CollegeInvest Direct Portfolio College Savings Plan

Transcription

1 Important changes coming to CollegeInvest Direct College Savings Plan We re making some changes to your plan. Effective March 23, 2018, the plan will have redesigned age-based options. These changes are automatic and won t count as one of your two annual exchanges. You don t need to do anything. You ll receive an updated Plan Disclosure Statement in March; however, here s a preview of what you can expect.

2 Highlights of the changes Smoothing the glide paths Current age-based options Redesigned age-based options Your plan is redesigning the glide paths of the plan s three age-based options to allow for a smoother transition from more aggressive to more conservative investments over time. Our age-based options, which invest in a broadly diversified combination of low-cost Vanguard index funds, will more gradually reduce an account owner s stock exposure as the beneficiary nears college age. This means the age-based options that currently step down their stock exposure in 25% increments will change to 12.5% increments after March 23. This smoothing effect will help protect an account from declines in the stock while still allowing it to benefit when the goes up. In other words, the changes will provide account owners with the opportunity to increase their returns without significantly increasing their risk. Age of beneficiary: 0 5 years 6 10 years years years 19 years and up option option Income Income Money Market 100% Money Age of beneficiary: 0 4 years 5 6 years 7 8 years 9 10 years years option option years Income years years 19 years and up 50% Money Market 75% Money Market Money Market 100% Money These charts compare the current age-based program with the newly redesigned program. Income Income Income Income option option 100% Stock Income 100% Stock Portfoilo Growth Portfoilo Stock Bond Money Stock Bond Money New portfolio Note: The new portfolios are only available for purchase as part of an age-based option and can t be purchased individually. 2 3

3 What these changes mean for you Age-based options with their underlying investments Underlying investments Vanguard Institutional Total Stock Market Vanguard Total International Stock Vanguard Total Bond Market II Vanguard Total International Bond Vanguard Short-Term Inflation-Protected Securities Vanguard Federal Money Market Fund s * * can only be purchased as part of an age-based option. * * * Income 50% Money Market * 75% Money Market * 70% 61.25% 52.5% 43.75% 35% 26.25% 17.5% 8.75% 0% 0% 0% 0% 30% 26.25% 22.5% 18.75% 15% 11.25% 7.5% 3.75% 0% 0% 0% 0% 0% 10% 20% 30% 40% 50% 60% 70% 42% 28% 14% 0% 0% 2.5% 5% 7.5% 10% 12.5% 15% 17.5% 15% 10% 5% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18% 12% 6% 0% 0% 0% 0% 0% 0% 0% 0% 0% 25% 50% 75% 100% Money Market Transaction freeze After 2 p.m., Mountain time on March 22, through 6 a.m., Mountain time on March 26, you won t be able to access your accounts, either online or by phone, while the program changes are being implemented. For specific details on what will happen and when, you can refer to Transition dates and action items on page 6. How changes to stock exposure may affect your account If you re not invested in one of our age-based options, these changes won t affect your account. However, if you do invest in one of these options, you should consider the age of your beneficiary and review the charts on the previous page to see if your investments will change. After March 23, account owners who are invested in an age-based option may end up with more, less, or the same amount of stock exposure. See the example to the right for a possible scenario of how your account s stock exposure could change once these changes are in effect. While a stock exposure increase or decrease of 12.5% may not seem substantial, we want to make sure you re aware of the changes and that you have the opportunity to consider your risk tolerance prior to March 23. Your investments after the transition If you re invested in one of the age-based options after the close of business on March 22, your account balance will automatically transition to the new investment option(s), if applicable. In addition, your contribution allocations will be updated and your future contributions will be invested according to the new allocations. You can change the allocation instructions for new contributions at any time with no annual restrictions. If you have an automatic contribution scheduled for March 24, 25, or 26, your account will be credited on March 26 with a trade date of March 26. If you haven t used your two allowable exchanges for 2018, you can use one to change your investments before 2 p.m., Mountain time, on March 22 or after 6 a.m., Mountain time, on March 26 or later. Scenario: Beneficiary is 6 years old and you re invested in the age-based option. Current investment New investment 12.5% increase in stock exposure 4 5

4 MARCH 2018 Transition dates and action items March 22 Requests for transactions and account changes will be processed as usual until 2 p.m., Mountain time, on Thursday, March 22. Requests received in good order after 2 p.m., Mountain time, through 2 p.m., Mountain time, on Friday, March 23, will be processed on Monday, March 26, using net asset values from Monday, March 26. Important: To ensure these changes are successfully implemented, there will be a blackout period covering both phone and online access and transactions. Beginning at 2 p.m., Mountain time, on Thursday, March 22, you won t be able to access your account online. We ll make online account access available by 6 a.m., Mountain time, on Monday, March 26. During that entire time, no transactions or account changes can be initiated or requested, either online or by phone. Transactions made by phone will resume at 6 a.m., Mountain time, on Monday, March 26. March Account assets are transferred from existing portfolios to new portfolios, as applicable. March 26 Recurring contributions (automatic investments) scheduled for March 24, 25, or 26 will be processed using net asset values of Monday, March 26. Requests for transactions or account changes that are received by mail after 2 p.m., Mountain time, on Thursday, March 22, through 2 p.m., Mountain time, on Friday, March 23, will be processed with the new allocations using net asset values as of Monday, March 26. We re here to help If you have any questions about these changes, CollegeInvest can help. Please call one of our education savings specialists at Monday through Friday from 6 a.m. to 7 p.m., Mountain time or at CO529@vanguard.com. 6 7

5 U N I O N AND A Division of Department of Higher Education CONSTITUTION Mailing address CollegeInvest Direct College Savings Plan P.O. Box Kansas City, MO For overnight delivery only CollegeInvest Direct College Savings Plan 920 Main Street, Suite 900 Kansas City, MO Important Disclosures For more information about the CollegeInvest Direct College Savings Plan, visit collegeinvest.org to obtain a Plan Disclosure Statement and Participation Agreement. Investment objectives, risks, charges, expenses, and other important information are included in these documents; read and consider them carefully before investing. Administered and issued by CollegeInvest. Vanguard Marketing Corporation, Distributor and Underwriter. If you are not a Colorado taxpayer, consider before investing whether your or the designated beneficiary s home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Other state benefits may include financial aid, scholarship funds, and protection from creditors. In the CollegeInvest Direct College Savings Plan, the Income s and the Money Market s investment in Vanguard Federal Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of the investment at $1 per share, it is possible that the portfolios may lose money by investing in the fund. Investments in the CollegeInvest Direct College Savings Plan are also not guaranteed by the State of Colorado or any other governmental entity, The Vanguard Group, Inc. or Ascensus College Savings, and may lose value including the principal amount invested. CollegeInvest is the issuer of plan securities and is the trustee of the plans in accordance with Colorado law. CollegeInvest also oversees the Managers activities and provides certain administrative services, such as ing, audit, and financial statements, in connection with the plans. Ascensus Broker Dealer Services, Inc. and Ascensus College Savings Recordkeeping Services, LLC serve as Plan Manager for the CollegeInvest Direct College Savings Plan and have overall responsibility for the day-to-day operations. The Vanguard Group, Inc. also serves as Plan Manager and Investment Manager for the CollegeInvest Direct College Savings Plan, and Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., assists CollegeInvest with ing and distributing the Direct College Savings Plan. The Direct College Savings Plan s portfolios, although they invest in Vanguard mutual funds, are not mutual funds and you could lose money by investing in the plan. This material may be used in conjunction with the offering of units of CollegeInvest Direct College Savings Plan portfolios only if preceded or accompanied by the current Plan Disclosure Statement and Participation Agreement. CollegeInvest and the CollegeInvest logo are registered trademarks of CollegeInvest. CollegeInvest Direct College Savings Plan is a registered service mark of CollegeInvest. Ascensus and the Ascensus logo are registered trademarks of Ascensus, Inc. Copyright 2018 CollegeInvest. All rights reserved. CO52930D