<Presenter Name>
OppenheimerFunds Inc.| <Insert Date>
Agenda
• College Savings Opportunity
• Advantages of a 529 Plan
• Bright Start College Savings
Some states offer favorable tax treatment to their residents only if they invest in the state’s own plan. Non-residents of Illinois should consider whether their state offers its residents a 529 Plan
with alternative tax advantages and should consult with a tax advisor about any state or local taxes. Investments in the plan are subject to market risk. You may lose money by investing in the plan.
College Savings Opportunity
College Savings Opportunity
Value of a College Degree
Invest for a Lifetime1
$120,000
Some College
$100,000
College is Worth It
High School Diploma
$99,707
Bachelor's or Higher Degree
$80,000
$58,258
$60,000
$48,637
The $99,707 median family income for
families headed by a four-year college
graduate was more than twice the
median income for families headed by
a high school graduate (according to a
recent study).1
$40,000
College Pays
$20,000
$0
Annual Median Family Income
1. Source of chart data: The College Board, “Trends in College Pricing,” 2010
Families with a college degree earn
more than twice the average income than
1
those with only a high school diploma.
College Savings Opportunity
Education Costs Outpace Inflation
The Future: The Rising Cost of a Four-Year Education
$500,000
Public College
$419,851
Private College
$400,000
$270,639
$300,000
$210,973
$174,457
$200,000
$100,000
$135,995
$87,664
$0
2010-2011
2019-2020
2028-2029
The College Board—Trends in College Pricing,
2010. Average college costs include tuition,
fees, books and supplies, room and board,
transportation and other expenses as well as
the assumed 6% annual rate of increase. This
illustration uses the “Average Estimated
Undergraduate Budgets, 2010-2011
(Enrollment-Weighted)” figures to project the
hypothetical future costs.
College Savings Opportunity
Help Maximize Your Savings
Invest for a Lifetime
$150,000
The money you start saving
today can grow over time,
potentially creating more money
to pay for higher education
expenses in the future
$75 per month contribution
$150 per month contribution
$300 per month contribution
$100,000
$50,000
$0
10 Years
15 Years
20 Years
The hypothetical example shown illustrates the future value of
different regular monthly investments over different time periods.
It also assumes an annual effective investment return of 5%. This
illustration does not represent the performance of any specific
account in the Bright Start College Savings Program and does not
reflect any taxes, fees or sales charges that may apply. If taxes,
fees, or sales charges were taken into account, returns would have
been lower. Returns will vary and different investments may
perform better or worse than this example. Such automatic
investment plans do not assure a profit or protect against losses in
declining markets. Before investing, investors should evaluate
their long-term financial ability to participate in such a plan.
Advantages of a 529 Plan
Advantages of a 529 Plan
Growth Potential
The Benefits of Tax-free Growth
$30,000
Tax-Advantaged Account
Taxable Savings Account
$20,000
$24,066
$18,096
$10,000
$0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18
Year
• Earnings have the potential
to grow completely federal
income tax-free
• Account balances may grow
faster than taxable
investments
• Qualified withdrawals
are federal tax-free1
1. Non-qualified withdrawals are subject to ordinary federal and
any applicable state income tax and an additional 10% federal tax.
In some states, non qualified withdrawals are also subject to
recapture of previous state tax deductions.
This hypothetical illustration assumes an initial investment of
$10,000 and a 5% annual rate of return. The taxable account
assumes a 28% federal and 5% state tax rate. The illustration does
not represent the performance of any specific account or
investment and does not reflect any plan fees or sales charges that
may apply. If such fees or sales charges were taken into account,
returns would have been lower.
Advantages of a 529 Plan
The Power of Compounding
Growth of monthly investments over 18 years1
$200,000
$150
$173,332
$250
$500
$100,000
$86,666
$52,000
$0
1. This chart is for illustrative purposes only
and does not predict or depict the returns on
any investments. The hypothetical example
shows incremental investments of $150, $250
and $500 per month. It assumes an annual
rate of return of 5% with no fluctuation in
principal. The example also assumes the
reinvestment of any distributions. It does not
reflect the effects of taxes, fees and expenses
and assumes that the investments are made
at the beginning of each month. If taxes, fees
and expenses were taken into account,
results would have been less.
Such automatic investment plans do not
assure a profit or protect against losses in
declining markets. Before investing, investors
should evaluate their long-term financial
ability to participate in such a plan.
Advantages of a 529 Plan
Estate Planning Benefits
Estate Planning Advantages
• Reduction of estate tax
• Contributions are considered completed gifts; excluded from the
contributor’s taxable estate
Ability to Accelerate Annual Gift Tax Exclusion
• Contribute up to $65,000/child in a single year ($130,000/couple1)
to take advantage of five years worth of tax-free gifts at one time
1. Account owners cannot make another tax-free gift to the same beneficiary for five years from the original contribution. If the account owner dies within five years of the funding date, a prorated
portion of the contribution allocable to the remaining years in the five-year period, beginning with the year after the contributor’s death, will be included within his or her estate for federal estate
tax purposes. Investors should consult their tax advisor.
Advantages of a 529 Plan
Contribute Your Way
No income level restrictions or age limitations
•
Lump Sum
– Contribute up to $320,000 per beneficiary1
• Automatic Investing2
– Flexibility to contribute on your schedule
• Fund as Many Accounts as You Want
– Anyone, including family and friends, can contribute (parent, grandparent,
relative or friend) but only account owners may direct transfers, rollovers,
investment changes, withdrawals, and Designated Beneficiary changes
– Can even set up account for yourself
1. All accounts for the benefit of the same Designated Beneficiary within all Illinois 529 Programs will be combined to determine whether this balance has been reached.
2. Such automatic investment plans do not assure a profit or protect against losses in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in
such a plan.
Advantages of a 529 Plan
You’re in Control
Account owner maintains control over assets
• Select and change beneficiary at any time
Withdrawals
• Qualified withdrawals
• Nonqualified withdrawals
• Nonqualified withdrawals without penalty
1. The Account Owner may change the Designated Beneficiary without incurring a tax penalty if the new Designated Beneficiary is a member of the family of the current Designated Beneficiary. See
the Program Disclosure Statement for more information.
Advantages of a 529 Plan
Flexibility
Use at any accredited public or private
post-secondary institution
• Two- and four-year undergraduate programs
• Vocational and technical schools
• Graduate, professional, medical & law schools
Applies to a wide range of Qualified Expenses
1
• Tuition and fees
• Room and board
• Books, supplies & special equipment
1. Non-qualified withdrawals are subject to ordinary federal and any applicable state income tax and an additional 10% federal tax. In some states, non-qualified withdrawals are also subject to
recapture of previous state tax deductions.
College Savings Opportunity
Comparing Higher Education Savings Options
Savings Vehicles
Tax Implications
Attributes
Section 529
Savings Plans
Any earnings
1
grow tax-free
•
•
•
•
•
•
•
Coverdell Education
Any earnings
1
grow tax-free
• Lowest annual contribution limit ($2,000)
• Low weighting in federal financial aid calculations
• Income restrictions
Section 529 Prepaid
Tuition Plan
Any earnings
grow tax-free1
• No investment control
• Funds may not be transferable to out-of-state schools
• Low weighting in federal financial aid calculations if
parent is account owner
UGMA/UTMA
A portion of
earnings are taxable
at minor’s rate
1. Tax-free earnings as long as withdrawals are used for qualified higher education expenses.
High contribution limit
Control over assets
Change beneficiary at any time
Estate and gifting benefits
Covers a variety of expenses
Low weighting in federal financial aid calculations
No income restriction
• Minors gain control at a certain age and can use assets for any purpose
• Earnings are taxable
• High weighting in financial aid calculations – treated as student’s asset
(20% in 2007)
Bright Start College Savings
Bright Start College Savings
Why Bright Start
Multi-manager approach
• Offers expertise from industry professionals across asset classes
Consistency
• Competitive returns over time and across asset classes
Investment Flexibility
• Age-Based Portfolios
• Static Portfolios
Bright Start College Savings
Managed by OFI Private Investments,
a subsidiary of OppenheimerFunds, Inc.
Stability of Large Corporation with Agility to be Independent
and Innovative
• Independent entrepreneurial investment teams
• Resources of a top-tier asset manager
Experience
• Over 50 years of investment experience
Distinct Investment Oversight
• Low correlation and overlap between investment styles
Bright Start College Savings
Choose how you’d like to contribute
High Contribution Maximum
• Maximum contribution limit of $320,000 per
designated beneficiary
1
Investment Minimums
• Blended Managed and Index Portfolios - $25 initial investment
Subsequent Contributions
• $15 for subsequent
1. All accounts for the benefit of the same Designated Beneficiary within all Illinois 529 programs will be combined to determine whether this balance has been reached.
Bright Start College Savings
Select the investment approach
Static Portfolios
■ Equity
1,2
Portfolio Allocation
Portfolio Objective
1, 2
-OFIPI Rising Dividends3
-OFIPI Value3
-OFIPI Capital Appreciation3
-OFIPI Main Street Small Cap3
-OFIPI Baring Focused EAFE
Equity3
-Oppenheimer Developing
Markets Fund4
■ Fixed Income
6
-American Century Diversified
Bond Fund4
-Oppenheimer International Bond
Fund Y4
-OFIPI Enhanced Short Term
Government Index Portfolio3
■ Money Market
-Oppenheimer Institutional
Money Market Fund4,5
A Portfolio may invest its assets in mutual funds; have its assets
managed in a separate account by OFI Private Investments for the
benefit of the Bright Start Trust; or a combination of the two. Each
underlying investment has its own risks. For example, the prices of
small-cap stocks are generally more volatile than large company
stocks. There are special risks inherent to international investing,
including currency, political, social and economic risks. Investments in
growth stocks may be more volatile than other securities. With value
investing, if the marketplace does not recognize that a security is
undervalued, the expected price increase may not occur. Fixed income
investing primarily entails credit and interest rate risks. When interest
rates rise, bond prices generally fall, and the underlying fund’s or
account’s value can fall. Diversification does not guarantee profit or
protect against loss. For more details on the Portfolio investments and
associated risks, please see the Program Disclosure Statement.
1. Once you invest in a portfolio, your
money will remain in that portfolio until
you instruct the Plan to move it to another
portfolio or approach. None of these
portfolios are designed to provide any
particular total return over any period or
investment time horizon. You should work
with your financial advisor to determine
which portfolios are appropriate to your
situation.
2. The actual mix of assets in portfolios that
invest in more than one underlying
investment will vary over time due to
market performance and will be rebalanced
at least quarterly to help maintain the
portfolio’s target asset allocation. None of
the portfolios are designed to provide any
particular total return over any particular
time period or investment time horizon.
Account owners own interests in a
portfolio; they do not have a direct
beneficial interest in the separate accounts,
mutual funds or other instruments held by
that portfolio, and therefore, do not have
the rights of a shareholder or owner of
those investments.
3. These investment strategies are not
mutual funds and are described more fully
in the Program Disclosure Statement.
4. Registered mutual funds.
5. An investment in the Fund is neither
insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency. Although the Fund
seeks to preserve the value of your
investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
Bright Start College Savings
Investment Options
Advisor-sold Actively-Managed Age Based Portfolios1
Portfolio Allocation
Portfolio Objective
■ Equity
1, 2
-OFIPI Rising Dividends2
-OFIPI Value2
-OFIPI Capital Appreciation2
-OFIPI Main Street Small Cap2
-OFIPI Baring Focused
EAFE Equity2
-Oppenheimer Developing
Markets Fund3
■ Fixed Income
5
-American Century
Diversified Bond Fund3
-Oppenheimer
International Bond Fund Y3
-OFIPI Enhanced Short Term
Government Index Portfolio2
■ Money Market
5
-Oppenheimer Institutional
Money Market Fund3,4
■ Other
-Fixed Income Securities
plus Insurance Wrapper5
A Portfolio may invest its assets in mutual funds; have
its assets managed in a separate account by OFI Private
Investments for the benefit of the Bright Start Trust; or
a combination of the two. Each underlying investment
has its own risks. For example, the prices of small-cap
stocks are generally more volatile than large company
stocks. There are special risks inherent to international
investing, including currency, political, social and
economic risks. Investments in growth stocks may be
more volatile than other securities. With value
investing, if the marketplace does not recognize that a
security is undervalued, the expected price increase
may not occur. Fixed income investing primarily entails
credit and interest rate risks. When interest rates rise,
bond prices generally fall, and the underlying fund’s or
account’s value can fall. Diversification does not
guarantee profit or protect against loss. For more
details on the Portfolio investments and associated
risks, please see the Program Disclosure Statement.
1. The actual mix of assets in portfolios that invest in
more than one underlying investment will vary over
time due to market performance and will be rebalanced
at least quarterly to help maintain the portfolio’s target
asset allocation. None of the portfolios are designed to
provide any particular total return over any particular
time period or investment time horizon. Account
owners own interests in a portfolio; they do not have
a direct beneficial interest in the separate accounts,
mutual funds or other instruments held by that
portfolio, and therefore, do not have the rights of a
shareholder or owner of those investments.
2. These investment strategies are not mutual funds
and are described more fully in the Program Disclosure
Statement.
3. Registered mutual funds.
4. An investment in the Fund is neither insured or
guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
5. See the Program Disclosure Statement for details.
Start Sooner rather Than Later
• Help Maximize Your Contributions
Advantages of a 529 Plan
• Estate Planning & Growth Potential
Bright Start Features & Benefits
• Investment Experience & Consistency
Next Steps
• Consider which type of college your child will attend
• Determine your projected college costs and financial
aid eligibility
• Set your goals
• Talk to your financial advisor about Bright Start
• Start saving now
Questions?
Visit our website at brightstartadvisor.com
Call 1.877.43.BRIGHT (1.877.432.7444)
This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice,
or for use to avoid penalties that may be imposed under U.S. federal tax laws. Contact your attorney or other advisor regarding
your specific legal, investment or tax situation.
The Bright Start® College Savings Program is administered by the State Treasurer of the State of Illinois and distributed by
OppenheimerFunds Distributor, Inc. OFI Private Investment Inc., a subsidiary of OppenheimerFunds, Inc., is the program
manager of the Plan. Some states offer favorable tax treatment to their residents only if they invest in the state's own plan.
Investors should consider before investing whether their or their designated beneficiary’s home state offers any state tax or
other benefits that are only available for investments in such state's qualified tuition program and should consult their tax
advisor. These securities are neither FDIC insured nor guaranteed and may lose value.
Before investing in the Plan, investors should carefully consider the investment objectives, risks, charges and expenses
associated with municipal fund securities. The Program Disclosure Statement and Participation Agreement contain this and
other information about the Plan, and may be obtained by visiting brightstartadvisor.com or calling 1.877.43.BRIGHT
(1.877.432.7444). Investors should read these documents carefully before investing.
®
Bright Start College Savings Program is distributed by OppenheimerFunds Distributor, Inc., Member FINRA, SIPC
Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008
© 2012 OppenheimerFunds Distributor, Inc. All rights reserved.
AV0000.421.0912 November 12, 2012