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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. .... [3]
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. Gallagher, 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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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.
[VANTAGEPOINT FUNDS LOGO]
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY 1
The Funds 1
FEE TABLES 5
INVESTMENT OBJECTIVES AND POLICIES 8
RISKS OF INVESTING IN THE FUNDS 16
Investment Limitations 17
MANAGEMENT OF THE FUND 17
Directors and Officers 18
SHAREHOLDER INFORMATION 20
Share Accounting for All Funds 20
Valuation of Funds 20
Reinvestment of Earnings 20
Pricing and Timing of Transactions 20
Reporting to Investors 21
PURCHASES, EXCHANGES AND REDEMPTIONS 21
Purchases 21
Purchases by Employee Benefit Plans 21
Exchanges and Allocations Among
Funds 22
Exchanges by Telephone 22
VantageLine 22
VantageLink 22
Purchases by IRA Investors 23
TAXATION 23
YEAR 2000 COMPLIANCE 24
</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.
Common Risks--The first six Funds listed in the following section and the first
four index Funds listed on page 3 invest primarily in common stocks, and are
subject to all of the general market risks of investing in the stock market.
Stock markets tend to move in cycles with periods of rising prices and periods
of falling prices. General market risk is discussed in greater detail on page
16. To the extent that a particular Fund is managed according to a specific
style (e.g. the Growth Fund), it is subject to the risk that other investment
styles may outperform its style. Each Index Fund is subject to the risk that it
will deviate from the performance of its benchmark, which is known as tracking
error. To varying degrees, all of the Funds entail the risk that an investor may
lose money.
THE FUNDS
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AGGRESSIVE OPPORTUNITIES FUND
Investment Objective--To offer high long-term capital growth.
Principal Investment Strategy--To invest primarily in common stocks of small- to
medium-capitalization companies. Strategies pursued by the Fund's subadvisers
include:
- investing in emerging growth companies
- identifying companies expected to exhibit high earnings growth
- investing in stocks believed to be undervalued.
Principal Risks--The returns on stocks of small-to medium-capitalization
companies tend to be more volatile at times than the returns on stocks of
larger-capitalization companies because of factors such as less certain
prospects for the growth of smaller companies and a lower degree of liquidity in
the markets for such stocks.
INTERNATIONAL FUND
Investment Objective--To offer long-term capital growth and diversification by
country.
Principal Investment Strategy--To invest primarily in the common stocks of
companies headquartered outside of the United States. The Fund will invest at
least 65% of its assets in foreign equity securities. Strategies pursued by the
Fund's subadvisers include:
- investing primarily in stock of companies headquartered in developed
countries
- investing in companies of all capitalization sizes
- investing in companies in a wide variety of industries
- investing in companies with above-average market earnings growth
potential
- investing in stocks believed to be undervalued.
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Principal Risks--The Fund is subject to the special risks of international
investing. These include: accounting and financial reporting standards that may
differ from those used in the U.S.; less supervision of stock exchanges and
brokers; the risk of foreign currency values changing relative to the U.S.
dollar; and the risk that political events or financial problems will weaken a
particular country's economy. Additionally, the Fund may invest in
less-developed markets where these risks can be more substantial. The Fund may
also invest a portion of its assets (35% or less) in bonds and domestic stocks.
GROWTH FUND
Investment Objective--To offer long-term capital growth.
Principal Strategy--To invest primarily in common stocks that are considered to
have above-average potential for growth. Strategies pursued by the Fund's
subadvisers include:
- investing primarily in common stocks of medium- to large-capitalization
companies
- selecting stocks of companies with long-term growth characteristics
- investing in stocks included in the S&P BARRA MidCap 400 Growth Index
Principal Risk--The Fund's growth stock investment strategy may 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 offer long-term capital growth and current income.
Principal Investment Strategy--To invest primarily in common stocks that offer
the potential for capital appreciation and current income. Strategies pursued by
the Fund's subadvisers include:
- focusing on large-capitalization companies whose stocks offer potential
for price appreciation because of undervaluation, earnings growth or both
- emphasizing stocks which may pay dividends.
Principal Risks--The Fund is subject to all of the general risks of investing in
the stock market, notably the risk of price and earnings volatility over the
short-term.
EQUITY INCOME FUND
Investment Objective--To offer long-term capital growth with consistency derived
from dividend yield.
Principal Investment Strategy--To invest primarily in dividend-paying common
stocks of well established companies. Strategies pursued by the Fund's
subadvisers include:
- investing in common stocks of companies that pay dividends at a
relatively high level.
- a general focus on large-capitalization companies.
Principal Risks--While investment in the Fund involves risk, the Fund's emphasis
on income should result in less volatility than is associated with other types
of common stock funds over the long-term. As a result of the Fund's income
focus, certain industry sectors and/or specific industries may be emphasized. As
such, the Fund may exhibit greater sensitivity to certain economic factors
(e.g., changing interest rates) than the general stock market.
ASSET ALLOCATION FUND
Investment Objective--The Fund's investment objective is to offer long-term
capital growth at a lower level of risk than an all equity portfolio.
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Principal Investment Strategy--To invest in a portfolio actively allocated among
common stocks, U.S. Treasury securities, and money market instruments. Under
normal circumstances the Fund will invest 45% to 85% of its assets in common
stocks. The remainder of the Fund's assets will be invested in U.S. Treasury
obligations and money market instruments. Strategies pursued by the subadvisers
focus on:
- approximating the general market return of each asset class
- allocating the stock portion of the Fund to a portfolio designed to
approximate the performance of the S&P 500 Index
Principal Risks--The Fund is particularly subject to manager risk--the risk that
the allocation strategy of the subadvisers will fail to meet the Fund's
objectives.
U.S. TREASURY SECURITIES FUND
Investment Objective--To offer current income.
Principal Investment Strategy--Strategies pursued by the Fund's subadviser
include:
- investing at least 65% of the Fund's assets in intermediate-term U.S.
Treasury Securities.
- investing up to 35% of the Fund's assets in undervalued U.S. Treasury
Securities and/or U.S. government agency mortgage pass-through
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 maturity of the bond, the greater the resulting change in value. The U.S.
Treasury Securities Fund will experience the volatility of an intermediate-
term (3-7 years) bond fund. The portion of the Fund's assets invested in
mortgage pass-through securities may expose it to pre-payment risk, which is the
risk that, in an environment of falling interest rates, mortgages will be paid
off early. This requires the Fund to invest the proceeds of such repayments in
lower-yielding instruments.
MONEY MARKET FUND
Investment Objective--To seek maximum current income, consistent with
maintaining liquidity and a stable share price of $1.00.
Principal Investment Strategy--To invest all of its assets in the Short-Term
Investments Company's Liquid Assets Portfolio, which invests in high-quality,
short-term money market instruments. The Portfolio's adviser is AIM Advisors,
Inc.
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--To offer long-term capital growth and diversification by
approximating the performance of the Morgan Stanley Capital International
Europe, Australia, and Far East (EAFE) Index.
Principal Investment Strategy--To invest in a sampling of securities that is
selected and weighted to result in investment characteristics comparable to the
index and performance that will correlate with the performance of the index.
Principal Risks--The Fund is subject to the risks of investing internationally,
as described for the International Fund.
MID/SMALL COMPANY INDEX FUND
Investment Objective--To offer long-term capital growth by approximating the
performance of the Wilshire 4500 Index.
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Principal Investment Strategy--To invest in a sampling of securities that is
selected and weighted to result in investment characteristics comparable to the
index and performance that will correlate with 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.
BROAD MARKET INDEX FUND
Investment Objective--To offer long-term capital growth by approximating the
performance of the Wilshire 5000 Index.
Principal Investment Strategy--To invest in a sampling of securities that are
selected and weighted to result in investment characteristics comparable to the
index and performance that will correlate with 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 offer long-term capital growth by approximating the
performance of the Standard and Poor's (S&P) 500 Index.
Principal Investment Strategy--To invest in all of the stocks in the S&P 500
Index, weighted to correlate to the investment characteristics of the Index.
Principal Risks--The Fund is expected to have the same volatility as the U.S.
stock market as a whole.
CORE BOND INDEX FUND
Investment Objective--To offer current income by approximating the performance
of the Lehman Brothers Government/Corporate Bond Index.
Principal Investment Strategy--To invest in a sampling of bonds that is selected
and weighted to result in investment characteristics comparable to the index and
performance that will correlate with 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 maturity of the bond, the greater the resulting change in value. The
Fund should experience the volatility characteristic of an intermediate-maturity
fixed income fund. The average maturity of bonds in the index is approximately
10 years and the average credit quality is Aaa.
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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 transaction fees of any
kind when you buy, sell, or exchange your shares.
SHAREHOLDER TRANSACTION EXPENSES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
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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
(Deducted From Fund Assets)
<TABLE>
<CAPTION>
Advisory Subadviser Other Total
Funds Fee Expense Expenses Expenses
----- -------- ---------- -------- --------
<S> <C> <C> <C> <C>
AGGRESSIVE OPPORTUNITIES 0.10% 0.75% 0.42% 1.27%
INTERNATIONAL 0.10% 0.53% 0.49% 1.12%
GROWTH 0.10% 0.28% 0.39% 0.77%
GROWTH & INCOME 0.10% 0.42% 0.40% 0.92%
EQUITY INCOME 0.10% 0.17% 0.39% 0.66%
ASSET ALLOCATION 0.10% 0.29% 0.38% 0.77%
U.S. TREASURY SECURITIES 0.10% 0.12% 0.37% 0.59%
MONEY MARKET 0.10% 0.08% 0.42% 0.60%*
Overseas Equity Index
CLASS I 0.05% 0.18% 0.65% 0.88%
CLASS II ** 0.05% 0.18% 0.45% 0.68%
Mid/Small Co. Index
CLASS I 0.05% 0.10% 0.46% 0.61%
CLASS II ** 0.05% 0.10% 0.26% 0.41%
Broad Market Index
CLASS I 0.05% 0.08% 0.33% 0.46%
CLASS II ** 0.05% 0.08% 0.13% 0.26%
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% 0.34% 0.47%
CLASS II ** 0.05% 0.08% 0.14% 0.27%
</TABLE>
+ Amounts shown are based on estimated amounts for the Fund's first full fiscal
year.
++ Includes 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%. The amount
shown includes fees paid to the Fund's investment adviser, as well as fees
paid for the underlying Fund.
** Amounts shown are equivalent to the total expenses that will be paid by Class
II shareholders. Please see page 21 for the eligibility criteria for Class II
shares.
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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 $130 $405
INTERNATIONAL $115 $358
GROWTH $ 79 $247
GROWTH & INCOME $ 94 $295
EQUITY INCOME $ 68 $212
ASSET ALLOCATION $ 79 $247
U.S. TREASURY SECURITIES $ 60 $190
MONEY MARKET $ 62 $193
Overseas Equity Index
CLASS I $ 90 $282
CLASS II ** $ 70 $218
Mid/Small Co. Index
CLASS I $ 63 $196
CLASS II ** $ 42 $132
Broad Market Index
CLASS I $ 47 $148
CLASS II ** $ 27 $ 84
500 Stock Index
CLASS I $ 46 $145
CLASS II ** $ 26 $ 81
Core Bond Index
CLASS I $ 48 $151
CLASS II ** $ 28 $ 87
</TABLE>
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
of that financial institution or retirement account 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"). VIA employs a "multi-management" strategy in which it
evaluates, selects, and monitors one or more subadvisers for each Fund.
A multi-management strategy seeks to improve consistency of return over time by
eliminating reliance on the results of a single subadviser. Therefore, where
advantageous, VIA allocates Fund assets among multiple subadvisers with distinct
and complementary investment strategies.
To construct a multi-managed Fund, VIA begins by identifying investment
strategies that are compatible with a Fund's objective. Next, VIA identifies
individual subadvisers who have demonstrated expertise in the consistent
execution of a specific investment strategy, and who complement the strategies
of other potential subadvisers. Selected subadvisers are then integrated within
a single Fund in weights that are expected to optimize return relative to risk.
Because each subadviser selects securities that reflect its specific investment
strategy, a multi-managed portfolio may be more diversified than any individual
subadviser's portfolio.
INVESTMENT OBJECTIVES AND POLICIES
- ----------------------------------------------------
The Funds have adopted certain investment policies and limitations. 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.
AGGRESSIVE OPPORTUNITIES FUND
General Description and Goals--The Aggressive Opportunities Fund seeks high
long-term growth of capital by investing primarily (at least 65%) in the common
stocks of small- to medium-capitalization U.S. and non-U.S. companies.
Investment Strategy--The Aggressive Opportunities Fund incorporates
complementary investment disciplines that provide exposure to a wide variety of
portfolio management approaches. Each subadviser employs a distinctive strategy
and focuses on securities reflecting that strategy.
The Fund invests in common stocks of companies with unique prospects for capital
appreciation. The Fund's investments may also include bonds. Instruments such as
futures contracts and options may be used occasionally for cash management
purposes, but will not be used for speculative purposes. The Fund will be
managed to limit concentration in the securities of any one issuer or industry.
Investment Risks--The Fund is subject to all of the general risks of investing
in the stock market. The Fund is also exposed to the added volatility of returns
for small- and medium-capitalization stocks as compared to the returns of
larger-capitalization stocks. The Fund can be expected to have significantly
greater volatility than the broad U.S. stock market (as measured by the S&P 500
Index) over any selected time period.
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Investment Subadvisers--First Pacific Advisors: (Los Angeles, California) serves
as a subadviser to the Fund. Robert Rodriguez serves as the Fund's portfolio
manager. Mr. Rodriguez began his investment career in 1971, and joined First
Pacific Advisors as a portfolio manager in 1983. First Pacific Advisors invests
its portion of the Fund's assets in small- to medium-capitalization stocks and
seeks stocks that are out-of-favor with the market, often in undervalued
industries. The number of holdings tends to be concentrated.
Massachusetts Financial Services: (Boston, Massachusetts) serves as a subadviser
to the Fund. Brian Stack serves as the Fund's portfolio manager. Mr. Stack began
his investment career in 1983 and joined Massachusetts Financial Services (MFS)
as a portfolio manager in 1993. MFS invests its portion of the Fund's assets in
small-capitalization stocks and seeks to invest in emerging growth companies
that the subadviser believes have potential to become major enterprises. These
companies are often in their early stages in their development.
TCW Funds Management: (Los Angeles, California) serves as a subadviser to the
Fund. Douglas Foremen serves as the Fund's portfolio manager. Mr. Foreman began
his career as a portfolio manager in 1989 and assumed his present position with
TCW in 1994. This subadviser invests its portion of the Fund's assets in small-
to medium-capitalization stocks of companies expected to exhibit high earnings
growth, and employs techniques such as quantitative screening, research
evaluation, and direct company contact.
INTERNATIONAL FUND
General Description and Goals--The International Fund seeks long-term growth of
capital by investing primarily (at least 65%) in the common stocks companies
headquartered outside of the United States. Dividend income is incidental to the
overall objective.
Investment Strategy--The International Fund incorporates complementary
investment disciplines that provide exposure to a wide variety of portfolio
management approaches. Each subadviser employs a distinctive strategy and
focuses on securities reflecting that strategy. The Fund may be more diversified
than each individual subadviser's portfolio.
The Fund invests primarily in common stocks of companies headquartered in
developed countries, including those in Europe, Asia, and the Far East. The Fund
may also invest, to a lesser extent, in less developed emerging markets in Asia,
Europe, Latin America, and Africa. In addition to common stocks, the Fund may
invest in a wide variety of other securities including stock index futures
contracts, convertible securities, currency futures, and investment grade bonds.
The Fund will be managed to limit concentration in the securities of any one
issuer or industry.
Investment Risks--The Fund is subject to all of the general risks of investing
in the stock market. The Fund is also exposed to the additional risks of
investing in foreign securities. These risks include loss due to political,
legal, regulatory, and operational uncertainty, as well as currency conversion
factors. These risks can be greater in emerging markets.
Investment Subadvisers--Capital Guardian Trust Company: (Los Angeles,
California), employs a decentralized team approach to managing the portfolio.
Capital Guardian invests its portion of the Fund's assets in the stocks of
companies of any size that they believe have potential for growth that is not
recognized by the market.
Lazard Asset Management: (New York, New York), employs a team approach to
managing the portfolio. Lazard invests its portion of the Fund's assets
primarily in large-capitalization stocks and emphasizes a value approach that
seeks to identify certain characteristics of companies that it believes indicate
improving fundamentals.
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Rowe Price-Fleming: (London, United Kingdom / Baltimore, Maryland), employs a
team approach to managing the portfolio. Rowe Price invests its portion of the
Fund's assets primarily in medium-capitalization stocks and seeks companies with
above-average market earnings growth potential at a reasonable price.
Barclays Global Investors, N.A. (San Francisco, California), uses an index
approach to managing the Fund's assets. BGI seeks to approximate the performance
and portfolio characteristics of the Morgan Stanley Capital International
Europe, Australia, and Far East (EAFE) Index.
GROWTH FUND
General Description and Goals--The Growth Fund seeks long-term growth of capital
by investing primarily (at least 65% of its assets) in common stocks with
above-average potential for growth in corporate earnings.
Investment Strategy--The Growth Fund is designed to incorporate complementary
investment disciplines that provide exposure to a wide variety of portfolio
management approaches. Each subadviser employs a distinctive growth strategy and
focuses on securities reflecting that strategy.
The Fund invests primarily in common stocks of companies with prospects for
above-average growth in earnings, with emphasis on stocks of seasoned,
medium-and larger-capitalization growth firms. The Fund also includes
smaller-capitalization stocks. The Fund will be managed to limit concentration
in the securities of any one issuer or industry.
Investment Risks--The Fund is subject to all of the general risks of investing
in the stock market. Additionally, the Fund's growth stock investment strategy
may expose it to a greater degree of price and earnings volatility over shorter
time periods than the stock market as a whole. There may be periods of time over
which other styles of investing outperform the growth style of the Fund.
Investment Subadvisers--Barclays Global Investors (San Francisco, California),
uses an index approach to managing its portion of the Fund's assets. BGI seeks
to replicate the performance and portfolio characteristics of the S&P BARRA
MidCap Growth Index, which consists of that portion of the S&P 400 MidCap Index
with growth characteristics.
Cadence Capital Management (Boston, Massachusetts) serves as a subadviser to the
Fund. William B. Bannick serves as the Fund's portfolio manager. Mr. Bannick
began his investment career in 1984 and joined Cadence as a portfolio manager in
1992. Cadence invests its portion of the Fund's assets in medium- to
large-capitalization stocks of companies with long-term growth characteristics
selling at reasonable valuations in relation to the fundamental prospects of the
underlying companies.
Fidelity Management Trust Company (Boston, Massachusetts) serves as a subadviser
to the Fund. Kennedy P. Richardson, who began his investment career in 1978 and
joined Fidelity in 1985 manages a portion of the Fund that focuses on the equity
securities of smaller companies having valuations close to or below those of the
broad domestic equity market. Neal Miller, who began his investment career in
1983 and joined Fidelity as a portfolio manager in 1988, manages a portion of
the Fund that focuses on stocks of well-established, well-managed companies of
all sizes whose earnings benefit from emerging trends that are identified by
Fidelity.
Neuberger & Berman, LLC (New York, New York), serves as an investment adviser to
the Fund. Jennifer K. Silver serves as the Fund's portfolio manager. Ms. Silver
began her career as a portfolio manager in 1981 and assumed her current position
with Neuberger & Berman in 1997. This subadviser invests its portion of 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.
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William Blair & Company, LLC (Chicago, Illinois) serves as a subadviser to the
Fund. Robert Lanphier, IV serves as the Fund's portfolio manager. Mr. Lanphier
joined William Blair as a portfolio manager in 1987. Blair invests its portion
of the Fund's assets in medium to large capitalization stocks and seeks to
invest in durable companies exhibiting strong business leadership, quality
products and services, solid financial prospects, and strong management.
The Growth Fund can be expected to have significantly greater volatility than
the broad U.S. stock market (as measured by the S&P 500 Index) over any selected
time period.
GROWTH & INCOME FUND
General Description and Goals--The Growth & Income Fund seeks long-term capital
growth by investing primarily (at least 65 percent) in common stocks that offer
the potential for high total return through a combination of capital
appreciation and current income.
Investment Strategy--The Growth & Income Fund is designed to incorporate
complementary investment disciplines that provide exposure to a variety of
portfolio management approaches. Each subadviser employs a distinctive equity
income strategy and focuses on securities reflecting that strategy.
The Fund focuses on large-capitalization companies whose stocks offer good
potential for price appreciation because of undervaluation, earnings growth, or
both, with an emphasis on those which may provide current dividend income. The
Fund shall be managed to limit the concentration in the securities of any one
issuer or industry.
Investment Risks--The Fund is subject to all the general risks of investing in
the stock market and is expected to exhibit the risk characteristics of a common
stock portfolio.
Investment Subadvisers--Capital Guardian Trust Company: (San Francisco, CA)
serves as a subadviser to the Fund. Theodore R. Samuels serves as portfolio
manager. Mr. Samuels began his investment career in 1979 and joined Capital
Guardian as a portfolio manager in 1981. This subadviser seeks to meet the
Fund's objectives using an approach that combines both value and growth
orientations.
Putnam Investment Management: (Boston, MA) serves as a subadviser to the Fund.
Manuel Weiss Herrero serves as the Fund's portfolio manager. Mr. Weiss Herrero
began his investment career in 1987 when he joined Putnam as a portfolio
manager. This subadviser seeks the potential returns from growth stocks but with
reduced volatility through the use of risk control techniques.
EQUITY INCOME FUND
General Description and Goals--The Equity Income Fund seeks long-term, stable
growth of capital by investing primarily (at least 65 percent) in
dividend-paying, common stocks of well-established companies.
Investment Strategy--The Equity Income Fund incorporates complementary
investment disciplines that seek stocks that provide exposure to a variety of
portfolio management approaches. Each subadviser employs a distinctive strategy
and focuses on securities reflecting that strategy.
The Fund invests in the common stocks of companies that pay dividends at
relatively high levels. These yields may be indicative of attractive valuations
and investments that are undervalued relative to a stock's history and to the
overall U.S. stock market. The Fund may be diversified across all sizes of
companies but generally focuses on large-capitalization companies, which tend to
have the most stable long-term earnings and dividend-paying records.
11
<PAGE> 17
Investment Risks--While investment in the Fund involves risks, the Fund's
emphasis on income should result in less volatility than is associated with
other types of common stock funds over the long-term. As a result of the Fund's
income focus, certain industry sectors and/or specific industries may be
emphasized. As such, the Fund may exhibit greater sensitivity to certain
economic factors (e.g., rising interest rates) than the general stock market.
Due to the Fund's emphasis on large-capitalization, dividend-paying companies,
the Fund's volatility level is expected to be equal to, or lower than that of
the S&P 500 Index.
Investment Subadvisers--Crawford Investment Counsel: (Atlanta, GA) serves as a
subadviser to the Fund. John Crawford, III serves as portfolio manager. Mr.
Crawford began his investment career in 1970 and established Crawford Investment
Counsel in 1980. This subadviser seeks consistent dividend growth by investing
primarily in the securities of companies that consistently raised their
dividends every year for the past ten years.
Newell Associates: (Palo Alto, CA) serves as a subadviser to the Fund. Roger
Newell serves as portfolio manager. Mr. Newell began his investment career in
1958 and established Newell Associates in 1986. This subadviser seeks to produce
high current income from common stocks. It invests in large, well-established
dividend-paying companies with a current yield at least 25% higher than the
Standard & Poor's Industrials.
ASSET ALLOCATION FUND
General Description and Goals--The Asset Allocation Fund seeks long-term growth
of capital at a lower level of risk than a portfolio consisting entirely of
common stocks. The Fund pursues this objective by allocating assets among
stocks, U.S. Treasury securities, and money market instruments in proportions
determined by the subadvisers based on projected returns and risks for each
asset class.
Investment Strategy--The Asset Allocation Fund is designed to incorporate
complementary tactical asset allocation strategies, in which overall exposure to
stocks, U.S. Treasury securities, and cash is varied according to perceived
changes in relative value among asset classes. These strategies are based on
systematic assessments of quantifiable criteria such as long-term expected asset
class returns, valuation measures, economic and monetary indicators, and
financial market conditions.
The primary responsibility of the Fund's subadvisers is to allocate assets among
stocks, U.S. Treasury securities, and cash; the subadvisers do not select
individual common stocks. Allocation among asset classes may change dramatically
over time, although typically will occur incrementally. The stock allocation is
passively managed in a portfolio designed to approximate the performance of the
S&P 500 Index; the Treasury allocation may be actively or passively managed; and
the money market allocation is actively managed. Stock and Treasury exposure may
be obtained or modified by using futures contracts.
Investment Risks--The Fund is subject to the general risks associated with stock
market investing, as well as to interest rate risk.
Investment Subadvisers--The Fund is managed by multiple subadvisers:
AVATAR Associates (New York, New York) serves as a subadviser to the Fund.
Edward S. Babbitt serves as the Fund's portfolio manager. Mr. Babbitt entered
the investment industry in 1970 and joined AVATAR as a portfolio manager in
1980. AVATAR actively allocates assets between stocks and money market
instruments. At any given time, 100% of assets may be allocated to stocks or to
money market instruments, although shifts more typically occur incrementally.
12
<PAGE> 18
Mellon Capital Management (San Francisco, California) serves as a subadviser to
the Fund. Thomas B. Hazuka serves as the Fund's portfolio manager. Mr. Hazuka
entered the investment industry in 1986 when he joined Mellon as a portfolio
manager. Mellon actively allocates assets among common stocks, long-term U.S.
Treasury obligations, and money market instruments. At any given time, 100% of
assets may be allocated to stocks, to Treasury securities, or to money market
instruments, although shifts more typically occur incrementally.
Wilshire Asset Management (Santa Monica, California) serves as a subadviser to
the Fund. Thomas D. Stevens serves as the Fund's portfolio manager. Mr. Stevens
entered the investment industry in 1980, when he joined Wilshire as a portfolio
manager. Wilshire passively manages the stock allocations of AVATAR and Mellon
in a portfolio that fully replicates the S&P 500 Index, with small
period-to-period variances.
Payden & Rygel Investment Counsel (Los Angeles, California) serves as a
subadviser to the Fund. Brian Matthews serves as the Fund's portfolio manager.
Mr. Matthews entered the investment industry in 1982 and joined Payden & Rygel
in 1985 as a portfolio manager. Payden & Rygel manages the money market
instrument allocations of AVATAR and Mellon, as well as cash underlying futures
positions.
Since AVATAR 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 current
income obtainable from active management of intermediate-term U.S. Treasury
securities and certain U.S. Government and Agency securities. Capital growth is
a secondary objective.
The Fund is designed to offer a rate of return equivalent to intermediate-term
U.S. 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
contracts 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. Christina
Seix serves as the Fund's portfolio manager. She founded the firm in 1991.
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 Investment Company Act of 1940.
13
<PAGE> 19
The Fund seeks to obtain its investment objective by investing substantially all
of its assets in a registered money market mutual fund, the Short-Term
Investment Company's Liquid Assets Portfolio, 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 Index Funds described below follow an indexed or "passively managed"
approach to investing. This means that Barclays Global Fund Advisors
("Barclays") selects securities designed to approximate the investment
characteristics and performance of a specified benchmark, such as the S&P 500
Index.
Unlike an actively managed portfolio, an index fund does not rely on a portfolio
manager's ability to predict the performance of individual securities. An index
fund simply seeks to parallel the performance of its benchmark. Additionally,
index funds tend to have lower operating expenses than actively managed funds.
The assets of the Index Funds are managed by Barclays, San Francisco,
California. In order to take advantage of the economies of scale offered by a
larger pool of assets, each Index Fund except the Overseas Equity Index Fund is
structured as a "feeder" fund. A "feeder" fund seeks to achieve its investment
objective by investing its assets in a single "master" fund managed by
Barclay's. Each Master Fund invests substantially all of its assets in
securities in accordance with investment objectives, policies, and limitations
that are identical to those of the applicable Index Fund. In other words, each
Index Fund (other than the Overseas Equity Fund), "feeds" shareholder
investments into its corresponding "master" fund.
The Broad Market Index Fund's master portfolio invests substantially all of its
assets in two other master portfolios of Barclays. One of these masters, in
turn, invests substantially all of its assets in a representative sample of
stocks comprising the Wilshire 4500 Index. The other master, in turn, invests
substantially all of its assets in stocks comprising the S&P 500 Index (the
"Underlying Portfolios"). The percentage of the Master Portfolio's assets
invested in the Underlying Portfolios is approximately the same as the
percentage such Portfolios are invested in stocks represented in the Wilshire
5000 Index.
Because it can be very expensive to buy and sell of the securities in a target
benchmark, the Index Funds, with the exception of the 500 Stock Index Fund,
employ "sampling" techniques to approximate benchmark characteristics such as
capitalization and industry weight using fewer securities than contained in the
benchmark. Historically, sampling techniques have been accurate but there is a
risk that Barclays could make an error, causing a Master Portfolio to track the
Index less precisely than projected.
The Masters maintain equity exposure for cash balances by purchasing appropriate
futures contracts to gain exposure to the components of the Index. Futures
contracts are not used for leverage. The Masters seek to remain fully invested
at all times, without significant cash balances.
Each Index Fund investing in "master" funds reserves the right to change the
"master" fund in which it invests 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."
14
<PAGE> 20
OVERSEAS EQUITY INDEX FUND
General Description and Goals--The Overseas Equity Index Fund seeks long-term
growth of capital by investing in common stocks of companies domiciled outside
the United States. The goal is to provide a portfolio that approximates the
investment characteristics and performance of the Morgan Stanley Capital
International Europe, Australia, and Far East (EAFE) Index.
Investment Strategy--The Overseas Equity Index Fund will invest in a sampling of
securities contained in the EAFE Index.
Investment Risks--The Overseas Equity Index 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
General Description and Goals--The Mid/ Small Company Index Fund seeks long-term
growth of capital by investing in common stocks of U.S. small- to
medium-capitalization companies. The goal is to provide a portfolio that
approximates the investment characteristics and performance of the Wilshire 4500
Index.
Investment Strategy--The Mid/Small Company Index Fund will invest in a master
fund that invests in a sampling of securities contained in the Wilshire 4500
Index.
Investment Risks--The Fund is exposed to the general risks of stock investing.
Additionally, the Wilshire 4500 Index includes smaller-capitalization companies
whose stocks tend to have more price volatility than those of larger companies.
BROAD MARKET INDEX FUND
General Description and Goals--The Broad Market Index Fund seeks long-term
growth of capital by investing in common stocks of U.S. companies across all
capitalization ranges. The goal is to provide a portfolio that approximates the
investment characteristics and performance of the Wilshire 5000 Index.
Investment Strategy--The Broad Market Index Fund will invest in a master fund
that invests in two other Master Portfolios of Barclays that invest in a
sampling of securities contained in the Wilshire 4500 Equity Index and the S&P
500 Index, respectively, in order to approximate the performance of Wilshire
5000 Index.
Investment Risks--The Broad Market Index Fund is exposed to the general risks of
stock investing.
500 STOCK INDEX FUND
General Description and Goals--The 500 Stock Index Fund seeks long-term growth
of capital by investing in common stocks of larger-capitalization companies
traded on U.S. stock exchanges. The goal is to provide a portfolio that
approximates the investment characteristics and performance of the Standard &
Poor's 500 Index.
Investment Strategy--The 500 Stock Index Fund will invest in a master fund that
seeks to replicate the holdings of the Standard & Poor's 500 Index.
Investment Risks--The 500 Stock Index Fund is exposed to the general risks of
stock investing.
15
<PAGE> 21
CORE BOND INDEX FUND
General Description and Goals--The Core Bond Index Fund seeks current income and
growth of capital by investing in U.S. government and corporate investment-grade
obligations. The goal is to provide a portfolio that approximates the investment
characteristics and performance of the Lehman Brothers Government/Corporate Bond
Index.
Investment Strategy--The Core Bond Index Fund will invest in a master fund that
invests in a sampling of securities contained in the Lehman Brothers
Government/Corporate Index.
Investment Risks--The Core Bond Index Fund is exposed to the general risks of
investing in bonds. The Fund experiences volatility similar to that of an
intermediate-term bond fund. The average maturity of the Fund is expected to
range from 8 years to 12 years. Market prices of the securities held in the
portfolio will fluctuate as interest rates change. The Fund is also exposed to
credit risk, which is the risk that the issuer of a corporate bond included in
the index will default on its obligations. However, the average credit quality
of the index is Aaa, which means that the level of such credit risk is very low.
Please see p. 16 for a detailed discussion of credit risk.
16
<PAGE> 22
RISKS OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The following is a description of one or more 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 some level of 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. However,
foreign securities involve additional risk of loss due to political, economic,
legal, regulatory, operational and currency conversion and pricing factors
affecting investment in the securities of foreign businesses or governments.
These risk factors may be even more prevalent in emerging markets. Foreign
securities are also subject to the risks associated with the value of foreign
currencies. A decline in the value of foreign currency vs. the U.S. dollar
reduces the dollar value of securities denominated in that currency. The
International Fund and the Overseas Equity Index Fund are subject to these
risks. The Aggressive Growth, Growth, Growth & Income and Equity Income Funds
may invest a limited portion of their respective assets in foreign securities,
and would be subject to these risks to the extent of such investment.
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. The U.S. Treasury Securities Fund
and the Core Bond Index Fund are both subject to this risk. Because of their
extreme short-term nature, money market instruments carry little market 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. Corporate bonds
rated BBB or above, such as those held by the Core Bond Index Fund, are
generally considered to carry minimal credit risk. Corporate
17
<PAGE> 23
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.
III. OBJECTIVE/STYLE 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 or the investment style of one or more of a Fund's subadviser (for
instance, a growth stock or a growth style) 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
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 with any
mutual fund, there can be no guarantee that a particular Fund will achieve its
objective.
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% (100% for the Money Market Fund) 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 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.
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.
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
18
<PAGE> 24
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 as
Chief Executive Officer and President of 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 began his investment career in 1969. He assumed his current position
with RC in January of 1998. From 1995 to 1998 Mr. Tobey served as President and
Chief Executive Officer of Investment Directions, Inc., and from 1986 to 1994 he
served as President of the Liberty Asset Management Company. 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 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
</TABLE>
19
<PAGE> 25
<TABLE>
<CAPTION>
Principal Occupations
Name, Address Position During Past 5 years
------------- ---------- -----------------------------------------
<S> <C> <C>
Robin L. Wiessmann Director* Principal
Yardley, PA Artemis Capital Group, Inc.
Girard Miller President* President and Chief Executive Officer
Washington, DC ICMA Retirement Corporation
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
Paul Gallagher Secretary* General Counsel (1998-present)
Washington, DC ICMA Retirement Corporation;
Formerly; Principal and Assistant General
Counsel,
The Vanguard Group
</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.
20
<PAGE> 26
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 (except for the Money Market Fund) 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 pricing services.
Securities for which market quotations are not readily available are valued
according to methods established by the Board of Directors that are believed to
reflect fair value. 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.
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
21
<PAGE> 27
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. Transaction requests by facsimile must be received by 12 noon to
receive that day's NAV.
REPORTING TO INVESTORS
- ----------------------------------------------------
With respect to any investment transaction reports you may receive from
Vantagepoint Funds, review these reports carefully, and call the toll-free
customer service line at 1-800-669-7400 or contact the Funds on-line at
[email protected]. 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 $125 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 (or
12 noon with respect to fax instructions) 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
22
<PAGE> 28
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 1-800-669-7400. 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) or 12 noon for fax
instructions 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.
The 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 1-800-669-7400. 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" below 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 1-800-669-7400.
VantageLine is normally available 24 hours a day, seven days a week for your
convenience; however, service availability 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 the Fund's address).
VANTAGELINK
- ----------------------------------------------------
The Funds maintain VantageLink, a home page on the Internet. The address is
http://www.icmarc.org.
23
<PAGE> 29
Information available from the Internet includes account balances (which
requires a special password), 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 1-800-669-7400 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, please call 1-800-669-7400 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. The Fund intends to distribute capital gains annually. The Money
Market, Core Bond Index and U.S. Treasury Funds will distribute dividends
monthly, and all of the remaining Funds will distribute dividends annually.
24
<PAGE> 30
Normally, distributions to shareholders are taxable as income or capital gains
when such income and gains are distributed to them. 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. The Funds and VIA are working with vendors to make any changes to the
systems necessary to achieve full Year 2000 compliance.
25
<PAGE> 31
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
26
<PAGE> 32
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
1-800-669-7400.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Description of the Fund and Its Investments and Risks ........ 2
Management of the Fund ....................................... 6
Control Persons and Principal Holders of Securities .......... 6
Investment Advisory and Other Services ....................... 7
Portfolio Transactions ....................................... 10
Capital Stock and Other Securities ........................... 10
Purchase, Redemption, and Pricing of Shares .................. 11
Taxation of the Fund.......................................... 12
Calculation of Performance Data .............................. 12
</TABLE>
<PAGE> 33
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:
<TABLE>
<S> <C>
Actively-Managed Funds: Aggressive Opportunities Fund
International Fund
Growth Fund
Growth & Income Fund
Equity Income Fund
Asset Allocation Fund
U.S. Treasury Securities Fund
Money Market Fund
Index Funds: Overseas Equity Index Fund
Mid/Small Company Index Fund
Broad Market Index Fund
500 Stock Index Fund*
Core Bond Index Fund
</TABLE>
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.
With the exception of the Money Market Fund the assets of each actively-managed
Fund are managed by one or more subadvisers. Subadvisers are retained to manage
a particular portion of each Fund under the terms of written investment
advisory contracts with VIA.
The Money Market Fund is invested in the Short Term Investment Co.'s Liquid
Assets Portfolio, a registered money market mutual fund. The mutual fund's
investment adviser is AIM Advisors. Inc.
As explained in the prospectus, and in greater detail on page 5, each Index
Fund with the exception of the Overseas Equity Index Fund is structured as a
"feeder" fund investing in a "master" fund which has identical investment
objectives and strategy as the applicable Index Fund. The investment adviser
for each "master" fund in which the corresponding Index Fund invests is
Barclay's Global Fund Advisors, N.A. ("Barclay's")
<PAGE> 34
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 the prospectus and 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.
THE 500 STOCK INDEX FUND 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.
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 -- consists of 500 companies representing
larger capitalization stocks traded in the U.S.
Standard & Poor's MidCap 400 Index -- consists of 400 medium sized domestic
stocks traded in the U.S.
<PAGE> 35
Standard & Poor's BARRA MidCap 400 Growth Index -- consists of the stocks of the
S&P MidCap 400 Index having growth characteristics.
Wilshire 5000 Equity Index -- consists of all common equity securities
domiciled in the U.S. for which daily pricing is available.
Wilshire 4500 Equity Index -- consists of all stocks in the Wilshire 5000 except
for those included in the Standard & Poor's 500 Index.
Morgan Stanley Capital International EAFE Index -- consists of approximately
1100 securities listed on the stock exchanges of developed markets of countries
in Europe, Australia and the Far East.
Lehman Brothers Long-Term Treasury Bond Index -- consists of all Treasury
obligations with maturities of 10 years or greater.
Lehman Brothers Government/Corporate Bond Index -- consists of U.S. Treasury,
agency, and corporate securities rated BBB or better.
Merrill Lynch 5-7 Year Treasury Index -- consists of all Treasury obligations
with maturities between 5 and 7 years.
Russell 2000 Index -- consists of the smallest 2,000 of the 3000 largest U.S.
companies based on total market capitalization, representing approximately 7%
of the Russell 3000 Index's total market capitalization.
ELIGIBLE INVESTMENTS
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> 36
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 also
participate in repurchase agreements and reverse repurchase agreements.
B. FINANCIAL FUTURES: 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 except for the
International Fund.
OTHER INVESTMENTS:
The funds may invest in certain other instruments as follows:
i. Rights and 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.
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> 37
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 (the
"Commission") thereunder and the aggregate value of all securities loaned does
not exceed 33 1/3% 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 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 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
(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)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 or by any rule, regulation, opinion or
interpretation of the Commission. Notwithstanding this restriction, the Index
Funds and the Money Market Fund may enter into 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> 38
THE INDEX FUNDS
---------------
Each Index Fund is managed by Barclay's Global Investors ("Barclays") using
quantitative, structured and passive management techniques. Each such Fund,
except the Overseas 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.
The Broad Market Index Fund's master portfolio invests substantially all of its
assets in two other master portfolios of Barclays. One of these masters, in
turn, invests substantially all of its assets in a representative sample of
stocks comprising the Wilshire 4500 Index. The other master, in turn, invests
substantially all of its assets in stocks comprising the S&P 500 Index (the
"Underlying Portfolios"). The percentage of the Master Portfolio's assets
invested in the Underlying Portfolios is approximately the same as the
percentage such Portfolios are invested in stocks represented in the Wilshire
5000 Index.
The Broad Market Index Fund invests in a Master Investment Portfolio ("MIP")
offered by Barclays, which, in turn, invests in two Underlying Portfolios, the
S&P 500 Index Portfolio, (which seeks to provide investment results that
correspond to the performance of the S&P 500 Stock Index) and the Extended
Index Portfolio (which seeks to approximate the capitalization range and
performance of the Wilshire 4500 Index).
The assests of the Vantagepoint Index Funds are invested in these Master
portfolios in proportions that are designed to meet their respective
objectives. The Vantagepoint 500 Stock Index Fund invests exclusively in the
S&P 500 Index Portfolio. The Vantagepoint Mid/Small Co. Index Fund invests
exclusively in the Extended Index Portfolio. The Vantagepoint Broad Market
Index Fund invests in both Underlying Portfolios in proportions that are
designed to approximate the performance of the Wilshire 5000 Index. Finally,
the Vantagepoint Core Bond Index Fund invests in a separate master that is
designed to track its benchmark index.
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.
<PAGE> 39
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 an Insider Trading Policy
established pursuant to Rule 17j-1 of the Investment Company Act of 1940. The
policy is designed to prevent unlawful
<PAGE> 40
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
VIA is 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> 41
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 LLC, provides all
distribution and marketing services for the Funds. VIA or its transfer agent
affiliate, Vantagepoint Transfer Agents, LLC. ("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 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 0.20% 0.15%
Index Funds
Class I 0.15% 0.15%
- -------
Class II 0.05% 0.05%
- --------
</TABLE>
<PAGE> 42
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. The fee schedules that have
been negotiated with each subadvisers are set forth below.
<TABLE>
<CAPTION>
Aggressive Opportunities Fund
Assets
Subadviser Managed Fee
- ---------- ------- ---
<S> <C> <C>
First Pacific Advisers First $20 million 1.00%
Over $20 million 0.75%
Massachusetts Financial Services Flat Fee 0.75%
TCW Funds Management Inc. First $100 million 0.72%
Next $100 million 0.69%
Over $200 million 0.67%
International Fund
Subadviser
- ----------
Capital Guardian Trust Co. 0.45%
Lazard Asset Management 0.50%
Rowe Price-Fleming, International, Inc. 0.62%
Barclays Global Investors, N.A. 0.18%
Growth Fund
Subadviser
- ----------
Cadence Capital Management First $100 million 0.45%
Next $400 million 0.20%
Over $500 million 0.15%
William Blair & Company, LLC First $150 million 0.50%
Next $150 million 0.45%
Over $300 million 0.40%
Neuberger & Berman, LLC Flat fee 0.45%
Barclays Global Investors, N.A. First $250 million 0.06%
Next $250 million 0.05%
Next $500 million 0.04%
Over $1 billion 0.05%
Fidelity Management Trust Company
(Small Company Growth account) First $25 million 0.80%
Over $25 million 0.60%
(Aggressive Equity account) Flat fee 0.40%
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
Growth and Income Fund
Assets
Subadviser Managed Fee
- ---------- ------- ---
<S> <C> <C>
Capital Guardian Trust Co. First $25 million 0.55%
Next $25 million 0.40%
Over $50 million 0.23%
Putnam Investments Management First $15 million 0.55%
Next $35 million 0.40%
Next $50 million 0.30%
Over $100 million 0.25%
Equity Income Fund
Subadviser
- ----------
Crawford Investment Counsel First $100 million 0.20%
Next $100 million 0.15%
Over $200 million 0.10%
Newell Associates First $250 million 0.19%
Next $500 million 0.15%
Next $250 million 0.10%
Over $1 billion 0.08%
Asset Allocation Fund
Subadviser
- ----------
AVATAR Associates First $250 million 0.25%
Next $250 million 0.20%
Over $500 million 0.18%
Mellon Capital Management First $200 million 0.38%
Over $200 million 0.20%
Wilshire Asset Management First $100 million 0.09%
Next $400 million 0.02%
Over $500 million 0.01%
Payden & Rygel Investment Counsel First $200 million 0.10%
Next $400 million 0.09%
Over $500 million 0.08%
U.S. Treasury Securities Fund
Subadviser
- ----------
Seix Investment Advisers, Inc. First $25 million 0.17%
Next $50 million 0.12%
Next $25 million 0.07%
Money Market Fund
Subadviser
- ----------
AIM Advisors, Inc.
Overseas Equity Index Fund
- ----------
Barclays Global Investors, N.A. First $25 million 0.20%
Over $25 million 0.15%
</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>
Index Funds (Barclays)
Flat fee
--------
<S> <C>
Broad Market Index Fund........................ 0.08%
500 Stock Index Fund........................... 0.05%
Core Bond Index Fund........................... 0.08%
Mid/Small Company Index........................ 0.10%
</TABLE>
Information on the advisory services provided by each subadviser and services
provided by Barclays 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 International Fund, the Growth 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> 45
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> 46
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 $125 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.
PURCHASE, REDEMPTION AND PRICING OF SHARES
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 and may be
required by The Vantagepoint Funds at the discretion of its management. 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> 47
* 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.
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 Fund 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.
The Funds have made an election with the Commission to pay in cash all
redemptions requested by any shareholder of record limited in amount during any
90-day period to the lesser of $250,000 or 1% of the net assets of the Fund at
the beginning of such period. Such commitment is irrevocable without the prior
approval of the Commission. Redemptions in excess of the above limits may be
paid, in whole or in part, in investment securities or in cash, as the Directors
may deem advisable; however, payment will be made wholly in cash unless the
Directors believe that economic or market conditions exist which would make a
practice detrimental to the best interests of the Fund. If redemptions are paid
in investment securities, such securities will be valued as set forth in the
Prospectus under "pricing and timing of transactions" and a redeeming
shareholder would normally incur brokerage expenses if he or she converted these
securities to cash.
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
that have been offered through the ICMA Retirement Trust, an unregistered
commingled fund which holds and invests the assets of public sector retirement
plans. The inception dates of these funds are noted below. Substantially all of
the portfolio securities of each Vantagepoint Fund were transferred 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. 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> 48
<TABLE>
<CAPTION>
Since
Fund 1 yr 3 yr 5 yr 10 yr Inception
- ---- ---- ---- ---- ----- ---------
<S> <C> <C> <C> <C> <C>
Aggressive
Opportunities (inception date: 10/1/94) 11.6 18.0 n/a n/a 22.9
International (inception date: 10/1/94) 5.0 8.5 n/a n/a 7.6
Growth 19.8 22.4 19.3 18.9 n/a
Equity Income (inception date: 4/1/94) 2.5 n/a n/a 22.0
Asset Allocation 22.4 21.1 17.7 15.0 n/a
U.S. Treasury
Securities (inception date: 7/1/92) 9.7 6.6 6.3 n/a 7.2
Overseas Equity
Index (inception date: 7/1/97) 19.8 n/a n/a n/a 8.8
Mid/Small Company 7.3 n/a n/a n/a 16.3
Broad Market Index (inception date: 9/30/94 22.7 24.7 21.3 17.1 n/a
500 Stock Index (inception date: 7/1/97) 28.1 n/a n/a n/a 28.1
</TABLE>
Communications 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> 49
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> 50
VANTAGEPOINT FUNDS
VANTAGEPOINT MONEY MARKET FUND
Statement of Asset and Liabilities
February 19, 1999
<TABLE>
<S> <C>
Cash $100,000
Total Assets $100,000
Total Liabilities -
Net Assets - Offering and redemption price of $1.00 $100,000
Per share with 100,000 shares outstanding
</TABLE>
Notes to Financial Statements
A. Organization
The Vantagepoint Funds (Delaware Business Trust) was organized on July 28, 1999
and was established as a no load open-end diversified "series" investment
company offering thirteen distinct investment portfolios (the "Funds"). The five
Index Funds offer two classes of shares. The other Funds offer a single class of
shares. The Vantagepoint Funds has had no operations other than those matters
related to their organization and registration as an investment company under
the Investment Company Act of 1940. The Statement of Assets and Liabilities
presented is for the Vantagepoint Money Market Fund, one of the portfolios
comprising The Vantagepoint Funds. The ICMA Retirement Corporation (a registered
Investment Adviser) has provided the initial capital for the Fund by purchasing
100,000 shares of the Vantagepoint Money Market Fund at $1.00 per share. Such
shares were acquired for investment and can be disposed of only by redemption.
The Funds are patterned on, have the same investment objectives, and are
operated in substantially 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 the ICMA Retirement Trust will be transferred in-kind to the corresponding
fund of the Vantagepoint Funds upon the commencement of operations. The
underlying portfolio of each fund of the ICMA Retirement Trust will consist
solely of the shares of the corresponding Vantagepoint Fund in which it invests.
B. Organization Costs
<PAGE> 51
The costs incurred in connection with the organization of the Funds has been
borne by ICMA Retirement Corporation. The Funds will not be required to
reimburse ICMA Retirement Corporation for these costs.
C. Management of the Funds
The Funds are managed by Vantagepoint Investment Advisers, LLC (VIA) a
wholly-owned subsidiary of ICMA Retirement Corporation. VIA employs a
"multi-management" strategy in which it evaluates, selects, and monitors one or
more subadvisors for each Fund. Compensation for the investment management of
the Funds paid to VIA and the subadvisors is asset based, i.e., it consists of
an annual percentage fee calculated based on average assets under management.
The aggregate annual advisory fees paid to VIA and to subadvisors ranges from
.10% to .86% of the average daily net assets of each Fund. VIA or its
broker-dealer affiliate, ICMA-RC Services, LLC, provides all distribution and
marketing services to the Funds. VIA or its transfer agent affiliate,
Vantagepoint Transfer Agents, LLC ("UTA") also provides certain administrative
shareholder support services for the Funds. VIA or VTA receives asset-based
compensation for these additional administrative services ranging from .10% to
.35% of the average daily net assets of the Funds.
<PAGE> 52
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Vantagepoint Funds:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of the Vantagepoint
Money Market Fund, one portfolio comprising The Vantagepoint Funds (the "Fund")
at February 19, 1999 in conformity with generally accepted accounting
principles. This financial statement is the responsibility of the Fund's
management; our responsibility is to express an opinion on this financial
statement based upon our audit. We conducted our audit of this financial
statement in accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 22, 1999
<PAGE> 53
PART C: OTHER INFORMATION
Financial Statements
Audited Financial statements showing the initial capitalization of the Fund
are included in Part B.
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) Opinion of Independent Accountants**
(k) Not applicable
(l) Purchase Agreement**
(m) Not applicable
(n) Not applicable
(o) Rule 18f-3 plan*
* Previously filed
** Filed herewith
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> 54
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, LCC, and
Vantagpoint Transfer Agents, LCC, under the heading "Investment Advisory and
Other Services."
<PAGE> 55
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 25th day of February, 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 February 25, 1999
.............................................................................
(Signature) (Title) (Date)
By: (Paul F. Gallagher)*
Robert A. Bowman Director February 25, 1999
By: (Paul F. Gallagher)*
N. Anthony Calhoun Director February 25, 1999
By: (Paul F. Gallagher)*
Arthur Lynch Director February 25, 1999
By: (Paul F. Gallagher)*
Eddie Moore Director February 25, 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.
<PAGE> 1
EXHIBIT 99.(D)(i)
MASTER INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE VANTAGEPOINT FUNDS
AND
VANTAGEPOINT INVESTMENT ADVISERS, LLC
AGREEMENT, made the [ ] day of [ ] 1999, between the Vantagepoint Funds ("VF")
and Vantagepoint Investment Advisers, LLC ("VIA").
RECITALS
(1) VF is an open-end, diversified management investment company organized as
a Delaware business trust and registered under the Investment Company Act of
1940. The VF is organized as a "series" investment company, and offers 13
distinct investment portfolios (the "Funds", each a "Fund").
(2) VIA has been established to provide investment advisory services to each
VF Fund and to manage and supervise other investment advisers who provide such
services to the Funds.
(3) VF and VIA wish to enter into this Master Investment Advisory Agreement
(the "Agreement"), under which VIA will render investment advisory services to
the Funds and manage and supervise other investment advisers who provide such
services to the Funds and also will furnish operational support to each Fund.
This Agreement includes payment provisions under which amounts are paid by VF to
pay VIA for services and support rendered under this Agreement.
<PAGE> 2
AGREEMENT
Article I
GENERAL
SECTION 1.01 Definitions. Unless otherwise specifically provided herein,
capitalized terms have the meanings ascribed in the Agreement and Declaration of
Trust of the Vantagepoint Funds dated [DATE], as now or hereinafter amended.
Article II
INVESTMENT ADVISORY AND MANAGEMENT SERVICES
SECTION 2.01 Appointment of Adviser. VF hereby appoints VIA to act as the
investment adviser to VF and its Funds and to manage and supervise other
investment advisers who provide services to VF under the terms and conditions
set forth in this Agreement. VIA accepts such appointment and agrees to render
the services herein described, for the compensation herein provided.
SECTION 2.02 Duties Relating to the Funds. Subject to the supervision of the
Board of Directors of VF, VIA shall manage the investment operations of the VF
and the composition of each Fund's portfolios in accordance with its investment
objectives, policies and restrictions set forth in the current prospectus and
statement of additional information for VF and such additional guidelines as may
be established from time to time by VF. In performing such services, VIA shall
use its best informed judgment, and shall have the following responsibilities:
(a) VIA shall supervise and direct each Fund's investments and shall
have the discretion to determine from time to time what investments, securities,
commodities or financial futures contracts or options thereon ("futures") will
be purchased, retained, sold or lent by a Fund and what portion of its assets
will be invested or held uninvested as cash;
(b) Subject to the receipt of such approvals of the Board of Directors
of VF and the shareholders of its Funds as may be required by law, VIA may
discharge its responsibilities to VF and its Funds through the appointment of
one or more subadvisers ("Subadvisers") as provided in Section 2.03 below to
which it may delegate the responsibilities granted to it herein;
(c) Subject to the limits set forth below, VIA may place orders,
pursuant to its determinations as to what securities or other instruments
should be purchased or sold
2
<PAGE> 3
on behalf of a Fund, with or through such persons, brokers, dealers or futures
commissions merchants as it may select; VIA may delegate this authority to
Subadvisers duly appointed by it;
(cc) VIA shall furnish VF's Board of Directors such periodic and special
reports as the Board may request, including reports on the nature and quality of
services provided by Subadvisers. VIA shall provide such information as the
Board of Directors may request and such information as shall be reasonably
necessary to evaluate the terms of any investment advisory contract.
(d) VIA may cause each Fund to keep such portion of its assets in cash
or cash balances as VIA, from time to time, may deem to be in the best interest
of such Fund without liability for interest thereon;
(e) VIA shall maintain, and cause Subadvisers to maintain, books and
records with respect to its and their services to the Funds in accordance with
good practice, applicable federal and state securities laws, and such
instructions as may be provided to it by VF from time to time;
(g) VIA shall provide, or cause the Subadvisers to provide, to each
custodian of the assets of, and accountant or bookkeeper for, each Fund, in a
timely fashion all requisite information relating to transactions concerning the
assets of VF.
(h) VIA may, and may authorize Subadvisers to, unless specifically
instructed to the contrary by the Board of Directors of the Fund, vote upon all
general or specific proxies relative to stocks, bonds, or other securities held
in VF, give general or specific powers of attorney with or without power of
substitution; exercise any conversion privileges, subscription rights, or other
options, and make any payments incidental thereto; oppose, or consent to, or
participate in, any corporate reorganization or other changes affecting
corporate securities, participate in any class action lawsuit the subject of
which is a security (or issuer of a security) held by a Fund, and delegate
discretionary powers, and pay any assessments or charges in connection
therewith; and generally exercise any of the powers of an owner with respect to
stocks, bonds, securities or other property held as part of VF property;
SECTION 2.03 Subadvisers. Subject to the receipt of such approvals of the
Board of Directors of VF and the shareholders of its Funds as may be required
by law, VIA is authorized to enter into agreements on behalf of VF with
Subadvisers under which the Subadvisers agree to perform all or any portion of
the management and advisory duties with respect to all or any portion of the
Funds of VF. In the event VIA enters into one or more such agreements, the VIA
will retain the authority and responsibility to monitor and review the
performance of each Subadviser. VIA may negotiate contracts that specify
investment subadvisory fees and provide for payment of such fees directly by
VF, and delegate to the Subadvisers responsibility for the
3
<PAGE> 4
day-to-day investment operations of the Funds with respect to which the
Subadvisers are hired, including any or all of the responsibilities set forth in
Section 2.02 hereof, except the power to enter into contracts with Subadvisers.
Each such contract with a Subadviser shall provide that it is terminable by VIA
or the Board of Directors of VF or the shareholders of its Funds, without
penalty, upon no more than 60 days notice to the Subadviser.
SECTION 2.04 Fund Design. VIA shall develop new Funds for VF responsive to
the evolving needs of existing and potential Shareholders and shall periodically
evaluate the objectives and performance of each existing Fund, and shall provide
a recommendation to the Board of Directors of VF as to whether such Fund should
continue to be offered or whether its objectives, policies, or strategies should
be modified.
SECTION 2.05 Fees for Services. For the services to be provided under this
Article II, each Fund shall pay to VIA an advisory fee based upon its average
daily net assets in the VF computed at the annual rates specified in the
following table:
<TABLE>
<CAPTION>
Fund Annual Rate
---- -----------
(as a % of Average Daily Net Assets)
<S> <C>
Aggressive Opportunities Fund 0.10%
International Fund 0.10%
Growth Stock Fund 0.10%
Growth and Income Fund 0.10%
Equity Income Fund 0.10%
Asset Allocation Fund 0.10%
U.S. Treasury Securities Fund 0.10%
Money Market Fund 0.10%
Overseas Equity Index Fund 0.05%
Small/Mid Company Index Fund 0.05%
Broad Market Index Fund 0.05%
500 Stock Index Fund 0.05%
Core Bond Index Fund 0.05%
</TABLE>
Fees shall be calculated and accrued daily and paid monthly.
Fees charged by Subadvisers will be paid by the respective fund directly to such
Subadvisers in accordance with the terms of Section 2.03.
4
<PAGE> 5
Article III
OPERATIONAL SUPPORT
SECTION 3.01 Office Space and General Services.
(a) VIA shall provide VF with such office space as shall be
required for the operation of the VF.
(b) VIA shall furnish to each Fund such additional services and
professional support to operate the Fund as the Board of Directors or the
officers of VF shall from time to time specify.
SECTION 3.02 Reimbursement to VIA. Each Fund shall reimburse VIA on a monthly
basis for the expenses, including costs of insurance, professional services,
printing and mailing, office space and facilities and transportation, and other
costs and expenses, incurred by VIA in providing operational support to such
Fund pursuant to this Article III.
Article IV
OTHER MATTERS
SECTION 4.01 Billing Procedures. VIA will submit monthly an itemized
statement of fees and expenses for services rendered to each Fund under this
Agreement to the President of VF or his/her designee.
SECTION 4.02 Liability. VIA shall not be liable to VF or any Fund for any
error of judgment or mistake of law or for any loss suffered by such Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from misfeasance, bad faith or negligence on the part of VIA in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement. Nothing in this Section 4.02 shall constitute a waiver by VF of
any rights it or any Fund may have under applicable federal or state securities
laws.
SECTION 4.03 Delivery of Documents by VF and VIA.
(a) VF has delivered to VIA copies of each of the following documents
and will deliver to it all future amendments and supplements thereto if any:
(i) The Agreement and Declaration of Trust of the Vantagepoint
Funds dated [DATE];
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<PAGE> 6
(ii) The By-laws of the Vantagepoint Funds; and
(iii) Certified resolutions of the Board of Directors of the
Vantagepoint Funds authorizing the appointment of VIA and
approving this Master Agreement and authorizing the
appointment of any Subadviser and approving the Agreement
with such Subadviser; and
(b) (i) VIA shall submit its audited financial statements to VF
within 120 days of the close of each calendar year.
(ii) VIA shall submit to VF VIA's current SEC Form ADV including
Form ADV-Y2K, and shall submit to VF updated copies of Form
ADV from time to time as updates occur.
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<PAGE> 7
SECTION 4.04 Effective Date, Duration and Termination.
(a) This Agreement shall be effective with respect to each Fund on the
date specified in the first sentence hereof and shall have an initial term of
two (2) years. This Agreement shall continue automatically with respect to each
Fund for successive periods of one calendar year upon the annual approval of the
Board of Directors of VF, including a majority of those Directors of the Board
of VF who are not "interested persons" as that term is defined in the Investment
Company Act of 1940, or by a vote of the outstanding shares of such Fund.
(b) This Agreement may be terminated with respect to a Fund by the Board
of Directors of VF or shareholders of such Fund or VIA at any time, without the
payment of any penalty, on sixty (60) days' written notice to the other party.
(c) In the event this Agreement is terminated, each Fund shall pay to
VIA any outstanding amounts payable under the terms of this Agreement that have
accrued with respect to such Fund as of the effective date of termination.
SECTION 4.05 Assignment. This Agreement shall automatically terminate
in the event of its assignment.
SECTION 4.06 Amendment. This Agreement may be amended only by an instrument
in writing executed by both parties.
SECTION 4.07 Miscellaneous.
(a) The captions in this Agreement are included for convenience only and
in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
(b) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) This Agreement supersedes any other agreement between the parties
concerning the matters covered herein.
SECTION 4.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
7
<PAGE> 8
AGREED:
THE VANTAGEPOINT FUNDS
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
VANTAGEPOINT INVESTMENT ADVISERS, LLC
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
8
<PAGE> 9
EXHIBIT D.(iv)
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement is made as of the __________ day
of _______________, 1999 by and between VANTAGEPOINT INVESTMENT ADVISERS, LLC, a
Delaware limited liability company (hereafter "Client"), and AVATAR INVESTORS
ASSOCIATES CORP. at 900 Third Avenue New York, New York (hereafter "Adviser")
and is effective as of______________ ,19 (the "Effective Date").
WHEREAS, the Vantagepoint Funds (the "Funds") is a Delaware Business
Trust registered as an open-end management investment company under the
Investment Company Act of 1940;
WHEREAS, Client is party to an Investment Adviser Agreement with the
Funds for management of the investment operations of the Funds including the
establishment and operation of investment portfolios for the Funds and the
entering into of contracts with sub-advisers to assist in managing the
investment of the Funds property;
WHEREAS, Client and Adviser wish to enter into an agreement pursuant to
which Adviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Adviser as Investment Adviser
of certain assets held by the Funds, the Client has authorized the Adviser to
manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Adviser shall perform its services
shall consist of those assets of the Funds which the Client determines to assign
to an account with the Adviser, together with all income earned by those assets
and all realized and unrealized capital appreciation related to those assets
(hereafter "Account"). From time to time, the Client may, upon notice to the
Adviser, make additions to the Account and may, upon notice to the Adviser, make
withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF ADVISER
(a) Purchase and Sale. Client hereby appoints Adviser to manage the
Account on the terms and conditions set forth in this Agreement. Subject to the
restrictions set forth in this Agreement, and acting always in conformity with
the Investment Policies provided in Paragraph 4, Adviser shall supervise and
direct investment of the Account. Client hereby grants the Adviser complete,
unlimited and
<PAGE> 10
unrestricted discretion and authority to select portfolio securities with
respect to the Account including the power to acquire (by purchase, exchange,
subscription or otherwise), to hold and dispose (by sale, exchange or
otherwise). The Adviser will consult with Client, upon the request of the
Client, concerning any transactions it makes with respect to the investment of
the Account.
(b) Limitation on Authority. Except as expressly authorized herein or
hereafter from time to time, Adviser shall for all purposes be deemed an
independent contractor and shall have no authority to act for or to represent
the Client or the Funds in any way or otherwise to be an agent of the Client or
the Funds.
(c) Voting. Unless otherwise instructed by Client, Adviser shall have
discretion to take any action or render any advice with respect to the voting of
shares or the execution of proxies solicited from time to time by, or with
respect to, the issuers of securities held in the Account. Adviser will report
annually to Client regarding such voting.
(d) Key Personnel. Adviser agrees that the following key personnel have
primary responsibility with respect to the investment management of the Account.
If the(se) individual(s) is unable to devote sufficient time to maintain primary
responsibility of the Account, the Adviser must give Client written advance
notice, or prompt notice within three (3) business days, of the name of the
person designated by the Adviser to replace or supplement the individual(s). In
addition, the Adviser will give Client prompt written notice of the replacement
of any employee of the Adviser who has direct supervisory responsibility for the
key personnel or who has responsibility for setting investment policy.
Key Personnel: Edward S. Babbitt, Jr.
Ted Theodore
Charles M. White
3. ACCEPTANCE OF APPOINTMENT
Adviser accepts the appointment as an investment adviser and agrees to
use its best efforts and professional judgment to make timely investment
transactions for the Client with respect to the investments of the Account, and
to provide the other services required of the Adviser under the provisions of
this Agreement.
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<PAGE> 11
4. INVESTMENT POLICIES
(a) Investment Objectives. The Adviser will adhere to the investment
objectives, guidelines, restrictions, and liquidity requirements of the Funds as
specified by the Client on SCHEDULE A hereto, and as restated or modified from
time to time by the Client in written notice to the Adviser.
(b) Funds' Agreement and Declaration of Trust. The Adviser will adhere to
all specific provisions established in the Funds' Agreement and Declaration of
Trust and Registration Statement as filed with the Securities and Exchange
Commission on Form N-1A ("Registration Statement), both of which are hereby
incorporated by reference and made a part of this Agreement. The Client shall
give written notice to the Adviser of any amendments to the Agreement and
Declaration of Trust or Registration Statement, which amendments, upon their
receipt by the Adviser, shall be binding on the Adviser.
(c) Investment Adviser Guidelines. The Adviser shall act in accordance
with the specific statement of Investment Adviser Guidelines, SCHEDULE B, as
restated or modified from time to time by the Client in written notice to the
Adviser. The Client retains the right, on written notice to the Adviser, to
modify any such objectives, guidelines, restrictions, and liquidity requirements
in any manner at any time.
(d) Conflict in Policies. If a conflict in policies or guidelines
referenced herein occurs, the Registration Statement shall govern for purposes
of this Agreement.
5. CUSTODY, DELIVERY, RECEIPT OF SECURITIES
(a) Custody Responsibilities. The Client shall designate one or more
custodians to hold the Account. The Custodian, as designated by the Client will
be responsible for the custody, receipt and delivery of securities and other
assets of the Funds (including the Account), and the Adviser shall have no
authority, responsibility or obligation with respect to the custody, receipt or
delivery of securities or other assets of the Funds (including the Account). In
the event that any cash or securities of the Funds are delivered to the Adviser,
it will promptly deliver the same over to the Custodian, in the name of the
Funds.
(b) Securities Transactions. All securities transactions for the Account
will be consummated by payment to or delivery by the Funds of cash or securities
due to or from the Account. The Adviser will notify the Custodian of all orders
to brokers for the Account by 9:00 am EST on the day following the trade date
and will affirm the trade within one (1) business day after the trade date
(T+1).
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<PAGE> 12
(c) Tri-Party Agreement. The Adviser is authorized to enter into
Tri-Party Repurchase Agreements and sign the standard PSA tri-party agreement
(the "Tri-Party Agreement") on behalf of the Client and the subcustodian
thereunder is authorized to act as a subcustodian for the Account's assets
involved in any tri-party repurchase agreement pursuant to such Tri-Party
Agreement.
6. RECORD KEEPING AND REPORTING
(a) Records. Adviser will maintain proper and complete records relating
to the furnishing of services under this Agreement, including records with
respect to the acquisition, holding and disposition of securities for Client.
All records maintained pursuant to this Agreement shall be subject to
examination by Client and by persons authorized by it at all times upon
reasonable notice. Except as expressly authorized in this Agreement or as
required by applicable law, regulation or order of court or as directed by other
party in writing, Adviser and Client shall keep confidential the records and
other information obtained by reason of this Agreement (including, with respect
to Client, the investment information and transactions executed by Adviser).
Upon termination of this Agreement, Adviser shall promptly, upon demand, return
to Client all records Client reasonably believes are necessary in order to
discharge its responsibilities to the Funds. Adviser shall be entitled to retain
originals or copies of records pursuant to the requirements of applicable laws
or regulations.
(b) Quarterly Valuation Reports. Adviser shall use best efforts to
provide to the Client within TEN (10) business days after the end of each
calendar quarter a statement of the fair market value of the Account as of the
close of such quarter together with an itemized list of the assets in the
Account.
(c) Valuation Methodology. For purposes of this Agreement, fair market
value shall mean, as of a particular date, the value of the Account, plus income
accrued thereon less the liabilities related to the assets in the Account.
Adviser shall reconcile security and cash positions, and market values, and
report discrepancies to the Client.
(d) Loss Reimbursement. Adviser shall reimburse the Account for any loss
caused by Adviser's actions that cause delay in the accurate daily pricing of
the Fund(s), it being understood that Adviser shall not be responsible for such
daily pricing.
(e) Monthly Reports. Adviser shall provide the Client an itemized report
as to the securities in the account, the fair market value thereof and the
accrued income thereon within FOUR (4) business days after the end of each
Calendar Month. The Adviser shall also use best efforts to provide, in writing,
preliminary performance numbers and a brief explanation of these results within
FIVE (5) business days after the end of each
4
<PAGE> 13
Calendar Month. The requested format will be as mutually agreed by Adviser and
Client. For purposes of this Agreement, fair market value shall mean, as of a
particular date, the value of the Account plus income accrued thereon less the
liabilities related to the assets in the Account.
(f) Reports on Request. Adviser shall provide to Client promptly upon
request any information available in the records maintained by Adviser relating
to the Account.
7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise instructed by
Client, (it being understood that Client may, in its absolute discretion, direct
portfolio transactions for which Adviser is responsible to any broker that
Client may see fit), Adviser shall place all orders for the purchase and sale of
securities on behalf of the Client with brokers or dealers selected by Adviser,
but not with a person affiliated with Adviser, as the term "affiliated person"
is defined in the Investment Company Act of 1940 (hereafter an "Affiliate").
(b) Best Execution. In placing such orders, the Adviser will give primary
consideration to obtaining the most favorable price and efficient execution. In
evaluating the terms available for executing particular transactions for Client
and in selecting brokers and dealers to execute such transactions, the Adviser
may consider, in addition to commission cost and execution capabilities, the
financial stability and reputation of brokers and dealers and the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided by brokers and dealers. Adviser is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if Adviser determines that such commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer in discharging responsibilities with respect to the Account.
(c) Bunching Orders. Client agrees that Adviser may aggregate sales and
purchase orders of Account with similar orders being made simultaneously for
other accounts managed by Adviser, if in Adviser's reasonable judgment such
aggregation shall result in an overall economic benefit to the Account taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. Client acknowledges that the determination of
such economic benefit to Client by Adviser represents Adviser's evaluation that
client is benefited by relatively better purchase or
5
<PAGE> 14
sales prices, lower commission expenses and beneficial timing of transactions or
a combination of these and other factors.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Adviser for its services under
this Agreement shall be calculated and paid by the Client from the assets of the
Account in accordance with SCHEDULE C hereto. The Adviser shall send a written
invoice to the Client within 30 days of the quarter end and shall be duly
compensated from the assets of the Account.
(b) Fee Computation. The Adviser's fee shall be calculated as set forth
in SCHEDULE C.
(c) Fee Amendment. Fee rates may be changed from time to time by
agreement between the Client and the Adviser; provided, however, that no
increase in such rates shall be made during the first calendar year of this
Agreement.
(d) Pro Rata Fee. If the Adviser should serve for less than the whole of
any calendar quarter, its compensation shall be determined as provided above on
the basis of the ending market value of the Account in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Adviser hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Adviser shall devote its best efforts and such time as it deems
necessary to provide prompt and expert service to the Client. The services of
Adviser to be provided to Client hereunder are not to be deemed exclusive and
Adviser shall be free to provide similar services for its own account and the
accounts of other persons and to receive compensation for such services. Client
acknowledges that Adviser and its members, Affiliates and employees, and
Adviser's other clients may at any time, have, acquire, increase, decrease, or
dispose of positions in the same investments which are at the same time being
held, acquired for or disposed of under this Agreement for the Client. Adviser
shall have no obligation to acquire or dispose of a position in any investment
pursuant to this Agreement simply because Adviser, its directors, members,
Affiliates or employees invest in such a position for its or their own accounts
or for the account of another client.
6
<PAGE> 15
10. INSIDER TRADING POLICIES AND CODE OF ETHICS
Adviser hereby represents that it has adopted policies that meet the
requirements of Rule 17j-1 under the Investment Company Act of 1940. Copies of
such policies shall be delivered to the Client, and any violation of such
policies by personnel of the Adviser shall be reported to the Client.
11. INSURANCE
At all times during the term of this Agreement, Adviser shall maintain,
at its own cost and expense, professional liability insurance for errors,
omissions, and negligent acts, in an amount and with such terms as are standard
in the financial services industry for an investment adviser managing the amount
of aggregate assets managed by Adviser for Client and for the Adviser's other
clients.
12. LIABILITY
Adviser shall not be liable to Client for honest mistakes of judgment or
for action or inaction taken in good faith for a purpose that the Adviser
reasonably believes to be in the best interests of the Client. Adviser shall be
liable to Client for any liability, damages or expenses of Client arising out of
the negligence, malfeasance or violation of applicable law by Adviser or any of
its officers, employees or Affiliates in providing management under this
Agreement. However, neither this provision nor any other provision of this
Agreement shall constitute a waiver or limitation of any rights which Client may
have under federal or state securities laws.
13. TERM
This Agreement shall be in effect for an initial term of two years
beginning on the Effective Date. This Agreement may be renewed thereafter for
successive one-year periods if such renewal is approved annually by the majority
of those members of the Funds' Board of Directors who are not "interested
persons" as that term is defined in the Investment Company Act of 1940.
7
<PAGE> 16
14. TERMINATION
This Agreement may be terminated by either party hereto, without the
payment of any penalty, immediately upon notice to the other in the event of a
breach of any provision thereof by the party so notified, or otherwise by
Adviser upon sixty (60) days' written notice to the Client or by Client upon 30
days' written notice to Adviser, except that this Agreement shall automatically
terminate in the event of its assignment, as provided in Paragraph 19, at the
discretion of the Client in the event of Adviser's ownership change as provided
in Paragraph 19, or upon the termination of the Funds. Any termination in
accordance with the terms of this Agreement shall not cause the payment of any
penalty. Any such termination shall not affect the status, obligations or
liabilities of any party hereto to the other.
15. REPRESENTATIONS
(a) Adviser hereby confirms to Client that Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into and perform fully the terms of this Agreement
and that the execution of this Agreement on behalf of Adviser has been duly
authorized and, upon execution and delivery, this Agreement will be binding upon
Adviser in accordance with its terms.
(b) Client hereby confirms to Adviser that it has full power and
authority to enter into this Agreement and that the execution of this Agreement
on behalf of Client has been fully authorized and, upon execution and delivery,
this Agreement will be binding upon Client in accordance with its terms.
16. RECIPROCAL INDEMNIFICATION
Client and Adviser each agree to indemnify and hold harmless the other
and each of its officers, directors and employees against any and all losses,
claims, damages, liabilities, or litigation (including reasonable attorney fees
and other expenses) to which the indemnified party becomes subject, insofar as
such matters arise out of, or are based upon, any material breach of this
Agreement by the indemnifying party.
17. NOTICES
Notices or other notifications given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent if
delivered to
8
<PAGE> 17
the party at its address listed below in person or by telex or telecopy receipt
of which is confirmed or by mail or by registered mail, return receipt
requested. The addresses of the parties are:
CLIENT:
Vantagepoint Investment Advisers, LLC
Attention: Legal Department
c/o ICMA Retirement Corporation
777 North Capitol Street, NE, Ste. 600
Washington, D.C. 20002-4240
ADVISER:
AVATAR Associates
Attention: Charles M. White
900 Third Avenue
New York, New York 10022
Each party may change its address by giving notice as herein required.
18. SOLE INSTRUMENT
This instrument constitutes the sole and only agreement of the parties to
it relating to its object and correctly sets forth the rights, duties, and
obligations of each party to the other as of its date. Any prior agreements,
promises, negotiations or representations not expressly set forth in this
Agreement are of no force or effect.
19. WAIVER OR MODIFICATION
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged. No failure to
exercise and no delay in exercising, on the part of any party hereto, of any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof.
Only the Chief Executive Officer, has authority on behalf of Client to modify or
waive any of the provisions of the Agreement.
20. ASSIGNMENT AND OWNERSHIP CHANGE
This Agreement shall automatically terminate in the event of its
assignment. Adviser agrees to provide immediate written notice in the event of
an ownership change.
9
<PAGE> 18
Such an ownership change will entitle, but not require, the Client to terminate
the Agreement immediately or upon notice.
21. COUNTERPARTS
This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.
22. CHOICE OF LAW
This Agreement shall be governed by, and the rights of the parties
arising hereunder construed in accordance with, the laws of the State of
Delaware without reference to principles of conflict of laws.
23. YEAR 2000 WARRANTY
Adviser warrants that it has taken all reasonable actions to ensure that
all software or other information technology product used by Adviser or by
Adviser's vendors, subcontractors, or agents, that is to be used in the
performance of Adviser's obligations under this Agreement, is designed to be
used prior to, during, and after the calendar year 2000 A.D., including without
limitation making reasonable inquiries of its vendors and suppliers in order to
ensure that said software or other information technology product will operate
during such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than one century.
10
<PAGE> 19
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON , 199
and make it effective on the date set forth.
CLIENT ADVISER
Vantagepoint AVATAR Investors Associates Corp.
Investment Advisers, LLC.
by: by:
- --------------------------------- ---------------------------------
(signature) (signature)
- --------------------------------- ----------------------------------
(name, title) (name, title)
Date: Date:
11
<PAGE> 1
EXHIBIT (e)
DISTRIBUTION AGREEMENT
This Agreement, made as of the ____________________ day of ______________
between The Vantagepoint Funds, a Delaware business trust (the "Fund"), and RC
Services, LLC,. (the "Distributor"), a Delaware limited liability corporation.
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act") and its shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the Fund's shares of
beneficial interest (the "Shares") to commence on ___________,
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the Fund and the Distributor hereby agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor
as its exclusive agent to sell and to arrange for the sale of the Fund's shares
of beneficial interest ("Shares") at the net asset value per share plus any
applicable sales charges in accordance with the Fund's current prospectus(es),
on the terms and for the period set forth in this Agreement, and the Distributor
hereby accepts such appointment and agrees to act hereunder directly and/or
through the Fund's transfer agent using all reasonable efforts in connection
with the distribution of Shares of the Fund.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent for the
Fund, from time to time during the term of this Agreement upon the terms
described in the Fund's current Prospectus(es). As used in this Agreement, the
term "Prospectus" shall mean the prospectus and statement of additional
information included as part of the Fund's Registration Statement, as such
prospectus and statement of additional information may be amended or
supplemented from time to time, and the term "Registration Statement" shall mean
the registration statement most
<PAGE> 2
recently filed from time to time by the Fund with the Securities and Exchange
Commission and any amendments thereto at the time in effect.
(b) The Distributor will hold itself available to receive orders,
that the Distributor reasonably believes to be in good order, for the purchase
of the Shares and will accept such orders and will transmit such orders as are
so accepted and funds received by it in payment for such Shares to the Fund's
transfer agent or custodian, as appropriate, as promptly as practicable.
Purchase orders shall be deemed effective at the time and in the manner set
forth in the Prospectus.
(c) The offering price of the Shares shall be the net asset value
per share of the Shares plus any applicable sales charges, determined as set
forth in the Prospectus. The Fund shall furnish the Distributor, with all
possible promptness, each computation of net asset value and offering price.
3. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Fund
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration Statement or
Prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Fund shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for and to the extent that may be required under
any state law, sale under the securities laws of such states as the Distributor
and the Fund may approve, and, if necessary or appropriate in connection
therewith, to qualify and maintain the qualification of the Fund in such states;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of the Shares in any
state, to change the terms of the offering of the Shares in any state from the
terms set forth in its Registration Statement and Prospectus, to qualify as a
foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Fund in
connection with such qualifications.
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<PAGE> 3
(c) Copies of Reports and Prospectus. The Fund shall, at its
expense, keep the Distributor fully informed with regard to its affairs that
reasonably relate to the distribution of the Fund's Shares and in connection
therewith shall furnish to the Distributor copies of all information, financial
statements and other papers which the Distributor may reasonably request for use
in connection with the distribution of Shares, including such reasonable number
of copies of its Prospectus and annual and interim reports as the Distributor
may request and shall cooperate fully in the efforts of the Distributor to sell
and arrange for the sale of the Shares and in the performance of the Distributor
under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees that
in selling Shares hereunder it shall conform in all respects with the laws of
the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Fund in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes.
6. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to indemnify and
hold harmless the Fund and each of its present or former directors, officers,
employees, representatives an each person, if any, who controls or previously
controlled the Fund within the meaning of Section 15 of the 1933 Act against any
and all losses, liabilities, damages, claims or expenses (including the
reasonable costs or investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Fund or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Fund by the Distributor, it being understood that
the Fund will rely upon the information provided by the Distributor for use in
the preparation of the Registration Statement and Prospectus. In no case (i) is
the Distributor's indemnity in favor of the Fund, or any other person
3
<PAGE> 4
indemnified, to be deemed to protect the Fund or such indemnified person against
any liability to which the Fund or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of his obligations and
duties under this Agreement, or (ii) is the Distributor to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or such person, as
the case may be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon the
Fund or upon such person (or after the Fund or such person shall have received
notice to such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Fund or any person against whom
such action is brought otherwise than on account of the Distributor's indemnity
agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume the defense of any suit
brought to enforce any claim as to which it provides this indemnification, but,
if the Distributor elects to assume the defense, such defense shall be conducted
by legal counsel chosen by the Distributor and satisfactory to the Fund, whose
approval shall not be unreasonably withheld, and any other indemnified defendant
or defendants in the suit. In the event that the Distributor elects to assume
the defense of any such suit and retain such legal counsel, the Fund and any
other indemnified defendant or defendants in the suit shall bear the fees and
expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will
reimburse the Fund and any other indemnified defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Fund of the commencement of any
litigation of proceedings against it or any of its officers, employees,
representatives or control persons in connection with the issue or sale of any
Shares.
(b) Indemnification of the Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its present or former officers,
employees, representatives and each person, if any, who controls or previously
controlled the Distributor within the meaning of Section 15 of the 1933 Act
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Distributor or other indemnified person may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Fund or any of the Fund's directors,
officers, employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the
4
<PAGE> 5
Fund or any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading unless such statement or
omission was made in reliance upon information furnished to the Fund by the
Distributor, it being understood that the Fund will rely upon the information
provided by the Distributor for use in the preparation of the Registration
Statement and Prospectus. In no case (i) is the Fund's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of his
reckless disregard of his obligations and duties under this Agreement, or (ii)
is the Fund to be liable under its indemnity agreement contained in this
Paragraph with respect to any claim made against Distributor, or person
indemnified unless the Distributor, or such indemnified person, as the case may
be, shall have notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Distributor or upon such
person (or after the Distributor or such person shall have received notice of
such service on any designated agent). However, failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which the Fund may
have to the Distributor or any person against whom such action is brought
otherwise than on account of the Fund's indemnity agreement contained in this
Paragraph.
The Fund shall be entitled to participate, at its own expense, in
the defense, or, if the Fund so elects, to assume the defense of any suit
brought to enforce any claim as to which it provides this indemnification, but
if the Fund elects to assume the defense, such defense shall be conducted by
legal counsel chosen by the Fund and satisfactory to the Distributor whose
approval shall not be unreasonably withheld, and any other indemnified defendant
or defendants in the suit. In the event that the Fund elects to assume the
defense of any such suit and retain such legal counsel, the Distributor, and any
other indemnified defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will reimburse the
Distributor and any other indemnified defendant or defendants in such suit for
the reasonable fees and expenses of any legal counsel retained by them. The Fund
agrees to promptly notify the Distributor of the commencement of any litigation
or proceedings against it or any of its directors, officers, employees or
representatives in connection with the issue or sale of any Shares.
7. Authorized Representation. The Distributor is not authorized by the
Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a registration statement filed with the
Securities and Exchange Commission ("SEC") under the 1933 Act and the 1940 Act,
as such registration statement may be amended from time to time, or contained in
shareholder reports or other material that may be prepared by or on behalf of
the Fund for the
5
<PAGE> 6
Distributor's use. The Distributor may prepare and distribute sales literature
and other material as it may deem appropriate, provided that such literature and
materials have been prepared in accordance with applicable laws, rules and
regulations and further provided that the Fund be given notice of such
literature and materials prior to their first distribution. No person other than
the Distributor is authorized to act as principal underwriter (as such term is
defined in the 1940 Act) for the Fund.
8. Term of Agreement. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force through
__________ ,2000 and thereafter from year to year, provided that such annual
continuance is approved by (i) either the vote of a majority of the Directors
of the Fund, or the vote of a majority of the outstanding voting securities of
the Fund, and (ii) the vote of a majority of those Directors of the Fund who
are not parties to this Agreement or interested persons of any such party
("Qualified Directors") cast in person at a meeting called for the purpose of
voting on the approval. The Distributor shall furnish to the Fund, promptly
upon its request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment hereof.
9. Amendment and Assignment of Agreement. This Agreement may not be
amended without the affirmative vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall automatically and immediately
terminate in the event of its assignment.
10. Termination of Agreement. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not more than upon 60 days'
nor less than 30 days' prior notice in writing to the other party; provided,
that in the case of termination by the Fund such action shall have been
authorized by resolution of a majority of the Qualified Directors of the Fund,
or by vote of a majority of the outstanding voting securities of the Fund.
11. Miscellaneous. The captions of this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Directors of the Fund of its
responsibility for and control of the conduct of the affairs of the Fund.
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<PAGE> 7
12. Compliance with Securities Laws. The Fund represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all applicable provisions of the 1940 Act, the
1933 Act and state securities laws and the rules and regulations thereunder. The
Distributor represents that it is a broker-dealer registered under the
Securities Exchange Act of 1934, is a member in good standing of the National
Association of Securities Dealers, Inc., and agrees to comply with all of the
applicable terms and provisions of the Securities Exchange Act of 1934, the 1940
Act, the 1933 Act, and state securities laws and the rules and regulations
thereunder and with applicable rules and regulations of the NASD.
13. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid to the Distributor at 777 North Capitol St., NE, Suite 600, Washington,
DC 20002 .
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act, however, shall
be resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons", "assignment", and "affiliated person", as
used in this Agreement, shall have the meanings assigned to them by Section 2(a)
of the 1940 Act. Where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
applications, such provision shall be deemed to incorporate the effect of such
rule, regulation or order. To the extent that the applicable laws of the State
of Delaware, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
15. Limitation of Liability. Notice is hereby given that this Agreement
is executed on behalf of the Directors of the Fund as Directors and not
individually and that the obligations of this instrument are not binding upon
any of the Directors, officers or Shareholders of the Fund individually but
binding only upon the assets and property of the Fund. Further, obligations of
the Fund with respect to any one Portfolio shall not be binding upon any other
Portfolio.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their fully authorized representatives and their respective corporate
seals to be hereunto affixed, as of the day and year first above written.
THE VANTAGEPOINT FUNDS
By:
--------------------------------
Attest:
- ---------------------------
Secretary
RC SERVICES, LLC
By:
--------------------------------
Attest:
- ---------------------------
Secretary
8
<PAGE> 1
EXHIBIT (i)
February 25, 1999
The Vantagepoint Funds
777 North Capitol Street, N.E.
Suite 600
Washington, DC 20002
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and sale from
time to time of an indefinite number of units of beneficial interest, with such
par value as the Trustees may determine (the "Shares"), of The Vantagepoint
Funds (the "Trust"), a Delaware business trust, in registration under the
Securities Act of 1933 by a Registration Statement on Form N-1A (File No.
333-60789; 811-8941) as amended from time to time (the "Registration
Statement").
We have acted as counsel to the Trust since its inception, and we are familiar
with the actions taken by its Trustees to authorize the issuance of the Shares.
We have reviewed the Declaration of Trust, the By-laws, and the minute books of
the Trust, and such other certificates, documents and opinions of counsel as we
deem necessary for the purpose of this opinion.
We have reviewed the Trust's Notification of Registration on Form N-8A under the
Investment Company Act of 1940. We have assisted in the preparation of the
Trust's Registration Statement, including all pre-effective amendments thereto,
filed or to be filed with the Securities and Exchange Commission.
In our review we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies.
We have assumed the appropriate action will be taken to register or qualify the
sale of the Shares under any applicable state and federal laws regulating sales
and offerings of securities.
<PAGE> 2
The Vantagepoint Funds
Page 2
Based upon the foregoing, we are of the opinion that:
1. The Trust is a business trust validly existing under the laws of the
State of Delaware. The Trust is authorized under its Declaration of
Trust to issue an unlimited number of Shares in series representing
interests in the Aggressive Opportunities, International, Growth,
Growth & Income, Equity Income, Asset Allocation, U.S. Treasury
Securities, Money Market, Overseas Equity Index, Mid/Small Company
Index, Broad Market Index, 500 Stock Index, and Core Bond Index
Funds, and in such other series or classes as the Trustees may
hereafter duly authorize.
2. Upon the issuance of any Shares of any of the series or classes of
the Trust for payment therefor as described in, and in accordance
with, the Registration Statement and the Declaration of Trust and
By-laws of the Trust, the Shares so issued will be validly issued,
fully paid and non-assessable, except that, as set forth in the
Registration Statement, shareholders of the Shares of the Trust may
under certain circumstances be held personally liable for its
obligations.
This opinion is intended only for your use in connection with the offering of
Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit (i) to the Trust's
Pre-Effective Amendment No. 2 to be filed with the Securities and Exchange
Commission and to the reference to our firm under the caption "Legal Counsel" in
the Statement of Additional Information filed as part of such Amendment.
Very truly yours,
Morgan, Lewis & Bockius LLP
<PAGE> 1
EXHIBIT J
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this pre-effective amendment No. --- under the
Securities Act of 1933 and pre-effective amendment No. ---- under the Investment
Company Act of 1940 to the Registration Statement on Form N-1A of The
Vantagepoint Funds of our report dated February 22, 1999 on our audit of the
statement of assets and liabilities as of February 19, 1999 of The Vantagepoint
Money Market Fund (one of the portfolios comprising The Vantagepoint Funds).
We also consent to the reference to our Firm under the caption "Legal Counsel
and Independent Auditors" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 23, 1999
<PAGE> 1
EXHIBIT 99.L
PURCHASE AGREEMENT
The Vantagepoint Funds (the "Fund"), a Delaware business trust and
Vantagepoint Investment Advisers, LLC ("Vantagepoint"), a Delaware limited
liability company, hereby agree with each other as follows:
1. The Fund hereby offers Vantagepoint and Vantagepoint
hereby purchases 100,000 units of beneficial interest
in the Vantagepoint Money Market Fund (such 100,000
units of beneficial interest being hereinafter
collectively known as "Shares") at a price of $1.00
per Share. Vantagepoint hereby acknowledges purchase
of the Shares and the Fund hereby acknowledges
receipt from Vantagepoint of funds in the amount of
$100,000 in full payment for the Shares.
2. Vantagepoint represents and warrants to the Fund that
the Shares are being acquired for investment purposes
and not with a view to the distribution thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the 25th day of February, 1999.
The Vantagepoint Funds
By: ________________________________________
[Title]
Vantagepoint Investment Advisers, LLC
By: ________________________________________
[Title]
