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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. .... [2]
Post-Effective Amendment No. .... [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [X]
Amendment No. .... [ ]
(Check appropriate box or boxes.)
THE VANTAGEPOINT FUNDS
(Exact Name of Registrant as Specified in Charter)
777 North Capitol Street, NE, Ste. 600
Washington, DC 20002-4240
(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, including Area Code -(202)962-4621
(Name and Address of Agent for Service)
Paul F. Gallagner, Secretary
777 North Capitol Street, NE, Ste. 600
Washington, DC 20002
Approximate Date of Proposed Public Offering -- as soon as possible after this
registration statement becomes effective.
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PRELIMINARY PROSPECTUS
----------------------------------------------------
JANUARY -, 1998
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
U.S. SECURITIES AND EXCHANGE COMMISSION, BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE VANTAGEPOINT FUNDS
, 1999
The Vantagepoint Funds is a no-load diversified open-end management investment
company. The Vantagepoint Funds operates as a "series" investment company
offering thirteen distinct investment portfolios (the "Funds"), each Fund having
different investment objectives. The Index Funds offer two classes of shares,
Class I and Class II. The other Funds offer a single class of shares.
This prospectus gives you information about the Vantagepoint Funds that you
should know before investing. You should read this prospectus carefully and
retain it for future reference. It contains important information, including how
each Fund invests and the services available to shareholders.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
[THE VANTAGEPOINT FUNDS LOGO]
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY 1
The Funds 1
FEE TABLES 3
INVESTMENT POLICIES, INVESTMENT
OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RELATED RISKS 6
Investment Policies 6
Investment Objectives of the Funds 6
RISKS OF INVESTING IN THE FUNDS 11
Investment Limitations 12
MANAGEMENT OF THE FUND 12
Directors and Officers 13
SHAREHOLDER INFORMATION 15
Share Accounting for All Funds 15
Valuation of Funds 15
Reinvestment of Earnings 15
Pricing and Timing of Transactions 15
Reporting to Investors 16
PURCHASES AND REDEMPTIONS 16
Purchases 16
Purchases by Employee Benefit Plans 16
Exchanges and Allocations Among
Funds 17
Exchanges by Telephone 17
VantageLine 17
VantageLink 17
Purchases by IRA Investors 18
TAXATION 18
YEAR 2000 COMPLIANCE 19
</TABLE>
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SUMMARY
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A summary of the investment objectives, principal investment strategies
(including the types of securities held in each Fund) and principal risks of
investing in the Funds is set forth below.
Please refer to the discussion under the heading "Shareholder Information" for
an explanation of how shares may be purchased, exchanged, or redeemed. An
investment in mutual funds is subject to fluctuations in market value, and loss
of the principal amount invested is possible.
THE FUNDS
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AGGRESSIVE OPPORTUNITIES FUND
Investment Objective--primary investment objective is to offer high long-term
capital growth.
Principal Investment Strategy--The principal strategy of the Fund will be to
invest in small-to-medium capitalization U.S. growth companies that are
considered to be "out of favor" in the market.
Principal Risks--The returns on stocks of small-to mid-capitalization companies
tend to be more volatile than the returns on stocks of larger-capitalization
companies, and you should consider the Fund as a long-term investment vehicle.
INTERNATIONAL FUND
Investment Objective--primary investment objective is to offer diversification
and long-term capital growth by investing in the stocks of companies doing
business primarily outside the United States. Investment opportunities are
sought in established foreign markets, and to a lesser extent, in less developed
emerging markets.
Principal Investment Strategy--The Fund will invest at least 65% of its assets
in foreign equity securities.
Principal Risks--Investment in foreign securities entails exposure to the
volatility of returns associated with common stocks as well as the substantial
risks associated with less-developed markets and foreign currencies. The
International Fund might provide a complementary portion of an overall portfolio
that consists mainly of domestic stocks and bonds. You should not consider the
International Fund as a complete investment program.
GROWTH STOCK FUND
Investment Objective--primary investment objective is to offer long-term capital
growth.
Principal Strategy--The Fund's principal strategy is to invest in common stocks
that are considered to have above-average potential to growth. Although the Fund
may invest in all capitalization sizes, it is expected that the emphasis will be
on medium- to large-capitalization growth stocks.
Principal Risk--The Fund's growth stock investment strategy can be expected to
expose it to a greater degree of price and earnings volatility over shorter time
periods than the stock market as a whole.
GROWTH & INCOME FUND
Investment Objective--To attempt to achieve a combination of growth and an
income yield greater than total returns available in the broad stock market.
Principal Investment Strategy--The Fund will attempt to achieve its objective by
investment in dividend-paying stocks and sometimes bonds. Investments may
include both foreign and domestic securities, emphasizing those that pay current
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dividends and offer the potential for earnings growth.
Principal Risks--Investment in the Fund entails the risk of price and earnings
volatility over the short-term.
EQUITY INCOME FUND
Investment Objective--primary investment objective is to offer consistency of
growth, and a comparatively high level of dividend income plus the potential for
moderate share price increases.
Principal Investment Strategy--The Fund will invest in the equity securities of
companies in industries where stocks tend to have higher yields, such as
utilities and energy companies.
Principal Risk--While investment in the Equity Income Fund involves risk, the
Fund's emphasis on income should result in less volatility and risk than is
associated with other types of common stock funds.
ASSET ALLOCATION FUND
Investment Objective--The Fund's primary investment objective is to offer
long-term growth.
Principal Investment Strategy--The Fund will invest in a portfolio actively
allocated among common stocks and index futures contracts, long-term investment
grade corporate bonds, and cash equivalents.
Principal Risk--Because this Fund can and may have a large percentage of its
portfolio invested in an index consisting of common stocks, it should be
considered a long-term investment vehicle with the potential for sudden,
sometimes substantial declines in market value over the shorter term.
U.S. TREASURY SECURITIES FUND
Investment Objective--The Fund's primary investment objective is to offer coupon
income and capital growth.
Principal Investment Strategy--The Fund will invest in intermediate-term U.S.
Treasury Securities and on certain U.S. Government and Agency Securities.
Principal Risks--As with any bond fund, the market prices of the securities held
in the portfolio fluctuate as interest rates change. Generally, the value of a
bond moves in a direction opposite to that of interest rates, and the greater
the duration of the bond, the greater the resulting change in value. The U.S.
Treasury Securities Fund will experience the volatility of an intermediate-
duration fixed income fund.
MONEY MARKET FUND
Investment Objective--The Fund's objective is to seek to obtain the maximum
current income, consistent with maintaining liquidity and a stable share price
of $1.00.
Principal Investment Strategy--The Fund will invest all of its assets in the AIM
Liquid Assets Fund, which invests in high-quality, short-term money market
instruments.
Principal Risk--An investment in the Fund is not 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.
OVERSEAS EQUITY INDEX FUND
Investment Objective--The Fund seeks to provide a portfolio that will
approximate, before fees, the investment characteristics and performance of the
Morgan Stanley Capital International Europe, Australia, and Far East (EAFE)
Index.
Principal Risks--Please refer to the above discussion of risk in the
International Fund.
Principal Investment Strategy--To invest in a sampling of securities that are
included in the EAFE Index that will be designed to match the performance of the
index.
MID/SMALL COMPANY INDEX FUND
Investment Objective--To seek to provide a portfolio that will approximate,
before fees, the investment characteristics and performance of the Wilshire 4500
Index.
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Principal Investment Strategy--To invest in a sampling of securities that are
included in the Wilshire 4500 Index that will be designed to match the
performance of the index.
Principal Risks--The returns on stocks of mid- to small-capitalization companies
tend to be more volatile than the returns on stocks of larger-capitalization
companies, and you should consider the Fund as a long-term investment vehicle.
BROAD MARKET INDEX FUND
Investment Objective--To seek to provide a portfolio that will approximate,
before fees, the investment characteristics and performance of the Wilshire 5000
Index.
Principal Investment Strategy--To invest in a sampling of securities that are
included in the Wilshire 5000 Index that will be designed to match the
performance of the index.
Principal Risks--The Fund is expected to have the same volatility as the U.S.
stock market as a whole.
500 STOCK INDEX FUND
Investment Objective--To seek to provide a portfolio that will approximate,
before fees, the investment characteristics and performance of the Standard and
Poor's (S&P) 500 Index.
Principal Investment Strategy--The Fund will invest in all of the stocks in the
S&P 500 Index in appropriate proportions to match the performance of the index.
Principal Risks--Due to the expected volatility of returns on common stocks over
short time periods, you should consider this Fund to be a long-term investment.
CORE BOND INDEX FUND
Investment Objective--To seek to provide a portfolio that will approximate,
before fees, the investment characteristics and performance of the Lehman
Brothers Aggregate Bond Index.
Principal Investment Strategy--To invest in a sampling of bonds included in the
Lehman Broth ers Aggregate Bond Index that will be designed to match the
performance of the index.
Principal Risks--As with any bond fund, the market prices of the securities held
in the portfolio will fluctuate as interest rates change. Generally, the value
of a bond moves in a direction opposite to that of interest rates, and the
greater the duration of the bond, the greater the resulting change in value. The
Fund should experience the volatility characteristic of an intermediate-duration
fixed income fund.
FEE TABLES
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FEES AND EXPENSES OF THE FUNDS
The purpose of the following tables is to assist you in understanding the
various costs that you, as a shareholder, will bear directly or indirectly in
connection with an investment in one or more of the Vantagepoint Funds.
As you can see in the following table, you do not pay fees of any kind when you
buy, sell, or exchange your shares.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
PURCHASES NONE
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
REINVESTED DIVIDENDS (AND OTHER
DISTRIBUTIONS) NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
</TABLE>
The next table shows the annual operating expenses you would pay as a
shareholder in the Funds. These expenses, calculated as a percentage of average
net assets, are deducted from Fund assets, and their effect is factored into any
quoted share price or investment return.
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ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
Advisory Subadviser Other Total
Funds Fee Expense Expenses+ Expenses
----- -------- ---------- --------- --------
<S> <C> <C> <C> <C>
AGGRESSIVE OPPORTUNITIES 0.10% 0.76% 0.40% 1.26%
INTERNATIONAL 0.10% 0.55% 0.54% 1.19%
GROWTH STOCK 0.10% 0.31% 0.39% 0.80%
GROWTH & INCOME 0.10% 0.49% 0.44% 1.03%
EQUITY INCOME 0.10% 0.18% 0.38% 0.66%
ASSET ALLOCATION 0.10% 0.26% 0.39% 0.75%
U.S. TREASURY SECURITIES 0.10% 0.14% 0.40% 0.64%
MONEY MARKET 0.10% 0.08% 0.41% 0.59%*
Overseas Equity Index
CLASS I 0.05% 0.40%++ 0.36% 0.81%
CLASS II** 0.05% 0.40%++ 0.16% 0.61%
Mid/Small Co. Index
CLASS I 0.05% 0.10%++ 0.36% 0.51%
CLASS II** 0.05% 0.10%++ 0.16% 0.31%
Broad Market Index
CLASS I 0.05% 0.08%++ 0.32% 0.45%
CLASS II** 0.05% 0.08%++ 0.12% 0.25%
500 Stock Index
CLASS I 0.05% 0.05%++ 0.35% 0.45%
CLASS II** 0.05% 0.05%++ 0.15% 0.25%
Core Bond Index
CLASS I 0.05% 0.08%++ 0.32% 0.45%
CLASS II** 0.05% 0.08%++ 0.12% 0.25%
</TABLE>
+ Amounts shown are based on estimated amounts for the Fund's first full fiscal
year, and include the Investor services fee, the Fund services fee, and Fund
operating expenses.
++ Includes subadviser fees and other expenses incurred at the "master" fund
level as a result of the Index Funds being "feeder" funds investing in
"master" funds.
* For the Money Market Fund, management has agreed, for a period of two years
from the effective date of registration, to waive any fees that would result
in total Fund expenses in excess of an annual amount of 0.55%.
** Amounts shown are equivalent to the total expenses that will be paid by Class
II shareholders.
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EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 dollars for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Funds 1 yr 3 yrs
----- ---- -----
<S> <C> <C>
AGGRESSIVE OPPORTUNITIES $129 $402
INTERNATIONAL $123 $383
GROWTH STOCK $ 82 $256
GROWTH & INCOME $106 $329
EQUITY INCOME $ 68 $212
ASSET ALLOCATION $ 77 $241
U.S. TREASURY SECURITIES $ 66 $205
MONEY MARKET $ 60 $190
Overseas Equity Index++
CLASS I $ 83 $260
CLASS II $ 63 $196
Mid/Small Co. Index++
CLASS I $ 52 $164
CLASS II $ 32 $100
Broad Market Index++
CLASS I $ 46 $145
CLASS II $ 26 $ 81
500 Stock Index++
CLASS I $ 46 $145
CLASS II $ 26 $ 81
Core Bond Index++
CLASS I $ 46 $145
CLASS II $ 26 $ 81
</TABLE>
++ Includes subadviser fees and other expenses incurred at the "master" fund
level as a result of the Index Funds being "feeder" funds investing in
"master" funds managed by the subadviser.
If you are investing through another financial institution or a retirement
account, you may be subject to additional fees or expenses, such as plan
administration fees. For more information, please refer to its program materials
for any special provisions, additional service features, or fees and expenses
that may apply to your investment in a Fund.
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INVESTMENT POLICIES,
INVESTMENT OBJECTIVES,
PRINCIPAL INVESTMENT STRATEGIES,
AND RELATED RISKS
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The Funds are managed by their investment adviser, Vantagepoint Investment
Advisers, LLC ("VIA"), which in turn selects and monitors subadvisers engaged by
VIA. The subadvisers are directly responsible for security selection and day-
to-day management of the assets entrusted to them and the primary factors on
which each subadviser bases its decisions to purchase or sell portfolio
securities is described below under "Investment Objectives of the Fund". The
Funds intend to seek authority from the U.S. Securities and Exchange Commission
(SEC) to allow VIA in its discretion, subject to approval of the Board of
Directors of the Vantagepoint Funds, to add, replace, or remove subadvisers.
INVESTMENT POLICIES
- ----------------------------------------------------
The Funds have adopted certain investment policies and guidelines. Those
designated as "fundamental" in this prospectus or in the Statement of Additional
Information cannot be changed without shareholder approval. Others may be
changed at the discretion of the Board of Directors.
The descriptions that follow are designed to help you choose the Funds that best
fit your investment objectives and tolerance for risk.
INVESTMENT OBJECTIVES
OF THE FUNDS
- ----------------------------------------------------
Aggressive Opportunities Fund--primary investment objective is to offer high
long-term capital growth. It can be expected that the Fund's portfolio will
consist primarily of the stocks of small- to medium-capitalization domestic and
foreign companies. Dividend and interest income, if any, is secondary and
incidental to the Fund's primary objective of long-term growth of capital.
The Aggressive Opportunities Fund is managed on a day-to-day basis by multiple
subadvisers.
First Pacific Advisers, invests the Fund's assets primarily in securities of
companies the subadviser believes to be undervalued. Investments tend to be
concentrated in a limited number of securities and in industries out-of-favor in
the current market.
Massachusetts Financial Services invests the Fund's assets primarily in
securities of emerging growth companies, many of which are at an early stage in
their development, that the subadviser believes have the potential to become
major enterprises. The subadviser selects companies it expects to show earnings
growth over time well above the growth rate of the overall economy and the rate
of inflation.
TCW Funds Management, Inc., invests the Fund's assets primarily in companies
expected to exhibit high earning growth, and employs techniques such as
quantitative screening, research evaluation, and direct company contact.
Due to the nature of the Fund's portfolio securities and the policy of the Fund
to accept opportunistic risk to enhance returns through techniques such as short
sales, investing in options and warrants, investing in bonds that are below
investment grade, and borrowing, the Fund can be expected to exhibit significant
price volatility over the short term.
International Fund--primary investment objective is to offer diversification and
long-term capital growth by investing in the stocks of companies doing business
primarily outside the United States. The Fund may invest in securities of
companies doing business in any developed foreign country, including those in
Europe, the Far East, and the Pacific Rim. The Fund may also invest, to a lesser
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extent, in less developed emerging markets in Asia, Europe, Latin America, and
Africa.
The International Fund is normally invested primarily in a variety of stocks and
secondarily in bonds. Investment may be made in companies of all capitalization
sizes and in a wide variety of industries as well as in stock index contracts.
The Fund is managed by multiple subadvisers each of whom manages an equal
portion of its assets.
Rowe Price-Fleming International, Inc., emphasizes the stocks of companies with
above-average market earnings growth potential at a reasonable price.
Capital Guardian Trust Company emphasizes the stocks of companies whose growth
prospects it views as undervalued.
Lazard Asset Management emphasizes a value approach that attempts to identify
certain characteristics of companies that it believes indicate improving
fundamentals.
The International Fund will also invest approximately 5% of its assets in a
sampling of securities designed to match the performance of the Morgan Stanley
Capital International Europe Australia and Far East Index ("EAFE"). This portion
of the Fund's assets will be managed by Barclay's Global Fund Advisers.
Foreign securities are subject to the same market risks as U.S. securities, such
as general economic conditions and company and industry prospects. Foreign
securities entail additional risk of loss due to political, economic, legal,
regulatory, operational and currency conversion factors. These risks are even
greater in emerging markets than in developed foreign markets.
Growth Stock Fund--primary investment objective is to offer long-term capital
growth by investing in the common stock of a variety of companies with prospects
for above-average growth in earnings, with emphasis on mid- capitalization
growth stocks of seasoned firms. The Fund may also include large-capitalization
stocks. The portfolio is expected to experience higher than average turnover,
which may result in increased brokerage commissions. Dividend income is
incidental to the overall objective of long-term capital growth.
The Growth Stock Fund invests in a variety of common stocks selected for
prospects of above-average growth in corporate earnings per share. The portfolio
is diversified by industry and market capitalization and experiences
higher-than-average portfolio turnover, which may result in increased brokerage
commissions. Investments may include larger, seasoned firms and also small- to
medium-size companies.
The Fund is managed on a day-to-day basis by multiple subadvisers.
Cadence Capital Management invests the Fund's assets in medium- to
large-capitalization stocks and seeks growth at a reasonable price. This
subadviser selects stocks of companies with long-term growth characteristics
selling at reasonable valuations in relation to the fundamental prospects of the
underlying companies.
William Blair & Company, LLC invests the Fund's assets in medium-capitalization
stocks and seeks to invest in durable companies exhibiting strong business
leadership, quality products and services, solid financial prospects, and strong
management.
Neuberger & Berman, LLC invests the Fund's assets in medium-capitalization
stocks of companies that appear to offer high long-term earnings-per-share
growth at a reasonable price relative to their growth rates.
Barclays Global Fund Advisers seeks to replicate the performance and portfolio
characteristics of the S&P BARRA MidCap 400 Growth Index, which consists of 400
domestic stocks traded on certain U.S. stock exchanges. The index is designed to
measure the performance of the middle capitalization sector of the U.S. equities
market.
Fidelity Management Trust Company invests a portion of the Fund's assets that
are assigned to it in the equity securities of smaller companies having
valuations close to or below market and a portion of the Fund's assets assigned
to it in the stocks of well-established, well-managed companies whose earnings
benefit from emerging trends that are identified by Fidelity.
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The Growth Stock Fund can be expected to have significantly greater volatility
than the stock market (as measured by the S&P 500 Index) over any selected time
period.
Growth and Income Fund--attempts to achieve its objective of long-term capital
appreciation and current income by investing primarily in common stocks. The
Fund may also invest in other equity-type securities including, but not limited
to, convertible securities.
The investment approach is to focus on companies whose stocks offer good
potential for price appreciation because of undervaluation, earnings growth or
both, with an emphasis on those which may also provide current dividend income.
The Fund is managed by multiple subadvisers. Capital Guardian attempts to meet
the Fund's objectives using an approach combining both value and growth
orientations.
Putnam Investments seeks the potential returns from growth stocks but with
reduced volatility through the use of risk control techniques, such as avoiding
over-concentration in certain industries and other high risk exposures.
The Fund can be expected to exhibit the risk characteristics of a common stock
portfolio.
Equity Income Fund--primary investment objective is to offer long term stable
growth of capital through a comparatively high level of dividend income plus the
potential for moderate share price increases.
The investment approach of the Equity Income Fund is to focus on established
companies that pay dividends at higher-than-average relative yields, indicating
attractive valuations and investments which may also be undervalued in relation
to earnings. The Fund may be diversified across all sizes of companies but will
be more concentrated in large-capitalization companies, which tend to have the
most stable long-term earnings and dividend-paying records. As a result of the
income focus, certain industry sectors and/or specific industries tend to be
emphasized.
The Fund is managed by multiple subadvisers. Crawford Investment Counsel, Inc.,
seeks consistent dividend growth by investing in the securities of companies
that consistently raised their dividends every year for the past 10 years.
Newell Associates, seeks to produce high current income from common stocks. It
invests in large, well-established dividend-paying corporations with a current
yield at least 25% higher than the Standard & Poor's Industrials.
Due to the Fund's emphasis on large-capitalization, dividend-paying companies,
the Fund's risk level is expected to be equal to, or lower than, the S&P 500
Index.
Asset Allocation Fund--primary investment objective is to seek to maximize total
return by investing in a portfolio actively allocated among common stocks and
index futures contracts of a particular index, long-term investment grade bonds,
and money market instruments.
The Fund seeks to maximize total return by varying its overall exposure to
common stocks, bonds, and cash equivalents in accordance with systematic efforts
to assess which of those asset classes are most attractive at a given time. The
investment objective is to seek maximum growth of principal and income with less
investment risk than a portfolio consisting entirely of common stocks.
The Asset Allocation Fund invests as follows: a portfolio of stocks and index
futures contracts selected and passively managed to parallel the investment
performance of the S&P 500 Index; bonds with maturities generally in excess of
20 years; and money market instruments. The Fund may invest in S&P 500 Index
futures and bond futures contracts to alter the percentage exposure to asset
classes. Futures contracts are not used to obtain market leverage, but instead
to reproduce representative returns for S&P 500 Index stocks and long-term
investment grade bonds. Active management of the Fund by its subadvisers
consists of rebalancing the percentage mix among stocks, bonds, and cash
equivalents based upon analysis of changes in financial market conditions. The
frequency and magnitude of changes in the proportional mix will vary with each
subadviser's assessment of market conditions.
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<PAGE> 14
The Fund is managed by multiple subadvisers who are responsible for portfolio
security selection. AVATAR Associates actively allocates assets between stocks
and cash. At any given time, all or none of the assets may be allocated to
either stocks or cash, though shifts more typically occur in varied increments.
Mellon Capital Management actively allocates assets among common stocks,
long-term, investment grade bonds and money market instruments. Changes to the
asset allocation are normally implemented in small increments on a gradual
basis.
Wilshire Asset Management does not allocate among asset classes but instead
manages the equity portion of the Fund utilized in the other managers'
strategies. The subadviser fully replicates all securities represented in the
S&P 500 Index within acceptably small period-to-period variances, both positive
and negative.
Since one of the subadvisers does not invest in bonds, the Fund's structure is
biased to take advantage of the long-term return potential of stocks. As a
result, the Fund may exhibit a level of price volatility and risk of loss more
consistent with a common stock portfolio than with a balanced portfolio,
especially over the shorter term.
U.S. Treasury Securities Fund--primary investment objective is to offer coupon
income and capital growth obtainable from active management of intermediate-term
U.S. Treasury securities and certain U.S. Government and Agency securities.
The Fund is designed to offer a rate of return equivalent to intermediate-term
Treasury securities, while minimizing the possibility of default. Returns will
reflect both interest income and market price changes in the bonds held by the
Fund.
The U.S. Treasury Securities Fund invests primarily in intermediate-term U.S.
Treasury securities. In addition, the subadviser is authorized to invest up to
35 percent of the Fund in U.S. Government Agency pass-through mortgage-backed
securities. The Fund may also invest in U.S. Treasury note and bond futures to
adjust duration exposure in response to anticipated interest rate movements. The
combination of fixed-income securities and futures maintains fixed-income
exposure comparable to that of a fully invested portfolio position.
The Fund's subadviser, Seix Investment Advisers, Inc., seeks to offer more
return than is available in a passively managed intermediate-term U.S. Treasury
index by identifying undervalued U.S. Treasury securities, and by allocating
assets to, and selecting securities in, the mortgage-backed sector.
The Fund should experience the volatility characteristics of an
intermediate-duration bond fund.
Money Market Fund--primary investment objective is to obtain the maximum current
income, consistent with preservation of capital and liquidity, that is available
through investments in specified money market instruments. The Fund seeks to
maintain a constant net asset value per share of $1.00. However there is no
guarantee that it will be able to do so. The Fund will meet the diversification
and quality provisions of Rule 2a-7 under the 1940 Act.
The Fund seeks to obtain its investment objective by investing substantially all
of its assets in a registered money market mutual fund, the AIM Liquid Assets
Fund, whose investment adviser is AIM Advisers, Inc. The underlying portfolio of
the AIM Liquid Assets Fund consists of certificates of deposit of major U.S.
banks, prime commercial paper, high quality short-term corporate obligations,
and short-term U.S. government and agency securities. The Fund has an average
maturity of less than 90 days.
THE INDEX FUNDS
The five Funds described below follow an indexed or "passively managed" approach
to investing. This means that the Funds' subadviser creates a mix of securities
designed to match the performance of a specified benchmark, such as the S&P 500
Index.
In order to take advantage of the economies of scale offered by a larger fund,
each Index Fund is structured as a "feeder" fund. A "feeder" fund seeks to
achieve its investment objective by investing all its net assets in a single
"master" fund managed by the subadviser. The master fund invests in securities
in accordance with investment objectives, policies, and limitations that are
identical to those of the applicable Index Fund. In other words,
9
<PAGE> 15
each Index Fund "feeds" shareholder investments into its corresponding
portfolio, the "master" fund.
With the exception of the Overseas Equity Index Fund, the assets of each Index
Fund and invested by Barclay's Global Fund Advisers, which focuses at the
"master" fund level on quantitative, structured and passive management. The
subadviser for the Overseas Equity Index Fund is Bankers Trust.
Unlike an actively managed portfolio, an index fund does not rely on the
portfolio manager's ability to predict the performance of individual securities.
An index fund simply attempts to match the performance of the benchmark.
Index funds offer relative performance predictability in that the investment
performance of the fund parallels that of the index. Additionally, index funds
tend to have lower operating expenses than actively managed funds.
Each Index Fund reserves the right to change the "master" fund in which it
invests, and a Fund may do so when the Board of Directors believes it is in the
best interests of the Fund's shareholders.
The Index Funds offer two classes of shares, Class I and Class II. Information
on your eligibility to invest in a particular class can be found under the
heading "Shareholder Information: Purchases".
The five Index Funds and their respective investment objectives and risks are:
The Overseas Equity Index Fund--seeks to provide a portfolio that will
approximate, before fees, the investment characteristics and performance of the
EAFE Index.
The Fund is exposed to the risks of investing in common stocks as well as the
additional risks of investing in foreign securities, which can be affected by
currency, political, legal, regulatory and operational factors.
Mid/Small Company Index Fund--seeks to provide a portfolio that will
approximate, before fees, the investment characteristics and performance of the
Wilshire 4500 Index.
Due to the breadth of the Fund's index, the Fund has a risk factor somewhat
higher than indexes such as the S&P 500. The Wilshire 4500 includes
smaller-capitalization companies whose stocks tend to have more price volatility
than larger companies.
Broad Market Index Fund--seeks to provide a portfolio that will approximate,
before fees, the investment characteristics and performance of the Wilshire 5000
Index.
The Fund is exposed to the risks of the overall stock market, and the Index
includes companies of all capitalization sizes.
500 Stock Index Fund--seeks to provide a portfolio that will approximate, before
fees, the investment characteristics and performance of the Standard and Poor's
(S&P) 500 Index.
The Fund has risk characteristics generally associated with large-capitalization
common stocks.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)" "Standard & Poor's 500" and "500"
are trademarks of the McGraw-Hill Companies, Inc. and have been licensed for use
by The Vantagepoint Funds. The Fund is not sponsored, endorsed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Fund.
Core Bond Index Fund--seeks to provide a portfolio that will approximate, before
fees, the investment characteristics and performance of the Lehman Brothers
Aggregate Bond Index.
As with any bond fund, the market price of portfolio securities will generally
move in a direction opposite to interest rates. The Fund should experience the
volatility characteristic of an intermediate-duration fixed income fund.
10
<PAGE> 16
RISKS OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The following is a description of the risks that you will face as an investor in
the Funds. It is important to keep in mind one of the main axioms of investing:
the higher the potential reward, the higher the risk of losing money. The
reverse is also generally true: the lower the potential reward, the lower the
risk.
Each of the Funds is exposed to one or more of the following types of risk:
I. STOCK MARKET RISK
Market risk is the possibility that stock prices overall will decline over short
or extended periods. Markets tend to move in cycles, with periods of rising
prices and periods of falling prices.
Although the U.S. stock market has risen consistently in recent years, this
trend is not indicative of the market's overall history.
To illustrate the volatility of the U.S. stock market, the following table shows
the best, worst and average total returns for the U.S. stock market over various
time periods as measured by the S&P 500 Index.
Average Annual U.S. Stock Market Returns
(1926-1997)
<TABLE>
<CAPTION>
1 year 5 years 10 years 20 years
------ ------- -------- --------
<S> <C> <C> <C> <C>
BEST 53.9% 23.9% 20.1% 16.9%
WORST -43.3 -12.5 -0.9 3.1
AVERAGE 13.0 10.5 10.9 10.9
</TABLE>
Keep in mind that the S&P 500 Index tracks mainly large-capitalization stocks.
Other groupings of stocks are likely to carry different degrees of volatility.
For example, small-capitalization stocks, as a group, have historically
exhibited greater short-term volatility than that of the S&P 500 Index. All of
the Funds except the Money Market Fund, the U.S. Treasury Securities Fund and
the Core Bond Index Fund are Subject to stock market risk.
Foreign securities are subject to the same market risks as U.S. securities, such
as general economic conditions and company and industry prospects. Foreign
securities involve additional risk of loss due to political, economic, legal,
regulatory, operational and currency conversion factors affecting investment in
the securities of foreign businesses or governments. The International Fund and
the Overseas Equity Index Fund are subject to this risk.
II. BOND MARKET RISK
Bonds also experience market risk, which is primarily attributable to changes in
interest rates. The general rule is that if interest rates rise, bond prices
will fall. The reverse is also true: if interest rates fall, bond prices will
generally rise.
A bond with a longer maturity (or a bond fund with a longer average maturity)
will be more volatile than shorter term bonds. Because of their extreme
short-term nature, money market instruments carry little market risk. The U.S.
Treasury Securities Fund and the Core Bond Index Fund are both subject to this
risk.
Bonds and bond funds are also exposed to credit risk, which is the possibility
that the issuer of a bond will default on its obligation to pay interest and
principal.
U.S. Treasury securities, which are backed by the full faith and credit of the
U.S. Government, have virtually no credit risk. Therefore, the U.S. Treasury
Securities Fund is not exposed to this risk. Corporate bonds rated BBB or above,
such as those held by the Asset Allocation Fund, are generally considered to
carry minimal credit risk. Corporate bonds rated below BB are considered to have
significant credit risk.
Of course, bonds with lower credit ratings generally pay a higher level of
income to investors.
11
<PAGE> 17
III. OBJECTIVE RISK
All of the Funds are subject, in varying degrees, to objective risk, which is
the possibility that returns from a specific type of security in which a Fund
invests (for instance, a growth stock) will trail the returns of the overall
market.
In the past, different types of securities have experienced cycles of
outperformance and underperformance in comparison to the market in general.
Therefore, if you invest in a fund with a specific objective, such as the Growth
Stock Fund, you would be exposed to this risk.
IV. MANAGER RISK
Manager risk is the risk that one of the Funds' subadvisers will do a poor job
of selecting securities and thus fail to meet the Fund's objectives.
As investment adviser to the Funds, VIA continually monitors the performance of
the subadvisers. The Funds intend to apply for an exemptive order from the SEC
that will allow VIA to change subadvisers with the approval of the Fund's Board
of Directors and upon notice to shareholders.
INVESTMENT LIMITATIONS
- ----------------------------------------------------
Each Fund has adopted certain limitations designed to reduce its exposure to
specific situations. Some of these limitations are that a Fund will not:
(a) with respect to 75% of the value of its total assets, purchase the
securities of any issuer (except obligations of the United States
government and its instrumentalities and securities of other investment
companies) if as a result the Fund would hold more than 10% of the
outstanding voting securities of the issuer, or more than 5% of the value
of the Fund's total assets would be invested in the securities of such
issuer;
(b) invest more than 25% of its assets in any one industry (except for the
Money Market Fund or to the extent that the applicable benchmark for an
Index Fund does not meet this standard);
(c) borrow money except from banks for temporary or emergency purposes, and in
no event in excess of 15% of the market value of its total assets.
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
The investment adviser to the Vantagepoint Funds is VIA, whose offices are
located at 777 North Capitol Street NE, Suite 600, Washington, DC 20002-4240.
VIA provides its advisory services pursuant to an investment advisory agreement
with the Vantagepoint Funds. VIA is a wholly-owned subsidiary of, and is
controlled by, the ICMA Retirement Corporation (RC), which has been registered
as an investment adviser with the U.S. Securities and Exchange Commission since
1983. RC was established as a not-for-profit organization in 1972 to assist
state and local governments and their agencies and instrumentalities in the
establishment and maintenance of deferred compensation and qualified retirement
plans for the employees of such public sector entities. RC's primary advisory
client is the ICMA Retirement Trust, which was formed to commingle and invest
the assets of the retirement plans administered by RC. VIA is a newly formed
entity.
Compensation for the investment management of the Funds is asset based, i.e, it
consists of an annual percentage fee calculated based on average assets under
management. The fee is paid out of Fund
12
<PAGE> 18
assets. The aggregate annual fees paid to VIA and to subadvisers for advisory
services are as follows:
<TABLE>
<CAPTION>
Aggregate Annual
Funds Advisory Fee
----- ----------------
<S> <C>
AGGRESSIVE OPPORTUNITIES 0.86%
INTERNATIONAL 0.65%
GROWTH STOCK 0.41%
GROWTH AND INCOME 0.59%
EQUITY INCOME 0.28%
ASSET ALLOCATION 0.36%
U.S. TREASURY SECURITIES 0.24%
MONEY MARKET 0.18%
OVERSEAS EQUITY INDEX 0.45%
MID/SMALL COMPANY INDEX 0.15%
BROAD MARKET INDEX 0.13%
500 STOCK INDEX 0.10%
CORE BOND INDEX 0.13%
</TABLE>
The fees charged by each subadviser can be found in the Statement of Additional
Information under the heading "Investment Advisory and Other Services".
The subadvisers are retained on behalf of the Funds by VIA, and day-to-day
discretionary responsibility for security selection and portfolio management
rests with the subadvisers. The responsibility for overseeing subadvisers rests
with VIA's Investment Division, whose division head, Senior Vice President John
Tobey, reports directly to Girard Miller, CFA, President of VIA.
Mr. Miller has over 15 years of experience in investment management, 5 years
with RC. He holds a Political Economy degree from the University of Washington,
a Masters in Economics from Wayne State University in Detroit, Michigan, and a
Masters of Public Administration from Syracuse University, and is a Chartered
Financial Analyst.
Mr. Tobey has over 20 years of experience in investment management, 8 months
with RC. He holds a BS degree in Finance from San Diego State University and an
MBA degree from the Stanford Graduate School of Business.
The investment program and its performance are subject to overall supervision
and regular periodic review by the Funds' Board of Directors.
Further information on Fund subadvisers, including portfolio managers and fees,
can be found in the Statement of Additional Information.
The Directors and Officers of the Vantagepoint Funds, together with information
as to present positions and their principal business occupations during the last
five years, are shown below. Directors who are deemed to be "interested
persons", as defined in the Investment Company Act of 1940, are indicated by an
asterisk. The mailing address for the Directors and Officers of the Funds is 777
North Capitol St., NE, Ste. 600, Washington, D.C. 20002-4240.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Occupations
Name, Address Position During Past 5 years
------------- ---------- -----------------------------------------
<S> <C> <C>
George Bissell Director Chairman of Board
Boston, MA Keystone Group Funds
Donna Anderson Director Chief Investment Officer
New York, NY City of New York Pensions
Robert A. Bowman Director President, Chief Operating Officer and
Westport, CT Director (1995-1998)
Chief Financial Officer (1992-1995)
ITT Corporation
N. Anthony Calhoun Director Deputy Executive Director and
Chevy Chase, MD Chief Financial Officer
Pension Benefit Guaranty Assoc.
Arthur Lynch Director Director of Finance
Glendale, AZ City of Glendale, Arizona
Eddie Moore Director President, Virginia State University
Petersburg, VA
Robin L. Wiessmann Director* Principal
Yardley, PA Artemis Capital Group, Inc.
</TABLE>
13
<PAGE> 19
<TABLE>
<CAPTION>
Principal Occupations
Name, Address Position During Past 5 years
------------- ---------- -----------------------------------------
<S> <C> <C>
Girard Miller President* President and Chief Executive Officer
Washington, DC ICMA Retirement Corporation
Paul Gallagher Secretary* General Counsel (1998-present)
Washington, DC ICMA Retirement Corporation;
Formerly; Assistant General Counsel,
The Vanguard Group
Paul Breault Treasurer* Chief Financial Officer (1998 to present)
Washington, DC ICMA Retirement Corporation
Formerly; Senior Vice President and
Retail Group Chief Financial Officer
Fidelity Investments
</TABLE>
* Ms. Wiessmann is considered an interested person because she is a member of
the Board of Directors of the ICMA Retirement Corporation. Officers of the
Funds are considered interested persons as defined in the Investment Company
Act of 1940.
14
<PAGE> 20
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
(For purposes of the following discussion, unless noted otherwise, "business
day" means the period(s) of time on any given day during which the New York
Stock Exchange is open for business. Unless noted otherwise, "close of business"
means 4:00 p.m. Eastern time on each business day or the final close of business
on any business day during which trading on the New York Stock Exchange is
suspended.)
SHARE ACCOUNTING FOR ALL FUNDS
- ----------------------------------------------------
The shares represent a dollar-weighted proportional ownership interest in each
of the Funds in which you are invested. The Funds do not issue share
certificates.
The price of a share is known as its net asset value ("NAV"). The daily NAV of a
share is determined at the close of each business day by adding the value of all
of a Fund's investments, plus cash and other assets, deducting liabilities, and
then dividing the result by the number of outstanding shares in the Fund as of
the end of the prior day and rounding the results to the nearest cent. The value
of your investment position equals the number of shares you own multiplied by
the current day's NAV.
Since share values and investment returns will fluctuate, an exchange or
redemption at any given time will normally result in your receiving more or less
than the original cost of your investment. Each Fund's share value can be found
daily in the mutual fund listing of most major newspapers under the heading
"Vantagepoint Funds".
VALUATION OF THE FUNDS
- ----------------------------------------------------
Investment securities held by the Funds are valued daily. Stocks are valued at
the price in effect at the close of business of the exchange on which they are
traded. Bonds are valued using pricing matrices obtained through Merrill Lynch
and other commercial services.
Securities for which market quotations are not readily available are valued
according to methods established by the Board of Directors. If values of foreign
securities have been materially affected by events occurring after the close of
a foreign market, foreign securities may be valued by another method that the
Board of Directors believes reflects fair value.
The underlying "master" fund for each Index Fund is valued daily by the "master"
fund itself, and the "master" fund's NAV is part of the calculation of each
Index Fund's NAV. Once the market value of each Index Fund is determined, it is
then divided by the number of shares outstanding to arrive at that day's NAV for
the Fund.
For the Money Market Fund, net asset value is calculated by valuing portfolio
securities by reference to the Fund's acquisition cost as adjusted for
amortization of premium or accretion of discount, rather than by reference to
their value based on current market factors. This valuation method generally
ignores fluctuations in the market price of the Fund's debt securities and
assumes a steady increase (decrease) in value until maturity.
REINVESTMENT OF EARNINGS
- ----------------------------------------------------
All earnings of the Funds (interest, dividend income, and capital gains are
reinvested in the Funds and used to purchase additional shares. See discussion
under the heading "Taxation".
PRICING AND TIMING OF TRANSACTIONS
- ----------------------------------------------------
Purchases, exchanges and redemptions are executed at the NAV next calculated
after the Fund or its transfer agent receives the transaction request. For
example, under normal circumstances, a transaction request received at 9:30 a.m.
on a business day is executed at the same price as that of a transaction request
received at 3:00 p.m. -- at that day's closing price. If the Funds receive a
transaction request in the morning, you do not insulate yourself from market
gains or losses during the rest
15
<PAGE> 21
of the business day. A transaction request received after the calculation of the
NAV on one day will be executed at the price in effect at the close of the next
business day.
REPORTING TO INVESTORS
- ----------------------------------------------------
With respect to any investment reports you may receive from Vantagepoint Funds,
review these reports carefully, and call the toll-free customer service line at
1-800-#### or contact the Funds on-line at **** immediately if you see any
discrepancies. In order to correct a discrepancy, the Funds must be notified
within 120 days of the close of the calendar quarter in which the discrepancy
occurs.
PURCHASES, EXCHANGES, AND REDEMPTIONS
- --------------------------------------------------------------------------------
PURCHASES
- ----------------------------------------------------
Initially, the Funds will be open for investment exclusively by (i) the ICMA
Retirement Trust; (ii) the employee benefit plans of state and local governments
and their agencies and instrumentalities (including retirement and deferred
compensation plans established under Sections 401 and 457, respectively, of the
Internal Revenue Code of 1986, as amended); and (iii) Individual Retirement
Accounts ("IRAs") of employees of state and local governments and the IRAs of
other persons having a familial or otherwise close relationship to those public
sector employees. The details of such eligibility criteria are set forth in the
account application.
Class I shares of the Index Funds are open to IRA and other individual accounts
and each public sector employee benefit plan that invests indirectly in the
Funds through the ICMA Retirement Trust containing assets of less than $40
million. Class II shares are open to (i) qualifying public sector employee
benefit plans that invest directly in the Funds and have qualifying assets in
excess of $150 million; and (ii) public sector employee benefit plans that
invest indirectly in the Funds through the ICMA Retirement Trust and have
qualifying assets in excess of $40 million so invested. Other plans with average
account balances or other features that are expected to afford the Index Funds
with certain economies of scale in servicing employee benefit plan participant
accounts, may also qualify for Class II shares.
There are no minimum investment amounts, front-end sales charges, deferred sales
charges, back-end sales or redemption charges associated with investment in the
Vantagepoint Funds.
The Vantagepoint Funds reserve the right in their sole discretion to (i) suspend
the offering of their shares or (ii) to reject purchase orders when in the
judgment of management such rejection is in the best interest of a particular
Fund or Funds.
PURCHASES BY EMPLOYEE
BENEFIT PLANS
- ----------------------------------------------------
Employee benefit plans must fill out a retirement plan account form that is to
be signed by the plan's trustee or other authorized official.
Investors may submit purchase orders to the Funds as often as daily. Payments
may be transmitted by check, wire, and Automated Clearing House, although it is
preferred that the Funds receive assets by wire. Investment detail must be
submitted on paper forms, diskette, magnetic tape, or electronically.
Purchase orders received in good order prior to next calculation of the NAV are
posted to Investor accounts at the closing NAV of that day, or if the day the
contributions are received is not a business day, at the closing NAV of the next
business day. Purchase orders received in good order after close
16
<PAGE> 22
of business are posted at the closing NAV of the next business day.
With respect to purchases made through the ICMA Retirement Trust, or by certain
employee benefit plans and other types of omnibus accounts, other arrangements
may be negotiated as to the timing and delivery of purchase instructions.
Posting of contributions to Investor accounts is contingent upon submission of
purchase orders in good order to the Vantagepoint Funds. This means that the
requests must be accompanied by sufficient detail to enable the Vantagepoint
Funds to allocate assets properly. If a purchase request is not received in good
order, the deposit is held in a non-interest bearing account until all necessary
information is received. If the purchase request is still not in good order
after three business days, the assets are returned to the Investor. Purchases
received for unidentified accounts for which no account form has been received
will be returned to the Investor.
EXCHANGES AND ALLOCATIONS
AMONG FUNDS
- ----------------------------------------------------
Investors may submit exchange requests daily in writing or by telephone
exclusively through the VantageLine phone system at 1-800-xxx-xxxx. Remember
that an exchange is a two-part transaction-a redemption of shares in one Fund
and a purchase of shares in another Fund.
Exchange requests received in good order prior to close of business on the New
York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day are
posted to Investor accounts at that day's closing NAV. Exchange requests
received in good order after close of business will be posted at the closing NAV
of the next business day.
Allocation of new purchase amounts among the Funds may be changed by Investors
without charge or limitation.
Written confirmations are normally sent to Investors on the business day
following the day the transaction occurs. Investors should verify the accuracy
of information in confirmations immediately upon receipt.
EXCHANGES BY TELEPHONE
- ----------------------------------------------------
Investors may make daily exchanges through VantageLine, the Funds' automated
service line or by calling 1-800-xxx-xxxx. Instructions received through
VantageLine must be accompanied by a Personal Identification Number. In
addition, verbal instructions given to a telephone representative will be
accepted upon verification of your identity and will be tape recorded to permit
verification. Written confirmations are normally sent to Investors on the
business day following the day the transactions occur. Investors should verify
the accuracy of information in confirmations immediately upon receipt. See
"VantageLine" and "Internet Capability" for more information.
VANTAGELINE
- ----------------------------------------------------
The Funds maintain VantageLine, an automated service line for the benefit of
Investors who have access to touch-tone telephones. You may use VantageLine to
make exchanges among Funds and change your investment allocation. The phone
number is 1-800-####.
VantageLine is normally available 24 hours a day, seven days a week for your
convenience; however, service availability during these times is not guaranteed.
Neither the Funds, the Funds' investment adviser nor the Funds' transfer agent
will be responsible for any loss (or foregone gain) you may experience as a
result of the service being unavailable or inoperative.
Should the VantageLine service or the "800" number become unavailable,
transactions may be made by VantageLink, as described below, or by express mail
at the shareholders' expense (see back cover for address).
VANTAGELINK
- ----------------------------------------------------
The Funds maintain VantageLink, a home page on the Internet should you have
access to the Internet
17
<PAGE> 23
(the address is http://www.*******). Information available from the Internet
includes account balances, investment allocations, and investment performance.
You may also execute transactions or make changes in your investment allocation
via VantageLink. The transfer agent for the Funds will require that instructions
received over the Internet be accompanied by a Personal Identification Number.
Written confirmations will normally be sent on the business day after the
transaction occurs. You should verify the accuracy of information in
confirmations immediately upon receipt.
VantageLink is normally available 24 hours a day, seven days a week. However,
service availability is not guaranteed. Like other Internet-based services,
VantageLink may be subject to external transmission problems that are beyond the
control of the Funds' management. Accordingly, neither the Funds, the Funds'
investment adviser, nor the Funds' transfer agent will be responsible for any
loss (or foregone gain) you may incur as a result of service being unavailable
or delayed.
PURCHASES BY IRA INVESTORS
- ----------------------------------------------------
PAYROLL DEDUCTION IRAS
Purchases made through payroll deduction of IRA contributions will be handled
the same as purchases made by employee benefit plans, but will require a
separate account form. Timing of investment, exchanges, and available services
will be the same as those for employee benefit plans. See "Purchases by Employee
Benefit Plans".
NON-PAYROLL DEDUCTION IRAS
First time IRA investors must fill out an IRA account application and mail it to
the Funds along with a check. Please call the ICMA Retirement Corporation at
1-800-**** for assistance when you are establishing a non-payroll deduction IRA
account. Timing of investment, exchanges, and available services will be the
same as those for employee benefit plans. See "Purchases by Employee Benefit
Plans".
REDEMPTIONS
Shares may be redeemed at any time, subject to certain restrictions imposed by
the Internal Revenue Code on the timing of distributions under tax-favored
employee benefit plans and IRAs. If investment in the Funds has been made
through one or more of these plans, the ICMA Retirement Corporation should be
contacted at 1-800-**** regarding these restrictions. With the exception of
redemptions that are made to effect exchanges among the Vantagepoint Funds,
redemption requests must be in writing.
REDEEMING SHARES IN WRITING
Write a letter of instruction with:
* Name of retirement plan, if applicable
* If a non-payroll IRA, your name and address
* The Fund's name
* Your Fund account number
* The dollar amount or number of shares to be redeemed
* How assets are to be distributed (by mail or by wire)
* If funds are to be distributed by wire, wire instructions.
A signature guarantee may be required, at the Funds' discretion, for certain
redemptions.
TAXATION
- --------------------------------------------------------------------------------
The Vantagepoint Funds intend to elect to be treated and to qualify each year as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. A regulated investment company generally is not subject to
federal income tax on income and gains distributed in a timely manner to its
shareholders. Normally, distributions to shareholders are taxable as income or
capital gains when such income and gains are distributed to them.
18
<PAGE> 24
However, shareholders who invest in the Funds through section 401 plans, section
457 plans or IRAs, will have earnings reinvested. If that is the case, the
income is not taxable in the year in which it is earned.
YEAR 2000 COMPLIANCE
- --------------------------------------------------------------------------------
Time and space saving programming decisions made by computer programmers in the
1960's have resulted in two-digit computer codes that recognize "00" as "1900",
not "2000". Such computers must be reprogrammed to prevent this error and make
them "Year 2000 compliant". A number of the systems employed by the Vantagepoint
Funds have been developed within the past few years and are already Year 2000
compliant. However, some systems are not yet fully compliant. The Funds and VIA
are working with several vendors to make changes to the systems necessary to
achieve full Year 2000 compliance.
19
<PAGE> 25
Other information, including the
Statement of Additional Information
can be reviewed and copied at the
Securities and Exchange Commission's
Public Reference Room in Washington,
D.C. For information on the operation
of the public reference room, call
1-800-SEC-0330. The Securities and
Exchange Commission maintains a Web
site (http://www.sec.gov) that
contains the Statement of Additional
Information and other related
information. Copies of this
information may be obtained, upon
payment of a duplicating fee, by
writing the Public Reference Section
of the SEC, Washington, D.C.
20549-6009.
The Statement of Additional
Information is incorporated in this
prospectus by reference -- it is
legally a part of this prospectus.
Detailed information on the investment
adviser and each subadviser for the
Vantagepoint Funds may be found in
this prospectus and in the Statement
of Additional Information.
Mutual fund shares are not guaranteed
or insured by the FDIC or any other
agency of the U.S. government.
Investment Company Act file numbers:
811-8941; 333-60789
20
<PAGE> 26
THE VANTAGEPOINT FUNDS
STATEMENT OF ADDITIONAL INFORMATION
______________________, 1999
The Vantagepoint Funds is a no-load, diversified open-end management investment
company. The Vantagepoint Funds operates as a "series" investment company,
offering thirteen distinct investment portfolios (the "Funds"), each Fund having
different investment objectives. This Statement of Additional Information
contains additional information about the Funds.
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information is incorporated by reference into, and should be read in
conjunction with, the Funds' current prospectus, also dated _____________, 1999.
A copy of the prospectus may be obtained by writing to the Funds or calling
1-800-****.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Description of the Fund and Its Investments and Risks ........
Management of the Fund .......................................
Control Persons and Principal Holders of Securities ..........
Investment Advisory and Other Services .......................
Brokerage Allocation and Other Practices .....................
Capital Stock and Other Securities ...........................
Purchase, Redemption, and Pricing of Shares ..................
Taxation of the Fund..........................................
Calculation of Performance Data ..............................
</TABLE>
<PAGE> 27
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
GENERAL INFORMATION
The Vantagepoint Funds is a no-load, diversified open-end management investment
company organized as a Delaware business trust. The Vantagepoint Funds are
managed by Vantagepoint Investment Advisers, Inc. ("VIA"), which in turn hires
and manages subadvisers who are responsible for the day-to-day management and
security selections for the Funds. The Vantagepoint Funds are as follows:
Aggressive Opportunities Fund
International Fund
Growth Stock Fund
Growth and Income Fund
Equity Income Fund
Asset Allocation Fund
U.S. Treasury Securities Fund
Money Market Fund
Overseas Equity Index Fund
Mid/Small Company Index Fund
Broad Market Index Fund
500 Stock Index Fund*
Core Bond Index Fund
The following discussion of investment objectives and policies for the Funds
supplements the discussion of those objectives and policies that is set forth in
the prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The policies and guidelines set forth below for each Fund have been adopted by
the Board of Directors of the Vantagepoint Funds to govern the management and
administration of each Fund by VIA. Those designated as fundamental in this
Statement of Additional Information and in the prospectus cannot be changed
without shareholder approval. Other policies and guidelines described below and
in the prospectus may be reviewed and revised at the discretion of the Board of
Directors. Each Fund's investment administration is under the supervision of
VIA, which is responsible for the appointment and monitoring of subadvisers to
handle the day-to-day investment of assets assigned to them.
The assets of each Fund are managed by one or more subadvisers. With the
exception of the Index Funds and the Money Market Fund, subadvisers are retained
to manage a particular portion of each Fund under the terms of written
investment advisory contracts with VIA.
As explained in the prospectus, each Index Fund is structured as a "feeder"
fund investing in a single "master" registered mutual fund which has identical
investment objectives and strategy as the applicable Index Fund. With the
exception of the Overseas Equity Index Fund, the investment adviser for each
"master" fund in which the corresponding Index Fund invests is Barclay's Global
Investors, N.A. The investment adviser for the "master" fund in which the
Overseas Equity Index Fund invests is Bankers Trust.
The Money Market Fund is invested in the AIM Liquid Assets Fund, a registered
money market mutual fund. The mutual fund's investment adviser is AIM Advisors.
Inc.
The Product is not sponsored, endorsed, sold or promoted by Standard &
Poor's a division of the McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Product or
any member of the public regarding the advisability of investing in securities
generally or in the Product particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to the Licensee
is the licensing of certain trademarks and trade names of S&P and of the S&P
500 Index which is determined, composed and calculated by S&P without regard to
the Licensee or the Product. S&P has no obligation to take the needs of the
Licensee or the owners of the Product into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the prices and amount of the Product
or the timing of the issuance or sale of the Product or in the determination or
calculation of the equation by which the Product is to be converted into cash.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Product.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEES, OWNERS OF THE PRODUCT, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
<PAGE> 28
Each subadviser is selected for its individual investment management expertise
and each operates independently of the others. Each subadviser is either
registered with the Securities and Exchange Commission (SEC) under the
Investment Advisers Act of 1940 or is a Bank, Insurance Company or Trust Company
exempt as such from registration. Further information on each Fund's
subadviser(s) may be found in this Statement of Additional Information in the
description of each Fund and under the heading "Investment Advisory and Other
Services".
Each subadviser agrees to exercise complete management discretion over assets of
the Fund allocated to its account in a manner consistent with the Fund's
investment policies and guidelines and within such further investment
limitations and conditions as may be established by VIA.
A formal review and appraisal of each Fund's investment objectives and
performance will be conducted periodically by the Board of Directors, and any
material changes in the Fund's fundamental investment objectives will be put to
a vote of its shareholders.
The Funds may engage in one or more securities lending programs conducted by the
Funds' custodian or other appropriate entities.
COMPARATIVE INDEXES
The Funds may, from time to time, use one or more of the unmanaged indexes
listed below for purposes of appraising fund performance. This list of indexes
is not intended to be all inclusive, and other indexes, benchmarks or peer
groups may be used, as deemed appropriate by the Board of Directors.
Standard & Poor's 500 Stock Index -- is a well diversified list of 500
companies representing the U.S. Stock Market.
Standard & Poor's MidCap 400 Index -- is composed of 400 medium sized domestic
stocks.
<PAGE> 29
Standard & Poor's BARRA MidCap 400 Growth Index -- consist of the stocks of the
S&P MidCap 400 Index having comparatively high price-to-book ratios.
Wilshire 5000 Equity Index -- consists of approximately 7,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available.
Wilshire 4500 Equity Index -- consists of all stocks in the Wilshire 5000 except
for the 500 stocks in the Standard & Poor's 500 Index.
Morgan Stanley Capital International EAFE Index -- is an arithmetic, market
value-weighted average of the performance of over 1100 securities listed on the
stock exchanges of countries in Europe, Australia and the Far East.
Lehman Brothers Long-Term Treasury Bond Index -- is composed of all bonds
covered by the Shearson Lehman Hutton Treasury Bond Index with maturities of 10
years or greater.
Lehman Brothers Aggregate Bond Index -- is a market weighted index that contains
individually priced U.S. Treasury, agency, corporate, and mortgage pass-through
securities rated BBB or better. The securities included in the Index have a
market value of over $4 trillion.
Lehman Brothers Corporate (BAA) Bond Index -- all publicly offered fixed-rate,
nonconvertible domestic corporate bonds rated Baa by Moody's, with a maturity
longer than 1 year and with more than $25 million outstanding. This Index
includes over 1,000 issues.
Merrill Lynch 5-7 Year Treasury Index -- All U.S. Treasury Notes and Bonds with
maturities greater than or equal to 5 years and less than 7 years.
Merrill Lynch 1-3 Year Treasury Index -- All U.S. Treasury Notes and Bonds with
maturities greater than or equal to 1 year and less than 3 years.
Russell 3000 Index -- consists of approximately the 3,000 largest stocks of U.S.
domiciled companies commonly traded on the New York and American Stock Exchanges
or the NASDAQ over-the-counter market, accounting for over 90% of the market
value of publicly traded stocks in the U.S.
Russell 2000 Index -- composed of the 2,000 smallest securities in the Russell
3000 Index, representing approximately 7% of the Russell 3000 total market
capitalization.
ELIGIBLE INVESTMENTS AND INVESTMENT LIMITATIONS
In addition to the securities and financial instruments described in the
prospectus, the Vantagepoint Funds are authorized to invest in the types of
securities and financial instruments listed below. Not all Funds will invest in
all such securities and/or financial
<PAGE> 30
instruments as indicated below.
A. CASH/CASH EQUIVALENTS: Fixed income obligations with maturity less than one
year, including short term accounts managed by a custodian institution, shares
of money market mutual funds, or repurchase agreements. All funds may invest in
the instruments. All funds may also participate in repurchase agreements and
reverse repurchase agreements.
B. FINANCIAL FUTURES: As appropriate for the Fund. A futures contract is an
agreement to buy or sell a specific amount of a commodity or financial
instrument at a particular price on a stipulated future date. Futures are used
to adjust investment exposure, and may involve a small investment of cash
relative to the magnitude of the risk assumed. Futures will not be used to
obtain market leverage. All funds except the Growth Stock Fund and the Money
Market fund may invest in financial futures.
OTHER INVESTMENTS:
The funds may invest in certain other instruments as follows:
i. Warrants. All funds except the Money Market Fund and the U.S.
Treasury Securities fund
ii. Convertible Securities. All funds except the Money Market Fund and
the U.S. Treasury Securities fund
iii. Forward contracts. The International fund and the Overseas Equity
Fund.
iv. Asset or mortgage backed securities. The U.S. treasury Securities
fund, Asset Allocation Fund and core bond index fund.
ELIGIBLE PRACTICES: There are no restrictions on subadvisers as to the
following:
- - Fund turnover.
- - Realized gains and losses.
These guidelines are not fundamental policies and may be changed by the Funds'
directors without a vote of shareholders.
FUND POLICIES AND INVESTMENT LIMITATIONS
The following policies supplement the Funds' investment limitations set forth in
the prospectus. It is a fundamental policy of each Fund not to engage in any of
the activities or business practices set forth below. Unless it is noted that a
particular restriction is not fundamental, these restrictions may not be
changed with respect to a particular Fund without the approval of a
dollar-weighted majority of the outstanding shares (the term "majority" is used
as defined in the Investment Company Act of 1940) of that Fund. A Fund may not:
1) Issue senior securities, (as defined in the Investment Company Act of 1940)
except as permitted by rule, regulation, or order of the S.E.C.; engage in
short sales except as described in the prospectus;
2) Engage in the business of underwriting securities issued by others, except to
the extent a Fund may technically be deemed to be an underwriter under the
Securities Act of 1933, as amended (this restriction is not fundamental);
3) Purchase or otherwise acquire any security if, as a result, more than 15% of
its net assets would be invested in securities that are illiquid (this
restriction is not fundamental);
<PAGE> 31
4) Make loans, except (i) by purchasing bonds, debentures or similar obligations
(including repurchase agreements, subject to the limitation described in (3)
above) which are either publicly distributed or customarily purchased by
institutional investors, and (ii) by lending its securities to banks, brokers,
dealers and other financial institutions so long as such loans are not
inconsistent with the Investment Company Act of 1940 or the Rules and
Regulations or interpretations of the Securities and Exchange Commission
thereunder and the aggregate value of all securities loaned does not exceed
331/3% of the market value of a Fund's net assets;
(5) Pledge, mortgage, or hypothecate its assets, except to secure authorized
borrowings as provided in the prospectus (this restriction is not fundamental);
(6) Buy any securities or other property on margin (except that the Aggressive
Opportunities Fund may enter into short sales as described in the prospectus, as
may be needed to enter into futures and options transactions as described in the
prospectus, and for such short-term credits as are necessary for the clearance
of transactions), or, with the exception of the Aggressive Opportunities Fund,
engage in short sales (unless by virtue of a Fund's ownership of other
securities its has a right to obtain at no added cost which are equivalent in
kind and amount to the securities sold) except as set forth in the prospectus
(this restriction is not fundamental);
(7) Purchase or sell puts or calls, or combinations thereof except as provided
in the prospectus, provided however, that a Fund may enter into commodities
contracts relating to financial instruments, such as futures contracts, index
contracts and options on such contracts, as well as forward currency exchange
transactions and reverse repurchase agreements as set forth in the prospectus;
(8) Purchase or sell real estate or real estate limited partnerships (although a
Fund may purchase securities secured by real estate interests or interests
therein, or issued by companies or investment trusts which invest in real estate
or interests therein);
(9) A Fund will not invest in the securities of other investment companies,
except as may be acquired as part of a merger, consolidation or acquisition of
assets approved by a Fund's shareholders or otherwise to the extent permitted by
section 12 of the Investment Company Act of 1940 (notwithstanding this
restriction, the Index Funds may enter into Master/Feeder arrangements as
described in the prospectus and in this Statement of Additional Information). A
Fund will invest only in investment companies which have investment objectives
and investment policies consistent with those of the Fund making such
investment except that a fund may invest a portion of its assets in a money
market fund for cash management purposes (this restriction is not fundamental);
and
10) Invest in companies for the purpose of exercising control of management.
The above-mentioned Fund policies and investment limitations are considered at
the time investment securities are purchased (with the exception of the
restriction on illiquid securities).
<PAGE> 32
AGGRESSIVE OPPORTUNITIES FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Aggressive Opportunities Fund seeks high long-term growth by using a
variety of long-term, flexible investment approaches and techniques.
Dividend and interest income, if any, is secondary and incidental to the
Fund's primary objective.
II. INVESTMENT STRATEGY
The Aggressive Opportunities Fund will incorporate complementary
investment disciplines that provide exposure to a variety of portfolio
management approaches, including options, futures, and the use of leverage
and short selling. Each subadviser may employ one or more specific
strategies and will generally concentrate in securities reflecting these
strategies. The Aggressive Opportunities Fund will be more diversified
than each individual subadviser's portfolio.
SUBADVISERS
The Fund has multiple subadvisers:
First Pacific Advisers (Los Angeles, California), for whom Robert
Rodriguez serves as the Fund's portfolio manager. Mr. Rodriguez has 27
years of investment management experience, 15 years with First Pacific
Advisers.
Massachusetts Financial Services (MFS) (Boston, Massachusetts), for whom
Brian Stack serves as the Fund's portfolio manager. Mr. Stack has 15 years
of investment management experience, 5 years with MFS.
TCW Funds Management, Inc. (Los Angeles, California), for whom Douglas
Foreman serves as the Fund's portfolio manager. Mr. Foreman has 9 years
of investment experience, 4 years with TCW.
III. INVESTMENT CHARACTERISTICS
The Aggressive Opportunities Fund may have investment characteristics
which differ from the general U.S. equity market as measured by the
Russell 2000 Index. Because of the broad mandate given subadvisers in
the Aggressive Opportunities
<PAGE> 33
Fund, investment characteristics may be expected to vary widely. However,
the beta of the Fund will frequently be higher than the Russell 2000
Index.
ELIGIBLE INVESTMENT LIMITS
<TABLE>
<CAPTION>
MINIMUM NORMAL RANGE MAXIMUM
------- ------------ -------
<S> <C> <C> <C>
Equity securities 50% 80-100% 100%
Cash and cash
equivalents 0% 0-25% 50%
Fixed income
securities
except derivatives 0% 0-5% 25%
Convertible securities 0% 5-15% 25%
</TABLE>
INTERNATIONAL FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The International Fund seeks long-term growth of capital by investing at
least 65% of its total assets in securities of companies whose principal
place of business is located in countries other than the United States.
The Fund will invest primarily in equity securities, however, debt
securities of foreign governments and private issuers are permitted. The
Fund may invest in securities payable in any currency and may hold foreign
currency.
II. INVESTMENT STRATEGY
The Fund will select subadvisers that represent a variety of investment
approaches investing in countries and companies located primarily outside
the United States. Subadvisers may specialize in a specific, defined
investment style, such as growth or value. Further, a subadviser may have
a particular geographic bias as represented by EAFE (Europe, Australia,
Far East), emerging markets, Pacific Rim or Latin America. The
International Fund will seek diversification by investment approach, type
of security and by the foreign markets in which subadvisers invest. The
majority of the Fund's investments will be in issuers in the EAFE
markets. As global markets evolve, it should be expected that the Fund's
allocations among countries may change. Approximately 5% of the Funds
assets will be invested in a sampling of securities designed to match the
performance of the EAFE Index. This portion of the Fund's assets will be
managed by Barclays Global Fund Advisers.
<PAGE> 34
Investment philosophies incorporated in the International Fund may include
"top-down" approaches which focus on macro-economic and political events.
Judgment, quantitative models and purchasing power parity models are among
the factors that may be used to identify currencies and markets that are
overvalued or undervalued relative to the U.S. dollar. The Fund
subadvisers may also use "bottom-up" strategies which emphasize company
and industry dynamics. The future prospects of growth in earnings per
share, security valuation and dividend considerations of companies will be
among the investment criteria of those subadvisers. Investments may
include companies in larger established countries and companies as well as
companies in smaller emerging markets. The Fund's performance may be
significantly affected by changes in foreign currency exchange rates.
SUBADVISERS
The Fund has multiple subadvisers:
Rowe Price-Fleming International, Inc. (Baltimore, Maryland), has an
Investment Advisory Group that has day-to day responsibility for managing
the portfolio and executing the Fund's investment program.
Capital Guardian Trust Company (Los Angeles, CA), which employs a team
approach to managing the portfolio and executing the Fund's investment
program.
Lazard Asset Management New York, NY employs a four-person portfolio
management team to manage the Portfolio and execute the Fund's investment
program.
III. INVESTMENT CHARACTERISTICS
The International Fund will have investment characteristics which differ
significantly from investments in the United States equity market. It is
expected that the Fund will exhibit more volatility than a fund invested
primarily in United States issues. Increased volatility will result from
fluctuations in currencies, political and economic events and factors, as
well as, both worldwide and country specific, as well as issue specific,
considerations.
It is expected that the International Fund will exhibit return patterns
and volatility characteristics similar to those of the EAFE Index. To the
extent that emerging markets are included in the Fund, volatility will
increase based on the proportion of the Fund allocation to emerging
markets.
<TABLE>
<CAPTION>
RELATIVE TO EAFE
CHARACTERISTIC INDEX
<S> <C>
Capitalization Lower/Similar
Standard Deviation Lower
</TABLE>
<PAGE> 35
ELIGIBLE INVESTMENT LIMITS
<TABLE>
<CAPTION>
MINIMUM NORMAL RANGE MAXIMUM
------- ------------ -------
<S> <C> <C> <C>
Equity securities 50% 80-100% 100%
Cash and cash
equivalents 0% 0-20% 50%
Fixed income
securities 0% 0-10% 25%
</TABLE>
GROWTH STOCK FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Growth Stock Fund seeks long-term growth of capital by investing
primarily in common stocks with above-average potential for growth in
corporate earnings. Dividend income is incidental to the Fund's overall
objective.
II. INVESTMENT STRATEGY
Growth Stock Fund is designed to incorporate complementary investment
disciplines that provide exposure to a wide variety of portfolio
management approaches. Each subadviser may employ one or more specific
growth strategies and will generally concentrate in securities reflecting
those strategies. However, the Fund in the aggregate will remain
diversified.
Investment strategies employed by the subadvisers included in the Growth
Stock Fund may focus on past patterns of earnings as well as future
prospects for growth in corporate earnings per share. For example,
earnings growth may result from changes in a company's management, an
industry trend, a cyclical recovery, unit growth, new products and product
expansion. Investments may include securities of large established growth
companies, medium size firms, and smaller emerging growth companies.
SUBADVISERS
The Fund has multiple subadvisers:
Cadence Capital Management (Boston, Massachusetts), for whom William B.
Bannick serves as the Fund's portfolio manager. Mr. Bannick has 14
years of investment management experience, 6 years with Cadence.
<PAGE> 36
William Blair & Company, LLC (Chicago, Illinois), for whom Robert C.
Lanphier, IV serves as the Fund's portfolio manager. Mr. Lanphier has
11 years of investment management experience, all of them with William
Blair.
Neuberger & Berman, LLC (New York, New York), for whom Jennifer K.
Silver, CFA, serves as the Fund's portfolio manager. Ms. Silver has 17
years of investment management experience, 1 year with Neuberger &
Berman.
Barclays Global Fund Advisers (San Francisco, California) uses an
index approach to managing the Fund's assets.
Fidelity Management Trust Company (Boston, Massachusetts), which manages
two separate accounts for the Fund. The portfolio manager for the Small
Company Growth account is Kennedy P. Richardson, who has 20 years of
investment management experience, 13 years with Fidelity. The portfolio
manager for the Aggressive Equity account is Neal Miller, who has 15 years
of investment management experience, 10 years with Fidelity.
III. INVESTMENT CHARACTERISTICS
The Growth Stock Fund may have investment characteristics which differ
from the general market, as measured by the Standard & Poor's 500 Index.
For the total Fund, these would include, but are not limited to:
<TABLE>
<CAPTION>
CHARACTERISTIC PERFORMANCE RELATIVE TO S&P 500 INDEX
<S> <C>
Capitalization Lower
Dividend Yield Lower
Historical 5 year EPS Growth Higher
Price to Earnings Ratio Higher
Standard Deviation Higher
</TABLE>
The Fund shall be managed to limit the concentration in the securities of
any one issuer through guidelines established by VIA.
<TABLE>
<CAPTION>
ELIGIBLE INVESTMENT LIMITS
MINIMUM RANGE MAXIMUM
------- ----- -------
<S> <C> <C> <C>
Equity securities 0% 0-100% 100%
Cash and cash
equivalents 0% 0-25% 100%
Fixed income securities
except derivatives 0% 5-15% 25%
</TABLE>
<PAGE> 37
<TABLE>
<S> <C> <C> <C>
Convertible securities 0% 5-15% 25%
</TABLE>
GROWTH AND INCOME FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Growth and Income Fund seeks long-term capital appreciation and
current income by investing primarily in common stocks. The Fund may also
invest in other equity securities including, but not limited to,
convertible securities. The goal is to provide a high total return from
underlying security positions that will offer price appreciation because
of undervaluation, earnings growth, or both with a focus on those which
may also provide current dividend income.
II. INVESTMENT STRATEGY
The Fund shall have subadvisers that represent a variety of portfolio
management approaches and investment disciplines. These investment
approaches will be combined in a complementary manner in an attempt to
achieve effectively the investment objective of the Fund.
Investment strategies employed by the subadvisers may involve:
- a focus on past patterns as well as future prospects for growth in
corporate earnings per share;
- an emphasis on securities that pay current dividends and offer
potential earnings growth;
- debt and equity securities which may not currently pay dividends, but
offer prospects for capital appreciation or future income;
- production of long-term capital growth by investing in securities that
the subadviser believes to be undervalued at the time of purchase where
the production of income in a secondary objective;
-the ability to emphasize a growth or income-oriented strategy
opportunistically.
<PAGE> 38
SUBADVISERS
The Fund has multiple subadvisers:
Putnam Investments (Boston, MA), for whom Manuel Weiss Herrero serves as
the Fund's portfolio manager. He has 11 years of investment experience,
all of them with Putnam.
Capital Guardian (Los Angeles, CA), for whom Bryan Jacoboski serves as the
Fund's portfolio manager. Mr. Jacoboski has 17 years of investment
management experience, 4 years with Capital Guardian.
III. INVESTMENT CHARACTERISTICS
The Growth and Income Fund may have investment characteristics which
differ from the general market as measured by the Standard & Poor's 500
Index. For the total Fund, these would include, but are not limited to:
<TABLE>
<CAPTION>
CHARACTERISTIC RELATIVE TO S&P 500
<S> <C>
Capitalization Somewhat Lower
Dividend Yield Similar
Hist. 5 year EPS Growth Similar
Price to Earnings Ratio Similar
Standard Deviation Similar
</TABLE>
EQUITY INCOME FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Equity Income Fund seeks long-term growth of capital by investing
primarily in common stocks, and the Fund may also invest in convertible
securities. The goal is to provide a high level of current income from
underlying security positions that will also offer price appreciation
because of undervaluation, earnings growth, or both.
II. INVESTMENT STRATEGY
<PAGE> 39
The Equity Income Fund will incorporate complementary investment
disciplines that provide exposure to a variety of portfolio management
approaches. Each subadviser may employ one or more specific strategies
each of which have in common the objective of obtaining yield. The Fund
will tend to be concentrated in higher yielding industries including, for
example, utilities, energy, financial, and cyclical companies. In addition
it is likely, because of the Fund's income requirement, that large
capitalization companies will dominate. The Equity Income Fund will be
more diversified than each individual subadviser's portfolio.
SUBADVISERS
The Fund has multiple subadvisers:
Crawford Investment Counsel (Atlanta, Georgia), for whom John H.
Crawford III serves as the Fund's portfolio manager. Mr. Crawford has
26 years of experience in investment management, 18 years with Crawford.
Newell & Associates (Palo Alto, California), for whom Roger D. Newell
serves as the Fund's portfolio manager. Mr. Newell has 30 years of
investment management experience, 12 years with Newell.
III. INVESTMENT CHARACTERISTICS
The Equity Income Fund may have investment characteristics which differ
from the general market, as measured by the Standard & Poor's 500 Index.
For the total Fund, these would include, but are not limited to:
<TABLE>
<CAPTION>
CHARACTERISTIC PERFORMANCE RELATIVE TO S&P 500 INDEX
<S> <C>
Beta Lower
Capitalization Somewhat Lower
Dividend Yield Higher
Historical 5 year EPS Growth Lower
Price to Earnings Ratio Lower
Standard Deviation Lower
</TABLE>
ELIGIBLE INVESTMENT LIMITS
<TABLE>
<CAPTION>
MINIMUM NORMAL RANGE MAXIMUM
------- ------------ -------
<S> <C> <C> <C>
Equity securities 50% 60-100% 100%
Cash and cash
equivalents 0% 0-25% 50%
Convertible securities 0% 0-30% 40%
</TABLE>
<PAGE> 40
ASSET ALLOCATION FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Asset Allocation Fund seeks to maximize total return relative to risk
by varying the asset class exposure to a portfolio invested in common
stocks, bonds and money market instruments.
II. INVESTMENT STRATEGY
The Asset Allocation Fund will integrate the activities of its managers to
create a framework in which overall exposure to stocks, bonds and cash as
separate asset classes will be varied in response to criteria including:
- long term expected returns
- historical valuation levels, earnings per share, and
- monetary, economic and other relationships that can be
quantified and measured over a long period of time.
Subadvisers attempt to add value by taking advantage of the changes in
relative value and risk among asset classes. Allocation among asset
classes may change dramatically over time. Allocation among asset classes
is often implemented by using futures contracts. Management of assets
within asset classes may be active or passive.
SUBADVISERS
The Fund has multiple subadvisers:
AVATAR Associates (New York, New York), for whom Edward S. Babbitt
serves as the Fund's portfolio manager. Mr. Babbitt has 28 years of
investment experience, 18 years with AVATAR.
Mellon Capital Management (San Francisco, California), for whom Thomas
B. Hazuka serves as the Fund's portfolio manager. Mr. Hazuka has 12
years of investment experience, all of them with Mellon.
Wilshire Asset Management (Santa Monica, California), for whom Thomas D.
Stevens serves as the Fund's portfolio manager. Mr. Stevens has 18
years of investment management experience, all of them with Wilshire.
<PAGE> 41
[Subadviser to be determined] will manage the Fund's cash portfolio.
III. INVESTMENT CHARACTERISTICS
The investment characteristics of the Fund will depend on the subadvisers'
asset allocation strategy. Such strategy is intended to maximize
risk-adjusted return.
<TABLE>
<CAPTION>
ELIGIBLE INVESTMENT LIMITS
MINIMUM NORMAL RANGE MAXIMUM
------- ------------ -------
<S> <C> <C> <C>
Equity securities 0% 40%-85% 100%
Cash and cash
equivalents 0% 0%-50% 100%
Fixed income
securities 0% 0%-50% 50%
</TABLE>
U.S. TREASURY SECURITIES FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The U.S. Treasury Securities Fund seeks to provide current income and
capital appreciation consistent with an objective of preservation of
principal by investing primarily in intermediate-term debt securities.
II. INVESTMENT STRATEGY
The U.S. Treasury Securities Fund is invested primarily in
intermediate-term U.S. Treasury Securities. In addition, the Fund may
invest up to 35% in U.S. Government agency pass-through mortgage
securities. The Fund may also invest in Treasury note and bond futures to
adjust duration exposure to take advantage of interest rate movements and
yield curve opportunities. The combination of securities and futures
maintains fixed income exposure comparable to that of a fully invested
portfolio position.
SUBADVISERS
The Fund's subadviser is Seix Investment Advisers, Inc. (Woodcliff Lake,
New Jersey), for whom John Talty serves as the Fund's portfolio
manager. Mr. Talty has 17 years of investment management experience,
over 5 years with Seix.
<PAGE> 42
III. INVESTMENT CHARACTERISTICS
The duration of the U.S. Treasury Securities Fund is managed so that it
will not exceed more than 1.25 times that of the Merrill Lynch 5-7 Year
Treasury Index at any time.
The U.S. Treasury Securities Fund may have some investment characteristics
which differ from the Merrill Lynch 5-7 Year Treasury Index primarily due
to the allowance for mortgage pass-through securities.
<TABLE>
<CAPTION>
SECTOR DIVERSIFICATION LIMITS
MINIMUM NORMAL RANGE MAXIMUM
------- ------------ -------
<S> <C> <C> <C>
Cash and Cash Equivalents 0% 5%- 15% 100%
U.S. Treasury Securities (over
one year) 40% 50%-80% 100%
Mortgage Pass-throughs 0% 10%-35% 35%
</TABLE>
IV. REVERSE REPURCHASE TRANSACTIONS
Assets of the U.S. Treasury Securities Fund may be transferred under
reverse repurchase agreements (including dollar roll transactions
involving mortgage securities) on terms established by VIA. Cash
associated with such transactions may be invested only in short term
liquid investment grade instruments.
MONEY MARKET FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Money Market Fund seeks to obtain the maximum current income, while
maintaining a constant net asset value of $1.00 per share, consistent with
preservation of capital and liquidity, that is available through
investments in specified money market instruments
II. INVESTMENT STRATEGY
The Fund seeks to obtain its investment objective by investing in a
registered money market mutual fund, the AIM Liquid Assets Fund, which in
turn invests in
<PAGE> 43
specified money market instruments. The Fund's average maturity is less
than 90 days. Eligible money market instruments include:
(1) Negotiable certificates of deposit and bankers' acceptances of U.S.
banks having total assets in excess of $1 billion;
(2) Commercial paper (including variable amount master demand notes) rated
A-1 by Standard & Poor's or Prime-1 by Moody's Investor Service, Inc. or,
if not rated, issued by a corporation having an outstanding unsecured debt
issue rated at Aa or better by Moody's or AA or better by Standard &
Poor's;
(3) Short-term corporate obligations rated Aa or better by Moody's or AA
or better by Standard & Poor's;
(4) U.S. Government obligations including bills, notes, bonds and other
debt securities issued by the U.S. Treasury. These are direct obligations
of the U.S. government and differ mainly in interest rates and dates of
issue;
(5) U.S. Government Agency securities issued or guaranteed by U.S.
Government sponsored instrumentalities and Federal agencies;
(6) Securities listed above which are subject to repurchase agreements.
SUBADVISERS
The Fund invests in the AIM Liquid Assets Fund, a registered money market
mutual fund, whose investment adviser is AIM Advisors, Inc.
III. INVESTMENT CHARACTERISTICS
The Money Market Fund is invested in the AIM Liquid Assets Fund, whose
underlying portfolio is invested in accordance with the requirements of
Rule 2a-7 of the Investment Company Act of 1940 regarding portfolio
maturity, quality and diversification. No portfolio instrument will have a
remaining maturity of greater than 397 days, and the Fund's
dollar-weighted average maturity will be less than 90 days.
IV. REVERSE REPURCHASE TRANSACTIONS
Assets of the Money Market Fund may be transferred under reverse
repurchase agreements (including dollar roll transactions involving
mortgage securities) on terms established by VIA. Cash associated with
such transactions may be invested only in short term liquid investment
grade instruments.
<PAGE> 44
THE INDEX FUNDS
---------------
Each Index Fund is structured as a "feeder" fund which invests in a registered
"master" fund. The "master" fund invests in securities in accordance with
investment objectives, policies, and limitations that are identical to those of
the applicable Index Fund.
With the exception of the Overseas Equity Index Fund, the subadviser for each
Index Fund is Barclay's Global Fund Advisers, which focuses at the "master"
fund level on quantitative, structured and passive management. The subadviser
for the Overseas Equity Index Fund is Bankers Trust.
The Index Funds employ "passive" management techniques, meaning that each Fund
tries to match, as closely as possible, the performance of its benchmark index.
Because it would be very expensive to buy and sell all of the stocks (or bonds,
as the case may be) in the target index, the Mid / Small Company, the Broad
Market, and the Core Bond Index Funds use a "sampling" technique. Using computer
programs, each of these Funds selects securities that will recreate its
benchmark index in terms of factors such as industry, size, and other
characteristics. Although such sampling techniques have been very accurate
historically, there is a risk the subadviser could make an error, causing a Fund
to fail to track the indesx as closely as projected.
OVERSEAS EQUITY INDEX FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Overseas Equity Index Fund seeks long-term growth of capital by
investing primarily in common stocks of companies domiciled outside
the United States. The goal is to provide a portfolio that will
approximate, before fees, the investment characteristics and
performance of the Morgan Stanley Capital International Europe
Australia and Far East (EAFE) Index.
II. INVESTMENT STRATEGY
The Overseas Equity Index Fund will employ a passive management
strategy to structure a portfolio that will approximate investment
holdings, characteristics, and investment returns of the EAFE Index
of common stocks of companies domiciled outside the United States.
<PAGE> 45
The Fund will maintain equity exposure for cash balances by purchasing
appropriate futures contracts to gain exposure to the components of the
Index. Futures contracts will not be used for the purpose of obtaining
leverage.
III. INVESTMENT CHARACTERISTICS
The Overseas Equity Index Fund should have portfolio characteristics
similar to the EAFE Index.
ELIGIBLE INVESTMENT LIMITS
The Overseas Equity Index Fund will be, through its "master" fund, fully
invested at all times in a combination of equity securities, equity index
futures contracts and small amounts of cash not covered by futures
contracts.
MID / SMALL COMPANY INDEX FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Mid / Small Company Index Fund seeks long-term growth of capital by
investing primarily in common stocks. The goal is to provide a portfolio
that will approximate the investment characteristics and performance of
the Wilshire 4500 index.
II. INVESTMENT STRATEGY
The Mid / Small Company Index Fund will employ a passive management
strategy to structure a portfolio that will approximate investment
holdings, characteristics, and investment returns (before fees) of the
Wilshire 4500 Index of common stocks.
The Fund will maintain equity exposure for cash balances by purchasing S&P
500 and S&P 400 Index futures contracts. Futures contracts will not be
used for the purpose of obtaining leverage.
III. INVESTMENT CHARACTERISTICS
The Mid / Small Company Index Fund should have portfolio characteristics
similar to the Wilshire 4500 Index.
<PAGE> 46
ELIGIBLE INVESTMENT LIMITS
The Mid / Small Company Index Fund, through its "master" fund, will be
fully invested at all times in a combination of equity securities and
equity index futures contracts and small amounts of cash not covered by
futures contracts.
BROAD MARKET INDEX FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Broad Market Index Fund seeks long-term growth of capital by investing
primarily in common stocks. The goal is to provide a portfolio that will
approximate the investment characteristics and performance of the Wilshire
5000 Index.
II. INVESTMENT STRATEGY
The Broad Market Index Fund will employ a passive management strategy to
structure a portfolio that will approximate investment holdings,
characteristics, and investment returns of the Wilshire 5000 Index of
common stocks.
The Fund will maintain equity exposure for cash balances by purchasing S&P
500 and S&P 400 Index futures contracts. Futures contracts will not be
used for the purpose of obtaining leverage.
IV. INVESTMENT CHARACTERISTICS
The Broad Market Index Fund should have portfolio characteristics similar
to the Wilshire 5000 Index.
ELIGIBLE INVESTMENT LIMITS
The Broad Market Index Fund, through its "master" fund, will be fully
invested at all times in a combination of equity securities, equity index
futures contracts and small amounts of cash not covered by futures
contracts.
<PAGE> 47
500 STOCK INDEX FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The 500 Stock Index Fund seeks long-term growth of capital by investing
primarily in common stocks. The goal is to provide a portfolio that will
approximate the investment characteristics and performance of the Standard
and Poor's 500 Index.
II. INVESTMENT STRATEGY
The 500 Stock Index Fund employs a passive management strategy to
structure a portfolio that will approximate investment holdings,
characteristics, and investment returns of the Standard & Poor's 500 Index
of common stocks.
The Fund will maintain equity exposure for cash balances by purchasing S&P
500 Index futures contracts. Futures contracts will not be used for the
purpose of obtaining leverage.
III. INVESTMENT CHARACTERISTICS
The 500 Stock Index Fund should have portfolio characteristics similar to
the Standard and Poor's 500 Index.
ELIGIBLE INVESTMENT LIMITS
The 500 Stock Index Fund, through its "master" fund, will be fully
invested at all times in a combination of equity securities and equity
index futures contracts and small amounts of cash not covered by futures
contracts.
CORE BOND INDEX FUND
STATEMENT OF INVESTMENT POLICIES
I. GENERAL DESCRIPTION AND GOALS
The Core Bond Index Fund seeks to provide current income and capital
appreciation consistent with the return of the broadly defined U.S. fixed
income market. The goal is to provide a portfolio that will approximate
the investment characteristics and performance of the Lehman Brothers
Aggregate Bond Index.
<PAGE> 48
II. INVESTMENT STRATEGY
The Core Bond Index Fund will employ a passive management strategy to
structure a portfolio that will approximate investment holdings,
characteristics, and investment returns of the Lehman Brothers Aggregate
Bond Index of fixed income securities.
The Fund may maintain fixed income exposure for cash balances by
purchasing U. S. Treasury Bond and Note financial futures contracts.
Futures contracts will not be used for the purpose of obtaining leverage.
III. INVESTMENT CHARACTERISTICS
The Core Bond Fund should have portfolio characteristics similar to the
Lehman Brothers Aggregate Bond Index.
ELIGIBLE INVESTMENT LIMITS
The Core Bond Index Fund, through its "master" fund, will be fully
invested at all times in a combination of fixed-income securities, bond
index futures contracts and small amounts of cash not covered by futures
contracts.
MANAGEMENT OF THE VANTAGEPOINT FUNDS
The Vantagepoint Funds is organized as a Delaware business trust and is governed
by a 7-member Board of Directors, one of whom is an "interested" director as
that term is defined in the Investment Company Act of 1940. The Directors stand
in the position of fiduciaries to the shareholders and, as such, they have a
duty of due care and loyalty, and are responsible for protecting the interests
of shareholders. The Directors are responsible for the overall supervision of
the operations of the Vantagepoint Funds and evaluation of the performance of
its investment adviser.
Vantagepoint Investment Advisers, LLC ("VIA") serves as investment adviser to
the Funds and employs a supporting staff of management personnel needed to
provide the requisite services to the Funds and also furnishes the Funds with
necessary office space, furnishings, and equipment. Each Fund pays its share of
VIA's net expenses which are allocated among the Funds under procedures
approved by the Funds' Board of Directors. In addition, each Fund bears its own
direct expenses, such as legal, auditing and custodial fees.
The Officers of the Vantagepoint Funds are also officers of VIA. The Officers of
the Funds manage its day-to-day operations and are responsible to the Funds'
Board of Directors.
The Vantagepoint Funds and affiliates adhere to a Code of Ethics established
pursuant to Rule 17j-1 of the Investment Company Act of 1940. The Code is
designed to prevent unlawful
<PAGE> 49
practices in connection with the purchase and sale of securities by persons
associated with the Funds, including officers and employees of VIA.
The names of the Directors and Officers of the Funds and their principal
occupations over the last 5 years may be found in the prospectus under the
heading "Management of the Fund".
COMPENSATION
------------
Directors and Officers of the Funds do not receive salaries, retirement
benefits, deferred compensation or any other form of compensation from the
Vantagepoint Funds. Directors are reimbursed for expenses incurred in the
exercise of their duties. As of the date of this Statement of Additional
Information, Directors and Officers of the Funds as a group beneficially owned
less than 1% of the outstanding shares of the Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Initially, the principal shareholder in the Vantagepoint Funds will be the ICMA
Retirement Trust (the "RT"), a District of Columbia common law trust. The RT was
established for the purpose of holding and investing the assets of public sector
retirement and deferred compensation plans. The RT will own a majority of the
outstanding shares of the Funds upon registration.
In exercising its rights as a shareholder in the Funds, the RT will seek
instructions from its investors, the plan sponsors of the public sector
retirement plans invested in the RT (the "employers"), in advance of exercising
the RT's voting rights. The RT will vote its shares of the Fund in the same
proportion as the instructions that it receives from the employers.
INVESTMENT ADVISORY AND OTHER SERVICES
The adviser to Vantagepoint Funds, VIA, as a wholly-owned subsidiary, is
controlled by the ICMA Retirement Corporation ("RC"), a retirement plan
administrator and investment adviser whose principal investment advisory client
is the RT. RC was established as a not-for-profit organization in 1972 to assist
state and local governments and their agencies and instrumentalities in the
establishment and maintenance of deferred compensation and qualified retirement
plans for the employees of such public sector entities. These plans are
established and maintained in accordance with Sections 457 and 401,
respectively, of the Internal Revenue Code of 1986, as amended. RC has been
registered as an investment adviser with the U.S. Securities and Exchange
Commission since 1983.
<PAGE> 50
RC is governed by a 10-member Board of Directors approved by the Executive
Committee of the International City/County Management Association, the
organization that founded RC. RC is a non-stock corporation.
VIA is a Delaware limited liability company, and is registered as an investment
adviser with the Securities and Exchange Commission.
VIA provides investment advisory services to each of the Vantagepoint Funds
pursuant to a Master Advisory Agreement (the "Advisory Agreement"). The advisory
services include Fund design, establishment of Fund investment objectives and
strategies, selection and management of subadvisers, and performance monitoring.
VIA furnishes periodic reports to the Funds' Board of Directors regarding the
investment strategy and performance of each Fund.
Pursuant to the Advisory Agreement, the Vantagepoint Funds compensate VIA for
these services by paying VIA an annual advisory fee assessed against daily
average net assets under management in each Fund as follows:
<TABLE>
<CAPTION>
Advisory fee
------------
<S> <C>
All Funds except the Index Funds 0.10%
Index Funds 0.05%
</TABLE>
VIA or its broker-dealer affiliate, ICMA-RC Services, Inc., provides all
distribution and marketing services for the Funds. VIA or its transfer agent
affiliate, Vantagepoint Transfer Agents, Inc. ("VTA"), also provides certain
administrative shareholder support services (such as telephone representatives)
for the Vantagepoint Funds related to the retirement plans investing in the
Funds. VIA or VTA, as the case may be, also provides Fund administration
services, such as preparation of shareholder reports and proxies, shareholder
recordkeeping and processing of orders.
VIA, ICMA-RC Services Inc. or VTA receives asset-based compensation for these
administrative services on an annual basis as follows:
<TABLE>
<CAPTION>
Fee for Fee for
Investor Services Fund Services
----------------- -------------
<S> <C> <C>
All Funds except
the Index Funds 0.25% 0.10%
Index Funds
Class I 0.20% 0.10%
- -------
Class II 0.05% 0.05%
- --------
</TABLE>
<PAGE> 51
The advisory fee, the fee for Investor services, and the fee for Fund services
are deducted from the applicable Fund's assets, and their effect is factored
into any quoted share price or investment return for that Fund.
The day-to-day management of each Fund rests with one or more subadvisers hired
by the Funds with the assistance of VIA. The responsibility for overseeing
subadvisers rests with VIA's Investment Division, headed by Senior Vice
President John Tobey, reporting directly to Girard Miller, CFA , President of
VIA. The following tables identify each subadviser and indicate the annual
subadvisory fee that is paid out of the assets of each Fund. The fee is assessed
against average daily net assets under management.
<TABLE>
<CAPTION>
Aggressive Opportunities Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
<S> <C>
First Pacific Advisers 0.80%
Massachusetts Financial Services 0.75%
TCW Funds Management Inc. 0.73%
International Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Templeton Global Advisers, Ltd 0.55%
Capital Guardian Trust Co. 0.**%
Lazard Asset Management 0.50%
Growth Stock Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Cadence Capital Management 0. 24%
William Blair & Company, LLC 0. 49%
Neuberger & Berman, LLC 0. 45%
Barclays Global Investors, N.A. 0. 03%
Fidelity Management Trust Company
(Small Company Growth account) 0. 49%
(Aggressive Equity account) 0. 45%
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
Growth and Income Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
<S> <C>
Capital Guardian Trust Co. 0.50%
Putnam Investments 0.47%
Equity Income Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Crawford Investment Counsel 0.16%
Newell Associates 0.20%
Asset Allocation Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
AVATAR Associates 0.23 %
Mellon Capital Management 0.27 %
Wilshire Asset Management 0.02%
U.S. Treasury Securities Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Seix Investment Advisers, Inc. 0.14%
Money Market Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
AIM Advisors, Inc. 0. 08%
Overseas Equity Index Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Bankers Trust 0. 40%
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
Mid/Small Company Index Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
<S> <C>
Barclays Global Investors, N.A. 0.10%
Broad Market Index Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Barclays Global Investors, N.A. 0. 08%
500 Stock Index Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Barclays Global Investors, N.A. 0.05 %
Core Bond Index Fund
Annual
Subadviser Subadvisory Fee
- ---------- ---------------
Barclays Global Investors, N.A. 0.08 %
</TABLE>
Information on the advisory services provided by each subadviser for each Fund
can be found in the prospectus, under the heading "Investment Policies,
Investment Objectives, Principal Investment Strategies, and Related Risks".
PORTFOLIO TRANSACTIONS OF THE FUNDS
VIA maintains a commission recapture program with certain brokers for the
Aggressive Opportunities Fund, the Growth Stock Fund, the Growth and Income
Fund, and the Equity Income Fund. Under that program, a percentage of
commissions generated by the portfolio transactions for those Funds is rebated
to the Funds by the brokers and used to reduce the operating expenses of those
Funds.
The advisory agreements with each subadviser authorize the subadviser to select
the brokers or dealers who will execute the purchases or sales of securities for
each Fund.
<PAGE> 54
The agreements direct the subadvisers to use best efforts to obtain the best
available price and most favorable execution with respect to all transactions
for the Funds.
In placing Fund transactions, each subadviser will use its best judgment to
choose the broker most capable of providing the brokerage services necessary to
obtain most favorable execution.
In choosing brokers, the subadvisers may take into account, in addition to
commission cost and execution capabilities, the financial stability and
reputation of the brokers and the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided by such brokers. The subadviser is authorized to pay brokers who
provide such brokerage or research services a commission for executing a
transaction which is in excess of the commission another broker would have
charged for that transaction if the subadviser determines that such commission
is reasonable in relation to the value of the brokerage and research services
provided to the subadviser by the broker.
One or more of the subadvisers may aggregate sale and purchase orders from the
Funds with similar orders made simultaneously for other clients of the
subadviser. The subadviser will do so when, in its judgment, such aggregation
will result in overall economic benefit to the Fund, taking into consideration
the advantageous selling or purchase price, brokerage commission, and other
expenses.
If an aggregate order is executed in parts at different prices, or two or more
separate orders for two or more of a subadviser's clients are entered at
approximately the same time on any day are executed at different prices, the
subadviser has discretion, subject to its fiduciary duty to all its clients, to
use an average price at which such securities were purchased or sold for each of
the clients for whom such orders were executed.
The Vantagepoint Funds participate in a securities lending program under which
one or more of the Funds' custodians is authorized to lend Fund securities to
qualified institutional investors under contracts calling for collateral in U.S.
Government securities or cash in excess of the market value of the securities
loaned. The Vantagepoint Funds receive dividends and interest on the loaned
securities. Lending fees received in the Vantagepoint Funds account are used to
reduce overall custodial expenses in the Funds from which the loaned securities
originated.
CAPITAL STOCK AND OTHER SECURITIES
The Vantagepoint Funds is an open-end diversified management investment company
organized as a Delaware business trust. As an open-end company, the Vantagepoint
Funds continually offers shares to the public. With the exception of the Index
Funds, each Fund offers a single class of shares.
<PAGE> 55
The Index Funds offer two classes of shares, Class I and Class II. Class I
shares are open to IRA and other individual accounts and each public sector
employee benefit plan that invests indirectly in the Funds through the ICMA
Retirement Trust containing assets of less than $40 million. Class II shares are
open (i) to qualifying public sector employee benefit plans that invest directly
in the Funds and have qualifying assets in excess of $150 million and (ii)
public sector employee benefit plans that invest indirectly in the Funds through
the ICMA Retirement Trust and have qualifying assets in excess of $40 million so
invested. Other plans with average account balances or other features that are
expected to afford the Index Funds with certain economies of scale in servicing
employee benefit plan participant accounts, may also qualify for Class II
shares.
PURCHASES AND REDEMPTIONS
Purchases
- ---------
Reference is made to the prospectus under the heading "Shareholder Information".
The Funds reserve the right in their sole discretion (i) to suspend the offering
of their shares or (ii) to reject purchase orders when in the judgment of
management such rejection is in the best interest of a particular Fund or Funds.
Redemptions
- -----------
Reference is made to the prospectus under the heading "Shareholder Information".
The Funds may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange is closed or trading on the
exchange is restricted as determined by the Securities and Exchange Commission
(the "Commission"), (ii) during any period when an emergency exists as defined
by the rules of the Commission as a result of which it is not reasonably
practicable for the Funds to dispose of securities owned by it, or fairly to
determine the value of its assets, and (iii) for such other periods as the
Commission may permit.
Certain redemption requests must include a signature guarantee
- --------------------------------------------------------------
A signature guarantee is designed to protect you against fraud. A redemption
request must be made in writing and must include a signature guarantee if any of
the following situations would apply:
* The account registration has changed within the past 30 days;
* The check is being mailed to an address other than the one listed on the
account (record address);
* The check is being made payable to someone other than the account owner;
* The redemption proceeds are being transferred to an account with a
different registration;
* Proceeds are to be wired to a bank account that was not pre-designated;
<PAGE> 56
* Any other transaction reasonably determined by the Funds to require a
signature guarantee.
A signature guarantee may be obtained from a bank, broker, dealer, credit union
(if authorized under state law), securities exchange or association, clearing
agency or savings association. Please note: a notary public cannot provide a
signature guarantee, and a notarized redemption request is not sufficient.
TAXATION OF THE FUND
The Vantagepoint Funds intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, which would cause the income
and capital gains of the Trust to "pass through" to the shareholders for federal
income and capital gains tax purposes. Failure to qualify for Subchapter M
status could result in federal income and capital gains taxes being assessed at
the Funds level, which would reduce Fund returns correspondingly.
CALCULATION OF PERFORMANCE DATA
As newly registered funds, the Vantagepoint Funds have no performance history.
However, the Vantagepoint Funds are patterned on, have the same investment
objectives, and are operated in subtantially the same fashion, as certain funds
offered through the ICMA Retirement Trust, an unregistered commingled fund which
holds and invests the assets of public sector retirement plans. Most of the
portfolio securities of each Vantagepoint Fund were transferred in-kind from the
corresponding fund of the ICMA Retirement Trust. The underlying portfolio of
each fund of the ICMA Retirement Trust currently consists solely of the shares
of the corresponding Vantagepoint Fund in which it invests.
The performance shown below is the performance an investor would have received
had the funds of the ICMA Retirement Trust charged the same asset-based fees and
expenses as the Vantagepoint Funds. Those fees and expenses are set forth below
under the heading "Vantagepoint Funds Fee Table".
The ICMA Retirement Trust's index funds offered a single class of shares. The
ICMA Retirement Trust did not offer a money market fund or a growth and income
fund, and performance is not shown. Prior to June 1, 1997, the the ICMA
Retirement Trust's Core Bond Index fund was not indexed. Figures shown will be
updated to most recent quarter-end prior to effectiveness.
Please note that the performance depicted is hypothetical. Actual performance of
the Vantagepoint Funds may vary from that shown.
<PAGE> 57
<TABLE>
<CAPTION>
Since
Fund 1 yr 5 yr 10 yr Inception
- ---- ---- ---- --- ---------
<S> <C> <C> <C> <C>
Aggressive
Opportunities *%
International *%
Growth Stock *% *% *% *%
Equity Income *%
Asset Allocation *% *% *%
U.S. Treasury
Securities *% *%
Overseas Equity Index *%
Mid/Small Company *%
Broad Market Index *% *%
500 Stock Index *%
Core Bond Index *% *% *%
</TABLE>
Advertisements which refer to the use of a Fund as a potential investment for
employee benefit plans or Individual Retirement Accounts may quote a total
return based upon compounding of dividends on which it is presumed no Federal
tax applies.
In assessing such comparison of yields, an investor should keep in mind that the
composition of the investments in the reported averages may not be identical to
the formula used by the Fund to calculate its yield. In addition, there can be
no assurance that any Fund will continue its performance as compared to such
other averages.
<PAGE> 58
VANTAGEPOINT FUNDS FEE TABLE
Annual Fund Operating Expenses
<TABLE>
<CAPTION>
Advisory Subadviser Other Total
Funds Fee Expense Expenses+ Expenses
- ----- --- ------- --------- --------
<S> <C> <C> <C> <C>
Aggressive
Opportunities 0.10% 0.76% 0.40% 1.26%
International 0.10% 0.56% 0.54% 1.20%
Growth Stock 0.10% 0.31% 0.39% 0.80%
Equity Income 0.10% 0.18% 0.38% 0.66%
Asset Allocation 0.10% 0.26% 0.39% 0.75%
U.S. Treasury
Securities 0.10% 0.14% 0.40% 0.64%
Overseas Equity
Index
Class I 0.05% 0.40%/\ 0.36% 0.81%
- -------
Class II 0.05% 0.40%/\ 0.16% 0.61%
- --------
Mid/Small Co.
Index
Class I 0.05% 0.10%/\ 0.36% 0.51%
- -------
Class II 0.05% 0.10%/\ 0.16% 0.31%
- --------
Broad Market
Index
Class I 0.05% 0.08%/\ 0.32% 0.45%
- -------
Class II 0.05% 0.08%/\ 0.12% 0.25%
- --------
500 Stock Index
Class I 0.05% 0.05%/\ 0.35% 0.45%
- -------
Class II 0.05% 0.05%/\ 0.15% 0.25%
- --------
Core Bond Index
Class I 0.05% 0.08%/\ 0.32% 0.45%
- -------
Class II 0.05% 0.08%/\ 0.12% 0.25%
- --------
</TABLE>
+ Amounts shown are based on estimated amounts for the current fiscal year, and
include the Investor services fee, the Fund services fee, and Fund operating
expenses.
/\ Includes subadviser fees and other expenses incurred at the "master" fund
level as a result of the Index Funds being "feeder" funds investing in "master"
funds managed by the subadviser.
LEGAL COUNSEL & INDEPENDENT AUDITORS.
Morgan, Lewis & Bockius, Washington, D.C. serves as legal counsel to The
Vantagepoint Funds. PricewaterhouseCoopers, LLP, Baltimore, MD, serves as
independent auditors.
<PAGE> 59
PART C: OTHER INFORMATION
EXHIBITS
(a) Agreement and Declaration of Trust *
(b) By-laws*
(c) Not applicable
(d) Advisory Contract with VIA.*
Form of Advisory Contract with Subadvisers*
(e) Distribution Agreement
(f) Not applicable
(g) Custodial Contracts**
(h) Not applicable
(i) Legal opinion**
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m) Not applicable
(n) Not applicable
(o) Rule 18f-3 plan*
* Previously filed
** To be filed by amendment
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Reference is made to the discussion regarding the ICMA Retirement Trust under
the heading "Control Persons and Principal Holders of Securities".
INDEMNIFICATION
Reference is made to Article VII, sections 3 and 4 of Registrant's Agreement and
Declaration of Trust.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Directors, Officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses incurred or
paid by a Director, Officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, Officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 60
BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
VIA, the investment adviser for the Funds, is wholly owned by the ICMA
Retirement Corporation, which is itself a registered investment adviser. The
ICMA Retirement Corporation also provides plan administration services to public
sector Section 401 qualified retirement plans and public sector Section 457
deferred compensation plans. Girard Miller is President, Chief Executive Officer
and an ex-officio member of the Board of Directors of the ICMA Retirement
Corporation. Mr. Miller is president of the Fund's principal investment adviser,
VIA. Mr. Miller also serves as President of the ICMA Retirement Trust, a
principal shareholder in the Vantagepoint Funds. Mr. Miller serves as President,
Chief Executive Officer, and Supervisory Principal of ICMA-RC Services, Inc., a
wholly-owned broker-dealer subsidiary of the ICMA Retirement Corporation.
Robin L. Wiessmann is a member of the Board of Directors of the ICMA Retirement
Corporation.
LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documentation required by section 31(a) of the
Investment Company Act of 1940 and the rules under that section will be
maintained in the physical possession of Registrant, the Registrant's transfer
agent, VTA, which has a place of business at 777 North Capitol Street, NE, Ste.
600, Washington, DC 20002, and the Registrant's custodian(s).
MANAGEMENT SERVICES
Reference is made to the discussion in this Statement of Additional Information
regarding the ICMA Retirement Corporation, ICMA-RC Services, Inc., and
Vantagpoint Transfer Agents, Inc., under the heading "Investment Advisory and
Other Services."
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of
Washington, DC, on the 20 day of December 1999
..............................
The Vantagepoint Funds
By: (PAUL F. GALLAGHER)*
George Bissell, Director
and Chair
...........................
(Signature and Title)
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the date(s) indicated.
By: (Paul F. Gallagher)*
George Bissell Director January 20, 1999
.............................................................................
(Signature) (Title) (Date)
By: (Paul F. Gallagher)*
Robert A. Bowman Director January 20, 1999
By: (Paul F. Gallagher)*
N. Anthony Calhoun Director January 20, 1999
By: (Paul F. Gallagher)*
Arthur Lynch Director January 20, 1999
By: (Paul F. Gallagher)*
Eddie Moore Director January 20, 1999
.............................................................................
(Signature) (Title) (Date)
By: (Paul F. Gallagher)*
Robin L. Wiessman Director January 20, 1999
* As Attorney-in-Fact, pursuant to Power-of-Attorney dated November 12, 1998.
