TIAA-CREF, a national financial services organization and the leading retirement system for people in the academic, research, medical and cultural fields, will complete its 90th year of service to clients on May 17.
On that day in 1918, the Trustees of the Teachers Insurance and Annuity Association of America (TIAA) ratified the organization’s mission to help meet the financial needs of the institutions and individuals it serves on the best terms practicable. Together with the College Retirement Equities Fund (CREF), TIAA is now America’s largest private retirement system. The organization serves 3.4 million individuals and more than 15,000 institutions, with $420 billion in combined assets under management (3/31/2008).
“As TIAA-CREF completes its 90th year we are better positioned than ever to help meet clients’ financial needs,” said Roger W. Ferguson, Jr., President and CEO. “This anniversary marks 90 years of consistent, long-term performance and service. Our organization’s continued strong investment performance, expanded choice, objective advice, and enhanced accessibility reflect the steps we are taking today to ensure that TIAA-CREF continues to meet clients’ needs now and in the future.”
“Congratulations and happy 90th anniversary to TIAA-CREF,” said Ronald B. McKinley, Vice President of Human Resources at Cincinnati Children’s Hospital Medical Center and Chairman of TIAA-CREF’s institutional client Advisory Council. “On behalf of the client Advisory Council, I want to thank TIAA-CREF for its track record of performance, innovation, service and responsiveness to clients. Our institutions are fortunate to have a retirement system we can call our own. On behalf of my colleagues, I appreciate TIAA-CREF’s dedication to our needs, and look forward to the organization’s continuing to build on its record of accomplishment.”
A Historic and Unchanging Mission
TIAA was started in 1918 with a $1 million grant from Andrew Carnegie through Carnegie Corporation of New York, to provide portable, fully vested retirement annuities and individual life insurance for educators. In cooperation with educators and with leadership from another Carnegie philanthropy — The Carnegie Foundation for the Advancement of Teaching — TIAA realized Andrew Carnegie’s pioneering vision that colleges needed to offer adequate pensions in order to attract and retain talented teachers.
Within one year, 30 public and private academic institutions and 464 participants had signed on with TIAA. Henry S. Pritchett, TIAA’s first president, grew the organization to manage nearly $24 million for 192 institutions and almost 12,000 participants by the time he retired in 1930.
In its first two decades, TIAA’s portfolio invested in government, railroad and industrial bonds. That strategy followed the prudent thinking at the time and enabled TIAA to continue paying pensions to participants throughout the Great Depression.
During the 1940s, inflation and long-term trends in improved U.S. life expectancy created new challenges for investing and retirement planning. TIAA’s pensions were meant to last a lifetime; however, with lives lasting longer and the dollar shrinking, new strategies were needed. The organization conducted its own pioneering economic study which concluded that an investment strategy including both fixed-income instruments and equities could help protect against fluctuations in stock prices and changes in the value of the dollar. To implement this strategy, TIAA created CREF, a companion organization, which introduced the world’s first variable annuity in 1952.
As the organization grew, TIAA-CREF continued to provide innovative solutions for building retirement assets. In the 1970s, it was one of the first to use an extensive portfolio of international stocks as part of its investment strategy. In 1988, the organization began expanding its variable annuity offerings, including the TIAA Real Estate Account launched in 1995, a separate account that invests in directly-owned real estate properties.
Sound investment products and a long-term investment strategy have allowed the organization to weather periods of high market volatility and to establish its superlative staying power. Today, TIAA is one of just three U.S. insurance companies to receive the highest rating from all major rating agencies, indicating that the organization has the claims-paying ability investors count on to get them through retirement.i Over 500,000 participants received a combined $10 billion from TIAA-CREF during 2007.
TIAA-CREF also has expanded its view of companies in its investment portfolios. In 1970, the organization began incorporating social issues into proxy voting. Today the organization’s CREF Social Choice Account, a balanced variable annuity account with over 430,000 investors and $8.7 billion in assets (as of 3/31/08), invests in U.S. and non-U.S. companies and is the largest, most comprehensive socially screened investment vehicle available to individual investors in the United States.
TIAA-CREF continues to believe that sound governance practices help companies improve performance, reduce risks and enhance shareholder value. That is why the organization continues to assert its rights as a shareholder, provides leadership in advocating for sound governance principles and practices those principles in its own operations. In recent years TIAA-CREF encouraged a majority vote standard in the election of directors and adoption of an advisory vote on executive compensation. In 2007, TIAA became the first U.S. company to voluntarily adopt and implement an advisory vote on executive compensation policies and related disclosures.
Broader Capabilities for Clients
In recent years TIAA-CREF has taken steps to offer clients a wider range of financial products and services that broaden their investment choices and help them make sound financial decisions. As a result of these steps:
- The organization’s proprietary fund/account offering has expanded from 19 in 2003 to 73 today, in addition to institutional separate accounts and almost 300 funds from other companies.
- Seventy percent of TIAA-CREF’s mutual funds and variable annuity accounts have exceeded their Morningstar median over the past three and five years.ii
- TIAA-CREF Mutual Funds ranked ninth out of 67 fund families in the 2007 Lipper/Barron’s Mutual Fund Family Surveyiii, the second year in a row in which TIAA-CREF earned a place among the top 10 mutual fund families based on overall investment performance.iv
- The fees on TIAA-CREF’s actively managed funds and accounts are typically in the lowest quartile of comparable products.v
- TIAA-CREF has maintained effective risk management that has helped it to largely avoid losses that other financial firms have experienced in the debt markets.
- TIAA-CREF has developed one of the leading retirement plan advisory services, which Forbes magazine called “the most extensive personalized workplace advice,” delivered via consultants who receive no sales commissions as part of their total compensation.vi
- More than 80 percent of individual clients who have used TIAA-CREF’s Wealth Management service, launched in 2004, rate the service “better or much better” than comparable services offered by competitors.vii
- TIAA-CREF has created several new annuity products, such as a stable value annuity and an annuity with features that provide institutional clients greater control over their fund offering. In addition, the organization has developed best-in-class lifecycle funds that are continually enhanced.
- The organization recently launched a new real estate fund, as well as a Lifecycle Retirement Income Fund, as part of its continuing effort to expand and simplify investment options.
Giving Back for the Greater Good
TIAA-CREF also continues to build on a record of giving back to individuals and communities where the organization operates. In the spring of 1938, TIAA’s 65 employees helped launch The Greater New York Fund, today known as United Way of New York City, to coordinate charitable-agency aid to the jobless and poor, the sick and aged, and children and youth who need health, recreation and opportunity.
Each year, TIAA employees volunteer for “Giving Back for the Greater Good Service Days,” a month-long series of community service projects. In honor of the organization’s 90th Anniversary, employees will be taking part in “Seussathon,” a book drive and organization-wide volunteer reading project in local K-12 public schools.
About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields with $420 billion in combined assets under management (3/31/08).
i A++, A.M. Best Company (as of 6/07); AAA, Fitch Ratings (as of 5/07); Aaa, Moody’s Investors Service (as of 5/07); AAA, Standard & Poor’s (as of 7/07) – the highest possible ratings from these independent analysts. These ratings do not apply to variable annuities, mutual funds, or any other product or service not fully backed by TIAA’s/TIAA-CREF Life’s claims-paying ability.
ii Morningstar Direct, March 31, 2008. The Morningstar median represents the midpoint of an index of comparable funds/accounts. “Comparable funds/accounts” refer to Morningstar fund categories, which are determined by factors such as asset class exposure and investment objective. Relative performance over other periods may vary. For more complete information about TIAA-CREF performance and rankings, visit our website at www.tiaa-cref.org/performance.
iii Published in the February 4, 2008 issue.
iv The Lipper/Barron’s Fund Family Survey ranks each fund’s total return (adding back 12b-1 fees) and weighs the rankings by its proportion of the fund family’s offerings and finally by a Lipper category ratio (e.g., general equity). Each fund’s score is added up to get the fund family score. TIAA-CREF was ranked 7th (of 67) for the period ending December 31, 2006 and 9th (of 67) for the period ending December 31, 2007. Please note that due to our recent fund merger in the spring of 2007 and the subsequent change in inception dates for a number of our funds, the TIAA-CREF fund family was not eligible for inclusion in the 5 and 10 year rankings.
v Morningstar Direct (February 2008) based on Morningstar expense comparisons by category.
vi “Got to Have a Plan,” Forbes, December 10, 2007. TIAA-CREF consultants are compensated through a salary plus incentive program that emphasizes client service excellence.
vii TIAA-CREF internal customer survey data, 2007.
Past performance cannot guarantee future results.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing. All TIAA-CREF investment vehicles are subject to market and other risk factors, which could result in loss of principal.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Insurance and annuity products issued by TIAA (Teachers Insurance and Annuity Association), New York, NY and TIAA-CREF Life Insurance Co., New York, NY. Advice and Planning Services is a division of TIAA-CREF Individual &Institutional Services LLC.
©2008 Teachers Insurance and Annuity Association-College Retirement Equities Fund, (TIAA-CREF), New York, NY 10017
C41652
Contacts:
Chad Peterson, 212-916-4808
Director, Corporate
Media Relations
cpeterson@tiaa-cref.org
