The Tennessee Education Lottery Scholarship (TELS) program was designed to meet the unique needs of the state of Tennessee by incorporating the hallmark elements of existing merit-based aid programs in other states. Developed through a process involving elected officials and members of the academic community, the TELS program aims to address the following broad public policy objectives: (1) Improve academic achievement in high school through scholarship incentive; (2) Provide financial assistance as a means of promoting access to higher education; (3) Retain the state's "best and brightest" students in Tennessee colleges and universities; and (4) Enhance and promote economic and community development through workforce training. The Tennessee Education Lottery began operations on January 20, 2004. Lottery proceeds fund scholarships for Tennessee students attending eligible public or private colleges and universities across the state. This report is divided into four major sections: (1) "Program Overview and Recipient Demographics" describes the program's objectives, eligibility requirements, and size and scope; (2) "Scholarship Renewal" describes the rates at which freshman cohorts receiving various types of scholarships renewed those awards, focusing particularly on differences in scholarship renewal across levels of family income and academic preparation; (3) "College Retention" longitudinally tracks the Fall 2004 first-time freshman class through their fifth year of college and/or graduation, with or without the scholarship; and first-to-second year retention of all classes, with an emphasis on the Fall 2008 first-time freshman class; and (4) "Best and Brightest" examines student matriculation patterns prior to and following creation of the lottery scholarship program. Appendices include: (1) Lottery Participation of Tennessee Residents 19 and Under Enrolled in Public Institutions as First-time Freshmen: 2004-2009; (2) Lottery Scholarship Receipt by Gender and Institution, Fall 2009; (3) Lottery Scholarship Receipt by Race/Ethnicity and Institution, Fall 2009; (4) Lottery Scholarship Receipt by Family Income and Institution, First-time Freshmen, Fall 2009; (5) Qualification Standards Met by Fall 2009 First-time Freshman TELS Recipients, by Institution; (6) Scholarship Renewal Rates by Award Type and Initial Postsecondary Institution Attended: TELS First-time Freshmen Fall 2004 through Fall 2008; (7) Cumulative Scholarship Renewal Rates by Institution, All TELS Types, TELS First-time Freshmen Fall 2004; and (8) Average ACT Composite Scores of Tennessee Residents 19 and Under Enrolled in Public Institutions as First-time Freshmen: 2004-2009. (Contains 22 tables, 5 figures, and 4 footnotes.)