense reimbursement agreement will remain in place through September 30, 2012 but that there will be no waiver or expense reimbursement agreement in effect thereafter. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| Retirement Class |
| Premier Class |
| Institutional Class |
| |||
1 Year | $ | 45 | $ | 35 | $ | 19 | |||
3 Years | $ | 273 | $ | 230 | $ | 169 | |||
5 Years | $ | 587 | $ | 503 | $ | 387 | |||
10 Years | $ | 1,478 |
| $ | 1,284 |
| $ | 1,017 |
|
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the fiscal year ended September 30, 2010, the Fund’s portfolio turnover rate was 43% of the average value of its portfolio.
16 Prospectus ■ TIAA-CREF Lifecycle Index Funds
PRINCIPAL INVESTMENT STRATEGIES
The Fund is a “fund of funds” that invests in Institutional Class shares of other funds of the TIAA-CREF Funds and potentially in other investment pools or investment products (collectively, the “Underlying Funds”). In general, the Fund is designed for investors who have a specific target retirement year in mind, and the Fund’s investments are adjusted from more aggressive to more conservative over time as a target retirement year approaches and for approximately seven to ten years afterwards. The Fund invests in Underlying Funds according to an asset allocation strategy designed for investors retiring or planning to retire in or within a few years of 2010. The Fund has a policy of investing at least 80% of its assets (net assets, plus the amount of any borrowings for investment purposes) in Underlying Funds that are managed to seek investment returns that track particular market indices.
The Fund expects to allocate approximately 49.00% of its assets to equity Underlying Funds and 51.00% of its assets to fixed-income Underlying Funds. These allocations represent targets for equity and fixed-income asset classes. Target allocations will change over time and actual allocations may vary up to 10% from the targets. The target allocations along the investment glidepath, illustrated in the chart below, for the Fund will gradually become more conservative, moving to target allocations of approximately 50% equity/50% fixed-income in its target retirement year of 2010 and reaching its final target allocation of approximately 40% equity/60% fixed-income at some point from 2017 to 2020. Within the equity and fixed-income asset classes, the Fund allocates its investments to particular market sectors (U.S. equity, international equity, fixed-income and inflation-protected assets) represented by various Underlying Funds. These market sector allocations may vary by up to 10% from the Fund’s target market sector allocations. The Fund’s target market sector allocations, which will change over time, are approximately as follows: U.S. Equity: 36.75%; International Equity: 12.25%; Fixed-Income: 44.60%; and Inflation-Protected Assets: 6.40%. Investors should note that the allocations above in this paragraph are expected to be as of June 30 of the current year.
The Fund’s target market sector allocations to Underlying Funds may include the TIAA-CREF Equity Index Fund (U.S. Equity); International Equity Index Fund and Emerging Markets Equity Index Fund (International Equity); Bond Index Fund (Fixed-Income); and Inflation-Linked Bond Fund (Inflation-Protected Assets).
Additional or replacement Underlying Funds for each market sector, as well as additional or replacement market sectors, may be included when making future allocations if Advisors believes that such Underlying Funds and/or market sectors are appropriate in light of the Fund’s desired levels of risk and potential return at the particular time. The Fund’s portfolio management team may also add a new market sector if it believes that will help to achieve the Fund’s investment objective. The relative allocations among Underlying Funds within a market sector may be changed at any time without notice to
TIAA-CREF Lifecycle Index Funds ■ Prospectus 17
shareholders. If 10% or more of a Fund’s assets are expected to be invested in any Underlying Fund or market sectors not listed above, shareholders will receive prior notice of such change.
The Fund’s asset class allocations, market sector allocations within each asset class, and Underlying Fund allocations within each market sector are listed in the chart below and are as of December 31 of the prior year. These allocations will change over time.
Asset Class | Allocation | Market Sector | Allocation | Underlying Funds | Allocation | ||
EQUITY | 49.48% | U.S. Equity | 37.06% | · |