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Subject: Re: New Vanguard/Calvert & TIAA-CREF SRI Funds
From: Mark
Date: 05/15/00

TIAA-CREF is the retirement fund I have through my employer. While I'm generally satisfied with them as a company, I have been rather disappointed with their Social Choice fund (retirement version), both from the vantage point of investment screening and performance. In my opinion the screening criteria are pretty "bare bones" - no tobacco or alcohol, "clean" environmental record (however that is determined), must abide by McBride principals if doing business in No. Ireland, no companies that are based predominantly on weapons manufacturing, and no nuclear energy. In short, the kind of SRI that your grandmother would beam contentedly about.

Meanwhile, no thought is given to a number of other areas that I care about. When I sat down to read the prospectus a few months ago, I learned that my "Social Choice" money there was invested in a bunch of companies (Nike was the major one I recall) who profit off of sweatwhop labor in developing countries, gambling casinos (why is exploiting drinking or smoking addictions a taboo, but taking advantage of compulsive gamblers cool?), and several domestic companies (Walmart that sticks in my head) with historically questionable business practices. Oh yeah, and Home Depot, who would as soon clear cut your back yard and then tell you to have a nice day.

I consider profits derived from these firms every bit as much "blood money" as the more publicized no-no investments.

Yet somehow, despite these ethical compromises, the Social Fund has managed to deliver pretty poor returns (18% average APR) over the past five years compared to the benchmark SRI indexes that I see floating around. So, it has been sort of the "worst of both worlds". I'm hoping that they have just been getting their feet wet in the SRI world, but in the meantime you may wish to steer clear of them.

Good luck.

PS - Oddly, I compared the TIAA social choice account to their "Growth Account", and was shocked to find that, percentage-wise, the two accounts' investment in areas I considered undesireable were roughly comparable. But the growth account actually performed. Perhaps the Growth Account should be dubbed the "Accidental SRI Fund".


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