NC 529 Plan Unveils "Protected" Equity Fund

September 3, 2002 ( - Investors contemplating a college savings investment in the Tar Heel state now have a new stock fund option with a principal and earnings guarantee.

North Carolina’s National College Savings Program announced in a press release that it was offering the Protected Stock Fund with a guarantee provided by Metlife. The 529 plan said the product was aimed at customers who wanted to protect their principal and get a reasonable market return from the equity markets.

According to the press release, the Protected Stock Fund requires a lump sum minimum investment contribution of $1,000 for a five-year period. The fund then invests in an insurance contract issued by MetLife that guarantees principal plus the greater of 3% annualized interest or 70% of the price return (which is the return without dividends) of the S&P 500 Index at the end of the five-year period.

The guarantee is not made directly to participants but to North Carolina’s National College Savings Program. The program then credits the returns to participants.

At the end of the five-year investment period, the participant’s contributions and earnings mature, then automatically move into the Dependable Income Fund, North Carolina’s National College Savings Program investment option managed by the State Treasurer.
The savings participant then can choose to leave it in the Dependable Income Fund, withdraw it for qualified higher education expenses or transfer it to another investment option offered under the program, including reinvesting in the Protected Stock Fund for another five-year period.

The addition of the Protected Stock Fund brings the total to five investment options in North Carolina’s program available directly through the Program Administrator,
More information is available on North Carolina’s National College Savings Program Web site at .