Fees and Expenses
The following table describes the fees and expenses that you pay if you open and contribute to a particular Investment Option in the Kentucky Education Savings Plan Trust (KESPT). These fees are indirectly paid out of the assets of your account. Except for the fees listed below, there are currently no other fees, charges or penalties imposed by or payable to the Plan in connection with opening or maintaining an account. The Board reserves the right to change the current fees, or to impose new or additional fees, expenses, charges or penalties in the future.
| Annual Asset-Based Fees | ||||||
|---|---|---|---|---|---|---|
| Investment Option | Estimated Underlying Mutual Fund Expenses(1) | Program Manager Fee(2)(3) | State Fee | Total Annual Asset-Based Fees(4) | ||
| Managed Allocation Option(5) | ||||||
| Age Band 0-3 Years | 0.16% | 0.49% | None | 0.65% | ||
| Age Band 4-7 Years | 0.16% | 0.49% | None | 0.65% | ||
| Age Band 8-11 Years | 0.16% | 0.49% | None | 0.65% | ||
| Age Band 12-14 Years | 0.16% | 0.49% | None | 0.65% | ||
| Age Band 15-17 Years | 0.18% | 0.47% | None | 0.65% | ||
| Age Band 18 and Over | 0.19% | 0.46% | None | 0.65% | ||
| Active Equity Option | ||||||
| 0.53% | 0.38% | None | 0.91% | |||
| Equity Index Option | ||||||
| 0.09% | 0.47% | None | 0.56% | |||
| Balanced Option | ||||||
| 0.27% | 0.47% | None | 0.74% | |||
| Fixed Income Option | ||||||
| 0.17% | 0.47% | None | 0.64% | |||
| Guaranteed Option(6) | ||||||
| None | None | None | None | |||
(1) For each Investment Option (with the exception of the Guaranteed Option), the figures in this column are based on a weighted average of the expenses of each underlying Fund's expense ratio as reported in the applicable underlying Fund’s most recent prospectus available prior to the date of this Supplement, in accordance with the Investment Option's asset allocation among its underlying Funds. Each Investment Option (with the exception of the Guaranteed Option) indirectly bears its pro rata portion of the underlying Funds' expenses because when fees are deducted from an underlying Fund's assets, the value of the underlying Fund's shares is reduced.
(2) The Program Manager Fee is the only fee deducted from Program assets. This fee may change at any time. Although there are no fees that are deducted from your Account, when you invest in the Program, you indirectly bear a pro rata portion of the Program expenses because when fees are deducted from Program assets, the value of the Program Units is reduced.
(3) Each Investment Option (with the exception of the Guaranteed Option) pays TFI an annualized Program Manager Fee equal to the stated percentage of the average daily net assets held by that Investment Option. However, for the Managed Allocation Option and the Active Equity Option, the percentages listed in this column may fluctuate because generally, if the underlying Fund expenses increase, then the Program Manager Fee decreases.
(4) The Total Annual Asset-Based Fees ("Total Fees") equal the Estimated Underlying Fund Expenses plus the Program Manager Fee. The portion of Total Fees attributable to the Program Manager Fee is assessed over the course of the year against assets in each Investment Option (with the exception of the Guaranteed Option). The portion of Total Fees attributable to Estimated Underlying Fund Expenses is indirectly borne by each Investment Option as discussed in footnote (3). You should refer to the Investment Cost Example for the total assumed investment cost over 1-, 3-, 5-, and 10-year periods.
(5) If the total assets in the Program become equal to or greater than $150 million, the Total Fees for the Managed Allocation Option will be reduced by 0.05%./p>
(6) The Guaranteed Option does not pay a Program Manager Fee. TFI does, however, receive from TIAA-CREF Life, the issuer of the Funding Agreement, an annual asset based fee to pay TFI for distribution, administration, and other services that TFI provides for this Investment Option. TIAA-CREF Life may discontinue this fee at any time.
Investment Cost Example
The example in the following table is intended to help you compare the cost of investing in the different Investment Options over various periods of time. This hypothetical example assumes that:
- You invest $10,000 in an Investment Option for the time periods shown below.
- Your investment has a 5% compounded return each year, except for the Guaranteed Option, which is assumed to have a 3% compounded return each year.
- You withdraw the assets from the Investment Option at the end of the specified periods for Qualified Higher Education Expenses.
- Total annual asset-based fees remain the same as shown in the Fee Table above.
- The example does not consider the impact of any potential state or federal taxes on the redemption.
Although your actual costs may be higher or lower, based on the above assumptions your costs would be:
| Investment Cost Example | ||||
|---|---|---|---|---|
| Investment Option | Approximate Cost of $10,000 Investment |
|||
| One Year | Three Years | Five Years | Ten Years | |
| Managed Allocation Option | ||||
| Age Band 0-3 Years | $67 | $209 | $363 | $812 |
| Age Band 4-7 Years | $67 | $209 | $363 | $812 |
| Age Band 8-11 Years | $67 | $209 | $363 | $812 |
| Age Band 12-14 Years | $67 | $209 | $363 | $812 |
| Age Band 15-17 Years | $67 | $209 | $363 | $812 |
| Age Band 18 and Over | $67 | $209 | $363 | $812 |
| Active Equity Option | ||||
| $93 | $291 | $506 | $1123 | |
| Equity Index Option | ||||
| $57 | $180 | $314 | $703 | |
| Balanced Option | ||||
| $76 | $237 | $413 | $921 | |
| Fixed Income Option | ||||
| $66 | $205 | $358 | $800 | |
| Guaranteed Option | ||||
| $0 | $0 | $0 | $0 | |
The table below indicates that there are no additional fees and expenses deducted from each account/paid directly by the Account Owner.
| Additional Fees | ||||
|---|---|---|---|---|
| Percent | Dollars | |||
| Application Fee | 0% | $0 | ||
| Cancellation Fee | 0% | $0 | ||
| Change in Beneficiary | 0% | $0 | ||
| Change in Investment Options | 0% | $0 | ||
| Other Charges as applicable | 0% | $0 | ||
