529 California

Fidelity Investments is the current program manager of California's ScholarShare savings plan, which was under TIAA-CREF Tuition Financing, Inc. up until April 2006. TIAA-CREF provided a provision for the "Guaranteed Option" in its "California's 529 plans".

Under a guaranteed option, an investor's principal amount is well protected by the agency, while providing some of the investment growth. The agency provides a minimum cover rate for the investments. Plus, there is no limit on the holding period.

However, the present 529 plan in California does not provide any guarantee on the principal deposit or on the return of investment. It does not guarantee a gain in the declining market. But the plan does have several good provisions for investment. They include:

· 2 age-based asset allocation options · 6 static portfolios · 100% equity option · A social choice portfolio

The new plan also offers 24/7 custom service to the investors. It offers lower costs, online help as well as guidance for investment and a much broader range of options. The current ScholarShare Plan fees are as following:

For Index Fund Portfolios: 0.50% of assets For Social Choice Portfolio: 0.80% of assets For Actively-Managed Fund Portfolios: 0.72% to 1.09% of assets

And for those who had opted for the guaranteed option, fees will be reflected in the rate as previously mentioned.

To understand this rate structure better, you must know what does the change of program managers from TIAA-CREF Tuition Financing, Inc to Fidelity Investments means. First of all, all the assets from the previous program manager will be moved to the new program manager. That is, securities held by the last program manager will be sold out and the subsequent new securities will be purchased by the new program manager. This selling and purchasing of securities will induce a one-time transaction cost. This cost will be absorbed by the ScholarShare Plan Accounts.

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