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Dear ScholarShare 529 Plan Account Owner,

INSIDE

There are now more than 310,000 ScholarShare 529 college savings accounts, which means more and more families are wisely investing in their higher education goals. That collective commitment to the ScholarShare 529 College Savings Plan has resulted in over $8.4 billion in plan assets as of 10/31/18. We couldn’t be more pleased that in this, our 19th year, we are witnessing the plan continuing to help families pay higher education expenses with contributions and earnings from years of dedicated saving.

2

California news in  higher education and industry

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 ow can California better H prepare its students to enter the 5th largest economy in the world?

3

 alifornia’s new community C college breaks ground – Online.

3

E mployers lend a hand in making college savings stress-free.

4

Q&A  with ScholarShare 529 spokeskid, Taj Mishra

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The  best birthday or holiday gift? An eGift

Annually, in our Report on Higher Education, we proudly provide you with updates to the plan and information on investment performance, current college cost trends, and how to contact your legislative representative. This issue covers those topics, plus several feature articles, including a Q&A with our beloved 10-year-old spokeskid, Taj Mishra, and a look at how California is currently preparing students to enter the 5th largest economy in the world. On behalf of the ScholarShare Investment Board, thank you for investing in California’s 529 College Savings Plan and in your family’s bright future. If you have questions regarding your account or about the plan in general, please call our toll-free number, 800.544.5248, or visit ScholarShare529.com . We welcome your questions and comments.

Best,

Julio Martinez Executive Director ScholarShare Investment Board

5-6 Historical 

performance

6

Undergraduate  California resident tuition costs


California news in higher education and industry. How can California better prepare its students to enter the 5th largest economy in the world? THIS YEAR, California surpassed Britain as the globe’s 5th largest economy and the state is engaging in multiple efforts to prepare our next generation to power the Golden State. The first order of business? Increasing the number of graduates produced by our institutions of higher education. By 2025, California is expected to fall short of more than 2 million degrees and credentials necessary to fuel its workforce and keep the state’s economy growing. One way the state is attempting to close this “degree gap” is by better aligning regional business needs with the academic programs offered by local colleges and universities. Doing What Matters for Jobs and the Economy and Strong Workforce Program are two statewide initiatives designed to improve student completion rates and prepare California’s workforce for high-demand jobs in order to better serve the needs of changing regional economies. These programs have already created productive partnerships between regional colleges and employers. One emerging partnership in the Sacramento area between the healthcare provider Dignity Health and the Los Rios Community College District (LRCCD) is assisting students

aiming to enter the region’s health field. Specifically, Dignity Health is working closely with LRCCD to accelerate the academic preparation and training students need to enter the field in the coming years. Another example of a collaborative effort between educational institutions and the business community is one launched by the Bay Area Council – this time in the area of aviation, an industry scrambling to hire qualified workers. The Council is working with local community colleges to better prepare students to receive their Federal Aviation Administration (FAA) certification and be able to apply for hundreds of in-demand careers that only require a two-year education and certification. To continue helping lead the global economy and to fill the pipeline with qualified workers with relevant skill sets, California will need more innovative successful initiatives like these. For students willing to stay abreast of the skills in demand, the Golden State’s job outlook most certainly looks bright. California Economic Summit , March 1, 2018: “California aims to retool its workforce for the future of work”; The Sacramento Bee, May 4, 2018: “California now world’s fih-largest economy, bigger than Britain”

Businesses leading the state. The top California industries in 2018 turn out to be as diverse as the state they thrive in.

Agriculture

Tourism

Technology

Education

Forestry

Professional Spos

Airpos and Seapos

Livability, April 8, 2018: “Top Industries in California”

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California’s new community college breaks ground – online. Governor Brown has spearheaded the opening of the 115th community college: a statewide, online-only public college focused on sho, career-oriented ceificates. Opening fall 2019, the college’s first three programs will prepare students for careers in medical coding and information technology and supervisor roles in fields such as retail and government. College officials say each of the fields has a shoage of workers and requires education beyond high school, though not necessarily a full degree.

Tuition for the programs will be based on the community college system’s rate of $46 per credit, the lowest fee level of any community college in the country. EdSource, August 2, 2018: “California’s online community college will break new ground in higher ed”

Employers lend a hand in making college savings stress-free. IT’S NO SECRET THAT COLLEGE IS EXPENSIVE. These rising costs are creating financial burdens for students and parents alike. Yet, many families still believe in the value of post-secondary education, and their employers agree. Through ScholarShare 529’s Workplace Savings Program, nearly 1,000 California companies are helping families to save for higher education as part of their employee benefits packages. These committed employers represent 11 of the state’s largest businesses and 8 of the 10 best companies to work for in the U.S., according to Forbes’ list of America’s Best Employers 2018. For companies not yet offering a workplace college savings option, here are a few advantages of and considerations for 529 workplace savings plans: • Small investment, with a meaningful payoff. College savings programs, such as ScholarShare 529, are easy and free for employers to manage, yet potentially worth thousands of dollars to employees through 100 percent tax-free growth. • Performance and fees. 529 college savings plans offer tax benefits, but they aren’t all created equal. California’s ScholarShare 529 College Savings Plan has a strong track record of investment returns and competitive fees. • Effortless college savings. A 529 workplace savings program makes it easy for employees to save for higher education through direct deposit.

• A recruitment and retention tool. More than 70 percent of families who want to open a 529 plan don’t know the steps involved.* By serving as a conduit to college savings, employers are delivering a potentially attractive recruitment and retention tool. • Fortify fiscal health and the workforce. A 529 plan increases access to college by minimizing financial barriers. This translates to more Californians accessing higher education and reduces the skills gap in the workforce while boosting the state’s fiscal health.

“It didn’t cost the company anything. Being in HR, you want to offer compelling benefits to your employees, and we thought it would be something our employees with college-bound kids would appreciate.” —Tamara McPherson HR manager, System Pavers

Adding a college savings option to a company’s benefits suite can positively and genuinely impact the lives of employees, the workforce and everyone in California. To learn more about the state’s ScholarShare 529 Workplace Savings Program, visit ScholarShare529.com/ employer. *savingforcollege.com: 2016 Annual College Savings Survey

2018 REPORT ON HIGHER EDUCATION

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Q&A with ScholarShare 529 Spokeskid, Taj Mishra IN 2017, ScholarShare 529 introduced “James,” a pint-sized financial guru with a mission to educate California parents on the merits of saving for college in a smart way. Taj Mishra, the 10-year-old actor who plays “James,” along with his parents Arvind and Kim, shared some insights on their experience as ScholarShare 529’s chief brand ambassador.

Q: Taj, how were you selected as the spokeskid for ScholarShare 529? What was that experience like for you? A: I first auditioned for ScholarShare 529 in Los Angeles, where I live. Everyone was so nice during my first audition that I was super excited to get the callback. Then ScholarShare 529 asked me to fly to Sacramento for one last audition. After that, I finally got the part and have loved being “James”! It is fun to transform into a financial whiz kid just by getting my haircut, putting on some nicer clothes, and, of course, the bow tie. And I even got to meet the Treasurer of California!

Q: Taj, have you learned much about saving for college since your time as the spokeskid? What is your advice for kids about saving? A: When I first got the script, I didn’t even know what a stock was. This is kind of embarrassing, but I thought it was the same thing as a stocking! So yes, I have certainly learned a lot. Tax-free growth is key to maximizing your savings. I also learned about age-based portfolios and, after a little explaining, how compound interest works. My advice for kids is to practice saving. If you are like me, it doesn’t come naturally when there are so many video games to buy! We need to know how to manage our money now. Start saving just a little bit, fifty cents, one dollar, five dollars—it all adds up!

Q: Arvind and Kim, how has being ScholarShare 529’s spokeskid changed Taj? Your family? A: Taj has really taken an interest in his own college savings account. He wants to know how much he has and offers advice on how we should keep saving. Actually, we have all become brand ambassadors as we talk to friends and family with kids and they ask about Taj’s latest commercials. We make sure to stress the importance of saving for college and beyond, using a ScholarShare 529 account.

The best birthday or holiday gift? An eGift. With your ScholarShare 529 account, you can easily turn the next birthday or holiday season into a way to build up funds for your child’s bright future. With the eGift option, you get a turnkey, secure way to ask friends and family for gift contributions. The service is included when you open your account and is free of charge. Visit ScholarShare529.com for step-by-step instructions.


Historical Performance

Fund Performance for the Period Ending October 31, 2018 The following tables show the returns of each Investment Poolio over the time period(s) indicated. For purposes of this discussion, each age band in the age-based Investment Poolio is considered a separate Investment Poolio. The tables below compare the average annual total return of an Investment Poolio (aer deducting fees and expenses) to the returns of a benchmark. The benchmark included in the tables combines the benchmark(s) for the underlying investment(s) in which an Investment Poolio invests weighted according to the allocations to those underlying investment(s) and adjusted to reflect any changes in the allocations, benchmark(s) or both during the relevant time period. Benchmarks are not available for investment, are not managed and do not reflect the fees or expenses of investing. Past peormance is not a guarantee of future results. Peormance may be substantially affected over time by changes in the allocations and changes in the investments in which an Investment Poolio invests. Investment returns and the value of your Account will fluctuate, so that your Account, when redeemed, may be woh more or less than the amounts contributed to your Account.

AGE-BASED PORTFOLIO OPTIONS

INCEPTION DATE

YEAR TO DATE

1 YEAR

3 YEAR

5 YEAR

10 YEAR

SINCE INCEPTION

1.60%

8.45%

7.49%

-

10.16%

ACTIVE AGE-BASED INVESTMENT PORTFOLIO1 Age Band 0-42

11/04/11

Benchmark Age Band 5-82 Benchmark Age Band 9-10

2

Benchmark Age Band 11-122 Benchmark Age Band 13-142 Benchmark Age Band 152 Benchmark Age Band 16

2

Benchmark Age Band 172 Benchmark Age Band 18+2 Benchmark

-1.01%

-

-1.76%

1.18%

7.46%

6.76%

-

9.13%

11/04/11

-1.00%

1.35%

7.82%

6.97%

-

9.41%

-

-1.71%

0.92%

6.74%

6.18%

-

8.24%

11/04/11

-1.22%

0.91%

6.95%

6.30%

-

8.54%

-

-1.68%

0.64%

6.02%

5.59%

-

7.35%

11/04/11

-1.23%

0.66%

6.24%

5.66%

-

7.70%

-

-1.66%

0.36%

5.29%

5.00%

-

6.46%

11/04/11

-1.30%

0.32%

5.43%

5.00%

-

6.85%

-

-1.65%

0.06%

4.55%

4.39%

-

5.56%

11/04/11

-1.06%

0.27%

4.73%

4.40%

-

5.89%

-

-1.33%

0.05%

3.74%

3.64%

-

4.50%

11/04/11

-0.77%

0.49%

4.16%

3.90%

-

5.21%

-

-1.02%

0.18%

3.30%

3.20%

-

3.89%

11/04/11

-0.52%

0.52%

3.63%

3.36%

-

4.41%

-

-0.55%

0.45%

2.82%

2.68%

-

3.21%

11/04/11

-0.16%

0.71%

3.01%

2.80%

-

3.59%

-

-0.08%

0.73%

2.35%

2.16%

-

2.52%

7.48%

6.86%

-

9.24%

PASSIVE AGE-BASED INVESTMENT PORTFOLIO OPTION

1

Age Band 0-42

11/04/11

Benchmark Age Band 5-82 Benchmark Age Band 9-102 Benchmark Age Band 11-12

2

Benchmark Age Band 13-142 Benchmark Age Band 152 Benchmark Age Band 162 Benchmark Age Band 172 Benchmark Age Band 18+2 Benchmark

-1.59%

1.26%

-

-1.69%

1.20%

7.42%

6.81%

-

9.25%

11/04/11

-1.68%

0.92%

6.83%

6.32%

-

8.39%

-

-1.67%

0.89%

6.70%

6.23%

-

8.36%

11/04/11

-1.61%

0.67%

6.01%

5.69%

-

7.47%

-

-1.66%

0.58%

5.98%

5.63%

-

7.46%

11/04/11

-1.46%

0.45%

5.20%

4.97%

-

6.48%

-

-1.66%

0.25%

5.26%

5.03%

-

6.57%

11/04/11

-1.82%

-0.27%

4.43%

4.35%

-

5.56%

-

-1.67%

-0.09%

4.53%

4.42%

-

5.66%

11/04/11

-1.65%

-0.29%

3.74%

3.70%

-

4.63% 4.59%

-

-1.37%

-0.11%

3.72%

3.67%

-

11/04/11

-1.27%

-0.15%

3.39%

3.35%

-

4.10%

-

-1.05%

0.03%

3.29%

3.22%

-

3.98%

11/04/11

-0.78%

0.24%

2.99%

2.96%

-

3.55%

-

-0.58%

0.33%

2.81%

2.70%

-

3.28%

11/04/11

-0.41%

0.41%

2.58%

2.49%

-

2.95%

-

-0.10%

0.63%

2.34%

2.17%

-

2.58%

11/04/11

1.20%

1.39%

1.28%

1.23%

-

1.31%

GUARANTEED INVESTMENT OPTION INVESTMENT PORTFOLIO1 Principal Plus Interest Portfolio3

2018 REPORT ON HIGHER EDUCATION

5


Fund Performance for the Period Ending October 31, 2018 MULTI-FUND PORTFOLIO OPTIONS

INCEPTION DATE

YEAR TO DATE

1 YEAR

3 YEAR

5 YEAR

10 YEAR

SINCE INCEPTION

11/04/11

-1.01%

1.98%

9.79%

8.59%

-

11.68%

-

-1.87%

1.68%

8.89%

7.90%

-

10.89%

11/04/11

-1.06%

1.25%

7.68%

6.90%

-

9.36%

-

-1.71%

0.92%

6.74%

6.18%

-

8.24%

11/09/11

-1.10%

0.62%

5.57%

5.11%

-

7.09%

-

-1.65%

0.06%

4.55%

4.39%

-

5.69%

11/04/11

-0.17%

0.26%

1.74%

1.75%

-

2.23%

-

-0.12%

0.22%

1.23%

1.23%

-

1.17%

11/08/11

-1.25%

-0.71%

2.32%

2.41%

-

3.40%

-

-1.71%

-1.22%

1.57%

1.91%

-

1.95%

11/10/11

-10.91%

-8.37%

4.64%

1.76%

-

5.42%

-

-10.62%

-7.91%

4.40%

1.71%

-

5.37%

11/04/11

-1.66%

1.77%

8.89%

8.05%

-

11.00%

-

-1.76%

1.77%

8.84%

7.97%

-

11.02%

11/04/11

-1.68%

0.86%

6.73%

6.28%

-

8.35%

-

-1.67%

0.89%

6.70%

6.23%

-

8.36%

11/08/11

-1.68%

-0.14%

4.54%

4.40%

-

5.57%

-

-1.67%

-0.09%

4.53%

4.42%

-

5.61%

11/04/11

-0.45%

-0.27%

1.30%

1.42%

-

1.41%

-

-0.18%

0.06%

1.22%

1.23%

-

1.22%

11/08/11

-1.82%

-1.56%

1.39%

1.76%

-

1.84%

-

-1.82%

-1.52%

1.57%

1.92%

-

2.05%

11/04/11

-10.09%

-8.03%

4.57%

2.01%

-

5.40%

-

-10.58%

-7.99%

4.26%

1.84%

-

5.26%

INVESTMENT PORTFOLIO1 Active Diversified Equity Benchmark Active Growth Benchmark Active Moderate Growth Benchmark Active Conservative Benchmark Active Diversified Fixed Income

Benchmark Active International Equity Benchmark Passive Diversified Equity Benchmark Passive Growth Benchmark Passive Moderate Growth Benchmark Passive Conservative Benchmark Passive Diversified Fixed Income

Benchmark Index International Equity Benchmark

SINGLE-FUND PORTFOLIO OPTIONS INVESTMENT PORTFOLIO1 Social Choice

11/04/11

1.06%

5.06%

10.72%

9.55%

-

12.53%

Benchmark

-

2.43%

6.60%

11.27%

10.81%

-

13.79%

Index Bond

11/04/11

-2.53%

-2.27%

0.82%

1.65%

-

1.60%

Benchmark

-

-2.38%

-2.05%

1.04%

1.83%

-

1.84%

11/04/11

2.90%

7.25%

11.41%

11.22%

-

13.90%

-

3.01%

7.35%

11.52%

11.34%

-

14.04%

11/04/11

2.38%

6.52%

11.23%

10.74%

-

13.69%

-

2.43%

6.60%

11.27%

10.81%

-

13.79%

Index U.S. Large Cap Equity

Benchmark Index U.S. Equity Benchmark

The peormance data quoted represent past peormance and are net of all fees and expenses. Past peormance is not a guarantee of future results. Your returns and the principal value of your account will fluctuate so your investment may be woh more or less than the original value when you withdraw your money. Current peormance may be lower or higher than the peormance quoted above. Investors cannot invest directly in a benchmark. 1

All peormance figures in the table, with the exception of the peormance figures less than one year, represent the average annual compound rate of total return. All figures less than one year represent cumulative, non-annualized returns.

2

Beneficiaries are moved from one Age Band to the next Age Band on the first “rolling date” following their fih, ninth, eleventh, thieenth, fieenth, sixteenth, seventeenth and eighteenth bihdays. The “rolling dates” are March 20, June 20, September 20 and December 20 (or the first business day thereaer).

3

The Principal Plus Interest Poolio seeks to preserve capital and provide a stable return. The assets in the poolio are allocated to a funding agreement issued by TIAA-CREF life to the Board, which is the policyholder under the agreement. This funding agreement provides for a return of principal plus a guaranteed rate of interest and allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The interest rate guarantee is made to the Board only, and not to account owners or beneficiaries.

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Undergraduate California Resident Tuition Costs CA COMMUNITY COLLEGES

CSU SYSTEM

UC SYSTEM

2017-2018

$1,104

$5,742

$12,630

2018-2019

$1,104

$5,742

$12,570

$0

$0

-$60

Annual Change

Source: 2018 CCC (tuition for CA resident / full-time student) hp://icanaffordcollege.com/en-us/aboutcommunitycolleges/collegecosts.aspx 2018 CSU (systemwide tuition fee) hps://www2.calstate.edu/aend/paying-for-college/Pages/campus-costs-of-aendance.aspx 2018 UC (systemwide tuition and fees for CA resident) hp://admission.universityofcalifornia.edu/paying-for-uc/tuition-and-cost/ Note: These tuition costs represent the estimated costs of aending one year of college as a full-time student at each respective institution. These estimates do not include the cost of additional campus-based fees, which can total as much as an additional $1,500 each year. In all, your total costs will vary depending on your personal expenses and the campus you aend.

Transform your tax refund. Before you get tempted by an impulse buy, remember that your refund can go so much further if you invest it in education. We have worked with the California Franchise Tax Board to make it easy to deposit your tax refund directly into your ScholarShare 529 account. What you’ll need: • ScholarShare 529 routing number • Your ScholarShare 529 account number • Your investment portfolio number Visit ScholarShare529.com/manage/ #contributions-withdrawals for details.

Your State Representative ScholarShare 529 College Savings Plan provides all account owners with contact information for their state legislators annually, as required by law. If you would like to contact your state representative about your ScholarShare 529 account, visit findyourrep. legislature.ca.gov to find the appropriate address and phone number, or contact our office at 916.651.6380.

2018 REPORT ON HIGHER EDUCATION

7


18SCH042_takeOneBrochure_050118v1_PRINT.pdf

915 Capitol Mall, Room 590 Sacramento, CA 95814

1

5/2/18

SMART SAVERS

choose ScholarShare 529.

Tax-free growth can mean up to 25% more for your higher education expenses. This hypothetical example assumes an initial contribution of $5,000, monthly contributions of $50 for 18 years, and an average annual return of 7% compounded monthly for an effective rate o  f 7.23%. Tax calculations assume the maximum federal capital gains tax of 20% and the maximum state marginal tax rate of 13.3%. At the end of the accumulation period the taxable account would be worth $31,290. The ScholarShare 529 account would be worth 25% more than that amount or $39,049. Assumes taxes are paid in lump sum at the end of the accumulation period, and state taxes are not federally deductible. This is only an example and you should expect that your performance and personal tax situation may vary. Past performance does not guarantee future results.

To learn more about the California 529 College Savings Plan, its investment objectives, tax benefits, risks, and costs, please see the Disclosure Booklet at ScholarShare529.com. Read it carefully. Check with your home state to learn if it offers tax or other benefits such as financial aid, scholarship funds or protection from creditors for investing in its own 529 plan. Consult your legal or tax professional for tax advice, including the impact of the new federal tax changes. Investments in the Plan are neither insured nor guaranteed and there is the risk of investment loss. If the funds aren’t used for qualified higher education expenses, a 10% penalty tax on earnings (as well as federal and state income taxes) may apply. Non-qualified withdrawals may also be subject to an additional 2.5% California tax on earnings. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA and SIPC, distributor and underwriter for the California 529 College Savings Plan. All social media platforms are managed by the State of California. 677447

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Report on Higher Education 2018  

Report on Higher Education 2018