Ohio Tuition Trust Authority Jackie Williams, Executive Director Evolution of Investment Options Mon

1
Ohio Tuition Trust AuthorityJackie Williams,
Executive Director Evolution of Investment
OptionsMonday, December 4, 2006
2

• The Ohio Tuition Trust Authority
• Created by Ohio General Assembly - 1989
• Ohio one of the first states to offer a 529
  qualified tuition plan to state resident
• Original program Ohio Prepaid Tuition Program

3

• Sold direct and through financial advisors
• Actively managed mutual funds
• Passively managed index funds

4

• Ohio Tuition Trust Authority (Tuition Trust)
• 2003 400 randomly selected households with
  children
• General attitudes about college savings and
  savings options
• Investment Company Institute (ICI)
• 2003 National Survey
• To examine how families are saving for college

5

• Research Findings
• College education is important
• 71 of Ohioans felt that a college education
  makes it easier to find a job
• Saving for college is the correct thing to do

6

• Research Findings
• 87 of Ohioans agreed a college investment is one
  of the best investments a family can make
• 41 agreed that for the most part people need a
  college education to be successful
• Use of taxable investments such as savings
  accounts, mutual funds and certificates of
  deposit as primary methods of saving for college

7

• Research Findings
• Large numbers of Americans still find the local
  bank best channels for saving
• Security of FDIC insurance more important than
  tax benefits and other savings incentives
  associated with college savings plans
• Ohioans are foregoing the tax benefits available
  through 529 plans by using their current savings
  methods

8

• Research Findings
• ICI looked at amounts of cash used for college
  savings
• As of August 2006 more than 8.2 trillion on
  sidelines from bank deposit products
• Taxable investments used to save for college

9

• Research Findings
• Need for a product that was affordable
• Easy to understand
• Principal protected
• Accessible to a broad and diverse population
• FDIC insurance
• Available direct through Tuition Trust and local
  distribution channels

10

• 529 CollegeAdvantage Bank Options
• September 1, 2005, Tuition Trust announced new
  529 bank options
• Offered by Fifth Third Bank

11

• Fifth Third Bank
• Full service bank
• 1,100 locations in Ohio, Florida, Illinois,
  Indiana, Kentucky, Michigan, Pennsylvania,
  Tennessee and West Virginia
• 400 banking centers in Ohio to serve more than 2
  million Ohio customers

12

• 529 CollegeAdvantage Bank Options
• Fifth Third 529 Savings Account
• Fifth Third 529 Certificate of Deposit
• FDIC insurance
• Federal and state tax advantages

13

• 529 CollegeAdvantage Bank Options
• Fifth Third 529 Savings Account
• FDIC insured
• Introductory interest rate of 3.25 (until Aug.
  31, 2006)
• Premium rates of interest
• No fees
• Contribute as little as 15

14

• 529 CollegeAdvantage Bank Options
• Fifth Third 529 Certificate of Deposit
• FDIC insured
• Flexible terms ranging from 3 months to 12 years
• Annual percentage yields (APY) range from 4.00
  to 5.00
• 500 minimum to open
• CD matures it will automatically transfer to a
  529 savings account
• At maturity funds can be withdrawn, reallocated
  to another CollegeAdvantage investment option or
  remain in savings account

15

• 529 CollegeAdvantage Bank Option Update
• Fifth Third 529 Savings Account
• Current interest rate 4.00 to 4.50
• More than 5000 savings accounts
• Assets totals over 8 million
• Fifth Third 529 Certificate of Deposit
• More than 4,500 accounts
• Assets totals over 24 million
• Total assets for 529 bank options
• Over 33 million

16

• 529 Bank Options versus Tuition Inflation
• Need for safety, security and simplicity
• Acknowledging the way customers save
• Making full range of 529 tax benefits available
  to them
• Over time customers will feel comfortable enough
  to diversity their investments
• Customers are willing to trade the opportunity
  for potentially higher returns for certainty that
  these products offer
• The key is to get them to save

17

• 529 CollegeAdvantage Bank Options
• Questions