NEST Advisor College Savings Plan · 2020-03-02 · should consult your tax advisor or investment...
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NEST Advisor College Savings Plan Program Disclosure Statement and Participation Agreement March 1, 2020
Transcript of NEST Advisor College Savings Plan · 2020-03-02 · should consult your tax advisor or investment...
NEST Advisor College Savings PlanProgram Disclosure Statement and Participation Agreement
March 1, 2020
Use of this Program Disclosure StatementThis Program Disclosure Statement is for use by persons investingwith a broker or financial advisor (“Financial Advisor”) in theNebraska Educational Savings Trust Advisor College Savings Plan(“NEST Advisor Plan” or the “Plan”). This Program DisclosureStatement contains important information about establishing andmaintaining an account with the NEST Advisor Plan. Investing is animportant decision. Investors should carefully read this ProgramDisclosure Statement in its entirety to understand and consider thePlan’s investment objectives, risks, charges and expenses anddiscuss the contents of this Program Disclosure Statement withtheir Financial Advisor before opening an account and making aninvestment decision. No one is authorized to provide informationthat is different from the information contained in this ProgramDisclosure Statement. Please keep this Program DisclosureStatement and all updates for future reference.
About the Nebraska 529 College Savings PlansThe NEST Advisor Plan is one of four college savings plans issuedby the Nebraska Educational Savings Plan Trust and administeredby the Nebraska State Treasurer, who serves as trustee to each ofthe four plans. The four plans offer a series of investment optionswithin the Nebraska Educational Savings Plan Trust. The fourplans are intended to operate as qualified tuition programs,pursuant to Section 529 of the U.S. Internal Revenue Code.
This Program Disclosure Statement describes only accounts heldthrough the NEST Advisor Plan that are sold through FinancialAdvisors. The other plans in the Nebraska Educational SavingsPlan Trust may offer different investment advisors, differentbenefits, different fees, different costs, and sales commissions, ifany, which may be more or less than those relative to accountsheld in the NEST Advisor Plan described in this ProgramDisclosure Statement. Some of these other plans are designed fordirect investments without the use of a Financial Advisor andwithout the imposition of sales charges. You can obtaininformation regarding the other plans in the NebraskaEducational Savings Plan Trust by contacting the Nebraska StateTreasurer at (402) 471-2455, or by visiting the Nebraska StateTreasurer’s website at treasurer.nebraska.gov.
Accounts in the NEST Advisor Plan have not been registered withthe Securities and Exchange Commission (the “SEC”) or with anystate securities commission pursuant to exemptions fromregistration available for securities issued by a publicinstrumentality of a state. Neither the SEC nor any state securitiescommission has reviewed this Program Disclosure Statement.
No insurance and no guaranteesOpening an account in the NEST Advisor Plan involves certainrisks, including possible loss of the principal amount invested.These risks are highlighted in the Section of the ProgramDisclosure Statement, “Part 10 – Certain Risks to Consider.”
Except as described herein for accounts invested in the BankSavings Static Investment Option, accounts in the NESTAdvisor Plan are not insured by the Federal Deposit Insurance
Corporation (FDIC). Accounts in the NEST Advisor Plan are notguaranteed or insured by the State of Nebraska, the NebraskaInvestment Council, the Nebraska State Treasurer, theNebraska State Investment Officer, First National Bank ofOmaha or its authorized agents or their affiliates, or any otherfederal or state entity or person.
The value of your account may vary depending on marketconditions, the performance of the Investment Options youselect, the timing of purchase, and fees. The value of youraccount could be more or less than the amount you contributeto your account. In short, you could lose money. Accountowners should periodically assess, and if appropriate, adjusttheir investment choices with their time horizon, risk toleranceand investment objective in mind.
FDIC insurance is provided for the Bank Savings Static InvestmentOption only, which invests in an FDIC-insured omnibus savingsaccount held in trust by the Nebraska Educational Savings PlanTrust at First National Bank of Omaha. Contributions to, andearnings on, the investments in the Bank Savings StaticInvestment Option are insured by the FDIC on a per participant,pass-through basis to each account owner up to the maximumlimit established by federal law, which currently is $250,000.
Investments in the Goldman Sachs Financial SquareSM
Government Money Market Individual Investment Option are notbank deposits and are not insured by the FDIC.
Participation in the NEST Advisor Plan does not guarantee thatcontributions and the investment earnings, if any, will beadequate to cover future tuition and other qualifying post-highschool education expenses (“Qualified Higher EducationExpenses”) or that a Beneficiary will be admitted to or permittedto continue to attend an accredited college or university or othereligible educational institution (an “Eligible EducationalInstitution”).
For use only for Qualified Higher Education ExpensesThe NEST Advisor Plan is intended to be used only to save forQualified Higher Education Expenses. The NEST Advisor Plan andany tax information contained in this Program DisclosureStatement are not intended to be used, nor should it be used, byany taxpayer for the purpose of evading federal or state taxes ortax penalties. Taxpayers may wish to seek tax advice from anindependent tax advisor based on their own particularcircumstances.
Nebraska state tax deductionContributions by an account owner who files a Nebraska stateincome tax return, including the principal and earnings portions ofrollovers from another qualified college savings plan not issued bythe State of Nebraska, are deductible in computing the accountowner’s Nebraska taxable income for Nebraska income taxpurposes in an amount not to exceed $10,000 ($5,000 for marriedtaxpayers filing separate returns) in the aggregate for allcontributions to all accounts within the Trust in any taxable year...
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Contributions by a custodian of an UGMA or UTMA account whois also the parent or guardian of the Beneficiary of an UGMA orUTMA account may claim this deduction. See “Part 14 – Federaland State Tax Considerations” for important additionalinformation about state tax benefits.
Taxpayers and residents of other statesInvestors should consider before investing whether their ortheir Beneficiary’s home state offers any state tax or otherstate benefits such as financial aid, scholarship funds, andprotection from creditors that are only available forinvestments in such state’s qualified tuition program andshould consult their tax advisor, attorney and/or other advisorregarding their specific legal, investment or tax situation.
Privacy PolicyExcept as otherwise required by law, information regarding aNEST Advisor Plan account owner or Beneficiary will not beshared with anyone other than the account owner, an authorizedrepresentative, or those employees and/or service providers whoaccess such information to provide services to the account owneror Beneficiary.
Conflicts with Applicable LawThis Program Disclosure Statement is for informational purposesonly. In the event of any conflicts between the description of thePlan contained herein and any requirement of federal or Nebraskalaw applicable to matters addressed herein, such legalrequirement would prevail over this Program DisclosureStatement and Participation Agreement.
Information is Subject to Change.Statements contained in this Program Disclosure Statement thatinvolve estimates, forecasts, or matters of opinion, whether or notexpressly so described herein, are intended solely as such and arenot to be construed as representations of fact or guarantee offuture performance.
Not an Offer to SellThis Program Disclosure Statement does not constitute an offer tosell or the solicitation of an offer to buy, nor shall there be anysale of a security described in this Program Disclosure Statementby any person in any jurisdiction in which it is unlawful for suchperson to make an offer, solicitation, or sale.
This Program Disclosure Statement is designed to comply withthe College Savings Plans Network Disclosure Principles,Statement No. 6, adopted on July 1, 2017. You shouldcarefully read and understand this Program DisclosureStatement. Please keep this Program Disclosure Statement forfuture reference.
This Program Disclosure Statement is dated March 1, 2020.
IMPORTANT LEGAL INFORMATION
THE NEST ADVISOR PLAN AND ITS AUTHORIZED AGENTS ORAFFILIATES MAKE NO REPRESENTATIONS REGARDING THESUITABILITY OF THE INVESTMENT OPTIONS DESCRIBED IN THISPROGRAM DISCLOSURE STATEMENT FOR ANY PARTICULARINVESTOR. OTHER TYPES OF INVESTMENTS AND OTHER TYPESOF COLLEGE SAVINGS VEHICLES MAY BE MORE APPROPRIATEDEPENDING ON YOUR PERSONAL CIRCUMSTANCES. YOUSHOULD CONSULT YOUR TAX ADVISOR OR INVESTMENTADVISOR FOR MORE INFORMATION.
NO BROKER, DEALER, FINANCIAL ADVISOR, SALESPERSON OROTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANYINFORMATION OR TO MAKE ANY REPRESENTATIONS OTHERTHAN THOSE CONTAINED IN THIS PROGRAM DISCLOSURESTATEMENT, AND, IF GIVEN OR MADE, SUCH OTHERINFORMATION OR REPRESENTATIONS MUST NOT BE RELIEDUPON AS HAVING BEEN AUTHORIZED BY THE NEST ADVISORPLAN, THE STATE OF NEBRASKA, THE NEBRASKAINVESTMENT COUNCIL, THE NEBRASKA STATE TREASURER,THE NEBRASKA STATE INVESTMENT OFFICER, OR FIRSTNATIONAL BANK OF OMAHA.
THE INFORMATION IN THIS PROGRAM DISCLOSURESTATEMENT IS SUBJECT TO CHANGE WITHOUT NOTICE, ANDNEITHER DELIVERY OF THIS PROGRAM DISCLOSURESTATEMENT NOR ANY SALE MADE HEREUNDER SHALL,UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONTHAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THENEST ADVISOR PLAN SINCE THE DATE OF THIS DOCUMENT.
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SUMMARY OF KEY FEATURES AND REFERENCE GUIDE
This section is intended to provide a summary of key features of the Plan. Before investing you should read and understand thecomplete detailed information contained in this Program Disclosure Statement and Participation Agreement. The capitalized terms in“Description” are defined in Part 16 – Glossary.
Plan StructureIssuer: Nebraska Educational Savings Plan Trust
Trustee: Nebraska State Treasurer
Investment Oversight: Nebraska Investment Council
Program Manager: First National Bank of Omaha
Primary Distributor/Underwriter: First National Capital Markets, Inc.
First National Capital Markets and First National Bank of Omaha are affiliated companies.
Contact Information: NEST Advisor Plan Phone: 888.659.NEST (6378)
P.O. Box 30277 8:00 a.m. to 8:00 p.m. Central Time
Omaha, NE 68103-1377 Monday through Friday
Web: www.NEST529Advisor.com
Topic Description Reference Page
Nebraska StateIncome Tax Benefits
• Contributions by account owners, and custodians of an UGMA or UTMAaccount where the custodian is the parent or guardian of the Beneficiary of anUGMA or UTMA account, and rollovers by account owners may be deductibleup to $10,000 per tax return ($5,000 if married filing separately).
• Earnings grow free from Nebraska state income tax• The earnings portion of a Qualified Withdrawal is exempt from Nebraska
income tax• The earnings and principal portions of a rollover into the NEST Advisor Plan
from another qualified 529 plan are exempt from Nebraska income tax
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Federal Tax Benefits • Contributions are not deductible for federal income tax purposes• Earnings grow tax-deferred from federal income tax• No federal income tax on Qualified Withdrawals• For federal gift and estate tax purposes, contributions are generally
considered completed gifts to the Beneficiary.
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No Guarantees • There are no guarantees that contributions and the investment earnings, ifany, will be adequate to cover future tuition and other higher educationexpenses or that a Beneficiary will be admitted to or permitted to continueto attend an Eligible Educational Institution.
• Except as described herein for accounts invested in the Bank Savings StaticInvestment Option, investments in the NEST Advisor Plan are not insured bythe FDIC.
• Investments in the NEST Advisor Plan are not guaranteed or insured by theState of Nebraska, the Nebraska Investment Council, the Nebraska StateTreasurer, the Nebraska State Investment Officer, First National Bank ofOmaha or its authorized agents or affiliates, or any other federal or stateentity or person.
• The value of your account could be more or less than the amount youcontribute to your account. In short, you could lose money.
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Enrollment Form • Available through your Financial Advisor• Download from www.NEST529Advisor.com
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Account Ownership • Individuals, trusts, certain entities, and custodial accounts• Must have a Social Security or taxpayer identification number and a U.S.
residential street address• No joint account ownership
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Beneficiary • Must have a Social Security or taxpayer identification number• Does not need to have a Nebraska or U.S. address• Can be changed at any time to another Member of the Family
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Topic Description Reference PageContributions • Contributions can be made by anyone but account owner retains ownership and
control of the account and its assets• Can be made online, automatically contributed from a checking or savings account;
by check; wire transfer; payroll deduction; or electronic funds transfer• No contribution minimum• Maximum Contribution Limit of $400,000 per Beneficiary for all accounts for the same
Beneficiary in all plans administered by the Nebraska State Treasurer. Assets cangrow beyond $400,000.
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Investment Options • 3 Age-Based Investment Options (Aggressive, Growth, Index)• 6 Static Investment Options (All Equity, Growth, Moderate Growth, Balanced,
Conservative, Bank Savings)• 19 Individual Investment Options• If an account owner has multiple accounts in the Plan for the same Beneficiary, or
multiple accounts among the NEST Advisor Plan, the NEST Direct Plan, the TDAmeritrade 529 College Savings Plan, or the State Farm 529 Savings Plan, the accountowner may change the Investment Options in all accounts without tax consequences,so long as the changes to all of the accounts are made at the same time and no morefrequently than twice per calendar year or upon a change of Beneficiary.
• Funds can be moved from one Investment Option to another twice per calendar yearfor all accounts administered by the Nebraska State Treasurer or at any time whenthe Beneficiary is changed to a Member of the Family.
• Transferring assets among Plans administered by the Nebraska State Treasurer isconsidered an Investment Option change.
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Risk Factors Opening an account involves certain risks, including:• The risk that the value of your account may decrease, you could lose money,
including the principal you invest;• The risk of state or federal tax law changes;• The risk of Plan changes, including changes in fees; and• The risk that an investment in the Plan may adversely affect the account owner or
Beneficiary’s eligibility for financial aid or other benefits.
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Performance • Performance of the Investment Options 44-47
Plan Fees andExpenses
• No annual account fee• No enrollment, investment change, transfer or withdrawal fee
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Class A• Age-Based Investment Option Cost Range: 0.44% - 0.77%*• Static Investment Option Cost Range: 0.20% - 0.77%*• Individual Investment Option Cost Range: 0.44% - 1.51%*• Up-Front Sales Load: 3.50%
Class C• Age-Based Investment Option Portfolio Cost Range: 0.44% - 1.52%*• Static Investment Option Cost Range: 0.20% - 1.52%*• Individual Investment Option Cost Range: 0.44% - 2.26%*• Contingent Deferred Sales Charge: 1.00%
Class C units automatically convert to Class A units within the month following the fifthanniversary of the purchase date. The units that convert to Class A will not pay a Class AUp-Front Sales Load at the time they convert. When the units convert to Class A, thedistribution and marketing fee will be reduced to 0.25%. Class A units are not subject toContingent Deferred Sales Charge (CDSC).
* Except for the Bank Savings Static Investment Option, these costs include a 0.25%Program Management Fee, a 0.02% State Administration Fee, and a 0.25% Class A or1.00% Class C distribution and marketing fee to cover administrative costs ofoverseeing, distributing and marketing the Plan. With respect to the Bank SavingsStatic Investment Option, the Program Management Fee is 0.18%. In addition, nodistribution and marketing fees apply to either Class A or Class C accounts thatinvest in the (i) Goldman Sachs Financial SquareSM Government Money MarketIndividual Investment Option; (ii) Age Based Index 17-18 and Age Based Index 19+Portfolios; or (iii) Bank Savings Static Investment Option.
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Topic Description Reference Page
Distributions • Assets in the account can be used to pay for Qualified Higher EducationExpenses of the Beneficiary including: tuition, fees, room & board (with certainlimitations), books, supplies, equipment required for the enrollment orattendance at an eligible post-secondary institution in the U.S. or abroad and thepurchase of computer or peripheral equipment, computer software, or Internetaccess and related services, if such equipment, software, or services are to beused primarily by the Beneficiary during any of the years the Beneficiary isenrolled at an Eligible Educational Institution regardless of whether suchtechnology or equipment is required by the Eligible Educational Institution.Computer software means any program designed to cause a computer toperform a desired function. Such term does not include any database or similaritem unless the database or item is in the public domain and is incidental to theoperation of otherwise qualifying computer software. Computer softwaredesigned for sports, games, or hobbies is not included unless this software ispredominantly educational in nature.
• The earnings portion of withdrawals not used for qualified expenses generally aresubject to federal income taxes, may be subject to an additional 10% federal tax,and may be subject to state or local taxes.
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Rollovers and Transfers • Funds can be rolled over from another 529 plan to this Plan or from this Plan toanother 529 plan once every 12 months for the same Beneficiary without beingsubject to federal tax.
• Funds can be rolled over from this Plan to an ABLE account for the sameBeneficiary without being subject to federal tax.
• A rollover to another Beneficiary who is a Member of the Family of the currentBeneficiary can take place at any time without federal income tax consequences.
• Nebraska state income tax deductions are subject to recapture when aparticipation agreement is cancelled, the assets in an account are rolled over toanother state’s qualified tuition program or ABLE program, or when aNon-Qualified Withdrawal is made.
• Liquidated assets from Coverdell ESA accounts, UGMA/UTMA assets and certainU.S. Savings Bonds can be transferred to the Plan at any time. Restrictions and taxconsiderations may apply.
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TABLE OF CONTENTS
PART 1 – OVERVIEW 11The Trust and the Plan 11The Program Manager 11Contributing to an account 11Investment Options 11Federal income tax benefits 11-12Nebraska state tax deduction 12Taxpayers and residents of other states 12
PART 2 – LEGAL DESCRIPTION OF THE PLAN 13The Trust and Plan 13The Treasurer 13The Nebraska Investment Council 13The Program Manager 13No insurance and no guarantees 13The Plan is not a mutual fund 13
PART 3 – OPENING AND MAINTAINING ANACCOUNT 14Using Financial Advisors 14Who can open an account 14No limits on the number of accounts 14Restrictions 14Maximum limits on contributions 14Completing and submitting an Enrollment Form 14You can obtain an Enrollment Form by 14Required information 14Choosing an Investment Option 14Selecting a Class 14Account ownership 15
Individual account owner 15Change in ownership 15Trusted Contact 15Death or legal incapacity of the account owner andsuccessor account owner 15Custodial accounts 15-16Accounts owned by minors 16Entity-owned accounts 16Trust accounts 16Accounts for infants 16
Maintaining and reviewing your account 16Program Manager’s right to terminate, freeze, suspend, orredeem your account 16-17Account opening error 17Documents must be in good order 17
PART 4 – BENEFICIARIES 18Beneficiary 18One Beneficiary 18Infant Beneficiary 18Scholarship account Beneficiary 18UGMA or UTMA or minor-owned account Beneficiary 18Changing the Beneficiary 18Member of the Family 18Death of a Beneficiary 18
PART 5 – CONTRIBUTING TO AN ACCOUNT 19Contributions 19Contribution restrictions 19
No contribution minimums 19Limits on maximum contributions to an account 19Excess contributions 19Allocation of contributions 19Systematic Exchange Program 19Contributions by non-account owners 19-20Contribution methods 20Contributing electronically from your bank account 20
Automatic Investment Plan (AlP) 20Electronic Funds Transfer (EFT) 20
Checks 21Wire transfer 21Payroll deduction 21Rollover 21Coverdell Education Savings Account 21-22Redemptions from certain U.S. Savings Bonds 22Transfers within the NEST Advisor Plan 22
Transfer to another account owner 22Transfer to another Beneficiary 22Transferring accounts among Nebraska-issued 529qualified tuition plans 22Potential tax consequences of a transfer 22
UGMA or UTMA accounts 22Transfers from a Upromise® by Sallie Mae® Account 22-23Contributions from Ugift® 23Contribution date 23Contribution pricing 23Contribution errors 23
PART 6 – INVESTMENT OPTIONS OVERVIEW 24Investment Options 2428 Investment Options 24No investment direction 24Changing Investment Options 24
PART 7 – AGE-BASED INVESTMENT OPTIONS 25Three Age-Based Investment Options 25Age-Based Aggressive Investment Option 25-26Age-Based Growth Investment Option 26-28Age-Based Index Investment Option 28-29Description of the underlying investments 30
PART 8 – STATIC INVESTMENT OPTIONS 31Six Static Investment Options 31All Equity Static Investment Option 31Growth Static Investment Option 31Moderate Growth Static Investment Option 31Balanced Static Investment Option 31Conservative Static Investment Option 31-32Bank Savings Static Investment Option 32
FDIC insurance 32No other guarantees 32
Description of the underlying investments 33
PART 9 – INDIVIDUAL INVESTMENT OPTIONS 3419 Individual Investment Options 34American Funds The Income Fund of America® IndividualInvestment Option 34DFA World ex-US Government Fixed Income IndividualInvestment Option 34-35Dodge & Cox Stock Individual Investment Option 35
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Federated Total Return Bond Individual InvestmentOption 35Goldman Sachs Financial SquareSM Government MoneyMarket Individual Investment Option 35iShares Core US Aggregate ETF Individual InvestmentOption 35iShares Russell 2000 Growth ETF Individual InvestmentOption 35-36MetWest Total Return Bond Individual Investment Option 36SPDR S&P® Dividend ETF Individual Investment Option 36State Street MSCI® ACWI ex USA Index IndividualInvestment Option 36-37State Street S&P 500® Index Individual Investment Option 37Tributary Small Company Individual Investment Option 37T. Rowe Price Large-Cap Growth IndividualInvestment Option 37Vanguard Extended Market ETF IndividualInvestment Option 37-38Vanguard FTSE Emerging Markets ETF IndividualInvestment Option 38Vanguard Real Estate ETF Individual Investment Option 38Vanguard Short-Term Bond ETF IndividualInvestment Option 38-39Vanguard Short-Term Inflation-Protected ETF IndividualInvestment Option 39Vanguard Total Stock Market ETF IndividualInvestment Option 39Bank Savings 39-40
PART 10 – CERTAIN RISKS TO CONSIDER 41Investment risks 41No insurance or guarantees 41Investment Options have certain risks 41
Call risk 41Concentration risk 41Credit risk 41ETF risks 41Extension risk 41Foreign investment risk 41Index sampling risk 41Interest rate risk 41Investment style risk 42Issuer risk 42Management risk 42Market risk 42Prepayment risk 42
Individual Investment Options and Bank Savings StaticInvestment Option are not as diversified as otherInvestment Options 42Program risks 42
Possible changes to the NEST Advisor Plan 42Limitation on investment selection 42Illiquidity of account 42Acceptance to an Eligible Educational Institution isnot guaranteed 42Qualified Higher Education Expenses may exceed thebalance in your account 42Plan does not create Nebraska residency 42Laws governing 529 qualified tuition programs maychange 42-43
Impact on the Beneficiary’s ability to receive financial aid 43Medicaid and other federal and state benefits 43
PART 11 – PERFORMANCE 44No ownership in underlying investments 44Performance differences 44Customized performance benchmarks 48
PART 12 – PLAN FEES AND EXPENSES 49Class fees 49No change in classes 49Class A accounts 49
Sales Load waivers 49Class A distribution and marketing fee 49
Class C accounts 50Contingent Deferred Sales Charge (CDSC) 50Class C distribution and marketing fee 50Conversion of Class C units to Class A units 50
Application of Class A up-front sales load, Class C CDSC,and distribution and marketing fees for certain InvestmentOptions or Portfolios 50Negative return 50Program Management Fee 50State Administration Fee 50Underlying investment fee 51Other account fees 51Selling institution compensation 51
Class A selling institution compensation 51Commission waivers 51Contributions from rewards programs 51Fee structure tables 52-55Approximate cost of $10,000 investment 56-58
PART 13 – DISTRIBUTIONS FROM AN ACCOUNT 59Requesting a distribution from an account 59Temporary withdrawal restrictions 59Systematic Withdrawal Program (SWP) 59Qualified Withdrawal 59Eligible Educational Institution 59Distribution of a Qualified Withdrawal 59-60Non-Qualified Withdrawals 60Exceptions to the federal penalty tax 60Rollovers 60
PART 14 – FEDERAL AND STATE TAXCONSIDERATIONS 61IRS Circular 230 Disclosure 61Qualified tuition program 61Federal tax information 61Qualified Withdrawals 61Qualified Higher Education Expenses 61-62Non-Qualified Withdrawal taxable 62Federal penalty tax on Non-Qualified Withdrawals 62Exceptions to the federal penalty tax 62Rollovers 62Change of Beneficiary 62Earnings portion 62Earnings aggregation 62-63Claiming a loss 63Estate and gift tax 63
Five-year election 63Change of Beneficiary 63
Coordination with education tax credits 63-64
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Coverdell Education Savings Accounts (ESAs) 64Lack of certainty 64Nebraska state income tax deduction 64Recapture of Nebraska income tax deduction 64Nebraska state income tax 64-65
PART 15 – OTHER CONSIDERATIONS 66Scholarships 66Contests 66Financial aid 66Bankruptcy 66Creditor protection 66Audits 66
PART 16 – GLOSSARY 67-68
EXHIBIT A – PARTICIPATION AGREEMENT 69-71
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PART 1 – OVERVIEW
The Trust and the PlanThe Nebraska Educational Savings Plan Trust (the “Trust”),established on January 1, 2001, is designed to qualify as atax-advantaged qualified tuition program under Section 529 ofthe Internal Revenue Code of 1986, as amended (the “Code”).Section 529 permits states and state agencies to sponsor qualifiedtuition programs under which you can contribute to an accountfor the benefit of any individual, including you (a “Beneficiary”).The Trust has a series of four plans, the NEST Advisor Plan, theNEST Direct College Savings Plan (the “NEST Direct Plan”), theTD Ameritrade 529 College Savings Plan, and the State Farm 529Savings Plan.
The NEST Advisor Plan provides a convenient andtax-advantaged way to save for Qualified Higher EducationExpenses. Each account in the Plan represents an interest in theTrust and holds units of one or more underlying investmentoptions (each an “Investment Option”) in the Plan.
The Nebraska State Treasurer acts as trustee for the Trust (the“Trustee”) and is responsible for the overall administration of thePlan.
The Nebraska Investment Council is responsible for theinvestment of the money in the Trust and the selection of allInvestment Options.
The Program ManagerThe Trustee entered into a Program Management Agreementwith First National Bank of Omaha (the “Program Manager”). Theseven-year contract ending December 17, 2017 was extended foran additional three-year term ending December 17, 2020. Underthis contract, the Program Manager provides day-to-dayadministrative and marketing services to the Plan. The ProgramManager is a subsidiary of First National of Nebraska, Inc., thelargest privately owned banking company in the United States.For more than 160 years, First National Bank of Omaha hasdedicated itself to providing quality products and superiorservice. First National of Nebraska, Inc. and its affiliates have $23billion in managed assets and 5,000 employee associates.
The Program Manager has entered into a distribution agreementwith First National Capital Markets, Inc. (the “PrimaryDistributor”). First National Capital Markets is the underwriter.The Primary Distributor and Program Manager are affiliatedcompanies. Under this contract, the Primary Distributor willengage registered broker-dealers and financial institutions toassist in marketing accounts to those interested in saving forcollege education expenses through the Plan. You will be able toopen an account and make contributions to your account throughyour Financial Advisor if they have entered into an agreement withthe Primary Distributor.
Contributing to an accountThe Plan is open to residents of any state, not just residents ofNebraska. As long as you have a Social Security number or
taxpayer identification number, and a residential street address inthe United States (including Puerto Rico, Guam or the U.S. VirginIslands), you may open and contribute to an account regardless ofyour income or the age of the Beneficiary.
While there are no limits on the number of accounts an accountowner can own, no additional contributions may be made for thebenefit of a particular Beneficiary when the fair market value of allaccounts owned by all account owners within the Trust for thatBeneficiary exceeds $400,000 (the “Maximum ContributionLimit”). If, however, the market value of such accounts falls belowthe Maximum Contribution Limit, additional contributions will beaccepted. The $400,000 per Beneficiary Maximum ContributionLimit applies to all accounts for the same Beneficiary in all plansadministered by the Nebraska State Treasurer, including theNEST Advisor Plan, the NEST Direct Plan, the TD Ameritrade 529College Savings Plan, and the State Farm 529 Savings Plan.
Investment OptionsThe Plan has 28 Investment Options from which to choose: threeAge-Based Investment Options, six Static Investment Options,and 19 Individual Investment Options. The Age-Based InvestmentOptions and Static Investment Options invest in specifiedallocations of domestic equity, real estate, international equity,international bond, fixed income funds, and cash equivalentinvestments (money market funds). The Bank Savings StaticInvestment Option invests in an FDIC-insured savings account.
Account owners do not (1) own shares of the underlying funds or(2) in the case of the Bank Savings Static Investment Option,directly hold a savings account but, rather, own an interest in theInvestment Options offered by the Plan. Account owners may notdeposit directly into the Savings Account at a Bank branch orotherwise. See “Part 6 – Investment Options Overview.” TheInvestment Options have been reviewed and approved by theNebraska Investment Council.
Working with your Financial Advisor you can choose anInvestment Option that is tailored to meet your investment riskand return profile. Accounts are offered through FinancialAdvisors to allow you to obtain advice as to whether aninvestment in the Plan is right for you.
Federal income tax benefitsInvestment earnings on your contributions accumulate on atax-deferred basis while in an account. Qualified Withdrawals areexempt from federal and Nebraska state income tax if they areused to pay for the Beneficiary’s Qualified Higher EducationExpenses. Qualified Higher Education Expenses include aBeneficiary’s tuition, fees, books, supplies, equipment requiredfor the enrollment or attendance of the Beneficiary at an EligibleEducational Institution and the purchase of computer orperipheral equipment, computer software, or Internet access andrelated services, if such equipment, software, or services are to beused primarily by the Beneficiary during any of the years theBeneficiary is enrolled at an Eligible Educational Institution..
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11
regardless of whether such technology or equipment is requiredby the Eligible Educational Institution. Computer software meansany program designed to cause a computer to perform a desiredfunction. Such term does not include any database or similar itemunless the database or item is in the public domain and isincidental to the operation of otherwise qualifying computersoftware. Computer software designed for sports, games, orhobbies is not included unless this software is predominantlyeducational in nature. For Beneficiaries enrolled at an EligibleEducational Institution on at least a half time basis, theBeneficiary’s room and board expenses also qualify as QualifiedHigher Education Expenses.
The earnings portion (if any) of a Non-Qualified Withdrawal will betreated as ordinary income to the recipient and may also besubject to an additional 10% federal tax, as well as partialrecapture of any Nebraska state income tax deduction previouslyclaimed.
Nebraska state tax deductionContributions by an account owner who files a Nebraska stateincome tax return, including the principal and earnings portions ofrollovers from another qualified college savings plan not issued bythe State of Nebraska, are deductible in computing the accountowner’s Nebraska taxable income for Nebraska income taxpurposes in an amount not to exceed $10,000 ($5,000 for marriedtaxpayers filing separate returns) in the aggregate for allcontributions to all accounts within the Trust in any taxable year.Contributions by a custodian of an UGMA or UTMA account whois also the parent or guardian of the Beneficiary of an UGMA orUTMA account may claim this deduction. See “Part 14 – Federaland State Tax Considerations” for important additionalinformation about state tax benefits.
Taxpayers and residents of other statesInvestors should consider before investing whether their or theirBeneficiary’s home state offers any state tax or other statebenefits such as financial aid, scholarship funds, and protectionfrom creditors that are only available for investments in suchstate’s qualified tuition program and should consult their taxadvisor, attorney and/or other advisor regarding their specificlegal, investment or tax situation.
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12
PART 2 – LEGAL DESCRIPTION OF THE PLAN
The Trust and PlanThe NEST Advisor College Savings Plan is one of four collegesavings plans issued by the Nebraska Educational Savings PlanTrust. The Plan is authorized by the State of Nebraska and isdesigned to qualify as a tax-advantaged qualified tuition programunder Code Section 529. The primary purpose of the Trust andPlan is to promote and enhance the affordability and accessibilityof higher education by offering a convenient and tax-advantagedway to save for the cost of tuition and other Qualified HigherEducation Expenses. Amounts contributed to the Plan areinvested in the Trust. The Trust holds the assets of the Plan,including all contributions made to accounts established byaccount owners.
The TreasurerThe Plan is overseen by the Nebraska State Treasurer, as Trusteeof the Trust. As Trustee, the Nebraska State Treasurer isresponsible for the overall administration of the Plan. The Plan issubject to the rules and regulations established by the NebraskaState Treasurer. A copy of these rules and regulations is availableupon request to the Primary Distributor or your Financial Advisor.
The Nebraska Investment CouncilThe Nebraska Investment Council is responsible for investmentoversight for the Trust and the Plan. The Nebraska InvestmentCouncil is responsible for the investment of money in the Trustand the selection of all Investment Options offered through thePlan.
The Program ManagerThe Nebraska State Treasurer, as Trustee, has engaged theProgram Manager to administer and market the Plan on behalf ofthe Trustee. The Program Manager works with the Treasurer toprovide day-to-day administrative and marketing services to thePlan. The Primary Distributor works with the Program Manager toengage registered broker-dealers and financial institutions toassist in marketing the Plan accounts.
No insurance and no guaranteesExcept as described herein for accounts invested in the BankSavings Static Investment Option, accounts in the NESTAdvisor Plan are not insured by the FDIC. Accounts in theNEST Advisor Plan are not guaranteed or insured by the Stateof Nebraska, the Nebraska Investment Council, the NebraskaState Treasurer, the Nebraska State Investment Officer, FirstNational Bank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity or person.
The value of your account may vary depending on marketconditions, the performance of the Investment Options youselect, the timing of purchases, and fees. The value of youraccount could be more or less than the amount you contributeto your account. In short, you could lose money.
FDIC insurance is provided for the Bank Savings StaticInvestment Option only, which invests in an FDIC-insuredomnibus savings account held in trust by the NebraskaEducational Savings Plan Trust at First National Bank ofOmaha. Contributions to, and earnings on, the investments inthe Bank Savings Static Investment Option are insured by theFDIC on a per participant, pass-through basis to each accountowner up to the maximum limit established by federal law,which currently is $250,000.
The Plan is not a mutual fundNeither the NEST Advisor Plan nor your account is a mutual fund,and you do not own shares in the underlying investments held inthe Investment Options offered through the Plan. Investments inthe Plan are considered municipal fund securities, which are notregistered with the SEC or any state securities commission.
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13
PART 3 – OPENING AND MAINTAININGAN ACCOUNT
Using Financial AdvisorsAccounts in the NEST Advisor Plan are only offered by the PrimaryDistributor and through Financial Advisors who have entered intoan agreement with the Primary Distributor to offer accounts totheir customers. Contributions to a Plan account will be investedafter applicable sales charges are deducted. To open an account,contact your Financial Advisor directly for specific instructions orassistance on how to complete and submit the Enrollment Form.
Who can open an accountAn account may be opened by an individual, certain entities(including a partnership, corporation, estate or association that isdomiciled in the United States), a custodian under a state’s UGMAor UTMA statute, or a trust to save for the Qualified HigherEducation Expenses of a Beneficiary. An account may also beestablished by a state or local government or a tax-exemptorganization described in Code Section 501(c)(3) as part of ascholarship program operated by the government or organizationwithout naming a specific Beneficiary when the account is opened.Each account owner must have a Social Security number ortaxpayer identification number and a residential U.S. street address.
You may select multiple Investment Options for the account youopen for your Beneficiary when you complete the EnrollmentForm or at a later date. All Investment Options opened by you foryour Beneficiary will be placed into a single account.
No limits on the number of accountsA single account can include different Investment Options for thesame Beneficiary. Separate accounts may be established for thesame Beneficiary by different account owners. An account ownermay open multiple accounts for different Beneficiaries. Joint ormultiple account owners are not permitted.
RestrictionsWhen an account owner or the address is changed on an account,there is a 10-business-day hold before a withdrawal can be made.A withdrawal request must be signature guaranteed if the requestis within 10 business days of the change to have the withdrawalreleased before the hold period expires.
Maximum limits on contributionsWhile there are no limits on the number of accounts an accountowner can own, no additional contributions may be made for thebenefit of a particular Beneficiary when the fair market value of allaccounts owned by all account owners within the Trust for thatBeneficiary equals the $400,000 Maximum Contribution Limit. If,however, the fair market value of such accounts falls below theMaximum Contribution Limit, additional contributions will beaccepted. The Maximum Contribution Limit applies to all accountsfor the same Beneficiary in all plans administered by the NebraskaState Treasurer, including the NEST Advisor Plan, the NEST DirectPlan, the TD Ameritrade 529 College Savings Plan, and the StateFarm 529 Savings Plan.
Completing and submitting an Enrollment FormTo open an account, you must complete an Enrollment Form andreturn it to your Financial Advisor. By completing and submittingan Enrollment Form, you agree to be bound by the terms andconditions of the Program Disclosure Statement and ParticipationAgreement, which govern your rights, benefits and obligations asan account owner. The current version of the ParticipationAgreement is included as Exhibit A to this Program DisclosureStatement.
Any amendments to the Code, Nebraska law, or regulationsrelating to the Plan may automatically amend the terms of yourParticipation Agreement, and the Trustee may amend yourParticipation Agreement at any time and for any reason by givingyou written notice of such amendments.
You can obtain an Enrollment Form by:Contacting your Financial Advisor
Downloading the form at www.NEST529Advisor.com
Writing the NEST Advisor Plan at:P.O. Box 30277Omaha, NE 68103-1377
Calling the NEST Advisor Plan at:888.659.NEST (6378)8:00 a.m. – 8:00 p.m. Central TimeMonday – Friday
Required informationThe Federal U.S.A. Patriot Act requires the Program Manager toobtain, verify, and record information that identifies each personwho opens an account. You are required to provide the accountowner’s name, street address, date of birth, citizenship status, andSocial Security or taxpayer identification number. Your accountwill not be opened if you do not provide the Program Managerwith this information. If the Program Manager is unable to verifyyour identity, it reserves the right to close the account at the nextcalculated unit price following such determination, at your risk, ortake other steps it deems reasonable.
Choosing an Investment OptionYou must select one or more Investment Options in an account foryour Beneficiary when you open an account or at a later date. AllInvestment Options selected by you for your Beneficiary will be placedinto a single account. See “Part 6 – Investment Options Overview.”
Selecting a ClassWhen you complete the Enrollment Form to establish an account,you need to select the share class (each a “Class”) applicable tothe account. See “Part 12 – Plan Fees and Expenses.” EachClass has different costs and you should work with your FinancialAdvisor to determine the Class that best fits your needs. Youcannot change the Class on an established account but you canselect an Investment Option for the same Beneficiary in a differentClass for future contributions. The account owner cannotexchange funds from one Class to another...
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14
Account ownershipIndividual account owner – An individual account owner who hasreached the age of majority, with a valid Social Security number ortaxpayer identification number and a residential street address inthe United States, Puerto Rico, Guam or the U.S. Virgin Islands canopen an account. The account owner must register the accountwith a U.S. residential street address when an account is openedbut may also designate a U.S. Post Office box to receive mail.There may only be one account owner – joint or multiple accountownership is not allowed. If an account owner changes his or heraddress on his or her account from a U.S. address to a foreignaddress contributions to the account will no longer be allowed.
Change in ownership – You may change ownership of your accountto another individual or entity that is eligible to be an accountowner. When you transfer ownership of your account, you are notrequired to change the Beneficiary. A change of ownership of anaccount will only be effective if the assignment is irrevocable andtransfers all ownership rights. To be effective, a transfer of ownershipof your account also requires the new account owner to completeand execute an Enrollment Form (and thereby enter into aParticipation Agreement), and an Account Information Change Formcompleted by the current account owner. You should consult yourtax advisor regarding the potential gift and/or generation-skippingtransfer tax consequences of changing ownership of your account.
Trusted Contact – You may designate someone you trust who isat least 18 years of age (a “Trusted Contact”) to act as a resourceif we lose contact with you or believe you and/or your assets areat risk. By choosing to provide information about a TrustedContact, you authorize us to contact this person and discloseinformation about your account to that person in the followingcircumstances: to address possible financial exploitation; toconfirm the specifics of your current contact information, yourhealth status, or the identity of any legal guardian, executor,trustee or holder of a power of attorney; or as otherwisepermitted by FINRA Rule 2165 (Financial Exploitation of SpecifiedAdults). Designating a Trusted Contact does not mean you areauthorizing him or her to act on your account. Instead, he or shecan be a resource to protect your account from suspected fraudor if you are unable to speak for yourself. We will not releaseinformation beyond what is necessary to protect you and/or yourassets from potential harm. To designate or change a TrustedContact please call the Plan.
Death or legal incapacity of the account owner and successor accountowner – On your Enrollment Form, you may designate a successoraccount owner to take ownership of your account in the event of yourdeath or legal incapacity. A successor account owner can be anindividual, entity or trust but cannot be a minor. If you have alreadyestablished an account, you may designate a successor accountowner or change your designation by completing the appropriateform which may be obtained by contacting your Financial Advisorthrough which you opened your account, submitting a form availableon the Plan’s website or by calling the Plan. If you do not designate asuccessor account owner, then the Beneficiary, rather than yourestate, shall be named the account owner.
Before the successor account owner will be permitted to transactbusiness in respect to your account, he or she will be required toprovide a certified copy of the death certificate, in the case of thedeath of the account owner, or an acceptable medicalauthorization or court order in the case of the legal incapacity ofthe account owner, and execute a new Enrollment Form,accepting the terms of the then-current Program DisclosureStatement and Participation Agreement. If the new account owneris an entity or trust, appropriate documentation may be requiredto accompany the Enrollment Form.
Custodial accounts – If a custodian holding assets under a state’sUGMA or UTMA statute establishes an account, the minor forwhose benefit the custodian holds the UGMA or UTMA accountassets must be designated as the account owner and Beneficiaryof the account. The custodian must complete the EnrollmentForm and assume account owner responsibilities until theBeneficiary reaches the age of majority under the applicableUGMA or UTMA statute, at which time the Beneficiary will assumeaccount owner responsibilities. At the time the Beneficiaryreaches the age of majority, the custodian must submit asignature guaranteed letter of authorization, an Enrollment Formaccepting the terms of the then-current Program DisclosureStatement and Participation Agreement, and a certified copy ofthe Beneficiary’s birth certificate indicating that the Beneficiaryhas reached the age of majority.
The custodian must liquidate the assets from the current UGMAor UTMA account (which may be subject to federal and stateincome taxes) for deposit into the Plan’s custodial account.Money in a custodial account is irrevocable and is a permanentgift to the Beneficiary. Money in a custodial account can only beused for the Beneficiary’s expenses. However, any earningsportion of any Non-Qualified Withdrawal made before theBeneficiary reaches the age of majority will be included in theincome of the Beneficiary.
The custodian will not be permitted to change the account owneror Beneficiary of a custodial account or transfer assets to anotherBeneficiary. The custodian will be required to certify on awithdrawal form that the withdrawal is for the benefit of theBeneficiary. Any contributions to a custodial account holdingUGMA or UTMA funds will be subject to these restrictions.
A custodian can be changed on a custodial account by providingsupporting documentation in writing from the current custodianor submitting a valid court order appointing another person asthe custodian. The new custodian must complete an EnrollmentForm available from a Financial Advisor, downloading a form fromthe Plan’s website, or by calling the Plan.
None of the Program Manager or its agents or their affiliates, theTrustee, the Nebraska Investment Council, or the State ofNebraska will assume responsibility to ensure, or will incur anyliability for failing to ensure, that a custodian applies assets heldunder an UGMA or UTMA custodianship for proper purposes.Liquidating an UGMA or UTMA account for deposit into the NEST..
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15
Advisor Plan may trigger tax consequences. Custodians shoulddiscuss the tax implications with their tax advisors beforetransferring funds to the NEST Advisor Plan.
Accounts owned by minors – As of February 1, 2016 a minor mayonly be named an account owner in the event of the death orlegal incapacity of the account owner in which a successoraccount owner had not been designated for that account. If at thetime of the account owner’s death or legal incapacity theBeneficiary is a minor, the minor will become both the accountowner and the Beneficiary of the account. The parent or legalguardian of the minor Beneficiary must provide a letter ofinstruction, a certified copy of the account owner’s deathcertificate or other proof of legal incapacitation, and execute anew Enrollment Form, accepting the terms of the then-currentProgram Disclosure Statement and Participation Agreement.
For all minor-owned accounts opened prior to or after February 1,2016, the parent or legal guardian must assume account ownerresponsibilities until the Beneficiary reaches the age of majority asdesignated by his or her residential state. At the time theBeneficiary reaches the age of majority, the parent or legalguardian or the Beneficiary must submit a signature guaranteedletter of authorization, an Enrollment Form signed by theBeneficiary who has reached the age of majority accepting theterms of the then-current Program Disclosure Statement andParticipation Agreement, and a certified copy of the Beneficiary’sbirth certificate indicating that the Beneficiary has reached theage of majority.
As with UGMA or UTMA accounts, the parent or guardian will notbe permitted to change the account owner or Beneficiary of theaccount or transfer assets to another Beneficiary. The parent orguardian will be required to certify on a withdrawal form that thewithdrawal is for the benefit of the Beneficiary.
Entity-owned accounts – If the account owner is a partnership,corporation or other entity, the entity must provide a validtaxpayer identification number, and the name and title of acontact person authorized by the entity to act in its capacity. Theentity must be domiciled in the U.S. including Puerto Rico, Guam,and the U.S. Virgin Islands. The entity may be required to provideappropriate documentation to accompany the Enrollment Form.
When signing Plan forms or conducting a transaction, the personauthorized to act on behalf of the entity will certify that he or shecontinues to be authorized to act on behalf of the entity. TheProgram Manager will presume that any entity documentsprovided are valid, effective to bind the entity, and will have noliability for defective documentations submitted by the authorizedcontact person.
Trust accounts – If the account owner is a trust, the trustee shouldconsult with his or her legal and tax advisors before establishingthe account. This Program Disclosure Statement does not attemptto address the income or transfer tax consequences ofinvestments in the Plan made by a trust or the propriety of such
an investment under state trust law. The trustee may be requiredto submit documents when an account is opened. Call the Planfor more information.
Accounts for infants – All Beneficiaries must have a Social Securitynumber or taxpayer identification number. If you have an infant,you cannot open an account until you obtain a Social Securitynumber or taxpayer identification number for that infant.
Maintaining and reviewing your accountThe Plan will send you confirmation statements each time financialtransactions are made (with the exception of age-band rolls, asystematic contribution through AIP, payroll deduction, systematicexchanges, or transfers from a Upromise® by Sallie Mae® Account)as well as when there are changes to your account registration. Forquarters one, two and three, if there were financial transactionsduring the quarter, the Plan will also send you a quarterly statementthat indicates the current account balance and financial transactionsmade during the quarter and transactions from previous quarterswithin the same calendar year, if applicable. For the fourth quarter,the Plan will send all account owners an annual statement that willinclude all financial transactions during the entire year. You cancheck your account balances, transaction history, and quarterlystatements online at www.NEST529Advisor.com, by contacting yourFinancial Advisor, or by calling the Plan. Contributors who are notaccount owners will not receive any notification of a transaction norwill they have any right to the account or to receive informationabout the account. Financial Advisors will not automatically receiveconfirmations and duplicate statements but will receive them ifrequested by the Financial Advisor or account owner. Accountowners can request that an interested party receive duplicatestatements.
Program Manager’s right to terminate, freeze, orsuspend, or redeem your accountThe Program Manager can terminate the account if the accountowner provided false or misleading information or if the accountreaches a zero balance. In addition, if there has been no activity inthe account and the Program Manager or its designee has notbeen able to contact the account owner for a period of at leastfive years, the account may be considered abandoned underNebraska state law. If the account is considered abandoned, itmay, without authorization from the account owner, betransferred to the Nebraska State Treasurer’s Unclaimed PropertyDivision. The Program Manager can freeze the account orsuspend account services if the Program Manager reasonablybelieves there is a dispute regarding the assets in the account,that fraudulent transactions may have occurred, upon notificationof the death of an account owner until the Program receivesrequired documentation in good order and reasonably believes itis lawful to transfer account ownership to the successor accountowner, or if there is suspicious conduct relating to the account.
Per FINRA Rule 2165 Financial Exploitation of Specified Adults,the Plan may place a temporary hold on a disbursement of fundsor securities from the account of a specified adult if the Plan hasreason to believe that financial exploitation has occurred, is..
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16
occurring or has been occurring. A “Specified Adult” is (a) anatural person age 65 and older; or (b) a natural person age 18and older who the Plan believes has a mental of physicalimpairment that renders the individual unable to protect his or herown interests.
Account opening errorlf the account owner believes that a new account’s InvestmentOption was not what the account owner indicated on theEnrollment Form, or if the Beneficiary’s age is incorrect, the Planmust be notified within 60 calendar days from the date theaccount opening confirmation was mailed. If you do not notify thePlan within 60 calendar days, you will be considered to haveapproved the information in the confirmation and to havereleased the State of Nebraska, the Nebraska Investment Council,the Trustee, the Nebraska State Investment Officer, and theProgram Manager or its authorized agents or their affiliates, ofresponsibility for all matters covered by the confirmation. After 60calendar days, the assets will remain in the Investment Optionuntil withdrawn or when the account owner requests anInvestment Option change. The Program Manager may waive the60-calendar-day notice requirement at its sole discretion in theevent an error has occurred.
Documents must be in good orderIn order to timely process any transaction, such as opening anaccount in or processing a contribution to the Plan, all necessarydocuments must be in good order. Documents are in good orderwhen they are fully, properly and accurately completed, executed(where necessary) and received by the Program Manager or itsauthorized agents for processing. For example, in order for anEnrollment Form or a contribution to be received in good order,certain information must be provided. Where information ismissing, an Enrollment Form or a contribution is not received ingood order and processing may be delayed or the Form or thecontribution may be returned to you.
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17
PART 4 – BENEFICIARIES
BeneficiaryThe Beneficiary is the individual for whom Qualified HigherEducation Expenses are expected to be paid from the account.Any individual with a valid Social Security number or taxpayeridentification number can be a Beneficiary. A Beneficiary can beof any age and need not be a resident of the State of Nebraska orof the United States.
An account owner does not have to be related to the Beneficiary.However, if you change the Beneficiary in the future, the newBeneficiary must be a Member of the Family of the formerBeneficiary in order to avoid a taxable transaction.
One BeneficiaryEach account may have only one Beneficiary, but differentaccount owners may establish different accounts for the sameBeneficiary. An account owner may also name himself or herself asthe Beneficiary.
Infant BeneficiaryAll Beneficiaries must have a Social Security number or taxpayeridentification number. An account cannot be opened until youcan provide the Plan with the infant’s Social Security number ortaxpayer identification number.
Scholarship account BeneficiaryIf an account is established by a state or local government (oragency or instrumentality thereof) or an organization described inCode Section 501(c)(3) as part of a scholarship program operatedby the government or organization, the Beneficiary is not requiredto be identified on the Enrollment Form at the time the account isestablished. The government or organization shall designate theBeneficiary prior to any distributions for Qualified HigherEducation Expenses from the account.
UGMA or UTMA or minor-owned account BeneficiaryIf the source of contributions to an account was a state UGMA orUTMA funds or if the account is owned by a minor, the Beneficiaryof the account may not be changed even if the new Beneficiary isa Member of the Family of the original Beneficiary of the account.
Changing the BeneficiaryExcept as set forth below, an account owner may change theBeneficiary at any time without adverse federal income taxconsequences if the new Beneficiary is a Member of the Family ofthe former Beneficiary. Upon a change in Beneficiary, the accountowner may also change the Investment Options in which theaccount is invested.
However, upon a change of Beneficiary, the existing assets plusthe assets moved to the new Beneficiary’s account cannot resultin the total account values in all accounts in the Trust for the newBeneficiary to exceed the Maximum Contribution Limit.
If the new Beneficiary is not a Member of the Family of the formerBeneficiary, then the change is treated as a Non-QualifiedWithdrawal that is subject to federal and state taxes and anadditional 10% federal tax on any earnings, as well as partialrecapture of any Nebraska state income tax deduction previouslyclaimed.
To change the Beneficiary of an account, you should contact theFinancial Advisor through which you established your account. Heor she will assist you in completing the appropriate paperwork. Oryou can visit the Plan’s website at www.NEST529Advisor.com todownload the appropriate form.
An account owner may change the Beneficiary at any time withoutadverse federal income tax consequences if the new Beneficiary isa Member of the Family of the former Beneficiary.
A Beneficiary cannot be changed on an UGMA or UTMA orminor-owned account.
Member of the FamilyA Member of the Family is defined as anyone who is related tothe Beneficiary in one of the following ways:
• A son or daughter, or a descendant of either;• A stepson or stepdaughter;• A brother, sister, stepbrother or stepsister;• The father or mother, or an ancestor of either;• A stepfather or stepmother;• A son or daughter of a brother or sister;• A brother or sister of the father or mother;• A son-in-law, daughter-in-law, father-in-law, mother-in-law,
brother-in-law or sister-in-law;• The spouse of the Beneficiary or the spouse of any of the
foregoing individuals; or• A first cousin of the Beneficiary.
For purposes of determining who is a Member of the Family, alegally adopted child or a foster child of an individual is treated asthe child of such individual by blood. The terms “brother” and“sister” include half-brothers and half-sisters.
Death of a BeneficiaryUpon the death of a Beneficiary, the account owner can changethe Beneficiary on the account, transfer assets to anotherBeneficiary who is a Member of the Family of the formerBeneficiary, or take a Non-Qualified Withdrawal. SomeNon-Qualified Withdrawals following the death of the Beneficiaryare not subject to the additional 10% federal tax. See “Part 13 –Distributions from an Account.”
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18
PART 5 – CONTRIBUTING TO AN ACCOUNT
ContributionsAnyone can contribute to a NEST Advisor Plan account but onlythe account owner can (1) control how the assets are invested andused, (2) designate a Beneficiary, and (3) claim tax benefits relatedto the account, regardless of who contributed to it.
Contribution restrictionsAll contributions must be cash-equivalent and denominated inU.S. dollars. Cash is not accepted. The Program Manager will holdall contributions up to five business days before a withdrawal ofthose assets can occur.
No contribution minimumsThere are no minimum contribution requirements and there is nominimum amount that must be maintained in a NEST Advisor Planaccount. The Program Manager reserves the right to close azero-balanced account.
Limits on maximum contributions to an accountAdditional contributions to an account are not permitted whenthe fair market value of all accounts owned by all account ownerswithin the Trust for that Beneficiary equals the MaximumContribution Limit. If, however, the market value of such accountsfalls below the Maximum Contribution Limit, additionalcontributions will be accepted.
The $400,000 per Beneficiary Maximum Contribution Limit appliesto all accounts for the same Beneficiary in all plans administered bythe Nebraska State Treasurer, including the NEST Advisor Plan,the NEST Direct Plan, the TD Ameritrade 529 College SavingsPlan, and the State Farm 529 Savings Plan. The Nebraska StateTreasurer may periodically adjust the Maximum Contribution Limit.
Excess contributionsThe Program Manager will notify you if you attempt to make acontribution to an account that exceeds the MaximumContribution Limit. The Program Manager will not knowinglyaccept and will reject contributions in excess of the MaximumContribution Limit. Contributions will be deposited up to theMaximum Contribution Limit and the remainder will be refundedless any amounts attributable to market losses suffered betweenthe date of the contribution and the date of the refund. If theProgram Manager determines that a contribution in excess of theMaximum Contribution Limit has been accepted, the excesscontributions and any earnings thereon will be promptlyrefunded. If a contribution is applied to an account and it is laterdetermined that the contribution resulted in exceeding theMaximum Contribution Limit, the excess contribution and anyearnings will be refunded to the account owner. Any refund of anexcess contribution may be treated as a Non-QualifiedWithdrawal.
Allocation of contributionsAt the time an account is established, you must select how youwant the contributions allocated among the Investment Options
you selected for future contributions (“Standing Allocation”).Additional contributions will be invested according to the StandingAllocation unless you provide us with different instructions. Youmay reallocate assets to different Investment Options twice percalendar year and with a permissible change in the Beneficiary.You can view your Standing Allocation any time online. You canchange your Standing Allocation any time by accessing the Plan’ssecure website, by submitting a form available through yourFinancial Advisor, by downloading and submitting a form availableon the Plan’s website, or by calling the Plan.
Systematic Exchange ProgramThe Systematic Exchange Program allows the exchange of aminimum of $200 from one Investment Option to anotherInvestment Option on a pre-scheduled basis (“SystematicExchange”).
In order to establish the Systematic Exchange Program, you mustdeposit a minimum contribution of at least $2,500 into a “source”Investment Option. When you establish a Systematic Exchange,you must select a preset dollar amount of $200 or more to beexchanged into each of one or more preselected “receiving”Investment Options over a preset period of time, either monthlyor quarterly. Any Age-Based, Static or Individual InvestmentOption can serve as the source Investment Option or receivingInvestment Option.
Systematic Exchange does not ensure a profit or protect againstloss in a declining market. Systematic Exchange commits you to apreset investment in the receiving Investment Option(s) selectedregardless of fluctuating prices.
If Systematic Exchange is selected at the time that an account isopened or after an account is opened and is selected for newcontributions, it will be considered the initial investment strategyfor that account and not be counted toward the investmentchange limit for that Beneficiary for the calendar year.
If Systematic Exchange is selected for money already depositedinto an account after an account is opened or if any changes to acurrent Systematic Exchange Program are made, that selection orchange will be counted toward the investment change limit forthat Beneficiary for the calendar year.
Before establishing a Systematic Exchange Program, you shouldcarefully consider with your Financial Advisor the risks associatedwith selecting and creating a Systematic Exchange Program.
Contributions by non-account ownersAnyone can make contributions to an account. However, only theaccount owner and a custodian of an UGMA or UTMA accountwhere the custodian is the parent or guardian of the Beneficiary ofan UGMA or UTMA account, are eligible for a Nebraska stateincome tax deduction for contributions made by him or her. Inaddition, only the account owner maintains control over allcontributions to an account regardless of their source, includingthe right to change Investment Options and make withdrawals..
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19
from an account. For the purpose of an UGMA or UTMA or minor-owned account, the minor is the account owner.
Under current law, the gift and generation-skipping transfer taxconsequences of a contribution by anyone other than the accountowner are unclear. Accordingly, if a person other than the accountowner plans to make a contribution to an account, that personshould consult his or her own tax or legal advisors as to theconsequences of a contribution.
Contribution methodsContributions can be made to an account by:• Contributing electronically from your bank account• Check• Wire Transfer• Payroll deduction• Rollover from another qualified tuition program• Coverdell ESA• Redemption from certain U.S. Savings Bonds• Transfer within the NEST Advisor Plan• UGMA or UTMA accounts• Transfer from Upromise® by Sallie Mae® Account• Contributions from Ugift®
Contributing electronically from your bank accountAccount owners can authorize contributions from their checkingor savings bank account into their NEST Advisor Plan account forone-at-a-time contributions (an “Electronic Funds Transfer” or“EFT”) or prescheduled, ongoing contributions (“AutomaticInvestment Plan” or “AIP”), subject to certain processingrestrictions. The bank from which the contribution is drawn mustbe a member of the Automated Clearing House. You canauthorize these instructions when you complete an EnrollmentForm, or, after your account is opened, online by accessing thesecure website, by submitting a form available through yourFinancial Advisor, by downloading and submitting a formavailable on the Plan’s website, or by calling the Plan (if you havepreviously submitted certain information about the bank accountfrom which the money will be withdrawn).
For both EFT and AIP you must provide the Plan with yourbanking instructions. For AIP you must also indicate the amountand frequency you want the ongoing contributions to occur. If theaccount owner does not own the bank account, the bank accountowner must authorize in writing the use of the other person’s bankaccount. This can be accomplished on the form that establishes orchanges bank account information for your account. The bankmust be a U.S. bank and the contribution must be in U.S. dollars.
You can initiate EFT contributions, change your bank, stop AIP, orchange your AIP contribution amount or frequency online byaccessing the secure website. You can also make such changes bysubmitting a form available through your Financial Advisor or onthe Plan’s website or by calling the Plan.
If your EFT or AIP contribution cannot be processed because ofinsufficient funds or incomplete or inaccurate information, or if the
transaction would violate processing restrictions, the Plan reservesthe right to suspend future EFT or AIP contributions. A $25 chargemay be assessed for rejected electronic transfers from bankaccounts against each account that was the proposed recipient ofthe attempted contribution. The account owner will also beresponsible for any losses or expenses incurred by the InvestmentOption.
We do not charge a fee for accepted EFT or AIP transactions.
Automatic Investment Plan (AIP)When you contribute to your account through AIP you areauthorizing us to receive periodic automated debits from achecking or savings account at your bank (if your bank is amember of the Automated Clearing House), subject to certainprocessing restrictions. Your AIP authorization will remain in effectuntil we have received notification of its termination from you andwe have had a reasonable amount of time to act on it. AIP debitsfrom your bank account will occur on the day you indicate,provided the day is a regular business day. If the day you indicatefalls on a weekend or a holiday, the AIP debit will occur on thenext business day (“debit date”). Quarterly AIP debits will bemade on the day you indicate (or the next business day, ifapplicable). You will receive a trade date of the business day onwhich the bank debit occurs.
The start date for an AIP must be at least three business days fromthe date of submission of the AIP request. If a start date for an AIPis less than three business days from the date of the submission ofthe AIP request, the AIP will start on the requested day in the nextsucceeding period.
A program of regular investments cannot assure a profit orprotect against a loss in a declining market.
Electronic Funds Transfer (EFT)If you have identified a checking or savings account from whichthe money will be withdrawn, you may authorize us to withdrawfunds by EFT for contributions into your account. EFTcontributions can be made online or by calling the Plan. The Planmay place a limit on the total dollar amount per day you maycontribute to an account by EFT. EFT purchase requests that arereceived in good order:
• Before 10 p.m. Eastern Time will be given a trade date of thenext business day after the date of receipt and will beeffective at that day’s closing price for the applicableInvestment Option or Portfolio. In such cases, the EFT debitfrom your bank account will occur on the second businessday after the request is received; or
• After 10 p.m. Eastern Time will be given a trade date of thesecond business day after the date the request is received,and they will be effective at that day’s closing price for theapplicable Investment Option or Portfolio. In such cases, theEFT debit from your bank account will occur on the thirdbusiness day after the request is received. Your trade datewill be on the business day prior to your debit date...
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20
ChecksChecks should be made payable to “NEST Advisor Plan” or“NEST.” A contribution by mail coupon should accompany thecheck. Contribution by mail coupons are sent to you when anaccount is opened, when a transaction is performed, and instatement mailings. You can also download a contribution couponfrom www.NEST529Advisor.com. If a coupon is not available,include the account number and name of the Beneficiary on thecheck or include separate written instructions. All checks must bein good order. Some checks that will also not be acceptedinclude: travelers checks, foreign checks, checks dated more than180 days from the date of receipt, post-dated checks, checks withunclear instructions, starter checks or counter checks, credit cardor bank courtesy checks, promotional checks, third-party personalchecks over $10,000, instant loan checks, and any other check wedeem unacceptable. Money orders are not accepted. Third-partypersonal checks must be payable to you or the Beneficiary and beproperly endorsed by you or the Beneficiary to the NEST AdvisorPlan.
A $25 charge may be assessed for returned checks against eachaccount that was the proposed recipient of the attemptedcontribution. The account owner may also be responsible for anylosses or expenses incurred in the Investment Options.
Checks should be made payable to “NEST Advisor Plan” or“NEST” and can be sent to the following address:
Mailing Address:NEST Advisor PlanP.O. Box 30277Omaha, NE 68103-1377
For faster delivery, consider using the overnight or courieraddress below.
Overnight or Courier Address:NEST Advisor Plan920 Main Street, Suite 900Kansas City, MO 64105
Wire transferWire transfers are initiated from the contributor’s financialinstitution. Please call the Plan to obtain information regardingwire transfers.
Payroll deductionContributions can be made into a NEST Advisor Plan from apaycheck if the employer permits direct deposit. Payrolldeduction is made with after-tax dollars. Account owners initiatepayroll deduction and any changes directly with their employer.
Mistakes made by the employer can only be remedied betweenthe employee and the employer. The Plan will not take anyresponsibility for mistakes made by the employer or employee.You must complete payroll deduction instructions by logging intoyour account at www.NEST529Advisor.com, selecting the payroll
deduction option, and designating the contribution amount in theinstructions. You will need to print these instructions and submitthem to your employer.
Class A sales loads may be waived for accounts opened withpayroll deduction in the NEST Advisor Plan. See “Part 12 – PlanFees and Expenses.” Please call the NEST Advisor Plan for furtherinstructions on establishing direct deposit from your paycheck.
RolloverContributions may also be made by a rollover or direct transfer offunds from another qualified tuition program. Rollovers from anotherqualified tuition program are treated as a non-taxable distributionfrom the distributing qualified tuition program if you (1) change theBeneficiary of the account to a Member of the Family of the formerBeneficiary, or (2) do not change the Beneficiary if the rollover doesnot occur within 12 months from the date of any previous rollover toa qualified tuition program for the Beneficiary.
To initiate a rollover from another qualified tuition program youmust first open a NEST Advisor Plan account. You have the option ofwithdrawing funds from the former account and, if that is the case,you must deposit the funds within 60 days into either (1) anotheraccount for the benefit of another Beneficiary who is a Member ofthe Family of the former Beneficiary, or (2) an account in the NESTAdvisor Plan account for the benefit of the same Beneficiary.
You may instruct the Plan to contact another qualified tuitionprogram directly to request that funds from your account in thatprogram be sent to the NEST Advisor Plan. Check with the otherqualified tuition program first to determine the best approach foryou to take. You can call the Plan for further instructions.
Under Internal Revenue Service (IRS) guidance, the ProgramManager is required to assume that the entire amount of anycontribution that is a rollover contribution from another qualifiedtuition program is earnings in the account receiving thecontribution unless the Program Manager receives appropriatedocumentation showing the actual earnings portion of therollover contribution.
Account owners who are Nebraska taxpayers who roll over fundsinto the NEST Advisor Plan may be eligible for a Nebraska stateincome tax deduction. See “Part 14 – Federal and State TaxConsiderations.” The qualified tuition program from which youare transferring funds may impose other restrictions on a rollover,such as the recapture of any state income tax deductionpreviously claimed, so you should investigate this optionthoroughly before requesting a transfer.
Coverdell Education Savings AccountContributions may also be made by a rollover or direct transfer offunds from a Coverdell Education Savings Account (“ESA”)(formerly known as an Education IRA). Amounts distributed froman ESA and contributed to an account may be treated asnon-taxable distributions from the ESA. Call the Plan for moreinformation and instructions...
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21
Under IRS guidance, the Program Manager is required to assumethat the entire amount of any contribution that is a rollovercontribution from an ESA is earnings in the account receiving thecontribution unless the Program Manager receives appropriatedocumentation showing the actual earnings portion of thecontribution.
Redemptions from certain U.S. Savings BondsSubject to certain limitations, redemption of certain qualifiedUnited States Savings Bonds may be tax-free if the proceeds arecontributed to a Plan account. Certain rules and requirementsmust be met. For more information consult IRS Publication 970and your financial, tax or legal advisor.
Under IRS guidance, the Program Manager is required to assumethat the entire amount of any contribution that is a rollovercontribution from a qualified United States Savings Bond isearnings in the account receiving the contribution unless theProgram Manager receives appropriate documentation showingthe actual earnings portion of the contribution.
Transfers within the NEST Advisor PlanFunds can be transferred between existing NEST Advisor Planaccounts that have different owners or Beneficiaries (or both). Youcan also transfer the entirety or a portion of the account’sbalance. To initiate a transfer within the NEST Advisor Plan, youmust complete and submit a form available from your FinancialAdvisor or the Plan’s website, or by calling the Plan. The totalaccount assets for all accounts held on behalf of the Beneficiary towhom the money is being transferred cannot exceed theMaximum Contribution Limit.
Transfer to another account owner – The NEST Advisor Planpermits a transfer of a portion or the entire amount of an accountto another account owner. If the new account owner does nothave an account, he or she must complete an Enrollment Formbefore the transfer of assets can occur. The current account ownermust also submit an Account Information Change Form. Youshould consider consulting a tax advisor about the potential taxconsequences of a change in account owner.
Transfer to another Beneficiary – The NEST Advisor Plan permitsthe transfer of a portion or the entire amount of an account toanother Beneficiary with either the same account owner or adifferent account owner. If 100% of the assets are beingtransferred to another Beneficiary for the same account owner,and an account has not been opened for that account owner andBeneficiary, a Beneficiary Change Form must be completed. Thenew Beneficiary must be a Member of the Family of the formerBeneficiary.
Transferring accounts among Nebraska-issued 529 qualified tuitionplans – Transferring a portion or the entire amount of a NESTAdvisor Plan account to another account within the Trust for thesame account owner and Beneficiary is considered an InvestmentOption change and requires the account owner to complete achange on an appropriate form. This change counts toward the
account owner’s twice per calendar year Investment Option changelimit.
Potential tax consequences of a transfer – Transferring funds to aBeneficiary who is not a Member of the Family of the formerBeneficiary is considered a Non-Qualified Withdrawal by the IRSand may be subject to federal and state income taxes and anadditional 10% federal tax on the earnings portion of the transfer,as well as partial recapture of any Nebraska state income taxdeduction previously claimed.
UGMA or UTMA accountsA custodian for a minor under a state UGMA or UTMA statutemay liquidate the assets held in the UGMA or UTMA account toopen an account in the Plan, subject to the laws of the state underwhich the UGMA or UTMA account was established. If thecustodian of an UGMA or UTMA account establishes an account,the minor for whose benefit the assets are held must bedesignated as the account owner and Beneficiary of the account,and the custodian will not be permitted to change the Beneficiaryof the account or transfer assets to another Beneficiary. Thecustodian will be required to certify on a withdrawal form statingthat the distribution from the UGMA or UTMA account will beused for the benefit of the Beneficiary of the account.
When the Beneficiary reaches the age of majority under theapplicable state UGMA or UTMA statute and the custodianshipterminates, the Beneficiary will become the sole account ownerwith complete control over the account. The custodian is requiredto notify the Program Manager when the minor attains the age ofmajority under the applicable state UGMA or UTMA statute.
All contributions once made to an UGMA or UTMA account,regardless of their source, become subject to the limitationsdescribed above at the time of their contribution into an UGMAor UTMA account.
The conversion of non-cash UGMA or UTMA assets to cash forcontribution to a NEST Advisor Plan account may be a taxabletransaction. Before liquidating assets in an UGMA or UTMAaccount in order to contribute them to an account, you shouldreview the potential tax and legal consequences with your tax andlegal advisors. Moreover, none of the Treasurer, the ProgramManager, or the Plan assumes responsibility to ensure, or willincur any liability for failing to ensure, that a custodian appliesassets held under an UGMA or UTMA custodianship for properpurposes.
Transfers from a Upromise® by Sallie Mae® AccountIf you are enrolled in the Upromise service, you can link thataccount to your NEST Advisor Plan account and have all or aportion of your savings automatically transferred to your NESTAdvisor Plan from your Upromise® by Sallie Mae® Account on aperiodic basis. The minimum amount for an automatic transfermade from a Upromise® by Sallie Mae® Account to your Planaccount is currently $25 and is subject to change. However, youcannot use the transfer of funds from a Upromise® by Sallie Mae®
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22
Account as the initial funding source for your Plan account.Transfers from a Upromise® by Sallie Mae® Account are notconsidered a deductible contribution for Nebraska state taxpurposes.
This Program Disclosure Statement is not intended to providedetailed information concerning Upromise. Upromise isadministered in accordance with the terms and procedures setforth in the Upromise Member Agreement (as amended from timeto time), which is available by going to www.NEST529Advisor.comand clicking on the Upromise logo. The Upromise service is anoptional service offered by Upromise, Inc., is separate from thePlan, and is not affiliated with the State of Nebraska or theProgram Manager. Terms and conditions apply to the Upromiseservice. Participating companies, contribution levels and termsand conditions are subject to change at any time without notice.
Contributions through Upromise are subject to the MaximumContribution Limit and are non-commissionable. Upromise is aregistered service mark of Upromise, Inc.
Contributions from Ugift®
This free to use service gives account owners a simple way to askfamily and friends to celebrate birthdays, holidays, and otherevents with a gift contribution to a NEST Advisor Plan account.Gift contributions received in good order will be held by theProgram Manager for approximately five business days beforebeing transferred into your Plan account. Contributions from Ugiftfrom persons other than the account owner are not considered adeductible contribution for Nebraska state tax purposes.
Gift contributions through Ugift are subject to the MaximumContribution Limit. Gift contributions will be invested accordingto the Standing Allocation on file for your account at the time thegift contribution is transferred. There may be potential taxconsequences of gift contributions invested in your account. Youand the gift giver should consult a tax advisor for moreinformation. Ugift is an optional service, is separate from the Plan,and is not affiliated with the State of Nebraska or the ProgramManager. Ugift can be initiated from the Plan’s website by clickingon the Ugift logo. Ugift is a registered service mark of AscensusBroker Dealer Services, LLC.
Contribution dateContributions are considered received on the date the contributionis reviewed and processed by the Program Manager or itsauthorized agents. Contributions to an account that are received ingood order before the market close (typically 4 p.m. Eastern Time)on any day the New York Stock Exchange (NYSE) is open forbusiness are generally processed on that day for the InvestmentOptions you selected. Contributions to an account that are receivedin good order after market close, or on a day the NYSE is closed forbusiness, generally will be processed on the next business day.Contributions received through the National Securities ClearingCorporation or through certain financial institutions must be made inaccordance with settlement procedures agreed to by the financialinstitution and the Program Manager.
Contributions sent by U.S. mail that are postmarked on or beforeDecember 31 will be treated as having been made in that yeareven if the check was actually received by the Program Manageror its authorized agents in good order in the next year, providedthe checks are subsequently cleared. For EFT contributions, fortax purposes, the contributions will be considered in that year ifthe EFT was initiated on or before December 31 of such year,provided the funds are successfully deducted from your checkingor savings account by your financial institution.
Regardless of the calendar year for which a contribution isdeductible, the trade date of the contribution (and thus the price ofthe units purchased with the contribution) will be determined basedon the day the contribution is received by the Program Manager orits authorized agents in good order, and with respect to AIPcontributions you will receive the trade date of the business day onwhich the debit occurs. For EFT contributions, the following applies:
• Before 10 p.m. Eastern Time will be given a trade date of thenext business day after the date of receipt and will beeffective at that day’s closing price for the applicableInvestment Option or Portfolio. In such cases, the EFT debitfrom your bank account will occur on the second businessday after the request is received; or
• After 10 p.m. Eastern Time will be given a trade date of thesecond business day after the date the request is received,and they will be effective at that day’s closing price for theapplicable Investment Option or Portfolio. In such cases, theEFT debit will occur on the third business day after therequest is received. Your trade date will be on the businessday prior to your debit date.
Contribution pricingThe unit price for each Investment Option is calculated at theclose of regular trading on the NYSE each day the NYSE is openfor trading. The unit price is calculated by dividing the value ofthe Investment Option’s net assets by the total number of units inthe Investment Option outstanding. The unit price is based on thevalue of the Investment Option underlying investments as well asexpenses and fees for administering and managing the NESTAdvisor Plan. See “Part 12 – Plan Fees and Expenses.”
Contribution errorsIf the account owner believes an error was made regarding his orher contribution, the Program Manager must be notified within 60calendar days. If you do not notify the Plan within 60 days, you willbe considered to have approved the information in theconfirmation and to have released the State of Nebraska, theNebraska Investment Council, the Trustee, the Nebraska StateInvestment Officer, and the Program Manager and its authorizedagents or their affiliates of responsibility for all matters covered bythe confirmation. The Program Manager may waive the 60-calendar-day notice requirement at its sole discretion.
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23
PART 6 – INVESTMENT OPTIONS OVERVIEW
Investment OptionsContributions to an account, less any applicable sales charges,will be invested in the Investment Options you select on theEnrollment Form. The Investment Options invest in one or moreinvestments, trust accounts, or other investment vehicles asdesigned by the Nebraska Investment Council. The InvestmentOptions described in this Program Disclosure Statement allowaccount owners to direct funds to specific investment categoriesand strategies approved by the Nebraska Investment Council.These may include Investment Options investing in domesticequity, real estate, international equity, international bond, fixedincome, money market funds, and an FDIC-insured savingsaccount.
You do not (1) own shares in the underlying funds or (2) in thecase of the Bank Savings Static Investment Option, directly hold asavings account but, rather, own an interest in the InvestmentOptions offered by the Plan. However, you may obtainprospectuses of the current investments and other investments inwhich the Plan is invested at any time by contacting your FinancialAdvisor.
28 Investment OptionsThere are 28 separate Investment Options. The followingInvestment Options are available:
• 3 Age-Based Investment Options• 6 Static Investment Options• 19 Individual Investment Options
The three Age-Based Investment Options are designed tobecome more conservative the closer the Beneficiary gets tocollege.
The six Static Investment Options keep the same asset allocationbetween domestic equity, real estate, international equity,international bond, fixed income, and cash equivalents over thelife of your account.
The 19 Individual Investment Options each invest in a single fundor, in the case of the Bank Savings Static Investment Option, anFDIC-insured savings account.
No investment directionUnder federal law, neither you nor your Beneficiary may exerciseinvestment discretion, directly or indirectly, over contributions toan account or any earnings on those contributions. As a result,you are not able to select the securities in which your account isinvested. Instead, contributions are invested according to thepercentage you indicate into the Investment Option or Optionsyou select on the Enrollment Form. The percentage can bechanged online by accessing the Plan’s secure website, bycompleting and submitting a form available from your FinancialAdvisor, by downloading and submitting a form available on thePlan’s website, or by calling the Plan.
The Nebraska Investment Council may change the InvestmentOptions, the asset allocation within each of the InvestmentOptions, and the underlying investments in which each of theInvestment Options invest at any time without notice to you.Any such change in Investment Options, allocations within anInvestment Option, or change in underlying investmentswithin an Investment Option made by the NebraskaInvestment Council is not considered a change in investmentdirection by an account owner.
Changing Investment OptionsGenerally, an account owner may only change the InvestmentOptions in which their account is invested twice per calendar yearor upon a change of Beneficiary. Therefore an account ownershould carefully make their investment selection with theassistance of their Financial Advisor at the time they complete theEnrollment Form. You can change the way you want to investfuture contributions any time by changing your StandingAllocation. See Page 19, “Allocation of contributions.”
If an account owner has multiple accounts in the Plan for the sameBeneficiary, or multiple accounts among the NEST Advisor Plan,the NEST Direct Plan, the TD Ameritrade 529 College SavingsPlan, or the State Farm 529 Savings Plan, the account owner maychange the Investment Options in all accounts without taxconsequences, so long as the changes to all of the accounts aremade at the same time and no more frequently than twice percalendar year or upon a change of Beneficiary.
Investment Options in which an account is invested can bechanged online by accessing the secure website, by completingand submitting a form available from your Financial Advisor, bydownloading and submitting a form available on the Plan’swebsite, or by calling the Plan.
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24
PART 7 – AGE-BASED INVESTMENT OPTIONS
Three Age-Based Investment OptionsThe three Age-Based Investment Options adjust over time so asthe Beneficiary nears college the allocation becomes moreconservative.
The Age-Based Investment Options generally invest in a mix ofdomestic equity, real estate, international equity, internationalbond, fixed income funds, (including bond, short-term bond, andinflation-protected securities), and cash equivalent investments (amoney market fund and an FDIC-insured savings account)allocated based on the current age of the Beneficiary.
Within the Age-Based Investment Options you may choose froman Aggressive, Growth, or Index asset allocation based on,among other factors, your investment goals and objectives, andyour tolerance for market volatility and investment risk.
Regardless of the Age-Based Investment Option selected, eachadjusts over time (each age band is called a “Portfolio”) so that asthe Beneficiary nears college enrollment age each Portfolio’sallocation between domestic equity, real estate, internationalequity, international bond, fixed income funds, and cashequivalent investments becomes more conservative relative to theallocation in earlier years.
As a result of market gains and losses and earnings, the Portfoliosmay differ over time from the target asset allocation describedbelow. To maintain the target asset allocation for each Portfolio,the Program Manager will rebalance each of the Age-BasedInvestment Options any time there is a positive or negativevariance of two percent (2%) or more to retain the target assetallocation described below.
You should review each of the Age-Based Investment Optionswith your Financial Advisor before making a selection from amongthe Investment Options offered through the Plan.
Age-Based Aggressive Investment OptionThe Age-Based Aggressive Investment Option is allocatedprimarily in equity or stock investment funds during the early yearsof the Beneficiary’s life. As the Beneficiary nears college age, theequity or stock allocation decreases, and the fixed income andthe cash equivalent allocations increase. When the Beneficiaryattains age 3, 6, 9, 11, 13, 15, 17 and 19, the Portfolios within theAge-Based Aggressive Investment Option automatically realignwith a decrease in the stock or equity portion and an increase inthe fixed income and the money market allocations. TheAge-Based Aggressive Investment Option seeks to providecapital appreciation. The strategy is based on the understandingthat the volatility associated with equity markets can beaccompanied by the highest potential for long-term capitalappreciation.
Newborn to 2 years old PortfolioObjectives – For Beneficiaries newborn to two years old, thisPortfolio seeks to provide long-term growth by investing 94.75%of its assets in diversified investments of domestic andinternational equity funds, and 5.25% real estate funds.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 71.5% domesticequity funds, 5.25% real estate funds, and 23.25% internationalequity funds. The Portfolio manages cash flows to maintain thestated asset allocation. The stock holdings in the underlyinginvestments consist primarily of large-cap U.S. stocks and to alesser extent, mid- and small-cap U.S. stocks and foreign stocks.
3 to 5 years old PortfolioObjectives – For Beneficiaries three to five years old, this Portfolioseeks to provide long-term growth and some income by investing90% of its assets in diversified investments of domestic andinternational equity funds, 5% real estate funds, and 5% domesticfixed income funds.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 68% domesticequity funds, 5% real estate funds, 22% international equity funds,and 5% fixed income funds. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
6 to 8 years old PortfolioObjectives – For Beneficiaries six to eight years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 80% of its assets in diversified investments of domesticand international equity funds, 5% real estate funds, and 15%domestic and international fixed income funds.
Strategies – The Portfolio invests funds according to a fixedformula that typically results in an allocation of 60% domesticequity funds, 5% real estate funds, 20% international equity funds,2% international bond funds, and 13% fixed income funds. ThePortfolio manages cash flows to maintain the stated assetallocation. The stock holdings in the underlying investmentsconsist primarily of large-cap U.S. stocks and to a lesser extent,mid- and small-cap U.S. stocks and foreign stocks.
9 to 10 years old PortfolioObjectives – For Beneficiaries nine to 10 years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 70.5% of its assets in diversified investments of domesticand international equity funds, 4.5% real estate funds, 23%domestic and international fixed income funds, and 2% moneymarket funds.
Strategies – The Portfolio invests funds according to a fixedformula that typically results in an allocation of 53% domesticequity funds, 4.5% real estate funds, 17.5% international equity..
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25
funds, 2.5% international bond funds, 20.5% fixed income funds,and 2% money market funds. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
11 to 12 years old PortfolioObjectives – For Beneficiaries 11 to 12 years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 61% of its assets in diversified investments of domesticand international equity funds, 4% real estate funds, 31%domestic and international fixed income funds, and 4% moneymarket funds.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 46% domesticequity funds, 4% real estate funds, 15% international equity funds,3% international bond funds, 28% fixed income funds, and 4%money market funds. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
13 to 14 years old PortfolioObjectives – For Beneficiaries 13 to 14 years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 51.5% of its assets in diversified investments of domesticand international equity funds, 3.5% real estate funds, 36.5%domestic and international fixed income funds, 5.5% moneymarket funds, and 3% FDIC-insured savings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 39% domesticequity funds, 3.5% real estate funds, 12.5% international equityfunds, 3.5% international bond funds, 33% fixed income funds,5.5% money market funds, and 3% FDIC-insured savings account.The Portfolio manages cash flows to maintain the stated assetallocation. The stock holdings in the underlying investmentsconsist primarily of large-cap U.S. stocks and to a lesser extent,mid- and small-cap U.S. stocks and foreign stocks.
15 to 16 years old PortfolioObjectives – For Beneficiaries 15 to 16 years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 42% of its assets in diversified investments ofdomestic and international equity funds, 3% real estate funds,42% domestic and international fixed income funds, 7% moneymarket funds, and 6% FDIC-insured savings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 32% domesticequity funds, 3% real estate funds, 10% international equity funds,4% international bond funds, 38% fixed income funds, 7% moneymarket funds, and 6% FDIC-insured savings account. The Portfoliomanages cash flows to maintain the stated asset allocation. The
stock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
17 to 18 years old PortfolioObjectives – For Beneficiaries 17 to 18 years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 32.5% of its assets in diversified investmentsof domestic and international equity funds, 2.5% real estate funds,45.5% domestic and international fixed income funds, 2.5%inflation protected funds, 9% money market funds, and 8% FDIC-insured savings account.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 25%domestic equity funds, 2.5% real estate funds, 7.5% internationalequity funds, 4% international bond funds, 41.5% fixed incomefunds, 2.5% inflation protected funds, 9% money market funds,and 8% FDIC-insured savings account. The Portfolio managescash flows to maintain the stated asset allocation. The stockholdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
19 years and older PortfolioObjectives – For Beneficiaries 19 years and older, this Portfolioseeks to provide current income and some growth of capital byinvesting 23% of its assets in diversified investments of domesticand international equity funds, 2% real estate funds, 49%domestic and international fixed income funds, 5% inflationprotected funds, 11% money market funds, and 10% FDIC-insuredsavings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 18% domesticequity funds, 2% real estate funds, 5% international equity funds,4% international bond funds, 45% fixed income funds, 5%inflation-protected funds, 11% money market funds, and 10%FDIC-insured savings account. The Portfolio manages cash flowsto maintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
Age-Based Growth Investment OptionThe Age-Based Growth Investment Option is allocated primarilyin equity or stock investment funds during the early years of theBeneficiary’s life. As the Beneficiary nears college age, the equityor stock allocation decreases, and the fixed income and the cashequivalent allocations increase. When the Beneficiary attains age3, 6, 9, 11, 13, 15, 17 and 19, the Portfolios in the Age-BasedGrowth Investment Option automatically realign with a decreasein the stock or equity portion and an increase in the fixed incomeand the cash equivalent allocations.
The Age-Based Growth Investment Option seeks to providecapital appreciation and some current income. This strategy is..
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26
based on accepting the risks associated with stocks, which havethe potential to provide high returns, and seeking to balance theeffects of volatility through diversification in fixed-incomesecurities.
Newborn to 2 years old PortfolioObjectives – For Beneficiaries newborn to two years old, thisPortfolio seeks to provide growth of capital and some currentincome by investing 80% of its assets in diversified investments ofdomestic and international equity funds, 5% real estate funds, and15% domestic and international fixed income funds.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 60% domesticequity funds, 5% real estate funds, 20% international equity funds,2% international bond funds, and 13% fixed income funds. ThePortfolio manages cash flows to maintain the stated assetallocation. The stock holdings in the underlying investmentsconsist primarily of large-cap U.S. stocks and to a lesser extent,mid- and small-cap U.S. stocks and foreign stocks.
3 to 5 years old PortfolioObjectives – For Beneficiaries three to five years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 70.5% of its assets in diversified investments of domesticand international equity funds, 4.5% real estate funds, 23%domestic and international fixed income funds, and 2% moneymarket funds.
Strategies – The Portfolio invests funds according to a fixedformula that typically results in an allocation of 53% domesticequity funds, 4.5% real estate funds, 17.5% international equityfunds, 2.5% international bond funds, 20.5% fixed income funds,and 2% money market funds. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
6 to 8 years old PortfolioObjectives – For Beneficiaries six to eight years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 61% of its assets in diversified investments of domesticand international equity funds, 4% real estate funds, 31%domestic and international fixed income funds, and 4% moneymarket funds.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 46% domesticequity funds, 4% real estate funds, 15% international equity funds,3% international bond funds, 28% fixed income funds, and 4%money market funds. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
9 to 10 years old PortfolioObjectives – For Beneficiaries nine to 10 years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 51.5% of its assets in diversified investments of domesticand international equity funds, 3.5% real estate funds, 36.5%domestic and international fixed income funds, 5.5% moneymarket funds, and 3% FDIC-insured savings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 39% domesticequity funds, 3.5% real estate funds, 12.5% international equityfunds, 3.5% international bond funds, 33% fixed income funds,5.5% money market funds, and 3% FDIC-insured savings account.The Portfolio manages cash flows to maintain the stated assetallocation. The stock holdings in the underlying investmentsconsist primarily of large-cap U.S. stocks and to a lesser extent,mid- and small-cap U.S. stocks and foreign stocks.
11 to 12 years old PortfolioObjectives – For Beneficiaries 11 to 12 years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 42% of its assets in diversified investments ofdomestic and international equity funds, 3% real estate funds,42% in domestic and international fixed income funds, 7% moneymarket funds, and 6% FDIC-insured savings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 32% domesticequity funds, 3% real estate funds, 10% international equity funds,4% international bond funds, 38% fixed income funds, 7% moneymarket funds, and 6% FDIC-insured savings account. The Portfoliomanages cash flows to maintain the stated asset allocation. Thestock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
13 to 14 years old PortfolioObjectives – For Beneficiaries 13 to 14 years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 32.5% of its assets in diversified investmentsof domestic and international equity funds, 2.5% real estate funds,45.5% domestic and international fixed income funds, 2.5%inflation protected funds, 9% money market funds, and 8% FDIC-insured savings account.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 25%domestic equity funds, 2.5% real estate funds, 7.5% internationalequity funds, 4% international bond funds, 41.5% fixed incomefunds, 2.5% inflation protected funds, 9% money market funds,and 8% FDIC-insured savings account. The Portfolio managescash flows to maintain the stated asset allocation. The stockholdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
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15 to 16 years old PortfolioObjectives – For Beneficiaries 15 to 16 years old, this Portfolioseeks to provide current income and some growth of capital byinvesting 23% of its assets in diversified investments of domesticand international equity funds, 2% real estate funds, 49%domestic and international fixed income funds, 5% inflationprotected funds, 11% money market funds, and 10% FDIC-insuredsavings account.
Strategies – The Portfolio invests in funds according to a fixedformula that typically results in an allocation of 18% domesticequity funds, 2% real estate funds, 5% international equity funds,4% international bond funds, 45% fixed income funds, 5% inflationprotected funds, 11% money market funds, and 10% FDIC-insuredsavings account. The Portfolio manages cash flows to maintain thestated asset allocation. The stock holdings in the underlyinginvestments consist primarily of large-cap U.S. stocks and to alesser extent, mid- and small-cap U.S. stocks and foreign stocks.
17 to 18 years old PortfolioObjectives – For Beneficiaries 17 to 18 years old, this Portfolioseeks to provide current income and some growth of capital byinvesting 14% of its assets in diversified investments of domesticand international equity funds, 1% real estate funds, 43% domesticand international fixed income funds, 9% inflation protected funds,18% money market funds, and 15% FDIC-insured savings account.
Strategies – The Portfolio invests according to a fixed formula thattypically results in an allocation of 11% domestic equity funds, 1%real estate funds, 3% international equity funds, 3% internationalbond funds, 40% fixed income funds, 9% inflation protectedfunds, 18% money market funds, and 15% FDIC-insured savingsaccount. The Portfolio manages cash flows to maintain the statedasset allocation.
19 years and older PortfolioObjectives – For Beneficiaries 19 years and older, this Portfolioseeks to provide current income and some growth of capital byinvesting 5% of its assets in diversified investments of domesticand international equity funds, 35% domestic and internationalfixed income funds, 5% inflation protected funds, 35% moneymarket funds, and 20% FDIC-insured savings account.
Strategies – The Portfolio invests according to a fixed formula thattypically results in an allocation of 4% domestic equity funds, 1%international equity funds, 2% international bond funds, 33% fixedincome funds, 5% inflation protected funds, 35% money marketfunds, and 20% FDIC-insured savings account. The Portfoliomanages cash flows to maintain the stated asset allocation.
Age-Based Index Investment OptionThe Age-Based Index Investment Option is allocated primarily inequity or stock index funds during the early years of theBeneficiary’s life. As the Beneficiary nears college age, the equityor stock allocation decreases, and the fixed income and the cashequivalent allocations increase. When the Beneficiary attains age3, 6, 9, 11, 13, 15, 17 and 19, the Portfolios in the Age-Based Index
Investment Option automatically realign with a decrease in thestock or equity portion and an increase in the fixed income andthe cash equivalent allocations. The Age-Based Index InvestmentOption seeks to provide a balance of capital appreciation andcurrent income through the use of index-based investments. Thisstrategy is based on accepting the risks associated with stocks,which have the potential to provide high returns, seeking tobalance the effects of volatility through diversification in fixed-income securities.
Newborn to 2 years old PortfolioObjectives – For Beneficiaries newborn to two years old, thisPortfolio seeks to provide growth of capital and some currentincome by investing 61% of its assets in diversified investments ofdomestic and international equity funds, 4% real estate funds,31% in domestic and international fixed income funds, and 4%money market funds.
Strategies – The Portfolio primarily invests in index and moneymarket funds according to a fixed formula that typically results inan allocation of 46% domestic equity funds, 4% real estate funds,15% international equity funds, 3% international bond funds, 28%fixed income funds, and 4% money market funds. The Portfoliomanages cash flows to maintain the stated asset allocation. Thestock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
3 to 5 years old PortfolioObjectives – For Beneficiaries three to five years old, this Portfolioseeks to provide growth of capital and some current income byinvesting 51.5% of its assets in diversified investments of domesticand international equity funds, 3.5% real estate funds, 36.5%domestic and international fixed income funds, 5.5% moneymarket funds, and 3% FDIC-insured savings account.
Strategies – The Portfolio primarily invests in index funds and cashequivalents according to a fixed formula that typically results in anallocation of 39% domestic equity funds, 3.5% real estate funds,12.5% international equity funds, 3.5% international bond funds,33% fixed income funds, 5.5% money market funds, and 3% FDIC-insured savings account. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
6 to 8 years old PortfolioObjectives – For Beneficiaries six to eight years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 42% of its assets in diversified investments ofdomestic and international equity funds, 3% real estate funds,42% domestic and international fixed income funds, 7% moneymarket funds, and 6% FDIC-insured savings account.
Strategies – The Portfolio primarily invests in index funds and cashequivalents according to a fixed formula that typically results in an..
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allocation of 32% domestic equity funds, 3% real estate funds,10% international equity funds, 4% international bond funds, 38%fixed income funds, 7% money market funds, and 6% FDIC-insured savings account. The Portfolio manages cash flows tomaintain the stated asset allocation. The stock holdings in theunderlying investments consist primarily of large-cap U.S. stocksand to a lesser extent, mid- and small-cap U.S. stocks and foreignstocks.
9 to 10 years old PortfolioObjectives – For Beneficiaries nine to 10 years old, this Portfolioseeks to provide current income and low to moderate growth ofcapital by investing 32.5% of its assets in diversified investmentsof domestic and international equity funds, 2.5% real estate funds,45.5% domestic and international fixed income funds, 2.5%inflation protected funds, 9% in money market funds, and 8%FDIC-insured savings account.
Strategies – The Investment Option invests in index funds andcash equivalents according to a fixed formula that typically resultsin an allocation of 25% domestic equity funds, 2.5% real estatefunds, 7.5% international equity funds, 4% international bondfunds, 41.5% fixed income funds, 2.5% inflation protected funds,9% money market funds, and 8% FDIC-insured savings account.The Portfolio manages cash flows to maintain the stated assetallocation. The stock holdings in the underlying investmentsconsist primarily of large-cap U.S. stocks and to a lesser extent,mid- and small-cap U.S. stocks and foreign stocks.
11 to 12 years old PortfolioObjectives – For Beneficiaries 11 to 12 years old, this Portfolioseeks to provide current income and some growth of capital byinvesting 23% of its assets in diversified investments of domesticand international equity funds, 2% real estate funds, 49%domestic and international fixed income funds, 5% inflationprotected funds, 11% money market funds, and 10% FDIC-insuredsavings account.
Strategies – The Portfolio primarily invests in index funds and cashequivalents according to a fixed formula that typically results in anallocation of 18% domestic equity funds, 2% real estate funds, 5%international equity funds, 4% international bond funds, 45% fixedincome funds, 5% inflation protected funds, 11% money marketfunds, and 10% FDIC-insured savings account. The Portfoliomanages cash flows to maintain the stated asset allocation. Thestock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
13 to 14 years old PortfolioObjectives – For Beneficiaries 13 to 14 years old, this Portfolioseeks to provide current income and some growth of capital byinvesting 14% of its assets in diversified investments of domesticand international equity funds, 1% real estate funds, 43%domestic and international fixed income funds, 9% inflationprotected funds, 18% money market funds, and 15% FDIC-insuredsavings account.
Strategies – The Portfolio primarily invests in index funds and cashequivalents according to a fixed formula that typically results in anallocation of 11% domestic equity funds, 1% real estate funds, 3%international equity funds, 3% international bond funds, 40% fixedincome funds, 9% inflation protected funds, 18% money marketfunds, and 15% FDIC-insured savings account. The Portfoliomanages cash flows to maintain the stated asset allocation.
15 to 16 years old PortfolioObjectives – For Beneficiaries 15 to 16 years old, this Portfolioseeks to provide current income and some growth of capital byinvesting 5% of its assets in diversified investments of domesticand international equity funds, 35% domestic and internationalfixed income funds, 5% inflation protected funds, 35% moneymarket funds, and 20% FDIC-insured savings account.
Strategies – The Portfolio invests in index funds and cashequivalents according to a fixed formula that typically results in anallocation of 4% domestic equity funds, 1% international equityfunds, 2% international bond funds, 33% fixed income funds, 5%inflation protected funds, 35% money market funds, and 20%FDIC-insured savings account. The Portfolio manages cash flowsto maintain the stated asset allocation.
17 to 18 years old PortfolioObjectives – For Beneficiaries 17 to 18 years old, this Portfolioseeks to provide preservation of principal by investing 100% inmoney market funds. No funds are invested in stock investments.
Strategies – The Portfolio invests according to a fixed formula thattypically results in an allocation of 100% money market funds. ThePortfolio manages cash flows to maintain the stated assetallocation.
19 years and older PortfolioObjectives – For Beneficiaries 19 years and older, this Portfolioseeks to provide preservation of principal by investing 100% inmoney market funds. No funds are invested in stock investments.
Strategies – The Portfolio invests according to a fixed formula thattypically results in an allocation of 100% money market funds. ThePortfolio manages cash flows to maintain the stated assetallocation.
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The detailed asset allocation, mix of underlying investments, and the age ranges for each of the Age-Based Investment Options aredescribed in the following table:
Domestic EquityUS Real
Estate
International
Equity
International
BondFixed Income Cash Equivalents
US Equity Large Cap
US Equity
Small/Mid
Cap
US Equity
Small Cap
US Real
Estate
International
Equity
International
BondFixed Income
Short-Term
BondTIPS
FDIC-
Insured
Money
Market
State
Street
S&P
500®1
Index
Dodge &
Cox
Stock
T. Rowe
Price
Large-
Cap
Growth
Vanguard
Extended
Market
ETF
Tributary
Small
Company
iShares
Russell
2000
Growth
ETF
Vanguard
Real
Estate
ETF
State Street
MSCI®2
ACWI
ex USA
Index3
DFA World
ex-US
Government
Fixed
Income
MetWest
Total
Return
Bond
Federated
Total
Return
Bond
iShares
Core US
Aggregate
ETF
Vanguard
Short-
Term
Bond
ETF
Vanguard
Short-
Term
Inflation-
Protected
ETF
Bank
Savings
Goldman
Sachs
Financial
SquareSM
Government
Money
Market
N/A DODGX TRLGX VXF FOSBX IWO VNQ N/A DWFIX MWTSX FTRBX AGG BSV VTIP N/A FGTXX
AGGRESSIVE
0-2 38.00% 11.50% 11.50% 2.00% 4.25% 4.25% 5.25% 23.25%
3-5 36.00% 11.00% 11.00% 2.00% 4.00% 4.00% 5.00% 22.00% 5.00%
6-8 32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 5.00% 8.00%
9-10 27.00% 9.50% 9.50% 1.50% 2.75% 2.75% 4.50% 17.50% 2.50% 7.00% 10.50% 3.00% 2.00%
11-12 22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 9.00% 13.00% 6.00% 4.00%
13-14 18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 9.50% 14.00% 9.50% 3.00% 5.50%
15-16 14.00% 7.00% 7.00% 1.00% 1.50% 1.50% 3.00% 10.00% 4.00% 10.00% 15.00% 13.00% 6.00% 7.00%
17-18 13.00% 4.50% 4.50% 1.00% 1.00% 1.00% 2.50% 7.50% 4.00% 10.00% 16.50% 15.00% 2.50% 8.00% 9.00%
19+ 12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 10.00% 18.00% 17.00% 5.00% 10.00% 11.00%
GROWTH
0-2 32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 5.00% 8.00%
3-5 27.00% 9.50% 9.50% 1.50% 2.75% 2.75% 4.50% 17.50% 2.50% 7.00% 10.50% 3.00% 2.00%
6-8 22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 9.00% 13.00% 6.00% 4.00%
9-10 18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 9.50% 14.00% 9.50% 3.00% 5.50%
11-12 14.00% 7.00% 7.00% 1.00% 1.50% 1.50% 3.00% 10.00% 4.00% 10.00% 15.00% 13.00% 6.00% 7.00%
13-14 13.00% 4.50% 4.50% 1.00% 1.00% 1.00% 2.50% 7.50% 4.00% 10.00% 16.50% 15.00% 2.50% 8.00% 9.00%
15-16 12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 10.00% 18.00% 17.00% 5.00% 10.00% 11.00%
17-18 10.00% 1.00% 1.00% 3.00% 3.00% 25.00% 15.00% 9.00% 15.00% 18.00%
19+ 4.00% 1.00% 2.00% 15.00% 18.00% 5.00% 20.00% 35.00%
INDEX
0-2 40.00% 6.00% 4.00% 15.00% 3.00% 22.00% 6.00% 4.00%
3-5 34.00% 5.00% 3.50% 12.50% 3.50% 23.50% 9.50% 3.00% 5.50%
6-8 28.00% 4.00% 3.00% 10.00% 4.00% 25.00% 13.00% 6.00% 7.00%
9-10 22.00% 3.00% 2.50% 7.50% 4.00% 26.50% 15.00% 2.50% 8.00% 9.00%
11-12 16.00% 2.00% 2.00% 5.00% 4.00% 28.00% 17.00% 5.00% 10.00% 11.00%
13-14 10.00% 1.00% 1.00% 3.00% 3.00% 25.00% 15.00% 9.00% 15.00% 18.00%
15-16 4.00% 1.00% 2.00% 15.00% 18.00% 5.00% 20.00% 35.00%
17-18 100.00%
19+ 100.00%
Description of the underlying investmentsEach of the underlying investments that comprise the three Age-Based Investment Options (as shown above in the table) is describedin detail, along with the risks associated with each underlying investment, in “Part 9 – Individual Investment Options.”
It is important to remember that none of the Nebraska State Treasurer, the Nebraska Investment Council, the Nebraska StateInvestment Officer, the State of Nebraska or its officials/employees, or the Program Manager or its authorized agents or any oftheir affiliates can guarantee a minimum rate of return. Except as described herein for accounts invested in the Bank SavingsStatic Investment Option, accounts in the NEST Advisor Plan are not insured by the FDIC. Accounts are not guaranteed orinsured by the State of Nebraska, the Nebraska Investment Council, the Nebraska State Treasurer, the Nebraska StateInvestment Officer, the Program Manager or its authorized agents or their affiliates, or any other party. See “Part 10 – CertainRisks to Consider.”1 The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by State Street. Standard & Poor’s® and S&P® are registered
trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The productsare not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding theadvisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
2 The MSCI ASWI ex USA is a trademark of MSCI Inc.3 Trust account managed by State Street Global Advisors Trust Company for the benefit of the NEST Advisor Plan. Not a mutual fund and not otherwise registered with the
SEC. See “Part 9 – Individual Investment Options” for more information about the investments.
30
PART 8 – STATIC INVESTMENT OPTIONS
Six Static Investment OptionsThe Static Investment Options are asset allocation InvestmentOptions that invest in a set or “static” mix of domestic equity, realestate, international equity, international bond, fixed income,FDIC-insured bank savings account or money market funds. Thesix Static Investment Options keep the same asset allocationbetween domestic equity, real estate, international equity,international bond, fixed income, and money market funds overthe life of your account. Unlike the Age-Based InvestmentOptions, they do not move to a more conservative allocation mixas the Beneficiary approaches college enrollment.
The six Static Investment Options you may choose from are theAll Equity, Growth, Moderate Growth, Balanced, Conservativeand Bank Savings asset allocation investments. In your selectionof any Investment Option should consider among other factors,your investment goals and objectives, and your tolerance formarket volatility and investment risk.
Although the Static Investment Options keep the same assetallocation over the life of an account, as a result of market gainsand losses and earnings, the asset allocation of each of the sixStatic Investment Options may differ over time from the targetasset allocation described below. To maintain the target assetallocation for each of the Static Investment Options, the ProgramManager will rebalance each of the Static Investment Options anytime there is a positive or negative variance of two percent (2%) ormore to retain the target asset allocation described below.
You should review each of the Static Investment Options beforemaking a selection from among the Investment Options offeredthrough the Plan.
All Equity Static Investment OptionObjectives – All Equity Static Investment Option seeks to providelong-term growth by investing 94.75% of its assets in diversifiedinvestments of domestic and international equity funds, and5.25% real estate funds.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 71.5%domestic equity funds, 5.25% real estate funds, and 23.25%international equity funds. The Investment Option manages cashflows to maintain the stated asset allocation. The stock holdings inthe underlying investments consist primarily of large-cap U.S.stocks and to a lesser extent, mid- and small-cap U.S. stocks andforeign stocks.
Growth Static Investment OptionObjectives – The Growth Static Investment Option seeks toprovide growth of capital and some current income by investing80% of its assets in diversified investments of domestic andinternational equity funds, 5% real estate funds, and 15%domestic and international fixed income funds.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 60%domestic equity funds, 5% real estate funds, 20% internationalequity funds, 2% international bond funds, and 13% fixed incomefunds. The Investment Option manages cash flows to maintain thestated asset allocation. The stock holdings in the underlyinginvestments consist primarily of large-cap U.S. stocks and to alesser extent, mid- and small-cap U.S. stocks and foreign stocks.
Moderate Growth Static Investment OptionObjectives – Moderate Growth Static Investment Option seeks toprovide growth of capital and some current income by investing61% of its assets in diversified investments of domestic andinternational equity funds, 4% real estate funds, 31% domesticand international fixed income funds, and 4% money marketfunds.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 46%domestic equity funds, 4% real estate funds, 15% internationalequity funds, 3% international bond funds, 28% fixed incomefunds, and 4% money market funds. The Investment Optionmanages cash flows to maintain the stated asset allocation. Thestock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
Balanced Static Investment OptionObjectives – The Balanced Static Investment Option seeks toprovide a balance of growth of capital and current income byinvesting 51.5% of its assets in diversified investments of domesticand international equity funds, 3.5% real estate funds, 36.5%domestic and international fixed income funds, 5.5% moneymarket funds, and 3% FDIC-insured savings account.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 39%domestic equity funds, 3.5% real estate funds, 12.5% internationalequity funds, 3.5% international bond funds, 33% fixed incomefunds, 5.5% money market funds, and 3% FDIC-insured savingsaccount. The Investment Option manages cash flows to maintainthe stated asset allocation. The stock holdings in the underlyinginvestments consist primarily of large-cap U.S. stocks and to alesser extent, mid- and small-cap U.S. stocks and foreign stocks.
Conservative Static Investment OptionObjectives – The Conservative Static Investment Option seeks toprovide current income and some growth of capital by investing23% of its assets in diversified investments of domestic andinternational equity funds, 2% real estate funds, 49% domesticand international fixed income funds, 5% inflation protectedfunds, 11% money market funds, and 10% FDIC-insured savingsaccount.
Strategies – The Investment Option invests in funds according toa fixed formula that typically results in an allocation of 18%domestic equity funds, 2% real estate funds, 5% international..
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31
equity funds, 4% international bond funds, 45% fixed incomefunds, 5% inflation protected funds, 11% money market funds,and 10% FDIC-insured savings account. The Investment Optionmanages cash flows to maintain the stated asset allocation. Thestock holdings in the underlying investments consist primarily oflarge-cap U.S. stocks and to a lesser extent, mid- and small-capU.S. stocks and foreign stocks.
Bank Savings Static Investment OptionObjectives – The Bank Savings Static Investment Option seeksincome consistent with the preservation of principal and invests allof its assets in a savings account (“Savings Account”) held at FirstNational Bank of Omaha (the “Bank”). The Savings Account is anomnibus savings account insured by the FDIC and is held in trustby the Nebraska Educational Savings Plan Trust at the Bank. TheBank also serves as Program Manager of the Plan.
Investments in the Bank Savings Static Investment Option willearn varying rates of interest. The interest rate generally will beequivalent to short-term deposit rates. Interest on the SavingsAccount will be compounded daily based on the actual number ofdays in a year (typically 365 days, except for 366 days in leapyears) and will be credited to the Savings Account on monthlybasis. The interest on the Savings Account is expressed as anannual percentage yield (“APY”). The APY on the Savings Accountwill be reviewed by the Bank on a periodic basis and may berecalculated as needed at any time. To see the current BankSavings Static Investment Option APY please go towww.NEST529Advisor.com or call 1.888.659.6378.
FDIC insuranceSubject to the application of Bank and FDIC rules and regulationsto each account owner, funds in the Bank Savings StaticInvestment Option will retain their value as a result of the FDICinsurance. In contrast, all other Investment Options of the Plan arenot insured by the FDIC.
FDIC insurance is provided for the Bank Savings Static InvestmentOption only, which invests in an FDIC-insured omnibus savingsaccount held in trust by the Nebraska Educational Savings PlanTrust at the Bank. Contributions to and earnings on theinvestments in the Bank Savings Static Investment Option areinsured by the FDIC on a per participant, pass-through basis toeach account owner up to the maximum limit established byfederal law, which currently is $250,000.
The amount of FDIC insurance provided to an account owner isbased on the total of: (1) the value of an account owner’sinvestment in the Bank Savings Static Investment Option, and (2)the value of all other accounts held by the account owner at theBank (including Bank deposits), as determined in accordance withBank and FDIC rules and regulations. Each account owner shoulddetermine whether the amount of FDIC insurance available to theaccount owner is sufficient to cover the total of the accountowner’s investment in the Bank Savings Static Investment Optionplus the account owner’s other deposits at the Bank. The NESTAdvisor Plan, the Program Manager, the State of Nebraska, the
Nebraska Investment Council, the Nebraska State Treasurer, theNebraska State Investment Officer or its authorized agents ortheir affiliates are not responsible for determining the amount ofFDIC insurance provided to an account owner.
No other guaranteesFDIC insurance is the sole insurance available for the BankSavings Static Investment Option. Furthermore, the Bank SavingsStatic Investment Option does not provide a guarantee of anylevel of performance or return or offer any additional guarantees.Like all of the Investment Options, neither the contributions intothe Bank Savings Static Investment Option nor any investmentreturn earned on the contributions are guaranteed by the State ofNebraska, the Nebraska Investment Council, the Nebraska StateTreasurer, the Nebraska State Investment Officer, the Bank or itsauthorized agents or their affiliates or any other federal or stateentity or person.
Risks – To the extent that FDIC insurance applies, the BankSavings Static Investment Option is primarily subject to the riskthat the return on the underlying Savings Account will varybecause of changing interest rates and that the return on theSavings Account will decline because of falling interest rates.
It is important to remember that none of the Nebraska StateTreasurer, the Nebraska Investment Council, the NebraskaState Investment Officer, the State of Nebraska or its officialsand employees, or the Program Manager or any of itsauthorized agents or their affiliates can guarantee a minimumrate of return. Except for accounts invested in the BankSavings Static Investment Option, funds deposited in anaccount are not guaranteed or insured by the FDIC. Depositsin an account are not guaranteed or insured by the State ofNebraska, the Nebraska Investment Council, the NebraskaState Treasurer, the Nebraska State Investment Officer, theProgram Manager or its authorized agents and their affiliates,or any other party. The value of your account may varydepending on market conditions, the performance of theInvestment Option you select, timing of purchases, and fees.The value of your account could be more or less than theamount you contribute to your account. In short you couldlose money. See “Part 10 – Certain Risks to Consider.”
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The detailed asset allocation and mix of underlying investments for each of the Static Investment Options are described in thefollowing table:
Domestic EquityUS Real
Estate
International
Equity
International
BondFixed Income Cash Equivalents
US Equity Large Cap
US Equity
Small/Mid
Cap
US Equity
Small Cap
US Real
Estate
International
Equity
International
Bond
Fixed Income Short-Term
BondTIPS
FDIC-
Insured
Money
Market
State
Street
S&P
500®4
Index
Dodge &
Cox
Stock
T. Rowe
Price
Large-
Cap
Growth
Vanguard
Extended
Market
ETF
Tributary
Small
Company
iShares
Russell
2000
Growth
ETF
Vanguard
Real
Estate
ETF
State Street
MSCI®5
ACWI ex
USA
Index6
DFA World
ex-US
Government
Fixed
Income
MetWest
Total
Return
Bond
Federated
Total
Return
Bond
iShares
Core US
Aggregate
ETF
Vanguard
Short-
Term Bond
ETF
Vanguard
Short-
Term
Inflation-
Protected
ETF
Bank
Savings
Goldman
Sachs
Financial
SquareSM
Government
Money
Market
N/A DODGX TRLGX VXF FOSBX IWO VNQ N/A DWFIX MWTSX FTRBX AGG BSV VTIP N/A FGTXX
ALL EQUITY
38.00% 11.50% 11.50% 2.00% 4.25% 4.25% 5.25% 23.25%
GROWTH
32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 5.00% 8.00%
MODERATE GROWTH
22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 9.00% 13.00% 6.00% 4.00%
BALANCED
18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 9.50% 14.00% 9.50% 3.00% 5.50%
CONSERVATIVE
12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 10.00% 18.00% 17.00% 5.00% 10.00% 11.00%
BANK SAVINGS
100.00%
Description of the underlying investmentsEach of the underlying investments that comprise the six Static Investment Options (as shown above in the table) is described in detail,along with the risks associated with each underlying investment, in “Part 9 – Individual Investment Options.”
It is important to remember that none of the Nebraska State Treasurer, the Nebraska Investment Council, the Nebraska StateInvestment Officer, the State of Nebraska or its officials/employees, or the Program Manager or any of its affiliates canguarantee a minimum rate of return. Except as described herein for accounts invested in the Bank Savings Static InvestmentOption, accounts in the NEST Advisor Plan are not insured by the FDIC. Accounts are not guaranteed or insured by the State ofNebraska, the Nebraska Investment Council, the Nebraska State Treasurer, the Nebraska State Investment Officer, the ProgramManager or its authorized agents or their affiliates, or any other party. See “Part 10 – Certain Risks to Consider.”
4 The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by State Street. Standard & Poor’s® and S&P® are registeredtrademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The productsare not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding theadvisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
5 The MSCI ASWI ex USA is a trademark of MSCI Inc.6 Trust account managed by State Street Global Advisors Trust Company for the benefit of the NEST Advisor Plan. Not a mutual fund and not otherwise registered with the
SEC. See “Part 9 – Individual Investment Options” for more information about the investments.
33
PART 9 – INDIVIDUAL INVESTMENT OPTIONS
This Part 9 describes the underlying investments that are offered asIndividual Investment Options (except the Bank Savings StaticInvestment Option, which is not offered as an Individual InvestmentOption, but is included in some Age-Based Investment Options andis offered as a Static Investment Option). These investments alsoserve as the underlying investments in the Age-Based and StaticInvestment Options except, Vanguard Total Stock Market ETF,SPDR S&P Dividend ETF, Vanguard FTSE Emerging Markets ETFand American Funds The Income Fund of America, which areoffered as Individual Investment Options. Additional informationdiscussing the risks of investing in these Investment Options may befound in the underlying fund prospectus (with the exception of theBank Savings Static Investment Option) which is available at https://www.nest529advisor.com/home/learn/investment-options.html orupon request by calling the Program Manager. Also see “Part 10 –Certain Risks to Consider.”
19 Individual Investment OptionsThe Individual Investment Options each invest in a single fund.You may allocate your contributions to an account among one ormore Individual Investment Options according to your investmentobjective and risk tolerance.
Since the Individual Investment Options invest in a single fund,their performance is based on the performance of the individualfund in which each of the Individual Investment Options isinvested. Performance differences for the Individual InvestmentOptions and their underlying funds may result from differences inthe timing of purchases and sales and fees charged. Consequently,the performance of each of the Individual Investment Options maybe more volatile than the Age-Based or Static Investment Options.Account owners do not own shares of the underlying fundsdirectly, but rather own an interest in the Investment Optionsoffered by the Plan. Part 11 of this Program Disclosure Statementdescribes performance in a greater detail.
The underlying investments in which each Individual InvestmentOption is invested are described below. The Individual InvestmentOptions are designed for account owners seeking a more focusedinvestment strategy. In consultation with your Financial Advisoryou may select an Individual Investment Option or mix ofIndividual Investment Options based on, among other factors,your investment goals and objectives, and your tolerance formarket volatility and investment risk. You should review each ofthe Individual Investment Options with your Financial Advisorbefore making a selection from among the Investment Optionsoffered through the Plan.
Descriptions of the underlying investments are taken from theprospectuses of the funds, as published by the investmentmanagers and described as follows. The Program Manager intendsthese descriptions to summarize the single fund’s respectiveinvestment objectives and policies that comprise each IndividualInvestment Option. Each of the underlying fund’s investmentmanagers have reviewed and approved these descriptions:
American Funds The Income Fund of America®
Individual Investment OptionThe Fund’s objectives are to provide current income whilesecondarily striving for capital growth. The Fund seeks to achieve itsobjective through investments in both the stock and bond marketsthat provide an opportunity for above-average current income andlong-term capital growth. Generally, at least 60% of the Fund’sassets will be invested in common stocks and other equity-typesecurities. However, the composition of the Fund’s investments inequity, debt and cash or money market instruments may varysubstantially depending on various factors, including marketconditions. The Fund may invest up to 25% of its assets in equitysecurities and up to 10% of its assets in fixed income securities ofissuers domiciled outside the United States. The Fund may investonly 20% of its assets in securities rated below investment grade.
Risks – You may lose money by investing in the Fund. Thelikelihood of loss may be greater if you invest for a shorter periodof time. Investors in the Fund should have a long-term perspectiveand be able to tolerate potentially sharp declines in value.Additionally, an investment is subject to a number of risks, whichinclude but are not limited to: market conditions, issuer risks,investing in income-oriented stocks, investing in debt instruments,investing in lower rated debt instruments, investing outside theUnited States and management. Your investment in the Fund isnot a bank deposit and is not insured or guaranteed by the FDICor any other governmental agency, entity or person. You shouldconsider how this Fund fits into your overall investment program.
DFA World ex-US Government Fixed Income IndividualInvestment OptionThe World ex-US Government Fund seeks its investmentobjective by investing in a universe of obligations issued primarilyby non-US government issuers and supranational organizationsand their agencies having investment grade credit ratings at thetime of purchase. As a non-fundamental policy, under normalcircumstances, the Fund will invest at least 80% of its net assets infixed income securities issued by foreign governments (includingpolitical subdivisions) and their authorities, agencies orinstrumentalities. Generally, the World ex-US GovernmentPortfolio will purchase fixed income securities that maturebetween five and fifteen years from the date of settlement. Undernormal circumstances, the Portfolio will generally maintain aweighted average duration of no more than one quarter yeargreater than, and no less than one year below, the weightedaverage duration of the Portfolio’s benchmark, the FTSE Non-USD World Government Bond Index, currency-hedged in USDterms, which was approximately 8.89 years as of December 31,2018. Because many of the World ex-US Government Fund’sinvestments may be denominated in foreign currencies, the Fundmay also enter into forward foreign currency contracts to attemptto protect against uncertainty in the level of future foreigncurrency rates, to hedge against fluctuations in currency exchangerates or to transfer balances from one currency to another.
Risks – As with all investments, there are certain risks of investingin the Fund. The Fund’s shares will change in value, and you could..
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34
lose money by investing in the Fund. The value of the debtsecurities may increase or decrease as a result of the following:market risk, foreign securities and currencies risk, foreigngovernment debt risk, interest rate risk, non-diversification riskand credit risk. Government agency obligations have differentlevels of credit support and, therefore, different degrees of creditrisk, income risk, derivatives risk, liquidity risk, securities lendingrisk, and cyber security risk.
Dodge & Cox Stock Individual Investment OptionThe Fund seeks long-term growth of principal and income. Asecondary objective is to achieve a reasonable current income.The Fund invests primarily in a diversified portfolio of commonstocks. In selecting investments, the Fund invests in companiesthat, in Dodge & Cox’s opinion, appear to be temporarilyundervalued by the stock market but have a favorable outlook forlong-term growth. The Fund focuses on the underlying financialcondition and prospects of individual companies, including futureearnings, cash flow, and dividends. Various other factors,including financial strength, economic conditions, competitiveadvantage, quality of the business franchise, and the reputation,experience, and competence of a company’s management areweighed against valuation in selecting individual securities.
Risks – The Fund is subject to stock market risk, meaning stocks inthe Fund may decline in value for extended periods due to thefinancial prospects of individual companies or due to generalmarket and economic conditions. Please refer to the Dodge &Cox Funds Prospectus and Statement of Additional Information(SAI) available online, for further details on investment risk. https://www.dodgeandcox.com/prospectus.asp.
Federated Total Return Bond Individual InvestmentOptionThe Fund pursues its investment objective by investing primarily inU.S. dollar denominated, investment-grade, fixed income securities.In addition, the Fund may invest in high-yield, non-U.S. dollardenominated, and emerging market fixed income securities whenFederated Investment Management Company considers the risk-return prospects of those sectors to be attractive. The Fund mayinvest up to 25% of its total assets in noninvestment-grade debtsecurities (otherwise known as “junk bonds” or “leveraged loans”).
Risks – High yield, lower-rated securities generally entail greatermarket, credit/ default and liquidity risks, and may be more volatilethan investment-grade securities. Bond prices are sensitive tochanges in interest rates, and a rise in interest rates can cause adecline in their prices. The value of some mortgage-backed securitiesmay be particularly sensitive to changes in prevailing interest rates,and although the securities are generally supported by some form ofgovernment or private insurance, there is no assurance that privateguarantors or insurers will meet their obligations.
Goldman Sachs Financial SquareSM Government MoneyMarket Individual Investment OptionThe Fund seeks to maximize current income to the extentconsistent with the preservation of capital and the maintenance of
liquidity by investing exclusively in high quality money marketinstruments. The Fund pursues the investment objective byinvesting in U.S. Treasury and government agency obligations andrepurchase agreements.
Risks – Loss of money is a risk of investing in the Fund. Aninvestment in the Fund is not a bank deposit and is not insured orguaranteed by the FDIC or any other governmental agency.
You could lose money by investing in this Investment Option.Although a money market fund seeks to preserve the value ofan investment at $1 per share, it cannot guarantee it will doso. Investment in this Investment Option is not insured orguaranteed by the FDIC or any other government agency. Thesponsor has no legal obligation to provide financial support tothe underlying fund, and you should not expect that thesponsor will provide financial support to the underlying fundat any time.
iShares Core US Aggregate ETF Individual InvestmentOptionThe Fund seeks to track the investment results of the BloombergBarclays U.S. Aggregate Bond Index (the “Underlying Index”),which measures the performance of the total U.S. investment-grade bond market. The Underlying Index includes investment-grade U.S. Treasury bonds, government-related bonds, corporatebonds, mortgage-backed pass-through securities, commercialmortgage-backed securities and asset-backed securities that arepublicly offered for sale in the United States.
Risks – Fixed income risks include interest-rate and credit risk.Typically when interest rates rise, there is a corresponding declinein bond values. Credit risk refers to the possibility that the bondissuer will not be able to make principal and interest payments.Diversification may not protect against market risk or loss ofprincipal. An investment in this Fund is not insured or guaranteedby the FDIC or any other government agency and its return andyield will fluctuate with market conditions. Growth securities maybe more volatile than other types of investments, may performdifferently than the market as a whole and may underperformwhen compared to securities with different investmentparameters. Further information on the investment strategies,risks and policies of this Fund can be found in the Fund’sprospectus and statement of additional information, which isavailable from the Program Manager upon request.
iShares Russell 2000 Growth ETF Individual InvestmentOptionThe Fund seeks to track the investment results of the Russell 2000Growth Index (the “Underlying Index”), which measures theperformance of the small-capitalization growth sector of the U.S.equity market. It is a subset of the Russell 2000® Index, whichmeasures the performance of the small-capitalization sector of theU.S. equity market. The Underlying Index measures the performanceof equity securities of Russell 2000 Index issuers with relatively higherprice-to-book ratios and higher forecasted growth.
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Risks – The risks of investing in the equity securities marketinclude both short-term and prolonged price declines. The valueof an equity security may decline due to factors affecting equitysecurities markets generally or particular industries represented inthe markets or factors specific to a particular security. Equitysecurities may underperform fixed income investments andsecurities market indexes that track other markets, segments andsectors. Equity securities of small-cap companies tend to presentgreater risks than equity securities of large-cap companiesbecause they are generally more volatile and can be less liquid.Further information on the investment strategies, risks andpolicies of this Fund can be found in the Fund’s prospectus andstatement of additional information, which is available from theProgram Manager upon request.
MetWest Total Return Bond Individual InvestmentOptionThe Fund’s investment objective is to maximize current incomeand achieve above average total return consistent with prudentinvestment management over a full market cycle. The Fund seeksto outperform the broad fixed income market over time andproduce favorable relative returns in all interest rate environmentsby focusing on security selection and portfolio construction ratherthan anticipating the direction of rates. The objective is groundedin long-term value considerations.
Risks – Funds investing in U.S. government-guaranteed securitiesare neither insured nor guaranteed by the U.S. government andneither the Fund nor its yield is guaranteed by the U.S.government. Fixed income investments entail interest rate risk,the risk of issuer default, issuer credit risk, and price volatility risk.Funds investing in bonds can lose their value as interest rates riseand an investor can lose principal. Mortgage-backed and otherasset-backed securities (“MBS”) often involve risks that aredifferent from or more acute than risks associated with other typesof debt instruments. MBS related to floating rate loans mayexhibit greater price volatility than a fixed rate obligation ofsimilar credit quality. With respect to non-agency MBS, there areno direct or indirect government or agency guarantees ofpayments in pools created by non-governmental issuers. Non-agency MBS are also not subject to the same underwritingrequirements for the underlying mortgages that are applicable tothose mortgage-related securities that have a government orgovernment-sponsored entity guarantee. For a complete list ofFund risks, please see the Prospectus.
SPDR® S&P Dividend ETF Individual Investment OptionThe SPDR S&P Dividend ETF (the “Fund”) seeks to provideinvestment results that, before fees and expenses, correspondgenerally to the total return performance of an index that tracksthe performance of publicly traded issuers that have historicallyfollowed a policy of making dividend payments. In seeking to
track the performance of the S&P High Yield Dividend AristocratsIndex (the “Index”), the Fund employs a sampling strategy, whichmeans that the Fund is not required to purchase all of thesecurities represented in the Index. The Index is designed tomeasure the performance of the highest dividend yielding S&PComposite 1500® Index constituents that have followed amanaged-dividends policy of consistently increasing dividendsevery year for at least 20 consecutive years.
Risks – As with all investments, there are certain risks of investingin the Fund. The Fund’s shares will change in value, and you couldlose money by investing in the Fund. The market prices of equitysecurities owned by the Fund may go up or down, sometimesrapidly or unpredictably. The value of a security may decline for anumber of reasons that may directly relate to the issuer and alsomay decline due to general industry or market conditions that arenot specifically related to a particular company. In addition, equitymarkets tend to move in cycles, which may cause stock prices tofall over short or extended periods of time. The Fund may besubject to additional risks, including consumer staples sector risk,dividend paying securities risk, equity investing risk, fluctuation ofnet asset value, share premiums and discounts risk, financialsector risk, indexing strategy/index tracking risk, industrial sectorrisk, market risk, non-diversification risk, passive strategy/indexrisk, and unconstrained sector risk as described in the Fund’sunderlying prospectus. Further information on the investmentstrategies, index methodology detail, risks and policies of thisFund can be found in the Fund’s prospectus and statement ofadditional information, which is available from the ProgramManager upon request.
State Street MSCI®7 ACWI ex USA Index IndividualInvestment Option8
Seeks an investment return that approximates as closely aspracticable, before expenses, the performance of the MSCI ACWIex USA Index over the long term.
An investment in the strategy is subject to a number of risks,which include but are not limited to: cash position risk,concentration risk, conflicts of interest risk, counterparty risk,currency risk, custodial risk, cybersecurity risk, defensive investingrisk/temporary defensive positions, depositary receipts risk,derivatives risk, emerging markets risk, energy sector risk, equityinvesting risk, frontier markets risk, futures commission merchantrisk, futures contract risks, other exchange traded derivatives risk,geographic focus risk, hedging risk, IPO risk, index tracking risk,industrial sector risk, investment risk, large shareholder risk,leveraging risk, limited investment program risk, liquidity risk,market capitalization risk, market disruption and geopolitical risk,market risk, market volatility; government intervention risk,modeling risk, non-U.S. securities risk, index strategy/index risk,portfolio turnover risk, re-balancing policy risk, repurchase
7 The MSCI ACWI ex USA Index is a trademark of MSCI Inc.8 State Street Global Advisors Trust Company has been appointed as discretionary trustee over the assets invested in these trust accounts and may commingle the particular
trust property into a bank maintained common trust fund. These trust accounts are exempt from registration with the Securities and Exchange Commission.
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agreement risk, restricted securities risk, risk of investment inother pools, securities lending risk; risks of investment of cashcollateral, settlement risk, significant withdrawal risk, small-, mid-and micro-cap companies risk, tax risk, risk considerations ofinvesting in China, and utilities sector risk. A detailed descriptionof the risks of investing in this strategy is included in the StrategyDisclosure Document, which is available from the ProgramManager upon request.
Risk management does not promise any level of performance orguarantee against loss of principal. State Street encouragesinvestors to seek the advice of well-qualified financial and taxadvisors, accountants, attorneys and other professionals beforemaking any investment or retirement decision.
State Street S&P 500®9 Index IndividualInvestment Option10
Seeks an investment return that approximates as closely aspracticable, before expenses, the performance of the S&P 500®
Index over the long term.
An investment in the strategy is subject to a number of risks,which include but are not limited to: cash position risk,concentration risk, conflicts of interest risk, counterparty risk,custodial risk, cybersecurity risk, derivatives risk, equity investingrisk, futures commission merchant risk, futures contract risks: otherexchange traded derivatives risk, geographic focus risk, growthstock risk, hedging risk, IPO risk, index tracking risk, investmentrisk, large shareholder risk, limited investment program risk,liquidity risk, market capitalization risk, market disruption andgeopolitical risk, market risk, market volatility; governmentintervention risk, modeling risk, index strategy/index risk, portfolioturnover risk, repurchase agreement risk, restricted securities risk,risk of investment in other pools, securities lending risk; risks ofinvestment of cash collateral, significant withdrawal risk, small-,mid- and micro-cap companies risk, tax risk, and value stock risk.A detailed description of the risks of investing in this strategy isincluded in the Strategy Disclosure Document, which is availablefrom the Program Manager upon request.
Tributary Small Company Individual Investment OptionThe investment objective of the Tributary Small Company Fund islong-term capital appreciation. Under normal market conditions,the Fund invests primarily in common stocks and securities thatare convertible into the common stocks of small-capitalizationcompanies. The Fund’s adviser has defined a “small” marketcapitalization as less than $5 billion. The Fund’s investmentadviser uses a value-oriented investment approach, looking forcompanies whose stock is trading below what the adviserconsiders its intrinsic value.
Risks – Stocks of small-capitalization companies are more volatileand carry more risk than other forms of equity investments. Thenet asset value per share of this Fund will generally fluctuate morethan the stock market, as measured by the S&P 500 Index.Common stocks, and funds investing in common stocks, generallyprovide greater return potential when compared with other typesof investments.
T. Rowe Price Large-Cap Growth IndividualInvestment OptionThe fund seeks to provide long-term capital appreciation throughinvestments in common stocks of growth companies. In taking agrowth approach to investment selection, the Fund will normallyinvest at least 80% of its net assets in the common stocks of large-cap companies. The Fund defines a large-cap company as onewhose market cap is larger than the median market cap ofcompanies in the Russell 1000 Growth Index, a widely usedbenchmark of the largest domestic growth stocks.
Risks – As with all equity funds, this Fund’s share price can fallbecause of weakness in the broad market, a particular industry, orspecific holdings. The investment approach reflects a belief thatwhen a company increases its earnings faster than both inflationand the overall economy, the market will eventually reward it witha higher stock price.
The Fund is nondiversified, and has the ability to invest a largerpercentage of its assets in the securities of a smaller number ofissuers than a diversified fund. As a result, poor performance by asingle issuer could adversely affect Fund performance more thanif the Fund were invested in a larger number of issuers.
Vanguard Extended Market ETF IndividualInvestment OptionThe Fund employs an indexing investment approach designed totrack the performance of the Standard & Poor’s CompletionIndex, a broadly diversified index of stocks of small- and mid-sizeU.S. companies. The S&P Completion Index contains all of theU.S. common stocks regularly traded on the New York StockExchange and the Nasdaq over-the-counter market, except thosestocks included in the S&P 500 Index. The Fund invests bysampling the Index, meaning that it holds a broadly diversifiedcollection of securities that, in the aggregate, approximates thefull Index in terms of key characteristics. These key characteristicsinclude industry weightings and market capitalization, as well ascertain financial measures, such as price/earnings ratio anddividend yield.
9 The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by State Street. Standard & Poor’s® and S&P® are registeredtrademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The productsare not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding theadvisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
10State Street Global Advisors Trust Company has been appointed as discretionary trustee over the assets invested in these trust accounts and may commingle the particulartrust property into a bank maintained common trust fund. These trust accounts are exempt from registration with the Securities and Exchange Commission.
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Risks – An investment in the Fund could lose money over short oreven long periods. You should expect the Fund’s share price andtotal return to fluctuate within a wide range. The Fund is subjectto the following risks, which could affect the Fund’s performance:
Stock market risk: The chance that stock prices overall will decline.Stock markets tend to move in cycles, with periods of rising pricesand periods of falling prices. The Fund’s target index tracks asubset of the U.S. stock market, which could cause the Fund toperform differently from the overall stock market. In addition theFund’s target index may, at times, become focused in stocks of aparticular market sector, which would subject the Fund toproportionately higher exposure to the risks of that sector.
The Fund is also subject to investment style risk and indexsampling risk. Because ETF Shares are traded on an exchange,they are subject to additional risks.
Vanguard FTSE Emerging Markets ETF IndividualInvestment OptionThe Fund employs an indexing investment approach designed totrack the performance of the FTSE Emerging Markets All CapChina A Inclusion Index, a market-capitalization- weighted indexthat is made up of approximately 4,302 common stocks of large-,mid-, and small-cap companies located in emerging marketsaround the world. The Fund invests by sampling the index,meaning that it holds a broadly diversified collection of securitiesthat, in the aggregate, approximates the index in terms of keycharacteristics.
Risks – An investment in the Fund could lose money over short oreven long periods. You should expect the Fund’s share price andtotal return to fluctuate within a wide range. The Fund is subjectto the following risks, which could affect the Fund’s performance:
Country/Regional risk: The chance that world events—such aspolitical upheaval, financial troubles, or natural disasters—willadversely affect the value of securities issued by companies inforeign countries or regions. The Index’s, and therefore theFund’s, heavy exposure to China, Taiwan, Brazil, India, and SouthAfrica subjects the Fund to a higher degree of country risk thanthat of more geographically diversified international funds.
Emerging markets risk: The chance that the stocks of companieslocated in emerging markets will be substantially more volatile,and substantially less liquid, than the stocks of companies locatedin more developed foreign markets because, among otherfactors, emerging markets can have greater custodial andoperational risks; less developed legal, regulatory, andaccounting systems; and greater political, social, and economicinstability than developed markets.
Currency risk: The chance that the value of a foreign investment,measured in U.S. dollars, will decrease because of unfavorablechanges in currency exchange rates. Currency risk is especiallyhigh in emerging markets.
China A-shares risk: The chance that the Fund may not be able toaccess a sufficient amount of China A-shares to track its targetindex. China A-shares are only available to foreign investorsthrough a quota license or the China Stock Connect program.
This Fund is also subject to stock market risk and index samplingrisk. Because ETF Shares are traded on an exchange, they aresubject to additional risks.
Vanguard Real Estate ETF Individual Investment OptionThe Fund employs an indexing investment approach designed totrack the performance of the MSCI® US Investable Market RealEstate 25/50 Transition Index, an interim index that will graduallyincrease exposure to other real estate-related investments whileproportionately reducing exposure to other stocks based on theirweightings in the MSCI US Investable Market Real Estate 25/50Index. The MSCI US Investable Market Real Estate 25/50 Index ismade up of stocks of large, mid-size, and small U.S. companieswithin the real estate sector, as classified under the GlobalIndustry Classification Standard (GICS). The GICS real estatesector is composed of equity real estate investment trusts (knownas REITs), which includes specialized REITs, and real estatemanagement and development companies. The Fund attempts toreplicate the Index by investing all, or substantially all, of its assets- either directly or indirectly through a wholly owned subsidiary(the underlying fund), which is itself a registered investmentcompany - in the stocks that make up the Index, holding eachstock in approximately the same proportion as its weighting in theIndex. The Fund may invest a portion of its assets in theunderlying fund.
Risks – An investment in the Fund could lose money over short oreven long periods. You should expect the Fund’s share price andtotal return to fluctuate within a wide range. The Fund is subjectto the following risks, which could affect the Fund’s performance:
Industry concentration risk: The chance that the stocks of REITsand other real estate-related investments will decline because ofadverse developments affecting the real estate industry and realproperty values. Because the Fund concentrates its assets in thesestocks, industry concentration risk is high.
This Fund is also subject to stock market risk, interest rate risk,investment style risk, asset concentration risk, non-diversificationrisk, and derivatives risk. Because ETF Shares are traded on anexchange, they are subject to additional risks.
Vanguard Short-Term Bond ETF IndividualInvestment OptionThe Fund employs an indexing investment approach designed totrack the performance of the Bloomberg Barclays U.S. 1-5 YearGovernment/ Credit Float Adjusted Index. This Index includes allmedium and larger issues of U.S. government, investment-gradecorporate, and investment-grade international dollar-denominated bonds that have maturities between one and fiveyears and are publicly issued. The Fund invests by sampling theIndex, meaning that it holds a range of securities that, in the..
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aggregate, approximates the full Index in terms of key risk factorsand other characteristics. All of the Fund’s investments will beselected through the sampling process, and at least 80% of theFund’s assets will be invested in bonds held in the Index. TheFund maintains a dollar-weighted average maturity consistentwith that of the Index, which generally does not exceed threeyears.
Risks – The Fund is designed for investors with a low tolerance forrisk, but you could still lose money by investing in it. The Fund issubject to the following risks, which could affect the Fund’sperformance:
Interest rate risk: The chance that bond prices will declinebecause of rising interest rates. Interest rate risk should be low forthe Fund because it invests primarily in short-term bonds, whoseprices are much less sensitive to interest rate changes than are theprices of long-term bonds.
The Fund is also subject to income risk, credit risk, liquidity risk,and index sampling risk. Because ETF Shares are traded on anexchange, they are subject to additional risks.
Vanguard Short-Term Inflation-Protected ETF IndividualInvestment OptionThe Fund employs an indexing investment approach designed totrack the performance of the Bloomberg Barclays U.S. TreasuryInflation-Protected Securities (TIPS) 0-5 Year Indexes. The Index isa market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury withremaining maturities of less than five years.
The Fund attempts to replicate the target index by investing all,or substantially all, of its assets in the securities that make up theIndex, holding each security in approximately the sameproportion as its weighting in the Index. The Fund maintains adollar-weighted average maturity consistent with that of thetarget index, which generally does not exceed three years.
Risks – The Fund is designed for investors with a low tolerance forrisk, but you could still lose money by investing in it. The Fund issubject to income fluctuations, which could affect the Fund’sperformance. The Fund’s quarterly income distributions are likelyto fluctuate considerably more than the income distributions of atypical bond fund. In fact, under certain conditions, the Fund maynot have any income to distribute. Income fluctuations associatedwith changes in interest rates are expected to be low, however,income fluctuations associated with changes in inflation areexpected to be high. Overall, investors can expect incomefluctuations to be high for the Fund.
The Fund is also subject to interest rate risk. Because ETF Sharesare traded on an exchange, they are subject to additional risks.
Vanguard Total Stock Market ETF IndividualInvestment OptionThe Fund employs an indexing investment approach designed totrack the performance of the CRSP US Total Market Index, which
represents approximately 100% of the investable U.S. stockmarket and includes large-, mid-, small-, and micro-cap stocksregularly traded on the New York Stock Exchange and Nasdaq.The Fund invests by sampling the Index, meaning that it holds abroadly diversified collection of securities that, in the aggregate,approximates the full Index in terms of key characteristics. Thesekey characteristics include industry weightings and marketcapitalization, as well as certain financial measures, such as price/earnings ratio and dividend yield.
Risks – An investment in the Fund could lose money over short oreven long periods. You should expect the Fund’s share price andtotal return to fluctuate within a wide range. The Fund is subjectto the following risks, which could affect the Fund’s performance:
Stock market risk: The chance that stock prices overall will decline.Stock markets tend to move in cycles, with periods of rising pricesand periods of falling prices. The Fund’s target index may, attimes, become focused in stocks of a particular market sector,which would subject the Fund to proportionately higher exposureto the risks of that sector.
This Fund is also subject to index sampling risk. Because ETF Sharesare traded on an exchange, they are subject to additional risks.
Bank SavingsBank Savings, which is an underlying investment used in some Age-Based Investment Options and the Bank Savings Static InvestmentOption, and not offered as an Individual Investment Option, seeksincome consistent with the preservation of principal and invests all ofits assets in a Savings Account held at the Bank. The SavingsAccount is an omnibus savings account insured by the FDIC and isheld in trust by the Nebraska Educational Savings Plan Trust at theBank. The Bank also serves as Program Manager of the Plan.
Investments in the Savings Account will earn varying rates ofinterest. The interest rate generally will be equivalent to short-term deposit rates. Interest on the Savings Account will becompounded daily based on the actual number of days in a year(typically 365 days, except for 366 days in leap years) and will becredited to the Savings Account on monthly basis. The interest onthe Savings Account is expressed as an APY. The APY on theSavings Account will be reviewed by the Bank on a periodic basisand may be recalculated as needed at any time. To see thecurrent Bank Savings Static Investment Option APY please go towww.NEST529Advisor.com or call 888.659.6378.
FDIC insuranceSubject to the application of Bank and FDIC rules and regulationsto each account owner, funds in the Savings Account will retaintheir value as a result of the FDIC insurance. In contrast, all otherInvestment Options of the Plan are not insured by the FDIC.
No other guaranteesFDIC insurance is the sole insurance available for the SavingsAccount. Furthermore, the Savings Account does not provide aguarantee of any level of performance or return or offer any..
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additional guarantees. Investment returns earned are notguaranteed by the State of Nebraska, the Nebraska InvestmentCouncil, the Nebraska State Treasurer, the Nebraska StateInvestment Officer, the Bank or its authorized agents or theiraffiliates or any other federal or state entity or person.
Risks – To the extent that FDIC insurance applies, the risk that thereturn on the underlying Savings Account will vary because ofchanging interest rates and that the return on the SavingsAccount will decline because of falling interest rates.
It is important to remember that none of the Nebraska StateTreasurer, the Nebraska Investment Council, the NebraskaState Investment Officer, the State of Nebraska or its officialsand employees, or the Program Manager or any of itsauthorized agents or their affiliates can guarantee a minimumrate of return. Except for accounts invested in the BankSavings Static Investment Option, funds deposited in anaccount are not guaranteed or insured by the FDIC. Depositsin an account are not guaranteed or insured by the State ofNebraska, the Nebraska Investment Council. the NebraskaState Treasurer, the Nebraska State Investment Officer, theProgram Manager or its authorized agents and their affiliates,or any other party. The value of your account may varydepending on market conditions, the performance of theInvestment Option you select, timing of purchases, and fees.The value of your account could be more or less than theamount you contribute to your account. In short, you couldlose money. See “Part 10 – Certain Risks to Consider.”
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PART 10 – CERTAIN RISKS TO CONSIDER
Opening an account involves certain risks. Among other thingsdiscussed in this Program Disclosure Statement, you shouldcarefully consider the following risks before completing anEnrollment Form. You also should read this ProgramDisclosure Statement carefully before making a decision toopen an account.
Investment risksAn account’s value may decline. As with any investment, there canbe no assurance that the value of your account will grow at anyparticular rate or that it will not decline. The value of the securitiesin which the Investment Options invest will change due to marketfluctuations and a number of other factors, which will not be in thecontrol of the Nebraska Investment Council, the Trustee or theProgram Manager. If the value of these securities declines, youmay lose some or all of the principal in your account. None of theNebraska State Treasurer, the Nebraska Investment Council, theNebraska State Investment Officer, the State of Nebraska or itsofficials/employees, or the Program Manager or any of its affiliatesguarantees any minimum rate of return or any return on youraccount or that you will not lose some or all of the principalamount invested.
No insurance or guaranteesExcept as described herein for accounts invested in the BankSavings Static Investment Option, your account is not insured bythe FDIC. In addition, your account is not guaranteed or insuredby the State of Nebraska, the Nebraska Investment Council, theNebraska State Treasurer, the Nebraska State Investment Officer,First National Bank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity or person.
Investment Options have certain risksEach of the Investment Options is subject to certain risks that mayaffect performance. Set forth below is a list of the major risksapplicable to the Investment Options. In addition, see thedescriptions of each of the underlying investments in each of theInvestment Options. For a description of the risks associated withthe underlying investments of each Investment Option, see“Part 9 – Individual Investment Options.”
• Call risk. The chance that during periods of falling interestrates, issuers of callable bonds may call (redeem) securitieswith higher coupon rates or interest rates before theirmaturity dates. The fund would then lose any priceappreciation above the bond’s call price and would be forcedto reinvest the unanticipated proceeds at lower interest rates,resulting in a decline in the funds income.
• Concentration risk. To the extent that an Investment Optionis exposed to securities of a single country, region, industry,structure or size, its performance may be unduly affected byfactors common to the type of securities involved.
• Credit risk. The value or yield of a bond or money marketsecurity could fall if its credit backing deteriorates. In moreextreme cases, default or the threat of default could cause asecurity to lose most or all of its value. Credit risks are higherin high-yield bonds.
• ETF risks. Because ETF shares are traded on an exchange,they are subject to additional risks. The ETF shares madeavailable through the Plan are listed for trading on NYSE Arcaand can be bought and sold on the secondary market atmarket prices. Although it is expected that the market priceof an ETF share typically will approximate its net asset value(NAV), there may be times when the market price and theNAV vary significantly. Thus, the Plan may pay more or lessthan NAV when it buys ETF shares on the secondary market,and may receive more or less than NAV when it sells thoseshares. Although the ETF shares available through the Planare listed for trading on the NYSE Arca, it is possible that anactive trading market may not be maintained. Trading of ETFshares on NYSE Arca may be halted if NYSE Arca officialsdeem such action appropriate, if the ETF shares are delistedfrom NYSE Arca, or if the activation of market wide tradinghalts (which halt trading for a specific period of time when theprice of a particular security or overall market prices declineby a specified percentage).
• Extension risk. The chance that during periods of risinginterest rates, certain debt securities will be paid offsubstantially more slowly than originally anticipated, and thevalue of those securities may fall. Extension risk is generallylow for short-term bonds.
• Foreign investment risk. Foreign stocks and bonds tend tobe more volatile and may be less liquid than their U.S.counterparts. The reasons for such volatility can includegreater political and social instability, lower market liquidity,higher costs, less stringent investor protections, and inferiorinformation on issuer finances. In addition, the dollar value ofmost foreign currencies changes daily. All of these risks tendto be higher in emerging markets than in developed markets.
• Index sampling risk. The chance that the securities selectedfor a fund, in the aggregate, will not provide investmentperformance matching that of the fund’s target index.
• Interest rate risk. A rise in interest rates typically causesbond prices to fall. Bonds with longer maturities and highercredit quality tend to be more sensitive to changes in interestrates, as are mortgage-backed bonds. Short- and long-terminterest rates do not necessarily move the same amount or inthe same direction. Money market investments are alsoaffected by interest rates, particularly short-term rates, but inthe opposite way: when short-term interest rates fall, moneymarket yields usually fall as well. Bonds that can be paid offbefore maturity, such as mortgage-backed securities, tend tobe more volatile than other types of debt securities.
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• Investment style risk. The chance that returns from the typesof stocks the Investment Option invests in (small, mid, orlarge capitalization stocks) will trail returns from the overallstock market. Historically, these stocks have performed quitedifferently from the overall market.
• Issuer risk. Changes in an issuer’s business prospects orfinancial condition, including those resulting from concernsover accounting or corporate governance practices, couldsignificantly affect an Investment Option’s performance if theInvestment Option has sufficient exposure to those securities.
• Management risk. An Investment Option’s performancecould suffer if the investment fund or funds in which it investsunderperforms.
• Market risk. Securities prices change every business day,based on investor reactions to economic, political, market,industry and corporate developments. At times, these pricechanges may be rapid and dramatic. Some factors may affectthe market as a whole, while others affect particularindustries, firms, or sizes or types of securities. Market riskprimarily affects stocks, but also affects high-yield bonds and,to a lesser extent, higher quality bonds.
• Prepayment risk. The chance that during periods of fallinginterest rates, homeowners will refinance their mortgagesbefore their maturity dates, resulting in prepayment ofmortgage-backed securities held by the fund. The fundwould then lose any price appreciation above the mortgagesprincipal and would be forced to reinvest the unanticipatedproceeds at lower interest rates, resulting in a decline in thefund’s income.
Individual Investment Options and Bank Savings StaticInvestment Option are not as diversified as otherInvestment OptionsThe Individual Investment Options are designed to invest in asingle fund, or in the case of the Bank Savings Static InvestmentOption, an FDIC-insured savings account. Individual InvestmentOptions, by design, are not as diverse as the Age-Based and mostStatic Investment Options, which are invested in a number ofdifferent investments. For the Individual Investment Options,account owners do not own shares of a single fund but, rather,own an interest in the Investment Options offered by the Plan.Performance differences for the Individual Investment Optionsand their underlying funds may result from differences in thetiming of purchases and sales and fees charged. Performance forthe Bank Savings Static Investment Option is based on theinterest earned on the FDIC-insured Savings Account. Accountowners may not deposit directly into the Savings Account at aBank branch or otherwise. The performance of each of theIndividual Investment Options may be more volatile than mostStatic Investment Options or Age-Based Investment Options. Part11 of this Program Disclosure Statement describes performance ingreater detail.
Program risks
• Possible changes to the NEST Advisor Plan – The NebraskaState Treasurer, Nebraska Investment Council and theProgram Manager reserve the right to make changes to theNEST Advisor Plan at any time. These changes may includechanges to the underlying investments in which the Planinvests and changes to the expenses the Plan imposes. If theunderlying investments are changed, the fees and expensesof the replacement investments may be higher or lower andthe replacement investments may achieve differentperformance results than the investments the Plan currentlyutilizes.
• Limitation on investment selection – An account owner mayonly change the investment election for an account twice percalendar year or upon a change in Beneficiary. If an accountowner has multiple accounts in the Plan for the sameBeneficiary, or multiple accounts in the NEST Advisor Plan,the NEST Direct Plan, the TD Ameritrade 529 College SavingsPlan, or the State Farm 529 Savings Plan, the account ownermay change the Investment Options in all accounts withouttax consequences, so long as the changes to all of theaccounts are made at the same time and no more frequentlythan twice per calendar year or upon a change of Beneficiary.
• Illiquidity of account – Funds in your account will be subjectto the terms and conditions of the Plan and the ParticipationAgreement. These provisions may limit your ability towithdraw funds or to transfer these funds. Under nocircumstances may any interest in an account or the Plan beused as security for a loan.
• Acceptance to an Eligible Educational Institution is notguaranteed – There is no guarantee that a Beneficiary will beadmitted to, or permitted to continue to attend, any EligibleEducational Institution. If the Beneficiary does not attend anEligible Educational Institution, withdrawals from youraccount may be subject to state and federal taxes andpenalties.
• Qualified Higher Education Expenses may exceed thebalance in your account – Even if you make the maximumamount of contributions to your account, the balance maynot be sufficient to cover the Beneficiary’s Qualified HigherEducation Expenses.
• Plan does not create Nebraska residency – Neitheropening nor contributing to a Plan account creates Nebraskaresidency status for you or a Beneficiary for purposes ofdetermining the rate of tuition charged by a NebraskaEligible Educational Institution.
• Laws governing 529 qualified tuition programs maychange – There is a risk that federal and state laws andregulations governing 529 plans could change in the future.The proposed federal Treasury regulations that have been..
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issued under Code Section 529 provide guidance andrequirements for the establishment and operation of theTrust but do not provide guidance on all aspects of the Trust.Final regulations or other administrative guidance or courtdecisions might be issued that could adversely impact thefederal tax consequences or requirements with respect to theTrust or contributions to or withdrawals from your account.
In addition, Code Section 529 or other federal law could beamended in a manner that materially changes the federal taxtreatment of contributions to and withdrawals from youraccount. You should understand that changes in the lawgoverning the federal and/or state tax consequencesdescribed in this Program Disclosure Statement mightnecessitate material changes to the Trust for the anticipatedtax consequences to apply. Furthermore, the Trust has beenestablished pursuant to Nebraska law, the guidelines andprocedures adopted by the Nebraska State Treasurer, andapplicable securities laws. Changes to any of those laws orregulations may also affect the operation and tax treatmentof the Trust, as described in this Program DisclosureStatement.
Impact on the Beneficiary’s ability to receive financial aidThe eligibility of the Beneficiary for financial aid may dependupon the circumstances of the Beneficiary’s family at the time theBeneficiary enrolls in an Eligible Educational Institution, as well ason the policies of the governmental agencies, school or privateorganizations to which the Beneficiary and/or the Beneficiary’sfamily applies for financial assistance. Because saving for collegewill increase the financial resources available to the Beneficiaryand the Beneficiary’s family, it most likely will have some effect onthe Beneficiary’s eligibility. These policies vary at differentinstitutions and can change over time. Therefore, no person orentity can say with certainty how the federal aid programs, or theschool to which the Beneficiary applies, will treat your account.However, financial aid programs administered by agencies of theState of Nebraska will not take your account balance intoconsideration, except as may be otherwise provided by federallaw.
Medicaid and other federal and state benefitsThe effect of an account on eligibility for Medicaid or other stateand federal benefits is uncertain. It is possible that an account willbe viewed as a “countable resource” in determining anindividual’s financial eligibility for Medicaid. Withdrawals from anaccount during certain periods also may have the effect ofdelaying the disbursement of Medicaid payments. You shouldconsult a qualified advisor to determine how an account mayaffect eligibility for Medicaid or other state and federal benefits.
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43
PART 11—PERFORMANCE
The performance chart below includes performance for investments in the Plan as of December 31, 2019. Performance data for themost recent month-end is available on the Plan’s website at www.NEST529Advisor.com. Please keep in mind, past performance –especially short-term past performance – is not a guarantee of future results. Investment returns and principal values will fluctuate, sothat account owners’ interests in an Investment Option may be worth more or less than their original cost. Current performance may belower or higher then the performance data cited.
No ownership in underlying investmentsAccount owners do not directly own shares of the underlying funds, in the case of the Bank Savings Static Investment Option, directlyhold a savings account, but rather own interests in the Investment Options of the Plan. As a result, the performance of the InvestmentOptions will differ from the performance of the underlying funds, even in circumstances where an Investment Option invests in a single,individual fund. This is due in part to the differences in the expense ratios of the underlying funds and the Investment Options.
Performance differencesPerformance differences between an Investment Option and its underlying investments may also result from differences in the timing ofpurchases and fees. On days when contributions are made to an account, the Investment Options will not use that money to purchaseshares of an underlying investment until the next business day. This timing difference, depending on how the markets are moving, willcause the Investment Option’s performance to either trail or exceed the underlying investment’s performance.
When you invest in an Investment Option, you will receive units in the Investment Option as of the trade date. Your money will be usedby the Trust to purchase shares of an underlying investment. However, the settlement date for the purchase of shares of an underlyinginvestment typically will be one to three days after the trade date for your purchase of units. Depending on the amount of cash flowinto or out of the Investment Option and whether the underlying investment is going up or down in value, this timing difference andfees will cause the Investment Option’s performance either to trail or exceed the underlying investment’s performance.
Performance as of December 31, 2019Total Returns without Sales Charges Total Returns with Maximum Sales Charges
Investment Option Name Average Annualized Since
Inception12
Average Annualized Since
Inception12
Inception Date
Benchmark11 Class 1 year 3 year 5 year 1 year 3 year 5 year
Age-Based Investment Options
Age-Based Aggressive 0-2 A13 26.72% — — 8.42% 22.31% — — 5.80% 7/20/18
Age-Based Aggressive 0-2 C14 25.79% — — 7.62% 24.79% — — 7.62% 7/20/18
NEST Benchmark 0-2 yr Aggressive 28.55% 28.55%
Age-Based Aggressive 3-5 A13 25.86% 12.39% 9.14% 9.82% 21.47% 11.05% 8.36% 9.39% 12/17/10
Age-Based Aggressive 3-5 C14 24.93% 11.56% 8.33% 9.01% 23.93% 11.56% 8.33% 9.01% 12/17/10
NEST Benchmark 3-5 yr Aggressive 27.46% 12.69% 9.40% 27.46% 12.69% 9.40%
Age-Based Aggressive 6-8 A13 23.97% 11.56% 8.53% 9.30% 19.66% 10.25% 7.75% 8.87% 12/17/10
Age-Based Aggressive 6-8 C14 23.10% 10.72% 7.71% 8.49% 22.10% 10.72% 7.71% 8.49% 12/17/10
NEST Benchmark 6-8 yr Aggressive 25.31% 11.79% 8.76% 25.31% 11.79% 8.76%
Age-Based Aggressive 9-10 A13 21.92% — — 8.02% 17.68% — — 5.41% 7/20/18
Age-Based Aggressive 9-10 C14 20.90% — — 7.15% 19.90% — — 7.15% 7/20/18
NEST Benchmark 9-10 yr Aggressive 22.99% 22.99%
Age-Based Aggressive 11-12 A13 19.69% 9.60% 7.12% 7.68% 15.51% 8.30% 6.37% 7.25% 12/17/10
Age-Based Aggressive 11-12 C14 18.76% 8.76% 6.32% 6.87% 17.76% 8.76% 6.32% 6.87% 12/17/10
NEST Benchmark 11-12 yr Aggressive 20.65% 9.79% 7.33% 20.65% 9.79% 7.33%
Age-Based Aggressive 13-14 A13 17.43% — — 7.15% 13.33% — — 4.56% 7/20/18
Age-Based Aggressive 13-14 C14 16.52% — — 6.34% 15.52% — — 6.34% 7/20/18
NEST Benchmark 13-14 yr Aggressive 18.23% 18.23%
Age-Based Aggressive 15-16 A13 14.96% 7.41% 5.54% 5.93% 10.94% 6.15% 4.79% 5.52% 12/17/10
Age-Based Aggressive 15-16 C14 14.15% 6.59% 4.75% 5.14% 13.15% 6.59% 4.75% 5.14% 12/17/10
NEST Benchmark 15-16 yr Aggressive 15.78% 7.66% 5.81% 15.78% 7.66% 5.81%
Age-Based Aggressive 17-18 A13 12.84% — — 6.14% 8.89% — — 3.58% 7/20/18
Age-Based Aggressive 17-18 C14 11.94% — — 5.33% 10.94% — — 5.33% 7/20/18
NEST Benchmark 17-18 yr Aggressive 13.46% 13.46%
Age-Based Aggressive 19+ A13 10.74% 5.07% 3.86% 4.14% 6.89% 3.83% 3.13% 3.73% 12/17/10
Age-Based Aggressive 19+ C14 9.85% 4.32% 3.10% 3.38% 8.85% 4.32% 3.10% 3.38% 12/17/10
NEST Benchmark 19+ yr Aggressive 11.12% 5.51% 4.28% 11.12% 5.51% 4.28%
44
Total Returns without Sales Charges Total Returns with Maximum Sales Charges
Investment Option Name Average Annualized Since
Inception12
Average Annualized Since
Inception12
Inception Date
Benchmark11 Class 1 year 3 year 5 year 1 year 3 year 5 year
Age-Based Growth 0-2 A13 24.00% 11.53% 8.51% 9.29% 19.68% 10.22% 7.73% 8.86% 12/17/10
Age-Based Growth 0-2 C14 23.10% 10.72% 7.71% 8.49% 22.10% 10.72% 7.71% 8.49% 12/17/10
NEST Benchmark 0-2 yr Growth 25.31% 11.79% 8.76% 25.31% 11.79% 8.76%
Age-Based Growth 3-5 A13 21.92% — — 8.02% 17.68% — — 5.41% 7/20/18
Age-Based Growth 3-5 C14 21.01% — — 7.21% 20.01% — — 7.21% 7/20/18
NEST Benchmark 3-5 yr Growth 22.99% 22.99%
Age-Based Growth 6-8 A13 19.69% 9.60% 7.12% 7.68% 15.51% 8.30% 6.37% 7.25% 12/17/10
Age-Based Growth 6-8 C14 18.75% 8.78% 6.33% 6.88% 17.75% 8.78% 6.33% 6.88% 12/17/10
NEST Benchmark 6-8 yr Growth 20.65% 9.79% 7.33% 20.65% 9.79% 7.33%
Age-Based Growth 9-10 A13 17.43% — — 7.15% 13.33% — — 4.56% 7/20/18
Age-Based Growth 9-10 C14 16.52% — — 6.34% 15.52% — — 6.34% 7/20/18
NEST Benchmark 9-10 yr Growth 18.23% 18.23%
Age-Based Growth 11-12 A13 15.03% 7.44% 5.56% 5.94% 11.01% 6.17% 4.80% 5.52% 12/17/10
Age-Based Growth 11-12 C14 14.15% 6.59% 4.75% 5.14% 13.15% 6.59% 4.75% 5.14% 12/17/10
NEST Benchmark 11-12 yr Growth 15.78% 7.66% 5.81% 15.78% 7.66% 5.81%
Age-Based Growth 13-14 A13 12.84% — — 6.14% 8.89% — — 3.58% 7/20/18
Age-Based Growth 13-14 C14 11.94% — — 5.33% 10.94% — — 5.33% 7/20/18
NEST Benchmark 13-14 yr Growth 13.46% 13.46%
Age-Based Growth 15-16 A13 10.74% 5.10% 3.86% 4.15% 6.88% 3.86% 3.13% 3.74% 12/17/10
Age-Based Growth 15-16 C14 9.94% 4.30% 3.08% 3.37% 8.94% 4.30% 3.08% 3.37% 12/17/10
NEST Benchmark 15-16 yr Growth 11.12% 5.51% 4.28% 11.12% 5.51% 4.28%
Age-Based Growth 17-18 A13 8.10% — — 4.65% 4.30% — — 2.13% 7/20/18
Age-Based Growth 17-18 C14 7.31% — — 3.91% 6.31% — — 3.91% 7/20/18
NEST Benchmark 17-18 yr Growth 8.40% 8.40%
Age-Based Growth 19+ A13 4.70% — — 3.29% 1.06% — — 0.80% 7/20/18
Age-Based Growth 19+ C14 3.92% — — 2.34% 2.92% — — 2.34% 7/20/18
NEST Benchmark 19+ yr Growth 5.19% 5.19%
Age-Based Index 0-2 A13 20.21% 9.23% 6.77% 7.68% 15.99% 7.95% 6.01% 7.25% 12/17/10
Age-Based Index 0-2 C14 19.32% 8.39% 5.96% 6.86% 18.32% 8.39% 5.96% 6.86% 12/17/10
NEST Benchmark 0-2 yr Index 20.71% 9.86% 7.38% 20.71% 9.86% 7.38%
Age-Based Index 3-5 A13 17.69% — — 7.55% 13.60% — — 4.95% 7/20/18
Age-Based Index 3-5 C14 16.91% — — 6.75% 15.91% — — 6.75% 7/20/18
NEST Benchmark 3-5 yr Index 18.28% 18.28%
Age-Based Index 6-8 A13 15.32% 7.07% 5.23% 5.90% 11.27% 5.79% 4.49% 5.49% 12/17/10
Age-Based Index 6-8 C14 14.43% 6.27% 4.46% 5.12% 13.43% 6.27% 4.46% 5.12% 12/17/10
NEST Benchmark 6-8 yr Index 15.83% 7.71% 5.85% 15.83% 7.71% 5.85%
Age-Based Index 9-10 A13 12.93% — — 6.27% 8.98% — — 3.71% 7/20/18
Age-Based Index 9-10 C14 12.03% — — 5.47% 11.03% — — 5.47% 7/20/18
NEST Benchmark 9-10 yr Index 13.48% 13.48%
Age-Based Index 11-12 A13 10.50% 4.86% 3.65% 4.05% 6.63% 3.63% 2.92% 3.64% 12/17/10
Age-Based Index 11-12 C14 9.76% 4.10% 2.88% 3.27% 8.76% 4.10% 2.88% 3.27% 12/17/10
NEST Benchmark 11-12 yr Index 11.13% 5.52% 4.30% 11.13% 5.52% 4.30%
Age-Based Index 13-14 A13 7.71% 3.59% 2.65% 2.19% 3.93% 2.35% 1.91% 1.79% 12/17/10
Age-Based Index 13-14 C14 6.87% 2.76% 1.84% 1.41% 5.87% 2.76% 1.84% 1.41% 12/17/10
NEST Benchmark 13-14 yr Index 8.39% 4.28% 3.29% 8.39% 4.28% 3.29%
Age-Based Index 15-16 A13 4.44% 2.17% 1.49% 1.11% 0.82% 0.95% 0.78% 0.72% 12/17/10
Age-Based Index 15-16 C14 3.61% 1.39% 0.73% 0.35% 2.61% 1.39% 0.73% 0.35% 12/17/10
NEST Benchmark 15-16 yr Index 5.18% 2.87% 2.13% 5.18% 2.87% 2.13%
Age-Based Index 17-18 A13 1.79% — — 1.79% 1.79% — — 1.79% 7/20/18
Age-Based Index 17-18 C14 1.89% — — 1.79% 1.89% — — 1.79% 7/20/18
NEST Benchmark 17-18 yr Index 2.25% 2.25%
Age-Based Index 19+ A13 1.79% — — 1.79% 1.79% — — 1.79% 7/20/18
Age-Based Index 19+ C14 1.69% — — 1.72% 1.69% — — 1.72% 7/20/18
NEST Benchmark 19+ yr Index 2.25% 2.25%
Static Investment Options
All Equity Static A13 26.70% — — 8.15% 22.27% — — 5.54% 7/20/18
All Equity Static C14 25.85% — — 7.48% 24.85% — — 7.48% 7/20/18
NEST Benchmark All Equity Static 28.55% 28.55%
45
Total Returns without Sales Charges Total Returns with Maximum Sales Charges
Investment Option Name Average Annualized Since
Inception12
Average Annualized Since
Inception12
Inception Date
Benchmark11 Class 1 year 3 year 5 year 1 year 3 year 5 year
Growth Static A13 24.04% 11.56% 8.53% 9.30% 19.72% 10.25% 7.75% 8.87% 12/17/10
Growth Static C14 23.10% 10.72% 7.71% 8.49% 22.10% 10.72% 7.71% 8.49% 12/17/10
NEST Benchmark Growth Static 25.31% 11.79% 8.76% 25.31% 11.79% 8.76%
Moderate Growth Static A13 19.61% — — 7.48% 15.38% — — 4.89% 7/20/18
Moderate Growth Static C14 18.70% — — 6.68% 17.70% — — 6.68% 7/20/18
NEST Benchmark Moderate Growth Static 20.68% 20.68%
Balanced Static A13 17.30% — — 7.15% 13.22% — — 4.56% 7/20/18
Balanced Static C14 16.44% — — 6.21% 15.44% — — 6.21% 7/20/18
NEST Benchmark Balanced Index Static 18.23% 18.23%
Conservative Static A13 10.74% 5.07% 3.84% 4.14% 6.89% 3.83% 3.11% 3.73% 12/17/10
Conservative Static C14 9.86% 4.27% 3.05% 3.36% 8.86% 4.27% 3.05% 3.36% 12/17/10
NEST Benchmark Conservative Static 11.12% 5.51% 4.28% 11.12% 5.51% 4.28%
Bank Savings Static A13 1.53% 1.00% 0.81% 0.70% 1.53% 1.00% 0.81% 0.70% 10/17/11
Bank Savings Static C14 1.53% 1.00% 0.81% 0.70% 1.53% 1.00% 0.81% 0.70% 10/17/11
FTSE 3-Month T-Bill 2.25% 1.65% 1.05% 2.25% 1.65% 1.05%
Individual Investment Options
State Street S&P 500® Index A13 30.82% 14.65% 11.09% 12.86% 26.23% 13.29% 10.30% 12.42% 12/17/10
State Street S&P 500® Index C14 29.87% 13.82% 10.27% 12.03% 28.87% 13.82% 10.27% 12.03% 12/17/10
S&P 500 31.49% 15.27% 11.70% 31.49% 15.27% 11.70%
Vanguard Total Stock Market ETF A13 29.32% 13.59% 10.38% 12.17% 24.80% 12.25% 9.60% 11.73% 12/17/10
Vanguard Total Stock Market ETF C14 28.40% 12.75% 9.55% 11.34% 27.40% 12.75% 9.55% 11.34% 12/17/10
CRSP US Total Mkt 30.84% 14.56% 11.21% 30.84% 14.56% 11.21%
Dodge & Cox Stock A13 24.19% 10.55% 9.14% 10.68% 19.85% 9.24% 8.36% 10.07% 7/26/13
Dodge & Cox Stock C14 23.33% 9.74% 8.33% 9.84% 22.33% 9.74% 8.33% 9.84% 7/26/13
Russell 1000 Value 26.54% 9.68% 8.29% 26.54% 9.68% 8.29%
T. Rowe Price Large-Cap Growth A13 27.85% 22.06% 15.28% 15.43% 23.36% 20.62% 14.47% 14.98% 12/17/10
T. Rowe Price Large-Cap Growth C14 26.91% 21.18% 14.45% 14.59% 25.91% 21.18% 14.45% 14.59% 12/17/10
Russell 1000 Growth 36.39% 20.49% 14.63% 36.39% 20.49% 14.63%
SPDR S&P® Dividend ETF A13 22.15% 10.78% 9.82% 13.27% 17.87% 9.47% 9.04% 12.74% 6/22/12
SPDR S&P® Dividend ETF C14 21.34% 9.96% 9.03% 12.45% 20.34% 9.96% 9.03% 12.45% 6/22/12
S&P High Yield Dividend Aristrocrats 23.88% 12.04% 11.07% 23.88% 12.04% 11.07%
Vanguard Extended Market ETF A13 26.88% 10.26% 8.29% 12.74% 22.47% 8.96% 7.52% 12.21% 6/22/12
Vanguard Extended Market ETF C14 25.92% 9.45% 7.49% 11.88% 24.92% 9.45% 7.49% 11.88% 6/22/12
S&P Completion 27.95% 10.97% 8.90% 27.95% 10.97% 8.90%
Tributary Small Company A13 22.83% 5.75% 7.83% 9.55% 18.56% 4.50% 7.06% 9.13% 12/17/10
Tributary Small Company C14 21.90% 4.94% 7.02% 8.74% 20.90% 4.94% 7.02% 8.74% 12/17/10
Russell 2000 25.52% 8.59% 8.23% 25.52% 8.59% 8.23%
iShares Russell 2000 Growth ETF A13 27.41% 11.67% 8.68% 12.88% 22.94% 10.35% 7.92% 12.35% 6/22/12
iShares Russell 2000 Growth ETF C14 26.51% 10.82% 7.88% 12.02% 25.51% 10.82% 7.88% 12.02% 6/22/12
Russell 2000 Growth 28.48% 12.49% 9.34% 28.48% 12.49% 9.34%
Vanguard Real Estate ETF A13 27.70% 7.63% 6.54% 9.83% 23.24% 6.36% 5.77% 9.40% 12/17/10
Vanguard Real Estate ETF C14 26.79% 6.84% 5.75% 9.02% 25.79% 6.84% 5.75% 9.02% 12/17/10
MSCI US Investable Market Real Estate25/50 29.03% 8.46% 7.27% 29.03% 8.46% 7.27%
State Street MSCI® ACWI ex USA Index A13 20.89% 9.12% 4.80% 3.84% 16.68% 7.84% 4.07% 3.44% 12/17/10
State Street MSCI® ACWI ex USA Index C14 19.89% 8.32% 4.02% 3.07% 18.89% 8.32% 4.02% 3.07% 12/17/10
MSCI ACWI ex USA (Net) 21.51% 9.87% 5.51% 21.51% 9.87% 5.51%
Vanguard FTSE Emerging Markets ETF A13 19.66% 9.79% 4.36% 4.57% 15.51% 8.50% 3.62% 4.08% 6/22/12
Vanguard FTSE Emerging Markets ETF C14 18.74% 8.98% 3.59% 3.80% 17.74% 8.98% 3.59% 3.80% 6/22/12
FTSE Emerging Markets 20.11% 11.19% 5.62% 20.11% 11.19% 5.62%
American Funds the Income of America® A13 18.68% 8.25% — 8.46% 14.54% 6.95% — 7.42% 4/29/16
American Funds the Income of America® C14 17.79% 7.44% — 7.66% 16.79% 7.44% — 7.66% 4/29/16
70% S&P 500 / 30% BBgBarc US Agg Bond 24.48% 11.98% 24.48% 11.98%
DFA World ex-US Government A13 7.93% 4.43% — 4.05% 4.14% 3.19% — 3.06% 4/29/16
DFA World ex-US Government C14 7.23% 3.65% — 3.31% 6.23% 3.65% — 3.31% 4/29/16
FTSE World Government Bond Index ex USA 8.02% 4.49% 8.02% 4.49%
46
Total Returns without Sales Charges Total Returns with Maximum Sales Charges
Investment Option Name Average Annualized Since
Inception12
Average Annualized Since
Inception12
Inception Date
Benchmark11 Class 1 year 3 year 5 year 1 year 3 year 5 year
MetWest Total Return Bond A13 8.70% 3.73% — 2.41% 4.85% 2.49% — 1.68% 2/6/15
MetWest Total Return Bond C14 7.96% 2.96% — 1.68% 6.96% 2.96% — 1.68% 2/6/15
BBgBarc US Agg Bond TR USD 8.72% 4.03% 8.72% 4.03%
Federated Total Return Bond A13 9.17% 3.79% 2.99% 3.33% 5.32% 2.55% 2.26% 2.93% 12/17/10
Federated Total Return Bond C14 8.38% 3.02% 2.21% 2.54% 7.38% 3.02% 2.21% 2.54% 12/17/10
BBgBarc US Agg Bond TR USD 8.72% 4.03% 3.05% 8.72% 4.03% 3.05%
iShares Core US Aggregate A13 7.65% 3.17% — 2.22% 3.83% 1.95% — 1.24% 4/29/16
iShares Core US Aggregate C14 6.90% 2.39% — 1.44% 5.90% 2.39% — 1.44% 4/29/16
BBgBarc US Agg Bond TR USD 8.72% 4.03% 8.72% 4.03%
Vanguard Short-Term Bond ETF A13 4.44% 1.95% 1.39% 1.05% 0.74% 0.75% 0.66% 0.58% 6/22/12
Vanguard Short-Term Bond ETF C14 3.55% 1.17% 0.62% 0.29% 2.55% 1.17% 0.62% 0.29% 6/22/12
BBgBarc US Govt/Credit 1-5 Yr TR USD 5.01% 2.54% 2.03% 5.01% 2.54% 2.03%
Vanguard Short Term Inflation-Protected
TIPS A13 4.27% 1.47% — 1.36% 0.57% 0.29% — 0.39% 4/29/16
Vanguard Short Term Inflation-Protected
TIPS C14 3.44% 0.70% — 0.57% 2.44% 0.70% — 0.57% 4/29/16
BBgBarc U.S. Treasury TIPS 0-5Y TR USD 4.85% 2.09% 4.85% 2.09%
Goldman Sachs Financial SquareSM
Government Money Market15 A13 1.86% 1.28% — 1.05% 1.86% 1.28% — 1.05% 4/29/16
Goldman Sachs Financial SquareSM
Government Money Market15 C14 1.86% 1.25% — 1.02% 1.86% 1.25% — 1.02% 4/29/16
FTSE 3-Month T-Bill 2.25% 1.65% 2.25% 1.65%
11 Each benchmark is not managed. Therefore, its performance does not reflect management fees, expenses or the imposition of front-end sales loads or contingentdeferred sales charges.
12 Since Inception Returns for less than one year are not annualized.13 Total Returns without Sales Charges do not include sales load. Total Returns with Maximum Sales Charges include a maximum Up-Front Sales Load of 3.50%.14 Total Returns without Sales Charges do not include sales charge or contingent deferred sales charge (CDSC). Total Returns with Maximum Sales Charges for Class C units
reflect the applicable contingent deferred sales charge of 1% through the first year.15 You could lose money by investing in this Investment Option. Although the money market fund in which your Investment Option invests (the underlying fund) seeks to
preserve the value at $1.00 per share, it cannot guarantee it will do so. An investment in this Investment Option is not insured or guaranteed by the Federal DepositInsurance Corporation or any other government agency. The sponsor has no legal obligation to provide financial support to the underlying fund, and you should notexpect that the sponsor will provide financial support to the underlying fund at any time.
47
Customized performance benchmarksThe benchmarks for the Age-Based and the Static Investment Options represent customized composites of market indices for theavailable underlying investments weighted by its relative target allocation. Investors cannot directly invest in the compilation of thebenchmark indices.
S&P 500Russell
1000Value
Russell1000
Growth
S&PCompletion
Russell2000
Russell2000
Growth
MSCIUS REIT
Index
MSCIACWI
ex USA (Net)
CitigroupWorld GovtBond Index
ex USA(Hedgedto USD)
BBgBarcU.S. AggBond TR
USD
BBgBarcU.S.Govt/
Credit1-5 Yr
TR USD
BBgBarcU.S.
TreasuryTIPS
0-5Y TRUSD
FTSE3-Month
T-Bill
Age-Based Investment Options
AGGRESSIVE
0-2 38.00% 11.50% 11.50% 2.00% 4.25% 4.25% 5.25% 23.25%
3-5 36.00% 11.00% 11.00% 2.00% 4.00% 4.00% 5.00% 22.00% 5.00%
6-8 32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 13.00%
9-10 27.00% 9.50% 9.50% 1.50% 2.75% 2.75% 4.50% 17.50% 2.50% 17.50% 3.00% 2.00%
11-12 22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 22.00% 6.00% 4.00%
13-14 18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 23.50% 9.50% 8.50%
15-16 14.00% 7.00% 7.00% 1.00% 1.50% 1.50% 3.00% 10.00% 4.00% 25.00% 13.00% 13.00%
17-18 13.00% 4.50% 4.50% 1.00% 1.00% 1.00% 2.50% 7.50% 4.00% 26.50% 15.00% 2.50% 17.00%
19+ 12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 28.00% 17.00% 5.00% 21.00%
GROWTH
0-2 32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 13.00%
3-5 27.00% 9.50% 9.50% 1.50% 2.75% 2.75% 4.50% 17.50% 2.50% 17.50% 3.00% 2.00%
6-8 22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 22.00% 6.00% 4.00%
9-10 18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 23.50% 9.50% 8.50%
11-12 14.00% 7.00% 7.00% 1.00% 1.50% 1.50% 3.00% 10.00% 4.00% 25.00% 13.00% 13.00%
13-14 13.00% 4.50% 4.50% 1.00% 1.00% 1.00% 2.50% 7.50% 4.00% 26.50% 15.00% 2.50% 17.00%
15-16 12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 28.00% 17.00% 5.00% 21.00%
17-18 10.00% 1.00% 1.00% 3.00% 3.00% 25.00% 15.00% 9.00% 33.00%
19+ 4.00% 1.00% 2.00% 15.00% 18.00% 5.00% 55.00%
INDEX
0-2 40.00% 6.00% 4.00% 15.00% 3.00% 22.00% 6.00% 4.00%
3-5 34.00% 5.00% 3.50% 12.50% 3.50% 23.50% 9.50% 8.50%
6-8 28.00% 4.00% 3.00% 10.00% 4.00% 25.00% 13.00% 13.00%
9-10 22.00% 3.00% 2.50% 7.50% 4.00% 26.50% 15.00% 2.50% 17.00%
11-12 16.00% 2.00% 2.00% 5.00% 4.00% 28.00% 17.00% 5.00% 21.00%
13-14 10.00% 1.00% 1.00% 3.00% 3.00% 25.00% 15.00% 9.00% 33.00%
15-16 4.00% 1.00% 2.00% 15.00% 18.00% 5.00% 55.00%
17-18 100.00%
19+ 100.00%
Static Investment Options
ALL EQUITY
38.00% 11.50% 11.50% 2.00% 4.25% 4.25% 5.25% 23.25%
GROWTH
32.00% 10.00% 10.00% 2.00% 3.00% 3.00% 5.00% 20.00% 2.00% 13.00%
MODERATE GROWTH
22.00% 9.00% 9.00% 1.00% 2.50% 2.50% 4.00% 15.00% 3.00% 22.00% 6.00% 4.00%
BALANCED
18.00% 8.00% 8.00% 1.00% 2.00% 2.00% 3.50% 12.50% 3.50% 23.50% 9.50% 8.50%
CONSERVATIVE
12.00% 2.00% 2.00% 1.00% 0.50% 0.50% 2.00% 5.00% 4.00% 28.00% 17.00% 5.00% 21.00%
BANK SAVINGS
100.00%
48
PART 12 – PLAN FEES AND EXPENSES
Class feesThe fees relating to an account’s investment in the InvestmentOptions will vary depending on the class of shares and theInvestment Option selected.
The NEST Advisor Plan has two classes – Class A and Class C.Each class bears certain fees that vary with the class selected byaccount owners with the advice of their Financial Advisor.
Working with your Financial Advisor you will choose which classbest meets your investment needs depending on several factors,including the amount of your investment, how regularly you planto invest, and the intended length of your investment.
No change in classesOnce a class is selected, an account owner cannot change theclass selected. If there is an account opening error regarding theclass selected it must be reported to the Program Manager within60 days. Assets invested in a specific class cannot be transferredto another account in a different class. An account owner caninvest in another class for future contributions to the Plan.
Class A accounts
a. Generally, Class A accounts bear an initial sales charge (anUp-Front Sales Load) of 3.50%, which will be deducted at thetime a contribution (including any rollover) is made to anaccount.
No Class A Up-Front Sales Load applies to the Class Aaccounts that invest in the (i) Goldman Sachs FinancialSquareSM Government Money Market Individual InvestmentOption; (ii) Age-Based Index 17-18 and Age-Based Index 19+Portfolios; or (iii) Bank Savings Static Investment Option.
b. The Up-Front Sales Load will be reduced for contributions thatexceed certain aggregate asset amount levels outlined below.Rights of Accumulation and Letter of Intent may apply for thepurposes of calculating the aggregated asset amount.
A Letter of Intent entitles you to a lower Class A Up-Front SalesLoad provided you fulfill the terms of the Letter of Intent. Byindicating your intent to purchase the aggregated assetamounts described below in your signed Enrollment Form youagree to make specified investments of $250,000 or more in theNEST Advisor Plan in the 13-month period following the date ofyour application. You understand that if you do not make theadditional investments within the 13-month period, the PrimaryDistributor reserves the right to redeem shares from youraccount to make up the difference between the applicableClass A Up-Front Sales Load and the reduced Class A Up-FrontSales Load you paid when you entered into the Letter of Intent.Rights of Accumulation apply to all investments made by anaccount owner and members of the immediate family of anaccount owner in the NEST Advisor Plan with combined assetsthat reach the breakpoint discount level in Class A unitsdescribed below:
Aggregated Asset Amount Up-Front Sales Load
Less than $250,000 3.50%
$250,000 – $499,999 3.00%
$500,000 or More 0%
The majority of the Up-Front Sales Load is paid to the financialinstitution employing your Financial Advisor with the remaindergoing to the Program Manager (see Selling institutioncompensation).
Sales Load waiversThe Program Manager may waive the Up-Front Sales Load forClass A accounts under the following circumstances:
1. Purchases by any employee of a firm, and any member of theimmediate family of such person, if such firm has in effect aselling agreement with the NEST Advisor Plan;
2. Purchases by any employee of an investment firm whoseunderlying funds are in the NEST Advisor Plan and any memberof the immediate family of such person;
3. Purchases by any employee of the Program Manager andits affiliates;
4. Purchases made to accounts that are sold through certainqualified fee-based Financial Advisors;
5. Purchases made by employees in an employer plan if theemployer and the Financial Advisor have agreed to such waiverand if the waiver is indicated at the time of purchase; or
6. Rollovers into the Plan where the Financial Advisor signs theappropriate form waiving the Class A Sales Load. This SalesLoad waiver is only available through certain broker-dealer firmsand, therefore, you should check with your Financial Advisor tosee if you are eligible for the waiver before initiating therollover.
A member of the immediate family includes a spouse, parent,legal guardian, child, sibling, stepchild, and father- ormother-in-law of the account owner or prospective accountowner.
Class A distribution and marketing feeClass A accounts generally bear an annual distribution andmarketing fee of 0.25% that is accrued daily as a percentage ofaverage daily net assets and will be deducted from eachInvestment Option or Portfolio.
No distribution and marketing fee applies to the Class A accountsthat invest in the (i) Goldman Sachs Financial SquareSM
Government Money Market Individual Investment Option; (ii) theAge-Based Index 17-18 and Age-Based Index 19+ Portfolios; or(iii) Bank Savings Static Investment Option.
There is no charge incurred on a Class A account upon awithdrawal.
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Class C accounts
Contingent Deferred Sales Charge (CDSC) – Withdrawals from anaccount are charged a 1.00% CDSC, if the withdrawal is within thefirst year of the contribution. This charge will be waived in theevent of withdrawals that are:
(i) For any amount attributable to investment gains; or(ii) Made as a result of the death or disability of either the
account owner or the Beneficiary.
Class C distribution and marketing fee – Class C accountsgenerally bear an annual distribution and marketing fee of 1.00%that is accrued daily as a percentage of average daily net assetsand will be deducted from each Investment Option or Portfolio.
No CDSC or distribution and marketing fee applies to the Class Caccounts that invest in the (i) Goldman Sachs Financial SquareSM
Government Money Market Individual Investment Option; (ii) theAge-Based Index 17-18 and Age-Based Index 19+ Portfolios; or(iii) Bank Savings Static Investment Option.
Conversion of Class C units to Class A units – Class C unitsautomatically convert to Class A units within the month followingthe fifth anniversary of the purchase date. The units that convertto Class A will not pay a Class A Up-Front Sales Load at the timethey convert. When the units convert to Class A, the distributionand marketing fee will be reduced to 0.25%. Class A units are notsubject to CDSC.
Application of Class A up-front sales load, Class CCDSC, and distribution and marketing fees for certainInvestment Options or Portfolios.If assets are transferred from the (i) Goldman Sachs FinancialSquareSM Government Money Market Individual InvestmentOption; (ii) Age-Based Index 17-18 and Age-Based Index 19+Portfolios; or (iii) Bank Savings Static Investment Option toanother NEST Advisor Plan Investment Option:
• When exchanging to a Class A Investment Option, theClass A Up-Front Sales Load will apply to any amount thathad not previously been subject to the Class A Up-FrontSales Load by virtue of such prior investment;
• When exchanging to a Class C Investment Option, theClass C commission and CDSC will apply to any amount thathad not previously been subject to those Class Ccommissions; and
• Any Class C units that were transferred into the GoldmanSachs Financial SquareSM Government Money MarketIndividual Investment Option, the Age-Based Index 17-18and Age-Based Index 19+ Portfolios, or the Bank SavingsStatic Investment Option from another NEST Advisor PlanInvestment Option will continue to age for purposes of CDSCand trail commissions.
Negative returnThe Program Manager will endeavor to maintain a positive or zeroreturn on the Goldman Sachs Financial SquareSM GovernmentMoney Market Individual Investment Option by foregoing aportion of its Program Management Fee earned on thatInvestment Option. However, the Program Manager cannotguarantee any return on Goldman Sachs Financial SquareSM
Government Money Market Individual Investment Option, or thatthe return on this Investment Option will not be negative.
Program Management FeeThe Program Manager receives a management fee equal to 0.25%of the average daily net assets in each Investment Option.However, with respect to the Bank Savings Static InvestmentOption, the Program Manager receives a management fee equalto 0.18% of the average daily net assets in that InvestmentOption. This fee accrues daily as a percentage of average dailynet assets and will be deducted from each Investment Option.This fee will reduce the value of an account.
The Program Manager will also receive a fee from Goldman Sachsand the Tributary Small Company Fund, which is an affiliate of theProgram Manager, to assist with the ongoing marketing anddistribution associated with its Program Manager duties under thePlan. Account owners are not separately charged for this fee. TheTrustee reserves the right to increase or decrease fees as theTrustee deems appropriate.
State Administration FeeAn administration fee equal to 0.02% of the average daily netassets in each Investment Option will be allocated to the state’scosts to administer, market, and distribute the Plan. This feeaccrues daily as a percentage of average daily net assets and isdeducted from each Investment Option. This fee will reduce thevalue of an account.
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Underlying investment feeThe underlying investments that comprise an Investment Optioncharge a fee called a weighted average underlying fund expenseratio which ranges from 0.00% to 0.99% of the average daily netassets in each underlying investment. This fee will reduce thevalue of an account.
Other account feesThere are no account opening fees and no other annual orquarterly fees associated with the NEST Advisor Plan.
Fee or Charge Type Amount
Enrollment/account opening None
Annual or quarterly None
Cancellation/withdrawal None
Change in Beneficiary None
Change in investment Portfolios None
Returned check Up to $25*
Rejected ACH or EFT Up to $25*
Outgoing wire Up to $25*
Overnight delivery $15** charged against the account
Units that automatically convert from Class C to Class A after fiveyears will not pay any Up-Front Sales Load and will not pay anySelling Commissions.
Selling institution compensation16
Classes A and C shares are sold through financial institutions thathave selling agreements with First National Capital Markets, thePrimary Distributor. These selling institutions will be compensatedby the Program Manager as indicated below.
The Program Manager also may make additional payments toselling institutions for marketing, promotional, distribution andinvestor servicing activities, subject to the approval of theNebraska State Treasurer and the Nebraska Investment Council.
Class A selling institution compensation – The Up-Front Sales Loadand the related selling compensation will be reduced forcontributions that exceed certain aggregate asset amount levels asoutlined as follows. Rights of Accumulation and Letter of Intent mayapply for the purposes of calculating the aggregated asset amount.
Class A
Aggregated AssetAmount
Up-FrontSalesLoad*
% ofUp Front
Sales ChargeRetained by
FinancialAdvisor Firm
Distributionand MarketingFee Charged*
Distributionand Marketing
Fee Paid toFinancial
Advisor Firm**
Less than $250,000 3.50% 3.00% 0.25% 0.25%
$250,000 - 499,999 3.00% 2.50% 0.25% 0.25%
$500,000 or More none none 0.25% 0.25%
* Fee starts accruing immediately** Payment made quarterly
Class C Selling Institution Compensation
CLASS C17
Class C Charges Before Units Convert to
Class A
After Units
Convert to
Class A
Up-Front
Sales Load
for Class C
Units
CDSC on
Class C
Units*
Distribution
and Marketing
Fee
Charged**
Distribution
and Marketing
Fee Paid to
Financial
Advisor
Firm***
Distribution
and Marketing
Fee Charged
after
Conversion
to Class A****
None 1.00% 1.00% 1.00% 0.25%
* Purchases are subject to CDSC for a period of one year after the purchase date ofClass C units
** Fee starts accruing in Month 13***Payment made quarterly**** Fee starts accruing after conversion to Class A
Also see “Application of Class A up-front sales load, Class CCDSC, and distribution and marketing fees for certain InvestmentOptions or Portfolios” above for more information.
The Program Manager reserves the right to modify these feearrangements, subject to the approval of the State of NebraskaTreasurer and the Nebraska Investment Council.
Commission waiversSelling institutions will not receive commissions for contributionsinto Class A Investment Options or Portfolios that have receivedan Up-Front Sales Load waiver. Class A accounts that are sold toinvestors through certain qualified fee-based Financial Advisorswill not receive Commissions.
Contributions from rewards programsContributions into a NEST Advisor Plan account from aUpromise® by Sallie Mae® Account or other rewards programsare not subject to Class A Up-Front Sales Load or Class C CDSCs.
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16 With the exception of investments in the Goldman Sachs Financial SquareSM Government Money Market Individual Investment Option, Age-Based Index 17-18 Portfolio,Age-Based 19+ Portfolio, and Bank Savings Static Investment Option.
17 Class C units convert to Class A units one month following five years after purchase date. The units that convert to Class A will not pay a Class A Up-Front Sales Load at thetime they convert.
51
Fee structure tablesSpecific fees, expenses and sales charges applicable to each Class are outlined in the tables below.
Class AWeighted Average
Operating
Expense Ratio18
Program
Management
Fee19
State
Administration
Fee
Distribution and
Marketing Fee
Total Estimated
Annual Asset-Based
Fees20
Additional Investor
Expenses –Maximum
Up-Front Sales Load21
AGE-BASED INVESTMENT OPTIONS
AGGRESSIVE
0-2 0.21% 0.25% 0.02% 0.25% 0.73% 3.50%
3-5 0.22% 0.25% 0.02% 0.25% 0.74% 3.50%
6-8 0.23% 0.25% 0.02% 0.25% 0.75% 3.50%
9-10 0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
11-12 0.25% 0.25% 0.02% 0.25% 0.77% 3.50%
13-14 0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
15-16 0.23% 0.25% 0.02% 0.25% 0.75% 3.50%
17-18 0.21% 0.25% 0.02% 0.25% 0.73% 3.50%
19+ 0.19% 0.25% 0.02% 0.25% 0.71% 3.50%
GROWTH
0-2 0.23% 0.25% 0.02% 0.25% 0.75% 3.50%
3-5 0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
6-8 0.25% 0.25% 0.02% 0.25% 0.77% 3.50%
9-10 0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
11-12 0.23% 0.25% 0.02% 0.25% 0.75% 3.50%
13-14 0.21% 0.25% 0.02% 0.25% 0.73% 3.50%
15-16 0.19% 0.25% 0.02% 0.25% 0.71% 3.50%
17-18 0.16% 0.25% 0.02% 0.25% 0.68% 3.50%
19+ 0.14% 0.25% 0.02% 0.25% 0.66% 3.50%
INDEX
0-2 0.06% 0.25% 0.02% 0.25% 0.58% 3.50%
3-5 0.06% 0.25% 0.02% 0.25% 0.58% 3.50%
6-8 0.06% 0.25% 0.02% 0.25% 0.58% 3.50%
9-10 0.06% 0.25% 0.02% 0.25% 0.58% 3.50%
11-12 0.07% 0.25% 0.02% 0.25% 0.59% 3.50%
13-14 0.07% 0.25% 0.02% 0.25% 0.59% 3.50%
15-16 0.09% 0.25% 0.02% 0.25% 0.61% 3.50%
17-1822 0.17% 0.25% 0.02% 0.00% 0.44% 0.00%
19+22 0.17% 0.25% 0.02% 0.00% 0.44% 0.00%
STATIC INVESTMENT OPTIONS
ALL EQUITY
0.21% 0.25% 0.02% 0.25% 0.73% 3.50%
GROWTH
0.23% 0.25% 0.02% 0.25% 0.75% 3.50%
MODERATE GROWTH
0.25% 0.25% 0.02% 0.25% 0.77% 3.50%
BALANCED
0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
CONSERVATIVE
0.19% 0.25% 0.02% 0.25% 0.71% 3.50%
BANK SAVINGS22
0.00% 0.18% 0.02% 0.00% 0.20% 0.00%
18 Weighted Average Operating Expense Ratio is the weighted average of each underlying investment’s expense ratio as of December 31, 2019.19 The Program Management Fee accrues daily as a percentage of average daily net assets.20 Total Estimated Annual Asset-Based Fees include the Weighted Average Operating Expense Ratio, the Program Management Fee, and the State Administration Fee, and
the distribution and marketing fee.21 The Up-Front Sales Load decreases as an account owner’s eligible assets Increase. The Up-Front Sales Load may be waived for certain account owners. There is no Up-
Front Sales Load if you purchase Class A units in an amount of $500,000 or more.22 The Program Manager has waived the distribution and marketing fee and the Up-Front Sales Load.
52
Fee structure tables, continued
Class AWeighted Average
OperatingExpense Ratio23
ProgramManagement
Fee24
StateAdministration
Fee
Distribution andMarketing Fee
Total EstimatedAnnual Asset-Based
Fees25
Additional InvestorExpenses –MaximumUp-Front Sales Load26
INDIVIDUAL INVESTMENT OPTIONS
American Funds The Income Fund of America® 0.26% 0.25% 0.02% 0.25% 0.78% 3.50%
DFA World ex-US Government Fixed Income 0.20% 0.25% 0.02% 0.25% 0.72% 3.50%
Dodge & Cox Stock 0.52% 0.25% 0.02% 0.25% 1.04% 3.50%
Federated Total Return Bond 0.39% 0.25% 0.02% 0.25% 0.91% 3.50%
Goldman Sachs Financial Squaresm Government
Money Market270.17% 0.25% 0.02% 0.00% 0.44% 0.00%
iShares Core US Aggregate ETF 0.05% 0.25% 0.02% 0.25% 0.57% 3.50%
iShares Russell 2000 Growth ETF 0.24% 0.25% 0.02% 0.25% 0.76% 3.50%
MetWest Total Return Bond 0.37% 0.25% 0.02% 0.25% 0.89% 3.50%
SPDR® S&P Dividend ETF 0.35% 0.25% 0.02% 0.25% 0.87% 3.50%
State Street MSCI®28 ACWI ex USA Index* 0.09% 0.25% 0.02% 0.25% 0.61% 3.50%
State Street S&P 500®29 Index 0.0175% 0.25% 0.02% 0.25% 0.54% 3.50%
T. Rowe Price Large-Cap Growth 0.56% 0.25% 0.02% 0.25% 1.08% 3.50%
Tributary Small Company 0.99% 0.25% 0.02% 0.25% 1.51% 3.50%
Vanguard Extended Market ETF 0.07% 0.25% 0.02% 0.25% 0.59% 3.50%
Vanguard FTSE Emerging Markets ETF 0.12% 0.25% 0.02% 0.25% 0.64% 3.50%
Vanguard Real Estate ETF 0.12% 0.25% 0.02% 0.25% 0.64% 3.50%
Vanguard Short-Term Bond ETF 0.07% 0.25% 0.02% 0.25% 0.59% 3.50%
Vanguard Short-Term Inflation-Protected ETF 0.06% 0.25% 0.02% 0.25% 0.58% 3.50%
Vanguard Total Stock Market ETF 0.04% 0.25% 0.02% 0.25% 0.56% 3.50%
23 Weighted Average Operating Expense Ratio is the weighted average of each underlying investment’s expense ratio as of December 31, 2019.24 The Program Management Fee accrues daily as a percentage of average daily net assets.25 Total Estimated Annual Asset-Based Fees include the Weighted Average Operating Expense Ratio, the Program Management Fee, the State Administration Fee, and the
distribution and marketing fee.26 The Up-Front Sales Load decreases as an account owner’s eligible assets increase. The Up-Front Sales Load may be waived for certain account owners. There is no Up-
Front Sales Load if you purchase Class A units in an amount of $500,000 or more.27 The Program Manager has waived the distribution and marketing fee and the Up-Front Sales Load.28 The MSCI ACWI ex USA Index is a trademark of MSCI Inc. State Street Global Advisors Turst Company has been appointed as discretionary trustee over the assets
invested in these trust accounts and may commingle the particular trust property into a bank maintained common trust fund. These trust accounts are exempt fromregistration with the SEC. The Weighted Average Operating Expense Ratio for the State Street MSCI ACWI ex USA Index does not include additional custody,transactions or auditing costs.
29 The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by State Street. Standard & Poor’s® and S&P® are registeredtrademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Theproducts are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representationregarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index. State Street GlobalAdvisors Trust Company has been appointed as discretionary trustee over the assets invested in these trust accounts and may commingle the particular trust property intoa bank maintained common trust fund. These trust accounts are exempt from registration with the SEC. The Weighted Average Operating Expense Ratio for the StateStreet S&P 500 Index does not include additional custody, transactions or auditing costs.
* Trust account managed by State Street Global Advisors Trust Company for the benefit of the NEST Advisor Plan.Not a mutual fund and not otherwise registered with theSEC. See “Part 9 - Individual Investment Options” for more information about the investments.
53
Fee structure tables, continued
Class C
Weighted Average
Operating
Expense Ratio30
Program
Management
Fee31
State
Administration
Fee
Distribution and
Marketing Fee32
Total Estimated
Annual Asset-Based
Fees33
Additional Investor
Expenses – Maximum
Contingent Deferred
Sales Charge34
AGE-BASED INVESTMENT OPTIONS
AGGRESSIVE
0-2 0.21% 0.25% 0.02% 1.00% 1.48% 1.00%
3-5 0.22% 0.25% 0.02% 1.00% 1.49% 1.00%
6-8 0.23% 0.25% 0.02% 1.00% 1.50% 1.00%
9-10 0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
11-12 0.25% 0.25% 0.02% 1.00% 1.52% 1.00%
13-14 0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
15-16 0.23% 0.25% 0.02% 1.00% 1.50% 1.00%
17-18 0.21% 0.25% 0.02% 1.00% 1.48% 1.00%
19+ 0.19% 0.25% 0.02% 1.00% 1.46% 1.00%
GROWTH
0-2 0.23% 0.25% 0.02% 1.00% 1.50% 1.00%
3-5 0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
6-8 0.25% 0.25% 0.02% 1.00% 1.52% 1.00%
9-10 0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
11-12 0.23% 0.25% 0.02% 1.00% 1.50% 1.00%
13-14 0.21% 0.25% 0.02% 1.00% 1.48% 1.00%
15-16 0.19% 0.25% 0.02% 1.00% 1.46% 1.00%
17-18 0.16% 0.25% 0.02% 1.00% 1.43% 1.00%
19+ 0.14% 0.25% 0.02% 1.00% 1.41% 1.00%
INDEX
0-2 0.06% 0.25% 0.02% 1.00% 1.33% 1.00%
3-5 0.06% 0.25% 0.02% 1.00% 1.33% 1.00%
6-8 0.06% 0.25% 0.02% 1.00% 1.33% 1.00%
9-10 0.06% 0.25% 0.02% 1.00% 1.33% 1.00%
11-12 0.07% 0.25% 0.02% 1.00% 1.34% 1.00%
13-14 0.07% 0.25% 0.02% 1.00% 1.34% 1.00%
15-16 0.09% 0.25% 0.02% 1.00% 1.36% 1.00%
17-1835 0.17% 0.25% 0.02% 0.00% 0.44% 0.00%
19+35 0.17% 0.25% 0.02% 0.00% 0.44% 0.00%
STATIC INVESTMENT OPTIONS
ALL EQUITY
0.21% 0.25% 0.02% 1.00% 1.48% 1.00%
GROWTH
0.23% 0.25% 0.02% 1.00% 1.50% 1.00%
MODERATE GROWTH
0.25% 0.25% 0.02% 1.00% 1.52% 1.00%
BALANCED
0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
CONSERVATIVE
0.19% 0.25% 0.02% 1.00% 1.46% 1.00%
BANK SAVINGS35
0.00% 0.18% 0.02% 0.00% 0.20% 0.00%
30 Weighted Average Operating Expense Ratio is the weighted average of each underlying investment’s expense ratio as of December 31, 2019.31 The Program Management Fee accrues daily as a percentage of average daily net assets.32 Class C units will convert to Class A units within the month following the fifth anniversary of the purchase date.33 Total Estimated Annual Asset-Based Fees include the Weighted Average Operating Expense Ratio, the Program Management Fee, the State Administration Fee, and the
distribution and marketing fee.34 The maximum CDSC of 1.00% may be charged and partially waived in limited circumstances, for Class C contributions made after December 17, 2010 that are withdrawn,
transferred, or rolled over from an account within one year of the contribution.35 The Program Manager has waived the distribution and marketing fee and the CDSC.
54
Fee structure tables, continued
Class C
Weighted Average
Operating
Expense Ratio36
Program
Management
Fee37
State
Administration
Fee
Distribution and
Marketing Fee
Total Estimated
Annual Asset-Based
Fees38
Additional Investor
Expenses – Maximum
Contingent Deferred
Sales Charge39
INDIVIDUAL INVESTMENT OPTIONS
American Funds The Income Fund of America® 0.26% 0.25% 0.02% 1.00% 1.53% 1.00%
DFA World ex-US Government Fixed Income 0.20% 0.25% 0.02% 1.00% 1.47% 1.00%
Dodge & Cox Stock 0.52% 0.25% 0.02% 1.00% 1.79% 1.00%
Federated Total Return Bond 0.39% 0.25% 0.02% 1.00% 1.66% 1.00%
Goldman Sachs Financial Squaresm Government
Money Market40 0.17% 0.25% 0.02% 0.00% 0.44% 0.00%
iShares Core US Aggregate ETF 0.05% 0.25% 0.02% 1.00% 1.32% 1.00%
iShares Russell 2000 Growth ETF 0.24% 0.25% 0.02% 1.00% 1.51% 1.00%
MetWest Total Return Bond 0.37% 0.25% 0.02% 1.00% 1.64% 1.00%
SPDR® S&P Dividend ETF 0.35% 0.25% 0.02% 1.00% 1.62% 1.00%
State Street MSCI®41 ACWI ex USA Index* 0.09% 0.25% 0.02% 1.00% 1.36% 1.00%
State Street S&P 500®42 Index 0.0175% 0.25% 0.02% 1.00% 1.29% 1.00%
T. Rowe Price Large-Cap Growth 0.56% 0.25% 0.02% 1.00% 1.83% 1.00%
Tributary Small Company 0.99% 0.25% 0.02% 1.00% 2.26% 1.00%
Vanguard Extended Market ETF 0.07% 0.25% 0.02% 1.00% 1.34% 1.00%
Vanguard FTSE Emerging Markets ETF 0.12% 0.25% 0.02% 1.00% 1.39% 1.00%
Vanguard Real Estate ETF 0.12% 0.25% 0.02% 1.00% 1.39% 1.00%
Vanguard Short-Term Bond ETF 0.07% 0.25% 0.02% 1.00% 1.34% 1.00%
Vanguard Short-Term Inflation-Protected ETF 0.06% 0.25% 0.02% 1.00% 1.33% 1.00%
Vanguard Total Stock Market ETF 0.04% 0.25% 0.02% 1.00% 1.31% 1.00%
36 Weighted Average Operating Expense Ratio is the weighted average of each underlying investment’s expense ratio as of December 31, 2019.37 The Program Management Fee accrues daily as a percentage of average daily net assets.38 Total Estimated Annual Asset-Based Fees include the Weighted Average Operating Expense Ratio, the Program Management Fee, the State Administration Fee, and the
distribution and marketing fee.39 The maximum CDSC of 1.00% may be charged, and partially waived in limited circumstances, for Class C contributions made after December 17,2010 that are withdrawn,
transferred, or rolled over from an account within one year of the contribution.40 The Program Manager has waived the distribution and marketing fee and the CDSC.41 The MSCI ACWI ex USA Index is a trademark of MSCI Inc. State Street Global Advisors Trust Company has been appointed as discretionary trustee over the assets
invested in these trust accounts and may commingle the particular trust property into a bank maintained common trust fund. These trust accounts are exempt fromregistration with the SEC. The Weighted Average Operating Expense Ratio for the State Street MSCI ACWI ex USA Index does not include additional custody,transactions or auditing costs.
42 The S&P 500® Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by State Street Bank and Trust. Standard & Poor’s® and S&P® areregistered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).The products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representationregarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index. State Street GlobalAdvisors Trust Company has been appointed as discretionary trustee over the assets invested in these trust accounts and may commingle the particular trust property intoa bank maintained common trust fund. These trust accounts are exempt from registration with the SEC. The Weighted Average Operating Expense Ratio for the StateStreet S&P 500 Index does not include additional custody, transactions or auditing costs.
* Trust account managed by State Street Global Advisors Trust Company for the benefit of the NEST Advisor Plan. Not a mutual fund and not otherwise registered with theSEC. See “Part 9 - Individual Investment Options” for more information about the investments.
55
Approximate cost of $10,000 investment
The following table compares the approximate cost of investing in the Plan over different periods of time. This hypothetical is notintended to predict or project investment performance. Past performance is no guarantee of future performance. Your actual cost maybe higher or lower. The tables are based on the following assumptions:• A $10,000 contribution is invested for the time periods shown;• A 5% annually compounded rate of return on the amount invested throughout the period;• The account is redeemed at the end of the period shown to pay for Qualified Expenses (the table does not consider the impact of
any potential state or federal taxes on the redemption nor any potential state tax recapture of previous state tax deductions);• The total estimated annual asset based fees remain the same as those shown in the Fee Structure Tables;• The investor pays the applicable maximum initial Class A Up-Front Sales Load; and• For Class C, the investor pays a 1.00% CDSC for contributions withdrawn within one year (inclusive).
INVESTMENT PERIOD
One Year Three Years Five Years Ten Years
AGE-BASED INVESTMENT OPTIONS
Aggressive
Ages 0-2 Class A $422 $575 $742 $1,225Class C without redemptions $151 $468 $808 N/AClass C with redemptions $251 $468 $808 N/A
Ages 3-5 Class A $423 $578 $747 $1,236Class C without redemptions $152 $471 $813 N/AClass C with redemptions $252 $471 $813 N/A
Ages 6-8 Class A $424 $581 $752 $1,248Class C without redemptions $153 $474 $818 N/AClass C with redemptions $253 $474 $818 N/A
Ages 9-10 Class A $425 $584 $758 $1,259Class C without redemptions $154 $477 $824 N/AClass C with redemptions $254 $477 $824 N/A
Ages 11-12 Class A $426 $587 $763 $1,271Class C without redemption $155 $480 $829 N/AClass C with redemption $255 $480 $829 N/A
Ages 13-14 Class A $425 $584 $758 $1,259Class C without redemption $154 $477 $824 N/AClass C with redemption $254 $477 $824 N/A
Ages 15-16 Class A $424 $581 $752 $1,248Class C without redemption $153 $474 $818 N/AClass C with redemption $253 $474 $818 N/A
Ages 17-18 Class A $422 $575 $742 $1,225Class C without redemption $151 $468 $808 N/AClass C with redemption $251 $468 $808 N/A
Ages 19+ Class A $420 $569 $731 $1,202Class C without redemption $149 $462 $797 N/AClass C with redemption $249 $462 $797 N/A
Growth
Ages 0-2 Class A $424 $581 $752 $1,248Class C without redemptions $153 $474 $818 N/AClass C with redemptions $253 $474 $818 N/A
Ages 3-5 Class A $425 $584 $758 $1,259Class C without redemptions $154 $477 $824 N/AClass C with redemptions $254 $477 $824 N/A
Ages 6-8 Class A $426 $587 $763 $1,271Class C without redemptions $155 $480 $829 N/AClass C with redemptions $255 $480 $829 N/A
Ages 9-10 Class A $425 $584 $758 $1,259Class C without redemptions $154 $477 $824 N/AClass C with redemptions $254 $477 $824 N/A
Ages 11-12 Class A $424 $581 $752 $1,248Class C without redemption $153 $474 $818 N/AClass C with redemption $253 $474 $818 N/A
Ages 13-14 Class A $422 $575 $742 $1,225Class C without redemption $151 $468 $808 N/AClass C with redemption $251 $468 $808 N/A
Ages 15-16 Class A $420 $569 $731 $1,202Class C without redemption $149 $462 $797 N/AClass C with redemption $249 $462 $797 N/A
56
Approximate cost of $10,000 investment, continued
INVESTMENT PERIOD
One Year Three Years Five Years Ten Years
Ages 17-18 Class A $417 $560 $715 $1,167Class C without redemption $146 $452 $782 N/AClass C with redemption $246 $452 $782 N/A
Ages 19+ Class A $415 $554 $705 $1,144Class C without redemption $144 $466 $771 N/AClass C with redemption $244 $466 $771 N/A
Index
Ages 0-2 Class A $407 $529 $662 $1,050Class C without redemptions $135 $421 $729 N/AClass C with redemptions $235 $421 $729 N/A
Ages 3-5 Class A $407 $529 $662 $1,050Class C without redemptions $135 $421 $729 N/AClass C with redemptions $235 $421 $729 N/A
Ages 6-8 Class A $407 $529 $662 $1,050Class C without redemptions $135 $421 $729 N/AClass C with redemptions $235 $421 $729 N/A
Ages 9-10 Class A $407 $529 $662 $1,050Class C without redemptions $135 $421 $729 N/AClass C with redemptions $235 $421 $729 N/A
Ages 11-12 Class A $408 $532 $668 $1,062Class C without redemption $136 $425 $734 N/AClass C with redemption $236 $425 $734 N/A
Ages 13-14 Class A $408 $532 $668 $1,062Class C without redemption $136 $425 $734 N/AClass C with redemption $236 $425 $734 N/A
Ages 15-16 Class A $410 $539 $678 $1,085Class C without redemption $138 $431 $745 N/AClass C with redemption $238 $431 $745 N/A
Ages 17-18 Class A $45 $141 $246 $555Class C without redemption $45 $141 $246 N/AClass C with redemption N/A N/A N/A N/A
Ages 19+ Class A $45 $141 $246 $555Class C without redemption $45 $141 $246 N/AClass C with redemption N/A N/A N/A N/A
STATIC INVESTMENT OPTIONS
All Equity Class A $422 $575 $742 $1,225Class C without redemptions $151 $468 $808 N/AClass C with redemptions $251 $468 $808 N/A
Growth Class A $424 $581 $752 $1,248Class C without redemptions $153 $474 $818 N/AClass C with redemptions $253 $474 $818 N/A
Moderate Growth Class A $426 $587 $763 $1,271Class C without redemptions $155 $480 $829 N/AClass C with redemptions $255 $480 $829 N/A
Balanced Class A $425 $584 $758 $1,259Class C without redemptions $154 $477 $824 N/AClass C with redemptions $254 $477 $824 N/A
Conservative Class A $420 $569 $731 $1,202Class C without redemptions $149 $462 $797 N/AClass C with redemptions $249 $462 $797 N/A
Bank Savings Class A $20 $64 $113 $255Class C without redemptions $20 $64 $113 N/AClass C with redemptions N/A N/A N/A N/A
INDIVIDUAL INVESTMENT OPTIONS
DFA World ex-US
Government Fixed Income Class A $421 $572 $737 $1,213Class C without redemptions $150 $465 $803 N/AClass C with redemptions $250 $465 $803 N/A
Dodge & Cox Stock Class A $452 $669 $904 $1,577Class C without redemptions $182 $563 $970 N/AClass C with redemptions $282 $563 $970 N/A
Federated Total Return
Bond Class A $440 $630 $836 $1,430Class C without redemptions $169 $523 $902 N/AClass C with redemptions $269 $523 $902 N/A
57
Approximate cost of $10,000 investment, continued
INVESTMENT PERIOD
One Year Three Years Five Years Ten Years
Goldman Sachs Financial
SquareSM Government
Money Market Class A $45 $141 $246 $555Class C without redemptions $45 $141 $246 N/AClass C with redemptions N/A N/A N/A N/A
iShares Core US Aggregate
ETF Class A $406 $526 $657 $1,039Class C without redemptions $134 $418 $723 N/AClass C with redemptions $234 $418 $723 N/A
iShares Russell 2000
Growth ETF Class A $425 $584 $758 $1,259Class C without redemptions $154 $477 $824 N/AClass C with redemptions $254 $477 $824 N/A
MetWest Total Return
Bond Class A $438 $624 $826 $1,408Class C without redemptions $167 $517 $892 N/AClass C with redemptions $267 $517 $892 N/A
SPDR® S&P Dividend ETF Class A $436 $618 $815 $1,385Class C without redemptions $165 $511 $881 N/AClass C with redemptions $265 $511 $881 N/A
State Street MSCI® ACWI
ex USA Index Class A $410 $539 $678 $1,085Class C without redemptions $138 $431 $745 N/AClass C with redemptions $238 $431 $745 N/A
State Street S&P 500®
Index Class A $403 $517 $641 $1,003Class C without redemptions $131 $409 $708 N/AClass C with redemptions $231 $409 $708 N/A
T. Rowe Price Large-Cap
Growth Class A $456 $681 $925 $1,621Class C without redemptions $186 $576 $990 N/AClass C with redemptions $286 $576 $990 N/A
The American Funds The
Income Fund of America® Class A $427 $590 $768 $1,282Class C without redemptions $156 $483 $834 N/AClass C with redemptions $256 $483 $834 N/A
Tributary Small Company Class A $498 $810 $1,145 $2,088Class C without redemptions $229 $706 $1,210 N/AClass C with redemptions $329 $706 $1,210 N/A
Vanguard Extended Market
ETF Class A $408 $532 $668 $1,062Class C without redemptions $136 $425 $734 N/AClass C with redemptions $236 $425 $734 N/A
Vanguard FTSE Emerging
Markets ETF Class A $413 $548 $694 $1,120Class C without redemptions $142 $440 $761 N/AClass C with redemptions $242 $440 $761 N/A
Vanguard Real Estate ETF Class A $413 $548 $694 $1,120Class C without redemptions $142 $440 $761 N/AClass C with redemptions $242 $440 $761 N/A
Vanguard Short-Term
Bond ETF Class A $408 $532 $668 $1,062Class C without redemptions $136 $425 $734 N/AClass C with redemptions $236 $425 $734 N/A
Vanguard Short-Term
Inflation-Protected ETF Class A $407 $529 $662 $1,050Class C without redemptions $135 $421 $729 N/AClass C with redemptions $235 $421 $729 N/A
Vanguard Total Stock
Market ETF Class A $405 $523 $652 $1,027Class C without redemptions $133 $415 $718 N/AClass C with redemptions $233 $415 $718 N/A
* Proceeds of units redeemed within one year (inclusive) of a contribution will be subject to a 1.00% CDSC.
58
PART 13 – DISTRIBUTIONS FROM ANACCOUNT
Requesting a distribution from an accountThere is no Beneficiary age or other deadline by whichdistributions from your account must begin. To request adistribution, the account owner may complete and submit a formto the Program Manager by mail. You can initiate a QualifiedWithdrawal online by logging into your account atwww.NEST529Advisor.com. You can also request a QualifiedWithdrawal, Non-Qualified Withdrawal or Rollover out of theNEST Advisor Plan by completing and submitting a form availablethrough your Financial Advisor, or the Plan’s website, or by callingthe Plan.
The Program Manager employs procedures it considers to bereasonable to confirm that instructions communicated bytelephone or Internet are genuine, including requiring certainpersonal identifying information prior to acting upon telephone orInternet instructions. None of the Program Manager, itsauthorized agents, the Trust, or the Trustee will be liable forfollowing telephone or Internet instructions that are reasonablybelieved to be genuine.
The Program Manager will review each withdrawal request todetermine that all information needed to process such request hasbeen received. Withdrawal requests will be satisfied as soon aspracticable following the Program Manager’s receipt and review ofa properly completed form. The Plan typically will process awithdrawal form sent by mail and initiate payment of a distributionwithin two business days of receipt of the request. During periodsof market volatility and at year-end, withdrawal requests may takeup to five business days to process. Please submit your withdrawalrequests well in advance of the start of each academic period. Seealso “Temporary withdrawal restrictions” below regardingwithdrawals of recent contributions to an account.
Although the Program Manager is required to report theearnings portion of any withdrawal to tax authorities, it issolely the responsibility of the person receiving thewithdrawal to calculate and report any resulting tax liability.
Temporary withdrawal restrictionsIf you made a contribution that was in good order, you will not beable to make a withdrawal of that contribution from your accountfor five business days after deposit. When an account owner or theaddress is changed on an account there is a 10-business-day holdbefore a withdrawal can be made. A withdrawal request must besignature guaranteed if the request is within 10 business days ofthe change to have the withdrawal released before the holdperiod expires. There is a 15-calendar-day hold on ACHwithdrawals after bank information is added or changed.
Systematic Withdrawal Program (SWP)You may choose to establish periodic, pre-scheduled withdrawalsfor Qualified Higher Education Expenses from your NEST AdvisorPlan account. The Plan will file IRS Form 1099-Q annually for
distributions taken for all withdrawals, including those usingsystematic withdrawals. You can have up to two SWPs on youraccount. If the balance in your Investment Option is less than theSWP amount specified, the SWP instructions will be stopped. ASWP distribution will be held for up to five business days forcontributions that have not yet cleared or, 10 business days if theaccount owner or address has been changed on the account andthe SWP is within 10 business days of that change. Thedistribution will be released when the specified waiting period hasbeen satisfied.
Qualified WithdrawalQualified Withdrawals from your account are free from federalincome tax. A Qualified Withdrawal is a withdrawal that is used topay the Qualified Higher Education Expenses of the Beneficiary.Qualified Higher Education Expenses include tuition, fees, books,supplies and equipment required for the enrollment or attendanceof the Beneficiary at an Eligible Educational Institution. Expensesfor the purchase of computer or peripheral equipment, computersoftware, or Internet access and related services, if such equipment,software, or services are to be used primarily by the Beneficiaryduring any of the years the Beneficiary is enrolled at an EligibleEducational Institution regardless of whether such technology orequipment is required by the Eligible Educational Institution.Computer software means any program designed to cause acomputer to perform a desired function. Such term does notinclude any database or similar item unless the database or item isin the public domain and is incidental to the operation of otherwisequalifying computer software. Computer software designed forsports, games, or hobbies is not included unless this software ispredominantly educational in nature. Reasonable room and boardexpenses are also considered Qualified Higher Education Expensesfor students enrolled on at least a half-time basis.
Eligible Educational InstitutionAn Eligible Educational Institution is an institution that is eligibleto participate in federal student aid programs under Title IV of theHigher Education Act of 1965 (20 USC 1088). These are generallyany accredited college or university, including trade and technicalschools, in the United States and abroad that participates infederal financial aid programs. To check if a specific school is anEligible Educational Institution go to the U.S. Department ofEducation Website at www.fafsa.ed.gov.
Distribution of a Qualified WithdrawalA Qualified Withdrawal may be distributed as follows:
• To the account owner at the address on the account;• To the Beneficiary at the address on the account; or• Directly to the Eligible Educational Institution at the address
on the withdrawal form.
Because money in your account may be withdrawn free fromfederal income tax only if it is used to pay the Beneficiary’sQualified Higher Education Expenses, you should retaindocumentation of all of the Beneficiary’s Qualified HigherEducation Expenses for your records. The account owner or
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59
Beneficiary, not the Plan nor the Program Manager, is solelyresponsible for determining if a withdrawal is a QualifiedWithdrawal or Non-Qualified Withdrawal and whether a federalpenalty applies.
Non-Qualified WithdrawalsTo the extent that a withdrawal is a Non-Qualified Withdrawal,any earnings portion of such Non-Qualified Withdrawal will beincludable in your income for Nebraska state income tax purposesand subject to partial recapture of any Nebraska state income taxdeduction previously claimed.
In general, a Non-Qualified Withdrawal is also includable in yourincome for federal income tax purposes and subject to anadditional 10% federal tax. Certain exceptions to this rule apply.For example, under Nebraska law, withdrawals from the NESTAdvisor Plan that are used to pay for a Beneficiary’s K-12 tuition,costs associated with the Beneficiary’s apprenticeship program(s),or student loan repayments for the Beneficiary and/or theBeneficiary’s siblings are Non-Qualified Withdrawals and theearnings portion of the withdrawal will be includable in yourincome for state income tax purposes and is subject to recapture.However, the withdrawal is not includable in your income forfederal income tax purposes or subject to an additional 10%federal tax.
The account owner or the Beneficiary is responsible fordetermining whether a withdrawal is a Non-Qualified Withdrawaland, if so, making the appropriate filings with the IRS and payingthe additional 10% federal tax on earnings. More information isavailable in “Part 14 – Federal and State Tax Considerations”about how the earnings portion of a Non-Qualified Withdrawal iscalculated and the other tax consequences of a Non-QualifiedWithdrawal.
Exceptions to the federal penalty taxThe additional 10% federal tax does not apply to Non-QualifiedWithdrawals if:
• Paid to the estate of the Beneficiary on or after the death ofthe Beneficiary;
• Used to pay for the Beneficiary’s K-12 tuition, up to thefederal limit (currently $10,000);
• Used to pay for fees, books, supplies or equipment required forthe Beneficiary’s participation in a registered apprenticeshipprogram;
• Used to pay the principal or interest on a qualified educationloan of the Beneficiary and/or the Beneficiary’s sibling, up tothe federal lifetime limit ($10,000 per qualifying individual);
• Made because the Beneficiary is disabled. A person isconsidered to be disabled if he or she shows proof that he orshe cannot do any substantial gainful activity because of hisor her physical or mental condition. A physician must
determine that his or her condition can be expected to resultin death or to be of long-continued and indefinite duration;
• Included in income because the Beneficiary received a tax-free scholarship, up to the amount of scholarship received bythe Beneficiary;
• Made on account of the attendance of the Beneficiary at aU.S. military academy (such as the United States NavalAcademy at Annapolis). This exception applies only to theextent that the amount of the distribution does not exceedthe costs of advanced education (as defined inSection 2005(d)(3) of Title 10 of the U.S. Code) attributable tosuch attendance; or
• Included in income only because the Qualified HigherEducation Expenses were taken into account in determiningthe American Opportunity and Lifetime Learning Tax Credits.
You should consult your own tax advisor regarding the applicationof any of the above exceptions.
Refunds from Eligible Educational InstitutionRefunds of any Qualified Higher Education Expense from anEligible Educational Institution, to the extent that the portion ofthe refund is from a previous Qualified Withdrawal, must berecontributed back into the Beneficiary’s account within 60 daysof receipt of the refund otherwise the refund is considered a Non-Qualified Withdrawal.
RolloversYou may direct a transfer of money from your account to anaccount in another qualified tuition program or an Achieving aBetter Life Experience Act (“ABLE”) program for the same oranother Beneficiary (a “rollover”). Alternatively, you may make awithdrawal from your account and re-deposit the withdrawnbalance within 60 days into an account in another qualified tuitionprogram or ABLE program for the same or another Beneficiary. Ifthe Beneficiary stays the same, the transfer will be treated as a taxfree qualified rollover as long as the transfer does not occur within12 months from the date of a previous rollover to a qualifiedtuition program account for the same Beneficiary. If you changeBeneficiaries, the transfer will be treated as a qualified rolloveronly if the new Beneficiary is a Member of the Family of theformer Beneficiary.
You may transfer money in your NEST Advisor Plan account to anEnable Savings Plan or Enable Savings Plan Alabama account(both issued by the State of Nebraska) without adverse taxconsequences, provided the transfer is a qualified rollover.However, if you roll over money in your NEST Advisor Planaccount to any ABLE program not issued by the State ofNebraska, the earnings portion of the rollover will be subject toNebraska state income tax. In addition, the rollover will be subjectto recapture of any Nebraska state income tax deductionpreviously claimed by the account owner. Not all ABLE programsponsors may accept rollovers from a 529 college savings plan;you should contact your tax advisor for more information...
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60
PART 14 – FEDERAL AND STATE TAXCONSIDERATIONS
IRS Circular 230 DisclosurePursuant to U.S. Treasury Department regulations, the followingstatement is provided: Any information contained in this ProgramDisclosure Statement is not intended or written to be used, andcannot be used, by a person as tax advice for the purpose ofavoiding any penalties that may be imposed under the InternalRevenue Code. In addition, the information contained in thisProgram Disclosure Statement was written to support thepromotion or marketing of the transaction(s) or matter(s)addressed in this Program Disclosure Statement. Each taxpayershould seek advice based on the taxpayer’s particularcircumstances from an independent tax advisor.
The following discussion summarizes certain aspects of federal andstate income, gift, estate and generation-skipping transfer taxconsequences relating to the NEST Advisor Plan and contributionsto, earnings of, and withdrawals from the accounts. The summaryis not exhaustive and is not intended as individual tax advice. Inaddition, there can be no assurance that the IRS or NebraskaDepartment of Revenue will accept the statements made hereinor, if challenged, that such statements would be sustained in court.The applicable tax rules are complex, and certain of the rules areat present uncertain, and their application to any particular personmay vary according to facts and circumstances specific to thatperson. The Code and regulations thereunder, and judicial andadministrative interpretations thereof, are subject to change,retroactively and/or prospectively. A qualified tax advisor shouldbe consulted regarding the application of law in individualcircumstances.
This summary is based on the relevant provisions of the Code,Nebraska state tax law and proposed Treasury regulations. It ispossible that Congress, the Treasury Department, the IRS, theState of Nebraska and other taxing authorities or the courts maytake actions that will adversely affect the tax law consequencesdescribed and that such adverse effects may be retroactive. Nofinal tax regulations or rulings concerning the NEST Advisor Planhave been issued by the IRS and, when issued, such regulations orrulings may alter the tax consequences summarized herein ornecessitate changes in the Plan to achieve the tax benefitsdescribed. The summary does not address the potential effectson account owners or Beneficiaries of the tax laws of any stateother than Nebraska.
Qualified tuition programThe NEST Advisor Plan is designed to be a qualified tuitionprogram under Code Section 529.
Federal tax informationContributions to a qualified tuition program are not deductiblefor federal income tax purposes.
There are two primary federal income tax advantages to investingin a qualified tuition program, such as the NEST Advisor Plan:
• Investment earnings on the money you invest in the Plan willnot be subject to federal income tax until they are distributedsince they are not includable in the federal gross income ofeither the account owner or the Beneficiary until funds arewithdrawn, in whole or in part, from an account; and
• If the investment earnings are distributed as part of aQualified Withdrawal, they are free from federal, and in mostcases state, income tax.
The tax treatment of a withdrawal from an account will varydepending on the nature of the withdrawal, that is, whether thewithdrawal is a Qualified Withdrawal or a Non-QualifiedWithdrawal.
Qualified WithdrawalsIf a Qualified Withdrawal is made from an account, no portion ofthe distribution is includable in the gross income of the accountowner or the Beneficiary.
A Qualified Withdrawal is a withdrawal that is solely used to paythe Qualified Higher Education Expenses of the Beneficiary.
Qualified Higher Education ExpensesQualified Higher Education Expenses include:
• Tuition• Fees• Books• Supplies• Equipment• Computers
that are required for the enrollment or attendance of theBeneficiary at an Eligible Educational Institution.
Qualified Higher Education Expenses also include expenses forspecial needs services in the case of a special needs Beneficiary atan Eligible Educational Institution.
Expenses for the purchase of computer or peripheral equipment,computer software, or Internet access and related services, if suchequipment, software, or services are to be used primarily by theBeneficiary during any of the years the Beneficiary is enrolled atan Eligible Educational Institution regardless of whether suchtechnology or equipment is required by the Eligible EducationalInstitution. Computer software means any program designed tocause a computer to perform a desired function. Such term doesnot include any database or similar item unless the database oritem is in the public domain and is incidental to the operation ofotherwise qualifying computer software. Computer softwaredesigned for sports, games, or hobbies is not included unless thissoftware is predominantly educational in nature.
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In addition, reasonable room and board expenses are consideredQualified Higher Education Expenses for students enrolled on atleast a half-time basis at an Eligible Educational Institution.
Non-Qualified Withdrawal taxableThere are also potential federal income tax disadvantages to aninvestment in a qualified tuition program. To the extent that adistribution from an account is a Non-Qualified Withdrawal, theportion of the Non-Qualified Withdrawal attributable toinvestment earnings on the account will generally be ordinaryincome to the recipient of the withdrawal for the year in which thewithdrawal is made. A few exceptions to this are when a Non-Qualified Withdrawal is used to pay the Beneficiary’s K-12 tuition,costs associated with the Beneficiary’s apprenticeship program(s),or student loan repayments for the Beneficiary and/or theBeneficiary’s siblings. The earnings on such withdrawals will notbe included in the recipient’s income for federal tax purposes, upto the federal limit. No part of the earnings portion of a Non-Qualified Withdrawal will be treated as capital gain. Under currentlaw, the federal tax rates on ordinary income are generally greaterthan the tax rates on capital gain. The contribution portion of awithdrawal is not includable in gross income.
A Non-Qualified Withdrawal is a distribution from an account thatis not a Qualified Withdrawal, a qualified rollover, or a refund ofany Qualified Higher Education Expenses from an EligibleEducational Institution that is recontributed back into theBeneficiary’s account within 60 days of receipt of the refund fromthe Eligible Educational Institution.
Federal penalty tax on Non-Qualified WithdrawalsAdditionally, to the extent that a distribution is a Non-QualifiedWithdrawal, the federal income tax liability of the recipient will beincreased by an amount equal to 10% of any earnings portion ofthe withdrawal distribution.
Exceptions to the federal penalty taxThe additional 10% federal tax does not apply to Non-QualifiedWithdrawals if:
• Paid to the estate of a Beneficiary on or after the death ofthe Beneficiary;
• Used to pay for the Beneficiary’s K-12 tuition, up to thefederal limit (currently $10,000);
• Used to pay for fees, books, supplies or equipment required forthe Beneficiary’s participation in a registered apprenticeshipprogram;
• Used to pay the principal or interest on a qualified educationloan of the Beneficiary and/or the Beneficiary’s sibling, up tothe federal lifetime limit ($10,000 per qualifying individual);
• Made on account of the disability of the Beneficiary. A personis considered to be disabled if he or she shows proof that heor she cannot do any substantial gainful activity because ofhis or her physical or mental condition. A physician mustdetermine that his or her condition can be expected to resultin death or to be of long-continued and indefinite duration;
• Included in income because the Beneficiary received a tax-free scholarship, up to the amount of the scholarshipreceived by the Beneficiary;
• Made on account of the attendance of the Beneficiary at aU.S. military academy (such as the United States NavalAcademy at Annapolis). This exception applies only to theextent that the amount of the distribution does not exceedthe costs of advanced education (as defined inSection 2005(d)(3) of Title 10 of the U.S. Code) attributable tosuch attendance; or
• Included in income only because the Qualified HigherEducation Expenses were taken into account in determiningthe American Opportunity and Lifetime Learning Tax Credits.
You should consult your own tax advisor regarding the applicationof any of the above exceptions.
RolloversNo portion of a qualified rollover is includable in the gross incomeof the account owner or the Beneficiary, or subject to theadditional 10% federal tax.
Change of BeneficiaryA change in the Beneficiary of an account is not treated as adistribution if the new Beneficiary is a Member of the Family ofthe former Beneficiary. However, if the new Beneficiary is not aMember of the Family of the former Beneficiary, the change istreated as a Non-Qualified Withdrawal by the account owner.
A change in the Beneficiary of an account or a transfer to anaccount for another Beneficiary may have federal gift tax orgeneration-skipping transfer (“GST”) tax consequences.
Earnings portionIf there are earnings in an account, each distribution from anaccount consists of two parts. One part is a return of thecontributions to the account. The other part is a distribution ofearnings in the account. A pro rata calculation is made as of thedate of the distribution of the earnings portion and thecontributions portion of the distribution.
For any year in which there is a withdrawal from an account, theProgram Manager will provide an IRS Form 1099-Q. This form willset forth the total amount of the withdrawal and identify theearnings portion and the contribution portion of any withdrawal.
Earnings aggregationAll Plan accounts for the benefit of a single Beneficiary and havingthe same account owner must be treated as a single account forpurposes of calculating the earnings portion of each withdrawal.Therefore, if more than one account is established for aBeneficiary that has the same account owner and a Non-QualifiedWithdrawal is made from one or more of those accounts, theamount includable in taxable income must be calculated basedon the earnings portion of all such accounts...
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Thus, the amount withdrawn from an account may carry with it agreater or lesser amount of income than the earnings portion ofthat account alone, depending on the earnings portion of allother accounts for that Beneficiary with the same account owner.In the case of a Non-Qualified Withdrawal, this aggregation rulemay result in an account owner being taxed upon more or lessincome than that directly attributable to the earnings portion ofthe account from which the withdrawal was made.
Claiming a lossA loss can only be claimed when all funds in an account havebeen withdrawn and the total distributions from that account areless than the total contributions made to that account. If there is aloss on an account, those losses are not capital losses but claimedas a miscellaneous itemized deduction, subject to a limit of twopercent (2%) of adjusted gross income for federal income taxpurposes. Please consult with your own tax advisor regarding anyloss on an account.
Estate and gift taxFor federal gift and GST tax purposes, contributions to anaccount are considered a completed gift from the contributor tothe Beneficiary. Accordingly, except as described below, if anaccount owner dies while there is a balance in the account, thevalue of the account is not includable in the account owner’sestate for federal estate tax purposes. However, amounts in anaccount at the death of the Beneficiary are includable in theBeneficiary’s gross estate.
An account owner’s contributions to an account for a Beneficiaryare eligible for the gift tax annual exclusion. Contributions thatqualify for the gift tax annual exclusion are generally alsoexcludible for purposes of the federal GST tax, unless an electionis made on the federal gift tax return to the contrary. A donor’stotal contributions to an account for the Beneficiary in any givenyear (together with any other gifts made by the donor to theBeneficiary in the year) will not be considered taxable gifts andwill generally be excludible for purposes of the GST tax if the giftsdo not in total exceed the annual exclusion for the year. Currently,the annual exclusion is $15,000 per donee ($30,000 for a marriedcouple that elects on a federal gift tax return to “split” gifts). Thismeans that in each calendar year you may contribute up to$15,000 to a Beneficiary’s account without the contribution beingconsidered a taxable gift, if you make no other gifts to theBeneficiary in the same year.
The annual exclusion is indexed for inflation and therefore isexpected to increase over time.
Five-year electionIn addition, if your total contributions to an account for aBeneficiary during a single year exceed the annual exclusion forthat year, you may elect to have the amount you contributed thatyear treated as though you made one-fifth of the contribution thatyear, and one-fifth of the contribution in each of the next fourcalendar years. You must make this election on your federal gifttax return by filing IRS Form 709.
This means that you may contribute up to $75,000 in a single yearto an account without the contribution being considered ataxable gift, provided that you make no other gifts to theBeneficiary in the same year in which the contribution is made andin any of the succeeding four calendar years. Moreover, a marriedcontributor whose spouse elects on a federal gift tax return tohave gifts treated as “split” with the contributor may contributeup to twice that amount ($150,000) without the contribution beingconsidered a taxable gift, provided that neither spouse makesother gifts to the Beneficiary in the same year and in any of thesucceeding four calendar years. An election to have thecontribution taken into account ratably over a five-year periodmust be made by the donor on a federal gift tax return.
For example, an account owner who makes a $75,000 contributionto an account for a Beneficiary in 2020 may elect to have thatcontribution treated as a $15,000 gift in 2020 and a $15,000 gift ineach of the following four years. If the account owner makes noother contributions or gifts to the Beneficiary before January 1,2025, and has made no excess contributions treated as giftssubject to the one-fifth rule during any of the previous four years,the account owner will not be treated as making any taxable giftsto the Beneficiary during that five-year period. As a result, the$75,000 contribution will not be treated as a taxable gift and alsowill generally be excludible for purposes of the GST tax. However,if the account owner dies before the end of the five-year period,the portion of the contributions allocable to years after the year ofdeath will be includable in the account owner’s gross estate forfederal estate tax purposes.
Change of BeneficiaryA change of the Beneficiary of an account or transfer of anaccount to another Beneficiary may have federal gift taxconsequences. An account owner may change the Beneficiary ortransfer an account without gift tax consequences if the newBeneficiary is a Member of the Family of the replaced Beneficiaryand the new Beneficiary is assigned to the same generation as thereplaced Beneficiary. If the new Beneficiary is a Member of theFamily assigned to a younger generation than the replacedBeneficiary, the change will be treated for federal gift taxpurposes as a gift. Federal gift tax law is unclear as to whether thegift will be considered made by the account owner or by thereplaced Beneficiary.
A change of the Beneficiary of an account or a transfer to anaccount for another Beneficiary may also have GST taxconsequences. A change or transfer will be considered ageneration-skipping transfer if the new Beneficiary is two or moregenerations younger than the replaced Beneficiary.
A change of account ownership may also have gift and/or GST taxconsequences. Accordingly, account owners should consult theirown tax advisors for guidance when considering a change ofBeneficiary or account ownership.
Coordination with education tax creditsAn American Opportunity or a Lifetime Learning Tax Credit maybe taken in the same year that funds from your Plan account are..
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withdrawn. The use will not effect participation in or receipt ofbenefits from a NEST Advisor Plan account as long as anywithdrawal from the NEST Advisor Plan account is not used for thesame expenses for which the credit was claimed. Please consultyour own tax or legal advisor if you plan to claim these tax credits.
Coverdell Education Savings Accounts (ESAs)An individual may contribute money to, or withdraw money from,both a NEST Advisor Plan account and an ESA in the same year.The same expenses, however, cannot count both as “qualifiededucation expenses” for education savings account purposes andQualified Higher Education Expenses for NEST Advisor Planpurposes. Accordingly, to the extent the total withdrawals fromboth programs exceed the amount of the Qualified HigherEducation Expenses incurred that qualifies for tax-free treatmentunder Code Section 529, the recipient must allocate his or herQualified Higher Education Expenses between both suchwithdrawals in order to determine how much may be treated astax-free under each program. Please consult your tax or legaladvisor for further details.
Lack of certaintyAs of the date of this Program Disclosure Statement, proposedregulations have been issued under Code Section 529 upon whichtaxpayers may rely at least until final regulations are issued. Theproposed regulations do not, however, provide guidance onvarious aspects of the NEST Advisor Plan. It is uncertain when finalregulations will be issued. Therefore, there can be no assurancethat the federal tax consequences described herein for accountowners and Beneficiaries are applicable. Code Section 529 orother federal law could be amended in a manner that wouldmaterially change or eliminate the federal tax treatmentdescribed above. The Program Manager and Trustee intend tomodify the NEST Advisor Plan within the constraints of applicablelaw for the Plan to meet the requirements of Code Section 529.
Nebraska state income tax deductionContributions by an account owner who files a Nebraska stateincome tax return, including the principal and earnings portions ofrollovers from another qualified college savings plan not issued bythe State of Nebraska, are deductible in computing the accountowner’s Nebraska taxable income for Nebraska income taxpurposes in an amount not to exceed $10,000 ($5,000 for marriedtaxpayers filing separate returns) in the aggregate for allcontributions to all accounts within the Trust in any taxable year.Contributions by a custodian of an UGMA or UTMA account whois also the parent or guardian of the Beneficiary of an UGMA orUTMA account may claim this deduction. Minors filing a Nebraskastate income tax return are eligible to take deductions for his orher contributions to his or her UGMA or UTMA account or to hisor her minor-owned account.
For contributions to be deductible for a given calendar year, theymust be postmarked prior to the end of that year (forcontributions sent by U.S. mail, the contribution must bepostmarked prior to the end of that year).
The following contributions are not eligible for the Nebraska statetax deduction:
• A parent or guardian’s contribution into a minor-ownedaccount
• Contributions by a custodian of an UGMA or UTMA accountwho is not the parent or guardian of the Beneficiary of anUGMA or UTMA account
• Contributions by any other person who is not the accountowner or parent or guardian custodian of an UGMA or UTMAaccount of the Beneficiary of an UGMA or UTMA account
• Contributions to an account from Ugift, Upromise® by SallieMae® Account or any other rewards program
Recapture of Nebraska income tax deductionNebraska law currently provides for the partial recapture of theNebraska state income tax deduction if a Participation Agreementis cancelled, when a Non-Qualified Withdrawal is made, or iffunds are rolled over to a qualified tuition program or ABLEprogram sponsored by another state or entity. Additionally, to theextent that a distribution constitutes a Non-Qualified Withdrawal,the Nebraska Department of Revenue will subject the distributionto partial recapture of the Nebraska state income tax deductionclaimed in prior years.
In general, an account owner or, the custodian of the UGMA orUTMA account where the custodian is the parent or guardian ofthe Beneficiary of an UGMA or UTMA account, must increase hisor her Nebraska taxable income by the amount of the cancellationdistribution, rollover to another state’s qualified tuition or ABLEprogram, or Non-Qualified Withdrawal but only to the extentpreviously deducted. Before cancelling a ParticipationAgreement, rolling funds to another state’s qualified tuitionprogram or ABLE program, or requesting a Non-QualifiedWithdrawal, you should consult with your own tax or legal advisor.
Nebraska state income taxThe earnings credited to an account will not be includable incomputing the Nebraska taxable income of either the accountowner or the Beneficiary of the account so long as the earningsremain in the account. There are no Nebraska state income taxesdue on investment earnings paid out as a Qualified Withdrawal orincluded in a qualified rollover to an ABLE plan issued by theState of Nebraska.
However, there are Nebraska state income taxes due on investmentearnings paid out as a Non-Qualified Withdrawal or included in aqualified rollover to a qualified tuition program or ABLE plan notissued by the State of Nebraska. For Non-Qualified Withdrawalsdistributed to the Beneficiary, the Beneficiary is responsible forNebraska state income tax on the earnings. For Non-QualifiedWithdrawals distributed to the account owner, the account owner isresponsible for the Nebraska state income tax on the earnings.
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The account owner or Beneficiary will not be required to includeany amount in computing Nebraska taxable income as a result of:(1) a permissible change of a qualifying Beneficiary of an account;or (2) a transfer of amounts from an account of a Beneficiary to theaccount of a different qualifying Beneficiary, provided that in eachcase the new Beneficiary is a Member of the Family of thereplaced Beneficiary and that the transfers occur either directly orby deposit to the new account within 60 days of the withdrawalfrom the prior account.
Before investing in the NEST Advisor Plan, you shouldconsider carefully the following:
• Investors should consider before investing whether theiror their Beneficiary’s home state offers any state tax orother state benefits such as financial aid, scholarshipfunds, and protection from creditors that are onlyavailable for investments in such state’s qualified tuitionprogram;
• Any state-based benefit offered with respect to aparticular 529 college savings plan should be one of manyappropriately weighted factors to be considered inmaking an investment decision; and
• You should consult with your financial, tax or otheradvisor to learn more about how state-based benefits(including any limitations) would apply to your specificcircumstances. You may also wish to contact your homestate or any other 529 college savings plan to learn moreabout the features, benefits and limitations of that state’s529 college savings plan.
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PART 15 – OTHER CONSIDERATIONS
ScholarshipsIf the Beneficiary of your account receives a scholarship, all of thefunds in that Beneficiary’s account may not be needed to pay hisor her Qualified Higher Education Expenses. If you choose towithdraw funds from the account, any earnings portion of thewithdrawal will be includable in your federal gross income, but theportion of the withdrawal up to the amount of the scholarship willnot be subject to the additional 10% federal tax.
You may also change the Beneficiary on your account to cover theQualified Higher Education Expenses of the new Beneficiarywithout adverse federal income tax consequences if the newBeneficiary is a Member of the Family of the former Beneficiary.
ContestsThe Plan may periodically participate in scholarship contestswhich award Plan contributions to contest winners. In somecircumstances, contest participation may be limited to accountowners who physically reside in Nebraska. In other instances, thatscholarship contest may be open to all account ownersnationwide.
Financial aidThe eligibility of the Beneficiary for financial aid may dependupon the circumstances of the Beneficiary’s family at the time theBeneficiary enrolls in an Eligible Educational Institution, as well ason the policies of the governmental agencies, school or privateorganizations to which the Beneficiary and/or the Beneficiary’sfamily applies for financial assistance. These policies vary atdifferent institutions and can change over time. Therefore, noperson or entity can say with certainty how aid programs, or theschool to which the Beneficiary applies, will treat your account.However, financial aid programs administered by agencies of theState of Nebraska will not take your account balance intoconsideration, except as may be otherwise provided by federallaw. For federal financial aid purposes, your account balance willbe included in the calculation of your expected familycontribution but only to the extent of approximately 5.64% ofqualified assets.
BankruptcyThe Bankruptcy Abuse Prevention and Consumer Protection Actof 2005 protects many Code Section 529 accounts in federalbankruptcy proceedings. Your account will be protected if theBeneficiary is your child, stepchild, grandchild, or step grandchild(including a child, stepchild, grandchild, or step grandchildthrough adoption or foster care) subject to the following limits:
• Contributions made to all Code Section 529 accounts for thesame Beneficiary more than 720 days before a federalbankruptcy filing are completely protected;
• Contributions made to all Code Section 529 accounts for thesame Beneficiary during the period between 365 days, and720 days before a federal bankruptcy filing are protected upto $6,225; and
• Contributions made to all Code Section 529 accounts for thesame Beneficiary 365 days before a federal bankruptcy filingare not protected against creditor claims in federalbankruptcy proceedings.
Your own state law may offer additional creditor protections. Youshould consult your legal advisor regarding the effect of anybankruptcy filing on your account.
Creditor protectionThe legislation establishing the Trust is interpreted in accordancewith Nebraska law. Nebraska law generally provides that anyamount credited to an account is not susceptible to any levy,execution, judgment or other operation of law, garnishment orother judicial enforcement, and that an amount is not an asset orproperty of either the Beneficiary or the account owner forpurposes of any state insolvency or inheritance tax laws.
As of the date of this Program Disclosure Statement, courts haveyet to interpret, apply or rule on matters involving aninterpretation of the Nebraska legislation. None of the Trust, theNebraska State Treasurer, the Nebraska Investment Council, theNebraska State Investment Officer, the Program Manager, or thePrimary Distributor makes any representations or warrantiesregarding protection from creditors. You should consult your legaladvisor regarding this law and your circumstances.
AuditsNebraska law requires the Trust to be audited by a certified publicaccountant or the Nebraska State Auditor. The Trust’s auditedfinancial statements may be viewed or downloaded attreasurer.nebraska.gov. The Trustee has currently engagedHayes & Associates, L.L.C., Omaha, Nebraska, to perform theannual audit.
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PART 16 – GLOSSARYAge-Based Investment Option means an Investment Optionthat invests in a mix of domestic equity, real estate, internationalequity, international bond, fixed income and cash equivalentinvestments based on the current age of the Beneficiary. EachAge-Based Investment Option adjusts over time (each age bandis called a Portfolio) so that as the Beneficiary nears collegeenrollment age the asset allocation between domestic equity, realestate, international equity, international bond, fixed income andcash equivalent investments becomes more conservative relativeto the allocation in earlier years. See “Part 7 – Age-BasedInvestment Options.”
Beneficiary means the individual designated in the EnrollmentForm as the Beneficiary of an account at the time the account isestablished, or the individual designated as the new Beneficiary ifthe account owner changes the Beneficiary of an account. TheBeneficiary must be a U.S. citizen or resident alien with a SocialSecurity number or taxpayer identification number. A Beneficiarymay be of any age. In the case of an account established by astate or local government or a Section 501(c)(3) organization aspart of a scholarship program, the Beneficiary is any individualreceiving benefits accumulated in the account as a scholarship.See “Part 4 – Beneficiaries.”
Code means the Internal Revenue Code of 1986, as amendedfrom time to time.
Enrollment Form means the Nebraska Educational Savings TrustAdvisor College Savings Plan Enrollment Form signed by anaccount owner establishing an account and agreeing to be boundby the terms of the Program Disclosure Statement andParticipation Agreement. A separate Enrollment Form is requiredfor each account.
Eligible Educational Institution means an eligible educationalinstitution, as defined in Code Section 529. This generally includesany accredited post-secondary educational institution in theUnited States offering credit toward a bachelor’s degree, anassociate’s degree, a graduate level or professional degreeor another recognized post-secondary credential. Certainproprietary institutions, post-secondary vocational institutions andforeign schools also are Eligible Educational Institutions. Theseinstitutions must be eligible to participate in U.S. Department ofEducation student aid programs.
Financial Advisor means a broker or financial advisor employedby an account owner in the Plan. Financial Advisors have enteredinto an agreement with the Primary Distributor to offer accountsin the Plan to their customers.
Individual Investment Option means an Investment Option thatinvests in a single fund. Account owners do not own shares of theunderlying funds but, rather, own an interest in the InvestmentOption offered by the Plan. You can allocate your contributionsamong one or more Individual Investment Options according toyour investment objectives and risk tolerance.
The performance of the Individual Investment Options is dependenton the performance of the individual underlying funds, plus thetiming of the purchases, and applicable fees. As a result, theirperformance may be more volatile than the other availableInvestment Options in the Plan. See “Part 9 – Individual InvestmentOptions.”
Investment Option means any of the Investment Optionsavailable under the Plan. An account owner must designate anInvestment Option or Options on the Enrollment Form for eachaccount. The Plan currently has Age-Based, Static, and IndividualInvestment Options. See “Part 6 – Investment Options Overview.”
Maximum Contribution Limit means no additional contributionsmay be made for the benefit of a particular Beneficiary when thefair market value of all accounts owned by all account ownerswithin the Trust for that Beneficiary exceeds $400,000. If, however,the market value of such accounts falls below the MaximumContribution Limit, additional contributions will be accepted. The$400,000 per Beneficiary Maximum Contribution Limit applies toall accounts for the same Beneficiary in all plans administered bythe Nebraska State Treasurer, including the NEST Advisor Plan,the NEST Direct Plan, the TD Ameritrade 529 College SavingsPlan, and the State Farm 529 Savings Plan.
Member of the Family means an individual who is related to theBeneficiary in any of the following ways:
• A son or daughter, or a descendant of either;• A stepson or stepdaughter;• A brother, sister, stepbrother or stepsister;• The father or mother, or an ancestor of either;• A stepfather or stepmother;• A son or daughter of a brother or sister;• A brother or sister of the father or mother;• A son-in-law, daughter-in-law, father-in-law, mother-in-law,
brother-in-law or sister-in-law;• The spouse of the Beneficiary or the spouse of any of the
foregoing individuals; or• A first cousin of the Beneficiary.
For purposes of determining who is a Member of the Family, alegally adopted child or foster child of an individual is treated asthe child of such individual by blood. The terms brother and sisterinclude a brother or sister by the half-blood.
Non-Qualified Withdrawal means any distribution from anaccount to the extent it is not a Qualified Withdrawal, a qualifiedrollover or a refund of any Qualified Higher Education Expensesfrom an Eligible Educational Institution that is recontributed backinto the Beneficiary’s account within 60 days of receipt of therefund from the Eligible Educational Institution. The earningsportion of a Non-Qualified Withdrawal will generally be treated asincome subject to state and federal income tax and an additional10% federal penalty tax, as well as partial recapture of anyNebraska state income tax deduction previously claimed. See“Part 14 – Federal and State Tax Considerations.”..
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Participation Agreement means the legally binding contractbetween an account owner and the Trust. However, the Trusteemay amend the Participation Agreement at any time.
Plan means the Nebraska Educational Savings Trust AdvisorCollege Savings Plan. See “Part 1 – Overview.”
Program Manager means First National Bank of Omaha, itsauthorized agents or any of its affiliates. See “Part 1 – Overview.”
Qualified Higher Education Expenses means the Beneficiary’squalified higher education expenses, as defined in CodeSection 529(e)(3). Currently, tuition, fees, books, supplies andequipment required for the enrollment or attendance of aBeneficiary at an Eligible Educational Institution are consideredQualified Higher Education Expenses. Expenses for the purchaseof computer or peripheral equipment, computer software, orInternet access and related services, if such equipment, software,or services are to be used primarily by the Beneficiary during anyof the years the Beneficiary is enrolled at an Eligible EducationalInstitution are also considered Qualified Higher EducationExpenses regardless of whether such technology or equipment isrequired by the Eligible Educational Institution. Computersoftware means any program designed to cause a computer toperform a desired function. Such term does not include anydatabase or similar item unless the database or item is in thepublic domain and is incidental to the operation of otherwisequalifying computer software. Computer software designed forsports, games, or hobbies is not included unless this software ispredominantly educational in nature. Reasonable room and boardexpenses are included as Qualified Higher Education Expensesfor those students enrolled on at least a half-time basis.
In addition, in the case of a special needs Beneficiary, QualifiedHigher Education Expenses include expenses for special needsservices that are incurred in connection with such Beneficiary’senrollment or attendance at an Eligible Educational Institution.
Qualified Withdrawal means a withdrawal from an account thatis used to pay the Qualified Higher Education Expenses of theBeneficiary. A Qualified Withdrawal generally is not subject tofederal income tax. See “Part 13 – Distributions from an Account.”
Static Investment Option means an Investment Option that mayinvest in either (1) a mix of domestic equity, real estate,international equity, international bond, fixed income and cashequivalents or, (2) in the case of the Bank Savings Static InvestmentOption, an FDIC-insured savings account. Contributions andearnings are invested in a set asset or static allocation. Unlike theAge-Based Investment Options, the Static Investment Options’asset allocations do not adjust as the Beneficiary ages. See“Part 8 – Static Investment Options.”
Trust means the Nebraska Educational Savings Plan Trust. See“Part 1 – Overview.”
Trusted Contact means someone you trust who is at least 18years of age who acts as a resource if we lose contact with you orbelieve you and/or your assets are at risk. See “Part 3 - Openingand Maintaining an Account.”
Trustee means the Nebraska State Treasurer. See “Part 1 –Overview.”
Upromise® by Sallie Mae® Account means an account maintainedwith Upromise that is separate from the Plan and not affiliated withthe Nebraska State Treasurer, the Nebraska Investment Council, orthe Program Manager. See “Part 5 – Contributing to an Account.”
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EXHIBIT A – PARTICIPATION AGREEMENT
Pursuant to the terms and conditions of this ParticipationAgreement for the Nebraska Educational Savings Trust AdvisorCollege Savings Plan (the “Plan”), the account owner, bycompleting and signing an Enrollment Form, hereby requests theNebraska Educational Savings Plan Trust the (‘Trust”) to open (orin the case of a successor account owner, to maintain) an accountfor the Beneficiary on the Enrollment Form.
The Participant (“you”), the Trust, which holds the assets for thePlan, the Nebraska State Treasurer (“Trustee”) and First NationalBank of Omaha, as the Program Manager (“Program Manager”),and its authorized agents agree as follows:
Section 1. Accounts and Beneficiaries.(a) Opening account. The purpose of this Participation Agreement
is to establish an account for the Qualified Higher EducationExpenses of the Beneficiary named in the Enrollment Form.
(b) Separate accounts. The Trust will maintain a separate accountfor each Beneficiary. Each account is governed by aParticipation Agreement. All assets held in your account areheld for the exclusive benefit of you and the Beneficiary asprovided by applicable law.
(c) Naming and changing Beneficiaries. You will name theBeneficiary in the Enrollment Form. You can change theBeneficiary at any time, subject to limitations imposed byfederal and state law. To avoid adverse income taxconsequences, the new Beneficiary must be a Member of theFamily of the former Beneficiary, as that term is defined underSection 529(e)(2) of the Internal Revenue Code of 1986, asamended, or any other corresponding provision of future law(the “Code”). The designation of the new Beneficiary will beeffective upon receipt of the appropriate form, properlycompleted.
(d) Choice of Investment Option. Money invested in an account isinvested in the Investment Option or Options designated inthe Enrollment Form by you. The account owner may changethe Investment Option or Options in which money is investedtwice every calendar year or upon a change of Beneficiary. Tochange the Investment Option or Options in which youraccount is invested, you should contact your Financial Advisor.
Section 2. Contributions.(a) All contributions must be in cash equivalents. Cash equivalents
means only (i) checks, (ii) payroll deductions made by youremployer, (iii) electronic funds transfers from your bank,(iv) automatic investment plan, (v) funds wired through theFederal Reserve System, or (vi) a rollover from another 529qualified tuition program.
(b) Minimum contributions. A contribution need not be madeevery year. If you use a payroll deduction plan or monthlyautomatic deductions from your bank account, the Plan has nominimum initial or subsequent required contributions.
(c) Additional contributions. You may make additionalcontributions at any time.
(d) Maximum Contribution Limit. The Trustee will set a MaximumContribution Limit for each Beneficiary. You may not makeadditional contributions to any account for a Beneficiary whenthe fair market value of all accounts owned by all accountowners within the Trust for that Beneficiary equals theMaximum Contribution Limit. If, however, the fair market valueof such account falls below the Maximum Contribution Limit,additional contributions will be accepted. The Trust will informyou of the Maximum Contribution Limit for each year.Currently, the Maximum Contribution Limit is $400,000. The$400,000 per Beneficiary Maximum Contribution Limit appliesto all accounts for the same Beneficiary in all plansadministered by the Trustee, including the Plan, the NESTDirect Plan, the TD Ameritrade 529 College Savings Plan, andthe State Farm 529 Savings Plan.
Section 3. Distribution From Accounts. You may direct theTrustee to distribute part or all of the money in an account atany time.
(a) You must complete the appropriate form or follow such otherprocedures for the withdrawal of money in an account as theProgram Manager may designate. The Program Manager maychange the form or modify the procedures for withdrawingmoney from an account from time to time.
(b) You acknowledge the earnings portion of a Non-QualifiedWithdrawal, as defined in the Program Disclosure Statement,will be included in your income for federal and state incometax purposes and may be subject to an additional 10% federaltax, as well as partial recapture of any Nebraska state incometax deduction previously claimed.
(c) Notwithstanding any other provision of this Agreement, theTrustee or the Program Manager may terminate an account atany time upon a determination that you or the Beneficiary haveprovided false or misleading information to the Trust, theProgram Manager or an Eligible Educational Institution. TheTrustee will pay you the balance remaining in the account, lessany fees, if applicable.
Section 4. Your Representations and Acknowledgments.You hereby represent and warrant to, and agree with, the Trust,the Trustee and the Program Manager as follows:
(a) You acknowledge that you are aware that the creation of anaccount under the Trust subjects your contributions to sales
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charges and ongoing fees which are not applicable if youestablish an account directly with the Trust without theassistance of a Financial Advisor.
(b) I have accepted, read, and understand the Program DisclosureStatement for the NEST Advisor Plan and have carefullyreviewed all the information contained therein, includinginformation provided by or with respect to the Trust and theProgram Manager. In making a decision to open an accountand enter into this Participation Agreement, I have not reliedupon any representations or other information, whether oral orwritten, other than as set forth in the Program DisclosureStatement and this Participation Agreement. You also agreethat you have had the opportunity to review and herebyapprove and consent to all compensation paid or received byany party connected with the Trust or any of its investments.
(c) You acknowledge and agree that the value of any account willincrease or decrease based on the investment performance ofthe Investment Option of the Trust in which the account is theninvested. YOU UNDERSTAND THAT THE VALUE OF ANYACCOUNT MAY BE MORE OR LESS THAN THE AMOUNTINVESTED IN THE ACCOUNT. You agree that all investmentdecisions will be made by the Nebraska Investment Council orany other adviser hired by the Trust, and that you will not directthe investment of any funds invested in the Trust, eitherdirectly or indirectly. You also acknowledge and agree thatnone of the State of Nebraska, the State Investment Officer,the Nebraska Investment Council, the Trust, the Trustee, theProgram Manager, or any other adviser or consultant retainedby or on behalf of the Trust makes any guarantee that you willnot suffer a loss of the amount invested in any account.
(d) You understand that so long as the Program Manager isperforming services for the Trust, it may follow the directives ofthe Trustee and the Nebraska Investment Council. Whenacting in such capacity, the Program Manager will have noliability to you or any other Beneficiary of this Agreement.
(e) You acknowledge and agree that participation in the NESTAdvisor Plan does not guarantee that any Beneficiary: (i) will beaccepted as a student by an Eligible Educational Institution;(ii) if accepted, will be permitted to continue as a student;(iii) will be treated as a state resident of any state for tuitionpurposes; (iv) will graduate from any Eligible EducationalInstitution; or (v) will achieve any particular treatment underapplicable state or federal financial aid program. You alsoacknowledge and agree that none of the State of Nebraska,the Trust, the Trustee, the Program Manager or any otheradviser or consultant retained by or on behalf of the Trustmakes any such representation or guarantee.
(f) You acknowledge and agree that no account will be used ascollateral for any loan. Any attempted use of an account ascollateral for a loan will be void.
(g) You acknowledge and agree that the Trust will not loan anyassets to you or the Beneficiary.
(h) You acknowledge and agree that the Trust is established andmaintained by the Treasurer of the State of Nebraska, pursuantto state law, and is intended to qualify for certain federalincome tax consequences under Code Section 529. You furtheracknowledge that such federal and state laws are subject tochange, sometimes with retroactive effect, and that neither theState of Nebraska, the Trust, the Trustee, the ProgramManager nor any adviser or consultant retained by the Trustmakes any representation that such state or federal laws willnot be changed or repealed.
(i) You acknowledge and agree that the Trust is the record ownerof the shares of any underlying investments in which eachInvestment Option is invested and that you will have no rightto vote, or direct the voting of, any proxy with respect to suchshares.
(j) If you are establishing an account as a custodian for a minorunder UGMA/UTMA, you understand and agree that youassume any responsibility for any adverse consequencesresulting from the establishment of an account.
(k) You understand and agree that your account and thisAgreement are subject to the rules and regulations as theState Treasurer may promulgate in accordance with Nebraskalaw. You also understand and agree that all decisions andinterpretations by the Trustee the Nebraska InvestmentCouncil, or the Program Manager in connection with the Planshall be final and binding on you and your Beneficiary and anysuccessors.
Section 5. Fees and Expenses. The Trust will make certaincharges against each account in order to provide for the costs ofadministration of the accounts and such other purposes as theTrustee shall determine appropriate.
(a) Program Management Fee. Each Investment Option is subjectto a program management fee at an annual rate of 0.25%(0.18% for the Bank Savings Static Investment Option) of theaverage daily net assets, which is accrued daily and reflected inthe price of each Investment Option.
(b) Investment Management Fees. You acknowledge and agreethat each of the underlying investments also may haveinvestment management fees and other expenses, which willbe disclosed or made available on an annual basis.
(c) State Administration Fee. Each Investment Option is subject toa state administration fee at an annual rate of 0.02% of theaverage daily net assets, which is accrued daily and reflected inthe price of each Investment Option.
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(d) Change in fees. You acknowledge and agree that the chargesdescribed above may be increased or decreased as theTrustee and Nebraska Investment Council shall determine tobe appropriate.
(e) Sales Loads, Redemption Fees, and Administrative Fees. Anaccount is subject to the fees set forth in the ProgramDisclosure Statement.
Section 6. Necessity of Qualification. The Trust intends toqualify for favorable federal tax treatment under CodeSection 529. You agree and acknowledge that qualification underCode Section 529 is vital and agree that the Trustee may amendthis Participation Agreement upon a determination that such anamendment is required to maintain such qualification.
Section 7. Reporting. The Trust, through the ProgramManager, will make quarterly reports of account activity and thevalue of each account. Account information can also be obtainedvia the Plan’s secure website.
Section 8. Account Owner’s Indemnity. You recognize thateach account will be established based upon your statements,agreements, representations and warranties set forth in thisParticipation Agreement and the Enrollment Form. You agree toindemnify and to hold harmless the Trust, the Trustee, theNebraska Investment Council, the Nebraska State InvestmentOfficer, the Program Manager and its affiliates, First NationalCapital Markets, Inc. (the “Distributor”) and any representatives ofthe Trust, the Trustee, the Program Manager, or the PrimaryDistributor from and against any and all loss, damage, liability orexpense, including costs of reasonable attorneys’ fees to whichthey may be put or which they may incur by reason of, or inconnection with, any breach by you of your acknowledgments,representations or warranties or any failure of you to fulfill anycovenants or agreements set forth herein. You agree that allstatements, representations and warranties will survive thetermination of your account.
Section 9. Amendment and Termination. Nothingcontained in the Trust or this Participation Agreement shallconstitute an agreement or representation by the Trustee oranyone else that the Trust will continue in existence. At any time,the Trustee may amend this Participation Agreement or suspendor terminate the Trust by giving written notice of such action tothe account owner, so long as, after the action, the assets in youraccounts are still held for the exclusive benefit of you and yourBeneficiaries.
Section 10. Governing Law. This Agreement shall begoverned and interpreted in accordance with the laws of the Stateof Nebraska. All parties agree that exclusive venue and jurisdictionfor any legal proceedings related to this Participation Agreementor the NEST Advisor Plan shall be in the State of Nebraska.
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NEST Advisor College Savings PlanP.O. Box 30277Omaha, NE 68103-1377
888.659.NEST (6378)www.NEST529Advisor.com
Nebraska Educational Savings TrustAdvisor College Savings PlanProgram Disclosure Statement
March 1, 2020
NEADVPDS0320
