TIAA-CREF's Financial Strength

Given the problems in the financial markets, you may have questions about the safety of your money in TIAA-CREF funds and accounts. We'd like to help by answering some of these questions for you.

• Is my money in the TIAA Traditional Annuity account safe? 
• How do I know that TIAA can honor its guarantees?
• Is my money in the CREF accounts, the TIAA Real Estate Account and/or the TIAA-CREF Funds safe?
• Is my money FDIC insured?
• Is my money protected by SIPC?
• The value of my 403(b) retirement account is declining because of the recent market volatility. I am considering holding off on making additional contributions until the market starts to go up again. Is that a good idea?
• I still have questions. I depend on my monthly check from TIAA-CREF, and I'm not sure that my money is allocated properly. What should I do?
• Questions about the CREF Money Market Account?

 Is my money in the TIAA Traditional Annuity account safe?

Yes, your money is safe at TIAA. The contract that you have with TIAA guarantees each dollar contributed to the account by you or your employer. It also guarantees a minimum rate of interest and provides the potential for additional amounts of interest. These additional amounts, if any, are declared by TIAA's Board of Trustees. TIAA's Trustees have declared additional amounts each year for 60 consecutive years — since Harry Truman was president — although there is no guarantee that additional amounts will be declared in future years.

Each dollar contributed to TIAA Traditional buys a specific amount of lifetime income for you, as a TIAA participant. The amount is determined by the rate schedule in effect at the time the contribution is made.*

TIAA's guarantees to repay principal and to pay the returns called for in the contract depend on TIAA's claims-paying ability.  They are backed by the financial strength of TIAA's General Account. Past interest rates are not indicative of future interest rates. Participants can view their balances in the TIAA Traditional Annuity by checking their last quarterly statement, or for more current information, by logging in to their account, or by calling 800 842-2776.

*Additional amounts when declared remain in effect for the "declaration year" that begins each March 1 for accumulating annuities and January 1, for lifetime payout annuities.  Additional amounts are not guaranteed for future years.

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 How do I know that TIAA can honor its guarantees?

The ratings agencies consider such factors as how much money insurers have on hand, how much they receive in retirement plan contributions and how much they must pay out each year to meet their obligations. In 2007, more than half a million retirees received a combined $10 billion in income from our company.

In addition to our sound financial footing, we have a strong commitment to managing risk throughout our organization and to making sure we operate in a way that puts your needs and interests first.

• Insurance Industry Ratings

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 Is my money in the CREF accounts, the TIAA Real Estate Account and/or the TIAA-CREF Funds safe?

Unlike the TIAA Traditional Annuity Account, these are investment funds and accounts, so they are not guaranteed. The investments vary from one fund or account to another. They consist of stocks, bonds, real estate properties or money market securities.

The amount of money in these funds and accounts rises and falls each day as the value of those investments changes in the marketplace. (With one exception: note that the values of the real estate properties held in the TIAA Real Estate Account aren't calculated every day.) In order to minimize the effect that any one investment can have on a single fund or account, each fund or account holds many investments. When one investment loses value, that loss can be offset by another investment's rising value.

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 Is my money FDIC insured?

No. The Federal Deposit Insurance Corporation insures deposits at member banks, but insurance companies like TIAA and investment companies like CREF are not eligible for membership in the FDIC.

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 Is my money protected by SIPC?

Only if you have a brokerage account. Products like the CREF variable annuity accounts and TIAA-CREF mutual funds that you invest in through a retirement plan are not protected by SIPC. For details about SIPC coverage, please speak with one of our registered representatives.

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 The value of my 403(b) retirement account is declining because of the recent market volatility. I am considering holding off on making additional contributions until the market starts to go up again. Is that a good idea?

While every investor needs to make an individual decision about setting money aside, most financial professionals agree that you do not want to miss out on taking advantage of your employer's retirement program.

It can be difficult to see your retirement fund account decline and then continue to stay the course in making regular contributions. But investing in a 403(b) or a similar defined contribution plan allows you to put pre-tax dollars aside for retirement and then let any returns on that money accrue tax-deferred. Plus, there's a good chance your employer provides a dollar for dollar match of your invested dollars up to a certain amount. By not investing at least enough money to take full advantage of any employer match you are effectively leaving free money on the table.

Also, by investing the same amount of money on a regular basis, you can benefit from dollar-cost averaging.** That means that you purchase more shares of a given investment when prices are lower, such as the case now for many investments, and fewer when prices are high. Over time, dollar-cost averaging can lower the average purchase price of your shares. It may also be a less risky way of investing than purchasing a large quantity of stock or other investments in a lump sum. If you stop investing now and begin again when prices rise, you may miss out on an opportunity when prices are low and instead get in when prices are higher, lowering your overall return potential.

You may want to examine your asset allocation, or how you have your retirement money divided up among equities, bonds and other types of investments. Even in turbulent times, you can be well served by sticking with a long-term investment game plan and diversifying your holdings across a variety of asset classes.

If you need further help planning your financial strategy, we encourage you to speak with a TIAA-CREF consultant at 866 861-8363.

**Dollar-cost averaging does not assure a profit or protect against a loss in declining markets. Because such a strategy involves periodic investment, you should consider your financial ability and willingness to continue purchases through periods of low price levels.

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 I still have questions. I depend on my monthly check from TIAA-CREF, and I'm not sure that my money is allocated properly. What should I do?

We'd be happy to look at your allocation with you to help evaluate the choices you've made in light of your financial needs and the other assets you own. To discuss your portfolio, please call us at 800 842-2776. We look forward to serving you.

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 Questions about the CREF Money Market Account?

Some participants have questioned why the CREF Money Market Account posted a small drop in unit value in the second quarter. Unlike most money market funds, the Money Market Account does not distribute income on a daily basis and therefore does not maintain a constant net asset value of $1.00 per share or unit.

As of June 30, 2009, the Money Market Account's unit value was 25.5312, compared to 25.5315 as of the beginning of the quarter. This equates to 12 cents on a $10,000 investment. Please note, however, that for the year to date, the Money Market Account has a positive return of 0.11%.

The change in the unit value during the quarter ended June 30, 2009, was due to two factors. As a result of the general decline in prevailing interest rates, the Account's 7-day yield fell to 0.01% at June 30, 2009, from 0.37% on March 31, 2009. In addition to the decrease in yield, CREF instituted an accounting change to the Money Market Account on May 1, 2009. The effect of the change was to eliminate net unrealized gains in the portfolio and value the securities at their amortized cost value. The elimination of gains resulted in a one-time decline in the Account's unit value of .03% during the quarter. Note that even absent the accounting change these gains would have been eliminated anyway - as the fixed income securities that have unrealized gains approach maturity, their market value adjusts and unrealized gains are slowly eliminated.

Market value changes have caused the CREF Money Market Account's unit value to decline from time to time in the past. Whether the net unrealized gains were eliminated through a one-time accounting change or gradually over time is primarily a difference in timing but does not change the final value of the securities upon maturity. Like all of the CREF accounts, the Money Market Account is designed for long-term retirement savings and fluctuates with the market.

This accounting change was made to bring the CREF Money Market accounting into conformity with the industry standard and was made after we received permission from the SEC to make such changes. This change will enable the Account to maintain a more stable net asset value per share and a yield that is consistent with the account's total returns. While most participants will not notice a difference, use of amortized cost accounting will enable the Account to avoid minor price fluctuations that sometimes occur.

Please note that the above information pertains to the CREF Money Market Account, and not the TIAA-CREF Money Market Mutual Fund.

An investment in this account is not a deposit of any bank and is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. It is possible to lose money in these funds. The current yield more closely reflects the account's current earnings than does the total return.

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