Kentucky Education Savings Plan Trust

Investment Options

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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 five investment options. Effective September 2, 2008, you can invest new contributions in any one or combination of these five investment options: the Managed Allocation Option, the Active Equity Option, the Equity Index Option, the Fixed Income Option, and 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.

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 KESPT account for a different beneficiary. (See the KESPT Disclosure Booklet and Participation Agreements (PDF, 961KB) 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.


Managed Allocation Option 
Investing in the Managed Allocation Option follows the method of using the number of years an investor has for saving to determine the appropriate investment allocation. The Managed Allocation Option is the core investment for the Kentucky Education Savings Plan Trust. Although there is no guarantee that the investment objectives will be met, this option offers the opportunity to invest aggressively when the beneficiary is young, and over time, more conservatively, thus creating a more balanced approach. The Plan allocates your contributions, together with any return on your contributions, under this investment option among the TIAA-CREF Funds - Institutional Class shown below. Aged-based investment portfolios combine equity, real estate, fixed income, and money market mutual funds offered by the TIAA-CREF Funds - Institutional Class. Younger beneficiaries will have a higher exposure to equities and real estate investments which will decrease significantly as they approach college age, as the following charts illustrate:



Allocations for all investments are as of September 2008. Allocations are reviewed and adjusted periodically.

Active Equity Option 
The Plan allocates your contributions, together with any return on your contributions, under this investment option among the TIAA-CREF Funds - Institutional Class shown below. Unlike the Managed Allocation Option, the allocation mix for this investment option will not be changed to reflect the age of the designated beneficiary as he/she approaches enrollment in an eligible educational institution.

The Active Equity Option seeks to provide a favorable long-term total return, mainly from capital appreciation, by investing in a combination of actively managed equity Mutual Funds. Assets in this Investment Option are allocated to Mutual Funds that invest heavily in domestic and foreign equity securities, which carry a high level or risk, but offer potentially greater returns than could be achieved by investing in more conservative investments. This Investment Option may be appropriate for you if you can tolerate a higher level of risk and corresponding fluctuations in value and if you have a long-term investment horizon. This Investment Option may be used in conjunction with substantial college savings in less volatile investments (e.g., fixed income) or combined with other Investment Options offered by the Plan to create a balanced and diversified portfolio.


Allocations for all investments are as of September 2008. Allocations are reviewed and adjusted periodically.


Equity Index Option
The Plan allocates your contributions, together with any return on your contributions, under this investment option among the TIAA-CREF Funds - Institutional Class shown below. Unlike the Managed Allocation Option, the allocation mix for this investment option will not be changed to reflect the age of the designated beneficiary as he/she approaches enrollment in an eligible educational institution.

The Equity Index Option seeks to provide a favorable long-term return, mainly from capital appreciation, by investing in equity index Mutual Funds.  Equity index Mutual Funds attempt to approximate the performance of a particular broadly-defined market. 

Assets in this Investment Option are allocated to Mutual Funds that invest heavily in domestic and foreign equity securities, which carry a high level of risk, but offer potentially greater returns than could be achieved by investing in more conservative investments. This Investment Option may be appropriate for you if you are seeking to track the performance of the market indexes represented by its underlying Mutual Funds, provided that you have a long-term investment horizon and can tolerate a higher level of risk and corresponding fluctuations in value. It may also be used in conjunction with substantial college savings in less volatile investments (e.g., fixed-income) or combined with other Investment Options offered by the Plan to create a balanced and diversified portfolio..

 


Allocations for all investments are as of November 2008. Allocations are reviewed and adjusted periodically.

Fixed Income Option 
The Fixed Income Option is designed for Account Owners who are willing and able to accept some volatility in returns in order to attempt to achieve a long-term rate of return potentially higher than offered through less volatile investment such as the Guaranteed Option. It may not be appropriate as a single investment option, but may provide a useful means by which to obtain incremental exposure to fixed-income markets as part of an overall college savings strategy.


Allocations for all investments are as of September 2008. Allocations are reviewed and adjusted periodically.


Guaranteed Option 
Your contributions to the Guaranteed Option, together with any return on your contributions will be allocated to a vehicle that guarantees the Kentucky Education Savings Plan Trust both principal and a minimum annual interest rate of 3%, plus the opportunity for additional returns. The guarantee of a minimum rate of interest is made to the Kentucky Education Savings Plan Trust by TIAA-CREF Life Insurance Company, but is not made directly to the account owner or beneficiary. This investment option provides the stability that people may want for a portion of their college investment.


Underlying TIAA-CREF Funds - Institutional Class 
Following is the list of underlying TIAA-CREF Funds - Institutional Class. For the Managed Allocation, Active Equity Option, Equity Index Option, and the Fixed Income Option an investment in KESPT is not the same as a direct investment in the mutual funds. Please read the prospectus for the TIAA-CREF Funds - Institutional Class for more information.
  • Large Cap Growth Index Fund
  • S&P 500 Index Fund
  • Equity Index Fund
  • Small Cap Blend Index Fund
  • Large-Cap Value Index Fund
  • Growth Equity Fund
  • Large-Cap Value Fund
  • Small-Cap Equity Fund
  • International Equity Fund
  • Real Estate Securities Fund
  • Bond Fund
  • Inflation Linked Bond Fund
  • Money Market Fund 

 

Please read the prospectus for the TIAA-CREF Funds - Institutional Class before investing. However, keep in mind that an investment in the Kentucky Education Savings Plan Trust is not the same as a direct investment in the underlying mutual funds.

 

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For informative articles on planning and investing, visit our Parent Resources section.

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The tax information contained on the Kentucky Education Savings Plan Trust (the Plan) Web site is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed in the Web site. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

The Plan is administered by the Kentucky Higher Education Assistance Authority. TIAA-CREF Tuition Financing, Inc. (TFI) serves as Program Manager. TFI's affiliate, TIAA-CREF Individual & Institutional Services, LLC, is the distributor.

The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating information you consider important in making an investment choice, the ultimate decision is up to you. It is a good idea to revisit your investment strategy periodically as your goals, personal financial situation, and market conditions change.

Consider the investment objectives, risks, charges and expenses before investing in the Plan. Please call toll-free 1-877-KY TRUST (1-877-598-7878) for a Disclosure Booklet containing this information. Read it carefully.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

The Commonwealth of Kentucky, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return except for TIAA-CREF Life Insurance Company’s guarantee to the Kentucky Education Savings Plan under the funding agreement for the Guaranteed Option. Account value will fluctuate based upon a number of factors, including general market conditions.

The Plan Web site is for informational purposes only, and does not constitute an offer to sell or solicitation of an offer to buy any security that may be referenced on the site. Such offer or solicitation can be made only through the Disclosure Booklet.

The Plan Web site contains links to other Web sites. Neither the Plan Trust nor TFI and its affiliates are responsible for the content of those other Web sites. The accuracy of information on those sites cannot be confirmed.

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© 2008 TIAA-CREF Tuition Financing Inc.