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Investment Options

The right college financing strategy may be one of the most important investment decisions you will make. What if you're not an investment professional? We know most people aren't, so we've set up a choice of seven investment options. You can invest new contributions in any one or combination of these investment options: Moderate Age-Based Allocation Option, Conservative Age-Based Allocation Option, Aggressive Age-Based Allocation Option, Balanced Option, 100% Equity Option, 100% Fixed Income Option, and the Principal Plus Interest Option (formerly the Guaranteed Option).

These investment options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs.

• Review Investment Performance
• Fees and Expenses
• Read the MESP Disclosure Booklet and Participation Agreements (PDF, 476KB)

Changing Your Investments
Once you invest in a particular investment option, you can transfer contributions and any earnings to another investment option once per calendar year or upon a transfer of funds to a MESP account for a different beneficiary. (See the MESP Disclosure Booklet and Participation Agreements (PDF, 476KB) for more information.)

Periodically Review Your Investments
It's a good idea to periodically re-evaluate your investment strategy as your goals, investment horizon, and personal situation change - for example, annually at tax time, on a yearly basis if your income changes, or upon the birth of another child.

Moderate Age-Based Allocation Option
The Moderate Age-Based Allocation Option was formerly known as the Managed Allocation Option. This is the core Investment Option offered under MESP. The investment objective of this Investment Option is to earn a rate of return that is greater than the rate of increase in the costs of higher education while limiting the risk of losing principal.

Because this allocation approach provides a balanced and diversified investment, many Account Owners may want to pursue this Investment Option as their single choice for investing, in order to achieve long-term growth. This option may be best for an investor who can invest in MESP long-term and can tolerate some level of risk.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

Conservative Age-Based Allocation Option
This Investment Option invests in the same underlying Funds as the Moderate
Age-Based Allocation Option. However, the initial contributions to this Investment Option are less heavily invested in equities and real estate than in the Moderate Age-Based Allocation Option. While the Conservative Age-Based Allocation Option maintains the investment objective of earning a rate of return that is greater than the rate of increase in the costs of higher education while limiting the risk of losing principal, it is less likely to keep pace with rising tuition rates because with less risk and lower volatility the investment returns are generally lower.

This Investment Option may be a good choice for investors who can seek lower risk and volatility in exchange for lower potential returns over time. It may also be appropriate for investors who already have substantial college savings in more volatile investments.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

The Aggressive Age-Based Allocation Option has a higher risk of losing principal than the Moderate Age-Based Allocation Option but is more likely to keep pace with rising tuition rates. In return for greater opportunity for reward, this investment also has possible heightened volatility. Thus, this Investment Option may be a good choice for investors who can tolerate greater risk and volatility in exchange for higher potential returns over time. It may also be appropriate for investors who already have substantial college savings in less volatile investments. This Option may also be considered by Account Owners who intend to pursue enrollment at a later than typical college entrance age.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

100% Equity Option
MESP allocates your contributions, together with any return on your contributions, under this Investment Option among the TIAA-CREF Institutional International Equity Fund, the TIAA-CREF Institutional Mid-Cap Growth Fund, the TIAA-CREF Institutional Mid-Cap Value Fund, the TIAA-CREF Institutional Small-Cap Equity Fund, the TIAA-CREF Institutional Large-Cap Value Index Fund and the TIAA-CREF Institutional S&P 500 Index Fund.

The 100% Equity Option may be a good choice 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 if you already have substantial college savings from less volatile investments (i.e., fixed income), if you have a longer time horizon or if you want a balanced account by combining this option with the more conservative Moderate Age-Based Allocation Option.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

100% Fixed Income Option
MESP allocates your contributions, together with any return on your contributions, under this Investment Option between the TIAA-CREF Institutional Bond Fund and the TIAA-CREF Institutional Inflation-Linked Bond Fund.

Because of a variety of risks associated with fixed income investments, this Investment Option may be considered by Account Owners who are willing and able to accept some volatility in returns in order to pursue a long-term rate of return potentially higher than that offered through less volatile investments. Though this Investment Option may not be appropriate as a single investment option for some Account Owners, it can provide a useful means by which to obtain incremental exposure to fixed income markets as part of an overall college savings strategy. It may also serve as a useful complement to investments in other Investment Options offered by MESP.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

Balanced Option
MESP allocates your contributions, together with any return on your contributions, under this Investment Option among the TIAA-CREF Institutional S&P 500 Index Fund, TIAA-CREF Institutional Mid-Cap Growth Fund, TIAA-CREF Institutional Mid-Cap Value Fund, TIAA-CREF Institutional Small-Cap Equity Fund, TIAA-CREF Institutional International Equity Fund, TIAA-CREF Institutional Real Estate Securities Fund, TIAA-CREF Institutional Bond Fund and the TIAA-CREF Institutional Inflation-Linked Bond Fund.

This Investment Option is designed to appeal to moderately conservative and moderately aggressive Account Owners who are willing to accept and can tolerate a degree of volatility in exchange for potentially higher returns over time. This Investment Option may be appropriate for use as a single investment option, or for use in conjunction with other Investment Options offered by MESP.

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically.

Principal Plus Interest Option
Contributions under this Investment Option are allocated to the Funding Agreement issued by TIAA-CREF Life to MESP. The current Funding Agreement is an insurance contract which provides MESP with a guaranteed return of principal and an annual minimum rate of return, with the opportunity for additional returns. The  guarantee is to MESP, not directly to account owners. The rate of any additional returns is declared in advance by TIAA-CREF Life for a period of up to 12 months and is not guaranteed for future periods. However, MESP cannot predict the amount of any such additional returns under the Funding Agreement beyond such 12-month period. The minimum rate over the term of the Funding Agreement will not be less than 1% nor greater than 3% and will be reset each year beginning on October 1, 2007. Please refer to the Disclosure Booklet for more detailed information regarding the calculation on the minimum rate.

Effective October 1, 2007, accumulations under the Funding Agreement for the Principal Plus Interest Option as of September 30, 2007 will be credited to MESP with an effective annual interest rate of 4.00%, and are guaranteed to earn this rate through September 30, 2008, subject to the claims-paying ability of TIAA-CREF Life Insurance Company. MESP will be credited with an effective annual interest rate of 4.00% on contributions received and earnings on such contributions under the Funding Agreement for the Principal Plus Interest Option from October 1, 2007 until further notice and are guaranteed to earn this rate through September 30, 2008, subject to the claims-paying ability of TIAA-CREF Life Insurance Company.

The Principal Plus Interest 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.

Underlying TIAA-CREF Institutional Mutual Funds
Following is the list of underlying TIAA-CREF Institutional Mutual Funds: for the Managed Allocation Option and the 100% Equity Option. An investment in MESP is not the same as a direct investment in the mutual funds. For example, there may be differences in expenses. Please read the prospectus for the TIAA-CREF Institutional Mutual Funds for more information.

The TIAA-CREF Institutional Money Market Fund is not insured or guaranteed by the federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to maintain a stable net asset value of $1.00 per share, you can lose money by investing.

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