Statement regarding subprime exposure in the TIAA-CREF money market portfolios

Since August the financial press has drawn attention to the effects on short-term money markets of liquidity issues stemming from subprime mortgage debt. Much of the concern has centered on a sharp decline in investor willingness to purchase asset-backed commercial paper (ABCP) and, in particular, asset-backed commercial paper issued by structured investment vehicles, or SIVs.  This statement describes the exposures to these types of investments within TIAA-CREF's money market funds and accounts, along with additional background to explain the nature of these investments and likely implications for money markets in general.

Key Points

• TIAA-CREF has no direct exposure to any subprime mortgage securities in any of its three money market portfolios: those of the CREF Money Market Account, the TIAA-CREF Institutional Mutual Funds Money Market Fund or the TIAA-CREF Life Funds Money Market Fund.
  
  
• Like most money market funds, our money market portfolios invest in asset-backed commercial paper (ABCP) and have invested in commercial paper issued by structured investment vehicles (SIVs).
  
  
• As of December 31, 2007, TIAA-CREF money market portfolios have experienced no losses, impairments, defaults in ABCP or SIV-issued commercial paper.
  
  
• With the benefit of years of experience in this area and a commitment to an investment philosophy that seeks to deliver consistent growth for our investors, TIAA-CREF's money managers have avoided low-quality ABCP and SIV-issued investments and, when market disruptions occurred this summer that threatened other parts of the market, we took steps to reposition portfolio holdings defensively.
  
  
• We have reduced ABCP and SIV-issued commercial paper holdings and increased holdings of government-backed agency securities to maintain a higher degree of liquidity. As of December 31, 2007, ABCP makes up about 10% of holdings in the CREF Money Market Account and about 12% of holdings in the TIAA-CREF money market funds, while SIV-issued commercial paper makes up less than 1% of the CREF account. There is no SIV-issued commercial paper in either the TIAA-CREF Institutional Mutual Funds Money Market Fund or the TIAA-CREF Life Funds Money Market Fund.
  
  
• TIAA-CREF remains focused on the developing conditions within the money market and broader fixed income markets.  As always, we will continue to seek to provide consistent, highly competitive performance within our money market funds, while closely managing and evaluating potential risk exposures.

Background

Asset-backed commercial paper and SIVs
Commercial paper is a form of short-term debt issued by banks, corporations and other borrowers. As of December 31, 2007, 46% of the total outstanding U.S. commercial paper market consisted of asset-backed commercial paper (ABCP). ABCP can be offered by a single seller using a single underlying asset or through multi-seller conduits, which typically invest in pools of various debt obligations including trade receivables, credit card receivables, auto loans, residential mortgages, and other types of debt.

A type of multi-seller commercial paper program known as a structured investment vehicle (SIV) issues short-term, asset-backed commercial paper and uses the capital it raises to buy to short- and medium-term floating rate debt holdings. These have a variable interest rate that is tied to a money-market index such as Treasury bill rates.

SIV-issued commercial paper currently makes up about 1% of the total outstanding U.S. commercial paper. While most SIVs invest in a diversified mix of high-quality debt securities, a variant of SIVs, known as SIV-lites, may invest in more concentrated portfolios, often composed primarily of residential mortgage debt, including subprime mortgage debt. We do not own any SIV-lites.

Developments in ABCP & SIV markets
Multi-seller ABCP programs, including SIVs, have access to bank lines of credit or alternative means of financing, but both types are normally dependent on continuing access to short-term commercial paper markets as an economical means of refinancing asset holdings. Between August and December, the ABCP market shrank substantially because of investor concern over a deterioration in credit quality of the mortgage-related securities held by many SIVs.
 
Likely implications of continued commercial paper liquidity problems
Because of these liquidity problems, ABCP sellers have been forced to resort to a number of measures, including the drawdown of lines of credit, borrowings against assets through the use of repurchase agreements, and the sale of holdings.

In a number of cases, banks have addressed SIV liquidity problems by taking the assets of affiliated SIVs onto their own balance sheets.  While such conversions have the potential to draw on bank resources and tie up bank capital, the potential for such actions to result in default remains very low.

Our Exposure

ABCP and SIV exposure within our money market portfolios
Like most money market funds, all three of our money market portfolios invest in asset-backed commercial paper and have invested in commercial paper issued by SIVs. As of December 31, 2007, ABCP makes up about 10% of the holdings in the CREF Money Market Account and about 12% of the holdings in the TIAA-CREF money market funds, while SIV-issued commercial paper makes up less than 1% of the CREF account. There is no SIV-issued commercial paper in either the TIAA-CREF Institutional Mutual Funds Money Market Fund or the TIAA-CREF Life Funds Money Market Fund.

With the benefit of years of experience in this area and a commitment to an investment philosophy that seeks to deliver consistent growth for our investors, TIAA-CREF's money managers have avoided low-quality ABCP and SIV-issued investments and, when market disruptions occurred this summer that threatened other parts of the market, we took steps to reposition portfolio holdings defensively.
 
In addition, we have reduced our ABCP and SIV-issued commercial paper holdings by restricting new purchases of such securities and by allowing existing holdings to mature.  At the same time, we have increased our holdings of government-backed agency securities in order to maintain a higher degree of liquidity. We continue to seek out and take advantage of specific opportunities where quality commercial paper can be purchased at attractive levels.

Importantly, our money market portfolios have experienced no defaults to date in ABCP or SIV-issued commercial paper or as a result of broader subprime-related concerns or defaults as of December 31, 2007.  Specifically, in regard to our asset-backed commercial paper holdings:

• The SIV-issued paper we hold is highly rated and due to mature during January, 2008. All SIV-issued paper held is triple-A rated.
• We hold no commercial paper issued by SIV-lites.
• We own no extendable commercial paper and have never participated in any extendable commercial paper program.  Extendable securities permit the issuer to postpone the repayment of principal beyond the note's maturity date.
• We have no direct exposure to subprime mortgages or collateralized debt obligations (CDOs)*, although we may have a very small amount of indirect exposure to sub-prime mortgages through investments in SIV-issued commercial paper or other portfolio holdings.
• We have no exposure to single-seller paper, warehouse** or repo facility debt***, CDO debt, or exposure to any other single-asset class conduit.

TIAA-CREF remains focused on developing conditions within the money market and the broader fixed income markets.  As always, we will continue to seek to provide highly competitive performance within our money market funds, while closely managing and evaluating potential risk exposures.

*Collateralized debt obligations (CDOs) are a type of asset-backed security and structured credit product. CDOs gain exposure to the credit of a portfolio of fixed income assets and divide the credit risk among different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher coupons (interest rates) to compensate for the added risk. CDOs serve as an important funding vehicle for portfolio investments in credit-risky fixed income assets.

**Warehouse debt refers to mortgages or other debt instruments that are being accumulated by a financial company with the intention of using them as the collateral for the issuance of debt securities.

***Repurchase agreements (RPs or repos) are financial instruments used in the money markets and capital markets. In a repo transaction, the cash receiver (seller) sells securities now, in return for cash, to the cash provider (buyer), and agrees to repurchase those securities from the buyer for a greater sum of cash at some later date, that greater sum being all of the cash lent and some extra cash (constituting interest, known as the repo rate).

Please note that holdings of the Money Market Funds and Account are subject to change.  This document speaks as of the date specified above.  The TIAA-CREF Money Market Fund and the CREF Money Market Account and the TIAA-CREF Life Funds Money Market Fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  Although each Fund seeks to preserve the value of your investment, it is possible to lose money by investing in these Funds.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 or log on to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.

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.