Capital Preservation Option
|100.00%||NexBank High Yield Savings|
The Capital Preservation Option seeks income consistent with the preservation of principal.
The option invests 100% of its assets in the NexBank High-Yield Savings Account (HYSA). The HYSA is held in an omnibus savings account insured by the FDIC, which is held in trust by KHEAA at NexBank. Investments in the Capital Preservation Option earn a varying rate of interest. Interest on the HYSA will be compounded daily based on the actual number of days in a year (typically, 365/365 and 366/366 in leap years) and will be credited to the HYSA on a monthly basis. The interest rate is expressed as an Annual Percentage Yield (APY). The HYSA APY will be reviewed by NexBank on a periodic basis and may be recalculated as needed at any time. Investments in the Capital Preservation Option are pooled into the FDIC-insured omnibus savings account held in trust KHEAA at NexBank.
Except for the Capital Preservation Option, investments in KY Saves 529 are not insured by the FDIC. FDIC insurance is provided for the Capital Preservation Option only, which invest in an FDIC-insured omnibus savings account held in trust by KHEAA at NexBank. Contributions to and earnings on the investments in the Capital Preservation Option are insured by the FDIC on a pass-through basis to each Account Owner up to the maximum amount set by federal law – currently $250,000. The amount of FDIC insurance provided to an Account Owner is based on the total of: (a) the value of an Account Owner’s investment in the Capital Preservation Option; and (b) the value of all other accounts held by the Account Owner at NexBank, as determined by NexBank and FDIC regulations. Neither KHEAA, the Commonwealth of Kentucky, nor the Program Manager or its affiliates are responsible for determining how an Account Owner’s investment in the Capital Preservation Option will be aggregated with other accounts held by the Account Owner at NexBank for purposes of the FDIC insurance.
No Other Guarantees
There is no other insurance and there are no other guarantees for the Capital Preservation Option. Therefore, like all of the options, neither your contributions into the Capital Preservation Option nor any investment return earned on your contributions are guaranteed by KHEAA, the Commonwealth of Kentucky, or the Program Manager or its affiliates. In addition, the Capital Preservation Option does not provide a guarantee of any level of performance or return.
To the extent that FDIC insurance applies, the option is primarily subject to income risk. Income Risk is the risk that the return of the underlying FDIC-insured HYSA will vary from week to week because of changing interest rates and that the return of the HYSA will decline because of falling interest rates.
Total Annual Asset-Based Fee
The Total Annual Asset-Based Fee is 0.20% as of May 31, 2020.