Dear Shareholder:

As you are aware, SM&R received notice last year from the Arizona Commission for Postsecondary Education (“the Commission”) of their decision not to renew the contract allowing SM&R to serve as a program manager for the Arizona Family College Savings Program.

However, SM&R did enter into a servicing contract with the Commission to allow SM&R to continue servicing your account until November 17, 2007.  Over the last few months, we have been in contact with the Commission and it is their intent to convert any accounts remaining with SM&R after September 30, 2007 to the Waddell and Reed Invest Ed Program.  Click here to view the letter from the Commission.

Should you not wish for this to happen, there are some additional options: 

• You may move your account to a 529 College Savings Plan of your choice.  To find which plan best suits your needs, we suggest you talk to your financial or tax advisor or you may visit www.savingforcollege.com;
   
• You may rollover your account to another option within the Arizona Family College Savings Program.  For further details, please contact the Commission at (602) 258.2435 or visit www.azhighered.gov;
   
• You may contact your Registered Representative or  call SM&R at (800) 526-8346, option 3. 

We apologize for any inconvenience this may cause you and wish you great success as you plan for your child’s future.  We are honored to have had a hand in helping your family prepare for such an important time in the growth of your children. 

Sincerely,
Securities Management and Research, Inc.

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