Vermont Higher Education Savings Plan

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 three investment options. You can invest new contributions in any one or combination of these three investment options: the Managed Allocation Option, 100% Equity Index Option and Interest Income 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 VHEIP account for a different beneficiary. (See the VHEIP Disclosure Booklet and Participation Agreements (PDF, 435KB) 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 Vermont Higher Education Investment Plan. 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 balanced approach. Aged-based investment portfolios combine equity, real estate, bond, and money market mutual funds offered by the TIAA-CREF Institutional Mutual Funds. 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 2007. Allocations are reviewed and adjusted periodically. 

 

100% Equity Option
The Plan allocates your contributions, together with any return on your contributions, under this investment option among the TIAA-CREF Institutional Mutual Funds 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 100% Equity Option may be a good choice if you can tolerate greater risk and volatility with some of your contributions in exchange for higher potential returns over time. It may also be appropriate for you if you already have substantial college savings from less volatile investments (e.g., fixed-income), if you have a longer time horizon or you want a balanced account by combining this option with the more conservative Managed Allocation Option.

 

100% Equity Option chart

 

Allocations for all investments are as of September 2007. Allocations are reviewed and adjusted periodically. 

Interest Income Option
Plan contributions made to the Interest Income Option will be invested in an interest-bearing note from VSAC, "the investment manager for this option." The goal is to provide investment returns that are at least equal to the 91-day Treasury Bill rate. Under the Interest Income Option, the value of your Account is neither insured nor guaranteed, and principal and returns will fluctuate. So, at any given time, your Account may be worth more or less than the amount of your contributions. 

Underlying TIAA-CREF Institutional Mutual Funds
Following is the list of underlying TIAA-CREF Institutional Mutual Funds for the Managed Allocation and 100% Equity Options. An investment in VHEIP is not the same as a direct investment in the mutual funds. Please read the prospectus for the TIAA-CREF Institutional Mutual Funds for more information.
  • Large-Cap Growth Index Fund
  • Large-Cap Value Index Fund
  • S&P 500 Index Fund
  • International Equity Fund
  • Equity Index Fund
  • Small Cap Blend Index Fund
  • Real Estate Securities Fund
  • Bond Fund
  • Inflation Linked Bond Fund
  • Money Market Fund
  • Growth Equity Fund
  • Large-Cap Value Fund
  • Small-Cap Equity Fund

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

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The tax information contained on the Vermont Higher Education Investment Plan (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 Vermont Student Assistance Corp. (VSAC). TIAA-CREF Tuition Financing, Inc. (TFI) serves as Program Manager. TFI's affiliate, TIAA-CREF Individual & Institutional Services, LLC, is the distributor. The Plan Web site contains information about the Managed Allocation Option, 100% Equity Option and the Interest Income Option. Investment management for the Managed Allocation and 100% Equity Options is provided by TFI while investment management of the Interest Income Option is provided by VSAC.

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 1-800-637-5860 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 State of Vermont, its agencies, VSAC, TIAA-CREF Tuition Financing, Inc., Teachers Insurance and Annuity Association of America and its affiliates do not insure any Account in the Plan or guarantee its principal or investment return. 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 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.
Vermont Student Assistance Corp.