1. 0 TIAA-CREF: A BRIEF HISTORY A LOOK AHEAD Scott Evans Executive Vice President, Asset Management TIAA-CREF October, 2007

2. 1 The TIAA-CREF Experience: Background 1905: No higher education retirement system TIAA founded in 1918 by Andrew Carnegie (U.S. Steel) as a charitable trust for higher ed, etc. ―National ―Self-funded ―Market risk borne by individuals ―Pooled mortality risk, guaranteed participating annuities CREF founded in 1952 as the first variable annuity Today: ―~$450 billion in assets, 15,000 institutional plans, 3.5 million individual participants

3. 2 TIAA-CREF INVESTMENT PHILOSOPHY: To maximize customers’ savings (rather than fees) by: Emphasizing the Importance of asset allocation, diversification, and rebalancing Offering pure, fully-invested low-cost exposure Seeking to add value through selective active management alongside a full range of index funds Seeking to add value through providing unique exposure to more asset classes

4. 3 TIAA-CREF INVESTMENT OPTIONS 1952-1990: TIAA and CREF Stock ―Mandatory Annuitization 1990s: Additional Investment Options ―Global Equities, Growth, Equity Index, Social Choice ―Money Market, Bond, Inflation-Linked Bond ―Real Estate 2002-2004: 20 Mutual Funds plus Lifecycle Funds 2005: Non-proprietary funds introduced

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6. 5 Is There a Simple Design That Can Get Them to Want What They Need? 1.Automatic enrollment - Opt out option to apply to all “automatic” features 2.Automatic default to Lifecycle fund or Balanced fund 3.Compact set of transparent fund choices that provide broad exposure to financial markets 4.Automatic rebalancing 5.Professional fund management that takes advantage of long investment horizon and risk control 6.Low cost 7.Automatic annuitization

7. 6 PENSION DESIGN FOR THE FUTURE How close was TIAA-CREF to an ideal balance of individual choice and institutional direction in the 20 th Century? In the U.S. an increasing realization that unlimited choice produces sub-optimal outcomes The Pendulum of Paternalism is Swinging Back The popularity of Lifecycle funds shows that simplicity wins – at least at the accumulation stage A challenge will be to deliver similar simplicity for the payout stage

8. 7 TIAA-CREF: A BRIEF HISTORY A LOOK AHEAD Scott Evans Executive Vice President, Asset Management TIAA-CREF October, 2007