MN0708.XXP

PLAN DISCLOSURE BOOKLET

AND

PARTICIPATION AGREEMENTS

for

Minnesota College Savings Plan

IMPLEMENTED AND ADMINISTERED BY: THE MINNESOTA OFFICE OF HIGHER EDUCATION

ASSETS INVESTED BY: THE MINNESOTA STATE BOARD OF INVESTMENT

PLAN MANAGER: TIAA-CREF TUITION FINANCING, INC.

August 1, 2007

No security issued by the Minnesota College Savings Plan has been registered with or approved by the United States Securities and Exchange Commission or any state securities

commission.

No dealer, broker, salesperson or other person has been authorized by TIAA-CREF Tuition Financing, Inc. (“TFI” or the “Plan Manager”), the Minnesota State Board of Investment (the “Board”) or the Minnesota Office of Higher Education (the “Office”) to give any information or to make any representations other than those contained in this document and, if given or made, such other information or representations must not be relied upon as having been authorized by the Plan Manager, the Board or the Office.

This Plan Disclosure Booklet (this “Disclosure Booklet”) describes the Minnesota College Savings Plan (the “Plan”) and its investment choices, fees and expenses, federal and Minnesota tax benefits and consequences, risk factors, and other important information about the Plan. The Disclosure Booklet includes three addenda. ADDENDUM A — PARTICIPATION AGREEMENTS contains three separate Participation Agreements, which incorporate by reference this Disclosure Booklet and, together with a signed Application to open an Account, form the contract between an Account Owner and the State of Minnesota. ADDENDUM B — PRIVACY POLICIES contains the NOTICE OF TIAA-CREF PRIVACY POLICY and the NOTICE OF PRIVACY POLICY OF THE MINNESOTA COLLEGE SAVINGS PLAN. ADDENDUM C — IMPORTANT DEFINED TERMS is a glossary containing key terms that are frequently used throughout this Disclosure Booklet. Statements contained in this Disclosure Booklet which involve estimates, forecasts or matters of opinion, whether or not expressly so described therein, are intended solely as such and are not to be construed as representations of facts.

The information and opinions in this Disclosure Booklet are subject to change without notice, and neither delivery of this Disclosure Booklet nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Plan Manager, the Board or the Office since the date of this Disclosure Booklet.

This Disclosure Booklet does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of a security in the Minnesota College Savings Plan by any person, in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

Please read and retain this Disclosure Booklet as an important document with your other records about the Plan.

This Disclosure Booklet is available as public information on the Plan’s Web site at www.mnsaves.org.

TABLE OF CONTENTS

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THE MINNESOTA COLLEGE SAVINGS PLAN – SUMMARY OF KEY FEATURES OF THE PLAN ..................................................................................................................................... 1

THE MINNESOTA COLLEGE SAVINGS PLAN .................................................................................... 5 About the Plan ................................................................................................................................ 5 No Insurance or Guarantee ............................................................................................................. 5 Federal Tax Matters ........................................................................................................................ 5 Circular 230 Disclosure .................................................................................................................. 6

MATCHING GRANTS ............................................................................................................................... 6 OPENING AND MAINTAINING YOUR ACCOUNT ............................................................................. 8

How To Participate In the Plan ....................................................................................................... 8 Individual Accounts ........................................................................................................................ 9 Entity Accounts .............................................................................................................................. 9 Minor Trust Accounts ................................................................................................................... 10 Important Information About Procedures For Opening A New Account .................................... 10 Contributions ................................................................................................................................ 11

Minimum Contributions ................................................................................................... 11 Maximum Account Balance Limit ................................................................................... 11 Method Of Payment ......................................................................................................... 11

No Pledging Of Account .............................................................................................................. 12 Bankruptcy and Related Matters .................................................................................................. 12 Changing the Beneficiary and Transferring Account Funds ........................................................ 13 Transfers Between Investment Options ........................................................................................ 14 Changing Account Ownership ...................................................................................................... 15 Naming A Contingent Account Owner ........................................................................................ 15

WITHDRAWALS ..................................................................................................................................... 16 RISKS OF INVESTING IN THE PLAN .................................................................................................. 16

Investment Risks ........................................................................................................................... 16 No Guarantee Of Attendance or Expense ..................................................................................... 17 Risks Related To Changes In Law ............................................................................................... 17 Risks Related To Illiquidity .......................................................................................................... 17 Limitations On Investment Selection ........................................................................................... 17 Potential Change Of the Plan Manager and Other Plan Changes ................................................. 18 Potential Impact On Financial Aid and Medicaid Eligibility ....................................................... 18 Suitability; Investment Alternatives ............................................................................................. 18 No Insurance or Guarantee ........................................................................................................... 19

OVERSIGHT OF THE PLAN .................................................................................................................. 19 THE PLAN MANAGER ........................................................................................................................... 19

TFI’s Term As Plan Manager ....................................................................................................... 20 INVESTMENT OPTIONS ........................................................................................................................ 20

Choosing Your Investment Options and How the Investment Options Are Invested .................. 20 Managed Allocation Option ......................................................................................................... 21 100% Equity Option ..................................................................................................................... 23 Balanced Option ........................................................................................................................... 23 100% Fixed-Income Option ......................................................................................................... 24 Money Market Option .................................................................................................................. 25 Guaranteed Option ........................................................................................................................ 26

UNIT VALUE ........................................................................................................................................... 27 PAST PERFORMANCE ........................................................................................................................... 27

TABLE OF CONTENTS

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FEES AND EXPENSES ............................................................................................................................ 30 UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL

FUNDS ......................................................................................................................................... 33 Equity Funds ................................................................................................................................. 33 Index Funds .................................................................................................................................. 34 Real Estate Securities Fund .......................................................................................................... 35 Fixed-Income Funds ..................................................................................................................... 35 Money Market Fund ..................................................................................................................... 36 Summary Descriptions Of Risks Of the Mutual Funds ................................................................ 37 Net Asset Value ............................................................................................................................ 40

THE TIAA-CREF LIFE INSURANCE COMPANY FUNDING AGREEMENT ................................... 40 DORMANT ACCOUNTS ......................................................................................................................... 41 INACTIVE MATCHING GRANT ACCOUNTS ..................................................................................... 41 REPORTING ............................................................................................................................................. 42

Account Statements ...................................................................................................................... 42 Tax Reports ................................................................................................................................... 42 Tax Withholding ........................................................................................................................... 42 Continuing Disclosure .................................................................................................................. 42 Financial Statements ..................................................................................................................... 42 Privacy Of Account Information .................................................................................................. 43

TAX INFORMATION .............................................................................................................................. 43 Tax Law Changes Affecting the Plan ........................................................................................... 43 Federal Income Tax Treatment ..................................................................................................... 43

Contributions ................................................................................................................... 44 Account Earnings ............................................................................................................ 44

Withdrawals .................................................................................................................................. 44 Qualified Withdrawals ..................................................................................................... 44 Non-Qualified Withdrawals and Additional Tax ............................................................. 46 Withdrawals Due To Death, Disability, Scholarship or Attendance At the

Military Academies ............................................................................................. 46 Computation Of Withdrawal Amounts ............................................................................ 47 Refunds Of Payments Of Qualified Higher Education Expenses .................................... 47

Beneficiary Changes, Transfers Of Funds and Rollover Distributions ........................................ 47 Coordination With Other Income Tax Incentives For Education ................................................. 48 Federal Gift, Estate and Generation-Skipping Transfer Taxes ..................................................... 49 State Tax Treatment ...................................................................................................................... 50 Taxation Of Matching Grants ....................................................................................................... 51 Tax Reports ................................................................................................................................... 51 Lack Of Certainty Of Tax Consequences; Future Changes In Law ............................................. 51 Federal Tax Effects Of the Expiration Of the 2001 Tax Act ........................................................ 52

ADDENDUM A - PARTICIPATION AGREEMENTS ......................................................................... A-1 PARTICIPATION AGREEMENT FOR AN ACCOUNT OWNED BY AN INDIVIDUAL ................ A-1 PARTICIPATION AGREEMENT FOR AN ENTITY ACCOUNT ...................................................... A-5 PARTICIPATION AGREEMENT FOR A MINOR TRUST ACCOUNT .......................................... A-11 ADDENDUM B – PRIVACY POLICIES .............................................................................................. B-1 NOTICE OF TIAA-CREF PRIVACY POLICY ..................................................................................... B-1 NOTICE OF PRIVACY POLICY OF THE MINNESOTA COLLEGE SAVINGS PLAN .................. B-2 ADDENDUM C – IMPORTANT DEFINED TERMS ........................................................................... C-1 OBTAINING ADDITIONAL INFORMATION ....................................................................... Back Cover

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THE MINNESOTA COLLEGE SAVINGS PLAN – SUMMARY OF KEY FEATURES OF THE PLAN

This section of the Disclosure Booklet provides summary information about certain key features of the Plan, but it is important that you read the entire Disclosure Booklet and Participation Agreements for complete information about the Plan. Capitalized terms used in this section are defined throughout the Disclosure Booklet and in the glossary in Addendum C.

Feature Description Additional Information State Administrators Minnesota Office of Higher Education of the State of Minnesota (the

“Office”) administers the Plan and Account Owner funds are invested by the State Board of Investment of the State of Minnesota (the “Board”).

OVERSIGHT OF THE PLAN, page 19

Plan Manager TIAA-CREF Tuition Financing, Inc. provides plan management services for the Plan. The current term of the Management Agreement expires on August 31, 2009.

THE PLAN MANAGER, page 19

Account Owner Eligibility

• Any U.S. citizen or resident alien with a Social Security Number or taxpayer identification number.

• Custodians for minors under UGMA or UTMA and Trustees For Minors, with Social Security Numbers or taxpayer identification numbers. Additional restrictions apply to such Accounts.

• Corporations and certain other types of entities with a taxpayer identification number. Additional restrictions apply to such Accounts.

• State or local government agencies (or instrumentalities) of the State of Minnesota and certain nonprofit organizations. Additional restrictions may apply to such Accounts.

How to Participate in the Plan, page 8

Beneficiary Eligibility

• Any U. S. citizen or resident alien with a Social Security Number or taxpayer identification number, including the Account Owner.

• The Account Owner may change the Beneficiary to a “Member of the Family” of the Beneficiary at any time, subject to the Maximum Account Balance Limit.

• No Beneficiary must be designated for Accounts established by Minnesota government agencies and instrumentalities, and nonprofit organizations to fund scholarships.

How to Participate in the Plan, page 8; Changing the Beneficiary and Transferring Account Funds, page 13

Contributions • Minimum initial and subsequent contribution is $25 per Investment Option; $15 minimum contribution per Investment Option via payroll deduction (if available).

• Contributions cannot be withdrawn until 10 days after receipt of that contribution by the Plan Manager.

Contributions, page 11

Current Maximum Account Balance Limit

Limit of $235,000 per Beneficiary – no new contributions may be made to any Account for a Beneficiary once this limit is reached.

Maximum Account Balance Limit, page 11

Withdrawals • Qualified Withdrawals: Account assets can be used to pay for tuition, fees, and the costs of books, supplies and equipment required for enrollment or attendance of the Beneficiary at an

WITHDRAWALS, page 16; TAX INFORMATION, page 43

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Eligible Educational Institution and certain room and board expenses.

• Non-Qualified Withdrawals are subject to applicable federal and Minnesota income tax on earnings and a 10 percent additional federal tax on earnings (Additional Tax).

• A federal and Minnesota income tax-free Rollover Distribution to an account in another qualified tuition program for the same Beneficiary or a tax-free Rollover Distribution to a different Beneficiary may occur under certain circumstances.

• Withdrawals are also permitted due to Beneficiary’s death, disability, scholarship award, or attendance at a Military Academy, which are subject to different federal and Minnesota income tax consequences.

• No withdrawal can be taken within 30 days of receipt of Account Owner’s request to change Account ownership or mailing address unless medallion signature guarantee is attached.

Current* Investment Options

• One age-based option (Managed Allocation Option) invested in the Institutional Class of The TIAA-CREF Institutional Mutual Funds.

• Three static options (100% Equity Option; Balanced Option; and 100% Fixed-Income Option) invested in the Institutional Class of The TIAA-CREF Institutional Mutual Funds.

• One guaranteed option (Guaranteed Option) invested in a Funding Agreement, which guarantees the Board principal plus a minimum interest rate of 3 percent per annum, with the opportunity for additional interest rates.

• *Effective November 1, 2007, the Plan will also offer a Money Market Option invested in the TIAA-CREF Institutional Money Market Fund.

INVESTMENT OPTIONS, page 20

Transfers Between Investment Options*

The Account Owner may move contributions and earnings from one Investment Option to another once per calendar year or at any time upon a change of Beneficiary. *Certain restrictions apply.

Transfers Between Investment Options, page 14

Federal Tax Benefits

• Earnings are federally tax deferred until distributed. • Qualified Withdrawals and Rollover Distributions are federal

income tax free upon distribution. • Certain withdrawals due to the Beneficiary’s death, disability,

receipt of a scholarship, or Military Academy attendance are subject to federal income tax, but not the 10 percent Additional Tax.

• No federal gift tax on contributions up to $60,000 (single filer) and $120,000 (married couple) if prorated over 5 years.

• Contributions are generally considered completed gifts to the Beneficiary for federal gift and estate tax purposes.

TAX INFORMATION, page 43

Minnesota Tax Benefits

• Earnings are tax deferred for Minnesota income tax purposes until distributed.

• Earnings on Qualified Withdrawals are exempt from Minnesota income tax.

• Certain withdrawals due to the Beneficiary’s death, disability,

State Tax Treatment, page 50. If you or your Beneficiary reside in, or have taxable income in, a state other than

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receipt of a scholarship, or Military Academy attendance are subject to Minnesota income tax.

• Contributions are not deductible by the Account Owner for Minnesota income tax purposes.

• State tax benefits are only available to Minnesota taxpayers.

Minnesota, see page 50 for important information about potential consequences of investing in an out-of-state 529 program. Consult a qualified advisor or contact your home state’s 529 program for more information about that program.

Current Fees and Expenses*

The Total Annual Asset-Based Fee is 0.65 percent. Of that amount, depending on the Investment Option, 0.315 percent to 0.50 percent is paid to the Plan Manager (Plan Manager Fee). *This does not apply to the Guaranteed Option, which does not pay the Plan Manager a fee. A fee of 5 percent of the Account balance (not to exceed $100) plus allowable costs may be charged by the Plan Manager to locate the Account Owner or Beneficiary of a Dormant Account, if no contributions are made for three consecutive years and Account statements are returned as undeliverable.

FEES AND EXPENSES, page 30

Performance Performance of the Investment Options is updated monthly on the Web site at www.mnsaves.org or can be obtained by calling the Plan Manager toll-free at 1 877 EDU 4 MIN (1 (877) 338-4646). Past performance is not a guarantee of future results. Investment results may be better or worse than the performance shown.

PAST PERFORMANCE, page 27

Risks of Investing in the Plan

• The value of your Account may decrease. You could lose money, including the principal you invest.

• Federal or State tax law changes could negatively affect participation in the Plan.

• Certain changes could be made to the Plan which could make it less favorable to investors, including an increase in existing fees and expenses and the addition of new fees and expenses.

• Change in program manager, in investment options, in allocation guidelines, or in underlying investment vehicles.

• Contributions to an Account may adversely affect the Account Owner’s or Beneficiary’s eligibility for financial aid or other benefits.

• No insurance or guarantee to Account Owners investing in the Plan by the Federal Deposit Insurance Corporation or any other government agency or entity.

• Investment returns may be less than the rate of increase in the costs of higher education.

RISKS OF INVESTING IN THE PLAN, page 16

Matching Grants • Beneficiaries under age 25 who are dependents of Minnesota residents and Beneficiaries age 25 or older who are themselves Minnesota residents may qualify for Matching Grants from the State of Minnesota.

• Minnesota residency requirements are determined by the filing

MATCHING GRANTS, page 6; Taxation of Matching Grants, page 51

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of a Minnesota income tax return for the calendar year in which contributions to be matched were made.

• In order to qualify for a Matching Grant, an Account Owner must apply for the Matching Grant by May 1st, have minimum contributions to the Account during the previous calendar year and the federal adjusted gross income of the Beneficiary’s family or the Beneficiary (if age 25 or older) must not exceed $80,000.

• No Beneficiary is guaranteed a Matching Grant. Matching grants may be forfeited under certain circumstances.

• The Account Owner’s Account must be opened at least three years before a Beneficiary may receive a distribution of Matching Grant funds to pay Qualified Higher Education Expenses.

• All Matching Grant funds are invested in the Guaranteed Option.

• The Office retains ownership of all Matching Grants and all earnings on Matching Grants until distributed in a Qualified Withdrawal.

Contact Information Call toll-free at 1 877 EDU 4 MIN (1 (877) 338-4646), visit the Plan Web site at www.mnsaves.org or write to TIAA-CREF Tuition Financing, Inc., P.O. Box 64028, St. Paul, Minnesota 55164-0028.

Back Cover

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THE MINNESOTA COLLEGE SAVINGS PLAN

About the Plan

The Minnesota College Savings Plan (the “Plan”) is designed to help people save for the costs of education after high school. The Plan was implemented and is administered by the Minnesota Office of Higher Education of the State of Minnesota (the “Office”) and the money is invested by the State Board of Investment of the State of Minnesota (the “Board”). The Office and the Board are agencies of the State of Minnesota (the “State”). Currently, federal and State tax benefits enhance the value of investing in the Plan.

The Plan is authorized by Section 136G of the Minnesota Statutes, as amended by Minn. Laws 2007, Chapter 144, Article 2 Section 43 (the “Statute”), which provides for the establishment of accounts (each an “Account”) to hold funds invested to pay the higher education expenses of a beneficiary designated on the Account (the “Beneficiary”). Among other powers and authority, the Director of the Office has the authority to enter into contracts for Plan management services and adopt regulations for the administration of the Plan. Your rights as the owner of the Account (the “Account Owner”) and the rights of your Beneficiary are established under provisions of the Statute and regulations, if any, adopted by the Office and the Board, and under an agreement that you enter into with the Office and the Board regarding your participation in the Plan (the “Participation Agreement”). For additional information concerning the Office’s and the Board’s oversight of the Plan, see “OVERSIGHT OF THE PLAN.”

The Office and the Board have engaged TIAA-CREF Tuition Financing, Inc. (“TFI” or the “Plan Manager”) to serve as the Plan Manager under management agreements (the “Management Agreements”) that have been executed by the three parties. TFI is part of TIAA-CREF, a financial services organization with nearly 90 years of investment experience. For additional information, see “THE PLAN MANAGER.”

No Insurance or Guarantee

Investments in the Plan are not insured or guaranteed (except to the extent of the guarantee by TIAA-CREF Life Insurance Company (“TIAA-CREF Life”) to the Board on behalf of the Office under the Funding Agreement (defined below) for the Guaranteed Option) by the State, any State agency, instrumentality, or political subdivision, the Plan, the Board, the Office, the Federal Deposit Insurance Corporation (“FDIC”), any federal government agency, TFI or Teachers Insurance and Annuity Association of America (“TIAA”) and its affiliates. For additional information, see “RISKS OF INVESTING IN THE PLAN — No Insurance or Guarantee.”

Federal Tax Matters

The provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (the “2001 Tax Act”) were set to expire on December 31, 2010. On August 17, 2006, the Pension Protection Act of 2006 (the “2006 Tax Act”) was enacted into law. The 2006 Tax Act eliminated the December 31, 2010 expiration date and extended the tax provisions of the 2001 Tax Act for investment in qualified tuition programs. For additional information about federal tax benefits of investing in the Plan, see “TAX INFORMATION.”

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Circular 230 Disclosure

The tax information contained in this Disclosure Booklet was written to support the promotion and marketing of the Plan. It was neither written nor intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek tax advice from an independent tax advisor based on their own particular circumstances.

MATCHING GRANTS

The State of Minnesota will award “Matching Grants” on an annual basis to those Beneficiaries who satisfy certain conditions. The conditions include: (1) an annual application by the Account Owner for the Matching Grant which must be filed by May 1; (2) a minimum contribution of $200 to the Account Owner’s Account during the previous calendar year; (3) the Beneficiary’s family meets Plan residency requirements; and (4) the family income of the Beneficiary did not exceed $80,000 for the calendar year in which the contributions were made.

The Plan has the following residency requirements for eligibility to receive a Matching Grant. If the Beneficiary is under age 25, the Beneficiary’s parents or legal guardians must be Minnesota residents. To meet the residency requirements, the parent or legal guardian of the Beneficiary under age 25 must have filed a Minnesota individual income tax return as a Minnesota resident and claimed the Beneficiary as a dependent on the parent or legal guardian’s federal individual income tax return for the calendar year in which contributions were made. If the Beneficiary’s parents are divorced, the parent or legal guardian claiming the Beneficiary as a dependent on the federal individual income tax return must be a Minnesota resident. If the Beneficiary is age 25 or older, the Beneficiary, and Beneficiary’s spouse, if any, must have filed a Minnesota and a federal individual income tax return as a Minnesota resident for the calendar year in which contributions were made. A Beneficiary under age 25 whose parents or legal guardians did not reside in Minnesota, or a Beneficiary age 25 or older who did not reside in Minnesota in the calendar year in which contributions were made, is not eligible for a Matching Grant.

If these residency requirements are met, the Beneficiary must also meet family income requirements in order to be eligible for the Matching Grant. If the Beneficiary is under age 25, family income is defined as the combined adjusted gross income of the Beneficiary’s parents or legal guardians as reported on the federal individual income tax return or returns for the calendar year in which contributions were made. If the Beneficiary’s parents or legal guardians are divorced, the income of the parent claiming the Beneficiary as a dependent on the federal individual income tax return and the income of that parent’s spouse, if any, is used to determine family income. If the Beneficiary is age 25 or older, family income is defined as the combined adjusted gross income of the Beneficiary, and Beneficiary’s spouse, if any, for the calendar year in which contributions were made.

The age of the Beneficiary for purposes of a Matching Grant is the age of the Beneficiary as reported on the Application or Participation Agreement to open an Account in the Plan on December 31 of the year in which contributions were made.

Matching Grants under the Plan are determined by the following formula. If the Beneficiary’s family income is $50,000 or less, the Matching Grant is 15 percent of contributions made to the Beneficiary’s Account during the calendar year, up to a maximum award of $400. If the Beneficiary’s family income is more than $50,000 but not more than $80,000, the Matching Grant is 10 percent of contributions made to the Beneficiary’s Account during the calendar year, up to a maximum award of $400. A Beneficiary who has been designated on multiple Accounts cannot qualify for more than $400 in Matching Grants annually.

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Account Owners of all types of Accounts naming a Beneficiary (individual, entity and Minor Trust Accounts (defined below)) may apply for a Matching Grant. Please refer to the instructions contained in the application for a Matching Grant for the required documentation that must be submitted with the application to meet all eligibility requirements.

An Account Owner’s application for the Matching Grant must be postmarked no later than May 1 of each calendar year immediately after the year the minimum contribution was made to qualify for the Matching Grant. If the Account Owner’s application is deemed eligible, the Matching Grant will be deposited into a “Matching Grant Account” that is owned by the State of Minnesota and linked to the Account Owner’s Account in the Plan. The application for the Matching Grant is made directly to the State of Minnesota on a separate form, not by completing an Application to open an Account in the Plan. Matching grant application forms may be obtained by calling the Plan toll-free at 1 877 EDU 4 MIN (1 877 338-4646) or visiting the Plan Web site at www.mnsaves.org.

No Beneficiary is guaranteed an annual Matching Grant by the State of Minnesota. The information in Matching Grant applications will be reviewed by pertinent State of Minnesota government agencies to verify eligibility requirements. Matching grants are dependent upon appropriations from the Minnesota Legislature as approved by the Minnesota Governor. If the total amount of Matching Grants exceeds the amount of State of Minnesota appropriations for Matching Grants, Matching Grants will be proportionately reduced so that the total equals the available appropriation. Additionally, Account Owners should be aware that at any time the State of Minnesota may change the eligibility requirements to receive a Matching Grant.

The Office retains ownership of all Matching Grants and earnings on such grants until a distribution is made to a Beneficiary or an Eligible Educational Institution for payment of a Qualified Higher Education Expense. See “TAX INFORMATION — Withdrawals — Qualified Withdrawals” below for information about how to take a Qualified Withdrawal of Matching Grant funds. An Account must be opened at least three years before a Beneficiary may take a distribution of Matching Grant funds for payment of Qualified Higher Education Expenses. (For purposes of satisfying this three-year period, the period of time that funds were held in another Account or in an account in another qualified tuition program will be used in calculating the three years if such funds were transferred to the qualifying Account through a Rollover Distribution. See “OPENING AND MAINTAINING YOUR ACCOUNT— Changing the Beneficiary and Transferring Account Funds” for the definition of “Rollover Distribution”.)

Matching grants will be fully or partially forfeited under certain conditions, including: (1) a transfer of funds from the Account or a change of Beneficiary; (2) the death or disability of the Beneficiary; (3) the award of a tuition scholarship to the Beneficiary or the attendance of the Beneficiary at one of the Military Academies; or (4) a Non-Qualified Withdrawal (defined below) by the Account Owner. See “OPENING AND MAINTAINING YOUR ACCOUNT — Changing the Beneficiary and Transferring Account Funds” and “WITHDRAWALS” below for more information. If the Account Owner makes a misrepresentation in the Application or Participation Agreement or in an application for a Matching Grant that results in a Matching Grant, the Matching Grant associated with the misrepresentation will be forfeited.

The Plan Manager shall direct the investment of all Matching Grants to the Funding Agreement issued by TIAA-CREF Life to the Board on behalf of the Office. The Funding Agreement provides the Board with a guarantee of principal and a fixed minimum interest rate of 3 percent per year, with the possibility of additional interest as may be periodically declared in advance by TIAA-CREF Life for a period of up to 12 months. The Board of Directors of TIAA-CREF Life may change at any time, (either upward or downward) on a going-forward basis, this declared rate of additional interest applicable to new deposits of Matching Grant funds.

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The Funding Agreement is a general obligation of TIAA-CREF Life to the Board. As such, the Funding Agreement provides the Board with the guarantee by TIAA-CREF Life as described above, but this guarantee is not made directly to Account Owners or Beneficiaries. Neither TIAA-CREF Life nor TFI makes any guarantee to Account Owners or Beneficiaries with respect to the Funding Agreement. The Funding Agreement is not guaranteed or insured by any entity other than TIAA-CREF Life.

Although the Plan Manager will assist in the administrative processing of Matching Grant applications under the guidance of the Office, the Plan Manager is not responsible nor liable for any Matching Grant decisions made by the State of Minnesota or any Minnesota government agency. In the event that the State of Minnesota terminates the Plan, the State of Minnesota will determine the disposition of all Matching Grant funds.

Under certain conditions, such as a Non-Qualified Withdrawal from an Account, the death or disability of the Beneficiary, a scholarship award to the Beneficiary, the Beneficiary’s attendance at one of the Military Academies, a change of Beneficiary, a Rollover Distribution to another qualified tuition program, and/or a misrepresentation by the Account Owner that results in a Matching Grant, the Account Owner will forfeit, in part or in full, the Matching Grant funds in the Matching Grant Account for the Beneficiary. For more complete information about Matching Grants, including an application for a Matching Grant and how to withdraw Matching Grant funds, contact the Plan Manager at the Plan’s toll-free telephone number or through the Plan’s Web site.

OPENING AND MAINTAINING YOUR ACCOUNT

How To Participate In the Plan

To open an Account, you must complete and sign an application (“Application”), which incorporates by reference your Participation Agreement and this Disclosure Booklet. You must designate a Beneficiary for the Account on the Application and mail the completed Application with a check or other authorization for your initial contribution to the following address: Minnesota College Savings Plan, P.O. Box 64028, St. Paul, Minnesota 55164-0028. The funds you invest in your Account are intended to pay for the Beneficiary’s “Qualified Higher Education Expenses” at an “Eligible Educational Institution.”

• “Qualified Higher Education Expenses” are tuition, fees and the cost of books, supplies and equipment required for the enrollment or attendance of a Beneficiary at an Eligible Educational Institution. The amount of room and board expenses that are eligible to be treated as Qualified Higher Education Expenses is subject to certain limitations as described in detail under “TAX INFORMATION — Withdrawals — Qualified Withdrawals.”

• In general, “Eligible Educational Institutions” are accredited, postsecondary educational institutions offering credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree or another recognized postsecondary credential, including certain proprietary institutions and postsecondary technical or vocational schools and certain institutions in foreign countries.

The Plan provides three different types of Accounts for investment depending on the type of investor: (1) individual Accounts; (2) entity Accounts; and (3) Minor Trust Accounts. To participate in the Plan, you must enter into the pertinent Participation Agreement by signing the corresponding Application. You can obtain an Application and enrollment kit from the Plan Manager. The Participation Agreements are set forth in Addendum A to this Disclosure Booklet.

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The Beneficiary of your Account must be a U.S. citizen or resident alien with a valid Social Security Number or federal taxpayer identification number. Each Account may have only one designated Beneficiary. If you wish to make contributions for more than one Beneficiary, you must complete a separate Application and open a separate Account for each Beneficiary. Other Account Owners may also open an Account for your Beneficiary subject to the Maximum Account Balance Limit.

You must specify in your Application how you want your contributions invested among the Investment Options. You may invest in any one or a combination of the Investment Options and you must specify in your Application how you want your contributions to be allocated among those Investment Options. For information on how to revise your Investment Option elections in the future, see “Transfers Between Investment Options” on p.14.

Your rights and obligations as an Account Owner are set forth in the Participation Agreement. However, any amendments to the Statute or to federal or Minnesota tax law will automatically amend the Participation Agreement, and any amendments to the operating procedures and policies of the Plan will amend the Participation Agreement within 30 days after adoption by the Office.

You may contact the Plan Manager or obtain any of the forms for the transactions described below in this Disclosure Booklet in any of the following ways: (1) access the Plan’s Web site at www.mnsaves.org; (2) call the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646); or (3) write to the Plan Manager at Minnesota College Savings Plan, P.O. Box 64028, St. Paul, Minnesota 55164-0028.

Individual Accounts

Anyone with a valid Social Security Number or federal taxpayer identification number who is a U.S. citizen or resident alien can open an individual Account.

Entity Accounts

Corporations, trusts, estates, partnerships, associations, companies and Minnesota state and local government agencies and instrumentalities are all entities that are permitted to own Accounts in the Plan. Such entities, however, may be subject to additional restrictions or administrative requirements which are not applicable to Account Owners who are individuals. For example, an entity Account Owner is not permitted to designate a Contingent Account Owner and entities will be required to submit documentation to open an Account and conduct certain transactions.

A Minnesota state or local government agency or instrumentality, and organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “IRC”), may open Accounts to fund scholarships. A Beneficiary need not be designated for a scholarship Account opened by these entities, but each person who receives an interest in the Account as a scholarship will be treated as a Beneficiary for that portion of the Account awarded to him or her. These Accounts may be subject to additional restrictions or administrative requirements and would not be eligible for a Matching Grant unless a Beneficiary has been named.

Trustees may open Accounts in the Plan, subject to the requirement that the trustee will be required to sign forms in the trustee’s capacity as a trustee and may be required to execute such other forms and statements as the Plan Manager may reasonably require. If the trustee is acting pursuant to a trust instrument that designates a person who has reached the age of majority as the Beneficiary, the trustee will be required to open an entity Account. If the trustee is acting pursuant to a trust instrument naming a minor as a Beneficiary (a “Trustee for a Minor”), the Account opened by the trustee will be

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treated as a Minor Trust Account and such trustee will be subject to greater restrictions as discussed below under “Minor Trust Accounts.”

Minor Trust Accounts

The Plan allows a custodian for a minor under the Uniform Gifts to Minors Act (“UGMA”) or the Uniform Transfers to Minors Act (“UTMA”) (collectively “UGMA/UTMA”) or a Trustee for a Minor to open certain Accounts (“Minor Trust Accounts”) in the Plan. Minor Trust Accounts will be subject to the following restrictions:

• The custodian will be required to sign forms in the custodian’s representative capacity as a custodian;

• The custodian will not be permitted to change the Beneficiary of the Account (directly or by means of a Rollover Distribution) and funds in an Account will not be permitted to be transferred or rolled over to another Account Owner or to an Account for another Beneficiary;

• The custodian will not be permitted to change the Account Owner of an Account from the custodian to anyone other than a successor custodian or the Beneficiary without providing the Plan Manager with a court order directing the change (or as otherwise allowed under UGMA/UTMA);

• The custodian will not be permitted to designate a Contingent Account Owner;

• The custodian will be required to notify the Plan Manager in writing when the Beneficiary is legally entitled to take control of the Account and become the registered owner. At that time, the Beneficiary must complete an Application to open an individual Account. After completion of the Application, the Account will be converted from a Minor Trust Account to an individual Account and the Beneficiary, as Account Owner, will be able to conduct the same Account transactions as individual Account Owners; and

• The custodian will be permitted to make a Non-Qualified Withdrawal or a withdrawal due to the disability or scholarship award of the Beneficiary, or made on account of the Beneficiary’s attendance at one of the Military Academies only in accordance with UGMA/UTMA rules, which may require that any funds withdrawn must be used for the benefit of the Beneficiary.

A Trustee for a Minor should be aware that imposing the same restrictions on such a trustee as on a custodian of an UGMA/UTMA Account is highly unusual and may substantially restrict the use of trust assets. Custodians and trustees should consult a tax advisor about the tax consequences of opening and holding Accounts in the Plan, as well as legal counsel regarding their rights and responsibilities as custodians and trustees.

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an Account.

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What this means for you: When you open an Account, the Plan Manager’s affiliated broker/dealer will ask for your name, address, date of birth, Social Security Number and other information that will allow it to identify you, such as your home telephone number. Until you provide the information needed, the Plan may not be able to open an Account or effect any transactions for you.

Contributions

Contributions to your Account will entitle you to a share of the assets held in the Plan, expressed as a number of “Units.” A contribution will be credited to your Account at the “Unit Value” of the applicable Investment Option determined on the day it is received by the Plan Manager’s transfer agent if it is received before the close of trading (usually 4:00 p.m., Eastern Time) on the New York Stock Exchange. For more information, see “UNIT VALUE” p.27. Contributions received by the Plan Manager’s transfer agent after the close of trading or on a day when the New York Stock Exchange is not open for trading will be credited to your Account at the Unit Value of the applicable Investment Option determined on the next day of trading on the New York Stock Exchange. Contributions will be credited to your Account only if the documentation received from you is complete and in good order.

Minimum Contributions

The minimum initial and subsequent contribution to an Account is $25 per Investment Option. However, if your employer permits payroll deduction, the minimum initial and subsequent contributions to your Account may be as low as $15 per Account per Investment Option per pay period.

Maximum Account Balance Limit

By law, you may not make additional contributions to your Account if at the time of a proposed contribution the aggregate account balance of your Account and all other Accounts for the same Beneficiary reaches a certain level (the “Maximum Account Balance Limit”). The Maximum Account Balance Limit established by the Office is currently $235,000, which is based on certain higher education costs. The Office periodically will review and may revise the Maximum Account Balance Limit. Account Owners will be informed in writing by the Plan Manager of any such changes to the Maximum Account Balance Limit. This limitation on Account balances is intended to comply with the federal tax law requirement that the Plan have adequate safeguards to prevent contributions to an Account in excess of those necessary to provide for the Qualified Higher Education Expenses of the Account’s Beneficiary. The Maximum Account Balance Limit applies no matter which Investment Option or combination of Investment Options you select for your Account and takes into consideration the total balances, including earnings, of all Accounts under the Plan, including Matching Grant Accounts, for the same Beneficiary.

The portion of a contribution for any Beneficiary that would cause the aggregate account balance of all Plan Accounts held for that Beneficiary to exceed the Maximum Account Balance Limit will be rejected and returned. Accounts that have reached the Maximum Account Balance Limit may continue to accrue earnings.

Even if the combination of contributions and earnings in an Account or Accounts held for any Beneficiary reaches the Maximum Account Balance Limit, such funds may not be sufficient to pay all Qualified Higher Education Expenses of the Beneficiary.

Method Of Payment

You may contribute to your Account in the Plan, by check, automatic contribution plan, payroll deduction, electronic funds transfer (including electronic purchase option), a transfer from another

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qualified tuition program, a transfer of funds between Accounts, or a Rollover Distribution. Contributions may not be made in the form of property. You may make systematic contributions by automatic deductions from your bank account through the automatic contribution plan. You may also make recurring contributions to your Account through payroll deduction, if your employer provides for it and both you and your employer complete a payroll deduction form.

Checks should be made payable to the Minnesota College Savings Plan. Contributions by check must be drawn on a banking institution located in the United States in U.S. dollars. Personal checks, bank drafts, teller’s checks, and checks issued by a financial institution or brokerage firm payable to the Account Owner and endorsed over to the Plan by the Account Owner are permitted, as are third-party personal checks up to $10,000 that are endorsed over to the Plan. Any other form of payment not expressly mentioned in this section of the Disclosure Booklet is not permitted and will not be accepted.

If your method of payment is by check and you have selected more than one Investment Option for your Account, you must provide written instructions to the Plan Manager whenever you make a new contribution regarding the dollar amount of each check that is to be invested in each Investment Option.

You may make contributions to your Account through the electronic purchase option, which enables you to make payments by telephone by speaking with a customer service representative, over the Internet through a password-protected feature on the Plan Web site (www.mnsaves.org), or by calling the toll-free, automated telephone number for the Plan (1 877 338-4646) and following the pertinent instructions. These methods of making contributions can be used if you have followed the pertinent instructions on the Application for selecting the electronic purchase option, you complete the appropriate form, or you provide pertinent banking information online at the Plan Web site.

You may also access information about your Account on the Plan Web site or through the automated telephone system after creating a password. You can change your physical address, bank information, and your email address in the password-protected, interactive section of the Plan Web site, or you can download and print appropriate forms from the Web site for the same purpose.

If your method of payment is payroll deduction, you can change the amount of your contributions, stop payroll deduction, or reallocate future contributions among Investment Options or multiple Accounts by following the instructions on the appropriate form. This may involve contacting your employer. If your method of payment is the automatic contribution plan, you can completely stop your participation in the automatic contribution plan, or you can stop or change the timing and amount of your contributions to any Investment Option that you selected for your Account, by making these changes online at the Plan Web site or downloading and completing the appropriate form.

No Pledging Of Account

An Account Owner or a Beneficiary may not use all or any part of any Account or other interest in the Plan as security for a loan.

Bankruptcy and Related Matters

Bankruptcy legislation that became effective for bankruptcy cases commenced by individuals under Title 11 of the United States Code on or after October 17, 2005, expressly excludes from such individual’s bankruptcy estate (and, therefore, will not be available for distribution to such individual’s creditors), certain funds paid or contributed by such individual to an Account. The bankruptcy protection for these types of Accounts, however, is limited. To be protected, the Beneficiary of the Account must be a child, stepchild, grandchild, or step-grandchild of such individual during the year of such contribution

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and the funds must have been contributed at least 365 days prior to a bankruptcy filing. The new bankruptcy protection also imposes a cap on the amount of funds that may be excluded from such individual’s estate. The maximum amount entitled to the new bankruptcy exclusion is $5,000 for payments or contributions made by such individual to the Account for the Beneficiary during the period between 365 and 720 days prior to the bankruptcy filing. Contributions made more than 720 days prior to the bankruptcy filing are generally protected provided that the aggregate amount contributed by such individual to the Account does not exceed the Maximum Account Balance Limit at the time of the bankruptcy filing, as adjusted for changes in the cost of education under a specified index. This information is not meant to be individual advice and Account Owners should consult with their own advisors concerning their individual circumstances.

Changing the Beneficiary and Transferring Account Funds

You may make the following changes and transfers related to your Account:

1. Change the Beneficiary of your Account;

2. Transfer funds between Accounts;

3. Transfer funds between an Account and an account in another qualified tuition program; and

4. Within 60 days of a withdrawal of funds from an Account or from an account in another qualified tuition program, make a deposit to a new or an existing Account or to an account in another qualified tuition program (known as a “Rollover Distribution”).

You should be aware that there are additional prohibitions and limitations on your ability to make these changes and transfers to Minor Trust Accounts. For additional information, see “How To Participate In the Plan” above.

Certain federal and State tax consequences may apply to the changes and transfers referenced above as follows:

• A beneficiary change described in (1) will be a nontaxable event and will not be subject to the Additional Tax, only if the new Beneficiary is a Member of the Family of the previous Beneficiary. Otherwise, the earnings on your Account will be subject to State and federal income taxation, including the Additional Tax.

• A transfer of funds between Accounts or between an Account in the Plan and an account in another qualified tuition program (as described in (2) or (3)) will not be subject to State or federal income tax and will not be subject to the Additional Tax if the Beneficiary of the Account or the account to which funds are transferred is a Member of the Family of the previous Beneficiary. You may also transfer funds from an account in one qualified tuition program to an account in another qualified tuition program for the same Beneficiary once every 12 months without incurring State or federal income tax, including the Additional Tax. Otherwise, the earnings on amounts transferred will be subject to State and federal taxation, including the Additional Tax.

• A Rollover Distribution described in (4) will be treated the same as a transfer described in (2) or (3), provided the deposit to the Account or other new account occurs within 60 days as described in (4). If the 60-day deadline is not met, amounts withdrawn from your Account or from the account in another qualified tuition program will be subject to State and federal

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taxation, including the Additional Tax, unless such amounts are used to pay the Qualified Higher Education Expenses of the Beneficiary.

A “Member of the Family” is a person related to the Beneficiary as follows: (1) a son or daughter, or a descendant of either; (2) a stepson or stepdaughter; (3) a brother, sister, stepbrother or stepsister; (4) the father or mother, or an ancestor of either; (5) a stepfather or stepmother; (6) a son or daughter of a brother or sister; (7) a brother or sister of the father or mother; (8) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (9) the spouse of any of the foregoing individuals or the spouse of the Beneficiary; or (10) a first cousin of the Beneficiary. For this purpose, a child includes a legally adopted child and a brother or sister includes a half-brother or half-sister.

The “Additional Tax” is an additional 10 percent federal tax imposed by the Internal Revenue Service (the “IRS”) on the earnings portion of Non-Qualified Withdrawals. For more information on the Additional Tax, see “TAX INFORMATION — Withdrawals — Non-Qualified Withdrawals and Additional Tax.” See also “TAX INFORMATION — Beneficiary Changes, Transfers of Funds and Rollover Distributions,” for additional information concerning tax consequences of changing the Beneficiary and transferring funds.

You should retain documents and information adequate to substantiate that a particular Rollover Distribution or transfer of funds between Accounts or between qualified tuition programs is not subject to State or federal income tax, including the Additional Tax, because it is your responsibility to substantiate that such Rollover Distribution or transfer of funds qualifies for federal tax exemption if the IRS requires you to do so.

You may transfer funds to, or make a Rollover Distribution to, either an Account that is owned by you or an Account that is owned by another Account Owner. If a change of Beneficiary, transfer or Rollover Distribution causes the aggregate account balance for all Accounts under the Plan for the new Beneficiary to exceed the Maximum Account Balance Limit, the excess amount will be rejected and returned.

If you make a change of Beneficiary, a transfer of funds, or a Rollover Distribution to an Account for a new Beneficiary, you may invest the funds for the new Beneficiary in the same or different Investment Options. Certain restrictions may apply if you transfer funds to a different Investment Option. See “Transfers Between Investment Options” below. For changes of Beneficiary, the Account for the new Beneficiary will be governed by the same Application that applied to the previous Beneficiary.

If you are transferring funds from another qualified tuition program to an Account in the Plan, the program from which you are transferring funds may restrict or prohibit such transfer or impose charges, so you should investigate this change thoroughly before requesting a transfer.

Transfers Between Investment Options

You may choose Investment Options for your Account by completing and submitting an Application to open an Account. Future contributions to your Account are not limited to your initial elections. Each time you make contributions to your Account, you may determine in which Investment Option you wish to invest. After you have completed an Application, you may revise your Investment Option election(s) in the future by: (1) adding new Investment Options; (2) stopping contributions to an Investment Option that you previously selected; or (3) increasing or decreasing future contributions to an Investment Option that you previously selected. You may also transfer all or any portion of the funds already invested in a particular Investment Option to another Investment Option once per calendar year or upon a change of the Beneficiary of your Account. Effective November 1, 2007, transfers

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(including transfers when there is a change of the Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, you will be notified prior to the effective date of any such change.

After completing the Application, if you choose to change your Investment Option elections at a later date, you must provide the Plan Manager with appropriate instructions identifying each Investment Option to be added to your Account and the amount of your contributions to be allocated to each Investment Option. You must also notify the Plan Manager in writing if you are using payroll deduction or the automatic contribution plan and you wish to stop your contributions to any Investment Option.

Changing Account Ownership

You may change ownership of your Account to another individual or entity that is eligible to be an Account Owner in the Plan. When you transfer ownership of your Account, you are not required to change the Beneficiary. Changes of the Account Owner of a Minor Trust Account are subject to special limitations. For additional information, see “How To Participate In the Plan” on p.8 .

A change of ownership of an Account will be effective to transfer ownership only if the assignment: (1) is irrevocable; and (2) transfers all ownership, reversionary rights, powers of appointment and powers to direct the withdrawal of funds. Unless you provide a medallion signature guarantee on the form provided by the Plan Manager, the transfer will result in a 30-day hold on withdrawals from the Account. You may get a medallion signature guarantee from a participating bank or trust company, savings bank, savings and loan association, or a member of a national stock exchange. A notary public cannot provide a medallion signature guarantee. A change of Account ownership may have federal or State tax consequences and Account Owners are urged to consult their own tax advisors prior to implementing any such change.

Naming A Contingent Account Owner

If you are an individual Account Owner, you may designate a contingent account owner to become the owner of your Account in the event of your death (a “Contingent Account Owner”). You may do this by completing the appropriate section in the Application or, if you have already established an Account, you may designate a Contingent Account Owner or change your designation by completing the appropriate form.

Under State law, if you are a resident of Minnesota at the time of your death, upon your death your Contingent Account Owner will automatically become the Account Owner and the assets of the Account should not be considered assets of your estate or subject to probate. Account Owners should seek legal counsel regarding the effect of naming a Contingent Account Owner in the event of death. Before a change in ownership of the Account will be effectuated, the Contingent Account Owner must provide the Plan Manager with the Account Owner’s Social Security Number or federal taxpayer identification number and a certified copy of the death certificate identifying the deceased Account Owner (or other documentation recognized under applicable law and acceptable to the Plan Manager) and enter into a new Participation Agreement by signing an Application.

If you are not a resident of Minnesota or if you do not wish to designate a Contingent Account Owner, you should consult with a legal advisor regarding whether your Account will be subject to probate procedures.

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WITHDRAWALS

Only the Account Owner may direct withdrawals from an Account. A withdrawal from your Account will be either: (a) a “Qualified Withdrawal”; (b) a withdrawal due to death, disability, or made on account of a scholarship award to the Beneficiary; (c) a withdrawal made on account of the Beneficiary’s attendance at the United States Military Academy, the United States Naval Academy, the United States Air Force Academy, the United States Coast Guard Academy or the United States Merchant Marine Academy (each a “Military Academy”); (d) a “Non-Qualified Withdrawal”; or (e) a Rollover Distribution.

To request a withdrawal from your Account, you must complete the appropriate form. You may contact the Plan Manager for instructions or to request the form to complete this transaction. The Unit Value used to calculate the value of a withdrawal from an Account will be the one next computed after a completed withdrawal request is received in good order by the Plan Manager. (See “UNIT VALUE” for more information.) If your Account is invested in more than one Investment Option, for every withdrawal that you take from your Account, you may select the Investment Option from which your funds are to be withdrawn to the extent permitted by Section 529 of the IRC. You will not be able to withdraw a contribution until 10 days after receipt of that contribution by the Plan Manager’s transfer agent.

RISKS OF INVESTING IN THE PLAN

Prospective account owners in the Plan should carefully consider, along with other matters referred to in this Disclosure Booklet, the following risks of investing in the Plan.

Investment Risks

Although the general objective of the Plan is to achieve investment returns over the applicable investment period at least equal to the rate of increase in the costs of higher education, there is no guarantee this investment objective will be realized and, in fact, with any Investment Option, there is a possibility the investment returns over the applicable investment period will be less than the rate of increase in the costs of higher education. The Plan does not guarantee principal or a minimum rate of return on contributions to the Plan (except to the extent of the guarantee by TIAA-CREF Life to the Board on behalf of the Office under the Funding Agreement for the Guaranteed Option). No one can predict the returns from the investment of your contributions to the Plan. There is a risk you could lose part or all of the value of your Account.

Each Investment Option involves a different mix of risks. The investment risks of investing in the Investment Options, other than the Guaranteed Option, are generally the same as the investment risks of investing in the individual investment portfolios of The TIAA-CREF Institutional Mutual Funds in which those Investment Options invest. (Any reference in this Disclosure Booklet to the specific name of a mutual fund, or to the terms “Mutual Fund” or “Fund”, is a reference to an investment portfolio of the Institutional Class of The TIAA-CREF Institutional Mutual Funds. Any reference to “Mutual Funds” or “Funds” refers collectively to the Institutional Class of The TIAA-CREF Institutional Mutual Funds.) The risks of investing in the Mutual Funds are described below under “UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS.” The investment risks of investing in the Guaranteed Option are generally the same as the investment risks of directly entering into the Funding Agreement issued by TIAA-CREF Life for the Guaranteed Option. The Funding Agreement and its investment risks are described below under “THE TIAA-CREF LIFE INSURANCE COMPANY FUNDING AGREEMENT.”

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No Guarantee Of Attendance or Expense

There is no guarantee that a Beneficiary will be accepted for admission to any institution of higher education, including an Eligible Educational Institution, or if admitted, will graduate or receive a degree, or otherwise be permitted to continue to attend an Eligible Educational Institution. Even if the account balance of an Account has reached the Maximum Account Balance Limit, the balance in the Account may not be sufficient to cover the Beneficiary’s Qualified Higher Education Expenses. Future inflation in Qualified Higher Education Expenses is uncertain. Qualified Higher Education Expenses have been growing more rapidly than increases in the general cost of living. Increases in Qualified Higher Education Expenses could exceed the rate of return under the Plan over the same time period.

Risks Related To Changes In Law

The proposed federal tax regulations that have been issued under Section 529 of the IRC provide guidance and requirements for the establishment and operation of the Plan, but do not provide guidance on certain aspects of the Plan. Final regulations or other administrative guidance or court decisions might be issued that could adversely impact the federal tax consequences or requirements with respect to the Plan or contributions to, or withdrawals from, Accounts. In particular, IRS administrative guidance and changes to the Plan may be necessary to implement the provisions of the 2001 Tax Act. Congress could also amend Section 529 of the IRC or other federal law in a manner that would materially change or eliminate the federal tax treatment described in this Disclosure Booklet. Such changes in federal law could materially affect the State tax treatment of Account contributions, earnings and distributions. The State could also make changes to its tax law which could materially affect the State tax treatment of the Plan or changes to the Statute which could terminate or otherwise adversely affect the Plan. Changes in the law governing the federal and/or State tax consequences described in this Disclosure Booklet might necessitate material changes to the Plan for the anticipated tax consequences to apply.

The Plan is established pursuant to the Statute, applicable State law and applicable securities laws. Changes to the Statute, such State law or such securities laws may affect the continued operation of the Plan as contemplated in this Disclosure Booklet.

Risks Related To Illiquidity

Investment in the Plan involves the risk of reduced liquidity with respect to your investment. Once you open an Account for a Beneficiary the circumstances under which funds may be withdrawn from the Account without application of the Additional Tax are limited. See “TAX INFORMATION — Withdrawals — Non-Qualified Withdrawals and Additional Tax” and “OPENING AND MAINTAINING YOUR ACCOUNT — Changing the Beneficiary and Transferring Account Funds” for further information about these restrictions. Contributions must be on deposit for at least 10 days before being withdrawn. In addition to these restrictions, no part of an Account may be assigned, transferred or pledged as security for a loan or debt.

Limitations On Investment Selection

As an Account Owner in the Plan, your investment choices for your initial and subsequent contributions are limited to the Investment Options offered by the Plan. (See “INVESTMENT OPTIONS.”) Once you have selected an Investment Option when making a contribution, you may transfer funds between that Investment Option and another Investment Option only once per calendar year, and at any time upon a permissible change of the Beneficiary of the Account. You may not direct the investment of an Investment Option. The Board has control over Investment Options, the asset

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allocations for each Investment Option, and the selection of underlying investment vehicles held in each Investment Option, and reserves the right to change them at its discretion.

Potential Change Of the Plan Manager and Other Plan Changes

TFI will not necessarily continue as Plan Manager for the entire period your Account is open. TFI’s current term as Plan Manager is for a period of eight years, ending on August 31, 2009. The Management Agreements are also subject to the possibility of earlier termination at the direction of the Office, the Board, or TFI. One example of circumstances that could result in termination of the Management Agreements is if any party materially breaches the Management Agreements. There is also no assurance that the terms and conditions of your Participation Agreement will continue without material change. There are, accordingly, various potential consequences which should be considered. These include: (1) changes in the investment manager, or the addition of new investment manager(s) to provide services to the Plan concurrently with TFI and its affiliates; (2) changes in the fees and expenses applicable to the Plan; and (3) if TFI ceases to be the Plan Manager, you may have to open a new Account in the Plan with the successor plan manager in order to make future contributions on behalf of your Beneficiary.

The Board may at any time modify the Plan to provide additional or different Investment Options or make other changes to the Plan. The State may terminate the Plan by giving written notice to the Account Owner, but the assets in the Account may not thereby be diverted from the exclusive benefit of the Account Owner and the Beneficiary. In the event the State terminates the Plan, the State will determine the disposition of all Matching Grant funds.

Potential Impact On Financial Aid and Medicaid Eligibility

The eligibility of your Beneficiary for financial aid will depend upon the circumstances of the Beneficiary’s family at the time the Beneficiary enrolls in school, as well as on the policies of the governmental agencies, school, or private organizations to which the Beneficiary and/or the Beneficiary’s family applies for financial assistance. Because saving for college will increase the financial resources available to the Beneficiary, it most likely will have some effect on the Beneficiary’s eligibility. However, because these policies vary at different institutions and can change over time, the Plan Manager cannot say with certainty how the financial aid program, or the school your Beneficiary applies to, will treat your Account.

The eligibility of an Account Owner for Medicaid assistance could be impacted by the Account Owner’s ownership of a college savings account in a qualified tuition program. Although the result is not clear and may vary from state to state, it is possible that the assets in your Account may be considered available assets for determining Medicaid assistance eligibility. In addition, a state may decide that any assets withdrawn from an Account within a certain “look back” period (generally 60 months) may also be considered as available assets of the Account Owner for purposes of Medicaid eligibility. Medicaid laws and regulations may change and Account Owners should consult their own financial and tax advisors for advice on their own particular situation.

Suitability; Investment Alternatives

The Board, the Office and the Plan Manager, except as required by law, make no representations regarding the appropriateness of the Investment Options as an investment. Other types of investments may be more appropriate depending upon an individual’s residence, financial status, tax situation, risk tolerance or age. Various qualified tuition programs other than the Plan, including programs designed to provide prepaid tuition and for certain other educational expenses, are currently available, as are other

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education savings and investment alternatives. The investments, fees, expenses, eligibility requirements, tax and other consequences and features of these alternatives may differ from those available in the Plan. Anyone considering investing in the Plan may wish to consider these alternatives prior to opening an Account and should consult a tax or investment advisor.

No Insurance or Guarantee

Investments in the Plan are not insured or guaranteed (except to the extent of the guarantee by TIAA-CREF Life to the Board on behalf of the Office under the Funding Agreement for the Guaranteed Option) by the State, any State agency, instrumentality, or political subdivision, the Plan, the Board, the Office, the FDIC, any federal government agency, TFI or TIAA and its affiliates.

OVERSIGHT OF THE PLAN

The primary purpose of the Plan is to encourage individuals to save for postsecondary education. The Statute provides that the Director of the Office shall administer the Plan and shall establish the rules, terms, and conditions for the Plan and the Board shall invest the money deposited in Accounts in the Plan. Pursuant to these powers, the Office and Board have engaged TFI to serve as the Plan Manager under the Management Agreements. See “THE PLAN MANAGER” below for additional information about the Plan Manager and the Management Agreements.

The Office is an agency of the State established pursuant to Chapter 136G of the Minnesota Statutes to provide access to higher education for citizens of the State. The Office provides a variety of statewide postsecondary education services, including student financial aid, consumer protection and postsecondary education data and information.

The Board is an agency of the State established by Article XI of the Minnesota Constitution to invest all State funds. The Board manages approximately $59.9 billion in assets as of March 31, 2007, including public pension assets, various trust funds and State cash accounts. The membership of the Board comprises the Governor (who is named as chair of the Board), the State Auditor, the State Treasurer, the Secretary of State and the State Attorney General.

Account Owners are not charged a fee by the State regarding their investments in the Plan (“State Fee”). The Office and the Board have the authority to charge a State Fee for the direct and indirect expenses of oversight of the Plan, but do not have plans to exercise that authority.

THE PLAN MANAGER

The Plan Manager is TFI, a wholly owned indirect subsidiary of TIAA. TIAA, with its companion organization, the College Retirement Equities Fund (“CREF”), forms one of America’s leading financial services organizations. TIAA and CREF together comprise one of the world’s largest pension systems, based on assets under management. Over three million participants are now accumulating future pension benefits with TIAA-CREF. While TIAA-CREF’s focus has traditionally been institutionally sponsored retirement plans, the organization has long offered savings and insurance products to individuals.

As the Plan Manager, TFI provides investment management, administration, recordkeeping, reporting, regulatory, tax reporting, marketing and outreach, and other services for the Plan. TFI has subcontracted certain of its responsibilities relating to distribution, telephone counseling, marketing and

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information services to two other subsidiaries of TIAA, Teachers Personal Investors Services, Inc. and TIAA-CREF Individual & Institutional Services, LLC, both of which are registered broker/dealers with the Securities and Exchange Commission. TFI may also subcontract its responsibilities relating to certain customer service, recordkeeping, transfer agency and related services, custody, fund accounting and certain administrative services to others. References to TFI or the Plan Manager in this Disclosure Booklet include, where applicable, any entity to which TFI subcontracts or delegates its duties as Plan Manager.

As Plan Manager, TFI is bound by the Management Agreements entered into by the Board, the Office and TFI. As discussed under “FEES AND EXPENSES,” in accordance with the Management Agreements, with respect to the Managed Allocation Option, the 100% Equity Option, the Balanced Option, the 100% Fixed-Income Option and the Money Market Option, TFI is paid an annual Plan Manager Fee currently equal to 0.315 percent to 0.50 percent (depending on the Investment Option) of the average daily net assets of the Accounts invested in such Investment Options. The Guaranteed Option does not pay TFI a Plan Manager Fee, but an annual asset-based expense fee is paid by TIAA-CREF Life to TFI. For additional information, see “FEES AND EXPENSES” .

TFI’s Term As Plan Manager

TFI’s current Management Agreements with the Office and the Board to serve as Plan Manager provide for an eight-year term expiring on August 31, 2009. The Management Agreements are also subject to the possibility of earlier termination at the direction of the Office, the Board, or TFI. One example of circumstances that could result in termination of the Management Agreements is if any party materially breaches the Management Agreements. At the expiration of TFI’s contract term or in the event that TFI is terminated earlier as Plan Manager in accordance with the Management Agreements, there may be a change in the fees and expenses applicable to the Plan and you may be required to execute a new Participation Agreement and/or open a new Account in the Plan with the successor plan manager. The Plan Manager Fee could also change under other circumstances, such as if the Plan is modified or restructured by mutual agreement of TFI, the Board, and the Office, or if applicable laws or regulations change. If terminated as Plan Manager, TFI would be obligated to work with any successor plan manager chosen by the Office and the Board to effect an orderly transition of the Accounts and Plan records.

INVESTMENT OPTIONS

Choosing Your Investment Options and How the Investment Options Are Invested

Building an Account that is right for you takes planning. You need to consider your college savings goals, understand the Investment Options, and select Investment Options suitable to your investment needs. This section helps you to understand the types of Investment Options offered under the Plan, the risks involved in investing in such Investment Options, and the types of investors for whom particular Investment Options are most appropriate.

Contributions allocated to the Plan, together with any earnings on such contributions, are invested in accordance with the investment policy established by the Board. The Board may change the investment policy for the Plan and may add or remove Investment Options or the investments held in any Investment Option at any time. The allocations among the Mutual Funds in the Managed Allocation Option, the 100% Equity Option, the Balanced Option, the 100% Fixed-Income Option and the Money Market Option will be reviewed by the Board at least annually and may be changed at any time. The Plan Manager may recommend changes to these allocation guidelines to the Board based on an assessment of market conditions. The Board, however, may change the allocation guidelines from time to time without

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receiving any recommendation from the Plan Manager. When new allocation guidelines are implemented, the Plan Manager will have a commercially reasonable period of time to make any necessary adjustments to reach the new allocation percentage for each Age Band and Investment Option.

The Board and the Office may also change plan managers in accordance with the terms of their respective Management Agreements. See “THE PLAN MANAGER” above for more information.

The Board has established six Investment Options under the investment policy: (1) the Managed Allocation Option; (2) the 100% Equity Option; (3) the Balanced Option; (4) the 100% Fixed-Income Option; (5) the Money Market Option; and (6) the Guaranteed Option. All of these Investment Options, except the Money Market Option, are currently available. The Money Market Option will be available effective November 1, 2007.

You may allocate your contributions to any one or more of the Investment Options. Although Account Owners may choose among these Investment Options for contributions made to their Accounts, under federal law neither Account Owners nor Beneficiaries may direct the investment of any contributions to an Account or any earnings on contributions. Please be aware that, once made, contributions and any earnings thereon may only be transferred to another Investment Option once per calendar year or upon a change of the Beneficiary of the Account. Effective November 1, 2007, transfers (including transfers when there is a change of the Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, you will be notified prior to the effective date of any such change. See “OPENING AND MAINTAINING YOUR ACCOUNT — Transfers Between Investment Options” for information about changing Investment Option elections.

In addition to the transfer restriction on the Guaranteed Option (described above), the Board reserves the right to add restrictions to other Investment Options in the Plan at any time.

The Plan does not guarantee a minimum rate of return and neither the Plan nor any Participation Agreement is guaranteed or insured by the State, the Board, the Office, the Plan Manager or any other party. You should note that an investment in the Managed Allocation Option, the 100% Equity Option, the Balanced Option, the 100% Fixed-Income Option and the Money Market Option is not the same as a direct investment in the underlying Mutual Funds of these Investment Options.

Managed Allocation Option

The core Investment Option offered under the Plan is the Managed Allocation Option. This Investment Option offers investors an opportunity to invest aggressively when the Beneficiary is young and, over time, more conservatively, thus creating a balanced approach. In addition, this Investment Option is designed to reflect the time horizons as well as the risk tolerances of the different Beneficiary age groups. Within the Managed Allocation Option, the Plan places Beneficiaries into groups according to age (“Age Bands”). Beneficiaries are grouped into one of six Age Bands. Contributions allocated to each Age Band will be invested among equity, real estate, bond and money market investments in varying percentages depending on the Beneficiary’s time horizon. In the early years of a Beneficiary’s life, a larger percentage of contributions is allocated to equity and real estate investments and as the Beneficiary grows older, a declining percentage of funds will be allocated to equity and real estate and an increasing percentage of funds will be allocated to bond and money market investments.

• Investor Profile: Because this age-based allocation approach provides a balanced and diversified investment, many Account Owners may want to make this Investment Option

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their single choice for investing, in order to achieve long-term growth. This Investment Option may be best for an investor who can invest in the Plan long term but, can tolerate some level of risk.

You may want to combine the additional Investment Options described below with this core Investment Option, or in certain cases, invest in those other Investment Options alone.

Under the Managed Allocation Option, the Plan allocates your contributions, together with any return on your contributions, among a combination of The TIAA-CREF Institutional Mutual Funds. These Mutual Funds are the Large-Cap Growth Index Fund, the International Equity Fund, the Large-Cap Value Index Fund, the S&P 500 Index Fund, the Equity Index Fund, the Small-Cap Blend Index Fund, the Real Estate Securities Fund, the Bond Fund, the Inflation-Linked Bond Fund and the Money Market Fund. Each of these Funds is described under “UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS,” on p. 33. The Board has established as part of its investment policy the percentage for allocation of contributions among this combination of Mutual Funds. The specific allocation to each Mutual Fund is shown below.

The age of the Beneficiary of an Account and the date that Beneficiaries of his or her age would generally be expected to enroll in college determine how contributions are allocated among the Mutual Funds in the Managed Allocation Option. Contributions allocated to each Age Band are invested in varying percentages of the Mutual Funds. The specific allocations to each Mutual Fund underlying the Managed Allocation Option are shown below. Beneficiaries are moved from one Age Band to the next Age Band on the first “rolling date” following their fourth, eighth, twelfth, fifteenth and eighteenth birthdays. The “rolling dates” are March 20, June 20, September 20 and December 20 (or the first business day thereafter).

ALLOCATION GUIDELINES FOR THE MANAGED ALLOCATION OPTION

The following table provides the percentage of assets of each Age Band within the Managed Allocation Option allocated to each Mutual Fund.* Note that contributions received on or after August 1, 2007, will be allocated in accordance with these allocation guidelines.

Age Bands

Age of Beneficiary1

Large-Cap Growth

Index Fund S&P 500

Index Fund Equity

Index Fund

Small-Cap Blend Index

Fund

Large-Cap Value Index

Fund

Real Estate Securities

Fund International Equity Fund Bond Fund

Inflation- Linked Bond Fund

Money Market Fund

1 0-3 4.80% 16.80% 24.80% 4.00% 5.60% 8.00% 16.00% 15.00% 5.00% 0.00% 2 4-7 3.90% 13.65% 20.15% 3.25% 4.55% 6.50% 13.00% 26.25% 8.75% 0.00% 3 8-11 3.00% 10.50% 15.50% 2.50% 3.50% 5.00% 10.00% 37.50% 12.50% 0.00% 4 12-14 2.40% 8.40% 12.40% 2.00% 2.80% 4.00% 8.00% 45.00% 15.00% 0.00% 5 15-17 1.50% 5.25% 7.75% 1.25% 1.75% 2.50% 5.00% 37.50% 12.50% 25.00% 6 18 and over 0.90% 3.15% 4.65% 0.75% 1.05% 1.50% 3.00% 30.00% 10.00% 45.00%

* The actual percentages are generally to be within 3 percent of the base percentages in the table. If a significant market change results in allocations outside of this range, the Plan Manager will have a commercially reasonable period of time to bring the percentage of assets in each Age Band allocated to each Mutual Fund within this 3 percent range.

1 Beneficiaries are moved from one Age Band to the next Age Band on the first “rolling date” following their fourth, eighth, twelfth, fifteenth and eighteenth birthdays. The “rolling dates” are March 20, June 20, September 20 and December 20 (or the first business day thereafter).

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100% Equity Option

Under this Investment Option, the Plan allocates your contributions, together with any return on your contributions among the Large-Cap Growth Index Fund, the Equity Index Fund, the Large-Cap Value Index Fund, the Small-Cap Blend Index Fund, the Real Estate Securities Fund and the International Equity Fund. The Board has established as part of its investment policy the percentages for allocation of contributions among this combination of Mutual Funds. The specific allocation to each Mutual Fund is shown below. It is important to note the allocation mix for this Investment Option will not be changed to reflect the age of the Beneficiary, unlike the Managed Allocation Option where the allocation changes as your Beneficiary approaches the age when he/she would generally be expected to enroll in an Eligible Educational Institution.

• Investor Profile: Although equity stocks can produce above-average long-term returns, they do not perform well in every type of market. For that reason, the 100% Equity Option is not for everyone. It may be a good choice for you if you can tolerate greater risk and volatility with some of your contributions in exchange for higher potential returns over time. It may also be appropriate for you if you already have substantial college savings from less volatile investments (e.g., fixed income), if you have a longer time horizon, or if you want a balanced Account by combining this Investment Option with the more conservative Managed Allocation Option.

The specific allocations to each Mutual Fund underlying the 100% Equity Option are shown below. Each of these Mutual Funds is described under “UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS.”

ALLOCATION GUIDELINES FOR THE 100% EQUITY OPTION

The following table provides the percentage of assets of the 100% Equity Option allocated to each Mutual Fund.* Note that contributions received on or after August 1, 2007, will be allocated in accordance with these allocation guidelines.

Large-Cap Growth Index

Fund Equity

Index Fund

Large-Cap Value Index

Fund Small-Cap Blend

Index Fund Real Estate

Securities Fund1 International Equity Fund

28.00% 8.00% 28.00% 6.00% 10.00% 20.00%

* The actual percentages are generally to be within 3 percent of the base percentages in the table. If a significant market change results in allocations outside of this range, the Plan Manager will have a commercially reasonable period of time to bring the percentage of assets allocated to each Mutual Fund within this 3 percent range.

1 A small portion of the Institutional Real Estate Securities Fund may be invested in fixed-income securities.

Balanced Option

Under the Balanced Option, the Plan allocates your contributions, together with any return on your contributions, among the S&P 500 Index Fund, the Mid-Cap Growth Index Fund, the Mid-Cap Value Index Fund, the Small-Cap Blend Index Fund, the International Equity Fund, the Real Estate Securities Fund, the Bond Fund and the Inflation-Linked Bond Fund. The Board has established as part of its investment policy the percentages for allocation of contributions among this combination of Mutual Funds. The specific allocation to each Mutual Fund is shown below. Each of these Mutual Funds is described under “UNDERLYING FUND SUMMARIES OF THE

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TIAA-CREF INSTITUTIONAL MUTUAL FUNDS.” It is important to note the allocation mix for this Investment Option will not be changed to reflect the age of the Beneficiary, unlike the Managed Allocation Option where the allocation changes as the Beneficiary approaches the age when he/she would generally be expected to enroll in an Eligible Educational Institution.

• Investor Profile: The Balanced Option offers investors exposure to equity, real estate securities and fixed-income Mutual Funds. It balances investments in equity and real estate securities, which have the potential to produce above-average long-term returns, with fixed-income investments to help reduce the risk and volatility typically associated with investing in the equity and real estate securities markets. This Investment Option provides investors with the opportunity for current income and capital appreciation by allocating contributions and corresponding investment returns, if any, across several asset classes, such as stocks, bonds, and real estate securities.

ALLOCATION GUIDELINES FOR THE BALANCED OPTION

The following table provides the percentage of assets of the Balanced Option allocated to each Mutual Fund.* Note that contributions received on or after August 1, 2007, will be allocated in accordance with these allocation guidelines.

Mid-Cap Mid-Cap Small-Cap International Real Estate Inflation- S & P 500 Growth Index Value Index Blend Index Equity Securities Linked Bond

Index Fund Fund Fund Fund Fund Fund Bond Fund Fund

33.75% 3.60% 3.60% 4.05% 9.00% 6.00% 30.00% 10.00%

* The actual percentages are generally to be within 3 percent of the base percentages in the table. If a significant market change results in allocations outside of this range, the Plan Manager will have a commercially reasonable period of time to bring the percentage of assets allocated to each Mutual Fund within this 3 percent range.

100% Fixed-Income Option

Under the 100% Fixed-Income Option, the Plan allocates your contributions, together with any return on your contributions, among a combination of Mutual Funds in accordance with the investment policy adopted by the Board. These Mutual Funds are the Bond Fund and the Inflation-Linked Bond Fund. Each of these Funds is described under “UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS.” The Board has established as part of its investment policy the percentages for allocations of contributions between these Mutual Funds. The specific allocation to each Mutual Fund is shown below. It is important to note the allocations for this Investment Option (and any future changes to those allocations made by the Board) do not reflect the age of the Beneficiary, unlike the Managed Allocation Option where the allocation changes as your Beneficiary approaches the age when he/she would generally be expected to enroll in an Eligible Educational Institution.

• Investor Profile: The 100% Fixed-Income Option is designed for Account Owners who are willing and able to accept some volatility in returns in an attempt to achieve a long-term rate of return potentially higher than that offered through less volatile investments such as the Guaranteed Option or the Money Market Option. It may not be appropriate as an investor’s only investment for college savings, but may provide a useful means by which to obtain incremental exposure to fixed-income investments as part of an overall college savings strategy. This Investment Option may serve as a useful complement to other Plan Investment Options because of the historically low correlation between the returns of bonds, such as conventional and inflation-linked bonds, and other asset classes, such as equity and real estate

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securities. The 100% Fixed-Income Option may help Account Owners to achieve higher returns (with less volatility) during periods of comparatively low performance of equities and real estate securities.

ALLOCATION GUIDELINES FOR THE 100% FIXED-INCOME OPTION

The following table provides the percentage of assets of the 100% Fixed-Income Option allocated to each Mutual Fund.* Note that contributions received on or after August 1, 2007, will be allocated in accordance with these allocation guidelines.

Bond Fund Inflation-Linked

Bond Fund

75.00% 25.00%

* The actual percentages are generally to be within 3 percent of the base percentages in the table. If a significant market change results in allocations outside of this range, the Plan Manager will have a commercially reasonable period of time to bring the percentage of assets allocated to each Mutual Fund with this 3 percent range.

Money Market Option

Effective November 1, 2007, the Plan will provide the Money Market Option. Under this Investment Option, your contributions and any returns are allocated to the TIAA-CREF Institutional Money Market Fund. The Money Market Fund is described under “UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS” on p.33. The Board as part of its investment policy established the allocation for this Investment Option. This allocation and any future changes to the allocation made by the Board do not reflect the age of the Beneficiary, unlike the Managed Allocation Option where the allocation among multiple equity, real estate, fixed-income and money market Mutual Funds changes as the Beneficiary approaches the age when he/she would generally be expected to enroll in an Eligible Educational Institution. The allocation guidelines for the Money Market Option are shown below. The Money Market Option is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other federal or state government agency.

• Investor Profile: The Money Market Option may be appropriate for conservative investors who are looking for a high degree of principal stability and liquidity, and are willing to accept returns that may be lower than those offered by longer term fixed-income investments. This Investment Option is designed to provide Account Owners with current money market returns, while striving to maintain the goal of preserving capital and providing a degree of protection from inflation.

ALLOCATION GUIDELINES FOR THE MONEY MARKET OPTION

The following table provides the percentage of assets of the Money Market Option allocated to the Money Market Fund. Note that contributions received on or after November 1, 2007, will be allocated in accordance with these allocation guidelines.

Money Market

Fund

100.00%

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Guaranteed Option

Contributions to the Guaranteed Option are allocated to the Funding Agreement issued by TIAA-CREF Life to the Board (on behalf of the Office). The Funding Agreement is an insurance contract that provides the Board with a guarantee of both principal and a minimum interest rate of 3 percent per annum, with the opportunity for additional interest above this minimum rate to be credited to the Board. Periodically, TIAA-CREF Life will declare the interest rate (the “Declared Interest Rate”) it will pay under the Funding Agreement, including any additional interest in excess of the annual minimum 3 percent per annum interest. This Declared Interest Rate generally will be guaranteed to the Board by TIAA-CREF Life for a period of up to 12 months, but is not guaranteed for longer periods. The Board cannot predict the amount of any Declared Interest Rate under the Funding Agreement. (See “THE TIAA-CREF LIFE INSURANCE COMPANY FUNDING AGREEMENT” on p. 40 for additional information.) This Investment Option does not have an allocation mix that changes as the Beneficiary approaches the age when he/she would generally be expected to enroll in an Eligible Educational Institution, as does the Managed Allocation Option. In addition, there are no allocation guidelines applicable to the Guaranteed Option. The return on an investment in the Guaranteed Option may not be sufficient to meet a particular college savings goal. Effective November 1, 2007, transfers (including transfers when there is a change of the Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, you will be notified prior to the effective date of any such change.

• Investor Profile: The Guaranteed Option provides the stability that many people may want for at least a portion of their college savings funds. It provides an Investment Option to investors who can tolerate little risk, including those who have traditionally saved using fixed-income vehicles and are willing to accept returns that may be lower than those offered in other Investment Options. In addition, investors with shorter investment time frames may find this Investment Option appealing, as will investors who want to create a balanced Account by combining this Investment Option with a more aggressive Investment Option.

TIAA-CREF Life is a wholly owned indirect subsidiary of TIAA that is regulated as a life insurance company by many states, including the State of Minnesota. TIAA-CREF Life is also an affiliate of the Plan Manager.

The Funding Agreement is a general obligation of TIAA-CREF Life to the Board. As such, the Funding Agreement provides the Board with the guarantee of principal and a fixed interest rate, as described above, but the guarantee is not made directly to Account Owners and Beneficiaries. This guarantee to the Board forms the basis of earnings that are credited to Accounts invested in the Guaranteed Option. Neither the Guaranteed Option nor any Account invested in this Investment Option is guaranteed by the State, the Plan, the Board, the Office, the Plan Manager, TIAA-CREF Life or any other person or entity. The Funding Agreement is not guaranteed or insured by any person or entity other than TIAA-CREF Life.

You should consult a financial advisor if you are uncertain as to which Investment Option(s) to select for your Account or if you wish to evaluate your individual financial circumstances. These investment approaches are not recommendations and do not take into consideration your personal goals or preferences. After evaluating information you consider important in making an investment choice, the ultimate investment decision is up to you.

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Past performance of each Investment Option is provided below under “PAST PERFORMANCE.”

UNIT VALUE

The Plan Manager or its designee will process Account transaction requests (e.g., contributions, withdrawals, and transfers) at the Unit Value of the applicable Investment Option determined on the day your Account transaction request and any required paperwork are received in good order if they are received before the close of regular trading (usually 4:00 p.m., Eastern Time) on the New York Stock Exchange and are accepted by the Plan Manager or its designee. The Plan Manager or its designee will process Account transaction requests received after the close of regular trading or on a day when the New York Stock Exchange is not open for trading at the Unit Value of the applicable Investment Option determined on the next day of regular trading on the New York Stock Exchange. The Plan Manager or its designee will not process Account transaction requests on holidays or other days when the New York Stock Exchange is closed for any reason other than its usual weekend or holiday closings, during any period when trading is restricted by the Securities and Exchange Commission, or during any emergency circumstances.

The value of a Unit in each Investment Option (for purposes of this discussion, each Age Band in the Managed Allocation Option is considered a separate Investment Option) is computed by dividing (a) an Investment Option’s assets less any liabilities (including management fees) allocated to that Investment Option by (b) the number of outstanding Units of such Investment Option.

The value of an Account invested in the Guaranteed Option is equal to your contribution(s) allocated to this Investment Option plus interest credited at the effective annual interest rate less the amount of any withdrawals you take from the Guaranteed Option.

PAST PERFORMANCE

The performance tables below show returns for the Managed Allocation Option, the 100% Equity Option and the Guaranteed Option over the specified time periods. Performance is calculated from the day on which funds were first invested in each Age Band or Investment Option after it was made available (the “Inception Date”). The performance tables below help illustrate some of the risks of investing Account assets in each Age Band of the Managed Allocation Option, in the 100% Equity Option, and the Guaranteed Option. The performance tables also help illustrate how investment performance may vary.

The tables set forth under “Managed Allocation Option” and “Additional Investment Options” show how the returns of each Age Band in the Managed Allocation Option, and of the 100% Equity Option, compare to a customized index benchmark (“Blended Index”). The Blended Index used for each Age Band and the 100% Equity Option is a customized index combining the Fund benchmarks for each of the Mutual Funds held in that Age Band or Investment Option during the relevant time period weighted according to the allocations of those Mutual Funds and adjusted to reflect any changes in the allocations and the benchmarks during the relevant time period. The Blended Indexes are unmanaged and do not reflect deductions of fees or expenses. The Additional Investment Options table also includes past investment performance information for the Guaranteed Option. No performance is included for the Balanced Option, the 100% Fixed-Income Option, and the Money Market Option because these Investment Options are new and have no operating histories.

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How the Investment Options and Age Bands have performed in the past is not necessarily an indication of how they will perform in the future. Performance of the Investment Options, and the Age Bands under the Managed Allocation Option, may be substantially affected over time by changes in the allocations and the Mutual Funds and other underlying investments.

Total returns and the principal value of investments in your Account can increase or decrease based on the investment performance of the Mutual Funds in which the Investment Options (other than the Guaranteed Option) have been invested, so your investment may be worth more or less than the original value when you withdraw your money.

Performance of each Age Band and Investment Option shown below is net of all generally assessed fees, expenses and costs. Performance of each Blended Index shown below, however, does not reflect deductions of any fees or expenses. Neither the performance of each Age Band, nor Investment Option, nor each Blended Index considers the impact of any potential state or federal taxes. If the impact of such taxes were considered, performance would be lower.

Due to market volatility, recent performance may be lower or higher than the performance data shown in the tables below. For the most current performance information which is updated monthly, visit the Plan’s Web site at www.mnsaves.org or call the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646).

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Managed Allocation Option

Average Annual Total Returns1 For the Period Ended May 31, 2007

Age Band2 Age of Beneficiary

Inception Date

1 Year 3 Year 5 Year Since Inception

1 0-3 January 16,

2004

20.88% 13.71% N/A 11.81%

Blended Index3

20.45% 14.43% N/A 12.66%

2 4–7 January 16,

2004

17.67% 11.83% N/A 10.23%

Blended Index3

17.65% 12.53% N/A 10.99%

3 8-11 January 16,

2004

14.80% 10.00% N/A 8.68%

Blended Index3

14.90% 10.70% N/A 9.42%

4 12-14 January 16,

2004

12.92% 8.86% N/A 7.79%

Blended Index3

13.10% 9.54% N/A 8.49%

5 15-17 January 16,

2004

9.91% 6.91% N/A 6.18%

Blended Index3

10.09% 7.42% N/A 6.71%

6 18 and over January 16,

2004

7.90% 5.54% N/A 4.97%

Blended Index3

8.08% 5.89% N/A 5.35%

The performance data quoted represent past performance and are net of all fees and expenses. Past performance is not a guarantee of future results. Your returns and the principal value of your Account will fluctuate so your investment may be worth more or less than the original value when you withdraw your money. Current performance may be lower or higher than the performance quoted above. If you would like to see current performance, please visit the Plan’s Web site at www.mnsaves.org or call the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646). 1 All figures in the table represent the average annual compound rate of total return. 2 Beneficiaries are moved from one Age Band to the next Age Band on the first “rolling date” following their fourth, eighth, twelfth, fifteenth and eighteenth birthdays. The “rolling dates” are March 20, June 20, September 20 and December 20 (or the first business day thereafter).

3 The Blended Indexes are unmanaged and do not reflect the deduction of any fees or expenses.

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Additional Investment Options

Average Annual Total Returns1

For the Period Ended May 31, 2007

Investment Option Inception Date

1 Year

3 Year 5 Year Since Inception

100% Equity Option October 1, 2001

24.70% 16.50% 12.12% 10.51% Blended Index2 24.33% 17.24% 12.76% 12.15%

Guaranteed Option3 October 10, 2001 3.68% 3.41% 3.55% 3.45%

The performance data quoted represent past performance and are net of all fees and expenses. Past performance is not a guarantee of future results. Your returns and the principal value of your Account will fluctuate so your investment may be worth more or less than the original value when you withdraw your money. Current performance may be lower or higher than the performance quoted above. If you would like to see current performance, please visit the Plan’s Web site at www.mnsaves.org or call the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646). 1 All figures in the table represent the average annual compound rate of total return. 2 The Blended Index is unmanaged and does not reflect the deduction of any fees or expenses.

3 Effective April 1, 2007, accumulations under the Funding Agreement for the Guaranteed Option as of March 31, 2007, were credited to the Minnesota State Board of Investment (on behalf of the Minnesota Office of Higher Education) with an effective annual interest rate of 3.70% and were guaranteed to earn this rate through March 31, 2008, subject to the claims-paying ability of TIAA-CREF Life. The Board was credited with an effective annual interest rate of 3.70% on contributions received and earnings on such contributions under the Funding Agreement for the Guaranteed Option from April 1, 2007, until further notice and was guaranteed to earn this rate through March 31, 2008, subject to the claims-paying ability of TIAA-CREF Life.

FEES AND EXPENSES

The following table describes the Plan fees and expenses. Except for the fees listed below, there are no other Plan fees and expenses. There is no fee charged by the State (“State Fee”) but the Board and the Office reserve the right to change the current fees, or to impose new or additional fees and expenses in the future.

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PLAN FEES (1) Investment Option Estimated

Underlying Fund Expenses (2)

Plan Manager Fee (3)

Total Annual Asset-Based Fees (4)

Managed Allocation Option

Age Band 1 (0-3 Years)

0.25% 0.40% 0.65%

Age Band 2 (4-7 Years)

0.27% 0.38% 0.65%

Age Band 3 (8-11 Years)

0.28% 0.37% 0.65%

Age Band 4 (12-14 Years)

0.29% 0.36% 0.65%

Age Band 5 (15-17 Years)

0.26% 0.39% 0.65%

Age Band 6 (18 and over)

0.24% 0.41% 0.65%

100% Equity Option

0.23% 0.42% 0.65%

Balanced Option 0.26% 0.39% 0.65%

100% Fixed-Income Option

0.335% 0.315% 0.65%

Money Market Option

0.15% 0.50% 0.65%

Guaranteed Option None None (5) None

(1) Plan Fees are deducted from Plan assets. Plan Fees may change at any time. Although there are no fees deducted from your Account, when you invest in the Plan, you bear a pro rata portion of the Plan expenses because when fees are deducted from Plan assets, the value of your Plan Units is reduced. (2) For each Investment Option (with the exception of the Guaranteed Option), the corresponding amount in the “Estimated Underlying Fund Expenses” column is based on a weighted average of each underlying Mutual Fund’s expense charge as of February 1, 2007, (the “Estimated Underlying Fund Expenses”) in accordance with the Investment Option’s asset allocation among its underlying Mutual Funds. Each Investment Option that invests in underlying Mutual Funds bears its pro rata portion of the Estimated Underlying Fund Expenses because when fees are deducted from an underlying Mutual Fund’s assets, the value of the underlying Mutual Fund’s shares is reduced. (3) For its services as Plan Manager, each Investment Option (with the exception of the Guaranteed Option) pays TFI an annual management fee equal to the stated percentage of the average daily net assets held by that Investment Option (the “Plan Manager Fee”). The percentages listed in this column may fluctuate. For example, if the underlying Mutual Fund expenses increase, then the Plan Manager Fee decreases.

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(4) The Total Annual Asset-Based Fees equal the Estimated Underlying Fund Expenses plus the Plan Manager Fee. The portion of Total Annual Asset-Based Fees attributable to the Plan Manager Fee is assessed over the course of the year against assets in each Investment Option. The portion of Total Annual Asset-Based Fees attributable to Estimated Underlying Fund Expenses is borne by each Investment Option as discussed in footnote 2 above. You should refer to the Investment Cost Example table below for the total assumed investment cost over 1-, 3-, 5-, and 10-year periods. (5) The Guaranteed Option does not pay TFI a Plan Manager Fee. TFI does, however, receive from TIAA-CREF Life, the issuer of the Funding Agreement, an annual asset-based fee to pay TFI for distribution, administration, and other services that TFI provides for this Investment Option. TIAA-CREF Life may discontinue this fee at any time.

Investment Cost Example

The example in the following table is intended to help you compare the cost of investing in the different Investment Options over various periods of time. This example makes the following assumptions:

• You invest $10,000 in an Account for the time periods shown below.

• Your investment has a 5 percent compounded return each year, except for the Guaranteed Option, which is assumed to have a 3 percent compounded return each year.

• You withdraw the assets from your Account at the end of the specified periods for Qualified Higher Education Expenses.

• Total Annual Asset-Based Fees remain the same as shown in the Fee Table above.

• The example does not consider the impact of any potential state or federal taxes on the redemption.

Although your actual costs may be higher or lower, based on the above assumptions your costs would be:

INVESTMENT OPTIONS APPROXIMATE COST OF $10,000 INVESTMENT

One Year

Three Years

Five Years

Ten Years

Managed Allocation Option $67 $209 $363 $812

100% Equity Option $67 $209 $363 $812

Balanced Option $67 $209 $363 $812

100% Fixed-Income Option $67 $209 $363 $812

Money Market Option $67 $209 $363 $812

Guaranteed Option $0 $0 $0 $0

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Additional Fees

The table below provides information concerning additional potential fees and expenses deducted from Plan Assets.

Percent Dollars

Application Fee 0.00% $0

Cancellation Fee 0.00% $0

Change in Beneficiary 0.00% $0

Change in Investment Options 0.00% $0

Other charges as applicable 0.00% $0

UNDERLYING FUND SUMMARIES OF THE TIAA-CREF INSTITUTIONAL MUTUAL FUNDS

The following provides a summary of the investment policies of those Mutual Funds of The TIAA-CREF Institutional Mutual Funds in which the Plan invests the contributions made to your Account if you selected the Managed Allocation Option, the 100% Equity Option, the Balanced Option, the 100% Fixed-Income Option or the Money Market Option. All Mutual Funds referenced below are investment portfolios of the Institutional Class of The TIAA-CREF Institutional Mutual Funds. An investment in the Plan is not an investment in the Mutual Funds. No Mutual Fund financial information is included in this Disclosure Booklet. Please consult the Mutual Funds’ prospectus for additional information. For copies of the prospectus and more information about the Mutual Funds, contact your Plan Manager or visit www.tiaa-cref.org/prospectuses/index.html.

Equity Funds

International Equity Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, primarily from equity securities of foreign issuers.

Principal Investment Strategies: The Fund invests at least 80 percent of its assets in equity securities of foreign issuers. The Fund has a policy of maintaining investments in equity securities of foreign issuers located in at least three countries other than the United States. The Fund may invest in emerging markets to varying degrees, depending on the prevalence of stock specific opportunities. The Fund may sometimes hold a significant amount of stocks of smaller, lesser-known companies.

Investment Risks: Substantial foreign investment risk, above-average market risk, company risk, and small-cap/mid-cap risk.

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Index Funds

Large-Cap Growth Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities of large domestic growth companies based on a market index.

Investment Risks: Substantial market risk, substantial index risk, modest company risk, style risk and the special risks of growth investing.

Large-Cap Value Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities of large domestic value companies based on a market index.

Investment Risks: Substantial market risk, substantial index risk, modest company risk, style risk and the risks of value investing.

Equity Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly from capital appreciation, by investing primarily in a portfolio of equity securities selected to track the overall U.S. equity markets based on a market index.

Investment Risks: Substantial market risk, substantial index risk, more than moderate company risk, and small-cap risk.

S&P 500 Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities of large domestic companies selected to track U.S. equity markets based on a market index.

Investment Risks: Substantial market risk, substantial index risk, modest company risk, and larger companies risk.

Mid-Cap Growth Index Fund

Investment Objective: The Fund seeks a favorable long-term return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities of medium-sized domestic growth companies based on a market index.

Investment Risks: Substantial market risk, substantial index risk, moderate company risk, style risk, special risks of growth investing, and mid-cap risk.

Mid-Cap Value Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities of medium-sized domestic value companies based on a market index.

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Investment Risks: Substantial market risk, substantial index risk, moderate company risk, style risk, the risks of value investing and mid-cap risk.

Small-Cap Blend Index Fund

Investment Objective: The Fund seeks a favorable long-term total return, mainly through capital appreciation, by investing primarily in a portfolio of equity securities in smaller domestic companies based on a market index.

Investment Risks: Substantial market risk, substantial index risk, very substantial company risk, and small-cap risk.

Real Estate Securities Fund

Real Estate Securities Fund

Investment Objective: The Fund seeks to obtain a favorable long-term total return through both capital appreciation and current income, by investing primarily in equity and fixed-income securities of companies principally engaged in, or related to the real estate industry.

Principal Investment Strategies: The Fund invests at least 80 percent of its assets in the equity and fixed-income securities of companies that are principally engaged in, or related to the real estate industry (“real estate securities”), including those that own significant real estate assets, such as real estate investment trusts (“REITs”). The Fund does not invest directly in real estate. The Fund concentrates its investments in the real estate industry.

The Fund also may invest up to 10 percent of its total assets in real estate securities of foreign issuers and up to 20 percent of its total assets in equity and debt securities of issuers that are not engaged in, or related to the real estate industry.

Investment Risks: Interest rate risk, income risk, substantial market risk, very substantial company risk, concentration risk, the risks associated with the ownership of real estate, the risks of equity and mortgage REITs, and small-cap/mid-cap companies risk.

Fixed-Income Funds

Bond Fund

Investment Objective: The Fund seeks as favorable a long-term total return through income as is consistent with preserving capital, primarily from investment-grade fixed-income securities.

Principal Investment Strategies: The Fund invests at least 80 percent of its assets in investment-grade bonds and other bonds. The Fund also invests in other fixed-income securities. Bonds of this type may include United States government securities, corporate bonds and mortgage-backed or other asset-backed securities.

The Fund may invest up to 15 percent of its total assets in fixed-income securities of foreign issuers.

The Fund may use an investment strategy called “mortgage rolls” (also referred to as “dollar rolls”), in which the Fund sells securities for delivery in the current month and simultaneously contracts

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with a counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date.

The Fund may also engage in duration-neutral relative value trading, a strategy in which the Fund buys and sells government bonds of identical credit quality but different maturity dates in an attempt to take advantage of spread differentials along the yield curve (i.e., differences in yield between short-term and long-term securities).

Investment Risks: Substantial interest rate risk, significant prepayment/extension risk, income risk, moderate credit risk, moderate call risk, company risk, moderate foreign investment risk, risks associated with mortgage rolls, high portfolio turnover, risks associated with downgrades, and moderate index risk.

Inflation-Linked Bond Fund

Investment Objective: The Fund seeks a long-term rate of return that outpaces inflation, primarily through investment in inflation-indexed bonds.

Principal Investment Strategies: The Fund invests at least 80 percent of its assets in inflation-indexed bonds – fixed-income securities whose returns are designed to track a specified inflation index over the life of the security. Typically, the Fund will invest in U.S. Treasury Inflation-Indexed Securities. The Fund can also invest in: (1) other inflation-indexed bonds issued or guaranteed by the United States government or its agencies, by corporations and other U.S. domiciled issuers, as well as foreign governments; and (2) money market instruments or other short-term securities.

The Fund may also invest in inflation-indexed bonds issued or guaranteed by foreign governments and their agencies, as well as other foreign issuers. Under most circumstances, the Fund’s investment in inflation-linked bonds of foreign issuers is generally less than 25 percent of its total assets.

The Fund also may invest in other fixed-income securities in which the Bond Fund invests, provided that no more than 5 percent of its total assets are invested in fixed-income securities rated below investment grade.

Investment Risks: Interest rate risk and certain tax risks.

Money Market Fund

Money Market Fund

Investment Objective: The Fund seeks high current income consistent with maintaining liquidity and preserving capital.

Principal Investment Strategies: The Fund invests primarily in high-quality short-term money market instruments.

The Money Market Fund limits its investments to securities that present minimal credit risk and are rated in the highest rating categories for short-term instruments. The Fund can also invest up to 30 percent of its assets in money market and debt instruments of foreign issuers denominated in U.S. dollars.

Investment Risks: The principal risk is current income risk. To a lesser extent, market risk, company risk, income volatility, interest rate risk, prepayment risk and extension risk.

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An investment in the Money Market Fund, like the other Funds, is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The TIAA-CREF Money Market Fund strives to maintain a stable net asset value of $1.00 per share. However, the fund is neither insured nor guaranteed by the government, and there's no guarantee that we will be able to maintain the stable $1.00 per share net asset value. It is possible to lose money investing in this fund.

Summary Descriptions Of Risks Of the Mutual Funds

• Call Risk—The risk that an issuer will redeem a fixed-income security prior to maturity. This often happens when prevailing interest rates are lower than the rate specified for the fixed-income security. If a fixed-income security is called early, a Fund may not be able to benefit fully from the increase in value that other fixed-income securities experience when interest rates decline. Additionally, a Fund would likely have to reinvest the payoff proceeds at current yields, which are likely to be lower than the fixed-income securities in which the fund originally invested.

• Company Risk (often called Financial Risk)—The risk that the issuer’s earnings prospects and overall financial position will deteriorate, causing a decline in the security’s value over short or extended periods of time.

• Concentration Risk—When a Fund concentrates its investments in only one industry and holds securities of relatively few issues, the value of its portfolio is likely to experience greater fluctuations and may be subject to a greater risk of loss than those of other mutual funds.

• Credit Risk (a type of Company Risk)—The risk that a decline in a company’s financial position may prevent it from making principal and interest payments on fixed-income securities when due. As a result, the issuer could default on its obligations, thereby causing a Fund to lose its investment in the security. This risk is heightened in the case of investments in lower rated, high-yield fixed-income securities.

• Downgrades—Securities originally rated “investment grade” are sometimes subsequently downgraded, should a ratings agency like Moody’s Investors Service, Inc. or Standard & Poor’s believe the issuer’s business outlook or creditworthiness has deteriorated.

• Equity and Mortgage REITs—Equity REITs may be affected by changes in the value of the underlying property of the trusts, while mortgage REITs may be affected by changes in the quality of any credit extended. Both equity and mortgage REITs are dependent upon management skill and may not be diversified. REITs are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to qualify for special tax treatment under the IRC or failing to meet other applicable regulatory requirements. Finally, certain REITs may be self-liquidating meaning that a specific term of existence is provided for in their trust documents. In acquiring the securities of REITs, a Fund runs the risk that it will sell them at an inopportune time.

• Foreign Investment Risk—The risk of investing in securities of foreign issuers, securities or contracts traded on foreign exchanges or in foreign markets, or securities or contracts payable in foreign currency. Investing in foreign investments entails risks beyond those of domestic investing. These include: (1) changes in currency exchange rates; (2) possible imposition of market controls or currency exchange controls; (3) possible imposition of withholding taxes on dividends and interest; (4) possible seizure, expropriation or nationalization of assets; (5)

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more limited foreign financial information or difficulties in interpretation because of foreign regulations and accounting standards; (6) the lower liquidity and higher volatility in some foreign markets; (7) the impact of political, social or diplomatic events; (8) the difficulty of evaluating some foreign economic trends; and (9) the possibility that a foreign government could restrict an issuer from paying principal and interest to investors outside the country. Brokerage commissions and transaction costs are often higher for foreign investments, and it may be harder to use foreign laws and courts to enforce financial or legal obligations.

The risks described above often increase in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their securities markets may be very small, share prices may be volatile and difficult to establish. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many such countries.

• High Portfolio Turnover—A high portfolio turnover rate generally will result in: (1) greater brokerage commission expenses borne by a Fund and, ultimately, by shareholders; and (2) higher amounts of realized investment gain subject to the payment of taxes by shareholders.

• Income Risk—Income a Fund receives may fall as a result of a decline in interest rates.

• Income Volatility—Income volatility refers to the degree and speed with which changes in prevailing market interest rates diminish the level of current income from a portfolio of fixed-income securities. The risk of income volatility is the risk that the level of current income from a portfolio of fixed-income securities declines in certain interest rate environments.

• Index Risk—This is the risk that a Fund’s performance will not match its index for any period of time. Although each Index Fund attempts to closely track the investment performance of its respective index, an Index Fund may not duplicate the exact composition of its index. In addition, unlike a Fund, the returns of an index are not reduced by investment and other operating expenses, and therefore, the ability of an Index Fund to match the performance of its index is adversely affected by the costs of buying and selling investments as well as other expenses. Therefore, none of the Index Funds can guarantee that its performance will match its index for any period of time.

• Interest Rate Risk (a type of Market Risk)—The risk that the value or yield of fixed-income securities may decline if interest rates change. In general, when prevailing interest rates decline, the market value of fixed-income securities (particularly those paying a fixed rate of interest) tends to increase. Conversely, when prevailing interest rates increase, the market value of fixed-income securities (particularly those paying a fixed rate of interest) tends to decline.

• Larger Companies Risk—An investment in securities of larger companies carries with it the risk that the company (and its earnings) may grow more slowly than the economy as a whole, or not at all. Also, larger companies may fall out of favor with the investing public for reasons unrelated to their businesses or economic fundamentals.

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• Market Risk—The risk that the price of equity securities may decline, over short or extended periods of time, in response to general market and economic conditions or events. Any stock is subject to the risk that the stock market as a whole may decline in value, thereby depressing the stock’s price. Equity markets tend to be cyclical, with periods when prices generally rise and periods when prices generally decline. Foreign equity markets tend to reflect local economic and financial conditions, and therefore, such trends often vary from country to country and region to region.

• Mortgage Roll—Under this strategy, there is a risk that Teachers Advisors, Inc., will not correctly predict mortgage prepayments and interest rates, which will diminish the investment performance of a Fund compared with what such performance would have been without the use of the strategy.

• Ownership of Real Estate—These risks include: declines in the value of real estate, negative changes in the climate for real estate, risks related to general and local economic conditions, overbuilding and increased competition, decreases in property revenues, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, leveraging of interests in real estate, increases in prevailing interest rates, and costs resulting from the cleanup of environmental problems.

• Prepayment Risk and Extension Risk—Prepayment risk and extension risk are normally present in adjustable rate mortgage loans, mortgage-backed securities and other asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (prepayment risk) or lengthen (extension risk). If interest rates on new mortgage loans fall sufficiently below the interest rates on existing outstanding mortgage loans, the rate of prepayment generally increases. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment generally decreases. In either case, a change in the prepayment rate and the resulting change in duration of fixed-income securities held by a Fund can result in losses to investors in the Fund.

• Risks of Growth Investing—The risk that growth stocks due to their relatively high valuations are typically more volatile than value stocks. For example, the price of a growth stock may experience a larger decline on a forecast of lower earnings, or a negative event or market development, than would a value stock. Because the value of growth companies is a function of their expected earnings growth, there is a risk that such earnings growth may not occur or cannot be sustained.

• Small-Cap/Mid-Cap Risk—Securities of small and mid-sized companies may experience steeper fluctuations in price than the securities of larger companies. They may also have to be sold at a discount from their current market prices or in small lots over an extended period, since they may be harder to sell than large-cap securities.

• Style Risk—The risk that equity securities representing growth investing or a value investing style may be out of favor in the marketplace for various periods of time. When this occurs, investors, such as the Funds, holding such securities may experience significant declines in the value of their portfolios.

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• Value Investing Risk—Securities believed to be undervalued are subject to the risks that: (1) the issuer’s potential business prospects are not realized; (2) their potential values are never recognized by the market; and (3) due to unanticipated or unforeseen problems associated with the issuer or industry, they were appropriately priced (or overpriced) when acquired.

Net Asset Value

The net asset value per share of each Mutual Fund (“NAV”) is determined on each day the New York Stock Exchange is open for business. The NAV is calculated at the time trading closes on all U.S. national exchanges where securities or other investments of a Fund are principally traded.

Each Mutual Fund’s NAV is calculated by dividing the value of the Fund’s assets, less its liabilities, by the number of outstanding shares of that Fund. Individual securities held by a Fund (except for the Money Market Fund) are valued using market quotations or independent pricing services. If market quotations or independent pricing services are not readily available, or if events that have a significant effect on the value of an investment occur between the time when its price is determined and the time a Fund’s NAV is calculated, the Fund may use a security’s “fair value” as determined in good faith.

To calculate the Money Market Fund’s NAV per share, securities held by the Fund are valued at their amortized cost. This valuation method does not take into account unrealized gains or losses on the Fund’s securities. Amortized cost valuation involves first valuing a security at cost, and thereafter assuming an amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the security’s market value. While this method provides certainty in valuation, there may be times when the value of a security, as determined by amortized cost, may be higher or lower than the price the Money Market Fund would receive if it sold the security.

THE TIAA-CREF LIFE INSURANCE COMPANY FUNDING AGREEMENT

The Funding Agreement issued by TIAA-CREF Life is the investment vehicle for the Plan’s Guaranteed Option described under “INVESTMENT OPTIONS.” The Funding Agreement is also the investment vehicle for all Matching Grants. The Funding Agreement guarantees the Board (on behalf of the Office) a return of all principal and a minimum interest rate of 3 percent per annum. Periodically TIAA-CREF Life will announce whether it will pay interest in excess of this fixed minimum interest rate. Any such additional interest rates will be declared in advance by TIAA-CREF Life and guaranteed to the Board for a period of up to 12 months, and are not guaranteed for longer periods.

Specifically, Funding Agreement accumulations (i.e., contributions and earnings) as of the date the Declared Interest Rate is set (e.g., April 1, 2007), and contributions received until a different Declared Interest Rate is set, will be credited with the first Declared Interest Rate until the next 12-month anniversary (e.g., April 1, 2008, in this example). However, contributions deposited after April 1, 2007, (per this example) and before the 12-month anniversary could be credited with different Declared Interest Rates that could be lower or higher than the first Declared Interest Rate and which will remain in effect until the last day of the 12-month period (e.g., March 31, 2008, in this example). Thereafter, any subsequent Declared Interest Rates will be effective for a new 12-month period. TIAA-CREF Life will review and determine at least annually in advance of each 12-month anniversary whether additional interest will be credited for the next 12-month period under the Funding Agreement.

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Contributions to the Guaranteed Option will be allocated by the Plan to TIAA-CREF Life under the Funding Agreement until the expiration date of the Funding Agreement, subject to earlier termination at the election of the Board. It is anticipated that the term of the Funding Agreement will correspond with the term of the Management Agreements. The Plan may make withdrawals under the Funding Agreement without penalty to cover distributions from Accounts invested in the Guaranteed Option.

Account Owners may find the current Declared Interest Rate by checking the Investment Options section of the Plan Web site: www.mnsaves.org. Account Owners may also obtain this information by calling the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646).

No financial information as to TIAA-CREF Life is included in this Disclosure Booklet. There is a risk that TIAA-CREF Life could fail to perform its obligations under the Funding Agreement for financial or other reasons.

DORMANT ACCOUNTS

An Account will be considered a “Dormant Account” if no contributions have been made to the Account for at least three consecutive years and Account statements mailed to the Account Owner are returned as undeliverable. The Plan Manager will attempt to locate the Account Owner and/or the Beneficiary of a Dormant Account to determine the disposition of the Account. A fee of 5 percent of the balance in the Account, not to exceed $100, plus allowable costs, may be charged for this service. Allowable costs will not exceed $100 or 5 percent of the balance in the Account, whichever is less. If the Account Owner or the Account Owner’s legal heirs are not found after three attempts by the Plan Manager, the remaining funds in the Dormant Account will be turned over to the Office and any funds in Matching Grant Accounts connected to the Dormant Account will be transferred to the Office and will no longer be available to the Beneficiary. The Office will return all such funds to the appropriate State agencies. For this reason, you may wish to designate a Contingent Account Owner for your Account. See “OPENING AND MAINTAINING YOUR ACCOUNT — Naming A Contingent Account Owner.”

INACTIVE MATCHING GRANT ACCOUNTS

An Account that contains Matching Grants will be considered inactive if: (1) the Beneficiary reaches the age of 28 and has not informed the Plan Manager of enrollment in an Eligible Educational Institution; (2) the Beneficiary does not begin attendance at an Eligible Educational Institution within one year of notice by the Plan Manager of pending inactive Account status; and (3) a deferment of the inactive status of the Account has not been obtained. (A Beneficiary who is also an Account Owner and who opened an Account in the Plan at the age of 18 or older, must inform the Plan Manager of enrollment in an Eligible Educational Institution within 10 years after the date the Account was opened.) The Plan Manager will attempt to locate missing Account Owners and/or Beneficiaries to notify them of pending inactive Account status, without charge to the Account or the Plan. If a Matching Grant Account is determined to be inactive, all Matching Grants, together with corresponding earnings, if any, that would otherwise be distributed to pay Qualified Higher Education Expenses of the Beneficiary will be returned to the Office and will no longer be available for such distribution.

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REPORTING

Account Statements

The Plan Manager maintains separate records for each Account and will mail the Account Owner quarterly and annual statements indicating:

• Contributions to each selected Investment Option and Matching Grants, if any, made to your Account during the period and aggregate contributions and Matching Grants, if any, year-to-date.

• Withdrawals from each selected Investment Option in your Account made during the period.

• The total value of your Account at the end of the period.

Tax Reports

Withdrawals and other matters will be reported to the IRS, distributees and other government agencies and persons, if any, as required by law.

Tax Withholding

Under proposed federal tax regulations, withdrawals from Accounts are not subject to backup withholding.

Continuing Disclosure

To promote compliance with Rule 15c2-12(b)(5) under the Securities Exchange Act of 1934, the Plan Manager has executed a Continuing Disclosure Certificate, on behalf of Teachers Personal Investors Services, Inc. and TIAA-CREF Individual & Institutional Services, LLC, for the benefit of Account Owners. Under the Continuing Disclosure Certificate, the Plan Manager will provide certain financial information and operating data (“Annual Information”) relating to the Plan and notices of the occurrence of certain enumerated events set forth in the Continuing Disclosure Certificate. The Annual Information will be filed by the Plan Manager with each Nationally Recognized Municipal Securities Information Repository (“NRMSIR”) and with a depository in Minnesota, if one then exists. Notices of certain enumerated events will be filed by the Plan Manager with the NRMSIRs or the Municipal Securities Rulemaking Board and with a depository in the State, if one then exists.

Financial Statements

The Plan Manager will prepare annual financial statements for the Plan. Each year, Mitchell & Titus, LLP, an independent certified public accounting firm, will audit the Plan in accordance with generally accepted accounting principles. The Plan Manager will distribute summary financial information for the Plan to each Account Owner annually, which will also include information regarding any change to the Maximum Account Balance Limit. The complete audited financial statements and the Annual Information provided to regulatory authorities as described above under “Continuing Disclosure” is also available to Account Owners upon request, once it is completed and/or filed with such regulatory authorities, by calling the Plan Manager toll-free at 1 877 338-4646.

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Privacy Of Account Information

Information obtained and stored by the Plan regarding Account Owners, Beneficiaries and Accounts is defined as private data on individuals under Minnesota Statutes, Section 13.02, subdivision 12, and cannot be disclosed to third parties without the informed consent of the individual to whom it pertains unless the information is authorized or required to be disclosed by Minnesota law, or federal or other state law. (See Addendum B to this Disclosure Booklet.)

TAX INFORMATION

The tax information contained below was written to support the promotion and marketing of the Plan. It was neither written nor intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek tax advice from an independent tax advisor based on their own particular circumstances.

The following discussion is not exhaustive and not intended as individual tax advice. There can be no assurance that the IRS or the Minnesota Department of Revenue will accept the conclusions reached here or, if challenged by the IRS or the Minnesota Department of Revenue, that these conclusions would be sustained in court.

The federal and state tax rules applicable to the Plan, including the 2001 Tax Act described below, are complex, and some of the rules have not been finalized. Their application to any particular person may vary according to facts and circumstances specific to that person. A qualified tax advisor should be consulted about how the laws apply to a particular Account Owner or Beneficiary.

The federal and state tax consequences applicable to Accounts established by a Minnesota state or local government agency or instrumentality (that is authorized to open an Account) or by an IRC Section 501(c)(3) organization to fund scholarships, and to Account ownership in the Plan by entities, and custodians or trustees of Minor Trust Accounts, will vary according to the particular circumstances of the situation and are beyond the scope of this discussion. Entities, and custodians or trustees of Minor Trust Accounts, should consult a tax advisor about the tax consequences of opening such Accounts.

Tax Law Changes Affecting the Plan

On June 7, 2001, the 2001 Tax Act was enacted into law. The provisions of the 2001 Tax Act specifically applicable to accounts in qualified tuition programs are summarized in the following description of the federal tax treatment of Accounts and in other sections of this Disclosure Booklet. The provisions of the 2001 Tax Act were set to expire on December 31, 2010. However, on August 17, 2006, the 2006 Tax Act was enacted and eliminated the December 31, 2010, expiration date and extended the tax provisions of the 2001 Tax Act for investments in qualified tuition programs.

Federal Income Tax Treatment

The Plan is designed as a qualified tuition program under Section 529 of the IRC. As such, undistributed earnings allocated to Accounts of the Plan are exempt from federal income tax. In order to be eligible for such tax treatment and for Account Owners and Beneficiaries to receive the favorable federal income, estate, gift and generation-skipping transfer tax treatment described below, the Plan is

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required to implement certain restrictions and procedures applicable to the operation of the Plan. Certain of these restrictions and procedures are described below and in other sections of this Disclosure Booklet.

Contributions

Contributions to an Account by an Account Owner do not result in federal taxable income to the Beneficiary. An Account Owner may not deduct the contribution from income for purposes of determining federal income taxes. Also, see discussion under “Federal Gift, Estate and Generation-Skipping Transfer Taxes.”

Contributions for any Beneficiary will be rejected and returned to the extent that the amount of the contribution would cause the total account balance for the Account(s) held for that Beneficiary in the Plan to exceed the Maximum Account Balance Limit of $235,000. See “OPENING AND MAINTAINING YOUR ACCOUNT — Contributions — Maximum Account Balance Limit” on p.11. It is not expected but could be possible that under federal law a lower limit on the maximum balance of qualified tuition program accounts for the same Beneficiary might be determined. If this occurs, your subsequent contributions will be limited to such lower amount required by federal law and the Office may take such other actions as may be necessary to maintain the Plan’s qualification as a qualified tuition program under Section 529 of the IRC. Accounts that have reached or exceeded the Maximum Account Balance Limit may continue to accrue earnings.

Account Earnings

Earnings from the investment of contributions to an Account will not be included in computing the federal taxable income of the Account Owner or the Beneficiary until funds are withdrawn, in whole or in part, from the Account. As long as withdrawals are used for the Beneficiary’s Qualified Higher Education Expenses, the earnings portion of the withdrawals will not be includible in the Beneficiary’s federal taxable income.

Withdrawals

Qualified Withdrawals

A Qualified Withdrawal is a withdrawal from your Account that is used to pay the Qualified Higher Education Expenses of the Beneficiary. By law, such expenses are defined to include only tuition, fees, the cost of books, supplies and equipment required for the enrollment or attendance of a Beneficiary at an “Eligible Educational Institution” and room and board in some cases. Qualified Higher Education Expenses include certain additional enrollment and attendant costs of special needs beneficiaries. The earnings portion of withdrawals from an Account will not be includible in the Beneficiary’s federal taxable income or State taxable income, as long as the withdrawals are used for the Beneficiary’s Qualified Higher Education Expenses.

Eligible Educational Institutions generally are accredited postsecondary educational institutions offering credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree, or another recognized postsecondary credential. Some proprietary institutions and postsecondary vocational institutions and some institutions located in foreign countries are also Eligible Educational Institutions. Prior to requesting a Qualified Withdrawal, contact your Beneficiary’s school to determine if it qualifies as an Eligible Educational Institution.

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Although a Qualified Withdrawal is not subject to Minnesota income taxation, residents of other states and those who pay income taxes in other states should consult with their tax advisors regarding whether a Qualified Withdrawal will be subject to state income taxation in those states.

Unlike expenses for tuition, fees, books, supplies and equipment, the cost of room and board may be treated as Qualified Higher Education Expenses only if it is incurred during an academic period during which the Beneficiary is enrolled or accepted for enrollment in a degree, certificate, or other program which leads to a recognized educational credential awarded by an Eligible Educational Institution, and during which the Beneficiary is enrolled at least half time. Half time is defined as half of a full-time academic workload for the course of study the student is pursuing based on the standard at the Beneficiary’s Eligible Educational Institution. The Eligible Educational Institution’s standard for a full-time workload must equal or exceed the standard established by the U.S. Department of Education under the Higher Education Act of 1965 (20 United States Code Section 481).

The amount that may be treated as a Qualified Higher Education Expense is generally limited to the room and board allowance (applicable to the student) that is included by the Eligible Educational Institution in its “cost of attendance” for purposes of determining eligibility for federal education assistance for that year. For students living in housing owned or operated by the Eligible Educational Institution, if the actual invoice amount charged by the Eligible Educational Institution for room and board is higher than the “cost of attendance” figure, then the actual invoice amount may be treated as qualified room and board costs. You may contact the Plan Manager to obtain more information regarding the treatment of room and board expenses.

Qualified Withdrawals from an Account Owner’s Account in the Plan may be paid in any one of the following ways, solely at the direction of the Account Owner:

1. Payment may be made directly to the Eligible Educational Institution on behalf of the Beneficiary; or

2. Payment may be made in the form of a check payable to both the Eligible Educational Institution and to the Beneficiary; or

3. Payment may be made directly to the Account Owner or to the Beneficiary, as reimbursement of Qualified Higher Education Expenses that have already been paid.

An Account Owner should visit the Plan’s Web site (www.mnsaves.org) or contact the Plan

Manager for the appropriate form when he/she is ready to make a withdrawal for any reason. Distributions of Matching Grant funds (both Matching Grants and earnings thereon) are only

permitted for the purpose of paying the Qualified Higher Education Expenses of the Beneficiary of the Matching Grant Account. Matching Grant funds will only be distributed to the Beneficiary named on the Matching Grant Account or the Eligible Educational Institution that such Beneficiary is enrolled in and attends. The permissible amount of a Qualified Withdrawal of Matching Grant funds is based on the total combined account balance of the Account Owner’s Account and the Matching Grant Account on the date of distribution. A Qualified Withdrawal must be taken proportionately from the Account Owner’s Account and the Matching Grant Account based on the relative value that the account balance of each Account bears to the combined account balance of both Accounts.

Please review the important coordination rules described under “Federal Income Tax Treatment

— Coordination With Other Income Tax Incentives For Education” if you have a Coverdell Education Savings Account (“Coverdell ESA”), formerly known as an Education Individual Retirement Account, or plan to take the Hope Scholarship Credit or Lifetime Learning Credit.

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You should retain receipts, invoices or other documents and information adequate to substantiate that a particular expense is a Qualified Higher Education Expense of the Beneficiary. It is your responsibility to substantiate a Qualified Higher Education Expense. The IRS may require that Qualified Higher Education Expenses be paid within a prescribed time period (for example, within the same taxable year as a Qualified Withdrawal is taken) in order to treat such distribution as a Qualified Withdrawal as discussed above.

Non-Qualified Withdrawals and Additional Tax

A “Non-Qualified Withdrawal” is any withdrawal from an Account other than a Qualified Withdrawal; a withdrawal because of the death or disability of, or scholarship award to, or attendance at one of the Military Academies by, the Beneficiary; or a Rollover Distribution. The distributee must include the earnings portion of a Non-Qualified Withdrawal in his or her taxable income. Furthermore, an Additional Tax of 10 percent is imposed on the earnings portion of withdrawals that are not used for a Beneficiary’s Qualified Higher Education Expenses. Distributees are responsible for paying the Additional Tax to the United States Treasury through their federal income tax returns.

The earnings portion of Non-Qualified Withdrawals is taken into account for purposes of computing the federal and Minnesota income tax liability of the distributee.

Withdrawals Due To Death, Disability, Scholarship or Attendance At the Military Academies

The distributee must include in his or her federal and State taxable income the earnings portion of a withdrawal made on account of the Beneficiary’s death or disability, or made on account of a scholarship award to the Beneficiary or the Beneficiary’s attendance at one of the Military Academies. No Additional Tax is due with respect to withdrawals that are not used for a Beneficiary’s Qualified Higher Education Expenses, if:

• Such withdrawal is made to a beneficiary of the Beneficiary (or to the estate of the Beneficiary) on or after the death of the Beneficiary.

• Such withdrawal is made because the Beneficiary has become disabled. “Disabled” means that the Beneficiary is unable to engage in any substantial gainful activity by reason of any medically determined physical or mental impairment which can be expected to result in death or to be of long-term, continued and indefinite duration.

• Such withdrawal is made in an amount that does not exceed certain qualified scholarships, allowances or payments. For this purpose, a scholarship includes certain educational assistance allowances under Section 25A(g)(2) of the IRC. The earnings portion of the amount withdrawn will be subject to the Additional Tax applicable to Non-Qualified Withdrawals to the extent the withdrawn amount exceeds the amount of the scholarship.

• Such withdrawal is made on account of the attendance of the Beneficiary at one of the Military Academies in an amount that does not exceed the costs of advanced education.

However, the earnings portion of such withdrawals is taken into account for purposes of computing the federal and State income tax liability of the recipient of the withdrawal (i.e., the Account Owner, the Beneficiary, or the Beneficiary’s estate). Residents of other states and those who pay state taxes in other states should consult their tax advisors regarding whether a withdrawal described in this section is subject to state income tax in other states.

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Prior to making a withdrawal described in this section, you may be required to provide the Plan Manager with certain specific forms of written third-party confirmation of the death or disability of, or scholarship award to, or attendance at one of the Military Academies by, the Beneficiary. For more information, contact the Plan Manager. You should retain receipts, invoices or other documents and information adequate to substantiate that a particular withdrawal was made on account of the death or disability of, or receipt of a scholarship or attendance at one of the Military Academies by, the Beneficiary, because it is your responsibility to substantiate the reason for such a withdrawal if the IRS requires you to do so.

Computation Of Withdrawal Amounts

Any withdrawal is treated in part as a withdrawal of contributions to the Account and in part as a withdrawal of earnings. The proportion of contributions and earnings is determined by the Plan Manager based on the relative portions of total earnings and contributions in the Account for all Investment Options as of the withdrawal date. Thus, an amount withdrawn from a particular Investment Option may carry with it a greater or lesser amount of earnings than the earnings in that Investment Option. This aggregation may also result in a higher amount of income taxation, including the Additional Tax, when applicable, given that the Additional Tax applies to the earnings portion of certain withdrawals.

Refunds Of Payments Of Qualified Higher Education Expenses

If an Eligible Educational Institution refunds to a Beneficiary any portion of an amount withdrawn from an Account the institution receives under the Plan for the payment of Qualified Higher Education Expenses, you must treat the refund as a Non-Qualified Withdrawal, the earnings portion of which will be subject to the Additional Tax unless the Beneficiary or Account Owner allocates the amount to other Qualified Higher Education Expenses or the refund was made due to the death or disability of, or receipt of a scholarship award or attendance at one of the Military Academies by, the Beneficiary. You should retain receipts, invoices or other documents and information if you allocate a portion of the refund to other Qualified Higher Education Expenses or if the refund was made due to the Beneficiary’s death or disability, or receipt of a scholarship or attendance at one of the Military Academies. It is your responsibility to substantiate this to the IRS.

Beneficiary Changes, Transfers Of Funds and Rollover Distributions

The earnings portion of a withdrawal from an Account will not be treated as taxable income of the Account Owner or Beneficiary and the Additional Tax will not apply to the extent that, within 60 days of the withdrawal, the Account Owner transfers all or a portion of the withdrawal to another Account, or to an account in another qualified tuition program, established for a new Beneficiary who is a Member of the Family of the Beneficiary of the Account from which the withdrawal is made. Such a federal income tax-free transfer may also be made from an Account within 60 days of withdrawal to an account in another qualified tuition program established for the same Beneficiary provided the Account Owner has not made a transfer to any qualified tuition program for the benefit of the same Beneficiary within the previous 12 months. Such transfers are sometimes referred to as Rollover Distributions. For a description of the requirements and tax considerations relating to Beneficiary changes, transfers of funds and Rollover Distributions, see “OPENING AND MAINTAINING YOUR ACCOUNT — Changing the Beneficiary and Transferring Account Funds” on p.13.

A change of the Beneficiary of an Account is a nontaxable event and will not be subject to the Additional Tax if the new Beneficiary is a Member of the Family of the previous Beneficiary.

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Rollover Distributions and Beneficiary changes that do not meet the foregoing requirements are subject to federal income tax and the Additional Tax in the same manner as Non-Qualified Withdrawals.

You should retain documents and information adequate to substantiate that a particular Rollover Distribution or transfer of funds between Accounts in the Plan and between qualified tuition programs is not subject to federal income tax, including the Additional Tax, because it is your responsibility to substantiate that such Rollover Distribution or transfer of funds qualifies for the federal tax exemption.

An Account Owner may not change the Beneficiary of an Account or transfer funds between Accounts to the extent that the change or transfer would result in contributions in excess of the Maximum Account Balance Limit for the applicable Beneficiary.

See “Federal Gift, Estate and Generation-Skipping Transfer Taxes” below in connection with any change of Beneficiary, change of Account ownership, or transfer of funds between Accounts.

Coordination With Other Income Tax Incentives For Education

In addition to the income tax benefits provided to Account Owners and Beneficiaries under Section 529 of the Internal Revenue Code, benefits are provided by several other provisions of the Internal Revenue Code for education-related investments or expenditures. These include Coverdell ESAs, Hope Scholarship Credits, Lifetime Learning Credits, and “qualified United States savings bonds” described in Section 135 of the Internal Revenue Code (“qualified U.S. savings bonds”). Each of these incentives is subject to specific rules and limitations and there are particular coordination provisions applicable to the interaction of these provisions and Section 529 of the Internal Revenue Code. The treatment of these incentives under State income tax law may differ from the treatment under federal income tax law.

In general, if certain requirements are satisfied, amounts derived from Coverdell ESAs and qualified U.S. savings bonds may be used to make contributions to an Account without the imposition of federal income taxes under the provisions applicable to Coverdell ESAs and qualified U.S. savings bonds. However, some or all of the deferred income taxes may be recognized at the time of a subsequent withdrawal from an Account, depending on whether that withdrawal is a Qualified Withdrawal or a Non-Qualified Withdrawal. An Account Owner who intends to make a contribution to an Account from a Coverdell ESA or a qualified U.S. savings bond should consult a qualified tax advisor with respect to the federal and State income tax effects arising therefrom.

Qualified Higher Education Expenses of a Beneficiary may be funded on a tax-free basis (subject to certain limitations) by an Account, a Coverdell ESA established for the benefit of the Beneficiary, or a qualified U.S. savings bond applicable to the Beneficiary. For purposes of determining what portion of a withdrawal from an Account constitutes a Qualified Withdrawal and is therefore exempt from federal income taxes, the following rules generally apply with regard to the interaction of the federal income tax education incentive provisions:

• The amount of a Beneficiary’s Qualified Higher Education Expenses in any tax year will be reduced by the aggregate amount: (1) of the Beneficiary’s expenses used for such tax year to qualify for the Hope Scholarship Credit and/or Lifetime Learning Credit; and (2) received by the Beneficiary as a result of certain qualified scholarships, allowances or payments (not including amounts derived from the redemption of qualified U.S. savings bonds).

• If the sum of withdrawals from the Plan, all other qualified tuition programs and all Coverdell ESAs for the benefit of the Beneficiary in any tax year exceed the Beneficiary’s Qualified

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Higher Education Expenses for the year (after the reduction described above), then the Beneficiary’s Qualified Higher Education Expenses generally must be allocated proportionately among the withdrawals to determine the amount of withdrawals that will be treated as used for Qualified Higher Education Expenses. Any amount of withdrawals from an Account in excess of the Qualified Higher Education Expenses allocated to those withdrawals will not be treated as used for the payment of such expenses and therefore generally will be treated as a Non-Qualified Withdrawal. Account Owners should consult a qualified tax advisor regarding the interaction of the federal income tax education incentive provisions in regard to Account withdrawals.

Federal Gift, Estate and Generation-Skipping Transfer Taxes

Contributions to the Plan are considered completed gifts for federal tax purposes and, therefore, are potentially subject to federal gift tax. Generally, no federal gift tax will be imposed on an Account Owner for gifts to a Beneficiary during a year if the Account Owner’s contributions to an Account for the Beneficiary, together with all other gifts by the Account Owner to the Beneficiary for the year, do not exceed $12,000, or $24,000 for a married individual who elects to split gifts with his or her spouse. (These annual exclusions are as of January 1, 2006, and are periodically adjusted for inflation.) If an Account Owner’s contributions to Accounts for a Beneficiary in a single year exceed $12,000, the Account Owner may elect to treat up to $60,000 of the contributions, or $120,000 in the case of a consenting married couple, as having been made ratably over a five-year period.

In addition, to the extent not previously used, each Account Owner has a $1,000,000 lifetime exemption that will be applied to gifts in excess of the annual exclusion amounts referred to above. A married couple may elect to split gifts and apply their combined exemption of $2,000,000 to gifts by either of them. Accordingly, while federal gift tax returns are required for gifts in excess of the annual exclusion amounts referred to above (including gifts that the Account Owner elects to treat as having been made ratably over a five-year period), no federal gift tax will be due until the lifetime exemption has been used. The top gift tax rate is currently 46 percent and is set to be reduced periodically until 2010 when it will be 35 percent. A potential Account Owner should consult with his or her own tax advisor regarding the current lifetime exemptions and the gift tax filing requirements.

Amounts in an Account that were considered completed gifts by the Account Owner will not be included in the Account Owner’s gross estate for federal estate tax purposes. However, if the Account Owner elected to treat the gifts as having been made over a five-year period and died before the end of the five-year period, the portion of the contribution allocable to the remaining years in the five-year period (not including the year in which the Account Owner died) would be includible in computing the Account Owner’s gross estate for federal estate tax purposes. Amounts in an Account at the death of a Beneficiary will be included in the Beneficiary’s gross estate for federal estate tax purposes. The top estate tax rate is currently 46 percent and is scheduled to be reduced periodically until 2007, when it will be 45 percent.

A permissible change of the Beneficiary of an Account or a permissible transfer to an Account for another Beneficiary will potentially be subject to federal gift tax if the new Beneficiary is in a younger generation than the generation of the Beneficiary being replaced. In addition, if the new Beneficiary is in a generation two or more generations younger than the generation of the prior Beneficiary, the transfer may be subject to the generation-skipping transfer tax discussed below. Under proposed regulations, these taxes are imposed on the prior Beneficiary. Account Owners should consult their own tax advisors for guidance when considering a change of Beneficiary or a transfer of funds to another Account. Furthermore, Account Owners and newly designated Account Owners should consult their tax advisors regarding the potential applicability of gift tax or generation-skipping transfer tax as a result of the transfer of ownership of an Account to a new Account Owner.

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Because contributions to an Account are treated as completed gifts for federal transfer tax purposes, an Account Owner may also need to be concerned about the generation-skipping transfer tax. This tax may apply to contributions in excess of the amount that may be elected to be ratably spread over the above referenced five-year period where the Beneficiary is in a generation more than one generation younger than the generation of the contributor. Each taxpayer has a $2,000,000 generation-skipping transfer tax exemption that will be allocated to transfers that are subject to the generation-skipping transfer tax unless certain elections are made. The current $2,000,000 exemption from the generation-skipping transfer tax will increase gradually to $3,500,000 by 2009. The size of the current and future exemptions makes this tax unlikely to apply to many Account Owners or Beneficiaries. However, where such tax applies, it is currently imposed at a 46 percent flat rate. This tax rate will be reduced to 45 percent in 2007. A potential Account Owner concerned about application of the generation-skipping transfer tax should consult with his or her own tax advisor.

The estate tax and the generation-skipping transfer tax (but not the gift tax) are scheduled to be repealed in 2010. The pre-2002 gift, estate and generation-skipping transfer tax rules will be reinstated in 2011 unless further legislation is enacted to extend the repeal or make additional modifications. A potential Account Owner should consult with his or her own tax advisor regarding these changes to the federal tax laws.

State Tax Treatment

Minnesota state tax benefits offered in connection with the Plan are available only to Minnesota state taxpayers.

If you or the Beneficiary of your Account reside in another state or have taxable income in another state, it is important for you to note that if that state has established a qualified tuition program under Section 529 of the Internal Revenue Code of 1986, as amended, that state’s program may offer favorable state income tax benefits or other benefits that are only available if you invest in that state’s program, and that are not available to you or the Beneficiary if you invest in this Plan. Those benefits, if any, should be one of the many appropriately weighted factors you consider before making a decision to invest in this Plan. You should consult with a qualified advisor or contact that state’s qualified tuition program to find out more about such benefits (including any applicable limitations) and to learn how the features, benefits and limitations of that state’s program may apply to your specific circumstances.

The State tax treatment of contributions, earnings and distributions mirrors federal tax treatment. The manner of determining the earnings portion of any distribution will be the same for State tax purposes as for federal tax purposes as described above. Contributions to an Account by an Account Owner do not result in State taxable income to the Beneficiary. An Account Owner may not deduct contributions from income for State income tax purposes.

A Qualified Withdrawal is not subject to State income taxation. The earnings portion of withdrawals from an Account will not be includible in the Beneficiary’s State taxable income, as long as the withdrawals are used for the Beneficiary’s Qualified Higher Education Expenses.

The earnings portion of withdrawals resulting from the death or disability of, or scholarship award to, or attendance at one of the Military Academies by, the Beneficiary is considered for purposes of computing the State income tax liability of the recipient of the withdrawal (i.e., the Account Owner, the Beneficiary, or the Beneficiary’s estate).

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The earnings portion of Non-Qualified Withdrawals is considered for purposes of computing the State income tax liability of the distributee.

Prospective Account Owners should consider the potential impact of income taxes imposed by jurisdictions other than the State. It is possible that other state or local taxes apply to withdrawals from and/or accumulated earnings within the Plan, depending on the residency or domicile of the Account Owner or the Beneficiary. Account Owners and Beneficiaries should consult their tax advisors about the applicability, if at all, of state or local taxes of other jurisdictions and applicability of State income tax on Account Owners and Beneficiaries who are not State residents.

Taxation Of Matching Grants

The Matching Grant program has been designed so the Matching Grant, including the earnings, used for certain Qualified Higher Education Expenses while a student is pursuing a degree will be treated as a scholarship and not be subject to federal or State income taxation. However, there is no assurance the IRS or the Minnesota Department of Revenue will agree. No legal opinion has been sought regarding the federal or State tax treatment of the Matching Grant program.

Certain restrictions apply to the use of funds in Matching Grant Accounts. If the Matching Grant is used for tuition, fees, books, supplies and equipment required for enrollment or attendance at the Eligible Educational Institution, it is not likely to be subject to federal or State income tax. However, if any portion of Matching Grant funds is used as payment for room and board costs, it will be subject to federal and State income tax. The student Beneficiary must report such amount to the IRS when filing his or her tax return. Similarly, any portion of Matching Grant funds used to pay for Qualified Higher Education Expenses at correspondence schools may not be eligible for federal or State tax-exempt treatment.

Notwithstanding the design of the Plan, the IRS and the Minnesota Department of Revenue could take the position that the Matching Grant is subject to federal and State income taxation in the year the grant is awarded. Account Owners and Beneficiaries should consult their own tax advisor regarding the federal and State tax treatment of Matching Grants.

Tax Reports

Under federal law, a separate report will be filed by the Plan Manager with the IRS reporting withdrawals from an Account to each distributee reflecting, among other information, the earnings portion withdrawn during the calendar year to which the report pertains. By January 31 of the following year, the distributee (which in the case of Qualified Withdrawals is deemed to be the Beneficiary whose Qualified Higher Education Expenses are paid thereby) will receive a copy of the report or a corresponding statement.

Lack Of Certainty Of Tax Consequences; Future Changes In Law

As of the date of this Disclosure Booklet, proposed federal tax regulations have been issued under Section 529 of the IRC that provide guidance and requirements for the establishment and operation of the Plan as a qualified tuition program. Under federal tax law applicable to a qualified tuition program, the Plan, the Account Owners and the Beneficiaries are eligible for favorable federal tax benefits pursuant to Section 529 of the IRC. The proposed tax regulations do not, however, provide guidance on certain aspects of the Plan.

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Final regulations or other administrative guidance or court decisions might be issued that could adversely impact the federal tax consequences or requirements with respect to the Plan or contributions to, or withdrawals from, Accounts. Congress also could amend Section 529 of the IRC or other federal law in a manner that could materially change or eliminate the federal tax treatment described above. If necessary, the Office and the Plan Manager intend to modify the Plan within the constraints of applicable law in order for the Plan to meet the requirements of IRC Section 529. If made, changes in the law governing the federal and/or State tax consequences described above might necessitate material changes to the Plan for the anticipated tax consequences to apply.

In the event the Plan, as currently structured or as subsequently modified, does not meet the requirements of IRC Section 529 for any reason, the tax consequences to Account Owners and Beneficiaries may be uncertain and it is possible Account Owners or Beneficiaries could be subject to taxes currently on undistributed earnings in their Accounts as well as to other adverse tax consequences. A potential Account Owner may wish to consult a tax advisor.

Federal Tax Effects Of the Expiration Of the 2001 Tax Act

The 2001 Tax Act repealed a provision of the IRC that provided that if Account Owners contribute to a Coverdell ESA on behalf of a Beneficiary and also contribute to a qualified tuition program account for the same Beneficiary in the same year, the contribution to the Coverdell ESA would be subject to an annual 6 percent excise tax until withdrawal of the funds. The repeal of that provision is set to expire on December 31, 2010. Unless Congress extends the repeal of that provision or otherwise changes the law, the federal tax law governing excise taxes on contributions to a Coverdell ESA will revert on January 1, 2011, to the rules that existed until December 31, 2001, and, consequently, the above-stated provision that was repealed by the 2001 Tax Act will again be effective.

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ADDENDUM A - PARTICIPATION AGREEMENTS

PARTICIPATION AGREEMENT FOR AN ACCOUNT OWNED BY AN INDIVIDUAL

I agree, represent and warrant to the State of Minnesota through its agencies, the State Board of Investment and the Minnesota Office of Higher Education (hereinafter collectively referred to as the “State of Minnesota”) as set forth below. Each capitalized term used but not defined in this Participation Agreement (this “Agreement”) has the meaning that term has in the Plan Disclosure Booklet (the “Disclosure Booklet”).

A. 1. I hereby establish, as the Account Owner, an Account representing an interest in the Minnesota College Savings Plan (the “Plan”) for my Beneficiary and enter into this Agreement with the State of Minnesota. I understand and agree that this Agreement is subject to and incorporates by reference the information concerning the Plan and the terms applicable to my Account contained in the Disclosure Booklet, as modified from time to time.

2. I understand that the State of Minnesota has retained TIAA-CREF Tuition Financing, Inc. (“TFI”) as the Plan Manager for the Plan.

3. I have received, read and understand the Disclosure Booklet as currently in effect. I have been given the opportunity to obtain answers to all of my questions concerning the Plan, my Account and this Agreement. In making a decision to open an Account and enter into this Agreement, I have not relied upon any representations or other information, whether oral or written, other than as set forth in the Disclosure Booklet and this Agreement. I understand that this Agreement shall become effective upon the opening of the Account on the records of the Plan Manager.

4. I certify that I am opening this Account to provide funds for the Qualified Higher Education Expenses of the Beneficiary of the Account. I understand that pursuant to federal and State law, any contribution, or portion of a contribution, made for a Beneficiary will be rejected and returned to the extent that the amount of the contribution would cause the total account balance for all Accounts in the Plan for that Beneficiary to exceed the Maximum Account Balance Limit of $235,000 (subject to change).

5. I recognize that the investment of contributions and of investment returns in my Account involves certain risks, and I have taken into consideration and understand the risk factors related to these investments, including, but not limited to, those set forth in the Disclosure Booklet. I understand that neither I nor my Beneficiary is, or will be, permitted to exercise any investment direction over my Account, either directly or indirectly, other than my selection of and potential later changes to the Investment Options for my Account. However, I understand and acknowledge that once invested in a particular Investment Option, contributions and any earnings thereon may not be transferred to another Investment Option other than once every calendar year, or upon a change of Beneficiary.

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6. I understand that contributions and returns allocated to the Guaranteed Option will be paid by the Plan to TIAA-CREF Life pursuant to a Funding Agreement that guarantees to the Board (on behalf of the Office) a return of principal and a minimum interest rate of 3 percent per annum, with the possibility of additional interest rates that may be declared in advance by TIAA-CREF Life for a period of up to 12 months. I understand that any Declared Interest Rate is not guaranteed for a period greater than 12 months. I also understand that under the Funding Agreement this guarantee is provided to the Board for the benefit of Account Owners who have selected the Guaranteed Option, but the guarantee is not made directly to Account Owners or Beneficiaries. I understand and acknowledge that effective November 1, 2007, transfers (including transfers when there is a change of Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, I understand that I will be notified prior to the effective date of any such change. I acknowledge that neither the Guaranteed Option nor any Account invested in this option is an investment or security guaranteed to an Account Owner by any State government agency or political subdivision, the Board, the Office, the Plan, the Plan Manager TIAA-CREF Life or any other person or entity. I understand that the Funding Agreement is issued to the Board and is not guaranteed or insured by any person or entity other than TIAA-CREF Life.

7. Except as set forth in paragraph 6 above, with respect to each Investment Option in the Plan, I understand and acknowledge that neither contributions nor investment returns allocated to my Account are guaranteed or insured by any person or entity, including but not limited to, any State government agency or political subdivision, the Board, the Office, Teachers Insurance and Annuity Association of America (“TIAA”), TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors, or investment managers selected or approved by the State of Minnesota or any agents, representatives or successors of the foregoing. I understand that there is no guarantee that the Plan’s investment objectives will be achieved.

8. I understand and acknowledge that I have not been advised by the Plan Manager, any State government agency or political subdivision, the Board, the Office, TFI or its affiliates to invest or to refrain from investing, in a particular Investment Option.

9. I understand and acknowledge that with respect to each Investment Option in the Plan, there is no guarantee or commitment whatsoever from the State of Minnesota, the Plan Manager, or any other person or entity that: (a) actual Qualified Higher Education Expenses will be equal to projections and estimates provided by the Plan; (b) the Beneficiary of my Account will be admitted to any institution (including any Eligible Educational Institution); (c) upon admission to an institution, my Beneficiary will be permitted to continue to attend; (d) upon admission to an institution, State residency will be created for tuition, tax, financial aid eligibility, or any other purpose for the Beneficiary; (e) the Beneficiary will graduate or receive a degree from any institution; or (f) contributions and investment returns in my Account, even if the Maximum Account Balance Limit for my Beneficiary is met, will be sufficient to cover the Qualified Higher Education Expenses of my Beneficiary.

10. I understand that TFI will not necessarily continue as Plan Manager for the entire period my Account is open. I acknowledge that if this occurs, or even if it does not occur, there is no assurance that the terms and conditions of this current Agreement

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would continue without material change, and that there are, accordingly, various potential consequences I should take into consideration as discussed in the Disclosure Booklet, including: (a) changes in the Plan Manager and its subcontractors and affiliates; (b) changes in the current Total Annual Asset-Based Fee; and (c) if TFI ceases to be Plan Manager, that I may have to open a new Account with the successor plan manager in order to make future contributions on behalf of my Beneficiary.

11. I understand that (except for assets invested in the Guaranteed Option) the Plan’s Total Annual Asset-Based Fee is 0.65 percent (less than 1 percent). Of that amount, depending on the Investment Option, 0.315 percent to 0.50 percent is paid to the Plan Manager as the Plan Manager Fee. I further understand that these fees could change under certain circumstances as described in the Disclosure Booklet.

12. I acknowledge that my Account will be considered dormant if: (a) I fail to make contributions to my Account for at least three consecutive years; and (b) Account statements mailed to me are returned as undeliverable. I understand that a fee of 5 percent of my Account balance (not to exceed $100), plus allowable costs, may be assessed against my Account to cover the Plan Manager’s efforts to locate me, my legal heirs or the Beneficiary. I also understand that if these efforts are unsuccessful, all remaining funds in my dormant Account will be remitted to the government agency of Minnesota in charge of abandoned funds.

13. I understand that my Account may be considered inactive if: (a) the Beneficiary has not informed the Plan Manager of enrollment in an Eligible Educational Institution on or before reaching the age of 28; (b) the Beneficiary does not begin attendance at an Eligible Educational Institution within one year of notice by the Plan Manager of pending inactive Account status; and (c) I have not obtained a deferment of the inactive status of my Account. (I also understand that if I designate myself as the Beneficiary of my Account and I am 18 years or older when I open the Account, I must inform the Plan Manager of enrollment in an Eligible Educational Institution within 10 years of the date I opened the Account.) I acknowledge that if my Account is determined to be inactive, all Matching Grants, together with corresponding earnings, if any, that would otherwise be distributed to pay the Account Beneficiary’s Qualified Higher Education Expenses shall be returned to the Office and will no longer be available for such distribution.

14. I acknowledge that my Account may not be used by me or my Beneficiary as security for a loan.

15. (The following sentence is applicable to individuals executing this Agreement in a representative or fiduciary capacity.) I have full power and authority to enter into and perform this Agreement on behalf of the individual named above as Account Owner.

B. Penalties, Fees and Additional Tax. I understand and agree that I or the distributee of a Non-Qualified Withdrawal from my Account will be subject to an Additional Tax of 10 percent on the earnings portion of such Non-Qualified Withdrawal and that this Additional Tax is payable through my federal income tax return to the United States Treasury. I acknowledge that the rate of this Additional Tax may be changed. I acknowledge and agree that I may be subject to other fees, charges or penalties in the future, as explained in the Disclosure Booklet.

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C. Necessity of Qualification. I understand that the Plan is intended to be a “qualified tuition program” under Section 529 of the IRC and to receive favorable tax treatment under Minnesota law. I agree that the State of Minnesota may make changes to the Plan, this Agreement and the Disclosure Booklet at any time if it is determined that such changes are necessary for the continuation of the federal income tax treatment provided by IRC Section 529 or the favorable tax treatment provided by Minnesota law, or any similar successor legislation.

D. Statutes and Regulations; Amendment. The Account and this Agreement are subject to, and incorporate by reference, any operating procedures and policies adopted for the Plan by the Board, the Office, or by the Plan Manager, the statutes governing the Plan codified as Minnesota Statutes 136G.01, et seq., and any amendments thereto, and any regulations as may be promulgated in accordance with State law. Any amendments to statutes and regulations shall amend automatically this Agreement and any amendments to operating procedures and policies shall also automatically amend this Agreement. In addition, the Account and this Agreement are subject to future changes to the Disclosure Booklet.

E. Indemnity. I understand that the establishment of my Account will be based upon my agreements, representations and warranties set forth in this Agreement. I agree to indemnify and hold harmless the State of Minnesota, TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors or investment managers that may render services to the Plan, and any agents, representatives, or successors of any of the foregoing, from and against any and all loss, damage, liability or expense, including reasonable attorneys’ fees, that any of them may incur by reason of, or in connection with, any misstatement or misrepresentation made by me on the Application or otherwise with respect to my Account, and any breach by me of any of the agreements, representations or warranties contained in this Agreement. All of my agreements, representations and warranties shall survive the termination of this Agreement.

F. Limitations On Certain Distributions From Account. I acknowledge that if I change the Account Owner for my Account or change my mailing address, and fail to provide a medallion signature guarantee of my signature on the request form, no distributions can be made from my Account within thirty days after receipt by the Plan Manager of the request form. I understand that I cannot withdraw a contribution for ten days after receipt by the Plan Manager of that contribution.

G. Binding Nature; Third-Party Beneficiaries. This Agreement shall survive my death and shall be binding upon my personal representatives, heirs, successors and assigns. The Plan Manager is a third-party beneficiary of my agreements, representations and warranties in this Agreement.

H. Termination. The Plan may be suspended or terminated, but except as permissible under applicable law, my Account may not thereby be diverted from my exclusive benefit.

I. Governing Law. This Agreement is governed by Minnesota law.

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PARTICIPATION AGREEMENT FOR AN ENTITY ACCOUNT

I, on behalf of the Account Owner named in the Application, agree and represent and warrant to the State of Minnesota through its agencies, the State Board of Investment and the Minnesota Office of Higher Education (hereinafter collectively referred to as the “State of Minnesota”), as set forth below. Each capitalized term used but not defined in this Participation Agreement (this “Agreement”) has the meaning that term has in the Plan Disclosure Booklet (the “Disclosure Booklet”).

A. 1. On behalf of the entity Account Owner, I hereby establish an Account representing an interest in the Minnesota College Savings Plan (the “Plan”) for the Account Beneficiary and enter into this Agreement with the State of Minnesota. I understand and agree that this Agreement is subject to and incorporates by reference the information concerning the Plan and the terms applicable to this Account contained in the Disclosure Booklet, as modified from time to time.

2. I understand that the State of Minnesota has retained TIAA-CREF Tuition Financing, Inc. (“TFI”) as the Plan Manager for the Plan.

3. I have received, read and understand the Disclosure Booklet as currently in effect. I have been given the opportunity to obtain answers to all of my questions concerning the Plan, this Account and this Agreement. In making a decision to open an Account and enter into this Agreement, there have been no representations or other information about the Plan relied upon, whether oral or written, other than as set forth in the Disclosure Booklet and this Agreement. I understand that this Agreement shall become effective upon the opening of the Account on the records of the Plan Manager.

4. I certify that I am authorized by the Account Owner to open this Account to provide funds for the Qualified Higher Education Expenses of the Beneficiary of the Account. I understand that pursuant to federal and State law, any contribution, or portion of a contribution, made for a Beneficiary will be rejected and returned to the extent that the amount of the contribution would cause the total account balance for all Accounts in the Plan for that Beneficiary to exceed the Maximum Account Balance Limit of $235,000 (subject to change).

5. I recognize that the investment of contributions and of investment returns in the Account involves certain risks, and I have taken into consideration and understand the risk factors related to these investments, including, but not limited to, those set forth in the Disclosure Booklet. I understand that neither the Account Owner nor the Beneficiary is, or will be, permitted to exercise any investment direction over the Account, either directly or indirectly, other than the selection of, and potential later changes to the Investment Options for the Account. However, I understand and acknowledge that once invested in a particular Investment Option, contributions and any earnings thereon may not be transferred to another Investment Option other than once every calendar year, or upon a change of Beneficiary.

6. I understand that contributions and returns allocated to the Guaranteed Option will be paid by the Plan to TIAA-CREF Life pursuant to a Funding Agreement that guarantees to the Board (on behalf of the Office) a return of principal and a minimum interest rate of 3 percent per annum, with the possibility of additional interest rates

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that may be declared in advance by TIAA-CREF Life for a period of up to 12 months. I understand that any Declared Interest Rate is not guaranteed for a period greater than 12 months. I also understand that under the Funding Agreement this guarantee is provided to the Board for the benefit of Account Owners who have selected the Guaranteed Option, but the guarantee is not made directly to Account Owners or Beneficiaries. I understand and acknowledge that effective November 1, 2007, transfers (including transfers when there is a change of Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, I understand that I will be notified prior to the effective date of any such change. I acknowledge that neither the Guaranteed Option nor any Account invested in this option is an investment or security guaranteed to an Account Owner by any State government agency or political subdivision, the Board, the Office, the Plan, the Plan Manager, TIAA-CREF Life or any other person or entity. I understand that the Funding Agreement is issued to the Board and is not guaranteed or insured by any person or entity other than TIAA-CREF Life.

7. Except as set forth in paragraph 6 above, with respect to each Investment Option, I understand and acknowledge that neither contributions nor investment returns allocated to the Account are guaranteed or insured by any person or entity, including but not limited to, any State government agency or political subdivision, the Board, the Office, Teachers Insurance and Annuity Association of America (“TIAA”), TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors or investment managers selected or approved by the State of Minnesota or any agents, representatives or successors of the foregoing. I understand that there is no guarantee that the Plan’s investment objectives will be achieved.

8. I understand and acknowledge that I have not been advised by the Plan Manager, any State government agency or political subdivision, the Board, the Office, TIAA, TFI or its affiliates to invest or to refrain from investing in a particular Investment Option.

9. I understand and acknowledge that with respect to each Investment Option in the Plan, there is no guarantee or commitment whatsoever from the State of Minnesota, the Plan Manager, or any other person or entity that: (a) actual Qualified Higher Education Expenses will be equal to projections and estimates provided by the Plan; (b) the Beneficiary will be admitted to any institution (including any Eligible Educational Institution); (c) upon admission to an institution, the Beneficiary will be permitted to continue to attend; (d) upon admission to an institution, State residency will be created for tuition, tax, financial aid eligibility, or any other purpose for the Beneficiary; (e) the Beneficiary will graduate or receive a degree from any institution; or (f) contributions and investment returns in the Account, even if the Maximum Account Balance Limit for the Beneficiary is met, will be sufficient to cover the Qualified Higher Education Expenses of the Beneficiary.

10. I understand that TFI will not necessarily continue as Plan Manager for the entire period the Account is open. I acknowledge that if this occurs, or even if it does not occur, there is no assurance that the terms and conditions of this current Agreement would continue without material change, and that there are, accordingly, various potential consequences I should take into consideration as discussed in the Disclosure Booklet, including: (a) changes in the Plan Manager and its subcontractors and affiliates; (b) changes in the current Total Annual Asset-Based Fee; and (c) if TFI

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ceases to be Plan Manager, that a new Account in the Plan may have to be opened with the successor plan manager in order to make future contributions on behalf of the Beneficiary.

11. I understand that (except for assets invested in the Guaranteed Option) the Plan’s Total Annual Asset-Based Fee is 0.65 percent (less than 1 percent). Of that amount, depending on the Investment Option, 0.315 percent to 0.50 percent is paid to the Plan Manager as the Plan Manager Fee. I further understand that these fees could change under certain circumstances as described in the Disclosure Booklet.

12. I acknowledge that this Account will be considered dormant if: (a) the entity Account Owner fails to make contributions to the Account for at least three consecutive years; and (b) Account statements are returned as undeliverable. I understand that a fee of 5 percent of the Account balance (not to exceed $100), plus allowable costs, may be assessed against this Account to cover the Plan Manager’s efforts to locate the Account Owner, its legal representatives, or the Beneficiary. I also understand that if these efforts are unsuccessful, all remaining funds in the dormant Account will be remitted to the government agency of Minnesota in charge of abandoned funds.

13. I understand that this Account will be considered inactive if: (a) the Beneficiary has not informed the Plan Manager of enrollment in an Eligible Educational Institution on or before reaching the age of 28; (b) the Beneficiary does not begin attendance at an Eligible Educational Institution within one year of notice by the Plan Manager of pending inactive Account status; and (c) a deferment of the inactive status of this Account is not obtained. I acknowledge that if this Account is determined to be inactive, all Matching Grants, together with corresponding earnings, if any, that would otherwise be distributed to pay the Beneficiary’s Qualified Higher Education Expenses will be returned to the Office and will no longer be available for such distribution.

14. I acknowledge that this Account may not be used by the entity Account Owner or the Beneficiary as security for a loan.

15. I understand that the entity Account Owner will retain ownership of contributions made to this Account in the Plan and earnings thereon until distribution. I also understand that an entity Account Owner may not name a Contingent Account Owner.

16. I understand and acknowledge that for every transaction conducted on this Account, including the execution of the Application to open the Account, the Account Owner must submit documentation substantiating the following: (1) the legal status of the entity; (2) authorization by the entity to conduct the transaction; and (3) authorization by the entity for the signer of the form or the requester to conduct the transaction.

17. (The following sentence is applicable to individuals executing this Agreement in a representative or fiduciary capacity.) I have full power and authority to enter into and perform this Agreement on behalf of the entity named in the Application as Account Owner.

B. Penalties, Fees and Additional Tax. I understand and agree that the Account will be subject to an Additional Tax of 10 percent on the earnings portion of a Non-Qualified Withdrawal and that this

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Additional Tax is payable through the Account Owner’s (or other distributee’s) federal income tax return to the United States Treasury. I acknowledge that the rate of this Additional Tax may be changed. I acknowledge and agree that other fees, charges, or penalties may apply in the future, as explained in the Disclosure Booklet.

C. Necessity Of Qualification. I understand that the Plan is intended to be a “qualified tuition program” under Section 529 of the IRC and to achieve favorable tax treatment under Minnesota law. I agree that the State of Minnesota may make changes to the Plan, this Agreement and the Disclosure Booklet at any time if it is determined that such changes are necessary for the continuation of the federal tax treatment provided by IRC Section 529 or the favorable tax treatment provided by Minnesota law, or any similar successor legislation.

D. Statutes and Regulations; Amendment. The Account and this Agreement are subject to, and incorporate by reference, any operating procedures and policies adopted for the Plan by the Board, the Office, or by the Plan Manager, the statutes governing the Plan codified as Minnesota Statutes 136G.01, et seq., and any amendments thereto, and any regulations as may be promulgated in accordance with State law. Any amendments to statutes and regulations shall amend automatically this Agreement and any amendments to operating procedures and policies shall also automatically amend this Agreement. In addition, the Account and this Agreement are subject to future changes to the Disclosure Booklet.

E. Indemnity. I understand that the establishment of this Account will be based upon the agreements, representations and warranties set forth in this Agreement. I agree to indemnify and hold harmless the State of Minnesota, TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors or investment managers that may render services to the Plan, and any agents, representatives, or successors of any of the foregoing, from and against any and all loss, damage, liability or expense, including reasonable attorneys’ fees, that any of them may incur by reason of, or in connection with, any misstatement or misrepresentation made on the Application or otherwise with respect to this Account, and any breach of any of the agreements, representations or warranties contained in this Agreement. All of these agreements, representations and warranties shall survive the termination of this Agreement.

F. Limitations On Certain Distributions From Account. I acknowledge that control of the funds in this Account is subject to the following limitations: if the Account Owner for this Account is changed or there is a change in the mailing address, no distributions can be made from this Account within thirty days after receipt by the Plan Manager of the form requesting such change unless there is a medallion signature guarantee. A contribution cannot be withdrawn for ten days after receipt by the Plan Manager of that contribution.

G. Binding Nature; Third-Party Beneficiaries. This Agreement shall survive my death and shall be binding upon my personal representatives, heirs, successors and assigns. The Plan Manager is a third-party beneficiary of the agreements, representations and warranties in this Agreement.

H. Termination. The Plan may be suspended or terminated, but except as permissible under applicable law, this Account may not be diverted from the exclusive benefit of the Account Owner.

I. Governing Law. This Agreement is governed by Minnesota law.

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List of Approved Documents for Substantiation

An entity Account Owner must provide documentary substantiation when opening an Account in the Plan or conducting a transaction for that Account of the following: (1) the legal status of the entity; (2) authorization by the entity to open the Account or conduct the transaction; and (3) authorization by the entity for the signer of the form or the requester to open the Account or conduct the transaction.

The same document may provide substantiation of all of the three elements above. The documents set forth below, which must be original documents or certified copies, dated or certified no more than sixty (60) days prior to receipt by the Plan, meet these substantiation requirements:

1. a corporate by-law extract or corporate resolution certified by an officer of the corporation (other than an individual authorized thereby to act as signer for the corporation’s Account in the Plan), with raised seal if in use by the corporation;

2. a certificate signed by the owner of a sole proprietorship;

3. a certificate signed by a general partner of a partnership (other than an individual authorized by the certificate to act as signer for the partnership’s Account in the Plan);

4. a certificate signed by an officer of a limited liability company, other company or association (other than an individual authorized by the certificate to act as signer for the Plan Account of the limited liability company, other company or association);

5. a certificate signed by the chief executive officer of a Minnesota state or local government agency;

6. a certified copy of a court order establishing an estate and naming a legal representative of the estate that is authorized to act as signer of the estate’s Account in the Plan;

7. a certificate signed by the trustee, a certified copy of material portions of a trust instrument, or a certified copy of a court order, confirming creation of a trust that names an individual who has reached the age of majority as the beneficiary of the trust, identifies the trustee, and provides authorization for the trustee to act as a signer for the trust’s Account in the Plan;

8. a letter or memorandum from the Internal Revenue Service indicating that the entity is an organization described in Section 501(c)(3) of the Internal Revenue Code;

9. an original memorandum exhibiting the appropriate letterhead and containing the holographic signature of: (a) the chief executive officer of a corporation or limited liability company; (b) the general partner of a partnership; (c) the owner of a sole proprietorship; or (d) the chief executive officer of a Minnesota state or local government agency; or

10. if the entity Account Owner is unable to provide substantiation in any of the foregoing forms, the entity Account Owner may propose an alternate form of substantiation to the Plan Manager for consideration. The Plan Manager will review the alternate form of substantiation for authenticity and completeness and will accept or reject it. If judged authentic and complete, the Plan Manager will act on the alternate form of substantiation within thirty (30) business days of so determining. If judged inauthentic or incomplete, the Plan Manager will notify the Account Owner of the rejection of the alternate form of substantiation and set forth

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the reason for such determination in writing within thirty (30) business days of so determining.

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PARTICIPATION AGREEMENT FOR A MINOR TRUST ACCOUNT

I agree, represent and warrant to the State of Minnesota through its agencies, the State Board of Investment and the Minnesota Office of Higher Education (hereinafter collectively referred to as the “State of Minnesota”), as set forth below. Each capitalized term used but not defined in this Participation Agreement (this “Agreement”) has the meaning that term has in the Plan Disclosure Booklet (the “Disclosure Booklet”).

A. 1. I hereby establish, as a custodian under a state’s Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (“UGMA/UTMA”) or as a trustee of a trust instrument naming a minor as the beneficiary of the trust (“Trustee”), an Account for my Beneficiary (each a “Minor Trust Account” and generally referred to in this Agreement as an “Account”) that represents an interest in the Minnesota College Savings Plan (the “Plan”) and enter into this Agreement with the State of Minnesota. I understand and agree that this Agreement is subject to and incorporates by reference the information concerning the Plan and the terms applicable to this Account contained in the Disclosure Booklet, as modified from time to time.

2. I understand that the State of Minnesota has retained TIAA-CREF Tuition Financing, Inc. (“TFI”) as the Plan Manager for the Plan.

3. I have received, read and understand the Disclosure Booklet as currently in effect. I have been given the opportunity to obtain answers to all of my questions concerning the Plan, the Account and this Agreement. In making a decision to open an Account and enter into this Agreement, I have not relied upon any representations or other information about the Plan, whether oral or written, other than as set forth in the Disclosure Booklet and this Agreement. This Agreement shall become effective upon the opening of the Account on the records of the Plan Manager.

4. I certify that I am opening this Account to provide funds for the Qualified Higher Education Expenses of the Beneficiary of the Account. I understand that pursuant to federal and State law, any contribution, or portion of a contribution, made for a Beneficiary will be rejected and returned to the extent that the amount of the contribution would cause the total account balance for all Accounts in the Plan for that Beneficiary to exceed the Maximum Account Balance Limit of $235,000 (subject to change).

5. I recognize that the investment of contributions and investment returns in this Account involves certain risks, and I have taken into consideration and understand the risk factors relating to these investments, including, but not limited to, those set forth in the Disclosure Booklet. I understand that neither I nor the Beneficiary is, or will be, permitted to exercise any investment direction over the Account, either directly or indirectly, other than my selection of, and potential later changes to the Investment Options for the Account. However, I understand and acknowledge that once invested in a particular Investment Option, contributions and any earnings thereon may not be transferred to another Investment Option other than once per calendar year.

6. I understand that contributions and returns allocated to the Guaranteed Option will be paid by the Plan to TIAA-CREF Life pursuant to a Funding Agreement that

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guarantees to the Board (on behalf of the Office) a return of principal and a minimum interest rate of 3 percent per annum, with the possibility of additional interest rates that may be declared in advance by TIAA-CREF Life for a period of up to 12 months. I understand that any Declared Interest Rate is not guaranteed for a period greater than 12 months. I also understand that under the Funding Agreement this guarantee is provided to the Board for the benefit of Account Owners who have selected the Guaranteed Option, but the guarantee is not made directly to Account Owners or Beneficiaries. I understand and acknowledge that effective November 1, 2007, transfers (including transfers when there is a change of Beneficiary) from the Guaranteed Option to the Money Market Option will not be permitted. If this restriction changes, I understand that I will be notified prior to the effective date of any such change. I acknowledge that neither the Guaranteed Option nor any Account invested in this option is an investment or security guaranteed to an Account Owner by any State government agency or political subdivision, the Board, the Office, the Plan, the Plan Manager, TIAA-CREF Life or any other person or entity. I understand that the Funding Agreement is issued to the Board and is not guaranteed or insured by any person or entity other than TIAA-CREF Life.

7. Except as set forth in paragraph 6 above, with respect to each Investment Option, I understand and acknowledge that neither contributions nor investment returns allocated to the Account are guaranteed or insured by any person or entity, including but not limited to, any State government agency or political subdivision, the Board, the Office, Teachers Insurance and Annuity Association of America (“TIAA”), TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors or investment managers selected or approved by the State of Minnesota or any agents, representatives or successors of the foregoing. I understand that there is no guarantee that the Plan’s investment objectives will be achieved.

8. I understand and acknowledge that I have not been advised by the Plan Manager, any State government agency or political subdivision, the Board, the Office, TIAA, TFI or its affiliates to invest or to refrain from investing in a particular Investment Option.

9. I understand and acknowledge that with respect to each Investment Option in the Plan, there is no guarantee or commitment whatsoever from the Plan Manager, the State of Minnesota, or any other person or entity that: (a) actual Qualified Higher Education Expenses will be equal to projections and estimates provided by the Plan; (b) the Beneficiary will be admitted to any institution (including an Eligible Educational Institution); (c) upon admission to an institution, the Beneficiary will be permitted to continue to attend; (d) upon admission to an institution, State residency will be created for tuition, tax, financial aid eligibility, or any other purpose for the Beneficiary; (e) the Beneficiary will graduate or receive a degree from any institution; or (f) contributions and investment returns in the Account, even if the Maximum Account Balance Limit for the Beneficiary is met, will be sufficient to cover the Qualified Higher Education Expenses of the Beneficiary.

10. I understand that TFI will not necessarily continue as Plan Manager for the entire period the Account is open. I acknowledge that if this occurs, or even if it does not occur, there is no assurance that the terms and conditions of this current Agreement would continue without material change, and that there are, accordingly, various potential consequences I should take into consideration as discussed in the Disclosure

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Booklet, including: (a) changes in the Plan Manager and its subcontractors and affiliates; (b) changes in the current Total Annual Asset-Based Fee; and (c) if TFI ceases to be Plan Manager, that I may have to open a new Account with the successor plan manager in order to make future contributions on behalf of the Beneficiary.

11. I understand that (except for assets invested in the Guaranteed Option) the Plan’s Total Annual Asset-Based Fee is 0.65 percent (less than 1 percent). Of that amount, depending on the Investment Option, 0.315 percent to 0.50 percent is paid to the Plan Manager as the Plan Manager Fee. I further understand that these fees could change under certain circumstances as described in the Disclosure Booklet.

12. I acknowledge that this Account will be considered dormant if: (a) I fail to make contributions to the Account for at least three consecutive years; and (b) Account statements mailed to me are returned as undeliverable. I understand that a fee of 5 percent of the Account balance (not to exceed $100), plus allowable costs, may be assessed against this Account to cover the Plan Manager’s efforts to locate me, my legal heirs or the Beneficiary. I also understand that if these efforts are unsuccessful, all remaining funds in the dormant Account will be remitted to the government agency of Minnesota in charge of abandoned funds.

13. I understand that this Account will be considered inactive if: (a) the Beneficiary has not informed the Plan Manager of enrollment in an Eligible Educational Institution on or before reaching the age of 28; (b) the Beneficiary does not begin attendance at an Eligible Educational Institution within one year of notice by the Plan Manager of pending inactive Account status; and (c) a deferment of the inactive status of this Account is not obtained. I acknowledge that if this Account is determined to be inactive, all Matching Grants, together with corresponding earnings, if any, that would otherwise be distributed to pay the Beneficiary’s Qualified Higher Education Expenses will be returned to the Office and will no longer be available for such distribution.

14. I acknowledge that this Account may not be used by me or the Beneficiary as security for a loan.

15. I understand that I will be required to sign forms and conduct transactions for this Account in a representative capacity as the custodian or Trustee acting for the benefit of the Beneficiary. I understand that I am not permitted to change the Beneficiary of this Account either directly or by means of a Rollover Distribution, including a transfer of funds to another Account for a different Beneficiary. I also understand that I am not permitted to name a Contingent Account Owner, or to change ownership of this Account other than to a successor custodian or trustee, without providing the Plan Manager with a court order directing the change. I understand and acknowledge that I must provide with any request for a withdrawal from the Account a certification that I am a custodian pursuant to a state’s UGMA/UTMA, or that I am a Trustee of a trust instrument naming a minor as the beneficiary, and (except with respect to a withdrawal due to the death of the Beneficiary or a Qualified Withdrawal) that the withdrawal is authorized under UGMA/UTMA or the trust instrument, respectively, and will be used for the benefit of the Beneficiary.

16. I understand that I am required to provide the Plan Manager with written notice when the Beneficiary becomes legally entitled to assume ownership of the Account so that

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the Beneficiary can be registered as the Account Owner and take control of the Account. I acknowledge that at that time the Beneficiary would be able to conduct the same transactions on the Account as any individual Account Owner, as opposed to an UGMA/UTMA custodian or trustee for a Minor who exercise limited control over Minor Trust Accounts in the Plan.

17. I understand that if I am the Trustee of a trust instrument naming a minor as the beneficiary of the trust, I will be required to provide the Plan with an original, signed certificate, a certified copy of material portions of the trust instrument, or a certified copy of a court order, that confirms creation of a trust naming a minor as the trust beneficiary, identifies me as the Trustee, and authorizes me to act on behalf of the trust beneficiary in opening and maintaining the Minor Trust Account.

18. (The following sentence is applicable to individuals executing this Agreement in a representative or fiduciary capacity.) I have full power and authority to enter into and perform this Agreement on behalf of the individual named in the Application as an UGMA/UTMA custodian or Trustee for a Minor.

B. Penalties, Fees and Additional Tax. With respect to all Minor Trust Accounts, I acknowledge that the rate of the Additional Tax may be changed and that other fees, charges, or penalties may apply in the future, as explained in the Disclosure Booklet. In addition, if I am an UGMA/UTMA custodian, I understand and agree that the Beneficiary of such Minor Trust Account will be subject to an Additional Tax of 10 percent of the earnings portion of a Non-Qualified Withdrawal and that this Additional Tax will be payable through such Beneficiary’s federal income tax return to the United States Treasury.

C. Necessity Of Qualification. I understand that the Plan is intended to be a “qualified tuition program” under Section 529 of the IRC and to achieve favorable tax treatment under Minnesota law. I agree that the State of Minnesota may make changes to the Plan, this Agreement and the Disclosure Booklet at any time if it is determined that such changes are necessary for the continuation of the federal tax treatment provided by IRC Section 529 or the favorable tax treatment provided by Minnesota law, or any similar successor legislation.

D. Statutes and Regulations; Amendment. The Account and this Agreement are subject to, and incorporate by reference, any operating procedures and policies adopted for the Plan by the Board, the Office, or by the Plan Manager, the statutes governing the Plan codified as Minnesota Statutes 136G.01, et seq., and any amendments thereto, and any regulations as may be promulgated in accordance with State law. Any amendments to statutes and regulations shall amend automatically this Agreement and any amendments to operating procedures and policies shall also automatically amend this Agreement. In addition, the Account and this Agreement are subject to future changes to the Disclosure Booklet.

E. Indemnity. I understand that the establishment of this Account will be based upon the agreements, representations and warranties set forth in this Agreement. I agree to indemnify and hold harmless the State of Minnesota, TFI and its subcontractors and affiliates, any vendors, contractors, investment advisors or investment managers that may render services to the Plan, and any agents, representatives, or successors of any of the foregoing, from and against any and all loss, damage, liability or expense, including reasonable attorneys’ fees, that any of them may incur by reason of, or in connection with, any misstatement or misrepresentation made by me on the Application or otherwise with respect to this Account, and any breach by me of any of the agreements, representations or warranties contained in this Agreement. All of these agreements, representations and warranties shall survive the termination of this Agreement.

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F. Limitations On Certain Distributions From Account. I acknowledge that control of the funds in this Account is subject to the following limitations: if the Account Owner is changed in accordance with restrictions applicable to Minor Trust Accounts, or if there is a change in the mailing address, no distributions can be made from this Account within thirty days after receipt by the Plan Manager of the form requesting such change unless there is a medallion signature guarantee. I understand that a contribution cannot be withdrawn for ten days after receipt by the Plan Manager of that contribution.

G. Binding Nature; Third-Party Beneficiaries. This Agreement shall survive my death and shall be binding upon my personal representatives, heirs, successors and assigns. The Plan Manager is a third-party beneficiary of the agreements, representations and warranties in this Agreement.

H. Termination. The Plan may be suspended or terminated, but except as permissible under applicable law, the funds in this Account will be held in trust for the benefit of the Account Beneficiary.

I. Governing Law. This Agreement is governed by Minnesota law.

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ADDENDUM B – PRIVACY POLICIES

NOTICE OF TIAA-CREF PRIVACY POLICY

Please read this carefully. It provides summary information about the privacy policy of TIAA-CREF Tuition Financing, Inc., TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc. (collectively referred to as “TIAA-CREF”). The TIAA-CREF privacy policy concerns nonpublic personal information (“personal information”) that TIAA-CREF may have about current and former Account Owners in the Minnesota College Savings Plan (the “Plan”).

TIAA-CREF may collect personal information about you from various sources. That includes personal information that you give on: the Application; Plan forms; and interactive tools. It may also include personal information about your participation in the Plan, such as your Investment Options. TIAA-CREF may also obtain certain of your personal information from third parties, such as consumer reporting agencies.

We use your personal information to effect your investment in the Plan and to effect related services. When you complete the Application, you may opt to receive information about other financial products and services offered by TIAA-CREF and its affiliates. If so, your personal information may be shared with these affiliates so that they can mail you their materials (“affiliate materials”). These affiliates include: insurance companies; broker/dealers; investment companies; investment advisors; and a trust company. Your personal information also is available to the Office in its role as Administrator.

TIAA-CREF limits access to your personal information to those employees who must know it to provide Plan-related services. TIAA-CREF may also give your personal information to service providers: who process your transactions; mail you Plan documents and affiliate materials; or enhance your Plan benefits.

We protect your personal information by physical, electronic and procedural safeguards as required by federal and state laws.

TIAA-CREF does not disclose your personal information to any other person outside of the Plan, unless you consent or it is permitted under applicable federal and state laws. TIAA-CREF may also disclose your personal information if it is allowed or required by its contract with the Office. With your consent or if allowed by law, we will provide your personal information to the financial advisor you designate.

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NOTICE OF PRIVACY POLICY OF THE MINNESOTA COLLEGE SAVINGS PLAN

The following notice provides important information about the reasons that the Minnesota College Savings Plan (the “Plan”) has requested certain information from you on your Application and other forms for the Plan and the way such information will be used by the Plan.

Section 7(b) of the Federal Privacy Act of 1974 (5 U.S.C.A. Section 552a note, Pub Law 93-579 Section 7) requires the State of Minnesota to disclose to you whenever your Social Security Number or Taxpayer Identification Number is requested, whether providing such information is mandatory or voluntary, the statutory or other authority by which the information is solicited, and the uses that the State of Minnesota will make of such information. Accordingly, you are hereby informed that the furnishing of your and your Beneficiary’s Social Security Number or Taxpayer Identification Number on an Application and other Plan forms is mandatory in that failure to provide it will prevent participation in the Plan. Your and your Beneficiary’s Social Security Number or Taxpayer Identification Number are requested pursuant to legal authority contained in the United States Code, Title 42, Section 405(c)(2) (C)(i); Internal Revenue Code of 1986, Section 6109(a); Proposed Treasury Regulation Section 1.529-4(b)(3)(i) and (c)(2)(i); and Internal Revenue Service Notice 2001-81. Your and your Beneficiary’s Social Security Number or Taxpayer Identification Number will be used to verify identity, as an identifier for your Account in the Plan so that all necessary data is accurately recorded, and for federal and State tax administration purposes involving Sections 529(b)(6) and (d) of the Internal Revenue Code of 1986. Your Beneficiary’s Social Security Number or Taxpayer Identification Number will also be provided to any Eligible Educational Institution that receives a direct distribution of a payment of Qualified Higher Education Expenses for the Beneficiary, so that the institution can verify your Beneficiary’s identity.

Pursuant to Minnesota Statutes, Section 13.02, subdivision 12 and Section 13.04, subdivision 2, you are hereby informed that the information that you supply on an Application, other Plan form, or on the Plan Web site is defined as private data on individuals and may not be disclosed to third parties without the informed consent of the person to whom it pertains, unless the information is authorized or required to be disclosed by Minnesota law, or other state or federal law. The purpose of requesting the information on the Application, other Plan form, or on the Plan Web site is to establish and administer a qualified tuition savings Account in the Plan according to the guidelines established under Section 529 of the Internal Revenue Code and by the State of Minnesota in Minnesota Statutes, Section 136G.01, et seq. Failure to provide the information requested on an Application or other Plan form will prevent your participation in the Plan. In order to establish and maintain a qualified tuition savings Account in the Plan for you, the information that you provide on the Application, other Plan form, or on the Plan Web site may be shared with other public and private individuals and entities for that sole purpose. Neither the Minnesota Office of Higher Education nor the Minnesota State Board of Investment discriminates on the basis of disability in the admission or access to, or treatment or employment in, their programs or activities.

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ADDENDUM C – IMPORTANT DEFINED TERMS

The Disclosure Booklet and Participation Agreements are intended to be as clear and understandable as possible. However, certain words and terms used throughout the Disclosure Booklet carry special meanings in connection to the Plan. These important terms are included here for your convenient reference. Please refer to the text throughout the Disclosure Booklet for a more complete discussion of these terms.

Account An Account in the Plan opened by an Account Owner to provide funds for the Qualified Higher Education Expenses of the Beneficiary.

Account Owner/You An owner of an Account in the Plan.

Additional Tax A 10 percent federal tax imposed on the earnings portion of Non-Qualified Withdrawals.

Age Bands Groupings of Beneficiaries based on age for purposes of allocating contributions under the Managed Allocation Option.

Application The application to open an Account.

Beneficiary Beneficiary for an Account as designated by the Account Owner.

Board The State Board of Investment of the State of Minnesota, which invests the funds of the Plan.

Declared Interest Rate The rate of interest credited to the Board on assets held in the Funding Agreement for the Guaranteed Option, which combines the minimum interest rate of 3 percent per annum with such additional interest rates that TIAA-CREF Life may declare for periods of up to 12 months.

Disclosure Booklet The Plan Disclosure Booklet.

Dormant Account An Account to which no contributions have been made for at least three consecutive years and for which Account statements mailed to the Account Owner are returned as undeliverable.

Eligible Educational Institutions Accredited, postsecondary educational institutions eligible to participate in a program under Title IV of the Higher Education Act of 1965 that offer credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree or another recognized postsecondary credential, including certain proprietary institutions and postsecondary vocational schools and certain institutions in foreign countries.

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Estimated Underlying Fund Expenses

For each Investment Option (with the exception of the Guaranteed Option), an amount which is based on a weighted average of each underlying Mutual Fund’s expense charge as of February 1, 2007 in accordance with the asset allocation for such Investment Option.

Funding Agreement

The current funding agreement issued by TIAA-CREF Life to the Board that guarantees a return of principal and a minimum interest rate of 3 percent per annum with respect to the Guaranteed Option.

Fund/Mutual Fund An investment portfolio of the Institutional Class of The TIAA-CREF Institutional Mutual Funds.

Funds/Mutual Funds The Institutional Class of The TIAA-CREF Institutional Mutual Funds.

Investment Options The investment options to which you may allocate your contributions and any earnings on such contributions.

IRC The Internal Revenue Code of 1986, as amended.

IRS Internal Revenue Service.

Management Agreements Agreements under which the Office and the Board have engaged TFI to serve as the Plan Manager.

Matching Grants A grant of money (not to exceed $400 annually) that is awarded to Beneficiaries who satisfy certain conditions, including without limitation, family income limits and Minnesota state residency.

Matching Grant Account An Account containing only Matching Grant funds and earnings thereon that is owned by the State of Minnesota and linked to the pertinent Account Owner’s Account in the Plan for payment of the Beneficiary’s Qualified Higher Education Expenses.

Maximum Account Balance Limit The total aggregate account balance of your Account and all other Accounts for the same Beneficiary, beyond which you are prohibited from making additional contributions (currently $235,000).

Member Of the Family Any of the following relations to a Beneficiary: (1) a son or daughter, or a descendant of either; (2) a stepson or stepdaughter; (3) a brother, sister, stepbrother or stepsister; (4) the father or mother, or ancestor of either; (5) a stepfather or stepmother; (6) a son or daughter of a brother or sister; (7) a brother or sister of the father or mother; (8) a son-in-law,

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daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (9) the spouse of any of the foregoing or the spouse of the Beneficiary; or (10) a first cousin of the Beneficiary. A child includes a legally adopted child, and a brother or sister includes a half-brother or half-sister.

Military Academy The United States Military Academy, the United States Naval Academy, the United States Air Force Academy, the United States Coast Guard Academy or the United States Merchant Marine Academy.

NAV The net asset value per share of each Mutual Fund.

Non-Qualified Withdrawal Any withdrawal from an Account other than: (1) a Qualified Withdrawal (see definition below); (2) a withdrawal paid to a beneficiary of the Beneficiary or to the estate of the Beneficiary on or after the Beneficiary’s death; or due to the Beneficiary’s disability; or made on account of a scholarship award to, or attendance at a Military Academy by, the Beneficiary; or (3) a Rollover Distribution.

Office Minnesota Office of Higher Education of the State of Minnesota, which administers the Plan.

Participation Agreement An agreement to open an Account in the Plan between the Board and the Office, on the one hand, and an individual, entity, custodian or Trustee for a Minor, on the other hand. Your rights and obligations as an Account Owner are set forth in the Participation Agreement.

Plan The Minnesota College Savings Plan.

Plan Manager TIAA-CREF Tuition Financing, Inc. (“TFI”).

Plan Manager Fee For its services as Plan Manager each Investment Option (with the exception of the Guaranteed Option) pays TFI an annual management fee equal to the stated percentages of the average daily net assets held by that Investment Option. The percentages range from 0.315 percent to 0.50 percent.

Qualified Higher Education Expenses

Tuition, certain room and board expenses, fees and the cost of books, supplies and equipment required for the enrollment or attendance of a Beneficiary at an Eligible Educational Institution.

Qualified Withdrawal Under federal law, a distribution from your Account that is used to pay the Qualified Higher Education Expenses of the Beneficiary.

Rolling Date The date on which allocations in the Managed Allocation Option are moved from one Age Band to the next Age Band. Currently, these dates are March 20, June 20, September 20, or

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December 20 (or the first business day thereafter).

Rollover Distribution Withdrawal of funds from an Account in the Plan or from an account in another qualified tuition program, followed within 60 days by deposit of the amount withdrawn to a new or existing Plan Account or to an account in another qualified tuition program for a Beneficiary that is a Member of the Family of the original Beneficiary; provided, however, a transfer of funds between a Plan Account and an account in another qualified tuition program for the same Beneficiary is permitted once every 12 months without incurring Minnesota or federal income tax, including the Additional Tax. The Maximum Account Balance Limit applies.

State The State of Minnesota.

Total Annual Asset Based Fees The Estimated Underlying Fund Expenses plus the Plan Manager Fee.

Unit A share of the assets held in the Plan.

Unit Value The value of a unit of an Investment Option in the Plan. Unit Value is calculated by dividing (a) the dollar value of an Investment Option’s assets less any liabilities (including management fees) allocated to that Investment Option by (b) the number of outstanding Units of such Investment Option.

UGMA Uniform Gifts to Minors Act.

UTMA Uniform Transfers to Minors Act.

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Toll-Free Telephone Number: 1 877 338-4646

Address: TIAA-CREF Tuition Financing, Inc., P.O. Box 64028, St. Paul, Minnesota 55164-0028

Web site: www.mnsaves.org

OBTAINING ADDITIONAL INFORMATION

Learn more about the Plan by visiting our Web site: www.mnsaves.org.

You may reach a customer service representative to answer your questions, to address your complaints, or to request an Application by calling the Plan Manager toll-free at 1 877 EDU 4 MIN (1 877 338-4646). Questions, complaints and requests may also be sent in writing to TIAA-CREF Tuition Financing, Inc., P.O. Box 64028, St. Paul, Minnesota 55164-0028.