Investment Options

Building a 529 savings strategy that is right for you takes planning. The Connecticut Higher Education Trust (CHET), Connecticut's direct-sold college savings plan, offers you a choice of 11 Investment Options. These options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that fit your needs.

For more information on the type of investor for whom each Investment Option may be appropriate, and the risks involved in investing in such Investment Options, refer to the Disclosure Booklet (PDF).

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Investment Options

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 CHET account for a different beneficiary. Effective February 18, 2008, transfers (including transfers when there is a change of the Beneficiary) from the Principal Plus Interest Option to the Money Market Option will not be permitted. (If this restriction changes, investors will be notified prior to the effective date of any such change.) Please refer to the CHET Disclosure Booklet and Participation Agreement (PDF) 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. Note that the three Managed Allocation Options will shift from more aggressive to more conservative as the Beneficiary ages.

Managed Allocation Options
Investing in the Managed Allocation Options (Moderate, Conservative and Aggressive) follows the method of using the number of years an investor has for saving to determine the appropriate investment allocation. 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 Options combine equity, real estate, fixed income, and money market mutual funds offered by the TIAA-CREF Funds - Institutional Class. 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:

Conservative Managed Allocation Option

(Risk level shifts from Aggressive to Conservative as the Designated Beneficiary ages)

The Conservative Managed Allocation Option works the same way and invests in the same Mutual Funds as the Moderate Managed Allocation Option, which is described above. The Age Bands for younger Designated Beneficiaries seek a favorable long-term return by investing primarily in Mutual Funds that invest in equity or real estate-related securities, each of which has a higher level of risk, but greater potential for returns than more conservative investments. As a Designated Beneficiary nears college age, the Age Bands allocate less to Mutual Funds that invest in equity and real estate-related securities and allocate more heavily to Mutual Funds that invest in fixed-income and money market securities to preserve capital. However, the Age Bands in the Conservative Managed Allocation Option, even for younger Designated Beneficiaries, will be more heavily weighted toward Mutual Funds that invest in fixed-income and money market securities than the Age Bands under the Moderate Managed Allocation Option.


 

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Moderate Managed Allocation Option

Formerly named Managed Allocation Option
(Risk level shifts from Aggressive to Conservative)

The Moderate Managed Allocation Option works the same way and invests in the same Mutual Funds as the Conservative Managed Allocation Option described above. The Age Bands for younger Designated Beneficiaries seek a favorable long-term return by investing primarily in Mutual Funds that invest in equity or real estate-related securities, each of which has a higher level of risk, but greater potential for returns than more conservative investments. As a Designated Beneficiary nears college age, the Age Bands allocate less to Mutual Funds that invest in equity and real estate-related securities and allocate more heavily to Mutual Funds that invest in fixed-income and money market securities to preserve capital. Effective as of November 22, 2010, each Age Band in the Moderate Managed Allocation Option will increase the allocations of its assets to Mutual Funds that are passively managed to track a particular index and will proportionately decrease its allocation to actively managed Mutual Funds. In addition, each Age Band in the Moderate Managed Allocation Option will increase the allocation of its assets to Mutual Funds that focus on international investment and will proportionately decrease its allocations to Mutual Funds that focus on domestic investment.

The Age Bands for younger Beneficiaries seek a favorable long-term return by investing primarily in Mutual Funds that invest in equities or real estate securities, each of which has a high level of risk, but greater potential for returns than more conservative investments. As a Beneficiary nears college age, the Age Bands allocate less to equities and real estate securities and invest more heavily in fixed-income and money market Mutual Funds to preserve capital.


 

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Aggressive Managed Allocation Option

(Risk level shifts from Aggressive to Conservative)

The Aggressive Managed Allocation Option works the same way and invests in the same Mutual Funds as the Moderate Managed Allocation Option described above. The Age Bands for younger Beneficiaries seek a favorable long-term return by investing primarily in Mutual Funds that invest in equities or real estate securities, each of which has a high level of risk, but greater potential for returns than more conservative investments. As a Beneficiary nears college age, the Age Bands allocate less to equities and real estate securities and invest more heavily in fixed-income and money market Mutual Funds to preserve capital. However, the Age Bands in the Aggressive Managed Allocation Option, even for older Beneficiaries, will always be more heavily weighted toward Mutual Funds that invest in equities and real estate securities than the Age Bands under the Moderate Managed Allocation Option.


 

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Equity Index Option

Formerly named 100% Equity Index Option
(Risk level - Aggressive)

This Investment Option seeks to provide a favorable long-term total return, mainly from capital appreciation, by investing in equity index funds. Because of the high exposure to domestic and foreign equities, and the corresponding high degree of risk, this option may be appropriate for you if you have a long investment horizon and you can tolerate a higher level of risk.

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Active Equity Option

(Risk level - Aggressive)

This Investment Option seeks to provide a favorable long-term total return by investing in actively-managed equity Mutual Funds. Because of the high exposure to domestic and foreign equities, and the corresponding high degree of risk, this Investment Option may be appropriate for you if you have a long investment horizon and you can tolerate a higher level of risk, or for use in conjunction with other Investment Options in the Direct Plan.

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

High Equity Option

(Risk level - Aggressive)

This Investment Option seeks to provide a favorable long-term total return, mainly from capital appreciation, by investing in a combination of equity and fixed-income funds. Because of the high exposure to equities, it is subject to greater risk and volatility. This Investment Option may be appropriate for you if you have a long investment horizon and you can tolerate a higher level of risk.

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Active Fixed-Income Option

Formerly named 100% Fixed Income Option
(Risk level - Moderate)

This Investment Option seeks to provide preservation of capital along with a moderate rate of return through a diversified mix of active fixed-income Mutual Funds. This Investment Option may be appropriate for you if you have a medium to short investment horizon and can tolerate a moderate level of risk.

Allocations for all investments are as of November 2010. Allocations are reviewed and adjusted periodically.

Index Fixed-Income Option

(Risk level - Moderate)

This Investment Option seeks to provide preservation of capital along with a moderate rate of return from interest income and capital appreciation. The Index Fixed-Income Option invests 100% of its assets in the TIAA-CREF Bond Index Fund, which employs a "passive management" - or indexing - strategy and seeks to match the total return of the Barclays Capital U.S. Aggregate Bond Index. This Investment Option may be appropriate for you if you have a medium to short investment horizon and can tolerate a moderate level of risk.

Social Choice Option

(Risk level - Aggressive)

This Investment Option seeks to provide a favorable long-term total return. The Social Choice Option invests in the TIAA-CREF Institutional Social Choice Equity Fund, which invests primarily in equity securities of companies that meet certain social criteria, such as product safety, corporate citizenship, human rights and environmental performance. Because of the high exposure to domestic and foreign equities, and the corresponding degree of risk, this option may be appropriate for you if you have a long investment horizon and you can tolerate a higher level of risk.

Money Market Option

(Risk level - Conservative)

This Investment Option seeks to provide high current income consistent with preserving capital and may be appropriate for you if you have a short investment horizon and are looking for a conservative investment with a low level of risk. This Investment Option invests in the TIAA-CREF Institutional Money Market Fund.

Principal Plus Interest Option

(Risk level - Conservative)

This investment portfolio seeks to preserve capital and provide a stable return. It may be appropriate for you if you have a short investment horizon and are looking for a conservative investment with a low level of risk. The assets in this investment option are allocated to a funding agreement issued by TIAA-CREF Life to the Connecticut Higher Education Trust (CHET), which is the policyholder under the agreement. The funding agreement provides for a return of principal plus a guaranteed rate of interest and allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The interest rate guarantee is made to CHET only, and not to account owners or beneficiaries. The rate of any additional interest is declared in advance for a period of up to 12 months and is not guaranteed for any future periods.

Effective July 1, 2011, contributions received, and accumulations arising from such contributions, under the Funding Agreement for the Principal Plus Interest Option as of June 30, 2011 will be credited with an effective annual interest rate of 2.40% and are guaranteed to earn this rate through June 30, 2012, subject to the claims paying ability of TIAA-CREF Life.


Account values are not guaranteed and will fluctuate with market conditions. For a complete discussion of risks associate with each investment option, please refer to the Disclosure Booklet.

The TIAA-CREF Institutional Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to maintain a stable net asset value of $1.00 per share, you can lose money by investing.

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