JUNE 30, 2017 ANNUAL REPORT. BlackRock CollegeAdvantage 529 Plan. Not FDIC Insured May Lose Value No Bank Guarantee

Transcription

1 JUNE 30, 207 ANNUAL REPORT CollegeAdvantage 529 Plan Not FDIC Insured May Lose Value No Bank Guarantee

2 Table of Contents Independent Auditors Report...3 Management s Discussion and Analysis...5 Statement of Fiduciary Net Position...6 Statement of Changes in Fiduciary Net Position...7 Notes to Financial Statements...8 Combining Statements of Fiduciary Net Position...4 Combining Statements of Changes in Fiduciary Net Position...2 Page Performance information and Fee and Expense information regarding the CollegeAdvantage 529 Plan may be found on s website and can be accessed at and respectively. References to s websites are intended to allow investors public access to information regarding the CollegeAdvantage 529 Plan and do not, and are not intended to, incorporate s website into this report. 2 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

3 Independent Auditors Report To the Board of Directors of the Ohio Tuition Trust Authority: We have audited the accompanying statement of fiduciary net position of CollegeAdvantage 529 Plan (the Program ), a Program of the State of Ohio, as of June 30, 207 and the related statement of changes in fiduciary net position for the year then ended, and the related notes to the financial statements, which collectively comprise the Program s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Program s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Program s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on page 5 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information As discussed in Note of the Notes to Financial Statements, the financial statements present only the Plan and do not purport to, and do not, present the fiduciary net position of the entire Ohio Variable College Savings Trust Fund or the State of Ohio at June 30, 207, or the changes in their fiduciary net position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Combining Statements listed in the table of contents on pages 4 and 2 are supplemental schedules presented for purpose of additional analysis and are not a required part of the basic financial statements. These schedules are the responsibility of the Program s management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such schedules have been subjected to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such schedules directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining Statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. In our opinion, the financial statements referred to above present fairly, in all material respects, the statement of fiduciary net position of the Program as of June 30, 207, and the respective changes in fiduciary net position for the year then ended in accordance with accounting principles generally accepted in the United States of America. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 3

4 Independent Auditors Report Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 9, 207 on our consideration of the Program s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Program s internal control over financial reporting and compliance. Deloitte & Touche LLP Philadelphia, Pennsylvania September 9, BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

5 Management s Discussion and Analysis The Ohio Tuition Trust Authority ( OTTA ) offers and oversees the CollegeAdvantage 529 College Savings Plan ( CollegeAdvantage ) for the State of Ohio. CollegeAdvantage 529 Plan (the Program ) is a subset of overall CollegeAdvantage, offering investment options exclusively through financial intermediaries. In addition, OTTA offers a direct-sold 529 Plan, as a subset of CollegeAdvantage for accounts established without the use of a financial intermediary. These financial statements pertain solely to the Program s investment options that are each referred to individually as an Investment and collectively as the Investment s. As investment manager of the Program, which is offered and overseen by OTTA for the State of Ohio, Advisors, LLC ( ) offers readers of the financial statements of the Program this discussion and analysis of the Program s financial performance for the fiscal year ended June 30, 207. Overview of the Financial Statements The Program s financial statements are prepared in accordance with Governmental Accounting Standards Board ( GASB ) Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. This report consists of two parts: management s discussion and analysis (this section) and the basic financial statements. The basic financial statements consist of a Statement of Fiduciary Net Position, a Statement of Changes in Fiduciary Net Position and Notes to Financial Statements that explain certain information in the financial statements and provide more detailed information. The Statement of Fiduciary Net Position presents information on the Program s assets and liabilities, with the difference between the two reported as fiduciary net position. This statement, along with the Statement of Changes in Fiduciary Net Position discussed below, is prepared using the accrual basis of accounting ) whereby contributions are recognized when enrollment has been successfully completed and all documentation is found to be in good order, 2) withdrawals are recognized when the withdrawal request has been received and all documentation is found to be in good order and 3) expenses and liabilities are recognized when services are provided, regardless of when cash is paid. The Statement of Changes in Fiduciary Net Position presents information showing how the Program s assets changed during the fiscal year. All changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows in future fiscal years. Notes to Financial Statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. Financial Analysis Fiduciary Net Position: The following is a condensed Statement of Fiduciary Net Position for the Program: June 30, 207 June 30, 206 Assets Investments... $5,63,558,566 $4,728,93,462 Receivables... 5,284,097 23,72,364 Cash Total assets ,68,843,022 4,752,634,826 Liabilities Bankoverdraft... 95,369 34,728 Payables... 7,567,559 30,79,627 Total liabilities.... 7,762,928 30,34,355 Total Fiduciary Net Position... $5,6,080,094 $4,722,320,47 Total fiduciary net position represents total contributions from participants since the Program s inception, plus net increases and (decreases) from investment operations, less withdrawals and expenses. Investments make up more than 00% of total fiduciary net position, and consist of 35 Investment s, each of which is invested in one or more underlying funds. Receivables consist of receivables for contributions, underlying funds sold and income receivable. Payables consist of payables for withdrawals, underlying funds purchased, sales fees and accrued expenses for management and administrative services. Changes in Net Position: The following is a condensed Statement of Changes in Fiduciary Net Position for the Program: Year Ended June 30, 207 Year Ended June 30, 206 Additions: Contributions and conversion ofunits... $,03,83,95 $,022,385,28 Increase (decrease) from Investment Operations ,785,477 (36,404,808) Exchangesin... 46,760,463 9,062,249 Total additions...,74,359,35,05,042,722 Deductions: Withdrawals and conversion ofunits...,098,238,50,073,23,232 Expenses after fees waived... 30,600,899 28,868,044 Exchangesout... 46,760,463 9,062,249 Total deductions.....,275,599,52,22,6,525 Net increase (decrease) in fiduciarynetposition ,759,623 (6,8,803) Fiduciary Net Position, beginning ofyear... 4,722,320,47 4,838,439,274 Fiduciary Net Position, end of year... $5,6,080,094 $4,722,320,47 This report presents the operating results and financial status of the Program, which the State of Ohio reports as a fiduciary fund (private purpose trust fund). Fiduciary fund reporting is used to account for resources held for the benefit of parties outside the governmental entity. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 5

6 CollegeAdvantage 529 Plan Statement of Fiduciary Net Position June 30, 207 Assets Investments in underlying funds $ 5,63,558,566 Cash Receivableforcontributions... 2,338,002 Receivable for underlying funds sold ,59 Income receivable ,67,576 Total assets... 5,68,843,022 Liabilities Bank overdraft ,369 Payableforwithdrawals... 2,45,68 Payable for underlying funds purchased... 2,720,666 Accrued program management and OTTA fees ,686 Accruedsalesfees...,809,589 Total liabilities ,762,928 Fiduciary Net Position... $ 5,6,080,094 See Notes to Financial Statements. 6 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

7 CollegeAdvantage 529 Plan Statement of Changes in Fiduciary Net Position Year Ended June 30, 207 Additions Contributions and conversion of units $,03,83,95 Increase from Investment Operations: Dividendincomefromunderlyingfundshares... 8,08,0 Capital gain distributions from underlying fund shares ,564,646 Net realized gain on sales of underlying fund shares... 25,760,262 Net change in unrealized appreciation (depreciation) on underlying fund shares ,379,468 Net increase from investment operations ,785,477 Exchangesin... 46,760,463 Total additions...,74,359,35 Deductions Withdrawalsandconversionofunits...,098,238,50 Expenses: Program management fees.... 9,286,060 OTTAfees ,474 Sales fees: ClassA... 9,0,60 ClassB... 8,89 ClassB... 5,752 ClassC... 0,727,608 ClassC ,05 Total expenses ,963,960 Less program management fees waived (37) Less OTTA fees waived... (39) Less sales fees waived - Class A (02,056) Less sales fees waived - Class B (2) Less sales fees waived - Class C... (260,583) Total expenses after fees waived... 30,600,899 Exchangesout... 46,760,463 Totaldeductions...,275,599,52 Fiduciary Net Position Net increase in fiduciary net position ,759,623 Beginningofyear... 4,722,320,47 Endofyear... $ 5,6,080,094 See Notes to Financial Statements. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 7

8 Notes to Financial Statements. Organization The Ohio Variable College Savings Trust Fund (the Trust ) is comprised of the CollegeAdvantage Programs which are variable return college savings programs that enable individuals to save and invest on a tax-free basis in order to fund future higher education expenses of a child or other beneficiary. The investment options managed by Advisors, LLC ( ) are referred to as the Program. The Program is designed to be a qualified state tuition program under section 529 of the Internal Revenue Code of 986, as amended, and is maintained by the Trustee, Ohio Tuition Trust Authority ( OTTA ), a state agency established under the laws of the State of Ohio. OTTA has selected to provide marketing, investment management, and certain record keeping and administrative services under the terms of an agreement dated June 8, 204 through June 8, 202. The Program has established the following 35 Investment s ( Investment s ), including 5 CollegeAdvantage Investment s, 3 CollegeAdvantage Target-Risk Investment s and 7 Single Strategy Investment s, as follows: Investment s - Conservative Investment (5 separate options based on beneficiary s date of birth) - Moderate Investment (5 separate options based on beneficiary s date of birth) - Aggressive Investment (5 separate options based on beneficiary s date of birth) Target-Risk Investment s - Moderate Portfolio - Growth Portfolio - Aggressive Growth Portfolio Single Strategy Investment s Equity s - Advantage International - Advantage Large Cap Core - Capital Appreciation - Equity Dividend - ishares Core S&P 500 ETF - ishares Core S&P Mid Cap ETF - ishares Core MSCI EAFE ETF - ishares Russell 2000 ETF - Voya Small Company Balanced s - Global Allocation - Multi-Asset Income Fixed Income s - GNMA - High Yield Bond - Inflation Protected Bond - Strategic Income Opportunities - Wells Fargo Advantage Core Bond Money Market - Money Market OTTA is also the administrator of other investment options under the Trust administered by OTTA, which are not covered in these financial statements. These financial statements report on the Investment s, each of which invests in one or more registered Funds, which may include, without limitation, one or more of the following: Funds managed by ( Funds ) - Advantage International Fund - Advantage Large Cap Core Fund - Advantage Large Cap Value Fund - Advantage Small Cap Growth Fund - All-Cap Energy & Resources Portfolio - Basic Value Fund, Inc. - Capital Appreciation Fund, Inc. - Commodity Strategies Fund - Core Bond Portfolio - CoreAlpha Bond Fund - Credit Strategies Income Fund - Emerging Markets Flexible Dynamic Bond Portfolio - Emerging Markets Fund, Inc. - Emerging Markets Long/Short Equity Fund - Energy & Resources Portfolio - Equity Dividend Fund - EuroFund - Flexible Equity Fund - Floating Rate Income Portfolio - Focus Growth Fund, Inc. - Global Allocation Fund, Inc. - Global Dividend Portfolio - Global Long/Short Credit Fund - Global Long/Short Equity Fund - Global Opportunities Portfolio - Global SmallCap Fund, Inc. - GNMA Portfolio - Health Sciences Opportunities Portfolio - High Yield Bond Portfolio - Inflation Protected Bond Portfolio - International Bond Portfolio - International Fund - International Index Fund - International Opportunities Portfolio - Large Cap Focus Growth Fund - Latin America Fund, Inc. - Low Duration Bond Portfolio - Managed Volatility Portfolio - Mid-Cap Growth Equity Portfolio - Mid Cap Value Opportunities Fund - Money Market Portfolio - Multi-Asset Income Portfolio - Natural Resources Trust - Pacific Fund, Inc. - S&P 500 Index Fund - Science & Technology Opportunities Portfolio - Small Cap Growth Equity - Small Cap Growth Fund II 8 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

9 Notes to Financial Statements (continued) - Small Cap Index Fund - Strategic Income Opportunities Portfolio - Tactical Opportunities Fund - T-Fund - Total Return Fund - U.S. Government Bond Portfolio - Value Opportunities Fund - World Gold Fund - World Income Fund, Inc. - TempFund Funds managed by Fund Advisors ( ishares ETFs ) - ishares -3 Year Credit Bond ETF - ishares 20+ Year Treasury Bond ETF - ishares 3-7 Year Treasury Bond ETF - ishares 7-0 Year Treasury Bond ETF - ishares Cohen & Steers REIT ETF - ishares Core Dividend Growth ETF - ishares Core GNMA Bond ETF - ishares Core Long-Term USD Bond ETF - ishares Core MSCI EAFE ETF - ishares Core MSCI Emerging Markets ETF - ishares Core MSCI Europe ETF - ishares Core MSCI Pacific ETF - ishares Core MSCI Total International Stock ETF - ishares Core S&P 500 ETF - ishares Core S&P Mid-Cap ETF - ishares Core S&P Small-Cap ETF - ishares Core S&P Total U.S. Stock Market ETF - ishares Core Short-Term USD Bond ETF - ishares Core Total USD Bond Market ETF - ishares Core U.S. Aggregate Bond ETF - ishares Core U.S. Growth ETF - ishares Core U.S. Treasury Bond ETF - ishares Core U.S. Value ETF - ishares Currency Hedged MSCI EMU ETF - ishares Currency Hedged MSCI Germany ETF - ishares Currency Hedged MSCI Japan ETF - ishares DJ US Basic Material ETF - ishares DJ US Consumer Service ETF - ishares DJ US Consumer Goods ETF - ishares DJ US Energy Sector ETF - ishares DJ US Financial Sector ETF - ishares DJ US Industrial Sector ETF - ishares DJ US Technology Sector ETF - ishares Dow Jones U.S. Real Estate Index ETF - ishares Edge U.S. Fixed Income Balanced Risk ETF - ishares FTSE/Xinhua China 25 Index ETF - ishares High Dividend Equity ETF - ishares iboxx $ Investment Grade Corporate Bond ETF - ishares India 50 ETF - ishares Intermediate Credit Bond ETF - ishares J.P. Morgan USD Emerging Markets Bond ETF - ishares Latin America 40 ETF - ishares MSCI ACWI ETF - ishares MSCI All Country Asia ex Japan ETF - ishares MSCI Australia ETF - ishares MSCI Canada ETF - ishares MSCI EAFE ETF - ishares MSCI Emerging Markets ETF - ishares MSCI EuroZone ETF - ishares MSCI Germany ETF - ishares MSCI Japan ETF - ishares MSCI Pacific ex Japan ETF - ishares MSCI Singapore ETF - ishares MSCI South Korea Capped ETF - ishares MSCI Taiwan ETF - ishares MSCI United Kingdom ETF - ishares Russell 000 Index ETF - ishares Russell 000 Growth Index ETF - ishares Russell 000 Value Index ETF - ishares Russell 2000 Index ETF - ishares Russell 2000 Growth Index ETF - ishares Russell 2000 Value Index ETF - ishares Russell 3000 ETF - ishares Russell Mid-Cap ETF - ishares Russell Mid-Cap Growth ETF - ishares Russell Mid-Cap Value ETF - ishares S&P 500 Growth ETF - ishares S&P 500 Value ETF - ishares S&P Mid-Cap 400 Growth ETF - ishares S&P Mid-Cap 400 Value ETF - ishares S&P Small-Cap 600 Value ETF - ishares U.S. Consumer Goods ETF - ishares U.S. Credit Bond ETF - ishares U.S. Energy ETF - ishares U.S. Financials ETF - ishares U.S. Healthcare ETF - ishares U.S. Industrials ETF - ishares U.S. Oil & Gas Exploration & Production ETF - ishares U.S. Technology ETF Fund managed by Voya Investments, LLC - Voya Small Company Fund Fund managed by Wells Fargo Funds Management, LLC - Wells Fargo Advantage Funds - Core Bond Fund OTTA and can change, at any time, and without any notice, the Underlying Funds, in which the Investment s invest, including adding Underlying Funds that are not listed above. The financial statements of the Funds, the ishares ETFs, Voya Small Company Fund and Wells Fargo Advantage Funds - Core Bond Fund (collectively, the Underlying Funds ) contain additional information about the expenses and investments of the funds and are available upon request. The Investment s offer Class A Units and Class C Units. Each Class of Units has a different fee structure determined by the sales charge and the Annual Sales Fee. The maximum front-end sales charge for Class A Units is 5.25%. Class A Units may be subject to a.00% deferred sales charge on certain withdrawals of investments made within 8 months of the date of contribution that were not subject to an initial sales charge. Class C Units are not subject to a front-end sales charge, BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 9

10 Notes to Financial Statements (continued) but are generally subject to a deferred sales charge of.00% on rollover distributions and other distributions of amounts invested in Class C Units made within one year of the date of contribution, unless the withdrawal qualifies for a waiver. There is no front-end sales charge or deferred sales charge for the Money Market. Class C Units are not available for new contributions, including subsequent contributions from existing account holders of these Units. Each class of Units has a different fee structure determined by the sales charge and the annual sales fee. Any amounts invested in Class C and reallocated to a different Investment will be converted to Class C Units, as applicable, and will be subject to the higher fees and expenses of such Class C units. Once a Class C Unit has been reallocated to another Investment and converted to a Class C Unit, it cannot be converted back to a C Unit. During the year ended June 30, 207, all outstanding units of Class B and Class B converted to Class A Units. Amounts withdrawn from an account for reasons other than payment of qualified higher education expenses generally will be subject to a 0% federal tax penalty on earnings in addition to the income tax that is due. The tax penalty and taxes would be payable directly by the account owner or beneficiary depending on who received the distribution and are therefore not deducted from the amounts withdrawn. The Trust is a private-purpose trust fund, which is a type of fiduciary fund. Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support a government s own programs. Revenues are mainly derived from investment income. Because the Trust is a fiduciary fund, the Program s financial statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Under this method of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flow. 2. Significant Accounting Policies Use of Estimates: The Program s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income and capital gain distributions from the Underlying Funds are recorded on the ex-dividend dates. Income, expenses and realized and unrealized gains and losses are allocated to each class based on its relative net assets. Distributions to Unitholders: Distributions, if any, paid by the Investment s are recorded on the ex-dividend dates. Income Taxes: The Program has been designed to comply with the requirements for treatment as a qualified state tuition program under Section 529 of the Internal Revenue Code, which is exempt from federal and state income tax. Therefore, no provision for income tax is required. 3. Investment Valuation and Fair Value Measurements: Investment Valuation Policies: The Program s policy is to fair value its investments in mutual funds at fair value. Investments in the underlying Funds, Voya Small Company Fund and Wells Fargo Advantage Funds - Core Bond Fund are valued based on the published net asset value of each such Underlying Fund computed as of the close of regular trading on the New York Stock Exchange ( NYSE ) on days when the NYSE is open. Investments in ishares ETFs are valued based on the closing market price on the relevant exchange. Fair Value Hierarchy: Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows: Level Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access Level 2 Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) Level 3 Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each Fund s own assumptions used in determining the fair value of investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments are typically categorized as Level 3. As of period end, the Program s investment in its respective underlying funds was classified as Level. 0 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

11 Notes to Financial Statements (continued) 4. Program and Other Fees Program Management Fee: On June 8, 204, entered into a Services Agreement (the Agreement ) with OTTA to provide certain investment management, marketing and administrative services. Under the Agreement, Investment s accrue daily, and pay monthly, an annual program management fee of 0.9% on the average daily net assets of each Account, subject to possible reductions based on specified asset levels as described in the Program Description. Sales Fee: receives a marketing support fee from each account in connection with the services that it provides to the accounts. The annual sales fee for Class A Units and Class C Units is generally 0.25% and.00% of average daily net position, respectively. The annual sales fee for Class B Units (other than the Money Market ), Class B Units ( Money Market ) and Class C Units is generally.00%, 0.25% and 0.50% of average daily net position, respectively. The annual sales fee for Class B Units is 0.80% for the first six years after contributions and 0.25% thereafter, of the average daily net position. OTTA Fee: OTTA imposes a fee at an annualized rate of 0.02% of the average daily net position of the Investment s. Annual Account Maintenance Fee: An annual account maintenance fee of $25 is typically assessed in December of each year. This fee may be waived under certain circumstances. Refer to the Program Description for further details. These annual fees are paid through processing withdrawals of Investment units. Underlying Fund Fee: Each of the Underlying Funds in which the Investment s invest also has annual operating expenses, including investment management fees and other expenses, which will be deducted by the Underlying Funds. For the year ended June 30, 207, the expense ratios of the Underlying Funds were between 0.05% and.06%. The expense ratios are based on the most recent audited fiscal year or most recent six month unaudited period, whichever period is more current. Investments by the Program in shares of Underlying Funds will be invested in shares that are not subject to any sales load or distribution fees. Sales Charges: For the year ended June 30, 207, Investments LLC, acting as underwriter, received net commissions of $560,68 from the sale of all Class A Units, and received $74,69 in contingent deferred sales charges from withdrawals of Class A, Class B, Class B and Class C Units. During the year ended June 30, 207, the Program management fees, OTTA fees and sales fees were waived for the Money Market to enable the option to maintain a minimum level of daily net investment income. These waivers are shown on the Combining Statements of Changes in Fiduciary Net Position in the Supplemental Schedules. 5. Program Units All beneficial interests in the Investment s are expressed as a number of Program units. Program unit values under each Investment are based on the net position value per share, or closing market price per share, in the case of the ishares Funds, of each of the Underlying Funds in which the Investment is invested. Unit values are determined daily. 6. Change in Investments The following table represents a calculation of the net change in appreciation (depreciation) on investments during the year ended June 30, 207: Valueofinvestmentsatendofyear... $ 5,63,558,566 Lesscostofinvestmentspurchasedduringyear... (3,3,63,58) Pluscostofinvestmentssoldduringyear... 3,267,347,522 Lessvalueofinvestmentsatbeginningofyear... (4,728,93,462) Net change in unrealized appreciation (depreciation) on investments duringyear... $ 390,379, Investment Risks Interest Rate: Certain Underlying Funds invest in debt securities, including bonds, and are subject to interest rate risk. Declining interest rates generally increase the value of existing debt instruments, and rising interest rates generally decrease the value of existing debt instruments. The exposure to interest rate risk is greater with Underlying Funds with longer average effective maturity and average effective duration. The Underlying Funds listed below have a majority of their investments exposed to interest rate risk. As of June 30, 207, the average effective maturity and the average effective duration measured in years are as follows: Average Effective Maturity Average Effective Duration CoreBondPortfolio CreditStrategiesIncomeFund Emerging Markets Flexible Dynamic Bond Portfolio FloatingRateIncomePortfolio Global Long/Short Credit Fund (0.0) GNMAPortfolio HighYieldBondPortfolio Inflation Protected Bond Portfolio LowDurationBondPortfolio Multi-Asset Income Portfolio Strategic Global Bond Fund Strategic Income Opportunities Portfolio TotalReturnFund U.S.GovernmentBondPortfolio ishares-3yearcreditbondetf ishares3-7yeartreasurybondetf ishares7-0yeartreasurybondetf isharescore-5yearusdbondetf ishares Core 0+ Year USD Bond ETF isharescoregnmabondetf isharescoretotalusdbondmarketetf ishares Core U.S. Aggregate Bond ETF isharescoreu.s.treasurybondetf ishares Edge U.S. Fixed Income Balanced Risk ETF BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

12 Notes to Financial Statements (concluded) Average Effective Maturity Average Effective Duration ishares iboxx $ Investment Grade Corporate Bond ETF ishares Intermediate Credit Bond ETF ishares J.P. Morgan USD Emerging Markets Bond ETF ishares U.S. Credit Bond ETF Wells Fargo Advantage Funds - Core Bond Fund Foreign Currency: Certain Underlying Funds ( EuroFund, Global Allocation Fund, Inc., Global Long/Short Credit Fund, Global Long/Short Equity Fund, International Opportunities Portfolio, ishares Core MSCI EAFE ETF, ishares Currency Hedged MSCI Japan EAFE ETF, ishares MSCI EuroZone ETF, ishares MSCI Japan ETF, ishares MSCI United Kingdom ETF) invest in foreign securities and the Program is subject to classification of risk under GASB Statement No. 40, Deposit and Investment Risk Disclosures. Certain additional risks are involved when investing in foreign securities that are not inherent to investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. The following represents the value at June 30, 207 of the investments in certain Underlying Funds which have a significant portion of their investments exposed to foreign currency risk: Investment Value Conservative $ 2,75,799 Conservative $ 3,453,080 Conservative $ 2,436,456 Conservative $ 5,428,95 Conservative7+... $ 9,80,877 Moderate $ 36,899,428 Moderate $ 54,364,98 Moderate $ 70,720,52 Moderate $75,746,642 Moderate7+... $28,96,400 Aggressive $ 29,257,672 Aggressive $ 35,726,670 Aggressive $ 36,359,557 Aggressive $ 40,843,345 Aggressive $ 9,490,30 ModeratePortfolio... $ 83,04,802 GrowthPortfolio... $72,372,70 Aggressive Growth Portfolio.... $ 67,072,87 International Opportunities..... $ 52,85,076 ishares Core MSCI EAFE ETF $ 8,02,353 GlobalAllocation... $354,507,879 Market and Credit Risk: In the normal course of business, the Underlying Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Underlying Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Underlying Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Underlying Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Underlying Funds have unsettled or open transactions fails to be able to perform on its commitments. Financial assets, which potentially expose the Underlying Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Underlying Funds exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Underlying Funds Statements of Assets and Liabilities, less any collateral held by the Underlying Funds. Certain Underlying Funds invest in various derivative instruments. Refer to the prospectuses and financial statements of the Underlying Funds for information on the respective Underlying Fund s investment strategy. The Program s investments consist of shares of the Underlying Funds, rather than individual securities and therefore are not subject to classification by custodial credit risk or disclosure of concentration of credit risk under GASB Statement No. 40. The Underlying Funds are not rated by any nationally recognized statistical rating organization. 8. Subsequent Events Management has evaluated the impact of all subsequent events on the Program through September 9, 207, the date the financial statements were available to be issued, and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements. 2 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

13 Supplementary Schedules BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 3

14 CollegeAdvantage 529 Plan Conservative Investment Combining Statements of Fiduciary Net Position June 30, 207 Conservative 0-5 Conservative 6-9 Conservative 0-2 Conservative 3-6 Conservative 7+ Assets Investments in underlying funds $ 7,833,668 $ 4,353,623 $ 3,068,532 $ 33,209,86 $ 53,983,823 Receivableforcontributions... 2,983 2,764 2,789,845 5,732 Income receivable ,687 0,02,953 29,06 39,978 Total assets... 7,839,338 4,366,489 3,083,274 33,250,722 54,029,533 Liabilities Payableforwithdrawals ,072 2,094,450 24,85 Payable for underlying funds purchased...,622 8,939 0,744 26,947 37,09 Accrued program management and OTTA fees ,354 2,479 2,253 5,658 9,343 Accruedsalesfees... 3,6 4,89 4,652 3,274 23,72 Total liabilities ,636 7,309 9,743 47,329 94,385 Fiduciary Net Position... $ 7,832,702 $ 4,349,80 $ 3,063,53 $ 33,203,393 $ 53,935,48 Computation of Net Position Value and Offering Price Class A,2 Fiduciary Net Position $ 5,460,385 $,478,498 $ 9,96,444 $ 22,797,62 $ 34,962,863 Numberofunitsoutstanding ,670 73, ,590,95,73 3,042,990 Netpositionvalue... $ 9. $ 5.68 $ 2.57 $.68 $.49 OfferingpriceClassA... $ 20.7 $ 6.55 $ 3.27 $ 2.33 $ 2.3 Computation of Net Position Value Class C Fiduciary Net Position $ 2,372,37 $ 2,870,682 $ 3,02,087 $ 0,406,23 $ 8,972,285 Numberofunitsoutstanding... 3,43 93,792 26,48 943,92,750,36 Netpositionvalue... $ 8.05 $ 4.8 $.86 $.02 $ 0.84 Cost of Investments in underlying funds..... $ 6,797,880 $ 3,482,34 $ 2,833,899 $ 32,694,540 $ 53,334,53 Class A Units reflect a front-end sales charge of 5.25%. 2 On October 8, 206, Conservative 0-5 s, Conservative 6-9 s, Conservative 0-2 s, Conservative 3-6 s and Conservative 7+ s Class B Units converted into Class A Units. 4 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

15 CollegeAdvantage 529 Plan Moderate Investment Combining Statements of Fiduciary Net Position (continued) June 30, 207 Moderate 0-5 Moderate 6-9 Moderate 0-2 Moderate 3-6 Moderate 7+ Assets Investments in underlying funds $ 35,73,492 $ 96,978,00 $ 278,452,77 $ 846,892,577 $ 67,487,895 Receivableforcontributions... 0,906 59,98 84, , ,234 Income receivable ,404 4,54 76,5 730, ,899 Total assets... 35,858,802 97,52, ,73, ,845,68 68,223,028 Liabilities Payableforwithdrawals... 8,60 7,949 9,965 79,8 64,940 Payable for underlying funds purchased... 25,278 43,357 97, , ,329 Accrued program management and OTTA fees ,20 33,859 48,004 46,4 07,357 Accruedsalesfees... 49,847 73,585 99,85 265, ,629 Total liabilities ,945 68, ,602,23,422,335,255 Fiduciary Net Position... $ 35,75,857 $ 96,983,692 $ 278,457,837 $ 846,64,259 $ 66,887,773 Computation of Net Position Value and Offering Price Class A,2,3,4,5,6 Fiduciary Net Position $ 00,64,528 $ 45,063,729 $ 23,76,62 $ 676,27,7 $ 464,76,803 Numberofunitsoutstanding... 5,283,02 7,457,025 3,04,6 48,266,27 36,042,504 Netpositionvalue... $ 9.04 $ 9.45 $ 6.38 $ 4.0 $ 2.89 OfferingpriceClassA... $ 20.0 $ $ 7.29 $ 4.79 $ 3.60 Computation of Net Position Value Class C Fiduciary Net Position $ 35,37,329 $ 5,99,963 $ 65,27,096 $ 27,625,847 $ 08,5,857 Numberofunitsoutstanding...,954,674 2,825,395 4,226,690 9,656,67 8,93,086 Netpositionvalue... $ 7.98 $ 8.38 $ 5.44 $ 3.22 $ 2.7 Computation of Net Position Value Class C Fiduciary Net Position $ 0,579 $ 42,86,295 $ 43,64,3 Numberofunitsoutstanding ,35,668 3,462,563 Netpositionvalue... $ 5.98 $ 3.67 $ 2.60 Cost of Investments in underlying funds..... $ 9,458,646 $ 73,08,2 $ 256,902,278 $ 84,568,2 $ 599,649,27 Class A Units reflect a front-end sales charge of 5.25%. 2 On September 6, 206, Moderate 0-2 s Class B Units converted into Class A Units. 3 On October 8, 206, Moderate 0-5 s and Moderate 0-2 s Class B Units converted into Class A Units. 4 On November 6, 206, Moderate 3-6 s Class B Units converted into Class A Units. 5 On December 9, 206, Moderate 6-9 s, Moderate 3-6 s and Moderate 7+ s Class B Units converted into Class A Units. 6 On December 9, 206, Moderate 7+ s Class B Units converted into Class A Units. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 5

16 CollegeAdvantage 529 Plan Aggressive Investment Combining Statements of Fiduciary Net Position (continued) June 30, 207 Aggressive 0-5 Aggressive 6-9 Aggressive 0-2 Aggressive 3-6 Aggressive 7+ Assets Investments in underlying funds $ 07,900,46 $ 26,820,564 $ 35,505,359 $ 56,893,824 $ 82,057,60 Receivableforcontributions... 93,09 9,293 74,554 72,490 93,746 Income receivable ,653 29,535 46,782 57,776 67,78 Total assets... 08,020,88 26,969,392 35,626,695 57,024,090 82,28,624 Liabilities Payableforwithdrawals... 24, ,963 9,85 Payable for underlying funds purchased... 20,04 9,24 35,986 44,67 63,785 Accrued program management and OTTA fees ,508 2,840 23,340 26,990 4,233 Accruedsalesfees... 38,424 45,936 45,447 6,028 35,742 Total liabilities ,60 87,054 09,736 32, ,575 Fiduciary Net Position... $ 07,99,658 $ 26,882,338 $ 35,56,959 $ 56,89,40 $ 82,03,049 Computation of Net Position Value and Offering Price Class A,2,3,4 Fiduciary Net Position $ 8,645,009 $ 95,367,27 $ 07,380,330 $ 0,564,787 $ 52,32,668 Numberofunitsoutstanding... 4,672,38 5,468,980 6,523,607 7,33,87 3,533,565 Netpositionvalue... $ 7.47 $ 7.44 $ 6.46 $ 5.50 $ 4.75 OfferingpriceClassA... $ 8.44 $ 8.4 $ 7.37 $ 6.36 $ 5.57 Computation of Net Position Value Class C Fiduciary Net Position $ 26,274,649 $ 3,55,2 $ 28,36,629 $ 46,326,64 $ 29,880,38 Numberofunitsoutstanding...,583,26,90,608,798,46 3,43,65 2,29,033 Netpositionvalue... $ 6.60 $ 6.57 $ 5.64 $ 4.74 $ 4.03 Cost of Investments in underlying funds..... $ 95,58,60 $ 2,960,606 $ 23,753,355 $ 48,938,975 $ 78,395,345 Class A Units reflect a front-end sales charge of 5.25%. 2 On September 6, 206, Aggressive 0-5 s Class B Units converted into Class A Units. 3 On October 8, 206, Aggressive 6-9 s, Aggressive 3-6 s and Aggressive 7+ s Class B Units converted into Class A Units. 4 On November 5, 206, Aggressive 0-2 s Class B Units converted into Class A Units. 6 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

17 CollegeAdvantage 529 Plan Target-Risk Investment Combining Statements of Fiduciary Net Position (continued) June 30, 207 Moderate Portfolio Growth Portfolio Aggressive Growth Portfolio Assets Investments in underlying funds $ 305,882,934 $ 622,454,445 $ 240,905,909 Receivableforcontributions... 7,479 08,584 20,398 Income receivable ,68 256, Total assets ,8,03 622,89,47 240,926,687 Liabilities Payableforwithdrawals , ,934 85,945 Payable for underlying funds purchased... 95,322 4,306 Accrued program management and OTTA fees ,980 07,599 4,648 Accruedsalesfees... 96,97 97,640 76,50 Total liabilities , , ,094 Fiduciary Net Position... $ 305,648,982 $ 62,984,938 $ 240,722,593 Computation of Net Position Value and Offering Price Class A,2,3,4 Fiduciary Net Position $ 240,874,963 $ 48,35,32 $ 90,457,60 Numberofunitsoutstanding... 4,830,64 27,39,966 0,029,46 Netpositionvalue... $ 6.24 $ 7.57 $ 8.99 OfferingpriceClassA... $ 7.4 $ 8.54 $ Computation of Net Position Value Class C Fiduciary Net Position $ 46,326,84 $ 92,20,277 $ 37,925,034 Numberofunitsoutstanding... 2,999,773 5,54,406 2,0,89 Netpositionvalue... $ 5.44 $ 6.7 $ 8.04 Computation of Net Position Value Class C Fiduciary Net Position $ 8,447,205 $ 48,549,340 $ 2,339,949 Numberofunitsoutstanding...,54,988 2,809, ,737 Netpositionvalue... $ 5.97 $ 7.28 $ 8.68 Cost of Investments in underlying funds..... $ 282,693,069 $ 552,906,700 $ 209,863,84 Class A Units reflect a front-end sales charge of 5.25%. 2 On October 8, 206, Moderate Portfolio s, Growth Portfolio s and Aggressive Growth Portfolio s Class B Units converted into Class A Units. 3 On October 8, 206, Moderate Portfolio s and Aggressive Growth Portfolio s Class B Units converted into Class A Units. 4 On December 9, 206, Growth Portfolio s Class B Units converted into Class A Units. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 7

18 CollegeAdvantage 529 Plan Single Strategy Equity s Combining Statements of Fiduciary Net Position (continued) June 30, 207 Advantage Large Cap Core Capital Appreciation Equity Dividend ishares Core S&P 500 ETF ishares Core S&P Mid Cap ETF Assets Investments in underlying funds $ 38,459,239 $ 04,246,470 $ 205,76,84 $ 85,479,534 $ 22,422,923 Receivableforcontributions...,75 32,580 00,294 36,97 3,955 Receivable for underlying funds sold ,650 7,492 37,603 34,72 8,550 Income receivable Total assets... 38,50,638 04,296, ,899,03 85,65,295 22,445,467 Liabilities Bank overdraft ,762 7,492 37,603 Payableforwithdrawals... 35,900 20,427 64,57 6, Payable for underlying funds purchased ,096 79,073 Accrued program management and OTTA fees ,650 8,04 35,374 4,662 3,84 Accruedsalesfees... 5,033 36,748 74,953 36,634 9,443 Total liabilities ,345 92,68 22, ,248 93,344 Fiduciary Net Position... $ 38,439,293 $ 04,203,87 $ 205,687,06 $ 85,58,047 $ 22,352,23 Computation of Net Position Value and Offering Price Class A,2 Fiduciary Net Position $ 27,030,827 $ 80,3,756 $ 53,479,559 $ 54,39,460 $ 4,656,588 Numberofunitsoutstanding...,55,068 3,394,083 6,469,04 2,323, ,398 Netpositionvalue... $ $ $ $ $ OfferingpriceClassA... $ $ 24.9 $ $ $ Computation of Net Position Value Class C Fiduciary Net Position $,408,466 $ 24,090,5 $ 52,207,457 $ 30,838,587 $ 7,695,535 Numberofunitsoutstanding... 56,399,08,85 2,333,0,386, ,97 Netpositionvalue... $ $ $ $ $ 2.44 Cost of Investments in underlying funds..... $ 24,825,005 $ 83,446,490 $ 56,439,5 $ 65,88,75 $ 22,637,7 Class A Units reflect a front-end sales charge of 5.25%. 2 On October 8, 206, Capital Appreciation s, Equity Dividend s, Advantage Large Cap Core s, ishares Core S&P 500 ETF s and ishares Core S&P Mid Cap ETF s Class B Units converted into Class A Units. 8 BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207

19 CollegeAdvantage 529 Plan Single Strategy Equity and Balanced s Combining Statements of Fiduciary Net Position (continued) June 30, 207 Advantage International Global Allocation Multi-Asset Income ishares Core MSCI EAFE ETF ishares Russell 2000 ETF Voya Small Company Assets Investments in underlying funds..... $ 52,85,076 $ 354,507,879 $ 8,379,953 $ 8,34,948 $ 26,388,42 $ 40,634,83 Receivable for contributions.. 65, ,322 3,200 37,703 60,948 6,556 Receivable for underlying funds sold ,030 29,482 Income receivable , Total assets ,256, ,874,708 8,45,34 8,72,695 26,449,393 40,650,743 Liabilities Bank overdraft ,030 29,482 Payable for withdrawals ,282 23,694 25, ,236 Payable for underlying funds purchased ,90 32,547 24,05,240 Accrued program management and OTTA fees ,046 6,502,435 3,04 4,523 7,09 Accrued sales fees ,030 68,274 3,383 7,964 0,984 4,038 Total liabilities , ,952 62,270 43,693 39,97 29,533 Fiduciary Net Position... $ 52,94,96 $ 354,49,756 $ 8,353,07 $ 8,29,002 $ 26,409,422 $ 40,62,20 Computation of Net Position Value and Offering Price Class A,2,3,4 Fiduciary Net Position.... $ 39,299,38 $ 202,729,669 $ 5,634,487 $,58,20 $ 7,332,025 $ 3,75,362 Number of units outstanding.. 2,887,274 3,423,968 59, , ,08,257,378 Net position value $ 3.6 $ 5.0 $ 0.86 $ 4.04 $ $ Offering price Class A $ 4.36 $ 5.94 $.46 $ 4.82 $ $ Computation of Net Position Value Class C Fiduciary Net Position.... $ 2,894,85 $ 5,762,087 $ 2,78,584 $ 6,970,882 $ 9,077,397 $ 8,905,848 Number of units outstanding..,004,2 0,65, , ,53 432,83 373,855 Net position value $ 2.84 $ 4.25 $ 0.62 $ 3.32 $ $ Cost of Investments in underlying funds $ 52,9,844 $ 348,962,567 $ 8,86,974 $ 8,353,99 $ 9,879,342 $ 3,499,39 Class A Units reflect a front-end sales charge of 5.25%. 2 On October 8, 206, Voya Small Company s, ishares Russell 2000 ETF s and ishares Core MSCI EAFE ETF s Class B Units converted into ClassA Units. 3 On November 6, 206, Global Allocation s Class B Units converted into Class A Units. 4 On December 28, 206, Advantage International s Class B Units converted into Class A Units. BLACKROCK COLLEGEADVANTAGE 529 PLAN JUNE 30, 207 9