Investment Options

The Georgia Higher Education Savings Plan has five investment options to choose from:

Managed Allocation Option

The right investment strategy for college expenses can be a complex matter for many families. That's why the Managed Allocation Option is the core investment for the Georgia Higher Education Savings Plan. Investing in the Managed Allocation Option follows the time-tested 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, the option is designed to achieve returns that exceed inflation.

Investment portfolios based on your beneficiary's age combine equities (stocks), real estate, bonds and money market investments offered by 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.

The following pie charts show the different allocations of the account portfolio among equities, bonds, and money market instruments for the current period.

To find the allocation that would apply to your account, look for the year your account beneficiary was born. As your beneficiary nears college age, more of your money would be moved into bonds and money market investments and out of equities.

Aggressive Managed Allocation Option

This Option, like the Managed Allocation Option described above, uses the age of the beneficiary as a guide in determining the proper mix of equities, bond, and money market investments. The difference is that the Aggressive Managed Allocation Option allocates a higher percentage of the investments to equities. Younger beneficiaries will have a higher and longer exposure to equities than under the Managed Allocation Option, which will decrease significantly as they get older. While equities have higher risk, they have historically resulted in higher returns than bond or money market investments over the long term. Past performance is no guarantee of future results.

To find the allocation that would apply to your account, look for the year your account beneficiary was born.

The above charts for the Managed Allocation and Aggressive Managed Allocation Options do not provide all material information concerning the Georgia Higher Education Savings Plan. Accounts representing interests in the Program are offered only through a Savings Trust Agreement and a Disclosure Booklet that describes the Program. The Program Disclosure Booklet should be read carefully before opening an account. Investment Management and Program Administration by TIAA-CREF Tuition Financing, Inc. (TFI) Teachers Personal Investors Services, Inc., and SEC registered broker/dealer, is the distributor.

Guaranteed Option

Your contributions to the Guaranteed Option will be allocated to a vehicle that guarantees the Georgia Higher Education Savings Plan both principal and a minimum annual rate return of 3%, plus the opportunity for additional returns beyond the minimum rate. This option provides additional safety and security that people may want for a portion of their college savings funds. The Georgia Higher Education Savings Program Disclosure Booklet discusses this and other options in more detail. The guarantee of principal and minimum rate of return is made to the Georgia Higher Education Savings Plan, not to Account Owners or beneficiaries. The Plan itself does not guarantee principal or earnings under this option.

Contributions received under the funding agreement for the Guaranteed Option from October 1, 2003 until December 31, 2003, will be credited with an effective interest rate of 3.00%, and are guaranteed to earn this rate through September 30, 2004, subject to the claims paying ability of TIAA-CREF Life Insurance Company.

Effective January 1, 2004, accumulations arising from contributions received under the funding agreement for the Guaranteed Option before January 1, 2004 will be credited with an effective annual interest rate of 3.00%, and are guaranteed to earn this rate through September 30, 2004, subject to the claims paying ability of TIAA-CREF Life Insurance Company. Contributions received under the funding agreement for the Guaranteed Option from January 1, 2004 until March 31, 2004 will be credited with an effective annual interest rate of 3.00%, and are guaranteed to earn this rate through September 30, 2004, subject to the claims paying ability of TIAA-CREF Life Insurance Company.

Effective April 1, 2004, accumulations arising from contributions received under the funding agreement for the Guaranteed Option before April 1, 2004 will be credited with an effective annual interest rate of 3.00%, and are guaranteed to earn this rate through September 30, 2004, subject to the claims paying ability of TIAA-CREF Life Insurance Company. Contributions received under the funding agreement for the Guaranteed Option from April 1, 2004 until further notice will be credited with an effective annual interest rate of 3.00%, and are guaranteed to earn this rate through September 30, 2004, subject to the claims paying ability of TIAA-CREF Life Insurance Company.

100% Equity Option

The 100% Equity Option is invested in the TIAA-CREF Institutional Equity Index Fund. The Fund seeks a favorable long-term rate of return from a diversified portfolio selected to track the overall market for common stocks publicly traded in the U.S., as represented by a broad stock market index. This Equity Index Fund may produce above-average returns over the long term. Given the higher volatility of this option, the risk of loss is greater, particularly for families with a short time to save for college.

Balanced Fund Option

The Balanced Fund Option invests in an equal combination of equity and bond investments offered by TIAA-CREF Institutional Mutual Funds. The Balanced Option has approximately 50% of its holdings invested in equity funds and 50% of its holdings invested in bond funds.

The Program Disclosure Booklet discusses these options in more detail.